Housing and Planning Bill

HL Deb 07 October 1986 vol 480 cc128-228

3.8 p.m.

Lord Skelmersdale

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill. Moved, That the House do now resolve itself into Committee.—(Lord Skelmersdale.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD AIREDALE in the Chair.]

Baroness David

moved Amendment No. 1: Before Clause 1, insert the following new clause: ("Exception to the right to buy with respect to dwelling houses for persons of pensionable age. .—In schedule 5 to the Housing Act 1985 (exception to the right to buy: Certain dwelling-houses for persons of pensionable age), there shall be substituted for paragraph 11— 11. (1) The right to buy does not arise if the dwelling-house—

1. (a) is particularly suitable for occupation by persons of pensionable age, having regard—
1. (i) to its location, and
2. (ii) to its size, design, heating system and other major features so far as those have been provided by the landlord, a predecessor of the tenant or a person qualified to succeed the tenant by virtue of part IV of the Housing Act 1985
2. (b) was let to the tenant or a predecessor in title of his for occupation by a person of pensionable age or a physically disabled person (whether the tenant or predecessor or another person)

(2) In determining whether a dwelling is particularly suitable, regard shall be had as to whether the dwelling—

1. (a) is easily accessible on foot;
2. (b) is on one level;
3. (c) being a flat located above ground floor access by lift is available;
4. (d) has no more than two bedrooms;
5. (e) has a heating system serving the living room and at least one bedroom".")

The noble Baroness said: May I add my congratulations to the Minister on his new and major responsibility? Having said, I hope, something nice, I am now going to make a criticism about the Committee stage of this Bill. We agreed before the Recess that we should have three Committee days, since when a vast number of Government amendments have been put down. There is now a total of 354 amendments, of which 284 are government amendments: that is 80.2 per cent. of the whole. I feel that we are being cut very short in the time for considering these amendments, particularly as they were put down only at the beginning of last week. With the House not sitting it has been very difficult to give proper consideration to government amendments. Also, we have had no help from the Government in the shape of notes on new clauses or with the new amendments. We have therefore been in some difficulty.

I now move to the first amendment in my name and those of the noble Baroness, Lady Stedman, and the noble Lord, Lord Hylton, and I should like to say now that I had hoped that this would be an all-party amendment. I spoke to the noble Earl, Lord Selkirk, on the telephone and he stated that although he could not be here today he would write to the Public Bill Office so that his name could be added. The letter evidently did not arrive in time, but I should like to say that the amendment does have his support.

I make no apologies for returning to a topic with which the Committee is very familiar. This is the question of ensuring that homes which are particularly suitable for the elderly are exempt from the right to buy. We had long discussions concerning this question when the Housing Act 1980 and the Housing and Building Control Act 1984 were going through this House. On those occasions there was all-party support for amendments which would enable local authorities to retain their precious stock of houses, flats or bungalows for renting to the elderly.

If we were anxious about the stock being depleted in 1980 and in 1984, we should be even more anxious in 1986, when local authorities are even more strapped for money to build new houses and when the number of elderly is increasing and they are living longer. While, in theory, homes suitable for the elderly are deemed to deserve exemption from the right to buy, in practice local authorities are experiencing the rapid and increasing loss of homes designed specifically for the elderly.

The arrangements for assessing applications for exclusion are not working as they should. Evidence provided to the Institute of Housing and others shows long delays in making decisions—on average about five months—and the Secretary of State appeared to be taking a particularly severe view of criteria set out in Circular 21/84. When the institute carried out a survey in 1985 (and this survey had a good response, with 322 local authorities replying) in only 16 per cent. of those cases where a decision had been made was an exemption granted.

The latest position (which unfortunately has not appeared in today's Hansard as a Written Answer, although I was given some assurance by the Minister that it would) shows the situation as being slightly better. Perhaps, as that Answer has not appeared, I had better explain the position. These statistics relate to applications received by the department between 26th August 1984, when the present rules came into effect, and 31st August of this year.

There were 936 applications received and 182 exemptions were granted; there were 326 applications refused and 194 applications were awaiting decision; there were 155 applications withdrawn by landlords; there were 72 out of time applications and seven applications in abeyance. The situation is slightly improved. The exclusion rate is now 36 per cent., which is much better than 16 per cent., but is still far from good. In fact, I would say it was bad, and one cannot help being a bit cynical about the recent increase in the exemption rate. Ministers must have been aware that this housing Bill was due for Committee stage in your Lordships' House.

As regards the survey to which I have referred, councils stated that in their view in 74 cases exemptions were refused in circumstances where the dwellings fell within the criteria of the Act and the circular. Of particular concern was the degree of detail required by the Secretary of State in support of applications: for example, the exact distance and type of business of the nearest local shop and whether it doubled as a post office; the precise height of socket switches, worktops and cupboards; the exact height and length of the bath and whether it was the flat-bottomed non-slip type; and whether the WC had a handrail.

Individual questions included whether or not the bungalow had a sunny aspect and whether the heated towel rail was originally provided in the dwelling. There were nine criteria in Circular 21/84 which gave guidance on the approach which the Secretary of State intended to take in assessing applications and it was stated that greater importance would be attached to the first five. What has been happening is that the last four seem to have been given more and more weight.

I have the history of a case from Wolverhampton where working surfaces, shelves and so on were not of a special height and where there was no provision of a special lock to enable the bathroom door to be opened from the outside. These facts were cited as reasons for refusal, and both come within the last four criteria which are supposed to be of less import. The Secretary of State or the department seem to expect that all houses for the elderly should have the most modern and up-to-date equipment. The Wolverhampton bungalow was built in 1948 and it can hardly be expected to have all the modern and desirable features. On this basis virtually every elderly person's dwelling built before the last five years or so could be sold.

To turn to the amendment, which I perhaps should have done earlier, it effectively replaces paragraph 11 of Schedule 5 to the Housing Act 1985. It retains similar wording but attempts to define the criteria in a more precise and exclusive manner. I really would have liked the amendment to go further, but this is felt to be most in keeping with the intention behind the amendment to the Housing and Building Control Act. There should be very little for the Government to object to here, unless they want to argue that they should have more discretion—something which we believe has been wrongly exercised.

Authorities of all political persuasions have objected to the sales that have been allowed. Harrogate district council, which is a Tory council, carried out a survey in 1985, and 155 councils supported Harrogate in seeking amendments to the criteria applied and a change in the law. The majority of authorities in favour of a change in the law were unanimous in their criticism of the present grounds for exclusion, and were of the opinion that the qualifying criteria for exclusion for the right-to-buy provisions are too stringent for the elderly persons' accommodation built prior to the introduction of the Parker Morris standard in 1967. There is much of interest in the detail of their report, some of which is shocking. However, I shall not quote that now.

Our amendment has the support of the Association of District Councils, the Association of Metropolitan Authorities, the National Housing and Town Planning Council, the Institute of Housing, Shelter and Age Concern, which body is very concerned. Our amendment achieves two objectives. It removes from the Government to the courts the final decisions on elderly persons' exemptions under the right to buy, and it incorporates in the Bill the important first five guidance criteria contained on the DoE Circular 21/84. The object is to prevent the refusal of exemptions on minor grounds. It does not widen the exclusion arrangements as requested by Harrogate and supported by 155 local authorities—mainly Conservative authorities. It is a modest amendment. I hope the Government will accept it, but, if they do not, I hope your Lordships will show the same concern for housing the elderly that you have shown on previous occasions. I beg to move.

Lord Skelmersdale

I am rather flabbergasted that the noble Baroness should, I think, be the fifth of your Lordships this afternoon to congratulate me on my appointment. I am also somewhat flattered. So far as concerns her introductory remarks on the amount of time that the usual channels agreed to give this Bill, I should have thought that perhaps it would be more proper for this to be a matter for the usual channels. On the Question for Written Answer, to which she referred, I did indeed arrange for it to be answered yesterday. With the best will in the world, I cannot be responsible for the happenings surrounding the Official Report, and the noble Baroness will see that there were no Questions for Written Answer answered yesterday. So though I gave her the information as she requested earlier, I was powerless to have it printed, although, as I believe she understands, that was my full intention.

Many of the amendments that we are due to discuss today—I am not quite sure how many we are due to discuss today, but certainly many of them—were tabled in the first week or so of the Recess. So the noble Baroness had plenty of opportunity to study them and, indeed, to ask questions about them of the department which I now serve.

Perhaps with that introductory paragraph I may now get on to this very important amendment—and I agree with the noble Baroness that it is a very important amendment. The basis upon which housing for the elderly should be exempted from the right to buy has been, as we all know, a matter of dispute ever since the right to buy was introduced in 1980. It was discussed at length then without me; we discussed it ad nauseam in 1984, when I was aiding my noble friend Lord Bellwin and when important changes were made in the statutory test, and we are discussing it again now. That, in itself, is clear evidence that there is continuing dissatisfaction with the way in which the test for exemption operates. There is no doubt in my mind that that has to be acknowledged, and I hope to be able to show that as a Government we are prepared to listen to reasonable criticism and to respond to it.

The Government's basic position is that we firmly believe that the right to buy should be available to as many tenants as possible and we would not wish to deny that right to any category of tenant, including the elderly, without good reason. On the other hand, we, of course, recognise that some local authorities face very real problems in meeting the housing needs of the elderly in their areas. Thus the solution to this problem is a matter of getting the balance right. It is clear from what has been said by the noble Baroness today, and from the representations we have received over the last two years, that the present test, though in some respects an improvement on what went before—and the noble Baroness has given the Committee the figures—is still not generally regarded as wholly satisfactory.

There is one general point with which I should first like to deal. There have been suggestions that since 1984 the test for exemption has been applied with a rigour which was not intended when your Lordships discussed this matter. I do not believe there is any evidence for that. The main purpose of the changes made in 1984 was not primarily to enlarge the scope for exemptions, but to improve the exemption test to make it clearer, more objective and less time-consuming to apply. Nevertheless, the figures show that, in fact, the 1984 changes extended the scope of exemption from the right to buy. Whereas the proportion of applications which resulted in exemption under the 1980 rules was only 11 per cent., under the 1984 rules almost 36 per cent. of local authorities' applications have been successful. There is, I believe, no evidence here for the suggestion that the test has been applied too restrictively. The question, though, is whether it is the right test.

I now accept that there is some substance in the argument put forward by the noble Baroness that, in fact, it is not quite the right test. The decision as to whether a dwelling should be excluded from the right to buy should depend more on the presence of major features, and less on the relatively minor internal features that has been the case under the present test. The Government therefore accept that the appropriate criteria for determining whether a dwelling is suitable for the elderly are those set out in the noble Baroness's amendment, with one addition—that access to shopping and public transport facilities should also be taken into account.

But there are, I suppose inevitably, other aspects of the amendment which we cannot accept. One of the effects of this amendment would be that the responsibility for decisions on applications from tenants to buy elderly persons' dwellings would pass from the Secretary of State to individual landlords. There can be little doubt that given a free hand many local authorities would not hesitate to deny the right to buy in respect of any ground-floor accommodation, irrespective of its particular suitability for the elderly. What is more, the test would be applied inconsistently across the country. We cannot accept this proposal. Decisions must rest with the Secretary of State. For that reason I cannot accept the amendment put down by the noble Baroness opposite as it now stands.

I believe, however, that we are fairly close to agreement on the criteria to be applied in deciding whether a dwelling-house is suitable for the elderly. We differ on the issue of who should take that decision. Since we cannot accept the amendment in its present form, I propose to bring forward a government amendment at Report stage.

Our proposal would be to grant a determination to exclude a dwelling from the right to buy, even where all the prescribed features were not present, if my right honourable friend nevertheless considered in the light of the other evidence that the dwelling was particularly suitable for the elderly. But the Secretary of State would not be able to withhold a determination if he was satisfied that all the prescribed features were indeed present. We shall have to consult on the features to be taken into account before prescribing them, and for this reason the amendment that I am proposing to put down at Report will include putting all these things in regulations.

The amendment will also go some way towards meeting another point raised by the noble Baroness, in that it will enable the Secretary of State to take into account features of a dwelling which have been provided by anyone other than the present tenant, or a predecessor in title of that tenant. In other words, if a previous tenant of that dwelling who has no connection with the present tenant has perhaps installed central heating, we intend that the Secretary of State will be able to take that feature into account when reaching his decision. But if, for instance, the present tenant is a widow who succeeded to her tenancy on the death of her husband, and the couple installed central heating at their own expense before the husband's death, the Secretary of State would not be able to take the presence of central heating into account in reaching his decision.

I apologise for the complexity of my response to the amendment, and I see the noble Baroness, not unusually, frowning when I speak. Perhaps I may summarise very briefly what I am undertaking the Government will do at Report stage. We do not accept that decisions should be taken away from the Secretary of State and left to local authorities; they must remain with the Secretary of State. We do accept that the test of suitability should be simplified by the exclusion in the normal case of minor internal design features. such as bathroom and kitchen fittings. On this we are in substantial agreement with the noble Baroness's amendment. We think, however, that access to shopping and public transport facilities should also be taken into account.

On the question of tenants' improvements, we are prepared to go some way to meet the noble Baroness's point, but we do not accept that improvements carried out by a predecessor in title of the present tenant should be taken into account. On mechanics, we propose that the list of prescribed features should be issued in regulations rather than embodied in primary legislation. The history of this issue suggests that this may not be the last time we shall want to make changes. I hope your Lordships will agree that this is a reasonable and open-minded response to the noble Baroness's amendment.

3.30 p.m.

Baroness Stedman

The Minister has certainly come forward with some suggestions and has obviously been concerned about the amendment which the noble Baroness has proposed. It is a little difficult at this stage, from just hearing them by the spoken word, to know exactly what will appear at Report stage and therefore what we ought to do about this amendment this afternoon. But I hope that the Minister and your Lordships' Committee appreciate the concern that there is among the local authorities as to how this matter has been handled up to this point in time.

There is a great deal of dissatisfaction with the way that the Secretary of State has determined. or otherwise, whether or not these are genuine old people's dwellings. The local authorities really are getting into trouble over it, because there are so many more older people now and their number is growing at a fast rate. I believe that the estimate is 25,000 a year for the next 10 years over 85. Those people are all going to need housing of some kind and, if we cannot provide the type of old people's dwellings that they need, then they will either have to go into homes and be cared for by the social services, or they will continue to occupy a house which could be much better occupied by a family.

The local authorities have been replying to the Harrogate questionnaire, which was referred to by the noble Baroness, and we are not in a position to say exactly who said what. But we know that in one case a local authority replied that they were disturbed at the trend to approve sales and said, We have only had one case where the Secretary of State has supported our submission to him, against 20 who have been determined in favour of the tenant". Another local authority referred to the provision of the electrical outlets at the raised height mentioned by the noble Baroness and to suitable locks on the toilet and bathroom doors. In that particular case, the council had installed the speech call system in the dwelling that was under consideration and had already decided to extend the mobile warden system to cover that area.

In South Cambridgeshire, which is part of my own manor, as it were, the authority has said that it is being seriously affected by the loss of housing stock because it comprises 101 small villages without a town, and the stock in each of those villages is therefore quite small to begin with. That has meant that those requiring council accommodation are being forced to leave the village in which they and their families have had links, unless they are prepared to wait years and years for accommodation. The authority says that it has been particularly concerned about the loss of accommodation which has been adapted for the elderly and which has not been exempted from the right to buy. Another rural community council says that the sale of the dwellings, particularly in these small rural communities where, with cutbacks in housing capital investment, there is no possibility of their replacement, is a loss that cannot be recovered.

We have a whole host of these comments from local authorities, and while I think I detected a partial acceptance at any rate from the Minister that the criteria are not right, I consider he is expecting rather much of us at this time in asking us not to press this amendment this afternoon but to wait to see what good comes out at Report stage. If we pass this amendment this afternoon, there is nothing at all to prevent the Minister from bringing forward his own amendment at the next stage. If it is better than ours, we on this side of the Chamber (and I am sure all noble Lords) would very happily change our minds and accept the Minister's amendment. But it seems to me that we have to do something to try to tighten up the ease with which this elderly persons' accommodation has been sold over the past two or three years.

The survey of the Institute of Housing and the Harrogate survey highlighted the very deep concern that these valuable stocks of property, which for many years have been let exclusively to elderly tenants and in many cases were built for that purpose by former urban and district councils, might eventually be depleted because of the difficulty of meeting the criteria from the Secretary of State. Many local authorities will be faced with a serious problem in accommodating these people when their numbers rise and the number of units available falls. I believe that we have to strike a balance between the rights of the individual tenants to buy their own homes and the needs of the wider communities, particularly those with special needs. At present, the balance is in favour of the right to buy these properties, and the local authorities are being deprived of the means of meeting the needs of the elderly citizens in their communities. I hope that the Committee will pass this amendment this afternoon.

Lord Hylton

I was very glad to hear that there will be a government amendment at Report stage. Obviously we cannot know exactly what it will be until we see it, but I am delighted to be able to follow the noble Baroness, Lady Stedman, principally because I thought she brought us back to the principles at stake and to the underlying situation.

We are faced with a large and rising demand and a small supply which is liable to be diminished all the time by sales, by constraints on building, by planning problems and by 101 factors which militate against the rapid production of an adequate number of houses and flats suitable for old people. I know perfectly well that in my own village we have been perhaps rather more successful than some other villages in having a supply of bungalows. They can always be filled, either by the local people or by relatives of local people who wish to return to the village.

In preparation for this debate, I consulted the director of a large association providing specialised old peoples' dwellings throughout the United Kingdom, from Dundee in the North to Bognor Regis in the South, with large concentrations on Merseyside and in the London area. She told me—and this was the answer I thought she would give—that wherever she has a scheme there is always a waiting list. So there can be no doubt about the strength of demand and the relatively poor amount of supply.

We need to protect what we have both in the cities and in the rural areas and villages, as the noble Baroness, Lady Stedman, so correctly pointed out from her experience of East Anglia. As has already been said, we would not prejudice the position in any way if we accept the amendment that is before us now. I am glad that I put my name to it, and I still wish to support it.

Lord Seebohm

As president of Age Concern, a position I have held for 15 years, I feel I must add my voice in support of this amendment. Of course a great many old people would want to buy. In five years' time they could make a handsome tax-free profit to pass on to the next generation. Of course they will want to do it. But very few people in the Committee seem to have thought about the landlord. He, she, or whoever it may be, has put in considerable effort to modify the property and to make it comfortable and suitable for old people, and I think they would be bitterly disappointed and shattered to find that after all that effort, even though it has not necessarily cost vast sums of money, the property was no longer going to be available for old people.

Lord Skelmersdale

That is exactly why I made the offer I did in my initial response to the amendment. It is most important that we all agree to get it right and have an objective test which is agreed not only by noble Lords in all parts of the Chamber—and we have all agreed that we need it—but is also agreed through consultation with the local authorities. That is why I am proposing, unlike the noble Baroness, that the form that should take is to have an order-making power which prescribes regulations. As time goes on, that might well need to be changed—exactly the purpose for which order-making powers are provided in the constitution. There would be full consultation at each and every stage.

I suggest to the Committee that that is the right way to go forward rather than to move in a rush, as it were, in either direction, either towards the amendment of the noble Baroness or indeed towards my proposal. There is nothing to stop the noble Baroness or any noble Lord putting down exactly the same amendment at Report stage, and then we can have the two side by side and consider them in that light. That might perhaps be a very much more appropriate way than writing this amendment into the Bill now and then seeking to take it out on Report, a practice which noble Lords regularly condemn the Government for even considering, let alone doing.

Baroness David

It is of course satisfactory that the Minister realises that the present position is very unsatisfactory. If the Government were intending to change things and to put down an amendment, it is rather a pity that it was not put down for us at the Committee stage so that we could see it. It is very difficult to realise its full implications from what has been said. Our amendment has been down since the end of July, so the Government have had plenty of time to consider it.

I feel that the situation would be very much better if the Committee accepted the amendment this afternoon. We have that amendment before us. The result of the courts or the Secretary of State being the final arbiter of this matter is very different. We are going to wait for orders and it will take a long time. The housing stock is being depleted all the time. It is a serious situation. So I would ask the Committee to support this amendment.

We shall have a further opportunity of looking at the Government's amendments later and then we can really consider the situation. But I should very much like to have this written into the Bill so that we know—and hope—that something very materially different will happen.

3.40 p.m.

On Question, Whether the said amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 117; Not-Contents, 105.

DIVISION NO. 1
CONTENTS
Airedale, L.	Aylestone, L.
Amherst, E.	Banks, L.
Annan, L.	Beaumont of Whitley, L.
Ardwick, L.	Beswick, L.
Attlee, E.	Blease, L.

Blyton, L.	Mackie of Benshie, L.
Bonham-Carter, L.	McNair, L.
Bottomley, L.	Mais, L.
Brockway, L.	Manchester, D.
Bruce of Donington, L.	Mayhew, L.
Chitnis, L.	Mishcon, L.
Cledwyn of Penrhos, L.	Molson, L.
Collison, L.	Morton of Shuna, L.
Darcy (de Knayth), B.	Munster, E.
David, B.	Murray of Epping Forest, L.
Davies, L.	Nathan, L.
Dean of Beswick, L.	Nicol, B.
Diamond, L.	Phillips, B.
Donaldson of Kingsbridge, L.	Pitt of Hampstead, L.
Elwyn-Jones, L.	Ponsonby of Shulbrede, L.
Ennals, L.	[Teller.]
Ewart-Biggs, B.	Rathcreedan, L.
Ezra, L.	Reilly, L.
Falkland, V.	Ritchie of Dundee, L.
Fisher of Rednal, B.	Roberthall, L.
Flowers, L.	Robson of Kiddington, B.
Foot, L.	Rochester, L.
Gallacher, L.	Ross of Marnock, L.
Galpern, L.	Rugby, L.
Gladwyn, L.	Sainsbury, L.
Graham of Edmonton, L.	Seear, B.
Grey, E.	Seebohm, L.
Grimond, L.	Sefton of Garston, L.
Hampton, L.	Serota, B.
Hanworth, V.	Shackleton, L.
Harris of Greenwich, L.	Shepherd, L.
Henderson of Brompton, L.	Silkin of Dulwich, L.
Henniker, L.	Simon, V.
Heycock, L.	Soper, L.
Houghton of Sowerby, L.	Stallard, L.
Hughes, L.	Stedman, B. [Teller.]
Hunt, L.	Stewart of Fulham, L.
Hylton, L.	Stoddart of Swindon, L.
Hylton-Foster, B.	Strabolgi, L.
Ingleby, V.	Taylor of Blackburn, L.
Jacques, L.	Taylor of Gryfe, L.
Jeger, B.	Taylor of Mansfield, L.
Jenkins of Putney, L.	Tordoff, L.
John-Mackie, L.	Underhill, L.
Kearton, L.	Vernon, L.
Kennet, L.	Wallace of Coslany, L.
Kilmarnock, L.	Walston, L.
Kinloss, Ly.	Wells-Pestell, L.
Lawrence, L.	Whaddon, L.
Leatherland, L.	White, B.
Llewelyn-Davies of Hastoe, B.	Williams of Elvel, L.
Lloyd of Hampstead, L.	Wilson of Langside, L.
Lockwood, B.	Wilson of Rievaulx, L.
Lovell-Davis, L.	Winstanley, L.

NOT-CONTENTS
Ailesbury, M.	Cottesloe, L.
Ampthill, L.	Cox, B.
Beaverbrook, L.	Cullen of Ashbourne, L.
Belhaven and Stenton, L.	Davidson, V. [Teller.]
Bellwin, L.	De Freyne, L.
Beloff L.	De La Warr, E.
Belstead, L.	Denham, L. [Teller.]
Bessborough, E.	Denning, L.
Blyth, L.	Derwent, L.
Boyd-Carpenter, L.	Ebbisham, L.
Brookes, L.	Effingham, E.
Brougham and Vaux, L.	Ellenborough, L.
Broxbourne, L.	Elliot of Harwood, B.
Butterworth, L.	Elliott of Morpeth, L.
Byron, L.	Elton, L.
Caccia, L.	Fanshawe of Richmond, L.
Caithness, E.	Ferrier, L.
Cameron of Lochbroom, L.	Fraser of Kilmorack, L.
Campbell of Alloway, L.	Gainford, L.
Campbell of Croy, L.	Gisborough, L.
Cawley, L.	Glanusk, L.
Chelwood, L.	Glenarthur, L.
Coleraine, L.	Gray of Contin, L.
Constantine of Stanmore, L.	Gridley, L.

Grimthorpe, L.	O'Brien of Lothbury, L.
Hailsham of Saint	Orkney, E.
Marylebone, L.	Orr-Ewing, L.
Halsbury, E.	Pender, L.
Harvey of Tasburgh, L.	Porritt, L.
Hesketh, L.	Portland, D.
Hives, L.	Portsmouth, E.
Hooper, B.	Reay, L.
Kinnaird, L.	Reigate, L.
Knollys, V.	Renton, L.
Lane-Fox, B.	Rodney, L.
Lauderdale, E.	St. Davids, V.
Layton, L.	Sandys, L.
Long, V.	Shannon, E.
Lucas of Chilworth, L.	Sharples, B.
Lurgan, L.	Shaughnessy, L.
McFadzean, L.	Skelmersdale, L.
Macleod of Borve, B.	Sudeley, L.
Mancroft, L.	Terrington, L.
Manton, L.	Thorneycroft, L.
Margadale, L.	Thanmire, L.
Merrivale, L.	Trefgarne, L.
Mersey, V.	Trenchard, V.
Milverton, L.	Ullswater, V.
Monk Bretton, L.	Vickers, L.
Mottistone, L.	Vivian, L.
Murton of Lindisfarne, L.	Westbury, L.
Newall, L.	Whitelaw, V.
Nugent of Guildford, L.	Young, B.

Resolved in the affirmative, and amendment agreed to accordingly.

3.49 p.m.

Lord Skelmersdale

moved Amendment No. 2: Page 2, line 1, after ("is") insert (",(subject to any order under subsection (2A))"). The noble Lord said: I shall speak also to Amendments Nos. 5, 10, 306 and 314. As the Committee will readily see, Amendment No. 5 is the substantive amendment and provides for the Secretary of State to have power to provide by order for higher discounts to be available to tenants exercising the right to buy. Currently, a tenant of two years' standing qualifies to buy at a discount of 32 per cent., but if the tenant has more than the basic two years he or she qualifies for extra discount, in steps of 1 per cent. for each additional year, up to a maximum of 60 per cent. Clause 1, of course, provides for the discount scale for flats to run from a minimum of 44 per cent. by 2 per cent. steps to 70 per cent. The proposed power will enable the minimum and the maximum discount and the size of the steps to be increased by order.

Amendment No. 10 makes parallel provision for Scotland. The reason for making this amendment in the Housing and Planning Bill rather than the Housing (Scotland) Bill is simply that of timing. The Scottish Bill has now passed the point in its parliamentary career at which this subject could have been introduced.

I should draw the Committee's attention to the important safeguards in the amendment. The power to make orders is to be exercisable only with the consent of the Treasury, and orders are to require affirmative resolutions of both Houses of Parliament. Any orders which may be made will therefore be subject to due financial and parliamentary scrutiny.

The reason for seeking this power is that it seems sensible to have flexibility to adjust the right-to-buy discount scales further in the light of experience. This is the third time that Parliament has legislated on this subject: The Housing Act 1980 provided for a maximum discount of 50 per cent. The Housing and Building Control Act 1984 raised this to 60 per cent. and now we are providing for higher discount rates for flats. It would not be surprising if at some point it seemed right to change the discount scales again. If that were so, it would be a pity if the pressures of the legislative programme held up the change. That is why we propose a power to make changes by order, subject, as I have said, to parliamentary scrutiny through the affirmative resolution procedure.

There are no proposals for further changes at the moment and it would be misleading if I were to volunteer suggestions as to the kind of changes which might seem right at some point in the future. Such suggestions would naturally create expectations which might be disappointed. At the same time, I suggest that it might be short-sighted to close our minds to the possibility that further changes in the right-to-buy discount will be justified.

The public housing sector is very different now from what it was in 1980. It is only to be expected that in two, four, six years, or however long is the time, the problems and opportunities will look very different from what they are now. That is why it seems sensible parliamentary administration to provide for any future changes to be made without the need for main legislation, yet with adequate parliamentary scrutiny. I beg to move.

Baroness David

I think it will come as no surprise to the Committee that we do not like this amendment. We showed in the vote on the previous amendment that we have some suspicion about what the Secretary of State might do, and I think we are again suspicious on this amendment. We do not want to put this power into his hands.

The amendment is opposed by the Association of District Councils and the Association of Metropolitan Authorities. The level of discount is an extremely controversial matter, as was shown as the Bill progressed through another place. I do not know how many noble Lords have taken the trouble to read the Committee stage in another place, but there was long discussion about Clause 1 and the level of discount.

Discounts will fundamentally affect local authority housing strategies and plans, and also their financial provision. They want to know where they stand. If discounts are determined by order they have to be accepted or rejected; they cannot be amended. There is no safeguard at all, but the Government clearly intend that such orders will be detailed and may make different provision with respect to different cases or classes of property. Therefore, we do not want to see changes made in that way. If they have to come forward we think they should be brought forward in a housing Bill, as the Government are doing at the moment.

We cannot imagine that the Government would bring forward this amendment unless they intend to use the powers in it, although the Minister says that there is no such intention at the moment. Well, they have no need because they have this Bill. Given that the Government have consistently sought to raise the level of discount, the accumulation of discount and to reduce the discount repayment period, the effect of the amendment will be to give the Government licence to extend this even further in future.

It will be interesting to see whether this is to be part of the Government's pre-election strategy. The Minister for Housing said at the Tory Party conference today that 1 million more home owners will be created in the next five years. I suppose the Government could use this amendment to hasten that process. As I said, we do not believe that the discount should be able to be raised by order. There would be no parliamentary control. Therefore, we object to this amendment.

Lord Houghton of Sowerby

The Committee should consider whether this is a proper amendment to bring before it. The relationship between the two Houses on matters of finance and expenditure are becoming very confused. When we receive a finance Bill from the House of Commons that contains many provisions that have nothing to do with taxation but a great deal to do with civil liberties we are prevented from doing anything about it because Mr. Speaker has certified the whole Bill as a money Bill.

Today we are considering an amendment to the Bill which indirectly affects public expenditure. This place should not be used as a kind of long stop for the Government to introduce in a Bill provisions which should have been introduced in another place. These are matters of some importance. I am against the amendment because it relates to something to which I strongly object in principle. We are engaged in a giveaway exercise. It is a give-away exercise of public money. That is what the Bill is about. It is intended to induce people to acquire public assets at discounted value for whatever reason can be advanced, including the Government's own interests. There is another aspect involved—the public interest. Therefore, I am very much against the amendment.

I certainly endorse what was said by my noble friend Lady David about the extent to which government amendments are being introduced into Bills which have already passed through the House of Commons. Either the Government have not properly thought out their own legislation, or the House of Commons has, for various reasons, been unable to discharge its constitutional function. We in this House are given the job of going over second thoughts on the part of the Government on matters which the other place has not really considered or has been prevented from considering by procedural motions. That is a very unsatisfactory way of doing business and on those grounds I strongly object to this amendment.

Lord Boyd-Carpenter

For once—and it is a very rare occasion—the noble Lord, Lord Houghton of Sowerby, is on a bad constitutional point. If the noble Lord is right, your Lordships' House is not entitled to legislate on practically any matter which has financial consequences. If that rule were to be established the next few weeks in this House would admittedly be very much easier for your Lordships, individually, but we should be emasculating the legislative power of this House to an unacceptable degree. Therefore, despite what the noble Lord, Lord Houghton of Sowerby, said I hope the Committee will be prepared to consider this amendment on its merits.

As regards the position of another place, that is perfectly safeguarded. If the Committee accepts this amendment it will have to go back to the other place as a Lords' amendment and either be approved or disapproved of. Therefore, the consent of the other place to the Bill in its amended form would be required if it be amended on these lines, as I hope it will be.

Of course one fully understands the dislike of the Opposition Front Bench for this proposal. In their heart of hearts they do not like to encourage home ownership; they much prefer to see a large number of local authority tenants and they instinctively dislike what I and a good many of my noble friends like a great deal, which is the sense of independence that ownership of one's own home gives to the citizen. The Government have a very good record of encouraging home ownership. In parenthesis I may say to my noble friend the Minister that they would have an even better one if they were to decide, as I hope one day they will do, to exempt a person's principal home from inheritance tax so that the individual concerned can be sure of passing it on to his family or descendants without being mulcted by tax at the very high valuations which the Inland Revenue now place on property. That would be a very considerable contribution. However, that is a digression from this point.

The point on this amendment is as to whether the precise percentages of discount reigning at the moment shall be enshrined in provisions which can only be altered by primary legislation. Supposing that it were the judgment of the government of the day some years hence that there ought to be another 2 per cent. or 5 per cent. on the discount. It really would be absurd to expend parliamentary time on a full-scale parliamentary Bill passing through both Houses in order to deal solely with that issue. Any Members of the Committee who have any experience of government know perfectly well that the knowledge that a full-scale Bill was required would be an almost fatal handicap in going ahead with that project. That of course is why those Members opposite rather like the present position.

The provision in this amendment gives flexibility. Despite what the noble Baroness, Lady David, has said, it does not exclude parliamentary control. As I understand it, it is an amendment which provides that these changes be subject to an affirmative parliamentary resolution. The noble Baroness says—and I have often heard this said in similar circumstances—that that is of no use, because one cannot amend an affirmative resolution. In many cases that is a quite valid objection, but, with respect, it is not so here. There will be a proposition put to Parliament that the percentage discount shall be increased by x per cent. That is a clear-cut issue, the answer to which must be either aye or no. We should get Parliament into an absurd position if Parliament were to seek to argue whether or not that percentage is precisely the right figure. It is the responsibility of the Government, who have the ultimate responsibility for public finance, to put forward such a proposition, and then it will be the responsibility of Parliament to either accept or reject it. Parliament would have the power to reject it completely, and no doubt if it thought that the Government were acting wrongly it would do so. Therefore I personally am very glad indeed to see this amendment and I hope that the Committee will accept it.

Lord Bellwin

I wonder whether I might make two points on this subject. In the first instance I think it is not a fair point to make to complain that the Government are bringing forward an amendment that may not have been discussed in another place. I know very well that representations to the Government are made continually at all times, often long after a Bill has passed through another place, and the Government then may decide that in the light of those representations they will in fact bring forward amendments. I think that that is only right and proper. It would certainly be vigorously opposed by those Members sitting opposite, were it not so.

So here we have a case in which the Government have brought an amendment forward, presumably because they feel that it is something which would improve the operation of the measure, and while we may not like the proposal it is really not on to criticise them for doing so. I am sure that there is a mass of precedent to justify it.

The other point I want to make is that this is a very flexible tool. I wonder whether noble Lords opposite appreciate that it will give any government of any complexion the right to make adjustments to the rate of discount without primary legislation. Therefore, unless they are so determined in their own way, were they ever to come to office, either to do away with the right to buy or materially to reduce the percentage, then in fact they need not be so concerned at all about this proposal. I suspect that it is their dislike of the right to buy which is so strong and they are concerned at the extension of it by means of increasing the discount and so on—which, incidentally, I feel is a very fair proposal, because we are talking here of flats and of people who have occupied these dwellings for a great number of years; and, unlike dwelling-houses, flats have certain additional costs in that there are common areas that have to be maintained and so on.

Although one would like to debate the subject at greater length, and indeed we shall, I hope, have the chance to do so on other amendments, I myself am very comfortable with this particular amendment by the Government and I hope that the Committee will support it.

Lord Dean of Beswick

I should like to come in here, very briefly, to deal first with the points made by the noble Lord, Lord Bellwin—and we have quite often clashed in local government. He is not quite correct in this particular instance because the Minister who resigned from office, the noble Lord, Lord Elton, during the speech he made at Second Reading, gave as his sole reason for the introduction of the high discount the fact that there was a disappointing response from people wishing to buy the flats in which they lived. The previous Minister made no mention at all of any pressures from outside to increase it. I think that response was the sole basis, which debunks the point made by the noble Lord, Lord Boyd-Carpenter. I do not think that the sale of council houses has anything at all to do with the question of high principle.

I have always been against this measure where there is a scarcity of housing, and I have always been in favour of it where there is a surplus of housing. Our main argument in the past has not, in a sense, been against the sale of council houses, but against the enforced sale of council houses. We viewed it as a local authority objective in that local elections could be fought on the local authority's housing policy. If I were still chairman of the housing committee in Manchester where there is a waiting list of nearly 30,000 families, I would still take the same view and I would still not want to be forced to sell council houses when I do not really have any to sell.

I think it is quite clear, as I said earlier to the Committee, that if they take the trouble to read what the noble Minister said in the Second Reading debate, they will see that this is a response from the Government to try to ginger up the sale of council flats because the total number of sales of council houses or flats is now tapering off. It is moving downwards having passed its peak, and this is because in the main the best properties have been purchased. So I do not think that it is a question of high principle.

I think I am right in saying that the noble Lord, Lord Bellwin, implied that this increased discount relates only to the purchase of flats. I do not see anything in the Bill which says that. I think that it relates to the purchase of all types of municipal housing, whether flats or houses. I have said before, and I repeat, that the sole reason given by the Minister at the Dispatch Box during the Second Reading of this Bill was to try to encourage people who were not attracted towards buying their council flat, to do so.

Baroness Stedman

On these Benches, we are not against the right to buy council houses, flats and so forth; we are against the selling of old people's dwellings, as we have just demonstrated. We are concerned that, if houses and flats are to be sold, there should still be an adequate pool of rented accommodation for those people who need to rent, be it from a housing association, a trust or a local authority.

We, like the noble Lord who has just spoken, feel that the discount is much too high. I have been told—I am subject to correction because I have no experience as an estate agent or anything like that—that the average value of these flats could be put at £12,500. If we take off the 70 per cent. discount, that brings down the price to £3,750. If the purchaser then takes up a council right to a mortgage, with no receipt to the council, another 25 per cent. comes off, making the price £2,800 for a £12,500 flat, of which councils receives 20 per cent. That is the prescribed proportion which they have to spend. That is £560 for a £12,500 flat. That means that a council must sell about 70 flats before it can rebuild another one. I do not think that is equitable or fair.

Lord Bellwin

That is not correct. Councils receive far more than that. Councils have permission to spend 20 per cent. of the receipts. That is different from what they receive. They receive much more. The balance of what councils receive has to stay, at least at present, in their accounts. It can be used to reduce their interest debt burden. They obtain the whole amount, but at the moment they may apply only 20 per cent. of it to capital spending.

Baroness Stedman

The councils receive only £2,800 to start with. They are not left with very much.

Lord Bellwin

There is a difference between £2,800 and £500, at least so far as I am aware. If the noble Baroness will do as the noble Lord, Lord Dean of Beswick, suggested and refer to what I said on Second Reading, she will see that I expressed concern about the 20 per cent. I hope that something can be done to increase that figure because I think that it would help local authorities if we could reach that point within the context of the national economy.

I wish to comment on a point made by the noble Lord, Lord Dean of Beswick. The amendment is about the Government's wish to do something by affirmative order as opposed to primary legislation. It is that which we are discussing. The noble Lord, Lord Houghton of Sowerby, asked whether it was right for the Government to bring forward amendments on a matter which may not have been debated in another place. I said, and I say again, that they are not just entitled but are obliged to do that if they feel that the weight of representations made to them makes it something that they should do.

4.15 p.m.

Baroness David

We have wandered a little off Amendment No. 5. We are not talking about percentages; we are talking about whether the Secretary of State has the right to change them by order. That is what we object to. We object to giving the power to the Secretary of State when we should have very little control over what happens.

I should like to say to the noble Lord, Lord Boyd-Carpenter, that the Labour Party is not opposed to home ownership. It is, as the noble Baroness said, opposed to the right to buy if there will be no houses left to rent. It is in favour of having a pool of rented housing, but that is becoming smaller and smaller. So far as I can see from the amendment, the Secretary of State will have only the right to put up the discount. He will not have the right to put it down. There will not be the flexibility suggested by the noble Lord, Lord Bellwin, who has now left his place. I repeat that we do not like the idea of this power going to the Secretary of State. We shall oppose the amendment.

Lord Skelmersdale

I never expected, perhaps because I am naïve, that when I proposed the amendment we should have a whole debate, short though it has been, on the exercise of the right to buy. But each noble Lord has done just that, perhaps I may say that exercising the right to buy does not make one more house available for letting. It does not make any difference to this country's housing stock.

I do not want to take issue with my noble friend Lord Boyd-Carpenter, especially as he has supported me sturdily on this amendment, on exempting an individual's house from inheritance tax. However, I take the point that there may well be other reasons for doing just as he suggested. I shall bear the point firmly in mind.

Lord Boyd-Carpenter

I referred to inheritance tax only in regard to the broad aspect of the matter—that the Government favour home ownership. I ventured to suggest to my noble friend that if the Government favour the encouragement of home ownership, another and effective way of doing so would be for the Chancellor of the Exchequer to be persuaded to act as I suggested.

Lord Skelmersdale

Yes, it would. Perhaps I may be allowed to turn to the amendment. The Committee has questioned whether it is right that the Government should ask either House of Parliament, or both Houses, to agree to an order-making power in a case such as this. This Bill represents the second time that the Government, in primary legislation, have asked this Chamber to change the discount structure. As my noble friend Lord Elton said on Second Reading, there must be a simpler way. My noble friend Lord Boyd-Carpenter said exactly that. There is a simpler way. That is what I have presented to the Committee in the amendment.

It seems ridiculous, as my noble friends have pointed out, to have to wait for a suitable legislative vehicle each time the Government want to change something as often as we need to. Conditions in the housing market are changing, and changing rapidly. The evidence for that is before the Committee. The Bill contains the third discount structure that this Chamber has considered—one in 1980, one in 1984 and the one that we are discussing today. Changes are needed at regular intervals. That is the kind of thing that affirmative instruments are for.

Some Members of the Committee have expressed concern that because orders cannot be amended and because, by convention, this Chamber does not reject those that have been approved in another place, that is the end of the matter. I concede those points. We all know that that is true. That does not mean that the Committee can do no other than have a jolly good moan at the Government by way of a reasoned amendment. It is often conveniently forgotten that this Chamber has a normal method of controlling government aspirations when it wants to, to which it resorts quite frequently. It is less sensational than voting but even more effective.

It is not rare for this Chamber to put the Minister in charge of a debate in a position where he has no option but to withdraw the order. Before any noble Lord seeks to interrupt me, let me say that of course we all know that the Government can re-lay the order at any time, even, occasionally, on the same day. I agree, but the power of this Chamber is truly formidable. In recent years, on no fewer than four occasions, the Government did not subsequently lay any order.

The use of an affirmative order does not deny this Chamber an effective voice in what that order contains. I cannot tell the Committee, my noble friends cannot tell me and Members of the Committee on the Opposition Benches cannot tell us, what that order will contain, but nonetheless we are talking about the propriety of having such an order-laying power in the first place. My noble friend Lord Bellwin spoke of precedents. Was it improper when, in 1982, the Government inserted Section 7 in the Social Security and Housing Benefits Act—the provision to vary the rate of payment of statutory sick pay by affirmative instrument? Was it unreasonable when the Labour Government provided that under the Redundancy Rebates Act 1977 variation of rebates should be, again, by the affirmative resolution of both Houses?

The noble Lord, Lord Houghton of Sowerby, talked about the give away of public money. I suggest that that is a comparable give away of public money. Even more than these, was it improper when the last Labour Government provided that prescription charges should be amended by order and did not even make it an affirmative instrument? In other words, it would not have had to be debated in both Houses. It is debated only if Members of another place or individual Members of your Lordships' House seek to debate it by putting down a Prayer against it. No, I submit to the Committee that there is nothing wrong with either the propriety or the constitutionality of the Government's intention to increase discounts by affirmative resolution of both Houses.

Finally, let me repeat a point that I made in my opening speech. All government departments, whatever the government in power, suffer from what one of my right honourable friends sometimes calls—I say this with all due respect and deference to my noble friend Lord Boyd-Carpenter—the dead hand of the Treasury. By that, he means that this great department of state only accepts totally compelling reasons before putting its weight behind an intended action of government departments. So the point that I made at the beginning that this new clause says, may with the consent of the Treasury", is a very real safeguard indeed. The Government cannot lay an order without that consent being given. With those two important safeguards, the most important being that of your Lordships' House, I beg to move.

4.21 p.m.

On Question, Whether the said amendment (No. 2) shall be agreed to?

Their Lordships divided: Contents, 117; Not-Contents, 104.

DIVISION NO. 2
CONTENTS
Ailesbury, M.	Campbell of Croy, L.
Ampthill, L.	Carnegy of Lour, B.
Beaverbrook, L.	Cawley, L.
Belhaven and Stenton, L.	Chelwood, L.
Bellwin, L.	Coleraine, L.
Beloff, L.	Constantine of Stanmore, L.
Belstead, L.	Cottesloe, L.
Bessborough, E.	Cox, B.
Boyd-Carpenter, L.	Davidson, V. [Teller.]
Brookes, L.	De Freyne, L.
Brougham and Vaux, L.	De La Warr, E.
Broxbourne, L.	Denham, L. [Teller.]
Buckinghamshire, E.	Derwent, L.
Butterworth, L.	Ebbisham, L.
Byron, L.	Ellenborough, L.
Caithness, E.	Elliot of Harwood, B.
Cameron of Lochbroom, L.	Elliott of Morpeth, L.
Campbell of Alloway, L.	Elton, L.

Fanshawe of Richmond, L.	Milverton, L.
Ferrers, E.	Monk Bretton, L.
Ferrier, L.	Mottistone, L.
Fortescue, L.	Moyne, L.
Fraser of Kilmorack, L.	Munster, E.
Gisborough, L.	Murton of Lindisfarne, L.
Glanusk, L.	Newall, L.
Glenarthur, L.	Nugent of Guildfor, L.
Gray, L.	O'Brien of Lothbury, L.
Gray of Contin, L.	Orkney, L.
Greenway, L.	Orr-Ewing, L.
Gridley, L.	Pender, L.
Grimthorpe, L.	Porritt, L.
Hailsham of Saint	Portland, D.
Marylebone, L.	Portsmouth, E.
Halsbury, E.	Rawlinson of Ewell, L.
Harmar-Nicholls, L.	Reay, L.
Harvey of Tasburgh, L.	Reigate, L.
Hesketh, L.	Renton, L.
Hives, L.	Rodney, L.
Hooper, B.	Romney, E.
Hylton-Foster, B.	St. Davids, V.
Kinloss, Ly.	Sandford, L.
Kinnaird, L.	Sandys, L.
Kinnoull, E.	Shannon, E.
Knollys, V.	Sharples, B.
Lane-Fox, B.	Shaughnessy, L.
Lauderdale, E.	Skelmersdale, L.
Layton, L.	Sudeley, L.
Long, V.	Terrington, L.
Lucas of Chilworth, L.	Thorneycroft, L.
Lurgan, L.	Thurlow, L.
McFadzean, L.	Tranmire, L.
Macleod of Borve, B.	Trefgarne, L.
Manchester, D.	Trenchard, V.
Mancroft, L.	Ullswater, V.
Manton, L.	Vickers, B.
Margadale, L.	Vivian, L.
Marshall of Leeds, L.	Westbury, L.
Merrivale, L.	Whitelaw, V.
Mersey, V.	Young, B.

NOT-CONTENTS
Airedale, L.	Herris of Greenwich, L.
Amherst, E.	Henderson of Brompton, L.
Ardwick, L.	Heycock, L.
Attlee, E.	Houghton of Sowerby, L.
Aylestone, L.	Hughes, L.
Banks, L.	Hutchinson of Lullington, L.
Beaumont of Whitley, L.	Hylton, L.
Beswick, L.	Jacques, L.
Blease, L.	Jeger, B.
Blyton, L.	Jenkins of Putney, L.
Bonham-Carter, L.	John-Mackie, L.
Bottomley, L.	Kearton, L.
Brockway, L.	Kennet, L.
Bruce of Donington, L.	Kilbracken, L.
Chitnis, L.	Kilmarnock, L.
Cledwyn of Penrhos, L.	Leatherland, L.
Collison, L.	Listowel, E.
David, B.	Llewelyn-Davies of Hastoe, B.
Davies, L.	Lloyd of Hampstead, L.
Dean of Beswick, L.	Lloyd of Kilgerran, L.
Diamond, L.	Lockwood, B.
Donaldson of Kingsbridge, L.	Lovell-Davis, L.
Elwyn-Jones, L.	Mackie of Benshie, L.
Ennals, L.	McNair, L.
Ewart-Biggs, B.	Mais, L.
Ezra, L.	Mayhew, L.
Falkland, V.	Meston, L.
Fisher of Rednal, B.	Monson, L.
Flowers, L.	Morton of Shuna, L.
Foot, L.	Nathan, L.
Gallacher, L.	Nicol, B.
Galpern, L.	Paget of Northampton, L.
Gladwyn, L.	Pitt of Hampstead, L.
Graham of Edmonton, L.	Ponsonby of Shulbrede, L.
Grey, E.	[Teller.]
Grimond, L.	Rathcreedan, L.
Hampton, L.	Roberthall, L.
Hanworth, V.	Robson of Kiddington, B.

Rochester, L.	Strabolgi, L.
Ross of Marnock, L.	Taylor of Blackburn, L.
Rugby, L.	Taylor of Mansfield, L.
Sainsbury, L.	Tordoff, L.
Seear, B.	Underhill, L.
Sefton of Garston, L.	Wallace of Coslany, L.
Serota, B.	Walston, L.
Shackleton, L.	Wells-Pestell, L.
Shepherd, L.	Whaddon, L.
Silkin of Dulwich, L.	White, B.
Simon, V.	Wilson of Langside, L.
Stallard, L.	Wilson of Rievaulx, L.
Stedman, B. [Teller.]	Winstanley, L.
Stewart of Fulham, L.	Ypres, E.
Stoddart of Swindon, L.

Resolved in the affirmative and amendment agreed to accordingly.

4.30 p.m.

Baroness David

moved Amendment No. 3: Page 2, line 6, leave out ("44 per cent. plus two per cent.") and insert ("32 per cent. plus one per cent."). The noble Baroness said: In moving Amendment No. 3, I shall be speaking also to Amendments Nos. 4 and 6. These amendments are still dealing with discount. They seek to remove the further increase in discount to 44 per cent., rising to 70 per cent., and to put back the incremental rise in discount accumulation to 1 per cent. for flats. That is to make the situation in relation to flats similar to that for houses.

The Government justify the increase by reference to the fact that very few of the dwellings sold to date are flats—I think that it is about 3 per cent. to 4 per cent. of all sales—but the assumption that all flats are unpopular is quite wrong. Some are even more popular than houses. Moreover, flats are the only type of accommodation available for certain groups of people such as the single, or for childless couples. In mentioning the flats that are popular, one thinks of some in the Barbican. Even multi-storey flats can be popular. Indeed, many are, according to a national survey published by the Institute of Housing and South Bank Polytechnic. Even more surprisingly, a study of deck-access flats by Dr. Chris Bacon came to the same conclusion. Of course, some are very unpopular, particularly where there are high concentrations of such dwellings and especially if families with children have no choice.

In the Committee stage in another place, efforts were made to make a distinction between the hard-to-let flats and other flats but the efforts were not successful, so we are not attempting to do that here. But we are trying to return the position on discount to what it was before. The reason that fewer flats are sold is not only a question of popularity. Flats are more likely to house single people, both young and old. They are also more likely to house people who see their residence as temporary. I think flats are also more likely to suffer from structural defects and are not altogether a very safe bet. However, even if all flats were unpopular it is surely quite wrong to sell community assets at such huge discounts.

The noble Baroness, Lady Stedman, quoted the figure which could be left to the local authority if the maximum discount was paid and it had also to make a mortgage available to the person who had bought. That figure was very small. I think the noble Baroness said that £560 was all that would be left to spend as only 20 per cent. of what is left is allowed to be spent each year. It would therefore take the sale of around 70 dwellings to provide one new dwelling if the maximum discount and all those other considerations were taken into account. It is perhaps not very likely that there would be that many. However, it would take a great deal more money to build even one house or flat.

We shall come later to the service charge for flats. The proposals for the service charges will take up quite a lot of local authority money as well. Is it sensible to sell flats, to sell more dwellings, when homelessness is going up all the time, and the costs associated with bed and breakfast are escalating? It costs £200 to £300 a week to keep families in bed and breakfast accommodation. These are increasing all the time. The most senseless and wasteful expenditure is that on hotel bed and breakfast accommodation. It is not satisfactory for those people in it and it is a waste of public money. We have to remember that local authorities have a £6½ million capital receipts backlog, of which £3½ million is cash which they are not allowed to spend, when we have this desperate need for more houses and flats.

Dealing with Amendment No. 6, similarly we see no reason to reduce the discount pay-back period from five to three years. In Committee stage in another place, the Minister seemed to have no figures or statistics to show how many purchasers had sold before the five years were up. He said that the motive for change to three years was compassion and quoted a few cases where people had good reason to want to move. He said that the three years would still be a safeguard against abuse. That I doubt. It is perhaps all too easy for friends, relations, children—anyone—to encourage people to lend them the money if they think they are going to make a good killing in as short a time as three years. It is something of a crooks' charter. The prospect of a large capital gain after three years could well encourage the unscrupulous to forward the purchasing price.

I hope therefore that the Government will think again about these increased discounts they are offering. We feel that they are extremely unwise and not in the interest of those who are homeless and those who want to rent and do not wish, for whatever reason, to buy. I beg to move.

Lord Houghton of Sowerby

I support this amendment. It seems to me that now that the Government have the power to change these percentages by order in the amendment passed by the Committee a few moments ago, there is no reason why the review for the future should take place on a preferential and higher base of discounts for flats accommodation. It seems to me that the powers the Government now have better enable them to judge whether the existing similarity between discounts on houses and flats should continue or whether there should be special favour granted to the municipal tenants of flats.

I do not think the case for a differential in the discounts and the advantages has been made out. After all, we are dealing with the concession that is to be given to the tenants of the municipal accommodation to exercise their right to buy. This is not a Dutch auction. This is a concession to council tenants of a considerable capital sum which I think it is difficult to argue they deserve to have. After all, they have been in no different a position from that of occupants of other tenanted property. They have not had a long lease to give them the right to buy as leaseholders. They have been, on the whole, tenants of municipal accommodation on very favourable terms indeed.

I see no reason to regard offering them the right to buy as some incentive that has to be provided. We are not dealing with supplementary benefit, and with our consciences being hurt because not enough people are taking up the benefits. There is no need to "up" the benefit for the acquisition of a considerable capital sum. It should be self-evident that it is desirable to have it; and those who want it should have it on reasonable terms.

As I said a few moments ago, and little more than a few moments ago, we are dealing with a give-away exercise. It really is giving away to municipal tenants (many of whom have occupied a favourable position for so long) a gift of a capital sum on very favourable terms indeed. When we consider the discounts that are offered and the capital sum which can be realised after only a reasonable interval following purchase, they are being treated very generously indeed. On top of that is the tax concession that they will get on mortgage interest paid. Taking all in all, I think it is extremely difficult to justify this bargain to people who do not occupy a similar favourable position.

The imbalance between owner-occupation, and the greater imbalance between owner-occupation of former municipal property as against those who are occupying private tenanted property, is nothing short of a public scandal. It really is. It seems to me that politics is being turned into a bucket shop where favours are granted and where advantages are taken. Sections of the community are given advantages over others, and one presumably looks for political motivation behind it.

This is not owner-occupation by the diligence of saving and the process of safeguarding one's property, acquiring the assets for that purpose. It is in some way inspired by a desire to get rid of council accommodation altogether and to provide incentives to people to buy it. In those circumstances, I think there is no case at all for putting in the statute law at this moment any preferential rate for flats. Let them be where they are. The power for review which we have just given in this Committee can be regarded as the outlet for further consideration on equitable terms. It should not be on Dutch auction terms, where if people do not buy you give them a greater concession to encourage them, because eventually if they hold back long enough they will get it for nothing. In the circumstances I think that we should insist that this amendment be withdrawn or rejected.

4.45 p.m.

Lord Boyd-Carpenter

The noble Lord, Lord Houghton of Sowerby, with his habitual honesty and frankness, has removed the veil of discretion which the noble Baroness tried to draw over the Opposition Benches this afternoon. The noble Lord made it perfectly clear—honestly clear—that he does not like owner-purchase of council housing.

This is where there is a difference of opinion. My noble friends and the Government, as I understand it, and certainly I, regard the encouragement of home ownership and the purchase of their homes by council tenants as being a matter of great social importance. We accept that this is done and encouraged on very reasonable and fair financial terms. We think that as a matter of social policy that is right. All governments act so as to favour financially developments of which they approve. I remind the noble Lord that for years successive governments have poured billions of pounds by way of investment into the mining industry in order to maintain the miners at work and the livelihood of the mining districts. This has been done by all parties and all governments although it could be very much criticised on the grounds that the investment has been enormous and disproportionate to any possible return.

I need not weary the Committee, but where a government are pursuing a line of social policy they naturally make sure that their financial policy helps rather than hinders that. I am grateful to the noble Lord, Lord Houghton of Sowerby, for making it perfectly clear where the clash is. Members of the Committee opposite do not want local authority houses to be sold.

There was one revealing remark from the noble Baroness. She said that when homelessness was substantial it was wrong to be encouraging the sale of council houses. I wonder whether she has thought that out. When sold, those council houses will continue to be occupied; they are not demolished when sold. They are occupied by people whom the local authority itself has apparently in the past treated as suitable tenants. The stock of housing is neither increased nor decreased by one bedroom by the sale of a council house to the tenant who is in it. Nor, at any rate in the short run, is the position of the homeless in the area affected, because everybody knows that council tenants have a very high degree of security in their tenancies, and there is no question in general of their being removed to make room for somebody else. All that the homeless may be said to lose is an opportunity which may arise when the council tenant concerned dies. Given the present ever-increasing expectation of life, that is, happily, generally a very long way off.

We are obscuring our own thinking in the matter if we try to say that we should not encourage the sale of council houses because there is homelessness. We should look at it on its merits. The noble Baroness does not agree, but some of us feel that to secure a situation in which people own their home is to introduce into their lives a sense of security and stability which hardly anything else can achieve. It is one of the great successes of this Government that they have so enormously increased the number of home owners; and I for one back them in that to the full.

Lord Dean of Beswick

I have no intention of repeating the first point that I made in my previous small discourse at this Box regarding my own party's previous position concerning the sale of council houses. But here I have to say quite forcefully something that I said 12, 15 or 16 years ago when Conservative local authorities began the sale of council houses. At that time I called it a form of legalised bribery. Every time I see them up the ante to sell more council houses, I believe that it has more to do with gathering votes than with creating social justice.

The fact is that during the lifetime of this particular Government the most shabbily treated section in our community in regard to housing has been existing council tenants. I am not talking about 100 per cent. of them. Nearly 50 per cent. of council house tenants receive some form of help to pay their rent. Some tenants, in very adverse circumstances, receive total help; and some to a varying degree.

Politics apart, we have 50 per cent. of our council house tenants who under this last Government have suffered the highest increases in rents that they have to pay in any section of the community, and they have very little to show for it. They have had to bear charges against their rent for matters for which they have had no responsibility, such as the repair or removal of the industrialised systems that we used and which are now being knocked down. Some had been sold, and the people who bought them and made a bad buy are actually being subsidised by the tenants in council houses to get the discount. So it is not so immorally high as the noble Lord, Lord Boyd-Carpenter, would have us believe.

I do not know why he introduced the question of comparing subsidising the mining industry with people who wish to purchase their council houses at a discount. It is a subsidy, whether we like it or not. I wonder why the noble Lord did not include the overwhelmingly large subsidy that goes to the farming industry. We never hear any quibbles about that. It far outstrips anything that the mining industry, or any single industry in general, has got from this or any previous government.

I would be one who thought that the miners were quite misguided in the exercise they conducted some months ago in the strike and the way in which it was dealt with. But I have to say that the noble Lord, Lord Boyd-Carpenter, gave the impression that over the last few years we could suddenly have done without the mining industry and the country would still have functioned. That is nonsense.

The noble Lord, Lord Ezra, will have the figures better than I, but I think our energy output from other sources is at the most about 30 per cent. How we would have got nuclear energy and other fuel sources to provide us with the necessities of life and to drive our industry over the last few years I do not know. I do not know how we would have introduced some other facet without heavily subsidising it, and it is totally irrelevant to introduce that.

I think that my noble friend in her first appearance at the Dispatch Box referred to a statement made at the Conservative Party Conference by the Minister for Housing, Mr. John Patten. I understand that he said that if another Conservative Government are returned, there will be another million home owners in five years. Where are they going to get them from?

Are they suddenly going to invest huge sums of money in a house building programme, such as people like myself and everybody on this side of the Chamber, including the spokesmen for the Liberals and the SDP, and even some of their own staunchest supporters, have been calling for over a number of years? There was the series of reports commencing with the Duke of Edinburgh's Faith in the City, the RIBA report, the DoE's own report, and everybody has been asking for this. Are they telling us now that they are going to embark on this new house building programme? If they are not, where are they going to get the properties for these million new home owners?

I could make a suggestion, but it would not go down very well. I would start to give tenants in private accommodation—as we have said in the past—the same rights as council house tenants. There are people who have lived in privately-tenanted houses over the years and paid increased rents. I would fully back that. If that is the way Mr. Patten and his Government want to increase home ownership by a million in the next five years, that is one pool they may look at. I would hope that we would start keeping to the amendments as they are. To introduce mining as against council house tenants is really the mismatch of the century.

Lord Coleraine

Perhaps I may return for a moment to the Committee stage of this debate, and particularly to Amendments Nos. 3, 4 and 6 that we are discussing. Amendments Nos. 3 and 4 seek to say that the tenants of flats shall get not one more penny discount than the tenants of houses. This flies directly against the experience recounted by my noble friend Lord Elton at Second Reading that the take-up in regard to flats is microscopic.

It is no use saying that this is not a question of valuation; that we should not give the tenants of flats a greater discount. The problem of flats is that in general the tenants do not want them at the sort of prices they would pay for houses. There are a number of reasons for this. There is the general need to take over a percentage of the repair of a whole estate or a whole building, as well as the deplorable state of the common parts in so many of the tower blocks, and things like that.

There is also the point that flats are on the whole less valuable than houses. They tend to he valued at very low prices. It is not going to be worth while taking a small percentage from a small price. If you want to give the tenants of flats the opportunity to buy them, you have to make it realistic. You have to give discounts which are high in absolute terms as well as in relative terms.

If I felt for one moment that the noble Baroness and her noble friends really had any sympathy with the desire of flat owners to buy their flats from the councils, I would understand it if they sought to reduce the discrepancy between the purchase price of houses and the purchase price of flats which the present legislation is introducing; but to say that the price shall be absolutely the same makes it clear that the Opposition are not interested in tenants owning their own homes. I hope that the Committee will not accept these amendments, and that we shall continue with the reasonable increases in discounts which the Government are now offering to flat tenants.

Lord Skelmersdale

On Second Reading, as has been pointed out in discussion on the last amendment, my noble friend Lord Elton made no secret of the fact that very few flats have so far been sold under the right to buy. We all know that. I freely admit it. There is no point in denying it. It is the truth. In fact sales of flats represent only 4 per cent. of all sales of council properties.

Reasons for this are not hard to find. A tenant who buys his or her flat still has to look to the landlord to maintain the building and has only limited influence over conditions outside the front door of the flat. Service charges are a major worry, too, but we shall get onto that in Clauses 2 and 3, on which I have no doubt we shall have equally as full a discussion as we are having on this clause. Clause 1 as it stands provides for a new discount scale when flats are sold under the right to buy. The scale would start at 44 per cent. and rise by 2 per cent. steps to a maximum of 70 per cent. for a tenant of 15 years standing. That contrasts with the present scale which, for houses and flats alike, runs from 32 per cent. by 1 per cent. steps to 60 per cent.

Amendments No. 3 and 5 would leave the discount provisions as they stand. The Government's object in proposing new incentives for tenants of flats to exercise the right to buy is to encourage the growth of owner occupation in public sector estates for the sake of the social benefits it can bring. In this whole right-to-buy argument it is so often forgotten that the great British public have expressed their wish to be home owners. For example, the building societies carried out polls over the last three or four years, and one point which emerged, if I remember correctly, is that about 80 per cent. of people under 40 expect to be home owners within five years. I know that I have not got the figures exactly right, but the point is clear.

What this Government have been consistently looking for, and at, are ways in which people can attain their very desirable objects, and I do not see that this is wrong. Our object in proposing new incentives for tenants of flats to exercise the right to buy is to encourage the growth of owner occupation in public sector estates for the sake of the social benefits it can bring.

I am sure I need not dwell on the changes that might be seen if even the least attractive council blocks were partially occupied by leaseholders with a pesonal stake in the building. I am sure that many of us in this Chamber went canvassing in the period leading up to the last General Election. We could see at a glance the difference that had been made to individual houses on estates and, on rare occasions, individual front doors of flats in blocks of flats. I hope that those reasons explain why I am asking the Committee to agree that tenants of flats should be entitled to a higher discount.

Clause 1 also provides for a reduction in the period during which there is a liability to repay discount when a house or flat is sold. Currently the tenant must covenant to repay discount on disposing of property within five years. We propose that the period should be reduced to three years. Amendment No. 6 would delete this provision. Horrors! What are the Government up to now? This proposed reduction in the discount clawback period has been prompted by a number of genuine hard cases in which tenants, who have bought their houses or flats, have had pressing personal reasons to move within five years of purchase. There have been distressing cases, for example, where sudden illness or disablement have made a move urgently desirable on medical grounds, yet the family have not been able to raise funds to buy elsewhere and repay the discount as well. The same applies to people having to move because of a change in employment.

The requirement to repay discount is there to stop tenants buying in order to cash in by promptly selling up. We take the view that a requirement to repay discount on sale within three years would be effective in stopping such abuses while offering significant help to tenants who have bought and wish to move. I should add that since this proposal was announced the Department of the Environment has had large numbers of inquiries about it from tenants who have already bought and are considering moving.

The noble Baroness spoke, as she so often does, of the £6½ billion. I may have misheard her, but for the sake of the record I should say that I think she said "million", while in fact it is billion pounds of capital receipts which local authorities have built up. If she sees the operation of the right to buy making a situation of homelessness worse, which is what I understood her to say and to mean, why do not local authorities take up the opportunity to use not 20 per cent. of their capital receipts, not 30 per cent., but the 100 per cent. which they are allowed?

Lord Dean of Beswick

They are not allowed to.

Lord Skelmersdale

They are allowed to through the low-cost home ownership scheme. I had a delegation from one district council to see me yesterday in the department. They expressed the same surprise that the noble Lord, Lord Dean, has. But they and officials in my department are to examine the position together to see whether it would help their housing needs.

The noble Baroness made another point. She said: "Well, flats are not going to be sold, anyway". If they are not going to be sold anyway, it does not matter if we have discounts of 80 per cent., 90 per cent., or even 100 per cent., as one of my noble friends suggested.

This clause is helping, which is a proper aim of Government, to give tenants what they want when those tenants can afford it. I think that is absolutely right and proper. I therefore invite the noble Baroness and her colleagues to withdraw the amendments.

Baroness David

I should first like to thank my noble friend Lord Houghton for his powerful speech and support. I can only repeat to the noble Lord, Lord Boyd-Carpenter, that we are not against home ownership and we are not against people being able to buy when there is an adequate pool. As he said, even if a house is sold, it is still a house, but the stock of houses to rent is reduced, and what more and more people need are houses and flats to rent. We want flats to rent to remain, particularly for the single, the old and the young, and those who wish to be mobile. The noble Lord, Lord Coleraine, asked why should not flats be sold at the same price as houses? It is not the prices that we are discussing but the discounts. We do not see why this bribe should be increased to the extent it is.

The total price of flats take into account the disadvantages which go with them. That is when the price is fixed. We are accused of being dogmatic and it is said that it is an ideological frenzy that we do not want to sell. That is not true. It is ideological on the part of the Government to wish to sell more and more just for the sake of adding to the numbers they can claim—the increasing numbers of home owners.

I look on this increased discount as a bribe. I think that at this moment when there is such a shortage of accommodation it is very wrong that this should happen. We shall oppose the Government and vote for our amendment.

5.5 p.m.

On Question, Whether the said amendment (No. 3) shall be agreed to?

Their Lordships divided: Contents, 102; Not-Contents, 109.

DIVISION NO. 3
CONTENTS
Airedale, L.	Llewelyn-Davies of Hastoe, B.
Ardwick, L.	Lloyd of Kilgerran, L.
Attlee, E.	Lockwood, B.
Aylestone, L.	Longford, E.
Benks, L.	Lovell-Davis, L.
Bernstein, L.	Lurgan, L.
Blease, L.	Mackie of Benshie, L.
Blyton, L.	McNair, L.
Bonham-Carter, L.	Manchester, D.
Bottomley, L.	Meston, L.
Brockway, L.	Molloy, L.
Brooks of Tremorfa, L.	Monson, L.
Bruce of Donington, L.	Morton of Shuna, L.
Chitnis, L.	Nathan, L.
Cledwyn of Penrhos, L.	Nicol, B.
Collison, L.	Ogmore, L.
David, B.	Ponsonby of Shulbrede, L.
Davies, L.	[Teller.]
Dean of Beswick, L.	Prys-Davies, L.
Diamond, L.	Ritchie of Dundee, L.
Donaldson of Kingsbridge, L.	Roberthall, L.
Elwyn-Jones, L.	Robson of Kiddington, B.
Ennals, L.	Rochester, L.
Ewart-Biggs, B.	Ross of Marnock, L.
Ezra, L.	Rugby, L.
Fisher of Rednal, B.	Sainsbury, L.
Foot, L.	Sefton of Garston, L.
Gallacher, L.	Serota, B.
Galpern, L.	Shackleton, L.
Gladwyn, L.	Shepherd, L.
Graham of Edmonton, L.	Silkin of Dulwich, L.
[Teller.]	Simon, V.
Gregson, L.	Stallard, L.
Grey, E.	Stedman, B.
Hampton, L.	Stewart of Fulham, L.
Hanworth, V.	Stoddart of Swindon, L.
Heycock, L.	Strabolgi, L.
Houghton of Sowerby, L.	Taylor of Blackburn, L.
Hughes, L.	Taylor of Gryfe, L.
Hunt, L.	Taylor of Mansfield, L.
Hutchinson of Lullington, L.	Tordoff, L.
Jucques, L.	Turner of Camden, B.
Jeger, B.	Underhill, L.
Jenkins of Putney, L.	Wallace of Coslany, L.
John-Mackie, L.	Walston, L.
Kearton, L.	Wells-Pestell, L.
Kennet, L.	Whaddon, L.
Kilbracken, L.	White, B.
Kilmarnock, L.	Wilson of Langside, L.
Kirkhill, L.	Wilson of Rievaulx, L.
Leatherland, L.	Winstanley, L.
Listowel, E.	Ypres, E.

NOT-CONTENTS
Aldington, L.	Hylton-Foster, B.
Alexander of Tunis, E.	Ironside, L.
Ampthill, L.	Kinloss, Ly.
Bancroft, L.	Knollys, V.
Beaverbrook, L.	Lane-Fox, B.
Belhaven and Stenton, L.	Lauderdale, E.
Bellwin, L.	Layton, L.
Beloff, L.	Leathers, V.
Belstead, L.	Long, V.
Bessborough, E.	Lucas of Chilworth, L.
Blyth, L.	McFadzean, L.
Boyd-Carpenter, L.	Macleod of Borve, B,
Brookes, L.	Mancroft, L.
Brougham and Vaux, L.	Manton, L.
Broxbourne, L.	Margadale, L.
Caithness, E.	Marshall of Leeds, L.
Cameron of Lochbroom, L.	Merrivale, L.
Campbell of Alloway, L.	Mersey, V.
Campbell of Croy, L.	Milverton, L.
Carnegy of Lour, B.	Molson, L.
Cawley, L.	Monk Bretton, L.
Chelwood, L.	Mottistone, L.
Coleraine, L.	Munster, E.
Cottesloe, L.	Murton of Lindisfarne, L.
Cox, B.	Nugent of Guildford, L.
Cullen of Ashbourne, L.	O'Brien of Lothbury, L.
Davidson, V. [Teller.]	Orkney, E.
De La Warr, E.	Pender, L.
Denham, L. [Teller.]	Plummer of St Marylebone,
Derwent, L.	L.
Ebbisham, L.	Portland, D.
Ellenborough, L.	Portsmouth, E.
Elliot of Harwood, B.	Quinton, L.
Elliott of Morpeth, L.	Rawlinson of Ewell, L.
Elton, L.	Reay, L.
Fanshawe of Richmond, L.	Reigate, L.
Ferrers, E.	Renton, L.
Ferrier, L.	Rodney, L.
Fortescue, E.	Romney, E.
Fraser of Kilmorack, L.	St. Davids, V.
Gainford, L.	Sandford, L.
Gisborough, L.	Shannon, E.
Glanusk, L.	Sharples, B.
Glenarthur, L.	Skelmersdale, L.
Gray of Contin, L.	Sudeley, L.
Greenway, L.	Terrington, L.
Gridley, L.	Thorneycroft, L.
Grimthorpe, L.	Tranmire, L.
Hailsham of Saint	Trefgarne, L.
Marylebone, L.	Ullswater, V.
Harmar-Nicholls, L.	Vickers, B.
Harvey of Tasburgh, L.	Vivian, L.
Hemphill, L.	Westbury, L.
Hesketh, L.	Whitelaw, V.
Hives, L.	Young, B.
Hooper, B.

Resolved in the negative, and amendment disagreed to accordingly.

5.15 p.m.

[Amendment No. 4 not moved.]

Lord Skelmersdale

moved Amendment No. 5: Page 2, line 9, at end insert— ("(2A) The Secretary of State may by order made with the consent of the Treasury provide that, in such cases as may be specified in the order—

1. (a) the minimum percentage discount,
2. (b) the percentage increase for each complete year of the qualifying period after the first two, or
3. (c) the maximum percentage discount,

shall be such percentage, higher than that specified in subsection (2), as may be specified in the order. (2B) An order—

1. (a) may make different provision with respect to different cases or descriptions of case,
159
2. (b) may contain such incidental, supplementary or transitional provisions as appear to the Secretary of State to be necessary or expedient, and
3. (c) shall be made by statutory instrument and shall not be made unless a draft of it has been laid before and approved by resolution of each House of Parliament.".")

The noble Lord said: I spoke to this with Amendment No. 2. I beg to move.

On Question, amendment agreed to.

The Deputy Chairman of Committees (Lord WellsPestell)

In calling Amendment No. 6, I have to inform your Lordships that if that amendment is agreed to I cannot call Amendments Nos. 7 or 8.

[Amendment No. 6 not moved.]

Lord Coleraine

moved Amendment No. 7: Page 2, line 35, leave out ("and") The noble Lord said: Amendment No. 7 is a paving amendment for Amendment No. 8 and, with the leave of the Committee, I shall speak to Amendment No. 8. This amendment was designed to probe the Government as to whether there is some hope of seeing whether anything can be done for those public-sector tenants who feel unable to buy because of the requirement that on a sale shortly after completion of the conveyance of the property to them they will have to repay all or part of the discount. They may be thinking of exercising the right to buy, for example, before moving house and they are put off because they will have to surrender part of the discount which they would normally expect to have been able to put into the house to which they were moving.

There must be many tenants who would gladly exercise their right were it not for the requirement as to repayment of the discount and against whom it could not really be fairly argued that they should repay part of the discount on resale. In a sense, we are dealing with the same problems as were touched upon in the question whether the discount should be repayable over three years or over five years following the conveyance or grant.

I should like to examine for a moment the question of whether a sale shortly after the completion of a conveyance or the grant of a lease is in some sense too soon so as to justify, as a general rule, requiring the former tenant to repay part of the discount. I would suggest to my noble friends that there is no real principle by which a sale soon after the exercise of the right may be said to be too soon and thereafter to be penalised in the way that we have until now done universally. There is no reason in general why a former right-to-buy tenant should not be allowed to sell his house or flat immediately and pocket the whole proceeds of sale. There is no reason why he should not be permitted to enjoy, in the form in which he wishes to enjoy it, the share of the social wealth of the country which has been released to him by his ability to buy at a discount.

There is no reason why he should not keep this wealth in whatever form he wishes, whether in the form of the original house or the original flat or in the form of the sale proceeds or in the form of the reinvested sale proceeds which, as I have indicated, might be a new house. I have to say that I see no reason why we should be concerned if a former right-to-buy tenant "blows" the lot. One of the ends to which our enterprise economy should be moving gently is, in my view, towards the giving to more and more people of the werewithal with which to blow the lot if they feel so inclined.

At the same time I should like to look at the question from the point of view of mobility of labour. It is likely, indeed I think it is very likely, that in the days in which we live there are a number of right-to-buy tenants who want to acquire their homes and sell them in order to be able to put down a deposit on, say, a house in an area where there is work to be found or where there are opportunities for self-employment. The present repayment discount provisions, to my mind, impose a quite unreasonable barrier in the way of more widespread exercise of the right to buy and they impede the creation of an enterprise economy in a quite surprising way.

If I were to ask my noble friend why these discounts require to be repaid, I suspect he would say, in unison with noble Members opposite, that it is to deter speculators. Yes, I agree that we should deter speculators, but I hope he will be able to give a more encouraging answer than that. We have structured the rights to buy in such a way that the incentive to exercise the rights is relatively greatest in the earliest years of a public sector tenancy, after the first two. Of course, if we provide that the discount on a house is to be 32 per cent. and on a flat 44 per cent. after two years' tenancy, we are bound to find that we have to deter speculators from buying houses and flats at these high starting discounts and then reselling at once to pluck the discount at its ripest stage.

I am not quarrelling in any way with the way in which the right to buy has been set up, as I have just described it. We want to see as much of the social value of houses in public housing firmly in the hands of those who live in the housing. What I would argue is that we can achieve the necessary deterrence to speculation without penalising or putting off right-to-buy tenants who are not speculators. Let us take a council tenant of five, 10, 15 or even 25 years' standing. Why should we penalise him? What I would suggest to my noble friend and what my amendments seek to achieve is that there could and should be a formula by which the requirement to repay discount could be removed from long-standing tenants.

My Amendment No. 8 would add at the end of Sections 155(2) and 155(3) of the Housing Act 1985 the following words: or (if greater) 10 per cent. for each complete year which has elapsed since the beginning of the period which was, in accordance with Schedule 4, taken into account for the purposes of discount". These sections provide that in right-to-buy and right-to-shared-ownership lease cases the conveyance of the house or flat to the former tenant shall include his covenant that if he re-sells—and here I am referring to the Bill as worded and as I assume it will go forward—within three years he will repay the whole discount, less 33⅓ per cent. for each complete year after the conveyance or lease. The date from which the requirement runs is the date of conveyance or lease, not the date on which the tenant gave notice to exercise his right.

If a right-to-buy tenant is thinking of exercising his right to buy he would not be thinking of three years during which he would be subject to this requirement: it will be three years, plus the time it takes the landlord authority to process the sale, and this may be a longer or shorter period of time, depending on the zeal with which the authority enters into its statutory duties.

My amendment proposes that we should add, as a rider to the existing statutory requirements, the provision that if, instead of the period commencing with the conveyance or grant we allow the former tenant to take as an alternative period the period taking into account for calculating the amount of discount under Schedule 4 to the Housing Act 1985—and this means broadly that the tenant can go back over the whole period during which he was a statutory public sector tenant—and if we add the period which has elapsed since the conveyance or grant, and if we then find that the whole discount reduced by 10 per cent. for each year of the alternative period is less than the whole discount reduced by 33⅓ per cent. for each year which has elapsed since the conveyance or grant, then it is the alternative (that is to say, the whole discount reduced by 10 per cent. for each year of the longer alternative period) which would be repayable on a sale within three years.

Perhaps I may try to put this in another way by giving an example. Let us assume that a council tenant has been one for 10 years. He would know, under what I have suggested, that if he exercised his right to buy he would be able to sell at once with no liability to repay any part of the discount after the sale. If he had been a tenant for nine years he could exercise the right to buy, and if he made the assumption that his conveyance would take less than a year to be forthcoming from the council he would know that a year after giving his notice to exercise his right to buy he would be freed from any requirement to repay discount on his resale.

If one goes a little further and makes the assumption that it takes a year in all from notice exercising the right to buy to completion of the conveyance or grant, then one can see that a council tenant of eight years' standing would know that when his conveyance is completed or his lease granted and he is free to sell, he would have to pay under this formula 10 per cent. of the discount if he sells at once, but if he waits only one further year before selling he will be free of the requirement altogether.

I would submit that by taking into account the length of the owner's former public sector tenancy in this way or in some similar way we would not only be acting fairly but would be seen to be acting fairly. Additionally, we would be helping to oil the wheels of rights to buy and making it possible for a body of tenants to exercise their rights when otherwise they would not find it either possible or feasible to do so in their particular circumstances. I beg to move.

Lord Skelmersdale

I must say that my noble friend's amendments are quite ingenious in providing for the amount of discount to be repaid on the resale of a property purchased under the right to buy to be reduced in accordance with the former tenant's tenancy record. My noble friend obviously sees no objection in principle or logic to allowing those with a long previous tenancy history to get away without having any claw-back at all imposed upon them. I have to say that I regret having to disagree with him, as I have no doubt that noble Lords opposite would too.

If I understand the amendment correctly, the amount of discount to be repaid would be reduced by a tenth for each year which had passed since the former tenant originally became a tenant, irrespective of when he or she actually bought the property. That would appear to be another problem. I am concerned that the amendments would give unequal treatment to different tenants purchasing their homes under the right to buy.

As the law presently stands there is a simple rule. If the former tenant sells again within five years the disount must be repaid and the amount to be repaid goes down by one-fifth each year. The Bill provides for a five-year period to be reduced to three years, with the amount to be repaid going down again by 20 per cent. each year.

The amendments would mean that those who had been tenants for many years before buying would stand to repay less on resale than their neighbours whose tenancy records have been shorter. I have already commented on that. But, even more importantly, it would depend when each particular tenant actually exercised his right to buy. You might have a tenant who exercised his or her right to buy yesterday and who would be treated in one way. You might equally have a tenant who, three months after the Royal Assent to this Bill, exercised his or her right to buy and who, if this amendment were accepted, would be treated in quite a different way. I do not see that that is a fair way to proceed.

It is equally true to say, in my noble friend's defence, that one does not expect a requirement to repay discount to be popular with those affected. At the moment, the rule is simple and well understood and it affects all purchasers equally. The reduction of the five-year period to three years will substantially reduce the burden on tenants who need to sell soon after buying. I fear that these amendments would cause some perplexity and even some ill-feeling between tenants. Moreover, in many cases they would mean, as we all recognise, that there was no requirement at all to repay discount. In these circumstances, I hope that my noble friend will not pursue these amendments.

5.30 p.m.

Lord Dean of Beswick

It will, of course, come as no surprise to the overwhelming majority of noble Lords present if I say that, for once, I am in total support of the Minister and what he has said. I think the difficulty is that if this amendment was accepted it would once again create not one category but a sort of conglomerate of categories, depending on when people decided to exercise certain options within the whole movement. Whether the noble Lord, Lord Coleraine, would like it or not, this particular amendment could result in some rather lucrative rackets in housing.

I am sure that the Government would not accept some of the prices for which council houses and flats have recently been sold in London and the rate of increase of house prices in London. I understand that some former council tenancies in London which were bought a few years ago are now being sold for somewhere in the region of £100,000. I am sure that no government who went in for the sale of council housing to existing tenants ever envisaged that such a situation would arise.

I think that this amendment, if carried, would lead to that type of activity increasing. I do not think that would be of benefit to anybody, other than the person involved. Whether we like it or not, the argument for the sale of council housing is supposed to be—and I say "supposed to be"—that it is in the interests of the tenant of the house. I think that this amendment, if accepted, would be influential in, perhaps, increasing the financial standing of the tenant in the house above what would be expected, and I fully support the Minister in his rejection of it.

Lord Coleraine

I must congratulate my noble friend on the support which he has received from the noble Lord, Lord Dean of Beswick, and indeed I draw some comfort from that support for the reasoning behind my amendment. However, I am sorry that my noble friend sees nothing at all in my amendment. I am particularly sorry that he felt that a former tenant who was not compelled to repay the discount was in some way "getting away with it". I think that is a very bad way of looking at the matter. However, as I said, I put down this amendment as a probing amendment and I now beg leave to withdraw it.

Amendment, by leave, withdrawn.

[Amendment No. 8 not moved.]

Lord Coleraine

moved Amendment No. 9: Page 2, line 43, at end insert— ("( ) In section 131(3) of the Housing Act 1985 (which limits discount to such sum as the Secretary of State may by order prescribe) for "such sum" substitute "£40,000 or such greater sum".") The noble Lord said: This amendment standing in my name should have been drafted as an amendment to subsection (2), and not subsection (3), of Section 131 of the Housing Act 1985. With the amendment that I had intended to draft I wished to probe the Government's intentions with regard to subsection (2) and also to propose what I consider to be a useful amendment to the statutory provisions. I hope that noble Lords will understand if, before formally moving the amendment on the Marshalled List, I speak briefly to the amendment as it should have been.

Section 131 of the 1985 Act deals with the maximum limits to right-to-buy discounts. Subsection (2) provides that the Secretary of State may by order prescribe absolute limits to discounts. The current absolute limit to discount was fixed as long ago as 1980 at £25,000 by the Housing (Right to Buy) (Maximum Discount) Order 1980 and its Statutory Instrument No. 13/82.

Since then, as the Committee will be aware, there has been a massive increase in prices and in values of houses, particularly in London and the South-East. I have had correspondence with various sources including my own borough of Kensington and the Right to Buy Club in Tottenham. This leads me to the thought that, although it cannot be proved, it seems only logical to suppose that the present maximum discount is an unreasonably low one and results in a growing number of right-to-buy tenants, who put off exercising the right to buy because they find that exercising the right would impose an unreasonable financial burden on them. It seems to me that in all the circumstances the present maximum should be in the region of £40,000 rather than £25,000.

Another point which has been made to me is that there is some fear that the Secretary of State might be persuaded by a local authority, because of circumstances pertaining on a particular housing estate, or in the area of that authority, that right to buy should be altogether discouraged in the area of the authority or on the estate. The Secretary of State might be asked in that particular case to reduce the maximum limit of discount to perhaps even a derisory figure.

I hope that my noble friend will consider favourably the argument that the discount maximum should be in the statute itself with power for the Secretary of State to increase it by order. That would be very much in line with the sort of scheme that was contained in the amendment which we recently passed. It seems to me that that would be a much better way of dealing with the matter than leaving the amount of discount entirely at large under the statute. I beg to move.

Lord Skelmersdale

The discount to which a tenant is entitled in exercising the right to buy normally depends on how long he or she has been a public sector tenant or has occupied armed forces accommodation. The tenant's discount qualification is expressed as a percentage of the market value of the property. That is not, however, the end of the story. In his concluding remarks my noble friend asked for what is, in fact, already on the Statute book in Section 131 of the Housing Act 1985, which already places limits on the amount of discount which may be allowed in cash terms.

First, discount is not to reduce the purchase price below the relevant costs incurred in respect of the building since 31st March 1974. That is normally referred to as the cost floor provision. Secondly, subsection (3) gives the Secretary of State power to set by order, subject to negative resolution, a limit to the amount of discount which may be allowed on sale under the right to buy. The limit was set at £25,000 in 1980. The effect is that if a tenant qualifies for, say, 50 per cent. discount and the house or flat is worth £60,000, the discount allowed on the sale will be £25,000 rather than £30,000.

The purpose of this limit is simple. The tenant's discount qualification is expressed as a percentage of the value of the property. If the tenant of an unusually valuable property happens to qualify for a high discount, the resulting sale price might be indefensibly low. The limit keeps within bounds the financial advantage conferred upon a tenant. The amendment would reduce the discretion conferred on the Secretary of State by providing that a limit must be at least £40,000.

As my noble friend Lord Coleraine explained, this would bring the limit up to date ín the light of inflation. Six years have passed since the present limit was set, and it is indeed natural to consider whether it ought to be raised to take account of inflation. It is clear that a significant proportion of sales in high value areas such as parts of London are now affected by the discount limit. There are, however, other factors to take into account besides inflation and, in particular, we have to take account of the financial consequences.

Nonetheless, I have to confess that my noble friend's amendment puts me in some embarrassment. The fact is that we are considering just at this moment whether an increase in the limit would be justified but have not yet come to a conclusion. Indeed, I do not think our conclusion will be arrived at before this Bill passes through this House.

Therefore, I am in no position to seek to persuade the Committee that the increase for which the amendment provides would be inappropriate. Equally, I am in no position to do the opposite and persuade the Committee that it would be appropriate. I can only invite my noble friend to accept that the case for an increase is under very careful examination at the moment and that this subject will, under Section 131 of the Housing Act 1985, be a matter for an order which would be presented to your Lordships in due course if, indeed, we decided to change this matter at all.

Lord Dean of Beswick

I take the point that the Minister has made. Obviously, when arriving at a figure such as a £25,000 maximum rebate that a person can obtain, one must be very careful not to become too parochial in what is really a national situation. I accept that as time moves on, if the policy remains the same, the figures have to be reviewed because costs alter. But being a North country man with quite a lot of big city experience, strangely, in both Lancashire and Yorkshire, I have to say that the increase in house prices there is insignificant compared with that in London. Whatever the Government decide to do about altering the figure of £25,000, they must be very careful that they are not once again seen to be giving to people who reside in the South as against those who do not.

Lord Skelmersdale

I take the point that the noble Lord, Lord Dean, has made. This is exactly the sort of subject that will be under consideration if and when we decide to produce an order and lay it before Parliament.

Lord Dean of Beswick

Having said that, I am extremely grateful for the information which the Minister has conveyed. Naturally, when it appears we shall look at it carefully.

Lord Coleraine

The noble Lord, Lord Dean of Beswick, seems to say that because in the North council tenants do not see the same values in houses as people may do in London and the South-East, and do not suffer from the same problem, the problem in the South-East should not be tackled. I do not think that is right. My noble friend has indicated that this matter is under consideration and, indeed, was under consideration at the time when I put down a Question for Written Answer back in May last year. I hope that not long after the passage of this Bill his department will be able to lay the necessary order. This has been a probing amendment and I beg leave to withdraw it.

Amendment, by leave, withdrawn.

Clause 1, as amended, agreed to.

5.45 p.m.

Lord Skelmersdale

moved Amendment No. 10: After Clause 1, insert the following new clause: ("Discount on exercise of right to purchase in Scotland. —(1) In section 1 (secure tenant's right to purchase) of the Tenant's Rights, Etc. (Scotland) Act 1980, in subsection (5), after ("b") insert— subject to an order under subsection (5B) below,". (2) after subsection (5A) of the said section 1 insert— (5B) The Secretary of State may by order made with the consent of the Treasury provide that, in such cases as may be specified in the order—

1. (a) the minimum specified percentage,
2. (b) the percentage increase for each complete year of the qualifying period after the first two, or
3. (c) the maximum percentage discount,

shall be such percentage, higher than that specified in subsection (5)(b), as may be specified in the order. (5C) An order—

1. (a) may make different provision with respect to different cases or descriptions of case,
2. (b) may contain such incidental, supplementary or transitional provisions, including such amendments to the provisions of section 9A (application of Part I when dwelling-house is repurchased as defective) below, as appear to the Secretary of State to be necessary or expedient, and
3. (c) shall be made by statutory instrument and shall not be made unless a draft of it has been laid before and approved by resolution of each House of Parliament.".").

The noble Lord said: On behalf of my noble friend Lord Glenarthur, I beg to move this amendment to which I spoke with Amendment No. 2.

Lord Ross of Marnock

I hope that we shall have some explanation of this new clause, particularly in relation to the Scottish complexities of it. This is something to which I have objected, and to which most Scots have objected, in the past. When we have legislation on matters which historically are purely Scottish, they are dealt with in separate legislation and so we are used to having Scottish housing Bills. I am sure that the noble Lord who has newly come to his position will appreciate the fact that we have a Scottish housing Bill on the go at the present time. I just happen to have a copy with me; I never go away without it. We get a new Bill every six months. But the first line in that Scottish housing Bill states: An Act to amend the Tenant's Rights, Etc. (Scotland) Act 1980". That is what this amending clause is about.

We have a Scottish Bill in which there is a series of new clauses concerned with the right to buy and making changes in that. One of the interesting changes which has been made, and which has already been voted against in this Chamber, is not yet law because the Government have got into such a fankle over the housing association in Scotland. They did not know how to deal with it. So it has still to come before us in this extended Session of ours and we have a new Minister who does not know a thing about it. In addition to that, we have this Tenant's Rights, Etc. (Scotland) Act being amended in respect of the very same clauses in a Great Britain Bill and it is tagged on at the end of Clause 1 of this important Bill for Scotland and England.

The Minister may say that they must march together. With all due respect, they are not marching together. What will happen if, by any chance, the House gets into a further fankle on this Scottish housing Bill that is still with this House? Then we shall find that the discounts in Scotland, which were to be put up to 70 per cent. for a flat and 60 per cent. for any other dwelling-house do not pass. Will the Government then use this new clause that they are putting in here, in order to bring them in? That is exactly why I object in principle to what is being done in one Bill, when the two Bills are at different stages.

I also object to the Government taking power to change the discounts by order, rather than by principal legislation. It is just too easy for a government to bring in an order which we are not allowed to amend. I think that the changes in the discounts were covered in Clause 2 of the Scottish Bill. I had down six amendments. But if we give the Government the power for which they are asking here, we shall not be allowed to amend it. We shall only be able to discuss the order and then accept or reject it. To my mind, this is not the right way to deal with such important legislation.

We have had about three Bills tackling this subject. I think that the discount started at 30 per cent. after five years, but it has gone on and on and we are practically giving away the local authority housing stock. If the Government had their way today it would apply to England, though not to Scotland, because the part that we have voted on today does not apply to Scotland. It applies only to England. As a Scot, I strongly object to what the Government are doing and to the way in which they are doing it.

Lord Skelmersdale

Not for the first time, I am slightly dumbfounded by the speech of the noble Lord. I rather resent the Government being accused of tagging things about Scotland on to the end of Clause 1. May I advise the noble Lord to please look at the Marshalled List?

Amendment No. 10, which is the subject of our mini-discussion, is very clearly a new clause after Clause 1. I do not regard inserting a new clause into a Government Bill as tagging something on to an existing clause. If I had wanted to tag it on, to use the noble Lord's phrase, I should have done so and just put it at the end of Clause 1 in the normal way. I do not know if the noble Lord was present when we discussed Amendment No. 2—and he is quite right, we did divide and made a decision for England. He is perfectly within his rights to say that we had not yet made a decision for Scotland.

Lord Howie of Troon

I am dumbfounded by the noble Lord's reply to my noble friend. Would it help him if instead of being accused of tagging something on to Clause 1 he were accused of squeezing it in after Clause 1? He just pleaded guilty—he took it out.

Lord Skelmersdale

Perhaps I can deal with one charge at a time; and I should have thought they were rather different charges.

We were talking about this new clause after Clause 1, which—and both noble Lords were quite right—refers to Scotland. From the very beginning this proposed Act of Parliament has in part referred to Scotland. I do not recall any noble Lord making a complaint on that score at Second Reading. There have been occasions in legislation—I am sure these were examples in the time when the noble Lord himself was Secretary of State for Scotland, and a very distinguished Secretary of State—when it was decided that on balance it would be better to have a law covering both countries. Because of existing Scottish law things were slightly different; the legal position in Scotland was slightly different from that in England. This happens all the time. Indeed I understand that the Scots pride themselves on their superior legal system, and I have no doubt that many people hold that view.

I do not know whether the noble Lord was present when I explained my reasons for asking the Committee to accept Amendment No. 2, which is the English and Welsh equivalent of this proposal. I said that Amendment No. 10 makes parallel provision for Scotland. The reason for making this amendment in the Housing and Planning Bill rather than in the Housing (Scotland) Bill, which, I agree, might well have been considered to be better, is simply timing. The Scottish Bill has now passed the point in its Parliamentary career at which this subject could have been added. As I understand the position—and the noble Lord, I have no doubt, knows far better than I do—the Housing (Scotland) Bill is now between the two Houses and is waiting for consideration by another place of amendments which have been passed in this Chamber. As a result I was quite right in saying as I did on Amendment No. 2 that it is past the time when a new issue—and this is a new issue—could have been included in that Bill.

I am not sure that there is an awful lot that I can usefully add unless the noble Lord wishes me to go over the argument again.

Lord Ross of Marnock

I would not want the noble Lord the English and Welsh Minister to go over the argument again. I expect Scottish Ministers to deal with Scottish matters and would not be satisfied with anything he said about the Bill. They should appreciate just what their task is and what their job is. They should be here. I know what the House of Commons would have said if I or a Scottish Minister had not been present to deal with something as important as this.

The noble Lord says that he objects to me saying that this is tagged on. It comes at the end of the English clause.

Lord Skelmersdale

It is a separate clause.

Lord Ross of Marnock

Oh, it is a separate clause. So it is not tagged on. My noble friend Lord Howie is probably right; it has been squeezed in. It is an afterthought. We are doing it for England; let us take the chance and do it for Scotland at the same time! It has been suggested that this kind of thing has happened before. When have we had an overlapping Scottish Bill which has not finished its proceedings in the House dealing with a subject which is further amended in an English Bill at the tail end of a Session? Never! I have about 40 years' experience of Scottish Bills. Until I became Secretary of State I was a member of the Committee of every Scottish Bill that passed through the House. It was very simple—in the early days after the war every Scottish Member was automatically a member of the Scottish Grand Committee. I can see people who probably have experience of that as English Members who were despatched to exile to the Scottish Grand Committee for something they had done wrong in another place.

There is the timing. I am sorry that the noble Lord, Lord Glenarthur, is not in his place. I have a letter dated 3rd October. It says: Dear Willie"— I shall miss out the first part about undertakings that were given by the Government to table amendments by 27th September— We have largely adhered to this timetable and you will find it helpful to see the enclosed set of printed amendments". It would have been helpful if I had seen them but they were not enclosed. The letter continues: We have also had to table a few more minor amendments of which I enclose a typescript copy". But he failed to enclose that as well. I hope that this is all duly reported back to St. Andrew's House. If there is no Scottish Minister present I doubt very much whether there will be a Scottish civil servant around to hear these words. Now we have these words: Most of the Scottish amendments are either equivalent to amendments for England and Wales or of a purely technical nature". This is one, I presume, that is equivalent to England and Wales but I think in the circumstances that a Scottish Minister should have been on the Front Bench to defend and explain it and to explain to me why—because we were dealing with the same subject in the weeks before we rose for the Summer Recess—at this late stage this has been put into the Bill when it would have been so much better elsewhere.

If you are going to look up a Scottish Act about the security of tenure you do not want to go through an English Act as well. So, from the point of view of the tenant, from the point of view of the lawyer and from the point of view of anybody else, this kind of thing should have been avoided.

Lord Howie of Troon

I should like to support my noble friend very briefly because we are in no mood to detain the Committee terribly long. In my experience of another place, which is much less than that of my noble friend by a very long way, this kind of thing could not have happened.

As my noble friend quite rightly said, when Scottish matters were under discussion there a Scottish Minister would always be on the Front Bench to answer any queries which anybody, Scotsman or Englishman, might have felt impelled to ask—and sometimes they did. It might sometimes happen that due to inadvertence or important occasions of State a Scottish Minister would not be present on the Front Bench. But in such circumstances it would become apparent that he ought to be, and the Government Whip or somebody would go and look for him, and find him and bring him, fairly promptly. If the Government Front Bench tonight felt inclined to go and seek a Scottish Minister to explain my noble friend's very important point, we would very happily keep the debate going until such time as the Minster arrived to answer the point so that the business did not lapse.

6 p.m.

Lord Denham

If the noble Lord, Lord Howie of Troon, will forgive me rising, I must apologise that I did not hear the points made by the noble Lord, Lord Ross of Marnock. Lord Howie says that he has not been in the House very long but as a distinguished Member for the last few years he, like Lord Ross, will realise that in this House, as distinct from another place, all Ministers answer for the Government and not for their particular departments. I think he will also judge it to be fair to appreciate that by tradition we do not have as many Ministers in this House as we do in another place. We only have at most one Minister from each department, and in some departments we have no Minister at all.

This is always the division between the Houses, whatever the colour of the government of the day. I would say that there are more Ministers on the Front Bench in this Parliament than in the last Labour Parliament. I am not complaining about that, but it has always been understood that Ministers in this House speak for Her Majesty's Government and not for a particular department. I hope the noble Lord will realise that certainly no discourtesy was intended either to Scotland or to your Lordships' House.

Lord Howie of Troon

I must say that the noble Lord speaks, as always, in emollient tones and with graciousness. His flattery was so delightful that I willingly subside.

Lord Stallard

I wonder if I may ask the noble Lord, Lord Denham, for some explanation. I accept his answer about not having enough Ministers and Ministers speaking for the Government and so on. What I do not understand is why Lord Glenarthur, who, I understand, is the Minister at the Home Office, or is attached to the Home Office if he has been moved to Scotland, is not here. He should be here. Either way there is no reasonable explanation for his absence. First of all, if he is in the Home Office, as he was when I last heard of him, he should not have been involved in this Bill. If he is not now and he is involved in the Scottish Office, then he should be here to reply to the criticisms and questions which have been raised. I would certainly support the noble Lord, Lord Ross, because this is not the first time that Scotland has been treated as an afterthought, and if there is no Minister responsible, then there ought to be, for a very important part of the United Kingdom.

Lord Denham

I think it is wrong to get into discussions on the Floor of the House about procedures in this House. There are generally accepted procedures which have been accepted by all sides for many years, and I think we are verging on being out of order if we discuss them here.

But it certainly has always been known and accepted on both sides of the House that Ministers speak for the Government. I know that this amendment was down on the Order Paper in the name of my noble friend, but again and again that is done, whichever party is in power. Another Minister may speak for the Government. I know that the noble Lord, Lord Ross of Marnock, will accept this.

Lord Hughes

I wish briefly to support my noble friend in his objection to this being handled in this way. My reason for doing so is not tied to the absence of Lord Glenarthur, it is because Lord Skelmersdale, in supporting this new clause, stated that he accepted that it would have been possible and proper for this change to be made in the Scottish housing Bill which is before us. But he then went on to excuse its absence from that Bill by saying that it was now too late in the proceedings to put it in the Scottish Bill.

In other words, the Government's defence is that they thought about this change on Scottish affairs too late to put it in the Scottish Bill and they are remedying the matter by putting it in an English Bill. It may be because of the way the Government have managed the business that they have got themselves into that position, but that would have been all the more reason to justify what my noble friend Lord Ross of Marnock has said, that its absence from the Scottish Bill and its presence in an English Bill would have been more properly explained by the Scottish Minister, particularly as he allowed his name to be put to the amendment.

I am not disagreeing with what the Government Chief Whip has said about normal procedures, but certainly when I was a Minister of State at the Scottish Office it was accepted that if I put my name to a piece of Government business I was there to speak to it. Admittedly, I never found myself in the position of having a party conference conflicting with my parliamentary duty, which is possibly the reason why the noble Lord is not here.

While I am not disagreeing with what the Government Chief Whip has said about Ministers talking for the Government and not for a department, it has also been the practice that when a Scottish Minister put his name to an amendment he was there to deal with it.

Lord Tordoff

I wonder if I may take this opportunity of wishing the noble Lord, Lord Glenarthur, a happy birthday.

Lord Ross of Marnock

I was hoping that I could congratulate him on his appointment. I merely intervened at an earlier stage when he was here on the Front Bench, to deal with the Order Confirmation Bill, I think about the Western Isles. Quite frankly, important though the Western Isles are, I think this is equally important.

May I say to the Chief Whip that if the noble Lord had been here he would have heard me quote a letter about this Bill and the amendments to it? The letter was headed, "From the Minister of State, Scottish Office". Was it unfair of me to expect that the man who wrote the letter would be here when we were dealing with the Bill? I do not think so.

His standards and mine may be different, he may be more accustomed to this House than I am, but even when Hamish Gray was Minister of State for Scotland, he was usually there. It may well be that this happened in the conflict of handing over from one department to another. I think the Scottish Ministers have been badly advised in respect of this, and of course Lord Glenarthur would not know very much about the other Bill that is going through the House at present.

But we have not dealt with the merits of the matter at all. It has not got any merits, that you should take this power which means that the kind of thing which has arisen today will not arise again, because all we shall get will be an order putting up the discount for flats probably from 70 to 80 or maybe 90 per cent., and the same thing in respect of that. Of course, it will be a Scottish Office Minister, it will come from the Scottish Office, and I presume that a Scottish Office Minister will then do it. I can see Lord Skelmersdale very much objecting to handling that kind of thing; when a purely Scottish order comes through, it will have to be a Scottish Minister.

So I do not like the procedure about an order, I do not like what they are doing and I certainly do not like the way it is being done. May I tell the Chief Whip that I have complained about this not just in this House but in another place as well? I can remember the first planning Bill where they tacked Scotland on at the end of every single clause. It was an abominable way to treat Scottish legislation and indeed to treat the Scottish legal system.

Lord Skelmersdale

I am not quite sure where that leaves us. At some point in his speech, the noble Lord, Lord Ross, said that he did not want me to adduce the same arguments as I did on the English equivalent of this particular piece of proposed legislation, and therefore I thihk perhaps my proper response would be silence. I accordingly seek the opinion of the Committee.

6.9 p.m.

On Question, Whether the said amendment (No. 10) shall be agreed to?

Their Lordships divided: Contents, 108; Not-Contents, 58.

DIVISION NO. 4
CONTENTS
Alexander of Tunis, E.	De La Warr, E.
Arran, E.	Denham, L. [Teller.]
Auckland, L.	Derwent, L.
Beaverbrook, L.	Elliot of Harwood, B.
Belhaven and Stenton, L.	Elliot of Morpeth, L.
Belstead, L.	Elton, L.
Bessborough, E.	Ferrers, E.
Boyd-Carpenter, L.	Ferrier, L.
Brookes, L.	Fortescue, L.
Brougham and Vaux, L.	Fraser of Kilmorack, L.
Broxbourne, L.	Gainford, L.
Bruce-Gardyne, L.	Gisborough, L.
Caithness, E.	Glanusk, L.
Cameron of Lochbroom, L.	Glenarthur, L.
Campbell of Alloway, L.	Gray of Contin, L.
Campbell of Croy, L.	Greenway, L.
Carnegy of Lour, B.	Gridley, L.
Cawley, L.	Hailsham of Saint Marylebone, L.
Coleraine, L.	Halsbury, E.
Colwyn, L.	Hampden, V.
Cottesloe, L.	Harmar-Nicholls, L.
Cox, B.	Hempthill, L.
Craigavon, V.	Hesketh, L.
Cullen of Ashbourne, L.	Hives, L.
Davidson, V. [Teller.]

Holderness, L.	Portland, D.
Hooper, B.	Quinton, L.
Hylton-Foster, B.	Rawlinson of Ewell, L.
Knollys, V.	Reay, L.
Lauderdale, E.	Reigate, L.
Layton, L.	Renton, L.
Lindsey and Abingdon, E.	Rodney, L.
Long, V.	Romney, E.
Lucas of Chilworth, L.	Shannon, E.
Lyell, L.	Sharples, B.
McFadzean, L.	Shaughnessy, L.
Macleod of Borve, B.	Skelmersdale, L.
Mancroft, L.	Strathclyde, L.
Manton, L.	Sudeley, L.
Margadale, L.	Swansea, L.
Merrivale, L.	Swinfen, L.
Mersey, V.	Terrington, L.
Milverton, L.	Thorneycroft, L.
Molson, L.	Thurlow, L.
Monk Bretton, L.	Tranmire, L.
Mottistone, L.	Trefgarne, L.
Munster, E.	Trumpington, B.
Murton of Lindisfarne, L.	Ullswater, V.
Napier and Ettrick, L.	Vickers, B.
Nathan, L.	Vinson, L.
Newall, L.	Vivian, L.
Nugent of Guildford L.	Whitelaw, V.
Orr-Ewing, L.	Young, B.
Pender, L.	Ypres, E.
Plummer of St Marylebone, L.

NOT-CONTENTS
Ardwick, L.	Manchester, D.
Blyton, L.	Molloy, L.
Bottomley, L.	Monson, L.
Brockway, L.	Morton of Shuna, L.
Bruce of Donington, L.	Mountevans, L.
Cledwyn of Penrhos, L.	Mulley, L.
David, B.	Nicol, B. [Teller.]
Dean of Beswick, L.	Pitt of Hampstead, L.
Elwyn-Jones, L.	Ponsonby of Shulbrede, L.
Ennals, L.	[Teller.]
Ewart-Biggs, B.	Prys-Davies, L.
Fisher of Rednal, B.	Rea, L.
Gallacher, L.	Ross of Marnock, L.
Galpern, L.	Sefton of Garston, L.
Graham of Edomonton, L.	Serota, B.
Heycock, L.	Shackleton, L.
Houghton of Sowerby, L.	Shepherd, L.
Howie of Troon, L.	Silkin of Dulwich, L.
Hughes, L.	Stallard, L.
Jacques, L.	Stewart of Fulham, L.
Jeger, B.	Stoddart of Swindon, L.
Jenkins of Putney, L.	Taylor of Blackburn, L.
Kagan, L.	Taylor of Mansfield, L.
Kilbracken, L.	Turner of Camden, B.
Kirkhill, L.	Underhill, L.
Listowel, E.	Wallace of Coslany, L.
Llewelyn-Davies of Hastoe, B.	Wells-Pestell, L.
Lockwood, B.	White, B.
Longford, E.	Wilson of Rievaulx, L.
Lovell-Davis, L.

Resolved in the affirmative, and amendment agreed to accordingly.

6.17 p.m.

Lord Skelmersdale

moved Amendment No. 11: Page 3, line 6, leave out ("service charges") and insert—

1. ("—(a) service charges, or
2. (b) improvement contributions,").

The noble Lord said: I must confess that the amendments in this group are rather complicated but their effects can, I hope, be stated fairly simply.

Clause 2 places certain limitations on the contributions which a tenant who has exercised the right to buy a flat can be required to make under the lease to costs incurred by the landlord in carrying out improvements. The clause provides that, with certain exceptions, the leaseholder can only be required to contribute to improvement costs if he or she has agreed to do so in respect of specified works, having been given due information about them in advance.

These provisions contained in new paragraph 16C of Schedule 6 to the Housing Act 1985 were criticised in another place on the ground that a minority of leaseholders in a block of flats might either block the carrying out of improvements which were highly desirable or, alternatively, have the benefit of the improvements without having to pay anything for them. The amendments delete the provisions which were criticised and put in their place provisions modelled on the limitations which Clause 2 imposes on service charges for repairs in the early years of the lease.

The effect of the new provisions is that a tenant who claims to exercise the right to buy a flat will have to be given an estimate of any contributions to be required under the lease in respect of improvement costs incurred during, broadly speaking, the first five years of the lease. Those estimates will then set a limit to the contributions which can be recovered except that there will be an inflation allowance. There will thus be a common regime for improvement contributions and for contributions to repair costs. In both cases the landlord will be free to seek whatever contributions may properly be required of the leaseholder under the lease, but during the first five years the leaseholder will not have to make any payments of which notice was not given before the sale.

I hope the Committee will agree that this strikes a fair balance between the interests of the leaseholder and the interests of the landlord and the other occupants of the block. I beg to move.

Lord Dean of Beswick

When moving this amendment the Minister commended it by saying that his explanation of its effects would be extremely complicated. I and my colleagues on the Front Bench agree wholeheartedly with him, but that does not help us. I should have thought that it might have been possible for the Government to let us have something in writing explaining the effects of this amendment.

I speak not only on behalf of my party and, I think, for other sentiments of opposition here, but also after having met some of the local authority associations, and they do not view the matter in that manner at all. As regards the AMA, which covers 40 per cent. of local authorities in this country, that is, the areas of London and the big cities which suffer the most pressure, this association take strong exception to the new amendment. They say that it makes matters far worse than they are at present under the Bill, whereby tenants who purchase flats will be required to pay no more than the estimated cost of service charges for repairs. Of course these are impossible to predict five years ahead and tenant purchasers should have a structural survey done to ascertain for themselves what they are letting themselves in for. It seems to us that the purpose of this new amendment is to extend the definition of "repairs" to include improvements. Consequently, no improvements can be carried out at the leaseholder's expense unless local authorities have estimated it five years ahead. We believe that this would effectively mean that local authorities could not recover the cost of worthwhile improvement schemes—such as, for instance, door entry phones. It may well be that after a year or two of occupation the tenant purchaser would actually want the local authority to install a door entry phone or something of that nature and would see it as improving the value of his property. However, as this had not been envisaged at the start of the five-year period, local authorities could only do this type of work at their own expense.

I think that the problem of responsibility divided between local authority and purchaser is highlighted in some correspondence that I received from the Institute of Maintenance and Building Management, which is the institute of officers who are actually in charge of direct labour departments in the United Kingdom. With the leave of the Committee I shall quote their very short letter: I wonder if you can help with a problem which has been raised recently. A number of our members are in difficulty over the legal interpretation of the 1980 Housing Act in respect of the definition of what constitutes a structural defect as opposed to structural repairs. The attached press cutting from the London Standard refers to the problem and later makes mention of new Government legislation later this year. If possible, they would like the points put forward that they have made, to try to get some explanation of the present situation and the Government's intention.

A short time ago—as late as August 28th—the London Standard published that particular article. With the leave of the Committee I shall quote briefly the salient parts. It says: A London council has been accused of dragging its feet for failing to bring to court a vital test case which has important implications for thousands of flat owners. Of course in this Bill we are talking not only of flat owners but of potential flat owners.

The article continues: Sutton Council has confirmed it will not be proceeding against Miss Gwen Proctor of Grove Lane, Coulsdon, for non-payment of a £1,300 roof bill until new Government legislation comes into force later in the year. The bill is the contribution the council insists is Miss Proctor's share of the cost of a new roof on her block of four flats, carried out 14 months ago. Other owners received similar bills and others, like her, are refusing to pay. The same article goes on to say: In some instances, particularly in respect of flats, right to buy has not been a great success, and one of the reasons for this is that new purchasers have found themselves paying disproportionately high service charges. That is slightly different from what they are talking about; but then we hear what the lady, who is in conflict with the local authority as to whose is the financial responsibility for the work, herself says: Miss Proctor, who bought her flat from Sutton Council in 1982, said: 'I just wish the council would sort it out once and for all. They can't let it drag on for ever. If they tell me to forget the money then all the others will say, what about me? If I'd known there would be all this fuss I wouldn't have bought the flat. I'd advise anyone thinking of buying a council flat to think extremely carefully. Buy a house by all means, but not a flat without knowing exactly what is entailed. I hope that the Minister does not think that I have sprung this particular point upon him, but it is obviously a problem of rather large dimensions for people who, as I say, have bought properties—probably mainly flats—and their local authorities as to where the line that divides the financial responsibility for this type of work lies. But the people involved with this particular problem say quite clearly that the Government's amendment as it now appears on the Marshalled List will exacerbate the situation as regards local authorities who will have to pay for work which really should not be their or their remaining tenants' responsibility. So I have to say that we on this side of the Committee certainly do not welcome the amendment, but I should like to hear the Minister's comments and explanation of what I have put to him.

Lord Skelmersdale

I was extremely interested to hear the quotation from the letter made by the noble Lord, Lord Dean, at the end of his speech because this is what Clause 2 is about. It is about a tenant considering exercising the right to buy wanting to know exactly what is entailed and what possible charges there will be, for example, for repairs to those parts of the building that he does not own after he has actually purchased the property.

Unexpected high service charges are a major worry for tenants who are buying their flats. I should not like to comment too much on the case mentioned by the noble Lord. I do not know whether the charges were expected or unexpected, but it is quite clear from representations that have been made to us that unexpected high service charges are a major worry for tenants who are buying their flats. The provisions of the present Clause 2 are designed to ensure that a tenant exercising the right to buy knows just what charges to expect in the early years of the lease and can budget accordingly.

The noble Lord, following advice that he has received, now brings up a point which I must confess had not struck me and which I shall have to look into, namely who exactly in the first instance is responsible for the initial payment of the bill for future repair? I should have thought that it would automatically be the landlord.

However, the noble Lord has quoted a particular case which I shall have to look into, where obviously there is some dispute as to whether in fact it is the landlord or the ex-tenant. I quite agree that we shall have to get this matter absolutely clear. But after all, if the ex-tenant is expected to pay it may very well be, for example, that he has one flat in a block of 40, or there may be two ex-tenants who have exercised their right to buy in a block of 20 flats. I should have thought that if the tenants were responsible for actually getting the works done the requirement to pay would be totally unreasonable. However, I take the noble Lord's point, of course, and I shall look into it.

6.30 p.m.

Lord Dean of Beswick

I commented on the fact that the Minister said that this was a complicated amendment and that the explanation would be complicated. I find it even more complicated because the Minister said that he has some doubts about the effects that his amendment will bring about.

Lord Skelmersdale

No, I cannot let the noble Lord get away with that. I do not have doubts about what the amendment says; what I have doubts about, as, indeed, has the noble Lord, is who in any particular case should be responsible for carrying out the repairs. As there is doubt about that, it seems to me that the point should be written into the right-to-buy contract in the first place. That is the sort of thing which I was thinking to look at when I made the offer to the noble Lord.

Lord Dean of Beswick

The Minister has not assuaged my fears and he certainly will not have assuaged the fears of the local authorities. They say that the amendment will tip the situation in favour of the purchasing tenant as against the local authority. I must remind the Minister that the people about whom we are talking are the council tenants who will remain in the block of flats. When the bill has to be paid it will mean that people who have bought a council flat will have their "structural defects—I am speaking in the jargon—remedied at the expense of existing tenants. That is the point that I am trying to get across.

The case I quoted is not an isolated one. The institute which covers maintenance and building management is a nationwide institute. Its members are local government officers. There are members of that institute in all the major London boroughs, the major cities, and ADC areas who manage local authority building departments which carry out the repairs or maintenance to council property.

The Minister touched on how the problem starts. It starts where there is a property or a series of properties in one block which is pepper-potted. Opposition Members in this place and another place warned the Government that there would be some complexities with which it would be difficult to deal. The local authorities think that the amendment will not help them. Obviously I will provide the Minister with a copy of the article I quoted. It will be interesting to see whether the Minister comes back with an explanation. At present I do not find the amendment acceptable.

Baroness Fisher of Rednal

I shall follow what my noble friend Lord Dean has just said. Ultimately, the bill will fall upon council tenants who are not purchasing their houses or flats. We must recognise that 75 per cent. of council tenants receive housing benefits. Although the Government are trying to sell as many council properties as possible, they will pick up a bigger burden in the repair bill for council flats which have been sold since the tenants who should pay the bill will be unable to do so because they are on housing benefit. The housing benefit will have to go up to pay for the repairs to the flats which have been sold. That seems a rather backward step. The Government will be spending money with one hand and giving it away with another.

Lord Skelmersdale

In the case that the noble Baroness cites, if there were no right-to-buy sales in a block, all the money required for repairs would have to come from the usual mixture of central and local government finance. I do not see that that point gets us any further.

Baroness Fisher of Rednal

At present 75 per cent. of Birmingham tenants of council flats, council maisonettes and council everything else have their rents paid by housing benefit.

Lord Skelmersdale

Yes.

Baroness Fisher of Rednal

Let us suppose that the Government sell the 25 per cent. that they are hoping to sell. They cannot sell the 75 per cent. that are occupied by tenants who are on housing benefit, because the tenants are not in a position to purchase them. Of that 25 per cent., 12.5 per cent. need extensive repairs. As the noble Lord is aware, surveys of blocks of flats are still going on. Many of the flats have not yet been surveyed. It takes considerable time to survey a 20-storey block of flats which might have a serious structural fault. If people decide to buy those flats, the burden goes back to the council house tenant. I cannot see why the noble Lord disagrees with what I am saying.

Lord Skelmersdale

I do not think that the burden does go back to the council house tenant. The whole object of the amendment is to let the tenant who wants to exercise his right to buy know in advance what his share of the cost of repairing the common parts of the building will be in the foreseeable future. We are not talking about his own flat.

I do not see that that is affected. The fact that part of the common parts has been sold with the sale of the flat is a bonus to the local authority because it will not have to pay for that part of the repair. I do not see that the amendment will affect the local authority one way or the other because, after all, it is the local authority which will decide that it is going to repair the common parts of block of flats A as opposed to the common parts of block of flats B before the exercise of the right to buy. Everyone will know that the local authority is going to do so. I genuinely do not see where the problem is.

On Question, amendment agreed to.

Lord Skelmersdale

moved Amendments Nos. 12 to 15: Page 3, line 8, after ("125A") insert ("(service charges) or 125B (improvement contributions)") Page 4, leave out lines 5 and 6 and insert— ("Estimates and information about improvement contributions. 125B.—(1) A landlord's notice under section 125 given in respect of a flat shall, as regards improvement contributions, contain—

1. (a) the estimates required by this section, together with a statement of the reference period adopted for the purpose of the estimates, and
2. (b) a statement of the effect of paragraph 16C of Schedule 6 (which restricts by reference to the estimates the amounts payable by the tenant).

(2) Estimates are required for works in respect of which the landlord considers that costs may be incurred in the reference period. (3) The works to which the estimates relate shall be itemised and the estimates shall show—

1. (a) the amount (at current prices) of the likely cost of, and of the tenant's likely contribution in respect of, each item, and
2. (b) the aggregate amounts of those estimated costs and contributions.

Reference period for purposes of ss. 125A and 125B. 125C.—(1) The reference period for the purposes of the estimates required by section 125A or 125B is the period—") Page 4, line 14, after ("charge") insert ("or improvement contribution") Page 4, line 26, after ("charges") insert ("or improvement contributions"). The noble Lord said: In moving the last amendment I should have said that I was speaking to Amendments Nos. 12 to 15, 17 to 22, 24, 120, 121 and 122. I apologise for confusing the Committee. In the event, I beg to move Amendments Nos. 12 to 15 en bloc.

On Question, amendments agreed to.

The Deputy Chairman of Committees (Lord Ampthill)

Before calling Amendment No. 16 I should remind the Committee that if it is agreed to, I cannot call Amendments Nos. 17 to 21.

Lord Dean of Beswick

moved Amendment No. 16: Page 5, line 25, leave out from beginning to end of line 37 on page 6. The noble Lord said: This amendment deals with the same subject. It calls for the deletion of paragraph 16B and the requirement to consult leaseholders. The effect of the amendment is to delete paragraph 16B from the Housing Act 1985. That would restore the position of caveat emptor—let the buyer beware—and require the purchaser of a council flat to accept the same liabilities as any purchaser in the private sector.

Local authorities would still be required to provide estimates, and if they were negligent, they could be debarred from making recovery and/or be liable in damages for negligent representations made to the tenant. Where the estimates are misleading for reasons other than negligence, the principle of caveat emptor would have full force. That would encourage the tenant, like other purchasers, to take the sensible course and commission a structural survey, with action against the surveyor if points are missed. The tenant would still have the protection of the five-year landlord liability period.

Furthermore, the amendment would enable the landlord to prevent a lessee taking the benefit of an improvement to the block as a whole without contributing to it. If that is not done, the additional cost would have to be borne by the remaining tenants and/or ratepayers. Improvements might be prevented altogether where a scheme can only be carried out if all the dwellings in a particular block are included. There are safeguards for the leaseholder because his or her agreement to make a contribution is required. That would normally be found in the lease, and he or she must be consulted before work is undertaken.

Baroness Hooper

This amendment goes to the heart of Clause 2. It would draw the teeth of the provisions of Clause 2 on repair charges. As my noble friend has already explained in relation to improvements, the main purpose of Clause 2 is to protect tenants who exercise the right to buy their flats against having to pay unexpectedly high service charges for repairs. We propose that they should be given estimates, before sale, of the contributions that they would be required to make under the lease to the cost of repairs carried out in, broadly speaking, the first five years. We propose that the landlord should then be bound by those estimates, apart from an allowance for inflation.

The amendment would remove the binding character of the estimates. The tenant would have the benefit of estimates of repair charges for the first five years of the lease, but the charges levied in practice could be much higher than the estimates. The provisions of Clause 2, as already stated, are complicated, and right-to-buy landlords are understandably reluctant to be bound by estimates of repair costs five years ahead. We are well aware that it is disagreeable for a landlord to have to look ahead so far, knowing that if the cost of repairs is underestimated it might not be possible to recover the full contribution from the leaseholders.

That is not, however, a situation to which there is an easy answer. If the landlord does not bear the risk of unacceptably high costs arising, the risk must be borne by the tenant instead. That is what happens now. In a number of cases, I understand, tenants who bought their flats on the strength of estimates that led them to expect to have to pay £200 and £300 a year on service charges, have been faced by bills running into thousands of pounds for major works.

The limitations proposed in Clause 2 were prompted by the bitter experience of tenants who found themselves in serious difficulties as a result of relying on the information given them by their landlords. The Government recognise that tenants who buy their flats cannot expect to be insulated from the expenses and uncertainties of home ownership. In fact, personal responsibility is what it is all about. The leaseholder of a flat will normally covenant to pay a share of the costs of keeping the building in repair. That is fair.

It seems to us right, however, to give some protection in the early years to public sector tenants who have exercised the right to buy their flats. If a building is not of traditional construction, repair costs may well be high; and the tenants are unlikely to have money to spare for wholly unexpected bills. Clause 2 provides for the tenants' liability during the first five years of the lease to be limited in accordance with estimates given before sale. The landlord is, after all, in a much better position than anyone else to judge what expenditure on repairs is likely to be needed over the next few years. On that basis, I hope that the noble Lord will consider withdrawing the amendment.

Lord Dean of Beswick

This also includes improvements. Is not one of the factors at the heart of the matter that people are being encouraged, by substantial and generous discounts, to buy property in a rather unprotected manner? No other section of the community buying a house would be advised that the person selling the house should also act as surveyor of the property. That is an absolute nonsense. I happen to be an owner-occupier. I believe in owner-occupation where people can afford it and desire to be an owner-occupier. I would absolutely quake at the thought of the person selling me the house surveying it and saying that it would remain in the same condition for five years.

Where people are buying substantial houses—in many cases, some of the best houses of certain types in the country—they should accept the responsibility, in some respects, of what they are embarking upon. If people are receiving, as we are told, up to £25,000 discount on the purchase of a council house, is it too much to ask that before they take that property—whether it is a flat or a house—they pay for an independent survey themselves? What would it cost? I shall tell the Committee. It will cost about £300 or £400. If the property is given a clean bill of health or its faults made known through a survey by an accredited surveyor and after that something goes wrong, the professional who carried out the survey is at fault—not the local authority. But the local authority is asked, on the sale of its own property to a council house tenant, to be not only the vendor but also the judge and jury as to the condition of the property. Then, if something goes wrong, it has to guarantee debts out of other council house tenants. That is disgraceful.

Lord Stoddart of Swindon

I wish we could all have that.

6.45 p.m.

Baroness Hooper

There is, I think, some basic misunderstanding here. This clause relates solely to flats. The noble Lord was referring also to houses.

Lord Dean of Beswick

It is the same principle.

Baroness Hooper

The noble Lord referred also to improvements. In fact, the changes that he seeks relating to improvements have already fallen as a result of our having passed previous amendments. I repeat that this is a situation where there is not an easy answer. We believe that the landlord is in a better position than the tenant to do this. After all, there is only a period of five years following purchase where this applies.

Lord Dean of Beswick

Bearing in mind that the amendment is linked to some degree with the Government's own previous amendment, and also taking account of the Minister's assurance that the points I have made will be looked into, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Skelmersdale

I spoke to Amendments Nos. 17 to 22 with Amendment No. 11. I should like to move them en bloc.

The Deputy Chairman of Committees

If Amendment No. 22 is agreed to, I cannot then call Amendment No. 23. But as the noble Lord was perhaps speaking to Amendment No. 23 at the same time as he was discussing Amendment No. 16, that is grouped with it.

Lord Skelmersdale

It might perhaps be simpler for the Chair if I moved Amendments Nos. 17 to 21 en bloc. We can then discuss Amendment No. 22 if that would be easier. I beg to move Amendments No. 17 to 21: Page 6, line 20, at end insert— ("16C.—(1) Where a lease of a flat requires the tenant to pay improvement contributions, his liability in respect of costs incurred in the initial period of the lease is restricted as follows. (2) He is not required to make any payment in respect of works for which no estimate was given in the landlord's notice under section 125. (3) He is not required to pay in respect of works for which an estimate was given in that notice any more than the amount shown as his estimated contribution in respect of that item, together with an inflation allowance. (4) The initial period of the lease for the purposes of this paragraph begins with the grant of the lease and ends five years after the grant, except that—

1. (a) if the lease includes provision for improvement contributions to be payable in respect of costs incurred in a period before the grant of the lease, the initial period begins with the beginning of that period;
2. (b) if the lease provides for improvement contributions to be calculated by reference to a specified annual period, the initial period continues until the end of the fifth such period beginning after the grant of the lease; and
3. (c) if the tenant served notice under section 142 deferring completion, the initial period ends on the date on which it would have ended if the lease had been granted on the date on which the notice was served.

16D.—"). Page 6, line 23, leave out ("this paragraph") and insert ("paragraph 16B or 16C"). Page 6, line 26, after ("service charge") insert ("or improvement contribution"). Page 6, line 27, leave out ("this paragraph") and insert ("paragraph 16B or 16C"). Page 6, line 28, leave out ("under sub-paragraph (5)"). On Question, amendments agreed to.

The Deputy Chairman of Committees

If Amendment No. 22 is agreed to, I cannot then call Amendment No. 23.

Lord Dean of Beswick

There has been some misunderstanding. I was not aware that Amendment No. 23 had been grouped with Amendment No. 26. That is a misunderstanding on my part.

The Deputy Chairman of Committees

If the noble Lord will forgive me, I shall call Amendment No. 22. If the Minister cares to move it, we can then proceed.

Lord Skelmersdale

moved Amendment No. 22: Page 6, line 38, leave out from beginning to end of line 29 on page 7. The noble Lord said: I am sorry that we have got into this little misunderstanding in the Committee. I beg to move Amendment No. 22, to which I spoke with Amendment No. 11. As I understand the position, the noble Lord cannot move Amendment No. 23, to which he has just spoken with Amendment No, 16, if Amendment No. 22 is agreed to.

As I think my noble friend made clear—much clearer than I seem to have been able to do so far—in Clause 2 we are talking about the common parts of blocks of flats, such as staircases, roofs, lifts if there are any, passages and fire doors in the passages. We are not talking about the flat, which should be the responsibility of the new leaseholder; in other words, the ex-tenant who has exercised his right to buy. The noble Lord spoke about houses on the last amendment. I agree that it is the person who has exercised his right to buy who should be totally responsible for a house, except in those rare cases where there are houses which have common services. On very rare occasions there might be a common bit of roof, or something like that, in which case this clause would cover it.

The noble Lord also asked about the provisions on contributions which tenants who have exercised the right to buy their flats might be required under their leases to make to costs incurred by the landlord in carrying out improvements. As the Committee will be aware, the Government have proposed deleting those provisions in favour of a different approach based on the provisions of Clause 2 in respect of contribution to repair costs. Indeed, that is Amendment No. 22, which we are currently discussing.

The clause as it stands provides that a tenant shall not be required to contribute towards the cost of improvements other than improvements of the kinds mentioned in new paragraph 16C(2) of Schedule 6 to the Housing Act 1985 unless he or she has agreed to do so not more than 12 months before the start of the works. The tenant must have been told what works were proposed and how much he or she would be likely to have to pay.

Amendment No. 22 would replace the requirement for consent by a requirement for consultation. It would certainly be helpful for the tenant to have an opportunity to challenge the need for any works which seem superfluous. The amended provisions would not, however, require the landlord to take any notice of views expressed by the leaseholder.

I think it might be helpful to bear in mind that the public sector tenants who have exercised the right to buy their flats will often be in a minority in the building—a point I have made before—most of the other flats being occupied by renting tenants. Improvements may well be of benefit to all the occupants, but leaseholders who are liable to pay a share of the cost can be expected to look more critically at the need for the works than a renting tenant. That is human nature, is it not?

If the landlord is minded to carry out improvements, and the renting tenants are in favour, the views of the minority of leaseholders are liable to be set aside. That is why we have thought it right to protect the position of tenants of flats who exercise the right to buy and may then find themselves asked to pay large and unforeseen sums for the upgrading of the building. The limitations proposed in the clause do not apply to works which the landlord is legally obliged to carry out, or after the flat has passed into the hands of someone other than the husband or wife of the original purchaser, or a member of the original purchaser's family who has been living there.

These are very modest restrictions and I do not believe that they would have a major impact in practice on improvement programmes. I therefore seek to persuade the Committee that Amendment No. 22 is correct and that the amendment of the noble Lord, Amendment No. 23, is not terribly helpful in this context. I beg to move.

Lord Dean of Beswick

I do not think that alters one iota the principle of the argument. We are opposed to almost all that has been said in this clause and what the Government are trying to do. We think that at the end of the day, if there is going to be any "fall guy", it will be the local authority housing tenant. The Minister says that there could be a substantial upgrading. He cannot have been listening in this Chamber for the past two or three years when we have been pressing Ministers and their predecessors about the cuts in housing investment programmes. I should like to know where these substantial upgradings are going to take place. I am sure that the local authorities with which I have dealings would love to publish such a list on the basis of the current housing investment programme. I cannot foresee that happening.

The Minister referred to Amendment No. 23. It would obviously be completely out of order to move the amendment, but the reasons for it do not accord with what the Minister has said. I think we are bound to come back to this clause at the further stages of this Bill, after we have read what the Minister has said and he has had a chance to look at some of the points I raised on an earlier amendment dealing with this aspect.

Baroness Fisher of Rednal

In answering, the Minister specified the kind of repairs that would have to be shared. He mentioned the common walkways, the stairs, the doors and so on. He also mentioned the roof. But those of us who know blocks of flats very well know that often it is the cladding on the outside of the flat that is falling away. Can the Minister tell us whether the person who has bought the flat would have to pay for the part where the cladding is falling off his flat; or does that come under what one calls the common parts of the whole block? When contractors come in, it is very difficult to repair only one part. They generally go all down the side of the block when they do these extensive repairs. Would that be included in what we call the common parts because it is the common part of the building?

The other point I am a little worried about is this. I ask the Minister to accept my apologies if I have not understood him properly. We understand that if there are improvements to the whole of the block, everybody will be paying. I am wrong, am I? Let us take the case of a tenant who moves into a block of flats which the local authority has refurbished. They put in entry phones, and make it better than it used to be. At the present moment it is all rented, shall we say. A tenant moving into that block, I understand, after improvement will not have to contribute when buying the flat. But the people who are already in the block, who have had the improvements done while they are there, will have to contribute to that improvement. Local authorities have not got that right, but I must say that the Government did them out of £7½million and had to be taken to court about it. That is as I understand the situation. When the Minister gives me the answer I shall correct them so that they can amend their recommendations.

Lord Skelmersdale

Again, I think we are back with the basic misunderstanding about this clause, which both my noble friend and I have tried to explain to the Committee. Before I go any further, I should say that in the case the noble Baroness has mentioned—with cladding falling off walls and the contractors going in to do the whole repair—the wall would be a common part.

Baroness Fisher of Rednal

The outside wall?

Lord Skelmersdale

The outside wall. But if the inside of that wall was part of the leaseholder's flat, the leaseholder himself would be responsible for the inside. However, if he were not a leaseholder—and I think this is linked to the second point that the noble Baroness raised—but an ordinary tenant, the tenant would not be responsible for the inside of that wall; it would be the landlord. The landlord is always responsible for the condition of his property.

There are some local authorities which immediately leap on to the band wagon and put up the rents. The noble Baroness knows as well as I do that this happens. Equally, there are other local authorities, which personally I regard as rather bad landlords, which carry out repairs, as indeed is their duty and obligation, but very seldom pass any of the cost on to the tenant. It is the tenant's living conditions which are improved. I say to the noble Baroness that basically it depends on the case in point. If she would let me have details of the particular case she is referring to, I should be able to make a much more germane comment on it.

Baroness Fisher of Rednal

Perhaps I may come back on that point. It is not a question of a particular case. If there are improvements to the whole block, some leaseholders will have to pay, while others will not. A tenant moving into a flat after improvements have been carried out will not have to contribute when buying the flat. But others will have to contribute—

Lord Skelmersdale

Perhaps I may interrupt the noble Baroness. A tenant who moves into a block of flats after they have been improved or repaired, and then exercises the right to buy, would find that that improvement would be reflected in the price of the flat. So, yes, at the end of the day the tenant would have to pay.

On Question, amendment agreed to.

The Deputy Chairman of Committees

I cannot now call Amendment No. 23. The next amendment is Amendment No. 24.

7 p.m.

Lord Skelmersdale

moved Amendment No. 24: Page 8, line 7, leave out from ("of") to end of line 10 and insert ("an improvement contribution otherwise than in accordance with paragraph 16C (restrictions in initial period of lease).".") The noble Lord said: I spoke to this amendment with Amendment No. 11. I beg to move.

On Question, amendment agreed to.

Clause 2, as amended, agreed to.

Clause 3 [Loans in respect of service charges]:

Baroness David

moved Amendment No. 25: Page 8, line 22, leave out from beginning to end of line 35 on page 9. The noble Baroness said: With this amendment we are on a very similar subject to that which we were on in the previous clause. It has been a case of feather-bedding the new owner. Our amendment seeks to delete the right to a loan after the exercise of the right to buy. The new owner is being given an extra benefit in Clause 3, and we think really this is somewhat unfair on the previous owner, the local authority. It is going to be forced to give this loan to help with any service charges or improvements which are made to the property. A similar amendment was moved in another place; but it seems that the Minister may have misled the House, as he asserted—and I quote from col. 129 of the Standing Committee on 25th February: No money will come from HIP (Housing Investment Programme) allocations. All that is being asked for by the local authority from the tenant is the undertaking to pay". This seems to us either wrong or disingenuous. Either the loan will be made as a further charge against the property, in which case it will be an extension of the debt or service charge—in which case the local authority is being asked to forgo a capital receipt (which would arise if the leaseholder obtained the loan from a building society and paid it over to the council). Either way, the local authority is effectively bearing the cost against its scarce housing investment programme resources. I hope that the Minister will totally clarify the point about where this money is expected to come from—which particular purse, which particular pocket.

Why should leaseholders have this right? If they take the benefit of home ownership, they should also take the problems—not that any would be expected. as building societies will almost certainly find more than sufficient equity to provide a loan. Probably, the people will have bought the house at a substantial discount, and so the value of the house will be a good deal greater than the amount they paid for it. In correspondence with the local authority association, the Minister has confirmed that while the local authority will not be required to make a loan to the purchaser, local authorities will nevertheless be required to incur the cost of carrying out the works themselves and then allow the purchaser to repay the cost over a period. That seems to me very much the equivalent of a loan.

The effect is therefore the same because the authority is effectively prevented from getting a capital receipt. If the purchaser had to turn to a building society or a bank for their share of the cost, the local authority would immediately receive the capital sum involved. As it is, they will have to bear the cost of the works out of their housing investment programme allocations and it will be many years before they recover that cost.

It is very unclear why leaseholders should have this right. If they take the benefit of home ownership, they should also take the risks and problems—although it is exceptionally unlikely that building societies would not wish to give them a loan. It should be borne in mind that the leaseholder could purchase a property with up to 70 per cent. discount. It is therefore probable that there will be more than sufficient equity in the property.

As I have said, it is really a case of feather-bedding and putting local authorities which are very strapped for money at a disadvantage. In a way, they are going to have to make double benefit. So I beg to move.

Baroness Hooper

Clause 3 gives the Secretary of State power to make regulations concerning loans in respect of repair charges payable by leaseholders of flats bought under the right to buy or by agreement. In the case of flats bought under the right to buy, the regulations may confer on the leaseholder the right to a loan, in prescribed circumstances, in respect of repair charges payable during, broadly speaking, the first 10 years of the lease. The amendment proposed would remove the provision for loans as of right.

The thought behind the right to a loan is that if a leaseholder is liable to pay an unusually large sum following expensive repairs, such as the replacement of a roof, it is reasonable for there to be time to pay. The right to a loan would give this, while protecting the landlord's position by providing for regular repayments and interest and giving the lender a charge on the property.

It may be helpful if I remind the Committee of the circumstances in which the right to a loan will arise. When a flat is sold under the right to buy, the landlord is required, under implied covenants in the lease, to keep in repair the structure and exterior of the flat and of the building of which it forms part. The lease will normally, however, include a covenant by the tenant to contribute to the costs so incurred.

A loan will be needed only when a service charge for repairs has become payable. Thus the leaseholder will already be in the landlord's debt. The landlord's duty to keep the building in repair arises independently, so if repairs are needed, the landlord will have to spend money on getting them done. All that is at issue here is how quickly the landlord will be able to recover part of its expenditure from a right-to-buy leaseholder.

I find it difficult to accept that the right to a loan will spell ruin for landlords or indeed tempt leaseholders to accumulate a burden of debt. Most leaseholders presented with a bill for several hundreds of pounds, or even thousands, are likely to seek time to pay, and a landlord which expects to get its money by return of post will normally be disappointed. The department knows of a number of local authorities which already make a practice of offering terms for payment of large bills of this kind. The provisions of Clause 3 will enable orderly arrangements to be made for payment. As for luring tenants into debt, the leaseholder considering exercising the right to a loan will, as I have said, already owe a service charge for repairs. All the clause provides is the right to pay by instalments if, and only if, that is the tenant's wish.

I appreciate that the amendment leaves untouched new Section 450B of the Housing Act 1985, which will confer a discretionary power for loans. In the Government's view, however, it is important for tenants exercising the right to buy to receive reasonably uniform treatment regardless of the identity and political colour of the landlord.

I am amazed that the party opposite is so keen on inequality. Indeed, dare I ask it, is the leopard changing its spots? That is why we propose a right to a loan in these cases where the lease was granted under the right to buy. The right to a loan will not, however, arise after the first 10 years, since by then it will be a matter of history that the lease was granted under the right to buy.

When a local authority leaseholder exercises the right to a loan this will not, I can assure the noble Baroness, score against the landlord's capital expenditure allocation, for the simple reason that the landlord will not incur any new capital expenditure as a result. The leaseholder will have the right to leave all, or part, of the service charge outstanding but will not receive any money from the authority. I hope that with this explanation the noble Baroness will feel able to withdraw her amendment.

Lord Swinfen

I wonder whether the Minister can help me? I see that the regulations can provide, where the landlord is a housing association, the right to an advance from the Housing Corporation. How will this affect funds available to housing associations for new developments for elderly disabled people, people without accommodation? Is it anticipated that the loans will be so large that they will affect the funds available to the Housing Corporation, because they are the source of funding for housing associations on new developments?

Baroness Hooper

The right arising under Clause 3 is for the Secretary of State to be empowered to make regulations concerning the loans. The sort of detail that my noble friend has raised will be dealt with in the proposed regulations, which will be a matter of the widest possible consultation which will include local authorities, housing associations, and others.

Lord Swinfen

With the greatest respect to my noble friend, it has nothing to do with regulations. It has to do with the amount of money available to the Housing Corporation. If they are lending their money they will not have the same funds available for new buildings. Is there going to be a separate pocket provided for the Housing Corporation?

Baroness Fisher of Rednal

The point that I wish to make is similar to that of the noble Lord. I think the Minister answered it but I was not quite sure that I understood the reply. Surely the loans that the local authority will have to make to the person who is going to make the purchase will have to come out of their housing investment programme? They have not got any other source of money.

Does that mean that the local authority will not be able to use the money that they were going to use to build new properties or repair other properties, because the loans will be coming out of their housing investment programme as well? The two things are really parallel. The Housing Corporation will be in the same position as the local authorities.

Baroness Hooper

As I understand it, the right to a loan would not affect individual housing associations but would be creamed off the Housing Corporation. So far as the related point that the noble Baroness has made is concerned, the detail of this clause is to be laid in regulations and I would wish to look at it further before giving a more detailed response.

Baroness David

I am not clear from what the noble Baroness has said whether or no the money that the local authority is going to have to forward for these purposes is coming out of the housing investment programme moneys or not. We did not have a clear answer to that.

Lord Swinfen

I wonder whether my noble friend will look further at this and write to me? It is a question of where the funding is coming from and whether this will reduce the amount of money available for housing associations for new developments. I have a feeling that I have bowled her rather a fast ball that she was not expecting, and about which she has not had time to obtain the necessary advice.

Baroness Hooper

I am grateful to my noble friend and to the noble Baroness opposite, and I undertake to write to both on these points.

7.15 p.m.

Lord Dean of Beswick

The noble Lord on the Government Back Bench dealt with the question of housing associations. It became clear from the Minister's answer to him earlier that we are not talking about new money. I think the Minister said that it would come from the Housing Corporation's global money. If you apply that to the public sector, I cannot see the Government not finding new money for the voluntary housing sector and yet finding it for the local authority sector.

I put a question that the Minister may think somewhat hypothetical but it could happen in reality. If you have local authorities with their housing investment programmes and the work they can do with the diminution in the money that they are being allowed, and being severely restricted in their activities, what is the situation—and it is not so unreal as one would think—when they have been landed with the question of rescuing large blocks of flats that were built by industrial and semi-industrial systems, and they are told by the Minister that they have to deal with these problems through their housing investment programme?

The Committee may think I am wandering a bit, but what would be the situation if that particular local authority said, "We are sorry, but we have no money available to deal with particular parts of the Act where we are obliged by the Secretary of State to provide loans for people who have bought council property either to upgrade or to renovate it"? What is the Minister's answer to that? To involve them in a policy that the Minister wants to force them to carry out may well be taking freedom away from the local authorities to do the work that they wish to do. That is part of the situation that this particular part of the Bill could impose on local authorities.

Baroness Hooper

All I can say is that the proposed new power to make loans has not, in itself, provoked controversy. The proposed right to a loan has, however, been criticised. I can only say that experience will, I hope, prove the critics to have taken an unduly gloomy view of the way the provisions will work in practice.

The Government do not have in mind that the regulations should enable right-to-buy leaseholders to stop paying service charges forthwith and apply for loans instead. The right to a loan will, however, make life easier in the early years for tenants of flats purchased under the right to buy.

Baroness David

There seems to be a certain amount of confusion about where the money is to come from and the purpose of this. As with the previous clause, Clause 2, we need to look at this again because we are not satisfied with the answers. We have not had a clear answer about where the money is coming from. We want to read what the Minister has said, and perhaps we can communicate between this stage and the next stage and try to get the facts rather clearer, because they certainly are not clear to me at the moment. It is something that local authorities feel rather strongly about. This is something they will be bound to do, but their resources are very small at the moment.

In the light of the confusion, I shall keep my right to come back at Report stage, but in the meantime I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3 agreed to.

Lord Denham

I think this is the right moment to adjourn for dinner and, in moving that the Committee do now adjourn, I should say that we shall not come back until half past eight o'clock. I beg to move that the Committee do now adjourn.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 7.20 to 8.30 p.m.]

Lord Skelmersdalemoved Amendment No. 26: Before Clause 4, insert the following new clause:

("Consultation before disposal to private sector landlord.

—(1) In Part IV of the Housing Act 1985 (secure tenancies and rights of secure tenants), after section 106 insert—

"Consultation before disposal to private sector landlord.	106A.—(1) The provisions of Schedule 3A have effect with respect to the duties of—
	(a) a local authority proposing to dispose of dwelling-houses subject to secure tenancies, and
	(b) the Secretary of State in considering whether to give his consent to such a disposal, to have regard to the views of tenants liable as a result of the disposal to cease to be secure tenants.
	(2) In relation to a disposal to which that Schedule applies, the provisions of that Schedule apply in place of the provisions of section 105 (consultation on matters of housing management).".
	(2) After Schedule 3 to the Housing Act 1985 insert as Schedule 3A the Schedule set out in Schedule (Consultation before disposal to private sector landlord) to this Act (consultation before disposal to private sector landlord).
	(3) The amendments made by this section apply to disposals after the commencement of this section.").

The noble Lord said: I beg to move Amendment No. 26 and, I regret to say, to speak also to Amendments Nos. 33, 51, 53, 56, 57, 99, 107, 112, 114, 115, 116, 117, 118, 119, 124, 126, 127, 128, 304, 307, 311, 315, 323, 326 and 327.

This somewhat daunting group of amendments will honour an undertaking given by the Government in another place. That undertaking was to give council tenants a statutory right to be consulted about proposals which would have the effect of transferring the ownership or management of their homes to another body. This clause is one that has caused enormous misunderstanding. We have had the remarks of Shelter, for example, which appeared in the press yesterday; we have had the debates in another place on this clause and there has been a total misunderstanding of the Government's intentions.

Therefore, I shall concentrate on the three main amendments since these contain the main changes of substance. The first two insert a new section, Section 106A, and a new schedule, No. 3A, into the Housing Act 1985. The effect of this is to give council tenants a statutory right to be consulted about proposals to sell their homes to a private landlord and to give them, in effect, a right of veto if the majority are opposed to the sale.

The other amendment, which inserts a new Section 27A into the 1985 Act, makes similar provision in relation to proposals to delegate management of tenanted council dwellings to another body. In other words, the tenants have to be consulted and there has to be a majority of tenants in favour. I recognise that these are lengthy amendments, but I am sure that the Committee will appreciate the necessity to spell out in some detail how the consultation arrangements are to work.

This is done in the new Schedule 3A and the new Section 27A. The procedures, I think, are self-explanatory. These new provisions will require local authorities to consult tenants fully and to take their views into account before making application to the Secretary of State. Tenants will also have to be told of any significant changes in the proposals subsequently put to the Secretary of State, including any modifications made to meet their objections. The tenants will then have a further period of at least 28 days in which to lodge any remaining objection direct with the Secretary of State.

If the Secretary of State concludes as a result of this consultation that the majority of tenants are opposed to the proposal he will not be able to give consent and the scheme will not proceed. These provisions will simply put on to a statutory footing the general principles which it has already been government policy to ensure through administrative means.

I refer, for example, to the consultation exercise mounted at Thamesmead where the Government ensured that the tenants were consulted fully and had a direct say in the future ownership and management of their homes. But the Government recognise the deep and real concern of the noble Lord, Lord Dean, and others, for protection for tenants affected by proposed transfers to new ownership or management to be embodied in the statutes. That is why Clause 4 itself has been included in the Bill at all, to ensure that one of the most important of tenants' rights, the right to buy, is preserved by statute when secure tenanted properties are transferred to a private landlord.

Hitherto, such protection has been achieved through complex legal agreements between the parties to such a transfer; but the Government are determined to put the protection of this important right on a statutory footing in this Bill. They are now responding equally positively to the concern about the associated matter of consultation with tenants by bringing forward these amendments. I beg to move.

Lord Dean of Beswick

I am grateful to the noble Lord the Minister for explaining these amendments so far. He is right in saying that the reasons for these amendments are the fears of tenants regarding the question of security of tenancy that in a way they have enjoyed historically. But I do not see where there are enough guarantees—although I accept the Minister's sincerity—that will suffice for the people I have met. Some few weeks before the recess, just before the Second Reading of the Bill in your Lordships' House, I chaired an extremely well attended meeting in one of your Lordships' committee rooms. I do not mean well attended by the Rent-a-Crowd type of demonstrators. It was attended by a large number of what I would call traditional-type council tenants of most age groups. But the preponderance of people at the meeting was mainly middle-aged to elderly who had probably had the benefit of council-house tenancy for a great number of years.

I met quite a number of people whom I did not know particularly, but they knew of me from my former days as a chairman of housing in Manchester. They were drawn from a widespread area, from Newham and other boroughs in London, from small authorities in Lancashire and Yorkshire—and I do not say "small" in any detrimental sense but in terms of housing stock. They came from places like Accrington, places just outside Sheffield. There must have been well over 100 people in the committee room upstairs concerned with the particular matters that we are talking about. The type of comments that were being made were: "I fought through the last war. I was one of the lucky ones and got a council house tenancy just after the war when we were developing Wythenshawe, which is a large council estate area of Manchester, one of the biggest in the country". That speaker went on to say: "I am now 64 and ready to retire. I am not getting any better in health and this is the first time I have felt threatened in my life".

The same could have been echoed by a middle-aged lady and her husband from the Accrington area who were somewhat similarly situated. Certainly, any of us who get better in health as we get older are very lucky indeed. That was the overwhelming type of persons who were worried as to what would happen if there was an attempt to change their landlords. Let us face it, in the normal course of events, as I have said, a person was fortunate—and I say that quite deliberately; because there used to be attempts on occasions to make out councils to be bad landlords—to have a council as his landlord, because in the main local authorities have been good landlords to the overwhelming number of people who have tenanted their houses. Although in the past few years, in law, they did not have the security of tenure that some private tenants had, they knew that once they became municipal tenants, if they behaved reasonably and met their financial commitments to their local authority in paying their rent, they were literally guaranteed a home until the end of their days. As I have said, it is unfortunate now that these people feel particularly threatened, and although I accept that the Minister and the Government are well intentioned in what they are saying, we do not think it goes far enough.

In addition to the people we met upstairs, I have been inundated with unsolicited letters from various people, mostly people who have been council house tenants for a very long time. I note the point the Minister made regarding the Shelter brief, but the fact is that the people we are talking about as being affected by this—I am not talking about the potential new owners but about people who have lived all their adult life in their council housing and have brought up their children in them until the children have left to make their own homes elsewhere—are the people who feel threatened. They have no desire to have their tenancy terms altered. They are quite happy to be municipal tenants, with all the faults, the virtues and the service that such a tenancy gives them.

Having said that, the Secretary of State is prepared in the majority of circumstances to act: but what really will that mean? In actual terms, it is not a copper-bottomed guarantee. How do the Government arrive at the fact that one-half or two-thirds of the tenants or a simple majority of the tenants do not want an alteration? There is no guarantee that this scheme could be carried out functionally to the satisfaction of the tenants. We believe that the only way to deal with this particular situation—this is a thread which runs through other amendments to the Bill—is to allow a public inquiry to take place so that the tenants can put their case fully and individually. The results of such a public inquiry would adduce without any shadow of doubt what the people involved in these proposed changes of tenancy think about their situation.

Before coming to this Chamber I heard in other places, throughout my life—I think the last time I heard it was in this Chamber, stated by the noble and learned Lord, Lord Denning—that an Englishman's home is his castle. In my layman's terms, I think it means that his home is sacrosanct and that he ought to have the ultimate protection for his home that the law of the land can give him.

I accept the good intentions behind what the Minister has said and I accept that this proposal has been brought forward on the basis of the discussions that took place in another place. But my impression of the situation is that it was only in the latter stages of this Bill in the other place that tenants in local authority housing started to realise what was happening. Most of the letters I received clearly indicated that the problem as they saw it was that they were only weeks away from the time when their security of tenure could be threatened and they could be faced with a new landlord, with all that that meant.

Athough some people may accept what the Minister has said—that the Government's intention here is that they should have the protection of the Secretary of State—I am not sure that they are reassured, because on a number of occasions (and here I have to deviate a little from the somewhat non-political approach to parts of the Bill that we have seen so far) I have had to remind the Chamber that over the past few years—in fact, over a great number of years—it has not been unknown for Secretaries of State to make mistakes and commit an act, mostly unintentionally, which has turned out to jeopardise, if not to be the opposite of, what they thought they were doing. One has only to go back to a number of instances concerning Ministers in the present Government. The present Secretary of State is an example, and his predecessor was another example, as was his predecessor. They took certain actions and made certain decisions that were found to be contrary to the law as it stood at the time.

In fact, we have had the situation where the present Government have had to become involved in retrospective legislation in order to deal with mistakes of judgment by Ministers. I am not too sure, but I think the last one was on the Birmingham issue where Birmingham proved that they had been dealt with incorrectly on the question of penal sanctions or punitive measures on rate capping: that was the area involved. For the Government to get off the hook—because the Secretary of State had blundered—they had to have recourse to bringing in new legislation.

I say that on the basis that an Englishman's home is his castle, and we want to remove at a stroke the threat which hundreds of thousands of responsible, honest-to-goodness working-class council tenants fear. I believe the Government should accept the amendment which suggests that that course be taken. If the Minister were able to say tonight that he accepted the principle of the public inquiry system being made available to tenants where even a single property is involved, tenants ought to have the right to know that the law is impartial. They ought to know that the courts of the land—and in spite of all our criticisms of them I think they are second to none—will indicate through the public inquiry system that a public inquiry, when it is conducted in a proper manner in accordance with the laws of the land, is binding.

I do not think that any Secretary of State in such a situation would attempt to interfere with that. It would be gratefully received not merely by the overwhelming majority but, I would say, all the municipal tenants I know if the Government were prepared to say that in circumstances where they felt threatened or did not want to change their tenancies they would have the recourse of going to a public inquiry in order to protect their homes, in which some of them have lived all their lives and in which they want to spend the rest of their years—in some cases not a lot of time—and to do that with this threat of eviction or disturbance lifted permanently from their heads.

8.45 p.m.

Lord Stallard

I should like to support my noble friend Lord Dean of Beswick in his opposition to this amendment. We are dealing here with some 23 amendments, which is a fairly large number, and they are not all exactly the same.

Concerning the Minister's opening remarks in which he referred to the undertaking given in another place, that undertaking was in fact repeated in this House at col. 904 of Hansard for 30th July, when the noble Lord, Lord Elton, said: Transfers of tenanted property to the private sector also require the consent of the Secretary of State. I can give a firm undertaking that we shall introduce amendments which require consultations with tenants before such transfers take place", and the Minister leaned heavily on that undertaking.

The Minister then seemed to be pouring scorn on Shelter's concerns and by inference on the Organisation of Tenants and others who have looked at this Bill as well as they are able in the circumstances and in the time provided. He came to the conclusion that there had been a great deal of misunderstanding. During the Recess, I have attended many meetings with tenants from all over the country and I also came to London, spoke with various people and had meetings with Shelter. I did not find any misunderstanding. I found a bit of mistrust here and there, certainly, and of course a lot of worry.

One gets the impression, as I did listening to some of the Government spokesmen and some of the people supporting the Bill, that we are dealing with commodities, almost like china plates on a stall in the market. The meetings which I attended were dealing with people, tenants and real problems. As my noble friend Lord Dean of Beswick has pointed out, some of these people have waited all their lives for a decent place and they are worried that it will be snatched away or that they will be evicted. There are others who are still waiting for a place and are worried that places will be sold before they can be considered to be rehoused. There are real fears and there is a great deal of justification for some of the mistrust.

I want to spend a few minutes now looking at what the Minister has suggested and what the undertaking means. I share most of the views expressed by Shelter, formed by my experiences with tenants, and I do not think that the new clauses set out by the Government and introduced by the Minister tonight are adequate. I think they leave many gaps and questions to be answered and that we should try to get those answers.

First, there is the question of consultation. I do not know whether the Minister has had any experience of this, but in industry the argument between employers and shop stewards has always included the argument about when consultation is truly consultation and not simply the passage of information. This is an important point, because management may feel that in many circumstances all they have to do is to tell the shop stewards or workers what they intend to do and that will rank as consultation. The same appears to apply here. The new clause requires councils to inform tenants once they propose to hand over the management or ownership of their homes to the private sector. It seems to me to be a bit late to begin a consultative process once that point has been reached.

Having served on a local authority, as have many noble Lords, I know the process that councils go through before reaching the stage of putting such proposals forward. Much goes on before that stage is reached, but it is at that stage that they intend to inform tenants, rather than, as I should have thought desirable, involving them at a much earlier stage. That part of the new clause is certainly unclear so far as I am concerned, and so far as Shelter is concerned as well.

We have a number of examples. We have the example of the Teviot Estate in Tower Hamlets, where there was certainly no consultation and where there is a great deal of worry and concern even now about what will happen to their estate. We have the examples of the Waterlow estate and the Elgin estate in Westminster where similar things have happened. I have a great deal of correspondence, including a letter from the Hadrian Estate in Hackney. They say, It has been planned for the last few years that our estate would be refurbished. Recently a refurbishment scheme was submitted to the DoE but was refused. Instead of being adjusted and resubmitted the newly-set up Neighbourhood Committee decided on the 11th June (at a meeting we knew nothing about)"— that is, the tenants— to market the whole estate. We haven't at any stage been consulted and the majority of tenants on the Hadrian Estate wished to remain as council tenants and see the flats refurbished". They also referred to the Waterlow and Teviot and other estates in London, where there has been no consultation and where tenants found out such information by accident.

In one case we understand that the council involved had arranged for a private firm to print the details so that the tenants would not get hold of those details and there would be no leak. So much for consultation! That has not been cleared up and it has not been made clear to the tenants to whom I have spoken and listened. We would therefore expect something with more teeth in it and something which tenants can understand and trust.

Concerning what the tenants will be consulted about, this again is not clear. It has never been made clear to anyone in any of the associations with whom I have spoken. The new clauses simply require the councils to inform and consult about any proposal to hand over management or ownership. There are many things which can happen to flats and homes apart from management and ownership. There are other options that tenants should be consulted about. There are a number of alternatives, such as tenants forming some kind of co-operative or management unit. There are many options which should be discussed in this area. It is not clear and it has not emerged that there will be anything of the kind. All the council is required to do is to inform and consult about the proposal to hand over management or ownership and nothing more. Once again, I think that we can understand their fears.

If there is to be consultation, what information will the council have to supply to the tenants? That is a relevant question which Shelter asks. The new clause simply requires councils to supply tenants with such details as they, the councils, consider appropriate. That is not adequate because there are other details which tenants might require and which they might consider to be appropriate.

This clause implies that whatever the council considers to be appropriate for these underlings or commodities which we call tenants will be told to them. That would not seem to be good enough, because we would expect them to be consulted about future rent levels, about future lettings, about equal opportunities and perhaps about policies on harassment which will be covered by later amendments. All these things could be the basis of real consultation with tenants when their future is being considered.

Whom would the councils have to consult? They have only to consult with those tenants whose homes would be handed over to the private sector. That leaves many people who are directly involved in the future of the houses and flats. I should have thought that people who are on waiting lists might be concerned. In my own authority there are 30,000-odd of these people and they have a stake in what happens to these blocks of flats. All of the ratepayers who have contributed to the purchase of these blocks of flats and the land on which they stand should have a say in the future of them, since they are looking to the future for their children, want them to have somewhere to live when they are married, and so on. There is a whole area in which councils ought to consult not only with the tenants immediately involved, but with others who have a right to some kind of knowlege of what will happen.

Concerning the veto and the vote mentioned by my noble friend Lord Dean of Beswick, if such a proposal were put in a clause and in a schedule I should have thought that there would have been details of how that vote or veto was to be managed and organised and what the structure would be. Are we simply going to hope that a leaflet will be sent round to tenants' organisations so that a few hand-picked or interested people will turn up?

A meeting will be arranged, there will be a show of hands, and that will be that. How is the council to judge the real view of the tenants, and what will be the machinery? Again, that is a perfectly reasonable question for tenants, because it is probably the most serious matter in which they will ever be involved, if they have lived in those flats for a long time, or hope to live in them until the end of their days. There is no more serious decision that they will ever have to make, and they ought to have all the facts and consultation. The only machinery for this is a ballot, but there is no provision for that in any of these amendments.

So how can the Minister say that there is any misunderstanding? I should have thought there was a great deal more understanding on the ground outside among the people directly involved than I have heard from Ministers in either House or have seen in any of the committee minutes. Let us assume that there is a structure. The noble Lord the Minister will say, "You are quite right. We ought to spell out how councils take decisions and we ought to be sure that the democratic process is rightly carried on."

But what will happen then and where is the misunderstanding?—because the new clauses would ensure that the hand-over of tenants' homes will be considered valid in law, even if the Government and the council fail to inform, consult and consider tenants' views, because if we look at page 13 of the Marshalled List, we see that paragraph 6, which is headed Protection of purchasers, reads: The Secretary of State's consent to a disposal is not invalidated by a failure on his part or that of the local authority to comply with the requirements of this Schedule". So even if they have gone through all that it does not invalidate the Secretary of State's right. He can say, "I notice what has been said. You have had consultation. But it is not on." That is repeated on page 18 of the Marshalled List where subsection (7) states: A management agreement made with the approval of the Secretary of State is not invalidated by a failure on his part or that of the local housing authority to comply with the requirements of this section". So there is a get-out from any of the procedures that are not even laid down in the schedules; and the Minister says that there is a misunderstanding.

But who is misunderstanding what? I suggest to him that we certainly understand, and I say that the only real way to answer it is to have some form of public inquiry where these proposals are set out, where there would be an opportunity for tenants and others to have their objections considered in detail. Then, if the tenants have a right to a veto or a vote following such an inquiry, that would provide an adequate safeguard against the hand-over of their homes against their wishes.

There is no other way if we are really sincere, and I accept that the noble Lord who is answering this debate is sincere and concerned about the situation. But the misunderstanding is on the Government's side, on the noble Lord's side, and there is certainly no misunderstanding on our side about the inadequacy of this set of clauses as they are worded at the moment.

I hope that the Minister will be able to say that he will have a look and come back with something that is a little more solid and real as regards people's main asset and the biggest problem that many of them will ever have to face. This matter ought to be treated more seriously.

Baroness David

I wonder whether I may add to what has been said. Of course, I agree with everything that my noble friends have said, but I should like to raise one further query. Could the amendments which have been proposed even, perhaps, reduce tenants' inadequate existing rights of consultation if their council is planning to dispose of their homes to the private sector? I refer to tenants' existing rights of consultation as established in the Court of Appeal judgment in the case of Mrs. Eileen Short v. The London Borough of Tower Hamlets. That case concerned the way the council decided to market Mrs. Short's home, in principle, for sale to private developers without their even informing, let alone consulting, Mrs. Short as to her views on the matter.

Although Mrs. Short lost on the facts of her case. the judgment emphasised two important principles: tenants are entitled to be consulted under Section 105 of the Housing Act 1985 not only about a firm plan to hand over their homes to the private sector, but also before their council can decide to pursue privatisation of their estate; and tenants are entitled to be consulted not only about a decision to pursue privatisation of their estate, but also about a decision to reject an option of improving their estate in council ownership.

A decision to privatise falls within the scope of Section 105 as it concerns a housing management matter and would, if implemented, substantially affect tenants. A decision to reject an option of improvement also falls within the scope of Section 105 as it represents a change in housing management policy. The Government's amendments outline a procedure which would replace tenants' existing rights under Section 105 of the Housing Act 1985 in relation to a proposal to delegate management or to dispose of their homes. It is very unclear what is the relationship between this procedure and tenants' existing rights of consultation under Section 105 of the Housing Act.

What are the Government's intentions? Has counsel's advice been taken on the relationship of these amendments to tenants' existing rights and, if so, what was the advice? I hope that the Minister can inform us on this.

Lord Skelmersdale

I am a little confused by the concerted Opposition attack on this set of amendments, and indeed on the clause which they seek to amend, because I genuinely believe that the effect of these provisions has been completely and utterly misunderstood. The more I heard noble Lords opposite, the more I was genuinely convinced that I was right and that they have been misunderstood.

These new provisions will require local authorities to consult tenants fully and to take their views into account before making application to the Secretary of State. Tenants will also have to be told of any significant changes in the proposals subsequently put to the Secretary of State, including any modifications made to meet their objections. The tenants will then have a further period of at least 28 days in which to lodge any remaining objections direct to the Secretary of State. If, as a result of this consultation, the Secretary of State concludes that the majority of tenants are opposed to the proposal, he will not be able to give consent. It really is a veto by tenants. There is no other way to describe it. It is there and I have explained it. It is there in the Bill which I am seeking to amend. As I say, the Secretary of State will not be able to give consent by law and the scheme will not proceed. There is nothing inadequate or unworkable about that.

The noble Lords, Lord Stallard and Lord Dean, spoke of meetings which had taken place with the tenants' association, representatives of Shelter and various bodies which were concerned. The noble Lords expressed some concern about provisions which provide that a disposal or management agreement is not invalid if the council has failed to consult its tenants properly. But there is nothing devious about these provisions. As I have said, local authorities will be under a statutory duty to consult their tenants. These further provisions are necessary to provide reassurance for private sector purchasers of tenanted council houses or bodies entering into management agreements that the deal cannot subsequently be declared invalid because, for instance, of some minor flaw in the way in which consultation with the tenants was carried out.

The noble Lord, Lord Stallard, asked how in this circumstance the Secretary of State would operate. I must tell him that the Secretary of State will not be able to give his consent if a majority of the tenants show him that they are opposed to a sale. It will be in the tenants' own hands to make sure that he will be in no doubt as to their views.

The noble Lord, Lord Dean, asked me how the Secretary of State will know what the tenants think. Paragraph 3(3) of the amendment requires a local authority to tell the tenant of his right to object to the Secretary of State, and then there is the ban on the Secretary of State giving his consent if a majority of those affected object. In addition, the Secretary of State can and does require information from the landlord on the results of the consultations. I do not see—

Baroness David

Perhaps I may interrupt the Minister. He quoted a paragraph. I wonder whether he can say to which amendment and to which paragraph he refers?

Lord Skelmersdale

I am talking about page 12 on the Marshalled List and paragraph 3 of the new schedule. I am talking about paragraph 3(3).

I do not see the practical problem that the noble Lord opposite sees. The noble Lord, Lord Dean, referred to tenants' historic security of tenure. This was brought in, I am duty bound to remind him, in 1980 by this Government and tenants' charter rights were extended in the 1984 Act. Our record shows our concern to give tenants statutory rights and safeguards.

The noble Lord, Lord Stallard, did very well to remind us that housing is not about commodities and is not really about the houses—it is about the people who dwell in them, whether they are tenants, owner-occupiers, leaseholders or whatever. Housing, as I have said in this Chamber on many occasions in the past three years—and the noble Lord has echoed my thoughts today—is about people. I could not agree with him more. The effect of these amendments on people is what we are really discussing in this short debate.

The Housing Act 1985 already provides for tenants to be consulted about matters of housing management. The provisions we are discussing now give additional rights to tenants where disposal or delegation of management is proposed. Noble Lords opposite ask whether it will be real consultation. If the tenants reckon it is not real consultation they have it in their own hands to exercise their veto. As to the timing and nature of the consultation, these amendments will ensure that consultations continue to take place. Clearly the proposals must have been considered in some degree of detail by the council since otherwise unnecessary anxiety and concern will be caused by premature consultations. It is certainly not in the councils' interests—the landlords' interests—to have that. After all, they are democratically elected in the same way as governments are democratically elected.

Once the council has established that a proposal to sell an estate or to delegate management is feasible, clearly detailed consultation is required and meaningful consultations with all the cards on the table can then take place. As I have already said, if the tenants then disagree with the proposal, they will have the means to prevent it taking place.

The amendments do not spell out the machinery of taking a vote because this would be inflexible. Disposals may take place on very different scales and may involve either large or small groups of tenants. Again, I do not want to comment on the individual case which has been brought up this evening, but of course the department, as it always does, will study the judgment with great care. If it sees the need, it will come back to noble Lords at some future time.

All that noble Lords opposite have said just shows me how vital it is for the tenants to have the final say in this matter. It is the tenants we are interested in, and it is the tenants who (a) must know what is going on, and (b) must be put in a position to decide something which, after all, is proposed in the first instance not by the Secretary of State but by the very landlord about whom noble Lords are worried in regard to its interaction with its own tenants.

9.15 p.m.

Lord Stallard

Before the noble Lord leaves that point, will he not concede that the onus is on the Government? It is not good enough for the Government to throw the onus on the tenants to do all this and make their views known. The Government are saying, "We shall give them consultation, we shall set up the consultative process between us and the council". I say that the onus is on the Government, therefore, to provide the resources and all the rest of it for the tenants to be able to participate in that consultation. The onus is on the Government to find out exactly how the tenants feel about something. They should not throw it back to the tenants and say, "Well, we've put a wishy-washy thing in a Bill. Now the onus is on you to let us know what you think". The onus, I think, is on the Government to find out how tenants feel on this matter.

Baroness Nicol

I am sorry to add a new voice at this stage but it might be convenient for the Minister to answer this point at the same time. Going back to page 13, paragraph 6, if we are so concerned about the tenants, in that small paragraph it says that the disposal will not be invalidated if someone has failed to do all that he has to do in consulting tenants and so on. What redress will the tenants have if a disposal takes place without their consent or without their knowledge, which is perfectly possible if someone is not doing the job properly? What redress will the tenants have, and what compensation, if necessary?

Lord Skelmersdale

Assuming this Bill becomes an Act in the form in which I hope it will, that procedure will be totally invalid because it is illegal. I will get to the point about paragraph 6 in a minute. What I was talking about was what the effect on the tenants will be, and the noble Lord came back to me, quite reasonably, and said: "Well, shouldn't the Secretary of State be the promoter in all this, rather than the tenant?" Well, of course, neither is the promoter in all this. The promoter in all this is the local authority who wants to pass the building over to a private sector landlord. It starts the ball rolling and then you have statutory consultation with the tenants under previous enactments. That statutory consultation must take place; as a result of the consultation the tenants then have to make up their minds, from their own point of view, whether they think the landlord is doing the right thing. They will then make their views known, usually in a tenants' referendum.

The noble Lord, Lord Dean, asked me whether a public inquiry might not be a better way of doing this. We have considered it, but there are problems, of course, with public inquiries at the best of times, and all Secretaries of State at all periods, under any government, regularly get criticised when they make their views known as a result of an inspector's report at a public inquiry.

I would suggest to the Committee that noble Lords are far better off giving this right of veto, which I have described on numerous occasions now, to the tenants themselves who will, by law, have to know what is going on. The tenants' redress will be against the local authority or the Secretary of State, not against the purchaser who had no duty to be involved in the consultation in the first place. In other words, the redress is against the promoter of the particular deal which is being considered at the time, and nine times out of ten it will be the local authority. The tenth time, it will be the Secretary of State.

Lord Stallard

The noble Lord said a few moments ago that the Secretary of State is not the promoter here, it is the local council. He gave me the impression that there might be some discretion on the part of some local councils, who may want to operate these schemes. Is that what the Minister is saying? Is he saying that this Bill allows councils to exercise some discretion on whether or not they go through with this procedure? Can the Minister now confirm that the Secretary of State is involved, and ought to be involved, in the promotion of these matters under the Bill?

Lord Skelmersdale

On occasions the Secretary of State, as all Secretaries of State do, will suggest to a council that it consider that it might be through the urban housing renewal scheme, for example, that the right way to manage a property would be not to keep it in its own ownership but to pass it over to the private sector. That happens from time to time now, so the Secretary of State may, as I said, in very few cases be involved; in which case, if the Secretary of State is at fault, it will be to the Secretary of State that the tenants would have redress.

I have been asked about paragraph 6 of Schedule 1. The Secretary of State's consent to a disposal is not invalidated by a failure on his part, or that of a local authority, to comply with the requirements of this schedule. It means exactly what it says. It does not mean what I think Members of the Committee have interpreted it as meaning—that this would invalidate either the previous housing Acts to which I have referred or the clause which gives this schedule validity. Again therefore I do not see that this is a particular problem.

Lord Dean of Beswick

Does not paragraph 6 mean that it removes from the tenant the normal right to have recourse to law if, by accident or design, the local authority and the Secretary of State allow the proposal to go out of time? I see that the Minister shakes his head, but I should like to see how it would actually work.

In replying to myself and my noble friend Lord Stallard, the Minister made a point of saying that it was only in 1980 that council house tenants obtained security of tenure. I do not recall that I said anything other than that; although I did not particularly refer to 1980. However, if the noble Lord checks Hansard he will find that I said that council house tenants did not historically have the same security of tenure as do people in the private sector, but that it was a fact of life that when people became council house tenants and behaved themselves by keeping to their obligations and financial responsibilities by paying the rent, then they had security of tenure in fact although not in statute. I said that it was only in recent years that security of tenure was made into law.

The Minister will forgive me if I remind him that the Opposition do not have the facilities to check all the details needed for these debates and on what may be coming up. They do not have the same facilities as do Government Ministers, handicapped though they are by the lack of service. It is not entirely in accordance with what one would normally expect to quote details in a Bill such as this when dealing with it at such short notice.

Having heard what the Minister has to say, I am not convinced—and I am not being awkward—with his explanation that the local authority will have a ballot, that they will sound out their tenants, that they will go to the Lord High Executioner, the Secretary of State, who can say yea or nay. We have not been told what will be the actual mechanics of the situation. I put that point at one of the meetings of various people but I could not obtain an answer.

Housing is a very lucrative financial field in which to operate. Why I am in favour of a public inquiry as against a simple ballot is because a public inquiry is more of a quasi-judicial meeting. It has certain things going for it that are undeniable. No inspector who has conducted a public inquiry would dare try to prostitute a decision reached by the people involved in that inquiry, in this case the tenants.

I have another reason for saying this. Here I am speaking hypothetically, but it is a point that I have put to a number of people. Not all the people who deal with houses have a history which shows them to be the most law-abiding and high-principled people that the Minister appears to think they are. I have only to think back to the Housing Act 1957 and what that produced in the form of Rachmanism. I am not saying that this would happen, but it is possible that it may happen with unscrupulous operators. There are some very difficult estates in the country—in the London boroughs and the urban areas—which are like pots that are boiling and simmering all the time. They contain the properties for which the local authorities should like to relinquish responsibility if they had to discard properties.

Let me put this situation to the Minister. Just imagine a case in which a not too well principled property developer wanted to get hold of a particular area where perhaps 70 per cent. of the tenants—and the figure could be as high as that in some adminstrative areas—are in fact receiving either a total rent allowance or a very high proportion of it from social security payments. Let us suppose that in the time it took to hold a ballot it is made known to those tenants that if they vote a certain way, they will be financially rewarded for doing so. Do not say that it could not happen. It is something that it is possible to envisage in certain circumstances. I have to say that for the life of me I would find it difficult to believe that if that sort of exercise took place, it would not influence any ballot of those tenants, knowing as I do that some of them have never seen the sort of money about which we are talking.

Property is increasing in value at a great rate and it is worth getting hold of it, modernising it and making it more attractive to a wider market. It is one of the things I worry about. As I say, my fears may never be realised, but I have asked whether such activities, if they were to be indulged in, would come into conflict with the law as it stands at present on corruption and bribery. Unfortunately, the only legal opinion which has been given to me is that they would not.

So that is another argument in favour of a public inquiry, which I believe would take the responsibility away from the Secretary of State in some respects and which would take the responsibility away from the local authority. In my opinion the public inquiry would deliver a verdict in favour of the tenants and reflect their views. They would be far more ready to accept it and in some respects it would be more easily understood by them than would a series of ballots up and down the country operated and organised by their own local authority, who in fact would be the people who want to carry out the exercise. Though the Minister has done his best to explain that the provisions in the new clause as they stand in this Bill deal with that problem, I suspect that the overwhelming number of council house tenants would say. "No, they do not".

Lord Mottistone

Does the noble Lord think that he has set up a great Aunt Sally of a special circumstance which might happen? I quite agree that it is something which might happen, but is he saying that it is something which will happen all the time? Is he saying that therefore we must have a public inquiry, with all the expense and trouble that that involves? I am sure that the noble Lord has been involved in public inquiries, as indeed I have. He knows that a public inquiry is a much bigger affair than this quite simple opportunity for tenants to have a say, which it seems to me, as my noble friend has said, is a very sensible procedure. I would suggest that the noble Lords opposite have made a great meal—43 minutes of a meal—out of this question, on a matter which is trying to give the tenants some sort of opportunity to say what they think. There may be special cases when they are misled, but it is really not worth the fuss.

9.30 p.m.

Lord Dean of Beswick

I am sorry that the noble Lord takes that view. I have been here since three o'clock. I have not moved out of the Chamber other than to have a meal. Those Members of the Committee who know me know that I am not noted for filibustering, either here or in the other place. That was a little naughty, because the Opposition take the view that this is the most important part of the Bill.

It is the tenants' fundamental right to have the final say in their future and to say who their landlord is to be. I put forward the argument at the end of what I said, not to persuade anyone but just to give my opinion that nothing I have heard from the Minister convinces me that any ballot, however organised, is as well able to deliver an unassailable verdict as is a public inquiry. I stand by that opinion.

On Question, amendment agreed to.

Lord Skelmersdale

moved Amendment No. 27: Before Clause 4, insert the following new clause: ("Certificate of fair rent with a view to disposal by public sector body. .—(1) In section 69 of the Rent Act 1977 (certificates of fair rent), after subsection (1) insert— (1A) A public sector body to which this subsection applies may, with a view to the disposal of an interest in a dwelling-house, apply to the rent officer for a certificate specifying a rent which in the opinion of the rent officer would be a fair rent under a regulated tenancy of the dwelling-house—

1. (a) in its present condition, or
2. (b) after the completion of works of improvement, conversion or repair.

(1B) In subsection (1A) 'public sector body' means an authority or body within section 80(1) of the Housing Act 1985 (the landlord condition for secure tenancies) other than the Housing Corporation, a housing association or a housing trust which is a charity. In this subsection 'housing association', 'housing trust' and 'charity' have the same meaning as in Part IV of the Housing Act 1985. (1C) A certificate under subsection (1) or (1A) shall be known as a certificate of fair rent.". (2) In section 69(1) of the Rent Act 1977—

1. (a) after "improvements", in both places where it occurs, insert "or repairs", and
2. (b) at the end add—

No application shall be made under this subsection if an application could be made under subsection (1A) below.""). The noble Lord said: I beg to move the second new clause before Clause 4, and I should like to speak also to Amendments Nos. 113 and 321, which are consequential upon it.

These amendments introduce changes to the law on certificates of fair rent in Section 29 of the Rent Act 1977 and Schedule 12 to that Act. They will enable local authorities and other public sector landlords to apply to the rent officer for certificates for fair rent in respect of residential properties which they are thinking of selling to another landlord. That is because in such cases sitting tenants normally become entitled to fair rents under the Rent Act 1977 after such disposals have taken place.

In negotiating prices for sale, it will be important to establish how much rent the prospective purchaser will be able to charge. The certificate of fair rent will specify what the fair rent for the property will be either in its present condition or on the basis that it is to be upgraded. The amendment also allows any landlord to whom Section 69 applies to apply for a certificate of fair rent where repairs are to be carried out. The amendment to Schedule 12 provides that public sector tenants are to have the same right of consultation as that afforded to tenants under the existing procedures and the same right of appeal to a rent assessment committee. I hope that on this occasion the Committee will feel that this is a reasonable provision. I beg to move.

Baroness David

Some authorities will welcome public sector bodies having the additional power to apply for certificates of fair rent before disposal. It could provide some protection to tenants, though it is insufficient protection where disposals occur. Rents are almost certain to rise because of this provision, because local authority rents are generally lower than fair rents. That will increase the cost to tenants and also to the Exchequer, as housing benefits will also increase. Who is this amendment intended to help?

When council homes are disposed of to the private sector they need not be let at a fair rent. Instead, they will probably be let under assured tenancies. That is what we are rather suspicious of. The rent which could be charged will be higher than a fair rent and tenants could have reduced security of tenure. That is what worries us.

The Government wish the factors to be taken into account in estimating a fair rent to include improvement, conversion and repair of property. It is exactly the same wording as under the extension of the assured tenancies scheme in Clauses 8 and 9. It underlines the Government's intention that the procedure should facilitate the disposal of council stock to the private sector to let under assured tenancies.

We are worried about the effect on tenants. Will they lose some of the existing rights given to them under this Government's previous legislation? Will they keep their rights as secure tenants to repair, to exchange and to assign, and their rights of consultation? We fear that tenants' rights on disposal may not be so great as they are at the moment when they are secure tenants of the local authority. We fear that this will facilitate the handing over of estates to private owners. We are anxious about the implications for the tenants. I should like to know from the Minister about those he considers will be helped by the new clause at the end of the day. What is the real aim?

Lord Skelmersdale

There are two points here, are there not? The noble Baroness started by expressing concern about tenants' security of tenure. Of course, the position is not exactly the same. Local authority tenants operate under one Act of Parliament and private sector tenanted property comes under another. If the property in this case is sold to a private sector landlord, the security of tenure of the sitting tenant would come under the Rent Acts. That does not mean any loss—absolutely none—of security of tenure, I am advised. At the moment if, after the transfer of the property, the tenant applies to the rent officer for a fair rent, he can do so. But it means that the new landlord will know what his rental income is only after he has bought the property. That seems fairly straightforward. The amendment enables the proposed new owner of the property to make a judgment in advance of purchase. It may well be the case, with a good local authority, where the rents are reasonable, that the situation described by the noble Baroness of a rent lower than the fair rent would not apply. Equally, the position may be that which she has described. The noble Baroness tempts me, although at this time of night I shall resist the temptation, to go into the whole question of local authorities as managers and owners of tenanted property. I do not feel, however, that such remarks would be a service to the Committee.

The amendment is partly, although not principally, to help the prospective purchaser of property and partly, but not principally, to help the local authority itself. After all, as I said on the last amendment—although I had great difficulty in making myself understood—it is almost always the local authority that starts this ball rolling. It is the tenants who make the final decision at the end of the day.

Lord Stallard

The Minister has not replied, surely, to the point made by my noble friend Lady David. The procedure at the moment under Section 69 of the Rent Act 1977 means that a property owner who is contemplating carrying out improvements to a property can apply to the rent officer to discover whether this would be worthwhile in terms of rent income that he would receive. The rent officer then issues a certificate of fair rent. The property owner then goes ahead and improves or lets the property. He applies within two years to the rent officer to register a fair rent. The rent officer will then register the same rent that appeared on the certificate. That is not what we are talking about here.

We are involved in the exercise of making it more attractive for councils to pass over these properties to private landlords or whoever wishes to buy them. Therefore, as I read the situation, they are being allowed to include not simply improvements but also conversions, repairs and other factors in the determination of the amount of rent that the new developer and the new property owner may be able to get. This makes it much more attractive. As already stated, this takes it into the area not of fair rented tenancies, but of assured tenancies, to which we shall come in Clauses 8 and 9. I do not think that the Minister has replied to that.

I see this issue as a preparation for a debate on Clauses 8 and 9 on assured tenancies (to which we come later) and as part of the whole exercise to make it far more attractive to a landlord who would now want to purchase these and know that he is assured of a higher income than the fair rent procedure, as we understand it, set out in Section 69 of the 1977 Act. I think the Minister would be hard pressed to deny that other factors would be allowed to be taken into account other than those laid out in Section 69.

Lord Skelmersdale

No. I think that the noble Lord has not understood that we are talking about two totally separate matters. In this new clause we are talking about the fair rent that the property would attract if it was in the private sector in exactly the same state as it now is. In other words, the landlord has had a good indication of how much rental income he will get if he buys the property.

The second case, with which perhaps the noble Lord is confusing this, is the fair rent certificate which he mentioned. That happens where a landlord in the private sector decides whether it is worth his while to improve the property. But that can only happen after the property is transferred into the private sector.

Baroness David

There certainly seems to be some dispute as to exactly what this is intended to provide. At this stage of the evening I think it would be sensible to read what the Minister has said and if we want to come back with further questions or amendments to this clause then we shall do that at Report stage.

On Question, amendment agreed to.

Lord Skelmersdale

moved Amendment No. 28: Page 12, line 38, leave out from ("home,") to ("in") in line 1 on page 13 and insert ("subject to the following provisions of this Part. (2) References") The noble Lord said: I beg to move Amendment No. 28 and speak also to Amendments Nos. 29 to 31, 36 to 40, 42 and 43. In the main this group of amendments deals with consequential or technical points but they incorporate two changes of substance. The first concerns the termination of the private landlord's interest in a property which is the subject of the preserved right to buy. Under Clause 4 at present the preserved right to buy would continue to apply in these circumstances. Thus, for instance, a tenant could, on the expiry or surrender of the private landlord's leasehold interest, become entitled to buy the freehold reversion at a discount from a third party not hitherto involved. This was not intended, and obviously would be quite unfair. Accordingly, we propose in these amendments that the preserved right to buy should cease to apply in these circumstances. But, to guard against abuse the tenant will be entitled to compensation if the landlord deliberately contrives such a situation.

The second is concerned with strengthening the protection of tenants with the preserved right to buy when their landlord applies to court for a possession order. At present Clause 4 requires the court to be satisfied that the right to buy will continue to be exercisable in relation to the alternative accommodation offered by the landlord. This is not a very good deal for the tenant, and I am sure that Members of the Commitee opposite will recognise this. It does not go far enough since to meet this requirement the landlord would need only to have a lease of at least 21 years for a house or 50 years for a flat—the bare minimum necessary for the right to buy to apply—even though the tenant may have been entitled to purchase the freehold or a long lease of, say, 125 years in his present home. In other words, it would not be a truly preserved right to buy under the same circumstances as the tenant had originally.

We therefore propose in these amendments that the landlord's interest in such alternative property should be the same as that which he holds in the tenant's existing home except in the case of flats offered as alternative accommodation where, for practical reasons, a minimum leasehold interest of at least 80 years will apply where this is less than the landlord's interest in the tenant's existing home. I beg to move.

9.45 p.m.

Baroness David

We asked if the Government would be good enough to give us a redraft of this clause as it would read with all these amendments in it as we really had it too late in the day. However, they would not agree to do that. It is a complicated matter, and we had it really rather too late to consider with all the other amendments—27 pages of them. I think it arrived last Monday or Tuesday when the House was not sitting. We shall have to reserve our comments on this matter until we have had a chance to read what the Minister has said, and see what the clause looks like when it has had all these amendments put in it. I am not quite sure whether or not we are going to be pleased about it, but we will certainly reserve our right to come back if need be and put down amendments on Report stage.

Lord Skelmersdale

My nanny always told me that it is better to live in hope.

On Question, amendment agreed to.

Lord Skelmersdale

moved Amendments Nos. 29 to 31: Page 14, leave out lines 22 to 25. Page 15, line 21, leave out from beginning to end of line 11 on page 16 and insert— ("Subsequent dealings: disposal of landlord's interest in qualifying dwelling-house 171D.—(1) The disposal by the landlord of an interest in the qualifying dwelling-house, whether his whole interest or a lesser interest, does not affect the preserved right to buy, unless—

1. (a) as a result of the disposal an authority or body within section 80(l) (the landlord condition for secure tenancies) becomes the landlord of the qualifying person or persons, or
2. (b) paragraph 6 of Schedule 9A applies (effect of failure to register entry protecting preserved right to buy);

in which case the right to buy ceases to be preserved. (2) The disposal by the landlord of a qualifying dwelling-house of less than his whole interest as landlord of the dwelling-house, or in part of it, requires the consent of the Secretary of State, unless the disposal is to the qualifying person or persons. (3) Consent may be given in relation to a particular disposal or generally in relation to disposals of a particular description and may, in either case, be given subject to conditions. (4) A disposal made without the consent required by subsection (2) is void, except in a case where, by reason of a failure to make the entries on the land register or land charges register required by Schedule 9A, the preserved right to buy does not bind the person to whom the disposal is made. Subsequent dealings: termination of landlord's interest in qualifying dwelling-house 171DA.—(1) on the termination of the landlord's interest in the qualifying dwelling-house—

1. (a) on the occurrence of an event determining his estate or interest, or by re-entry on a breach of condition or forfeiture, or
2. (b) where the interest is a leasehold interest, by notice given by him or a superior landlord, on the expiry or surrender of the term, or otherwise (subject to subsection (2)),

the right to buy ceases to be preserved. (2) The termination of the landlord's interest by merger on his acquiring a superior interest, or on the acquisition by another person of the landlord's interest together with a superior interest, does not 'affect the preserved right to buy, unless

1. (a) as a result of the acquisition an authority or body within section 80(1) (the landlord condition for secure tenancies) becomes the landlord of the qualifying person or persons, or
2. (b) paragraph 6 of Schedule 9A applies (effect of failure to register entry protecting preserved right to buy);

in which case the right to buy ceases to be preserved. (3) Where the termination of the landlord's interest as mentioned in subsection (1) is caused by the act or omission of the landlord, a qualifying person who is thereby deprived of the preserved right to buy is entitled to be compensated by him. Subsequent dealings: transfer of qualifying person to alternative accommodation. 171DB. The court shall not order a qualifying person to give up possession of the qualifying dwelling-house in pursuance of section 98(1)(a) of the Rent Act 1977 (suitable alternative accommodation) unless the court is satisfied—

1. (a) that the preserved right to buy will, by virtue of section 171B(5) (accommodation with same landlord or connected company), continue to be exercisable in relation to the dwelling-house offered by way of alternative accommodation and that the interest of the landlord in the new dwelling-house will be—
1. (i) where the new dwelling-house is a house, not less than the interest of the landlord in the existing dwelling-house, or
2. (ii) where the new dwelling-house is a flat, not less than the interest of the landlord in the existing dwelling-house or a term of years of which 80 years or more remain unexpired, whichever is the less; or
2. (b) that the landlord of the new dwelling-house will be an authority or body within section 80(1) (the landlord condition for secure tenancies).").

Page 16, line 21, leave out ("171D(5)") and insert ("171D(1)(a) Or 171DA(2)(a)."). On Question, amendments agreed to.

Lord Skelmersdale

moved Amendment No. 32: Page 16, leave out lines 30 to 39 and insert— ("(2) If the circumstances after the disposal differ in any material respect, as for example where—

1. (a) the interest of the disponee in the dwelling-house after the disposal differs from that of the disponor before the disposal, or
2. (b) the right to a mortgage becomes exercisable against the Housing Corporation rather than the former landlord, or vice versa, or
210
3. (c) any of the provisions of Schedule 5 (exceptions to the right to buy) becomes or ceases to be applicable,

all those concerned shall, as soon as practicable after the disposal, take all such steps (whether by way of amending or withdrawing and reserving any notice or extending any period or otherwise) as may be requisite for the purpose of securing that all parties are, as nearly as may be, in the same position as they would have been if those circumstances had obtained before the disposal."). The noble Lord said: In moving Amendment No. 32 I should like to speak also to Amendments Nos. 97 and 104. These are technical amendments which need not delay us for long. New Section 171 F, which is introduced by Clause 4, relates to the right to buy which tenants will retain when the ownership of their dwellings passes to a private landlord, defined for the purposes of the Bill as the preserved right to buy. It has been modelled on existing provisions in Section 137 of the Housing Act 1985 in relation to the normal right to buy. Both are concerned to safeguard right to buy applications which are in the pipeline when tenanted dwellings are transferred to the private sector. But we have realised that these provisions do not cater fully for all the various material changes in circumstances that could result from such a transfer of ownership. For example, the new landlord may take a long leasehold interest instead of the freehold, or the right to a mortgage may become exercisable against the housing corporation instead of the local authority concerned, or vice versa.

These technical amendments to both new Section 171F and existing Section 137 will plug these gaps but will not otherwise materially change the effect of these provisions. I beg to move.

Baroness David

I gather this is really an improvement on the wording of the clause as it now stands. May I ask whether "disponee" and "disponor" are new words in legislation? We do not seem to have come across them before.

Lord Skelmersdale

To the best of my knowledge and belief, the words "disponor" and "disponee" are normal language of the law. If I am wrong in that, I shall advise the noble Baroness as soon as possible. But I am fairly certain that noble and learned Lords, and indeed learned gentlemen of any description, would understand readily what these mean.

Baroness David

The Minister has not answered my question. Is this really a re-writing of what is there? It is trying to make what is already there better? It is not changing anything?

Lord Skelmersdale

With the exception that I described, it is not changing anything at all. I can assure the noble Baroness that everything that should be on the record is on the record. When she reads it—it will not be tomorrow now, it will be the next day—she will understand absolutely everything.

On Question, amendment agreed to.

Clause 4, as amended, agreed to.

Lord Skelmersdalemoved Amendment No. 33: Before Schedule 1. insert the following new schedule—

cc211-28
1. SCHEDULE TO BE INSERTED IN THE HOUSING ACT 1985 SCHEDULE 3A CONSULTATION BEFORE DISPOSAL TO PRIVATE SECTOR LANDLORD 9,508 words