RIGHT CONFERRED BY PART III (Hansard, 29 March 1988)

§ Mr. David Steel (Tweeddale, Ettrick and Lauderdale)
I beg to move amendment No. 129, in page 31, line 10, leave out 'one-third' and insert 'one-fifth'.

Mr. Deputy Speaker
With this it will be convenient to consider the following amendments: No. 130, in page 31, line 13, leave out 'and' and insert 'or'.
No. 131, in page 31, line 13, leave out `and the Secretary of State is satisfied that an unreasonable proportion' and insert 'or one-tenth'.

§ Mr. Steel
I realise that at this hour of the morning the House will not wish to have a long debate on the problems of housing in rural areas. If the Government had followed their logic correctly, part III of the Bill would not have applied to the district councils covering the rural areas. The Government have said all along that part III is aimed principally at the large inner city and peripheral housing schemes. Nevertheless, in drafting the Bill, the Government accepted that some special provision should be made for the smaller local authorities in the rural areas.
When the Bill was first published it contained provision that if a rural housing authority lost one third of its housing stock through council house sales and/or tenancy transfers, the Secretary of State could place before Parliament an order forbidding any future sales or transfers in that district or islands area. Our criticism was that it was left to the Secretary of State to define a rural area and there was no certainty that he would act once the one third threshold had been reached.
I understand that in Committee my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood), to whose industry in Committee I pay deserved tribute, moved amendments that sought to define a rural area more precisely or, alternatively, would have obliged the Secretary of State to lay an order as soon as the threshold was reached.
The Government rejected both amendments as being arbitrary and restrictive. The Committee accepted a Government amendment which, it was claimed, would allow an order to be placed sooner if "an unreasonable proportion" of the transferred houses ceased to become principal residences—for instance by becoming holiday 1035 homes. In other words, these houses would be removed from the figure for the total original district council stock used to calculate the one third threshold.
The problem with that Government amendment is that on closer examination it becomes clear that, however conciliatory the Government were trying to be, the effect of the amendment was to tighten rather than loosen the conditions for the banning of further transfers or sales. That is because the use of the word "and" in line 13, clause 53(6) means that only when the one-third threshold has been reached and an unreasonable proportion of houses have changed usage will an order be possible. If, for example, one third of the authority's housing stock has changed hands but not very many houses have become, for instance, holiday homes, there would be no order. Therefore, a bad clause has been made worse.
The purpose of amendment No. 130, which I hope that the Minister will accept, is to replace the word "and" by the word "or" so creating an additional possibility for granting an order to prevent further transfers or sales. This would bring the clause in line with the Government's intention as stated in Committee.
On amendment No. 129, small local authorities are those that can least afford the loss of houses from their council stock, because there is often a paucity of provision in those areas. The one-third threshold is considered to he too high, even though it is a concession not granted to most local authorities. Amendment No. 129 seeks to replace the one-third requirement by a less damaging one-fifth limit. There is at least some prospect that that limit might be reached and some protection given to these authorities.
The Ettrick and Lauderdale district council has argued with me that by the time the one-third limit was reached, a council's housing capabilities would be too severely weakened for proper provision to continue. I hope that the Minister will accept that a one-fifth statement in the Bill would be much more realistic.
On amendment No. 131, the Secretary of State's powers under the Bill are extensive, and an example of that is his right to define what is meant by an unreasonable proportion of houses being resold and ceasing to be used as principal places of residence. Our amendment takes out that phrase and sets one tenth as the level at which the Secretary of State must lay an order to prevent further house transfers in rural areas. That also follows the argument that I used in support of amendment No. 130.
I hope that, taken together, these three amendments will appeal to the Minister as being reasonable to meet the strong objection of the housing authorities in rural areas and will be closer to meeting the Government's intentions than was their original drafting in Committee.

§ Mr. Home Robertson
We take the view that part III of the Bill is a totally unwarranted and unbalanced interference in housing legislation, which is simply designed by the Government to enable private landlords to acquire chunks of potentially lucrative and valuable property at a knockdown price from local authorities.
The right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel) is right to draw attention to the fact 1036 that the measure could have a particularly disruptive effect on rural communities in Scotland, many of which have already seen the loss and depletion of a significant amount of their public sector rented housing stock, which makes it far too difficult for local people in those neighbourhoods to rent housing. They find that the housing stock has all been bought up or sold off to holidaymakers.
The right hon. Gentleman rightly said that this may not be the most appropriate time of night to be discussing the matter. We intend to return to the generality of part III when the debate resumes, but I certainly support the principle behind the point that he makes.

§ Lord James Douglas-Hamilton
I listened with care to the right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel), who put his case persuasively, and I hope that I shall be able to reassure him.
Two procedures must be followed before the Secretary of State can designate an area as a rural area and exempt houses from the tenants' choice provisions in part III. First, as the right hon. Gentleman said, it is a necessary condition that one third of the total public sector housing stock in the area before the right to buy came into effect should have been sold, either under the right to buy or under tenants' choice or otherwise. Amendment No. 129 suggests that the figure should be reduced to one fifth. Secondly, the Secretary of State must consider whether, in his view, an unreasonable proportion of the houses sold have been resold and are being used as holiday homes.
I know that strong views have been expressed that it would be so difficult to satisfy both those criteria that, in practice, no designation orders will be made. Ettrick and Lauderdale district council was good enough to send the Scottish Development Department a copy of the notes that it made available to the right hon. Gentleman. The provisions in clause 53 and in the right-to-buy provisions in the 1987 Act are more flexible than the right hon. Gentleman or the district council concerned may realise. As I said in Committee on 25 February, the word "area" in line 44, page 30 of the Bill, is not defined. That is deliberate. The intention is that "area" can mean, for example, the full area of a particular district council, such as Ettrick and Lauderdale, or a parish, town or village.
The first criterion that must be met before a designation order can be made—that one third of the houses in the area have been sold — prevents much less difficulty, given that the area in which the threshold must be reached can be flexibly defined.
The provisions are reasonably and workable and I give the right hon. Gentleman my assurance that my right hon. and learned Friend the Secretary of State and I will consider carefully any applications received from local authorities for the areas to be designated under the provisions. Each application will be considered on its merits. With that assurance, I hope that the right hon. Gentleman will not press the amendment.