Mobile homes pitch fees - annual uprating index: consultation

Options for Changing the Basis of Uprating in Legislation

18. The enabling power for Scottish Ministers to make secondary legislation amending the Implied Terms of agreements between owners and occupiers ("the Implied Terms") is contained in Section 2B of the 1983 Act. Under the Mobile Homes Act 1983 (Amendment of Schedule 1) (Scotland) Order 2013 ("the 2013 Order"), alterations were made to Implied Terms. Scottish Ministers had the express power to make amendments to the Implied Terms that would apply retrospectively to pre-existing agreements entered into before the 2013 Order came into force (as well as to future agreements), but that only applied to the 2013 Order (being the first order made using those powers). Any further order made under Section 2B would not be applied retrospectively to pre-existing agreements. While secondary legislation could therefore be used to change the basis of uprating for future contracts, changing the basis of uprating from RPI to CPI for existing contracts requires primary legislation. On this occasion there is a Housing Bill in the current Parliamentary timetable that would be an appropriate mechanism to make the change if primary legislation is required.

19. Primary legislation is made relatively infrequently, to implement a substantive changes in policy while secondary legislation can generally be scheduled more readily and passed more quickly. Secondary legislation is often used to set out technical details or administrative matters necessary for primary legislation to operate, for example to update existing regulations to reflect changes in practice over time. Secondary legislation provides flexibility to alter or update statutory arrangements without having to pass new primary legislation. The process for scrutinising primary legislation is different to that for secondary legislation, with primary legislation being subject to a greater level of scrutiny than secondary. More information on the difference between primary and secondary legislation is available on the Bills and Laws pages of the Scottish Parliament website.

20. Options to achieve a change in the basis of uprating and to prepare for future possible changes are set out below:

• Option 1 - to use existing powers to make secondary legislation under the 1983 Act to change the basis of uprating from RPI to CPI for contracts that are signed in future but leave existing contracts unchanged;
• Option 2 - to amend the implied terms of agreement set out in the 1983 Act to substitute RPI for CPI in existing and in future agreements; and
• Option 3 - to amend the implied terms of agreement set out in the 1983 Act to substitute RPI for CPI in existing and future agreements and to include a further power to be able to make changes in the future to the basis for uprating by secondary legislation, with retrospective effect. This would mean that any future change to uprating needed to keep pace with changes in the reporting and forecasting of statistics, for example a move from CPI to CPIH or back to RPI, could be made by secondary legislation and apply to existing and future agreements.

21. The option chosen for making the changes to existing legislation needs to be proportionate to the aim. The level of consultation and scrutiny needs to be appropriate to making changes to implied terms in residential mobile home contracts under the Mobile Homes Act 1983, and sufficient to balance the interests of the residents and site owners. In addition, it needs to be proportionate to make changes apply retrospectively to existing agreements, as well as to future agreements.

22. We do not think that Option 1 would progress the policy intention of ensuring that the statistical measures are fair, appropriate and up to date because of the difference in effect on new and existing residents. Existing contracts are likely to be in place over a long period so that the change would be effected very slowly and different provisions for indexation increase potential for confusion. We would like to gather views on Options 2 and 3.