Opinion: draft Tenants Fees Bill and the trading standards burden In this feature | unfair fees | enforcement | public interest Ever increasing burdens The governments inability to effectively fund and resource trading standards borders on the negligent, says Huw Evans, as the profession is given yet another burden to enforce: the draft Tenants Fee Bill The UK government published the draft Tenants Fees Bill in November 2017,1 following the commitment in the Queens Speech to ban unfair tenant fees [and to] promote fairness and transparency in the housing market.2 As proposed, any breach in England could lead to an administrative penalty or, in more serious cases, prosecution for an offence. The legislation will be enforced by trading standards that is, local authorities (LAs) acting in their capacity as local weights and measures authorities (LWMAs). The policy context The policy driving the legislation has high priority. The UK government identified a market failure for consumers in the private rented sector which, according to the English Housing survey for 2015/16, comprises 4.5 million (20 per cent) of all households.3 This failure was referred to in the 2016 Autumn Statement, when the Chancellor stated: In the privaterental market, letting agents are currently able to charge unregulated fees to tenants. We have seen these fees spiral, often to hundreds of pounds. This is wrong. Landlords appoint letting agents and landlords should meet their fees. 4 Next, the 2017 Conservative Party manifesto emphasised that: Government can help by making consumer markets work more fairly and, in doing so, reduce the cost of the essentials families have no choice but to buy. Tackling living costs must mean making consumer markets work fairly.... We will... improve protections for those who rent. 5 Housing costs are part of essential personal expenditure, and the Queens Speech duly followed. The draft Bill continues that process. Its driving force is part of a wider and core government ideological belief that making markets work fairly benefits everyone. As the Crowther Committee reported in 1971, that belief can only be tested if market failure is avoided. To begin to do so in the case of the private rented market involves ensuring that the proposed legislative intervention is effective as laws and regulations are useless unless they are enforced.6 Enforcement and resourcing This leads to consideration of the enforcement proposals. As mentioned, trading standards has been chosen as the enforcer. In principle, this is an obvious choice, as the subject matter falls within consumer protection and there is a natural relationship between the proposed legislation and the Consumer Protection from Unfair Trading Regulations 2008.7 But, once enacted, to ensure that the legislation is not useless requires effective enforcement. It is well documented that, over a sustained period, trading standards has experienced significant reduction in resourcing, which has affected its ability to deliver the service. As a consequence, there can be a risk of not delivering an aspect of the service at all, so there is a failure of statutory duty. Speaking to the BBC in 2014, in response to two cases where trading standards had not responded as required in answering a question about whether the public were at greater risk from rogue traders due to job losses, Leon Livermore, chief executive of the CTSI, said: They cant fail to be, can they? Your two case studies demonstrated our inability it shows the inability of the system to respond to individual consumer needs.8 There is no evidence to suggest improvement in that position. How, therefore, is there going to be a response to meet the individual needs of tenants under the legislation? The governments inability to look at policy implementation through effective enforcement borders on negligence Enforcement and the draft Bill It is not suggested that the police enforce the law in accordance with a self-financing model. There would be outrage if there was. Perhaps there should be outrage in this case? As to resourcing the legislations enforcement, according to the draft Bill explanatory notes: The enforcement by [LWMAs] is intended to be fiscally neutral since [LWMAs] may retain the proceeds of any financial penalties [from] its enforcement functions relating to the private rented sector under this Bill or any other legislation. 9 Essentially, the intention is that enforcement will be self-financing. Two questions arise: first, whether this is achievable; and second, in any event, whether this is appropriate. As to whether this self-financing model is achievable presupposes that trading standards can turn on the enforcement tap and start imposing penalties. But to get to that position requires investment in human resources, training and infrastructure. And where is Microbeads is latest burden on trading standards the initial pump-priming to come from? And even if an LWMA gets to a point of The latest burden to be given to trading standards enforcement capacity, where is the without extra funding or resource is the new evidence to suggest enforcement can be ban on the manufacture of products containing self-financing? microbeads. Environment Minister Thrse Coffey announced There is a precedent that can inform in January that the ban on the manufacture of assessment. Under the Consumer Rights cosmetics and personal care products containing Act 2015, in England and Wales, letting microbeads was now in force. It was hailed by the 10 agents must publicise their fees. This is government as a landmark step in the introduction enforced by trading standards through of one of the worlds toughest bans on these administrative penalties, with any harmful pieces of plastic. proceeds retained used for any of its However, Craig McClue, lead officer and [LWMA] functions.11 In March 2017, Sian policy executive at CTSI, was critical of the move, Berry, a member of the London Assembly, which follows hot on the heels of the draft Tenants published a report concerning the impact Fees Bill. He said: Despite CTSI expressing strong of that law in London from its concerns that funding will be required to ensure enforcement actions can be taken, it is expected commencement in May 2015. She that local authorities will mostly pass enforcement reported that penalties had only been responsibilities for the regulations to trading imposed by four London boroughs.12 In standards officers, who conduct inspections for Wales, where the law came into force in cosmetic products safety. November 2015, LAs reported that no A ban on the sale of products containing penalties had been imposed by April microbeads is expected to follow later this year. 2017.13 Thisevidence casts doubt on the belief that self-financing enforcement can be achieved. Consideration of the appropriateness of the intention raises issues of principle as, at face value, it is wrong to link enforcement action directly to financial return. Enforcement decisions must be made independently and involve applying the two-stage test set out in the Code for Crown Prosecutors;14 that is, firstly, there is sufficient evidence and, secondly, it is in the public interest to prosecute. The code here will apply as much to decisions to impose a penalty as to decisions to prosecute. A financial incentive has the potential to skew independent assessment of the public interest test when applying an LA enforcement policy. Applications for judicial review are readily conceivable concerning financial penalties where they are claimed not tobe in accordance with an LAs enforcement policy. Other potential consequences include perverse incentives for trading standards to not seek compliance though advice or education, or for trading standards to decide not to prosecute because there can be no financial return for the LWMA. In a comparative context, it is not suggested that the police should enforce the law in accordance with a self-financing model. There would be outrage if there was. Perhaps there should be outrage in this case? Conclusion If the government is serious about correcting market failure it must inconjunction with policy formulation realistically assess its implementation. Enforcement is one method of implementation and itneeds to be effective. One contributor to effective enforcement is sufficient resourcing. The draft Bill does not provide for this and, however good its intent, there is a real danger that once enacted it will be useless. Look at the evidence of London and Wales. The government clearly sees value in trading standards why else has it been chosen to enforce the legislation? But its inability to look at policy implementation through effective enforcement borders on the negligent. Pursuing the logic of government-stated policy, effective consumer protection is essential if markets are to work fairly and market failure avoided. This extends beyond the private-rented market, and for broaderenforcement to be effective, requires holistic action involving evaluation of appropriate structural arrangements for trading standards, in addition to resourcing. Without both, trading standards sustainability is compromised. Once enacted, to ensure that the legislation is not useless requires effective enforcement 1. Department for Communities and Local Government, Draft Tenant Fees Bill, Cm9529 2017. 2. Queens Speech 2017 (Parliament, 21 June 2017). 3. Department for Communities and Local Government, English Housing Survey: Headline Report, 2015/16, Department for Communities and Local Government 2017, 2. 4. Philip Hammond, Autumn Statement 2016, Parliament, 23 November 2016. 5. Conservative and Unionist Party, Forward, Together: Our Plan for a Stronger Britain and a Prosperous Future: The Conservative and Unionist Party Manifesto 2017, 2017, 59. 6. Department for Trade and Industry, Consumer Credit: Report of the Committee (Cmnd 4596, 1971) 337. This report was otherwise known as the Crowther Committee Report. The Consumer Credit Act 1974 followed in consequence. 7. SI 2008/1277. 8. BBC Radio 5 Live, Trading Standards, Adrian Goldberg - 5 Live Investigates, 2November 2014. 9. Department for Communities and Local Government (n 1) 14. 10. ss 83-88 and sch 9. 11. sch 8, para 6(5). 12. Sian Berry, Letting Them Get Away With It, March 2017, 2. 13. Based on responses from all local authorities in Wales to requests under the Freedom of Information Act 2000 submitted by the author. 14. Crown Prosecution Service, Code for Crown Prosecutors, 2013. Credits Huw Evans is a lecturer in law (and non- previously delivered there. Contact him practising solicitor) at Cardiff Metropolitan at hdevans@cardiffmet.ac.uk University. He lectured on the Consumer and Images: iStock.com / Dmitrii Guzhanin Trading Standards degree programme To share this page, in the toolbar click on You might also like Sign of the times April 2017