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“these grossly inflated...piecemeal and inaccurate estimates”.
I could go on endlessly, but hon. Members will be grateful that I shall not.
Something else that has emerged—this has happened more recently—is that management costs on such contracts have escalated dramatically. Again, however, leaseholders have no control over them. I am grateful to Dr. Peter Wright of Camden for a couple of examples. For one contract for lighting maintenance, he has worked out that
“40.24 per cent. of the costs are due to management costs; leaseholders will pay 10 per cent. administration...on top”.
Therefore, 50 per cent. of the costs of that contract went on administration and management. It is beyond belief. Nobody in the private sector would dream of charging that.
In response to another contract, the Churchill Gardens Lessees Association wrote:
“We do not consider the costs of the bids to be excessive. However, we do have concerns about add-ons of 40 per cent. totalling £460,000 on the contract price.”
“What is the 3.8 per cent. contractor’s overhead contingency for? If the tender preparation is outsourced, where is the corresponding saving in fees? Why is the contractor not responsible for his own safety audit? Where is the £24,700 fee for plans—
“going? Why is a separate asbestos survey needed? The Estate has been so surveyed many times previously.”
I could go on. Some of the costs being dumped on public sector leaseholders are outrageous.
Then there are the experiences of the leaseholders of Orbit South, who have recently been transferred from Bexley. My hon. Friend on the Front Bench, the hon. Member for Bromley and Chislehurst (Robert Neill), who used to be the member of the Greater London authority for Bexley and Bromley, will be well aware of the problems of the leaseholders of Orbit South. They have been in touch with me because Orbit South has taken exactly the same approach to them. Those leaseholders are challenging their monthly management costs, which increased from £75 a month in 2003-04 to £116 a month this financial year, and will potentially be £140 a month next year. Even in the private sector, the management charges in my block—it is a rather pleasant block, as everybody will have seen recently in The Daily Telegraph—are not that size. It is unbelievable that management costs should be so much and that the leaseholders should have no redress or ability to negotiate.
Robert Neill (Bromley and Chislehurst) (Con):
I thank my hon. Friend for giving way and for her plug for my past existence. I, too, have Broomleigh leaseholders in my constituency, although we tend to pronounce it “Bromley” at our end of the borough. In any event,
does she agree that one of the issues that people feel strongly about is the fact that tenants and leaseholders in the situation that she has described are at a significant disadvantage? When we are seeking to encourage, for example, the growth of mixed communities, it seems strange that, as things stand, private sector tenants have at least some leverage against their management companies, whereas public sector tenants do not have the same leverage when they are confronted with bills from what can sometimes be monopoly suppliers, even in the case of fairly enlightened housing associations and registered social landlords such as Broomleigh.
Mrs. Lait: I could not agree more with my hon. Friend. He draws a clear contrast between the treatment of people in the public sector and the treatment of those in the private sector, however enlightened a housing association or council is. While acknowledging the defects of the Bill, I hope very much that he will support the principle, so that we can move forward in finding a remedy to the injustice that has emerged. That injustice is an example of the law of unintended consequences, but we need to deal with it.
The difficulty is that councils and RSLs are used to telling tenants what to do. They have difficulty in getting into the mindset of people who have bought, and that comes from a different way of thinking. I am lauding neither one nor the other, but we have to recognise that the difference exists and that RSLs need to work much harder to deal with their leaseholders to provide the kind of service that they are giving to their tenants. That is all that we are asking: that leaseholders should have the same ability to manage their environment as RSLs think that they are giving to their tenants.
Barry Gardiner: Does it surprise the hon. Lady to hear of a situation concerning the Stadium housing association in my constituency? It relates to the leaseholders in Airco close, who were billed for an equal sum for their water bills despite the fact that each of the flats had a water meter. When the housing association was challenged about this, it simply informed the leaseholders that, because there was a common tank, they would each have to pay the same amount. I have taken the trouble to point out to it that, under Ofwat regulations, if a meter is fitted, it is illegal to charge on any basis other than that of metered usage. This exemplifies the way in which RSLs tend to treat leaseholders by telling them what to do, with the implication that if they do not like it, they can lump it.
Mrs. Lait: I sometimes wish that the ingenuity that goes into dreaming up these spurious charges was applied to working with leaseholders to ensure that they got a better service. I share the hon. Gentleman’s horror and disgust at such behaviour. If this debate—let alone the Bill—does nothing else but draw RSLs’ attention to the bad behaviour that they show to the people who live on their estates, we will at least have achieved something, if not much else.
I recognise that it can be difficult, particularly when there is mixed tenure, for RSLs to bring in the kind of thinking and techniques required to work with public sector leaseholders. However, given my illustrations of how badly managed so many contracts are, the RSLs could probably save themselves a huge amount of money
by employing properly managed contractors and taking on board the arguments and points put to them by their leaseholders.
I have spent half an hour talking about clause 1. Clause 2 is much shorter, and it basically encourages the Government to consult on policies that affect leaseholders before they promulgate them. After all, this Government have said that they wish to consult, and they produce endless consultation documents. Many of their policies affect leaseholders, yet the basic rules of consultation do not appear to have been observed for them.
A document called the Sedley rules—which I confess I had not come across before—sets out four requirements for lawful consultation. The first is that
“consultation must be at a time when proposals are still at a formative stage.”
This means that a decision maker cannot wait until they have identified a definite solution. They must embark on the consultation process while being prepared to change course if persuaded to do so. They cannot make a decision in principle and then consult. Nor can they start by excluding an option and then denying any real opportunity to present a case on it.
“the proposer must give sufficient reasons for any proposal to permit of intelligent consideration and response.”
The reasons given should be the true reasons. Consultees should be told the criteria that are intended to be adopted. The third is that
“adequate time must be given for consideration and response.”
“the product of the consultation must be conscientiously taken into account in finalising any statutory proposals.”
I was interested to find out what had happened to the Tenant Services Authority, because I was pointed towards the issue by my very good consultees, who asked me to table a parliamentary question. I did so, and I do not declare any interest whatever; I did it because I am interested in the subject. My concern was that the Tenant Services Authority had no responsibility whatever toward public sector leaseholders, so I tabled a question and the reply was:
“The Tenant Services Authority has no responsibilities in respect of leaseholders who own 100 per cent. of the interest in their homes. Leaseholders already have access to a wide range of protections and rights.”
“The Housing and Regeneration Act 2008 limits the Tenant Services Authority’s future regulatory remit to ‘social housing’, which includes low cost rental and low cost home ownership accommodation”—[ Official Report, 25 March 2009; Vol. 490, c. 492W.]
under the Act. Quite apart from anything else, that clearly means that public sector leaseholders were not consulted on that legislation. Their rights are not only ignored by the RSLs; they are being overridden by Government—not, I am sure, in any way malignly, but through just not thinking.
That is why clause 2, which I also took from the earlier Bill of the hon. Member for North Southwark and Bermondsey, is an important part of the Bill. If we are dealing with a group of people who find themselves in a position of almost exclusion, the best thing we can
do to help them become part of the wider community is to ensure that they are consulted and involved at all levels.
Public sector leaseholders, as I hope I have made very clear over the last half hour, have huge disadvantages in their dealings with their landlords. My Bill does not sort the whole problem out; I make no claim for that, as a much bigger legislative job would be necessary. Nevertheless, by giving those leaseholders the right to consultation, the right to receive quotes and the right to a variety of forms of paying back their bills, the Bill will take a small step to mitigate the anger and alienation they feel and their regret at becoming public sector leaseholders. I very much hope that the Government will give the Bill as fair a wind as possible at this stage of the legislative cycle—at the very least by indicating that they understand the problem and plan to do something about it.
12.3 pm
Mr. Andrew Dismore (Hendon) (Lab): I congratulate the hon. Member for Beckenham (Mrs. Lait) on securing a place in the ballot and on introducing the Bill. The regularity with which Bills on leasehold reform turn up—whether it be from the hon. Lady or from my hon. Friend the Member for Brent, North (Barry Gardiner), who is a regular on this issue, or from others—shows the importance of the issue and demonstrates that something must be done. I declare an interest in that I am a leaseholder and I am facing the possibility of a rather large bill coming up in the not-too-distant future, although we will not be particularly affected because proper consultation is taking place.
I am minded to support the hon. Lady’s Bill, subject to what my right hon. Friend the Minister might say. I hope to speak at less length than the promoter did, which would probably be a record for me on a Friday, but there are a few points that I would like to raise.
My initial impression on reading the Bill through was that it was entirely about the private sector, not the social sector. I thought of intervening to ask how the hon. Lady envisaged her Bill applying to registered social landlords, as it appeared to me that the Bill did not deal with them. It seems to deal almost perfectly with the private sector and existing protections, but it is difficult to see how it fits together with problems experienced in the public sector.
The hon. Lady’s point about mixed tenure is particularly important. In my constituency, problems have arisen primarily in housing estates where some people have bought their homes while others are still tenants. We need to think about how to deal with the difference between the two. As my hon. Friend the Member for Brent, North said in an intervention, problems occur when leaseholders feel that they are being loaded with bills that really belong to the housing revenue account and tenancy side. Sometimes it can be the other way round. That issue must be dealt with at some stage.
There is a further problem where the landlord—in this case, the council, or in my area, the arm’s length management organisation—has entered into a long-term agreement with one contractor. At present, we are in the middle of an £88.5 million decent homes initiative
improvement project, the contract for which has been awarded to Balfour Beatty. A lot of problems have arisen as a result of that. One of the key questions leaseholders will always ask is whether they will get value for money from cosy arrangements—the term “sweetheart deals” crossed my mind, but that might be going too far—between the contractor and the arm’s length management organisation.
The Bill also fails to deal with major works contracts that may be sufficiently large to require a public notice under the EU procurement rules and advertising in the EU journal. In such instances, a problem arises about how people can get involved in the consultation process and, more importantly, how leaseholders might be allowed to put forward alternative proposals when it is necessary to go through that tendering process required under EU regulations. That issue must be addressed in this process.
The Department for Communities and Local Government has done some research on this issue. In 2006, it was recommended that the Department should provide
“further guidance on the standards of works to be carried out in flatted accommodation and...clarify the position in relation to the decent homes standard”.
I shall cite an example of that important point shortly. It was also recommended that the Department should
“provide further guidance in relation to defining hardship”.
One issue that confronts leaseholders in social housing arrangements is that they can face big bills that they did not expect to have to pay when they originally bought the property, whether under the right to buy or otherwise. I was a councillor in Westminster in the 1980s when right to buy was introduced, and I remember warning people who bought flats in badly neglected blocks that they would face enormous bills in the future. Many people did not think that that would happen to them; they believed that Lady Porter would look after them, but she looked after them in a rather different way, as we all know. I shall not go into the details of that, other than to mention the “homes for votes” scandal. Part of that scandal was the fact that leaseholders were asked to buy flats—including in my ward—in tower blocks, and were then faced with enormous bills.
One problem was that purchasers went ahead without having their eyes open to the possibility of bills. Matters have improved somewhat, and I understand that leaseholders purchasing under the right to buy now have to be given a five-year estimate of possible future costs, but what happens beyond that five-year period? Unfortunately, many elderly tenants thought the right to buy was their way of providing a little nest egg for their children, but they then found that the circumstances were rather different when, as pensioners, they were faced with bills for many thousands of pounds.
Mrs. Lait: I have cases where people have bought a property after having done all the searches and were then told that they have a five-year bill to pay.
Mr. Dismore: That clearly should not happen.
The social sector leaseholders working party was reconstituted by the Government in 2005 and reported two years ago. It recommended the introduction of separate legislation for social sector leaseholders because of the increasing complexity of social sector leasehold
management as a result of the various rules and regulations relating to the arrangements. The statutory consultation process under section 20 of the Landlord and Tenant Act 1985 did not really suit the arrangements often found in respect of social landlords, particularly the way that ALMOs, local authorities or housing associations have to go through particular arrangements laid down by the Government.
I wish to refer to a couple of cases from my constituency in order to illustrate the problem. One of them concerns Woodburn close, whose tenants wrote to me in April saying that for several months they had heard nothing from their ALMO, Barnet Homes, but that then in a short space of time they received letters informing them of a planning application that was being submitted. Those letters did not, however, detail the estimates and so forth for the work. The Woodburn close tenants go on to say:
“Despite previous requests none of the lessees have received quotes as to the cost of the works...It appears as if Barnet Homes have made a decision and are steam rolling it through, without due consideration to the lessees who have to pay.”
Then there was a public meeting. The letter continues:
“the initial letters were in respect of the windows, and it was not until the public meeting that Barnet Homes declared their intention to replace the aerial system at this time, and clean out the gutters”.
The tenants make the point that digital switchover was not for another three years, and that estimates of the cost of the work had not been received. The letter continues:
“we have to question the necessity of doing”
“as there is a Sky system which does not require scaffolding.”
That system could have been installed at a cost of between £150 to £200 per home. The tenants complain that
“Barnet Homes have carried out this exercise without due consideration of the lessees issues”.
Barnet Homes wrote back to me saying that the
“design and details of the scheme have now been finalised”,
and it anticipated consulting tenants within the next two to three weeks by letter, with a breakdown of the proposed costs. That was on 11 May. It has not happened yet, so far as I can see. Again, Barnet Homes completely ignored the leaseholders’ alternative suggestion regarding the TV aerial. It simply bulldozed through, saying, “This is what we’re going to do.”
I received a letter from the tenants expressing continuing concern,
“as it appears they”
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