The
Committee consisted of the following
Members:Brake,
Tom (Carshalton and Wallington)
(LD) †
Cooper,
Yvette (Minister for Housing and
Planning)†
Duddridge,
James (Rochford and Southend, East)
(Con) †
Gove,
Michael (Surrey Heath)
(Con) †
Griffith,
Nia (Llanelli) (Lab) †
Hands,
Mr. Greg (Hammersmith and Fulham)
(Con) †
Hillier,
Meg (Hackney, South and Shoreditch)
(Lab/Co-op) †
Jackson,
Mr. Stewart (Peterborough)
(Con) †
McCarthy,
Kerry (Bristol, East)
(Lab) †
Pound,
Stephen (Ealing, North)
(Lab) †
Rosindell,
Andrew (Romford)
(Con) †
Shaw,
Jonathan (Chatham and Aylesford)
(Lab) †
Smith,
Ms Angela C. (Sheffield, Hillsborough)
(Lab) †
Spellar,
Mr. John (Warley)
(Lab) †
Stuart,
Ms Gisela (Birmingham, Edgbaston)
(Lab) †
Stunell,
Andrew (Hazel Grove)
(LD) Wright,
Mr. Iain (Hartlepool)
(Lab) John Benger, Committee
Clerk † attended the
Committee Third
Standing Committee on Delegated
LegislationThursday 20
July
2006[Hugh
Bayley in the
Chair]Home Information Pack Regulations 20062.30
pm Michael
Gove (Surrey Heath) (Con): I beg to
move, That
the Committee has considered the Home Information Pack Regulations 2006
(S.I. 2006, No.
1503). It
is a pleasure to serve under your chairmanship, Mr. Bayley.
In a way, it is curious to be having the debate on the regulations
governing the introductionof home information packs today,
because the past48 hours have been the most tumultuous that we
have seen in the life of HIPs. The idea of such packs was originally
raised before the 1997 general election, and the Prime Minister
conceived that something similar to them would be a way to deal with
gazumping.
Subsequent to
that original conception, HIPs have had a bumpy ride through the House.
They were introduced in the Homes Bill 2000, dropped before the general
election, and then re-introduced in the HousingAct 2004. They
have been trumpeted by the Minister, and particularly by her
predecessor the right hon. Member for Streatham (Keith Hill), as the
answer to all sorts of ills in the housing market. Then, just 48 hours
ago, the Minister issued a written statement that was extraordinarily
welcome to the Opposition. It explained that the central
keystone—the architecture—of HIPs, namely the home
information report, would no longer be mandatory but voluntary. By
making that change, the Minister brought the whole house tumbling down
on the Department’s head. The scheme, or at least the system of
information reports, which was to be mandatory to deliver all the
benefits claimed for it, was now to be voluntary, and the whole
situation was
transformed. Mr.
Greg Hands (Hammersmith and Fulham) (Con): I cannot help
feeling slightly sorry for the HIP providers, who have also had a
pretty torrid time in the last 24 hours. A couple have been on the
phone to me today. It seems that the share price of Rightmove, for
example, has dropped by 20 per cent. in the last couple of days,
thereby wiping £90 million of its market value. It is another
victim of this Government
chaos.
Michael
Gove: My hon. Friend makes a good point. The Association
of Home Information Pack Providers is a body that was set up
essentially to service the Government’s requirements, but the
Government have pulled the rug from underneath it, because the changes
made as a result of the written statement on Tuesday essentially mean
that the association has been deprived of the market that it sought to
service. Consequently, as my hon. Friend rightly points out, the share
and equity markets have formed their own judgment about the
Government’s wisdom in claiming that HIPs survive in some form
or other—they have wiped a huge sum off the share prices of
those companies that were due to deliver the packs and
reports.
Obviously, markets are markets,
and it is not for the Government to insulate people from their own
folly, but the Government bear responsibility for creating a scheme,
for encouraging home information pack providers to provide a certain
product and for subsequently saying that that product, which would have
been mandatory, is now voluntary. It will be interesting to see how the
Minister seeks to discharge her responsibilities in that
regard. Before we had
the Opposition day debate on HIPs, I received an e-mail from a member
of the Association of Home Information Pack Providers, in which the
member said that the association would stay closely in touch with key
spokespeople, Labour MPs and the Minister’s office. I suspect
that that close amity was ruptured by Tuesday afternoon’s
decision to pull the rug from under their feet. Given the
Minister’s strictures about Conservatives being in the pockets
of vested interests, will she explain precisely what conversations she
has had with the association and others about her past and future
plans? Ms
Gisela Stuart (Birmingham, Edgbaston) (Lab): Talking of
e-mails, I had one in which the Government were chastised for not
making the scheme mandatory. It was said that the market would demand
it, to which my response was that, if the market demands it, it will
happen—that is operation of the market. Surely the hon.
Gentleman would agree.
Michael
Gove: The hon. Lady makes a good point. She has a
sophisticated understanding of markets, as is attested by her recent
article in The Daily Telegraph, which took the Chancellor to
task for his over-regulation of the economy. I pay tribute to her for
making a free-market point once again, and adding grace and lustre to
the Government Benches as she does so. However, the key point about the
operation of the market is that, if home condition reports are seen as
an asset, they will be taken up voluntarily. That case was made by my
hon. Friends the Members for Cotswold (Mr. Clifton-Brown),
for Poole (Mr. Syms) and for South Holland and The Deepings
(Mr. Hayes) during debate on the Housing Act 2004. If there
is a demand, that demand will be satisfied; there is no need for
compulsion. We
saw the raising of the white flag on Tuesday afternoon and the retreat
under fire yesterday afternoon, and this afternoon is the mopping-up
operation. I shall ask the Minister a few questions, so that she can
give us and the people who have staked so much money on the scheme a
greater sense of clarity on how we will proceed in
future. The first
issue is the number of home inspectors. The Minister has acknowledged
that there are question marks over the number of home inspectors who
will be qualified in time for 1 June 2007. The number of home
inspectors was a key factor in leading her and her right hon. Friends
to climb down. She has made it clear that we would need between 5,000
and 7,500 home inspectors to make the scheme work. How many home
inspectors does she believe will be necessary to deliver those aspects
of the HIP that she still considers mandatory and worth insisting
on?
On the last occasion when the
number of those qualified was updated, we were told that fewer than 250
had qualified. How many have qualified now? Can we have a timeline so
that the Minister can tell us how many she expects to qualify in each
of the succeeding months before 1 June? She has spoken of 4,000 home
inspectors undertaking training. How many of those people were simply
registered for training, and how many had embarked on a full training
course? Of those who had, how much money did they commit to the course?
What compensation, if any, will be available to those who, having sunk
more than £8,000 into the training course in some cases, now
feel that it is no longer appropriate to carry on, because home
condition reports will not be mandatory and their services will no
longer be in the same demand as they would have
been? Can the Minister
also tell us about the certification scheme or schemes for home
inspectors? She has mentioned a number of companies competing to offer
certification. How many companies have expressed an interest in the
scheme? After her announcement on Tuesday, how many companies still
retain an interest in it? When does she expect to announce details
about who will operate the schemes and how they will
operate? Can the
Minister tell us about the HCR database? The original idea was to have
a Big Brother-style database featuring HCRs on every home in the
country. The Government assured us that access to the database would be
restricted to lenders, buyers and sellers, but one question mark in
many of our minds is whether the Government will have access to it and
use it as part of their process of council tax revaluation by stealth.
Enlightenment on that point would be worth while and
welcome. More than
that, we need to know something about how the HCR database will operate
and integrate with the work of lenders. The concerns of the Council of
Mortgage Lenders, building societies and others about its operation
also contributed to the climbdown of the Minister and her Department.
Lenders said that they would need at least 12 months to ensure that
their systems were compliant with the database. We are already less
than 12 months away from 1 June, and there are still huge question
marks over how the database will
operate. I
asked yesterday about the number of people who had applied to run the
database. It was reported that four companies originally expressed an
interest and two had pulled out. How many companies are still
expressing an interest in running it? What are the terms of the tender
for which they are applying? What conditions will govern how the HCR
database operates? The
Minister made it clear in her statement on Tuesday and in a fiery and
characteristically feisty speech yesterday that dry runs to prepare for
the introduction of HIPs would carry on. I cannot help feeling that
they are curious exercises. It is almost as though the beaten
Confederate army of 1865 was still undertaking manoeuvres in 1866. Even
after the white flag of surrender has been pulled up, a phantom force
tries to carry on the fight as though nothing has
changed.
Nevertheless,
can we hear more about the dry runs? Will people be provided with HCRs?
Will the reports be mandatory in specific geographical areas? If so,
will new legislation be required? How will that legislation be passed?
If such reports are voluntary in all dry runs, how effective a test of
market demand for HCRs will they be? Who will pay for the HCRs in a dry
run, if they are provided? Will they be paid for by organisations that
are members of the Association of Home Information Pack Providers? If
so, how will that be an effective market
test? Stephen
Pound (Ealing, North) (Lab): In his
short time—I hope that it will remain short—in the House,
the hon. Gentleman has earned himself a reputation as a skilful
forensic operator. He is known as the stiletto of Surrey Heath. We are
interested in his accounts of forays by Sherman and Lee. However, does
he not have it in his heart, as a profoundly decent and reasonable
human being—a man who has more friends than he probably
suspects—at least to recognise that the Government are
responding to the situation? Could he not at least say that he approves
of yesterday afternoon’s
statement?
Michael
Gove: I am delighted to accept that kind
invitation—issued with customary grace and eloquence—from
the hon. Gentleman. I am grateful to him for his kind words, which
provide me with the opportunity to repeat what I tried to say in my
halting and inadequate way yesterday afternoon. I am delighted that the
Minister has seen the force of the Conservative arguments and climbed
down. We,
in the modern and compassionate Conservative party, are always
delighted when a consensus is forged and division ends. So I took the
opportunity yesterday—I am delighted to do so again—to
congratulate the Minister on her perspicacity. In particular, I pay
tribute to her for grasping a nettle that her predecessor, the right
hon. Member for Streatham (Keith Hill), failed to
grasp.
Stephen
Pound: I shall try not to trespass on your patience too
long, Mr. Bayley, but as the hon. Gentleman is wearing a
tie, clearly he is not a fully paid-up member of the compassionate
Conservative party. I believe that the injunction was to hug a hoodie,
not a baldy. Will he contain
himself?
Michael
Gove: As the hon. Gentleman notes, in the
Conservative party, there is a proud tradition of lavishing affection
on baldies. We elected two of them as leaders, and now we are trying
someone slightly less follicly challenged. However, let me assure the
hon. Gentleman that I have no intention of embracing him or indeed the
Minister in anything other than a metaphorical
sense. I should like
to make some progress, or at least to carry on with the questions that
I was asking the Minister. She said that some 14,000 HIPs have been
trialled. Of those 14,000, how many contained HCRs? What has the
analysis of their distribution led her and her Department to believe?
Will she tell us what independent assessment or testing will take place
in the dry runs? Will the Government or the Association of Home
Information Pack Providers sit as judge and jury of the tests? Or will
someone suitably independent run their eye over the dry runs to see
what merit is in the Government’s undertaking?
More broadly, the Minister said
in her statement on Tuesday that there were significant risks and
disadvantages in pressing ahead with the big bang on1 June
2007 and the introduction of mandatory HCRs. However, with
uncharacteristic reticence, she did not go into those risks and
disadvantages. So that we can better understand what we should do, will
she outline what those specific risks and disadvantages would have been
and explain how she would seek to mitigate them? For the benefit of the
Committee, will she enumerate those risks and
disadvantages? The
Minister has made great play of the importance of energy performance
certificates. Indeed, the Opposition are delighted that the Department
for Communities and Local Government has assumed an environmental
conscience. However, what consultation did she and her Department
undertake to find the best way of ensuring that energy performance
certificates, or any other mechanism, could be implemented to assure
compliance with the EU directive? What other schemes might have been
adopted, or could yet be adopted, to ensure that we meet our
obligations by
2009? A
number of people have put to me a problem with the Minister’s
proposal for enabling us to meet our objectives: HIPs necessarily only
come into play when a house is bought or sold. Given that the number of
transactions every year is significantly less than the total housing
stock in Britain and that energy performance certificates will only be
issued when houses change hands, how can we be sure that the private
housing stock in this country—every private
house—receives an appropriate energy performance certificate by
2009, when the directive is due to come into
force? It has been
suggested that it might be appropriate to use some other means of
ensuring that there is appropriate certification. Would it be
appropriate for local authorities—possibly with the issuance of
council tax bills—to play some part in ensuring that energy
performance certificates apply to all homes? As we know, those energy
performance certificates will give all houses a rating from A to G.
Will the Minister enlighten us how complex the process of setting that
rating will be? How long will it take for an average home—if
there is such a thing—to receive an energy performance
certificate? Will she tell us what qualification is required to issue
an energy performance certificate?
As the
Minister knows, the process of qualifying as a home inspector is
currently arduous and expensive. As we have mentioned before, it costs
at least £8,000. Will it really cost that much to be fully
equipped to issue an energy performance certificate? If she could tell
us precisely what it will take, we may have a better understanding of
whether or not it would be an economically rational choice for
individuals to press ahead with home inspector training? Will she tell
us whether VAT will be charged on the issuance of energy performance
certificates? It will be interesting to know whether or not this is
another mechanism for a stealth tax?
On local authority searches,
which we discussed briefly in the House yesterday, I had the
opportunity to ask the Minister about the National Land Information
Service—the system of electronically providing local
authority search information—which the Council of Mortgage
Lenders has described as a mess. Will the Minister tell us what is
being done to improve access to, the delivery of and the subsequent
forwarding to relevant bodies of local authority searches? We heard
that only 10 per cent. of local authorities are fully e-nabled. Will
the Minister tell us what action she is taking to ensure that local
authorities live up to their obligations in that area? Will she tell us what local
authorities are specifically doing to lower their charges and to ensure
that the market operates—that the private property search groups
have the opportunity to gain full access to local authority information
and ensure that searches are delivered in a timely
way? On
the whole matter of energy performance certificates and local authority
searches, one question that has been put to me by others is why cannot
such things be required—if they are required—at the point
of sale, rather than the point of marketing? Given the importance of
ensuring that local authority searches are timely, will the Minister
tell us why those local authority searches are needed at the point of
marketing? Would it not be cheaper and less bureaucratic to require
them at the point of
sale? At this stage, I
should like to say that the Minister has been, as I mentioned earlier,
feisty and fiery at the Dispatch Box, but also gracious in
acknowledging the sincerity of many Opposition Members in seeking to
ensure that, if the scheme goes ahead, it does so in a way that will
comply with market requirements.
We are asking those questions
now because we acknowledge the Minister’s climbdown. We welcome
that and are delighted that she has seen sense. We would rather that
she went back to the drawing board and thought again. However, we
acknowledge that she wishes to press ahead. We wish to ensure that all
those who are charged with delivering the scheme have all the
information now, so that what the Government seek to deliver can be
delivered. We asked questions in the past, as a result of which the
Government had to acknowledge that they were not ready to press ahead.
If the answers that we, or more importantly the industry and consumers,
receive are inadequate, I am afraid that the lack of confidence that
people have expressed in home information packs will—if that
were possible—only
grow. 2.49
pm Andrew
Stunell (Hazel Grove) (LD): Thank you
for calling me, Mr. Bayley. I am pleased to serve under you
this afternoon. Following the announcement on Tuesday and the debate
yesterday, I wondered whether we would go ahead with this statutory
instrument. I hope that the Minister will explain why it is still
appropriate to go ahead in view of the decision that she has taken. In
yesterday’s debate, I posed a number of the important practical
questions that arise. Understandably, detailed answers were not
available then, but I hope that the Minister will now take the
opportunity to
respond. One
of my main questions concerned the nature and scope of the
pilots—or the dry runs, as they are called in the explanatory
notes. Another was, what has happened and what is to happen to the HIP
inspectors? A number of other important issues need to be explored as
well.
My first question today arises from consideration of the explanatory
memorandum and the regulatory impact assessment. Both documents are
rather more thorough than is often the case when we consider statutory
instruments. They were clearly written with a view to the introduction
of the mandatory scheme on 1 June next year. The evaluation of the
options for proceeding is written with that in mind. Let me draw to the
Minister’s attention paragraph 7.6, which
says: “The
Government has powers under section 162 of the 2004 Act to suspend the
home information pack duties after they come into
force.” I am
not clear what procedure the Minister will use to implement the
statement that she made on Tuesday. Will those duties come into force
and then be suspended, or will they not come into force? What process
does she intend to follow? It makes a difference. If the duties are not
to come into force at all, this statutory instrument is nugatory.
However, if they are going to come into force and then be suspended,
the House should be fully aware of the process that will be followed.
That seems to me to be a starting point for the Minister’s
response.
During
yesterday’s debate the Minister helpfully said that, before
proceeding in more detail with the dry runs, she would want some market
research to take place this summer. She did not have the opportunity to
tell us what that market research would consist of or even which market
would be consulted—potential buyers and sellers, the industry or
some other group of people who might have useful things to say, such as
a better set of spin doctors. What will the market research be? I hope
that one thing that it will do will be to re-explore the cost and
savings assumptions to which the Minister briefly referred, and which
are set out in considerable detail in the regulatory impact assessment.
I shall come to that. What is the market research, who is asking the
questions and what is the intended
outcome? That leads,
clearly, to the nature and scope of the pilot operations, and
particularly to their intended timetable. I freely admit that I was a
little surprised when I came to pages 46 and 47 of the regulatory
impact assessment to find that the process is to be divided into a
number of steps: phases 1, 2 and 3. Of phase 1, it says:
“This phase has already
begun.” Perhaps that is a
reference to the dummy runs that have, reputedly, taken place. However,
in all the information that I have been given, both by providers and by
critics, there has been no clear reference to what has been done so far
and what the outcome of phase 1 has been. The RIA—if I may call
it that—then says that the process will move on to phase 2,
voluntary full home information packs. In light of the
Minister’s announcement, does that mean what it says, or will
the voluntary full home information packs in phase 2 be voluntary half
full home information packs? Again, we need to understand exactly what
kind of a dry run is being put in
place. The regulatory
impact assessment also says that phase 2 cannot start until
“the first Certification Scheme is
approved”. I assume that
no certification scheme has been approved. I do not know whether that
is the case, but perhaps we could be told, as well as the number of
schemes, how soon they will be approved and so on. Clearly, that is
crucial to getting to phase 2—whatever that consists
of. Beyond that is
phase 3, described as “voluntary tertiary activity”,
which “will enable
Lenders and other third parties to test their ability to acquire Home
Condition Reports from the Entity-level Registers and assess their use
in lending decisions.” I
think that means that it will allow mortgage providers to see whether
reports on home condition surveys are sufficient for a valuation. That
is phase 3. I thought that that had been tested, nailed down and
agreed, but it seems that a lot of questions remain to be answered, not
just about the need for a dry run and pilots, but about their basis. I
support the comments of the hon. Member for Surrey Heath (Michael
Gove); we need to know the location, the baseline from which we will
measure success or failure, and the monitoring process that will be
used. Paragraph 201
of the regulatory impact assessment
states: “Results
will be monitored and reported through a monthly confidence assessment
report to the Programme Board, the Central Stakeholder Group and other
interested parties as defined by the
Programme.” I declare
myself to be an interested party, although I do not know whether I am
recognised by the programme. What will be the process of reporting and
who will be eligible to receive the information as a going
concern? I have
probably made my next point in passing already: if the certification
scheme is to be an integral part of rolling out the pilot studies or,
rather, if it is a necessary precondition, we need to know the expected
start date. When I first became aware of the lively discussion taking
place in spring of this year about the pilot studies, it was suggested
to me that they would be carried out in distinct geographical
locations, and that they would start in June this year—last
month. However, it was not possible to proceed with those, not least
because the regulations before us had not been published and approved
by the House. Will the Minister tell us whether the intention is still
to use distinct geographical areas? If so, where will they be? Or will
anyone be able to volunteer, from one end of the country to the other?
If so, how will it be possible to evaluate whether there has been a 5
per cent. increase or decrease in the number of transactions, if only
one in 100 in each area
volunteer? Of course,
the number of volunteers is one of the issues. The regulatory impact
assessment was perhaps a little too honest for the Minister’s
requirements. Page 16 contains the various options considered. It
evaluates in detail three options and then gives two further ones that
“were considered”. Interestingly, of the five options,
none is that which has been given to us by the Minister. So we have a
sixth, unevaluated option, although it might be said to fall broadly
between options C and E. When I come to the cost implications, I shall
mention that
again. The assessment
has this to say about voluntary
schemes: “previous
attempts at voluntary reforms have not been
successful”.
It goes on to
speculate that if 10 per cent. of sellers provided a home information
pack, that could reduce the annual cost of failed transactions by up
to£35 million. That is the estimate in the
RIA—10 per cent. The next sentence
reads: “However
this is probably overly
optimistic.” In other
words, the RIA says that a figure of 10 per cent. for people
volunteering is overly optimistic.
We need to understand the pilot
quite clearly. The geographically ring-fenced nature becomes more
important. If 30 per cent. of people volunteer, that might be highly
detectable across the country, but if the relevant figure is the
difference between 5 and 15 per cent. it will not be detectable, owing
to variations in take-up in different places. We need to understand
things a lot more clearly than is possible on the basis of what we have
been told so far. On
the question of HIP inspectors, I was troubled by what was said in
paragraph 96 of the report because of the implications now that the
scheme has changed. Paragraph 96 says that being a home information
pack inspector would
be “particularly suitable
for people who want to work but have additional responsibilities, such
as caring for children or elderly relatives. As carers tend to be
female the career opportunities created under this option could
particularly benefit
women.” That
has been undermined by the decision that has been taken. The
assessment, which is remarkably thorough, explains that the Department
has arranged monthly monitoring meetings and monthly reports on the
number of candidates in training. It has also arranged monthly
monitoring reports on the number of people who receive the
qualification and who graduate from the course. So if the assessment is
right, the Minister already has a month-by-month report on the number
of candidates and the number of qualified people, and I hope that she
will tell us those figures. Given the Department’s additional
responsibilitiesfor women and their well-being, I hope that
she will also tell us what assessment she has made of the impact that
the undermining of the scheme will have on employment opportunities for
women.
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