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Noble Lords: The noble Earl.

Lord Phillips of Sudbury: I do apologise. That is the most appalling error that a man can make in this House. I doubly apologise.

At Second Reading, in relation to concerns about the effects of the packs on low value homes, the Minister said that,

"we believe that it is best left to the market to provide solutions".—[Official Report, 7/6/04; col. 86.]

I wholly concur with that sentiment. The noble Earl is absolutely right in saying that people are quite capable of judging between one offer and another, between one estate agent and another, or between an offer with a pack and one without.

But how does the Minister see the position of a couple who are poor—perhaps old age pensioners—who have to sell a house to relieve their financial problems? Are they going to be denied the prospect of a sale unless they can find an estate agent prepared to bear all the up-front costs? I think that the up-front costs are going to be of the order of £800 to £1,000. That is without solicitor's fees and solicitors are not in the habit of doing abortive work without charging for it, at least, by no means always. So if one adds solicitor's costs, one is well over £1,000.

Who is going to bankroll that? If the answer is that some estate agents will bankroll it themselves, the noble Earl made the point that they are not going to hang around for ever. If the property is still on the market after six months, they will not wipe the debt off or continue to carry it. I can tell the noble Lord that the firms that will benefit from this will be the big battalions. This is highly anti-competitive. The small, newish estate agent is not going to be able to carry the debt of £50,000 to £100,000 of unpaid expenses that will be incurred in these home packs. So, if the Minister rejects these amendments, what is the fate of the poor seller? Who is going to carry the very substantial costs, which may ultimately prove abortive, but which, in any event, could be hanging around for months?

Lord Bassam of Brighton: The two amendments in this group effectively create a voluntary system rather than a compulsory one. We have gone over this issue a fair bit already and I do not want to tire the Committee with more of our thinking behind the system. I simply say that we do not think that a voluntary system is right or fair or that it would, in the end, be at all effective. There are extensive benefits in the system as set out in the legislation. If we take Amendments Nos. 183B and 185A together, they would have the effect of making the system for home information packs voluntary. Effectively, the only duty would be for the seller or his agent to say whether the property was being sold with a pack.

Despite what the noble Earl, Lord Caithness, says, we think that there is sufficient evidence to suggest that buyers and sellers are unhappy with the way in which
 
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properties are bought and sold. In many cases, people are losing hundreds of pounds on abortive surveys and searches. To pick up the point made by the noble Lord, Lord Phillips, it is those who are perhaps least able to afford those costs who often end up bearing the brunt of them. I do not think that there is any doubt—and what the noble Lord, Lord Phillips, said underlines the point—that some of these costs can be quite crippling. But we think that, in the end, there will be a benefit for all in having a universal system, rather than a voluntary system.

As the noble Lord, Lord Rooker, made plain yesterday, there is a cost to the wider economy, apart from the substantial time that is wasted through abortive transactions. I do not think that anyone could seriously argue that the market is working well in all circumstances and should be left alone and unfettered; but, effectively, that is what the opposition to this main proposal suggests. Ultimately, it is not enough simply to suggest that technology will solve the problems over time. Yes, of course it will assist in the end in terms of introducing the proposed changes. That is why we have provided for a longer time, so that the benefits of speeding up transactions can be fully brought in.

I do not think that anyone has disputed the benefits of key information being provided up front. All that has been suggested is that essentially there is a disbenefit in delaying going to market, which, basically, is what is on offer here. Estate agents offering home information packs or condition surveys up front report that buyers and sellers welcome them and that many people are positively enthusiastic. Certainly, agents in my area say that to me, which I think is for two reasons. First, it is easier to market a property and, secondly, the sellers and their agents do not have the fear that extra efforts will not be rewarded.

Ultimately, this system will be welcomed, particularly when we have the added benefit of technological change. Last night, I heard the argument that we should simply wait for that: but we do not want to wait. Of course we want to accrue those benefits and see the system speeded up, but by having a voluntary system, which effectively would create a two-tier system across the country, all sellers would be missing out, and that would be very unfortunate.

In our view, the market is not working well enough. There are too many disadvantaged people for us to maintain the status quo. We need change and improvements so that consumers can see a real and lasting benefit. That is why the voluntary approach is not the right approach to adopt in this situation. Some people do not like compulsion, but, regrettable though it is, in this situation it is entirely necessary.

A couple of important questions and points were raised. The noble Baroness, Lady Hamwee, talked about the dry run, which she saw as a sort of voluntary system. All the pack components will be in force, including the home condition report and certification scheme. In answer to her specific point: yes, it is the commencement order that will bring in the duty after the dry run is over. It is important to respond to that point.
 
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The noble Lord, Lord Phillips, made a point about paying the costs and the poorer seller. That class of seller already incurs costs under the present process. Those people can least afford the wasted costs with the associated abortive transactions that sometimes occur. I know I made that point earlier, but it is important. It is much more likely that there will be greater certainty in the process when the information is up front from the moment that the property is taken to market, which those people will welcome.

Clearly there is more debate to be had about where the costs will fall. I do not necessarily accept what the noble Lord said about where that cost will be. Nor do I accept his cost estimate, which, from the evidence that we have had so far, seems to be on the high side. I think that sellers really want greater certainty in the process and less frustration, which a universal system of home information packs will provide. That is why the voluntary approach is the wrong approach and why we think that we have got it about right. Some ironing out will be done and there will be a careful process of implementation. That is why we have set the timing as we have, which will be welcomed by the industry as a whole as we move towards that point of implementation.

The Earl of Caithness: Perhaps I may clarify one point with the Minister. Did he say that, under the Government's present proposals, the abortive costs that the market experiences at the moment will not arise in the future?

Lord Bassam of Brighton: I would not want to say that there never will be abortive costs after the scheme has been introduced. I know that the noble Earl takes exception to the pilots in Bristol and does not have a high opinion of them, but so far the evidence suggests that abortive costs will be much less and abortive sales will be fewer in number. There must be a benefit from that. Neither of us would be happy estimating exactly how much less those abortive costs will be or how many fewer abortive sales there will be. All the evidence suggests that there will be greater certainty in the process, which is surely what people selling a home want. Do we not all want to see a better market that performs and works well for everyone?

Lord Phillips of Sudbury: Perhaps I may ask the Minister to expand on the dry run. All Members of the Committee want that to work and for a better system to come out of it. However, it is fair to say that the practitioners in the Chamber have more anxieties about the exceptional cases; that is, the number of cases that will not fit neatly into the proposed package. I ask, first, what is the scale of the dry run? Secondly, what is the length of the dry run?

Thirdly, and most importantly, I am sure that the Minister will agree that there is no point in having a dry run if one cannot learn from it and make such amendments as may be necessary in the light of it. My concern is whether there is anything in the Bill as presently structured—I do not think that there is—
 
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that will allow the Government to say, "Okay, we have learnt these lessons for sure. Two of them confirm our view about this Bill. One of them runs directly contrary to what we thought when we debated this and we will amend the legislation before it comes into full effect".

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