Mr Roger Gale (North Thanet, Conservative)

I remind the Committee that with this we are considering amendment No. 2, in clause 4, page 4, line 12, leave out subsection (5).

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich & Woolwich, Labour)

At our previous sitting I referred to the fact that on a number of other comparable issues involving housing law, criminal sanctions do apply as a means of enforcing what are, in effect, civil duties. I was referring to the Landlord and Tenant Act 1954, where obligations to provide rent books and to provide information about service charges to leaseholders are important and are, essentially, civil duties that are backed by criminal sanctions when there is a failure to comply. In those circumstances, it seems entirely appropriate to adopt a similar approach in this legislation. Another important reason for doing so is that the duties of estate agents under this legislation are, in many ways, complementary to the obligations under the Property Misdescriptions Act 1991. The hon. Member for Cotswold (Mr. Clifton-Brown), who seemed to be pre-occupied by this matter earlier, should be reminded that that Act, which imposed criminal sanctions with unlimited fines, was passed by the Government he supported.

Hon. Members also raised the interesting question of what happens overseas. New South Wales was the first area to pursue the idea of a seller's pack. It felt it necessary to provide for sanctions in the event of a failure to comply. My understanding is that any seller in New South Wales found guilty of concealing or falsifying any information required to be disclosed shall be liable, at the discretion of the supreme court, to suffer such punishment by fine or imprisonment for any time not exceeding two years, with our without hard labour, or both, as the court awards. I am only astonished at our own moderation.

Mr Nigel Waterson (Eastbourne, Conservative)

I shall resist the temptation to talk about the possibility of transportation back to England. The legislation to which the Minister referred talks about concealing or falsifying. That is not what we are talking about. We are talking about when people do not have their tackle in order, as it were. Surely, such biblical penalties are not to be visited on people in those situations in New South Wales.

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich & Woolwich, Labour)

The hon. Gentleman will know how I intend to respond to that because, as I have pointed out several times, it is important that the response is proportionate. Clearly, we do not anticipate a draconian response to an individual who has, often entirely unknowingly, failed to provide a basic piece of information. However, where there is deliberate, wilful and persistent failure to comply with the law, it would be appropriate for that type of sanction to be pursued.

Mr Nigel Waterson (Eastbourne, Conservative)

What the Minister has just said chimes in with something his hon. Friend the Under-Secretary, the law graduate, said the other day. In reality, this is a matter not for the Minister. It is for the trading standards officers and the courts to decide whether they will take a view on proportionality. That is why it is important that we get it right before it gets into their hands.

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich & Woolwich, Labour)

We agree entirely with the hon. Gentleman that the sanction must be proportionate. The trading standards officers will, of course, be working within the concordat that governs the way they operate. That is the right way to achieve the desired effect. We want to avoid unnecessary court proceedings and avoid unsuspecting home-owners being caught up in sanctions. The Bill confers the duty of enforcement on local trading standards officers, but those officers retain discretion as to what to do in performance of that duty. Local weights and measures authorities, like all prosecuting authorities, have considerable discretion as to how they operate. Their role involves providing help and advice. The commission of an offence does not automatically lead to a prosecution. Where the offence is sufficiently serious to warrant a fixed penalty notice, the service of such a notice does not bring about a criminal record.

The hon. Member for Bath (Mr. Foster) raised concerns regarding the cost of this activity for local authority trading standards. He will be pleased to know that, following the concerns he raised on Second Reading, we have taken further advice from the Local Authorities Co-ordinating Body on Food and Trading Standards—LACOTS. We are informed by LACOTS that it stands by its view that the activities involved are complementary to its existing duties in relation to the Property Misdescriptions Act 1991 and that, therefore, it envisages only a very notional additional expenditure—this is an average figure—of about £5,000 per authority. I can assure the hon. Gentleman that we have taken his comments seriously. If he chooses to check with LACOTS, I am sure it will give him the same advice.

Trading standard officers will have the discretion to vary their action with regard the circumstances of the case. For example, they will be able to provide help and advice where a person is genuinely unaware of the requirements. They will be able to give a warning, perhaps for a first or minor offence, and they will be able to offer a formal caution or serve a fixed penalty notice where the offence was deliberate and more serious, but even that will not attract a criminal record. In the most serious cases, where there has been deliberate and persistent flouting of the law, they could commence proceedings in the magistrates court.

I hope that, on reflection, hon. Members will recognise that the enforcement arrangements set out in the Bill are proportionate and do provide the appropriate way forward. I hope that the hon. Member for Eastbourne will withdraw his amendments.

Mr Nigel Waterson (Eastbourne, Conservative)

I am grateful to the Minister, who has obviously done his homework since our previous sitting. We think that this involves the fundamental principle of whether the criminal law should be drawn into this. It is interesting to hear what punishments are available in New South Wales and to hear about other statutes in this country, but we hold the unshakeable view—and we are not alone—that these are matters of private contractual relations between three individuals where the nanny state should not intervene. With all due respect to the Minister, we are minded to press this to a Division.

Question put, That the amendment be made:—

The Committee divided: Ayes 4, Noes 7.

Mr Bob Ainsworth (Government Whip (technically a Lords Commissioner, HM Treasury); Coventry North East, Labour)

On a point of order, Mr. Gale. May I ask you to check that vote again?

Mr Roger Gale (North Thanet, Conservative)

In fact, the Ayes were 4 and the Noes were 7.

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

Mr Nigel Waterson (Eastbourne, Conservative)

I indicated earlier that, with your agreement, Mr. Gale, I wanted to initiate a short debate on clause 3. I want to make four points as expeditiously as I can.

We have already debated the issue of the responsible person having to have the pack

in his possession, at all times.

We think that that is an incredibly difficult piece of draftsmanship. I have reiterated the reasons for that more than once. The Minister has said that he will look at it again, and it would be helpful if he could give us the occasional bulletin on his progress.

Clause 3 (3) deals with the changes in the seller's pack. It is now common ground between the two sides of the Committee that the seller's pack could change with the passage of time. It is now conceded that, in the real world, seller's packs will not always be completely ready at the beginning of the marketing of a property. We think that that underlines the artificiality of these proposals in terms of the effect they will have on the market. People will produce seller's packs of their own with some basic documents, regardless of whether there is legislation. We think that there are real concerns about seller's packs not being ready. As my hon. Friend for East Worthing and Shoreham (Mr. Loughton) pointed out this morning, some pieces of paper remain elusive throughout any transaction.

We have just covered the issue of criminal sanctions and enforcement. I urge the Minister to have another meeting with his hon. Friend and Member for Upminster (Mr. Darvill). The hon. Member for Upminster, the phantom at the feast, is not a member of the Committee, but he made some detailed, constructive and critical comments on Second Reading. Having been a Whip myself, I can understand that that would not immediately suggest that he should be a member of the standing committee. There is a story of a former Tory Whip who, many years ago, decided not to put one of his colleagues on a Committee because he saw him leaving the Library, and, worse than that, he was clutching a hardback book. That was said to be his offence.

Mr Andrew Love (Edmonton, Labour/Co-operative)

It was only for show.

Mr Nigel Waterson (Eastbourne, Conservative)

I think it was ``Black Beauty'' or something like that. That was the reason he was given for not being on the Committee. I see that struck a chord with the Government Whip.

On a serious note, it is excellent that, in parallel with this Committee, the Minister is having meetings with the hon. Member for Upminster. It would have been interesting for us all to benefit from his detailed views.

Mr Don Foster (Bath, Liberal Democrat)

Perhaps I can save time by asking whether the hon. Gentleman agrees that it might be helpful if the Minister were to prepare a briefing note on the arguments that have been made for the various alternatives by his hon. Friend the Member for Upminster and others, and the Government's reasons for rejecting them. That would aid the continuing debate and put some of these issues on the record. I hope that he might agree that it would be worth seeking the Minister's support for that proposal.

Mr Nigel Waterson (Eastbourne, Conservative)

That is an excellent suggestion from the hon. Member for Bath—I suppose, on the law of averages, it had to happen sooner or later.

This is a serious point. It is clear that the hon. Member for Upminster has a wealth of experience and knowledge on these matters. We know of at least one specific proposal, to which I referred earlier, which involves a system of registration instead of having the great mass of criminal sanctions and enforcement and having to rely on the hard-pressed trading standards officers. We could use the same mechanism as that used to ensure that stamp duty is paid. I do not believe that there is any evasion of stamp duty for that very reason. The hon. Member for Upminster and others, who did not make it onto the Committee, may have proposed other mechanisms and had other excellent ideas. Apparently, many hon. Members are keen to get on to part II; the hon. Member for Upminster would have been keen to debate part I properly. That is a shame, but it is not a matter for me. Even if we cannot have note of the meeting with the hon. Member for Upminster, it would be helpful for the Minister to give us some outline of what was discussed. The practical difficulties of that proposal are being floated not just by me or the hon. Member for Upminster but, by one of the relevant organisations in one of the briefings we have received. There may be good practical reasons why the proposal would not work, but if the shadow of the hon. Member for Upminster is hovering over our deliberations in that regard, it might be helpful to lay the ghost to rest.

My next point is what I refer to in my notes as the Madonna point. I remember reading some time ago that when the pop star Madonna—I think that it was her—was selling an expensive property in central London, the agent involved was charging people about £2,000 for the particulars of the property and to see around it. That is obviously a rare example, but it is not uncommon for a charge to be imposed for very upmarket properties whose owners, not unreasonably, do not want the world and his wife trooping around just to have a look. That is what happens on the last day of the boat show, which fills up with people who do not have the slightest intention of ever buying a boat.

That leads me to ``reasonable cost''. I could have tabled a probing amendment to remove those words. What is a reasonable cost? Will agents involved in such upmarket transactions be able to charge a high amount for the seller's pack? As I understand the clause, they are allowed to insist on payment in advance, and do not have to produce the pack—even if they have to have it about their person 24 hours a day—until the money has been paid up front. That is a serious issue. Who is to define ``reasonable''? Many lawyers have waxed wealthy and successfully on defining that word in legislation and I do not want this Bill to be another instance of that.

Mr Geoffrey Clifton-Brown (Cotswold, Conservative)

I shall be brief because we want to make progress. I would like to put on record my conversation with the Minister after this morning's sitting. Trading standards officers often act in a supporting role in a civil prosecution. For example, if someone goes into a shop and buys faulty goods, contravening the Sales of Goods Act 1979, the purchaser may complain to the trading standards officer that he has in some way been disadvantaged by the transaction. The trading standards officer will then investigate. He will not prosecute, but he will be prepared to produce an expert report to enable civil litigation to take place.

There is no good reason why that should not be the procedure in the Bill. The trading standards officer would investigate whether there had been breaches of the legislation and, if there had, he would report to the Stamp Office or the Land Registry that an offence had been committed, automatically triggering an excess penalty. That would be a civil matter that would be simple to undertake and would not delay the property transaction. The solicitors involved would simply be informed that the legislation had been breached but that it had been remedied and the correct information supplied.

The possibility would remain of a penalty being applied, but the transaction could still go through. The argument could then take place as to whether there had been a breach of the law. The Minister said that that procedure would cause property transactions to be slowed, but I do not believe that. I believe that if criminal sanctions are to be applied, property transactions will be slowed in any case.

I know that the Minister does not agree, but I want to put my view on the record. If criminal sanctions are to be applied in the event of a breach of the terms of this Bill, something serious must have occurred—there must be a serious defect in the seller's pack. If that is the case, I doubt that any solicitor would advise a purchaser to go ahead with the transaction until the litigation had been resolved. A criminal sanction would delay the transaction far more than the simple civil procedure than I propose. I want to get that on the record, Mr. Gale. I know the Minister does not agree—he is shaking his head—but at least others will now be able to see what I have said.

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich & Woolwich, Labour)

The debate has seen five main issues raised and one suggestion made by the hon. Member for Bath. I will try and deal with them in turn.

The first point made by the hon. Member for Eastbourne (Mr. Waterson) was an expression of concern about the provision that requires the seller or the seller's agent to have a seller's pack in his possession at all times. During debate on a previous amendment, I gave an undertaking that the Government would think further on the matter, as it was not our intention to create an unworkable requirement that might be interpreted over-zealously. I hope the hon. Gentleman will accept that is a genuine commitment. It is difficult to avoid amending the provision in a way that does not create a huge loophole, but I am hopeful that the great legal minds that advise us on legislation will come up with an appropriate solution that enables us to avoid that loophole while making the changes he wants.

The hon. Gentleman's second concern focused on circumstances in which it might not be possible to get all the documents together. In my view, the Bill represents a sensible and practical response to such circumstances. The normal requirement is that the seller's pack should be assembled in full and marketing can then begin. However, for cases in which, for good reasons, certain documents cannot be secured in a timely fashion and the whole process would be unreasonably delayed thereby, we have provided that seller's pack can be issued with the missing items indicated in the pack and provided as soon as they become available.

We had an interesting and useful debate about the kind of documents that would be involved—the warranties and guarantees that owners recall having secured some time ago, but are found to have mysteriously disappeared when the time comes to trawl through the chest of drawers. That is a common occurrence and it is reasonable to make provision for such items not to be provided in the initial seller's pack, but to be provided at a later stage. That is entirely pragmatic and I do not accept the suggestion the provision is an indication that the system will not work properly.

Mr Nigel Waterson (Eastbourne, Conservative)

It might be a philosophical point, but in respect of items flagged as not being included in the initial seller's pack, the Minister appears to be falling back on the principle of caveat emptor, in the sense that the buyer will be on notice that there might or might not be a problem and can act accordingly. However, the whole thrust of the Bill is to undermine caveat emptor, although it does not say that. Would he like to comment on that?

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich & Woolwich, Labour)

I have already made it clear that the principle of caveat emptor remains. The important point is that the buyer is properly alerted at an early stage to issues that might be a cause of concern. In practice, warranties and guarantees—as I am sure the hon. Member for Eastbourne recognises—are often out of date and inappropriate and so do not matter a great deal, but they might in some cases, so the buyer should have the information. I repeat, the principle of caveat emptor remains and our proposals mean that the buyer will receive more information up front on which to judge whether or not it is appropriate to purchase the property and, if so, what is a reasonable price to offer.

The third point that the hon. Gentleman relates to criminal sanctions. He referred to my hon. Friend the Member for Upminster, who as I said this morning made a very useful contribution to the debate on Second Reading. I invited my hon. Friend to the Department last week to discuss his concerns and we had a useful discussion in which I pointed out to him that there were difficulties with his proposals. In practice, they would not achieve our objective of a system that works expeditiously and in which sanctions are clear and can be applied without causing the buyer unreasonable difficulty or expense, or requiring effort to enforce the procedure through civil sanctions. Although my hon. Friend's proposal is ingenious, it would not provide that effective sanction, because it would bite only at the end of the process. In such cases, the seller will generally not be the least bit interested if the sale has fallen through, so I am not convinced that my hon. Friend's proposal would be an effective sanction against a seller.

The hon. Member for Bath asked me to set out the reasons for opting for criminal sanctions rather than the alternatives. I spent quite a lot of time this morning trying to do so—that is the purpose of Committee—and I responded specifically to the issues raised. I will respond in public in the same way as I responded in private this morning to the hon. Member for Cotswold. I hope that the hon. Member for Bath will accept that I have no wish to conceal anything and that I am happy to be open with the Committee. However, rather than put my officials to considerable trouble by requiring them to write down again what I have already said to the Committee, I ask the hon. Gentleman to bring to my attention now any doubts that he has about the arguments that I have advanced and I will try to respond.

Mr Don Foster (Bath, Liberal Democrat)

The Minister asks me to bring to his attention matters about which I know nothing. He made it clear that the Department had seriously considered whether to go for a criminal offence and that many other options that had been proposed. The point I made through the hon. Member for Eastbourne was that to date not all those options had been explored in the Minister's remarks in Committee or elsewhere in public. I should be grateful to be told about those suggestions and the reasons why they were rejected. I cannot give the Minister examples, because I do not know what the suggestions were.

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich & Woolwich, Labour)

I am tempted to say, as my hon. Friend the Under-Secretary said to me sotto voce when the hon. Member for Bath said that he knew nothing about the subject, ``That has never stopped him speaking about it in the past,'' but that would be unkind. I have heard the hon. Gentleman's request and I shall try to ensure that he receives a succinct summary. He will have to accept that it will not be comprehensive and the gold-plated, Rolls-Royce version that we normally try to produce in such circumstances, because we must focus on moving forward, rather than look backward.

Fourthly, the hon. Member for Eastbourne advanced the Madonna argument—moving us into even more interesting territory. In a nutshell, the argument rests on the contention that a seller may have good reason to want to restrict access. A celebrity might be selling a house that is notorious or attractive to large numbers of fans. Such circumstances may constitute a perfectly good reason for wanting to restrict access. The hon. Gentleman asked whether the price charged for the seller's pack would be a way to achieve that. To some extent, it might be, because the seller's pack produced for the extremely expensive property that he describes is likely to be rather larger and contain more documents than the pack for an average house. However, the policy objective should not be achieved in that way.

If the hon. Gentleman looks ahead to clause 6(3)(c), he will see that we have made provision for the agent not to provide a seller's pack to categories of people whom the seller is unlikely to favour. That is a very difficult issue, and I hesitate to bring it up as it raises hard questions of compatibility with anti-discrimination legislation. At this point, suffice it to say that we have thought very carefully and we are completely satisfied that the provision allows a seller to indicate, for good reason, that certain categories of people should not be offered a seller's pack. That is entirely compatible with and in no way breaches anti-discrimination legislation, which will continue to apply and will bind the estate agent throughout these proceedings. We believe that the provision is the effective way to achieve our aim. I hesitate to get into this debate now, as we will come to it later, but I can see the hon. Gentleman wishes to intervene—

Mr. Waterson rose—

Mr Roger Gale (North Thanet, Conservative)

Order. No. I am sure the Ministers' remarks are helpful at this stage, but we will leave the matter there for now and deal with it when we debate clause 6.

Mr Nigel Waterson (Eastbourne, Conservative)

I hope you will allow me to intervene on a more germane point, Mr. Gale. I acknowledge that we shall return to the issue later and probably discuss it at some length, so let us not deal with it now. The Minister has been helpful in explaining that link, but my real concern relates to use of the word ``reasonable''. Leaving aside matters relating other clauses, is the situation that we are discussing covered by that word?

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich & Woolwich, Labour)

The normal construction of the word ``reasonable'' is ``reasonable in relation to the expenditure that has been incurred'' which is why I made the point that because an elaborate and glossy brochure produced to promote the virtues of Madonnaville, or whatever the particular building is called, might be an expensive item, it would be reasonable to charge quite highly for it. However, I did say that I do not regard that as the most effective way to achieve a policy objective, so I hope that we shall return to the subject later.

Finally, the hon. Member for Cotswold raised a point that he discussed with me after this morning's sitting regarding the possibility of seeking a declaration from a trading standards officer in which the officer states his belief that an offence has been committed. That could then be presented to the solicitor acting for the buyer, which would be likely to have an effect of warning the buyer about such circumstances. As I pointed out to the hon. Gentleman, the difficulty with that approach is that a trading standards officer who could be sued for indicating incorrectly the likelihood of an offence having been committed would be highly unlikely to issue such a statement without very careful and thorough appraisal, which could take a considerable period of time.

It is not uncommon for anything relating to a sensitive issue that is put into the public arena by the Government—any Government—to be checked thoroughly by lawyers. I would imagine that a statement of such a nature coming from a trading standards officer would be crawled all over by local authority lawyers, and probably outside advisers as well, before it was put into the public arena, just because of the risk of legal challenge. I do not accept the hon. Gentleman's argument that that could be done expeditiously.

Such a sanction would in any case be post hoc. That is the difficulty with the proposals made by hon. Friend the Member for Upminster. It would not have the effect of providing a clear indication that would act as a deterrent to malpractice, which is the purpose of having sanctions to enforce measures of this nature. If an offence had been committed in the situation that the hon. Gentleman describes, by the time the conclusion of such a tortuous process had been reached, either the sale would have proceeded because the buyer had ignored it, or it would be history because the buyer's solicitor had advised strongly against proceeding in such circumstances. I honestly do not accept the hon. Gentleman's argument.

Mr Geoffrey Clifton-Brown (Cotswold, Conservative)

The Minister may not accept my argument, but his precise arguments apply with a vengeance to the whole issue of criminal sanctions and issuing a prosecution notice, which will be scrutinised in even greater depth.

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich & Woolwich, Labour)

The hon. Gentleman ignores my key point that I was making: the provision exists to be a deterrent. I have said repeatedly that would expect the more extreme sanction of prosecution to be used only in cases of persistent and wilful breach of the law—for example, if an agent has chosen deliberately on a number of occasions not to provide a seller's pack. In the case of an individual who has unknowingly failed to provide a seller's pack or has accidentally forgotten to put an item in the seller's pack, the most likely response of trading standards officers, if it were brought to their attention, would be to issue nothing more than advice or a warning. That seems to be compatible with the fast-track procedures that we want, while retaining the deterrent of knowing that an agent who wilfully and repeatedly breaks the law risks criminal prosecution.

Such an arrangement is compatible with the Property Misdescriptions Act 1991 and is comparable to procedures used in New South Wales. The hon. Member for Cotswold was not paying full attention earlier, so I remind him that, unlike the authorities in New South Wales, it is not our intention to add hard labour to the other penalties that would apply.

I hope that the Committee accepts that there are sound policy reasons for having an effective system that can be enforced to prevent widespread malpractice, that the penalties should be proportionate, and that the right mechanism to achieve that is to allow trading standards officers considerable discretion to make an appropriate response when they believe that the provisions have been breached. I invite the Committee to accept that clause 3 should stand part of the Bill.

Question put and agreed to.

Clause 3, as amended, ordered to stand part of the Bill.