Select Committee on Delegated Powers and Regulatory Reform Fourth Report

Letter from the Clerk to the Office of the Deputy Prime Minister

The Committee considered the proposal again at its meeting [yesterday], in the light of the further information provided in your letter of 19 November. It remains concerned about the proposal so far as it involves amending the provisions of the 1954 Act on agreements to exclude security of tenure. If it is a real possibility that the changes proposed might increase the proportion of "contracted out" tenancies to an extent that undermined the protection afforded by the 1954 Act, the change would be fundamental and so inappropriate for a Regulatory Reform Order. Even if it were appropriate for such an order, the Committee would doubt that the order did not remove any necessary protection as envisaged by section 3(1)(a) of the 2001 Act.

The Committee appreciates the efforts made by the Department to obtain evidence to substantiate the view that the present protection is ineffective (because the court acts as a "rubber stamp"); and that the proposals will not result in a significant increase in the number of contracting-out cases. But the Committee is minded to report that this aspect of the Department's proposals should not be the subject of a Regulatory Reform Order at this time.


The Committee has taken account not only of the Department's statement, and other documents and its oral evidence, but also of the consultation exercise. It has considered whether there was any general consensus either that the existing protection was illusory or that its removal and replacement with a less burdensome procedure would not effect a substantial increase in the number of "contracted out" tenancies.


The consultation paper proceeded on the basis that the courts "almost invariably authorise applications to contract out" and did not expressly address the questions whether the proposed alternative procedure would lead to an increase in the number of contracting out cases and whether, in particular, the mere existence of the court procedures deterred landlords from persuading tenants to join in an application to contract out.


Those respondents who did touch on this issue seem to have shared the Committee's concerns (Bar Council, Ladbrokes - even though they supported the proposal - and MOL). Possibly a specific consultation on this issue would elicit material that could persuade the Committee.


The Committee meets on 11 December to deliver its report on the proposals and thought you might wish to be aware at this stage that their report might recommend either

  • that the "contracting-out" provisions of the draft order (essentially Articles 21 and 22) should be omitted; or
  • that convincing evidence (including evidence from any further consultation) should be submitted to meet the Committee's concerns by the time the draft order is laid for approval.

If there is any further material you wish the Committee to consider at its meeting on 11 December, please would you let me have it by Thursday, 5 December.

27 November 2002

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