Commercial Rent (Coronavirus) Bill
1.This Bill was passed by the House of Commons on 12 January. It was introduced in the House of Lords on 13 January and had its second reading on 27 January.
2.The purpose of the Bill1 is “to support landlords and tenants in resolving disputes relating to rent owed by businesses which were required2 to close during the COVID-19 pandemic”. It “enables arbitration to be used to resolve these disputes if landlords and tenants cannot agree a way forward”.
3.The Bill allows a landlord or a tenant to refer a dispute to arbitration by a suitably qualified and independent arbitrator appointed by a body approved by the Secretary of State. The Bill sets out the arbitration process, making provision for landlords and tenants to state their case, for the types of award an arbitrator can make and the principles that govern such awards.
4.The Department for Business, Energy and Industrial Strategy has provided a Delegated Powers Memorandum (“the Memorandum”).3 We draw one delegated power to the attention of the House.
Clause 27—power to apply Act in relation to future periods of coronavirus control
5.The Bill applies only in relation to business closures which took place during the following periods4—
- 21 March 2020 to 18 July 2021 (for businesses in England); and
- 21 March 2020 to 7 August 2021 (for businesses in Wales).
6.However, clause 27 gives the Secretary of State power to make regulations that provide for the Bill5 “to apply again in relation to rent debts under business tenancies affected by closure requirements … imposed as a public health response to … coronavirus”. This allows the Bill to apply in relation to future periods of coronavirus control. The regulations are subject to the affirmative procedure.6
7.But this is much more than just a power to provide for the Bill in its existing form to apply in relation to future periods of coronavirus control. This is because clause 27(3) allows the regulations to—
- specify provisions of the Bill which are not to apply;
- provide for provisions of the Bill to apply with modifications; and
- make different provision for different purposes (including different provision for England and for Wales).
8.This means that the regulations could provide for a very different version of the Bill to apply in relation to future periods of coronavirus control. For example, the regulations could—
- modify the arbitration process (for example, by removing the right to an oral hearing7);
- change the principles that govern the making of arbitration awards;8
- limit the types of award that an arbitrator can make;9 or
- limit the availability of awards (for example, so that they could only be made in relation to certain kinds of businesses, or periods of closure of a particular length).
9.The Memorandum does not explain why the Bill contains such a highly unusual Henry VIII power giving ministers so broad a discretion to re-write primary legislation. It simply states that “the power enables specification of the provisions to apply, so that only those aspects necessary need be applied, and with modifications to work in the context of the future situation”.10
10.Had the Bill instead contained a power that would allow it to apply in relation to future periods of coronavirus control coupled with a limited power to make the necessary changes to those provisions that currently limit its application to periods in 2020 and 2021, we may have found this unobjectionable. However, we are concerned that clause 27 instead gives ministers a very broad discretion to change how the Bill would work in relation to future periods of coronavirus control. It would allow changes of a kind that would give rise to serious policy issues and which we consider ought not to be a matter for secondary legislation.
11.Accordingly, we consider that clause 27 contains an inappropriately wide delegation of power and that clause 27(3) in its current form should therefore be removed from the Bill.
1 See para 1 of the Explanatory Notes to the Bill.
2 By regulations made under section 45C of the Public Health (Control of Disease) Act 1984 (see clause 4(2) and (6)).
3 Memorandum by the Department for Business, Energy and Industrial Strategy (undated).
4 See clause 4(2)(b) (definition of “relevant period”).
5 With the exception of clause 27 itself.
6 See clause 27(4)(b).
7 See clause 20.
8 See clauses 15 and 16.
9 The Bill allows an arbitrator to require (a) the whole or part of a debt to be written off, (b) time to be given to pay the whole or part of a debt, and (c) interest payable in relation to a debt to be reduced (including to zero) (see clause 6(2)).
10 See para 24 of the Memorandum.