Lords Sitting of 26 July 1988

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Sheffield.

COSMOS 1900
Baroness Faithfull Baroness Faithfull Asked Her Majesty's Government:
What civil protection precautions are being taken in view of the fact that COSMOS 1900, a nuclear-powered spacecraft which is out of control, is due to crash on 16th October 1988.
The Minister of State, Home Office (Earl Ferrers): My Lords, the Government are monitoring the progress of COSMOS 1900. If a threat to the United Kingdom became apparent the emergency services would be alerted and arrangements to deal with the effects would be set in hand.
Baroness Faithfull: My Lords, while thanking my noble friend the Minister for that reply, may I ask what instructions and guidance have been given to the Lord Great Chamberlain, to our much respected Black Rod and to the Doorkeepers who serve us so well—likewise the police—in the event of it landing on Westminster?
Earl Ferrers: My Lords, the Gentleman Usher of the Black Rod follows a distinguished number of people who have looked after the interests of the Palace of Westminster. I am not aware of any specific instructions given to him as regards this particular instance any more than would have been given to him in the eventuality of a No. 11 bus humping into the Victoria Tower. In the somewhat bizarre circumstances which my noble friend postulates, I am sure that the Gentleman Usher would remember the resourcefulness and courtesies which have always gone with his office and that he would at least have time to say, "Cheerio chaps".
Lord Shackleton: My Lords, while the lighthearted intention of the noble Baroness has been well echoed by the Minister and since the Government have now ensured that this country has no capability of putting any satellites into space, the fact remains that a similar satellite—I am sure that the noble Earl has been briefed on this—namely, COSMOS 954, caused several million pounds worth of damage. Although the odds are heavily against the satellite landing on Westminster, the fact remains that there will be quite a problem. Will the Government therefore consider pressing and supporting those who seek some limitation as regards putting into space nuclear capabilities which present a particular threat when they come down to earth?
Earl Ferrers: My Lords, the noble Lord, Lord Shackleton, is quite right. When these objects go up into space and go wrong they can cause immense
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trouble. This is a matter with which the Government are always concerned. According to the information I have, there is about one chance in 2,000 of this particular instrument collapsing on to the United Kingdom.
Lord Renton: My Lords, is my noble friend aware that if, mercifully, this object does not land on Westminster, it might nevertheless land in an important farming area? Is he aware that a report of the Agriculture Select Committee of another place published today contains advice both critical and constructive as regards our handling of the Chernobyl incident and its effect on farming? Can the Minister confirm that if there should be this kind of mishap in a farming area the advice of the Select Committee will be followed?
Earl Ferrers: My Lords, if that eventuality were to come about, the authorities would be responsible for dealing with it. They would no doubt take into account what the Select Committee says. However, overall responsibility would be exercised from a central control point with ministerial and official representation from all the government departments concerned. Local authorities would follow the Home Office emergency planning and guidance to local authorities in which Annex C to Section 25 deals specifically with incidents of this kind.
Lord Boston of Faversham: My Lords, on reflection, does the noble Earl feel that not only would it be unfortunate if a Number 11 bus collided with the Victoria Tower, but it would also be very careless indeed because it should be going down Victoria Street?
Earl Ferrers: My Lords, the noble Lord, Lord Boston of Faversham, is particularly accurate. In that case, the bus would not be going in the right direction. Oddly enough, this missile or satellite is also not going in the right direction and that is why it is a hazard.
Lord Campbell of Croy: My Lords, is this not a situation where a simple form of the star wars technology might be useful in disposing of this dangerous object in a peace-time incident?
Earl Ferrers: My Lords, that might be one method of disposing of it; but whether it is the most appropriate or suitable is a matter of opinion and for considerable discussion. I do not believe that everyone would welcome the idea of objects being shot out of space.
Baroness Ewart-Biggs: My Lords, can the Minister say whether there has been confirmation of the Tass news agency report of May this year that the satellite poses no danger? If not, what confirmation can the Minister give that the Government have sought from the USSR Government assurances that the nuclear reactor on COSMOS 1900 will be expelled into space?
Earl Ferrers: My Lords, we have had statements not only from Tass but also from the Russian Ambassador who wrote about this matter. There is the possibility of danger. As I understand it, this satellite may burn up as it comes into the earth's atmosphere. In that case, it may leave a long trail. On the other hand, it may come down in one lump in which case the effects will be somewhat different. In either eventuality the emergency services will take control of the situation, and it will be dealt with.
Lord Tordoff: My Lords, in the event of it coming down in either form, have the Soviet Government given any indication of what compensation they will pay to people who are stricken by this object?
Earl Ferrers: My Lords, international law allows a country in which a satellite falls to be reimbursed for any damage and other costs which arise from the incident. In such an eventuality an announcement would be made after the event about claims for compensation for injury or death. It is another thing of course to get the compensation.
Lord Shackleton: My Lords, does the noble Earl agree that it is perhaps desirable that the public should be informed of the risk, if any? Is he aware that one fragment from COSMOS 954 was nine inches long and gave off 40 times the acceptable level of radiation? Although the risk is small, nonetheless it would be as well on a matter of this kind if the Government were to issue a flat straight statement which showed the extent to which there could be a risk, although I would agree that the odds are heavily against it landing in an inhabited part of the world.
Earl Ferrers: My Lords, I understand that not until about two weeks before the entry of the object will it be clear exactly where it is likely to land. I can assure the noble Lord, Lord Shackleton, that if it were decided that there was a possible threat, no matter how small, a warning would be given to relevant agencies, including the police, so that they could activate their contingency plans; and the public would be advised at the same time if the threat was significant.
Lord Harmar-Nicholls: My Lords, is this not the kind of Question to which it is impossible to give a coherent answer—apart from the possibility of creating a lot of fright? I should have thought that the practical thing to do is to get in touch with Lloyds of London to see what the terms are for covering the risk.
Earl Ferrers: My Lords I am grateful to my noble friend for his generous comment upon my answers. I agree that the situation is somewhat hypothetical, but I have tried to describe only what might happen should the hypothesis become a fact.
Lord Whaddon: My Lords, would not the Hotol space plane be particularly useful in this situation in its ability to intercept satellites in distress? Will the Government show a little more enthusiasm in supporting the project?
Earl Ferrers: My Lords, I do not think that Hotol in its present form would be much of an assistance in dealing with the problem under discussion. The noble Lord asks a far wider question which I do not propose to answer.

Bus Registration Database
2.46 p.m.
Lord Teviot Lord Teviot asked Her Majesty's Government:
What progress is being made with the Transport and Road Research Laboratory's bus registration database, and to what extent it is being used to monitor the effects of bus deregulation.
The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara): My Lords, some 30 reports have already been published on the basis of information supplied from the database. A further comprehensive report covering the first year of deregulation will be published next month.
Lord Teviot: My Lords, I thank my noble friend for that Answer. Will he confirm that the TRRL is not continuing with the registration of bus services? What do the Government propose to put in its place to provide this information? Can the Minister inform the House what other monitoring work will be done on deregulation?
Lord Brabazon of Tara: My Lords, we have decided to discontinue this database because it was too expensive to maintain indefinitely. Now that deregulated bus services are well established, we shall be able to rely upon normal statistical returns from the operators to monitor developments in local bus services. I can confirm to my noble friend that the statistical branch of the Department of Transport will continue to publish statistics on a variety of matters, including vehicle kilometres run, patronage, passenger receipts, fares and so on.
Lord Underhill: My Lords, is the Minister aware that Oxford University Transport Studies Group has been commissioned by the Association of Metropolitan Authorities to carry out a three-year study into deregulation under the 1985 Act? Is he further aware that the university studies group has said that there are gross inaccuracies in the database used by TRRL? If that is so, what will happen to the future of monitoring? The Minister says that it is being carried on. I understand that these inaccuracies mainly affect deregulation in the metropolitan areas.
Lord Brabazon of Tara: My Lords, I was not aware that Oxford University was carrying out this study for the Association of Metropolitan Authorities; nor was I aware that it is said that there are inaccuracies in the statistics produced by the database. However, as I have said, the database is to cease. We shall continue to publish statistics based on the figures sent into us. Those will continue to be published by the department.
Lord Barnett: My Lords, does the Minister place more reliance on the statistics of his department than apparently the Department of Trade and Industry is prepared to place on its statistics in relation to imports?
Lord Brabazon of Tara: My Lords, that is a very different question. In this situation we were receiving two sets of statistics: one set provided by the database of the TRRL and one set produced by the department. That seemed to be a waste of resources.

DHSS General Practice Research Unit
2.49 p.m.
Lord Sherfield Lord Sherfield asked Her Majesty's Government:
Why the Department of Health and Social Security has decided to close its General Practice Research Unit and transfer the bulk of its funding to the Medical Research Council.
The Parliamentary Under-Secretary of State, Department of Social Security (Lord Skelmersdale): My Lords, the retirement of the director of the DHSS funded General Practice Research Unit at the Institute of Psychiatry and the forthcoming retirements of the two Medical Research Council unit directors provides the opportunity for restructuring the three programmes. Our objective is to fund research of high scientific quality with the potential to improve the treatment and care available to patients by means of the establishment of a new social psychiatry research unit. The DHSS intends to fund a significant programme of work at that unit.
Lord Sherfield: My Lords, I thank the Minister for that Answer. Does he think that even if the Medical Research Council devotes the bulk of this fund, so reserved, to the same kind of work as that being done by the research unit, that the Medical Research Council, as a science-led body, is the right body to undertake research concerned with the delivery of primary care to the National Health Service?
Lord Skelmersdale: My Lords, I think I would be wise to reserve my answer to the noble Lord's question until such time as the Government publish their response to the Select Committee's Report on the subject.
Lord Rea: My Lords, I am sure the noble Lord is aware of the most important and internationally recognised work that has been carried out by this unit in delineating and defining the large proportion of work which reaches general practitioners which is of psychogenic or social origin, although it often masquerades first as physical illness. If the Medical Research Council takes over the bulk of the funding, can he say whether the expertise of that team will be maintained? Further, will the new units be situated appropriately as this one is, at the Institute of Psychiatry?
Lord Skelmersdale: My Lords, what I can say is that the Department of Health will continue to fund research at broadly the same level of expenditure at the new unit. I recognise that primary care and the work of general practitioners is of vital and growing importance in the mental health field, as the noble Lord said. Indeed, the unit itself recognises that fact.
Lord Ennals: My Lords, may I take this opportunity of congratulating the noble Lord on his new appointment and express the hope that he will continue to speak in this House on health as well as social security?
In relation to the Question on the Order Paper, may I ask what the total expenditure by the DHSS was on the GP research unit and what extra funding will be made available to the Medical Research Council? Moreover, can the Minister give an assurance that the decision which has been taken will have no adverse effect on the research into general practice?
Lord Skelmersdale: My Lords, I was very pleased to hear the noble Lord's introductory comments. When I said earlier that I expected the Department of Health's support to continue at broadly the same level, the figure I referred to was£280,000 per year. More generally, however, the research will have to be discussed with the new director when he is appointed, But I must point out that he is currently in the final stages of selection.
Lord Shackleton: My Lords, while the noble Lord is quite right to reserve his answer to my noble friend Lord Sherfield, can he draw the matter to the attention of the new Minister of Health, Mr. Clarke—to whom we also extend congratulations—and wish that he will do better than he has done in space over HOTOL? At the same time, my noble friend has brought out a most fundamental point in the report; namely, that it is the view of the committee—perhaps he will consider this—that research should not just be transferred to the Medical Research Council. Will he give a good deal of consideration to this fundamental point?
Lord Skelmersdale: My Lords, of course I shall refer the matter both to my right honourable friend the Secretary of State for Health and also to my honourable friend the Minister for Health, because I am aware of the concern of your Lordships in this area.
Lord Peston: My Lords, perhaps the noble Lord can clarify one aspect of his Answer which I may have missed. Will the new research unit which will be working in this field be located at the Institute of Psychiatry, or do we not yet know where it will be located?
Lord Skelmersdale: My Lords, I cannot give a cast iron guarantee; but it expected that it will continue to be at the Institute of Psychiatry.

TV and Films: Exports to South Africa
2.53 p.m.
Lord Hatch of Lusby Lord Hatch of Lusby asked Her Majesty's Government:
Whether they are encouraging independent British television companies and film-makers to export to South Africa; and if so whether this does not breach the spirit of limited sanctions against apartheid to which they subscribe.
The Secretary of State for Trade and Industry (Lord Young of Graffham): My Lords, officials in my department have been in touch with British television companies in order to draw their attention to the potential for the sales of British television programmes to South Africa. Such action is not contrary to our international undertakings on South Africa.
Lord Hatch of Lusby: My Lords, the Minister makes an assertion at the end of his Answer which is certainly questionable. Is it the case that an official in his department, a Mr. Barry Harding, wrote a letter which included the following statement:
"Whilst, because of international commitments, the DTI is unable to offer financial support for trade missions to South Africa, or trade fairs there, all other export assistance is available both in London, and through commercial sections overseas".
Is that not a breach of the whole spirit of the Government's participation in the Commonwealth and the EC sanctions programme which was intended to deter governments from offering to export any goods to South Africa?
Lord Young of Graffham: My Lords, I fail to see what the noble Lord's question has to do with the Question on the Order Paper. However, as I have told the noble Lord on previous occasions, we stand by the letter of our agreement with our Community and Commonwealth partners that we arrived at in 1985 and 1986. The measures which most affect our civil trading links with South Africa are of course the cessation of Government funding; the trade missions to South Africa or the participation in exhibitions in that country; a ban on the import of certain gold coins; a ban on the import of certain bulk iron and steel and a voluntary ban on certain new investment in South Africa. Other than that, we do not see how the letter from which the noble Lord quoted comes under any one of those headings.
Lord Cledwyn of Penrhos: My Lords, can the noble Lord tell us whether his officials, when they discussed the matter with the BBC, were informed whether the recent BBC Panorama programme concerning the torture and imprisonment of children in South Africa was exported to South Africa If it was, can he lay down a condition that such programmes are exported there so that the South African government can take the rough with the smooth?
Lord Young of Graffham: My Lords, I am glad to be able to inform your Lordships' House and the noble Lord the Leader of the Opposition that this Government is not the kind of government which
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tells anyone—the BBC or otherwise—what they should do. I suspect that all Members of your Lordships' House would greatly rue the day if the Government were to do so. It may well be in the noble Lord's mind that the Government of the day should have the power to tell the BBC, or anyone, exactly what they should do.
Lord Boyd-Carpenter: My Lords, apart from what my noble friend has so rightly said as to the Government's attitude, would it not be the height of folly if one wishes to change the climate of thinking in South Africa, as most of us do, to deny that country the import of as many films and television programmes as possible which are made in this country?
Lord Young of Graffham: My Lords, there is no doubt that we have close historical, cultural and family links with South Africa. Further, there exists a sizeable English-speaking population in that country. Surely all Members of your Lordshps' House would agree that the absence of British material from South African screens—which can only be for the good in trying to solve the problems in that troubled land—means in effect that we are missing opportunities to influence and to promote our way of thinking.
The Viscount of Falkland: My Lords, is it not a fact of life in South Africa—as in so many other places—that the wider use of the video-tape recorder has made almost any product accessible to everyone, whether in its legitimate or pirated form? Therefore would it not be a prime objective of the Government to encourage products for the small and the large screen which reflect our democratic traditions and freedom of speech?
Lord Young of Graffham: That is actually the purport of my department's policy.
Lord Hatch of Lusby: My Lords, is it not the height of hypocrisy for the Government to claim that they are opposed to apartheid when one of their principal departments is deliberately encouraging, and using taxpayers' money, to circumvent the sanctions with which they, on paper, agree?
Is it not also a breach of the agreement which has been made with a number of trade unions, including Equity, that no television programme in which their members take part shall be sold to South Africa?
Lord Young of Graffham: My Lords, the noble Lord had best be his own judge of what constitutes hypocrisy. I must tell the noble Lord that the Government are in no way responsible for the policies of trade unions. The restrictive measures we agreed in common with our Commonwealth and Community partners were intended as a political signal to bring home to the South African Government the urgent need for peaceful dialogue leading to fundamental change. In no way was that signal meant to discourage legitimate civil trade which, I suspect, would not be to the benefit of the whole population.

Bredero (Bon Accord Centre, Aberdeen) Order Confirmation Bill
3 p.m.
Read a third time, and passed.

Highland Region (Lochinver Harbour) Order Confirmation Bill
Read a third time, and passed.

Solicitors (Scotland) Bill
Lord Morton of Shuna: 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 Morton of Shuna.)
On Question, Motion agreed to.
Lord Taylor of Gryfe: My Lords, I do not wish to oppose the Bill. In fact, I approve of it, and I am supported in that view by the citizens of——
Noble Lords: Order, order!

Local Government Finance Bill
3.2 p.m.
The Minister of State, Department of the Environment (The Earl of Caithness): My Lords, I beg to move that the Commons reasons and amendments be now considered.
Moved, That the Commons reasons and amendments be now considered.—(The Earl of Caithness.)
On Question, Motion agreed to.
COMMONS REASONS FOR DISAGREEING TO CERTAIN OF THE LORDS AMENDMENTS AND MOTIONS TO BE MOVED IN CONNECTION THEREWITH, COMMONS AMENDMENT IN LIEU OF ONE OF THE LORDS AMENDMENTS AND COMMONS AMENDMENT TO ONE OF THE LORDS AMENDMENTS
[References are to HL Bill 82 as first printed by the Lords. The Commons reasons and amendments are printed in italics.]

LORDS AMENDMENT
1 Clause 13, page 10, line 3, at end insert—
"() If a person is undertaking a course of nursing education on each day of that period, the amount he is liable to pay under this section shall be determined by order, no such amount being less than one-fifth of the amount it would be apart from this section.".
2 The Commons disagreed to this amendment for the following reason:
Because the amendment affects local taxation, and the Commons do not offer any further reason trusting that this reason may he deemed sufficient..
The Earl of Caithness: My Lords, I beg to move that the House do not insist on their amendment numbered 1 to which the Commons have disagreed for their reason numbered 2. With the leave of the House, I should also like to speak to amendments numbered 3, 4 and 4A which all relate to the same subject.
Your Lordships will recall that we had two interesting debates on the subject of student nurses and the community charge. At the end of the second debate on report the Government were defeated on an amendment moved by the noble Baroness, Lady Robson of Kiddington. That group of amendments was intended to require my right honourable friend to make an order determining the level of community charge to be paid by student nurses. The order could have set a level of payment between 20 per cent. and 100 per cent. The Government accept the spirit behind the amendments agreed in your Lordships' House.
My right honourable friend is content that he would be required to specify in secondary legislation the level of community charges to be paid by student nurses. The original amendments were, however, defective in their drafting in a number of ways. In order to ensure that the powers operated effectively, it was obviously essential to replace the amendments. The Government did that in another place, and the consequence is reason numbered 2 and part of amendment numbered 4 which disagree with your Lordships' amendments numbered 1 and 3. The other part of amendment numbered 4 is the substitute amendment which produces the same effect as those it replaces except in one respect. The amendments moved on Report by the noble Baroness would have allowed the level of payment to be set anywhere between 20 per cent. and 100 per cent. The government amendment allows a choice only between 100 per cent. payment and 20 per cent. The option of interim levels of payment will not he open except of course to the extent that student nurses may be eligible for rebate. That reflects the fact that in practice the Government may choose only 20 per cent. or 100 per cent.; in other words, whether the student nurses should be treated as students in some or all cirumstances.
The noble Baroness has tabled an amendment for further debate today (amendment numbered 4A). Perhaps I may first reassure her that my right honourable friend will, in the regulations he makes under the government amendment, be setting out the level of community charge to be paid by all student nurses. He will be defining those student nurses who will pay only 20 per cent. If there are to be any categories of student nurse which are not to benefit from that relief they will also be shown in the regulations. I know that that has been a matter of some concern, but I hope that my reassurance has helped to clarify the position.
However, amendment numbered 4A can be read another way. The noble Baroness might be attempting to go further and say that certain categories of pre-Project 2000 student nurses should automatically pay less than 100 per cent. If that is so, I do not believe that that is something that was in her original amendment or that I can recommend your

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Lordships to accept as it would not be in accordance with our usual procedures.
What I can say to the noble Baroness is that when Project 2000 is implemented, the nature of student nurses' training will alter and they will begin to receive bursaries rather than salaries. At that point, student nurses would in any case automatically become students for the purposes of the community charge. That leaves a level of community charge to be paid by student nurses before Project 2000 is implemented. No decision has yet been taken on that matter. We shall be considering the matter carefully in the light of all the issues that arise, including the timetable for implementing Project 2000 and of course the views expressed in your Lordships' House. We shall then announce our decision, probably in the autumn of this year, and lay the regulations that the amendment requires my right honourable friend to make.
I hope that what I have said has been helpful. Let me confirm that the Government accept the spirit of the amendments originally passed in your Lordships' House, and that my right honourable friend the Secretary of State will make regulations setting the level of community charge to be paid by student nurses, both those who are on salaries and those post-Project 2000 who receive bursaries. I am afraid that I cannot today say what those regulations will include so far as pre-Project 2000 student nurses are concerned; but the Government will come to a view on this matter in the next few weeks before regulations are laid in the autumn. In doing that we shall of course take account of the views expressed in your Lordships' House.
Moved, That the House do not insist on their amendment numbered 1 to which the Commons have disagreed for the reason numbered 2.—(The Earl of Caithness.)
Baroness Robson of Kiddington: My Lords, I am grateful to the Minister for his statement and for the amendment that he moved which was introduced in another place. I should also like to thank him for the two long letters he wrote to me in which he tried to explain the implications of the Government's amendments. I regret that his second letter arrived while I was abroad. I was unable to communicate with him until 1 p.m. today. I tried to telephone him from about 12 noon onwards when I returned but he is such a busy man that his telephone was engaged all the time.
I of course accept the implications of a varying rebate if the Government were to use the power contained in my original amendment. I do not argue about that. I welcome the recognition in the Bill of nursing education as part of student education. That was originally missing from the Bill. It now appears in the Bill, and so to that extent I accept the government amendments.
What worries me is that the amendments give the Government power to specify which courses constitute full-time courses of nursing education for the purpose of the 80 per cent. poll tax. The crucial point to me and my fellow Members on these Benches is how the Government mean to use their powers. We
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are reassured that once Project 2000 is fully introduced and nursing students move from a salary to a bursary they will automatically become students for the purposes of the rebate; so that is not at issue.
However, the Minister will remember that in debating the amendments which I introduced prior to this one there is the problem of what happens before Project 2000 is introduced in full. It will be remembered that this interim period before the introduction of Project 2000 could be very significant. Some student nurses will start their nursing education perhaps only three months before the introduction of Project 2000. We all hope that that will take place in 1990. They will therefore remain under the old system for the whole of the period of their training. It is inconceivable that they should move across to Project 2000 in mid-stream.
We do not know what is going to happen about the introduction of Project 2000. It is also unclear at what rate students will become proper students; in other words, in receipt of bursaries or full bursaries and no salary once the run-in to the introduction of Project 2000 begins. It may take a number of years before the new system is fully introduced. Even if it is fully introduced in 1990 there will still be the anomaly of the students who started their ordinary nursing student training perhaps only three months before Project 2000 was introduced.
I have read Hansard for another place and the Government were questioned on the issue during the debate there on 20th July. The Minister for Local Government said:
"We have not decided how to exercise the order-making power".
—[Official Report. Commons, 20/7/88; col. 1129.]
He also said, at col. 1121:
"That is an issue on which we have yet to take a decision".
That is what worries and concerns me. It is the Government's intention which is the crucial issue. We on these Benches have no objection in principle to accepting the Government's new amendment as long as they are prepared now to commit themselves to granting poll tax rebate to student nurses under the conditions which I have mentioned. If this power is not used to any significant extent, there will be tremendous problems in nurse recruitment prior to the introduction of Project 2000. But if the Minister can assure me that the Government intend to treat student nurses as students the moment the poll tax is introduced, great relief will be felt among students all round the country. I sincerely hope that the Minister will be able to give me that assurance.
3.15 p.m.
Baroness Seear: My Lords, perhaps I may raise a question for genuine information related to the return to us by the Commons of this amendment. We are told that the Commons reject it because the amendment affects local taxation. I am extremely confused as to the criteria on which the Commons turned down our amendment on the ground that it affects local taxation. I should have thought a great many of the matters we have been discussing throughout this long, cold summer have affected local taxation in the field of education and many other fields.

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What is the test by which it affects taxation or does not affect taxation? When we decided that we should not charge poll tax to the people in short-stay hostels, that would affect taxation. There must be some rule. I genuinely ask for information because we need to know this. What makes an amendment affect local taxation in one case and not in others? I am mystified.
Lord Trafford: My Lords, I spoke previously in support of the amendment passed in this House benefiting nurses. If I have any comment to make on the amendment now before the House it is that it does not go far enough. I cannot understand why the Government have consistently been a little mean-handed with this branch of a respected profession. I have heard arguments to the contrary, but it seems to me that there is a distinction between the student nurse and the nurse who will move into the situation of full-time education and other trainees, if one wishes to use that word. Perhaps I may point out that the nursing profession itself does not like the use of the term "trainees". Nonetheless, they are in training in one sense or another.
These people do not have the opportunity that so many other students have to earn extra money, to do extra things and to have long vacations in which they can also be economically viable, to put it at its lowest. There are not that many nurses involved. Three times amendments have been put by others to your Lordships' House to suggest that a special privilege or special right should be granted to this group of people. They are not numerous, unfortunately, in terms of student nurses as opposed to other nurses. They are articulate and are championed, I am glad to see, by the noble Baroness; and I congratulate her on it. It seems to me that it would not be difficult for the Government to accept that the Secretary of State would have the powers to make the necessary regulations.
If I remember correctly the last amendment on which this matter was discussed, nobody asked that any money should be expended or that any specific task should he enjoined upon the Government. It was very simply the granting of powers to smooth out the anomaly first of all between Scotland and England relative to the timing of the introduction of the community charges Bill, the Local Government Finance Bill; and, secondly, those nurses who would already be in one form of education and unlikely to switch to another.
I am sorry to disagree with the Minister but I have deep suspicions that this will not be introduced with the same degree of funding as one might hope. Also, it will not be followed (as I personally believe it ought to be) with the support this House would have shown to this relatively small number of people, the student nurses.
Lord Hailsham of Saint Marylebone: My Lords, I ventured on an earlier amendment, at an earlier stage of these proceedings, to give a perfectly sincere though not universally accepted view as to the constitution of this country and the relationship between the two Houses. If I may refer to what the noble Baroness mentioned a moment ago, I gave very clear references from two universally accepted
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textbooks as to the extent to which another place regarded its privileges and had done so for more than 250 years. They included local taxation. They had nothing to do with the terms of the Parliament Act which discusses the meaning of a money Bill.
Perhaps noble Lords will look at Amendment No. 2 on the Marshalled List, to which the noble Baroness has already referred. It says:
"the Commons do not offer any further reason"
other than the fact that the amendment affects taxation——
"trusting that this reason may be deemed sufficient".
I warned the House that that was the line that another place would inevitably take. The Commons gave the following reason for disagreeing with the amendments:
"Because the amendments involve charges on public funds and affect local taxation, and the Commons do not offer any further reason trusting that this reason may be deemed sufficient".
I told the House that that would happen. And it has happened. I beg the noble Baroness who speaks from the Liberal Benches and the noble Lord from the Opposition Front Bench to pay some attention to the previous attitude of their parties as regards the relationship between the two Houses. I know the words "I told you so" are very unpleasant; but I propose to use them now.
Lord McIntosh of Haringey: My Lords, I shall he happy to respond to the noble and learned Lord when we come to later amendments where that matter becomes an issue. But the noble Baroness, Lady Robson of Kiddington, has not raised it in her amendment and I do not believe it is relevant to our discussion on this group of amendments.
What was missing from the Minister's speech was any recognition of the sterling work of the noble Baroness, Lady Robson, and of other noble Lords, including the noble Lord. Lord Trafford, and particularly my noble friend Lord Morton of Shuna, in advancing the Government's thinking on the matter of student nurses and the poll tax. It is an undoubted fact that the Government, under reasoned pressure over weeks and even months, have acceded in large part to arguments which they resisted at the very beginning.
Their opening stand was that nursing education, either now or in the future, should not be treated in the same way as other forms of post-school education. They have now recognised—and we are grateful for it—that when Project 2000 comes in nursing education will be treated in the same way as other forms of post-school education and will, therefore, not be subject to the poll tax. The force behind the amendments put down at all stages by noble Lords from all sides of the House was not only in respect of the long-term but also a recognition of the desperate shortage of nurses in the health service in England, Wales and Scotland.
The failure of the Government, having accepted all the other parts of the argument, is to go the last part of the way and recognise the difficulty there will be in the transitional period. The existing shortage of nurses, the problems about nurses' education and the penury in which nurses in education now exist are not

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resolved by the Government's amendments. The noble Baroness, Lady Robson, is concerned with the transitional period. Her amendment gives regulation-making power to the Minister. It does not impose anything on the Government which would delay the Bill. The Government could accept the amendment if it were approved by your Lordships now in advance of it being put to a Vote and the Bill would suffer no loss. It could be accepted by the House of Commons in two minutes flat and the Bill could receive Royal Assent by Friday without any difficulty. I suggest to noble Lords that rather than getting sidetracked now on constitutional issues, they should consider the very real merits of the case put forward by the noble Baroness, Lady Robson.
Lord Renton: My Lords, I voted for the amendment of the noble Baroness, Lady Robson, when it was previously before us. I did so in the spirit which I think nearly all of your Lordships on all sides of the House show when they are asking the Commons to think again about a Bill we have received from there.
We carried that amendment; I am glad that we did. In another place Members gave the amendment further thought. The Government, having given it further thought, advised another place accordingly. It is contrary to the spirit of the constitutional relationship between the two Houses that, having given another place the chance of second thoughts, we should go on trading the amendment back to them again.
The noble Baroness, Lady Seear, made a point which my noble and learned friend Lord Hailsham of Saint Marylebone answered. It related to the Commons reason for disagreeing with the amendment; namely, that it affects local taxation. The Commons stated that it trusted that reason was sufficient and that this House would not take the matter any further. It is true, as my noble and learned friend said, that the Parliament Act does not specifically' deal with local taxation and make it impossible for us to deal with it. But page 854 of Erskine May states that it is a matter of privilege. On matters of privilege affecting finance of any kind, the House of Commons has the right to express the hope that it will have the last word. I should have thought that on this occasion it is best that it should have the last word.
Lord Morton of Shuna: My Lords, the noble and learned Lord, Lord Hailsham, and the noble Lord, Lord Renton, may or may not be correct. I do not wish to enter into that argument. But the amendment standing in the names of the noble Baroness, Lady Robson, and my noble friend Lord McIntosh of Haringey is not in contradiction of that assertion. It seeks to add to the Commons amendment. Therefore it does not disagree with the Commons amendment, but adds to it.
From a purely pragmatic point of view, when there is a shortage of 18-year-olds for training as nurses it is essential, for the sake of the people who may become ill during the next 10 years or so, that we do nothing that diminishes the number of nurses in
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training. We should suggest to another place that it accepts the amendment standing in the name of the noble Baroness and my noble friend which merely gives a power to the Government to make regulations, if they so wish. I should have thought that that was entirely consistent with the constitutional issue.
Lord Hailsham of Saint Marylebone: My Lords, I ask the noble Lord to consider once again whether, even though this provision concerns the giving of a power, it does not affect local taxation and does not give power to the Minister to impose it or to make charges on public funds. Obviously, it does. The amendment adds a further insult to our constitution; one should be accepting defeat.
Lord Morton of Shuna: My Lords, although the noble and learned Lord makes that point, we have discussed for days at a time on this Bill the question of whether people who have mental deficiencies of various kinds should receive rebates. We have also discussed whether people in various situations—for example, people in care or carers—should receive rebates. Those cases have all been discussed without the noble and learned Lord on any occasion raising the constitutional issue.
If my memory is correct, this matter was raised in an article in The Times written by the noble and learned Lord. It was not raised on Second Reading. Advice we received from those who are empowered to give it was that the practice of another place was not to raise the question of privilege on matters of local taxation.
Lord Hailsham of Saint Marylebone: My Lords, I am sorry to interrupt the noble Lord. I am sure that the last thing that he wishes to do is to mislead the House. I raised this matter in Committee on the very first amendment in this Chamber. I did not reiterate my complaint on every single amendment which followed, but what I said was said in terms which were designed to mean, and were understood to mean, exactly what I have said this afternoon.
3.30 p.m.
Lord Morton of Shuna: My Lords, I am much obliged to the noble and learned Lord. The matter was not raised on Second Reading. I think that was what I said. It was not raised by the Government and it had not been raised by the Commons at that stage.
Page 850 of Erskine May reads:
"Amendments infringing privilege with respect to local rates. The Commons now generally waive their claim regarding amendments made to bills that they have sent to the Lords, dealing with municipal, county and local rates and assessments".
According to Erskine May, that has been the practice over the years. I should have thought that the discussion concerning the Bill in your Lordships' House showed that that is the general practice. I believe that amendment numbered 4A is perfectly within the spirit of Erskine May.
Lord Boyd-Carpenter: My Lords, the noble Lord has said that the other place has previously not raised the question of local expenditure or taxation.

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However, it is clear that the claim to privilege is there. Has it occurred to the noble Lord that the reason the other place is raising the matter now is that it feels (perhaps not without justification) that the amendments carried in this House on the Bill have sought to take the power of this House to intervene in matters of local government finance and taxation a good deal further than has been the case for many years? If you press people who possess a power—in this case, the power to claim privilege—you are apt to get precisely the reaction we have had. The other place has said, "Now that you are pushing this as hard as you are, we must rely on our privilege or the whole balance of power between the Houses will be permanently upset".
The noble Lord made the extraordinary observation that my noble and learned friend had not raised the matter on Second Reading. He did not raise it on Second Reading because there were no amendments on Second Reading. It is only when amendments arise which seek to interfere in local government finance that the question arises. My noble and learned friend raised the issue on the very first amendment. I have heard some bad points made in this House; I have not often heard a worse one.
Lord Morton of Shuna: My Lords, I am sorry that the noble Lord, Lord Boyd-Carpenter, has never heard a worse point. I have certainly made some bad points and I believe I have made many points that were worse than the present one. However, if the question of a Bill being a money Bill or a Bill that raises the question of Commons privilege was to be raised, it would have been raised by the noble and learned Lord not only in an article in The Times before Second Reading but also on Second Reading. Surely he would have suggested to the House that debate should be restricted on the lines of the assertions of another place.
Lord Hailsham of Saint Marylebone: My Lords, once again, with great hesitation I ask the noble Lord to give way. I did not raise the matter on Second Reading. There has never been a privilege of the other place to refuse to allow this House to discuss even a money Bill on Second Reading. This has nothing whatever to do with a money Bill. That conception was introduced into Parliament in 1911. I was speaking of the immemorial privilege of the other place which was asserted as early as the 17th century. The noble Lord must study the elements of constitutional law.
Lord Morton of Shuna: My Lords, I studied the elements of constitutional law a long time ago. I may well have forgotten many of them. In view of the debates which have taken place in another place and in view of the suggestions that were made at Second Reading, I believe that the House would have expected that some of the amendments foreshadowed at Second Reading might be suggested to be out of place by the noble and learned Lord. However, I do not believe that the argument can be continued further. Perhaps I shall be allowed to sit down without being asked to say anything more.
Lord Jenkins of Hillhead: My Lords, I agree with the noble and learned Lord, Lord Hailsham, on only one point. It is quite irrelevant that he did not raise the matter on Second Reading. He raised the broad issue in a letter to The Times, to which the noble Lord, Lord Morton, has referred. However, it is not relevant that he did not raise the issue on Second Reading.
To my mind, the argument put forward by the noble and learned Lord and supported by the noble Lord, Lord Boyd-Carpenter, is totally different from and contradictory to that raised by the noble Lord, Lord Renton, who said that it was desirable that your Lordships' House should express an opinion on the matter which should then be considered again by another place and by the Government. He said that if, after consideration, they said, "No", that would be a different matter.
The proposition which the noble and learned Lord, Lord Hailsham, advanced in his letter and during debate on the first amendment was that the House should not only not have the last word but that it should not have a first word. That is completely different from the proposition put forward by the noble Lord, Lord Renton.
Furthermore, it seems to me that the other place claims privilege when it does not like an amendment carried by this House. However, if it happens to think an amendment carried by this House is agreeable and reasonable, it does not claim privilege. In fact, the privilege is just as strong in either case. I therefore hope that the noble and learned Lord, Lord Hailsham, will not get into too great a passion on the matter or be too intoxicated by his own omniscience.
Viscount Tonypandy: My Lords, I have listened to the noble Lord, Lord Jenkins, with great interest. The other place has a right to be jealous of its privileges. They go back a long way. This House has always been jealous of those privileges because real power lies there. We are fortunate on some amendments that the Speaker was prepared to put them to the other place at all. On more than one occasion I exercised that right and said to the other place, "I shall not put the amendment to the House because the other place has exceeded its powers". This House then accepted that ruling. It had no choice.
The other place has power and it is not for us to seek to diminish it. It could not have put the matter in rougher language in rejecting the amendments on the ground that this House has exceeded its power. On this matter, I should have thought that all those who have served in another place would remember that above all we must protect its rights concerning expenditure. The other place fought hard for those rights. There was a civil war over the matter. I should be the last to attempt to encroach when another place has said, "You are going too far".
Viscount Whitelaw: My Lords, I had not intended to intervene in the discussion. However, having been the Leader of your Lordships' House for some four years, I believe that I should contribute briefly. When I was a Member of another place, I was extremely jealous of its privileges. When I came to your Lordships' House and had the great privilege of

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leading it, I properly became jealous of the privileges of this House. I believe that the privileges can easily be reconciled within our parliamentary system. They can be reconciled by some thought being given by each side to the privileges of the other. Both Houses should act in accordance with that principle.
I think that this House has made very important changes to the Bill. I believe that the Government and the Secretary of State in another place have taken considerable account of what your Lordships have done during the passage of the Bill. That is as it should be. This House has given its advice to another place. In some cases that advice was taken. That is as it should be.
In those cases in which, after consideration, it has not been taken, it seems to me that in your Lordships' House we have done a great deal to improve those Bills—as indeed we did on many other Bills while I was privileged to be Leader. However, there comes a moment when it is right for this House to bow to the position, privileges and views of another place rather than to press its views much further. That is the position which I believe we have reached today so far as concerns these amendments.
Lord Simon of Glaisdale: My Lords, we have now strayed firmly onto the ground which is covered by amendment numbered 11 B. I am one of those who believes that your Lordships' House should be quite firm and quite resolute in asserting the powers that lie in your Lordships' hands when it comes to differences with another place. However, that does not mean that your Lordships should interfere with any matter of supply; in other words, any matter that concerns public expenditure.
The reason for that is twofold. First, as my noble and learned friend Lord Hailsham reminded your Lordships, in the 17th century the other place asserted the principle that it alone was concerned with all forms of expenditure. Your Lordships' House acquiesced with that assertion until 1910 –1911. The second reason is that if two Houses are concerned with supply, the Constitution becomes completely snarled up. We saw that happen in Australia where the senate asserted and indeed had the power to interfere with supply, withheld supply and caused a change of government.
I entirely agree with the way in which the case was put by my noble friend Lord Tonypandy. It is essential that, while insisting on our very real powers, your Lordships' House should not attempt to interfere with the other place's superiority and exclusive control over all matters of public expenditure and supply. In fact it is doubly dangerous to do so because the other place has its own rules which limit the discussion of supply, as I am sure the noble Lord, Lord Boyd-Carpenter, with his Treasury experience will bear out.
The matter is difficult in this sense: many people regard the Parliament Act as embodying a complete code of law: that there are money Bills which have their own special procedures and there are all the other Bills. There are two things to be said about that. The first is the point that was made by my noble and learned friend that there is nothing to inhibit your
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Lordships in discussing money Bills, even money Bills strictly defined and properly certified. They can be discussed but they cannot be effectively amended.
The second point is that the Parliament Act itself makes it plain that that is not exhaustive. It says, first, what can be done by your Lordships' House with Bills other than money Bills and then what can be done with money Bills, which is much more restrictive. However, a further clause was added—I think that it is Section 6 of the 1911 Act—which says that nothing in the foregoing (which refers to money Bills) should be taken as in any way derogating from the privileges of the House of Commons as heretofore asserted. That goes back to the resolutions of the 17th century.
Unfortunately two explanations were given of that particular provision. Two Ministers were in charge at that time. The Home Secretary, Mr. Winston Churchill, said that it referred to the privileges of the House of Commons as against the Crown; but the Postmaster-General, Mr. Herbert Samuels, said, no, it referred to the other financial privileges of the House of Commons. I agree with the interpretation which my noble and learned friend Lord Hailsham put upon that provision and with what has been said by my noble friend Lord Tonypandy.
I have nothing to say on the matter on which this debate turns. However, since we have touched on the subject of its constitutional basis, it seems to me that this House, while firmly asserting its powers as to matters of which it has undoubted cognisance, should be extremely cautious of—no, should abnegate—any attempt to deal with questions of supply, in other words with questions of public expenditure.
3.45 p.m.
Lord Peston: My Lords, I am under the impression—I hope that it is correct—that we are discussing amendment numbered 4A. Amendment numbered 4A deals with the tax treatment of student nurses. As I understand it, the amendment meets the rules of order of your Lordships' House and it is an amendment of the kind which your Lordships have debated, carried and put to the other place. I find it an extraordinary state of affairs, and I certainly think that those in the nursing profession will find it even more extraordinary that we have had two speeches on the subject of the amendment from the noble Baroness and the noble Lord, Lord Trafford.
Lord McIntosh of Haringey: And me, my Lords.
Lord Peston: My Lords, and from the noble Lord, Lord McIntosh. We have also had a long series of lectures on the British Constitution which, interesting though they are—and I found them immensely interesting, speaking as an academic—seem to me to have no bearing on this matter.
Speaking I hope for others, but certainly for myself, I feel that we are not doing our duty as Members of your Lordships' House in debating the Constitution instead of debating the amendment. It may be a good or a bad amendment, but it is certainly debatable and it is certainly one which I think we owe

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it to student nurses to debate properly and if necessary take a view on, because it deals with a serious matter. To tell student nurses in due course that the reason nothing was done about this matter was because we preferred to spend half an hour discussing constitutional matters would be a most unsatisfactory state of affairs.
Lord Wolfson: My Lords, as something like 50 per cent. of local authority expenditure is financed by the Exchequer, surely we should recognise the fiscal privileges of the other place.
Lord Diamond: My Lords, I ask for a few more minutes! I think that I must rise to explain why I shall be voting for the Government and recommending my colleagues to do likewise. I completely share the views expressed by the noble Viscount, Lord Whitelaw. I recognise the benefits that he was able to introduce for this House during his period of leadership. I must be a great simpleton, but I find less difficulty in this matter than some of your Lordships. Noble Lords are entitled to discuss broadly what they like and to come to whatever conclusions they like. They are not prevented, and I very much hope that they never will be, from exercising their discretion as to what topics they discuss and what they do not discuss in their own way and by their own general consent.
We are not entitled to require the other place to accept our views. If the other place chooses to say that this is a matter of privilege—and we know that it is a matter of privilege; there is no dispute about that—it is entitled to do so. If, on another occasion, it chooses to say, "Well, we rather like this amendment", in my view the question of privilege does not then arise. With great respect to those who have put a different point of view, it is not my opinion that the other place is then disregarding its privileges. Certainly it is not my view that it is then eroding its own privileges. It is the case that it takes a view on the substance of the matter.
As regards the substance of the matter, I am wholly in favour of the amendment. In the situation in which we find ourselves, having discussed the matter, put it to the other place, received certain knowledge that the other place has given it the further consideration that we are entitled to ask it to give, should this matter be put to a Division (which I very much hope it will not be) I shall advise my colleagues to support the Government.
The Earl of Caithness: My Lords, clearly the intervention of the noble Baroness Lady Seear, has led to a most interesting debate on the constitution. I think that it would be wrong for me to prolong that debate, but with your Lordships' permission perhaps I may say a few words on the matter. I should like to take noble Lords back to Amendments Nos. 1 and 2, which we are now discussing, as well as to Amendments Nos. 3, 4 and 4A.
In speaking to Amendment No. 4A the noble Baroness, Lady Robson of Kiddington, was concerned that there should be certainty about the new arrangements. Let me state clearly that there will indeed be certainty. This autumn we shall make absolutely clear the level of community charge to be
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paid by student nurses. I do not think that certainty requires any kind of transitional scheme, as the noble Baroness sought to argue. It merely requires the Secretary of State to spell out which student nurses will pay 20 per cent. and which, if any, will pay 100 per cent.
If the decision is taken that some student nurses should pay the full charge, that will be because pre-Project 2000 student nurses will still be receiving salaries rather than bursaries. if the decision is taken that all student nurses should pay 20 per cent., one of the considerations will indeed be, as the noble Baroness pointed out, that there might be a risk of confusion if some student nurses were paying only 20 per cent. of the community charge while others were paying the full amount. Those arguments are indeed ones that the Government will weigh carefully when reaching a decision.
It is not just that when Project 2000 is fully introduced student nurses in any case will be students for the purposes of the community charge. Let me confirm that any student nurse who is trained under the Project 2000 scheme will pay only 20 per cent. The question is whether student nurses who begin their training before Project 2000 should pay 100 per cent. or 20 per cent. I am afraid that, like my honourable friend in another place, I cannot yet say how much such nurses will pay. That matter is still under active consideration.
I must put to your Lordships that what I surmised when I opened the debate has indeed proved to be correct; namely, that the noble Baroness, Lady Robson, is trying to go further than the amendment that was inserted in the Bill in your Lordships' House. That amendment gave the Secretary of State the right to decide, and in moving her amendment at Report stage the noble Baroness clearly indicated that that was what she wanted. I should like to quote from the debate on 30th June (Official Report, col. 1750) in which the noble Baroness said no more than that,
"the Secretary of State will hopefully use it to minimise the differential between students and student nurses".
Clearly the noble Baroness went considerably further than that this afternoon.
In reply to the noble Lord, Lord McIntosh of Haringey, perhaps I may say that it is simply not the case that we have always proposed to deny student nurses the 80 per cent. student discount. Our starting position was that student nurses on salaries should not be treated as students but that Project 2000 student nurses should receive the discount. I should like to refer the noble Lord to something that my noble friend Lord Hesketh said in Committee on 6th June, at col, 1196 of the Official Report.
Lord McIntosh of Haringey: My Lords, I am sorry to interrupt the noble Earl, but I did not say that the Government had always wanted to deny the student nurses the 80 per cent. What I said was that the further concessions which have been made were about the 20 per cent. That is our concern.
The Earl of Caithness: My Lords, I think that I have covered the point that the noble Lord raised. Before I close perhaps I may pick up a point that

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rather surprised many of your Lordships who are aware of the situation of nurses. It was a point made by the noble Lord, Lord McIntosh of Haringey, and echoed by the noble Lord, Lord Morton of Shuna. I thought that they made some rather extraordinary comments about recruitment and pay for nurses.
Contrary to the assertions of the noble Lords, this Government have an outstanding record for increases in nurses' pay and cutting the burden of income tax that nurses have to bear, thus making the nursing profession a much more attractive proposition for prospective entrants than it was in 1979. I see that the noble Lord, Lord Morton of Shuna, shakes his head, but he knows that under this Government nurses' pay has increased by over 40 per cent. in real terms since 1979 compared with a fall of over 20 per cent. in real terms under the last Labour Government.
Lord Morton of Shuna: My Lords, perhaps the noble Earl will give way. I do not think I said a word about the levels of pay of nurses. I commented on the lack of 18 year-olds to be trained as nurses, which is a purely demographic issue. I did not say a word about levels of pay; nor did I criticise the Government. If I had thought about it, perhaps I would have criticised the Government, but in fact I did not do so. Therefore, the noble Earl should not put into my mouth words that I never said. I said that there was a shortage of 18 year-olds and perhaps even the Government will accept that.
The Earl of Caithness: My Lords, I believe that the noble Lord said (and I stand to be corrected when I read the Official Report) that he was concerned about recruitment to the nursing profession. He has raised the question of finance before. Moreover, in addition to what we have done as regards nurses' pay, the income tax paid, for example, by a first-year student nurse has fallen in constant prices from £908 in 1979 to £744 last year, which is a drop of 18 per cent. There can be no doubt of the support that this Government give to nurses. However, I have to say to your Lordships that the noble Baroness, in speaking to her Amendment No. 4A, made it absolutely clear that she wanted to go further than the amendment which was accepted at Report stage.
On Question, Motion agreed to.

LORDS AMENDMENT
3 Clause 27, page 16, line 29, at end insert "and
(e) education may include nursing education.".
4 The Commons disagreed to this amendment but proposed the following amendment in lieu—
Page 16, line 29, at end insert—
"(2A) The regulations shall include a statement of what courses constitute, in the Secretary of State's opinion, full-time courses of nursing education: but this is without prejudice to the power to provide, or not to provide, that a person undertaking such a course is to be treated as undertaking a full-time course of education for the purposes of this Part.".
The Earl of Caithness: My Lords, I beg to move. Moved, That the House do not insist on their Amendment No. 3 to which the Commons have disagreed, and do agree with the Commons in their
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Amendment No. 4 in lieu thereof.—(The Earl of Caithness.)

AMENDMENT TO COMMONS AMENDMENT 4 IN LIEU OF LORDS AMENDMENT 3
4A Clause 27, at end insert—
("() The regulations referred to in subsection (2A) above shall provide for a transitional scheme to take effect from the date of introduction of the community charge to ensure that any person who is eligible for inclusion in a course under this section is so included during the period before the full replacement of nursing student salaries by bursaries or grants.").
Baroness Robson of Kiddington Baroness Robson of Kiddington had given notice of her intention to move, as an amendment to Commons Amendment No. 4 in lieu of the Lords Amendment No. 3, Amendment No. 4A.
The noble Baroness said: My Lords, I must say that I have absolutely no such constitutional knowledge as do others who have taken part in the debate. However, I have listened with very great care to what has been said. I thought that when I came to move my amendment to the Commons amendment, Members of this House would express their opinion on the amendment itself. I do not understand why an amendment which deals with a small number of people, some of whom are the most deserving in our society, and which addresses the matter not even on a permanent basis but as an interim measure, should provoke a constitutional debate so that the whole mind of the House is diverted from the amendment that I tried to introduce.
The amendment that I intended to introduce does not change the Government's amendments. We accept them. We just specify how the measures should apply to nurses. The House will remember that at Committee stage I moved an amendment which was defeated by only six votes—the figures were 94 to 100. That was a much stronger amendment, and we nearly won that Division. At Report stage I moved another amendment on the lines of my present proposal, which was approved by a majority of 20 Members of this House. It seems to me a tragedy that we should be in this position today where I am told that we cannot insist on this amendment. We are discussing a group of people to whom all of us owe the greatest thanks. They work hard and without them all of us at our age have a very poor future. I regret that I cannot move the amendment.
Noble Lords: My Lords, you can.
Baroness Robson of Kiddington: My Lords, I regret that I cannot move the amendment.
[Amendment numbered 4A not moved.]
On Question, Motion agreed to.
4 p.m.

LORDS AMENDMENTS
5 Clause 116 page 64, line 3, at end insert—
"(3) Each relevant authority which is a charging authority in relation to the Personal Community charge shall, in accordance with regulations made by the Secretary of State, make arrangements for—

(a) the administration of the Community Charge Additional Element as specified in paragraph 3(2) of Schedule 13 below; and

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(b) the calculation in each year from 1st April 1990 of its Personal Community Charge in relation to the national average charge for that year, for the purposes of determining whether any person in its area may be eligible for the Community Charge Additional Element.".

6 Schedule 13, page 125. line 45, at end insert—
"(5AA) Where a disabled person is entitled to community charge benefit in respect of a day, and section 20(8E)(a) or (b) above applies, the amount to which he is entitled shall be the sum of the community charge additional element and the amount which is the appropriate maximum community charge benefit in his case.".
7 Page 126, line 5, at end insert—
"(5BA) Where a disabled person is entitled to community charge benefit in respect of a day, and section 20(8E)(c) above applies, the amount to which he is entitled shall be found by deducting amount B from amount A, where—

(a) amount A is the sum of the community charge additional element and the appropriate maximum community charge benefit in his case, and

(b) amount B is the prescribed percentage of the difference between the applicable amount and the income of the person concerned in respect of that day.".

8 Page 126, line 5, at end insert—
"(5BB) For the purposes of (5AA) and (5BA) above, a person is a disabled person if he is in receipt of:

(i) income support with disablement premium, or

(ii) income support with higher pensioners' premium, or

(iii) attendance allowance, or

(iv) mobility allowance, or

(v) severe disablement allowance, or

if he is registered blind or partially sighted.".
9 The Commons disagreed to this amendment for the following reason:
Because the amendments involve charges on public funds and affect local taxation, and the Commons do not offer any further reason trusting that this reason may he deemed sufficient.
The Earl of Caithness: My Lords, I beg to move that the House do not insist on their amendments numbered 5 to 8 to which the Commons have disagreed for their reason numbered 9. With the leave of the House I should also like to speak to the amendments and reasons numbered 10, 11, 11A, 11B, 14, 15, 15A and 15B which are all related to the same point.
When we debated that the Local Government Finance Bill should pass from this House, virtually all those who spoke remarked on the good spirit in which our debates on the Bill had been conducted. Your Lordships will recall that there were also many references to the concessions that the Government had made as a result of the arguments that were put forward in your Lordships' House. I believe that the consideration of this Bill has shown the value of your Lordships' House as a revising Chamber. There is no doubt in my mind that the Bill was greatly improved as it left this House compared with when it arrived.
Those who attended our debates will recall the many important changes that the Government made as a result of the arguments put forward by noble Lords from all sides. Your Lordships will recall how noticeable it is that so many of them concerned the most disadvantaged members of our society; the homeless, the handicapped, those on very low incomes and the organisations that are dedicated to caring for them. That is a testament to the concern of your Lordships' House, but it is also a clear indication of the Government's willingness to listen
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and, on issues such as these, to be guided by the wisdom and expertise of your Lordships' House.
I prefaced my remarks in the way that I have because I think it is important to set in context the issue now before us. Your Lordships will recall that at the Committee stage, an amendment moved by the noble Lord, Lord Allen of Abbeydale, providing for 100 per cent. rebates for the disabled, was defeated by 20 votes. However, at the Report stage, a somewhat revised series of amendments was approved. It was contended that one of the purposes of your Lordships' House might be to invite the other place to look again at certain aspects of the Bill. The noble Lord gave the other place that opportunity with his amendments. The other place has looked at the matter again and has disagreed with the amendments because they would strike so fundamentally at the basic purpose of the Bill.
I must emphasise that the reasons the Government asked the other place to disagree to the amendments were reasons which were entirely concerned with the policy underlying the Bill. I should also like to stress that the Government's attitude to the amendment of the noble Lord, Lord Allen of Abbeydale, is not borne of any lack of concern for the disabled. That much, I hope, is evident from the concessions for the disabled that we have made in the Bill. I would also remind noble Lords that as a result of the social security changes which took effect from April of this year disabled people are on average£4.50 a week better off than they were before. The Government's aim has been to target help where it is needed. Among the main beneficiaries of that policy have been the disabled. The same is true of the community charge rebate system. It too will be specifically designed to give extra help in three important respects to those who are disabled. First, disabled people who have far higher net incomes than their able-bodied counterparts will be eligible for rebates, whether the maximum or any other level of rebate. In 1988–89, for example, that differential is £13.05 a week.
Secondly, for those disabled people who have earnings, the first £15 a week of those earnings are disregarded in calculating their entitlements to rebates. For individuals who are not disabled, the disregard is only £5 a week.
Thirdly, the whole of any mobility allowance and attendance allowance will be disregarded in calculating entitlement to community charge rebate as well as the first £5 a week of any more pension.
Among the amendments which were made to the Bill in your Lordships' House are those which ensure that those who are severely mentally impaired as a result of accidents in adulthood are exempt as well as those handicapped from birth or in childhood. That was another major government concession.
I must also say at this point that I suspect that there may be some misunderstanding about the extent of the exemption for the severely mentally impaired. A number of individual cases have featured in the press and on the radio recently in discussions on this topic. All the cases of which I am aware concern mentally handicapped young people living with their parents. On the facts as I have heard and seen them described, all the young people concerned would he exempt from the community charge. Under no circumstances

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would they therefore be required to pay anything and no question of a rebate would arise. To them the noble Lord's amendments are superfluous.
So far as concerns those on low incomes who are not exempt, those living in low-spending areas will be slightly in pocket as a result of our proposals. Those living where spending is higher will find that they will have to pay slightly more. That will be true of all those who are community charge payers in any area. In the case of those on low incomes including the low-income disabled, the amounts involved are small. In only five local authority areas would the amount be more than 50p a week even on present spending. But the Government believe that those amounts are crucial to ensuring that local councils are fully accountable to the adults in their area.
Before I sit down I should like to give two further assurances which I hope will underline the Government's concern in these matters. The first involves the level of uprating to be included in income support to reflect the 20 per cent. community charge payments that will be made. That uprating will be carried out this autumn in time for the start of the community charge system in Scotland in 1989. In deciding the amounts to be included within income support, the Government will of course take account of the best estimate available at that time of likely community charges.
The second point on which I wish to reassure your Lordships is this. Much of the concern that has been expressed in your Lordships' House and outside relates in practice to the total amount that needs to be provided for disabled people to live on. I believe that the Government have an excellent record in this respect. I have already referred to the more generous treatment that disabled people receive in the social security and rebate systems. Let me assure your Lordships that the Government have no intention of resting on their laurels. We keep, and will continue to keep, these matters under constant review. That approach of reflecting the needs of disabled people in the social security system is, it seems to me, the appropriate one.
On the basis that the Government are committed to it, I invite your Lordships to agree that we should not pursue the amendments put forward by the noble Lord, Lord Allen of Abbeydale, for altogether laudable motives. I beg to move.
Lord Renton: My Lords, before my noble friend sits down, in view of what he said, I think that I should point out that there is a material misprint on the Marshalled List against the reason numbered 9. Instead of reading that,
"the Commons disagreed to this amendment for the following reason",
it should read "these amendments" because my noble friend has pointed out that they disagreed with amendments numbered 5, 6, 7 and 8.
The Earl of Caithness: My Lords, my noble friend is absolutely correct. I apologise for the spelling mistake in amendment numbered 9. Of course "this" should read "these" and "amendment" should read "amendments".
Moved, That the House do not insist on their amendments numbered 5 to 8 to which the Commons have disagreed for the reason numbered 9, as amended.—(The Earl of Caithness.)
Lord McIntosh of Haringey: My Lords, on the previous group of amendments, I refrained from commenting on the constitutional aspects of the matter not least because of my manifest incapacity to do so. On this group of amendments I have raised two amendments which might be thought to have constitutional significance. I think that it is right that I should introduce them properly. First, I wish to point out what a short way they go. Amendments numbered 11B and 15B do not in any way question the judgment of Mr. Speaker, or the right of another place to oppose any amendment on privileged grounds. Nor do they in any way delay the progress of this Bill. They accept the amendments which have already been spoken to by the noble Earl that the House do not insist on their amendments to which the Commons have disagreed. So if these two amendments are passed the Bill can go through without a single second's delay.
However, we believe that it is necessary to make not a constitutional but a political protest against what has happened as a result of the passage of the Bill through your Lordships' House and another place. According to Erskine May, it has been recognised in the past that, although the Commons has a privilege over local rates:
"The Commons now generally waive their claim regarding amendments made to bills that they have sent to the Lords, dealing with municipal, county and local rates and assessments".
That is stated at page 850. The change that has taken place as a result of the passage of the Bill through your Lordships' House is that a greater part of local government finance is now paid from central resources, and the claim can now be made—in fact is being made by the Commons—that any view that your Lordships take about any part, of local government finance, whether it is the community charge or the other parts, can be subject to the privilege of the House of Commons. That is a major change. I have no idea whether it is a constitutional change, but it is a practical change, because for decades now your Lordships have felt it proper to debate and vote on issues relating to local government finance. We are now under threat that if we do so in a way which does not please another place, privilege can be invoked and your Lordships can be denied the right to do this. The right is not absolute; it is always by agreement of another place. But it is a valuable right because it affects so much of our public life, so much of the business that proceeds through Parliament, and demands and deserves the full consideration of your Lordships.
It is for that reason that I have put down these two amendments which do not seek to contest the right of another place, but regret that Her Majesty's Government are seeking to oppose the amendments not on their merits but on the grounds of Commons financial privilege, notwithstanding, as Erskine May has confirmed, that the Commons has in the past generally waived its privilege on issues relating to local government finance. Indeed—and this has

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already been referred to in the House this afternoon—it has done so in relation to other amendments made by this House to the Local Government Finance Bill.
On the substance of the issue I yield to the noble Lord, Lord Allen of Abbeydale. I say from these Benches formally that we are deeply disappointed that the Government have felt it necessary to overturn the view which the noble Lord, Lord Allen, persuaded your Lordships was the right view and, as a result, have put the disabled poor at an unnecessary risk and have raised the possibility of unnecessary financial suffering for this very deserving group of people.
4.15 p.m.
Lord Allen of Abbeydale: My Lords, I was under the impression that we were discussing amendments numbered 5 to 8 and that we had not yet reached amendment numbered 11B. I for my part am not proposing to make any comment at this stage on the constitutional aspect, except to say that I recognise that, in view of the reason given by the House of Commons for rejecting our amendments, there can be no question of our challenging the decision taken by the elected Chamber. However, I was interested and very grateful to the Minister for not limiting himself to that reason but for giving an explanation, if I may say so, in rather more convincing terms than has previously been forthcoming for the reasons taken by the House of Commons on my amendments.
On reading the debates in the other place on these amendments I noticed that they did not centre on the powers of the House of Lords but that they centred on the merits of what we decided here. It seemed to me that the Government lost the argument by roughly the same margin as they won it on the vote.
I confess that I was a shade surprised to find that some words of mine were read out, somewhat out of context, and that they were accompanied by references to me which I might be forgiven for thinking could have been more felicitously phrased. But, in accordance with what I understand to be the traditions of this House, I propose to say no more about it.
On the merits though I may perhaps in the circumstances be permitted to say just a few words. I am still puzzled. There is the argument about accountability on which the Government have laid so much stress and to which the noble Earl referred today. The Government say time and again that it is essential that every citizen should have a financial interest in the affairs of his local council. But I find that extraordinarily difficult to reconcile with the fact that a person on maximum rebate who lives in an area with a less than average community charge receives not only the 100 per cent. relief for which I have been asking, but an additional financial bonus as well. It may be small, but it will be very welcome to those who receive it. Exactly what "accountability" means to an individual in that position does not exactly leap to the eye.
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There are other anomalies, notwithstanding the improvements that we made in the Bill in this House, which have been accepted by another place. However, this provision seems to me to be the oddest of them all. Although I listened carefully to what the noble Earl said about mental handicap, what Ministers have said both in another place and in the media gives the impression that they think that the fact that the severely mentally impaired are exempt means that all the points which some of us have been making on behalf of the mentally handicapped have nothing in them. Alas, my Lords, it means nothing of the kind. It is true that the totally unsatisfactory provisions remaining in the Bill about certifying those suffering from severe mental impairment leave much too much scope for uncertainty. But whatever the numbers of those who in the end are so certified, there will be many mentally handicapped people who will not qualify for exemption but who will still be living at home with their parents, who may themselves be disabled on the borderline of poverty, as in the example I ventured to give to your Lordships at an earlier stage.
Some of the cases to which the BBC has given publicity may in the end be certified as severely mentally impaired. I just do not know. But to generalise from these few cases and to dismiss the many mentally impaired and mentally handicapped people falling short of the definition of "severe mental handicap" seems to me simply to be a refusal to face what amounts to a very serious problem.
We have no answer to the question: where do the Government think the money is coming from year by year for many of those on income support and faced with all the additional problems of disability? Nor have we had any answer to the point that the effect of the Bill is bound to be that more people will go into residential care (if they can find it); in fact, that is a contradiction of the Government's policy of care in the community. It is easy to understand why we have not had an answer to that point: there simply is not one.
I think that I have said enough. I wanted to put those few points on the record because I am sure that the day will come when it will be found how grave are the problems to which today's decision will give rise. I believe that the Government are likely to come to regret the decision for the reasons which some of their supporters have stated with great clarity. Unfortunately, so will numbers of the poorest, most struggling and deprived of our fellow citizens. When this hits them they may well be tempted to feel that common sense, compassion and any real understanding of what it means to be poor and mentally or physically disabled have had to give way to party dogma.
Lord Hailsham of Saint Marylebone: My Lords, I eschew any attempt to reply to the noble Lord, Lord Allen. As the noble Lord, Lord McIntosh, disclaimed any desire to speak on a constitutional issue, so I do not wish to cross swords with an acknowledged expert on the merits. My position has always rested with my noble friend Lord Jenkin of Roding when he spoke on this subject on Second Reading.

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I want to add a footnote to what was said by the noble Lord, Lord McIntosh of Haringey. The noble Lord, Lord Jenkins of Hillhead, accused me of being intoxicated by my own omniscience. I do not claim to be omniscient but I claim to be a student of Erskine May. The difficulty about what was said by the noble Lord, Lord McIntosh, is that he quoted only one of the references to Erskine May which I believe to be relevant. I do not have them immediatley in my head. Noble Lords will have seen that I have been sitting in my place since the debate began and have not had an opportunity to revert to my bible on these subjects. If the noble Lord will refer to my speech in Committee he will see that I made two references and not one. The first is at page 800 and something—the one to which he referred. I believe that there was an earlier reference which I think is at page 321, though I may be wrong.
The point is this. I believe that his proposed amendment contains a serious misapprehension. It is common ground that the Commons has a right to waive any of its privileges and it has not done so in the present case. However, I believe that the noble Lord, Lord McIntosh, went wrong, both in his speech and in the text which he was about to propose in respect of Amendment No. 11B, because he looked at only one of the two references and therefore he did not understand what the true practice has been in relation to local taxation.
I believe that if he studies Erskine May a little more fully he will discover that something similar to the following has been the practice. A large number of Acts go through Parliament which in one way or another affect local taxation and local imposts of various kinds, from drainage rates to general rates. Where they occur in local and private Acts of Parliament it is the custom of the House of Commons expressly to waive its privilege. I believe that it has usually done so—that it has done so universally but always expressly. However, where the tax in question is a general impost it has always insisted on its privilege, contrary to what is implied in the noble Lord's amendment.
I think that his proposed amendment is an objectionable one, notwithstanding the fact that it does not seek to challenge the supremacy of the Commons on this basis, because it contains a false statement of the constitutional practice. The fact is that where a general impost is imposed the Commons has always insisted on its amendments, except where it found it convenient expressly to waive them. The general practice to which he referred from the pages of Erskine May was related to private and local taxation where the Commons habitually waives its amendments. That is all I have to say.
Lord Mulley: My Lords, I had not intended to speak on this matter but it goes a little further than the subject in front of the House. With respect, perhaps I may refer to the words of the noble and learned Lord, Lord Hailsham. It deals not only with private Acts of Parliament but also Bills sponsored by Private Members.
Lord Hailsham of Saint Marylebone: Yes.
Lord Mulley: My Lords, that is where local government expenditure has been permitted. As the House well knows, all Supply not only needs to be supported by a financial resolution but it must have the Queen's consent by Privy Counsellor. In the same way, any increases in taxation can be moved only on behalf of the Crown; namely, by a Privy Counsellor on behalf of the Government.
Many Bills have been passed affecting both local government revenue and expenditure without a financial resolution. I can call to mind an example which is very much in the context of that which we are discussing. The Bill imposed more charges and affected the disabled to a greater extent. It was put forward in 1970 by the right honourable Alfred Morris and the whole basis of the local authorities' responsibility for the disabled rests on it. There was no question of privilege being claimed in that case.
Noble Lords will remember that recently the House inserted an amendment into a Bill to replace dog licences. That was not objected to by the other place, though I believe that, because it rests on statutory instrument, statutory instrument is unlikely to be made. That is a different point.
I should be the last person to say that the House of Commons does not have the right to object on grounds with which I may or may not agree. I should be the last person to wish to challenge in a conflict the right of the elected Chamber against ourselves. Nevertheless, I believe that it would be wrong if it were thought that Private Members, whether in this House or in another place, should be inhibited because they do not have a financial resolution, which is strictly the privilege of the House of Commons. That may be thought to be so if the interpretation of the noble and learned Lord, Lord Hailsham, was strictly adhered to.
Lord Hailsham of Saint Marylebone: My Lords, before the noble Lord sits down I should like to point out that the right honourable Alfred Morris was, and still is, a Member of the other place and not of your Lordships' House. What can be done in the other place is of course open to a Private Member. However, it is not within the rights of this House, whether by the Government or a Private Member, to deal with matters of Supply or expenditure, as my noble and learned friend on the Cross-Benches said a few moments ago.
Lord Boyd-Carpenter: My Lords, I should like to comment on the amendment proposed by the noble Lord, Lord McIntosh. The amendment is curious because it seeks to censure Her Majesty's Government for seeking to oppose the amendment not on its merits but on the grounds of Commons financial privilege. That is a curious reason for seeking to blame the Government. During the course of the debate there has been little dispute or argument that Commons financial privilege covers the matter. Therefore it seems odd that the Government should be blamed if, in those circumstances, they invite your Lordships not to seek to violate it. What else could any government do? What could the noble Lord, Lord McIntosh, do if he were on that Bench? Would he seriously invite your Lordships' House to

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disregard Commons privilege? Of course he would not.
Therefore it is a quite extraordinary procedure to table an amendment censuring Her Majesty's Government for doing what any government plainly have the right, and I suggest the duty, to do in the circumstances. I invite your Lordships' attention to the fact that, whatever the merits, this is clearly a matter within Commons privilege and the other place has indicated that for those reasons it is not prepared to agree to it.
I very much sympathise with the noble Lord, Lord Allen of Abbeydale, because he worked so hard on this issue: he has had the cup, as it were, dashed from his lips. I shall not seek to argue the merits of the matter, which he put so well and so movingly. I confine myself to the issue of your Lordships' House being asked to approve this quite extraordinary amendment.
In suggesting that your Lordships' House reject this amendment—and reject it firmly because, as I have already said, your Lordships' House knows that no government could make any other recommendation—I make just one further comment. I t is rather ironic that it should be from the Labour Front Bench that proposals are made for this House to exercise powers against the Commons. Your Lordships will recall that at the general elections of 1979 and 1983, so far from recommending such an attitude, the Labour Party came out for the abolition of your Lordships' House. It is a rather startling reversal of that destructive attitude that on this occasion it not only likes to see your Lordships' House in full vigour but also suggests that your Lordships' House should take on another place.
I suppose that since the conversion of Saint Paul on the road to Damascus, one should always welcome repentant sinners. In that sense I express a warm welcome to the noble Lord, Lord McIntosh of Haringey. I congratulate him on his new-found enthusiasm for your Lordships' House but I suggest that he should not carry that too far because, as his own amendment indicates, it is just when your Lordships' House treads on the Commons' corns by pressing too many issues involving Commons privilege that it is inevitable and perhaps right that another place should react. Therefore, I suggest to the noble Lord—moderation even in virtue.
4.30 p.m.
Lord Carter: My Lords, like my noble friend on the Front Bench I should like to express deep and immense disappointment that this amendment should have been rejected. It was so ably moved on Report by the noble Lord, Lord Allen of Abbeydale, who has spoken to it again today with impressive knowledge and sincerity.
In my view the amendment was rejected for illogical reasons. That rejection portrays an attitude of mind which is totally detached from the realities of the everyday living of disabled people. The Minister said that it offended the basic principles of the Act. The Minister then pointed out that in those areas where the poll tax is below the national average, the
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disabled will make a small profit. It is also the case that the elderly and disabled who are in rest homes or residential care will be exempt from the poll tax. It seems that the local authority does not have to be accountable to those people but has to be fully accountable to the disabled poor.
The rejection of the amendment ignores the pattern of life of disabled people and the problems they have with the everyday business of living; namely, getting up, getting dressed and going to and from the shops. Added to all that there is now the further worry of the reduction in their income because of the rejection of this amendment. They do not have the time to sit down and decide on the finer points of the parties who are contending for power in the local authority. They often live where they do because that is where the relatives are who give them the necessary support.
I should like to repeat a proposition which I put to the Minister on Report. The rejection of this amendment creates an impossible dilemma for the disabled poor. They either have to pay more out of income support for the vital services which they need or they lose those services in order to have more money left from their income support. We have heard of Catch-22. I believe that there is now another device—Ridley-22.
The Government's intention seems to be that disabled people on income support will somehow be in the van of the campaign to force local authorities to reduce their expenditure on vital services—services which the Griffiths Report Care in the Community clearly said should be centred on and co-ordinated by the local authorities.
On television this weekend there was a practical example of what this will mean. A young man employed in the housing department of a local authority was pressing the authority to alter the access to the housing department, to make the doors wider and to put in ramps and so on so that disabled people could gain access. The local authority said that it would like to do it but could not afford to. If in future it finds that it has the money to do it, and spends the money and thereby increases the poll tax in that area over the national average, it is those disabled whom the improvements are intended to help who will be disadvantaged.
Perhaps I may deal with the obsession of the Secretary of State with accountability. If a disabled person is to be able to take account of the performance of a local authority, he has to be able to vote. I should like to quote briefly from an excellent report, Disabled People and the General Election, which was prepared by the Spastics Society:
"We spoke to disabled people living in the community who had not registered to vote both because of the physical difficulties of voting and because of other people's attitudes to their disability and resulting experiences.…
Other disabled people who were registered to vote were prevented from actually voting by a range of physical problems and by difficulties the system presents for people with mental handicap.…
We spoke to both physically disabled people and people with mental handicap who did vote but only by over-coming a series of obstacles. People had difficulties getting to the polling station, getting into the polling station, getting into the polling booth and marking the ballot paper.…
Our own enquiries about access to polling stations revealed substantial access problems.".

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Sadly I have to say that this is all part of a pattern. We have had the indefensible delay in the implementation of the Disabled Persons (Services, Consultation and Representation) Act 1986. An amendment was moved by my noble friend Lord Basnett and myself to a previous local government Bill which was intended to slightly improve the employment chances of disabled people with contractors to local authorities. That was rejected by the Government although it was first accepted by this House.
The Minister was careful to refer to the average increase for the disabled under the Social Security Act. He omitted to mention that there are hundreds of thousands of disabled people who are worse off as a result of the Social Security Act. We now have this measure, which will reduce the income of substantial numbers of the disabled poor.
Last autumn I introduced a debate on the needs and problems of people with disabilities. I referred to the fact that besides the North-South divide about which we hear so much there is another divide in society—the disabled divide. That is the gap in the quality of life, expectations and income of people with disabilities compared with the rest of society. The rejection of this amendment has made that gap just that much wider.
Lord Jenkin of Roding: My Lords, I wish to make one very brief point on the merits of the amendment to which we are speaking. On the question of the constitutional proprieties, I find myself in very close agreement with the noble Lord, Lord Diamond. That is not altogether surprising because in the past we have both held the office of Chief Secretary to the Treasury.
There is one point on the merits where I feel that it is right to take issue with the noble Lord, Lord Allen of Abbeydale. I shall not quote the passage from his speech at an earlier stage in this House which he suggested Mr. Ridley took out of context. I read both Mr. Ridley's speech and that of the Opposition spokesman who quoted rather more of it than did Mr. Ridley. To me it meant the same thing. The noble Lord suggested that the reason for this amendment was that the halt, the blind, the lame and the mentally handicapped could not be expected to take part in the democratic process. As one who fought quite a few elections over a number of years and perhaps saw them from a somewhat different perspective from that of the very, very high office held by the noble Lord in the Home Office, I find that an astonishing proposition. Indeed, it is one which goes contrary to what successive governments of all parties have sought to achieve in addressing themselves to the problems of disabled people.
There are key phrases which we have all used. Certainly when I was Secretary of State for Social Services presiding over the International Year for Disabled People we spoke of the concepts of participation, of maximising an individual's capabilities, of concentrating on abilities rather than disabilities and, in the realms of policy, of doing as much as possible to enable disabled people, no matter what their disability, to live as normal lives as possible in the community.
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Those of us who have fought elections, both local government and parliamentary, have always been humbled—I certainly have been on many occasions—by the determination of people with very severe handicaps to play their part in the democratic process and to feel that they are citizens exercising their rights to vote. Like Mr. Ridley, I am bound to say that I find it a somewhat strange concept to believe that poor disabled people simply cannot grasp the niceties of the democratic process, that they cannot fill in postal ballot papers and that somehow they are to be regarded as non-citizens.
If I have been unfair to the noble Lord, Lord Allen of Abbeydale, I shall gladly give way to let him explain what he meant, but I can read his words in no other sense. Of course there are some who are so seriously disabled that they have little option but to rely entirely on other people for support, but a great many of the poor disabled people, whether they be blind, deaf of physically handicapped in some other way, actually do take part. They want to take part, They want to be like other people.
I shall not repeat the figures which my noble friend from the Front Bench gave about the additional financial support which is available, but in relation to the concepts of accountability and of voting, I think it is entirely right that disabled people, subject to income—which is of course provided for throughout this Bill—should be able and encouraged to exercise their full rights under the democratic process.
I found this amendment a difficult one to accept as it seemed to fly in the face of everything towards which one has been working in a variety of different capacities: to allow disabled people to participate and to develop their potential as far as possible so that they should not be treated as a race apart but fully regarded as part of our community and encouraged to play their role. For that reason, on the merits, quite apart from the constitutional question, I believe that we are absolutely right in not insisting on the amendment which was passed earlier.
Lord Allen of Abbeydale: My Lords, I am not sure whether I am in order in speaking again, but may I say briefly that I stand by what I said at earlier stages of the Bill. Contrary to what the noble Lord seemed to imply, I have not been suggesting that these poor people should be deprived of the vote.
Lord Renton: My Lords, we seem to have got on to Amendment No. 11B, and we even heard Amendment No. 15 being mentioned. Perhaps I may point out that Amendment No. 11B is not an amendment to the Bill. It is an amendment to a government Motion. An amendment to the government Motion can have no legislative effect whatsoever. From a legislative point of view it is merely a protest; it is not an amendment.
4.45 p.m.
Lord McIntosh of Haringay: My Lords, I am very grateful to the noble Lord for this confirmation of what I actually said in my speech on this matter.
Lord Banks: My Lords, I very much regret that the Commons has rejected this amendment, and in such

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a way as to make it impossible for us to challenge its decision. I say that because I believe that the case for the amendment is as strong as it is simple. The equivalent of 100 per cent. rebate would be available for those disabled poor living in an average spending local authority, but less than 100 per cent. recompense would be available to the disabled poor living in a high spending authority.
We know that the high spending authorities inevitably include the poorest areas of the country. 'We know also that very many of those both poor and disabled will be living in the above average spending areas. The Government say that they cannot agree the amendment because it would deprive the poor and disabled in high spending areas of accountability, but one is bound to ask whether those people are likely to determine policy in any event. Should they, the poorest and disabled, be blamed for local high spending policies and be penalised because of them?
The Government say that the disabled are treated better for thresholds for income support than the able-bodied. As far as I am aware, those reliefs do not take into account the amount which will have to be paid by those whose community charge is above average. The reliefs apply to all disabled people in high, average and low spending areas. Presumably they represent what the Government consider disabled people should have as a minimum without taking into account any extra spending which there may be because of the community charge.
The Government say that the income support needs allowance will be higher in depressed areas, but that will not take into account the extra cost incurred through having a rebate which is short of 100 per cent. Again, it presumably represents the Government's view of the minimum required without allowing for extra community charge expenditure.
The Government argument is an argument against any help with the community charge for disabled people, but that point has already been conceded by the Government. Under the amendment claimants will still have to pay their community charge first and then claim. They are not sheltered from that process.
The amendment moved by the noble Lord, Lord Allen of Abbeydale, in this House is supported by all the major disablement charities and also by the Royal College of Nursing, which is concerned about the possibility of people being pushed into residential care because of additional expenditure. That would be exactly the opposite of the Government's stated policy and intention.
For all those reasons and for many more, I very much regret that the other place has decided to reject this important amendment.
Lord Henderson of Brompton: My Lords, allow me to say very briefly that I agree with every word of the noble Lord, Lord Allen of Abbeydale, and with those of the noble Lord, Lord Banks, who has just spoken about the merits of the amendments. I very much regret that the Government have not seen fit to advise the commons to accept them.
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So far I have not mentioned my views on the constitutional position because I have been disinclined to find myself enmeshed, if that is the right word, in a political storm. I should only say that I have grave reservations about everything that has been said on either side of the House. I slightly regret that the noble Lord, Lord McIntosh of Haringey, has sought to introduce amendments numbered 11 B and 15B into reason numbered 9. I honestly think that his amendments are separate and should be dealt with separately. What we should be dealing with are the merits of the amendments to which the Commons disagreed.
Lord McIntosh of Haringey: My Lords, while I do not wish to intervene, perhaps I may point out that in introducing the amendments the Minister said that he was speaking to the whole list of amendments, including my own. In courtesy to the House, therefore, I thought it right that I should speak to my own amendments.
Lord Henderson of Brompton: My Lords, indeed, that is so. I wish that it were not so. However, I hope that the noble Lord will not move the amendments or, if he does move them, that he will not press them. I am sympathetic to his point of view, but I do not think that he gains anything by what he is trying to do.
Although we should respect Commons financial privilege with the greatest care, I think it is important that we should also respect our own privileges and freedoms and not allow them to be eroded or diminished in any way. I fear that to a certain extent some of the constitutional arguments have tended that way today. It is worth pointing out that the Bill is not a Supply Bill or a Finance Bill, and it has nothing to do with the Parliament Act in that respect.
Lord Hailsham of Saint Marylebone: My Lords, no one ever said that it was.
Lord Henerson of Brompton: My Lords, I am afraid that some people have—not the noble and learned Lord, but other noble Lords who have spoken today and indeed hitherto have said so.
Where I part company with the noble and learned Lord is when he says he is advised that the Commons was bound to disagree to the amendments that the Lords had made. That, he said, is what he foresaw and advised the House would happen, and there is no possible alternative. In fact, there is a possible alternative. The House of Commons can be advised to waive that privilege and agree to Lords amendments. That is a perfectly valid possibility. Not only is it a possibility, but the Commons does it in countless cases. The House of Commons Journals are littered with the waiving of privilege whenever the Government advise the House of Commons to accept Lords amendments, so it is perfectly possible.
Indeed, in this very Bill now before the House the Government have accepted Lords amendments. One has only to look at Amendment No. 13:
"The Commons agree to this amendment and propose the following amendment to it".

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Of course the Commons can agree to amendments, even to Bills that affect local or indeed national taxation. However, on the whole we do not make amendments to Supply Bills and money Bills, and that is why we do not normally go into Committee on such Bills.
I wish to raise one other procedural matter. When these amendments were being discussed in another place, it was most unfortunate that the Secretary of State quoted the very words of the noble Lord, Lord Allen of Abbeydale, in this House. What is more, he described them as patronising and offensive. In this House we have two very good rules whereby we protect Members of another place. One is that we do not quote from the verbatim report of another place, unless they be words of Ministers, for very good reason. I therefore deplore that the words of a non-ministerial Back-Bencher, the noble Lord, Lord Allen of Abbeydale, should have been quoted in another place, not just by an ordinary Member of Parliament—if I may describe any Member of Parliament as ordinary —but by a Secretary of State. I think that that is deplorable, and it should not go without protest.
The second rule is that we do not refer to Members of another place by name by way of criticism. The Secretary of State has referred to a Member of this House by name by way of criticism. I think that that too is a matter for regret. I say that not because I wish to criticise any Member of another place but because I think that we ought to expect the same kind of protection from another place in regard to our Members as we give to Members of another place in this House. I thought that it was only right to make that point. Having done so, I shall sit down without any further comments on procedure or privilege.
Lord Chelwood: My Lords, I shall be very brief. I think it is a pity that we have been discussing constitutional questions alongside the merits of the amendments. It was perhaps unavoidable. It happened also when I moved an amendment to Clause 1 of the Bill on a much larger scale. It resulted then, as I think that it results now, in the merits of the amendments not being fully debated, which is a pity.
I deplore the rejection of this amendment. The Government appear to be making a fetish of accountability. I think that as a result of the rejection of the amendment things will bear harshly and unfairly on some people who are both poor and disabled and living in highly rated areas. But, my Lords, what is, is; and although I think that the Government are making a mistake here I see no point in debating it at length.
Although I am quite unqualified to do so, I should like to make a comment on the constitutional question. It seems to me, with respect, that all through the discussions of constitutional questions, particularly today, there has been a failure to make a distinction between the two reasons given by the Commons for the rejection of Lords amendments. One reason is that amendments involve "charges upon public funds". A community charge is a charge upon the people and therefore upon public funds, which automatically attracts grants from central
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government funds, over which the Commons claims privilege against the Lords. That is quite clear from the 1983 edition of Erskine May at pages 755 and 756. I am not a student of Erskine May like my noble and learned friend Lord Hailsham of Saint Marylebone, but I find it very pleasant light reading in the evening!
The second reason given by another place for rejecting Lords amendments is quite different; namely, that they "affect local taxation". Where that is concerned, I wholly agree with the noble Lord, Lord McIntosh of Haringey, in everything that he said on the subject, and with the noble Lord, Lord Jenkins of Hillhead. From a very careful study of Erskine May—and I refreshed my mind today—I find
that since 1838, based on a precedent in 1834, with rare exceptions—"generally" is the word in Erskine May—the Commons has waived the exercise of its sole financial privilege to discuss municipal, county and local rates. Since then, 150 years ago, the Commons has disagreed to Lords amendments based not upon the Commons claim for privilege but upon the merits of the amendments. It seems to me therefore, with respect, that this is a very grey area which it is all too easy to oversimplify.
5 P.m.
The Earl of Caithness: My Lords, it may be helpful to your Lordships if I deal briefly with some of the points that have been made.
I did indeed widen the scope of the debate from the amendments that we are discussing to discuss all the amendments, and the noble Lord, Lord McIntosh of Haringey, for the convenience of the House rightly spoke to Amendments Nos. 11B and 15B to the Motion. Those amendments express regret that the Government seek to oppose Lords Amendments Nos. 10 and 14 on the grounds of privilege. The noble Lord's amendment draws attention to the fact that on other occasions, including amendments to this Bill, the other place has waived privilege.
I have to say to the noble Lord that it is indeed possible for the other place to waive privilege and to agree to amendments passed in your Lordships' House. However, when the other place disagrees to amendments from this House that involve privilege then, even if there is a policy reason for that disagreement, the convention is that the reason and the only reason cited is privilege. Those are the circumstances on this occasion. The amendments inserted in the Bill in your Lordships' House were fully debated in the other place. Far from Mr. Speaker ruling privilege—which the noble Viscount, Lord Tonypandy, explained, and said that he had used—there were in fact 12 speakers in the debate, some supporting the deletion of the amendments, others not.
My right honourable friend the Secretary of State set out in detail why the Government have reached the view that the amendments were unacceptable. I too have set out the policy reasons for disagreeing with the amendments of the noble Lord, Lord Allen of Abbeydale. The debate in both Houses has been in terms of the policy. Privilege was mentioned only when the Deputy Speaker reminded the other place before the debate began that the amendments involved privilege. I hope that clarifies the position.

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Had the other place decided to agree to the amendments privilege would certainly have been waived, but because the amendments were not agreed to, privilege was, by convention, the reason given.
The noble Lord, Lords Banks, said that under the amendment disabled people would have to pay the charge first and then claim the additional element. That is not provided for in the amendment. In fact the rebate system will provide in most cases that people entitled to rebates get them in the form of a reduction in their bill. The additional element provided for in the amendments of the noble Lord, Lord Allen of Abbeydale, if they had been accepted, would fall to have been paid in the same way. I was interested to hear what the noble Lord, Lord Carter, read from the report. We all know of circumstances where is has been difficult for disabled people to get to polling booths. I take up a point made by my noble friend Lord Jenkin of Roding when he said that there are postal ballots. Of course one wants the physical situation to improve but where one knows it is difficult a postal ballot can be arranged.
I hope that the noble Lord, Lord Allen of Abbeydale, will forgive me if I do not respond in detail to every point that he made in his opening remarks. We have debated the substance of these amendments at length and I know that the ground has been covered in great detail more than once. If your Lordships will permit me, I should like to respond to one of his arguments; namely, his view that our proposals will provide a disincentive to care in the community. That was a point raised also by the noble Lord, Lord Banks. The Government simply cannot accept that contention.
It is perfectly true that an elderly or disabled person will be exempt from the community charge if he moves into a nursing home or a residential care home. If that same person were to remain resident in the community—if he stayed in his own home for example—and if his income were low, he would be eligible for a rebate of up to 80 per cent. and, if appropriate, to an extra amount of income support to reflect the average 20 per cent. liability. The supposed incentive to move into care would be minute and in many areas it would actually work the other way because, as the noble Lord knows, in an area with a below-average charge an 80 per cent. rebate plus a 20 per cent. uprating will be worth more than a complete exemption.
Morever, if there is any disincentive to care in the community it is one that exists at present. As your Lordships will recall from what I said at earlier stages of the Bill, nursing homes are exempt from rates but ordinary houses are not. I agree with my noble friend Lord Jenkin of' Roding that we must include the disabled as much as possible in everyday life and treat them as normally as we can. I believe my noble friend once again made a persuasive speech. I remind your Lordships however that during the passage of this Bill the Government have shown a willingness to listen and to modify their proposals in the light of concerns that have been advanced.
I emphasise again that the severely mentally handicapped will be entirely exempt from the
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personal community charge. There was, as your Lordships know, a major improvement made to the Bill in respect of those citizens in this House. As regards other disabled persons, the Government continue to believe that the appropriate way of giving help is through the social security and rebate systems. The noble Lord, Lord Carter, will have heard what I said in opening the debate about what we have done for the disabled. As a result disabled people will be treated more favourably than others. But surely it is right that local councils should still be accountable to them as well as to others. We believe that is the correct and fair outcome.
Lord Carter: My Lords, before the Minister sits down will he accept a correction? I believe he said that in the debate in the other place the Deputy Speaker, at the beginning of the debate, said that it was a matter of privilege. It was said halfway through the debate.
The Earl of Caithness: My Lords, if that is true, then of course I fully accept it and retract what I said earlier.
On Question, Motion agreed to.

LORDS AMENDMENT
10 Schedule 13, page 126, line 5, at end insert—
"(5BC) For the purposes of this section, the community charge additional element shall be calculated by deducting amount D from amount E, where—

(a) E is the difference between the personal community charge in an area and the product of the maximum community charge benefit and the personal community charge of the area, and

(b) D is the difference between the national average personal community charge and the product of the maximum community charge benefit and the national average personal community charge.".

11 The Commons disagreed to this amendment for the following reason:
Because the amendment involves charges on public funds and affects local taxation, and the Commons do not offer any further reason trusting that this reason mat' he deemed sufficient.
The Earl of Caithness 11A The Earl of Caithness rose to move, That the House do not insist on their Amendment 10 to which the Commons have disagreed for the reason numbered 11.
The noble Earl said: My Lords, I beg to move.
Moved, That the House do not insist on their Amendment No. 10 to which the Commons have disagreed for the reason numbered 11.—(The Earl of Caithness.)
Lord McIntosh of Haringey 11B Lord McIntosh of Haringey rose to move, as an amendment to the above motion, at end to insert—
"but regrets that Her Majesty's Government are seeking to oppose Lords amendment 10 not on its merits but on the ground of Commons financial privilege, notwithdstanding that the Commons have in the past generally waived their privilege on issues relating to local government finance, and have done so in relation to other amendments made by this House to the Local Government Finance Bill."
The noble Lord said: My Lords, I rise to move formally Amendment No. 11B because this is the only opportunity I have to respond to the remarks that were made. I do not believe that it would have been in accordance with the procedure of your Lordships' House to intervene more than once. I wish to make as strongly as I can the point so helpfully made by the noble Lord, Lord Renton. I am making

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a political protest and not a constitutional one. The noble and learned Lord, Lord Hailsham, recalled other parts of Erskine May and I certainly would not wish to contradict him on any of them. I draw his attention to one point I made where the noble and learned Lord appeared to be claiming that my reference referred only to private Bills. He may recall from his omniscient knowledge of Erskine May that the Commons has a Standing Order 191 which refers to local rates in private Bills. My references were to public Bills and not merely to private ones.
Erskine May goes on to make what I believe is the important substantive point at page 850:
"The Commons in dealing with amendments by the Lords to bills for the administration of local and other rates and charges, which touched matters of privilege, have been influenced by recognition of the fact that, if the Lords amendments dealt with legislative and not fiscal objects, a rigid adherence on the part of the Commons to their privileges might exclude the Lords from the practical consideration of such Bills".
In essence that is the point I wish to make. Over the decades, going back as far as 150 years, it has been possible, as the noble Lord, Lord Chelwood reminded us, for this House to take an active part in consideration of all aspects of local government finance. That possibility is now at risk because of the changes to the system of local government finance. It is that perfectly legitimate political decision—in our view a very wrong one—which we are protesting against.
Moved, That the House do not insist on their Amendment 10 to which the Commons have disagreed for the reason numbered 11, since when an amendment has been moved to insert the words at 11 B on the Marshalled List. [Lord McIntosh of Haringey.]
Lord Simon of Glaisdale: My Lords, I do not wish to go over the constitutional points which have been so exhaustively discussed. I agree entirely with the noble Lord, Lord McIntosh, and the noble Lord, Lord Renton, that this amendment does not affect the Bill. Nevertheless, its terms are a motion of censure. It is the normal form of censure appended to the Queen's Speech when any Opposition wants to challenge the policy of government. If a vote of censure is carried then, if the government are defeated in the other place, they resign. What is being censured is the government's reliance on a privilege which is now accepted as a privilege though it may be expressly, covertly and implicitly waived.
A privilege may be waived so consistently as to disappear entirely. For example, it is the privilege of both Houses not to have their proceedings reported, but that has been waived so consistently that it can no longer be asserted constitutionally. However, this privilege has not been so consistently waived. It has been very frequently waived, as the noble Lord, Lord McIntosh, pointed out, but not consistently waived.
When I intervened earlier I ventured to quote what was said by Mr. Herbert Samuel during the proceedings on the Parliament Act 1911. This made it quite plain that the privilege was not being permanently waived. It was being kept in existence and could be waived on any particular occasion. Therefore, because this amendment is framed in the terms of a vote of censure and censures the
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Government for advising the other place to insist on what is accepted as its privilege, I venture to hope that the noble Lord will not press it.
Lord Hailsham of Saint Marylebone: My Lords, I should like to associate myself with what has fallen from my noble and learned friend on the Cross-Benches. Where the Commons has disagreed with this House on a matter which is the subject of privilege, the Government have no option in the Commons but to insist on it on privilege grounds. It is done invariably. It always has been done. The amendment of the noble Lord, Lord McIntosh of Haringey, suggests that the contrary position could be taken by the Government; that is to say, they could disagree on the merits but not insist on the privilege. To my knowledge that has never been done.
I made four references to my recollection when I first raised the question of constitution on the first amendment in Committee. It is quite unprecedented for a government who disagree in the Commons on a matter which is uncontestedly now a question of privileges not to raise privilege. If they failed to do so they would be failing in their duty to the House of Commons. The privilege is not the privilege of the Government. It is the privilege of the House of Commons.
Where the Commons insists on an amendment, whether on the merits or any other grounds, contrary to what has been moved and passed through this House, it is the duty of any member of the Government to insist on the privilege on that ground and to give no further reasons. It would be absolutely unprecedented so far as I know for a member of any government of any persuasion on any difference on a matter incontestably of privilege to take any other course. I therefore suggest with great respect to the noble Lord, Lord McIntosh of Haringey, whose ingenuity I applaud but with the propriety of whose amendment I disagree, that he should not press it for the reason I have given.
5.15 p.m.
Lord Henderson of Brompton: My Lords, on this occasion I am happy to agree with both noble and learned Lords and join them in trying to dissuade the noble Lord, Lord McIntosh, from pressing the amendment to a Division and in asking him to withdraw it.
I would put it like this. Although we know that it is the Government who have prevailed upon the House of Commons to disagree, the form is that it is not the Government who are disagreeing with the House; it is the Commons which is disagreeing. Therefore when the noble Lord regrets,
"that Her Majesty's Government are seeking to oppose Lords amendment 10 not on its merits but on the ground of Commons financial privilege",
it is the Commons which, in accordance with its ancient custom and privilege, is disagreeing.
Although the Commons has argued on the merits it is disagreeing formally when it sends a message to this House on grounds of privilege. I should be very upset indeed if this House were to lend its name to any attempt to interfere with a time-honoured

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formula that the Commons adopts on this occasion when it offers a hint of privilege and trusts that this hint will be deemed to be sufficient in the eyes of this House. I have great respect for the financial privilege of the House of Commons. I have great respect for the forms which are used between the two Houses and I should not like to see them changed.
Lord McIntosh of Haringey: My Lords, I share the respect expressed by the noble Lord, Lord Henderson, for the financial privilege of the House of Commons. It will not be unknown to the noble Lord, Lord Boyd-Carpenter, that I agree with the Labour Party manifesto of 1983. I am in favour of the abolition of the House of Lords. However, while it is here we have to make it work, have we not? I confess that my amendments in this respect are my second choice.
Lord Boyd-Carpenter: My Lords, the noble Lord says that, but will he explain why it was not included in the last Labour Party manifesto?
Lord McIntosh of Haringey: My Lords, ohne mich is the only way I can answer that.
These amendments were my second choice. I looked again in Erskine May and found, as the noble Lord, Lord Henderson, has quite correctly pointed out, that the hint of privilege is generally accepted by the Lords and the amendment is not insisted upon. On some occasions, however, when the Commons has rejected amendments on the ground of privilege and has indicated the fact in its formal statement of reasons, the Lords have not insisted on the amendments but have asserted by a resolution that they made no admission in respect of any deduction which might be drawn from the reasons offered by the Commons and did not consent that these reasons should thereafter be drawn into a precedent. There are examples of that in Erskine May from 1890 until 1921.
I did not pursue that tactic because under our rules of debate such a resolution would have been taken after the consideration of the Housing Bill in Committee rather than at the proper stage now. It is quite true that a resolution of that kind would have been more consistent than the amendments I have put down. Indeed, if I had been able to use the wording used by the Marquess of Lansdowne in 1909 they would have been a good deal more elegant.
That option was not open to me. I repeat that what
I am doing here is making a political protest about the absorption of local government finance into our central taxation system. That is what we are complaining about. I believe that the protest has been made, and I am content to beg leave to withdraw the amendment.
[Amendment No. 11B withdrawn.]
On Question, Amendment No. 11A agreed to.

LORDS AMENDMENT
12 Schedule 13, page 147, line 28, at end insert—
".—(1) Section 24 of that Act (duty to provide for rebates from community charges) shall be amended as follows.
(2) In paragraph (a)—

(i) for the words "local authorities" there shall be substituted the words "levying authorities"; and

(ii) for the words from "community charges" to "this Act)" there shall be substituted the "words "personal community charges and (except in relation to residence in premises which are special designated premises for the purposes of section I l(4B) of this Act) collective community charge contributions".

(3) In paragraph (b) for the words "local authority in respect of each year" there shall be substituted the words "levying authority".
(4) That section as so amended shall be subsection (1) and there shall be added the following subsection—
"(2) This section shall have effect only in respect of the financial year 1989-90.".".
13 The Commons agreed to this amendment and proposed the following amendment to it:
Line 8, leave out "(except in relation to residence in premises which are special designated premises for the purposes of section 11(4B) of this Act)".
The Earl of Caithness: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 13 to Lords Amendment No. 12. The amendment made by another place simply corrects a missed consequential by deleting a reference to special designated premises. That reference was included by amendment on Report in your Lordships' House when it was proposed in certain cases that the collective community charge and collective community charge contributions should be automatically reduced to give the effect of full rebates for all residents in specially designated collective community charge premises.
However, those provisions were superseded by the provision brought forward on Third Reading for complete exemption from both personal and collective community charge liability for residents in short-stay hostels of a prescribed description. I beg to move.
Moved, That the House do agree with the Commons in their Amendment No. 13 to Lords Amendment No. 12—(The Earl of Caithness.)
Lord Morton of Shuna: My Lords, this disagreement took place in another place without any discussion as to the reasons for it, because of the operation of the guillotine procedure. It is satisfactory, as this amendment in all its stages was a government amendment, to have some explanation as to why the other place disagreed with it, no doubt at the instigation of the Government. However, having had that explanation, I have no reason to disagree with it now.
On Question, Motion agreed to.

LORDS AMENDMENT
14 Schedule 13, page 147, line 28, at end insert—
".After section 24 there shall be inserted the following section—
"24A. Each levying authority shall in relation to the personal community charge and in accordance with regulations made by the Secretary of State make arrangements for—

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(a) the adminstration of the Community Charge Additional Element as specified in paragraph 3(2) of Schedule 13 to the Local Government Finance Act 1988; and

(b) the calculation in each year from I April 1989 of its personal community charge in relation to the national average charge for that year for the purposes of determining whether any person in its area may be eligible for the Community Charge Additional Element."".

15 The Commons disagreed to this amendment for the following reason:
Because the amendment involves charges on public funds and affects local taxation, and the Commons do not offer any further reason trusting that this reason may be deemed sufficient.
15A The Earl of Caithness 15A The Earl of Caithness rose to move, That the House do not insist on their Amendment No. 14 to which the Commons have disagreed for the reason numbered 15.
The noble Earl said: My Lords, I beg to move.
On Question Motion agreed to.
[Amendment No. 15B not moved.]

Housing Bill
5.22 p.m.
The Earl of Caithness: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(The Earl of Caithness.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD NUGENT OF GUILDFORD in the Chair.]
Lord McIntosh Lord McIntosh of Haringey moved Amendment No. 97:
Before Clause 46 insert the following new clause:
("Housing Association tenancies.
.—(1) In this Part, 'housing association tenancy' shall have the meaning specified in this section.
(2) A tenancy which is entered into on or after the commencement of this Act shall be a housing association tenancy, where the tenant—

(a) is a new tenant of a housing association; or

(b) is an existing tenant of a housing association to whom a new tenancy is granted; or

(c) is transferring from a tenancy of a local authority, a new town corporation; or an urban development corporation: (all within the meaning of section 80 of the Housing Act 1985), a housing action trust established under Part III of this Act or the Development Board for Rural Wales.

(3) A tenancy under this section shall include each of the following:

(a) the right to a fair rent, which shall be a registered rent under the Rent Act 1977;

(b) the rights of a secure tenant under the Housing Act 1985;

(c) the right to buy, in circumstances where the housing association is able to identify, and secure (whether by purchase, refurbishment or new building), a replacement unit of housing of broadly equivalent size and type of use.").

The noble Lord said: In moving Amendment No. 97 I shall speak also to Amendment No. 99. These amendments refer to the concept of housing association tenancies which we are proposing to put into this part of the Bill. Before any Members of the
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Committee point to the fact, I am aware that the concept of housing association tenancies is not a new one and that it occurs in Part I of the Bill, notably in Clause 35.
The reason we did not refer to the matter last night when we reached Clause 35 was that it was extremely late at night and it would not have been a good opportunity to secure a full discussion of the very important issues which are raised by housing association tenancies. Moreover, it is actually easier to put forward positive alternatives to the Government's proposals in Part II which deals with housing associations. I am sure that noble Lords will forgive me therefore if I concentrate on the aspects of housing association tenancies which arise in Part II. I recognise that if my amendments are carried—and I say this from the outset—further amendments would be necessary to Clause 35 in Part I; otherwise the Bill would be inconsistent to some degree.
The purpose of our whole approach to Part II of the Bill is to seek to secure that housing associations remain in the public sector and are not spatchcocked into the private sector because the Government have the intention in Part I of the Bill, and indeed in other parts, of improving the conditions for private rented accommodation. We have been through the issue of private rented accommodation at considerable length in Committee over the past few days and we are now moving on to the housing association sector.
What I want to suggest o the Committee is that is is not appropriate in this Bill, or anywhere else, for housing associations to be brought into the thrust of the Government's arguments which take place on other parts of the Bill. Housing associations, as indeed the Government have recognised on many occasions, provide services especially for tenants with low incomes and also for tenants in need who would not otherwise be able to find accommodation. In other words, they are complementary to the public sector of the housing market, rather than being comparable to the private rented sector.
The Government have recognised that and they claim that Part II of the Bill maintains that situation. Indeed, as regards existing housing association tenancies that is undoubtedly true. Existing housing association tenants, provided that they stay in the same dwelling or at least within the same housing association, continue to be protected tenants, to have the benefit of protected tenancy status and to have the benefit of fair rents.
The problem arises, as indeed it does in the private sector, where new tenancies are necessary either because the housing association tenant is moving, because he is moving out of the housing association sector and a completely new tenancy is being created or indeed because new housing association accommodation will become available after the passage of the Bill. The problem is that such new tenancies will be subject to the assured tenancy conditions and that the fair rent provisions will no longer apply.
The Government recognise that that is a problem. They point out that the housing associations should be expected to provide additional rights for housing association tenants in such conditions. Indeed, the

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whole of the tenants' guarantee procedures, which have been set out and which were discussed by the Minister on Second Reading (and which also apply to applicants for the transfer of local authority housing under Part IV) seek to provide further protection both in terms of security of tenure and in terms of fair rents for new housing association tenancies.
The problem is that this tenants' guarantee does not match up to the tenants' charter which has been produced by the National Federation of Housing Associations and, above all, it is not statutory. The Government have firmly resisted its becoming statutory. I must say that it is most difficult for me to understand quite why that should be the case, if they share with us the view that it would be highly desirable for housing association tenancies to continue to have additional protection over and above that which will be available under the assured tenancy procedure.
If we are talking about voluntary agreements between housing associations and their tenants, which is what the tenants' guarantee in effect means, the only remedy that the tenant will have against the breach of that voluntary agreement will be to sue for breach of contract. Unfortunately there are examples, although I am not lawyer enough to be able to quote them with any conviction, where the courts have found that the statute law, which is the law that will be introduced for such tenancies when the Bill is enacted, takes precedence over any agreement that might be made between a housing association and its tenant. That is our concern. I am thinking especially of what the Minister said at Second Reading on 11th July at col. 675. He has confirmed that housing associations exist mainly for those with lower incomes and those with special housing needs. If that is to be the case and of that provision is to be enforced, it is necessary that housing associations should not be in the private rent regime. They should have fair rents. I shall deal with that point when I speak to Amendment No. 98. It is necessary that their tenants should have the rights of a secure tenant which exist under the Housing Act 1985. It is necessary—some noble Lords may be surprised that I should say this—that they should have the right to buy, which is now accepted in all parties as being an important part of tenants' rights, where the housing association can identify and secure a replacement unit of housing or broadly equivalent size and type of use.
We propose an extension of tenants' rights. We propose measures which will keep the housing association movement where it wishes to be—still in the public sector providing mainly for those with lower incomes and special needs. We welcome the emphasis given to the housing association movement by the Bill. That emphasis, we believe, can only be made truly effective if our amendments are agreed to and we maintain the special and important role of housing associations in our housing structure. I beg to move.
5.30 p.m.
Lord Ross of Newport: I support the amendment. As I said on Second Reading, I accept that the Bill is
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far better today than when it was introduced in another place. For that we thank the outgoing Minister whom we wish well in his new place. Proposals relating to housing association tenancies have not much changed. At the outset, when the National Federation of Housing Associations published its document Rents, risks, rights it made clear its wish that housing association tenancies should continue. It said then and the situation remains the same:
"As the Government's proposals stand at present, new housing association tenants would be treated very differently from existing tenants and from both new and existing council tenants".
That is the problem which housing associations will face throughout the country unless we make some concessions on the amendment. It cannot be right to have one set of tenants who have protection and whose rents are controlled to a certain extent and new tenants who do not have those rights.
Housing associations have co-operated with one another and with local authorities to assist tenants who need to move. Housing associations operate a mobility scheme called HALO. Local authority assistance is usually by way of reciprocal arrangements whereby the housing association takes a nominated tenant from the local council in return for the council rehousing the association's tenant. Those arrangements of mutual co-operation are threatened by Clause 35, referred to earlier by the noble Lord, Lord McIntosh.
The Government recognise that tenants would naturally be reluctant to abandon their secure tenances for assured tenancies. The Under-Secretary of State said:
"It is unlikely that housing associations will encourage their tenants to switch accommodation in order to deprive them of their statutory rights".—[Official Report, Commons, 2/2/88; col. 603.]
I think I am right in saying that if tenants move within that housing association they retain their statutory rights. If they move to an Isle of Wight housing association from a London association they do not retain them. They would have done so if they had already been a tenant or had moved within that association. That is what we are up against. On Tuesday of the week before last the national federation pressed again for statutory rights for its tenants. The national council voted on 12th July to continue its campaign in your Lordships' House for a statutory housing association tenancy to ensure that future tenants will enjoy rights similar to those enjoyed by existing tenants and to ensure also—this comes later—that future rent levels are affordable by housing association tenants.
When he introduced the discussion, the outgoing national federation director, Mr. Richard Best, a power in the housing association movement whom many of us are sorry to see leave, stated that it was his view that the legislation in its present state was considerably better than the consultation papers and the original form of the Bill. He said that while the terms of the tenants' guarantee were a step forward, they could be changed at a later date a a new tenant could be offered worse conditions. Thus it was right to continue to pursue a statutory housing association tenancy in your Lordships' House. He said:

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"The Housing Corporation says it will incorporate what we want in a mandatory tenancy but we must take the lead to avoid a wishy washy situation".
I hope that that will convince your Lordships that we believe this to be an area which will cause immense problems and bureaucracy for the housing associations which, when charitable, are run by management committees made up of volunteers who receive no payment for their services. I beg the House to consider the amendments seriously and to support them.
Lord Hylton: I must apologise to the noble Lord, Lord McIntosh of Haringey, for not having been here to hear his opening words when he moved the amendment. The amendment will be welcome, first, to the management committees of existing housing associations whether charitable or non-charitable. Numerous people give their services entirely free. Until now they have been distinct from local authorities, on the one hand, and private and commercial landlords on the other. That is how they wish to go on. The amendment will also be welcomed by housing associations' existing tenants.
As to the present local authority tenants who, under the terms of the Bill, may be moved into the housing association sector, the amendment, if adopted, will make their choice very much clearer. It is on those grounds that I recommend the amendment to the Government. I am sure that they will take the matter seriously.
Lord Moyne: I should like to cross swords with the noble Lord, Lord McIntosh, who is my ally on many aspects of the Bill. He said that he thought that housing association tenants should have the right to buy. I think that was an obiter dictum. I do not think that it is contained in the amendment. I felt that that point should not go unchallenged. I speak as a trustee of a charitable trust which is organised to look after its tenants and could not have a patchwork of owners receiving the same services. The tenants have the right to buy houses outside. They receive full benefits from the Government for so doing. They are not disadvantaged. When they leave, the houses are available for other tenants within the organisation.
Baroness Fisher of Rednal: It is not strictly related to what my noble friend said, but yesterday the noble Earl, Lord Caithness, said:
"I should like to stress to my noble friend Lady Macleod of Borve that housing associations can at present charge premiums for tenancies and that some do"—[Official Report, 25/7/88; col. 66.]
I was hesitant when the noble Earl said that. I happen to be a member of a housing association. Will the Minister check whether that statement is correct? I understood that housing associations were debarred from fixing a premium and that if one does, it is subject to disciplinary action by the Housing Corporation. We are discussing the clause on housing association tenancies and I feel sure that the position ought to be clarified.
Lord Brabazon of Tara: The Government are aware of the concerns in some parts of the housing association movement which I believe underlie these
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two amendments and about which noble Lords have expressed concern this afternoon. Let us be clear: they are concerns about future tenancies granted by housing associations because existing tenancies will of course continue in their present form, as the noble Lord, Lord McIntosh of Haringey, reminded us. We are dealing therefore with the reletting of dwellings where an existing tenancy comes to an end or the letting of a newly developed property.
The concerns expressed are twofold. First there is a general concern that future tenants of housing associations should have terms of tenancy which offer more than the basic statutory rights available under the assured tenancy regime and ideally should be the same as under the existing secure tenancy regime. Then there is the more specific concern that the level of rents charged under new tenancies should be controlled so as to remain within the means of people who are most in need of social rented housing.
The Government respect these sentiments. Let me make it quite clear, first on tenants' rights generally, that we expect housing associations to continue in their honourable tradition of being good and socially responsible landlords. Secondly, we expect them to let their housing at rents which are within the reach of people in low-paid employment. In terms of broad objectives, therefore, there is little between the Government and their critics. Where we differ—and the reason why the Government must resist these amendments—is in the degree to which these matters should be fixed in statute and in the danger which the amendments pose to the greatly enhanced role which we would like to see the housing association movement play.
We think it would be wrong to move away from the basic provision in this Bill setting up the new assured tenancy regime. To recreate, as these amendments do, a statutory form of housing association tenancy would be to recreate also much of the complexity of the landlord and tenant legislation that we are trying to simplify. We have provided instead for tenancies granted by registered housing associations, both existing tenancies and new ones, for something known as the tenants' guarantee. Under Clause 49 of the Bill, the Housing Corporation will be empowered to issue guidance to all registered housing associations on matters of housing management practice. The corporation, which is already consulting interested parties on what such guidance should contain, will also have the power, as part of its normal monitoring function, to ensure that associations comply with the guidance.
The draft of the guidance already produced by the corporation adds on to the basic assured tenancy regime a number of additional rights for housing association tenants. There is in the guidance, for example, the right to take in lodgers or sublet part of the property, the right to carry out improvements, and the right to exchange with a tenant elsewhere if this has been agreed between the parties involved. This sort of approach, which will be enforceable by the corporation, is a much more practical and flexible approach to responsible landlord-tenant relations than would be the approach of erecting a whole new apparatus of statutory controls, which could never fit

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every individual circumstance and would probably become quickly out of date.
On the question of rent levels, everything about housing associations' honourable traditions argues against their charging tenants a penny more than they have to. But again we have taken the precaution, through the avenue of Clause 49, of ensuring that they do not do so. The draft of the tenants' guarantee makes clear that rents for assured tenancies granted by registered housing associations must be within the reach of people in low-paid employment. That too will be enforced by the Housing Corporation. The corporation will be able to make its own judgments about individual cases in different localities; and there is certainly no need for it to be tied by some rigid statutory formula. I shall come to that issue when we debate Amendment No. 98. For the reasons I have given I must ask the Committee therefore not to accept these two amendments.
I should like to say to the noble Baroness, Lady Fisher of Rednal, that I understand that what my noble friend said yesterday is quite correct that housing associations can charge premiums for tenancies but it might be helpful if I arranged for a letter to be sent to the noble Baroness with more details.
5.45 p.m.
Baroness Fisher of Rednal: I thank the noble Lord for that reply, which I find very difficult to accept. I telephoned the Housing Corporation this morning after I had contacted my housing association. I received the advice from the Housing Corporation. I was given the reply which I gave to the Minister, that it would be a matter of discipline by the corporation if any housing associations were found doing this. If the noble Lord knows of any housing associations which are charging premiums to tenants, I think that is important. I received the answer from the Housing Corporation at about a quarter-to 11 this morning.
Lord Brabazon of Tara: My understanding is what I said, and perhaps it would be best for me to write to the noble Baroness clarifying the situation, if that would be helpful.
Baroness Macleod of Borve: I wonder whether my noble friend would answer a question. I have not discussed it previously with him and it might be outside his knowledge at this time. In that case perhaps he could kindly write to me. He has just mentioned that the people who rent from housing associations can take in lodgers. We have a very great problem so far as concerns widows; they are not allowed to take in male lodgers. If they do there is a great possibility that they will lose their rent book because someone will accuse them of cohabiting. This is quite a serious problem. I do not expect an answer from my noble friend today, but perhaps he could very kindly write to me. Widows find that there is discrimination against them when it is supposed that "lodgers" means both sexes.
Lord Brabazon of Tara: I shall certainly look into that situation. We propose that tenants should have
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the right to take in lodgers. I shall have to look into the detail of whether that applies to widows and write to my noble friend.
Lord McIntosh of Haringey: I welcome the noble Lord to the Dispatch Box on this Bill, but I can hardly be expected to welcome what he has said. I think he has taken a very narrow view of the purport of these amendments and of the impact of the legislation on the housing association movement.
He has quite rightly quoted one part of the tenants' guarantee and referred to the fact that the Housing Corporation will be expected to enforce agreements under the tenants' guarantee. However the Housing Corporation is not statute law. It is a quango, and as a result of this Bill it will he one of the biggest quangos in the country, We shall be seeking to show the Committee the degree to which the powers of the Housing Corporation have increased, are increasing and ought to be not diminished but at least made subject to democratic control. Perhaps I should not stray on to that issue at the moment.
I must insist that even a guarantee which is supported by the Housing Corporation does not provide the same degree of protection as statute. It is not as if, as the noble Lord asserts, we are talking about a whole new structure of protection. It is not a whole new structure. The protection already exists under the 1977 Rent Act and under the 1985 Act. There are perfectly good precedents for the kind of structure for fair rents and secure tenancy for all the things we want to do. We are not going into new territory in the law. We are simply proposing to maintain for all housing association tenants what the Government have agreed will be maintained for some housing association tenants. That cannot be thought of as something wildly extravagant, innovatory or anything which is contrary to the intentions of the Government in putting forward this Bill.
It is common sense that housing associations will not wish to have varying kinds of tenancies on an irrational and indiscriminate basis in the housing that they control. How can they manage housing where some tenants are governed by secure tenancies and fair rents while their next door neighbours and the people above and below them are governed by assured tenancies and are, in effect, on market rents? That cannot be the proper way for housing associations to work as businesses, quite apart from the fact that has been referred to by the noble Lord, Lord Ross, and my noble friend Lady Fisher of Rednal, that the housing associations are run by volunteers.
Those volunteers run the associations because they consider that the associations offer a worthwhile contribution to the housing of those with lower incomes and special housing needs. If that objective is taken away from them, these housing associations will become businesses rather than a housing movement. That will progressively damage their ability to provide a distinctive form of housing for those most in need. I am sorry to say that the Minister's arguments are completely unconvincing. I think it is necessary that I should seek the opinion of the Committee.
5.51 p.m. 5.51 p.m.
On Question, Whether the said amendment (No. 97) shall be agreed to?
Their Lordships divided: Contents, 88; Not-Contents, 128.

DIVISION NO. 1

CONTENTS

Addington, L.

Lawrence, L.

Airedale, L.

Listowel, E.

Alport, L.

Lloyd of Hampstead, L.

Ardwick, L.

Lockwood, B.

Aylestone, L.

Longford, E.

Banks, L.

McGregor of Durris, L.

Birk, B.

McIntosh of Haringey, L.

Blease, L.

Mackie of Benshie, L.

Bonham-Carter, L.

McNair, L.

Boston of Faversham, L.

Mayhew, L.

Bottomley, L.

Morton of Shuna, L.

Brooks of Tremorfa, L.

Mountevans, L.

Buckmaster, V.

Nicol, B.

Carmichael of Kelvingrove, L.

Ogmore, L.

Carter, L.

Oram, L.

Cledwyn of Penrhos, L.

Pitt of Hampstead, L.

Cocks of Hartcliffe, L.

Ponsonby of Shulbrede, L. [Teller]

David, B.

Dean of Beswick, L.

Prys-Davies, L.

Diamond, L.

Rea, L.

Dormand of Easington, L.

Ritchie of Dundee, L.

Elwyn-Jones, L.

Rochester, L.

Ennals, L.

Ross of Newport, L.

Ewart-Biggs, B.

Rugby, L.

Ezra, L.

Seear, B.

Falkland, V.

Serota, B.

Fisher of Rednal, B.

Sheffield, Bp.

Foot, L.

Stallard, L.

Gallacher, L.

Stewart of Fulham, L.

Galpern, L.

Stoddart of Swindon, L.

Graham of Edmonton, L. [Teller.]

Strabolgi, L.

Taylor of Blackburn, L.

Grey, E.

Taylor of Gryfe, L.

Grimond, L.

Tordoff, L.

Hampton, L.

Underhill, L.

Harris of Greenwich, L.

Wallace of Coslany, L.

Hart of South Lanark, B.

Walston, L.

Hatch of Lusby, L.

Wells-Pestell, L.

Hayter, L.

Whaddon, L.

Houghton of Sowerby, L.

Wilson of Rievaulx, L.

Hughes, L.

Winchilsea and Nottingham, E.

Hylton, L.

Jeger, B.

Winstanley, L.

Jenkins of Hillhead, L.

Winterbottom, L.

John-Mackie, L.

Young of Dartington, L.

Kennet, L.

NOT-CONTENTS

Alexander of Tunis, E.

Caithness, E.

Allenby of Megiddo, V.

Cameron of Lochbroom, L.

Allerton, L.

Campbell of Croy, L.

Ampthill L

Carlisle of Bucklow, L.

Arran, E.

Carnegy of Lour, B.

Ashbourne, L.

Carnock, L.

Auckland, L.

Colnbrook, L.

Beaverbrook, L.

Colwyn, L.

Belhaven and Stenton, L.

Constantine of Stanmore, L.

Beloff, L.

Cork and Orrery, E.

Belstead, L.

Cottesloe, L.

Bessborough, E.

Cox, B.

Blatch, B.

Craigavon, V.

Borthwick, L.

Crathorne, L.

Boyd-Carpenter, L.

Crickhowell, L.

Brabazon of Tara, L.

Davidson, V. [Teller]

Broadbridge, L.

Deedes, L.

Brougham and Vaux, L.

Denham, L. [Teller.]

Broxbourne, L.

Dilhorne, V.

Bruce-Gardyne, L.

Eden of Winton, L.

Butterworth, L.

Elibank, L.

200

Elliott of Morpeth, L.

Morris, L.

Fanshawe of Richmond, L.

Mottistone, L.

Ferrers, E.

Mowbray and Stourton, L.

Gisborough, L.

Moyola, L.

Gray, L.

Munster, E.

Gray of Contin, L.

Napier and Ettrick, L.

Greenway, L.

Nelson, E.

Gridley, L.

Norfolk, D.

Hailsham of Saint Marylebone, L.

Nugent of Guildford, L

Orkney, E.

Hanson, L.

Orr-Ewing, L.

Harmar-Nicholls, L.

Oxfuird, V.

Havers, L.

Pender, L.

Henley, L.

Platt of Writtle, B.

Hesketh, L.

Polwarth, L.

Hives, L.

Pym, L.

Holderness, L.

Rankeillour, L.

Home of the Hirsel, L.

Reay, L.

Hooper, B.

Renton, L.

Hunter of Newington, L.

Russell of Liverpool, L.

Hylton-Foster, B.

St. Germans, E.

Jenkin of Roding, L.

Sanderson of Bowden, L.

Johnston of Rockport, L.

Shannon, E.

Joseph, L.

Skelmersdale, L.

Kimball, L.

Somers, L.

Kimberley, E.

Stockton, E.

Kinnoull, E.

Stodart of Leaston, L.

Lauderdale, E.

Strange, B.

Layton, L.

Strathcarron, L.

Lindsay, E.

Sudeley, L.

Long, V.

Swinfen, L.

Lucas of Chilworth, L.

Swinton, E.

Lyell, L.

Terrington, L.

McFadzean, L.

Thomas of Gwydir, L.

Mackay of Clashfern, L.

Thorneycroft, L.

Macleod of Borve, B.

Trafford, L.

Mancroft, L.

Trefgarne, L.

Manton, L.

Trumpington, B.

Margadale, L.

Ullswater, V.

Marley, L.

Westbury, L.

Merrivale, L.

Wynford, L.

Middleton, L.

Young, B.

Milverton, L.

Zouche of Haryngworth, L

Monk Bretton, L.

Resolved in the negative and amendment disagreed to accordingly.
6 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 98:
Before Clause 46, insert the following new clause:
("Affordable rents
.—(1) Where a landlord has granted a Housing Association tenancy in accordance with this Part. it shall be the duty of the landlord to apply to the rent officer on the commencement of that tenancy and on every second anniversary of the commencement of that tenancy for a determination of an affordable rent as set out in subsection (3) below.
(2) The rent officer shall determine an affordable rent for the tenancy and shall indicate to the landlord the amount by which he considers the rent should rise on each anniversary of the tenancy up to the date of the next determination of rent.
(3) In determining an affordable rent, the rent officer shall have regard to

(i) the lower quartile of the average male manual workers' earnings for that part of the country and shall ensure that at no time shall the affordable rent exceed 20 per cent of this figure.

(ii) the age, size, location and state of repair of the property.").

The noble Lord said: Amendment No. 98 stands on its own. However, it is related to the issues which we have been considering. It refers specifically to the concept of an affordable rent. That concept is framed in the spirit of the Government's intentions for the housing association movement which have been mentioned a number of times in the past hour. We are

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concerned that the housing association movement should provide mainly for those with lower incomes and special housing needs. The question is how that intention can be secured if new tenancies—in other words, an increasing proportion of housing association tenancies as the years go by—are not subject to the fair rent provision but are subject to the provisions for rents in the private rented sector.
In that respect, as in respect of security, housing associations will progressively become more and more like the private rented sector and less and less concerned with the type of service they provide at the moment. That must be a fact. I do not think that the Government will seek to deny that, because the law is framed in that way. The process may be delayed by tenants' guarantees. However, there is no assurance that it will be delayed in that way because the power to enforce those matters rests not in the hands of Parliament or the courts (except in cases of breach of contract) but in the hands of a quango and a very large number of housing associations which will be dragged in a direction in which they do not wish to go.
The deregulation of housing associations regarding security of tenure has been discussed. The deregulation as regards rent is an extremely important matter. Therefore, we have put down Amendment No. 98 which seeks to ensure that there is, in new housing association tenancies, an affordable rent which will ensure that the Government's intention of looking after those with low incomes is achieved.
We have defined low incomes in terms of the lower quartile of the average male manual worker's earnings for that part of the country. We have suggested that the rent should not exceed more than 20 per cent. of that figure. We have also recognised that rent ought to reflect the age, size, location and state of repair of the property. That is common sense. This is a housing market, even if it is one which must be regulated to some extent.
We may be wrong in our definition. I shall be interested to see whether the Government have a better alternative. It seems to make good sense. However, I do not hold to every word and comma of the definition that we have come to. I think the objective is clear. It is one which we retain so far as rents are concerned, and it is the single most important aspect so far as most tenants are concerned. We must maintain housing associations in the public sector where they will continue to provide the distinctive service which they provide now.
In April of this year, there was an extended and well-publicised debate about housing benefit. The National Federation of Housing Associations put to the Government at that time a number of proposals for rethinking housing benefit in order to ensure that even under existing law we would not have a significant number of people suffering as a result of the new housing benefit regulations. They were particularly concerned, not with those who get 100 per cent. of the rent paid, but with the next category who are subject to a taper and who get a proportion of their rent paid.
The argument was not won by the National Federation of Housing Associations. The Government resisted the amendments. As a result, a large number of people receiving substantially below the average manual worker's wage and up to that average wage are paying considerably more than 20 per cent. of their net income on rent. I shall not weary the House with examples. However, they are available in publications of the federation. They show that, for example, a single qualified nurse at the age of 23 and living in a one-bedroomed flat in London may well be paying 40 per cent. of her income on rent under the housing benefit regulations.
It is possible to produce many examples to show that far too many people are paying far more of their net income in rent than should be permitted and is consistent with a decent standard of living. They must provide for all the other necessities of life. Housing is a necessity and it is something on which people choose to spend a significant part of their income if they can afford it. However, for those in the greatest need there must be a restriction on the proportion of net income paid on rent. Our concept of affordable rent, with all the defects which may be found in drafting, is the right way to approach the matter. I hope that it will commend itself to the Committee. I beg to move.
Lord Ross of Newport: I rise to support the amendment. Housing associations will be faced yet again with two regimes. Existing tenants will have rents fixed by agreement with a rent officer. However, new tenants will pay what is loosely called "an affordable rent". That will be based on a market rent. We are already seeing what some of those rents are likely to be. Figures have been published recently by the National Federation of Housing Associations. I believe that the Department of the Environment might well agree those figures.
Such figures depend on the amount of housing association grant. However, if we take as an example a family with two children under the age of 11 living in a newly-built flat in Cambridgeshire with a HAG grant limited to 65 per cent. and with a net household income including child benefit of £151.59, the weekly rent would be£661.
For some reason, the Isle of Wight is included in the West of England federation area. At a recent meeting of the federation held in Bath, I was given figures which showed that single adults in the West of England were facing increases of up to £10 per week on rent. That was based on a HAG grant of about 70 per cent. I gave statistics to the House at Second Reading and I do not wish to bore your Lordships unduly. However, the average wage in the West of England is below the average wage in the North-East. It is one of the lowest wage areas in the country. In a recent survey, out of 750 returns 99 per cent. of the incomes recorded were below the national average. The average income of housing association tenants as a whole in the West of England was £74 per week. The replies to the survey came mainly from the large housing associations. Vast numbers of those tenants were on benefit of one sort or another.
I believe that the Government began by speaking of a HAG grant of 30 per cent. The figure then went

203
to 50 per cent. We have ended up with a figure of between 60 and 70 per cent. For some reason which I do not understand, even if the HAG grant drops a bit, rents do not necessarily go up that much. Perhaps the Minister can explain that. However, he has only had one day in the job and I shall not expect him to do so. Nevertheless, the housing association movement is very worried. People who are ill-able to afford them may well face substantial increases. At the end of the day, the whole matter will depend on the amount of housing benefit. That is the crucial issue.
The role of the rent officer has been a good one. The noble Lord, Lord Goodman, made an excellent speech on that subject at Second Reading. The rent officer is on the spot and he has facts and figures at his disposal. Rents have been coming up to much more sensible levels than was previously the case. In many places people are paying between 20 and 25 per cent. of their income on housing. Why are we not to be allowed to use the knowledge and resources of the rent officer for all new tenancies under the housing association movement? It beats me. I do not understand it. That is why I very much support the amendment.
Lord Brabazon of Tara: We have already debated the proposal that there should be a separate housing association tenancy, and this amendment is related to that earlier proposal. The purpose of noble Lords who have moved the amendment is quite clear. They would like us to provide explicitly on the face of the Bill that rents should be affordable by the client groups for which housing associations have traditionally catered. Indeed, the purpose of the amendment is to supplant the concept of the fair rent which at present applies to housing association tenancies with the concept of an "affordable rent". In character, as I read their amendment, an affordable rent would be very similar to a fair rent inasmuch as both seek to keep rents below market level.
As I said in the earlier debate, and as I expect I shall say in the debate on later amendments, the Government's position is that we intend rents for housing association tenants to be within the means of those for whom the associations have traditionally provided. There is nothing between myself and the noble Lords in that respect and it is an object which I am sure that all Members of the Committee will share. Housing associations exist for a purpose. That purpose is to provide good quality housing for those in various groups who could not obtain access to such housing without assistance. That is why we shall continue to pay housing association grant.
However, the fair rent system, around which the whole edifice of housing association finance is at present constructed, is no longer credible. Its operation for housing associations is to produce rents unrelated to development costs below the level which many tenants could afford and wholly dependent on decisions by a rent officer whose decisions are taken without reference to their implications for the financing of the scheme in question.
Our approach is different. We say that rents should be determined by housing associations, subject to the terms of the tenancy agreements with their tenants
204
and supervision of the Housing Corporation (through the tenants' guarantee) as to the terms which those tenancy agreements contain. Setting rents is part of the managerial responsibility of housing associations and it is right that they should deal directly with tenants on that issue. In doing so one of the factors they must take into account is the wording of the housing benefit system. But registered housing associations—and this is the most important point—will still receive very substantial government grants towards the cost of their schemes. For mixed funded public and private sector schemes (on which I shall say a little more in a moment) in the current year the grants range from 50 per cent. to 75 per cent. Those grant levels are intended to enable the associations to provide housing for their traditional client groups. That is what housing associations—exist to do and are keen to do.
Therefore noble Lords need have no fear that associations will try to put up rents beyond the level which their tenants can afford. Even if an association tried to do that—which would be quite contrary to the purpose for which it existed—it would be circumscribed by the terms of its tenancy agreement, and if it went outside those terms it coud be taken to court. The tenants' guarantee, policed by the Housing Corporation, will make it clear that rents must remain within reach of lower paid workers.
Nevertheless, as I said earlier, we believe there is a case for rents to rise somewhat above present levels. This will not affect existing tenants, since they will retain their right to a fair rent even if they move to another property owned by the same association. But for new tenants we accept that some increase makes sense. There is no reason why public subsidy should be greater than it needs to be. Besides that, however, we are looking to housing associations to expand their role in future by greater use of mixed funding, in other words from public and private sectors. There is a later amendment on this subject which we shall no doubt debate. Suffice it to say now that mixed funding at a 60 per cent. average grant rate—which is what we are applying in the current year—enables two-thirds again as many new or rehabilitated dwellings to be provided for the same input of government grant as is possible where grant at 100 per cent. is available.
To make mixed funding work, it is necessary to give associations more control over their rents than they have under the fair rent system. I do not believe that the support of private investors could seriously be expected if the setting of rents where left to the rent officer. What certainty could there be that associations could service their debts?
In case Members of the Committee think that housing associations will have great difficulty in operating under mixed funding—and I know that this is sometimes alleged—let me say that the early signs from a pilot programme last year, and a larger programme being run in the current year, are that there is a great deal of interest in mixed funding from within the housing association world. These are not associations which are aiming to charge unrealistic rents. On the contrary, they know that with the current grant regime they have no need to do anything of the kind. With the tenants' guarantee,

205
they know that they could not do so even if they wanted to.
I therefore believe that this amendment is fundamentally misconceived. It would return us to a situation very like the present, where housing association grant would bear all the strain of housing association costs and associations would be left with very little managerial discretion as regards their rents. This is inimical to proper accountability for public funds and to the great expansion of housing association activity which we expect through the mixed funded programmes. Above all, it is quite unnecessary to protect tenants' interests. I therefore urge the noble Lord to withdraw the amendment.
6.15 p.m.
Baroness Fisher of Rednal: Can the Minister give the Committee more information regarding mixed funding and the housing associations which are most likely to take it up? As my noble friend and others have said, most housing associations are small organisations which make accommodation available to meet specific needs. One would expect that even under this Bill most housing associations catering for such needs will not want to expand to become large housing associations.
Therefore one concludes that the mixed funding is more likely to be applicable to the larger housing associations. If my premise is correct, would that mean that in the long run the scheme will apply not so much to the lower income or disabled groups for whom housing associations cater at present but will be more of an upmarket housing association scheme?
Lord Brabazon of Tara: We shall be discussing mixed funding in more detail when we come to Amendment No. 108. I shall be delighted to answer the noble Baroness's question then. However, we do not expect all housing associations to opt for mixed funding, but certainly a great many of them.
Lord Hylton: At Second Reading the noble Earl, Lord Caithness, when replying to the debate (at col. 676 of Hansard for llth July) and speaking about the proposed tenants' guarantee, said:
"Rents must remain within the reach of those in lower paid employment".
I was very glad to hear the noble Lord say words to that effect when replying to the amendment.
If that is the Government's intention I believe that they must pay attention to the amendment even though its wording may be defective and even though it may be a mistake to involve the rent officer in considering, for example, the precise levels of manual workers' earnings. I believe that the amendment draws our attention to a situation which requires further thought.
Perhaps I may explain that a little further. We have on the one hand the Department of the Environment and the Housing Corporation which are concerned about rent levels. As the noble Lord has explained, they are very concerned about the impact of rent levels on the future development of the housing association movement and on new building,
206
rehabilitation and all that goes with it. On the other hand we have another group of government departments which are concerned with housing benefit, namely the Departments of Health and of Social Security. Then there are all the complications of tapers and how one withdraws housing benefit as people's income rises. There are the injustices, the poverty trap, the disincentive to earn a little more, and matters of that kind. So there is not always perfect liaison between those two areas of government departments.
Then there is a third ingredient; namely, financial control, which is normally exercised through the Treasury. It only requires a small change in economic and financial circumstances for a severe clamp to be put on the amount of money that is allowed to be paid over in the form of housing benefit.
At the present time we are in the fortunate position of having a considerable gap left between the Committee stage and the next stages of this Bill. I suggest that the time could fruitfully be employed in harmonising the different and conflicting interests within the Government—let alone within the different sectors of the voluntary housing movement—so that at the next stage we can have spelt out on the face of the Bill a much better system for the future of housing association rents.
Lord McIntosh of Haringey: The Government say it and the tenants' guarantee says it:
"housing associations are expected to set and maintain their rents at levels within the reach of those in low paid employment".
So far so good; but do they mean it? Do the Government mean it and can the housing associations, with the tenants' guarantee, in fact enforce that requirement?
Perhaps we should look at what the tenants' guarantee further states:
"In addition they are expected to take account of the size, amenities, situation and condition of the accommodation"—
fine; that is what we seek in our amendment—
"and the need to cover the costs after subsidy of loan charges, and management and maintenance, including the requirement to make prudent provision for future repairs".
There is one respect in which the housing association movement is not and cannot be different from any other part of the housing market. If a housing association has a portfolio consisting almost entirely of new properties built at very high costs and with high debt charges, its return on capital for a given level of rent will be very much lower than if it has a portfolio of older properties built at lower costs with debt charges either much lower or already amortised. The concept of the economic rent in terms of a return on capital employed, whether in the housing association sector, the local authority sector or the private rented sector, is a nonsense. It depends on when one built and at what cost; or when and at what cost one buys.
Therefore, there will be very powerful pressure on housing associations, as on the private rented sector, to seek to set rents at the replacement level; in other words, at the highest possible level, which is the level at which they would have to expend in order to build new property. Unfortunately, that is reflected in the

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tenants' guarantee. It is what gives the lie to the Government's intention in making provision for that as a part of the rent structure for housing associations.
If the Government were to accept our amendments there would be a clear choice and judgment to be made by housing associations: they must link their rents to the needs of those who will live in their houses and they must make the judgment between one property and another on the basis of the age, condition and location of those properties. That seems to us to be common sense, but to seek to bring the rent regime of housing associations into the same situation as the private housing sector on the grounds that there must be an adequate return on capital (which is implied by the mixed funding requirement) does not make economic sense, cannot be supported and will not ensure the survival of the housing association movement as a distinctive sector of the housing market.
I regret to say that the Government's arguments against this amendment are as weak as the arguments which they put against the preceding amendment, and the Committee ought to decide on them.
6.25 p.m.
On Question, Whether the said amendment (No. 98) shall be agreed to?
Their Lordships divided: Contents, 82; Not-Contents, 121.

DIVISION NO. 2

CONTENTS

Addington, L.

Irving of Dartford, L.

Airedale, L.

Jeger, B.

Ardwick, L.

Jenkins of Hillhead, L.

Aylestone, L.

John-Mackie, L.

Banks, L.

Kirkhill, L.

Birk, B.

Listowel, E.

Blease, L.

Lloyd of Hampstead, L.

Bonham-Carter, L.

Lockwood, B.

Boston of Faversham, L.

McGregor of Durris, L.

Brooks of Tremorfa, L.

McIntosh of Haringey, L.

Buckmaster, V.

Mackie of Benshie, L.

Carmichael of Kelvingrove, L

McNair, L.

Carter, L.

Milverton, L.

Cledwyn of Penrhos, L.

Molloy, L.

Cocks of Hartcliffe, L.

Morton of Shuna, L.

David, B.

Mountevans, L.

Dean of Beswick, L. [Teller.]

Nicol, B.

Diamond, L.

Ogmore, L.

Dormand of Easington, L.

Oram, L.

Elwyn-Jones, L.

Pitt of Hampstead, L.

Ennals, L.

Ponsonby of Shulbrede, L

Ewart-Biggs, B.

Ritchie of Dundee, L.

Ezra, L.

Rochester, L.

Falkland, V.

Ross of Newport, L.

Fisher of Rednal, B.

Seear, B.

Gallacher, L.

Seebohm, L.

Galpern, L.

Serota, B.

Graham of Edmonton, L. [Teller.]

Somers, L.

Stallard, L.

Gregson, L.

Stewart of Fulham, L.

Grey, E.

Stoddart of Swindon, L.

Grimond, L.

Taylor of Blackburn, L.

Hanworth, V.

Taylor of Gryfe, L.

Harris of Greenwich, L.

Taylor of Mansfield, L.

Hart of South Lanark, B.

Tordoff, L.

Hatch of Lusby, L.

Underhill, L.

Houghton of Sowerby, L.

Wallace of Coslany, L.

Hughes, L.

Walston, L.

208

Wells-Pestell, L.

Winstanley, L.

Whaddon, L.

Winterbottom, L.

Willis, L.

Young of Dartington, L.

Winchilsea and Nottingham, E.

NOT-CONTENTS

Alexander of Tunis, E.

Jenkin of Roding, L.

Allenby of Megiddo, V.

Johnston of Rockport, L.

Allerton, L.

Joseph, L.

Ampthill L

Killearn, L.

Arran, E.

Kimball, L.

Beaverbrook, L.

Kimberley, E.

Belhaven and Stenton, L.

Lauderdale, E.

Beloff, L.

Layton, L.

Bedstead, L.

Lindsay, E.

Bessborough, E.

Long, V. [Teller.]

Blatch, B.

Lucas of Chilworth, L.

Borthwick, L.

Lyell, L.

Boyd-Carpenter, L.

McFadzean, L.

Brabazon of Tara, L.

Mackay of Clashfern, L.

Brougham and Vaux, L.

Macleod of Borve, B.

Broxbourne, L.

Margadale, L.

Bruce-Gardyne, L.

Marley, L.

Butterworth, L.

Merrivale, L.

Caithness, E.

Mersey, V.

Cameron of Lochbroom, L.

Monk Bretton, L.

Campbell of Croy, L.

Mottistone, L.

Carnegy of Lour, B.

Mowbray and Stourton, L.

Carnock, L.

Munster, E.

Coleraine, L.

Napier and Ettrick, L.

Colnbrook, L.

Nelson, E.

Colwyn, L.

Norfolk, D.

Constantine of Stanmore, L.

Orkney, E.

Cork and Orrery, E.

Orr-Ewing, L.

Cottesloe, L.

Pender, L.

Cox, B.

Platt of Writtle, B.

Craigavon, V.

Polwarth, L.

Crathorne, L.

Radnor, E.

Davidson, V. [Teller.]

Rankeillour, L.

Denham, L.

Reay, L.

Dilhorne, V.

Renton, L.

Dundee, E.

Renwick, L.

Eden of Winton, L.

St. Germans, E.

Elibank, L.

St. John of Bletso, L.

Elles, B.

Sanderson of Bowden, L.

Elliott of Morpeth, L.

Shannon, E.

Fanshawe of Richmond, L.

Skelmersdale, L.

Ferrers, E.

Stockton, E.

Fortescue, E.

Stodart of Leaston, L.

Gisborough, L.

Strathcarron, L.

Gray, L.

Strathclyde, L.

Gray of Contin, L.

Sudeley, L.

Gridley, L.

Swinfen, L.

Hailsham of Saint Marylebone, L.

Swinton, E.

Terrington, L.

Hanson, L.

Thomas of Gwydir, L.

Harmar-Nicholls, L.

Thomas of Swynnerton, L.

Havers, L.

Thorneycroft, L.

Hayter, L.

Trafford, L.

Headfort, M.

Trefgarne, L.

Henley, L.

Trumpington, B.

Hesketh, L.

Ullswater, V.

Hives, L.

Vinson, L.

Holderness, L.

Westbury, L.

Home of the Hirsel, L.

Wynford, L.

Hylton-Foster, B.

Young, B.

Ironside, L.

Zouche of Haryngworth, L

Resolved in the negative, and amendment disagreed to accordingly.
6.33 p.m.
[Amendment No. 99 not moved.]
Clause 46 [Housing for Wales]:
Lord Brabazon of Tara Lord Brabazon of Tara moved Amendment No. 100:
Page 34, line 39, after ("1985") insert ("(in this Part referred to as the 1985 Act")").
The noble Lord said: With the leave of the Committee I should like to speak also to Amendments Nos. 101, 103, 104, 109 and 171.
Amendments Nos. 100, 101, 103, 104 are quite simply drafting amendments to tidy up references to the Housing Associations Act 1985 in Part II of the Bill. I trust that the Committee will find them wholly unobjectionable.
Amendment No. 109 is a consequential amendment to repeal Clause 52(4) when the Land Registration Act 1988 is enacted. Clause 52 replaces Section 52 of the Housing Associations Act 1985. It transfers to the Housing Corporation powers to reduce, suspend or recover certain grants paid to registered housing associations. The grants concerned are capital and revenue deficit grants paid under Clauses 50 and 51 and housing association grant paid under Section 41 of the 1985 Act or any enactment replaced by that section.
Clause 52(1) empowers the corporation to determine the relevant events in which its powers of recovery may be exercised. Such determinations will be subject to consultation with bodies representing housing assocations and to the approval of the Secretary of State as required under Clause 53. However, in order to exercise its powers, the corporation must be able to ascertain that a relevant event has occurred. Clause 52(3) requires housing associations in receipt of grant to notify the corporation of any relevant event giving rise to the exercise of this power.
There may be circumstances where the corporation needs information from the Land Registry in order to establish whether a relevant event, such as the disposal of grant-aided property, has occurred. Under the current legislation it is necessary for the Chief Land Registrar to have statutory authority in order to provide information to another body. Clause 52(4) provides this authority. However, Section 3 of the Land Registration Act 1988 provides for an open registry and, when this provision comes into force, the registrar will no longer need this specific authority. Amendment No. 109 therefore provides for the repeal of Clause 52(4) from the date Section 3 of the Land Registration Act comes into force.
Finally Amendment No. 171 is simply a drafting amendment to correct a defective reference to the Housing Associations Act 1985 in the schedule of minor and consequential amendments. I beg to move.
On Question, amendment agreed to.
Clause 46, as amended, agreed to.
Schedule 5 agreed to.
Clause 47 [Transfer to Housing for Wales of regulation etc. of housing associations based in Wales]:
Lord Brabazon of Tara Lord Brabazon of Tara moved Amendment No. 101:
Page 35, line 8. leave out ("Housing Associations Act 1985") and insert ("1985 Act").
On Question, amendment agreed to.
Clause 47, as amended, agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 102:
After Clause 47, insert the following new clause:
("Composition of Housing Corporation and Housing for Wales.
.—(1) Not later than one year after the commencement of this Part of the Act, the Secretary of State shall bring forward regulations for changing the composition of the Boards of the Housing Corporation and Housing for Wales.
(2) Such proposals shall include—

(a) provision for the Board to consist of a majority of respresentative members, who shall be representative of housing associations and their tenants' local authorities; community groups, and other voluntary organisations;

(b) provisions for the inclusion of an equitable proportion of women and respresentatives of minority ethnic groups; and

(c) provision for the Board to appoint its Chair and Chief Executive without reference to the Secretary of State.").

The noble Lord said: I have already made threatening noises about the Housing Corporation. The Housing Corporation is itself threatening to become the biggest and least accountable quango in British public life. Perhaps I may remind the Committee that at the moment there are about 4 to 5 million local authority tenancies and about 500,000 housing association tenancies. It will be seen that the potential for the expansion of the Housing Corporation in terms of the number of dwellings for which it has responsibility is enormous. If the remainder of the Bill, which provides for the transfer of local authority properties over to housing associations, is achieved, the potential for increased responsibilities for the Housing Corporation, simply because of the rise in the number of dwellings for which it is responsible is enormous.
Over a period of 10 years, the housing corporation could easily become 10 times its present size for that reason alone. However, the Bill is not only extending the number of tenancies for which the Housing Corporation is responsible. It is also changing its role and increasing its responsibilities very dramatically. The fact that is is being broken down into an English Housing Corporation and Housing for Wales is a bit of minor tinkering compared with the other changes that are taking place.
The existing functions of the Housing Corporation are set out in Section 75 of the Housing Associations Act. The Housing Corporation is responsible for promoting registered housing associations, facilitating their functions, publicising their aims, maintaining a register of and supervising housing associations—note the word "supervising"—and acting as agent for the Secretary of State in the payment of grant. This function will certainly not decrease. It will probably increase because the conditions of grant will change and become more complex. The final power is not used very much. It is providing dwellings for sale and rent.
The Bill as originally drafted provided for substantially increased powers for the Housing Corporation. It is said that capital grant decisions and payments should be taken away from local authorities and that the Housing Corporation should act as agent for the Secretary of State in housing

211
association schemes; and that the Housing Corporation should be responsible for revenue deficit grant decisions and for payments. Of course the Bill provided for the approval of landlords for Part IV of the Bill under the so-called tenants' choice, where estates and properties are taken away from local authorities and given to applicants, who will very largely be housing associations. That also comes under the responsibility of the Housing Corporation.
As the Bill has proceeded through Parliament, additional powers have been given to the Housing Corporation of which perhaps the most important is Clause 49. That is why we have proposed the amendment at this place in the Bill. The corporation is now enabled to give guidance on the management of accommodation by registered housing associations. We referred to this matter when considering the tenants' guarantee so that, for example, the assessment of housing demand and the means of meeting that demand can become and will become part of the responsibility of the Housing Corporation.
Allocations policy, which has been dealt with largely by local authorities, now becomes the responsibility of the Housing Corporation. The terms of tenancy and the principles on which rent levels should be determined under the tenants' guarantee become the responsibility of the Housing Corporation. Standards of maintenance and repair become the responsibility of the Housing Corporation. The whole issue of consultation and communication with tenants which one would have thought would be far better done by people much closer to those tenants—the housing associations themselves—than by some national quango based in London all become the responsibility of the Housing Corporation, or rather guidance and control of housing associations in respect of these functions.
We have the prospect of the Housing Corporation being not just 10 times the present size, but probably 20 or even 30 times the present size when all the provisions of the Bill have been implemented. I say again without fear of contradiction that we have the prospect of the biggest and the most unaccountable quango this Government have ever produced, taking away from local democracy and parliamentary control most of the important decisions in our housing policy—not just in development but in management of public housing. This is a quite unacceptable degree of expansion for a body which is simply nominated by the Secretary of State with no control outside Whitehall or Marsham Street of its membership, detailed powers or staffing. Our aim through Amendment No. 102—I am also speaking to Amendment No. 111A in the name of the noble Lord, Lord Ross of Newport—is to find some way of bringing a semblance of democratic representation, not necessarily democratic control, into the Housing Corporation before it runs away with us and takes over not just Tottenham Court Road but housing throughout the whole of the country.
The amendment provides that a majority of the board should consist of members representative of housing associations and their tenants, local authorities, community groups and other voluntary
212
organisations. There should be an equitable proportion of women and representatives of minority ethnic groups. The board itself, not the Secretary of State, should appoint the chair and the chief executive. What we do not say is that the Secretary of State shall be deprived of any ability to make appointments to the Housing Corporation. That would clearly be quite wrong. The Secretary of State has in the past appointed people—I pay tribute to them—of considerable distinction in the housing field to the Housing Corporation. It is correct that he should continue to have the power to do so. But it is not acceptable that that body, which will grow to such an extent with so little control, should not be to a substantial extent representative of the housing associations, tenants, local authorities, community groups and other voluntary organisations with whose work it will be so intimately concerned.
We cannot believe that the Government seriously want to have the Housing Corporation growing in this way without recognising the role that it has to play and its responsibilities to the people whom it is designed to serve. We are in serious danger of having housing management in this country and a good part of housing development out of the hands of Parliament and out of the hands of the people who will be using and providing services. That cannot be right. I beg to move.
6.45 p.m
Lord Ross of Newport: My Lords, once again I rise to support what has been said by the noble Lord, Lord McIntosh. I suppose that if he were thinking of some comparable body, the London Residuary Body might come to mind. It has an enormous financial responsibility that does not seem ever to be coming to an end. However, I agree with everything he said. There is a massive increase in the Bill of the powers of the Housing Corporation. It must be democratised to a reasonable degree.
I should like to pay my tribute to the work in housing associations in my area of Lady Benson who is a member of the existing board. It is rumoured that Lady Benson may not remain. We hope that that is not true because she has been assiduous, very hard working and popular. Anything I say is not meant to reflect on her at all.
Amendment No. 111A which is grouped with Amendment No. 102 takes the democratisation of the Housing Corporation a step further by suggesting it be set up on a regional basis. In fact it already operates on a regional basis to a large extent. There are eight regions within the English area of the Housing Corporation operating from Exeter, Leicester, Wolverhampton, Liverpool, Manchester and Leeds and it would be simple for it to structure itself properly on a regional basis to give much more power at regional level. As the noble Lord, Lord McIntosh, has said, let us have local people on the board of the Housing Corporation from local housing associations, nominated, elected and appointed thereto. For the first time the Housing Corporation in its annual report has reported on a regional basis; so let us follow it down that path and make it efficient. That is the purpose of Amendment No. 111A.

213
The national federation is also organised on a regional basis. So it would be proper for the housing associations and the Housing Corporation to work together within the regions. I truly believe that this ought to have the support of the Government because they are giving the corporation quite staggering powers with a budget of something like £1 billion which will clearly grow much higher. The housing association movement is set to increase substantially as well; so let us do the natural thing. Let us widen the responsibilities and widen the democratisation of the corporation so that local people have a much closer liaison with it.
I totally support what the Government have done in Wales. I feel sure that the Secretary of State had some part in that. To have hived off the corporation's work in Wales to its own Welsh housing movement is quite correct. But let us also do something for the regions in England. Why do we not do it? I support the amendment.
Lord Moyne: My Lords, I believe it is entirely logical to discuss the Housing Corporation which, as the noble Lord, Lord McIntosh, pointed out, has such a vital part to play. I can speak only of the excellent work that I have seen. I doubt whether I can vote for the amendment. I hope that my noble friend will say a little about what the Minister has borne in mind and will bear in mind in making appointments. I feel that the amendment is too rigid. It might lead to the appointment of "statutory women" who are not as good as ordinary women. I hope that my noble friend will be able to tell us a little of what the Minister is thinking along these lines, although maybe not wishing to have his hands tied exactly to the letter of the new constitution.
Lord Hylton: My Lords, the Housing Corporation has come a long way since it was first set up in the 1960s by the noble Lord, Lord Joseph. By and large, I believe everyone would agree that it has done a pretty good job. Indeed its current annual report is an impressive document. It is a pity that the Government have not seized the opportunity of the Bill to consider how the Housing Corporation should be constituted. Therefore I am personally grateful to the proposers of the two amendments.
I prefer Amendment No. 111A with its emphasis on regionalism to which the noble Lord, Lord Ross of Newport, has already referred. He explained how the corporation works through regions and has a considerable measure of administrative devolution to them. We welcome that but it needs to be taken a step further beyond merely the devolution of scrutiny, office work and the adminstration of funds and paper. Therefore, I should welcome separate boards in the eight regions.
I conclude by pointing out that the Housing Corporation expects the committees of registered housing associations to be both representative and accountable. It likes to see on the committees representatives of local authorities or parish councils. It likes to see tenants represented. It likes to see community and voluntary bodies playing a full part in the decisions which a housing association
214
committee must take. If the corporation is insisting on that kind of accountability and local community responsibility at the level where new building, improvement and maintenance of houses is taking place, the same principles should apply within the funding and administrative body—-that is to say, the Housing Corporation. Surely, what is sauce for the goose is also sauce for the gander.
Lord Swinfen: While I appreciate the need for representation on the board of the Housing Corporation by the housing associations (which are using the money being given to them by the corporation), we ought not to lose sight of the fact that the corporation is spending taxpayers' money. Therefore it needs to be under ministerial and government control. Regarding both amendments, I cannot agree with the appointment of a chair. A chairman is the leader of the board. As far as I can see the movers of both amendments wish to appoint an inanimate object for the board to perch upon.
Lord Brabazon of Tara: My noble friend Lord Swinfen put the last point extremely well. I was going to say something along similar lines, but I do not think that I need now do so. I am sure that Amendment No. 102 has the best interests of the housing association movement at heart. The Government also have those interests at heart. Indeed, they would not be seeking so actively to increase the role of the housing associations if they did not have such a commitment. I am afraid that it is to misunderstand the role of the Housing Corporation and Housing for Wales to suppose that the amendment could help to secure the effects which we want.
It is of course an important function of the corporation to promote development and activity by housing associations. But that is only a part of its role. The corporation is also responsible for the management of a very large capital programme, worth £737 million in England in the current year. It must take detailed investment decisions, within the policy priorities indicated by the Government, about where and how that money is spent, a point made by my noble friend. The corporation also acts on the Government's behalf as banker to the housing association movement, making loans to associations from advances drawn down from the National Loans Fund. The amount outstanding at the beginning of this financial year stood at nearly £2,000 million for England and Wales. Then the corporation has the role of supervising and monitoring the activities and behaviour of individual housing associations, to ensure that the highest standards are set and maintained. This is a vital function, bearing in mind the large amounts of taxpayers' money involved in supporting housing association development through Exchequer grant: over £750 million of grant was approved by the corporation last financial year.
In order to maintain its confidence in the proper regulation of the corporation's functions, the Government could not accept, therefore, that they should not have the power to appoint the chairman of the corporation, or to approve the appointment of the chief executive. In the same way, it would also be

215
wrong, in the Government's view, for the discretion of the Secretary of State to appoint board members to be constrained in such a way that a majority of the board had to be composed of representatives from specified interest groups. It is precisely because of the desirability of avoiding conflicts of interest that the Secretary of State is required by the 1985 Act to satisfy himself, before appointing a member of the board, that he or she has no financial or other interest likely to have a prejudical effect on their role as a member.
In practice I think that the discretion of the Secretary of State over appointments has been exercised most wisely. Members of the Committee who have spoken this evening have complimented some of the members of the present board. There is nothing about the composition of the present board of the housing corporation, for example, which points to any shortage of experience of the housing association world. A majority of the members are, or have been, actively involved in running an association. And yet the board is still rich in many other skills and fields of experience important to the work of the corporation: architecture, the law, housing finance and public administration. And fields of experience such as financial expertise will be of vital importance in the move to expand housing association activity by attracting sources of funding in the private sector. That might give an indication to my noble friend Lord Moyne. The corporation is fully aware of the need to consult with representative bodies and does so effectively at present. This Bill will add further obligations to consult representative bodies where appropriate.
The amendment also seeks to limit the discretion of the Secretary of State by providing that a proportion of board members be of a certain gender or ethnic origin. In practice again the Secretary of State is very much aware of the need to act equitably in the making of public appointments and will do his utmost to continue so to act. But it would be unnecessarily restrictive of his discretion to legislate in the way proposed. It could also mean in practice that, at any particular time when a vacancy arose, he might be prevented from appointing a person who otherwise had precisely the skills or experience most suited to fill the vacancy. For all these reasons the Government cannot accept Amendment No. 102.
Turning to Amendment No. 111A, I have again to say that the proposals contained in it would not have effects which were in the best interests of the housing association movement. The main effect of the amendment would be to do away with the Housing Corporation as the central co-ordinating and regulatory body in England. It would be divided into eight or more regional bodies. This cumbersome structure would result in a great deal of extra administration and duplicated effort, without any obvious potential for any compensating gains in terms of greater efficiency or a better end-product. It would also mean that functions such as planning for investment priorities nationally, and the regulation and supervision of housing associations generally, would have to be shifted to central government. One of the purposes of Part II of this Bill is to delegate
216
more of the functions of the Department of the Environment to the Housing Corporation. The reverse of this would happen under this amendment, with many more functions ending up in the Department of the Environment. I do not believe that the noble Lord, Lord Ross of Newport, wants that.
Again, in practice it is a fact that the Housing Corporation is most sensitive to the needs of different regions. It delegates much of its executive work to its existing network of regional offices and its regional managers frequently consult with interested parties locally. The corporation would in fact like to delegate more decision-making to its regional managers. This process will not be improved upon by the approach advocated in the amendment.
I hope that I can give some reassurance to Members who have expressed concern at the potential growth of the Housing Corporation, particularly to the noble Lord, Lord McIntosh. It is true that it will take on important new functions under the Bill. However, many of those are only a natural extension of the activities which the corporation is already carrying out as the agent of the Secretary of State, or as the body responsible for ensuring high standards of probity in the housing association movement. There is emphatically no danger of the corporation being expanded to 10 or 20 times its size, as has been alleged.
Perhaps I may turn to the main point of the noble Lord, Lord McIntosh of Haringey, namely, that it is an undemocratic and unelected body. At the end of the day the Secretary of State is responsible to Parliament and has to answer in another place for what goes on. Therefore, democratic accountability is there.
7 p.m.
Lord McIntosh of Haringey: I listened with great interest to the response of the Minister. On the growth of the Housing Corporation he has made an assertion and has not given any evidence to indicate that it will do anything less than grow in proportion to the number of properties with which it deals. He has not given me any indication that it will not grow more because of additional responsibilities placed upon it.
The Minister's speech was interesting because it concentrated on some aspects of the amendments rather than the principle of accountability. In particular he criticised a provision in the amendments that a majority of the members of the board would be appointed as representative of the various bodies specified in the amendment. Therefore, is he prepared to take the proposal away and look again at the prospect of a minority of the members of the board being appointed as representative of those interests and the remainder being appointed by the Secretary of State?
Before the noble Lord responds to that, perhaps I may ask him whether he would be encouraged to think again about that if we withdrew the suggestion that the chairman and the chief executive should be appointed by the board rather than by the Secretary of State. I am reluctant to do that because I believe that the appointment by the board of the chief executive in particular is of great importance. But if

217
we could make progress in the representativeness of at least a minority of the members of the corporation we might be willing to moderate the suggestions put forward in this amendment. I do not know whether he feels able to respond in any way to those suggestions.
Lord Brabazon of Tara: At this moment I am not able to respond very positively to the suggestion. If the noble Lord tables what I would call a slightly less draconian amendment, we should have to look at it on its merits. But I cannot give any assurance that we would look at it particularly favourably.
Lord McIntosh of Haringey: I did not expect any more than that. The noble Earl, Lord Caithness, will no doubt read what has been said. I believe that he is the Minster responsible for housing, and he may be in a position to be more positive. Although the detail may be questionable, I believe that the thrust of the amendment is still valid.
Similarly, as regards the amendment of the noble Lord, Lord Ross of Newport, which I said I was speaking to and failed to commend adequately, it does not seem to me that the objections made by the Minister have great force. For example, it would be perfectly possible for these regional housing corporations in England to set themselves up with a chairman and committee which could cover the whole of England and which would fulfil the coordinating functions by which the Minister sets such great store. None of those regions would be significantly smaller than Wales; and were it not for the difference between the Principality and the regions of England, which on this Bench in particular I dare not minimise, it would be equally good sense for the regions of England to have their own housing corporations, in the same way as the Principality of Wales. I do not believe that that question was adequately answered, and I am sure that the noble Lord, Lord Ross, will feel free to come back to this at a later stage if necessary.
Lord Ross of Newport: I should like to comment on the noble Lord's suggestion. I have no objection to the Secretary of State appointing the chairman of the Housing Corporation, but I believe that it should be up to the board to appoint the chief executive. The hoard should appoint its chief executive and the regional boards should appoint their chief executives. I should like to put that on record.
Lord McIntosh of Haringey: We are faced with a body which will grow very substantially despite the Minister's denial. We are faced with a body which, quite unlike the Training Commission, which is an analogy that we must make, does not have any representation from outside interests except by the goodwill of the Secretary of State. After all, the Training Commission, and the Manpower Services Commission before it, is the prime example in this country of the tripartite composition of public bodies which is such a strong feature of the European Community, in which we are becoming increasingly involved as 1992 approaches very quickly.
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The analogy of the composition of the Manpower Services Commission and the Training Commission, with employer and union representatives as well as government representatives, is not threatening to the Government. This tripartite membership has led to conflict on occasion but has enabled the Manpower Services Commission to do a more effective job in securing the co-operation of employers and trade unions in its work.
I seriously suggest to the Minister that the Housing Corporation will be stronger if those who live under its sway, are dependent on its finance and need to influence its policy have a statutory right of membership on the body. It is not something which is outside the existing experience of the Government or government policy in other departments in other spheres. I strongly commend this view to the Committee. I hope that at a later stage it will be possible to come back with amendments which put at rest some of the fears expressed from the Government Front Bench. However, because there are a number of matters which need to be thought about again in detail on the ideal composition of the Housing Corporation, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 48 [Permissible purposes, objects or powers]:
Lord Brabazon of Tara moved Amendment No.
103:
Page 35, line 41, leave out ("Housing Associations Act 1985 ("the 1985 Act")") and insert ("1985 Act").
On Question, amendment agreed to.
Clause 48, as amended, agreed to.
Clause 49 [Guidance as to management of accommodation by registered housing associations]:
Lord Brabazon of Tara Lord Brabazon of Tara moved Amendment No.104:
Page 37, line 21, leave out ("Housing Associations Act 1985") and insert ("1985 Act").
On Question, amendment agreed to.
Clause 49, as amended, agreed to.
Clause 50 [Housing association grants]:
[Amendment No. 105 had been withdrawn from the Marshalled List.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 106:
Page 38, line 31, at end insert ("Such determination shall specify the manner in which housing association grant shall be paid in connection with housing activities where a local authority has provided promotion and assistance in accordance with section 58 of the Housing Associations Act 1985.").
The noble Lord said: I should like to express my gratitude for the support of the noble Baroness, Lady Faithfull, and the noble Lord, Lord Seebohm, who had tabled an identical amendment to Amendment No. 105. Since my amendment and that of the noble Lord, Lord Ross of Newport, was tabled after theirs, I believe we should have withdrawn our amendment and appended our names to theirs, but they were

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good enough to do it the other way round, which is why I move the amendment.
I believe that everybody is agreed that the ability of local authorities to continue to provide loan finance for grant-aided housing association projects is important. The Government have indicated that they wish that to continue, and housing associations like to think that there is more than one source of funding for new projects. In that way they are not simply dependent on a single source and not threatened if for any reason they fall out with one particular funding body.
It is also true that local authorities have an understanding of local housing needs because of their much greater involvement with housing in the area. Therefore they are able to put the money at their disposal into housing association projects which are more likely to fulfil local housing needs. I think it would be generally agreed that it is a good thing that that should continue. Sections 41 and 46 of the Housing Associations Act 1985 provide that both local authorities and the housing associations can act as agents for the Secretary of State in passing on housing association grant.
In this Bill Clause 50 takes over and gives the Housing Corporation the sole power to make housing association grants. It must be admitted that there have been difficulties in the 1985 Act. When the local authorities are proposing to make grants the Department of the Environment insists on carrying out its own double scrutiny and on looking at schemes in Marsham Street which have already been looked at by the local authority. Whatever the reasons for that may be—
I do not think it is appropriate to go into them now—the fact is that the approval procedure for local authority grants to housing associations has been slower and more cumbersome than for the Housing Corporation, because principally the Government have been more willing to give latitude to the Housing Corporation than to local authorities. Therefore, schemes which are funded by the Housing Corporation tend to go through more quickly than local authority funded schemes.
Clause 50 is certainly wide enough to allow the corporation to pay housing association grant, because only the corporation can pay housing association grant on local authority funded schemes as well as on housing corporation funded schemes. In May the Government said that that was the intention and that it was their policy that housing association grant would continue to be paid on local authority funded schemes as well as on Housing Corporation funded schemes. But it is not good enough for that to be a statement of intent for the Government, because the Government could very well reverse the statement of intent and change quite dramatically the situation which now exists and which would continue under the statement of intent.
In this amendment we are giving statutory effect to the statement which the Government made in May about restoring to local authorities the statutory ability to provide funding to grant-aided housing association schemes, which it is now proposed to replace by a statement of intent.
I think the noble Lord will be able to say in reply that our objectives are the same as those of the Government. I hope he will recognise that to have it on the face of the Bill is a real improvement, a real protection. Undoubtedly, we shall have to do something about the speed of approval of local authority schemes, but to maintain a diversity of funding is a very sound principle. Such a principle, which increases the ability of housing associations to respond effectively to local needs, is of real benefit to housing associations and is recognised by the housing association movement as being of real benefit. I believe that the amendment will therefore commend itself to the Committee. I beg to move.
Lord Seebohm: I wish to support the amendment. It is the result of long conversations which we have had with the National Federation of Housing Associations, and it seems to me that it is in accordance with that which the Government want. It is more in the nature of a tidying-up amendment than anything else. Otherwise, there is nothing fundamental about it.
Lord Ross of Newport: Obviously I also speak in support of this amendment. I know from the housing association movement that relations with local authorities have been close and good. Certainly, in days gone by local authority funding was probably regarded rather more highly than that from the Housing Corporation. That has changed as years have gone by, as money has become very tight within local authorities.
I understood from a statement made by the Minister in another place recently that it was not the intention of the Government totally to freeze out local authority funding. I very much hope that we shall hear more on that from the Minister now.
7.15 p.m.
Lord Brabazon of Tara: I hope that I shall be able to say rather more. There has been a long tradition of local authority support for housing associations, which we greatly value. However, it is widely recognised that the present arrangements for paying housing association grant (HAG) on local authority sponsored schemes are very unsatisfactory, involving much delay and confusion of accountability. The noble Lord, Lord McIntosh, referred to the difficulties that were encountered.
Because of those problems we had indeed wondered whether it would not be better to discontinue entirely the availability of HAG on such schemes under the new regime. However, my honourable friend the then Minister for Housing and Planning announced on 23rd May our decision to authorise the Housing Corporation to pay grant on schemes which local authorities decide to support with loans. The idea is that the local authority alone should be responsible for deciding whether public resources should be committed to a scheme while the corporation alone should be responsible for vetting it for grant. This should get us away from the problems of overbureaucratic scrutiny which have dogged the present arrangements.

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The details of the system are being thoroughly discussed with the local authority associations, representatives of the housing associations, and the Housing Corporation; and if the proposed amendment has been prompted by any particular worries about how the new arrangements will work these can be looked at in the discussions.
Clause 50 as it stands enables the corporation to pay HAG on schemes supported by local authorities, as by any other lender. I hope I can dispel any concern there may be that the corporation would not be evenhanded in its treatment of local authority sponsored schemes. First, there will be no question of the corporation seeking to ration the schemes. HAG on schemes assisted by local authorities will be outside the corporation's cash-limited programme. While the grant will actually come from the corporation, the entire cost of the scheme, including the grant, will be a charge on the local authority capital allocation. So it will be for the local authority to decide what schemes should go forward, and any scheme which satisfies the HAG rules will automatically attract HAG. The HAG rules themselves will be for the corporation to specify, but they will be in accordance with principles which have to be approved by the Secretary of State and the Treasury and on which the housing association movement has to be consulted. So the corporation would certainly not be allowed—even if it had any inclination—to put bias on the working of the system against local authority sponsored schemes.
The amendment would require the arrangements for payment of housing association grant for local authority sponsored housing schemes to be specified in the corporation's determinations.
I can, however, assure noble Lords that such an amendment is not necessary. Clauses 50 and 53 already provide for the corporation to specify such matters as the grant procedures and the method for calculating and paying grant for the full range of eligible schemes, including those sponsored by local authorities. This will be done in accordance with such principles as the corporation may determine with the consent of my right honourable friend the Secretary of State for the Environment, and in most cases the Treasury.
More importantly, I do not think it desirable that Clause 50 should make specific reference to local authority sponsored schemes in this way. There are numerous categories of schemes and arrangements for funding that will need to be covered in the determinations. Indeed, the corporation's determinations will need to be very comprehensive in their coverage. They will need to spell out not only the procedures that will be necessary for schemes using different manners of financing but also those required for each type of scheme, of which there is a wide variety. For instance, the arrangements for schemes for rent developed as part of a programme by a large, financially strong housing association will be different from those for similar schemes developed on a one-off basis by a small, relatively weak association. The arrangements for home ownership schemes will be different again.
To mention just local authority sponsored schemes when there are so many other matters, many of them
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no less important, would be to unbalance the clause and make it very difficulty to work. However, with the explanations and assurances I have given, in particular that we see a considerable future role for local authorities to promote and fund housing association projects, I hope that the noble Lord will feel able to withdraw the amendment.
Lord McIntosh of Haringey: I fear that the Minister has done little more than repeat the assurances given by his colleagues in May. We never doubted that it was the Government's intent as of May or July 1988 to continue to have local authorities playing an important role in the funding of new housing association projects. That is not the issue in question. We are saying that, while intent can change, more effort is required to change statutes. We think that the intent should be enshrined in statute rather than left to the whim of governments, who may be less favourably inclined to local authorities than the present Government—if that were possible.
I am intrigued by the concept that the local authority will provide the basic funding and the Housing Corporation will be responsible for the allocation of housing association grant. I do not think that that concept has got through to all those who have been consulted. It certainly has not been put to me as the pattern to be implemented in the future.
The Minister has said much that demands serious attention before we consider what to do at a later stage. I therefore beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Ross of Newport Lord Ross of Newport moved Amendment No. 107:
Page 38, line 34, at end insert ("except that no condition, whether imposed by the Corporation or by the Secretary of State under this Chapter, may specify that any surplus remaining after the payment of grant and incurring of expenditure on it shall be paid to any source").
The noble Lord said: This is intended as a paving amendment to Clause 55. If it is agreed to, I suppose that it would make something of a nonsense of Clause 55. Clause 55 allows the Secretary of State to direct housing associations to set up rent surplus funds, from which he can then claw back surpluses accruing from higher rents. As the Minister knows well, the National Federation of Housing Associations has for long felt that this should be dropped.
As to what the amendment adds to the Bill, it is proposed that there should be no restrictions on a grant made by a housing association, which should not be made subject to repayments of any kind. Housing associations will increasingly face problems as the years go by because for housing stock—particularly that requiring rehabilitation—maintenance and repairs will become more costly and grants will be reduced from 90 per cent. to 70 per cent. so that fewer funds will come from the Housing Corporation. It is doubtful whether it will be possible to get much out of the private sector. I know the Government say that they wish to see more funding from the private sector. However, the private sector is not likely to be very enamoured of housing associations that have little cash in the bank.

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Therefore, it will be necessary to build up the surpluses.
My own association wrote to the Minister in May. It wanted to use the grant redemption fund (which is now to be known as the rent surplus fund) to build up its reserves. It suggested also that the rent surplus fund might be used to alleviate what it regards as excessive rent increases in order to establish a more equitable rent system. That met with little favour from the Minister. We were told that how the rent surplus fund would work was still a matter of discussion between the Department of the Environment, the Housing Corporation and the National Federation of Housing Associations. It remains the wish of the NFHA to persuade the Government to abolish it.
As I said, this is a paving amendment to Clause 55, and proposes that grants should not have particular requirements tied to them. When a grant is made, it should be used for a particular purpose and the rent surplus fund should remain in the vaults of the housing associations to use as they think fit. If the Government want the housing association movement to thrive, they should not threaten that money will be claimed back, sometimes with interest—that is what Clause 55 says. While it is true that the Government claim that money clawed back in fact goes back into the housing association movement, the housing associations would much prefer to run their own affairs and be allowed to build up their own surpluses. It is necessary—the Government have
accepted this—for the housing associations to set up sinking funds for repairs. If they do not know whether they will be allowed to retain their surpluses as they build up slowly—and indeed, not many have a great deal in the way of surplus, so let us get that straight—how on earth can they plan ahead sensibly a sinking fund for repairs? I beg to move.
Lord Graham of Edmonton: I support the amendment. It asks the Government to trust housing associations. There is no disguising that the national federation, representing all its members, has had a dislike of the previous arrangements. What the Government propose is a similar arrangement but under a different name. I ask the Minister to be serious about putting into effect the Government's expressed wish to expand the housing association movement. I do not dispute that the Government wish to expand and strengthen housing associations because they have for a long time recognised the value of this third arm in housing—municipally-owned housing, the owner-occupied sector and housing association and co-operative forms of management and ownership. Nor do I dispute their integrity or question their motives, but we are talking of hard practicalities.
Housing associations are responsible bodies. They too wish to have some independence. By good management and skill—and often by luck—they
build up surplus funds. However, if the Government can call these in at will, the desire of the housing associations to be more enterprising than they might otherwise be will be sapped. Housing associations must be able to build up their money reserves and,
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when they want to be enterprising and undertake a major programme of renovation and repair, have some funds of their own. We all want some independence. The Minister, his family, his wife and his friends surely like to feel that they are free from interference. We plead with the Government not to perpetuate what has been a bone of contention in the past between the housing association movement, the Minister and his advisers and the Housing Corporation.
Many risks are involved. With the best managed housing associations in the world, not all will be best managed. Some are feckless and some are poorly managed professionally. It is a broad church. Given that they seriously want to expand and provide the opportunity for participation and modest ownership, we ask that these groups of people, some of whom are professional and some of whom are volunteers, be given a little confidence.
We want the Government also to inject a little certainty for housing corporations about the future. It is not good for them always to be beholden to the whim of government or a housing corporation. What about bureaucracy and the costs involved? What about the need for small housing associations to maintain financial control and be able to evaluate profit and loss and aggregated profit on properties in order to put the surplus into a fund, with all the paperwork that is involved? In the end the Government will be taking away money from those who have made it, they will make the money go round so that, in the fullness of time, the money taken from the housing association will come back and go round yet again.
The Government might fairly say that their job and that of the Housing Corporation is to manage the whole of the movement. The Minister should listen, and this Minister might, to the people at the sharp end—those concerned with the housing associations. They are saying "Goodness gracious, give us a little freedom and the opportunity to manage our own affairs." The Government may wish to see some private finance injected into the housing associations, but that will be inhibited unless they are allowed to build up, retain and use the surpluses that they make from managing their business.
We believe that the Government have an opportunity under the new arrangements to demonstrate that they have confidence, as we have on this side of the Chamber, in the housing association movement. The sums involved are modest. I do not have precise figures but I am told by the national federation that they are modest in the totality of the scheme. The Minister mentioned a figure earlier of £730 million which is managed and recycled by the Housing Corporation. Here we are talking about a few thousand pounds. We are not talking about a few thousand pounds to waste; it can be circumscribed in a number of ways. I very much hope that the Minister will say kind words which might enable the noble Lord, Lord Ross, to withdraw his amendment.
7.30 p.m.
Lord Moyne: I shall speak to Amendment No. 107 and the Motion to omit Clause 55 from the Bill at the

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same time. I am not clear as to the effect of missing out Clause 55 or of truncating it by Amendment No. 107. I am not clear whether the old grant redemption fund would still apply and whether the whole of the surpluses would have to be handed back as at present.
On Second Reading I asked my noble friend for an assurance that he would at least allow part of the rent surplus funds to be retained as sinking funds for major repairs. That assurance was generously given, though without commitment as to the proportion. I felt that half a loaf was better than no bread, if it was to be a half, but I was asking for a whole loaf.
My noble friend was kind enough to say that I had not yet persuaded the Government that the whole surplus should be retained. I venture to hope that my argument that those who have made talents fructify should be allowed to retain the results for further fruition, combined with the persuasive arguments expressed today, may induce the Government to consider introducing an amendment of their own on Report by which proportions will be fixed. Let us say that it should be half for the sinking fund and half for further investment in bricks and mortar. A slice for the Housing Corporation, to which the movement owes so much, would not be unreasonable but would confuse the existing pattern by which the corporation is financed by central government.
I believe that it will he best to fix proportions in the Bill rather than to leave them for endless discussion and negotiation. On the assurance that such an amendment will be considered by the Government, I hope that these amendments might be withdrawn.
Lord Brabazon of Tara: I am not entirely clear whether the noble Lords, Lord Ross of Newport and Lord Graham of Edmonton, were speaking to Clause 55 stand part.
Lord Ross of Newport: I was speaking to the amendment and I pointed out that the inevitable result of passing this amendment means that Clause 55 will have to be drastically rewritten.
Lord Brabazon of Tara: If I may, I shall answer both debates and include Clause 55 stand part at the same time. I must tell the noble Lord that I do not believe that his amendment would have the effect that he wishes. It seems that it is intended to emasculate Clause 55 by preventing the Housing Corporation from making payments of grant conditional on the later repayment of surpluses. Clause 55 is self-contained and the duties that it imposes on associations are not dependent on conditions having been made on the payment of grant. Therefore, the amendment would have no effect on the operation of the rent surplus fund arrangements in Clause 55.
Turning to Clause 55 itself, which I believe to be the main point of the debate, in order to understand its purpose it is necessary to go back some way into history and also to delve into the technical details of the current method of financing housing association development. Since 1974 the greater part of the cost of an approved housing association project (typically 85 per cent. of it) has been met by housing association grant. HAG is paid as a lump sum when the project
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has been completed. and its amount is calculated so as to bridge the gap that would otherwise arise between the associations' reasonable expenditure on the project and its estimated income—that is, chiefly the income it can obtain from rents, which, as we have seen, are at present pegged to the fair rent level determined by the rent officer.
The important point to note is that this is a single calculation, based on the associations' estimated costs and income at a particular point in time. But unfortunately both of these things will tend to change over the years. If costs and income rise broadly in line with each other, there is no difficulty. But all past experience is that they tend not to, for one very simple reason. The 15 per cent. or so of the project cost which is not paid by HAG is normally financed by a loan. That loan normally takes the form of a conventional mortgage.
It is characteristic of the conventional mortgage that annual repayments stay constant in cash terms over the years (leaving aside the effect of fluctuations in interest rates) and many housing association loans were in any event taken out at fixed interest rates, whatever is happening to the general level of prices and earnings in the economy. Loan charges are an important element of associations' costs. Since prices and earnings continue to rise, though mercifully no longer at the tremendous rate we experienced in the 1970s, and since this rise is reflected in the level of fair rents, it follows that associations' costs arising from a particular project tend to grow less fast than their rent income.
The Public Accounts Committee of another place drew attention some years ago to the uncovenanted bonus which associations were receiving in this way over and above the very generous grant they were given towards the capital cost of their schemes. On its recommendation a corrective mechanism, called the grant redemption fund or GRF, was introduced in 1980. This is designed to recover any surplus rental income which accrues on grant-aided projects as rents rise faster than costs. It is often, and quite unfairly, represented as a tax on the housing association movement. It is of course nothing of the kind. It is there merely to ensure that an association is not put in a more favourable position than was intended when the grant was first paid to it. Nor is this merely a one-way street. There is separate provision for revenue deficit grant to be paid to associations which for some reason outside of their control incur an overall deficit on their operations.
The GRF is a complicated arrangement, deeply and understandably unpopular with associations. Nor has it been very succesful. By a variety of accounting procedures, associations have managed to minimise their GRF liability. One of our objectives in designing the financing arrangements for new housing association schemes under the Bill and under the current pilot programme of schemes funded by a mixture of public and private finance has therefore been to tackle at source the problem the GRF was brought into force to deal with. The key to this is the nature of the loan involved. Our troubles arise, as I have explained, from the use of conventional mortgages. If instead associations raise the money for the balance of the scheme cost through one or more

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of the available sources of low-start money, index-linked loans, deferred interest loans, deep discounted stock issues or whatever, the burden of loan charges will be less formidable in the early years and will broadly keep pace with their other costs and their rental income thereafter. Initial input of grant can therefore be lower than it would otherwise need to be, and no corrective machinery will be required thereafter.
However, the greater part of the associations' stock was funded under the present grant regime, and the problem has not gone away. Indeed in one respect it is more significant than before. Associations will no longer be constrained by fair rent controls on re-lettings to new tenants of their existing stock. We would expect them to take the opportunity to increase their rents on those dwellings to levels comparable with those they will be charging on schemes funded under the new grant regime. Their capacity to generate surplus rental income will therefore be increased.
At the same time, however, new uses for associations' rental income will arise. Two are particularly important. First, we think it right that associations should increasingly look to their own resources to fund major repairs to their stock. At present 100 per cent. grant is available for this purpose. But the supply of course has to be rationed and inevitably a fair amount of bureaucracy is entailed. It would be far better for associations to set aside a proportion of their rental income each year to provide for their future repair needs. Secondly, many associations have little or nothing in the way of reserves to draw upon in the event of unexpected costs arising. It is desirable that they should build up rather more of a cushion for themselves in future, not least as the new grant arrangements will require associations to accept a greater responsibility for the cost of their schemes, and of the financial consequences of these, than they do today. A healthy reserves position will also be encouraging to potential private lenders.
These new demands on associations' rental income, particularly as regards major repairs, will be substantial in the early years and any successor arrangement of the GRF must take proper account of them. But they will affect different associations to different degrees. Those most fortunately placed may well before long find themselves with surplus rental capacity significantly exceeding their needs, whereas for many others it will be many years before they can fund all their major repair requirements for themselves. It is necessary therefore to ensure that the taxpayer continues to enjoy the protection which the Public Accounts Committee called for, though equally necessary to devise new machinery to fit the new situation and to remedy the difficulties of the existing GRF arrangements.
Clause 55 therefore provides for a rent surplus fund, or RSF, which will replace the GRF. This gives the Secretary of State far greater flexibility in determining the rules under which recoverable surpluses will be computed than exists under the GRF provisions, and my department is already discussing intensively with the Housing Corporation
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and the National Federation of Housing Associations how the RSF might operate. Among other things, it is intended that new schemes funded with low-start loans should be excluded from the RSF altogether; that generous allowance should be made in the calculation for the funding of future major repairs; and that associations should also be able to retain a proportion of their additional income in order, for example, to strengthen their reserves.
It is only to be expected that the housing association movement would press for Clause 55 to be removed altogether. A number of associations have indeed worked themselves into a great lather of indignation over this issue. Any recipient of grant would of course prefer to retain the money indefinitely, even if circumstances changed greatly for the better.
The noble Lord, Lord Graham, said that only a few thousands pounds were involved in the grant redemption fund. I fear that he has been misinformed. Receipts from the grant redemption fund amount not to a mere few thousand pounds but to many millions.
Lord Graham of Edmonton: Per association.
Lord Brabazon of Tara: I readily concede that it is a modest sum in comparison with the total resources available for grants and loans to associations from——
Lord Graham of Edmonton: When I was talking about a few thousand pounds, the figure was per association. I was making the point that the administrative costs and the bureaucracy involved could well be disproportionate. Of course millions of pounds are involved globally but I was referring to the figure per association.
Lord Brabazon of Tara: I apologise if I misunderstood the noble Lord.
My noble friend Lord Moyne made the point that the proportion of rent surplus which associations can retain should be fixed on the face of the Bill. I can understand his preference for a bird in the hand rather than two, or perhaps merely a half, in the bush. I have to say, however, that our first thoughts in this matter might not turn out to be our last thoughts. Were we to provide for a specific percentage in the Bill we might all too soon conclude that it was the wrong percentage—either too generous or too mean. We would then have to await a suitable opportunity for amending legislation.
I have given a rather lengthy explanation of why we believe Clause 55 should stay in the Bill. I hope that, with what I have said, the noble Lord, Lord Ross of Newport, will feel able to withdraw Amendment No. 107 and that Members of the Committee will not feel it necessary to press for the exclusion of Clause 55 from the Bill when we get to that stage.
Lord Moyne: I accept what my noble friend said about flexibility in the future, but I was puzzled by him saying that certain things might be in excess of

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needs. A charitable housing association "needs" to build as many houses as possible. I cannot see how anything can be in excess of their needs.
Lord Graham of Edmonton: Answer that one.
Lord Ross of Newport: We have had a lengthy reply and many of us will want to study it because it was given at a fair old pace. I am an auctioneer and I speak far too quickly. When I left the other place the Hansard writers said "Thank God". That is entirely right because I spoke at 260 words a minute. The Minister was not very bad.
He gave us some hope in that negotiations are still going on and he appreciates that at least some of the funding should remain in the hands of the housing associations both to build up sinking funds and to build up their own reserves so that they can perhaps attract more finance from the private sector.
I know that many housing associations would say that there is far too much bureaucracy from the corporation when they are buying land and in regard to when they can actually build on it. They buy the land one year and perhaps build on it two years later. If only they could build up sufficient funds they might be able to get some of these schemes off the ground much earlier. There is definitely a great loss of money in that respect when land is lying idle and one cannot put bricks and mortar on it.
However, I recognise that the matter is still continuing. It is two months or so before we come back at Report stage. Perhaps we may reconsider it and get a more up-to-date report from the Minister on that occasion. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7.45 p.m.
Lord Dean of Beswick Lord Dean of Beswick moved Amendment No. 108:
Page 39, line 10, at end insert—
("(6) In exercising the powers under this section, the Corporation shall commit no more than one quarter of its Approved Development Programme to housing association housing activities partly funded by loans from the private sector until three years after the commencement of this Act.").
The noble Lord said: This amendment seeks to limit the speed at which housing association funding is moved to mixed funding—part private sector money—by limiting the proportion of the Housing Corporation's funds which can be used for these types of scheme. Such a limit would enable the move to be genuinely experimental and a proper assessment to be made of the impact on rents and the financial risks to associations. I take the view that as it stands the Bill would in some way inhibit the housing associations from fulfilling their traditional role.
The National Federation of Housing Associations, while being willing to work with the Government and the Housing Corporation to draw private sector money into housing association funding, has expressed concern at particular aspects, which can be summarised as follows. Rents: these should remain at a level affordable for the existing low income groups
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housed by housing associations. This matter is dealt with more fully in the amendment on rents. However, I make the point now that the role adopted over a number of years by the National Federation of Housing Associations in caring for people at the lower end of the scale could be jeopardised quite severely by the proposals in the Bill. On risks, the payment of housing association grant up front at the beginning of a scheme means that housing associations would bear all the risks of an overspend because of unforeseen costs.
The Government have now responded to that by introducing a form of risk sharing between associations and the corporation for associations which are unable to bear the full risk. Small associations, including black and ethnic minority associations and co-ops, are unlikely to have an asset base which would attract private investment. They are a continuing substantial part of the approved development programme remaining for full public funding. Those associations will either never get off the ground or their future development will be thwarted. In some areas that type of association has started to fill a vacuum which we believe no one else would have been able to pick up or even have attempted to pick up.
As regards the speed of change, the National Federation of Housing Associations is concerned that change should be gradual. The effects on rents and small associations need to be carefully assessed, as does the ability of housing associations to attract private finance on reasonable terms and to bear the risk that the Government are asking them to take. Of course for private finance there must be an attraction, and there will have to be some underpinning before private finance will be attracted. That is why I think that the situation as it stands at present in the Bill would have the opposite effect to this idea. I believe it could irreparably damage, in some respects beyond recovery, the role of some of the associations.
However, the amendment concerns itself with the speed of change. In another place the Minister of State for Housing always referred to the mixed funding scheme as experimental, indicating that the approach must be a careful one and the effects of mixed funding closely monitored. Further, the noble Earl, Lord Caithness, referred to this year's pilot mixed funding programme on 11th July (at col. 675 of Hansard). However, the indications are that despite such assurances the DoE and the Housing Corporation are pressing ahead at speed with the mixed funding scheme, without waiting for its effects to be properly assessed.
There are dangers as well as opportunities for housing associations in working with private finance. At present there is too little experience available, especially for smaller organisations, for the change to mixed funding to be other than the experimental approach indicated in both places.
As a former chairman of a large municipal housing authority, I recall that when the housing associations first started to appear—I am talking about the housing associations as we see them today—there was a great deal of suspicion, and to some extent resentment, among some of the local authorities concerned with housing about their role. However,

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time has shown that housing associations, as I and my colleagues believe, are fulfilling a vital role which is complementary to the public sector. We believe that it should be on an expanding basis because it can certainly be more trusted by virtue of historical events than some of the bad practices which have gone on in the private sector. I think that it should be receiving all the encouragement that the Government can give it if they are really serious about providing housing for rent for people at the lower end of the scale.
From what the Minister said last night in reply to some of the amendments, there will be very little housing in the private rented sector which will be available to the bottom end of the social scale when the Bill becomes enacted. I am not using exactly the same words but I am explaining the sentiments behind what the Minister said to the Committee last night. He conceded that the lower end of the scale—namely, the homeless—would not to any substantial extent be affected by what is before us.
I am making the case on behalf of my colleagues and other Members of the Committee on this side of the Chamber, and perhaps some noble Lords on the Government Benches, that the housing associations have a proven record. They are delivering the goods. We believe that the Bill as it is presently structured will inhibit them in doing a job which is welcomed by the community and we think they should be allowed to get on with that job without any such inhibition. On that basis, I beg to move.
Lord Brabazon of Tara: An important underlying objective this Bill is to make it easier for housing associations to co-operate with the private sector in the development of new housing schemes. The reason for that is quite clear. If public and private sectors can co-operate, where up to now only the public sector has been involved, we will be able to make our public sector resources stretch further, and get far more homes for the same money. Let me briefly explain the background.
At present it is housing association grant which bears nearly all the burden of the Housing Corporation's approved development programme. Where a new scheme is developed, a very large proportion of the capital costs is met by grant, and a residual public sector loan is left, to be serviced by rental income calculated by the rent officer under the fair rent system. So there is no private sector financial involvement. And yet housing is pre-eminently a field in which the private sector has always been well prepared to invest. This has not, it is true, been the case in recent decades in the field of housing for rent for the reasons that we have already discussed in relation to Part I of the Bill and I do not wish to repeat those arguments. They are to do with the notorious complexity of landlord and tenant law, and not least the unrealistic nature of the current fair rent system.
However, with a more rational tenancy and rental regime there is no reason why the private sector should not be prepared to invest in rented housing. This does not just mean private sector provision of new accommodation at market rents. Important
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though that is, we fully recognise the continuing need for substantial public sector input to provide accommodation within the means of the less well off. We will continue to provide for this through the housing associations. But the mere fact that there is an input of grant is no reason to suppose that the private sector will be unable or unwilling to invest.
On the contrary, we have seen in the last year or so the first steps towards a mixed funded programme of private sector loan and public sector grant run by the Housing Corporation. Under last year's initial programme, £30 million was made available and housing associations were able to bid for mixed funded projects to make use of those resources. I am pleased to say that this £30 million was fully committed before the end of the financial year.
In the current year the corporation has set aside £58 million of its approved development programme for a continuance and enlargement of mixed funding. New and more generous rates of grant are now available, ranging from 50 per cent. in low cost areas to 75 per cent. in high cost areas. The corporation received no less than £700 million of bids to take up these resources, and it has in fact committed over £100 million to help ensure a complete spend. That is all very encouraging. What is more, it is all happening in advance of this legislation, which will ensure that new lettings are granted on assured tenancy terms. Once the legislation has received Royal Assent, we are confident that there will be further interest from housing associations in the mixed funded programme.
At the levels of grant we have announced for this year we are confident that associations will be able to provide accommodation well within the means of their traditional client groups. We are not contemplating market rents or anything like that. Mixed funded schemes will be a continuance of existing programmes providing for those who need subsidised housing. We will monitor the grant rates to ensure that that is what is being achieved. I hope that will give some reassurance to the noble Lord.
I turn now to the noble Lord's amendment. It seeks to limit the scope for mixed funding to a maximum of one-quarter of the Housing Corporation's total investment programme for the next three years. Why should one do that? At an average grant rate of 60 per cent., which is the average applying this year, mixed funding delivers two-thirds more dwellings for the same input of grant as 100 per cent. public sector funding. That is a major prize for the housing associations to grasp, and many of them are trying to grasp it with enthusiasm. We wish to give them all the encouragement we can to go further down that path as rapidly as possible. I see no case for imposing any artificial restrictions of the kind the amendment seeks to impose.
Members of the Committee are concerned that a shift in emphasis towards mixed funding may mean that there is no place in future for traditionally funded schemes. That is not so. We recognise, and have always recognised, that there are certain kinds of schemes, and also certain associations, which for a variety of reasons will find it difficult to attract mixed funding. That may apply, for example, to some types of special needs schemes. And in some cases

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associations will he too new or will lack the resources to participate in mixed funding. They will need to be able to offer some security to private lenders. At the present stage in their development, they may just not have any to offer. For such reasons, I repeat, we accept the continuing need for public sector loans as well as grant to be available. In some cases, schemes will continue to be wholly dependent—or almost—upon government grant.
We should expect the Housing Corporation to continue to provide a substantial level of assistance to schemes, or to associations in the categories I have just described. However, I repeat the point I made earlier. It would be an artificial restriction on the Housing Corporation to limit its contribution to mixed funding to just one quarter of its approved development programme. It would be wrong to suppose that the build-up towards higher levels of mixed funding must be as slow as the amendment proposes. We cannot at this stage be certain of the level of mixed funding which can be achieved or how quickly. We should like it to be the most which is compatible with the corporation continuing to fulfil its basic role; that is, to provide, through the housing associations, good quality housing for a variety of groups which could not afford it without subsidy.
With those assurances and for those reasons, I hope that the noble Lord will feel able to withdraw the amendment.
8 p.m.
Lord McIntosh of Haringey: Before my noble friend responds, I am bound to say that that was an extraordinarily sanguine response to the amendment. It reminds me of the bursar of the Oxford college who wanted to criticise the college's investment policy on the grounds that the previous 200 years had been totally exceptional in economic policy. When the Minister says that there has been plenty of money for investment in housing except in the past few decades, he seems to be whistling in the dark. During the past few decades, in particular, the whole climate of investment in housing has been changed because we have subsidised private ownership on a large scale through tax relief on mortgages. The Minister did not even refer to that major consideration in housing investment in his response to my noble friend.
Lord Brabazon of Tara: I did however refer to figures for the past year and the current year and how it looked as though investment was coming in for the programme.
Lord Dean of Beswick: I wish that I could receive what the Minister said with some gratitude. I wish that what he said would help reach the Government's objective. I am certain that it will not do so. This part of the Bill is based upon attracting private funding. It may have gone over the Minister's head, although it did not go over mine because I have been involved in large and medium scale housing development in the past, but what one can build and fund often depends on the interest that one pays. I do not know how
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housing associations can plan when we have the bank rate yo-yo-ing.
The Government believe that private money will be made available to housing associations at an interest rate that will enable them to fund developments and redevelopments at only reasonably increased rents. I consider that the Government are whistling in the dark. I do not believe that there is any possibility of that happening because private funding, whatever the Minister says, is not a charitable institution. I do not have any money to invest, but if I were to place some money with a financial institution—a bank or unit trust—it would not suddenly decide that I had given it for charitable purposes and start to make it available to housing associations at such a low interest rate that it almost guaranteed protection to housing association tenants.
I have attended a number of conferences; I do not know whether Ministers have. How to attract private capital into the market for houses to rent is an involved and important subject. It is so unattractive that there are few examples of financial institutions becoming involved. The rents that would have to be charged would be outside the reach of the families that the Government are supposed to be dedicated to assisting. The Minister's response gave me about as much hope as the lancers had during the Charge of the Light Brigade. They did not achieve their objective. It was a noble charge, but few returned. That is the type of thing that will happen with housing associations. They have a tremendous role to play. They are a proven success which should be built upon. We must almost discount the idea that the private sector will play a large part in funding housing associations for the type of people whom the Opposition, and the Government through their Ministers, profess continually to want to help most—the people at the bottom of the social market who have a variety of problems.
Local authorities have almost stopped building council houses because of the huge cut in funding. There is almost a stalemate. Some of the slack may have been taken up by housing association programmes. I hope that the Government will reconsider the effects of what they say the Bill will do. I believe that it will do the opposite. It will be a discouragement. It will retard the further substantial development of the housing association movement that we should all like to see. I should like to read what the Minister has said. I am sure that I have drawn the correct conclusion that the proposals contained in the Bill will do nothing to help that worthwhile and charitable movement expand the role that it has established to help the people who need the type of housing that it can produce.
I should like to read the Minister's long answer and perhaps discuss it with my colleagues and people from the housing associations to see whether I or the Minister have drawn the wrong conclusion. On that basis I beg leave to withdraw the amendment and perhaps come back at a later stage.
Amendment, by leave, withdrawn.
Clause 50 agreed to.
Clause 51 agreed to.
Clause 52 [Recovery etc. of grants]:
Lord Brabazon of Tara Lord Brabazon of Tara moved Amendment No. 109:
Page 40, line 9, at end insert ("but this subsection shall cease to have effect on the day appointed under section 3(2) of the Land Registration Act 1988 for the coming into force of that Act.").
The noble Lord said: I spoke to the amendment with Amendment No. 100. I beg to move.
Question, amendment agreed to.
Clause 52, as amended, agreed to. Clauses 53 to 55 agreed to.
Clause 56 [Duty of Housing Corporation and Housing for Wales in relation to racial discrimination]:
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 110.
Page 44, line 22, after ("Corporation") insert ("and to a registered housing association").
The noble Lord said: I move the amendment on behalf of my noble friend Lord McIntosh of Haringey. Clause 56 applies Section 71 of the Race Relations Act to the Housing Corporation. The amendment seeks to extend it to registered housing associations. I think it will be for the benefit of the Committee and those outside the House who read the debate if I gave a little background. Section 71 states that:
"it shall be the duty of every local authority to make appropriate arrangements with a view to securing that their various functions are carried out with due regard to the need—

(a) to eliminate unlawful racial discrimination; and

(b) to promote equality of opportunity, and good relations, between persons of different racial groups".

We are seeking in Amendment No. 110 to add on page 44 at line 22 that the subsection shall apply to the corporation and to a registered housing association just as it applies to a local authority. We ask the Government to take into account that many of the housing associations which will be formed according to the Government's intention and desire are likely to be formed from housing authority stock. In other words, it is council housing. Under the law councils are obliged to refer to and uphold Section 71 of the Race Relations Act. We are saying that in those circumstances a comparable duty ought to be laid on housing associations to undertake the duty I read out earlier, to eliminate unlawful racial discrimination and to promote equality of opportunity and good relations among persons of different racial groups.
The Minister and the Committee are well aware that many housing associations in areas of inner city stress have high ethnic minority populations. I confess that the performance of some of those housing associations on equal opportunities is patchy, not just in regard to housing but also to employment, management committee representation and racial harassment.
We wish to lay down the duties. To be fair, the Minister is pushing at an open door if he consults the National Federation of Housing Associations. It has taken initiatives, which I applaud, as the Minister might very well do. The NFHA has issued guidance
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to member associations through its race and housing publications, which have been accepted by the Housing Corporation. This complements the Section 71 duties in that it advises associations operating in areas where the black community exceeds 2 per cent. to establish and monitor ethnic minority records for housing allocations, to establish and monitor ethnic minority records for employment, to ensure that ethnic minorities have fair access to their housing, to have regard to the need for translated material for tenants, to establish links with ethnic minority communities, to ensure that their management committee representation reflects the ethnic make-up of the community and to adopt a policy on racial harassment.
We are saying to the Government that there is a need in the area of race to be positive. The national federation has gone as far as it can. We make no pretence. The power of the law, the power of the Government and of what is said in this Chamber could very well do a great deal more than that. We want to see the elimination of discrimination. If the Government are serious, housing associations, whether existing ones or those established by local authorities for the purpose, should be the main vehicles for diversifying existing council housing. It is only logical that similar duties for promoting good race relations should apply to the successor landlords as to the local authority.
I invite the Minister to answer some questions. The Government feel that it is right that councils should have laid upon them the duty to follow the 1976 Race Relations Act, in particular Section 71. If the Government ask their tenants, "Do you want to change your landlord?" and the tenants say yes, is it not right, fair and logical that the obligations to observe the duties under Section 71 of the 1976 Race Relations Act should be passed to the new landlord? In this instance we are talking about a new landlord who could very well be a housing association. We want to see that housing associations are brought into that provision.
If the Government see housing associations as the main providers of social rented housing in the future, it is logical that the Section 71 duties should apply to those housing associations first as they apply to local authorities at present. I am sure that the Minister understands what I am saying, will tell me that he sympathises, that the matter is already being taken care of and there is no need for this amendment. This suggestion has the full support of the national federation, which is doing its best. It wants the Government to match the efforts of the federation. I beg to move.
8.15 p.m.
Lord Brabazon of Tara: The noble Lord has rightly drawn our attention to the importance of the ethnic dimension in housing provision. We believe that this Bill will do much to remedy some of the problems of discrimination which have been referred to, partly by extending the scope of Section 71 of the Race Relations Act 1976 to the Housing Corporation and housing action trusts. I ought at once to mention that Clause 56 was introduced by the Government in another place following moderately and persuasively

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argued representations by the Opposition. We were most grateful for their constructive suggestions, even though we felt unable at the time, as we still do, to go quite as far as we were asked to do.
We are not, however, persuaded that it would be appropriate further to extend the scope of Section 71 by accepting this amendment. There is a strong promotional flavour to Section 71, so that bodies to which it applies have a duty not only to perform their functions in a non-discriminatory way but to take wider steps to secure good race relations and equal opportunities. This is not something we think it is right to impose on bodies which are voluntary in constitution, often small in size, and with a relatively narrow range of activities.
That is not of course to say that we consider it unimportant for associations, or other smaller landlords, to conduct their affairs in a just and nondiscriminatory fashion They are already subject to provisions in the 1976 Act which make it unlawful to discriminate in the provision of services and accommodation and the granting of membership. They will also be subject to monitoring by the Housing Corporation, which will be operating with the strengthened responsibility for ensuring nondiscriminatory behaviour given to it by Clause 56.
Nor is that all. In a new clause which we have tabled and which the Committee will be considering in due course we are proposing to give the Commission for Racial Equality a power under which it could produce a code of practice on rented housing. The code would give guidance on the implications of the Race Relations Act for rented housing and, as we see it, would have wide application to those concerned with the provision of such housing in both the private and public sectors. Registered housing associations would of course be covered, and it would be a requirement of the tenants' guarantee that they observed the code.
In the light of what I have said, I hope the noble Lord will accept that the behaviour of associations in the race relations field will be quite adequately controlled without the needto apply the very wide-ranging provisions of Section 71.
Lord Graham of Edmonton: I have just told my noble friend Lord McIntosh that that was a fair offer. It is certainly the best that I shall get tonight. The Minister said that he recognised the problems that existed and that steps were being taken to produce a code of practice. In those circumstances, it would be churlish if we did not wait to see whether the code achieved our objectives.
I shall repeat here what I have said in other places. The record as regards seeking to eliminate discrimination and racial harassment is infinitely better in housing associations and local authorities than in great wedges of the private sector. One has only to have attended previous debates on the Bill to recognise that. I appreciate that the Minister who is replying to the debate this evening may not have attended all of the previous debates, but he is aware of the situation. Some horrendous cases have come to light which are due not only to bigotry and prejudice, but also to racial harassment.
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I accept the Government's bona fides in this matter. Anything that they feel will improve the situation and provide people in wretched housing circumstances with the feeling that the Government care and want to take some action or provide the weapons to take some action is welcome. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clauses 56 to 58 agreed to.
Clause 59 [Interpretation of Part II and amendments of Housing Associations Act 1985]:
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 111:
Page 45, line 39, at end insert—
("(aa) amending the provision in Part I of the 1985 Act concerning payments and benefits to committee members, etc").
The noble Lord said: I beg to move Amendment No. 111 standing in the name of my noble friend Lord McIntosh of Haringey and the noble Lord, Lord Ross of Newport. It may be for the convenience of the Committee if I also speak to Amendments Nos. 113 and 114. However, other Members of the Committee will be taking part in the debate on those amendments.
Amendment No. 111 seeks to amend Section 15 of the Housing Associations Act 1985 as regards payments and benefits to committee members and others so that housing association employees and their close relatives, and tenant representative committee members and their close relatives, are not barred from receiving payments and benefits. The disqualification would still apply to non-tenant representative committee members and officers of the association who may be employees.
In putting forward this amendment I must say that the intention behind the original provision was to prevent any abuse of position by committee members, officers or employees of housing associations. In particular, it was designed to prevent consultants and contractors who carried out work for a particular association serving on its committee and, in effect, awarding themselves commissions and contracts. As a tenancy is held to be a benefit within the terms of Section 15, it was also intended to prevent tenancies being allocated incorrectly. I think the word "incorrectly" is a euphemism. I am sure that Members of the Committee will understand what is meant by that.
The wide scope of Section 15 has, however, claimed some unfortunate victims. That was probably never envisaged when the provisions were drafted. For example, a recent case was recorded by the NFHA of the aged mother of a housing manager of a national housing association being unable to accept the tenancy of a sheltered unit owned by the same association to which she was nominated by her local authority. That was despite the fact that the tenancy was in a different part of the country from where the housing manager operated. So the proscription within Section 15 would catch such a circumstance. I am sure that kind of circumstance was never intended to arise.
Another case detailed a receptionist of an association who married one of its contractors and had to choose between resigning or her husband being unable to continue working for the association. Again I am certain that the true intention of Section 15 was not designed to lead to such cases. I am told by the national federation that other similar examples can be illustrated. The problem is unlikely to abate if housing associations, either new or existing, see an increase in their stock. That is what the Government want and what we want. So the dilemma will increase.
The problem of encouraging tenant participation is made more difficult by Section 15. Few tenants are likely to want to serve on a management committee, particularly if the association has any sizeable stock in the area, if they know their membership of the committee will ban any close relative from becoming a tenant of the association. While no one would wish to return to the unregulated situation which existed prior to 1974, the rapid growth of housing associations in the years since then and the possibility of future expansion has meant that the provisions of Section 15 have affected many more people than could have been anticipated earlier.
If the Government will not agree to the amendment as it stands, it would be helpful if they would address themselves to the problem and invite us to consult the housing federation with them in order to produce a better amendment. The Government should bear in mind the growing dilemma for which they will, in part, be responsible. The Minister may however have some other way of satisfying what is, I think, a genuine non-partisan problem. It is a dilemma which is born out of the success of the housing association movement. I beg to move.
Lord Brabazon of Tara: This is an important issue. I wish to speak to the Government's Amendment No. 113 in response to some of the points which the noble Lord, Lord Graham of Edmonton, made. We believe that our amendment responds to a number of the respresentations which the Government have received from the housing association movement. It extends to England, Wales and Scotland. In so far as it extends to Scotland, it reproduces an amendment to the Housing (Scotland) Bill to which the Chamber has already given its approval.
The amendment relaxes the restrictions set out in Section 15 of the Housing Associations Act 1985. That section prohibits housing associations from making any payment or granting any benefit to their committee members, officers or employees, present or recent; their close relatives, or businesses run by people in these categories. There are a few exceptions, the most important being ordinary salaries and expenses of members and staff, and tenancies granted by co-operative housing associations, but Section 15, as the noble Lord has said, is essentially a blanket provision.
The purpose of Section 15 is to prevent abuse. It was first introduced in 1980, following a concern by the Public Accounts Committee that a number of associations were operating unfairly, not to say
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corruptly. I could give examples, but I do not wish to take up the time of the Committee. I am sure that the noble Lord is aware that there were examples of abuse. The safeguards in Section 15 have worked very effectively to control abuse and it is essential that we maintain that effectiveness. The Government are determined that housing associations should continue to have a reputation for probity and sound management, and for fairness in their letting procedures. But the blanket nature of Section 15 has been shown to inhibit some perfectly legitimate activities by associations, and I know that concern has been expressed that it conflicts with the move towards tenants' participation in the management of their own homes.
The current position in Scotland is in fact slightly different from that in the rest of Great Britain, as some changes were introduced there in 1986. These changes, which are now embodied in paragraph 9 of Schedule 6, allow the granting of tenancies to committee members of designated community-based associations, and to their close relatives. This power to designate has hitherto been exercised by the Housing Corporation in Scotland and will pass to Scottish Homes in due course.
That is the background against which we have to consider how the controls over the making of payments and the granting of tenancies and other benefits should be most usefully and prudently amended. Opposition Amendment No. 114, in the Government's view, goes too far by removing all restrictions on the granting of tenancies and other benefits to housing association employees, and to committee members who are also tenants and who represent tenants. I do not wish to impugn the integrity of the movement or of any of the individuals working within it, many of them in a voluntary capacity; but we do need to learn from the experience of the past, and tread very cautiously in this area.
The government amendment before the Committee seeks to strike a balance between the need for caution on the one hand and the need for flexibility on the other; and it recognises that experience in Scotland has been different from that in the rest of Great Britain. I know that my Scottish colleagues believe that the amendments in the Housing (Scotland) Act 1986, which I mentioned a few moments ago, do not go far enough. The amendment therefore enables Scottish Homes to designate classes of case in which the restrictions in Section 15 of the 1985 Act will not apply and associations will be able to make payments or grant benefits which would not otherwise be permitted. The power it gives to Scottish Homes is essentially a development of that which has been available to the Housing Corporation in Scotland since 1986, and it will enable Scottish Homes to balance the case for relaxation of existing controls against the continuing need for safeguards against abuse.
The amendment gives essentially the same power to the Housing Corporation and Housing for Wales. But it is not the Government's experience that Section 15 has been as troublesome in England and Wales as in Scotland, and it was only in relation to Scotland, where community-based associations are more common, that it was amended in 1986. We

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therefore intend that the Housing Corporation and Housing for Wales should be required to consult the movement before determining the classes of case to which relaxation of Section 15 is to apply; and that such determinations should be subject to the Secretary of State's approval. I believe that this somewhat more cautious approach in England and Wales is justified by the historical background to Section 15 and by our lack of experience in administering relaxations.
I believe that government Amendment No. 113 meets the concerns which have been expressed about the restrictiveness of Section 15. I hope that the noble Lord will withdraw his amendment and accept Amendment No. 113 in due course.
Lord Ross of Newport: I recognise that we are in a very tricky area and that mistakes can easily be made. I hope that the Official Opposition will accept Amendment No. 113, which seems to me to go a long way to meet the concerns expressed.
Lord Graham of Edmonton: The Minister has been helpful in acknowledging the problem which we have brought before the Committee. I believe that he appreciates the way that oppositions work. We are told that there is a problem. We do not bring it forward before studying and understanding it. Part of the exercise is to get on the record and into the public domain matters which may have been amicably discussed and negotiated between the advisers of Ministers and those outside. The ante is higher, as it were, so that we must be more careful.
I am grateful to the Minister for Amendment No. 113. As he said, it does not go as far as our amendment. Amendment No. 113 says:
"Except in the case of housing associations registered in the register maintained by Scottish Homes, payments made or benefits granted by an association in such class or classes of case as may be specified in a determination made by the Corporation with the approval of the Secretary of State".
Will consultations take place with, for instance, the National Federation of Housing Associations so that when the cases are codified under the Act there will be some common ground and they will include the matters which we believe are causing problems? We are not asking the Minister for a commitment. We are asking for consultations to make sure that he has it right.
Lord Brabazon of Tara: I said in my speech that the Housing Corporation would be required to consult the movement before determining the classes of case to which Section 15 is to apply. I can assure the noble Lord that those consultations will take place.
Lord Graham of Edmonton: On that basis, I am perfectly satisfied. We cannot ask for more. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 59 agreed to.
[Amendment No. 111A not moved.]
Schedule 6 [Amendments of Housing Associations Act 1985]:
Lord Brabazon of Tara Lord Brabazon of Tara moved Amendment No.
112:
Page 110, line 31, leave out ("under section 2(2)(a)") and insert ("or a loan under section 2(2)").
The noble Lord said: I beg to move Amendment No. 112 and I shall speak also to Amendment No. 115. They are technical amendments. I beg to move.
On Question, amendment agreed to.
Lord Brabazon of Tara Lord Brabazon of Tara moved Amendment No.113:
Page 111, line 34, at end insert—
("8A.—(1) In section 15 (payments and benefits to committee members, etc.) at the end of subsection (2) there shall be inserted the following paragraphs—
"(f) except in the case of housing associations registered in the register maintained by Scottish Homes, payments made or benefits granted by an association in such class or classes of case as may be specified in a determination made by the Corporation with the approval of the Secretary of State;
(g) in the case of housing associations registered in the register maintained by Scottish Homes, payments made or benefits granted by such an association with the approval of Scottish Homes (which approval may be given only in relation to a class or classes of case)."
(2) After subsection (2) there shall be inserted the following subsection—
"(3) The Housing Corporation and Housing for Wales may make different determinations for the purposes of subsection (2)(f) above and, before making such a determination, the Corporation shall consult such bodies appearing to it to be representative of housing associations as it considers appropriate; and after making such a determination the Corporation shall publish the determination in such manner as it considers appropriate for bringing it to the notice of the associations concerned." ").
On Question, amendment agreed to.
[Amendment No. 114 not moved.]
Lord Brabazon of Tara Lord Brabazon of Tara moved Amendment No. 115:
Page 111, line 46, leave out from ("dwellings") to ("and") in line 48.
The noble Lord said: I spoke to the amendment in speaking to Amendment No. 112. I beg to move.
On Question, amendment agreed to.
Lord Brabazon of Tara Lord Brabazon of Tara moved Amendment No.
116:
Page 115, line 21, at end insert—
("22A. After section 33 there shall be inserted the following section—
"Provision of services between the Corporations.
33A. Any of the Corporations may enter into an agreement with the others or either of them for the provision of services of any description by the one to the other or others on such terms, as to payment or otherwise, as the parties to the agreement consider appropriate." ").
The noble Lord said: I believe that noble Lords will agree that Amendment No. 116 is self-explanatory. I beg to move.
Lord McIntosh of Haringey: For once, I agree with the noble Lord. The amendment does not require

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explanation. I congratulate the noble Lord and the draftsman for doing something which is visible to the naked eye.
On Question, amendment agreed to.
Schedule 6, as amended, agreed to.
Lord Hesketh: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Copyright, Designs and Patents Bill [H.L.]
Returned from the Commons with amendments, and with a Privilege amendment, it was ordered that the amendments be printed.
House adjourned at twenty-three minutes before nine o'clock.