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Mr. Challen: Does the hon. Gentleman recognise that, even in government, circumstances can change, and now we have hundreds of profligate Tory and Lib Dem councils that need to be reined in?

Mr. Davey: The hon. Gentleman says that even in government things can change. Let me take him back to last May, when the Minister for Local Government, Regional Governance and Fire told the public that councils deemed as excellent by the comprehensive performance assessment and the Audit Commission review would not be capped. Three months later, he changed his mind. What are we supposed to make of ministerial pronouncements if they can change at three months' notice? How are councils expected to approach long-term planning if they are subject to such change? Back in 1998, the Deputy Prime Minister said:

If only that were so. I am afraid that in this Session we will consider capping legislation, even though the Government said that they opposed it.

Mr. Nigel Jones (Cheltenham) (LD): Does my hon. Friend recall that, in 1992, when I first came to this place, Gloucestershire county council, on which I was a councillor, was capped three years out of four? We are still recovering from those terrible capping days. Does he think that those Labour MPs who voted with me against capping then should vote against any new capping introduced by their Government?

Mr. Davey: My hon. Friend is exactly right. The problem with capping is that the cuts imposed by central Government are indiscriminate. They hit the vulnerable and lead to sudden cuts to programmes that people had put in place years earlier and looked after, which can wreak havoc on local services.

Jim Knight: If the hon. Gentleman does not want the Government to impose capping, will he talk to Liberal Democrat councillors such as those on Weymouth and Portland borough council who seem to want to face both ways? That is extraordinary for Liberal Democrats. They say that the council tax should not increase by much but, at the same time, they oppose every attempt to streamline services and achieve the savings that we want to keep the council tax down.

Mr. Davey: The hon. Gentleman seems to be advocating service cuts. Liberal Democrats advocate replacing the council tax because it is unfair and prevents local authorities from taking control of their budgets. I hope that he agrees that this year's settlement is imposing huge pressures on local authorities throughout the country. Some 297 out of 387 local

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authorities have received a non-education grant increase that is less than inflation, which is astonishing. If he becomes cognisant of that, he will realise that there are huge pressures on authorities to put up council tax. We argue that fundamental reform by getting rid of the council tax and introducing a fair local tax system will allow us to move on.

Mr. Betts: The hon. Gentleman said that the Government should have all the answers instead of asking questions. His party has had a policy of replacing council tax with a local income tax for a long time. Will he tell me whether there is a fully worked out and costed local income tax proposal from the Liberal Democrats that deals with such issues as whether people should pay their taxes in the area in which they live or the area in which they work?

Mr. Davey: The hon. Gentleman should calm down. We shall publish detailed proposals, as we did in 1989, 1990 and 1991 during the poll tax years. In fact, our party was the only one that produced such publications because his party failed to engage in the debate on poll tax by producing any worked-through proposals. We are borrowing on experience from American states, Switzerland, Sweden, Finland, Norway, Denmark, Japan and many other mature western democracies. They have solved the problem of local government finance by adopting a local income tax.

May I return to the Queen's Speech and talk about the housing Bill? The Bill contains several measures that we welcome in principle. The proposal to review fitness standards for housing is welcome, as are many reforms to the right to buy. We welcome the proposal to regulate houses in multiple occupation and the selective licensing proposals in part 3 of the draft Bill, especially those that deal with antisocial behaviour. There will be cross-party support for those proposals. We will debate whether there is too much regulation and whether the detail of the regulation has the right balance. I am especially worried about the proposals for fitness standards in version 2 of the new standards in the Bill, although that is perhaps too detailed for this debate. Version 2 has not been tried out, so local government officers are worried about whether the system will work. Nevertheless, it is right to change the old fitness standards in principle.

One of my main problems with the Bill is what has been omitted from it, which was picked up in the report by the Housing, Planning, Local Government and the Regions Committee. The Government have consulted on a statutory tenancy deposit scheme and there is widespread agreement that it is time to introduce such a scheme. Private tenants put millions of pounds into deposits. They get no benefit from the money because it stands idle for years, and they often do not get the money back at the end of their tenancy because unscrupulous landlords keep the cash and the interest accrued from it. It is time to change the system. Landlords hold nearly £1 billion of private tenants' money on deposit, so the Government should act.

The Government make excuses by saying that they must wait for the Law Commission to comment and for this and that report, but the scheme is well thought-out and they have already consulted on it. There is no reason for delay, so they should go forward. I hope that the

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many Labour Members who have signed early-day motions on the matter will work with us—and perhaps Conservative Members, although I do not know their position—to push Ministers to get a statutory tenancy deposit scheme in the housing Bill.

Dr. John Pugh (Southport) (LD): Does my hon. Friend agree that one of the groups worst affected by the lack of such legislation is students? The National Union of Students is keen that we make progress along those lines.

Mr. Davey: My hon. Friend is right. I am glad that he mentioned student housing, because that is one of the omissions from the regulation of houses in multiple occupation. That is not covered by the licensing regime. I have heard no plausible argument why students should not have quality housing.

I am also concerned about the omission from the Bill of compulsory leasing schemes. The Government are consulting on those schemes, which are important for dealing with empty homes. In my constituency, private landlords own a large number of empty homes. In two streets near the Hook roundabout just off the A3, there are 27 empty family properties, and some have been empty for three or four years. The local council is trying to work with the landlord and his advisers, but it has little leverage. We need empty property management orders soon, so that we can start tackling the shortage of affordable housing in areas such as mine, where houses prices are high and it is difficult for the council and registered social landlords to meet demand. I hope that the Government can fast-track the consultation on compulsory leasing schemes and include them in the Bill, so that they become law as soon as possible.

There is one policy in the Bill with which we fundamentally disagree, and I think that we have that in common with the Conservatives. Sellers' packs are a nonsense. They are a solution in search of a problem. Whether one is purchasing or selling, the housing market works pretty well. That is why hundreds of thousands of homes are bought and sold every year. If there was a problem, we would find that the market had seized up, and that is not the case. To argue that in the odd case a purchase did not go through and people lost their money is not a good way to produce law: hard cases make bad law. We need to look at the vast majority of house purchases and sales, which happen without a problem.

The Minister for Housing and Planning (Keith Hill): The hon. Gentleman should bear it in mind that some 30 per cent. of house sales fall through; that that is estimated to cost would-be house purchasers and, for that matter, sellers £350 million annually, not to mention all the personal heartache and anguish that results; that nine out of 10 house purchasers favour a reform in the law; that the Government will roll this out, as they say nowadays, on a regional basis and in an entirely pragmatic fashion when all appropriate certification, training and insurance arrangements are in

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place; and that the measure has been enthusiastically endorsed by the Consumers Association and even, I might add, by Halifax Estate Agents.

Mr. Davey: Methinks the Minister doth protest too much. I recommend that he read the report by the Housing, Planning, Local Government and the Regions Committee, which could not be clearer. It says:

the exact point that I made earlier. It also says:

There is no logic behind the proposal. The Minister can quote the Consumers Association, but many other bodies are against it. The Royal Institution of Chartered Surveyors has grave doubts.

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