4 Bills considered: 2 Government Responses - Secondary Legislation Scrutiny Committee Contents

Twentieth Report

Housing and Planning Bill: Parts 1-5

1.  The Housing and Planning Bill had its second reading on 26 January. It is a wide-ranging measure which includes a number of significant delegations of power. The Department for Communities and Local Government has provided a memorandum on those powers.[1] We have so far confined our consideration of the Bill to Parts 1 to 5 which are about housing. We will report separately on the remaining Parts of the Bill.

Clause 13(3) - Power to prescribe "banning order offence"

2.  According to clause 12(1), Part 2 of the Bill is about "rogue landlords and property agents". This term, however, is not explained at all in the Bill. We understand it to mean persons who, following their conviction for a "banning order offence", are banned from letting housing or from engaging in letting agency or property management work as a result of an order made by the First-tier Tribunal on the application of a local housing authority (see clause 15).

3.  Persons subject to banning orders will also be banned from holding a house in multiple occupation (HMO) licence (see clause 24 and Schedule 2)) and may be placed on a database of rogue landlords and property agents (see clause 27). It would be a criminal offence to breach a banning order (see clause 20).

4.  A "banning order offence" is not described on the face of the Bill. Instead clause 13(3) confers a power on the Secretary of State to specify its meaning in negative procedure regulations. Clause 13(4) would allow him to describe an offence by reference to:

·  its nature,

·  the characteristics of the offender,

·  the place where it was committed,

·  the court that passed the sentence, or

·  the sentence imposed.

5.  There is no restriction on the type of offence that may be specified in regulations. It does not have to be one connected with the letting or management of housing, and it could even be one committed before the enactment and coming into force of the Bill.

6.  The memorandum seeks to justify the delegation on the basis that it provides "flexibility in the event that it is considered necessary to amend the description of offences over time" (paragraph 21.3). It sets out the type of offences "it is envisaged" would trigger an application for a banning order. These would include offences "involving fraud, drugs or sexual assault that are committed in or in relation to a property that is owned or managed by the offender", and also "specified housing offences, which will include offences such as unlawful eviction and failing to comply with an improvement notice in relation to property conditions" (paragraph 21.5).

7.  Since the types of offences are described in the memorandum, we cannot understand why the "banning order offences" are not listed on the face of the Bill, together with a delegated power to amend the list as necessary. This is especially puzzling, given that the Government have succeeded in devising a list of offences in clause 39, conviction for which could result in the First-tier Tribunal making a rent repayment order.

8.  We accept that the First-tier Tribunal would be unlikely to impose a banning order under clause 15 where the offence concerned was a trivial one (see paragraph 21.5 of the memorandum). Nonetheless, the very fact that proceedings are commenced could have serious consequences for the landlord or letting agent concerned. We consider it inappropriate that the determination of the offences that are to constitute "banning order offences" should be left entirely to the discretion of the Secretary of State and with only a modest level of Parliamentary scrutiny.

9.  We therefore recommend that clause 13(3) be removed from the Bill and replaced with a provision listing the offences that constitute "banning order offences", coupled with a delegated power to amend the list by affirmative procedure regulations.

Clause 22(9) - Financial penalty for breach of banning order: guidance

10.  Clause 22 would allow a local housing authority to impose a financial penalty of up to £30,000 on a person if it is satisfied that the person has committed a breach of a banning order (that is, that his or her conduct amounts to an offence under clause 20). This is an alternative to a criminal prosecution. It follows that the protections for defendants in the criminal courts would not necessarily apply, in particular the safeguard that there can be no conviction unless the case is proved beyond reasonable doubt. Indeed, it might be considered that this clause empowers an authority to act as if it were prosecutor, judge, jury and executioner!

11.  Clause 22(9) requires a local housing authority to "have regard" to any guidance given by the Secretary of State about the exercise of its functions under clause 22 (or Schedule 1, which contains supplementary provisions about the imposition of penalties, and provides for an appeal mechanism). As we observed in our recent report about the Immigration Bill,[2] a body that is required by statute to "have regard" to a code is normally, as a matter of public law, expected to follow the guidance in it, unless in particular circumstances it has cogent reasons for not doing so. The guidance under clause 22(9) is therefore likely to be highly influential when an authority determines whether to impose a financial penalty instead of bringing a prosecution, and when it decides the level of that penalty. The guidance could also deal with matters such as the appropriate standard of proof to be applied.

12.  Nonetheless, there is no Parliamentary procedure associated with the guidance, or even a requirement to lay it before Parliament. We were unpersuaded by the explanation in the memorandum for the proposed delegation and lack of Parliamentary involvement, in particular the suggestion that the guidance is "likely to be uncontroversial and may contain a level of detail that is inappropriate for legislation" (paragraphs 23.2 and 23.3).

13.  In July 2015, we considered a comparable provision in the Energy Bill which requires the Oil and Gas Authority to have regard to the Secretary of State's guidance when determining the amount of a financial penalty, and recommended that it should be laid in draft before Parliament, and that the affirmative procedure should apply to the order bringing the initial or any revised guidance into force.[3]

14.  Given the nature of the power conferred on local housing authorities by clause 22(1), which would deny the accused access to adjudication by a court as to whether he or she had committed a criminal offence, we consider that the guidance provided for in subsection (9) to be of even greater significance to that provided for in the Energy Bill. We therefore recommend that the guidance should be laid in draft before Parliament and not brought into force without an affirmative procedure resolution of each House.

Clause 67 - High value local authority housing: payments to the Secretary of State

15.  Clause 67 enables the Secretary of State, by "determination", to impose a levy on local housing authorities who own social housing stock in respect of the estimated market value of their interest in any "high value" housing which is likely to be become vacant in a given financial year. The housing concerned has to appear in the authority's housing revenue account, and not have been excluded by negative procedure regulations (see clause 68).

16.  A determination under clause 67:

·  must set out the method of calculating the payment, which may be by reference to a formula (see subsections (5) and (6)); and

·  may also provide for assumptions to be made in making a calculation, whether or not these are, or are likely to be, borne out by events (see subsections (7)).

17.  So, for example, the Secretary of State could calculate the payment on the assumption that:

·  10% of the local housing authority's stock of "high value" housing would be likely to become vacant in a particular year, or

·  prospective purchasers would not be deterred by defects in the title or in the state of repair of the premises,

regardless of whether these assumptions are, or are even likely to be, correct.

18.  A determination could relate to:

·  a particular local housing authority,

·  a description of local housing authorities, or

·  all local housing authorities.

So it is clearly capable of having a legislative character (see section 69(1)).

19.  The Bill, however, provides for no Parliamentary procedure at all for determinations made by the Secretary of State, even in respect of those which relate to all local housing authorities. The memorandum attempts to justify this on the basis that "whilst the technical detail of the calculation will be set out in the determination, the overarching principle on which the calculation will be based is set out in … clause 67(2)" and that "the key component of the calculation — the definition of 'high value' — will be set out in regulations which will be subject to further Parliamentary scrutiny". The Department therefore does not consider it necessary "for the exercise of the determination-making power to be subject to further Parliamentary scrutiny" (paragraph 31.9).

20.  We have found it impossible to extract any "overarching principle" from clause 67(2). The provision appears to be designed to allow the Secretary of State maximum leeway to determine how the levy is to be calculated, untrammelled by anything beyond the sparse words of subsection (2) which provides merely that the amount of the payment must "represent an estimate of—

(a)  the market value of the authority's interest in any high value housing that it is likely to become vacant during the year, less

(b)  any costs or other deductions of a kind described in the determination".

It follows that the whole substance of the calculation of the levy will be in the determination: this is not a matter of mere "technical detail" as suggested in the memorandum (paragraph 31.9).

21.  The memorandum points to legislative precedents for the approach adopted in clause 67, including sections 168 to 175 of the Localism Act 2011 (see paragraphs 31.10 and 31.11). These provisions are concerned with the calculation of Government subsidies to local authorities. They appear to us be wholly different in character from a requirement on local authorities to pay over to the Secretary of State the market value of valuable assets on the basis of an estimate to be determined by him.

22.  A precedent not mentioned in the memorandum is to be found in the Pensions Act 2004. Part 2 empowers the Pension Protection Fund to impose a levy on the pensions industry. Sections 174 to 181A contain detailed provisions about the levy. The contrast with clause 67 of this Bill is striking.

23.  In our view, it is inappropriate to delegate to the Secretary of State a power to determine the amount of the payment to be made by local housing authorities without any form of Parliamentary scrutiny, particularly in view of the paucity of detail on the face of the Bill to guide how the power is to be exercised. We therefore recommend that a determination under clause 67(1) should be made by statutory instrument laid before Parliament, and that:

·  it should attract the negative procedure where it applies to a particular local authority, and

·  the affirmative procedure where it applies to all local housing authorities or to all such authorities of a particular description.[4]

24.  Deciding what housing is to be treated as "high value" is absolutely central to the operation of clause 67. This key expression is not defined in the Bill. Instead, the Secretary of State is given power to say what it means in negative procedure regulations (see clause 67(8)). Furthermore, clause 68(9) allows him to define "high value" in different ways for different areas. So, for example, a one-bedroom council flat in Westminster may fall within the definition, while a four-bedroom house in Liverpool may not.

25.  The memorandum explains that defining "high value" in regulations will "provide greater flexibility over the definition than if it was included in primary legislation" (see paragraph 32.2). No doubt this is true, but it does not begin to justify the lack of detail in clause 67 to indicate when housing is to be considered as "high value". The memorandum justifies the negative procedure on the basis that "the range of values within which it will be possible to set the definition of 'high value' will be limited by normal public law principles" (see paragraph 32.3). We do not regard this as being even remotely persuasive.

26.  In our view, the delegation of power in clause 67(8) to the Secretary of State to determine the meaning of "high value" is inappropriate without the inclusion on the face of the Bill of a detailed list of factors governing its exercise.

27.  Furthermore, whether or not the Bill is amended to provide for such a list, we recommend that the affirmative procedure should apply to every exercise of that power.

Clauses 78 to 89 - Power to provide for mandatory rent levels for "high income" tenants of local authorities

28.  This group of clauses contains a series of powers designed to require local authority tenants in social housing on higher incomes to pay what the Explanatory Notes describe as "a fairer level of rent" (see paragraph 3).

29.  Clause 78 enables the Secretary of the State to make "rent regulations" about the levels of rent that local housing authorities in England would have to charge to a "high income" tenant of social housing. Under subsection (2), the regulations could require the rent to be:

·  equal to the market rate,

·  a proportion of the market rate, or

·  "determined by reference to other factors" (which are not specified on the face of the Bill).

30.  Under subsection (3), the regulations may provide for the rent to be different for people with different incomes or for social housing in different areas (so that, for example, a high income tenant in a council flat in Westminster may not have to pay the full market rent, while a tenant with the same income living in an identical flat in Liverpool may have to do so).

31.  It appears that the regulations are not to contain any detail about how a local housing authority is to determine the rent. Instead this is to be sub-delegated to guidance issued by the Secretary of State, to which the regulations may require local housing authorities to "have regard" and for which there will be no Parliamentary procedure (see subsection (4)).

32.  Clause 79 requires the Secretary of State to define the meaning of "high income" in regulations. The memorandum indicates that "the income threshold for a high income social tenant will be based on a household income of £30,000 or £40,000 in Greater London" (paragraph 38.2). However, it fails to explain why it is impractical for this detail to appear in clause 79 itself, coupled with a delegated power to amend the provision.

33.  As it stands, clause 79 permits the Secretary of State to define "high value" in almost any way he chooses. Subsection (2) offers no guiding principles to indicate how the power should be exercised. Moreover paragraph (f) of that subsection contains a further sub-delegation: the regulations can require local housing authorities to have regard to guidance when calculating or verifying a person's income. The guidance would not be subject to any Parliamentary procedure.

34.  Clause 80 would allow regulations to be made empowering local authorities to require their tenants to provide information about their income. If tenants fail to comply, the regulations can require the local authority to charge them the maximum rent permissible under the regulations.

35.  Under clause 82, the regulations may (but do not have to) include provision for the purpose of ensuring that the rent reverts to its original level where, for example, a tenant ceases to have a "high income" or where a tenant who is charged the maximum rent because of a failure to provide information, subsequently provides it.

36.  Under clause 83, the regulations could confer power on local authorities to change the rent payable under a tenancy for the purpose of complying with the obligations referred to above. This could result in any pre-existing contractual or statutory entitlement of the tenant being overridden. There is a Henry VIII power in subsection (4) which allows the regulations to amend primary legislation for this purpose.

37.  Clause 84 is particularly significant. It could be viewed as a form of taxation because it enables the regulations to require local housing authorities to make payments to the Secretary of State in respect of "any estimated increase in rental income because of the regulations". The method of calculation is to be set out in the regulations. Provision can be made for deduction of administrative costs, and for interest to be charged in the event of late payment. The memorandum gives only the barest explanation or justification for this power; indeed it seeks to dismiss this highly important provision as "quasi-technical" (see paragraph 43). The intended meaning of that expression wholly eludes us, and the House may wish to ask the Minister for an explanation.

38.  The Henry VIII power in clause 83(4) will be subject to the affirmative procedure. Otherwise, the negative procedure applies to regulations made under all the other powers in this group of clauses. The justification in the memorandum is that the negative procedure follows "the clear policy framework that has been set in clause 78 and the related clauses of the primary legislation" (see paragraph 37.8). We strongly disagree with the suggestion that the clauses in question offer anything like a clear enough statement of discernible policy to justify the delegation, far less the negative procedure.

39.  These are important provisions which could have a significant impact on large numbers of tenants, and are bound to be burdensome on local housing authorities. They will be required to:

·  gather information,

·  increase rents,

·  deal with appeals, and

·  make payments to central Government.

40.  The clauses set out only a bare framework, and the Secretary of State is given broad discretion to determine key details, particularly as to what constitutes "high income" and what rents must be charged, and how much of the increased rental revenue is to be paid over to him by local authorities.

41.  All this is to be done with only a minimal level of Parliamentary scrutiny.

42.  We therefore recommend that:

·  the affirmative procedure should apply to the first exercise of all the powers conferred by clauses 78 to 89;

·  the affirmative procedure should apply to every subsequent exercise of the power to make regulations under clause 84 about payments by local authorities to the Secretary of State;

·  clause 79 should be amended to set out the key definition of "high income" on the face of the Bill, but with power to amend this by regulations to which the affirmative procedure should always apply;

·  the powers in clauses 78(4) and 79(2)(f) to sub-delegate to guidance provision concerning the determination of rent and the calculation of income should be removed from the Bill and replaced by a requirement to include such provision in the regulations, so that it may be scrutinised by Parliament.

Age of Criminal Responsibility Bill [HL]

43.  There is nothing in this Bill to which we wish to draw the attention of the House.

Public Advocate Bill [HL]

44.  There is nothing in this Bill to which we wish to draw the attention of the House.

Road Traffic Act 1988 (Alcohol Limits) (Amendment) Bill [HL]

45.  This Private Member's Bill had its Second Reading on 29 January. Clauses 1 and 2 amend certain amounts, representing maximum concentrations of alcohol in breath, blood or urine, specified in sections 8(2) and 11(2) of the Road Traffic Act 1988.

Clause 3(2) - Power to appoint commencement date

46.  Clause 3 includes a power enabling the Secretary of State to appoint, by regulations, the day on which clauses 1 and 2 are to come into force. We recommend that subsection (2) should require those regulations to be made by statutory instrument.

Trade Union Bill: Government Response

47.  We considered this Bill in our 15th Report of this Session.[5] The Government have now responded by way of a letter from Baroness Neville-Rolfe, Parliamentary Under Secretary of State and Minister for Intellectual Property, at the Department for Business, Innovation and Skills, published at Appendix 1.

Welfare Reform and Work Bill: Further Government Response

48.  We considered this Bill in our 13th Report of this Session.[6] The Government provided a response, published in our 19th Report.[7] The Government have now provided a further response, by way of a letter from Rt Hon. Lord Freud, Minister of State for Welfare Reform at the Department for Work and Pensions, published at Appendix 2.

1   http://www.parliament.uk/documents/lords-committees/delegated-powers/HousingandPlanningBillDelegatedPowersMemo.pdf  Back

2   18th Report, Session 2015-16, HL Paper 83, para 12. Back

3   6th Report, Session 2015-16, HL Paper 31, paras 10 to 15. Back

4   The Committee made a similar recommendation in relation to analogous powers of direction contained in Children and Families Bill in our 7th Report, Session 2013-14, HL Paper 49, paras 3 and 4. Back

5   15th Report, Session 2015-16, HL Paper 64.  Back

6   13th Report, Session 2015-16, HL Paper 56. Back

7   19th Report, Session 2015-16, HL Paper 85. Back

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