MANAGEMENT AGREEMENTS

HC Deb 14 June 1993 vol 226 cc690-9

Lords amendment: No. 175, in page 116, line 39, leave out from beginning to ("there") in line 40 and insert

("At the end of subsection (3) of section 27 of the 1985 Act (management agreements), there shall be inserted the words "and shall contain such provisions as may be prescribed by regulations made by the Secretary of State".

(1A) For subsection (5) of that section")

Motion made, and Question proposed, That this House doth agree with the Lords in the said amendment.—[Sir George Young.]

Mr. Deputy Speaker (Mr. Michael Morris)

With this it will be convenient to discuss Lords amendments Nos. 182 and 183.

Mr. Straw

These amendments and amendment No. 181 involve compulsory competitive tendering for housing management. Therefore, it may be for the convenience of the House if I address my remarks to both groups of amendments. I hope that the Minister agrees. I congratulate him on his elevation to Her Majesty's Privy Council.

One of the major contentions between the Opposition and the Government when the issue was discussed earlier was the fact that the Government proposed to enforce compulsory competitive tendering for housing management and to remove the tenants' right of veto which they possessed under section 27 of the Housing Act 1985. Under that Act, they had the power to veto a change in the management of their housing. The matter was considered at great length in Committee, in the House and in their Lordships' House.

With one exception—which is dealt with by Lords amendment No. 181—the Government stuck to their original position. They went through the rigmarole of explaining why a tenant's right of veto was no longer necessary and why, if it was necessary, the tenant's veto would be dealt with through other means. The Government did not offer much clarity over whether they wanted the veto or not.

The Government first claimed—as Lord Strathclyde did in another place—that the veto was unnecessary because there was no proposal to change the landlord's or the tenant's basic rights under compulsory competitive tendering for housing, whereas there would be proposals to do so in the parallel cases involving housing action trusts or large-scale voluntary transfers.

Our view, which I believe was widely shared in the other place, was that, in practice, a competitive tendering process that led to the management of housing responsibilities being transferred to a private company involved at least as substantial a transfer as a large-scale voluntary transfer—which usually results in transferring responsibility for housing management to the same people as before. In a sense, it is in practice a larger transfer than that which is occasioned under a housing action trust, where tenants now have the right to go back to the local authority at the end of the period.

Having dealt with that point, Ministers in another place argued that the veto was unnecessary, as tenants were being given better rights to consultation and involvement. I am always very suspicious of such arguments. I am always suspicious when a categorical right is removed, when one hears weasel words from Ministers—even words as elegant as those that dropped from the lips of the now right hon. Gentleman. Ministers may admit that a specific right is indeed being taken away but say that anyone going through the small print will see that tenants may be consulted. The truth is that tenants will no longer have the clear veto right that they enjoy under the current law. We believe that that right should be continued.

We believe that the determination to remove tenants' veto rights in respect of housing management—rights that are enjoyed in respect of compulsory competitive tendering and large-scale voluntary transfers—springs from the fact that the Government attach much more importance to the privatisation of public services than to the protection of tenants' rights.

In these debates we have tried to flush out the rights to which Ministers give priority. Do the Government regard as more important the right of tenants to a say in the running of their estate or the right of private firms bidding for the management of local authority housing stock? If there is a conflict, does profit come far above the rights of tenants? I am not suggesting that this is necessarily the Minister's own view. Indeed, it is likely that, if he were in control of Government policy, he would have scarcely nothing to do with privatisation and the rest of the now-rotting Thatcherite agenda, to which he is tied. In fact, we saw his attitude when the lady was still in office. As a Minister, however, he has to support pernicious nonsense of this type.

7.30 pm

Lords amendment No. 181 deals with management agreements and compulsory competitive tendering. The Government's concession is that the new clause imports into the Bill the provisions of section 27A of the Housing Act 1985, which previously had been removed altogether. At first glance, this is certainly progress and represents Ministers' recognition of the force of our argument. However, we still have very considerable anxiety about the operation of this provision, and I hope that he will be able to put our minds at rest.

Our first anxiety concerns the breadth of the power being given to the Secretary of State under what will be section 27A(2) of the 1985 Act, which might be described as a Henry VIII provision. Subsection (2) provides: The Secretary of State may by regulations provide that … the provisions of section 27A shall have effect with such modifications as appear to the Secretary of State to be necessary or expedient. The Secretary of State is being given power to use subordinate legislation as a means of modifying a provision of an Act. Both Houses of Parliament have always been extremely reluctant to give a Secretary of State power to amend primary legislation by edict unless the circumstances are very clear.

Some hon. Members will remember the debates on the provision that started out as clause 222—but ended up as something different—of the Education Reform Bill of 1988. In that case, the Secretary of State was given power to amend employment legislation very widely by regulation and without further notice to the House. In what respect is it intended that section 27A of the 1985 Act shall be modified? It is important that hon. Members know what is being talked about when they are invited to accede to Lords amendment No. 181.

The second issue concerns the extent of management agreements and the application of section 27A to compulsory competitive tendering. My understanding of the proposed section 27AA is that the tenant's right of veto will operate in respect of management agreements. It seems to me that, where there is a voluntary arrangement for the management of a local authority's housing stock, it will be subject to a tenant's veto. Perhaps the Minister will be able to clarify something about which I am not clear. If there is a compulsory arrangement, will section 27A apply? In this context, I hope that the Minister will be able to define "management agreement" and say whether such an agreement includes the notion of a service agreement.

The right hon. Gentleman will know that there has been some argument about this matter. My understanding is that Rutland and Brent have sought to evade the more stringent procedural requirements by defining as service agreements those that amount to management agreements. That practice is unacceptable to us, and I hope that it is unacceptable to the Minister. If, under Lords amendment No. 181, tenants are being given a right that some local authorities are able, with malign intent, to evade by means of such redefinition of agreements for the purposes of the veto, that will defeat the object and frustrate Government policy by the back door.

I may want, with the permission of the Chair and the leave of the House, to return to this issue after the Minister's reply.

Sir George Young

The hon. Member for Blackburn (Mr. Straw) has raised a number of issues—the tenant's veto, compulsory competitive tendering for housing management, and some technical matters relating to Lords amendment No. 181. He drew on an article in the 21 May issue of Inside Housing.

Mr. Straw

No.

Sir George Young

That was certainly the source, although the hon. Gentleman did not refer specifically to it.

The tenants' veto was a matter that we spent some time discussing in Committee. I do not thing that this issue has exactly set the country alight since January. Tenants now have a deeper understanding of what the Government plan to do. The veto question concerns the removal by the Bill of the requirement on the Secretary of State to withhold his approval of a housing management delegation if it appears to him that a majority of tenants in the area to which the agreement relates do not want to proceed with it. We must keep in mind the new environment in which housing management agreements are now being sought. Full consultation with tenants will be standard; tenants are increasingly involved, often seeking to manage their own homes. Local authorities are also actively looking for new ways to deliver services and looking to the private sector to help them with that.

All these developments are good for housing management and, above all, for tenants, many of whom enjoy the benefits of improved and more cost-effective services. In addition, there will be housing management compulsory competitive tendering, which is, in effect, being introduced under the Local Government Act 1988. When a local authority intends to keep its housing management in-house, it will have to follow a competitive process.

I was asked what would happen if there were a conflict between tenants' right to manage and CCT. The answer is that if tenants want to take over responsibility for management, that takes precedence. The local authority then does not have to pursue CCT. Tenants can take over responsibility for managing their estate—there is provision for a break clause in any existing agreement—so to that extent, they take precedence over CCT.

The effect of CCT—

Mr. Straw

I am grateful for that undertaking. Under the Bill, tenants have no right of veto over candidates in the competitive process—is that right?

Sir George Young

The hon. Gentleman is right, but there will be much more tenant involvement and consultation than at present. For instance, tenants will be consulted on specifications and they will be involved in monitoring the contract. We are trying to build a constructive, on-going, meaningful relationship between tenants and local authorities, rather than using the blunt instrument of a veto.

Tenants will have rights to consultation on the terms of management agreements, including those resulting from CCT. Local authorities will have to consult tenants on the standards of service proposed—for example, on the specification for the delegation. The authority has to consider the tenants' representations before it can make any decisions on the terms—that is, before it can invite tenders. Tenants will be involved in monitoring a contractor's performance, and the Secretary of State can also say in more detail how that consultation should be run.

The Government's case is that this represents an extensive package of rights, which give tenants a good opportunity to influence the management of their homes in a positive and beneficial way. That is more meaningful than giving them a rather blunt choice between yes or no at the end of a process.

Mr. Battle

What the Minister has said seems to give tenants some say after the event. Will they have the right to reject the choice of a managing agent who they are not convinced will properly manage their estate? Will they be involved at that primary stage?

Sir George Young

No; tenants will not be able to impose a veto on the successful candidate after the process has been gone through, but they will have rights to consultation on the terms of an agreement, including those resulting from CCT—and they will be involved in monitoring the contract.

I hope that anyone thinking of putting in a bid for a contract will contact the tenants' representatives and organisations to gain some insight into what they want and to build a constructive relationship with the tenants on an estate. The introduction of a ballot would be clumsy and ineffectual, and would provide no positive value for the quality of housing management. We want authorities to involve tenants in all stages of the process of selecting contractors, as far as practicable.

The Bill provides for tenants to be consulted on drawing up the contract specification and the identity of the contractor, and to be involved in monitoring his performance. It will be open to authorities to involve tenants in helping to choose the successful contractor, subject to the usual requirements of commercial confidentiality, and we shall encourage them to do so. That is as far as I can go to meet the hon. Gentleman's point.

CCT for housing management is about improving the quality of life for people on our council estates. As housing management is exposed increasingly to the disciplines and business practices of the private sector, the fresh wind of competition will blow through estates up and down the land, raising standards and improving value for money.

Of course, it is true that local authority housing management has improved in recent years, but there are still too many estates where management breakdown is evident, with empty properties boarded up for long periods or taken over by squatters, and with common areas displaying numerous signs of neglect—lifts not working, rubbish chutes blocked, vandalism, litter and graffiti.

This grim picture is all too familiar. Tenants are not getting the deal they deserve. We are determined to ensure that the standards in the worst authorities and on the worst estates are raised to those of the best. It can be done. Some local authority services have been subject to CCT for more than 10 years. The improvement in the standard of service delivery has been plain for all to see; so have the savings in costs—6 per cent. across the board. It would be wholly wrong to deny the benefits of competition to housing management—

7.45 pm

Mr. Raynsford

Will the Minister give way?

Sir George Young

Yes, when I get to the end of this moving passage.

The experience of the Conservative-controlled London borough of Wandsworth underlines the point. It has already put its housing management out to competition, and its tenants and council tax payers have reaped the benefits. If one of the best-run and most tightly managed authorities in the country can achieve significant savings, I invite hon. Members to think what others can do.

Mr. Raynsford

I am grateful to the Minister for giving way after that moving passage. He has shown his commitment to Wandsworth; but will he tell us what representations he and the Department have received from tenants all over the country who have said that they want to retain the ultimate right of veto because, without it, they cannot say no to an unsatisfactory contractor? Why will he not accept that tenants should have that right; why will he not give it to them, to ensure that they have real power instead of this charade of consultation?

Sir George Young

The hon. Gentleman asked Ministers the same question several times in Committee and on Report. He knows the answer perfectly well: we do not think that it would be right for tenants to be able to veto the improvement in standards that we want. There is often a rather cosy relationship between the activists in tenants' associations and the local authority trade unions, and we would not want that to stand in the way of higher standards on estates.

Mr. Battle

Why is there a ballot for tenant management organisations at the initial stage when the Minister is not willing to grant one before a management agency is chosen?

Sir George Young

There is a ballot for TMOs because they have put up their hands to take over the management of estates in the name of all the tenants there. It is therefore legitimate to establish whether they have a mandate, to determine whether the tenants' organisation is truly representative. I have just explained that that does not provide a parallel with giving tenants the veto with which to block the process of housing management CCT.

Lords amendment No. 181 inserts a new clause dealing with consultation on management agreements under CCT. Without it, clause 117 would still apply to delegation under CCT, but there are enough differences between the procedures that an authority would follow when delegating voluntarily and those that it would follow under CCT to merit specific mention of the CCT case. That is what the new clause does. Because of the differences in procedure, some modifications to the consultation arrangements will be necessary.

Clause 117, for example, refers to consultation when an authority proposes to enter into an agreement. However, under CCT, when an authority wants to do the work itself, it will propose to enter into an agreement only and when it has lost a tendering exercise. That would be far too late for consultation on the terms of the agreement, so the new clause will allow the Secretary of State to take the procedure back in time to when the authority is going to invite tenders under the CCT legislation.

The Government's intention is that, where there is CCT, tenants should not lack any of the rights enjoyed by tenants where there is a voluntary delegation. The amendments would enable that to happen. I hope that they are not controversial.

Mr. Straw

Will there be consultation with local authority associations and tenants' representatives about the draft regulations that will bring the legislation into effect?

Sir George Young

Yes. We hope to lay the regulations by April and shall consult on many of the aspects of housing management before we take a decision. We shall consult representatives of tenants and local authorities.

Although the hon. Gentleman did not mention the publication he referred to an article that appeared in a recent edition of Inside Housing about the Bill's tenant consultation provisions. The Government propose that certain aspects of housing management should be defined activities for CCT purposes. Those defined activities will have to be put out to tender if an authority intends to carry out the work itself. Any resulting agreement will be a management agreement and the normal consultation procedures will apply.

CCT will not enable authorities to enter into management agreements without consultation. We do not accept that there is a potential loophole. Where management functions are delegated, a management agreement will arise. Therefore, I do not share the hon. Gentleman's fears that it will be possible to get around the provisions of the legislation.

Mr. Straw

The Minister is something of a Jekyll and Hyde character, and when he speaks to a script he sounds like a combination of Dr. Hastings Banda and Mr. Alan Clark. He treated us to the most extraordinary statement when he said that tenants could not be trusted. It reminds me of the way in which the great Dr. Banda—for the benefit of those who read my remarks rather than listen to them, I should say that I use the word "great" ironically—has managed to resist any semblance of democracy in Malawi for the past 30 years on the ground that, if the peasants had the right to vote, they might exercise it against him and his interests. We had a flavour of that from the Minister.

There was a wonderful elision between the assertion that tenants associations may not be representative, which is true in some cases, and the implicit assertion—with which we were all invited to agree—that, because some tenants associations may not be representative, a secret ballot of all tenants was likely to result in an unrepresentative verdict of what the tenants wanted. That is an extraordinary assertion for a democrat.

That was the Hastings Banda part of the Minister's speech, and before that we heard the Alan Clark part. The Minister has only one attribute in common with Alan Clark. I make it clear that it has nothing whatever to do with the Minister's private life. I almost said the late Mr. Alan Clark, but that hope has not yet materialised for Conservative Members. The Minister and Mr. Clark share the entertaining ability to mock their own speeches when they do not believe a word of them.

The Minister made some cerebral remarks about the right of veto and CCT. He changed to auto-pilot when reading from a passage which he obviously found unconvincing and revolting. He described it as a moving

passage, but he was unmoved. The Minister of State, Foreign and Commonwealth Office is seeking to ensure that compulsory competitive tendering is applied in Malawi if Dr. Hastings Banda is still there after today's vote. That would be consistent with the support that the Foreign and Commonwealth Office has been extending to the puppet regime in Malawi for so long.

The Minister said that CCT was intended to improve the quality of life for tenants and provide a "fresh wind of competition" for them. Tenants can themselves decide whether they want an improvement in their quality of life. If they vote for it, that is fine, because they are the only judges of that. They should have CCT imposed on them if that is their wish, and if about 90 per cent. of them vote for all kinds of other horrors, so be it. The democratic principle is that the majority should decide, and the tenants have a right to decide on their quality of life: decisions should not be imposed by Ministers.

The Minister sped through what he called the moving passage, which contained a reference to empty properties. In the light of the report that I published about four or five weeks ago on empty Government properties, I hope that we shall not have any more dissembling from the Minister on that issue. Some 15 per cent. of the properties for which the Minister and his colleagues are responsible are empty. The Government have 25,000 empty properties and Opposition Members, such as my hon. Friend the Member for Plymouth, Devonport (Mr. Jamieson) are doing their damnedest to get some of those empty properties out of the Ministry of Defence and other Ministries, but are running into one blockage after another.

Local authorities, and especially Labour local authorities, have on the whole an excellent record on the management of empty properties. No authority has more than 4 per cent. of its total stock empty for management reasons. That means that the properties are empty and available to let or empty and available to let after minor repairs.

Earlier this year, the Minister spoke on the Walden programme and tried to pretend that Manchester had 5,000 empty properties. I hope that he will apologise to Manchester for the way in which he traduced its record, because it does not have 5,000 empty properties available to let as he sought to imply. Some 5,000 properties on its books do not have tenants, but about 1,500 of those are in the Hulme district and were put up, not least on the suggestion of speculative industrial builders—all of them contributors to Tory funds—in the 1960s. Those properties are uninhabitable. One would not put a pig in them, and if the Minister had bothered to go on a tour of Manchester, he would know that they are being demolished.

Another 1,500 properties in Manchester are in desperate need of major repairs, but they cannot be carried out, thanks to the Government's parsimony—the Governments's refusal to allow authorities to use capital receipts accrued before the end of November 1992. Those properties are empty, not because of inefficiency by Manchester city council but directly because of Government policy. When allowances are made for that, far from having an unacceptable record, Manchester has about 2 per cent. of empty properties, which is about average. That percentage is well below the percentage in Redbridge, which still has a large stock of housing. That is not an authority like Tonbridge and Malting; it is Conservative-controlled.

The record of Labour housing authorities generally is the best in the land. It is far better than that of the private sector or the owner-occupied sector, a little better than that of housing associations and infinitely better than that of central Government.

Mr. George Howarth (Knowsley, North)

My hon. Friend spoke about the so-called woeful reputation of Manchester. Knowsley is constantly trotted out as being among the top 10 worst authorities for vacant properties. The properties that are empty there are mostly being decanted, and they are mostly blocks of flats that are to be handed over to housing associations. The Under-Secretary of State is aware of that, because he visited the area and was told about it. Despite that, the Government still trot out statistics purporting to show that Knowsley is performing badly.

8 pm

Mr. Straw

My hon. Friend is right. The point that Ministers have made—that mandatory and compulsory competitive tendering should be supported even when the tenants do not want it—is based on the grounds that, somehow, the tenants need to be saved from the record of their local authorities. To support their case, Ministers have said that there are thousands upon thousands of empty properties, which housing authorities—typically, Labour authorities—are failing properly to manage and are leaving empty. The figures tell a different story.

It is something of a compliment to Labour authorities that, to try to damn their records, Ministers have had to fiddle the figures and drag into them not only the properties that are empty and ought to be let, but all those that are empty and uninhabitable, empty and in need of major repair or empty and awaiting transfer to a housing association, housing action trust or large-scale voluntary transfer.

If the Minister responds to this short debate, I hope that he will apologise for the way in which he has traduced the reputation of housing authorities, and that he will instruct Conservative central office—if he has any influence with that strange body—not to put out any more misleading information about the record of Labour housing authorities. I think that Ministers are learning that such statements from Conservative central office have a habit of boomeranging and returning to Conservative authorities. That has been the case on fraud and corruption and on value for money. The right hon. Member for Sutton Coldfield (Sir N. Fowler) was rash enough before the county elections to talk about them being fought on value for money. He got his answer on 6 May. That will also be the case here.

Sir George Young

The hon. Member for Blackburn (Mr. Straw) is wrong in what he says about management voids. The figures that I published were for management voids. That left out the properties that are derelict for other reasons. I gave those figures at Question Time a fortnight ago. They represent management voids and were exactly the figures for which the hon. Gentleman asked. I have no intention of apologising to Manchester city council. It gave me the figures that I used. Perhaps the hon. Gentleman will consider apologising to Suffolk Coastal and Tunbridge Wells, each of which has transferred nearly the whole of its housing stock but has a handful of voids —two, I think, in one case.

By fiddling the figures, the hon. Gentleman has pretended that Suffolk Coastal was a worse housing authority than Lambeth or Hackney. He confused no one with that mischievous allegation. It is clear from listening to him that he is not concerned with improving standards for tenants. He is much more interested in protecting trade union monopolies. I hope that the House will agree to all the amendments.

Question put and agreed to.

Lords amendments Nos. 176 to 180 agreed to.