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That leave be given to bring in a Bill to require rentcharge companies to notify annually residents subject to chief rent of their statutory right to redeem their charge under the Rentcharges Act 1977; and for connected purposes.
I am pleased to have been given this opportunity to bring to the attention of the House a specific problem affecting properties in my constituency and a small number of others, and to provide a practical and, for the Government, cost-free method of resolving a long-standing problem. In short, I wish the existing law to be amended to allow for a tightening up of the regulations regarding chief rent charges and to prevent some of the bad practices that rentcharge companies have used on my constituents in recent years.
I first raised the issue of rentcharges in my maiden speech, and since then I have been contacted by a large number of local residents who have been caught up in various chief rent scams and have quite frankly been conned out of money, often hundreds of pounds, by estate management companies. Greater Manchester is one of only a handful of areas in the country where chief rents were legally established. Chief rent is a perpetual charge, a form of ground rent that is charged on freehold properties by a previous landowner. It affects properties only in small parts of the country including parts of Greater Manchester such as Tameside and Stockport in my constituency.
As with any charge, the resident is billed by the property company each year to pay the chief rent. It is often a very small sum of a few pounds a year, and because the charge remains at the level at which it was originally set in the deeds, it is of diminishing value in real terms to the rentcharge companies as time goes by.
Under the provisions of the Rentcharges Act 1977, the freeholder can unburden themselves of any annual rentcharge created before 22 August 1977 by applying to make a lump sum payment through the relevant Government office. In the case of my constituents, that is the Government office for the north-west. The Act provides a formula that enables the Government office to calculate the redemption figure that the rent payer has to pay the rent owner in order to redeem their rentcharge. That figure comes out at roughly 14 times the annual chief rent.
When the transaction has been completed, the Government office, on behalf of the Secretary of State, issues a redemption certificate to the rent payer. That provision was secured by intensive campaigning in the 1970s by a number of MPs, including my predecessor but one Ken Marks, who was the Member for Manchester, Gorton, in the days when much of my constituency was in that one. He also successfully campaigned to ensure that no new chief rents could be created after 1977 and that any rentcharges still in existence by 2037 would be automatically extinguished. However, those laudable changes unfortunately created some new challenges, as I will briefly explain to the House.
For all the time that I have been an elected representative, first as a councillor on Tameside metropolitan borough council and since 2005 as an MP, I have been contacted by many local constituents who have been subject to various underhand tactics by unscrupulous management companies. In the past, I have launched campaigns to warn residents throughout Tameside and Stockport about various chief rent scams. In the most recent scam, letters were sent out by property companies to local residents, offering a "cut-price reduction" for home owners to buy out their chief rent. One area where they targeted householders was the Dane Bank area of Denton, where the chief rents were set in the 1930s, generally at around £2 to £5 a year, depending on the size of the landholding. Had residents been made aware of the 1977 Government scheme, the average cost of buying out the rent would have been between £30 and £60 in total. The property company's offer was for people to pay around £350 but, in a twist, there was a "special offer" whereby that was reduced to £250 for a limited period. In essence, people were being fleeced for hundreds of pounds by those property companies.
There are other examples of such practices. Companies sent out property surveys to see what improvements residents had made to their homes. When people filled out the details, they were hit with excessive charges for making alterations without having the rentcharge company's permission to do so, despite being freeholders. Such administration and penalty charges can also run into hundreds of pounds.
It appears that that tactic is being used only on properties on which it is not now economically viable to collect the charge annually, so the companies are looking for other methods for raising income from the rentcharge. For years, rentcharge companies have been trying it on with residents, attempting to fleece them for as much money as they can, especially as the value of the rentcharge is worth less and less as time goes by. Frankly, it is outrageous that the companies can charge people for occupying land that, as freeholders, they own outright anyway. It is nothing short of a throwback to feudal times.
Until the rentcharges are extinguished in 2037, I want to ensure that my constituents are made fully aware of their rights to buy the rent out using the existing Government scheme. I would hate for even more local people, particularly vulnerable groups, to pay over the odds. That is why I am presenting this Bill.
My concern is that some residents who are unaware of the provisions in the 1977 Act will think that the £250 offers and the like are a good deal. I want to make local residents in Denton and Reddish, and elsewhere, aware that they can purchase their chief rent for a lot less money by filling in an application form and sending it to their Government office. That can be achieved very simply and at no cost by legally obliging all property companies to automatically notify residents of their rights under the 1977 Act to buy out their chief rent, in plain English and in a prominent way, when they send out demands for the charge each year.
Back in 1977 when the Rentcharges Act was being debated, probably nobody anticipated how rentcharges would be abused. The small changes proposed in my Bill will ensure that people are correctly notified about their existing statutory right to purchase and buy out chief rents, and most importantly, give them the absolute confidence that they are doing so at the correct price.
That David Heyes, Ann Coffey, James Purnell, Sir Gerald Kaufman, Tony Lloyd, Graham Stringer, Mr. Graham Brady, Mark Hunter, Andrew Stunell, Mr. John Leech, Jim Dobbin and Andrew Gwynne present the Bill.
The Secretary of State for Communities and Local Government (Mr. John Denham): On a point of order, Mr. Speaker. I came in very slightly too late to hear the gist of an earlier point of order made by the hon. Member for Meriden (Mrs. Spelman), but I gather that the document the Government have published today, which is referred to in our amendment, is not in the House of Commons Library and that it may not have been provided to the hon. Lady and other Opposition spokespersons. I deeply apologise for that. I personally attach great importance to the matter. I will endeavour to find out what went wrong, but for now, I give my apologies to you, Mr. Speaker, and to the House.
That this House welcomes the provisions of the Sustainable Communities Act 2007 requiring the publication of local spending reports; believes that people have a right to know how their money is spent by public bodies; especially welcomes the assurances given by the then Minister for Local Government, the hon. Member for Oldham East and Saddleworth, that the local spending reports would include all public agencies; further welcomes the Minister's assurance that the purpose was to achieve a report that identified how much would be spent in each area by the authorities; is therefore very concerned by the limited information available in the local spending reports produced by the Department for Communities and Local Government; believes them to be a contravention of the expressed assurances of the Minister; and calls for proper local spending reports to be published, which will give effect to those assurances.
Obviously, I appreciate the Secretary of State's apology for the non-availability of the written ministerial statement to hon. Members. However, I am sure that hon. Members share with me just a touch of incredulity that the consultation report is being produced on the very day of the Opposition day debate. That we do not have access to the information will obviously have an impact on the quality of the debate. It is right to record that. We accept the apology, but the impact remains.
I shall proceed by setting out why we feel it is so important to revisit the issue of local spending reports and then spend some time looking at the implications of the Government's failure to implement local spending reports as they were originally conceived in the Sustainable Communities Act 2007. In conclusion, I will look at how the policy should be implemented and at how, as elected representatives, we should go further and faster in responding to the public appetite for transparency and efficiency.
All hon. Members will be familiar with the history of the 2007 Act as many of us took part in its passage. As a Bill, it enjoyed genuine cross-party support and it would be remiss of me not to pay tribute to colleagues on both sides of the House, particularly my hon. Friend the Member for Ruislip-Northwood (Mr. Hurd), whose private Member's Bill was responsible for the 2007 Act and who will wind-up the debate, and the hon. Members for Falmouth and Camborne (Julia Goldsworthy) and for Stroud (Mr. Drew), for all their hard work in getting this important piece of legislation on to the statute book.
Of themselves, those tributes emphasise the cross-party nature of the support for local spending reports. It is also fitting to record our thanks to the tireless efforts of Local Works, which has done so much to drive support for the 2007 Act. I am sure that hon. Members on both sides of the House will have received letters and e-mails from their constituents expressing strong support for the legislation.
Hon. Members will have noticed that the wording of today's motion is based on that of early-day motion 1064, tabled by the hon. Member for Stroud. That early-day motion, like the original Bill, drew widespread cross-party support-254 signatures in total. In that spirit of cross-party working, let me say to Liberal Democrat colleagues how helpful it is for the debate that they have become co-signatories of today's motion. I, for one, hope that that bodes for a constructive and conciliatory debate-an example of the new politics that people want to see.
To my mind, the reason why the Sustainable Communities Bill enjoyed so much support-not just in this House, but among the public-was that it was seen as a way of delivering a clear, tangible change in the balance of power between communities and their elected representatives. It was seen as a way of giving the people the tools with which they can better shape the communities where they live. Measures that could help to reverse the pattern of the development of ghost towns or to reduce local carbon emissions were seen to be strong moves in the right direction, and as a way to empower communities and give people more say over what happened in their locality.
However, arguably, the centrepiece of the 2007 Act is section 6, which is on local spending reports, and I shall focus for a moment on why the spending reports are so significant. On the one hand, it is a matter of transparency and accountability, but on the other, getting a clear understanding about where money is being spent is the key to getting better use of financial resources. If local strategic partnerships, which we all support, are really to deliver, they need the information that would have been provided in the local spending reports and must be able to get their arms around the totality of local spending.
Mr. Oliver Letwin (West Dorset) (Con): Does my hon. Friend agree that it is remarkable that in the case of Cumbria, the Local Government Association-presumably in collaboration with the Department-has managed to publish all of the relevant information, non-departmental public body by non-departmental public body and Department by Department? Does she agree that it is therefore likely that this information might already exist on the COINS-combined online information system-database and other Government databases?
Mrs. Spelman: I thank my right hon. Friend for that helpful information. Residents in Cumbria have access to the sort of information that we would all like to have. His intervention shows that providing such information is perfectly possible.
The information is the bedrock for finding out where there is duplication, where spending can be pooled or better aligned to optimise efficiency, and where funds can be reinvested or redirected for a better outcome. These reports are integral to ensuring that we get more for the money spent. In this time of recession, the imperative for that has never been stronger. On that basis, it is no surprise that early-day motion 1064 attracted such support.
Local spending reports are fairly innocuous in name, but hugely significant in nature. As colleagues will know, they were the key to unlocking the level of departmental spending in local areas. The clause provided
for all public authorities to insist on local spending being publicised so that people could see where their hard-earned money was going, and if they wished, challenge it. Indeed, this was a clause lauded by Ministers at the time.
"Less of Whitehall calling the shots and more of men and women everywhere working with their council to set the agenda".
"The fundamental point of the reports would obviously be to aid transparency and accountability, but I believe that they would also have the beneficial effect of prompting serious debate in local areas". --[ Official Report, Sustainable Communities Public Bill Committee, 2 May 2007; c. 47.]
"A breakdown of all public spending would ultimately be of great benefit to older people, particularly with regards to transparency about spending on things like benefits and public services in local areas."
"We urge the Government to deliver on their promise to publish the full local spending reports which are so vital to the Sustainable Communities Act. Local communities can only effectively use their right to have a say in their local services if they know how the money which was raised from their taxes is being spent."
"The voluntary sector fully supports the need for local spending reports as a breakdown of all public spending by local authority areas. This information would not only be valuable to voluntary organisations everywhere, it would also encourage more people to get involved in the Sustainable Community Act's exciting new processes."
As a result, it may cause some consternation that colleagues find themselves having to use valuable parliamentary time today debating why the Government have watered down the scope of these vital local spending reports. In the consultation paper on spending reports, Ministers released details of a critical change so that the reports would now apply only to local authority spending and primary care trusts. To a large extent, that information is already available, but more significant than what the 2007 Act covers is what it does not cover. It is worth taking a moment to list those organisations missing from the current proposals for local spending reports. They include the Environment Agency; Natural England; Jobcentre Plus; the Health and Safety Executive; local probation boards; probation trusts; NHS foundation trusts; regional development agencies; the Learning and Skills Council; national health service trusts; Sport England; English Heritage; the Arts Council; the Museums, Libraries and Archives Council; the Highways Agency; and the Homes and Communities Agency.
Mr. Letwin: Would it interest my hon. Friend to know that details for all the bodies that she has just listed are published in the case of Cumbria, making it slightly odd that they will not be published for the rest of the country?
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