Local Government and Housing Bill

HL Deb 24 October 1989 vol 511 cc1266-357

3.3 p.m.

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

My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.—(Lord Hesketh.)

On Question, Motion agreed to.

Clause 71 [Duty to keep Housing Revenue Account]:

Lord McIntosh of Haringey moved Amendment No. 113A: Page 79, line 34, at beginning insert— ("(1) In determining annual rent assumptions for the purposes of Housing Revenue Account Subsidy the Secretary of State shall disregard housing accommodation which has been disposed of.").

The noble Lord said: My Lords, this is a relatively innocuous amendment which does very little justice, I am sorry to say, to the seriousness of the situation in which we find ourselves as regards council house rents. It was only two weeks ago that we had a long and somewhat technical debate on the theoretical mechanism which the Government propose to adopt for the establishment of levels of subsidy for council house rents in the future, from 1990 onwards. From these Benches we made it clear that we were suspicious of the Government's intentions when they said that they did not intend any necessary change in rents in the new mechanisms.

Moreover, when the noble Earl, Lord Caithness, told the House that there were no target levels for rents we were forced, failing any other evidence, not to withdraw our amendments, because our suspicions were still there, but to accept the fact that we could not prove what we were saying about the Government's intentions as regards council house rents.

Little more than two weeks later we find ourselves with all our worst suspicions confirmed many times over. They are confirmed in a consultation document issued by the Department of the Environment late last night. We have had less than 12 hours to consider our response to the document. That is not the way this House should be treated. At the very best this consultation document was promised for last Friday but that information was available only by way of a statement which said that it would be sent out yesterday. It is impossible for those of us who try to take this Bill seriously to give the issues involved the kind of consideration that is really necessary. Therefore my first complaint about the consultation document concerns the timing of it and the fact that we have had so little time for consideration.

My next complaints are far more serious. They are that in effect the Government have proved all of our suspicions and that even the figures which were indicated by the noble Earl in Committee two weeks ago are no longer valid. The noble Earl sought to convince us that there were no real increases in rents proposed as a result of the new mechanism. I am reminded of the consultation document which was issued on 27th July 1988. The Government said then that for tenants the immediate effect should be indistinguishable from what would have happened if the current system had remained in force. I only need to read out the rent increase assumptions over the past few years to indicate to the House how serious the matter is.

In 1981–82 the increase assumption was £2.95; in 1982–83 it was £2.50; in 1983–84 it was 85p; in 1984–85 it was 75p; in 1985–86 it was 60p; in 1986–87 it was 65p; and in 1987–88 it was 65p. I have a gap between 1988 and 1989, though I am not quite sure why, but in 1989–90 it was £1.95. Two weeks ago the Paymaster General told us that the assumption for 1990–91 was £3.95. Presumably the Government think that, because during a period of time in which for only three out of nine years the increase was more than £1, £3.95 is indistinguishable. Well, I do not think so and tenants will not think so. However, it is worse than that. We are now receiving an indication for the purpose of subsidy of a national average increase of 10 per cent. and a maximum increase not of £3.95 but of £4.50.

These rent increases are not gradual rent increases, they are not indistinguishable rent increases and they are not painless rent increases. They are part of a deliberate attempt which we alleged two weeks ago to use the new mechanism in order to increase rents. If a 25 per cent. increase, which is the average increase for those authorities mainly in outer London and the South-East is gradual, I do not know what a dramatic increase would be.

I do not think there is any understanding of the budgets of council tenants in the Government's calculations. Moreover, I do not think that the Government have in their presentation over the period from 1988 right up to last night played fairly with the British electorate or with council tenants. With the knowledge of what the Government have said on the matter over the months and years I do not think that anyone would have believed that this was the final intention of the new rent calculation system. My complaint about the timing was serious enough but my complaint about the content of the new consultation document is much more serious. I fear that it puts in a very poor light government's probity, openness and clarity of expression.

I assure the House that our amendments would have been different and more wide-ranging if we had had time to table them. However, the specific amendment that we have tabled deals with one particular abuse of the new proposed mechanism. I do not wish to go over the ground again but simply remind the House that, although the new mechanism is supposed to be neutral, clearly it is not. Therefore there is an elaborate although undefined damping process; that is, a period of years over which the changes are to take place.

It is recognised that, if adopted by all authorities in accordance with guidelines—in other words, if they increase their rents in accordance with the subsidy assumptions—the new mechanism will mean ludicrous differences between areas in the south and the north. The basis of rents has nothing to do with affordability—as Ministers used to claim—or with the condition of the property. It is to be based on capital value. As we all know, that varies enormously between the South-East and the North, North-West and North-East. The result is that the anticipated increase for Croydon is of the order of £33 per week, whereas that for Burnley is of the order of £10 a week. It has nothing to do with the quality of the stock or its historic cost because that assumption has been completely abandoned. It is based entirely on the ludicrous theory that the capital value is the proper consideration for setting council house rents.

The absurdity of the proposals is piling upon itself because, if that were not bad enough, it is not the capital value of the stock which is in the ownership of the local authorities but the capital value of the stock which has been sold under the right-to-buy procedures. Everyone who knows anything about the right to buy—and common sense will dictate it—will know that the better properties have been sold. First the houses were sold because they were easier to sell as there were fewer legal conplications. Then the better quality flats were sold.

The result is that the capital value of the properties which have been sold is being used as the yardstick for subsidy for the properties which remain in the ownership of the councils. Presumably that has been done on the basis that it is easier to collect information about capital values of items which have been sold rather than to go to the trouble of collecting capital values for the truly relevant properties; that is, those which remain.

It is a similar situation to that of the drunk who was looking for his keys under a lamp post. On being asked he said that he had dropped them somewhere else but the light was better under the lamp post. It is exactly that which is now being proposed by the Government. Our Amendment No. 113A deals with that marginal blemish on the total absurdity of their programmes.

I urge upon the House the justice of the amendment. However, I must warn the House that our dissatisfaction with the manner and the content of the Government's proposals about rent is by no means exhausted. Regardless of the amendment, we shall certainly return to the matter at a later stage. I beg to move.

3.15 p.m.

Lord Irving of Dartford

My Lords, on more than one occasion my noble friend Lord McIntosh has mentioned the fact that I am a member of a local authority. I have been a member of the Dartford Borough Council for 37 years. During that time it has been led by one or another of the major parties with more success and co-operation than is usual in many local authorities. I should like to put forward an anxiety felt by members of the Dartford Borough Council.

It is noted the the Government do not intend to define the housing revenue account too closely in 1990. However, it would appear that the new financial regime is a cohesive whole and if one element is deferred there will be serious consequences when the remainder is implemented. Some local authorities such as Dartford debit to the housing revenue account a substantial number of items not related to its role as a landlord—for example, community centres, maintenance of estate greens, open spaces and so forth. Unless those factors are specifically excluded from the housing revenue account by statute—because no authority will wish to load them voluntarily onto the community charge during the first year of operation—the management and maintenance costs for the authority may well exceed the proposed allowances resulting in a substantial rent increase above the Government's guidelines. Therefore, it is suggested that the implementation of the whole system at once will be the only way of preventing rents from rising unreasonably in that respect. I hope that the noble Earl will comment on that matter.

The Earl of Caithness

My Lords, no doubt your Lordships will recognise a great deal of what was said by the noble Lord, Lord McIntosh., in moving the amendment. It will be recalled that the substance of the noble Lord's amendment was debated at length in Committee. That amendment, No. 134Y, was taken to a Division by the noble Lord and rejected by the Committe by a substantial majority. Yet again the noble Lord is treading over ground that has already been covered.

During our debate in Committee I offered quite a detailed account of how we propose to calculate annual rent guidelines for local authorities in the new HRA subsidy system. I do not want to spend too much time going over old ground. But as the effect of this amendment would be to prevent our proposals from being implemented in the way that I described I fear that I must do so.

In calculating local authorities' entitlements to HRA subsidy each year, we shall need to make an assumption about the levels of rents that they will charge. I stress the fact that the councils determine the level of rent and not the Government. The Government must work out a notional national rent but the council must determine the rent for its area. As I explained during Committee, under the present housing subsidy system we simply assume each year that every authority will increase its rents by the same flat-rate amount. But, as I also explained, that assumption is in fact unrealistic. It implies that the distribution of rents around the country is satisfactory and no authority needs to have a higher increase than any other. In fact, the way rents vary at present is extremely illogical, largely reflecting the variation in the remaining historic costs in each area or the size of rate fund contribution to the housing revenue account made by different authorities. We want to see rents vary in a more logical, realistic pattern, reflecting something in the variation of the value of council housing around the country.

That is why we have proposed that under the new system the assumptions we made about rent increases will vary between authorities. We shall distribute the assumed national increase between authorities pro rata to a measure of the value of their housing stock. We shall then damp the implied increases or decreases in rents to prevent unreasonable fluctuation in rent levels in individual authorities. The effect will be to expect authorities whose rents are comparatively low, when looking at the variation in house values, to increase their rents by more than those authorities whose rents are already comparatively high.

For this method to work we need a reliable measure of the variations in the value of local authorities' housing stocks. A suitable measure of housing can be found in the prices paid under right to buy and other council house sales. So in our assessment of local circumstances we would take the average, undiscounted valuation for each authority of its right to buy and other sales of individual properties and apply this average price across the whole of the council's remaining housing stock. We would thus arrive at a proxy for the total value of each authority's stock.

I agree of course that this does not give us a precise measure of the value of a council's housing stock. But it does give us what we need: namely, an indication of the measure of variation in the value of housing from one authority to the next. It is this pattern of values in which we are interested. The great virtue of using councils' own right to buy figures is that they provide a quick, straightforward and perfectly justifiable method of looking at the pattern of values. We are looking at ways in which it can be improved, without losing this simplicity. For the first year of the new system we propose to take the value of flats and houses separately and arrive at an aggregate valuation that way. That is something which I announced to your Lordships at Committee stage. In future years other refinements may be possible. But whatever route we choose, it will not involve great upheaval, expense or onerous duties on individual authorities.

The amendment would prevent all that. It would force us either to accept a more elaborate, time-consuming and in truth quite impractical method of valuation, or to rethink our proposed subsidy formula altogether. The amendment is very similar to the one at Committee stage which sought to drive a coach and horses through this part of the Bill. I could not possibly commend it to your Lordships.

I should like to answer some of the points which the noble Lord, Lord McIntosh, raised this afternoon. He complained about the unfair timing of the consultations. We have just embarked on a six-week consultation period with the local authority associations, before the Secretary of State must make up his subsidy determinations by 25th December.

We did not have to provide the proposals yesterday. We could have left them a week or two and still met the timetable. However, we wanted to consult earlier than absolutely necessary. I hope that it is welcome that we have done so while the Bill is in your Lordships' House. We have made a special effort to try to get the figures to the noble Lord, Lord McIntosh. I appreciate that he is ungrateful over the timing, but I am sure that he would have been even less grateful had we followed a different path and produced them at a later date, as we could quite easily have done.

Perhaps I may say a word more on the rent guideline proposals "or 1990–91, with which the noble Lord, Lord McIntosh, started the debate this afternoon. The consultation paper contained proposed rent guidelines for each authority in England in 1990–91. Overall, we have assumed that authorities will generally increase their rents by 5 per cent. in real terms. Contrary to what the noble Lord, Lord McIntosh, said, that is the same real terms increase as we have assumed in the calculation of current housing subsidy for each of the last two years. That shows the consistency. It implies an average increase of £2.08 per dwelling per week across all authorities.

We have also made proposals for the damping factors which will limit the guideline increases or decreases once the national total has been distributed by reference to stock values. At the lower end of the scale we have allowed for a minimum increase of 95p. We estimate that this is 9p a week less than would have been needed just to take account of inflation—a small real terms reduction in rents.

At the upper end of the range, we have proposed that no authority should be assumed to increase its rents by more than £4.50. The effect of these proposals is that out of the 366 local authorities in England, 66 would receive the maximum rent guideline increase and 170 the minimum. The remaining 130 authorities would have their increases scaled down by a constant percentage between these two damping limits. Almost two-thirds of all authorities—that is, 210—will be expected to increase their rents by less than the average of 5 per cent. in real terms.

I therefore commend these proposals to your Lordships as both sensible and fair. They begin the process of encouraging a more logical pattern of rents round the country. Authorities would not be expected to increase their rents in real terms by unreasonable amounts. In many areas the proposals would allow a real terms standstill or even a modest reduction in rents. As we promised, they would therefore ensure that rents could remain within the reach of people in low-paid employment.

The noble Lord, Lord Irving of Dartford, raised an important point. We have said that to begin with we shall allow authorities to debit and credit the account in the same manner as at present; that is, no change in the position of the ring fence to begin with. We shall of course monitor and consult for the second year. Any expenditure now in the HRA is therefore built into our subsidy for the next year.

Lord McIntosh of Haringey

My Lords, the Paymaster General sought to chide me for repeating arguments that had been put in Committee. I certainly cannot make the same accusation about him because when he came to the Committee only two weeks ago he told it that the maximum increase would be of the order of £3.95. It takes only two weeks for that to be disproved and for us now to hear the truth, which is that the maximum increase will be £4.50.

The Minister also chided me for being what he called ungrateful about the timetable and over the fact that we received, or rather the local authority associations received, this important consultation document less than 24 hours before the matter was to be debated in your Lordships' House. I shall not go into the words that he used, though he might be accused of being intemperate, which is a word he appears to be quite fond of when referring to my colleagues on these Benches.

I should remind the House that I may have received this consultation document, though I only saw it one-and-a-half hours ago. However, other noble Lords have not had that opportunity. So far as I know, nobody else in this House has had an opportunity to consider the very important matters which are contained in the consultation document. It affects the way in which Parliament ought to be looking at the Bill and reflects the reaction that we ought to have to it. I have apologised, in a sense, on behalf of government rather than on behalf of myself, for the fact that our amendment does not now adequately reflect our anger, concern and distress at what is being put forward by the Government.

The Minister congratulates himself that the document has been made available for this stage of your Lordships' consideration of the Bill. I put it to him that it has not been made available to other than a very small number of your Lordships and that the House ought not to consider that it has been adequately consulted, adequately informed or given adequate assurance that Parliament is being taken seriously in the way this important legislation is being put before it.

This is a most unsatisfactory situation, both in the manner of the introduction of the document and in the content of its introduction. Without any prejudice to the fact that we shall return to this matter at Third Reading—

The Earl of Caithness

My Lords, with the leave of the House, I am grateful to the noble Lord for giving way. I meant to pick up earlier one point which he mentioned again when summing up. He suggested that I had said that the maximum would be £3.95. I have quickly skimmed through the Official Report of those proceedings and I do not seem to recall that I mentioned that figure.

Lord McIntosh of Haringey

My Lords, that is my recollection. Neither of us has it in writing. Perhaps we had better deal with it in writing between us. I do not think that I have invented such a figure. It may not have been the noble Earl himself who mentioned it, but that is certainly my recollection. We shall find it necessary to return to this matter at Third Reading.

Lord Harmar-Nicholls

My Lords, why not withdraw the statement until the noble Lord can confirm it? Would that not be a better way of sorting out the different views?

Lord McIntosh of Haringey

My Lords, I do not wish to prolong this point, but the figure has not been rebutted. The noble Earl has not said that he made any other assumption. I have said that we shall both, together or separately, establish the truth of the matter. If I am wrong, I shall apologise. I do not think that the House would expect me to do anything more in the circumstances. The matter will come back to your Lordships' House on Third Reading.

Baroness Fisher of Rednal

My Lords, I wish to support my noble friend as regards consultation.

Noble Lords

Order!

Lord Harmar-Nicholls

My Lords, did we not agree that after the mover of the amendment had spoken, the debate could not continue on Report? Is that not one of our rules?

Noble Lords

Hear, hear!

3.30 p.m.

On Question, Whether the said amendment (No. 113A) shall be agreed to?

Their Lordships divided: Contents, 90; Not-Contents, 111.

DIVISION NO. 1
CONTENTS
Addington, L.	Lloyd of Kilgerran, L.
Amherst, E.	Lockwood, B.
Attlee, E.	Longford, E.
Aylestone, L.	Lovell-Davis, L.
Banks, L.	McIntosh of Haringey, L.
Birk, B.	Mais, L.
Blackstone, B.	Mason of Barnsley, L.
Blease, L.	Mishcon, L.
Bonham-Carter, L.	Molloy, L.
Bottomley, L.	Monson, L.
Broadbridge, L.	Nicol, B.
Bruce of Donington, L.	Northfield, L.
Callaghan of Cardiff, L.	Oram, L.
Campbell of Eskan, L.	Parry, L.
Carmichael of Kelvingrove, L.	Phillips, B.
	Pitt of Hampstead, L.
Cledwyn of Penrhos, L.	Robson of Kiddington, B.
Cocks of Hartcliffe, L.	Rochester, L.
Dean of Beswick, L.	Ross of Newport, L.
Donaldson of Kingsbridge, L.	Rugby, L.
Dormand of Easington, L.	Sainsbury, L.
Ennals, L.	Scanlon, L.
Ewart-Biggs, B.	Seear, B.
Ezra, L.	Sefton of Garston, L.
Fisher of Rednal, B.	Serota, B.
Gallacher, L. [Teller.]	Shackleton, L.
Galpern, L.	Soper, L.
Gladwyn, L.	Stallard, L.
Glenamara, L.	Stedman, B.
Graham of Edmonton, L. [Teller.]	Stoddart of Swindon, L.
	Strabolgi, L.
Grey, E.	Taylor of Blackburn, L.
Hampton, L.	Taylor of Gryft, L.
Hayter, L.	Taylor of Mansfield, L.
Henderson of Brompton, L.	Thomson of Monifieth, L.
Hunt, L.	Tordoff, L.
Hutchinson of Lullington, L.	Turner of Camden, B.
Hylton, L.	Underhill, L.
Irving of Dartford, L.	Wallace of Coslany, L.
Jay, L.	Walston, L.
Jenkins of Hillhead, L.	Wedderburn of Charlton, L.
John-Mackie, L.	Whaddon, L.
Kagan, L.	White, B.
Kilmarnock, L.	Williams of Elvel, L.
Kirkhill, L.	Winterbottom, L.
Leatherland, L.
Llewelyn-Davies of Hastoe, B.

NOT-CONTENTS
Abinger, L.	Cranbrook, E.
Airey of Abingdon, B.	Cullen of Ashbourne, L.
Allerton, L.	Davidson, V. [Teller.]
Annaly, L.	De Freyne, L.
Arran, E.	Denham, L. [Teller.]
Beaverbrook, L.	Effingham, E.
Beloff, L.	Ellenborough, L.
Belstead, L.	Elliot of Harwood, B.
Bessborough, E.	Faithfull, B.
Blatch, B.	Fanshawe of Richmond, L.
Blyth, L.	Fortescue, E.
Borthwick, L.	Fraser of Kilmorack, L.
Boyd-Carpenter, L.	Gainford, L.
Butterworth, L.	Gardner of Parkes, B.
Caithness, E.	Gisborough, L.
Campbell of Alloway, L.	Glenarthur, L.
Campbell of Croy, L.	Gray of Contin, L.
Carnegy of Lour, B.	Gridley, L.
Carnock, L.	Hailsham of Saint Marylebone, L.
Clanwilliam, E.
Colnbrook, L.	Halsbury, E.
Constantine of Stanmore, L.	Harmar-Nicholls, L.
Cork and Orrery, E.	Harvington, L.
Cottesloe, L.	Havers, L.

Henley, L.	O'Brien of Lothbury, L.
Hesketh, L.	Orkney, E.
Hives, L.	Orr-Ewing, L.
Hood, V.	Oxfuird, V.
Hooper, B.	Pender, L.
Hunter of Newington, L.	Peyton of Yeovil, L.
Hylton-Foster, B.	Porritt, L.
Johnston of Rockport, L.	Pym, L.
Kaberry of Adel, L.	Rankeillour, L.
Killearn, L.	Reay, L.
Kinnaird, L.	Reilly, L.
Kinnoull, E.	St. Aldwyn, E.
Lauderdale, E.	St. Davids, V.
Long, V.	Shannon, E.
Lothian, M.	Sharples, B.
Lucas of Chilworth, L.	Stanley of Alderley, L.
Lyell, L.	Stodart of Leaston, L.
Mackay of Clashfern, L.	Strathmore and Kinghorne, E.
Macleod of Borve, B.
Manton, L.	Strathspey, L.
Margadale, L.	Swinfen, L.
Marley, L.	Terrington, L.
Merrivale, L.	Teviot, L.
Monk Bretton, L.	Thomas of Gwydir, L.
Montgomery of Alamein, V.	Tranmire, L.
Morris, L.	Trumpington, B.
Mowbray and Stourton, L.	Ullswater, V.
Munster, E.	Vaux of Harrowden, L.
Murton of Lindisfarne, L.	Vinson, L.
Nelson, E.	Waldegrave, E.
Nelson of Stafford, L.	Whitelaw, V.
Norrie, L.	Wynford, L.
Nugent of Guildford, L.

Resolved in the negative, and amendment disagreed to accordingly.

3.38 p.m.

Schedule 4 [The Keeping of the Housing Revenue Account]:

Lord Dean of Beswick moved Amendment No. 113B: Page 179, line 44, at end insert— ("The formula referred to above shall include but not be restricted to the interest on any balances held within the account during the relevant year.").

The noble Lord said: My Lords, the purpose of this amendment is to allow local authority tenants and not the Treasury to benefit from the efficient management of the housing revenue account by allowing any interest on balances in the account, or earned on the 75 per cent. or reserved part of capital receipts, to be credited to the housing revenue account with no subsequent loss of subsidy.

Any private landlord would manage his or her assets so that the benefits of good financial management accrued to the landlord. However, as the Bill is currently drafted, the Government are not prepared to allow local authorities, as landlords, to do the same. It is currently proposed that when a local authority earns interest on any balances in the housing revenue account, or through the temporary investment of the reserved part of housing capital receipts, this interest is credited to the housing revenue account. There would be a subsequent adjustment of subsidy so that subsidy would be withdrawn on a pound for pound basis. The Treasury would then benefit from good financial management and not the tenant.

I believe that the Government should accept the spirit of the amendments, if not their actual wording. The amendments would address this anomaly and allow interest earned to be of genuine benefit to tenants.

Without the amendments what incentives do the Government think there will be to efficiency in financial management when the end result is a loss of subsidy of the same amount? I beg to move.

Lord Hesketh

My Lords, the intention of the amendment is to ensure that local authorities should be able to credit the interest on housing revenue account cash balances to the housing revenue account. That is the practice of many local authorities at present, if not all of them.

The amendment perpetuates a common misunderstanding about the nature of the housing revenue account. The housing revenue account is not a cash account. It is not like a bank account in which income is deposited and from which payments are withdrawn.

Lord Dean of Beswick

My Lords, will the Minister please speak a little more slowly? I am having difficulty in following what he says.

Lord Hesketh

My Lords, I apologise to the noble Lord, I shall shift down a gear.

It is simply an annual account of certain specified transactions of the authority. That does not mean that it is necessarily wrong to credit interest on cash balances to the housing revenue account. An authority can keep track from day to day, if it wishes, of items of cash income and expenditure which will eventually score in the housing revenue account for the year. Of course some of those so-called cash transactions are purely notional: for instance, when the housing revenue account notionally "pays" for work undertaken by the authority's direct labour organisation, no cash changes hands.

The local authority associations have argued very strongly that cash management is just one aspect of housing revenue account. In their view, the interest earned from cash balances is a reward for good management and should in fairness be credited to the housing revenue account. In the same way a private sector landlord can earn interest from his cash in hand for the benefit of his business—or he may have to pay interest if he goes into overdraft.

We accept those arguments. It is right that there should be an incentive for prudent cash management, and the interest which can be earned on cash balances provides such an incentive. We therefore intend that the formulae to be made for credits to the housing revenue account under Item 8 of Part I of the schedule and for debits under Item 8 of Part II should include allowances for interest receivable from cash balances or payable on cash borrowings. To ensure that the incentive effect is preserved, those credits and debits will not be included in the subsidy calculation.

I hope that on that basis the noble Lord will see fit to withdraw his amendment.

Lord Dean of Beswick

My Lords, the Minister will agree that his reply was rather complicated. However, it appears that the Government have something to offer, and on that premise I beg leave to withdraw the amendment at this stage.

Amendment, by leave, withdrawn.

3.45 p.m.

Lord Dean of Beswick moved Amendment No. 113C: Page 181, line 23, at end insert— ("Item 10: debit balance in respect of incidental expenditure on homelessness. Any sum calculated in accordance with such formula as the Secretary of State may from time to time determine which is reasonably incurred by the authority in the discharge of its duties under Part Ill of the Housing Act 1985").

The noble Lord said: My Lords, during all stages of the Local Government and Housing Bill there has been very little discussion of homelessness. The purpose of the amendment is not only to recognise the need for revenue expenditure by local authorities encountering homelessness but also to allow a debate on homelessness and the likely outcome of the Government's review of legislation covering homelessness.

One of the main concerns of the Association of Metropolitan Authorities is that the Government should make available sufficient capital resources to allow those empty local authority properties which are awaiting major works or demolition to be brought into management in order to reduce the use of bed and breakfast accommodation. The AMA has put together an emergency housing programme—which we believe is feasible.

The latest figures from the Department of the Environment, rounded to the nearest 100 are as follows: 11,000 households in bed and breakfast accommodation; 6,300 households in hostels; 13,000 households in other forms of temporary accommodation; giving a grand total of 30,300. In addition, there are the hidden homeless—people sleeping rough, mainly in the centres of the big cities and to a great extent in London where it is calculated that at present 10,000 people sleep in the open.

Those figures indicate the minimum number of homes which must be provided, either by new house building programmes or rehabilitation and conversion schemes. If noble Lords will bear with me I shall quote statistics on homelessness which were collated last year. In 1987 local authorities had 109,000 empty properties, representing 2.49 per cent. of their total stock. In 1988 that was reduced by 8,000 to 101,000. In 1987 housing associations had 13,000 empty properties, 2.69 per cent. of their stock. There has been no change in the number of those empty properties. In 1987 in central government and other public sector housing there were 16,000 empty properties, 5.97 per cent. of the stock. The same figure pertains today. In the owner-occupied sector there were 570,000 empty properties in 1987, representing 4.13 per cent. of that sector of the housing market. In 1988 there were 579,000 empty properties, an increase of 9,000. I quote those figures because I hope that they will dispel once and for all the notion that local authorities have played a major role in driving up the number of homeless people in this country.

During last night's debate, which was not the best tempered debate in which I have been involved, the noble Earl gave certain figures concerning the amounts of money which local authorities had spent since 1985–86. He said: It is worth reminding your Lordships that between 1985–86 and the present year, local authority capital spending power has increased from £5.7 billion to £8.1 billion, an increase of 44 per cent.".—[Official Report, 23/10/89; col. 1220.] I do not quarrel with those figures, but we are talking about two different things. I have checked the figure that the Minister gave. It related to the total outlay of local authorities and not just to housing. I believe that the most damning figure, which has led to an escalation in the numbers of homeless people, relates to local authority housing investment programme allocations. In 1979 local authorities received £5.8 billion from central funding; last year, as I understand it, the figure was down to £1 billion, a cut of 80 per cent. That is the most damning aspect of the Government's housing policy. I believe that that is the biggest contributory factor to the problem of homelessness that now faces us as a nation.

I said that 101,000 local authority properties are empty at present. The breakdown of that figure is: available for letting, 22,000; to be let after minor repairs, 29,000; undergoing major works, 17,000; awaiting major works, 12,000; to be sold off, 6,000; awaiting demolition, 9,000; and 6,000 miscellaneous other properties; which gives a total of 101,000. As I indicated, that is the void status of each property at 1st April 1988. Obviously, individual properties pass through different statuses while they are empty.

The first three categories should all be let within the next six months, so I assume that they are now possibly in the process of being let and are not relevant to the exercise. However, the 12,000 properties which are awaiting major works and the 9,000 which are awaiting demolition could, with the necessary resources being made available, significantly reduce the number of homeless families. But it is vital to remember that not all those properties coincide with the authorities which have families in bed and breakfast accommodation and in other temporary accommodation. The demographic differences in the housing field may be quite profound. As noble Lords know, the shortages are not always where the empty properties are.

The AMA argues that resources must be made available by the Government to allow local authorities to start work on the 12,000 properties awaiting major works and that they should do so as a matter of urgency. As a significant proportion of those 12,000 will be "street properties," municipalised in the late 1970s, there will be a gain in conversion. We therefore maintain that around 15,000 homes should be provided in that way.

Secondly, local authorities should be given the necessary resources to demolish the 9,000 properties so designated and rebuild on those sites. That small redevelopment programme should produce about 11,250 homes. Thus, around 26,250 homes will come out of local authority voids, in other words, empty properties. The cost of that part of the programme will obviously vary according to regional costs, but, using national averages, the 15,000 homes from the rehabilitation programme would cost a total of around £340 million. The cost of demolishing the 9,000 properties and building 11,250 homes would cost in total around £510 million.

In addition to those 26,250 homes, the AMA proposes that a further 23,750 should be started, bringing the total to 50,000 across the whole of England. Obviously, more detailed planning would be required to assess to what extent the 26,250 homes coincide with the housing requirements of homeless households. Some local authorities would require a considerable proportion of the additional pool that would be produced. Others might require none.

The cost of those 23,750 homes would be approximately £1,000 million. Thus, the total cost of 50,000 new homes would be around £1,850 million. That is an average per unit cost of £36,950. To put it in perspective, the basic total housing investment programme allocation for England in 1989–90 is £920 million. That includes £15 million for obligations under the housing defects legislation, £11.5 million for the home insulation scheme and £20 million for the so-called private sector area renewal initiative. The basic allocation is supplemented by an additional £190 million for estate action.

In order to implement that emergency programme and to aim to transfer all the families currently in bed and breakfast accommodation to permanent local authority housing, local authorities will need to incur revenue expenditure to support and subsidise the development programme. It seems likely that the Government will finally publish the results of their homelessness review towards the end of November. That is the AMA's view. Ministers will recall that I asked during the Committee stage when we could expect the report, given the onset of winter and the fact that a serious situation might arise in the centres of our major cities, certainly in London, if there is a severe winter. Several options have been floated in the press over the past few months; for example, that young single mothers with children should live in "unattractive but adequate hostels". Are those to be any different from bed and breakfast hostels?

While it is unlikely that the Government will introduce any new primary legislation on the subject, it is likely that a consultation paper or circular will be issued tightening up the local connection and the definition of vulnerability. Several classes of homelessness could be introduced with priority going to those people who have no roof at all over their heads. I have read recently in the press, as no doubt have other Members of the House, that an additional £100 million for a homelessness programme will be announced by the Chancellor in his Autumn Statement. It is likely that that money will come from local authority capital receipts, but very unlikely that it will be available to local authorities. Instead, it will or may probably go to housing associations which do not have the statutory duty to house homeless families. As well as some housing association schemes, those resources will go towards portable discounts and towards bringing some derelict properties into use. However, it should be noted that all that can be done through subordinate legislation and by amendments to the code of guidance on homelessness and is therefore beyond debate in either House of Parliament.

I have had to detain the House on this issue because, as I said in moving the amendment, the question of homelessness has not been dealt with in any depth in either this House or the other place. I have given some figures which debunk the idea that it is the fault of local authorities. They have brought 9,000 more houses into play while the Government have done nothing about the empties over which they have quite considerable control.

If the press is correct and £100 million is to be found and used to alleviate homelessness, perhaps the Minister will give us some indication of to whom that money will be made available. We may then be able to guide him or he may perhaps be willing to listen to some of our views as to the best areas in which to use the money. Although it is welcome, it is not a huge sum and it will take a great deal more than that. Nevertheless, if it is available, we should like to know where the Government suggest that it goes. We may then help by suggesting other places where it could be used more beneficially. I beg to move.

Lord Hylton

My Lords, I am grateful for the amendment because it gives me the opportunity to congratulate the Secretary of State, Mr. Christopher Patten, on his recent initiative designed to make it possible for local auhorities and housing associations to take people—particularly families with children—out of bed and breakfast accommodation and put them into permanent homes which are now standing empty. I am sure that that is something which we all welcome. I am delighted that the Secretary of State has succeeded in convincing the Treasury that that is a sensible and economic use of resources. It is something that has stood out a mile for years, but it is highly encouraging that it at last seems to have been appreciated and even acted on. It may be that the sum of money allocated is too small, but let us hope that it is a first instalment and, once it has been shown to work and to succeed, it can be increased.

I should like to ask the Minister—I do not know whether he can answer today; if not, perhaps he could let me know later—whether the first instalments of that money will be available in the current financial year for those authorities and housing associations that are in a position to begin to spend it right now. I know that it will be available in the coming financial year. It would be helpful if some of it at least could be available sooner than that to those who, as I said, are ready to use it.

Rather more worrying is the recent study of people who have been discharged from mental hospitals in London. I am sorry to say that it shows that around one-quarter of those discharged very soon become homeless. They fall through the supportive and preventive networks. They are not being picked up by social workers. They are going almost directly on to the streets, sleeping rough and so on.

I submit that such a situation makes a mockery of community care and all that is called for in the recent Griffiths Report. Can the Government indicate what they have in mind to prevent that situation?

4 p.m.

Baroness Fisher of Rednal

My Lords, I should like to support my noble friend on the Front Bench and amplify some of the points that he made. I am sure in my own mind that the Government do not understand the housing problems that exist throughout the country. They do not realise the difficulties faced by those people who are trying to manage local authority housing in the best way possible. They do not see the problems of the local authorities and brush them aside by talking about the Housing Corporation and housing associations.

The people housed by local authorities far out-number those involved with the Housing Corporation and housing associations, which in the main are not subjected to criticism. Most of the criticism levied against the provision of housing by local authorities is a result of the investment programme that the Government have put on to local authorities over a sustained period of time, in fact since 1980 just after this Government came to power.

The problem of housing the people of this country will never be overcome until the Government recognise quite clearly that some people will never be able to buy their houses. We cannot all be in the category which considers buying houses of £200,000 or even £100,000. The Government must face up to that reality.

The Government who tried to abolish wage councils so that wages are still kept low must face up to the fact that if one advocates low wages (by abolishing wages councils) accommodation must be provided for those who must live on low wages. The Government decided to give local authorities the opportunity to sell council houses. I was never a great believer in that course because I could see ultimately what would happen. Nevertheless it was beneficial to many people who were able to buy their own property. It was no help to those people who, in the words of the noble Earl, Lord Selkirk, were trying to reach the first rung on the housing ladder. It helped those who were already housed but did nothing for those who were not because the Government would not let the local authority spend the money it received from the sale of properties to provide housing for those who were still waiting.

The Bill that we are discussing today and have been discussing for many days now fails to address the real problem of providing houses for people. There is a fundamental underlying conflict between the Government and local authorities. I do not understand why there is that conflict. The local authorities were set up and work under statute; and they have done excellent work. Most noble Lords listening to this debate will acknowledge the work that they have done in the past in providing pure water, public transport and public housing. But there remains the conflict which the Government have with local authorities. The Government believe that local authorities—the councillors and officers who run them—are incompetent and spendthrift. In my opinion that is an indictment which is not sustainable.

My noble friend spoke about the homeless. I must ask the Minister in that context who will build the houses for the homeless? My noble friend spoke of the number of people who are homeless. Who will build housing for them? Where will the money come from? Stating the problem in those simple terms, we must then say that if we have a caring government, we have to get people out of the cardboard boxes and away from appalling hostel accommodation where in the main it is the landlords who do well from it.

The way in which the Government are tackling it will not get rid of the problem. All the documents that are available are not perhaps immediately obtainable and one reads of these matters only in the press. But one sees that there will be new figures produced for homelessness and they will be compiled in a different way. If one has not been in the local authority's area for so many months, one will be struck off the number. People might be struck off some specific figure. We all know how the figure for unemployment was juggled about until it came down. However, the homeless will not be housed simply by juggling figures. That is the most important thing. It is the most important feature of this Bill.

Comparing the number of properties that have been built with those that could be built—and this is a point put forward by my noble friend—one can see that there is something fundamentally wrong with housing in this country. The private builder and private contractor are providing houses for the people who can afford them. We have to make quite sure that someone provides houses for the people who cannot afford to purchase propery.

I have been involved for a very long time with Birmingham and I know the housing figures there. Last year such a large city as Birmingham did not give a contract for one new house to be built. It has a very long waiting list and the money has to be spent in trying to bring housing up to, date and on massive rehabilitation and modernisation. It spends money on doing those jobs which will keep properties in good condition so that they may be relet. The city concentrated on its empty properties. But consider a large city like Birmingham not being able to give one contract to build new houses! The other money that was given went to the Housing Corporation to build properties in the main for the elderly and on some occasions for the disabled.

I see that the Minister raises his head. I have some documentation on that matter. When I tried to raise the point earlier on the last item before he sat down it was not because I wanted to prolong the debate. I like to come to this House with knowledge of what I intend to speak on. When I went into the Printed Paper Office to pick up the amendments on this Bill, I said to the girl there, "Can I have the consultation document that is out about rent increases? She replied, "I am terribly sorry but we have only what is there. If you will give me the document number and anything else you know about it I shall see that you get it at your earliest convenience". It is not that I do not have the figures. When the Minister raised his head, perhaps he did not readily understand what I was talking about. It is important to understand what my noble friend said and to give support to what we are seeking in this amendment.

Baroness Faithfull

My Lords, perhaps I may make one comment on the subject of empty properties. The noble Baroness, Lady Fisher, has spoken about the very good housing authority that Birmingham has. We all know how good it is. However, in a number of places that I have visited lately there have been properties standing empty for three or four years. I asked at the town hall why the properties were empty.

Baroness Fisher of Rednal

My Lords, is the noble Baroness talking about Birmingham?

Baroness Faithfull

My Lords, no, I am not. When I asked, I was informed that the property was going to be developed. I have been in the same position. When I worked at Oxford we had many empty properties. Minimal standards having been put in—they were only minimal—at least some of those little Victorian houses with three rooms up and two rooms down were a home for tenants who were licensees. They could then be moved out when development took place. I implore local authorities—I do not refer to Birmingham, which has used all its properties—to use the properties that are standing empty.

Perhaps I may ask the Minister a question on timing. The bed and breakfast situation in London, in particular in Bayswater, is quite appalling. When will the local authorities be able to do something about it? The noble Lord, Lord Hylton, made the point that patients discharged from mental hospitals in many cases are now being discharged with no plans made for them. The Griffiths Report makes a very good recommendation that patients should not be discharged until a plan has been made for them. However, the implementation of the Griffiths Report will take some time. Is there any way in which the authorities can be enjoined to implement the recommendations in the Griffiths Report before the Bill comes before the House? This is a very important issue.

Lord Ross of Newport

My Lords, I should like to join with the noble Lord, Lord Hylton, in congratulating the Government on the fact, if it is true, that the new Secretary of State for the Environment has managed to obtain f,100 million from the Treasury to do something about the homeless situation, in particular about bed and breakfast accommodation. That is costing the nation £100 million a year at the present time and the figure keeps increasing.

The noble Baroness, Lady Faithfull, talked of short life accommodation. If this money is to go to a housing corporation, and therefore to housing associations—which one suspects will be the way in which it is distributed—I request that some of the money should be spent on putting some short life accommodation into good order. It is probably council owned but let to housing associations.

I know something about this issue because my son has recently left short life accommodation in south-east London. I have a letter from a lady who has been in such accommodation for nine years. Yet she still has no security. She is still a licensee. Where some of the properties have been put into good order, we should consider whether those people should now have security of tenure. Her children are grown up. She is not a person with children under 16 and therefore given priority, if that remains a priority after the review is finally published.

The situation on homelessness is so drastic and deplorable that we have to reconsider the issue. I was interested in the debate last night at about nine o'clock when the noble Lord, Lord Northfield, spoke about the schemes in Lewisham. I look at other parts of the United Kingdom. I look at Wales and Scotland, They have authorities which would be regional bodies in an English context. The Welsh landlord can step in and undertake to do things. When Mr. Tom King, Secretary of State for the Environment at the time, repealed the Silkin Act, the community land legislation, he maintained the provisions for the Welsh landlord. The Welsh landlord has done a very good job in Wales. Much land now owned is highly profitable. Land has been assembled and developed. We have to do that in some parts of this country. I would hand the houses built back to the local authorities. I totally agree with the noble Baroness, Lady Fisher. They would look after them very well if they were given the money to do so. We have to do that and do it fast.

I would go further. We have to reorganise local government and give real guts back to it. I believe therefore that we have to move to directly elected chief executives in the cities of our country. They can undertake action so much better than the Department of the Environment, which at the moment is making a thorough mess of it. All these views are in a speech that I gave to a housing centre trust of which I am president. I shall be very pleased to send copies to Members when it is published. I shall send it to the Minister, though I do not suppose that he will take any notice of it.

We are in a deplorable situation. We have to take drastic steps. If the £100 million is available the first move is to do something about the bed and breakfast situation. We should be profoundly grateful for that. There is much more to do after that. I make this plea. Let us give security of tenure to some of those people who are still licensees in short life accommodation.

4.15 p.m.

Lord Stallard

My Lords, the subject of homelessness always brings forth a response from government speakers about the obscenity of empty properties. Every time someone mentions homelessness, it is said always to be the fault of local authorities which are keeping their houses empty. We have explained a hundred times the numerous reasons that can force a local authority to keep some voids for some time, but it does not seem to go in. The thrust of the Government's policy seems to be to keep saying that local Labour authorities keep these properties as empty as possible, and to blame them for the homelessness. They say, "It is nothing to do with us. We cannot do anything about it. Let us blame Labour-controlled, high-spending local authorities". In particular they blame Camden, the local authority that I know best. It always gets the blame; it is the problem; it is the cause of homelessness. That view is a load of utter nonsense, as we all know. We have proved that not once but a hundred times.

Let us look at the tables. I do not know whether my noble friend read all the figures. I do not have the figures with me but we know that there are some London boroughs which are deliberately keeping properties empty. They have deliberately emptied the properties of council tenants. They are keeping the properties empty against the time when they can sell to private landlords. I do not know how many there are. I know of Wandsworth and Westminster. I know that it does not happen in Camden, Hackney or Islington. However, it occurs in those other areas. There are properties which are empty. If a Member on the government side can explain the policy that those two councils operate with regard to voids it might help to achieve a complete picture.

To put the local authority position into perspective, local authorities have far fewer empty properties in their possession than any other part of the housing sector. The percentage of local authority housing that is empty at the moment amounts to under 2.5 per cent. of its total stock. But the amount of empty properties in the hands of housing associations—and we all welcome housing associations in the field—is 2.69 per cent. of their stock. Central government are the worst offenders, though they never admit it. They never say, "We are sorry. We are sitting on empty properties that could be given owners". They are sitting on 5.97 per cent. of their stock. Nearly three times the amount of stock that is in local authority hands is in government hands. The figure for the owner-occupied sector, or private owners, is 4.13 per cent.

It suits the Government to hide the true figures of the stark reality of the homeless. It ought not to be a party political point. We have talked about council housing and council rents. That issue is exceedingly important. However, one of the most serious problems in the inner cities is homelessness. The issue was not covered in the Bill. The subject has not been thoroughly discussed; nor can it be thoroughly discussed on the basis of one amendment, though the amendment gives us a small chance to do so.

This is far more serious than some of the other problems with which we are dealing. For example, I am particularly disappointed that in drawing up the Bill the Government did not grasp the opportunity to do something practical and helpful about homelessness by improving the situation which exists at present for hundreds and thousands of people living in squalid conditions.

I need only quote from the Government's own 1987 survey. That report states quite frankly the conditions that exist in sheltered housing nation-wide when it states: It was exceedingly squalid and an indictment of national and local government policy over many years". That is true but the Government did not then tackle that when they had the opportunity presented by this Bill. They could have tackled some things which were wrong. For example, 81 per cent. of the 34,000 houses in multiple occupation lacked a satisfactory means of escape from fire and yet between 1983 and 1986, 1,052 people died as a result of fire in houses in multiple occupation. There is nothing in the Bill to deal with that situation although there could have been. If there is something, it will be on a "maybe" or "perhaps" basis. The Government will not bring in any statutory powers but only permissive powers as they always have.

We know from the latest figures available from the Institution of Environmental Health Officers that 3,550 means of escape notices were served by councils on houses in multiple occupation. That is an appalling state of affairs for those of us who are involved in these matters and who have seen the tragedies that have occurred in relation to fires.

We also know that another 13,360 houses were considered to be in such bad condition I hat control orders could have been made to safeguard tenants' health, safety and welfare. However, control orders need statutory bite. These matters should not be left to permissiveness; there should be some legal powers to implement these orders. Yet in 1986–87, although 13,360 houses were found to be in such bad condition that they needed control orders, only 23 such orders were made in the whole country.

Who is taking these problems seriously? The size and extent of the problem are known. The suffering and indignity for thousands of people living in bed and breakfast accommodation in appalling conditions is known. Here is a Bill to deal with local government and housing and yet it does nothing. It merely scratches at the problem and the Government may put in a few sentences as a sop to those of us who have argued for 20 years for statutory powers to control these problems. Statutory power is needed to force local authorities to examine these properties, to get the repairs done or to do them by default and then charge the landlord where the properties are in the private sector. That will not be done in this Bill.

The Government must come forward and prove that they are taking this seriously by dealing with some of the problems. Until they do that, they are not only using empty and meaningless words to thousands of people and certainly those people mentioned by the noble Lord, Lord Ross, who are sleeping in cardboard boxes on the embankment. That population is increasing and is sadly becoming younger. Who is looking and watching? We all walk past on the other side. We now have the opportunity presented by this Bill. However, we argue for hours as to how much we can increase council rents and whether we can double them and how we can get our own back on high-spending authorities, particularly if they are Labour. That is the purpose of this Bill. It does not deal with the real problems. Therefore, I am pleased to support the amendment moved by my noble friend.

The Earl of Caithness

My Lords, I return your Lordships to the amendment before us. Amendment No. 113C would add a further item to the list of items of expenditure which may be debited to the housing revenue account. It would provide that costs incurred by an authority in connection with its functions under Part III of the Housing Act 1985—housing the homeless—should, subject to a formula determined by the Secretary of State, be debited to the account. This amendment would, however, extend the scope of the HRA beyond that which it has now and beyond that which we have said it should have in the future.

Section 417 of the 1985 Act, on which Clause 71 of the present Bill is based, defined the housing revenue account as an account of transactions concerning a local authority's own housing stock; that is, houses, other dwellings and land provided largely under Part II of the 1985 Act.

Under Part III of the 1985 Act, an authority may discharge its duties to house the homeless either by making available accommodation of its own, or by securing the provision of accommodation from elsewhere, or by giving advice and assistance which will lead to accommodation being found. Only in the first of those cases—where an authority provides housing of its own and where that housing was provided under Part II of the 1985 Act or equivalent legislation—would expenditure be debited to the HRA. No separate debit item is required, because all the associated costs of providing the accommodation—expenditure on management, maintenance and loan charges—are already covered by the items in the schedule. The fact that the housing is being used to house a homeless person does not change the way it is treated within the housing revenue account.

All other expenditure connected with housing the homeless is a charge outside the HRA. I appreciate that, particularly in the case of housing advice, it is not always clear-cut whether the service provided is part of the normal landlord service or specifically a homelessness function. Nor is it always possible to identify with precision the costs incurred on one function or the other, especially where both are provided by the same local authority staff from the same office. But that is the case now, and authorities simply make a sensible apportionment of the costs to be debited on the one side or the other within the scope of the legislation. That is a matter between the local authority and its auditor, depending on the individual circumstances of each authority. It is not something which the Secretary of State could direct by means of a single formula to cover all authorities. It is for that reason that we cannot recommend the amendment to your Lordships.

I now turn to the matter which took up the greater part of our discussion; that is, a general debate on the homeless. The noble Lord who introduced this amendment was right to say that homelessness has not been debated very much during the course of this Bill. However, all your Lordships will be aware—and I remember it very vividly—that homelessness has been debated on numerous occasions in your Lordships' House, and quite rightly. I remember answering questions and debates on homelessness.

The greatest difference between this side of the House and noble Lords opposite is that noble Lords opposite seem to think that the only way of catering for the homeless is through local authority housing. As I have explained on more than one occasions it is a combination of local authority housing, private sector housing, housing associations and voluntary organisations which do such a good job in housing the homeless wherever they can.

As there has been a shift in government resources towards housing associations and other forms of finance—and indeed to local authorities to help the private sector—it is not surprising that the local authority new build stock has declined. It is not the first time that that has declined, because it did so even more rapidly under the Labour Party between 1976 and 1979, if I remember correctly.

As housing Minister I distinctly remember agreeing with my right honourable friend the Secretary of State and within government that extra funds should be transferred to the housing associations to take care of the problem about which your Lordships are concerned today. Let us remind ourselves that the housing associations do not merely house the elderly or the disabled but they cover the whole range of subsidised housing for those in low income employment.

There is another important point to remember which I mentioned earlier this afternoon. I stress that local authorities are not responsible for housing the homeless. They are responsible for helping to find accommodation, which is very different. If they use their own accommodation, which they are entitled to do—and I am glad to say that they have refurbished some properties which have not previously been put to their best use—that comes within the housing revenue account. That of course, because it is the local authority's own property, comes within the housing revenue account—

Baroness Fisher of Rednal

My Lords, I am very interested in what the noble Earl said, and I understand what we mean by "enabling". However, if he were the housing manager of a local authority, what would he do if tomorrow morning he had 10 homeless families outside his door and he had rung round all the housing associations in this area and they had said, "We are terribly sorry but we have no vacancies: we have nothing"? Does he compel a private landlord to have the families if he has a vacancy? I never understand what this word "enabling" means in the context of housing the homeless.

4.30 p.m.

The Earl of Caithness

My Lords, there are a number of opportunities open to somebody in the situation that the noble Baroness puts before me. We are talking about a supply-led matter and it cannot be predicted with accuracy. But there might be accommodation in private hands that could be used and that could be leased. I know that a number of schemes have been undertaken whereby, through leasing, a local authority has sought additional housing on a short-term basis in order to get itself through a problem. There is of course the unfortunate bed and breakfast accommodation which we seek to reduce and which the noble Baroness also mentioned.

Perhaps I may pick up a number of points that have been raised as this is an important matter. I know that they are not all strictly related to the amendment but I hope that your Lordships will forgive me. I was a little surprised when the noble Baroness, Lady Fisher, said that local authorities are above criticism. I found that very difficult to understand—

Baroness Fisher of Rednal

My Lords, I am sorry but I did not quite hear what the noble Earl said.

The Earl of Caithness

My Lords, I said that, as I understood it, the gist of the noble Baroness's remark was that local authorities are above criticism on housing. It is not for me to comment but I would merely draw your Lordships' attention to the numerous reports on the homeless situation where criticism has been made of local authorities. In particular I recall that the Audit Commission made some fairly telling points. It also made telling points against the Government: that I freely admit and that is why, among other reasons, we undertook a review of the whole situation of homelessness. We hope that the report of the review will be published in the very near future. For me to comment beyond that now would merely add to the speculation to which some of your Lordships have given voice this afternoon. It would be quite wrong to prejudge the outcome. I am sorry to have to keep the House waiting a little longer but I am sure your Lordships will agree that it would be wrong to prejudge the situation or to add to the press speculation.

The noble Lord, Lord Stallard, mentioned the question of empty properties. I remember answering a debate, in which the noble Lord took part, when I admitted the number of Government "empties". There were a considerable number—I think something like 16,000—but, as I said at the time, many of those properties are not in ideal locations for the homeless because they are well out in the country—

Baroness Seear

My Lords, I am sorry to interrupt the noble Earl. I have not so far taken part in this Bill, but all of us are obviously extremely concerned about homelessness, as I know is the noble Earl. It seems quite extraordinary that we are passing a housing Bill at the end of October if this report is to be published at the end of November. Presumably this report will produce recommendations which can be put into effect only by some form of legislation. Can the Minister give us an undertaking (because it will be too late for it to be included in this Bill) that parliamentary time will be available to take action on the report which is to be published at the end of November? This is a matter which is worrying people and which is quite outside party lines. One has only to walk around the streets of London to feel thoroughly ashamed. If we cannot get some relevant legislation included in this Bill—which would appear to be the obvious place for it as it is so plainly a housing matter—because it is going to be too late for that, will there be time for legislation on the report which is coming out at the end of November?

The Earl of Caithness

My Lords, whether legislation is needed or not will depend on the report, and I am not going to prejudge that. However, I am sure that, knowing the interest of your Lordships in this matter, your Lordships will seek to debate the report. That will be a matter to be dealt with through the usual channels.

I was saying to the noble Lord, Lord Stallard, that some of the Government properties available are not in areas which are suitable for housing the homeless: they are in areas where there is no homelessness problem. I am very concerned to make the point that the Government were not the laggards in this. Of course I would remind your Lordships that during the past 18 months or so we have given £74 million additional money to local authorities, particularly for the homeless. A special allocation has also been given to the housing associations in order to help meet this very serious problem; but until one actually gets the report it is difficult to comment further. I certainly know from experience your Lordships' deep concern over this matter.

Let me return to the amendment, which seeks to extend the scope of the HRA well beyond the provision that we have made in the Bill. I cannot commend that to your Lordships.

Lord Dean of Beswick

My Lords, in some respects the debate we have had has been wider than the amendment on the Marshalled List but has given us a chance to talk about the immediate situation of homelessness. I am grateful to the Minister for his reply, but not for its content, because I am saddened that the Government think their policy for dealing with homelessness is right. I think it is sad that the Government appear to be living in tram lines, from which they do not appear to be able to get out and do something about the situation.

I am glad that the noble Baroness, Lady Seear, joined in the debate about the forthcoming consultations and the paper that will be issued in due course. I have no doubt that we shall debate homelessness in depth when we have the report and its recommendations. This has been a genuine attempt to deal with homelessness as a start in the form of a crash programme. Nobody could say that the measures I have indicated would resolve the whole questions of homelessness as such but they would give a very quick start, and value for money, as a base for dealing with the problem. I am a little saddened that there appears to be no response from the Government on that particular basis.

I have said, as have others in your Lordships' House, that we are in a very dangerous situation indeed. We have got away with it during the last two or three winters because of their mildness. I have said before, as have other Members of your Lordships' House, that a terrible situation could occur in London, especially where people are sleeping rough, with some of them not even in cardboard boxes but in the streets, in doorways and so on. I do not intend to go into any further detail because I did that earlier in moving the amendment.

We can bandy statistics about between one another, but I was a little concerned when the noble Baroness, Lady Faithfull, who has now left the Chamber, once again appeared to tilt the criticism towards the local authorities. I was glad therefore that the noble Lord, Lord Stallard, reinforced the point that I made a few weeks ago in your Lordships' House. I quoted one local authority, in which this palace is situated, which is boarding up flats when there are people sleeping on the pavement and in boxes in its own area. It is boarding up flats so that it can place them on the market.

I was not aware until today that the same procedure and policies are being pursued in the borough of Wandsworth. Surely that borough can be said to be close to the epicentre of homelessness in this country. It seems contradictory that the Government are not using their best influences to persuade those two local authorities to move away from that sort of policy. There is no point in boarding up those flats or maisonettes because that only adds to the homelessness problem in the centre of London.

I would be doing less than my duty if I did not press this amendment based on the fact that the Minister's reply did not indicate anything like the urgency with which the Government should be tackling the problem of homelessness.

4.40 p.m.

On Question, Whether the said amendment (No. 113C) shall be agreed to?

Their Lordships divided: Contents, 90; Not-Contents, 127.

DIVISION NO. 2
CONTENTS
Addington, L.	Galpern, L.
Airedale, L.	Gladwyn, L.
Amherst, E.	Glenamara, L.
Ardwick, L.	Graham of Edmonton, L.
Attlee, E.	Grey, E.
Aylestone, L.	Hampton, L.
Birk, B.	Hayter, L.
Blease, L.	Houghton of Sowerby, L.
Bonham-Carter, L.	Hutchinson of Lullington, L.
Bottomley, L.	Hylton, L.
Brooks of Tremorfa, L.	Irving of Dartford, L.
Campbell of Eskan, L.	Jay, L.
Carmichael of Kelvingrove, L.	Jeger, B.
	Jenkins of Hillhead, L.
Cledwyn of Penrhos, L.	John-Mackie, L.
Cocks of Hartcliffe, L.	Kennet, L.
Cudlipp, L.	Kilmarnock, L.
David, B.	Kirkhill, L.
Dean of Beswick, L.	Leatherland, L.
Donaldson of Kingsbridge, L.	Lloyd of Kilgerran, L.
Dormand of Easington, L.	Lockwood, B.
Ennals, L.	Longford, E.
Ewart-Biggs, B.	Lovell-Davis, L.
Ezra, L.	McIntosh of Haringey, L.
Falkland, V.	Mais, L.
Fisher of Rednal, B.	Mason of Barnsley, L.
Fitt, L.	Milner of Leeds, L.
Foot, L.	Molloy, L.
Gallacher, L. [Teller.]	Mulley, L.

Murray of Epping Forest, L.	Serota, B.
Nicol, B.	Shackleton, L.
Northfield, L.	Stallard, L.
Oram, L.	Stedman, B.
Parry, L.	Stoddart of Swindon, L.
Phillips, B.	Strabolgi, L.
Pitt of Hampstead, L.	Taylor of Blackburn, L.
Ponsonby of Shulbrede, L. [Teller.]	Thomson of Monifieth, L.
	Tordoff, L.
Prys-Davies, L.	Turner of Camden, B.
Ripon, Bp.	Underhill, L.
Robson of Kiddington, B.	Wallace of Coslany, L.
Rochester, L.	Walston, L.
Ross of Newport, L.	Warnock, B.
Rugby, L.	Whaddon, L.
Seear, B.	White, B.
Sefton of Garston, L.	Williams of Elvel, L.

NOT-CONTENTS
Abinger, L.	Hooper, B.
Airey of Abingdon, B.	Hunter of Newington, L.
Alexander of Tunis, E.	Hylton-Foster, B.
Allerton, L.	Johnston of Rockport, L.
Annaly, L.	Kaberry of Adel, L.
Arran, E.	King of Wartnaby, L.
Auckland, L.	Kinloss, Ly.
Beloff, L.	Kinnaird, L.
Belstead, L.	Lauderdale, E.
Bessborough, E.	Long, V.
Birdwood, L.	Lucas of Chilworth, L.
Blatch, B.	Lyell, L.
Blyth, L.	McColl of Dulwich, L.
Boardman, L.	Mackay of Clashfern, L.
Borthwick, L.	Macleod of Borve, B.
Boyd-Carpenter, L.	Manton, L.
Butterworth, L.	Margadale, L.
Caithness, E.	Marley, L.
Campbell of Alloway, L.	Merrivale, L.
Campbell of Croy, L.	Mersey, V.
Carnegy of Lour, B.	Milverton, L.
Carnock, L.	Monk Bretton, L.
Carr of Hadley, L.	Montgomery of Alamein, V.
Carrington, L.	Mottistone, L.
Chorley, L.	Mowbray and Stourton, L.
Colnbrook, L.	Munster, E.
Colwyn, L.	Murton of Lindisfarne, L.
Constantine of Stanmore, L.	Nelson, E.
Cork and Orrery, E.	Norfolk, D.
Cottesloe, L.	Norrie, L.
Cox, B.	Nugent of Guildford, L.
Cranbrook, E.	Onslow, E.
Cullen of Ashbourne, L.	Orkney, E.
Darcy (de Knayth), B.	Orr-Ewing, L.
Davidson, V. [Teller.]	Oxfuird, V.
Denham, L. [Teller.]	Pender, L.
Dilhorne, V.	Porritt, L.
Eccles, V.	Pym, L.
Effingham, E.	Rankeillour, L.
Ellenborough, L.	Reay, L.
Elliot of Harwood, B.	St. Aldwyn, E.
Erroll of Hale, L.	St. Davids, V.
Faithfull, B.	St. John of Fawsley, L.
Fanshawe of Richmond, L.	Seebohm, L.
Fortescue, E.	Shannon, E.
Fraser of Kilmorack, L.	Sharples, B.
Gisborough, L.	Shaughnessy, L.
Glenarthur, L.	Stanley of Alderley, L.
Gray of Contin, L.	Strathcarron, L.
Greenway, L.	Strathmore and Kinghorne, E.
Gridley, L.
Hailsham of Saint Marylebone, L.	Strathspey, L.
	Swansea, L.
Halsbury, E.	Swinfen, L.
Harmar-Nicholls, L.	Teviot, L.
Harvington, L.	Thomas of Gwydir, L.
Havers, L.	Tranmire, L.
Henley, L.	Trefgarne, L.
Hesketh, L.	Trumpington, B.
Hives, L.	Tryon, L.
Hood, V.	Ullswater, V.

Vaux of Harrowden, L.	Wise, L.
Vinsion, L.	Wynford, L.
Waldegrave, E.	Young, B.
Whitelaw, V.

Resolved in the negative, and amendment disagreed to accordingly.

Clause 75 [Directions to secure proper accounting]:

4.58 p.m.

Lord Graham of Edmonton moved Amendment No. 113D: Page 83,1ine 20, at end insert— ("(2) The directions to be given under this section shall be made by statutory instrument which shall not be made unless a draft of it has been laid before, and approved by a resolution of, each House of Parliament.").

The noble Lord said: My Lords, this amendment is in the name of my noble friend Lord McIntosh of Haringey. The purpose of it is to ensure that, when rules for the operation of the ring-fenced HRA proper are introduced, Parliament has an opportunity to debate the important principles that will be included. We are of course speaking about very serious and important matters that affect the ability of a council to fulfil its housing obligations.

During an earlier debate the Minister indicated that when discussing matters we are perhaps straying beyond the narrow terms of the amendment. We appreciate and acknowledge, however, that at times the Minister himself is not constrained in going beyond the narrow confines of the amendment itself. All of these matters are interlocking and all aspects of housing finance impinge on other factors. During the debate on Part VI of this Bill in both Houses the Government have consistently fallen back for their defence on the excuse either that they have not yet made up their minds or that negotiations with the local authority associations are continuing.

We find this state of affairs very unsatisfactory indeed. Earlier, the noble Earl, Lord Caithness, chided my noble friend Lord McIntosh when he raised the question of the impossibility of the Opposition doing its duty, which is to challenge what the Executive is doing, properly, in good order, in good time and in a good place; namely, across the Chamber. The defence of the Minister on the earlier issue was that he was already in consultation with the authorities and that he expected to be able to make an announcement next week.

We believe that from time to time the Government exercise a cavalier attitude to the proper functioning of this House. We on the Opposition Benches and also, I believe, noble Lords on the Government Benches, have a duty not merely to act as Lobby fodder whenever a vote is cast; we have also to demonstrate outside the House that we follow matters very closely indeed. On this issue we do not wish to fall between two stools—first, that the Government have not made up their mind and, secondly, that they are consulting other people—and then find, as my noble friend Lord McIntosh indicated during the first debate this afternoon, that only when we actually see the colour of the Government's money as regards the issue of rents do we find—shall we say diplomatically—a gap between that which the Minister said on one occasion and what we find the true situation to be.

We understand that those two situations can arise: the Government may not have made up their mind and they are consulting other authorities. We do not wish Parliament to be deprived of the only opportunity to debate some very important issues. Our purpose in this Chamber is to debate, argue, challenge and very often to agree with the Government. We wish to fulfil our obligations as parliamentarians, not simply for our own satisfaction but for the thousands of people outside who follow what we are doing. In the main they are people with responsibilities in housing, associations and councils. It has also been demonstrated by my noble friends behind me on these Benches that there are hundreds of thousands, if not millions, of people who are vitally affected by what the Government say as regards rents, principles and policies.

The amendment suggests that Clause 75 as drafted is too limited in its scope. While the heart of the matter will be accounting practices, such practices will necessarily reflect important political and financial decisions that Parliament has not had an opportunity to debate. There is a precedent for this approach. During the passage of the Housing Act 1988 the House was concerned that the new role for the rent officer in respect of housing benefit was not clearly spelt out on the face of the Bill, and that the regulations provided for in that Bill clearly needed to be debated in Parliament. As a result, the Government introduced an amendment to allow that. It is something along those lines that we are asking the Minister to consider.

I believe that the situation to which I have referred is somewhat analogous to what we are seeking in this amendment. Parliament needs to be kept informed and to be given a chance to discuss important issues which, by the Government's own admission, are not currently resolved. We are limited in our opportunities for debate. This opportunity is not the last but the second to last, and it is no good the Government saying that they still have not made up their mind and are still consulting. The House is entitled to tell the Government what it believes to be the best way forward.

We believe that the best way forward is for the Government to accept the amendment or to propose to the House an alternative means of providing an opportunity for debate to take place. We have no illusions about winning votes. On some other occasions we might be concerned, but on this matter we are not concerned to win the vote. I repeat that we have a responsibility to ourselves to have the Minister explain to us how we can do our job effectively, especially in the light of the experience during the first debate. The Minister may believe that he is on good ground, but we have ample evidence from that debate to demonstrate that it is possible—without remotely challenging the integrity of the Minister—for there to be a difference between what the Minister says at one stage and what turns out to be the practice.

We should not have to rely on what we are told by those outside the House as regards, a particular situation. We have a duty to ask the Minister at the Dispatch Box—he is able and competent—to tell the House what he intends to do. It is for that purpose that we believe that this amendment is sensible and should be accepted. I beg to move.

Lord Boyd-Carpenter

My Lords, we are dealing with an extremely narrow amendment to a clause whose heading refers to accounting practices. All that this provision permits the Secretary of State to do is to lay down the accounting practices to be followed. I can imagine few subjects more unsuitable to the affirmative resolution procedure which this amendment seeks to impose. It would be largely a technical question as to what was the correct and proper accounting practice. It will be right for the Secretaries of State to lay that down in order to secure, among other things, a universal practice throughout the local authorities.

However, to bring the matter to both Houses of Parliament subject to the affirmative procedure would, first, be somewhat of an exaggeration of its significance and, secondly, a singularly ineffective method of dealing with what would be largely a technical question. The affirmative procedure is a very useful parliamentary expedient for dealing with substantial issues of principle. I suggest that it is a singularly ineffective method of dealing with technical accounting practices. Moreover, if one continues accepting amendments to introduce the affirmative resolution procedure one will be clogging up the parliamentary machine with a great deal of material which either goes through on the nod, and therefore serves very little purpose, or takes up valuable parliamentary time on a matter which is not appropriate.

I very much hope that your Lordships will not waste much time on this amendment. It is not a sensible proposal. It has always to be remembered that if, in a fit of lunacy, the Secretary of State should get his accounting practices wrong, under ordinary parliamentary procedure he can be questioned. He can be submitted to oral questions in either House through the usual channels or a debate can be arranged. There is no difficulty in calling him to account if any serious point should arise.

However, the affirmative procedure means that whatever happens and however trivial or technical the order the Secretary of State makes may be, it will have to go through the hoops of parliamentary procedure, waste parliamentary time and indeed hold up its own implementation. Of all the amendments we have seen this afternoon, this is the silliest.

Baroness Phillips

My Lords, the noble Lord postulates a rather dangerous philosophy. The suggestion that accounting is not important is very disturbing. Many people have this idea about balance-sheets. The accountants are so remarkable that they manage to mystify everybody. That is often the way in which strange affairs do not come to light until after a good deal of money has been lost.

The clause is headed: Directions to secure proper accounting". If the way to secure proper accounting is not the business of both Houses of Parliament in an Act of Parliament, I am not quite clear what is.

5 p.m.

Lord Hesketh

My Lords, as is so often the case, my noble friend Lord Boyd-Carpenter has already said it all for me. Part VI of the Bill grants the Secretary of State a range of powers to make directions and determinations to fill in the details of the new system. Noble Lords opposite and their colleagues in another place have expressed some disquiet about this. But the fact is that what we are doing is not new. The new powers will simply replace powers granted by the Housing Act 1985, which consolidates earlier Acts of 1972 and 1980. In all these statutes it has been accepted that detailed rules for keeping the housing revenue account and for calculating subsidy should be made by directions and determinations.

I do not think that this has caused any special difficulty. On the contrary, we believe that there would have been far greater trouble and difficulty if these rules had been subject to parliamentary procedures. The rules are very detailed; they are subject to frequent revision and updating; and they need to be easily capable of amendment so that we can come to the help of individual authorities which might otherwise be caught out by unforeseen, and unintended, consequences of the general rules.

Clause 75, which is the subject of this amendment, in fact corresponds to Section 420 of the 1985 Act. Indeed, Section 420 is if anything wider in its effect, since it allows the Secretary of State to prescribe specific corrections in the accounts of individual authorities. From 1st April 1990 this power will no longer be available. The Secretary of State will be able to vary the rules, but not to enforce their application in a particular way.

It is also of course the case that the power in Clause 75, like all the other direction and determination-making powers in this Part of the Bill, is subject to the requirement in Clause 84 for prior consultation with local authority associations and other professional bodies. We value this advice very much; and I hope that the way in which we have developed our detailed proposals for the new system, responding positively to many of the points made by the local authority associations during consultation, will be a token of our good intentions for the future.

I did not feel that in his remarks my noble friend Lord Boyd-Carpenter was taking accounting lightly. What he was taking lightly was whether or not this is the right way to approach providing the best answer for local authorities. That is a different matter. For the reasons I have given, we shall resist the amendment.

Lord Graham of Edmonton

My Lords, I am disappointed by that reply. I did not take it that the noble Lord, Lord Boyd-Carpenter, was in any way denigrating the importance of proper accounting. He felt that it was not for Parliament to be involved in detail. That is where I disagree. The Minister has told us that local authorities, accounting bodies and other organisations are properly involved in the nitty-gritty. I make a claim on behalf of parliamentarians. They have a responsibility. We are once removed from direct responsibility on behalf of constituents but every Member of this House is privy to pressure from various quarters. We are not ignorant of what is going on, especially in housing. We have a point of view.

The Minister told us—and the noble Lord, Lord Boyd-Carpenter, pursued the same line—that the balance struck within the phrase "proper accounting procedures" should not be capable of major dispute. He suggested that it is a minor matter. However, we must look at the kind of balance that can be struck within the so-called proper accounting procedures. There is the balance between the interests of tenants and those of ratepayers in regard to the housing revenue account, and whether the ratepayer is advantaged or disadvantaged to the benefit or disbenefit of the tenant. That is an important matter. We must also look at the timescale and how tight the ring fence around the housing revenue account will be. These factors are all part of proper accounting procedures.

We understand why the Minister does not wish to come back here. We understand that once they have decided on their policy, they do not wish anyone—and certainly not Parliament—to interfere. They want to get on with it. If we adopt that attitude, we shall be reneging on our responsibility to ensure that the legislation is satisfactory in every detail. In the financing of housing, perhaps more than in other matters, Parliament has a responsibility to exercise some oversight.

The noble Lord, Lord Boyd-Carpenter, who knows far more about these matters than I do, is correct in what he says about the place of the affirmative procedure in parliamentary affairs. Where we differ is that I believe that this is a proper exercise of that function. He takes a different view. I believe that the House should decide, and I intend to press the matter to a vote.

5.7 p.m.

On Question, Whether the said amendment (No. 113D) shall be agreed to?

Their Lordships divided: Contents, 90; Not-Contents, 111.

DIVISION NO. 3
CONTENTS
Addington, L.	Donaldson of Kingsbridge, L.
Ardwick, L.	Dormand of Easington, L.
Attlee, E.	Ewart-Biggs, B.
Aylestone, L.	Ezra, L.
Birk, B.	Falkland, V.
Blease, L.	Fisher of Rednal, B.
Bonham-Carter, L.	Fitt, L.
Bottomley, L.	Foot, L.
Brooks of Tremorfa, L.	Gallacher, L.
Bruce of Donington, L.	Galpern, L.
Carmichael of Kelvingrove, L.	Gladwyn, L.
	Glenamara, L.
Cledwyn of Penrhos, L.	Graham of Edmonton, L. [Teller.]
Cocks of Hartcliffe, L.
David, B.	Grey, E.
Dean of Beswick, L.	Hampton, L.

Harris of Greenwich, L.	Prys-Davies, L.
Houghton of Sowerby, L.	Ripon, Bp.
Hunt, L.	Robson of Kiddington, B.
Hutchinson of Lullington, L.	Rochester, L.
Irving of Dartford, L.	Ross of Newport, L.
Jay, L.	Sainsbury, L.
Jeger, B.	Seear, B.
Jenkins of Hillhead, L.	Sefton of Garston, L.
Kagan, L.	Serota, B.
Kilbracken, L.	Shackleton, L.
Kirkhill, L.	Shepherd, L.
Lloyd of Kilgerran, L.	Stallard, L.
Lockwood, B.	Stedman, B.
Longford, E.	Stoddart of Swindon, L.
Lovell-Davis, L.	Strabolgi, L.
McIntosh of Haringey, L.	Taylor of Blackburn, L.
Mais, L.	Taylor of Gryfe, L.
Mason of Barnsley, L.	Taylor of Mansfield, L.
Milner of Leeds, L.	Thomson of Monifieth, L.
Molloy, L.	Tordoff, L.
Monson, L.	Turner of Camden, B.
Mulley, L.	Underhill, L.
Murray of Epping Forest, L.	Wallace of Coslany, L.
Nicol, B.	Walston, L.
Northfield, L.	Warnock, B.
Oram, L.	Whaddon, L.
Parry, L.	White, B.
Phillips, B.	Williams of Elvel, L.
Pitt of Hampstead, L.	Winchilsea and Nottingham, E.
Ponsonby of Shulbrede, L. [Teller.]
	Winterbottom, L.

NOT-CONTENTS
Abinger, L.	Hesketh, L.
Ailesbury, M.	Hives, L.
Airey of Abingdon, B.	Hylton-Foster, B.
Alexander of Tunis, E.	Johnston of Rockport, L.
Allenby of Megiddo, V.	King of Wartnaby, L.
Allerton, L.	Lauderdale, E.
Annaly, L.	Lawrence, L.
Arran, E.	Layton, L.
Beloff, L.	Long, V.
Belstead, L.	Lucas of Chilworth, L.
Bessborough, E.	Lyell, L.
Birdwood, L.	McColl of Dulwich, L.
Blatch, B.	Mackay of Clashfern, L.
Boardman, L.	Macleod of Borve, B.
Borthwick, L.	Manton, L.
Boyd-Carpenter, L.	Margadale, L.
Butterworth, L.	Marley, L.
Caithness, E.	Maude of Strafford upon Avon, L.
Campbell of Alloway, L.
Campbell of Croy, L.	Merrivale, L.
Carnegy of Lour, B.	Mersey, V.
Carnock, L.	Milverton, L.
Carr of Hadley, L.	Monk Bretton, L.
Clitheroe, L.	Mottistone, L.
Colwyn, L.	Mowbray and Stourton, L.
Constantine of Stanmore, I[...]	Munster, E.
Cork and Orrery, E.	Murton of Lindisfarne, L.
Cottesloe, L.	Nelson, E.
Crickhowell, L.	Norfolk, D.
Cullen of Ashbourne, L.	Norrie, L.
Davidson, V. [Teller.]	Nugent of Guildford, L.
Denham, L. [Teller.]	Orkney, E.
Dilhorne, V.	Orr-Ewing, L.
Dunrossil, V.	Oxfuird, V.
Effingham, E.	Pender, L.
Elliot of Harwood, B.	Pym, L.
Erroll of Hale, L.	Rankeillour, L.
Faithfull, B.	Reay, L.
Fortescue, E.	Renwick, L.
Fraser of Kilmorack, L.	St. Davids, V.
Gisborough, L.	St. John of Fawsley, L.
Gray of Contin, L.	Seebohm, L.
Greenway, L.	Sharpies, B.
Hailsham of Saint Marylebone, L.	Somers, L.
	Stanley of Alderley, L.
Halsbury, E.	Stodart of Leaston, L.
Havers, L.	Strathcarron, L.
Henley, L.	Strathclyde, L.

Strathcona and Mount Royal, L.	Trumpington, B.
	Tryon, L.
Strathmore and Kinghorne, E.	Ullswater, V.
	Vaux of Harrowden, L.
Swansea, L.	Vinson, L.
Swinfen, L.	Waldegrave, E.
Teviot, L.	Whitelaw, V.
Thomas of Gwydir, L.	Wynford, L.
Tranmire, L.	Young, B.
Trefgarne, L.

Resolved in the negative, and amendment disagreed to accordingly.

5.14 p.m.

Lord McIntosh of Haringey

My Lords, before I move Amendment No. 113E I should like to refer to a matter raised by the noble Earl, Lord Caithness. He queried something I said earlier in the Bill's proceedings. I originally said that the Government had argued that rent increases this year would not exceed £3.95. In one sense I was wrong because the statement about the £3.95 was mine and not his. I said in Committee: I understood the Minister to say that rent increases over the next year would not be greater than £3.95 a week, which is roughly twice the increase that took place this year". [Official Report, 9/10/89; col 111.] The Minister responded, at col. 113: The noble Lord went on to say that we have already agreed a rental limit—I think I wrote this down correctly—of £3.95 next week. Again, he is wrong to use such a figure. This was a hypothetical figure given in an example to the local authorities' association". Strictly speaking I was wrong and I ought to apologise. On the other hand, I am bound to say that when the Minister tells me that the £3.95 figure is wrong I do not think he intended the House to know what is actually the case—which is that the figure was too low and the maximum increase was going to be £4.50 rather than £3.95. This could, perhaps, be described as a technical knock-out rather than a serious debating point on either side.

5.15 p.m.

Clause 76 [Housing Revenue Account subsidy]:

Lord McIntosh of Haringey moved Amendment No. 113E: Page 83, line 31, at end insert— ("(4) Before determining the total amount payable in any year under this section, the Secretary of State shall calculate the amount of Residual Debt Subsidy which would have been payable under section 79 below in that year if that section had applied to years after that beginning 1st April 1989 and if that section had applied to each local housing authority, whether or not housing subsidy was payable to them in the year beginning 1st April 1989. (5) In determining the total amount payable under this section, the Secretary of State shall not have regard to the amount calculated under subsection (4) above and shall assume that Residual Debt Subsidy is still payable on the terms for which provision is made in subsection (4) above.").

The noble Lord said: My Lords, this amendment is concerned with the complex issue of residual debt subsidy. To some extent it is a matter which was debated in Committee on 9th October. The noble Lord, Lord Hesketh, took part in the debate. We argued that there will still, in many cases, be outstanding debt left to be paid at the end of 1989–90; that is, before the new housing revenue account system is introduced. We wish to secure the assurance that from 1990–91 the loan charges associated with those debts will be eligible for the main housing revenue account subsidy just like any other housing debt.

The amendment requires that the Secretary of State should work out what would have been payable in the residual debt subsidy if that residual debt subsidy had continued to be payable after 1989–90 and if it had applied to all local authorities. I apologise for the hypothetical nature of some of these arguments. I can however assure noble Lords that this has been forced upon us by the provisions of the Bill rather than having been invented in our own minds. The amendment would stop the Secretary of State from taking the notional amount of residual debt subsidy into account when fixing the total level of subsidy.

We have argued that any debt which was still being paid off and subsidised on property which had been transferred out of the public sector ought not to be charged on the remaining tenants. I say this because the effect would not be that the ratepayers, or the community charge payers as they will be, as a whole, would be paying off any residual debts but that those council tenants who remain in property which is under the council's control would have the sole responsibility for those debts. That provision seemed to us to be deeply wrong and deeply unjust to council tenants. After all, the whole of the disposals programme has been urged upon local authorities—some were willing; others were less willing—by central government over a period of years.

However, I am not raising the political issue of disposals at this time. What I am saying is that the one group of people who ought not to be penalised by taking over responsibility for outstanding debts are those who have not exercised the right to buy. They have not done so because they did not wish to, because they were not able to, due to financial circumstances, or because of the kind of property in which they were living.

On 9th October (at col. 99 of Hansard) the noble Lord, Lord Hesketh, said that the new housing revenue account subsidy will meet the cost of any loan charges remaining after disposal and tenants will not meet them. That sounded all right and at that stage we were reassured. However, I am not now certain that that will happen.

The total amount of housing revenue account subsidy available will be determined not primarily by the level of loan charges which most local authorities must meet but by the Chancellor's annual decision on how much he is able to make available. That is the essence of the argument. On the basis of the Chancellor's statement and in the light of the total the department will take its decisions on rent, management and maintenance.

We do not doubt that the Minister was strictly correct in saying that 100 per cent. of the residual loan charges will be taken into account. What he did not say, and what he must now say in order to satisfy us, is that not only will it be taken into account but that it will be fully reflected in the determination of the housing revenue account subsidy. As we know from many debates on legislation in this House, "taken into account" means that attention is paid to it; but it is reflected in some part in the final judgment.

In order to be reassured that tenants are not paying residual debt subsidy we need to be told more than that it is being "taken into account". We need to be told that it is being taken into account fully and that there is no residual burden on the existing tenants. It is a fairly straightforward matter and one in which any noble Lord who has taken an interest in legislation will have been involved on many occasions. I confess that we were too easily satisfied by the response of the Minister in Committee. I hope that he will be able to clarify the issue in the way that we wish and that government, in justice, would wish. I beg to move.

Lord Hesketh

My Lords, the purpose of this amendment is to preserve the effects of residual debt subsidy beyond 31st March 1990 and to extend its benefits to all local authorities. In Committee I felt that there was still some misunderstanding of this subject so I am glad of the opportunity to clear up the matter.

In the new debt subsidy system, each authority's entitlement to HRA subsidy will be calculated on the basis of a notional housing revenue account for the authority. The components of the notional account will be rents, management and maintenance spending, rent rebates, interest and loan charges. The loan charges component will consist of the full amount of the actual loan charges on outstanding HRA loans at 31st March 1990.

In other words, all the loan charges which would have been eligible for residual debt subsidy will automatically be taken into account in calculating HRA subsidy. That will be true for all authorities whether or not they are in fact within the scope of residual debt subsidy.

If we proceed with the amendment some authorities would have the same costs subsidised twice over. Everyone would have the full amount of their loan charges taken into account in the HRA subsidy calculation. In addition, some authorities would benefit from the amendment by having the same loan charges subsidised all over again. I appreciate that the noble Lord, Lord McIntosh, always has a desire to be generous with taxpayers' money but we believe that that may be going a little too far. We have said in the clearest possible terms that all loan charges brought into the new HRA will be fully taken into account. That means 100 per cent. I cannot give a commitment going beyond that and urge the noble Lord to withdraw his amendment.

Lord McIntosh of Haringey

My Lords, we are almost there but before the Minister sits down I wish to ask one further question. It is reassuring to know that they will be taken into account 100 per cent. Is that true for every local authoriy or will some local authorities not have their residual debt subsidy taken into account 100 per cent. while others will have more taken into account?

Lord Hesketh

My Lords, the provision applies to all local authorities, as I said earlier, whether or not they fall within the scope of the residual debt subsidy.

Lord McIntosh of Haringey

My Lords, I am grateful for that reply. It sounds as though we have achieved our intention. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 77 [Calculation of Housing Revenue Account subsidy]:

Lord Graham of Edmonton moved Amendment No. 113F: Page 83, line 36, at end insert— ("( ) Any formula referred to in subsection (1) above shall be constructed such that for any authority the subsidy payable in any one year shall not be determined by reference to any increase in the notional rental income for that authority as directed by the Secretary of State.").

The noble Lord said: My Lords, the amendment takes forward the arguments about 1.he true impact of the changes in rent paid by council tenants. We make particular reference to the use of the term "the soft landing" which has been used to imply that the impact will not be as hard or harsh as might otherwise be the case. We wish to probe and test what the Government foresee as being the true impact of the change not only during the next year—which is likely to be the year before a general election when such issues will assume a greater importance—but beyond that. We believe that the landing may not be as soft as the House has been led to believe.

In an earlier debate the noble Earl, Lord Caithness, said that the Government do not expect rents to rise too quickly or too far and that they stand by that assurance. I shall quote to the Minister a number of authorities whose rents have been assessed not by the AMA or ALA but by the LBA, the Conservative-controlled local authority association, showing that council rents will increase by more than 100 per cent. over five years.

I have a number of questions for the Minister although I appreciate that he may not be able to answer them all immediately. First, without the notional rent increases, how can a figure for subsidy be derived for the purpose of the public expenditure planning process? In other words, we are having masked from us the difficulty of being able to be specific about the notional rent increases. They can vary and are likely to be greater in the South-East than in many other places.

Without an assurance on the scale of the proposed increases, what are tenants to make of the Government's commitment to a soft landing? If in over-subsidised areas rents are to move to realistic levels—as the Minister said on 9th October at col. 113 of Hansard—what levels are realistic? How can the Government have a policy which is words without figures when the financial basis for implementing that policy depends crucially upon the figures?

We have already had a general debate on capital value rents and their longer-term impact. We have also had an earlier debate in respect of Amendment No. 113A in which it was established that the maximum increase in rent levels will not be £3.95 but could be £4.50. What is the relationship between rents and affordability? How will the Minister satisfy himself that tenants who are subjected to what we consider to be stiff increases are capable of paying? How can there be a soft landing or a general tapering of the impact on tenants? In this context, how soft is "soft"?

We have already debated the Minister's assumptions on the percentage of rents collected by authorities on an assumed 100 per cent. collection rate with tenants making up the shortfall in their rents. I repeat, I have obtained these figures from the London Boroughs Association. They are based on the DoE figures which have been made available to DoE officials. That information strongly suggests that over the next five years 49 authorities—48 of which are in the South-East—will face maximum rent increases anyway for the next 10 years and beyond to reach capital value rents. For instance, in Bexley the increase over five years on current rents will be 108 per cent. I wonder how loudly that will be trumpeted in the local elections next year in the London Borough of Bexley. If people support the policies of the council and the Government, they will be voting for rent increases which will double over the next five years.

In Reading, the increase will be 102 per cent.; in Slough, 107 per cent.; in South Cambridge, 117 per cent.; in Exeter, 114 per cent.; in Dacorum, 122 per cent.; in East Hertfordshire, 104 per cent.; in North Hertfordshire, 112 per cent.; in Maidstone, 120 per cent.; in Oxford, 124 per cent. These figures do not strike me as being soft landings. They are only for the South-East which is likely to be the more regionally affected area. The Minister must be very convincing in telling the House that he does not feel that our amendment is not at least sensible. He may not like it, he may not want the proscriptions which it lays upon him. The amendment says: Any formula referred to in subsection (1) above shall be constructed such that for any authority the subsidy payable in any one year shall not be determined by reference to any increase in the notional rental income for that authority as directed by the Secretary of State". I beg to move.

Baroness Fisher of Rednal

My Lords, I do not know what "soft landing" means. I thought it was something to do with jumping with a parachute, but evidently it is not. Can the Minister tell me whether "soft landing" means the same as "affordability"? Does it mean what the Government suggested in the past, that rent levels should be related to average earnings in any area? What does it mean? Does it mean just an election ploy?

5.30 p.m.

The Earl of Caithness

My Lords, the amendment would run directly contrary to the provisions of subsection (4), and so would make a nonsense of the proposals which we put forward yesterday. In short, like the first amendment, it attacks the heart of what we are discussing and if agreed would drive a coach and horses through this part of the Bill.

The Secretary of State will assume a national rent figure each year as a step on the route to working out different rent guidelines for different authorities. Detailed proposals for how this should be done are contained in the consultation papers issued by the Department of the Environment yesterday. The amendment prevents the Secretary of State making an assumption about the national rent income, so that the effect would be to prevent—

Lord Graham of Edmonton

My Lords, I agree that there is an error in the wording of the amendment, but I moved the words "notional rent" and not "national rent". An error occurred in the printing.

The Earl of Caithness

My Lords, if there is an error then that gives me a great deal of difficulty because I have taken the amendment as it is shown on the Marshalled List. It is difficult for me to second-guess what the noble Lord, Lord Graham of Edmonton, intends.

Lord McIntosh of Haringey

My Lords, the amendment is in my name and I was responsible for putting it down. I can only apologise; I did not notice the error until we saw it this morning. We typed "national", we corrected it to "notional" in the draft and hoped that it would also have been corrected in the printing. I am responsible and I must apologise to the Minister for the error.

Lord Graham of Edmonton

My Lords, I wonder whether the Minister might adopt the novel practice of listening to what I said and answering what I said, without necessarily using the brief.

The Deputy Speaker (Lord Nugent of Guildford)

My Lords, perhaps I may assist the noble Lord, Lord Graham of Edmonton, by once again putting the amendment with the necessary correction.

Amendment proposed: Page 83, line 36, at end insert the words on the Marshalled List, with the amendment of the last word in the third line to "notional" instead of "national".

The Earl of Caithness

My Lords, I am very happy to speak to the words used by the noble Lord, Lord Graham of Edmonton. I examined the amendment and we considered whether the noble Lord meant "notional" or "national", reading it in both ways, I am happy to tell the noble Lord. I have to tell him that the situation is even worse because this is a totally cuckoo amendment using "notional". Only in fairyland could anyone think that a subsidy which is intended to cover a potential deficit could be calculated without knowing the size of the deficit. As there is no inflation in the fairyland of the noble Lord, Lord Graham, rents never need to go up for any reason at all.

However, we do not live in fairyland; we live in the real world. We understand that subsidy is intended to supplement an authority's income from rents. So we have to acknowledge that an annual subsidy system must make provision for annual increases in rents. These have to be notional rents, so that the Exchequer—that is, the taxpayer—does not pay an open-ended subsidy to low rents. As my noble friend Lord Hesketh recently commented to the noble Lord, Lord McIntosh of Haringey, it is interesting how generous the Party opposite wish to be with taxpayers' money.

The noble Lord, Lord Graham of Edmonton, carried on with the exemplifications of the London Boroughs Association, as he did at Committee stage. That organisation took our earlier exemplification of the rent mechanism and projected it forward over five and 10 years. It did so despite being told that each year's rent guidelines would be determined anew. We said quite clearly that we had no targets. I have said that to your Lordships on many occasions, I repeat it now. I hope that the noble Lord, Lord Graham of Edmonton, is listening: we have no targets.

Each year's rent determination is a new decision. There is no justification whatever for supposing that this year's rent increase will be matched every year over five or 10 years, as the London Boroughs Association said. So the whole basis of the noble Lord's comments, which I wrote down, that there will be a 100 per cent. increase over five years is a false assumption. He also said that we are aiming for capital value rents: no, my Lords, that is based on a false assumption.

Then the noble Lord used the words "soft landing" which the noble Baroness picked up. It is quite interesting to look at the information which was put out yesterday. We have assumed that in the northern region only one local authority will be above a rent increase of 95p. That is the minimum and it is still less than inflation. I take the noble Lord south a little to Yorkshire, to Humberside. He will find there that only two local authorities are above 95p. Perhaps I may concentrate particularly on the South East, and look first at Greater London. There, 19 local authorities will be at the assumed limit of £4.50; none will be at 95p; 14 will be at less than £4.50.

The noble Lord tried to instil some fear into the electorate about rent increases in the South East. I have to tell him that eight local authorities are assumed to have a rent increase of 95p. That is below inflation. I call that a pretty soft landing.

Lord Underhill

My Lords, before the noble Earl sits down, we understand that the information was supplied to the DoE by the London Boroughs Association, which is Conservative-controlled. Can he say what reply has been given to the LBA by DoE officials?

The Earl of Caithness

No, my Lords, I am afraid I do not possess that information; I am not in the department and do not know what it has said. I can only repeat what I said earlier, that the department has told the London Boroughs Association that, as has been said on numerous occasions by Ministers, there are no targets. If we were to make targets it would be on a false basis.

Lord Graham of Edmonton

My Lords, I am grateful to the Minister for the information that he has given to the House. We, with others outside the House, will read carefully what he has said. I certainly shall not press this amendment to a Division. It is extraordinary that the Government never make mistakes and are never guilty of leading people to believe, wrongly, that the assumptions they draw from statements and inferences are incorrect. If only the Government would from time to time acknowledge that they have been too imprecise or acknowledge that there is a case for taking matters more slowly and carefully and explaining to people outside that they have matters wrong.

If what the Minister is telling us is the antithesis of what I told the House, and he is correct—I told the House that 48 out of 49 authorities in the South-East would face deleterious effects from this part of the legislation—I acknowledge that my remarks were based on wrong assumptions. The Minister is now telling the House and the country pit large that the number of council tenants who will be gravely adversely affected under the new regime is a tiny handful. I advise the Minister to wait and see.

If the impact of the legislation is to have such a tiny bearing upon so few people, one must ask why the Government are introducing it. People outside the House are not fools. They and their advisers are not only looking at what the Minister says on a piece of paper, but also at their experience of how things have turned out from words on similar pieces of paper of seven and 10 years ago. However, I am not in the business of frightening people. If the Minister is correct and I have used assumptions based upon a false premise, that is not a 'very happy or satisfactory way to conduct debates. I shall be in touch with the LBA to ask it not only to explain how it went wrong, but also why people like myself, who try to speak on behalf of that body, can be so wrongfooted by the Minister.

However, I suspect that the answer that I shall receive will not be wholly to the liking of the Minister. If that is the case, we shall find another opportunity to raise the matter, if not directly across the Floor of the House then in some other way. The Minister has been very open, honest and willing to listen to arguments. If I have used a brief which has misled the House, I shall take the necessary steps to remedy that. However, I believe the Minister has sought to put a gloss upon what is seen by those outside to be a difficult matter. It intrigues me, when we are talking about a sum of less than 95p, that housing rents need to be raised above the level of inflation. I know that inflation goes up and down and I believe that the Minister told us that some of the increases were less than the rate of inflation. However, housing is such a crucial element to people who are bereft of major support that even £1 or £2 can make a big difference between being able to live sensibly and happily or in great difficulty. However, most Members of this House, would take such an increase in their stride. Nevertheless, we have had a good run on this matter and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

5.45 p.m.

Lord McIntosh of Haringey moved Amendment No. 113G: Page 83, line 40, at end insert— ("( ) The amount of Housing Revenue Account subsidy payable to a local housing authority for a year shall be calculated such that any expenditure debited to the account under Item 2 to Part II, Schedule 4 of this Act shall be included within the formula described in subsection (1) above.").

The noble Lord said: My Lords, this amendment is concerned with the issue of capital charges lawfully debited to the housing revenue account. We are anxious to ensure that the Government are not proposing new restrictions which will affect a local authority's ability to spend its capital allocation on housing.

As we understand the situation at present, the Bill will allow a local authority to decide how its borrowing approvals will be allocated between service areas. We discussed this to some extent in debate yesterday. This means that if a local authority had any slack in other service areas (although I cannot for the life of me think of many authorities which would have considerable slack) it could, if it thought fit, increase the expenditure on housing by transferring it from the other service areas. I understand that the Government do not care for that prospect because if capital charges on housing can be debited to the housing revenue account, they could be fully eligible for subsidy at the rate of 100 per cent. Why should a local authority not use all its approvals on housing where expenditure will attract this level of subsidy which is higher than in other service areas?

I do not think that I am revealing any deep secret here. I am sure the Government are perfectly well aware of the implications of their own legislation. Although we appreciate the Government's need to secure control over their subsidies, we do not want to find that in seeking to maintain control over their subsidies, the Government are thereby further affecting not how central government spend their own money but how local authorities spend their own money. In other words, we are afraid that the Government will find some other way of limiting housing projects—for example, they may limit the amount of subsidy that is paid to an authority in any year by reference to the housing investment programme allocation, or to some notional basic credit approval for housing.

We recognise in this amendment that capital expenditure which is lawfully debited to the housing revenue account would be eligible for subsidy. The effect of that would be that the subsidy would be based on actual expenditure rather than expenditure being based on the prospect of subsidy. I think that is the right way round. I think that subsidy should be based on what authorities are actually spending on housing, and what they spend on housing according to the Government's own legislation is dependent on those capital charges which can lawfully be debited to the housing revenue account.

I am not suggesting that we shall test the opinion of the House on this amendment, but it is a matter where the Government need to take the opportunity to clarify their intentions with regard to subsidy on the housing revenue account and this issue of the possibility of transfer between one service area and another. I beg to move.

The Earl of Caithness

My Lords, this amendment would bring into subsidy an item of expenditure which in the Government's proposals will not be included in the subsidy calculation at all. Item 2 in Part II of Schedule 4 specifically allows authorities to charge the cost of capital works directly to the housing revenue account. Most capital works are of course financed by borrowing, in which case the loan charges are included in the HRA and taken into account in subsidy; or by drawing on usable receipts, in which case the HRA is unaffected. But some capital works may be financed directly from revenue and the item in the schedule allows for this.

However, there is a big difference between allowing authorities the freedom to undertake this extra spending and freeing them of any actual cost by paying subsidy on whatever they spend. The Government issue capital allocations each year to authorise capital spending financed from borrowing; and, as I have said, subject to an annual limit the loan charges on this borrowing will be fully reflected in subsidy. In other words, the subsidy system already provides for the cost of capital works to be taken into account. If we went further than this by paying subsidy on capital works financed directly from revenue, we would again be rewarding high spenders regardless of need while doing nothing for the more prudent authorities. As your Lordships will be aware, the more effective directing and targeting of limited resources is one of the main points of this Bill.

To answer some of the points raised by the noble Lord, Lord McIntosh, authorities will be free to use their credit approvals each year, either for HRA or non-HRA purposes. On the non-HRA side, we shall take their spending into account in revenue support grant. On the HRA side we shall take the loan charges into account in subsidy. We shall have to make an assumption for both grant and subsidy as to how the authorities will use their credit approvals and we shall pay subsidy up to the assumed limit.

As a quid pro quo we also propose the abolition of a set of value-for-money controls known as admissible cost limits. Those can only be abolished if the proposed new limit is accepted on the new loan charges end year.

Lord McIntosh of Haringey

My Lords, that reply degenerated into such a list of acronyms that I did not even know that the noble Earl had finished. I apologise for the delay in rising to my feet. I still think that he did not turn over the page.

I believe that there is some misunderstanding between us. It may be my fault. I did not intend the amendment to be about housing expenditure financed from revenue. I understood my amendment to refer to capital charges lawfully debited to the housing revenue account. That was what we intended. If the amendment is defective in that way that is another reason why we should withdraw it.

The Minister said a number of things. I pricked up my ears when I heard the words "quid pro quo" because I assumed that he was flogging some form of concession. Under the circumstances the best thing for me to do is to see whether or not that is correct.

The Earl of Caithness

My Lords, I am grateful to the noble Lord for giving way. I misread something that I intended to say to the House. When I spoke about the abolition of admissible cost limits I said that they could only be abolished if the proposed new limit was accepted on new loan charges "end year". I meant "each year".

Lord McIntosh of Haringey

My Lords, I do not know whether that helps, but it is as well to have the record straight. We shall have to read carefully what the Minister said. In order to do so, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 113H not moved.]

Lord Graham of Edmonton moved Amendment No. 113J: Page 84, line 31, at end insert— ("Without prejudice to the generality of subsection (3) above, a formula for the year beginning 1st April 1991 shall be calculated such that any expenditure debited to the account in accordance with Schedule 4 to this Act during the year commencing 1st April 1990 shall be fully taken into account in the calculation.").

The noble Lord said: My Lords, a similar amendment was introduced in Committee and the debate at that stage is familiar to the House. The current amendment provides that, in the absence of any decision by the Government to date, any expenditure lawfully debited to the HRA in accordance with Schedule 4 in the financial year 1990–91 will be fully eligible for subsidy in future years, even if during the next year new rules are introduced which have the effect of limiting the extent to which new items of expenditure can be debated.

The Opposition consider that some aspects of the matter are crucially important. We believe, however, that in Committee the Minister misunderstood the intention of the amendment, assuming that it referred to the repairs account. In fact it goes wider. The Government have been pressed to accept that if the ring fence is tightened in a future year, after the discussions that have been promised, any expenditure lawfully debited to the HRA before that tightening will continue to be eligible for subsidy.

In withdrawing an earlier amendment I said that we would study what the Minister had said and come back to the matter. Is the Minister in a position to answer questions arising from what he said on that previous occasion? First, how is the transition between next year's apparently flexible HRA regime and the more restrictive HRA to be managed? What are the guidelines and the measuring rods? Secondly, what assurances can he give local authorities that any lawful practices which they adopt for next year will not be outlawed retrospectively in terms of future years' subsidy entitlement? Thirdly, is there to be total flexibility within the parameters of Schedule 4 in 1990–91, or is it the Government's intention to introduce rules, however loosely drawn, governing the operation of the HRA in 1990–91?

We believe that the Government could have deferred their proposals. By their own admission the Government will be unable to introduce the proposals as planned in April 1990 and they have no accurate data on management and maintenance. Their capital value rents formula is flawed and, we believe, totally inappropriate.

I understand that the local authority associations have been willing to co-operate with officials in working towards a workable solution. I am told that the local authority association negotiators no longer have any faith in the system being introduced because the Government's determination to introduce changes in April 1990 means that not enough time has been allowed for a satisfactory system to be devised. It is not merely those of us on this side of the House who say that. The Minister will be aware that that has been said in many quarters.

In the light of the Minister's inflexibility regarding time we ask him to help authorities to try to do what they say is impossible. First, it is important that the Minister should give a strong reassurance to authorities that in calculating subsidy entitlement for 1990–91 he is willing to use as his starting point current local authority practice on the HRA as revealed by his officials' own survey of local authorities. That survey concluded that the Government, would be leaving the boundary fairly loosely drawn". If that is the situation I believe that there is a strong case for using that as a starting point. The Minister's officials' survey also reported: The responses to the questionnaire do not appear to suggest any pressing need for new definitions to be in place for 1990–91". If the Minister received that advice from his officials we are genuinely puzzled as to the imperative which drives him to try to put in place a system which is disliked, if not detested. Using such a starting point means that the Government would continue to allow the local authority discretion as to what was in or out of its HRA, including the discretion to include items—which would be eligible for subsidy—which it is widely believed would be excluded under the so-called tighter definitions, namely estate shops and wardens. If that subsidy is not available the cost of those community services would fall entirely on the tenants. As with capitalised repairs, it would cast doubt on the Government's sincerity about wanting to achieve the "soft landing" mentioned in the July 1988 consultation paper. It read: The introduction of the new system should not of itself introduce any sharp change in the level of rents".

The debates today have covered the extent to which the changes will be sharp and their impact on the tenants. We can foresee the possibility that what is included in the calculation would have a bearing upon the level of rents that need to be charged to the tenants.

Secondly, there is the question of any changes to that practice which local authorities introduce between now and April 1991, taking into account any further ministerial guidance that might be issued. We believe that, without such an assurance, it is difficult for authorities to know how to manage their HRA and assess the likely subsidy implications of any change in practice. We are very much concerned about the levels of rents that will be borne by council tenants in the future under the new regime.

It is the Government's choice to introduce a half-baked system rather than wait for a full and proper commencement at a later date. Consequently, it is they who must give that clear undertaking to local authorities in today's debate. I am sure that the Minister acknowledges that the people who brief us are responsible officials of responsible local authority associations. In that sense, without putting too fine a point on it, we speak on behalf of local authorities which are not fighting the political battle. That political battle is being won in this House by the Government who have won it in another place. We have no complaint about that, but we are concerned about what it means in practice. If the Government could only have the grace to recognise from time to time that the impact of what they put into practice is sometimes less desirable than what they believe is right in principle, they would earn the gratitude of the House, tenants and authorities. I beg to move.

6 p.m.

The Earl of Caithness

My Lords, as I am sure the noble Lord, Lord Graham of Edmonton, will realise, there has been considerable discussion with the local authority associations. The Government have been quick to take on board the points of concern raised by the local authorities. I remember discussions with the authorities after which I was happy to go away and try to meet their concerns. Of course, we shall continue to do so. In this House, we have been happy to bring forward amendments which take into account the arguments. The Government will not suddenly change. We shall continue to listen to what is said both inside and outside the House.

Perhaps I may turn to the amendment. It is not often that I say this, but this amendment is a nonsense amendment. If an authority disposed of a significant proportion of its housing stock in the first year, clearly its HRA expenditure in the second year would be reduced. Amendment No. 113J, taken literally, would prevent us from taking that into account.

There is, however, a more fundamental point on which I should like to dwell for a moment or two. In the new system, each authority's entitlement to HRA subsidy will be based on a notional housing revenue account for the year. The notional account will include allowances for each of the five main items of income and expenditure—that is, rent, management and maintenance spending, interest, loan charges and rent rebates. Within certain limits, the notional account will reflect the actual amount of interest, loan charges and rent rebates. Only on rents and on management and maintenance are the actual and the notional liable to be very different. So an authority which follows our guidelines each year on rents and management and maintenance will receive enough subsidy to balance the account.

The authority might of course choose to undertake more expenditure on management and maintenance, perhaps by increasing its rents or by drawing on balances from previous years, or it might choose to hold down its rents by curtailing its expenditure or again by drawing on balances. That is fine; the system is designed to leave authorities with those choices. But an authority should not be able, by holding down rents or by increasing its expenditure, to obtain an automatic increase in its subsidy entitlement. Otherwise, we would have a regressive system which rewarded high spending and low rents with more and more subsidy each year, regardless of need, while other authorities which prudently stayed within our guidelines would lose out. That would be the effect of this amendment and I cannot believe that that is what the noble Lord, Lord Graham of Edmonton, really wants.

To answer some of the points raised by the noble Lord, I confirm that the new HRA can start off with the same contents as the old. That is to help local authorities. Our new management and maintenance allowance is calculated on the basis of actual past spending and allows for a 3 per cent. real increase for everyone. Loan charges undertaken next year will be taken into account for subsidy up to the limit allowed each year. In subsequent years those loan charges will continue to be taken into account at 100 per cent. Management and maintenance expenditure next year is calculated as a notional sum, but it allows for the loose definition of the ring fence. If we tighten the ring fence in subsequent years, that might restrict subsidy. That follows naturally, but it would be the result of a careful appraisal following consultations. If the ring fence is relaxed, subsidy will again follow suit. If my memory serves me right, I recall telling noble Lords in Committee that there were ongoing consultations with the local authorities. I believe that that is the case, but I hope that what I have said today will comfort those outside the House who advise the noble Lord.

Lord Graham of Edmonton

My Lords, I am grateful to the Minister for his explanations, but he does a grave injustice to the overwhelming majority of authorities which are at the sharp end in managing the housing revenue account by using as a defence or a ploy for the legislation the idea that some authorities would deliberately set out to be high spending and thus earn larger subsidies in subsequent years. The Minister said that he could not believe that I would believe that that would happen. He is correct. I do not believe that there are many—not that there are not some—within 400 authorities or more. Of course, there are one or two which might deliberately try to do so. How long does the Minister think that they would get away with it or that someone who was so reckless and malevolent in his attitude towards legislation would deliberately seek to flaunt and challenge the Government?

If any body has been through a sea change in attitude over the past 10 years, it is local government. It completely detests what the Government want to impose upon it in so many ways but recognises that there are some ways which are profitable and some which are an exercise in futility. Challenging the Government directly to the extent that punitive measures far greater than any benefits that might be obtained for tenants or ratepayers, or in general, are imposed, is not seen as sensible. As we have said more than once, the Government and their advisers have an obsession, based, perhaps genuinely, upon the activity of some authorities in the early 1980s. They persist in imposing punishment upon the totality of local authorities by way of a regime of this kind.

The Minister says that, if we start off in the first year by being reasonable, it is possible that the ring fence will be tightened in future. He must be able to tell the House the circumstances in which the ring fence would be drawn tighter in future years. I hope that he does not use the red herring that one or two authorities have decided to use to try to buck the system and act in a cavalier fashion. It would certainly be helpful if the Minister could deal with that point. As he said, the ring fence could be tightened in future and then slackened. It is the uncertainty in that field, as in many others, that bedevils the ability of councils to be good landlords.

The Earl of Caithness

My Lords, with the leave of the House, perhaps I may say that I do not think it would be wise to follow the noble Lord down the path on which he is trying to lead me because of the hypothetical nature of the question. As I said earlier, there are consultations with the local authorities. Obviously we want to see how that works and take into account the reaction in order to make it the best possible system. However, as the noble Lord rightly said, it could be tightened or loosened.

Lord Graham of Edmonton

My Lords, it is a case of the pot calling the kettle black. The Minister chides me for asking him to put some flesh on the bones of a hypothetical circumstance. However, the Minister himself introduced that hypothetical circumstance when he said, "Let us envisage the possibility that the ring fence will be tightened". That is the hypothetical circumstance: it may or may not happen.

When the Minister says that it is possible for it to happen, I ask him what would be the gounds on which the ring fence would be tightened. The Minister says that he will not go down that road. The Government are unable to face up to the need for people outside to know—not that they can do very much to change the Government's mind. However, it is a very weak case when the Minister cannot say that the reason why the ring fence will be tightened is that if x, y or z circumstances arise, those are grounds on which they will consider tightening it.

People outside can guess at the reason. They are fearful that the Government will decide—not necessarily in the best interests of tenants, housing or local government but in the interest of some macro-economic imperative of the Government—to make it more and more difficult for councils to manage their housing. With no disrespect to the Minister, I do not believe that he is unwilling but that he is unable at this stage to be more helpful to those concerned. That is a great pity. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6.15 p.m.

Lord McIntosh of Haringey moved Amendment No. 113K: Page 84, line 31, at end insert— ("( ) Notwithstanding the preceding provisions of this section in determining a formula for the purposes of this section for the financial year beginning 1st April 1990, the Secretary of State shall have regard in particular to the total level of expenditure incurred prior to that date by each local housing authority in respect of the repair and maintenance of housing held for housing purposes.").

The noble Lord said: My Lords, this amendment may appear to return to an issue which was debated in Committee during the discussion on Amendment No. 135PB. There is a good reason why we should return to that matter. At that stage t he noble Earl, Lord Caithness, indicated that the Government would be able to crystallise their thoughts in the near future, thus enabling discussions to take a more focused view. They have done so and that is the intention of this debate.

Perhaps I may repeat very briefly what is meant by the concept of capitalised repairs. It is one of the most elusive of all the concepts in the whole of housing legislation. Basically, local authorities which have capital receipts from a disposals programme have been able to use those capital receipts for repairs and maintenance of properties because they have not been prescribed expenditure under the 1980 Act. Therefore such expenditure on repairs and maintenance has been additional to the housing investment programme.

That was a device—if one wants to use a pejorative word—employed by a very large number of local authorities of all political persuasions. This is not a party political matter. It has been used particularly in the inner cities, in inner London and the big cities where the physical condition of the housing stock leaves much to be desired and where the necessity for a continuing repairs programme is very great indeed, bearing in mind the reduction in the new house building programme in the public sector.

The difference proposed by this legislation is that instead of being able to use 100 per cent. of their capital receipts—which after all is the authority's and the ratepayers' own money and is not a contribution from central government—for the purpose of repairs and maintenance, in the future they will be allowed to use only 25 per cent. Unless something is done and there is some provision to make up the difference in the repairs and maintenance programme, either there will be within the housing revenue account a drastic reduction in repairs and maintenance, and therefore a drastic reduction in the quality of the housing stock, particularly the quality of the housing of those most in need, by means of a slowing down of the repairs and maintenance programme, or there will have to be very substantial rent rises to make up the shortfall of money.

That is a matter of very great concern to large local authorities in our inner cities all over the country. It is not just a concern in London and the South but, as I said, in the great cities of this country. Let me give an indication of how serious is this matter. If past capitalisation is expressed in poundage per week (which after all is the way in which ratepayers or poll tax payers will in fact see it) in Hackney it would be £5, in Newham it would be £4.30 and in Lambeth it would be £5. All those authorities would be subject to the maximum £4.50 rent increase about which we have spoken if local authorities are to follow the subsidy guidelines. Outside London the figures would also be very high. They would be £7 in Sheffield, £4 in Birmingham and £3 in Liverpool.

It will be obvious that the political complexion of the council does not really matter. The point is that these are the areas which historically over a century or even more have had poor housing conditions combined with poor economic conditions. It is those authorities which have found the capital receipts programme a godsend because they have been able to spend money outside government controls, although with tacit government approval, throughout the 1980s on repair and maintenance programmes.

If one drives, as I do, around inner London it is very easy to see the extent to which local authority blocks of houses and flats dating from the '20s, '30s, '40s, '50s and even the '60s are receiving very necessary renovation and rehabilitation. They are being made fit for people to live in instead of being very definitely substandard housing. So it does not matter too much where the money comes from. What we have to ensure is that the money continues to be available for a programme of repair and maintenance comparable to that which has been possible over recent years.

Therefore something has to be done to fill the gap, bearing in mind the reduction in the availability of capital receipts from 100 per cent. to 25 per cent. We have now had the answer in the consultation document issued yesterday. I regret that the answer is totally unsatisfactory. Last year the increase in the national sum made available for management and maintenance rose by 10.25 per cent. That was at a time when the Government trumpeted the decline in the rate of inflation. As we understand it, this year the figures will be only 8 per cent. That is only 0.4 per cent. above the current rate of inflation and well below the rate of increase in costs in the building industry, as everybody concerned with the building industry will recognise. In effect that means that there will be a reduction in real terms in the amount of money made available for management and maintenance.

The noble Earl, Lord Caithness, at Committee stage, said that he was sympathetic to the idea that allowance should be made for capitalised repairs when fixing management and maintenance allowances. But he was worried about over-compensating authorities which are rich in capitalised receipts. I have given examples of authorities which have used capital receipts for the purpose of repairs and maintenance. The first thing that will be self-evident is that the authorities which have been using them are not the ones which are rich in capital receipts. On the contrary, the authorities rich in capital receipts are those, particularly in the suburbs and rural areas, which have better quality housing and a higher proportion of houses to flats. It is not because they are rich in capital receipts that these authorities are using the technique of capitalised repairs but because their needs are so great. That is the fundamental issue, which is not recognised in the Government's policy.

On 9th October at col. 85 of the Official Report the noble Earl said: We have to find a balance … I assure the Committee that we shall try to strike the best balance we can in the circumstances".

Let us now consider the balance that is being struck. Let us consider what is now being proposed. Only 14 authorities in the country will be affected by this balance. The Government are proposing to take the higher of the expenditure and notional reckonable allowance used for subsidy purpose under the existing system. Of the 14 authorities which will benefit from these proposals, only three, Camden, Haringey and Islington, will benefit significantly and even they will not achieve the amount of money that they need in order to maintain a repairs programme. Of the remaining 14, the worst example is Lewisham, which gains only 8p per property per week whereas past capitalisation was about £6 per week. The remaining housing authorities in the country obtain virtually nothing from this balance.

Is that the best balance in the circumstances to which the noble Earl referred? It cannot be. The Government cannot be serious in putting it forward. It is certainly not a balance: it is the least that could possibly be provided. It is the least that we could ever have feared would be provided, It means that boroughs such as Hackney, Lambeth, Newham, Tower Hamlets, Birmingham, Sheffield, Liverpool and Manchester will not have compensation for the fact that they are not allowed to use their own money for repairs and maintenance.

If there had been more notice of the Government's intention than the 12 or 24 hours that we have had to consider this provision, I can assure the Minister that the building industry would have been up in arms, as it will be during the consultation period. However, it is outrageous that it has been produced at such short notice. Whatever the responses may be to the consultation document, Parliament will not have a proper opportunity to consider the implications.

The Government are proposing a dramatic reduction in the repairs and maintenance programme of local authorities on their own property. It is property which after years of the right to buy is still in the public sector. It is in the public sector because it is in the worst condition. It most needs expenditure on repair and maintenance and the people who live in it are most in need of a decent income and decent housing. It is a disgrace that at this stage of the Bill the Government should come up with a totally inadequate solution to the problem that they are themselves creating in housing finance which will make poor people in poor areas of this country suffer in consequence. I beg to move.

The Earl of Caithness

My Lords, the subsidy calculation for each year will include a notional allowance for expenditure on management and maintenance. However, for the year beginning on 1st April 1990, which is the subject of this amendment, we propose to calculate the allowance by reference to authorities' actual past expenditure on management and maintenance charged to the HRA. We shall take the average of their spending for the years 1986–87 to 1988–89 and uprate it to 1990–91 prices plus an extra 3 per cent.; except that where their notional spending in the old subsidy system, if given the same uprating for inflation plus 3 per cent., would give a higher figure, we shall take that figure instead.

I fear, however, that even this has not been sufficient to satisfy the noble Lord, Lord McIntosh of Haringey. If we followed his advice, our subsidy would also have to cover past expenditure on capitalised repairs—that is, expenditure on repairs paid out of capital receipts—which will allegedly no longer be permitted to be capitalised.

We have given much thought to this. But the more we look at the noble Lord's proposition, the more peculiar it becomes. In essence it boils down to just two things. First, it overlooks the basic fact that capital resources, once used, are used up. If authorities spend their capital receipts and then receive extra subsidy to reflect this, they are having their cake and eating it. I do not think there is anything very fair about this. We should also remember that there are other authorities with needs of their own which would lose out if resources were used up by compensating for capitalised repairs, regardless of need. I rather suspect that these authorities would agree with me that there is nothing fair in this proposal.

Secondly, the proposal asks us in effect to give compensation to authorities that have been using capital resources to meet costs which would more properly have been met from revenue. This may or may not have been permissible in the old system. But in any case it was certainly not the most prudent thing that they could have done. We are in effect being asked to compensate authorities for the fact that they will no longer be allowed to behave imprudently. Of course we recognise that some capitalised repairs work is genuinely capital expenditure. In the new capital finance system, allocations to authorities will take account of past expenditure of this type. In other words, authorities that have made prudent use of their ability to spend non-prescribed capital receipts on genuine capital repairs will have their needs taken into account—but not through the subsidy system.

The noble Lord stressed the necessity to have their needs taken into account. Although we do not intend to take account of capitalised repairs and subsidy, we are prepared to look at the needs of authorities to carry out capitalised repairs as part of the capital allocation system. If an authority raises this issue in the housing investment programme meetings with the Department of the Environment officials, we shall certainly listen to what it is saying and consider whether capital allocation needs to be enhanced. This is obviously a key issue in housing investment programme meetings.

There is another important fact to which I should draw the attention of the House. In the old capital control system the total amount of spending financed by capital receipts including capitalised repairs had to be deducted from public expenditure provision before we issued allocations. This greatly reduced the size of the allocation we could issue. In the new system spending on receipts is more restricted and this in turn enables us to issue a larger amount of allocations for any given public expenditure total. We shall therefore have more room in allocations to compensate for the loss of the ability to spend capital receipts and capitalised repairs.

We shall consider this matter. We shall be able to do so through the capital allocation system. Therefore these resources will be able to go on capital works of repair and renovation. That seems to us to be far better than frittering the resources away through extra subsidy for revenue spending.

Lord McIntosh of Haringey

My Lords, that reply indicates the most breathtaking arrogance on the part of Government. I do not refer to the Minister personally but the Government. They have created the problem. The Government have decided that only 25 per cent. of capital receipts will be available to local housing authorities for the purposes for which 100 per cent. of receipts have been available in the past. The change is therefore not one that is introduced by local authorities. It is introduced only by government and by the provisions of this Bill.

The Government now seek to make a distinction between what the Minister called genuine capital repairs and other capital repairs. If he is supporting genuine capital repairs, what are false capital repairs? Will a representative from the Department of the Environment go along every street in every estate where that are capital repairs and say "That is genuine; that is not genuine". This is centralisation gone mad. What is the alternative to a genuine capital repair? What does the Minister mean by that?

The Earl of Caithness

My Lords, I mean the expenditure spent on true capital project rather than a capitalised maintenance item.

6.30.p.m.

Lord McIntosh of Haringey

My Lords, a capitalised maintenance project has been within the law. That has been legal under the provisions of the 1980 Act. The Minister is now applying retrospective disapproval to something which has been legal since 1980 and which has contributed very substantially to the improved quality of our urban housing. The distinction between capital repairs and maintenance may be an important distinction to an accountant or to the Minister. However, in reality it means that there is a whole range of council houses and flats, some of which are in a very bad condition, about which the accountants will say that that is a genuine capital repair. Some are in less bad condition and an extended programme of maintenance is required. It makes no difference to the tenants. They merely want somewhere decent to live. That has been provided out of the capitalised repair programme and that has contributed to what has been salvaged in the 1980s from any realistic housing policy.

With the decline of the housing investment programme, to which my noble friend Lord Dean referred, the only thing which is left to local housing authorities is expenditure on capitalised repairs; in other words, carrying out the repair and maintenance programme. The amount of money is very substantial; it has amounted to something like £500 million over the past three years. Now the best that the Minister can say is that local authorities must come along to the housing investment programme meetings and must beg to have something restored to them. I find that attitude unacceptable, and that is why I accuse the Government of arrogance. They create a problem, refuse to deal with it, issue a consultation document which produces the most minimal response to the gravest problem imaginable, and they then say, "It is all right. We give our assurance that anybody who comes along and begs will be treated sympathetically".

It was significant that the Minister spent nearly all of his response referring to the particular terms of my amendment rather than the terms of the consultation document. He knows that I tabled the amendment before that document was available, as we did on rent levels which were discussed earlier this afternoon. On this matter the amendment does not go anywhere near far enough to correct the damage being done to the housing stock in our cities. This is an issue where we must take full account of the consultation document issued yesterday and table further amendments on Third Reading. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 78 [Consequential adjustment of rent rebate subsidy]:

Lord Graham of Edmonton moved Amendment No. 113L: Page 84, line 37, at end insert— ("(1A) Where a local authority's actual expenditure on rent rebates including any discretionary payments in any year exceeds an amount estimated by the Secretary of State for the purpose of calculating Housing Revenue Account subsidy the Secretary of State shall pay to the authority an amount equal to the difference.")

The noble Lord said: My Lords, as the Minister and his advisers will have deduced, the purpose of this amendment is to ensure that the real cost to a local authority of paying housing benefit to council tenants will be met by central government through the new housing revenue account subsidy. We also wish to take the opportunity during this debate of exploring the mechanics of the new subsidy and how the different elements will interact.

Of course we are also taking the opportunity to stress in the most strenuous way that we strongly object to the combination of rent rebate subsidy within the new housing revenue account subsidy. We wish to make sure that there are safeguards written on the face of the Bill which are designed to protect council tenants and their local authorities. We believe that the full cost of the rent rebate should be covered by the housing revenue account subsidy.

Perhaps I may remind the House that when it was proposed that local authorities should take on the responsibility for housing benefit, there was a commitment that they would be fully reimbursed for the cost of benefits paid out. That commitment has been repeated more than once by government Ministers. Indeed, Mr. Hugh Rossi MP, when he was Minister for Social Security, made that point time and time again. Perhaps in his response the Minister could take on board what I am advised; namely, that the general subsidy level only covers 97 per cent. of the cost of operating the subsidy. Of course, the result is that if that is the position then all council tenants from April 1990 must meet the cost of 3 per cent. of the expenditure. Furthermore, in certain specific instances the Government have developed a system of subsidy penalties, or incentive areas as the Department of Social Security euphemistically calls them, which reduces central support. Those areas include over-payments, backdating and disproportionate rent increases.

I believe that the Minister can help us by answering a number of questions. First, will the Minister tell us what the payment arrangements will be for the rent rebate subsidy? Will the Minister assure us that where a council's actual expenditure on rent rebates is higher than estimated by government when calculating housing revenue account subsidy, the difference will be met? If the Minister cannot give a categorical assurance, then he is really saying that a local authority must meet the shortfall. That shortfall will not be met by the ratepayer in general but by the council tenant in general. I look the Minister straight in the eye. I am sure that the Minister will not want people to pay for something for which they are not responsible. The Government are responsible for this policy and the shortfall. Therefore we want the Minister to assure us that the local authorities will not have to bear that shortfall.

So far the Minister has failed to make public his information about the impact on councils and their tenants of combining these subsidies. I should like to ask the Minister a number of questions. First, in which local authorities will tenants be paying for the housing benefit of others from the beginning of the new financial regime? Those facts will be known to the officials within the department. I believe that the House and those authorities outside it are entitled to know the answer. In which local authorities will part of the cost of paying for rent rebates be transferred to local tenants? The Minister must have answers to those two questions. If he does not have answers, he is admitting that a fundamental change in housing finance has been put forward without any assessment of the implications.

I do not believe that the Minister will need to be reminded of the crucial importance of housing benefit to a wide range of council tenants. The average weekly payment for rent rebates for the financial year 1988–89 will be 15.37. It is estimated that 60 per cent. of council tenants are in receipt of housing benefit. For the year 1988–89, 3.43 billion council tenants will receive a rent rebate. The majority of rent rebate claimants are pensioners—and there were 1.98 billion in 1988–1989.

I believe that the Minister can understand the drift of what I am saying and how important it is to local authorities in the first instance because they intensely dislike the system which they are operating. If they have operated it on an assumption that they would not have to bear any cost at all while in practice they will have to bear, according to my information, 3 per cent. of the total, then that is unfair. The burden of this amendment is to ask the Minister whether he can tell us, first, whether he is aware that the facts I have given the House are correct and, if they are, what is his attitude towards them and what steps he intends to take legislatively to put them right. I beg to move.

The Earl of Caithness

My Lords, in responding to this amendment I am tempted to say "Here we go again". At every stage in the progress of the Bill both in this House and in another place the party opposite has introduced amendments, all different, but all with the same purpose in mind: namely, to ensure that local authorities continue to receive government subsidy to cover the full cost of the rent rebates which they grant to their tenants without regard to whether this is needed. Amendment No. 113L is the latest amendment in this series.

In our earlier debate at Committee stage I explained some of the historical background to rent rebates and subsidy. I shall not repeat that explanation today except to say that, to hear the noble Lord, Lord Graham, speak, you might think that Exchequer subsidy for the full cost of rent rebates came in with Magna Charm. That is very far from being the case. Until 1972 authorities funded their own rebate schemes. A national scheme is thus a comparatively recent institution.

We are not seeking to return to the pre-1972 arrangements. We are not saying that local authorities should meet the full cost of rent rebates themselves. Still less are we saying that some tenants should pay for the rebates of others. That is a scurrilous piece of nonsense put about by the party opposite and it has caused needless worry and alarm among council tenants.

All that we are saying is that where the revenues in a council's HRA are sufficient to cover its other expenditures, with something to spare, the surplus should be put towards the cost of rebates granted by the authority. I find it difficult to see what it is about this proposition that arouses so much indignation. What we are saying is that subsidy should go to the authorities which need it and not to cover costs which authorities can meet for themselves. The closer we stick to this basic principle, the more we can do to assist in meeting real needs. The further we stray—and there is no question that this amendment would cause us to stray far, far away—the more we will leave real needs unsatisfied.

This is what has saddened me about the discussions that we have had at Committee stage and again today. It seems that the noble Lord, Lord Graham, and his party opposite do not really want to target resources in the most efficacious way when one knows those resources are limited. They do not want to touch those areas where the needs are unsatisfied because the present system prevents us from doing so. What we are proposing is a scheme that will be able to direct the resources in a far, far better way than we have been able to do so far so that those authorities in real need will start to get the resources that they should have. I hope the House will support me in putting forward that proposition.

The noble Lord, Lord Graham of Edmonton, said that the subsidy covers only 97 per cent. of rebates. I have to remind him that although that is true now but that under the new system the subsidy calculation will take 100 per cent. of the general cost of rebates into account. In the case of costs in the so-called incentive areas, a cash-limited grant will be payable to cover legitimate expenditure. It will neither increase nor decrease an authority's spending in the area. The calcualtion of this amount is subject to detailed talks with the local authorities and the Department of Social Security.

I think it is worth reminding the House what the subsidy consists of, because that is a question that the noble Lord, Lord Graham of Edmonton, wanted clarified. It consists of a small piece of arithmetic. We add together three items of spending: that is, the loan charges, the cost of management and maintenance and rent rebates. Then we deduct two items of income: the rents and the interest from receipts which have been invested. The result of that sum is the subsidy payable.

If I may return to another paint now, the actual—not the estimated—amount of rebates granted will be taken into account 100 per cent. in the subsidy calculation. I think that is an important point of clarification to the noble Lord and I hope I have been able to answer his concerns.

6.45 p.m.

Lord Graham of Edmonton

My Lords, I am grateful to the Minister. Perhaps we have common ground here. Is he saying that the amendment is unnecessary in the light of his assurance that councils will receive 100 per cent. of their expenditure on rent rebates? If that is the situation, there is no argument. What I am asking is that, if in any year the amount they pay out is less than the amount they get in from central government, who is going to fund the difference? If the Minister is telling me that will never happen and that they will always get 100 per cent. of what they pay out, I rest content. However, he is aware that whenever we speak on these matters we are briefed in the main by the local authority associations and it is they who are asking us to put the questions to the Minister. These people are not fools. They are well experienced and they do not wish to waste the Minister's time or cause him and his officers offence by asking what he might think to be needless questions. They are genuine concerns.

There is a principle of course—the manner in which the Government are looking at those who are living in public housing and these who are owner-occupiers. When one looks at the raft of regulations, the hurdles and the measuring rods used by the Government in one way or another to make sure that public expenditure goes to the poor, I can tell the Minister that under this legislation there is a danger that the poor will be subsidising the poorest in council housing.

The percentage of people that I indicated to be in receipt of housing benefit represented a general figure, I think I said, of 60 per cent. In some areas it is 80 per cent. and in other areas it is more than that. These are unfortunate people. Of course they are the beneficiaries of largesse from the Government, from the general taxpayer; and most of them are grateful for that. Of course they are. Nevertheless, they have a burden to bear and that burden is made even heavier if they are going to find that their councils in the main—they may be Labour—are going to be put under stress and strain here themselves.

When the Minister comes to look at how the Government dispense public money to the owner-occupier through the mortgage interest relief system, there are very few inhibitions there. Those who are in a fortunate position, as I am and as no doubt many other Members of your Lordships' House are, of paying a mortgage are comparatively unfettered by the controls and regulations that the Government impose in respect of subsidies or assistance to those at the other end of the scale. The Government are not only in grave danger but indeed stand accused of having two standards in their dispensation of public money: one for the owner occupiers and one for the tenants of our housing stock.

I want the Minister to say a little more about what, in reading my brief, I sense to be the concern of local authorities. If he tells me that my amendment is not necessary, I want him to tell me again why it is not. As I understand it, he told me that the fear behind my amendment is misplaced because local authorities will get 100 per cent. of that which they spend. I am asking: if they spend properly in excess of what they get, who is going to meet the difference?

I apologise to the Minister if I appear to be tedious but at this time of the night we are entitled to be clear on these matters. I have re-read my brief—which I was able to do while the Minister was speaking—and there is genuine concern. It is not me who has got it wrong but the many people outside this House who need to have clarification, and the Minister can be of assistance in that respect.

Baroness Fisher of Rednal

My Lords, before my noble friend sits down, I listened to him carefully but did I understand him to say that the housing associations would also receive a full subsidy for rent rebates as distinct from the local authorities?

Lord Graham of Edmonton

My Lords, perhaps the Minister can assist us on that.

The Earl of Caithness

My Lords, I have never known the noble Lord, Lord Graham, duck a question so quickly.

The reason I told the House that I could not recommend the noble Lord's amendment was because it does not target the limited resources in the best way. We are saying, and I repeat it, that where the revenues in a council's housing revenue account are sufficient to cover its other expenditures, with something to spare, the surplus should be put towards the cost of rebates granted by that authority. The noble Lord wishes to take us down another avenue and that is why I cannot recommend his amendment to the House.

The second point raised by the noble Lord was covered in my original answer. One hundred per cent. of the rebates goes into the little piece of arithmetic that I mentioned; that is, adding together the three items of spending—loan charges, management maintenance and rent rebates—and deducting the two iems of income—rents and income from receipts which have been invested. It does not always mean that authorities receive a 100 per cent. subsidy. Whether or not they do depends on the answer to the calculation.

Turning to the noble Baroness, housing association tenants receive rent allowances. These have nothing to do with the HRA subsidy we are discussing at the moment.

Lord Graham of Edmonton

My Lords, the Minister has done his best but revealed another nasty part of Government policy when he said that he could see no objection to surpluses on the housing revenue account being used to subsidise other council tenants. I find that offensive because it is a matter of some council tenants subsidising the needs of other council tenants.

Before anyone jumps down my throat and says, "Surely that is a jolly good principle" I should add that we are not talking about the generality of those living in an area—that is, the ratepayers subsidising some of the council tenants in need—but about the surplus on the housing revenue account created by the level of rents and subsidies. That surplus is to be used not to reduce the rents of those who have helped to create it but to increase the subsidy, one way or another. I use the phrase again. "The poor will be subsidising the poorest". That is a shabby trick.

People outside the House are well aware of what the Government are doing. They are shifting the burden on the margin from the ratepayer to the council tenant. The Government are trying to make the position a little more disadvantageous for a council tenant and more advantageous for an owner-occupier. They hope to encourage tenants to buy their council houses and get these burdens off their shoulders so that they can enjoy the advantage of being an owner-occupier. That is reprehensible. This House should be ashamed at endorsing that situation and not accepting this amendment.

However, the Minister has been helpful at least to the extent that his words will once more appear in print and will be used, I hope effectively, against him and his Government in the future. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 84 [Determinations and directions]:

Lord Dean of Beswick moved Amendment No. 113M: Page 87, line 14, after ("bodies") insert ("and tenants' representatives").

The noble Lord said: My Lords, in regard to the interests of tenants this is an important amendment. Clause 84 gives the Secretary of State the power to make determinations and directions about the way in which a local authority or a group of local authorities operate their housing revenue accounts. As presently constituted this clause places a duty on Secretaries of State to consult representatives of local authorities and professional bodies but no obligation is placed on the Secretary of State to consult the local authorities' customers, who are of course the tenants.

The Government have made great play of supporting a greater role for tenants in the delivery of council services. This amendment further promotes that concept. It will allow tenants to comment directly and with emphasis on the Government's proposals for local authority housing; that is, the authority houses in which they live. The determination that the Secretary of State may make could have a great bearing on tenants as ratepayers. We believe that it is only fair that they should be allowed to comment on any proposals before those proposals are put into effect.

Decisions that the Secretary of State might make about housing revenue account and subsidy levels could be fundamental to tenants as a result of any determination. The debate we had on the previous amendment illustrated some of the difficulties that might be encountered in certain areas. The way in which council estates or properties are put together can be quite different. For example, Manchester city centre is a worse area of deprivation than some of the overspill estates, of which the council is still the landlord. They are different in concept and the deprivation has not touched them to the same degree as it has the centre of the city.

It is a fact that some estates in the better areas—I hate to use that term—or areas of less pressure have formed tenants' associations. They are extremely progressive and objective without being in the business of obstructing the local authority. If they are brought into the discussions at the right stage and can submit proposals it will be a contribution which could avoid trouble. I give an example. I was recently on one of Manchester's overspill estates, at a place called Hattersley, which is in Derbyshire on the way to Glossop. His Royal Highness the Prince of Wales was there at the same time. I was there having inherited the duty from Lord Rhodes, who was president of an organisation called Selcare (Greater Manchester Council) which deals with aftercare for people across the age spectrum who have been in trouble.

The estate at Hattersley is very pleasant and in a desirable part of Derbyshire. In conjunction with the local authority and the city of Manchester certain properties are being made available to Selcare. A number of flats were provided for single people and some two-bedroomed flats to house people who have had problems with the courts. It is an attempt to give them a chance to start again—under the control of a warden appointed to that position. That was mainly done after consultation with the local authority. Having spoken to the tenants—who attended mainly to see His Royal Highness the Prince of Wales—I did not hear anyone cavil at the scheme. It was accepted on a community basis.

The decisions that the Secretary of State may make as regards the housing revenue account and the subsidy level could be quite fundamental for tenants. The amount of rent to pay is one of the most important aspects for local authority tenants. I have not found any proliferation in council house tenants who are living off the fat of the land yet still living in council houses. That is an overworked phrase that in reality went out of the window a long time ago. People with any sense, well-heeled and living in nice council houses would be completely honkers if they did not take advantage of the right to buy.

I recall the early 1980s and the first Conservative Government with the present Prime Minister when I was a Whip in the other place. A Bill was being introduced by the Government, part of which proposed the mandatory sale of council houses. At about the same time there was the first attempt to write into local authority housing legislation certain rights for tenants. I am not trying to pinch the cloak from the present Government, but during the lifetime of the last Labour Government there were movements in that direction. Civil servants were actually working up schemes that would allow the sale of council houses to take place.

Naturally, my party was bitterly opposed to the sale of council houses at the time. Its views have changed somewhat. My own views have changed a little but not all that much. Where there is a grave housing shortage I still believe that the local authorities should have a role to play in how people are rehoused and who obtains the tenancies. But we are not here to talk about that. Political parties being what they are, my party was opposed to one part of the Bill but in spirit supported by the other. When the political machinery subsequently began to move—as it normally does at Labour Party conferences—resolutions were coming in by the shoal, suggesting that if the Labour Party took control again it should repeal all the procedures in the Act.

At the time I was wearing my Yorkshire hat as a Yorkshire MP. I attended the Yorkshire regional annual conference and I had to reply to a debate. I had to explain that the proposals that the Government had put into effect to give tenants increasing rights, including matters relating to repairs, were a tremendous step forward. I said that while such measures may embarrass some local authorities which did not want to be affected, the measures were not of the kind that could be opposed with sincerity because they were helping the tenants of local authorities that were not doing their best in that direction. The tenants were being assisted to obtain their basic rights.

The clause refers to various organisations that could be consulted by the Secretary of State, such as local authorities and professional bodies. In terms of local authority housing, my view of professional bodies is such that I do not believe they are the best people to approach. I am not saying that one should not approach them. If the Government believe that these bodies have such a claim, what kind of claim do they believe the tenants have? By virtue of being professional bodies, such organisations will put a professional input into the situation. If one is talking about rents they will apply what they see as market rents or what the Government consider to be fair rents. That is not the kind of jargon that is used in housing today, it belongs to some years ago.

I believe that your Lordships basically understand the point I am getting at. With all the goodwill in the world local authorities do not necessarily represent fully the views of their own council house tenants. Those views belong to the individual council house tenant. The Government may wish to consider the views of tenants' associations. It would be an extremely costly exercise to ask for the views of the individual tenant. I have been a local councillor and a local authority housing chairman and I know the difficulties in dealing with the tenants of adjoining houses. They may have conflicting views.

Nevertheless it is possible to get a collective view from a tenants' association that could be extremely helpful in eliminating many of the problems that the Minister may find. For example, as regards housing action areas, (HATs), Parliament and the whole legislative process could have been saved a great deal of money if a collective view had been obtained before the Government introduced the last Bill. The provisions have been overwhelmingly rejected other than in a small minority of cases.

In my capacity as a Front Bench spokesman for the Opposition, I was inundated with hundreds of unsolicited letters and documents. Delegations came from the far North and the South coast, besides other parts of England. They were bitterly opposed to the proposals. The point I am making is that if the Government had consulted at that time the local authorities and their tenants besides the local authority associations, they could have avoided all the costly work that had been put in and borne little result.

Most of the people who came here were not from newly formed housing associations on these estates. They were not rent-a-mob or people who had suddenly got together and decided that they were not going to accept what the Government offered. Most of them had belonged to these organisations for quite a while and they had been very effective in the areas in which they were organised. If the Minister is not in a position to give an undertaking now he may, in his answer, be somewhat sympathetic to the idea because the case is overwhelmingly made out that the local authority tenant has a right to be heard, if not individually, then through an association which he may be prepared to join. One does not get 100 per cent. membership on estates, but where housing associations exist they fulfil a useful purpose. On that basis I beg to move.

Lord Hesketh

My Lords, the noble Lord, Lord Dean, has given an extensive disquisition of the case as he sees it. This amendment would add tenants' representatives to the list of people whom the Secretary of State must consult before he makes any directions or determinations under the powers contained in this part of the Bill.

I am very happy to give an undertaking here and now that we shall consult the national tenants' organisations on the annual subsidy settlement, including the rent guidelines and the allowances for management and maintenance. We have arranged for the consultation papers that were issued yesterday to be sent to the National Tenants Organisation and the National Tenants and Residents Federation. I am not convinced that this consultation should be made a statutory requirement. We are in danger here of legislative over-kill. I have no doubt that our proposals will receive plenty of publicity. It is open to anyone who is interested to write to the Department of the Environment for copies of the consultation papers and to offer their comments on them. This is exactly what happened with our consultation document on the new financial regime last year, and the department was happy to oblige.

We are also little wary of appearing to come between the local authorities and their tenants, as the noble Lord, Lord Dean, pointed out in a different context. Our proposals each year will be for the amount of subsidy to be payable to the authorities. But it is for the individual authorities to draw up their budgets, taking into account not just their subsidy entitlement but all the other relevant local factors, including the tenants' own requirements and wishes. Of course I am not saying that the tenants have no interest in the subsidy settlement—far from it. But I believe that it is the authorities' duty to take account of their tenants' views in the comments which they themselves offer during consultation, and I do not believe that we should make any provisions in this Bill which might appear to bypass this most important role of the authorities. With those words, we resist the amendment.

Lord Dean of Beswick

My Lords, I am grateful for the Minister's response that the door is somewhat open. He overstated his own case at the end when he referred to resisting the amendment because I thought that he had gone some way along the road to meet some of my points.

There is a difference within local authorities. On a nice estate in a nice area the tenants might like to opt for course A or course B. In another area under the same local authority the type of property and the type of tenant—I must be careful what I say—might be quite different. One might get a different answer there. The Minister said that the Government are now prepared to consult on the basis of trying to find a format to cater for that situation but without impeding the local authority from carrying out its major function, which, as a former chairman of housing, is the last thing I would want. I am grateful for what the noble Lord said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 87 [Conditions for declaration of renewal area]:

Lord Graham of Edmonton moved Amendment No. 113N: Page 89, line 21, leave out paragraph (a).

The noble Lord said: My Lords, this amendment seeks to strike out paragraph (a) of Clause 87(1). We are dealing here with the conditions for the declaration of a renewal area. Paragraph (a) states: the area contains not less than a specified minimum number of dwellings". We understand that DoE officials are thinking in terms of 500 dwellings. Will the Government think again about the number? I have information that in six authorities—Burnley, Birmingham, Sheffield, Allerdale, Derby and Southampton—the DoE is testing a model approach to appraising renewal options. This approach refers to cover in excess of 1,500 dwellings, which suggests that the minimum size may be even higher. The associations outside the House are firmly of the view that there should be no arbitrary minimum number.

I realise that no minimum number is specified on the face of the Bill. But if there is to be a figure, we believe that it ought to be far lower than the figure of 500 which is being talked about. It would be helpful if the noble Lord could tell us that he is conscious of the desire of authorities to excise this part of the Bill. The deleterious effect of bad housing on our people is well known. The survey brought out by the AMA earlier this year showed that £18 billion must be spent on existing stock merely to bring it up to modern standards. Noble Lords who have had experience of another place will remember that their surgeries consisted almost entirely of people who were dissatisfied with their housing, people who had no homes, people in poor housing and people who had problems with the council or private landlords. We believe that the Government should say a little more to the House about the specified minimum number of dwellings to be contained in a renewal area. I beg to move.

7.15 p.m.

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 contained within a renewal area. I should like to explain why the Government would resist such an amendment.

The thrust of our proposals on renewal areas is to ensure that resources are directed to the remaining areas of the private housing stock where conditions are unacceptable but where there is real potential to turn these areas around. We wish to ensure that areas are large enough to provide the scope for drawing in resources from the private sector, and in many cases that will require a programme that envisages some new build as well as renovation. Our experience of housing action areas—which have generally been between 250 and 350 dwellings in size—has pointed to the need for larger areas if this is to be achieved. We have in mind, to use the words of the noble Lord, Lord Graham, an area of at least 500 dwellings.

Secondly, we are determined that resources are not dissipated too widely between many small schemes which individually are unable to achieve the impact that we are looking for. Where we envisage supplementing local authorities' basic credit approvals on the basis of a well argued case for a specific programme of works, then the ability of a scheme to achieve this wider impact would be a particularly important consideration.

But I can assure the noble Lord, Lord Graham, that there is nothing in the Bill that would rule out the possibility of a smaller scheme being declared. What we have sought to do is to give local authorities freedom to declare renewal areas provided the areas concerned meet the various criteria specified under this clause. This goes further than the present system of housing action areas which requires the Secretary of State's specific approval. If an authority has a particularly good case for declaring a renewal area which does not meet the criteria then there is no reason why it should not seek the Secretary of State's approval to do so. Clause 96 provides expressly for this.

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 on size and therefore on the number of schemes to which resources are to be directed. We do not want a proliferation of declared areas under the new system which will only serve to dilute the effort that is needed in respect of some of the worst areas of our towns and cities. If we are to mount a successful attack on such areas, then we must draw some cut-off point for the generality of cases. But as I have said, my right honourable friend the Secretary of State will of course consider under Clause 96 any special cases when these are put forward to him. I hope that I have in part met the noble Lord's points and that he will see fit to withdraw the amendment.

Lord Graham of Edmonton

My Lords, I am grateful to the Minister but I am not satisfied. The noble Lord mentioned the figure of 500. I appreciate that he said that applications can be considered. Is he saying that if a case can be made out for clearance areas of 20, 30 or 50 houses, that would be acceptable if the criteria were right?

Lord Hesketh

My Lords, that is exactly what I said. We want to establish a policy. If I may put it in these words, we believe that a critical mass occurs and that 500 is about where it is. But there are liable to be special occasions. That is why the criteria under Clause 96 allow that to happen.

Lord Graham of Edmonton

My Lords, in those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 89 [Duty to publish information]:

Lord Ross of Newport moved Amendment No. 113P: Page 90, line 32, after ("shall") insert ("provide a neighbourhood information and advisory service to individual householders and shall").

The noble Lord said: My Lords, I promise that I shall not take 20 minutes in speaking to this amendment. However, it is a case of, "If you don't at first succeed, then try, try and try again". The amendment now put forward is in a slightly different form from that which was put forward both in another place and in Committee in this House.

Although we believe that the views of the National Home Improvement Council, the organisation which originally drafted the amendment, have been considered sympathetically by the Government, it is evident to us that the interpretation the last time the amendment was before your Lordships was that the word "assistance" could possibly be construed as meaning financial assistance.

When one is discussing any kind of financial assistance to local authorities in this House it is always considered as rather a rude word. Accordingly, we have taken the word "assistance" out of the amendment. In its present form and with its present wording there can be no possibility of any misconception or misunderstanding as to what are the intent and purpose behind the amendment. We believe that it should be added to the Bill in the interests of ensuring that the Government's wishes to create renewal areas will be carried out in such a way that they will make a positive contribution to improving the conditions for the community and improving the nation's housing stock.

I cannot see any grounds whatever upon which the Government can resist the amendment. I beg to move.

Lord Reay

My Lords, we are sympathetic to the objectives which the noble Lord is seeking to achieve in respect of this amendment. My noble friend Lord Hesketh explained as much at Committee stage. But the way in which this amendment is worded causes certain technical problems in that the clause deals with a duty to publish information rather than to provide advisory services, and we have reservations about whether such provision should always be made by the authority itself.

As an alternative we should prefer to see an amendment to Clause 88 which deals with the steps an authority must take once a renewal area has been declared. What we have in mind is a requirement that an authority should provide itself, or make arrangements for others to provide, advisory services in relation to the carrying out of works in a renewal area.

I am, however, happy to accept this amendment now on the basis that the Government will bring forward a clarifying amendment on these lines at a later stage.

Lord Ross of Newport

My Lords, I should like to say, "Put out the flags‡". However, I am grateful for that offer and I totally accept what the Minister said in reply; namely, that they accept the amendment now but will possibly be drafting a rather different amendment for consideration on Third Reading. On that basis I thank the Government for making such a sensible decision.

On Question, amendment agreed to.

Clause 97 [Interpretation of Part VII]:

Lord Graham of Edmonton moved Amendment No. 113Q: Page 95, line 29, leave out from ("occupation") to ("house") in line 31 and insert ("has the same meaning as in Part XI of the Housing Act 1985, except that it does not include any part of such a").

On Question, amendment agreed to.

Clause 98 [Grants for improvements and repairs]:

Lord Reay moved Amendment No. 114: Page 97, line 8, leave out from ("with") to ("shall") in line 90 and insert ("a scheme under that section").

The noble Lord said: My Lords, Amendment No. 114 makes a minor technical change to Clause 98(5)(b) of the Bill. It deletes the specific reference to the Homes Insulation Scheme 1984 in that clause in order to enable local authorities to pay grant due to applicants for work approved under any homes insulation scheme made in accordance with the provisions of Section 521(1) of the Housing Act 1985 but not completed until after the date on which the provisions of Part VIII of the Bill come into force. This amendment is needed so that payments still outstanding in relation to grants approved under other schemes can be paid. I beg to move.

On Question, amendment agreed to.

Lord Reay

My Lords, I beg to move that further consideration of the Bill on Report be now adjourned until 25 minutes past eight.

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

[The Sitting was suspended from 7.25 to 8.25 p.m.]

Lord Swinfen moved Amendment No. 114A: After Clause 98, insert the following new clause:

("Disabled facilities grant

Notwithstanding section 98(3) above, where a dwelling is being provided or is to be provided by any one of the persons listed in paragraphs (a) to (h) of section 98(3), and where a disabled person has entered into a contract to become the owner or tenant of the dwelling, a disabled facilities grant in respect of works in progress or planned—

1. (a) shall be payable to a person listed in section 98(3) where the relevant works are for the purposes set out in section 108(2); and
2. (b) may be paid to a person listed in section 98(3) where the relevant works are for the purposes set out in section 108(3).").

The noble Lord said: My Lords, the amendment is the same as Amendment No. 139 tabled in Committee. It seeks to allow payment of the disabled facilities grant in respect of dwellings which are in the course of construction. It is designed to prevent the waste of public money because it is cheaper to include special adaptations for disabled people while a dwelling is being built rather than await completion and then partially destroy the dwelling in order to rebuild in a suitable manner for the disabled occupant. It will enable more disabled people to live at home rather than in an institution, which is generally more expensive for the public purse.

In Committee my noble friend Lord Caithness confirmed that the Government's consultation paper had proposed grants for adaptations during construction but that a practical system for achieving that had not yet been designed. I do not know whether in the next Session there will be a local government Bill or a housing Bill and I doubt whether my noble friend on the Front Bench is able to tell the House. I doubt that we shall have one, and therefore it is important that the amendment is inserted into this Bill.

My noble friend Lord Hesketh was kind enough to discuss the amendment with me and my adviser after the end of the Committee stage and to explain some of the difficulties as he saw them. Those difficulties appear to me to be the possible need for the Government to make further consequential amendments to the Bill on Third Reading. I do not consider that to be satisfactory. That argument is far outweighed by the benefits that may well be brought to disabled people by the acceptance of the amendment and the money saved to the public purse. I beg to move.

Baroness Masham of Ilton

My Lords, I support the amendment. I assure noble Lords that it aims to save money. For example, when we built our house I had a bath lift installed which meant the erection of a reinforced ceiling. Had that not been done at the time of building it would have cost a great deal more money. When we first moved into the house I did not need to use the bath lift but now in my ageing years when my arms are not so strong I use it. Therefore, it is a necessary piece of equipment.

I stress that one has very many extra expenses as a result of being disabled. They are not for luxuries and they do not improve one's house. They are essential to be able to live in the community.

Lord Hesketh

My Lords, the intention behind these two amendments is to allow disabled facilities grant to be paid in respect of adaptations carried out during the construction of a dwelling, whether in the public sector or in the private sector.

The Government recognise that there may be occasions when it appears to make good sense to adapt a dwelling at an early stage of construction rather than once it has been completed. It makes even more sense to modify the plans at the design stage wherever possible. Our policy has therefore been to encourage developers to design new housing to basic mobility standards. That is why we have given active support to the National House Building Council's award scheme which seeks to promote an understanding among developers as to what can be done at little extra cost to provide homes suitable for people with many types of disability. I should be very reluctant indeed to do anything which might inadvertently discourage the progress that is being made.

I should also be reluctant to discourage the usual negotiations between potential purchaser and developer which would, in normal circumstances, lead to a sensible accommodation being made to the needs of disabled people before dwellings are completed and at no great cost to either side. We therefore have to find a balance between encouraging good practice and common sense of this kind right across the board and recognising genuine cases where additional adaptations could not reasonably have been anticipated and where it makes good sense to carry out work before completion. I do not believe however that we have yet established just where that balance should lie.

There are also a number of practical problems to resolve. For example, the whole basis of Part VIII of the Bill rests on the assumption that there is a dwelling already in existence which can be repaired, improved, converted or adapted. The same rules could not apply once we seek to grant aid dwellings under construction, or dwellings yet to be started, or dwellings which can be built only after demolition has taken place. We would need to recast substantially large parts of Part VIII to accommodate this. We believe that that just cannot be done at this stage of the Bill and with so many issues unresolved.

The most pressing of these is where a property has been adapted for the special needs of a disabled person but, for one reason or another, that person is no longer able to occupy it on completion. The work obviously has been finished and the costs incurred. When the local authority has made the commitment to meet the developers' bill does it meet that cost or does it pass on the cost? Is there a continuing responsibility on the original applicant? We cannot simply leave this outstanding because the developer is entitled to his money, wherever it comes from. Of course it would normally be the applicant who would be liable to pay the developer. I f a grant is less than the full cost of the work, the applicant may find himself in a very difficult position indeed.

I am, however, happy to give your Lordships an undertaking that we are prepared to look closely at just what would be involved in a grant system designed to assist adaptations to dwellings under construction. We should want to look at this at the same time as we are considering the implications of a grant for the reconstruction of dwellings—a matter discussed in relation to this part of the Bill in another place.

We shall obviously want to consult closely with the National Housebuilders' Federation and with organisations representing disabled people. We shall need to discuss with local authorities how best such a provision might fit in with their responsibilities for community care, and with housing authorities and the Housing Corporation in respect of their responsiblities for meeting the need for social housing. I have no doubt too that the financial institutions and the building societies in particular will wish to consider whether special financing arrangements would also be needed to be put in place.

We are not unsympathetic to the needs of the disabled and are prepared to consider extending the scope of mandatory grant for adaptations where we are convinced that the proposed provisions do not cater for real needs and where any extension can be fitted into the framework of Part VIII of the Bill. My noble friend, Lord Swinfen, moved a number of amendments during Committee which would have had the effect of widening the range of mandatory grants. Some of these are down for debate again today. I have had the benefit of a full discussion on these points with the noble Lord and, as he knows, I am now persuaded that there is a case for improvement in the provisions to reflect the particular difficulties of disabled people. Your Lordships will have the opportunity to consider the disabled facilities grant in more detail when we reach the amendments tabled in respect of Clause III.

In the meantime, in the light of the remarks that I have made, I hope that my noble friend Lord Swinfen will be able to accept that it is simply not possible in the time available to design a grant system capable of covering buildings which are not yet constructed. I hope that he will feel able to withdraw his amendment.

Lord Swinfen

My Lords, my noble friend Lord Hesketh raised the matter of a potential purchaser who was unable to complete, failed to complete, or failed to move into the house at one time or another after the dwelling had been constructed. The purchaser or lessee is in a contractual position. As drafted, the amendment would not come into effect until the contract had been exchanged and was therefore binding.

Regarding what would happen to a dwelling built by a private developer where alterations had been done at the behest of a contracted disabled purchaser, the risk is no greater than that which would be carried with a contracted able-bodied purchaser. The number of occasions on which there is a risk to any developer, through the career of one individual working solidly for that developer and no one else, would be extremely rare. Even able-bodied people do not arrange for special alterations to a potential home after the exchange of contracts and then withdraw. They can be liable to complete the purchase or go ahead with the lease. The same applies to a disabled person.

The noble Lord spoke at great length about various difficulties that would arise if the amendment were carried. He appears to have taken no account of the growing need for special dwellings for disabled people as the doctors keep more people alive after accidents and help disabled people to live longer and as a growing army of elderly people become disabled.

The Bill has been before both Houses of Parliament for many months. It was not difficult to foresee that this problem could easily arise. The original amendment was tabled well before the Recess and I believe that it was mentioned by various Members of this House at Second Reading. I do not accept that there would be difficulty over the matter. There may be, but any problem should have been foreseen, although not necessarily by my noble friend who has been thrust into the driving seat by the promotion of my noble friend Lord Caithness. However, to my mind, I have been given no indication as to whether or not there will be a suitable alternative Bill in the near future which could include this provision. My noble friend and the Government have both indicated in consultation papers that this is something that is desirable. If we do not deal with this matter now I doubt whether it will be dealt with for years, if at all. I feel that I have no alternative but to press the amendment.

8.40 p.m.

On Question, Whether the said amendment (No. 114A) shall be agreed to?

Their Lordships divided: Contents, 25; Not-Contents, 51.

DIVISION NO. 4
CONTENTS
Airedale, L.	Phillips, B.
Blease, L.	Pitt of Hampstead, L.
Cocks of Hartcliffe, L.	Ross of Newport, L.
David, B.	Seear, B.
Dean of Beswick, L. [Teller.]	Seebohm, L.
Ezra, L.	Shackleton, L.
Grey, E.	Shepherd, L.
Hampton, L.	Swinfen, L. [Teller,]
Kinloss, Ly.	Taylor of Gryfe, L.
Kirkhill, L.	Underhill, L.
Lockwood, B.	Winchilsea and Nottingham, E.
McIntosh of Haringey, L.
Masham of Ilton, B.	Winstanley, L.

NOT-CONTENTS
Allenby of Megiddo, V.	Hesketh, L.
Arran, E.	Hives, L.
Belstead, L.	Hooper, B.
Blatch, B.	Kimball, L.
Boardman, L.	Long, V. [Teller.]
Borthwick, L.	Lucas of Chilworth, L.
Boyd-Carpenter, L.	Lyell, L.
Butterworth, L.	Monk Bretton, L.
Caithness, E.	Mountevans, L.
Carnegy of Lour, B.	Orr-Ewing, L.
Carnock, L.	Oxfuird, V.
Colnbrook, L.	Pender, L.
Cork and Orrery, E.	Reay, L.
Craigmyle, L.	Reigate, L.
Crickhowell, L.	Rippon of Hexham, L.
Cullen of Ashbourne, L.	Sharples, B.
Davidson, V. [Teller.]	Stanley of Alderley, L.
Effingham, E.	Stodart of Leaston, L.
Elliot of Harwood, B.	Strathclyde, L.
Fortescue, E.	Strathmore and Kinghorne, E.
Fraser of Carmyllie, L.
Gisborough, L.	Trumpington, B.
Glenarthur, L.	Ullswater, V.
Halsbury, E.	Vaux of Harrowden, L.
Hayter, L.	Wise, L.
Henley, L.	Wynford, L.

Resolved in the negative, and amendment disagreed to accordingly.

8.48 p.m.

Clause 101 [The interest of the applicant in the property]:

Lord Swinfen moved Amendment No. 114B: Page 98, line 18, leave out ("an owner's interest in the flat") and insert ("such an owner's interest as is referred to in paragraph (a) above").

The noble Lord said: My Lords, in moving this amendment I wish to speak also to Amendments Nos. 115A and 123B. These are designed to ensure that disabled facilities grants for adaptations to the common parts of buildings containing flats will be available where a disabled person lives in a flat but on a long leasehold. The point at issue is technical but the principle involved is important.

Under Clause 101 grant applicants are required to have an interest in the property which is to be adapted. Clause 101(1)(d) makes special provision where the adaptation is to the common parts of a building. It requires an interest in a flat in the building rather than in the common parts. I believe, however, that it fails to cover the situation in which the disabled person lives in a flat let on long leasehold, a not uncommon situation in blocks of flats.

A long leaseholder almost always has an owner's interest for grant purposes because he usually has a lease with more than five years to run. Subsection (1)(d) applies to tenants who do not have an owner's interest and therefore excludes a long leaseholder. Similarly, a long leaseholder cannot satisfy the normal requirements for an owner's interest because he will not own the common parts which are to be adapted. Amendment No. 114B addresses that point and enables a long leaseholder to make a tenant's application in respect of adaptations to common parts.

Amendments Nos. 115A and 123B address a related matter. The landlord of a block of flats would have an owner's interest in the common parts and would therefore be able to apply for a grant to adapt them to meet the needs of disabled residents. However, he would be unable to provide the necessary certificate of occupation if disabled people live in long leasehold flats. That is because he is required to state that the flat involved will not be let on long lease. In addition, he would be unable to comply with the letting conditions provided for in Clause 116 because that clause also specifically excludes lettings on long leasehold. Amendment No. 115A therefore has the effect of disapplying the requirement that letting will not be on a long tenancy where the application is for a disabled facilities grant.

Amendment No. 123B makes similar provision with respect to letting conditions where an application for a disabled facilities grant is in respect of works to the common parts of buildings. I beg to move.

Lord Reay

My noble friend Lord Swinfen has explained that the amendments address the problem of adaptations to common parts where the disabled person for whose benefit they are being carried out lives in a flat which is let on long leasehold.

It was certainly never our intention that long leaseholders and those living with them should be excluded from the benefits of grants for adaptations to common parts. That would be a quite unjustifiable form of discrimination. We also wish to encourage landlords to meet the needs of their disabled tenants and not to impose on them requirements which it is impossible to fulfil in certain circumstances. We are therefore happy to accept the amendments.

On Question, amendment agreed to.

Clause 103 [Certificate as to future occupation, etc.]:

The Viscount of Oxfuird moved Amendment No. 115: Page 100, line 8, leave out ("section") and insert ("sections 123 and").

The noble Viscount said: My Lords, in moving Amendment No. 115 I should also like to speak to Amendments Nos. 122 and 124. The amendments deal with renovation grants for converting a building into two or more flats. The main amendment is Amendment No. 124 which proposes new insertions into Clause 123. Clause 123 provides that a single application may be made where conversion is proposed. It also provides that each flat provided is to be treated separately where grant conditions are concerned.

The appropriate type of grant condition depends on the type of certificate provided. Here one looks back to Clause 103. The problem is that normally only one certificate is given per application. Where a conversion is involved there will be at least two flats but apparently only one certificate. What is to happen if the person converting the building wants to live in one flat and let the others? How is it to be decided whether he supplies an owner-occupation certificate or a certificate for intended letting? Different conditions apply in respect of each.

Amendment No. 124 is intended to solve that confusion. It enables a separate certificate to be given in respect of each flat. It also caters for the test of resources to be applied. Again, Clause 112 is at present not clear on that point. Where somebody intends to live in one of the flats he is providing he will be tested as an owner-occupier under Clause 106. If all the flats provided are to be let he will be tested as a landlord under Clause 107.

I believe that that is the fairest way of proceeding. It takes account of the fact that some people, particularly elderly people, have homes which are too large for them and, rather than move from well loved surroundings, they choose to convert their homes into two flats, letting one and living in the other. Those in the business of converting for letting are unlikely to live in one of their own conversions. Amendments Nos. 115 and 122 simply have the effect of making the requirements as to certificates and resource testing subject to the provisions of Clause 123. I beg to move.

Lord Reay

My Lords, as we have heard, Amendments Nos. 115 and 122 make the requirements as to the provision of certificates of occupation and the test of resources for landlords subject to the provisons of Clause 123. Amendment No. 124 provides for certificates to be given in respect of each dwelling provided by a conversion. It also provides that where mixed certificates are given and at least one is an owner-occupation or a special certificate the applicant is to be tested as an owner-occupier.

My noble friend Lord Oxfuird has drawn attention to the fact that it is possible that someone undertaking a conversion may wish to live in one of the dwellings and let the others. He has also pointed out that the Bill, as drafted, is not clear on the question of which certificate should be provided or how the test of resources would work. It is also unclear how the grant conditions which are attracted by Clause 123(3)(a) and (b) would operate. We accept that that is the case and that provision should be made for separate certificates.

My noble friend has also proposed that where different certificates are provided and at least one of those would normally cause an application to be tested in accordance with Clause 106, the owner-occupier test should be the test applied. We agree that in the case of conversion it would be almost impossible to apply different tests in respect of different portions of the work being undertaken, paticularly since some of the works will be in respect of common parts not directly attributable to any individual dwelling to be provided. The question is which test is the more appropriate: that for a landlord or that for an owner-occupier.

I take my noble friend's point that it is desirable to cover the situation of the elderly person undertaking a conversion to make his home more manageable and perhaps to earn some extra income. It is, however, also necessary to prevent abuse of the grant system. That might arise if someone undertaking a conversion providing a large number of flats decided to live in one of them simply in order to gain the more attractive level of grant which an owner-occupier's test would give. We believe, however, that abuse can be prevented by use of the regulation-making power provided in Clause 106. Regulations could, for example, provide that in a case where the provisions of paragraph (ab) of Amendment No. 124 apply the rental income which can be derived from the dwellings which are to be let is to be counted as part of the applicant's resources. We think that some such safeguard would be necessary and if the amendments are accepted we intend to make appropriate provision in the regulations.

Amendments Nos. 115, 122 and 124 clarify the operation of Clause 123 and we welcome them.

On Question, amendment agreed to.

Lord Swinfen moved Amendment No. 115A: Page 100, line 38, after ("(c)") insert ("except where the application relates to a disabled facilities grant").

On Question, amendment agreed to.

9 p.m.

Clause 104 [Certain dwellings and works excluded from grant aid]:

The Viscount of Oxfuird moved Amendment No. 116: Page 101, line 22, after ("unless") insert—

1. ("(a) it is an application which they are required to approve by virtue of section 109 below and completion of the relevant works is necessary to comply with a notice under section 189 of the Housing Act 1985 (repair notice requiring works to render premises fit for human habitation); or
2. (b)").

The noble Viscount said: My Lords, in moving Amendment No. 116, I speak also to Amendments Nos. 117 and 125.

These amendments are intended to remove what appears to be a discrepancy in the treatment of landlords and owner-occupiers for grant purposes. Clause 110, which was introduced as an amendment during the Committee stage, provides for a mandatory grant in circumstances where local authorities serve notices requiring people to repair or improve their homes. In introducing the amendment, my noble friend Lord Hesketh explained that those notices compelled people to start and finish work within a set period and that for that reason it was also necessary to introduce related amendments. Those related amendments now in Clauses 104, 105 and 131 allow people entitled to mandatory grant under Clause 110 to get on with the necessary works without waiting for grant approval. As I read the Bill, people normally have to wait for grant approval before they can start work and grant cannot be given if work is finished before grant approval.

One of the notices referred to in Clause 110 is a notice under Section 189 of the Housing Act 1985. I believe that such notices can be served on landlords and owner-occupiers alike. However, the clause refers only to applications by landlords and the related provisions that I have described therefore only protect landlords. An owner-occupier, just like a landlord, can be prosecuted if he does not do work required in the time ordered. But, if he gets on with the work, he can lose his grant because he has not waited for grant approval. The landlord in the same circumstances runs no risk of losing grant. That does not seem just. Amendments Nos. 116, 117 and 125 put the owner-occupier in the same favourable position as the landlord. I beg to move.

Lord Reay

My Lords, Amendment No. 116 would have the effect of disapplying the requirements of Clause 104 in circumstances where works for which mandatory grant is available under Clause 109 have been required by a notice served under Section 189 of the Housing Act 1985. Amendment No. 117 would permit applicants to start any works required by the notice without waiting for grant approval. Amendment No. 125 removes local authorities' discretion to withhold or reduce grant because works have been started before grant approval if the works have been required by notice.

My noble friend Lord Oxfuird is correct in his belief that Section 189 notices can be served on both landlords and owner-occupiers. It is also the case that Clause 110 refers only to landlords' applications in respect of works required by a Section 189 notice. The reason for that is that such notices deal with works necessary to bring a property up to the fitness standards. For owner-occupiers mandatory grant for that purpose is provided for in Clause 109. There was therefore no need to mention them in Clause 110.

Clause 104 lists the circumstances in which a local authority must not approve grant. It does not apply where grant is mandatory by virtue of Clause 110. Similar exemptions appear in respect of the requirements as to not starting works dealt with in Clauses 105 and 131. As my noble friend Lord Hesketh explained during Committee stage, that is necessary because the person served with the relevant statutory notices cannot both comply with the notice and meet the requirements of the grant system. The fact that the exemptions are linked to Clause 110 and make no reference to mandatory grants under Clause 109 does indeed produce the discrepancy highlighted by my noble friend and there is some risk that owner-occupiers could lose grant if a Section 189 notice required works to be completed within six months. We therefore welcome the amendments.

On Question, amendment agreed to.

Clause 105 [Restriction on grants for works already begun]:

The Viscount of Oxfuird moved Amendment No. 117: Page 102, line 43, after ("to") insert—

1. ("(a) an application which the local housing authority are required to approve by virtue of section 109 below if completion of the relevant works is necessary to comply with a notice under section 189 of the Housing Act 1985 (repair notice requiring works to render premises fit for human habitation); or
2. (b)").

The noble Viscount said: My Lords, this amendment has already been spoken to. I beg to move.

On Question, amendment agreed to.

Clause 106 [Owner-occupiers and tenants]:

Lord Swinfen moved Amendment No. 118: Page 103, line 12, after ("then") insert ("subject to the exclusions by virtue of subsection (4) below,").

The noble Lord said: My Lords, in moving Amendment No. 118, I should like to speak also to Amendment No. 121.

In the original consultation paper issued by the Department of the Environment in 1987 it was envisaged that no means test would apply in respect of disabled facilities grants. Despite that provision in the consultation paper no such provision appears in the Bill. Generally speaking, disabled people have an income that is so low that even if there is a means test they will obtain the maximum possible grant. In those circumstances, the nationwide cost of administering such tests will far outweigh any possible savings.

When dealing with the amendment perhaps my noble friend the Minister will tell me whether he feels that a means test for such benefits is appropriate as a means test for capital expenditure on renovation work even with the £20 renovation premium. Perhaps he will also tell me what makes a means test for a renovation grant suitable as a means test for a disabled facilities grant even with the added renovation premium. I beg to move.

Baroness Masham of Ilton

My Lords, when there is a means test and people find the extra expense of disability is a great strain on their lives, the discouragement of a means test may mean the final straw which breaks up a marriage. It m ay also mean the family using up their income and then leaning on the state instead of being self-supporting.

If care in the community is to work there should be some help given for the extra expenses of disability. Recently there was an article in the Reader's Digest headed "Are we a caring community?" If the Government want to pile on the agony of disability by means testing for necessities which every disabled person would wish to do without, most of all their own disabilities, they should stand up tonight and say, "No, we are not a caring society. We are being very mean".

Lord McIntosh of Haringey

My Lords, I shall speak to Amendment No. 120A which is grouped with these two amendments, although I do not really want to speak only to my amendment because I believe that it has virtually the same effect as the amendments tabled by the noble Lord, Lord Swinfen, and the noble Baroness, Lady Masham. I support those amendments because I support the intention behind them. As the noble Baroness said, this is a rather basic obligation. Even if the number of people who would suffer from a means test is small, because so many disabled people are in fact poor, in our view it would be wrong to subject disabled people to a means test.

To some extent we were encouraged by the response of the noble Earl the Paymaster General at Committee stage. First of all he talked about regulations in what is now Clause 106 giving flexibility to set additional premiums and to take account of the fact that those who care for disabled people also face higher costs and that those who are disabled may not have access to loans on such favourable terms as others. Then, as he was pressed in debate, he went further and said, at col. 197: We are giving more detailed thought as to how these circumstances might be defined". He added at col. 202 that he wished to listen to all the arguments and report back to his right honourable friend. He said that there would be discussions with RADAR on the matter. That encourages me to think that there is movement on the Government's side. I hope that the movement will be either to the amendments of those who have spoken (my noble friend Lord Carter regrets not being able to be present tonight) or to my amendment.

Lord Hesketh

My Lords, the effects of Amendments Nos. 118 and 121 would be to ensure that all disabled facilities grants, together with all renovation grants awarded to applicants whose household contained a disabled person, should be given at 100 per cent. irrespective of the cost of the works or the resources of the applicant. Amendment No.120A of the noble Lord, Lord McIntosh, has the same effect in relation to disabled facilities grant but not to renovation grants. To that extent it is less widely drawn.

Perhaps I may address the principle of means testing. So far as grants for adaptations are concerned the Government do not accept the principle of the amendments. Nor of course do they accept such a principle in relation to any other sort of grant provided under Part VIII of this Bill, although there have been amendments put down and debated both in this House and in another place which would have had that effect. We are seeking to ensure that scarce public resources go to where they are most needed. It means that where disabled people are well able to contribute all or part of the costs of the work they should do so, if they can afford to do so. In that way we can provide the right help to the right people at the right time. Also we can help those on the lowest incomes with the full costs of the work for the first time through the grant system. I should have thought that noble Lords would welcome that.

The alternative would be that we should be forced to set either a limit on the amount of grant that can be paid, a limit on the eligible cost of the adaptations, or some other arbitrary restriction on what can be paid. It is unrealistic to suppose—particularly in the case of a grant which is mandatory for a wide range of purposes—that there should be no restrictions imposed at all. And were we not to impose such a restriction then of course local authorities would impose a different kind of restriction themselves. There would be ever growing queues for grants or there would be other forms of delay introduced, so that an authority could better manage its limited resources. That would help no one, least of all the disabled person who requires urgent work and yet who has insufficient income to pay for it outside the grant scheme. Those who could afford to pay would simply bypass the grant system anyway. I cannot see that being acceptable to noble Lords. We believe that it would certainly be inequitable between those who have and those who do not have the necessary resources.

My noble friend Lord Swinfen, I believe, also suggested that the test of resources itself is too harsh, and expressed his concern on that point. He thought that the assumptions within it were unrealistic in terms of what a disabled person could afford to contribute even after making allowance for the £20. I have made clear on a number of occasions that we would be prepared to look at the details in the light of any evidence which the noble Lord might care to supply.

The purpose of the test is to prevent hardship, not to cause it: It is to deliver what is needed to those who need it. If the test fails to do so in the case of adaptations then of course we shall look at the matter again. Adjustments can and no doubt will be made in the light of experience. That is why the test is to be prescribed in regulations and not on the face of the Bill. We are prepared to consider any proposals that would make the test work better or direct resources to where they are needed. We are open to constructive dialogue.

Between the Committee stage of this Bill and tonight I have had extensive discussions with the noble Lord, Lord Swinfen, and his advisers outside this House. I believe that in many areas, as will be seen by further amendments to which we shall come later this evening, we have gone a considerable way. On this occasion I feel that our principal aim is to target the resources to those who need them most. That is why we must resist the amendment.

Baroness Masham of Ilton

My Lords, before the noble Lord sits down, will he consider for a moment the people whom he is targeting? He is hitting those who have probably been professional people, such as nurses and teachers, who suddenly contract a disease such as multiple sclerosis. The agony is piled on. They have lived carefully and have saved some money. I have dealt with several such people.

The Government are giving everything to people who have not worked, who have probably drunk and gambled, and who have no incentive to do anything useful for the community. The problem is that there is no incentive for rehabilitation, to get people who have a disability back to work. This is a very damaging situation.

9.15 p.m.

Lord Hesketh

My Lords, with the leave of the House, I must take issue on one point that the noble Baroness drew to your Lordships' attention. I do not believe that this provision applies only to people who drink or gamble. I must not accept that suggestion.

Lord Swinfen

My Lords, my noble friend said that it was the intention of his department and of the Government to ensure that scarce public resources reach where they are most needed. Can he please advise the House how much they estimate will be saved to the Exchequer by carrying out means tests?

Lord Hesketh

My Lords, the purpose of means testing is not to save money for the Exchequer. It is to provide greater resources for those who are worse off in the community.

Lord Swinfen

My Lords, I shall read carefully what my noble friend has said. I do not intend to press this matter tonight. However, I reserve the right to come back to it at a later stage of the Bill. I beg leave to withdraw the amendment.

Amendment by leave, withdrawn.

Lord Seebohm moved Amendment No. 119: Page 103, line 12, after ("then") insert ("unless the applicant is an exempt person as defined in subsection (3A) below,").

The noble Lord said: My Lords, in moving Amendment No. 119 I speak also to Amendment No. 120. One is consequential upon the other.

The purpose of the amendment is to exempt people over 75 from the new means test for home improvement and repair grants. It also allows for the exemption of any other category of person for whom the Secretary of State decides that the means test is inappropriate. Clause 106 introduces a means test for people, mostly home owners, who apply for a home improvement grant from the local authority.

At Committee stage when I put the amendment forward, the noble Earl, Lord Caithness, said that he wished to consider it between Committee stage and now. He also asked for further information that I have now provided. I am perfectly aware of what the noble Lord has said about the importance of targeting. I am in complete agreement that one wishes to ensure if possible that scarce resources go where they are most needed. However, the problem is that targeting is not always successful. When we were discussing the Social Security Bill, for instance, it became clear that of people entitled to family benefit or income support only about 60 per cent. claimed, and 40 per cent. did not. I hope to indicate later that with old people the situation is even worse.

We do not know all the reasons why they do not apply. However, many of us know that there are good reasons. Some simply do not like other people to know that they are going to social security. They feel slightly ashamed as though receiving charity. There are various other reasons. If they have to declare income, and assets, including savings, they are frightened of losing them.

In the short debate in Committee the noble Lord, Lord Boyd-Carpenter, pointed out that a great number of people in this age group are active and earning money. That is perfectly true. On the other hand, I have been in touch with the Government's statistics department and the average age of people in this age group, 75 upwards, is 83.9 years—that is, nearly 84 years—for men and 85.4 years for women. That is the average age of the people with whom we are concerned. We are not talking only about the active 75 year-olds.

People of 84 or 85 years may also become mentally confused, which is not the same as being disabled. However, they do not always understand their rights; nor do they feel that they can face the problems of applying, form-filling and so on.

Having said that, I should like to come on to more specific facts and figures which may be rather more impressive. In this country 6.6 per cent. of the population are 75 years and over. Sixteen per cent. of unfit properties and 31 per cent. of properties lacking basic amenities are occupied by people in that age group. That is in accordance with the 1986 English House Condition Survey. I understand that since then the housing situation has become worse.

The proportion of people who undertake major repair work is extremely low. That survey found that only 2.6 per cent. of households which had undertaken major works were aged 75 or over. According to a parliamentary Answer in July 1989, the median net income, including benefits, of single pensioners aged 75 and over is £59 per week or £3,068 per annum. That figure is well within the maximum income for which a 100 per cent. grant is to be available. For people over 80 years it is well below their figure, which is £71.60.

It is important to stress the correlation between low income and bad housing. Again that survey found that 68.8 per cent. of unfit housing and 77.5 per cent. of housing lacking basic amenities were occupied by people with annual incomes of less than £6,000 per year. Therefore, to exempt people over 75 years would result in substantial administrative savings, to which the noble Lord, Lord Swinfen, has already referred. In Committee, the noble Earl, Lord Caithness, said: The test would deliver in the great majority of cases sufficient to cover the full costs of unnecessary work".—[Official Report, 10/10/89; col. 207.] I have not been able to discover the average amount of claims under this scheme and perhaps the Minister can reveal those figures. However, I believe that they are very low and that means testing probably doubles the cost to the nation of making the grant. It follows that most of the time spent administering the means test to people over 75 years is wasted, especially as explaining the complexities of the scheme to some elderly people can be time-consuming.

I should like to mention two other matters. First, people over 75 years are very much under the study of government and everyone else and will be in connection with the Griffiths Report in considering the importance of keeping old people in their homes. Both Age Concern and Care and Repair Ltd. believe that to help elderly people to stay in their homes in this way would be a very cost effective element within the overall policy.

The final point is that our housing stock in this country is very bad indeed. If we can repair some of those houses occupied by elderly people it may give those houses another 10 or 15 years' lire instead of making them uninhabitable and therefore only fit for demolition. I beg to move.

Lord Ross of Newport

My Lords, may I briefly support this amendment, moved so convincingly by the noble Lord, Lord Seebohm. I would have thought that his statistics certainly vindicate what we are seeking to do. As the Minister may recall, I had a fairly similar amendment down at the Committee stage which was trying to protect elderly people whose long leases which contained onerous repair clauses were coming to an end and they were liable to face dilapidation claims, especially in certain parts of London and in Kensington in particular.

I felt at the time that it was much simpler—and I thought the Government were sympathetic—rather than trying to define such a group, to restrict the provision to the over-75s. I am conscious of having a lady on my immediate left whose mind at the age of 63 is very much brigher than mine. I apologise to those very active Members of this House who are over 80 and more than capable of doing things—

Baroness Seear

My Lords, I hope my noble friend is not including me!

Lord Ross of Newport

My Lords, I certainly never said that my noble friend was included. But it is a fact that as one grows older one does not want to be bothered with all the form filling and the problems which beset people when confronted with bureaucracy. We want to encourage people in their later years to live in reasonable comfort where perhaps they may not have the basic facilities. At present far too many people are in that position. It would not cost the Government very much to implement this proposal. We do not want these people to have to encounter the problems of having to fill in forms and reveal income which at that time of life they may not wish to reveal. I hope very much that the Government will take this on board. I support the amendment.

Lord Dean of Beswick

My Lords, I also want to support the amendment and not just for the reasons that have been given. We have had debates in your Lordships' House on a variety of reports by various commissions—for instance, the Audit Commission report, the Duke of Edinburgh's report, Faith in the City and so on. They have all come to the very definite conclusion that the biggest deterioration in our housing stock is in the owner-occupied sector with properties in the ownership of ageing members of our population. If the Government are saying at this point that they have to target money within that area, it is far better to adopt the wider approach and save the property anyway for ourselves as a nation. But if we cannot do that, we have to go for the lesser solution, and I believe that the amendment addresses itself to that. It is a smaller segment of the population that we are dealing with and it certainly would encourage a substantial number of properties which are rapidly deteriorating to be saved before their state becomes irretrievable.

Regarding the remark about the confusion that can arise at 75 years of age, I have to say, having been a long while in politics in another place, that such a state of confusion often arises well before the age of 75. I support the amendment.

Lord Hesketh

My Lords, as the noble Lord, Lord Seebohm, has explained, Amendments Nos. 119 and 120 seek to introduce a provision which would exempt those over 75 years of age, or any other category of person defined by the Secretary of State, from the test of resources. This would mean in practice that were such persons to apply for a grant and an authority were mindful of approving their application, the grant would be available towards the full costs of the work irrespective of the resources they had available to meet some or all of the costs.

I am not unsympathetic to what this amendment seeks to achieve. I recognise, certainly in the case of those over 75 and in poor housing, that the great majority of them would qualify for generous help with the costs of any repair or improvement works. I also accept that many of them would find form filling a difficult business. I am less sure of the implications in respect of adaptations for disabled people over 75, but I am willing to concede that even with a growing population of very elderly people the cost of the implication of going along with this amendment may not be very high. To give an indication of the figure which the noble Lord, Lord Seebohm, requested we believe that nearly 90,000 people over the age of 75 would receive help who otherwise would not do so without the amendment.

The noble Lord, Lord Seebohm, also drew attention to the low take-up among the elderly. We certainly accept that there is a need to improve take-up. That is why we intend to give the full grant for the first time to poorer applicants. We believe that the full grant will make take-up easier.

Nevertheless, the amendment would set a significant precedent which would provide a focal point for many other groups to argue that they are a special case. The Government cannot accept that. Instead, we prefer to address this issue not by providing exemptions on the face of the Bill but by exploring the possibilities of passporting—that is, where a person has already been tested for some other purpose; for example, housing benefit—so that it might be possible to avoid testing them a second time for grant purposes. That way it might even be possible to passport through the grant system a wider group of people than would be the case should this amendment be agreed by your Lordships. I should be very happy to consider how best that might be done so that in drafting the regulations we can meet the anxieties as fully as possible. I hope that that in part answers the questions posed by the noble Lord, Lord Seebohm, in his two amendments.

Lord Seebohm

My Lords, I am grateful for that reply. It is not quite what I had hoped for; but, on the other hand, it is promising that we should get something to help these old people. Therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 120 to 121 not moved.]

9.30 p.m.

Clause 107 [Landlords]:

Lord Reay moved Amendment No. 122: Page 103, line 33, at beginning insert ("Subject to section 123 below").

On Question, amendment agreed to.

Clause 111 [Approval of applications to provide certain facilities for the disabled]:

Lord Swinfen moved Amendment No. 122A: Page 107, line 26, leave out paragraph (c) and insert— ("(c) facilitating access by the disabled occupant to, or providing for the disabled occupant, a room used or usable for sleeping;").

The noble Lord said: My Lords, this is a resurrection of Amendment No. 148 which was considered in Committee. My noble friend the Minister said that he would take the amendment away to consider and discuss the matter with me. I understand from those discussions that he is likely to accept it.

Briefly, the amendment is designed to allow grants for the building of a new bedroom, not merely for providing access to a room that can be used as a bedroom for a disabled person. I beg to move.

Lord Hesketh

My Lords, the Government have been persuaded, and accept the amendment.

On Question, amendment agreed to.

Lord Swinfen moved Amendment No. 122B: Page 107, line 33, at end insert— ("(ee) improving any heating system in the dwelling to meet the needs of the disabled occupant or, if there is no existing heating system in the dwelling or any such system is unsuitable for use by the disabled occupant, providing a heating system suitable to meet his needs;").

The noble Lord said: My Lords, again this is a revision of an amendment that was brought forward in Committee. It is designed to allow grants for not only the installation but the improvement of heating systems where that is necessary for a disabled person. I beg to move.

Lord Hesketh

My Lords, again the Government have been persuaded, and accept the amendment.

On Question, amendment agreed to.

Lord Swinfen moved Amendment No. 122C. Page 107, leave out line 40 and insert ("person who is normally resident in the dwelling and is in need of such care").

The noble Lord said: My Lords, this is a similar case, namely, a revised amendment to Amendment No. 150 tabled at the Committee stage. The amendment is designed to allow improvements to be made to a dwelling where a disabled resident needs to look after a disabled occupier. I beg to move.

Lord Hesketh

My Lords, for the third time the Government have been persuaded and I accept the amendment.

On Question, amendment agreed to.

Lord Swinfen moved Amendment No. 123: Page 107, line 40, at end insert ("and (h) providing adequate thermal insulation, and draught proofing;").

The noble Lord said: My Lords, this amendment is another revision of an amendment put forward at the Committee stage. It is to allow grants for adequate thermal insulation and draught-proofing, bearing in mind that disabled people in general need improved heating and insulation to their dwellings. I beg to move.

Lord Hesketh

My Lords, I can assure the noble Lord that we attach great importance to energy efficiency measures both in the home and in the wider environment. That is why a disabled person can receive assistance under the provisions in Clause 111(4) on a discretionary basis. They can also receive help under Clauses 112 and 128 as indeed can able-bodied applicants. In each case, these grants are discretionary rather than mandatory. That is because we wish to encourage wherever possible insulation work to be carried out alongside other repair or improvement work rather than in isolation. We wish to get away from the notion of help being exclusively focused on single items of work. This is as true in the case of disabled facilities grant as for renovation grants generally.

It follows that we wish to restrict the number of purposes for which mandatory grants are given—often as single grants—to those essential to the health and safety of applicants. This is the principle behind the revised fitness standard in Schedule 9 of this Bill, as it is behind the last of mandatory purposes in this clause. Whatever the merits of thermal insulation, or indeed of the very many other useful measures which can be taken to make life more comfortable, and indeed less expensive, for disabled people, the Government do not consider that thermal insulation and draught-proofing should be an absolute priority. That is not to say that good insulation, carried out at the right time and in conjunction with other work, is not a better and more efficient way of of improving living conditions. But where that is the case, we would expect the social services and housing authorities to make that judgment and to provide a grant under their discretionary powers.

It is easy to add yet further items to the list of purposes for which grants should be mandatory irrespective of whether the need is fully justified or whether there are the resources available. It is quite plain that an equally good case for mandatory grant for thermal insulation could be made on behalf of other groups of the population who may be vulnerable to the cold; the elderly generally and those with small children. But however important such measures might be, the Government do not believe that the right way to go about helping people in this position is to add yet another mandatory element to the standard. Were we to do that, we would be adding yet further pressures on local authorities' resources and providing less flexibility for them to use those resources in a way most benefiting the needs of their local community as a whole.

Lord McIntosh of Haringey

My Lords, I am grateful to the Minister for giving way. If he were to accept my Amendment No. 124A he would not be placing further burdens on local authorities.

Lord Hesketh

My Lords, as I passed through this little part of my ensemble I was thinking of the noble Lord, Lord McIntosh, and the next amendment. I have no doubt that we shall have the opportunity momentarily in your Lordships' House to proceed to the very point that I have no doubt he will make.

In responding to Amendments Nos. 122A, 122B and 122C, I agreed that there was a case for extending the mandatory disabled facilities grant to cover items essential for the safety of disabled people and for the maintenance of normal family life. For that reason I have accepted that the grant should be mandatory for the provision of a new bedroom, the installation of a suitable heating system and adaptation designed to enable disabled people to care for others living in the family.

With thermal insulation we believe that the case is less compelling. There is scope within this part of the Bill to provide for improvements to thermal insulation in many different ways. I do, not believe that we need to add a yet further category which will favour unduly one group of the population as against another and hinder rather than improve what we believe is the sensible use of limited resources. Therefore, we resist the amendment moved by my noble friend Lord Swinfen.

Lord Swinfen

My Lords, my noble friend said a great deal in an incredibly short time. At this hour of the night my hearing seems to deteriorate and I cannot take it all in. Therefore, with the leave of the House, I shall withdraw the amendment. I shall read carefully what my noble friend has said. It is quite likely, however, that I shall come back at Third Reading with yet another attempt to move this forward. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Masham of Ilton moved Amendment No. 123A: Page 107, line 40, at end insert— ("( ) A local housing authority may 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, this amendment has already been spoken to, but I should like to ask the Minister why this small but important matter which is aimed at saving resources would mean rewriting part of this large Bill. I should like to discuss this matter further. I hope that the Government can find a satisfactory solution before the next stage of the Bill.

Lord Swinfen

My Lords, at this hour of the night I rise briefly to support my noble friend Lady Masham.

Lord Hesketh

My Lords, I believe that I spoke to this amendment some time ago with Amendment No. 114A.

Baroness Masham of Ilton

My Lords, my noble friend said that the amendment was so complicated that part of the Bill would have to be rewritten. I am asking why part of the Bill would have to be rewritten for such a small but important matter.

Lord Hesketh

My Lords, I tried to set out the reasons earlier. The most pressing one concerns the position of a local authority when a property that has been adapted for the special needs of a disabled person can no longer be occupied by that person on completion. The problem arises over the position of the authority with regard to having given a grant.

The noble Lord, Lord Swinfen, pointed out that a contractural arrangement existed between the developer and the purchaser. What we did not cover was the position of the local authority which had committed the money for the grant, and whether or not it should pursue the applicant. There are a number of other reasons. As I recall, there is no reference in Part VIII to a building which is planned for construction, is being built or is a building which is being demolished to be reconstructed. That is also added to the problems of having to redefine that all the way through Part VIII.

Baroness Masham of Ilton

My Lords, with such a shortage of suitable buildings for disabled and elderly people, would it not be possible for that house to go to somebody else on the waiting list?

Lord Hesketh

My Lords, that would be in the case of a private house, for which I do not think there would be such a thing as a waiting list.

Baroness Masham of Ilton

My Lords, there are plenty of elderly people who might want to buy the house.

Lord Hesketh

My Lords, in the case of Amendment No. 123B we were discussing the disabled rather than the elderly.

Baroness Masham of Ilton

My Lords, many people who are elderly are also disabled.

Lord Swinfen

My Lords, with the leave of the House, I wonder whether my noble friend will undertake to look at this again. It seems such a simple matter. It may be complicated, but surely the Bill is set out somewhere on a computer or a word processor. It cannot be that difficult. It is not as though we are working with a quill.

Lord Hesketh

My Lords, sometimes I think that we would be better off working with a quill.

Baroness Masham of Ilton

My Lords, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

9.45 p.m.

Clause 116 [Condition as to availability for letting]:

Lord Swinfen moved Amendment No. 123B: Page 111, line 20, after second ("grant") insert ("other than an application for a disabled facilities grant in respect of works to the common parts of a building containing flats").

The noble Lord said: My Lords, I have already spoken to the amendment, and accordingly I beg to move.

On Question, amendment agreed to.

Clause 123 [Renovation grants relating to two or more dwellings]:

The Viscount of Oxfuird moved Amendment No. 124: Page 117, line 26, at end insert— ("(aa) for the purposes of section 103 above, a separate certificate may be given in respect of each dwelling or in respect of any one or more of them; (ab) if the application is accompanied by more than one certificate and at least one of them is an owner-occupation certificate or a special certificate the application shall be treated as falling within section 106 above and not within section 107 above.").

The noble Viscount said: My Lords, I have already spoken to this amendment and therefore I beg to move.

On Question, amendment agreed to.

Lord McIntosh of Haringey moved Amendment No. 124A: After Clause 129, insert the following new clause:

("Expenditure of grants

.—(1) Where in any year the expenditure by a local authority on grants which it has under this Part a duty to approve exceeds that amount which the Secretary of State had calculated would be payable in determining the amount of a basic or supplementary credit approval under section 52 of this Act, subsection (2) below shall apply.

(2) Where the conditions mentioned in subsection (1) above are fulfilled, the Secretary of State shall issue a local authority a supplementary credit approval under section 51 of this Act to cover that expenditure which is in excess of that amount which had previously been calculated.").

The noble Lord said: My Lords, this is where the bill is presented. The head waiter turns up and says, "We are all very nice people, and we have all had a good time adding more mandatory grants". I must confess that in one respect as regards the disabled facilities grant I have gone along with the noble Lord, Lord Swinfen, in what he said. Indeed, we have certainly debated many of these issues in Committee. However, the issue we raised in Committee remains unresolved.

The trouble with mandatory grants as part of a very limited budget of basic credit approval available to local authorities from central government is that if you extend the mandatory grants too widely they are bound to be at the expense of other local authority expenditure. However admirable mandatory grants may be—and I do not object to them—local authorities need nevertheless to have some assurance that the programme of other work which they carry out using their basic credit approvals will not be strangled by a demand-led expenditure; otherwise they cannot possibly plan their expenditure or give any indication to those who need the other parts of the expenditure of what their expenditure will be.

What sort of budget can a local authority produce if it has, let us say for the sake of argument, £1 million of basic credit approval, and it finds in the first two months of the municipal year that £800,000 of mandatory grants have been applied for? What is the authority supposed to do? Is it supposed to abandon all the other expenditure under the basic credit approval? Further, what will happen if the mandatory grants actually exceed the basic credit approval? It is of course possible that a supplementary credit approval could be made available. That is good enough for that purpose and solves the problem of the mandatory grant; however, it does not solve the problem of other expenditure of the local authority.

The amendment recalls to the House the point which we made in Committee, which is stronger now because of the increases which have been agreed to the scope of mandatory grants, that where a local authority spends more on grants in a year than was provided for the purpose of mandatory grants in its initial basic credit approval allocation, the Government shall issue a supplementary credit approval to cover the extra expenditure on mandatory grants.

Mandatory grants are not an exercise of local authorities' power or discretion; they are a decision by central government. If the basic credit approval has any meaning for any other part of local authority housing expenditure, that housing expenditure having been authorised by government in the basic credit approval, the authorisation ought to be honoured and the mandatory grant expenditure ought not to be allowed to swallow it up or to diminish it. I beg to move.

Lord Hesketh

My Lords, sure enough, moments later we came to the suggestion of the noble Lord, Lord McIntosh, which would have been the answer to the problems in the previous amendment.

It might be helpful to your Lordships if I were to explain the basis upon which provision will be made next year for private sector housing renewal generally, and also how we see provision for mandatory grants fitting into that picture. I should point out to the noble Lord that work is still continuing on many of the details, and we have undertaken to discuss these with the local authority associations very shortly.

Provision for public spending on the private sector stock will next year comprise two elements. The first will be that proportion of the total local authority spend which will be met by specific grant; that is the Exchequer contribution. On average Oat amounts to just over three-quarters of the total, and will be identified separately in the Public Expenditure White Paper. The remainder will form part of local authorities' annual capital guidelines, from which will flow their credit approval—which will include provision for the renovation of their own stock as well as authorities' other housing responsibilities. Together the two represent the provision for local authority capital expenditure on housing which the Government consider appropriate for that year. How much that will be for next year must await the Chancellor's Autumn Statement, but clearly it will include a sum sufficient in the Government's view to enable local authorities to fulfil their obligations under Part VIII of this Bill.

The way in which the specific grant total is distributed between housing authorities will be discussed with the local authority associations shortly. It will need to take into account not just the need for grant—in this case especially the likely number of mandatory cases—but also the likely capacity of authorities to claim grant, which depends on their past record of expenditure and other issues.

Lord McIntosh of Haringey

My Lords, I am grateful to the Minister for giving way. What estimates does he and his department have of the likely take-up and cost of the mandatory grants? He appears to be referring glibly to what are unknowable statistics.

Lord Hesketh

My Lords, if the noble Lord will bear with me for a short time he will find that I shall explain why we believe we know what the figure will be. Concern has been expressed about the level of demand under the new system for mandatory grants in particular, and the difficulties that this might pose for authorities' budgeting. I should like to explain in detail why I believe these fears may be exaggerated.

As regards the effective demand for mandatory grants, there are a number of factors which need to be taken into account. I believe that they answer the noble Lord's recent intervention. I would suggest to your Lordships that taken together these give local authorities more influence over that demand that would at first sight seem to be the case.

In the first place, an applicant is eligible for a mandatory grant only if in the opinion of the local authority the property in question fails one or more of the elements in the new standard of fitness provided in Schedule 9 of the Bill, and by reason of that failure is not reasonably suitable for occupation. That is, or should be, a stringent test. We shall publish guidance to local authorities on the interpretation of the new standard—and we are discussing a draft with the local authority associations at the moment. But this guidance will be advisory and at the end of the day it is for each authority to make its own decision in each case. This is then the first gate to mandatory grant, and the gatekeeper is the local authority.

The second is the decision by the authority as to whether renovation is the most satisfactory course of action in respect of an unfit dwelling. It may be, for example, that clearance is the better option—and we have sought to balance the respective merits of renovation as against clearance in this Bill. It may be also that, having decided on renovation, the authority determines to include that property within a group repair scheme; or it may have already determined to do so. In that case there is no obligation on the authority to pay a mandatory grant until that property is improved in a group scheme. All this points to an authority having in place a proper policy on private sector renewal against which such decisions can be taken.

Thirdly, we have the test of resources. Unless the applicant is unable to afford some or all of the costs of the necessary work no grant is payable. It has been said that the proposed test is too harsh. If we were to move in that direction then of course the call on mandatory grants would be all the greater. Where an authority has, however, a large number of unfit properties occupied by poor people and has few resources of its own then the proposals both in this part of the Bill and in Part IV seek to recognise that.

Overall the Government estimate that more mandatory grants will be approved than under the present system. Even so they will represent one quarter of the total number. The majority will continue to be discretionary. The cost of individual mandatory grants may well, however, be higher, but that follows from our proposals to tackle the worst properties in our towns and cities. The balance between mandatory and discretionary grants—and between the unit costs of each—will of course vary authority by authority. This we shall seek to recognise in the way in which we shall distribute provision for specific grants as reflected in authorities' basic credit approvals. We shall also consider the use of supplementary credit approvals where these might be warranted.

It is the Government's view that in the light of the factors I have explained, the new arrangements for capital finance and for grant expenditure provide the right framework within which local authorities can plan their housing programmes and tackle the remaining problems in the private housing stock. We are not unaware of the difficulties which the noble Lord, Lord McIntosh, has highlighted, even if we might not agree on the likely problems for authorities in practice. We are willing to discuss these with the local authority associations, and we shall listen very carefully to what they have to say. I hope that in part this goes some way towards answering the noble Lord's proposals in the amendment, which I hope he will withdraw.

Lord McIntosh of Haringey

My Lords, that was a shocking and cynical reply. I am disappointed that the Minister should find it possible to stand up with a straight face and put it to the House. He is saying that grants which appear to be mandatory—in other words obligatory on local authorities—are not obligatory. Local authorities have three what he calls gates which enable them to juggle with the conditions of mandatory grants. But he is encouraging them to do so for resources reasons, financial reasons. That is the effect of what he said.

First, he said that local authorities shall determine the fitness standards. He implies that if it looks as though the grants will become too expensive and there will be too much call on their basic credit approval, authorities should raise the fitness standards accordingly. I thought that the fitness standards were set nationally and that local authorities had no discretion. But if the Minister describes it as being a gate and in the power of the local authority, clearly he thinks that there is room for local authorities to juggle the fitness standards.

Secondly, the Minister raised the question of whether it was right for the building to be renovated or demolished. Again, I should have thought, and most people would have thought, that that was an objective decision which ought to be reached on criteria which are nationally accepted. But the Minister suggests that again this should be something which the local authority should have the power to juggle in order to make sure that mandatory grants stay within the resources and are not a threat to other parts of the expenditure of the local authorities.

The third element which the Minister proposes should be juggled is the resources of the applicant. Again I thought that under the mandatory grant system the resources of the applicant would be determined by nationally agreed criteria. There would be no possibility for a local authority to adjust them to meet its financial circumstances.

In all these three cases, the Minister proposes that local authorities should quite shamelessly interpret the mandatory grant criteria to their advantage in order to minimise the danger, which I am glad to see he recognises, to other items of expenditure for which their basic credit approval is required. I believe that on reflection the Minister will wish to reconsider the answer he has given because it casts doubt on the objectivity and national applicability of the mandatory grant system. It casts doubt on the relationship between central government and local authorities in the application of the mandatory grant system. I suggest that in one way it is an invitation to local authorities to abuse the conditions of the mandatory grant systems.

I hope that the Minister will reconsider this. I can only beg leave to withdraw the amendment on the basis of the continuing discussions which are taking place with the local authority associations and not in any way because I am satisfied with that reply. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 131 [Cases in which grants may be re-calculated, withheld or repaid]:

The Viscount of Oxfuird moved Amendment No. 125: Page 125, line 7, leave out ("not") and insert ("neither—

1. (i) one which they were required to approve by virtue of section 109 above in a case where completion of the relevant works was necessary to comply with a notice under section 189 of the Housing Act 1985 (repair notice requiring works to render premises fit for human habitation); nor
2. (ii)").

The noble Viscount said: My Lords, I have already spoken to this amendment. I beg to move.

On Question, amendment agreed to.

Clause 135 [Interpretation of Part VIII]:

Lord Dean of Beswick moved Amendment No. 125ZA: Page 127, line 13, at end insert ("and, in relation to a house in multiple occupation, "owner" has the same meaning as in Part XI of the Housing Act 1985").

On Question, amendment agreed to.

Lord Reay

My Lords, I beg to move that further consideration of the Bill on Report be now adjourned.

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

House adjourned at one minute past ten o'clock.