HOUSING BILL

HL Deb 30 June 1980 vol 411 cc9-109

2.51 p.m.

The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of THE ENVIRONMENT (Lord Bellwin)

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, that the House do now again resolve itself into Committee.—(Lord Bellwin.)

Lord DENHAM

My Lords, I wonder whether it would be helpful—and I assure your Lordships that I do not intend it in any other way—if I were to point out that last Thursday, when we started this Housing Bill, after a fairly long day we had got through 17 amendments out of a very large number. I realise that this is a long and controversial Bill, and that there is a great deal of interest in it in all parts of your Lordships' Committee; but after today we are sitting on it only until 8 o'clock on Wednesday, and we hope to finish the Bill on Thurdsay night. What follows, therefore, is that the further we can get today the earlier we shall be able to rise on Thursday, in view of the Friday sitting at 11 o'clock which is to follow.

Baroness LLEWELYN—DAVIES of HASTOE

My Lords, I had not intended to intervene, but I hope the noble Lord realises that there would in fact be time to finish the Bill on Friday, very shortly. We hope to finish it on Thursday, but, of course, no undertakings can be given by any part of the Committee to that effect.

On Question, Motion agreed to.

House in Committee accordingly.

[The Earl of Listowel in the Chair].

Clause 7 [Discount]:

Lord MONSON moved Amendment No. 18:

Page 6, line 6, leave out ("33") and insert ("20").

The noble Lord said: I beg to move Amendment No. 18, and with the leave of the Committee I will speak at the same time to Amendment No. 19. The purpose of these amendments is to reduce from 33 per cent. to 20 per cent. the discount available to those tenants wishing to buy under Part I of the Bill who have been in their council accommodation, or series of council properties, for only three years. Correspondingly, the discounts further up the time—scale will also be reduced; that is, council tenants having been in residence for, say, ten years would have their discounts reduced, if these amendments are passed, from 40 to 27 per cent. When a tenant has been in occupation for 33 years, the full discount of 50 per cent. would continue to apply, as it does under the Bill as drafted.

In support of these amendments, I do not think I can do better than quote from what the Housing Centre Trust said about the clauses in question. I believe the Housing Centre Trust was mentioned briefly in Committee last Thursday. Your Lordships may know that the president of the Trust is the noble Lord, Lord Greenwood of Rossendale, and the vice—presidents include Lord Brooke of Cum—nor, and the noble Viscount, Lord Esher. So it is a truly cross—party organisation with no political axe to grind whatsoever. Here is what the trust has to say about the Government's proposals: We question the propriety of disposing of a public asset at less than the best price obtainable. We submit that the generous scale proposed, taken in conjunction with inflation, is unacceptable. There is no precedent in valuation law for discounts to sitting tenants to be based solely on length of tenancy, let alone on the aggregate length of a series of tenancies….It seems to us inequitable that a tenant who has already benefited from 20 years of subsidised and usually satisfactory housing should now additionally be privileged to buy his house at half price".

Let us consider for a moment the value of a post-war semi-detached house in the South—East of England. It will not be less, I submit, than £30,000. A discount of 33 per cent. for someone who has been in residence, and not necessarily in the same house, for a mere three years will amount to £9,900. This is tantamount to a gift to the tenant—not in cash, admittedly, but a gift, none the less—of £3,300 a year. I really submit that there is no moral justification for this, and I doubt very much whether there is any practical justification, either. I do not believe the Government have made their case there.

There is another point to be considered. Last Thursday a series of amendments were moved, supported from all sides of the Committee—from the Conservative Benches in the person of the noble Lord, Lord Hylton, from the Labour and the Liberal Benches and from the Cross-Benches℄to exempt from the provisions of Part I certain categories of housing (housing in stress areas in the Greater London Council area, houses in national parks, and so on), and in reply the noble Lord, Lord Bellwin, made the valid point that those excluded by such amendments, had they been passed, would feel aggrieved that they were missing out on the opportunity to buy. Of course, it is perfectly true that if they are missing out on a bargain they will feel aggrieved. By reducing the discount, the bargain element will be less, I submit.

I realise, of course, that the 33 per cent. figure was included in the Conservative manifesto—but there were a great many things included in the manifesto which are not or cannot be fulfilled, and I really do not think that any intelligent person believes that anyone who casts his vote for a particular political party automatically endorses every single item in that party's manifesto. Nobody can seriously believe that. I hope your Lordships will give this amendment your full support. I beg to move.

Lord BELLWIN

The noble Lord has said that the discounts available under Clause 7 of the Bill when a dwelling is sold under the right to buy are unduly generous. I cannot agree. They are certainly not ungenerous, but they are nevertheless fair both to landlords and to tenants, and fairly reflect the relationship in which they stand to each other as seller and buyer. When a tenant in the private sector arranges to buy his home from his landlord, he does not expect to pay, nor does the landlord expect to receive, the price that the dwelling would have fetched if it had been sold on the open market with vacant possession. The price which is paid takes due account of the realities of the situation and the presence of a sitting tenant with security of tenure. There is no reason why those realities should be disregarded when a sale takes place in the public sector.

The basic discount of 33 per cent. provided in Clause 7(1) has accordingly been set at a level which is broadly equivalent to the sort of discount that a tenant in the private sector might be able to negotiate if he bought his home from his landlord. The additional percentage points, up to a maximum discount of 50 per cent., which the buyer receives for each year spent as a secure tenant over and above the three-year qualification for the right to buy, are in recognition of the extent to which he has contributed to the cost of his accommodation by paying rent over all the years.

A basic 20 per cent. discount after four years, as proposed in the amendment tabled by the noble Lord, Lord Monson. would be ungenerous because it would not adequately reflect the relationship between a landlord vendor and a sitting tenant who buys. For example, it would take 16 years as a secure tenant to qualify for the basic 33 per cent. provided for in the Bill as drafted, and that, I repeat, is the sort of basic discount that any private sector might expect to negotiate. As the noble Lord himself has just said, to qualify for the maximum of 50 per cent. would then take no less than 33 years as a secure tenant, and that is quite unacceptable.

I noted what the noble Lord said about the observations of the Housing Centre Trust, but as I said the other day it would not be the first time that I disagreed with some of their observations. As to the point that the noble Lord made when he said that there was no practical justification for this, if anyone doubts the practical justification in terms of incentive, it might be interesting to know that in Leeds when the 20 per cent. discount was being offered the rate of application to purchase was latterly between 30 and 35 a week. Once the discount was increased, as in the Bill, the average number of applications jumped to 140 per week; so that I should have thought it was a practical incentive. I would hope that the noble Lord will feel able to withdraw his amendment and, if not, I hope he will understand why we resist it.

Baroness BIRK

I listened to what the Minister said in answer to the noble Lord, Lord Monson. My colleagues and I will do our best to keep discussions short at this Committee stage. I hope the Minister appreciates that this is a complex and lengthy Bill. One way in which proceedings could be shortened would be for the Government to accept some of the amendments. When the Minister talks these days about being generous or not I begin to wonder in what context he is speaking. He is speaking in the context of one of the most severe economic situations in which the country has found itself. I am not putting that down entirely to the present Government; the international situation is difficult. But it seems to me to be not the right time to be generous. With possible cuts across the social services, with the fear of unemployment, with anxiety in business, in industry and everywhere, we cannot afford as a nation to be generous even to those who are in great need. Yet at this moment there are discounts being offered which (I agree with the noble Lord, Lord Monson) are almost outrageously generous.

The Minister says that when the discounts were increased, the number of applications increased. Of course, they did! What did he expect? If at the same time—and he was arguing this all through the Committee stage on Thursday—together with the right to buy (or the compulsory sale) there would still be, in the opinion of the Government, adequate housing for people to rent, then the more generous the inducement you offer—and that together with a cut in the housing expenditure, so that the housing investment programmes are cut—the more the amount of the rented sector must shrink. These are the Minister's own words. This must be so.

One of the arguments the Minister put up was that people who had been in houses and paying rent for a considerable time should have some benefit from it. What about the people who are paying rent and who are not able to buy their own house? Are they to get a discount on their rent or a handback in order to mark the fact that they have been paying rent for their council houses for 20 or 30 years? I think seriously—and this is not a party political point—that in the present climate and with the amount of money involved and in order to get a fairer distribution between rented housing and houses that are sold, to reduce the discount in the way proposed by the noble Lord, Lord Monson, still leaves (I would have considered) an adequately generous offer today. If the noble Lord intends to press this to a Division, I and my colleagues will be prepared to support him.

Lord HYLTON

I express general support for this amendment. May I ask the Minister whether he would consider this proposition and give a reply now or later? if 50 per cent. discount is the correct figure after 20 years' occupation, then surely 33 per cent. is too much, too high, after only three years.

Lord BELLWIN

As the noble Baroness, Lady Birk, has said, one could pick up and continue the debates we had the other day. I shall try not to do so. Replying to the point my noble friend Lord Hylton has made, I do not think that. In the first place the 33 per cent. was in the manifesto and it was always understood that that would be the basic starting point after three years' occupancy as a secure tenant. I do not think that to go 1 per cent. a year thereafter is wrong at all.

May I say to the noble Baroness, Lady Birk, that it is true that if we were to accept amendments it would shorten the proceedings. I can think of a way to shorten them even more: it would be if she were to withdraw some of them. I do not think I can add a great deal. I do not take the point made—and will not expand on it now but will do so later—as to the effect on other tenants. It is right to raise the point of the effect of the sales policy on other council tenants. I can give more than one explanation of how they are helped very much; but, in the interests of brevity, let us leave that for the time when we are talking about the financial inplications. I repeat that this is very much a cornerstone of Government policy. We feel it is right on all counts. While I respect the aims and motivations behind the amendment, I fear we cannot accept it.

Lord GREENWOOD of ROSSENDALE

May I say how strongly I support the noble Lord, Lord Monson, in what he has said. I think there would be wide support among noble Lords for that point of view. The point I wish to raise is narrower. In case the reference that the Minister made to the Housing Centre Trust (of which I have the honour to be president) might have been regarded as disparaging, would he assure the Committee that the fact that he disagrees with its views on some subjects does not detract from his admiration for it or from the esteem in which his department holds it?

Lord BELLWIN

Having arrived at the department in only relatively recent times, I am not sure what the department thinks of the Housing Centre Trust. I have known them for many years and there is no doubt that they have made, and, I am sure, will continue to make, an important contribution to the whole of what is being done in housing in this country.

Lord UNDERHILL

May I ask the noble Lord two simple questions? Reference was made to the 33 per cent. at which it would be possible for a sitting tenant to negotiate a private sale. Has any survey been conducted to achieve the figure of 33 per cent.; or is it something that has been gathered as perhaps being possible? Was there a survey? Secondly, I know he will deal with the financial implications later but this does affect this particular issue now. What will be the effect on local authority housing finances if houses are sold at very low cost?

Lord BELLWIN

As to the first point, of the survey, I cannot quote a specific survey; but much research was done into this a long time ago. I have no doubt that any check on the percentage difference of the market value of a house with vacant possession, as opposed to one with a sitting tenant, must fall within the ball-park that we are talking about. I cannot quote a specific survey.

On the other point, regarding the possible effect on housing finances, I did not want to get into this now but I will give one instance which I hope will indicate that the effect will be positive. First of all, those local authorities who have housing revenue accounts which are not run with any rate fund contribution have for long been able to apply any of their receipts from the sale of council houses to the housing revenue account. Because they are not allowed to have a surplus in balance within those accounts, they have had to do either of two things with the money: either to use it to hold down rents (which no one would question would help other tenants) or to use it to spend on other things to do with housing—usually improved maintenance, repairs and the like; so that in that sense they benefit very much indeed.

Baroness PHILLIPS

I should like to follow up this point, although I know we shall be on finance later. Throughout the whole of this Bill there does not seem to have been a reference that I have heard to the fact that as in private business these houses have been paid for wholly before they are sold. The money has to be borrowed at the expense of the ratepayers. If that money has already been repaid, all well and good. But surely some of these houses will still have to continue to be paid for by the ratepayers, so they will be subsidising a sale of a house.

Lord BELLWIN

That is not quite so. On a house which is sold when subsidy is still on it—and that would apply to the great majority of houses—the money received is offset against the interest that would have to be paid on the continuing debt. The statistics which I shall gladly be quoting at a later stage will indicate that the net effect of, on the one hand, offsetting what one loses by way of income from rents on dwellings and, on the other, the continuing cost of maintenance and of paying the interest on the remaining outstanding debt more than offset each other. We will get down to the detail of it when we come to it.

Baroness GAITSKELL

May I ask the Minister whether he is going to drown us with words when there is a perfectly reasonable, strong amendment brought forward from the Cross-Benches? All the Minister can do with everything he says is completely unconvincing. There is not a word of conviction about the whole thing. I think that it is absolutely disgraceful that this kind of amendment is not passed through this House easily and quickly.

Lord BELLWIN

I am sorry if the noble Baroness considers that my words are unconvincing. They may be to her. I sincerely hope they are convicing to many other Members of the Committee. I take issue with her very much when she says that I make my points without conviction. I should like her and other noble Lords who may have any doubts to know that I have been involved in the issue of selling council houses for longer than most people in the House of Lords, going back over 14 or 15 years. There are not many who have been involved in selling them for that length of time. I am deeply of the belief that the Government's policy is absolutely right. If the noble Baroness feels that I do not speak with sufficient conviction, then if she listens later I shall try to improve on my delivery.

Baroness GAITSKELL

I did not wish to offend. I did not use the word in that sense at all; I would not criticise the noble Lord about conviction. But it seems to me that this is the kind of amendment that the whole of this Committee can accept.

Lord MONSON

I am grateful to noble Lords for the support that I have received from both sides of the Committee on these amendments. The noble Baroness, Lady Birk, rightly made the point, on Lord Bellwin's argument about tenants' contributions, that a tenant who had been in a council house or flat for many years

and who could not afford to buy or did not want to buy might justifiably ask for a reduction in rent at the end of a certain number of years. Furthermore, given that the rents are subsidised, it may well be that the rents have not covered the outgoings in terms of repairs, insurance and interest on borrowed money over the period.

The noble Lord, Lord Bellwin, also drew an analogy with the private sector, where houses are sold to sitting tenants, which I do not think is valid. There is a security of tenure in the private sector which bears no comparison with that available in the public sector. I believe that discounts of such magnitude impose an unacceptable burden upon ratepayers and, indirectly, upon taxpayers. I strongly believe that public opinion would be in favour of a lower discount. For that reason, I feel that I must press this amendment.

3.15 p.m.

On Question, Whether the said amendment (No. 18) shall be agreed to?

Their Lordships divided: Contents, 67; Not-Contents, 85.

CONTENTS
Amherst, E.	Donaldson of Kingsbridge, L.	Macleod of Fuinary, L.
Amulree, L.	Evans of Claughton, L.	Maybray-King, L.
Ardwick, L.	Fisher of Rednal, B.	Milford, L.
Ayleston, L.	Gaitskell, B.	Monson, L. [Teller.]
Bacon, B.	Gladwyn, L.	Northfield, L.
Balogh, L.	Gordon-Walker, L.	Oram, L.
Banks, L.	Gosford, E.	Peart, L.
Beswick, L.	Greenwood of Rossendale, L.	Phillips, B.
Birk, B.	Grey, E.	Rathcreedan, L.
Blease, L.	Hale, L.	Ritchie of Dundee, L.
Blyton, L.	Henderson, L.	Sainsbury, L.
Boston of Faversham, L.	Hunt, L.	Seear, B.
Brockway, L.	Hylton, L.	Segal, L.
Bruce of Donington, L.	Irving of Dartford, L.	Simon, V.
Buckinghamshire, E.	Jacques, L.	Stewart of Alvechurch, B.
Burton of Coventry, B.	Janner, L.	Stewart of Fulham, L.
Byers, L.	Kilmarnock, L.	Strauss, L.
Craigavon, V.	Leatherland, L.	Taylor of Mansfield, L.
Crook, L.	Lee of Newton, L.	Underhill, L.
Crowther-Hunt, L.	Listowel, E.	Wallace of Coslany, L.
David, B.	Llewelyn-Davies of Hastoe, B. [Teller.]	Wells-Pestell, L.
Davies of Penrhys, L.		Wootton of Abinger, B.
Diamond, L.	Lloyd of Hampstead, L.
NOT-CONTENTS
Abercorn, D.	Bellwin, L.	Campbell of Croy, L.
Adeane, L.	Belstead, L.	Carrington, L. (A Principal Secretary of State.)
Allerton, V.	Bessborough, E.
Ampthill, L.	Blake, L.	Clancarty, E.
Balfour of Inchrye, L.	Boyd-Carpenter, L.	Clwyd, L.
Barnby, L.	Bridgeman, V.	Cockfield, L.
Cottesloe, L.	Grimston of Westbury, L.	Nugent of Guildford, L.
Craigton, L.	Halsbury, E.	Nunburnholme, L.
Cullen of Ashbourne, L.	Harmar-Nicholls, L.	Orkney, E.
Davidson, V.	Hawke, L.	Penrhyn, L.
de Clifford, L.	Henley, L.	Reigate, L.
De Freyne, L.	Hill-Norton, L.	Romney, E.
Denham, L. [Teller.]	Hood, V.	Sandford, L.
Digby, L.	Hylton-Foster, B.	Sandys, L. [Teller.)
Drumalbyn, L.	Ilchester, E.	Shannon, E.
Dundee, E.	Lindsey and Abingdon, E.	Sharpies, B.
Effingham, E.	Long, V.	Sligo, M.
Ellenborough, L.	Loudoun, C.	Soames, L. (L. President.)
Elliot of Harwood, B.	Lyell, L.	Spens, L.
Emmet of Amberley, B.	Macleod of Borve, B.	Strathclyde, L.
Faithfull, B.	Malmesbury, E.	Strathspey, L.
Fortescue, E.	Marley, L.	Trefgarne, L.
Fraser of Kilmorack, L.	Milverton, L.	Trenchard, V.
Gage, V.	Mountgarret, V.	Trumpington, B.
Gainford, L.	Mowbray and Stourton, L.	Vaizey, L,
Gisborough, L.	Moyne, L.	Vickers, B.
Glenkinglas, L.	Newall, L.	Vivian, L.
Gowrie, E.	Norfolk, D.	Young, B.
Gridley, L.	Northchurch, B.

On Question, amendment agreed to.

[Amendment No. 19 not moved.]

3.22 p.m.

Lord HYLTON moved Amendment No. 20:

Page 6, line 11, leave out subsection (2).

The noble Lord said: I come now to a series of probing amendments. Each particular amendment deals with a quite separate point. Should the Committee wish it, I shall be quite happy for them to be taken together, but perhaps we could take them one by one, and I will begin with Amendment No. 20. This is a probing amendment to ascertain the meaning of the word "costs" in line 13. Does it refer to gross costs or net costs? Does it include construction costs, maintenance costs, legal costs, the cost of interest or any one or more of these? Also, why is the special date of 31st March 1974 specified? It occurs to me that that might have been the date of reorganisation of local government in England but, if so, why is that significant? I beg to move.

Lord BELLWIN

Regarding Amendment No. 20, together with Amendments Nos. 21 and 22, I think really I should like to speak, with your Lordships' permission, to all these amendments because I believe I can cover the points raised by my noble friend, and perhaps some others as well, which may short-circuit some of his queries. Needless to say, if I do not do so, I shall be glad to try to pick up any other points he may feel I have missed.

These amendments would delete a provision which is known in the jargon as the "cost floor" on discounted sales. The effect of this provision is to provide that discount shall not reduce the price of a dwelling-house below a figure representing the aggregate of certain costs, incurred on it since 31st March 1974. A broadly similar provision applies under the existing general consent for council house sales. The clause leaves the detailed machinery of the cost floor provision to be prescribed in a determination to be made by the Secretary of State, since the subject involves a wealth of detail which is naturally unsuitable for embodiment in a statute. The intention is, however, that this cost floor will take into account significant costs incurred since the cut-off date of 31st March 1974 in constructing, acquiring, improving or converting the dwelling concerned.

There is nothing sinister in this provision. Its purpose, quite simply, is to ensure that no landlord is hound to incur an immediate loss on the capital cost of the accommodation that is sold under the right to buy. This is clearly a desirable safeguard for the public purse, and I am sure that no noble Lord would wish to sec it deleted from the Bill.

The guts of the provision are contained in subsection (2), which contains the power for the Secretary of State to make his determination. The cut-off date of 31st March 1974 is the date of the reorganisa- tion of local government in England and Wales under the Local Government Act of 1972. Because of those changes, data for calculating costs incurred before the cut-oft date might often not be fully available. The cut-off date, therefore, is intended to provide landlords with a workable system of calculating the cost floor. Because of movements in building costs and market values, it is likely that expenditure before that date would rarely, if ever, have had a significant effect on the sale price of a dwelling had it been taken into account in the cost floor.

Subsection (3) allows for the Secretary of State's determination to make different provisions for different areas. This formulation allows a useful degree of flexibility to make allowance for specifically local, regional or national conditions, and it has been adopted as a matter of general practice for directions, orders and determinations under the Bill. The Government have at present formed no intention to make different provisions for different areas in the Secretary of State's determination under this clause.

Subsection (3) also gives the Secretary of State discretion to make exceptions to his determination under subsection (2). Again, there are no instances in which the Government have formed a definite intention to use this power, but its presence in the Bill will allow suitable steps to be taken where, because of extraordinary and unforeseen circumstances, the operation of the cost floor might pose a threat to the right to buy. If such circumstances arose, I assure your Lordships that the interests of tenants would be very carefully weighed against those of the public purse, which the cost floor provision was specifically designed to safeguard, before any exception was made.

Subsection (4) provides a financial safeguard which is complementary to, and independent of, the cost floor in subsection (2). It enables the Secretary of State by order to prescribe a maximum cash figure by which discount may reduce the purchase price. In some cases, for example, there could be properties sold whose market values were exceptionally high. It would be reasonable for a tenant of a dwelling valued at, say, £16,000 to be able to take advantage of a 50 per cent. discount where he was suitably qualified and where the cost floor did not bite; but this would not be so self-evidently true if a dwelling was valued at, say, £100,000. It could be desirable, again in the interests of the public purse, for a line to be drawn, and this provision for a cash ceiling on discount would have that effect. In the light of what I have said, perhaps my noble friend may feel satisfied with the information given and possibly may feel able to withdraw his amendment.

Lord HYLTON

I am most grateful to my noble friend for his explanation, which I shall study with great care. I am aware that a number of files around the country were lost during the local government reorganisation. I am just wondering whether it is right that costs prior to March 1974 should be written off or neglected.

Lord BELLWIN

It is not so much a question of being written off or neglected as the degree of practicability. I think that this matter was carefully thought through, and it was decided that this was the most practical way of dealing with it. But just as the noble Lord says he will consider what we have put, as with everything that he said I hope we will consider any observations he may care to make either now or in any other form.

Lord HYLTON

With that assurance, I beg leave to withdraw Amendment No. 20.

Amendment, by leave, withdrawn.

[Amendment No. 21 not moved.]

3.30 p.m.

Lord HYLTON moved Amendment No. 22:

Page 6, line 23, leave out subsection (4).

The noble Lord said: I should just like to ask why this second limit is considered to be necessary, unless it is that the discounts otherwise written into the Bill may in some cases be thought to be too large.

Lord BELLWIN

I do not think there is much I can add to what I have already said on this, but as noble Lords in the Committee will have gathered, we are in a very complex area now. I suspect it is going to become even more complex in the next hour or so. I would gladly say that there will be a number of matters for which we may have to give more detail, perhaps in another way.

Lord HYLTON

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord HYLTON moved Amendment No. 23:

Page 6, line 31, leave out from ("tenant") to end of line 35.

The noble Lord said: I should like to ask here why the armed forces are singled out for particular treatment. If we are to include the armed forces in a special way as regards the qualifying period for house purchase, why do we not also include the police service, the ambulancemen or the emergency services generally?

Lord BELLWIN

We believe that this particular form of making this provision is fully justified. Those serving in the regular armed forces of the Crown on or after 21st December 1979, the day after publication of the Bill, will have the benefit for discount purposes of time spent in accommodation provided in connection with their membership of the armed forces. The husband or wife of someone serving on or after that date who subsequently becomes a secure tenant will also be able to count for discount time spent in accommodation provided because he or she was married to a member of the armed forces.

The purpose of this provision is to show recognition of the unique service to the community provided by the armed forces, and of the fact that that service frequently—and I think this is the particular point my noble friend is looking for—involves living in circumstances which would not allow them to gain entitlements under Chapter 1 of this Bill if no special arrangements were made. It is not, however, a provision which the Government consider that it would be justifiable to extend to anyone who has been a member of the armed forces, or the spouse of one, at any time during the past, because to do so would involve going back into history where records would be difficult to find and check. Any cut-off date for the provisions would be bound to cause hard cases, but 21st December 1979 was chosen so that no member of the regular armed forces of the Crown who was serving when the Government's proposals were made public is excluded.

Lord BOYD-CARPENTER

Will my noble friend allow me to assure him that some of us think this is a most admirable provision in the Bill? One of the problems with recruiting for the armed forces is that service in the forces deprives the serviceman, and sometimes his family, of advantages which otherwise come in the ordinary way of life to those not so serving. For my part, I am delighted to see this provision in the Bill and I hope the Minister will keep it there.

Lord STRATHCLYDE

I should like to support what my noble friend has just said; I entirely agree with him. As one who was a member of the armed forces for a great number of years, I sympathise with the position that the wives of people serving in the forces are in, under certain circumstances, which this will help them to avoid.

Baroness FISHER of REDNAL

I think this is an admirable clause, but it is nothing new, as the noble Lord will understand. For many years now—25 years or more—many large local authorities have given added points to people who are in the armed forces, so that they come to the top of the queue when they give up their serving time. This is really a continuation of what perhaps good local authorities have been doing on the letting side. Now it is on the purchase side.

Lord BELLWIN

I am most grateful to my noble friends and to the noble Baroness, Lady Fisher of Rednal. What she says is quite correct. We are merely extending the principle to this new provision.

Lord SIMON of GLAISDALE

I hesitate to interrupt the chorus of approbation. The question that I propose to ask is not related purely to the substantive provisions of the Bill but to the drafting. The armed forces of the Crown are defined in subsection (10) of this clause with reference to the House of Commons Disqualification Act. We have been promised for a long time a new interpretation Act. A cross-reference like this is highly inconvenient to anybody who wants a definition. As I say, I do not expect the noble Lord the Minister to answer the question, but I should like to put it on record. When are we going to have the interpretation Act for which we have been looking for so long?

Lord BELLWIN

I am grateful to the noble and learned Lord for the point he makes. As he so rightly assumed, I am not in a position to answer him now, but I do assure him that it will be taken away —it is on the record—so that we can see whether we can give him some information that might be helpful.

Lord HYLTON

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 24 not moved.]

3.38 p.m.

Lord MOWBRAY and STOURTON moved Amendment No. 25:

Page 7, line 28, at end insert— ("(8A) Subsections (5) to (8) above shall have effect as if—

1. (a) the references to a secure tenancy included a tenancy which either was a secure tenancy within the meaning of the Tenants' Rights, Etc. (Scotland) Act 1980 or would have been such a tenancy if Part II of that Act had been in force and the bodies mentioned in section 10(2) of that Act had included the predecessor of any such body; and
2. (b) the references to a secure tenant included the tenant under such a tenancy as is mentioned in paragraph (a) above, except when the landlord was a body specified in paragraph (e) or (g) of section 10(2) of the Act of 1980, and also included a tenant of the Northern Ireland Housing Executive or of a predecessor of that Executive.").

The noble Lord said: This amendment seeks to mirror a similar provision in the Tenants' Rights, Etc. (Scotland) Bill. It is concerned with the position of a person who may exercise the right to buy in England or Wales under the Housing Bill after spending time as a tenant in Scotland or Northern Ireland. Broadly speaking, it will mean that such a person will be able to claim discount in respect of his Scottish or Northern Irish periods of tenancy if they corresponded to one of the categories of tenancy in England or Wales for which the Housing Bill allows discount to be claimed.

The one exception to this is the case of housing association tenancies in Scotland. Because of fundamental differences in Scottish and English law, it was impractical to draw the distinction in respect of housing association tenants in Scotland which is drawn in respect of such tenancies in England and Wales by Clause 2(1) and Clause 7(6) of the Housing Bill. Those subsections exempt a number of housing trusts and associations, most of which are charities, from the right to buy. If the Bill had allowed former tenants of similar associations and trusts in Scotland to claim discount in England or Wales in respect of those tenancies, a difficult anomaly would have been created. As a result, former tenants of charitable trusts or associations in Scotland would have been treated more favourably for discount purposes than former tenants of similar trusts and associations in England. Housing association tenancies in Scotland, I remind your Lordships, do not attract either discount or the right to buy under the Tenants' Rights, Etc. (Scotland) Bill. I beg to move.

Clause 7, as amended, agreed to.

Clause 8 [Repayment of discount on early disposal of freehold or lease]:

3.40 p.m.

Baroness BIRK moved Amendment No. 26:

Page 7, line 38, leave out ("five") and insert ("ten").

The noble Baroness said: It may be for the convenience of the Committee if I speak to Amendments Nos. 26 and 27 together. The first amendment extends from five to 10 years the period during which there is a liability to repay a proportion of the discounted value if the property is resold, and provides for the proportion of the discounted value which is repayable to reduce by 10 per cent. per annum. The reason for this is that, given the very generous discounts which are being offered and which go up to 50 per cent. of the value of the property, it is only right that there should be an obligation to repay part of this if the property is sold in the reasonably near future. Otherwise, it is clear that former tenants will be able to make large specula- tive capital gains, at the expense of the public authority, within a very short period of exercising the right to buy.

The Government have, to some extent, recognised this, but propose to require payment only if the property is resold within five years, and the liability for repayment reduces by 20 per cent. per annum under that time scale. This, I submit, is a very limited period and Amendment No. 26 proposes to double it. It is not unusual in other fairly similar fields to have a time limit of 10 years

For example, quite recently, during the time when I was a Minister at the Department of the Environment, we had in the last Bill on ancient monuments that went through a clause under which, if a grant was offered by the Historic Buildings Council for repairs to a house and the house was sold within 10 years, then that grant, or part of it—whatever was equitable in view of the work done—should be repaid. Obviously, the Government money that was going into the house meant not only that the house was improved, but that it would fetch a higher price if it were sold.

The time limit we imposed, after a great deal of consideration, was 10 years. Five years is a very short period in which somebody can buy a house at a very good price and then resell it, and be completely in the clear afterwards. It is far too short a period and, from the point of view of any Government, it is handing over too much money and the possibility of making a profit too easily.

The second amendment would, to a certain extent, safeguard public authorities against speculation in their former assets, and would also generate some additional income to compensate for the low market value which they are required to put on sales to long-standing tenants. It would not prejudice the bona fide purchaser of a former council property who needed to move house before 10 years, because of a change of work, as he would obtain the market value of the property which is likely to be far in excess of the price he paid; that is, the earlier market value less discount. He would simply be required to repay to the public purse a proportion of the profit he had made out of the resale of his former public property, and the discounted value would reduce by 10 per cent. per annum. This is the other side of the equation, making it a rather more equitable proposition for the local authority. I beg to move.

Lord HARMAR-NICHOLLS

I hope that the Government will resist this amendment. I rather think that the noble Baroness has a conscience about it, because the requirement to extend the period from five years to 10 years will interfere with the mobility of labour, There is no doubt about that. One of the things that the nation is concerned with is getting greater mobility of labour, in order to take advantage of the changed make-up of industry in this country. To feel that you cannot move because of the problem of your house is interfering with the extension of the new industries and the new ideas we need if we are to solve the present problem which is causing unemployment and all the other things that we find so miserable. If you have a good idea, be generous with it, and five years is the right degree of generosity while preserving the asset and the value of the community's possessions.

The noble Baroness is being contradictory, because her second amendment tries to face up to the point I made. But saying, "We do not want to interfere with mobility", and producing words which are, to some extent, an excuse for taking away the advantages which the five years give, is a contradiction that we ought to accept. Now that, as I hope, we shall be deciding that it is a good thing for people to own their houses, provided that they are bona fide, we ought to go forward with confidence and generosity. But, mainly, we must do all we can to encourage the mobility of labour so that our skills can be placed where they are wanted. The noble Baroness's amendments would interfere with that and for that reason ought to be resisted.

Lord EVANS of CLAUGHTON

Whether it should be five or 10 years is a matter of judgment. Normally, in the local government sales that have taken place in the past, there has been a five-years' pre-emption. I must say, with respect to the noble Lord, Lord Harmar-Nicholls, that I do not think mobility of labour is a key feature of this amendment. The freedom of people to move from one house to another is taken care of by later amendments in this very large Marshalled List.

What I and my noble friends are concerned about is that we had understood—and I believe it to be the Government's case—that the concept of the sale of council houses is that people can own their houses. It is not a question of enabling or encouraging people to make speculative gains. I suppose that virtually the only legal gain that you can make these days without having to pay tax is by selling your principal residence.

It is a matter of delicate balance, but the time limit suggested by the noble Baroness, Lady Birk, is preferable, if we put the accent on the concept that people should have the right to buy the council houses they live in and should enjoy them, and not on the concept that they should be seeking opportunities to make speculative gains. I agree that, in certain circumstances and special cases, there will be people who will require to move within a period of less than 10 years, but they will still get some profit from the discount provisions. So, on balance—and it is a difficult balance—I prefer the period set down in the amendment moved by the noble Baroness.

Lord MONSON

I frequently find myself in agreement with the noble Lord, Lord Harmar-Nicholls, but I am afraid that in this case I do not. I strongly support the noble Baroness in her amendment. She made out an impeccable case for it. It logically complements my pair of abortive amendments, Nos. 18 and 19, except that the case for these two amendments is very much stronger. I think that public opinion would be most offended to see very large tax-free gains being made within a space of merely five years. I hope that if the Government do not give way she will press the amendment and I, for one, shall certainly support her.

Lord DIGBY

On this idea that people are making a lot of tax-free gains, they are also paying. The whole basis of this Bill is that instead of paying small rents they will be paying very sizeable extra amounts, and I do not accept that we should think it absolutely wrong that someone should make a gain. That person is putting an investment into his house and if he makes a gain, then good luck to him.

Lord JANNER

I should like to support this amendment from a different point of view. The speculative element is one of the things that is frightening people in this country. To invite people to speculate will go against the kind of feeling that people in private residences in particular have with regard to the manipulation that is going on at the present time. I think that the amendment is fair, in the circumstances, and that it will have to be considered from the speculative angle at later stages. I strongly support the amendment.

Viscount GAGE

If a man buys his house and then, after four or five years, dies, under the amendment moved by the noble Baroness will the widow be compelled to live in that house until the 10 years are up before she can sell it?

Lord STEWART of FULHAM

That contribution exposes some of the misunderstandings that there are on the other side of the Committee about the amendment. This amendment does not compel anybody to go on living in a house. The noble Viscount might address the question to the Government: what happens if a purchaser dies before the five years that they propose are up? Neither the clause nor the amendment oblige anybody to go on living in a house. The question is this. If you are allowed to buy a house, which originally was council property, on very advantageous terms, how soon ought you to be able to sell that house and in effect make a gain out of it? That is the point we are arguing.

The two amendments, so far from contradicting each other as the noble Lord, Lord Harmar-Nicholls, suggested, as a matter of plain arithmetic must go together. If you have a 10-year period instead of a five-year period, the reduction in what has to be paid will be by 10 per cent. each year instead of by 20 per cent. each year. If the noble Lord thinks it out, he will see that this is so. It has nothing to do with mobility of labour. If you want to provide for mobility of labour, you do that just as well—indeed, more simply—by providing a greater abundance of council property to let. That is quite obvious.

Clearly this is a problem for anybody who decides to buy a house, whether by virtue of this Bill or in any circumstances. He has to consider whether in the future this may face him with a problem if, for very strong employment reasons, he wants to move and dispose of his asset. Therefore, he has to weigh up whether or not it is worth his while to buy. But that happens, irrespective of this Bill. If he decides, having got the house on very advantageous terms, that in a very short time he wants to sell it, perhaps for very good employment reasons, it is not unreasonable that some of the advantage he has got out of it should go back to the public from which it came originally.

I am afraid that the Government are now trying to build up a policy the inspiration for which comes from Ernie, who chooses the winning numbers. It is quite clear by now that the bulk of the population are going to be worse off as a result of the Government's policies, but if they can hold out the chance that each of us might be the lucky one who makes a speculative gain from one or other of the things that the Government have done, it may buoy up the general feeling towards perhaps this not being so bad a Government after all. That, as I see it, is what the Government are doing. They are introducing an Ernie principle into the running of the economy. I think it is an unsatisfactory principle, and I am glad to see that this amendment mitigates some of its effects.

The DUKE of NORFOLK

I really cannot allow the noble Lord to compare this subject with Ernie. When a man buys a house on a private housing estate it very often happens that within two or three years he moves to another job in another part of the country by reason of promotion. People change their location within a firm and go from one area of the country to another. I know this from the experience I had when I built a little housing estate in Lancashire. I have spent most of my life on housing estates—what we in the army call the "married family patches". If we take Germany as an example, they have no shackles like this. They can sell and buy their houses—they are not normally council houses—and move from one area to another as they are promoted. The whole purpose of the Bill is to remove the shackles and therefore the plight under which, unfortunately, we are living.

May I make one further point with reference to the noble Lord who spoke last. It is not true to say that a man can get promotion by taking a tenanted house. There are enormous waiting lists. Many people who want to move within a firm for promotion reasons are unable to do so because they cannot get out of one tenanted house and into another somewhere else. I believe that the period of five years in the clause is absolutely right.

Lord STEWART of FULHAM

May I say in reply to the noble Duke that he has raised the question of private estates. If a man buys a house privately at the market value, it is his business when he sells. But if he buys a house, which was built at public expense, at well below the market value on very favourable terms, it is a matter of public concern to ask to what extent ought he to be able to make money out of that transaction.

The Duke of NORFOLK

Does the noble Lord really suggest, with inflation as it is now and as it is likely to be, that in five years' time it will be much below the market value?

Lord STEWART of FULHAM

The noble Duke supports the Government, not I. He will take, if he likes, his pessimistic view of the future of inflation.

Baroness FISHER of REDNAL

I failed to follow the reasoning of the speaker on the Back Benches opposite. The noble Lord on the Front Bench keeps telling us that these people are not going to sell their houses, that they do not want to make a profit out of them and that they want to continue to live in them; there will therefore be very few which will come on to the market. There seem to be crossed wires between the Front and the Back Benches on the opposite side. The previous speaker spoke about having the opportunity to sell and move around the country, but the noble Lord on the Front Bench does not think that this is what will happen. He thinks they will continue to live in their properties.

Lord HARMAR-NICHOLLS

I apologise for speaking again, but I believe that the noble Lord, from the Dispatch Box opposite, and the noble Baroness who has just spoken are being very unfair. I am rather surprised at the noble Baroness because she comes from the Birmingham area, as do I, so I know that her experience must be the same as mine. The crossed wires are not on this side of the Committee. They are opposite. The argument of the noble Lord and the noble Baroness is that the only people who will buy these houses will be those who will want to sell them quickly in order to make an outrageous profit at the expense of the community. We say that the number of people who will want to sell will be minimal but that those who do want to sell, for all sorts of reasons—for mobility of labour reasons or because a husband dies—ought not psychologically to have to have put against them the advantages that we are giving to them by encouraging them to buy their houses.

The noble Lord was very unfair in the way that he disregarded the question put by my noble friend. If a husband dies, it is possible that the wife will not then want to carry on in the house, for all sorts of reasons which are well understood if one understands the psychology of people who lose their partner. To say that because she has suffered the loss of her husband she must also suffer the loss of some of the advantages that the family would have had if her husband had not died, is a complete negation of the spirit in which we ought to promote this Bill.

With regard to mobility of labour, again psychology must come into it. The noble Lord must know—I know that the noble Baroness knows it because, from the area she comes from, she has experienced it, as I have, on many occasions—that the psychological advantage of being able to get the market price for your house and have the full benefit from it does weigh when you have to decide whether or not to accept a job in another part of the country. The family budget is examined carefully. To suggest that that would not be taken into account is a misreading of the whole psychology that is holding back the mobility of labour which this country wants. I believe that the noble Lord, as always, was plausible but, uncharacteristically on this occasion, very unfair.

4 p.m.

Lord MOWBRAY and STOURTON

We have had a very interesting debate on this matter and I am most grateful to my noble friend Lord Harmar-Nicholls in particular for his forceful comments. As the noble Baroness explained to us, these amendments would vary the discount sharing provision in Clause 8, so that a purchaser under the right to buy was liable to repay a proportion of the discount for the 10 years following his purchase. This would double the period of liability and the amount repayable would diminish by 10 per cent. stages, rather than by 20 per cent. as Clause 8 at present provides. Thus not only would the purchaser have this liability for longer, he would have to pay back more discount if he disposed of his property in a way which triggered off the discount sharing charge.

With one or two exceptions, this period of 10 years would be longer than any period for which restrictions have ever been imposed on the sale of council and new town houses. The maximum period for the restrictions in the present consent is eight years, and then only for the sale of empty houses. The maximum period of restrictions in sales to sitting tenants is five years. The noble Baroness may have in mind the provision now in Clause 18 for the imposition of a 10-year preemption condition when dwelling houses are sold under the right to buy in specified rural areas. But this condition does not impose a financial penalty on the purchaser because the pre-emption is to take place at market value.

As the noble Lord, Lord Evans, said, these are largely matters of judgment on which we as parties have different philosophies. My noble friend Lord Gage asked about what happens on the death of a tenant. There is no discount repayment if the purchaser dies within five years; it is only if he sells, of course. Noble Lords and noble Baronesses opposite have been speaking about large speculative gains but, as my noble friend Lord Harmar-Nicholls said, they do not have to sell, they will only have the option. The vast majority of people will buy in order to live in the house. If they were to take advantage and sell they would still have to pay the amount of the so-called gain in buying a new house which they would have to move into. No one will be worse off; no one is going to be made to buy a house. If he does not want to buy a house or cannot afford to do so he can continue to stay there as a local authority tenant.

We believe firmly that more choice and more variety will bring far more reality into the housing situation, and I believe that this amendment would make the discount sharing provision too stringent, especially when it is borne in mind that in the private sector tenants with security of tenure would expect to buy at below market value without any requirement to repay. Clause 8 provides what we believe to be a necessary financial safeguard. It is already adequate for that purpose.

I hope your Lordships will understand that our judgment in this is bound to be different from the judgment of noble Lords sitting immediately opposite me, although I should have thought that the party of the noble Lord, Lord Evans, would have been nearer to our philosophy in this matter; but that is something for noble Lords to judge.

Baroness PHILLIPS

Before the noble Baroness replies, may I say that I think it would be most unfortunate if the party opposite went on record as the defenders of the people who wish to buy houses, and we on this side of the Committee were described as the grinders of the faces of the poor. Nothing could be further from the truth. It is always useful to have a long memory, and I think I can recall that it was one of the philosophies of the Conservative Party apropos local authority housing, that in my own area there was a description of a poor old lady who lived in a private house and who had to pay rates which made some contribution to the people who were living in rented local authority housing. I cannot see the difference, except that in this case it is possible that they could make a profit from the poor old lady living in a privately owned house. That is the kind of thing that we have in mind.

Lord CLEDWYN of PENRHOS

I should like to follow and support what my noble friend has just said. The noble Lord, Lord Mowbray and Stourton, referred to the differing philosophies of his party and of this party. I do not know precisely what he meant, but I assume I am right in saying that his argument is that his party believes in a so-called property-owning democracy whereas this party does not. I see that the noble Lord assents. Therefore I wish to make a short point: when the Leasehold Bill was going through Parliament, it was designed to ensure that people should have the right to purchase the reversions of their own houses. The party opposite opposed that measure, clause by clause and line by line, at every opportunity. I know that perfectly well because I played a part when that Bill was going through Parliament. Therefore when it comes to talking about a property-owning democracy there is a good deal of humbug in what the noble Lord has been saying.

Lord EVANS of CLAUGHTON

Possibly to comply with the suggestion made by the noble Lord, Lord Mowbray and Stourton, we should have tabled an amendment giving the figure of 7½ years! The basic point that concerns me is that there is a generous discount which we debated on the amendment tabled by the noble Lord, Lord Monson. It is a very generous discount that purchasers of council property are given. We think it is over-generous and we have to compare that with the position, of which I have quite a lot of experience, of tenants in the private sector who have lived perhaps for 30 or 40 years in a privately-tenanted house which they have repaired and very often improved themselves, and they say: "Now we can afford to buy this house," and one gets a survey for them. The survey comes back and the valuation is £X thousand vacant possession value. The tenant then says: "It is not vacant possession value. I am buying as the sitting tenant"; and the surveyors in my part of the world will always say that for a sitting tenant in a privately rented property the value to him or her is almost the same as vacant possession value. The point I am making is that the tenant of a council house is getting a special benefit.

4.8 p.m.

Baroness BIRK

It seems to me that there is quite a lot of feeling in different parts of the Committee on this amendment, and I preface my remarks by saying that I frankly think this is something which the Government should reconsider. The noble Lord, Lord Mowbray and Stourton, says that we now have restrictions greater than have ever been known on (presumably he means) pre-emption and resale. In fact we have never had a situation like this before, where local authorities are being put into the position compulsorily of having to sell houses. It is an entirely different situation, so one cannot talk about restrictions greater than have ever been known before.

I think my noble friend Lord Stewart dealt very neatly with the points raised by the noble Lord, Lord Harmar-Nicholls, but I would emphasise with regard to the question of mobility of labour that I did not bring that in to salve my conscience or the conscience of anybody else. I was making the absolutely valid and accurate point that the purchaser of a former council property—and that is what we are talking about—who needs to move before the period of 10 years expires, will still get the existing market price for his house, less the discount which is really part of the public contribution. Taking the assessment given by the noble Duke, the Duke of Norfolk, of inflation in the future, then that man will presumably be in a position to buy another house somewhere else because he will already have had an asset which will have increased in value. I think the noble Lord Lord Evans, is absolutely right; it is a matter of judgment.

My noble friend Lord Stewart was absolutely right when he said that there

was a great deal of misunderstanding and, without wishing to rub the point in, here again I think that Notes on Clauses would have been a great help on the whole of this Bill. I think the noble Lord, Lord Harmar-Nicholls, in one of his interventions said that the number of people who will want to sell is minimal. If they are minimal, why not agree to a very sensible arrangement which would at least come down on and act as some sort of penalty on those who may be speculating? Otherwise it will be minimal and people will still have their own property.

I think my noble friend Lord Stewart dealt quite fully with the position of the widow or widower. If, in the case of a widow, it is going to be based on when her husband dies, it could be one year, two years; we cannot depend on people remaining alive until five years have passed, if then the requirement to sell back to the authority goes. I would ask the Government to consider taking it back and reconsidering this point, which again seems to me not a party political point; it seems to me to make very good sense. It is looking after public stock and public assets and taking what I would have thought was a very sensible financial view. If the Government are not willing to do that, I intend to press the amendment.

4.12 p.m.

On Question, Whether the said amendment (No. 26) shall be agreed to?

Their Lordships divided: Contents, 85; Not-Contents, 100.

CONTENTS
Amherst, E.	Crowther-Hunt, L.	Henderson, L.
Amulree, L.	David, B.	Hill-Norton, L.
Ardwick, L.	Davies of Penrhys, L.	Houghton of Sowerby, L.
Avebury, L.	Denington, B.	Hunt, L.
Aylestone, L.	Diamond, L.	Hylton, L.
Bacon, B.	Donaldson of Kingsbridge, L.	Ilchester, E.
Balogh, L.	Elwyn-Jones, L.	Irving of Dartford, L.
Banks, L.	Evans of Claughton, L.	Jacques, L.
Barrington, V.	Fisher of Rednal, B.	Janner, L.
Beswick, L.	Fulton, L.	Jeger, B.
Birk, B.	Gaitskell, B.	Kilmarnock, L.
Blease, L. [Teller.]	Gladwyn, L.	Leatherland, L.
Blyton, L.	Gordon-Walker, L.	Lee of Newton, L.
Brockway, L.	Goronwy-Roberts, L.	Listowel, E.
Burton of Coventry, B.	Greenwood of Rossendale, L.	Llewelyn-Davies of Hastoe, B.
Byers, L.	Hale, L.	Lloyd of Hampstead, L.
Cledwyn of Penrhos, L.	Halsbury, E.	Lloyd of Kilgerran, L.
Collison, L.	Hatch of Lusby, L.	Lovell-Davis, L.
Maelor, L.	Ponsonby of Shulbrede, L. [Teller.]	Stewart of Alvechurch, B.
Maybray-King, L.		Stewart of Fulham, L.
Milverton, L.	Porritt, L.	Stone, L.
Monson, L.	Rathcreedan, L.	Strabolgi, L.
Noel-Baker, L.	Ross of Marnock, L.	Strauss, L.
Northfield, L.	Sainsbury, L.	Taylor of Mansfield, L.
Oram, L.	Seear, B.	Underhill, L.
Peart, L.	Sefton of Garston, L.	Wallace of Coslany, L.
Phillips, B.	Segal, L.	Wells-Pestell, L.
Piercy, L.	Simon, V.	Wootton of Abinger, B.
	Stamp, L.	Wynne-Jones, L.
NOT-CONTENTS
Abercorn, D.	Elliot of Harwood, B.	Marley, L.
Adeane, L.	Emmet of Amberley, B.	Montgomery of Alamein, V.
Allerton, L.	Exeter, M.	Mowbray and Stourton, L.
Amory, V.	Fairfax of Cameron, L.	Moyne, L.
Ampthill, L.	Faithfull, B.	Murton of Lindisfarne, L.
Avon, E.	Fortescue, E.	Newall, L.
Balfour of Inchrye, L.	Fraser of Kilmorack, L.	Norfolk, D.
Barnby, L.	Gage, V.	Northchurch, B.
Bellwin, L.	Gainford, L.	Nugent of Guildford, L.
Belstead, L.	Glenkinglas, L.	Nunburnholme, L.
Bessborough, E.	Gowrie, E.	Orkney, E.
Blake, L.	Grantchester, L.	Penrhyn, L.
Bridgeman, V.	Gridley, L.	Reigate, L.
Campbell of Croy, L.	Grimston of Westbury, L.	Robbins, L.
Carrington, L. (A Principal Secretary of State.)	Hailsham of Saint Marylebone, L. (L. Chancellor.)	Romney, E.
		Saint Oswald, L.
Chelwood, L.	Hanworth, V.	Sandford, L.
Clwyd, L.	Harmar-Nicholls, L.	Sandys, L. [Teller.]
Cockfield, L.	Hawke, L.	Sharpies, B.
Cotteslow, L.	Henley, L.	Sligo, M.
Craigavon, V.	Home of the Hirsel, L.	Soames, L. (L. President.)
Craigton, L.	Hood, V.	Spens, L.
Cullen of Ashbourne, L.	Hornsby-Smith, B.	Strathcarron, L.
Davidson, V.	Hylton-Foster, B.	Strathclyde, L.
de Clifford, L.	Kinloss, Ly.	Strathcona and Mount Royal, L.
De Freyne, L.	Lindsey and Abingdon, E.
Denham, L. [Teller.]	Long, V.	Strathspey, L.
Derwent, L.	Loudoun, C.	Swinton, E.
Digby, L.	Lucas of Chilworth, L.	Trenchard, V.
Drumalbyn, L.	Lyell, L.	Trumpington, B.
Dundee, E.	Macleod of Borve, B.	Vaux of Harrowden, L.
Ebbisham, L.	Macpherson of Drumochter, L.	Vickers, B.
Effingham, E.	Malmesbury, E.	Vivian, L.
Ellenborough, L.	Mancroft, L.	Young, B.

On Question. amendment agreed to.

[Amendment No. 27 not moved.]

4.20 p.m.

Lord EVANS of CLAUGHTON had given notice of his intention to move Amendment No. 28:

Page 8, line 5, at end insert ("or (c) the grant of a lease or sub-lease for a term of twenty-one years or less with an option to renew or to purchase the freehold or lease as the case may be; ").

The noble Lord said: We have been exhorted to speak today and no doubt for the rest of the week as briefly as possible. I think that I shall be able to do that by refraining from moving this amendment, because Amendment No. 28A covers the loophole which my honourable friends in another place discovered in the proposed legislation. In the other place it was suggested that an amendment should be put down to fill that loophole. I think that Amendment No. 28A in the name of the noble Lord, Lord Bellwin, and the noble Lord, Lord Mowbray and Stourton, does that and therefore, I am happy not to move this amendment.

Lord BELLWIN moved Amendment No. 28A:

Page 8, line 31, at end insert ("and for the purposes of this section the grant of an option enabling a person to call for a disposal falling within subsection (3) above shall be treated as such a disposal.").

The noble Lord said: I beg to move Amendment No. 28A. With the leave of the Committee I shall speak also to Amendments Nos. 75A, 163A, 164A and 164B. These amendments are the outcome of an undertaking which my honourable friend the Parliamentary Under-Secretary of State gave to Mr. Alton in the other place.

Mr. Alton had expressed concern about a possible loophole in the provision in Clause 8 for the repayment of discount where a purchaser under the right to buy resells within five years. He drew attention to the possibility that the liability to repay discount in these circumstances might be avoided by granting a subsequent purchaser an option to buy rather than convey the dwelling-house to him straightforwardly during the five year period. Because the grant of the option would not count as a disposal, there would be no liability to repay discount at that stage, and when the sale finally took place the five years would be up.

Successful use of such a dodge would depend on the sale of an option to buy a house for a high price in several years' time. The man buying the option might move into the house as a tenant until he could exercise the option and buy outright unless he were a speculator who did not wish to occupy the house. It is not clear how easy it would be in practice to strike bargains of this type, but we agree that there is enough of a risk to justify bringing forward amendments to the Bill so as to deal with the risk.

Indeed, a similar option device could be used to get round the 10-year rural preemption safeguard under Clause 18. Also, if, as the Bill stands, an option were granted where a covenant had been imposed under Clause 18 limiting future purchases to people living or working locally, that option would not trigger the covenant but the consequent disposal would. This would make for confusion. The problems could also arise on voluntary council house sales where discount sharing or a rural areas safeguard was imposed under Clause 88. We have therefore tabled amendments to Clauses 18, 87 and 88 as well as to Clause 8 itself.

The noble Lords, Lord Evans of Claughton, and Lord Byers, have put down an amendment to Clause 8 in similar terms to that moved by their honourable friend Mr. Alton in the other place. Their amendment was defective however and did not cover all the eventualities. We are grateful to the noble Lords and their honourable friend for drawing attention to the essential point, but I hope that in the light of these Government amendments they will not feel it necessary to move their amendments. I beg to move.

Lord EVANS of CLAUGHTON

May I say on behalf of my noble friends and myself how grateful we are to the noble Lord and his noble friends for putting down this amendment and the other amendments to which he referred? Although it would not have been often used as a device because it is rather complex, this might well have given people an opportunity to make very considerable speculative gains to which they were not entitled. I am extremely grateful to the Minister for the amendments that he has put down.

Clause 8, as amended, agreed to.

Clause 9 [Right to a mortgage—amount to be secured.]

4.25 p.m.

Lord HYLTON moved Amendment No. 29:

Page 8, line 37, leave out paragraphs (b) and (c).

The noble Lord said: I beg to move Amendment No. 29. It may be for the convenience of the Committee if I speak also to Amendment No. 30. These are both probing amendments and I should like to ask first, why is it thought right that the tenant's legal costs should be included in the mortgage to which he will be entitled. Secondly, how will "available income" be defined? Will it be on the same sort of criteria as building societies employ? What will the factor be by which the income is to be multiplied? If the answer is "building society practice", then I should point out that there has been, over the years, very considerable variation in building society practice. The multipliers have ranged from two-and-a-half to three and perhaps in some cases even a little wider than that.

Finally, I should like to ask the meaning of the word "appropriate" on page 9, line 3. I wonder whether it is a suitable word for inclusion in a statute because, of its nature, it seems to imply a value judgment to be made by somebody. I beg to move.

Lord BELLWIN

I shall try to answer the points which my noble friend has raised. The intention behind our arrangements for costs under the right to buy is that each side of the transaction should pay its own costs, as normally is the case with sales in the private sector. The provision in subsection (1) that the mortgage should include those costs—legal or otherwise—which the vendor either validly charges to the purchaser (namely, the costs arising from the mortgage) or which it initially meets on his behalf is a valuable help for purchasers in meeting all the liabilities they will face on becoming home-owners.

My noble friend asked how "available income" will be defined; what the factor will be; and the meaning of "appropriate". We are at present considering the calculation of income for mortgage purposes and other aspects of the regulations. It is not yet possible to give definite information as to what these are likely to be, but they can reflect what a purchaser spends on everyday living and his existing credit commitment.

My noble friend also asked about the size of the deductions and how much flexibility it is necessary or desirable to have in the regulations. The answer is that the precise provision of the mortgage regulations is still under consideration, as I said a moment ago. The provision for different factors and different amounts to be applied to different incomes is necessary to take account of the individual incomes of those purchasing jointly. It is an integral part of the procedure giving tenants the right to purchase jointly.

My noble friend also suggested that subsection (5) seemed to be contradictory and asked why it was necessary. That provision permits the landlord to allow the tenant a larger mortgage than he is entitled to, so long as the amount of the mortgage does not exceed the aggregate purchase price and costs as set out in subsection (1). Subsection (5) ensures that the landlord may not attempt as a way of getting round the right to buy, to force a larger mortgage on the tenant than he wished to have. It will, however, enable a landlord to grant a larger mortgage backed by guarantees from people whom the tenant did not wish to have as joint purchasers or who did not wish to be so, but who were willing to take on the commitment of helping the tenant with the purchase. I hope that perhaps my noble friend will feel that that explanation will enable him to withdraw his amendment.

Lord HYLTON

I am grateful to my noble friend for what he has said. However, I do not quite see why it should be thought right, in all cases, to provide the purchaser's costs by means of a mortgage. I should have thought that there was a very good case for expecting the purchaser to put at least some stake of his own into his purchase. I am also somewhat concerned to hear that, when we could be rather close to the coming into effect of this Bill as an Act, thinking is still taking place as to how the regulations will be drawn up. I understand that that could be a matter of only eight weeks after Royal Assent. Is my noble friend able to say a little more?

Lord BELLWIN

There are, indeed, a number of matters that are still being discussed with bodies which are involved and interested. I think that it is right that that should be so. Indeed, I am sure that he will be pleased to know that some of the very points still being discussed are ones that have been raised by my noble friend himself, and are matters where we have given undertakings that we would be talking about certain aspects. I suspect that that will be the case until the very time when we move that the Bill do now pass. I hope that my noble friend will feel that that is encouraging rather than discouraging.

Lord HYLTON

I do not wish to press this amendment any further, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 30 not moved.]

Baroness DAVID moved Amendment No. 31: Page 9, line 1, leave out from ("account") to end of line 21 and insert ("determined by the landlord, having regard to the normal commercial criteria of building societies and the guidance issued by the Secretary of State, on the basis of the tenants income, needs, and commitments and the manner in which he has discharged his obligation as a tenant to pay rent. (3) Where the right to a mortgage belongs to more than one person the limit is the aggregate of the amounts to be taken into account determined by the landlord, having regard to the normal commercial criteria of building societies and the guidance issued by the Secretary of State. (4) The Secretary of State may give guidance generally or to specified descriptions of authorities in respect of any matter arising with respect to this section.").

The noble Baroness said: As it stands, Clause 9 provides that the amount of a mortgage advance will have to be determined from a formula laid down in regulations issued by the Secretary of State. The Minister has undertaken that the regulations will conform with the normal commercial criteria in granting mortgages, although this is not written into the Bill and, of course, we know that the regulations are not yet with us.

Inescapably, the determination of the amount of the mortgage by central Government regulations must mean the application of some more or less crude formula to the income, and perhaps some other circumstances, of the applicant. An inherent part of normal commercial criteria is that although such formulae can provide a rule of thumb, each application must be considered in its own individual circumstances. This must mean an element of local discretion for those responsible for granting the mortgage, corresponding to the element of discretion that the managers of individual branches of building societies take for granted.

The proposed amendment allows the local authority to consider the tenant's income, needs, commitments and past rent record, and itself to arrive at the amount of the mortgage to be granted. However, it also provides that the local authorities must have regard to guidance—not regulations—issued by the Secretary of State and to the normal commercial criteria of building societies. It is contended that this amendment provides a proper balance between the Secretary of State's concern for a reasonable response by local authorities to the right to a mortgage and the local authorities' concern for a reasonable measure of discretion to allow them sensibly to under take their responsibilities under this section. I think that it also might provide some protection for the prospective buyer if there is an element of local discretion as to whether that buyer is able to fulfil the obligations. There must be some anxiety about those who may default on their mortgages, and I think that this local dimension would be a help in this way. I beg to move.

Lord BELLWIN

There are obviously strong arguments for allowing a landlord—and indeed the Housing Corporation though it is not mentioned in this amendment—to be able to calculate a purchaser's mortgage entitlement in a way which takes proper account of his ability to make his mortgage repayments, which in its turn will depend to a considerable extent on his existing commitments. This is why the Secretary if State said in another place that it was his intention to ensure that normal commercial practice applies under the provisions of Clause 9. Clause 9 empowers the Secretary of State to make regulations determining how the amount of mortgage entitlement is to be calculated. That remains our guiding principle in this matter. It is our intention that the mortgage to which a purchaser is entitled should be one which he can reasonably afford to repay.

But there are important arguments in the other direction. The right to a mortgage is a crucial corollary of the right to buy. We have to be sure that tenants can get the maximum mortgage which they can reasonably afford. We cannot allow for unreasonable cautiousness on the part of the landlords; nor should there be scope to evade the right to buy by finding ways to offer inadequate mortgages. The regulation-making power in Clause 9 is designed to provide the means for us to get the balance right. With this in mind, we brought forward amendments at Report stage in another place to enable the Secretary of State, when prescribing what counts as available income, to take into account sums reflecting the needs and commitments of purchasers as well as their income itself. This will provide sufficient flexibility to ensure that under the regulations purchasers do not become entitled to borrow amounts which they cannot reasonably be expected to repay.

The noble Baroness has now added to the amendment which was originally tabled a provision for the Secretary of State to give guidance about the granting of mortgages to purchasers under the right to buy. But it is unclear what status that guidance would have. The amendment says that an authority must have regard to the guidance. Does that mean that it would have to follow it? If so, why should the Bill be amended in this respect, when the net result would not be so different from that with the regulation-making power in the Bill as it stands? If not, then the power of the Secretary of State to give guidance would not provide the necessary assurance to tenants that they have an adequate right to a mortgage. This refinement to the amendment is not a sufficient palliative. The amendment as a whole still does not meet the Government's requirements. As to a purchaser's previous history as a tenant, there is already the safeguard in Clause 15(7). A landlord need not complete the transfer of the dwelling house to the tenant if there are significant arrears of rent outstanding.

This amendment has a purpose with which I think there may be some initial sympathy, but I hope that what I have said will have illustrated that it is unnecessary and that it holds potential dangers. It could, if accepted, result in some tenants being deprived of a mortgage to which they were reasonably entitled and which they could afford to repay. Furthermore, it would be naive not to recognise that some local authority landlords who were opposed to the right to buy would, with such discretionary opportunities, gleefully take advantage of such a loophole, thereby denying that right to their tenants. With this explanation, I hope that the noble Baroness may feel able to withdraw the amendment.

Lord HYLTON

Obviously, I do not have any particular brief for subsection (4) of this amendment which may need a little redrafting or strengthening. But I feel that the amendment is an improvement on the Bill and gets the balance between the central power of the Secretary of State and the local power of the local authority into a better relationship. At page 9, line 22, in subsection (5), what I had thought to appear contradictory, I now begin to understand. That gives the local authority some greater discretion. I believe that that supports this amendment as it is framed. I am sorry that my noble friend cannot see his way to being able to accept it.

Baroness DAVID

Do I understand from what the Minister has said that one of the reasons the Government are against this amendment is the fear that Labour authorities will try to exploit any discretion to undermine the effective operation of the right to buy? Perhaps I could have an answer to that.

Lord BELLWIN

Indeed, I do, yes. I thought that I had said that.

Baroness DAVID

We have cleared that up. It seems to me that the amendment would not prevent the right to buy because it gives only a limited discretion to the local authority. The right to a mortgage would still remain. Can the Minister tell me when these regulations will be published? Are we going to get them before Report stage?

Lord BELLWIN

As I stand at the moment I cannot say exactly when, but before the day is out I shall endeavour to give the information to the noble Baroness.

Baroness DAVID

I have listened carefully to what the Minister has said. I am not altogether happy about his reply. I should very much like to see the regulations too. I shall at the moment withdraw the amendment and shall possibly come back with it or one similar at Report stage.

Amendment, by leave, withdrawn.

[Amendments Nos. 32 and 33 not moved.]

4.41 p.m.

Lord EVANS of CLAUGHTON moved Amendment No. 34:

Page 9, line 28, at end insert— ("(6) The Treasury shall provide all monies required to enable local authorities to make such mortgage advances as are required by this section.").

The noble Lord said: I put this amendment down in order to try to discover the answer to some problems that seem to me to arise from the Bill as drafted, although I hope that the noble Lord will be able to give me a satisfactory explanation. It seems to me that, while most of the mortgage money for tenants of council property will not actually have to be provided but will be dealt with by merely not paying the cash value, in certain other cases, for instance where a housing association house is sold, it may be necessary for the local authority to make money available for such a purchase—to make the actual cash available rather than a book entry.

From my experience in local government and the Housing Act mortgages of the past, if you did not get in very quickly for your local authority mortgage, the local authority resources ran out. If you had not applied for your mortgage under the Housing Act by June or July, very often in the part of the world that I come from there was no mortgage money left. If Her Majesty's Government's wishes are that there should be a reduction in public sector expenditure, it may be that, unless additional words of this nature are put in, the opportunity of selling not so much local authority housing as housing association or other public bodies' housing would be frustrated if local authorities did not have the money available.

My amendment seeks to require the Government to make monies available for local authorities so that, if you like, that excuse will not be available against exercising the right to sell. I am really trying to find out what the Government's plans are because, as I understand it, there is no actual clarity yet as to whether the housing corporation will be providing the money, or what body will be providing the money, for the sale of council houses and private sector houses where actual cash has to change hands. I beg to move.

Lord BELLWIN

Let me quickly and, I hope, briefly, put the noble Lord's fears at an end. I can assure him that the right to a mortgage will not put any strain on local authority mortgage loan money. When a tenant exercises his right to buy and, along with that, his right to a mortgage, there will be no need for the local authority to raise money to advance to the purchaser. After all, the local authority already owns the house and is merely handing over that ownership to the tenant. On a sale under the right to buy, therefore, it will simply forgo an immediate receipt, leaving the amount of the mortgage outstanding. There is no question of the authority having to find new money. I hope that with that explanation the noble Lord will feel able to agree to withdraw his amendment.

Lord EVANS of CLAUGHTON

With respect, I did say in my introductory remarks, which may not have been as clear as perhaps your Lordships would have liked, that I was not so concerned as to whether there was a contra-entry where the purchase was from a local authority, because, as the noble Lord said, no cash passes from one hand to the other, which I mentioned. What I am concerned about is to discover what happens to a tenant who purchases from a housing authority, or some authority other than the local authority. From what source will the money for that be made available? Is it going to be the Housing Corporation, or where is it going to come from? Is it going to come from the actual resources of the local authority?

Lord BELLWIN

I am not clear here as to what the noble Lord means. If we are talking entirely of a local authority selling to its sitting tenant, then the position is as I have already stated and as the noble Lord so obviously knows. What other body he is referring to, I am not sure. When a housing association tenant exercises the right to a mortgage—possibly that is what the noble Lord has in mind—the money will come from the Housing Corporation and not from the local authority.

I think I said at Second Reading, or some time last week when we were discussing matters, that the Government, once they know the extent of the likely requirements, will then be looking at the monies which are made available to the Housing Corporation because that is a route it will take. I hope that is helpful.

Lord EVANS of CLAUGHTON

That was the point I was trying to find. I accept that the regulations have not yet been made. I wanted to be sure that there would not be any obstacle to a person purchasing from other than a local authority. I think that the assurance that the noble Lord has given is sufficient to enable me to—

Lord BELLWIN

Would the noble Lord give way for a moment? It might be helpful if I made a comment on a point that the noble Baroness made a moment ago and that the noble Lord just mentioned regarding the regulations. I am advised that the regulations cannot be made until the Bill is passed and the power to do so becomes available.

Lord EVANS of CLAUGHTON

I am grateful, and I beg leave to withdraw the amendment in my name.

Amendment, by leave, withdrawn.

Clause 9 agreed to.

Clause 10 [Notice of purchase price and right to mortgage]:

4.47 p.m.

Lord BELLWIN moved Amendment No. 35: Page 10, line 8, after ("12") insert ("and section 15(3A)").

The noble Lord said: The mass of paper increases as the hour advances. I hope that your Lordships will bear with me. Together with this amendment may I speak also to Amendments Nos. 37, 40, 41, 42, 43, 45, 48, and 49. This amendment to Clause 10 paves the way for an important series of amendments, including those to which I have just referred. I should like to speak to all of them together although the more important ones relate to Clauses 12 and 15. The amendments involve a substantial revision of the provision in the Bill for a tenant whose mortgage entitlement is insufficient to enable him to exercise his right to buy to be able to deposit £100 with his landlord and defer completion for two years. This enables a tenant who cannot afford to buy at once to save for two years towards a fixed purchase price.

The provision is one to which we are firmly committed. It was promised at the time of the general election. We have found it necessary to make important changes to the way in which it will operate, although our policy remains unchanged.

I am well aware that this policy is not to the liking of some people. They make the point that someone who buys his home after taking advantage of these arrangements will benefit from a price which represents in percentage terms a discount higher than the one to which the tenant was originally entitled. If we compare the price that the purchaser pays with the value of the home when he eventually completes, that is certainly true. It is a necessary corollary of the arrangements we have introduced.

I make no apology for these arrangements. They enable us to extend the frontiers of home ownership so that it is within the reach of a group of people who could otherwise never have aspired to it. I must make that quite clear before I turn to the amendments. At present the right to defer completion is dependent on the service of a completion notice by the landlord. We believe that the tenant should be able to claim his right to defer completion of his purchase by depositing £100 with his landlord without having to wait for a completion notice, and these amendments bring that about. The purchaser will therefore be warned of the right to deferred completion when he receives notice of the purchase price under Clause 10. That is provided for in Amendment 35. The notice of mortgage entitlement under Clause 12 will also advise him of his right to deferred completion and enclose a form for claiming it, as provided in Amendment 37.

Where appropriate, the tenant will be able to claim deferred completion within three months of the landlord's notice under Clause 12(4), which informs the tenant of the landlord's calculation of his mortgage entitlement, or within a longer period if the landlord or county court considers there are reasonable grounds for extending the period. Thus, the tenant could claim his right to deferred completion before all the relevant matters had finally been agreed or determined, and therefore before it had been established whether or not he was entitled to delayed completion. In a case where it then turned out that there was an entitlement, the arrangements we are concerned with would operate. On the other hand, in a case where there was no right to delayed completion although the £100 had been deposited. the landlord would be able to serve a completion notice in the usual way and the tenant would be entitled to the return of his £100.

Another defect with which these amendments deal is that the tenant is, as the Bill stands, required to complete his purchase within two years of the service of his notice claiming to exercise the right to buy. But there might be cases where a tenant made every effort to proceed with the sale and complete the purchase within the two years but, for reasons beyond his control, the purchase was non the less not completed within that period. The tenant could thus lose his right to complete the transaction at the old price through no fault of his own. The amendment would, therefore, provide that where a tenant has indicated his willingness to proceed with the sale, by requiring the landlord to reassess his mortgage entitlement within two years but the sale has not been completed within that period, the landlord may, where there are reasonable grounds for doing so, extend the period for completion at the original price. This might be desirable where, for instance, there had been some delay over processing the period mortgage application. If there are reasonable grounds for the landlord to act in such a way but he fails to do so the county court may extend the period by order.

These amendments are complicated, but they embody an important aspect of our policy. In moving the first of them, I am glad to say that in tabling it we are improving the Bill and helping it to reflect more closely the policy of the Government.

Clause 10, as amended, agreed to.

Clause 11 agreed to.

Clause 12 [Claim to a mortgage]:

4.53 p.m.

Lord MOWBRAY and STOURTON moved Amendment No. 36:

Page 11, line 32, at end insert ("and (c) the provisions which, in the opinion of the landlord or Housing Corporation, should be contained in the deed by which the the mortgage is to be effected.").

The noble Lord said: This is a procedural amendment. Its effect would be to require the local authority, when notifying the purchaser of the amount it considers may be left outstanding on mortgage and the way in which this amount has been arrived at, also to notify him of the provisions which it proposes should be included in the mortgage. The Housing Corporation would be under a similar obligation when it was to advance money to a housing association. This would mirror the procedure under Clause 10, where the proposed terms of the conveyance or lease have to be notified to the purchaser. This amendment will remove any chance of an authority failing to reveal the proposed terms of the mortgage until the last moment.

Lord BELLWIN moved Amendment No. 37:

Page 11, line 32, at end insert— ("(4A) The notice shall also inform the tenant of the effect of section 15(5A) below and shall be accompanied by a form for use by the tenant in claiming, in accordance with section 15(3A)(c) below, to be entitled to defer completion.").

The noble Lord said: I spoke to this with Amendment No. 35. I beg to move.

Clause 12, as amended, agreed to.

Clauses 13 and 14 agreed to.

4.55 p.m.

Lord MOWBRAY and STOURTON moved Amendment No. 38: After Clause 14, insert the following new clause:

"Children succeeding parents

( .—(1) Where the secure tenant of a dwelling-house (in this section referred to as "the former tenant") dies or otherwise ceases to be a secure tenant of the dwelling-house, and thereupon a child of his who occupies the dwelling-house as his only or principal home (in this section referred to as "the new tenant") becomes the secure tenant of the dwelling-house (whether under the same or under another secure tenancy), the landlord may, if it thinks fit, count the whole or part of any period qualifying under this section—

1. (a) for the purposes of section 1(3) above; or
2. (b) towards the period to be taken into account under section 7(5) above for the purposes of discount;

or both (and may count different periods under paragraphs (a) and (b) above).

(2) A period qualifies under this section if it is a period during which the new tenant, since reaching the age of sixteen, occupied as his only or principal home a dwelling-house of which a parent of his was the secure tenant or one of joint tenants under a secure tenancy, and either—

1. (a) it was the period at the end of which he became the secure tenant; or
2. (b) it was a period ending not earlier than two years before another period qualifying under this section.

(3) For the purposes of this section two persons shall be treated as parent and child if they would be so treated under paragraphs (a) and (b) of section 49(3) of this Act.

(4) This section has effect, whether or not the former tenant and the new tenant are also the former tenant and the new tenant within the meaning of section 13 above.").

The noble Lord said: This amendment meets a commitment given in another place. One often hears it said that children sooner or later inevitably grow up and leave home. In fact, this is not always true; not all of them leave home. Grown-up children may continue to live as members of their parents' households for long periods, and some of them will eventually become secure tenants of dwellings of which a parent was the secure tenant before them. Others may eventually take over the secure tenancy of a dwelling in which they have started off their married life living with in-laws. By the time the secure tenancy formally passes from parent to child in this way, either because the parent has died or because the tenancy has been transferred otherwise, the child may for some years have been bearing a major part of the expenses of the household, or even bearing them altogether. But if the child then decides to exercise his right as a secure tenant to buy his home, under the Bill as it stands he will not be able to count any of that time either for the three-year qualification period for the right to buy in Clause 1(3) or to claim discount on it under Clause 7.

This new clause would allow such deserving cases, at the discretion of their landlords, to be granted either entitlement to the right to buy, or discount under Clause 7, or both, in respect of time spent since the age of 16 occupying as their only or principal home dwellings of which a parent was the secure tenant. We decided that this arrangement had to be discretionary because it would have been impossible to devise a mandatory provision which was sensitive enough to distinguish between cases which were genuinely deserving and those which were not, given the huge range of personal and family circumstances which could be involved. This is a modest provision to enable landlords to give a fair deal to a comparatively small number of deserving cases. I am sure that even those of your Lordships who do not approve of the principle of the right to buy will not begrudge its presence in the Bill.

Baroness FISHER of REDNAL

I do not disagree with this proposal, but I should be grateful if the Minister could clarify two points. Because many parents cannot have children of their own, they foster children at a very young age until those children become adults, and I am wondering whether "child" in the new clause will be of help to the foster child. Secondly, does "a child of his" embrace "her", as we would expect under the Sex Discrimination Act?

Lord MOWBRAY and STOURTON

I am not sure I have all the points the noble Baroness has in mind. It is true that some children will have spent some time as adult members of their parents' households before moving away to become secure tenants in their own right. On the other hand, of course, they will have been accumulating periods of entitlement to the right to buy and to discount in their own right ever since they did so, and a discretionary power will accordingly be of less significance to them. I accept that a small number of deserving cases may be excluded from the discretion we propose, but the fact is that we have confined the provision to tenants who have succeeded a parent as secure tenants of the same dwelling because we believe that only a limited discount concession in particular could be justified on financial grounds, and because we believe that the provision as it stands will cover the great majority of the most deserving cases. I am delighted again to be able to confirm to the noble Baroness that as under the Sex Discrimination Act the terms "his" and "her" will be effective in this Bill.

Baroness FISHER of REDNAL

Perhaps I framed my question badly and it was not readily understood, but f was trying to speak quickly so as not to delay the Committee. I understand that Clause 49 contains a definition of a person who is a member of another's family. This appears at page 35 of the Bill. I hope that this time I hall make myself a little clearer. My point is that there is no definition of what is known as a foster-child. If we are to encourage local authorities to foster more and more children—and this is in fact encouraged, and is taking place—could such children be included in the definition, so that both the legitimate and the illegitimate child are covered?

Lord MOWBRAY and STOURTON

I understand that under the definitions in Clause 49 foster-children are not included, but step-children will be included. Speaking off the cuff, I am not sure whether illegitimate children will also be covered, but I believe that as a result of recent laws illegitimate children will have rights in this matter in the same way as other children, but foster-children are not included.

Lord GREENWOOD of ROSSENDALE

If the noble Lord is correct in his interpretation that the legal meaning of parent and child excludes foster-children, then speaking as a foster-grandparent, I must say that the Bill contains a very serious deficiency. Perhaps the noble Lord will agree to look at this point before the Report stage, so as to be quite sure about it.

Lord MOWBRAY and STOURTON

I see the justice of what the noble Lord Lord Greenwood of Rossendale, said, and I shall certainly undertake to do as he asks.

Clause 15 [Completion]:

The DEPUTY CHAIRMAN of COMMITTEES (Lord Jacques)

I should point out that if Amendment No. 39 is agreed to, I shall not be able to call Amendments Nos. 40 to 49.

5.2 p.m.

Lord HYLTON: moved Amendment No. 39: Page 13, line 6, leave out subsections (2) to (6).

The noble Lord said: I put down this amendment with a probing intention, because I wanted to hear from the Govern ment some justification of the whole option period. I listened very carefully to what my friend the Minister said when earlier he moved a whole string of amendments which have some bearing on these options. I cannot say that I then heard anything which made me feel happier about options. I hope that my noble friend will not now say that this was in the manifesto and that we must take it or leave it.

My view is that a local authority tenant who has occupied a house for a period of years has been subsidised by the rest of the community for whatever the period happens to be. If he wants to go ahead and buy, he receives his appropriate discount. He might then put down this relatively small option sum, £100, and following that, he receives the benefit of whatever is the going rate of inflation. As I understand it—I may be wrong—during the two years he also receives the benefit of a further 2 per cent. on his discount. So when he has received all these benefits he is a highly favoured person and, as I said on Second Reading, I cannot see that this represents social justice. I beg to move.

Lord BELLWIN

In reply to my noble friend I should like again to touch upon one of the aspects of this matter which may not be very clear. The amendment would make two fundamental changes to the right to buy procedure. It would mean that local authority landlords no longer had the power to serve completion notices on any tenants who were delaying, and it would remove the option procedure from the Bill. With regard to the service of a completion notice, I think it is only reasonable that, just as a landlord is required to proceed with his side of a sale as soon as possible, the landlord should be able to require a tenant who is delaying to complete within a fixed period of time. The other major provision in Clause 15 which this amendment would seek to remove is that whereby a tenant who cannot afford to buy straight away may have a 2-year option to purchase the dwelling-house at the original valuation.

The Government are firmly committed to this provision. I am sorry that I must put the matter in the way that my noble friend asked me not to put it, but this provision was contained in the manifesto, quite clearly, and it will enable those who are not immediately able to buy outright to have the prospect of being able to buy a property within a defined period. This is a tightly drawn provision. The option procedure will be available only in limited circumstances; that is, where tenants' mortgage entitlement would not enable them to buy immediately. I consider that most people who wish to buy will want to do so at once, so that they can start paying off their mortgage, and so that the five years for discount sharing begins to run soon.

However, we believe that Clause 15 is somewhat unfair on the tenant at present, since he must wait for a completion notice before taking out an option. For this reason we tabled the earlier amendments (which we have already discussed) which will enable the tenant to take the initiative in taking out an option as soon as all matters relating to the grant of the freehold or lease and the amount of the mortgage have been agreed or determined.

This topic has been discussed at considerable length in another place and elsewhere. I am aware that some people feel that a special benefit is being given to those who wish to proceed in this way, but the Government believe that it is not inequitable. Anyone who really wants to buy a house will want to get on with it, but if he cannot put down the money, we want to be able to help him.

As my noble friend said, all this may result in the person receiving a discount of the kind forecast, but that is merely the procedural outcome of the matter. This represents a commitment which we made. There was no mystique about it; nothing was hidden. We have always made it clear, and we are committed to it.

Viscount SIMON

Probably I have not fully understood the clause. The Minister said that the option is available for people who are unable straight away to proceed with the purchase. But is it not likely that people will say, "I am sorry, but I cannot take up the purchase at once", simply because there would be an enormous advantage in buying the house two years hence at a price which is now current?

Lord BELLWIN

Such people may indeed say that they will wait for two years. The motive behind that may be the one that the noble Viscount suggests, or that they want to save as much as possible. Surely when purchasing a house it is always preferable to put down the maximum possible amount so that the remaining capital sum on mortgage is as small as possible. That would be another reason why people might want to delay the matter.

Not unreasonably, we are discussing here, and in the many other debates on this Bill, the peripheral cases which will arise. Some people may consider that such cases would be much more than peripheral, but I do not share that view. I entirely recognise the concern of my noble friend, but may I say, without discourtesy, that we are probably more of one mind on some other matters. As the noble Lord, Lord Evans of Claughton, said, in so many of these matters one takes a view and makes a judgment. The Government took a view in this case a long time ago. They feel that they are committed to it and that the provision is not unfair.

Lord CLEDWYN of PENRHOS

I wonder whether the noble Lord can confirm one point, which I do not necessarily refer to in a spirit of criticism. As I understand it, the provision would place the tenant who is in the circumstances outlined in a much more favourable position than the private tenant who is in similar circumstances.

Lord BELLWIN

It is not normal, I quite agree, that in making a purchase you can arrange to have a price that will stay fixed for two years. Yes, that is a very fair point to make; but, again, one would have to look at it in the total context of the whole scene and of what one is doing and what one is seeking to do.

5.10 p.m.

Baroness BIRK

I may be wrong, but I get the feeling, both from what the Minister said to his noble friend and from what he said in reply, that he is not quite as happy about this provision as he is about some of the other proposals in this Bill. I should like to support the noble Lord, Lord Hylton. I think his amendment, as I believe the Minister mentioned at one point, is probably defective, because I do not think he needs to delete all the subsections to achieve what he wants. In fact, all he needs to delete, as I understand it, are subsections (2)(b), (4) and (5). Then, he would not take out the paragraph referring to the exercise of the right to a mortgage. But, of course, this is not the point. I am quite certain that the Government are not resisting this amendment on the basis of defective drafting; it is on the principle of the whole thing.

It seems to us that this is an extremely important part of the Bill; and, I am afraid, it is once again adding extra seductive lumps of sugar to something that has already been, one could say, almost over-sugared. There is the right to buy, and on top of that there are the discounts. The Minister may not like hearing all this again, but I am speaking specifically to the amendment and it is impossible to isolate these things because they are all tied up together. If there was no compulsory sale on the part of the local authority and no system of discounts, or much lower ones at the discretion of the authority, as was the practice before, then one might talk about an option in different terms.

The Minister said that the way in which the matter had been drafted now meant that it had been very tightly tied down. We will come to that. Unfortunately, these are all in different clauses, and there is a new clause on this matter being moved by the Government. I would say that it is not yet tightly tied down; but, nevertheless, even if it were, the point about these amendments is whether, on top of the right to buy and the discounts, there should in fact be added an option. I think one could just as well argue that if people with all those financial advantages, almost at their elbows, at their fingertips, still cannot complete a purchase, giving them an option which will extend for two years and which will enable them to buy their house or flat at the price that it was at the beginning of the two years is really financial irresponsibility on the part of the Government.

I also question very much whether it is in fact ethical or morally right to put that sort of pressure on people who are probably not in a position to afford to buy their house at that time. This is a pressure like that which is often exercised, and which succeeding Governments have tried to cut down, in the hire-purchase field. This is the same sort of thing. So I think that for economic reasons and for social reasons, and for ethical reasons this whole option clause is quite wrong. The attempt to help the buyer who needs more time has been covered by the right to a mortgage and by mortgage facilities before ever this Bill appeared. We had special help for the first-time buyer. It is through the mortgage right that this should be done, and there should not be this extra option.

Incidentally, I should also like to know what it is estimated it will cost the local authority in legal and other expenses when somebody takes out such an option, as a number of people will. The demand could be absolutely enormous, because here it is not just demanding a house to buy; it is taking out an option which you can exercise or which you need not exercise; so it is skin off nobody's nose to take out an option like this. But presumably somebody has got to process these applications; somebody has to look at them; somebody has to write letters to deal with them. I should like to know whether there has been any calculation made of the extra cost, particularly in the circumstances when, at the end of the two years, the option is not taken up.

I really think that this is an iniquitous part of the Bill, and that the Bill could stand up on its own, with all the Government's principles about the right to buy, without having this extra bit on top of the discounts. We have seen what the response has been when we had tried to extend the time during which people cannot sell their houses without paying back the discount. That has remained five years rather than 10. The attempt by the noble Lord, Lord Monson, to cut down the rate of discount has been refuted; and now, on top of that, we have these options. It is in the manifesto, as the Minister said, but again I repeat that no Government have the right to take something blindly a year after they came into office, and probably 18 months after the manifesto itself was drafted, and not look at it in the context of the economic situation today. So I really think that the amendment moved by the noble Lord, Lord Hylton, is worthy of support.

Lord UNDERHILL

Before the Minister replies, I wonder whether I could follow up this particular point. We are being told at the present time that local authorities must do everything possible to keep within financial limits, and here we have a case where, due to inflation—because we must assume that inflation is continuing at the particular time—we could easily find ourselves with house prices having gone up 40 per cent. in a period of two years; and yet here we have a contract which is to be kept at the original purchase price agreed two years previously. We are always being told by noble Lords opposite that public authorities should be looking at things on a commercial basis. It seems that everything possible is being done in this Bill to ensure that those persons who wish to buy are going to get every opportunity, which is not open to people in other spheres.

I wonder whether the noble Lord would give some indication whether, in the light of this very generous provision, the Government have any intention of bringing in legislation to provide the same sort of facilities for people who wish to buy from private landlords. Or would it be the case that that would be hitting the landlords' pockets, and therefore that cannot possibly be agreed; but as this is public money there is therefore no hesitation on the part of the Government in seeing that it is disbursed in this way to people who wish to buy?

Lord BELLWIN

The noble Lord, Lord Underhill, has suggested that private people should perhaps be given the right to buy in special circumstances, and spoke about that hitting the landlords' pockets. I would have thought that it would have exactly the opposite effect. I should think that many landlords would be only too delighted if they were able to sell to people who might be assisted to buy in one way or another; but I think that that is really a side issue.

I do not know that there is a lot more that I can add to what I have already said on this. I understand the points which have been made by my noble friend, as I have said, and by the noble Baroness. I do not take the point at all about the general mal-effect upon finances generally. I said last week, I think it was, on the Question, Whether Clause I shall stand part?, or on Second Reading—it is a job to remember which it was—that certainly no one argues that it is not a good thing from the point of view of the tenant, but I was also absolutely satisfied, and no doubt it would come out when we got into the nuts and bolts of the implications of the rights to buy, that it was also an excellent thing for the local authority as well, and for everybody concerned. Therefore, although one might disagree now and may even disagree later (although I hope not, when we get down to the detail), the fact is that I do not think that, on those grounds, I have any sympathy with the arguments. Where I do take some of the points made—and the noble Baroness was very sensitive to the way I was putting the points, perhaps—is in that I understand exactly in this case what the concern is. I am not without sympathy for them, but I must say that on balance—and it is a matter of judgment —it is a fair thing. It was thought through a long time ago. It is no new thing. On balance, it is a good thing, and that is why I support it.

Lord HYLTON

I acknowledge that this amendment is defective in its drafting. Perhaps that is not altogether harmful in what is something of a probing amendment. I feel that the Government are leaning over backwards in favour of the marginal buyer. Having said that, I do not wish to go on battering my head against the manifesto, the mandate and the serried ranks of the Tory Party. We shall have a further opportunity to discuss the matter on the Opposition Amendments Nos. 44, 46 and 47. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord BELLWIN moved Amendment No. 40: Page 13, line 10, leave out paragraphs (a) and (b) and insert ("to complete the transaction within a period stated in the notice").

The noble Lord said: I have already spoken to this amendment with Amendment No. 35. I beg to move.

5.22 p.m.

Lord BELLWIN moved Amendment No. 41:

Page 13, line 23, leave out from ("than") to end of line 26 and insert ("whichever of the following is applicable, that is to say—

1. (a) if the tenant has not claimed to exercise the right to a mortgage, three months after the end of the period within which a notice claiming it could have been served by him;
2. (b) if he has claimed the right to a mortgage, but is not entitled to defer completion, three months after the service of the notice under section 12(4); and
3. (c) if he is entitled to defer completion, two years after the service of his notice under section 5 claiming the exercise of the right to buy or, if later, three months after the service of the notice under section 12(4) above.

(3A) A tenant is entitled to defer completion if—

1. (a) he has claimed the right to a mortgage; and
2. (b) the amount to be left outstanding or advanced on the security of the dwelling-house is less than the aggregate mentioned in section 9(1) above; and
3. (c) he has, within the period of three months beginning with the service on him of the notice under section 12(4) above or within that period as extended under subsection (3B) below, served a notice on the landlord claiming to be entitled to defer completion and has, within the same period, deposited the sum of £100 with the landlord.

(3B) Where there are reasonable grounds for doing so the landlord shall extend (or further extend) the period within which a notice under subsection (3A)(c) above must be served and the sum of £100 deposited; and if it fails to do so the county court may by order extend or further extend that period until such date as may be specified in the order.").

The noble Lord said: I spoke to this amendment, too, with No. 35. I beg to move.

Baroness DAVID moved, as an amendment to the amendment, Amendment No. 41A: Line 17, leave out ("to be left outstanding or ") and insert ("which he is entitled, or is treated as being entitled, to leave outstanding or have").

The noble Baroness said: The Government have implied throughout, when talking about the £100 option scheme, that these options will be available only to those who cannot afford to buy immediately. Mr. Stanley, in Standing Committee "F" in another place, said: The object of the options concept is to enable those who at present are not able to buy outright the prospect of being able to buy a property within a defined period. That is the whole rationale of the clause".

Mr. Ginsburg said on Report: The provision that we have made is tightly drawn. The options procedure will be available only in limited circumstances where a tenant's mortgage entitlement would not enable him to buy immediately".

The Bill's Explanatory and Financial Memorandum introduces the proposal with the words: if his mortgage entitlement is insufficient".

Yet there appears to be nothing in the clause as drafted which limits the options to those who cannot afford to buy. As it stands, it appears to allow any purchaser simply to choose to delay for two years and thereby take advantage of the extra effective discount which will arise to avoid house price inflation over that period. It might be thought that there was a difficulty in introducing into the clause the inherently subjective distinction between those who can and those who cannot afford to buy; but the Bill's existing provisions make such a distinction in relation to the right to a mortgage. Subsections (1) to (4) Clause 9 define the amount that the tenant is entitled to leave outstanding or have advanced to him. Clause 9(5) gives the local authority discretion to treat him as entitled to leave outstanding a higher amount.

The amendment that I am moving into Clause 15 from Clause 9 by introducing these concepts would ensure that the £100 options could be exercised only where a tenant had failed to qualify, in the terms of the Bill's own provisions, for a mortgage large enough to enable him to buy immediately. Since, according to Mr. Stanley, this is the whole rationale of the clause, it will be interesting to see how the Government respond; but to make their own purpose more clear I imagine that they will welcome and accept this amendment and be flexible for, I think, the first time. I beg to move the amendment to the amendment.

Lord MOWBRAY and STOURTON

I am grateful to the noble Baroness for explaining what she meant on this amendment. We were puzzled about it and have only just had our advisers' comments on it. I must make it clear at the outset that the provisions in Clause 15 which enable a tenant purchaser to complete his sale at a price which has been frozen for two years are designed to help a particular category of tenant. There is no question of every council tenant, no matter how high his income, being able to turn up with his £100 and being able to take advantage of the option to complete later on.

The category of purchaser we are concerned with in these provisions is made up of those who are just on the wrong side of the financial dividing line between those who can afford to buy at once and those who cannot. We want to give them a leg up so that they can cross that barrier. In order to define this group of people in a way which is practical, we have come up with the scheme which is now embodied in Clause 15 as amended by Government Amendment 41. This makes it clear that the only tenant who can take advantage of the option to complete at a later date is the one who has applied to exercise the right to a mortgage, but whose entitlement turns out to be too low to enable him to buy at once. Where it looks on the face of it as though the tenant was entitled to complete later, and he deposited his £100 in order to claim to do so, but it subsequently turns out that his entitlement was high enough to buy immediately, he will either put his £100 to the cost of the house, or get it back if he decides not to go ahead.

From what I have said, I hope it will be clear that I do not accept that there is any danger of these provisions being abused by those who may wish to manoeuvre themselves into an option. It will depend on the outcome of the valuation of the house and calculation of the price payable, and the calculation of the mortgage entitlement under the regulations which my right honourable friend will make under Clause 9. Despite what the noble Baroness has said, I can see no way in which her amendment would either clarify or make more rigorous the provisions of Government Amendment 41, and I therefore hope that she will withdraw her amendment.

Baroness BIRK

I thought that my noble friend Lady David clearly explained this amendment. This is not a matter of principle at all. It is a matter of our believing that it does the job that the Government have said they want their amendment to do, but it ties it even more tightly. I would ask the noble Lord and his noble friend to take this back and look at it. The noble Lord said that he had only just had a chance to see the amendment and to see the advice on it. I agree that it was tabled only on Friday. Therefore, I cannot see that anything is going to be lost—and there may be quite a bit gained—on this particular point if this is taken back and looked at. On the objective in this narrow area, evidently we are in agreement to make it as tight as possible. This, as my noble friend quoted, was said in another place also. To me, it looks as though our words: is entitled or is treated as being entitled

are tighter than to be left outstanding".

All that we are discussing is which is the tighter drafting. With respect, I submit that the amendment to the new clause is the tighter piece of drafting and I would ask the Minister to take it back.

Lord BELLWIN

I do not think we can take it away in the manner that the noble Baroness, Lady Birk, suggests. On the face of it, there seems to be no reason to do that. Having said that, I will undertake to look at it and if there is any cause for special concern—or if the noble Baroness would care to discuss it later with me and anything transpires from that —we will deal with it in that way.

Baroness DAVID

Having listened to what has been said, including what the Minister said, I am quite willing to withdraw this amendment on the understanding that we shall have some further information. If not, we may come back on Report.

Amendment to the amendment, by leave, withdrawn.

5.30 p.m.

Lord BELLWIN moved Amendment No. 42: Page 13, line 34, leave out ("(2)(b") and insert ("(3A)(c)").

The noble Lord said: I spoke to this amendment with Amendment No. 35. I beg to move.

The DEPUTY CHAIRMAN of COMMITTEES (Baroness Wootton of Abinger)

The next amendment is No. 43. I have to draw the attention of the Committee to the fact that if Amendment No. 43 is agreed to, I shall not be able to call Amendment No. 44.

Lord BELLWIN moved Amendment No. 43: Page 13, line 36, leave out from ("transaction") to ("that") in line 37.

The noble Lord said: I spoke to this amendment when I moved Amendment No. 35. I beg to move.

Baroness BIRK

This is all so complicated. It seems to me that that wording has nothing to do with the other amendment but I am sure that it must be so and I accept that. Speaking on this, with the leave of the Committee, I shall speak to Amendment No. 44 because I am not quite sure what Amendment No. 43 means. The point of Amendment No. 44 is to reduce the time that the option can be held, from two years to six months. This really does more than any of the amendments—even Amendment No. 41 with its amendment—to make sure that an option is granted only in order to help people over a very short, bridging period. In those circumstances, it could be argued that an option was just about feasible because it would take about six months for people to organise themselves, for the conveyance to be carried out and for everything to be done to enable the purchase to go forward.

What it does not do is to allow people to have what is a lengthy period of time which we discussed on a previous amendment moved by the noble Lord, Lord Hylton. It is a practical matter and quite frankly reduces the time of the option almost down to a minimum. If, as the Government say, it is to help people along the way a bit but not take it as far as they would like it to go, to an extent however that we feel would be quite wrong in the circumstances, then the six months is about the only other alternative which I would have thought could be considered at all viable in the whole context of buying discounts and options. Therefore, I hope that the Government will certainly look on this with a more kindly glance than they looked on the other amendment which was moved by the noble Lord, Lord Hylton.

Lord BELLWIN

This is probably the third time that we have spoken on this matter in the Bill. I have tremendous sympathy with the noble Baroness in the difficulty of finding a way round the various amendments, and so on. I do not think that we are going to be able to help her very much here. There are one or two points that I ought to make clearer than I may have done before when discussing this whole subject. The option procedure is a tightly drawn provision. It will only be available in limited circumstances—that is, where a tenant's mortgage entitlement would not enable him to buy immediately. I do not think that it has been said before but a prospective purchaser has to be able to show that he cannot buy immediately. It is not simply good enough to say, "I do not want to buy immediately".

I do not want to repeat what I said before on this; that would be wasting the time of the Committee. But, as to the life of the option, it must be long enough to fulfil its purpose: that the tenant should know in advance the price at which he can buy while he saves the money to do so. It would not help to reiterate some of the basic philosophical arguments and points about past commitments that I have before me. We are all aware of those. It is a fact that when this whole proposal was first mooted—and it was done by the now Secretary of State in a speech made at around the time of the election—we were referring to two or three years as the period. So if it is any comfort to the noble Baroness—and I am sure it is not—it is two years that we are talking about and not three. I suppose that everything is relative.

I say again that the option procedure is an integral part of the right to buy, as we see it. We believe that a period shorter than two years would be too short to make the option of any benefit, given that some time will elapse from a tenant's initial application to the date at which it becomes clear that he may have the option to complete at the fixed price within two years. I am sorry that I cannot go further than that.

Lord EVANS of CLAUGHTON

I see this is again going back to the question of the mandate and the manifesto. Like other noble Lords, I am getting confused with the plethora of amendments. May I inquire why, if the matter is being left at two years between the date of wishing to have the purchase and then completing under the option, there should not be a revaluation? The way inflation is "steaming" away, and is expected to do so, certainly in the housing sector, why will not the Government say: "We insist on two years but if the person completes the purchase for which he has an option within the two year period there should be a revaluation of the value of the house"? The value will change materially in two years, I would have thought.

Lord HYLTON

I take the point that my noble friend is making about the grounds for having an option being tightly drawn. I accept that. It may be that six months is too short a period for the option to run. Equally, I feel that two years is too long. I am sorry that my noble friend was not able to be more forthcoming. I wonder whether there are some grounds for a compromise period here.

Lord BELLWIN

I have always been—and I hope I have shown in your Lordships' House and in Committee no less—a great lover of compromise where it is possible. I hope that I will continue to show that where it is possible. I fear, however, that I do not have the room to manoeuvre in this particular instance. I cannot help my noble friend.

The DEPUTY CHAIRMAN of COMMITTEES

We now pass to Amendment No. 45. I have to point out that if Amendment No. 45 is agreed to, I shall not be able to call Amendments Nos. 46 or 47.

Lord BELLWIN moved Amendment No. 45; Page 13, line 40, leave out from ("transaction") to second ("the") in line 43 and insert ("but withdraws his notice claiming to exercise the right to buy or is, by virtue of subsection (4) above, deemed to have withdrawn it").

The noble Lord said: I spoke to Amendment No. 45 when I moved Amendment No. 35. I beg to move.

Lord BELLWIN moved Amendment No. 48:

Page 13, line 44, at end insert— ("(5A) A tenant who is entitled to defer completion may, at any time before the service on him of a notice under subsection (2) above, serve a further notice under subsection (1) of section 12 and, if he does so, subsection (4) and (where applicable) subsection (5) of that section shall then apply accordingly.").

The noble Lord said: I spoke to this amendment with Amendment No. 35. I beg to move.

Lord BELLWIN moved Amendment No. 49: Page 14, line 1, leave out subsection (6).

The noble Lord said: I spoke to this amendment with Amendment No. 35, and I beg to move.

The DEPUTY CHAIRMAN of COMMITTEES

Amendment No. 50: I have to point out that if this amendment is agreed to it will not be possible to move Amendment No. 51.

5.40 p.m.

Lord EVANS of CLAUGHTON moved Amendment No. 50:

Page 14, line 13, leave out subsection (8).

The noble Lord said: I should be grateful if your Lordships would be willing to consider Amendments Nos. 50 and 51 together. It may sound a technical lawyer's point—the question of how important the completion of a purchase is when used against a landlord—but in the normal practice of completing transactions for the sale of property, where a court makes an order that the person shall complete a contract for the sale of land, it is done by ordering completion to be done by a method known as "specific performance" and not by injunction, as this subsection proposes.

There is a very important practical difference. If the normal conveyancing procedure were followed in this Bill and completion was enforced on a vendor by the system of specific performance, a court official would then execute the conveyance as "specific performance" and the landlord would be overtaken by the court order and the court officials signing the conveyance, and the transaction would be completed.

It seems to me that by going for the unusual procedure—certainly extremely unusual in the world of conveyancing—where you use the system of injunction the penalty for disobeying an injunction is imprisonment. It seems rather an extreme way of dealing with a conveyancing transaction that a vendor of any kind, whether it be a local authority or otherwise, should be committed to prison for refusing to complete.

From a practical point of view—and perhaps this is the most important point with regard to this amendment—it would seem to me infinitely preferable to adopt the solution of a court order for specific performance, so that we would avoid the opportunities given to councillors in local authorities, if such councillors disagreed with the selling legislation, to make dramatic martyrdoms in public; because it seems to me that if an injunction is disobeyed there might be many councillors of certain political views considerably to the left of my own who may feel that it would be newsworthy and very spectacular to get themselves committed to prison, to demonstrate in a dramatic way their opposition to the provisions for sale. Therefore, what I am suggesting is, on the face of it, a technical amendment that specific performance is more usual than injunction, and also specific performance avoids the drama that disobedience to an injunction might bring. In considering these amendments, I have the option, first of all, of leaving out the subsection altogether; but I would prefer, if your Lordships will not leave out the subsection altogether, that the words "specific performance" should be substituted for "injunction", for the reasons I have given. I beg to move.

Lord JANNER

I should like to support this amendment as a person who for some 60 years has been in practice as a solicitor. I am bound to say that the noble Lord has given in very clear terms the reasons why his amendment should be accepted. It would be very unusual for anything in the course of a conveyancing transaction to impose at any time the penalty of imprisonment, and I hope the Government will realise that. It is not only unusual, but it could be exercised in a way which the noble Lord has already pointed out: it could be utilised for political purposes as well, and for committing a breach of the law. After all, the important thing is the law as it stands, whether or not we agree with all of it, and we know that breaches of it are very frequently utilised in order to bring public attention to matters which ought in other ways to have been aired. I hope that the noble Lord will realise this and, if I may say so with respect, will take the advice of those of us who are actually in practice, and have been in practice for years, to approve of this amendment.

5.44 p.m.

Lord MOWBRAY and STOURTON

As has been explained, these amendments are concerned with the case of a tenant who is exercising the right to buy and wants to complete the sale. As the noble Lord, Lord Evans, explained, the amendments are not compatible with each other: the second would amend what the first would leave out, but the effect of the first amendment would be that the Bill no longer explicitly gave a tenant a remedy through the courts if the landlord failed to complete the transfer of the dwelling-house to him as soon as the transaction was far enough advanced. It could cast doubt on the ability of the county court to entertain proceedings to enforce the statutory duty imposed on a landlord by Clause 15 of the Bill.

Once everything has been either agreed by the vendor and purchaser under the right to buy, Clause 15 places the landlord under an obligation to convey the freehold of the dwelling-house to him, if it is a house, or grant him a long lease, if it is a flat. It would be wrong to describe the purchaser as having a contract at that stage, because the procedure which we have adopted does not embody a formal contract step. On the other hand, once the purchaser reaches the stage envisaged in Clause 15 he will have reached a point at which it would clearly be appropriate for him to be given the power to enforce the transaction through the courts. That is what is achieved by Clause 15, and subsection (8) merely places it beyond doubt that the county court, which is the usual forum for proceedings under Chapter of the Bill, can exercise for this purpose a jurisdiction to grant an injunction to enforce this statutory duty.

Proceedings of this kind will no doubt be very rare. There must be few cases in which a vendor would not fulfil its statutory duty, having got so far, and of course the powers of the Secretary of State under Clause 22 would be available if it was considered that they were appropriate in any case. Nevertheless, the Government consider that it would be wrong not to make it clear that the individual can enforce the sale at this stage should he decide to do so.

The noble Lord, Lord Evans, and the noble Lord, Lord Janner, both argued cogently that the Bill might encourage martyrs because imprisonment is the remedy for breach of an injunction. I have to say, however, that anyone who is determined enough to defy an order of a court, of whatever kind, may end up in prison at the end of the day. I hope that this will never happen as a result of this Bill. I find it very hard to think of a county council trying to bludgeon a small man into not buying his house. It would be quite wrong, in my view, to regard the danger to which the noble Lords have drawn attention as a pretext for incorporating what the Government do not consider to he an appropriate remedy in the Bill.

The second amendment would replace the remedy of injunction by that of specific performance. Specific performance is, as the noble Lord, Lord Evans, has reminded us, a remedy for the enforcement of contracts. But under Chapter I of the Bill, there is no contract between the parties, and specific performance would therefore be quite inappropriate.

The Bill provides, in Clause 5(3), that a tenant should be able to withdraw from his exercise of the right to buy at any time. A contractual commitment would inhibit that flexibility also, which enables a tenant to take a considered judgment as to whether to go on to take the responsibility of home ownership. Until the price and terms of sale and the amount of the mortgage are known, the tenant cannot finally decide. A contract before that stage would be premature but once the relevant matters have been agreed or determined, the parties can proceed directly to completion of the purchase without further formality or the tenant can, if he wishes, withdraw. This gives the tenant a right to buy rather than a duty to do so. A contract would, of course, bind both parties. Already local authorities such as the GLC have found it convenient to dispense with contracts when selling council houses to tenants. It gives greater flexibility.

The tenant has, as the Bill stands, an adequate legal means of enforcing completion when it is appropriate for him to do so. The first of these amendments would put him in a worse position, and the second is not considered to be an appropriate remedy to enforce a statutory duty. I hope that on further reflection the noble Lord will be able to withdraw these amendments.

5.51 p.m.

Lord EVANS of CLAUGHTON

I accept the remarks made by the noble Lord, Lord Mowbray and Stourton, with regard to my first amendment, No. 50. I agree that there probably needs to be some kind of sanction to ensure that a vendor carries out his commitment. I accept that. It had been my intention to say that I would then prefer that the second amendment, No. 51, should be considered. It is not quite that the noble Lord has taken me unawares, but he has put me in a position where I want to reconsider the position about injunctions and specific performance. I must reiterate with all the force I can that specific performance, if it could be applied, if it may be applied in some other way to this Bill, would be a neater and a tidier and a less messy procedure and certainly one that would not have the emotional implications of the remedies for failure to obey an injunction. I agree with the noble Lord. Like him, I hope this would never have to be used, or very rarely used.

I am not quite as optimistic as he is about the concept of the large local authority bullying the small individual purchaser, because there are many people, rightly or wrongly, in local government who hold very strongly the view that people should not have the right to purchase houses, and it may well be that people would seek this as a method to martyrdom. As I say, I do not think that would help either the cause that the Government want, or indeed the cause that those of us who are worried about some aspects of the right to sell, would want. All I can do, therefore, is beg leave to withdraw both these amendments at this time, reconsider them and possibly bring something else forward later on. On that basis, I beg to withdraw Amendment No. 50.

Amendment, by leave, withdrawn.

[Amendment No. 51 not moved.]

Lord MOWBRAY and STOURTON moved Amendment No. 52: Page 14, line 17, at end insert ("and, if there is then a subtenancy, section 139 of the Law of Property Act 1925 shall apply as on a merger or surrender.")

The noble Lord said: This is a minor technical amendment. Clause 15(9) of the Bill provides that a purchaser's secure tenancy shall come to an end on the completion of his purchase under the right to buy. This amendment is designed to protect the position of any sub-tenancies which he may have granted before then. It provides for this by applying Section 139 of the Law of Property Act 1925. I beg to move.

Baroness PHILLIPS

I should like to make just one point. I did not think there were sub-tenancies in local authority housing.

Lord MOWBRAY and STOURTON

Under this Bill, when we have enacted it, there will he sub-tenancies. It is merely a right to take in lodgers that we are talking about.

On Question, Whether Clause 15, as amended, shall stand part of the Bill?

5.55 p.m.

Lord STEWART of FULHAM

I wonder whether it would not be better for us to remove the clause from the Bill at this stage and give the Government time to think about putting in something a little more appropriate at a later stage. Already in the course of the discussion on this clause the noble Lord, Lord Bellwin, has agreed to discuss certain matters with my noble friends on the Front Bench. It was very right and courteous of him to do that, but the reason he did it was that on some points neither of us can be quite certain what the clause actually means. As has been pointed out to us from the Liberal Benches, we have a choice between either having provisions in the Bill that may result in people going to prison—with the prisons as overcrowded as they are at present—or there may be no way of enforcing the law at all. Here, again, we should gain from further consideration of the Bill by the Government.

Then we add to those lesser points the fact that the Bill has again the disquieting suggestion of a lottery about it. It means that if one purchases this option for £100 and it is to be for two years and not six months, the thing one is buying may have increased in money value by 40 per cent. in that period. It is a remarkable privilege one gets. Apparently it is not to be open to the public in general. It will be a piece of luck who gets this and who does not.

The Government have insisted throughout the argument that this is meant to help people who are in the unfortunate position of being nearly, but not quite, able to buy the house with the help of a mortgage. That is our understanding; it has been the Government's argument. If that was so one would have much sympathy with it. At one stage the noble Lord, Lord Bellwin, said that it will not be enough for the man to say that he cannot complete; he has got to show that he cannot. I wonder—I will give way if the noble Lord can help me—whether he will tell me where in Clause 15 the proposed purchaser is put under the obligation to prove or to come near to proving that he cannot complete.

Lord BELLWIN

The way in which it will become clear that a purchaser is unable to buy at once is as follows. The amount of mortgage entitlement of the purchaser will be calculated under the Clause 9 regulation. Where the amount which emerges turns out to be below the price which he is going to have to pay then, and only then, will he get his option to complete later. Otherwise, if he wants to complete, he must do so as soon as everything is clear.

Lord DAVIES of LEEK

May I put a point? I am a little concerned because there is obvious difficulty in understanding. As the noble Lord opposite rightly said, all this is a pillar of cloud. Under subsection (1), a tenant's notice may be withdrawn at any time by notice in writing served on the landlord. There are no sanctions whatsoever there. I am concerned with a third point. We are offering a bonanza. It has been pointed out from the Liberal Benches that the spiral of inflation is going on. So Davies of Leek may consider that some of his family ought to go into this buying of council houses racket and I may struggle with a little bit of wire pulling to get some of my family in council houses. What is in the Bill to stop anybody running that kind of racket? Nothing whatsoever. The Government have opened up such a bonanza that they will not know how to deal with it. I suggest that the clause better be taken back and a good look taken at the entire Bill.

Lord JANNER

There is one point in particular on which I should like to have some explanation. We are told that the matter will depend upon whether a person is in a position to purchase or whether help should be given to him. I would like to know how an inquiry is going to be made as to the position of an individual; how far his private affairs are going to be probed into. Are these people going to have the right to serve a subpoena on the bank or whoever else may be concerned? The noble Lord may think me very ignorant about this. The Government are in fact going to assess the position of an individual and I would like to know, if I may, how it is proposed to make that assessment, who will make it, and what rights these people will have in order to probe.

Lord STEWART of FULHAM

The interventions that my noble friends have made indicate that there is a great deal of difficulty about this. I have again been studying Clause 9, to which the noble Lord, Lord Bellwin, referred me. Clause 9 deals with the amount of mortgage to which a person is entitled, but it does not give an entirely clear answer. The amount is set out in subsection (1). Then subsection (2) states: The amount mentioned in subsection (1) above is subject to the limit that it does not exceed the amount to be taken into account, in accordance with regulations under this section"—

we have not seen the regulations— as the tenant's available annual income multiplied by such factor as, under the regulations, is appropriate to it".

We do not have the regulations, so it is not crystal clear from Clause 9 what mortgage the tenant will be entitled to. But, even if it were, surely the person we are talking about is somebody who wants to buy a house, has to pay a given price for it, is entitled under Clause 9 to a certain amount on mortgage and is, or says he is, unable to meet the difference. At what stage is he required to prove that he cannot meet the difference? That question is still there and has not been answered. Therefore, it would help the Government and all of us if they took a deep breath and redrafted this clause althogether. For that reason, I suggest that at this stage we do not let it stand part of the Bill.

Lord HYLTON

Before my noble friend replies, I should like to ask him a very technical question of which I have given him notice, and it is this. Does subsection (7) of Clause 15 apply generally to all house purchasers, or does it apply only during the period of the option to those who are able to take advantage of the option?

Lord BELLWIN

May I, first, say that I hope that noble Lords opposite do not consider—I am sure that they do not—that because one is willing to take something away and have a look at it, that that automatically implies that one is dissatisfied. It is one of the courtesies of the House to consider something which is raised, which it might be useful to do, or to see whether there is a case for looking again. So although, as I said earlier to the noble Baroness, Lady Birk, it would be helpful to give more information or to give a better explanation—which one would always want to be doing—it should not be concluded that one was unhappy with the whole of a clause.

I am sure that that is not what the noble Lord, Lord Stewart, meant, anyhow, when he referred to this being a lack of option. I do not accept that either. Nor do I accept that there is no way of enforcing the clause. I am sure that there is. What we ought to be doing is ensuring that we have the best way. The noble Lord, Lord Evans, made an interesting point about specific performance. I am not sure how far it gets us down the road, in one way as against another, but one certainly ought to think about it, which we will do. I wish that the noble Lord, Lord Davies, had not used the word "racket "when talking about buying council houses. In no way is it a racket. It is exactly the opposite and I am sure, knowing the noble Lord, that he did not mean that.

Lord DAVIES of LEEK

I did not. But it could become a racket.

Lord BELLWIN

He talked about getting some of his friends into council houses, but if he could do that easily he would be destroying his own earlier argument that it is a difficult thing to do. But, even more important, I should have to remind him that, even if they were in, they would have to wait three years and after that time they might not be so enthusiastic as the noble Lord suggested.

The noble Lord, Lord Janner, asked how one assesses entitlement or otherwise to an option. I have to refer him to the point I made to the noble Lord, Lord Stewart, and I do not necessarily disagree with the point that he made. I referred him to Clause 9 and what flows from that. Yes, it is indeed a very complex point, but that does not mean that it is necessarily bad or wrong. It may mean that it requires more clarification, and that we will look at. But that is a whole world away from taking out the clause, which we clearly could not do.

As to the point which my noble friend Lord Hylton raised, he always catches me on the hop. Perhaps he could just remind me. One tries to jot down these things at a rapid rate—

Lord HYLTON

My point was about subsection (7) of this clause, and failure to pay rent.

Lord BELLWIN

The intention of this subsection is to allow the tenant to delay purchase by up to two years, but only where his mortgage entitlement under this chapter is insufficient. During that period of two years, he may purchase at a price based on the valuation at the relevant time as defined in Clause 3(5). That is the date on which a tenant served notice under Clause 5, or the date of enactment of the Bill if his notice was served within six months of the commencement of Part I of the Bill. The discount would be made that to which he was entitled by virtue of Clause 7. In other words, the price would be unaltered by any change in value after the relevant time, nor would the discount be increased on account of the tenant having remained a tenant.

Lord ROSS of MARNOCK

Before the noble Lord sits down, can he answer a fairly simple question? Who determines whether or not a person can afford to pay this? The noble Lord has referred to a formula. We cannot work that out, because that depends on the regulations and the Government have not published them. But there is evidently a gap. So who determines? Does the tenant determine that he cannot meet the obligations, or is it the housing authority? If it is the housing authority, is there any appeal?

Lord BELLWIN

Once the regulations are clearly made and laid down, there will be no difficulty. Everyone will be able to see what they comprise, and when a tenant who is applying wishes to get the information it will be made available to him. Once he knows what it is, he can then make the decision.

Lord ROSS of MARNOCK

Yes, but that means that it is the tenant who makes the decision?

Lord BELLWIN

No, not necessarily. If the terms that are laid down in the regulations are ones which he cannot fulfill, then he knows what the position is. But once they are there for everyone to see, it will not be a question of who decides. That is what they will be and it is as simple as that. In this Bill, we are trying to make it as clear as possible, so that everyone knows his entitlements, rights and limitations. I readily agree that this is a very complex matter. The noble Lord, Lord Stewart, suggested that we might look to see whether the wording could be made clearer, and I said that one should always do that. I do not think we can go much further.

Lord ROSS of MARNOCK

The only bit further that the Minister can go is to give an indication of what the regulations contain. We are near enough to the end of the Bill for the Government to have their minds made up as to what the regulations will be, and on that basis we shall have some elucidation about the responsibilities that will fall upon a tenant. I come back to my original question. Is it the tenant who decides that he cannot afford and, therefore, applies for the option?

Lord BELLWIN

No, it is neither the tenant nor the landlord. It is the facts as they will be which will decide the issue. The noble Lord asked whether I would take this away. I have already said to the noble Lord, Lord Stewart, that, No, I cannot do that. But everything that has been said here will be considered very carefully, to see whether we can provide greater clarification or improvement. That is one of the reasons why these Bills come to your Lordships' House.

Baroness BIRK

The Minister said just now that the object was to make the Bill as clear as it could be. He could have fooled me. I thought the object must be the reverse. It is so obscure and its density is so great. We now have a situation in which those of us on this side of the Committee—and I suspect that this applies to other Members of the Committee as well—feel very strongly about the principle of the option scheme.

In addition, the Minister has been unable to show that what he is arguing for is in the Bill. He has argued all the way through that the option scheme is not in order to give people a treat or a bonanza but to help those who may need extra help over a short period of time to find that extra bit of money with which to buy a house. The Minister has very great experience—I am not criticising his intelligence or intellect—but he has been quite unable to put a finger on any sentence in the Bill which says specifically that this is the way in which this is going to be judged. Is the reason that

there is going to be a means test and the Government do not want to say so? Or is it that it is all to be left in the clouds and that at the end of the day anybody who wants it will get the two-year option?

In answer to an earlier amendment moved by my noble friend Lady David, the Minister said, and repeated it to my noble friend Lord Ross of Marnock, that all this will be in the regulations. As my noble friend Lord Ross of Marnock quite rightly said, although we have got to this stage of the Bill there are no draft regulations and we do not even know what will be in them.

In this Bill there are about 18 occasions where the Secretary of State has almost absolute power. It would be quite wrong not only for this side of the Committee but for the Committee as a whole to let this clause stand part of the Bill in the condition it is in at the moment. Therefore, we shall not be able to allow Clause 15 to stand part of the Bill.

Lord HYLTON

Before my noble friend the Minister says anything further, or before we take a vote, he gave me a very interesting reply to the question I put to him. I have the greatest sympathy for him but I do not think it was a reply to my question. I was trying to discover whether a tenant who is in arrears with his rent can exercise the right to buy at all. I realise from subsection (7) of Clause 15 that he cannot exercise his right to buy if he is in arrears during the option period.

Lord BELLWIN

I confirm that that is so. In those circumstances, a tenant cannot exercise the right to buy.

6.13 p.m.

On Question, Whether Clause 15. as amended, shall stand part of the Bill?

Their Lordships divided: Contents, 96; Not-Contents, 72.

CONTENTS
Allen of Abbeydale, L.	Blake, L.	De Freyne, L.
Allerton, L.	Campbell of Croy, L,	Denham, L. [Teller.]
Alport, L.	Cathcart, E.	Derwent, L.
Amory, V.	Chelwood, L.	Digby, L.
Ampthill, L.	Cockfield, L.	Drumalbyn, L.
Auckland, L.	Craigmyle, L.	Dundee, E.
Bellwin, L.	Cullen of Ashbourne, L.	Ellenborough, L.
Belstead, L.	Davidson, V.	Elles, B.
Bessborough, E.	de Clifford, L.	Elliot of Harwood, B.
Exeter, M.	Kemsley, V.	Rawlinson of Ewell, L.
Fairfax of Cameron, L.	Kilmany, L.	Redmayne, L.
Faithfull, B.	Kinloss, Ly.	Reigate, L.
Fortescue, E.	Long, V.	Rochdale, V.
Gage, V.	Loudoun, C.	Sandford, L.
Gainford, L.	Lyell, L.	Sandys, L. [Teller.]
Gibson-Watt, L.	Macleod of Borve, B.	Sempill, Ly.
Gisborough, L.	Malmesbury, E.	Sharples, B.
Glenkinglas, L.	Mancroft, L.	Soames, L. (L. President.)
Gowrie, E.	Marley, L.	Spens, L.
Grantchester, L.	Masham of Ilton, B.	Stamp, L.
Greenway, L.	Monckton of Brenchley, V.	Strathclyde, L.
Gridley, L.	Montgomery of Alamein, V.	Strathcona and Mount Royal, L.
Grimston of Westbury, L.	Mottistone, L.
Hailsham of Saint Marylebone, L. (L. Chancellor.]	Mowbray and Stourton, L.	Stathspey, L.
	Moyne, L.	Swinfen, L.
Hanworth, V.	Murton of Lindisfarne, L.	Swinton, E.
Harmar-Nicholls, L.	Newall, L.	Trefgarne, L.
Hawke, L.	Northchurch, B.	Tryon,L.
Henley, L.	Nugent of Guildford, L.	Vaux of Harrowden, L.
Home of the Hirsel, L.	Orkney, E.	Vickers, B.
Hood, V.	Orr-Ewing, L.	Vivian, L.
Hornsby-Smith, B.	Pender, L.	Young, B.
Hylton-Foster, B.	Penrhyn, L.
NOT-CONTENTS
Airedale, L.	Diamond, D.	Lovell-Davis, L.
Amherst, E.	Donaldson of Kingsbridge, L.	Maelor, L.
Amulree, L.	Evans of Claughton, L,	Monson, L.
Ardwick, L.	Fisher of Rednal, B	Noel-Baker. L.
Aylestone, L.	Fulton, L.	Peart, L.
Bacon, B.	Gaitskell, B.	Phillips, B.
Balogh, L.	Gifford, L.	Pitt of Hampstead, L.
Banks, L.	Gordon-Walker, L.	Ponsonby of Shulbrede, L. [Teller.]
Barrington, V.	Goronwy-Roberts, L.
Beswick, L.	Gosford, E.	Ross of Marnock, L.
Birk, B.	Greenwood of Rossendale, L.	Seear, B.
Blease, L.	Hale, L.	Sefton of Garston, L.
Blyton, L.	Hatch of Lusby, L.	Simon, V.
Boston of Faversham, L.	Henderson, L.	Stewart of Alvechurch, B.
Brockway, L.	Houghton of Sowerby, L.	Stewart of Fulham, L.
Bruce of Donington, L.	Hutchinson of Lullington, L.	Strabolgi, L.
Burton of Coventry, B.	Irving of Dartford, L.	Taylor of Mansfield, L.
Caradon, L.	Jacques, L.	Underhill, L.
Cledwyn of Penrhos, L.	Janner, L.	Wallace of Coslany, L.
Collison, L.	Kilmarnock, L.	Wells-Pestell, L.
Craigavon, V.	Leatherland, L.	Wigoder, L,
David, B.	Llewlyn-Davies of Hastoe, B. [Teller.]	Winstanley, L.
Davies of Leek, L.		Wootton of Abinger, B. [Teller.]
Davies of Penrhys, L.	Lloyd of Kilgerran, L.	Wynne-Jones, L.
Denington, B.	Longford, E.

On Question, amendment agreed to.

Resolved in the affirmative, and Clause 15, as amended, agreed to accordingly.

Clause 16 agreed to.

6.20 p.m.

Baroness DENINGTON moved Amendment No. 53:

After Clause 16, insert the following new clause:

(Protection of old persons' dwellings .—(1) Where a conveyance or grant executed in pursuance of this Chapter is of a dwellinghouse being one of a group where the dwellings were identified on the submitted plan approved by the Department of the Environ- ment (or its predecessor) as old persons dwellings and which it is the practice of the landlord to let for occupation by persons of pensionable age, and has been designed or specially adapted for that purpose, the conveyance or grant shall contain a right of pre-emption precluding a disposal of the dwelling-house falling within subsection (2) below for a period of ten years beginning with the conveyance of grant unless the owner for the time being has first offered to sell the dwelling-house to the landlord with vacant possession and the landlord has refused the offer or has failed to accept it within one month after it is made, the price (subject to subsection (4) below) to be the price which, at that time, the dwellinghouse would realise if sold on the open market by a willing Vendor and which shall be determined by agreement between the parties but in default of such agreement which shall be determined by the District Valuer whose determination of such price shall be conclusive and not be capable of being questioned in any proceedings. (2) A disposal falls within this subsection if it is—

1. (a) a further conveyance of the freehold or an assignment of the lease; or
2. (b) the grant of lease or sub-lease for a term of more than 21 years otherwise than at a rack rent;

whether the disposal is of the whole or part of the dwellinghouse; but neither a disposal in pursuance of an order under section 24 of the Matrimonial Causes Act 1973 nor a vesting in a person taking under a will or an intestacy is a disposal falling within this subsection. (3) The reference in subsection (2) above to a lease or sub-lease does not include a mortgage term. (4) Where a dwellinghouse falling within this section is sold by the landlord at a discount, the pre-emption right contained in the conveyance or grant shall provide that on the first occasion of a disposal falling within sub-section (2) above which takes place within a period of five years from the date of the conveyance or grant, the purchase price payable on the exercise of the right shall be reduced by the amount specified in subsection (5) below. (5) The amount by which the purchase price payable on the exercise of the pre-emption right is to be reduced in the circumstances mentioned in subsection (4) above shall be an amount equal to the discount to which the secure tenant was entitled on the sale by the landlord but reduced by 20 per cent. of that discount for each complete year which has elapsed between the date of the conveyance or grant and the date of purchase under the pre-emption right. (6) Nothing in this section shall affect the operation of section 8 of this Act in relation to dwellinghouses to which this section applies. (7) The pre-emption right referred to in this section shall be a local land charge and the Chief Land Registrar shall enter the appropriate restriction on the register of title as if application therefor had been made under section 58 of the Land Registration Act 1925. ").

The noble Baroness said: Following the undertaking that was given last Thursday by the Minister, on this question that concerns us on all sides of the Committee, dealing with the sales of old people's dwellings, some of my noble friends would be grateful if the Minister would repeat his undertaking. We are not quite clear what it was. Is he going to bring forward another clause, or is he going to wait until Report stage? If the Minister can make that clear, it will be helpful. I beg to move.

Lord BELLWIN

I am most grateful to the noble Baroness. We had a long and really quite fascinating debate on this whole matter last time on the amendments raised by my noble friend Lord Hylton, in which the noble Baroness, Lady Denington, also spoke, and points were raised by the noble Lord, Lord Evans. I then said that, as a result of what had been said and also as a result of some of the points which I myself made, I would take the matter away to be considered and that I felt it was most likely that we should want to do something about it. I am not quite sure of the best timing but I have already discussed it with my ministerial colleagues and they are now looking at the best and most practical ways of doing it. No doubt conversations will be taking place shortly, but certainly we hope before Report stage to be in a position to do something. If that satisfies the noble Baroness and other Members of the Committee that will be an end to it; if it does not, then presumably we shall have to look at it in another way. But I hope to be able to give notice of what we intend to do in good time so that all concerned will be able to make their decisions accordingly.

Baroness DENINGTON

I thank the Minister and I am happy to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 54 not moved.]

Schedule 2 [Conveyance of freehold and grant of lease]:

Lord BELLWIN moved Amendment No. 55: Page 96, line 11, after ("water") insert ("sewage").

The noble Lord said: This is a minor but necessary amendment. Its nature is such that I must choose my words with great care. Schedule 2 provides how the conveyance or grant of a lease under the right to buy shall have effect on rights of support, passage of water and so on. It is necessary to protect both the rights of the purchaser and the owners of neighbouring property in relation to easements and rights over the property being bought and over adjoining property. As drafted the schedule covers water, smoke or fumes but, alas, it does not deal with such easements and rights for the passage of sewage. This amendment is, therefore, necessary to ensure that they are included. I beg to move.

Lord MONSON moved Amendment No. 56; Page 98, line 17, leave out ("£10 per annum") and insert— ("£25 per annum for the first 25 years of the term £50 per annum for the second 25 years of the term £100 per annum for the third 25 years of the term £200 per annum for the fourth 25 years of the term £400 per annum for the final 25 years of the term").

The noble Lord said: I do not want to spend too much time on this amendment because we discussed a similar one at a previous sitting of the Committee, although it must be said that because of the lateness of the hour on that occasion the Committee was decidedly on the thin side. I pointed out then that, because of the absence of any provision which would allow local authorities to levy a service charge upon lessees where a local authority flat had been sold on a 125 year lease, it was imperative that the ground rent should be set at a figure which would both cover the local authority's minimum costs at the outset (and by that I mean the costs relating to insurance, maintenance of the structure and of the communal parts and administration) and additionally give the landlord authorities some minimal protection against inflation. I pointed out then that £10 would hardly cover the insurance premium alone, let alone the other items mentioned, and that a grant of at least £25 would be needed for this purpose, which would need to be maintained in real terms. That £25 of course was based on the most optimistic expectations of repair costs.

It seems an opportune moment to put right a wrong impression which I may have given to the noble Lord, Lord Bellwin. Whether because of the excitement of the moment or the lateness of the hour, I regret that I made a factual error in inadvertently moving a decimal point further to the left than it should have been by asserting that with inflation at 3 per cent. £10 would be worth only one quarter of a penny in 125 years' time. In fact, with inflation at 3 per cent. £10 would be worth fully 2p in 125 years' time; it would require inflation at almost 7 per cent. for the £10 to be reduced to one quarter of a penny. However, at 10 per cent. inflation the value of £10 would be reduced to one fifteen-hundredth of a penny and I am sure that most noble Lords would put their money on inflation being rather nearer 7 or even 10 per cent. than 3 per cent. over that period. The noble Lord, Lord Bellwin, agreed to look into this matter, but in, view of the extremely serious financial implications for local authorities if nothing is done I ask for his confirmation that the Government will take this point seriously before the next stage of the Bill. I beg to move.

Lord BELLWIN

When we were dealing with Amendment No. 16 I think I said then that so far as I was concerned I was also speaking to Amendment No. 56. I should like to reiterate one point which I think to some extent at least should assuage the fears of the noble Lord, Lord Monson; namely, that a service charge will be possible on sales and the right to buy. In any case, the Bill provides for the tenants of flats to buy a long lease under the right to buy rather than the freehold, and the reason for that is that, under the law as it stands, long leasehold sales offer the most convenient way of making arrangements for dealing with such matters as the provision of services and obligations to repair.

The existence of the ground rent is in fact an incidental element of arranging matters in this way. It is not designed to secure a continuing income for the ground landlord but merely to represent in a token way his continuing interest in the land. Therefore, I see no reason to make specific allowance for inflation, as the amendment would do, or to try to maintain the true value of the ground rent. However, I did say before, and I gladly repeat it, that the noble Lord made one or two quite fascinating points last time which I said we would look at carefully. I said that I felt sure there was a snag in it somewhere, but I did not spot it then and I have not spotted it now, but we shall no doubt be looking at it in due course.

Lord MONSON

I am most heartened by the noble Lord's assurance, but can he tell the Committee exactly where in the Bill, which clause or which schedule, the provision for local authorities to levy a service charge is to be found, because I have not been able to find it? Schedule 18 refers to service charges, but it has nothing to do with local authorities.

Lord BELLWIN

This is something on which I will undertake to come back to the noble Lord, as I will on the point he has raised. I think that is probably the best way to deal with it.

Lord MONSON

With that assurance, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 2, as amended, agreed to.

Clause 17 [Right to a mortgage—terms of mortgage deed]:

6.31 p.m.

Lord HYLTON moved Amendment No. 57: Page 14, line 29, leave out from ("period") to ("and") in line 30.

The noble Lord said: I beg to move Amendment No. 57 and at the same time to speak to Amendment No. 58. These are both probing amendments and I am seeking to discover why an extension of the mortgage period is considered necessary, how it will be done by the mortgagee, and if it can be done by the mortgagee why it cannot also be done by the mortgagor, for instance, if interest rates rise and the person with the mortgage wishes to extend the period. I should also like to ask why at all points it is written into the Bill that all mortgages must start off on a 25-year term, neither more nor less. I should have thought it might have suited some fairly young purchasers to begin with a slightly longer term. The Bill does not seem to give any flexiblity in that respect.

I come on to Amendment No. 58. I should like to ask why the Secretary of State should need to have power to vary the provisions of the Act. For whose benefit will he want to vary them and in what kind of ways might he wish to make variations?

Lord BELLWIN

These amendments would considerably reduce the flexibility which Clause 17 provides at present in the possible terms of the mortgage deed to be granted under the right to a mortgage. The first of the amendments would remove the facility for the mortgagee to extend the normal term of 25 years. The mortgagee may want to extend the terms of the mortgage, for example, to deal with the case where the mortgagor found at some time after buying that his long-term income prospects were reduced, or where interest rates rose and extension of the repayment period would prevent default. The amendment would remove the scope for mortgagees to act humanely in difficult circumstances. It would remove a power that there is no reason to expect to be abused by local authorities.

The second amendment would remove the provision which enables the Secretary of State to vary the terms specified in paragraphs (a) and (b). I believe this is important since it is quite conceivable that experience will show it to be appropriate to vary or add to the terms included in all deeds drawn up when tenants exercise the right to a mortgage. The noble Lord is worried that this may give the Secretary of State unfairly wide powers to impose variations in the terms of mortgage deeds on tenants. However, I believe his fears are unfounded. An order under Clause 17 would affect only deeds executed after it came into force, and a tenant would always, therefore, be aware of the terms of the mortgage deed he was being offered. There is no question of retrospection. I hope that this explanation satisfies the queries which my noble friend raises.

Baroness FISHER of REDNAL

Perhaps the noble Lord can explain this. Is there anything in Clause 17 which would be a change? If the tenant was going to make the purchase through a building society and not claiming the mortgage through the local authority, would it be a similar facility? In other words, is the Secretary of State really taking a similar line to what a building Society would be doing if it was offering the mortgage instead of the local authority?

Lord BELLWIN

To the best of my knowledge, I think the answer is, No.

Lord HYLTON

I am slightly surprised at the last "no" from my noble friend, because I gathered from his previous reply to my amendment that it was envisaged in the Bill that the lender—that is to say, the local authority—would take into account the interests of the borrower. Let me give an example. Supposing a borrower who is in work and earns a wage or salary becomes unemployed, then I would have expected from what the noble Lord said that the lender would perhaps charge interest only during a relatively short period of unemployment. Is this not the case?

Lord BELLWIN

I understood that the noble Baroness, Lady Fisher, was asking whether there would be a difference between the two, and it was to that that I said, "To the best of my knowledge, no".

Baroness FISHER of REDNAL

That was the question that I did ask.

Lord HYLTON

It may be that I misinterpreted things. I will certainly study what has been said very carefully. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 58 not moved.]

Clause 17 agreed to.

6.37 p.m.

Lord EVANS of CLAUGHTON moved Amendment No. 59:

After Clause 17, insert the following new clause:

"Exceptions to right to buy ( . The right to buy shall not be exercisable where the dwelling-house is:

1. (a) situated in a National Park; or
2. (b) situated in an area designated under section 87 of the National Parks and Access to the Countryside Act 1949 as an area of outstanding natural beauty; or
3. (c) situated in an area in Wales designated by an order of the Secretary of State as a rural area; or
4. (d) situated in the area of a Housing Authority where 25 per cent. or less of the housing stock is owned by that authority; or
5. (e) situated in a Housing Action Area within the meaning of the Housing Act 1974").

The noble Lord said: I beg to move the amendment standing in my name, and in order to avoid some doubt or concern of some noble Lords, the fact that on page 12 of the Marshalled List I put down an amendment to leave out Clause 18 was not because I thought that the present Clause 18 is not preferable to no clause at all, but that my clause, which I want to put in after Clause 17, is preferable to the limited rights of sale and pre-emption put into the Bill at Clause 18. This was discussed at some length on Thursday evening in a different context under Schedule 1.

The reason I want to pursue this is that I think it is of very great importance to a very large number of people who are concerned about the quality of life in rural areas and are concerned about the maintenance of a stock of property available for rent in areas of natural beauty or national parks. Therefore, I do not hesitate to rehearse the matter again to your Lordships, because I think there is a very serious danger indeed that the very small stock of local authority property in many parts of the country would, under the Government's provision in Clause 18, not be adequately protected against loss.

I think your Lordships hardly need to be told the prices which houses in national parks and areas of outstanding natural beauty fetch, which are quite outside the financial resources of many of the fairly lowly-paid people who work in national parks and areas of outstanding natural beauty. Your Lordships will have had plenty of experience, from reading the newspapers, of the bitterness and frustration that does exist, particularly in parts of Wales, about the second home problem, and indeed in other parts of the country, but perhaps in a less dramatic form.

I was in Wales at the weekend recovering from Thursday or possibly preparing myself for this week. It was quite apparent to me from going about parts of North Wales that there is very genuine concern—and I am sure that this is a concern which other noble Lords have experienced—about the very small available stock of council properties being sucked away and replaced with either second homes or by people living in them who have much higher incomes than the very badly paid people, particularly in areas of North Wales. Therefore, it seems to me that we should have a total ban on the sale of the stock in national parks and areas of outstanding beauty and areas designated in Wales as rural areas. Indeed, that takes care of paragraphs (a), (b) and (c) of my amendment.

Paragraph (d) of my amendment concerns a matter which I mentioned on Second Reading. There is in many areas such a small stock of rented housing accommodation in the public sector that even an occasional sale, even the odd selling off of one or two properties belonging to the local authority, might completely destroy the balance of many villages and small towns in the rural areas of this country. Again, it is a matter which has been drawn to my attention and which one sees almost every day of the week in the holiday season which is now upon us. Whole villages and small towns are being virtually populated by second home owners and people who do not spend most of their lives in the area and who certainly do not bring up their children in the area. If a housing authority with a very small stock of houses were to sell those houses it would completely destroy the very delicate balance of the neighbourhood. That accounts for paragraph (d).

Finally, I turn to paragraph (e), which is a rather different concept; namely, that in a housing action area the most important thing in my experience (and I have a fair amount of experience as a councillor, as a member of a housing association, and of housing action areas) is that if you cannot so organise the housing action area that the improvements can be carried out en masse and the people can be decanted temporarily into other accommodation before coming back; if you do not have control as it were, in the form of rented accommodation so that the housing association, local authority, or whatever body'it is, can decant the people temporarily and bring them back; if you have owner-occupiers in a housing action area then, under the present law, as I see it and from my experience of housing associations, you cannot take on an agency for an owner-occupier. Therefore, in a housing action area you would have, if the amendment is not passed, perhaps two dozen terraced houses all being improved and the odd one standing out which had not been improved, modernised or brought up to date. It would therefore take much of the value away from the housing action areas created by the Housing Act 1974 which have been, to those involved in inner urban areas, of great value to the communities there. That is why I have added paragraph (e) to my amendment.

These are very important matters about which there has been a great deal of correspondence and discussion in the past months and in the other place. Therefore, I believe that, despite the discussions we had on Thursday, it is important that these matters should be debated again, and that the additional matters which I have added in paragraphs (d) and (e) should also be considered. I beg to move.

6.45 p.m.

Viscount GAGE

I was for many years President of the National Federation of Housing Associations. For that reason, and as I very rarely bother your Lordships, perhaps I may be allowed to make one or two general comments before coming to this particular amendment, although everything that I say will be connected with the amendment.

When I went around to different associations I found, among other things, that if, for example, there were 500 housing associations, 499 of them would be building houses efficiently and continuously. However, the most publicity that they were ever likely to receive was some reference in the local paper. Successful housing associations were not news. But, if one went wrong or if one did anything particularly dishonest, then that was news and it was well covered by the press, radio, television and so on. The result has been to cast doubt—particuarly in the minds of those people who do not know much about the matter—the whole housing movement. That is a great pity. I used to travel around and found that in nearly every case those engaged in building houses were very conscientious and straightforward. Indeed, they did build houses. A year ago they built 30,000, and this year, as my noble friend Lord Hylton said, that number had to be reduced. I think that they could build that number again. I think that they might well become a considerable supplier of rented accommodation and that might be, in the circumstances, somewhat important. Therefore, I feel that the Government and your Lordships would be right to give the housing associations the quite minor matters that are being requested in the amendments.

That is particularly true as regards the present amendment. As the noble Lord, Lord Evans, has said, there is a great danger of rented accommodation becoming increasingly difficult to find. I am a loyal supporter of the Government as regards the idea of the right to sell, but in these special areas of outstanding natural beauty and in national parks I do not know that it will produce a great impetus for either local authorities or individual private owners to build for rent. It might be done by housing associations. I think that there is a chance that rural housing associations might be formed to produce this very much needed extra rented accommodation.

The trouble, as has been mentioned, is that in these areas—and I live in one, so I know about them—it is very difficult to get any form of planning consent for any new building. I think that it has been overdone. We do not want to turn rural villages into rural museums; but it would be possible to build if housing associations were given half the chance. I know that my noble friend Lord Bellwin has said that the right to buy ought not to be restricted. However, I am thinking of the future. I am talking about housing associations that I hope will be formed and as regards which obviously no right to buy exists at all at present. People will go into them knowing very well what they are facing. At present there is about one housing association for agricultural labourers. It would be good if they could be encouraged in that way, and to that extent I entirely support the noble Lord, Lord Evans.

Lord GIBSON-WATT

I hope that my noble friend will forgive me if I do not follow him in his argument about housing associations. But I certainly would agree with the noble Lord, Lord Evans, that the matter we are discussing is a delicate one in the Principality. However, I would not advise your Lordships to agree to the amendment and I shall try to explain why.

In my view, the Government's Clause 18, as it now stands, is definitely preferable to the new clause as proposed. The effect of the new clause would be to exempt from the provisions and benefits of the Bill a large number of householders in national parks and the other areas specified by the noble Lord, Lord Evans. As far as Wales is concerned, the five categories cover a fairly high percentage of those now living in council houses in Wales.

In my view, this would not be fair to them. The limitations imposed on resale in Clause 18 of the Bill are, in my view, adequate to safeguard these houses from exploitation and being bought by "outsiders", if your Lordships will forgive the word. Certainly there is a fear of outside invasion of such properties, as the noble Lord, Lord Evans of Claughton, said. But the reasonable anxieties of people in Wales have been adequately met by the Government. A council house so bought will only be available for sale to someone who has either worked in the area for three years or who has his or her main place of residence in such an area. Another objection to the new clause, as I see it, is that it would not help the sales of council houses in designated rural areas in England. This is not an occasion when Wales needs legislation different from that in England. We all remember what the Welsh people said on 1st March 1979; they said "No", and I hope that your Lordships will say "No" to this amendment.

6.51 p.m.

Lord SANDFORD

I should like to follow my noble friend for a number of reasons, but chiefly in this connection because he and I were joint chairmen of the committee which reviewed the national parks, and, as I mentioned to the Committee last Thursday, this topic of how to deal with housing to let in national parks cropped up over and over again. If I may say so, I thought that the noble Lord, Lord Evans of Claughton, made the case which he is now making very cogently last Thursday, at what I believe was the proper part of the Bill; namely, Schedule 1, which deals with the exceptions to the right to buy. I am afraid that I also thought that those of us who indicated our agreement with his concern but our difference with him about the way in which to meet it, also made our point cogently.

I very much agree with my noble friend that it is not appropriate to deprive large numbers of our people of what will become a very cherished right—this right to buy the council house in which one is living— in order to deal with the problem in national parks and the other areas mentioned in his amendment. I very much agree with my noble friend that the right way to deal with it is to give the local authority the power to recover the property after the right has been exercised and thus to maintain the housing stock.

I believe that the provisions in Clause 18 in respect of properties in rural areas deal with this matter correctly, as does the noble Lord's own amendment, Amendment No. 54, in respect of housing for the elderly. I do not see how he can consistently espouse an amendment, like Amendment No. 54, in respect of the elderly and at the same time twice seek to move an amendment which deals with it quite differently in respect of properties in rural areas. Therefore, having given this matter a second airing, I hope that the noble Lord will feel that he need not press it any further.

Lord HYLTON

From everything that has been said so far I cannot see any likelihood of my noble friend Lord Bellwin being able to accept this amendment. If I read it rightly, like my noble friend Lord Sandford, I am sure that he will rely very much on Clause 18. Therefore, I think that this is the appropriate moment for me to try to outline why I do not believe that Clause 18 will be good enough in all cases.

I accept that it may be sufficient in some cases, but I suggest that whether or not Clause 18 works will be very much a question of supply and demand for houses. I should like to give an instance from the Lake District National Park which covers a great part of Cumbria. Prices of houses within the national park boundaries are, I understand, twice as high as they are in the rest of the County of Cumbria. In any desirable area—whether it is a national park, an area of outstanding natural beauty or at the seaside—the pressure of demand will be highest where people want to have second homes and where they want to have retirement homes. That is the background that we need to have in mind in considering this amendment and this whole question.

In Clause 18 the Government rely on two possible strategies. The first is that of pre-emption and repurchase by the local authority of a house that has already been bought. We have not yet heard with any clarity how, in fact, this right of repurchase will work out in practice. How will the local authority bridge the gap—which may be a very large gap, a very big sum in monetary terms—between the initial sale price, which may often have been reduced both by discount and by the effects of the option scheme, and the full open market repurchase price after a period of five years or more? I suggest that this gap may be unbridgeable.

Then we come to the second strategy, which is the limitations on resale. Here, as far as I know, we have not yet had any definition of the criteria which the Secretary of State will take into account when defining rural areas. I should like to suggest that, again, even when we know the criteria, the whole question will be governed by supply and demand for houses in a particular area—it may be a very small area. If there is not much demand, there will be few purchasers qualified coming forward to buy when the first person wants to resell. If that is the case, we run the risk of doing an injustice to the vendor. If too many people qualified to buy come forward, then prices will rise and our object is, to some extent, defeated.

If all the council houses in a particular parish or district get sold off in the first place, when they come to be sold for the first time local people who have a need to live locally will have no chance of getting a house unless they happen to be rich enough to purchase at that time and in that place. If only half the previous stock of houses is sold, then those local people who can only rent will have a 50 per cent. chance compared with the chance they now have.

On Second Reading I thought that the right reverend Prelate the Bishop of Newcastle made an excellent plea for special treatment and, indeed, exemption from the right to buy for areas where the local authority at present owns less than 25 per cent. of the housing stock. That plea is taken up in paragraph (d) of the amendment of the noble Lord, Lord Evans. A great deal of play has been made of the number of bodies that are said to be satisfied. These include the Association of District Councils, with which my noble friend Lord Sandford is concerned, the NFU and perhaps even the Standing Conference on Rural Community Councils. But I wonder whether these bodies and the Government have thought through this question of supply and demand, which I submit will be quite critical. I should like to support the amendment.

Lord BELLWIN

First, I should like to deal with one or two of the points which the noble Lord, Lord Evans of Claughton, made. On the one hand, he said that the particular people living in many of these areas would not be able to buy. Then he called for a total ban on sales. With respect, I do not think that those two statements are consistent. If people will not be able to afford to buy, why have a ban on selling, on the right to buy? However, I suspect that, as always, what will happen is that there will be some who will want and some who will not want, either because they are not able or because they do not want. Then I should have to return to the point I made on the first day of the Committee stage when I said, All right, but what we are talking about is a right to buy". If they do not buy for any reason, then so be it; no one is making them buy.

This new clause would exclude from the right to buy all dwellings on whose resale a restriction could be imposed under Clause 18 of the Bill. Clause 18, as my noble friend Lord Gibson-Watt so rightly said—he hit the nail absolutely on the head when he talked about fairness to people and the likelihood of what will happen—allows certain safeguards to be imposed on sales under the right to buy in rural areas. These safeguards may be applied on dwelling-houses situated in national parks, areas of outstanding natural beauty and other rural areas designated as such by the Secretary of State.

There are two alternatives. First, where the landlord executing the conveyance or grant is a local authority, county council or the Development Board for Rural Wales, it may require a convenant in the conveyance or grant making it a condition of resale that the purchaser should have lived or worked for the previous three years in a region within which the national park, areas of outstanding natural beauty or designated rural area wholly or partly falls. The Secretary of State has the power to designate these "catchment areas". When we reach Clause 18, I shall be bringing forward amendments to allow housing associations a similar discretion. I hope that that will perhaps be of comfort to my noble friend Lord Gage, who was understandably concerned about this matter but who I hope will feel happier when we come to those amendments.

As at present drafted, the Bill allows associations to include a covenant in the conveyance or grant to restrict resale by catchment area in this way only if the local authority within whose territory the dwelling is located requires it. Secondly, if the landlord is a local authority or the Development Board for Rural Wales, it may, subject to the consent of the Secretary of State, replace the restriction on resale by catchment area with a preemption condition giving it the right to buy back at market value if the purchasing tenant sells within 10 years. Again, we shall be proposing amendments later to give a similar alternative to all landlords. Housing associations, too, will need consent, but from the Housing Corporation rather than the Secretary of State.

In providing these safeguards on sales in rural areas we have struck a fair balance between the right of tenants, whether in the countryside or in a town, to buy their home, and the special, local circumstances with which some rural authorities have to deal. We simply cannot agree the exclusion from the right to buy of all those dwellings in the rural areas in which either pre-emption conditions or the restrictions on resale provided under Clause 18 could be imposed.

In the new clause the noble Lord, Lord Evans, also proposes that there should be no right to buy in the area of a local authority which owns less than 25 per cent. of the housing stock, or within housing action areas. Indeed, the point of 25 per cent. was touched on by my noble friend Lord Hylton. Twenty five per cent. is about the average proportion of the housing stock owned by local authorities. Before I say something about that figure, however, I should like to comment on the assumption that the noble Lord seems to be making that the sale of dwellings under the right to buy will have a significant adverse effect on the availability of dwellings for letting.

I am looking to see the exact words he used. He said that the sale of one or two houses could destroy the whole balance. I do not want to bring up again the debate we had earlier on this but I do not see that at all, because the people who buy them still go on living there. If they bought them, left the district, and they were then sold to outsiders coming in, then his point would be valid, but for the reasons we have repeated so many times already this is just not going to happen, and the safeguards coming under Clause 18 will make that even less likely to happen.

As to the new clause, it is interesting to note that of 366 local authorities which will be subject to the right to buy in England, 226 own less than 25 per cent. of the housing stock in their area. An exclusion such as the noble Lord proposes would therefore abolish the right to buy in almost two-thirds of the local authorities in England. I do not know whether the noble Lord is aware of this, but I feel I need say no more to show the Committee what an unacceptable effect this provision of the new clause would have.

The noble Lord, Lord Evans, then wanted to abolish the right to buy in housing action areas. But why does he assume that an owner-occupier would not want to improve his house in an housing action area?—especially as, under the proposals for grant, subsidies, and so on, we shall be making more facilities for grants available in housing action areas than has been the case hitherto. But even without that, so far as I am concerned, everything I have seen where sales have taken place, whether they be on council estates or especially in poorer areas or whatever, the people who buy their homes upgrade them and that in turn upgrades all those around them; just as, conversely, where you get an area where one or two people neglect their homes badly, then it tends to lower the standard in the area.

So, far from being concerned about sales in housing action areas, I would very much welcome them, perhaps almost as much as anywhere. That is aside entirely from the question of why we should disadvantage the people in the housing action areas. Why should they not have the same opportunities as people who may live in better areas? I am sure that that was not the intention of the noble Lord, Lord Evans, but that is what the effect of the amendment would be.

I do not think I can add much more without going over old ground again, and I am anxious not to do that. I listened carefully, as always, to the points made by my noble friend Lord Hylton, one or two of which I have touched upon. He is concerned about the effect of supply and demand, and that by itself is valid enough except that we would always come back at the end of the day to the point I keep making all the time—namely, what happens when a sale takes place. What happens to the accommodation? What is the effect upon it thereafter? As I have said so many times, selling does not have the adverse effect that some have intimated. I believe that, apart from giving the benefit which it certainly does to the purchaser and his whole family, it also has other benefits as regards the whole area in which the houses are placed. For those reasons, I feel that we could not accept the amendment.

Viscount GAGE

Does what the noble Lord is going to say about Clause 18 contain any suggestions as to who is to build new rented accommodation in these areas of outstanding natural beauty? I made a suggestion, but nobody else has made any suggestion as to who is going to provide new rented accommodation in these special areas.

Lord BELLWIN

It would be up to the authority in each case to decide whether or not it wished to make such provision. That would be its option, if it felt that that was what it should do. I would have to come back to say that there would be no need to do so in my view—I know it is not a view held by noble Lords opposite—for the simple reason that a sale had been made, because when a sale is made the house just does not disappear at all, but if it should be that an authority feels that it ought to build new, then of course that is for it to decide.

Lord HYLTON

Just for clarity, perhaps I may say to my noble friend that I entirely agree with him that there is not a problem when the tenant first buys from the local authority. The problems will undoubtedly arise when that tenant who has bought resells.

7.8 p.m.

Baroness BIRK

Like the noble Lord, Lord Evans, I personally preferred Amendments Nos. 10 and 11, which were unfortunately lost when we voted on them last Thursday. I think, however, that this amendment, although it may have certain defects, is something that the Government should look at. I would hope, perhaps not very hopefully, that the Government would take it back to look at it.

The rural areas—I do not know whether it was error or not—should apply to England and Wales. I think the amendment has only Wales. I imagine that the noble Lord thinks it should apply to both. On the housing action areas, there again I prefer the original amendment on housing stress areas, but there is a case for making an exception there, and also for the percentage of stock. None of these things is perfect, as the Minister pointed out, and no doubt will do so in the future, but one has to try and find the best sort of arrangement one can.

I underline the point made by other noble Lords who have spoken on this subject. The problem comes when a local authority sells a house, even if it has the opportunity to buy it back; in this case it has that opportunity for 10 years, which I tried unsuccessfully to secure in another context. As I understand it, under Clause 18 there is no recovery of the discount gained by the original purchaser, so it seems that local authorities will be in a position where, in the majority of cases, the pre-emptive right will mean nothing at all—what is the use of having a right if you cannot exercise it? If, as has been explained, it is more than likely that house prices will rise, particularly in rural areas, local authorities will not be able to afford to buy the houses if they are for sale, even with the longer period of 10 years in which to exercise the right.

I would remind the Minister—we tend to forget this when we debate these issues—that all these things are discretionary. The local authority does not have to buy back a house that is offered to it; and as I said, even if it wants to, I do not think it will be able to afford to do so. In the way this is framed—indeed, in the way the original amendment was framed—the local authority will make up its own mind about whether it will sell a house. There may be houses in rural areas which authorities will be happy to sell, and of course the same applies to houses for the elderly. What so many of us object to—this applies not only to noble Lords on these Benches—is the mandatory effect of the rule on local authorities, which means that their hands are completely tied so that they are unable to take any discretionary action.

I will not go over what was said last Thursday about the autonomy of local authorities. A great deal of feeling exists in the Committee on this issue, particularly in respect of rural areas, and the Government should consider the amendment afresh, despite its defects, and, as the Minister has promised to do in regard to the elderly, at a later stage introduce an amendment which would meet some of the concern that has been expressed by noble Lords in all parts of the Committee.

Lord BELLWIN

It is precisely because there exists in the Committee the feeling of which the noble Baroness, Lady Birk, spoke, on this as much as in other areas; precisely because representations have been made by people concerned with the matter, who put their case in the way they did; and precisely because there is concern and agreement about the problems involved, that we are introducing amendments to Clause 18 which were not there originally. When one puts all of this into the context of the whole scene of what the Government are seeking to do, noble Lords should feel satisfied that we have gone all the way down the line to meet the fears which were expressed, fears which in my view are no longer what they might have been at one time.

Lord EVANS of CLAUGHTON

I have much sympathy with the point put forward by the noble Viscount, Lord Gage, and I had incorporated in a later amendment—which, I am happy to see, has been overtaken by a Government amendment—a provision to extend opportunities for housing associations to build because, I suspect, that they are the most likely, under the present dispensations, to be letting in the future in any part of the country. We have debated this matter in a sense twice and I concede that my amendment is perhaps not the most beautifully drafted amendment ever devised by the hand of man and that the amendment in the name of the noble Baroness may be rather better. I also concede that the new Clause 18 is much better than no Clause 18. My point is that Clause 18 does not go far enough, for the reasons mentioned in most apposite and probing terms by the noble Lord, Lord Hylton.

The noble Lord, Lord Bellwin, did not deal with the point which is uppermost in my mind, which is that for the indigenous populations—I am sorry to use that phrase; if I call them "natives" that might be misunderstood—and the people living and working in the areas of national parks and the like are often, if not always, the people least able in income terms to be able ever to afford to buy a house but have to rely on the rented sector. I suspect that in one way or another—either through the local authority not being able to buy the house back or not choosing to exercise its option—the number of rented houses will be eroded to the point where the comparatively little rented accommodation that is at present available in rural areas will become absolutely nil. This is a matter of great concern to a large number of people in all parts of the Committee, as the noble Baroness said.

I will not go into the various points about housing action areas and so on. The one point I wish to reiterate about housing action areas, however, is that while grants may be available—the grants

CONTENTS
Amherst, E.	de Clifford, L.	Jacques, L.
Ardwick, L.	Denington, B.	Janner, L.
Aylestone, L.	Elwyn-Jones, L.	Kaldor, L.
Bacon, B.	Evans of Claughton, L.	Kilmarnock, L.
Banks, L. [Teller.]	Fisher of Rednal, B.	Llewelyn-Davies, L.
Barrington, V.	Gage, V.	Llewelyn-Davies of Hastoe, B.
Beswick, L.	Gaitskell, B.	Lloyd of Kilgerran, L.
Birk, B.	Gifford, L.	Longford, E.
Blease, L.	Goronwy-Roberts, L.	Lovell-Davis, L.
Boston of Faversham, L.	Gosford, E.	Maelor, L.
Brockway, L.	Greenwood of Rossendale, L.	Monson, L.
Bruce of Donington, L.	Hale, L.	Moyne, L.
Cledwyn of Penrhos, L.	Harris of Greenwich, L.	Noel-Baker, L.
Collison, L.	Hatch of Lusby, L.	Peart, L.
David, B.	Hutchinson of Lullington, L.	Phillips, B.
Davies of Leek, L.	Hylton, L.	Pitt of Hampstead, L.
Davies of Penrhys, L.	Irving of Dartford, L.	Plant, L.

are not, in my view, generous enough and I hope to move amendments about that later—the machinery is not available for people who are owner-occupiers to be moved out while their houses are being brought up to the standards of a housing action area. As for the comparison by the noble Lord, Lord Sandford, of an earlier amendment of mine designed to deal with the elderly, that is a quite different matter. There one was dealing with a class of people. Here we are dealing with a class or grouping or kind of house.

As for the rather horrendous statistic which the noble Lord, Lord Bellwin, gave, most local housing authorities—I think he said there were 226 which would be covered by my proposal—are comparatively small. The very big ones in the urban areas have the sort of proportion to which the noble Lord referred, but most of the housing authorities we are talking about are very small. I can only repeat the point I made, namely, that one can do a considerable amount of damage to the whole nature and concept of a small village community if even one or two houses are ripped out of the rented sector and put in the owner-occupied sector. This is my view, one which many others share, and while I appreciate that the Government feel they have gone as far as they can on this, I am not satisfied and I must press the amendment to a Division.

7.18 p.m.

On Question, Whether the said amendment (No. 59) shall be agreed to?

Their Lordships divided: Contents, 67; Non-Contents, 80.

Ponsonby of Shulbrede, L.	Stamp, L.	Underhill, L.
Rathcreedan, L.	Stewart of Alvechurch, B.	Wallace of Coslany, L.
Ross of Marnock, L.	Stewart of Fulham, L.	Wells-Pestell, L.
Seear, B. [Teller.]	Strabolgi, L.	Wigoder, L.
Segal, L.	Taylor of Mansfield, L.	Wynne-Jones, L.
Simon, V.

NOT-CONTENTS
Allerton, L.	Gisborough, L.	Nugent of Guildford, L.
Alport, L.	Gowrie, E.	Orkney, E.
Ampthill, L.	Greenway, L.	Orr-Ewing, L.
Avon, E.	Gridley, L.	Penrhyn, L.
Bellwin, L.	Grimston of Westbury, L.	Rawlinson of Ewell, L.
Belstead, L.	Hailsham of Saint Marylebone, L.(L. Chancellor.)	Redmayne, L.
Bessborough, E.		Reigate, L.
Blake, L.	Hanworth, V.	Remnant, L.
Brougham and Vaux, L.	Harmar-Nicholls, L.	Rochdale, V.
Camoys, L.	Hastings, L.	Sandford, L.
Cathcart, E.	Holderness, L.	Sandys, L. [Teller.]
Craigavon, V.	Home of the Hirsel, L.	Sempill, Ly.
Craigmyle, L.	Kemsley, V.	Sharples, B.
Cullen of Ashbourne, L.	Kilmany, L.	Soames, L. (L. President.)
Davidson, V.	Kimberley, E.	Spens, L.
De Freyne, L.	Kinloss, Ly.	Strathclyde, L.
Denham, L. [Teller.]	Long, V.	Strathcona and Mount Royal, L.
Derwent, L.	Lyell, L.
Digby, L.	Macleod of Borve, B.	Strathspey, L.
Drumalbyn, L.	Mancroft, L.	Swinfen, L.
Dundee, E.	Marley, L.	Trefgarne, L.
Ellenborough, L.	Montgomery of Alamein, V.	Trenchard, V.
Elles, B.	Mottistone, L.	Tryon, L.
Elliot of Harwood, B.	Mowbray and Stourton, L.	Vaux of Harrowden, L.
Fairfax of Cameron, L.	Murton of Lindisfarne, L.	Vickers, B.
Faithfull, B.	Newall, L.	Vivian, L.
Fortescue, E.	Northchurch, B.	Young, B.
Gibson-Watt, L.

Lord TREFGARNE

I beg to move that the House be now resumed.

House resumed.