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Michael Gove: My hon. Friend knows something about buying and selling houses and is absolutely right to say that these packs, had they been introduced, would have failed first-time buyers. [Hon. Members: Ah!] Let me explain; I shall be delighted to do so and shall take as long as hon. Gentlemen want. [Interruption.] Thanks for that support from a sedentary position.
The home condition report was supposed to forestall the need for a house buyer to commission a survey or valuation. As designed by the Government, however, it signally failed to provide proper protection for the consumer, and in particular for first-time buyers. In the regulations laid by the Minister, there was no requirement for home information packs to include information on flood risk, natural subsidence, electrical safety, radon gas or land contamination. As designed by the Government, home condition reports were both deficient and dangerous. They would not even have done the job for which they were originally conceived.
The Minister argued that when home condition reports were introduced the need for buyers surveys would diminish dramatically. She quoted support that she claimed to have received from the Nationwide building society. Just last week, the Nationwide described the Department for Communities and Local Governments use of its figures as misleading. Indeed, the Minister was clearly labouring under a misapprehension when she believed that home condition reports would dramatically reduce the need for buyers surveys. Mortgage lenders need to be certain of a propertys value before they can extend a loan. They explained to the Minister that a separate physical inspection, on top of the home condition report, would be needed in a wide range of circumstances.
Lenders specifically said that an additional survey evaluation would be needed where the mortgage was worth more than 80 per cent. of the value of the house, where the property was distinctive, newly built or a character home, and particularly for flats and conversions. As I am sure hon. Members will not need reminding,
there are few first-time buyers whose mortgage is less than 80 per cent. of the value of the home. In addition, they are likely to be disproportionately represented among those buying new-built homes and flats. Ministers spent a great deal of time, and public money, trumpeting the benefit of home condition reports for first-time buyers, but those buyers, who are already hit by the Governments increases in stamp duty, would have faced paying twice, for the home condition report, which would have been added to the cost of the home, and for a lenders survey on top of it. As the party that has constantly championed wider home ownership and put support for first-time buyers at the heart of our policy process, we can only welcomealong with first-time buyers everywherethe Governments retreat.
Mr. Raynsford: Will the hon. Gentleman tell the House how many first-time buyers, when entering into what is probably the largest financial transaction of their life, have any detailed information about the condition of the property they are buying? Does not he think that is a defect and that it is time something was done to improve it?
Michael Gove: I will tell the right hon. Gentleman what is defective: home condition reports designed by the Minister for Housing and Planning and conceived in the Department that the right hon. Gentleman once graced. How effective is a report that contains no details about flood risk or land contamination? How effective is a report that lenders will require a separate valuation or survey to back up?
Of course surveys are needed for valuation, but as anybody who has ever claimed on a chartered surveyors professional indemnity insurance because of a defect found in a property would know, no home pack could ever give that level of assurance.
Michael Gove: As ever, my hon. Friend makes an excellent point. One of the many defects of the scheme was that, as of yesterday, there was no adequate indemnity insurance scheme for home inspectors, so the Government would have asked home inspectors to conduct inspections even though no private sector supplier was, at this stage, willing to insure them.
When the Minister makes her speech, I hope that she will not try to paint her retreatwhich we want to celebrateas a precursor to the reintroduction of the
scheme, for there is no prospect of her being able to deliver on her Departments earlier pledges. As several of my hon. Friends have pointed out, there are not enough qualified home inspectors ready; as my hon. Friend the Member for Castle Point said, there are fewer than 250, yet the Government said that they would need at least 7,500 to make the scheme work. The Minister has often told me and others that 4,000 inspectors are in training, but how many of them have merely registered for training? How many have actually ponyed up the £8,000 necessary to complete the course? When she tells us how many have put the money up front, will she tell us what words of condolence or what compensation she will offer to all the people who have sunk their money into a scheme that will not be honoured?
The Government were prepared to spend £3 million on advertising the scheme£3 million for spin doctors but no compensation for those who have lost their savings as a result of the Governments U-turn. What will those who invested in that flawed scheme think when public money is used to advertise the merits of a flagship that has already been sunk?
More than that, there were real worries about the home condition report database, which was integral to the scheme. As we know, and as we have heard from Members on other occasions, the Government have grave problems in handling IT schemes. Lenders said that they needed 12 months to get systems in place to reconcile them to the HCR database, but even yesterday we still did not have details about the tender or the operating rules for the database. Last week, it was reported that two of the potential bidders to run the scheme had already pulled out. After yesterdays announcement, how many will offer to run it now? Rather than trying to nail the dead parrot to the perch, would not the Minister be better off admitting that the home condition report has shuffled off the mortal coil and gone to join the choir invisible?
Ministers will try to clutch at two straws in their efforts to say that HIPs are still alive: the need for energy efficiency ratings, up front at the point of marketing, and the need for local government searches, also up front at the point of marketing. The Government have tried to make a great deal of the energy efficiency report, but the truth is that it is a fig leaf. It is small and it looks green, but it cannot really cover the Ministers embarrassment. As the Government have themselves admitted, and as I pointed out in response to two questions earlier, we do not need HIPs to implement energy efficiency reports. The Northern Ireland Office said that
we do not believe a home information pack is necessary to ensure compliance with the directive.
Indeed, given that HIPs apply only when a home is bought or soldobviouslyhow can we ensure that all the homes in the country have their energy efficiency rating fixed if we rely only on transactions for the commissioning of those ratings or reports? It simply does not make sense.
The Governments pretensions to environmental consciousness in respect of house building policy will raise a hollow laugh in many parts of the country. Their code for sustainable homes has been criticised by both the World Wildlife Federation-UK and the Association for the Conservation of Energy. The WWF-UK resigned
from the sustainable buildings taskforce, saying that it felt unable to defend the draft code because it did not do enough to promote energy conservation. In the last Parliament, the Environmental Audit Committee, chaired by my hon. Friend the Member for East Surrey (Mr. Ainsworth), drew considerable attention to the environmental defects of the Governments house building programme. Indeed, it was only thanks to my hon. Friend the Member for Bexhill and Battle (Gregory Barker) that the Climate Change and Sustainable Energy Bill has provisions to ensure that microgeneration is one of the factors that planning committees take into consideration when deciding whether to go ahead with new developments.
Michael Gove: It was an amendment introduced by my hon. Friend the Member for Bexhill and Battle, which I was delighted to support. It is a commitment to the fact that when it comes to construction the Opposition take their environmental responsibilities seriously.
The final straw that the Minister may be tempted to clutch is the need for local searches, paid for at the point of marketing. But as anyone who has been involved in the home-buying and selling process knows, the key problem with local searches is that they need to be timely; after three months, they instantly date. It is much more sensible to make them at the point of sale rather than at the point of marketing. Indeed, the Governments pretensions to be an agent of quicker searches overall are undermined by their record. They presided over the introduction of the national land information service, which was designed to cut delay, but according to the Council of Mortgage Lenders NLIS is a mess; it is another flawed IT project. Fewer than 25 per cent. of local authorities can accept a request, process the search and deliver it electronically. Some local authorities take weeks to deliver. Nothing has been done to achieve full connectivity and more than half of local authorities say that the key problem is the Governments failure to ensure a fully joined-up systemyet another reason for the Government to get the detail right before pressing ahead with over-ambitious schemes.
I have a specific question for the Minister on searches. At present, local authority searches do not incur VAT, but HIPs were supposed to incur VAT, so will we now have VAT on local authority searches as part of the HIP? Is that another stealth tax that the Minister is trying to rescue from the wreckage of her schemes?
The home information pack was a sickly child; now it is being abandoned even by those who were anxious to bring it into the world. The Consumers Associationonce the Governments loyal ally in this regardsaid that the Government have come up with a half-baked compromise and shown that their house is made of straw. Today, the Financial Times said of yesterdays climbdown:
It is hard to imagine a better way of discrediting the process before it even gets off the ground. Policy making on the hoof is rarely a pretty sight and it is pretty clear that this is a poorly thought-out climbdown. Time to go back to the drawing board.
It is indeed time for the Government to go back to the drawing board. They have failed to provide adequate consumer protection in the housing market, failed to manage the crucial detail even though they were warned years ago, and failed to use their time and public money to bring about genuine improvements to the house-buying process. I suspect that it will fall to another Government to bring about the changes that first-time buyers and others need to secure the improvements that the country desperately needs.
believes that reforms to home buying and selling need to be designed around the interests of consumers; further believes that Home Information Packs (HIPs) will cut waste and duplication and speed up transactions for consumers; applauds the proposed inclusion in HIPs of Energy Performance Certificates which will give buyers and sellers vital information about the energy efficiency of homes and practical suggestions about how to cut fuel bills and carbon emissions; welcomes the Governments intention to carry out further testing of HIPs; and notes that the Government is working with industry to encourage the successful voluntary take-up of Home Condition Reports, retaining the option of a mandatory approach to ensure widespread take-up, and thus maximising the benefit for consumers.
The hon. Gentleman began his speech with an important issue. He talked about stability in the housing market and in the economy. I think the people of this country will be astonished that the Conservatives are attempting to say that they have concern for housing market reforms because they are concerned about the stability of the economy and the housing market. The Conservatives put interest rates up to 15 per cent. They pushed people out of the housing market and pushed that market into free-fall. The hon. Gentleman talks about helping families on to the housing market ladder, yet his party pushed half a million families off the housing market ladder.
The hon. Gentleman referred to a report that he knows is based on utterly unfounded assumptionsor at least I hope he knows, given his partys concern and its pretensions to try to regain some economic credibility. He also talked in some detail about his concerns about first-time buyers, and other hon. Members raised that issue. First-time buyers, by definition, are not sellers. They do not have to provide home information packs. In fact, they get the packs for free. They will get the information, for which they currently have to pay, for free. That is why home information packs are good news for first-time buyers and why the Labour party is supporting first-time buyers. Conservative Members say that they are concerned to help first-time buyers, yet they oppose home information packs, they oppose the new homes that we desperately need to help first-time buyers, and they oppose the funding of shared ownership schemes to help people get their first step on the housing ladder.
Yvette Cooper: My hon. Friend is right. If a first-time buyer, or any buyer, wants to buy a house and the sale falls through, another buyer will come along and have to pay for all the same searches all over again. That seems to be an awful lot of duplication and waste. It seems that an awful lot of money is going into the hands of people who are gathering that information, but the consumer should not be spending that money time and again.
We know that Conservative Members have always opposed all aspects of home information packs. One minute they complain that they will cost too much, the next they tell us that sellers should pay more for extra information on flooding or on radon gas in their HIPs. One minute they say that HIPs are too bureaucratic, the next they say that they want someone who lives on top of the Pennines to pay for an extra bit of paper saying whether their property is subject to flood risk. We do not think that that is appropriate. The fact is that consumers can waste a lot of money under the current process. I do not understand why Conservative Members want to keep defending the status quo. Why do they want to keep defending a situation in which consumers waste huge amounts of money every day?
Adam Afriyie (Windsor) (Con): I noticed that there were chuckles from the Labour Benches when the Minister was making some of those statements. If the home information packs are so important and essential, why have her Government now abandoned them?
Yvette Cooper: Let us be clearwe are not abandoning home information packs. The chuckles from the Labour Benches were at Conservative Members pretending to support the interests of first-time buyers and blatantly opposing measures that will help them.
We think that we should not simply defend the status quo in the housing market. There are serious problems in the way in which that market works at the moment. Consumers can end up wasting a lot of money. There is a lack of transparency. They cannot have the information that they need. We think that we need to amend the way in which we introduce the home information packs and we have changed our approach in the light of the work on the dry run and the information on the readiness of the market. Many hon. Members have called on us to do more work on the testing, and we agree. We are doing more work. We will introduce area-based trials later in the year, underpinned by independent monitoring and research, to test the costs and benefits of the home information packs and to look at some of the underlying assumptions. We think that that is appropriate.
Mr. Gordon Prentice (Pendle) (Lab): I just wonder what the implications are for home inspectors. A constituent e-mailed me this morning to say that he had borrowed £7,000 to become a home inspector and he does not know what the future holds.
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