Local Government and Housing Bill

HL Deb 01 November 1989 vol 512 cc249-333

3.12 p.m.

Lord Denham

My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Local Government and Housing Bill, has consented to place her prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

Read a third time.

Clause 2 [Politically restricted posts]:

Lord McIntosh of Haringey moved Amendment No. 1:

Page 4, line 25, at end insert— ("(4A) Nothing in subsection (3)(b) above shall be taken to refer to an officer whose principal form of contact with journalists or broadcasters is the giving orally of factual information rather than the presentation of the policy of the authority.").

The noble Lord said: My Lords, this amendment is consequent upon a very helpful debate and amendments which were agreed by the House at Report stage. Like some of the amendments which follow it seeks to clarify anomalies which appear as a result of the amendments agreed at Report stage and to press the Government slightly more about the detailed application of the Bill as it now reads.

Let me stress that we do not intend to seek the opinion of the House on these amendments. They are amendments which have been tabled in order to establish with greater clarity the Government's attitude. At Report stage the Government clarified the position with regard to giving advice to committees and sub-committees of a council by local government officers in the context of the programme of political restrictions which the Bill imposes on those officers. In particular, I want to refer to the clarification that giving advice to committees and sub-committees does not include the provision of factual information.

At the same time, with the support of the Government the House agreed that the restriction of contact with members of the public would no longer be enforced and therefore that the giving of information to members of the public was no longer an element in political restriction. This amendment seeks to secure the same treatment for those who deal with members of the press or broadcasting media, and press officers in particular.

There are many press officers working for local councils whose role very largely consists of issuing press releases —a post which it has now been agreed is no longer a politically restricted post —but who also deal with factual queries from members of the press. For example, they deal with requests for information about council services or the programme of activities of the mayor —that kind of relatively non-political matter which does not involve the press officer in acting as a policy spokesman for the council.

In this amendment we seek to exclude from the political restrictions those posts which principally deal with factual information rather than the presentation of the policy of the authority. I hope that in his reply the Minister will be able to indicate that either the amendment is acceptable or that the principle that giving factual information is not politically sensitive should be extended to press officers. I beg to move.

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

My Lords, this amendment would exclude from the second of the categories of politically sensitive posts in Clause 3(3) officers whose principal form of contact with journalists or broadcasters is the giving orally of factual information rather than the presentation of the policy of the authority. The amendments to Clause 2(3) that we agreed at Report reduce to two the number of categories of politically sensitive posts subject to the restrictions on political activity, to those who advise the council and its committees, and those who speak for the council to the media.

On the first category the noble Lord, Lord McIntosh, suggested that we should make it clear that simply providing purely factual information was not advising the council. This I was able to do by assuring the House that advising someone goes beyond providing information —just the distinction with which we were concerned in the amendment of my noble friend Lady Strange. That amendment is now Clause 38.

The noble Lord, Lord McIntosh, now suggests that we make a similar change here to make it clear that when someone in a local authority's press office simply provides factual information to the media, he is not doing something which justifies applying the political restrictions.

I do not think that that would be sensible. In the first place, we do not believe that life is like that. Dealing with the media does not divide into two neat packets of "giving factual information" on the one hand and "presenting policy" on the other. In real life the two will be inextricably linked. It would therefore be wrong to suggest that it is possible neatly to separate the two.

Nor do I think that press offices and public relations departments are organised in a way that corresponds to that division. Calls come in from the media in a mixed sequence, and I have yet to hear of any press officer who deals with a question by saying, "Oh no, I only dish out the facts; it's my colleague who presents the policy". I therefore think that it would not be sensible to suggest that this distinction corresponds with real life.

Finally, on the positive side, I do not think that the amendment gives sufficient weight to the restrictions already built into the definition. To fall into the category it must be a duty of the post to speak to journalists and broadcasters, rather than to the public at large. It must be a duty to do so regularly, rather than on an occasional basis; and it must be a duty to do so on behalf of the authority, which implies that something special to the authority is being communicated —not information which is generally available.

In the light of my last remarks in particular, I hope that the noble Lord will feel able to withdraw the amendment.

Lord McIntosh of Haringey

My Lords, the Minister does less than justice to the drafting of my amendment. We anticipated the response that some people would be both giving factual information and representing the authority's policy. That is why in the amendment we refer to the principal form of contact with journalists or broadcasters. I had hoped that that would have helped the Minister to take a slightly more favourable attitude than he has done.

However, as he indicated, his last remarks were helpful enough, at least in clarifying the position and in enabling local authorities to make a sound judgment from the beginning about who should be excluded and who included. In those circumstances I am able, as he suggested, to beg leave to withdraw the amendment.

Amendment by leave, withdrawn.

Lord McIntosh of Haringey moved Amendment No. 2: Page 5, line 13, after ("duties") insert ("fall within subsection (9A) below").

The noble Lord said: My Lords, Amendments Nos. 2 and 3 refer to an issue which has been discussed. It is the definition of deputy chief officers. When we raised the matter at Report stage, the Minister quite rightly referred to a number of examples. A director of technical services would have a number of very senior officers reporting to him —such as the chief architect or the chief building surveyor, or whoever it may be —who would be acting as deputies and ought to be covered by the chief officer and deputy rules. We agree. That is certainly correct.

However, as the post of deputy is defined in the Bill, not only would such people be covered but those who because of the nature of their functions report directly to a chief officer but are nowhere near being deputies would also be covered. For example, a mayor's secretary or programme officer could report directly to the director of personnel, or to the chief executive or the town clerk. Those are junior or middle ranking officers rather than people in the position of a chief architect. It seems to us to be inappropriate that as the Bill is at present drafted they should be included simply because they report directly to a chief officer. We hope that the formulation in the amendment makes matters clearer and excludes people who on any objective view ought not to be included in the political restrictions. I beg to move.

Lord Hesketh

My Lords, the effect of these amendments would be to give the adjudicator to be appointed under Clause 3 power to direct in certain cases that a post should not be regarded as that of a deputy chief officer. He would consider whether certain posts which came within the definition of a deputy chief officer in Clause 2(8) should nevertheless be excluded because in practice they were not senior enough for the holders to be regarded as such.

The House considered at Report stage an amendment which would have attempted to restrict the definition of a deputy chief officer. I explained then that the proposed definition in the Bill is a response to the widely ranging management structures that exist in local government, to which the noble Lord, Lord McIntosh, referred in his opening remarks.

To establish a common measure of what is a chief officer, we have used the concept of those who directly report, for all or most of their duties, to the council, a committee, a sub-committee or the chief executive.

We think that it is reasonable to treat as the next tier of officers all those who directly report to a chief officer for all or most of their duties. We exclude those who provide secretarial, clerical or similar support services, as referred to by the noble Lord, Lord McIntosh For the rest, I stress that they must report directly for all or most of their duties. Someone who reports directly on some limited aspect will not therefore be covered. Likewise, I stress that the reporting must be direct. This means that there must not be anyone interposed.

What this means is that, if the chief officer is not there, it will be for the deputy chief officer, on our definition, to handle matters within his bailiwick. In considering the definition of what makes an officer sufficiently senior to be brought automatically within the political restrictions, we therefore think that it should be the chief executive and those in the next two tiers. It does not matter that the officer may, in comparison with other similar officers, be paid less. What matters is that, in the absence of the chief officer, he or she is going to be dealing direct with councillors on matters in his or her area.

That is why we have proposed the definition as it is, and that is why we think that it should remain so. I hope that in the light of that explanation the noble Lord will be able to withdraw the amendment.

Lord McIntosh of Haringey

My Lords, it is sad that we have reached this point without agreement. I do not think that the Minister's reply covers the complexities of situations that are found in local authorities. He did not refer to the example that I gave of someone who is responsible for the mayor's diary for ceremonial functions, or for a member's services. Such people meet the qualification for political restriction because they report entirely to a chief officer —the director of personnel or the chief executive. They do not report to anyone else. There is no one else between them. Nevertheless, they are not giving advice to committees or taking part in the policy of the council.

With respect, I do not consider that the Minister's definition would exclude them although common sense would indicate that they should be excluded. However, we have pursued the matter as far as we can. We have recorded our objection to this relatively minor defect in the provisions. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 3 not moved.]

Clause 3 [Grant and supervision of exemptions from political restriction]:

Lord McIntosh of Haringey moved Amendment No. 4:

Page 6, line 46, at end insert— ( "(7A) Any individual applying under the section to be exempted from the consequences of holding a politically restricted post shall not be regarded as holding such a post during the period in which the application for exemption is being considered.").

The noble Lord said: My Lords, Amendment No. 4 refers to a matter of considerable urgency. We have had a number of amendments which reduce the scope for the appeals procedure. That must be helpful both as regards the appeals procedure within a local authority and the request for guidance. That must be good. The urgency arises because these issues must be settled by the May 1990 elections, which cover councils in a very large part of the country. It is not simply the campaign itself. We have to be concerned with the selection of candidates for the election —in other words, with the public identification of people with the party for which they will be candidates —and the process of run-up to the election period.

Despite all the good things that have been done to reduce the scope for appeals, and the undertaking which government have given that the cases of those who are affected by the May 1990 elections will be given priority in the appeals procedure —for which we are grateful —there is still the possibility that appeals will be outstanding at the time the May 1990 elections take place or are being prepared for. People who may ultimately turn out not to be restricted could be restricted pending the appeal. In the amendment we are asking that there should be a fail-safe position: that while the appeal takes place they should not be restricted. The restriction should take effect only when the appeal has been determined by imposing a political restriction.

Lord Hesketh

My Lords, the effect of Amendment No. 4 is to enable those categorised as politically restricted under Clause 2 of the Bill to continue to engage in public political activity until such time as the adjudicator has ruled on the admissibility or otherwise of the application for exemption.

In order to deal with applications as expeditiously as possible, my right honourable friend the Secretary of State will appoint the independent adjudicator as soon as possible after Royal Assent. Moreover, the Bill provides that the adjudicator must give priority to those who declare that they are candidates for an election. Furthermore, the restrictions will not come into effect immediately. There must be a period during which the necessary lists can be drawn up, and applications for exemption made. We envisage that the actual restrictions will not come into force until about the beginning of next March; and then those affected who are councillors will be able to continue until the end of their current term.

Finally, there is power under Clause 2(2) to make exemptions for descriptions of posts. We envisage that that will be used, for example, to deal with the question of those whose posts are brought into question by reason of annual increments.

We shall be consulting local authorities on the use of that power. In the light of what the noble Lord said, I shall be glad, subject to one point, to include in that consultation the question of whether the power should be used also where an application for exemption has been lodged but not determined. The only reservation I have is that I do not think it would be right to permit a transitional arrangement of that kind where the employing local authority has determined that in its view the post should be restricted. In that case the restrictions should apply unless and until the adjudicator takes a different view.

I hope that in the light of those remarks the noble Lord, Lord McIntosh will feel able to withdraw his amendment.

Lord Ross of Newport

My Lords, before the noble Lord sits down I should like to ask a point of clarification. I heard him say that when the restrictions come into force next March sitting members will be allowed to stay until the end of their term. That means that county councillors elected last year will be able to see through the remaining two years of their term. Is that correct?

Lord Hesketh

My Lords, that is entirely correct.

Lord McIntosh of Haringey

My Lords, I must be grateful for the indication that the matter will be included in the consultation document and also for the assurance and reminder that powers are available to make regulations and orders giving effect to our request. I should have wished the consultation document to include all the cases raised by the amendment. However, the fact that any are to be raised is a step forward and gives me art opportunity to withdraw the amendment.

Amendment, by leave withdrawn.

3.30 p.m.

Clause 8 [Duty to adopt standing orders with respect to staff]:

Lord Graham of Edmonton moved Amendment No. 5: Page 12, line 34, at end insert ("clearance").

The noble Lord said: My Lords, the amendment is familiar to the Minister. It has been re-tabled because, during the last stage of the Bill, there appeared to be a genuine misunderstanding. On that occasion I invited the Minister to consider his remark in Committee on 20th July when he said: We feel that it is enough for the monitoring officer to sign a clearance report"— The word "clearance" is the operative one, without having to submit it before the appointment is confirmed. This should ensure that, except where an appointment has not been properly made appointments are not delayed … The Government's intention is that this power to require a report by the monitoring officer should be used only in respect of posts where councillors are involved in the appointment process".—(0fficial Report, 20/7/89; col. 979.)

The final formulation of that answer was repeated by the noble Lord, Lord Reay, on 19th October. It is clearly understood to be the Government's intention. However, in responding on that occasion to Amendment No. 24, the noble Lord said: These amendments would instead provide that the monitoring officer should merely issue a clearance. Such a clearance would not be a report in the sense of Clause 4".—(0fficial Report, 19/10/89; col. 1077.) That was not the purpose of the amendment. The word "clearance" is inserted merely as an attempt to qualify the type of report which is required and to give effect to the Government's intention as expressed in Committee —that it should be a clearance report which need not be submitted before the appointment is confirmed.

The amendment was intended to be constructive and not to disrupt the basic scheme in Clause 8 of the Bill. At col. 1078 of Hansard I made the point that I was genuinely puzzled as to why the amendment could not be accepted in the light of what the Minister had said in July. I said that the arguments that had been made on Report did not appear to me to match the remarks of the Minister in Committee in July.

I suggest that today the Minister may be able to say whether at an earlier stage there was a misunderstanding. Whatever the merits of the amendment, it is suggested that the Government's intention is still not fully reflected in the Bill. Clause 8(3)(c) requires a report to the authortiy in respect of every proposed appointment of a person to a politically restricted post. That suggests that the report must be submitted before the appointment is confirmed. It is precisely the opposite formulation to that put forward by the Government in Committee.

The Minister can help me and also many people outside the House who are seeking clarification by way of the amendment. I beg to move.

Lord Hesketh

My Lords, the effect of the amendment would be to amend the description of what an authority's monitoring officer can be required to prepare in respect of proposed appointments. Instead of simply preparing a report, he or she would have to prepare a clearance report.

At Report stage we discussed the question of what the monitoring officer should prepare. I was then unwilling to accept the replacement of the word "report" with the word "clearance", because I felt that it was important that the provisions of Clause 5 should clearly apply to whatever is prepared if it shows that all is not well.

Although the amendment would make it clear that what is to be prepared is a report, I think that there might still be some doubt about whether an adverse clearance report was a report within the meaning of Clause 5. Someone might ask: why use a different phrase if they are the same? The important thing is not what the report is called, but what it says. The requirement that can be applied is that the monitoring officer should state whether in his opinion the proposed appointment can properly be made. As the report of the joint working group on the implementation of these proposals suggests, that opinion should be to the best of his knowledge and belief and, once it has been stated, the appointment can go ahead. It is only where an adverse report is given that any further proceedings are needed.

I must re-emphasise that we do not believe that the word "clearance" in any way changes the effect.

Lord Graham of Edmonton

My Lords, do I take it that the Minister is rejecting the amendment?

Lord Hesketh

My Lords, yes.

Lord Graham of Edmonton

My Lords, at least we have clarification about that matter. The Minister and his advisers are clear that there can be no dubiety about what is meant. We must wait to see what happens in practice. I appreciate that the Minister has taken the trouble to go over the ground again. Today it appeared to me to be a little clearer than on a previous occasion and I mean no disrespect to the noble Lord, Lord Reay. I hope that people outside the House share my opinion that we have clarity if not clearance. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 18 [Schemes for basic, attendance and special responsibility allowances for local authority members]:

Lord Graham of Edmonton moved Amendment No. 6: Page 25, line 50, after ("regulations") insert ("(bb) a financial loss allowance;").

The noble Lord said: My Lords, I should like to speak also to Amendment No. 7. The purpose —particularly of Amendment No. 6 —is to insert a power enabling the Secretary of State to introduce regulations to create a financial loss allowance. As a result of his long experience in local government, my noble friend Lord McIntosh was on the last occasion able to illuminate and entertain the House on the aspect of seeking to make proper recompense to those who serve on local authorities. The time that they give is part of the structure, the history and the raison d'etre of local government.

The Minister will know that the Association of County Councils, the Association of District Councils and the Association of Metropolitan Authorities —in other words the big three local government associations —have expressed views on the matter. A joint statement issued on 18th October stated that there were, a number of members who feel that Financial Loss Allowance is an important and valuable alternative to attendance allowance and who will greatly regret its demise. It is not much used, but can make all the difference in enabling some members to avoid serious financial detriment as a direct consequence of being a councillor. Its existence encourages and extends the representative nature of local government and there will be councillors still hoping for the possibility of an option to give up the Basic Flat Rate and Attendance allowance in exchange for continuing Financial Loss Allowance

The statement, which, I repeat, is from the three senior local government organisations, went on to say that if the Government see difficulties in offering such flexibility in that it would add uncertainty within the constraints of the new cash limit system, then the associations would wish to see an element of flexibility in the operation of the cash limit to be applied to each local authority. I hope that the Government will be able to confirm that the option should be kept open, at this stage, of creating a financial loss allowance alternative for certain members by regulation. That is what the amendment seeks to achieve.

In relation to the uprating of the quantum available to each local authority, the associations continue to express their regret at the Government's failure to make available for members' allowances the full amount represented by Widdicombe. The Minister will be familiar with the Widdicombe Report on this aspect. The associations have said: It is, however, to be regretted that the Government is not proposing the level of expenditure, suitably updated, which was proposed in Widdicombe and which was seen by that report as an intrinsic part of its general approach to members' allowances. At current levels the Widdicombe quantum would be £75 million. That is what the local authority associations think appropriate and would have wished to see, as the chairmen of the associations stated in their letter to the Minister. The Associations' concern is to maintain a healthy, efficient and effective local democracy". Of course the Minister will share those aims. The people at the sharp end are saying that an aid or a tool to maintain a healthy, efficient and effective local democracy would be allowances of this kind and in these terms.

The associations went on to say to the Minister: The financial consequences of service on a council should not become a powerful disincentive to participation in local government; especially given the desirability of encouraging a variety of councillors from all walks of life, representative of their communities in the round. The aggregate quantum proposed is actually a very small element of expenditure when seen in the context of the services and budgets for which local government is responsible".

I hope that the Minister will give an indication that the overall figure available for local government, and therefore the amounts available to individual local authorities, will at least be uprated annually. The ideal way of doing that is to have recourse to the retail prices index. The Minister will be well aware of the genuine distaste felt when people have to argue annually about the level of expenses, let alone the level of salaries. Many noble Lords will recall the difficulty and, sometimes, public distress caused in the past when Members of Parliament had to consider on a regular basis at what levels their salaries should be pitched. That is now taken out of the controversial public arena because their salaries are pitched at a grade in the Civil Service. In my view, that is a powerful step forward. There is a good analogy here. The expenses legitimately claimed for loss of allowances in respect of their pay by councillors could be dealt with in the same way as the salaries of Members of Parliament.

There is a second point which needs to be dealt with. If the Government cannot accept the argument put forward by local government associations controlled by Labour, Conservative and indeed no party at all, so that it is not a party political matter, perhaps the Minister can respond to my request that there should be no diminution in real terms in the amount in future years. If the RPI is not seen to be the best vehicle, perhaps the Minister could suggest an alternative.

I speak as a local government man, as do many other noble Lords on both sides of this House, and I am anxious that we should have the best quality and calibre of men and women in our communities to serve on our councils. We do not have to provide them with a lucrative reward but we must make sure that the disincentive of their business or employment suffering is taken care of by the level of allowances which we are prepared to vote for them. I beg to move.

3.45 p.m.

Lord Hesketh

My Lords, these amendments would make small but nevertheless important changes to Clause 18 which your Lordships included on Report to enable the Secretary of State to set up a new system of councillors' allowances. Amendment No. 6 deals with the payment of the financial loss allowance to councillors.

Clause 18 already provides for the payment of financial loss allowance to appointed members of local authorities and their committees. The amendment would enable the Secretary of State to provide for local authorities to pay financial loss allowance also to councillors. Only 1 per cent. of councillors opt for this allowance. The issue is therefore likely to be of interest to only about 250 councillors in the whole of Great Britain.

Having said that, on Report the noble Baroness, Lady Seear, chided me for saying that only a few people were concerned and that it would complicate administration. I was not arguing that the extra expense was a determining factor, but that with so few involved —less than one councillor in every two councils on average —it would unreasonably complicate the schemes which local authorities will have to adopt. But the basic objections to continuing to have financial loss allowance as an optional extra under the new scheme are greater than mere administrative convenience.

The principal attraction of FLA over the present attendance allowance is that, for historical reasons, it is payable under the present system at a somewhat higher rate than attendance allowance. I doubt that it is right that there should be two different systems of remuneration for councillors, under one of which those lucky enough to be able to opt for it do rather better. But such an arrangement becomes even less justifiable under the new system, since all the allowances will come out of one pot and the higher rate of FLA could only be continued at the expense of those who did not claim it. We believe that all councillors should be treated equally.

I turn now to Amendment No. 7 which would require the Secretary of State to increase the limit on allowances payable by local authorities under Clause 18, each year in line with the retail price index. As I am sure most noble Lords are aware, it is not the normal practice of this Government —or indeed of previous governments —to provide for index-linking of grants, resource levels or expenditure limits of this type. The Government must decide what is the appropriate level at any given time, and in doing so will take account of relevant factors and indices.

I announced on Report that the allocations to individual local authorities for 1990–91 under the new scheme would be worked out within the context of a clear ceiling of £42 million at current prices. I hope noble Lords will agree that this is a fair and reasonable starting level which takes account of the views which have been put to us by the local authority associations and others.

However, I am sure your Lordships will appreciate that I cannot make any absolute commitments about what would be appropriate in say five or 10 years from now. Perhaps I could remind the House that this Government have increased the limits on allowances in every year since we came to office, and for the last three years these increases have exceeded the increases in the retail prices index. I can however assure the noble Lord, Lord Graham, that we shall review the allocations on a regular basis and make increases where appropriate. I hope that on the basis of that he will feel able to withdraw the amendment.

Lord Graham of Edmonton

My Lords, I am grateful to the Minister for his clear explanation of why he is unable to accept my amendment. I seem to recall that the Minister said that he had taken into account the views of a number of people, and he listed them. However, he failed to say that he had taken into account the views of Widdicombe which had recommended £75 million which is something like 60 or 70 per cent. more than the £42 million. And that followed an in-depth inquiry and face to face interviews with hundreds of people.

With great respect to the Minister and his advisers, they live in Marsham Street. The real world of local government is out in the town halls and county halls of the country. I am grateful to the Minister for giving the figure of 250 because the associations were uncertain of the number. But even if it is 250, that is one between two councils. If there is one good man or woman who is dissuaded from serving on one or two councils as a result of the financial nexus then we will be the poorer. When I say "we" I do not mean that man or woman, or even the council, the community or the country. There is a desperate shortage of people who are good people in the sense of being good public servants at the lay democratically elected level, whether it is to serve in the other place or in council chambers.

I am sorry that the Minister has not been able to take the point, but I acknowledge what he said in his concluding remarks. Although he is not prepared to accept a write-in of an automatic increase, the Government's record in latter years has been one that ought to inspire confidence in those outside. When the matter is reviewed then at least the level that is required is given and, sometimes on the margin, a little bit more than that. I think that is the best that I am going to get this afternoon. I am grateful to the Minister. Those outside will read very carefully what he had to say. I beg leave to withdraw the amendment.

Amendment, by leave withdrawn.

[Amendment No. 7 not moved.]

Clause 20 [Duty to adopt certain procedural standing orders]:

Lord Graham of Edmonton moved Amendment No. 8: Page 28, line 40, after ("to") insert ("subsection (1A) below and to").

The noble Lord said: My Lords, I beg to move Amendment No. 8 and with it speak to Amendment No. 9. These amendments are in the name of my noble friend Lord McIntosh. We are dealing here with the issue of standing orders which are extremely important. There is no dubiety about that. We know that there has been substantial progress in the working party between the department and local authorities, but Amendment No. 9 states: No regulations made under subsection (1) above shall apply to any authority which resolves, with the agreement of all parties, to make local provision in respect of standing orders to which this section would otherwise apply, and gives notice of such resolution to the Secretary of State.

The working party recommended in respect of certain standing orders not falling within the Clause 8 staffing provisions of the pool that local authorities should, with all party agreement, be able to opt out of the statutory prescription and produce their own standing orders and arrangements. We understood that the Minister could give some encouragement to that view. Can the Minister tell us what the Department of Environment and local authority sides have said on this issue in the working party? We wonder whether what they have said will be accepted by Ministers in respect of standing orders which are covered by Clause 20.

Will the Minister indicate which standing orders the Government are currently considering making available for a potential opt-out by local authorities? I do not think there is any dispute at any level here. There is a recognition that there are circumstances in which write-in additional standing orders are appropriate, but the Minister can help us if he indicates what the working party recommended on this matter and what is the Government's thinking. I beg to move.

Lord Hesketh

My Lords, these amendments would allow local authorities to make local provision for standing orders instead of complying with the requirements of any regulations made under Clause 20, provided they do so by resolution with agreement of all parties, and give notice of such resolution to the Secretary of State.

For many years there has been a model set of standing orders. This was last revised in 1963, since when much has changed. It was clearly appropriate that there should be a review. At the same time, following the Widdicombe Committee's review of the conduct of local authority business, the Government took the view that there were certain matters on which it was approriate that there should be uniformity. That view is the basis of the power in the clause to prescribe a "core" of required standing orders.

To ensure that the review was carried out properly, and to take forward the Government's proposal, a working group was set up jointly by the Government departments concerned and the local authority associations. Its task as to review the operation of the current model standing orders and to prepare a draft code of standing orders for discussion including those proposed by the government as "core".

The report of the working group has now been presented to my right honourable friend the Secretary of State and to the local authority associations. My right honourable friend intends shortly to consult local authorities about it before deciding which matters should be prescribed by regulation.

I understand the report recommends that standing orders should be divided into three categories. First, and most numerous, there would be those which local authorities would be free to adopt or modify or reject as they thought fit. Secondly, there would be some which would be required under the powers in this clause unless all the political groups on a council agreed that they were not necessary. These would be those aimed at protecting the rights of minority political groups. Clearly it is reasonable to let these be set aside if the political groups agree.

Finally, there would be those which would be required absolutely. They would be those, for example, dealing with matters of staff appointments and discipline and those dealing with the rights of individual members of the council. The arguments in favour of such an absolute requirement are that, in the former case, the staff appointments will persist beyond the electoral period of the current council and that therefore there is an interest in ensuring that all is done properly and in order; and that the staff have an interest in having clear rules established. Likewise, where the rights of individual members are concerned, there is an argument against allowing the combined political groups to restrict the rights of an awkward individual councillor.

The general concept of the three levels of standing order seems sensible. Clearly there can be debate on which standing orders should be allocated to which level. That will be one of the matters on which my right honourable friend will be consulting local government. I hope therefore that, with the assurance of a general acceptance of the idea of required standing orders which can be put aside by general local agreement and my undertaking that we shall be shortly consulting on the working group's recommendations about which those should be, the noble Lord will be able to withdraw his amendment.

Lord Graham of Edmonton

My Lords, I think I am most grateful, but before I say so can the Minister confirm, perhaps with a nod of the head, that broadly the view of the department is that the joint report dealing with the matter in this way —that is, the three categories —is something which is approved in the thinking in the department and that the consultations will be to get the views of local authorities on the proposals? The Minister nods his head and I am grateful.

If, substantially, the ability of standing orders to be managed in the way that my amendments are saying is possible I will withdraw the amendment because the Minister will rely upon getting the evidence from local councils, if that is the way in which they want to work. The Minister also raises the crucial point that it all depends very much into which of the three compartments the various kind of standing orders are put. That is where these things can be manipulated (I use the word clumsily) or managed for good or ill. However, the Minister has satisfied me that there is good intent here and I am grateful to him. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 9 not moved.]

Clause 34 [Restrictions on promotion of economic development]:

Lord Dean of Beswick moved Amendment No. 10:

Page 42, line 43, at end insert — ("(2A) In any case where regulations made under subsection (1) above apply a geographical limitation to the exercise by an authority of the power in section 33(1) above, the Secretary of State shall make provision in such regulations for local exemptions within the boundaries of, or corresponding to, a metropolitan or non-metropolitan district or London borough, where he considers that the rate of unemployment in that area is, or appears to be, above a standard specified level, and in specifying such a level the Secretary of State shall consult such organisations representative of local government as appeared to him to be concerned.").

The noble Lord said: My Lords, this amendment stands in the name of my noble friend Lord McIntosh. The Bill as it stands provides for unemployment levels to be related to travel-to-work areas. The use of the travel-to-work areas for this purpose is, in our opinion, totally unsatisfactory as the measure is crude and obscures severe unemployment within a small geographical boundary.

The problem can be identifed from the following figures that I will quote for the Manchester travel-to-work area which relate to a date earlier in 1989. The figure for unemployment in the Manchester travel-to-work area is listed at 8.4 per cent. Within that area, in terms of the city of Manchester, the unemployment rate is 14.2 per cent. I originated from central Manchester, and the unemployment rate in that area is extremely high at 23.6 per cent. I am sure that similar figures can be quoted as regards Leeds, Liverpool and London, where the problem is particularly acute. London is divided between two travel-to-work areas both of which have relatively low rates of unemployment. However, those rates mask a very high level of unemployment in the inner London boroughs. We tabled this amendment in order to try to rationalise that situation.

It is understood that, as in the past, the Department of the Environment accepted ward-based census material for analytical purposes concerning urban programme designations and funding. The purpose of the amendment is to provide in the regulations for local exemptions corresponding to a metropolitan or non-metropolitan district or a London borough boundary, where the rate of unemployment in the area is or appears to be above a specified level.

It is proposed that, in determining such a level, the Secretary of State shall consult the appropriate local government representative bodies from those areas. We believe it is important that this kind of discretion should be available to the Secretary of State so that boroughs and districts are not denied the benefit of the full range of powers available under the new economic development power.

The measure is insurance to protect local authorities at a time when Ministers concerned with inner city matters continue to indicate that the list of designated districts benefiting from inner city powers and funding is under review. There has been no consultation as regards the terms of reference of this review. It is well known that when the first list of partnership and programme authorities was introduced in 1968, financial experts, using the same data as were available to the Department of the Environment, produced a list of deprived authorities which was not the same as that produced by the central government criteria either in total content or in graduation.

This amendment is an attempt to put into the Bill powers that will enable the Secretary of State to consider areas individually where deprivation and unemployment are considerably higher within a travel-to-work area. I hope it will elicit a sympathetic response from the Minister because I believe it to be well founded on the facts that I have given. I beg to move.

4 p.m.

Lord Hesketh

My Lords, this amendment proposes that, where restrictions on the use of the new economic development power apply on a geographical basis, the regulations should make provision for local exemptions in areas where the unemployment rate is above a standard specified level. The amendment is clearly directed at ensuring that black spots in an area which otherwise has a fairly buoyant local economy will be eligible for the full range of economic help from the local authority. I believe that this is a problem which is more apparent than real. I shall explain why.

In the first place, we have only proposed that geographical limitations should apply to one form of economic development promotion; namely, grants, loans and guarantees above a certain level to commercial undertakings. All other kinds will be available throughout the country. This means that if there is a local black spot the local authority will be able to target that black spot with, for example, local training schemes. If the general local economy is buoyant, it is that type of scheme that is likely to make the biggest impact.

In the discussion, the size of travel-to-work-areas is often cited. It is said that statistics based on them mask local problems. But it is important to remember that these areas are what they say they are: areas within which people normally travel to work. If there are black spots within such an area which is otherwise economically buoyant, the most important task is to find out why those black spots exist and to tackle the specific causes, not to treat the area as though it was distinct from the rest of the surrounding area.

Secondly, the geographical limitation that we are proposing will only apply to grants, loans and guarantees above a certain level. The level we have in mind is £10,000 per annum per firm. If there is a small local problem it is much more likely to be small firms that will be able to help, and it is small firms that are going to be most helped by grants below the level of £10,000.

Finally, I think that there may have been a misunderstanding in our proposals. We have specifically indicated that we accept that there will be cases where training will sensibly be assisted by grants towards the costs of trainees, and cases where grants specifically to take on the long-term unemployed would be sensible. We do not intend that specific grants of those kinds should be restricted by the £10,000 limit. Such specific grants are responding to particular problems which are not restricted to specific areas.

I hope that in the light of those explanations the noble Lord, Lord Dean, will feel able to withdraw his amendment.

Lord Dean of Beswick

My Lords, I welcome the last remark made by the Minister, which is of a very helpful nature. However, I believe that he has rather downgraded the problems that I have been talking about as regards the areas which this amendment is trying to help. The Minister said that the problems are local and minor, but they are not. For example, the city of Manchester begins at the boundary of Trafford and ends at the boundary of Tameside. There is no question but that that area has become a black spot in terms of unemployment.

It does not require a genius or any research to understand what has happened. At one time the area to which I have referred was part of the huge manufacturing base of this country. It dealt in a wide variety of industrial activity, such as coalmining, general engineering, chemicals and aeroplane manufacture. Now almost all those activities have gone. That is why I believe that the Government are not appreciative of particular areas such as Manchester and inner London.

In terms of travel-to-work areas, Manchester people who work in those areas do not actually live in Manchester. The same argument can be put forward as regards London. People travel into London and the bad areas from outside those areas. When I was a member of Manchester City Council it was calculated that nearly half a million people travelled into Manchester during the day and travelled back out again at night to the dormitory areas where they lived.

I believe that the Bill as it stands is too rigid to deal with those very difficult black spots. The Minister referred to the problem as being of a minor nature and small in area but it is not because the areas involved are quite substantial. Though the inner city partnerships are welcome —I fully support them, and always have done —they are not necessarily the answer and will not cure the problem as it stands at present. However, in view of what the Minister said he is obviously not going to move on the issue. I beg leave to withdraw the amendment.

Amendment, by leave withdrawn.

Clause 38 [Information etc. on individuals' rights]:

Lord Hesketh moved Amendment No. 11: Page 46, line 26, leave out ("and Housing").

The noble Lord said: My Lords, as your Lordships will remember, during Report stage of this Bill my noble friend Lord Reay was pleased to support an amendment moved by my noble friend Lady Strange which clarified local authorities' powers in relation to the funding of advice services. As the noble Lord explained then, the Government were prevented through drafting restraints from bringing such an amendment forward and so we welcomed the opportunity provided by the noble Baroness's amendment. The amendment was not however technically correct and, as promised, I am now bringing forward amendments to rectify that position. I commend them to the House. I beg to move.

On Question, amendment agreed to.

Lord Hesketh moved Amendments Nos. 12 to 15:

Page 46, line 33, leave out ("(whether") and insert ("either").

Page 46, line 34, after ("communications") insert ("or").

Page 46, line 35, leave out ("or otherwise").

Page 46, leave out lines 37 to 41.

On Question, amendments agreed to.

Clause 48 [Credit arrangements]:

Lord Dean of Beswick moved Amendment No. 16:

Page 57, line 21, at end insert— ("(5A) A lease of property is not a credit arrangement if the term of the lease is for a period not exceeding three years.").

The noble Lord said: My Lords, the amendment seeks to ensure that any three-year lease is not regarded as a credit arrangement. That means that such property, especially private houses, can be acquired by local authorities without giving up any of their limited capital allocations which are desperately needed to fund, for example, renovation or council housing stock.

The main use made by local authorities of three-year leases is to provide temporary accommodation for homeless families, as there is virtually no new building and council stock has been depleted by right-to-buy sales. The only alternative is bed-and-breakfast accommodation. As your Lordships know bed-and-breakfast accommodation is more expensive than leasing and is a much worse form of accommodation. It often threatens the viability of the family and is demoralising and degrading.

Within London, 10,000 properties have been acquired to house homeless families, but there are still another 7,000 households in bed-and-breakfast accommodation. There are 25,000 households in temporary accommodation in London as a whole. The Department of the Environment has been kept informed of the acquisitions of property by local authorities, and its housing section, at least, has encouraged it. For example, in a letter to the Association of London Authorities' housing chair dated 8th February 1988, which I understand was during the passage of a previous Housing Bill, the then Minister said that he needed no convincing of the undesirability of using bed-and-breakfast accommodation, especially for homeless families. There were certainly better forms of interim accommodation than bed-and-breakfast; for example, taking a short lease on a private sector property.

I am sure most of your Lordships would agree with that statement by Mr. Waldegrave. However, under the draft regulations, upon which the local authority associations have been consulted, there is a proposal which will effectively stop local authorities from making further use of that type of accommodation. If an authority acquires a three-year lease, it will be regarded as a credit arrangement if any other local authority has taken a lease on that property in the previous 10 years. The amount of credit cover required will be the capital value, not only of the three-year lease but in respect also of the previous authority's lease, if it was for three years or less.

The effect of the regulations will be to prevent authorities from renewing the leases of properties initially taken out by other local authorities. In time the 10,000 properties will revert to the private sector, and the previous occupants will be consigned to living in squalid bed-and-breakfast accommodation.

To understand the absurdity of those proposals, let us consider two properties which are next door to each other: one which had previously been leased by a local authority for three years and another which had not. In one case a new local authority would have to reduce its credit approvals —that is, its capital programme —by the value of a six-year lease. In the other case, the local authority would charge nothing to credit approvals. The effect on the real economy would be the same. However, the effect on a local authority's ability to act would be different.

The absurdity becomes even greater when one considers the relevant costs involved. The cost of accommodating a household in bed-and-breakfast accommodation is £50 a night. That is equal to £18,250 a year. The average gross cost, including government contributions through housing subsidy, of a leased property is less than £14,000 a year. There is a cost to the local or national taxpayer of over £4,000 per household to keep its members in much worse bed-and-breakfast accommodation. The cost to the local authority is mulch less on average—£3,500 for each household for a leased property. That figure is arrived at after deducting housing subsidy. From those figures it is seen that it will be difficult to maintain 10,000 properties or more on short-term leases. The effect of the proposals contained in the regulations is to add £42.5 million to public expenditure in London alone.

Nationally, the Government would probably blame that increase in expenditure on local authority over-spending. That has happened in the past. In practice, it will be the Government's fault that many homeless families will be housed in accommodation worse than that in which they could be living and at greater expense while private properties remain vacant.

It is easy to see which course is the best to take. There might be some logic in the Government's proposal if there were any indication that there would be a diminution in the number of homeless people and families. Unfortunately, there is not. Despite the Government's measures in previous housing Bills, which we were told were designed to reverse that trend, there is still a serious increase week by week. I know that most of your Lordships are looking with trepidation at the coming winter and hoping that it will not be too severe because of the number of homeless people and those with related problems. I beg to move.

4.15 p.m.

Lord Ross of Newport

My Lords, this is an important amendment. It is rumoured —I believe that it is correct —that the Secretary of State has managed to obtain something like £100 million to deal with the bed-and-breakfast situation which is particularly costly in London but applies also elsewhere. I understand that we may have a statement within the next 10 days or so on the homeless review. I do not ask the Minister to give me the answer today, but I believe that a statement is coming.

The number of homeless is unfortunately increasing. I was told only yesterday that the figure now approaches 120,000. The proposal is one of the ways in which local authorities can deal wih the problem. I believe the solution was originally devised by a Conservative-controlled council in Gloucestershire. It has been supported all around the country. It would be daft if we were now to close that method of trying to cut the cost of getting families out of bed-and-breakfast accommodation and into at least some form of semi-permanent accommodation. I support the amendment.

The Paymaster General (The Earl of Caithness)

My Lords, as the noble Lord, Lord Dean of Beswick, has explained, the purpose of the amendment is to provide that leases of property for a term of less than three years should not be credit arrangements. In other words, a local authority would not need credit cover to enter into such leases.

Your Lordships are by now familiar with the arguments that we have advanced for requiring credit cover for leases. Where an authority leases rather than buys outright, capital goods are still being consumed in the same way and the economic effect is similar to borrowing.

We have always recognised, however, that there should be some relaxation of those requirements in respect of short-term leases of land and buildings. We have proposed that for that purpose a short-term lease should be a lease of three years or less, as in the present capital control system. That is included in the proposals for regulations on which we are consulting the local authority associations at the moment.

So the point of the amendment will normally be met by the proposed regulations, but there are two cases where it would not be. First, if a local authority takes a succession of short-term leases on the same property, then once it has leased the property for three years, any future leases would not be exempt. Otherwise there would be an obvious incentive for authorities to take a series of leases just under the three-year limit, even when they intended at the outset to occupy the property for a much longer period. Such an arrangement would probably be less efficient than taking one long lease, and it would be wrong if the capital finance system provided an incentive for authorities to adopt it. I hope that the noble Lord will agree with that. A similar provision exists in the regulations on leases in the present capital control system.

That brings me to the second case where the amendment differs from what we intend to provide by regulations. This is the point of real concern to the noble Lord, Lord Dean of Beswick. It concerns the case where instead of one authority taking a succession of leases on a property, different authorities take a succession of leases on the same property. We have said in the proposals for regulations on which we are consulting that an authority would not enjoy the three-year exemption if the term of the lease —together with any previous interest in the property held in the last 10 years by any other local authority —exceeds three years.

The reason for our proposal is, I am afraid to say, that some local authorities are making use of the three-year exemption in the present system in a way that was never envisaged or intended. Local authorities are joining together to pass leases between each other every three years. Thus authorities are acquiring the use of property for much longer than three years but by the use of this device are avoiding the effect of the capital control system.

It is never a happy task to have to tighten up rules to deal with avoidance devices. But that is precisely what we have here. The three-year exemption is intended to allow authorities to lease property to deal with a genuine short-term need. When local authorities in effect acquire the use of property for much longer periods, then the acquisition of that property should come within the capital finance system in the normal way. That is what our proposal would achieve.

Lord Harmar-Nicholls

My Lords, perhaps I may ask my noble friend a question as I find this particular manoeuvre rather interesting. Is it suggested that the officers of the council are a party to this sort of arrangement, which is a way of getting around the general principle behind the regulation in a rather underhand way?

The Earl of Caithness

My Lords, I am not sure about the position of the officers. However, I can reaffirm to my noble friend that some local authorities are using this as a device to get around the capital finance system. Of course it is disappointing that they should use this as a device to do so when it was introduced specifically to alleviate a short-term problem.

I listened carefully to the remarks of the noble Lord, Lord Dean, especially those in regard to the impact of leasing on the problem of homelessness in London. The Government are acutely aware of the problem. Indeed, noble Lords who have taken an interest in the Bill will know that we have debated the issue on more than one occasion. Noble Lords will also be aware, from having listened to our discussions, that one of the main objectives of the new capital finance system is to enable us to distribute resources where the needs lie. In the case of housing those needs include dealing with the problem of homelessness. I contend that that is the proper way to solve the problem.

Leasing can of course play a part in dealing with the homeless and in reducing bed-and-breakfast accommodation. The noble Lord, Lord Dean, referred to remarks made by my honourable friend Mr. Waldegrave when he was Minister of Housing. I should like to draw your Lordships' attention to one statement made by my honourable friend. He said that this was an interim solution. I think that the noble Lord, Lord Dean, would agree that this is not an efficient long-term solution. That is why it is sensible to have a short-term exemption in this respect.

The practice which is developing among London boroughs of passing leases between themselves on expiry of the three-year period leads to unwelcome instability in the tenure of those properties. This is neither to the benefit of the tenants nor the neighbourhoods in which they are located. It is not a satisfactory arrangement from the housing point of view; it is a device to get around the capital control system. Moreover, for medium-term leasing which exceeds the three-year limit, we propose a major relaxation in the new system of which your Lordships should be aware. At present, if a local authority takes a lease of just over three years, it scores against its resources the full freehold value of the property. Under our proposals for regulations in the new system, the authority would only need credit cover for the capital value of the lease. For a three-year lease, I would normally expect that to be less than a third of the freehold value.

The Government therefore cannot accept this amendment. I explained earlier how it would allow an authority to keep taking leases on the same property without ever having to provide credit cover. As for the point about the treatment of authorities passing leases between each other, that is the subject of consultation on the proposed regulations at present. Indeed this very point was raised by the associations in a meeting of the capital programmes working party on Monday. As with all points made to us we will of course consider it carefully.

I should remind your Lordships that the noble Lord, Lord Dean, has been vociferous on more than one occasion in complaining about the regulation-making powers in Part IV. I hope that on reflection he will be grateful for them as they give us an opportunity to consider carefully the points made on these important matters of detail.

Perhaps I may reply to the noble Lord in respect of one comment he made regarding the fact that the previous occupation has to be scored. He said that the amount of credit cover needed when a previous authority had leased the property would include an allowance for the previous authority's occupation. I am pleased to tell the noble Lord that that is not the case; only the new authority's lease will score.

Lord Dean of Beswick

My Lords, I am a little disappointed with the Minister's reply, although some of it was informative and helpful. He said that I had been rather vociferous during the passage of the Bill. In a sense I think that politics has entered a new age. Indeed, many people in the Minster's own party have been most vociferous in the past week —and not on the subject of housing.

I am sorry that the Minister and the Government seem to be obsessed with these cases of capital resources. If the Minister was able to say to those of us on this side of the House that the Government were mindful of the real increase in the problem of homelessess and that they will become involved in a large-scale low-cost house building programme for low wage earners, there would be some merit in what he said. Indeed, we may see the benefits of that programme by the end of the three-year period.

However, there is no possibility of that happening. In fact the Minister at the Dispatch Box only a few weeks ago in answer to one of my questions—although, not during discusions on the Bill —said that the Government no longer saw local authorities as being involved in large-scale building programmes. They would prefer this to be done by the housing associations in the private sector. Obviously, neither of those bodies will be in a position to do so.

If the Government really take that view seriously then they are living in cloud cuckoo land because it will not happen. The problem of homelessness is with us now. The Government would do well if they listened occasionally to some of their own people on the Back Benches as regards the issue of the use of capital resources and that of capital expenditure. I say that because all the signs are that there is still a menacing increase in the problem of homelessness. Further, if the Minister is saying that there is abuse, why is it not dealt with? Why bring a sledgehammer to crack a walnut?

As I said, I am rather disappointed in the answer. I believe the amendment put forward to be a reasonable one. It will not hurt anyone and it will assist the local authorities to carry out their function of being responsible for the homeless —not for housing. They have the statutory responsibility to look after the homeless. The Bill as it stands will reduce their capacity further to do so. On the basis of that argument I am sorry but I must test the opinion of the House although I had not intended to do so.

4.28 p.m.

On Question, Whether the said amendment (No. 16) shall be agreed to?

Their Lordships divided: Contents, 91; Not-Contents, 137.

DIVISION NO.1
CONTENTS
Addington, L.	Kennet, L.
Airedale, L.	Kirkhill, L.
Amherst, E.	Leatherland, L.
Ardwick, L.	Listowel, E.
Birk, B.	Lloyd of Kilgerran, L.
Blease, L.	Lockwood, B.
Bottomley, L.	Longford, E.
Broadbridge, L.	Lovell-Davis, L.
Brooks of Tremorfa, L.	McGregor of Durris, L.
Bruce of Donington, L.	McIntosh of Haringey, L.
Callaghan of Cardiff, L.	Mason of Barnsley, L.
Carmichael of Kelvingrove,L.	Mayhew, L.
	Mishcon, L.
Carter, L.	Molloy, L.
Cledwyn of Penrhos, L.	Mulley, L.
Cocks of Hartcliffe, L.	Nicol, B.
David, B.	Northfield, L.
Dean of Beswick, L.	Oram, L.
Donaldson of Kingsbridge, L.	Peston, L.
Dormand of Easington, L.	Phillips, B.
Ennals, L.	Pitt of Hampstead, L.
Ewart-Biggs, B.	Ponsonby of Shulbrede, L.[Teller.]
Falkender, B.
Falkland, V.	Prys-Davies, L.
Fisher of Rednal, B.	Ritchie of Dundee, L.
Fitt, L.	Rochester, L.
Foot, L.	Ross of Newport, L. [Teller.]
Gallacher, L.	Sainsbury, L.
Galpern, L.	Seear, B.
Gladwyn, L.	Sefton of Garston, L.
Graham of Edmonton, L.	Serota, B.
Grey, E.	Shackleton, L.
Grimond, L.	Stallard, L.
Hampton, L.	Stedman, B.
Hatch of Lusby, L.	Strabolgi, L.
Houghton of Sowerby, L.	Taylor of Blackburn, L.
Hughes, L.	Thurlow, L.
Hunt, L.	Turner of Camden, B.
Hutchinson of Lullington, L.	Underhill, L.
Hylton, L.	Walston, L.
Irvine of Lairg, L.	Whaddon, L.
Irving of Dartford, L.	White, B.
Jacques, L.	Williams of Elvel, L.
Jeger, B.	Wilson of Rievaulx, L.
Jenkins of Hillhead, L.	Winchilsea and Nottingham,E.
Jenkins of Putney, L.
John-Mackie, L.	Winstanley, L.
NOT-CONTENTS
Ailesbury, M.	Carnock, L.
Airey of Abingdon, B.	Constantine of Stanmore, L.
Allenby of Megiddo, V.	Cork and Orrery, E.
Allerton, L.	Craigavon, V.
Arran, E.	Cross, V.
Astor, V.	Cullen of Ashbourne, L.
Auckland, L.	Davidson, V. [Teller.]
Belhaven and Stenton, L.	Denham, L. [Teller.]
Beloff, L.	Dulverton, L.
Belstead, L.	Eccles, V.
Bessborough, E.	Elibank, L.
Birdwood, L.	Ellenborough, L.
Blatch, B.	Elles, B.
Blyth, L.	Elliot of Harwood, B.
Borthwick, L.	Elliott of Morpeth, L.
Boyd-Carpenter, L.	Elphinstone, L.
Brabazon of Tara, L.	Erroll of Hale, L.
Brookeborough, V.	Ferrers, E.
Brookes, L.	Fortescue, E.
Brougham and Vaux, L.	Fraser of Kilmorack, L.
Bruce-Gardyne, L.	Gainford, L.
Butterworth, L.	Gardner of Parkes, B.
Caithness, E.	Gibson-Watt, L.
Campbell of Alloway, L.	Greenway, L.
Campbell of Croy, L.	Gridley, L.
Carlisle of Bucklow, L.	Grimston of Westbury, L.
Carnarvon, E.	Halsbury, E.
Carnegy of Lour, B.	Hardinge of Penshurst, L.

Harmar-Nicholls, L.	Onslow, E.
Harvington, L.	Oppenheim-Barnes, B.
Havers, L.	Orr-Ewing, L.
Hemphill, L.	Oxfuird, V.
Henley, L.	Pender, L.
Hesketh, L.	Peyton of Yeovil, L.
Hives, L.	Quinton, L.
Holderness, L.	Reay, L.
Home of the Hirsel, L.	Renton, L.
Hooper, B.	Renwick, L.
Hunter of Newington, L.	Rippon of Hexham, L.
Hylton-Foster, B.	Rodney, L.
Jenkin of Roding, L.	St. Davids, V.
Johnston of Rockport, L.	Saltoun of Abernethy, Ly.
Joseph, L.	Sanderson of Bowden, L.
Kaberry of Adel, L.	Shannon, E.
Killearn, L.	Somerset, D.
Knollys, V.	Stanley of Alderley, L.
Knutsford, V.	Stodart of Leaston, L.
Long, V.	Strange, B.
Lucas of Chilworth, L.	Strathcarron, L.
Lurgan, L.	Strathcona and Mount Royal, L.
Mackay of Clashfern, L.
Macleod of Borve, B.	Strathmore and Kinghorne, E.
Margadale, L.
Marley, L.	Sudeley, L.
Maude of Stratford-upon-Avon, L.	Swinfen, L.
	Terrington, L.
Merrivale, L.	Teviot, L.
Mersey, V.	Thomas of Gwydir, L.
Milverton, L.	Tranmire, L.
Monk Bretton, L.	Trefgarne, L.
Morris, L.	Tryon, L.
Mottistone, L.	Ullswater, V.
Mountevans, L.	Vaux of Harrowden, L.
Mowbray and Stourton, L.	Vinson, L.
Munster, E.	Weir, V.
Murton of Lindisfarne, L.	Westbury, L.
Nelson, E.	Wise, L.
Nelson of Stafford, L.	Wyatt of Weeford, L.
Norfolk, D.	Young, B.
Norrie, L.	Young of Graffham, L.

Resolved in the negative, and amendment disagreed to accordingly.

4.36 p.m.

Clause 59 [The reserved part of capital receipts]:

Lord Lloyd of Kilgerran moved Amendment No. 17:

Page 68, line 25, at end insert — ("with the exception that, where land is being disposed of to enable low cost housing provision for rent or shared ownership the reserved part of the capital receipt shall be nil").

The noble Lord said: My Lords, I beg to move the amendment standing in my name. The object of the amendment is to assist local government in relation to their attack on homelessness and also in reducing the squalour, as well as the cost, of bed and breakfast accommodation. The amendment is concerned with how local government should deal with the reserved part of capital receipts. This is dealt with in Clause 59, in its present form: how to deal with the reserved part of capital receipts. This is the position. As many of your Lordships will be well aware, when a local authority receives a capital receipt, part of the receipt must be set aside by the authority as provision to meet credit liabilities. That is in effect covered by subsection (1) of that clause. Subsection (2) says this: (2) subject to the following provisions of this section, the reserved part of a capital receipt shall be—". Paragraph (a) says that in the case of receipts from the disposal of dwelling-houses 75 per cent. must be reserved. That is in respect of the disposal of dwelling-houses. Paragraph (b) says that in respect of any other receipts, 50 per cent. must be reserved.

My amendment is directed towards dealing with that. It gives another exception, which is that, where land is being disposed of to enable low cost housing provision for rent or shared ownership the reserved part of the capital receipt shall be nil".

The Government have already made a number of concessions regarding this clause, which was Clause 58 at Report stage, as announced by the Paymaster General to this House at the time. He dealt with a number of amendments, including this one, en bloc. He was dealing with nomination rights that will not be treated as a national capital receipt when land is disposed by local authorities for subsidised rented housing. The exceptions that he introduced are very welcome, and I should like to say how personally grateful I am for the concessions that he has made. I ought to have declared an interest in that I have been asked to put forward these amendments by the House Builders Federation. For many years, local authorities have worked in partnership with house builders and housing associations to provide social housing for those people who cannot afford to buy or rent on the open market. A mix of local authority land, housing association grant and private finance has made possible a range of low cost housing initiatives such as low-cost sale, shared ownership, as well as private rental schemes. This has broadened the range of housing choice for low income households and increased the private sector's contribution to the social housing market, particularly in the urban areas. The Government have stated on many occasions that the rental schemes will receive favourable treatment, but what is the position regarding the low cost sale or shared ownership?

The provision of land at less than market value has been a key factor in the development of these important schemes for social purposes. Over the years the Government have made clear their support for the transfer of land from the public to the private sector on this basis. However, it now appears that as a by-product of regulations introduced by the Government and aimed at preventing local authorities side-stepping capital expenditure controls, as the Minister has explained on more than one occasion, the Government propose to introduce measures which will effectively reduce all incentives for local authorities to undertake partnership schemes of this type with either private developers or housing associations. If I may use a legal technical term, that is the mischief which the amendment is directed to deal with.

Few local authorities will be interested in partnership schemes on the terms proposed in the Bill. I am informed that already house builders' experience has been that a wide range of partnership initiatives has now been brought to a halt. The most noteworthy is shared ownership schemes targeted at low income households which cannot afford to buy on the open market. Therefore it is to some extent ironic that these are precisely the types of schemes which the Government seek to encourage private landowners to develop in rural areas, where their contribution to meeting housing demand and stimulating the local economy is now widely recognised. Without a simple specific measure such as I have adumbrated to encourage local authorities to dispose of land to the private sector, including housing associations, it will be increasingly difficult to provide low-cost housing in urban areas. As the Local Government and Housing Bill stands notwithstanding the recent concessions on the former Clause 58, now Clause 59, made by the Minister there is no incentive to local authorities to dispose of land for low-cost housing and every incentive to them simply to sell to the highest bidder. Unless land disposal, which enables low-cost housing for rent and shared ownership to be provided, is exempt from the capital controls proposed in the Bill, there is a serious risk that the Government's other main objective of encouraging the private sector to meet housing need will become impossible to achieve.

The noble Earl the Paymaster General has made a number of exceptions and dealt with a number of amendments en bloc at the Report stage, including this amendment. I have been advised that although many of these exceptions are to be welcomed, the House Builders Federation, on whose behalf I propose the amendment, feels that this provision is of considerable importance since it deals with the capital receipts arising in local government.

It is usual with lawyers sometimes partly to give away their case. I fully realise that perhaps my amendment should not be included in the Bill but rather be dealt with in regulations which are to be produced later. I am sure that the Minister will help me on this procedural matter. I hope he will be able to be sympathetic —as he always is towards social problems —and say that at least I have his sympathy and if the amendment is not included in the Bill, he will consider it being inserted in regulations at a later stage. I beg to move.

4.45 p.m.

The Earl of Caithness

My Lords, the noble Lord, Lord Lloyd of Kilgerran, has reminded the House that I made an announcement last week at Report stage concerning certain exemptions which we intended to provide by regulations. Let me remind the House what I said. First, where a local authority disposes of land for the provision of subsidised rented housing, and receives nomination rights to that housing in return, we propose that there should be no debt redemption in respect of the nomination rights. Secondly, we propose to have an exemption for build for sale schemes in the new system. Thirdly, we are urgently considering whether there should be help for other low-cost home ownership initiatives which received favourable treatment in the present system. That remains the position, and I am very grateful to the noble Lord, Lord Lloyd of Kilgerran, for the reception he has given to the initiative which I announced. Obviously, I have to say that I am afraid that I cannot give the House final decisions on all the exemptions yet, but I hope we shall be able to make a further announcement shortly.

What I said last week I believe goes a long way towards meeting the spirit of this amendment. It may well be that when we come to final decisions on the other exemptions we can go even further. I have to say though that we shall not go the whole way. For example, if a local authority facilitates a low-cost home ownership scheme by selling land cheaply, but still receives some cash for the land, there is no reason why there should not be debt redemption in respect of that cash receipt. The debt redemption would already be at the more favourable rate of 50 per cent. for housing land as opposed to 75 per cent. for council house sales. I know that the noble Lord will agree with me that if we make a concession on this, of course it reduces the scope for issuing credit approvals and therein lies the rub.

Nevertheless, as I said, we have gone some way towards the noble Lord. The announcement I made on nomination rights certainly meets the main concerns expressed to me on low-cost housing initiatives in my previous capacity as Minister for Housing. I can reassure the noble Lord on the question that he asked about shared ownership and repeat that this is one of the areas which we are considering.

Lord Lloyd of Kilgerran

My Lords, I am very grateful indeed for the noble Earl's remarks. We shall read that speech in Hansard and consider it further. I sympathise over the technical difficulties which arise around Clause 59 and the exemptions. As the Minister knows, the matter has been discussed at considerable length with his colleagues. I wish to thank them for the courtesy that they have given to representatives of the federation which asked me to put forward the amendment.

I hope therefore that—as I am sure will happen—progress can be made with the discussions. In the light of the Minister's statement, I hope that the matter can be included in some form in the regulations which, as the noble Earl said, are under consideration. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 63 [Duty to set certain amounts aside as provision to meet credit liabilities]:

Lord McIntosh of Haringey moved Amendment No. 18: Page 73, line 34, leave out ("an amount equal to") and insert ("not more than 50 per cent. of").

The noble Lord said: My Lords, I make no apology for returning to this matter although it was debated on Report on a more ambitious amendment. However, we return to the matter partly because the response of the Government to our previous amendment was singularly unconvincing. In the response he gave, the Paymaster General made three points. There may have been more, but there were three which I noted in particular. First, he referred to difficulties which local authorities may have. Perhaps I should at this point introduce the amendment. I apologise to the House. I have assumed that everyone is familiar with what we are talking about.

The purpose of this amendment is to ensure that at least 50 per cent. of the money which comes in grants to authorities which put in successful applications to the European Regional Development Fund is given to those authorities in addition to any other credit approvals. In other words, the amendment is concerned with the principle of what is called in the Commission, additionality. That is the principle that, when a grant is given for any purpose from the regional fund or the Social Fund or any other fund, it is available for the purpose for which it is intended, in addition to any other support from the national government for similar purposes.

In his reply to our preceding amendment, the Paymaster General referred to difficulties which authorities might have when they put in a scheme for approval which they are anxious to start but where they experience some delay in obtaining from the European Commission approval on funding. All I can say to the Minister is—I have enquired about this matter particularly —that none of the local authorities which have made representations to the department about this matter have indicated that that is any problem. Authorities say they have no fears on that score.

The second point the Minister made concerned the difficulty of authorities financing a scheme before the money arrives from Brussels. In other words, it is a cash flow problem. I can see that that could be a problem, but it would be very easy for the department either to give temporary borrowing powers or indeed to make a grant itself once a European Regional Development Fund grant had been given. The cash flow problem could easily be dealt with by central government.

The third and most serious point that the Minister made concerns the fact that, if all local authorities obtained spending authority to match the European Regional Development Fund grant, there would be less total credit approval available. But the grants from the European Regional Development Fund reflect, or ought to reflect, specific local needs which cannot be met from normal Government expenditure. It is a principle of the European Commission, and should be a principle of this Government, that these grants should be in addition to existing government expenditure, which presumably has been worked out on some rational basis of how much the country is able to afford for this head of expenditure. They should not be affected by the success or otherwise of individual local authorities in applications for European regional development funding.

There are two ways in which the Government claim that their proposals are satisfactory. I believe those claims are unfounded in both cases. First of all, the Government claim that the funding is certain and that the principles are clear. I do not think that is the case, because it is unclear how much will be taken away from credit approvals when a European Regional Development Fund grant is approved by the Commission. We can understand a clear yes or no. I am told that a betting tax is easy to understand. I do not bet myself so I do not understand it, but those who bet understand that they are paying a tax on the bet rather than on the winnings, if that is the right way round. However, the Government's proposals for credit approvals in this case seem to be totally unclear.

Secondly, the Government claim that their proposals give local authorities an incentive to apply for regional development funds. That is true only to a very limited extent, in the sense that we understand that the Government are prepared to allow additionality for 25 per cent. of the amount of the grant. What we are saying is not that there should be 100 per cent. additionality, although I happen to believe that should be the case, but that at least 50 per cent. additionality should exist, and that there should be a real incentive for local authorities to apply for this European Regional Development Fund money. There should be a real incentive also for the Commission to go on granting the money on the basis that it will go where it is intended. Otherwise, the intentions of the Commission will be frustrated and I am bound to say that the sincerity of the Government in encouraging local authorities to apply for grant will be called in question. I beg to move.

Lord Rippon of Hexham

My Lords, I share to a large extent the anxieties which have been expressed about this provision by the noble Lord, Lord McIntosh of Haringey. When we joined the Community we made great play with the fact that over the years the size and shape of the Community budget would change and that many areas in the United Kingdom would benefit from the regional development fund. There was then, of course, some discussion about whether or not they would get the full benefit. The indications were given that they should get it, ought to get it and would get it. Great play was made with that point at the time. It may be inevitable that, if the Community makes a contribution, that will have some effect upon the amount that the Government themselves have to provide. I should have thought that this measure was a reasonable compromise. I should be grateful if my noble friend the Minister would indicate whether there is any other statute in which a provision of this kind —which, on the face of it, goes completely against the practice of the Community —has been made.

Lord Ross of Newport

My Lords, I am grateful to the noble Lord, Lord Rippon, for intervening on this matter because he will know, as I am sure the Minister will also know, that while we hear about avoidance schemes by local authorities, local authorities likewise feel very aggrieved at the way in which the Treasury has over a number of years dealt with the principle of additionality. Local authorities have been penalised when they have received grants and money from Brussels. This is a Treasury manoeuvre which is very much resented in local government circles. If the Paymaster General could at least ease that situation, it would be a great step forward. Why should local authorities not receive the money for which they qualify under European grant systems?

5 p.m.

The Earl of Caithness

My Lords, I have the feeling that the noble Lord, Lord McIntosh of Haringey, believes that this is a relatively small matter for the Government, simply a matter of degree, because we have already proposed that in some circumstances ERDF grant should be matched by extra credit approvals equal to 25 per cent. of the grant. So why not provide that some of the grant should convey spending power directly?

However as I explained when this issue was raised on Report, there are a number of objections. The noble Lord, Lord McIntosh of Haringey, has itemised those objections, so noble Lords will now have to listen to them for a second time in this discussion.

One of the objections that I enunciated is that, if EC grant conveys spending power directly, this can create a considerable amount of uncertainty for authorities. The noble Lord, Lord McIntosh suggested on Report and again today that this objection was trivial, but I raise it because it is a concern which local authorities themselves raised in response to the consultation paper. I know that a number of authorities are in the position at the moment of having started schemes although they do not yet know whether they will eventually receive grant to support those projects, or at what rate that grant would be paid. An authority has to know before committing itself to a project that it will be able to accommodate that project in its capital programme. The question is whether it should rely on the credit approval in hand, as the Government propose, or on the ERDF grant in the bush. That dilemma will not easily disappear.

Our objections are of principle as well as of practicality.Over wide areas of public expenditure —transport especially —the credit approvals which local authorities will receive will be tied closely to particular projects which individual local authorities need to carry out. So if a local authority had had its case for a road scheme accepted by the Secretary of State for Transport, it would have received credit approvals to fund that expenditure. If the local authority were then to obtain ERDF to support the same scheme, the amendment of the noble Lord, Lord McIntosh, would mean that the ERDF grant too would convey spending power. So the authority would be funded twice for the same scheme.

I am sure that your Lordships would agree that that would be neither fair nor sensible. It would be an extremely complex business to prevent such anomalies under the arrangement which the noble Lord, Lord McIntosh, proposes. Any attempt to do so would almost inevitably be at the expense of local authority discretion in other areas.

I can reassure the House that the Government have considered carefully whether ERDF and other European grants should convey spending power directly. We have considered carefully whether, as an alternative, allowance should be made in the distribution of credit approvals for the expected likely distribution of ERDF receipts. We have decided instead to go down the road which prevents the kind of anomalies which I have described. We have decided to continue the present approach; namely, in general capital allocations should be given to authorities based on overall assessments of their need to spend including their need to spend on the sort of projects which are eligible for assistance from Brussels, and no explicit account should be taken of whether expenditure may be financed in part through ERDF grant.

A great many ERDF-funded projects directly complement the aims of Government expenditure programmes —assisting the economic regeneration of the inner cities and areas suffering from industrial decline. The Government's own assessment of needs complements that of the ERDF programme. We can point to many major ERDF-funded projects which have received very substantial support through the Government's own capital allocations —major airport, road development and public transport schemes are key areas.

For local environmental services expenditure, we intend to tie some £25 million of allocations to expected ERDF grant for individual authorities. But as I explained at Report stage, the reasons for that are very specific. Resources for local environmental services are distributed by means of formulae at the recommendation of the local authority associations. There is therefore nothing in the main local environmental services distribution which takes account of individual project needs. So with local environmental services expenditure there is a need for specific resources and, moreover, ERDF can be supported by extra spending power without creating the anomaly of funding the same project twice.

The Government's proposed approach ensures that local authorities retain the discretion to decide their own spending priorities locally, ERDF has already enhanced the total available for spending nationally, so if the amendment were adopted there would be less available to local authorities for credit approvals for their general spending purposes. We do not believe such a restriction on local authority decision-making would be desirable.

I was particularly interested by one point mentioned by the noble Lord, Lord McIntosh of Haringey. He said that if there were a cash-flow problem for the local authority it was not really a cash-flow problem because the Government could take care of it. What he meant was that the taxpayer would have to take care of it. I should have hoped that there would have been a more responsible attitude towards taxpayers' money.

Lord McIntosh of Haringey

My Lords, I do not believe that the Minister listened to what I said. I said that the Government could give temporary borrowing powers to local authorities for that purpose. In other words, the local authority and community charge payers would take responsibility for it and not taxpayers as a whole.

Taking the generality of his answer, the Minister has changed his ground to some extent. He did not put the uncertainty argument as strongly as he did earlier. He did not claim, as he did before, that the Government's proposals are either certain or that they encourage local authorities to apply for European Regional Development Fund grants. What he has now said is a straightforward Treasury answer. He will not apologise for that because after all that is where he is based. It was a straightforward Treasury answer. The Government are seeking to benefit from any European Regional Development Fund grants obtained by local authorities in order to cut central government spending.

This is a matter on which we are not going to agree. It is a matter of fundamental principle concerning the relationship between local authorities, central government in this country and the European Commission. It is a matter on which we are totally dissatisfied with the Government's answer. I shall have to seek the opinion of the House on the amendment.

5.5 p.m.

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

Their Lordships divided: Contents, 86; Not-Contents, 124.

DIVISION NO. 2
CONTENTS
Addington, L.	Kinloss, Ly.
Airedale, L.	Kirkhill, L.
Amherst, E.	Listowel, E.
Annan, L.	Lloyd of Kilgerran, L.
Ardwick, L.	Lockwood, B.
Birk, B.	Longford, E.
Blease, L.	Lovell-Davis, L.
Boston of Faversham, L.	Mclntosh of Haringey, L.
Bottomley, L.	Mason of Barnsley, L.
Brooks of Tremorfa, L.	Mayhew, L.
Bruce of Donington, L.	Molloy, L.
Callaghan of Cardiff, L.	Monson, L.
Carmichael of Kelvingrove, L.	Nicol, B.
	Northfield, L.
Carter, L.	Oram, L.
Cocks of Hartcliffe, L.	Perry of Walton, L.
David, B.	Peston, L.
Donaldson of Kingsbridge, L.	Pitt of Hampstead, L.
Dormand of Easington, L.	Raglan, L.
Ennals, L.	Rea, L.
Falkender, B.	Rippon of Hexham, L.
Falkland, V.	Ritchie of Dundee, L.
Fisher of Rednal, B.	Rochester, L.
Fitt, L.	Ross of Newport, L.
Foot, L.	Russell of Liverpool, L.
Gallacher, L. [Teller.]	Seear, B.
Galpern, L.	Sefton of Garston, L.
Gladwyn, L.	Shackleton, L.
Graham of Edmonton, L. [Teller.]	Shaughnessy, L.
	Somerset, D.
Grey, E.	Stallard, L.
Hampton, L.	Stedman, B.
Hatch of Lusby, L.	Strabolgi, L.
Houghton of Sowerby, L.	Taylor of Blackburn, L.
Howie of Troon, L.	Turner of Camden, B.
Hughes, L.	Underhill, L.
Hunt, L.	Walston, L.
Hutchinson of Lullington, L.	Whaddon, L.
Irvine of Lairg, L.	White, B.
Jacques, L.	Williams of Elvel, L.
Jeger, B.	Wilson of Rievaulx, L.
Jenkins of Hillhead, L.	Winchilsea and Nottingham, E.
Jenkins of Putney, L.
John-Mackie, L.	Winterbottom, L.
Kilbracken, L.

NOT-CONTENTS
Alexander of Tunis, E.	Joseph, L.
Allenby of Megiddo, V.	Knutsford, V.
Allerton, L.	Lloyd of Hampstead, L.
Arran, E.	Long, V.
Astor, V.	Lucas of Chilworth, L.
Auckland, L.	McAlpine of Moffat, L.
Beaverbrook, L.	McAlpine of West Green, L.
Belhaven and Stenton, L.	Mackay of Clashfern, L.
Belstead, L.	Margadale, L.
Bessborough, E.	Marley, L.
Blatch, B.	Maude of Stratford-upon-Avon, L.
Blyth, L.
Borthwick, L.	Merrivale, L.
Boyd-Carpenter, L.	Mersey, V.
Brabazon of Tara, L.	Milverton, L.
Brookeborough, V.	Monk Bretton, L.
Brookes, L.	Morris, L.
Brougham and Vaux, L.	Mottistone, L.
Butterworth, L.	Mountevans, L.
Caithness, E.	Mowbray and Stourton, L.
Campbell of Alloway, L.	Munster, E.
Campbell of Croy, L.	Nelson, E.
Carnarvon, E.	Nelson of Stafford, L.
Carnegy of Lour, B.	Norrie, L.
Carnock, L.	Onslow, E.
Clinton, L.	Oppenheim-Barnes, B.
Constantine of Stanmore, L.	Orkney, E.
Cork and Orrery, E.	Orr-Ewing, L.
Craigavon, V.	Oxfuird, V.
Crawshaw, L.	Pender, L.
Cross, V.	Peyton of Yeovil, L.
Cullen of Ashbourne, L.	Plummer of St. Marylebone,L.
Davidson, V. [Teller.]
Denham, L. [Teller.]	Quinton, L.
Dilhorne, V.	Reay, L.
Dulverton, L.	Renwick, L.
Elibank, L.	Rodney, L.
Ellenborough, L.	St. Davids, V.
Elles, B.	Sanderson of Bowden, L.
Elliott of Morpeth, L.	Slim, V.
Elphinstone, L.	Stanley of Alderley, L.
Ferrers, E.	Stodart of Leaston, L.
Fortescue, E.	Strange, B.
Fraser of Kilmorack, L.	Strathcarron, L.
Gainford, L.	Strathclyde, L.
Gardner of Parkes, B.	Strathcona and Mount Royal, L.
Geddes, L.
Gibson-Watt, L.	Strathmore and Kinghorne, E.
Gray of Contin, L.
Greenway, L.	Sudeley, L.
Gridley, L.	Swinfen, L.
Hardinge of Penshurst, L.	Teviot, L.
Harvington, L.	Teynham, L.
Havers, L.	Thomas of Gwydir, L.
Hemphill, L.	Tranmire, L.
Henley, L.	Tryon, L.
Hesketh, L.	Ullswater, V.
Hives, L.	Vaux of Harrowden, L.
Holderness, L.	Vinson, L.
Home of the Hirsel, L.	Weir, V.
Hooper, B.	Wise, L.
Hunter of Newington, L.	Wyatt of Weeford, L.
Jenkin of Roding, L.	Young, B.
Johnston of Rockport, L.	Young of Graffham, L.

Resolved in the negative, and amendment disagreed to accordingly.

Clause 68 [Companies controlled by local authorities and arm's length companies]:

5.12 p.m.

Baroness David moved Amendment No. 19:

Page 78, line 20, at end insert — ("( ) Without prejudice to the generality of subsection (1) of this section, the Secretary of State shall exercise his powers of direction under that subsection in respect of any company which would otherwise be a controlled company for the purposes of this Part of this Act —

1. (a) whose activities, in the opinion of the Secretary of State, are predominantly designed to facilitate co-operation between local authorities in the discharge of statutory duties; and
2. (b) whose financial transactions, in the opinion of the Secretary of State, are such as to justify exemption from the provisions of this Part of this Act relating to controlled companies.").

The noble Baroness said: My Lords, as I said I would last week, I have come back to the attack. This amendment is in exactly the same terms as the amendment which I moved on Report. The House will see that it is supported not only from these Benches but, as before, by the noble Baroness, Lady Carnegy of Lour. This is an entirely non-partisan matter. Those of us who are dissatisfied with the Minister's refusal to accept our case are concerned only for the well-being of our public library service and the importance to that service of the regional library systems.

Perhaps I may briefly recapitulate the case for those who may not have heard it. Each local authority is independent for the purposes of running its public libraries, but it makes sense for them to group together in regions for the provision of important common services, particularly for the operation of the inter-lending system which is infinitely superior in this country to that in many other countries and which is the facility that allows each authority to provide a much superior service for its customers than it could possibly do without such co-operation. I should like to stress the success of the inter-lending system. Such regional library systems exist throughout the country. Because successive governments over the last 25 years have failed in their statutory duty —a duty, not just a power —to create a legal form for those systems, they have had to find a legal form for themselves. Two of them (London and South-East Region and North-West Region) formed themselves into companies. That means that they are caught by the provisions of the Bill relating to companies controlled by local authorities.

Clause 68(1) allows the Secretary of State to exempt any particular company or class of companies from those provisions. We are asking the Minister to say that the Government will use that power, which they asked for, in respect of those regional library systems.

Rather than go over the whole ground again, I want to pick up the points made by the Minister in his speech at Report stage —23rd October, col. 1166 of Hansard—and try to persuade him that he is being thoroughly inconsistent and that there is no reason at all why he should not make the very mild concession for which we ask.

First, perhaps I may refer the Minister to his own remarks during a previous intervention in that debate. At col. 1162 he indicated that the Government would issue a consultation paper in which certain general exemptions from the Bill would be indicated. He then added: We shall be glad to consider others". He later added: there will remain the possibility that there will be one-off cases where we are persuaded either that a company which comes within the criteria is nevertheless genuinely independent of the local authority"— that will not be the case with the companies of which I am speaking — or that for some reason we can be certain that it will never undertake activities contrary to the rules and that there is some advantage in not formally applying the controls". —[Official Report, 23/10/89; col. 1162.]

I suggest to the Minister that the case that I have put to him in previous debates and in the meeting which he was kind enough to hold with me and representatives of the Library Association should abundantly convince him that that is exactly the situation here. He now knows very well that the practical difficulties for LASER and NWRLS in adhering to the requirements in the Bill are enormous and probably insuperable. In our various talks with the Minister and his officials, he has not attempted to deny that. What he has done is to suggest ways in which those regional systems might be able to avoid —I prefer to say evade —the normal provisions.

One of the ideas flung out in the course of our meeting with the Minister the other week perfectly illustrates the artificiality of the Government's notions on this. It was suggested that, in order to avoid the complications of getting tiny amounts of capital expenditure included in the borrowing plans of 42 local authorities, those 42 authorities might make revenue contributions to LASER to constitute a fund which would be set aside for use on capital expenditure when required. I myself, the Library Association and the expert on local authority finance who was with us were astounded by the suggestion. The idea that, in present circumstances, 42 local authorities could be persuaded to set aside a little nest egg of money for expenditure some time in the future is surely wholly unrealistic.

In brief, the case is as follows. First, the Government are estopped from arguing that no exceptions can be made to the provisions of the Bill, because they themselves have built in power to make exceptions in the Bill. Secondly, the Government cannot argue that the amounts of money that would be involved are so high as to undermine the very purpose of this part of the Bill. Thirdly, the Government cannot now argue that any definition of exempted companies would allow undesirable cases to creep through the partially open door. The Minister and his officials made clear the other week that exemptions would be not only by means of definitions, but also of named companies. So there is no reason why, after full consultation with his colleague in the Office of Arts and Libraries, he should not exempt those companies because of the particular circumstances applying to them.

The Minister will no doubt tell us once again that the amendment will not be appropriate to add to the Bill because the Minister already has power to make an exemption if he can be persuaded that it is right so to do. I know that perfectly well. The trouble is that he has not so far been so persuaded and it is therefore legitimate for us to table an amendment which makes clear what we are seeking. I shall be more than happy to withdraw the amendment if the Minister would just do the simple thing and say that he is prepared to make the regional library systems one of the exceptions which he admits that he will make.

The Minister knows in his heart that he does not have a good case. He knows that he can make this concession without incurring any practical disadvantages for the Government or setting a precedent for other cases. I hope that he has had discussions with his right honourable friend the Minister for the Arts, as I suggested. If so, he will know that the Minister for the Arts is well aware of the enormous practical difficulties that failure to exempt the regional systems will create.

All that is required is for the Minister to go in for a little British common sense and refuse to follow the absolute line of logic to the point of downright silliness. I still hope for a sympathetic response from the Minister. I beg to move.

Baroness Carnegy of Lour

My Lords, in my view the aim of this amendment, which is the exemption of two local government companies that would otherwise be caught by this Bill, is very commendable indeed. Its argument is strong on grounds of fairness to the local authorities concerned, which have acted in good faith in forming those companies, and from the Government's point of view on moral grounds as well.

Although the two groups of libraries are in England and are of much concern to the Library Association, I put my name to the amendment and I declare an indirect interest in that I am the honorary president of the Scottish Library Association. In his reply to the debate at Report stage, and in a letter which he sent to me today, for which I am extremely grateful, my noble friend Lord Hesketh explained clearly and fully why the Government must set upper limits on capital expenditure by local authorities and why they must resist the attempts of local authorities to get round those limits. I agree absolutely with him. In my view, local government capital expenditure is far too big a proportion of national public expenditure on capital projects to be allowed to run riot. This amendment is about something else.

I agree with the noble Baroness, Lady David, that this is not at all a party political issue. The amendment concerns a statutory obligation imposed on central government by the 1964 Public Libraries and Museums Act under which the Government were required to group local authorities regionally in order that they might better be able to co-operate in sharing books and other resources across local authority boundaries without the extremely costly and inefficient process of shared capital expenditure and inter-authority revenue payments. That requirement was to enable local authorities to have a formal legal framework within which to fund that co-operation.

As the noble Baroness, Lady David, reminded us, over the years successive governments have failed completely in that duty. Because of the extreme difficulty of grouping informally and somehow collecting funding every year —in one case from 42 participating authorities —and with no legal framework in which to do it (as noble Lords will realise, local government can do nothing that is not allowed by statute), authorities have had to find their own ways. It so happens that two groups of authorities have chosen quite legally to set up companies for that purpose. Those companies are now caught under this measure. It raises for those companies the most enormous practical difficulties which they probably cannot overcome.

There would have been no need for those companies if previous governments, including this one, had fulfilled their legal obligations. Those companies are creatures of successive governments' statutory default.

As the noble Baroness said, under this Bill Ministers have power to exclude certain classes of companies or specific companies by name from those caught by the Bill. The noble Baroness and this amendment simply ask Ministers to undertake to exclude two regional library systems—London and South-East and the North-West regions —or to exclude the class of company to which those systems belong.

The situation in which regional library companies find themselves is of successive governments' own making. Local government quite rightly felt that it owed it to its ratepayers to take action that the Government had never taken. It seems to me that now local government owes it to its community charge payers to resist the unfairness brought about by this Bill. At this late stage I very much hope, on grounds of justice to certain local authorities and on moral grounds, that the Minister will change his mind.

Lord Graham of Edmonton

My Lords, these Benches very much hope that the Minister will take on board the absence of political animus in this matter. I submit that the stable from which the amendments come is impeccable. The amendment has been moved and seconded by two colleagues who in other respects are very much political ladies. They have spoken across party lines and certainly are motivated from a non-party viewpoint.

The Library Association is a body that has served this House well. It has indicated its views quite clearly. I think that the Minister should reflect seriously on the fact that this is a group of people who want to help themselves. As the noble Baroness, Lady David, said, it represents a group of people who want to put away a nest-egg for a rainy day, who want to be prudent and sure that they are not caught out. They want to look to the future. Surely this Government ought to be prepared to accept that aim.

The Minister said that there were exceptions and levels and that one must be careful before creating precedents when exceptions are made. But the Minister and his Government must recognise that there is a case to be made for exceptions. The powerful case that has been made out this evening deserves, I believe, the approbation of the whole House. I hope that the Minister will respond helpfully.

Lord Ross of Newport

My Lords, my first chairmanship in local government was as chairman of the Library and Arts Committee. I should like very much to associate myself with the remarks that have already been made on this issue.

5.30 p.m.

Lord Hesketh

My Lords, this amendment would require the Secretary of State to exempt from the controls a company which is predominantly designed to help local authorities co-operate in discharging statutory duties. We again return to the vexed question of the companies set up to provide regional library services. Let me start by reiterating once again my personal admiration for the work that these companies and the other regional associations do.

I do not think that we should let our admiration for this work blind us to the purpose of this amendment. It is to give these companies a favoured status above all other local authority services. We do not think that that is right.

At Report stage I endeavoured to set out why we think that there is a problem with the approach advocated by the noble Baroness, Lady David. I beg the forgiveness of the House if I weary it briefly with a little repetition. It is an important part of the Government's strategy to control the demands of the public sector on the national economy. The local authority sector is an important part of the general public sector. We believe that it is necessary as part of that control of the public sector to control the demands of the local authority sector for capital, which is why we have Part IV of this Bill.

In looking at the local authority sector we have to look not only at the local authorities themselves but also at the other entities which are, to all intents and purposes the creatures of local authorities. Hence the provisions of Part V to identify the bodies which go to form the local authority sector, and the provisions for applying the capital finance controls to them. The regional library services companies are two of those creatures of local authorities that are properly regarded as part of the local authority sector. Local authorities own a majority of them and local authorities control a majority of the votes in them.

I well remember that the noble Baroness chided me thoroughly at Report stage with offering devices by which these companies could cease to be regarded as part of the local authority sector. I am sorry to say that she did so again today. I was not offering such devices, but simply pointing out that if these companies are no longer the creatures of local authorities but are in the private sector, the reasons for applying controls to them disappear.

A case has been made for an exemption for these companies on the grounds that such an exemption will not make a difference to the Government's policy because the capital requirements of the two companies are, on that scale, too small to be significant. I agree. But where I differ is over the belief that this category is not only small but also unique. I have doubts that arguments can be found to show that this case is unique. But I have no doubts that once it is accepted as a special case equally forceful arguments will be found that other cases share all the qualities of these two companies, and that those other cases should also be given special treatment.

We are trying to introduce a rational system of controlling the capital finance of the local authority sector. To single out these companies either means giving them an exemption denied to other parts of that sector or giving them a special allocation from the resources available to that sector in preference to the other local authority services.

My noble friend Lady Carnegy of Lour pointed out that the Government ought to fulfil their statutory duties by setting up statutory joint boards. Of course if that had happened the end implication would be that those joint statutory boards would come within the controls and would not be in a position to put forward the argument that is being presented today. It is an important point to remember. The noble Baroness, Lady David, pointed out very clearly, with the greatest charm, that by just a little change I could satisfy the requirements of her amendments. For the reasons that I have given I fear that I shall be unable to do so.

Baroness David

My Lords, I am extremely disappointed at that reply. Indeed, I am rather shocked. The sums involved are small. It would be very easy to exempt these companies by name. The Minister gave no examples of other companies which might suddenly wish to join the queue. His reply shows the Government's general lack of care about education and the arts. We are very proud of public libraries. It is a great shame that they cannot have the help that exempting these regional companies would give. I shall not waste any more time. I shall test the opinion of the House.

5.33 p.m.

On Question, Whether the said amendment (No. 19) shall be agreed to?

Their Lordships divided: Contents, 85; Not-Contents, 105.

DIVISION NO. 3
CONTENTS
Addington, L.	Donaldson of Kingsbridge, L.
Airedale, L.	Dormand of Easington, L.
Amherst, E.	Dunrossil, V.
Ardwick, L.	Ennals, L.
Blackstone, B.	Falkender, B.
Boston of Faversham, L.	Falkland, V.
Bottomley, L.	Fisher of Rednal, B.
Callaghan of Cardiff, L.	Fitt, L.
Carmichael of Kelvingrove, L.	Foot, L.
	Gallacher, L.
Carnegy of Lour, B. [Teller.]	Galpern, L.
Carter, L.	Graham of Edmonton, L.
Cocks of Hartcliffe, L.	Grey, E.
Darcy (de Knayth), B.	Hampton, L.
David, B. [Teller.]	Hardinge of Penshurst, L.
Dean of Beswick, L.	Hatch of Lusby, L.

Houghton of Sowerby, L.	Northfield, L.
Howie of Troon, L.	Oram, L.
Hughes, L.	Peston, L.
Hutchinson of Lullington, L.	Pitt of Hampstead, L.
Irvine of Lairg, L.	Ponsonby of Shulbrede, L.
Jacques, L.	Rea, L.
Jeger, B.	Ritchie of Dundee, L.
Jenkins of Hillhead, L.	Ross of Newport, L.
Jenkins of Putney, L.	St. John of Bletso, L.
John-Mackie, L.	Sefton of Garston, L.
Kilbracken, L.	Serota, B.
Kilmarnock, L.	Shackleton, L.
Kirkhill, L.	Shaughnessy, L.
Listowel, E.	Stedman, B.
Lloyd of Kilgerran, L.	Strabolgi, L.
Lockwood, B.	Turner of Camden, B.
Longford, E.	Underhill, L.
Lovell-Davis, L.	Walston, L.
McIntosh of Haringey, L.	Whaddon, L.
Mason of Barnsley, L.	White, B.
Mayhew, L.	Williams of Elvel, L.
Milner of Leeds, L.	Wilson of Rievaulx, L.
Milverton, L.	Winchilsea and Nottingham
Mishcon, L.
Molloy, L.	Winstanley, L.
Monson, L.	Winterbottom, L.
Nicol, B.

NOT-CONTENTS
Alexander of Tunis, E.	Joseph, L.
Allenby of Megiddo, V.	Kaberry of Adel, L.
Allerton, L.	Kimball, L.
Arran, E.	Knutsford, V.
Ashbourne, L.	Lauderdale, E.
Astor, V.	Long, V.
Beaverbrook, L.	Lucas of Chilworth, L.
Belstead, L.	McAlpine of Moffat, L.
Bessborough, E.	McAlpine of West Green, L.
Blatch, B.	Mackay of Clashfern, L.
Blyth, L.	Margadale, L.
Borthwick, L.	Marley, L.
Boyd-Carpenter, L.	Maude of Stratford-upon-Avon, L.
Brabazon of Tara, L.	Stratford-upon-Avon, L.
Brookes, L.	Merrivale, L.
Brougham and Vaux, L.	Mersey, V.
Butterworth, L.	Mottistone, L.
Caithness, E.	Mountevans, L.
Campbell of Alloway, L.	Munster, E.
Campbell of Croy, L.	Nelson, E.
Carnock, L.	Nelson of Stafford, L.
Clinton, L.	Onslow, E.
Constantine of Stanmore, L.	Oppenheim-Barnes, B.
Cross, V.	Orkney, E.
Cullen of Ashbourne, L.	Oxfuird, V.
Davidson, V. [Teller.]	Pender, L.
Denham, L. [Teller.]	Peyton of Yeovil, L.
Dilhorne, V.	Plummer of St. Marylebone,L.
Dulverton, L.
Elibank, L.	Reay, L.
Ellenborough, L.	Renwick, L.
Elliott of Morpeth, L.	Rodney, L.
Elphinstone, L.	Saint Albans, D.
Erne, E.	Sanderson of Bowden, L.
Fortescue, E.	Slim, V.
Fraser of Kilmorack, L.	Somerset, D.
Gardner of Parkes, B.	Stanley of Alderley, L.
Geddes, L.	Stodart of Leaston, L.
Gibson-Watt, L.	Strange, B.
Gray of Contin, L.	Strathcarron, L.
Harmar-Nicholls, L.	Strathcona and Mount Royal, L.
Harvington, L.	Royal, L.
Havers, L.	Strathmore and Kinghorne, E.
Hemphill, L.
Henley, L.	Sudeley, L.
Hesketh, L.	Swinfen, L.
Hives, L.	Teviot, L.
Holderness, L.	Teynham, L.
Home of the Hirsel, L.	Thomas of Gwydir, L.
Hooper, B.	Tranmire, L.
Jenkin of Roding, L.	Tryon, L.
Johnston of Rockport, L.	Ullswater, V.

Vaux of Harrowden, L.	Wyatt of Weeford, L.
Weir, V.	Young of Graffham, L
Wise, L.

Resolved in the negative, and amendment disagreed to accordingly.

5.40 p.m.

Clause 69 [Companies subject to local authority influence]:

Lord McIntosh of Haringey moved Amendment No. 20: Page 80, line 38, leave out ("net assets of the company") and insert ("aggregate of the company's nominal share capital and capital grants received by the company.").

The noble Lord said: My Lords, I should like to speak also to Amendment No. 21. This is an attempt —I hope that it is in the right form —to correct an anomaly which I am convinced cannot be intended by the Government. Noble Lords will recall that when at Report we considered the definitions of influenced companies, the Government —I am grateful to them —accepted an amendment which provided that joint ventures owned 50 per cent. each by the local authority and the private sector should be accepted as not being local authority influenced companies. That was a useful improvement and exemption of a form of enterprise jointly between local authorities and the private sector. It is valuable, has done good work and has been accepted by local authorities of all political persuasions as being worth while.

However, an anomaly exists. It often occurs that in the life of such a joint venture the first few years are conducted at a loss and then profits begin to come in from the project. The effect is that the company's net assets fall. As a definition of whether a company shall be influenced or not the Government have chosen its net assets. That means that during a period of loss a company which was not originally influenced becomes influenced and therefore is restricted in the ways about which we know. Presumably it again becomes not influenced when its net assets rise to their original level; that is, unless all kinds of absurd and irrelevant devices are undergone by the company so that its net assets are not influenced.

Amendment No. 21 proposes that, instead of being based on net assets, the definition is based on the aggregate of the company's nominal share capital and capital grants received by the company. We believe that that information should be readily available in the company accounts and could be required to be so.

In the second amendment we are looking for an exemption to the joint ventures in their first few years if, for technical reasons, they become influenced. We believe that the first amendment is better but we cannot see that the second will cause any difficulty to the Government. We hope that they will accept if not the first amendment then the second one. I beg to move.

Lord Hesketh

My Lords, Amendments Nos. 20 and 21 are alternative solutions to what is seen as a problem over joint ventures between local authorities and the private sector.

The problem is the fear that where a local authority and a private sector company have established a company as a vehicle for a joint venture the company might count as subject to the influence of the local authority because, initially at least, the company will incur losses which will diminish its net assets and thus make the local authority's contribution more than half of those net assets. In that way the company might satisfy the business relationship test for being subject to a local authority's influence. The problem is seen as particularly severe in the case of property development projects where losses may be inevitable at the start.

Amendment No. 20 would address this by replacing the reference to net assets with a reference to the sources of finance. We do not think that is acceptable because information about those sources of finance will not necessarily be available from a company's published accounts. We have designed the tests of a business relationship so that from its own records and from published accounts a local authority will be able to apply the tests. We would not want to modify a test so that the local authority was not able to satisfy itself of the position.

Amendment No. 21 attempts a different approach by providing a transitional exemption for certain types of company. If there is a real problem here we think that this is a much more promising solution. It ensures that, if a company is put into this position, the position is redressed if the situation does not prove to be merely transitional.

As the House knows, we are in the process of consulting local authorities on the implementation of Part V. We accept that theoretically there can be circumstances in which the problems addressed by these amendments might arise. We are not certain how realistic those circumstances are.

I am happy to give an assurance that, in the process of consultation, we shall look sympathetically at the question raised by these amendments, and that if it appears that there is a genuine problem we shall provide for appropriate general transitional exemptions. On the basis of that assurance, I hope that the noble Lord will withdraw his two amendments.

5.45 p.m.

Lord McIntosh of Haringey

My Lords, I should have preferred assurances in respect of Amendment No. 20. However, assurances in respect of Amendment No. 21 are certainly most acceptable. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 21 not moved.]

Lord McIntosh of Haringey moved Amendment No. 22:

Page 81, line 4, at end insert — ("(3A) The Secretary of State shall, within 3 months of the date of Royal Assent, issue a direction under subsection (1) above in respect of advice services (including law centres) whether or not such services form part of a national network.").

The noble Lord said: My Lords, again this is an attempt to deal with what at Report stage appeared to be an anomaly. The Government accepted that certain kinds of advice services —notably the citizens' advice bureaux, which are members of the National Association of Citizens' Advice Bureaux —ought to be exempt from the provisions of Part V relating to controlled and influenced companies. One of the criteria on which the citizens' advice bureaux were to be exempted was that they conformed to a national network. In other words, they were members of the national association. I readily agree that there are other criteria.

Although the national network criterion is obviously convenient for government in the sense that it is easier for them to identify members of a national association and exempt them en bloc rather than deal with many individual applications, it appears to us to be irrational in itself. Membership of a national organisation is not necessarily a guarantee of independence and lack of membership of a national organisation is not necessarily a guarantee of dependence.

As we stated on Report, the case arises particularly in respect of law centres. They have a Law Centres Federation which is more loosely organised than the National Association of Citizens' Advice Bureaux. However, not all law centres belong and they may fail the test of exemption simply because they are not members of a national association. I do not believe that the Government would wish to be stuck with that anomaly of membership of a national organisation. In particular, I do not believe that they intended the Bill to discriminate against law centres simply because they do not happen to be members of a formal national association.

If the Government are unable to accept the text of the amendment I hope that they will at least give an assurance that there is no deliberate intention to exclude law centres from the exemption or indeed that membership of the Law Centres Federation is an acceptable basis for exclusion because law centres are complementary to the work of the citizens' advice bureaux. I believe that everybody involved with that movement will agree that their work is complementary. In many cases they take up the cases with which the citizens advice bureaux are no longer able to deal. Therefore, a rational look at the exemption procedure would surely include law centres as well as citizens advice bureaux. I beg to move.

Lord Hesketh

My Lords, this amendment seeks to place an obligation on the Secretary of State to make a direction under subsection (1) of Clause 69 within three months of Royal Assent of this Bill, in respect of all advice centres whether or not such services form part of a national network.

I must resist this amendment which seeks to place on the face of the Bill a requirement on the Secretary of State to exempt all advice agencies. I do not think it is appropriate to place such matters on the face of the Bill and I am unsure why advice agencies should be singled out in this way.

The amendment follows up debates we had at Report stage in this House with regard to the position of advice agencies and in particular law centres. On Report I explained that the Government are willing to consider applications from any network of advice agencies which, although caught by the provisions in Part V, can demonstrate that they operate independently. The reason why we said that we would consider applications from networks of advice agencies is that where a national association exists, as for example is the case with citizens advice bureaux, that provides evidence that the agency operates as part of a national organisation with a specific set of rules and therefore independently of local authorities. But we are not saying that a national network must exist before an exemption can be considered although that would obviously provide at least part of the assurance we require that agencies are not operating as extensions of local authorities.

I should repeat therefore that we will consider sympathetically applications from any advice agencies which consider that their activities will be frustrated by these proposals. There will, of course, also be a general exemption for all charitable organisations which operate independently of local authorities. I set out in our debate on Report the criteria which would need to be fulfilled for such an exemption. It is quite likely that many advice agencies, including law centres, will be covered by the scope of this general exemption. That is why we resist the amendment of the noble Lord, Lord McIntosh.

Lord McIntosh of Haringey

My Lords, when a Minister says that he will listen sympathetically to applications, that is certainly a good basis on which one should not pursue an amendment. If the law centres have any sense —and this is a word to the wise —they will seek to strengthen the rules of the Law Centres Federation; in other words, they will seek to make themselves more like the National Association of Citizens Advice Bureaux than they are at present. That may or may not be good. I do not know enough about law centres to tell whether or not that is so. Clearly there would be no difficulty for law centres —which operate in very much the same way throughout the country —to do that. Therefore, there seems to be a good chance on this ground, as well as on other grounds, for law centres to be exempted by regulation. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey moved Amendment No. 23:

Page 81, line 4, at end insert — ("(3A) The Secretary of State shall give a direction under subsection (1) above where he is satisfied that a company which, apart from such a direction would satisfy the tests in subsections (1) and (3) above, or would fall within section 73(2) below, carries out its activities independently of the local authority or authorities concerned.")

The noble Lord said: My Lords, this amendment follows some observations by Ministers on Report. The Minister said: We have no intention of imposing unnecessary controls on companies which operate independently of local authorities even if they satisfy the conditions under strict interpretation of the rules". [Official Report, 23/10/89; col. 1153.]

The Minister was saying that the Government have set out in Part V of the Bill rules of such complexity and impossibility of compliance that, even if they rely on regulations rather than it being on the face of the Bill, there will have to be discretion for the Secretary of State as to the rules which he is establishing. The Minister also said that a consistent approach would be adopted.

We should not want the Government to be in the embarrassing position of putting forward legislation which they know cannot be adhered to—indeed, they are declaring that in advance. Surely when one has rules, their strict interpretation is the right way in which to have a consistent approach. We could put that on the face of the Bill and in Amendment No. 23 we seek to give effect to the indications which the Government gave on Report.

As it is, the Bill has nothing other than a bald power for the Secretary of State to exempt particular companies or types of companies from the clause. We do not believe that that is the way in which legislation should be approached. We believe that if the Government are to impose restrictions, they should do that on a consistent basis. I hope that the Minister will accept this amendment as a step in that direction. I beg to move.

Lord Hesketh

My Lords, the purpose of the amendment is to place an obligation on the Secretary of State to make a direction under subsection (1) of Clause 69 to exempt companies which satisfy the tests for an influenced company if he is satisfied that the company carries out its activities independently of local authorities.

I have already explained in speaking to previous amendments that we have no wish to place unnecessary restrictions or controls on companies which operate independently of local authorities. We have already made it clear that there will be a number of general exemptions for categories of companies where it would not be sensible to apply the controls in Part V of the Bill. In tabling this amendment I think that the noble Lord has in mind those companies which do not fall easily into any of the general exemption categories but may warrant consideration for exemption in their own right.

We have been careful in setting the dual test for influenced companies so that only those companies which are without doubt under a dominant influence of local authorities are caught. The amendments we have made during the passage of this Bill both to the personnel association test and the business relationship test have tightened up the definitions considerably and we have been grateful to the Opposition for bringing forward some amendments which have clearly improved the drafting.

It of course remains a matter of judgment, nevertheless, when considering influence, to determine exactly where to draw the line. We recognise that there will be a few cases where the strict interpretation of the rules will catch companies which remain quite definitely independent of local authorities. We intend to deal with such circumstances by granting individual exemptions. The Bill already provides the necessary mechanism to enable the Secretary of State to do so by direction. It is not appropriate to do so on the face of the Bill as proposed in this amendment. Each case must be considered on its merits, and company structure is simply too complex an area to attempt to place general criteria on the face of the Bill.

I reiterate therefore that the Bill already provides the Secretary of State with the necessary flexibility to deal with the circumstances highlighted by the noble Lord, Lord McIntosh. We will be prepared to consider all cases sympathetically from companies who consider that their activities will be unfairly inhibited by these provisions. If we can be satisfied that an influenced company operates independently of local authorities and that it cannot be used by local authorities as a means of avoiding statutory controls, an exemption will be considered and if appropriate granted by the Secretary of State. With that assurance, I hope that the noble Lord will feel able to withdraw his amendment.

Lord McIntosh of Haringey

My Lords, it is always disarming when a Minister says that he is grateful to the Opposition for introducing amendments which clarify the rules. I suppose that I am expected to smile gracefully and withdraw. However, I am bound to say that this is a failure of legislation. The Government, having introduced extremely complex rules, are forced to say at the end of it that they do not believe that their rules, however complex, will work and the Secretary of State will have to introduce individual exemptions.

That conjures up an idea of the Secretary of State holding an audience like a medieval potentate with his courtiers around him. The applicants come forward, bow on their bended knees, touch their foreheads to the carpet in front of him and say, "Please Secretary of State, we know that the law is against us but will you give us an exemption?" He says, "By virtue of the powers entrusted to me by Part V of the Local Government and. Housing Act 1989, I will give you an individual exemption even though the law says otherwise".

That is not what the law ought to be about and it is not what the Secretary of State ought to be about. The Government should be ashamed of themselves, however well meaning they are in their response to this amendment. They should be ashamed of getting themselves into this position. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6 p.m.

Clause 71 [Control of minority interests etc. in certain companies]:

Lord Reay moved Amendment No. 24: Page 84, line 12, leave out ("Subject to subsection (8) below").

The noble Lord said: My Lords, this is a technical amendment to replace an incorrect reference in subsection (7) of Section 71 which was not amended at the time of an earlier amendment to Section 71. I beg to move.

On Question, amendment agreed to.

Clause 80 [Calculation of Housing Revenue Account subsidy]:

[Amendment No. 25 not moved.]

Lord McIntosh of Haringey moved Amendment No. 26:

Page 90, line 34, at end insert — ("( ) Notwithstanding the preceding provisions of this section, in determining a formula for the purposes of this section in respect of the year beginning 1 April 1990, the Secretary of State shall have regard to any information available to him concerning the amount of expenditure incurred by a local housing authority prior to 1 April 1990 on the repair of housing held for housing purposes by that authority the initial cost of which was not charged to the Housing Revenue Account and to which he has not had regard in issuing credit approvals under sections 53 and 54 of this Act.").

The noble Lord said: My Lords, we again return to a matter which was debated on Report and we do so because the response of the Government to our amendment was not only ungenerous —we would not expect generosity —but was actually wrong. It misunderstood the issue of capitalised repairs.

I briefly summarise the issue in Part VI of the Bill. Many local authorities have legally and properly for a number of years used the receipts from disposal of homes under the right-to-buy schemes for repair and maintenance expenditure. Nobody has claimed that the maintenance and repair expenditure is wrong, but the Government are now proposing to deny local authorities the right to continue to do that by virtue of the restrictions which are to be placed on the capital receipts from the right-to-buy programme. In other words, the Government are requiring that a substantial part of the capital receipts from the right-to-buy programme shall be used for the redemption of the local authority's debt rather than for capital purposes.

I do not need to go in detail over the ground of why that would be disastrous, particularly for many local authorities in inner city areas. I gave examples at Committee stage of how this would work. It would mean that unless necessary expenditure on repairs and maintenance were cut, rents would have to go up by a very considerable amount. In Liverpool, this would mean increases of between £3 and £3.80; in Birmingham, between £4 and £4.80; in Southwark, between £4 and £7; in Camden, between £7.40 and 7.80, and in Wandsworth, a Conservative borough, between £9.70 and £10.60. Your Lordships can see the issue is extremely serious and the threat to local authorities which have been acting, I repeat, perfectly legally and properly under the law as it stood, is going to be extremely damaging.

The Minister will recall that the consultation paper of July 1988 indicated that there would be transitional provisions which would provide what is now called, in the current jargon, "a soft landing". What we want now is an assurance that the "soft landing" which was promised in July 1988 is still valid —at least let us have that assurance, if not more —and an assurance that compensation will actually be made on the capital side. I beg to move.

Baroness Fisher of Rednal

My Lords, I will be brief, but I want to support my noble friend. Those of us who come from large cities which have a great number of multi-storey blocks of flats-20 to 30 storeys —know that they have a real problem, now the blocks have been up for so many years, with their total management. Everybody who knows about building in concrete knows that it is a difficult substance to weather.

The capitalised repairs have meant that there has been a big surge forward in the repairs of high-rise blocks of flats. They have to be capitalised repairs and it is important for us to remember that fact if a local authority is not able to use this money. I remind the Minister again that, when properties and houses were sold, the idea was that local authorities would then use their capital receipts to the advantage of the residents. That is one aspect to be very careful about in depriving local authorities of their capital receipts.

It the first place the Government are breaking faith with local authorities but also it is important for us to bear in mind that many council properties —some of them were built just after the first world war —are really in need of substantial capital repairs rather than just maintenance. For local authorities which have been using the money in that way this is a retrograde step and will not only deprive the occupants but will also have the effect of downgrading the property still further.

The Earl of Caithness

My Lords, under the present system of local authority capital controls, the statutory distinction between capital and revenue expenditure is only loosely drawn. Some councils have taken advantage of this to spend capital receipts on day-to-day maintenance and jobbing repairs. They were permitted to do that. I do not want to imply that they were going beyond their powers. Most people, however, would expect a landlord to fund day-to-day maintenance from rental income, especially as housing subsidy had augmented that income for over one-fifth of the authorities.

Frankly, some authorities have acted imprudently. The new capital finance system which will be introduced by Part IV of this Bill will have the effect of preventing such expenditure being met from capital receipts in the future. The authorities will still be able to spend receipts on capitalised repairs to enhance the asset, but not on day-to-day maintenance. The authorities which have been capitalised in maintenance expenditure, which will not count as capital in the new system, will have to stop. They fear this will be a difficult adjustment, and we are being asked to give them additional resources to cushion the transition. That is the effect of the amendment tabled by the noble Lord, Lord McIntosh of Haringey. It would require us to take into account, in setting future levels of funding, the amounts which authorities have spent on non-prescribed housing works. We would need to have regard to that expenditure either in setting the allowances for management and maintenance expenditure in housing revenue account subsidy or in setting each authority's credit approvals on the capital side.

We have thought long and hard about the proposal to include in subsidy an element which reflected past levels of expenditure on capitalised repairs. As I said at Report stage, there are strong arguments against doing so. First, the fact that authorities have been spending surplus capital receipts on housing does not in itself give an indication of a continuing need for that expenditure. In the past, once receipts had been spent in that way, then they were used up. It is now suggested that we should provide authorities with additional resources to enable that expenditure to continue, irrespective of authorities' individual needs. This could only be done at the expense of other authorities and could therefore lead to an inequitable distribution of resources.

Secondly, in so far as the expenditure from receipts was on works which more properly might have been expected to be met from revenue, then we are being asked to compensate authorities for this rather imprudent use of capital resources, again at the cost of authorities which have not behaved in this way.

The noble Lord suggested that in order to achieve the smooth transition which we had promised we must take account of capitalised repairs and subsidies, otherwise we should not be achieving a "soft landing". It is going a bit far to say that smooth transition depends on compensating authorities for resources they have already used up. It is also going a bit far to say that a soft landing means that we must compensate them for the fact that they can no longer prudently meet their day-to-day expenditure out of capital resources. That would not just be a "soft landing", it would be feather-bedding, and the feathers would have to come from the nests of other authorities which have a real claim on our support.

On the second leg of the noble Lord's amendment, I hope I can be more helpful to him and to the House. To the extent that non-prescribed expenditure in the past was on genuine capital works which reflect a continuing need to spend on repairs, we can take this into account in setting borrowing approvals. And we will indeed do so. The context for this would be the annual series of housing investment programme, or HIP, meetings with the Department of the Environment's regional housing officials. I am sorry that when I referred to this at Report stage the noble Lord, Lord McIntosh, claimed that we were suggesting that authorities should have to beg for the resources they need. In truth, the system of bidding for resources is long-established, and the HIP meeting is the right forum for discussions of this sort to take place since it enables local issues and needs to be discussed locally.

For the reasons I have outlined, I cannot recommend acceptance of the consequences of the noble Lord's amendment regarding revenue subsidy. But I hope he will accept my assurances that where genuine capital expenditure has been undertaken in the past the present arrangements would enable that to be taken into account for future years.

Lord McIntosh of Haringey

My Lords, as the noble Earl the Paymaster General settles into his duties in the Treasury he will no doubt have to deal with the Finance Bill, if not in this House then as part of his departmental responsibilities. He will find that the distinction that the Government are now seeking to make between enhancing an asset and more general repairs is a distinction that is virtually impossible to make in the context of tax legislation. Governments have always tried to treat enhancing assets differently in terms of capital allowance and other forms of corporate taxation from simple maintenance. This system has always been extremely difficult to apply in practice and led to very grave anomalies as between one business and another.

I do not think that the Department of the Environment will welcome being invited into this maze of complexity and paradise for tax lawyers which is already the experience of the Treasury and the Inland Revenue. To that extent I believe that the Government's position is ill-advised and I am sorry that the Minister should repeat it. I am also sorry that the Minister said that the amendment would have the effect of providing authorities with additional resources. This measure is not providing authorities with additional resources. This is their own money; it is money coming to them from a discounted sale —not a sale at the full market value —of assets that the ratepayers have contributed to over the years. It is not money coming from central government, but their own money.

The restrictions that central government are putting on them are taking away their ability to choose how they spend their own money. The money is not being taken away because it will go to debt redemption. Local authorities with severe housing problems will rightly feel that debt redemption has a lower priority than keeping the housing stock in good repair. When the Minister speaks of feather-bedding as opposed to a soft landing, I must remind him of exactly what the July 1988 consultation paper said: It is essential therefore that the introduction of the new system should not of itself introduce any sharp change in the level of management and maintenance spending" — there is nothing here concerning enhancement — in any individual authority". In so far as authorities have been using capitalised repairs for management and maintenance spending, a reduction in the availability of capital for this purpose will undoubtedly result in a sharp change in the level of management and maintenance spending with individual authorities. It must do. Therefore the Government are reneging on the statements that they issued for consultation in July 1988.

In almost every respect these provisions in the Bill are backward-looking. They are damaging to the condition of our housing stock in the parts of the country where it is most important that it should be maintained. The alternative to a decline in the physical condition of public housing is that there should be a very considerable increase in council house rents. Neither of those conditions is acceptable. It is only because this is Third Reading and the matter has been aired before that I refrain from seeking the opinion of the House. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 27 not moved.]

6.15 p.m.

Clause 90 [Conditions for declaration of renewal area]:

Lord Graham of Edmonton moved Amendment No. 28: Page 95, line 13, leave out paragraph (a).

The noble Lord said: My Lords, I beg to move this amendment standing in the name of my noble friend Lord McIntosh. We return, as we have done on a number of issues, to matters that have already had a good and fair airing. I believe that we have done a first-class job in exposing the issues. This issue relates to the conditions for declaring a renewal area.

Although we had a debate at Report stage, the issue certainly left us with some loose ends. On one occasion the noble Lord, Lord Hesketh, said: We have sought to strike a balance between giving local authorities freedom to declare renewal areas without the express approval of the Secretary of State and pursuing some flexibility" — I stress the word "flexibility" — on size and therefore on the number of schemes to which resources are to be directed".

The noble Lord said that at one moment, and a little later he said: If I may put it in these words, we believe that a critical mass occurs and that 500 is about where it is". The noble Lord then qualified that by saying: But there are liable to be special occasions". [Official Report, 24/10/89; col. 1330.]

The noble Lord will recall that later I asked whether if in fact there was some flexibility, we were talking about the possibility that renewal areas might comprise 20, 30 or 50 houses. The Institution of Environmental Health Officers and all the local authority associations are concerned that the size of a renewal area is irrelevant. But what concerns practitioners more —they should know best, but I fear the Government do not pay as much attention to them as we do —is the condition of the properties.

The range of houses included can be as few as 20 or 30 and as many as 700 or 800. The figure of 500 is far too tight. It will mean that many local authorities will be unable to help owner-occupiers and private tenants in the smaller pockets of houses which are unfit or in serious disrepair. The Minister was suggesting that the figure of 500 would be the norm and that there would only be exceptional special occasions.

We do not believe that there is any political animus as regards this matter, but someone —perhaps someone at Marsham Street—thinks that 500 is a good and right figure. What I am saying to the Minister is that people who will have to manage this matter will want far more flexibility than that. We are raising the issue through this amendment in order to give the Minister a chance to say to local authorities that he wishes local government to get on with the job and that private owners and tenants should benefit from the results of this legislation. I beg to move.

Lord Hesketh

My Lords, the effect of this amendment would be to remove the Secretary of State's power to specify by directions the minimum number of dwellings which should be present in a renewal area. Your Lordships will recall that we debated an amendment having the same effect during Report. I explained that our aim is to ensure that renewal areas are large enough to enable a coherent plan of renewal to be undertaken, including, where necessary, clearance and rebuilding, and to attract investment from the private sector. We recognise, however, that there will be circumstances where a smaller than average renewal will be appropriate.

The Bill therefore leaves local authorities the freedom to seek the Secretary of State's agreement to declare renewal areas which do not comply with the general criteria. The noble Lord, Lord Graham, queried how the Bill provides for this flexibility. The answer to that lies in Clause 99. Clause 99 empowers the Secretary of State to make different provisions for different cases, different descriptions of cases and different areas when giving directions under Part VII. In particular, different provision may be made with respect to different authorities, including individual authorities.

The requirements which must be met under Clause 99 are to be specified by directions. The intention is that initially those directions will be of general effect. Where an authority, however, is able to justify the need for a renewal area which does not comply with the general directions, my right honourable friend the Secretary of State is prepared to make directions specific to that area using the powers available under Clause 99. In that way, the Bill provides for variation in the general requirements although, of course, and authority will need to initiate the process by requesting the Secretary of State to use his direction-making powers in that way.

At present local housing authorities must seek individual approval in respect of each scheme of area renewal which they propose. The new provisions in Part VII would leave them free to proceed without such approval where the area complies with the matters specified in general directions and requires a special procedure only in the unusual cases. I believe that that represents a considerable improvement and I hope that the noble Lord, Lord Graham of Edmonton, will see it in that way.

Lord Graham of Edmonton

My Lords, Clause 99 says, in effect, that the Secretary of State can do what he likes. He can approve. He can disapprove. He can look at all kinds of special circumstances. One has to ask the Minister why the Government persist in trying to hobble local government from using its own initiative. If, as the Minister said on the last occasion, he envisages that the number of designated areas may be as low as 20 or 30 (that is on the record), but that it could be higher (he has already talked about 500) why does he go to the trouble of ensuring that local government must go through the hoop? The department at Marsham Street will need the staff and resources to consider those matters. That runs counter to what the Government say publicly about letting people govern their own affairs.

We are talking about responsible people, responsible councillors, and, what is more important, responsible professional officers who will not waste time and money. The Government however are wedded to the idea that the men and women in Marsham Street know best. We disagree. We believe that there are people out in the sticks (the council chambers and council offices) who understand their local circumstances far better. In practice, the Government will find that they will be accused of delay and of wanting to be too involved in the detail of running local government than they need to be. I can understand a great many of the macro arguments about control, but surely these are small matters. I do not denigrate their importance to local government or to the community, but they are small in the context of what the Bill sets out to do. I am disappointed by the Minister's reply, but I am not prepared to press the matter any further. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 91 [Steps to be taken after declaration of renewal area]:

Lord Reay moved Amendment No. 29:

Page 96, line 2, at end insert — ("(bb) provide, or secure the provision of, a service of information and advice to persons residing or owning property in the area who wish to carry out works to housing accommodation in the area").

The noble Lord said: My Lords, in speaking to Amendment No. 29 I should also like to speak to Amendment No. 30. The effect of Amendment No. 29 is to require local housing authorities to ensure that an information and advisory service is provided in a renewal area either by themselves or by some other body or person. Amendment No. 30 would delete the similar requirement as to the provision of advice and information which currently appears in Clause 92.

The wording proposed to be deleted by Amendment No. 30 was inserted during Report by an amendment moved by the noble Lord, Lord Ross of Newport. In accepting that amendment I indicated that a clarifying amendment would be necessary, partly because of certain technical difficulties with the wording and partly because we wished to cater for circumstances where information and advice could most appropriately be provided by bodies other than local authorities. The amendment proposed by the noble Lord, Lord Ross of Newport, did not empower authorities to delegate that role.

Amendment No. 29 provides the clarification which I promised. I beg to move.

On Question, amendment agreed to.

Clause 92 [Duty to publish information]:

Lord Reay moved Amendment No. 30: Page 96, line 25, leave out from ("shall") to ("comply") in line 26.

On Question, amendment agreed to.

Clause 96 [Contributions by the Secretary of State]:

Lord Reay moved Amendment No. 31:

Page 99, line 10, at end insert — ("(2A) Contributions under this section shall be payable subject to such conditions as to records, certificates, audit or otherwise as the Secretary of State may, with the approval of the Treasury, impose.").

The noble Lord said: My Lords, I should like to speak at the same time to Amendment No. 34. Amendment No. 31 empowers the Secretary of State to impose certain conditions in connection with the payment of Exchequer contribution towards expenses incurred in relation to renewal areas. Amendment No. 34 applies the provisions of Amendment No. 31 in relation to Exchequer contributions payable towards expenditure incurred in respect of grants available under Part VIII.

Amendment No. 31 reproduces the existing provisions of Section 516(6) of the Housing Act 1985. Those provisions are used to require the keeping of certain registers and certificates which must be made available to the district auditor or other officers authorised by the Secretary of State. The purpose of the registers and certificates is to provide evidence of the propriety and regularity of grant payments and to form the basis of claims for Exchequer contribution. They therefore provide both protection for authorities and safeguards for the use of public money.

For that reason it has always been our intention to require a similar form of record-keeping in relation to renewal areas and the new grant system. It now appears, however, that there is some doubt as to whether the provision of Clauses 96 and 132 are sufficiently widely cast to permit this. For the avoidance of doubt a specific power is necessary. Amendments Nos. 31 and 34 provide that power. I beg to move.

On Question, amendment agreed to.

Clause 109 [Owner-occupiers and tenants]:

Lord Swinfen moved Amendment No. 32:

Page 109, line 32, at end insert ("and (c) shall make provision for determinations in respect of a disabled facilities grant, or of a renovation grant sought by a disabled person or by someone on whom a disabled person is dependent, to take full account of not only all the extra costs arising on account of disability but also all the expenditure that may need to be made to help a disabled occupant overcome or compensate for disability.").

The noble Lord said: My Lords, the amendment seeks to secure a realistic means test for disabled people. Disabled people, and many upon whom they depend, will suffer financial hardship, often grave financial hardship, if they are means tested as though they or their dependants were able bodied.

Research by the Disablement Income Group has shown that the extra costs of disability can easily use up to 25 per cent. of a disabled person's income. Thus, compared with non-disabled people, 25 per cent. of a disabled person's income is not available for renovation work or alterations to a home. Where income consists of social security benefits, the percentage can be as high as 47 per cent., according to recent research. That recent research, following the OPCS report, has shown that the OPCS methodology seriously underestimates those extra costs. For severely disabled people (in categories 9 and 10 of the survey) receiving attendance allowance and/or mobility allowance, and considering only seven types of extra cost: home services, unprescribed medication, laundry, clothing, bedding, food, fuel and transport, the OPCS found average extra costs of £9.50. The Disablement Income Group found that the extra costs were much higher—£41.81.

As I said earlier, the amendment is designed to ensure that proper account is taken of the extra cost of being disabled when means testing is applied to disabled people. I beg to move.

6.30 p.m.

Baroness Darcy (de Knayth)

My Lords, I should like strongly to support this amendment, especially as it would allow the extra costs of disabled life to be taken into account when determining the grant. The noble Lord, Lord Swinfen, has already briefly mentioned those extra costs. I must stress that they really concern the basic necessities of life which most people take for granted: for example, food, where people may need to have special diets; warmth, where extra heating is needed if one's circulation is bad; clothing, which wears out more quickly if one is using crutches and calipers; washing, where extra laundry costs are involved if one is incontinent; and mobility, where many people cannot use public transport and where the mobility allowance, although most welcome, does not fully cover the cost involved for other forms of transport.

Even if there is easy access to the shops and adequate parking available, the sheer extra time involved means that disabled people cannot usually shop around for the best bargains. All this is not intended to be a catalogue of moans; it is my intention to put forward concrete reasons why the test of resources as regards the application for disabled facilities grant should not be the same as that for an able-bodied person applying for a home improvement grant. There should be a little extra weighting just to balance the scales more justly.

Lord Carter

My Lords, I was pleased to add my name to the amendment as indeed I did to other amendments on similar subjects at earlier stages of the Bill. The problem which lies behind the amendment was well aired during the initial stages and the situation has been explained again with great clarity by the noble Lord, Lord Swinfen. Therefore there is no need to repeat the arguments in detail.

I find it hard to understand why the Government wish to reject the amendment. I hope that when the Minister replies he will explain why the Government have changed their stance on the matter since the consultation papers in 1987 and 1989. The amendment is intended to correct that fault.

The Bill as drafted runs directly counter to the principle that disabled people should receive as of right an allowance to meet the extra costs of disability. That is a belief which I am glad to say was adopted by the Labour Party as official party policy in 1988. The OPCS survey, as pointed out by the noble Lord, Lord Swinfen, has shown graphically, and for the first time in great detail, the practical problems faced by people with disabilities. Of course we are all aware of the considerable financial problems which these people face. It is quite wrong that the Bill by way of this clause should add to those problems. Acceptance of this amendment would remove the possibility of further financial hardship for people with disabilities.

Baroness Elliot of Harwood

My Lords, I too should like to support the amendment. We have, of course, had this debate before. I supported the proposal when it was first put forward. I have had a good deal of experience of housing conditions for handicapped people, which I gained while I was chairman of the housing committee of Roxburgh County Council. I am also concerned at present with a college for the handicapped in Birmingham which is doing a wonderful job.

However, the fact remains that it is quite an expensive undertaking to alter ordinary houses to suit certain types of handicap. Indeed, private people very often cannot do so. Moreover, if they cannot do so they are obliged to go and live in a home or an institution which is just what we do not want to happen. What is proposed is not only wise but it would also be very economic. It would also greatly assist people who need such help.

There is also another aspect to consider in the matter. Houses could be built for handicapped people. Here I must again mention Birmingham. There they adapt flats and houses for handicapped people so that they do not have to go and stay in hospitals or institutions. That is a most valuable project. The city of Peterborough has a similar scheme. Such projects help enormously. They enable handicapped people to lead the kind of ordinary life that we do. I think it is vital that we should accept what is proposed.

I understand that there was originally a Government Bill which made it perfectly possible to obtain grants for carrying out this kind of work; namely, adapting houses for handicapped people. However, it has now been removed. In my view it is high time that the Government put it back. I say that because this is one of the measures which would be of enormous help to such people. We have the opportunity by way of this Bill, which is now receiving its Third Reading, to make a rare contribution towards helping disabled people and thereby improving their living conditions.

Baroness Masham of Ilton

My Lords, I should also like to support the amendment which has the full support of the Disablement Income Group and of the Royal Association for Disability and Rehabilitation. Those are organisations which are working for many disabled people throughout the country. It seems such a pity that families with disability who have to face so many struggles in life must work so hard to obtain those facilities which will enable them to stay in the community, especially as we hear so much these days about care in the community.

If disabled people are not able to live in the community because of financial costs, what will they do? I ask the the Minister to think very carefully on the matter.

Baroness Stedman

My Lords, I should like to also to express my support for these amendments, especially Amendment No. 45 which was referred to by the noble Baroness Lady Elliot of Harwood. The Peterborough Development Corporation, the city council, the DHSS, and the local builders' federation, joined together in the early 1980s. They agreed that it was much more sensible to give a grant to the builder who was building the house so that he could install the facilities needed for the disabled person who would live in the house, rather than build the house and then give a grant afterwards to enable doors to be widened, bathrooms and kitchens altered, and so on. It was agreed that the city council would give to the builder the same grant as it would give to someone to alter a house after it had been built, thus enabling the builder to install the right kind of facilities from the beginning. That was done quite happily, with consent all around, for a couple of years. However, the district auditor then came in and drew the attention of the department to the fact that the city council was acting illegally. He said that the money being used for the grant was money which was meant for the alteration of existing properties and therefore could not be used to make new properties right in the first instance. He ruled that the council was acting illegally. Therefore the scheme had to stop.

I have made inquiries of the city council and I understand that at that time the Department of the Environment was very sympathetic. However, there was nothing that could be done in the matter because there was no means of making those grants available under such circumstances.

The proposal in Amendment No. 45, which is grouped with this amendment, would provide the opportunity for cities such as Peterborough, and other authorities, to make grants available to the builders so that they could build in the right kind of facilities at the initial stages and thereby not have to go to the trouble of altering the house afterwards.

Lord Hesketh

My Lords, Amendment No.32 will require the Secretary of State, in making regulations under Clause 109, to provide for a test of resources which takes into account not only the extra costs incurred by disabled people but also any expenditure needed to compensate for disability.

Amendment No. 45 seeks to empower the Secretary of State to make regulations which would allow a local housing authority to approve a disabled facilities grant for adaptations to dwellings under construction.

We are dealing here with two rather different aspects of assistance for disabled people. The first is, in effect, the amount of grant which is to be made available and the second is the eligibility of works for assistance. The major common factor is the use of regulations to achieve those ends.

I should like to start with the question of the test of resources. During the Report stage of the Bill in this House I indicated that we were willing to consider any proposals which would help to make the test work better or which would direct aid to those most in need of it. The regulation-making powers provided under Clause 109 are wide enough to enable special provision to be made for the disabled if that can be justified. Therefore, I repeat that I am prepared to consider the details of the test in the light of any evidence which my noble friend Lord Swinfen may care to supply in support of his contention that our proposals make insufficient allowance for what disabled people, and those caring for them, can and cannot afford by way of meeting the cost of essential adaptations.

The amendment, however, goes far beyond the principles of a test of resources associated with capital expenditure required for adaptations. It touches on the level of support required to help disabled people to overcome or compensate for their disability.

Those are matters germane to the level of benefits generally payable to disabled people and not simply to grants to adapt housing. Your Lordships will be aware that the question of benefits is something which my right honourable friend the Secretary of State for Social Security has been considering in the light of the recent OPCS survey. In particular, he has recently announced in another place his intention to bring forward proposals, it is hoped before the end of the year, to improve the balance and structure of social security provision for the long-term sick and disabled and those who help to care for them.

That is necessarily a longer-term plan, but in the meantime 10 immediate improvements were proposed. Among them are increases in she disability premiums for adults and families and the wider availability of attendance allowances. My right honourable friend has announced that the total full-year cost of these improvements wild be around –100 million a year, and they will Improve the incomes of more than 500,000 seriously ill or disabled people and carers. Many of those increases will feed through into the new test for adaptions.

Our intention is that the test of resources should reflect the level of benefits payable in recognition of the extra costs faced by disabled people. Any increases in benefits will therefore also be reflected in the test applied for the purposes of Part VIII of this Bill. In addition, the test will allow an extra premium to take account of the fact that expenditure required for an adaption is of a different nature from the expenditure needed to support daily living. However, it would be inappropriate to provide for a test which makes different assumptions regarding the basic level of support which is needed by disabled people from those made in relation to benefits generally.

We recognise that housing adaptions provide those who are disabled with valuable increased independence and the opportunity to maintain or regain a normal family life. We also recognise that an adaption can greatly ease the burden of carers where total independence by the disabled person is not possible. Indeed, the provisions in this Bill are consistent with the policy of care in the community, where the primary aim is to enable disabled people to remain in their own homes whenever possible.

We also recognise the importance of grant aid in this respect, and for this reason we have provided an entirely new and specific provision. We have also agreed to extend the range of mandatory grants from that provided on the introduction of this Bill. I believe that so far as concerns the test of resources, the provisions of Clause 109 already provide flexibility to meet the particular circumstances of disabled people regarding adaptions and in order to make adjustments for the circumstances both now and in the future. However, as I have explained, I cannot accept that a test for adaption grant purposes should be a major feature of elements not directly related to the cost of adaptions.

Turning to Amendment No. 45, we have on several —

Lord McIntosh of Haringey

My Lords, would the noble Lord forgive me? Throughout his explanation of this amendment he has been using a word which is not in the dictionary. He used it at the Committee and Report stages. The word that I know is "adaptation". Is it in the noble Lord's brief as "adaption"?

Lord Hesketh

My Lords, it is a victim of a 1960s education.

Lord Graham of Edmonton

You are not 60!

Lord Hesketh

My Lords, for the benefit of the noble Lord, Lord Graham, the time refers to the decade and not to my age, though I may already be beginning to look it. However, I shall take the advice of the noble Lord, Lord McIntosh, and endeavour to switch to "adaptation" for the remainder of our discussion on this amendment.

We have on several occasions debated the desirability of providing a grant to adapt properties which are being built. As your Lordships are aware, I am not unsympathetic to the principle of adaptation during construction in certain circumstances, although I believe that we need to ensure that the availability of grant does not discourage builders from seeking to meet the needs of their disabled customers as a matter of course and at their extra cost by building to basic mobility standards. The problem is that the disabled facilities grant, as provided for in this Bill, simply does not provide the right vehicle.

All the conditions as to eligibility, entitlement and approval presuppose that the building being adapted is already in existence. Examples that spring to mind include the requirements relating to the applicant's interest in the property, the conditions as to the starting and completion of work and the definition of "dwelling" itself. A major recasting of the various provisions would be necessary, and that is assuming that they could be recast in a sensible way.

I appreciate that Amendment No. 45 seeks to confer a simple regulation-making power, and I have already emphasised the flexibility of regulation-making powers in the context of Clause 109. Amendment No. 45 is however still cast in terms of the disabled facilities grant and if it were to be used it would in practical terms mean the setting aside of a substantial part of the primary legislation. It would be a major departure from normal practice to give the Secretary of State powers to use subordinate legislation in such a way as to effectively rewrite the primary legislation rather than to supplement it. This is particularly so since Amendment No. 45 does not seek o confine the regulation-making power or even to provide a framework for its use in the way that, for example, Clause 131 does in relation to assistance with minor works, or indeed Clause 109 does in relation to the test of resources. I do not think therefore that this would be an appropriate way of using subordinate legislation or that it would be a desirable precedent to set.

I have already given an undertaking to consider how grant aid might be available for adaptations to dwellings under construction. I believe that a completely separate form of grant may be necessary and I want to look at this, not only in relation to adaptations but also in relation to grants for the reconstruction of dwellings, an issue which was raised in another place. Related matters are involved and we believe that the best way forward is to develop an appropriate grant not saddled with the restrictions and conditions which cannot readily be adapted. I repeat my undertakings to consider this point further. On the basis of that, I hope that the mover of this amendment will be able to withdraw it.

6.45 p.m.

Lord Swinfen

My Lords, when moving Amendment No. 32, I did not speak to Amendment No. 45. Therefore I shall deal with that amendment first, as we are discussing the two together. Despite what my noble friend has said, I am still very much in favour of Amendment No. 45. It does not commit the Government to do anything. It is purely enabling.

Should it be incorporated into the Bill, the Government may or may not wish to take advantage of it at some time in the future. If they so wished, they could repeal it at a time when they brought in what they considered to be more appropriate legislation. If my noble friend is given permission by his wife to go out for a walk, it does not mean to say that he has to do that. He may if he wishes. I am sure that he does not need his wife's permission: one would hope not. But it purely allows the Secretary of State to make regulations. The word in this amendment is "may" and not "shall". There have been numerous arguments on this in the past. "May" is enabling and not compelling, and I still feel that Amendment No. 45 should be in the Bill.

However, regarding Amendment No. 32, to which we are addressing ourselves in the main at the moment, the Minister has given certain undertakings with regard to the way in which the test of means will be administered and has asked me to write to him on that. That is an invitation which I shall accept. I therefore ask the leave of the House to withdraw Amendment No. 32.

Amendment, by leave, withdrawn.

Clause 130 [Payment of balance of costs in case of certain disposals]:

Lord Reay moved Amendment No.33: Page 128, line 14, leave out ("and 121") and insert ("to 123").

The noble Lord said: My Lords, Amendment No. 33 is a minor drafting amendment. Clause 130 provides for the circumstances in which someone who has participated in a group repair scheme must pay to a local housing authority the balance of the cost of works attributable to his dwelling. Broadly speaking, some payment is required if the dwelling is disposed of for more than a certain amount within a three-year period. There are, however, certain exempt disposals which do not trigger the requirement to make a payment. These are defined in Clause 124.

Clause 124 applies not only for the purposes of Clause 130 and the two clauses specifically referred to in subsection (5) of that clause —namely, Clauses 120 and 121 —but also for the purposes of Clauses 122 and 123. Amendment No. 33 therefore has the effect of inserting a reference to Clauses 122 and 123 into Clause 130(5). I beg to move.

On Question, amendment agreed to.

Clause 132 [Contributions by the Secretary of State]:

Lord Reay moved Amendment No. 34: Page 129, line 42, leave out ("(3)") and insert ("(2A)").

The noble Lord said: My Lords, I spoke to this amendment in moving Amendment No. 31. I beg to move.

On Question, amendment agreed to.

Clause 156 [Contingency planning and co-ordination in respect of emergencies or disasters]:

Lord Graham of Edmonton moved Amendment No. 35: Page 150, line 22, leave out ("may") and insert ("shall").

The noble Lord said: My Lords, I beg to move Amendment No. 35 and to speak to Amendments Nos. 36 and 37. These amendments deal with the important matter of peacetime emergency planning. I am sure that the noble Earl, Lord Ferrers, and I will have a more amicable discussion than we had on the previous occasion. I was sorry that a certain note was introduced into the discussions which was perhaps engendered by my remarks.

These three amendments hang together. Their purpose is first to clear up technical drafting matters relating to the Government's amendment at Report stage. The provisions are now incorporated as Clause 156 of the Bill. I know that the noble Earl has written to my noble friend Lord McIntosh in a letter dated 31st October which I have in my possession. I shall comment on it in due course.

The second purpose of the amendments is to underline the issue raised at Committee and Report stages concerning the desirability of a duty rather than a power to plan. A third purpose of the amendments is returning to the point made by the noble Lord, Lord Renton, who played a major and constructive part in the discussions. At Committee and Report stages he made the point that fire and civil defence authorities should be able to determine the overall shape of a plan in a metropolitan area.

The technical issue is covered by the second of these amendments. The new Clause 157 introduces a new power for lower tier authorities to undertake peacetime civil emergency planning and adds it into the existing Section 138 of the Local Government Act 1972. This is where there is some confusion and a need for clarification. Section 138 gives councils powers to deal with disasters which have actually occurred, or which are reasonably expected to occur. In producing the new power, the Government have simply added to the existing power of local authorities, without altering the substance of the existing power to deal with an emergency.

The new clause also gives a power to fire and civil defence authorities and to counties to incur expenditure in co-ordinating planning. It has been assumed throughout that the co-ordination was intended to relate to the new planning power created for lower tier authorities. However the wording of Clause 156 leaves this unclear. Subsection (3) refers at line 39 of page 150 to co-ordination of plans drawn up, "under subsection (1) above". As inserted into the 1972 Act, this would relate not to the new planning power, but to the existing power to act in an emergency. It is assumed that the Government intended the two new powers in Clause 157 to fit together. Our amendment attempts to correct this For the sake of completeness, it gives FCDAs powers to co-ordinate both plans produced under the new power and any action taken in relation to actual emergencies under the existing Section 138(1).

We shall be quite satisfied if the Minister can explain the drafting and clarify the points which I have made. However, the Minister and his advisers may think that our amendment is helpful and they may accept it. It is hoped that the noble Earl will be able to confirm that the two new powers in Clause 157 are intended to fit together and that the upper tier is intended to co-ordinate the planning for peacetime emergencies undertaken by the lower tier.

The remaining two amendments raise more substantial issues which have been debated at the earlier stages, but on which there was a clear feeling that the Government could go further in order to respond to the views of the House.

The first amendment would simply replace the word "may" with "shall". As often happens, the noble Lord, Lord Swinfen, has already raised the interpretation of the words "may" and "shall" in legislation. The replacing of "may" with "shall" would produce a step towards a duty to plan for districts and boroughs. Those councils would be required to plan, where they considered it appropriate, for an emergency or disaster which would involve destruction of or danger to life or property in some or all of their area.

This formulation, I submit, is not as, strong as a strict duty to plan, but it puts the council in practice under a duty to consider the issue and to reach a view as to whether or not there are imminent dangers and whether planning is appropriate in relation to them. It also serves to underline the point that councils need to be aware that resources are available from the Home Office, before they can with confidence undertake substantial expenditure in this area. As the noble Lord, Lord Renton, said: One of the worst things that Parliament can do is to enact a dead letter—a nullity". [Official Report, 25/10/89;—col. 1469.] This amendment seeks to move the Bill's proposals away from such an outcome. The Minister indicated at Report stage that the new civil emergencies adviser would be asked to consider the issue of a future duty to plan. The amendment is tabled to enable the House to express a view as to the proper direction of government policy.

The third amendment draws on formulations put forward by the noble Lord, Lord Renton, in his amendments at Committee and Report stages. The purpose of the amendment is to ensure that there is one overall plan, rather than several local plans which might not make sense in aggregate. The Government have given a clear power to plan to the boroughs and district authorities, on the basis that they are the authorities closest to the ground and most likely to have knowledge of local detail and needs. Major disasters, however, are likely to affect, or at least draw resources from, the area of more than one such authority. Under the Government's proposals as they stand, there is no guarantee that plans will synchronise to produce a coherent use of such resources.

Clause 157(3) gives a power to FCDAs to incur expenditure in co-ordinating planning. It leaves uncertain the situation in which either authorities disagree or there is a simple difference of approach, leading either to overlap or to gaps in provision. On such an important issue as this, it surely seems sensible for there to be a clear understanding at all levels of the respective roles which different organisations and authorities should play. The role of the FCDAs in this context is not to dictate the detail of plans, but to ensure in overall terms that needs are covered and that resources are properly distributed.

It is hoped that the Government can accept all these amendments as a constructive attempt to move forward a little further, using the opportunity of this legislation to develop peacetime emergency planning in this country. We know that during the next Session there will be no local government Bill. According to the Minister of State at the Department of the Environment, another opportunity may not occur for more than one Session.

The amendments all fall considerably short of those which I tabled on the last occasion and those which the noble Lord, Lord Renton, tabled at the Committee stage. They do not compromise in substance the step-by-step approach of the Government but merely suggest that a couple more steps at this stage could usefully be taken. I beg to move.

7 p.m.

The Minister of State (Home Office) Earl Ferrers

My Lords, I am grateful to the noble Lord, Lord Graham of Edmonton, for introducing these amendments in, if I may say so, such an agreeable way. If there were any waves of concern on Report between us, I can assure the noble Lord that those have vanished entirely.

I shall discuss the drafting amendment, Amendment No. 36, first. This amendment seeks to replace the reference to subsection (1) with a reference to subsections (1) and (1A). This is a fairly harmless looking amendment, but it is in fact very complicated.

As drafted, the new subsection (5) in the Bill, which is to be added to Section 138 of the Local Government Act 1972, allows FCDAs to: incur expenditure in co-ordinating planning by principal councils in connection with their functions under subsection (1) above". Those functions are defined in subsection (1) of the existing statute (Section 138 of the Local Government Act 1972) as action taken: to avert, alleviate or eradicate … the effects or potential effects", of an emergency.

The purpose of the new subsection (1A) which your Lordships agreed to on Report, is simply to extend the conditions under which it is lawful for a council to undertake planning. The only function in the new subsection (1A) is in fact contingency planning. If we were to include a reference to subsection (1A) here as the noble Lord, Lord Graham, suggests in his amendment, we should give FCDAs a power to incur expenditure in co-ordinating planning by principal councils in connection with contingency planning. That clearly does not make sense. It is for that reason that the draftsmen have correctly tied the planning to the functions —these are to be found in subsection (1).

I have gone into this in some detail and I can assure the noble Lord that the drafting achieves the effect that is intended. I hope that the noble Lord, Lord Graham, who I know wishes to be helpful in this matter, will accept that that is the case. I agree that all kinds of planning are covered, including the new contingency planning element. The clause is intended to achieve that effect, and I think it does so.

I shall now turn to the other two amendments of the noble Lord, Lord Graham. Amendment No. 35 seeks to make into a duty the new power for FCDAs to co-ordinate planning. I am bound to tell the noble Lord that I do not think that the amendment has quite the effect he intends. I informed your Lordships on Report that the new civil emergencies adviser will be looking at the substance of this issue as a matter of priority. He will consider it not just as it affects FCDAs, but in its application to all principal councils.

In Amendment No. 37 the noble Lord also wishes to make any plans which are prepared by FCDAs binding on the relevant boroughs or districts. The point here remains that it is the boroughs or the districts which have the legal responsibilities in relation to an emergency, and they have the resources to meet them. It cannot be right that a body without the legal responsibilities or the necessary resources should dictate how those who are responsible should deploy their own resources. There should, of course, be discussion and co-operation. However, we should be careful not to create in this statute powers which conflict with the existing statutory duties of the boroughs and districts.

The noble Lord, Lord Graham, is quite rightly concerned about the area we are discussing. However, I can assure him that it will be the task of the civil emergencies adviser to review and to consider all aspects of civil emergency arrangements. Those aspects are complex. It will be his task to advise on how these arrangements can be improved, if possible. These are delicate areas of interaction of duties and responsibilities both of local authorities, of Government, and of police, fire and other agencies. It is important that any alteration to the existing arrangements should prove to be both correct and better. The matter is not just resolved by a simple method of drafting. I urge the noble Lord, Lord Graham, to realise that. I want the noble Lord to know that we share his concerns, but we are anxious to get the matter right. I wish it were a matter of simple drafting, but I fear that if we are not careful we may land ourselves in more difficulty than we may anticipate.

I accept the noble Lord's concern, but I ask him in turn to accept that the best way to resolve this matter is to ensure that my right honourable friend is given good, considered advice by one who has studied the whole problem in depth. My right honourable friend will then be able to advise Parliament in confidence that any proposals for alteration are likely to be sound and lasting.

Lord Renton

My Lords, I must apologise for intervening now as I was not present — —

Lord Ponsonby of Shulbrede

Order!

Earl Ferrers

My Lords, the noble Lord, Lord Ponsonby, is agitated. I merely made a speech and then sat down. As far as I know, it is perfectly all right for my noble friend Lord Renton to make a speech.

Lord Ponsonby of Shulbrede

My Lords, the noble Earl was replying to the debate for the Government.

Earl Ferrers

My Lords, the noble Lord said that I was replying to the debate for the Government. He is quite right that I was making a speech on behalf of the Government and not on behalf of the Opposition. However, that does not prevent my noble friend from contributing to the debate too.

Viscount Davidson

My Lords, as it is Third Reading no one is allowed to speak after the Minister has replied.

Earl Ferrers

My Lords, in that case I bow with shame to the noble Lord, Lord Ponsonby. He was quite right and I, as usual, was wrong.

Lord Graham of Edmonton

My Lords, I am genuinely sorry that the noble Lord, Lord Renton, has not been able to make a contribution to the debate because I believe he was not present when I said that he has followed these matters very carefully and constructively and is in great sympathy with the points I have tried to make. However, be that as it may, we are governed by the rules of procedure.

I shall certainly not press these amendments to a Division. I rest very heavily upon the assurance of the Minister that if there is any dubiety these matters will be considered very carefully by the civil defence coordinator. That person has a major responsibility in these matters. I very much hope that we can inject some urgency into the need for a review and for a report to be presented to the Government. I hope that the House will be told of its conclusions.

I can assure the Minister that the advice I have received is that some people who are very experienced in the legal world in respect of emergencies are not satisfied that the words on the face of the Bill are clear and unambiguous. It is very important that the words on the face of any Bill are clear and unambiguous. However, I am satisfied that the Minister has given a full reply. He has assured me that we are at one in wanting to make sure that the people with power are able to exercise it in this connection. The Minister said that it is the boroughs which have the legal responsibility and resources. We have been trying to give another tier of government some legal responsibility.

Lord Renton

My Lords, I hope this intervention is in order, if the noble Lord gives way. The point I wish to make is that the principal councils have no responsibility; they have only a discretion.

Lord Graham of Edmonton

My Lords, that was a first class means of making a point, and I heard it. That point will be on the record. That, of course, is the nub of the question. However, the noble Lord, Lord Renton, has contradicted what the Minister told the House and that, too, will be on the record. It is quite clear that we are all anxious to get the matter right. The final point the Minister made was that he wished to get the matter right as quickly as possible. I am grateful to the Minister and also to the noble Lord, Lord Renton, who has played a major part on this issue, not only on this Bill but on other occasions over the years. He and I have worked together not just on this Bill but in other ways. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 157 [Commutation of, and interest on, periodic payments of grants etc.]:

[Amendments Nos. 36 and 37 not moved.]

Clause 158 [Electronic transfer of documents]:

Lord Reay moved Amendment No. 38: Page 152, line 45, leave out ("provision") and insert ("power to make rules providing").

The noble Lord said: My Lords, in speaking to this amendment, I wish to speak also to Amendments Nos. 39 and 61. Amendments Nos. 38 and 39 are technical. They correct a grammatical error in the changes brought about in the Local Land Charges Act 1975 by the new Clause that was accepted on Report. Amendment No. 61 is an amendment to the Long Title of the Bill to take account of the new clause. I beg to move.

Baroness Blatch

My Lords, since I have put my name to Amendment No. 61, together with the noble Lord, Lord Lloyd of Kilgerran, I should like to take the opportunity to thank my noble friend and the members of his department for their co-operation regarding the inclusion of the new Clause 158 to allow local authorities to use electronic transfer for documents.

On Question, amendment agreed to.

Lord Reay moved Amendment No. 39: Page 153, line 11, leave out ("provision to modify") and insert ("power to make rules modifying").

On Question, amendment agreed to.

Clause 165 [Removal of exception to the right to buy]:

Lord McIntosh of Haringey moved Amendment No. 40: Page 155, line 33, leave out ("by the Secretary of State").

The noble Lord said: My Lords, Amendment No. 40 is grouped with Amendment No. 46. Both are drafting amendments. Amendment No. 40 is intended to be purely a drafting amendment, whereas Amendment No. 46 is intended to apply to Scotland the changes which were introduced at Report stage to what is now Clause 165 for England and Wales.

It has been indicated to me that, whether or not my drafting is correct, the Government would be willing to help with the drafting of that part of the Bill. I should like to say now that I accept gratefully the offer of government help with drafting. I shall certainly want to use it. When the Minister responds, perhaps he will be able to give an indication of the Government's intentions concerning this part of the Bill, and in particular with reference to all the related amendments —Amendments Nos. 40, 41, 42, 43, 44 and 46. That will be most helpful.

Lord Hesketh

My Lords, the House accepted in Committee a Government amendment to repeal paragraph 11 of Schedule 5 to the Housing Act 1985, thus bringing within the right to buy housing which is particularly suitable for elderly people unless it forms part of a sheltered scheme. The reason for proposing that was our very grave concern over the unfairness suffered by tenants of such housing since January 1987, when the Secretary of State ceased to have the function of determining whether or not particular properties should be outside the right to buy.

At Report the House considered the subject again and accepted amendments tabled by the noble Lord, Lord McIntosh. Clause 165 of the Bill is the result. Its drafting needs to be tidied up, as the noble Lord, Lord McIntosh mentioned —I make no point on that —but the intention is clear. New housing for elderly people is to be within the right to buy unless it forms part of a sheltered scheme. Existing housing, on the other hand, returns to the position as it was before 1987: the Secretary of State is to have the task of determining whether or not particular properties are within the right to buy.

Before I say anything further regarding the amendments and the point made by the noble Lord, Lord McIntosh, concerning the amendments that follow, perhaps I may say that the Government propose to acquiesce in the view which the House took at Report stage, namely that existing housing for elderly people should remain within the jurisdiction of the Secretary of State. The House made its views plain, and the Government are prepared to listen.

Landlords will remain free to seek a determination by the Secretary of State that a particular property falls within paragraph 11 and can therefore not be sold. New housing for elderly people, on the other hand, will be within the right to buy unless it is sheltered. In order to give effect to that intention the Government propose to table in another place an amendment restoring the Secretary of State's jurisdiction in respect of existing housing.

Amendment No. 46 seeks to bring the legislation regarding sales of amenity housing for elderly people in Scotland into line with the position reached for England and Wales as a result of the amendments carried at Report. In bringing forward the government amendments at an earlier stage it had been our intention that that policy should be broadly consistent on both sides of the Border. In those circumstances we are prepared to accept Amendment No. 46.

With the leave of the House, it may be convenient, as the noble Lord, Lord McIntosh, suggested, if I say something about the other amendments relating to the right to buy since the relations between them are complicated. Amendments Nos. 41 and 44 both seek to ensure that the right to buy is not denied where elderly persons' housing has been let for occupation by disabled people. There is general agreement with that. The amendment to be introduced in another place will take the point on board. The House may nevertheless wish to put its view on record. If my noble friend Lord Swinfen moves Amendment No. 44, I propose to commend it to the House.

It is right to say that Amendments Nos. 42 and 43 were tabled mainly to deal with the possibility that further amendments to the Bill might repeal paragraph 11 outright as the Government originally proposed. If, as is now proposed, the Secretary of State once more has the task of determining whether non-sheltered housing for elderly people should be outside the right to buy, that may go a long way to meeting the anxieties of my noble friends Lord Vinson and Lord Monk Bretton about housing for the elderly in rural areas and housing which is on the borderline of sheltered housing.

With those remarks, I hope that I have answered the points that the noble Lord, Lord McIntosh, raised. I hope that that can be seen as a satisfactory conclusion for your Lordships' House as a revising Chamber.

7.15 p.m.

Lord McIntosh of Haringey

My Lords, to say that I am grateful to the noble Lord for that response would be an understatement. The response of the Government has been most generous. It has reflected a view which was not only carried on a Division last week but, much more importantly, has been a matter of decision by this House over a period of eight years. On some occasions that has been with the agreement of the Government and on some occasions it has been on Divisions carried against the Government, but it has been a fairly consistent view.

I have said that I have accepted the offer to tidy up the drafting. I take it that that means that I should withdraw Amendment No. 40 but that I should put Amendment No. 46 to the House.

Before I do so, I want to make a particular point to the House about Amendments Nos. 41 and 44. I undertook to the noble Baroness, Lady Darcy (de Knayth), last week that I would do everything in my power to see to it that there was protection for the disabled in the final version of the Bill that goes back to another place. I hope that she will agree that what is now proposed —which is an acceptance of Amendment No. 44, to which I have put my name, rather than my own Amendment No. 41 —is a proper way for me to fulfil my pledge to her and for the House to satisfy the concern of both the noble Lord, Lord Swinfen, and the noble Baroness.

I think that we have reached a satisfactory result of quite complex negotiations and a complex debate on the Floor of the House. I repeat my gratitude to the Government. I beg leave to withdraw Amendment No. 40.

Amendment, by leave, withdrawn.

[Amendment No. 41 not moved.]

Lord Vinson had given notice of his intention to move Amendment No. 42:

Page 155, line 35, at end insert — ("(1A) The Secretary of State shall make determinations excluding from the right to buy dwelling houses in rural areas which are particularly suitable for occupation by persons of pensionable age and where both the present tenancy and the previous tenancy, if any, have been let to persons of pensionable age. Such determinations shall only be made in areas referred to in section 157(1) of the Housing Act 1985 and the Secretary of State shall designate areas under that section in such a way as to enable local authorities in rural areas to meet the housing needs of elderly persons and retired agricultural workers".)

The noble Lord said: My Lords, in view of the Government's very realistic and positive response to the many views put by this House, it gives me great pleasure not to have to move the amendment.

[Amendment No. 42 not moved.]

Lord Monk Bretton moved Amendment No. 43:

Page 155, line 44, at end insert— ("(4) After paragraph 10(2)(b) of Schedule 5 to the Housing Act 1985 there shall be inserted — or (c) the services of a non-resident warden or other person designated by the landlord and a system for calling him, provided that the system was in operation either on 1st November 1989 or, if the tenancy was granted after that date, at the inception of the tenancy." ").

The noble Lord said: My Lords, I had intended to speak to the amendment in conjunction with the amendment of my noble friend.

I also should like to thank my noble friend Lord Hesketh very much indeed for the opportunity to discuss the matter which he afforded us following our discussions at Report. He has now solved the one remaining problem, which related to new sheltered housing which is being built by local authorities or by housing associations which are not charities. That was a problem because it was likely to be caught by the removal of Clause 11, despite the alterations made by the amendment of the noble Lord, Lord McIntosh. I take it that that is quite all right. I believe it is, but I thought that I had better just utter that word of caution. Perhaps the Minister will confirm that point. I beg to move.

Lord Hesketh

My Lords, I hoped that, as a result of the fruitful discussions that took place earlier, my noble friend Lord Monk Bretton would not move his amendment on the basis that we believe that we have now covered the principal point at issue.

Lord Monk Bretton

My Lords, in view of what my noble friend said, I think that it would be quite in order and much the best course, to withdraw the amendment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Swinfen moved Amendment No. 44: After Clause 165 insert the following new clause —

("Amendment to exercise of right to buy with respect to certain dwelling-houses.

(". —(1) Schedule 5 to the 1985 Act (which deals with exceptions to the right to buy) shall be amended in accordance with this section.

(2) In paragraph 11(1)(b) the words "or a physically disabled person" shall be omitted.

(3) The amendment by this section of the said paragraph 11(1)(b) shall not affect the operation of that paragraph in any case where the tenant's notice claiming to exercise the right to buy was served before the coming into force of this section, unless at that time no notice in response had been served under section 124 of the 1985 Act (landlord's notice admitting or denying the right to buy).

(4) For the purposes of subsection (3) above, no account shall be taken of any steps taken under section 177 of the 1985 Act (amendment or withdrawal and re-service of notice to correct mistakes).")

The noble Lord said: My Lords, in moving this amendment, I should like to thank the noble Lord, Lord McIntosh of Haringey, on behalf not only of myself but of my noble friend Lady Darcy (de Knayth) for tabling Amendment No. 41 in his own name and for putting his name to this amendment, as he said at Committee stage that he would do, to bring back the right to buy for disabled people. I understand that at least one local authority has been trying to encourage disabled people who are perfectly capable of looking after themselves to accept a social service so that, under the provisions of another paragraph of Schedule 5 of the Housing Act 1985, they would then be taken out of the right to buy. I hope that my noble friend will look carefully at that to ensure that the process is not being misused.

Perhaps I may also point out to the House that there is a printing error on the Marshalled List of amendments. There should be an additional word at the very end of the ultimate line of subsection (3), so it should read: or denying the right to buy". The final word "buy" has been missed out, but I am sure that, if the amendment is accepted, the printing error will be put right when the Act is printed. I beg to move.

Baroness Darcy (de Knayth)

My Lords, in adding my warm support for this amendment, perhaps I may give my equally warm thanks on my own behalf to the noble Lord, Lord McIntosh of Haringey, for honouring his commitment to me at Report stage to reclose this loophole in the Bill which has prevented people with disabilities from exercising their right to buy. I must also offer my warm thanks to the Minister for indicating that he looks kindly on the amendment.

Baroness Masham of Ilton

My Lords, it has taken a long time to come this far. I hope that the Lady Lane-Fox is looking down on the House at this moment. She will be very pleased. Disabled people have been most worried by the many different deliberations over the right to buy, and I hope that the position will be made clear to them. Apart from rape, I have received more letters and telephone calls on this subject than on any other that I have taken up in this House. I have even received two letters today from very concerned people. It has been, and is, a great issue. I ask the Minister to make clear the position for those people. I thank him and everyone else who has helped with the matter.

Baroness Elliot of Harwood

My Lords, I should also like to support the amendment very strongly. It is vital. It affects rural areas, disabled people and any area where it is difficult to obtain houses and people want to live. The Government have an opportunity to include the amendment in the Bill so that it is possible for disabled people and others to buy their own houses. I do not understand why they cannot be allowed to do so.

Lord Swinfen

My Lords, I simply wish to thank all those who have taken part in the debate.

On Question, amendment agreed to.

Baroness Masham of Ilton moved Amendment No. 45: After Clause 170, insert the following new clause —

("Regulations to approve disabled facilities grant.

The Secretary of State may issue regulations to enable a local housing authority to approve an application for a disabled facilities grant, where the relevant works are to be made to a dwelling in the course of construction.").

The noble Baroness said: My Lords, I did not speak on this amendment before, and although I do not want to detain the House now I just want to say a few words.

When preparing the Bill, the Government could have done more to take into consideration the special needs of disabled people. It is typical of what happens when houses are built for disabled people; their needs are often conveniently forgotten. The amendment would remind those people responsible for planning and building that, if facilities such as a space for a lift or a reinforced ceiling were incorporated at the building stage, it would save money, time and energy. Many people will be disappointed at the lack of the Government's will to be more helpful in this matter. The Government want efficiency savings and I do not think that they have understood the helpful way in which the amendment would deal with the matter.

Lord Swinfen

My Lords, I rise to support my noble friend Lady Masham. The Government have been extremely short-sighted on the issue. I have a strong suspicion that they felt that there was not sufficient Civil Service time to write the provision into the Bill at this stage. It would have paid the Treasury to have paid some overtime and it would have saved a great deal of money in the long run. I hope that my noble friend will give an indication that the proposal will be taken on board and brought forward as soon as possible.

Lord Hesketh

My Lords, I do not think that the House would thank me for repeating the arguments that I deployed on Amendment No. 32. Suffice it to say that we see a technical problem with relation to other points in the Bill. I have always accepted that the department has the point under discussion, and I can assure my noble friend that it takes the matter seriously. I have given an undertaking to consider how grant aid might be made available for adaptations to dwellings under construction.

Baroness Masham of Ilton

My Lords, I thank the Minister for that reply. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 178 [Sale to secure tenants of houses provided for persons of pensionable age: Scotland]:

Lord McIntosh of Haringey moved Amendment No. 46: Page 169, line 6, leave out ("cease to have effect") and insert ("apply to a dwelling-house only where such a dwelling-house was completed before the date of royal assent, or such other date thereafter as the Secretary of State may specify.").

The noble Lord said: My Lords, in moving the amendment, I want to refer to one drafting point; namely, that, because I withdrew Amendment No. 40, we do not have in this amendment the provision that we have in Clause 165(1) that the determination of the dwelling-house shall be by the Secretary of State. Thus, if Amendment No. 46 were carried and Amendment No. 40 were withdrawn on the advice of the Government, we would land up with different provisions in Scotland from those in England and Wales.

In view of the fact that the matter will still have to be tidied up, I do not think that that matters too much, but it enables me to make the point that it was our intention —it should have been in the amendment that we carried last week —that the determination should be by the local authorities rather than by the Secretary of State. We certainly did not want to see the Secretary of State being forced to adjudicate on every dwelling-house which might or might not be determined to be appropriate to paragraph 11 of Schedule 5 of the Housing Act. I hope that, in carrying out the rationalisation which will undoubtedly be necessary, the Government will veer towards the Scottish version rather than the English and Welsh version which was carried last week. I beg to move.

Lord Hesketh

My Lords, this morning I was extremely reluctant to find anything to do with Scotland combined with something to do with England because all the troubles I have ever had in your Lordships' House tended to come from the Celtic fringe. I shall bring the noble Lord's remarks to the attention of the department.

On Question, amendment agreed to.

Schedule 5 [Local Government Finance Act 1988: Amendments]:

7.30 p.m.

Lord McIntosh of Haringey moved Amendment No. 47: Page 196, line 21, leave out first ("section") and insert ("sections").

The noble Lord said: My Lords, in moving Amendment No. 47 I shall speak also to Amendment No. 50. I apologise for the fact that alone of my amendments these have been starred. There is a very good reason for that in that we obtained only yesterday —and I was given only today —the draft consolidation paper on the government proposals for transitional relief. I noticed that the paper was dated 28th October. I was interested to see the precedent of the finance policy director issuing consultation papers on a Saturday.

Amendments Nos. 47 and 50 return to the fundamental issue of who are the gainers and who are the losers in the poll tax. There are quite a number of administrative matters, to which I shall refer swiftly later, that arise from the consolidation paper. I assume that it is a consolidation paper and not a consultation paper, although I do not know whether that is in fact intended. In a sense it consolidates the letters of 11th and 20th October. On the other hand, it may be simply a misprint. However, there are a number of administrative matters to which I want to take this last opportunity to refer in the House before I return to the basic principle.

In paragraph 5 we are told that the regulations are due in late November. Is it not the case that a large number of anomalies and inequities have been revealed in the consultation so far? Is it possible that the regulations can be achieved by late November and respond to the great anxieties which have been expressed?

In paragraph 6 the Government propose to reimburse the actual administrative costs in 1989–90; but in later years they will base reimbursement on a formula which will be calculated by Peat Marwick. Will that formula adequately deal with the problems of recruitment that local authorities will undoubtedly have and with cash flow costs of late billing?

In paragraph 7 the Government say that 6 million people will benefit from transitional relief. That statement is based on a sample family expenditure survey. Although I am in favour of sample surveys, surely we need something more comprehensive and up to date than a survey in order to estimate who are the gainers and who are the losers. In paragraph 9 the impression is given by Ministers that the maximum increase in liability will be £3 a week. Will Ministers give an undertaking to make clear in any publicity that they issue that £3 a week is not the maximum because it is predicated on a national poll tax?

On the national poll tax, I turn to paragraph 11. The impression was given that the Government's benchmark figure was £275, whereas now it will be 3.8 per cent. or some other figure dependent on fine-tuning of the rate support grant settlement. I should like to have an undertaking that the Government will be completely candid in their expression of what the likely maximum increase will be in the first year.

I am sorry to see in paragraph 14 that it is still proposed that the only people who will benefit from the transitional relief are primary rate payers and that secondary rate payers in hostels, nurses' homes, barracks, etc. will not benefit from transitional relief.

In paragraph 16 the document states that each person's amount of transitional relief will be reduced to zero by 1993–94, but transitional relief is based on the 1990–91 entitlement. A person in otherwise identical circumstances but in an authority where no safety net is payable might not qualify for transitional relief. Yet that person may be faced with a higher poll tax bill in year two than is the first person. Will the Government ensure that that anomaly is dealt with before the regulations are finally issued?

Paragraph 23 refers to the matters that I raised in Amendment No. 49 and I shall postpone my remarks on that for the moment.

Paragraph 30 refers to pensioners. I understand that the position is that pensioners will have to prove that they are not the spouse or partner of a rate payer in order to qualify for supplementary relief. Does that mean that we shall have snoopers looking at whether pensioners are cohabiting with other pensioners? Surely that would be inappropriate. I hope that the Government will be able either to deny it or show that that is not the effect of the provision.

As regards rebates, in paragraphs 37 and 38 the intention appears to be that bills should be issued net of rebates and relief. Many of the firms which are providing advice to local authorities on, for example, computer consultancy and turnkey systems —notably Bull and McDonnell Douglas —are expressing deep concern about whether they can achieve even simple changes to the mechanism. What will the Government be able to do to help in terms of resources and computer consultancy to enable local authorities to meet the gain?

Finally, we understand from the document that this winter there will be a major advertising campaign on the poll tax. I have already asked for assurances that the campaign will be completely candid, but we need more than that. In order that it shall be effective in helping local authorities and not just in putting a political message, the local authorities ought to be consulted in the publicity campaign. I hope that the Government will be able to give that assurance.

The number of concerns is so great that we have had to table Amendments Nos. 47 and 50, which deal with the gainers and losers. Amendment No. 50 requires that the Secretary of State shall keep a close check on who are the gainers and the losers and on the social, financial and fiscal effects of the poll tax.

At Report stage, when what is in effect this new Bill was introduced, we sought to have the whole business put off for another year. The House did not agree with that course so at the very least the Government should provide adequate monitoring of what is, after all, a major and very ill advised social experiment. I beg to move.

Lord Hesketh

My Lords, the noble Lord ranged far and wide with the consolidation paper. I can assure him that it is a consolidation paper because it is the consolidation of two consultation papers, which is how it consolidates. As for 28th October, I cannot think of any reason other than that it was my birthday! Maybe it was some small compliment being paid within the department.

Obviously we shall take on board the noble Lord's remarks, but this document will be part of the process in which the local authority associations have it as a working draft. It will be discussed tomorrow, as it so happens. No doubt some of the points brought up by the noble Lord will be discussed within that forum.

Amendments Nos. 47 and 50 would require the Secretary of State to give reports to Parliament on the numbers of people estimated to be paying more in community charge than in rates in the first year of the scheme and less in community charge than rates; and then to make the same estimates for the second and third years of the scheme, and to make a new scheme if the number of losers exceeds the number of gainers in either of those years.

This amendment bears the heading "impact of transitional relief", but it has nothing to do with the transitional relief scheme proposed by the Government. It is important to remember that about half of all households will gain as the result of the switch to the community charge. Our scheme is not based on a crude comparison between rates and the community charge. It is a transitional scheme, designed to ease the change. It allows for £3 a week of losses to come through in the first year; and it will be wound down in the succeeding two years. It is not based on actual community charges. Chargepayers will not be protected from high charges which could arise from authorities spending above the Government's assumptions.

The noble Lord's amendment would require the Government to estimate what people would have paid in rates for the next three years. This is an impossible task. It would be necessary to take account of moves, new properties, and so on, and the proposal makes no allowances for increases in the community charge which arose from higher spending or price changes.

The scheme proposed by the noble Lord, Lord McIntosh, is ingenious but we do not believe it is relevant to the purpose of the relief scheme. That is why we resist it.

Lord McIntosh of Haringey

My Lords, I do not think that the Minister meant the word ingenious as a compliment. Nor do I think that his objections to the scheme hold water. The changes in the rateable value in a local authority from new construction in any one year, from one year to the next, or even over a period of three years, will not be significant. Removals do not affect it. In order to calculate the rates that would have been paid, one has only to consider the rates chargeable in 1989–90, the amount of money raised from those rates and how much is required to be raised from local authority taxation in the succeeding years. One then calculates a rate figure accordingly.

However, the issue is far too important simply to be brushed off. We do not deny that half the people will be better off and half the people will be worse off. That must be so if the same amount is being demanded from the same number of people. The point on which we have insisted all the time is that those people who will be better off are those who are better off now; and the people who will be worse off are those who are poorer now. As we have always said, the rich will be richer and the poor poorer. We wish to know the extent of that. The Government have already accepted that that will happen because they have accepted that one has to have the individual transitional relief. We have won the argument. All that we said as the Bill went through in 1988 has proved to be correct. The Government have been forced to accept the implication of the provision even though they will not come clean about the principle.

We require that the Government monitor what happens. If they do not, we shall have to find some way of doing so ourselves. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 48 not moved.]

7.45 p.m.

Lord McIntosh of Haringey moved Amendment No. 49:

Page 196, line 50, at end insert— ("(4A) The rules mentioned in subsection (2) above shall require the amount of any reduced liability calculated in respect of a hereditament containing two or more adults to be apportioned equally among all the adults resident in that hereditament.").

The noble Lord said: My Lords, I felt forced to raise this as a separate issue. It is perhaps the single most glaring absurdity in the proposals that the Government brought forward last week. It is proposed that the transitional relief shall not be available for more than two adults. Anybody who knows anything about houses in multiple occupation, and in particular those where rents are charged inclusive of rates, knows that very often these are people who have no relationship with each other. On occasions they may be members of an extended family but very often they are not even that. They may well be lodgers within the same dwelling house. Yet the Government say, first, that only two adults will benefit from the transitional relief, which is wrong to start with, and, secondly, that they have to sort out among themselves who is to be eligible for the transitional relief and who not. Anyone who knows anything about housing in multiple occupation or about large families knows that one will have fist fights if one tries to impose the provision in the way that the Government have put forward. It is an absurdity and an example of their lack of contact with real people that the Government can put foward such a proposal.

The amendment seeks not to correct the fundamental wrong, but at least to provide a mechanism to allow that wrong policy to be implemented. I beg to move.

Lord Hesketh

My Lords, Amendment No. 49 would require transitional relief to be divided equally among all adults resident in a property which contained two or more residents. As the noble Lord has said, this does not accord with the Government's proposals which were published on 20th October.

As I have explained to your Lordships on past occasions, the aim of the transitional relief scheme is to provide protection for former ratepayers who would face significant increases arising from the change from rates to the community charge. It is not intended to provide universal relief; and only in the case of disabled people and pensioners is it intended that there should be relief for non-ratepayers. If we were to adopt the approach advocated by the noble Lord it would mean that the scheme was less well targeted and that more people who did not previously pay rates would benefit. It is true that under the Government's proposal some non-ratepayers would benefit.

The effect of the noble Lord's amendment would not, in any event, be very great. Many houses which contain three or more adults will have a rateable value which is too high to qualify the residents for relief. Clearly, the more people among whom relief is spread, the less the benefit to the individual. The Government have made it clear that relief is to be based on a comparison between rates and a maximum of two community charges.

It may also be worth reminding your Lordships that the transitional relief which we are proposing is intended to be additional to the protection which is already built into the community charge system. It is important to recognise that it is not the only help that is available. There is a rebate system which directly links the community charge to ability to pay; and students are entitled to an 80 per cent. relief on their charge.

The relief is defined as transitional. That is not the same as the other forms of relief which are designed for the duration of the community charge and which are entirely separate. The noble Lord, as always, makes a seductive argument but tends to muddle the two issues.

Lord McIntosh of Haringey

My Lords, they are issues which arise because the Government have been forced into recognising that the simple-minded approach which was adopted in the Local Government Finance Act 1988 will not work. The provision is a belated and inadequate recognition of the imperfections of the Local Government Finance Act and of the poll tax proposals.

We are familiar with the idea that the law is an ass. That saying refers to law which has already been enacted. We are now proposing blatantly to place on the statute book legislation that is absurd and cannot meet the intentions of the Government, if their intentions are expressed openly and honestly. The Minister states that many houses with more than two adults will be highly rated anyway. That is in total conflict with the accountability argument that was put forward when the 1988 Act was first proposed. It is not a matter on which we can divide at this stage. However, the record will show that the Government have given inadequate thought at all stages of these poll tax proposals to the implications of their legislation. As usual, the unintended effects of the proposals will be very much greater and more damaging than the intended effects. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 50 not moved.]

Lord Reay moved Amendment No. 51:

Page 197, line 32, at end insert— (". In subsection (3) of section 26 (community charges registration officer for the Common Council) for the word "chamberlain" there shall be substituted "person having responsibility for the administration of certain of the financial affairs of the Council under section 6(1) of the Local Government and Housing Act 1989.").

The noble Lord said: My Lords, Amendments Nos. 51, 54 55 and 56 are minor drafting amendments which tidy up the sequence of amendments being made to the Local Government Finance Act 1988 in this schedule. They move two paragraphs into their correct position. I beg to move.

On Question, amendment agreed to.

Lord McIntosh of Haringey moved Amendment No. 52:

Page 198, line 20, at end insert — ("( ) The following sub-paragraph shall be substituted for sub-paragraph (2) of paragraph 4 (the severely mentally impaired)— (2) The conditions are that

1. (a) he is entitled, or would be entitled but for any test of residence, for the day to an invalidity pension under Section 15 of the Social Security Act 1975;
2. (b) he is entitled, or would be entitled but for any test of residence, for the day to a severe disablement allowance under Section 36 of that Act;
3. (c) he is on the day of pensionable age within the meaning given by Section 27 of that Act.").

The noble Lord said: My Lords, the amendment deals with a potential anomaly in the most welcome recognition of the need for exemption for severe mental impairment —what is commonly called Alzheimer's disease. It was made in an announcement to the House on 11th October and was incorporated in amendments on Report. The problem which appears to arise is that one of the requirements for entitlement to the benefits of invalidity pensions, severe disablement allowance, unemployability supplement and unemployability allowance is that the person concerned has been resident in the UK for at least 10 of the past 20 years.

I cannot believe that if either the Minister, in speaking to this House and proudly announcing the concession on Alzheimer's disease, or his honourable friend who spoke to the Conservative Party Conference on the same lines, had realised that there is potential for discrimination against ethnic minorities in particular—that is, people who have not been in this country for long enough to qualify —the announcement would have gone down so well.

The definition of severely mentally impaired ought to be amended, if necessary by order, to allow those with degenerative mental illnesses such as Alzheimer's disease to be included; also, the qualifying benefits should be extended to include attendance allowance and constant attendance allowance. They are non-contributory benefits and the residence restrictions which exist for severe disablement allowance would not apply.

I hope and think that the Government have the same intention as we do in this matter. I also hope and think that they will agree that the residence qualifications ought not to apply and were not intended to apply, and that they will accept the spirit if not the wording of the amendment. I beg to move.

Lord Hesketh

My Lords, as the noble Lord, Lord McIntosh, has explained, the amendment is designed to avoid people failing to qualify for community charge exemption because they do not meet the residence qualifications for severe disablement allowance or invalidity pension. I understand that there is no residence qualification for invalidity pension but there is a contribution requirement.

As I announced in the House on 11th October, the Government intend to amend by order the definition of severe mental impairment in paragraph 4 of Schedule 1 to the Local Government Finance Act 1988. This is to enable people suffering from degenerative conditions to fall within the scope of the exemption. This will be done through the addition of attendance allowance and constant attendance allowance to the list of qualifying conditions and removing the references to arrested or incomplete development of mind and injury to the brain.

Attendance allowance has less stringent qualifications than severe disablement allowance and there is no contribution requirement. It is likely that most people who would satisfy the medical criteria for SDA will also be qualified for attendance allowance and would therefore be entitled to exemption. I can assure the noble Lord that in amending the definition in paragraph 4 by order we shall seek to ensure that no severely mentally impaired person will be deprived of exemption purely on technical grounds. In the light of that assurance I hope that the noble Lord will be able to withdraw his amendment.

Lord McIntosh of Haringey

My Lords, I should like to be clear about the position. Does the expression "purely on technical grounds" mean purely on grounds of residential qualification?

Lord Hesketh

My Lords, yes.

Lord McIntosh of Haringey

My Lords, I am most grateful, as I am sure will be those concerned with Alzheimer's disease. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 53 not moved.]

Lord Reay moved Amendment No. 54: Page 201, line 38, leave out paragraph 13.

The noble Lord said: My Lords, I spoke to the amendment when moving Amendment No. 51. I beg to move.

On Question, amendment agreed to.

Lord Reay moved Amendment No. 55:

Page 213, line 49, at end insert— ("(8A) In paragraph 2, in sub-paragraph (9) after "(1)" there shall be inserted ", (1A) or (1B)".").

On Question, amendment agreed to.

Lord Reay moved Amendment No. 56: Page 214, line 12, leave out sub-paragraph (10).

On Question, amendment agreed to.

Schedule 11 [Minor and Consequential Amendments]:

Lord Reay moved Amendment. No. 57: Page 293, line 29, leave out ("2(1)") and insert ("4").

The noble Lord said: My Lords, Amendments Nos. 57, 58, 59 and 60 make drafting changes to paragraphs 17 and 24 of Schedule 11 to the Bill, which provides for local authorities to appoint sub-committees directly. Amendments Nos. 57 and 58 deal with social services sub-committees appointed under the Local Authority Social Services Act 1970. Amendments Nos. 59 and 60 deal with advisory sub-committees appointed under Section 102(4) of the Local Government Act 1972.

The Government are pleased to accept the original amendments tabled by the noble Lord, Lord McIntosh. I hope that your Lordships will accept these further minor drafting amendments. I beg to move.

Lord McIntosh of Haringey

My Lords, I am grateful for these helpful drafting amendments. They improve the amendments tabled in my name and agreed by the House on Report.

On Question, amendment agreed to.

Lord Reay moved Amendments Nos. 59 to 60:

Page 293, line 29, leave out from ("after") to end of line 30 and insert ("subsection (1) there shall be inserted the following subsection —

(1A) A local authority may establish sub-committees of their social services committee and may delegate to any such sub-committee any of the functions of the committee.

17A. In section 5(4) of that Act for the words "section 4(2)" there shall be substituted "subsection (1A) or subsection (2) of section 4".").

Page 294, line 34, at end insert ("and").

Page 294, leave out lines 35 to 38 and insert — ("(c) after subsection (4) there shall be inserted the following subsection— (4A) A local authority may appoint one or more sub-committees of a committee appointed by them under subsection (4) above to advise the committee with respect to any matter relating to the discharge of functions with respect to which the committee is appointed to advise." ").

On Question, amendments agreed to.

In the Title:

Baroness Blatch moved Amendment No. 61: Line 23, after ("1973;") insert ("to amend the Local Land Charges Act 1975;").

The noble Baroness said: My Lords, I apologise for the absence of the noble Lord, Lord Lloyd of Kilgerran. The amendment was spoken to with Amendments Nos. 38 and 39. I beg to move.

On Question, amendment agreed to.

8 p.m.

Lord Hesketh

My Lords, I beg to move that this Bill do now pass.

Once again your Lordships have demonstrated the effectiveness of this Chamber in revising the Government's legislative proposals. The Bill has received the most thorough consideration in your Lordships' House. Following a spirited four-hour debate on Second Reading we spent some 50 hours in Committee considering the details of the Bill. They were spread over seven sitting days before and after the recess. More recently, we considered the Bill for some 26 hours over four days on Report and, of course, we have had another full day's debate today. The Bill returns to another place with some 600 amendments, including some 32 new clauses.

Your Lordships would not thank me if I went into a long dissertation on what is in the Bill. I should just like to say a few words of thanks to the many people who have been involved with this Bill as it has proceeded through your Lordships' House. My task on this Front Bench has been considerably eased by having been able to share the burden with my three noble friends: the Paymaster General; my noble friend Lord Arran who went to higher and greater things halfway through our considerations; and my noble friend Lord Reay who has been a fine and doughty replacement for my noble friend Lord Arran, together with my noble friend Lord Ferrers who spoke for the Home Office and other noble friends who spoke for the territorial departments. I am indebted to them all.

The noble Lord, Lord McIntosh, has, as always, led for the Opposition. He has proved a determined but courteous debater and I am particularly pleased that we have been able to have constructive discussions with him during the progress of this Bill particularly in the last few weeks and that we have been able to strike a sensible compromise on the issue of political restrictions. Of course, he has been well supported by the noble Lords, Lord Graham of Edmonton and Lord Dean of Beswick.

Furthermore, the noble Lord, Lord Ross of Newport, has contributed extensively from the Liberal Democrat Benches. To him and to all other Peers from all sides of the House who have contributed to our debates —and on some debates such as rural housing there have been many contributions —I express my thanks for the interesting and worthwhile speeches made.

Last but certainly not least, I wish to pay tribute to the many officials without whom we could not have reached this point, to the officers and staff of the House at all levels who have produced paper for us and looked after our creature comforts, to the officials of my own department and to all those in local authorities, voluntary bodies and elsewhere who have ensured that the debating issues have not been overl000ked. I thank them all and I commend the Bill to the House.

Moved, That the Bill do now pass. —(Lord Hesketh.)

Lord McIntosh of Haringey

My Lords, I believe that it is appropriate at the conclusion of this complex Bill to attempt as briefly as possible a summary of the results of our very long considerations of the Bill.

There have been significant improvements to the Bill and let us be quite clear about that. The first, to which the noble Lord, Lord Hesketh, referred, is the question of political restrictions. I share his pleasure that it was possible to reach sensible conclusions as a result of negotiations although I am bound to say that the sensible conclusions were assisted by a victory in the Division Lobby and by the approaching prorogation of Parliament.

In Part III we have achieved a better protection for voluntary organisations in Section 48 schemes. In Part V we have achieved some rationalisation of the rules which govern controlled and influenced companies. We have, for example, achieved a very considerable and valuable number of exemptions for voluntary organisations and a whole variety of independently managed companies and organisations.

In Part IX reference has already been made to Alzheimer's disease and to the redefinition of severe mental impairment and that is very valuable. It looks as though we may be making some progress on emergency planning although perhaps not in the form which we would have wished.

On the Motion of the noble Lord, Lord Stanley, we achieved an eminently just and valuable piece of protection for rural areas and for those who need and will continue to need homes at a reasonable rent in those areas. I hope that the Government will take full account of the strong feeling of the House expressed in the Division last week. It was not just a Division in which the official Opposition were strong; it was one in which a very considerable number of Government Back-Benchers and Cross-Benchers took part and expressed their views very forcibly and effectively. I hope that there will be no intention to overturn that decision in another place.

Finally, and most recently, I am especially grateful for what has been done about the protection of housing which is particularly suitable for elderly people and the need to keep a significant amount of that in the public sector for those elderly people who are now living in unsuitable accommodation and who could never envisage the right to buy.

On the negative side of the balance sheet, there are many matters which are still wrong with this Bill. In Part I the resources for members' allowances are way below those envisaged by the Widdicombe Committee. In Part III, under the guise of giving permission for economic development powers which were previously operated under Section 137, there has been a series of severe and damaging restrictions to economic development powers by local authorities. In Part V the change as regards the treatment of capital receipts from the right to buy, to make sure that a high proportion is used for debt redemption rather than what the local authorities would wish to use it for, is extremely damaging and that has not significantly changed.

In Part V the whole provision concerning controlled and influenced companies seems to us to be a very severe case of chronic and acute paranoia. Because of a few perceived abuses by local authorities, a virtually unworkable structure of new central government controls over local authorities is being enacted.

In Part VI the provisions for basic credit approvals will mean either that rents increase dramatically or that the quality of other services, including management and maintenance, will decline or both. A particular abuse is the provision that those council tenants who pay on time will alone be responsible for the arrears of bad tenants. That is thoroughly bad law and will certainly have to be repealed at the earliest possible opportunity.

In Part VIII we are very disturbed about the means testing of grants, and the amendments made to the Bill on that matter are inadequate to deal with the abuse which has now been introduced.

Finally, in Part VIII —and I could mention many matters —there is the introduction at a late stage on Report of, in effect, a completely new Bill amending the 1988 poll tax Act. In one way that is good because it is a climb down and a belated recognition of the arguments which we put forward in 1988 when the legislation went through. On the other hand, it is a disgraceful delay and it is a disgraceful way in which to treat Parliament. The results are clearly —as we have seen as recently as the past half hour —not going to work. The poll tax provisions, which have been cobbled together at the last minute, will simply not be in operation effectively by the next financial year.

Therefore, despite the many advances which have been made in the Bill, it still remains a bad Bill and still remains the Department of the Environment's annual interference Bill. I fear that there will be an annual interference Bill and an annual attack on local government in the next Session and the Session after. The pace of attack on local government independence and responsibility shows no sign of letting up. This is a particularly bad example. It is conspicuous that the Bill grew in this House from 220 to 320 pages. When one adds to that the regulations which will ensue and the powers given to the Secretary of State, it is another example of Marsham Street megalomania at its worst.

Despite it being a bad Bill in political and social terms, it has been a Bill in which we have had a considerable degree of co-operation and only a small amount of acrimony. First of all, I am deeply grateful to my noble friends Lord Graham and Lord Dean and to other noble Lords who have intervened from the Back-Benches; to my noble friends Lord Dormand, Lord Carter, Lord Sefton, Lady Fisher of Rednal, and others too many to enumerate.

We have worked very successfully with what I insist on calling the Alliance Benches, because it is quicker. I am grateful to their spokesmen for the work that they have done. In dealing with the Government Front Bench, I can only echo what the Minister said. Our relationships have been businesslike and occasionally even cordial: but they have never been acrimonious or unpleasant. I am grateful for that and for the degree of co-operation and negotiation which has taken place.

I echo also the thanks to all who have taken part outside the chamber, and particularly I should like to thank our advisers from the housing associations, the local authorities, the local authority associations, other pressure groups and all the staff of the House who on occasion have had to put up with extremely late nights and with a gruelling timetable.

Lord Mayhew

My Lords, my noble friend Lord Ross has been unavoidably called away. However, he would want me to express his appreciation of the remarks which the noble Lord the Minister made on this Motion, and to associate himself with many of the points made by the noble Lord, Lord McIntosh. It is a matter of regret to me that I was not able to hear all the speeches made by the Minister on this Bill; but I have no doubt that they were made with his usual courtesy. This is emphatically not a listening government. However, there have been times when the Minister has given every evidence of paying careful attention to the points made on all sides in the House during the long passage of this Bill. On these Benches we are very grateful for that.

Lord Greenway

My Lords, I apologise for rising at this very late stage on this Bill. I had hoped that my noble friend Lord Lytton might be here to raise a particular point; but, as your Lordships can see, I stand alone on the Cross-Benches.

I promise I will take only a few moments. However, I think it is important that this should be placed on the record. The Bill as it stands appears not to reinstate Schedule 2, Part II of the 1984 Rate Act which allows for group assessment of moorings in yacht marinas. As a result, once this Bill becomes an Act it will in theory be possible for individual berths in marinas to be rated separately. That, as your Lordships can imagine, will upset the boating fraternity enormously and might run contrary to the Government's admirable policy of cutting down on unnecessary bureaucracy.

I know it would be improper of me, indeed impossible, to ask for any assurance from the Minister at this late stage, but I should like to place the matter on the official record in the hope that such provision might be included in future legislation as soon as the opportunity arises.

Lord Hesketh

My Lords, amazingly I can in part provide an answer for the noble Lord, Lord Greenway. The noble Lord asked about the provisions for multiple moorings. It is one of those answers which is always to hand! I can assure the noble Lord that it is our intention to bring forward legislation at the earliest opportunity to replicate the relevant provisions of Part II of Schedule 2 to the Rates Act 1984. Perhaps I may take this opportunity of thanking the noble Lords opposite for their kind words.

On Question, Bill passed, and returned to the Commons with amendments.