Draft Housing (Tenancy Deposit Schemes) Order 2026
It is always a pleasure to serve under your chairmanship, Sir Desmond. I welcome the opportunity to sit opposite the Minister again, whom I have seen more often in the past few days than my own wife. I appreciate the remarks that he has made, and I welcome the opportunity on behalf of His Majesty’s Opposition to address this measure, but I must be frank: we do not like the draft order very much, because it appears to be little more than an act of state-sponsored thievery. In this Halloween season, lurking in the shadows is not a vampire or a monster, but the larcenous light fingers of Marsham Street. The draft order seeks to give the Secretary of State the power to hive off a portion of the interest accrued on someone else’s money and pocket it on behalf of the Government. As a Conservative—as a believer in private property—I am astounded to find the Government pushing through yet another stealth tax just days after the Budget. I know I should not be—after all, it is not the first, and I doubt it will be the last stealth tax we see in this Parliament—but the brazen lack of respect for other people’s money beggars belief. That is why the Opposition will seek to divide the Committee and will vote against the draft order today.<span id="5" class="column-number" data-column-number="5"></span> As the Deposit Protection Service has stated, at present interest goes towards the effective running of the scheme, back to tenants or landlords, or in some cases to charity. In siphoning off funds to pay for the Ministry of Housing, Communities and Local Government’s litany of costly policies, the Government’s action raises a number of questions—some of which, to be fair, the Minister may have just answered. For example, will the draft order leave the deposit protection schemes financially exposed? What assessment has been made of the funding needed to keep these schemes running so that tenants and landlords are protected with certainty, along with the jobs that these companies provide? The draft instrument has no clear purpose, outlines no formula and sets no clear cap. We are being asked to approve a power without knowing how much money the Government are seeking to take, nor what limit the Secretary of State will impose on herself in a scheme that lets the Government profit from other people’s money. I also want to raise concerns about the relationship between this policy and the planned abolition of insured tenancy deposit schemes. Taken together, hiving off the interest on deposits for the Government’s benefit and moving all deposits into the custodial schemes will create a perverse incentive. If the Government take income from the same custodial deposits that they are forcing the whole market towards, how can they demonstrate that profiting from interest on other people’s money has played no part in their decision-making process? That is a very serious concern and it deserves far greater parliamentary scrutiny than hon. Members have been afforded today. We believe that there is a convincing argument that these changes should be made not through a statutory instrument, but in primary legislation. We can make no amendments today, we have little time to probe the details and we are being asked to approve a new tax outside the place best suited constitutionally to scrutinise financial legislation. The draft order lets the Secretary of State, on behalf of the Government, take a share of the interest earned on tenants’ deposits. It does not say how much, it does not say what the money is for, and it sets no cap and no formula. The Government are asking the House for a blank cheque to draw down on other people’s money. That money does not belong to the Government. By changing the system a week after a tax hike on landlords, the Government are creating another stealth tax. That comes on top of a new database fee and a rewritten tenancy system, in a sector in which landlords are already considering the viability of their portfolios. Every cost eventually lands on renters. The Opposition’s tests are simple. Is this a stealth tax? Yes, it is. Is it the Government’s money? No, it is not. Does it deliver for renters? Clearly not. For all those reasons, we will divide the Committee and vote against this instrument.