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Chris Ruane (Vale of Clwyd) (Lab): In my hon. Friend's definition of HMOs, would the three storeys include the cellar and the attic?

Mr. Betts: We went through that in Committee and the Minister will probably be able to reinforce the argument. We were told then that an attic or cellar might well count towards the number of storeys. However, there is a further problem because if a landlord then chose to block off the cellar, basement or attic, the property might not count. There could therefore be a three-storey property with a blocked-up attic that was not included under the definition. That issue should be taken up, and perhaps the Minister will say more on it.

Lynne Jones (Birmingham, Selly Oak) (Lab): My hon. Friend mentioned the problems other than fire hazards that occur in HMOs of fewer than three storeys. Does he accept that, in many areas, particularly where there are large numbers of students occupying smaller properties, there can be similar problems even when only four people occupy a property? What are his views on the amendment tabled by my hon. Friend the Member for Nottingham, South (Alan Simpson)?

Mr. Betts: That is an interesting point, which takes us back to the arguments about the Housing Act 1996. The position of the Labour Opposition at that time was that the definition should be three or more storeys or four or more people, which is exactly what is in amendment No. 87, tabled by my hon. Friend the Member for Nottingham, South (Alan Simpson). I accept that point, but by sticking to the figures used by the Government and inserting "or" instead of "and", I am trying to raise the principle that the problems of HMOs do not just concern risks such as that from fire. They also concern the management of the property in terms of nuisance, especially in student areas. The number of people in a property is more important in that regard than the number of storeys. If the Minister insists on a definition that means that any property lower than three storeys, irrespective of the number of people in it, will not be subject to the national licensing arrangements, that leads to a position in which many properties where there is the potential to create nuisance will be excluded from
 
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the scheme. That is a real concern that I hope he will address. It is the additional issue of nuisance that I hope that he will take into account in the final definition.

The Minister might point out that there can be additional licensing and that it is open to any local authority to designate an additional area in which the definition of HMOs for licensing can be different from that prescribed by the Minister for the national scheme. I have had discussions with him on that point and I hope that he will respond on it.

Funding arrangements are important for local authorities because in their present budgets, education and social services funding tends to be passported, so that what is left is often constrained and under pressure. My understanding is that the first start-up costs of the national scheme will be borne by an up-front Government grant, but that the ongoing costs will be covered by the charge made for licences. However, when a local authority considers an additional licensing scheme, although any licences under that scheme will cover the day-to-day running costs, the start-up costs, because of the consultation that must be undertaken, are likely to be greater than the start-up costs of implementing the national licensing scheme. Yet as I understand it, there are to be no additional funds whatever from central Government for that.

The start-up costs—for all the consultation and arrangements laid down in the Bill—of additional licensing arrangements will come out of the small amount of money that local authorities have for street cleaning, environmental improvements, parks and gardens, and other important services on which local people rely. Perhaps the Minister will consider giving us some comfort in that regard. It would not take much for central Government to agree that, where an additional licensing scheme is ultimately accepted and approved—the Minister said in Committee that he would not seek to second-guess local authorities on that—the start-up costs, at least, should be borne by central Government.

Mr. Hayes: The hon. Gentleman is making a compelling case, as ever on such issues. What broad assessment has he made—or does he know what assessment the Minister has made—of those costs? I am particularly concerned about extra resources and staffing, and the retraining of existing staff. We have not had clear answers on that and I wonder whether the hon. Gentleman could elucidate.

Mr. Betts: A response with that sort of detail is probably up to the Minister to give. I understand that he has accepted that, where there is a statutory requirement for a mandatory licensing scheme because that is an extra responsibility on local authorities, the Government are committed to providing for that under their principle of funding for such costs. However, they are not committed to funding any discretionary work that local authorities do on additional schemes.

I know that other hon. Members want to speak, but I have a few more points to raise with the Minister. I understand that he is discussing with local authorities in housing market renewal areas the possibility that they could bring in additional licensing arrangements
 
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without having to come to the Secretary of State for approval for them. Perhaps the Minister could give us some information on that.

Local authorities have mentioned the lack of interaction between the legislation and HMOs in terms of class 1 hazards. Has that problem been resolved? As I understand it, where there is a class 1 hazard, a prohibition order can be put on the property. As a result, the property could be excluded from being an HMO, but because such an order does not come into force for 28 days, and because there is a right to appeal during that period, it might be necessary for the local authority to take a decision on licensing the property as an HMO at the same time as it has identified a class 1 hazard. The problem associated with the class 1 hazard would not be resolved for some months, so what would the authority do in the meantime? That issue needs to be addressed.

2.30 pm

Finally, I turn to an important issue raised by Chris Galley, a Sheffield city council officer who is responsible for dealing with these matters. We need to be rigorous in introducing a national licensing scheme and local authorities need to be rigorous in enforcing it. But in addition to ensuring that we catch landlords who act wrongly, we should also be interested in educating them to act in the right way. As well as trying to raise standards through an inspection regime that is designed to catch landlords out, will there be funding for local authorities for the start-up costs of the scheme, so that they can engage with landlords through a proper education programme in an effort to raise standards? I doubt whether the cost of the licence will cover that, although the Minister will correct me if I am wrong. That is another important issue that needs to be addressed.

Matthew Green: This is a huge group of amendments, including 12 Liberal Democrat amendments and two new clauses that deal with seven major issues. In addition, we have added our names to amendment No. 3. I hope that the House will bear with me as I try to go through some of the amendments. I shall try to allow plenty of time for others to get in.

I was mightily relieved to hear that the first two Conservative amendments are probing ones. I was worried that the Conservatives were harking back to their days as the party of over-regulation. I want to add to the comments of the hon. Member for Sheffield, Attercliffe (Mr. Betts) on amendment No. 3. There is a real case for the Government's having to justify why they are not going for three storeys or five or more occupants, given that they supported that principle fairly extensively in the past. Indeed, the Entec report, which is one of their own commissioned reports, makes it clear that all three-storey houses in multiple occupation are high risk, regardless of occupancy levels. That is the very report on which the Government relied in making the case, and rightly so, for the licensing of HMOs. The same report also identified two-storey bedsits and homes for vulnerable persons as being high risk. A two-storey bedsit could easily contain five or more people, but currently, it would be outside the mandatory system, even though it should be in it.
 
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Amendment No. 3 would in fact cover only 120,000 properties, extending the provision to just 19 per cent. of HMOs. That is not over-regulation but regulation of the most vulnerable and dangerous properties. There is a real case for the Government to answer here. Their argument that they propose to rely on regulation might be satisfactory if we could believe that they would introduce it. However, they have made it clear throughout the process that they will regulate only in respect of three or more storeys and five or more occupants.

Another argument that the Minister has used against the amendment is that local authorities could use the discretionary powers to extend the scheme to areas in which there were particular problems. A Shelter survey of local authority environmental health teams discovered that 13 of the 32 authorities taking part were considering additional licensing to cover a larger number of HMOs in their local area, but worryingly, 10 of the authorities that were not likely to extend licensing provided examples of dangerous and substandard HMOs that fell outside the limits of the mandatory scheme. The discretionary powers still have to be agreed by the Office of the Deputy Prime Minister, but the Minister has not said that the ODPM would agree to local authority applications for such powers—and it is clear that, even if it does agree, many local authorities are not likely to follow the procedure.

I should point out that most of the local authorities that responded to the Shelter survey were Labour run. I wish the Minister would listen to those Labour authorities and councillors. I shall quote the excellent Labour authority of Telford and Wrekin, which is a near neighbour of mine. It has just been capped, but we shall leave that issue to one side for the moment; it is still rated as "excellent". It states:

"Size and storeys are not the most important factors but increase the risk."

However, that is the principle on which the Government are relying, in respect of a provision that will include very few properties.

Amendment No. 105, which is one of our amendments, seeks to ensure that licensed houses in multiple occupation do not contain hazards that present a threat to the health or safety of occupants. As currently drafted, the Bill allows licensed properties to contain hazards for up to five years after the application for a licence. The amendment would require local authorities to bring such properties up to standard within 12 months. The Conservatives suggested a period of three years, but under our proposal, a local authority could apply for an additional discretionary period if it had particular problems.

The Conservatives said that all local authorities would apply under the terms of such a provision, but not all would. For example, because my own South Shropshire district council is in a rural district—the Minister chided me in Committee because it has not undertaken a voluntary scheme—it has only three properties that fall within the HMO category. It should consider starting such a scheme quickly. Indeed, under our amendment, many local authorities could put such a scheme in place quickly, and those with a particular problem or burden could apply for extra time. So we
 
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have shown some flexibility. The amendment does not insist on a period of 12 months; a case can be made if a longer period is needed.

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