Housing Bill

HL Deb 25 October 1988 vol 500 cc1509-98

5.9 p.m.

The Minister of State, Department of the Environment (The Earl of Caithness)

My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.—(The Earl of Caithness.)

On Question, Motion agreed to.

Schedule 5 [Housing for Wales]:

The Minister of State for Defence Procurement (Lord Trefgarne) moved Amendment No. 114: Page 116, leave out line 45.

The noble Lord said: My Lords, I should like to speak at the same time to Amendment No. 150 in the name of my noble friend Lord Caithness. I hope that consideration of these two small but important amendments need not detain your Lordships very long. They have been tabled to meet the concern expressed by the noble Lord, Lord Carter, in Committee about the Secretary of State's proposed power to remove members of Housing for Wales and of housing action trusts from office on the grounds of physical or mental incapacity. As we promised, we have considered again the drafting of the provision and, on reflection, we are happy to delete the references to physical and mental incapacity in Schedules 5 and 7. I hope that noble Lords will accept that the relevant schedules are more felicitously drafted and will therefore agree to the amendments. I beg to move.

On Question, amendment agreed to.

Lord McIntosh of Haringey moved Amendment No. 115: After Clause 48, insert the following new clause:

("Housing Association tenancies.

.—(1) This section applies where the interest of a landlord belongs to one of the following bodies—a housing trust which is a charity, or a registered housing association other than a co-operative housing association or an unregistered housing association which is a co-operative housing association.

(2) Where a tenancy is entered into on or after the commencement of this Act and the interest of the landlord belongs to a body set out in subsection (1) above, Part IV of the Housing Act 1985 (secure tenancies and rights of secure tenants shall have effect as if for any reference in that Part (and only that Part) to a secure tenancy there were substituted a reference to a Housing Association Tenancy within the meaning of Part II of this Act except that—

1. (i) section 80 shall not apply,
2. (ii) the landlord condition mentioned in section 79 shall be that the interest of the landlord belongs to a housing trust which is a charity or a registered housing association other than a co-operative housing association or an unregistered housing association which is a co-operative housing association.

(3) This tenancy shall be known as a Housing Association Tenancy within the meaning of Part II of the Housing Act 1988.").

The noble Lord said: My Lords, I make no apology for the fact that this amendment revives the concept of the housing association tenancy which was debated at some length in Committee. However, the Committee debate was unsatisfactory in many respects, not least because the noble Lord replying from the Government Front Bench made a number of statements which, on reflection, we think are questionable and need to be drawn again to the attention of your Lordships' House.

The principle behind the amendment is to preserve the equivalent of the tenancy conditions which were established at the time of the Housing Act 1980. I remind the House that that Act set up a series of tenancy conditions known as the "tenants' charter" which at that time received the support not only of' the local authority associations, the Institute of Housing, the National Consumer Council, the National Federation of Housing Associations and the Housing Corporation, but also all-party support in this House and in another place. It is not as if the tenants' charter, as established by an Act of a Conservative government, had caused difficulty in implementation. Since that time there has been little controversy about the provisions of the tenants' charter as it applies to the tenants of housing associations.

Perhaps I may briefly remind the House of what the tenants' charter stated. It stated that housing association tenants who were affected by it should have security of tenure. They should have the right whereby a widow, widower or resident member of the family could succeed to the tenancy on the tenant's death. They should have the right to exchange with other housing association tenants; the right to take in lodgers; the right to sub-let part of their home; the right to repair the dwelling themselves; the right to make improvements to the dwelling themselves; the right to have a degree of information about the tenancy and the right to be consulted about housing management changes.

I repeat: the tenants' charter has not caused any significant degree of difficulty in implementation; it has not been a matter of controversy since it was formulated under the Housing Act 1980. The only difficulty that has arisen—and we were told by the Government on another occasion that it is not a matter for the Housing Bill—is that of sometimes getting the courts to reach a speedy enough decision about cases drawn under the legislation. However, that is a criticism of the administration of the courts and is a matter for the Lord Chancellor's Department, rather than something which ought to be of concern in the Housing Bill. The backlog of cases in the county court—which is not simply a backlog of housing cases—is well-known and it is a matter on which the civil justice review has been reporting to the Lord Chancellor's Office.

The National Federation of Housing Associations asked its membership what changes should be made in the tenants' charter. I do not think that I am oversimplifying the matter by saying that the answer it received was: no changes at all. There is no significant level of satisfaction with the tenants' charter. It makes provision for the housing association to be where it wishes to be; namely, in the public sector of housing rather than in the private sector of housing. That is the reason why it must be under threat.

I now turn to the problems caused by the Bill's provisions. It is not as if the Government do not recognise the problems because they knew all along that the housing association movement wanted to be part of the public sector. They knew that the housing association movement wished to provide for its tenants a better form of tenancy than that which is likely to be available for tenants in the private rented sector. Indeed, in the beginning they said that there should be such provision.

In October, last year the Government published their consultative paper on the 'private rented sector, which gave details of their legislative proposals. In that paper they explained that housing associations were to be considered as part of the private sector. The National Federation of Housing Associations responded by saying that that should not be the case and that the tenants' charter rights should be maintained. That view was also taken by the Institute of Housing, the National Consumer Council and Shelter. The Housing Corporation did not intervene because, after all, it is a government body.

Therefore, what was proposed by the Government at that time was a "social landlords' charter" replacing the statutory package of rights with a similar set of contractual rights. That is the issue upon which there was consultation. The result of the consultation was quite predictable. The housing association movement said that it preferred the tenants' charter and wanted it to be statutory and, in so far as it differed from a tenants' charter, it thought that the social landlords' charter was not strong enough. On the other hand, the private sector thought that it was far too tough and that there would be difficulty in private sector landlords meeting even the conditions of the social landlords' charter. So that proposal was scrapped. What we had instead was known as the "tenants' guarantee-, and that is what we are now faced with.

The problem with all of those proposals, especially with the proposals which have now been put forward, arises from the fact that the same form of tenancy is supposed to apply both to housing associations and to the private rented sector. However, that is not the reality of the situation. If the Government are sincere in their promise that no tenants will lose any of their existing rights, then secure tenants of housing associations will continue to have all of the conditions of a secure tenancy. But that will not be the case either for assured tenancies, under the existing regime, or for the new-style assured tenancies which will be set up in their place.

Therefore any proposal which seeks to deal with all tenancies on the same basis will either take away the rights of secure tenants or will provide for the new-style assured tenancies in a way which will create differences among tenants in the same housing association; that is, neighbours. people in the same block, and people in the same area who have the same kind of accommodation. the same landlord, but different tenancy conditions.

The differences between a secure tenancy and an assured tenancy are very great. We covered many of them yesterday. I do not wish to go over the ground in detail, but perhaps I may mention the two major issues; namely, security and possession. We know that under the new assured tenancy procedure. for example, a landlord only has to offer alternative accommodation in order to obtain possession. He does not need to give any other ground and the court has no discretion.

As we debated at some length yesterday, if the rent is three months in arrears—which could easily be the case if there is a failure to pay housing benefit on time—the court must grant possession; it is not discretionary, it must grant possession. If there has been any persistent delay in paying rent, even if there is no rent outstanding when the court order is made, the court can grant possession. I can say without fear of contradiction that security of tenure under the proposed regime is much less than security of tenure under existing tenancies which most of the 600,000 housing association tenants enjoy.

The second issue to which I draw attention is that of succession. As I have said, the tenants' charter asserts the right of a widow, widower or resident member of the family to succeed to the tenancy on the tenant's death. What is now proposed under the tenants' guarantee is that succession will be restricted to a surviving spouse; in other words, the upheaval of a family upon the death of one of its members is much more likely than would otherwise be the case.

The Government have made their case for adhering to that view in the private rented sector. We opposed them. We were defeated. I shall not go over that ground again, but in support of the housing association tenancies, which are the theme of the amendment, I say that such a regime is totally inappropriate for housing associations. Housing associations do not want it and housing association tenants do not want it. They are afraid and they have good reason to be afraid—of being thrust into the private sector in that way. They are afraid that the provision will be a major breach in the Government's undertaking that no one will be worse off as a result of the Act. I believe that they are right. We should support the housing association movement in its attempt to restore a genuine measure of security and a decent rent regime to housing association tenancies. The tenants' guarantee does not provide that. I believe that my amendment does. I commend it to your Lordships. I beg to move.

Lord Seebohm

My Lords, I support the amendment. The noble Lord, Lord McIntosh of Haringey, has covered the subject very well but there are certain points that I wish to emphasise strongly. The first is that the housing association movement is not part of the private sector and it is not part of the public sector, though it is largely supported by government funds. It is an entirely different animal. Its objectives have always been clear—to provide affordable rents for those people on low incomes in good quality housing at no profit.

The private sector is completely different. It goes for profit, and good luck to it. The two are not comparable. The idea of bringing housing associations nearer to the private sector is a great mistake. The incentives are different. The two sectors cannot be brought together without making the housing associations poorer and providing less accommodation for those on low incomes. I hope that the amendment will be supported.

Lord Ross of Newport

My Lords, I add my support to what has already been said. We are moving into uncharted waters with the Bill's provisions relating to housing associations. The management of charitable housing associations has become extremely complex. As the noble Lord, Lord McIntosh, has said, tenants under the new regime will not understand why they have rights different from those of existing tenants.

If the Bill goes through unamended, neighbouring tenants on an estate will have entirely different rights. One will have full security of tenure; the neighbour will not. The children of one will have the right to stay in their home should their parents die while a neighbour's children will not. One will have the backing of the law. The neighbour will have to rely upon civil action to enforce the contract. That is hardly simplicity. New housing association tenants are unlikely to understand why their tenancy conditions are so different from those of the 600,000 existine, housing association tenants.

We shall come in a minute to the subject of affordable rents. I am sure that noble Lords will have seen documents from the National Federation of Housing Associations giving the average income of the vast majority of housing association tenants, which I shall quote later. They are not part of the private sector. They are part of the social market for housing. They are people on low incomes, which is why it is so important that we do not destroy the security that has been rightly built up over the past eight years. I hope that the Government will think again about destroying that security.

Lord Moyne

My Lords, I should like to give general support from these Benches to the amendment. I am mainly impressed by the fact that the National Federation of Housing Associations favours it so much. To divide on it would perhaps wear out our shoe leather rather vainly at this stage of the Bill. As the federation favours the amendment so much I wonder whether the Government might look at the proposal again before Third Reading. I am sure that they will not give a firm commitment, but they always have open minds. If they were to undertake to look again at the matter the noble Lord, Lord McIntosh, might withdraw the amendment.

The Lord Bishop of Southwark

My Lords, I do not wish to take up your Lordships' time by repeating the arguments which have been so well put. I should like to underline one point which picks up the point made by the noble Lord, Lord Ross; that is, there is a real sense among many local associations, a number of which I have been speaking to in the past few weeks, that their whole raison d'être will be strongly undermined if we do not do something along the lines of the amendment and the following one relating to affordable rents.

The associations make the point that the noble Lord, Lord Seebohm, was making—that the majority of people who serve the housing association movement, whether as volunteers or nowadays often as paid people, are doing so out of a deep motivation that what they are doing genuinely serves those who otherwise would be inadequately housed or not housed at all. If they cannot go on doing that, if they are going to be forced upwards in the market—that is how it is seen and I am sure that is what will happen—we may find that the whole housing association movement will weaken and decline because its members' strong motivation will be seriously undermined.

Lord Hylton

My Lords, I should like to support the amendment as strongly as I can. The noble Earl will be aware that I speak as a past chairman of the National Federation of Housing Associations. I also happen to be the founder of a small village-scale housing association in Somerset which has worked in close co-operation with the Housing Corporation for some years.

I should like to go back a little in history. When the housing association movement came into prominence again after the Second World War, Conservative Ministers such as, for example, the noble Lord, Lord Joseph, referred to it as the third arm of housing, distinguishing it from private landlords and local authority housing departments. It was seen as something distinct from either.

I wish to pick up and reinforce the point made so well be the right reverend Prelate the Bishop of Southwark: that there are several thousand housing associations, all managed by voluntary committees. They are the purest kind of volunteers that can be found. They are not allowed to charge fees even if they happen to be professional architects, solicitors, or whatever else they may be. They are in it to perform a service. I am confident that they will lose heart if they are lumped in with private landlords of whatever category. The motivation of those volunteers is completely different.

I should like to take up a point that has been touched upon about family continuity for housing association tenants. Many of us look upon this as very important. If one goes back to the old, original housing associations that started in the 19th century, such as the Peabody Trust or the Guinness Trust, with which the noble Lord, Lord Moyne, has been so closely associated for many years, those associations have consciously and as a matter of policy given priority and preference to the children and close relations of their existing tenants. The effect of that in a given estate, village, town or locality is very clear. It gives stability to that place and continuity to the inhabitants so that people do not find themselves in a new town situation where nobody knows their next-door neighbour.

I think I ought also to refer to mobility. For some years there has been in existence a specialist body called HALO, which is a co-operative venture between housing associations to make sure that when their tenants want to move across the country they can do so. It is possible to make exchanges or transfers or to fill vacancies from one housing association to another, achieving what successive governments have encouraged and urged us to do. That is at risk if the Bill is enacted exactly as it stands.

The point was well made by the noble Lord, Lord Ross of Newport, that it is reasonable to expect that there should be equal treatment for all tenants of housing associations and not a different regime for next-door neighbours. For all those reasons I strongly urge that the Government should think again on this point.

5.30 p.m.

Lord Stallard

My Lords, I too briefly want to support this amendment. Most of what I wanted to say has already been said far more eloquently than I could have put it. I agree with the noble Lord, Lord Seebohm, the right reverend Prelate and other speakers. Housing associations, which we have all supported—I have supported them ever since they first began and the movement took an interest in housing—have become totally different organisations from those to which we have been accustomed. The reasons have been outlined. I am strengthened in that view by discussions which I have had and correspondence which I have read recently.

I ask the Minister to reply to the question on Rochford District Council, which has promoted a new housing association, the Crouch Valley Housing Association, for the sole purpose of taking over all the council's housing stock and managing and owning it. That is not what housing associations are about and it will be a completely different set-up from the housing associations that we knew. It did not seem to me that that was what the Bill was about—that local authorities should set up a housing association, as this authority has done, and then hand over its stock. There are allegations that the propaganda being issued by the council and the housing association leaves a lot to be desired in terms of accuracy. Allegations are voiced here as well about the activities of the Electoral Reform Society on this process. So far as I am concerned, that would alter the whole relationship between housing associations and the people whom they were set up to help.

That brings me to my final question, which I have asked before. I am still not absolutely certain that the housing associations, mainly charitable organisations set up to house people in need, are legally entitled now to take over the hundreds or thousands of people who are already housed and not in need. I should have thought that a legal argument could arise as to whether they are entitled to do so or can legally take over these mass dwellings and estates. Can tenants challenge their right as charitable organisations, with their conditions clearly laid down? Is it not possible that tenants could challenge the right of these charitable organisations to take over council estates? I hope that the Minister will be able to clear that up because it is still unanswered since the very first time I raised it in an earlier debate.

Perhaps the Minister could also comment on this new development epitomised by Rochford District Council, which is promoting its own housing association in order to accommodate the purchase of whole blocks of flats.

Lord Pitt of Hampstead

My Lords, there is one other legal point. I am advised that the Charity Commission has told some of these associations that they may be acting ultra vires if they do what the noble Lord, Lord Hylton, and I and many other noble Lords expect them to do; that is, to grant succession as a result of an early contractual agreement rather than a statutory obligation. I should like the Minister to address himelf to that.

If it is true, the Government are putting these charitable organisations into a dangerous situation. If one is acting ultra vires as a trustee or a charitable organisation, one is in trouble. I put it no higher than that. I should like the Minister to address himself to that because the advice I have received is that this is very pertinent to the Government's decision.

The Earl of Caithness

My Lords, as the noble Lord, Lord McIntosh of Haringey, reminded your Lordships, this is yet another issue which has been debated at considerable length at an earlier stage of the Bill. What the noble Lord did not remind your Lordships of was that this amendment has exactly the same principle as the amendment that he moved at Committee and took to a vote. Therefore your Lordships have already decided on the principle of the matter. On that occasion there was a substantial majority for the Government. There is really not much difference in principle between the two sides. What difference does exist relates more to the form in which the rights of new housing association tenants should be expressed than to the content of those rights, though perhaps not exclusively so.

The kernel of the difference between noble Lords opposite and ourselves is that the basis of the Government's view is that housing associations, though they owe a great deal of their funding to the public sector, are much more akin to the private sector. They owe their origins to private initiative. Their management committees are manned by private individuals in their spare time. We hope that in future much more of their finance will come from private funds—something which I am sure your Lordships agree would be beneficial. It would make public funds go much further and we should be able to provide more houses for those who need them.

That is very different from saying that they are always 100 per cent. commercial in their outlook; far from it, as the right reverend Prelate said. They are non-profit making and their objects clearly set out their social and in many instances charitable purposes. It follows, in our view, that the statutory framework for the relationship between association landlord and tenant—I emphasise the word "framework"—should be the one which we have constructed in the assured and shorthold tenancy regimes for the private sector as a whole. One can of course fill in a framework in varying degrees and in all sorts of ways.

In view of their objectives and the nature of their clientele, we are sure that housing associations will want to fill in a lot of detail. In the case of registered associations, those that can receive public money and are supervised by the Housing Corporation, some pretty prescriptive guidance, compliance with which can be closely monitored and enforced, is required on how they should fill in the framework and how they should carry out other aspects of their management. Hence we have the provisions of Clause 49 and the idea of the tenants' guarantee. Similar principles are to be applied in the case of non-housing association private landlords seeking to involve themselves in tenants' choice. Another advantage of a framework is that the infill can be modified at will as one goes along, without the need to wait for further legislative opportunity.

The noble Lord, Lord McIntosh of Haringey, raised one point of concern that was picked up by some of your Lordships. It was that because the assured tenancy regime will apply to associations' new tenants but not their existing ones, some of the tenants will be confused and perhaps management will be unnecessarily difficult because the secure tenants and assured tenants will be living side by side. With respect, I see little force in that argument. Rents will in any event be different for the old and the new tenants. Nor would the Opposition propose the retention for new tenants of exactly the same package of rights as that for old ones. A notable and indeed fundamental distinction is that new tenants will not get the right to buy, except where in certain circumstances they carry a preserved right to buy with them.

I do not recognise the Government's proposals from the description of them given by those of your Lordships who have spoken in support of the amendment. The Government are in no way seeking to alter the purposes of housing associations, or to divert them from their essential task of providing for those with low incomes or with special needs. Indeed our whole housing policy is based on putting housing associations still more to the forefront in providing subsidised, rented housing for those people than they are today.

I understand the concern—as expressed so clearly by my noble friend Lord Moyne—of the housing associations. I have met quite a few of them in the short time that I have been responsible for housing. I understand their concern when change comes about. But the great majority of the housing associations told me that they liked the challenge of the change and that they liked the new opportunities that the Government were giving to them although I must admit that there were one or two who said that they preferred to stay as they were.

They have already looked at the amount of money that they will receive. The existing funds total some £750 million a year. That is set to go up. They see the great opportunities of bringing in private finance to take them a step further in providing their facilities. We realise that there is a demand which is unmet. We believe that housing associations can meet that demand.

I wish to pick up a point made by the noble Lords, Lord Stallard and Lord Pitt of Hampstead. That point was explained in Committee. It concerned the fact that some charitable housing associations could not purchase houses that had existing tenants in them. As I said in Committee, this is a complex area of the law. The commissioners have expressed some doubts about the matter and my department is discussing these with them. I naturally hope that it will prove possible for the Government to conclude that the acquisition of tenanted dwellings is generally a permissible activity for charitable associations. But I am afraid I have no firm news to give your Lordships other than that which I was able to give in Committee.

Lord Pitt of Hampstead

My Lords, I asked a different question. All housing associations wish to be able to retain the right to succession. They have been advised that unless it is a statutory obligation, they may be ultra sires. I wish the Government would address themselves to that point because it is important.

The Earl of Caithness

My Lords, I am sorry if I misunderstood the noble Lord's point. I am glad that he was able to clarify it. I should like to examine that specific point. As I understand it, that situation will not be ultra vires. I believe that housing associations will be able to arrange for succession if they wish. But, as I say, I should like to examine that point because it is a point of law. Not having a legal brief in front of me at the moment or a legal adviser beside me to help me, it would be better for me to come back to the noble Lord on that point.

We discussed this matter at some length in Committee and voted on it. The principle we are discussing today is exactly the same as that on which the Chamber voted in Committee. Housing associations are beginning to realise the full extent of the opportunity before them. Most of them are beginning to see the great opportunities that lie ahead.

5.45 p.m.

Lord Ross of Newport

My Lords, as a member of a charitable housing association I can only say that the management committee of which I am a member is becoming increasingly worried about the problems which are facing it. I have attended meetings of the federation in the West of England at which concerns about the future were expressed very strongly. I am sure that we have all received representations on this matter. I do not know whether the Minister is talking about the larger bodies, but for the average sized or smaller charitable housing associations the Government are creating such problems that many of us who have given a lot of our time to the housing association movement will have to consider whether we can continue to serve it as we have in the past. We are concerned about what will happen in the future. I must tell the Minister that the favourable comments he has received have not been my experience.

Lord McIntosh of Haringey

My Lords, this is my amendment —

The Earl of Caithness

My Lords, we are on Report. The noble Lord, Lord Ross, has replied.

Lord McIntosh of Haringey

My Lords, I moved the amendment. I am entitled to respond to the debate. I am not responsible for the actions of others. The Minister must have smiled to himself when he read in his brief the phrase: those of your Lordships who have spoken in support of this amendment. The fact is that every single speaker, except the Minister, has spoken in support of the amendment. There have been no fewer than eight speeches in support of the amendment. The Minister cannot dismiss them as easily and as quickly as he thinks it is possible to do, simply by saying that the Chamber considered a similar amendment in Committee. This matter is one of the fundamentals of' the Bill. Part II of the Bill is about the housing association movement. The whole of that movement depends on the regime of the tenancies which it is able to give to its tenants. The movement thinks that is the case. It knows far more about it than I or the Government.

If there were no other reason than that, I would still be pressing this amendment. The housing association movement believes that the threat from these proposals to its intentions, purposes, financing and continued existence is so great that it wanted us to raise this matter again in order to give your Lordships and the Government an opportunity to think again about the matter.

The Minister said in his reply that the issues concerned the form rather than the content of the regime under which tenancies are to be granted. I assume that by "form- he meant the question of whether the regime should be included on the face of the Bill or whether it should be contained by regulation. We have not asked that it should be spelt out in detail on the face of the Bill. However, we are saying that it should have statutory backing.

As regards the content, I have no doubt that the Minister is right in saying that in many ways we want the same things, and that these are different ways of achieving them. But the fundamental difference which the Minister failed to address at all in his reply is the question of who is covered by the regime. The Minister did not in any way answer the accusation, which was made from all sides of the House, that unless the Government's proposals are amended by this amendment, they will result in some tenants being more equal than others within the same housing association.

The noble Lord, Lord Ross, talked about some people paying one rent while their neighbours paid another. He also mentioned some people having one right of succession while their neighbours had a different right of succession. That was a very good way of putting it and I am happy to follow him. It is a fact, and it has not been denied by the Government, that we shall land up with a significant proportion of housing association tenancies (and an increasing proportion as secure tenancies expire) being regulated by a regime which is not desired by the housing association movement itself, and which does not in any case provide the security of tenure which enables the housing association movement to fulfil the social purpose it wishes to fulfil. In the past I understood that purpose was universally accepted to be a desirable social purpose.

The Government are departing from all party agreement over a number of years about the worth of the housing association movement and about the way it should conduct its affairs with the help of society as a whole. I find that a tragic betrayal of a movement which I thought the Government had supported in the past. I ask the House to reject that betrayal and to support the amendment.

5.49 p.m.

On Question, Whether the said amendment (No. 115) shall be agreed to?

Their Lordships divided: Contents, 98; Not-Contents, 116.

DIVISION NO. 2
CONTENTS
Addington, L.	Grey, E.
Airedale, L.	Hampton, L.
Ardwick, L.	Hanworth, V.
Birk, B.	Harris of Greenwich, L.
Blackstone, B.	Hatch of Lusby, L.
Blease, L.	Hayter, L.
Blyth, L.	Henderson of Brompton, L.
Bonham-Carter, L.	Hooson, L.
Boston of Faversham, L.	Hughes, L.
Brooks of Tremorfa, L.	Hunter of Newington, L.
Carmichacl of Kelvingrove, L.	Hutchinson of Lullington, L.
Cledwyn of Penrhos, L.	Hylton, L.
Cocks of Hartcliffe, L.	Hylton-Foster, B.
Craigavon, V.	Ingleby, V.
David, B.	Jay, L.
Davies of Penrhys, L.	Jeger, B.
Dean of Beswick, L.	Jenkins of Putney, L.
Diamond, L.	John-Mackie, L.
Donaldson of Kingsbridge, L.	Kennet, L.
Dormand of Easington, L.	Kilbracken, L.
Elwyn-Jones, L.	Kinloss, Ly.
Ennals, L.	Kirkhill, L.
Ewart-Biggs, B.	Listowel, E.
Falkland, V.	Liverpool, Bp.
Foot, L.	Llewelyn-Davies of Hastoe, B.
Gallacher, L.	Lockwood, B.
Galpern, L.	Lovell-Davis, L.
Graham of Edmonton, L.	McGregor of Durris, L.

McIntosh of Haringey, L.	Seear, B.
McNair, L.	Scebohm, L. [Teller.]
Mar, C.	Sefton of Garston, L.
Marsh, L.	Serota, B.
Mason of Barnsley, L.	Shannon, E.
Milner of Leeds, L.	Southwark, Bp.
Molloy, L.	Stallard, L.
Moyne, L.	Stedman, B.
Mulley, L.	Stewart of Fulham, L.
Murray of Tipping Forest, L.	Stoddart of Swindon, L.
Nicol, B.	Strabolgi, L.
Northfield, L.	Taylor of Blackburn, L.
Oram, L.	Taylor of Gryfe, L.
Phillips, B.	Turner of Camden, B.
Pitt of Hampstead, L.	Underhill, L.
Ponsonby of Shulbrede, L.	Wallace of Coslany, L. [Teller.]
	Walston, L.
Prys-Davies, L.	Weir, V.
Raglan, L.	Williams of Elvel, L.
Robson of Kiddinglon, B.	Winstanley, L.
Ross of Newport, L.	Winterbottom, L.
Russell, E.

NOT-CONTENTS
Ailesbury, M.	Killearn, L.
Aldington, L.	Kintore, E.
Alexander of Tunis, E.	Long, V.
Allerton, L.	Lothian, M.
Arran, E.	Lucas of Chilworth, L.
Auckland, L.	Lyell, L.
Balfour, E.	McAlpine of Moffat, L.
Beloff, L.	McFadzean, L.
Belstead, L.	Mackay of Clashfern, L.
Bessborough, E.	Macleod of Borve, B.
Blatch, B.	Mancroft, L.
Borthwick, L.	Margadale, L.
Brookes, L.	Maude of Stratford-upon-Avon, L.
Caccia, L.
Caithness, E.	Merrivale, L.
Cameron of Lochbroom, L.	Mersey, V.
Campbell of Croy, L.	Milverton, L.
Carlisle of Bucklow, L.	Montgomery of Alamein, V.
Carnegy of Lour, B.	Morris, L.
Carnock, L.	Mottistone, L.
Carr of Hadley, L.	Mowbray and Stourton, L.
Coleraine, L.	Munster, E.
Colnbrook, L.	Murton of Lindisfarne, L.
Colwyn, L.	Nelson, E.
Constantine of Stanmore, L.	Norrie, L.
Cottesloe, L.	Nugent of Guildford, L.
Cranbrook, E.	Onslow, E.
Crathorne, L.	Orkney, E.
Dacre of Glanton, L.	Orr-Ewing, L.
Davidson, V. [Teller.]	Oxfuird, V.
Denham, L. [Teller.]	Pender, L.
Dilhorne, V.	Peyton of Yeovil, L.
Dormer, L.	Platt of Writtle, B.
Dundee, E.	Prior, L.
Ellenborough, L.	Pym, L.
Elliot of Harwood, B.	Rankeillour, L.
Elliott of Morpeth, L.	Reay, L.
Ferrers, E.	Rochdale, V.
Forester, L.	Rodney, L.
Fortescue, E.	St. Aldwyn, E.
Gibson-Watt, L.	St. Davids, V.
Gisborough, L.	Saltoun of Abernethy, Ly.
Glenarthur, L.	Sanderson of Bowden, L.
Gray of Contin, L.	Sempill, Ly.
Gridley, L.	Sharples, B.
Grimston of Westbury, L.	Skelmersdale, L.
Grimthorpe, L.	Somers, L.
Harmar-Nicholls, L.	Stodart of Leaston, L.
Harvington, L.	Strathclyde, L.
Henley, L.	Sudeley, L.
Hesketh, L.	Swinfen, L.
Hives, L.	Thomas of Gwydir, L.
Holderness, L.	Trafford, L.
Home of the Hirsel, L.	Tranmire, L.
Hooper, B.	Trefgarne, L.
Johnston of Rockport, L.	Trumpington, B.
Kaberry of Adel, L.	Ullswater, V.

Vaux of Harrowden, L.	Young, B.
Wyatt of Weeford, L.

Resolved in the negative, and amendment disagreed to accordingly.

5.57 p.m.

Clause 49 [Guidance as to management of accommodation by registered housing associations]:

Lord McIntosh of Haringey moved Amendment No. 116: Page 38, line 26, leave out ("principles upon which the level of rent should be determined") and insert ("levels of affordable rent").

The noble Lord said: My Lords, in moving Amendment No. 116 I should like to speak also to Amendment No. 117. I take as my text for both amendments the words of the noble Lord, Lord Brabazon of Tara, in Committee. At col. 203 of the Official Report of 26th July the noble Lord said that. the Government's position is that we intend rents for housing association tenants to be within the means of those for whom the associations have traditionally provided".

I wonder whether the House is fully aware of the facts about those for whom the housing association movement traditionally provides. I wonder if it is fully aware that the proportion of housing association tenants who are elderly is 34 per cent., single adults (29 per cent.), single parents (13 per cent.), or of non-white European origin (14 per cent.). Twenty three per cent. of housing association lettings are to those who are unemployed; only 29 per cent. are to those who are in work. The average income of housing association tenants is £77.50 compared with a national average of £224. For those households with no one in work the average income is £59.

Seventy-one per cent. of housing association tenants rely to some extent on housing benefit; 49 per cent. are wholly reliant upon benefits; 28 per cent. do not qualify for housing benefit or do not think that they qualify; and 78 per cent. have no savings whatsoever.

Housing association tenancies go to those in housing need—those who have always been in housing need or who were in housing need before coming to the housing association. The four most common reasons for re-housing by a housing association are over-crowding, ill-health, leaving temporary accommodation and poor housing conditions. That makes up 46 per cent. of all the reasons why housing associations house tenants.

On average the households in housing association accommodation which are not in receipt of housing benefit pay 16 per cent. of their net weekly income in rent. I apologise for giving such a large number of figures. It is not usual to bombard the House with figures of that kind. However, I want to make two fundamental points about housing associations which may not be fully recognised.

The first point is that however much the Minister may say, as he said in response to the previous amendment, that housing associations are more nearly in the private sector and are not part of the public sector, the fact is that when one examines exactly what the housing association movement does, one finds that it provides housing—decent housing we hope and believe—for that section of the community which is most in need.

Secondly, as I have proved from the fact that those who are not on housing benefit pay on average 16 per cent. of their income in rent, housing associations are providing for those most in need accommodation at affordable rents. The figures are derived from the most recent survey of the National Federation of Housing Associations made in April and May this year. They are as up to date as it is reasonably possible for such figures to be and they show very clearly not only what the housing associations want to do—which is what I and other noble Lords referred to when we debated the previous amendment—but what is in fact happening.

The purpose of this amendment is to ensure that housing associations are able to continue to provide that service—and it is a service. I challenge the Government to deny that it is not one which will ever be provided by the private rented sector. It can only be provided by those who set out on a non-profit basis deliberately and consciously and out of a feeling of social concern to offer housing that can be afforded by those who are most in housing need. That is what the noble Lord, Lord Brabazon of Tara, appeared to say about the rents for housing association tenants.

I remind the House that the existing rents regime for housing associations tenants is one of fair rents determined by an independent rent officer under the Rent Act 1977. This Bill will blow those fair rents away. They will not be blown away immediately because there are still secure tenancies but it will happen progressively over a period of years. As secure tenancies come to an end and as new assured tenancies under the tenants' guarantee (for what that is worth) take their place, the protection that has been given to housing association tenants and housing associations which want to provide for their tenants will be blown away. That is as sure a fact as can be stated. It cannot be denied that that will happen as the housing association movement approaches more closely the private sector and moves further away from the public sector.

As regards rents, the non-statutory tenants' guarantee says: Where accommodation has been provided with the assistance of public subsidy, or purchased from a public body, such as a local authority or New Town, housing associations are expected to set and maintain their rents at levels within the reach of those in low-paid employment. This will often entail setting rents below market level. Associations should not discriminate in their rent setting between tenants in receipt of housing benefit and others on below average incomes". So far so good. The tenants' guarantee goes on: In addition they are expected to take account of the size, amenities, situation and condition of the accommodation: and the need to cover the costs, after subsidy, of loan charges and management and maintenance, including the requirement to make prudent provision for future repairs".

The problem is not that those statements in themselves are utterly wicked but that they are in conflict with each other. In certain parts of the country it will mean that housing association tenancies will move closer and closer to market rents and further and further away from the affordable rents which we believe ought to be maintained as a principle of the housing association movement.

We have made an attempt to define what is a fair rent in paragraph (c) of a new Subsection (3A). We have said that account should be taken of: the requirement that average affordable rents should not generally exceed one-fifth of the average net disposable income of persons referred to in (a) and (b) above". That may not be the right figure. It accords reasonably well with what is happening in housing associations at the moment and it has that reality to defend it. However, some figure has to be found. There has to be some recognition of the need for housing association rents to be set at a level which is affordable by the people for whom the housing association movement provides a service. At the moment, despite the good will of the noble Lord, Lord Brabazon, when he responded to the debate in Committee, the Bill does not provide for that. Our amendment does provide for it and I commend it to the House. I beg to move.

6 p.m.

Lord Seebohm

My Lords, once again this is an attempt to drag the housing association movement into the private sector. It is bound to increase rents. As I understand it, even with housing benefit certain people now covered by housing associations will pay over 40 per cent. of their income in rent. That does not make any sense at all to me. Housing associations are to provide affordable rents and we must stick to that principle. I think that something like 20 per cent. of income might be an acceptable figure, but 40 per cent. is not. I support the amendment.

The Lord Bishop of Southwark

My Lords, it may be helpful if we try to recover some sense of the totality of this Bill and see this issue in relation to it. In the earlier edition of the Bill the preamble stated that the Bill was: aimed particularly at transforming the rented housing market". All through the debate on the Bill deep concern has been expressed from all sides of the House, and I do mean all sides of the House, that this aim should not be achieved at the expense of the low paid and the homeless. It is a moral and human concern that has been heard from all quarters.

Now that we have reached the Report stage of the Bill let us see how things look. I believe that this amendment is the key to achieving balance and justice in the Bill. I want to acknowlege that many positive things may well be achieved by it: greater freedom at the top of the market, greater diversity of landlords, perhaps the stimulus of some competition in order to ensure a better deal for the tenants, and perhaps a greater sense of participation and control over their homes and communities by the people who live in them. All those things may well happen. But at the end of the day if families continue to spend 18 months in bed and breakfast accommodation, if housing associations are forced to charge rents which increasingly many of the most needy will not be able to afford and if housing benefit (I stress this point very strongly) fails to rise to meet the level of rent which insistence on mixed funding in one form or another requires, the Bill will not simply have transformed the rented housing market, and by implication made it better, hut will have deformed it and made it worse for people who have less choice than do the rest of us.

Fortunately, I am sure that the Government know this to be so, and do not want it to happen. The Minister told us at the end of the Second Reading of this Bill: We fully accept that, if our policy of boosting the private rented sector is to work, tenants on low incomes or who arc unemployed will need help to pay market rents. We have undertaken that housing benefit will be available to enable tenants to afford market rents"—(Official Report, 11/7/88: col. 680.] This leads to the question: what is an affordable rent? What proportion of a person's income can one expect to be paid in housing rent? Hitherto—and I have considered this as carefully as I can—Ministers have been unwilling to answer that question. However, the process is to decide, first, the level of grant, and, secondly, the level of housing benefit. Those two matters go together although, alas, not in the same government department. That is a fundamental problem. Deciding what is an affordable rent depends on getting the answers right. The matter has to be debated publicly and some standard found. This lies at the heart of the concern which has led to this amendment.

We have already had the figures from the noble Lord, Lord McIntosh. about the census that the National Federation of Housing Associations has carried out. That is very important because it underlines the kind of thing that will happen if mixed funding cones in. I do not think it is commonly realised that if mixed funding comes in and the level of housing association grant is cut off at varying points up to 75 per cent., in many different parts of the country people will find themselves paying up to 40 per cent., or slightly more of their income, without yet being eligible for housing benefit. This is the point that the noble Lord, Lord Seebohm, was making. We have to consider this matter.

How were any people in this Chamber pay 40 per cent. of their income on rent'? We are considering people with a low income. Are we happy to see this happen? If we do not wish to see it happen something must be provided on the face of the Bill to ensure that certain people recognise this responsibility. I wish to stress this point.

Not only the present Minister for Housing but also his predecessor said publicly that housing association rents, should be set and maintained within the reach of those in low-paid employment". I am sure that the Government do not wish to set up another deep poverty trap, but that will happen. It will discourage from working the very people whom I understand we wish to see back at work. This is the obvious danger apart from the hardships involved, along with the continuing growth in homelessness and despair. Family life, children's development and human dignity are all at stake. Choice—one of the aims of this Bill—with responsibility for one another must be seen as partners. They are not alternatives. This amendment is crucial to that issue.

I hope that your Lordships will agree to the proposal or that the Minister will give us a much clearer undertaking that affordable rents and adequate housing benefit will continue to be available for those who need them. The amendment suggests a figure of around 20 per cent. I believe that figure to be right, so that poverty and hardship are not further increased for many families and individuals.

Lord Moyne

My Lords, I have sympathy with this amendment. However, speaking personally, I am a little concerned that the rigidity of formulae may not be entirely practical, with situations varying in different parts of the country. I should be much happier if the Minister would give us some assurance about housing benefit. The problem has to be solved from two ends: one is to keep rents down; the other is to make them affordable from below by housing benefit. I believe that the tenants' guarantee has not yet been set out, although I may be wrong. If some assurance could be given about housing benefit and incorporating something about affordability in the tenants' guarantee, I should feel happier about it.

6.15 p.m.

Lord Ross of Newport

My Lords, I am conscious that I exceeded my ration last time. I apologise to the House if I was out of order. However, I hope that I may speak briefly in support of this amendment.

I think that everybody should take on board very seriously what the right reverend Prelate has said. It is a warning. I believe that it will be the Achilles heel of the Government that the younger generation without wealthy parents is finding itself priced out without the ability to purchase. If we are not careful we shall find the elderly, and not so elderly, on low incomes being priced out of the ability to rent. We have had some examples. If it is true that a lady in Eastleigh earning £92 a week will have to pay 36 per cent. of that income in rent and will not receive housing benefit as matters stand at the moment. it is a very serious situation.

Problems are already arising. In my local newspaper, the Isle of Wight County Press, on 21st October the heading was: "Tenants' fury over rent increase bid". As I described to noble Lords at Committee stage, they are from ex-GLC properties. There are about 120 or more tenants in my part of the world. They are faced with rent increases of £10 per week on average. This has not been finally confirmed by the rent officer but they are trying to register these rents with the North British Housing Association. The article states: The association have said their bid for a fair rent is in part to cover the costs of their borrowing requirement, resulting from taking out mortgages to buy the properties Some of these people will not qualify for housing benefit. Some are facing rent increases of 45 per cent. They are retired people from Dagenham who have a small pension from the Ford Motor Company. At the moment they are not entitled to housing benefit and are doubtful that they will receive much in the future.

This is the crucial point. I cannot put it better than the right reverend Prelate who spoke a moment ago. We must have an answer. As I have said before, I wish to see rented accommodation coming back onto the market. It has been very difficult in London. Outside London, this could provide a way forward. But if these rents are going to go through the roof—and we know that the prospective tenants under the housing association movement are largely people on very low incomes—what will their future be? We must have an answer tonight. If not, we must support these amendments. I hope that Members on the other side of the House will listen very seriously to this proposal.

Lord Hylton

My Lords, I should like to support these two amendments which have been so ably moved and so strongly supported from all sides of the House. I regret that the Government, in the way they have written this Bill, are separating old and new tenants of housing associations not only as to their legal rights—as we saw on the last amendment—but also on the future level of rents for new tenants. That is bad enough. But as the National Federation of Housing Associations has already pointed out, it will cause a real problem to charitable housing associations, which are a large proportion of the total.

When we come to the question of affordability—as we shall see when we reach Clause 118—the Government give the appearance of trying to fudge the issue by creating new functions for rent officers to administer. Rent officers by and large are very able people. No doubt they will be able to cope with these new functions in so far as it is humanly possible to cope with them. But it is not what rent officers were set up for and it should not have to happen.

It has been said over and over again—I should like to re-emphasise it—that the proposed new regimes will bear particularly hard on those in full-time employment but on average or less than average incomes. Those are precisely the people in our society who are not in a position to buy their own houses. For instance. there is a large proportion of workers in service industries in cities, especially in London. Equally, there are the lower-paid people in the rural areas. Those who will be hardest hit are those who live where land prices are high and where building costs are also high.

As regards the new schemes which associations will undertake. the greatest difficulty will arise where the proportion of private funds is highest. That will give us considerable trouble. The amendments ask for guidance on what is affordable to be written into the Bill. One may agree or disagree with the figure of 20 per cent. of net income, but let us at least start with something definite and it can be fine tuned or moved up and down later as experience may indicate. I hope that the amendment will be approved.

Lord Brookes

My Lords, in rising with some hesitation to support the amendment, I am conscious of the fact that the necessities addressed by the Bill are real and purposeful. Deep-seated problems which have developed over the years in municipal housing of all kinds must have presented serious economic problems to this Government—indeed, to any government. I sense, without knowing, that many of us on these Benches have gone along voting against some very well-argued and well-reasoned amendments from the other side of the House. Sometimes perhaps our hearts have been in conflict with our heads and vice versa.

Those of us who have spent our lives in business know that investment is needed to yield profit, so very large sectors of what I have called in my lifetime public or municipal housing will now or in the not too distant future have to charge rents which will realise profit in order to attract investment to ensure their maintenance. I have opposed many amendments which have had a bearing on that point with great reluctance. But having done that I am now conscious that at this point in the debate we are addressing a safety net of proven social consequence, proven social work and one that down the years has demonstrated all that is worthy and worthwhile in human decency in terms of staffing facilities, private funding and so on.

Therefore I plead that we do not remove this safety net which is there to help the unfortunates who are at the bottom of the pile and who will always be there. Unfortunates are not always there because they deserve to be. We are all conscious of the fact that people have taken advantage of the housing situation and misused it and have misused all kinds of direct and indirect subsidies. But the amendment addresses the needs of people who are at the bottom of the pile. I feel that it is part of the duty of your Lordships' House to be mindful of their necessities.

The Lord Bishop of Liverpool

My Lords, I too should like to support these two very important amendments. Yesterday I said on a personal note that I had been away on a sabbatical during the earlier stages of the Bill. I should have said that all of us on these Benches were away during the Committee stage because we were at the Lambeth Conference.

Part II has brought us to the heart of whether the Bill will make it possible to deliver an effective change to large council estates, which I believe is of the first importance to the Government in bringing forward the Bill. The Government hope that housing associations may play a major part in that. I welcome the possibility of the break-up of large estates. I welcome more mixed tenure. I believe that there will be a significant long-term benefit to urban communities if a reasonable proportion of those who have done well in school, for example, can buy and stay. I strongly support the major personal stake which housing co-operatives give their tenants.

Whether the Bill will make it possible to deliver, depends on new landlords being able to offer affordable rents and together with that whether they can offer efficient repairs. For many years the biggest change which people on housing estates have longed for—not just in the world of housing but in the whole of their lives—has been that housing repairs should be done promptly and efficiently. We cannot defend the indefensible about council housing estates. Often repairs have not been done promptly and efficiently. When a new and more co-operative council came into office in Liverpool after four years of militant leadership, a survey showed that the average delay in housing repairs in Liverpool was four years. All that cannot be laid at the door of the militants. They were in power for four years, but it shows that neither they nor their predecessors in three different parties over a good many years had achieved prompt and efficient repairs on council estates.

I look with hope to a mixture of tenures and of landlords, hoping that efficient repairs will emerge. Do not let us underestimate what we are asking for. The old problem of unpopular estates with unpopular tenants has never been solved. Two weeks ago as national president of the Family Service Unit, I visited a large estate in North Manchester part of the area of the Manchester and Salford FSU. Local families, the health visitor, FSU social workers all gave me a picture of an estate in which fear runs very high—fear of break-ins, of youthful gangs and of the large dogs people keep for security purposes being let out on their own to exercise themselves.

Most people will feel able to stand up to vandals and violence only if they can stand together with their neighbours. Alas, they often mistrust and fear their neighbours. I am a great supporter of housing cooperatives, but they are not likely to allow unpopular tenants to become members of their co-operative nor are landlords who expect to make a profit. That is all a reminder that we need a vigorous and well-funded public sector of housing as well, both council-owned and housing association-owned.

We talked a lot in your Lordships' House yesterday about the balance between landlords and tenants. We need to recall that the landlords will often be housing associations. If they are expected to take over parts of large estates, it matters very much that they should have the capacity to manage. Being able to manage must include having enough money to house low paid people and to offer them efficient and prompt repairs.

I hope the Minister will tell us whether he accepts that rents should not generally exceed one fifth of someone's disposable income and that the housing corporation should be able to offer sufficient funds to housng associations for them to produce affordable rents and efficent management. That is, of course, equally true for private landlords.

I want to speak for a moment about Stockbridge Village. It is, I suppose, the largest single model of what the Government may have in mind. A local authority, Knowsley, sold a whole estate to a private sector consortium. I was taken round it by the chairman when I was there three weeks ago installing a new vicar. In the legal document instituting the vicar I had to use the old name Cantril Farm. Afterwards I was talking with members there and I said, "Do you now like to say Cantril Farm, or Stockbridge Village'?" "Stockbridge Village", they said, without hesitation—good news for something which has made a good beginning.

Substantial public money was needed to launch Stockbridge Village. Substantial public money has been needed again to keep it underway. Repairs have been carried out. In many ways a good start has been made, but some of the most difficult parts have not yet been dealt with. The church members to whom I was talking mentioned the need for substantial repairs again in some dwellings. The rents in Stockbridge Village are low for the area. The majority of people there are low paid or unemployed. If rents are raised in order to maintain repairs, one way or another subsidies will also need to rise.

I make that point because I am enthusiastic for the break-up of some large estates. However, dogma about the effectiveness of the private market will not solve such problems. If hopes are to come true substantial public money must be put in and sustained. I hope that the Minister will not hesitate to acknowledge that.

6.30 p.m.

Lord Pitt of Hampstead

My Lords, the housing associations were set up not merely to provide housing but also to relieve poverty by providing affordable housing. Why do the Government want to change that? Do they not recognise the fact that there will always be a need for houses at that level, that the housing associations can provide them and that they should be encouraged and helped to do so? I believe that, in their anxiety to get rid of local authority housing and to stimulate the development of private rented housing, the Government are missing the point. By allowing the housing associations to perform their social functions, the Government would be helped rather than hindered in what they are trying to achieve. What the Government are trying to do to the housing associations will make their other objectives more difficult to attain. I ask the Minister to think about that matter.

The Earl of Caithness

My Lords, we come to yet another amendment that was discussed and voted on in Committee. I shall say nothing more about that to the noble Lord, Lord McIntosh of Haringey. However, I was most surprised that the noble Lord chose to quote what was said by my noble friend Lord Brabazon of Tara in Committee. I should like to repeat his words. He said that, the Government's position is that we intend rents for housing association tenants to be within the means of those for whom the associations have traditionally provided"—[Official Report. 26/7/88: col. 203.] When speaking to the last amendment the noble Lord accused the Government of wishing to change the rules of the housing associations and the type of housing that they are providing. Now he is happy to quote what my noble friend said in Committee. That proves that we want the housing associations to continue to fulfil the role that they have provided so well. Therefore, it will come as no surprise to the noble Lord, Lord McIntosh, if I say that the Government are as opposed now as they have been on previous occasions to any attempt to define on the face of the Bill exactly what rent a tenant of a housing association might expect to pay for his tenancy.

I shall explain as briefly as possible why that remains our view. In doing so, I shall draw attention to the fact that, in principle, there is little between ourselves and the noble Lords who have spoken on these matters. The Government fully share the view that housing associations should be providing accommodation at rents within the reach of people on lower incomes; we do not, however, think that it is necessary or desirable to enshrine such a requirement in statute. That is the nub of the difference between us.

These amendments come close to recreating the fair rent system under which associations currently operate. They do not, it is true, bring the rent officer into play, but they assign a very similar role to the Secretary of State. In effect, the Secretary of State, through the mechanism of the tenants' guarantee issued by the Housing Corporation, would impose an upper limit on rents chargeable by registered associations.

Perhaps I may say as an aside that notwithstanding our objection to the substance of these amendments, we welcome the Opposition's use of the tenants' guarantee as a means of achieving their objective. We might otherwise have thought that the guarantee remained out of favour with the Opposition in view of their attempt in another amendment to recreate a statutory housing association tenancy.

I should like to say to my noble friend Lord Brookes that it is of course the Government's own intention that the guarantee should lay a general requirement on associations in respect of rents, and the draft guidance issued by the Housing Corporation makes it clear that associations must, set and maintain their rents at levels within the reach of those in low-paid employment". That answers the main concerns raised by your Lordships, in particular by the right reverend Prelate the Bishop of Southwark.

That requirement, however, gives associations a crucial measure of discretion over how they determine the amount of rent affordable by the lower paid. Housing associations have a tradition—an honourable one—of acting as responsible landlords. Their purpose is to provide housing for those of limited means and in most cases their constitutions require them to do so. They are not profit-making bodies.

We are quite confident, therefore, that they will not be exploiting tenants, pushing rents towards market levels, or generally charging a penny more in rents that they have to do. But they should at least be able to make reasonable adjustments to their rents without fear that doing so will carry them just above some statutory formula. Even the rent officer does not operate according to such rigid guidelines as those envisaged for the Secretary of State under these amendments. My noble friend Lord Moyne was quick to point that out.

Why, it may be asked, is this flexibility in rent-setting so desirable? It seems to the Government that rent-setting is a key part of the landlord's managerial function and one on which a landlord should deal direct with the tenants through the tenancy agreement. We believe that associations have earned the right to be treated as responsible bodies, fit to be given discretion in this important respect. We propose under Part II of the Bill to introduce a new regime for funding associations which places more direct responsibility on them for achieving quick and cost-effective development of new housing schemes. But we cannot expect them to take those kinds of responsibility and then suggest that they cannot be trusted to set their own rents.

There is, too, a clear need for housing associations to have discretion over rent-setting if they are to attract funds from the private sector. Through mixed public and private funding, we expect associations to expand the supply of new rented accommodation—accommodation no one will deny is needed. I do not think the long-term support of private investors could be expected if rent-setting was effectively in the hands of the Secretary of State as these amendments propose.

We shall not expect associations to develop new schemes through private finance alone. There could be little prospect of them doing that while maintaining rents at the levels indicated in the tenants' guarantee. Grant will continue therefore to be available, and at substantial levels. Nor will all schemes be expected to use private finance; there will be opportunities for associations to bid for full public sector support for good schemes which meet recognised needs and for which private funds would not be forthcoming.

I turn to deal with a point raised by the right reverend Prelate the Bishop of Southwark. Obviously we must keep under review the important matter he raised—that of grant rates—in the light of information such as that from the National Federation of Housing Associations census. Additionally, some type of scheme will require to be continued to be funded at a very high level of grant, above the mixed funding grant-rate levels. I repeat that in some cases it is possible that there may be 100 per cent. funding. I hope that that reply meets the concern expressed by the right reverend Prelate.

The noble Lord, Lord McIntosh of Haringey, said that the concept of rents within the reach of people in low paid employment, and the need to pay for management, maintenance and major repairs and to remunerate a private loan, were incompatible. They are not incompatible. It depends substantially on the amount of grant which the Housing Corporation provides. We have undertaken that that will be enough to enable assocations to keep their housing affordable by those groups for whom it is provided.

The noble Lord, Lord Ross of Newport, said that he welcomed the opportunity to have more rented property on the market. I agree with the noble Lord. It is one of the main points of the Bill and a reason why we are giving the housing associations such a confidence booster under our proposals in the Bill. Therefore, the points raised about ex-GLC homes being charged higher rent under the current system have no relevance to the item under discussion, as I am sure he will realise.

The noble Lord, Lord Hylton, raised the question of rent officers. I know that he will be aware that that was discussed at some length in Committee and is fully reported in Hansard.

We are aiming for a system in which the tenant is properly protected through tenant guarantee and the availability of grant. The wider needs of tenants and would-be tenants to have access to good rented accommodation will be met through the ability of associations to develop more housing for each pound of public money available. Our objective is very simple. It is to give people who want and need to rent —we know that the accommodation is needed—the opportunity to do it through housing associations in particular. We want that to be at an affordable rent. We are backing that by giving housing associations access to considerable amounts of public finance. The basis of our objective is to provide rents at affordable levels. We disagree with the noble Lord, Lord McIntosh of Haringey, because we do not think that it is necessary to state that on the face of the Bill.

Lord McIntosh of Haringey

My Lords, I sincerely congratulate the Minister on the way in which he continues to present his case in the face of universal opposition from your Lordships' House, with the exception of those noble Lords who troop into the Division Lobbies without having heard the debates. I want to draw attention to the fact that, of the eight speakers in support of the amendment, two sit on the Government Benches. I shall refer to those two speeches before reverting to the wider issues.

The noble Lord. Lord Moyne, said that the danger of the amendment, which he supported, was that it was too rigid. I want to reassure him on that point. The amendment refers to regulations to be made by the Secretary of State. Therefore, the detail is not set out on the face of the Bill as the noble Lord fears. The Secretary of State is to make regulations that take account of various factors, including the disposable income of housing association tenants and of persons in low-paid employment. There is then included, although not exclusively, the relationship between affordable rents and disposable income. Without the latter point we run the risk of doing what the right reverent Prelate the Bishop of Southwark referred to, that is, increasing dependency. There is the danger that housing associations, which already have among their tenants many people fully or partly on housing benefit. will have a higher proportion of tenants on housing benefit because the rents have risen to a level that people cannot afford to pay without housing benefit. We believe that it is better to keep the rents down and for people not to be in receipt of housing benefit rather than to allow the rents to rise, which leads to increased dependency. That is surely an objective of government also.

The noble Lord, Lord Brookes, in a valuable contribution— it is the first time that I have heard him speak in your Lordships' House—referred to his business experience. Perhaps I too may refer to business. If one wants to increase the productivity of labour in the country, the way not to do it is to wipe out all the low productivity jobs and leave the rest alone. One improves labour productivity statistically on average but one does not improve the productivity of any single individual job; nor is one achieving any recognisable or justifiable business or industrial objective by so doing. One is simply putting more people on the dole and making the rest of us support them.

The noble Lord similarly proclaimed his support for private rented housing. So be it. We are not opposed to private rented housing, but we are opposed to the phoney claim that the scope for private rented housing is improved by forcing housing associations and their tenants who do not want to be in the private sector into that very sector. One is statistically increasing the number of people who are under a regime comparable to the private sector, but not a single new private landlord and not a single new private tenancy is created. In those circumstances the objectives of the Government are no more than window dressing.

I rest the case for the amendment on the quotation of the noble Lord, Lord Brabazon of Tara—indeed, the quotation was used by both the Minister and myself. We agree that it is right for housing association tenancies to be based on affordable rents. We say that the Bill does not provide for that. In situations where housing associations will be dependent on both private funds and public funds, I welcome what the Minister said about the balance between them. In circumstances where private funds will be involved and the pressure for higher rents will be unavoidable in respect of housing associations, we think it right that the housing association movement and its tenants should be reassured that the Government state this not only in speeches but also in the Bill.

6.47 p.m.

On Question, Whether the said amendment (No. 116) shall be agreed to?

Their Lordships divided: Contents, 85; Not-Contents, 94.

DIVISION NO. 3
CONTENTS
Adrian, L.	Kilbracken, L.
Airedale, L.	Kilmarnock, L.
Ardwick, L.	Kinloss, Ly.
Blackstone, B.	Kirkhill, L.
Blease, L.	Listowel, E.
Blyth, L.	Liverpool, Bp.
Bonham-Carter, L.	Llewelyn-Davies of Hastoe, B.
Boston of Faversham, L.	Lovell-Davis, L.
Brooks of Tremorfa, L.	McIntosh of Haringey, L.
Carmichael of Kelvingrove, L.	Mackie of Benshie, L.
Cledwyn of Penrhos, L.	McNair, L.
Cocks of Hartcliffe, L.	Mar, C.
Darcy (de Knayth), B.	Masham of Ilton, B.
David, B.	Mason of Barnsley, L.
Davies of Penrhys, L.	Meston, L.
Dean of Beswick, L.	Milner of Leeds, L.
Dormand of Easington, L.	Molloy, L.
Elwyn-Jones, L.	Murray of Epping Forest, L.
Ennals, L.	Nicol, B. [Teller.]
Ewart-Biggs, B.	Northfield, L.
Falkland, V.	Oram, L.
Gallacher, L.	Pitt of Hampstead, L.
Galpern, L.	Ponsonby of Shulbrede, L. [Teller.]
Graham of Edmonton, L.
Grey, E.	Prys-Davies, L.
Hampton, L.	Raglan, L.
Harris of Greenwich, L.	Ritchie of Dundee, L.
Hatch of Lusby, L.	Ross of Newport, L.
Hayter, L.	Russell, E.
Hooson, L.	Russell of Liverpool, L.
Houghton of Sowerby, L.	Seear, B.
Hughes, L.	Seebohm, L.
Hylton, L.	Sefton of Garston, L.
Ingleby, V.	Serota, B.
Jeger, B.	Southwark, Bp.
John-Mackie, L.	Stallard, L.

Stedman, B.	Underhill, L.
Stewart of Fulham, L.	Wallace of Coslany, L.
Stoddart of Swindon, L.	Walston, L.
Taylor of Blackburn, L.	Williams of Elvel, L.
Taylor of Gryfe, L.	Winstanley, L.
Thurlow, L.	Winterbottom, L.
Turner of Camden, B.	Wyatt of Weeford, L.

NOT-CONTENTS
Arran, E.	Lyell, L.
Balfour, E.	McAlpine of Moffat, L.
Beloff, L.	McFadzean, L.
Belstead, L.	Mackay of Clashfern, L.
Blatch, B.	Mancroft, L.
Borthwick, L.	Margadale, L.
Broxbourne, L.	Marley, L.
Caccia, L.	Merrivale, L.
Caithness, E.	Mersey, V.
Cameron of Lochbroom, L.	Milverton, L.
Campbell of Croy, L.	Monk Bretton, L.
Carnegy of Lour, B.	Montgomery of Alamein, V.
Carnock, L.	Mottistone, L.
Coleraine, L.	Mowbray and Stourton, L.
Colwyn, L.	Munster, E.
Constantine of Stanmore, L.	Murton of Lindisfarne, L.
Cottesloe, L.	Nelson, E.
Davidson, V. [Teller.]	Nugent of Guildford, L.
Denham, L. [Teller]	Onslow, E.
Dilhorne, V.	Orkney, E.
Dundee, E.	Pender, L.
Elliot of Harwood, B.	Peyton of Yeovil, L.
Elliott of Morpeth, L.	Platt of Writtle, B.
Elton, L.	Prior, L.
Ferrers, E.	Pym, L,
Forester, L.	Rankeillour, L.
Fortescue, E.	Reay, L.
Gibson-Watt, L.	Rees, L.
Gisborough, L.	Renton, L.
Glenarthur, L.	Rochdale, V.
Gray of Contin, L.	Rodney, L.
Grimston of Westbury, L.	Saltoun of Abernethy, Ly.
Harmar-Nicholls, L.	Sanderson of Bowden, L.
Henley, L.	Sharples, B.
Hesketh, L.	Skelmersdale, L.
Hives, L.	Stodart of Leaston, L.
Holderness, L.	Strathclyde, L.
Hooper, B.	Sudeley, L.
Hylton-Foster, B.	Thomas of Gwydir, L.
Johnston of Rockport, L.	Torrington, V.
Kaberry of Adel, L.	Trafford, L.
Kenilworth, L.	Tranmire, L.
Kimball, L.	Trefgarne, L.
Kintore, E.	Trumpington, B.
Lindsey and Abingdon, E.	Ullswater, V.
Long, V.	Vaux of Harrowden, L.
Lucas of Chilworth, L.	Young, B.

Resolved in the negative and amendment disagreed to accordingly.

6.53 p.m.

[Amendment No. 117 not moved.]

Clause 50 [Housing association grants]:

The Minister of State, Scottish Office (Lord Sanderson of Bowden) moved Amendment No. 118: Page 38, line 47, leave out ("Corporation") and insert ("Housing Corporation and Housing for Wales").

The noble Lord said: My Lords, I speak also to Amendments Nos. 119, 122, 123, 124, 126, 127, 128 and 135 to 142 inclusive.

These amendments are essentially of a technical nature. Except for Amendments Nos. 118, 119, 122, 123 and 124, their main purpose is to apply Part II of the Bill to the new housing agency in Scotland, Scottish Homes, in the same way as it applies to the Housing Corporation and Housing for Wales. Scottish Homes should have the same powers of guidance and control over the housing associations in Scotland as are available to the other two bodies and have similar powers to act on behalf of the Secretary of State.

Amendments Nos. 118. 119, 122, 123 and 124 relate to Clauses 50 and 51. These clauses, which provide for the making of grants to housing associations, need not apply to Scottish Homes as Scottish housing associations will be funded by Scottish Homes under the grant-making powers available to that body in Clause 2(2) of the Housing (Scotland) Bill. The amendments to these clauses, taken together with Clause 59, as amended, achieve that purpose. I beg to move.

Lord Carmichael of Kelvingrove

My Lords. I am grateful to the Minister for tabling these amendments. We have no basic objection to them. I have just one query. Some of the amendments are removing amendments which were earlier Scottish provisions added at Committee stage. However. we have no objection to the amendments and I thank the Minister for bringing them forward.

On Question, amendment agreed to.

Lord Sanderson of Bowden moved Amendment No. 119: Page 38, line 49, at end insert ("and any reference in the following provisions of this section to "the Corporation" shall be corstrued accordingly").

On Question, amendment agreed to.

The Earl of Caithness moved Amendment No. 120:

Page 39, line 12. at end insert— ("(3A) On such terms as it may, with the appropriate approval, specify. the Corporation may appoint a local housing authority which is willing to do so to act as its agent in connection with the assessment and payment of grant under this section: and, where such an appointment is made, the local housing authority shall act as such an agent in accordance with the terms of their appointment. (3B) In subsection (3A) above, "the appropriate approval" means the approval of the Secretary of State given with the consent of the Treasury.").

The noble Earl said: My Lords, I speak also to Amendment No. 121, in the name of the noble Lord, Lord McIntosh of Haringey. The Government have made it clear on several occasions, and I think it is now generally accepted, that we intend that local authorities should continue to be able to play a significant role in promoting housing association schemes in their areas. My noble friend Lord Brabazon explained in Committee the arrangements by which we aim to put that intention into practice and I do not think I need detain your Lordships with a repetition of that explanation.

In Amendment No. 121, however, the noble Lord, Lord McIntosh, returns to a point which he raised in Committee; namely, the concern that the position of local authorities in the new housing association grant regime should in some way be enshrined in statute. That is a concern which I recognise and I am happy to do what I can to meet it. I do not, however, feel that the noble Lords' amendment is the right way to do so.

Amendment No. 121 would give the Housing Corporation a statutory duty to pay housing association grant direct to a local authority where that authority has made loans to cover an association's expenditure. However, the corporation will be able to make such payments direct to the local authority, using its powers under Clause 50 as it stands. It may not of course always be right that the whole of the grant be paid to the local authority.

However, there is an aspect of the present arrangements for local authority support of housing association schemes which can with advantage be carried forward into the new grant regime and which requires specific legislative provision. Under the Housing Associations Act 1985, the Secretary of State can appoint local authorities as his agents for the payment of housing association grant to housing associations, and this is generally what happens where a local authority sponsors a project. In such circumstances, the local authority is expected to scrutinise the association's claims for grant, certify that the scheme has been satisfactorily completed, and so on. It is certainly a useful provision.

Under the Bill as drafted the Housing Corporation, which will be solely responsible for making housing association grants, would not be able to appoint local authorities to act in this way. We think that they should have that opportunity and we are sure that many local authorities would welcome the ability to continue to act as they have in the past. We are therefore proposing in Amendment No. 120 that the corporation may appoint those local authorities which are willing to do so to act as its agents for the calculation and payment of grant. That will serve the dual purpose of preserving a useful part of the present arrangements and at the same time referring specifically to local authorities on the face of the Bill. In the light of what I have said I hope that the noble Lord will not move his amendment and will accept ours. I beg to move.

7 p.m.

Lord McIntosh of Haringey

My Lords, I am grateful to the Minister for the way in which he has moved his own amendment and referred to mine. I recognise immediately that there is a common thread between the two amendments and to some extent they overlap as they have a common intention. We have no objection whatever to the government amendment. We believe it is right that the Housing Corporation should have the power that is proposed to appoint a local authority as its agent. We believe it is complementary to our amendment rather than supersedes it. I shall explain why in a moment.

My questions as regards the government amendment arise from the fact that the power to make agency arrangements is not a new one. It already exists in the sense that the Department of the Environment can make agency arrangements with local authorities. However, it has not worked very well. The conditions that have been imposed by the Department of the Environment were drafted to exclude all but the very largest local authorities from acting as agents. The question that I put to the Minister before we decide whether to accept the amendment is this. How extensively do the Government anticipate the power being used? Is it anticipated that the powers given to the Housing Corporation will be more extensively used than the existing departmental powers and will they extend to a wider range of local authorities? Another point is whether the drafting will be in such a way as to encourage the agency agreement rather than to discourage it, as has been the case until now.

I now speak to Amendment No. 121. As I said, this is complementary to the Government's amendment and it is not superseded by it. Here we move into realms of housing finance which I find virtually impenetrable. The House will forgive me if I can only repeat what I am told concerning these matters rather than speaking from a full understanding of the implications of the various statutory provisions. As I understand it, the Housing Associations Act 1985 says that local authorities and/or the Housing Corporation may act as agents for the Secretary of State to pass on housing association grants. It is these provisions under Sections 41 and 46 of the 1985 Act that are repealed by the present Clause 50 which gives the Housing Corporation the sole power to make the housing association grants. I hope I have got that right.

The Government are now saying in their Amendment No. 120 that the role of the local authority may be preserved by agency arrangements through the Housing Corporation rather than directly through a housing association grant from the Department of the Environment. The existing system may be cumbersome and under-used, as I have said, but we should adhere in the best way that we can to the principle which the noble Lord, Lord Brabazon of Tara, expressed in the Official Report at col. 220 on 26th July: … that the local authority alone should be responsible for deciding whether public resources should be committed to a scheme while the corporation alone should he responsible for vetting it for grant. I hope the Minister will be able to reasure me on this point; namely, that the indirect system of the Housing Corporation appointing the local authority as agent will not bring back the risk of double scrutiny— that is, two different groups of people poring over the same proposals. I have never served on a housing committee but I well remember the difficulties that there used to be in the 1960s when everyone was double guessed. Everything that the local authority did was checked by Government and vice versa. It became extremely tedious, inefficient and long drawn out.

I accept the goodwill of the Government in moving this amendment. I need to be reassured more than I am at the moment that the system proposed will work not only effectively but more so than the existing regime under the 1985 Act.

Baroness Faithfull

My Lords, it hardly needs me to rise to support my noble friend the Minister as the noble Lord, Lord McIntosh, agrees with Amendment No. 120. However, I wish to make one or two points. First, the Housing Corporation "may" appoint a local authority to act as its agent but not "must". Therefore there is an element of choice. Secondly, there has always been a close relationship between the Housing Corporation and local housing associations. This amendment will mean building on an existing relationship. Thirdly, I believe that local authorities are close to the grass roots and know the needs of the people in their areas.

I take the point made by the noble Lord, Lord McIntosh, about double scrutiny. Surely we can bring some efficiency into local authorities. I am sure that can be done. Lastly, as an ex-local government chief officer, despite difficulties in some few local authorities, I am glad to acknowledge the role of local authorities in this country.

Lord Hylton

My Lords, there is one technical point I wish to raise as regards Amendment No. 120. It says in the first line "with the appropriate approval". Can the noble Earl tell us whether that means the Secretary of State, possibly the Treasury or some other approving body? I wish to underline what the noble Lord, Lord McIntosh, was saying about double scrutiny. We do not want that back. I am sure that it is possible to devise streamlined arrangements that will not include it.

Lord Ross of Newport

My Lords, perhaps I may briefly interrupt in this debate to say that I hope very much that local authorities will still be able to play some part in financing housing association schemes. That has been very valuable in the past. I can vouch for the fact that certainly my own housing association has enjoyed very close relations with both of the two local authorities in my part of the world that have from time to time financed some of its schemes. It wishes to see that close relationship remain. I know it is not the intention that local authorities should finance much of housing association work in the future. Perhaps the Minister can refer to that when he replies.

The second point I wish to raise is that at the moment there is a vast waste of money. The situation could he improved if local authorities were brought into play rather more in looking after Housing Corporation money before it is passed on to the associations. Land is purchased well in advance of its need to be developed. For instance, my own housing association has recently taken over some rather outdated flats for the elderly just outside Ryde. It has acquired them and the money has been paid. However, the money required for the work to convert them will have to come into next year's allowance. That means that those properties are now standing empty and are likely to remain so for at least another nine months, much to the annoyance of local people.

I feel that here there is a gap whereby associations have to purchase properties well in advance of time and then have to wait perhaps 12 months before obtaining the next financing through the local regional allocation before the conversion work or the building can take place. It is a very bad waste of public money and we should find ways to expedite matters.

The Earl of Caithness:

My Lords, perhaps I may take that last point first because it is a matter that I shall want to look at. I am as concerned as the noble Lord, Lord Ross of Newport, with his surveying background, that land is bought in advance. If in the meantime that property can be utilised in some form or another it would be extremely helpful. That is a point I wish to look at.

In answer to the noble Lord, Lord McIntosh of Haringey, we expect that where a local authority sponsors a project the Housing Corporation will use it as an agent, in the same way as the Secretary of State does now. It will be up to the corporation to decide, and it will be dependent too on the local authority sponsoring the project in the first place. I was grateful for the support of my noble friend Lady Faithfull, who picked up the point of the noble Lord, Lord McIntosh, about double scrutiny. We all agree on that point. Double scrutiny should be avoided if the local authority is discharging its agency function effectively.

Lord McIntosh of Haringey

My Lords, what does that mean? Does it mean that if the local authority is discharging its agency function effectively, the Housing Corporation will not subject the project to additional second scrutiny?

The Earl of Caithness

My Lords, where funds are required from the Housing Corporation, the matter should be looked at by the authority because it is dealing with public money. But we want to keep double scrutiny to a minimum. If the local authority is contributing towards the project, and is acting effectively, it will in all probability have been involved from an early date.

Lord McIntosh of Haringey

My Lords, that is double scrutiny. The scrutiny will be by the local authority discharging its functions properly, and by the housing association, because the money is coming from the housing association, scrutinising it again. It is no use the Minister saying that in principle he is against double scrutiny if he then goes on to describe precisely what it is he is trying to avoid.

The Earl of Caithness

My Lords, I think that the noble Lord is right. Of course we all want to get rid of double scrutiny. If the local authority is doing its job there will probably be no need for it.

The noble Lord, Lord Hylton, asked about who is responsible for the appropriate approval in Amendment No. 120. He will find the definition of the appropriate approval in subsection (3B).

On Question, amendment agreed to.

[Amendment No. 121 not moved.]

Clause 51 [Revenue deficit grants]:

The Earl of Arran moved Amendments Nos. 122 to 124: Page 39, line 32, leave out ("Corporation") and insert ("Housing Corporation or, as the case may be, Housing for Wales"). Page 39, line 38, after ("Corporation") insert ("concerned"). Page 39, line 42, leave out ("Corporation") and insert ("Housing Corporation or, as the case may be, Housing for Wales").

On Question, amendments agreed to.

7.15 p.m.

Lord Graham of Edmonton moved Amendment No. 125: After Clause 51, insert the following new clause:

("Black and ethnic minority housing associations.

. The Corporation may make additional revenue and capital grants to assist the formation of black and ethnic minority housing associations and may continue this support for the first five years after registration.").

The noble Lord said: My Lords, black and ethnic minority housing associations have been formed because on balance people in those communities find difficulty in having their needs met by traditional housing associations. As the Minister will know, they already receive some financial assistance to carry on their work. The Housing Corporation is currently smoothing over the position by using grants under Section 87 of the Housing Associations Act. This comes from a pool which is grossly oversubscribed. The pool covers other organisations such as co-ops. The housing association movement is asking the Minister to recognise the realities and to listen carefully to the people at the sharp end. There are difficulties in establishing any housing association but there are even more difficult problems for those catering for the black and ethnic minority communities.

We are asking for funds so that these associations can employ staff and undertake the normal development work designed to raise additional funds, and so on. The amendment is limited to five years. The Minister may say that there is no need for the amendment, that the problem is recognised and that the Housing Corporation is advising him that this additional provision is not required. However, there is a problem. I am told by those outside the House whose views I respect that there is a need for certainty and for money to help the Government do that which they profess they want to do. I refer to expanding the housing association movement. In some areas of the country this will be much more valuable than in others. I am not making a geographical or an ethnic point. If the Government want to develop housing associations this is one small area in which it can be done. I hope the Minister can say something helpful. I beg to move.

Lord Hylton

My Lords, I should like briefly to support the amendment. I have had experience over some years as chairman of the housing associations' charitable trust. We gave a number of small grants and loans to associations housing elderly Asians, some of them refugees from Uganda. We also assisted a body housing elderly White Russian emigres, some of whom had been in this country since the First World War and the Russian Revolution. These are instances of highly specialist bodies catering for an unusual kind of need. By and large it has been accepted policy for a number of years that we have about the right number of housing associations for the whole country. However, one still needs extra associations in particular places to deal with specialist needs. The amendment is helpful and I hope that the Government will look upon it favourably.

The Earl of Arran

My Lords, perhaps I may say at the outset that we have no doubt that the amendment has the best interests of the ethnic community at heart. The Government and the Housing Corporation also recognise the special housing needs of people with an ethnic minority background and the desirability of housing associations being set up and run by groups from those minorities. However, the powers already available to the corporation seem to us to be sufficient for the purpose.

Under the powers in Section 87 of the Housing Associations Act 1985 the Housing Corporation may provide grants and other assistance to voluntary organisations needing help in setting themselves up as housing associations eligible for registration by the Housing Corporation. The corporation has indeed been using the powers for a number of years to assist ethnic groups for these purposes and, more generally, to encourage black people to take up opportunities for them in the housing association movement.

While grants of this kind have been available to assist black and ethnic groups in the formation and promotion of their own housing associations, our emphasis in the provision of new rented housing is, and will remain, in making provision for black people through general funding arrangements for the housing association movement. Once set up, ethnic minority housing associations are eligible for capital grants for development projects and the Housing Corporation is able to consider the individual merits of such projects within its capital programme.

I hope I have demonstrated that our doubts relate not to the purpose of the amendment, which we entirely share, but to its necessity. I therefore invite the noble Lord, Lord Graham of Edmonton, to withdraw the amendment.

Lord Graham of Edmonton

My Lords, I am glad that at least the Minister— as I suspected he would— fully subscribes to the words contained in the amendment. However, he indicates that there is no need for them because what the amendment proposes is already being done. I wonder whether the Minister would care to tell us— I shall keep speaking long enough for his colleague to bring us the news whether there are sufficient funds available to meet the needs of the number of applications for assistance. We are not asking merely for a grant per se; we are asking for a grant for five years. We are not asking for the normal grants for capital and capital uses; we are talking about sustaining the birth or the growth of such bodies.

I do not need to argue that one has to be exceedingly careful about special pleading. I understand all the problems involved and the resentment that someone may be getting either preferential treatment or being looked after. The Minister should listen carefully to those whom he ought to respect, not only the Housing Corporation and other individuals, but also members of the National Federation of Housing Associations— the movement which he professes to want to assist— who advise me of the need for such an amendment.

The Minister has been frank enough; indeed he always tells the truth. He has told us that at the moment he recognises what the amendment seeks to do and that there is a source of funds under Section 87 of the Housing Associations Act which is being used. My information is that there is more need for the funds; they are oversubscribed. In other words, there are insufficient funds to assist.

I have given the Minister and his colleagues time to travel a lot further than is required for taking advice; it is quite clear that we are in for a treat when the news arrives. At least, I very much hope so; otherwise there are people outside the House who will be disappointed. It will not be the end of the world; but it will be a disappointment. I hope however that the House will not be disappointed by the Minister's response.

The Earl of Arran

My Lords, naturally I am most grateful to the noble Lord, Lord Graham of Edmonton, for giving me considerable time for a measured response to his very penetrating question. As regards the funds, there are always more demands on any programme of public expenditure than available resources can meet. The sums available to the Housing Corporation for the Section 87 grants, and other revenue purposes, are carefully considered each year in discussion with the corporation. I hope that that answer will satisfy the noble Lord.

Lord Graham of Edmonton

My Lords, I do not intend to press the amendment. However, it is interesting that the Minister said that the sums are carefully considered in discussions with the corporation. He means discussions between Ministers and the corporation; not discussions involving the housing association movement, Ministers and/or the corporation, or discussions between representatives of the black and ethnic minority communities, the Government and the association.

We all know the realities. The Minister does not need to dissemble in the matter. The Government will say to the Housing Corporation, "These are the funds which we are prepared to make available to you. Let us discuss how best you can use them in pursuit of the Government's housing policy". I am not being offensive in saying that. The role of the Housing Corporation is to discharge the role in its particular field that the Government attribute to it in pursuing their policy.

I can well imagine that if £10 million or £20 million as priming capital are the sums available, in this instance as well as in others there will still be more people wanting access to them. I have been told and, like the Minister, I rely on what I am told, that the funds available— I do not even know the figure— are oversubscribed by those who can use them.

I must say to the Minister that this is a case where we are asking for a little more. It is to serve a good purpose. There are areas of the country, communities in our large urban cities, where— I am grateful for the intervention of the noble Lord, Lord Hylton— a valuable service can be rendered to small groups of people whose need, if not exactly for a fair crack of the whip, is certainly for encouragement and assistance. I am asking the Minister to encourage the people at the sharp end— those like the noble Lord, Lord Hylton, and tens of thousands of others who have the task of doing the Minister's job for him in spreading the gospel of housing associations. They want a little encouragement in that way. I think that the Minister has said as much as he is able. In fact he said little; but he said it very well. Therefore I intend to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 52 [Recovery etc. of grants]:

The Earl of Arran moved Amendments Nos. 126 to 128:

Page 40, line 6, at end insert ("or (c) a grant under section 2(2) of the Housing (Scotland Act 1988.").

Page 40, line 27, after ("applies") insert ("other than one falling within subsection (1)(c) above").

Clause 55 [Surplus rental income]:

Page 43, line 16, at end insert ("or (c) a grant under section 2(2) of the Housing (Scotland) Act 1988,").

The noble Earl said: My Lords, I beg to move Amendments Nos. 126 to 128 en bloc.

On Question, amendments agreed to.

The Earl of Arran moved Amendment No. 129: Page 43, line 18, after ("period") insert ("ending after the coming into force of this section").

The noble Earl said: My Lords, in moving Amendment No. 129 I should like to speak also to Amendments Nos. 130 and 134. The transition from the 1985 Act provisions on housing association finance to the new ones in the Bill will be dealt with mainly by way of commencement orders. However these minor amendments are also required to ensure that the new arrangements for the treatment of surplus rental income can operate in relation to accounting periods which straddle the commencement date, and to enable the Secretary of State to delegate to the Housing Corporation after commencement residual work under the old arrangements and under the 1985 Act system of revenue grants. I beg to move.

Lord Graham of Edmonton

My Lords, the amendments to which the Minister has referred relate to the transitional arrangements for housing association finances during the changeover period. I should be most grateful if the Minister could comment upon one or two questions that I should like to ask on the matter.

The National Federation of Housing Associations would certainly be interested if the Government could confirm that under the amendments accounting periods, which have already started before the Bill's provisions come into force, will in fact be subject to the rent surplus fund regime and that service income and costs will continue to be treated for this transitional period as under the existing financial regime.

The Minister will be aware that we go more fully into the rent surplus fund regime with Amendment No. 131. As he is dealing with the transitional period, I should be grateful if he would give some indication that the transitional arrangements for the surplus will be treated as under the existing financial regime. The Minister will he aware that the housing association movement is apprehensive that what is proposed in the Bill is less helpful and less welcome to it than the existing situation.

I have exhausted my comments but I am prepared to extend them as a special favour because I do not want to keep getting up and down. I hope that the Minister will shortly be receiving some assistance. We are dealing with a transitional period. I am trying to extend my remarks as much as I can, but I have failed.

The Earl of Arran

My Lords, I am once again grateful for the assistance of the noble Lord, Lord Graham of Edmonton. We can answer his question. He has referred to Amendment No. 129, which provides that new arrangements under Clause 55 for the treatment of associations' surplus income shall apply for accounting years which end after enactment of the clause, which will be on 1st April 1989.

Lord Graham of Edmonton

My Lords, that refers to accounting years that end after April 1989. If an accounting year includes a period before April 1989, where will that leave the housing associations in respect of treatment of the matter?

The Earl of Arran

My Lords, perhaps I may slightly expand my previous answer. While we cannot go as far as the noble Lord would wish, we are well aware that there are strict limits to the amount of charge which associations can absorb in relation to years which have already begun on the commencement date. We will take that fully into account in our discussions with the NFHA.

Lord Graham of Edmonton

My Lords, I am more than grateful to the Minister for what he has said. It was very fair and satisfactory. I am therefore happy with the amendments.

On Question, amendment agreed to.

The Earl of Arran moved Amendment No. 130: Page 43, line 25. at end insert ("and, notwithstanding anything in subsection (5) of that section. such an order may make provision applying to any period to which this section applies").

On Question, amendment agreed to.

The Earl of Arran

My Lords, this may be a suitable moment at which to break for dinner. I beg to move that further consideration on Report be now adjourned until 8.30 p.m.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 7.33 to 8.30 p.m.]

Lord Graham of Edmonton moved Amendment No. 131: Leave out Clause 55.

The noble Lord said: My Lords, I beg to move Amendment No. 131, which has the effect of striking Clause 55 out of the Bill. As the House will be aware, this clause intends to claw back for the Government surpluses which accrue from higher rents or in any other way. We are asking the Government seriously to reconcile their aims and objectives in a number of ways.

Every housing association that has received the housing association grant, HAG, must now repay to the Government any surpluses on properties developed, repaired or improved with the help of the grant. The 1980 Housing Act introduced a grant redemption fund, after the Public Accounts Committee in the late 1970s criticised the basis on which HAG was paid. At first the rent for each housing scheme matched its outgoings on servicing the loan and paying for management and maintenance. However, over the years the loan servicing costs stayed the same while inflation caused rents and other costs to rise. The results might sometimes— but not always — be a surplus although to date some surpluses have not been large when measured against the investment on the properties concerned.

Clause 55 of the Housing Bill introduces a rent surplus fund to continue the clawback of surpluses under the new financing regime in which housing associations will find themselves. It follows the measures already in place under the 1980 Act but gives the Government wider powers to reclaim surpluses computed on a basis which they are to determine. I should like the Minister to tell the House why the Government wish to increase the moneys which they receive and, ipso facto, decrease the moneys arising from this aspect of housing finance which housing associations will be denied.

Government Ministers may very reasonably claim that they have given certain assurances to the National Federation of Housing Associations that certain new schemes will be excluded from the rent surplus fund and that deductions from surpluses and retentions will be permitted in order to fulfil other objectives of the Government.

Let us see what those other objectives could be and how much housing associations are likely to be able to retain. First— and the Minister has an opportunity to confirm this— is it not a fact that in future housing associations are expected increasingly to pay for major repairs to their properties as the properties become older, rather than relying on further housing association grants? If that is the case, where is the money coming from? One of the sources in the past could have been the moneys which were surplus from the rents which were collected. Secondly, the raison ďêtre, the philosophy of the Government on housing associations, as with so many other things, is that those housing associations will have to take development risks on future projects, by accepting a predetermined level of grant and meeting much or all of the cost if the cost exceeds expectations. In other words there will be a greater risk element introduced into the management of housing associations. If that is the case, where is the cushion? Where is the reserve against which housing associations will be able to meet this unexpected increase in their costs?

Housing associations are also expected to draw in private investment from building societies and city institutions in substitution for public sector loans. The Minister is well aware— as is the House— that institutions of that kind will want to examine much more closely not only what the housing association is doing but also how much it is able to retain from sources like its rent surplus fund.

For all those purposes housing associations will need greater rather than smaller surpluses. They will need to build up reserves to improve their balance sheets as seen by investors. Housing associations will be much more in the business of attracting people to invest than simply relying upon grants. In my view, the Government cannot have it both ways.

Of course, the noble Lord, Lord Brabazon of Tara, who has been mentioned more than once today, in his absence, acknowledged in this House that the Government are now prepared to see substantial retentions against the rent surplus fund calculation. If that is the case, the Minister needs to reconcile what I believe to be those two conflicting strands. In 1987–88 the grant redemption fund— the predecessor to the rent surplus account— yielded some £14.66 million. It may be a little higher in 1988–89; increases in rents could increase the yield further in the future. However if the Government are true to their word and allow retentions for all the purposes mentioned, then, on the basis of percentage retentions which civil servants have used as examples, only about 15 per cent. of the present and future surpluses may be recouped by the Government.

For these relatively small sums a bureaucracy needs to be retained to collect the moneys back from associations. All associations that have received HAG are required to compute and account for their rent surplus fund in a complex way. This tax— because that is what it is— sounds in my view like very bad value for money.

The associations operate in a world carrying increasing risks. They will be subject to the political risk of a change in policy at any time. Private lenders too will see the risk that associations may be subject to heavier clawbacks, even going to the 100 per cent. at present. They will be more reluctant to lend or will want higher risk premiums or interest rates.

We are asking the Government whether they are aware of the consequences of this clause standing part of the Bill. How do they reconcile their other aims, particularly for housing associations, if at the same time they are going to have to operate within Clause 55? I think that the Minister and the House will accept that housing associations operate in a different world now from the one on which the Public Accounts Committee reported in the 1970s. The funding systems about to be introduced for new development by associations, and for managing their existing stock, require that bodies that are not permitted to trade for profit under their constitutions must shoulder considerable risks. For this they need the certainty of a system which will at least permit the full retention of any surpluses on past developments. Clause 55 does not give them such a certainty and in our view that clause ought to be withdrawn by the Government.

Again, in parenthesis, we hear what the Government have to say in many ways. I do not dispute their sincerity and certainly not that of the Minister and his colleagues. They mean what they say. Yet when we look at what they have done on the face of the Bill, they are making it very difficult for friends of the Government in the housing association world. There will be many who want to see housing associations flourish and prosper, but I am afraid that the Government are in this instance giving with one hand and taking with the other. I hope that the Minister can say something helpful, not least to those outside at the sharp end. I beg to move.

Lord Moyne

My Lords, I find myself lost in the verbiage of Clause 55. I should be grateful if my noble friend the Minister would make the underlying intention clear to me. I had understood that the provision was to replace by a rent surplus fund the rather inequitable grant redemption fund by which profits derived from housing association grant were liable to be clawed back. If behind the new rent surplus fund lies the intention, which has been mentioned to housing trusts by the Ministry, of only clawing back 85 per cent., that is very welcome. To lose the clause, if that is what it means, would be regrettable.

The Government's intention is said to be that the 85 per cent. would be retained as a sinking fund for repairs instead of grants being sought for those repairs from the Housing Corporation. That would surely improve the credit of the associations for attracting private capital. But, if that principle were adopted, it would be better to refund 100 per cent. for repairs and avoid all the bureaucracy of calculating the 15 per cent.

Many small associations do not have computers or staffs of accountants. Surely it would be better to go the whole hog and refund for purposes of repairs the whole lot. If I am right in my interpretation of this clause, I should not like to see it go. I hope that my noble friend the Minister will make some promise of the 85 per cent. which will improve the credit of associations as regards attracting private capital. I hope my noble friend will also look at the possibility of 100 per cent. That would be widely welcomed by the National Federation of Housing Associations.

The Lord Bishop of Liverpool

My Lords, I also hope the Minister will seriously consider this amendment. It seems to me that a considerable bureaucracy will be needed to recover quite modest sums from housing associations. If it is not a terrible mixing of metaphors, I should say that the bureaucracy will be needed to claw back the fat that they may have.

The housing associations are charitable bodies. I believe that they could use a little fat very creatively. We should be very glad that they may have a surplus. The idea of a cushion has been suggested. However, I should like to suggest a much more creative use for a bit of capital. I have a fairly well rehearsed story to recount to your Lordships. The story concerns the Eldonian Housing Co-operative in Liverpool. Government departments have been extremely helpful to that co-operative. The Eldonian Village is now being built on the old Tate and Lyle site in the north of Liverpool.

It must be about eight years ago that members of the co-operative first came into my office with their plans. This local co-operative in the heart of the Old Scotland Road stood its ground and never lost its vision. But through those years the co-operative needed professional help and advice. That help and advice was given by Merseyside Improved Housing. The cost of the operation amounted to £100,000. Because a large housing association had some fat, it was able to offer that kind of help.

I do not believe that that is a one-off story, or that it should be a one-off story. I am aware of the cooperative housing movement growing in a very creative way in my part of the world. I am aware of three housing co-operatives trying to come to their feet in Kirby. There is another a mile away from the Eldonian in the north of Liverpool. They need professional advice and help.

I was glad to hear the Minister earlier today assuring your Lordships that the Housing Corporation grants would be larger where necessary. He said they might even be 100 per cent. I hope that the Minister will be ready to see the very positive value of what I have described as leaving the fat with housing associations whose trust deeds would prevent them from using grants for any other purpose than the development of housing.

8.45 p.m.

Lord Hylton

My Lords, I must begin by apologising for not having quite got back in time to hear the opening words of the noble Lord, Lord Graham, in moving the amendment. It is an important amendment. I wish to follow on from what the right reverend Prelate the Bishop of Liverpool said. I, too, in August of this year saw the Eldonian Housing Co-operative houses almost finished. I was taken on a conducted tour of the Eldonian garden centre and greenhouses just across the road. It appears to be a very good scheme.

I wish to give another example from my own village housing association in Somerset where we were able to use some surplus capital funds from the sale of a property or two, which had never received statutory grant aid, to fund the provision of a small village hall. That provision was entirely within our charitable objectives and it happened to be absolutely adjoining our old peoples' bungalows. That is another example, in a totally different context, which shows what can be done if there is a little bit of resource over which the association itself has control.

I follow the noble Lord, Lord Moyne, in urging the Government to go the whole hog. I do so because we already know— there can be no question about this— that charitable housing associations can only use any surplus they generate for the relief of poverty or for other approved charitable purposes. They cannot use it for anything else.

If an association happens to be registered and is also non-charitable, we know for certain that it cannot distribute profits or surpluses to its committee— that is absolutely out. It cannot distribute to its members either. If, by any chance, a registered housing association uses it funds in an improper way to benefit its own tenants, it will be called into account by the Housing Corporation. Therefore, both those escape routes, as it were, are totally blocked.

A non-registered housing association does not qualify for grants in the first place. Therefore, such an association is a non-starter. I finish by trying to bring to the Government's attention that the more they claw back in a highly bureaucratic, time-consuming and expense-creating way, the more they will have to pay out in housing association grant on new schemes.

In replying to a previous amendment, the noble Earl, Lord Caithness said, "Oh yes, we may easily have to have 100 per cent. HAG for certain schemes in certain areas, even though we would like otherwise to inject 30 per cent. or 50 per cent. of private funding". I ask the Government to please consider that matter.

The Earl of Caithness

My Lords, as your Lordships will no doubt recall, we had quite a lengthy debate on this matter in Committee. At that time my noble friend Lord Brabazon of Tara gave a full explanation of the Government's position. I had hoped that, having read the Official Report, your Lordships would be persuaded both that it is absolutely necessary on grounds of public accountability to retain some machinery for the retention of surplus income arising on schemes financed with Exchequer grant, and that the new rental surplus fund will he a much friendlier device than the grant redemption fund which it replaces. I well understand that housing associations would prefer that we did away with the idea of the RSF altogether. To use that well-known phrase: they would, wouldn't they? But there is a fundamental inconsistency in many of the representations we receive on this subject, of which your Lordships should be aware. We are told on the one hand that it is a vicious tax which will prevent struggling associations from ever getting their finances on to an even keel. Almost in the same breath we are told that it will recover so little money for the Exchequer and thus for the housing association movement as a whole that it is not worth bothering with at all.

That was the argument of the noble Lord, Lord Graham of Edmonton. The right reverend Prelate the Bishop of Liverpool was also on that tack. Neither of those things happens to be true, as I shall go on to explain; but it is a logical impossibility that both should be true.

First, it is certainly not "taxation" to make a correction over the years if income from a grant-aided scheme rises significantly faster than recurrent costs of the scheme and thus alters the basis on which the original grant was calculated. I am talking there about the surplus which the right reverend Prelate called the fat. I hope that your Lordships will not have forgotten that it was the all-party Public Accounts Committee of another place which pointed out the need for corrective machinery of this kind. However, I admit that the old grant redemption fund was an inflexible and somewhat draconian arrangement and we believe that it is right to relax it considerably.

In particular, we must take account of new demands which will be made on associations' rented income: to make provision of their own for future repairs to their stock, rather than relying on 100 per cent. grant aid as now— as the noble Lord, Lord Graham of Edmonton, mentioned— with the bureaucracy and rationing that entails; and to strengthen their reserves as a cushion against development risk and to help attract private investors. Because these are new demands and because the decontrol of rents will operate only gradually, we would expect them to absorb a high proportion of most associations' additional income in the early years. Thereafter, however, depending on how income evolves in relation to costs, one would expect the level of uncommitted surpluses to grow significantly. I put it to your Lordships that it would be foolish and dangerous therefore to throw away the surplus recovery machinery merely because its initial yield was likely to be modest.

I should like to take up some of the comments made in relation to the 85 per cent. grant. As to the illustrative figures which are being used in discussion between my department and the NFHA on how the RFS might work. I can confirm that associations might only he asked to surrender in effect 15 per cent. of their income in excess of their reasonable expenditure on loan charges, management and maintenance. I stress that that would apply only if associations used the entirety of the allowance which we would make for their sinking fund contributions.

The figures are illustrative at this stage. We are in discussion with the NFHA. How the final figures will emerge I cannot at the moment say. I would stress that initially one might not expect them to represent a large proportion, but over the years as the level of uncommittted surpluses grows they could reach a significant level.

Finally, I should emphasise again that we expect most new housing association schemes to be financed with "low start" loans and somewhat lower rates of grant. As a result costs and income should keep better in step over the life of the scheme and the RSF machinery need not apply.

That is how the new scheme will work. Where we have a potential difficulty with existing schemes we are replacing the old grant redemption fund with a much more flexible RSF which I hope will meet many of the concerns of the N FHA. Of course I understand that it would prefer us not to have anything at all. However, given the fact that we believe that it is right to have machinery of some sort we hope that we have made it much more flexible.

Lord Graham of Edmonton

My Lords, I am grateful to the Minister for what he has said. I am disappointed that this has again been a typical debate: no one has been moved either by what the Minister has said or by the case that has been made to come to his aid in the debate. It is astounding. No one in the House other than the Minister, who understands the situation believes that the Government have a good case. I seriously suggest to the Minister and his advisers that they ought to reflect upon that fact. Very often a government bring forward an unpopular Bill or a Bill with unpopular aspects but generally there is one person who is moved to stand up and say that he believes that what the Government are doing is right. Throughout the day, during four or five debates, no one has felt compelled or been prepared to stand up to say that what the Government are saying is right.

This is not a catastrophe. I am heartened by the fact that the Minister said that these matters are still being discussed. Figures have been mentioned but they are hypothetical and still being discussed. I hope very much that the Minister's advisers consider what has been said, not just by the Opposition but also by all the other speakers who have housing experience. I am sure that they will; they are responsible people.

The Minister rested his case very heavily upon the report of the Public Accounts Committee of the late 1970s. The world has changed since then. I was involved in those matters. I recall that there were suspicions about the honesty of many housing associations. They were looked upon as rackets. The newspapers were full of cases of individuals— professionals such as surveyors, estate agents, solicitors and others— who deliberately used the housing association movement as a means of making money.

The Minister is entitled to take pride in the fact that over the past 10 years the Housing Corporation has tightened up the position out of all recognition and has limited the possibility for someone to abuse the powers and misuse the funds of housing associations. I am not talking about corruption or people putting money in their pockets. The Minister is absolutely right. Where public money is concerned one needs to be satisfied that it is not being wasted. But no one has made the charge either tonight or at any other time that the housing association movement per se is lackadaisical about its responsibilities. Goodness gracious me, this Government have taught many public bodies and not least the housing association movement that they are not in the business of giving away public money fecklessly. They want to see it spent properly.

The Minister said that he expects that the situation will change over the years and that the size of the rent surplus fund will increase. Of course it will, because rents will increase. The Minister and his colleagues will know that there is every likelihood of rent surpluses increasing as rent levels are forced up. That is part of a government strategy to force up the level of rents. Ipso facto housing association rent funds are likely to be increased.

I should like the Minister to take on board the points which have been raised. The right reverend Prelate the Bishop of Liverpool mentioned Liverpool. Liverpool is perhaps special but not unique in that in large conurbations there are well established, successful and comparatively profitable housing associations which, because their raison ďêtre is mutuality, want to help each other. Does the Minister really want to preside over a situation where the only source of guidance, advice or finance to assist struggling people is the centre and the only people who have purse strings to loosen are the Minister and his colleagues? That would be the antithesis of what a housing association ought to be.

I can certainly draw some comfort from the fact that in resisting the Motion that the clause shall not stand part of the Bill the Minister assures me that the figures used as amounts likely to be clawed back and left are still the subject of discussion and negotiation. beg him to understand that there are people outside this Chamber who want the housing association movement to survive just as much as he does. They have a different experience of it, however. They are actually running the associations. In general that represents the big difference between people in this House and those outside it who can see the dangers. However, I am satisfied that the Minister has gone as far as he can. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

9 p.m.

Lord Dean of Beswick moved Amendment No. 132: Before Clause 56, insert the following new clause:

("Amendment of Housing Associations Act 1985.

. The following new paragraph shall be added after paragraph 1 of Schedule 6 of the Housing Associations Act 1985—

"(2A) Before appointing the members of the Corporation (other than the Chairman) the Secretary of State shall—

1. (a) as to not less than four of them consult such organisations representative of housing associations as he considers appropriate:
2. (b) as to not less than four of them consult such organisations representing local housing authorities as he considers appropriate:
3. (c) as to any other members he may appoint, consult such organisations representing tenants, and such other organisations including professional bodies, the activities of whose members are concerned with matters relating to the objects of the Corporation.".").

The noble Lord said: My Lords, this amendment is proposed in the light of the huge growth in the corporation's powers proposed in the Bill. The new clause seeks to amend its constitution of the corporation and to make it more representative of the bodies and tenants directly affected by its powers.

I hope to illustrate to your Lordships the changing role of the corporation. Its present functions are set out in Section 75(1) of the Housing Associations Act 1985. They include the promotion of registered housing associations; facilitating their functions and publicising their aims; maintaining the register of housing associations and supervising them; acting as agent for the Secretary of State in the payment of grant; and providing dwellings for sale and rent. Minimal use has been made of the last mentioned power.

The Bill as originally drafted envisaged a substantial increase in powers. It was proposed that certain functions be transferred from the Secretary of State to the corporation; namely, all capital grant decisions and payments, which incidentally removed the statutory function of local authorities also to act as agents of the Secretary of State for housing association schemes; and all revenue deficit grant decisions and payments. In addition, the corporation was given the duty of approving landlords as mentioned in Part IV of the Bill.

Major new powers have been given to the corporation during the passage of the Bill through the House of Commons. The most far-reaching is probably that in Clause 49. The clause enables the corporation to give guidance on the management of accommodation by registered housing associations and includes assessment of housing demand and the means of meeting that demand, terms of tenancy and the principles on which rent levels should be determined, standards of maintenance and repair, and consultation and communication with tenants.

If the Government are correct in their assumption that a substantial proportion of local authority housing stock will be transferred to either existing housing associations or new ones promoted by local authorities, the Housing Corporation would gain effective control over a major part of the public rented sector. Rented housing policy would be centralised and the important decisions taken by an ever-growing quango.

Additional powers given to the corporation since the original Bill appeared include revocation of approved landlord status, approval of landlords for Part III of the Bill, provision of legal assistance to transferred tenants for certain test cases, provision of advice and assistance to prospective approved landlords, and duties under Section 71 of the Race Relations Act 1976. Not included in the Bill but spelt out in the document called Tenants' Choice are the corporation's functions; namely, to promote Part IV of the Bill, including finding prospective new landlords for tenants and offering tenants impartial advice; organising a pre-selection consultation procedure between competing alternative landlords, which may include a vote of tenants; advising tenants wishing to form tenants' co-operatives; issuing guidance to approved landlords on housing management matters similar to that issued to housing associations; and monitoring the performance of approved landlords.

There is a need for change. Despite the massive increase in powers and functions, many of which are incompatible, the only change for the Housing Corporation, apart from its obvious increase in size, is the proposal to hive off its Welsh operations into Housing for Wales. The composition of its board will remain unchanged with up to 15 members appointed by the Secretary of State. There is no requirement on the Secretary of State even to appoint members with a special knowledge of housing, let alone members who may represent the various interests affected by the corporation's activities.

In Committee the noble Lord, Lord Brabazon of Tara, invited the submission of, what I would call a slightly less draconian amendment"— [Official Report, 26/7/88; col. 217.], on the composition of the Housing Corporation board. The proposed amendment is tabled within the spirit of his words. It is modelled on Section 10 of the Health and Safety at Work Act 1974, which sets out the provisions for the establishment of the Health and Safety Commission. Section 10 of that Act requires the Secretary of State to appoint a chairman and not less than six or more than nine members of the commission. Before making the appointments, however, he must consult organisations representing employers as to three of the members, organisations representing employees as to three, and local authorities and relevant professional bodies' organisations as to the other members.

As this provision is operated, the Secretary of State invites nominations from the bodies that he is required to consult and makes his appointments from those nominees. The amendment proposes a similar arrangement for the Housing Corporation. The bodies to be consulted would be organisations representing local housing authorities as to four members, and organisations representing tenants and relevant professional bodies as to other members.

It may be argued that because of the corporation's monitoring and regulatory role over housing associations, it is inappropriate for them to nominate board members. However, as I said, no problem has arisen over a similar situation in the Health and Safety Commission. This commission has regulatory power over employers and local authorities, both of whom are invited to make nominations to the commission. Without removing the Secretary of State's overall discretion, the amendment would go some way to allay fears concerning the corporation's increased role by ensuring that board members were representative of those affected by the corporation's new and existing powers.

It has taken me some time to explain that brief. However, I wish to encapsulate the concerns underlying this amendment. The Scottish Homes board came into being only recently. That board had to be manned. The appointments to it were made by the Secretary of State for Scotland, Mr. Rifkind. I may be told that the people who have been appointed to man the board have a special contribution to make to the housing of Scotland. But there is bitter disappointment in CoSLA in Scotland because not one place has been found on it for a member of a local authority with housing experience. We have tried to keep away from the political divide in this Bill but if that is Mr. Rifkind's idea of impartiality I can only say that he needs a lesson in understanding democracy.

It does not need me to remind the Minister and the Government what happened in Scotland at the last general election. The Government were overwhelmingly rejected. It is sad that CoSLA, in making its complaint, stipulates quite clearly that had it been lucky enough to have the appointment to this board of a councillor from one of its authorities, it would have been done solely on the basis of working for the benefit of Scottish Homes and not of trying to obstruct it. This information was brought to me by my colleague the noble Lord, Lord Carmichael, who unfortunately has another appointment. However, I make the point that the wider the Government can cast their net, and are seen to be embracing people of all political shades who have a contribution to make, the more there will be good will to make this act work even though we oppose it in principle.

I know that we shall be told that the people who have been placed on this new quango all have an expertise to offer in housing although the background of some of them does not convey that, although they may be very able people. Some are completely new imports into the field of housing. As a local government product of one of the largest cities in England who has dealt with housing, I can well understand the sense of outrage among the local authorities in Scotland when they have a Secretary of State who is so impudent and biased that he completely negates and turns a blind eye to what the ballot box said in Scotland. Out of common decency CoSLA in Scotland ought to have been allowed to submit at least one name. Had the Secretary of State had the common sense to allow that he could well have defused some of the animosity that this board may well meet in Scotland due to what I consider to be a totally irresponsible and unacceptable action. I beg to move.

Lord Ross of Newport

My Lords, I believe that Members on the other side of the House will agree that there is now a suspicion in the country that patronage under this administration has got somewhat out of hand. The Secretary of State has enormous powers under this Bill. He appoints all 15 members of the corporation— chairman, vice-chairman and so on. There is a need to write into this Bill at least a direction to consult in particular those in the housing association movement before appointments are made. It is necessary to make sure that a real cross-section of people who know about financing and housing are considered and that the names do not all come out of the list of the good and true in Smith Square. That is the suspicion. and quite frankly, it has been proved correct time and again. That is why I support this amendment.

The Earl of Arran

My Lords, if noble Lords will allow it, I shall come straight to the point. We debated in Committee at some length a still more far-reaching amendment on this very theme. The noble Lord, Lord McIntosh, gave us notice at the time that he would be likely to come back with amendments at a later stage designed to set at rest some of the fears expressed by his Bench. My noble friend Lord Brabazon of Tara undertook that we would look at any less draconian amendment on its merits, but said that he could not give any assurance that we would look at it any more favourably.

Having studied the noble Lord's new amendment, we have to say that it does not enthuse us very much more than its predecessor. It is true that, unlike the earlier amendment, it would leave the Secretary of State essentially in control of the appointment process, unfettered in the case of the chairman, and constrained in the case of ordinary members only by a requirement to consult. To that extent, we find it a little more tolerable.

However, there seem to us important difficulties in the proposal, both of practice and of principle. At a practical level, it is hard to see how the consultation process would work unless the entirety of the board membership, apart from the chairman, were due for replacement at any one time. What actually happens is that only a few appointments fall to be considered in any one year. Suppose we were seeking to fill two vacancies. What would be the effect of a provision requiring us to consult the NFHA about four places, local authority associations about four, and tenants' organisations and others about the remainder?

More fundamentally, the proposal seems to me to involve a danger of blurring the accountability of the board to the Secretary of State and its independence of other interests. True, the members would still be his appointees, but they would often owe their places to the organisations which put them forward. It is hard to imagine that they would not on occasions be more influenced than they otherwise would be, or than would be desirable, by the interests of, as it were, their constituents.

If it is any consolation to the noble Lord, Lord Dean, the present chairman of the Housing Corporation, Sir Hugh Cubitt, was a prominent figure in local government for 15 years before his appointment, and most of his present members have considerable direct experience of the housing association movement.

All in all, we see no need to elaborate on the present statutory provisions governing the membership of the corporation, but see some difficulty and danger in advancing down the path indicated to us by the noble Lord. In that context I ask the noble Lord to withdraw his amendment.

9.15 p.m.

Lord Dean of Beswick

My Lords, I am very sorry that in his opening remarks the Minister gave such a nonsensical reply. He said that to appoint people to man this board on a staggered basis would create difficulty. It would create no difficulty, because if certain places on the board were occupied by nominees of certain parties whose term was being ended, those parties would ask to be nominated. Membership would be on a rolling basis, similar to the present system in the regional and area health authorities, where composition is on a staggered basis. I think that argument is spurious and the worst possible.

I used the illustration of what happened in Scotland and the very impartial way that the Secretary of State appears to have acted. The first name on the list is that of a Conservative ex-Member of Parliament who lost his seat at the last general election. It is strange that somebody who had no input to housing of which I was aware in another place during his political career now has an input and an expertise that the Secretary of State for Scotland can find useful.

I do not know why the Minister mentioned the name of Sir Hugh Cubitt. I am as familiar as the Minister and whoever gave him that information with the role of Sir Hugh Cubitt. I am also familiar with the fact that the noble Lord, Lord Goodman, was the first chairman of the Housing Corporation. I used to go to see him when I was chairman of housing in Manchester. I am also aware that one of his successors was Sir Lou Sherman, who was a distinguished person in local government, chairman of the London boroughs. But the first action of the Secretary of State was to remove Sir Lou as chairman of the Housing Corporation because he was not of the right political colour.

The point I am making relates not only to my own political party. There is a great input into housing by people of good will of all political parties. I knew Conservatives in Manchester in my day, people like the late Sir Richard Harper, who had as much of a conscience about housing as anybody. I should have been glad to welcome anybody the government of the day appointed. But this format of the good and the great, those who appear to enjoy the political favours of the Secretary of State, creates a tremendously bad image.

The Bill will make some rather revolutionary changes. Although we are opposed to some of its main principles and we do not want it to damage housing, we want it to succeed. I suggest to the Minister that one will not bring together the good will of all those involved in housing by coming forward with a slate such as this and denying those who have an almost historical right to a place. I am surprised that the Minister has not taken time to answer my point about the Secretary of State's appointments in Scotland. They are an outrage— nothing short of that.

There is no point in pressing the amendment tonight. However, I wished to make the point about the biased attitude of the Government, if not in favour of their appointees or people of their political colour then against those whose political colours do not fit the Bill. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 56 [Duty of Housing Corporation and Housing for Wales in relation to racial discrimination]:

[Amendment No. 133 not moved.]

Clause 57 [Delegation of certain functions]:

The Earl of Arran moved Amendment No. 134:

Page 45, line 10, leave out second ("or") and insert— ("(aa) sections 53 (recoupment of surplus rental income). 54 to 57 (deficit grants) and 62 (grants for affording tax relief) of the 1985 Act, so far as continuing in force after the passing of this Act; and").

On Question, amendment agreed to.

Clause 58 [Application of Housing Acts to certain transactions]:

The Earl of Arran moved Amendments Nos. 135 to 141:

Page 45, line 19, leave out from ("1985") to end of line 22.

Page 45, line 29, at end insert ("or").

Page 45, line 31, leave out front ("land") to end of line 35.

Page 45, line 37, leave out ("(a) in England and Wales.").

Page 45, line 40, leave out from ("applies") to end of line 43.

Page 46, line 10, at end insert ("and").

Page 46, line 12, leave out from ("given)") to end of line 14.

On Question, amendments agreed to.

Clause 59 [Interpretation of Part II and amendments Housing Associations Act 1985]:

The Earl of Arran moved Amendment No. 142: Page 46, line 17, leave out from beginning to ("the") in line 19 and insert ("and (b) except as provided in section 50(1) above").

On Question, amendment agreed to.

Lord Dean of Beswick moved Amendment No. 143: After Clause 59, insert the following new clause:

("Tenant Advisory Agency.

. The Secretary of State shall appoint a Tenant Advisory Agency, consisting of representatives of bodies representing housing associations and their tenants and local authorities and their tenants to advise the Housing Corporation in the exercise of its powers and duties under this Part and Parts III and IV below of the Act.").

The noble Lord said: My Lords, the Bill proposes a great increase in powers for the Housing Corporation. They are detailed in the briefing on the proposed new clause on appointment of the Housing Corporation Board. The amendment proposes an additional mechanism to the new clause proposals for the corporation to be aware of and responsive to those directly affected by its new powers. The full briefing is given with the new clause proposals. Either proposal could stand alone but they are complementary in that the new clause proposals deal with the corporation's overall responsibilities and the amendment suggests an advisory agency with a specific role to advise on the new powers. I beg to move.

Lord Ross of Newport

My Lords, I appreciate that we did not get very far with the last amendment. However, I believe that this amendment has merit. If we are to have a Housing Corporation totally appointed by the Secretary of State, let us at least have some kind of tenant advisory agency which can make representations to the corporation and which the corporation can look to for advice on occasion. I support the amendment.

The Earl of Arran

My Lords, perhaps I may be allowed to take a short time in pointing out to your Lordships why we believe that the amendment has no purpose in practice.

Taking first the idea of the role of the proposed body in relation to the Housing Corporation's functions under Part II of the Bill, we can find little to commend it. Part II is predominantly about the corporation's role of supervising and monitoring the housing association movement and the powers the corporation is to have in relation to the payment of grant to associations. Many of the provisions of Part II already require the corporation to consult bodies representative of the housing association movement before exercising its powers; for example, in issuing guidance or in issuing determinations about the grant system.

In practice, moreover, the Housing Corporation already conducts a great deal of less formal, non-statutory consultation with representative bodies. In the preparations for the new grant system, for example, extensive consultation has been going on this year, and is still continuing, between officials of the corporation, the National Federation of Housing Associations and my department. There is relatively little of Part II which is of direct concern to local authorities, but, where there is— as in the provision for local authority funding of housing association projects— there has also been detailed consultation with their representative organisations. We do not see, therefore, that imposing by statute a further layer of consultation and advice would be useful or effective.

If we then consider the point of the proposed agency in relation to the tenants' choice provisions in Part IV of the Bill, we see that its role would be equally superfluous. The corporation has already been consulting widely within the housing association and local authority worlds, and among those representing tenants' interests, about the use to which it proposes to put its approval and supervisory powers. It has the experience, skill and sensitivity to carry out this role and the others that we propose for it, to provide information and advice, properly and effectively. I do not think that a new statutory body— with, if I may say so, a rather ill-defined advisory role— would help either the corporation,itself or indeed the tenants in whose interests the corporation is being given its job under the tenants' choice scheme.

Similarly, in relation to housing action trusts, tenants will be fully consulted by the trusts about their proposals for disposal. Tenants themselves will be able— and will be encouraged— to offer suggestions about the landlord to whom they would like to be transferred when the trusts have carried out their work. They will be able to opt to return to the local authority, if the authority is willing to have them, and we have given assurances that the necessary borrowing approvals will be given to ensure that they are able to do so; or they can opt to manage their own housing through a tenant cooperative, or transfer to a landlord approved by the Housing Corporation. Tenants will be fully informed about all these options. They will have a real choice about their future.

I think it follows from what I have said that the effect of the amendment would be to establish an unnecessary organisation with no useful role to play. I therefore ask the noble Lord to withdraw the amendment.

Lord Dean of Beswick

My Lords, I listened with care to the rather involved reply of the Minister. He has not convinced me that the agency proposed in the amendment would have no worthwhile role.

The Minister mentioned HATs, the housing action trusts. I should tell him what has been conveyed to us without any attempt on our part to solicit it. There is a growing anger among tenants in areas in which housing action trusts have already been announced. People who do not normally react angrily are becoming bitterly angry about the proposals for takeover by a housing action trust. Where such fear exists, the kind of agency that we have proposed would act as a fallback — that is, a layer of protection for the tenants. I realise that the points that we have made have not convinced the Minister that this is a worthwhile amendment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 6 [Amendments of Housing Associations Act 1985]:

The Earl of Arran moved Amendment No. 144: Page 121, line 44, after ("10") insert ("and sections [consent required for certain subsequent disposals by approved persons] (6), 104(4) and [consent required for certain subsequent disposals] (6) of the Housing Act 1988.").

The noble Earl said: My Lords, in moving Amendment No. 144, I wish to speak also to Amendment No. 145.

Amendments Nos. 144 and 145 tidy up Schedule 6, adjusting it to reflect clauses that we shall he introducing to control subsequent disposals by housing action trusts, tenants' choice landlords and those who buy council housing as part of a voluntary disposal. In those clauses we have disapplied the requirement for a registered housing association to seek the Housing Corporation's consent to a disposal where the disposal requires the Secretary of State's consent. Amendments Nos. 144 and 145 change the relevant section of the Housing Associations Act 1985, Section 9, accordingly.

I hope that noble Lords will agree that these minor consequential amendments are sensible in the light of the new clauses that we shall discuss and, I hope, agree later on. I beg to move.

On Question, amendment agreed to.

9.30 p.m.

The Earl of Arran moved Amendment No. 145. Page 121, line 46, leave out from ("association") to end of line 50.

On Question, amendment agreed to.

The Earl of Arran moved Amendment No. 146:

Page 125, line 16, at end insert— ("and in the words following paragraph (b) for the words "the association's business" there shall be substituted "the business of the association or any other such body as is referred to in subsection (1)".").

The noble Earl said: My Lords, I speak also to Amendment No. 147. The Housing Corporation may conduct an inquiry into the affairs of a registered housing association. It may be helpful to the person conducting an inquiry if he can also inquire into any subsidiary or associate body of the association. Paragraph 19 of Schedule 6 already provides for this. Something it does not do, however, is to enable him to require the subsidiary or associate to produce its accounts, and so on, as he already can do in the case of the parent association. Amendment No. 146 remedies that omission. Amendment No. 147 simply adds a minor clarification to the inevitably rather complex definition of a subsidiary. I beg to move.

On Question, amendment agreed to.

The Earl of Arran moved Amendment No. 147:

Page 126, line 5, at end insert— ("(9) In relation to a company which is an industrial and provident society,—

1. (a) any reference in subsection (6)(a) or subsection (7) to the board of directors is a reference to the committee of management of the society; and
2. (b) the reference in subsection (7) to the holders of all or a majority of the directorships is a reference to all or a majority of the members of the committee or, if the housing association is itself a member of the committee, such number as together with the association would constitute a majority.").

On Question, amendment agreed to.

Schedule 7 [Housing action trusts: constitution]:

Lord McIntosh of Haringey moved Amendment No. 148: Page 129. line 13, leave out ("have regard to the desirability of securing") and insert ("secure").

The noble Lord said: My Lords, in moving this amendment, I speak also to Amendment No. 149. These two amendments have the virtue that they can be taken either together or separately. Instead of giving the Secretary of State the opportunity to appoint people with local experience to housing action trusts, which certainly as we understand it from what the noble Lord, Lord Hesketh, said in Committee on 28th July is the Government's intention, Amendment No. 148 states that the Government should "secure" the appointment of such people.

There cannot be any great difficulty about that because, after all, in each of these housing action trust areas there are literally thousands of properties. Moreover, I can assure the Minister from having met and spoken to the tenants in these housing action trust areas, there will be no difficulty in finding qualified, articulate people who are well-versed in the issues of their estates and local areas who will certainly be available and willing to serve on the housing action trusts.

I suspect that the Minister does not care too much for the articulateness of some of them, but the Government have decided on the areas of the housing action trusts and if they do not realise that tenants in these areas will be organised and, when they see the housing action trust proposals, even militant, then the Government will not have done their homework very well. The Government may not realise the kind of people and the kind of areas in which they are becoming involved.

Those of us who have served on local authorities in deprived areas of London, as I have, know that there is nothing more effective and unrelenting than a tenants' association which feels that it has been neglected and that its problems have not been given adequate attention by the local authority or, specifically, by the ward councillor. I wish the Government all the joy in the world with some of the tenants who will now be the responsibility of central government rather than, as in the past, the responsibility mainly of Labour local authorities.

Amendment No. 149 is a related amendment which is a less ambitious version of an amendment tabled in committee. The Minister will recall, and other noble Lords may recall, that we said in Committee that tenants should be in the majority on the board. We are now saying that: not less than 50 per cent. of the members of the trust, not including the chairman and the deputy chairman, shall be such persons". That means that the Government can retain effective control of the housing action trust by the way in which they appoint the chairman and deputy chairman. There should be no fear on the part of the Government that they are creating a body which is immediately going to find itself in flat and outright opposition to the Government's intentions. The Government can ensure, by the way that they make appointments to the other 49 per cent. or 50 per cent. of the places and to the chairmanship and deputy chairmanship, that this is not the case.

It means that the tenants and people with housing knowledge in the area will have slightly more confidence and rather less suspicion of the housing action trust members than they would have otherwise. The Minister already has some experience of tenants of housing action trust areas. I have just been referring to that. He will have a good deal more experience of them over the coming months. One situation that the tenants will not stand for is being ignored and pushed on one side. I can assure the Minister that if these amendments are agreed the tenants' associations in the estates in housing action trust areas will take on the responsibilities of membership of the housing action trust provided that the tenants as a whole have voted for the creation of the trust in accordance with the terms of the Bill. They will take the responsibilities very seriously and they will participate actively and co-operatively in the work of the housing action trusts.

There is no threat to the Government in these amendments. There is an opportunity to mend the fences with the tenants in the housing action trust areas that have been— perhaps not entirely through the actions of the Government— left in very bad repair over the past few months. It may be that there are unjustified suspicions and, as I am sure the Government believe, that there is unnecessary militancy among the tenants. The way to deal with that is not to continue to ignore them but to take them seriously and to give them this representation which we are advocating in these amendments. I hope that the Government will see that it is in the interests of their own objectives in setting up housing action trusts to agree to these amendments. I beg to move.

The Earl of Arran

My Lords, the noble Lord, Lord McIntosh of Haringey, says that there is no threat in these amendments, but we are not too convinced of their validity. We understand the concern of the noble Lord in introducing these amendments. We too recognise the desirability of appointing people who live in or have special knowledge of the HAT area. However, I do not think that it is appropriate to try to tighten the present requirement. As my noble friend Lord Hesketh pointed out in Committee, HATs will be temporary bodies charged with carrying out the difficult tasks in a short time. My right honourable friend the Secretary of State must be able to appoint to the board the best combination of people he can find.

We intend that there should be local representation on HAT boards but we cannot require the Secretary of State to find, in every case, at least 50 per cent. of members who are local residents or who have a special knowledge of the area. Other qualities such as management skills and housing expertise will be relevant.

It is also important to recognise the other ways in which HATs will be involving residents. There will be tenants' advisory groups created by HATs. We will also expect HATs to encourage tenants to become directly involved in managing their homes using estate-based management techniques and by means of tenant co-operatives. HATs will, of course, be under a statutory duty to consult local people about their proposals for the area. Given our obvious commitment to local people being involved in HAT operations, I hope noble Lords will agree that it is not necessary to make these amendments. The Secretary of State must retain his flexibility in appointing members if the HAT is to operate in the best possible way for the benefit of local people. In the light of those arguments I invite the noble Lord to withdraw the amendment.

Lord McIntosh of Haringey

My Lords, it is simply a recipe for conflict if the Minister seriously thinks that the Secretary of State can exercise his discretion in such a way as to marginalise the tenants and the people with knowledge of the area on the housing action trusts, however temporary they may be.

Those with knowledge of local government will know that there is nothing more permanent than a temporary planning consent. I suspect that there will be quite a long life in many of these housing action trusts. If the tenants believe that they are being put on one side and that they do not have a statutory right to representation on the housing actions trusts, which are concerned with their homes— none of us is concerned with the matter in the way that they are concerned with it— they will respond very unfavourably. I promise the Minister of State that his life will be a misery if he offends the people in whose areas he is seeking to establish housing action trusts. He is in serious danger of doing so.

I have talked to many of these people. I have met them in this building and in Central Hall and I have been to more than one of the estates, as I know the Minister has himself. These people are conscious of their rights. They have had to fight for their rights against Labour local authorities. Nothing gives people more consciousness of the need to stand up for themselves than a fight against some local authorities. They will make the Minister's life and the Government's life a misery. I urge the Government to think again about what the noble Earl, Lord Arran, has just said. I shall beg leave to withdraw the amendments in order to give them a chance to do so. They are taking a very unwise action.

Amendment, by leave, withdrawn.

[Amendment No. 149 not moved.]

The Earl of Arran moved Amendment No. 150: Page 129, leave out line 39.

On Question, amendment agreed to.

Clause 63 [Objects and general powers of housing action trusts]:

Lord Graham of Edmonton moved Amendment No. 151: Page 49. line 2. after ("accommodation") insert ("in compliance with any management guidance issued by the Secretary of State").

The noble Lord said: My Lords, I should like to speak at the same time to Amendment No. 152. Those who follow these matters will see that we are anxious to ensure that the best interests of those who are less fortunate than the able-bodied are taken into account.

In Committee the Government stated that it was their intention to issue management guidance to the HAT to enable it to carry out its housing management functions effectively. The first amendment is an attempt to get that assurance into the text of the Bill. The noble Lord, Lord Hesketh, said that the management guidance would apply to special needs housing. The second amendment aims to codify that commitment. The Government should have no difficulty therefore in accepting either of the amendments. The Government's commitment to issue management guidance to HATs is welcomed. We hope that it will he comprehensive in its scope. In the case of special needs housing, we hope that it will do more than simply refer the HAT to publications on special needs housing, as the noble Lord, Lord Hesketh, seemed to imply at the previous stage of the Bill.

I should like to ask the Minister some direct questions. Can the Government say what the management guidance will be? We can have a shot at it; but that is not our responsibility. It is the duty of the Government to indicate not only to the House but also to those outside the House what the scope of the promised management guidelines is. It is important that HATs are given detailed guidance on all aspects of housing management in general, and in particular detailed guidance on how to manage special housing projects, based upon the policies and practices of local authorities and housing associations in that area.

There will be a need to cover in any guidance produced such sensitive issues as continuity of service to people living in such accommodation. It may well include a recommendation to consult relevant organisations where necessary. We hope that it will include proposals to develop specific housing projects for those with special needs. Most important, the management guidance should require HATs to play a full part alongside the local authority in meeting the needs of the community for special needs housing.

Knowing the Minister as I do, I am sure that he will be sympathetic to what we are trying to achieve. He and his colleagues have said repeatedly throughout the Bill's proceedings that it is their intention to do this, that or the other. I am certain that the Minister will tell us that it is their intention to ensure that those who are ultimately responsible for managing a HAT are given clear guidelines as to what they need to do in respect of the needs of the disabled.

Not for a moment do I impute to the Minister anything other than the best intentions. However, there are people who are disabled who have been looked after to a certain extent— as well as they can be— and who will be anxious about what will happen to them if in the future they find themselves in a HAT area where in effect they have changed their landlord. Their landlord has been changed and the people who have the ability to make their lives comfortable or otherwise have changed. It does not need any stretch of the imagination to realise that while the raison ďêtre for a local council service and the raison ďêtre for a HAT is primarily profit, such people will he subject to a period of uncertainty.

Before I withdraw the amendment, I want to hear from the Minister what he intends to do to put flesh on the promises made by his ministerial colleague at the last stage of the Bill's proceedings. It is a most important issue. I beg to move.

9.45 p.m.

The Earl of Arran

My Lords, it is the Government's responsibility to try to persuade the noble Lord, Lord Graham of Edmonton, that both amendments are not necessary. We have already announced our intention to issue and publish HAT management guidance which will cover many issues. Perhaps I may return to that at a later stage because the noble Lord asked especially about the matter.

It is not necessary to place this requirement on the face of the Bill. It will deal with such things as the methods of management and use of the housing accommodation, as well as how we expect HATs to make provision for disabled people. Under Clause 65 we are about to discuss an amendment that we are bringing forward which provides for the Secretary of State to apply by order to HATs the provisions of Section 3 of the Chronically Sick and Disabled Persons Act 1970. We do not therefore think that Amendment No. 151 is truly justified.

Furthermore, as we pointed out in Committee, we are already doing a number of things to promote the needs of the disabled. In the management guidance issued to HATs we will draw their attention to the publications on housing for the elderly and disabled, including the recent departmental publication House Adaptions for People with Physical Disability.

The guidance will also lay down the guidelines on the HATs, onduct in matters such as employing staff. They will be encouraged to adopt recruitment and personnel management practices which meet the standards expected of public service employers, and in particular we will be drawing their attention to the Cabinet Office code of practice on the employment of disabled people.

As I also said in Committee, we are prepared to require HATs' annual reports to detail the steps taken to promote the employment of disabled people. I hope that noble Lords will acknowledge our commitment to the needs of the disabled. The noble Lord, Lord Graham, asked about management guidance. That will be a comprehensive and wide-ranging document. We are sure that it will give a great deal of detailed information as to how people can be helped. On the basis of what I have said, I invite the noble Lord to withdraw the amendment.

Lord Graham of Edmonton

My Lords, I am grateful to the Minister. I do not doubt his intentions, especially in respect of guidance and responsibility, but I shall ask him the simple question: how will he force a HAT to fulfil and comply with government requests? A local authority is the present housing manager and the Government have a range of measuring rods and yardsticks that they can apply. The Minister could do himself and those outside the House a great deal of good if he spent a little time considering the possibility, and I put it no higher than that, that some HAT management teams will feel disinclined to go any further than they need. They will need to be prodded and probed. There will be some which will anger the Minister by the lethargy with which they look after people. What does the Minister have up his sleeve, statutorily or otherwise, to make such people comply with what he and I want?

The Earl of Arran

My Lords, the Secretary of State has discretionary powers under Clause 72. HAT management guidance will include matters such as the powers available to HATs; the way that they should have the estates transferred; the interaction with other agencies, and the way that they should undertake the disposal of their property. I hope that that helps the noble Lord.

Lord Graham of Edmonton

My Lords, it helps me, but it does not answer the question. At the moment we have councils which are democratically directly accountable to the electorate and which are therefore sensitive about their image and the delivery of services for the disadvantaged and the unfortunate. A HAT, with all its good intentions, is not democratically accountable other than to the Secretary of State. That is the direct lifeline. Will the Minister tell us what the Secretary of State will do to a HAT management which fails to do what he wants done for people who need the assistance that they have been receiving from the local authority?

The Earl of Arran

My Lords, my natural reaction to that question is that my right honourable friend the Secretary of State is the very source and soul of democracy and fully intends to see that the full play is enacted.

Lord Graham of Edmonton

My Lords, will the Minister tell us when there was a change in the Secretary of State? Surely he is not referring to the present one. I am bound to say that the Minister has not only failed to convince me, I am certain that he has failed to convince many people outside this place that the Government genuinely intend to look after the disadvantaged and disabled if the HAT is unwilling to look after their interests. However, I think the Minister has gone as far as he can, which is not very far. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn

[Amendment No. 152 not moved.]

Clause 65 [Housing action trust as housing authority etc.]:

The Earl of Arran moved Amendment No. 153: Page 50, line 35, at end insert ("and section 3(1) of the Chronically Sick and Disabled Persons Act 1970").

The noble Earl said: My Lords, during the course of our debate on housing action trusts at Committee stage we undertook to look at the possibility of applying Section 3 of the Chronically Sick and Disabled Persons Act 1970 to HATs. We have a genuine concern for the problems and difficulties experienced by sick and disabled people and we are therefore bringing forward this amendment which empowers the Secretary of State to apply the duty to housing and to the special needs of chronically sick and disabled to HATs. I hope noble Lords will accept this amendment. I beg to move.

On Question, amendment agreed to.

Clause 70 [Co-operation on homelessness between local housing authorities and housing action trusts]:

Lord Graham of Edmonton moved Amendment No. 154:

Page 54. line 45. at end insert— ("and at the end of the section there shall he added—

1. "(2) A local housing authority' in whose area a housing action trust has been designated shall he under a duty to initiate discussion with the housing action trust on the discharge by the local authority of their functions under sections 62, 63. 64 to 67 and 68(1) and (2).
2. (3) A housing action trust, when approached by a local housing authority under subsection (2) above shall he under a duty to respond to such an approach.
3. (4) If the local housing authority is not satisfied with the response of the housing action trust as in subsection (3) it shall so notify the Secretary of State.
4. (5) The Secretary of State shall investigate any submissions received under subsection (4) above and shall direct the housing action trust accordingly if he finds that the housing action trust has been unreasonable in response." ").

The noble Lord said: My Lords, I beg to move Amendment No. 154. The purpose and thrust of this amendment is that it creates a mechanism whereby negotiations between a local authority and a HAT will have to occur over the issue of re-housing the homeless. I know that the Minister will not need to be reminded that the situation of the homeless is one of the many growing problems in the sphere of housing which is not getting better: it is getting worse. Where the local authority is not satisfied with the HAT's response, it will refer the matter to the Secretary of State. The Secretary of State will be under a duty to examine the allegations and if he finds that the HAT has been unreasonable, to direct it accordingly.

I should like to have heard the Minister say something like that on the previous amendment regarding the powers of the Secretary of State in the event of a HAT failing to come up with what it needs to do.

The functions that a housing action trust will take over from a local authority are set out in earlier clauses of the Bill. Practically every relevant part of the 18 parts of the 1985 Housing Act— the consolidated Act that gives councils their housing powers and duties— is transferred. The glaring omission which we have noted and on which no doubt the Minister will comment is Part III, housing the homeless. HATs were given no specific responsibilities for the homeless whatever when the Bill first went before Parliament. Throughout the stages of the Bill in another place and here in this House, a series of Opposition amendments was tabled, attempting to make HATs more responsible for filling local housing needs, especially those involved in housing the homeless. The Minister and his colleagues will be aware of them.

The only concession that the Government have made so far is to include an amendment to an existing very weak section— Section 72 of Part III of the Housing Act 1985. Under this amendment HATs are given the duty that where a local housing authority requests a HAT to assist them in the discharge of their functions relating to rehousing the homeless, the HAT to whom the request is made shall co-operate in rendering such assistance in the discharge of the functions to which the request relates as is reasonable in the circumstances. That duty will not be sufficient to ensure that a HAT pulls its weight in responding to the housing needs of the community. The Minister and his colleagues are well aware that there are many reasons why there is a need for access to the stock of housing which will be within the enclave of a HAT area as regards housing the homeless.

The removal of substantial numbers of homes from a local authority will severely hinder its ability to fulfil its statutory duties to the homeless and to provide for all those others in housing need who require low cost rented accommodation. In 1987, nationally, 112,730 households were accepted as homeless by local authorities. Last year in London alone boroughs accepted 30,000 homeless households. That is twice the figure of 1979 but it still represents only a small proportion of those who apply. Increasingly boroughs have had to use bed-and-breakfast hotels to accommodate households because they do not have enough available homes. Only five of the 32 London boroughs do not use bed-and-breakfast accommodation. Nearly 7,300 families are accommodated in that way. That represents 25,000 to 30,000 people, including 10,000 children. Another 13,500 families are waiting in other forms of temporary accommodation for a permanent home.

Time after time the Minister has blamed local authorities for not making better use of their voids. Yet the Minister needs to be reminded of the true position regarding empty properties. Local authorities are quite clearly the most efficient users of their housing stock. Just 3.6 per cent. of council homes in London are vacant compared with 4.2 per cent. of housing association properties, 6.3 per cent. of other public stock, including government properties, and 5.1 per cent. of private sector housing.

Those figures are even better known to the Minister than to myself. I am certain that he grapples with this matter every day of his working life. We are asking what access a local authority— which has statutorily placed upon it the responsibility to try to deal with this horrendous situation— will have to the housing stock that, in the event of a HAT being formed, will have been taken away from it. What access will a local authority have to that housing in order to deal with its housing problem?

I can help the Minister very quickly by illustrating the kind of situation that makes the position worse for a local authority. Let us take a HAT in an area which comprises 5,000 dwellings. A HAT has been created with 5,000 dwellings. In the first year the local authority loses 190 vacancies on the estate to which it would have had access. Of those vacancies, 81 per cent. would have gone to the priority homeless. As a result, over 150 homeless families have to be housed in temporary accommodation. The authority has so far managed to avoid using bed-and-breakfast, but it has now run out of alternatives. Families have to be placed in hotels. That will cost the authority £2.3 million in the first year. London prices, of course, are certainly much higher than those outside. Unless those people can be rehoused, that cost will have to be paid in year two as well, by which time another year's vacancies will have been lost.

The proposed HATs outside London are larger. Leeds, for example, has 7,123 dwellings. Sandwell has 3,930 and Sunderland has 6,600. We want the Minister to tell us how he intends to restore the lost access to HAT properties which he himself will have created by virtue of creating HATs. I beg to move.

10 p.m.

The Earl of Caithness

My Lords, I can assure the noble Lords, Lord Graham of Edmonton and Lord McIntosh of Haringey, that I have listened with great care to what has been said this evening when your Lordships discussed their fears about the effect of the setting up of HATs on local authorities' attempts to deal with the problems of homeless people, and indeed the whole question of HATs themselves.

I believe that HATs can and will make a key contribution to alleviating homelessness by bringing back into use stock which is lying void at present. I know that on several of the estates where the Secretary of State is considering seeking parliamentary approval to set up a HAT there are a large number of empty properties. In London, where, as we all know, the problems of homelessness are at their worst, the stock standing vacant for six months or more in the authorities where we are proposing to set up HATs stood at more than 3,500 on 1st April 1988.

The noble Lord, Lord Graham of Edmonton, has talked recently about the possibility of HATs not doing what the Secretary of State wants as regards looking after disabled people, the homeless and those who are least well off. The whole purpose of a HAT is to get in and do the job which the local authority has blatantly failed to do. The authority has made a mess of the housing in that area. The tenants are crying out for someone to go in and do a proper management job. That is what the HATs will do. It is a disgrace that there are 3,500 properties which have been standing vacant for more than six months in these areas. HATs will bring some of those empty properties back into use in quick order and that will help the local authorities.

Local authorities will retain their overall responsibility towards homeless people under Part III of the 1985 Act. In most cases we have proposed that HATS should take over a comparatively small proportion of a local authority's stock— only some 7,000 dwellings in total in London.

The noble Lord, Lord Graham of Edmonton, mentioned the figure of 5,000 dwellings for one HAT. But there are only 7,000 dwellings in London overall. What does that comprise? It is no great percentage of the local authorities' housing stock. There are 158,000 local authority dwellings in the three HATS which are under consideration at the moment. That represents just 4.4 per cent. of those authorities' stock. Taking the whole of London into account, it represents under 1 per cent. of the total local authority stock. Let us get this back in perspective and I hope that we shall have a more rational debate from now on.

Under Clause 70, we have imposed a duty on HATs which is exactly the same as that which applies under Section 72 of the 1985 Act to local housing authorities, new town development corporations, the Commission for the New Towns, registered housing associations and the Scottish Special Housing Association. We know that it is common for local authorities to agree nomination arrangements with, for example, housing associations without any further specific statutory requirement beyond Section 72. We see no reason why there should not be similar co-operation between HATs and local authorities, with Clause 70 as the back-up.

However, I want to stress that there are further safeguards. First, we have already promised to make clear to HATs in the management guidance which my right honourable friend will issue to them, and which will be published, that they will be expected to enter into agreements with local authorities— possibly by means of formal contracts— giving the authorities access to stock held by HATs. The exact proportions of stock must be a matter for local agreement.

Secondly, under Schedule 8, HATs will be required to report on their operations generally every year. My right honourable friend will tell HATs, through his management guidance, to include in those reports details of how they have carried out their statutory duties, including the duty laid on them by Clause 70. My right honourable friend is required to lay that report before Parliament. Finally, my right honourable friend already has a general direction-making power under Clause 72 which he could use if he felt that HATs were not co-operating sensibly with local housing authorities.

I do not think that there is any disagreement between us and noble Lords opposite about the fact that homelessness is a serious problem in some of the areas where we have proposed setting up HATs. But we are acting to deal with the issue. That is one of the reasons why we are asking for HATs to be set up— to tackle the kind of problem which has been allowed to occur. I therefore hope that we can now proceed on the basis of the assurances which I have been able to give the noble Lord, Lord Graham of Edmonton. We have registered the concern; that is the problem and that is how we shall tackle it.

Lord Graham of Edmonton

My Lords, the Minister is far more optimistic than we are about the ability of local authorities satisfactorily to reach agreements with HATs under the wording on the face of the Bill. For instance, at the moment there is a comparable obligation between local authorities and housing associations under Section 72 of the 1985 Act. Quite frankly, it has failed to work. Housing associations are quite unable to house the homeless. To give one illustration. in the London Borough of Greenwich 80 per cent. of local authority properties house the homeless.

The Minister—I think very unkindly and uncharacteristically— lambasted the local authorities in London in whose areas HATs will be established to take over their empty properties.Southwark is one of those authorities. Southwark has over the past three years reduced its number of public sector voids from 4.619 to 1,989. That is an enormous step and it was unkind of the Minister to speak in that way in view of the horrendous problems that Southwark and other London boroughs are encountering. For instance. Lambeth, which has a poor record in general, nevertheless has reduced its numbers.

The Minister has some magic formula whereby those in charge of HATs will be able to obtain the money or better use the money that they receive in order to make their properties available for letting. I wish him well. Certainly in two or three years' time I do not want to say to the Minister, "I told you so. The horrendous bed and breakfast nexus which is the curse of housing has got even worse". However, I fear that the Minister intends to rely on the form of words which impose a duty to consult and a duty to assist.

Nothing in what the Minister has said will convince councils and councillors, including Labour councils as well as those of his own political colour. They have very little faith that they will be able to persuade a HAT to help them accommodate the homeless. In my own local authority of Enfield— and there are other like authorities— only two years ago the number of families in bed and breakfast accommodation was down to single figures. Now it has over 200 families in bed and breakfast, and the situation is worsening. The Minister should examine some Conservative authorities which are paragons of virtue in housing and note their inability to deal with this problem.

However, I think that the Minister has said as much as he intends to say. He has given a disappointing reply. I very much hope that the picture painted by me tonight will not be revealed. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 74 [Transfer of land and other property to housing action trusts]:

Lord Dean of Beswick moved Amendment No. 155:

Page 56, line 27, at end insert— ("() A local authority from which housing accommodation is transferred under subsection (1) above shall have the right to nominate tenants to all vacancies arising in such of the said housing accommodation as is excluded from the provisions of Part V (Right-to-Buy) of the Housing Act 1985.").

The noble Lord said: My Lords, we seem to have had a rather extensive discussion about some of the difficulties encountered with HATs. This amendment deals with one specific section of accommodation. It is concerned in the main with people with special housing needs.

The effect of this amendment would be to ensure that local authorities have nomination rights to vacancies occurring in those properties which have been excluded from the right to buy provisions; namely, to vacancies occurring in sheltered accommodation schemes and other individual properties that have been adapted for the elderly and in special schemes for people with disabilities. The amendment is in keeping with the spirit of the commitment made by the Government at the Committee stage of the Bill that in exercising their housing management functions HATs should have regard to special housing needs and not discriminate against them. That is recorded in the Official Report of 25th July at cols. 425 to 431.

This amendment would enable HATs to fulfil that commitment in two respects. First, it would ensure that for the duration of any HAT any vacancies arising in sheltered blocks or other specialist schemes or specially adapted property would continue to be used for the purpose for which they were originally built. Secondly, it would also mean that HATs would make a direct contribution in helping local authorities to meet special housing needs. There will be no shortage of nominees from local authorities. In London alone there are currently 88,200 elderly people who are in need of sheltered, wheelchair-adapted or similar accommodation. With such a demand local authorities cannot afford to lose access to even a fraction of that much needed accommodation. I am sure that the elderly residents in Sandwell who have lost three sheltered blocks and 94 bungalows to the HAT will welcome this amendment.

Some local authorities already have systems in operation for assessing special housing needs and maintaining waiting lists for specialist accommodation. They are in a position to provide suitable nominees more efficiently than the HAT, at least in the short term. How else do the Government envisage using vacancies which arise in special needs projects in a way that is commensurate with their stated commitment not to discriminate against people with special needs? The amendment meets the concern expressed from the Government Benches in Committee that it may be impractical not to transfer special needs housing to the HAT with all the other property. Under this amendment the property would be transferred to, and managed by, the HAT. Only the selection of tenants would be handled by the local authority.

Can the Government give an assurance that for the duration of the FIAT it will not allocate these properties to people without special housing needs, nor will it allow these properties to stand empty until whole blocks can be disposed or) I beg to move.

10.15 p.m.

Lord Ross of Newport

My Lords, I shall be very brief. I hope that we shall not hear the Minister criticising local authorities again. The noble Lord, Lord Dean. mentioned the borough of Sandwell. I should like to pay tribute to the borough of Sandwell and the way in which it looks after its elderly and disabled. I know because I see some of those tenants who visit the Isle of Wight in the early and late part of the year. It is quite magnificent what the borough does for those people. I am sure that the proprietors of the Savoy holiday camp to which they come for a fortnight in the spring and autumn would confirm that.

I was interested in the answer that the Minister gave on the last amendment. I hope very much that we shall have the co-operation that he seeks, and that he has assured us about, between the HATs and the local authorities. I refer not only to property for homeless people, but also to properties that I hope will be available for those who are disabled where quite expensive alterations have been made already. I also hope that the annual report that he mentioned will be made to Parliament and that we shall be able to ask questions to ensure that these proposals are being carried out. That seems one way in which we can apply pressure to ensure that there is cooperation.

I am more reassured than the Opposition Front Bench may have been by the Minister's assurances that these provisions will be made to work. However, I would still rather see the provision written into the Bill.

The Earl of Caithness

My Lords, perhaps I may say how much I welcome the contribution of the noble Lord, Lord Ross of Newport. Let me say at the outset I should very much like the co-operation of the local authorities. I agree with him that many local authorities have done a splendid job in many aspects of the work they carry out. But that does not make them immune from criticism over some of the things that they have not carried out terribly well. They are certainly not slow to criticise the Government: and they should not expect that they will not be criticised in return. It is one of the reasons for the HATs. Management and repairs, maintenance and the general environment of certain housing stock have not been sustained but allowed to become run down.

I fully appreciate the very real concern that all your Lordships have for the position of disabled people. As the noble Lord, Lord Dean of Beswick, reminded us, we had a very full debate on this issue at Committee stage. We shall return to it when debating amendments to Part V tabled by my noble friend Lord Swinfen and my noble kinswoman, Lady Masham.

As I explained when we discussed similar amendments designed to prevent any possibility of housing currently excluded from the right to buy being transferred to a HAT, HATs will be concerned to deal with all the run-down housing in an area. We recognise that these areas might include specialised housing of the type excluded from the right to buy and tenant's choice provisions including those occupied by tenants with particular needs. I must stress once again that the wellbeing of tenants is central to the HATs policy and while we believe that tenants would benefit from the presence of a single-minded body devoted to improving the area and its housing, particular care will be taken over decisions on boundaries and the transfer of properties to consider what the best option is for tenants in housing specially designed for the old and disabled. As your Lordships will know we have consultants and advisers working on this at the moment. I hope that local authorities will assist them in every way so that when we come to define the boundaries for a HAT we get it right. We can only do that with help and information from tenants and local authorities. We are statutorily required to consult local authorities about the properties being transferred. That adds up to what I have just said. We shall listen carefully to their views about whether it is a good idea to transfer particular dwellings to a HAT. That of course is dependent on their taking an active part in the consultation process.

If there are cases where such housing is transferred to a HAT we shall make sure that they follow the best practice in managing it. We have tabled an amendment to Clause 65 to enable the Secretary of State to impose on HATs a statutory duty to consider the needs of chronically sick and disabled persons. We shall also issue guidance to HATs. We shall draw to their attention the literature on housing for the disabled and elderly produced by the department including the recent publication Housing Adaptations.for People with Physical Disabilities. Where accommodation is let in connection with employment it may well be appropriate to transfer it if. for example, a caretaker is going to transfer to employment with the HAT.

In cases where the transfer of specialised elderly and disabled accommodation to the HAT has been approved, great care will be taken over its subsequent disposal and there will be full consultation with tenants. Some accommodation may he returned to the local authority. Another possibility would be transfer to a specialised housing association with experience in dealing with the specialised needs of such tenants. In 1987 nearly a third of all new lettings were to elderly tenants. Over a quarter of all housing association homes are for the elderly or wheelchair units for the elderly. It is hardly likely that a housing association will change the use of such stock. The tenants' guarantee requires registered housing associations approved by the Housing Corporation to pay special attention to specific housing difficulties experienced by particular groups, including the disabled. Any other post-HAT landlords will have to conform to similar requirements.

In the case of accommodation let in connection with employment, I suppose that there is more chance of a change of use being deemed appropriate— if, for example, redesign meant that it was necessary to move a caretaker into different accommodation.

As I have said, at the first stage we shall give extremely careful consideration to whether transfer of such property to a HAT is appropriate and we will also take extreme care in considering who is an appropriate future landlord for this type of property— someone who we can be sure will do his or her utmost to ensure that the needs of the tenants are met. We also intend to make subsequent disposals by post-HAT landlords subject to the consent of the Secretary of State.

I am sure that your Lordships will appreciate that this will act as a further check to ensure that this type of accommodation is put to best possible use in meeting needs. I have taken a little time to answer the noble Lord, Lord Dean, but he has raised an important point and I hope I have settled some of his worst fears.

Lord Dean of Beswick

My Lords, I am grateful and I am sure that a number of noble Lords present in all parts of the House are grateful for the detailed reply to the amendment because it is an important one. I do not want to go into a lengthy debate on the subject, but in opening his reply the Minister broadened the debate wider than the amendment. He talked about HATs in general. I do not share the optimism that he and his ministerial colleagues share regarding HATs, because during the last week or two Mr. Trippier visited the city of Leeds, where 7,000 houses have been designated a HAT area. He received a very difficult reception, a very warm reception indeed. The point was made by my noble friend Lord McIntosh on a previous amendment that where there is a lack of goodwill— and this seems to he the initial kick-off to this type of exercise— it has little chance of succeeding.

I am grateful to the Minister for the detailed answer he gave. But I still have a nagging doubt in my mind. A couple of weeks ago we debated various amendments relating to accommodation for handicapped and disabled people. I expressed a view that I was against the disposal of any special accommodation at present because of the appalling shortage of it. If it were to be disposed of or went outside the normal pool of housing or if it was sold off or let to other people, that would mean that the next generation of disabled and handicapped people would be the sufferers. If I was told that there was to be a crash programme of adaptation and of building houses for the disabled and handicapped I should accept it, but there are no signs of any initiatives on that front.

We are talking about housing or flat units now in the public sector which are used for a specific purpose. I am grateful for the innovations and courses which the Government are pursuing but I am still not convinced that the safeguards are strong enough. The Minister said that housing action trusts would be asked to consider — I believe that that was the word he used— the question of handicapped people or nominees to such places. I hope that the Minister will alter that statement and say that the Government will have a mandatory responsibility to ensure that a property which was built or adapted for use by handicapped or disabled people will not be let to anyone who is not so afflicted.

The amendment tries to keep such existing properties 100 per cent. available for those who are disabled or handicapped. It is absolutely essential that they have hope that such properties will remain for them to have an opportuntity to tenant.

I do not know whether the Minister can give me a firm guarantee about that matter. I believe that he falls a little short of giving that undertaking. I hope that he can do so. I am sure that it would be well received in all parts of the House. Can he say that the established use of such properties must continue, irrespective of ownership, and that the tenant will remain entitled to such a property because of his handicap or disability? I do not know whether the Minister wishes to respond further but I should like to clear up that important point.

The Earl of Caithness

My Lords, with the leave of the House— and I appreciate that this is Report stage—there is nothing that I can add. I covered the points that concern the noble Lord, Lord Dean, fairly fully in my answer.

Lord Dean of Beswick

My Lords, I am sorry that the Minister cannot go a little further. However, in his lengthy reply he gave an undertaking for which I expressed appreciation, and he said that discussions and consultations are continuing. I hope that they are going down the road I have tried to pinpoint in the amendment. If he can find the way to the end of that road I am sure that he will receive wholehearted support from all sides of the House. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Caithness moved Amendment No. 156:

Page 56, line 43, at end insert ("and an order under this section may provide that, notwithstanding anything in section 141 of the Law of Property Act 1925 (rent and benefit of lessee's covenants to run with the reversion), any rent or other sum which —

1. (a) arises under a tenancy of any local authority housing or other land transferred to the housing action trust under subsection (1) or subsection (2) above, and
2. (b) falls due before the date of the transfer,

shall continue to be recoverable by the local housing authority or, as the case may be, the local authority to the exclusion of the trust and of any other person in whom the reversion on the tenancy may become vested.").

The noble Earl said: My Lords, this amendment is intended to ensure that there can be flexibility over the treatment of rent arrears debt on the properties to be transferred to a HAT. I hope your Lordships will agree that it is sensible for the Secretary of State to have the flexibility to consider with local authorities the best provision to make for debts such as this. In some cases it will be right for HATs to take on the responsibility. In others the better course may be to leave the responsibility with the local authority.

Leaving the matter open gives an incentive to local authorities to continue to collect rents right up to the date of transfer. I hope your Lordships will agree with me that we want to be able to make the most suitable arrangements for each case individually and will accept the amendment. I beg to move.

Lord Dean of Beswick

My Lords, I have no desire to oppose the amendment. However, I should like to ask the Minister two questions. First, why is it considered necessary to specify this procedure in respect of arrears when Clause 74(4) gives the Secretary of State unlimited discretion to set any financial terms that he thinks fit? The Government throughout our consideration of the Bill have argued consistently against placing details on the face of the legislation, and unnecessarily tying the hands of the HATs and of the Secretary of State in exercising his powers of discretion.

Secondly, what is the Government's view of the effect of the outstanding arrears on the valuation of the HAT stock when considering compensation for local authorities? Would they go so far as to consider the arrears to be an asset or accept that in essence the arrears will be a liability, given the increased problem in arrears recovery that will be created? Will this extra burden be reflected in the compensation to local authorities?

10.30 p.m.

The Earl of Caithness

My Lords, it seems that I cannot win today! I am chastised for not putting details on the face of the Bill, yet the moment that I try to do so the noble Lord asks why I am doing it. I had thought that this would be helpful.

Lord McIntosh of Haringey

My Lords, that is not quite the point. We do not mind if the Minister is doing that, but why does he keep on chastising us for doing it?

The Earl of Caithness

My Lords, it is very clever of the noble Lord to try to turn the argument round in that way, but I do not agree with him.

As to the second point that the noble Lord, Lord Dean of Beswick, raised, this will of course affect the amount of the dowry. It is clearly one of the many considerations that must be taken into account when reaching the valuation. We therefore thought it better to put the flexibility on the face of the Bill.

Lord Dean of Beswick

My Lords, I am terrified of the word "dowry". Does the Minister mean that the local authority will have to meet the dowry when the property is transferred? It could be that a considerable dowry will have to be met by the remaining council house tenants. I have expressed my total opposition to such a dowry having to be met by those long-suffering people. It is grossly unfair on them. However, those are just comments. I do not oppose the amendment.

On Question, amendment agreed to.

Clause 75 [Supplementary provisions as to transfer orders]:

Lord McIntosh of Haringey moved Amendment No. 157: Page 57, line 34, at end insert ("and, notwithstanding the provisions of section 74(4) above, the terms of a transfer under that section shall comply with any representation made by the transferor authority as a result of consultation under this section concerning the date or dates on which any sum payable to that authority is paid.").

The noble Lord said: My Lords, a debate took place in Committee on this subject although not on the same amendment. Amendment No. 157 takes account of the Minister's response to our suggestion that a local authority should be paid in a lump sum on the date of transfer as would be the case if it were a normal commercial transaction. The Minister said that that might not be appropriate. Local authorities might wish not to be paid in one sum. They might find that a staggered payment would he more financially advantageous to them. I do not see that. I do not know in what circumstances people would want deferred payment. unless they were going to receive interest for it.

We have taken the Minister's reply into account in drafting the amendment. We remain of the view that it ought not to be left entirely to the discretion of the Secretary of State to make such financial provision as he thinks fit. If a housing action trust is taking over a local authority estate for payment, we think that the payment should be made in a lump sum or, if the local authority prefers, on a staggered basis. It should be set down how it is to be paid, and the Government should not be free to vary the conditions of payment of their own free will.

The Minister may ask why we are worried. The housing action trust proposals state that £ 125 million will be available for renovation. What they do not say is where the money will come from for the acquisition of the housing action trust area properties themselves. I appreciate that the properties will be disposed of in due course, in whatever short or medium term may transpire, but the money still has to come from somewhere even if the property is being transferred to another local authority.

I am no expert on government expenditure White Papers, but I have spoken to nobody who can find where this provision can be seen in any government budget. We are afraid that the Secretary of State will impose staggered payments on local authorities against their wishes. We are seeking an assurance that that is not the case. Therefore, we ask, first, that the Government confirm that there is no intention of enforcing staggered payments on local authorities if they want the money immediately and, secondly, that the Minister tells the House where in the Government's expenditure plans there is provision for these acquisitions. I beg to move.

The Earl of Caithness

My Lords, I listened carefully to the noble Lord, Lord McIntosh of Haringey, who raised the question of the arrangements for payments for properties transferred to housing action trusts. The best answer that I can give him is that the Secretary of State is already under a duty in Clause 75 to consult the local authority on the properties to be transferred and the terms of the proposed transfer. I think that covers one of the points raised by the noble Lord. He asked whether there would be consultation. Yes, under Clause 75 there will clearly be consultation. The "terms" include the date or dates on which transfer payments would he made. Therefore, the local authority already has an opportunity to put its views on the preferred options to the Secretary of State.

However, where we disagree with the noble Lord, Lord McIntosh of Haringey, is to allow the local authority to determine the date which, in effect, is what the amendment does by taking away the Secretary of State's power to take into account the concerns of both sides— the local authority and the HAT.

As to whether or not the money should be paid in a lump sum, I said that we need flexibility. I give the example of the right-to-buy sales. Your Lordships will be aware that the right to buy is not lost on a transfer to HATs. A local authority might accept a lower sum to begin with in order to receive the benefit of right-to-buy sales in future; that is, as they come through in practice rather than a theoretical assumption as to what they might be.

Lord McIntosh of Harringey

My Lords, I find that reply totally incomprehensible and— to retreat slightly — in so far as I understand any of it I find it totally illogical. First, I was not making any particular point about consultation. I do not deny that Clause 75 says that there will be consultation. However, consultation is not in any way giving the local authority the right to demand a payment as it ought to do in a commercial transaction.

We must remember that we are speaking about compulsory purchase. if a compulsory purchase was made from a private individual or organisation I am sure that noble Lords on the Government side would be standing on their Benches and waving their Order Papers in the air, even in this House, if they thought that compulsory purchase could take place with payment for it being left entirely to the whim of the purchaser and not being given as of right, in a way prescribed by statute, to the person who is being compulsorily purchased out. I cannot imagine any supporter of the Conservative Party who would accept that compulsory purchase could be made without protection for the person who is being purchased out to have a say in the right of payment; otherwise we shall have in effect expropriation, not purchase.

The second point that I do not understand is how the Minister can say that there are two parties who have an interest here, the local authority and the HAT. What interest does HAT have in the terms of payment? The money is being provided to the HAT by the Government, though in what way I was unable to establish from the Minister. He did not answer my question as to where in the expenditure plans of the Government the money for these purchases is to be found. I will gladly give way to enable the Minister to answer that question, of which he did have notice before he spoke. It is my amendment and the Minister will need the leave of the House in order to respond. I hope that he will feel able to do so

The point that I am making is that the HAT does not have a financial interest; the money is coming from the Government. The only people who have a financial interest are the Government, who are enforcing the purchase, and the local authority which is receiving the money. In those circumstances I do not believe that it is consonant with any business principles that I am aware of to leave the expropriator a completely free hand in determining how and when the money shall be paid. I will gladly give way to the noble Earl in order that he may answer my previous question.

The Earl of Caithness

My Lords, I apologise to the noble Lord for not answering the question earlier. With the leave of the House, perhaps I may be allowed to answer it now. The necessary provisions for the financing of the HATs to purchase the area designated. if a purchase sum is required. will be made in the Government's public expenditure plans.

Lord McIntosh of Haringey

My Lords. I am delighted to have that confirmation and also the confirmation that it has not been done so far. I am sure that my honourable and right honourable friends who are concerned with Treasury matters in another place will be very interested to have that reply. It confirms what I was saying more recently; namely, that the HATs themselves do not have any financial interest whatever. It is only the Government, the expropriator, and the local authority which is to receive the money. It seems totally inequitable that the expropriator can determine the financial terms that are provided for in Clause 74(4). What we are trying to put right in this amendment is that quite unequal relationship between the Government and the local authority.

I can see that I am not going to get any further by argument across the Floor of the House and I shall beg leave to withdraw the amendment. I must record that the answer the Government have given is totally unsatisfactory.

Amendment, by leave, withdrawn.

The Earl of Caithness moved Amendment No. 158: After Clause 80. insert the following new clause:

"Consent required for certain subsequent disposals by approved persons

.—(1) If. by a material disposal, a housing action trust disposes of a house which is for the time being subject to a secure tenancy to such a person as is mentioned in section 79(2)(a) above (in this section referred to as an "approved person"), the conveyance shall contain a statement that the requirement of this section as to consent applies to a subsequent disposal of the house by the approved person.

(2) For the purposes of this section a "material disposal" is—

1. (a) the transfer of the fee simple;
2. (b) the transfer of an existing lease; or
3. (c) the grant of a new lease;

and "the conveyance" means the instrument by which such a disposal is effected.

(3) An approved person who acquires a house on a material disposal falling within subsection (I) above shall not dispose of it except with the consent of the Secretary of State which may be given either unconditionally or subject to conditions, but nothing in this subsection shall apply in relation to an exempt disposal as defined in subsection (7) below.

(4) Where an estate or interest in a house acquired by an approved person as mentioned in subsection (3) above has been mortgaged or charged, the prohibition in that subsection applies also to a disposal by the mortgagee or chargee in exercise of a power of sale or leasing, whether or not the disposal is in the name of the approved person: and in any case where—

1. (a) by operation of law or by virtue of an order of a court. property which has been acquired by an approved person passes or is transferred to another person, and
2. (b) that passing or transfer does not constitute a disposal for which consent is required under subsection (3) above,

this section (including, where there is more than one such passing or transfer, this subsection) shall apply as if the other person to whom the property passes or is transferred were the approved person.

(5) If, apart from subsection (6) below, the consent of the Corporation would he required under section 9 of the Housing Associations Act 1985 (control of dispositions of land by housing associations) for a disposal to which subsection (3) applies, the Secretary of State consult the Corporation before giving his consent in respect of the disposal for the purposes of this section.

(6) No consent shall be required under the said section 9 for any disposal in respect of which consent is given in accordance with subsection (5) above.

(7) In this section an "exempt disposal" means —

1. (a) the disposal of a dwelling-house to a person having the right to buy it under Part V of the Housing Act 1985 (whether the disposal is in fact made under that Part or otherwise);
2. (b) a compulsory disposal, within the meaning of Part V of the Housing Act 1985:
3. (c) he disposal of an easement or rentcharge;
4. (d) the disposal of an interest by way of security for a loan;
5. (e) the grant of a secure tenancy or what would be a secure tenancy but for any of paragraphs 2 to 12 of Schedule I to the Housing Act 1985;
6. (f) the grant of an assured tenancy or an assured agricultural occupancy, within the meaning of Part I of this Act, or what would be such a tenancy or occupancy but for any of paragraphs 4 to 8 of Schedule 1 to the Act; and
7. (g) the transfer of an interest held on trust for any person where the disposal is made in connection with the appointment of a new trustee or in connection with the discharge of any trustee.

(8) Where the title of a housing action trust to a house which is disposed of by a material disposal falling within subsection (1) above is not registered —

1. (a) section 123 of the Land Registration Act 1925 (compulsory registration of title) applies in relation to the conveyance whether or not the house is in an area in which an Order in Council under section 120 of that Act (areas of compulsory registration) is in force:
2. (b) the housing action trust shall give the approved person a certificate stating that it is entitled to make the disposal subject only to such encumbrances, rights and interest as arc stated in the conveyance or summarised in the certificate; and
3. (c) for the purpose of registration of title, the Chief Land Registrar shall accept such a certificate as evidence of the facts stated in it, but if as a result he has to meet a claim against him under the Land Registration Act 1925 to 1986 the housing action trust is liable to indemnify him.

(9) On an application being made for registration of a disposition of registered land or, as the case may be, of the approved person's title under a disposition of unregistered land, if the conveyance contains the statement required by subsection (1) above, the Chief Land Registrar shall enter in the register a restriction stating the requirement of this section as to consent to a subsequent disposal.

(10) In this section references to disposing of a house include references to —

1. (a) granting or disposing of any interest in the house;
2. (b) entering into a contract to dispose of the house or to grant or dispose of any such interest; and
3. (c) granting an option to acquire the house or any such interest:

and any reference to a statement or certificate is a reference to a statement or, as the case may be, certificate in a form approved by the Chief Land Registrar.").

The noble Earl said: My Lords, this clause fulfils a commitment given in another place that subsequent disposals of property transferred from housing action trusts to approved landlords should be subject to the Secretary of State's consent. A similar amendment has been tabled to Part V of the Bill and the existing provisions in Part IV have been amended along the same lines.

We are looking for a commitment from those who buy from HATs to provide long-term rented housing for those who need it. We do not expect landlords taking over HAT housing to sell it in normal circumstances because they have that long-term commitment. But, as a back-stop, we also said that we would be taking powers in this Bill to control disposal of property by the new landlord. This clause fulfils that commitment. I beg to move.

On Question, amendment agreed to.

Clause 83 [Provisions applicable to disposals of dwelling-houses subject to secure tenancies]:

10.45 p.m.

Lord McIntosh of Haringey moved Amendment No. 159:

Page 64, line 51, after ("below") insert — ("() informing him of the consequences of more than 50 per cent. of secure tenants to whom this section applies expressing opposition to the proposed disposal.'").

The noble Lord said: My Lords, I speak also to Amendment No. 162. My text for these amendments is the press release issued by the Minister himself on 7th October of this year under the heading: Government promises free choice to HAT tenants.' In this news release the Minister was speaking about choice and the concern that tenants may have about their new landlords when the housing action trust is wound up. It stated: On choice they will he able to refuse any landlord the trust offers if they do not like them and will he free to make their own suggestions — a housing association, a tenant co-operative or back to the council". This was confirmed in a letter from Mr. David Trippier. I understand that the Minister reassured the Conservative Party conference that he is not Mr. David Trippier, which helps any problem of an identity crisis. Mr. Trippier wrote to all tenants in all the HAT areas. In that letter he said: You will be given a choice by the trust about who you would like to see managing your home". I shall come back to that point in a later amendment. He added: The important thing is that your individual choice will be respected. You will be able to refuse any landlord the HAT offers you that you do not like".

Our amendments give effect to the undertakings of Ministers in that news release and that letter. Amendments Nos. 159 and 162 deal with the collective right to refuse a particular landlord if more than 50 per cent. of those affected oppose such a transfer. Amendments Nos. 160 and 161 deal with the individual right of tenants to refuse a transfer if they want to.

It is important to have these amendments not only because the Government have clearly said that tenants have these rights —the statements and new releases are written in much better English and are much more readily comprehensible than legislation usually is—but also because subsection (8) of Clause 83 removes from tenants in housing actions trust areas the protection of the consultation and veto arrangements of Section 105 of the Housing Act 1985. Those provisions apply when a local authority proposes to transfer stock to other landlords. Having removed the provision by dint of subsection (8) of this clause, it is essential that the rights which the Government intend to give to tenants shall also be on the face of the Bill. In those circumstances I do not think we can listen to the usual arguments that the Secretary of State will do it by direction. It is not only that rights are being removed but also that tenants, with experience of dealing with authorities of all kinds— whether central or local government— will not believe in such assurances unless they are on the face of the Bill.

Nothing in the amendments goes against the Government's intentions. We are giving the Government an opportunity to increase their credibility with the tenants in the housing action trust areas and to increase the possibility of co-operation along the lines the Government themselves wish. I cannot see any objection to the Government accepting the amendments. I beg to move.

Lord Monson

My Lords, having strongly supported the Government yesterday evening over Part I of the Bill, I think it will be recognised that it is not out of any partisan spirit that I find myself supporting the noble Lord, Lord McIntosh, over Part III of the Bill. He has made out a most convincing case for the amendments.

The Earl of Caithness

My Lords, there has, alas, been much loose talk portraying HATs as unaccountable. unsympathetic and unresponsive bodies whose primary concern will be to transfer tenants against their will to private racketeers. Nothing could be further from the truth. HATs cannot be set up at the whim of Ministers. It will be Parliament that decides whether to approve the establishment of each and every one of them following affirmative resolution order procedures. It will be Parliament to whom the Secretary of State will be accountable for the performance of HATs. It will, I hope, be local people who will be helping to run a HAT by participating as board members, by becoming involved in managing their estates and by participating in tenants' advisory groups. And it will be tenants to whom a HAT will have to look when it wants to discuss its proposals for the area.

My purpose in saying all this is to remind the House that HATs will be fully accountable bodies working for and with tenants, not against them. I suggest that if noble Lords study the objects of HATs in Clause 63, which the House endorsed without amendment during Committee stage, they will recognise the Government's commitment to improving the quality of life for many thousands of tenants. That commitment carries through into the arrangements for disposals by HATs. When HATs are established, tenants transferring to them will retain exactly the same status and rights as they had as local authority tenants.

When it comes to disposals by HATs we want to ensure that, within the constraints of HATs being short-life bodies to be wound up once their objects are achieved, tenants will have access to a wider range of disposal options. This means the following. All HAT tenants will retain their right to buy which they will retain after transferring to new landlords. Any HAT tenant will be able to take the initiative in finding himself the landlord he wants, either by means of statutory tenants' choice or else by proposing an approved landlord to the HAT. HATs will, as a matter of policy, foster tenant co-operatives and facilitate transfer to them. HATs will have to consult every secure tenant before transferring ownership of their homes to another landlord. And they will have to take into account the wishes of any tenant who wants to return to a willing local authority, propose an alternative landlord or stay with the HAT. When it appears to the HAT that its objects have been substantially achieved, it will give remaining tenants a final choice between as many as possible of approved landlords, including housing associations and tenants' co-operatives, or the local authority if it is willing.

Clause 83 provides the legislative framework for giving effect to this variety of individual choice. Tenants have a right to detailed consultation; a right to receive the information they need to make informed choices; and a right to seek a return to a willing local authority or another landlord or to say that they want to stay with the HAT if they do not like a landlord offered by the HAT prior to its meeting its statutory requirements under Clause 87.

We are committed to seeing that those rights are honoured. We shall make that clear in the Secretary of State's management guidance which will he published. In addition my right honourable friend the Secretary of State has reserve powers of direction to make it stick; and of course disposals will only be allowed if the Secretary of State consents after he has received details of the representations made by tenants about the HATs proposals and a statement of the consideration given to those representations.

It is against that background that I must resist the noble Lord's amendment. I remain of the view, which I expressed in Committee, that it is in tenants' longterm interests that HATs should be wound up once their job is done. They are being established to accelerate improvements in physical, management, social and environmental conditions and to find permanent ways of maintaining these improvements. It would therefore be wrong to introduce provisions in the Bill designed to frustrate that objective. Infinite veto provisions would do just that.

Nor do I accept the noble Lord's argument for amending Clause 83 so that a HAT disposal could not proceed if a majority of tenants were opposed. That is not because I expect HATs to ride roughshod over the wishes of a majority; how could they where so much of their time will be devoted to discussing disposal options with tenants? But there may be disposal proposals brought forward by a HAT, including those based on tenants' own suggestions, which individual residents want to choose. Why should they be prevented by the noble Lord's amendment from transferring to a willing landlord?

And why does the noble Lord seek to include his majority against provision only in relation to a disposal proposed by a HAT and not where, for example, a majority of affected tenants might wish to oppose the return of some of their neighbours' homes to the local authority? He does not seem to want to impose any majority rule there. Nor do we.

I am just a little suspicious that the noble Lord's concern is only with some tenants and some interests. The Government's concern is with maximising all tenants' individual choice within a framework that is consistent with achieving a HAT's objectives.

Lord McIntosh of Haringey

My Lords, the Minister clearly thinks that the soft answer he gave at the beginning of his speech will turn away wrath. He gave us what was not much more than a Second Reading defence of the HAT proposal. I do not intend to follow along that road. If I talk in the context of trying to improve the HAT proposal before us I do so not because I accept the principle of HATs, but because the job of the House is to make such amendments as are appropriate to make the legislation more effective. That is what we are trying to do.

The Minister's more general answers do not help the House to achieve that objective. He has not answered the point I made that Clause 83(8) takes away rights provided in Section 105 of the 1985 Act in respect of consultation and vetoing arrangements. He does not answer that point by suggesting that there should be alternative statutory consultation and vetoing arrangements. All he says is that the Secretary of State will issue guidance or regulations to that effect.

I am sorry, but that will not do. It will not be acceptable to tenants. Let us take the worst possible case. The Minister seems to think that tenants in HAT areas are being manipulated by agitators. He did not use the word and I do not accuse him of that. The Government seem to think that there are people going around HAT areas trying to whip up dissent. Well, they are being given plenty of ammunition by the clause because seeking to replace statutory rights with ministerial assurances is not the way to achieve tenants' confidence.

Lord Harmar-Nicholls

My Lords, is not the noble Lord being unfair? I have listened to many of his arguments on other parts of the Bill. In the past he has said that one of the difficulties about a regulation is that we do not know what will be in the regulation before we pass the legislation. My noble friend has made it perfectly clear that in this regulation that sentence will be put in by the Secretary of State. I have no doubt that it will be inherited by other Secretaries of State. Why does the noble Lord now want to denigrate the value of knowing in advance what the regulation will be by suggesting that it has no real power?

Lord McIntosh of Haringey

My Lords, I am not attacking the Minister's sincerity. I am not suggesting that he does not fully intend to do that. But Secretaries of State and governments change. The reason for having legislation is to deal with the situation that arises when that happens. Guidance and regulations issued by Ministers can also change if their minds change. We have legislation to avoid that problem.

The point I make is that there are protections for tenants in the 1985 Act. Those protections are being removed by the clause and they are not being replaced by anything else. One point that the Minister has, which I shall have to read more carefully, is when he argues about us being selective in the exercise of the collective right to object to a disposal. I am not sure that I fully take in the point that he makes about 50 per cent. preventing their neighbours from returning to a local authority, but it deserves enough thought to justify me in withdrawing the amendment. I do not believe that that applies to the amendment about the individual right of choice that I shall move in a minute, but I have no doubt that he will come up with something else to deal with the problem.

The Minister has not satisfied me that the Government are prepared to give the assurances in legislation which they have given in their news releases. Tenants and tenants' organisations will not be satisfied with the response that has been made today. They will feel that there will inevitably be a diminution in the effectiveness of the assurances which the Minister and Mr. Trippier gave in their news release of 7th October. That is undesirable. It will cause great difficulty for the Government when they seek to achieve tenants' co-operation in HAT areas. They would be well advised to reconsider their approach to the matter. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

11 p.m.

Lord McIntosh of Haringey moved Amendment No. 160: Page 64, line 51. after ("below") insert— ("() informing him of his right to refuse to become a tenant of the person to whom disposal is proposed and of his right to make representations to that effect under paragraph (f) below.").

The noble Lord said: My Lords, I separated these amendments for debate today because I thought that, although the argument is clearly closely related to the previous argument and still depends on the news release issued by Ministers on 7th October, it is sufficiently different to justify a separate discussion and certainly sufficiently different to justify a different reply from the Minister. The reply that he gave us on the previous amendments was not that our amendments were in conflict with the undertakings that he gave in the news release. Not at all. What he said was that there were complications about the particular form of collective right to object which we were proposing in Amendments Nos. 159 and 162.

Those objections do not apply here. These amendments are very specifically and directly based on the undertakings already given by Ministers. There cannot be any rational reason for not agreeing that the objections should be confirmed in Parliament today. We obviously prefer those undertakings to be confirmed in legislation and we believe, as I have said, speaking to the previous amendment, that this should be done by means of the amendment which we have put down to the Bill. We think we are helping the Government's purposes in moving these amendments and we hope very much that the Minister will feel able to accept them. I beg to move.

The Earl of Caithness

My Lords, I am afraid that I am slightly confused. I do not know where something went wrong which perhaps ought not to have gone wrong. I answered, I thought Amendments Nos. 159 to 162 together because I thought Amendment No. 159 would go with Amendment No. 161. Then when the noble Lord mentioned Amendments Nos. 159 and 162, I thought he was lumping all four together.

Lord McIntosh of Haringey

My Lords, we appreciate that the groupings have no statutory force and that they are only advisory. However, the grouping, on our insistence in the course of this morning, was changed so that Amendments Nos. 159 and 162 were taken together and Amendments Nos. 160 and 161 were taken together. We agreed with the department's wish to take Amendments Nos. 166 and 167 separately.

The Earl of Caithness

My Lords, that is exactly the point. I thought Amendments Nos. 159 and 161 were going together, whereas the noble Lord spoke to Amendments Nos. 159 and 162 together.

Lord McIntosh of Haringey

My Lords, there has clearly been a misprint here. Amendments Nos. 159 and 162, I think, quite clearly refer to the collective right to withdraw, and Amendments Nos. 160 and 161 refer to the individual right to withdraw. If we have agreed to a wrong grouping, I apologise, but I think that the noble Earl will agree that that is the commonsense grouping.

The Earl of Caithness

My Lords, I was only seeking to say to the noble Lord that I think I covered all four amendments when I spoke before. The noble Lord said that the amendments were very much on the same issue. I appreciate that he notified my office of the breaking up of these four into two groups. That is obviously right from his point of view. The Government's position is very clear. HATs will be fully accountable bodies, working in the best interests of the local people. They are not, as some misleading propaganda being circulated suggests, being set up to sell the homes of tenants over their heads to private landlords.

The object of HATs, as Clause 63 clearly states, will he to improve existing conditions and provide greater choice and opportunities in the future. I am delighted that the Opposition now acknowledge that HATs could bring improvements. I can remind the House that the noble Lord, Lord McIntosh of Haringey, has indicated that he is not opposed to housing action trusts in principle.

Lord McIntosh of Haringey

My Lords, I am sorry, I know that this is Report stage, but I specifically refused to do either of those things. What I said was that in order to soften the debate, and I do not blame him for that, the Minister had made another Second Reading speech about the housing action trusts. I specifically said, and the record will show, that I was not commenting on the general issue of housing action trusts. I was doing our legislative duty by trying to improve the housing action trusts which are proposed by the Government. If the Minister reads the Official Reporttomorrow, he will agree that I made no such concession in what I said this evening.

The Earl of Caithness

My Lords, I shall read with care what the noble Lord said. But I understood him to say at an earlier stage that he was not opposed to HATs in principle in view of the good that they could do.

The noble Lord's amendment which we are now discussing would, I believe, frustrate the very objects to which noble Lords agreed when they endorsed the HATs statutory objects without amendment in Committee. Our concern is to ensure that all tenants have maximum opportunity to express their individual choice within a framework that is consistent with the objective of winding HATs up once their statutory objects have been achieved.

I believe that we have done just that. I am very happy to stick by the news release, which the noble Lord cited, of 7th October. I can tell the noble Lord and other noble Lords that that release has received some very favourable comments from tenants who were pleased that we were able to clarify the two points that were of concern. I believe that the noble Lord's amendment runs contrary to what was agreed earlier.

Lord McIntosh of Haringey

My Lords, I do not at all know what was agreed earlier. But if the Minister is now confirming the terms of the release which state that: On choice they will he able to refuse any landlord the Trust offers if they do not like them and will be free to make their own suggestions", and if he is confirming the words of Mr. Trippier as follows: You will be able to refuse any landlord the HAT offers you that you do not like", it is valuable to have that mentioned on the Floor of this House as well as in a press release. I should be grateful if the Minister would now, in terms, confirm what he and Mr. Trippier said.

The Earl of Caithness

My Lords, with the leave of the House, what we have said is that we are all for giving tenants the choice that they need. What we must not do is get ourselves into a situation where tenants can consistently veto the winding up of a HAT, because a HAT will be a short-term project in order to upgrade the whole of the area in which tenants live. It will then move out to allow tenants to have a landlord other than the HAT. It could be the local authority from whence they came, if the local authority is willing; it could be a community-based housing association; it could be a co-operative; or it could be an approved landlord.

Lord McIntosh of Haringey

My Lords, we shall have to pour over that submission word by word. But my reading of it is that it is not the same as what was stated in the press release. I remind the House that we are not talking about a collective veto. We are not talking about 50 per cent. of tenants. We are talking about Amendments Nos. 159 and 162. We are talking about an individual veto. To me the news release promised an individual veto; the Minister is saying something different.

The Minister is making a rod for his own back. That will rebound on him and he will lose the confidence of tenants unless he is able to confirm, without any equivocation whatever, what was said in the news release. He is quite right in saying it had a good press. It deserved a good press. What he will get out of this exchange is a very bad press unless he is prepared to go further than he has done.

We may well have to return to this matter on Third Reading, if only to protect the Government's own credibility, and to protect the interests of tenants who will certainly feel that they have been misled by what was said on 7th October. With that prospect I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 161 and 162 not moved.]

Lord McIntosh of Haringey moved Amendment No. 163: Page 65, line 29, at end insert— ("() Where a disposal is made to a local authority under this section, the Secretary of State shall increase the amount of expenditure prescribed under Part VIII (Capital Expenditure of Local Authorities etc.) of the Local Government, Planning and Land Act 1980 for the said authority by an amount equal to the difference between the price at which the said disposal is made and the sum equal to that part of the sum paid to the local authority as a result of the transfer of the property under section 74 of this Act which the local authority was authorised by the Secretary of State to use for the purpose of incurring capital expenditure.").

The noble Lord said: My Lords, this amendment deals with the situation where a tenant has chosen to return to a local authority. Let us accept it is common ground that that is a possibility, and that the local authority agrees to have him or her back. The amendment says that if that is to be a reality not only must it be provided for in principle but the money must also be provided for.

In our interpretation of the press release we have been encouraged by the statement on page 2 that David Trippier: is writing to the local authorities concerned to tell them that additional borrowing approval will be granted by the Government to enable them to bid for the HAT property when the Trust has completed its improvement work. By doing this the Government is ensuring that where tenants express a wish to return to the local authority the Government is not standing in the way of the council in responding to that wish". We agree. We believe that that is the right thing to do and that tenants will think the same. We think that the way to ensure harmony between the Government and tenants is to accept the amendment and put the undertaking which has already been given on the face of the Bill. I beg to move.

The Earl of Caithness

My Lords, if the House will permit me, I should like to clarify one point in relation to the previous amendment. As I understand it, the noble Lord, Lord McIntosh of Haringey, said tonight that he opposed HATs in principle.

Lord McIntosh of Haringey

My Lords, I have made no statement in principle tonight about HATs and it is not my intention to do so. What I said about HATs at Second Reading is on record and I shall not go back on that.

The Earl of Caithness

My Lords, the noble Lord chastised me for what I said about him. I now have the quotation from the Official Report of 28th July, when he said: Indeed we do not oppose them in principle". That was why I was surprised that the noble Lord should have picked me up when I said that he had agreed that HATs were acceptable in principle. I have again looked at the press release to which he referred before withdrawing the amendment and I stick by the wording in it. It gives tenants the opportunity to make representations about an alternative landlord to that proposed by a HAT.

In relation to Amendment No. 163, the noble Lord was quite right to draw the attention of the House to the press release of 7th October. My honourable friend the Parliamentary Under-Secretary of State said in his letter to the leaders of the local authorities concerned that authorities in the HAT areas which wish to repurchase HAT property when the trust has completed its improvement work will be given the necessary credit approvals to enable them to raise sufficient funds for this purpose. Under the proposed new financial system this means that a supplementary credit approval would be issued. Unless the local authority is clearly in a position to raise part of the costs from within its exisiting credit limit or from its own resources, the credit approval would cover 100 per cent. of the purchase price.

That relates to the second part of the press release. In the light of that commitment I hope that the noble Lord will be able to withdraw the amendment.

Lord McIntosh of Haringey

My Lords, I cannot claim the detailed knowledge of the status of credit approvals which I ought to have in order to make a final judgment. I am grateful for the Minister's confirmation that the letter which had been promised in the press release has been sent out. I shall certainly want to consult with the leaders of the councils which have received that letter and with their local authority associations. If, as I hope, the Minister's assurances cover all the points which I have raised in moving this amendment, I shall very happily acknowledge that and not return to the matter at a later stage. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

11.15 p.m.

Clause 86 [Agency agreements]:

Lord McIntosh of Haringey moved Amendment No. 164:

Page 66, line 31, at end insert— ("() Where the functions to be exercised under a proposed agreement include those concerning matters of housing management, the Secretary of State shall not give his approval under subsection (1) above unless he is satisfied that a majority of the tenants of the housing action trust who are likely to be affected by the proposal agree with the terms of the proposed agreement.").

The noble Lord said: My Lords, in moving Amendment No. 164, I should like to speak also to Amendment No. 165. We are now dealing with Clause 86 of the Bill. It is concerned with agency agreements for the management of the housing action trusts and again is a matter referred to in the news release of 7th October.

I have already quoted Mr. Trippier's letter, but I think it is necessary to quote it again. He said: You will be given a choice by the trust about who you would like to see managing your home". It did not say "You will be consulted by the trust" but "You will be given a choice by the trust". There is a very clear distinction between consultation and being given a choice, which to me certainly means that if the tenants do not like the proposals they can veto them.

At this hour of the night I do not think that it would be appropriate to go into the detail of the amendments, though of course I shall respond to any points that the Minister feels it necessary to make. We seek confirmation of what Mr. Trippier said in that letter; namely, that it is not just a matter of consultation but that tenants will be given a choice about whom they would like to see managing their homes under the agency agreement provisions in Clause 86.

As with the previous amendments, this is again a separate point but a related one. It is in the interests of all concerned when the matter is being dealt with in such detail on the face of the Bill, because this is not a matter that will be left entirely to regulation and one cannot make that accusation. The Bill is extremely detailed on agency and management agreements. What we want now is for this clause to confirm what the Parliamentary Under-Secretary of State said in his letter to tenants. I beg to move.

The Earl of Caithness

My Lords, the noble Lord, Lord McIntosh, read one sentence from the letter sent by my honourable friend. If he had read the next phrase I think that it would have helped him. I shall read it to him. It says: and you will be able to make your own suggestions". I think that that goes a long way to meeting the concerns of the noble Lord.

I am afraid I cannot agree that the provision in this amendment requiring the Secretary of State not to give his approval to any agency agreement unless there was a tenant majority in favour of it should be applied to HATs. The reason for this is that we are concerned about deliberate obstruction tactics. Once HATs are established, if Parliament agrees the necessary orders, they will want to proceed with their work in the most efficient and effective manner in order to bring tenants the benefits from the extra resources that the Government are making available.

We know that there are people who oppose HATs on principle. Some have said they will try to make HATs unworkable. It would be a shame if HATs were prevented from achieving their objectives as a result of deliberate obstruction. Those opposed to HATs in the first place would simply argue that their case had been proven; and tenants who were caught in the middle would not get the benefits.

I am anxious that we should have genuine consultation with tenants. It is therefore our firm intention to require HATs to carry out full consultation with the tenants on agency agreements. We propose to achieve this through the Secretary of State's management guidance to HATs, which will be published. We would back this up, if necessary, by a direction under the Secretary of State's general direction-making power in Clause 72. And when a HAT comes to the Secretary of State for approval to its proposed agency agreement, he would take the views expressed by tenants into account before giving approval to the proposal.

I believe that reflects our commitment to make HATs work with and for tenants. I hope that that explanation will reassure the noble Lord.

Lord McIntosh of Haringey

My Lords, that is a very significant and disturbing retraction of what was said as recently as this month by the Parliamentary Under-Secretary of State in a letter to all tenants. I repeat that the Parliamentary Under-Secretary said: You will be given a choice by the trust about who you would like to see managing your home". He did not say, "You will be consulted" but "You will be given the choice". What does that mean except that they will have the right to decide'?

I am happy to confirm that the succeeding words are: and you will be able to make your own suggestions". That is the answer to the Minister's own point, that it may be used to obstruct agency agreements. What the Parliamentary Under-Secretary of State was saying was that constructive suggestions will be welcomed. We agree with that. We think that is exactly what the position should be.

The Minister is now saying—and if the record proves that I am wrong again I shall humbly withdraw this—that choice means consultation. I do not believe that choice means consultation. I do not believe that what the Parliamentary Under-Secretary of State spoke about was consultation. I do not believe that tenants will feel anything other than that there has been a turning back from the commitments made in public by a member of the Government in the course of this month. I am glad to give way.

Lord Harmar-Nicholls

My Lords, the noble Lord is exaggerating the point. If it is agreed that one will have a choice, and on the same undertaking it is said that one's suggestion will be listened to, that is consultation in practice. If it is not, I do not know what consultation means.

Lord McIntosh of Haringey

My Lords, it does not say that one's suggestion will be listened to. It says "You will be able to make suggestions". In commonsense English it means that the tenants are given a choice. If they do not like one choice they can reject it and can make their own suggestion. That is not the same as consultation. That means that they can reject what they do not like. Consultation does not mean that. I leave it to the record to confirm what I am saying.

There is a huge difference between the right of choice and the right to be consulted. It is absolutely fundamental to the way in which we deal with individual citizens and organisations of citizens in our society.

The Earl of Caithness

My Lords, I am grateful to the noble Lord. With the leave of the House, I hope that the noble Lord will wish to clarify matters for tenants. I fear that some tenants will be rather confused when they read the Official Report. I think that the noble Lord has misrepresented that letter because it was not about agency agreements, which is the purpose of this amendment.

Lord McIntosh of Haringey

My Lords, the letter is about who will be managing their homes. One of the ways in which the homes will be managed is by agency agreement. If agency agreements are to be imposed on the management of homes after consultation, despite the results of the consultation—and that is possible, from what the Minister has said—then we are going back on the undertakings given by the Parliamentary Under-Secretary of State.

It is twenty past eleven at night. We shall not be able to pursue this matter. It is a very serious matter and one which we shall not be able to let drop. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 165 not moved.]

Clause 87 [Dissolution of housing action trust]:

[Amendments Nos. 166 and 167 not moved.]

Clause 89 [Information]:

Lord McIntosh of Haringey moved Amendment No. 168: Page 68, line 8, at end insert ("and its officers").

The noble Lord said: My Lords, in moving Amendment No. 168 I should like to speak also to Amendment No. 169. This is a matter that we discussed in Committee on a different amendment. In this amendment—and I believe that it is entirely in accordance with the procedures of this House—we seek to take into account the reaction of the Government to our previous amendment and to try to come up with something that achieves our objectives while overcoming the objections of the Government.

To summarise the issue very briefly indeed, the Act says that individual officers of a local authority can be required to give information regardless of grade or to hand over documents to the Secretary of State to enable him to implement the HAT proposal. We are not saying that the Secretary of State should not have from local authorities all the information that he needs to implement the HAT proposal.

This is not an anarchic suggestion that we are making. We are saying that the chain of authority within local government derives from the chief executive or the most senior officer responsible. Individual officers in the department are responsible to their chief officers and chief officers are responsible to the chief executive appointed by the council. Therefore if authority is to be given to officers and if officers are to be required to provide information to the Secretary of State, that should be done by the authority of the chief executive of the council.

I still feel that the answer which the Minister gave shows a complete misunderstanding of the nature of the chain of command in local authorities. I do not believe that he answered adequately the previous amendment. What he said in Committee was: Clearly the wording is important, and clarifying the wording of legislation is one of the roles that this Chamber fulfils extremely well."—[Official Report, 27,7/88: col. 472.]

The Minister said that he would take the matter away and look at the precise wording in order to meet my concerns. He has not done so. I raised the matter with him between Committee and Report stages. The response, made with his usual courtesy, was that he did not see there was any problem here. We believe that there is still a problem and that it has to be dealt with by reasserting the position that the officers of a local authority are collectively responsible to their chief officer. We are doing something more modest and uncontroversial in seeking to add after "authority" the words "and its officers". We believe that this meets the Government's intentions and helps to preserve the position of responsibility of council officers to their chief executive. We hope that it is acceptable to the Government, even though they have not felt able to put down their own amendment. I beg to move.

The Earl of Caithness

My Lords, as many people involved in housing action trusts will read with great care the Official Report, I think it is right, even at this hour, that one is not misrepresented and that a clear record is there for people to read. The letter which the noble Lord referred to on the last amendment is about the arrangements for the disposal of properties by a HAT. It does not relate to agency agreements, as the introductory sentence in paragraph 3 of the letter makes clear. I feel that it is important that I get that on the record.

The noble Lord, Lord McIntosh of Haringey, is right in saying that on 27th July at Committee stage I said that I would read carefully what he had said. However, I did not give a commitment that I would come back to the matter because I needed to have a further look at it before I made up my mind. The noble Lord is right in saying that we discussed this when we met. I can assure him that I have looked carefully at the provisions of Clause 89 to see whether they require any amendment in the light of the points that he raised in Committee and again when we met the other day.

The noble Lord's first concern was the drafting of Clause 89. It may help if I explain what we are seeking to achieve with this clause. We are trying to ensure that the Secretary of State can obtain the information necessary to help him to decide whether to seek parliamentary approval for the designation of a HAT area and, where HATs have been designated. determining whether he should exercise any of his other powers under this Bill enabling him to pass information on to a FIAT to help it to carry out its functions. There are various types of information which might be required—details of contracts which affect the transferred properties, for example, or the existing arrangements for various services. The Secretary of State would need access to such information to make sensible arrangements for transfer and to help the HATs, as new landlords, to manage the properties properly.

The noble Lord has pointed out that Clause 89 is more specific than Section 5 of the Local Government (Interim Provisions) Act 1984. That is true. I understand that the clause also draws in the provisions of the Housing Act 1985, in particular Section 169. The point of doing this is to make it clear in what form the information the Secretary of State may require may be. Clause 89(2) puts an onus on every officer who has custody or control of any relevant document or is in a position to give information to which the notice relates to take all reasonable steps to ensure that the notice is complied with. This avoids any argument about the mechanics of compliance with a notice which is not addressed to a specific officer. It is also an important safeguard for officers who are under a clear legal duty to comply with the notice if they have the required information. That could help them to deal with any pressure which may be exerted on them. I hope that the noble Lord, Lord McIntosh, will understand that fact and the safeguard that this provides for them.

Lord McIntosh of Haringey

My Lords, I understand what the Minister has said, although that does not mean that I agree with it. The Secretary of State takes responsibility for the actions of the officials in his department. In legislation we do not say that any official in the Department of the Environment shall provide to any outside body information required by statute. We say that the Secretary of State shall provide it and, through his officials, it is his responsibility to secure that that information is provided in accordance with statute.

That ought to apply in local authorities. We ought not to be departing from that principle. We ought not to be intervening in the command structure of local authorities in the way that we are. It is because of the Government's paranoia about obstruction in local authorities that we find ourselves in this unpleasant and unfortunate position.

I am sorry that we end on a note of strong disagreement at the end of an evening's proceedings. However, I have been deeply dissatisfied with the responses given by the Government in the last three-quarters of an hour. There are many matters to which we must return at a later stage and to which we must give wider publicity. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 169 not moved.]

The Earl of Arran

My Lords, I beg to move that further consideration on Report be now adjourned.

Moved accordingly, and, on Question, Motion agreed to.