I thank the noble Lord for that intervention. I understand the point that he is making. Having said that, I think it is right to see how this develops in practice as it moves forward. The Secretary of State has the power to cap fees, but to do that at the beginning could have the perverse effect of worsening the situation by meaning that there will be fewer arbitrators coming forward to do this.
Perhaps I may clarify a point I made earlier about the parties choosing an arbitrator. Formally, of course, the arbitrator is chosen by the arbitral bodies but, from discussion with those bodies, it is clear that they work through with the parties who might be the most appropriate arbitrator to appoint in a certain case.
We do not intend to produce guidelines specifying the factors to be considered in relation to the use of the power to cap fees, but I say categorically that the affordability of the scheme and whether arbitrators are sufficiently incentivised to act will be considered with any other relevant factors, if ever the Secretary of State decides that the power has to be exercised. In conclusion on that amendment, I know that, like us, the noble Baroness and the noble Lords who have spoken are keen to ensure that there are enough arbitrators to administer the scheme, and I therefore ask for Amendment 2 to be withdrawn.
On Amendment 6, which also concerns the Secretary of State’s powers to cap arbitration fees, I am again grateful to the noble Baroness and the noble Lord for emphasising the point about the affordability and accessibility of the scheme, should the power to cap fees be exercised. As I have said before, I agree that these are crucial issues. If the Secretary of State were to exercise the power to cap fees, I can reassure the noble Baroness and the noble Lord that the ability of landlords and tenants to access the scheme and the affordability of arbitration fees would of course be considered, along with other relevant factors such as whether arbitrators are sufficiently incentivised to take on cases. I reiterate that the Government will continue to work with approved arbitration bodies to monitor arbitration fees as well as arbitrator capacity. As I said, the Secretary of State will use these delegated powers only if it seems the right thing to do, taking into account the factors at the time.
The Bill gives arbitration bodies that are experienced at costing such schemes the power to set their own fee levels according to market demand. These fees will be publicised, and it will be possible to compare the fees of one arbitral body with those of another. We will absolutely monitor this and make sure that it is balanced with the other considerations to which I have referred. In conclusion, we will continue to work with approved arbitration bodies to monitor arbitration fees, as well as arbitrator capacity. Therefore, I hope that the noble Baroness and the noble Lord are reassured, and I request that Amendment 6 not be pressed.
On Amendment 7, the noble Baroness has proposed an amendment that would require the Secretary of State to issue guidance to arbitrators on two specific points: how the viability of the tenant’s business should be assessed and over what timescale. I agree that these issues are important, but I hope to persuade her that the amendment is unnecessary.
I hope she would agree that a very large variety of businesses of different sizes in a diverse range of business sectors may use the arbitration process provided in the Bill. In light of that, it is clear that arbitrators need the flexibility to make the assessment of viability against the context in which the individual business operates, considering the different kinds of evidence that may be available. We have to be alive to the danger of being too prescriptive, as a one-size-fits-all approach could lead to unfair arbitration outcomes.
That said, the Government are providing assistance to arbitrators who have to make these assessments. There is a list of factors that the arbitrator must consider when assessing viability in Clause 16. Annexe B of the revised code of practice sets out a detailed non-exhaustive list of the types of evidence that tenants, landlords and arbitrators should consider when assessing the viability of a tenant’s business and the impact of any relief on protected rent debt on the landlord’s solvency.
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We are having ongoing discussions with arbitration bodies and landlord and tenant representatives in relation to producing statutory guidance. It is making good progress, and I can reassure the noble Baroness that the guidance will provide more information about
viability. It is for those reasons that I hope that she will agree that the amendment is unnecessary and I request her not to press it.
I now move on to Amendment 7A, which proposes a new clause after Clause 26. I thank the noble Lord, Lord Fox, for his comments. We must recognise that in addition to rent arrears a tenant may have accumulated during the pandemic, interest may also apply to that debt. The Bill’s core purpose in this area is to protect businesses, which, if they did not have to pay their rent debt in full, would otherwise be viable.
If, despite being granted relief in respect of the rent itself, businesses necessarily had to meet all interest charged on unpaid rent under high contractual rates, they may still be forced under. That would subvert the whole purpose of the Bill. I am sure that this is the point about which the noble Lord, Lord Fox, is concerned. That is why I am pleased to reassure him that in the context of the Bill the definition of rent includes interest. Rent is defined in the Bill as the sum for the use of the premises, the service charge payable to the landlord, including payment towards an insurance premium, and any interest on an unpaid amount of those charges. Including interest within the Bill’s definition of rent will allow arbitrators to consider whether any relief should be granted in respect of any interest payable.
I further reassure the noble Lord, Lord Fox, that the Bill’s temporary moratorium provisions protect tenants from actions such as forfeiture or debt claims in relation to unpaid interest on unpaid rent and service charges for the projected periods while arbitration is ongoing. Again, that issue arises because of the inclusion of interest within the definition of rent. Having said that, I note that the Bill seeks to respect the contractual terms of the lease. It is not intended to impose different interest rates, but the arbitrator can look at the interest rate when considering the overall position.
I hope that I have reassured noble Lords on the Bill’s measures regarding interest on protected rent debt. I do not believe that further intervention is necessary and therefore I ask the noble Lord, Lord Fox, not to move his amendment.