Lords Sitting of 11 April 1988

Preamble
Reassembling after the Easter Recess, the House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of St. Albans.

Clerk Assistant of the Parliaments
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, I beg to move the first of the two Motions standing in my name on the Order Paper.
In accordance with my statement to the House on 11th February, I have appointed Mr. Michael Addison John Wheeler-Booth to be Clerk Assistant in place of Mr. John Egerton Grey, who has retired. I therefore beg to move.
Moved, That this House do approve the appointment by the Lord Chancellor, pursuant to the Clerk of the Parliaments Act 1824, of Michael Addison John Wheeler-Booth, Esquire, to be Clerk Assistant of the House in place of John Egerton Grey, Esquire, CB, who has retired.—(The Lord Chancellor.)
The Lord Privy Seal (Lord Belstead): My Lords, the two Motions which appear in the name of my noble and learned friend the Lord Chancellor on the Order Paper today were foreshadowed by the statement which my noble and learned friend made on 11th February to your Lordships' House. I should like to take this opportunity of paying tribute to Mr. John Grey, whose retirement has occasioned these new appointments.
Many of your Lordships have known John Grey a long time. He joined the Parliament Office over 29 years ago, having previously practised at the Chancery Bar. Since 1974 he has been Clerk Assistant of the Parliaments and Clerk of Public Bills. Among many other things, he gave notable service as Clerk to the Brooke Committee on Delegated Legislation in 1972 to 1973.
I know that your Lordships are very appreciative of the guidance we receive from the Clerks. Those of us who sought John Grey's advice recognised his thoroughly professional grasp of the practice and procedures of the House. He has many friends among your Lordships and I know that the House would not wish to take leave of John Grey without thanking him most warmly for his services and sending him and his wife every good wish for a long and happy retirement.
Lord Cledwyn of Penrhos: My Lords, on behalf of my noble friends, I warmly endorse the tribute paid to Mr. John Grey by the noble Lord. As the noble Lord has said, Mr. Grey has served this House ably and diligently for nearly 30 years. Prior to that he practised as a Chancery barrister. The House has been fortunate to have a man of his background and wide knowledge as one of its senior Clerks.
Some years ago I had the pleasure of his company on an overseas delegation and came to know him as a
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man of wide interests, of great kindness and a ready sense of humour. I think that one needs a sense of humour as well as a fund of patience if one is to listen to our speeches with an apparent show of interest for 30 years.
We are grateful to Mr. Grey for his service to us and wish him and Mrs. Grey a long and happy retirement.
Baroness Seear: My Lords, we on these Benches should also like to pay tribute to John Grey. We very strongly appreciate the work that is done by the Clerks and realise how difficult it must often be to guide us in the direction in which we ought to go when our enthusiasms exceed the rules of the House.
John Grey has been an extremely patient servant of the House and a most affable and agreeable colleague whenever we have approached him with problems that we wished to sort out.
We hope very much that he will have a long retirement. We are grateful to him for all that he has done.
Baroness Hylton-Foster: My Lords, we on the Cross-Benches also wish to express our thanks to Mr. Grey for the courteous help and advice that he has given to us. After nearly 30 years here we hope that he will now be able to enjoy his boat and his garden. We wish him a very happy retirement with his family.
On Question, Motion agreed to nemine dissentiente.

Reading Clerk and Clerk of Outdoor Committees
The Lord Chancellor: My Lords, I beg to move the second of the two Motions standing in my name on the Order Paper.
In accordance with my statement to the House on 11th February, I have appointed Mr. John Michael Davies to be Reading Clerk and Clerk of Outdoor Committees in place of Mr. Michael Addison John Wheeler-Booth, appointed Clerk Assistant of the Parliaments. I therefore beg to move.
Moved, That this House do approve the appointment by the Lord Chancellor, pursuant to the Clerk of the Parliaments Act 1824, of John Michael Davies, Esquire, as Reading Clerk and Clerk of Outdoor Committees of the House in place of Michael Addison John Wheeler-Booth, Esquire, appointed Clerk Assistant.—(The Lord Chancellor.)
On Question, Motion agreed to nemine dissentiente.

Exchange Rate: Policy
2.42 p.m.
Lord Ezra Lord Ezra asked Her Majesty's Government:
What is their policy on the exchange rate.
The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara): My Lords, exchange rates play a central role both in

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domestic monetary decisions and in international policy co-operation. The objective of monetary policy is to exert downward pressure on inflation. The Government will not accommodate increases in domestic costs by exchange rate depreciation. Governments of all the major industrial countries are committed to seeking greater exchange rate stability.
Lord Ezra: My Lords, will the noble Lord accept that the reports of recent disagreements in high places on exchange rate policy have caused confusion and unsettlement? Will he tell the House whether those disagreements have been resolved and whether, in the light of the reduction in interest rates last week, it is now the firm objective of government policy to ensure that we have a stable exchange rate at a competitive level in order to enable us to counter the increasing imports coming into this country?
Lord Brabazon of Tara: My Lords, I do not accept that there was a disagreement. However, as my right honourable friend the Chancellor made clear in his Budget speech, exchange rates play a central role in domestic monetary decisions as well as in international policy co-operation. Greater exchange rate stability will bring advantages to the economy in general and to industry in particular. However, exchange rate stability does not mean immobility, and adjustments are needed from time to time.
Lord Bruce-Gardyne: My Lords, can my noble friend assure the House that, as his noble friend the Secretary of State for Trade and Industry reminded us, the pursuit of a competitive exchange rate can prove to be a will-o'-the-wisp, as happened in the 1960s and 1970s, and that he will continue to give us that wise advice and will not allow himself to be nobbled by the parties opposite, by the Treasury or anyone else?
Lord Brabazon of Tara: My Lords, my noble friend is quite right. There are three factors which affect industry. The most important is the containment of inflation.
Lord Bruce of Donington: My Lords, would not a more accurate and fair reply to the Question put by the noble Lord, Lord Ezra, have been that the Government do not have the remotest clue what their exchange policy is? Does the noble Lord agree that the quite idiotic remark made by his right honourable friend the Prime Minister in mid-June 1980, when the dollar stood at 2.40 to the pound and she stated that the pound could at last look the dollar in the face, was one of the statements of government policy which was followed by large-scale unemployment? Will the noble Lord please ask his right honourable friend the Prime Minister, before she follows the noble Lord, Lord Young, in the market forces argument, to have some regard to history in those matters?
Lord Brabazon of Tara: My Lords, I certainly do not accept that my original Answer was either inaccurate or unfair. As for the remarks made by my right honourable friend the Prime Minister, I do not believe that she has taken to making idiotic remarks.
Lord Molloy: My Lords, is the Minister aware that all the responsible financial newspapers in this country and in other countries completely disagree with his reply to the Question asked by the noble Lord, Lord Ezra? Such goals would be admirable if they were being achieved. The fact is that British industry is suffering, British finance is suffering, and the Continent, if not the world, is talking about schisms in high place in the Government. Because of those schisms and because there is no real policy, the British nation is suffering.
Lord Brabazon of Tara: My Lords, I can hardly accept that the British nation is suffering at the moment, with exports holding up extremely well and reserves extremely buoyant. The exchange rate has shown greater stability over the past year. As I said earlier, our primary purpose must be to contain inflation.
Lord Boyd-Carpenter: My Lords, is it not a fact that the strength of sterling, which is the matter now causing comment, is a considerable justification of the economic policy pursued by the Government? Does my noble friend recall the contrast of the weakness of sterling when noble Lords opposite were in charge?
Lord Brabazon of Tara: My Lords, I do indeed. I am glad to be able to say that that was a long time ago. Of course there are problems when sterling is too strong. However, we do not wish to return to the era of attempting to fix rates.
The Earl of Halsbury: My Lords, what has become of our old power to require the deposit banks to deposit with the Bank of England, thus preventing the economy overheating with reduced interest rates? Surely the two mechanisms could be made to work in parallel in such a way as to promote exports and do the opposite to imports, while promoting the economy.
Lord Brabazon of Tara: My Lords, I do not have an answer for the noble Earl's question concerning bank deposits. I shall write to him.
Lord Stoddart of Swindon: My Lords, is the noble Lord aware that the theory of free markets only operates when it is allowed to prevail? Will he say by how much the unemployment figure will rise in the next year if the exchange rate is not allowed to react to market forces?
Lord Brabazon of Tara: My Lords, I could not possibly give an answer to that question, even if the original Question had been about unemployment, which it was not. However, it would be even more damaging to employment figures to allow inflation to rise.
Lord Taylor of Gryfe: My Lords, I am sure that we all welcome the Government's commitment to exchange rate stability. However, in pursuit of that objective, will the Government review their attitude towards joining the European Monetary System, which would achieve that end?
Lord Brabazon of Tara: My Lords, we keep the matter of joining the exchange rate mechanism under continual review, as I have said on many occasions in your Lordships' House. However, I do not accept that joining the exchange rate mechanism would necessarily protect us or indeed anyone else from currency fluctuations. The countries within the mechanism are not protected from realignments nor from frequent changes in interest rates.
Lord Peston: My Lords, I wonder whether the noble Lord would care to correct one aspect of an answer which he has just given? Is he not aware that the sterling/dollar rate and the sterling/deutschemark rate were considerably higher when the Labour Party was last in power than at the present time, and that sterling is now devalued against both the dollar and the deutschemark compared with 10 years ago?
Lord Brabazon of Tara: My Lords, I do not think that I said anything to the contrary.
Lord Barnett: My Lords, can the Minister tell us whether the Government consider that the present exchange rate against the deutschemark and the dollar is sustainable? If so, why were interest rates reduced last week?
Lord Brabazon of Tara: My Lords, interest rates were reduced last week because we do not wish to see an unsustainable rise in the exchange rate and because overall conditions made the one-half of 1 per cent. interest rate cut appropriate.
The Earl of Onslow: My Lords, is my noble friend not aware that one should congratulate the present Government on running a very successful economy, with reducing unemployment, increasing production and increasing general welfare for the population? Does my noble friend agree that the knowledge of history on the Front Bench opposite seems to be inaccurate because the statement about looking the dollar in the face was made either by Chamberlain or by Churchill before the war and not by Mrs. Thatcher in 1980; and that if their knowledge of economic policy is as inaccurate as their knowledge of history it bodes well for the Conservative Party at the next election?
Lord Brabazon of Tara: My Lords, my noble friend is correct in many of the points he makes. The British economy has been transformed over the past nine years. Nowhere has this been more marked than in manufacturing industry. Manufacturing exports rose by 8½ per cent. last year alone.

Airbus Programmes: Support
2.53 p.m.
The Earl of Kinnoull The Earl of Kinnoull asked Her Majesty's Government:
What support they are giving to the major aerospace equipment companies involved in the Airbus A330/340 programmes, and how this compares with the French and German contributions.
Lord Beaverbrook: My Lords, Her Majesty's Government support the efforts of UK manufacturers to gain work on these important programmes. We have agreed to provide £450 million of launch aid to British Aerospace. The Government are not persuaded that further financial support should be provided to equipment companies. I understand that the French and German governments may make some financial support available to equipment companies.
The Earl of Kinnoull: My Lords, I thank the noble Lord for that reply. I recognise the support that the Government have given to British Aerospace in this vital European Airbus project. Is my noble friend aware that Germany is reported to have given £70 million directly to equipment companies? Does he agree that it is very important that we support the equipment companies to make certain that their technology and skilled staff do not lose out?
Lord Beaverbrook: My Lords, the Government recognise the importance to the economy of the equipment sector. That goes without saying. I cannot comment on my noble friend's remark concerning the level of aid given to the equipment sector in Germany. Apparently the German Government do not publish those figures. Perhaps I should point out that equipment companies in the United Kingdom may be eligible to apply for other forms of DTI support under the enterprise initiative and are free to negotiate with British Aerospace for contributions towards their investment costs.
Lord Bruce-Gardyne: My Lords, can my noble friend tell us what proportion of the £250 million of launch aid for the A320 has so far been spent on orders in Taiwan and elsewhere on the Pacific rim, in the United States or in Canada? Can he also say what proportion of the £450 million for the A330 and A340 is likely to go in the same direction? Was that the Government's original intention?
Lord Beaverbrook: My Lords, my noble friend raises two very interesting points, but I am afraid they are somewhat outside the scope of the Question on the Order Paper. If he would like to put down a Question on those points I should be pleased to answer it.
Lord Underhill: My Lords, in the light of the Minister's reply to the last supplementary question, can we be assured that the Government have still complete confidence in, and support, Airbus Industrie? In the light of recent criticism by the chairman of British Aerospace can we be assured that the Government will be associated with any approach to Airbus Industrie in connection with those criticisms, in view of their £450 million launch aid?
Lord Beaverbrook: My Lords, I can confirm that government support for the Airbus programme is not in question. Your Lordships may be aware that a report prepared recently on Airbus is being reviewed by Ministers at the present time.

County Hall, London: Use
3.57 p.m.
Lord Boyd-Carpenter Lord Boyd-Carpenter asked Her Majesty's Government:
For what purpose they propose to use the buildings of County Hall in London, S.E.1.
The Minister of State, Department of the Environment (The Earl of Caithness): My Lords, Her Majesty's Government do not propose to use the County Hall complex. The buildings are owned by the London Residuary Body, in which they vested on abolition of the GLC and which is currently marketing the complex. The future use of the buildings will be for the new owners to determine, subject to the appropriate planning and listed building consents.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that if that Answer means—as it seems to mean—that the site is to be sold, that will be a matter for great congratulation for the ratepayers of London?
The Earl of Caithness: My Lords, I can tell my noble friend that the closing date for bids for County Hall was 5th April.
Lord St. John of Fawsley: My Lords, could not the Government themselves acquire the site? Could not the Minister persuade the Government to move his own department out of the present buildings in Marsham Street, thus enabling one of the most hideous structures in London and indeed in the kingdom to be demolished? In any case, can he give the House an assurance that, whoever acquires the building, the great ceremonial rooms and ceremonial hall will be preserved?
The Earl of Caithness: My Lords, I am sorry that my noble friend considers the DoE to be the worst building in the world. It was commended by the Royal Fine Art Commission when it was being built. As to the future use of County Hall, I think that it would be wrong for me to speculate.
Lord St. John of Fawsley: My Lords, is my noble friend aware that the Royal Fine Art Commission is now under entirely new management?
The Earl of Caithness: My Lords, indeed; and I congratulate my noble friend on his new role.
Lord McIntosh of Haringey: My Lords, no doubt the Minister will have in front of him the judgment of Mr. Justice Simon Brown of 28th March in which he found for the ILEA and London local government against the Secretary of State. Will the Minister confirm to the House that Mr. Justice Simon Brown noted the fact that the Secretary of State accepted the inspector's conclusion that there was neither need nor desirability for the main building of County Hall to be used in future as offices?
Is the Minister also aware that in the course of a series of scathing criticisms of the Secretary of State's
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overturning of the Minister's decision Mr. Justice Simon Brown recorded that there was a plain failure by the Secretary of State to give proper reasons for his decision? Will the Minister confirm that it is now the case not only that County Hall is designated for local government use and not for office use but also that the Secretary of State himself has accepted that, and quite rightly so?
The Earl of Caithness: My Lords, the noble Lord, Lord McIntosh, obviously has seen the judgment. It was received at the department on Friday. It consists of 50 pages of closely typed sheets and is fairly complex. My right honourable friend is studying it at the moment.
Lord Molloy: My Lords, in view of the fact that there are so many rumours in both responsible and irresponsible newspapers concerning the future of County Hall, I should like to ask the Minister whether it would be possible when the time approaches for Parliament to examine what is proposed for this famous building, the contents of which at one time held together Greater London, which has been ruthlessly destroyed. Is he aware that there could well be some other local government use which could enhance London and the youth of London in the future?
The Earl of Caithness: My Lords, the future of County Hall is a matter for the London Residuary Body, which has invited offers for it.
Lord Mellish: My Lords, during our exchanges, the building at Marsham Street was mentioned as an example of the worst architecture in the whole of Britain; and the Minister seemed to refute that view. Would he be good enough to tell the House what is the worst?
The Earl of Caithness: My Lords, I do not think 1 refuted it. My noble friend said that it was the worst.
Baroness Macleod of Borve: My Lords, will the Minister confirm that County Hall is listed as a grade 1 building?
The Earl of Caithness: My Lords, not all of County Hall is listed. The riverside block is listed grade 2.
Baroness Seear: My Lords, as the judgment was announced in the press before the recess, is it not rather peculiar that the Minister saw it only on Friday?
The Earl of Caithness: My Lords, it is up to the court to send the judgment and up to the post to deliver it to us.

Science Parks
2.59 p.m.
Lord Schon Lord Schon asked Her Majesty's Government:
How many university and polytechnic science parks are now operational in the United Kingdom,

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and what performance criteria are being used to judge their effectiveness in transferring technology to British industry.
Lord Beaverbrook: My Lords, there are 33 operational university and polytechnic science parks in the UK on the latest reckoning. In addition a further three are expected to open in 1988. Ten more are known to be at the planning or feasibility stage. The effectiveness of science parks is normally judged by their success in attracting new businesses and generating new jobs. The Government do not control science parks, and we have not established specific performance criteria along the lines suggested by the noble Lord.
Lord Schon: My Lords, can the Minister say how many schemes receive financial support from industry only and are not government supported?
Lord Beaverbrook: One, my Lords.

RADARSAT
3 p.m.
Lord Shackleton: My Lords, I beg leave to ask Her Majesty's Government a Question of which I have given private notice, namely:
Whether they have agreed with the Canadian Government a date until which the invitation to the United Kingdom to participate in RADARSAT remains open.
The Secretary of State for Trade and Industry (Lord Young of Graffham): My Lords, there is no specific deadline. We have to set our decision within the context of other decisions on earth observation policy particularly within the European Space Agency. Although the Canadians did ask for a United Kingdom decision by the end of March, my right honourable friend the Chancellor of the Duchy of Lancaster wrote to them last month explaining that we could not give them a decision until early April. I understand that the Canadian Minister involved is still considering the position and we shall inform him of our decision very soon.
Lord Shackleton: My Lords, does the Minister, whom I certainly would not accuse of deliberately misleading the House, agree that in effect it might have been better if he had said that during the debate instead of saying (at col. 827 of Hansard for 30th March):
"we shall respond to the Canadian Government in good time. The time is not tomorrow night",
since every communication to the Government has made clear that the time was tomorrow night? Is the Minister just relying on goodwill? Has he received any communication from the Canadian Government postponing the 31st March deadline? The situation is wrapped in mystery. Has there been any communication at all?
Lord Young of Graftham: My Lords, as I told the noble Lord in a letter which I wrote to him on Friday
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and which he received this morning, my right honourable friend the Chancellor of the Duchy of Lancaster wrote on the 21st March to his opposite number, Mr. Oberle. We saw the High Commissioner on that day and told him. We understand from the Office of the High Commissioner in London, that they have been perfectly well aware of the position all the time.
We shall not be pushed into a decision by a fit of enthusiasm. We have before us three different radar satellites to consider. Decisions will be made by the time that the next relevant ESA meeting takes place on the 18th April. The Canadian authorities are aware of that. I did not mislead your Lordships' House. Indeed, had I done so in any way either expressly or by implication I should have been here to apologise.
Lord Williams of Elvel: My Lords, it is still unclear whether the Canadian Government at any time or at any level, ministerial or official, imposed the deadline to which my noble friend has referred. Did they do so and did the Government renegotiate that deadline? Has that deadline now passed? Are we awaiting a decision on the polar platform, the deadline for which is very close now, so that the two decisions can be announced together? What exactly is the situation?
Lord Young of Graffham: My Lords, the position is very simple. Many months ago the Canadian Government said that they would have liked to have heard of our decision by the end of March. In good time my right honourable friend the Chancellor of the Duchy wrote to them and said that because of other considerations it would not be possible for us to comply with their request; but that we would let them know by the middle of April. All the indications confirm that they have accepted that position. They are waiting for us to come back to them. We shall make up our minds in good time after we have considered all the implications. We shall do so by the time of the ESA meeting. That is exactly what I said to your Lordships' House. The time is not tomorrow night. So far as we are concerned there was no deadline for the 31st March, and I stand by that to this moment.
Lord Harmar-Nicholls: My Lords, while no one would wish the Government to come to an ill-considered decision, may I ask whether my noble friend is aware that the apparent delay in making a decision gives the impression that there are vital differences within our own departments? If that is so and they are allowed to grow by further delay, it will mean that the decision whenever it is made will not have quite the same force that it would have had if it had seemed to be more acceptable generally to all the departments concerned.
Lord Young of Graffham: My Lords, I can assure my noble friend that I am constantly aware that the funds which I dispense are not mine but belong to the taxpayers. In looking at all these matters we are very conscious that we have priorities before us. Indeed, in this period of questioning we have seen the cost of the Columbus platform come down very considerably.

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That reduction I suspect would not have come about had not my right honourable friend the Chancellor of the Duchy queried those costs.
Before us we have three overlapping satellites, all of them involved in radar and looking at similar matters. It is in the interests of the taxpayer that the Government should consider them in an orderly manner before making a decision. We have told the Canadians by when we hope to decide, and ESA knows by when we wish to decide. There is not the slightest conflict within the Government about that decision. We shall take our decision and I shall then be quite happy to come to your Lordships' House and inform it of that decision.
Lord Shackleton: My Lords, indeed the Minister has now written to me. Perhaps first of all, I should like to acknowledge with appreciation his expression of regret. I feel it is characteristic that he does so regret. Undoubtedly we were misled; but I do not accuse him of doing it.
Lord Young of Graffham: Excuse me, my Lords, but I regretted nothing. I have denied that I misled your Lordships' House, and I stand by each and every word I said. To put the record absolutely right, I said to the noble Lord that if I had misled him, I should have been the first to come here and explain.
Lord Shackleton: Of course my Lords, I withdraw my remark. I just hoped that the Minister would come a bit cleaner, that is all.
Noble Lords: Shame! Really!
Lord Shackleton: My Lords, it is within the knowledge of the House that it was deceived.
Noble Lords: No, no! Hear, hear!
Lord Shackleton: My Lords, the noble Lords whom you can hear all agree with that. There is a large number—
Noble Lords: No, no!
Lord Shackleton: Yes there was my Lords. However, I say that the Minister did not do it deliberately. Since he has now said that it seems unlikely that the UK will participate in RADARSAT, would it not be the decent thing to say so now, so that the Canadian Government are not involved in this rather curious exchange?
Lord Young of Graffham: My Lords, the noble Lord really must not let his enthusiasm for the subject carry him away. In the debate before the Easter break I said to your Lordships' House (at col. 827 of Hansard)—and I quote my words again:
"we shall respond to the Canadian Government in good time. The time is not tomorrow night; we have longer than that".
The words that I used were as right then as they are today. They were based on information which I had then and which I have today. For all the pressure in the world we shall not change our decision. We shall
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consider the three satellites and will make an announcement in good time for the ESA meeting, which I believe is to take place on 18th April.

Education Reform Bill
3.10 p.m.
The Bill, having been brought from the Commons on Friday last, and printed pursuant to Standing Order 48, was read a first time (H.L. Bill 71).

Examiners of Petitions for Private Bills
The Chairman of Committees (Lord Aberdare): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That, pursuant to Private Business Standing Order 69, Mr. R. J. Willoughby and Mr. M. G. Pownall be appointed Examiners of Petitions for Private Bills in the places of Mr. H. M. Barclay and Mr. J. M. Davies.—(Lord Aberdare.)
On Question, Motion agreed to.

Landlord and Tenant Bill [H.L.]
Lord Coleraine: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Lord Coleraine.)
On Question, Motion agreed to.

Regional Development Grants (Termination) Bill
3.12 p.m.
Lord Taylor of Gryfe: My Lords, before the House goes into Committee I wish to raise a question that is not strictly related—
Noble Lords: Order!
Lord Young of Graffham: 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 Young of Graffham.)
Lord Taylor of Gryfe: My Lords, it must be the Easter break that generates a certain amount of enthusiasm to become involved! However, I raised a question this morning with the Leader of the House on the subject of the operation of this Bill and the constitutional position.
I read in the newspapers during the recess that the regional grants had been terminated on 31st March and that the drawbridge was now down, as it was

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stated, on any new applications. I wish to raise the question whether it was possible, and constitutionally correct, to terminate regional grants before the House had approved the Regional Development Grants (Termination) Bill.
Lord Young of Graffham: My Lords, it is a matter of record that I came to your Lordships' House on 12th January to announce our intention to finish with the regional development grants scheme at the end of March. By the time of the closure date, some 10 weeks ahead, all Commons stages and the Second Reading in your Lordships' House had taken place. There have been many precedents for legislation to be enacted after its provisions come into force. Indeed, it happens every single year with the Finance Bill.
Lord Williams of Elvel: My Lords, in view of the point that the noble Lord, Lord Taylor of Gryfe, has raised, if applications for regional development grants are made after the deadline date while the Bill is still before the House, are they automatically approved or not? If not, why not?
Lord Young of Graffham: My Lords, no applications will be processed after 31st March. There was some 10 weeks' notice. Although firm figures are not yet available, I am told that the best part of a year's applications have been squeezed into the first quarter of 1988. Those will be dealt with as quickly as possible.
Lord Williams of Elvel: My Lords, I am sorry to press the noble Lord. Were such applications to be received before the Act—as it will then be—receives the Royal Assent, will they be processed in the normal way?
Lord Young of Graffham: My Lords, no.
Lord Taylor of Gryfe: My Lords, I should like the Minister to comment on this. If the amendment that the House is about to consider were to be passed, what would be the effect of that, in so far as a Bill has now been implemented before it has the full authority of this House?
Lord Young of Graffham: My Lords, if the amendment of the noble Lord, Lord Taylor of Gryfe, succeeds in your Lordships' House at all stages, and finds approval in another place, we shall have to consider the situation. However, the position is very clear. Ten weeks' notice or more was given that the regional development grants scheme would come to an end on 31st March; and so it has.
Lord Tordoff: My Lords, with respect, it has nothing to do with 10 weeks' or 50 weeks' notice. Here is a Bill that has not passed through your Lordships' House. It seems to me that it is an insult to this House to behave in such a way.
Lord Young of Graffham: My Lords, perhaps I should remind all in your Lordships' House who are looking forward to their changed tax position, or otherwise, that the Finance Bill will not pass through your Lordships' House until the last few days of July, as indeed happens every year.
Lord Tordoff: My Lords, the noble Lord knows perfectly well that the Finance Bill is in a totally separate category.
Lord Wilson of Langside: My Lords, surely the position of the Finance Bill is entirely different. The one thing that is quite clear is that the announcement made by the Scottish Office was not appropriate in law.
Lord Jay: My Lords, surely the Finance Bill is no precedent. The Finance Bill is covered by the Provisional Collection of Taxes Act 1913 and has no relevance to expenditure of this kind.
Lord Young of Graffham: My Lords, nevertheless the position is this. Noble Lords will accept that this Bill has passed all stages in another place. It has had a Second Reading in your Lordships' House. There have been many other cases of Bills in a similar position. There has to be a termination date. Sufficient notice was given and that date has now passed.
Lord Peston: My Lords, can the noble Lord clarify his answer to my noble friend? I think that I misunderstood. Am I right in assuming that any applications made before 31st March will be assessed according to the current law? I refer not to this Bill but the Bill that this legislation terminates. The Minister seemed to say that the earlier applications would not be dealt with in this way, but I do not think he meant that.
Lord Young of Graffham: My Lords, let me reassure all in your Lordships' House. Any applications that have been received by the date of closure—by 31st March—will be processed and dealt with in the usual way. Those that arrive on or after 1st April will not.
Lord Taylor of Gryfe: My Lords, I raised this matter with the Leader of the House this morning because of the constitutional position to which the noble Lord, Lord Tordoff, referred. In view of the anxiety that has been expressed, would it be convenient for the Leader of the House, between now and Third Reading, to consider this issue from the constitutional view point and not in relation to the Department of Trade and Industry? It is a matter that affects the power and responsibilities of this House.
Lord Belstead: My Lords, I am delighted to consider any points that noble Lords put to me. However, I must make it clear to your Lordships' House that I accept absolutely what my noble friend Lord Young of Graffham has said by way of answer to your Lordships. Among the answers that my noble friend has given is that there are precedents to be found in legislation.
Lord Cledwyn of Penrhos: My Lords, with respect, it is very dubious that there are so many precedents. I should like to hear of precedents other than the Finance Bill. These we have not heard. I think that a case has been made in this exchange for an extension of the date beyond 31st March. I know perfectly well

923
that there is considerable concern in South Wales, as there is in Scotland, about the way in which this matter has been dealt with by the Department of Trade and Industry. Therefore I support the appeal of the noble Lord, Lord Taylor, that the Secretary of State should give this matter further thought before coming to a final conclusion.
Lord Young of Graffham: My Lords, I am following well-honoured precedents. For example, if noble Lords consider the way the investment grants scheme was terminated in 1971 they will find that exactly such a precedent was followed; that it is customary to give adequate notice; and that the notice applied from a date and the legislation followed. If the legislation were to fall, that would be another matter. But if the legislation is passed, that is the precedent that has been honoured in the past and will be honoured on this occasion.
Lord Wilson of Langside: My Lords, can the Secretary of State tell the House whether the precedents to which he has referred were at any time questioned? One is familiar with bad precedents being established because no one challenged them at the time.
Lord Young of Graffham: My Lords, I shall carry out research into that and write to the noble and learned Lord.
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clauses 1 and 2 agreed to.
Clause 3 [Short title]:
Lord Taylor of Gryfe Lord Taylor of Gryfe moved the Amendment:
Page 2, line 45, at end insert—
("(2) This Act does not extend to Scotland.").
The noble Lord said: This amendment is simple and straightforward. It is not a frivolous amendment and it is not an exercise in Scottish nationalism. But it gives the Minister an opportunity, before he makes this dramatic decision to move away from automatic investment development grants, of isolating part of the United Kingdom to see how it works. That is an important thing.
Regional development grants have been an important aspect of regional policy for many years, and a very successful aspect of that policy. Before we make the move away into the uncharted waters of the abolition of RDG, it might be sensible—and it might be attractive to the Minister's bright and imaginative mind—to have one area isolated to see how it works. We could see whether the regional development grants are working effectively in Scotland. If so we might scrap the present legislation. If they are not working in Scotland, then Scotland could be brought within the fold of the national legislation.
There is no doubt that regional development grants have been successful. I commend to the Minister the annual report of his own department dated February 1987, which states:
"This scheme is an important factor in investment decisions".
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As we said on Second Reading, I am not arguing that regional development grants are the only factor in making investment decisions. We agreed on that. Also involved are questions of good industrial relations; the experience of Dundee is a disincentive to inward investment in this country. Other factors such as availability of skills are important in making investment decisions. But all the evidence from the Minister's department and from practitioners in the field suggests that the automatic availability of a regional development grant is significant.
I commend to the Minister the reading of the discussion that took place in another place on this subject in which a distinguished Member of his own party, with considerable experience in the department which he now leads, pointed out that he was not persuaded that this change is desirable. He went on to point out the difficulty of boards making investment decisions when the finance manager or finance director brings to the board a proposition for a large investment and is asked, "Is there a grant if we go to Scotland, Wales or any of these other areas?" The answer would need to be, "Not yet. We will need to submit our case to the DTI, who will examine it, probably guided by a group of businessmen who give their services in this area. They will go through the same procedure as the regional selective assistance". That is not good enough for boards who have to make decisions and want to know where they stand. To depart from this basis into a speculative idea that "it will work and when we have examined it with the DTI and the help of some businessmen, we will decide then whether you will receive an investment grant or not", does not make for attraction of industry or good business decision-making.
In his reply on Second Reading the Minister said that his department had conducted a survey and that 40 per cent. of the companies surveyed had said that the regional development grant had made no impact on investment decisions. I presume from that that 60 per cent. of those surveyed decided that it was an important factor in making the investment decisions. I commend to the Minister these survey findings of his own department in the hope that they may just influence him to make the change that is suggested.
The new grants, the present arrangements, are only four and a half years old. They were introduced in December 1983. When they were introduced it was said that this scheme provided the basis for longstanding regional policy and investment decisions. But four and a half years is not a very long time to test the effectiveness of the new scheme which the Government commended in this Chamber in December 1983.
I suggest that we give it time to see whether it is working. Based on my own experience in Scotland I would suggest that the present arrangements have had considerable success. "Locate in Scotland", which is interested in inward investment, has created 45,000 new jobs and attracted investment of over £2 billion since 1981. This is important. Should we discard this effective instrument and take a chance on the enthusiasm and energy of the noble Lord, Lord Young, or should we just hold on to it for a longer period? For example, I noted that the Minister said that this regional development grant does not really

925
matter all that much. When I was on holiday I read in the Glasgow Herald that Mr. Lang, the Minister responsible for industry in the Scottish Office, had said:
"More than 2,000 … businessmen tried to 'beat the drawbridge' on the end of the Government's regional development grant during last week."
Some 2,000 people in Scotland applied for the regional development grant in the final week. This suggests that it is some kind of incentive to investment. Obviously if 2,000 people take the trouble to submit these applications and seek assistance under the RDG, that is some incentive to investment.
I suggest to the Minister that he should think again. Other countries have different forms of investment and different forms of incentive, but, as someone who has travelled throughout the world seeking inward investment for Scotland on behalf of the Government as well as in my own private capacity as a banker, I know that this matters. When one has to meet the competition from Germany, France, but more importantly from Spain, Portugal and Southern Ireland, one has to have important investment incentives in one's armoury in order not to lose that investment.
I suggest to the Minister that before we discard this we should perhaps consider it again. I sincerely trust that he will find my rather simple amendment acceptable. I beg to move.
3.30 p.m.
Lord Peston: I suppose that in one way the amendment of the noble Lord, Lord Taylor of Gryfe, is a forlorn hope, because it is essentially an amendment which totally undermines the nature of the Bill. I recall the Second Reading debate. We agreed then that the purpose of this legislation was not to end regional policy. We agreed that we still believed regional policy to be of great significance and that we might regard it as becoming more significant in the future than it had been in the past. I gather that we are not to interpret what the Government propose to do here as somehow the Government announcing that regional policy is at an end. We were all interested in that common view that we held.
As the noble Lord, Lord Taylor of Gryfe, has said, we were all agreed that regional policy is not only about subsidies and grants. Again, that is common ground. The point at issue is the question of automatic versus non-automatic grants. I recall making the point that I was fairly open-minded about the matter and that I was interested in a grant system that worked and which was (to use an expression which I dislike intensely) "cost effective"; in other words, to put it in a form which I like, which was "efficient". We favour an efficient grant system but, as I understand the matter, the Government are taking the view that a non-automatic targeted system will be more efficient than the automatic system that they are seeking to abolish in this legislation.
I take the liberty of interpreting what has been said by the noble Lord, Lord Taylor of Gryfe, as meaning that we do not know for certain whether the system will be successful, and the least we can do is to monitor it. He suggests that the system could be
926
monitored by creating an experiment in Scotland. It would run the old system which we could compare with that running in England and Wales. It is an interesting idea, to say the least, but it undermines the legislation.
However, it is a serious point which I hope the Secretary of State will take up in his response. It is that, because regional policy is important and we wish to see it succeed, one would like to feel that in the DTI and other departments efforts will be devoted to monitoring the new policy. In a year or two—or in whatever time we agree might be a fair test of the new system—we hope that the noble Lord will come back and give us the outcome of the monitoring. I hope that if such monitoring takes place he will also be willing to come back and say that it does not seem to have worked and that those noble Lords who wished to act in another way may have been right. However, I agree that economics are never as clear cut as that.
In interpreting the amendment as a plea for careful monitoring of the policy in order to ascertain whether the non-automatic system will work, in so far as it will be introduced, I believe that it is an important idea and I have sympathy with what has been said by the noble Lord, Lord Taylor of Gryfe.
Lord Wilson of Langside: I was disappointed to hear the noble Lord, Lord Peston, say that the amendment was a forlorn hope. Perhaps naively I had assumed that, surrounded as he is on the Front Bench by Scotsmen, he was about to tell the Committee that, with their enthusiasm for devolution, they had persuaded him that this was an appropriate step to take.
I do not see why this could be regarded as a wrecking amendment. I hope that the Secretary of State, who is a man of considerable vision, will consider the amendment most seriously. I also hope that, after the forceful presentation of the case in its favour by my noble friend Lord Taylor of Gryfe, he would have been ready to reconsider the matter.
Much is done in different ways North and South of the Border, which runs along the Tweed and the Cheviot Hills. That does not upset us. However, there is a perfectly valid political reason for regarding this matter more seriously than it has been up till now. It is that North of the Border the enthusiasm for the present Government is markedly less noticeable than it is South of the Border. I was glad that my noble friend Lord Taylor of Gryfe made clear to the Committee the fact that this is not a Scottish nationalist ploy. I do not believe that the noble Lord and myself are tainted by undue Scottish nationalism. I believe that there is political as well as economic and industrial wisdom in accepting the amendment.
The noble Lord and his colleagues laugh about this matter and that slightly disturbs me. Recently some Members of the present Government visited Scotland. I have some sympathy with them because there was something in the point which they made: namely, that the Scots—particularly under the present Government, which seem to bring out the worst in us as a nation—were a disgruntled lot, always complaining and asking Westminster to do

927
something for them. It is not in that spirit that the matter is raised here.
I am and always have been a devoted supporter of the Anglo-Scottish symbiosis. I sense that there is less enthusiasm for it South of the Border now that there is no Empire with which we can help, nor any threat on the Northern frontier from a French army or navy, as there was when we formed the unusual and highly successful partnership. Could we not have a little political as well as economic and industrial vision? If coincidentally it helped to restore the Government's reputation in Scotland, I would see no harm in that. I believe that this is a perfectly practical and sensible amendment. I do not believe that I can usefully add a further word to the most impressive case presented to the Committee by my noble friend.
Lord Harmar-Nicholls: I was disappointed to hear what the noble and learned Lord, Lord Wilson of Langside, had to say. I remember that he and I battled together when there was a suggestion of separating parliamentary control of Scotland. I believe that he recognised, as we then argued, that there was one unit and that we should not separate parts of the United Kingdom on the basis that the benefits that they could receive were different.
I believe that the Bill is sensible and correct, and that it is wrong to distribute money automatically on a regional basis instead of sorting out the areas which need it, and I believe that that is right. If it is right for England, I believe that it is also right for Scotland. If one is convinced that the general idea behind the Bill is correct, it would be wrong to separate Scotland and deny it the benefits that will flow from it. I believe that we must move together on this issue.
I do not believe that my noble friend needs a great deal of support from these Benches in resisting this amendment. I think that the noble Lord, Lord Peston, made an admirable speech. He described the terms and the potentialities of the Bill most accurately and he clearly came down on the side of believing that it should be pursued because it is good. If it is good for England we should not rob Scotland of the advantages of benefiting from that good.
Lady Saltoun of Abernethy: Unlike the noble Lord, Lord Harmar-Nicholls, I live in Scotland and I know how people there are thinking and feeling. I entirely agree with every word spoken by the noble and learned Lord, Lord Wilson of Langside. I hope that the Government will think seriously about this matter. I believe that some regions have special needs and that Scotland is such a region, particularly at this moment.
Lord Peston: I hope that the Committee will forgive me for speaking a second time but I believe that the discussion is getting slightly out of control. I understood that the amendment was not specifically directed to Scotland; that we were not debating Scotland; not interpreting the Bill as being in some sense anti-Scottish. I did not approach the amendment in that way and I am now a little taken aback to find myself in the middle of a Scottish versus English debate. I hope that that is not the case.
Lord Young of Graffham: I am grateful for the opportunity to debate this amendment. The noble Lord, Lord Taylor, has made a number of points about Scotland and the Scottish economy, and has argued forthrightly that regional development grants should be retained in Scotland. I hope that the noble Lord will understand if I am equally forthright in explaining why the Government do not feel able to accept this amendment.
The arguments against retaining the regional development grant scheme apply not just to the North of England, Wales, the South or Scotland; they apply to the whole of Great Britain. Economic recovery with falling unemployment and a rising trend of investment is not confined to any one part of our nation. Therefore, the Government have strenuously resisted any attempts to make such distinctions in the new policies which we announced on 12th January. We strongly believe that a mere automatic scheme of investment subsidy is now wrong, regardless of where it operates. It makes no assessment of need or viability before parting with taxpayers' money. The spectre of some 2,000 Scotsmen queueing up for free grants in the last week of March is probably only equalled by the same vision of hundreds of Welshmen or many thousands of Englishmen queueing up for exactly the same purpose.
That way of disbursing money cannot be cost-effective particularly at a time when investment trends are rising anyway and the cost-effectiveness of taxpayers' money is not restricted to any one area. I try not to labour these points because, as the noble Lord, Lord Williams of Elvel, chided me at Second Reading, I have made them before and shall no doubt make them again. However, repetition does not invalidate them.
As the noble Lord, Lord Peston, accepts, the plain fact is that we are not abandoning regional policy—far from it. We are trying to and will maintain a system of regional selective assistance which is tried and tested. Worthwhile projects which need assistance in order to proceed will receive it. I made it clear on a number of occasions that that includes the very important category of inward investors who have made such a great contribution to the Scottish economy.
Perhaps I may answer the suggestion that regional development grants have been crucial in attracting such investors. It is worthwhile remembering that even when regional development grants have been available, many firms have come to the intermediate areas of Britain where, by definition, only selective assistance could have been offered. Telford in the West Midlands is one good example of a new town that has benefited in that way.
Concern has been expressed this afternoon about the ways in which grants will be made available under selective assistance, which we are keeping now that automatic grants will no longer be available. Understandable concern has been expressed about the effect on inward investment and about removing the guarantee whereby particular projects will qualify for grants. How will potential investors be able to tell what they might receive? The potential investor can receive an early indication of whether or not his

929
project is likely to qualify for regional selective assistance. Inward investors can a priori qualify to meet the criteria of international mobility and, if the project is a good one, of economic benefit to the UK. It is also worthwhile noting that the Federal Republic of Germany recently abandoned its system of automatic grants in favour of a more selective one.
In order for inward investors to have some idea of the grant which might be offered at which levels of assistance can be quoted, they will be averaged as there is a wide range above and below the average. The factors influencing the level of the grant offered can be discussed in general terms ahead of a detailed appraisal of application.
We are confident that the three departments which administer the scheme are geared up to cope effectively with inquiries. During the course of the debate I was asked whether we had made adequate provision to start to process regional selective assistance applications. With regard to my department, in the current financial year we have made provision for 126 man years of effort to be available to regional officers for regional selective assistance work. If that is inadequate we have made contingency arrangements for adding further staff to that effort.
Just as important as staff numbers is the fact that we are working hard to improve the efficiency of our resources. We have, as the Committee has heard, recently introduced simplified procedures for grants of up to £25,000 and are taking further steps in this direction. Most applications are processed within three months and nearly all within four months. Generally speaking, applicants should face no significant delays if the case is a normal one and in particular if all the right papers and information have been submitted with the application.
Therefore, although I can well understand the concern, I do not believe that it is justified and I am confident that we can continue to provide inward investors and others with the service they need to make a timely decision on the project.
To attract firms into the regions from elsewhere is worthwhile and important but it is not enough. What is even more fundamental to regeneration is the promotion of strong, self-sustaining, local enterprise. The emphasis must be placed on encouraging the indigenous firm, particularly smaller firms, to set up, grow and acquire the skills which will enable them to compete with firms in other areas and overseas. That is the motivation behind the enterprise initiative, and that initiative is highly relevant to the assisted areas. For that reason we are offering higher rates of assistance there than elsewhere. As nearly two-thirds of the population in Scotland live in an assisted area, Scotland stands to benefit to a very great extent.
Even if automatic grants were the answer for severely disadvantaged areas, I find myself in disagreement with the noble Lord, Lord Taylor of Gryfe, because I believe it is not only untrue but unfair to give Scotland that bleak title. Of course there are pockets of high unemployment in Scotland; there are also pockets of high unemployment in London and the South-East. I believe that I should remind your Lordships' Committee that in the year
930
to February 1988 unemployment in Scotland fell by more than 42,000 to the lowest level for five years.
Recent surveys report that business optimism, output, orders and exports are all rising. If we look at the figures between 1979 and 1986, we see that productivity in the United Kingdom grew by 3·8 per cent., and that it grew by 5·1 per cent. in Scotland. A recent survey of 470 American electronic companies showed the Scottish Development Agency to be the most successful attraction agency out of 150 European organisations. The Scottish CBI and the Scottish council for developing industry, of which the noble Lord, Lord Taylor of Gryfe, is such a distinguished member, were among the most enthusiastic in their welcome of our new policies. Scotland is benefiting from the country's economic recovery just as is every other region. Unemployment is coming down; it is even coming down in Dundee despite the best endeavours of certain people.
I believe that it is possible to do the regions a grave disservice by painting them too bleakly, and Scotland should occasionally stand up and portray how well matters are going rather than how it needs other help. Perhaps I may assure the noble Lord, Lord Peston, that over the next year or two we shall look at the way in which this operates. Should it appear that it is not operating well, despite all the logic, then I shall certainly not hesitate to come back.
In summary, this amendment would destroy the important integral basis of our regional policy, which is drawn up on the basis of the assisted areas map and not out of territorial distinctions which could become divisive. Therefore, I oppose this amendment.
Lord Taylor of Gryfe: I am disappointed that the Minister has not responded to the invitation to have this monitoring process which the noble Lord, Lord Peston, has suggested. I can find no other way of operating it other than by the proposed amendment. We could have this interesting monitoring sample to see how the measure works. That should commend itself to a Minister who is not afraid to experiment in his department and in other areas with which he is involved. He makes a most unusual claim. In rejecting the amendment and in changing the system of regional development grants, he has said that Scotland is doing remarkably well. It is doing remarkably well under the present system and it is the present system that we are seeking to retain. Of course unemployment is declining and of course there are more people in Scotland in the electronics industry than there are in coal mining, steel and shipbuilding combined, and that is a triumph. It is a triumph for regional policy and for the Scottish Development Agency, which has been the instrument of the policy which the Minister now hopes to discard. That is the unfortunate fact.
The Scottish Development Agency is a Government-funded institution, but I was interested, while the Minister claimed its support for his new ideas, to get the policy announcement of the SDA. Though they are civil servants, and inhibited as they are, they said—and I quote the words of the chief executive of the SDA:
"Over the period since the SDA was set up, Regional Development Grants have played an important part in encouraging new capital

931
investment in Scotland. At a time of major industrial change, new growth industries and technologies have been established in Scotland, benefiting both output and employment. It is too early to predict how the pattern of industrial investment in Scotland will be affected by the changes announced today.".
This does not sound like a very enthusiastic welcome for the proposals of the DTI. There is scepticism. It is true that the Scottish Council for Development of Industry, of which I am the vice-president, says that it is prepared to go along with this, combined with a package which includes the movement of government offices out of London and a revision of the rating system to make it more efficient and more acceptable in Scotland, but it was part of a package. I suggest that it would be wise, now that the Minister has told this Committee of the immense successes of his policy in Scotland, not to reject that package. He should hold on to it and see if south of the Border they do better under the regional selective assistance scheme and then make the decision.
I detected in the Minister's speech a little change of emphasis as regards regional policy. He asked why Scotland and certain other areas should automatically get these grants. They get the grants because these areas are under-utilised as regards industrial activity. They have resources which are under-utilised and also an infrastructure which is under-utilised. They have large numbers of skilled people coming from the universities and schools who are finding their way down to the overheated economy of the South-East of England. It is in order to correct that imbalance that we have positive regional incentives. I detected in the Minister's speech just a little feeling that if the South-East is prosperous—incidentally, we are going to pay 50 per cent. of all consultants' fees to improve business activities in the South-East of England—that overheated economy will pull the other areas along with it.
It has not happened that way and such is not the history of post-war Britain. What has happened with the greater economic activity arising from the prosperity of the South-East is that the area has been able to attract labour and skills and invest in new equipment. Conversely, the regions have been unable to do that. It is in order to correct this imbalance and this continual magnetic pull towards the South-East, which is economically and politically indefensible, that a positive regional policy is called for. I regard the Bill as a departure from that positive regional policy and I commend the amendment to the Committee.
Lord Young of Graffham: I hope the noble Lord will forgive me if, before he presses the amendment, I emphasise two particular points. Firstly, this does not mean in any way a move away from a regional policy. When I came to your Lordships' House on Second Reading, I pointed out that we were spending more money and not less. It is a qualitative change. I am sure that in his private life the noble Lord would question giving out money irrespective of proof of need. I would rather give taxpayers' funds only in those cases where they would make a difference. That is one reason for the move away from automatic grants and towards selective assistance.
932
The noble Lord also brings into question the enterprise initiative. It is necessary to look at the evidence of the long and slightly unhappy history of regional policy since the war and to see what it has produced. The policy has bred in many of our regions a branch economy. It has achieved that by the giving of automatic grants mainly for industrial development. What we have seen is the closure of factories in many parts of the regions—for the moment I take England and do not comment on Scotland—and a move towards the South of many of the service economies such as the consultants, the advertising agencies, accountants and many others.
What the policies of my department are there to do is to make the regions, including Scotland, a mirror image of the rest of the country. It is for that reason that we wish to depart from the psychology that says that temporary manufacturing occupations go to the regions and the rest of the activities go to the South. The whole purpose of the enterprise initiative is to ensure that the best business practice is spread around the economy.
This is not an act of faith. This decision was taken after discussion with many heads of our chief industrial concerns. Time after time they assured me in private that they would take the grants because they were there but that this did not actually affect their decision whether to go to an area. I was recently in Japan and I spoke with many potential inward investors. They do not look for the temporary accommodation of grants, they look towards the provision of skills in an area, and that is what we wish to do. This Government are concerned to improve regional policy and also to improve the economy in Scotland. I believe that is what the Bill will do.
3.57 p.m.
On Question, Whether the said amendment shall be agreed to?
Their Lordships divided: Contents, 62; Not-Contents, 94.

DIVISION NO. 1

CONTENTS

Amherst, E.

Jay, L.

Ardwick, L.

Jeger, B.

Attlee, E. [Teller]

John-Mackie, L.

Aylestone, L.

Kennet, L.

Basnett, L.

Kinloss, Ly.

Bonham-Carter, L.

Leatherland, L.

Bruce of Donington, L.

Listowel, E.

Burton of Coventry, B.

Llewelyn-Davies of Hastoe, B

Caradon, L.

Lloyd of Hampstead, L.

Carmichael of Kelvingrove, L.

Lloyd of Kilgerran, L.

Cocks of Hartcliffe, L.

Longford, E.

Davies of Penrhys, L.

McGregor of Durris, L.

Donaldson of Kingsbridge, L.

McIntosh of Haringey, L.

Elwyn-Jones, L.

McNair, L.

Ezra, L.

Mais, L.

Falkland, V.

Mishcon, L.

Gallacher, L.

Molloy, L.

Galpern, L.

Nicol, B.

Graham of Edmonton, L.

Paget of Northampton, L.

Grey, E.

Peston, L.

Halsbury, E.

Ponsonby of Shulbrede, L.

Hampton, L.

Ritchie of Dundee, L.

Hanworth, V.

Sainsbury, L.

Hooson, L.

Saltoun of Abernethy, Ly.

Houghton of Sowerby, L.

Seear, B.

933

Serota, B.

Underhill, L.

Stallard, L.

Walston, L.

Stoddart of Swindon, L.

White, B.

Taylor of Blackburn, L.

Williams of Elvel, L.

Taylor of Gryfe, L.

Wilson of Langside, L. [Teller.]

Taylor of Mansfield, L.

Tordoff, L.

NOT-CONTENTS

Ailsa, M.

Joseph, L.

Allenby of Megiddo, V.

Kinnaird, L.

Alport, L.

Lauderdale, E.

Ampthill, L.

Lawrence, L.

Annan, L.

Long, V.

Arran, E.

Lyell, L.

Balfour, E.

Mackay of Clashfern, L.

Bauer, L.

Macleod of Borve, B.

Beaverbrook, L.

Malmesbury, E.

Belhaven and Stenton, L.

Margadale, L.

Beloff, L.

Marley, L.

Belstead, L.

Marshall of Leeds, L.

Bessborough, E.

Merrivale, L.

Birdwood, L.

Mersey, V.

Boyd-Carpenter, L.

Monckton of Brenchley, V.

Brabazon of Tara, L.

Morris, L.

Brougham and Vaux, L.

Mowbray and Stourton, L.

Bruce-Gardyne, L.

Munster, E.

Butterworth, L.

Nelson, E.

Caithness, E.

Nelson of Stafford, L.

Cameron of Lochbroom, L.

Newall, L.

Campbell of Croy, L.

Nugent of Guildford, L.

Carnegy of Lour, B.

Orkney, E.

Carnock, L.

Oxfuird, V.

Coleraine, L.

Porritt, L.

Constantine of Stanmore, L.

Renwick, L.

Cottesloe, L.

Russell of Liverpool, L.

Crickhowell, L.

Saint Brides, L.

Cullen of Ashbourne, L.

St. Davids, V.

Davidson, V. [Teller.]

Sanderson of Bowden, L.

Denham, L. [Teller.]

Selkirk, E.

Dundee, E.

Shannon, E.

Effingham, E.

Sharples, B.

Faithfull, B.

Skelmersdale, L.

Fortescue, E.

Somers, L.

Fraser of Kilmorack, L.

Strange, B.

Gardner of Parkes, B.

Strathspey, L.

Gibson-Watt, L.

Sudeley, L.

Greenway, L.

Terrington, L.

Gridley, L.

Teviot, L.

Hailsham of Saint Marylebone, L.

Thomas of Gwydir, L.

Thorneycroft, L.

Hardinge of Penshurst, L.

Trumpington, B.

Harmar-Nicholls, L.

Vaux of Harrowden, L.

Hesketh, L.

Ward of Witley, V.

Hylton-Foster, B.

Wise, L.

Ironside, L.

Young of Graffham, L.

Jessel, L.

Resolved in the negative, and amendment disagreed to accordingly.
Clause 3 agreed to.
House resumed: Bill reported without amendment.

Housing (Scotland) Bill
4.7 p.m.
The Minister of State, Scottish Office (Lord Sanderson of Bowden): My Lords, I beg to move that the Housing (Scotland) Bill be now read a second time.
On this occasion we are dealing with a purely Scottish measure. The Government's policies for housing in Scotland were announced in a White Paper published in November last year. The Bill gives effect to many of the proposals in the White Paper. It took as its main themes the improvement of the
934
quality and supply of Scotland's housing and the provision of greater choice for individuals within that improved housing stock.
The emphasis on improved supply and quality in the White Paper, and the relevance of the Bill to that purpose, have been overlooked by many critics. It has been wrongly alleged that the Government's policies will not make any extra housing available or help the homeless. That is a gross distortion.
It is helpful to remind ourselves that there are about 130,000 more houses than there are households in Scotland. This is more than five times the number of households with which local authorities deal as homeless in a year. One of our main tasks is to get more of those houses into use.
In the public sector many empty houses are in the rundown and unpopular estates which are symptomatic of the problems which can arise from large monopoly landlords and lack of choice and involvement for tenants. The Bill provides a double solution to these problems. The creation of the new housing development agency, Scottish Homes, is a vital part of the Government's overall strategy for rundown council estates, which was set out last month in the document New Life for Urban Scotland. Complementing this new strategic initiative are new rights which will enable problems to be tackled from the grass roots by individual tenants exercising the options offered by our tenants' choice proposals in Part III of the Bill.
There are also many empty houses in the private sector. Often they stand unused because the restrictions surrounding private renting create a disincentive to their owners to let them. Our policies on the private rented sector are designed to remove that disincentive. That will make more houses available for those who wish to rent. This is being done without disadvantaging those who are already renting. They will retain their existing tenancy status and the rights in relation to rent registration which they currently have.
We are not relying only on bringing existing houses back into productive use; we wish to see new provision of housing, both for owner occupation and for renting. The Bill is concerned mainly with new building for rent. The deregulation of new lettings in the private rented sector will bring new landlords into the market, as we can already see from the announcement by the Nationwide Anglia Building Society of a very large planned investment and from other more modest announcements.
It will also allow one very important source of private rented accommodation, the housing associations, to expand faster than would otherwise have been possible. The way is clear for them to make much greater use of a combination of private sector lending and public sector grant. That will enable the public sector investment, which this year stands at a record level, to be spread round more associations and more projects. That will be of considerable benefit to those seeking good rented housing at below market rents.
I find it incomprehensible that anyone should seek to dispute the central importance given within our policies to the homeless and others wishing wider

935
availability of rented housing. In fact, I noticed that Shelter shares the Government's objectives of increasing tenants' choice and control over their homes and of improving the quality of rented housing.
An improved supply of housing is one aspect of our central concern with improved housing choice for people in Scotland. Choice involves giving people greater ability to select a home which matches their needs and those of their family. It also involves a greater variety of options as to how they occupy that home: whether as owner-occupiers, as tenants or as a participant in the many new forms of tenure which are being developed, such as co-operatives and shared ownership. Above all, we seek to enable people to take, if they wish, much greater control of their own homes, whether as owners or as active participants in management arrangements for houses which they rent. We believe that taking responsibility in this way will give people the ability to achieve for themselves an improved quality of life.
These policies are implemented in a Bill which contains not a word of compulsion on tenants. It is a Bill which provides scope for change, if that is what tenants individually want. Despite substantial and continued scaremongering to the contrary, no tenant will be forced to do anything against his will and no one is to be forced from his home. Indeed, one of the major provisions is to enable tenants to choose an alternative landlord without leaving the home they already occupy. The Bill builds on the policies successfully introduced in the Tenants' Rights Etc. (Scotland) Act 1980. That Act gave public sector tenants rights, including security of tenure and the right to buy, which they had not had before. This Bill safeguards those rights and adds to them. The 1980 Act was argued against furiously during its passage through Parliament. But it has proved popular and today more than 113,000 public sector houses have been bought by their former tenants. I am sure that this Bill will, in time, be seen to be equally important and popular.
I turn now in more detail to the main provisions of the Bill. It is in four parts. Part I establishes the new housing development agency, Scottish Homes. This will be a major body which will take over the existing duties and responsibilities of the Scottish Special Housing Association and the Housing Corporation in Scotland. It will have new duties—for example, those arising from Part III of the Bill—and will take an enabling and funding role in Scottish housing. For the avoidance of doubt, I emphasise that it will be a public sector body and the tenants it inherits from the SSHA will continue to be public sector tenants with all their existing rights.
Scottish Homes is given a broad range of powers and functions by Clauses 1 and 2 of the Bill. The existing bodies, the SSHA and Housing Corporation in Scotland, have found their scope for action limited unnecessarily by the existing legislation. The new range of powers should enable Scottish Homes to find a method of assistance which matches the problem. The new body will be subject to a full set of controls by the Secretary of State and will be funded by the Scottish Office. However, we do expect it to operate
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largely independently, much as the Scottish Development Agency does today, with benefits for housing in Scotland similar to those which the SDA has been able to achieve for the Scottish economy.
Scottish Homes will act as a partner for anyone working in housing, Housing associations, which have been highly innovative and successful under the Housing Corporation's care, will find Scottish Homes fully supportive. Those in the private sector prepared to tackle difficult areas will find Scottish Homes an experienced source of advice and assistance. Local authorities, which are now faced with some of the most serious problems in housing, will be able to turn to Scottish Homes as a partner to co-ordinate major action to revive moribund communities. These are ambitious objectives but we are determined to bring an improved quality of life to Scotland, and particularly to the peripheral estates of Scotland's towns and cities, which is worthy of the late 20th century.
Part II of the Bill deals with the private rented sector. It aims to remove the restrictions which have prevented the proper development of this sector. The private sector has, in the past, conjured up an image of seedy, low-quality housing run by grabbing landlords, all summarised in the term "Rachmanism". We wish none of that. The introduction of the assured tenancy and the short assured tenancy are intended to enable landlord and tenant to agree between them the terms of the tenancy of a house, free from outside intervention. We believe that this will encourage tenants to demand a high level of service and attract landlords to provide it. We have seen already that major financial institutions such as building societies have indicated their interest in providing new rented housing and I am sure that there will be a real revitalisation of this sector. The Bill incorporates adequate safeguards which we shall no doubt examine at a later stage.
Part III deals with tenant's choice. This is a process by which a public sector tenant is able to select another landlord for the house he currently lives in. There are no restrictions on who landlords should be, provided that they can satisfy Scottish Homes as to their ability to provide tenants with a good service, save that it makes no sense for a public sector tenant to transfer to another public sector landlord. New landlords are likely to be housing associations, trusts, landlord arms of major financial institutions or, perhaps most significantly, landlords set up by tenants themselves.
The possibility of transfer to Scottish Homes may seem at odds with the bar on transfer to other public sector landlords. However, Scottish Homes will be developing substantial expertise in setting up new landlords, shaped to tenants' wishes, and such a transfer would probably be a stepping stone to some alternative tenure. There was much debate in another place that transfer should be allowed to local authorities or back to local authorities. But such transfers do nothing to add to the diversity of provision and nothing to ease the burden on local authorities, many of which are failing to provide an adequate service for their existing tenants. That failure is not necessarily a criticism of the efforts of local authorities and their staff. It is a direct reflection

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of the scale of their operations, particularly where they own six, seven or eight out of every 10 houses in their area.
The approval of Scottish Homes will be required for transfers. Landlords seeking to receive tenants will have to demonstrate that they are financially stable and can deliver the quality of service they claim and which the tenant seeks. Scottish Homes will act as a broker between tenant and receiving landlord as well as providing straightforward advice to tenants.
Part IV of the Bill contains a number of miscellaneous measures including some important changes. Clause 66 has attracted considerable and unjustified criticism. It gives rent officers additional functions in relation to housing benefit. In principle it is intended to ensure that the housing benefit system is not abused by landlords demanding rents beyond what is reasonable in the knowledge that it is the housing benefit system and not the tenant who pays. I am sure noble Lords will recognise the need to prevent such abuse.
Part IV also removes existing restrictions on to whom new town development corporations may dispose of housing land. Debate in another place centred on the wind-up of new towns. This provision has nothing to do with wind-up and is simply a measure to enable further diversity to be introduced into new towns. The other major provision of Part IV is Clause 62 which gives effect to a White Paper proposal to ease the restrictions on the discount applying to right to buy sales of recently built or improved houses. This provision was introduced in another place after careful consideration of the interests of public sector landlords and of their tenants. We think that it is a fair compromise.
The Bill as it now stands has been amended in another place in a variety of ways. Many of the amendments were of a relatively minor or technical nature but the Bill has been improved as a result. Many organisations outside contributed to the process of debate and the Government were pleased to have their views either directly or through the parliamentary process. The Bill, and the White Paper before it, were founded on consultation exercises. In particular, the consultation document on Scottish Homes published in May 1987 produced a major response, broadly in support of a unified body. Of course, not all of the responses supported every proposal. The purpose of consultation is to elicit a range of views. The consultation which we have carried out has been successful and much of what was said to us is now reflected in the Bill. I look forward to constructive suggestions from your Lordships' House.
This is a major Bill; probably the most important Scottish housing Bill since the Tenants' Rights Etc. (Scotland) Act, itself a milestone. It is intended to improve the quality of housing in Scotland and to open opportunity for those who wish to take it. I commend it to the House. My Lords, I beg to move.
Moved, That the Bill be now read a second time.—(Lord Sanderson of Bowden.)
4.20 p.m.
Lord Carmichael of Kelvingrove: My Lords, we are grateful to the Minister for going through the Bill as
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he did, and we shall read his speech with great care. In May last year, as the Minister said, immediately before the election the Government published a Scottish Development Department consultation document, Scottish Homes: A New Agency for Housing in Scotland. The Bill before us fulfils that manifesto commitment, and if its provisions are implemented in the direction of making housing provision for the future in Scotland it will be done on new and radically different lines.
I agree that new approaches are required in a changing society, especially when the aspirations of those seeking to be housed are themselves changing. Certain almost intractable problems remain with us and they demand effective solutions. What we shall be considering in this Bill as we go through it in Committee is whether the Bill, as it stands, is the proper instrument to deal with those problems. Between the first consultation paper and the issue of the Bill in December several other consultation documents and the White Paper were issued. In the course of a consultation period of a little over six months different but related parts of the Government's housing policy for Scotland were reviewed.
The consultation period itself was really very short and it has been quite rightly criticised because of that. It has also been criticised because the relevant financial and procedural assumptions, estimates or indicators were not provided. Although our primary purpose is to look at the terms of the Bill as amended at Third Reading, I can only hope that the information we need to know to enable us to comprehend how the proposed legislation will be put into effect will be provided by the Government during the next few weeks when we are examining the Bill in detail in this House.
The Long Title sets out the main purposes and provisions of the Bill, and the Minister has outlined them with his characteristic fairness: he has outlined the objectives to which the Bill is directed. In Scotland the provision of houses by the public sector is a dominant fact of life. Public sector provision came into being in the early 1920s precisely because the private sector provision was wholly inadequate and housing provision for the mass of the people in Scotland was most unsatisfactory, and deteriorating.
I should like very briefly to put in a small historic note here because I feel that at some point in this debate someone will try to blame the poor state of housing in Scotland on the early rent control Acts. That is bound to come up at some point, particularly in relation to those passed in the First World War. Sometimes one hears the argument that the low controlled rents made it impossible for owners to keep their buildings in good repair. Anyone who has lived in cities, particularly those in Scotland —although it applies to rural housing as well—will know that long before the Rent Act the housing stock in Scotland in which the mass of our people lived were slums. They were built on the cheap, often with no decent sanitation; and what sanitation there was was added almost as an afterthought. The miracle, as I have said before in this House, has been that tens of thousands of Scottish people were able to maintain a standard of decency and dignity in those appalling

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huddles. These houses in the beginning were profitable to their owners when they were originally built at the end of the last century.
Before the First World War, I understand that tenement property in Edinburgh, Glasgow or any of our major cities could recoup its capital in about 10 years. That is what we were living with. So although we have splendid, well-built tenements in many parts of the country which are a monument to the best of Victorian architecture and construction, in the main private housebuilders were building properties for rental and they have left us with an appalling legacy. Because of that background, for over 60 years the development of the public sector provision increased very rapidly, and all governments during that period accepted as legitimate the dominant housing provision role of local authorities and the Scottish Special Housing Association, which incidentally has just celebrated its 50th anniversary. Then as the Minister said, much more recently there has been the housing association movement under the guidance of the Housing Corporation for Scotland. I fully accept that as being one of the things that have been of great help to us, particularly in rejuvenating parts of our inner cities.
These housing providers have been the mainstay of housing choice and opportunities for more than half the households in Scotland. Their contribution cannot be lightly dismissed, and I believe that any change introduced must maintain the best housing service and provision that can be made. Because of the dominance of public sector provision in Scotland, the level of owner-occupation has been lower than in England. There are other economic reasons as well, but that is perhaps the primary one. By the introduction of the Tenants' Rights Etc. (Scotland) Act 1980, the Government introduced the tenant's right to buy and have progressively promoted sales of public sector stock to individual tenants with increased levels of personal discount, so that the total figure of houses sold that I have—the Minister will correct me if I am wrong—is something like 117,000 houses.
The Housing (Scotland) Bill contains no provisions which directly impinge on the promotion of the tenant's right except, as the Minister said, in Clause 62. That varies the discount on the cost-floor rule. We will need to examine that further during the Committee stage. The primary purpose of the Bill is to create the necessary circumstances in order to enable the development of the private rented sector, which has dropped to about six per cent. of all housing stock available for letting.
There are a number of factors which have contributed to this severe decline in the private rented sector. For most of this century all governments have recognised the need to provide a subsidy for housing. The subsidy for owner-occupiers is of course mortgage interest tax relief, and is available for all individual house purchasers whose ownership of their homes is subject to a loan. The personal subsidy for tenants with eligible low income is housing benefit. Then there are direct subsidies to housing providers which are paid on different formulae to the local authorities, to the SSHA and to housing
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associations. Therefore, broadly speaking the Government prefer the regime of personal subsidies, as shown in this Bill, and are progressively reducing the direct subsidies—particular housing support grants—for housing authorities. I believe that personal subsidy favours the more affluent, and positively discriminates in favour of the house purchaser rather than the house-letter.
A further factor is the legislation affecting the relationship between landlords and tenants which the Government perceive as being positively discriminating against landlords and acting as a disincentive to investment and housing to provide private sector housing to let. To a large extent the main purpose of the Bill is to redress this balance so that potential landlords will be encouraged to invest without the present disadvantages which inhibit them from making a significant contribution towards encouraging housing to let in Scotland.
To these ends the Bill seeks to create a new housing agency, Scottish Homes, which will replace the existing SSHA and the housing corporation in Scotland and will have much wider entrepreneurial power to achieve the Government's new policy objectives. The Minister did not deal with this, and I do not blame him for that; but I think it is very important from our point of view and from the point of view of tenants to deal with the two types of new tenancy which are to be introduced. There will be assured tenancies and short assured tenancies which will establish contractual rights negotiated between landlords and tenants, rather than overriding statutory rights and obligations which variously govern the different parts of the private rented sector at present. The present regulated tenancy regime will be progressively diminished. I think there are possible dangers in that and I shall deal with them in a moment or two.
The next objective of the Government is to diversify letting options for tenants. This policy proposal is expressed in the general phrase of "pick a landlord" and is directed at public sector tenants so as to enable them to opt out of the present statutory tenancies with their public landlords and take on contractual tenancies with new private landlords. Obviously, that is something which must be gone into during the passage of the Bill because, as I understand it, they lose many of their rights when they do this. It is clear that the creation of a private rented sector can occur only if private investors can be assured of an adequate investment return. Inevitably that return will need to be financed by higher rents, certainly much higher rents than are paid by tenants in the public sector at present.
Although no details have been provided, the indications are that the Government may have to consider subsidising private investors by increasing the availability of higher benefit to support the higher rates—and probably even by direct subsidy—either at the development stage, where new private rented sector housing is being built, modernised or adapted to bring it into such use, or by direct revenue subsidies. In any case, information on that aspect must be forthcoming. Finally, the Bill contains provisions for restricting the payments which local authorities can make in the administration of the

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housing benefit scheme for certain rents where the personal circumstances of tenants are not seen to justify the size or type of house which they occupy.
Such a short summary of the Bill's provisions must inevitably be a little superficial. However, that is my brief interpretation of them which does not differ greatly from that of the Minister, although perhaps the way I looked at it was rather different.
When we consider the Bill in Committee we shall have the opportunity to look at its provisions in more detail. However, for my present purposes I have highlighted what I see as the essential elements of the Bill. I have expressed a view on those aspects of the Bill which have been criticised in another place and by a wide range of organisations. I had a different reception from those organisations which are concerned about housing than the Minister. I found a great uneasiness in them. That is another situation with which we shall need to deal.
I shall try to be constructive. I do not really care who owns houses (whether they are owned by local authorities or personally owned) just so long as there is adequate housing for people to live in with decency and dignity. However, the Bill obviously affects a wide range of people and the effect on tenants, and potential tenants, would be considerable.
The corner-stone for every individual is his or her home. The Government have chosen as the banner headline for their housing proposals the smart racy title of Scottish Homes. I think that is precisely what must be kept in focus throughout our deliberations on the Bill. We must concentrate on the many Scottish homes that are affected by the proposed legislation and not on Scottish Homes as an agency, an organisation, that will do something. We must not lose sight of the individual.
The Bill's provisions go beyond a statement of the Government's housing policy. They delineate precisely the circumstances whereby individual men and women would be housed if the Government's proposals receive the support that they anticipate from private investment and individual tenants entering into the new contractual arrangements which the Bill would make possible. Notwithstanding the shortness of the consultative period prior to the publication of the Bill in December, a whole range of bodies has spoken and written about the Bill, and I am sure that many of us have a large bundle of representations from caring people and those involved in the housing scene.
The Government are clearly resolute about the Bill. It emerged at Third Reading practically unscathed and, although over 100 amendments out of the 600 that were originally tabled were finally approved, few real concessions were made. As amended the Bill reaches this place in substantially the same form as the first published version—or perhaps I should say the second published version, as the first one had to be withdrawn due to certain material omissions in two of the schedules.
It is inevitable that some organisations have endeavoured to defend the status quo for a variety of reasons, ideological and idiosyncratic. However, I am impressed with the thoughtfulness of the range of observations made by those who have primarily
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considered the proposals, and their effects on individual tenants and those seeking to be housed, rather than about the effects on present private sector housing providers. In Scotland there is a much greater popular support for the public sector housing provisions than exists south of the Border. If we are going to reach the stage where the "pick a landlord" scheme becomes popular, the Government must ensure that there are ideal landlords to start the scheme off so as to encourage others to follow suit.
During the time which will be allotted to us in Committee to consider the Bill I hope we can examine its proposals especially those regarding the efficacy of the new agency, Scottish Homes, which will replace the SSHA and the Housing Corporation. Those organisations are quangos. However, is it necessary to create a new quango? Is it the right way forward to make such a powerful new agency, a quango—it will be very powerful—without any statutory obligation to ensure that its board includes representatives of tenants, of housing authorities and of rural and geographical interests? I hope the Minister will provide some information on that aspect in his winding-up speech.
Given that there must be new circumstances for private sector finance to operate when its investment is directed towards the private rented sector, the security and sense of security of tenants entering the new private rented sector of assured tenancies and short assured tenancies should nevertheless be paramount. One of the worrying features of the legislation governing landlords and tenants which we are anxious to hold on to is that of repossession. At present tenants involved in such proceedings must appear before the sheriff before the power of repossession is granted. The sheriff can at least exercise the test of reasonableness in such litigation.
It is accepted that landlords must be able to recover their properties at some point. However, the Bill extends the grounds of mandatory possession in Schedule 5; and some of those grounds—for example, the absence of the right of intervention by the sheriff to apply a test of reasonableness—cannot but undermine the sense of security which tenants should have from the contractual tenancies.
In the 1980 Act the Government introduced many tenants' rights, in addition to the right to buy. They see themselves as having championed those rights; but, regrettably, the Bill appears to provide evidence that the Government are turning their back on ensuring the rights that they created and formalised by the Act for public sector tenants. They may even be denying such rights to tenants who will enter the new private rented sector which they seek to create. The 1980 Act enshrined rights of succession; the right to a written lease and the right to be consulted. The whole thrust of those rights was to engender greater tenant participation and involvement. Surely it is unrealistic to think that such rights which were given to public sector tenants by the Act could be as easily gained by tenants entering into contractual arrangements with private sector landlords. What control measures will be introduced to ensure that rents do not rise beyond the means of those seeking to be housed?

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Public sector tenants who are to be accorded the right to pick a landlord must be fully involved in that process. The provisions of Part III of the Bill read much more like a charter for the landlord to seek a tenant rather than the other way round. There will be considerable advantages to landlords once they have acquired ownership of former public sector stock. It is obvious that the property which can be acquired at a relatively low price, set by the district valuer on a sitting secure tenant, would increase in value dramatically if and when the landlord secures vacant possession of the house. Therefore there is a danger that tenants in the public sector may be too easily persuaded to relinquish their secured tenancies and transfer from housing authorities to new private landlords on inducements—this is where Rachman comes in—which can take all forms. They could be induced, by various types of pressure, to sacrifice what was, in effect, a permanent heritable right for short-term gain without heeding the potentially disastrous consequences of moving into a contractual tenancy in the private sector.
The Housing (Scotland) Bill, which began as a gleam in the eye of the Government, sparkling coyly in the first consultation paper published last May, reached Third Reading in almost record time. This is, as I said earlier, essentially the same Bill as was presented at First Reading. It is clear that, given the limited time that will be made available to us to consider the Bill in Committee, substantial change to it is unlikely to be achieved. Nevertheless, I believe that in this House our first concern must be to look at the effect of the legislation on individuals as tenants or persons seeking to be housed and also at the effect of the Bill as regards any serious distortion which may be created within the housing circumstances which we already have in Scotland. I hope that our discussions will elicit a positive response from the Government, and that, following the arguments and discussions we shall have in Committee, the Government will look at any serious deficiencies in the Bill, because, despite what has happened in another place, we believe there are still a number of serious deficiencies in the Bill. We hope that the Government will look favourably at our amendments when we come to the Committee stage and agree them.
4.41 p.m.
Lord Taylor of Gryfe: My Lords, I do not know what harm Scotland has done to have two controversial measures affecting Scotland on the first day after the "hols". But I am sure that the Minister will have some sympathy with me, doubling, as I have on these diminished Benches of the Social Democratic Party, in order to deal with economic matters and Scottish housing at the same time.
It would be quite wrong of me to offer the kind of detailed comment that has been made on this important issue. All I can say is that I recall very vividly entering Glasgow city council some 50 years ago with my good friend the noble Lord, Lord Galpern, who subsequently became the Lord Provost of that distinguished city. The major social problem confronting us in Glasgow at that time was the
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problem of re-housing, because no housing had been constructed during the war. We tackled it with great enthusiasm and built vast housing estates. Indeed, we were so concerned about building houses and proving that we had built more houses than the "Moderates" as they were known then or the Tories that that became the objective of our housing policy: how many can we build this year as against their accomplishment last year? Sometimes we did it wrong; sometimes we were obsessed with numbers, rather like the Russians who are obsessed with production figures as opposed to quality. I am sure that the noble Lord, Lord Galpern, would subscribe to that view. We neglected amenities, we neglected the needs of communities. Some of these houses, thanks to the attention of tenants and the local authorities, have survived even better than the ghettos which were built after the Second World War.
This gave me an abiding interest in and concern over the subject of housing. It is in my view one of the great social problems in Scotland. Scotland is a neglected area compared with other parts of the United Kingdom. The great preponderance of local authority housing, for example, has not been a useful mix in our economy. We tended to have two sets of communities: the council houses and the others. On these Benches we did not oppose the sale of council houses. We believe that that has been an important and useful change in the general climate of housing in Scotland.
However, in order to understand the Bill and to congratulate the Government on their good intentions in this matter, I went to various organisations in Scotland which had given this very serious consideration. I am impressed by the representations which I have received from Shelter, from the Scottish Federation of Housing Associations, from the Citizens' Advice Bureaux and so on. I feel that they have a deep concern for the neglected areas in our community, for the homeless and for people who are living in substandard housing. I commend to the Minister some of the representations made by these responsible organisations. Shelter, the Scottish campaign for the homeless, said that it recognised that the Bill:
"has major implications for all those who currently rent their homes and for all those who, in the future, will either want to or have to rent their homes."
That means that 58·1 per cent. rent their homes. Currently 43·3 per cent. of all Scottish households rent their homes from public sector landlords. Only 2·2 per cent. rent from housing associations and only 6·3 per cent. from private landlords.
Shelter shares the Government's objectives of increasing tenants' choice and control over their homes and of improving the quality of rented housing. That is the objective of the Government; it is the objective of Shelter; it is the objective of all these organisations mentioned. However, they also all seem to have serious doubts about the Bill before us achieving these objectives. Because of the nature of its interests, Shelter is concerned at the absence of any requirement with regard to the allocation policies of those landlords who receive financial support from Scottish Homes or take over public sector housing. Shelter anticipates that landlords will allocate their

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properties on the basis of tenants' ability to pay rather than on the basis of housing need. That is particularly worrying, given the likelihood that as from today, many tenants will not be able to rely on housing benefit to provide the appropriate support. That is because of the new social service regulations.
Shelter feels that throughout the Bill insufficient attention is given to tenants' rights and that those tenants' rights will be eroded without any guarantee of increased access to decent rented housing. New private tenants will have no right to a written lease and no right not to be charged a premium or what is known colloquially as "key money". It is most dispappointing, when we look at this new quango, Scottish Homes, that it does not appear to have any function with respect to preventing and alleviating homelessness. Homelessness in Scotland is now at an unprecedented level. It is difficult to understand why no specific role is envisaged for the national agency to assist local authorities to tackle this problem.
The central concern of Shelter is the proposal to abandon the regulations governing the activities of private landlords. As was mentioned by the noble Lord, Lord Carmichael of Kelvingrove, it seems to be more a landlords' charter than a tenants' charter Shelter says:
"In our view there arc insufficient safeguards written into this Bill to protect tenants from those landlords who offer poor quality, high rent and insecure housing."
If that is so, then the Bill fails in achieving the desirable social objectives which are spelt out.
Some reference is also made to the Scottish Special Housing Association and the intended compulsory transfer of the 83,000 SSHA tenants to the new agency. I wonder whether this is consistent with the Government's expressed intention of giving choice to the tenants. I should like the Minister, in examining this and in looking at the Committee stage of the Bill, to pay some attention to the important contribution of the housing associations.
I have always felt that the more hopeful aspect of the endeavour to improve housing in Scotland was the fact that people formed housing associations and gave of their time in order to see those associations prosper. They gave their time freely, and I feel that that was a good thing and a great community endeavour.
If the Bill is enacted in its present form, future housing association tenants will stand to lose important statutory rights such as were granted in 1980 under the Tenants' Rights Etc. (Scotland) Act and which are now consolidated in the 1987 Act. The housing associations believe that the retention of those rights would not adversely affect the ability of the housing associations to attract private finance.
There is also the question of the discrimination against people who are members, officers and staff of housing associations in that they are excluded from tenancy in housing association properties. That is a totally unfair discrimination. It does not apply to councillors on city councils as regards getting access to local authority housing. There seems to be no good reason why people who give of their time to run housing associations should have this exclusion.
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The more I read of this Bill and the new provisions the more complex they appeared to be. The weather was very good over the Easter holidays and it was difficult to give this matter the attention it deserved. I found the Bill complex and somewhat difficult. To tenants who have been accustomed to an entirely different environment of housing legislation it must be confusing. So I had a certain amount of sympathy with the Scottish Association of Citizens' Advice Bureaux, which receives a massive number of inquiries on tenants' rights, as regards its suggestion that there should be some additional allocation in its direction so that tenants could be fully and independently advised as they found their way through the provisions. I do not know whether that is something that could be incorporated in the Bill or outside it.
I also suggest that similarly the Bill makes no provision for the right of succession to an assured tenancy. To me, that is a rather important matter which I hope we can look at in Committee. I hope that at the end of the day we in this House shall have done our customary job of examining the Bill. That will be done from these Benches without prejudice and without party politics. We are addressing a serious social problem in Scotland and I hope that at the end of the day we may even have a better Bill.
4.53 p.m.
The Earl of Selkirk: My Lords, I was extremely glad to hear the noble Lord, Lord Carmichael of Kelvingrove, say that he recognised that new policies were required. He went on to say that this was an intractable problem. I can only say that I agree with him. We must all in our own way try to find truth or advancement in this very difficult subject. I agree with the Bill as it stands and that the formation of Scottish Homes is probably a move in the right direction. I was sorry that we lost Sir Hugh Cubitt, chairman of the Housing Corporation, who was a man of outstanding ability. However, I think that bringing that work back into Scotland, where the known problems can be dealt with in more detail, is on the whole an advantage.
In spite of what the noble Lord, Lord Taylor of Gryfe, has said, I think it is probably true that the Scottish Special Housing Association is much better united with this work. That body has had an exceptionally fine career. It is greatly admired for the quality of its work, for its originality and for much that it has done. I presume and I very much hope that almost all of the staff of that body will be taken on by the new body.
I shall mention an example which occurred some years ago of how everybody involved in housing fears change. The Latin expression for that is omnia ignota per terribile. Some noble Lords may recognise that. I remember that the Scottish Special Housing Association looked into the prospects of a wooden house. There is nothing wrong with a wooden house. In North America it is the commonest form of house. But everyone said that people were being put into rabbit hutches.
It so happened that His Majesty King George V, along with the present Queen Mother, were visiting the special areas in Scotland at that time. I asked

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them whether they would visit the people living in the wooden houses and they kindly agreed to do so. After they had seen how people were living very nicely in the wooden houses, there was no more trouble at all. I am afraid that those are tricks which have to be played from time to time in this vexed question of housing.
I remind the House of the position that we have arrived at in Scotland. We were in a desperate situation in the 1920s. Every action had to be taken when the government for the first time began to take over responsibility for housing. At that time there were probably about 1,100,000 houses in Scotland. Today there is nearly double that number—2 million. That is an achievement. Of course the primary task—what I call the first phase of this development—was the council house. Then came a second phase—owner-occupation. That second phase was largely the work of building societies, which started in a humble way 200 years ago and have gradually evolved their position until in Great Britain something like two-thirds of houses are owner-occupied.
I believe that owner-occupation is the best holding, but it is not open to everybody. That is where I am sure we fall down in Scotland. I do not wish to criticise council houses but there are disadvantages to them. First, they are built primarily for people belonging to a particular council. That is natural as each council has a waiting list. That therefore inhibits mobility. Mobility is terribly important in housing and it must be encouraged. That is indeed one of the reasons why rented houses are of such outstanding importance.
Secondly, local authorities become very big landholders. Glasgow is said to be the biggest landholder in the whole of Western Europe. I do not know whether or not that is true as I am not familiar with the distribution of local authority housing, but I think that very big council estates have disadvantages. There are stories that sometimes they are not as good as they should be. I know that, but I believe that the personal responsibility for any housing should lie with the landlord. It is the council of perhaps 20, 30, 50 or 60 people which is responsible for council housing in a particular district. Not one of those people is actually personally responsible for housing. I believe that personal responsibility is of the utmost importance.
It was at this stage—when there were council houses and owner occupation—that Mr. Crosland, whom I always regard as one of the finest Labour Ministers of Housing, said that it was intolerable that the people of this country should have a choice between a council house and owner occupation. It was largely due to those thoughts which he developed that housing associations, which are of such enormous importance at the present time, have developed. I entirely agree with what the noble Lord, Lord Taylor of Gryfe, said about housing associations, and I am sorry that he has already left the Chamber.
There is one particular contribution which housing associations make to which I attach immense importance. They are supported by a very large body
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of voluntary workers. As far as I know, no other housing organisation is able to attract voluntary workers in the same way as housing associations. They are doing a tremendous job of work and they deserve the fullest support in every way.
I do not think that anybody knows at this juncture just what the answer is to our problems with housing. The Government have, I believe, put forward proposals which are a big step forward. Nobody knows whether or not they will work. We shall only discover after 10 years whether or not the system is sound. Before those 10 years are up, it is almost certain that another government will come in and change the whole system. Looking back on housing policy in this country over the past 50 years, it is apparent that few schemes have been worked out to their full conclusion because another government have come in and changed the rules. Changing the rules in the middle of the game is not profitable. We have to form a judgment as to what will be an effective rule for housing in the course of the next 10 years.
I shall not go into those matters further as we shall have the Committee stage of the Bill. However, I have one or two suggestions. They come in particular from the Citizens' Advice Bureaux. The first suggestion was mentioned by the noble Lord, Lord Carmichael, and it concerns the need to keep the people of Scotland fully informed. This is a highly complicated Bill. I found it very unattractive reading. It is not easy to understand and I beg the Government to make clear to Scottish Homes that people must be properly informed and that it must accept visitors from the housing associations and elsewhere so that they can be fully informed about what it will do. That is extremely important and I hope the Minister takes up that suggestion.
I should also like to make a positive suggestion which the Minister will not like. Schedule 6, Part I, consists of nine paragraphs. Each of those paragraphs amends the 1984 Act. That means that one cannot understand the schedule if one has only the 1984 Act or only the Bill; one must have both in order to understand it. Why not write that into the text of the Bill? Why not write it out fully so that any fool can, if he wants to, sit down calmly and read it? That is a simple proposition. The Scottish Office is pretty resistant to any major concession. However, I think that every effort should be made in that direction.
I hope that we shall be able to make something of the Bill at Committee stage. The purpose of the Bill is right. We must try to restore private rented accommodation. We look on that with disdain now. However, let us remember that in the best-housed country in Europe, which I believe to be Switzerland, 65 per cent. of houses are rented. Let that be an example which proves we can have good rented property. I feel that that is a major development for people who cannot afford to buy and who, for one reason or another, cannot get a council house. That idea can be developed and I believe that with encouragement a number of big firms, including building societies, will put money into it. I hope that the Scottish Office will bear in mind that it must consider those who have money and that it will make it worth while for them to put it into such schemes.
5.5 p.m.
Baroness Carnegy of Lour: My Lords, the noble Lord, Lord Carmichael, emphasised the importance of looking at the Bill from the point of view of the tenants of the housing we are discussing. I agree with that and I wish to confine my few remarks to the implications of the Bill for council house tenants and those on waiting lists in the massive council estates which have long been a problematical feature of our Scottish cities and urban burghs—the kind of estates to which the noble Lord, Lord Taylor of Gryfe, referred.
I concentrate on that aspect because of all the hundreds and thousands of Scots for whom the Bill offers new housing opportunities and choices. Those living in the biggest and most rundown conglomerations of council housing stand to gain most of all. One must not generalise too widely. No two council house tenants find themselves in identical circumstances, even within the same scheme. The large schemes vary enormously. Some have always been reasonably attractive and popular and are well maintained and cared for. In some, the original uniformity has begun to be broken up. Tenants have exercised the right to buy. They have embellished their houses and gardens in new ways. Blocks of houses have been transferred to the SSHA or a co-operative and as a result they have been altered externally, thus varying the scene. The SDA has contributed to environmental improvement in many areas.
However, too many other schemes remain in their original homogeneous state, with row upon row of near-identical houses or flats which are even drabber now than when they were built. Because they are the wrong size for the people who wish to live in that part of the town or because they are in the wrong part of town for people who wish to live in houses of that size, many are boarded up, with rubbish collecting in untended gardens. Somehow, despite people's aspirations nowadays and despite all that they have learnt at school and all they have seen on television, they cannot overcome the sense of helplessness and inertia in which they are trapped as their environment collapses around them.
I believe that CoSLA is very much inclined to run down what it does. I do not know how many of the 500,000 Scottish houses which it claims are damp, the 250,000 which it claims are in need of major repair or the many houses which it claims are overcrowded are in the large housing estates over which it presides. However, you have only to walk through the streets of Whitfield in Dundee, which is an estate built comparatively recently and which is near to my home, and see its empty houses and increasingly decaying appearance to realise that the system is not working for those tenants. The local MP, Mr. McAllion, said the other day in another place that half Dundee lives in housing estates like Whitfield.
That is by no means all the council's fault. Housing is a major concern of district councils. There is a genuine desire to run good housing departments and a genuine attempt in some schemes to involve tenants and to provide premises for tenants' associations. Housing department officials have much professional
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skill. Councillors spend much time and energy on constituent housing complaints and needs.
It seems to me that the problems are simply built into the system. Those estates are of the most enormous size. At least one in Dundee has a population of 14,000, which is the same size as the entire county town of Forfar in neighbouring Angus. The estates have few of the facilities of the town and none of the variety. The houses are broadly all of the same type and still mainly council-owned. I remember one school of over 1,000—that was before the right to buy—which had in its whole catchment area only two owner-occupied houses.
To people in council housing, everything they are involved in seems to be in the hands of the council—not only finding a house but the fixing of the rent and rates; getting repairs, alterations and maintenance done; the community centre and its charges; the leisure facilities; the open spaces; and the schools and the nurseries. All those are council concerns. It seems to the tenant that there is little room for anyone to have a bright idea and have it implemented or for a group to do its own thing and change things. There is no room to shop around for a better bargain.
To give them their due, councillors work very hard on all of this. Lord Wheatley's report which outlined the present system anticipated far less council involvement in day-to-day operations and more being done by highly accessible officials face to face with the public. That alas has not happened, at least in the areas of which I speak. Politics intrude further and further into the scene. Because housing department activity is closely linked with satisfaction with the way a councillor operates, at a time like the present in the run up to the district council elections people could be forgiven for thinking that they cannot get a downpipe unblocked without involving their councillor. I hope that my erstwhile political friends and colleagues in local government will forgive me if I say that this way of working is by no means confined to councils of any one political complexion.
As ever when politics take over it is very difficult to get efficient, crisp, cost-effective management. Responsiveness to individual need depends on who goes to the councillor. The professionalism of officials has to give way to councillors' detailed priorities. There is a temptation to blame inefficiency on central government or other councils' wrong-headedness. The people who suffer are always the tenants.
It seems to me that probably the most important thrust of this Bill is that it will bring new money, new ideas and new methods of operation into such enormous schemes. It should enable the tenants who live on the estates if they so desire to seek other landlords, other forms of tenure, and give them the chance to create for themselves more variety, more interest, more involvement and more choice. I believe that the Bill will bring about a more limited role for politicians whereby for many people they will be there to help and advise if asked but will not also be the landlords.
The effect of those changes would be that the feeling in the community would be more like that in

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a rural town where everybody is much more involved than on a large council estate, where anyone can have an idea and try to sell it to the neighbours, and where variety is the spice of life.
The Bill is about far more than better use of public housing resources and introducing private resources. If it works—as it should work, and during our considerations we must do all we can to ensure that it does work—through the years it could transform the scene for people living in the more run-down urban housing estates.
5.14 p.m.
The Earl of Balfour: My Lords, I have taken an interest in housing all my life. I have a few houses to let from time to time, so I must also declare a pecuniary interest, although it is very small. This Bill is ending an interesting chapter in Scottish housing because under Clause 3 the Scottish Special Housing Association is to be dissolved. My father—when he was Viscount Traprain—was its first chairman in 1937.
Under Part III of the Bill certain public sector tenants are permitted to transfer to a new landlord. I wonder whether the Government would consider extending to Scottish Homes the right to take over public sector housing which has remained unoccupied for, say, more than a year. Although there is a fairly long waiting list for council houses in many areas of Scotland, a number of district councils seem to be rather loath to open houses which have been unoccupied for some time. It would be a pity if such houses became slums, and the slum clearance subsidy under Section 200 of the Housing (Scotland) Act of 1987 is being repealed by this Bill.
Of all the laws that have been passed this century, the Rent Acts are some of the most peculiar. The tenant either has security of tenure or absolutely none at all. The laws are peculiar because the security of tenure depends upon who is the landlord and has nothing to do with the circumstances of the tenant. Until the Rent Acts were consolidated in 1971 they were almost impossible to follow. The Acts were then reconsolidated in 1984. It was the Rent (Scotland) Act of 1957 that brought the laws of England and Scotland closer together than at any other time. For example, in Scotland since as far back as about 1550 nobody could be evicted from his home without a court order. The 1957 Act brought England into line.
The conditions under which a court order must or may grant eviction were established under the 1965 Rent Act. That Act had quite a stiff passage through Parliament. Those conditions are covered in Schedule 2 of the 1984 Act and are divided into 21 cases. In Schedule 5 of the Bill before us there are 17 grounds under which the court either must or may grant possession to the landlord. I am very pleased to see on page 57 that two new grounds (numbered 6 and 7) have been added. However, Cases 8 to 10, 12, and 17 to 21 of the 1984 Act are not covered in this Bill. Grounds 1 and 2 limit the present Case 11, and Case 7 is rather better than Ground 17. I am seriously concerned about that because the Bill states between Clauses 38 and 39 that the Rents (Scotland) Act 1984 will be phased out.
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Many of your Lordships have wondered why the present private rented sector has become so small. The reason is very simple. Successive governments have so protected the tenants that prospective tenants, particularly those with children, have little chance of renting any private accommodation. The Rent Act 1984 provides for protected tenancies, statutory tenancies, regulated tenancies and short tenancies with which by now we are all familiar. Part II of this Bill introduces an assured tenancy, a contractual tenancy, a statutory assured tenancy, a short assured tenancy and a new protected tenancy under Clause 39. It is a little difficult for me to determine exactly what will be the position of the landlord. Although this Bill undoubtedly has been improved during its passage through another place, it has only recently been printed for your Lordships' House and there has not been much chance to go into it in any great detail, at least not in so far as there are alterations.
As has been said already this evening, one of the difficulties is our very large council estates. I criticise some of the local planning departments which allocate areas for houses, shops or industry. One of the great advantages of the city of London is that it is made up of many small villages in which one finds houses, shops and light industry all mixed together. It is something that might make many housing estates very much more attractive. I appeal to the local planners: remember the poor housewife who walks home with a load of shopping on her arm which can seem stretched to the ground: do not ask people to take a bus or drive a car when they can walk to work. Sometimes I feel that those who plan try to make their towns too tidy by allocating different functions to different areas. That has already been borne out to a very great extent by remarks made this evening.
5.21 p.m.
Lord Campbell of Croy: My Lords, I am pleased to take the opportunity to speak at the imminent birth of the proposed new body to be called Scottish Homes, because I have been much involved in the past with its two ingredients: the Housing Corporation in Scotland and the Scottish Special Housing Association. In 1963 and 1964 I was a junior Minister on the committee and dealt with the later stages of the Bill in another place which became the 1964 Housing Act. That was nearly 25 years ago. That Act established the Housing Corporation, which had the principal task of assisting and, where appropriate, providing finance for housing associations. With its other provisions for housing associations the Act gave a great boost to the housing association movement, which in those days was in its infancy. I mention in passing that the Minister in charge of the Bill, the father of the present Paymaster General, was the late Henry Brooke, who later sat in this House as Lord Brooke.
The important point for me about Part I of this Bill is that the new body, Scottish Homes, will inherit the functions and powers of the Housing Corporation in Scotland. Unless I have misread the details, the work will be carried on as before. This is not the time to dilate upon the activities of housing associations in general but I shall point out that in Scotland the

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number of housing association tenants has more than quadrupled since 1979, which is a great expansion in numbers. Housing associations also have a variety of functions ranging from straight commercial renting to special needs and charitable roles. They can make an increasing contribution to the independent rented sector, which in Scotland has become very small—so small that it severely limits availability and choice today.
As a director of one of the largest building societies and chairman of its Scottish board, I look forward to increased co-operation with housing associations in providing more homes and more choice in the independent sector. My building society is not the one that was named by my noble friend the Minister in his opening speech, so I had better name it now. It is the Alliance and Leicester. I shall not add anything about the nature of its investor.
The other ingredient of the new body is the Scottish Special Housing Association, which has a longer history. It was formed in the 1930s. I should like to pay tribute to a line of chairman, chief executives and staff—people who have run this unique organisation efficiently and effectively since that time. There is no counterpart to the SSHA elsewhere in the United Kingdom.
I do not lament the amalgamation because the functions and powers are to be continued in the new body. The SSHA has been valuable to Scotland above all for its flexibility. It excelled in the early 1970s when oil was discovered in the North Sea. I was Secretary of State for Scotland at that time and responsible for it, so I can testify to the quality of the contribution which it urgently made in providing appropriate accommodation in areas where it was needed in North-East Scotland both for the short and the long term.
I understand that this is a willing amalgamation between the two existing bodies: the Housing Corporation in Scotland and the SSHA. Like friendly mergers in business and industry, each body should benefit from gaining the assets and additional functions of the other. The new body will also bring together activities in the public and private sectors. That is important because co-operation between them will be needed for regeneration in both urban and rural areas.
I draw attention to two matters. First, as regards housing associations, some concern has been expressed through the Scottish federation that there are difficulties in prospect for some housing associations in the changes proposed by the Bill. Where such apprehensions are unnecessary I hope that the Government will give reassurances, or that they will consider the minor changes that may be required if there is substance in those anxieties. The second matter relates to the situation of existing tenants of the SSHA. The Government have made clear that all the existing rights of those tenants will continue. However, there is anxiety about who might become their future landlords. I trust that the Government will be able to give reassurances in different parts of Scotland, including the islands.
As regards rented housing, with which the Bill is much concerned, I welcome the fact that the Government propose changes aimed at making the
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letting of property easier and more worth while for both tenant and owner. The Government have done a lot to promote the right to buy, and many people in Scotland have availed themselves of the opportunity and benefited from it. Others will continue to do so. From inquiries which I have made at Question Time over the past two years noble Lords will know that I have been pressing also for the right to rent. By this I mean providing a choice and alternatives to the public sector.
There will always be some people who for various reasons do not wish to buy their homes. In addition, and most important, mobility is needed in certain occupations. In some kinds of employment a person expects to move every year or so and does not wish to go through the whole process of purchase each time he moves. Council houses have not been able wholly to meet that situation. There have been waiting lists. Once a home has been allotted, the individual and his family do not want to give it up and start again somewhere else, probably again with his name on a waiting list.
Most councils regard their principal duty to be toward the residents of their areas and to the homeless. The present system has discouraged private letting, especially in urban areas. As a result very little now exists in Scotland. This needs to be changed—with the interests and rights of tenants uppermost—while the system is being made more flexible. The Government's proposals to improve the situation will no doubt be examined carefully at the later stages of this Bill. I am sure that they are right to seek to create conditions in which more housing will be available for renting in the independent sector.
I welcome the fact that housing benefit will be available to help the less well off tenants with rent payments, in particular because the rent rebate schemes were introduced in Scotland for both the public and private sectors when I was Secretary of State. The rent rebates are now incorporated in their successor—housing benefit.
Noble Lords will remember that the introduction of those rent rebate schemes accompanied a requirement for councils to raise their rents gradually to a level which was determined by a formula based on historic costs. Some councils in Scotland were charging very low rents, well below that level. Others were charging at that level or near it. The rebate system ensured that tenants who could not afford the higher rents were not required to do so.
I end on a hopeful note in recalling that time in the early 1970s. Subsequent history records that the two main political parties—despite rhetoric at the time—built on progress made in Scotland. When I refer to rhetoric I remind your Lordships that it is easy to play politics in the field of housing. People can be alarmed by stories of steep rent rises or doubts about security of tenure.
Despite some harsh things being said in 1972–73 about the Scottish housing legislation that I had piloted through Parliament as Secretary of State, the voices raised at that time were only a few. Not all the spokesmen of the parties on the Benches opposite—and I am sure none of your Lordships in this House—joined in. However, despite that rhetoric, the succeeding Labour Government in 1974

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retained the historic cost system for council house rents in Scotland. They went further. They paid me the compliment of introducing the system also in England and Wales. After 1974 they introduced the system which I had been responsible for providing in Scotland, supported by the rent rebate schemes.
I refer to those events as a good augury for the future. Let us try together to achieve the changes and the actions needed to provide better homes in Scotland, both in the public and in the independent sectors, with more variety and choice for both ownership and renting.
5.33 p.m.
Lord Stallard: My Lords, it is with some hesitancy that I rise to speak in the gap because I recognise that I am probably the only speaker in the debate so far who at the moment is not directly involved in housing affairs in Scotland. However, I recognise that the proposals contained in this Bill have much wider implications. It has always been my hope—and there is still a chance—that those people who are involved in legislating for other parts of the United Kingdom may well be influenced by the discussions that we have on this Bill in your Lordships' House. I have also had a long connection with housing matters—homelessness and so on—throughout the United Kingdom. As a result, I have received much correspondence about this Bill and others that may come on the statute book.
I should like to congratulate the Minister on his introduction to the Bill. I received information from his introduction. I should like to ask him this question which arises from correspondence that I have received and from the second paragraph of the Explanatory and Financial Memorandum. The Bill transfers to Scottish Homes the registration and supervision powers of the Housing Corporation. Was the Housing Corporation consulted about this transfer of its functions in Scotland to Scottish Homes and does it agree with the transfer? Again, there are English and Welsh implications involved in that transfer. I am not sure whether there was any consultation.
I am interested in two aspects of this Bill. First, I am very concerned about the erosion of tenants' rights in the private sector. Much has been said about this. There has always been, and always will be, controversy about the standards and criteria that should apply to both public and private tenants. I am concerned about the apparent erosion of the rights of tenants in the private sector as outlined in this Bill. Secondly, I am concerned about the problems of homelessness. This was touched on by the noble Lord, Lord Taylor of Gryfe.
One of the main aims of the Bill is to revive the private rented sector and encourage private landlords. That the private rented sector has rapidly declined in recent years is not in dispute. The issue has been touched on by other speakers. What is in dispute is why the private rented sector has declined. There have been as many reasons as there have been speeches, both in this debate and in others, as to why it has declined. It is not only because of the existence of the various rent Acts. In his opening remarks my
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noble friend Lord Carmichael referred to a period before the introduction of those rent Acts. He was quite right to draw attention to the conditions that existed long before the rent Acts, to the problems of homelessness and to the conditions of the tenants in those rented properties. The decline is not simply because of those issues. There are other main reasons that are not so widely publicised for obvious reasons. One is the increase in house sales, in particular in the public sector, with the removal of those houses from the rented stock. Those houses disappeared for ever from the rented stock.
Here perhaps I may bring your Lordships up-to-date with an example in today's news of just such a house. In the London borough of Camden a tenant has sold his council house for £180,000. He bought it eight years ago for 16,000. That house will not have been purchased by somebody who is looking for a rented house. That house will not have been purchased by someone on the waiting list. It will not have been taken by people who are homeless. It is gone for ever from the rented stock. That situation would be all right if the housing stock were being replaced, but under the conditions that exist at the moment there are no replacements. These houses in the rented area are being taken over. They disappear for ever. That is one of the main reasons that is never mentioned.
The other main reason—certainly in the inner cities—is the dramatic increase in the number of conversions to self-contained flats of what used be "digs" or accommodation that housed families as well as single people. Because of the huge profits that can be made these have now been converted into private, single, self-contained flats. To my knowledge most of the hostels and accommodation of that kind that existed in the cities—and I have traveled up and down the country on this issue—have disappeared, are disappearing or are being reduced in size. That has exacerbated the problem. There is the low, almost non-existent, level of new building in the cities, be it private or public. Those are all perfectly good reasons why there has been this decline in the rented sector, as well as the points mentioned about the rent Acts.
I agree with those who say that there is room for change. Certainly on this side we have never opposed choice. We have encouraged it. We took the lead in the other place in pushing for housing corporations, housing associations, tenants' organisations, cooperatives, and all kinds of choice that ought to be made available to tenants. We were never satisfied. Had we been able to carry on we should have made more choice available to tenants.
However, it is not just the numbers that are important—not just the fact that they can choose. The relevant legislation says that they can be transferred to different landlords. What has always been important to us is that the legislation must be framed not just to improve the statistics, but to improve the standards of accommodation and the availability of that accommodation to those in need at affordable rents and with no less security than they have now. In other words, we must maintain a balance between landlord and tenant.
Until now under the 1980 Act—and I pay tribute to the people who introduced that Act—there has

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been an attempt to rectify the balance that got a bit out of gear in the relationship between landlord and tenant. That is now being reversed. It is being turned almost upside down and the emphasis now is on landlords, whoever they are; the balance is now in their favour. That is what we have to consider in the provisions of the Bill.
The Bill makes no provision for registering or monitoring those private bodies and landlords who offer residential accommodation for rent. It gives no right to a written lease. It allows a landlord to charge key money. It gives no right to a rent book and for assured tenants it gives no right of arbitration of rent levels. Shelter in Scotland is particularly concerned that the proposals in the Bill will result in a high rent, low quality, insecure rented market being created in Scotland. The Scottish Federation of Housing Associations has expressed similar concerns about the loss of rights for housing association tenants. If I had time I should dearly like to quote some of the paragraphs in those briefs, particularly in view of the opening remarks of the noble Lord, Lord Sanderson, about choice, security of tenure and so on and his reference to the 1980 Act. The Scottish Federation of Housing Associations has adequately dealt with those remarks.
My final point relates to homelessness. I shall be brief. We have debated homelessness many times in the House. It is extremely worrying to me that it is not even mentioned in this Bill, nor in the Bill relating to England and Wales that I now understand is in another place. There is no mention of homelessness, although how we can discuss a strategy for housing without involving a discussion on homelessness defeats me completely. Homelessness is what housing should be all about.
The proposals contained in the Bill in my view create the conditions for a new upsurge in unfair exploitation of those people in dire need of accommodation. Worse than that, I fear in the inner cities the possibility of a revival of the Rachman-type activity which flourished in London in the early 1970s. I have no time to develop these matters but I look forward to participating, if possible, during the Bill's further progress through the House.
5.43 p.m.
Lord Sanderson of Bowden: My Lords, our debate today has covered a wide range of housing matters. I should like to thank all noble Lords who contributed to the debate. I was interested that the noble Lord, Lord Stallard, saw fit to join in this debate. I welcome another Scotsman, even though he has moved south of the Border, to take part in our deliberations. Perhaps, first, I should put him out of his misery when he asked whether the Housing Corporation was consulted about Scottish Homes and whether it agreed. The answers are "Yes" and "Yes". The noble Lord may be aware that the Housing Corporation's responsibilities in Wales are also to be passed to a separate body to be called something that I cannot pronounce in Welsh, but it is Housing in Wales.
First, perhaps I may say how much I appreciated the constructive approach that the noble Lord, Lord
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Carmichael, brought to the Second Reading debate. I was very pleased to find that he was in agreement that as this Bill passes through this House, we must try to ensure that at the end of the day we improve housing in Scotland.
I turn now to some of the points that the noble Lord made and I shall try to cover as many as I can. He asked whether we need such a powerful body as Scottish Homes to replace the SSHA and the Housing Corporation. I believe the answer is that we do. The existence of a single powerful unified development agency in the economic field, the SDA, which his own government brought into operation, has been widely recognised as one of Scotland's strengths. The Government feel that Scottish Homes, when it is up and running, will be just as effective and powerful a body to deal with the very difficult problems of housing which exist. It has been questioned whether the board of Scottish Homes will be representative. In the White Paper we made clear that particular attention will be paid to ensure that the tenants' interests will be looked at very closely. One member of the board of Scottish Homes will be somebody who can contribute experience in that field to the deliberations of that board.
The noble Lord, Lord Carmichael, also asked whether the consultation on Scottish Homes was not far too short. Almost four months of consultations were allowed on Scottish Homes and, where possible, comments received later have been taken into account. It was a skeleton document seeking ideas from consultees. It was successful, for over 247 responses came in, with many useful suggestions being received.
The noble Lord asked about the lack of discretion for a sheriff in some of the grounds for possession. All rent legislation has always included grounds on which the court must order possession. For example, the Rent (Scotland) Act 1984 contains 11 such grounds compared with only eight in the Bill. But I have no doubt that we shall come back to this matter when we debate it in Committee.
The noble Lord also asked what control measures there will be to ensure that rents do not rise beyond the means of the tenant. There is none. A tenant should not agree to a rent that he cannot afford, but the poorest tenants will receive housing benefit, and a new scheme will mean that people receiving housing benefit will be totally insulated from rent increases which reflect market movements.
The noble Lord also asked about the loss of rights if tenants exercise tenants' choice. I emphasise that under Part III of the Bill no tenant will be forced or in any way obliged to transfer to a new landlord against his will. All secure tenants remaining in the houses under the present landlord will continue to be secure tenants with no loss of rights whatever. So any tenant moving under these provisions from a secure tenancy to an assured tenancy will do so entirely of his own volition. The noble Lord also asked about the reduction in housing support grant—the subsidies to individuals benefiting the better-off. I have to say that the opposite is the case. Our policy is indeed to concentrate subsidies on individuals who require them and to ensure that the resources available for housing are used to best effect rather

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than to subsidise the rents of individuals who can well afford rents without such subsidy. I accept that, because housing support grant has been steadily reduced, local authority rents, for example, have increased by more than inflation over recent years to levels which more nearly reflect the costs of providing housing. But where an individual tenant is unable to afford these higher rents the housing benefit system is available to assist him.
In passing I should say, because it has perhaps been inferred, that, if given more money, local authorities could to the job. The allocation to local authorities has been substantial over the past three years and the increase is over 90 per cent. over the last four years. It amounted to a gross total of some £227·5 million in 1984–85 and £445·2 million in 1988–89.
I pass to one final point which the noble Lord made. It concerns the Part III provisions for a landlord to seek a tenant rather than the other way round and the possibility that the property will go up in value when the new landlords seek vacant possession. I agree that the legal transfer will be between a new landlord and an existing landlord, but no transfer can proceed without the tenant's agreement to the initial approach to the existing landlord and also without the tenant agreeing to a new lease which he is offered. We must note that the tenant can withdraw at any time from these proceedings. Tenants' choice provisions are exactly that: no transfer can proceed without the tenant choosing to agree to it. Any landlord acquiring property under the tenants' choice provisions in Part III will be able to dispose of the property only with the approval of Scottish Homes. That approval will not be given lightly or without regard to the interests of the tenants. There is therefore very little chance of any new landlord being able to make large profits from acquiring property under Part III and then seeking to sell it on with vacant possession.
I was most interested and heartened by the views expressed by my noble friend Lord Selkirk. He made several valid points. He said that there was always a genuine fear of change, particularly in relation to such a sensitive matter as housing. He also said that mobility must be encouraged. That is one of the major reasons why we welcome the Bill now before the House. The noble Earl also asked whether the Government will inform people about the new legislation. Those noble Lords who live in Scotland will be in no doubt that it has been widely reported in the press, on radio and on television. I am sure that that will continue as the Bill passes through this House. We shall consider what further publicity is necessary in due course.
I should like to return to the question of housing associations raised by the noble Lord, Lord Taylor of Gryfe, and my noble friends, Lord Selkirk and Lord Campbell of Croy. I declare an interest as a past chairman of a housing association in Scotland and I am keen to see that progress is made in that area. Indeed, so are the Government, who last December announced that they were increasing their provision for housing associations to £132·74 million in Scotland. My right honourable friend the Secretary of State for Scotland recently added a further £25
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million in connection with projects for urban regeneration. I can honestly say that this Government intend to back the housing association movement all the way and particularly to see its percentage increase from a small 2·2 per cent. of the total housing provision in Scotland.
My noble friend Lord Campbell of Croy asked about the difficulties for some housing associations. I must emphasise that the new financial regime is being introduced very gradually by virtue of the fact that it applies only to new lettings. We have also made clear that nothing in our proposals rules out the continuation of 100 per cent. public funding if necessary. I do not believe that any association will be placed in a position which it cannot cope with.
The noble Lord, Lord Taylor of Gryfe, expressed misgivings about the future for housing associations. He mentioned the question of the existing housing association tenants retaining their existing rights. There have been discussions between the Scottish Development Department, the Scottish Federation and Housing Associations and the Housing Corporation of Scotland about the rights of future housing association tenants. I shall be bringing the outcome of those discussions to the House at a later stage. However, I can now say that it is common ground that tenants' rights are very important. The discussions are about how, rather than whether, to provide for them.
The noble Lord, Lord Taylor of Gryfe, also asked about the problem of tenancies and other benefits to committee members and staff of housing associations. An undertaking to look at the issue was given in another place and I endorse that undertaking. He also asked whether transfer of SSHA tenants to Scottish Homes widened the choice. In one sense the transfer will simply preserve the status quo. Tenants will be in exactly the same position with Scottish Homes as they are with the SSHA. However, it would be part of Scottish Homes' remit to make a particular effort to make available new choices for its own tenants to meet their wishes. The noble Lord also asked about advice to tenants. We expect that Scottish Homes will provide advice and assistance to both tenants and landlords. In addition it may well give assistance to independent agencies providing advice to tenants. We recognise that tenants will need help to take advantage of the new opportunities, and Scottish Homes will ensure that that is available.
The noble Lord also asked about homelessness, which was also referred to by the noble Lord, Lord Stallard. He remarked that it was at an unprecedented level. The Housing (Homeless Persons) Act 1977 places responsibility clearly on the local authority—that is, on the district and island authorities. Scottish Homes will be able to assist local authorities in their functions. For example, it can make available houses to local authorities to house homeless persons. However, in my view it must continue to be for the local authority to take the lead in this matter.
My noble friend Lord Selkirk talked about the disadvantages of large estates. The Government entirely agree and we are in favour of decentralising responsibility for housing to a more local level. My

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right honourable friend the Secretary of State for Scotland in his recent announcement underpinned that fact when he brought forward proposals for the peripheral estates.
My noble friend Lord Selkirk also talked about Schedule 6 and the impossibility of understanding it. He said that he found it difficult to understand the Bill in its entirety. I sympathise with him: it is not very easy particularly to assimilate its different facets. However, this is the normal method adopted by parliamentary draftsmen. To set out the provisions of the Rent Act at length would greatly increase the bulk of the Bill. Even if that could be done one would still need a copy of the Rent Act to see how the new provisions interacted with the old. In effect one would need a reprint of the Rent Act as the Bill proposes to amend it and that would be quite impracticable—
The Earl of Selkirk: My Lords, I appreciate what the noble Lord has said, but does he appreciate the fact that many of us believe that normality is very bad?
Lord Sanderson of Bowden: My Lords, I do appreciate that and I have heard the noble Earl speak of it before in relation to the Local Government Bill dealing with the community charge. I shall look carefully at what he has said but I can assure the House that the advice I have been given probably means that it will not be possible to accede to his wishes.
My noble friend Lady Carnegy of Lour referred to Whitfield. That is a well-chosen example of a poor estate in Dundee which is being radically improved by the introduction of private funding in combination with private sector funding through the building societies, housing associations, etc. I hope that the initiative that has been announced will remove some of the grave problems of that estate. My noble friend also talked about the implication for council house tenants and those on waiting lists. Waiting lists should be reduced because the extension of the private rented sector should bring more accommodation into use.
My noble friend Lord Balfour talked about Scottish Homes and asked whether it could take over public sector houses unlet for over one year. That is an interesting suggestion. I am sure that once Scottish Homes has begun its work local authorities with unlet housing will find their partnership with the new body of considerable assistance in bringing back into use those empty houses. I doubt whether a specific power of this kind, based on compulsion, is the right way to develop a constructive partnership. In relation to empty houses, Scottish Homes will have powers of compulsory purchase as a last resort. However, I hope that in all cases it will be able to proceed by co-operation. It will be well placed to take over from public sector bodies or others responsibility for housing which they hold but do not have the expertise to deal with.
My noble friend Lord Balfour also talked about the repeal of Section 200 of the 1987 Act. Local authorities will still be able to spend money on slum
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clearance. It is the way in which they will be subsidised in future which is being changed, not the power to take such action.
My noble friend Lord Campbell of Croy asked about SSHA tenants and asked for reassurance about future landlords. I believe that his anxiety about future landlords of SSHA tenants after transfer to Scottish Homes is based on a misunderstanding. The important point is that tenants will be offered as wide a choice as possible, including taking over their own houses, and will not be forced into any change against their will.
As I said at the outset, the Bill before your Lordships' House is a very important one, for many of today's problems are the result of failure to match homes to people's changing needs, whether in size, type, location or tenure. This Bill aims to remedy that fundamental difficulty. It will open the way for resolution of acute problems, such as homelessness and poor quality houses. At the same time it will bring benefits to the majority of people who do not face any housing crisis but who nevertheless aspire to better housing.
Much has been said about the need for safeguards in our policies. It is inevitable that in any major change such as this Bill proposes there will be matters about which people have doubts or anxieties, which was clearly brought out by the noble Lord, Lord Carmichael. However, we believe that for many people it will be the opportunities offered by this Bill which matter most. Once the Bill is in operation, people also will come to recognise that it contains an ample range of safeguards. To add further layers of restriction would defeat the object of improved supply and choice of housing. We would be giving people theoretical protections since the lettings to which they might apply would not exist, which is clearly borne out by the fact that only 6 per cent. of housing in Scotland is in the private rented sector at the present time.
This Bill, as I have said, does not force anyone to do anything which they do not wish to. It is about providing choice for those seeking a home and opportunity for providers of housing to do so. It will enable those who wish to take greater responsibility for their own housing, whether as tenant or owner, to do so.
This Bill provides the basis for a huge step forward for Scottish housing. The extent of the improvement which is made will depend on the way in which all concerned with Scottish housing respond to the opportunities that the Bill now offers. Everyone with a genuine commitment to Scottish housing should welcome those opportunities.
Indeed I look forward to the Committee stage of this Bill when we shall have detailed debate on the various clauses of the Bill. I commend the Bill to your Lordships' House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.
House adjourned at four minutes past six o'clock.