HOUSING BILL

HL Deb 22 July 1980 vol 412 cc296-376

Consideration on Report resumed.

Schedule 15 [Rent rebates and allowances.]:

Lord BELLWIN moved Amendment No. 99: Page 140, line 10, at end insert ("or, where the housing co-operative is a housing association, but for sections 15 and 16 of the Act of 1977").

The noble Lord said: My Lords, the purpose of this amendment is to correct a technical flaw in the drafting of Schedule 15 as it affects tenants of local authority housing co-operatives constituted under Schedule 20 to the Bill. It is, of course, the intention that tenants of housing co-operatives should be entitled to rent allowances, and subsection (5)(f) of the new Section 19 of the Housing Finance Act 1972, inserted by Schedule 15, is intended to provide for this. Subsection (5)(f), however, defines a housing co-operative tenancy by reference to a tenancy which would be a protected tenancy but for Section 16 of the Rent Act 1977, which excludes housing cooperatives. This deals satisfactorily with some co-operatives which are constituted as, for example, bodies of trustees; others, however, are constituted as fully mutual and industrial provident societies and although not of course registered housing associations, they would fall within the broad definition of "housing association" used in this schedule. Tenants of such co-operatives would therefore be protected tenants but for Section 15 of the Rent Act, which excludes housing associations, as well as Section 16. Subsection (5)(f) as currently drafted does not cater for this, but the insertion proposed puts the position right.

8.2 p.m.

Lord BELLWIN moved Amendment No. 100: Page 141, line 18, after ("3") insert ("to this Act").

The noble Lord said: My Lords, this corrects a minor drafting error by adding to the repeal of Schedule 15(5)(2) the words "to this Act", which should have been included in the repeal but were omitted in error. If they are not added to the repeal they will continue to stand in the 1972 Act and will have no meaning.

Clause 120 [Disposal of land by registered housing associations]:

Lord MOWBRAY and STOURTON moved Amendment No. 101: Page 88, line 3, after ("apply") insert ("(with the modification specified in subsection (4A) below)").

The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 9. I beg to move.

Lord MOWBRAY and STOURTON moved Amendment No. 102: Page 88, line 9, at end insert— ("(4A) The modification referred to in subsection (4) above is that the Housing Corporation is added to the bodies specified in subsection (5A) of section 104B.")

The noble Lord said: My Lords, I spoke also to this with Amendment No. 9. I beg to move.

Clause 121 [Consent of Housing Corporation to disposals of land by housing associations and housing trusts]:

Lord MOWBRAY and STOURTON moved Amendments Nos. 103 and 104 en bloc: Page 88, line 26, leave out from first ("to") to end of line 27 and insert ("any particular land or description of land") Page 88,line 43, leave out ("property") and insert ("land").

The noble Lord said: My Lords, I spoke to these amendments with Amendment No. 88. I beg to move.

Clause 122 [Accounts and audit]:

8.5 p.m.

Lord BRUCE of DONINGTON moved Amendment No. 105: Page 89, line 32, leave out ("and balance sheet").

The noble Lord said: My Lords, this and the subsequent amendments through to No. 110 I move as a result of representations made to me and, I gather, also to the Ministry, by the Consultative Committee of Accountancy Bodies which, as noble Lords possibly know, comprises a body for co-ordinating the activities in specific respects of the three institutes of chartered accountants in England and Wales and Scotland and Ireland: the Association of Certified Accountants, the Institute of Cost and Management Accountants and the Chartered Institute of Public Finance and accountancy. That committee, on behalf of its component bodies, which comprise the leading professional accountancy organisations in the United Kingdom, keeps a very watchful eye on all legislation which has any auditing or accountancy implications and from time to time endeavours to advise successive Governments as to the legislation which comes before them which carries such implications.

As it applies to all the amendments on this issue appearing under my name, I should perhaps declare a very remote and contingent financial interest, since my firm, Halpern and Woolf, might conceivably in the future act for housing associations or charities. It is therefore proper that I should disclose that remote interest. At the same time, I wish to make it clear that I speak in an independent capacity only. It will not therefore he possible for me to bring these amendments to issue on a Division, because that would imply a party political interest on the part of those sitting behind me and those who sit on other Benches. These amendments are of an entirely technical and non-political nature.

In moving Amendment No. 105, I would ask for the indulgence of the House so that I may speak at the same time to the following amendments: Nos. 107, 108, 109A, 109B, 109C, 109D, 109E, 109F, 109G and 109H, which all embody essentially the same point. In the clause as drafted—and Clauses 122 and 123 and Schedule 16 incorporate substantially the same words as I seek to amend—there are references to accounts and balance sheets, yet it is well known in the accountancy and legal professions that the word "accounts" includes also the balance sheet, which is essentially part of the ordinary system of accounts. Therefore the term "balance sheet" is entirely redundant.

Substantially the same point arises on Amendment No. 107, where in view of the existence of the word "accounts" we eliminate the words "and balance sheet". Similar considerations apply in Amendments Nos. 108, 109, 109B, 109C, 109D, 109E, 109F, 109G and 190H in the relevant form according to the context in which the words appear. The consultative committee has already spoken to the Department of the Environment on this matter, and I sincerely hope that the Government may see fit to accept the amendments. I beg to move.

Lord MOWBRAY and STOURTON

My Lords, I appreciate the noble Lord's argument that the word "accounts", encompasses balance sheets and that separate reference is unnecessary. I am therefore happy to accept the noble Lord's amendments.

With regard to Amendment No. 109F I appreciate the noble Lord's reasons, for moving it, and I accept that it makes paragraph 4 of the schedule consistent on the face of the Bill with paragraph 2. Therefore I am happy to accept that particular amendment, too. I thank the noble Lord for having gone to the trouble of explaining this matter to the House, and to myself in particular.

8.12 p.m.

Lord BRUCE of DONINGTON moved Amendment No. 106: Page 89, line 34, leave out from first ("of") to end of line 37 and insert—

1. ("(a) the state of affairs of the association;
2. (b) the source and application of funds;
3. (c) so far as the housing activities are concerned its surplus or deficit during the financial year").

The noble Lord said: This amendment, which refers to Clause 122(1), deals with a slightly more complex matter than that with which the noble Lord has been good enough to concur on the previous amendment. If your Lordships look at Clause 122(1), you will find that towards the end of the subsection there is a reference to, the state of affairs of the association, so far as its housing activities are concerned, and of the disposition of funds and assets which arc, or at any time have been, in its hands in connection with those activities". The purpose of this amendment is to leave out those words, and to substitute:

1. ("(a) the state of affairs of the association;
2. (b) the source and application of funds;
3. (c) so far as the housing activities are concerned its surplus or deficit during the financial year").

The clause as drafted presents certain difficulties. In the first place, there is no requirement for the revenue accounts to show a true and correct view, which in all the circumstances is generally felt to be desirable. Secondly, the requirement that the balance sheet, or the state of affairs and the source and application of funds statement should show a true and fair view is restricted to the association's housing activities. Here we are up against a difficulty. If as part of the accounts one is to present a balance sheet which comprises a statement of the assets and liabilities, together with particulars of funding and reserves, in the case of a charity or an association having activities which partially relate to housing activities, it is not possible to separate assets and liabilities relating to those specific activities, which is what the existing clause as drafted requires us to do. This is also true of the source and application of funds statement which shows, broadly speaking, the movements in assets and liabilities between balance sheets at different dates. The third difficulty is that the reference to the disposition of funds and assets would be far more in accordance with current usage if it were to be replaced by a requirement for a source and application of funds statement.

So it will be observed that that part of the clause that the amendment seeks to delete and to replace with the words proposed is not really possible of achievement. It is not possible to segregate a balance sheet, or an account of which a balance sheet is a part, showing the separate housing activities. Of course it is always possible to show a revenue account, and it is possible to say whether there can be a true and fair view established as regards that revenue account. But when it comes to dealing with the specific allocations of assets and liabilities of the organisation as a whole to this particular branch of its activities, that is quite impossible. I suggest that the words in the amendment are much more appropriate.

I realise that in saying that I am entirely in the hands of the Government. For reasons that I previously explained, I should not wish to force this matter to a Division; that would not be appropriate for what is an entirely non-party issue. It would place all Members of the House, particularly those at present absent from the Chamber, in an entirely impossible position. That may give the noble Lord, Lord Mowbray and Stourton, some cause for modest serenity over the whole question. So I venture most courteously to draw his attention to the fact that even though it may not be possible to bring the matter to a Division, his statement in reply to mine is likely to be faithfully reproduced in the professional accountancy and legal press, and that in the event of the Government being unable to accede to what is a purely technical matter in order to clear up a legal complexity that would otherwise arise, the accountancy and legal professions would then be in a position to form an independent judgment of their own. I beg to move.

Lord MOWBRAY and STOURTON

My Lords, first, I can assure the noble Lord, Lord Bruce of Donington, that I have very little modest serenity when speaking to experts on their own subject. I know my limitations only too well, and chartered accountancy has always been a subject on which, I hate to say, I am not an expert; I wish I were.

I am most grateful to the noble Lord for having explained the intention behind this amendment. As he said, its most important effect would be to widen the scope of Clause 122 so that the Secretary of State would be able to lay down accounting requirements on matters not connected with housing. At present, the only part of the requirements in Clause 122 and Schedule 16 that could involve non-housing activities is that relating to associations' balance sheets, which cannot be split up between various activities of an association.

One of the significant results of widening the clause in this way would be that the Housing Corporation could become involved in the examination of documents, other than balance sheets, not related to an association's housing activities. The Government believe that these would be unnecessary and undesirable effects, and certainly not ones that should be legislated for in a housing bill. I am glad to be able to reassure the noble Lord that our legal advice is that the requirement in Clause 122 for a true and fair view to be given of an association's affairs does indeed cover the production of revenue accounts.

The noble Lord also referred to the phrase "disposition of funds and assets". It is always possible, I am told, to argue that this or that bit of a statute might, with advantage, be differently drafted. We can only say that the present wording seems to us to be perfectly clear, and leaves no room for doubt. I appreciate the fact that the noble Lord has warned me that the words will be taken down and looked at very carefully, so I shall say no more than my brief allows me to say.

Lord BRUCE of DONINGTON

My Lords, I am very sorry indeed, of course, that the noble Lord has not seen fit to accept the amendments that have been laid before the House. In the course of his remarks he referred to parliamentary draftsmen. The profession of parliamentary draftsmen is one for which every Member of this House must have the most profound respect. Nevertheless, if the judgments of the Divisional Courts, of the appeal courts and of the House of Lords sitting judicially are to he taken into account on a whole series of matters, it is quite clear that over a considerable field and in quite a significant number of important instances parliamentary counsel have not always been beyond reproach in their drafting. I need refer the noble Lord only to certain aspects of the income tax Acts and the subsequent Finance Acts which have been commented on unfavourably from time to time, particularly in regard to their draftsmanship, by noble and learned Lords who sit in this House in their judicial capacity. I will merely hazard the view, therefore, that it may well be that in due course criticisms may be made of the parliamentary draftsman in this case. Nevertheless, I am indebted to the noble Lord for his courtesy, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The DEPUTY SPEAKER (Lord Airedale)

My Lords, with the leave of the House, I could put a single Question as to Amendments Nos. 107 to 109H.

Lord MOWBRAY and STOURTON

My Lords, with great respect, can we leave Amendment No. 109 out, please?

Lord BRUCE of DONINGTON moved Amendments Nos. 107 and 108: Page 89, line 38, leave out ("and balance sheet"). Page 90, line 2, leave out ("balance sheet").

Lord BRUCE of DONINGTON moved Amendment No. 109: Page 90, line 15, leave out from ("shall") to ("be") in line 16.

The noble Lord said: My Lords, I beg to move Amendment No. 109, which refers to page 90 of the Bill, Clause 122, and seeks to leave out the following words: in respect of its housing activities (and separately from its other activities, if any)…". The reason why this amendment is moved is that there would seem to be conflict with paragraph 2(1)(b) of Schedule 16 to the Bill. If your Lordships will kindly look at paragraph 2(1)(b) of Schedule 16, which is at page 142 of the Bill, you will find that the charity is required for each period of account to prepare, a balance sheet giving a true and fair view (as at the end of the period) of the state of the charity's affairs"; whereas subsection (5) of Clause 122 seeks to narrow this to: in respect of its housing activities (and separately from its other activities…". The two would appear to be in conflict with one another, and I therefore beg to move Amendment No. 109, to delete the appropriate words from subsection (5) of Clause 122.

Lord MOWBRAY and STOURTON

My Lords, I am again grateful to the noble Lord for explaining the meaning and intention of this amendment. I am pleased to be able to reassure him, having checked the position very carefully with our advisers, that we are satisfied that the present wording of Clause 122 meets the point which he has raised. On Clause 122, I hate to say it to the noble Lord (he is being so kind and nice) but we think it would be unhelpful and (again, I hate to say it) undesirable. I should explain that the words we are concerned with do not rigorously constrain the scope of Schedule 16, to which we shall be coming in a moment: rather they provide an indication of what the reader will find when he turns to the schedule.

The schedule's requirements, as implied by Clause 122(5), are concerned first and foremost with housing activities. Indeed, the only reason why the schedule needs to embrace any other activities at all is that some associations will have balance sheets which are not confined to housing and which have to be read as a whole. In view of this, we see no need to delete these words. Indeed, we think that to do so would be unhelpful to those less familiar with these provisions than the noble Lord.

The DEPUTY SPEAKER

My Lords, does the noble Lord desire to withdraw the amendment?

Lord BRUCE of DONINGTON

My Lords, I note that the noble Lord does not consider that the amendments would be helpful. I am not quite sure which body is going to be helped by the retention of these words, but I am quite confident that if any litigation should ever arise on this clause possibly learned judges may feel constrained to observe that it might have been well to have clarified it on the lines that I have ventured to suggest to your Lordships. I ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 123 [Enforcement of s. 122:]

The DEPUTY SPEAKER

With the leave of the House I could put into a single Question Amendments Nos. 109A to 109H.

Lord BRUCE of DONINGTON moved Amendments Nos. 109A to 109H: Page 90, line 34, leave out ("and balance sheets") Page 90,line 38, leave out ("and balance sheet") Page 90,line 44, leave out (",balance sheet") Page 142, line 42, leave out ("and balance sheet") Page 143, line 29, leave out ("and balance sheet") Page 143,line 32, leave out ("accounts give") and insert ("revenue account gives") Page 143,line 46, leave out ("and balance sheet") Page 144, line 2, leave out ("or the balance sheet").

8.29 p.m.

Lord BRUCE of DONINGTON moved Amendment No. 110: Page 144, line 7, leave out from ("and") to ("and") in line 9 and insert ("accounts and all other documents of the charity;").

The noble Lord said: This is another amendment that seeks to put the clause into some kind of form in which it will not be contradicted elsewhere in the Bill. It will be observed from the amendment that it is desired to eliminate the words, and to all other documents relating to those activities from paragraph 5(3) of Schedule 16, and to substitute the words, accounts and all other documents of the charity".

My Lords, this clause gives the auditor the right of access to the various books and documents which he is entitled to see. But if one looks at paragraph 4(2)(b) of the same schedule one finds that the auditor's report shall give an opinion as to whether in the auditor's opinion the balance sheet gives a true and fair view of the state of affairs of the charity as at the end of the period of account. Yet, paragraph 5 only gives him the right of access at all times to the books, deeds and accounts of the charity so far as relate to its housing activities.

The duty imposed on the auditor by paragraph 4(2)(b) gives him a responsibility over the charity as a whole. Paragraph 5(3)(a), as at present drafted, only gives him the right of access to the charity's activities as far as its housing activities are concerned. The two are in conflict. If the auditor has a duty to give a true and fair view of the state of affairs of the charity, clearly he must be entitled to access to all the books, accounts and documents relating to that charity rather than being restricted merely to those which relate to the housing activity. I should have thought that the logic of that, even though it may have been enunciated in professional terms, is clear enough to your Lordships. I therefore hope that the Government will seek to remove this blatant contradiction and accept the amendment.

Lord MOWBRAY and STOURTON

My Lords, once again I have to stand up and risk the censure of the noble Lord opposite warning me of what will happen in legal cases to come when the Government's advice on this Bill has been proved wrong. I can only say that his legal and financial advisers, who, I am sure are the most eminent of men, are in conflict with the legal and financial advisers who are advising us. Therefore, I have to put to the noble Lord and the House what our advisers, despite having had the advice of the noble Lord, still persevere in advising.

I am told that I can assure the noble Lord that his amendment to paragraph 5(3)(a) to Schedule 16 is unnecessary. The reason here is quite simply that paragraph 5(3)(b) will allow the auditor to obtain any information which he needs to carry out his duties. It follows that if any of those duties touches on an association's non-housing activities, he can apply to the trustees or officers of the association to provide the relevant information. That is the advice I have to give.

Lord BRUCE of DONINGTON

My Lords, I am grateful to the noble Lord. I am quite sure that many members of my profession will be grateful for his explanation and assurances. The assurances have been so specific that I am still a little at a loss as to why they could not be incorporated in the Bill itself. Nevertheless, I can hardly carry the matter further, for the reasons I have already described. I would thank the noble Lord for his courtesy and his department for the courtesy that they have shown to representatives of the accountancy profession with whom these matters have been long discussed. I beg leave to withdraw the amendment.

Lord HYLTON

My Lords, before the Question is put, may I say that the charitable housing associations in particular are extremely grateful to the noble Lord for the care, consideration and thought which he has put into drafting these amendments and in moving and speaking to them.

Amendment, by leave, withdrawn.

Lord MOWBRAY and STOURTON moved Amendment No. 111:

Page 146, line 5, at end insert— ("(6A) Nothing in this section prevents the grant or renewal of a tenancy by an association whose rules restrict membership to persons who are tenants or prospective tenants of the association and preclude the granting or assignment of tenancies to persons other than members.")

The noble Lord said: Schedule 16 to the Bill which bans fee earning or duality of interest for housing association committee members, prevents associations granting tenancies to committee members or their close relatives; although it does not prevent existing tenants from becoming committee members. This satisfactorily prevents a possible abuse as far as the great majority of housing associations is concerned. It raises a problem, however, for fully mutual co-operatives where all members must be tenants or prospective tenants, and in the co-operative's development stages, at least, the founder members must envisage granting themselves tenancies. This amendment removes that anomaly by ensuring that fully mutual associations can grant tenancies to members. I invite your Lordships to accept the amendment.

8.36 p.m.

Lord BELLWIN moved Amendment No. 112: After Clause 125, insert the following new clause:

("Removal of certain housing associations from register

.—(1) In section 15 of the 1974 Act—

1. (a) after subsection (2) there is inserted the subsection set out below; and
2. (b) in subsection (6) for the words this section "there are substituted the words" subsection (2) above.

(2) The subsection inserted after subsection (2) is:— (2A) Where a body which is registered—

1. (a) has not at any time received a grant under section 29 or section 32 below or any such payment or loan as is specified in paragraph 2 or paragraph 3 of Schedule 2 to this Act; and
2. (b) requests the Corporation to remove it from the register;

the Corporation may, if they think fit, remove it from the register."").

The noble Lord said: My Lords, your Lordships may know that the Housing Corporation has only very narrow powers of de-registering housing associations under the Housing Act 1974. These, in effect, apply only when an association is no longer operating as such. The sort of circumstances in which these new powers of voluntary re-registration would be of benefit mainly involve housing associations whose registration has always been unnecessary or inappropriate. When the 1974 Act first came into effect, the corporation registered a number of associations which continue to exist but whose activities are untypical of those of a registered housing association. Such associations will not have received public money in the form of housing association grant and probably have never had any intention of applying for grant. The registration often stems simply from a lack of understanding of the purpose of registration in the early days of the Act. They remain on the register simply for want of a power to remove them. This clause enables associations which have not received public money to be de-registered with the corporation's consent. That consent is necessary to ensure, for instance, that an association does not de-register in order to avoid an inquiry into its affairs. I invite the House to accept the new clause.

8.38 p.m.

Baroness VICKERS moved Amendment No. 113: Page 92, line 29, leave out ("for any period") and insert— ("until such time as an amount equivalent to the original grant has been redeemed".)

The noble Baroness said: My Lords, I understand that this Bill is required to register the housing associations to service the grant redemption fund in their statutory accounts. This fund will, I suggest, show many surpluses derived from schemes which have been subject to the housing association grant. Such services will arise when the rental income is greater than the combined costs of the management and maintenance and loan repayments. The Secretary of State, I understand, is given the power to specify the uses to which monies may be shown in this fund which may be appropriate, with interest to any sums standing in this account. With the conception of the grant redemption fund—and this I gather was introduced by the previous Labour Government in their Housing Bill—it was considered by the Federation of Housing Associations, and they debated the principle at that time of the Government particularly having to claw back surpluses deriving from the housing association grants; in other words, what is known as the HAG subsidy.

It is recognised that there are some schemes where the management and maintenance costs are particularly low and fair rents are particularly high. This will make remarkable surpluses in years to come and the organisations concerned may have no other unprofitable schemes. I should like to suggest that any plans related to this activity could absorb these monies. I appreciate therefore that the Government may need to exercise control over surpluses from the HAG schemes in certain circumstances. I also recognise that some local autorities may turn envious eyes on this grant system claiming that it is more generous than their own and that the Government Ministers may wish to demonstrate that there are other opportunities available to them to prevent the associations accumulating private fortunes.

I also accept the point put forward by the Department of the Environment that if associations have access to revenue deficit grants in their bad times, the Government could justify seeking some replayments of surpluses in good times. These various arguments do not lead to the conclusion that surpluses accumulated on the HAG schemes should in normal circumstances be returnable—this is the point I want to make quite clear—to the Government. I do not see that it is objectionable that such surpluses should be accounted for by means of grant redemption funds nor that the Government should keep a watchful eye over spending of such surpluses; but I must ask the Minister to make it clear that only in exceptional circumstances will these surpluses be clawed back. Grants were given, I suggest, and received in good faith; in order to secure them, associations have had to comply with a long list of requirements. Associations have carried out their responsibilities in these contractual relationships and Government have no right, retrospectively, to convert a grant into a repayable loan.

The NFHA policy, therefore, is that, in the fact of constant calls for "accountability" by the Public Accounts Committee and others, a grant redeption fund is not objectionable in principle. However, only in those cases where associations are unable to demonstrate that the funds shown in this account cannot be used constructively for forwarding the objects of the association, should Government require them to be paid back. It would be of the greatest help if the Minister is able to give us some reassurance that the intention is not sequestration of the monies in the GRF but that this is a mechanism for ensuring such surpluses are wisely spent.

I am worried about the open-ended nature of the "fund": it appears that the present wording of Section 113(1) indicates not just the "redemption" of the original grant received but a continuing requirement for surpluses to be controlled by this GRF. In other words, as I understand this Bill, the Secretary of State has no discretion ever to stop the transfer to the GRF of income—even though the word "redemption" clearly implies that, when the grant has been redeemed, no further transfers would be necessary. It would seem very unfair for an association to go on transferring income from HAG schemes into the GRF for years after the full amount of grant had been redeemed.

So that in place of saying that surpluses shall be shown separately in the association's accounts "for any period", substitute the words: until such time as the Secretary of State determines that the grant has been redeemed". If the Government cannot accept this amendment, it would at least keep the door open for further debate on the issue if the substituted words read, until such time as the Secretary of State shall determine".

The Federation has had to accept the concept of the grant redemption fund which takes the unprecedented step of considering that a grant can be regarded as a loan, but it is unfair in any circumstances, that the further implication that Government could be in the position of requiring payments not just of the original grant (with interest if necessary) but of further sums: this turns the original grant not even into a loan but into an investment by the Government. I believe it was not the intention of any Government to consider payment of HAG as a profit-making exercise and, even at a time of economic difficulty, for Government to seek such powers contravenes all the rules governing behaviour between two parties to an agreement. I beg to move.

Lord MOYNE

My Lords, in rising to support the amendment of my noble friend Lady Vickers I hope that, under this unaccustomed—but I hope reasonably stable ceiling—I am reasonably audible. I will at least be reasonably brief because many of the arguments which I used at the Committee stage in moving what is now Amendment No. 115 apply very much to the amendment of the noble Baroness. The noble Lord, Lord Bellwin, in foreshadowing the assurances he intends to give to charitable housing trusts has very fairly said that: surpluses arising from individual projects will only be recovered or directed in so far as they reflect the input of housing association grant". The amendment of the noble Baroness would give statutory recognition to this principle, not only for charitable trusts but also very properly and equitably to the whole housing association movement.

If it be argued that the grants were more valuable in terms of present money values when given in 1974 or subsequently, I would say that the grants are still there in the bricks and mortar they were intended to bring together, thus fulfilling their purpose. But if the Minister should feel that inflation needs to be taken into account, it would, after all, be open to him, if he accepts this amendment, or has it pressed successfully upon him, to introduce an amendment to this amendment on Third Reading, authorising repayment up to the original value but computed to take account of inflation. Myself, I think that would be wrong because the bricks and mortar are still there fulfilling their purpose; but, either way, I hope the Minister will accept the amendment.

Lord HYLTON

My Lords, I wish to support this amendment so clearly moved by my noble friend Lady Vickers. The essence of this amendment is the question of time. What we are anxious to do is to prevent a perpetuity arising in favour of the Government and the Exchequer by inadvertence or by accident. Beyond that, I would say that I hope that on many occasions where such surpluses arise the Government will see fit to leave them in the hands of the association where the surplus is, given, of course that the Government are satisfied that that association can make a really good use of that money in the public interest.

Lord BELLWIN

My Lords, my noble friend Lady Vickers will appreciate that on the vast majority of recent schemes housing associations have provided no money of their own whatsoever. The costs of the schemes have been covered by housing association grant supplemented by loans to be serviced out of rental income. It was never the intention of housing association grant that it should put an association into surplus, and I am sure at the time when grants have been given initially the housing association movement never expected that it would be so.

This is likely to happen in future as a result of rent increases, particularly as the Bill is removing the out-dated 75p a week limit on housing association rents. While this is happening, loan repayment will remain constant in money terms and a gap will develop between income and expenditure the effect of which may be that housing associations will accrue large and fast-increasing surpluses generated entirely as a result of public funds. Associations may not have a sufficiently forward programme to put the surpluses to good use. May I say here, in case there is any misunderstanding about this, that the Secretary of State is not, and will not be, obliged in all circumstances to recover surpluses. He can, and undoubtedly sometimes will, simply direct their use. I cannot accept, nor could the Public Accounts Committee, that retention of these benefits would represent proper handling of public funds. Of course, where surpluses arise as a result of an injection of private funds to whatever degree in a project which has received housing association grant, I have already said, and no doubt will say again later on, that the surpluses will be recovered or directed by the Secretary of State, only in so far as they reflect the input of grant.

We shall ensure administratively that surpluses reflecting charitable endowments can be retained by the association with no strings attached—and I repeat, "with no strings attached". I do not accept that it can be said that the Government have no right to take back this money. We are talking about surpluses which accrue from public money and which accrue for the reasons I have given. I hope that we have made it categorically clear that the question of private funds is in no way affected. I frankly do not consider it to be unfair. I do not think—here I choose my words carefully—that it would be in the interests of the housing association movement, in which so many of us have believed so much for such a long time and, as I have said before so many of us feel will play a greater part in the future in housing than it may ever have done in the past. Certainly it has the potential. But I think if we reached the point where surpluses which accrued in this way as a result of the injection of public money could not reasonably be recovered, if it was felt appropriate that they should be so recovered, or even put to use as the Secretary of State such as he might direct, I think it would do the housing association no good at all, and that is not what any of us want.

I cannot accept the amendment, and I hope that my noble friends, whose views on this I respect—and of course I do not come fresh to this tonight because we have had some correspondence and much discussion together since I have been anxious to try to assure them of the equity of what we are proposing,—might have felt that that would be so. In view of what I have said—and no doubt in one way or another we shall be talking about this further in respect of other amendments-I hope they may feel able to withdraw their amendment.

Baroness VICKERS

My Lords, There is one point that I should like to raise with the noble Lord. My amendment envisages paying back the amount necessary. Would he be kind enough to let us know in due course how that is to be dealt with?

Lord BELLWIN

My Lords, by leave of the House, I am not absolutely clear as to the precise point the noble Baroness is making but I will undertake, as I always do, to take it away and look at it. I cannot go further than that at the moment.

Baroness VICKERS

My Lords, on that assurance, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness FAITHFULL had given Notice of her intention to move Amendment No. 114: Page 92, line 31, after ("projects") insert ("other than hostels").

The noble Baroness said: My Lords, I spoke to this amendment at Committee stage, and since then I have had a most helpful letter from the Minister. In view of that helpful letter, and with his assurance to the noble Baroness, Lady Vickers, I shall not move the amendment.

8.54 p.m.

Viscount BOYD of MERTON moved Amendment No. 115: Page 92, line 32, at end insert— ("Provided that in the case of a Housing Trust which is a Charity within the meaning of the Charities Act 1960 any such surplus shall be divided in such proportion that the Capital Value of the Trusts Assets on the 18th of September 1974 bears to the total Housing Association grant payable to it by the date of the passing of this Act and only that part which is proportionate to the Housing Association grant payable shall be shown in its Grant Redemption Fund; the balance, being proportionate to the Trusts own assets shall be retained in the Trusts accounts as a General Revenue Reserve available for any of the Trust's objects.")

The noble Viscount said: My Lords, I beg to move the amendment standing in my name and in the names of my noble friends and of the noble Baroness, Lady Denington. I am sorry that the wording of the amendment is complicated and rather daunting, but the problem is really a simple one. A broadly similar amendment was moved at Committee stage by the noble Lord, Lord Moyne, and then withdrawn in view of certain assurances given by the Minister. I myself raised the matter during Second Reading and said that my anxieties were shared by the older charitable trusts—the Guinness Trust, a housing trust of which I am a trustee, the Peabody, the Sutton and Samuel Lewis Trusts. The House will know that the 1974 Housing Act set up housing association grants, now referred to in a rather unfelicitous but, I hope, not an ungrateful way as HAGS. But long before this Act was passed, a number of the older charitable trusts had very considerable holdings of land and buildings—some thousands of properties in the case of a number of them—and these particular holdings have been very little if at all affected by housing association grants. These assets will earn future higher rental surpluses, independently of surpluses generated by HAGS. It seems to us surprising that the whole of these future surpluses should be placed in the new grant redemption fund of each trust. Once in this trust, all monies will be subject to the complete control of the Secretary of State. There is another important point. The object of some of the older trusts, including the Guinness Housing Trust, include purposes in addition to housing and surpluses that arise in that way should surely not be regarded as general housing association grants and then be automatically placed in a grant redemption fund.

I am very grateful to the noble Lord the Minister, whose housing record is supremely good and who is much trusted by charitable institutions and everyone else. He made certain helpful observations at Committee stage, and since then has been good enough to write to me and to have a talk with me. His statement on Committee stage recognised the arguments of the older charitable trusts, and he told your Lordships that he would be looking for a formula which would account fairly for the funding involved and would allow for the surpluses I have mentioned to be retained by the association and trusts. Those of us with anxieties do not suggest that surpluses arising on any projects which have received housing association grants should be excluded from the grant redemption fund; nor were we intending to suggest that surpluses should not be divided. Our intention was that for relevant projects the surpluses which would have to be calculated in any case should be divided before they were transferred into the Grant Redemption Fund and only that part that was generated by HAGS should go into the Grant Redemption Fund.

That seems to us to be a much more acceptable and simpler way than putting all the surpluses on every HAG scheme into the fund and having to rely on a subsequent direction by the Minister, allowing the trust to share back from the fund into the trust's general revenue reserve. The Minister has assured me that the formula he is seeking will ensure administratively that surpluses arising on individual projects will be recovered or directed only in so far as they reflect the input of housing association grants. He has added that so far as private funds are concerned, it is intended that the Secretary of State will use his directive power to ensure that surpluses arising reflect that input can be retained by the association or trust and, as he said tonight, "With no strings attached".

We are very grateful for these assurances, but I confess that I should be very much happier if they could be embodied into the Bill. I remember, with some thirty years' experience of another place and nearly twenty years in this House, how much more difficult it has proved in the past for a future Minister to escape from an undertaking given by a predecessor, if the undertaking has been written into a Bill, rather than left as a ministerial undertaking. But knowing in what respect the Minister is held in housing circles, and happily conscious that the noble Baroness, Lady Denington, has put her name to my amendment, I hope that I shall be satisfied when I listen with keen interest to what the Minister has to say. My Lords, I beg to move.

9 p.m.

Baroness DENINGTON

My Lords, I am very happy to support this amendment fully. I am most grateful for the statement that the noble Lord, Lord Bellwin, made a few minutes ago about the protection of charitable funds, because a principle that everybody in this House would want to stand by is that those funds should be protected. But I support very strongly the point that it is a great safeguard for the future if we can have this amendment embodied in the Bill. Following the Minister's statement here, we can trust the present Government, but who knows what Government will follow? One cannot be too careful on this matter. Since the Government accept what we are putting forward, is it necessary for us all to go trooping into the same Lobby, which would be lovely, or will the Government just accept the amendment and embody it in the Bill, and then we can all rejoice?

Lord HYLTON

My Lords, in rising to support this amendment, I should declare an interest in that I am chairman of a small housing association which has already received a very limited amount of HAG. I should first like to thank the noble Lord the Minister for the very helpful remarks that he made earlier on Amendment No. 113, which bear on this amendment of my noble friend Lord Boyd. The essence of this amendment is the idea of apportionment, and I wonder whether I could give some instances of the kind of case where apportionment is so much needed.

The first is where the land on which housing has been built has been donated. The second is where part of the building costs have been donated by, for instance, charitable sources. The consequence of this, as I know from my own experience, can be that higher standards will have been built into a scheme than would otherwise have been possible under the old cost-yardstick system. The result of the higher standards will be a higher fair rent. In the case of some older charitable trusts, they have properties which have been modernised with HAG repair grants. But those properties were already in ownership of the organisation before the receipt of the HAG, so that the existing property contributed by far the greater part of the total asset.

Finally, I have one small administrative point which I should like to put to my noble friend the Minister, on which I hope that he can give me an assurance. It concerns the calculation of the grant redemption fund. Can he assure us that it will not be necessary to go into all the complications of calculating the GRF, when an association is in overall deficit, which can clearly be shown when, for instance, that association is receiving revenue deficit grant. If my noble friend can give that assurance, it would be extremely helpful and would save a great deal of abortive and unnecessary administration in the future.

Lord BELLWIN

My Lords, to take up the last point made, I do not feel that I am able to give the assurance that my noble friend requests. After all, I suppose it is not impossible to envisage a situation where an association was in deficit for all kinds of reasons, and yet was in surplus so far as the funds which had come from grants were concerned. However, it must surely be a comfort to know that, if that were the eventuality, any Secretary of State would surely have to take that into account. But I could not give an assurance at this stage.

I was interested in what the noble Baroness, Lady Denington, said. I wonder whether I have more confidence in what a future administration that she supports would do, than she has. But I do not think that we should cross that bridge till we come to it. Some of us hope that it will be a long time before we come to it and, if that be so, then there will be no problem. I am sure that she has confidence in her ability to influence events at that time.

As I said on the previous amendment, I cannot accept that surpluses arising on any projects which have received Housing association grant should be excluded from the grant redemption funds. I believe it to be a matter of accounting discipline that these surpluses should be identified. Nor can I accept the notion that surpluses should be divided on the basis of the proportional relationship between a charity's total assets and the total amount of grant paid. The effect of this would be that, even on projects which were provided entirely with housing association grant, only a proportion of the surpluses arising would come with the grant redemption funds.

However, I very much appreciate the importance of charitable endowments in the activities of many associations, particularly as my noble friend Lord Boyd said, the older housing trusts, and I can again assure noble Lords that, as I said during the discussions in Committee, we shall be seeking a formula to ensure administratively that surpluses arising on individual projects shall be recovered or directed only in so far as they reflect the input of housing association grant. So far as private funds are concerned, the Secretary of State will use his direction power to ensure that surpluses which reflect the input of those funds can be retained by the association or trust—and I say it again—with no strings whatsoever attached.

When considering the manner in which surpluses are to be calculated and the treatment of those surpluses, we shall be consulting representatives of the charitable trusts, because of the specific points that have been raised on the treatment of charitable endowments. I recognise clearly the keen concern that exists among the charitable trusts—and it is right that they should be so concerned—to ensure that whatever formulae are reached in calculating, in apportioning, in directing or whatever, this is something into which they should have an input. I am very happy to confirm again that we would want them to be putting in that input. I think this is the right approach. In view of that, I wonder whether my noble friend will feel able to withdraw the amendment?

Viscount BOYD of MERTON

My Lords, it was never my intention to take this motion on the amendment to a vote, but I would make one plea to the Minister: that so often when money is paid back to people to whom it belongs there are long delays before the payments are made. I very much hope that this will not be the case in this particular problem.

Amendment, by leave, withdrawn.

Clause 131 [Working balance in Housing Revenue Account]:

9.9 p.m.

Baroness DAVID moved Amendment No. 116: Page 94, line 24, leave out from ("of") to fourth ("the") in line 25 and insert ("the Housing Repairs Account").

The noble Baroness said: My Lords, this is an important amendment which was not moved at the Committee stage because of the pressure of time late at night. We think that public housing should not seek to be profit-making. It has been a long-standing principle that rents within an area are pooled. This means that existing tenants pay rent increases to help meet the cost of providing new houses. We do not want tenants to subsidise the general rates. Some may say that because on other occasions rate fund contributions have gone to housing revenue accounts there should now be no objection to that process being reversed.

Quite apart from the principal objection to that argument, in 1979–80, 180 authorities did not make any voluntary rate fund contribution to housing revenue accounts. At the beginning of this financial year, working balances in those accounts totalled some £70 million. It is precisely those authorities which had previously declined to make any rate fund contributions which are now most likely to be able to turn their working balances into profits for the general rate fund. I wonder whether the Minister is listening to what I say?

Lord BELLWIN

My Lords, I am very much listening to what the noble Baroness is saying.

Baroness DAVID

Good! Just one example taken from a set of statistics for 1979–80 shows that in that year South Shropshire, which is an independent council, expected to retain a working balance of some £240,000, which is over £100 per dwelling. In other words, they could have charged rents of £2 a week lower without incurring any loss. Neither in that year nor in each of the two previous years did they make any voluntary rate fund contribution. It may be said that the profits from rents, by reducing the need to raise the rates, will help to keep down the cost of public expenditure. We object to this in principle but we look at this, too, in the context of the public expenditure plans for housing. Profits from rents going to the rate fund do nothing at all to reduce public expenditure on housing, so the Government are proposing that these profits should be taken away from housing on top of the reduction of £2 billion in public expenditure on housing.

This amendment seeks to prevent such profit-making, but to allow any balances from housing revenue accounts to be transferred to housing repair accounts. Let us look forward a few years. It is those authorities with little housing need and a fairly old housing stock which are in the easiest financial position. However, this in turn means that before long they will face higher costs for repair, modernisation or even replacement. It would be sensible housekeeping to set money aside for this in the housing repairs account over a period of years until it is needed. Until then, it could be "borrowed"—I put that in inverted commas—by authorities and thus still help to reduce the public sector borrowing requirement without being lost from the reduced funds to be available for public expenditure on housing. I beg to move.

Lord SANDFORD

My Lords, if I may say so with the greatest courtesy to the noble Baroness, I think that we have just heard a piece of tremendous humbug and hypocrisy. The operative word in this clause is "may". Here we have the Government giving to local authorities power and discretion to exercise their own judgment about the way in which they will combine the resources in their general revenue account and their housing revenue account. Noble Lords and noble Baronesses opposite have argued time and time again that the Government are being inflexible and are interfering in the affairs of local government. Here in this clause the Government are being less rigid, removing rigidities, being more flexible, giving local government more power, more discretion, and noble Lords and noble Baronesses opposite complain.

Lord BELLWIN

My Lords, I, too, really am astonished at this amendment. The noble Baroness began by saying that public housing should not be profit-making. I presume, therefore, that it is quite satisfactory to her that public housing should be loss-making; and there is plenty of evidence of that. I am not concerned with my brief on this. This was a subject which the local authorities, the local authority associations, talked about for years. The one thing they always said was that the right to decide what local rent should be, the right to decide what should be done with any surpluses from those rents, should be for local decision; and that is precisely what we are doing in this Bill.

There are authorities in the country who have annual rate fund contributions to their housing revenue accounts—in some cases well over £30 million a year—while other authorities with more public houses not only have no deficits, no rate fund contribution, but have actual surpluses. Yet here we have situations where like authorities have, on one side, massive losses which are made up for every year by their ratepayers, and, on the other side, authorities with great numbers of houses who have no such losses at all. All we are saying is that those authorities who have a surplus can, if they wish, apportion those surpluses as they want. What is the position at the present time? The position is that if one so manages one's affairs—and without charging expensive or exorbitant rents—one has a surplus, one may apply that surplus to housing purposes—that is perfectly in order—but one may not do anything else with that money.

There is no way that that can be right by any standards. What we are seeking to do in this Bill is to say to authorities, "Yours are the decisions. If you get it wrong, if you get it so that your rents are too high, you will answer to the local electorate for it. If you get it so that your rates are too high you will answer to the local electorate. But yours are the decisions and yours will be the decision to decide how you use that money". How can it be wrong in this day and age for us to come along and say, "From now on you have the decisions to make. We will give you the freedom to make those decisions and you will answer for them to the people who elect you"? That cannot be wrong in any way that one looks at it.

I was really rather pleased at Committee when, of all the things that were raised, this was not raised. I felt that at last there was a realisation of the fact that this is what local government and local authorities want; it has to be right, and all sides of the House recognise it. Now it rears its ugly head again. I hope that the noble Baroness will be persuaded by the arguments and will not press the amendment.

Baroness DAVID

My Lords, I am not persuaded by the arguments. I think it depends on the importance one puts on the need for public housing. Homes are extremely important, and I think this is the point. We consider that homes in good repair are important, and that is the reason we have moved this amendment. But I will not press it at this time of night.

Amendment, by leave, withdrawn.

9.18 p.m.

Lord BELLWIN moved Amendment No. 118: After Clause 133, insert the following new clause:

("Avoidance of certain unauthorised disposals

.—(1) If—

1. (a) at any time after 18th July 1980 a local authority or a housing association has disposed of a house; and
2. (b) the disposal was one which, under section 104 of the 1957 Act or section 2 of the 1974 Act, required the consent of the Secretary of State or of the Housing Corporation (or would have required it had the relevant provisions been in force but was made without that consent;

then, unless the disposal was to an individual (or to two or more individuals) and did not extend to any other house, it shall be void (and, if made before the passing of this Act, be deemed always to have been void) and section 128(2) of the Local Government Act 1972 or, as the case may be, subsection (5A) (inserted by section 121(6) of this Act) of section 2 of the 1974 Act (protection of purchasers) shall not apply. (2) In this section "house" includes a flat and "the relevant provisions" means Part I and sections 90 and 121 of this Act.").

The noble Lord said: My Lords, during the passage of this Bill, Parliament has expressed its clear will that secure tenants of local authorities and of certain housing associations should have the right to buy. The Bill sets out a procedure for tenants to exercise that right, a procedure which is designed to ensure that this right can be confidently exercised. But we must be just as sure that the expressed will of Parliament cannot be frustrated through any loopholes in the legislation. This was bound to be a preoccupation of the Government. The attitude and statements of the Opposition were bound to ensure that. In another place, the right honourable gentleman, Mr. Kaufman, for instance, has said that though in his opinion any opposition to the Act should be conducted within the law there is no obligation on any citizen in the country to obey the spirit of the law. No doubt his view reflects that of a number of people in local authorities. Hence the effect of the law must be entirely clear, with no scope for any landlord to wriggle out of complying with the expressed will of Parliament. Hence, this new clause.

The basic purpose of the new clause is to ensure that no landlord should be able to succeed in frustrating the right to buy by disposing of some or all of its housing to some other body to whom the right to buy does not apply. The Bill in some cases by amendment of prior legislation provides for a comprehensive requirement consent both to the disposal of "Part V" houses and land and also to the disposal of land and houses by registered housing associations. This consent requirement is needed in order to simplify the present law. We have also seen it as the means to ensure that tenants whom Parliament intends to have the right to buy shall not be deprived of that right as a result of disposals to other bodies.

However, as it stands, Section 128 of the Local Government Act 1972 has the effect that if a disposal takes place without necessary consent the person to whom it is made still gets valid title. The Bill makes similar provision in respect of housing association disposals in Clause 121. We have come to the conclusion therefore that, as the Bill stands, the rights of tenants are not yet adequately protected.

The new clause deals with the problem by providing that a disposal which takes place without consent will be void; in other words, it will be as if the disposal had not taken place and tenants will still have their right to buy. The important exception is made, to deal with the case where an individual makes a single purchase of a house or flat. It is possible that an authority might sell or lease a house or flat and do so without consent unwittingly perhaps because it had not conformed with the terms of an available consent. Such a disposal would clearly not subvert the right to buy, and it is clearly right to protect the position of the individual purchaser in such cases.

The new clause also deals with a loophole in the present requirements for ministerial consent for the disposal of "Part V" council houses, that is the requirements which apply until the relevant part of the Bill comes into force. Under the present law, the consent requirements may not cover all possible disposals. We are not prepared to see the right to buy snatched from tenants by any landlord who might seek to get rid of his housing through the gaps and sought to make a perverse disposal in the short time that the Government hope remains before enactment. The new clause provides, therefore, that such a disposal also would be void.

My Lords, we must ensure that individual tenants have the rights which Parliament intends them to have and that these rights are not taken away. These provisions have that purpose. They apply only to transactions after the new clause was tabled. The Department and the Welsh Office have already written to all local authorities warning them of the new clause. The Housing Corporations are writing similarly to housing associations. I beg to move.

Baroness DAVID

My Lords, the Minister asked us earlier to speak rather slowly so that we might hear. In fact I found that he went extremely fast, so if I ask foolish questions I must ask him to forgive me. May I ask whether the effect of this amendment is to introduce retroactive legislation which will make any disposals by local authorities or housing associations which have occurred after 18th July null and void unless they received the consent of the Secretary of State? Also, will the Minister confirm that if this amendment is accepted, transactions which are legal today would become illegal once this Bill becomes an Act? Surely that is a departure from any previous legislation.

Lord BELLWIN

My Lords, may I first apologise for speaking perhaps more quickly than I should have done. One is caught up in the wish to get on with the proceedings but at the same time to consider the problems of the Hansard writers. I accept that sometimes it makes it difficult to follow some of the points and I shall try to slow down a little in future. I am not absolutely certain as to the answer to the noble Baroness. Again, as I have said before, I can give—

Baroness DAVID

My Lords, if the Minister will allow me, there really must be an answer.

Lord BELLWIN

My Lords, of course there is an answer and I was about to say that I can give my interpretation of it if the noble Baroness wishes, but I think it is always preferable for me to confirm and to write to the noble Baroness and that I gladly undertake to do. If the noble Baroness is not happy with that, then I will check this point out and will return to it even as we continue with the proceedings.

Schedule 19 [Provisions replacing sections 90 to 91A of Housing Finance Act 1972]:

9.25 p.m.

Lord STRABOLGI moved Amendment No. 119: Page 151, line 41, at beginning insert ("normal")

The noble Lord said: My Lords, I beg to move Amendment No. 119 and, with your Lordships' permission, I should like to speak also to Amendments Nos. 120, 121 and 122. With this schedule we move now into the private sector, dealing mainly with the service charges in the larger blocks of flats in our cities, and in particular in Inner London, which have been causing much concern. This is not at all a party matter. We are grateful to the Government for meeting us in many respects and for improving the schedule enormously, both in another place and since it came to this House, and we are also grateful for the actons of the Inner London Members of Parliament, most of whom are also members of the governing party.

The purpose of the amendments is to restrict the amount of money that can be levied on tenants under the heading of "service charges" to normal maintenance and to the actual costs incurred. I readily concede that running repairs need to be done, but in some mansion blocks tenants are being asked to pay large sums in advance, sometimes two or three years in advance, for major repairs and reconstruction. Some landlords, either directly or through their managing agents, in certain blocks of flats are attempting to establish what is called a reserve fund, amounting sometimes to a very large sum, against any eventualities and even as a hedge against inflation, or so they describe it.

The effect of this is that tenants are giving the landlords an interest-free loan over and above the normal service charge for what, in many cases, should surely be capital expenditure, and the landlord has the benefit of a cash flow far in advance of what is required. If a tenant refuses to pay, he is threatened with the forfeiture of the long lease which he has bought, sometimes for a large sum; and I have seen some such letters. They may he bluff, but, on the other hand, if they are not bluff they are very worrying for the recipients. There is no control over the sums involved, amounting, sometimes, to tens of thousands of pounds—which a later amendment of mine seeks to rectify—and in some cases the landlord uses his interest-free loan to refurbish empty flats in the block which are then sold off at great profit.

The Government say that charges should be restricted to what is reasonable. But what is reasonable? If the landlord says that the roof may need repairing one day in the future and this will cost so many thousands of pounds, it may be reasonable, but what proof is there that the work needs to be done? If he wants to put Chinese silk in the communal hall in order to get a higher price for the empty flats that he is hoping to sell off, it might be at a reasonable cost for Chinese silk, although the tenants (who, of course, are doing the paying) may not want this expensive form of wall covering. Tenants under the Bill as at present drafted are at the whim of the landlord, who will be able to demand large advance payments for expenditure that could be proved to be reasonable in the context.

I consider that service charges should be used for normal running repairs and normal maintenance, which they always used to be until recently, and for which they are still used by many good landlords. In Dolphin Square, after it was taken over by Westminster Council when it was under threat of being taken over by some of these offshore property companies, there have been no problems of this kind. So it can be done. Any other major structural repairs, general refurbishing of empty fiats and so-called reserve funds should be, I submit, a capital liability for the property company concerned. What I have described is by no mans universal practice. There are, of course, many good landlords, but there are, I regret to say, some bad ones; and it is to give tenants the extra protection over and above what the Government have already rightly given them that I have ventured to put down these amendments. I beg to move.

9.30 p.m.

Lord BELLWIN

My Lords, I am grateful to the noble Lord for raising once more this question of advance payments. I think our objectives are very much the same, and, as the noble Lord was kind enough to say, we have had some discussion on this matter since the Committees proceedings; we have talked about the difficulties of adopting any approach which is different from that now laid down in the schedule.

As I have said before, there is no question of party politics here. We want to try to get the law right so that it operates fairly for both landlord and tenant and promotes good management of blocks of flats. It may be helpful to your Lordships if I explain the background and the view we have reached. First of all, it has been common practice for leases of flats to provide for some part of a service charge to be paid on an interim basis. This is meant to contribute to such items as porters' wages, cleaning the common parts and fuel costs. If a landlord could only claim for such items once a year after he had paid for them out of his own pocket, his financing costs would clearly be very substantial. Without doubt they would be passed on to the leaseholder as a legitimate cost of providing services.

A second practice, which is not as general as interim payments but is certainly not uncommon, is for a lease to require contributions to a sinking fund for major repairs which occur only infrequently, such as the replacement of roofs, boilers and lifts. The object is to save leaseholders from being faced out of the blue with very large bills and instead to spread the cost over the years. Here again we have a very reasonable concept which, if fairly operated, will be in the interests of leaseholders. Neither this Government nor, as I understand it, any previous Government of either party have taken the view that interim payments or contributions to sinking funds should be entirely banned and that the provisions of leases giving effect to these should be made void. Nevertheless, the High Court in the very recent case of Frobisher v. Kiloran took the view that the provisions made about service charges by the Housing Act 1974 were so worded as to make a requirement for advance payments in that case not lawfully enforceable. The court was not, of course, concerned with the merits of the issue but with the interpretation of the statute and the facts of that particular case.

It was not the intention in 1974 to ban advance payments. Indeed, it has never been the purpose of these statutory provisions to try to rewrite leases. Their purpose has been, and still is, to provide rights of consultation and information as a prelude to a possible challenge to what is being charged. For this reason, the present Schedule seeks to reverse the effect of the Kiloran judgment in so far as it interfered with provisions of leases on the subject of interim advance payments. In no way does this give landlords carte blanche to levy whatever advance payments they wish. They can operate only under the provisions of the lease. If a lease provides for interim payments of £100 per year, that is all that can be demanded. I utterly repudiate the idea which has been put about that in restoring the legal position to pre-Kiloran we are innovating in favour of landlords.

Now as I understand the noble Lord's position, he accepts that some interim payments, such as those contributing to staff wages, are reasonable and should not be banned, while others, relating for example to major building works, should be recoverable only after the work has been done. If we accepted this, it would certainly outlaw sinking funds, which could mean very heavy bills facing leaseholders with little prior warning. However, leaving that aside, I think we have to recognise that in these days of inflation and high interest rates stage payments are not an uncommon or necessarily unreasonable feature of major building contracts. Quite apart from the drafting difficulty of distinguishing between major and minor works of repair, I can see objection to banning interim payments by tenants until the whole of a job has been completed.

My Lords, notwithstanding these difficulties, we have included in the schedule an amendment made in Committee which gives leaseholders in addition to their protection under the terms of the lease the opportunity to challenge any demand for advance payment which is unreasonable, notwithstanding the express provisions in the lease. This, I accept, is a broad brush approach, but given the variety of purposes for which advance payments can be made I think it is the only practical way of giving leaseholders an extra line of defence.

As always, I listened carefully to what the noble Lord, Lord Strabolgi, said, and he made a fair point—what is reasonable? I agree that it is considered unsatisfactory that the courts should have to decide what is reasonable, and if one does resort to the point where it is the courts who have to decide, it is in my view usually a sad situation. Nevertheless, it is, if you like, a term in which the courts now have very considerable experience and there is any amount of precedent, albeit not in every particular instance.

I hope that my explanation will, at least to some extent, have reassured the noble Lord. Certainly I think he knows of the Government's concern and of our desire to do what is practical to help. I have not, perhaps, gone into as much detail as the noble Lord might have liked on his amendment, but I am bound to say I could not advise an acceptance, however kindly disposed I felt, because I think it would cause considerable uncertainty, and this is a great difficulty.

This is not an area of great principle as such; it is a problem. It is a problem for the people, the landlords, the tenants, the management—it really is a problem all round. If the noble Lord, as he has been seeking to do recently, can come up with—what was it Matthew Arnold said? —"a spark from heaven", then we would be glad to know of the spark that would perhaps lead us on to better ways of doing these things. I think the noble Lord knows my position here, I am anxious to help; I do not think we have the answer here.

Lord STRABOLGI

My Lords, as the noble Lord has said, this is a problem. Of course, one of the troubles is that many of these leases were signed some years ago with standard wording which was used in more spacious—should I perhaps say, more gentlemanly—days when these blocks of flats were owned by old family trusts and so on. There was never any problem. But now the wording is being interpreted in a most ruthless way to extort all sorts of sums, large sums from tenants, and I have seen some of these letters. They are threatened with the forfeiture of their lease if they do not pay.

The noble Lord says they should go to court, but that is a time consuming matter. This is a big subject, and I know the noble Lord is sympathetic. I hope the department will study it, and, in the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 120 to 122 not moved.]

9.38 p.m.

The Earl of HALSBURY moved Amendment No. 123: Page 152, line 4, at end insert— ("(3) This Schedule shall have effect notwithstanding anything to the contrary contained in any lease or tenancy agreement which makes provision for payment of a service charge.").

The noble Earl said: My Lords, I beg to move the amendment standing in my name on the Marshalled List. I would also like your Lordships' permission to make a brief reference to my other amendment, No. 129A. Both these amendments are in the same form as that in which I withdrew them in Committee, following an undertaking by the noble Lord the Minister to examine my points very carefully and write to me. As a result of that, I am happy to assure him that if he successfully pilots through his own amendment to paragraph 12—I think it is No. 129—I shall not move my Amendment No. 129A. Therefore, it only remains for me to speak to Amendment No. 123.

My Lords, people outside this House who have been following attentively the progress of the Bill in Committee have written to me about this amendment and asked me to pursue it. In addition, it has attracted the attention of the noble Lord, Lord Strabolgi, and the noble Baroness, Lady Birk, on the Opposition Front Bench. Therefore, although this subject is not by any means mine, I do not feel I am in any way indulging in frivolous behaviour in pursuing the matter a little further on Report in your Lordships' House tonight.

A typical correspondence includes a firm of solicitors whose practice is mainly concerned with the administration of large estates and the chairman of a tenants' association in a large block of London fiats. They both urge me to pursue the matter and seek the assurance that the noble Lord has endeavoured to give me in correspondence, but which I should like to persuade him to pursue with me a little further. What he has told me is that the Act would not permit somebody to introduce into a lease a provision which was outwith the terms of this schedule. But that does not cover leases in being—in the words which he used in giving me that assurance—and one must remember that there are three groups of leases here.

There are those entered into before the Housing Act 1974; those that have been entered into in the interim between 1974 and the date when this Act vests, and the question arises as to whether provisions in leases ante-dating this Act or the 1974 Act would or would not be overridden by this schedule in relation to the matters legislated for. It is that particular point on which I seek somewhat further assurance from the noble Lord in the form not merely of a statement, if I may put it ex cathedra, that the Act does override earlier leases, but rather to tell us what the authority for that statement would be either in terms of something recited in the Act itself or in terms of some general legal authority on the construction of statutes.

I have myself, not being a lawyer, tried to do a little homework on this point. But, although I have consulted Maxwells Interpretation of Statutes I have not really got much further.

Lord MOWBRAY and STOURTON

My Lords, may I politely ask the noble Earl to talk into the microphone a little louder, because the Box is totally unable to hear what he is saying.

The Earl of HALSBURY

My Lords, I am so sorry. I have been doing my best to speak into the microphone. I hope that the noble Lord the Minister was able to hear what I was saying. I was saying that I had tried to find some general legal authority for this, but that, although consulting a textbook, I really felt that I was not up to the task. I should be greatly obliged to the noble Lord the Minister if he would he so kind as to give me the authority for whatever assurance he is able to give.

We all know that what we say here in Committee, or what we say here tonight, or whatever may be said on Third Reading, does not apply when it comes to construction of the Act in the courts. The courts will construe this Bill as an Act, when it vests, in terms of what it says. What we say in debate does not really count for very much. It is for that reason that I ask the noble Lord whether he can quote the authority for saying that the Bill overrides any provision there may be to the contrary in earlier leases. I do not wish to pursue the matter any further. I could give illustrations but the hour is late and I prefer not to do so. I beg to move.

Lord BELLWIN

My Lords, I explained in Committee that there was no need for the amendment. However, I am obliged to the noble Earl for moving it again today, because it provides me with the opportunity to clarify a fundamental point about Schedule 19 on which, I believe, he seeks an assurance and which may be helpful generally.

The provisions in Schedule 19 apply to existing leases and to future leases. Let there he no doubt at all on that point. Furthermore, it will not be possible for a landlord to put a term in a new lease so as to evade the schedule. Whatever the terms of an existing lease or a new lease may say, a landlord will be able to recover costs only to the extent that they have been reasonably incurred, and provided that he has consulted tenants in the manner required. Where a lease provides for an advance payment, whether that is based on estimates or is a contribution to a sinking fund, or is provided for in any other way, such a payment will be recoverable only by the landlord to the extent that it is reasonable. I am happy to assure your Lordships once again that there is no need for Amendment No. 123.

The noble Lord says, "Yes, that is fine; I am sure that that is right". But he asked whether I would care to quote him legal cases or whatever to endorse what I say". As to that, there is no actual legal authority as such; it is just part of the constitutional position. I would not dare to be so bold as to state it in such clear and unequivocal terms unless I was very sure of what I was saying. With that, I hope that the noble Lord is satisfied.

The Earl of HALSBURY

My Lords, subject to anything that the noble Lord, Lord Strabolgi, or the noble Baroness, Lady Birk, may wish to add, for my own part I must be content with the very positive assurance given to me by the noble Minister and I beg leave to withdraw the amendment standing in my name.

Amendment, by leave, withdrawn.

9.47 p.m.

Lord STRABOLGI moved Amendment No. 125: Page 152, line 48, at end insert— ("( ) Where a service charge relates to a later period the monies collected for this charge shall be accounted for separately by the landlord or the association or company responsible for the collection of the service charge and shall be controlled and administered by a representative of the landlord and one representative of each category of tenant nominated by the respective categories subscribing to the service charge.").

The noble Lord said: My Lords, I beg to move Amendment No. 125. I submit that it is important that when there are large advance payments demanded by the landlord for a reserve or sinking fund, the monies collected should be controlled and administered jointly by landlord and tenants. This is particularly important in the case of certain offshore companies or, indeed, anonymous foreign landlords where the funds collected could be transferred overseas or used for quite another purpose to help the cash flow.

What happens if the company goes out of business or, indeed, sells the property to another landlord?—and there have been cases where the tenants have had to go to court. I submit that this is the tenants' money and it should be accounted for separately and not treated as an interest-free long-term loan over which there is no control.

In Committee the noble Lord, Lord Bellwin, said that the Government were not unsympathetic to the purpose of my amendment, and the noble Lord kindly said that if I would withdraw it, the Government would look at it again. I therefore hoped that the Government would put down their own amendment. As they have not done so, for some reason or another, I thought that I had better put mine down again. I beg to move.

Lord BELLWIN

My Lords, the question of sinking funds has been raised certainly here in this House, indeed in Committee, and in another place. The Government have said that this is a matter which must be looked into in the longer term and I am happy to repeat that undertaking. In recent years my department has been engaged on a study of the problems of tenants of flats in the private sector, particularly in mansion blocks. The first fruits of that study are the provisions in Schedule 19. We have, in fact, already started to look into the question of sinking funds, but we came to the conclusion that this is such a complex matter that there was no possibility of bringing forward effective proposals within the time-scale of this Bill. I think it is fair to say—and I say it certainly in no spirit of criticism—that none of the amendments relating to sinking funds which has been tabled at various stages of the Bill, either here or in another place, including the present one, would be satisfactory, despite the fact that we know the intentions behind thern;and indeed approve of them.

I should also like to point out that while we are aware of the general concern of some leaseholders about the administration and security of sinking funds we have not so far been shown detailed case histories of abuses where existing remedies have been tried and have failed, If the noble Lord is able to give us such cases I should be very pleased indeed to have them, which is not to imply that because we do not have them we are satisfied; far from it. I would hardly have said what I did about our intentions had that been the case.

I want to assure the noble Lord that, after the present Bill has been enacted—and I am sorry that I am not able to bring forth for him that which he and certainly I too would wish, but it is not there to be, and therefore I cannot do it—we shall resume our study of this question. We do not intend to let it go away because the legislation will be there. We shall be reviewing it with a view to drawing up proposals if a workable scheme can be devised. If the noble Lord can (as they say in another colloquialism), put his tenpence in, we shall be very glad indeed to have it.

Lord STRABOLGI

My Lords, I am grateful to the noble Lord. He said and implied that I did not bring forward any cases. I did refer to one case, and indeed this was referred to in another place, where, in a block of flats in central London, the tenants were asked to pay a substantial capital expenditure for future repairs. The block was sold and the funds so collected were mysteriously whisked away, the tenants being asked by the new landlord to pay that money again; and they had to go to court. All the amendment seeks to do is to see that tenants' money is accounted for separately. It is not seeking to stop sinking funds or to do any of the other things over service charges that we have discussed at length in Committee. All it is doing is earmarking the tenants' money in a separate account, which they themselves will control jointly with the landlord. This is an important amendment, and we must press it.

9.52 p.m.

On Question, Whether the said amendment (No. 125) shall be agreed to?

Their Lordships divided: Contents, 42; Not-Contents, 94.

CONTENTS
Airedale, L.	Diamond, L.	Kinloss, Ly.
Amherst, E.	Donaldson of Kingsbridge, L.	Leatherland, L.
Ampthill, L.	Ellenborough, L.	Lee of Newton, L.
Amulree, L.	Elliot of Harwood, B.	Llewelyn-Davies of Hastoe, B.
Ardwick, L.	Elwyn-Jones, L.	Lloyd of Kilgerran, L.
Bacon, B.	Evans of Claughton, L.	Longford, E.
Balogh, L.	Faithfull, B.	McGregor of Durris, L.
Banks, L.	Foot, L.	Macleod of Borve, B.
Barrington, V.	Fulton, L.	Maelor, L.
Beaumont of Whitley, L.	Gaitskell, B.	Milne, L.
Bernstein, L.	Gardiner, L.	Monson, L.
Beswick, L.	Gifford, L.	Moyne, L.
Birk, B.	Gladwyn, L.	Northchurch, B.
Blease, L.	Glenamara, L.	Northfield, L.
Blyton, L.	Goronwy-Roberts, L.	Ogmore, L.
Boston of Faversham, L.	Greenway, L.	Oram, L.
Brockway, L.	Greenwood of Rossendale, L.	Paget of Northampton, L.
Brooks of Tremorfa, L.	Gregson, L.	Phillips, B.
Bruce of Donington, L.	Grey, E.	Pitt of Hampstead, L.
Byers, L.	Hale, L.	Ponsonby of Shulbrede, L.
Caradon, L.	Halsbury, E.	Raglan, L.
Chitnis, L.	Hampton, L. [Teller.]	Rathcreedan, L.
Cledwyn of Penrhos, L.	Hanworth, V.	Rochester, L.
Clifford of Chudleigh, L.	Hooson, L.	Ross of Marnock, L.
Collison, L.	Houghton of Sowerby, L.	Seear, B.
Cooper of Stockton Heath, L.	Hughes, L.	Segal, L.
Cork and Orrery, E.	Jacques, L.	Simon, V.
Craigavon, V.	James of Rusholme, L.	Spens, L.
David, B.	Janner, L.	Stedman, B.
Davies of Leek, L.	Jeger, B.	Stone, L.
de Clifford, L.	Kaldor, L.	Strabolgi, L.
Denington, B.	Kilmarnock, L.	Strathclyde, L.
Strathspey, L.	Vaizey, L.	Whaddon, L.
Tanlaw, L.	Vaux of Harrowden, L.	Wigg, L.
Taylor of Blackburn, L.	Vickers, B.	Wigoder, L. [Teller.]
Taylor of Gryfe, L.	Wade, L.	Winstanley, L.
Taylor of Mansfield, L.	Wallace of Coslany, L.	Wootton of Abinger, B.
Underhill, L.	Wells-Pestell, L.	Yarborough, E.
NOT-CONTENTS
Alexander of Tunis, E.	Dundee, E.	Mansfield, E.
Allerton, L.	Eccles, V.	Margadale, L.
Alport, L.	Elles, B.	Marley, L.
Amory, V.	Elton, L.	Massereene and Ferrard, V.
Atholl, D.	Falkland, V.	Monk Bretton, L.
Auckland, L.	Ferrers, E.	Mottistone, L.
Avon, E.	Ferrier, L.	Mountevans, L.
Balerno, L.	Godber of Willington, L.	Mowbray and Stourton, L.
Bellwin, L.	Gowrie, E.	Norfolk, D.
Belstead, L.	Gridley, L.	Orkney, E.
Bessborough, E.	Grimston of Westbury, L.	Perth, E.
Boyd of Merton, V.	Hailsham of Saint Marylebone,L. (L. Chancellor.)	Rawlinson of Ewell, L.
Boyle of Handsworth, L.		Rochdale, V.
Brabazon of Tara, L.	Harmar-Nicholls, L.	Salisbury, M.
Bridgeman, V.	Hatherton, L.	Sandford, L.
Brookeborough, V.	Henley, L.	Sandys, L. [Teller.]
Caithness, E.	Hornsby-Smith, B.	Savile, L.
Campbell of Croy, L.	Hylton, L.	Selkirk, E,
Chelwood, L.	Killearn, L.	Sempill, Ly.
Clitheroe, L.	Kilmany, L.	Sharples, B.
Cockfield, L.	Kinnoull, E.	Skelmersdale, L.
Colville of Culross, V.	Lauderdale, E.	Soames, L. (L. President.)
Crawshaw, L.	Long, V.	Stanley of Alderley, L.
Croft, L.	Lucas of Chilworth, L.	Swinton, E.
Cullen of Ashbourne, L.	Lyell, L.	Thorneycroft, L.
Denham, L. [Teller.]	McAlpine of Moffat, L.	Trefgarne, L.
Digby, L.	McFadzean, L.	Vivian, L.
Drumalbyn, L.	Mackay of Clashfern, L.	Young, B.
Dulverton, L.	Malmesbury, E.

On Question, Amendment agreed to.

CONTENTS
Barrington, V.	Greenwood of Rossendale, L.	Mountevans, L.
Beaumont of Whitley, L.	Grey, E.	Northfield, L.
Birk, B.	Halsbury, E.	Peart, L.
Blease, L.	Hampton, L.	Ross of Marnock, L.
Boston of Faversham, L.	Hooson, L.	Seear, B.
Brooks of Tremorfa, L.	Houghton of Sowerby, L.	Segal, L.
Cledwyn of Penrhos, L.	Howie of Troon, L.	Simon, V.
Collison, L.	Janner, L.	Stone, L.
Crowther-Hunt, L.	Jeger, B.	Strabolgi, L.
David, B. [Teller.]	Llewelyn-Davies, L.	Taylor of Blackburn, L.
Davies of Leek, L.	Llewelyn-Davies of Hastoe, B. [Teller.]	Underhill, L.
Denington, B.		Walston, L.
Eldon, E.	Maelor, L.	Wells-Pestell, L.
Evans of Claughton, L.	Mishcon, L.	Wigoder, L.
Gifford, L.

NOT-CONTENTS
Abercorn, D.	Eccles, V.	Mottistone, L.
Abinger, L.	Ellenborough, L.	Mowbray and Stourton, L. [Teller.]
Airey of Abingdon, B.	Elles, B.
Ampthill, L.	Elliot of Harwood, B.	Moyne, L.
Avon, E.	Elton, L.	Newall, L.
Balerno, L.	Faithfull, B.	Norfolk, D.
Bellwin, L.	Ferrers, E.	Orkney, E.
Belstead, L.	Ferrier, L.	Pender, L.
Bessborough, E.	Fortescue, E.	Rawlinson of Ewell, L.
Boyd of Merton, V.	Gainford, L.	Renton, L.
Brabazon of Tara, L.	Godber of Willington, L.	Rochdale, V.
Bradford, E.	Gowrie, E.	St. Aldwyn, E.
Bridgeman, V.	Gridley, L.	Salisbury, M.
Buxton of Alsa, L.	Grimston of Westbury, L.	Sandford, L.
Caithness, E.	Hailsham of Saint Marylebone, L. {L. Chancellor.)	Sandys, L. [Teller.]
Campbell of Croy, L.		Savile, L.
Chelwood, L.	Harvey of Tasburgh, L.	Selkirk, E.
Clifford of Chudleigh, L.	Hatherton, L.	Sempill, Ly.
Cockfield, L.	Keyes, L.	Sharples, B.
Colville of Culross, V.	Killearn, L.	Skelmersdale, L.
Cork and Orrery, E.	Kimberley, E.	Soames, L. (L. President)
Craigavon, V.	Kinnoull, E.	Strathclyde, L.
Craigmyle, L.	Long, V.	Strathcona and Mount Royal, L.
Crawshaw, L.	Lucas of Chilworth, L.	Swinton, E.
Croft, L.	Lyell, L.	Thorneycroft, L.
Cullen of Ashbourne, L.	McFadzean, L.	Trefgarne, L.
De La Warr, E.	Mackay of Clashfern, L.	Trenchard,V.
Denham, L.	Macleod of Borve, B.	Vaux of Harrowden, L.
Digby, L.	Malmesbury, E.	Vickers, B.
Drumalbyn, L.	Mansfield, E.	Vivian, L.
Dulverton, L.	Margadale, L.	Yarborough, E.
Dundee, E.	Marley, L.	Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

10.1 p.m.

Lord BEAUMONT of WHITLEY moved Amendment No. 126: Page 153, line 20, leave out ("another building") and insert ("other buildings")

The noble Lord said: My Lords, I beg to move this amendment. This is another amendment about service charges. The purpose of the amendment is to make certain that the procedure regarding accounting for service charges is considerably simpler than it is made out to be in the Bill. Now that my noble friend has arrived I shall allow him to continue with the theme.

Lord EVANS of CLAUGHTON

My Lords, I apologise that I was not in my place when the amendment was called, but under the temporary arrangements it takes some time to get back to this Chamber after a Division. It seems to me and to my noble friends, and indeed to the Association of Metropolitan Authorities, that local authorities will have a considerable additional administrative expense in converting the existing procedures relating to service charges to those laid down in the Bill. It seems to those advising me that service charges should be arranged so that they can apply to more than one block; and that is why the amendment has been moved.

There are two elements in a service charge: the basic charge and the charge for major repairs. As things stand in the Bill as drawn, block by block accounts will have to be kept for any blocks in which flats have been sold. This would apply even if only one flat has been sold in a block of local authority flats. Heaven knows! what this provision will mean for a large authority, but for a medium-size authority, such as Knowsley, near Liverpool, which has 900 blocks, it will mean that the authority will have to keep 900 separate accounts. At present in that kind of set-up minor repairs and maintenance charges are not charged separately, as I am sure the noble Lord the Minister will be aware from his experience of local government. They are kept on an estate basis, or indeed almost on a local authority basis. If the legislation as set out is carried, the change will take in local authorities such as Knowsley which, as I have said, is a medium-size authority. It will take two man-years to introduce the new procedures; and that does not include computer testing or systems implementation time. I am sorry to use those kind of somewhat "way out" terms.

My amendment seeks to clarify the fact that local authorities may base a proportion of the service charges—in other words, not the major items of repair—on an across-the-board basis. This would not in any way take away the rights of the tenant, enshrined in the Bill, to challenge charges: it is merely seeking information about whether in fact local authorities, if this measure is introduced in the way it is drafted, will have to carry out a block by block charge—as I say, it might amount to 900 different charges—or whether they can in fact charge for maintenance and for minor repair items across-the-board or on an estate basis. I think that from a point of view which the Government are very concerned about, it would be preferable if an across-the-board basis could be established so that in fact a very considerable saving in administrative charges could be made.

Lord BELLWIN

My Lords, paragraph 7 of Schedule 21 gives a tenant of a flat the right to a summary of costs relating to his service charge. If there are more than four flats in the building, or if the costs relate also to another building, the summary must be certified by an independent accountant. The amendment substitutes "other buildings", in the plural, for "another building".

The provision as drafted already covers the situation where the costs relate to one other building or several other buildings, because if the cost relates to several others it must relate to "another". On the other hand, the amendment would remove the requirement for certification when there is only one other building, which I submit is a valuable protection for the tenants. If the noble Lord is arguing that costs should not relate to more than one other building, I do not think this is practical. Surely the vital thing is for the tenant to be able to see how his charges are derived.

My Lords, I am slightly puzzled here, because we have discussed this position of block by block accounts with the local authority associations, and we understood that in fact they were satisfied. The schedule does not specifically require accounts for each block. The summary of costs must take account of how the expenditure is apportioned, each tenant to his block, with another block. With that, I admit very brief but, I hope, to the point explanation, I hope the noble Lord will feel that his point is covered.

Lord EVANS of CLAUGHTON

My Lords, I am sure the noble Lord the Minister appreciates that I am not trying to create difficulties; I am trying to simplify matters for the future. I am advised by the Association of Metropolitan Authorities in this matter, which suggests to me that the lines between the noble Lord the Minister and the AMA are possibly not as clear as the noble Lord thought they might be. Because they say in the last paragraph of their briefing note to me: The above amendment is sought in order to clarify that local authorities may base a proportion of their service charge—that is, for non-major items—in relation to several blocks on an acrossthe-board basis. The costs involved could, of course, as I said earlier, be challenged by tenants in the normal way, but the ability to relate the charge to several blocks"— and this is the important point which perhaps the noble Lord the Minister might take up— could considerably ease what would otherwise become an extremely costly administrative exercise". I know that it is the often-repeated sentiment of the present Government that they are anxious to reduce administrative charges, and that is why, in a desire—a totally disinterested desire, my Lords—to assist the present Government to reduce their administrative charges, I move this amendment; and I hope the noble Lord will take the spirit in which I move the amendment from the way in which it is moved.

Lord BELLWIN

My Lords, I will certainly do that without any hesitation. I continue to be slightly puzzled—although I take the point about the lines of communication. We last met the local authorities associations on this on 29th May and, in fact, have heard no more since. I can only repeat that the accounts do not have to be kept on a block-by-block basis and there is nothing in the schedule which says that they must. I hope that the noble Lord will feel able to withdraw his amendment. Certainly, it is important that the lines of communication be clear and kept clear now and at all times. Of course, we will want to be talking and urging them by saying, "Come on, what are you concerned about?" That we shall certainly do.

Lord EVANS of CLAUGHTON

My Lords, with the consent of the House, I beg leave to withdraw the amendment on the understanding that the Government are keeping in constant touch with the Association of Metropolitan Authorities.

Amendment, by leave, withdrawn.

10.11 p.m.

Lord BELLWIN moved Amendment No. 127: Page 154, line 31, after ("whether") insert ("any amount payable before")

The noble Lord said: My Lords, if I may, in moving this amendment I should like to speak also to Amendments Nos. 128 and 129. Noble Lords will be aware that in Committee the Government introduced an amendment to paragraph 2 of Schedule 19 providing that the limitation on what a landlord can recover in a service charge to what is reasonable will apply to advance payments as well as costs which have been incurred. These three amendments—Nos. 127, 128, and 129—are necessary consequences on that amendment which we overlooked at that time. I do not think I need elaborate further unless I am required to do so. I hope this amendment will be accepted and that it will satisfy the noble Earl, Lord Halsbury. I beg to move.

On Question, amendment agreed to.

Lord BELLWIN moved Amendment No. 128: Page 154, line 32, after ("management") insert ("are incurred is reasonable, whether such costs").

On Question, amendment agreed to.

Lord BELLWIN moved Amendment No. 129: Page 154, line 35, after ("declaration") insert ("that any such amount is or is not reasonable").

On Question, amendment agreed to.

[Amendment No. 129A not moved.]

Lord MOWBRAY and STOURTON moved Amendment No. 130: Page 156, line 35, after ("account") insert ("in determining the authority's or corporation's reckonable expenditure or reckonable income under Part VI of this Act or").

The noble Lord said: My Lords, this is a small technical amendment to paragraph 2(1) of Schedule 20 which deals with the treatment of subsidy for housing cooperatives. As Schedule 20 is drafted at present, it provides that the existence of a co-operative on a local authority or new town estate shall not be a ground for recovering, withholding or reducing subsidy paid under Clause 101 of the Bill. It does not, however, ensure that the existence of a co-operative shall not be a reason for changing the basis on which subsidy is calculated under the new provisions in Part IV of the Bill. The amendment ensures that subsidy will be calculated for co-operatives on the same basis as if the dwellings were ordinary local authority or new town dwellings. I invite noble Lords to accept the amendment.

On Question, amendment agreed to.

10.15 p.m.

Lord MOWBRAY and STOURTON moved Amendments Nos. 131, 132 and 133: Page 156, line 39, leave out ("sub-lease") and insert ("lease") Page 156,line 41, leave out ("sub-lease") and insert ("lease") Page 156,line 42, leave out ("sub-lease") and insert ("lease")

The noble Lord said: My Lords, these again are small technical amendments to the treatment of subsidy for housing co-operatives on local authority or new town estates. As drafted at present, Schedule 20 provides only one exception to the general rule that subsidy for cooperatives should be calculated on the same basis as if no co-operative agreement has been made. This exception deals with what seems likely to be the quite rare circumstance in which a co-operative itself grants a shared-ownership lease to an individual. This amendment broadens the circumstances in which a subsidy adjustment may be made to include those in which shared-ownership lease is granted; for instance by a local authority to a co-operative on a shared-ownership basis.

It is obviously necessary to adjust subsidy where shared ownership is involved for co-operatives—as for all local authority property. I invite noble Lords to accept the amendments.

On Question, amendments agreed to.

Schedule 21 [Amendments of Leasehold Reform Act 1967 and Housing Act 1974, Schedule 8]:

10.17 p.m.

Lord DAVIES of LEEK moved Amendment No. 134: Page 157, line 41, at beginning insert— ("1.—(1) For the first paragraph of section 1 of the 1967 Act (tenants entitled to enfranchisement or extension), substitute— This part of this Act shall have effect to confer on a tenant of a leasehold house or self contained flat, occupying that house or flat as his residence, a right to acquire on fair terms, in the case of a house, the freehold or an extended lease of the house and premises and in the case of a self contained flat an extended lease of the flat and premises where— (2) In subsection (1)(a) after the words "of house and premises" insert "or flat and premises as the case may be. (3) In subsection (1)(b) after the words "of the house" insert "or flat. 2. In section 2(1) of the 1967 Act after the words "any building" insert "not being a self contained flat" and omit the words "or is divided horizontally into flats or maisonettes and—" and subsections (a) and (b) of that subsection.").

The noble Lord said: My Lords, are the acoustics all right in this place? Can I be heard? This is a charming little amendment and, on a night like this, after the Government have been defeated so many times, I hope that in the kindness of their hearts they will see the logic and the fairness of this amendment which I am about to move. I should also like to congratulate the noble Lord who has been working for days, morning, noon and night, meticulously and fairly on this Bill. I hope that he will be tolerant with me for about three minutes—I will not take much longer—in moving this amendment to Schedule 21. I shall not read the words because the Lord Chairman, who sits stately on the Woolsack, will simply say: "The words inserted on the Marshalled List", and as every noble Lord can read, there is no need for me to read them again.

I beg to move Amendment No. 134 as being more fitting for the world in which we now live than Section 1 of the 1967 Act; and, to show that I know what I am talking about, I have read Section 1 of the 1967 Act. We substitute through this amendment the right of a tenant of a leasehold house or self-contained flat in that house on fair terms—which I underline—to obtain a freehold or an extended lease of a house and premises and also in this case I say a self-contained flat. A lease—and this is a little bit of history—as generally understood today is a document creating an interest in land for a fixed period or a certain duration, but it has not always been so. Leases are governed now by numerous statutory positions. Despite all the legislation of all Governments (to be fair) in the past two or three decades or more, there is a need for simplification and clarification in this sphere of legislation. Particularly is this true—as a Welshman myself from rural areas—of old farmhouses, rural workshops and dwellings as well as for the dwellings in cities and modern towns.

The issue of leasehold rights grows more acute and more complicated particularly as large dwelling-houses in our modern cities and environment tend to be changed into multiple living quarters—what I am saying is absolutely clear—and are built up as self-contained flats. My own mother-in-law's house which was sold for £1,000 in Lewisham is now worth about £260,000 because there are about five flats in it.

How does a leasehold and freehold hold in that building, for instance? So far as rents are concerned, which links with it a little, an effort was made in the Rent Act 1977 to embody a complicated mass of legislation in one Act, and a distinction was made then between the controlled and regulated tenancies on which it would be irrelevant for me, in moving this amendment, to dwell.

A basic human need is shelter and, coupled with the freehold, it ranks as the target house buyers like to acquire—the fullest status that any people can enjoy is that of freehold owner-occupation. Under the Leasehold Reform Act 1967, a person who is a long leaseholder of a house, though not of a flat, can compel the landlord to sell him the freehold of the premises, or else compel the landlord to extend the lease for another 50 years beyond the date of its original termination for a price. These rights do not apply to those houses which are not horizontally divided from other premises: that is, they do not to any extent overlap or underlap another property. The house could be in a row of terraced houses: it need not be free standing. This amendment aims at rectifying this and making the entire business more fair for the owner-occupier of small means.

It is still necessary under this Bill and the Leasehold Reform Act 1967 for a leaseholder to exercise his rights to purchase the freehold, and that is known as the enfranchisement or extension, before the lease expires. The leaseholder who has been occupying a house as his main residence for a period of at least five years would be entitled to this. The price can be fixed freely between the parties by land tribunals, and here legal aid can come in and the public should know this, and simple information should be available. In some cases it is much inure important, in the question of freehold, for a tenant to employ a good surveyor than a barrister or a lawyer, for in this sphere not so many lawyers are as well informed as some of the surveyors in local authorities.

One other point: the price of this enfranchisement bears no relationship to currency today and the public should be made aware that when they are buying freehold—something which will last for generations—they are now dealing in capital sums of £200,000 or more. I hope that, in his magnanimity, the overworked Minister, who has been working like a lion all the week, will say, "Yes, the Government can see the common sense of this and will accept it." I beg to move.

Lord EVANS of CLAUGHTON

My Lords, I warmly support the amendment which has been moved by the noble Lord, Lord Davies of Leek. I think the amendment he moved should probably be taken conjointly with Amendment No. 136. The position at the moment is that the leasholders of flats are not afforded the same opportunities for enfranchisement as the leaseholders of houses, and because of the curiosities and almost medieval history of our land law, it is very difficult to provide for the ownership of flats in the way that can be done in Scotland—I hate to admit that Scottish law may be superior to English law in this respect. However, it seems to me that we have two choices. We can provide as this amendment suggests that, instead of getting the freehold of a block of flats for themselves, which will be very difficult under English law, leaseholders can seek a 50-year extension of their existing lease.

Amendment No. 136, which I think is the better amendment, would mean that leaseholders would be entitled to join together to purchase the freehold of a block of flats and organise it as a cooperative. The two amendments seek the same end and I should have thought, if under the 1967 Act we are offering lessees of houses an opportunity of enfranchisement, that we ought to give something similar to the lessees of flats. I very warmly support the concept that the noble Lord, Lord Davies, has tried to introduce. If it is an individual lessee he gets a 50-year extension, or, if they can co-operate together, the lessees of a whole block of flats are given the right to buy the freehold and then organise the block as they wish. I very much support the amendment moved by the noble Lord.

10.27 p.m.

Lord BELLWIN

My Lords, I do not think it is fair to bring the noble Lord, Lord Davies, in to bat at this time of night. He certainly introduces a breath of fresh air but I cannot agree with most of what he said. But he says it with such panache that he adds a great deal to the proceedings. Amendment No. 134 would give leaseholders of flats the right to an extension lease, but not the right to buy the freehold. The reason why the 1967 Act does not apply to the flats is that under the existing law enfranchisement of individual flats would lead to difficulties regarding the future maintenance of the block. The positive covenants which would be required for the owner of each flat to ensure proper maintenance of the rest of the building cannot, at present, be made binding on subsequent purchasers of the freeholds.

Long leases of flats have, on the whole, been granted fairly recently and have substantial periods left to run. We are not aware of long leases of flats which are about to expire, but if they exist leaseholders of such flats will normally have the right to stay on as protected tenants under the Rent Act 1977. We are aware, however, of problems which can arise in selling flats as the unexpired term of the lease gets shorter, because of the difficulty the purchaser may have in getting a mortgage.

We have already indicated that we intend to look at the question of extension leases in the longer term, as part of our continuing work on mansion blocks. Any proposal of this kind would give rise to a number of difficult questions which would have to be considered. For example, whether under any such right all leases in the same block should fall in together; how to deal with the situation where different flats in the same block have leases on different terms; or whether such a right might be better exercised on an individual or collective basis.

The present proposal would not be workable, because a great deal more would need to be done to adapt the provisions of the 1967 Act to deal with such cases. For example, the existing provision for the fixing of the new ground rent for an extension lease relates to the value of the site. In any case, it would be little more than a stop-gap arrangement and landlords would in future be able to sell shorter leases in the knowledge that they could be extended.

I wonder whether with that explanation the noble Lord will feel able to withdraw his amendment. I have made the point about general concern, and the intention to go further into the whole area of mansion blocks and all that goes with them. I wonder whether the noble Lord will withdraw his amendment.

Baroness BIRK

My Lords, before my noble friend withdraws the amendment may I say this: Amendments Nos. 134 and 136 really go together, but they have somehow become separated by another amendment coming in between. It seems a pity to take the other amendment next, which is on a different subject, and not to deal with these two amendments together. They are on the same point and have both been explained by my noble friend Lord Davies and by the noble Lord, Lord Evans. Therefore, may I ask the Minister whether we can take them both together, and I can then move No. 136 formally.

10.30 p.m.

Lord DAVIES of LEEK

My Lords, in view of the Minister's statement, there is still not much oil in the lantern but there is a glimmer of light across the moors. Consequently, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

The DEPUTY SPEAKER (Viscount Simon)

My Lords, the next amendment is manuscript amendment No. 134AZ, the Earl of Kinnoull. In accordance with standing orders, I have to read this amendment. The manuscript amendment reads:

Page 157, line 43, at end insert: ("Section 9(2) of the Leasehold Reform Act, 1967 shall be amended so as to add the following:— 9.(2)A. Where a tenant has given notice, pursuant to Section 8 of this Act, of his desire to have the freehold, a landlord may serve upon such tenant notice in writing stating the price which the landlord proposes that the tenant shall pay for the house and premises and if within one year of the service of this notice upon him a tenant has neither given to the landlord notice in writing of his agreement to pay such price nor applied to a Leasehold Valuation Tribunal pursuant to Section 21 of this Act to determine the matter of the price payable, then upon the expiration of the said one year the tenant shall be deemed to have given to the landlord notice under subsection (3) hereof that he is unable or unwilling to acquire the house and premises and thereupon the provisions of the said subsection (3) shall have effect accordingly"").

The Earl of KINNOULL

My Lords, I must apologise to the House both for the length of the amendment and for the fact that it is a manuscript. I would apologise to my noble friend, except for the fact that I see he has already had three manuscript amendments, so I feel that I am in good company. I do not intend to speak for any length of time—the purpose of the amendment is very simple—but I should like to spend one minute this evening upon placing on record the purpose of the amendment, for my noble friend to consider it, and perhaps for myself to be able to come back on it at the final stage of the Bill.

As I have said, the purpose of the amendment is very simple. The machinery of the leasehold enfranchisement which triggers off the right of a tenant to purchase his freehold comes, as the House is aware, under Section 8 of the 1967 Act. The tenant applies in the usual form. The landlord is then obliged, under Section 9, to reply and to state his value. There is then normally a period of negotiation and, failing that, either party may apply, under Section 21 of the Act, to the Lands Tribunal.

There is one flaw in the machinery which concerns the landlord: that there is no timescale between the moment that the tenant applies, under Section 8, to the moment when the deal must be closed. One has to remember that the date of valuation dates from the time of the first application. What one has seen, since 1974 in particular, is that tenants who applied in 1974 have still not purchased, although the valuation will date back to 1974. I think that this is a flaw. The amendment seeks to achieve the fact that if no action is taken by the tenant within one year, which is a reasonable period of time, then his right will fall and he will not be able to apply again for another three years, as under the Act.

There is an alternative which I should like my noble friend to consider. If the tenant does not react within one year, then the valuation should be at the modern valuation at the time of the contract. I hope that my noble friend will consider this point. I beg to move.

Lord BELLWIN

My Lords, the fact that my noble friend has tabled a substantive and rather complicated amendment which came to our notice at 9.30 p.m., means that in the time available we have been unable to examine its effects. It may be that the simple answer is that the landlord can apply to the Leasehold Valuation Tribunal, which will fix a price. Then, under the rules, the tenant must complete within a specified timescale. However, I propose to write to my noble friend in more detail, and I hope he will feel satisfied with that. Certainly we will go into the detail carefully.

The Earl of KINNOULL

My Lords, of course I am satisfied with that reply, for which I am grateful. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

10.36 p.m.

Lord MONSON moved Amendment No. 134A: Page 158, line 7, leave out paragraph 3.

The noble Lord said: My Lords, in moving this amendment I am taking the rather unusual step of moving an identical amendment to one I moved in Committee, as it has since become evident that, because of genuine misunderstandings on both sides, perhaps only to be expected in such a complex Bill as this one, the noble Lord, Lord Bellwin, misinterpreted my question and I, in turn, misinterpreted his answer. In other words, the misgivings which I thought had been allayed are very much not allayed.

The purpose of paragraph 3 of this schedule, it now appears, is to close up a loophole in the 1967 Act. The existence of this loophole has been well known to lawyers for over 12 years. It provides a most useful facility for anyone wanting to enter into a contract for the purchase of a leasehold house which has been demonstrably excluded from the enfranchisement provisions of the 1967 Act in the full knowledge of the pros and cons of doing so. Anybody wanting to know what I mean by "useful facility" need only refer back to the speech made by the noble Lord, Lord Brooke of Cumnor, on the Second Reading of the Leasehold Reform Bill 13 years ago this summer to see exactly what I mean. The noble Lord, Lord Brooke, pointed out that the leasehold system had enabled him and his family to live in a much better house in a much better district than would have been the case if only freehold houses had been available.

The point which seems to have escaped the Government—I cannot stress this too highly—is that precisely the same facility is still available to those who are choosing a leasehold house over a certain rateable value or choosing a flat of any rateable value. With a given sum of money, one can opt either for a flat in Belgravia with, say, a 27-year lease, or, alternatively, a flat in Earl's Court, perhaps with a 75-year lease. The flat in Belgravia may very well be a nicer one in a more desirable district, but it will be a fairly rapidly wasting asset. Against this, the flat in Earl's Court will be a rather more slowly wasting asset. Surely in a free country where people are treated as adults and encouraged by the Government of the day to stand on their own feet, as the oft-repeated saying goes, those looking for houses should be given the same options as those looking for flats.

Given the Government's general overall philosophy, given that the Conservatives, along with the then Liberal Party and the Independents, bitterly opposed the 1967 Act—they were assisted by the misgivings of at least a few Socialists, including the late Mr. Richard Crossman—and given that at least one eminent authority believes that the 1967 Act infringes Article 1 to the First Protocol to the European Convention on Human Rights, I should like to ask the noble Lord, Lord Bellwin, what a Conservative Government are doing extending this Act rather than, if not actually repealing it, then trying to make its provisions a little fairer.

Lord BELLWIN

My Lords, perhaps I might remind the House of the intention of paragraph 3 of Schedule 21 to the Bill, which is to close a loophole in the Leasehold Reform Act which some large commercial landlords have been exploiting in order to get round the Act. The 1967 Act contains a provision which exempts from it all tenancies terminable by notice after a death or marriage. That was intended to allow for the creation of what I referred to in Committee as bona fide leases. Such a lease might be granted to a former employee to let him live in a house for the rest of his life, or under the terms of a will, or where a person sells his house to raise capital but leases it back for the rest of his life. In such circumstances it would not be right if the tenant could buy the freehold of the house on the favourable terms of the Act. The provision was not intended to enable commercial landlords to evade the Act. There is evidence that some have been doing this by granting leases terminable at any time after the death of a descendant of King George V.

The noble Lord will remember that we spoke about this when we were in Committee. The Government therefore decided to close the loophole, and paragraph 3 of Schedule 21 does this by imposing more stringent limitations on the kind of life lease which will be exempt from the Act. This should allow for the continuing creation of bona fide leases but prevent exploitation. The change in the law will not, however, operate retrospectively, since it will not affect leases granted before 18th April 1980, the date on which the proposal was announced.

In moving this amendment, I hope that the noble Lord, Lord Monson, is not suggesting that the loophole should be kept open. I am confident that that is not his wish, and therefore I wonder whether he is prepared to withdraw his amendment. I take the point which he made originally about our criss-crossing over. I am sorry about it, but I suppose it was largely inevitable. Perhaps the only surprising thing is that we have not had more of that with all that one has been trying to do in giving information on the great complexities of this Bill.

Lord MONSON

My Lords, I entirely accept the last part of the noble Lord's statement. It was inevitable in a Bill of this complexity that there should be some accidental criss-crossing and it was kind of him to make that apology. However, I am saying to him that the loophole should not be closed because the point is that this is a loophole which is freely available to people who want to go into it with their eyes open and to take advantage of the same facilities as are available to them when they wish to buy flats on short leases, knowing full well that they are buying a wasting asset. It seems extraordinary that a party which so bitterly opposed the 1967 Act—and I have a mass of quotations to prove this—should apparently have changed their mind in a surreptitious way. I rather feel that they should have been more open about it. If they were wrong in 1967, should they not say so openly now? Obviously I have no prospect of changing the Government's mind on this, so I must beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

10.44 p.m.

Lord BEAUMONT of WHITLEY moved Amendment No. 135: Page 158, leave out from end of line 7 to first ("the") in line 10.

The noble Lord said: My Lords, I beg to move this amendment which deals with very much the same point, but certainly from a different angle. I want to pursue it for a little while if only because I was unable to hear the Minister's reply to the last point. I hope I am not wasting your Lordships' time, but I think it is a very important point.

The 1967 Act gave rights to various tenants to buy freeholds but it exempted, for the best of all possible reasons, various arrangements which had been entered into, which were due to come to an end on the death of a particular tenant and were designed to provide a home for a member of the family or something analogous to that. Because of the rather poor wording of the Act, an enormous loophole was created whereby owners of blocks of flats were able to produce formulae by which they could evade the whole purpose of the Act.

At the last stage of the Bill I sought to put before your Lordships an amendment which would bring those people back into the Act. In the Minister's reply, he no longer sought (as had happened in another place) to rely on what I hoped I had shown to be the rather bad point of resistance; that is, that the whole thing was retrospective. But he pointed out, quite rightly, that I was throwing out the baby with the bath water, and that in trying to bring in the various firms who had found the loophole in this Act I was also bringing in the few cases of the genuine arrangements which the 1967 Act had been designed to protect. I accepted that and I took the amendment away again.

I now bring forward this amendment which, by doing away with the whole of that proviso, will bring into this Bill all the previous arrangements, which will therefore mean that the genuine arrangements will be covered, because under the Bill the genuine arrangements which are entered into now are also covered. It seems to me that this is a protection for the few cases, where these exist, and I think they are fairly few because, in quite a lot of inquiries and in talking to people I have found no one who, in fact, in their legal practice, has come across one. But I am sure that they do exist, and I am sure that they should be preserved.

My Lords, this is another try which is designed to block a really beastly loophole which is being taken advantage of for all the wrong reasons, and when the Minister, if he does, points out to me the errors in this particular amendment I hope that he will say that between now and the Third Reading he will, in fact, ask his department to look at it again and see whether they cannot find something better, always assuming that mine is defective, as I rather fear it is. I beg to move.

Lord BELLWIN

My Lords, I do not know whether the noble Lord will be pleased or sad at the comments I have to make. One is not that the amendment is defective. To that extent, I hope he may feel it is a plus. Would that I could say other things to make him feel likewise, but I fear I cannot.

The amendment now proposed would make paragraph 3 operate retrospectively, and that is not the Government's intention, as I pointed out in Committee. Furthermore, it would not be consistent with our position on the Leasehold Reform Act of 1979 to make the provision retrospective. I appreciate that this amendment would not operate retrospectively on all leases, unlike an amendment which the noble Lord tabled in Committee, but I think there is little doubt that it would nevertheless affect some existing bona fide leases. This is because although the qualifying conditions we have imposed in paragraph 3(b) should allow adequately for the creation of bona fide leases in the future which will be exempt from the Act, it does not follow that all bona fide leases created in the past will satisfy those conditions, and where they do not they will be brought within the Act.

Consequently, my Lords, I think that possibly Amendment No. 135 goes further than is intended by the noble Lord. It certainly goes a great deal further than the Government's proposal, because it is not our intention that the change in the law should be retrospective at all. Without saying more, I wonder whether the noble Lord might therefore feel that on the technicality he may wish not to pursue the point.

Lord EVANS of CLAUGHTON

My Lords, before my noble friend responds to the invitation made by the noble Lord the Minister, may I say, as a solicitor myself and as a member of a profession that uses these kinds of devices, that the kind of thing which enrages me, with great respect, is that time and again loopholes are left which members of my profession use quite outrageously while talking about the descendants of King George V or King George VI.

For some reason, Governments of all political complexions seem reluctant to close these kinds of loopholes. I agree that by accepting the amendment of my noble friend we might in fact close a loophole which is perfectly legitimate, but I would have hoped that the Minister might have looked for some way of stopping the kind of exploitation of loopholes in the law which give people who are highly paid to look for these kinds of loopholes an opportunity of expanding their kind of, I think, quite illegitimate practice. I should have thought that the Minister might have given a more optimistic reply to my noble friend.

Lord BELLWIN

My Lords, the last thing I would want to do at this time of the day is to enrage the noble Lord. Certainly, I have no wish to do that. I must say I actually feel much sympathy with the way he puts the point. I clearly cannot promise him that anything will be done about this, but I promise him from my own interest, and because of the way he puts the point, that I will want to talk to officials about this to see whether or not it is practical. I make no promises; I am sure the noble Lord will accept that. If he feels so strongly about this technical point, I feel I ought to take it and have a look at it on that basis.

Lord BEAUMONT of WHITLEY

My Lords, I should like to thank the noble Lord very much for that. The noble Lord can pass on now from the compliments of the noble Lord, Lord Davies of Leek, who said that he worked like a lion. In fact lions do no work at all; they lie about sleeping all day and wait for the lionesses to bring the meat. So that was a very double-edged compliment. I will go further and say the noble Lord is working like a beaver, and beavers really do work. I am grateful. This really is a loophole which should be plugged. I beg leave to withdraw the amendment.

Lord DAVIES of LEEK

My Lords, with permission, I would like to point out that lions work. I made a film of lions on the kill, and I know how they worked on that.

Amendment, by leave, withdrawn.

10.51 p.m.

Lord MONSON moved Amendment No. 135A: Page 158, line 9, after ("granted") insert ("or an enforceable contract was entered into for its grant").

The noble Lord said: My Lords, this is a very much more modest amendment than my Amendment No. 134A. I want to stress that this amendment does not seek to reverse the course on which the Government seem currently, although in my view mistakenly, set in their attitude towards the leasehold system. It appears that the Liberal Party has reversed its opposition to the 1967 Act even more totally than the Conservatives have, which I suppose is a bull point for the Government.

The purpose of this amendment is simply to avoid accidental retrospection that may occur in the case of certain building lease schemes which are set up but not finalised in every detail prior to 18th April 1980. This is a highly complex, technical matter with which I will not bore your Lordships; indeed, I should probably get it wrong. I think the noble Earl, Lord Kinnoull, could probably explain it better than I can. I assure your Lordships that unless something is done people who have entered into perfectly legitimate schemes prior to that date will be caught out. One thing that can be said with confidence is that the Conservative Party still maintains its opposition to punitive retrospective legislation, and rightly so.

I will not be pressing this amendment because, after an enormous amount of legal head scratching, it was decided two hours ago that the word "enforceable" in my amendment implied a meaning which might possibly invalidate the intention of the amendment as a whole. I propose to move what I trust will be a legally watertight amendment leaving out the word "enforceable" at Third Reading. Before I withdraw this amendment I should like to hear whether the Government are in principle opposed to accidental punitive retrospection, and therefore, subject to careful scrutiny beforehand on the part of the Government, they would in principle support an amendment to avoid such accidental retrospection at Third Reading.

Lord MOWBRAY and STOURTON

My Lords, I do see the point of Amendment No. 135A, and I do not dissent from the objective. I would draw the attention of your Lordships' House to the definition of a tenancy in Section 37 of the Leasehold Reform Act. A tenancy there means a "tenancy at law or in equity". I am assured that the words "tenancy in equity" cover the situation where there is an enforceable contract to grant a tenancy. It follows, therefore, that a tenancy granted after 18th April as a result of an enforceable contract entered into before that date will not be affected by the proposal in paragraph 3; consequently, there is no need for this amendment. If the noble Lord is satisfied on that point, perhaps he would withdraw his amendment, but I am grateful to him for giving me this chance to explain the point to the House.

Lord MONSON

My Lords, I thank the noble Lord very much for what he has said. In fact it appears that lawyers are not wholly agreed that Section 37 of the 1967 Act does have the effect that he says it has. This is the difficulty about it. But in any case I intend to withdraw the amendment because it appears, again as a result of legal disputation, that it may be defective. I reserve the right to move a more legally watertight one if possible on Third Reading, but for the moment I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 135B not moved.]

Baroness BIRK moved Amendment No. 136: Page 158, line 14, at end insert— (" .In section 1 of the 1967 Act after subsection (1) insert— (1A) Where any house is divided into self-contained flats in circumstances where the tenant of each flat:

1. (i) has a right to acquire on fair terms an extended lease; and
2. (ii) is, in relation to his occupation of that flat, a member of a housing co-operative then, for the purpose only of conferring upon that co-operative the right to acquire on fair terms the freehold of that house and premises, the co-operative shall be treated for the purpose of subsection 1 of this section as the tenant of a leasehold house complying with the requirements of paragraphs (a) and (b) of that subsection.").

The noble Baroness said: My Lords, I have already spoken to this amendment. I beg to move the amendment.

Lord MOWBRAY and STOURTON

My Lords, the intention of Amendment 136 is evidently to enable a housing co-operative which owns the long lease of a house to buy the freehold under the terms of the Leasehold Reform Act, in circumstances where the house is divided into self-contained flats and each tenant is a member of the co-operative and has the right to acquire an extended lease on fair terms. The 1967 Act does not apply to individual flats and is tailored to deal solely with the case of an individual long leaseholder of a house. I do not think it would be appropriate to use it in this way, and to attempt to do so might give rise to all sorts of practical difficulties. There is nothing to prevent a co-operative or any other association of long leaseholders from purchasing the freehold of a house or a block of flats if the freeholder is willing to sell to them. I understand that there are several cases where this has already happened, but I see no case for giving special rights to co-operatives to buy out freeholders.

Lord EVANS of CLAUGHTON

My Lords, may I say I am somewhat disappointed by the view the noble Lord the Minister has taken here? As one who is very much involved in the purchase and sale of blocks of flats, I find it is becoming common practice in the private sector for a landlord or a builder to build a block of flats, to give to the flat purchasers leases of 99 years and then at the end, when all the leases have been granted, to sell the free- hold reversion to a management company which is made up of the individual lessees. This is a sensible and civilised modern system of dealing with the problems that flats create for us, not because they are flats but because of our archaic conveyancing system in this country. In Scotland they have been conveying flats for generations. In the time of James IV, James III, James I and Malcolm the Maiden they were conveying flats in Scotland. It is only the curiosities of the English conveyancing system that prevent us from conveying the freeholds of flats, and, to get round this problem, we have devised in the private sector this means of conveying the freehold to a management company in which each of the lessees has a share.

I would have thought that if the Government had been a little more flexible (to use a term that has been used a great deal in the last few weeks and days) they could have accepted this kind of amendment, which is put forward by a responsible body of people, the Association of Metropolitan Authorities, who are very anxious themselves to create a property owning democracy.

I would have thought that we could have had (if I may put it without, I hope, being unduly offensive to the noble Lord) not quite the brush-off that he has given us this evening. I would have thought this might have been an area where the Government could say, "Very interesting. We'll look at this and try and create a system akin to that used in the private sector so that people can feel themselves involved as individuals in the flats in which they live".

Baroness BIRK

My Lords, these amendments were separated by a number of other amendments, but from a discussion point of view it would have been better if they had been taken together. When the Minister answered the amendment moved by noble friend Lord Davies of Leek, Amendment No. 134, my impression was that he was not going to have a look at the whole matter generally. He did not say that he would necessarily come back on this Bill, but it was certainly a very much more flexible answer than the answer we have had on this amendment. I said that I had spoken to it because I got up and said that they seemed to me to be two parts of the same subject, and that if this was the attitude taken that was all right and I was leaving it like that. That was why I got up and moved it formally.

However, a very much harsher response seems to have come to this one but they really are fairly similar amendments. I would like to have it confirmed that what the Minister the noble Lord, Lord Bellwin, said in reply to my noble friend Lord Davies of Leek operates as far as this other amendment is concerned.

Lord MOWBRAY and STOURTON

Yes, my Lords; that would be the case.

Baroness BIRK

My Lords, if that is so I shall withdraw the amendment and I suggest that the noble Lord tears up what he said in answer just before.

Amendment, by leave, withdrawn.

Schedule 23 [Houses in multiple occupation: revised penalties for certain offences]:

11.2 p.m.

Lord MOWBRAY and STOURTON moved Amendment No. 137. Page 162, leave out lines 21 to 26.

The noble Lord said: My Lords, you will remember that during the previous stage of consideration of the Bill we inserted a clause giving local authorities new powers to deal with overcrowding in houses in multiple occupation. This amendment arises directly from that, in that it removes from Schedule 23 the provision to update the penalty for contravention of the section in the 1957 Housing Act that will be replaced by the new clause. This updating is unnecessary because the new clause includes provision for a penalty at the higher level. I beg to move.

On Question, amendment agreed to.

Lord MOWBRAY and STOURTON moved Amendment No. 138: Page 163, line 33, leave out paragraph 8.

The noble Lord said: My Lords, I beg to move Amendment No. 138. This has already been spoken to with Amendment No. 96.

On Question, amendment agreed to.

Lord MOWBRAY and STOURTON moved Amendment No. 139: After Clause 142 insert the following new clause:

Houses in multiple occupation: means of escape from fire.

(".—(1) Schedule (Houses in multiple occupation means of escape from fire) shall have effect in place of section 16 of the Housing Act 1961 and section 60 of the 1969 Act except in relation to notices served, undertakings accepted or orders made before the commencement of this section. (2) In relation to a breach after the commencement of this section of an undertaking accepted under section 60 of the 1969 Act subsection (3) of that section (fine on summary conviction) shall have effect as if for "£20" there were substituted "£50". (3) The amendments and repeals made by this Act (except subsection (2) above) shall not affect the operation of any enactment in relation to any notice served, undertaking given or order made under the provisions replaced by this section.")

The noble Lord said: My Lords, this amendment also has already been spoken to with Amendment No. 96.

On Question, amendment agreed to.

[Amendment No. 140 not moved]

Clause 146 [Regulations and orders]:

Lord MOWBRAY and STOURTON moved Amendment No. 141: Page 103, line 12, after ("section") insert ("52(4),").

The noble Lord said: My Lords, during the Committee stage of the Bill my noble friend undertook to consider whether the affirmative procedure might be more appropriate than the negative procedure for which the Bill currently provides if an order were to be made under Clause 52(4) of the Bill to disapply compulsory rent registration for shorthold, either generally or in particular areas. Let me stress once again that if such an order were made it would not affect any existing registered rent under shorthold and would still enable a fair rent to be registered if either party wanted it.

My right honourable and honourable friends and my noble friend have considered very carefully everything that was said in your Lordships' House during the discussions of this issue in Committee. We accept that if the Government were to make an order disapplying compulsory rent registration for shorthold, either generally or in particular areas, it should be necessary to seek the approval of both Houses of Parliament before such an order could come into force. I have no doubt that even under the negative procedure appropriate debates would have taken place. Nevertheless, the Government are very content to meet the wishes expressed in different parts of the House on this matter. That is why we have tabled these amendments, which have the effect of making any order under Clause 52(4) subject to Affirmative Resolution rather than Negative Resolution. I hope that this will be welcomed by your Lordships. I beg to move.

Baroness BIRK

My Lords, I should like to thank the Government very much. I am very pleased that these amendments have been moved. I think that this is a very great improvement. It is extremely important that there should be Affirmative Resolution in this area and, therefore, it is something about which, at the end of a long, long two days and nights, we can be pleased.

On Question, amendment agreed to.

Lord MOWBRAY and STOURTON moved Amendment No. 142: Page 103, line 14, after ("section") insert ("52(4)or").

The noble Lord said: My Lords, in moving Amendment No. 141 I was really taking Amendments Nos. 142 and 143 as well. I beg to move.

On Question, amendment agreed to.

Lord MOWBRAY and STOURTON moved Amendment No. 143: Before Schedule 24 insert the following new schedule—

("SCHEDULE

HOUSES IN MULTIPLE OCCUPATION: MEANS OF ESCAPE FROM FIRE

Exercise of powers of local authority

1.If it appears to a local authority that a house which is occupied by persons who do not form a single household is not provided with such means of escape from fire as the local authority considers necessary the local authority may exercise such of its powers under this Schedule as appear to it most appropriate; and it shall do so if the house is of such description or occupied in such manner as the Secretary of State may by order specify.

Powers available to local authority

2.—(1) The local authority may serve a notice on any person on whom a notice may be served under section 15 of the Housing Act 1961 specifying the works which in the opinion of the local authority are required to provide the necessary means of escape from fire and requiring the person on whom the notice is served to execute those works within such period, not less than twenty-one days from the service of the notice, as may be specified in the notice. (2) The period specified in the notice may from time to time be extended by the local authority. (3) Where the local authority serves a notice on any person under this paragraph it shall inform any other person who to its knowledge is an owner, lessee or mortgagee of the house of the fact that the notice has been served. 3. If it appears to the local authority that the means of escape from fire would be adequate if part of the house were not used for human habitation the local authority may secure that that part is not so used. 4. The local authority may secure that part of the house is not used for human habitation and serve a notice under paragraph 2 above specifying such works only as in the opinion of the authority are required to provide the means of escape from fire which will be necessary if that part is not so used. 5. For the purpose of securing that a part of the house is not used for human habitation the local authority may, if after consultation with any owner or mortgagee it thinks fit to do so, accept an undertaking from him that that part will not be used for human habitation without the permission of the local authority. 6. If the local authority does not accept an undertaking under paragraph 5 above with respect to a part of the house or if, in a case where it has accepted such an undertaking, that part of the house is at any time used in contravention of the undertaking, the local authority may make a closing order with respect to that part of the house.

Enforcement

7. Any person who, knowing that an undertaking has been accepted under paragraph 5 above, uses the part of the house to which the undertaking relates, in contravention of the undertaking, or permits that part of the house to be so used, shall be guilty of an offence and liable on summary conviction to a fine not exceeding £50 and to a further fine of £5 for every day, or part of a day, on which he so uses it or permits it to be so used after conviction.

Consultation with fire authority

8. A local authority shall, before serving a notice, accepting an undertaking or making a closing order under this Schedule, consult with the fire authority concerned.

Exclusion of Rent Act protection

9. Nothing in the 1977 Act shall prevent possession being obtained of any part of a house which, in accordance with any undertaking in pursuance of this Schedule, cannot for the time being be used for human habitation.

Interpretation

10. In this Schedule expressions defined in the 1957 Act have the same meanings as in that Act.

Application and amendment of enactments

11. Part II of the 1957 Act shall apply to a closing order made under this Schedule as it applies to a closing order under section 18(1) of that Act, but the ground on which, under section 27(2) of that Act, the local authority is required to determine the order shall be that it is satisfied that the means of escape from fire with which the house is provided is adequate (owing to a change of circumstances) and will remain adequate if the part of the house with respect to which the order was made is again used for human habitation. 12. In section 17(1) of the Housing Act 1961 for the words "either of the two last foregoing sections" there are substituted the words "section (Houses in multiple occupation: means of escape from fire) of this Act or Schedule (Houses in multiple occupation: means of escape from fire) to the Housing Act 1980" and for the words from "in the case of a notice" to "that section" there are substituted the words "in the case of a notice under that Schedule, that the notice is not justified by the terms of that Schedule". 13. In section 18(1) of the Housing Act 1961 for the words "section fourteen, section fifteen or section sixteen of this Act" there are substituted the words "section 14 or 15 of this Act or Schedule (Houses in multiple occupation: means of escape from fire) to the Housing Act 1980". 14. In section 61 of the 1969 Act for the words "section 14, 15 or 16 of the Housing Act 1961" there are substituted the words "14 or 15 of the Rousing Act 1961 or Schedule (Houses in multiple occupation: means of escape from fire) to the Rousing Act 1980". 15. In section 29(7) of the Land Compensation Act 1973 for the words "section 60 of the Housing Act 1969" there are substituted the words "Schedule (Houses in multiple occupation: means of escape from fire) to the Housing Act 1980" and for the words "section 60(2) of the said Act of 1969" the words "paragraph 5 of the said Schedule (Houses in multiple occupation: means of escape from fire).".")

The noble Lord said: My Lords, I beg your Lordships' pardon. I spoke to Amendments Nos. 141 and 142. Amendment No. 143 has already been spoken to with Amendment No. 96. I beg to move.

On Question, amendment agreed to.

11.6 p.m.

Baroness VICKERS moved Amendment No. 144: Page 164, line 45, at end insert— (" .In section 77 of the 1957 Act (Definition of Overcrowding) in subsection (2) for "one half" there shall be substituted "one".")

The noble Baroness said: My Lords, I beg to move the amendment standing in my name and in the name of the right reverend Prelate. The statutory overcrowding standard enforceable by local authorities is virtually unchanged since the Housing Act 1935. At the present time all rooms normally used as living rooms and bedrooms are included in calculating the "permitted number" of any dwelling-house, with the exception of the kitchen, the lavatory and the bathroom, if there is one.

Therefore, I propose the introduction of the bedroom standard as a basis for calculation, and children from one to 10 years will be calculated as one unit. This proposal will not create any homelessness, but it will provide a situation which reflects, I suggest, the current attitudes to space requirements and presents a safety net which is appropriate to the life-styles of the 1980s, not the 1930s when the original standard was introduced.

By omitting babies up to the age of one year from this standard—they were also omitted from the original standard —parents will be provided with the opportunity to plan their future housing circumstances. I should like to emphasise that the proposals will have little overall effect on the housing situation because the problem is relatively small. It will assist families to plan their accommodation and enable local authorities to look at each property as a whole, having regard to the health and environmental standards of the 1980s.

I should like to mention that I moved a similar amendment in Committee, but I was told that it was not in order, and I said that I would try to introduce another one at this stage. In conclusion, may I add that this amendment involves no extra cost and no extra staff. I beg to move.

Lord MOWBRAY and STOURTON

My Lords, I am grateful to my noble friend Lady Vickers for going to the trouble of tabling these amendments again so that the House can see the form that was originally intended. I thank her, too, for her detailed explanation.

First, I ought perhaps to reiterate a little of what I said in Committee. The existing standards are minima, admittedly lower than one generally finds today. But this is hardly surprising, because if the standards are contravened, the implications are serious; the landlord is guilty of an offence. The excess residents lose their security of tenure and homelessness may well result, causing very serious problems in those areas already subject to housing stress. I know that the right reverend Prelate and my noble friend are concerned about the number of people who are homeless or obliged to live in unsatisfactory hostels, but if this amendment is accepted it might result in an improvement in comfort for those already established in independent accommodation but at the high cost of swelling the ranks of the homeless.

I cannot readily accept what my noble friend said in Committee. She said that the amendment—and she repeated this tonight—would not cost any money or involve any extra staff. She said that it would have very little effect on the housing situation. Before coming to such a conclusion, we should have to estimate how many people would be displaced by a change in the standard. This would not be easy and wide consultation would be needed. We are always ready to consider fresh evidence, but so far we have not seen anything to persuade us that a change would be free of very serious and expensive consequences. There is a danger that an attempt to deal with what is perceived to be a problem will, in fact, create a very real and intractable problem. I would therefore ask my noble friend to withdraw her amendment at the moment.

11.12 p.m.

Lord SANDFORD

My Lords, I should like to thank the noble Baroness for moving this amendment, and I regret to some extent the less than cordial reception of it by the Government. Through this Bill, the local housing authorities have lost their power to control overcrowding in their own estates through landlord control, and in principle welcome the opportunity that the noble Baroness has taken of using this Bill to improve and bring up to date the criteria by which overcrowding is judged. I would hope, therefore, that the Government would look, not necessarily at this amendment, but this initiative by my noble friend with rather more consideration.

Lord HYLTON

My Lords, I should like strongly to support the spirit of this amendment. I thought that perhaps my noble friend Lady Vickers was being slightly sanguine in moving her amendment when she said that the writing into an Act of Parliament of this new standard would create no homelessness at all. I hope she is right, but I fear that she may be wrong. Nevertheless, like my noble friend Lord Sandford, I too thought that the Government were being unwelcoming. If they think it is wrong now to write this in, could they please tell us when they think it might be possible, because it will be a great and useful step forward.

It is already the practice of the best local authorities and the best housing associations to do something that is better and at a higher standard than the bedroom standard, and very much in line with the figures that her amendment suggests. I hope that the Government can be more forthcoming than they have been up to now.

Lord MOWBRAY and STOURTON

My Lords, with the leave of the House, I should like to say that we have every sympathy, as I said, with what my noble friend and the right reverend Prelate are proposing. But although we agree that it is a good and proper thing to aim for better standards, if it is going to be done at the cost of putting more people on the homeless list we think it could at this moment of time be counterproductive. As soon as the situation changes, the Government will alter their plans.

Baroness VICKERS

I thank the noble Lord for his reply. I cannot say I am satisfied with it. I had the assurance of the environmental officers who do this duty that there would be hardly any extra people needing housing. I should have thought that perhaps the noble Lord could say if he cannot bring it in now, that he would do so in, say, a year's time when he has had time to consult other people about possible numbers. I did not move the amendment without receiving an assurance that it would not create homelessness, and therefore with much regret I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 145 not moved.]

11.15 p.m.

Baroness VICKERS had given Notice of her intention to move Amendment. No. 147: Page 165, line 30, at end insert—

("Housing Act 1961 (c.65)

For section 16 there is substituted— 16.—(1) Where a local authority upon consideration of a report from a proper officer, or a complaint from a private tenant, are satisfied that any house which is occupied by persons who do not form a single household is not provided with such means of escape from fire as the local authority consider necessary, then the local authority shall, subject to this section, serve on the person having control of the house, a notice specifying—

1. (a) the works which, in the opinion of the local authority, are required to provide such means of escape; and
2. (b) such reasonable time, or times, within which the works are to be executed; and
3. (c) requiring the person on whom the notice is served to execute those works within the specified time or times.

(2) A local authority who are not, under the Fire Services Act 1947, the fire authority for the area in which the house is situated, or who have under section 12 of that Act, delegated all their functions in respect of that area to another fire authority, shall, before serving a notice under this section, consult with the fire authority concerned. (3) Within seven days of the service of a notice under subsection (1) of this section, the local authority shall post a copy of that notice in some conspicuous part of the house, and it shall be an offence (other than on the authority of the local authority) for anyone to remove, damage, deface or obscure that notice, punishable, on summary conviction, by a fine not exceeding ten pounds for a first offence, and a fine not exceeding fifty pounds for a subsequent offence. (4) Where a local authority receive a complaint from a private tenant that a house occupied by persons who do not form a single household is not provided with the necessary means of escape from fire, then a proper officer shall forthwith inspect that house and report to the local authority stating all the facts in the case and whether or not, in his opinion, the house is provided with the necessary means of escape from fire. Copies of that report shall be available to the private tenant (or his authorised representative) at all reasonable times, for a period of 28 days from the date of inspection, at the principal office of the local authority. (5) In addition to serving a notice under subsection (1) of this section on the person having control of the house, the local authority may, at any time after the service of that notice and before the execution of the works, serve a copy of the notice on any other person having an interest in the house, and, where such a person, or a private tenant who has made a complaint to the local authority under subsection (1) of this section, gives notice to the local authority, the local authority shall provide him with a copy of any notice served under this section. (6) The person on whom the notice was served may, within 14 days of the service of the notice, serve a counter-notice on the local authority—

1. (a) undertaking to carry out the works specified in the notice within the periods specified in the notice, and also stating the date upon which he intends to commence those works; or
2. (b) he cannot, or does not intend to, carry out the works specified in the notice within the periods specified in the notice; or
3. (c) undertaking to provide necessary means of escape from fire, and providing to the local authority an alternative specification of works and specifying alternative periods within which those works will be executed.

(7) Where—

1. (a) no such counter-notice as mentioned in subsection (6) is received by the local authority; or
2. (b) a counter-notice under subsection (6)(b) is received by the local authority; or
3. (c) a counter-notice under subsection (6)(a) is received, but specifies a commencement date which, in the opinion of the local authority, will cause an unreasonable delay; or
4. (d) a counter-notice under subsection (6)(c) is received but, in the opinion of the local authority, the alternative specification is unsatisfactory;

then the local authority shall themselves execute the works specified in the notice. (8) Where a local authority have accepted an undertaking under subsection (6)(a) or (b) and the undertaker has failed to comply with any of the terms of his undertaking, then the local authority shall themselves complete the works specified in that agreed undertaking. (9) Where the local authority are about to enter upon a house under the provisions of either subsection (7) or (8) of this section for the purpose of carrying out any works thereon, they shall serve on the person having control of the house a notice of their intention so to do, and if at any time after the service of such notice any person upon whom the notice was served, or any workman or contractor employed by him, is in the house for the purposes of carrying out any work, such persons shall be deemed to be obstructing the local authority in the execution of this Act, and liable on summary conviction to a fine not exceeding fifty pounds for a first offence, and to a fine not exceeding two hundred pounds for a subsequent offence, unless he proves to the satisfaction of the court that there was an urgent necessity to carry out the works in order to obviate danger to the occupants of the house. (10) Any expenses incurred by the local authority under this section including administration expenses and expenses incurred under subsections (1), (2), (3), (4), (5), (6), (7), (8) or (9), together with interest (at the rate fixed by section 171(2) of the Local Government Act 1972) when a demand for the expenses is served until payment is made, may be recovered by the local authority in accordance with the provisions of section 10(3), (4), (5), (6), (7), (8) and (9) of the Housing Act 1957. (11) For the purposes of this section, "private tenant" has the meaning given to it in section 17 of the Rent Act 1977.")

The noble Baroness said: My Lords, I am in a somewhat difficult position over this because my noble friend Lord Bellwin, to whom I owe a great deal of thanks for accepting one of my amendments, referred to Amendment No. 147 along with a number of others, and I had no knowledge that he intended to do so. Therefore, I will not move this amendment now but may wish to bring it forward at Third Reading because there are a number of amendments I would like to suggest to the Government Amendment No. 143.

Lord HYLTON

My Lords, I consider my noble friend's Amendment No. 147 in many ways considerably superior to the Government amendment. I say that because it seems to contain more effective teeth, and I hope that between now and Third Reading the Government will look at the points I outlined earlier, and in my view what my noble friend suggests in No. 147 has an advantage in that it is stronger and more enforceable.

Baroness VICKERS

In view of my earlier remarks, my Lords, I will not at this stage move Amendment No. 147.

[Amendment No. 146 not moved.]

Lord MOWBRAY and STOURTON moved Amendment No. 148: Page 169, line 44, at end insert— ("(dd) Part IV of the Act of 1972 (conversion by reference to rateable values);")

The noble Lord said: My Lords, I will, with permission, speak at the same time to Amendments Nos. 151 and 154. These are all minor tidying amendments consequential upon the conversion of controlled tenancies into rent regulation under Clause 64. They deal with the situation whereby a landlord is entitled to serve a notice of increase in rent in respect of repairs or improvements carried out before decontrol, but has not done so. Under the Bill at present, the notice could still be served and the rent increased after decontrol. The amendments remove this possibility by repealing paragraphs 3 and 4 of Schedule 17 to the Rent Act 1977. The landlord will instead have to apply to the rent officer for a fair rent which will take account of the improvements and repairs. This will be so not only for decontrol under Clause 64, but also for previous decontrol under Parts III or IV of the Housing Finance Act 1972. I hope your Lordships will approve these minor improvements. I beg to move.

On Question, amendment agreed to.

Lord MOWBRAY and STOURTON moved Amendments Nos. 149 and 150 en bloc: Page 170, line 14, leave out ("87(5)"). Page 170,line 17, leave out from ("where") to ("before") in line 19 and insert (", on the determination or confirmation of a rent by the rent officer, the rent determined by him is registered, or his confirmation is noted in the register,").

The noble Lord said: My Lords, with permission, I will speak at the same time to Amendments Nos. 152 and 153. These are all minor technical amendments consequential on the Government's earlier amendments to Clause 61—Nos. 57 and 59 to 67—dealing with the effective date of rent registrations. They ensure that the necessary consequential amendments are made to Part VI of the Rent Act 1977 (housing association registrations) and that the new effective date rules apply only to registrations made after the relevant provisions are brought into operation. I beg to move.

On Question, amendments agreed to.

Lord MOWBRAY and STOURTON moved Amendment No. 151: Page 173, line 20, after ("Act") insert— ("(aa) paragraphs 3 and 4 are hereby repealed;").

The noble Lord said: My Lords, I have already spoken to this amendment with Amendment No. 148. I beg to move.

On Question, amendment agreed to.

Lord MOWBRAY and STOURTON moved Amendment No. 151A: Page 173, line 30, at end insert—

("Protection from Eviction Act 1977 (c. 43)

The Protection from Eviction Act 1977 shall apply, where a person has been let into possession of a dwelling-house under the terms of a rental purchase agreement (within the meaning of section 87 of this Act) as if—

1. (a) the dwelling-house had been let to him as a dewlling under a tenancy which is not a statutorily protected tenancy (within the meaning of section 3 of that Act); and
2. (b) that tenancy had come to an end on the termination of the agreement or of his right to possession under it.").

The noble Lord said: My Lords, this is a minor amendment, effectively consequential on Clause 87, which gives new protection to those purchasing under rental purchase agreements. It provides that someone who was buying under a rental purchase agreement and who defaults on the payments cannot be evicted without a court order. I ask your Lordships to accept this amendment. I beg to move.

Lord GIFFORD

My Lords, this is a small, but important, point about which there have been some discussions outside the Chamber. I wish merely to thank the noble Lord for a most prompt and favourable response to a matter that was brought to his notice and which is now covered by this amendment.

Lord MOWBRAY and STOURTON

My Lords, with the leave of the House, I should like to thank the noble Lord, Lord Gifford, for the very helpful way in which he has advised us as to what he should like to see done in some of these cases.

On Question, amendment agreed to.

11.22 p.m.

Lord MOWBRAY and STOURTON moved Amendment No. 152: Page 173, line 41, after ("in") insert ("Schedule 6 to the Rent (Agriculture) Act 1976 or in").

The noble Lord said: My Lords, I have already spoken to this amendment with Amendment No. 149. I beg to move.

On Question, amendment agreed to.

Lord MOWBRAY and STOURTON moved Amendment No. 153: Page 175, line 9, leave out paragraph 74.

The noble Lord said: My Lords, I have already spoken to this amendment with Amendment No. 149. I beg to move.

On Question, amendment agreed to.

Lord MOWBRAY and STOURTON moved Amendment No. 154: Page 175, line 19, at end insert— ("77. Paragraphs 3 and 4 of Schedule 17 to the 1977 Act continue to have effect, notwithstanding paragraph 59 of this Schedule, in relation to a notice of increase served under paragraph 4 before the commencement of paragraph 59.")

The noble Lord said: My Lords, I have already spoken to this amendment with Amendment No. 148. I beg to move.

On Question, amendment agreed to.

Schedule 25 [Repeals]:

Lord MOWBRAY and STOURTON moved Amendment No. 154A: Page 176, line 2, after ("4") insert ("(2) and").

The noble Lord said: My Lords, this amendment repeals Section 4(2) of the New Towns Act 1959 which will become superfluous. The new housing subsidy system will make it unnecessary to pay to the Commission for the New Towns the Exchequer payments authorised by the subsection. The Commission for the New Towns will, in future, like new town development corporations under this Bill, receive the new housing subsidy. I beg to move.

On Question, amendment agreed to.

Lord MOWBRAY and STOURTON moved Amendment No. 155: Page 176, line 4, column 3, at beginning insert ("Section 16")

The noble Lord said: My Lords, my noble friend Lord Bellwin has already spoken to this amendment with Amendment No. 96. I beg to move.

On Question, amendment agreed to.

Lord MOWBRAY and STOURTON moved Amendment No. 156: Page 176, line 56, column 3, at end insert ("Section 60")

The noble Lord said: My Lords, likewise my noble friend has already spoken to this amendment with Amendment No. 96. I beg to move.

On Question, amendment agreed to.

Lord MOWBRAY and STOURTON moved Amendment No. 157: Page 177, line 4, at end insert—

(" 1971 c. 62.	The Tribunals and Inquiries Act 1971.	In section 7(3) the words "28(a)" and the words from "but" onwards.
		In section 13(1) the words "(a) or ".
		In Schedule 1 paragraph 28(a).")

The noble Lord said: My Lords, this is a minor repeal of the Tribunals and Inquiries Act consequential on Clause 71. I beg to move.

On Question, amendment agreed to.

Lord MOWBRAY and STOURTON moved Amendment No. 158: Page 179, line 18, at end insert ("and paragraph 7").

The noble Lord said: My Lords, with permission, with this amendment I would speak to Amendments Nos. 160, 161 and 163. All record repeals to the Rent Acts by earlier Government amendments. In the case of Nos. 158, 160 and 161, the repeals stem from the effective date amendments made to Clause 61 (Sections 57 and 59 to 67). In the case of Amendment 163, they stem from the amendments on decontrol provisions made to Schedule 24 (Sections 148, 151 and 154). I beg to move.

On Question, amendment agreed to.

Lord MOWBRAY and STOURTON moved Amendment No. 159: Page 179, line 57, at end insert ("and paragraph (b)").

The noble Lord said: My Lords, with the permission of your Lordships, with this Amendment I would speak to Amendment No. 162 as well. It might be convenient if I take them together. They repeal Section 69(4)(b) and paragraphs 13 and 14 of Schedule 11 to the Rent Act 1977, which provide for the provisional registration of a fair rent. Where a certificate of fair rent has been issued to a person intending to grant a regulated tenancy, he may apply for a provisional registration of a rent in accordance with the certificate. This rent will not take effect unless the rent officer is notified, within a set period from the date of the registration, that the regulated tenancy has been granted. These amendments repeal this little-used procedure.

This is one of a number of minor improvements to the certificate of fair rent procedure that have been agreed with the Institute of Rent Officers. We have in mind to make the others by statutory instrument at an early date. My Lords, I beg to move.

On Question, amendment agreed to.

Lord MOWBRAY and STOURTON moved Amendments Nos. 160 and 161: Page 180, line 15, at end insert ("In section 87, subsections (3) to (5)."). Page 180,line 24, at end insert ("Section 96(1) and (2),").

The noble Lord said: My Lords, I spoke to Amendment No. 160 and to Amendment No. 161 when I moved No. 158. I beg to move the two together.

On Question, amendments agreed to.

Lord MOWBRAY and STOURTON moved Amendment No. 162: Page 181, line 7, after ("paragraphs") insert ("13, 14 and").

The noble Lord said: My Lords, I have already spoken to this amendment, when I moved Amendment No. 159. I beg to move.

On Question, amendment agreed to.

Lord MOWBRAY and STOURTON moved Amendment No. 163: Page 181, line 27, leave out from ("17") to ("10") in line 30 and insert ("paragraphs 3, 4,").

The noble Lord said: My Lords, I spoke to this amendment when I moved Amendment No. 158. I beg to move.

On Question, amendment agreed to.