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Baroness Sharp of Guildford: My Lords, I have very little to say about the order. It is the first time that we have had the impact assessment when debating these orders. It is an interesting document to have, but I echo the words of the noble Baroness, Lady Blatch. It would have been more interesting had we been given slightly more information, and if, as she says, scenarios had been included with the figures. Blankly setting out the figures leaves one wondering what firms are involved and why the figures are what they are.
To echo the words of the noble Lord, Lord Puttnam, this is a scheme that the industry wished upon itself of its own volition when it had the choice of whether to carry the levy forward. It has received quite wide support. In the building industry there is a problem of what is termed "the lump"—the self-employed who in many senses are exploited—and the problem of the lack of qualifications. One sees that particularly in the domestic sector. Small firms are exempted from this provision, and the problem of the "cowboys" in the domestic sector is a very real one. It is one of the reasons why training is necessary. The danger of allowing each firm to say whether it will opt in or opt out is that those firms that opt out do not train anyone. We see this time and again. They spend no money on training and then they poach from those who have spent a great deal of money on training. That is the whole concept behind the levy system—otherwise, one gets free riders in the system.
It was agreed at the time when the industrial training levy boards were undone that those industries that wanted a levy system would hold a ballot and would agree among themselves. This provision is supported by the large firms in the industry which are beginning to do a great deal of training. Some are now pursuing a policy of not employing people who are not qualified—an approach we want to endorse.
On the whole, we endorse these procedures. We should like to see the issue of small firms in the industry considered; and perhaps some form of regulation on small firms considered more widely.
Lord Davies of Oldham: My Lords, I am grateful for the extensive debate we have had on the order, an increase of at least 50 per cent in the length of time spent on it last year. Useful contributions have been made. I shall take them in order and seek to reply as accurately as I can.
I hear what the noble Lord, Lord Skelmersdale, says about the question of whether an accurate response was received in the letter—namely, as to which order we are talking about. He is right that the scope of the industry does not come under this order, which is about the levy to be imposed. As I indicated, it is the same figure as last year.
Baroness Sharp of Guildford: My Lords, the hire equipment industry covers such plant as large cranes, and it is very important that people who are properly qualified operate them.
Lord Davies of Oldham: My Lords, I accept that point entirely; indeed, I accepted the entire contribution of the
noble Baroness, Lady Sharp, when she emphasised the virtue of this system with regard to training. I was not indicating a restriction on the scope of the two training boards; instead, I was pointing out that this was not the order under which to debate the scope of their activities. This order is about the levy to be raised.We have a small dispute with the noble Lord, Lord Skelmersdale, about whether we have accurately defined the situation in terms of the statutory instruments we are talking about. I do not want to be pernickety, but as we have just had a debate on agriculture which went on for about 50 minutes and revolved around the accuracy of the documents, I should point out that the reason we referred to the 1992 order is that it amended the Industrial Training (Construction Board) Order 1964. Therefore, if we are to effect change along the lines advocated by the noble Lord, we will seek to amend the 1992 order, which is more recent. That is the area I am seeking to clarify.
The noble Lord also made a more substantial point, to which the noble Baroness, Lady Blatch, referred, regarding the representations made by the plant and tool hire sector about the CITB's scope and whether it should be included. The noble Lord was very fair in acknowledging that these discussions have been going on for some time and that a significant number of representations have been made to Members of both Houses of Parliament. The Minister is in listening mode with regard to these representations; one meeting has already taken place. However, I assure the noble Lord that if he and his colleagues wish to make additional representations, now is the time to do so. Consultation needs to take place for a period of time and the outcome will determine whether amendments to the order are effected. I am grateful to the noble Lord for making that point and assure him that the Minister in another place will be pleased to receive representations on this front.
My noble friend Lord Puttnam was as creative as ever about the effectiveness of training in an area that he knows well. I hear what he says about the potential of the Communications Bill. In my experience, the Communications Bill has almost limitless potential for everything to come within its scope. He will know that Ministers in another place are struggling to keep a grasp on that which has already been fully covered in the legislation. I have no doubt that my noble friend is encouraging the Government to take the issue on board as well as serving due notice that he intends to use the debate on that Bill, when it arrives in this House, to further the important cause that he addresses so well.
Broadcasting has precious little to do with this order, but my noble friend tempts me. We all know that, as the noble Baronesses, Lady Blatch and Lady Sharp, said, the media are important areas when it comes to the effectiveness of training. My noble friend will seize his opportunity and I will also ensure that Ministers responsible for the Communications Bill—I have a very small part to play in it—will take due cognisance of his representations this evening.
I shall answer one or two specific points raised by the noble Baroness, Lady Blatch. There is a structure for appeals against payment of the levy. Employers can appeal if they believe that they do not fall within the scope of the ITB or if they think that their levy has been wrongly calculated. Appeal in the first instance is to the ITB.
Baroness Blatch: My Lords, that is the point I was making. As long as the employers were within the scope of the order, even the judge who was sympathetic to their case was unable to help them. Once within the scope of the order they cannot do anything about it and once the levy has been agreed by the industry and approved by Parliament, there is almost nothing on which they can seek redress. There needs to be a voice or some mechanism for them at least to ask for a reconsideration of the definition of whether they should be within the scope of the compulsory levy. That is why the 1964 order is relevant to this debate.
Lord Davies of Oldham: My Lords, I hear what the noble Baroness says, but let us be clear about the concept of both these boards. They reflect the wishes of employers on the operation of these issues.
The noble Baroness indicated earlier that some aspects of how the boards work can create controversy in the industry. She seems to be asking for much greater government direction and interference with the body. We are saying that the boards have proper responsibilities on behalf of the industry. They know what their training requirements are. As the noble Baroness, Lady Sharp, said, the levy is imposed on those who fall within the scope because of the range and scale of their activities, for the very proper reason that otherwise they would be poaching on those who contribute to the levy and do the training while they themselves were getting off scot-free of any such obligation. That is the philosophy behind the boards.
We recognise that the legislation has survived periods in office of governments of both parties and makes a valuable contribution to the development of training in this country—significantly and differentially so. After all, there are only two areas in which these training boards exist. In other areas other strategies are employed.
The noble Baroness also asked how the Government monitored the performance of the ITBs. They are required to submit an annual report of their activities together with a statement. A copy of the annual report is laid before Parliament. Officials from the department attend all ITB board meetings and receive copies of all committee papers and minutes. Information about the performance of the boards is kept and followed in departments.
We have had a range of questions today about the philosophy behind the board and about its scope. I emphasise again that the order is concerned solely with the levy, which is at the same level as was imposed last year. Accordingly, I commend the order to the House.
On Question, Motion agreed to.
Industrial Training Levy (Engineering Construction Board) Order 2003
Lord Davies of Oldham: My Lords, on behalf of my noble friend Lady Ashton of Upholland, I beg to move the second Motion standing in her name on the Order Paper.
Moved, That the draft order laid before the House on 20th January be approved.—(Lord Davies of Oldham.)
On Question, Motion agreed to.
Regulatory Reform (Assured Periodic Tenancies) (Rent Increases) Order 2003
6.4 p.m.
Lord Evans of Temple Guiting rose to move, That the draft regulatory reform order laid before the House on 13th January be approved [8th Report from the Regulatory Reform Committee].
The noble Lord said: My Lords, this is the second order from the Office of the Deputy Prime Minister to be brought forward under the Regulatory Reform Act 2001.
The order proposes a small and quite detailed change to the procedure under Section 13 of the Housing Act 1988 for increasing rents for assured periodic tenancies. The change is small, but its potential impact is significant. It could change the timing of rent increases for over 1 million tenants in England and Wales. These are tenants of both private landlords and registered social landlords, commonly known as housing associations, with tenancies of less than one month.
First, I need to summarise for your Lordships the current ways in which rents are increased to set the context for the change that we are proposing. There are three ways in which rents for assured periodic tenancies can be raised. Landlords can include a provision in the tenancy agreement or come to a specific individual agreement with the tenant. By far the most common, however, is the notice procedure in Section 13 of the 1988 Act.
Section 13 contains three rules governing the timing of rent increases under this procedure. One is that the starting date for the proposed new rent must not be earlier than the first anniversary of the date on which the rent was last increased or, if the tenancy is new, the date on which it started. This "anniversary" rule was intended to provide what was regarded by Parliament as a reasonable annual period between rent increases. However, in combination with another rule—that increases can take place only at the start of the period of the tenancy—the anniversary rule has an unintended administrative consequence for tenancies of less than one month.
I shall explain with an example. In the case of a monthly, quarterly or annual tenancy starting, say, on Monday 1st April 2002, the timing rules enable subsequent rent increases to occur on the standard
date of 1st April each year. For tenancies of less than one month—most commonly, weekly tenancies—the timing rules mean that the date of increase advances each year. For a weekly tenancy starting on Monday 1st April 2002, the earliest date for the first increase will be Monday 7th April 2003. For the second increase it will be Monday 12th April 2004, and so on.For housing associations with many thousands of weekly tenants, this drift forward in rent increase dates is administratively inconvenient. For those with a mix of tenancies there may be the added administrative burden of having different and increasingly divergent rent increase dates for different types of tenancies. This drift forward of dates can be confusing to tenants.
The impetus for the order came from a number of housing associations and their professional representative body, the National Housing Federation, on their behalf. We know that many associations want to set a fixed day for increasing the rents for tenancies of less than one month. A fixed day is a day which, though it does not always fall on the same date, recurs predictably at the same point each year. Many associations wish to increase the rents for their weekly tenants on the first Monday in April each year. The order amends the existing rent increase procedure to allow this.
The order replaces the current anniversary rule with a provision that rent increases must take place at not less than 52 week intervals The provision is qualified by a condition that a minimum period of 53 weeks applies intermittently. The condition acts as a corrective mechanism to avoid the slight backward drift in increase dates each year that would otherwise occur if landlords chose to increase rents at the first opportunity after 52 weeks. This prevents the cumulative drift back of rent increase dates, which would be to the detriment of tenants.
The order allows landlords to choose to set a fixed day for rent increases for tenancies of less than one month. It also allows landlords to continue to increase rents on a fixed date for tenancies of one month or more. We believe that the order removes or reduces the administrative burden imposed by the current timing rules. It also provides greater clarity and certainty for tenants because they would have a rent increase at the same time each year.
The Office of the Deputy Prime Minister consulted extensively on this proposal. The proposal received overwhelming support from both landlords and tenants, with over 90 per cent of respondents in favour. Many respondents thought that the proposal would be simpler to administer and make financial planning easier and that the incorporation of a fixed review day into a tenancy agreement would be easily understood by all parties. In addition, respondents said that the proposals would provide clarity for both parties and would be easier to explain to tenants.
The Select Committee on Delegated Powers and Regulatory Reform concluded that the proposal to allow landlords to set a fixed day for rent increases was appropriate within the meaning of the Regulatory Reform Act 2001 and that the order, as it now stands, is in a form satisfactory to be submitted to the House
for affirmative resolution. I thank the members of the committee for the time they spent scrutinising the proposal and for recommending the proposal to the House.The Regulatory Reform Committee in another place considered that the proposal reduced a burden imposed on landlords but that it also imposed a new burden on tenants. The new burden is that tenants may be required to pay increased rent at slightly less than full yearly intervals. However, the committee concluded that the new burden was proportionate to the benefit expected to result from its creation. The Office of the Deputy Prime Minister also provided an assurance to the satisfaction of the committee in another place that no landlords, or only very few landlords, are likely to apply the minimum 52/53 week period and increase rent at the first possible opportunity. We firmly believe that landlords will choose to set a fixed day for rent increases.
Finally, the committee in another place is satisfied with the guidance that the Office of the Deputy Prime Minister intends to give about the change in timing rules in the notes to the new prescribed forms for notifying rent increases. Those forms will come into effect the day after the order is made. The order was approved in another place. I now commend it to this House. It introduces a small but useful change of particular benefit to landlords with many weekly tenants. It also ensures that the rent increase notice procedure more closely reflects the original intention of Parliament. I beg to move.
Moved, That the draft regulatory reform order laid before the House on 13th January be approved [8th Report from the Regulatory Reform Committee].—(Lord Evans of Temple Guiting.)
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