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Grand Committee

Thursday, 30 October 2014.

Deregulation Bill

Committee (3rd Day)

2 pm

Relevant documents: 4th Report from the Constitution Committee, 14th Report (Session 2013-14) from the Joint Committee on Human Rights and 5th Report from the Delegated Powers Committee

Clause 29: Reduction of qualifying period for right to buy

Amendment 24A

Moved by Lord McKenzie of Luton

24A: Clause 29, page 24, line 11, at end insert—

“(5) Within one year of the passing of this Act, the Secretary of State shall lay before each House of Parliament a report setting out the effect of the Government’s policy of reducing the qualification period for right to buy on the number of affordable and council houses which have been replaced on a like-for-like basis.”

Lord McKenzie of Luton (Lab): My Lords, this is a modest amendment that requires a report to each House of Parliament to set out the effects of the policy of reducing the qualifying period for eligibility for the right to buy from five to three years. In particular, it seeks information on the impact of this reduction on the numbers of affordable council houses that have replaced those sold. While this amendment focuses on replacement on a like-for-like basis, I acknowledge that the Government’s commitment relates to a one-for-one replacement.

As I made clear on Second Reading, we believe that people should have the right to own a home and have come to support the right-to-buy programme as one mechanism to facilitate this. We are considering these issues when home ownership has declined to its lowest level in 30 years, and when we have a housing crisis in the UK because for decades we have failed to build sufficient homes to meet demand. The consequences of this are now being widely felt by millions of working people who are unable to afford the house that they want, and their children and grandchildren face the prospect of never being able to do so.

As Michael Lyons stressed in his latest report, building more homes is not just about home ownership. There is a need to provide homes for social and affordable rent so that those on the lowest incomes can have a decent home, too. His report specifically identified that local authorities should have a key role in commissioning and building social housing, and acknowledged the continuing commitment of housing associations to this end. Of course, the sale of a council house does not of itself add to or diminish the stock of housing in the UK, but how the proceeds of sale are applied and the extent to which that adds to the housing stock are of crucial importance. These things need to be considered in the near and longer term. Evidence provided to the Lyons commission

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suggested that about one-third of the properties sold under the right to buy are now privately rented, many at rent levels above applicable housing benefit levels.

In seeking this report, we are looking to hold the Government to account for the commitment made when their reinvigorated right-to-buy programme was introduced. The Solicitor-General in the other place,

“guaranteed, for the first time ever, that receipts from additional local authority sales—that is, sales above the level forecast prior to the change—would be used to help to fund new homes for affordable rent, on a one-for-one basis”.—[

Official Report

, 6/3/14; col. 276.]

This commitment applies to the reinvigorated programme generally, not just to changes in this clause, and requires some decoding. It is accepted that it is one-for-one, not like-for-like, and it would appear—perhaps the Minister can confirm this—that it is based on the Government’s analysis at national level that, should it have the relevant proceeds, and with the application of those receipts limited always to 30% of the cost of new provision, a one-for-one test could nationally be satisfied. Can the Minister throw any light on the distributional aspects of this approach and the extent to which the allowance works only because of a mismatch between locations where proceeds arise and where they can be reinvested? What assumptions have the Government made about the type of properties sold and those replaced? Because the right-to-buy proceeds could be applied to only 30% of the cost of replacement provision, local authorities will be expected to borrow the balance and fund from affordable rents. They have to sign agreements with the Government to this effect, so how many councils have entered into such agreements with the Government or the HCA? How many have not? Are the Government aware of any councils that would be precluded from undertaking such an agreement because of their borrowing cap? What is the Government’s definition of affordable rents for this purpose? Has any estimate been made of the additional housing benefit or universal credit cost that will arise from the requirement to charge such rents to benefit from the replacement arrangements?

One of the difficulties in all this is how to be clear about the baseline—the forecast level of sales prior to the reinvigorated programme. Is it correct that the baseline is set in terms of revenues garnered, not units sold, so that the Treasury always gets its money first? Will the Minister provide an analysis, year by year, of the baseline so that there can be some clarity as to the additionality that should provide the Government’s one-for-one commitment? It is understood that the Government’s guarantee does not extend to tenants accessing the preserved right to buy for those council homes that transferred into housing association ownership. The National Housing Federation briefing asserts that because housing associations entered into agreements about the split of proceeds of sale before the reinvigorated programme, they receive only a small proportion of the sale proceeds, with the lion’s share going to local authorities and not always used for housing. It says that 92% of housing associations that it surveyed declared that they would not be able to replace homes sold via the preserved right to buy. What plan do the Government have to facilitate replacement of homes sold by housing associations in that manner?

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The National Housing Federation has given us figures for 2012-13, stating that 5,944 local authority homes were sold but that only 3,634 new homes had been started to replace them. For that and the subsequent year, how many homes have been sold and what are the related proceeds? How many of those have been treated as attributable to the reinvigorated process, and therefore how much is available for replacement homes?

Three other amendments focused on resources for social housing are grouped with this one, and I shall outline our position on them when they have been spoken to.

This is an important issue. Given the Government’s change in policy we need at least in these circumstances to review what is happening, hence the requirement for a report. I beg to move.

Lord Best (CB): My Lords, I propose a cluster of three new clauses in the group, all concerned with the desperate problem of this country’s acute shortage of homes that are affordable to those on average incomes and below. Amendment 40 relates to right-to-buy discounts and seeks not to undermine these arrangements but to make them more productive. Amendment 41 seeks to apply more of the receipts from right-to-buy sales to the provision of new homes. Amendment 42 attempts to enable councils to borrow prudentially more funds to increase housing supply.

These proposed new clauses do not represent earth-shattering proposals that will solve the nation’s acute housing problems. Other more dramatic changes are needed to achieve really significant results, but this trio of amendments would enable councils to play a bigger role once again in meeting this country’s crying need for more and more affordable new homes.

I declare my interest as president of the Local Government Association. I am grateful to the LGA for preparing these amendments and, as always, for valuable briefings.

Clause 29 endeavours to make the right to buy more attractive by reducing the time from five to three years that a tenant has to live in a council property before being able to buy at a big discount. Discounts can be as much as 70% of value, so tenants can buy a home for 30% of what it is worth, subject to maximum discounts of an index-linked £100,000, now £102,700, in London and £75,000, now £77,000, elsewhere. These nationally set figures are very much back-of-the-envelope stuff. They do not recognise that the housing market outside London is not uniform. Levels of demand and house prices in Bradford and Burnley are not as the same as in Bedford or Brighton. Indeed, house prices are not even the same across London.

Amendment 40 would mean councils setting their own discount levels, based on local markets. It would place a maximum 60% on discounts. It would avoid giving away publicly owned assets on extravagant terms. It localises decision-making, in keeping with the Government’s general disposition towards the devolution of responsibility to local government.

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Critics of the amendment could worry that some local authorities, which believe that the right to buy has already removed too many properties from their stock of affordable homes, will reduce discounts to the point where no one wants to buy. Some councils will certainly point out that a large proportion of RTB sales lead to the first buyer selling on to buy-to-let landlords. Sadly, this can mean the same previously rented home being re-let at twice the earlier rent, often increasing the housing benefit. Worse, the private tenants may be people requiring intensive housing management and support, which is not available from the private landlord. In extreme cases, I hear of families evicted by the council for anti-social behaviour returning to the estate, into former right-to-buy properties, costing the taxpayer twice as much, but without the restraints on behaviour that could be exerted for council tenants.

There are also the problems for the purchasers themselves. Those buying flats can discover a few years down the line that they must pay large sums towards major repairs and replacements of lifts, external cladding, roofs and so on, turning their asset into a liability.

Amendment 40 puts these arguments to one side and avoids the accusation that it could be used to undermine right-to-buy sales. It would require discounts to continue at levels that will still attract buyers. It would stop local authorities being forced to spend more than is necessary to encourage sales, and would prevent unwise tenants being tempted by the sheer scale of the discount from making an unwise purchase. It would substitute localised decision-making on an issue that requires local knowledge, for the distant regulation of RTB discounts by Whitehall.

Amendment 41 follows from that. It would seek to capture 100% of the sale proceeds—admittedly after they have been greatly depleted by the discount—to be recycled for local housing purposes. The importance of this measure is not hard to see. At present, the Treasury takes a 25% slice of proceeds from right-to-buy sales. Last year, from a total £877 million, the Treasury took £237 million. If that extra money had been recycled into the housing revenue account and used for new homes, it would have made a very helpful difference at the local level. Councils which have done the sums have estimated that they could have improved their housebuilding performance by some 30%.

2.15 pm

As the noble Lord, Lord McKenzie of Luton, set out, the Government’s stated intention is that local authorities will be enabled to replace each home lost through right to buy with a new one. At first sight, this sounds improbable. If you sold an older property for, say, half its value—for example, at just £20,000—after discount for a council house in many places away from the south of England and you wanted to pay for a brand new one worth, say, £120,000, you would expect to make a big loss. However, borrowing to fill the gap and charging higher rents to cover the borrowing costs, plus obtaining special consent from the Homes and Communities Agency to fund 30% of the building costs from the retention of more of the receipts from sales, the figures can just about be made to add up in

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some, but by no means all, cases. Regrettably, there remain plenty of instances where the discount and the loss of receipts to the Treasury mean that replacing homes sold creates an unbridgeable gap to producing a replacement.

I know that the Government have responded to the LGA that it is only fair for local authorities to return some of the receipts from sales because, in establishing the basis for councils’ housing revenue accounts to be returned to local control, there has been an expectation in settling on the figures that RTB sales could generate some cash for the Treasury. However, everything would be simpler and extra resources could be put to very good use if, quite simply, councils could keep their sales proceeds and recycle them for housing purposes.

Finally, Amendment 42 sets out the LGA’s proposition for removal or, in the context of this Bill, deregulation of the current housing borrowing cap—the ceiling on the amount that each authority is allowed to raise for housing purposes. The Government have built into the calculations for every council’s housing revenue account some headroom for additional borrowing, and, helpfully, a year ago the Chancellor announced £300 million extra to top this up. However, a number of local authorities are straining at the bit to do a great deal more than their individual cap allows.

In no cases does anyone suggest that local government should borrow what it cannot afford to repay. This is the principle enshrined in the prudential code. However, there are local authorities with a strong balance sheet for their housing, which would enable borrowing that could be prudentially repaid from rental and sometimes other income. We cannot afford to hold back those local authorities that have the land, the competence and the eagerness to do more. The LGA’s estimate is that these keen local authorities would gear up to borrowing some £7 billion over the next five years, producing an important fillip to housebuilding production. I have visited a number of councils which have made a start on programmes of new council house building. No one should fear that the ghastly mistakes of 40 or 50 years ago are even remotely likely to be repeated. No council would ever contemplate the mono-tenure, concrete, soulless estates of yesteryear. Today, the housebuilding contribution of councils is one in partnership with housing associations and housebuilders.

I know very well that the Government have, as a very high national priority, the reduction of the national debt, and borrowing by councils, even prudentially, currently counts against our deficit. This means that getting tomorrow’s new homes built by housing associations and, of course, private sector housebuilders is much preferred to seeing local authorities borrowing and building. However, throughout the EU different borrowing rules apply, which means that all “trading” activities by municipalities fall outside their national debt. I recognise that the Government are not keen to change the definition they use in defining public expenditure, but it seems unlikely that other countries would object to a definitional change that liberates the UK Government from this constraint.

Even without changing our definition, I urge support for the amendment. Work by the consultancy firm Capital Economics, which surveyed economists, fund

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managers and credit ratings analysts, concluded that there would not be any significant reaction from the markets to an increase in borrowing of £7 billion over five years resulting from lifting the borrowing cap. It is a matter of all hands on deck and we desperately need councils to be part of the picture. For those that are ready to go and those that would gear up if given the helpful nudge this amendment provides, I ask both the Government and the opposition parties to be a little braver in allowing local authorities to do what we know they can do extremely well.

Lord Stoneham of Droxford (LD): My Lords, I am pleased to support the thinking behind the amendments proposed by the noble Lords, Lord McKenzie and Lord Best. In fact, I agree 100% particularly with what the noble Lord, Lord Best, was saying in the detail of what is now required in the social housing sector. It has been one of the frustrations of this Government to get the number of houses up. Indeed, as the noble Lord, Lord McKenzie said, every Government have been frustrated with their idealistic objectives in this area. It is perhaps not surprising that after the huge damage of the recession in the housing and building sector it has been slow to respond, although many of us from an early stage have been saying that this was an even stronger argument for a more positive stimulus to social housing construction.

We are encouraged under this Government that it looks as though we will end up with a larger stock of social housing than we had before, but it is still not enough. The figures disappoint when set against the need and the potential to meet that need. We have to hold the Government to account on this, particularly as this is the fourth change in the right-to-buy policy in the last two years. It can be supported only if it ensures that we get a one-for-one replacement so, as one social house is sold, one replaces it. There are particular difficulties—as the noble Lord, Lord McKenzie, said—for housing associations dealing with preserved stock in terms of the money they then have to build new homes once somebody has exercised the right to buy. We will want some assurances from the Government on that. There is a danger in reducing the eligibility to three years to buy houses that people will increasingly see the need to get into social housing, not to meet necessarily their social need but to ensure they then end up buying a house at a discount. That is not the purpose of our social housing.

The noble Lord, Lord McKenzie, asked the Government to reveal if they can—or at least say when the latest set of figures will be available to show—how many homes have been sold and how many new social homes have started. We have the figures for 2012 and 2013 and we are six months now from the end of the financial year. I hope the Minister will be able to provide some figures which will be encouraging to us and if not, will tell us when those figures will be available. I remind the Committee—and indeed remind the Government—that it has always been one of the objectives of the right-to-buy policy initiative under this Government that we build more houses to meet social need, and that is what we have to hold them to account for.

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Lord Wallace of Saltaire (LD): My Lords, I think we all agree we need to build more houses and it is part of the puzzle over the last 20 years and more that successive Governments have been committed to doing this and have not been succeeding. Certainly, my own observation in Bradford is that one of the problems is a shortage of skilled labour for building. I am quite happy that the housing association that has its headquarters a good 10 minutes’ walk from my house in Saltaire now has a very good apprentice scheme to train plumbers, builders, electricians and others in sourcing its own maintenance and building. That is a model I hope others are planning to take forward. We are all conscious that we need to build more houses and aware—and this answers one or two of the questions raised by the noble Lords, Lord McKenzie and Lord Best—that we do not necessarily need to build the houses in the same areas where houses are being sold off as the population is shifting. We have different sorts of housing needs and requirements in different areas. Population has shifted towards the south-east and areas of heavy immigration require more housing than areas without much immigration, which now often have surplus housing stock. I have just been in Hull, for example, which does not suffer from a shortage of housing at present.

The noble Lord, Lord McKenzie, asked a number of questions. I do not have all the figures to answer him but I will make sure he gets the answers to all his questions as soon as possible, and of course well before Report. I am told by officials that many of the figures which he asks for are publicly available, so there should be no problem in that respect, but I do not have them immediately to hand. I noted his comments about houses that have been sold under right to buy and which are now privately rented. In some parts of England, there are some problems of that sort.

I think that the noble Lord, Lord Best, suggested that the discounts were enormous and immediate but the discount scheme, as he knows, is progressive and one gets the higher rates of discount only after renting a house for considerably longer than three, five or 10 years. The longer that someone has been a tenant the more discount they get, starting at 35% discount on a house and increasing by 1% each year to a maximum of 70% of the market value. It is not a short-term renters’ paradise, as I thought he was almost beginning to suggest.

The baseline for right to buy was set in April 2012, when the policy was reinvigorated, and it does not change year by year. I assure noble Lords that the Government are committed to keeping this reinvigorated right-to-buy scheme under review, including the impact of the change in the qualifying period from five to three years. The Committee may be interested to read the impact assessments for this clause that were published in January 2014, which is available on the parliamentary website, and in March 2012, at the time of reinvigorating the policy, which provide important context. When this Government reinvigorated the right to buy, they included an important measure guaranteeing for the first time ever that receipts from additional local authority sales—that is, sales above the level forecast prior to the

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change—would be used to help fund new homes for affordable rent on a one-for-one basis, not a like-for-like basis.

Lord McKenzie of Luton: While it is on my mind, is the test—the baseline—the originally anticipated numbers of sales of units, or is it anticipated sales proceeds?

Lord Wallace of Saltaire: I think that it is the units rather than the baseline being the proceeds of sales, but I will check with the officials and come back on that.

We publish quarterly and annually on right-to-buy one-for-one starts on-site and acquisitions, so the figures are available. I will make sure that they are circulated and put in the Library. Since the reinvigoration, there have been more than 12,600 additional local authority right-to-buy sales and, as the noble Lord, Lord McKenzie, said, councils have already reported almost 3,700 starts on-site and acquisitions of replacement homes for affordable rent. Councils have three years from the date of receiving the additional receipts in which to use them. This gives councils adequate time to leverage in additional funds and build up enough receipts to produce robust economies of scale.

The Government also publish annual statistics on preserved right-to-buy sales in England, which strike a balance between the needs to monitor the effectiveness of the policy and not to place unnecessary burdens on housing associations. As housing associations are independent organisations and stock transfer agreements are private commercial contracts, we do not mandate what those associations do with receipts that they receive from preserved right-to-buy sales. In practice, any surplus receipts retained, after costs and compensation for lost rental income, are likely to be used to support new build and other public benefits. Where receipts are shared with councils, it is our expectation that associations will work with them to develop replacement homes.

2.30 pm

I turn to Amendments 40 to 42, which the Government cannot accept for very good reasons, which I will try to explain briefly. In terms of the proposed changes to the right-to-buy discount, while the noble Lord may welcome the local flexibility envisaged in this amendment, flexibility which is in line with the Government’s commitment to decentralisation and devolution wherever possible, I believe that the system of regional discounts set under the last Government proved confusing for social tenants. Indeed, it punished those living in the wrong area, so to speak, where discounts were low and sales fell to a record low. To reverse this decline we introduced a national discount level for the cash cap of £75,000 across England when the coalition Government reinvigorated the right-to-buy scheme back in April 2012. Of course, we are committed to ensuring that the right-to-buy discount remains effective. That is why we increased the discount to £100,000 in London in March 2013.

In July 2013 we went even further to help social tenants realise their home ownership aspirations by increasing the maximum discount for a house to 70% of

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its value, and the cash cap—£75,000 in England, £100,000 in London—has increased to £77,000 and £102,700 respectively. The cash cap will now increase annually in line with the consumer prices index rate of inflation. These national discount increases will ensure that social tenants across the country are not disadvantaged by where they live. Not only will the discounts ensure that take-up of the scheme continues to increase, they will ensure that sales receipts are sufficient to help fund new homes for affordable rent on a one-for-one basis nationally.

While I note the intention to reduce the maximum percentage discount to 60%, the noble Lord may be interested to know that the average percentage discount level across England for houses sold between 2012 and 2013 was 45%. That reflects, of course, the length of time that people had rented their houses before they exercised their right to buy. This coalition Government are committed to ensuring that social tenants are able to exercise their home-ownership aspirations. This part of the amendment would cause increased confusion and unfairness for social tenants.

Moving on to the part of the amendment affecting the use of capital receipts by local authorities, as part of the self-financing settlement the Government reduced the overall level of local authority housing debt by £862 million. In exchange for this significant financial benefit, local authorities must return a proportion of their right-to-buy receipts to the Exchequer under a process known as pooling. Since the introduction of the self-financing settlement in April 2012 until the middle of 2014, some £317 million of right-to-buy receipts was paid back to the Exchequer, while local authorities retained about £1 billion.

Section 11 of the Local Government Act 2003 enables the Secretary of State to make regulations about the use of capital receipts by a local authority and what amounts shall be pooled. However, the Government have decided that they want local authorities to retain as many of their capital receipts as possible so that they can invest those receipts in, for example, new social housing or other regeneration projects. The Government do not, therefore, generally pool receipts other than right to buy. We believe that we have struck a fair deal with local authorities. The Government have paid off a significant amount of housing debt and, in return, ask for an element to be returned to the Exchequer. We do not pool other housing capital receipts and this gives local authorities the flexibility to invest locally.

Finally, on the issue of the housing revenue account borrowing limits, local authorities welcomed the financial freedoms arising from the replacement in 2012 of housing subsidy with the self-financing settlement. However, the Government, and the Treasury in particular, have a duty to reduce the national deficit and cannot allow unrestricted increase of each local authority’s housing debt. That is why my right honourable friend the Secretary of State for Communities and Local Government issued the limits on indebtedness determination in 2012, which set a limit on each of the 167 stock-holding authorities’ housing debt. The amendment would render us unable to issue such a determination.

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In case Members of the Committee are under the impression that local authorities have no ability to borrow for housing purposes, perhaps I can clarify. The self-financing settlement gave the local authorities with landlord responsibilities the ability to borrow about £2.8 billion. That is a significant sum, but we have listened to those who have said that some councils may need additional borrowing, perhaps because they have already borrowed up to their cap. That is why we announced in the Autumn Budget Statement some £300 million additional borrowing up to 2016-17, to support new affordable homes. We very much hope that local authorities will make use of this. We are conscious that we all need to build more homes, and £122 million is already allocated to support 1,700 affordable homes.

I hope that that answers the various questions and I urge the noble Lord to withdraw the amendment. I reiterate my promise to answer the detailed questions raised.

Lord Stoneham of Droxford: Before the noble Lord, Lord McKenzie, responds, may I apologise to the Committee? I meant to declare my interest as chair of Housing & Care 21 but failed to do so. I would like to put that on the record.

Lord McKenzie of Luton: My Lords, I thank the Minister for his reply and the noble Lords, Lord Best and Lord Stoneham, for their contributions to this debate. I look forward to receiving the figures in due course from the Minister. I was not quite sure whether in his response he was saying that the Government are currently meeting their one-for-one guarantee. It would be helpful to know if that is the Government’s position.

Lord Wallace of Saltaire: There is not yet a one-for-one guarantee.

Lord McKenzie of Luton: In which case, when is it expected that the Government will meet that guarantee?

Lord Wallace of Saltaire: I have not chosen between soon or shortly, but we very much want to move on that. It takes time. As I said, local authorities have three years to replace, and we are already two years into this new scheme. We are, of course, frustrated by the length of time it takes to build new homes. That is part of a long-standing story under successive Governments which we continue to push forward with.

Lord McKenzie of Luton: I thank the Minister for that. I was also not sure whether he had accepted the thrust of my amendment, which was that the Government would produce a report. Could he respond to that?

Lord Wallace of Saltaire: My answer was that the Government already produces a large number of statistics which, in effect, form the basis of the report for which the noble Lord is asking.

Lord McKenzie of Luton: I take that as a yes. I thank the noble Lord, Lord Stoneham. I think we are on the same page in recognising the scale of the

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housing crisis which faces this country and the need for more social housing in particular, and for a one-for-one replacement policy.

We have debated the issues in the three amendments from the noble Lord, Lord Best, extensively from time to time in recent years. We share with him a strong desire to do more to produce more and better social housing, particularly housing for rent, though we are not able to follow him specifically on every aspect of his three amendments.

Where Amendment 40 is concerned with setting discounts locally, it discusses setting them at a level which will encourage right-to-buy take-up. That raises an interesting question of where the policy should be focused between facilitating and encouraging. Presumably, it would depend on the need for investment into the social housing sector, and there has to be a balance in these matters. I do not resile from my party’s position on managing the country’s overall level of debt. Our priority is not a wholesale lift of the cap.

Notwithstanding that, we should recognise the important role that local councils can and should be enabled to play in tackling the housing crisis—as the Lyons report put it, to return to their historic responsibility to build affordable housing. We note that there is some scope for a rise in output even on the current basis, but that would be modest compared to historic output. In the 1960s, I think that about 200,000 units a year were produced.

We recognise that councils have a long record of sound economic management and borrowing prudently—a point that the noble Lord made—but early removal of the overall cap will be difficult for any Government. The Lyons report recognised that. The report suggested that there is an opportunity to provide additional capacity without exceeding total borrowing if there is more active management from the Treasury of the overall borrowing headroom. Lyons suggests, for example, that councils should be able to apply for more borrowing headroom by demonstrating: a viable business plan and asset management strategy in the context of new contracts for housing delivery and a single pot of funding for housing investment; costed plans for investment in new housing that relate to their housing strategy and make full use of partnership opportunities; that new homes will be additional to those which would be delivered by others; and compliance with prudential rules with expectations about rent levels and reinvestment in their existing stock. The Treasury would be able to make a decision on a case-by-case basis against an understanding of the overall level of borrowing planned, to ensure that total borrowing did not exceed the current provision.

The report also points to the alternative models by which councils can invest in homes—by using land, by entering into joint ventures, by some of the imaginative work which the LGA has done on the municipal bonds agencies. There are other opportunities there, but we cannot go the whole way with the noble Lord in reducing the cap as he wants to.

I hope that debates such as this will continue to help us focus on the absolute need to address the housing crisis across the private sector, the local authority

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sector and housing associations. I look forward to receiving the Minister’s data in due course; I take it that they will come in the form of the requested report. In the mean time, I beg leave to withdraw the amendment.

Amendment 24A withdrawn.

Clause 29 agreed.

Clause 30 agreed.

Clause 31: Tenancy deposits

Amendment 24B

Moved by Baroness Hayter of Kentish Town

24B: Clause 31, page 25, line 2, at end insert “—

(a) after subsection (10) of section 213 of the Housing Act 2004 (requirements relating to tenancy deposits) insert—

“(11) Where an order made by the appropriate national authority under subsection (5) requires, in connection with the tenancy in respect of which a deposit has been paid, the provision of the name, address, telephone number, and any email address or fax number of the landlord; the name, address, telephone number, and any email address or fax number of any agent who is holding the deposit on behalf of the landlord may be provided instead.”;

(b) ”

Baroness Hayter of Kentish Town (Lab): My Lords, a bit like government Amendments 25 to 35, which are in this group, Amendment 24B will close an unforeseen loophole in existing legislation. The loophole arises because, where letting agents are managing a tenant’s deposit on behalf of the landlord, they usually put their details on the documentation given to tenants. Obviously, that is particularly useful where landlords live abroad and where their only address for service in the UK is therefore that of the letting agent.

Under the terms of the tenancy deposit legislation, certain information, known as prescribed information, has rightly to be given to the tenants. Unfortunately, the wording of the order is highly prescriptive. It requires the landlord’s contact details, even if it is the agent who manages the deposit. There have been claims by tenants, including in court, that deposits have not been protected in accordance with the law. In fact, the agent has done everything correctly, other than to put down its address for service rather than the landlord’s home address. Nevertheless, a claim on behalf of a tenant has been upheld by a county court, meaning that what has been normal practice ever since tenancy deposit protection was introduced in 2007 is now potentially unlawful. There has not as yet been a High Court case on it, but clearly, given the county court’s case, there is now uncertainty and it seems much more sensible to fix this problem now before it is tested in the High Court. In the mean time, solicitors are taking this to court and challenging the proper protection of a deposit on behalf of a tenant.

2.45 pm

My slightly technical, but perfectly formed, amendment to the Housing Act 2004 would clarify the “prescribed information” which landlords or their agents must

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supply to tenants in relation to the deposit, alongside protecting deposits with an approved government scheme. The prescribed information for tenants is set out in a statutory instrument and includes,

“the name, address, telephone number, and”—

because they are a very modern Government—

“any e-mail address or fax number of the landlord”,

“landlord” being the critical word. Fairly obviously, the purpose of giving that information to the tenant is to help them at the end of the tenancy to be able to contact the person who is holding their deposit so that they can get it back quickly.

In practice, it is very often the letting agent rather than the landlord who holds the deposit or puts it in the appropriate insurance or tenant deposit scheme, so it is their details which are important to the tenant because it is about getting back the deposit. Therefore, lettings agents put their contact details in the prescribed information rather than those of the landlord. This practice was confirmed in advice from the tenancy deposit scheme and indeed from the Government. However, yesterday the Government’s website was still stating that the information that needs to be given is,

“their (or the letting agency’s) name and contact details”,

the word “their” referring to the landlord. Therefore, the Government are saying that it is the landlord’s or the letting agent’s name and contact details that need to be given, although that is not what, so far, one court has found.

I am advised that the Government may say, when the noble Lord comes to reply, “Don’t worry about it because the primary legislation says that where the word ‘landlord’ is used, it also refers to letting agents”, but that is not what the statutory instrument says and that is what we are seeking to clarify. The statutory instrument is clear: despite all the advice that has been given, the wording states that the details must be those of the landlord.

The problem is that if this is found—as we think it will be—to be open to challenge, the penalty is very serious. If there is non-compliance with the detail of the prescribed information order, the defective information can invalidate a Section 21 possession and there can be a penalty on the landlord as high as three times the amount of the deposit. Therefore, this very small but perfectly formed amendment would allow the details of the agent who is holding, or organising the holding of, the deposit to provide their details rather than those of the landlord in those circumstances.

We might note in passing that there is an added advantage to this. Since the beginning of October, every letting agent has had to belong to an ombudsman scheme, but that is obviously not the case for landlords. Therefore, there is an added protection for tenants should they have any complaints about the address not being readable or being changed. They can go to an ombudsman, whereas that is not the case should the landlord have moved in that time.

Therefore, the amendment is necessary to deal with confusion among agents about whose details are included. We are talking about 1 million tenancies here, so this is serious stuff and we need to get it right. It will assist tenants by ensuring that they have the details of the

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agent who is managing the deposit on behalf of the landlord, and it is clearly to the advantage of landlords, who otherwise risk being found in contradiction of the requirements. The amendment is supported by the tenancy deposit scheme and by the Royal Institution of Chartered Surveyors, the National Association of Estate Agents, the Association of Residential Letting Agents and the Residential Landlords Association. It must be fairly clear to the Minister that everyone who is handling this says that it needs fixing.

For similar reasons, we concur with the amendments that the Minister will move shortly to correct something that, because of a court case, needs challenging. However, our amendment is equally urgent, so I beg to move.

Lord Wallace of Saltaire: My Lords, this clause and the government amendments are here because of the uncertainty and concern caused to landlords and tenants across the private rented sector by the Court of Appeal decision in the case of Superstrike Ltd v Marino Rodrigues. The noble Baroness’s amendment also touches on some of the implications of that case. The decision effectively interpreted the legislation differently from its original intention and contrary to the advice given by successive Governments. It left a large number of landlords at risk of court action and open to a financial penalty, because the tenancy deposit protection requirements must be complied with within a set period. That leaves landlords in an impossible position with no means of complying. The situation is made more complicated by the increase in the number of landlords resident outside the United Kingdom, which means that they are dependent on letting agents to deal with their tenants. Similarly, it has left tenants unclear about the status of their deposits.

The aim of Clause 31 is not to completely reverse the decision made by the Court of Appeal, as it is important that the protection offered to these tenants as a result of the ruling is retained. It gives landlords a grace period to protect those deposits and give the necessary information to the tenant. That applies to landlords who still hold deposits which were taken before the introduction of the tenancy deposit protection legislation for tenancies which rolled over into statutory periodic tenancies after the introduction of the legislation.

The clause will make it clear that where a deposit has been protected, the prescribed information is given to the tenant and the tenancy is subsequently renewed, there is no need for the landlord to keep providing the same information every time the tenancy is renewed. It will also be clear that this has always been the position and will continue to be from now on.

Where legal proceedings are under way at the time the provisions come into force, tenants will be protected from paying their landlords’ relevant legal costs where the court subsequently decides against the tenant in the light of these provisions. We see the provisions as striking the right balance between ensuring that tenants do not suffer financially as a result of the retrospective legislation and ensuring that landlords are not penalised where they have followed government advice. I hope that these changes are accepted as uncontroversial.

Finally, government Amendments 25 to 35 are technical drafting amendments.

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The Government agree with the intention behind the noble Baroness’s amendment but are not sure that it is necessary. We understand that the law as it stands provides that, where the agent holds the deposit, it is sufficient for just the agent’s details to be included in the prescribed information. Article 2(1)(g)(iii) of the Housing (Tenancy Deposits) (Prescribed Information) Order 2007—I am sure that she knows it by heart—indeed states that,

“the name, address, telephone number, and any e-mail address or fax number of the landlord”,

should be provided. However, Section 212(9)(a) of the Housing Act 2004 explains that any reference in Chapter 4 of Part 6 of the Act—and hence in the 2007 order—to “landlord” in relation to any shorthold tenancy includes a reference to a person acting on his behalf in relation to the tenancy. Clearly, an agent managing the deposit on behalf of the landlord falls within that definition. Paragraph 40 of the regulatory impact assessment that supported the 2007 order covered this point, stating that:

“The person who receives the deposit will need to be the person who is registered with the authorised tenancy deposit scheme. Thus, in instances where the deposit is taken by a letting agent, the landlord’s details will not need to be included in this information”.

This is an issue with the deposit schemes that letting agent bodies have previously raised with the department, and I understand that they still consider the language of the Act and the supporting statutory instrument to be ambiguous. As I have set out above, we do not share that view. Of course, if they are able to provide evidence to the contrary we will consider whether a change to the order could be made to clarify the point, but we do not believe that any change to the primary legislation is required. I have asked officials from the Department for Communities and Local Government to contact the tenancy deposit schemes and letting agent bodies to discuss this further.

I hope with that assurance that the noble Baroness will be willing to withdraw her amendment. I thank her for the discussions we had before Committee and, if necessary, I am very happy to have further discussions. I commend Amendments 25 to 35 to the Committee.

Baroness Hayter of Kentish Town: My Lords, I thank the Minister for that. Clearly this would not have been brought up and supported by the groups I mentioned if there were not real concerns. They have counsel opinion that differs from that of the Government. Of course, if the Government would like to assure them that should it go to the High Court they will then cover all their costs and those of all landlords, maybe we could accept that. Would he like to make the offer now? Offer came there none.

The groups are doing this day to day—their lawyers have worries and counsel opinion continues to say there is a difficulty that the words “or their agent” do not apply to the instrument. That seems the problem. I also cannot see why this change cannot be made. It would be very easy and would make sure we did not have to go to the High Court to get a ruling. I urge that that meeting takes place before we come to Report, so that I can then consult these good organisations

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and, if necessary, table an amendment for Report if they are not reassured by the meeting. If it is possible to set that up before Report then I would be happy to withdraw this amendment at this stage. I think the nod means that the meeting will take place before Report. On that basis I beg leave to withdraw.

Amendment 24B withdrawn.

Amendments 25 to 35

Moved by Lord Wallace of Saltaire

25: Clause 31, page 25, line 7, leave out “and”

26: Clause 31, page 25, line 10, at end insert—

“(c) on the coming to an end of the fixed term tenancy, all or part of the deposit paid in connection with the fixed term tenancy is held in connection with the periodic tenancy, and

(d) the requirements of section 213(3), (5) and (6) have not been complied with by the landlord in relation to the deposit held in connection with the periodic tenancy.”

27: Clause 31, page 25, line 39, leave out “respect of” and insert “relation to”

28: Clause 31, page 25, line 41, leave out from “section” to end of line 43 and insert ““the commencement date” means the date on which the Deregulation Act 2014 is passed.”

29: Clause 31, page 25, line 44, leave out from beginning to end of line 2 on page 27 and insert—

“215BA Shorthold tenancies: deposit received on or after 6 April 2007

(1) This section applies where—

(a) on or after 6 April 2007, a tenancy deposit has been received by a landlord in connection with a shorthold tenancy (“the original tenancy”),

(b) the initial requirements of an authorised scheme have been complied with by the landlord in relation to the deposit (ignoring any requirement to take particular steps within any specified period),

(c) the requirements of section 213(5) and (6)(a) have been complied with by the landlord in relation to the deposit when it is held in connection with the original tenancy (ignoring any deemed compliance under section 215A(4)),

(d) a new shorthold tenancy comes into being on the coming to an end of the original tenancy or a tenancy that replaces the original tenancy (directly or indirectly),

(e) the new tenancy replaces the original tenancy (directly or indirectly), and

(f) when the new tenancy comes into being, the deposit continues to be held in connection with the new tenancy, in accordance with the same authorised scheme as when the requirements of section 213(5) and (6)(a) were last complied with by the landlord in relation to the deposit.

(2) In their application to the new tenancy, the requirements of section 213(3), (5) and (6) are treated as if they had been complied with by the landlord in relation to the deposit.

(3) The condition in subsection (1)(a) may be met in respect of a tenancy even if the tenancy deposit was first received in connection with an earlier tenancy (including where it was first received before 6 April 2007).

(4) For the purposes of this section, a tenancy replaces an earlier tenancy if—

(a) the landlord and tenant immediately before the coming to an end of the earlier tenancy are the same as the landlord and tenant at the start of the new tenancy, and

(b) the premises let under both tenancies are the same or substantially the same.”

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30: Clause 31, page 27, line 3, leave out “to 215C” and insert “and 215BA”

31: Clause 31, page 27, line 4, leave out “to 215C” and insert “and 215BA”

32: Clause 31, page 27, line 6, leave out “to 215C” and insert “and 215BA”

33: Clause 31, page 27, line 18, leave out “, 215B(2) or section 215C(2)” and insert “or 215BA(2)”

34: Clause 31, page 27, line 28, leave out “, 215B(2) or 215C(2)” and insert “or 215BA(2)”

35: Clause 31, page 28, line 1, at end insert—

“(8) In this section “the commencement date” means the date on which the Deregulation Act 2014 is passed.”

Amendments 25 to 35 agreed.

Clause 31, as amended, agreed.

Clause 32: Optional building requirements

Amendment 36

Moved by Lord Best

36: Clause 32, page 28, leave out lines 15 to 17

Lord Best: My Lords, the amendment amends Clause 32, relating to building requirements imposed through building regulations and planning conditions. This is all about quality for the new homes that we build and included in this are standards required from housebuilders for homes to be accessible and easy to enter and move around inside, not least for a parent with a baby in a buggy or the teenager temporarily on crutches after a football accident, but particularly for those who have a disability or, as we do as we all get older, a mobility problem.

I congratulate the Department for Communities and Local Government on its extensive housing standards review, which has been going for more than two years and will finally be concluded early next year. This has already reached a point at which we can see some excellent progress in raising and rationalising housing standards. I pay tribute to Simon Brown at the DCLG and the key architect on the review team, Julia Park, from Levitt Bernstein architects. I welcome the work being done and am sure that it will push up standards in some key respects and save a lot of money. The outcome will be better standards because more of the requirements will move from being planning conditions, which are hard to enforce, to being within building regulations, whereby building inspectors will see that they are actually achieved. There will be substantial savings for those housing associations and housebuilders creating the homes that we so desperately need because the plethora of current requirements from different public bodies will be compressed into a simpler and clearer set of standards covering all tenures equally. Bearing in mind that we have been building the smallest homes in Europe—we are simply miles behind Scandinavia, Germany, the Netherlands and France—getting to grip on space standards, for example, is a real step forward.

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3 pm

So far, so good. The hazard here is that, of the standards that cover accessibility, security, water and energy—and, in a newly defined set of standards, space—some key ingredients will be optional. That is of particular significance in relation to that important issue of accessibility. Although local authorities will not be able to devise and require variations on standards, they will have the option of requiring a higher-tier standard when they believe it is justified. Thus, in terms of accessibility, covering steps up to the front door, the width of that door, provision for a downstairs WC, a walk-in shower, and so on, all homes will have to accord with a basic level of standards, but the option will be there for local authorities to require housebuilders to move to a higher level, incorporating features of the lifetime homes standards devised by the Joseph Rowntree Foundation in the 1990s and adopted by the Greater London Authority, the Welsh Assembly and a number of local authorities. It will be possible for the local authority to stipulate a third and higher level of accessibility for a proportion of all homes, which would make them suitable for people using wheelchairs.

Of course, those of us convinced of the value for all families and individuals of the lifetime homes standards and the savings for the occupiers, the NHS and social care, all want to see local authorities opting for the level 2 accessibility standard as a matter of course. It is the one that is more or less the same as lifetime homes. That will be an option for the local authority. The extra expense of achieving this level 2 standard will eventually come out of the price paid for the land although, in a transitional period, for those who have already acquired sites, there could be an additional expense. It is most unlikely that this would be more than £500 per home, but I can understand that there is nervousness, even if the costs are modest, about requiring the higher standard in all cases immediately.

The problem, which Amendment 36 would remove from the Bill, lies in the housing standards review’s consultation suggestion that planning authorities would be allowed to require that important level 2 only if a rigorous test is passed. That stipulation is embedded in the Bill through Clause 32(4), which the amendment would remove. It is a considerable anxiety among organisations such as Leonard Cheshire Disability. The hazard here for future housebuilding is that local authorities will find this test, which at present is rather vague, hard to meet and will have to dumb down to the lower level because they have failed it.

We are not sure yet what this test will involve. I am hopeful that the Minister will be able to provide some reassurance that the intention is indeed to move standards upwards, not to allow housebuilders or developers always to argue that a scheme is not viable or that there is no local need for the standards that so many authorities now accept as the norm. Can we assume that those authorities leading the way will be allowed to continue with their current approach for any developments already in the pipeline? Can those currently requiring lifetime home standards maintain this requirement for those projects where people have started

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on the planning process? How will planning inspectors judge whether the higher standards are strictly necessary and justifiable?

It is certainly important for local authorities to undertake proper assessments of the needs of their population. Any such assessment will quickly demonstrate the demographic change which means that so many of us will live to an age at which our homes need to be more accessible than in times past. Will the Government provide guidance on what evidence is compelling enough for councils to require the level 2 accessibility standards across the piece? It would of course be reassuring to have confirmation that the Government want an increased supply of accessible and inclusive homes, which are not only disabled-friendly but would better suit us all during our lifetimes.

I hope that the Minister will be able to give reassurances, because good progress has been made in achieving higher standards and setting them out clearly, by getting rid of a plethora of currently very varied standards. However, if this is a dumbing-down and it will be possible to wriggle out of the requirement which I know many local authorities want to put in place—that in all cases one can move to the middle tier of level 2 for accessibility—then it will have all been for nothing. This important exercise will not have been worth while.

Lord Tope (LD): My Lords, I support with enthusiasm the amendment of the noble Lord, Lord Best, to which I have added my name. He has moved his amendment with his customary thoroughness, leaving little more to be said, but I look forward very much to hearing the reassurances that I am sure the Minister will give us in a few moments.

The noble Lord, Lord Best, rightly stressed the importance of standards: in this case, the importance of maintaining the good work that has been done in many areas, not least in London, in building to lifetime homes standards. I am sure that the Minister will tell us that it is not the intention—it would be remarkable if he told us that it was—to reduce these standards. What I want is reassurance on how confident he is that there will not be unintended consequences. That is the fear not just from Leonard Cheshire Disability, which the noble Lord, Lord Best, mentioned and from which we have had some briefing, but from other organisations for which this is important.

It has been a long and quite a hard battle at times for local authorities and others to improve standards from the periods in the 1960s and 1970s when they virtually disappeared altogether. There is much greater recognition now of the importance of designing for accessibility for the future as well as the present. We are nowhere near meeting the demand that already exists, never mind the future demand that the noble Lord, Lord Best, apparently envisages for himself and for the rest of us. If the unintended consequence of subsection (4) of Clause 32 is such as to weaken or even remove that drive, I hope that the Government will consider further and perhaps feel that that subsection is not necessary to that clause. I hope that the Minister can reassure us that there will not be any unintended consequences and, not least, that there are no intended consequences.

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Lord Stirrup (CB): My Lords, I rise briefly to speak to this amendment, as I am also concerned about the effect that it might have upon the provision of lifetime home standards within new buildings. The noble Lord, Lord Best, made all the key points with his customary eloquence and I do not intend to repeat them. There is a supposed requirement to meet the test of need. The need is surely very clear. The English housing survey found that only around 5% of properties can be visited by disabled people and, as a result, one in six disabled people and more than half of disabled children live in accommodation that is not suitable for their needs.

I am very sympathetic to the cause of deregulation and I therefore support the intent behind the Bill, but, as ever, when the water disappears through the window we must ensure that the baby remains in the bath. There seems to me a slight danger that in attempting to reduce red tape we may, in this instance, be achieving the reverse. We seem to be increasing the requirement on those who want to provide homes that are suitable for those with a variety of disabilities, making it more difficult for them, increasing the evidentiary burden and, instead of reducing red tape, doing the reverse—and, in this instance, increasing it. I am sure that that is not the intent and, equally, I am sure that it is not the intent of the Government to reduce the stock of housing that is built to the lifetime home standards.

I close by remarking that, in addition to the tremendous need that already existed throughout the country, we have, of course, very sadly, over the past 10 years or so, added to the number of disabled people in this country through veterans with severe muscular-skeletal damage as a result of operations. These people already face a challenge with their lives and the challenge will grow greater as they age. We saw, a couple of days ago, a very worrying report about the extent to which the military covenant is already under stress with regard to provision within the National Health Service for this group. I am sure we do not wish to see any further regression in the undertaking that the Government gave, within the military covenant, to care for that group of people, among the much larger group of disabled people within our community. I therefore ask the Minister to pay particular attention to this baby and make sure, either through this amendment or through some other means, that it is properly safeguarded in the future.

Baroness Andrews (Lab): My Lords, I, too, rise to support the amendment, brilliantly moved, as usual, by the noble Lord, Lord Best, who asked fundamental, awkward questions about the impact that this will have on standards in the future. I want to make some general points about what the Bill signals about the Government’s strategic approach to housing for an ageing population.

The noble Lord, Lord Tope, has already pointed out that establishing lifetime home standards in the first place was an extremely long and very challenging process, but it is accepted and the best developers take it as a matter of course. In fact, we have tried to learn from the mistakes of the past, when we assumed that people would not want to age in place. Part of the crisis that we have at the moment in finding homes of

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sufficient quality and appropriateness for an elderly and frail population is because in the past we simply did not understand that this would be necessary.

What troubles me about the standards review, for which the noble Lord, Lord Best, made a very good case, is that there is a real paradox in the language that the review uses in one respect. It is concerned with local authorities not pursuing standards which are simply nice to know, but standards which are strictly necessary. The point is that in building for an ageing population with disabilities, we should be building every home across the piece to lifetime standards which are strictly necessary. It is a misreading of the situation we are in and the challenge of the future.

I also see a real paradox in the situation that the Government has posed in this clause. It is a paradox in logic. To make lifetime homes standards and other accessible standards statutory, and yet to make higher standards optional, simply does not make logical sense. If we are assuming that we all want the highest standards and to maintain the highest standards, why is there an optional extra? Good developers and local authorities are already pursuing the best and highest standards and are doing so with conviction. Is it a question, for example, of the Government trying to obtain the moral credit while making it more difficult in practice for local authorities to enforce? We have to ask about the unintended consequences. We know that local authorities are strained and strapped for cash, resources and expertise. When developers approach these second-level standards, who will advise the developers and implement the standards?

3.15 pm

The case for the clause turns on the evidence that local planning authorities will have to demonstrate if they wish to apply for that standard. I am seriously concerned that local authorities simply will not have the capacity to do that. We have far too much evidence to the contrary.

As the noble Lord, Lord Best, has already asked, where are the standards laid down? Where will the universal authority be? How will we protect against more postcode lottery? Where are the criteria stated? Sadly, although local authorities are under some obligation to plan for demographic change and lead, they do not do so with great intelligence or conviction, if you look at some of the local authority area needs plans and so on. There is an absence of vision, there is an absence of incentive and there is a real issue about not rising to the occasion and understanding the genuine challenge in the housing market for planning for the future.

I am disappointed in this clause. Finally, as we have pointed out in discussion on other parts of the Bill—a Bill that is ostensibly deregulatory—this is not deregulatory. This requires local authorities to do more, to use more resources and achieve different sorts of standards, possibly at the expense of those which have already done their best and shown the way to other local authorities that are more laggard.

Lord Lexden (Con): My Lords, I would like to comment briefly on this amendment. I apologise to the noble Lord, Lord Best, for not being here at the start of his remarks.

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There may be grounds to believe that this is an issue more of access than of supply. According to Leonard Cheshire, 10% of the British population have mobility issues and 2% use a wheelchair, but no British region has fewer than 19% of homes with disabled-friendly front doors, and London has 36%. There appear to be reasons to believe that the homes exist but that disabled people are not living in them.

I would like to touch briefly on research by the highly regarded organisation, Create Streets, which has shown that, in an urban environment, the results of lifetime homes standards requirements tend to be fewer houses and more flats, which is the opposite of what most people in this country want. If the issue is one of access rather than supply, might it not be better to require local councils to ensure an adequate supply of new homes and of new disabled-friendly homes and to take responsibility formally for ensuring that disabled people are housed in the right homes ?

Lord McKenzie of Luton: My Lords, I put my name to this amendment but there is not much else left to say, so I shall be brief. Like the noble Lord, Lord Best, we welcome the work on standards and the inclusion of these matters in building regulations. We are grateful to Leonard Cheshire for its very helpful briefing. We welcome the fact that the lifetime homes standards and the wheelchair accessible standards have been recognised in building regulations, but like Leonard Cheshire and noble Lords who have spoken, there is a concern that those standards are optional, and that, moreover, a hurdle has to be gone through for a local planning authority to be able to require those as a planning condition. My noble friend made a telling point about the capacity of local planning authorities to address those issues.

I conclude on one point: this is not only a quality-of-life issue, although it is very important at that level; it has economic ramifications. Unsuitable accommodation means the likelihood of more trips and falls, more visits to the A&E and hospital, and more cost. I hope that the Minister can assure us that there is a way through this process to address the real concerns that have been raised today.

Lord Wallace of Saltaire: My Lords, I thank noble Lords who have taken part in the debate. As I came in, I was thinking that I have mixed views on housing standards. I first became aware of housing standards because of Parker Morris, when a number of houses in the Yorkshire dales were being condemned as back-to-earths which were not suitable or up to Parker Morris standards. Nowadays, those houses that remain would be regarded as extremely environmentally friendly and valuable; they were indeed beautiful homes. I once sat in on a violent argument between someone who lived in one of them and a particularly modernist Liberal councillor who believed that the Parker Morris standards were the absolute minimum and that any house that did not meet them should be immediately demolished.

On the other hand, having with my wife delivered to a large number of houses on the other side of the Aire from Saltaire just before the local elections this

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spring, with road names such as Cliff Rise and Steep Avenue—one house had 41 steps up to the front door—I recognise that accessibility is an issue with new housing. As I was listening to the debate, I reflected that if I wish to get out of bed in the middle of the night, in our house in Saltaire there are 15 steps down to the bathroom, whereas in my house in London there are five steps down to the bathroom, which, for someone approaching middle age, as I am, is much easier. The question of suitable and unsuitable accommodation is one which we all need to be concerned about.

First, this is not a dumbing down. As there is in much of the Bill and much government legislation at present, there is an inherent tension between local autonomy and central direction. I must say to the noble Lord, Lord Tope, that no Government can ever say that they understand in full the consequences of what they propose. We do our best to conduct impact assessments, but we are never entirely sure where we will be—especially after the High Court has had a go at our provisions in a few years’ time.

The optional requirements are intended to allow local authorities to set higher requirements for development than the building regulations minimum. They are a new concept in building regulations, and we are enabling local authorities, as a condition of granting planning permission, to require a developer to meet a higher building regulation requirement than the national minimum.

Lord Rooker (Lab): Is it not the case, however, that if the local authority wants to do that, it must change its plan and go through the planning process for its local plan? So it is not just a question of a committee of councillors meeting to say, “We will let this go. We want higher standards”. It has to go through the process of changing its public local plan. Does the Minister accept that?

Lord Wallace of Saltaire: That is my understanding, but I am a great deal less expert on this than the noble Lord, so I shall have to consult and write to him if I am mistaken.

The intention is of course to raise standards for new builds. We understand the reasons why there is this strong push for lifetime building standards; we also recognise that that imposes costs and that there are parts of the country—certainly the part of the country in which I live when I am in Yorkshire—where finding a sufficiently large level site on which to build, which is part of the requirements, is not easy. A great deal of housing is therefore not entirely suitable for the high standards which are suggested.

The Government intend to issue planning guidance on matters to be taken into account by local authorities in applying optional requirements, and we are consulting on the matters to be covered in that guidance.

This will mirror the approach taken with planning guidance, which supports the National Planning Policy Framework. I promise that I will write to the noble Lord, Lord Rooker, on the point he has raised just to make sure I am correct.

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Lord Rooker: I can give advance warning—it would nice if we could have the answer before we start the debate on the next amendment, because it is a fundamental issue. The time it takes for a local authority to change its local plan is enormous, and it is a huge cost as well. All I am asking is whether it is a requirement based on what he has just said in relation to this particular amendment. It ought to be straightforward to get an answer to that—yes or no—from his officials.

Lord McKenzie of Luton: My noble friend is absolutely right. I think the consultation document makes it very clear that it has to be part of the planning process for planning authorities to be able to impose it as an optional requirement.

Lord Wallace of Saltaire: My Lords, I reform that. If the local authority already has a standard, it can passport this on, keeping the standard without a need for a new policy. If it wants a new policy, it will have to have a plan policy. Does that begin to answer the question the noble Lord has raised?

Baroness Andrews: It answers the question in part, but it raises and reinforces the problem of the complexity of getting these higher standards in place. Changing a local plan, as we know—and some local authorities still have not prepared and finalised their plans—takes four to five years. In the meantime, there are going to be hundreds, if not thousands, of people reaching their eighties and living in deeply inappropriate accommodation. If the Minister will bear with the Committee, I hope that we can return to this in more detail on Report.

Lord Wallace of Saltaire: I understand that our consultation suggests that where lifetime home standards exist these can be passported and will be carried on but I will consult and make sure we come back. I recognise the importance of this issue—particularly as we, Members of the House of Lords, might be approaching our 80s at some time in the next 25 years or so and therefore perhaps have a greater interest than our children do in this respect. Clause 32 is available in case there is a major problem in the delivery of the new system—for example, if the powers we have given to authorities are not applied properly, or without sufficient rigour, or the system is misused in some way. If the Government decide to put conditions in regulations under Clause 32(4)—and we have no plans to do so at present—then these will be subject to full consultation with interested parties, as with all changes to building regulations. I stress that this is intended not to lower standards but to raise them. Our proposals currently out to consultation are, for the first time, proposing that standards for accessible housing and for wheelchair-adaptable and accessible housing will be given the force of building regulations. This is a major new step and I hope it will be welcomed by all noble Lords. Indeed, I heard what was being asked for. The consultation under way at the moment sets out the Government’s thinking on the issues that local authorities should consider if they wish to apply optional building regulations’ requirements for access.

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The key points are that local authorities should plan for the current and future housing needs of a wide range of households, including older and disabled people, and should clearly state in their local plan the proportion of new development that needs to comply with the requirements for accessible and adaptable dwellings, or wheelchair-adaptable or accessible dwellings. Local authorities should base their decision on the outcome of their housing needs assessments, taking into account: the likely future need for housing for older and disabled people, including wheelchair-user dwellings; whether particular sizes and types of housing are needed to meet specific needs—for example retirement homes, sheltered homes or care homes—the accessibility and adaptability of existing housing stock; and the overall impact on viability. I hope noble Lords will agree that these are reasonable matters to be addressed by local authorities and answer some of the questions raised, for example, by the noble Lord, Lord Best, and the noble and gallant Lord, Lord Stirrup. Currently the Government expect to set out the detailed consideration, which I have described, in guidance rather than put it into regulations.

Multiple compliance regimes have created a maze for designers and developers to navigate. There are 50 different local space standards and many different conflicting ways in which to apply local energy standards, some of which may conflict with the building regulations. Concerns about these issues prompted the Government to launch a fundamental review of technical housing standards during 2012-13, which aimed to rationalise the proliferation down to a sensible core of what worked and what is really needed. There was widespread support for this; 92% of last year’s consultation responses supported the review.

3.30 pm

The review involved extensive work with over 140 key stakeholder groups, from local authorities through to standard owners. The working groups concluded that necessary technical housing standards should be incorporated into a new form of optional building regulations. Currently, building regulations apply nationally across England and provide a clear and consistent set of requirements for homebuilders to meet and for building control orders to apply. However, local needs can vary across the country, so it is right that we provide a mechanism for local discretion and control to ensure that specific local issues can be addressed through the regulations. Issues such as providing for access and disability, water efficiency, space standards, and sustainability can vary to some extent within local authorities. Therefore, unlike existing building regulations, the optional requirements will not be mandatory. They will be applicable only when a local planning authority has a policy in place triggering them, as the noble Lord, Lord Rooker, suggested. This puts authorities in control. I hope that that provides sufficient justification for the proposals that we are making and I hope that the noble Lord, Lord Best, will be able to withdraw the amendment on the assurances that I have given him. Again, I am open to further consultation between now and Report if he is not entirely satisfied.

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Lord Best: My Lords, I am very grateful to all who participated in that excellent exchange. I am grateful to the noble Lord, Lord Tope, for his support. He reminded me in passing that I did not mention the good work of Habinteg Housing Association, which has been working on these things very successfully over the years.

The noble and gallant Lord, Lord Stirrup, raised the fundamental point, and underlined it, which is that to allow local authorities to insist on this higher level but absolutely universal higher standard of lifetime homes across the piece requires this rigorous test to be fulfilled, which brings with it potentially more red tape. This is the essence of the problem—passing a test of viability and need, while of course acknowledging that around the country circumstances are different. But we all get older, all around the country. There are families everywhere with a mother in a buggy going up those steps. The essence of the lifetime homes philosophy is that we need to build all our new homes to a standard that is good for everyone for their lifetime, and it is very hard to see what the rigorous test is going to be that one area might merit being able to insist on those standards and another are might not. The noble and gallant Lord, Lord Stirrup, gets to the essence of that problem. I am grateful to the noble Baroness, Lady Andrews, who emphasised concerns about older people and points out that this is going to be a bit of a postcode lottery as to whether the optional higher level is plumped for by the local authority concerned and whether it is able to sustain that if people go to appeal.

The noble Lord, Lord Lexden, raised the question about there are quite a lot of homes specifically adapted for wheelchair use. It is just that sometimes the people who need them are not living there but somewhere else. Of course, that creates the problem of how you get people to swap homes so that everybody is in the right place, but that point relates specifically to wheelchair-user homes rather than the broader standards that would apply, it is hoped eventually, to everybody—the universal move to level 2.

The noble Lord, Lord Rooker, raised the question of the local plan. There is a potential hiccup there that we have not got to the bottom of. If there is one thing that we are going to have to talk more about in the consultation period, it will be how we fit this within local plans without that leading to endless delay. It was important that the Minister made clear that we will be able to be passported, if we are a local authority that currently requires higher standards; that will carry on uninterrupted into the future.

I am grateful to the noble Lord, Lord McKenzie, for his support. I hope that he will be part of further consultation as we move towards the guidance, not regulations, that will put these standards into effect. The Minister’s remarks were reassuring but still have some rather vague edges to them. There are opportunities and wriggle room for developers to say that it is not possible to go to these higher standards in this area because, perhaps, we have paid too much for the land and the cost of £500 or so involved would mean that we will not make the profits we would have made. If such excuses are tolerated, we will lose the battle.

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We need to be firm on these matters and I hope that the guidance will be firm when it comes out. There is some reassurance—for which, thanks—but there is more work to be done. I beg leave to withdraw the amendment.

Amendment 36 withdrawn.

Clause 32 agreed.

Clause 33: Amendment of Planning and Energy Act 2008

Debate on whether Clause 33 should stand part of the Bill.

Lord Rooker: My Lords, I have a few reasons for seeking to have a short debate on Clause 33. First, let us be clear: this clause was not in the draft Bill that the Joint Committee scrutinised. That is a statement of fact. I am not complaining about that, because there are other things in the Bill that were not in the draft Bill and which I totally support. Indeed, I have signed one of the later government amendments. However, the fact is that it was not in the draft Bill. It was not even discussed or scrutinised in the House of Commons. I often wonder what happens down there. I spent 27 years there. We used to go through the minutiae in great detail. Half the Bills that come up here now have not even been debated. I question that. This clause was not in the draft Bill and was not discussed or scrutinised in the House of Commons; therefore we in this House ought to ask a few questions about it.

This is about lowering building standards. I do not want to be unfair to the Minister, because it is not his Bill—it is Oliver Letwin’s Bill. We were told that in the Joint Committee; Ken Clarke said to Oliver, when they came in as witnesses, “It is your Bill”. Is the Minister aware that he will be the first Minister in the coalition to speak in support of lowering housing standards? When the Environmental Audit Committee in the other place looked at this, a civil servant was sent to give evidence, not a Minister. He is out on a limb today. Is this what he went into politics and into the coalition for, to advocate the lowering of housing standards, from a Liberal Democrat perspective? That is what this is about.

I do not know all the background to this, obviously. There is a limit to my time. I looked at the clauses which were not in the Bill that we scrutinised in the Joint Committee that I had the honour of chairing. This one popped up one day on the system and my attention was drawn to it. I can see the Home Builders Federation’s fingerprints all over the clause; there is no question about that. I cannot see the fingerprints of the Construction Products Association, though—the people who actually make the products that make our houses energy efficient and more sustainable. Of course, they are small firms; there is probably not much by way of political donations from that part of the economy. So the message to the building products companies from this clause is, “Do not bother to invest in sustainable products”. What a message to send to a vital part of our manufacturing industry.

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In the previous debate I raised the question of the local plan, and I fully accept that the Minister has to come back on that. However, in respect of this clause, my understanding is that the required local plan changes will effectively mean that nothing will happen. There will be a real problem here if local authorities have to change the plans at massive cost due to Clause 33. I say to the Minister that it will put a blight on housebuilding—the very opposite to what we need. We need 4,000 new homes every week. Local authorities which want to build sustainable housing or have a sustainable housing requirement will have to change their local plan when this clause becomes a reality and the code is no longer in use, and I will come to the details of the code in a minute. They will be forced to go to public inquiries at massive cost and that will take time. As my noble friend said, it will take two or three years. In other words, they will be advised not to bother, and we will end up getting housing of a lower standard.

My questions to the Minister are more specifically about this clause than the previous one, to which I was not paying full attention, although I listened to what the noble Lord, Lord Best, said. It struck me that the question about the local plans was quite legitimate. To say that you are giving local authorities choice is fine if the choice is theirs to make and they can get on with it, but if the consequence of the change is that they have to change the local plan and they may be opposed in doing that, it could take years and money, so they will not do it. Therefore, their choice is actually removed. The clause is giving them a freedom but constraining the way they use it in such a way that they cannot use it. It is a bit like saying that this is a Deregulation Bill but it is shot through with more regulation. There is a real difficulty here. I should like the Minister to be more specific about the effect of local plans because that will be important when we come to Report.

What is going to be lost in this? What will be lost are rules relating to materials and life cycle, pollution, site waste, internal recycling, energy efficiency, water efficiency, surface water flood risk, drying space in homes, white goods facilities in homes, daylight and sound. These are all issues relating to the environment and energy, and they will be lost because the code will not apply. That is what it is all about. There is no doubt that there will be a drop in housing standards exactly at the time when we do not need that.

The Environmental Audit Committee of the other place looked at this. It said that unlike building regulations, the code for sustainable housing,

“incentivises developers and designers to think about sustainability from the outset and throughout the development process”.

The coalition agreement stated that the Government would,

“require continuous improvements to the energy efficiency of new housing”.

Since 2007, the code for sustainable housing has delivered continuous improvements in the energy efficiency of new housing and other aspects of sustainable construction. On the Government’s decision to wind down the code, the Environmental Audit Committee of the other places stated, as part of its consultation, that the:

“DCLG may have overstated the case in dismissing”,

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the code,

“as ‘unnecessary bureaucracy’. Retaining and evolving the CSH may offer a better way of driving incremental increases in sustainable home building than the proposed options set out in the … consultation”.

The LGA has said that it is going back almost to square 1 in terms of decent standards.

Manufacturers of building products have highlighted that long-term investment in sustainable building products might be affected by the new regime. The Construction Products Association pointed out that,

“sustainability represents an important business opportunity for UK manufacturers and represents market growth and export potential. Regulation and Standards are required to drive this forward”.

The BRE, which I will come to in more detail in a minute, said that the consultation proposals would restrict the ability of local planning authorities to adopt proactive strategies and would run counter to the Government’s stated aim to allow greater local choice.

3.45 pm

From my point of view, we have a real problem here with the clause. It looks so innocuous, does it not? Page 28 looks like a technical adjustment, as Ministers sometimes say—as I have said myself several times—but there is far more to it than that. You have to look at the section of the Planning and Energy Act that the clause amends. It states:

“A local planning authority in England may in their development plan documents”—

note that, in their development plan documents—

“and a local planning authority in Wales may in their local development plan, include policies imposing reasonable requirements for … (c) development in their area to comply with energy efficiency standards that exceed the energy requirements of building regulations”.

It is paragraph (c) that the clause removes. That is what it is about. You have to read the section that it amends to see how damaging this part of the Bill is.

The removal of the code, which gives local authorities flexibility, and the introduction of a national standard as part of building regulations goes against the coalition agreement, which I have already quoted from, which said that the Government would return decision-making powers on housing and planning to local councils. The quality of housing stock may decline when the standards are removed. Home owners will be faced with high energy bills and poorer quality environments. Twenty seven per cent of the UK’s carbon emissions come from domestic property. That was something we drove home when the then Climate Change Bill went through this House before it went to the other place. We did far more work on it than the House of Commons. Domestic properties are creating a massive amount of the carbon emissions of the UK. We need to do more to tackle that, not less. The UK low-carbon environmental goods and services market is now worth an estimated £122 billion to UK plc.

Why on earth is this in the Bill? Why is the Minister today proposing to scrap the code? He must tell us about the impact of that. How will environmentally sustainable housebuilding be promoted? If the code

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goes and local authorities say that they want to maintain those standards, they will have to change their local plans. That will take years and it will be opposed by developers—I know that developers build the houses; I am not slagging them off. They like flat greenfield sites—I think that they should have more of them in the green belt, by the way; I have no problem about that. If the Minister wants to talk about delivering up steps, try delivering in Stroud in Gloucestershire. That is the place to go delivering to find out about access and steps up.

Building to lower standards will store up problems for future generations. That is the reality. To conclude, I ask the Minister to make a commitment before we get to Report that he personally—because he is operating as the postbox for the other Ministers, for Mr Letwin and Co., the gang who want to burn all the regulations and hang the consequences because it looks good—will visit the BRE. It is only 10 miles up the M1, near Watford. He should see the reality of what it does to give advice. It is now privately funded; it was government-funded at one time. The late Ian Gow permitted me to go there when I was shadow Housing Minister in about 1984. The fact is that it is a leader in this. People, both in this country and abroad, listen to the BRE on sustainability in housing.

We have housing stock of 23 million or so. We are not doing much to upgrade that. The only chance we have to improve is in the small numbers of new stock that come along—although we all want those numbers to be vastly increased. Will the Minister go and look on site and listen to the BRE’s views about the damaging effects of this clause on our future housing standards? I do not want him to be in the position of the lap-dog for the Tories and of being told, “Go and do this. It is lowering housing standards, but you are the patsy Lib Dem”. He does not want that reputation. One way to deal with it is to get a few facts, listen to people who know about this and who have certainly advised the Government in the past, though I do not know whether they did on this clause. The BRE has certainly drawn the attention of others to the clause. I saw it on e-mail and that made me look at why this clause was not in the Bill to start with. It was part of another consultation around the same time. It is a tragedy that this was never raised in the House of Commons, because there has been no warning about building to lower housing standards. That cannot be a good thing. That is why we should have a brief debate on Clause 33.

Baroness Andrews: My Lords, far be it for me to improve or elaborate on anything that my noble friend has said. I just want to pick up a couple of points in the context of the code for sustainable homes.

That code has been in place since 2007. People are quite clear about the benefits. It has led to improved standards and to efficiencies. That is acknowledged by bodies such as the Environmental Audit Committee and the Local Government Association and many good public authorities. It is familiar, it is quite elaborate—that is true—but on the other hand, people know how to respond to that and how it benefits them. It has led to great energy efficiencies. Will the Minister tell me what the problem is that will be solved by removing the code?

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The noble Lord, Lord Rooker, has quoted extensively from the BRE. It has probably provided us with similar briefings. The briefing points out that the new arrangements will mean that, in the future, energy performance set through the building regulations will be lower than many local authorities currently require, with the need for a special application to use optional regulations. This takes us back to the previous debate, and the shift in process and relationships, and in how things are decided, who gets to decide them and on what basis. He is right: of course there is a tension between national standards and localism. We are five years into this Government and it is about time some of those tensions were resolved. It is causing real issues at local level.

The BRE, which is expert in sustainability, has stated that:

“Over 75% of the sustainability requirements currently covered by the Code will no longer be covered by any UK standards or regulations”.

Is that factually correct? I would like to know if that is the case. What might that 75% include? How will that be compensated for in the new arrangements? In short, I would need to be convinced that whatever is coming forward will have the universal nature of the code for sustainable homes, that it will be as accessible and as easily applied, and that it will have the impact that the code can have in terms of efficiencies. What is going to happen to energy bills and to energy efficiencies within the home? I do not think that the House would want to proceed with this clause unless we could be certain that we knew the answers to those questions, and that we could say to people outside this House that the energy situation and their energy bills would get better as a result of these changes.

Lord McKenzie of Luton: My Lords, we have heard two very powerful presentations from my noble friends. It is not my nature to be helpful to the Minister, but I want to put one matter to him. The bit of briefing I received suggested that the particular provision in the Planning and Energy Act 2008 would stay in being until the zero-carbon homes policy was in place and that that would effectively replace it. That itself raises a couple of questions. The first is whether the zero-carbon homes policy would cover all the protections that my noble friends have said would be lost once we delete this provision. Secondly, how can we be assured that there will be an alignment—if that is the right way to go—and that the zero-carbon homes policy will come in at the same time as the ability to require higher standards disappears? There is a fundamental issue about whether the zero-carbon homes policy equates to what could be achieved under this provision. If it does not, the sort of losses that my noble friends Lord Rooker and Lady Andrews have identified become very real and pertinent.

Lord Wallace of Saltaire: My Lords, the noble Lord, Lord Rooker, often raises difficult issues for Governments, and I give all credit to him for the attention he pays to this. It is an entirely proper role for a Member of the House of Lords to look with deep suspicion at government proposals and to make

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sure that the Government can provide the rationale for them. Perhaps I can assure him that Oliver Letwin spoke on this on the Floor of the House and it was discussed in Committee, so it has not been entirely ignored by the House of Commons.

Lord Rooker: Then I apologise. My advice was that it had not been looked at in the Commons. Obviously I was wrong there.

Lord Wallace of Saltaire: The noble Lord is entirely right to be suspicious and to make sure that this is properly scrutinised, particularly an umbrella Bill such as this. I in no sense criticise him for raising a number of important points.

This is in no sense intended to lower standards; it is intended to continue the process of raising energy efficiency standards and to achieve zero-carbon aims. I was already briefed to make the point that the noble Lord, Lord McKenzie, just helpfully made. This is not intended to commence until it replaces the other standards. The code on which representation has been made is a fairly complex piece of legislation. Those parts will not be abandoned; they will be incorporated into the building regulations. I stress that we are raising standards, not lowering them. I will make sure that I can say that with confidence again on Report, because I recognise the concerns of noble Lords.

By 2016, the Government plan to have tightened building regulations to deliver zero-carbon housing. I repeat that the Section 1(1)(c) amendment will not be commenced until then; meanwhile there will be no dip in standards. We intend to consolidate necessary standards to ensure that sustainable housing can be built. The current situation means that insufficient housing is being built because authorities are applying too many different standards, making sites unviable. This is a rationalisation, not a deregulation of the sort that lowers standards and enables people to move further away from the zero-carbon housing that we all very much want.

Clause 33 amends the Planning and Energy Act 2008 to ensure that local authorities in England will no longer be able to set energy efficiency standards via local planning policies for new homes in excess of the building regulations. It does so by disapplying Section 1(1)(c) for dwellings in England where government policy is that such a requirement should be found only in national building regulations. However, local authorities will still play an important strategic role in delivering carbon reductions and the Act will continue to enable them to do so.

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Authorities are best placed to decide the wider energy needs of an area and will be able to require that developers connect, for example, to off-site low-carbon or renewable energy infrastructure, or district heating schemes. This role is an important element of planning authorities’ responsibilities and will not be affected by the proposals to amend the Planning and Energy Act. In this way, authorities will still be able to seek local goals to promote sustainable energy development and

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reduce emissions. We are not removing those powers; we are consolidating and raising the level of the building regulations.

Local authorities will also play an important role in shaping the allowable solutions scheme. Although the proposal is to develop a nationally-led scheme, local authorities are encouraged to come forward with their specific ideas and work with developers on delivering them. These provisions, if the House agrees with them, will be commenced by order. I know that there is a widely shared view that the Government should not commence the amendments until such time as the zero-carbon policy is in place, and the Government accept that.

The Government issued a consultation on 12 September, which covered the implementation of the housing standards review and set out the transitional and implementation requirements that will apply. The consultation says that,

“local planning authorities will continue to be able to set and apply policies”,

imposing reasonable requirements for,

“development in their area to comply with energy efficiency standards that exceed the energy requirements of building regulations until the zero carbon home policy has been put in place … alongside the commencement of the amendment to the Planning and Energy Act 2008, which … we anticipate would be in late 2016”.

The Minister for Government Policy underlined this commitment by stating in the Commons that the amendment to Section 1(1)(c) of the Planning and Energy Act would be made so that it,

“knits properly with the start of the operation of”,—[

Official Report

, Commons, 23/6/14; col. 153.]

zero-carbon homes regulations.

In the interim, we would expect local planning authorities to take a sensible approach to setting energy-efficiency requirements for new homes and not set conditions above a level equivalent to the Code for Sustainable Homes energy level 4. This will ensure that the industry continues to be pushed to deliver more energy-efficient homes to the code level 4 standard nationally, while the national zero-carbon policy on allowable solutions and the strengthened building regulations are prepared and come into effect from 2016. I hope that that provides the reassurance that the noble Lord, Lord Rooker, and others were looking for. I am happy to talk further off the Floor with the noble Lord if he needs further assurance.

Lord McKenzie of Luton: Given that we are not expecting the zero-carbon home policy to be included until late 2016, there is a lot of water to flow under the bridge between now and then. Would he accept an amendment which put in the commitment not to repeal the provision in the 2008 Act until the zero-carbon home policy was in place?

Lord Wallace of Saltaire: I thank the noble Lord for that interesting suggestion. May I consider it and consult? Perhaps we can also discuss that off the Floor, between Committee and Report.

Lord Rooker: I thank the Minister for his reply. I am not sure what I am supposed to do now on the clause stand part because there is no amendment.

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Noble Lords: Sit down.

Lord Rooker: So that is it—I shall sit down, but I thank the Minister.

Clause 33 agreed.

Clause 34: Short-term use of London accommodation: power to relax restrictions

Amendment 36A

Moved by Lord McKenzie of Luton

36A: Clause 34, page 29, line 7, leave out “may also” and insert “must”

Lord McKenzie of Luton: My Lords, I shall speak also to Amendments 36B, 36C and 36D. This amendment would effectively give to individual London boroughs the right to override any relaxation of planning requirements for short-term lets which the Secretary of State might introduce. It would further make it clear that local authorities could deny any relaxation in respect of residential premises which were not the sole or main residence of the lessor.

The Government’s proposals to deregulate the position are proving to be, understandably, very contentious, as noble Lords will have seen from their postbag. We are supportive of those people who want to rent out their homes when, for instance, they go on holiday and want to make a bit of extra money. Although it may not be a mainstream activity where I live, we should not stand in the way of someone doing a house swap as part of their holiday plans. It is difficult to see why someone should be required to obtain planning permission in such circumstances. However, there is a distinction in our minds between infrequent letting in these circumstances and those who want to operate a short-let business. For those who do, and thereby materially change the use of a property, it is reasonable that they submit a planning application.

The arguments against a wholesale deregulation of the position for London have been well made. The specific problems caused by short-term letting have been fully set out in a range of briefings. London Councils says that deregulation of short-term lets will diminish the supply of permanent accommodation for those living and working in London, because if owners can charge significantly more for short-term lets, there will be general upward pressure on rents. The Camden case studies exemplify this. The survey of London boroughs has identified widespread concerns about the problems caused by extensive use of residential accommodation, which include increases in noise and anti-social behaviour, increasing fear of crime, the loss of community identity and reduced focus on fire risks.

The British Hospitality Association and others remind us why Section 25 of the Greater London Council (General Powers) Act 1973 is there in the first place: to ensure that housing is available and affordable for London residents. This, sadly, is an ambition which is increasingly difficult to fulfil. They claim that some

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other major cities—Paris, New York and Singapore—are looking to tighten their legislation in this regard at a time when the UK is moving in the opposite direction. Will the Minister tell us whether that is the case? The Bed & Breakfast Association expresses concerns that short-let businesses are largely unregulated, are enabled by technology to operate partly offshore and are careless of their responsibility regarding public safety.

Those who support some deregulation include Onefinestay, which says that it has pioneered a business which enables visitors to cities to stay in private homes while the owners are out of town. It argues that householders can top up their income, while tourist spending gets spread to local economies outside the usual hotel zones. It makes the point that such activity is not about scarce residential property being converted wholesale to other uses, it is about occasionally renting a home when you are not around, or even renting a room in your house while you remain in residence. In some ways, it might be argued that this is, de facto, the current position, because enforcement of the current planning requirements is limited. The London Councils’ briefing suggests that overall, it is less than 50%. Has anyone has been prosecuted for letting out their home for a couple of weeks while they have been away without getting planning permission?

The fact that London boroughs might effectively police the current position by where they draw the line on prosecutions does not make it altogether comfortable. What do we conclude from all this? It would be appropriate to deregulate in circumstances where the short-term let was in respect of a residential premises which was, and continued to be, the sole or main residence of the person letting the property. There would need to be careful definitions of sole or main residence—to preclude, for example, circumstances in which the owner was working abroad but expected to return to the property, but that should be well within the competence of parliamentary counsel. That would remove the nonsense of somebody having to get planning permission each year to let their home when they go on holiday, or, indeed, rent out a room for a few weeks and remain in residence.

It should also provide a degree of comfort from concerns that such arrangements will be uncaring of the neighbourhood and the local environment, because those letting the property will be returning to live in it. Further, it would remove the strain of boroughs having to look aside from such perfectly acceptable arrangements and determine not to prosecute. If the Secretary of State’s powers to deregulate are narrowed in this way, it might be said that no further safeguards are needed.

However, as the Bill provides an opportunity for the Secretary of State or the local planning authority to disapply the deregulatory change to particular types of residential premises or particular areas, we need to consider whether that is fair. Given that the Secretary of State in the first instance can set the circumstances in which the short-term let is facilitated, it would be reasonable and a localist approach to empower individual boroughs to disapply the deregulation. They know their areas better than the Secretary of State, and that is what our amendment provides. I beg to move.

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Lord Tope: My Lords, I am grateful to the noble Lord, Lord McKenzie, who tabled his amendments yesterday, thereby giving him the onerous task of explaining what this debate is all about.

During this Grand Committee, I have heard from London Councils that, while it regards the noble Lord’s amendments as moving in the right direction, it still prefers to go for the deletion of the clause as a whole. My noble friend Lord Clement-Jones—who unfortunately is in China on business today, leaving the task to me—and I have therefore given notice of our intention to oppose the clause standing part so as to enable a full and proper debate on this issue. As the noble Lord, Lord McKenzie, rightly said, the issue is contentious—I think that he used that word. It is certainly controversial in London, where it is a growing issue.

We have received objections from London Councils. The Local Government Association, of which, I should perhaps mention, I am a vice-president, rightly sees this as a London issue, as it is relevant to the Greater London powers Act, and is therefore leaving it with London Councils. We have received representations from Westminster City Council, which understandably is probably the local authority in London most affected by these issues—although it is by no means the only one—from the Covent Garden Community Association, the British Hospitality Association, the Bed and Breakfast Association, Whitbread, which runs Premier Inn and Costa coffee, and a number of individuals who are personally affected.

That leads me to ask the Minister the following. Specifically, whom did the Government consult before deciding to insert this clause? When did they do that consultation? What was the response and has it been published? It may well be that I have missed it. Given the body of opinion that is outright opposed to this clause, one wonders what led the Government to go along with it. I should say, and will say again later, that since tabling what is effectively our intention to delete the clause we have received a number of representations which are not wholly in support of the clause but perhaps rather more positive towards it. I will try to deal with those as well, because we want to have a full debate on the issue.

It is easy to think that this is a provision that was put into a 1973 Act—coincidentally, that happened to be my one year as a London MP, so I remember these things reasonably well—and that since then, times have changed. Yes, of course they have. The internet has been invented and businesses are now doing a very good job with something that could not have existed then. However, something else has changed since 1973: the housing crisis in London is now even worse than it was at that time. I looked at the Explanatory Notes to understand more fully the Government’s thinking on this. Paragraph 193 states:

“The purpose behind the provision”—

that is, the original 1973 provision—

“was to protect London’s existing housing supply, for the benefit of permanent residents, by giving London boroughs greater and easier means of planning control to prevent the conversion of family homes into short term lets”.

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The only thing that has changed since is that that is even more necessary now than it was then. Therefore, I contend that the purpose is still there, although the means of achieving it is open to debate.

London Councils, which represents all 32 London boroughs and the City of London, tells us that Westminster City Council has estimated that 3,000 properties in its borough are being used for short-term accommodation. In Camden, 923 flats are being offered by just one short-term let business, a rise of 37% in just over three months. On that scale, it is not simply people who want to offer their home for someone to live in while they go away, perhaps for a long holiday, in order to help finance that holiday. This is a business.

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London Councils has surveyed all its members and 92% of responding boroughs said that short-term letting caused problems with noise and anti-social behaviour; 92% that it resulted in a loss of permanent accommodation; 75% that it caused loss of community identity; 58% that it caused increased fear of crime, and 25% that it caused increased crime and fire safety risks. I suspect that might be an underestimate of fire safety risk, which is of course the particular concern of both the British Hospitality Association and the Bed and Breakfast Association.

I mentioned the Covent Garden Community Association because it has written to the noble Lord, Lord Wallace of Saltaire, who has now sadly left us, and to the noble Lord, Lord Stevenson, who is still with us. It is a long-established community association—I stress community association—which I can remember working with back in 1973. It says:

“We appeal to you to delete this proposal from the Bill, and indeed to work with communities like ours to bring in far stricter regulation of short term letting. It is no exaggeration to say that short term letting is already harmfully affecting our community more than any other issue in our generation … we believe that communities now need protection from people who go away a lot, and whose homes become informal hostels on a regular basis using websites”—

and they name some, which I will not. It goes on:

“This activity is very difficult for local authorities to take action against, even under the current legislation. Yet it is ruining the quality of life of long term residents who then, of course, are driven to move out themselves”.

My final quotation comes from an individual, who I will not name for the record, but who puts it much more succinctly in a letter to Mr Eric Pickles. He says:

“I am fed up with the constant stream of people staying for short periods”—

he gives an example of his own house—

“immediately below my flat and letting people into our otherwise secure courtyard and staircase. This flat (below mine) should be a home for someone who would be a part of the community. Instead it deprives hotels of business (and the accommodation charges go to an owner who lives abroad)”.

The noble Lord, Lord McKenzie, is right to say that it is a contentious issue and there is some example of the contention.

I said that we had received contrary representations from people operating in business since tabling our opposition to the clause. I want to refer to one in particular from a company called onefinestay, with

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which my noble friend Lord Clement-Jones and I had a useful, productive and constructive meeting, subsequent to which, at our request, it wrote to us more fully. It says that:

“we are absolutely not in favour of wholesale deregulation”.

As a relatively new business made possible by the coming of the internet, which offers a clearly needed service—they are doing good business and benefiting people—what it quite reasonably wants is not deregulation, but better and more appropriate regulation. It wants regulation which meets the circumstances and strengthens its legitimate and very proper business, which protects them against the cowboys who operate in this area, and which would also strengthen the hands of local authorities.

One of its key recommendations, which is very much in line with that of the noble Lord, Lord McKenzie, is that the regulation should apply simply to properties that are the sole or main residence. There is a test of what is a residence: it is where somebody is living. I understand that that is defined in law. Nobody wishes to stop somebody letting a property while they go away on holiday for a few weeks or even a month or two. We are talking not about that but about the businesses that are into short-term lets—often, though not always, of poor quality, with low fire-safety requirements and so on. That is the area we need to attend to.

We come now to the clause before us. As so often, we are being asked to do away with the only safeguard that exists, albeit one from 1973, without any evidence that it is not working. As far as I know, there is no evidence that local planning authorities are applying this provision disproportionately. Perhaps the Minister will tell me whether the Government have any evidence. Given the state of most local planning authorities and their staffing I suspect that they are not applying it at all, which may be a worse situation. There can be no serious suggestion that in the vast majority of London boroughs, if any, it is applied disproportionately. We are being asked to do away with the only protection there is with no certain knowledge of what is to replace it. We are allowing the Secretary of State to make regulations but are given no indication of what those regulations will or will not cover. I hope that the Minister will tell us in a minute and that we will be able to see those draft regulations, preferably before the next stage of the Bill. Whether that is possible, who knows?

If the Government are determined to do away with the provision in the 1973 Act, we need to know what is coming in its place. We need to be reassured that it really will be fit for purpose and will safeguard the interests of the organisations, commercial businesses and, particularly, the individuals in communities to which I have referred. In conclusion, I hope that the Minister will also reassure us that this section of the 1973 Act will not be repealed—if that is the right word—before we have the new regulations debated, discussed, agreed and in place, at least so that the protection remains in place throughout.

Baroness Donaghy (Lab): My Lords, I thank the noble Lord, Lord Tope. I spoke on this issue at Second Reading and little did I know that I would be entering this twilight world of virtual hotels and absence of

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health and safety. It is a very new world and perhaps not one that I would welcome. I make no apology for speaking about a London issue. I am a Londoner by adoption. I have done my fair share of one-room bedsits and one-bedroom flats, so I think I have some knowledge of the standard of private sector renting. The big issue why it is special for London is the high proportion of flat-dwellers. We must emphasise that because it means that there is a whole new relationship with fellow homeowners, which does not necessarily exist in a street of houses.

I support what the noble Lord, Lord Tope, said. This is not a cosy, house-swapping issue. This is big business. We are talking about Airbnb valued at £10 billion and IHG valued at £8 billion and also about a crisis in housing supply in London. Can the Minister say how the Government reconcile that shortage and the fact that this is going to make accommodation even more short? How does that reconcile with the model tenancy agreement that the coalition Government are preparing? How can we be sure that there is going to be enough accommodation left for those who want to rent on a longer basis?

Noble Lords have already spoken about undermining the tourist industry. I will not go on about that, but I support everything that has been said about it. All the organisations that have approached other noble Lords have also approached me. I believe that the health and safety issue is important, because the Chief Fire Officers Association wrote in March to Airbnb saying the fire safety information given to people using its properties was wrong.

Finally, let me deal briefly, because others have covered the issues that I wanted to, with the libertarian issue. It is quite right that the homeowner ought to have the right to deploy their property in whatever way they choose. That has to be balanced by the right of the property owner not to have a major change in ambience of the place that they purchase. That is particularly true in blocks of flats. There is an expectation when someone buys a property within a block of flats that the ambience will not change, that it will be secure and settled and that it will not turn into the A&E department of the local private hospital, into a hotel, or into more unfortunate areas such as brothels and housing benefit fraudsters at the other extreme. The right of homeowners has to be balanced by the need for people to have some security in the property that they buy in London. If the noble Lord, Lord Tope, were to pursue this on Report, I would support the clause being deleted entirely, but as a reasonable compromise, I will support my noble friend Lord McKenzie.

Lord Mawson (CB): My Lords, I am not an expert in this area, but following a discussion with an entrepreneur who is active in this field and behaving responsibly and who has developed a successful business in response to a real market, I thought it important that an alternative case be put. Over the years, I have often heard a strong case from the public sector as to why it would be unhelpful for a particular change to happen. I have heard attempts to hold the sea back before, but it has often proved impossible in the end.

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Change happens. As a social entrepreneur and innovator I have certainly been told by the public sector on numerous occasion that, “the sky will fall in” if such and such a change should happen. Having usually stayed the course, I noticed that, in reality, it never did and a new, often positive reality emerged.

The noble Lord, Lord Fowler, gave some excellent illustrations of this phenomenon, and attempts in the past to hold back business development, in his Second Reading speech. I shall articulate an alternative scenario to that painted by colleagues. I have heard considerable opposition to this change and concern over the unintended consequences that may arise as a result. However, I have yet to hear enough focus on the benefits of this reform, which in many people’s eyes is a sensible and forward-thinking piece of policymaking. It is these benefits that I shall focus on.

First, this reform will deliver a more optimal use of space and existing assets. With such well-documented pressure on our housing capacity, surely it makes sense to make better use of the residential property that we already have and to allow our properties not to lie empty for short periods when owners are away. I declare an interest as someone who lets out rooms in my London home. Secondly, a system which no longer makes people feel fearful of criminal sanction simply for renting out their residence when they are away will mean that families, many of whom are in need of additional income, will be free to tap into an additional revenue stream. Much of this revenue will be taxed and will ultimately boost revenue for the Exchequer to spend as it chooses.

Thirdly, it is evident that increasing the variety and stock of locations for tourists to stay will not only boost tourism in the capital, but will give a boost to local businesses that will benefit from this new mode of travel. This extra tourist footfall has the potential to reach parts of our economy that tourist dollars have previously never reached. Furthermore, when tourists decide to stay in people’s homes rather than in hotels, they tend to spend their money in local businesses, local restaurants and local museums. Finally, it should be pointed out that the costs for a family wanting to stay in a hotel in London are incredibly high and many people are simply priced out of a trip to our capital city. Short-term holiday lets provide travellers, especially families, with more choice and often more suitable properties in which to reside while on holiday.

We must be clear that the internet has fundamentally changed the way in which people live, work and travel. Either we decide to embrace this shift in our policy-making and our regulation or we will be left behind, as other cities embrace what is increasingly a preferred way to travel. The emergence of platforms such as Onefinestay, which has been mentioned and which enables people to rent out their residence safely and securely on a short-term basis when they are not at home, is something that we should embrace and not hinder.

4.30 pm

Regulation in this area has evidently not kept pace with technological and social advance. We now have an opportunity to put in place a sensible framework which puts London at the centre of a new and exciting

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phenomenon: what many people refer to as the sharing economy. This is not about wholesale deregulation or allowing speculators to buy up property for their individual profit. We must be clear that this is not what the Government are proposing, as I understand it. Appropriate safeguards should be put in place in any secondary legislation to ensure that buy-to-let investors cannot choose to turn homes into businesses. However, individuals should have the basic right to let their residences for short periods if circumstances warrant it.

London is currently the only place in the country, I understand, which puts such restrictions on this activity. While London is clearly a special case, the time has come for proportionate reform which would mean that those seeking to rent out their residence on a short-term basis would not have to apply for planning permission as if they were commercial premises, such as a shop or bar. This activity is clearly already taking place in London and elsewhere, so either we put in place a sensible system to regulate it properly and proportionately or we risk an unregulated and underground market—with all the associated risks.

Baroness Hanham (Con): My Lords, I apologise to the Committee that I have not had the opportunity so far to take part on the Bill. I do so now as a very new co-president of London Councils and as a freeman of the Royal Borough of Kensington and Chelsea, of which I am a former leader.

I want to intervene on this issue because I am long enough in the tooth, as my noble friend is, to remember the 1973 Act being introduced. It was introduced then because there was an experience of a transient population developing within London along with scarce housing. They were coming in for a short time, going away again and not contributing at all to the settled population. I wish that that situation had changed but in fact it has not. Central London is still the magnet for people coming here for a short time. Why do we worry about that? I think that it is because it destabilises the population and the use of accommodation. It makes it almost impossible for a local authority to know what its property, or the property within the borough, is being used for.

The noble Lord, Lord Mawson, spoke about having proper regulation, but there is proper regulation. What is happening in the Bill takes that proper regulation away. It seems absolutely essential that the local authority should have the oversight of what is going on. An application has to be made to it for practically everything else to do with property, so it should be able to see what is going on and to approve, or not, the short-term use. Perhaps I may go back to the suggestion that this is stopping people letting out their homes for a short time. Nobody is looking at that. What they are looking at is somebody who owns a property and then deliberately turns it into not a buy-for-let but a buy-for-rent for six weeks or so.

In my own area, you often see people coming into quite expensive accommodation. They put their suitcases behind them and go in, and you have no idea who they are. They vanish again a week later and somebody else turns up. That is not at all helpful for stability and it certainly does not help us with the transient nature of

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the situation. Central London boroughs may suffer from that more than others: Westminster, Kensington and Chelsea, and probably Camden.

Secondly, there has been an enormous amount of new development in London which is not necessarily of any use to local residents. It will be made of less use to local residents if some of those really big glass buildings, even at the rents that are charged, are let out on a short-term basis. The coming and going there will be absolutely uncontrollable.

I do not know what mischief has brought this clause about. I very much hope that my noble friend Lord Ahmad will be able to tell us, because the legislation seems to have been running along quite happily, doing what it is meant to do, for more than 30 years. Why suddenly, at this moment when London is in turmoil, a perpetual fever, of people, including tourists, coming and going—apart from the fact that this is an opportune Bill to put it in—is it important?

My borough, the Royal Borough of Kensington and Chelsea, is very alarmed about this. It has made its position clear. One of the reasons why I support the opposition to the clause, as well as the amendments, is that it will be badly affected. Other boroughs may not be as badly affected, but if this is a matter where each borough will make up its mind about deregulation, that is its choice, its power and its local decision if its local residents support it. I do not think that there is a role here for the Secretary of State in making a decision that affects a local authority area that much.

It is London that is affected by the Bill. London was deliberately affected by the London Government Act because of the situation then. I doubt that any other city has the pressure that London has now—although that may develop. I very much hope that the clause will be reconsidered, because I think it is unnecessary. London has spoken before about this. People who want to let their houses when they go away must be exempted. As it stands, I am very much against the clause.

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Lord Ahmad of Wimbledon) (Con): My Lords, first, I thank all noble Lords for their contributions to the debate. Many noble Lords have spoken from their personal experience in London and as representatives of various London councils.

Perhaps at the outset I may say that I am not an adopted Londoner; I am a born and bred Londoner and someone who has represented a London council and sat on the London Councils body itself, so I am aware of some of the key concerns that have been raised about the provisions. However, I cannot claim to have made a coherent contribution to the 1973 Act. I hope that my contributions today will be somewhat more coherent, but that is for others to judge.

The amendments, which would allow local authorities to make their own exemptions for particular properties and areas, would, in the Government’s view, risk removing the certainty and consistency that are behind our proposals for all London residents. Indeed, they would create a patchwork of different regulatory approaches across the capital, potentially resulting in unjustifiable

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differences between local authority areas. Residents may find that their near neighbours have either greater or lesser freedoms to let their property short term, which in many cases would be difficult for them to understand.

Let me be absolutely clear: we intend to retain the important safeguards of Section 25, which protect London’s housing supply for Londoners who live and work permanently in the capital city. However, through Clause 34, we want to provide certainty for all residents in all London local authority areas that they are able to let their homes on a short-term, temporary basis, such as when they are on holiday, without having to deal with the unnecessary bureaucracy of applying for planning permission.

These amendments also seek to exempt from deregulation properties that are not the main residence of the landlord. I reiterate that, through Clause 34, the Government only want to allow residents to be able to temporarily let their homes. This measure will do nothing to make it easier for those seeking to short-term let property on a permanent or commercial basis. Rather than specifying how the deregulation will work on the face of the Bill, the clause seeks the power to make regulations which will provide the legal framework. These will follow the affirmative procedure and will be subject to debate and the approval of Parliament on important issues, including in precisely what circumstances short-term letting will not require planning permission.

I turn to the detail of Clause 34. The clause updates an outdated 40 year-old law restricting Londoners from being able to temporarily let out their homes or spare rooms. Section 25 of the Greater London Council (General Powers) Act 1973 prohibits the use of a,

“building, or any part of a building”,

for “temporary sleeping accommodation” for fewer than 90 consecutive nights without planning permission for temporary change of use. In London, residents failing to secure planning permission face a fine of up to £20,000 for each offence. The regulations that the Government are bringing forward will clarify for London residents what is permissible.

Baroness Donaghy: What is the record of the number of fines imposed?

Lord Ahmad of Wimbledon: The noble Baroness makes a very valid contribution. Both the noble Lords, Lord McKenzie and Lord Tope, have mentioned that, and I shall come to it in a moment.

We are seeking to provide clarity for Londoners across all boroughs. The noble Lord, Lord Mawson, mentioned London as a capital city and its economy. Last summer nearly 5 million overseas visitors came to the capital. Some of those visitors, as well as UK residents, want to experience London as a local by staying with Londoners who live in London permanently or indeed in their homes while the resident is away on holiday. We know that there are currently thousands of London properties and rooms advertised on websites, but each is potentially in breach of Section 25 as it stands. That is the important point here, and I shall come to that in a moment. There is uncertainty for householders as to whether their local authority will

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take action against them for unauthorised short-term letting. Today’s technology enables internet sites, which we have heard about in the debate, to offer services to manage and quality-control short-term lettings. Planning legislation for the capital needs to catch up with the 21st century way of living. Noble Lords talked about their personal experience. Every year, thousands of visitors enjoy their holidays in Londoners’ homes, and such short-term letting is prevalent in areas such as Wimbledon during the tennis fortnight.

Through regulations, we want to provide certainty and consistency for all residents in all London local authority areas about when it will be permitted for householders to temporarily short-term let their property without the need for planning permission. The Government’s amendment to Section 25 crucially retains the main provision for protecting London’s housing for those who live and work permanently in London, while seeking to bring the current legislation up to date. Importantly, we want to make it clear that we do not seek to allow the short-term letting of London’s housing stock on a permanent or commercial basis. The Government do not seek to repeal Section 25 of the 1973 Act or amend its primary purpose of protecting London’s housing supply for Londoners who live and work permanently in the capital. Moreover, the Government fully recognise that London’s homes should not be lost to investors to let out exclusively for short-term lets, and our reforms will not enable this. It is the Government’s intention simply to allow Londoners to let their homes on a short-term, temporary basis, such as when they are on holiday, without having to deal with the unnecessary bureaucracy of applying for planning permission.

Clause 34 enables the Secretary of State for Communities and Local Government to bring forward regulations to prescribe the circumstances in which the use of a home as temporary sleeping accommodation is not deemed a material change of use, requiring planning permission. The clause also allows for regulations to exclude individual residential premises, and premises in particular areas, from any relaxation of Section 25.

I come to some of the questions that were raised. The noble Baroness, Lady Donaghy, the noble Lord, Lord McKenzie, and my noble friend Lord Tope asked about prosecutions. London boroughs have taken enforcement action against short-term letting. For example, in Westminster action has been taken against statutory nuisances and anti-social behaviour. This clause is designed to redress the sporadic enforcement of Section 25. It certainly creates greater certainty for residents who want to let their properties short term. The Government’s intention is to allow more people to enjoy and visit London. We are proposing allowing temporary, short-term letting for only householders and not commercial or permanent short-term letting.

4.45 pm

Various other questions were raised. The noble Lord, Lord McKenzie, talked about how other cities are tightening regulation and asked why we are deregulating. I think that I addressed that in part by saying that the clause applies only to short-term letting for householders and not to commercial or permanent short-term letting.

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Another question raised concerned the timing of the legislation, and my noble friend Lord Tope asked about the regulations. As I have already said, regulations will be subject to the affirmative procedure whenever they are introduced. It is certainly the Government’s intention to introduce regulations as soon as possible on Royal Assent. When that happens will of course be subject to the timings.

My noble friend Lord Tope also raised the question of web platforms and the consultation. There was quite a detailed consultation in this respect. The Review of Property Conditions in the Private Rented Sector consultation paper was published in February 2014 as part of a wider consultation. That paper sought views on whether Section 25 of the Greater London Council (General Powers) Act 1973 should be reviewed or updated. In total, there were 97 responses to that specific question. The concerns—some of which we have heard this afternoon—were focused on the removal of Section 25. However, some individuals and providers of online accommodation supported the relaxation that is being proposed in the regulations.

The noble Lord, Lord McKenzie, and my noble friend Lord Tope also raised questions concerning the acute housing shortage. Basically they asked, perfectly pertinently, whether the legislation will add to the problem. Of course, I recognise the importance of keeping London homes for Londoners, and this change will not remove the protection of Section 25. It will amend Section 25 to permit regulations which, as I have already said, will allow genuine householders to supplement their income by renting out their spare room or their property while they are on holiday without having the bureaucracy or the concern and cost of applying for planning permission. The Government also recognise London’s unique circumstances. I assure noble Lords that we will be working with the London boroughs to design the provision to ensure that we achieve the right balance between increasing freedoms for London’s residents and protecting London’s housing supply. The provisions are also intended to ensure that speculators will not be able to buy homes meant for Londoners and rent them out permanently as short-term lets. I have already made it clear that these regulations will follow the affirmative procedure.

The noble Baroness, Lady Donaghy, referred to the model tenancy agreement. Perhaps I may write to her between now and Report on her specific questions.

Baroness Hanham: I clearly heard the Minister say that this provision is intended specifically to allow people to let out their homes. Under those circumstances, I wonder whether the current wording of the legislation, which refers to,

“accommodation of any residential premises”,

describes that particular position.

Lord Ahmad of Wimbledon: As a previous Whip to the noble Baroness, I know that when she asks questions one needs to be quite detailed in one’s response. Let me again assure the noble Baroness that I will write to her specifically on that element. I am sure officials have also made note of her quite specific question. My noble friend Lady Hanham also raised the issue of

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curtailing the role, or asking why the Secretary of State would retain this role. As I have already said, we will work with local authorities in London on how regulations covering the role of the Secretary of State would work.

I am just looking through the number of specific fines from local authorities. Again, I have touched on some of them. I do not have the detailed breakdown of how many people have been pursued by which authority, but I have requested that from officials and will write to all noble Lords in that respect. I trust that I have covered most if not all of the questions. For anything pending I shall, of course, review the contributions made by all noble Lords, which I welcome, not least because of the experience across the board. I reiterate that the Government recognise that this is an area where there will be considerable interest and we wish to ensure that we get the change right. Therefore, I welcome the contributions that have been made in Committee today.

I reassure noble Lords that the Government will be working closely with all interested parties in London, including the local authorities and the hospitality industry. The Government want to ensure that the measures brought forward meet householders’ aspirations of temporarily letting out their homes or spare rooms, while retaining the key purpose of Section 25 which is keeping London homes for those who live permanently in London. We believe that these reforms benefit those Londoners who wish to supplement their income by making their homes or spare rooms available. It offers an alternative to hotels and guesthouses—as the noble Lord, Lord Mawson, mentioned—and further supports the wider tourist industry. It also helps those temporarily working in the capital or searching for a place to live by expanding the pool of competitively priced accommodation on offer. I beg to move that Clause 34 stands part of the Bill and I urge the noble Lord, Lord McKenzie, to withdraw his amendment.

Lord McKenzie of Luton: My Lords, I thank the Minister for his very full reply and thank all noble Lords who have contributed to the debate on this amendment. I was slightly comforted by the Minister’s direction of travel. My understanding is it is likely that what is proposed is a narrower deregulation than might originally have been assumed from looking at the Bill. Whether it is narrow enough is something we need to look at with reference to genuine householders. I do not think that necessarily required a short-term let to be in respect of the householder’s property—that is it was their sole or main residence. That could impact on our position a little. I am not sure if we heard when at least the draft regulations are going to be available. The Minister prays in aid affirmative procedures. We have all done that and we know that is really only a marginal opportunity to influence the outcome of the regulations.

The Minister set his face against there being a right for London boroughs to take a different view and not follow the Secretary of State on the deregulation. That does not necessarily sit easy with those of us who are paid-up localists—normally including the noble Lord, Lord Tope. I think all noble Lords who spoke, including

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the noble Lord, Lord Tope, the noble Baronesses, Lady Donaghy and Lady Hanham, and, perhaps with respect to a lesser extent the noble Lord, Lord Mawson, share the analysis. It is just a question of where that takes us in terms of a solution.

The noble Baroness, Lady Hanham, made the point that central London in particular is a magnet for these operations and it does not necessarily apply to London as a whole. I do not think the survey that London Councils did—or maybe it was Camden—covered all the boroughs of London. I do not think there was 100% return, so it will be interesting to know what a wider spread might mean.

Clearly there is great concern about this provision. The Minister has helped to allay some of that concern this afternoon, but we need to have more detail before Report so we can determine which way we are going to proceed on this. Having said that, I beg leave to withdraw the amendment.

Amendment 36A withdrawn.

Amendments 36B to 36D not moved.

Clause 34 agreed.

Amendment 37

Moved by Lord Ahmad of Wimbledon

37: After Clause 34, insert the following new Clause—

“Provision of advice etc about residential licences

In the Housing Act 1996, after section 220 insert—

“220A Provision of general advice etc about residential licences: England

(1) The Secretary of State may give financial assistance to any person in relation to the provision by that person of—

(a) information, training or general advice about any matter relating to residential licences in England, or

(b) a dispute resolution service in connection with any matter relating to residential licences in England.

(2) Financial assistance under this section may be given in such form and on such terms as the Secretary of State considers appropriate.

(3) The terms on which financial assistance under this section may be given may, in particular, include provision as to the circumstances in which the assistance must be repaid or otherwise made good to the Secretary of State and the manner in which that is to be done.””

Lord Ahmad of Wimbledon: My Lords, this amendment would enable the Secretary of State to provide financial assistance to an organisation providing advice, information and training concerning residential licences. Importantly, this would allow such assistance to be made available where advice is provided in connection with the law concerning park homes.

The Mobile Homes Act 2013 introduced significant changes to the law on park homes and marks this Government’s commitment to provide proper protection to park home owners, while ensuring that those site operators who run a decent and honest business can prosper without the heavy burdens of red tape and bureaucracy.

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As noble Lords are aware, the sector is small—about 85,000 homes on 2,000 sites in England. The law applying to it is unique and complicated. Many homeowners are older people and some are vulnerable. They are often hard to reach. It is also fair to say that many of them have suffered exploitation at the hands of unscrupulous operators. Homeowners often lack basic understanding of the law and their related rights. Not surprisingly, therefore, a source of concern in the past has been the lack of available, accurate and independent advice on the rights and responsibilities of the parties to a residential park home contract. This is why the Government commissioned the Leasehold Advisory Service, known as LEASE, in 2013, following the introduction of the Mobile Homes Act, to provide free initial advice on park home law.

LEASE has for many years provided advice to the residential leaseholder sector and it has been funded to do so by the Secretary of State by way of grant aid under powers in Section 94 of the Housing Act 1996. Those powers were not available to fund LEASE in respect of its park home functions because Section 94 is only available to fund advice in respect of residential tenancies. The tenure arrangement for park homes means they are residential licences. The amendment would enable the Secretary of State in future to pay grant aid to LEASE, or any other organisation, in connection with park home advice, in the same way as he can in respect of leasehold advice. Therefore I beg to move the amendment.

Lord McKenzie of Luton: My Lords, I am happy to support this amendment.

Amendment 37 agreed.

Amendment 38

Moved by Lord Ahmad of Wimbledon

38: After Clause 34, insert the following new Clause—

“Designation of urban development areas: procedure

(1) Section 134 of the Local Government, Planning and Land Act 1980 (urban development areas) is amended as follows.

(2) After subsection (1) insert—

“(1A) Before making an order designating any area of land in England as an urban development area, the Secretary of State must consult the following persons—

(a) persons who appear to the Secretary of State to represent those living within, or in the vicinity of, the proposed urban development area;

(b) persons who appear to the Secretary of State to represent businesses with any premises within, or in the vicinity of, the proposed urban development area;

(c) each local authority for an area which falls wholly or partly within the proposed urban development area; and

(d) any other person whom the Secretary of State considers it appropriate to consult.”

(3) After subsection (3B) insert—

“(3C) A statutory instrument containing an order under subsection (1) above designating any area of land in England as an urban development area is subject to annulment in pursuance of a resolution of either House of Parliament.”

(4) In subsection (4), after “No” insert “other”.

(5) The duty to consult under section 134(1A) of the Local Government, Planning and Land Act 1980 (inserted by subsection (2) above) may be satisfied by consultation before this section comes into force.”

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Lord Ahmad of Wimbledon: My Lords, I thank the noble Lord, Lord McKenzie, for his succinct and focused response to the previous amendment. I hope this is hinting at a trend, but I fear not.

The Government’s aim is to promote and support the regeneration of brownfield land and the creation of new locally led garden cities. Increasing the supply of new homes is a key priority for our Government. We want to support people’s ambitions to deliver the homes they need in innovative ways. We believe that urban development corporations can play a key role in driving forward delivery of large scale development, especially in areas where previous ambitious plans have failed to progress. Urban development corporations, as noble Lords will know, are statutory bodies which are established under the Local Government, Planning and Land Act 1980. Their objective is to regenerate designated urban development areas.

The legislation on urban development corporations is now over 30 years old. While the substance of the legislation remains fit for purpose, the Government believe that the procedure for establishing them should now be reformed. They are established through affirmatively approved instruments, which, if held to affect private interests, can be declared to be hybrid by the House, and therefore become subject to the hybrid instruments procedure. Once declared hybrid, the order is open to allow private interests to petition. This has happened in all previous cases. The hybrid procedure is time-consuming and can be costly for all parties, involving processes of representations and hearings over what can be a substantial period of time.

I say from the outset that I have received and read the Delegated Powers and Regulatory Reform Committee Report which says, on page 5, that we need,

“better to manage local expectations and to ensure that the prior requirement for Parliamentary scrutiny and approval is properly understood”.

Balanced with that, I have already stated the Government’s intention, which I am sure is an intention shared by everyone, that more homes need to be built. Therefore, if there are no petitions, the delay can be short under current procedures. However, where there are petitions, the process can be very time-consuming, as they need to be considered in turn by both the Hybrid Instruments Committee and then, if necessary, a specially convened Select Committee, before returning for debate in both Houses.

5 pm

The Government do not consider that the hybrid procedure is necessary in the case of a statutory instrument establishing an urban development corporation, provided, of course, that there is proper consultation with individuals, businesses and local authorities in the area concerned before the statutory instrument is presented to Parliament. This is looking at the process in advance, while the current process, the process of the UDC, is already under way. What are the Government proposing? The Government propose that the parliamentary approval process to establish an urban development corporation should be a negative procedure. We also propose creating a new statutory consultation duty which must be fulfilled before an order is made.

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Of course, I note the concerns that the Delegated Powers and Regulatory Reform Committee has raised in relation to this proposal. I assure noble Lords again that the Government are considering the issues that have been raised carefully. We will be responding formally before the next stage of the Bill and all noble Lords will be made aware of that response. However, I hope that I will be able to persuade noble Lords that the Government’s proposal provides the appropriate level and type of scrutiny before an urban development corporation can be established.

The Government recognise that amending the process to establish urban development corporation would remove the right to petition. However, the loss of the right to petition through the hybrid procedure will not mean that people do not have an opportunity to express their views and provide input into proposals. Our amendment includes a statutory consultation procedure which requires the Secretary of State to consult with persons who represent residents, businesses, local authorities and anyone else considered appropriate as part of that duty to consult. Surely, it increases the level of public scrutiny that proposals of this nature must undergo, and puts it in the hands of the people it will affect the most at an early stage, which allows them a real opportunity to shape the outcome before the proposal goes live. It would ensure that anyone will be able to respond to a consultation on proposals and have a forum in which they can express their views. Such consultation is now standard practice and by putting consultation on a statutory footing, as we propose, the rights of affected parties to make their views known are fully protected and we would be required as a matter of public law to take those views into account.

The recent non-statutory consultation exercise that we have carried out on the proposal to establish an urban development corporation at Ebbsfleet in Kent is a case in point. That proposal was promoted by an extensive engagement campaign, which included public events with local residents, businesses, town and parish councils and members of each of the three impacted local authorities. The consultation, and how to access it, was widely publicised throughout the local area. Almost 9,000 leaflets were delivered and posters were distributed and displayed. Advertisements in the local press and promotion via the websites of each of the three local authorities played a key part. This has provided a full opportunity for local concerns to be raised. We are giving serious consideration to all the comments and suggestions raised during the consultation and although decisions are yet to be finalised, it is possible that these representations will result in changes to the proposed urban development corporation. We will publish our formal response to the consultation shortly.

Provided that a robust consultation has been carried out, as I have illustrated in the case of Ebbsfleet, we do not consider that the hybrid process is a proportionate form of scrutiny, as there will have already been a statutory process, as proposed in the Bill, in which local objections can be formally registered.