Mr Tim Loughton (East Worthing & Shoreham, Conservative)

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

Mr Roger Gale (North Thanet, Conservative)

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

Mr Tim Loughton (East Worthing & Shoreham, Conservative)

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.

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

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.

Mr Nigel Waterson (Eastbourne, Conservative)

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?

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

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.

Mr Geoffrey Clifton-Brown (Cotswold, Conservative)

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?

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

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.

Mr Geoffrey Clifton-Brown (Cotswold, Conservative)

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?

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

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.

Mr Don Foster (Bath, Liberal Democrat)

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?

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

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.

Mr Tim Loughton (East Worthing & Shoreham, Conservative)

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.

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

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.

Mr Tim Loughton (East Worthing & Shoreham, Conservative)

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.

Mr Geoffrey Clifton-Brown (Cotswold, Conservative)

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.

Mr Tim Loughton (East Worthing & Shoreham, Conservative)

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.

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

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.

Mr Tim Loughton (East Worthing & Shoreham, Conservative)

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.

Mr Nigel Waterson (Eastbourne, Conservative)

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.'.

Mr Roger Gale (North Thanet, Conservative)

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.'

Mr Nigel Waterson (Eastbourne, Conservative)

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.