Local Government and Housing Bill

HL Deb 04 July 1989 vol 509 cc1064-126

2.53 p.m.

The Earl of Caithness

My Lords, I beg to move that this Bill be now read a second time.

This is an important Bill which contains essential reforms to the way local authorities carry out their business. These reforms will ensure that local authorities receive and act upon independent advice from officers and will bring them closer to their electorate. The provisions of the Bill will strengthen accountability, encourage better management, reinforce the local democratic process and focus resources on those in greatest need. The Bill is in 9 parts and I should like to take your Lordships through each part in turn.

The underlying theme of Part I of the Bill is to restore the vital traditions of accountability and efficiency in local government. Most of the proposals stem from the report of the Widdicombe Committee. I hope that it would be helpful to your Lordships to stress two themes which run through this part of the Bill.

First, there is the emphasis on distinguishing the roles of elected representatives and officers. In central government there are many formal safeguards to protect that distinction. In local government the distinction has rested largely on convention alone. The Widdicombe Report showed that this convention is under pressure and the Bill therefore reinforces it.

The Bill will introduce formal restrictions on public political activity for certain senior local government officers. There have been many misrepresentations of this proposal. It has been attacked as though it bans from political activity everyone in local government service who earns more than a certain sum. It does not. The Bill considers three different cases.

First, chief executives, chief officers and their deputies, and other staff designated by the council to act for it; these, we think, are clearly in the category of those who should not at the same time be active politicians. The Bill therefore puts them directly into the restricted category.

Secondly, there are other staff in senior jobs. Here we think they should be in the restricted category in that they are carrying out a sensitive job, as defined in the Bill. But we think that there should be an independent judgment as to whether they are in a politically sensitive job. This is what the Bill provides.

Thirdly, there are the other jobs which each council considers meet the Bill's criteria for politically sensitive jobs. These proposals, we think, ensure that the formal restrictions apply only to the posts where it is important that their holders should not simultaneously be active politicians. The range of posts subject to the restrictions is in fact much narrower than that proposed by the Widdicombe Committee. They are no different in principle from those which for generations have applied in the Civil Service. Their aim is to protect one of the most important human rights of all: the right of everyone to a democratic and efficient local government system of the kind which we in Britain have traditionally had.

This theme of distinguishing the roles of councillors and officers continues with the provisions relating to the appointment of staff and with requirements relating to the head of the paid service and the monitoring officer which reinforce the tradition that it is for officers to give advice to the council, and for the council to consider that advice and take decisions. These proposals have been misrepresented as giving officers power to override the council. They do not: they make sure that on certain important matters the council is fully aware of advice and must address its mind to the implications before a decision is taken.

The second main theme of Part I is to preserve the balance between expediting council business and the protection of the rights of minorities. The Bill protects the position of minorities on local authority committees and sub-committees and provides for certain minimum standards in standing orders. These minimum standards are being worked out in close consultation with local authority representatives.

Part II of the Bill revises the provisions relating to the local ombudsman. These are designed to simplify and improve the administration of this service and to improve the effectiveness of pressure on councils to implement the conclusions of the ombudsmen where they find maladministration, without undermining the responsibility of the council for its own decisions.

A new general power is introduced in Part III for principal local authorities in England and Wales to promote the economic development of their area. This clarifies and simplifies their powers, while providing for necessary restrictions to prevent inappropriate use of these powers. We shall be developing the precise definitions of those restrictions in consultation with local authorities. Part III also clarifies and restates the general residual power of local authorities to undertake expenditure for which they have no other powers.

I turn now to the need for a new system of capital finance which has been called for by many local authorities, among others. This is one of the most important items in the Bill. It will enable capital resources to be distributed between local authorities in a sensible way. It will help local authorities to plan their capital programmes against a stable background.

The new system in Part IV of the Bill will control the amount of capital expenditure that local authorities can finance from credit, but they will be free to supplement that with expenditure financed from usable capital receipts or from revenue. Their capital budget will be very much in their control and will benefit from the accountability of the community charge.

The new system will also provide a prudent framework for debt redemption by authorities. It is worth bearing in mind that the burden of debt per chargepayer now exceeds £1,250. When assets are sold, some receipts will go to debt redemption or to mitigate borrowings. Community charge payers would not thank their local authorities for leaving them to shoulder the burden of debt charges when they no longer have the benefit of the assets for which many authorities borrowed.

There have been a number of amendments made to Part IV in the other place. The majority have been technical, drafting amendments. But there have been some useful points of clarification which will ensure local authorities can operate the system with appropriate flexibility.

We shall be bringing forward a number of further amendments to Part IV. The majority of these will be technical, but there are two topics which I should like to mention to your Lordships. First, the new system does not in general place any direct control on capital grants paid to local authorities by central Government. In many cases, such as urban programme grants, the Government can exercise the necessary control through the normal grant mechanisms; but in some cases local authorities have considerable influence over the level of grant paid and appropriate control is needed to keep a grip on the national total of grant payments. We therefore propose that when local authorities receive certain capital grants, their credit approvals should be reduced by the amount of grant received. To compensate for this, the national total for credit approvals will be increased by the expected total of payments of these grants. That increase will be distributed between local authorities. That treatment will allow local authorities considerable flexibility. They will be free to receive more grant and borrow less, or receive less grant and borrow more. The housing grants which will be covered by this approach are specific grants paid in support of home improvement grants, environmental works, housing defects expenditure, improvement for sale and slum clearance.

Secondly, amendments will be brought forward to give effect to the proposals which we announced on 26th June regarding arrears of rent and other income owing to local authorities. Clause 59 at present provides that from 1st April 1990 local authorities would be able to cover their arrears of rent and other income by borrowing for six months after the end of the year in which the arrears arose. We have carefully considered the representations of the local authority associations and now propose to extend that period to 12 months. Thereafter authorities must make provision in their budgets for any arrears which remain outstanding. In addition, in line with our announcement, we will be proposing that the Secretary of State for the Environment should have a direction-making power to allow for a phased write-off where a local authority has substantial arrears of rents and other income at 31st March 1990. We envisage that an authority with such arrears would apply to the Secretary of State to enable it to spread over three to five years any budgetary provision for writing them off.

Part V establishes a new framework for the regulation of local authority interests in companies. Local authorities have been, and will remain, able to use companies formed under the Companies Acts for a wide range of purposes.

The objective is to define what companies should be treated as part of the local authority sector. That is done on the face of the Bill. The Bill would require local authorities to use their various powers to ensure that specified standards are observed by the companies which they control or influence. Part V also lays down standards for the way in which local authorities act in relation to companies outside the local authority sector in which they have an interest and provides a mechanism for defining in which companies they may have such interest.

Part V contains a power for the Secretary of State for the Environment to exempt, by direction, certain types of company from these provisions. Registered housing associations, for example, will be among those to be exempted.

Part VI establishes a new financial framework for council housing. That will improve the financial discipline of local authorities in their provision of housing and enhance accountability. As at present, local housing authorities will keep a housing revenue account (HRA) recording transactions concerning their housing service, but the new housing revenue account will be more closely defined. The account will relate only to those services which the council provides in its capacity as landlord. This should give tenants a clearer picture of the performance of their landlord.

I should make it clear to your Lordships that there is one important difference between the housing revenue account under the present system and the new account. The new HRA will be ring-fenced. That is, authorities will not be able to make indiscriminate transfers into the HRA from the rest of their funds or in the normal run of events to make transfers out of the HRA. It has been argued that because the rate fund contributions made by certain councils were small, it was possible to justify the subsidy by the ratepayer to the tenant; but when one looks at the figures, a different picture emerges. When Manchester is making a net contribution from the rate fund in 1988–89 of £52 million, the London borough of Camden a contribution of £44 million, and Islington £35 million, how can those be presented as minor balancing items? The existence of rate fund contributions has required the payment, in turn, of rate support grant by the Exchequer. That makes the system far more complex than it need be. Furthermore, the inescapable conclusion from looking at the facts is that in some cases excessive rate fund contributions are being made, keeping rents artificially low, or hiding from tenants the cost of inefficiency. The cost of these extra rent subsidies, or of this inefficiency, is picked up by the ratepayer.

Under the new system authorities will have to meet the cost of services to tenants from the housing revenue account itself. Where additional support is needed to allow authorities to provide those services at a reasonable rent to tenants, this will be provided through the new housing revenue account subsidy. That subsidy replaces three separate forms of Exchequer support under the present system and so will enable us to target the available resources far more carefully to those areas where they are needed, something that I am sure all your Lordships will welcome.

I now turn to those parts of the Bill which reform the home improvement grant system and related matters. Part VII replaces the present housing action and general improvement areas with renewal areas. That is not just a change in name, even though many of the areas that would qualify for declaration under the present system will qualify also under the new. The provisions in the Bill emphasise the need for a comprehensive approach to areas of poor quality private housing. We want to see a mix of clearance and new build, of individual renovation and the repair of blocks of houses. The Bill will achieve that aim. It also provides that an authority should consider all the resources likely to be available within the area for urban renewal. They will be encouraged to devise a practical programme of work within that level of resources, and where necessary authorities can seek additional help from the Exchequer. That way we can ensure that resources are directed where needed rather than widely dissipated.

Part VIII extends and restructures the improvement grant system. It introduces a new renovation grant for all repairs, improvements and conversions. In some circumstances, grant will be mandatory. It provides for a new test of resources for all grant applications. Those least able to afford the costs of essential work will be more generously helped than under the present system. Others will qualify for a reduced amount of grant, depending on their income. That way we shall target grants to those who most need them. We shall also be introducing amendments which will enable grants to be paid for houses in multiple occupation to bring them up to a new fitness standard: this will include means of escape from fire.

We amended the Bill in the other place in four important respects. First, we introduced a new grant to help disabled people with the cost of essential adaptations: this will be mandatory on a local authority in certain circumstances, generally to help disabled people with access to and around their home. It will be discretionary in a range of other circumstances. The Bill allows disabled local authority tenants to apply for the new disabled facilities grant. I know that there has been some confusion and concern about this, and I hope that this statement today will reassure those who are worried about it. It demonstrates the Government's very real commitment to ensuring that disabled tenants are eligible for help, regardless of their form of tenure.

Secondly, we have introduced arrangements for group repair; that is, where the external fabric of whole blocks of houses is repaired and improved as one. These replace enveloping and similar methods using individual grants. We expect those arrangements to be especially useful to authorities with a significant proportion of private sector stock built at the turn of the century and now in need of comprehensive repair.

Thirdly, we have introduced for the first time a grant for minor works which will enable elderly people to stay longer in their own homes or move in with relatives. It is not a substitute for a full renovation grant or the work that such a grant is designed to promote; but it provides local authorities with more flexibility where an elderly person is unwilling or unable to cope with the upheaval major repair or improvement works can bring. We hope that it will be particularly helpful to the "care and repair" style of agency services which are doing so much useful work around the country and with which some of your Lordships may be familiar.

Fourthly, we have provided for full market value compensation to be paid to all those owners whose properties have been earmarked for clearance and where currently only site value compensation is available. Those measures, taken alongside the changes we have made in Part IX to the basic standard of fitness and to the enforcement notice procedure, strengthen local authorities' ability to tackle the worst areas of housing in the private sector by again using the principle of directing resources to those who need them. Finally, Part IX of the Bill concerns miscellaneous local government and housing provisions.

This is a far-reaching and significant Bill. It is intended to bring to an end the worst practices of many poorly run local authorities which have overshadowed the highly competent work of the best councils whose work I have seen and which deserves praise. The Bill will raise standards, improve the efficiency and enhance the accountability of local authorities. I commend it to your Lordships and beg to move.

Moved, That the Bill be now read a second time.—(The Earl of Caithness.)

3.10 p.m.

Lord McIntosh of Haringey

My Lords, this is the fiftieth piece of primary legislation affecting local government which has been introduced by the Government in the past 10 years. Noble Lords who have been involved in much of the legislation may be forgiven for hoping, as this parade of new legislation proceeds, that sometime we might approach the end of it: that the Government might make up their mind that they have interfered enough in local government and done enough damage to our local democratic system not to feel it necessary to intervene any further. Judging from the evidence of the Bill before the House today, that does not seem to be the case.

The ultimate objection appears to be, as Ministers say, that local authorities will be reduced to being enablers and regulators rather than providers of services. The Secretary of State, Mr. Ridley, said only last year that he saw as his ultimate aim local authorities which met only once a year after dinner in order to award contracts, rather than meeting on a regular basis to provide the services needed by their electors.

Apart from the major problem which does not seem to bear any relationship to local democracy as we know it, the difficulty is that because of the way in which the Government are framing their legislation, the Secretary of State will not only ensure that the dinners are provided at a certain time and in a certain place, but he will, by regulation, lay down the menu and establish a system of portion control to be run from Marsham Street. That is the evidence of all the legislation, because as we see a restriction in local authority autonomy and responsibility, so we see an inexorable increase in the legislative and regulation-making power of Secretaries of State and central government. As we consider the Bill in detail—and we shall have to consider it in considerable detail—we shall see how true that remark is and how it is borne out by every single part and most clauses of the Bill.

The problem with this approach to local government is that it seems to neglect the fact that the world moves on. It does not always move on in the right direction. It is a fact, which is not denied by changes in definitions by the Secretary of State for Social Services, that there is more poverty in this country, that there is an increase in the proportion of our people who, under any definition of the poverty line, suffer from deprivation. It is a fact, not gainsaid by any of the fine words of the Minister in introducing the Bill, that the condition of our housing stock in this country is deteriorating. It is a fact, which is not gainsaid by any of the statements by the multiplicity of Secretaries of State who claim responsibility for it, that the division between the richer and poorer regions of our country is increasing rather than decreasing. It is not only through the action of our local authorities, but with the co-operation of our local authorities that we shall deal with any of these major defects in our social structure. That is why the Bill is such a damaging, divisive and backward-looking Bill.

It is only too predictable that the Minister should have sought to introduce it by the usual smokescreen of complaints about poorly run local authorities. What the Government mean when they say, "poorly run local authorities" is almost always local authorities which say things that the Government do not like. It is a very good definition to them of what is a poorly run local authority.

The Minister took us conscientiously through the Bill, and I thank him for doing so. However, it will be necessary for me to deal with each part in turn and I shall try to do so as briefly as I can. The first part of the Bill is that which claims to deal with the political responsibilities within local authorities and the role of local authority officers and local authority members. It is brought in on the basis—if we are to judge from Ministerial speeches in the country at large—that there is a huge abuse in the form of twin tracking of senior officers in one authority occupying roles as councillors in other authorities; and that this is particularly a sin of left wing Labour authorities which somehow justifies the draconian measures which are proposed in the Bill.

Of course there has been a small amount of abuse, of twin tracking, by some local authorities. Of course some of those local authorities have been Labour and some of those Labour local authorities have been left wing. But the proposals in the Bill, however sweetly explained by the Minister, go very much further than the disease which they are supposed to cure. They mean that between 80,000 and 100,000 local government officers will be, in different degrees but almost always in very severe degrees, deprived of many of their democratic rights. They mean not only that chief officers, deputy chief officers and people with particular financial responsibility and for explaining matters to the public will be deprived of some of those rights. They mean that all local authority officers earning more than £13,500 a year will be deprived of those rights.

That means not just that chief officers and deputy chief officers and the like will not be able to stand as councillors but that a very considerable number of firemen—not teachers because they have been exempted—school caretakers, social workers, planners, architects, and those responsible for cleansing and transport services will be excluded. All of those people provide totally non-political services. They have no connection with political policy-making in the councils for which they work. They will be deprived of the right to take part in local politics. Many of them will not only be deprived of that right but will be deprived of their right to take part in national politics. They cannot be deprived of the vote, but they will be deprived of the opportunities to be active in political parties, of the right even to put up posters in their windows unless they can demonstrate that it was somebody else in the household who put up the posters, and many other political rights for which we have fought hard over the years and which have come to be expected as part of citizenship in this country.

I seriously question whether the proposals in the Bill do not offend against the protection of civil liberties which will be upheld by the European Court of Justice. I seriously question whether the Government can sustain the breadth and depth of these attacks on civil liberties which are proposed in the Bill in the face of the European Court of Justice.

We shall be moving many amendments which will seek to diminish some of the worst effects of this part of the Bill. We shall seek to ensure that the restrictions on local government are not more severe than they are for the Civil Service, for example, where there is still departmental discretion on what posts are politically sensitive. We shall also seek to preserve the services to members by paid officers which help to make local government effective in an increasingly complex, regulatory world.

Part II is not so much a matter of contention. We agree with the Government that the recommendation on the local authority ombudsman should not have the force of law. I know that my noble friend Lady Serota has strong views on these matters, but I hope that she will agree that it is better for the local authority ombudsman to have more wide-ranging powers than to concentrate on enforceability.

We are interested in the amendments introduced at Report stage in another place on Members' interests. We wonder whether those regulations, however desirable they might be, should not apply equally to Members of Parliament and to your Lordships. Part III contains what the Minister described as a general power on economic development. It appears to contain that, but in practice what it does in Clause 32 is to provide a general power which in many subsequent clauses is taken away. In Clause 33(1), for example, the power is defined in regulations to be made by the Secretary of State. Clause 33(2) allows the Secretary of State to make conditions on the exercise of that power. Clause 33(3) gives the Secretary of State power to set financial limits. Clause 34 enables the Secretary of State to set guidance as regards how the power should be exercised. The most important aspect is contained in Clause 35. This clause ensures that any additional powers given to local authorities by this part of the Bill are in effect taken away, because the powers of Section 137—Section 83 of the Scottish 1973 Act—are reduced accordingly. So there is in fact no greater discretion given to local authorities and resources are accordingly reduced.

The position is worse than that. Mr. John Gummer made it clear in Committee in another place that the powers for economic development are to be used in area which have a particular need to promote economic development. That sounds all right, but it means in fact that these powers are to be exercised only where central government give priority to them. That means that in geographical terms and in terms of economic need considerable parts of the country, including quite large pockets of deprivation in areas which are not totally deprived, will not have the power which they have at the moment to use money for economic development purposes under the powers given under Section 137 of the 1972 Act. We shall certainly seek amendments to ensure that these powers have some meaning. At the moment the Government have given away an inch but taken away several feet of local authority rights.

The final restriction on economic development powers is the restriction in Part V, which I shall deal with before Part IV. That provides restrictions on the interests of local authorities in companies in order to achieve their ends. I am puzzled by that because I had always thought that it was part of Conservative philosophy that there should be collaboration between the public and the private sector. Indeed, in the past the Government have encouraged collaboration between the private and the public sector. After all, it is only three years since local authorities were encouraged to set up airport companies in order to obtain this collaboration. I have chosen only one example of the many I could have chosen of effective collaboration between the private and public sector which is to be severely restricted.

As regards science parks, let me take the example of the University of Warwick. That university has a science park jointly funded by the university, Warwickshire County Council and Coventry City Council. I am sorry that the noble Lord, Lord Butterworth, is not in his place because he could speak with much more authority on this matter. However, such science parks are now to be restricted as they come under local authority rules, and the local authorities concerned will lose part of their capital allocation by as much as they put into these joint venture companies.

We are talking here about a severe restriction on joint ventures in science parks, in the Yorkshire mining museum, in airport companies and in many other valuable ventures, all of which have been encouraged by government and many of which have been inaugurated by Government Ministers around the country. Now, however, they turn their back on those ventures and say that local authorities must lose their capital allocation if they encourage these ventures. Indeed, they will lose their capital allocation if too many of the members of a management committee can be shown to have connections with political parties or local authorities. This is going a bit far, is it not? If we are going to restrain misuse of joint ventures in local authority controlled or influenced companies, surely the implication of that is that, as these companies act under the Companies Acts, the Companies Acts themselves should be amended and there should be the same criteria for private as for public companies. There should not be a huge new level of bureaucracy imposed on these companies and local authorities should not be penalised for taking part in them. However, that is what the Bill intends

I return now to Part IV, which I suppose is the classic example of the kind of Bill to which we are tending which says in effect that the Secretary of State will do what he likes. This is the part in which there are no fewer than 15 regulation-making powers. We start off with the apparently clear provision that 75 per cent. of the receipts of capital from housing sales and 50 per cent. of the receipts of other disposals must be devoted to repayment of loans. That sounds nice and clear, but immediately after that we find that the Secretary of State has the power to vary those proportions. The variation can be any figure between nil and 100 per cent. Indeed, the next provision states that the Secretary of State has the ability to set a negative figure for housing grant. I wonder whether the Government are proposing to produce amendments saying that there will be a negative figure in this regard. It would not be out of keeping with their other proposals.

We have so many qualifications and worries about this part of the Bill that I hardly even have time to list them, let alone to discuss them. The timetable up until 1st April 1990 is an impossibly short one. The whole process of credit approvals has been carried out without adequate consultation with the local authority associations. The whole principle of capital receipts and the effect of the 75 per cent. and 50 per cent. figures to which I have referred could well discourage disposal of surplus assets. There is no provision, as we had been promised in the Government Green Paper Paying For Local Government, that there will be continued availability of earlier capital receipts for capital expenditure purposes. The way in which the Government are to insist that debts be written off over a period of years is primitive in accounting terms, to say the least. A reducing balance is mentioned when most private industry nowadays has gone for straight line depreciation. That provision is better than the equal instalments of principal which was the Government's previous proposal, but it still makes very little sense in accounting or financial terms.

The provision for temporary borrowing to deal with shortfalls in income is still severely restrictive. The provision that local authorities are not allowed to capitalise many of their major repair programmes through the restriction on enhancement is again quite unsuitable. When the Bill receives Royal Assent, the uncertainty which surrounds local authority finance and which means that local authorities have great difficulty in spending more than 50 to 60 per cent. of their capital allocations will still be there. In the course of the Bill, we shall seek to ensure that the Secretary of State should, at least once a year, come clean and declare—this will allow time for local authorities to plan—his financial proposals for capital expenditure by local authorities and what regulations he is to introduce in the course of the year. I cannot think that that would represent a major clash of principle between us and the Government, but at least it would be a help in forcing them to express, in terms which can be used by local authority treasurers, the intentions which they have and the controls which they intend to apply.

As regards the housing element of the Bill, I propose to leave the bulk of that argument to my noble friend Lord Dean of Beswick who will wind up from this Dispatch Box. However, t here are a few things I must say in order to set the scene for the later debate. The ring-fencing of housing revenue account and housing repairs account was described by the Minister as being a way of reducing indiscriminate transfers. It is no such thing. It is a way of ensuring that instead of housing benefit being paid for by taxpayers, ratepayers, or charge payers as a whole, it will be paid for by other council tenants. It is a way of ensuring that council tenants' rents, which are now to be based on capital values rather than on historic cost, will go up dramatically. They will go up even more dramatically in areas such as inner London where capital costs of housing are high. This is a recipe for reducing the standard of living of some of the poorest people in our society.

I remind the House that two-thirds of council tenants are eligible for housing benefit. In future the payment of that housing benefit is to be the responsibility not of the rest of us who are not council tenants, but of the other one-third of council tenants who are not eligible for housing benefit. That means that the poor will be subsidising the poorest instead of those most in need being helped by those best able to help them, which is the principle which we have applied for many, many years. Poverty is a national concern and should not be passed off to become the responsibility of the poorest in our society.

Whatever Ministers may say, there is a need for continued council housing. The National Federation of Housing Associations, which is supposed to be the partner in this matter, shares that view. This Bill will severely restrict the ability of local authorities to meet the desperate and increasing need for decent housing at affordable rents.

I shall not go into the issues of renewal areas and improvement grants. My noble friend Lord Dean of Beswick is far better qualified to do so than I am. I am interested to hear what the Minister will say about new amendments for new standards for housing in multiple occupation. It is certainly the case that the present standards are more appropriate to the 1930s than the 1980s or 1990s.

I reiterate the point that I made at the outset: while the Government have sought to extend their own power and to reduce the power of those in our regions, cities, towns and villages who might otherwise contribute from local knowledge, the world has been moving on. The problems in our society have been getting worse and not better. It is a matter of deep regret that this Bill will intensify the problems rather than help to solve them.

3.20 p.m.

Lord Ross of Newport

My Lords, 18 months ago I was in Seoul in South Korea where Hanyang University was establishing a chair in local government, with the laudable intention of preparing a draft system of democratically elected local administrations most suited to the needs of that country, which has not seen much democracy in recent years. It was the Koreans' belief that West Germany and the United Kingdom were the best sources of advice because of our considerable experience in this field. I am afraid that I had to say that to my mind local government in England and Wales was in terminal decline and that only a completely new structure, probably based on the directly elected mayoral system, could possibly bring it back to life. I have floated that view for many years. I believe that to be the case if local government in Britain is to work again as it should.

I gather from the Secretary of State's comments at Second Reading in the other place that he considers that the Bill before us today completes the process of local government reform. I fear that it just adds to the problems and will hasten that decline. What is really needed is a complete rethink if we are to return to our once great cities and counties the power to raise much of their own finance and to make the meaningful decisions needed to benefit their residents and ratepayers. I am afraid that, from what I have read, all that came out of the early debates in the other place was a constant exchange about the misdeeds of Westminster and Lambeth, to name but two of the authorities which were mentioned.

Of course all is not well and some action is needed on Widdicombe. But do we really need a head of paid services sending out his reports, or a monitoring officer? When I was in local government we all heeded the advice and warnings of the chief executive. Every spending committee had either the treasurer or one of his senior assistants to keep it within bounds. I am sure that that still applies today with the vast majority of local authorities up and down the country.

Of course I cannot support senior officers of one authority chairing committees on another, any more than I can accept that it is right for a chief executive to be paid £1 million to keep his mouth shut. But that is not the way local government is run in most of Britain.

Once again in this Bill far too much is left solely to regulations at the whim of the Secretary of State. In its nine parts, 11 schedules and 164 clauses the Bill covers a great deal of ground—arguably too much ground. Local government reform may well grab the headlines, but the proposals relating to housing will have an important and far-reaching effect on one of the nation's greatest assets—its housing stock. The objectives to replace general improvement areas and housing action areas with a new renewal area and proposals for reform of home improvement grants are laudable, and I welcome them. However, this Bill is notable for its lack of detail as to how those objectives are to be met.

For example, areas of run-down housing which will constitute renewal areas will need a great deal of advice and assistance to individual householders if renewal area objectives are to succeed. The Bill provides in various clauses for local authorities to provide agency services if they so wish. However, in renewal areas advisory services are paramount to the success of their revitalisation. Therefore one of the conditions set out in the Bill should be for a renewal area to be declared.

The Bill provides for a major reform of the home improvement grant system, a reform which is well overdue and which has been talked about by this Government since the early 1980s. A means-testing provision is provided for in the Bill and is central to the future of home improvement grants. Once again, the Bill is lamentably short of detail on the means-testing proposals. The Department of the Environment has issued a consultation document outlining the detail of the means test to be adopted. So far as I know, the results of that consultation have not been made available to anybody outside the department. It is therefore extremely difficult to have a meaningful discussion on the Government's proposals relating to means testing without knowing what those proposals are in detail.

If your Lordships are to consider the clause which allows for means testing it is only reasonable that the Minister should tell the House: first, how many responses have been received to the consultation document; secondly, of those, how many agreed and how many disagreed with the Government's detailed proposals; and thirdly, what alternative options were suggested, and what are the Government's reactions to them. We are surely entitled to that information if we are seriously to consider this proposal in the Bill.

We are also entitled to ask what arrangements the Government will make for those eligible under a means test but who are unable to borrow or service a loan from a financial institution to meet their contribution to the cost of the works. A number of non-political oganisations are very concerned about the details of the proposals. The National Home Improvement Council is deeply concerned about the anomalies that will result if this Bill allows the Government's means-testing proposals as outlined in the consultation paper to be put into effect.

While it would enable some people to have 100 per cent. grants many families would be worse off than under the existing arrangements. For example, for a family with one earner and two children under 11 with a gross income of £12,000 the existing home improvement grant arrangements would provide grants of 75 per cent. of eligible works. For work costing £4,000 the grant entitlement would be £3,000. Under the proposed system that same family would receive a means-tested grant of just £268 for work costing £4,000. It is true to say that at the other end of the scale if that family left the repairs until the building had deteriorated to such an extent that it cost £20,000 to put right, the system would enable them to have some £16,000 of home improvement means-tested grant.

That cannot be a sensible way forward if the Government really want to improve the United Kingdom's housing. It cannot be a sensible way of targeting public funds. It is a recipe for encouraging substandard housing to decline to an unacceptable level of fitness. The Government need to give assurances that a means-tested grant scheme will target resources and improve the housing stock without hardship to those in need.

There is nothing in the Bill to encourage people to repair, maintain and improve their homes which would prevent them from falling into a state of disrepair. The home improvement grants scheme as proposed is still aimed at tackling that perpetual problem. What is needed is an addition to the home improvement grants scheme which would help prevent houses from falling into a state of disrepair, encourage householders to maintain and repair houses on a regular basis and give assistance to them when needed, especially to all those new home-owners who have been encouraged under the right-to-buy scheme and now find themselves in severe financial straits in maintaining their mortgages, let alone finding the funds to repair and maintain their houses.

Perhaps I may give a personal example. My son has bought a house in south London for £72,000. The mortgage on it is £35,000. His monthly income is about £750 and his payment on mortgage about £340. That is an enormous sum to be taken out of his monthly income; it is about 40 per cent. There must be hundreds of thousands of people in that position.

For all those reasons, I say that the objectives are laudable, but there must be extreme doubts as to whether the proposals in the Bill will go anywhere near achieving the objectives. Even then the question of creating incentives must still be addressed. It is our intention on these Benches to propose amendments at Committee stage that address those points to which we hope the Government will give some sympathetic consideration.

There is also no doubt that the proposed legislation will adversely affect the work of Neighbourhood Energy Action which insulates the homes of elderly and disabled people and others on low incomes. The discretionary nature of the grants will provide no signal to local authorities that energy efficiency measures are considered vital. The loss of the £25 million expenditure on energy efficiency, which is currently available for loft insulation and draught-proofing, will mean that thousands of elderly people will be at risk from the cold. Local authority tenants and housing action trust tenants will no longer be eligible for grants and tight controls on general housing finance are unlikely to provide for energy efficiency measures.

I have been particularly requested by my noble friend Lord Winstanley, who will speak in the next debate, to raise the subject of the Groundwork Trusts with which I gather the noble Earl is familiar. It is vital that they should be exempted from the provisions of Part V of the Bill for it would be catastrophic if local authorities were obliged to withdraw from them. I gather that some promises in that regard have already been made in the other House, but they are not on the face of the Bill. May we please expect a clear statement before the Bill leaves this House?

That is also a matter that greatly concerns housing associations—as the noble Lord, Lord McIntosh of Haringey, has briefly mentioned—as does Part IV of the Bill which relates to the revenue accounts and capital financing of local authorities, an area which remains much of a mystery to me, despite an excellent brief from my old county council.

I have spoken on other occasions in the House of the desperate need to expand the supply of rented social housing. It is still the belief of the National Federation of Housing Associations that the Bill hardly helps in that respect. Moreover, Part VI and the ring fencing of housing revenue accounts is also a matter of much concern, particularly since the references by the Secretary of State in the other place on 14th June to the effect that local authorities should move to rents based on capital values. I shudder to think what he means by that. It is surely wrong that housing revenue account surpluses should be used to offset housing benefit subsidy when we desperately need so much more accommodation.

The problem of bedsits and the enforcement of safety conditions is another matter that should be tackled while we have the opportunity. I gather that the Government intend to bring in some amendments of their own, but the deaths in recent years of at least two people in my part of the world whose bedsits caught fire convince me of the need for action.

There are parts of the Bill which may be given a cautious welcome. I agree very much with Part II and the role of the ombudsman. I understand that some of the capital refinancing is welcomed by local authorities, but, on the whole, I find it depressing and yet another impediment to the freedom of those who still believe in local government to use their skills and initiative.

3.44 p.m.

Baroness Stedman

My Lords, I should like to thank the Minister for his exposition of the Bill and what is in it, but it did not give me very much satisfaction or confidence in the Bill. I should also like to apologise to the noble Lord and those who will follow me that I shall have to leave the Chamber at about half past four for a meeting. No discourtesy is intended and I shall be back as soon as possible.

Much of the Bill follows from the recommendations of the Widdicombe Committee. Indeed, the interim report of that committee formed the basis of the Local Government Act 1986.

Clauses 1 to 3 deal with the question of the political restrictions on staff. As things stand at present, under the Local Government Act 1972, a local government officer may not stand for election as a councillor in his employing authority. Widdicombe highlighted the fact that some 10 per cent. of all councillors are employees of other authorities. The majority of those are teachers.

Widdicombe showed concern on two major counts. First, it felt that councillors could not serve the interests of the council to which they had been elected if they were employed as members of another authority, and vice versa. Secondly, the employing authorities may be giving excessive paid leave to employees sitting as councillors on other authorities. The committee felt that no conflict existed in the case of manual workers or teachers. It recommended that officers holding principal officer rank and above should be prevented from becoming councillors anywhere. I subscribe to the view that perhaps the most senior local government officers should not take an active part in party political activity or membership of another council, but fixing the ceiling salary at £13,500 is much too low. I believe that such restrictions should apply only to chief officers and their deputies. We shall support any efforts to try to change Clauses 1 and 2.

The proposed widespread categorisation of politically restricted posts goes much further than ensuring the traditions of political neutrality in the way in which an officer performs his duty. The Minister said that his proposals have been misrepresented, but, as I see it, as the Bill now stands, it curtails for thousands of local government officers the right to freedom of speech and free association and to campaign politically. It therefore diminishes the role of democratic and participative local government in this country. The fundamental liberties of the subject cannot be taken away as lightly as that.

We are also concerned about the proposal in Clause 7 that all staff are to be appointed on merit. That proposal cuts right across the sheltered placement schemes or positive employment policies geared to helping mentally and physically disabled and handicapped persons. The Disabled Persons (Employment) Acts of 1944 and 1958 accepted that local authorities have a special role in trying to increase employment opportunities for the disabled. Local authorities have a duty to provide social workers and social services for those less fortunate people. Surely, if they can be employed and earn a living, it reduces the demand on the statutory welfare benefits and can be very cost-effective. But if future appointments are to made on merit alone, where does that leave the disabled? Will local authorities still be able to administer a policy of positive discrimination towards disabled people?

Clause 9 permits the appointment of political assistants to party groups on local authorities. It is limited to the four largest groups on a council and then only if those groups contain 10 per cent. of the membership of the council. We may have to give that clause some further scrutiny as it passes through the House.

Clauses 13 and 14 deal with co-option to committees. Where co-option is required by statute, co-opted members are full members with voting rights. In other cases, their status and voting rights are at the discretion of the various local authorities. Widdicombe recommended that the decision-taking committees and sub-committees should consist only of councillors. There may be anomalies in those clauses where teachers, for example, can be co-opted to education committees but cannot have a vote whereas church representatives, as co-opted members, would still have full voting rights.

Clauses 15 to 17 concern the political balance on committees. Widdicombe recommended that local authorities should be statutorily required to include in their standing orders provisions governing the composition of committees and reflecting the composition of the council with seats on committees being allocated according to the proportion of council members of the parties on the council as a whole.

We should certainly support measures to require councils to appoint members to committees proportionately. The smaller parties have too often been frozen out by the majorities without having representation on committees, and in some cases they have been denied the relevant documents and advice to enable them to take considered decisions. I speak from personal experience immediately after the reorganisation of local government in 1974 when no one party had an overall majority on the Cambridgeshire County Council. We shared everything proportionately, with the three Liberals and the three Independents having their share of committee chairmen and vice-chairmen.

Maybe I am biased but I believe, and perhaps the noble Baroness, Lady David, will agree with me, that that period of working together at the beginning of the new council was one of the most constructive periods in the history of the Cambridgeshire County Council. It laid good foundations for the new county and proved that consensus politics work.

Clause 18 deals with the declaration of members' interests. I should welcome a similar declaration for senior officers. Now that more contracts are being put out to tender or services privatised, chief officers also will need the protection given by a declaration of interests showing that they have no pecuniary interest in the contracts. I regret that Part II of the Bill has not adopted the Widdicombe suggestion that in cases in which the local ombudsman has found injustice due to maladministration the claimant should have the right to seek judicial enforcement of remedies through the courts.

The Bill that is before us does not go that far. It allows for the report of a local commissioner to be laid before the authority concerned and for the authority to notify the commissioner of the action that it intends to take. I believe that many of us would prefer some form of enforcement and some teeth to be given to the local ombudsman.

I suspect that the part of the Bill that will take most time in your Lordships' House will be the financial and housing clauses. Local authorities will have difficulty in becoming involved in economic development work to boost jobs in their own localities. Desperately needed jobs have often depended on the joint efforts of local authorities and private enterprise. But under this Bill local authorities will be forced to use their capital receipts to repay loans—75 per cent. of housing capital and 50 per cent. of other receipts, or even more at the whim of the Secretary of State. They have been unable to use the receipts from the sale of council houses to build desperately needed housing at affordable rents. They have been unable to use much of those receipts for rehabilitating their old property. Despite being told in the Green Paper Paying for Local Government: Local authorities have been given an assurance that the amount accruing from sales will be available in full over time to justify additional capital expenditure", these receipts are now to be used to pay off loans. Yet again it seems that the Government are selling local government short.

The Bill goes a long way toward ending the role of local government in housing at a time when 116,000 families are homeless and the use of bed and breakfast accommodation is rising rapidly. The introduction of ring fencing is the worst attack yet on council tenants. Homelessness is increasing and yet the homeless and the poorest gain nothing from this measure, while council tenants will have to pay through their rents for the welfare benefits given to other poorer tenants. The intention is to ring fence councils' housing revenue accounts so that the general rate fund moneys will not be available to subsidise council housing. Central government subsidy is also steadily to be withdrawn. These subsidies are being withdrawn with a view to making the housing revenue account balance initially and subsequently generate a surplus to transfer to the general fund. In effect it means that council tenants will be paying twice for certain non-housing local authority services: once through the poll tax and again through their rents.

The second intention is to contain housing benefit within the housing revenue account by paying benefit to council tenants, where applicable, out of the surplus element from those council tenants who are not in receipt of benefits. This flies in the face of every principle of social welfare and means that the poor will be subsiding the very poor. Indeed, private tenants will continue to receive their housing benefit, again where applicable, from the national purse. So many taxpaying council tenants will be paying for the housing benefit of two tenure groups whereas non-council residents will pay for only one.

I am sure that I am not alone in having had a very big postbag on this part of the Bill. With the leave of the House, I shall quote from a letter sent from Dulwich, an area that is not unknown to the right honourable Lady the Prime Minister. It says: We are particularly worried that the changes in the Bill relating to housing finance … will lead to a very iniquitous situation. As the Bill stands, the combination of 'ring fencing', the housing revenue account and the phasing out of government housing subsidy will result in the money needed to pay the housing benefit of council tenants being increasingly raised from rents. The result will be that the better off council tenants will pay for the housing benefit of poorer tenants—the less well off will pay for the even less well off. However, the housing benefit for private tenants will still be paid from the 'national pool' (like other welfare benefits). This will lead to a situation where a private tenant living next door to a council tenant on exactly the same income will receive housing benefit almost exclusively from the 'national pool' whereas the council tenant's benefit will be increasingly paid for out of the rents of other council tenants. There seems to be no rationale for this". As my Dulwich correspondent commented, private and housing association tenants will not carry the same burden as council house tenants. I believe that ring fencing will be disastrous for rents. I hope that before the Bill leaves this House the Government will announce what they believe to be a fair rent, although they would not do so in spite of many questions in another place.

Combining the rate fund subsidy, the rate rebate subsidy and the Housing Act 1980 subsidy now place a single subsidy within the control of the Secretary of State, and that is wrong. Local authorities need a central government subsidy to cover the full cost of their rent rebates, giving them the flexibility to meet the needs of their electors. As the noble Lord, Lord McIntosh, said, this is the 50th local government Bill in 10 years. I can only assume that means that the Government have failed time and again to get right their local government policies. For the past 10 years all that we have had is a continuous attack on the freedom and the democratic accountability of local government. For 10 years investment in public housing has been at a lamentably low level. This Bill does nothing at all to give help with our ageing housing stock. It does nothing to provide hope for the homeless. The ordinary people—not the party activists, but those who have little interest in politics—are now becoming aware of the continuous attacks on local government by this Government in the past 10 years, and I believe they resent it.

I wish I could share the Minister's certainty that this Bill will cure all ills. There are some parts of the Bill which are right, proper and necessary. We shall be prepared to unite with other noble Lords to oppose other parts of it, and we shall try to amend the Bill during its passage through your Lordships' House

4 p.m.

Lord Bellwin

My Lords, I welcome the Bill. The necessity for it saddens me. But, along with others, I warned again and again that, if local government could not and would not itself do something about the abuses which have long been taking place and which have been highlighted so often, in the end government would have to step in. That is what has now happened. The indictment on local government is that it has acquiesced. It has stood by and done nothing to eradicate the evil practices with which the Bill deals. It has steadily and progressively stood aside while itself and others have progessively corrupted and undermined what was previously a fine reputation. There has been no shortage of expressions of regret and dismay. There has been the ritual wringing of hands by the cognoscenti, the practitioners, both elected members and officers. They have deprecated and deplored the excesses, but they have done nothing to stop them.

Therefore the Widdicombe recommendations are being brought into legislation. The awful twin tracking abuse is being tackled. The politicisation of local government officers is to be ended and impartiality—which for so long was the pride and joy of local government service—is to be restored. I give a hearty welcome to the proposal that there should be a balance on council committees pro rata to the representation on the council. That is something that has always pertained in my home town of Leeds under all parties. I am delighted that there is to be a stop to the dreadful giving of votes to unelected committee co-optees. We have heard talk today about democratic procedures, but I can think of nothing more undemocratic than that.

For how much longer can the public be expected to pay for and put up with a system that allows the incestuous cross-employment of council members between one authority and another? What price impartiality when one sees advertisements for local government officers, "like-minded to the party in power"; when the chairman of the housing committee in Brent is a legal officer; when the leader of the council in Brent is employed by Lambeth Council as a race adviser; when the leader of Barnsley Council works for Sheffield Council and, surprise, surprise, the leader of Sheffield Council works for Barnsley Council? What price impartiality when the then leader of the Bradford City Council was employed as an anti-privatisation adviser by Wakefield District Council? I ask you, an anti-privatisation adviser!

A noble Lord

That is real democracy.

Lord Bellwin

Can you believe it? The list is long. Others may quote more such examples. In my submission, it is wrong and contrary to all that is good in local government. When members of the public consult the local government officer for advice or to make representations, they are entitled to expect that they are coming to an independent person, not someone who is actively committed and involved in politics.

I am glad that we shall now see limitations on paid political advisers. I would do away with them altogether. If local government would stick to doing what it was put there to do in the first place, there would not be any need for paid political advisers. We never had them in my time, and I look forward—am I being naive?—to a return to the time when local government will be dealing with local government matters. Then there should be no such thing as paid political advisers.

Equally ridiculous, and in local government terms irrelevant, is the proliferation of committees. Noble Lords will know of the peace committees, the race committees, the anti-nuclear committees, the South African committees, the women's committee and so on. As they have distorted, politicised and diverted resources from providing the basic services, so they have spawned political advisers. We have watched aghast to see local authorities moving into areas which have little to do with local government but much to do with challenging the mandate of central government.

Let me stress that it is not just Conservatives who deplore what local government has lost and what is still happening in far too many authorities. The vast majority of authorities function in an honourable way. The pity is that hybridity and other such rules make it obligatory to legislate for all. Therefore those authorities become swept into the legislation which goes onto the statute book.

Part IV of the Bill deals with the reform of capital finance, concentrating on borrowing rather than spending. I particularly like—and I am rather surprised that the previous speakers did not mention it because they have all at one stage or another asked for it—the three-year credit approval. It is a long sought after step in helping councils to be able to take a forward view of three terms with regard to their capital programme. That is something that we have cried out for for years. I am sure that no one would object to it. We ought to welcome the provision. It is a step forward.

Capital spending was always a very controversial subject. A new era dawned with the huge sums that became available through capital receipts from the sale of council houses. Yes, there have been arguments because in the early days all such moneys could be applied to whatever authorities wished to spend the money on. Then, because the numbers became so big and began to impact upon the totality of public spending, only a percentage of that was available. That percentage has been reduced to around 20 per cent. latterly. I am bound to say that I should like to see it increased, but perhaps that is too much to hope for.

Let no former devotee of local government pretend that what pertained in the past was an ideal situation—very far from it. It was a famous Labour leader in Leeds who said, "If we wanted to put up a so-and-so rabbit hutch, we had to go to central government to obtain planning permission to let the local authority do so". That was hardly the good old days with regard to capital spending. I am pleased that there is at least a genuine attempt to consider improving the procedure.

Perhaps I may say a word about the housing proposals in the Bill. They are very complex and we shall certainly have to consider them in the later stages. However, given the vast differences in the way that authorities run their housing revenue accounts, I fear that I have to be in favour of ring-fencing. I put it that way deliberately. Anything that will focus on and bring discipline to local government housing finance must be right. It should give no trouble to those who keep their affairs in good order. Those who do not should not expect the ratepayers or the community charge payers to put it right for them.

There are to be safeguards enough to mitigate any short-term problems which may apply to individual tenants. On the other hand, there are one or two aspects of ring-fencing which concern me. For example, I am interested in the London Boroughs Association suggestion that authorities which have no outstanding housing revenue account debt should be able to transfer any credit balance to another account. There should always be recognition and reward for sound practice and achievement.

I welcome the resource tests in Clause 99. It is right to concentrate help on those who need it most. I also like the provision of services for owners and occupiers in Clause 141. I consider that a real advance. Clause 49 provides some capital receipts to be set aside to reduce borrowing and thereby debt charges. It is finally tackling a vital area which has long bedevilled local government housing finance. Paramount among all the factors that have adversely impacted upon that has been the debt charges that have been around the necks of so many authorities. Those councils which set rent levels too low on newly built dwellings and then compounded the situation by failing to collect the rents, thus relying on the general rate fund contributions to balance the housing revenue account, were simply storing up financial nightmares which grew worse year by year.

We heard earlier, I believe from the noble Lord, Lord McIntosh, about the Manchester debt charges of some £52 million. If one is trying to run a housing revenue account with debt charges of that kind, what is one to do? There is no way out of it. I remember the former leader of Manchester taking me on one side and asking "What can I do?" The fact that he had himself created many of the problems by too low rents, not collecting them and all the rest of the problems, is beside the point. The fact is that this problem bedevils local authorities who have such housing situations.

I welcome the fact that at last there is to be a positive focus upon reducing the housing debt. Until that is done, whatever else we may do to tackle that problem, it will not get down to the basic cause of it. There will always be authorities who say that they cannot afford to keep houses in repair, that they do not have the money to do it. If we leave aside the side issues in which they become involved in spending millions of pounds, which some of us think are ludicrous, if the housing affairs are not managed and controlled correctly then problems will arise. The Audit Commission said that if authorities would reduce the length of their housing repairs to two and a half weeks on average that would bring some 20,000 more dwellings into the pool of houses available for rent. That is a significant figure, and I do not think we should pooh-pooh it and turn it down on any political dogmatic ground. It is a matter of management.

Everybody in your Lordships' House expresses great concern about homelessness and housing, and rightly so. One cannot turn away from the fact that there are hundreds of thousands of empty dwellings. One can say that a point is being scored in saying that, but at the end of the day there are those houses in decay and rotting away. Yet we have all this homelessness and the dreadful cost of doing something about it. What are we to do? I say that it highlights the iniquity—that is the best word I can think of—of not collecting rents. Do we really think it helps tenants to allow them to get into debt and then for the rest of their lives stay in debt?

We used to talk about this when I was chairman of housing in Leeds. We were worried about the tenants, so we never allowed them to get to that stage. Do not let us turn away on any political argument about failing to collect the millions and millions outstanding in rents. If we have to find ways to help people over the short term, let us do it. But at the end of the day we have to find ways to bring all that money in and to bring all those empty dwellings back into the pool of housing to rent. That is the most positive contribution we can make.

As to whether the housing revenue account surpluses should go to housing benefit or, as at present, to help the general rate fund, one can argue about. I do not mind surpluses going to help local housing benefits. Obviously, we shall return to the housing proposals at later stages.

The only other observation that I want to make today on the proposals in the Bill concerns members' allowances. What started as good intentions has been abused to the point where something has to be done. That is why we find it in the Bill. I was one who, on behalf of local government, gave evidence to the Robinson Committee in 1977. I was one of those who advocated that we should have this kind of attendance allowance. However it has been abused, and it does not help everybody when a few get away—that is the right phrase for it—with abusing the system. The idea of attendance allowances to reward people is correct in itself. It is a financial loss allowance in a sense because people lose money when they serve as councillors, and no one should have to do that. But where there are approved duties—as we used to call it—by holding surgeries in one's home, by attending political group meetings and claiming attendance allowance, that cannot be right. There is perhaps an extreme case, I admit, but the worst I have ever seen is of the lady chairman of Lambeth housing committee—if I can call a lady a chairman: perhaps it should be chair—who collected £28,000 for one year's attendances. If that is right, I do not know what is wrong. It is also made worse when the same lady, I am told, owes £2,000 back rent unpaid. What a reflection upon the calibre of all in local government.

Today, it is only possible to skim over the subject. I repeat my general welcome to the Bill. It is not a day too soon to be ending some of these abuses. I hope it will go some way towards restoring public confidence in local government, a confidence which some of us on all sides worked for years to establish and protect.

Lord Molloy

My Lords, before the noble Lord sits down, may I say that I can agree with quite a lot of what he has said and with some of the criticisms he has made, but it behoves us to bear in mind that in the early 1950s, when I was privileged to be the leader of Fulham and Hammersmith Councils, our greatest problem was finding homes for ex-servicemen from the British Army, the Royal Navy and the Royal Air Force. The legislation introduced by Aneurin Bevan enabled us to accomplish a great deal in housing—I hope that this will not be considered an offence—British ex-servicemen who fought in the British Army, the Royal Navy and the Royal Air Force. Some of us ran into debt in our councils in providing homes for those ex-servicemen and their young children. That was one of the greatest achievements of local government. Perhaps I may conclude by saying that if local government everywhere could emulate the behaviour of local authorities throughout the country, Labour and Conservative, under the legislation of Aneurin Bevan—who at the same time was establishing the National Health Service—we would be in a much better situation than we are now.

4.17 p.m.

Lord Jay

My Lords, I agree partially with the noble Lord, Lord Bellwin, on one thing, namely, that the recent practices of the Westminster City Council are much in need of reform. The Bill, however, quite apart from its other deficiencies, seems to me to be a very poor response to the debate on homelessness that we had in this House as recently as 7th June. The Bill will do little or nothing to improve the deteriorating housing situation from which we suffer in this country. If anything, by financially tying the hands of local authorities, ring-fencing them as we have heard, even further, it will make the problems and the plight of the homeless and the badly housed even worse than before. One certainty is that rents will rise.

In the midst of the alleged prosperity in this country that we hear so much about, I find it deplorable that homelessness has doubled in the past 10 years. We now have over 100,000 families officially accepted as homeless. According to Shelter there are some 360,000 individuals in this dead end, many of them children. That, as we all know, entirely excludes the single homeless, who are uncounted.

How do the Government explain this doubling of the number of homeless in the past 10 years? The Minister's latest excuse in the previous debate was that there are too many unoccupied council dwellings, due, he said, to faulty administration. Unoccupied dwellings should be kept to the minimum, but why should this number have doubled during this Government's 10 years? Presumably the inefficiency of local authorities has not doubled during that period. Since, in any event, there is a much higher proportion of unoccupied dwellings in the private sector than in the publicly-owned sector, why should the Government pick on that particular phenomenon? The "void rate", as it is called, is only 2.5 per cent. in local authorities and over 4 per cent. in the private sector. That is not a convincing excuse.

I believe that, as everyone except the Government knows, there are two reasons for the growth of homelessness since 1979. First, there is the acute shortage of low-cost rented dwellings, mainly due to the Government's policy—which I am afraid the Bill continues—of deliberately reducing the total stock of council housing in this country. There are 300,000 fewer local authority homes in this country than there were 10 years ago. The number of housing association and private rented homes has also positively decreased. I believe that the second reason is the Government's abandonment of any effective regional policy for location of new employment in appropriate areas. That has forced an intense housing shortage in the South-East because people already decently housed in the North and West find that they are either forced to move elsewhere or stay unemployed.

The only way in which homelessness can be overcome and all our population can be decently housed is by a major expansion of local authority dwellings to rent at low cost. Every official report has agreed that that is true. Of course we need home ownership and housing association and co-operative ownership. But we need them in addition to, and not instead of, local authority ownership. That means a very large increase in public investment in housing, and that is the last thing that we shall get out of this Bill.

The Government still say that they are trying to increase the rented stock through the private sector. The Minister repeated that on 7th June. However, the contribution made by the private sector to the rented stock is becoming smaller and it cannot be enough on its own. Indeed, no country in the world—not even the United States, which has far greater resources than we have—has succeeded in decently housing the whole of its population by market forces alone. The only countries in the world which have decently housed their whole population are the Scandinavian countries. They have done so largely by public and co-operative investment.

The House should also reflect for a moment on what the makeshift bed and breakfast system means for 30,000 families in this country. They have nowhere that they can call home. Whoever may be blamed for families getting into that situation, it certainly is not the young children who are so frequently affected.

My 30 years experience as a London constituency Member of another place left me with the conclusion that, other than unemployment, bad housing causes more human distress in Britain than anything else. The makeshift bed and breakfast system is exceedingly expensive. It would be so much better to spend all that money on capital investment in new homes. At present it amounts to £68 million per year.

Yet, by manipulating the housing revenue account and other devices, all the Bill does is to restrict —"ring fence", as it is called—still further the power of local authorities to do anything about it. I believe that the primary aim of the Bill is not to rehouse anyone but to save public money. For instance, we are told, even in the explanatory memorandum, that after 1990 the share of rent rebates met by the housing revenue account subsidies are expected to fall, thereby leading to a reduction in public expenditure. That is a matter to which we are always brought back.

The Government leave in existence the legal obligation on local authorities to house those who are undoubtedly homeless, but denies them the financial resources to carry out that obligation. Let us take a particular example which has already been mentioned today. Why do the Government still refuse to allow local authorities to spend on investment in new build—that is in new homes to rent—at least the whole of their capital receipts from the sale of council houses? No justification for that decision has ever been given. Perhaps this evening the Minister will tell the House how that particular issue is affected by the Bill. I can see no improvement, and apparently the Secretary of State is taking power to make matters even worse. Perhaps we can be fully informed about that issue this evening. The Minister might also remind the House of the miserable proportion of capital receipts which councils are allowed to spend: I believe that it is 20 per cent.

If the scandal of homelessness is to be ended, and if the Government mean that seriously, what is needed is not merely the accountancy manoeuvres in the Bill, but a major expansion of local authority building with adequate provision for proper maintenance and repairs in the future. I believe that my noble friend Lord Dean will agree that in the past the major fault with local authority housing—and there was a fault—was the lack of public funds for proper maintenance and repairs. I refer to the maintenance and caretaker service which we all associate with private blocks of flats but which so seldom exists in council housing due to lack of money.

Of course it is right that sitting tenants should be given the right to buy. But if the aim of public policy is to enable them to do so and not simply to reduce the supply of subsidised housing, such a right in future should be conditional on the property being resold—if it is ever resold—to the relevant local authority. If that policy is pursued it will be perfectly possible to continue the right to buy and not reduce the total stock of council housing.

Until that is done, and as long as negative and restrictive Bills such as this come forward one after another in every Session, more people will believe that the Government's housing policy is inspired not by any wish to end homelessness and bad housing, but partly by the Prime Minister's childish feud against all local governments and partly by her apparent belief that home owners vote for her party.

No doubt this Bill, like all Bills, can be improved and amended in many particulars. I hope that it will be. However, it will not stop the relentless growth in homelessness which has continued in this country over the past 10 years.

4.28 p.m.

Lord Middleton

My Lords, I should like to focus briefly on a special problem which was highlighted in a debate in another place on 14th .June, when an amendment to this Bill was proposed at the Report Stage. The amendment sought to alleviate the acute shortage of low-cost housing in rural areas. It is beyond dispute that it is becoming increasingly difficult for wage earners living and working in such areas to find a house that they can afford.

The reduction in the supply of houses to rent or to buy follows naturally from the purchase of council houses by sitting tenants and from the sale of privately-owned houses by owners cashing in on the recent surge in house values. The purchasers of such privately-owned houses in our villages are rarely local people but they are able to pay prices well beyond the means of the indigenous young whose needs must be catered for if the rural economy is to be sustained.

One way of making housing available to such people has been the provision of housing by government-funded housing associations, the need for which has just been emphasised by the noble Lord, Lord Jay. Besides providing rented accommodation at affordable rents, housing associations enable local people to get on to the housing ladder. That is done by enabling the occupants to buy part of the landlord's interest, usually with the aid of a mortgage, and to rent the rest.

However, where a shared ownership lease is granted by a housing association with the aid of a government subsidy, the Housing Corporation insists that the occupant shall have the right to buy additional slices of the landlord's interest until he has acquired a freehold or, in some cases, a long leasehold. That is called staircasing. If, having by that means reached the top of the staircase, the new owner then sells the property at full market value it ceases to be affordable by the very people for whom it was originally intended and for whose benefit the housing association received government subsidy through the Housing Corporation. It comes out of the low-cost housing pool.

That is a problem of great concern to such bodies as the Association of District Councils and the National Federation of Housing Associations. It is also of concern to landowners who have provided land either as a gift or at below development value on condition that the houses on it remained available for the local community.

The general need for low-cost rural housing is acknowledged by the Government and that particular problem has been recognised by the Secretary of State for the Environment. He made that clear when Mr. Jopling's proposed new clause was debated in another place on 14th June. That debate illustrated two alternative ways of ensuring that low-cost houses remain available for local people. It would not be appropriate on Second Reading to delve into the arguments at length. However, Mr. Jopling's amendment would have removed the Housing Corporation's power to insist that the occupant be given the right to buy the entire interest of his landlord where a shared ownership lease of a dwellinghouse in a rural area was granted. The Government's solution was that announced on 7th February of this year; that would allow to a housing association a pre-emptive right, once a shared owner has moved on, to buy back the property at market price and the property would thereby remain available as low-cost housing. The repurchase by the housing association could be subsidised by the Housing Corporation.

At this stage I have an open mind as to which of those solutions would best serve the needs of the rural wage-earners. I shall listen to what my noble friend Lord Hesketh says when he winds up this debate and I shall seek advice from such bodies as the Association of District Councils. That may well be a matter which should receive the attention of your Lordships in the Committee on this Bill.

4.34 p.m.

Lord Mountevans

My Lords, as the noble Earl, Lord Caithness, told us in his opening remarks, this is a Bill which inter alia seeks to encourage accountability and to prevent inappropriate use of local authority powers. I believe that those are laudable intentions which I go a long way to support. But it may be no surprise to the noble Lord who is to reply that I have some tourism questions on which I should like reassurance. My concerns are in respect of tourism promotion, regional tourist boards and the marketing bureaux which some local authorities have set up as a means whereby local authority and private funding can come together for promotional purposes.

I believe that tourism is recognised as a big business. Expenditure by Britons holiday-making within this country in 1987 is estimated to have been slightly over £7 billion, while foreigners are estimated to have spent slightly under £6 billion; so we are talking about expenditure of about £13 billion, contributing directly or indirectly to perhaps 1.5 million jobs—a figure which is growing by 40,000 or 50,000 per year.

Tourism is not only a big business but one in which local authorities have always played their part. I believe that practically all local authorities in England support tourism by one means or another. In wide terms they contribute 15 per cent. of the income of the regional tourist boards, to which I shall return. Internationally, they contributed 12 per cent. of the British Tourist Authority's non-government funded joint promotional schemes in the past financial year, thus contributing towards a whole range of co-ordinated overseas promotional ventures. Closer to home, many local authorities run their own tourist departments, or as, for example, in Plymouth, York and Birmingham, co-partnership marketing bureaux.

Hitherto that activity has been underpinned by Section 137, and I am not aware of any complaints about how that Section 137 money has been used for promoting tourism. That does not mean that there have not been any, but I am not aware of them. However, Clause 35 in the Bill introduces a new test in terms of expenditure in that expenditure must be of direct benefit to the community. While I worked for the British Tourist Authority I shudder to think how many times we were reviewed. I know that the Scottish local authorities were reviewed and the Scottish Tourist Board was reviewed, as were the Welsh and English Tourist Boards. We were perpetually under review, so much so that one spent more time defending oneself against the reviewers than doing the job one was employed to do.

The point I make about all those reviews is that they would not have happened if direct benefit could easily be proven. It seems to me that that perpetual ferreting around, digging and sniffing confirms that direct benefit is not easily proven. I ask the noble Lord to confirm that, in so far as the noble Earl mentioned inappropriateness of expenditure, that expenditure on tourism promotion will remain appropriate expenditure for all local authorities.

I now turn briefly to the regional tourist boards which promote individual parts of England and have parallel bodies in Scotland and Wales. They are funded by the commercial sector, by the English Tourist Board and some 15 per cent. of their expenditure is funded by local authorities. As I said, there are very few local authorities which are not contributing to the work of their regional tourist board. They are also funded by other sources. Taking another part of the Bill, will they be regarded as controlled companies or will they qualify for exemption as what are called minority interest companies, a status which seems to reflect the 15 per cent. of their funding which they derived in 1987–88 from relevant local authorities of England?

I might ask a similar question on a lower scale about the marketing bureaux. They have been extremely successful. They derive ever-increasing amounts of their funding from the private sector, from commercial companies such as transportation companies. By doing that, they are lowering the proportion of expenditure which they receive from their sponsoring local authority. I wonder whether the noble Lord can tell me what their status will be.

I ask these three questions because I am mindful of the fact that the Secretary of State for Employment repeated not very long ago that tourism is one of our great growth industries and one that he would wish to see taking a higher profile. I hope that the achievement of this higher profile will not be complicated in particular by the terms of Clause 35 and the status of the various companies in which local authorities are contributing to the promotion of tourism.

4.40 p.m.

Baroness Carnegy of Lour

My Lords, a great many of the provisions in this Bill relate to Scotland. I wish to confine what I have to say at this point to some elements in Part I of the Bill and to look at those from the point of view of Scotland and Scottish local Government. The noble Lord, Lord McIntosh, had very little good to say about the Bill. I have spoken to councillors in Scotland, many of whom are his political colleagues, and I have received a rather more measured response. A good deal of benefit is perceived by them in this Bill. On the whole, the Widdicombe Report was welcomed in Scotland. I believe that parts of the report that are being implemented in this Bill, though some may present difficulties for some councils and some individuals, are changes that the Scottish public want to see and which in general Scottish officials welcome. I believe that elected Members in Scotland know in their heart of hearts that these provisions are mostly necessary.

The more scattered a population is and the more diverse the various parts of the country, the more important it is to have a strong, high-quality local government which local people feel they can identify with and trust. In Scotland people are very anxious indeed to see their councils as free from doubtful practice as possible. For that reason I believe a number of the reforms in this Bill will be welcomed. Some of the provisions in Part I are already standard practice in a number of councils. For example, when I was among those elected to Tayside Council at the reorganisation in 1974, our region brought together two county councils and one city council. Those councils had been run in very different ways. We were anxious to incorporate the best practice of all three councils.

In our standing orders we established that the political balance of committees and subcommittees should reflect the political balance of the council that the people had elected. We wanted the public to know that its voice would be reflected in all our deliberations and not just that of the main council, and that committee and subcommittee membership could not be rigged. The Bill makes a very similar arrangement mandatory everywhere. I believe that will be a safeguard that the Scottish public will welcome. Likewise, in Tayside we established a register of councillors' pecuniary interests. In fact I believe it was a voluntary register. The councillors were required to declare those as well as other relevant interests verbally in debate as the occasion arose. Such a register will be mandatory under the Bill. In my view that is absolutely essential.

Decisions are made everyday in councils: planning decisions and decisions about contracts. Because they are so local they may very well affect councillors' own local business interests. Nothing less than a publicly available register will do. I believe it is somewhat different for Members of Parliament and Peers, though one could argue strongly that there should be a register of our interests as well. The provisions in Part I of the Bill regarding the so-called twin tracking by officials have already received much attention in this debate, in another place, and in Scotland.

In another place it was claimed that the Bill was a threat to the human rights of council officials. The noble Lord, Lord McIntosh, echoed this. It is clear that for certain council officials it is simply not possible for them to do their jobs properly if they are also councillors with another authority. How can they explain to the public the policy of the council for which they work as officials when the public reads daily in the press of their support, say, of opposing policies or policies where there is a conflict of interest in the council where they are elected members? How can elected members trust an official's advice on a subject when they know he is involved in a political campaign on that very matter in another direction or even in the same direction as a councillor with another council?

Twin tracking has to stop for some categories of local government officials. In my view the only question is: which categories? In this matter the Government have followed Widdicombe in saying that officials who come face to face with the public and who give councillors direct advice are generally those who have a salary above a certain level. So the Bill as it stands defines politically sensitive posts as those carrying salaries of £13,500 a year and above. That seems to be a strange definition to put into the Bill. Apart from anything else, the figure will require constant updating for inflation. Can the Government not find a better way? For example, one could use the position of the post on the scale. In Scotland we call that the spinal column. I am not -sure whether that is international-speak or not. The equivalent position for part-time posts could be placed in the same way. Once set that would define the level of the post, but it would not require constant adjustment. I say to my noble friend that I believe that matter should be explored in Committee.

It has been suggested to me by a number of Scots that head teachers, their deputies and assistants, principal teachers and heads of departments in schools, besides the heads of colleges, are also people who cannot do their jobs properly if they are also councillors. In Scotland a number of teachers are councillors and a number of those are in senior promoted posts. I do not know how many of them are head teachers. This situation worries the public very much. I myself am unsure of this point and whether or not this Bill is the right route for improving matters. There is certainly a problem, but with financial delegation to schools, the changing exam system and career development arrangements in Scotland, the job of head teacher and other promoted post holders is going to become far more responsible, demanding and also more interesting.

This state of affairs, together with school boards and more local parent involvement, will get the message through that properly professional senior teachers can no longer combine the two roles. Someone with aspirations to promotion in the teaching profession will see this flag being flown before he embarks on a political career. Nevertheless, it will be interesting to know approximately how many head teachers in Scotland are councillors as well, besides how many deputies, assistant heads and principal teachers are councillors. I shall be enormously grateful to my noble friend Lord Hesketh if he can find out this information and write to me. I do not expect him to have the answer before him at the moment. At least then we would know the extent of the problem in Scotland.

I ask my noble friend another question on a specifically Scottish matter. Are the Government satisfied that the provisions limiting the voting rights of elected members will allow the present excellent arrangements in the planning committee of the Highland region to be continued? District councillors, whose authorities are not planning authorities, sit and vote on regional council subcommittees and they make their contribution that way. But is my noble friend satisfied that this arrangement can continue under the Bill? As I have said, it is a very satisfactory arrangement in the Highland region, and I hope that it can continue. This matter was discussed in another place but I do not think that it was completely resolved.

I shall look closely in Committee at those and many other changes which are proposed in the Bill in order to ensure that the changes relating to Scotland will work properly for Scotland. Local government is very important indeed to us in the North, and I am sure that as we proceed through this all-UK Bill, the whole House will wish to ensure, that Scottish needs are met in a proper Scottish way.

4.51 p.m.

Baroness David

My Lords, as someone who has been active in local government as a councillor and as a spokesman for local government in this House, I must say that I feel angry about many proposals in this Bill. There are some parts of which I approve; for instance, the duty to allocate seats to political groups and the duty to give effect to allocations in Clauses 15 and 16. The noble Baroness, Lady Stedman, referred to what happened on the Cambridgeshire County Council in 1973 after reorganisation. I totally agree with the noble Baroness that giving a balance to the parties in the allocation of jobs meant that the council worked extremely well.

One aspect that angers me is the political restriction on officers and staff. We have heard a great deal about this matter today but I do not apologise for speaking about it again because it is a very important part of this Bill. The Government's proposals are supposed to be a response to the Widdicombe Committee, but they go infinitely further than that committee proposed. They are based on unsubstantiated assumptions that there is widespread abuse in local government procedures, staffing and the activities of officers. I admit that there is no doubt some abuse, but the Widdicombe Commitee commented that no serious evidence of abuse emerged from its investigations and that there was a lack of evidence from the Government. Therefore there is no sound base for the stringent and unfair conditions in the first two clauses in the Bill. What is more, the activities to be restricted are not spelt out in the Bill but, like so much in so many Bills, will be set out in regulations made by the Secretary of State.

I agree that chief officers and their deputies and probably some others, should not be councillors. However, there are, as NALGO estimates, 100,000 people who under Part I of the Bill will be barred from standing for elected political office or office in a political party. Those are people earning over 13,500 a year. I certainly agree with what the noble Baroness, Lady Carnegy, said; that that cannot be left to stand. Large numbers of these people will be those whose work can be described as technical, such as engineers, administrative, clerical or professional staff. Such general categories of staff could work for a variety of employers both in the public and private sectors but it will be only those in local government who will be banned from civil and political activity by this Bill.

I have received letters from a great number of people who will be caught by the Bill. Their outrage at the restrictions on their civil liberties and democratic rights is manifest. One letter came from a district councillor at Chesterfield Borough Council, employed by Derbyshire County Council as the county arts co-ordinator. I thought that this was a very good letter and I quote from it: I have been employed by Derbyshire County Council from the 3rd April 1984 and stood for election as a Chesterfield Borough Councillor in May 1987. There is no conflict between my employment and my position as a councillor. The reasoning that restrictions upon political activities need to be imposed because employment may be provided for political sympathisers and because of conflicts of interest, cannot be said to be true in my case since I chose to stand for political office several years after entering into my employment, and the area of work (the arts) provides no opportunity for conflict of interests due to political beliefs. There is a counter-argument that needs to be aired concerning conflict of interest which states that if most people hold political beliefs and that the holding of those beliefs influence their actions, then it is the openness and public statement of those beliefs (coupled with open and honest pursuit of those beliefs within the democratic and political systems) that is healthier than concealment of loyalties. In a democracy the right to assist, join and promulgate political views of peaceful democratic parties is a paramount and fundamental requirement of the very democracy that the system is meant to support. The Local Government and Housing Bill is an attack upon such fundamental democratic freedoms for a minority of local government workers whose influence is so negligible that it could not even be measured. Since such a restriction is only placed upon a group of people defined by their salary level and since the same legislation exempts a similar class of people (teachers) upon the same or greater salary levels and makes no attempt to justify such exemptions or to apply the restriction universally, for example including employees of private industry undertaking lucrative government contracts, I can only conclude that this Bill if enacted will pose an infringement of my democratic freedoms and my human rights when compared to other citizens. If this Bill goes through in this form, I hope that my noble friend is right and that one can make an appeal to the European Court.

I also received a letter from the manager of a small day centre, who is earning just over £13,500. She is not a member of a political party but a member of the British Association of Social Workers. She said that she believed it was her duty to work in her spare time for the interests of her clients and the improvement of services. She wrote: I am totally dismayed at the proposed curtailment of my civil liberties. I talked to the chairman of our housing committee in Cambridge at the weekend. She is a group leader doing research at the county council. She said that in nine-and-a-half years as a councillor she had had no criticism or complaint from any officer or councillor on the county council. She said that she was very careful about the committees on which she served on the city council. She also pointed out that in taking on the work of a councillor some sacrifices are inevitable, as you are less likely to get promotion in your job if you have to take time off, even though flexi-time can help.

The Minister will doubtless reply that there can be exemptions and that there is an appeals system; but that only covers those people earning more than £13,500. Those earning less can be caught by the restrictions. Why create more bureacracy for this purpose, instead of making the disqualification much less rigorous and avoid offending large numbers of local government employees who may well have to choose between employment and exercising their civil rights?

There is also great concern about the potential role of the monitoring officer. Big Brother, they will feel, is watching them. I should not think that the spy job would be one that many people would wish to take on.

I am also angry about the way the Government intend to deal with capital receipts. There are to be new controls, with severe restrictions on use for reinvestment. This will lead to major restrictions on the ability of local authorities to invest in housing, overwhelming though the need is. It will not be possible to plan sensibly over several years, as is essential, a stable framework within which councils can operate their capital programmes over adequate time periods.

In relation to housing, it is proposed that 75 per cent. of any capital receipts will have to go to redeem current and future debts, leaving only 25 per cent. available for reinvestment. This is a gross breach of the commitments made by Ministers when we complained bitterly about authorities being able to invest annually 20 per cent. of the proceeds from council house sales. We were told that the rest would be kept by the councils and released gradually. I am sorry to say that the noble Lord, Lord Jenkin of Roding, has left because I wish to quote what he said in 1984 when Secretary of State: The receipts are and will remain the property of local authorties. They can spend them in future years". That is not going to be allowed to happen. I heard those commitments made from the Government Benches—I thought in good faith—when I was spokesman for local government on these Benches. I am really shocked by this. The restrictions will be bound to lead to significant losses in spending power.

I talked last Friday to the manager of Cambridge City Council. He told me that, owing to the buoyancy of council house sales in that area and the high local property values, capital receipts are an important contribution to the city's capital programme. In the last financial year the council was able to boost its capital programme by approximately £6 million. A further £3 million was spent on capitalised repairs to council homes. Under the proposed changes, the allowable expenditure would drop to approximately £1.5 million. Moreover, the right to spend on capitalised repairs would disappear altogether. That is in an area of housing shortage. There have been no ministerial assurances that credit approvals will be used to compensate for this loss. When the Minister replies, can he please tell us what the position there will be?

Where local authorities are genuinely trying by new building and repair to alleviate the housing shortage and where there are no affordable rented houses or flats for any but the highly paid, the Government's actions seem to be motivated entirely by spite and political hatred of a very few local authorities which have been inefficient or improvident. There is no evidence of incompetent management in the vast majority of authorities; but they will be made to suffer, though all the evidence from the Audit Commission, the Royal Institute of Chartered Surveyors and the Duke of Edinburgh's inquiry into British housing concluded that authorities should be allowed to use the resources they already have to bring poor quality council properties up to decent standards and that additional investment was required for new building.

I turn now to the subject of rents. The Secretary of State has made it clear that in future rent levels are set to rise, although he will not indicate by how much. He stated that actual levels will be set in relation to the value of right-to-buy sales. This is worrying for authorities—like Cambridge District Council—where the right-to-buy values are high due to the overheated property market. It does not take account of the fact that Cambridge has to cater for those who cannot compete in the private market; namely, the low paid, the unemployed and many others.

Areas with high house prices are often those with high incidences of homelessness and housing need. Just look, for example, at London. There is no confidence that housing benefit will be an effective safety net for tenants who may be faced with steep rises. Arrears generally are likely to rise. The Government should realise that it is their policy towards housing benefit which has contributed significantly towards increasing arrears.

The result of the new measures brought in in April 1988 was a reduction in government expenditure of £640 million. All claimants, no matter how poor they may be, have to pay 20 per cent. of their general rates. It is that policy which has thrown many tenants into financial difficulty and resulted in major increases in arrears. This is happening, to those in housing association properties as well as to those in council properties.

As regards ring fencing of the housing revenue accounts, I recommend that noble Lords read the article on this written by the director of the National Housing and Town Planning Council in the May edition of its review. It gives a very nasty warning about what will happen to local authorities and their finances when the consultation papers produced by the DoE this summer are turned into the next Housing Bill—the one due to be introduced in December—as well as what is happening in this Bill.

The proposals do nothing to address the escalation of housing need, as the noble Lord, Lord Jay, pointed out. The effect will be to increase rents, deepen the poverty trap, make it more difficult to provide a high quality service and further restrict access to council housing.

Contributions from the general rate fund will not be allowed. The incidence of councils which use rates to help fund council housing is not major. Only 20 local authorities nationally draw on the rates to provide 20 per cent. or more of their income. I know that the noble Earl, Lord Caithness, in his opening speech, mentioned the councils of Manchester, Islington and Camden. But those are areas where housing is particularly difficult and where there are many inner city problems.

Where councils have made contributions, it is usually where projects affect the private as well as the public sector—for example, environmental projects in a general improvement area. London councils where land, development and management costs are very high will be badly hit and they should be looked upon as special cases. Is it fair that councils will be prevented from using rate fund contributions when surely housing is a community asset which should be supported by all ratepayers? After all, council tenants will pay the poll tax.

The proposal to pass the cost of paying housing benefit to the local authorities is grossly unjust. Tackling poverty should be a national responsibility. In practice it will mean that some council tenants will be paying for the housing benefit of other council tenants. Let us take, for example, two neighbours. One might be in low paid work but above the eligibility threshold while the other is in receipt of full housing benefit. The tenant not entitled to benefit will, through his rent, be contributing to the cost of rent rebates to the other. The poor will be subsidising the very poor, as the noble Baroness, Lady Stedman, said. It is not only unjust, it is also inconsistent, in that it treats council tenants differently from others who receive assistance with housing costs. That includes others who recieve housing benefit and those who are eligible for mortgage tax relief.

For the most part this is an unfair and unmaginative Bill. Those who drafted it seem to have no knowledge of how a great many of our compatriots live. They seem to have paid no heed to the vast number of reports, many from the DoE, which show the need for investment in repair and in houses. Like so many other Bills, it shows a real antagonism towards and lack of trust in local government and those who serve in it either as officers or members. I hope that the noble Lord, Lord Bellwin, is right when he says that he believes that confidence in local government will return. I just hope that confidence will remain with those who work in local government, either as members or officers. I think that that is most important for the future.

5.6 p.m.

Baroness Blotch

My Lords, some of us feel that the provisions contained in the Bill have been a long time in coming, especially those based upon the recommendations contained in the Widdicombe Report on local government. On the other hand, like my noble friend Lord Bellwin, I too regret the need for such a Bill. When considering the reasons for the provisions contained in Part I, one only has to witness the practices of some local authorities. It is all very well to say, "Well, it is only some local authorities, by and large the rest of them are well behaved". Some of those local authorities actually represent many hundreds of thousands of people across our country.

When looking at such practices one can see, for example, council chambers being used for discussing national and international politics. The public is fed up with watching such practices. In my local authority most of the time is spent in pontificating about defence measures and matters which have very little to do with the provision of local services for local people. I believe that the public is waiting for councils to return to the business which local council chambers should be about; that is, determining policy to provide local services for local people at a price which local people can afford.

Another example of these practices is the appointment of political activists to local government staff. Then there are the tactics used when appointing councillors to committees; for example, in some local authorities—indeed, one in my own county—only the majority party serve on the all-powerful policy committee. There is also political interference with the day-to-day management of the authority and the use of co-optative powers to recruit political friends onto committees.

I welcome the restrictions in the Bill on co-opted members to become advisory only. I see no reason—perhaps my noble friend will give the matter some thought—why such restrictions should not extend to university representatives, Church representatives and teacher representatives.

To councillors who feel that the Bill is unnecessary—indeed, that has already been mentioned this afternoon—because their particular authorities, or the authorities which they know well, are being run consistently under the provisions as set out in the Bill, all I can say is that they should accept the Bill because it enshrines best practice.

However, we all know of local authorities where the implementation of the Bill will mean a radical departure from their present practice. Indeed, one only has to list some of the more glaring examples of abuse, especially that of twin-tracking: the former leader of Lambeth Council is employed as head of Hackney's women's unit and was considered for the post of the council's chief executive; the leader of Greenwich Council is also the policy adviser for Lewisham Council; and the chairman of Waltham Forest race relations committee is an industrial relations adviser to Haringey Council. Moreover, Camden Council appointed Patrick Kodikara a Sri Lankan born black activist and gay rights campaigner, as director of social services while he continued to be member of Hackney social services committee.

Almost a quarter of Glasgow City councillors were employed by their regional councils. At one time, 48 per cent. of Camden's Labour councillors depended, directly or indirectly, on councils for their living. About 16 per cent. of local authority councillors are also local authority employees. That amounts to about 4,000 people. Of those 4,000 people, 58 per cent. are teachers or lecturers, to whom the twin-tracking provision will not apply. I am minded to bring forward an amendment in Committee, because I find it abhorrent that teachers should find it necessary to involve themselves in local politics, not for some of the reasons that have been given today but because it is wholly inconsistent with the professional job of a teacher to be politicking in local government. It is something about which I feel strongly. The restrictions should apply at least to head teachers and heads of departments.

One has only to look at some of the abuses that I have listed to know that the Bill, especially Part I, is necessary. It contains a clause relating to political advisers to groups on county and district councils. In 12 years of being in local government, I never saw the need to have a political adviser. I was leader of my authority for four years and leader of my group for a further two years, and I never saw the necessity of having a political adviser. I do not support them. I shall not be supporting them in the Bill. If there is money around to pay for political advisers, that money could be better spent on the many social needs within our communities.

Part II relates to the local ombudsman and local powers. I have two comments to make. The first relates to how the local government ombudsman works. I am sorry that the noble Baroness, Lady Serota, is not in the Chamber because it might be useful if we were to discuss the issue. When a complaint is made to the local government ombudsman, his department will often apply to the authority involved for an account of what led to the complaint. The local authority provides the information. The local government ombudsman, often without any reference to the complainant, frequently determines that the complaint will not be pursued. There is a question mark over that procedure: the authority being complained about provides the evidence which leads to the decision that the complaint will not be pursued. That gives me cause for concern.

My other cause for concern relates to the ombudsman's powers. If a complaint is made to him of maladministration leading to injustice by a local authority all that he can do, even under the Bill, is to make a report and recommend that the council put the matter right. The council can ignore him. If it does, the local government ombudsman can return with a second report and further propose that action should be taken. The second report can be ignored. That happens. One of my first actions as a county councillor was to take my authority (Cambridgeshire) to the local government ombudsman. The county council was found guilty.

It ignored the recommendations, and I, with the local people, returned to the ombudsman and the county council was found guilty on a second occasion. The county council merely said that it would not have the ombudsman telling it what to do. The report was made public. It left the parents, who knew that the county council was guilty but that nothing could be done, with a sense of grievance. There should be some sanction, perhaps compensation for the aggrieved party, or, as the noble Baroness, Lady Stedman, suggested, some independent judicial enforcement.

I wholeheartedly welcome Part IV. It relates to the reform of local authority capital spending. I find it almost unbelievable that people should believe that the requirement to reduce local authority debt is necessarily bad. Local government borrows £45 billion. The cost of servicing that debt is high. The people in the local communities pay for that debt. Any measure that reduces that debt frees money which can be applied to other local services. I welcome that measure.

I welcome the abolition of annual allocations which often came in late in the financial year, and sometimes even beyond the end of the financial year. I welcome the fact that we shall no longer be able to hide behind the Government's skirts and say that because the Government have done this, that or the other we can no longer carry out our policies. I welcome the increased accountability that the provision will bring. I welcome the three-year planned credit approvals about which the Government will inform the local councils and which will enable them to plan ahead. That will be nothing new for Cambridgeshire which has a sophisticated forward planning system. It might well come as something of a culture shock to some authorities which will be required to think beyond one year.

I have one reservation about credit approvals which I should like to communicate to the noble Lord, Lord Middleton. We should recognise the capital spending needs of rural areas in addition to their housing difficulties. The requirement for rural areas to spend capital, especially when they have the logistical difficulties of reorganising school provision, is as high as that of more urban areas. The requirement to reduce debt is a boon. Genuine accountability is important.

I shall deal briefly with housing because my noble friend Lord Bellwin dealt with it in some detail. I support the point made by the noble Lord, Lord Middleton, who referred to the Jopling amendment moved in the other place. There is a need to reconsider providing low-cost housing and to enable young people to enter the home ownership market step by step while allowing local authorities to retain some part of the equity. I refer your Lordships to Hansard of the other place (cols. 1029 and 1045 of 14th June) because that amendment may well be brought back in some form in Committee.

I am rather tentative about making my next comment, because no one so far has mentioned, and I suspect no one after me will mention, dogs. I mention them because I wish to pre-empt the possibility that the subject may return as an amendment in this place. It is well known that I oppose a registration scheme. It will do nothing to resolve the difficulties over dogs. It will not eliminate strays, resolve the problem of dangerous dogs or do anything to resolve some of the problems that were mentioned in another place. The scheme will however increase bureaucracy. If the charges are to be realistic, there will inevitably need to be exemptions. There may need to be exemptions for children, the elderly and those on low incomes. Once we enter into that field, all dogs will be owned by children, the elderly and low-income families. We shall quickly find that the ownership of a dog will be passed around like a parcel. I hope that the registration scheme will not be resurrected as an amendment to the Bill. Deregistration of course is another problem. I do not know how on earth one registers dogs that die, are killed on the road or go missing.

The Bill builds on what has gone before. It will improve the accountability of elected Members to their communities. It will improve the ability of councils to plan ahead. It will restore to local government democracy, which has been undermined by political abuse, and it will set a framework for local authorities to boost their economies in their local areas. The community charge and competitive tendering legislation and the measures contained in the Bill present opportunities and not constraints.

It was my experience during 12 years in local government to work with highly competent professional and in the main apolitical officers. I should like to see local government go back to a position where councillors are engaged in determining strategy and policy only, working with officers who should be allowed to get on with the job of carrying out that policy. They should put in place systems which measure performance and are concerned with the quality of services.

Serving the community is a high calling. The Bill goes a very long way towards depoliticising councils and making local government more democratically accountable to do the job for which it is elected—that is to provide the most effective services in response to local needs at a cost that can be afforded by the community it serves. I shall support the Bill.

5.20 p.m.

Lord Pitt of Hampstead

My Lords, I must begin by apologising to the Minister for not being here when he started his speech. Transport proved a little difficult; the congestion in Finchley Road was far more than usual. It is regrettable that I was not here for the whole of his speech because I intend to be very critical of the Bill.

As has been said before, this is the fiftieth Bill which affects the running of local government in England and Wales to come before Parliament since 1971. Nineteen Bills dealing with housing have come before Parliament. Yet in the same period local authority services have become a lot worse; homelessness has more than doubled.

The Bill, when enacted, will have major implications for the operation of local government and will have a directly adverse impact on the black and ethnic minority communities living in the urban areas. Increasingly over the past decade these communities have looked to local government for responses that are relevant to their particular needs in education, housing, social services, leisure and recreation services, employment opportunities and the general environment.

In the early 1980s when it looked as though some parts of local government were responding to such needs with innovation and equality action programmes, the scope for eradicating racial disadvantage appeared to be tremendous. However, the continuous programme of legislation and the upheaval it has brought within local government has led to the erosion of that optimism placed on local government capabilities to make positive inroads in the provision of race equality through its service provision.

Central government, as the biggest employer of labour and the largest provider of contracts, could do a great deal in this respect but refuse to do so. They continue to pressurise local authorities for trying to do something. The pressure for change in local government has been daunting over recent years. That is now manifesting itself in acute staff shortages in the urban areas and particularly in London where many technical and professional staff, including surveyors, accountants, teachers and social workers are hard to come by.

The Bill will contribute to local government's decline and demise. It will erode even further the confidence of local people in the ability of local government to deliver. It will further increase central government's control over local government. It will futher reduce local government's influence in the local economy and in the overall delivery of social, economic and equality programmes for its inhabitants. Ultimately it will contribute to increased misery for urban residents in the most deprived parts of our inner cities.

It is regrettable that it is now customary to find in legislation of this kind the absence of substantial detail because it is argued that such detail will be settled by a plethora of future regulations to be formulated by the Secretary of State. There are many specific concerns to be addressed in the Bill. I cannot address them all. My particular concerns are with the overall management of local government which is dealt with in Part I and with the housing proposals in Parts VI, VII and VIII.

Part I of the Bill has serious implications for the black and ethnic minority communities and its ramifications have not been thought through. No adequate consideration has therefore been given to them. During the past decade we have been able to witness the emergence of black and ethnic minority residents in urban areas involving themselves in local political activity. They have responded to calls to use the democratic processes as a way of challenging racism and developing equality policies and programmes rather than using other means. Many of them are now local authority councillors and are active participants in local democracy. Many of them also work as employees in local government, having experienced widespread racial discrimination in the wider labour market, and having found local authorities as employers more accommodating.

Few of them are to be found in senior positions. Therefore they are unable to use their political affiliations in a detrimental way within their employment. Yet the proposals set out in Part I to end twin-tracking will directly affect them adversely. There is little or no evidence to justify the Government bringing forward legislation that is so draconian in intent and discriminatory in effect, to deal with what is a small number of twin-trackers.

When enacted, this legislation will mean that councillors who are employed by other local authorities will either have to give up their present jobs or give up local politics. That is neither a healthy situation for economic survival nor for local democracy. Local government is big business, irrespective of whether the services are provided directly by local authorities or on their behalf by private contractors. Therefore it justifies better remuneration for councillors, instead of placing the emphasis on continued enthusiasm and amateurism.

The legislation will drive many competent people away from being councillors because of the derisory allowances to which they are entitled when compared with those enjoyed by company directors and indeed elected Members of Parliament. Many of them have no direct responsibility in the same way as locally elected councillors. Those councillors have to face the prospect of surcharges and disqualification if they make wrong or unlawful decisions. That is a prospect which even the Secretary of State—and we know that Secretaries of State make wrong and often unlawful decisions—does not have to face.

If the Government are to press ahead with such legislation, they clearly need to make provision for adequate remuneration to be paid to councillors, or at least to leading members of local authorities such as chairs and vice chairs of main committees. This will at least ameliorate the damaging effect of councillors having to give up their jobs and ensure that they are not further penalised for serving as elected representatives on their local councils in the discharge of the enormous responsiblities that we place upon them.

Clearly the race implications of Part I of the Bill have not been considered. It could be argued that the effect will lead to a decline in the number of black and ethnic minority people who will want to become councillors because of the doubly penalising effect. That is not a healthy development in good race relations, or for local democracy in the inner cities. Furthermore, considerations of what activity is politically acceptable or not politically acceptable on the part of local authority officers and staff will bring much conflict and consternation to those black staff who have risen to middle ranking and senior posts within local government.

It is quite clear that a whole range of legitimate activity in which black and ethnic minority people are engaged on a day-to-day basis could be deemed political. Many black people, for instance, actively support campaigns which seek to end racial harassment or which seek the reform of racist legislation: they may protest vigorously against police misdemeanours as well as being active in a whole range of other campaigns for civil liberties, equality and justice. Being involved in anti-racist activity could possibly be determined as political activity leading to conflict. These matters require clarification from Government before such legislation can be enacted. I believe the Government at least ought to indicate what kind of political activities are deemed unacceptable.

These are matters which require clarification on the part of the Government so that the black and ethnic minority communities can be assured of their continued employment in local government and their continued active participation in the local democratic processes which are all conducive to society's well-being, the improvement of local race relations and the achievement of race equality and justice.

In addition to the specific concerns in Part I of the Bill, I am sufficiently anxious to raise at this point the restrictiveness of the reforms in relation to the economic development power for local authorities as set out in Part III of the Bill. It is not clear, and the Government have failed to clarify how grants to voluntary bodies working for economic development are to be dealt with. I hope that when the Minister replies he will make that matter clear.

It is absolutely clear in the inner cities that voluntary organisations take a lead role and play an active part in contributing to economic regeneration. Yet it is not clear that they can receive grant and assistance from local authorities under the provisions of the Bill. Once again I am deeply concerned about the extent to which details are to be settled by regulations to be issued by the Secretary of State. In particular, the rigidity of imposing a requirement on local authorities to prepare and circulate economic development plans before the beginning of each financial year will be a straitjacket that does not allow local authorities the necessary flexibility of being able to respond to sudden unexpected local changes, such as the sudden collapse of a local industry which seeks to shed hundreds or even thousands of jobs.

If the Government are serious about economic development within the inner cities happening in any meaningful and realistic way, they must provide local authorities with greater flexibility, and they must involve them fully in the drawing up of the numerous regulations to be introduced. The Government must also review the adverse impact of this Bill on the management of local government in the inner cities and—I hope I may refer again to this—on the black and ethnic minority communities.

Although I have spoken at length on the implications of the Bill for the black and ethnic minority communities, the Bill has the same adverse effect on the indigenous community. Like other noble Lords, I have received a great deal of correspondence from councillors who will be adversely affected by this Bill and who feel that their civil liberties are being infringed. Some are in fact threatening to take the matter to the European Court. The level of 1,350 is in fact thirty-third on the scale of local government salaries. The highest scale is 49. The AMA estimates that some 78,000 local government officers will be adversely affected and that the total can rise to 114,000 this year and continue to rise in future years. The salary qualification means that more and more people could be affected as there is no commitment to vary it for inflation or to take account of regional pay variations. I have a suspicion that London employees will be more adversely affected than those elsewhere.

As I have said before, many of these officers are in no position to affect council policy as they are at too low a level to do so. Local authority officers should have conditions no more onerous than those of the Civil Service. This is an issue over which we shall need to have a great deal of discussion as it seems to me that the Government are using a steamroller to crack a nut. Like the noble Baroness, Lady Carnegy of Lour, I think that the Government should consider naming the posts which will carry a ban against political activity. I think that that can be done and I think that that is the way it should be done if we wish to go along this road.

I now turn to the housing section of the Bill. I am very concerned about the housing proposals in this Bill. I shall attempt to put them in context in order to explain how damaging they will be. Instead of assessing today's acute housing needs and bringing forward measures to deal with them, the Government have devised a new housing finance regime which will only worsen our housing problem. There has been a recent assessment of our housing requirements in the report entitled Housing Needs in the 1990's. That report was published by the National Housing Forum in National Housing Week last May. That report showed that around 2 million extra homes are needed now, and that there are up to 1.2 million households in England and Wales who want their own separate accommodation but who do not have it at present. Households such as these who have to live with others are unlikely to be able to afford to buy their own homes. Only one in five of these households in London were in a position to buy, according to the London Housing Survey, conducted by the London Research Centre.

Local authority housing has been able to provide accommodation at the rents which those in housing need can afford, or at least that used to be the case. The link between low incomes and severe housing need and homelessness was well illustrated by research published last year by the Minister's own department, the Department of the Environment. That research was entitled, Responding to homelessness: Local authority policy and practice. It showed that the vast majority of households accepted as homeless by local authorities had no earned income, with only a fifth of them in paid work, and even fewer in the metropolitan authorities. That is what the department's survey showed. Therefore, the department should be trying to remedy that situation.

However, the supply of public sector housing has been drastically reduced. Housing Investment Programme allocations were cut to less than one-fifth in 1989 from their level in 1979, at a time when we need 2 million new houses. Over 1 million council homes have been sold since 1980 and they have not been replaced. Public sector completions, including housing associations, totalled 94,000 in 1980, and they were down to 18,600 in 1988. The combined total of council and housing association completions for rent is planned to rise to just 30,400 by 1991 to 1992. That is the plan. That is nowhere near enough to begin to make up the shortfall. At the same time the new financial regime for housing associations is taking rent levels beyond the range of their traditional client group. The rents are now too high for the people for whom they normally cater, or at least they will be if the new regime is followed. With private rents now at market levels as a result of the latest Housing Act, they are beyond the scope of people on low incomes. The vast majority of those people are in housing need.

The proposals before us today will reduce still further our ability to meet the needs which have been established by independent housing assessments. The last major source of genuinely affordable housing for those who need it will be cut off and priced beyond their reach. In the words of the Secretary of State, rents will be encouraged to increase to reflect the pattern of house prices around the country. That will be achieved by the ring-fencing of the housing revenue account.

With around 60 per cent. of council tenants receiving housing benefit, a substantial increase in rents will cause great hardship, especially for those receiving low wages. Those tenants who manage to afford those rents will eventually have to pay for the debts of those who cannot, and some council tenants will have to pay for the housing benefit of their neighbours.

The new capital finance system will cause local authority housing programmes to be run down even further. The ability of democratically elected local authorities to implement local decisions to build more homes will be severely curtailed. The scope for using capital receipts for housing investment and repairs will be cut, even though that money could be used to reduce homelessness significantly in many parts of the country.

We urgently need much increased investment in public housing, but this Bill will take us in the opposite direction. What is worse, as the noble Lord, Lord Ross, has pointed out, the new system of grants for housing repairs is a recipe for encouraging the decline of substandard housing to an unacceptable level of fitness. I do not believe that that is what we want.

We are in desperate need of a housing policy which will address the housing requirements of this country and the needs of those millions who are poorly housed. This is just another bad Bill which can lead only to increased homelessness and even less affordable housing. I do not believe that we shall be able to do anything to the Bill, but I hope that the Government will begin to think seriously about the issues which confront the nation.

5.44 p.m.

Lord Coleraine

My Lords, I should like to draw attention to one or two aspects of the Bill which fall outside the areas of local government housing finance. First, I welcome the new initiative for the payment of grants for improvements and repairs to houses set out in Part VIII of the Bill. Clearly the condition of the housing stock is such as to call for the continuation of subsidies in this field. I also tentatively welcome the proposals for means testing, but I join the noble Lord, Lord Ross, in inquiring about the results of the department's consultation paper.

I should like to talk about Clause 157 of the Bill and the long ninth schedule, which deals with the rents payable for long leases on flats after the leases expire. This subject has not been touched on before in your Lordships' House and was touched on very little in another place. Since 1951, residential leases of 21 years or more granted at low rents have given lessees the right to remain as Rent Act tenants when the leases expire. The effect of Clause 157 and the ninth schedule is to provide that, when the leases expire, the lessees may continue with security but they will be assured tenants paying full market rents. I must declare an interest in the subject as I live in a flat which has a long lease at a low rent which will expire very soon after the start of the third millenium.

This clause has been included in the Bill because it was left out of the Housing Act 1988. In the debates in another place, my honourable friend the Under-Secretary of State, Mr. Trippier, said in Standing Committee G on 2nd May: Now that we have established the market rent principle for the generality of lettings, it would hardly be right to perpetuate the fair rent regime for long leases that are coming to an end. We made our intentions on that subject clear as long ago as October 1987, as part of the main deregulation package. We had hoped to include the necessary provisions in the 1988 Act, but the drafting was more difficult than we had expected". He also said: The change from fair rents to market rents is an entirely logical adjunct to the measures to deregulate private sector lettings, which we introduced in the 1988 Act." [Official Report, Commons, Standing Committee G, 2/5/89; Col. 1204] There is consistency there. Although I shall listen very carefully to the explanation that my noble friend Lord Hesketh may give when winding up, at the moment it exhibits to me something approaching the foolish consistency which is said to be the hobgoblin of certain minds.

To my way of thinking, an entirely different situation exists as between long leases and their expiry and the position of rent act tenancies. That is primarily because the long leases were granted or transferred for premiums. There is a contractual expectancy, on the part of both the landlord and the lessee, that at the end of the lease the lessee will have the statutory tenancy on the same terms as from time to time will apply to other statutory tenants. Therefore the clause proposes the destruction of certain financial rights which exist and are enjoyed by long lessees. It would be likely to be a source of particular hardship to people who may quite recently have bought the fag ends of long leases in London for very high premiums.

There is a second point. Under the Housing Act, assured tenancies are created only on the occasion of new lettings. Existing tenancies ere not affected. It seems quite anomalous to subject lessees under long leases to such a provision. After all, a Rent Act controlled tenant does not have to look forward to the possibility that in as little as nine and a half years he will be transferred to an assured tenancy. I understand that a number of long leases which are close to expiry are enjoyed by the elderly. I am certain that they must be looking forward with a great measure of apprehension to what will happen when their leases come to an end and they come within the full assured tenancy regime.

There is a final point. One has to look at the enfranchisement position of the Leasehold Reform Act 1967 and compare the position of houses and flats. The clause will apply almost entirely to flats because the lessees of houses in the same position will have taken the opportunity under the 1967 Act to buy their freeholds. There is a strong body of opinion which says that, one way or another, the provisions of the 1967 Act should be extended to the lessees of flats. Consistency of treatment between lessees of flats and lessees of houses demands that the playing field should not be tilted against lessees of flats in the way that the clause suggests.

My noble friend the Minister is the Minister responsible for housing and is qualified and experienced in these matters. I shall certainly support or put down amendments for Committee stage which I hope will persuade the Government to at least think again about the provision.

5.50 p.m.

Lord Carter

My Lords, this Bill has many political and financial implications and will affect local government substantially. My noble friend Lord McIntosh has ably covered the broad sweep of the provisions of the Bill. I should like to concentrate on two aspects of the Bill. The first, which I do not think has been touched on, is the way that it will affect people with disabilities; and the second is the provision of low-cost rural housing.

Clause 131 and Schedule 5 amend the Local Government Finance Act 1988 which deals with the poll tax. There is an omission in that no attempt has been made to correct a serious injustice affecting disabled people as a result of the ending of the rating system. The Rating (Disabled Persons) Act 1978 allowed for rate reductions for disabled people who had altered or improved their houses to cater for their disabilities. It effectively granted them rate rebates. Not surprisingly, the ending of rates means the ending of those rebates, but the Government have made no attempt to deal with the injustice that will result from that change. As a result, many disabled people have realised too late that their poll tax bill will far exceed their previous rates demands. Many physically disabled people have discovered that they may face anything up to an extra £300 per year. RADAR and the Spastics Society have been flooded with inquiries. From March 1990, the rebates that were previously available will no longer apply because the poll tax is a tax on people, not on properties. Only disabled people on income support or very low incomes will be able to obtain a rebate on the tax.

Mr. Taylor of Inchture in Scotland, where the poll tax has been introduced, discovered that his bill for the poll tax is almost double his previous rates bill—an extra £259 a year. He is registered disabled and retired last year. Under the rates system, he received a rebate, but, under the poll tax, he does not qualify because his wife is earning. The kind of people who are likely to be affected are those in his position, where a non-disabled partner is working or where the disabled person himself is working. Where rates rebates worked as an incentive to encourage disabled people to live in the community, the poll tax may well act as a disincentive.

Perhaps I may give another example concerning a couple in Scotland. Before the introduction of income support and the poll tax, they were not liable for rates at all. After the introduction of income support, but before the introduction of the poll tax, they were liable for £8 per month of their £40 per month rates bill. Now, with income support and the poll tax, they must find a sum of £12.75 a week in total. So, in two years, their rates bill has increased from nothing to £12.75 a week. At the same time, their benefits have increased by £2.25 a week. So, in two years, a disabled couple are £10.50 per week worse off. We shall certainly wish to put down amendments to the Bill at the Committee and Report stages to deal with that situation.

The other area of concern relates to the disabled facilities grants in Clause 108. Those grants are to be means tested, which is monstrously unfair for all people, but particularly for disabled people. The whole idea of means testing runs directly counter to the concept of a comprehensive disability allowance which is paid irrespective of means to all disabled people to meet the extra costs of their disability. Not surprisingly, that idea has received rather guarded support from Mr. Nicholas Scott, the Minister for the Disabled. I am pleased to say that the proposal is now the official policy of the Labour Party.

If disability is acquired in the course of a working life and is so great as to require expensive adaptations to a house, most people suffer a significant financial loss when they become disabled. The same is true of a disabled dependant. The disabled applicants or dependants will probably spend the rest of their lives disabled. Few, if any, will be able to look forward to employment as a means of making good whatever they are forced to spend on adaptations. Those with savings at the time of their disablement can look forward only to seeing those savings steadily depleted, having to spend them on disability aids and equipment which are not supplied through the health service and on helping to offset some of the heavy extra costs of daily living as a disabled person.

It is also unfair that the proposed means test will be based on scales established for non-disabled people, so that no account is taken of the hidden extra costs of disability. Besides the fundamental objection to means testing for disabled facilities grants, we wish to amend, if possible, Clause 108 to improve and extend its range. It mainly concerns improving access in and around the home. That is very welcome, but many of us would like to see an extension of disabled facilities grants and we shall therefore put down amendments to this effect.

There is also the question of the effect of the Bill on improving heating for low income families, and particularly for the elderly and disabled. There is no doubt that the legislation will adversely affect the work of Neighbourhood Energy Action which insulates the homes of elderly and disabled people and others on low incomes. The discretionary nature of the grants will provide no signal to local authorities that energy efficiency measures are considered vital. The loss of the £25 million expenditure on energy efficiency which is currently available for loft insulation and draught-proofing will mean that thousands of elderly people will be at risk from the cold. Local authority and housing action trust tenants will no longer be eligible for grants, and tight controls on general housing finance are unlikely to provide for energy efficiency measures.

There is a further serious anomaly in the operation of the poll tax. That relates to the refusal to grant exemption from the tax to those suffering from severe dementia. There is exemption for those defined as severely mentally impaired, but the Government have resisted inclusion in that category of those suffering from severe dementia. We know that the poll tax is now in operation in Scotland. A recent press cutting makes it clear that the situation is chaotic. It states that, Doctors are exempting about three out of four Alzheimer's disease sufferers from the poll tax in spite of a Scottish Office order that they should pay, according to Alzheimer's Scotland … [The] director of the organisation, said yesterday there was complete chaos over the Scottish Office ruling, which has been widely condemned as illogical. 'It is a mess, whatever way you look at it', he said". He also said that; some people were being refused [exemption] who were more severely mentally impaired than those being given exemptions. 'It is not only unfair, it is unworkable', he said". Again, we shall wish to put down amendments to deal with that situation.

A number of noble Lords have referred to the problem of the homeless. There is an inference that homelessness is a problem almost entirely of the inner cities. That is just not true. It is a fact that 50 per cent. of the homeless are to be found in rural areas. Only this morning I checked some figures with my own district council in Wiltshire. It is a rural area with a population of 67,000. Five years ago the bill for bed and breakfast came to £2,000 a year; in the last financial year it was £70,000, and this year the budget is £82,000. That is the increase over five years in a rural area. It illustrates very well the problem of rural housing.

I should like to mention the problem in relation to staircasing, which was a point raised by the noble Lord, Lord Middleton. Staircasing is the right of an occupier of shared ownership housing to buy the freehold of his house. Housing associations and local authorities are not allowed to subsidise shared ownership housing unless the right to staircase is written into the contract. There is a great deal of support among district councils in rural areas for that right to be abolished. Houses for shared ownership have been built in villages to help those who cannot afford to buy a house or cannot find one to rent. Many of those houses have then been staircased and have become part of the general housing market. They are available only at the full market price and are no longer reserved for local people.

At this point I should like to declare an interest. On the farm in which I am involved it is intended to set up some low cost rural housing. That depends on us, as landowners, being prepared either to make a gift of the land to the housing association at a fraction—perhaps only 10 per cent.—of its development value. This means that effectively the cost of land is removed from the cost of the houses on that land. It halves the cost of the house. Half of the remaining half stays in the ownership of the housing association, and the buyer has only to find one quarter of the full cost. On a house worth £80,000, that will amount to some £20,000.

We are quite prepared philanthropically to make what amounts to a gift in perpetuity to a housing association in order to ensure that the property is always available for those who are not able to afford to buy. We are certainly not prepared to make such a gift for the benefit of the occupiers of that low cost housing which our philanthropy is helping if, as a result of staircasing, they are eventually able to achieve the full ownership of the house, and then are able to sell it at full market value. We shall certainly not set up the scheme if staircasing is included. That will remove some eight to 10 houses from the potential stock in a rural area.

All the matters upon which I have touched are of real and practical concern. From these Benches we look forward to the opportunity to improve the Bill as it goes through its various stages in this House.

6.3 p.m.

Lord Swinfen

My Lords, perhaps I may start by taking up a point raised by my noble friend Lady Blatch; namely, the effectiveness of the local government ombudsman. If I heard her aright, she suggested that when the ombudsman found against a local authority there should be some form of financial compensation. I am not in favour of financial compensation generally because it can increase the number of spurious claims by people who wish purely to obtain money. I very strongly agree with her and support her suggestion that there should be some form of judicial enforcement. The ombudsman needs to be given at least one tooth.

Turning to the Long Title to the Bill, about one-third of the way down it says: to amend the Housing Act 1985". When the Housing Act 1988 was passing through this House by a substantial majority vote disabled people were given the right to buy. Unfortunately Schedule 5 of the Housing Act 1985 also contains paragraph 11, which is designed to protect accommodation for elderly people who are also disabled. It is phrased in such a way that it refers to elderly and disabled people. In my view it is being misused by a number of local authorities which are preventing disabled pople from buying their rented accommodation despite the will of Parliament. I think that it will be necessary to bring forward an amendment at Committee stage to ensure that that paragraph refers only to accommodation designed specifically for elderly pople who are also disabled.

Noble Lords may thank the noble Lord, Lord Carter, for considerably reducing the length of my speech tonight. I had intended to raise many of the points that he mentioned, including the question of conservation of heating in accommodation and means testing for disabled facilities grants. It must be remembered that a severely disabled person is not only handicapped physically in moving around and doing various things but is also handicapped at the same time in his or her earning potential. Any savings that they have will be used up within a few years in most cases by the extra costs involved in living life as a disabled person.

I believe that we should provide the facilities needed for them to be as independent as possible in their own homes. As I have said often in your Lordships' House, it is cheaper for a disabled person to live at home even with the capital cost of those facilities than it is to live in some form of institution or a hospital. We should insist on such facilities being provided.

As I read the Bill, if a physically disabled person wishes to buy a dwelling that is currently under construction, he will obtain no grant for any special adaptations that he needs in that dwelling. That is a mistake. It is far cheaper to build in the adaptations during the construction of that dwelling than to allow it to be built completely and then have to tear it to pieces before putting it together again. I am sure that my noble friend the Minister, as a surveyor, will understand that point very easily.

As the noble Lord, Lord Carter, has already delivered most of my speech, it only remains for me to say that I shall join with him in supporting various amendments at Committee stage. I wish the Bill well.

6.9 p.m.

Lord Dean of Beswick

My Lords, I think that it will be generally agreed that we have had a full and extensive debate on the Bill. Many of the technical points in both the local government part and the housing part of the Bill have been widely covered by various Members of your Lordships' House. As this has been a rather long debate, I do not intend to backtrack and go over points that have been raised during the speeches of other noble Lords.

I shall deal briefly with the local government part of the Bill because that was extensively explained very ably and in an accurate way by my noble friend Lord McIntosh in his opening speech. I simply make this reference. I find it a strange criterion of democracy that a government who have introduced an average of five Bills every year that they have been in office discipline or contract the areas of responsibility for local authorities and their elected members. It is dangerous when we reach the stage where a political party, or a political movement, considers that democracy is good so long as it is always right. I find it strange that the Prime Minister and Ministers of the Government, who quite rightly are welcoming the loosening of the rigidity in the Eastern European countries, are moving away from centralisation. We have a Government who are moving quite decisively in the opposite direction on a variety of excuses. It is a very dicey exercise in which to become involved.

As a former member of a large local authority I believe that the overwhelming majority of authorities do a good job. In the same way as there are bad governments and Ministers, there are bad local authorities. However a response to the Government's treatment of the local authorities was indicated by the reception given to the Secretary of State for the Environment by the annual conference of the Association of District Councils, which is Conservative controlled. It showed Mr. Ridley in no uncertain terms that it did not support what he was imposing on local authorities.

We have had a Government over the past 10 years who are uncaring in their attitude to the people in all political parties who wish to become councillors in local governments and to do a good job. They are certainly unheeding when people in their own party start to object to some of the measures that are being forced down their throats.

I must refer briefly to the comments made by the noble Baroness, Lady Blatch. She said that she was minded to move an amendment that will stop school teachers from having the privilege of standing for office in local elections and being either rejected or elected. If one adds council house tenants and the unemployed to that list, we shall have no electorate left. It may sound funny, but that is the road down which we are going. People from sections of the community who have most to offer will be barred under the Bill from any input whatsoever. Whether one is Conservative, Labour, Liberal, SDP or whatever, it is a very dangerous trend for a Government to decide who will have the power to represent people. Adolf Hitler did that; he decided who would have the power. So did Stalin; and we know how that ended.

Let me turn to the main aspects on housing in the Bill. I shall not speak to them clause by clause. In my winding up speech on the Second Reading of the Housing Bill 1988, I said that not only was the Bill flawed, it was also a fraud. It would not achieve what the Government said it would. I contend that practice has shown that it has not achieved their aims. To go briefly over old ground, there has been no forum in this country more forceful in its criticism of government policy—policy not decided in this Chamber but in another place by senior Ministers —than your Lordships' House. I am referring to all sections in this Chamber regarding the succession of debates that have taken place. Members of the Duke of Edinburgh's Commission, those who reported in Faith in the City and other groups have all come to the final conclusion that there is a tremendous shortage of houses. A report was mentioned which stated that we were 2 million housing units short.

The Government appear to have two planks of argument for their housing policy. The first is, what a tremendous success the sale of council housing is. That has always been topped by the response that, when the sales stop, make the bribe bigger so that they will go up. That is considered successful housing policy of course. Secondly, there is the fact that there are just over 100,000 council properties in need of repair which are deteriorating. The Government will find that more than 100,000 properties will have to be discarded from housing stock. I speak of industrialised dwellings. I do not blame this Government but the policies that were imposed on local authorities by successive Conservative and Labour Governments. Some properties which have been built less than 20 years are having to be demolished. The full cost still remains on the council house tenants. I believe that we can get away from that argument. Give us something new. Do not give us the old hat because it is wearing a little thin. We deserve a more intelligent response than to be told that those two excuses have to be accepted.

On capital receipts, as I have said previously, Members of your Lordships' House from all sections of the political spectrum and the Cross-Benches have repeatedly questioned the Government and reminded them of this fact. One of the main planks for the acceptance of the sale of council houses was that the money would be made available in total to build new council houses. I argued at the time that it would cost three or four times as much to build a new house as the amount for which the old one was sold. But the local authorities have not been allowed to do that. The provision in the Bill will make that position worse. As I understand it—I should like to be corrected if I am wrong—under the Bill there will be a point of nil extraction from those capital sales to build houses or to repair existing houses. The Minister who gave that undertaking is now a Member of your Lordships' House—the noble Lord, Lord Jenkin of Roding. He as Secretary of State gave the copper-bottomed undertaking that this was the reason for the Bill. I am sorry that he is not present but I am stating historic facts that are able to be checked. I believe that noble Lords will find that I am right. We now have a Government who are not prepared to carry out the undertaking that they gave and to allow local authorities to use their own money. It is not the Government's money.

The noble Lord, Lord Pitt, referred to the sad fact that in 1988 in terms of financial resources and allocations local authorities received one-fifth of the amount that they received in 1979. Such sums are supposed to produce more houses and enable more repairs to be undertaken.

If I have to deal with one part of the Bill that is absolutely monstrous it is this ring-fencing. Mr. Gummer is a pillar of the Church. He is supposed to be steeped in Christianity. I happen to be an atheist or an agnostic but I care for my fellow men. For such a man to make a public announcement that the council house tenant who pays his rent will have to pay the debts of one who does not is monstrous and absolutely unacceptable by any standards to a fair-minded person. I have repeatedly asked in another place and have used the same terms here. Why are the Government so obsessed with a vendetta against council house tenants? This is the most outstanding example of the depths to which they will go to prove that such a vendetta exists.

In the pressure areas, parts of inner London or in parts of the city where I used to be the leader of the council and at one time chairman of housing, 50 to 60 per cent. of council house tenants are on very high housing benefit. That means that the full weight of the housing revenue account is being borne by about 40 per cent. of the council house tenants in those authorities. They are not people with a lot of money otherwise they would have been able to take advantage of the gift horse of buying their council homes. They cannot afford to buy them or, for various reasons, do not want to. What it means is that the full weight of the debts of that housing revenue account will fall on people with principles, who honour their debts to society and have paid the rent.

I have heard of some cases where, if rents are paid on time people, receive a bonus for paying them. How can anybody, other than this Government, bring in a scheme whereby someone can be punished for paying his rent on time? This is absolutely beyond belief.

If the Government have any principles they should think this thing through. This scheme is tantamount to saying to somebody who is in an average, decent job and pays his rent, high as it is, that as Charlie next door does not pay his rent, you can pay it for him. That is the way they will take it. They will not understand the figures coming through the door from the Government or from the local authority. In the days when we are talking about getting the community more balanced, doing away with violence and improving the social order, that is a good input to it, is it not? I can see what will happen in local clubs and pubs at weekends to people who do not pay their rent. Your Lordships might think that that is a laughing matter, but it is the type of situation that will be created.

I have referred to the last housing Bill. The Minister will be aware that on a number of occasions I have questioned him. One of the strong points he made was when he talked about the private sector during the passage of the last housing Bill. He was questioned about the homeless and gave figures. I do not want to go through all the rigmarole because the figures have been quoted in this House today, on previous days in debates and at Question Time, of what is happening regarding homelessness. It is becoming a fearful concept of what may happen. I said a few weeks ago that we were lucky we had a mild winter. But if there is a severe winter to come there will be carnage in the inner areas of London among the people sleeping out in cardboard boxes, and with the youngsters who have had to leave home for a variety of reasons. It is no good the Minister then saying that the bad winter has caused it. People ought not be be in such a position. If the Government had not withdrawn financial support—the Treasury is supposed to be awash with money under Mr. Lawson—many of these problems may have been eradicated. I am not saying they would have been completely eradicated, but they would have been alleviated.

I want to compliment the Minister. I have asked him at various times to give me a clear indication or evidence as to how the private sector was now dealing with homeless people. Is there any evidence that homeless people could negotiate with an agent for a private tenancy, and if the rent was £150 a week it would be met from housing benefit? I have never been given an answer. I do not think the Minister has one. I was amazed, as were other Members of your Lordships' House, when my noble friend Lord Stallard mentioned in the debate on the last Housing Bill that rents of £150 a week from housing benefit were being paid in London. Believe it or not, those are the lowest now.

I wonder how many in your Lordships' House read the article in last week's Sunday Times which states: Single rooms in Highgate, north London, [are] let for a rent of £160 pw; Luxury flats in a converted warehouse in Bethnal Green, east London, at £150 to £200 pw; Flat; costing £260 pw in The Cascades, a luxury development on the Isle of Dogs in London's Docklands, with its own swimming pool and squash courts; Houses at Brunswick Quay, a development in Surrey Docks, let at £200 to £300 pw". Let us move from that to what was said in the Evening Standard last night. This is the success of the Government's policy. Those people may be homeless, but if those sums of money were used for building, if they had been ploughed into a building programme, what effect would that have had? The Evening Standard said: London has become the mecca for homeless and jobless families all over Britain". I do not suppose whoever wrote this has been near Charing Cross station to see the people living there. It is not a mecca for them, but the leader continues: Two-thirds of all impoverished families housed in bed-and-breakfast accommodation are in London, at an annual cost for each family of more than £11,000 (enough to finance the debt repayable on two new council homes). What really are the Government playing at and trying to prove? Every known housing agency, non-political or whatever it may be in the country, has come down forcefully to say that over the period there is a shortage of houses. In every debate in your Lordships' House that I have mentioned, people from outside, the Institute of Housing, Shelter, National Federation of Houseowners, everybody, says that there should be a substantial building programme of new housing to let. Let us make it clear. The only authority that can carry out such a programme is the local authority. My noble friend Lord McIntosh earlier said that the housing associations say that they have no way in which they can take over the role of the local authorities. They can supplement the work, but no more than that.

Finally, there are indications in the Bill—I say only indications—that there may be more money or a different scheme to make money available for improvements of private housing. Faith in the City pointed out clearly that the biggest area of concern for housing in this country is deterioration not in the public sector, but in the owner-occupation sector. As people grow older they no longer have the funds to repair or maintain their houses. Some form of financial assistance ought to be given to help people to get on with that job and to stop the rot in that sector. There are indications that there may be something in the Bill, but we can only deal with that when the Bill goes into Committee and we can press the Government as to what it means.

I have tried to give what I think is a summary of what the Bill is supposed to do. My view is that it will have no more effect on the terribly deteriorating housing situation than the last one. In terms of taking homelessness off the streets, succouring those concerned, including the children, and giving them somewhere to live, it might just as well never have passed through your Lordships' House on its way to the statute book. Unless the Government alter the Bill drastically the injustices in it will have no effect. We shall oppose it and amend it wherever we can.

6.30 p.m.

The Parliamentary Under-Secretary of State, Department of the Environment (Lord Hesketh)

My Lords, we have had a most interesting Second Reading debate and I thank all noble Lords who have contributed. I should like to respond briefly to as many of the points made as possible.

The Bill has been criticised on the grounds that once again the Government are interfering with local authorities and constraining them unnecessarily. But this is not the case. All of the reforms which the Bill introduces are logical and justified, as my noble friend Lord Bellwin said. Much of the early part of the Bill stems from the Widdicombe Committee which demonstrated a need for clear rules on political activities of local government officers. The Bill will ensure greater political impartiality in all local services, achieve greater accountability, encourage better management and strengthen the local democratic process.

We have a real concern about the failure of local authorities to comply with the ombudsman's recommendations. The Bill will ensure that all reports are given full and proper consideration by authorities, and it provides a statutory basis for the National Code of Local Government Conduct.

There is a need to rationalise the current powers on economic development. The Bill will provide specific power to assist economic regeneration, target help on key activities and areas and clarify the scope of the discretionary spending power.

We are also concerned over mounting local authority debt of £45 billion. The Government have a duty to establish some influence over that debt as part of their management of the national economy. The Bill will provide effective control over aggregate levels of borrowing, encourage local authorities to dispose of surplus assets and provide a sound basis for planning capital programmes.

Local authorities should not use companies as a means of avoiding controls imposed by Parliament. The Bill will ensure that local authority controlled companies are subject to the same rules of accountability and propriety as the parent local authority.

On the housing side, too many councils are indifferent to tenants' needs and desires, providing low standards of service at low rents subsidised by the ratepayer. The Bill will bring disciplines into local authority housing, enable council tenants to judge whether they are getting value for money from their landlord and encourage wider choice, more competition and better services for those in council housing. We have dispelled the notion that we are intent on bringing council rents to market levels.

The present system of improvement grants, HAAs and GIAs is complicated and unwieldy, with arbitrary rules and no regard to applicant's resources. The Bill will overhaul the existing system with a new system of renovation grants and renewal areas and target help to people and areas most in need.

Finally, Part IX of the Bill contains material on a large number of topics. Among these I should draw your Lordships' attention to the bringing to local authorities much needed flexibility for them to charge for services, while at the same time protecting the core of the free public library service. The home loan scheme has made practically no contribution to the growth of home ownership, take-up having been very disappointing. It is therefore sensible to wind it up. And the functions of the Audit Commission have been strengthened and extended to the health service in England and Wales.

Many and varied points have been raised this afternoon and I shall attempt to deal with as many as I can. First, I very much welcome the support given by my noble friend Lord Bellwin to the Second Reading of the Bill, particularly in the light of his enormous experience both in local government and at the Department of the Environment at an earlier time.

The noble Lord, Lord McIntosh, in describing the Government's position over poorly run local authorities, called them authorities which did not agree with the Government. My honourable friend the Minister for Local Government has made clear his admiration for the work of many local authorities. Two examples which I should choose are Barking and Dagenham, neither of which is known for its affection or constant agreement with the Government.

Lord McIntosh of Haringey

My Lords, is the Minister aware that the Barking and Dagenham is one local authority and not two?

Lord Hesketh

Yes I am.

The noble Lord, Lord McIntosh, began his remarks earlier this afternoon by saying that the Government wished to be enablers and regulators rather than providers. In order to be providers we must be enablers. I see no dichotomy in the suggestion made by the noble Lord.

In moving towards Part I of the Bill, both the noble Baroness, Lady David, and the noble Lord, Lord McIntosh, suggested that in some way the proposals might be contrary to the policy of the EC. The proposed restrictions have been drafted so as to be consistent with the covention, and that is our understanding of it.

The noble Lord, Lord Ross of Newport, said that during a recent visit to South Korea he described British local government as being in terminal decline. We believe that the Bill is quite the reverse: it will give local government back to local government.

Many local authority officers who are in sensitive jobs will not lose their political rights. It is a misrepresentation of our proposals. The noble Lord, Lord McIntosh, said that the proposals would deprive people in non-sensitive jobs of political rights. In his opening speech my noble friend made clear the fact that any officer earning over £13,500 per year will be able to apply for exemption to the independent adjudicator. Thus, if an officer is not in a politically sensitive position, it is highly unlikely that he will in any way be affected.

The noble Baroness, Lady David, raised the question of those who earn less than £13,500 per year. The local authorities will have to identify those whose posts require them to carry out three jobs: regularly to advise councillors, regularly to speak to the media for the authority and regularly to deal with the public where the public think that they would affect the council's decision. They are the only jobs under £13,500 per year where the council would have to make a decision. I hope that I have made that matter clear.

The noble Baroness, Lady Stedman, suggested that Clause 7 cuts right across the provision of employment for the disabled. We believe that that criticism is incorrect. Where local authorities provide sheltered employment under their special powers to do so, they are not making appointments to their service and the requirements of Clause 7 do not apply.

As this House will see, Clause 7 is careful to ensure that it does not cut across provisions that are relevant to appointments of the disabled to the ordinary service of the council, such as Sections 9 and 12 of the Disabled Persons (Employment) Act 1944.

The noble Lord, Lord Pitt of Hampstead, argued that the rules will have a disproportionate effect on the representation of ethnic minorities among elected councillors. The fact that a high proportion of elected councillors from ethnic minorities may also be senior local authority officers is not relevant to the question of whether the combination of those two roles is appropriate within our governmental system. If it is not appropriate to combine the roles, we do not believe that the ethnic background of those concerned can make it so.

The noble Baroness, Lady Carnegy of Lour, asked how many head teachers in Scotland are councillors and whether the Bill will permit the continuation of the arrangements for the Highland regional divisional planning committees. We believe that the only recent research into the number of head teachers who are councillors was carried out by the Widdicombe Committee and published in its report. However, I shall look into the matter and if I find anything of interest to the noble Baroness I shall write to her.

As regards the Highland divisional planning committees, my honourable friend Lord James Douglas-Hamilton made clear in another place that the power to exempt committees as given by Clause 14(4) will be used to ensure that the Highland regional divisional planning committees can continue as at present.

The noble Lord, Lord McIntosh, and the noble Baronesses, Lady Stedman and Lady David, suggested that the Government had reneged on previous assurances about the use of capital receipts. The Government have not gone back on their assurances. The Green Paper, Paying for Local Government, was published in January 1986. It proposed that a new capital control system be introduced in April 1987. The Green Paper estimated tentatively—

Lord Dean of Beswick

My Lords, if the Minister checks the records he will find that prior to the publication of the Green Paper an absolute copper-bottomed guarantee was given in another place by the then Secretary of State that that was the purpose for which those capital assets would be made available to be returned to the local authority. Whether the Minister likes it or not, the Government have reneged on an undertaking, whether in a Green Paper or not.

Lord Hesketh

My Lords, I shall check on what the noble Lord said.

Baroness David

My Lords, I quoted the remarks of the noble Lord, Lord Jenkin.

Lord Hesketh

My Lords, a little further on I shall come to the important part of the matter, which is the amount of the money itself. That appertains to the whole of this issue.

The fact is that at the time local authorities had been given assurances that that amount, which was some £3 billion, will be available in Full over time to justify additional capital expenditure. The interesting part of the equation is that we are now approaching April 1990 and, by then, the local authorities will have spent some £8.5 billion from receipts and will take another £3 billion into the new system as usable capital receipts. That makes £11.5 billion in total which is not bad against the amount of £3 billion which we said should be available for additional capital spending. That is the important figure.

Lord McIntosh of Haringey

My Lords, I am sorry to pursue this matter, but when the Secretary of State made his original statement, which was quoted by my noble friend, he may have referred to a figure as being the current estimate of receipts but he gave a very clear indication to local authorities that they would have the ability to spend money from future receipts. At that time nobody was making any estimate of what those future receipts would be. The point is that those local authorities were encouraged to act on the basis that the money from the receipts would still be usable.

Lord Hesketh

My Lords, I quite understand the point made by the noble Lord, Lord McIntosh, but I think it is important to understand how the sums of money have changed very considerably in actuality over that period of time.

The noble Lord, Lord McIntosh of Haringey, referred to the reduction of the burden of debt as being inefficient and suggested that we might use a straight line method rather than the reducing balance method. That is what the Government originally intended, but local authorities did not like it so we have proposed the reducing balance method which meets our objectives and is more popular with the local authorities.

Lord McIntosh of Haringey

My Lords, I am sorry to intervene again. I acknowledged that the reducing balance method was preferable to the equal instalments of principle. However, I said that neither of those accord with modern accounting practice as would a straight line basis rather than a reducing balance.

Lord Hesketh

My Lords, I believe that it is fair to say that a considerable amount in local government does not accord with modern accounting practice and has developed over the years in a rather different way.

The noble Lord, Lord Mountevans, as always, defended and represented the interests of the tourist industry. I should like to reply to the three points which he raised. The new economic development power will be available to support the promotion of tourism. Section 137 will no longer be relevant to the promotion of tourism. We believe that there is a strong case for exempting any regional tourist boards which might otherwise be subject to Part V from those provisions and we are examining that case in detail. The status of marketing boards will depend on particular local arrangements. My department will be glad to advise in any particular case.

The noble Lord, Lord Ross of Newport, raised the matter of an undertaking with regard to the groundwork trusts. My right honourable friend the Minister for Local Government gave an assurance that the groundwork trust companies would be exempt from Part V while they are receiving government grant, which is expected to be the case for the foreseeable future. My honourable friend the Member for Surrey South-West repeated those assurances on Report in another place, and I gladly repeat them now.

Lord Ross of Newport

My Lords, I have seen the comments made by the Minister in another place. Is it the intention of the Government to move an amendment so that that is on the face of the Bill while it is in this House, or do we have to wait for regulations?

Lord Hesketh

My Lords, that will be by regulation.

The noble Lord, Lord McIntosh, suggested that local authorities will be prevented from capitalising major housing repairs by the introduction of the word "enhancement". We have always accepted that local authorities should be able to capitalise repairs which provide a long-term benefit. The definition of "capital expenditure" in Part IV is in line with the commonly accepted understanding of capital expenditure. However, we have sought to clarify the grey areas which have surrounded previous definitions of "capital expenditure" and that is why we have introduced that term.

The noble Baroness, Lady David, also refered to the restriction, as she saw it, of the use of capital receipts. We are not taking away local authorities' receipts. We merely say that they should use some of their receipts in order to repay their debt. The Government must influence the total level of capital expenditure. The more of that total spent from capital receipts, the less can be given in capital allocations or credit approvals in the future. I cannot tell the noble Baroness what the total credit approvals will be because that is a decision for the Government to take when they come to matters of the Public Expenditure Survey.

My noble friend Lord Bellwin asked whether or not authorities with no debt on their housing revenue account should be able to transfer the surplus to the general account. The Bill provides that if an authority has a surplus in its housing revenue account after meeting all its costs and if the authority is not receiving any subsidy, it must transfer a specified amount to the general fund and may transfer more if it wishes to do so.

Lord McIntosh of Haringey

My Lords, perhaps I may be forgiven for intervening again. The Minister's noble friend Lord Caithness had a principle which I believe was a very good one; namely, in a winding up speech he does not refer to interventions from noble Lords who are not present. I believe that it would be a very good idea if the Minister followed that rule.

Lord Hesketh

My Lords, attending as I was to the noble Lord, Lord McIntosh, I had not looked behind and was unaware of the situation of which he has now informed me. I shall endeavour to do my best not to repeat what the noble Lord clearly finds unacceptable.

Many noble Lords referred to the new housing subsidy system as the poor paying for the poorest. That is simply not the case. Our proposals mean that the subsidy will continue to be paid to meet the cost of rent rebates of council tenants where that is needed. They also mean that local authorities capable of making a surplus on their housing revenue account without any special increase in rents will be expected to recycle that surplus by contributing to the cost of their rebates. That will ensure that the subsidy from the Exchequer—that is the taxpayers' money—will be directed to the authorities which have the most need of it.

The noble Lords, Lord Jay and Lord Dean, said that homelessness can only be fully overcome through a very large increase in investment in public rented housing.

Lord Dean of Beswick

My Lords, I am sorry to intervene. When I referred to that, I was quoting what many non-political organisations dealing with housing are saying in general. I do not have the means to research that and to confirm whether or not that is the case. However, the overwhelming views expressed by your Lordships over a long period and by housing organisations outside the House inform me that that is the case. That is not solely my opinion or that of my noble friend Lord Jay. We were quoting what those organisations have said.

Lord Hesketh

My Lords, I think I am right in following the convention of replying to Members of your Lordships' House rather than referring to bodies outside. I believe that that is correct.

The Government are not relying on the private sector. There will always be a subsidised sector but it is a fallacy to think that council housing is the sole answer to all housing needs. About one million families have bought their public sector homes since the right to buy was introduced, and more still wish to. Others do not wish to be dependent on the council for their home and welcome the Government's expansion of the housing association sector. That expansion is not dependent solely on public funds. Private investment in housing association schemes is being encouraged and the Housing Corporation grant is payable at the same time.

As for council housing, this Bill will make it easier for the Government to target resources for new building and renovation where most needed. That is what we are attempting to do.

Lord Jay

My Lords, as I am present, can the Minister tell us how many new rented houses or flats have been made available by the private sector or the housing associations in the past year?

Lord Hesketh

My Lords, it is not without notice. For a moment I believed that there was an echo in the Chamber. My noble friend Lady Blatch and the noble Lord, Lord Carter, brought up the subject of rural housing. As my noble friend Lord Middleton said, there is concern that local people should be able to buy homes in the area in which they reside and not be priced out of the market by others moving into the area. People become worried when a shared owner in a rural area buys the whole of his property and then sells it on the open market. It is lost to local people from the pool of low-cost housing.

Since the number of available alternative properties in the area may be limited because of planning constraints, it can be difficult to replace the shared ownership property. The Government have decided to let housing associations prevent shared ownership housing from passing into the general market in those rural areas where there can be particular difficulty in obtaining replacement properties. They will do so by requiring the shared owners to offer the house back to the association when he wishes to move. The association could buy it from him and re-allocate it to another local person on similar terms.

The advantage of the scheme over that proposed in another place, which would prevent the shared owners from buying the whole of his home, is that it keeps the house for use by local people without stopping them progressing to full ownership of their homes. The disadvantage of the amendment proposed was that people would be effectively prevented from expressing their right to buy by allowing the housing association to restrict the amount of equity that the shared owner could buy. The Government believe that there is a better way of achieving the same aim. The aim is to retain shared ownership homes in rural areas for local people. Our scheme achieves this while also allowing the shared home owner to become a full home owner. On the other hand, we believe that restrictions deprive the shared owner of the chance of the staircase to full ownership. I hope that my noble friend Lord Middleton will be convinced that our scheme is a way forward.

The noble Lord, Lord Pitt, said that the proposals disregarded the evidence of housing need and the homeless. On the contrary, they will help to ensure that Exchequer support is concentrated on the authorities with the greatest needs. That is true both of the new capital system, which will ensure that a higher proportion of the total provision of capital spending goes in allocations to authorities which need it, and the new revenue subsidy system, which we also intend shall be much better targeted to those areas which need it the most.

My noble friend Lord Swinfen and the noble Lord, Lord Carter, both brought up the problems of the disabled as regards the right to buy. My noble friend raised a point concerning the elderly and disabled as a statement in Schedule 5 of the Housing Act 1985. I willingly undertake to consider carefully what he said and I shall look at the evidence of the way in which the Act is working.

My noble friend referred also to grants to adapt properties under construction. The Government's policy is to encourage properties to be built from the outset to standards that are suitable for disabled people. We are not convinced that grants are the way forward. I am happy to undertake to look at what he said and at the issue involved.

My noble friend Lady Blatch raised the matter of dogs. She was very brief on the subject and I shall also be brief. The Government do not believe in a registration scheme. She said that her views are those of the Government, which is surprising. I was pleased that we had only one mention of the matter in your Lordships' House this afternoon, but I fear that it is a subject that may be returned to later in consideration of the Bill at the Committee and possibly the Report stage.

I have tried to deal with the points which have been raised during the debate but I shall of course read Hansard carefully. If I can provide further answers in writing I shall gladly do so. The Bill completes the new regime for local authorities that we promised at the last general election, and I hope that we can leave it to work for many years to come. We must ensure the integrity of local government in the way in which it conducts its business. We must provide a new framework of control over local authorities' borrowing and capital finance. We must reform housing finance. This Bill does all of these things and it is for those reasons that commend it to your Lordships' House.

On Question, Bill read a second time, and committed to a Committee of the Whole House.