HC Deb 22 July 1996 vol 282 cc39-41

Lords amendment: No. 52, in page 25, line 35, leave out subsection (1) and insert— ("(1) The moratorium in consequence of the taking of any step as mentioned in section 41—

  1. (a) begins when the step is taken, and
  2. (b) ends at the end of the period of 28 days beginning with the day on which notice of its having been taken was given to the Corporation under that section, subject to the following provisions.")

Mr. Curry

I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker

With this, it will be convenient to discuss also Lords amendments Nos. 53, 55, 60, 70, 72 and 73.

Mr. Curry

We had a considerable debate in Committee about what would happen in the event of a new social landlord becoming bankrupt or getting into financial difficulty. We provided that the Housing Corporation would be able to step in for a cooling-off period to protect the interests of all the parties—the tenants as much as the lenders. A small problem, rather than a significant one, could arise that could be sorted out shortly after the introduction of the so-called cooling off period.

The amendments allow the Housing Corporation to suspend a moratorium when the problem that provoked it has been solved, and it no longer needs to make a proposal. The Housing Corporation must consult the lender before calling it off, but this is a common-sense amendment, which I commend to the House.

Mr. Raynsford

I shall discuss Lords amendments Nos. 60, 70 and 73. We greatly welcome Lords amendment No. 60, which gives effect to a point that we pressed in Committee. It will ensure that members of the committee of a housing association are not required by the duties imposed by the Bill to act in a way contrary to their fiduciary or other duties towards the proper running and management of their association.

Lords amendment No. 70 is equally welcome. It specifies that the manager appointed by the Housing Corporation in such cases shall, so far as practicable, consult the landlord's tenants about any exercise of his powers which is likely to affect them and inform them about any such exercise of his powers. The Minister will have anticipated my question. Might not the words "so far as practicable" provide an opportunity for some managers to disregard the obligation, which I believe Parliament wishes them to honour, to ensure that tenants are properly consulted?

I hope that that will not be the case, but sadly one knows of instances in which such words have been used as loopholes. While I understand that the Government do not want to require an absolutely binding obligation, which the manager might not be able to honour in all circumstances, there is a risk that the provision might be used to short-circuit the proper consultation processes with tenants—perhaps if a considerable amount of money is at stake or the lender puts on a lot of pressure to try to resolve the problem quickly and get new arrangements into place without delay. I hope that the Minister can give an assurance on that point.

4.30 pm

Amendment No. 73 involves the deletion of subsection 49(3), which simply states: Except as provided by this section, the actions of a manager appointed under section 46 shall not be questioned by any legal proceedings whatever. The removal of that subsection raises a question whether the manager might be frustrated in his actions if he were threatened with legal action by one of the parties—possibly an unsecured creditor, unhappy with the approach being taken by the manager, who will be predominantly interested in the point of view of the secured creditors and the lenders in particular.

The threat of legal action could cut across or interfere with a manager's ability to exercise his powers, which could be damaging. I would welcome some explanation from the Minister of why the amendment appears to delete that proposed immunity.

Mr. Curry

With the leave of the House, Mr. Deputy Speaker, I must draw amendment No. 55 to the hon. Gentleman's attention. That requires: So far as practicable no proposals shall be made that would leave unsecured creditors worse off than they would otherwise have been. Amendment No. 60 makes it clear that the duty of members, directors and trustees to co-operate with the implementation of the proposal does not require them to act in a manner contrary to their fiduciary obligations.

The reference to "so far as practicable" in amendment No. 70 is intended to be directed towards taking the action, rather than giving a loophole to enable people not to take it. So the amendment has to be taken at its face value. We would not have proposed it, had we intended it merely to be platonic in its effect. It is intended to make managers have the firm intention of consulting, unless there is a clear reason why that cannot be done.

Lords amendment agreed to.

Lords amendments Nos. 53 to 81 agreed to.

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