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Mr. David Ashby (North-West Leicestershire): In Committee, we all envisaged that these actions would be like any others--free. Suddenly and most unfortunately, charges are being introduced.

A fee of about £500 has been mentioned. An arbitrary sum like that is surely very odd. Is it more or less than one could expect if the case were dealt with in the county court?

Lastly, neither my hon. Friend nor I nor anyone else who served on the Committee seems to have thought of an idea that recently occurred to me--why not use magistrates courts? After all, they do licensing and matrimonial actions, so why cannot they deal with these issues too?

Mr. Clappison: As I said earlier, the initial provision on fees was that, taking one year with another, they should be sufficient to cover the full costs of providing the service. As for the amount of costs in the county court, my hon. Friend will know that the fees charged for the court service always include an arbitrary element. The advantage of the leasehold valuation tribunal is that the litigant will not be exposed to the risk of costs, as he would in the county court. My hon. Friend, with his long experience of county courts, will know that I refer to the costs of not just the litigant but the other party to action in the county court. That factor weighs heavily with many litigants and acts as a deterrent to their taking action.

I note my hon. Friend's point about magistrates courts. We believe that the right forum for this type of case is the leasehold valuation tribunal. My hon. Friend will have heard me describe the presence of a qualified surveyor on the tribunal. I am sure that he will agree that it is important for the members of the tribunal to have that sort of expertise. With it, they can make a fair evaluation of the facts much more quickly--another material advantage to be borne in mind.

When designing the fee structure, we will seek to construct a scale of charges that offers a degree of certainty to the applicant before the case starts; in other words, we will not seek to charge a fee relating to the length of the case. We will also see whether it is possible to design a sliding scale of fees relating to the value of the disputed sums--although in cases of this kind that might not prove straightforward.

The discussions that have taken place on this issue, particularly in another place, have been of considerable value in focusing attention on this important issue. What the Government propose strikes the right balance of fairness and equity for all parties. It will be vital to leaseholders and, with the maximum fee set at £500, we believe that it will give them a real opportunity for effective justice at an affordable price.

Mr. Raynsford: This is one of the most important groups of amendments to be considered this evening. It concerns justice for leaseholders and remedies against the abuse of service charges which all too many leaseholders

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have experienced in recent years. Throughout these debates, hon. Members have been all too well aware of the problems brought to our attention by a large number of leaseholders and their organisations, highlighting the way in which they have been exploited by far too many rogue landlords--many of whom bought the freehold for relatively little so as to be able to charge disproportionate sums in management, service and insurance charges.

In Committee, the hon. Member for North-West Leicestershire (Mr. Ashby) highlighted some of those abuses. Other Committee members highlighted similar examples of crude and blatant exploitation of leaseholders by unscrupulous freeholders or managing agents. There was general agreement, I believe, that action had to be taken that provided redress and that made it possible for leaseholders to get redress without being deterred by the cost of challenging a freeholder through a legal system which could be expensive. The idea of going to the High Court, for example, to challenge a freeholder is nonsense. It is simply not possible for leaseholders to meet the costs envisaged in such an exercise.

5 pm

There was agreement, therefore, that we wanted a framework that would enable leaseholders to get justice quickly, expeditiously and cheaply. The concept that the leasehold valuation tribunal should be given scope for sorting out such disputes commanded wide support. The hon. Member for North-West Leicestershire has asked whether a magistrates court might take on the function. Until he raised the point, I had not considered that, because the leasehold valuation tribunal seemed to be the right and appropriate body, but the important point, which undoubtedly underlies his question, is the need for justice to be quick and cheap, and for people not to be deterred by the prospect of large fees or serious costs.

In Committee, therefore, we welcomed the concept of leasehold valuation tribunals performing these functions. To my knowledge--I will check Hansard carefully--no one raised the prospect of fees being charged for cases taken to the tribunals. Our assumption in Committee was that access to such tribunals would be free, in the same way as access to other tribunals has been free. It has been an important point of principle that people could take their case to a tribunal without being deterred by fees. That was certainly my understanding.

Mr. Ashby indicated assent.

Mr. Raynsford: The hon. Gentleman nods to show that that was his understanding too.

For that reason, it was shocking when, in Committee in another place, Lord Lucas, the Government spokesman, announced that he envisaged fees and, when pressed on the scale of fees, said that they could be between £500 and £2,000 a day. The Government justified that by saying that that was the economic cost of dealing with the cases. Frankly, that is a fairly horrifying prospect, but, irrespective of that, fees on that scale would deter any leaseholder from taking their case to a leasehold valuation tribunal, simply because they would be unable to pay such charges.

Consequently, there was a substantial debate in another place, during Committee and Report and on Third Reading only last week, about the adverse impact of fees

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being charged in leasehold valuation tribunals. During those debates, hon. Members from a wide range of different political parties highlighted the serious consequences of the Government's proposal to charge fees for access to the tribunals.

First, there is the obvious point about leaseholders not feeling able to take up their right to obtain justice because of a fear of the cost being prohibitive. Secondly, if the fee system were in place, there would be obvious scope for the unscrupulous landlord--we know that these measures are being introduced purely to provide redress against unscrupulous landlords--to intimidate a leaseholder by the prospect of substantial fees and costs. Thirdly--this became increasingly important in the debates in another place--there is the wider point of principle about free access to justice.

My noble Friend Lord Archer of Sandwell spoke for the whole House, I believe, when he raised the concern that this would be the thin end of wedge, saying that, if the Government got their way on charging fees for leasehold valuation tribunals, shortly, we would be hearing proposals for fees to be charged for other tribunals. Clearly, that anxiety exercised the minds of many Members of the other House.

Viscount Bledisloe, who moved amendment No. 102, which was ultimately successful, made the point that it was entirely inconsistent of the Government to suggest that, while citizens have access to other tribunals without having to pay a fee, those who wish to challenge service charges should be subject to a fee--a different treatment of leaseholders from that of other people seeking redress through tribunals.

As the House knows, the Government were defeated. As a result of amendment No. 102, which was supported across the political parties, an amendment in the Bill restricts steeply and properly the fee level that can be charged.

We have reservations about the whole concept of a fee being accepted at all, because there will still be discrimination. Leaseholders will be subject to fees when they try to get justice, whereas people seeking justice from a different tribunal will not be subject to a fee; but amendment No. 102 restricts the fee level to an amount that is similar to the one that could be charged in a county court.

There seems to be a measure of common sense behind that, despite my reservation, because a leaseholder would have the option and alternative of seeking justice in a county court instead of in a leasehold valuation tribunal. The restriction to the fee level chargeable in the county court, which I understand is about £115, is clearly a considerable improvement on the Government's original proposal.

In reaction, the Government have gradually withdrawn from their original position, which I suppose one could describe as the free market position, where the full cost of £2,000 a day could be charged. They are now seeking a limited cost of £500 for a case.

There is, however, an extraordinary inconsistency about the Government's position. Although they say that they are prepared to limit the cost to £500, they are still leaving in the Bill language that refers to the charge being no more than is necessary to cover the costs. The Minister will recognise that that phraseology still remains.

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It is not only those of us who have reason to be sceptical about the Government's good intentions who will feel nervous about the fact that, while that phraseology is still there, Ministers have scope to come forward with the powers that they are giving themselves under their amendment and to say, "We need to change this figure. It may have been £500 in 1996, but in 1997 there may be a need to increase it because the cost is greater." No doubt we will be given the statistics and figures showing that the costs are higher and justifying an increase from £500. Therefore, the £500 figure, which is an arbitrary figure for which there is no logical justification, cannot be counted on as the maximum cost that a leaseholder might have to face.

There is still scope in the Bill for the Government to vary that amount by order, and there is provision in the Bill for the fees not to exceed the total cost. That link between the fee and the cost is extremely dangerous, and could lead to proposals to increase the fee. Even if it does not, £500 is a substantial sum, which would seriously deter many leaseholders on low incomes from seeking justice. We have had evidence from many organisations that represent leaseholders highlighting the extent to which people on modest incomes can be intimidated.

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