Homes Bill

Public Bill Committee, 23 January 2001.

Standing Committee D

Homes Bill

Roger Gale (Conservative, North Thanet)

Good morning. My intelligence from the hon. Member for Bath (Mr. Foster) is that the hon. Member for Carshalton and Wallington (Mr. Brake) is in the process of becoming a father. Further information, via modern electronics, will follow.

Don Foster (Liberal Democrat, Bath)

On a point of order, Mr. Gale. I am sure that the Committee would not wish to be misled. My hon. Friend is already a father; we are now awaiting the birth of his second child who, according to my pager, is en route.

Roger Gale (Conservative, North Thanet)

I thank the hon. Gentleman for that clarification.

On a housekeeping matter, new clauses 5 and 6 are printed on the amendment paper as relating to part I of the Bill but they in fact relate to part II.

Clause 7 - Contents of sellers' packs

Nigel Waterson (Conservative, Eastbourne)

I beg to move amendment No. 8, in page 6, line 22, leave out from `provision' to the end of line 24.

I am grateful for the birth condition report. I hope that we will have good news later on. Nigel is a nice name—despite its recent misuse in the Chamber by someone much more important than me.

The amendment has the simple purpose of removing the power of the Secretary of State to make different rules for seller's packs in different areas, properties, circumstances and so on—in other words, the amendment would prevent exemptions. It is pre-eminently a probing amendment that seeks to raise the issue of low-value, low-demand areas, which might be said to have dominated the Second Reading debate. The issue is obviously of considerable and understandable concern to several Labour Back Benchers. The hon. Member for Bassetlaw (Mr. Ashton) spoke about the problems of old mining homes that probably have a tiny paper value. Clearly, much pressure has been placed on the Minister behind the scenes to do something about the problem, but our sympathy is limited because it is of the Minister's own making. He is the first to admit that that situation raises all sorts of problems. Is one to draw lines on maps? Is one to use a particular value that may change? Is one to use a particular council tax band? That is a difficult conundrum for the Minister and his Department. It would be helpful if the Minister could give us just a teensy-weensy glimpse into the way in which his mind is working because, as before, we do not have the benefit of draft regulations to debate in Committee.

This problem, like so many others, is caused by the Government's desire to bash on regardless with imposing the seller's packs, with the force of law, in the teeth of opposition and criticism from a range of organisations and bodies. We take the view that if the seller's packs are to be obligatory, the Minister will have to look at exemptions. Sadly, the list of potential exemptions and exceptions to the Bill gets longer and longer, as the hon. Member for Bath and my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) have said. As matters advance, we discover more and more provisions that the Minister does not intend to impose and reasons why people should be exempted and excepted from them. However, it would be invidious to start drawing lines on maps or making similar distinctions. We take the view—expressed initially by my right hon. Friend the Member for Skipton and Ripon—that there could be a self-fulfilling prophecy whereby an extra stigma would be imposed on certain properties because of their exemption from the requirement for a seller's pack. We are talking about areas where there is already low demand, low values and possibly houses that have no real value at all. It would mean that a red line would be drawn around an area, and people would be told that they were not required to have a seller's pack—they would not even have that benefit.

Above all, it would be outrageous—I say this without having heard what the Minister has in mind—if he implicitly acknowledged the problems with seller's packs that we have continued to expound by making regulations saying that the packs should not apply in certain areas and for certain types of property. It would be even more outrageous if he thereby exempted large Labour-represented and controlled areas of the country from the so-called benefits of seller's packs, but left many other parts of the country subject to the full requirements of the legislation.

As I said, it is difficult to guess which way the Minister will jump on the issue. He has accepted that he must do something or he will have a major Back-Bench rebellion on his hands, but he has also spotted all the potential problems and difficulties. To use that much over-used phrase, the devil will be in the detail. I commend the amendment to the Committee.

Don Foster (Liberal Democrat, Bath)

I am delighted that the hon. Member for Eastbourne (Mr. Waterson) moved the amendment to give us an opportunity to debate an issue about which, as he rightly pointed out, a number of the Minister's hon. Friends raised considerable concerns on Second Reading. The hon. Gentleman will be aware, as you are, Mr. Gale, that we have had an opportunity to touch on the issue on several occasions during our deliberations, but I want to draw the Committee's and particularly the Minister's attention to a letter that I recently received from Knight Frank, a major firm of estate agents. It raises what is almost the opposite end of the problem, and I would be grateful for the Minister's comments. That firm wonders whether the requirement for a seller's pack should be applied to very large properties. It proposes that any property with two or more acres should be excluded from the Bill, although I have not tabled an amendment to that effect. If the amendment tabled by the hon. Member for Eastbourne were accepted, it would prevent any opportunity for the Minister to take that proposal into account in the regulations.

In the letter, Knight Frank makes the point that the burden on farmers and smallholders selling large properties would be huge, because the costs of preparing a seller's pack and condition report for such a property would be proportionately much higher, bearing in mind rights of way, easements, additional buildings and so on.

I suspect that the Minister will say that all that information would have to be obtained during a sale anyway and that there may well be advantages—the same advantages for which he has argued strenuously in the case of all other properties—in providing it in a seller's pack. However, as Knight Frank and other organisations have contacted me with concerns about the impact of the clause on people seeking to sell large properties, the Minister might like to comment on those concerns.

Nick Raynsford (Labour, Greenwich and Woolwich)

I am pleased that the hon. Member for Eastbourne stressed at the outset that this is a probing amendment, even though towards the end of his comments he appeared to be rather more enthusiastic about pursuing it. The amendment would make completely impossible something for which he argued strongly at an earlier stage in the proceedings, which is that newly built properties should not require a home condition report. We were entirely happy to accept that newly built properties, with the benefit of a warranty such as that provided by the National House Building Council or Zurich, provide the protection necessary for the buyer, thereby avoiding the requirement for a separate home condition report. That common-sense solution would not be possible if this amendment were to be accepted.

The provision enables us, if necessary, to make special provisions for particular categories of properties. I have already talked about properties that are being built or those which are newly completed. As I have stressed in earlier debates, the issue of low-value properties, which has been raised by hon. Members, is a difficult one. It is not our intention to undermine the benefits of the seller's packs by making widespread exemptions, but there are genuine concerns where the requirement to produce a seller's pack might be disproportionate in the case of extremely low-value properties.

Tim Loughton (Conservative, East Worthing and Shoreham)

The Minister said that it might be possible to exempt extremely low-value properties. Will he quantify that in terms of defining a benchmark?

Nick Raynsford (Labour, Greenwich and Woolwich)

In case anyone believes that we are considering widespread exemptions that would cover a large number of properties, I should make it clear that I have previously indicated that around £10,000 might be the order of magnitude we have in mind. We are thinking about circumstances where the requirement to produce a seller's pack might be a deterrent to putting a property on the market. In most cases, we believe that the seller's pack will help to clarify the condition of the property and improve the workings of the market so, even in low-value areas, it might help to ensure that home owners are able to sell their properties. However, some hon. Members have highlighted the fear that, in some circumstances, the requirement to produce a seller's pack might act as a deterrent to putting a property on the market. We do not want that to happen so we have said that we will undertake detailed consultation before making any final decision.

We are sympathetic in principle and we are cautious about the application of exemptions because, as has been said, they could have the perverse effect of stigmatising property. Therefore, if we decide to propose any exemptions, they will be limited and tailored to specific circumstances rather than having a more general application. I cannot give any specific indications because we have undertaken to consult in detail with all the interested parties—professional bodies, local authorities and others, including right hon. and hon. Members—and it would be wrong for me to try to anticipate the outcome of those consultations. I have already said that we intend to apply an exemption to newly built properties that benefit from warranties provided by NHBC, Zurich or other insurance companies, and if we propose any other exemptions, they will be subject to full parliamentary scrutiny.

The issue of larger homes was raised by the hon. Member for Bath. He evoked a rather touching image of Knight Frank, a company whose image is not associated with smallholders coping on a pittance with impoverished farm land and small properties. That may be the image it is trying to cultivate, but this is really a lobby in favour of those with large properties—two acres of more—on which the partners of Knight Frank are no doubt delighted to receive instructions. The information required for a seller's pack is information that would always be obtained. People purchasing large and complicated properties will want all the information and will almost certainly commission a full structural survey rather than just relying on the house condition report. Nevertheless, that report is helpful because it will give useful information and say whether a full structural survey is necessary. An exemption would not be of any practical use or benefit to people in those circumstances. Therefore, the only case for an exemption is where a property is part of a commercial enterprise, for example, a farm. That is the answer to the hon. Gentleman's genuine concern for poor smallholders in financial difficulties, but the wider issue is not meritorious.

Don Foster (Liberal Democrat, Bath)

The hon. Gentleman gives the answer that I was expecting. I am grateful for his clarification about the smallholding. For the record, will the Minister comment briefly on the case of a farm that is being sold which comprises a large number of outbuildings, the condition of which will, presumably, not have to be studied in the same depth as properties in which people will live? The buyer will want a great deal of information on the condition of such farm buildings, but will they be excluded from the detailed condition survey?

Nick Raynsford (Labour, Greenwich and Woolwich)

Where a sale involves farm premises, which are all part of the farm enterprise, they will be exempt. If, however, a farmer possesses residential property and chooses to sell it independently with vacant possession, the normal requirements will apply. If it is part of the farm enterprise, it will be exempt. For those reasons, the amendment is not just unnecessary but unhelpful, and I hope the hon. Member will withdraw it.

Tim Loughton (Conservative, East Worthing and Shoreham)

The Minister's point about exemptions on new properties being detrimental is well taken. We debated that earlier, which is why my hon. Friend the Member for Eastbourne said that this was a probing amendment.

Before fashioning the legislation and putting it before the House, did the Government properly assess the scale of the problem posed by properties at the lower-end of the market? On Second Reading we heard from many Labour Members, in particular, the hon. Members for Workington (Mr. Campbell-Savours) and for Burnley (Mr. Pike). The hon. Member for Burnley said that his constituency has more than 3,000 empty properties and the bottom has fallen out of the lower end of the market. The hon. Gentleman would maintain that a good portion, if not all, of those 3,000 properties may be valued at less than £10,000, and the same is true of many properties in other former mining areas.

Last year, 660,000 private residential sales—more than 40 per cent. of all private residential sales in this country—were sold for less than £60,000, and so did not attract any stamp duty. That is large portion of the market, and many of those 660,000 may have been below the imaginary £10,000 threshold. Given the potential size of the problem, and the stigma of whatever exemption the hon. Gentleman may be considering, the matter should have been thought about long before the legislation came before the House. It is not a new phenomenon. It is not as though the property market has suddenly gone down; if anything, it has moved up. Certain metropolitan boroughs, particularly in the north of England, suffer from a lot of low value property.

The Minister has ruled out broad-brush council band A proscribing, as recommended by his hon. Friend the Member for Workington, which is probably right. Surely whatever solution he eventually comes up with, however soon that is after all the detailed work that we are told that went into fashioning the proposals, must lead to a degree of blight on the classification of those properties, which will fall below the threshold, however, he qualifies that.

All the other exemptions to which we have referred—between family and friends, for commercial property, or whatever—are for perfectly good reasons, and do not reflect on the integrity of the property or the area in which it is located. The provisions will lead to a degree of postcode blighting, which will simply reinforce the Opposition's view that the proposals are ill-thought out and have been rushed through. A large segment of the market will be detrimentally effected in terms of cost, but if they are not included within the scheme, they will be blighted and the implications that that will have on the values of their properties will be an even greater cost. Few of those involved will be inclined, or indeed able, to bring their properties to the market and attain a decent price for them. As my hon. Friend the Member for Eastbourne said, this goes to the heart of the legislation's inconsistencies and flaws. I hope that the Minister will not underestimate the scale of the problem, given the number of low-value properties in this country, to which I have referred.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I wish to probe the Minister on a different point. It may be in order under this amendment, but if may be more in order under amendment 29.

What standard is required of seller's packs? I understand that the Bill does not alter the dictum of caveat emptor, and it would be up to the purchaser or his solicitors, or advisers to check the content, accuracy and completeness of the seller's pack. To what standard is the vendor expected to produce the pack? In normal property transactions, purchasers make a number of inquiries and, having considered them, will make further requisitions and inquiries, until they are fully satisfied that they understand all the variations of a particular property. It is impossible for a vendor to imagine precisely what a purchaser might want when he is producing the seller's pack. This area will give rise to huge arguments, and perhaps litigation, in the future. I wonder whether the Minister can give us some idea of the standard to which these reports are expected to be produced.

The Chairman: Order. It is inevitable in discussions of complex matters such as these that there is an overlap of material. My view is that those comments relate more to matters arising under amendment No. 29. However, if the Minister wishes to deal with them now, he may do so. If he chooses to wait until the broader issues that arise under amendment No. 29, I am sure that the Committee will understand.

Geoffrey Clifton-Brown (Conservative, Cotswold)

On a point of order, Mr. Gale. It may be more convenient for the Minister to reflect on this matter and see whether further thoughts come into his head. Perhaps we should deal with it under the later amendment.

Roger Gale (Conservative, North Thanet)

I allowed the hon. Gentleman to complete his remarks because, having got halfway through them, it seemed sensible to put them on the record.

Nick Raynsford (Labour, Greenwich and Woolwich)

It will probably be easier to deal with that issue when we are discussing the content of the home condition report. I can assure the hon. Gentleman that we have given some detailed thought to this matter and have had a thorough briefing. I do not need any further reflection or to wait for further ideas to come into my head. As hon. Members can see, I have with me some extremely detailed work that has already been prepared. I will be happy to share it with the hon. Gentleman later.

I can tell the hon. Member for East Worthing and Shoreham that we had anticipated the low-value problem. We commissioned research in Burnley and Bradford to test the views of buyers, sellers and professionals involved in the process in two defined low-value areas. The research showed that the buyers, sellers and professionals thought that there home condition reports were relevant and had some use in low-value areas. As I have said many times, someone buying a low-value property has most to lose if it requires an unforeseen and expensive repair that might cost more than the total value of the property. For that reason, we are reluctant to make widespread exemptions.

The hon. Member for East Worthing and Shoreham seems to have confused two different concepts. He confused the limit for stamp duty payments of £60,000 with a definition of low value. There is no question of us adopting the figure that he mentioned—a £60,000 limit—as a definition of low value. This point was made forcefully by my hon. Friend the Member for Burnley, who said that he had come into the debate thinking that a band A council tax level might be appropriate but had reflected and realised that it would go too wide. It is certainly not our intention to cover anywhere like that number of properties.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I do not wish in any way to be rude to the Minister. I should like, for the third time, to raise a point that I made in an intervention on Second Reading and in Committee. Inevitably, parts of the seller's packs will be time limited. Despite what the Minister has said in the past, there will have to be a time limit on the survey. There will be probably be a time limit on the local authority searches and the pre-contract inquires. It is the low-value properties that will perhaps take longer to sell. If the whole of, or part of a seller's pack needs to be redone, that will incur additional costs. The burden, therefore, could potentially be greater on low-value properties than on higher-value properties. I should be grateful if the Minister would consider that point seriously and let the Committee know his intentions.

Nick Raynsford (Labour, Greenwich and Woolwich)

The fact that there might be special difficulties in disposing of properties in some extremely low-value areas was debated at length. Having visited areas such as Warsop Vale and Bassetlaw, I readily conceded that I could see the problem. The problem is that the market has collapsed and there is no demand in those areas—not that the prospect of the seller's pack was creating a difficulty. I could see that problem, which is why I was prepared to consider this exemption. The hon. Gentleman knows from his knowledge and understanding of these issues that market conditions ultimately determine the speed at which a property sells. During the recession which was created by the former Government in 1990-91, properties did not sell because of the market. It did not matter whether they were high, medium or low value. Our objective is to ensure a healthy market in which properties will sell timeously.

May I say to the hon. Member for Loughton—I am sorry.

Geoffrey Clifton-Brown (Conservative, Cotswold)

The hon. Gentleman is not an Essex man.

Nick Raynsford (Labour, Greenwich and Woolwich)

I apologise, Mr. Gale. I was carried away by my tour around the country and I inevitably came to Essex. I can see that interesting county when I look across the Thames from own patch in south-east London. When I walk along the Thames and see the other bank—Essex is there.

I must apologise to the hon. Member for East Worthing and Shoreham and return to his point, which is that a large segment of the market could be affected. I want to stress that we are talking not of the kind of exemptions that would affect a large segment but of exceptional circumstances, with exceptionally low-value properties, where there could be a problem. There would be no question of postcode blighting, because we would not be adopting such criteria. In circumstances where there are very special problems, we are prepared to give further thought to the matter, as I undertook to do on Second Reading.

I hope that that answers hon. Members' questions and reassures the Committee that this is an entirely sensible and consistent approach which we have adopted all the way through to ensure that the benefits of the seller's pack are widely available. We will not apply it in such a rigid way that a seller's pack is required in circumstances where would be inappropriate, for example, new properties covered by warranties or special circumstances in areas of exceptionally low value, where an exemption might be justified. We will consult fully before final decisions are taken on the latter point.

I hope that Opposition Members are satisfied and will agree to withdraw the amendment.

Nigel Waterson (Conservative, Eastbourne)

The Committees' debates will be enlivened by the arrival of the Under-Secretary with responsibility for aviation, the hon. Member for Sunderland, South (Mr. Mullin). I am grateful for what the Minister for Housing and Planning said. I made it clear at the outset that this was a probing amendment, and indeed it is. I take on board his point about new properties and the National House Building Council or Zurich schemes. The Minister has ruled out the band A option in terms of low-value, low-demand areas, and has pinned his colours to a maximum value of £10,000 for a property. We still think that that will lead to anomalies and problems. It is an arbitrary, suspiciously round figure. [Interruption.] The hon. Gentleman is waving his hand around, which makes me wonder whether I have misrepresented him.

Nick Raynsford (Labour, Greenwich and Woolwich)

I have made this crystal clear time and again. That is not a figure that we propose. I gave it simply to show what we were looking at, because other, wildly different figures were being bandied around. I would urge the hon. Gentleman not to treat this as a figure cast in stone. It is not a proposal. It is simply an indication, to be helpful to the Committee, of the territory that we are exploring.

Nigel Waterson (Conservative, Eastbourne)

I am grateful to the Minister for that clarification. He says that it is not set in stone; it is part of the shifting sands on which this unfortunate edifice is based. It remains to be seen whether his attempts to talk down the extent of properties that can be exempted will chime in with the requirements of Labour Back Benchers. We shall soon find out. Whether it is £5,000, £10,000 or £20,000, whatever figure the Minister eventually settles on, it will be arbitrary. There will be unfairness and problems with the up-to-date nature of valuations. As he accurately said, what we are mainly talking about is properties that have no value, or indeed have a negative value when one tots up the cost of repairs and maintenance, where the market has collapsed.

The Minister has not entirely addressed the stigma argument. He has ruled out postcode blight of the sort expressed by my hon. Friend the Member for East Worthing and Shoreham, and that is right. However, an element of stigma will be attached to these properties if the Department or the Minister decides that their value is £10,000 or less. That in itself will set them out as different from other properties.

The Minister overstated the conclusions of the report into Burnley and Bradford, and the enthusiasm that engendered for the seller's packs. However, these are all useful issues. Like so much in the Bill, this is a continually moving target. On that basis alone, I beg to ask leave of the Committee to withdraw the amendment.

Amendment, by leave, withdrawn.

Roger Gale (Conservative, North Thanet)

We are all aware of the pressures on Members of Parliament, and know that life goes on outside the Committee Room as well as inside it and that hon. Members from time to time have to leave. I gently remind all hon. Members that if they arrive to raise points of information, or to question a Minister, custom and courtesy dictate that here, as on the Floor of the House, they should be present to hear the reply.

Nigel Waterson (Conservative, Eastbourne)

I beg to move amendment No. 9, in page 6, line 24, at end add—

`(9) All the documents and information contained in the sellers' packs shall be confidential to the seller, a person acting on his behalf as an estate agent, and any bona fide buyer or potential buyer.'.

The amendment would add new subsection (9) to clause 7, dealing with the vexed issue of confidentiality. It would make clear that a seller's pack will be confidential to the seller, a person acting on his behalf as an estate agent and any bona fide buyer or potential buyer.

We touched on that issue last week. In that context, the Minister accepted that it is a defence under the Bill for a seller to refuse a seller's pack in certain circumstances. The seller may consider that a potential buyer does not have the money or is not the sort of person to whom he would like to sell. On the other hand, he may charge a reasonable amount. We went around that course and did not reach a conclusion. We debated the issue of celebrities selling high-value properties and requiring people to pay a substantial fee before they could view them or before they could have a seller's pack.

This is a probing amendment. The Minister will almost certainly talk about difficulties of enforcement, a point that the Law Society made to me, and of definition. The lender is encouraged to rely on a home condition report, but is the seller entitled to some confidentiality in respect of the report? We think it important that a potential seller has some protection and privacy, particularly on the HCR, and that only those with a genuine interest in seeing a report should do so.

The Minister has already accepted that principle in a different context. It would be helpful to have his assurance that he accepts the principle in this context, and that he will seek appropriate safeguards to ensure the same result. No one wants seller's packs to be available to all and sundry, particularly in the age of the photocopier. What regulations are already in place to control access to the information in reports stored on computers? Perhaps the Minister will say that I am excessively apprehensive about the way in which people behave. I touched on what I call the Madonna example in a different context. People in the public eye, perhaps even the Minister, are entitled to filter out idle viewers of their property or, at the other end of the scale, potential stalkers, to protect their privacy.

More seriously, there is also a potential for burglars and terrorists to get their hands on the reports. The existence of a viable burglar alarm system may be covered in the HCR. That could prove to be of great interest to a potential criminal. Terrorists, as we know, are ingenious in finding out information about the homes of their potential targets. As we approach the election period, political opponents may be interested in getting their hands on a seller's pack for a Member's or political candidate's home.

Tim Loughton (Conservative, East Worthing and Shoreham)

Or homes.

Nigel Waterson (Conservative, Eastbourne)

Yes. I appreciate that, in the case of some Ministers, that may require a lot of homework—for some five or more homes.

Don Foster (Liberal Democrat, Bath)

The hon. Gentleman is right. There is a serious point to the probing amendment. Has he reflected on the ownership of the seller's pack and the issues of copyright relating to its contents? Who has the copyright of the home condition report? Who has ownership of the information provided by local authorities as a result of searches? The issue is even more complicated that the hon. Gentleman said.

Nigel Waterson (Conservative, Eastbourne)

I am grateful to the hon. Gentleman for that intervention. To be honest, I have not considered the copyright implications. I am not sure whether copyright does or could apply to the seller's pack. The Minister will undoubtedly receive notes on the subject, so he can enlighten us. I should have thought that there was an argument about copyright attaching to the surveyor who carries out the home condition report, at least until he is paid.

Geoffrey Clifton-Brown (Conservative, Cotswold)

Client confidentiality.

Nigel Waterson (Conservative, Eastbourne)

My hon. Friend mentions the main point—confidentiality. There is also the related issue of privity—lawyers refer to privity of contract when a buyer commissions a surveyor and the passing of payment is based on the contractual relationship—which makes it difficult under existing law for someone else to sue on the basis of a mistake in the survey or home condition report. That may be an issue for debate on another occasion.

I have the impression that the Committee shares a common concern about confidentiality. The seller's packs containing much detailed information about a given property may be circulated freely, but they could be used by people who are evilly disposed. We must deal with that important issue. At the other end of the scale is the problem of time-wasters—people who have neither the intention nor the means to buy a particular property—asking for seller's packs and insisting on their rights. To some extent, the Bill already deals with the problem under the defences in clause 6, but I should like to hear what the Minister has to say. He would, I am sure, accept the need for confidentiality and I am open to suggestions about approaching the problem in a different way.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I raised that matter during the afternoon sitting on 18 January when I intervened on my hon. Friend the Member for Eastbourne and said:

The seller's pack contains a lot of private information, particularly at the more expensive end of the market. I wonder whether my hon. Friend has considered the fact that the seller, or indeed the buyer, might not want such information to be generally available to a lot of other people. How will that impinge on these defences? It could be a defence for a seller to say, ``I only want one or two people to have the seller's pack. I don't want it to go to those who I believe are not genuine purchasers''.— [Official Report, Standing Committee D, 18 January 2001; c. 144.]

We need to probe the Minister on the defences. It is a tangled approach to have to rely on a defence for something that is common sense. As I said to my hon. Friend, all professionals acting for a client owe him a duty of care and of confidentiality. How will the Bill change that? Certain information would not usually be imparted to a purchaser—precisely for reasons of confidentiality—until fairly late in the negotiations, when one could be almost certain that the transaction was likely to go through.

The Minister should explain how the amendment relates to the defences under clause 6(3)(a) to (c), which refer to a person who

was unlikely to have sufficient means to buy the property in question... was not genuinely interested in buying a property of a general description which applies to the property... or was not a person to whom the seller was likely to be prepared to sell the property.

We need to probe those three defences carefully to ascertain the circumstances in which the seller can withhold information. Can he withhold partial information? Would it not be reasonable to withhold from the home condition survey information about security? Another example might be information in a local authority survey about people who had previously bought the house and at what price. There could be many reasons why such information should not be generally available.

In my experience of the property market, a certain class of people—particularly at the more expensive end of the market—will intentionally not put their property on the market because they do not want too much information to be made generally available. In some circumstances, they are prepared to accept a lower price on the basis that an agent will put their property to only one or two people who he knows are genuinely in the market, and on condition that confidential information will not be made generally available. How will the Bill impinge on that sort of marketing? I shall be grateful for the Minister's comments.

Nick Raynsford (Labour, Greenwich and Woolwich)

We recognise that there are circumstances in which a seller, perfectly justifiably, would not want information about his property to be disclosed to anyone who is not naturally and correctly involved in the house buying and selling process. We believe that those interests are already covered adequately in the Bill. The amendments would result in a series of unfortunate consequences. I hope that when the hon. Member for Eastbourne thinks about it a little more, he will recognise that the amendments are undesirable and should be withdrawn.

As I mentioned on the afternoon of 18 January, clause 6(3) enables sellers to refuse to show the seller's pack to someone who they believe cannot buy or is not genuinely interested in buying the property, or to whom they would not wish to sell. I pointed out that that complies with anti-discrimination and human rights legislation. It is an important safeguard and we believe that it is the right way forward. However, there is unlikely to be anything in the seller's pack that would cause problems if disclosed to parties other than those directly involved in the transaction.

The hon. Member for Cotswold (Mr. Clifton-Brown) raised two issues. Security systems will not be part of the requirement for disclosure in the seller's pack, as they are not part of the structure of the building but are incorporated into it. The presence of bars to be drawn across a window would probably be covered, but disclosure of that would not cause any anxiety, whereas disclosing the presence of an electronic security system might. The other issue he mentioned was price. He will be aware that price information is publicly available and is obtainable via the Land Registry, so confidentiality cannot be secured.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I must probe the Minister a little more about security. Some houses have fairly sophisticated safes that were built into the property at the time of its construction. Security is an important issue. The Minister dismisses my point about price, but local authority searches can make available more than price information; they may list previous owners, who might not want to have their names generally linked with a particular property.

Nick Raynsford (Labour, Greenwich and Woolwich)

If a report simply states that a safe is built into the property, I am not sure that making such information available would be prejudicial. If the combination lock were revealed, it would be a different matter, but we certainly do not intend that to happen. Indeed, there might be a beneficial effect if the fact that a building was secure were in the public domain: it might put off the likes of Kenneth Noye or others who might use a seller's pack as a means of casing a joint. I am not convinced by the hon. Gentleman's argument. On the issue of price, I have already made the point that it is already public information that is available through the Land Registry. There is a general move away from a culture of unnecessary secrecy and toward greater transparency and wider availability of information. One example is that information about the price paid for homes in previous transactions is now publicly available from the Land Registry.

The amendment would be harmful to consumer interests. It would expose the potential buyer to the risk of breaking the confidentiality provision if he wanted to discuss with a friend or colleague whether, in the light of the contents of the seller's pack, the property was worth the price that he was thinking of paying for it. It does not seem sensible to prevent someone from having such a discussion, especially if the friend or colleague has expertise in the market.

The amendment would have very undesirable consequences. The hon. Member for Eastbourne readily accepts that lenders might have an interest in the information. We intend that lenders should be able to rely on the home condition report; to refuse under confidentiality provisions to let them have access to it would be wholly counter-productive. Lenders will be bound by procedures to ensure that such information is not disclosed more widely, but they should have access to it. The amendment is not helpful as it would have unfortunate and unforeseen consequences.

The hon. Members for Eastbourne, for Bath and for Cotswold raised some specific issues to which I shall respond. No change is proposed in the position on copyright; we shall simply retain the existing copyright provisions in respect of home condition reports. The hon. Member for Eastbourne mentioned privity; the Contracts (Rights and Third Parties) Act 1999 established that third parties have a right to that information, which is fundamental if lenders are to rely on those reports, and rightly so. Therefore, there is no problem in that respect. I have already answered the hon. Member for Cotswold's questions about security and price.

The amendment is unnecessary as the confidentiality issue is already well covered. I hope, therefore, that the hon. Gentleman will ask leave to withdraw the amendment.

Nigel Waterson (Conservative, Eastbourne)

If the Minister thinks that my amendment is unhelpful, the bottom has fallen out of my world, but I shall soldier on none the less. It is curious that hon. Members on both sides of the Committee, including the Minister, agree that only people with a proper interest should have access to seller's packs. Apart from the fact that some parts of the pack are slightly odd, the existing defences do not go far enough to deal with the matter. There are concerns about confidentiality, which we have little doubt will be borne out in practice.

I am sorry that the Minister is not prepared to reconsider the amendment. Nevertheless, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Nigel Waterson (Conservative, Eastbourne)

I beg to move amendment No. 29, in clause 7, page 6, line 24, at end add—

`(8A) The regulations may specify that a property may be marketed with an incomplete pack in circumstances where reasonable efforts have been made to gather the missing information.'.

The amendment is a blatant attempt to widen the defences available to hapless and otherwise law-abiding citizens who fall foul of the measure. The amendment would make it possible under regulations to continue to market a property that had an incomplete pack if reasonable efforts had been made to gather the missing information.

Last week, we discussed what would happen if there were a delay in obtaining certain documents or if documents never showed up, thus delaying the process. The pertinent example used time and again was of damp-proofing and other guarantees, which may, in any event, be academic because the company that did the work has gone out of business so the guarantee, even if it can be found, is not worth the paper it is written on. We want to go further: when the seller has made reasonable efforts to obtain the documents, he should be exempted from liability and marketing should go ahead.

In support of the amendment, the Royal Institution of Chartered Surveyors stated that

the marketing of properties with an incomplete pack should be allowed only if it is clearly the case that the agent/provider has been unable to gain the information that they have sought,

adding that

Strict controls will be required to prevent abuse.

I agree. Whatever the Minister may think, the official Opposition are not in the business of providing routes in the Bill through which coaches and horses can be driven, which is why the regulations would have to be specific. RICS made the sensible suggestion that there should be a definition of core and non-core information. There is a case for the Bill or the regulations being clearer about peripheral papers that are not particularly important, and which may not be found despite all reasonable efforts being made. Sometimes, a seller makes every possible effort to assemble a pack, but cannot complete it because, for example, some deeds or parts of deeds have been lost. The Law Society stated that it was common for details of an old covenant referred to in the deeds to be lost, and that it would be unfair to penalise a seller who, through no fault of his own, could not produce all the documentation. We endorse that view.

Some matters cannot be dealt with satisfactorily by producing documentation at any time in the transaction. For example, when I bought a new home in my constituency a year ago, there was a detailed discussion between solicitors about a right of way across the access to the property. The seller's solicitors could not produce an unbroken line of people to give evidence that they had used that right of way without hindrance for a number of years. I was required to take out an insurance policy against future problems—something that I believe is common in such situations—and the difficulty was resolved for a modest premium. Such matters often arise, especially with older properties. The Minister must understand the logic of not further delaying a process that will, in any event, be held up at the start by compulsory seller's packs.

This is a sensible, probing amendment. ``Reasonable efforts'' has a track record as a legal definition; alternatives would be ``best endeavours'' or ``reasonable endeavours''. I shall be interested in what the Minister has to say on the subject.

Nick Raynsford (Labour, Greenwich and Woolwich)

The hon. Member for Eastbourne described his proposal as a blatant attempt to widen defences, but then slightly rode back from that position. There is no need for his blatant attempt because we are entirely satisfied that the regulations will provide exactly the defence that he wants: when a seller, or a seller's agent, has, in good faith, assembled all the material that can be assembled and is prevented from including in the pack one or more items because they are not available in time, he will not be prevented from proceeding to market the property. The seller and his agent must use their best endeavours to obtain the information subsequently, but, as discussed in a previous sitting, some documents will never become available, even if it is desirable to find them.

The hon. Gentleman mentioned core and non-core information, which is an interesting concept, but it would not be helpful to incorporate it in the Bill or in regulations. It would be unduly restrictive to prevent marketing from taking place if core information were not available at the time that marketing should begin.

The hon. Gentleman quoted RICS, which was closely involved in our discussions. That body is happy for the matter to be dealt with in the regulations that the Secretary of State is empowered to make. We are minded to use that power to enable properties to be marketed with an incomplete seller's pack when, through no fault of the seller or his agent, one or more of the prescribed documents are not available or cannot be supplied within a reasonable period. In such cases, the missing item or items will be required to be indicated in the seller's pack and inserted when and if they become available.

Geoffrey Clifton-Brown (Conservative, Cotswold)

There is a problem in the Land Registry. Under voluntary registration arrangements, owners of properties that are not currently registered have the option to apply for registry; compulsory registrations are those that must take place when a property is sold. They are being put on hold because the Land Registry cannot cope with the amount of work. I understand that the Bill will not come into operation for two years, but if a substantial number of properties have still not been registered under the new system at the Land Registry, that could make it much more difficult to provide local authority searches on time to put properties on the market where they are not registered. Will the Minister address that problem or at least give the Committee an idea of when he expects all houses in England to be registered?

Nick Raynsford (Labour, Greenwich and Woolwich)

The hon. Gentleman has made a fair and good point and I undertake to look into the matter and write to him. It is certainly our wish that the Land Registry should be operating as efficiently and smoothly as possible as soon as possible to provide the swift and seamless service that we want to be available for quick clarification of the information required for searches. On that basis, I hope that the hon. Member for Eastbourne will agree to withdraw the amendment.

Nigel Waterson (Conservative, Eastbourne)

I am happy to beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Nigel Waterson (Conservative, Eastbourne)

I beg to move amendment No. 36, in page 6, line 24, at end add—

`( ) Before making regulations for the purposes described in subsection (1) the Secretary of State shall consult with representatives of those bodies likely to have an interest in or be affected by the proposals.'.

I am afraid that the amendment will require a more substantial debate than we have had on others, Mr. Gale, but I do not see myself seeking to catch your eye for any stand part debate on clause 7. I hope that that is helpful.

On the face of it, the amendment may seem rather innocuous, but it raises serious and worrying issues. It makes the eminently reasonable point that, before making any regulations under subsection (1),

the Secretary of State shall consult with representatives of those bodies likely to have an interest in or be affected by the proposals.

We hope that the Secretary of State would be willing to do that in any event. We are entering uncharted waters with the legislation, so it is important that, when considering any regulations to be published in due course, the Secretary of State has access to the best possible advice from those in the property-selling field and that those regulations have their full confidence. Many concerns have been expressed to my hon. Friends and me about aspects of the Bill and we are doing our best to raise them as we go along. Even if the Minister is not willing to accept our amendments, I hope that his advisers will take on board at least some of the comments when considering the draft regulations.

We have received quite a lot of advice from certain organisations—I am not saying that others are not properly involved. The Law Society, the Council of Mortgage Lenders, the National Association of Estate Agents and the Independent Association of Estate Agents are only major examples of groups that have made representations. I think that we have all seen releases and briefings from the CML in particular.

It is important that three groups of professionals are fully signed up to the proposals. One group is the Law Society, whose comments and reservations I have quoted on several occasions, including Second Reading; I do not see the need to do so again. The society is deeply concerned about some aspects of the Bill and has made a number of criticisms of the Bristol pilot scheme as relied on by the Government as a basis—we would say an unsound one—for the legislation.

Another group is, of course, estate agents. It is fair to say that the NAEA is broadly in favour of many of the Government's proposals, but it has concerns and they have been expressed in our debates. Indeed, a number of estate agents have concerns. I remember addressing a year or so ago the annual meeting of the Team group of estate agents, which has serious reservations and is very concerned about the effect of the Bill on their profession. With estate agents, I shall group surveyors, who of course also have a view on the legislation. The Royal Institution of Chartered Surveyors in particular has been helpful in proposing amendments and making comments.

The third big group that must sign up to the legislation if it is to stand any chance of success is the mortgage lenders and particularly the CML, which represents more than 98 per cent. of the mortgage-lending sector. Its press release of November 2000 was scathing, saying that:

the evidence in support of introducing Sellers Information Packs (SIPs) is not robust and such packs could lead to increased costs for consumers. The CML does not believe that the pilot of...SIPs has proven the case for change, and that the Government should not commit to new legislation to make SIPs compulsory at this stage.

It went on to express concern about the size of the Bristol pilot and to talk about

a significant fall in the number of property transactions as sellers will be put off `testing' the market.

That is a concern expressed by others who have been in touch with us. The press release quotes the CML director general, Mr. Michael Coogan, as saying

the evidence in support of introducing Sellers Information Packs is not robust and such packs could prove to be unpopular with consumers. The Bristol pilot has failed to demonstrate that SIPs significantly improve the process and that there is widespread support from the professionals in the process.

That constitutes a far from clear expression of support by the CML for the proposals.

All members of the Committee have probably recently received the CML briefing paper setting out its concerns, for example, about the need for lenders to be able to rely on the home condition report and asking whether they have comments on the certification process—a matter to which I may return on another occasion. It is interesting that as recently as December, when the Minister attended its annual conference, members of the CML expressed major worries and opposition to the legislation. Originally, the CML strongly and publicly opposed the Government's proposals to use criminal sanctions to impose the so-called seller's packs on house sellers. As I have said, it also expressed concerns about the Bristol pilot.

Through the good offices of Money Marketing, I have obtained a copy of an internal CML document in which director general Michael Coogan reports, referring to the meeting on 23 November 2000, that

the Executive Committee gave a firm steer that the CML should issue a critical press release on 24 November—

probably the one from which I quoted—

highlighting lenders' concerns about the introduction of SIPs and the (lack of) robustness of the findings from the Bristol Pilot... CML's position was widely covered in the press and CML's views were further emphasised in a second press release issued on 4 December (after the Minister spoke to the Annual Conference that day...)

However, he goes on to say that:

Feedback from the DETR has confirmed that both the Minister and officials are very unhappy at the CML's view that the Bristol Pilot did not present a compelling case for the introduction of SIPs.

I see the Minister nodding. The internal document continues:

Even if there is an early General Election, the current expectation is that the Bill's progress will be completed by April/May. It will, in our estimation, be very difficult to create sufficient support to oppose the Bill successfully in Parliament—

the CML is aware of the efforts of the official Opposition to expose what we regard as the major shortcomings of the legislation—

and strong opposition continuing along the lines of recent releases could damage the CML's working relationship with officials on a number of fronts... However, as expected, the DETR is pressing lenders not to charge for the valuation service in the future (an aspect I responded to negatively in my speech at the Conference last week).

As an appetiser for what comes next, Mr. Coogan says that

The CML will be represented on the HCR working group.

In the light of what he then says, we might regard that as an attempt to buy off the opposition of that important organisation, for the document continues:

However, the Minister will not change direction. It is highly likely that any action taken to prevent the Bill being passed would be fruitless, and only serve to hinder productive work aimed at securing the best possible operating environment for lenders. Now that a legislative slot has been confirmed, some lenders have already indicated that they are stepping-up their work on exploring how they can gain advantage from the proposals.

That is a clear invitation to the CML to haul up the white flag in the face of pressure from Ministers and officials. Mr. Coogan concludes:

Executive Committee members are therefore asked to confirm that they support the CML now working closely with Government officials, behind the scenes, in shaping the framework of both the HCR and the certification process to ensure that the most favourable operating environment for lenders is secured. In particular—

this is the punch line—

in light of recent developments, the Committee's views are sought on the CML taking a less high profile and critical approach to the SIP proposal as the Bill progresses through Parliament.

Chris Mullin (Labour, Sunderland South)

Very sensible.

Nigel Waterson (Conservative, Eastbourne)

The Minister—the one with the third-class law degree—says that that is very sensible, but I do not agree, nor do I think that it is very democratic. It is obvious what has been going on: the CML, which represents more than 98 per cent. of the mortgage-lending sector, has been got at by Ministers or their officials. It has been persuaded that it is not in its commercial interests to continue a high-profile campaign against the legislation. All the talk about working ``behind the scenes'' and adopting a ``less high profile and critical approach'' to the SIP proposal, reflects the CML's recognition of the fact that Ministers are determined to bash on regardless of any opposition. They intend to take no prisoners and certainly do not intend to do any favours for the CML and its members if they have the temerity to continue publicly to oppose the legislation.

Mr Gale, you do not need me to tell you that it is a vital part of our democratic process that interested bodies such as the CML—few bodies have a more legitimate interest in the Bill—can comment on and criticise legislation during its passage through Parliament. Many Committee debates are informed by that sort of comment and criticism. Hard-pressed Opposition members, who do not have access to the lavish back-up enjoyed by Ministers, are often grateful for the briefings, proposed amendments and meetings with bodies such as the CML that are often made available during Committee stage. Therefore, it is all the more disappointing that the CML has chosen to haul up the white flag.

Tim Loughton (Conservative, East Worthing and Shoreham)

Is my hon. Friend aware that this is not the first time that the CML has caved in to Government pressure? When consideration of the regulation of mortgages through the newly formed Financial Services Authority began—I was a member of the relevant Select Committee and the Standing Committee on what became the Financial Services and Markets Act 2000—the CML was entrenched in its opposition to mortgages coming under regulation by the FSA; mysteriously, however, as the months passed and that legislation progressed, it changed its view, as it saw the writing on the wall from the Government and attended discussions behind the scenes.

Nigel Waterson (Conservative, Eastbourne)

I will not pursue my hon. Friend down that avenue. However, he provides another graphic example of the bully-boy tactics—[Laughter.]—that Ministers are prepared to adopt. It is amazing that Government Members find that a cause of hilarity. The Minister for Housing and Planning has not yet sought to intervene, although he is welcome to do so. I hope that he will not try to evade the opportunity to give the Committee precise details of the pressures that have been brought to bear on the CML, whether by him or by officials at his behest. Unless his explanation is thorough, complete and clear, I intend to table a series of parliamentary questions to tease out the details of meetings between the CML and him or his officials. The CML has obviously seen fit to haul up the white flag after being bullied by the Minister; it has given up its its genuine opposition to the Bill. That should cause the Committee great concern.

Mr. Nigel Holt, director of the Independent Association of Estate Agents, has made some useful comments on the Bill. I shall not weary the Committee with all of them. He writes:

The overall thinking behind this legislation is flawed . . . the complete package of measures is likely to hinder the market and have detrimental and have unintended side effects.

Let us hope that Mr. Holt is not shortly to receive a visit from the Minister or any of his henchmen and that, in a week or two, we will not have a totally different view being adopted by the Minister in his briefings.

Mr. Holt cites places such as Portugal and sees parallels being drawn with other countries as inappropriate. He talks about chains in property transactions, something with which we are all familiar, and says:

These new packs will not save one day from a proposed sale time if a chain is involved.

He makes a telling point, which we have not covered adequately, on competition:

We pointed out to the Government in March 1999 that one of the risks inherent in the proposals was that large groups of Agents, usually referred to as ``Corporates'', and generally owned by financial institutions, would have the financial clout to offer these packs free. The independent agent would not have that facility.

Mr. Holt makes the perfectly reasonable point that that

will not be good for the general public.

He says that, at a recent meeting to discuss the Bristol pilot, the Minister for Housing and Planning was reported as saying—the hon. Gentleman will have every opportunity to deny it if he thinks the reported statement is untrue—that

small estate agents may not survive. This is part of general competition.

The Minister is reported as going on to say that

his main duty was to consumers and not small businesses.

That will come as relevant information to organisations such as the Federation of Small Businesses, the Independent Association of Estate Agents and the National Association of Estate Agents.

Referring to estate agents, Mr. Holt repeats a point which has been made before that

a significant part of their business in some areas arises from the speculative seller who, although not quite certain, decides to test the water with an agent. Such vendors will disappear.

Mr. Holt talks about a massive overkill and says:

A criminal record for failing to produce the right documents? Mussolini would have been proud.

This final and useful point was made by Mr. Holt:

Is the Government suggesting that they can police the Internet too?

He talks about

a vendor offering a property on the Internet via a server in, say, the British Virgin Islands.

All told, that is a series of very convincing points about the Government's proposals.

As Mr. Holt's letter indicated, it is not as if the Government have been short of good independent advice on the subject. People have been queueing up for a while to advise Ministers that these ideas are wrong-headed and impracticable.

I have another lengthy letter from Cormac Business Systems, a company specialising in putting together the computer software back-up that is likely to be involved in producing seller's packs. Mr. Michael Mortimer makes telling and detailed points which he apparently made to the Minister when he attended meetings at the DETR on the subject. The most interesting aspect is the benefit of Mr. Mortimer's experiences with the United States. Mr. Mortimer says that last August he wrote in some detail to the Minister for Housing and Planning and Mr. Nutall and Ms Whitehead of the Government consultants Martin Hamblin about the experience in the United States and had meetings with officials and consultants.

We hear a great deal about the situation in Denmark—you may feel, Mr. Gale, that you have heard more than you wanted. Mr. Mortimer says:

I discovered that in the US they have tried their version of Home Condition Reports (known as Pre-listing reports) without any degree of success and that in some cases it has lead to greater conflicts of interest and less protection for consumers.

He talks about recent legislation by some states, for example, Massachusetts,

whereby it will soon be illegal for an estate agent to make recommendations to a home buyer on a choice of home inspector.

He says that other states are also considering legislation to limit seller's packs. .

All those genuine, well-argued concerns, which are based on experience and knowledge, seem to have gone unheeded by the Minister and the Government. Why? It is all the more important that we insert this innocuous provision which will ensure consultation with relevant bodies before anything can be done.

The Council of Mortgage Lenders may think that it has had enough consultation to last it a lifetime. The Minister and his officials should lay off people such as the CML, stop trying to bully them into withdrawing their public criticisms of the legislation—which they are perfectly entitled to do in our parliamentary system—let them get on with their proper purpose and let us get on with our proper role in scrutinising this legislation. I should be grateful to have that undertaking from the Minister. For the moment, I commend the amendment to the Committee.

Roger Gale (Conservative, North Thanet)

Order. Those veterans of the 87 hours of the Standing Committee on the Transport Bill will recall that in the small watches of the night I said that members of the Chairman's Panel were not endowed with crystal balls. The precise line of argument that the hon. Member for Eastbourne was going to undertake was not clear from the wording of the amendment. Had it been clearer, I would probably have been minded to group amendment No. 22 with this amendment. It now seems that similar matters are covered in those amendments. If the hon. Member for Bath wishes to raise now the matters that he intended to raise under amendment No. 22, I shall be happy to accommodate that.

Don Foster (Liberal Democrat, Bath)

Thank you for that ruling. I am sure that it will be for the convenience of the Committee to take the two issues together. As I am sure that members of the Committee will not have had time to jump forward to amendment No. 22, for their benefit I remind them that it proposes that in clause 8, page 6, line 30, insert—

`( ) Regulations under section 7 shall ensure that the home condition report is required to be of a standard likely to be acceptable to mortgage lenders.'.

The purpose of that amendment is clear. When we were debating amendment No. 9, I wrote down some words used by the Minister for Housing and Planning. I hope that I quote him correctly. I understand that he said, ``We intend that the home condition report can be relied on by lenders.'' Later in the debate, referring to the same issue, he said, ``and rightly so.''

I do not think, therefore, that I need to say much more. The purpose of the amendment is clear. It is absolutely clear that the Minister entirely supports it. For those of us who, like you, Mr. Gale, sat through the long hours of the Transport Bill Standing Committee will understand when I say that this is one where I suspect I will have the opportunity of writing a letter home to Mrs. Foster.

Roger Gale (Conservative, North Thanet)

Order. I should have made it clear to the hon. Member that, as he has availed himself of the opportunity to include amendment No. 22 in this group, if he wishes to put the matter to the vote at the appropriate time, I shall be perfectly happy to call it forward.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I did not realise that you were going to call amendment No. 22 at this particular time, Mr. Gale. I would just like to make one important point. The Royal Institution of Chartered Surveyors, in a submission to us, makes the point that it will be, and is, working closely with the Government in developing a multi-disciplined, independent accreditation board for the new home inspector's report. It is clearly in everybody's interest that the people producing home inspection reports should be property qualified. Lest anybody should cast aspersions on what I am going to say, I remind them of my registered interest as a chartered surveyor. It is not, however, in that capacity that I raise this point. It is simply a practical point.

My hon. Friend the Member for Eastbourne quoted from a long letter that we received from Michael Mortimer MRICS, of Cormac Business Systems. I should like to hear the Minister's comments. Mr. Mortimer says that valuations have to be carried out by a qualified valuer, although the same can be said of home condition reports which must be carried out by a qualified surveyor. He adds:

there are currently only about 3,500/4,000 residential valuers—

I assume that the same number would apply to surveyors—

who are currently acceptable to mortgage lenders whereas it is estimated that it will take 9,000 personnel to carry out the required number of home inspections.

That is a significant increase of more than 50 per cent. It takes time to train people to produce a properly qualified and reliable home condition report. It cannot be done overnight. I should like the Minister's assurance that that number of extra qualified people will be available when the Act comes into force in two years' time.

Nigel Waterson (Conservative, Eastbourne)

On a point of order, Mr. Gale. I seek your assistance. There are a number of points, in addition to those that I have already made, that I was proposing to make in the context of amendment No. 22. Am I right in thinking that we will not now be having a separate debate on amendment No. 22, as we have had it already, or will we have a narrow debate on it when we get to it? I am happy to make the points now if you would prefer, but it breaks up the routine.

Roger Gale (Conservative, North Thanet)

I thought that I had made it plain, but let me clarify the position. I offered the hon. Member for Bath the opportunity to raise his points in this debate in view of the breadth of the argument that he deployed. I intend to call amendment No. 22 formally. If the hon. Member for Eastbourne wants to debate it, he should do so now.

Nigel Waterson (Conservative, Eastbourne)

In that case, I shall proceed with the second half of my remarks. I have already dealt with the issues that are particularly relevant to amendment No. 27.

We say that amendment No. 22 is a bit of double-edged sword. If the report is not acceptable to lenders, the buyer will have to pay for a further report, but if the seller is likely to have to pay even more for it to meet the needs of the lender that simply adds to the cost. It is important that we know where lenders stand on the question of the acceptability of the report itself. If they do not accept it, half the purpose of the exercise will be lost. If the lender starts making unreasonable demands about the nature of the report, the seller will incur yet further expense.

What is the position on valuations? I understand that the Minister had something to say about them when he addressed the CML annual conference in December, but his comments were not that well received.

Don Foster (Liberal Democrat, Bath)

For the benefit of the Committee, will the hon. Gentleman tell us whether, when he preceded his remarks with ``we say'', he was referring to the Conservative party or to the Law Society, whose briefing, he has just read out almost word for word?

Nigel Waterson (Conservative, Eastbourne)

Both—and well spotted by the hon. Gentleman. I am glad to see that he is doing some of his homework, but if it assists him, I am now turning to the briefing from the Council of Mortgage Lenders. It is keen to ensure that lenders can rely on the home condition report. It says:

This can only be achieved if Home Inspectors—

we will come on to them in more detail under another heading—

are liable to lenders, as well sellers and buyers.

They must also have proper threshold indemnity insurance. It then talks about certification, which again we can leave for the moment.

The only other point that I would have made in the usual way concerns an interesting attachment from our friends at the CML about comparisons with other countries. I do not intend to go through it in detail, but I commend to those hon. Members who have not yet had the chance to read it, the table set out there, making international comparisons. We have heard a lot about Denmark. The document states:

It is the only country identified in the DETR study of practice overseas where the seller is required to include a property condition report in the pre-marketing information pack.

Differences between this country and Denmark are listed, demonstrating conclusively that it is dangerous to draw international parallels. Those differences include significantly lower level of home ownership, a dramatically lower average number of transactions per annum—89,000 in Denmark and 1.4 million in the United Kingdom—and different approaches to financing house purchase and to the liability of the seller for property defects. If we are to hear even more about the Denmark experience, it needs to be put in that context.

I am grateful for the opportunity to speak. I have got off my chest not only my concerns, which would have arisen naturally under amendment No 22, but those of other organisations.

Nick Raynsford (Labour, Greenwich and Woolwich)

I well remember those happy days on the Transport Bill Committee, when the debate went from crystal balls in the early stage of the Committee to golden balls at the end. You are right, Mr. Gale. There is a linkage between amendments Nos. 22 and 36. I am pleased that you suggested that we consider the two together. I shall respond to both debates.

The hon. Member for Eastbourne expressed various views about consultation. I can tell him we are absolutely at one with him about the importance of consultation. I hope that he will understand why his amendment is not acceptable. The farrago of innuendo and speculation that formed the bulk of his speech had absolutely no substance. Let me deal with that quickly, to put it out of the way and put him out of his agony.

We have heard criticisms from the Law Society. The hon. Gentleman always studiously ignores the point that the person best placed to understand the working of the seller's pack—the chairman of the Law Society in Bristol—has been one of the most fervent advocates of seller's packs. I put it to the hon. Gentleman that the closer people are to understanding the workings of the seller's pack, the much more likely it is that they will be supportive. I would take the wider issues of the Law Society with a slight pinch of salt. It may have been preoccupied with different things in recent months and perhaps has not focused enough on the local experience of the seller's pack.

The NAEA has been extremely supportive of the seller's pack proposals, and I am glad that the hon. Member for Eastbourne acknowledged that fact. He then turned to the CML, on which his comments were entirely groundless. Let me give him the information that he sought. How many times have I met the CML? I have met it once—my speech on 4 December, where I made the merits of seller's packs clear. I also made it clear that the Government were interested in the public interest, not in the professional interest of any group of professionals. That has always been, and remains, our stance.

I am delighted that the effect of my speech appears to have been to persuade the CML to change its slightly ill-thought-out opposition to the seller's pack. Mortgage lenders charge £180 for a valuation, which the buyer pays. In many cases, that is a rather large and unreasonable charge. If there is scope to reduce it, that will be widely welcomed by the public. It is in the public interest that we are pursuing this approach. I am delighted that a number of lenders now recognise that and are talking of working with the Government to take forward the seller's pack proposal.

The hon. Member for Eastbourne read all sorts of suspicious connotations into the document from which he quoted, which are largely unfounded. Mr. Coogan, the director general of the CML, had referred to the number of members in the context of making best use of the opportunity to advance their interests through the seller's pack. In that respect, the CML is rightly listening to the views of some of its members.

The hon. Gentleman also cited a particular individual, Mr. Holt. Opposition Members often dredge out some extraordinary people who have written long letters, possibly in green ink. They quote them at great length, as if it added further substance to their arguments. Unfortunately for the Conservatives, Mr. Holt's comparison of the Government with Mussolini is truly extraordinary, given that the first attempt to introduce criminal law in this sector was the previous Conservative Government's Property Misdescriptions Act 1991. In that legislation no limit was placed on the fine, so the charge of being like Mussolini applies more to the Conservatives than to us.

Tim Loughton (Conservative, East Worthing and Shoreham)

Without wishing to enter into a debate about wartime fascists, was not the Property Misdescriptions Act 1991 introduced because of the loopholes and mess left by the previous Labour Government's Estate Agents Act 1979?

Nick Raynsford (Labour, Greenwich and Woolwich)

It is rather a long time between 1979 and 1991, so why did the Conservative Government take so long before getting down to it? I repeat that the Property Misdescriptions Act 1991 introduced criminal sanctions, so the suggestion that we are acting in a dictatorial way reminiscent of Mussolini is wholly wide of the mark. That would also be an appropriate comment on the judgment of Mr. Holt.

I made it clear earlier that the CML was closely involved in the Department's discussions from the outset. Officials have met and will continue to meet the CML regularly to ensure that all issues of mutual concern are properly discussed and dealt with.

The hon. Member for Eastbourne suggested that we are against small businesses. He misquoted the remarks that I made in Bristol, where I pointed out that all businesses—small or large—that did not modernise and failed to recognise that consumers wanted a better, more up-to-date and efficient service would suffer. That is the nature of the market. We cannot and it is not our role to protect inefficient businesses whose customers leave them.

I am surprised that the informant who wrote to the hon. Gentleman did not mention it, but I also said that small estate agents who seized the opportunities of modern technology, new ways of doing business and providing better services to the public were doing extremely well. The strongest evidence comes from the Bristol estate agent who has been the most imaginative and progressive in adopting the seller's pack approach: as a result, it can no longer be regarded as a small estate agent, but a large and expanding one.

Providing a high-quality service, offering seller's packs and utilising electronic communications to speed up the process are clearly attributes of modern, efficient business to which customers respond. Such businesses will do well. Good luck to them. Our proposals will act as a spur to encourage efficient businesses—small and large—to provide a better standard of service to the public. Those who want to continue as they have in the past and live in the quill-pen age—to make an inappropriate reference to a film currently in circulation, and I shall certainly make no further reference to it—will go out of business.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I am sorry to interrupt the Minister's dinosaur peroration, but will he respond to my point about the number of competent people available to produce the home condition report?

Nick Raynsford (Labour, Greenwich and Woolwich)

I was about to come to the points raised by the hon. Gentleman and by the hon. Member for Bath, but I was covering the issues relating to consultation in amendment No. 1 before dealing with amendment No. 2, which covers the reliability and standard of the report.

We have involved the Consumers Association and all the major professional bodies in the development of the consultation proposals. Those bodies are members of the advisory group that has helped to steer our research and is helping us to prepare implementation. They include the Consumers Association, the NAEA, the Law Society, the Council of Mortgage Lenders, the Royal Institution of Chartered Surveyors, the Council for Licensed Conveyancers, the Local Government Association and the Land Registry. We have no problem with full and proper consultation.

We fully share the intention behind the amendment, but the difficulty is that such a general duty to consult is not just meaningless but is potentially unhelpful. For example, it would leave the regulations open to challenge by any body which might claim to have an interest, however remote, and which had not been consulted. The amendment would leave that risk of challenge very present. Therefore, I hope that Opposition Members will recognise that there are good reasons for not accepting the amendment, but I hope that they will also accept that we are utterly committed to consultation.

With regard to amendment No. 22 in the name of the hon. Member for Bath, clause 8 provides that regulations made under clause 7 may make provisions for a report on the physical condition of the property, and that is the home condition report. Clause 8(6) allows the Secretary of State to require or authorise an approved certification scheme to contain provision about any matter relating to home condition reports. That provides an effective way for the Secretary of State to ensure that the interests of all the relevant parties are taken into account, including lenders and consumers. There is no need to single out particular stakeholders as proposed in this amendment. It would be dangerous to do so, as that could effectively give the named group a right of veto over the format of the home condition report.

Because it is necessary to satisfy a range of different interests, I hope the hon. Member for Bath will accept that, while we do not accept the wording of his amendment and hope that he will agree not to press it, the principle behind it is one that we wholeheartedly support. It is our earnest intention to ensure that the procedures for carrying out the inspections leading to the home condition report will give lenders the confidence that they require to rely on that report for valuation purposes. This will significantly reduce the cost to buyers of any charge that is made by lenders for the valuation process.

Don Foster (Liberal Democrat, Bath)

So that I can be clear about the strength of the hon. Gentleman's view on this matter, could he tell me whether or not this merits at least a postcard?

Nick Raynsford (Labour, Greenwich and Woolwich)

The hon. Gentleman should hold his horses. He may have other opportunities to send a communication to the wife of Bath which may contain stronger news than that the Government had accepted the spirit, if not the wording, of this particular amendment.

The CML is among those represented on the group of stakeholders assisting in the development of the home condition report. It is well placed to ensure that the interests of lenders are given proper consideration. That is very important and I welcome its active involvement. A key objective is that the home condition report should meet its legitimate needs and be trusted by it. On that basis, I hope that the hon. Gentleman will agree not to press his amendment No. 22.

The hon. Member for Cotswold raised two particular issues. The first concerned the standard of the report, and the second the number of surveyors necessary to carry out inspections. We are dealing with a report that will provide a level 2 inspection, a mid-range inspection, which is the broad standard applicable currently for the home buyer survey and valuation. In a number of respects the home condition report will be superior to the home buyer survey and valuation. It will be prepared in a standard form with consistent reporting and therefore will achieve greater objectivity. The caveats and limitations will be specified in a standard format, reducing the scope for individual valuers to undermine the value of the report by setting conditions or caveats themselves that might be difficult for individual members of the public to understand.

The electronic format will aid completion and transmission of the report, and—this is crucial, and as an experienced valuer, the hon. Member for Cotswold will understand the importance of this—there will be rigorous monitoring, auditing and validation of reports because all reports will have to be registered. There will be a mechanism to scrutinise reports to identify the possibility of soft reporting by individual valuers, which can then be investigated.Therefore, a good standard will be provided for the public. I would be happy to undertake to circulate further details to all members of the Committee if that would be helpful.

On the question of numbers, the figure mentioned by the hon. Member for Cotswold was slightly misleading. The people who qualify under a certification scheme will have to be sufficiently qualified to carry out the work to a necessary standard. Based on current transaction levels, we estimate that some 9,000 inspectors will be needed. The industry already employs about the same number of general practice surveyors, who are dedicated to residential practice and are expected to be interested in this work. Those surveyors currently undertake a variety of roles, including agency, as well as surveying and valuation, but it is anticipated that the industry will realign itself in response to demand for home condition reports. In addition, there are 3,000 RICS building surveyors, the number referred to by the hon. Member for Cotswold, who have expressed interest in undertaking the work. Members of other professions are interested, including those from the Architecture and Surveying Institute, the Chartered Institute of Builders, the Association of Building Engineers, the Institute of Structural Engineers and the Institution of Civil Engineers.

I hope that the hon. Member for Cotswold will recognise that we do not believe that there will be a problem with numbers, but that we recognise that it is important to allow sufficient time for all those people to acquire the necessary skills and training to be able to meet the rigorous standards required for accreditation. That is why it is necessary and appropriate to have a two-year period before the introduction of the scheme.

I hope that that allays the concerns of the hon. Member on the standard of the report and the number of surveyors required. With those assurances, I hope that hon. Members will not press the amendments.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I am not sure whether the Minister is giving way or whether I am to make a speech. A separate speech suits me rather better, as I will not have to be quite so concise—[Interruption.] It is in my nature to be so.

The Minister might like to consider—he does not have to reply now—that one of the problems involved in buying and selling properties is the financial offer. Even after all inquiries and the information provided by the seller's pack, there would still be the problem of purchasers obtaining a financial offer. It has been suggested to us that property transactions could be speeded-up by involving the mortgage industry and other financial lending institutions in a pre-certification scheme. A decision could be made on whether to offer a loan on the basis of the seller's pack. Such institutions could decide, in principle, particularly in the case of new property, to lend a certain amount on a particular property. That could be extended to insurance as well so that one would know that insurance would be provided and the approximate cost of the premium. If we could incorporate such a mechanism, we really would begin to make a step change in the rate at which properties are bought and sold.

Nick Raynsford (Labour, Greenwich and Woolwich)

I can say two things to the hon. Gentleman. First, we believe that there is merit in potential buyers establishing their mortgage potential in advance. That would help to speed up the process and give reassurance to any seller who had doubts about their ability to pay for the property. There may be a case for seeking in advance from the lender an in-principle view on the willingness to lend on certain types of property. As the hon. Gentleman will be the first to recognise, we then move into more difficult territory because, in most cases, the lender will be cautious about giving such an indication without having had an opportunity to establish an informed view about the value of the property and its condition. Therefore, my guess is that a lender might be unwilling to give an indication to which one could attach much weight, unless there had been a previous opportunity to view the property, perhaps as a result of a previous failed transaction or if the property had recently changed hands. We are certainly sympathetic to the principle of securing more advance information to enable people to move with confidence and to reach a quick decision.

Nigel Waterson (Conservative, Eastbourne)

I have no intention of asking leave to withdraw the amendment. The Department seems to have a house style for Ministers trying to get out of tight corners by bluster alone. When a Minister starts talking about a ``farrago of innuendo'' and using a lot of other words in the same sentence ending in an ``o'', we know that he is on the ropes.

Nick Raynsford (Labour, Greenwich and Woolwich)

Portillo. [Interruption.]

Nigel Waterson (Conservative, Eastbourne)

I am glad that the hon. Gentleman finds that amusing. However, many people will find the debate rather chilling, to put it mildly. He wheeled out his old chum, the president of the Bristol Law Society. As I said on Second Reading, of course the Bristol Law Society and Bristol estate agents, were over the moon at the one-off shot in the arm from the taxpayer, which amounted to some £370,000. If the Minister would like to do the same for Eastbourne, I can almost guarantee that the president of the Eastbourne Law Society would be similarly appreciative and enthusiastic. Also, if the estate agent mentioned by the Minister has been a beneficiary of the same process, she will be expanding. It is genuinely worrying and an affront to the whole process to talk about taking what the Law Society says with a pinch of salt. I am a member of the Law Society and I do not always agree with what it says on a range of issues. However, it does represent over 80,000 solicitors in England and Wales, and the Minister could be a little more open to the points it is trying to make. It does have a legitimate interest, not only financially, but in getting the legislation right.

The Minister said that what I said about the CML was entirely groundless, which on the facts alone cannot be right. It was bad salesmanship to refer to his speech to the CML on 4 December 2000, which seems to have gone down like the proverbial lead balloon. There are some unhappy people in the CML as a direct result of the Minister's remarks. He took a very narrow view when he tried to paint himself and his colleagues as champions of the public interest. With a sweep of the hand he discounted the views of all the professional bodies and professionals involved as somehow unreliable and not worthy of our consideration, because that is how they make their living. That is outrageous. Those professionals have concerns that go beyond their own narrow professional and financial interests. They are concerned about the effect of the proposals on consumers in the real world. They are particularly qualified to make those comments, because that is how they make their living. It is obvious that there has been arm-twisting of the CML and who knows what other organisations behind closed doors by Ministers, and by others at Ministers' behest. The Minister said that he had only one meeting with CML; it would be interesting to know who else met its representatives. As I said, we shall table questions to try to discover the relevant dates, names and times.

It is bad enough that the Government are trying to reduce the opportunities for debate in the House, without their terrorising organisations that have a legitimate interest in commenting on the barmy nature of some of the Government's proposals. When an organisation such as the CML talks about behind-the-scenes activity, it suggests that it can have come only from the Government side of the Committee.

If people such as Mr. Holt, whom I quoted extensively, take the trouble to write to the Committee with their sensible and detailed thoughts, it is unacceptable for the Minister to talk about extraordinary people and people who write in green ink. We all have our share of such people in our constituencies, but sadly the Labour party also has them in its own ranks. The Minister is one of those people who thinks that everyone but him is out of step; not only is everyone else wrong—the Law Society, the CML, the Independent Association of Estate Agents, Mr. Holt and so on—but it is an outright impertinence that they tell us their views.

Nick Raynsford (Labour, Greenwich and Woolwich)

I do not expect to persuade the hon. Gentleman, but comparing the Government's actions with those of Mussolini is not a helpful contribution to a serious and rational debate, especially in view of my observations about the Property Misdescriptions Act 1991.

Nigel Waterson (Conservative, Eastbourne)

I would not compare the Minister to Mussolini, but people are entitled to express their frustration, alarm and surprise that criminal sanctions such as those imposed for carrying a flick knife are to be applied to people who cannot get their seller's packs sorted out. What kind of world is the Minister living in? The foundations of our civilisation will not be threatened if people do not sort out their seller's pack in time.

The Minister met the CML once—did not that go well?—and his officials will no doubt continue to have meetings with that organisation. The hon. Gentleman claimed not to be against small business, but he is happy to countenance smaller agents going out of business and large agents, usually owned by the big financial institutions, dominating the market. The Bill will distort the market in two ways: first, it will reduce the number of properties being put on the market and, secondly, it will disadvantage smaller, independent agents. It is no good the Minister saying, ``Oh well, they don't give the same kind of service; they are all in the age of the quill pen.'' The Minister may have made a startling revelation about how he spends his off-duty hours, but that is another matter.

Nick Raynsford (Labour, Greenwich and Woolwich)

Will the hon. Gentleman please accept what I have said clearly in Committee and on other occasions, that there is no question of small businesses going out of business as a result of the measures? I spoke specifically about a small business that was thriving and about how innovative businesses, whether small or large, which developed services for the public would thrive. Those businesses, large or small, that did not would probably go to the wall, as that is the nature of business. Will the hon. Gentleman please not misrepresent me as saying that somehow that would be disadvantageous to small businesses? I do not believe that and I have never said it.

Nigel Waterson (Conservative, Eastbourne)

I am happy to accept that the Minister was misquoted in respect of the meeting in Bristol, or the Bristol scheme, and to move on. However, that does not alter the more important fact that the small agents think that they will be under threat as a direct result of the proposals.

We struck a sensitive chord with the Government; the Minister's answers were not remotely satisfactory and some were downright derogatory to people who made legitimate, responsible representations. I urge my hon. Friends to support the amendment.

Question put, That the amendment be made:—

The Committee divided: Ayes 4, Noes 9.

Clause 8 - Home condition reports

Tim Loughton (Conservative, East Worthing and Shoreham)

I beg to move amendment No. 44, in page 6, line 24, leave out `may' and insert `shall'.

Roger Gale (Conservative, North Thanet)

With this we may take amendment No. 45, in page 6, line 31, leave out `may' and insert `shall'.

Tim Loughton (Conservative, East Worthing and Shoreham)

These probing amendments cover some of the same ground as those in the previous group, which included amendment No. 22, so I will not go into too much detail.

Amendment No. 44 would clarify the drafting of the first paragraph of clause 8, which appears to make optional, rather than mandatory, various provisions of the home condition report. It is essential that the regulations made by the Secretary of State are as clear as possible, and that is why the amendment replaces the word ``may'' with ``shall''. Will the Minister explain what the clause is trying to achieve?

Amendment No. 45 would also replace ``may'' with ``shall'' because it is essential that the scheme, which gives approval to certification of the surveyors or their equivalent who carry out the home condition reports, is, to use the Minister's phrase, absolutely rigorous and clear, thus keeping their integrity is intact.

The Minister quoted various organisations that expressed an interest in becoming part of the scheme; I am not convinced that the numbers add up to the 9,000 personnel who will be required to carry out the home condition reports for what may be 1.5 million properties a year before the various exemptions. The proposals seem to provide that persons registered and accredited as being suitable to carry out home condition reports may not be qualified valuers, therefore reports prepared by them, as unqualified personnel, would contravene the building societies legislation, as well as being unacceptable to mortgage lenders when granting mortgage offers. I should be grateful for the Minister's clarification of that point.

How will the Minister prevent conflicts of interests from occurring within what are likely to become property supermarkets? House transactions have three distinguishable components: marketing by a estate agent, conveyancing by a lawyer and surveying by a surveyor. Those three elements are increasingly combined within a single firm. A company such as the Countrywide Assured agency—one of the largest, if not the largest chain of British estate agents—aims to take 10 per cent. of the conveyancing market over the next few years.

In the past 15 years since the big bang, the financial world has witnessed financial supermarkets being set up at an increasing rate; they offer a range of financial products, advice and so on. There might be conflicts of interests in the one-stop shops of the property world if the surveyor or surveyor equivalent who produced a home condition report came from the same firm as the agent marketing the property, who, in turn, provided the details to another colleague in the same company who dealt with the legal transactions. The vague details of the accreditation scheme provide no assurance that there will be a watching brief for any overlaps causing conflicts of interests between the three component parts that are currently separate.

By imposing a degree of compulsion through the use of ``shall'', the amendment probes how watertight the integrity of the scheme will be and how the Government will monitor it. I should be grateful for clarification.

Nick Raynsford (Labour, Greenwich and Woolwich)

I am grateful to the hon. Gentleman for expanding the argument beyond an arid debate on the merits of ``may'' and ``shall'', which, as the hon. Gentleman knows and I have conceded, is an approach that Oppositions often adopt—indeed, I pursued similar lines of argument when I was in opposition. I shall first deal with the technicalities of why we use ``may'' and then deal with the more substantive points that he raised.

It is appropriate to use ``may'' rather than ``shall'' in this instance as there is no requirement for the regulations empowered by clause 7 to be made. However, as I explained when dealing with amendment No. 43, ``may'' does not imply that the regulations will not be made. The other provisions in the Bill cannot work unless the contents of the pack are prescribed in regulations and we are therefore wholly committed to using them. Legally, the Secretary of State cannot be bound to make regulations that are not otherwise absolutely required. As soon as we have completed our consultation with interested parties and we are satisfied that a sufficient number of appropriately qualified inspectors is available, we intend that the Secretary of State will make regulations under clause 7 to deal with the provisions in clause 8.

On the number of inspectors, I have said that sufficient general surveyors are practising to meet the target figure of 9,000. In addition, some 3,000 others are engaged in valuation and others who are qualified in different disciplines may have an interest—I mentioned several professional institutes whose members might be interested in becoming accredited inspectors. The important point is that they must have the skills to carry out an inspection.

Currently, not all valuers have all the necessary skills. Last week, we had an interesting debate on energy efficiency. Inspectors will need to be familiar with the standard assessment procedure—the SAP rating—for a property. Not all valuers will necessarily have that skill and they will need training. A degree of training will therefore be necessary for all those who want to be accredited as inspectors, whatever their current professional discipline. It is our intention that the arrangements will ensure that all those who are accredited have all the skills necessary to complete all the work contained in the home condition report.

We hope that lenders will be satisfied that those arrangements ensure that they have the information necessary to complete the valuation, but they will probably, as is increasingly common practice, depend on a degree of desktop valuation conducted in their offices by experts in the particular field. The new system will not necessarily entirely supplant the process of valuation by the lender, but it will considerably reduce the requirement to visit a property and carry out an expensive additional inspection so that the valuation can be agreed. That is where the potential saving will be made.

The hon. Member for East Worthing and Shoreham referred to property supermarkets, and I agree that we will see a trend toward the provision of a more seamless service that covers a range of different disciplines; in particular, I believe that a number of solicitors will move in that direction. Rather than simply adopt the position that they are concerned solely with conveyancing, solicitors will recognise that they have a good basis for preparing the seller's pack themselves, providing the information necessary for it and offering that service. No doubt, there will be circumstances in which individual professionals are engaged in other activities. That is not a bad thing if it provides the public with a better quality of service, but important issues of conflict of interest might arise, as the hon. Gentleman pointed out.

Nigel Waterson (Conservative, Eastbourne)

Does the Minister accept that the cost to people involved will rise? In particular, does he agree with the prediction of those who say that commission levels will rise to a level nearer to those that pertain in other European countries, which I gather are between 6 and 8 per cent?

Nick Raynsford (Labour, Greenwich and Woolwich)

No, I do not accept that. It is typical of the scaremongering tactics adopted by people who are opposed to the scheme and who have been unable to find rational arguments to challenge it. They have caused various scares and alarms. There is no basis for that conjecture about percentage fees increasing to 6 or 8 per cent. It is precisely to ensure that the public receive a high-quality service that we are keen to establish an efficient, modern, competitive system in which a range of different organisations bid for the work and thereby ensure that the prices charged are competitive.

Conflict of interest is a genuine issue, which I undertook to address. The certification scheme will deal with that by close monitoring and inspections. For example, there will be procedures for monitoring a sample of all inspections—I referred to that issue in response to a question asked by the hon. Member for Cotswold in a previous debate.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I have been reflecting on what the Minister said. Does he mean that we are moving away from a self-disciplining arrangement for the professional bodies to one that is put on a statutory footing, and that trading standards officers will be responsible for policing home condition surveys?

Nick Raynsford (Labour, Greenwich and Woolwich)

The hon. Gentleman is confusing two separate elements of the scheme. The trading standards officers' role is to ensure that there is compliance with the legislation's requirements, whereas the certification scheme will have its own arrangements for monitoring performance. Part of that scheme will involve ensuring that certified inspectors continue to meet the standards necessary to justify their certification. Continuous review and monitoring will help to identify potential weaknesses.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I want to be crystal clear about this point. Will the certifying bodies carry out certification and trading standards officers have no role? Will professional bodies rather than trading standards officers deal with complaints about the home condition report?

Nick Raynsford (Labour, Greenwich and Woolwich)

There will be a single certification body, which will be brought into existence to ensure the certification of inspectors who carry out the function. The inspectors will be drawn from several different professional institutes, all of which will be involved with the Government in framing the detail of the certification scheme and will undoubtedly have much to say about the proper constitution of the new certification body. That body will deal with the certification of inspectors to carry out the home condition reports; it will monitor performance and deal with any complaints. As the hon. Gentleman suggests, trading standards officers may make complaints, but it is not for them to form a judgment on the professional qualifications for certifying inspectors.

Don Foster (Liberal Democrat, Bath)

Let us get it on the record. The Minister said previously that the costs of the certification body would amount to about 50p for each survey report. Assuming 1.5 million such reports, the cost would be total approximately £750,000. Is that right?

Nick Raynsford (Labour, Greenwich and Woolwich)

I congratulate the hon. Gentleman on his good memory—I supplied the figure in a previous sitting—and on his mental arithmetic skills.

I believe that I have now covered all the issues and I urge the hon. Member for East Worthing and Shoreham to withdraw the amendment.

Tim Loughton (Conservative, East Worthing and Shoreham)

I take the Minister's point about amendment No. 44; he has helped to make clear the first part of the clause. I also take his point about amendment No. 45. We shall have to wait and see: so much that is relevant and so much detail is lacking from the Bill that even if the entire scheme is introduced as scheduled, we shall have to wait until at least 2003 before we know how the Government intend to carry it out.

Serious concerns remain about the preparation of home condition reports. My hon. Friend the Member for Cotswold drew attention to the problems created for people on the ground. We are to debate the weights and measures officers in connection with the next clause, but I should like to ask what are they to do if they encounter bad practice by surveyors? We are told that such matters will be for the professional bodies—in a self-regulatory role—to determine, but we do not know how the panel for self-regulation will be constituted. The Minister says that personnel will be drawn from all sorts of interested parties, including those outside the 120,000 members of the Royal Institution of Chartered Surveyors.

The more fragmented the groups who provide the surveyors or surveyor equivalents—an important caveat—to carry out home condition reports, the more diluted will be the high standards that we have come to expect from surveyors who have the initials MRICS after their names. We are greatly concerned that standards pertaining to home condition reports in future will be greatly diluted from the standards currently practised.

Nick Raynsford (Labour, Greenwich and Woolwich)

The logic of that argument, if pursued, implies a serious slur on the competence of professionally qualified members of other institutions, for example architects and engineers. Members of the Institution of Civil Engineers may not be pleased by the hon. Gentleman's remark implying that their qualification to carry out the work would mean a dilution of standards. We have insisted that the highest standards be required for accreditation for the purposes of the inspections. That is our commitment and that will maintain the confidence of the public.

Tim Loughton (Conservative, East Worthing and Shoreham)

There is no slur, as the Minister well knows. It is purely a question of suitability, a word that he too has used. Those people who may now be adding to the army of surveyor or surveyor equivalents carrying out home condition reports may be vastly more authorised in certain other qualifications than members of the Royal Institution of Chartered Surveyors. My comments in no way demean their qualifications in other semi-related areas; my point is that they will bring other experiences to the surveying practice, which may or may not be a good thing.

In using the word ``dilution'', all I am saying is that it is likely that the requirements will be factored down rather than up. That must be so if the Minister is to achieve the numbers that he will inevitably need to provide home condition reports on the 80 per cent. of the 1.5 million private properties that are sold each year without a surveyors report. The amount of additional work is considerable and can only be done if the level of detail and specifications in the home condition report are significantly less than those in most normal surveys today.

Geoffrey Clifton-Brown (Conservative, Cotswold)

When a surveyor conducting a full structural survey finds a defect, he will often recommend that another professional be brought in, for example a civil engineer. A civil engineer may be well capable of calculating whether the size of a beam of a lintel is sufficient for the stress on it, but he would not be capable of commenting on the subsidence of a property. We are going to have boundary problems between differently qualified professionals and the Minister will have to consider that.

Tim Loughton (Conservative, East Worthing and Shoreham)

My hon. Friend makes a very fair point. The opposite is also true. Now, less than 3 per cent. of surveys involve a full structural survey. If there are more detailed requirements, especially in connection with older properties, a professional of another related body will be called on to provide that greater degree of detail. Under a home condition report, it is far less likely that the one-size-fits-all surveyor or surveyor equivalent will call upon another person to add detail, because the cost of doing so is likely to be far greater than the normal cost of providing the home condition report. It is therefore less likely the additional professional detail will be added to the home condition report.

Nick Raynsford (Labour, Greenwich and Woolwich)

There is no question of dilution of standards: all those who are accredited to carry out the inspections will have to meet the standards necessary to complete home condition report inspections—that would be a condition of their accreditation. In terms of numbers, there are already 9,000 general surveyors, 3,000 valuers and further thousands of engineers, architects and others who would have the basic professional understanding needed to acquire accreditation, if they can demonstrate that they have the specific skills. I really do not think that there is a problem with numbers, and there is certainly no question of dilution. We would not tolerate that.

Tim Loughton (Conservative, East Worthing and Shoreham)

Presumably those 9,000 plus individuals are not idly twiddling their thumbs waiting for the Bill to be passed; they have their time cut out doing all sorts of other work, including surveys and engineering or structural surveys on commercial property, which has nothing to do with the Bill. It is inevitable that there will be a shortfall of individuals readily available to fill a large gap. Eighty per cent. of 1.5 million homes represents a large figure. The RCIS and all the other bodies that are professionally involved in the issue say that they will have to recruit many additional people, which is likely to cause problems.

The Minister said that the Government want to ensure that the standards of the new scheme are maintained—the trouble is that we do not know what those standards are to be. We do not know the details of the standards that will be required in the home condition reports. As is so often the case, we are all flailing around in the dark trusting in a promise—not, I hope, a whim—regarding the detailed provisions that the Government might implement if the scheme gets off the ground within its two-year take-off slot. I can see that we will not get any further. We must rely on the assurances of the Minister—assurances that are based on very little detail. Our probing amendments have exposed the continued gaps in the legislation. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Nigel Waterson (Conservative, Eastbourne)

I beg to move amendment No. 11, in page 7, line 2, at end insert

`, being a minimum of £500,000 in the first instance.'.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to take the following amendments: No. 37, in page 7, line 3, after first `the', insert `effective'.

No. 12, in page 7, line 4, after `sellers', insert `, lenders'.

No. 13, in page 7, line 13, at end insert—

`(8) Sellers, buyers and lenders shall be entitled to bring proceedings in respect of a home condition report upon which they have relied in any transaction.'

Nigel Waterson (Conservative, Eastbourne)

I seek your indulgence, Mr. Gale. The four amendments are narrow in scope and I shall not take long to explain their virtues to the Committee. May I put down a marker about having a short stand part debate on the clause, given that the amendments do not touch on at least one aspect of it? Compared with the debate on clause 7, our debate on clause 8 has not ranged far, so I make my request in the desire to be helpful.

The amendments are narrowly drawn and designed to tighten the existing provisions. Amendment No. 37 is very simple and is designed to ensure that complaints are properly resolved to the satisfaction of all parties. It may seem obvious to include that in the Bill, but why not include the obvious? That is the entire purpose behind the amendment.

Amendment No. 11 was partly instigated—it is certainly supported—by our old friend the CML. It tackles the familiar problem of professional indemnity cover. Solicitors have an obligatory scheme and many take part in top-up schemes to ensure that they have adequate professional indemnity insurance cover should they make a mistake and face a claim made against them by a client. I assume that qualified surveyors have a similar scheme. Such schemes are often expensive, but they are a prerequisite for professional people and provide reassurance to the clients for whom they act.

The CML says:

Lenders will require Home Inspectors PI cover of at least £500,000 for each case they appraise.

It makes the fair point that, if lenders are expected to rely on the contents of the HCR, they

should be able to bring a claim under PI cover for negligence.

I perceive no argument against that.

The Minister may want to argue against setting a specific figure, but the amendment is designed to probe what figure he thinks would be appropriate. If he has his way, both buyers and lenders will rely on the reports. We support the notion that there should be adequate indemnity insurance. I am open to the argument that it is not sensible to put a firm figure on that in primary legislation, but the Minister will have reflected on that and I am sure that he agrees with the principle that those drawing up the reports are not, as he said, second-class citizens and should have sufficient back-up—

It being One o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at half-past Four o'clock.

Standing Committee D

Homes Bill

Don Foster (Liberal Democrat, Bath)

On a point of order, Mr. Gale. It may interest members of the Committee if I remind them of the information that I gave at the beginning of our sitting this morning—that the birth was in progress. I can report that it still is.

Roger Gale (Conservative, North Thanet)

I am sure that the Committee will be grateful for that, but I am happy to say that it is not a matter for the Chair. Clause 8 Home condition reports

Clause 8 - Home condition reports

Roger Gale (Conservative, North Thanet)

I remind the Committee that with this we are taking the following amendments: No. 37, in page 7, line 3, after first `the', insert `effective'.

No. 12, in page 7, line 4, after `sellers', insert `, lenders'.

No. 13, in page 7, line 13, at end insert—

`(8) Sellers, buyers and lenders shall be entitled to bring proceedings in respect of a home condition report upon which they have relied in any transaction.'.

Nigel Waterson (Conservative, Eastbourne)

I am even happier that the birth is nothing to do with me either, but we wish all participants well, of course.

The rest of my speech to amendment No. 11 will be brief, for reasons that I shall explain, and then my hon. Friend the Member for East Worthing and Shoreham (Mr. Loughton) will deploy some of the heavy artillery that I originally intended to bring to bear. I apologise in advance to you, Mr. Gale, and to the Minister and the rest of the Committee, as I shall have to go to the Chamber, where there will shortly be some other business on which I am required.

I had more or less finished speaking to amendment No. 11, and had referred to points made by organisations such as the Council of Mortgage Lenders. I hope that the Minister is in a better frame of mind this afternoon because, to judge from some of the phone calls that my office has had since this morning, he managed to upset just about everybody involved in the property and conveyancing business. I suspect that his punishment, fittingly, will be many extra briefings for us to take him through in the rest of our debates.

Our point was simple. Those who draw up the home condition reports, whatever one's views about their qualifications, should have full indemnity cover if they get it wrong. Such provision should be in the Bill, but we are open to persuasion on whether a specific amount should be mentioned, although it should certainly be covered in regulations.

Amendments Nos. 12 and 13 focus on what lawyers call the privity point. The Minister referred to the Contract (Rights of Third Parties) Act 1999, which may indeed have the answer to my points. We want to ensure absolutely that sellers, buyers and lenders will all have rights to bring proceedings when they have relied on a home condition report that turns out to be in some way defective, and when some actionable negligence has caused that. People should be able to rely on the report, knowing that they will have redress if there is a problem.

According to the Law Society, as the law stands it is not clear who, other than the seller, could be certain of being able to secure compensation if the report were defective. A lender and a buyer could be reluctant to rely on a report if they had no redress in the event of it being defective. The Law Society says that it is essential to make it clear to whom the producer of a report on a property could be liable.

The issue is fairly straightforward. The Minister may feel that he has a complete answer to it, and I look forward not to hearing it, but to reading it.

Gareth Thomas (Labour, Clwyd West)

The hon. Member for Eastbourne (Mr. Waterson) has for once, with the greatest respect to him, done us a service by probing the important issue of privity of contract, in which I take an interest. I want to take a few minutes to explore the subject, in the expectation that my hon. Friend the Minister will elucidate matters a little.

As a lawyer, I have had experience of dealing with what we describe as surveyor's negligence cases, and this is an issue that often arises in practice. Who can sue? Following the case of Smith and Bush, the position prior to the coming into force of the Contracts (Rights of Third Parties) Act 1999 was that, while there was no privity of contract between a buyer and the party who had prepared a valuation report for the lender or the building society, very often the buyer was able to sue in negligence—not in contract—where it could be established that he had relied upon the valuation report to his detriment. That has been an established principle, certainly when the transaction concerns what could be described as a low-value or modestly priced property.

However, it seems that we need to look at the Contracts (Rights of Third Parties) Act 1999, and I am sure that the Minister will refer to it in his reply. It has extended rights to third parties to be able to sue upon a contract in their own right. Section 1(1)(a) of the Act says that a third party may enforce a term of the contract—I believe that we are talking about the home condition report—if it

expressly provides that he may.

Section 1(3) goes on to say that the

third party has to be expressly identified

if not in name, he has to be identified as belonging to a particular class. Is it the intention that buyers and lenders should rely upon the home condition report? If it is, there is a strong argument for putting that in the Bill—given that one of the primary objectives of the Bill must be to reduce the cost of house buying. Surely one of the objectives is to avoid the necessity for the buyer to obtain his own valuation report by enabling him to rely upon the home condition report procured by the seller. I should be grateful to hear what the Minister has to say on those issues.

When this matter was raised on Second Reading, my hon. Friend the Minister said that it was the Government's intention that both the buyer and the seller would be able to reply upon the HCR. No specific reference was made to the lender being able to rely upon the report. The lenders have a case, because if they are to do desktop valuations, they have to have before them a fairly robust report upon which they can rely, in law as well as in practice, in order to obviate the necessity for them to go out and get their own valuation report and charge the buyer for it.

However, there is of course no privity of contract between the lender and the seller. Do the Government believe that the law of negligence would apply and that, provided that detrimental reliance could be established, there would be a cause of action for the lender as well as the buyer? I should be grateful if the Minister would address these issues because they concern a number of people, including the Law Society and those in the commercial lending community. Although hon. Members might think that I am making a trade unionist point, I have never conveyed a house during the whole of my professional life. If the Bill is to be enacted, we will need greater clarity. I would like to see something like amendment No. 13 included in the Bill or, if not, further assurances from my hon. Friend the Minister.

Nick Raynsford (Labour, Greenwich and Woolwich)

In accordance with clause 8(4), the Secretary of State is able to make provision for the approval of one or more suitable certification schemes. Clause 8(5) lists a number of points about which the Secretary of State should satisfy himself before approving a scheme, including whether inspectors have adequate indemnity insurance and whether a complaint resolution procedure is in place.

Amendment No. 11 would specify that members of the scheme should have a minimum of £500,000 indemnity insurance cover. However, it does not state whether that should apply on an aggregate or per claim basis, so it could be rather confusing to put it in the Bill. We do not support including a minimum level in the Bill as it would make it difficult to amend it in line with changes in house prices and inflation. It is far better that the certification scheme should determine a suitable level of cover, as it will vary over time.

It would be inappropriate to include in the Bill a minimum level of indemnity insurance required without also addressing other insurance-related matters—for example, the maximum level of insured excess required and the maintenance of proper run-off cover by members after they cease trading. All those relevant issues will be dealt with in the arrangements that will be put in place as part of the certification scheme. The amendment is therefore unnecessary and unhelpful.

On amendments Nos. 12 and 37, we recognise that lenders as well as buyers and sellers should have access to a complaint resolution procedure. Again, we intend that this matter should be addressed through the certification scheme. In approving a scheme, the Secretary of State will be well placed to ensure that proposals for handling complaints will be effective. That deals with the concern expressed in amendment No. 37.

We are sympathetic to the intention behind the amendments. We are considering how the clause might be amended to make it absolutely clear that lenders' interests are covered, and we shall give further thought to the matter. Clause 8(5)(c) may not necessarily be the best place to do it, but I assure the Committee that we shall return to the subject at a later stage.

In developing arrangements for the resolution of complaints, certification schemes will need to consider whether lenders' interests can be served by the same complaints handling arrangements as those for buyers and sellers, or whether separate schemes would be more appropriate; as my hon. Friend and others will appreciate, lenders will have different concerns from buyers and sellers. The Council of Mortgage Lenders is playing a key role with other stakeholders, including the Consumers Association, in developing the home condition report and certification scheme; it is therefore well placed to ensure that its member's needs are met.

We intend that home condition report inspectors' liability to sellers, buyers and lenders will be secured by contract. I have said that on a number of occasions; it is our clear policy intention. As I said earlier, we are sympathetic to the amendment's purpose, which would make it clear in the Bill that lenders could rely on the document. We shall return to that question later.

As for third parties and privity of contract, the Contracts (Rights of Third Parties) Act 1999 will ensure that the buyer and the lender, as well as the seller who commissioned the home condition report, will be able to rely on it, and will be able to bring proceedings against the inspector should it prove necessary. I have repeatedly made clear our intention that buyers, sellers and lenders should be able to rely on the report and that they should have redress. I repeat that assurance. I fear that some parties simply do not wish to hear our assurances because, for whatever reason, they have taken against the idea of a home condition report. However, that does not change the facts, which are that we intend to ensure that all interested parties—buyers, sellers and lenders—will all be able to rely on the report and bring proceedings against the inspector should it prove necessary.

I hope that I have demonstrated that the certification arrangements, which are subject to the Secretary of State's approval, will deliver what hon. Members are seeking, without the need for the amendments. A valid point has been made with regard to Members' interests, which we will review in the context of the clause as a whole, rather than just in the context of the complaints procedure. I hope that, on that basis, the hon. Member for East Worthing and Shoreham will agree to withdraw the amendment on behalf of the hon. Member for Eastbourne, who moved it.

Roger Gale (Conservative, North Thanet)

Order. On a technicality, that is not possible. The relevant Standing Order states that only the Member who moved the amendment can withdraw it. On that basis, when we come to the appropriate time, the amendment will have to be formally negatived. A Division will not be required, but the amendment must be negatived.

Tim Loughton (Conservative, East Worthing and Shoreham)

I am grateful for that advice, Mr. Gale. Perhaps you will explain, on another occasion, how we actually do that. I am sure that it will become clear.

Will we have a clause stand part debate, Mr. Gale? There are a few extra points that I wanted to make which may be more appropriate to such a debate.

Roger Gale (Conservative, North Thanet)

Certainly.

Tim Loughton (Conservative, East Worthing and Shoreham)

Thank you, Mr. Gale. In the light of what the Minister has said, I am inclined to go along with that suggestion. The Minister said that some hon. Members did not wish to hear assurances because they were against home condition reports. We certainly want to hear assurances. We have been trying to add certain things to the Bill because it is so lacking in detail, and because it will not be enacted for such a long time, if it ever gets to that stage. The home condition reports are flawed, and do not deal with the central problem of gazumping, with which they were supposedly designed to deal. However, we are pragmatic, and realise that if the Government are, as they have demonstrated, determined to go ahead with the home condition reports, we must ensure that the legislation that is to be forced upon us is as watertight as possible for all the parties concerned. That also accounts for our desire for insurance guarantees.

All this debate is unnecessary. I am aware that the Minister's Department has had discussions with various firms of surveyors that are well-versed in dealing with the problem of indemnities against flawed survey reports, and have been doing so on a purely voluntary and very successful basis. Allied Surveyors has made submissions to his Department. It is one of the largest firms of surveyors in the country, and is based in Chipping Sodbury, near Bristol, a place that has been mentioned many times in our discussions.

Two years ago, Allied Surveyors launched its own scheme—the Allied Surveyors guarantee survey. Under the scheme it has issued approximately 21,660 policies, which have resulted in 256 claims, the vast majority of which will have resulted in some form of payment. A relatively small number, on an ordinary, insurance-based guarantee, have received compensation because the firm has admitted some liability. In many cases, to avoid arguing over £300 or £400, they are prepared to be big and pay up. That is an exaggerated figure.

By way of comparison, when relying merely on professional indemnity insurance for surveyor negligence, over the same period of time, that firm has had just 16 notifications for claims for professional negligence, and it expects that only three or four of those claims will be successful. Those claims apply to all the work that the firm has undertaken, whereas the guarantees are issued on only approximately 20 per cent. of the work. That is an example of a perfectly practical and pragmatic scheme that has worked rather well, separately and far ahead of the legislation that the Government want to bring in. It has worked especially well for customers, who have not had to go to lengthy and costly legislation to take or threaten to take to court surveyors for faulty surveys. Customers on that voluntary and sensible scheme have had a far more satisfactory deal, and have had payouts with having to resort to legal action. Firms have been perfectly happy with the scheme.

The scheme could be extended throughout the country. It could easily operate through the growth of chains of people involved in property transaction—a subject that we discussed this morning. I am sure that any insurance company could take the scheme up and provide the framework for it. If the Government had taken a little more trouble to consider what works in practice and needs to be expanded by better practice, they could have saved us all the trouble of this yet further piece of legislation.

There are warnings ahead. The experience in the United States is not a happy one. Apparently, the US has tried a version of home condition reports known as pre-listing reports. Their success has been scant indeed. In many cases, they have led to greater conflicts of interest and less protection for consumers. That can be seen in recent legislation enacted in several states, especially Massachusetts, whereby it will soon be illegal for a real estate agent to make recommendations to a home buyer on a choice of home inspector. It seems odd that the evidence that the scheme works seems to have been drawn almost exclusively from Denmark. The rather closer example of the US has been fraught with problems, yet I do not believe that it has been mentioned by the Government.

Notwithstanding all that, as it is patently obvious that the Government will not accept a scheme, given their manic compulsion for legislation, it is right that we should stipulate protection for sellers, buyers and lenders. The Minister identified the obvious gap in the wording to protect lenders, so I am greatly encouraged that the Government might move towards the thrust of our amendments. On that basis, I will stop speaking, but I am not able to commit myself to anything ahead of your instructions, Mr. Gale.

Geoffrey Clifton-Brown (Conservative, Cotswold)

Hitherto, a surveyor acting for a purchaser or a seller has had a specific obligation to that party. He may have a conflict of interest in how he describes something, as he could do so to suit the interests of either the buyer or the seller. On occasion, it will not be possible to look after both interests at the same time. Indeed, the surveyor would be expected to look after the lender as well, so he would be looking after three different parties with three possibly competing interests. In view of the amendment, the Minister needs to give some guidance as to how a surveyor would act under those circumstances.

Nick Raynsford (Labour, Greenwich and Woolwich)

Three points have been made. The first is the Allied Surveyors issue raised by the hon. Member for East Worthing and Shoreham. Voluntary schemes such as that are fine. We have no problem with them, and have said that we welcome schemes such as that operated in the case of seller's packs. Some estate agents are successfully using them, which is fine. However, only one person has to decline to take part for the chain problem to arise and the benefits to be lost—which is why it is essential for home condition reports to be made mandatory. The framework for guaranteeing the validity of survey reports must be a consistent scheme throughout the country and not simply depend upon whether there is a good voluntary scheme operating in respect of one group or another of surveyors.

The stakeholders involved in setting up the certification scheme are examining, with insurers, how hidden defects insurance can be provided on home condition reports. The concerns raised by the hon. Gentleman are very much part of the considerations and discussions taking place at the moment because, while such insurance could not be compulsory, it could be a very effective additional—and quite cheap—bolt-on, if people sought additional protection. It is a very important point and one that we are addressing.

The hon. Member for East Worthing and Shoreham talked about the US experience. We have not simply acted on the basis of the experience in Denmark. We have taken evidence from a large number of countries and we did not look at evidence from the United States. The absence of a certification scheme in the US is one of the weaknesses of the arrangements that exist in that country. There are variations from state to state—that is part of their constitutional framework—but there is no national arrangement for providing the underpinning that is provided by a certification scheme. That is why we do not believe that the American experience, in this respect, is helpful.

The hon. Member for Cotswold (Mr. Clifton-Brown) has raised the issue of conflicts of interest. That is a fair and reasonable concern. He raised it in a different context this morning and I addressed it then. It is absolutely with a view to ensuring that we can depend on the quality of the inspector's reports that we are seeking a robust certification framework under which inspectors who prepare reports will produce evidence in a format that allows the least possible scope for interpretation that might favour one party. Objectivity is the key aim, and that is the format that has already been discussed. I think that the hon. Gentleman has seen a copy of the proposed format. If he has not, I will make sure that he does. The objective is to ensure that, so far as possible, information is delivered in a way that is the least prone to interpretation as favouring one party. It is not always possible to remove all elements of subjectivity because judgment is involved in certain respects. So far as possible, however, we intend to ensure that an objective report is delivered.

Geoffrey Clifton-Brown (Conservative, Cotswold)

May I warn the Minister of one problem that may occur, which he can think about when he has discussions with the new body? The temptation will be for the surveyor's description to be minimalist. He will say simply that the house has a crack. There will be no temptation to make a judgment as to how serious that crack is because, if he is trying to look after the interests of the vendor, the purchaser and the financial institution at the same time then, as the Minister has just acknowledged, wherever possible he will avoid making subjective judgments, although his report will be factually correct. That is yet another reason why the purchaser may need to have a more extensive structural survey to serve his own interests.

Nick Raynsford (Labour, Greenwich and Woolwich)

That is an interesting point and when the hon. Gentleman studies the proposed format for the home condition report he will see that it is proposed that, in addition to the descriptions, inspectors should give a rating on a scale of one to four in respect of all the indicators. If I may summarise, rating 1 will indicate that the item is in acceptable state of repair; rating 2 will mean that minor maintenance may be required; where rating 3 is given, significant repair or maintenance is required; and rating 4 will indicate that urgent repair is required. I hope that the hon. Gentleman will accept that, given that obligation, it will not be possible for an inspector simply to gloss over a crack. The inspector would have to indicate whether it was something purely cosmetic, which might rate 2, or something more serious, rating 3 or 4. There really will be an attempt to grade the severity of the problem.

I do not minimise the difficulties. The new format will be complex; it will require a lot of preparation and training and it will need to be properly enforced. However, I ask the hon. Gentleman to accept that it is our intention to ensure, as far as possible, that the measures are objective and will give a fair indication of the condition of the property without the scope for evasion that sometimes mars the benefit to customers of survey reports at present.

Don Foster (Liberal Democrat, Bath)

Earlier in our deliberations, the Minister said that the work of the certification body would be largely a paper exercise. How often does he envisage that representatives of the certification body will check the accuracy or otherwise of the documentation?

Nick Raynsford (Labour, Greenwich and Woolwich)

That is a fine point of detail on how the certification scheme will operate. It would be wrong for me to anticipate what will be decided. An expert body involving all the stakeholders is discussing the matter, and it will make recommendations. We shall consider them carefully before making a decision. It would be wrong of me to anticipate its conclusions.

Don Foster (Liberal Democrat, Bath)

Given that in our earlier deliberations the Minister was clear about the cost of the certification body and the average cost that would be added to surveys, the Government must have some idea of the percentage of reports that would be backed up by a visit from the certification body. One would expect the cost of such checks to be a major element in the body's expenses, and it must have been taken into account in the figure that the Minister cited earlier.

Nick Raynsford (Labour, Greenwich and Woolwich)

The hon. Gentleman probably misunderstands the basis on which the certification proceeding will be set up. It is not designed to be a double checking mechanism that will check inspectors' work on properties. However, as I said this morning, there will be an obligation for every report to be registered. That will be open to checks, so there will be an option to verify whether one inspector seems to be adopting an approach that appears to be out of line with that of other inspectors. That circumstance might well justify further intervention by the certification body. What the precise criteria should be and how those checks should be carried out are details for the certification body to consider. I ask the hon. Gentleman to accept that we are keen that it should be a rigorous and thorough arrangement, but it must be informed by the views of the specialists and experts who are working with us to develop the system.

Geoffrey Clifton-Brown (Conservative, Cotswold)

Normally, someone commissions a surveyor to undertake a survey. Under the Bill, the seller will commission a survey, but the buyer will pay for it and the surveyor will be liable to the seller, the buyer and the lender. Under those circumstances, if the buyer or the lending institution wishes to raise further inquiries with the surveyor, will the surveyor be liable to answer them? If so, who will pay for the extra work involved?

Nick Raynsford (Labour, Greenwich and Woolwich)

Perhaps I can clarify the procedure. If I heard the hon. Gentleman correctly, he implied that, although the seller would commission the survey, the buyer would pay for it; but that is not our intention. The seller will commission the survey when preparing the seller's pack and he will have financial liability for it. Depending on the arrangement reached with the estate agent who puts together the seller's pack, it may be paid for at the time or on completion of the sale, but it will be commissioned and paid for by the seller. The seller will have the option to seek further information, but that option could be available to other parties. In certain circumstances, and provided that they are satisfied that the particulars are available and that the surveyor is on an approved panel, lenders may choose to go to the same surveyor for further information in the course of a valuation. I see no reason why such an arrangement could not be made to work. There would obviously need to be safeguards, but it would be sensible.

Equally, on seeing a home condition report, a buyer may seek a further more detailed survey from the same surveyor on the basis that that will probably be more economical than starting out with an entirely different structural survey from a separate surveyor. Again, that is one of the options. Our aim is to ensure that the home condition report provides information of real use to all three parties—seller, buyer and lender—on which they can rely. Also, it should provide a cost-effective way to secure additional information, if that is necessary.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I want the matter to be absolutely clear. If buyers or lending institutions request information over and above that required by the home condition report, will they be liable to pay for it?

Nick Raynsford (Labour, Greenwich and Woolwich)

If they seek extra information from the inspector, that is a matter entirely for them. It is separate and ancillary to the home condition report, and the seller has no liability. Whether the surveyor chooses to charge for it will depend on his relationship with the lender. If the inquiry is a minor matter from a lender who puts a lot of business a surveyor's way, the surveyor may choose not to charge for it. The judgment will be the surveyor's, but the liability will be entirely on the person commissioning the extra information.

I hope that we have now covered all the issues that we need to. I urge the Committee to reject the amendment.

Amendment negatived.

Don Foster (Liberal Democrat, Bath)

On a point of order, Mr. Gale. I did not want to interrupt the flow of debate but, like the hon. Member for Eastbourne, I may need to attend the debate on the Floor of the House shortly. I apologise if I have to leave early.

Roger Gale (Conservative, North Thanet)

I am grateful to the hon. Gentleman. All members of the Committee understand the difficulties of attending to duties in Committee and on the Floor of the House at the same time.

Nick Raynsford (Labour, Greenwich and Woolwich)

I beg to move amendment No. 56, in page 7, line 12, leave out `affects' and insert `limits'.

I shall be brief, lest the threat of the hon. Member for Bath is realised and the Opposition Benches are denuded of Liberal Democrats to participate.

Amendment No. 56 is designed simply to clarify the Bill. Clause 8 states:

Nothing in this section affects the power under section 7 to make provision about home condition reports in the regulations.

That is not an elegant way to express the purpose, and the substitution of ``limits'' for ``effects'' makes the intention clear and allows no ambiguity. I hope that everyone will agree that that is a sensible and appropriate amendment. In line with my earlier comments, I commend it as an improvement to the Bill with no change in substance or policy.

Amendment agreed to.

Question proposed, That the clause, as amended, stand part of the Bill.

Tim Loughton (Conservative, East Worthing and Shoreham)

It has become clear as we have talked to the amendments to clause 8 that there are still many questions to be answered, many schemes to be finalised and many details to be given. It is obvious that we are unhappy about the use of the home condition reports. We believe that the HCRs will be too brief, too general and will prove inadequate for many purposes. The measure is far-reaching, given that it could affect more than 1 million private residential sales and that the survey take-up is less than 20 per cent. of the 1.5 million sales at the moment. As things stand, buyers of property will be given a misleading picture as to the thoroughness of the home condition report, as opposed to a fuller survey of the sort that the seller is now perfectly at liberty to commission.

We feel that there is some lulling of the purchaser into a false sense of security. We also want to stress—

Sitting suspended for a Division in the House.

On resuming—

Tim Loughton (Conservative, East Worthing and Shoreham)

I was about to point out a further problem with home condition reports, which is the lack of what I might call shelf life, and the Government have said nothing to suggest that the reports should be time-limited. They are effectively condoning a system under which a house sale could be based on a home condition report carried out six months, a year or even 18 months ago, since when fundamental changes might have been made to the building's soundness—not least, in today's climate, through flooding.

That weakness raises the question of cost. During the frenetic activity that went into the producing the Bill, the Department of the Environment, Transport and the Regions told the various interested parties that it anticipates that the costs involved will rise considerably, even to European levels, where commission rates are typically between 6 per cent. and 8 per cent. That would have a serious impact on the house sales economy.

It is important that people should know that a home condition report will not provide a property valuation. It will not be a structural or building survey, and the buyer may still want a rather more detailed structural survey to be made; if it is deemed to be necessary, which would certainly be the case with older property. That would be in addition to the cost of the home condition report.

The home inspector's inspection will be visual only. We are led to believe that no part of the property will be opened up or damaged to allow a more detailed inspection. In particular, the home inspector will not raise floorboards or floor coverings, will not lift wall finishes or other contents or remove vegetation—I presume that that means mould growing on the walls. However, we are assured that the home inspector will come manned with a 3m ladder, so that will be all right. The reports will contain many flaws, particularly about the outside of the building. Only significant defects to boundary fences and walls, retaining walls, paths and driveways that are part of the property will be reported on, and the home condition report will not deal with the condition of external features or amenities such as tennis courts and ponds.

We are dealing with something that is betwixt and between; the home condition report will not be a cursory tick box valuation, but nor will it be a full survey. It will be a halfway house, but it will increase the cost of the transaction considerably. It will not lead to a full investigation of the property, as some have been led to believe. It will be woefully inadequate. I fear that the home condition report, which is at the heart of the Bill, shows the weakness in the changes that the Government are keen to thrust upon us. We want to reiterate our concern that the Bill is fraught with problems.

Nick Raynsford (Labour, Greenwich and Woolwich)

The Opposition's weakness is their tendency to criticise from a particular angle, regardless of whether their criticisms are consistent. [Interruption.] To answer the hon. Member for Cotswold, it is right for the Opposition to oppose, but that need not mean criticism irrespective of consistency. One expects a degree of integrity from Oppositions, and that they will pursue a consistent line. Unfortunately, the hon. Member for East, or rather for Shoreham—

Tim Loughton (Conservative, East Worthing and Shoreham)

At least we are consistent about our constituencies.

Nick Raynsford (Labour, Greenwich and Woolwich)

I confessed in a previous sitting to my terrible problem with double-barrelled constituencies. The words East Worthing and Shoreham have at last reached my lips, and I apologise to the hon. Gentleman for getting his constituency wrong.

The hon. Member for East Worthing and Shoreham began by saying that the home condition reports would be too limited and inadequate, and that leitmotif returned at the end of his remarks. He also said that they would lull buyers into a false sense of security. Early in his speech he came up with the simple fact, which we endorse, that a great majority of buyers now obtain no survey or home condition report at all. They enter into what is almost certainly the biggest financial transaction of their life with no information. Far from agreeing on the advisability of encouraging people to obtain some information, the hon. Gentleman took the opposite view and said that the idea was wrong. He then resorted to attacking the proposal on the ground that it would increase cost. However, following his logic and obtaining a more thorough and rigorous survey would cost even more.

What do the Opposition want? Do they want people to be well informed when they take a decision, or ignorant? Do they want them to have a reliable and informative report on which to base a judgment about the need for a further survey? If several important matters in a report received a rating of 4, clearly, any potential buyer would be well advised to obtain further information, but at least the preliminary information would be available.

Tim Loughton (Conservative, East Worthing and Shoreham)

At the moment every person—few as they are—who obtains a survey of a building is guaranteed to receive one that is up to date, because it is commissioned when a sale is likely. The assurance of the impartiality of the report is that it has been commissioned by the would-be purchaser. Is not that the big difference?

Nick Raynsford (Labour, Greenwich and Woolwich)

No, it is not. I notice that the hon. Gentleman immediately tried to sidle away under a different argument, namely the shelf-life of the survey. The key point is that the buyer must be able to rely on the home condition report. We discussed that issue in detail earlier this afternoon, and because it is so important we are setting up a framework that will provide buyers with reports on which they can rely, in contrast to the present state of affairs, in which the vast majority have nothing. It is rich to be accused by the Opposition of foisting unsatisfactory and insufficiently informative reports on the public, when they admit that most people now obtain little or no information.

As to the shelf-life, we have always made it clear that there will be an obligation to produce a first seller's pack and that in general it would be possible to rely on it for a period but that after a time some items might need renewing. In particular, local authority searches would probably require a check after perhaps three months, but, as I have mentioned several times, with the introduction of new electronic communications systems and with NLIS coming on line, it should be possible to carry out a check for a tiny sum of money, to ascertain the validity of the original search. That would be a way of keeping up to date at minimal cost and would be compatible with what we are proposing.

If a property is on the market for a long time, there maybe a need for a further check—particularly in circumstances such as flooding, as was mentioned by the hon. Member for East Worthing and Shoreham. However, the basic information will generally be valid for a significant time and will provide buyers with information that they currently do not have.

Tim Loughton (Conservative, East Worthing and Shoreham)

Surely the point is that it is only a basic search. Given new problems, such as flooding, sensible buyers will have further questions that go above and beyond the scope of the basic search. Further to my earlier point, from which I did not wish to drift, is it not true that if a buyer chooses a property that has been on the market for 12 or 18 months, he will have to pay a premium in commissioning an additional survey because the old one's shelf life has expired? Why should he be prejudiced simply because the seller's property has been on the market for a long time, while someone who bought it after a short time would not have to commission a further report? Why is the Minister so biased against the buyer of such a property?

Nick Raynsford (Labour, Greenwich and Woolwich)

That is a preposterous argument. It is not a question of bias against individuals. We have clearly said that the home condition report will be available to them. We have indicated where it maybe necessary to update it and, in the case of searches, that is likely to be a cost-effective operation. Flooding that affects a property is a serious matter, and someone considering buying a property that has been subject to flooding would be well advised to have further checks made, whatever period had elapsed since the original survey.

If nature sends a flood, it is not the Government being biased against someone who chooses to buy some time after the survey, it is life; it is an act of God. I can tell the hon. Member for East Worthing and Shoreham that that is indicative of the Opposition's approach, which is to seek carping criticisms rather than to recognise that the Bill attempts to remedy a fundamental weakness in our current framework. At present, many people spend money on probably the biggest financial transaction of their lives without any reliable information on the value or condition of the property or the potential cost of any repairs.

Tim Loughton (Conservative, East Worthing and Shoreham)

It is not the Government but the system that is biased against those people that buy properties that have been on the market for a long time. Whatever the Minister may say, they would be well advised to commission their own surveys if there is a threat of flooding or circumstances change. The difference is that the cost of their survey would be on top of the cost of the vendor's home condition report, which would be reflected in the price. The difference is that we have had one impartial survey at the point of sale, which would satisfy all those concerns, and we are now to have two surveys—one HCR and a survey.

Nick Raynsford (Labour, Greenwich and Woolwich)

That is indicative of an Opposition who are focusing on the detail rather than seeing the big picture. I have had cause to chide the Liberal Democrats for not being conscious of the realities of business, and I have to say that the hon. Gentleman has fallen into the same trap. If a property has been on the market for a year or more, it is likely that the vendor will reduce the price in order to secure a sale. To suggest that the person who buys six months, a year or 18 months after the property was put on the market is landed with an additional cost without any potential off-setting saving shows that he is out of touch with reality. The hon. Gentleman will recognise that when properties are on the market for a long time the vendors tend to reduce the price in order to make a sale. The Opposition should ``Get real''. They should think about how the market operates and recognise that this is an important additional provision that will ensure that people are better informed and better able to make rational judgments on something that is hugely important to them. That is the result of the Government's determination to attack the problem instead of trying to justify the maintenance of the status quo, which, sadly, is the Opposition's position. They spent 18 years presiding over a housing market that went through extreme fluctuations of boom and bust, and did nothing about it. Now, they can only carp at and criticise our attempts to put matters right. It is a sad reflection on the Opposition that they are not able to take a more constructive position, and the judgment of history will find them wanting.

Question put and agreed to.

Clause 8, as amended, ordered to stand part of the Bill.

Clause 9 - Enforcement

Tim Loughton (Conservative, East Worthing and Shoreham)

I beg to move amendment No. 14, in page 7, line 15, leave out subsection (1).

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss the following amendments: No. 15, in page 7, line 19, leave out

`by officers of local weights and measures authorities.'.

No. 30, in page 7, line 21, at end add—

`( ) The Secretary of State shall provide resources to cover additional training and operational requirements that local weights and measures authorities may require for the enforcement of this Part.'.

Tim Loughton (Conservative, East Worthing and Shoreham)

The Minister's final comment on the previous amendment reminded me of the old saying by a Member of this House that now is not the time for cliches, but I feel the hand of history on my shoulder.

Clause 9 deals with the enforcement of the penalties that the Government seek to impose on innocent house sellers, who are to join the ranks of people who pursue country sports as criminals. The amendments would decriminalise the faults specified by the clause and take the weights and measures trading standards officers out of the equation. Amendment No. 30 represents a fall-back position. If the Government insist on making such behaviour a criminal offence, with the full force of the trading standards officers to enforce their diktats, we want at least to ensure that those officers are suitably resourced to carry out their duties.

Conservative Members are surprised that the Government are relying on weights and measures officers to carry out their bidding—one would have thought that they already have their work cut out in pursuing sellers of bananas in imperial measures. The metric martyr, Steven Thorburn, will no doubt be the first of many honest tradespeople in this country whom the Government intend to fine and give a criminal record.

Roger Gale (Conservative, North Thanet)

Order. I have a vivid imagination, but, try as I might, I cannot link metric bananas with the sale of housing.

Tim Loughton (Conservative, East Worthing and Shoreham)

The point is not as distant as you might have been led to believe, Mr. Gale. It is essential to the clause that the enforcement procedure is carried out by weights and measures staff. Those same staff are, as we speak, having their resources pressed to the limit by the pursuit of wrongdoers in the shape of purveyors of bananas and assorted loose fruit in imperial, rather than metric, measurements.

Chris Mullin (Labour, Sunderland South)

The regulation that the officers are enforcing, on whatever grounds, was introduced by the Government whom he supported.

Tim Loughton (Conservative, East Worthing and Shoreham)

Yes, indeed. However, by pursuing such people the Government are failing to use common sense.

Geoffrey Clifton-Brown (Conservative, Cotswold)

Two wrongs do not make a right.

Tim Loughton (Conservative, East Worthing and Shoreham)

As my hon. Friend says, two wrongs do not make a right.

Chris Mullin (Labour, Sunderland South)

The hon. Gentleman should not pay any attention to his hon. Friend.

Roger Gale (Conservative, North Thanet)

Order.

Tim Loughton (Conservative, East Worthing and Shoreham)

Let me try another angle. The weights and measures staff who are hiding themselves in piles of bananas in greengrocers up and down the land are also having to deal with the problem of cowboy builders, which the Minister's scheme singularly, and abysmally, fails to address. Despite warnings from Conservative Members, building practitioners and those who look after the victims of cowboy builders—including an effective operation in my constituency called First Checkpoint, of which I am a trustee—the Minister went ahead with a scheme for a quality register mark for builders, but in the entire country two firms only have registered. Meanwhile, cowboy builders are let loose to carry out their cowboy activities. Again, they will have to be checked by overworked, under-resourced members of weights and measures departments.

A solicitor in my constituency commented on weights and measures staff enforcing the extra legislation:

They are grossly overworked and unable to fulfil their existing commitments satisfactorily.

Indeed, it is worth reminding ourselves for what weights and measures officers are already responsible: weights and measures, fair trading, product safety, food standards, consumer credit, business advice, animal health and welfare, licensing, underage sales of alcohol, consumer advice, consumer education and road traffic functions. Policing the sale of 1.5 million British properties each year, which is a large commitment, is to be added to those weighty responsibilities.

There are inadequacies and variations in the weights and measures system, as last year's Audit Commission briefing on the best value agenda for trading standards services pointed out:

In some places, high-risk premises have a less than 1 in 10 chance of being visited each year.

Given that background, the Opposition must ask, regardless of how proper, watertight and effective the Government think their legislative recommendations, whether the weights and measures system can cope with such an additional burden on its time and resources.

As laid out in the legislation, trading standards officers will have the discretion to decide action to be taken when a suspected offence is reported and investigated. They can give advice, issue a warning, offer a formal caution, serve a fixed-penalty notice or, ultimately, commence a prosecution in the magistrates court. Much additional training will be required to help trading standards officers decide which course of action to take, because they will have great discretion in interpreting how the breach of the regulations should be tackled. For example, they will have to work out who constitutes someone acting as an estate agent beyond the conventional estate agent working in an office. That relates to our earlier discussion about the man operating through the man in the pub.

There is also a problem with keeping up with the estate agency business; because estate agents do not have to be licensed, anybody can set up as one. There is a proper trade body called the National Association of Estate Agents which has a code of practice. It has 10,000 members, which is the majority, but not all, of the industry. Of course, they are wholly voluntary members, so adhere to the code on a voluntary basis. Only one third of estate agent firms in this country support the voluntary ombudsman for estate agents scheme, which has been in operation since 1990.

My point is that many estate agents fall outside the trade-body net, and even more fall outside the ombudsman net. The estate agents most likely—it is not inevitable—to transgress the terms of the regulations will surely be those who are not members of official trade bodies or who are not prepared to sign up to ombudsman schemes. It will be much more difficult for hard-pressed trading standards officers to keep tabs on such people, particularly if they do not have obvious offices in the high street. Interestingly, the ombudsman for estate agents specifically is not able to deal with disputes over surveys and formal valuation, so that is a weakness in the system as it stands.

Let us take the example of the trading standards office in my constituency—one of three offices covering the county of West Sussex. West Sussex has eight constituencies and a population of just under 750,000. For the entire county—and I am told that we are relatively well provided for—there are 65 staff. Around half of them are involved in enforcement. Seven give advice, and they are the ones who tend to receive complaints at the sharp end and judge whether there is a case to hand over to enforcement officers or the legal department. West Sussex trading standards receive 16,000 complaints and inquiries a year which, as I said, tend to be filtered through the advice team.

The first problem concerns a general awareness that trading standards will have a role in the proposed provisions. Will members of the public automatically ring up trading standards if they are not satisfied with the seller's packs or the way in which a sale has taken place? They are not the obvious first port of call if something has gone wrong with a house sale. As I said earlier, West Sussex has good provision relative to other authorities. Many authorities have no advice department. That is particularly so in London weights and measures offices, and may be in the Minister's constituency in east London. Therefore, any complaints are referred purely on an inspection basis, often with spot checks from enforcement officers. Many of those departments are completely overwhelmed already.

It is interesting to look at the example of the working of the Property Misdescriptions Act 1991, which was mentioned this morning. As we heard earlier, the Act was introduced after lengthy consideration on rectifying glaring gaps in the previous Labour Government's legislation in 1979 and, before that, in 1968. From talking to trading standards officers, it seems that it has proved fiendishly difficult to secure prosecutions under the Act. Up to 1996, when a five-year review was held—and bearing in mind that there are currently 1.5 million property transactions a year—there had been only 60 convictions. As it is difficult to get convictions under the Act, there is little case law. Typically, cases hinge on disputes over garden size and the nature of leasehold and freehold, for example.

It is almost impossible to secure a conviction for failure to reveal by an estate agent. Failure, either by the seller or the estate agent, to reveal certain defects which then become apparent after the sale has gone through is not unusual, but prosecuting it is highly difficult. Therefore, the experience of trading standards officers in pursuing house sale legislation in the form that has been on the statute book for almost 10 years is not good. Any trading standards officer will say that, despite their current resources, they are not able in practice properly to bring to bear the full requirements of the legislation.

There is a very interesting case from 1997 that went to the Court of Appeal: McCullagh v. Lane Fox and Partners. Lane Fox was instructed to sell a five-bedroom house in 0.48 of an acre of land for £850,000, but owing to a mistake by the agent in reading the measurements, the plot was recorded as 0.92 of an acre—almost double its actual size. The particulars included a standard disclaimer. Will the Minister to take up the point of whether standard disclaimers on estate agents seller's packs will have any bearing in the matter? Although the judge ruled that Lane Fox and Partners owed a duty of care to Mr. or Mrs. McCullagh in respect of the negligent mis-statement, he said that there had been no financial loss and therefore dismissed the action. That is just one example of how difficult it has proved for trading standards officers to bring convictions under the 1991 Act.

Opposition Members do not believe that, despite the exemptions on which the Government have sought to reassure us at various stages, not providing all the necessary component parts of a seller's pack, for whatever reason, should be a criminal offence. Earlier legislation deals with fraud , but the worst cases could be pursued under the Bill. There may be a case for fines, the threat of fines or penalties, but to make the offence criminal is to go over the top.

We believe that the provision is unworkable. The practice of using trading standards officers to enforce previous legislation connected with house sales has clearly proved unworkable. At present, trading standards offices are overworked. They are being asked to take on increasing amounts of work to impose the Government's will and are given precious few additional resources for that increased work. They are also having to undergo a harsh best value audit. Therefore, in the best interests of the Bill, the omission should not be deemed a criminal offence and weights and measures officers should not be required to enforce it. Related legislation has not worked over the past 10 years, so why should the Bill?

Geoffrey Clifton-Brown (Conservative, Cotswold)

My hon. Friend the Member for East Worthing and Shoreham gave an excellent exposition on amendments Nos. 14 and 15, but rather glossed over amendment No. 30, although the compliance costs of the Bill are highly germane to the clause. Will the Minister tell the Committee exactly how many extra weights and measures officers he expects will be needed to police the Bill and who will be responsible for training them in their new duties? They will have no experience in property matters. Presumably, therefore, their existing work will have to be covered while they are being trained.

How much will the extra officers cost and will local authorities be fully reimbursed for that extra cost? Might we find, as on so many occasions, that local authorities are given an extra statutory burden but are not fully recompensed by central Government for it? If so, the extra burden will fall on council tax payers, many of whom are likely to face a settlement this year that is way above inflation and who will be howling from the rooftops at the Government's treatment of them even before additional costs are imposed by the Bill. So that local council tax payers may have an idea of what the Bill will impose on them, the Minister should give the answers to my questions.

Chris Mullin (Labour, Sunderland South)

As the hon. Member for East Worthing and Shoreham says, amendments Nos. 14 and 15 would remove the references in the clause to local weights and measures authorities, but would leave intact the associated provisions relating to fixed penalties. The amendments would remove any practical means of enforcing the seller's pack obligations. We have not chosen to impose a criminal sanction lightly. We believe that that is the only truly effective way in which to ensure that everyone complies with the new requirement. The vast majority of people abide by the law, but there will always be some who seek to take advantage if given half a chance. That is why effective sanctions are necessary.

Under our proposals, local weights and measures officers will be responsible for enforcing the seller's pack requirements. The hon. Member for Cotswold said that they have no experience of property matters, but that is nonsense. They are ideally placed to carry out that function. As has been noted, they are already responsible for enforcing the Property Misdescriptions Act 1991 and parts of the Estate Agents Act 1979. Enforcing the seller's pack obligations is in many respects complementary to the activities of trading standards officers under those Acts. Our proposals will therefore provide an experienced and cost-effective means of enforcement. I shall discuss in a moment some of the details to which reference was made.

Some Opposition members of the Committee have tried to paint a lurid picture of sellers being dragged through the courts by jackbooted trading standards officers on the basis of a casual conversation in a public house, in which they happened to mention that their house was up for sale. To be fair, the hon. Member for East Worthing and Shoreham has not drawn that comparison on this occasion, but on two others he has used the word ``Gestapo''. Trading standards officers are public servants who do a very good job, so perhaps the hon. Gentleman might like to take this opportunity to put on record an apology, or at least to make it clear that he was talking about someone else. I can think of no other candidates, so it seemed to me that he was indeed referring to trading standards officers.

Tim Loughton (Conservative, East Worthing and Shoreham)

I am delighted to put it on the record that we do not intend to insult or besmirch the names of any of the hard-working, hard-pressed and under-appreciated members of trading standards offices throughout the country. In the heat of Second Reading, perhaps the word ``Gestapo'' was taken out of context. I might say instead that the tactics that we will debate in respect of schedule 1—the powers that will be given to trading standards officers—at the very least have something of the night about them.

Chris Mullin (Labour, Sunderland South)

I am not sure to what extent that constitutes an apology. I do not think that the hon. Gentleman's remarks were made in the heat of the moment. I accept that explanation in relation to Second Reading, but his repeating them in Committee rather suggests that they were premeditated. If a Labour Member were to make such a comment, mass hysteria would be organised by the Opposition. As on many past occasions, the Prime Minister would be asked to dissociate himself from the Member concerned. We have been through this many times before—it is a little game called ``denounce'', which the Opposition when in government used to play often and with considerable success.

Geoffrey Clifton-Brown (Conservative, Cotswold)

The Minister is playing a very mischievous game on my hon. Friend the Member for East Worthing and Shoreham. He used the term because Conservative Members wholly deprecate the giving of yet another group of criminal sanctions to civil servants. Criminal sanctions are unnecessary, because the civil procedure of fixed penalty could perfectly well be adapted for the Bill.

Chris Mullin (Labour, Sunderland South)

It is possible to make that point without calling trading standards officers gestapo, as the hon. Member for Cotswold—although not his colleague, unfortunately—has demonstrated. I am sure that you do not want me to labour the point, Mr. Gale. I thought that I should give the hon. Member for East Worthing and Shoreham the opportunity to apologise, but it is clear that he does not want to.

The truth is less sensational. In most cases, no offence will have been committed, as there will have been no marketing to the public or a section of the public. However, even if a technical offence is committed, enforcement officers will have a range of options to go through before anyone is taken to court. In the vast majority of cases, in which someone has made an honest mistake in marketing a home without a seller's pack for example, trading standards officers will be able to provide advice or a warning, which will be the end of the matter.

The hon. Member for East Worthing and Shoreham said that there had been only 60 prosecutions under the Property Misdescriptions Act 1991. Incidentally, hon. Members may be interested to know that there are criminal sanctions attached to the legislation, and I think that it was introduced by one of the hon. Gentleman's former colleagues. The reason for the small number of prosecutions may be that trading standards officers have employed the large range of other sanctions, ranging from advice to slightly more direct measures, and it has not been necessary to go round prosecuting lots of people. Trading standards officers are sensible people, and they do not prosecute lightly. They may have managed to enforce the Act without difficulty.

Tim Loughton (Conservative, East Worthing and Shoreham)

To use the phrase used by the Minister for Housing and Planning, if the Under-Secretary gets out into the real world and talks to trading standards officers, he will find that they are frustrated, although not because they have mitigated criminal proceedings to the lesser course of action that they are allowed to take. They are frustrated about the impossibility of making convictions stick so that cases never get near a court in the first place. I was making the point that that is the real weakness with the Act.

Chris Mullin (Labour, Sunderland South)

Of course one needs evidence to make a prosecution stick, but in the overwhelming majority of cases of infringements that I anticipate under the Bill, prosecution will not be necessary. In cases in which the offence is considered to be a little more serious, trading standards officers may issue a formal caution. The next option is a fixed penalty. We have it in mind that that penalty will be about £150 to £200, in line with the general level of fines commonly imposed by magistrates courts for offences under the 1991 Act. That form of sanction may be considered if someone continues to market a property without a seller's pack, despite receiving a formal caution. Payment of a fixed penalty does not mean that someone will have a criminal record, which is a rather important point.

The ultimate sanction is a summons to a magistrates court. A court will hear a case after service of a fixed penalty notice only if a person chooses not to pay the fixed penalty. That may happen if the person believes that they are not guilty of any offence. It is an important provision, which means that everyone has an effective opportunity to challenge the service of the notice. In other cases, proceedings may be started without the service of a fixed penalty notice. That option may be considered if an estate agent has consistently flouted the law by continuing to market properties without seller's packs, despite repeated warnings and fixed penalties.

We want to avoid unnecessary court proceedings and avoid unsuspecting home owners being caught up in sanctions. The Bill gives local weights and measures authorities considerable leeway to exercise discretion in the use of the sanctions available, and I have every confidence that they will do so, especially where private citizens are concerned.

We have consulted the Local Authority Co-ordinating Body on Food and Trading Standards, and the only concern relates to our decision to impose the seller's pack duty, backed up by criminal sanctions, on home owners who market their own homes. As the vast majority of homes are marketed through estate agents, we considered restricting the seller's pack requirement to people marketing homes in the course of a business. However, there are fundamental drawbacks with that option. Sellers seeking to avoid the cost of an up-front seller's pack would be tempted to market their homes themselves, rather than through an agent, to avoid the seller's pack requirement. That would lead to the two-track system and the chain problems mentioned earlier, and would undermine the Bill's objectives. People are naturally worried that imposing on private individuals criminal sanctions that are enforced by local trading standards officers will have a detrimental impact on public perception of those authorities and hamper their efforts to ensure the adequate protection of consumer interests. That is not our intention, as my Department has made clear to LACOTS.

In enforcing the seller's pack duty, trading standards officers will have extensive discretion within the principles of good enforcement detailed in the enforcement concordat. We shall consult LACOTS and others on the best means of ensuring that trading standards officers can provide effective help and advice to consumers and avoid unnecessary sanctions. We envisage the trading standards officer's role as protecting the interests of consumers, by which I mean responsible home buyers and sellers.

Amendment No. 30 would require the Secretary of State to provide the resources that local weights and measures authorities need to carry out their enforcement duties—additional resources to cover the additional training and other operational requirements imposed by the Bill. The cost implications of enforcing the duties will be considered, and the additional funds that are considered necessary will be taken into account in the appropriate local government financial settlement. My hon. Friend the Minister for Housing and Planning has already been in touch with my right hon. Friend the Minister for Local Government and the Regions about the matter.

Bids for additional resources will be treated in the usual way, but to return to the point made by the hon. Member for Cotswold, preliminary signs from LACOTS suggest that such bids are unlikely to be significant, given the complementary nature of the work and trading standards officers' existing duties under the Property Misdescriptions Act 1991. When the matter arose a few days ago, the hon. Member for Eastbourne described our figure of £5,000 as the average cost per authority—what we believe is likely to be the increase in cost to each authority on average—as ``amazing''. The hon. Member for Bath (Mr. Foster), who is not now present, also queried it.

I emphasise that the estimate was not ours but was provided by LACOTS, which has since confirmed it. It is totally bogus to suggest that the proposals will cost too much money, that no one will be able to afford to implement the proposals and that overworked trading standards officers will simply not have the time. The estimate was made by LACOTS, which says that the proposals are liable to cost an average of £5,000 per authority. That body represents the interests of trading standards officers, and is responsible for, among other matters, consideration of issues arising in connection with consumer protection matters. If, however, hon. Members have a more reliable source of information than LACOTS, perhaps they could share it with me and, indeed, LACOTS, as I expect that it would be interested.

Geoffrey Clifton-Brown (Conservative, Cotswold)

The Under-Secretary is once again being rather mischievous and cursory in his remarks. Does he agree with the LACOTS estimates? Does he believe that they are too large or too small? Will he give the Committee a cast-iron guarantee that, whatever costs local authorities incur—they will incur different costs, as some will have more difficult cases with which to deal than others—those costs will be met by the Government in full? Otherwise, local authority treasurers will be scratching their heads and worrying about how much provision to make to offset the cost of the Bill.

Chris Mullin (Labour, Sunderland South)

I shall not give guarantees, but I hope that any sensible person will realise that £5,000, in the overall context of a trading standards officer's budget, is a rather small sum. That is not my estimate; I am not qualified to make one, but I believe that LACOTS is. If the hon. Gentleman knows of a more reliable source of information, we shall take it into account. As I said, my hon. Friend the Minister for Housing and Planning has been in touch with my right hon. Friend the Minister for Local Government and the Regions, and if a bid needs to be made for increased resources, it will be dealt with in the usual way.

Geoffrey Clifton-Brown (Conservative, Cotswold)

That is simply not good enough. The Government should have produced realistic cost estimates. Do they agree with the LACOTS estimate? Is it too high or too low? As they are imposing obligations on local authorities, they have a duty to tell them what costs they expect the Bill to impose.

Chris Mullin (Labour, Sunderland South)

I have absolutely no reason to doubt the LACOTS estimate. However, if, by some chance, it was 100 per cent. wrong, and the figure was £10,000 not £5,000, that would not devastate local government finance.

We are serious about enforcing the Bill. If compliance is optional or extremely difficult to enforce, not many seller's packs will be used. There is no middle way—one is either in favour of enforcement or against it, and we have sound reasons for favouring it.

The hon. Gentleman's argument is undermined by the fact that the previous Government introduced several pieces of property legislation—including the Property Misdescriptions Act 1991 and the Estate Agents Act 1979—which contain precisely the same sanctions enforced by precisely the same people.

Tim Loughton (Conservative, East Worthing and Shoreham)

It is a shame that the Minister dismisses so complacently the points that we have made, which are perfectly genuine and were made to us by the people who will have to enforce the regulations—some of which are highly unenforceable—regardless of whether they have the resources to do so. We did not invent these objections to undermine the Bill; they are based on the comments of council employees in our constituencies who will have to enforce it.

I have provided perfectly feasible examples of problems arising from existing legislation in terms of property descriptions that fail to have the effect that the 1991 Act was fashioned to achieve. The Minister acknowledged that only 60 prosecutions were made in its first five years, but he does not care about that. On top of the failure properly to execute the terms of 1991 Act, the entire private residential house selling industry is to fall into the lap of trading standards officers.

The Bill does not merely give staff a little more work to do or a few more areas to regulate. In my county, under the scheme to be introduced in two years' time, 65 staff will be responsible for 1.5 million properties a year. The Minister has not said whether, if more staff are required, additional resources will be provided to enable them properly and adequately, within the letter and spirit of the Bill, to carry out the additional job that has been given to them.

The Minister was woefully complacent in responding to our concerns. Moreover, he completely failed to deal with the point about standard disclaimers on literature that may be included in seller's packs.

Chris Mullin (Labour, Sunderland South)

I am advised that the inspector is liable, regardless of any disclaimer that he places in his literature.

As for the hon. Gentleman's accusation about my attitude to the figures produced by the West Sussex trading standards officers, it is not true that I did not care about them. Indeed, I acknowledged the figures in my remarks, but interpreted them less extravagantly than he does.

Tim Loughton (Conservative, East Worthing and Shoreham)

The Minister danced around the gestapo issue, which he regularly regurgitates to deflect attention from the serious shortfalls in the Bill. If he thinks that an apology is necessary, I unreservedly apologise for any misrepresentation that he sought to make of my earlier comments. However, my postbag and telephone have been bereft of communications from trading standards officers. Many trading standards officers are more sensible than the Minister thinks, because they know not to take those comments personally or professionally. If anyone is acting like the gestapo—whatever that may mean—it is the Government, who give trading standards officers their orders. They are only obeying orders that the Minister gives them through the legislation.

My hon. Friend the Member for Cotswold put his finger on the key issue, namely, that the existing civil penalty procedure can deal with the problems that the Government are trying to address. The Minister is right to say that this argument goes to the heart of the legislation. In many cases, he could achieve more on a voluntary basis. We certainly do not need the full criminal law coming down on people who are going about the legitimate business of trying to sell their house. On that basis, I urge my hon. Friends to support the amendments, which go to the core of whether the problem should be treated as a criminal matter, to a vote.

Geoffrey Clifton-Brown (Conservative, Cotswold)

My hon. Friend has heard the Minister's replies to my questions about the costs that will be imposed on local authorities and how many extra trading standards officers will be needed to police the Bill. We have an estimate from a body that the Government do not control, so we do not know whether they have any idea what the costs are. Furthermore, we have had no information as to how many extra officers will be required to police the Bill. Given those circumstances, the Government are not living up to the standards expected by the House. They have introduced a Bill, but they are unable to answer basic questions about it—all that we get is snide comments from the Minister.

Tim Loughton (Conservative, East Worthing and Shoreham)

I fear that my hon. Friend is right. I fear that the standards that the House expects from the Government have been on a slippery slope since 1 May 1997. The complacency with which the Minister treated these important points, which will affect people in the Government's employ who will have to enforce these unenforceable provisions, is scandalous. On that basis, we shall press the amendments to a vote.

Question put, That the amendment be made:—

The Committee divided: Ayes 3, Noes 9.

Schedule 1 - Fixed penalties and enforcement

Tim Loughton (Conservative, East Worthing and Shoreham)

We have already discussed part of the schedule, which concerns fixed penalties and enforcements. I do not intend to rake over previously covered ground, but I have about half a dozen points that I would like the Minister to clarify. Paragraph 4(1) states that there is a facility for withdrawal of a fixed penalty notice. In what circumstances does he envisage that withdrawal notices will be used? Under paragraph 6(4), a weights and measures officer who has reason to believe that documents might be required is empowered to

seize and detain them and . . ., if he does so, inform the person from whom they are seized.

If the fault is deemed to lie with the estate agent who has the documents necessary for a seller's pack, and if that agent has jumped the gun and commenced marketing without first assembling the component parts of the seller's pack that the Secretary of State has deemed appropriate, it is the vendor of the house who could be most inconvenienced. If weights and measures officers were to seize documents from the estate agents Bloggins & Co., would the sale of the house be left in limbo? Given that it might take time to establish what action will be taken, and to pursue what might prove a criminal action, the vendor could be left sitting on a house that he is not allowed to sell. Would the vendor be able, for example, to end his contract with the potentially criminalised estate agent and move the sale—lock, stock and barrel—to another agent? If so, how will the seized documents be resecured, so that they may form part of the alternative agent's seller's pack? We must address that practical problem, so that we can protect the vendor.

The word ``reasonable'' appears several times in paragraphs 6 to 8. Weights and measures officers are empowered to make reasonable inquiries and to secure documents that are reasonably relevant. What safeguards exist to ensure that reasonableness will not be stretched to its limits by a trading standards officer who, for example, has a grudge against a firm of estate agents whom he failed to convict for reasons that we have discussed? How will ``reasonableness'' be defined? I can find no definition of it in this context.

Under section 7—and, indeed, under section 6—weights and measures officers who have seized documents are obliged to

inform the person from whom they are seized.

Again, that person is most likely to be an estate agent, but there seems to be no requirement for the weights and measures officer to inform the vendor of the house. Surely the vendor should have an equal right to know that there is a potential problem with the sale of the house. A particularly unscrupulous estate agent—if such a person exists—could choose not to inform the vendor that he was the subject of an investigation by a weights and measures department, and that the documents that formed part of the seller's pack had been seized. The vendor could be under the impression that the estate agent was marketing the house, and wondering why no callers are viewing it, only to discover that marketing had technically been suspended because an investigation was under way. The Bill should surely require that the vendor be notified of any seizure of documents or action against an estate agent. I am surprised that I can find no reference to such a requirement.

Paragraph 7(4) states:

The powers of an officer under this paragraph may be exercised by him only at a reasonable hour and on production (if required) of his credentials.

Again, there is the question of the definition of reasonableness. Reasonable hours as kept by the Under-Secretary might be rather different from those kept by the estate agent Bloggins & Co. Can the Under-Secretary provide more detail on what constitutes reasonable hours?

This is a long schedule with many technical and, if I may say so, vague references. I have asked a mere soupccon of the many questions that practitioners will ask themselves when faced with this terminology. Given the time and effort that the Under-Secretary has spent on fashioning what he sees as foolproof legislation, I trust that he will be able to answer my questions immediately and off the top of his head, without referring to any notes that might be handed to him.

Chris Mullin (Labour, Sunderland South)

As it happens, I could have guessed most of the answers that I have received, because they largely concern matters of common sense.

One must bear in mind throughout this discussion that the schedule, like the enforcement clause that we have just discussed, is lifted almost entirely from the Property Misdescriptions Act 1991, which was introduced by the previous Government. The same questions might therefore have been asked of that Act, although I doubt whether they were.

The hon. Member for East Worthing and Shoreham asked about the circumstances in which paragraph 4(1), which will enable withdrawal of a fixed penalty notice, will be used. It will be used, for example, if a mistake has been made. Has it occurred to the hon. Gentleman that people sometimes make mistakes? Not everybody corrects their mistakes, of course, but trading standards officers do. He asked whether paragraph 6(4), which enables the seizing of documents, would in such circumstances leave the sale in limbo. In fact, the vendor would not be prejudiced by seizure because copy documents can be made and he could retain his own copy.

The hon. Gentleman asked what safeguards exist in terms of the reasonableness of trading standards officers' behaviour. The short answer to that is the British legal system. He asked who is to notify a person whose documents have been seized. That is the estate agent's job, because he has a contractual relationship with the vendor and is therefore liable. The hon. Gentleman also asked what constitutes a reasonable hour for the exercising of an officer's power. Here he is returning to his ``something of the night'' argument, in which he imagines trading standards officers exercising their powers in a gestapo-like fashion at 4 o'clock in the morning. That might happen in west Sussex, but it certainly does not in Sunderland. His guess as to what constitutes a reasonable hour is as good as mine, but I imagine that the English courts might have something to say if officers started bashing down doors at 4 o'clock in the morning. I rest my case.

Tim Loughton (Conservative, East Worthing and Shoreham)

I am glad that the answers were so simple and such a matter of common sense that the Minister still needed to read the notes that were thrust under his nose. That shows that the answers were not obvious. Indeed, they give rise to further questions.

Of course a sale will not be interrupted, because only copy documents are required—there will not just be one seller's pack. However, the weights and measures officer will, presumably, have taken action either because something in the seller's pack is incorrect, or because something has not been included in it. Could the sale process be restarted for the vendor, seamlessly and straight away? Could it be restarted with the same firm of estate agents, which would then be required simply to insert the missing document or correct the erroneous one? Given the basis of employee or employer responsibility and liability, could the sale continue with the same estate agent even though an employee of that estate agency was the subject of a criminal investigation? There is a potential conflict of interest. If the sale cannot be restarted with the same estate agent, how easily can it be transferred to an alternative firm?

For the Minister yet again to dismiss my question in a complacent manner is most unsatisfactory. He tells us that the estate agent is contractually obliged to communicate to the vendor that a sale has been interrupted or suspended—whatever terminology he chooses to accept. Where in the contract is it clearly stated that the estate agent has a contractual duty to inform the vendor of any seizure of documents, any interruption or potential interruption of the sale through the actions of weights and measures officers? We, as laymen, want the answers, but so do technical experts and practitioners in the field. It is not a matter of common sense. There are many details still to be provided. The Minister—solo—did not know the answers. We should approach the questions with rather more seriousness than he has shown.

Chris Mullin (Labour, Sunderland South)

I dealt with all the points head on. The notes that I was struggling to read were my own. They were to remind me of the clauses to which the hon. Gentleman had drawn my attention. He asked whether the sale could continue. Yes, it could, although it is possible that the vendor might have lost confidence in the estate agent if there had been a raid that resulted in documents being taken away. The cause of the raid might have been a complaint from the vendor, which would make it highly likely that he would want to go elsewhere. That is a matter for the vendor to decide.

The hon. Gentleman asked about the estate agent's duty to inform the vendor in the event that he is investigated. The estate agent has a duty to market the property. He has a duty towards the vendor from the moment an agreement is reached. A contract does not have to written down in black and white, although there will be terms and conditions that are standard to the profession. The estate agent will be expected to perform his duty to the best of his ability. If he keeps quiet about some relevant consideration, such as the fact that he is, in some way, under investigation, he will be in breach of that duty.

Question put and agreed to.

Schedule 1 agreed to.

Clause 10 ordered to stand part of the Bill.

Clause 11 - Offences by bodies corporate etc.

Tim Loughton (Conservative, East Worthing and Shoreham)

I beg to move amendment No. 46, in page 7, line 41, leave out subsection (1) and insert—

`( ) Any offence under this Part committed by a person in the course of his employment shall be treated as committed by his employer as well as by him, whether or not it was done with the employer's knowledge or approval, unless the employer shows that he took such steps as were reasonably practicable to prevent the employee from committing that act, or from doing in the course of his employment acts of that description.

( ) Any offence under this Part committed by a person as agent for another person with the authority (whether express or implied, and whether precedent or subsequent) of that person shall be treated as having been committed by that other person as well as by him.'.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to take Government amendments Nos. 57, 58, 59 and 60.

Tim Loughton (Conservative, East Worthing and Shoreham)

Amendment No. 46 refers to clause 11, which is about offences by bodies corporate. The Government have tabled amendments on similar lines. It refers to a point that I made previously about corporate as opposed to employee liability, and it seeks to clarify the position of the relationship between the employee and employer as regards such offences.

We believe that the wording in the Bill, which we want replaced with that in the Government amendments, seems to place too heavy an onus on the employee as the responsible party. Our wording reflects the balance more appropriately. Only if the employee acted outside the course of his duty, as a rogue trader—a rogue estate agent—would he be likely to be first in the line of fire.

I commend the amendments because I believe that the new wording creates a better balance between the employer and employee. Will the Under-Secretary confirm whether the employee would be prosecuted if an offence were committed only if he acted outside his course of duty, as a rogue trader?

Chris Mullin (Labour, Sunderland South)

Clause 11 deals with offences by corporate bodies. Subsections (1) and (2) provide that when an offence is committed due to the act or default of an employee of a business, or of an officer of the business, it will be possible to take out proceedings against the employee, the officer, the employer or indeed all of them depending on the circumstances of the case. For the purposes of the Bill, ``officer'' includes a director, manager, company secretary or similar. Subsections (4) and (5) set out similar provisions with regard to co-operatives and partnerships.

Amendment No. 46 is in two parts. The first would provide that, when an employee of a company was responsible for committing an offence, it should be presumed that both the employee and the company were guilty, unless the company could demonstrate that safeguards designed to prevent such offences from occurring were in place.

That limb of the amendment is unnecessary, because the employer will already be the responsible person as a consequence of clause 15(2). In effect, that means that the employer is responsible for actions taken by an employee. However, the defence in clause 6(1) would apply if the employer could show that the precautionary steps described in the amendment had been taken. The provisions of the Bill are modelled on similar provisions in the Estate Agents Act 1979, the Property Misdescriptions Act 1991 and most consumer protection legislation. That means that estate agents, trading standards officers and the courts are already familiar with the relevant concepts.

The second branch of the amendment would provide that when the offence was committed by someone acting as an agent for a person—but with that person's authority—the person would also be liable to be proceeded against. The Bill provides that the penalties for breaching those duties apply only to the person responsible for marketing the property in question. That may be the seller, someone acting as the seller's agent or both of them if, for example, the seller is engaged in marketing his or her own home as well as using the services of an estate agent.

Individuals who market their own homes without the services of an estate agent will be responsible for their own actions. In cases when a person acting as an estate agent is responsible for marketing, it will be up to the agent to ensure that the seller's pack obligations are complied with, as he will bear the consequences if they are not. If, therefore, an estate agent were deliberately to market a property with a defective pack because, say, the seller asked him to do so, the agent would be liable to any resultant proceedings under the enforcement provisions of the Bill. Those proceedings would not involve the seller who had put him up to committing the offence. To seek to do so would cut right across the concept of responsibility set out in clause 2. However, an individual might be guilty of an offence under other legislation, if it could be proved that he or she aided, abetted, counselled or procured a breach of the law.

Under our proposals, the duty on estate agents is clear. They are for the most part responsible professionals who will abide by the law and not risk losing their livelihood by colluding in breaches of it. I hope that my explanation has been helpful.

Government amendments Nos. 57, 58, 59 and 60 all make drafting changes intended to make the clause easier to understand. I therefore ask the hon. Gentleman to withdraw amendment No. 46 and to accept the Government amendments.

Tim Loughton (Conservative, East Worthing and Shoreham)

I know that the Committee is keen to make progress. I am grateful for the Minister's clarification, and note the Government amendments. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Roger Gale (Conservative, North Thanet)

I should point out—I am sure that the Committee is aware of it—that I have agreed with the usual channels that we shall sit today until 7.30 pm. If the adjournment is moved at or before that time, the Committee will rise and sit next on Thursday morning. However, if the adjournment has not been moved by 7.30 pm, I shall adjourn the Committee for an hour and a half.

Amendments made: No. 57, in page 7, leave out lines 43 and 44 and insert

`also guilty of the offence and liable to be proceeded against and punished accordingly.'

No. 58, in page 8, line 3, leave out from `he' to end of line 6 and insert

`is also guilty of the offence and liable to be proceeded against and punished accordingly.'

No. 59, in page 8, line 16, leave out from `he' to `guilty' and insert `is also'.

No. 60, in page 8, line 17, at end insert—

`(6) A person who is guilty of an offence under this Part by virtue of subsection (1), (2) or (5) may be proceeded against and punished whether or not proceedings are also taken against the employer, body corporate or partnership in question.'.

Clause 11, as amended, ordered to stand part of the Bill.

Clauses 12 and 13 ordered to stand part of the Bill.

Clause 14 - Acting as an estate agent

Geoffrey Clifton-Brown (Conservative, Cotswold)

I beg to move amendment No. 53, in page 8, line 41, leave out from `Only' to `a' and insert

`a person who in the course of a business is engaged in estate agency work and who has'.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss amendment No. 48, in clause 15, page 9, line 18, at end insert

```estate agency work'' has the meaning given by section 1(1) of the Estate Agents Act 1979;'.

Geoffrey Clifton-Brown (Conservative, Cotswold)

It is worth pausing in order to probe the Government a little further on precisely what they mean by acting as an estate agent. It is a curious anomaly that anyone can set up as an estate agent; they need no training or experience to deal with what, for many, is the most expensive and important transaction in their lives.

Most estate agents are covered by one or more of the professional bodies and will have had extensive training; many will have had many years' experience and be able to handle such matters with a great deal of professionalism and the requisite judgment. However, cowboy agents, with no experience or training, can set up a stall overnight. They may be covered by section 22 of the Estate Agents Act 1979, but that deals only with ethical matters and not with minimum standards of competence. It would be interesting to know whether the Government believe that the Bill should impose minimum standards of competence. After all, the purpose of the Bill is to make buying and selling of houses quicker and more efficient. The cowboys are precisely the sort of people who ought to be rooted out.

I wish to probe the Government also on exactly what the Bill covers. For example, does it cover firms or individuals who are not estate agents but who have set themselves up to handle a particular sale and who then subcontract the work to an estate agent? In such circumstances, the firm or individual that started the process would be liable for producing the seller's pack, but if they were not skilled in the work of estate agency, how would they know whether the seller's pack was complete in all particulars? It would be useful if the Government were able to give us some idea of their thinking. I shall let the Minister reply before saying any more.

Nick Raynsford (Labour, Greenwich and Woolwich)

Clause 14 identifies who is to be regarded as a person acting as an estate agent for the seller of a residential property. The amendments would replace the definition of

an individual, body corporate or partnership with a place of business in England and Wales

with the definition of someone engaged in ``estate agency work'', as set out in the Estate Agents Act 1979. I understand the motives that have led to the amendments, but, although the definition of an estate agent in clause 14 draws on the definition of estate agency work used in the 1979 Act, for several practical reasons it is not appropriate to use that definition in the Bill. I hope that when the hon. Gentleman hears the explanation he will accept it.

In considering why the 1979 Act definition is not appropriate for the Bill, we need to remind ourselves of the link between marketing and the requirement to provide a seller's pack. First, the 1979 Act definition includes several other actions by estate agents that do not involve marketing. It could include acting for a buyer, which would not come within the ambit of the Bill. It could also include acts preparatory to the marketing of a property, which might even include the preparation of a seller's pack. Both those activities do not relate to marketing and are therefore outside the scope of the Bill.

Secondly, the 1979 Act definition omits several situations that we would want to include in the scope of the Bill. For example, section 1(2)(a) specifies that the Act does not apply to things done

in the course of his profession by a practising solicitor or a person employed by him.

However, under the new provision it will be possible for a solicitor to prepare a seller's pack. Indeed, it is likely that some solicitors will be inclined to become involved in a range of services, so that they can provide a seamless service to customers. While solicitors' property shops are not yet as common in England and Wales as they are in Scotland, we believe that their numbers may increase as a result of the business opportunities offered by the seller's pack.

Clause 14 contains a definition of estate agency work that we have developed to be appropriate to the Bill. It draws on and is close to the definition in the Estate Agents Act 1979, but it also reflects the requirements of the Bill. I realise that there might be some virtue in maintaining a single definition for the same profession in the 1979 Act and the Homes Bill. However, the definition that we have used makes it abundantly clear to estate agents which of their activities might cause the obligations under the Bill to apply. There is nothing confusing about the definition, which closely echoes the definition in the 1979 Act, but which is preferable in the context of the Bill.

Geoffrey Clifton-Brown (Conservative, Cotswold)

The National Association of Estate Agents is worried by the two different definitions. Will the Minister explain more precisely why the definition under section 1(1) of the Estate Agents Act 1979 could not have been used in the Bill? It would have made matters simpler for everyone involved in the estate agency business and for trading standards officials trying to enforce the Bill.

Nick Raynsford (Labour, Greenwich and Woolwich)

As I pointed out, the definition in the 1979 Act includes several activities that do not come within the ambit of the Bill. To include them would be confusing, because it might imply a potential liability with respect to an offence. In fact we have carefully avoided that. For example, section 1(1)(a) of the Estate Agents Act 1979 mentions acting

with a view to . . . effecting the introduction to the client of a third person who wishes to acquire

a property. The hon. Gentleman's example, which he gave in an earlier discussion, of an estate agent acting perfectly properly within the ambit of estate agency work, would not come under the Bill. That is why the distinction is necessary.

As to the hon. Gentleman's argument that estate agents should be licensed, the Government, like their predecessor, do not favour regulation except where it is absolutely necessary. The Department of Trade and Industry is keeping an open mind on whether estate agents should be formally licensed. At present, the Department is not convinced that that would deliver a significant increase in the level of consumer protection. The Director General of Fair Trading already has powers to act against estate agents who breach the requirements of the Estate Agents Act 1979 and he has shown that he is prepared to use them where justified.

It would be helpful if I clarified a point that was twice raised on 18 January by the hon. Member for Cotswold. It concerns the position of an estate agent who introduces a client seeking to buy a property to another estate agent who is marketing a property, or to a seller. I have taken further advice. Where an estate agent acting for a potential buyer seeks to introduce him to another of his clients who is trying to sell a property, the agent will have to have a seller's pack in his possession. The requirement to have a pack will be by virtue of the fact that the estate agent is acting for the seller rather than because of the business relationship with the buyer. So where an estate agent acting for a buyer seeks to effect an introduction to a seller for whom the agent also acts, there will have to be a seller's pack.

However, an estate agent who acts only for the potential buyer is not required to have a seller's pack as he is not marketing anything nor is he acting on instructions from the seller. I hope that that clarifies the matter. The hon. Gentleman will now be aware of the distinction. I am grateful for the opportunity to set the record straight on that important matter, not least for the National Association of Estate Agents, who will be able to read our proceedings in the Official Report.

It is a common occurrence for more than one agent to be instructed by a seller to market the same property, a situation that is known as multiple agencies. Once the Bill comes into force, each agent so instructed will be required to have a copy of the seller's pack in his possession. That is logical.

However, the National Association of Estate Agents has raised the circumstance where an agent acts solely as a sub-agent for another and therefore has no relationship with the seller, that being solely the responsibility of the main agent. In such circumstances, it would be excessively onerous to require the sub-agent to have a seller's pack. Therefore, where the marketing is carried out by the main agent through sub-agents, the agent would have the obligation to hold the seller's pack at all times without the requirement applying to all sub-agents. That seems a practical and sensible way forward. I hope that it will comfort those worried about how the obligations of the Bill will apply on that complex issue.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I am grateful to the Minister. He always answers in a concise and helpful way. I shall probe him further about two aspects.

Does the Minister think that clause 14 will catch everyone who purports to be an estate agent? Will it catch the rogue person, who sets himself up as an estate agent overnight, and simply puts up a board stating that he is a house seller? Will it catch the person who is open for whatever business, house selling being one of many activities? Will the clause catch the trader who is not normally recognised as an estate agent?

We have talked about the draconian sanctions under the Bill, but what if one happens to be the poor, unfortunate vendor caught up by an unregistered estate agent? It could be a catastrophic experience. The Government should keep an open mind. If it appears that one or two people are providing a less than professional service because they are not registered with any of the professional bodies, it would be reasonable to consider revisiting the question of whether it should be compulsory to be registered as an estate agent. It is a serious matter that concerns the largest transaction that someone is likely to make in their life. We do not want untrained people acting for sellers and buyers of houses. It will not do the estate agency profession or its image any good, and it will provide a lurking danger to the general public. Sales may go wrong rarely, but when they do, they will go wrong with a vengeance, and those most important transactions will become much more difficult and expensive.

Nick Raynsford (Labour, Greenwich and Woolwich)

I hope that I can give the hon. Gentleman the comfort for which he is looking. Clause 14 will catch the sort of rogue traders that he describes if they market a property for a seller. It will not catch rogue traders acting as estate agents on behalf of a buyer, because it is concerned only with the process of marketing properties. It will be a complete answer to the problem of unqualified people, who are likely to deliver a poor service, setting themselves up as rogue estate agents. That is a separate issue, and I shall return to it in a moment.

The provision will cover any individual body corporate or partnership that markets properties and has a place of business in England and Wales. That is a much broader definition that will catch rogue traders. I do not want to detail circumstances in which they will not be caught. Of course, they will not be caught if they have premises outside England and Wales, for the simple reason that there is no enforcement mechanism without the complicated arrangement of a reciprocal procedure with Scotland. Anyone who sets up his premises in Scotland is badly placed to market properties in England and Wales, so we do not think that that is a serious issue, although it might technically be seen as a loophole.

I was asked whether we should revisit the issue of the licensing of estate agents. I made it clear that, although the Government have no current plans to proceed with such licensing, we have a genuinely open mind. We are conscious of the extent of the work that the National Association of Estate Agents has carried out to raise standards in the profession, and of the representations that we have received on the issue. We prefer the voluntary route where possible, but we recognise that there is sometimes a need to take action to protect the public interest.

I hope that the hon. Member for Cotswold will be reassured that we will keep an open mind on the matter. I ask him to withdraw the amendment.

Geoffrey Clifton-Brown (Conservative, Cotswold)

I love the image of the Minister as the Minister with the light touch. Time will tell whether he fulfils that criterion. I am not sure that he will do so with the enactment of the Bill but, be that as it may, his response was helpful and courteous, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 14 ordered to stand part of the Bill.

Clause 15 ordered to stand part of the Bill.

Further consideration adjourned.—[Mr. Robert Ainsworth.]

Adjourned accordingly at eighteen minutes past Seven o'clock till Thursday 25 January at fifteen minutes to Ten o'clock.