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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