Lords Sitting of 29 March 1993

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

Credit Cards: Fraud
Lord Molloy Lord Molloy asked Her Majesty's Government:
Whether they will take steps to protect customers from fraudulent charging by companies when making payments by credit cards.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Baroness Denton of Wakefield): My Lords, the Government have no plans to take such steps. Credit card holders are not liable for fraudulent charges by traders.
Lord Molloy: My Lords, I thank the noble Baroness for that Answer. However, is she aware of the enormous problem that is being created, bearing in mind the fact that the credit card referral unit has itself initiated a number of arrests and nothing much has been done? Two thousands cards are either lost or stolen each day. Further, British people on holiday on the Continent have had to pay bills from places which they have never visited in their lives. Surely the Government could contact the card companies and instruct them to be a little more careful and to play the game with their reasonably honest customers who, although they may be foolish, are not dishonest?
Baroness Denton of Wakefield: My Lords, I must tell the noble Lord that I believe this to be an occasion on which we could have some sympathy with the banks. If a transaction has not been authorised by a card holder, the card issuer will reimburse the holder and charge the amount back to the merchant acquirer or retailer. It is important for individuals to retain transaction vouchers, to check their statements carefully and to inform the card issuer without delay.
Lord Williams of Elvel: My Lords, is the noble Baroness aware that there has been considerable comment recently in the press about credit card vouchers which are left open to car hire companies by holidaymakers? When the return comes in, people find that extra charges have been added. Is that a desirable practice, or is there any way in which one could prevent it?
Baroness Denton of Wakefield: My Lords, I am aware of the issue regarding car hire vouchers returned in such a way. It is something at which the Director General of Fair Trading is looking. There are already rules stating that charges in respect of vehicle damage, parking tickets and traffic violations cannot automatically be charged to the card holder's account.
Lord Clinton-Davis: My Lords, while operating within the letter of the law, is it not outrageous that credit card companies are now charging 20 per cent.
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over the base rate on balances which are not cleared by the end of the month? Further, is it not even more outrageous that those companies are now considering ending the interest-free period, so that the interest is paid as soon as the item is bought and not from the time it appears on the statement? What do the Government propose to do about the matter?
Baroness Denton of Wakefield: My Lords, the Government will leave commercial contracts to the parties concerned. I should also point out that it is standard banking practice for interest to be paid on an amount borrowed from the time that it is borrowed.
Lord Molloy: My Lords, is the noble Baroness aware that the Consumers' Association is very interested and much perturbed by what is going on at present with credit card firms? The association believes that such firms should not just add on extras without proof of such extras being approved by the person who owns the card. It asks that there should be more responsibility taken before debiting accounts with extras. There is also the problem which arises when people telephone for an item and give their credit card number. They think that the amount to be charged is "x" amount, but when they come to pay for it they discover that the amount is very much more than that stated in the advertisement. Surely in the interests of honesty, the credit card companies and the bankers would be pleased if the Government were to take some initiative in the matter so as to get a better understanding for all concerned?
Baroness Denton of Wakefield: My Lords, I fully appreciate the noble Lord's concern. Credit card fraud and lost credit cards are a major problem. There is a responsibility on the card holder's part; for example, many cards are stolen from cars. That seems to me to be no place to leave one's credit card. Moreover, if a trader cannot substantiate a transaction, the card holder will be reimbursed. But leaving a credit card docket unsigned is no different from writing a blank cheque.
Lord Bruce of Donington: My Lords, at the risk of sounding a little old-fashioned, is there not a certain virtue in settling one's debts by cash?
Baroness Denton of Wakefield: My Lords, I suggest that there are many protections against using a credit card which are to the advantage of the consumer.
Earl Attlee: My Lords, what consideration have the Government given to obliging issuers of credit cards and bankers' cards to encapsulate a photograph of the card holder on the card?
Baroness Denton of Wakefield: My Lords, I am pleased to be able to assure the noble Earl that that matter, and several other technological protection matters, are being considered by the card issuers, who are the ones most at risk in many such transactions. Barclays Bank recently installed a system whereby an automatic check can be made to ascertain whether the proposed spend is in the pattern of the person spending. Unfortunately, I understand that it stops someone buying an engagement ring.
Lord Marlesford: My Lords, does my noble friend agree that in general there are no free lunches and that credit cards are often a snare and an illusion? Cautious people should be extremely careful about using them. It is foolish for people to have many credit cards just because they are often regarded as a status symbol.
Baroness Denton of Wakefield: My Lords, I agree with my noble friend that responsible borrowing is the only kind of borrowing that people should enter into.

Honorary Consuls: Selection
2.43 p.m.
Lord Auckland Lord Auckland asked Her Majesty's Government:
What criteria they use for the appointment of honorary consuls and for the selection of countries in which they serve.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, candidates for honorary consular appointments should be people of sound standing in the local community with good access to useful contacts. Our policy is to strengthen the honorary consular network. Each head of mission throughout the world may consider whether or not a particular area under his or her jurisdiction would benefit from the appointment of an honorary consul.
Lord Auckland: My Lords, I thank my noble friend for her customary courteous and comprehensive Answer. Is she aware of the great debt we owe to our consuls, whether paid or unpaid, in our diplomatic service the world over? However, does my noble friend not agree that there is an anomaly? In Canada, for example, one can travel for 4,000 miles without having access to a consul. In Finland, which is a country I know and love well, there are 10 honorary consuls; in Norway there are 14. Is that not an anomaly? Consuls carry out excellent work. Will my noble friend consider the matter?
Baroness Chalker of Wallasey: My Lords, I thank my noble friend for that question. I agree that we owe a great debt to all consuls, whether honorary or in the diplomatic service. Many consuls who reside in holiday resorts work way beyond their normal hours. I realise that in large countries where long distances are involved there may be a case for appointing more consuls if the diplomatic service and Ministers think that that is right. However, I am told that travelling is easy in Canada and that telecommunications there are good: the facilities are better than those that exist in Finland and perhaps in Norway. Canada constitutes a special case in this regard. The High Commissioner in Ottawa keeps the matter under continual review. I gather that in Finland the large number of honorary consuls is a matter of historic significance. The consuls perform little work but, for historical reasons, are not paid, as other honorary consuls are.
Lord Cledwyn of Penrhos: My Lords, what is the Government's argument against establishing an honorary consulate in Alberta?
Baroness Chalker of Wallasey: My Lords, the situation in Alberta has been special. We have not continued the appointment because of the low amount of work that was being done by the consulate general there. As my noble friend made clear on 2nd March, we are satisfied that consular assistance to British citizens transiting Alberta is adequately covered from Vancouver. The office in Vancouver covers export promotion work. That work could not be undertaken by an honorary consul. However, as I told my noble friend earlier, we are keeping the situation under review, although at the present time there does not seem to be the work for an honorary consul there.
Lord Boyd-Carpenter: My Lords, will my noble friend confirm that the High Commissioner in Ottawa is considering the situation in Alberta? Vancouver may help a little but it is a considerable distance from Alberta where there was formerly a full-blown consular office.
Baroness Chalker of Wallasey: My Lords, I am well aware of the matter my noble friend refers to. In the past year or so few inquiries were made to the paid consul in Alberta. We are asking the High Commissioner in Ottawa to keep the matter under close consideration. I can assure my noble friend that Ministers are keeping the situation in Alberta under review and are also reviewing the opportunities that might be afforded by honorary consuls elsewhere.
Lord Belhaven and Stenton: My Lords, will my noble friend consider appointing a consul general in Krakow as Poland has requested?
Baroness Chalker of Wallasey: My Lords, I note what my noble friend says. I shall look into the matter.
Baroness Blackstone: My Lords, does the Minister agree that when subordinate posts have to be closed, as they are likely to have to be closed following the cuts in the Autumn Statement, there is a case for examining them post by post to see whether it would be appropriate for an honorary consul to be appointed in place of a full-time consulate? Will the Government also consider a recommendation made by the Central Policy Review Staff in its review of overseas representation some years ago that British trade representatives should be drawn from local businessmen based abroad? The recommendation appears in chapter 6, paragraphs 118 to 120.
Baroness Chalker of Wallasey: My Lords, I am not surprised that the noble Baroness knows the paragraphs so well. Most of us who have read the report also know them. Foreign governments can turn down requests to have honorary consuls either from the visiting nation or their own nation. Sometimes, if a post is closed for any reason, the government concerned do not wish to have an honorary consul there instead of a full diplomatic post. The position is not always quite as easy as the noble Baroness indicated. It is clear that while honorary consuls can represent extremely good value for money, one should not think that honorary consuls who occupy their

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posts in the name of the British people and the British Government should have an additional ability to pursue their own trade interests.
Viscount Montgomery of Alamein: My Lords, in view of my noble friend's support for the concept of honorary consuls, especially in remote cities, can she support the notion of increasing the number in Latin America where the distances are even greater than in Canada and the countries are diverse?
Baroness Chalker of Wallasey: My Lords, I can tell my noble friend that we are perfectly prepared to look at such matters in the light of the work which is asked of us. We know from our annual records what is asked of us. Where there is a case for having them, then I believe that honorary consuls can represent not only good value for money but also good publicity for the United Kingdom abroad.

European Elections
2.50 p.m.
Lord Holme of Cheltenham Lord Holme of Cheltenham asked Her Majesty's Government:
What is their response to the De Gucht proposals for the adoption of proportional representation in the United Kingdom for the next European elections, and in particular what action they propose to take on the six additional seats allocated at the European Summit in Edinburgh.
The Minister of State, Home Office (Earl Ferrers): My Lords, we are ready to discuss the European Parliament's resolution in the Council of Ministers. The Government are currently formulating proposals for accommodating six extra seats. When we have done so we shall consult with the opposition parties.
Lord Holme of Cheltenham: My Lords, I thank the noble Earl for that extremely encouraging and interesting reply. On previous occasions in this House I have heard him stonewall when replying to questions on the subject of proportional representation for European elections. Perhaps I may encourage him in that new open-mindedness on the part of the Government by reminding him that Article 138 of the European Community treaty, to which the UK is a signatory, commits us to a uniform electoral procedure. Is the Minister further aware, as I am sure he is, that in their proposals Mr. De Gucht and his colleagues in the European Parliament bend over backwards to try to accommodate British institutional conservatism on the issue? Finally, does he agree that failure on our part to move towards a common electoral system would not merely take us further from the heart of Europe but would also further widen the gap between the British people and European democratic institutions?
Earl Ferrers: My Lords, I agree with the noble Lord that Article 138 of the European Community treaty requires the European Parliament to draw up proposals for uniform electoral procedures. It is for the presidency to decide when the Council of Ministers will discuss the matter.
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I am grateful to the noble Lord for saying that he thought that I was more open-minded, but I would not wish to encourage him too far about that. We, intend to discuss the matter with our European partners in the Council of Ministers. We have always taken the view that the first-past-the-post system is the best and that proportional representation is not a system: it depends on which of the 20 systems one desires to adopt. I do not believe that if 'we retain the first-past-the-post system it will take us away from the heart of Europe.
Lord Beloff: My Lords, does my noble friend agree that if there is to be a uniform system, given the desire of the Italians to rid themselves of PR and the Mafia in one blow, it is more likely that Europe will opt for a single system, namely first-past-the-post?
Earl Ferrers: My Lords, I would not wish to equate the first-past-the-post system with the Mafia. Whether the Council of Ministers agrees in the end on a first-past-the-post system or proportional representation is a matter for the Council of Ministers. The obligation is to find a uniform electoral procedure. That system has yet to be found.
Lord Bruce of Donington: My Lords, is the noble Earl aware that we have been down this road before? We had direct elections in 1979 in order to bring ourselves into conformity with the remaining states of Europe, with the result that we had a system of direct elections here and in Ireland, whereas the remainder carried on exactly as before. Would it not be far better if her Majesty's Government were to relax on this issue and concentrate instead on seeking the verdict by referendum of the British people as to whether they want Maastricht at all?
Earl Ferrers: My Lords, the noble Lord is remarkable in being able to bring up the subject of Maastricht on this Question about proportional representation. It has nothing to do with it.
Baroness Elles: My Lords, is my noble friend aware that it is the British Members of the European Parliament who have the closest connection with their electorate in this country? MEPs have direct links with the electorate in their regions. Other Members of the European Parliament do not have that direct link. Perhaps I may be allowed to tell the House that one MEP, a Frenchman, said that if he had three articles in Le Monde a year that was his only connection with his electorate.
Earl Ferrers: My Lords, I am most grateful to my noble friend Lady Elles for making the case for the first-past-the-post system so clear. When people say that we are the only country not having proportional representation, it is interesting to note that Spain and Portugal have a list system in which the electorate choose parties rather than a member, Belgium has a list system of a different variety, Italy has a list system but now wants to revert to the first-past-the-post system, and France has a system in which one votes on two consecutive Sundays. There is no unanimity there at all.
Lord. Cockfield: My Lords, is my noble friend aware that the present Socialist majority in the European Parliament is due entirely to the bizarre operation of the first-past-the-post system in the United Kingdom? Does he regard that as a good argument for the retention of the first-past-the-post system?
Earl Ferrers: My Lords, having a Socialist majority is regrettable. But to use that as an argument for doing away with the first-past-the-post system is even more regrettable.
Lord Richard: My Lords, the noble Earl told us that the Government are considering ways of accommodating the six additional seats allocated at the European Summit. Do they propose to accommodate those on the basis of single member constituencies? If so, should not the Boundary Commission be hard at work?
Earl Ferrers: Yes, my Lords. The idea is to redraw the lines of the European parliamentary boundaries. That can either be done by the Boundary Commission, which at the moment is tied up, or by a special body of people. If that is so we shall, of course, have consultations with all opposition parties.
Lord Richard: My Lords, can the noble Earl tell us who the special body of people might be?
Earl Ferrers: My Lords, not until the special body of people has been devised.
Lord Tordoff: My Lords, is the noble Earl aware that that reply will cause considerable shock to democrats in this country? We have a system for devising boundaries in this country which is called the Boundary Commission.
Is there any truth in the rumours that the Government may not proceed with the six seats at all and, because of the difficulties of redrawing the boundaries on the first-past-the-post system, we may forgo those seats? Do the Government care to deny that?
Earl Ferrers: My Lords, I do not believe that there is any validity in the rumour that the noble Lord has just promulgated.
Lord Howie of Troon: My Lords, leaving aside the question of proportional representation, which is obviously much more sensible than the system we have here, will the Minister give us some guidance on how those six seats are to be divided among the various nations which make up the United Kingdom?
Earl Ferrers: My Lords, that would be for the advisory body to decide.
Lord Stoddart of Swindon: My Lords, can the noble Earl confirm that any alteration to the voting system for the European Parliament would have to be agreed by both Houses of the Westminster Parliament?
Earl Ferrers: My Lords, the noble Lord is quite right. Any alteration of this kind would require primary legislation, which would need the approval of both Houses of Parliament.
Lord Elton: My Lords, can my noble friend tell us who Mr., Mrs. or Miss De Gucht is and by what right he or she makes recommendations that we should change our system of election?
Earl Ferrers: My Lords, Mr. De Gucht—I hope that I have the correct pronunciation—is a Member of the European Parliament. He is a Belgian. He is a Liberal. He has made his proposition to the Council of Ministers and the Council of Ministers is going to discuss it.
Lord Holme of Cheltenham: My Lords, the noble Earl belies his chauvinism with his exquisite pronunciation of Mr. De Gucht's name, on which I congratulate him. If it is the Government's intention to consult with opposition parties, will they also consult the Conservative Members of the European Parliament, a large majority of whom favour a reform of the electoral system on these lines?
Earl Ferrers: My Lords, I wish to make the situation perfectly clear. We intend to redraw the parliamentary constituency boundaries for the European election before next July. How that is to be done in order to accommodate the six new additional places is a matter still to be discussed. It could be by the Boundary Commission; it could be by a special body.

Royal Parks Agency
3 p.m.
Baroness Hamwee Baroness Hamwee asked Her Majesty's Government:
Whether, following the establishment of the Royal Parks Agency on 1st April 1993, each of the parks will be able to retain for its own use any surplus income it may generate, and if not, why not.
Viscount Astor: My Lords, the financial arrangement agreed with the Treasury will allow the Royal Parks Agency to keep 50 per cent. of any income above its Voted provision. This reflects the need to tackle a backlog of essential maintenance which exists throughout the parks. It is not specific to individual parks.
Baroness Hamwee: My Lords, does the Minister agree that to allow discretion as to the use of surplus income would encourage appropriate investment in the parks and the enjoyment and full use of them? It would be a good idea for each park to be treated differently by those who know about it.
Viscount Astor: My Lords, in practice that would normally be the aim. However, because of differing priorities across the parks, the chief executive will be the ultimate arbiter on how the additional income will be used. That is to ensure that the primary aims of the agency set out in the corporate plan are best served.
Lord Strabolgi: My Lords, why has the essential repair and refurbishment work to the Albert Memorial in Kensington Gardens, one of the Royal

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parks, been suspended? Is it part of the Exchequer cuts? Should it not be a national responsibility for that work to proceed as quickly as possible?
Viscount Astor: My Lords, the Government recognise the importance of that Grade I listed memorial and are committed to its repair and restoration. Over £2 million has already been spent on a full survey and protection and to prevent any deterioration. Plans for the restoration have been prepared. The current cost is projected to be £10.4 million over six to seven years. We do not yet have a commencement date for the works.
Baroness Gardner of Parkes: My Lords, what is happening about the Royal Parks Advisory Committee? Is there to be one committee for all the Royal parks or will each park have its own committee? How will local people be consulted in advance?
Viscount Astor: My Lords, there will be one advisory committee. Its main function will be to provide a source of independent advice for the Secretary of State on the agency's proposals for the development of the parks and the agency's performance against its published targets. Park managers are building on their relationships with local interest groups. The agency's corporate plan will be published on 1st April. A copy will be placed in the Libraries of both Houses. In addition, the agency also proposes to make individual park plans available to local groups and statutory bodies in due course.
Baroness Nicol: My Lords, does the Minister accept that some of us are extremely surprised to learn that any Royal park might make a profit? Will he explain how a profit is to be made? If it is to be made what magnitude are we talking about? Furthermore, is making a profit to be a criterion in re-letting contracts? In other words, if a park fails to make a profit, will that failure influence who obtains the contract next time?
Viscount Astor: My Lords, I believe that the noble Baroness is somewhat mistaken. The parks do not make a profit. The expenditure for 1993–94 is £26.9 million. Out of that sum, the income is only £2 million. There is therefore no question of making a profit. We were discussing earlier any profit on specific projects which occur within a park. That is a different matter.
Lord Elton: My Lords, if any profit or other surplus money is generated in relation to St. James's Park, will my noble friend ask the body responsible for allocating such surplus money to consider further work to ensure the full aeration, circulation and cleanliness of the water in the pond which in hot weather can detract considerably from the attractions of the park?
Viscount Astor: My Lords, we have already taken steps to improve the water quality in St. James's Park. Time will tell this summer how successful those measures have been. In the past, all excess receipts had
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to be surrendered to the Consolidated Fund. The fact that we are able to retain 50 per cent. is a substantial improvement.
Lord Geddes: My Lords, in his original Answer, did my noble friend refer to 50 per cent of any income or 50 per cent. of any surplus income?
Viscount Astor: My Lords, it is 50 per cent. of any surplus income, which means 50 per cent. of any income which is not part of budgeted income for that year.
Lord Donoughue: My Lords, when announcing the extension of the agency concept to Royal parks, the Chancellor of the Duchy of Lancaster claimed that hitherto the agencies had achieved three of their four targets in the areas of finance, productivity and value for money. He admitted that with regard to the fourth target area, quality, the agencies were falling short. Is the Minister aware that quality is the prime priority in relation to our Royal parks for the citizens of London and its visitors and that it should be a higher priority than the financial considerations being promoted?
Viscount Astor: My Lords, the aims of the Royal Parks Agency is to protect, preserve and enhance the parks and to offer peaceful enjoyment, recreation, entertainment and delight to their visitors.
We care about quality. The recent review of Hyde Park and Kensington Gardens, carried out by Dame Jennifer Jenkins identified the need for increased funding to tackle the severe backlog of urgent maintenance. We are extremely grateful to Dame Jennifer and her committee for the hard work that they have put into producing an excellent report on Hyde Park. We expect her further report on Green Park, St. James's and Regent's Park to he published shortly.

Business
Lord Hesketh: My Lords, it may be for the convenience of the House to know that the Committee stage of the Housing and Urban Development Bill will be adjourned at about 7 p.m. for about one hour and that during this adjournment the Pneumoconiosis etc. (Workers' Compensation) (Payment of Claims) (Amendment) Regulations 1993 and five Scottish legal aid regulations will be taken.

Business of the House: Consolidated Fund (No. 3) Bill
3.6 p.m.
The Lord Privy Seal (Lord Wakeham): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That, in the event of the Consolidated Fund (No. 3) Bill being brought from the Commons, Standing Order 44 (No two stages of a Bill to be taken on one day) be dispensed with to enable the Bill to be taken through all its stages this day.—(Lord Wakeham.)
Lord Bruce of Donington: My Lords, your Lordships will recall that previously when the Motion has been moved there has been raised from all quarters of the House the possibility of using the day on which the Consolidated Fund Bill comes before your Lordships as a means of inaugurating a debate on the general economic or financial state of the nation's affairs.
Noble Lords will be aware that this afternoon the Select Committee on Procedure will be meeting in order to discuss the matter on a proposal produced by the noble and learned Lord, Lord Simon of Glaisdale, the noble Lord, Lord Boyd-Carpenter, and myself. Will the noble Lord give the House the benefit of any further constructive thoughts that he may have before the committee meets?
Lord Wakeham: My Lords, I have been around just long enough to know that last time I gave the benefit of my advice after the Select Committee had considered the matter. I do not believe that it would be wise for me to give any views prior to the committee meeting later this afternoon.
Lord Boyd-Carpenter: My Lords, will my noble friend give your Lordships some guidance? As the position now stands, debate on the Consolidated Fund (No. 3) Bill is prohibited. As the noble Lord, Lord Bruce of Donington, said, that is to be discussed by the Procedure Committee this afternoon, and I shall not touch upon it now. However, will my noble friend say whether or not the procedural Motion that he has moved is regarded as debatable?
Lord Wakeham: My Lords, I am sure that noble Lords are perfectly in order if they wish to debate the procedural Motion that I have moved.
Lord Cocks of Hartcliffe: My Lords, I wish to support the two noble Lords who have spoken. The first item on the Orders of the Day and Notices of Motions in another place is the Consolidated Fund (No. 3) Bill. It states that,
"Questions on Second and Third Reading of the Consolidated Fund (No. 3) Bill will be put forthwith".
There will therefore be no debate whatever in another place. Members in another place will obviously do as they wish. However, we have had previous discussions on the subject in this Chamber and I should like some assurance that we are not negating any right that we may have had in the past.
Lord Campbell of Alloway: My Lords, as on previous occasions, I support all noble Lords who have spoken in this matter.
Lord Wakeham: My Lords, all four noble Lords who have contributed briefly to the debate are well apprised of the issues which will be discussed later this afternoon by the Select Committee.
On Question, Motion agreed to.

Deputy Chairmen of Committees
The Chairman of Committees (Lord Ampthill): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Baroness Hooper and the Viscount Allenby of Megiddo be added to the panel of Lords appointed to act as Deputy Chairmen of Committees for this session in place of the Viscount Davidson, who has resigned.—(The Chairman of Committees.)
On Question, Motion agreed to.

Housing and Urban Development Bill
3.10 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Strathclyde): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Strathclyde.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Clause 93 agreed to.
Clause 94 [Tenant's notice of intention etc.]:
Lord Monk Bretton Lord Monk Bretton moved Amendment No. 176A:
Page 96, line 13, at end insert:
("() In Schedule 5 to the 1985 Act, paragraph 10 (certain dwelling houses for persons of pensionable age), sub paragraph (2) (b), for the words from "a system" to "a group of dwelling houses" there shall be substituted "or other designated responsible person and a system for calling him provided that the system was in operation either on 1st January 1993 or, if the tenancy was granted after that date, at the inception of the tenancy."").
The noble Lord said: The history of this amendment goes back a long way. In order not to empty the Chamber too quickly, I shall try not to go back further than I can help. But I fear that I have to go back to the Local Government and Housing Act 1989. At a late stage in the passage of that Bill, in fact the Committee stage in this House, the Government decided to repeal paragraph 1 I of Schedule 5 to the Housing Act 1985. That repeal would have permitted enfranchisement in small groups of council housing designed for the aged, but where, inter alia, no common room facilities existed. That had particular implications for the provision for the elderly in small groups and in smaller villages in rural areas.
This House was not satisfied with the position then and hence passed by 94 votes to 36 a somewhat hastily composed amendment which relied upon each application for enfranchisement in those cases being determined by the Minister. It was hastily proposed by the noble Lord, Lord McIntosh of Haringey. I am sure that he would not mind my saying that it had to be done hastily and it may not have been as perfect as all that. However, on the whole the House felt that he had done a good job. That amendment constitutes the present paragraph II of Schedule 5 to the 1985 Act, and that is the present position.
At that time there was some doubt as to whether the proposal was ideal. To begin with, it is a pretty cumbersome procedure. My noble friend Lord Vinson and I had put amendments down which would have reduced the number of cases which the Minister

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needed to determine. Our amendments were with-drawn pending discussion before Third Reading with the Minister, who was then my noble friend Lord Hesketh. My recollection is that we got within an ace of success in the discussions, but at that time there were great pressures on the parliamentary timetable at the end of the Session. There was a strong desire not to amend the Bill further and it was therefore concluded that perhaps the best thing we could do on that occasion was to await a further legislative opportunity. So, although amendments were put down on Third Reading, they were not moved.
Amendment No. 176A was one of the amendments put down on that occasion. In effect, it amends paragraph 10(2) (b) of Schedule 5 to the 1985 Act. That paragraph lists the cases where enfranchisement does not apply. The amendment simply takes out the requirement for the common room, leaving the other provisions as they are in paragraph 10. The rest of the amendment proposes to prevent the later addition of a calling system, which might be some form of abuse to which authorities might possibly resort.
Today, looking at the matter again, we have the advantage of hindsight. Since 1989 a large number of applications have been made to the Minister, I believe almost 4,000. There have been complaints about uncertainty and delay. Local authorities have 28 days in which to apply. They have found that a pretty tight schedule and in a number of cases they have failed over the deadline.
On the other hand, the Minister is permitted to take as long as he likes, and it is alleged that he has certainly done so. One wonders whether the uncertainty is of much help to anyone, local authorities or potential enfranchisers. There have been complaints on both sides about petty application of the rules and I suppose that that is fairly inevitable. I shall not go into it now.
Then, of course, there is the cost of this lengthy procedure; and another drawback is that the Act in no way enjoins the Minister to take into account the likelihood or otherwise of a dwelling for the elderly being replaced if the original one is enfranchised. Several local authorities are concerned on that score. They see a steady attrition of suitable accommodation available to them which will make it more difficult for them to fulfil their obligations. My anxiety about that is the obligation they have of rehousing under the Rent (Agriculture) Act 1976. It would be interesting to know how the Minister sees the position.
The dangers, in my view, are, first, that as people become older they wish to stay in the same neighbourhood, to continue to live where they have reason to live as long as they can. That is something which might be prevented. I also see increasing difficulty for local authorities in rehousing retired agricultural workers under the 1976 Act.
It seems to me right to propose something that would make for more automatic decisions and less bureaucracy. That is what the Association of District Councils wishes to see. The amendment would reduce the number of applications for the Minister to decide. It would provide, I believe, more certainty. It might result in somewhat fewer enfranchisements of that
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kind of property. Under the circumstances, that might be to the good; after all, the number of elderly is not decreasing. I beg to move.
Lord Coleraine: I support my noble friend's amendment for most of the reasons that he gave. In particular, there is the position of small groups of houses in rural areas where it would not be reasonable to expect a common room to be attached to the group. Nor would it seem to be reasonable for a council in those circumstances to have to go through the currently cumbersome and capricious procedures involved in paragraph 11. I hope that my noble friend will consider that a case has been made here.
Lord Renton: I too support the amendment moved by my noble friend Lord Monk Bretton. I happen to be an elderly person and live in a rural area, but I have no interest to declare so far in the amendment. It is a fact that a great many people in rural areas seem to live to a great age. Once they have become settled in a cottage, flat or small house, they do not wish for any reason, whether it be a technical reason under the housing law or any other, to have to move against their will. To the extent that my noble friend's amendment would prevent that, I think it requires a great deal of sympathy.
We have reached a stage of the Bill at which I must confess, although I am a lawyer, we enter a realm of a good deal of legislative complexity and some technicality. My noble friend explained with great clarity the reason for the amendment and its result. I find it difficult to understand how my noble friend on the Front Bench could be other than sympathetic towards it.
Baroness Hollis of Heigham: On this side of the Committee we warmly support the amendment so eloquently moved by the noble Lord, Lord Monk Bretton. We have long been concerned at the way the Secretary of State exercises powers under the Housing Act 1985 to exclude elderly persons' dwellings from the right to buy. The significance is that, short of full sheltered housing, there is special housing designed to meet the social and physical needs of the elderly in the last five to 10 years of life which can now be sold. As so many speakers have said, owing to the growing number of the elderly, the demands of care in the community which very shortly will face us all and the particular needs of the rural community to allow elderly people to remain in their villages and small towns, it is essential that elderly persons' bungalows, short of full sheltered housing, should remain part of the socially rented housing stock.
It cannot be sensible that someone of 80 should exercise his or her right to buy an elderly persons' bungalow which has been customised for his needs, and buy at a heavy discount, which does not allow a replacement bungalow to be built, who may then, unfortunately, die within a year or two, so that the elderly persons' bungalow passes to a son or daughter of 40 or 50 who can sell it to somebody else as a second home. That cannot be right. It strips rural areas in particular of their ability to meet the housing needs of the elderly.

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The Secretary of State currently exempts sheltered housing where it is clustered round a common room or has a resident warden and high care facilities. But where we deal with elderly persons' bungalows without the full range support of facilities, it is left, as the noble Lord, Lord Monk Bretton, said, to the Secretary of State to decide. The factors he takes into consideration include location, heating systems, design, size and so on. When the delays prove to be bureaucratic and time-consuming, local authorities are required to contest a right-to-buy application on an elderly person's dwelling in 28 days. In my authority it has taken up to 14 months for the Secretary of State to reply—not surprisingly, when one asks the Secretary of State to deal with each individual case on its merits based on the associated paperwork. In consequence, local authorities have to measure to the nearest yard the distance of a bungalow from shops and from bus stops, heights of ceilings and the like. It is simply bureaucratic nonsense. The result is that we have had whimsical, unpredictable and arbitrary decisions flowing from the Secretary of State as to whether an elderly person may or may not buy his or her bungalow or flat.
For example, the local authority was required to sell an old person's ground-floor flat on the basis that that flat was located on a noisy road and therefore, the Secretary of State held, was not suitable for an elderly person. Yet at the same time, if that flat were not on a main road, the Secretary of State would have regarded it as being too far from buses and shops and therefore not suitable for an elderly person.
On another occasion, the local authority was required to sell a dwelling because it was 0.9 miles away from the nearest shop—this being in a rural area where there were no shops for two miles. That meant that, on that formula, that village could have no elderly persons' bungalows at all. In another case, for example, the Secretary of State required the sale of an elderly person's flat because it had high ceilings and the Secretary of State argued that people could not reach to change the light bulbs. Another was sold because it had the wrong catch to a bathroom door; another because, though the bath was fitted with grab rails, it was not properly designed for an elderly person.
On that basis, neither the tenant applicant nor the local authority can predict whether an elderly person's flat, bungalow or dwelling will come within RTB. It is clearly nonsense. What the amendment will do—which is why we support it so warmly—is to exclude from RTB not just sheltered housing which is currently exempt but those elderly persons' dwellings which are connected to a warden system or a control system; in other words, designed for the elderly in the last years of their life who need some degree of support to remain in the community. We believe that that is an appropriate field for socially rented housing, particularly in rural areas. We very much hope that the Government will support the amendment.
Lord Marlesford: I too rise to support strongly the amendment of my noble friend Lord Monk Bretton. I am a great supporter in general of the right to buy.
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But, as noble Lords know, it has caused very special problems in rural areas. They are problems which have to some extent to be made up for through the reinvention of council housing under another name—through housing associations. Unfortunately, due to a shortage of government funds, it has not been possible to make up the deficit. There are many villages where people are simply unable to afford to live and where the whole social and age mix of the population is changing greatly as the result of that particular scarcity.
If one has legislation of this sort, which is in general good, one should not shrink from producing the necessary amendments to make it more precise in meeting demands. I believe that the amendment of my noble friend would facilitate matters. I believe that all Members of the Committee must agree that where there is housing which has been specially provided in any form for the elderly, at a cost great or small, it is a great pity if there is no simple and non-bureaucratic means whereby the right to buy should not apply to such housing.
Baroness Hamwee: Voices have been raised on all sides of the Chamber in support of the amendment. I hope that the Minister's voice will be added to them. If he accepts the amendment, he need not tell the Committee whether it is merely to avoid bureaucracy or whether he accepts the arguments about right to buy which have been put forward. Perhaps he can avoid embarrassment on that score.
I support all that has been said about keeping a stock of housing which is very much needed. I should like to add one comment in regard to alarm systems (call systems). As technology advances, the use of such systems is the greater and they may be used and installed all the more easily. Anything which discourages that installation must concern us. Any sort of discouragement, and a fear that one needs to provide additional facilities in the form of a common room to meet all the criteria in order to take housing out of the right-to-buy provisions, is of concern. I say quite simply that I hope the Minister will support the widest spread of that sort of system and avoid the bureaucracy that has already been referred to this afternoon.
Lord Campbell of Alloway: I support the amendment for the reasons given by other Members of the Committee. It is obviously the work of a competent draftsman. I compliment my noble friend Lord Monk Bretton on his clarity of exposition in an exceedingly technical and complex area. However, he has made plain the spirit of the amendment. If the drafting does not appeal to my noble friend, perhaps he would take on board the spirit of the amendment and produce his own draft with the assistance of a parliamentary draftsman. The Committee may well think that the essence of the amendment is wholly admirable and right, irrespective of whether one supports the right to buy. I support it, but as the Committee knows, with qualifications as to residency.
Lord Swinfen: I should like to add my support for the amendment moved by my noble friend Lord

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Monk Bretton. If dwellings in a group are sold off one by one, it will become virtually impossible to find a warden to look after those which remain. Certainly it will he difficult to find back-up wardens. The amount of money that one would be able to pay to wardens will go down and no one will come forward to be of help.
The other point that I want to put to the Minister concerns rural areas. Should that type of accommodation in rural areas become extremely rare and difficult to find, it will mean that elderly people in the last days of their life will be forced out of country areas, away from their families and friends and into an urban and what may be to them a possibly hostile environment. I very much support the amendment.
3.30 p.m.
Lord Strathclyde: My noble friend Lord Renton said that we were legislating in an area of increasing complexity and technicality. He is right and it gives me a problem. I should like to bring some clarity to this area because I suspect that there is confusion in the minds of some of my noble friends as to the current position. Therefore perhaps I may ask the Committee's blessing if my reply is slightly lengthy. I should also like to say to my noble friend Lord Monk Bretton that I am conscious that we are returning to a subject which has been much debated in this Chamber—as he said, most recently in 1989—and which, as has been demonstrated today, arouses strong feelings.
I remind the Committee that following the 1989 legislation we now have two separate statutory regimes under which housing occupied by elderly people may be excluded from the right to buy. First, there is the provision currently in paragraph 10 of Schedule 5 to the Housing Act 1985 which applies to groups of housing particularly suitable for elderly people. The amendment would change that provision. Paragraph 10 applies only if there are special facilities for the benefit of the occupants of a group of dwellings. The special facilities may take the form of a resident warden. Alternatively there may be a non-resident warden and a call system; but in that case there must also be a common room.
I should like to emphasise the point that paragraph 10 applies to an elderly person's bungalow or flat only if it forms part of a group. It does not apply to such properties when they stand alone. The provision is clearly directed, as I agree that it should be, at what might be called the classic sheltered housing scheme. One of the thoughts lying behind the provision is that the scale of individual units in a group which has shared facilities may affect the viability of the whole scheme.
There has not been a lot of controversy about the exclusion of sheltered schemes from the right to buy and the provision which now appears as paragraph 10 is not much changed from when it first appeared in the Housing Act 1980. If the landlord denies the right to buy to a tenant or the ground that his or her home forms part of a sheltered housing scheme, the tenant has no right to challenge. So far as I know, few or no disputes have arisen. No doubt it is quite clear whether
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or not someone is living in a sheltered housing scheme. The Government and my noble friends have no dispute with that. By contrast, the law relating to individual non-sheltered housing for elderly people has been through several changes, has provoked many disputes and has been debated in this Chamber on a number of occasions. It is one of the subjects on which Members may regard themselves as having some expertise.
The problem is that housing for elderly people, when it takes the form of individual free-standing properties rather than sheltered groups, is not always obviously recognisable. Most elderly tenants live in housing which could be equally appropriate for younger people. It is probably true that housing for elderly people should be on the level and properly heated, because people become less able to climb stairs and less able to cope with the cold as they become older. However, beyond that the suitability for elderly people of a particular property can be very much open to debate. For that reason no doubt the original legislation in 1980 provided that if the landlord did not want to sell elderly persons' housing under the right to buy and that housing did not form part of a sheltered scheme, the Secretary of State had to be asked to determine that the right to buy was not to be exercised.
During the period between the Housing and Planning Act 1986 and the Local Government and Housing Act 1989 the Secretary of State lost that jurisdiction and landlords were free to deny the right to buy on their own authority. The position now is that the Secretary of State has jurisdiction under paragraph 11 of Schedule 5 to the Housing Act in respect of what was, broadly speaking, the existing public housing stock at the end of 1989. A determination may only be made if the property was first let before 1st January 1990. Post-1989 housing for elderly people can only be excluded from the right to buy if it forms part of a sheltered group and falls within paragraph 10 of the schedule.
The amendment tabled by my noble friends would change paragraph 10 so as to widen the definition of a sheltered group. Under the amendment a group of dwellings could fall within paragraph 10 provided that it had the services of a non-resident warden or other designated responsible person and a system for calling that person. There would no longer be any need for a common room. The presence of a system for summoning a designated responsible person might be thought to be strong evidence that the property in which it is installed is rather special. That was certainly the view of the noble Baronesses, Lady Hollis and Lady Hamwee. At one time it might well have been so. But with modern telecommunications it no longer seems to be the case.
That is not just the Government's position. Let me quote from a pamphlet kindly supplied to the department by Stroud District Council explaining its lifeline service. It reads:
"The lifeline consists of a telephone unit and a body worn radio trigger. An alarm call is raised by simply pressing a red button on the telephone or by pressing the petite radio trigger

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… Having activated an emergency call your details are displayed on a visual screen at the ambulance headquarters control centre".
I am sure the whole Committee will agree that that is an admirable service. Perhaps I may explain to whom it is available. The council's note says:
"Lifelines are available to anyone living in Stroud District Council's area, for the elderly, the disabled or even the person living on their own who feels the need for reassurance, irrespective of whether you are a house owner or rent your accommodation".
The leaflet goes on to explain that all that is needed for the equipment to be installed is a British Telecom telephone line and socket and a power point.
We would not take the view that the residents of Stroud district who take advantage of that excellent facility are therefore to be regarded as living in sheltered housing.
I have a further concern about the amendment tabled by my noble friends. In paragraph 10 the provision which the amendment would modify relates to groups of dwellings and not to individual bungalows and flats. As the law stands there is unlikely to be a problem there because a scheme with a resident warden or a common room will generally be a recognisable entity. However, if there is neither a resident warden nor a common room, what is to count as a group of dwellings? Must they be contiguous or within 50 yards or 500 yards of each other? Why should it make a difference if the properties share no common facilities apart from being connected to a call system such as the one I described provided by Stroud District Council?
I say to my noble friend Lord Campbell of Alloway that this is not just a point of technical detail. As it stands, paragraph 10 applies to recognisable sheltered housing schemes. I suggest that the amendment would dilute the definition of such a scheme to the point where it extended to housing which in reality was free-standing and not sheltered in any real sense. Such housing, if first let before 1st January 1990, can be excluded from the right to buy. But the landlord must first apply for a determination from the Secretary of State.
My noble friend Lord Renton was concerned that as people grow older they do not wish to move away from the homes in which they have been living. Nothing in the legislation in any way obliges people to move away from homes in which they have been living.
Many Members of the Committee suggested that the Secretary of State was reluctant to make determinations when asked to do so. I checked that suggestion, as did the noble Baroness. My facts do not support that contention. Since 1st March 1990 local authorities and other landlords have applied for 4,100 determinations. About 1,700 have been made and 800 refused. That means more than twice as many decisions have gone in the landlord's favour than in the tenant's. I understand that it takes about six months for each determination. I am sure that there are examples where it has taken longer, but that is the average.
My noble friend Lord Monk Bretton asked about the tight deadline for landlords' applications to the
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Secretary of State for a determination. In applying, the landlord need only tell the department that it wants the property excluded from right to buy and it can put its reasoned case forward later, after the statutory deadline has expired.
Perhaps I can turn briefly to the important question of rural housing. It was raised by many Members of the Committee, including my noble friend Lord Swinfen. It was suggested that the Secretary of State does not make due allowance for rural circumstances. Since 1990 4,700 dwellings have been provided by housing associations in villages of 3,000 people or less. The Housing Corporation's 1993–94 programme provides for 1,850 new dwellings to be approved: that represents 6 per cent. of the whole programme. The Secretary of State's planning guidance—PPG3— encourages planning authorities to consider granting planning permission for low-cost rented housing and shared ownership in rural areas where development would not normally be permitted.
The department's guidance to the landlord says that the property should be located reasonably conveniently for shops and public transport. I know that that has provoked controversy in the case of villages with no shops. Following representations from local authorities, that policy was relaxed in June of last year. The Secretary of State will now consider making a determination in respect of a property in a rural area even though there may be no shop within walking distance provided that there are other reasonable means of obtaining necessities.
At the beginning of my reply I accepted that we were discussing technical and complex issues. I have tried to demonstrate that the Government are at one with my noble friends in that sheltered housing should be excluded from right to buy. I suspect that we also agree that where there is a clear use of housing for elderly people, then the provision should apply there also. But the method of application is by receiving a determination from the Secretary of State. As I hope I have demonstrated, generally speaking the Secretary of State is happy to give that dispensation.
In the light of what I have said I hope that my noble friends will agree that there is a good deal more common ground between us than there might have been when my noble friend moved the amendment.
3.45 p.m.
Lord Swinfen: Before my noble friend sits down, does he agree that if the amendment were accepted it would save considerable expense, both for local authorities and the Government, incurred when local authorities have to apply to the Minister?
Lord Strathclyde: I am not aware that applying for determinations places an onerous burden on local authorities. If the amendment were accepted it would create a great deal of uncertainty and arbitrary differences between the rights of different tenants living in similar housing. I do not wish to see that area more confused than it already is.
Baroness Hollis of Heigham: Before the Minister sits down, perhaps he can help me. As I understand it, his description of the Stroud situation would not be

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covered by the amendment; therefore it was irrelevant. That concerned a technical appliance which summoned an ambulance service. We are not discussing the means of contact but the fact that the means of contact lock into a responsible person—generally a good neighbour scheme and people monitoring the system—who can give a degree of support. It is a little less than sheltered housing but much more than independent free-standing dwellings.
Therefore, if the Minister is right when he says we all agree that elderly persons' housing occupied by elderly persons with support should be exempt, surely he can accept the amendment.
Lord Strathclyde: There is nothing irrelevant about the scheme I mentioned. The noble Baroness takes an entirely different philosophical point from this side of the Chamber. The noble Baroness and her party believe that right to buy is wrong; they are against it in essence. We believe that right to buy has brought significant benefit to many hundreds of thousands of people; it is something that we wish to extend.
By using the Stroud example I demonstrated that a communication which does not include a common room or resident warden is readily and cheaply available no matter what kind of house one lives in because telecommunications provide it.
Lord Williams of Elvel: I am sorry to press the Minister on the matter but it is important. He brought up the whole question of right to buy. We are not arguing about right to buy or philosophical differences between his party and ours. We are arguing about a specific type of accommodation which, generally speaking, we all want to see treated with sympathy.
The point made by my noble friend Lady Hollis, which the Minister did not answer, concerns who is at the other end of the telephone in Stroud. If it is the leader of the Stroud council, that is no use whatever. If it is a hospital, it is of no use whatever. What is needed is some sort of warden arrangement so that the old person, when he or she wishes to activate the alarm system, does not contact the local hospital, is not involved in high-tech video telephones and so forth, but can pull a string and obtain a warden. That is the point at issue.
Lord Strathclyde: I apologise to the noble Lord and the noble Baroness if I was trying to create philosophical differences where there are none. Perhaps I misunderstood the point of the question of the noble Baroness. I shall explain what happens in Stroud. By pressing a radio trigger the emergency call gets through and details are displayed on a visual screen at the ambulance headquarters control centre. Upon receipt of the information the control room staff will talk to the caller and identify the problem. A decision will then be taken on what course of action is needed either by contacting the caller's doctor, family or a friend, or even dispatching an ambulance to ensure the caller's well-being. During that time the caller will be in constant contact with the control room staff who will be sympathetic, reassuring and professional. I hope that that gives some comfort to Members opposite.
Baroness Hamwee: I apologise for further prolonging the matter but many Members of the Committee will be familiar with the services referred to. They are excellent services. They are extremely responsive. My mother has a service. If she knocks the instrument when dusting it, she immediately receives a call inquiring whether she needs help. If she were calling for help the service would go through a list of telephone numbers of her neighbours until somebody was found who could come in. That is not a designated responsible person in the language of the amendment. In describing the Stroud scheme and asking us to concentrate on that, the Minister appears to have taken that as the overriding consideration and has perhaps become a little distracted from the provisions of paragraph 10(1) of Schedule 5 to the 1985 Act. That starts by describing the type of accommodation and only then goes on to say that there shall be facilities of the type described in the provision which the noble Lord, Lord Monk Bretton, seeks to provide.
Lord Monk Bretton: I should like to ask my noble friend to consider the introduction of tighter definitions in the amendment, such as the definition or a group, or a means of confining the operation of the amendment to predominantly rural areas or parishes If the Minister is to continue to designate in all of these cases it may be necessary to introduce an additional criterion to take into account whether the housing need problems in the immediate area are being considered sufficiently. We have had a considerable debate on this issue today. Perhaps my noble friend will undertake to look at these points. I should be grateful to know whether the matter may he discussed before the next stage of the Bill.
Lord Strathclyde: I believe that my noble friend knows me well enough to realise that naturally I shall be very happy to consider these points. Perhaps he and I, and other of his noble friends who still have concerns on these issues, can discuss them. What I cannot do is give any commitment that the Government will come back with amendments. The Government's feeling is that the points raised by my noble friend have been well dealt with in legislation already, but if my noble friend has evidence to suggest that it is not working I shall be delighted to see it.
Lord Williams of Elvel: It appears to me that the Minister is offering nothing. If he is offering to read the amendment again and merely listen to his noble friend repeating its text, that is of no concern to us. It is only if the Minister can offer something positive —for example, to take it away, study the problems seriously and come back with something—that the commitment means anything at all.
Lord Strathclyde: I may not have been clear to the noble Lord, Lord Williams, but I hope that I have been clear to my noble friend Lord Monk Bretton.
Lord Monk Bretton: I begin by thanking all noble Lords who have supported me in this amendment. I remain most concerned about the degree of attrition that is taking place in relation to this Bill. I am not altogether happy that one-third of the cases dealt with

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by the Minister have been found in favour of the local authorities and enfranchisement has not taken place. I am not sure that that is really enough. There are a number of areas where the matter does not come forward at all and consideration of a particular case is ruled out on some other ground. For example, I believe that 12 per cent. of cases were out of time. This is a matter of very considerable concern.
A great deal has been said today and we have a lot to think about. I would prefer not to press the amendment at this stage, but I hope that we can have some reasonably meaningful discussions. I beg to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 94 agreed to.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 176B:
After Clause 94, insert the following new clause:
("Right to require former landlord to repurchase

.—(1) In this section, "former secure tenant" means a secure tenant who has exercised the right to buy or the right to acquire on rent to mortgage terms; and such a tenant has the right to require repurchase.

(2) In this section, "the right to require repurchase" means the right, in the circumstances and subject to the conditions stated in this section, to require the former landlord to repurchase the interest acquired by the former secure tenant under the right to buy or right to acquire on rent or mortgage terms.

(3) In this section, "the former landlord" is the landlord from whom the dwelling was purchased under the right to buy or the right to acquire on rent to mortgage terms.

(4) The right to require repurchase shall cease to apply where the former secure tenant disposes of the interest acquired under the right to buy or right to acquire on rent to mortgage terms, or where he ceases to occupy as his residence the dwelling house in which the interest is held.

(5) Where a dwelling house is repurchased under the provisions of this section, the price payable by the former landlord is either—

(a) where the dwelling house was purchased under the right to buy, the price for which it was purchased; or

(b) where the dwelling house was acquired on rent-to-mortgage terms, the sum of the initial payment and any subsequent payment made in pursuance of such an acquisition, or, such other amount as is agreed between the former landlord and the former secure tenant.

(6) Where a local authority makes any payment to a former secure tenant in relation to a repurchase under the provisions of this section, the Secretary of State shall issue to that authority a supplementary credit approval, within the meaning of section 54 of the Local Government and Housing Act 1989 (supplementary credit approvals), in an amount equal to the price payable for, and for the purpose of, repurchasing the dwelling house.").

The noble Baroness said: This amendment is about the right to require the former landlord to repurchase. It is the first of a series of amendments to deal with the problems associated with families on very modest incomes who are seeking to buy their council homes. All the evidence is around us that during the 1980s too many people who could not afford it were encouraged into owner occupation and, as soon as the recession deepened, found themselves struggling to keep up repayments. Worsening unemployment wiped out any gain from lower interest rates. In consequence, last year there were 70,000 to 80,000 repossessions. There
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are now about 300,000 families in arrears of more than six months. It is estimated that at least half of them will lose their homes. Most of them are unable to sell. Even if they could sell they would experience negative equity and could not even dump the keys on the desks of building societies and walk away.
Council tenants have not been exempt from such problems even when they are exercising the right to buy at extremely large discounts. Obviously, if no one in the family is in work they are eligible for income support after 16 weeks—four payments—but that still leaves half of the costs to be met for the first 16 weeks, together with ongoing insurance, repairs and the like. It also means that very often they face very heavy service charges, especially in flats, for the maintenance of lifts, the concierge, cleaning of communal parts and caretaking which do not attract income support and can easily exceed £20 per week. They also face the likelihood of a major repair.
Far worse is the plight of someone on very low earnings. Perhaps the husband has lost his job, his wife is in part-time work and the family is eligible for family credit but there is no mortgage help at all. All too often such families end up by being repossessed. Even when building societies roll up the arrears it merely adds to the long-term problem of debt and negative equity. Clearly, such families need financial help. Ideally, they would have a mortgage benefit scheme so that those on family credit got such help and reductions in the levels of support through mortgage tax relief would be recycled into such a scheme. But if under the law we cannot give benefit to residents as owners and enable them to afford housing when their incomes fall, we need to allow them to turn into tenants, staying in their homes so that they may draw housing benefit instead.
This amendment will do precisely that for former council tenants and housing association tenants—the one-and-a-quarter million who since 1980 have exercised the right to buy. It will give them the right to require repurchase by the local authority for whom they bought the home at a price no higher than was paid for it, including discount. It also requires the Department of the Environment to give supplementary credit approval so that the local authority can afford to do so without depleting its capital resources.
We do not expect great numbers of people to need this help. After all, most council tenants who buy their homes are older, the property is cheaper and so on. Nonetheless, in a situation where council tenants have exercised the right to buy, their financial circumstances have changed and they cannot afford to maintain their mortgage payments, we suggest that this is a civilised, humane and cost-neutral proposal that will allow such families to remain in their homes and to retain them. I beg to move.
Lord Strathclyde: This amendment would give former secure tenants who had purchased under the right to buy the right to require their landlords to buy back their homes at the price that they had originally paid. I have some sympathy with those purchasers who have problems with resale, but this is a proposal that I cannot support. I am fully aware that former tenants in certain kinds of ex-council flats have

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experienced difficulty over resale. One of the problems has been the alleged reluctance of building societies to lend on those properties. We have been discussing this problem with the Council of Mortgage Lenders and have received assurances from them that there is no blanket ban on lending on such properties and that each case is considered on its merits. A further problem that has recently arisen is the unwillingness of some mortgage insurance companies to provide cover on certain properties. Without extra security the lenders cannot advance more than 75 per cent. of the purchase price.
In the present state of the housing market lenders and insurers are acting very cautiously, but once the market picks up, right-to-buy purchasers, together with other home owners, will benefit. Meanwhile, we are continuing to work with the building societies to do what we can. That seems to me to be the way forward rather than to place a formal duty on landlords to buy back. However, the noble Baroness will know, I am sure, that the landlord can already buy back a property from a right-to-buy purchaser if it so wishes and if it seems a reasonable and justifiable use of its resources, given other demands and priorities. In that way the responsibility to exercise discretion over whether to re-acquire these dwellings is married to the financial implications of doing so. That is surely right.
The amendment seeks to place a duty on landlords to repurchase and provides for central government to reimburse them for the expenditure incurred. That would in effect be an open-ended call on limited public sector resources. Under our current practices, which are drawn up in consultation with the local authority associations, all resources that are available for housing are allocated to individual local authorities or earmarked for programmes such as Estate Action well in advance of the beginning of the financial year. If the amendment were to become law the Government would have to hold back an amount each year to meet reimbursement costs. Since the amendment places no constraints on the right-to-buy purchaser's right to demand repurchase by the landlord, this could amount to a significant sum. I hardly think that we can justify such use of scarce public resources.
I believe that by stimulating the market in the way that we have and by continuing our consultation with building societies, we can cover this problem. I hope that the noble Baroness will withdraw the amendment.
4 p.m.
Baroness Hollis of Heigham: We obviously welcome any moves that building societies are willing to make to allow people who are unable to maintain mortgage payments to remain in their homes. There is no dispute between us on that. However, the way they are doing it at the moment is to roll up arrears which then add to the negative equity that people currently experience. What is not possible, for the most part, is for people to change their tenure and remain in their own homes. Either they are locked into negative equity and debt or the building society forecloses. We can expect another 70,000 or so foreclosures next year. What then happens? The local authority has to rehouse families in either temporary accommodation
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or, if they are lucky, in permanent accommodation—and, probably, in the inner cities, in bed and breakfast accommodation.
The amendment seeks to allow the former tenant in such situations to trigger a right to repurchase. The local authority can agree to do so at neutral cost. That avoids a situation which would otherwise occur of a family becoming homeless and possibly going into bed and breakfast accommodation, the children having to move school and all the problems of domestic stress and strain that result. I suspect that the amendment would eliminate the prospect of very real social misery and that there would also be a financial saving when we consider just how much bed and breakfast accommodation is currently costing local government. There is not a cost-free solution. We accept that. But the amendment would be cheaper and certainly more humane than the present system.
The Bill pushes marginal tenants into owner occupation. We are trying to offer them a route back from owner occupation into tenancy without going through the trauma of court procedures, foreclosure, repossession and homelessness. If the noble Lord is not minded to accept the amendment, we feel that we shall need to come back at Report stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 95 agreed to.
Clause 96 [Right to acquire on rent to mortgage terms]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 176C:
Page 97, line 4, at end insert;
("; or,
(c) at any time in the relevant period the arrears of rent owed by the tenant exceeded the equivalent of the rent lawfully due from him for a period of eight weeks.").
The noble Baroness said: This is the first of a series of amendments on the rents to mortgages clause of the Bill. If Members of the Committee were asked to describe the most pressing housing problems facing this country I am sure that they would mention homelessness. They would probably mention the families in bed and breakfast accommodation we have just been discussing. They would probably mention too the long waiting lists within the council rented sector. They might also mention, as we await the English House Condition Survey, the very poor state of repair, which is the consequence of cutbacks in local government investment, given capital controls over the years. They would probably refer, in the private sector, to repossessions and evictions allied to a frozen housing market in which one cannot move, buy or sell on. They might even mention the 400,000 building workers who have lost their jobs and the hundreds of small construction companies that have crashed. We have a housing Bill before us which tackles not one of those problems that Members of the Committee might think are the key housing problems facing us. Instead the Bill introduces an initiative for a problem that does not exist—that of turning very low rent payers into highly vulnerable owner occupiers.
Last year the London boroughs accepted 13,000 more homeless families than they could house. The

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initiative does nothing to help them. It adds not a single house to the stock and houses not a single family. It merely bribes poor tenants into changing their tenure and possibly putting the long-term security of their homes at risk, particularly as the Government were minded to reject the previous amendment. We have had a decade of right to buy which has allowed tenants to buy at substantial discounts—up to 70 per cent. In the past few years applications to buy have dried up, mainly because of the growth of unemployment but partly because many families now left in council housing are on housing benefit and are therefore ineligible and partly because there is uncertainty in the housing market. In other words, right to buy has probably reached the edge of its natural constituency.
As a consequence the Government introduced another initiative to press owner occupation further down into the ranks of the rather poor. I refer to shared ownership schemes in which tenants bought slices of equity, if they could afford it, and paid rent on the outstanding share of the dwelling. The Government spent vast sums of money advertising it. All of 600 tenants took it up. There were two inquiries in Norwich out of 22,000 tenants and neither was followed through. We warned the Government at the time that this was an initiative for a problem that did not exist. The Government ignored us. We warned them again. We now have a different version of the same scheme—rents to mortgages—in which the existing rent becomes a mortgage payment paid to a building society weekly which amortises it into a lump sum to be paid to the local authority as an initial payment. The outstanding sum, which could be as much as 60 per cent. of the value of the property, is held by the local authority as an equity stake to be redeemed at some unspecified time in the future. Essentially it is a deferred purchase scheme in which the local authority loses the property and gets only a partial capital receipt.
That is deeply undesirable not just in terms of the problems it will present to local government—it is costly, cumbersome and unattractive but we can live with that—but in terms of the problems it will present to the tenants themselves. Britain already has the highest percentage of owner occupation in the western world. It is surpassed only by Bangladesh, which is some test of affluence. The rate is far higher than in Germany, France or Scandinavia. As a result we have the highest level of personal debt—of mortgage debt in ratio to personal income—in Europe. In consequence we have greater financial problems within the housing market as well as within the economy than anywhere in Europe. This scheme will, I believe, in its folly, add to them.
That is not my view alone. It is the view also of the Conservative-controlled Association of District Councils, which doubts whether, at a time of rising homelessness, increasing numbers of homeless families in temporary accommodation, unprecedented levels of mortgage arrears and repossessions, and when there is a continuing need for affordable housing, it is appropriate to introduce a scheme which
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will result in further erosion of the supply of socially rented dwellings. It is also considered questionable whether it is sensible—this is the Tory-led ADC—to encourage low income households to take on the responsibilities of home ownership at a time of falling house prices and low inflation.
The view is not that of the Tory-led Association of District Councils alone. It is also the view of the Institute of Housing—a professional officers' association, not a Labour authority. It states:
"We believe that rents to mortgages is the wrong scheme at the wrong time".
There are record levels of mortgage repossessions and record levels of homelessness applications. To propose a scheme which will encourage families who can barely afford it into owning their homes is both unnecessary and unwise.
It is also a bad buy for the tenants themselves who will get a worse deal than they would under the right to buy in terms of lower discounts. The message to tenants should be that if they cannot afford the outright right to buy they should not touch rent to mortgages. It is bad for their financial health. It extends owner occupation to very marginal renters when what we need is the reverse; namely, to extend the option to rent to poor owner occupiers.
Before formally moving the amendment, I ask the Minister to answer some general points about the practical details of the scheme. First, the building society will amortise the rent payment and hand it over to the local authority as an initial payment. If the applicant is over 40 or 50 years of age, what happens if the building society expects higher repayments than the current rent level in order to have the repayments met within a less than 25-year term? How can and will the tenant afford that? Secondly, if the value of the property is, say, £32,000 and the average rent produces an initial payment of £17,000, the local authority landlord is left with an equity share of 45 per cent. before discount. What protection is there for the local authority landlord if the tenant defaults on the mortgage payments to the building society because financial circumstances worsen?
What power does the landlord have, which pertains to half the asset value of the property, to ensure that it is protected by requiring that repairs are done or covenants put on? If the tenant decides only to increase his tranche of equity by taking out stakes, who pays for that and will it occur within a reasonable time? Given that the full redemption of that outstanding share—whether it is 40 per cent. 50 per cent. or 60 per cent.—must occur on the death of the original tenant, and if the property passes to, say, a daughter who is living with them and who is a secure tenant otherwise, she is required to redeem that money. What happens if she cannot find it? Does she become homeless? Who pays?
Fortunately, I do not believe that the scheme will work or be taken up any more than the previous one. It is being piloted at huge expense and publicity in Milton Keynes and Basildon. Of a possible 10,000 tenants only 150 showed any interest. Why? First, given the rules about initial payments, any tenant living in a flat for more than five to eight years, or in

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a house for more than 20 years, is technically ineligible because of the minimum payment rule. Secondly, those who remain will have problems getting loans from the building society. Thirdly, the Government rightly disqualify anyone on housing benefit, which is 70 per cent. of all remaining council tenants. So it is an expensive scheme which will be extremely cumbersome to administer. It is a scheme for very few tenants and it would almost certainly be financially better for them to go for the right to buy.
There is one final problem which this amendment addresses; namely, that of arrears. If it is right to exclude those on housing benefit from exercising the rent-to-mortgage choice, it must be right to exclude those who currently or recently have been in arrears and cannot even afford to keep up their rent payments. If they cannot afford the upkeep of their rent payments, what hope have they for financing owner occupation? If they are already in debt, it cannot be sensible to add an even larger debt. I assume that the Government simply forgot about that. I beg to move.
Baroness Hamwee: I support a good deal of the analysis which we have just heard from the noble Baroness, Lady Hollis. I agree that the rent-to-mortgage scheme is largely an irrelevance. Clearly it does not begin to address the country's housing problem. I have some difficulty with some of the amendments. If there is to be such a scheme then we risk being a little too paternalistic if we seek to exclude people from it on the basis of judgments that the legislators make rather than as potential purchasers.
However, as regards this amendment, to exclude tenants who are in arrears with rent, looked at from the point of view of the potential lender, must be very sensible and should be included in the legislation. Any normal lender in a normal lending situation will investigate the financial situation of the proposed borrower. If he discovers that the proposed borrower has financial problems then the lender is going to be very circumspect, and probably very reluctant to proceed with a loan, and may well say no. It would be a sensible move to reflect that in the legislation.
4.15 p.m.
Lord Strathclyde: The noble Baroness, Lady Hollis, repeated her Second Reading speech in introducing this amendment and very interesting it was, too. The Committee will be glad to know that I shall not be repeating mine. I am sure that there will be plenty of opportunities during the discussion on the next few amendments to consider rents to mortgages and how that will work. There is one important thing: the right to buy is the major plank on which the Government have sought to extend home ownership. That provision, coming more than 10 years after that initial legislation, is designed to offer just an extra opportunity to a number of people who may feel that they need that extra choice.
The noble Baroness, Lady Hamwee, is right. We must not be overly paternalistic in our view of how arrangements are going to be made between the tenants and the building societies. The noble
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Baroness, Lady Hollis, asked what would happen if the building society does not grant a 10-year mortgage. The initial payment is the amount which can be borrowed in general on the market, on a 25-year mortgage. It is for the tenant's discretion how to raise that sum. The arrangement between the tenant and the building society cannot be and should not be the concern of the landlord.
If the tenant cannot raise the initial payment, then he will simply refrain from buying and that must be the right way to go ahead. The noble Baroness asked what would happen if the tenant were to default. The landlord's right to a further payment on disposal or debt is set down by a registered charge on the property. That charge has a priority after the building society's mortgage. Therefore, the landlord will have a claim on the residue of the proceeds if there has been a sale. The noble Baroness shakes her head, but I understand that that is the case.
I now come to the amendment. The noble Baroness made a useful contribution at that stage. Perhaps I may first explain that the legislation includes a provision on similar lines to the amendment. It is slightly less severe in its effects. I can forgive the noble Baroness for not spotting it because it is not obvious from a reading of the Bill. The provision in question is in the existing right-to-buy legislation that will apply to rents to mortgages. A landlord is not obliged to complete a sale under the right-to-buy scheme if the tenant is a month or more behind with the rent. The tenant, of course, does not lose the right to buy, but must first clear the arrears. I hope that that explanation will go some way towards meeting the concerns of the noble Baroness.
Baroness Hollis of Heigham: I thank the Minister for his reply. We shall obviously pursue his last point. I was shaking my head about his other point on the security of the landlord's stake in the property should a tenant default. The Minister said that it would take priority over other debts. I feel that that is not so. We have an amendment tabled to that effect which will allow that to be so. But where a tenant spends quite a large sum of money—say £15,000—on major improvements, that can take priority over, and therefore wipe out, the landlord's equity which is reflected in his share of the property. Given what the Minister has just said, I look forward with confidence to the Minister's support for the subsequent amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 176D:
Page 97, line 27, at end insert:
("less an amount equal to the landlord's estimate of the average weekly expenditure on repairs to the dwellinghouse for the most recent year for which audited accounts are available.").
The noble Baroness said: In moving this amendment I speak also to Amendments Nos. 176E and 176H. As defined in the amendment, the purpose is that only 80 per cent. of the rent is used in calculating the minimum initial payment. The intention is to take account of the fact that tenants

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acquiring rent to mortgage terms will take on full responsibility for maintaining the dwellings and need to make financial provision for it. This amendment effectively gives them financial head space for the additional outgoings over and beyond rent payments which they will be forced to undertake when they become owners. The figure has been chosen to reflect, in particular, the cost of keeping a property in repair, which the Minister in another place estimated to be just under £8 per week, to say nothing of the insurance and legal costs.
This is a useful amendment which would ensure that the tenant had enough financial resource not only to pay the rent or the equivalent of a rent through the mortgage payment but also to meet the additional outgoings which he faces. Therefore, we hope that the amendment will meet with the Government's support. I beg to move.
Lord Strathclyde: I, too, will speak to Amendments Nos. 176D, 176E and 176H. Rents to mortgages is designed to offer tenants a low-risk route into home ownership by giving them the opportunity to buy their homes without having to make a significant increase in their regular outgoings. That is why the minimum initial payment is calculated in such a way that a typical purchaser's mortgage payments will be no greater than the current rent. There are, of course, other expenses involved in home ownership, and tenants contemplating buying will have to take them into account when they decide whether or not to buy their homes.
The first two amendments of this group would reduce the amount of the minimum initial payment for house purchasers to take account of repair costs. The noble Baroness who tabled the amendments will no doubt have noticed that purchasers of flats under rents to mortgages can make an initial payment that will result an mortgage payments lower than the rent. That is in recognition of the obligation to pay service charges.
I recognise that tenants buying houses will also have repair and maintenance costs to meet. However, in the case of a house, repairs will not have to be paid for each week or each month. House owners can often decide for themselves what needs doing and when. They may well be able to carry out routine repairs themselves, use friends to help or, if they need to employ professionals, they can shop around for the best offer.
Flat owners do not have that flexibility. It is their landlord who is in control of the management of repairs and improvements to their block, and the service charge bill will not always come at the time when it would best suit the leaseholder. That is why we have taken the view that tenants buying flats should be given the flexibility of being able to make a reduced initial payment but that for house purchasers this is not necessary. Making a lower initial payment would in any case be a mixed blessing. The scheme is structured in such a way that purchasers maximise their discount by making as large an initial payment as they can. And we should bear in mind that any change in the Bill which reduces the initial payment will have
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public expenditure implications by deferring receipts for local authorities. The noble Baroness has always been very keen on receipts for local authorities.
The third amendment would require the Secretary of State to make orders subject to affirmative resolution by both Houses of Parliament specifying the relevant amount and the multipliers which are to be used for calculating the minimum initial payment. I am all for proper parliamentary oversight of the exercise of delegated powers, but it seems to me that it could be a waste of the time of both Houses if affirmative orders had to be made for this purpose. The Secretary of State's discretion in the matter is already closely circumscribed by the Bill. In arriving at the relevant amount and the multipliers, the Secretary of State will be obliged to make certain assumptions about the applicable interest rate, the type of mortgage and the repayment period. The interest rate used will be the standard national rate which is a weighted average of the rates charged by the top 15 commercial lenders. It will be assumed that the mortgage is a 25-year repayment mortgage in which the monthly payments represent payments of both capital and interest. All this is clearly laid down in the legislation.
The relevant amount will be the rent that, given these assumptions, would finance a mortgage commanding maximum tax relief. The mortgage interest relief at source or MIRAS limit is £30,000 at the moment, and at current interest rates a payment of £45 a week will support a mortgage for £30,000. The first multiplier will be applied to amounts of rent up to the relevant amount and will take account of the effect of MIRAS in increasing the size of the mortgage which can be supported by a given repayment. The second multiplier will be applied to rent over the relevant amount and will make no allowance for MIRAS.
Perhaps it would be useful if I were to give an example. Assuming that a net standard national interest rate of 6.01 per cent. applies throughout the 25-year period of a repayment mortgage, the multiplier would be 664.06 on rents below £45 a week. When applied to a weekly rent of £30, this would give an initial payment of around £20,000 on a house, or £16,000 on a flat. For any part of the rent above £45 a week, tax relief would not apply. For this portion of the rent, a gross interest rate of 8.01 per cent. would be assumed, giving a multiplier of 554.59.
The point of the example is to demonstrate that the Secretary of State has very little discretion when declaring the relevant amount and the multipliers. He will be obliged to follow the rules laid down by the Act. The Bill could have left it to landlords and tenants to work out for themselves what the minimum payment should be, but it seemed more convenient if the Secretary of State were to go through the process and publish the results. Each time interest rates change, or the MIRAS rules are amended, a new relevant amount and new multipliers will need to be fixed quickly. That is why the Bill provides for them simply to be declared by the Secretary of State: in practice, the department will send a circular to landlords. I hope that the noble Baroness will feel

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reassured and that she will understand that the sanctity of Parliament is not being trodden over by this provision.
Baroness Hollis of Heigham: That was a very interesting reply. However, although the Minister spent some time dealing with the formula which the Secretary of State will operate, he did not deal with the substance, which is the ability of the tenant to pay on the one hand and of the landlord to have his equity stake protected on the other. That was the substance of the major part of this cluster of amendments. I refer to Amendment No. 176H, which relates to the 80 per cent, rule. The Minister said that house owners know perfectly well what to spend on repairs. But it is the case that they often under-estimate the amount. After all, as the Minister himself said, for tenants to acquire the maximum discount, the arrangement needs to be structured so that they pay the maximum initial payment, which will encourage them to over-commit.
The amendment will protect tenant-purchasers' ability to maintain their property in decent repair by considering that as part of the formula on the one hand., while on the other hand it will protect the local authority's equity charge over the property. That depends on the property being kept in good repair, which in turns depends on the tenant being able to afford to do so.
In the light of the leaks about the English House Condition Survey showing the generally poor state of repair of the English property market, nothing that the Minister has said gives me any confidence that this is a sensible way forward. Nonetheless, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 176E not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 176F:
Page 98, line 10, leave out ("25 year").
The noble Baroness said: At pre3ent it is assumed that a rent-to-mortgage purchaser will raise a mortgage over 25 years. The amendment would amend that assumption where the applicant (or the youngest applicant in the case of a joint bid) would reach retirement age within 25 years, subject to a minimum of 10 years. In other words, the amendment seeks to bring the English provisions into line with the Scottish provisions in not having extended mortgages which would run well beyond people's probable financial ability to repay. I beg to move.
Lord Strathclyde: As I said earlier, the idea of rents to mortgages is to offer tenants the opportunity to buy their homes by taking out a mortgage with repayments the same as their rent. They will be able to pay less than the normal right-to-buy price but at a minimum they must pay the amount which can be raised on a 25-year repayment mortgage with repayments the same as their current rent. I say, "the amount which can be raised" rather than "the amount which the particular tenants can raise" because the terms of sale will not be fine tuned to the circumstances of individual purchasers. Typical purchasers will be able to finance the purchase price by taking out mortgages
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with repayments the same as their current rent, but they may choose to pay more, for reasons which I shall explain in a moment. Even if their mortgage repayments are exactly the same as their rent at the time of purchase, that will cease to be the case if they have taken out an ordinary mortgage with a variable rate of interest and that rate changes. As home owners they will also have to meet other costs such as repairs and insurance, so the current rent is only meant to be a broad guide to what the purchaser can afford.
The amendments seek to introduce a little more fine tuning by enabling older tenants to pay less. It may be helpful if I illustrate the effect of that. Instead of paying the amount which could be raised on a 25-year mortgage with payments the same as their rent—say, £20,000 if their rent were £30 a week—they would be able to make the initial payment which they could finance on a mortgage running up to the age of retirement. If that were in, say, 15 years' time, £30 a week would service a mortgage of £15,000. There would be a minimum assumed payment period of 10 years, which would give an initial payment of about £11,500 for tenants whose rent was £30 a week.
I am afraid that there is a snag. Allowing older tenants to make smaller initial payments would reduce the extent to which they were able to benefit from discount. That is because the initial payment will attract normal right-to-buy discount pro rata to the amount paid. If, for instance, the purchaser qualifies for a 50 per cent. discount under the right to buy, every £1 of the initial rents-to-mortgages payment will attract discount of £1. Putting it another way, every £ I paid will buy a £2 share in the equity in the property. Later, if the purchasers sell up, or after their death, a further payment must be made to buy out the former landlord's share. That payment too will normally attract discount, but only at a fixed rate of 20 per cent. There will thus be an incentive for purchasers to make as big an initial payment as they can afford in order to get as much discount as possible and reduce the payment which has to be made later.
It would, then, be a doubtful blessing if older purchasers were allowed to pay significantly less. They would lose discount, and the landlord's share would be disproportionately high as a result. Purchasers could find that they were locked into their homes, unable to sell because the net proceeds of sale, after paying off the landlord's share, were not enough to buy their next home.
I should say also that the amendment would reduce the receipts realised by landlords in the short term from sales under the rents-to-mortgages scheme. Given that explanation, I hope that the noble Baroness will feel able to withdraw the amendment.
4.30 p.m.
Baroness Hollis of Heigham: I am delighted that the Minister is concerned that local authorities should maximise their capital receipts. That is a welcome move by the Minister. However, I remained baffled. Why is it appropriate to have this restriction in the Scottish clauses and not in the English?
Lord Strathclyde: As the noble Baroness points out, there is indeed a precedent in the Scottish rent-to-loan scheme for allowing older purchasers to pay less. As a general rule, I am very much in favour of good ideas from Scotland being applied elsewhere. However, the English and Welsh version of rents to mortgages in the Bill is structured differently from the rent-to-loan scheme. Under rents to mortgages, as practised south of the Border, the tenant's initial payment will attract normal right-to-buy discount pro rata to the amount paid. Thus, the larger the initial payment, the better the deal the tenant gets. In the Scottish scheme, by contrast, the discount on the initial payment is on a lower scale from that available under the right to buy, but does not vary according to the size of the initial payment. Paying more at the outset, of course, reduces the amount to be paid later, but there is no gearing effect because the discount credited is the same regardless of how much the purchaser pays initially. That means that older purchasers can be allowed to make smaller payments without doing them a disservice.
The noble Baroness will ask me why, if that works in Scotland, it should not work in England and Wales. I have to say that as a result of the pilot schemes and the consultations we had in England, it was felt that the two schemes could differ.
Baroness Hollis of Heigham: We often enjoy the Minister's ability to speak impromptu—bluffing would be the wrong word in the circumstances—but would the Minister like to tell us why he thinks that they should differ?
Lord Strathclyde: As the noble Baroness said earlier, the rent-to-mortgage schemes were piloted throughout England and Scotland. It was because of the results—
Lord Williams of Elvel: Were they piloted in Wales as well?
Baroness Hollis of Heigham: No.
Lord Strathclyde: I am delighted to tell the noble Lord that I understand the schemes were piloted in Wales. They were definitely piloted in England and Scotland. This is an important issue, but it was decided that there are areas of difference between legislation in England and Wales and Scotland—my noble and learned friend Lord Fraser of Carmyllie will be bringing forward amendments that demonstrate that there are differences—and it was due to the results of the consultation and the pilot studies that we decided to do things differently in England. I hope I indicated, during the course of my explanation on the amendment, why we believe that we have it right in England, and why we do not disagree with what is being proposed for Scotland.
Baroness Hollis of Heigham: Will the Minister tell the House what were the differences in the pilot studies that led him to different conclusions for Scotland and England?
Lord Strathclyde: The noble Baroness will realise that I do not have the results of those pilot studies with
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me. I am happy to look further into the matter, and perhaps I may write to the noble Baroness with the information for which she has asked.
Baroness Hollis of Heigham: In other words, the Minister is saying that he does not know what were the differences in the pilot studies. He does not know upon which basis different recommendations have been made but, nonetheless, asks us to accept it. I do not have much option but to withdraw the amendment, but that is not because the Minister has persuaded the Committee. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 176G to 176J not moved.]
On Question, Whether Clause 96 shall stand part of the Bill.
Lord Williams of Elvel: Before we leave the clause, perhaps I can ask the Minister to clarify one or two points on the famous formula about which he talked at considerable length. In Clause 96 (page 97) as at present drafted there is a multiplier. At first sight it seems that the multiplier is something that the Secretary of State can fix at his will. But, as the Minister rightly pointed out, on page 98 there are some requirements that the Secretary of State has to consider in fixing the famous multiplier.
I understand that if the MIRAS arrangements change clearly that amount has to change to take account of that alteration. What I am unclear about, and what I hope the Minister will be able to clarify in my mind, is what is meant by the "standard national rate" mentioned in subsection (7) (a). I was not aware that there was a standard national rate. I was not aware that there was a standard national rate which apparently is a fixed rate, if I read the Bill correctly, throughout the 25-year term; that is, a fixed mortgage rate for 25 years which is apparently standard throughout the United Kingdom, lacking any evidence to the contrary.
I assume that that rate is in sterling, although again there is no evidence in the Bill that it is sterling. It is possible, as the Minister will be aware, to arrange a mortgage in dollars, where the interest rate would be substantially different, or in ecu, French francs, or other currencies. I imagine that at a later stage the Minister will ensure that we are certain that it is the currency of the United Kingdom, whatever currency that my happen to be at any particular point in time. I suppose one can argue that at certain times the Scottish pound is a different value from the English pound which, alas, we have to use in Wales as well.
I am also concerned, in subsection (7) (b), that the monthly mortgage payments represent payments of capital and interest only. That rules out the consideration by the Secretary of State of the possible cost of endowment mortgages. I do not see why that should be the case, because in many respects endowment mortgages can be advantageous. They can also be disadvantageous. I recognise that there are two sides to the argument. However I cannot see why the Government have chosen one side rather than another. In order words, I find the whole definition of what the Secretary of State has to take into account

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when fixing his famous factor "M" in Clause 96 to be pretty muddy. I hope that the Minister will be able to clear it up for me.
Lord Peyton of Yeovil: I do not want to take up the time of the Committee. However, I always believe that the avid readers of Hansard should have the opportunity to see for themselves the material which is under discussion. Perhaps I may refer the Committee to Clause 96(6), which states:
"The relevant amount and multipliers for the time being declared for the purposes of this section shall be such that, in the case of a dwelling-house which is a house, they will produce a minimum initial payment equal to the capital sum which, in the opinion of the Secretary of State, could be raised on a 25 year repayment mortgage in the case of which the net amount of the monthly mortgage payments was equal to the rent at the relevant time calculated on a monthly basis".
If there were a competition for obscurantism and horrible drafting, that paragraph would be a fair and proper entry. It has the extraordinary distinction of doing the reverse of shining against the background of a perfectly horrible clause.
Lord Strathclyde: I welcome the opportunity which the noble Lord, Lord Williams, has given me to explain some of the definitions which we use in the clause. The noble Lord asked about the standard rate. That is laid down by local authorities under Schedule 16 to the Housing Act 1985. The interest rate used will be the standard national rate, which is a weighted average of the rates charged by the top 15 commercial lenders. I dare say, therefore, that the currency is not relevant because the rate will be expressed as a percentage rather than a fiscal amount.
Lord Williams of Elvel: Before we go any further, what is the weighting percentage? Which is the most important lender? How does the weighting occur? What is the formula?
Lord Strathclyde: That is a perfectly fair question to ask. I suggest that it is done by consideration of the size of the lenders. I said that the panel, if I may call it that, is made up of the top 15 lenders. Presumably the weighting will be up to the size of the lenders on the panel.
Lord Williams of Elvel: Again, before we go any further, I wish to point out that as a matter of fact, securitised mortgages—I am sure that the noble Lord understands what I mean by that—represent a larger market than some of the 15 major institutional lenders. Is the average rate for the securitised mortgage market included in his weighted average?
Lord Strathclyde: No, because we are looking at standard repayment mortgages. The reason we do that —and this is the reply to another question which the noble Lord asked about why they were not set on endowment mortgages—is that in all cases the tenant is free to use whatever financial instrument he believes is most applicable to his circumstances, depending on whether the lender will lend on those terms. The multiplier that we are discussing in this clause determines the minimum payment. It is up to the
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tenant to decide how to raise the cash. We must set the minimum payment under this legislation and that is what we have done.
I appreciate that there arc aspects of the clause which are complicated. My noble friend Lord Peyton read out some of the language used in describing the clause and I can understand why he thinks that it is complicated. However, I hope that I have explained how the decision is reached and that that will suffice.
Lord Williams of Elvel: I am sorry to press the noble Lord again but I wish to ask only one question which I asked previously but which he failed to answer. Are we talking about a weighted average fixed-rate mortgage for 25 years or are we talking about a floating-rate mortgage? That appears to me to be an important factor in fixing the multiplier that we were discussing.
Lord Strathclyde: The statute requires the Secretary of State to have regard to the interest rates which are currently being charged by the building societies—
Lord Williams of Elvel: Is that the monthly rate?
Lord Strathclyde: The monthly rate, to the overall rate, to the interest rate charged by the building societies. The Secretary of State must then make a reasonable judgment about what is the prevailing market rate.
Lord Williams of Elvel: The discussion is becoming wearisome and I do not wish to weary the Committee. I do not believe that the Government have thought the matter through at all, let alone having thought through when a dwelling-house is not a house.
Clause 96 agreed to.
Clause 97 agreed to.
4.45 p.m.
Clause 98 [Landlord's notice admitting or denying right]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 176K:
Page 99, line 26, at end insert (", and, where paragraph (a) applies,
(c) advising the tenant of any circumstances known to the landlord, including the tenant's financial circumstances or the condition of the property, which may prejudice an application by the tenant to an approved lending institution for a loan towards the acquisition of the dwelling-house on rent to mortgage terms.").
The noble Baroness said: This is a modest probing amendment. We are extremely worried that tenants may be persuaded by publicity into taking out RTM schemes without a full knowledge of and a full briefing on the implications. I refer not only to the rent payments, which can be converted to mortgage payments to a building society, but to the associated costs of, above all, repairs, insurance, legal services and the like. They should be seen in terms of the tenant's financial circumstances. In tabling the amendment we seek to give a steer that local authorities counsel tenants adequately about the financial implications of taking on such a responsibility. If tenants take that on but cannot meet the

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ongoing responsibilities the local authority's stake in the property is at risk and the tenant is at risk of repossession and homelessness. I beg to move.
Baroness Hamwee: Does the noble Baroness fear that such counselling might have the reverse effect to that which she intends? In general I support the intention but the tenant may rely too heavily on the landlord in judging his own position. The situation is difficult but suggesting that the landlord should advise on matters which include the tenant's own financial circumstances could tip the balance too far the other way.
Baroness Hollis of Heigham: I take the noble Baroness's point. However, the amendment is part of a sequence that we have been moving. In doing so we have tried to make clear that when a tenant takes on an obligation to purchase he is not merely commuting existing rent payments into mortgage payments. He is taking on additional costs. We have moved a series of amendments to that effect—for instance, the 80 per cent. and the arrears—which the Government have dismissed as not being particularly significant or, alternatively, as being outweighed by other considerations. Therefore, we are extremely worried that this group of marginal tenants will become even more marginal owner occupiers without adequate proper financial counselling. That is the purpose which the amendment is designed to achieve.
Lord Strathclyde: I am conscious that the noble Baroness, Lady Hamwee, said at the beginning that we should not be overly paternalistic—at least, I think that that is what she said—and I believe that she is right. I understand and welcome the anxieties of Members of the Committee opposite that we are dealing with a potentially vulnerable group of people who may believe that they are being forced into buying their properties. That is not the case; we are not forcing anyone to buy their property. We do not want people to be forced to buy their property. What we want is the ability for certain tenants who do not feel that they have quite enough to come under the right to buy legislation but feel that they want to own their properties. There may be people who fall into that class. The legislation before us gives them that ability.
Of course there are safeguards; for example, before a tenant reaches the point of claiming to buy under the rent-to-mortgage scheme, the landlord will already have served notice setting out the terms under the ordinary right to buy. The notice is required to include a description of any structural defects known to the landlord. If the property is one that is designated under housing and defects legislation, the landlord must say so.
It is possible that some prospective purchasers under rents to mortgages will be able to raise the purchase price without borrowing from a mortgage lender. For example, they may be able to use savings or buy with help from members of their family. Anyone who does so is well advised to make inquiries to ensure that the property is mortgageable so that
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they do not run into difficulties if they want to sell later. We have always advised tenants to have a survey carried out to warn them of potential problems. But in the large majority of cases where I would expect tenants to take out a mortgage, they will find out from the horse's mouth whether or not there is a potential problem because they will be applying for a mortgage from a private lender.
As I said earlier, I understand the noble Baroness's concerns. But with all the publicity that there has recently been on home ownership, on mortgages, on defaulting and on repossessions, I regard it as very unlikely that anyone would go down the route of turning their rent into a mortgage without looking very carefully at the financial implications involved.
Baroness Hollis of Heigham: I, too, share the Government's concern not to be over-paternalistic. I hope, therefore, that when we deal with CCT we can expect the Minister to take the same approach on CCT and paternalism as he does here. We shall return to that point later.
I should like to remind the Minister that there is a fear behind the proposal. I believe—and I think my figures are correct—that 154,000 families presented themselves as homeless last year. A proportion of those were former council tenants who had exercised their right to buy. Had they known the full implications of taking on that liability, they might have been spared the problems of repossession and homelessness. The amendment seeks to ensure that proper counselling is available. That has not always been the case. But, given the present situation, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 98 agreed to.
Clauses 99 to 103 agreed to.
5 p.m.
Clause 104 [Terms and effect of conveyance or grant: general]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 176L:
Page 103, leave out lines 23 to 42.
The noble Baroness said: The amendment would remove the provision that a rent-to-mortgage purchaser of a flat should pay a lower service charge than a right-to-buy purchaser. The Government have inserted the provision because they say that the local authority will benefit, in proportion to its share of the equity, from any appreciation in the value of the property.
We are concerned that expenditure on repairs, for example, is rarely reflected pound for pound in increased value. If indeed that has occurred, it is more appropriate that that should be reimbursed when the purchaser redeems part or all of the equity mortgage and that subsequent valuation of the dwelling should exclude any major contribution for repairs or improvements to which the subsection applies. In other words, because a rent-to-mortgage purchaser would pay only a proportion of the service charge when we feel that they should pay the full amount —and, as I say, some offsetting, if appropriate at the

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point of redemption—we believe that it is basically inequitable. It means that other tenants in the housing revenue account will be picking up some of the costs of repairs that should properly be met in the full by the leaseholder. Why should some tenants who are not on housing benefit and paying a full rent cross-subsidise the repair bills of other former tenants who have become owner occupiers? I beg to move.
Lord Strathclyde: We all know that service charges can be a very significant problem for owners of flats. The standard arrangement in the private sector is that the freeholder undertakes in the lease to keep the structure and exterior of the building in repair and the leaseholder covenants to make appropriate contributions to the costs incurred by the freeholder. That practice applies equally to sales under the right to buy, and it will apply to sales under rents to mortgages.
All leaseholders of flats have protections against unreasonable service charges. Under the right to buy, purchasers also have the benefit of binding estimates, given to them before the sale, of the charges that they may have to pay for repairs and improvements over the first five years of the lease. That, too, will apply to rents to mortgages. The intention is that tenants who consider buying should have reliable warning of the charges they will face before deciding whether to proceed.
The five-year estimates to which I have referred were introduced by the Housing and Planning Act 1986. Some tenants who bought with the benefit of those estimates have, nevertheless, reported having difficulty with their service charges. The five-year estimates are not, of course, designed to give permanent protection. The department is in discussion with representatives of right-to-buy leaseholders and with the local authority associations to get a clearer picture of the problems and see what can be done.
The trouble with service charges for major repairs, such as the renewal of a roof, is that they often come as a demand for a large lump sum. Raising the purchase price to buy a flat under the right to buy is usually much easier than in the case of a house because the market value will generally be lower and the discount scale is more generous. The purchase price will normally be financed by a mortgage, which spreads the burden of repayments and attracts tax relief. By contrast, a demand for a service charge can require the leaseholder to find a large amount of cash. We have introduced a right to a loan from the landlord in respect of particularly large service charges in order to help spread payment, but the leaseholder must still find the cash sooner or later.
The rent-to-mortgage scheme is designed to offer a route into home ownership for tenants who cannot afford to pay the normal right-to-buy price. Knowing that service charges can be a problem for people who have exercised the right to buy, we were concerned to make realistic provision for tenants buying flats under rents to mortgages.
A precedent was available in the right to shared ownership. That right was introduced in 1984 for tenants who had the right to buy but could not afford to exercise it. The rules were rather complex and, as the noble Baroness said earlier, very few people took
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advantage of it: that is why the Bill repeals it and puts rents to mortgages in its place. The two schemes are, however, designed for the same category of purchasers. Service charges on flats were potentially a problem for people exercising the right to shared ownership. The legislation therefore provided for the Secretary of State to make an order adjusting the responsibilities of the shared owner in respect of repairs and maintenance. The order provided that any amount payable by the leaseholder of a flat for repairs, maintenance and insurance would normally be adjusted so that the amount payable was reduced pro rata to the leaseholder's current share.
The amendment would delete the counterpart to that rule in the rent-to-mortgage scheme. The Bill provides that if the leaseholder's share is, say, 60 per cent., only 60 per cent. of the service charges which would otherwise be payable for repairs and improvements will be recoverable.
I have explained the practical considerations which led us to this. There is also another argument of principle. A landlord which, as in the example I have quoted, retains a share of 40 per cent. in the equity in a flat has an interest in ensuring that its value is maintained. By keeping the rest of the building in good repair it is preserving and perhaps increasing the value of its stake in the flat. If leaseholder and landlord share the equity in the flat between them it seems reasonable that they should equally share between them the costs of looking after the building, to the extent that those costs are for the benefit of the flat.
If the question is asked, how is the landlord to pay for its share of those costs, I can answer with another question: how would the landlord pay for mending the roof and the lifts if the flat in question was not sold? It would not be able to recover any specific contribution from the tenant of the flat and the tenant's rent would not go far to cover the costs of major repairs.
I am aware that that is not necessarily a precise answer. It is difficult to give one because the combined effects of the rule on rent-to-mortgage service charges and the rules of the financial regimes which govern local authority and housing association expenditure are extremely complex. I know that there have been discussions with the National Federation of Housing Associations, and the department will of course be very willing to discuss this also with the local authority associations if they have a serious concern on this point.
However, I hope we shall not become too engrossed with the mechanics. I invite the Committee to consider the substance of the matter. If the tenant of a flat cannot afford to exercise the right to buy and remains a tenant, he or she will continue to look to the landlord to keep not only the common parts but the interior of the flat in repair, and will be paying a rent which assuredly does not cover the landlord's full costs. If instead the tenant buys under rents to mortgages, the landlord will realise an immediate receipt; will cease to be responsible for looking after the interior of the flat; will be able to recover part of the costs of looking after the common parts; and will

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have the prospect of a further payment in due course on disposal or death. And, perhaps most important of all, the flat will be owned by someone who has a personal interest in looking after it and seeing that the building is a good place to live. I suggest that those are benefits well worth having. I apologise for that rather lengthy explanation. I hope the noble Baroness can now withdraw her amendment.
5 p.m.
Baroness Hollis of Heigham: As far as I can see, the Minister has given three different answers as reasons for rejecting this amendment. The first is a practical consideration; that is, bluntly, that the tenant cannot afford the bill if he wishes to take on full responsibility for the property. The implication of that is that other tenants will therefore have to take on the bill. It is not a question of the landlord taking on the bill, but rather that other tenants, through their rents, pay for the person buying to have a reduced obligation for financing the repairs the Minister mentioned. The Minister's first answer therefore, which concerns the practical problems of presenting a tenant with a full bill, is to be met by making other tenants, who may be poorer than the tenant in question and therefore not able to buy, pick up the bill through increased rents. That does not seem to me a legitimate answer.
The second answer the Minister gave was that the landlord retains an equity stake in the property. That is fine but, first, the equity stake may not be redeemed for 40 to 50 years, at which stage the notion of capital receipts is fairly nebulous. Secondly, there is no way for the landlord to ensure that repairs are carried out, thus protecting the landlord's equity stake. Will the Minister give an assurance that he will allow landlords to impose covenants to ensure that their equity stake is protected to give backing to the point he has just made, which is that if the landlord is protected by his equity stake, the landlord in return must be protected by his right to impose repairs?
Thirdly, the Minister gave an analogy with shared ownership. He was right to say that that scheme was a non-starter. That also applies to the scheme that we are discussing. But the important difference is that under shared ownership purchasers paid rent on the proportion of equity that remained with the local authority, and therefore through their rent they contributed to the cost of the repairs that would fall on the landlord. That does not apply here. The analogy is not exact. I await the Minister's response, but I suggest to him that none of the arguments he has adduced is valid. I invite the Minister to reply to those points.
Lord Strathclyde: The noble Baroness did not answer the final point that I made, which is that the landlord retains a share of the ownership of the flat, or indeed the block of flats. He will receive some more money at some stage in the future. It must be in his interest to make sure that the flat is reasonably maintained. It must be in the interests of the new purchaser—the new owner—to make sure that the building is kept in good repair. That is why we have
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introduced this provision. The tenant will certainly be required to keep the flat in repair but it will be up to the landlord to mend the roof and the external parts of the block of flats. I think that that is perfectly reasonable. I do not share the concerns of the noble Baroness. I accept that the analogy with shared ownership is slightly flawed because in that case a degree of rental was maintained, but, as the noble Baroness pointed out, shared ownership did not work very well. We hope that rents to mortgages will be far superior.
Baroness Hollis of Heigham: If the Committee is persuaded by that, I shall be surprised. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 104 agreed to.
Clause 105 agreed to.
Schedule 15 [Schedule inserted after Schedule 6 to the Housing Act 1985]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 176M:
Page 215, line 20, after ("occurs") insert ("and in any event not exceeding 30 years in cases of disposal)").
The noble Baroness said: The aim of this amendment is similar to that of a later amendment on Scotland which is to be moved by my noble friend. This amendment seeks to ensure that the remaining landlord's share, or deferred financial commitment, is redeemed in a reasonable period of time. At the moment the matter is open ended until the tenant's death. As I have said, this may constitute a period of 40 to 50 years. During that time the landlord has to forgo his capital receipt. It does not seem to us unreasonable to bring that to an end and to limit the period to perhaps 30 years. That allows for an average mortgage period of 25 years, together with an additional extension, if necessary, for, for example, loans for improvements. I beg to move.
Lord Strathclyde: I can well understand the object of this amendment. When tenants buy their homes under rents to mortgages they pay less than the normal right-to-buy price. In return, the landlord retains a right to be paid part of the value of the property if it is later sold, or after the death of the purchasers. The payment will be based on what the property is worth at that time so that the former landlord retains a stake in any future growth in its value. The share must be bought out eventually, but the timing of that event, from the landlord's point of view, is uncertain. The purchasers may sell their home sooner or later or they may stay in it for the rest of their lives, which may be, as the noble Baroness said, 40 to 50 years.
The only snag is that the former landlord may have to wait a long time for his share in the value of the property. Hence the proposal the noble Baroness has made that there should be a 30-year time limit. Having said that I understand the object of this amendment, I do not think we can impose a limit. The difficulty is simple. If the purchasers are alive and well and are living in the house and have not sold it, how are they to raise the money to buy out the landlord's share? Anyone who takes out an ordinary mortgage must of

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course redeem it by a set date, but the arrangements for repayment are worked out so as to enable the borrower to do this whether by spreading repayments over the period of the mortgage or by taking out an endowment policy which will produce the necessary sum.
I do not think that we can put people in a position where they may have to find a substantial sum of money, representing perhaps a quarter of the value of their home, at a time when they have no plans to sell up. They may not have the means to repay a loan and be forced to sell to raise capital. They might not be able to rehouse themselves out of the net proceeds of the sale. While I have some sympathy and understanding with the point the noble Baroness has made, I believe the provision is impractical and probably unnecessary.
Baroness Hollis of Heigham: I accept that we are between two alternative problems as it were. The Minister has put the position fairly. I do not know whether he would like to take this measure away and consider whether it is possible that, where a tenant in the situation we have been discussing is under the age of 65, that tenant may reasonably go on to take out an additional and further mortgage based on a capacity to continue to pay rent which may be compounded by the building society to offset the outstanding equity stake. That would seem to me to be reasonable where the 30 or 40 years still comes to a term that is well under the 65 years of age of a pensioner whose income may then be expected to fall.
I take the Minister's point, but I hope he can reconsider this matter because it is no kindness to a local authority to have 40 or 50 year-old debts outstanding which it is unable to realise. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 15 agreed to.
Clause 106 [Mortgage for securing redemption of landlord's share]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 176N:
Page 104, line 27, leave out ("so give") and insert ("not unreasonably withhold").
The noble Baroness said: The amendment relates to a point on which we had a brief skirmish earlier this afternoon. The amendment would give local authorities a limited discretion to prevent a further loan being taken out by a rent-to-mortgage purchaser having priority over the landlord's mortgage.
The background to the amendment is the growth in debt and arrears across the country. We find, for example, from the Rowntree Trust, which has studied such arrears, that in 45 per cent. of cases of substantial arrears people have extended their mortgage. That was often associated with multiple arrears in respect of fuel, water and credit companies. In more than half of the cases such arrears were associated with worsening unemployment, lower wages, loss of overtime and so on. The Rowntree Trust also found that those who were in arrears were not the better off with higher mortgages but the worse off with lower mortgages, in other words the most vulnerable. The background to
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the amendment is an arrears problem which is becoming worse and a problem of increased indebtedness.
In that context, if people exercise a right to buy or take advantage of a rent-to-mortgage scheme the first thing that those purchasers do is to show that they have bought their homes and are different from other council tenants. As a result, they have new doors, windows, porches, garages, conservatories and even extensions. Anyone who visits a council estate can pick out the houses which have been bought by the alterations and the extensions which have been made to those properties. In many cases that is to be welcomed.
However, to finance those improvements the tenant purchaser usually takes out a loan or second mortgage, sometimes well in excess of the discounted purchase price. In the case of a flat costing perhaps £15,000 or £18,000, it is not unusual for major improvements to exceed that discounted purchase price. That is fine if the purchaser can afford it. However, if purchasers fail to keep up their mortgage payments to their lenders and therefore the building society decides to foreclose, there is—as we know, because the noble Lord rejected our amendment—no provision for the local authority to have first refusal to purchase at a nil cost implication through supplementary credit approval. Homelessness results.
Given that it is the case that many right-to-buy purchasers have borrowed large sums which are not covered by sufficient residual equity in the property, the noble Lord will share our concern to protect the local authority's position in its fiduciary responsibility to other tenants and other rate and rent payers. Essentially, we say that further loans from lenders should be restricted to no more than the equity share left in the property until such time as full equity has been acquired by the purchaser. Otherwise the tenant is at risk of foreclosure and the local authority as landlord is at risk.
As the Bill stands the landlord must agree that a loan for approved purposes, as defined in subsection (6), will always have a higher priority than the landlord's share, contrary to what the noble Lord said earlier this afternoon. The amendment would allow the landlord to refuse to give it a higher priority if there were good reasons for doing so, and that consent must not be unreasonably withheld.
The amendment seems to me to be of unimpeachable virtue, so I hope that the noble Lord will support it. I beg to move.
5.15 p.m.
Lord Strathclyde: I certainly indicated earlier that the landlord came second. However, I did not go on to say, as I clearly should have done, that there are exceptions. This is one of the exceptions.
When a tenant buys his or her home on rent-to-mortgage terms the proportion of the right-to-buy price which is not met by the initial payment is covered by an equity mortgage from the landlord. That is to say, the landlord has a right to be

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paid a proportion of the value of the property on disposal or death. That right is protected by a registered charge.
The landlord's mortgage will have priority immediately after a mortgage taken out by the tenant to finance the purchase. That is to ensure that the landlord has good security for his loan. In some circumstances, however, the purchaser will wish to borrow an additional sum, either at the time of purchase or later, perhaps, as the noble Baroness pointed out, to carry out repairs or improvements to the property. The lender will want security for that loan and the money will be used to ensure that the value of the property is maintained or even enhanced. That is why we have provided that if a further advance is made for purposes connected with the purchase, maintenance or improvement of the property, the landlord should be required to consent in writing to the postponement of its charge.
The amendment framed by the noble Baroness would give the landlord discretion in granting that consent. I can understand that there might well be concern that the purchaser would be able to borrow large sums which could undermine the security of the landlord's mortgage. However, the purposes for which the loan could be used would be strictly limited and would be in the long-term interests of the former landlord in protecting the value of the property. If the landlord were given discretion over whether to grant postponement in those situations it would create uncertainty and be liable to give rise to a substantial amount of dispute. It might also have the effect of discouraging lenders from making loans to tenants wishing to purchase on rent-to-mortgage terms since they might fear that any further advances which they made, even if they were for legitimate purposes connected with the property, might not be protected.
We have included in the Bill detailed rules to ensure fair play between the former landlord and the mortgage lenders. I do not believe that it would be virtuous to complicate the position further by giving landlords a discretion. The requirement to give consent where it was reasonable to do so would be a fertile source of dispute. The legislation as it stands gives sufficiently secure protection to the landlord's mortgage.
For those reasons I hope that the noble Baroness will withdraw her amendment.
Baroness Hollis of Heigham: I believe that the Minister is wrong in this. I believe that his position is foolhardy. If a proposed improvement adds to the value of the property and therefore protects the landlord's interest, assent would surely be given. If a £10,000 garage adds broadly £10,000, or even £8,000, to the value of the property then of course the landlord's equity interest is protected. There is no problem there. There is an array of improvements, ranging from double glazing or conservatories to work on kitchens, which may be desirable but whose cost is not reflected in additional value to the property. They may also be acceptable if the tenant proposing to make those improvements can afford to pay for them.
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However, if the tenant cannot afford to pay and if those loans are not secured by the residual value in the property, what is the landlord's position?
What is the local authority supposed to do when somebody defaults because he has taken out more than he can afford to spend and that is a first charge on the property over and above the landlord's own share? It is not the landlord that is hurt, but other council tenants are denied their rightful return because consent has been unreasonably given when it should reasonably have been withheld in those circumstances. I ask the Minister to comment further.
Baroness Hamwee: Before the Minister does so, is it not normally the case in the commercial market that there would always be the opportunity for the first mortgagee to give or withhold consent? One hopes that he would do so on a reasonable basis. I do not see the difference.
Lord Strathclyde: The noble Baroness, Lady Hamwee, makes a very valuable point reflecting what happens in normal market practice.
Perhaps one of the aspects which the noble Baroness, Lady Hollis, has missed is the approved list. Money cannot be borrowed for any purpose such as a Caribbean holiday, a boat or a car. It has to be borrowed for approved purposes. It is only on that basis that the landlord is obliged to give his consent. The approved purposes are to enable the tenant to make an interim or final payment to redeem a landlord's mortgage, to pay for insurance, works to the property or service charges for works or to defray so much in advance as is outstanding, any arrears of interest, costs or expenses of enforcement. That is what we refer to. We do not refer to the opportunity for new owners to involve themselves in fast living. We assume that the extra loan will be used to enhance the property. That is clearly in the interests of the landlord.
I understand the point that the noble Baroness makes. However, if we were to agree the amendment, not only would it create disputes but bureaucracy. Every time a new owner wished to extend his loan for approved purposes, he would have to request discretionary permission from the landlord. That could be cumbersome.
Baroness Hollis of Heigham: I am sorry to press the Minister. Perhaps he will help me with the sums because I am somewhat baffled. Let us suppose that the property is valued at £35,000; that the tenant's initial mortgage payment covers £20,000 of that; and that the equity stake represents the £15,000 to the landlord. There are therefore effectively two mortgages in place: one to the building society for the original £20,000; and one to the local authority for £15,000 as an outstanding charge. The tenant can afford the payment. The tenant wishes to do £15,000 worth of approved work. The local authority is concerned about it. The approved works may be desirable but they may add only £5,000 to £8,000 to the value of the property. The landlord is worried about the tenant's financial circumstances. The tenant finds that he is unable to maintain his £20,000

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payments to the building society and the £15,000 to a second company for the improvement works. The tenant defaults.
The charge on those works applies ahead of the landlord's stake. Effectively it would wipe out all but £5,000 of the landlord's equity. The landlord finds that instead of having a charge on the property worth about £15,000 he has a charge of only £5,000. In other words, the local authority tenants have lost £10,000 on that deal because the landlord's mortgage could not take precedence over improvement works. That is what we refer to. How does the Minister propose to compensate council tenants for that loss of £10,000?
Lord Strathclyde: The noble Baroness began by making a good point. However, she is now making a meal of it. I accept the example that she gave proves that there is a substantial loss to the local authority. But even the noble Baroness will accept that that case is unlikely to arise.
The rules that we have introduced have been generally much welcomed by the local authority associations because they represent a considerable tightening up of the old right-to-buy rules. Under the old rules any further advance by the same lender had priority. In this case we have introduced the system of approved purposes. I believe that that is a substantial improvement. I hope that the noble Baroness envisages it as a considerable and worthwhile improvement.
Baroness Hollis of Heigham: I believe that the Government's position is foolhardy. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 106 agreed to.
Clauses 107 and 108 agreed to.
Clauses 119 and 120 agreed to.
Clause 126 agreed to.
Clause 127 [The rent to loan scheme]:
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove had given notice of his intention to move Amendment No. 176P:
Page 131, line 14, leave out lines 14 to 21 and insert:
("(3) Payment of he deferred financial commitment to the original seller of the house—

(a) shall be made at a date no later than 30 years after the original purchase, or

(b) subject to section 73D(1), be made—

(i) on the sale or other disposal of the house by the rent to loan purchaser, or

(ii) if the rent to loan purchaser does not sell or dispose of the house, on his death, whichever first occurs.").

The noble Lord said: The amendment has already been spoken to by my noble friend. There was an error in the grouping which caused certain confusion. I shall not move the amendment.
[Amendment No. 176P not moved.]
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 176PA:
Page 133, line 16, after ("of") insert ("testate or intestate").
The noble Lord said: The amendment seeks to ensure that the provision of the Bill refers to succession only without indicating whether or not it is restricted to testate or intestate succession. In normal circumstances a reference to succession alone indicates
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intestate succession. The amendment clarifies that the law of succession covers inheritance to estate whether intestate or where a will has been made. I believe that it is a helpful small amendment. I beg to move.
The Minister of State, Scottish Office (Lord Fraser of Carmyllie): Although I understand the reasons why the noble Lord does not wish to move Amendment No. 176P—the noble Baroness moved the amendment which applies to England—perhaps I may advise the Committee on a brief item of fact. We have had a pilot scheme in Scotland. It may be of interest that the average age of those purchasing under the scheme in Scotland is about 46 years. Accordingly, if one were to put a limitation of 30 years on the provision, it might be inappropriate to require a sale at a time when one could have a widow or widower at the age of 76 or 80 having to find that very substantial sum.
The noble Lord seeks to ensure that the reference to the law of succession in new Section 73D(1) includes both testate and intestate succession. I assure the noble Lord that there is nothing between us. It is our intention that the provision, which is about the circumstances in which the deferred financial commitment need not be repaid, should apply when the house passes to another joint purchaser whether by the law of testate or intestate succession.
In his Institutions of The Law of Scotland, Lord Stair dealt with both testate and intestate succession under the heading of "Succession". A recent definition of the law of succession is given by the Emeritus Professor of Scots law at Glasgow University, David Walker, as,
"the branch of law which deals with the devolution of a person's property to others on his death".
He recognises it as covering both testate and intestate succession.
As the wording of the law of succession embraces both testate and intestate succession, I see no reason to change it. Indeed, to specify in the Bill that the term means both testate and intestate succession could cast doubt on references in other legislation where there is no such separate specification. I hope that with the reassurance that there is nothing between us the noble Lord will feel able to withdraw the amendment.
Lord Carmichael of Kelvingrove: I must accept the opinion of the former Lord Advocate. I was merely advised that it made matters absolutely clear. However, I understand the point that if the reference were included in this Bill only it could cause confusion in other legislation and that there would be debate as to why it was not included. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 127 agreed to.
Clause 128 agreed to.
Clause 129 [Abatement of purchase price]:
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 176PB:
Page 136, line 35, after ("sale") insert ("or where the provisions of the Land Registration (Scotland) Act 1979 apply, a Land Certificate with no exclusion from the Keeper's indemnity is delivered").
The noble Lord said: I speak also to Amendments Nos. 176PC to 176 PE. The amendments are highly technical to me and to others. The provision of the Bill refers to a date upon which a good and marketable title would have been granted by the seller. The phrase "a good and marketable title" is a term of art which has a special significance under the system of registration of deeds known as the Sasine system. The amendment clarifies that where the provisions of the Bill apply the new system of registration of title (as opposed to deeds) applies. The system of registration of title was introduced by the Land Registration (Scotland) Act 1979 and ensures that a person who obtains an entry in the land register, certified by the Keeper of Registers to be without exclusion of indemnity, obtains the equivalent entry of a "good and marketable title" under the Sasine system. The amendment is designed to ensure that the effect of the new system is recognised.
I find that a particularly difficult part of a difficult Bill. Reading through some of the Second Reading speeches such as that by my noble friend Lord Macaulay of Bragar, I was struck by the fact that he complained about a small part of a very large Bill being applicable only to Scotland. I find myself wondering what happens: does every lawyer's office in Scotland need to obtain the Bill and have it on the shelves? Obviously, the subject comes up frequently and it seems an incredibly clumsy way of dealing with it. We know the difficulties of the Scottish Standing Committee, but it seems an incredibly cumbersome method. The Bill itself is also obtuse. I received from a friend a copy of a letter from a senior partner of a firm of Scottish solicitors. He ends the letter by saying:
"Apart from these main points, I must say that I found the provisions in relation to the rents to mortgage scheme fiendishly complicated. I cannot believe that any ordinary Local Authority tenant would, have any chance of understanding them at all".
In fairness to local authority tenants, I think that many people in this House will not understand them either. I beg to move.
Lord Fraser of Carmyllie: While I certainly accept that many of the provisions relating to the rent-to-mortgage scheme are necessarily complicated, I do not believe that the basic scheme itself is particularly difficult to understand. Indeed, council tenants in Scotland will not only be able to understand it but will, as the pilot scheme indicates, take advantage of it.
The matter raised by the noble Lord is certainly highly technical. According to the authorities, one of the meanings of the words "good and marketable title" is that the seller undertakes that he is in a position to confer ownership onto the buyer. He further undertakes that the buyer's title will be free from challenge; that is, that it will be absolutely good and invulnerable to reduction.
What I should explain to the noble Lord is that this applies equally in the register of Sasines transactions and in the land register transactions. In the case of land registered or to be registered in the land register, the view of one of the main authorities on conveyancing in Scotland—and so far as I am aware,
640
his view has not been contradicted—is that the words "good and marketable title" cover the point that there will be no exclusion of indemnity.
In addition, it is the practice of the legal profession in Scotland, as recommended in what is known as the Practice Book: Registration of Title, to provide in missives a clause that the keeper issue a land certificate in the name of the purchaser as the registered proprietor of the whole subjects of offer and containing no exclusion of indemnity in terms of Section 12 (2) of the Land Registration (Scotland) Act 1979. The Practice Book also recommends that there be an addition to the effect that, notwithstanding the delivery of the disposition, the clause shall remain in full force and effect and may be founded upon. It would also be unsatisfactory to single out exclusion from the keeper's indemnity because not only is the concept of exclusion from indemnity covered by the words "good and marketable title", but other aspects too.
The idea of a good title may be said to involve four different aspects: first, that the buyer is to be made owner; secondly, that there are no heritable securities; thirdly, that there are no unusual conditions of title; and, lastly, that there are no leases. It would therefore be unsatisfactory to single out exclusion from the keeper's indemnity.
I am not sure whether that will make any sense at all to the noble Lord, but I am sure that he sees it now as clearly as ever. Noble Lords may have felt that a point was not covered but I hope that from what I have said they will be reassured and accept that the amendment is unnecessary. We wish to leave the terminology as "good and marketable title". It covers the point that vexed either the noble Lord or those who first raised the matter with him. With that explanation, I hope that the noble Lord will withdraw the amendment.
Lord Carmichael of Kelvingrove: I thank the Minister for that explanation. I think that all I can do is to compare it with the original wording and see whether I can understand it. If not, then perhaps I shall have an opportunity of taking advice and bringing the matter back on Report. Meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5.30 p.m.
[Amendments Nos. 176PC, 176PD and 176PE not moved]
Clause 129 agreed to.
Clause 130 agreed to.
Clause 109 [Right to have repairs carried out]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 176Q:
Page 108, line 13, leave out from ("(1)") to ("(to)") in line 16, and insert:
("A landlord of secure tenants shall operate a repair default scheme in accordance with the provisions of this section, for entitling secure tenants").
The noble Lord said: In moving this amendment, it may be convenient for the Committee if I speak also to Amendments Nos. 176R to 176V and Amendment

641
No. 176W. It is odd that all amendments in this part of the Bill start with the number 176, so we have to play a game of "Scrabble".
We come to the tenant's right to have repairs carried out, which is in the rubric of Clause 109. The Government have taken the view—in our opinion, correctly—that the existing scheme which was in the 1984 Act was bureaucratic, legalistic, complex and difficult to understand. In its place, they have attempted in the Bill to put something which is bureaucratic, legalistic, complex and difficult to understand. Our amendments try to make it slightly less bureaucratic, legalistic, complex and easier to understand. In particular, with Amendment No. 176Q, we are not satisfied that it is really the job of the Secretary of State to operate a blanket scheme. Although the proposed new national scheme is something of an improvement on the existing scheme, we argue that local authorities within it must have a great deal of flexibility due to the different conditions in different parts of the country.
Our view is that landlords must have flexibility to decide what repairs qualify under the scheme and what response times are appropriate, to decide how and when a back-up contractor should be called in, and to decide locally on compensation arrangements. Those three thoughts are the subject of Amendments Nos. 176Q, 176R, 176U, and 176W. Of those, the most important is Amendment No. 176Q, which lays on the landlord of secure tenants the operation of a repair default scheme in accordance with the provisions of the section and removes the burden from the Secretary of State. We believe that that is the right way to go about it. It would restrict the Secretary of State's power to prescribe a scheme to where a majority of tenants object to the local scheme.
The other amendments in the group are of a slightly different kind, but are all concerned with the repair default schemes about which I have been talking. Therefore, I accepted the grouping in the interests of trying to get a move on with the Bill.
Amendment No. 176S is designed to ensure that the first contractor has the opportunity to complete the work by the end of the last day before the tenant is eligible to call in the second contractor. Without that, it would be possible for the first and second contractors to arrive to do the same job on the last day, which seems an undesirable event, leaving the tenant in the rather difficult situation of having to mediate between the two contractors and possibly giving rise to legal challenge.
The purpose of Amendment No. 176T is to enable the local authority to decide which back-up contractor should be called out. We believe that there should not necessarily be two back-up contractors. It should be the local authority that decides. That is the purpose of the amendment. The amendments are slightly complex but we thought it appropriate to group them together because they deal with rent default schemes. Amendment No. 176Q is the central one. I beg to move.
Baroness Hamwee: I support this group of amendments. Compliments have been paid by the Government Front Bench to local authorities along
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the lines of their diversity and so on. Local authorities are diverse. There are different circumstances, different types of housing and different types of tenancy agreement. To allow that diversity to be reflected in the landlord's own decision on those matters would be appropriate.
On a more detailed point, I fear that if a long list of contractors has to be involved, no one contractor will have any particular loyalty or enthusiasm in providing a scheme which is properly priced and under which he could respond energetically. There is a point beyond competition where too many cooks spoil the broth. To reduce the list of contractors would not only reduce administrative complexity and the cost of operating the scheme; it would also be a practical approach. Finally, I add to the list of adjectives used by the noble Lord, Lord Williams. He left out "obscure" and possibly "obscurantist".
5.45 p.m.
Lord Strathclyde: The noble Lord, Lord Williams, introduced the amendments to deal with the Government's new right-to-repair scheme. He began by criticising the old scheme. I accept that the old scheme was not the great success for which we had initially hoped. But it is wrong to write off the low take-up as a sign of failure. In the first three years, 71 claims were worth £7,300. It is also to ignore some of the very positive things that the scheme achieved. It changed attitudes among tenants and authorities; it enabled tenants to use the threat of the scheme to get repairs done—largely hidden from view, thus negating the need to exercise the right. The noble Lord accused the Government of introducing something that was bureaucratic, legalistic and complex. However, these amendments, although they change the fundamental nature of the proposed new right to repair, are a recipe for a mixture of schemes and a mixture of rights. If they are accepted, I fear that many tenants will end up with second-rate schemes and second-rate rights.
No doubt the proposals are well intentioned. But in seeking to have the best of both worlds—a locally-agreed scheme and the fall-back statutory scheme—tenants will not get a right to repair but a right to negotiate for a right to repair. The scheme proposed by the amendments would undermine the very scheme that the Government propose. It removes from tenants the opportunity to take control for themselves when things go wrong and puts the design and detailed operation of the scheme back into the hands of the local authority. Where the local authority is a good and effective manager, no doubt that would work well enough. But since too many authorities have poor and ineffective management and repair services, what guarantee do we and the tenants have that the schemes devised by the worst authorities will be up to scratch? By putting the control of the right to repair in the hands of those authorities, there will be little or no incentive for the authority to do better. It is the tenants in the poorest performing authorities who need the right to repair most of all. It is those tenants whom the Government's scheme is designed to help. If the Committee accepts the amendments, it will

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provide the worst authorities with the escape route that they seek and deny tenants the opportunity to get urgent repairs done to their homes.
After long and perhaps frustrating negotiation with an unco-operative authority, tenants could, under the proposals, provided that a majority of tenants can be mobilised to submit requests to the council, insist on a scheme described in regulation under this part. But how long will all that take? When will the tenants get the right to repair and when will they get their repairs done? That is why I say to Members opposite: surely it will be quicker and easier for all concerned, and ultimately more acceptable to tenants, if, as we propose, authorities are required from the outset to deliver a basic statutory scheme. After consulting their tenants, local authorities will be free to enhance that statutory scheme by extending the range of repairs or shortening repair times. That way, tenants can be assured that they will have a right to repair, a right compatible with that of their fellow tenants and, most importantly of all, that repairs will be done quickly. That is our main aim.
The noble Lord, Lord Williams, said that there could be the confusion of contractors arriving on the same day. But the regulation-making power allows government to specify in the regulation the precise time by which work should be completed. Therefore the problem envisaged by the noble Lord—a totally fair problem—will not occur because the second contractor will arrive only after the first contractor has patently failed to turn up to complete the repairs.
I am sure that many questions arise about how we envisage our scheme operating. We have consulted widely on the principles of the new scheme (during late 1991) and we are currently consulting on its detailed operation. The consultation period closes on 2nd April. We are listening to the views of all parties and will describe the new right in regulations later this year. When we say that we are listening to all parties, that includes the points made today by the noble Lord, Lord Williams. In the light of that, I commend to the Committee the Government's proposals for a basic statutory scheme which local authorities can improve upon. It offers the best way forward for tenants and also for local authorities, which will have a clear framework and timetable against which to operate. I acknowledge that some authorities will have to rethink how they deliver their repair services and whether current structures best serve the needs of tenants. But that is surely a small price to pay for improved repairs services. The Government's proposal offers the best way forward for all concerned. Therefore I ask the noble Lord, Lord Williams, whether, in the light of what I have said, he might withdraw his amendment.
Lord Williams of Elvel: Perhaps the noble Lord could kindly direct me to the paragraph in the regulation which deals with the point I made about the end of the last day when responding to that amendment. He said that I had made an error by not seeing something that I should have seen. If so, that would he an error of the Institute of Housing which did not see something which it should have seen.
Lord Strathclyde: The noble Lord asked where it said in the regulation-making power that the Government can specify in the regulation the precise time by which the work can be completed. I am advised that it is in the proposed Section 96(2) (b).
Lord Williams of Elvel: I am most grateful to the noble Lord for pointing us to the right clause. That is the regulation-making power, but it does not say that the regulations that the Secretary of State may make will in fact do what this amendment says they should do. If that is not the case, why not have it on the face of the Bill? I cannot understand it. Perhaps we can decide this point before we continue.
Lord Strathclyde: I am turning up the specific page in the Bill. I am quite happy to look up the regulation. On advice that I have received from my officials, I understand that there is no problem here. However, in the light of what the noble Lord said—I certainly do not wish to try the patience of the Committee—I am quite happy to take away this point and make sure that what I said to the noble Lord was appropriate.
Lord Williams of Elvel: I should be grateful if the noble Lord could take it away and respond to the question of why it should not appear on the face of the Bill rather than be in some kind of regulation-making powers, the substance and contents of which we do not know. Would the noble Lord care to intervene?
Lord Strathclyde: My eye is drawn to Clause 109 —the proposed new Section 96(2) (b)—which states that:
"provision that, if the contractor specified in a repair notice fails to carry out the repair within a prescribed period, the landlord shall issue a further repair notice".
The point I want to make is that in the regulations we shall prescribe the period. I am sorry if I have caused any confusion. I hope that that explanation is sufficient.
Lord Williams of Elvel: I am grateful to the noble Lord. It does not say what the amendment says. Nevertheless, it gives power to the Secretary of State to make that provision. I fully understand that. I also fully understand when the Minister gives an undertaking which is, as I understood him, that the regulation shall contain the amendment that I have proposed.
Lord Strathclyde: If the noble Lord understood that, he must have misheard me. Certainly that is not what I said. I said that the regulations would include what I said they would include. That may or may not include the wording of the noble Lord, Lord Williams.
The point is that I have nothing against the wording used by the noble Lord, Lord Williams, and it may be appropriate to include something like that in the regulation when it comes to be made. I said that we were consulting on this matter. This is clearly part of the consultation. If it is appropriate, I shall be very happy to take it on.
Lord Williams of Elvel: It seems that we have gone as far as we can go on this point. I hope that the regulations do not include all that the Minister said. Some of it, to say the least, was a little eccentric.

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Let me move on to the main basis of the Minister's criticism. He claims that our amendments would undermine the scheme that the Government have put forward. He is right. That is the purpose of the amendment; namely, to undermine the scheme. We consider that the scheme as put forward will give rise to a great deal of bureaucracy and complexity which people will not understand.
As always when dealing with local authorities, the noble Lord assumes that the Government know best and the local authority knows worst. That is a characteristic of this Government with which we have learnt to live. It seems that the local authority does not understand what it is doing, whereas the Government, in some magic way that we have not yet found, know what they are doing.
In our view, the tenants should have a majority right to appeal to the Secretary of State to prescribe a scheme along the lines that the Government have in mind. That does not mean that the tenants will have to suffer from some poor old inefficient and ineffective Conservative local authority which has got the whole thing wrong and manages its affairs in a terrible way. If it wants to do so, it can opt out. That is the expression that the Government seem to wish to use. But yet again, we have an example of the Government refusing to delegate powers to local authorities and insisting on centralising still more than they have done in the past. This is a matter on which we ought to take the opinion of the Committee.
5.55 p.m.
On Question, Whether the said amendment (No. 176Q) shall be agreed to?
Their Lordships divided: Contents, 62; Not-Contents, 133.

Division No. 1

CONTENTS

Allenby of Megiddo, V.

Jeger, B.

Ardwick, L.

Kilbracken, L.

Attlee, E.

Kirkhill, L.

Banks, L.

Lincoln, Bp.

Birk, B.

Llewelyn-Davies of Hastoe, B.

Blease, L.

Lockwood, B.

Bonham-Carter, L.

Macaulay of Bragar, L.

Boston of Faversham, L.

McGregor of Durris, L.

Bottomley, L.

Mackie of Benshie, L.

Broadbridge, L.

McNair, L.

Bruce of Donington, L.

Merlyn-Rees, L.

Callaghan of Cardiff, L.

Morris of Castle Morris, L.

Carmichael of Kelvingrove, L.

Mulley, L.

Castle of Blackburn, B.

Murray of Epping Forest, L.

Cledwyn of Penrhos, L.

Nicol, B.

Cocks of Hartcliffe, L.

Pitt of Hampstead, L.

David, B.

Rea, L.

Dean of Beswick, L.

Richard, L.

Dormand of Easington, L.

Robson of Kiddington, B.

Ennals, L.

Seear, B.

Falkland, V.

Sefton of Garston, L.

Galpern, L.

Serota, B.

Gladwyn, L.

Shackleton, L.

Graham of Edmonton, L. [Teller.]

Stedman, B.

Stoddart of Swindon, L.

Hampton, L.

Taylor of Blackburn, L.

Hamwee, B.

Taylor of Gryfe, L.

Harris of Greenwich, L.

Tordoff, L.

Hilton of Eggardon, B.

White, B.

Hollis of Heigham, B.

Williams of Elvel, L.

Hooson, L.

Winchilsea and Nottingham, E.

Jay of Paddington, B. [Teller.]

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NOT-CONTENTS

Aberdare, L.

Lane of Horsell, L.

Ailesbury, M.

Lindsay, E.

Aldenham, L.

Lindsey and Abingdon, E.

Archer of Weston-Super-Mare, L.

Liverpool, E.

Long, V.

Ashbourne, L.

Lucas of Chilworth, L.

Astor, V.

Lyell, L.

Astor of Hever, L.

McAlpine of West Green, L.

Birdwood, L.

Mackay of Clashfern, L. [Lord Chancellor.]

Blatch, B.

Blyth, L.

Macleod of Borve, B.

Boardman, L.

Margadale, L.

Borthwick, L.

Marlesford, L.

Boyd-Carpenter, L.

Marsh, L.

Brabazon of Tara, L.

Merrivale, L.

Braine of Wheatley, L.

Mersey, V.

Butterworth, L.

Milverton, L.

Cadman, L.

Monk Bretton, L.

Campbell of Alloway, L.

Montgomery of Alamein, V.

Campbell of Croy, L.

Mottistone, L.

Carnegy of Lour, B.

Mountevans, L.

Carnock, L.

Mowbray and Stourton, L.

Carr of Hadley, L.

Moyne, L.

Chalker of Wallasey, B.

Munster, E.

Charteris of Amisfield, L.

Murton of Lindisfarne, L.

Chelmsford, V.

Napier and Ettrick, L.

Clark of Kempston, L

Nelson, E.

Colnbrook, L.

Norrie, L.

Colwyn, L.

Orkney, E.

Craigavon, V.

Orr-Ewing, L.

Cranborne, V.

Park of Monmouth, B.

Cumberlege, B.

Pearson of Rannoch, L.

Davidson, V.

Pender, L.

Denham, L.

Perry of Southwark, B.

Denton of Wakefield, B.

Peyton of Yeovil, L.

Derwent, L.

Prentice, L.

Dundonald, E.

Rankeillour, L.

Elles, B.

Rees, L.

Elliott of Morpeth, L.

Rennell, L.

Elphinstone, L.

Renton, L.

Elton, L.

Renwick, L.

Faithfull, B.

Rodger of Earlsferry, L.

Ferrers, E.

Saint Albans, D.

Flather, B.

St. Davids, V.

Fraser of Carmyllie, L.

Seccombe, B.

Fraser of Kilmorack, L.

Selborne, E.

Gardner of Parkes, B.

Shannon, E.

Gilmour of Craigmillar, L.

Sharples, B.

Gisborough, L.

Stewartby, L.

Goschen, V.

Strange, B.

Greenway, L.

Strathclyde, L.

Gridley, L.

Strathcona and Mount Royal, L.

Halsbury, E.

Harmar-Nicholls, L.

Strathmore and Kinghorne, E. [Teller.]

Harmsworth, L.

Harvington, L.

Swinfen, L.

Hayhoe, L.

Teviot, L.

Henley, L.

Thomas of Gwydir, L.

Hertford, M.

Trumpington, B.

Hesketh, L. [Teller.]

Ullswater, V.

Hives, L.

Vaux of Harrowden, L.

Holderness, L.

Vivian, L.

HolmPatrick, L.

Wade of Chorlton, L.

Hooper, B.

Wakeham, L. [Lord Privy Seal]

Hothfield, L.

Howe, E.

Whitelaw, V.

Hylton-Foster, B.

Wise, L.

Johnston of Rockport, L.

Wynford, L.

Kimball, L.

Younger of Prestwick, L.

Resolved in the negative, and amendment disagreed to accordingly.
6.4 p.m.
[Amendments Nos. 1761? to 176V not moved.]
Lord Strathclyde Lord Strathclyde moved Amendment No. 176VA:
Page 109, line 9, leave out ("and").
The noble Lord said: Amendment No. 176VA is a simple and sensible procedural amendment. It allows the Secretary of State to make regulation to allow the landlord to set off any payments for compensation under the right of repair against moneys owed to it by the tenant. I beg to move.
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 176VB:
Page 109, line 12, at end insert ("and
(e) enable the landlord to set off against any compensation payable under the regulations any sums owed to it by the tenant.").
On Question, amendment agreed to.
[Amendment No. 176W not moved.]
On Question, Whether Clause 109, as amended, shall stand part of the Bill?
Lord Peyton of Yeovil: Before we part with Clause 109 perhaps I may take the opportunity of explaining that I have just voted for the Government on Amendment No. 176Q. However, I regard the clause as a fairly horrible provision in a fairly horrible Bill. It is difficult to understand. It is particularly messy.
I managed to persuade myself, aided by my regard for my noble friend, and drag myself into the Government Lobby because I had something of a suspicion that the amendment proposed by the noble Lord, Lord Williams of Elvel, would make a nasty situation much worse. That is my excuse for doing what I did. I do not feel at all proud; in fact, I feel slightly ashamed. I only hope that my noble friend feels something of the shame which I feel in regard to that measure.
Lord Strathclyde: I am at a loss for words. It grieves me that my noble friend is so upset by the Bill and particularly by this aspect of it. We went through it in some detail at Second Reading. I made two speeches and my noble friend made a speech on other aspects of the Bill. I should have thought that my noble friend could accept the clause as being an important step in giving rights to council tenants to improve the quality of their homes.
Lord Peyton of Yeovil: There was a time when I greatly admired the Secretary of State, but I do not believe that the present or any other Secretary of State will have an easy road in making the kind of regulation which this clause and others call for. It is an enormous obligation. To take one part at random,
"if the contractor specified in a repair notice fails to carry out the repair within a prescribed period, the landlord shall pay to the tenant such sum by way of compensation as may be determined by or under the regulations".
That will be an exceedingly complex regulation. It will take more than a genius to implement it and carry it into effect. I believe that the intention of the clause is to make life easier and more comfortable for tenants. One wonders whether it will.
Clause 109, as amended, agreed to.
Clause 131 [Right to have repairs carried out]:
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 176X:
Page 138, line 43, after first ("the") insert ("end of the").
The noble Lord said: When Amendment No. 176X was tabled, I did not appreciate that a similar amendment had been tabled in Committee in another place and in response the Minister had tabled an amendment which was slightly different but which he maintained covered the points made by the original amendment. Perhaps the Minister can clarify the situation. I beg to move.
Lord Strathclyde: An identical amendment to the same effect was tabled by the noble Lord's honourable friends in another place. That led to a government amendment which sought to clarify that very point by substituting the word "by" for "before" in new Section 60(3) (b), to make clear that the tenant would not be able to call in an alternative contractor unless the original contractor had failed to start the repair work before the end of the specified period. I hope I am able to assure the noble Lord that the clause as currently drafted achieves exactly what his amendment seeks to do. If that is the assurance that he seeks I hope the noble Lord will be able to withdraw his amendment.
Lord Carmichael of Kelvingrove: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 131 agreed to.
Clause 110 [Right to compensation for improvements]:
Lord Strathclyde Lord Strathclyde moved Amendment No. 176XA:
Page 110, line 5, leave out from beginning to ("and") in line 7.
The noble Lord said: These amendments make a number of changes to the enabling provisions in Clause 10 which allow for the establishment, by regulation, of the new scheme whereby secure tenants of local authorities will be able to receive compensation from their landlords for certain home improvements which they have made, once their tenancies end. In moving this amendment I speak also to Amendments Nos. 176YA to 176YC. They reflect a number of sensible suggestions put forward by local authorities, and others, during the recent consultation exercise on the general operation of the compensation scheme. They will improve the operation of the scheme, and I commend them to the Committee.
On Question, amendment agreed to.
6.15 p.m.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 176Y:
Page 110, line 36, after ("amount") insert ("which shall not exceed a reasonable estimated cost of the works had the improvement been made by the landlord,").
The noble Lord said: This amendment stands in my name and that of my noble friend Lady Hollis. The whole question of compensation is a difficult one. Almost by definition the scale and timing of any take up of the scheme is unpredictable. It is possible that authorities will find themselves unable to meet claims within the capital resources available to them. Quite how that is to be handled in the regulations that the Secretary of State is to make I know not, but the

649
amendment that I propose tries to quantify an upper limit that the compensation shall achieve. The words used in the amendment are:
"which shall not exceed a reasonable estimated cost of the works had the improvement been made by the landlord".
That is an upper limit which, I understand from a news release from Mr. Baldry that the noble Lord was kind enough to send me, is in the mind of government. In the terms of that news release there will be both upper and lower limits in relation to the amount payable in respect of improvements, and the Government are proposing to make minor amendments to the enabling powers to reflect a number of suggestions from consultees. I am not sure whether those minor amendments have now passed us or whether there are more minor amendments setting upper and lower limits to come. In the circumstances, it seems wise to stick to real life; that is,
"a reasonable estimated cost of the works had the improvement been made by the landlord"
and not unreal life as might be imagined by the Secretary of State. I beg to move.
Lord Strathclyde: I hope that the Committee will not be surprised if I confess to having some sympathy with what the noble Lord has said. Why should a local authority pay more in compensation to a tenant for an improvement than the reasonably estimated cost to it had it undertaken or arranged for the work to be carried out? We should have value for money for public expenditure, but let me explain why the amendment is not acceptable. We should begin by remembering the fundamental principle behind the proposed scheme. Council tenants should be able to receive some recompense towards the cost of home improvements they have made should they leave within the expected lifetime of the improvement. Part of the value of the scheme is in the encouragement it gives to tenants to develop a stake in their homes, and a commitment to making them better places in which to live. There are wide benefits here.
Let us also note that when we make the regulations we do not propose to include in the calculation of the compensation any element in respect of the costs of the labour provided by the tenant. In the case of such DIY improvements compensation will be based solely on the cost of the materials. In those cases, of which we expect there to be a significant number, it is highly unlikely that a council would be able to undertake the work at less than the materials cost to the tenant. That is one situation where the concerns expressed by the noble Lord will not arise.
As for other cases, where there is a paid labour cost, it is technically possible for an authority to pay out more in compensation than the cost to them of carrying out the improvement themselves. But I do not believe that that is likely to occur often, due to the method of assessing the compensation payable. Let me explain why.
First, we propose that in the regulations the amount of compensation will be based on the original cost of the improvement discounted over time. Realistically, that means that unless the tenancy ends quite soon after the completion of the improvement the amount of compensation payable will have
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reduced significantly. Secondly, local authorities will have an element of discretion in determining the amount of compensation payable. Therefore, in circumstances where they believe that the original cost of the improvement on which the compensation is based is unacceptably high, the council can reduce, within reason, the amount of compensation offered to the tenant. The tenant will be able to appeal if he or she is not satisfied with the council's offer. Thirdly, and finally, the amount of compensation payable on any one improvement will be restricted by an upper limit. This will ensure that councils are not faced with excessive claims for compensation. We propose to consult further on the proposed upper limits and the content of the draft regulations, providing authorities with an opportunity to put forward suggestions on what they believe are reasonable maximum levels for each type of improvement, and other aspects of the scheme.
In conclusion, I believe that the amendment is unnecessary because of the features 'which are to be built into the provisions, and that, in any event, the circumstances mentioned by the noble Lord, Lord Williams, are seldom likely to occur.
I hope that given the commitment to consult on the regulations and on the upper limits, the noble Lord, Lord Williams, in retrospect will feel that his amendment is unnecessary but will join in the consultation when it comes forward.
Lord Williams of Elvel: I am grateful to the Minister. We will join in the consultations, and we accept that the amendment as it stands is not necessary. We look forward to that consultation being completed in time for an amendment to be made to the Bill rather than by regulation. The Minister appears to be making faces that express some doubt about that procedure.
The Minister will be aware that the consultation document issued by his department said that the calculation of the compensation payable could be based on the increase in the capital or rental value of the dwelling resulting from the improvement at the time that the tenancy ended. That seems to me to be a very odd concept. One of the reasons for tabling the amendment was, to make sure that the Government did not take their own consultation paper too seriously. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Strathclyde Lord Strathclyde moved Amendments Nos. 176YA to 176YC:
Page 110, line 36, after ("be") and insert ("determined by the landlord, or").
Page 110, line 50, leave out ("and").
Page 111, line 3, at end insert ("and
(d) enable the landlord to set off against any compensation payable under the regulations any sums owed to it by the qualifying person or persons.").
On Question, amendments agreed to.
Clause 110, as amended, agreed to.
Clause 132 agreed to.
Clause 111 [Existing rights with respect to disposals by housing action trusts]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 176YD:
Page 112, line 48, at end insert:
("() In section 94 of that Act, there shall be added at the beginning of subsection (1) the words "Except where subsection (8) applies".
() After subsection (7) of the same section, the following new subsection shall be added—
"(8) In respect of a housing action trust, the right conferred by this part may be exercised by the local housing authority or authorities in whose area the trust is located, but not until the dwellings concerned have been owned by the housing action trust for at least two years".").
The noble Baroness said: Amendment No. 176YD and the subsequent tranches of amendments refer to housing action trusts. The trusts were introduced by the Housing Act 1988 to serve rather like a UDC and target large but rundown council estates starved of investment and modernisation moneys and transfer them to an action team made up of government and local authority nominees. The teams could then draw on specific funding for a defined period of between five and 10 years to turn those estates around. Their intent was therefore not only to target and modernise stock but to diversify their ownership.
As originally proposed in HATs, tenants would have had no say in the matter. They were to be transferred if they lived on such an estate to a housing action trust whether they liked it or not. But when the 1988 Housing Bill came to this House we inserted, quite rightly, a tenants' right to a ballot and therefore to a veto. We inserted into HATs a tenants' choice, which was respected subsequently by the Government.
The six areas that the Government had at the time in mind for HATs—Lambeth, Southwark, Sunderland, Sandwell, Leeds and Tower Hamlets—were balloted in the light of your Lordships' amendment and the tenants declined the proposals fearing that they could end up both with private landlords and the loss of their right to buy. Since that time—we certainly welcome the move that the Government have made on this—housing action trusts have become, so to speak, more user friendly, involving stronger local authority and tenant participation in management. In return for a promise, which so far the Government have proposed to honour but which has not yet come about, that the tenants should have the right to return to a local authority when the work of the housing action trust is complete and that they should not be propelled against their wishes into the control of an alternative landlord, we very much welcomed them. In consequence, in 1991 the Minister was able to announce a HAT with tenants' support in Hull and a second one in Waltham Forest. A third is due in Liverpool. Ballots are shortly due—I know that the Minister is concerned about their outcome—in Tower Hamlets, and I understand that Birmingham and Sheffield may also be considered for HATs.
Although Clauses 111 and 112 give statutory force to the undertakings offered by the Minister, the tenants, especially of Tower Hamlets who are due to ballot soon, seek assurances on some further issues which we bring before the Committee today and
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which are the subject of these amendments. I refer to the financial terms of the transfer—Amendments Nos. 176YE to 176YG; secondly, the right for the minority of tenants in a block of flats where the majority may have voted to go to a private landlord to stay with the local authority—Amendment No. 176YH; and, thirdly, the extension of the tenants' choice that the process should be initiated by the tenants themselves and that they should not have to wait until the end of the HAT's first term.
In Committee in another place the Minister gave the undertaking that there would be a transfer of improved properties back to the local authority at the tenants' request at nil cost rather than by purchase and then offset by the much more cumbersome route of supplementary credit approvals. We welcome that —and we think that the Minister was being exceedingly helpful—but we believe that it needs to be on the face of the Bill just in case subsequent Ministers, or concurrent or subsequent Treasury officers, should change their mind or have it changed for them. It is clearly unreasonable, nonetheless, that that initiation back to a local authority should occur within a few months of a HAT being initiated. That is why in Amendment No. 176YD we say that there should not be initiated a tenants' right to transfer back to the local authority until a HAT has been in existence for at least two years. The bite of the amendment is that the tenants should be able to initiate that right to return. I beg to move.
Baroness Hamwee: I wish briefly to put on record our support for the amendments and for the attempt to plug loopholes, if that is the appropriate word, to fill the gaps and make sure that the provisions of the Bill entirely fulfil the assurances given by the Minister in another place.
Lord Strathclyde: As the noble Baroness pointed out, this is the first amendment concerning housing action trusts. It may be useful to the Committee if I say a few words about the policy background and the provisions in the Bill to which this amendment and subsequent amendments refer.
The housing action trust policy was introduced some five years ago to address one of the most intractable problems of housing provision. I refer to local authority estates, some built before the war but many more recently, which exhibit a complex combination of physical, management and social problems. These estates are often very large with an overwhelming sense of monotony and uniformity. They are often riddled with vandalism and crime. They generally house some of the poorest members of society in a pervasive sense of isolation and insecurity. Management of the estates is often near to breakdown and not infrequently many of the ordinary services on which local communities depend have come to an end.
As Members of the Committee know, the fundamental proposition on, which trusts are based is the need for a special public body able to act comprehensively and independently. Over the years the policy has been open to debate, but it is founded on three basic justifications which I believe remain relevant today. The first is the overwhelming severity

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and complexity of the problems which will often require a special ad hoc agency capable of concentrating and focusing the necessary effort. The second is the fact that such estates are often themselves located within broader local authority areas where there is a wide range of other problems. In many cases the local authority is already overstretched and relieving it of this particular and most severe problem can be the key to its beginning to get on top of its other difficulties. Finally, the problems and failings of local authorities over many years have often bred a deep alienation of tenants from the authority, which means that a new start under a new organisation is an essential basis for regeneration.
That is the background and a little of the history. I believe that we have now reached a point where HATs can offer a real partnership of government, local authorities and tenants. That partnership can bring a strength to tackling these problems which we have not previously had and which the severity of the problems requires. The overwhelming support in tenant ballots for HATs in Hull, Waltham Forest and Liverpool shows that the approach has now found strong support among tenants themselves.
As it has developed in the past two years, a cardinal feature of the HATs policy has been a right for tenants to choose, when the redevelopment or renovation of their estate is complete, to which landlord they should move—whether to the local authority, a housing association, a co-operative or whatever. It is the Government's firm policy that their wishes in this matter should be respected. It was on that basis that Clauses I 111 and 112 were inserted in the Bill to give statutory effect to a right for tenants to move to the local housing authority if that is their wish at the end of a HAT's work.
These clauses set out a clear and effective procedure for tenants to exercise this right closely tailored to the specific circumstances of housing action trusts. Its principles have found widespread support. However, Amendment No. 176YD would now import on top of that a different tenants' choice procedure under the 1988 Act that would allow local authorities to initiate these different procedures after two years regardless of the circumstances of the trust or the impact on its development programme and the interests of its tenants. It would be wholly inappropriate and perverse to have yet another regime for the transfer of HAT properties to the local housing authority. Given the extensive rights already set out in the Bill, that would add nothing but confusion and potential disruption.
There is a further perversity. The tenants' choice legislation in Part IV of the 1988 Act (all 20 sections) is drafted for tenants moving from public sector landlords. To stand the provisions on their head and try to use them where tenants may opt to move to the local housing authority would be perverse and a violence to the original legislation. It is much better to rely on the tailor-made provisions in the Bill which give tenants a secure right to transfer to local authorities, which reflect the particular circumstances of HATs and which allow transfers to follow a timetable compatible with HATs programmes.
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HATs have an enormous and difficult task dealing with renovation and redevelopment of some of the most rundown housing areas in the country. They need a clear basis on which to work. Their tenants also need to know where they stand. The existing clauses of the Bill give them full rights to exercise their own choice of landlord at an appropriate time. To bring in a wholly different procedure and allow local authorities to initiate tenants' choice transfers of property through trusts to themselves, even while large-scale redevelopment programmes were in progress, would undermine the work of trusts and contribute nothing to the effective rights of tenants. Therefore I urge the noble Baroness to withdraw her amendment.
6.30 p.m.
Baroness Hollis of Heigham: I thank the Minister for that reply. I agree with a considerable amount of what he said. I accept entirely that, not the original HATs, but HATs Mark II, have gained a high degree of tenants' acceptance and, in co-operation with local authorities, may very well be doing an important job.
Let us remind ourselves why that job is necessary to some degree. The rundown condition of estates is in no small part due to the squeeze on capital spending by local government. The noble Lord pulls a face. I have been checking figures. I remind the noble Lord that my own local authority had an investment programme for 1989–90 of £17.5 million. That was cut by the Government for 1991–92 to £8.5 million or less than half in real terms. In such a situation it is not that local authorities are unwilling to remedy conditions on the estates but that the Government have deprived them of the resources to do so. Central government should not easily pass the buck in the way that the Minister indicated. Having said that, I take into account what the Minister said. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 111 agreed to.
Clause 112 [New rights with respect to such disposals]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 176YE:
Page 115, line 1, at beginning insert ("Subject to subsection (4A)").
The noble Baroness said: In moving this amendment I should like to speak also to Amendments Nos. 176YF, 176YG and 176YH. The first three amendments simply seek to get on the face of the Bill an undertaking given by the Minister in another place at Committee stage that HAT properties are transferred to the local authority at nil cost. It is something which we very much welcome and would like to see in the Bill. That is the point of the first three amendments.
Amendment No. 176YH covers a rather different issue. Its purpose is to ensure that where the majority of tenants in a block of flats vote to transfer to a private landlord—perhaps to a housing association—that will allow the minority of tenants to become council tenants again by requiring the local authority to take a lease on the relevant dwellings. That has been

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demanded, for example, by the Tower Hamlets tenants as a consideration that will affect the way in which they will vote on the new HAT ballot. The procedure we are asking for is analogous to that already exercised by tenants under the tenants' choice.
What it means is a lease back. It is not unlike the enfranchisement of flats. It is essentially a minority right that where the majority exercise their right, the minority may have a right to return to the local authority. Why may they want to do that? There are two very obvious reasons. First, tenants may actively prefer local authority management with its democratic accountability, possibly over a housing association and almost certainly over some of the private landlords whose reputations are not always immaculate. Secondly, if a majority of tenants are going over to a housing association or a private landlord, they go with the loss as secure tenants of the right to buy. By having a right to return on lease-back arrangements to the local authority, that would protect such tenants, as I understand it, and their right to buy. Otherwise they would lose it.
It is certainly true that they could have exercised that right while they were tenants within the HAT procedure but that may not have been financially possible for them at the time. It seems unreasonable to us that they should be required to lose it were they a minority of tenants who preferred to remain with the local authority. For that reason in particular we wish to press the Minister on Amendment No. 176YH. I beg to move.
Lord Strathclyde: I join with the noble Baroness in speaking to Amendments Nos. 176YE to 176YH. These amendments provide two small but significant changes to the arrangements introduced by the Bill to allow HAT tenants to become tenants of the local housing authority when the work of the trust is complete. The first would include in the statute the requirement to transfer back to the local authority at nil cost. Let me make it clear that that is, as a matter of policy, the Government's intention in respect of all those trusts now established or proposed. However, it is not possible to anticipate the valuations or financial circumstances of estates that in due course might pass to trusts.
The clause as drafted therefore gives the Secretary of State discretion to set the transfer terms. That is a flexibility we should preserve for the future. I urge the Committee to preserve it. I readily understand, however, the motives of those who have put forward the amendment. They fear that at some point the Secretary of State might reverse his nil cost transfer policy and, by onerous financial conditions, frustrate the right of tenants to return to the council. That is not a risk which need concern tenants.
The fact is that the local authority will be under a duty to take tenants back. I believe that the Secretary of State would be acting outside his statutory duties if he used his current flexibility to impose onerous financial conditions which would negate the right of return which Parliament will have given. For those reasons I see no justification for the amendment and invite the Committee to leave the clause as drafted.
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Amendment No. 176YH would alter our present proposals that blocks of flats should transfer to a single landlord on the basis of a majority tenant vote. I recognise that the Bill provides for individual choice of landlord in the case of renovated or new houses. But there are two reasons why that is not sensible or practicable in the case of blocks of flats, and why I must therefore urge the Committee to resist the amendment. The first consideration is that such a statutory scheme would paradoxically undermine real diversity of choice for tenants. The fact is that landlords would be discouraged from coming forward to take over blocks of flats from HATs where they had no control over the proportion of flats they might end up owning in any block. For instance, it might be difficult for them to raise private finance for the purchase of a block in which they might own anything from 51 per cent. to 100 per cent. of the flats. The danger is that even the sociable landlords would simply consider it too much trouble.
The second consideration is that we must preserve as far as practicable the improved management arrangements which HATs are designed to deliver. That will be far easier where each block is under a single landlord. I accept that the right to buy may diversify tenure in a block, but that is quite different from having different landlords managing the properties. There should be nothing to prevent a HAT negotiating with prospective landlords lease-back arrangements where that is sensible, practical and acceptable to the landlords. That would mean that tenants could take into account the position on those flats when expressing their preferences but would not be bound, as they would in this amendment, to their initial choice. Existing and proposed trusts are sympathetic to that approach, but to impose a rigid statutory scheme would, in our view, go too far,
I submit that this amendment would result in a more onerous restriction of opportunity and choice for tenants than the arrangement for the transfer of blocks by majority ballot which we are proposing. Therefore, I hope that the noble Baroness will withdraw her amendment.
Baroness Hollis of Heigham: The Minister's case in response to these amendments seems to rest on two arguments. The first relates to practicalities and the second to the problem of diverse ownership and the possible limitation on choice for the majority. On the point about practicalities and the view that it is not reasonable to have mixed landlord arrangements within a block, I have to say that the Government have already conceded that pass on enfranchisement on the one hand (where there will often be mixed tenures) and on the right to buy on the other hand, in which some tenants will have bought, some tenants will have bought and enfranchised, and some tenants will remain renters. That situation will exist in previously local authority owned blocks where there will be three different sorts of tenure arrangements in order to respect the rights and wishes of individual tenants. There will be the right to buy on leasehold, the right to buy and to enfranchise, and the right to remain a tenant.

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If that can be done under the right to buy plus leasehold enfranchisement, I suggest that it can certainly be done in the much simpler situation in which there is a transfer back of housing action trusts. So much, therefore, for the practicalities. The Government have already conceded that such arrangements can be made to work where they want them to work. We are now asking that they should be made to work where the tenants want them to work.
The second point relates to the democratic rights of tenants which the Minister did not address at all. Clearly, where two-thirds of the tenants want to enfranchise under the leasehold arrangements, one-third may be overruled, but that one-third have the right not to enfranchise. Under this arrangement, a majority of tenants may seek to go to a private landlord or a housing association. However, that would deprive the remaining 49 per cent., or whatever, of their right to buy at some future date. If the Minister is serious, as he was professing today, in saying that we on this side are restricting the right to buy while he and his side are pushing for the right to buy, what is he doing restricting tenants' rights to buy once a HAT is transferred out of HAT ownership into the private sector?
Lord Strathclyde: I am sorry to interrupt the noble Baroness. I understand that tenants transferring to a housing association would retain a preserved right to buy.
Baroness Hollis of Heigham: And if they transferred to a private landlord?
Lord Strathclyde: That, too, would be the case.
Baroness Hollis of Heigham: In that case, I have been misbriefed and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 176YF, 176YG and 176YH not moved.]
Clause 112 agreed to.
6.45 p.m.
Clause 113 [Provision of housing welfare services]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 176Z:
Page 115, line 42, leave out from ("services' ") to end of line 44 and insert ("includes, in relation to accommodation occupied by elderly, sick or disabled persons—

(a) counselling, monitoring and support in connection with tenants' well being and health, and their personal needs other than those directly related to housing;

(b) the provision of monitoring and alarm schemes to reflect increased personal dependency and frailty of tenants;

(c) cleaning tenants' rooms and windows and their laundry services, to the extent that this reflects their reduced abiliy to do so themselves;

(d) organising social and leisure activities and functions;

(e) liaising with medical and social services staff and GPs about tenants' health needs;

(f) providing and supervising restaurants, meals and ancillary services thereto;

(g) counselling and liaising with relatives;

(h) running regular errands because tenants are unable to do so themselves;

(i) administering first aid;

(j) responding to out of hours calls by tenants;

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(k) helping tenants into and out of bed;

(l) toiletting, dressing, feeding, bathing and shaving tenants;

(m) administering tenants' medication;

(n) nursing care.").

The noble Baroness said: We now move to a cluster of amendments dealing with housing welfare services. If I may, I should like to speak to the amendments more generally first and then deal briefly with the detail. The amendments deal with two sets of issues. The first relates to the powers of the local authority (as housing authority) in the field of housing welfare. Secondly, I have a set of questions about how such welfare activities can properly be funded.
One of the most significant housing developments of the past 20 years or so has been the establishment of sheltered or "good neighbour" housing whereby elderly residents move into suitable and adapted housing clustered around common room facilities, with the support of wardens, good neighbours and alarm systems. That has meant care in the community in the best possible sense. For example, no old people's home has been built in Norwich since the early 1970s because elderly people have been enabled to enjoy richer and more independent lives, with support, in their own neighbourhoods. However, outside the metropolitan authorities housing is a district council function while the provision of social services is a county council provision. Sheltered housing has always been a district function to which county social services occasionally made a modest contribution which, in most cases, dried up during the 1980s. In their turn, at district level, the local authorities have increasingly regarded welfare as part of a broader housing management role, providing, for example, furniture for young people corning out of care into an empty flat; debt counselling for families in arrears or support through the "good neighbour" schemes. How much of such welfare activity was funded through the housing revenue account and how much from the general funds (and therefore from the ratepayers) has always been a matter for local discretion.
That brings me to the second issue—the question of finance, as opposed to powers, and to the council house account. Because the Government contributed subsidies to the housing revenue account, they determined—rightly, in my view—that it should be a landlord's account only; in other words, that it should be ring-fenced to fund only those items pertaining to council tenants, and that those items which should be financed from all of us should be offset by matching general rate fund contributions or excluded from the HRA altogether.
Under that system, local authorities have proceeded perfectly reasonably and with due regard to local circumstances over the past 10 or 15 years. As a consequence of it, in 1991–92, for example, local authorities spent about £174 million on warden services. However, into that situation came the Ealing judgment. A council tenant in Ealing appealed to the courts that the rent on his council house was artificially high because he was paying in his rent for items such as sheltered housing which should properly

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be borne by the general rate fund. The courts agreed that, in their words, housing management should not go beyond,
"the ordinary and natural meaning of the term".
That meant that the personal care part of the welfare element should be funded by the only body, apparently, with the powers to do so—that is, by the social services. What does the Ealing judgment potentially mean? It would mean closing down sheltered housing, or stripping out its welfare functions, or seeking to persuade cash-starved county councils (in the midst of their desperately trying to mount care in the community) that they should make a hefty contribution to district councils' housing revenue accounts. None of those three outcomes is desirable or feasible; hence the need to legislate (which we welcome) and to reconstruct by law the situation that pre-existed the Ealing judgment.
Therefore, Clause 113 gives local housing authorities explicit power to provide welfare services in connection with housing accommodation. Clause 114 gives local housing authorities the discretion to charge that to the HRA and to finance that either from rents or from a contribution from general funds. However, Clause 115 gives the Secretary of State the power to repeal any of those provisions. That is why we have tabled a series of amendments to test a number of issues. They are probing amendments.
The first set of issues associated with Amendment No. 176Z and with the group comprising Amendments Nos. 176BZ to 176QZ relates to the question: what counts as housing management when tenants are frail, elderly, disabled or mentally handicapped? We on this side want to argue that all good, sensitive housing management is, to a degree, customised (if I can use that ugly word) according to the needs of particular groups of residents. In other words, it is part of the full range of housing management services that need to be provided, but only some of those services will be drawn on at particular times by particular groups of residents. That may range from housing advice on the right to buy, where only council tenants wanting to buy will draw on that welfare service, to counselling on housing and benefits which, again, only those needing housing benefit will draw on, and "good neighbour" services, on which only the elderly will draw. It follows —this is the key part of our argument—that housing welfare is a proper and necessary part of a comprehensive housing management service, especially as council housing increasingly houses those who are too poor, too frail or too handicapped to have an alternative tenure.
If that is right and if housing welfare is part of housing management and therefore part of the local authority's housing powers, there is a second set of questions relating to how that should be funded. First, should the funding come from the housing revenue account and tenants' rents on the grounds that all tenants may need to use those services at some point or, secondly, should it be placed within the housing revenue account but cross-funded from other local authority residents on the grounds that all should
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contribute as many will enter sheltered housing direct from owner occupation? Thirdly, should it be financed by specific contributions from social service authorities which, in the shire counties, are the county councils? Given the county councils' current concern with funding care in the community and their fears that their funding will be something like £200 million short, it is clear that funding the existing local authority warden services will come low down their priority list.
It is clearly not practicable to split responsibility and funding for sheltered housing. Indeed, the counties have already argued that, if they should be required to contribute to housing revenue accounts to cover the cost of the welfare element in sheltered housing, they would need transferred to them the housing authority money and the housing benefit money for them to transfer it back again to local housing authorities. That is a silly circular movement.
In practice, most authorities fund from within the housing revenue account, but there is a mixture of practice reflecting local needs, the degree of support offered by schemes and the like. We obviously want that discretion to continue, and hence Amendment No. 176Z, because we suspect that that discretion may disappear after April 1994. We want to move an amendment to defer that until April 1998 when we shall see the knock-on consequences of local government reorganisation and whether splintered housing and social service authorities are brought together in a single unitary authority.
Finally, the proposal has implications for housing benefit, because housing benefit at the moment clearly covers a considerable part of housing management costs, including the welfare dimension. If it should be funded from outside the local authority housing service but from the county council, it would have to be recycled back through the SSAs, which is much less precisely targeted. The implications of course for that and for housing provided by local housing associations are significant.
There is then a series of amendments covering the wider issues of housing welfare services and a cluster of amendments on the powers that housing authorities may have to offer those welfare services, properly understood, we believe, as the natural extension of a comprehensive housing role. Secondly, there is a series of amendments on the funding of that provision, whether from council tenants' rents, district council ratepayers or county social services. Amendment No. 176Z is the first of the amendments, and I move it on behalf of myself and my noble friend Lord Williams of Elvel. It provides that we should have a common definition of "welfare services" so that when we come to debate the Secretary of State's power to repeal we shall know to what he might refer. I beg to move.
Baroness Hamwee: The noble Baroness has introduced an interesting area which reflects the fast-changing role of housing authorities' provision of specialist housing rather than normal housing. The list set out in Amendment No. 176Z is an interesting and comprehensive one, but I wonder whether it is wise, other than for the purposes of tonight's debate. It

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changes the definition of "welfare services" as set out in Section 11A(3) inserted by Clause 113 from an exclusive definition,
"'welfare services' does not include the repair, maintenance supervision or management of houses",
to a list which I shall describe as inclusive. At the very least, it would be sensible to retain subsection (3), to which I referred, which provides that welfare services do not include certain matters.
I wonder whether the list is appropriate. I understand and fully support the argument that, because, as we know, the Government do not like local discretion, it may be necessary to spell out what a local authority may do. One might find that the Secretary of State has a more restricted view of welfare than the local authority directly providing the services. My fear is that if we list the services in such detail, clients—local authority tenants are fast changing their status from tenants to clients, as their need for services from social services as well as housing grows—may begin to regard them as mandatory. To that extent, the amendment may have the effect of limiting a local authority's discretion in a way that may not be intended. However, as I say, for the purposes of this debate it is useful to have the list.
Lord Strathclyde: I am grateful to the noble Baroness, Lady Hollis, for explaining so clearly what lies behind the amendments. It is useful for that to be laid out. We proposed initially that the amendment should be grouped with other amendments because they relate to the central issue of how welfare services to local authority tenants should be provided and paid for. But doing it this way gives us an opportunity to deal with each matter separately.
Like the noble Baroness, perhaps I could discuss the background briefly. The background to Clauses 113 and 115 is the Court of Appeal judgment against the London Borough of Ealing last year. The Court of Appeal found that housing authorities could not debit to their housing revenue account the cost of welfare services provided by wardens in sheltered accommodation. The judgment also highlighted the limited powers available to housing authorities to provide welfare services to their tenants. To avoid uncertainty and disruption to those important services, Clause 113 will give housing authorities powers to provide welfare services to their tenants.
As the noble Baroness, Lady Hamwee, noticed, the term "welfare" was used to ensure that all the care services which wardens carry out and the provision of group monitoring and alarm schemes that do not necessarily depend upon wardens would be covered. The amendment specifies a list of services which, I am glad to say, the term "welfare" already includes.
The noble Baroness asked about funding arrangements. The consultation paper suggests that adjustments to the housing revenue account subsidy and the revenue support grant intend that the overall effect on local government finance is to be neutral. Of course I look forward to comments on the consultations. I hope that that is reason enough for the noble Baroness to withdraw her amendment.
Baroness Hollis of Heigham: The amendment was meant to be a probing one to provide a basis for the other amendments. In the light of the Minister's reply, I am happy to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 113 agreed to.
Clause 114 agreed to.
Clause 115 [Power to repeal provisions made by sections 113 and 114]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 176AZ:
Page 116, line 24, after ("time") insert ("after 31st March 1998").
The noble Baroness said: The purpose of the amendment is to prevent the exercise of powers to repeal Sections 113 and 114 until the process of local government reorganisation is substantially complete. In other words, one of the problems facing the appropriate funding of housing welfare services is that housing is a district council function and social services a county council function. It is the expectation, is it not, that following the review of local government there may well be unitary authorities with integrated housing and social services powers? It therefore seems foolish to proceed according to the Government's timetable when we do not yet know the outcome of that local government reorganisation. Therefore all such procedures will have to be re-assessed in the light of possible unitary authorities. I therefore move what we believe to be a helpful, modest amendment that such proposals should be deferred until after the local government reorganisation. Our best guess is that that is 31st March 1998.
Baroness Hamwee: Clause 115 is an extraordinary clause, is it not? It follows two new provisions which give discretion to local authorities, but then it says that the Secretary of State may decide that he does not like what they are doing and so he can repeal the provision. Is that the way to go about legislation or have I misunderstood the clause?
7 p.m.
Lord Strathclyde: The amendment will delay the withdrawal of the powers of the housing authorities to provide welfare services and account for their costs; in the HRA until 31st March 1998. We are currently consulting local authorities and others on the future funding and provision of welfare services for local authority tenants. We have said that we will take no decision on whether or when to withdraw those powers until we have considered what consultees have to say.
Clause 115, which would enable my right honourable friend the Secretary of State to withdraw those powers, has been drafted with flexibility in mind. The amendment would remove that flexibility and pre-empt the outcome of the consultation exercise. I hope that the noble Baroness is content with that explanation.
Baroness Hollis of Heigham: Am I right to understand that the Minister has undertaken that the right to appeal will not be brought into effect until after the completion of the reorganisation?
Lord Strathclyde: We are consulting on future funding and on the provision of welfare services. I said that we shall do nothing until we have completed that consultation and have seen what has been stated. That may take some time.
Baroness Hollis of Heigham: But does not the Minister agree that to try to fund across two local authorities is infinitely more difficult than being able to fund by virement between two committees of the same tier of local government?
Lord Strathclyde: No. I can see the point which the noble Baroness makes but I believe that we need to preserve flexibility in the matter. That is why we have drafted the Bill in the way we have.
Baroness Hollis of Heigham: I am unimpressed by the argument of flexibility in respect of a situation in which local authorities may find themselves with extremely bureaucratic arrangements. Nonetheless, given the hour, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Viscount Goschen: I beg to move that the House do now resume. Perhaps I may suggest that the Committee stage begins again at eight o'clock.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Consolidated Fund (No. 3) Bill
7.2 p.m.
Brought from the Commons, endorsed with the Certificate of the Speaker that the Bill is a Money Bill, and read a first time.
Then, Standing Order No. 44 having been dispensed with (pursuant to Resolution of this day), Bill read a second time; Committee negatived; Bill read a third time, and passed.

Carrying of Knives etc. (Scotland) Bill
Brought from the Commons, read a first time, and to be printed.
Licensing (Amendment) (Scotland) Bill
Brought from the Commons; read a first time, and to be printed.
Local Government (Overseas Assistance) Bill
Brought from the Commons; read a first time, and to be printed.
Protection of Animals (Scotland) Bill
Brought from the Commons; read a first time, and to be printed.

Pneumoconiosis etc. (Workers' Compensation) (Payment of Claims) (Amendment) Regulations 1993
7.4 p.m.
The Parliamentary Under-Secretary of State, Department of Employment (Viscount Ullswater)The Parliamentary Under-Secretary of State, Department of Employment (Viscount Ullswater) rose to move, That the draft regulations laid before the House on 1st March be approved [23rd Report from the Joint Committee].
The noble Viscount said: My Lords, these regulations are being made under the Pneumoconiosis etc. (Workers' Compensation) Act 1979. The purpose of the regulations is to increase by 2½ per cent. the amounts of compensation paid under the Act to those who first satisfy all the conditions of entitlement on or after 1st May 1993.
People suffering from industrial diseases have the right to sue the employer concerned for damages. However, certain dust-related diseases take a long time to develop and may not be diagnosed until 20 to 30 years or more after exposure. By the time the disease is diagnosed the employer or employers responsible may no longer exist.
Parliament enacted this legislation in 1979 to provide a measure of compensation to those who cannot claim it in the normal way through the courts. It provides lump sum payments to sufferers from certain dust-related diseases or, when the sufferers have died, to their dependants. However, I would point out that it has never been the intention of the Act to provide an alternative to taking civil action in the courts.
There are three basic conditions of entitlement, which must be satisfied before a payment can be made: first, that there is no relevant employer who can be sued; secondly, that no court action has been brought nor compensation received in respect of the disease; and, thirdly, that industrial injuries disablement benefit has been awarded.
The Department of Employment does all it can to administer the compensation scheme in a sympathetic

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way. While it is necessary to ensure that payment conditions are met it is also recognised that each case is art individual disaster and the department is as generous as the legislation allows. Since the Act came into force in 1980 more than 7,000 applicants have made a claim and 75 per cent. of those have received payment. The total cost to date has been £33 million. Payments under the Act are additional to any social security benefits awarded.
The Government have given an undertaking to Parliament to review the amounts payable regularly to maintain their value. These regulations aim to fulfil this commitment.
I feel sure that all noble Lords will agree with me that the circumstances leading to these payments are very much to be regretted. They reflect the conditions in which some people worked many years ago. Action taken by the Government to control the use of asbestos and other hazardous substances will prevent such suffering for present generations of workers. Nevertheless, I very much welcome the opportunity provided by these regulations to maintain the value of the compensation.
I know that all noble Lords will recognise that no amount of money will ever compensate individuals and families for their loss but at least these regulations allow us to give some practical and material help. I beg to move.
Moved, That the draft regulations laid before the House on 1st March be approved [23rd Report from the Joint Committee].—(Viscount Ullswater.)
7.7 p.m.
Lord Dean of Beswick: My Lords, I welcome the regulations before the House and the manner in which the Motion has been moved. I wish to put forward only one or two points. We are grateful that there is to be an increase and that it is based on 2.5 per cent. However, because of the group of people about which we are talking I wish to suggest that the Minister takes into consideration the fact that they will be paying more for heat and warmth, which helps to sustain the lives of sick and aged people. The Budget will impinge heavily on the amount of money which such people draw. I realise that the Minister cannot answer tonight because he is not empowered to do so but I ask him to bring the matter to the attention of his right honourable friend the Secretary of State for consideration when the regulations are next updated.
We are dealing with a diminishing number of people. There have been enormous reductions in the number of miners and, as the Minister probably knows, there is today a lobby of miners and their supporters who are fighting to save the last vestiges of their industry. I am not sure that I agree with the press and some of the claims made by government Ministers that Mr. Heseltine has made an attempt to save the mining industry. I believe that all Mr. Heseltine is doing is slowing down the rigor mortis. But, having said that, I never .see the word "pneumoconiosis" without casting my memory back to a person who very quickly became a friend of mine when I first came to your Lordships' House. Unfortunately, he is no longer with us; indeed, he died about two years ago.
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I am talking about Lord Taylor of Mansfield, who was known as Bernard to us all. He was a real miner in the truest sense. He spent his life in the pits before going to another place and then coming to your Lordships' House. He was very well respected, and loved, by most people who met him as a true person of the kind that the mining communities and industries produced and who helped the country.
Lord Taylor once told me—and I believe one can read the history of this in his autobiography, Uphill all the Way—that he actually played a part in the formulation of the word "pneumoconiosis" and in its inclusion as an industrial complaint. That relates not just to miners, because other people also suffer from the disease. However, I wanted to put on record what Lord Taylor had done in his younger days and the way that he carried it through to his final years in your Lordships' House.
Once again, I should like to tell the Minister that we welcome the upgrading. I hope that the point I made regarding the increase in respect of costs that such people will have to bear as regards heating and lighting will be taken into consideration when the matter is next considered in the House for upgrading under the regulations, which I expect will be some time next year. On that basis, the Opposition is pleased to accept the Motion.
Lord Skelmersdale: My Lords, like the noble Lord opposite, I welcome the regulations. Of course, like the noble Lord opposite and, indeed, my noble friend the Minister, I regret the need for it. My noble friend said that we are talking about a shrinking number of people, but pneumoconiosis is, of course, still extant in some of our deep mines. Without going into the rhetoric of the noble Lord opposite, which may well have been directed to our debate on Wednesday, can my noble friend say whether the use of masks, and other equipment, which are now issued to miners has led to a decrease in the incidence of pneumoconiosis and that, therefore, sooner or later it will no longer be a problem down the mines?
Viscount Ullswater: My Lords, I welcome some of the comments made by the noble Lord, Lord Dean of Beswick. However, I have to point out two factors to him. Of course, the 2.5 per cent. uprating is in fact a generous one as the RPI has obviously not reached that figure at present. Lest the noble Lord should forget, the social security benefits to which all these people will be entitled, will reflect upratings for the future. Therefore, they will receive a generous payment of this lump sum and will also be entitled to the uprating of social security benefits.
My noble friend asked me a question to which I do not have a reply at present. He asked whether the wearing of masks will prevent people currently working down the deep mines from contracting pneumoconiosis. I have to point out to him that the scheme we are discussing tonight only deals with those people whose employer cannot be traced. Where the employer can be traced—and most of those about whom my noble friend is talking have an employer in British Coal—that employer is responsible for the safeguarding of the health of deep-coal miners.

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However, I shall try to ascertain some information on the question put by my noble friend. If he will allow me, I shall write to him on the matter.
On Question, Motion agreed to.

Legal Aid (Scotland) Act 1986 Amendment Regulations 1993
7.14 p.m.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie rose to move, That the draft regulations laid before the House on 11th March be approved [24th Report from the Joint Committee].
The noble and learned Lord said: My Lords, I beg to move that the House considers five sets of draft legal aid regulations which are subject to the affirmative resolution procedure. The regulations are listed on the Order Paper.
The subject of legal aid in Scotland—and, indeed, in England and Wales—has, of course, been the subject of a considerable amount of comment in recent weeks. It may be of assistance to the House if I describe briefly the policy background against which we are bringing forward the regulations.
Legal aid is the means whereby people on low incomes may be helped to have access to the justice system. I believe that, over the years, it has been successful in that aim. However, legal aid of course involves the expenditure of very large amounts of taxpayers' money. Over the past few years, and most particularly over the last year or so, legal aid expenditure has risen dramatically. Indeed, it has almost doubled over the past five years. Expenditure on legal aid from public funds was £49 million in Scotland in the year ending 31st March 1988. That had risen to £83 million in the year ending 31st March 1992 and will reach £104 million in the financial year which is now ending.
It is not only a matter of the increase in expenditure; there have been significant and, indeed, dramatic increases in the numbers of grants of legal aid. In the year 1991–92, there were some 23,000 grants of civil legal aid. In the year now ending, that figure had risen to 27,000—an increase of some 17 per cent. In 1991–92, legal advice and assistance figures were about 272,000 in Scotland; in the year now ending, that figure rose to 287,000—an increase of 5.5 per cent. Although I understand that some noble Lords may have been briefed on the matter, and although the figures that I have just given are in the public domain following my appearance before a Select Committee in another place last week, such figures have, curiously, been omitted or concealed.
The first two sets of regulations before the House this evening represent a major element in the Government's response to that rise in expenditure. The Government have a general responsibility to ensure the best use of taxpayers' money, and to set their spending priorities accordingly. It is in that context that we have had to look—as any responsible Government would have to—very carefully indeed at the levels of expenditure on legal aid which have arisen recently.
With your Lordships' permission, I shall now describe the provisions contained in each of the sets of regulations in a little more detail.
The Civil Legal Aid (Financial Conditions and Contributions) (Scotland) Regulations 1993 adjust the threshold of a person's disposable income below which free civil legal aid is available. They propose that the threshold should be set at £2,293 with effect from 12th April 1993, when the annual adjustments in income support levels under the social security system come into effect. The upper limit will remain unchanged at £6,800 (£7,500 in personal injury cases). The maximum contribution which a person between the lower and upper limits will be asked to make towards the cost of his legal aid bill will be raised from one-quarter to one-third of his disposable income above the lower threshold.
The Advice and Assistance (Financial Conditions) (Scotland) Regulations 1993 similarly change the threshold—this time of weekly disposable income—above which a person is required to pay a contribution for legal advice and assistance. The new disposable income level will be £61 per week. The regulations also prescribe the scale of contributions to be paid where weekly disposable income exceeds £61 but does not exceed a slightly increased upper disposable income limit of £147. The level of contribution will range from £7 to £86.
I should make a number of points about the changes. In the first place, all the figures relate to a person's disposable income; that is, his income after allowance has been made for a number of necessary outgoings such as expenditure on dependants, housing costs, the costs of travel to work and other expenses associated with employment, and a number of others.
The calculation will vary significantly according to the circumstances of each individual applicant, but an applicant with a disposable income towards the upper end of the scale giving rise to eligibility could well have a gross income of something around £15,000 or even more. The levels of eligibility therefore continue to represent generous provision, and we estimate that some 55 per cent. to 60 per cent. of households in Scotland will remain eligible for legal aid under the new proposals.
The second point I would wish to make is that the contributions which are payable are in all cases maximum contributions. We have seen some newspaper comment recently which seems to imply that the maximum contribution levels are in some sense an entrance fee for access to the system of civil justice. That, of course, is not the case. As at present, no legally-aided person will be required to pay more than their case actually costs; on the other hand, however high the costs of an individual case rise, no one will be required to pay more than the maximum contribution. For those at the top levels, just within eligibility, it needs to be remembered that the average cost of consistorial cases in Scotland is in many cases, if not all, below what would be the maximum contribution.
Thirdly, I should say that our approach has not been to remove significant numbers of people from eligibility for legal aid altogether. We calculate that, of

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the nearly 300,000 people who received grants of civil legal aid or advice and assistance in 1992–93—the year now ending—only some 7,500, 2 to 3 per cent., would not be eligible under our current proposals. Their effect is rather to require that some people who previously made no contribution towards the costs of their case will have to make a, generally very small, contribution and that the level of contribution of those who already contribute will rise. Given the context within which expenditure has to be set, we assess that that is a fair and even-handed approach.
I turn now to the remaining three sets of regulations before the House. These give effect to the commitment by the Government during the recent passage of the Bankruptcy (Scotland) Act 1993 to extend the scheme of assistance by way of representation to cover the preparation and presentation of a petition by a debtor for the sequestration of his or her estate. The regulations will allow an eligible debtor to obtain the help of a solicitor in completing and submitting the necessary petition forms required by the court. If necessary, the solicitor can also appear in court on behalf of the debtor at any hearing relating to the petition.
This assistance is in addition to, and separate from, any preliminary advice which the solicitor may have provided under the advice and assistance scheme on the options available to the debtor. The Government's commitment to extend the scheme of assistance by way of representation was welcomed by the Opposition at the time of the passage of the Bankruptcy (Scotland) Bill. I hope that that support will continue in respect of the regulations before us this evening. I hope that I have described in sufficient detail the content of the regulations which are being brought forward for your Lordships' approval and the policy background against which they are set. I commend these five sets of regulations to your Lordships' House.
Moved, That the draft regulations laid before the House on 11th March be approved [24th Report from the Joint Committee].—(Lord Fraser of Carmyllie).
Lord Macaulay of Bragar: My Lords, from this side of the House I hope I may say that what the noble and learned Lord has outlined is a series of punitive and unjustified measures which will deprive people of access to justice. Having listened to the Minister this evening, I must ask: what is the cost of justice and what is the right to justice? Are the accountants and the Treasury now telling us what justice is all about? The noble and learned Lord made reference to the number of legal aid certificates. That is a statistic but it does not necessarily translate into immediate payments—no doubt the accountants would like that to be the case—because cases may settle extra-judicially and there is the matter of the recovery of expenses from defenders or from pursuers in cases where legal aid has been granted. I shall return to that point later.
The draft regulations as a whole have some good points but I intend to concentrate on the bad points. Without wishing to personalise the matter, I wish to read from a report in The Scotsman of Thursday of last week. It states:
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"The Law Society has urged the Government to postpone the changes in civil legal aid for one year because it believes the rise in spending on it is a temporary blip.
Lord Fraser said that the Scottish Legal Aid Board's best estimates indicated a continued rise in caseloads and expenditure.
Asked outside the committee if he felt uncomfortable about the Scottish Office plans being so heavily criticised by the legal profession, he said: 'No. They would, wouldn't they? It's just good trade union stuff".
The noble and learned Lord will no doubt inform the House whether he has been quoted correctly. I find his comments a sad approach to the administration of justice in Scotland.
The Minister in another place introduced—I believe he did so the day after the noble and learned Lord the Lord Chancellor had introduced measures for England—what I can only describe as a back-to-back piece of legislation which tries to apply to Scotland the provisions which relate to the increases in legal aid costs in England. We all know that there is no way one can compare the two systems. I do not have the relevant figures to hand, but they show that between 70 and 80 per cent. of jury trials in Scotland are conducted by solicitors. In England all jury trials, as I understand the position, are conducted by counsel and counsel are usually on legal aid. Therefore in comparing the two systems we are not comparing like with like.
The President of the Law Society of Scotland encapsulated what this debate is all about when he said:
"Justice is the cornerstone of our society and if that society is to be a caring society, every member of it, most particularly the poorest, the disadvantaged and the frail must be provided with proper access to justice. Any threat to them should be the cause of our profession's outspoken concern".
It is for that reason that the Law Society has no doubt provided the Minister with its own memorandum on this matter. The noble and learned Lord the Lord Chancellor stated:
"It is in the civil field that the growth of legal aid expenditure is rising particularly fast".
He was not referring to Scotland but to England and Wales. As I understand it, that is not the position in Scotland. The figure increased from roughly £15,700,000 to £16,600,000 between 1987–88 and 1991–92. In fact there has been no significant increase in the cost of civil legal aid in Scotland over recent years.
The person who at the moment pays nothing towards his legal aid out of an income of about £160 will now pay a £35 contribution. People may say that that is all right because it may be spread over several weeks or the person can save it up and then pay the full sum. However, £35 is a large sum of money to find out of such an income. Can the Minister forecast how many people will be affected by this measure? On what basis are the predictions made? I know he gave us some figures, but that appeared to me to be an accountancy exercise where one takes a percentage rise and applies that rise over the years. What savings are anticipated to be made to the Legal Aid Fund? More fundamentally, how can the Government, or anyone else, predict human behaviour? How can they say how many more, or fewer, divorces there will be next year?

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I ask the Government seriously to consider postponing the implementation of the Advice and Assistance (Financial Conditions) (Scotland) Regulations 1993 and the Civil Legal Aid (Financial Conditions and Contributions) (Scotland) Regulations 1993 so that reasonable consultation can take place with those most closely involved in the administration of justice. Will the Minister agree to have consultations with the parties most closely involved? That is not a clarion call from a lawyer. We have heard from the citizens advice bureaux, Victim Support, the Law Society, the Faculty of Advocates and various local faculties throughout Scotland. I am not sure, because no indication is given, how much discussion took place between the Government and any of those bodies prior to the introduction of the regulations.
Access to the legal process is a right, not a privilege. It is the badge of a civilised society. Any measure which minimises that right of access to the courts is a bad measure.
My information indicates that legal aid in Scotland is closely monitored and controlled. I have been given certain figures as to how much has been recovered in damages and how much has been recovered in expenses. However, I should like the Minister to give the official government figures as to how much has been recovered under the legal aid system during the last year for which tabulated figures are available in respect of damages and of expenses and the net figure as between the cost of legal aid in Scotland and the amount recovered in expenses in the courts.
Why is it that the litigant is being penalised because of the cost of what many of us regard as an inefficient system? Why is the finger not being pointed at the courts? Why are the courts not being placed under severe pressure to make themselves more efficient and to cut down costs to the country and the legal aid system? Do the Government have any plans for an overall review of the operation of civil legal aid and of means of cutting costs within the court system and making it efficient? Do they have plans to seek the views of those most closely involved?
An even more pertinent point is that the biggest hood or criminals in any part of Scotland who commits the most heinous crime can walk straight into the legal aid system and have a senior counsel, a junior counsel and a solicitor, all on legal aid, with no questions asked. The woman who wants to protect herself from a bullying husband or the worker who has an accident in the course of his employment has to grovel for legal aid under this scheme. Why are those two schemes so diametrically opposed?
The last available figures for the legal aid scheme in Scotland show that 60 per cent. of the money spent on legal aid in Scotland was spent within the criminal field. Why is the civil field now being picked upon? What steps do the Government have to sort out the criminal field? We all know from our practice in the courts that many of those who appear in the High Court, in the sheriff court or in Solemn Procedure are
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very wealthy people with assets behind them. They obtain a legal aid certificate and representation with very little trouble.
If the state is to deprive people of access to the courts certain consequences may follow. First, the citizen may take the law into his own hands, leading to other consequences. Secondly, the citizen may litigate on his own behalf. Thirdly, he may do nothing whatsoever because he cannot afford to exercise his rights. That is justice denied. Can the Minister say what consultation has taken place with the judges in relation to the prospect of people undertaking their own litigation in the courts? What is the prospective cost of such an outcome? It may be an impossible exercise because, as I said earlier, it is impossible to project the course of human behaviour.
I understand that 70 per cent. of cases in the civil legal aid field have involved divorce, separation, custody, access, adoption and interdiction against errant spouses. Of the 23,000 applications, 19,000 involved family law. Those people who previously had the right to apply for legal aid will now be deprived of the right of free representation. The legislation will hit at those who are least able to pay and who are the most vulnerable in society. Children and human relationships are vital to the continuation of a reasonably ordered society.
The ideal would be free access to the courts at all times. That will not happen. Consultation rather than confrontation should be the key word for the future. I ask the Government to look again at what they propose in these regulations and take them back and consult with those most closely involved.
Lord Mackie of Benshie: My Lords, I have been briefed by a very responsible body—the Law Society of Scotland—which the Minister mentioned. The Minister rightly said that the Government have to watch the taxpayers' money. But it worries me that the figures which I have—from which the Minister said some vital facts may have been omitted or concealed, which is a serious charge—indicate that in Scotland expenditure on legal aid is much more reasonable than in England. I should like the Minister to comment on the figures, which he must have seen in his brief.
I understand that total expenditure in Scotland in the past five years has increased from about £47,000 to £80,000 whereas in England it has more than doubled. In addition, I understand that in respect of the criminal law there has been a large payment from the Lord Chancellor's Department. If that is so, and the increase in expenditure in Scotland is mainly in relation to criminal legal aid and associated advice and assistance, there does not appear to be a case. In relation to criminal legal aid the Minister has not reduced the level of assured income below which a person has to pay or altered the level of contribution. However, in relation to civil legal aid, where the figures from the Law Society suggest that the cost has fallen, the Minister has reduced the level of earned income and increased the proportion to be paid from a quarter to a third.
In the case of a married couple with children of five and 12 on an income of £7,000, the contribution would be £140. That is a lot of money for a man with

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a wife and two children. In respect of what is a very average income, which is well below the industrial wage in this country, of just £10,000 the figure rises from £277 to £1,139. That is a very severe increase.
It appears to me that the Minister may simply be following the policy based on expenditure in England whereas in Scotland the cost appears to be contained. I understand too that the criteria laid down for legal aid are strictly applied. It is an attempt to save money by which the status quo is the least that should have been achieved.
I ask the Minister to explain this. If the figures cited are close, his case for savage increases, or savage decreases—call it what one will—appears to be poor. Perhaps he will comment on the figures and state where they omit or conceal facts that are known.
Baroness Carney of Lour: I listened carefully to what has been said in the debate. Following what the noble Lord, Lord Mackie of Benshie, said, is the basis for the cost figures in England the same, or is it different? Are those correct comparisons? If so, will the noble and learned Lord explain the difference? That is important.
I too have been briefed by the Law Society. I read the comments of the Law Society of Scotland with great interest. The society states:
"Whilst it is acknowledged that in the period from April to December 1992 expenditure on Civil Legal Aid had increased from the 1991–92 total of £16.5m to £19.3m in December 1992, the number of cases paid had increased over the period from 20,324 to 22,184".
That is an indication that the number of civil cases has increased by over 9 per cent. and the cost by nearly 17 per cent. Why is that? What is the reason? Is there any explanation for those increases in cost being considerably greater than the increase in the number of cases?
My noble and learned friend said that of the 300,000 cases in 1992–93, 2 percent. to 3 per cent. will not be eligible. Will he indicate who the 2 per cent. to 3 per cent. will be? That is the nub of the matter. The noble Lord, Lord Macaulay, stated that there were many good factors in the order but said that he would only talk about the bad aspects. I was sorry to hear that because the public like to know when parties agree on matters. If the Minister will indicate who the 2 per cent. to 3 per cent. are, it will help us to understand the problem.
7.45 p.m.
Lord Fraser of Carmyllie: Perhaps I may respond to a number of points raised in the short debate. When we originally put out our regulations, the Law Society of Scotland produced a leaflet. It was sent to your Lordships. In that leaflet, it identified nine or 10 cases which indicated that individuals would be unacceptably affected by the changes that we proposed to introduce. As noble Lords are aware, subsequent to that first set of proposals we significantly altered the proposals to the effect that a contributory band was reinstated with regard to legal advice and assistance. We made our position generally clearer.
As I understand it, the Law Society of Scotland now accepts that all those individual examples that it
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then used would no longer be a problem because of the changes that we have subsequently introduced with the latest proposals before your Lordships today. My point is this. Whatever figure one chooses, if we increased the figure significantly, people would still say, "What about those with £20,000 income with two or three children? They will find it extremely difficult. They would always find it difficult to pay any contribution for legal aid or legal advice and assistance". It will always be a matter of judgment. It has always been a matter of judgment ever since the legal aid scheme was first introduced. There has not always been cover for everyone who considers themselves outwith the group of the really wealthy.
The 2 per cent. or 3 per cent. who, we calculate as best we can, would fall out of eligibility, would be among the best off of those whom we are considering. They are the people whose income is now above the level for grants. They are not brought into the level for legal advice and assistance or to civil legal aid. It is not a small group somewhere at the bottom which is worse off.
The fact of the matter is that expenditure has climbed and continues to climb. As I indicated, the expenditure for this year is about £104 million. We already have to budget next year for about £112 million on legal aid. Therefore while there are changes—we calculate that about 7,500 people are taken out of eligibility altogether—those changes bring about a small restriction in growth in legal aid expenditure in Scotland. It is in no sense a cut-back from it. There will be more legal aid paid out this year to more people than ever before.
I do not believe that it is particularly helpful to consider the amount paid out in civil legal aid and advice and assistance this year. There are perfectly sound reasons for believing that, when there is a recession, solicitors and others may put in their bills rather more expeditiously than otherwise in order to improve their cash flow. That is easy enough to understand. However, it is important to understand the figures—I have to express disappointment that they have not been more vigorously highlighted—which indicate that the number of grants of legal aid in civil legal aid and advice and assistance has significantly increased in the past year. It is for that reason that it was considered necessary to bring about the changes to contain the growth in expenditure. As I indicated in evidence to a Select Committee in another place, it was for that reason that the changes were brought about, not because of the position south of the Border, although clearly my noble and learned friend the Lord Chancellor has significant costs to contain in that area too.
The noble Lord, Lord Macaulay, quoted from The Scotsman. I indeed made that comment. However, it was in the context of being told that someone giving evidence before the Select Committee had indicated that, if the legal aid budget were to be maintained and a nuclear submarine or some other item of defence had to be cut out, so be it. I consider that a rather "trade union" attitude, the equivalent of saying, "Let's look

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at our own expenditure, our own interests, and forget the problem of balancing expenditure and income that governments have to do".
I believe that the numbers who will still receive legal aid in Scotland are such that a fair balance has been struck. One point of agreement in your Lordships' House has contributed. It is a concern about criminal legal aid. I readily accept that concern. However, as the noble Lord appreciates, for there to be any significant change in the way that legal aid in criminal matters is granted we should require further primary legislation relating to some aspects of legal aid, although perhaps not all.
From the speech from the Opposition Front Bench, I understand that there is agreement that in one form or another we should restrict criminal legal aid in Scotland. I welcome that. If the noble Lord or others in Scotland have constructive proposals to put forward as to how such restrictions in the growth of criminal legal aid may be achieved, I shall be very pleased to hear from him.
I regret that these modest restrictions seem to have been hyped up as being far more considerable than they are. I believe that they are reasonable enough and I commend them to the House.
Lord Mackie of Benshie: My Lords, before the noble and learned Lord sits down, there is an intriguing point which reflects great credit on his profession in Scotland. I refer again to the comment of the Law Society of Scotland that the average cost per case of legal aid in Scotland is £815 as against nearly £1,600 in England and Wales. That appears to me to be most creditable. It is a bit hard that in Scotland we should lower the base when the efficiency of the Scottish Bar and the Scottish professions seems to be so much higher than in England.
Lord Fraser of Carmyllie: My Lords, this set of regulations is not geared to adjust the fees that lawyers earn in Scotland. In the past three years there has been a 21 per cent. increase in fees paid to lawyers. It is difficult to make comparisons across the Border in relation to legal aid fees and it does not follow that, because they are at a particular level this side of the Border, those fees are appropriate.
On Question, Motion agreed to.

Advice and Assistance (Financial Conditions) (Scotland) Regulations 1993
7.50 p.m.
Lord Fraser of Carmyllie: My Lords, I beg to move.
Moved, That the draft regulations laid before the House on 18th March be approved [24th Report from the Joint Committee].—(Lord Fraser of Carmyllie.)
On Question, Motion agreed to.

Advice and Assistance (Assistance by Way of Representation) (Scotland) Amendment Regulations 1993
Lord Fraser of Carmyllie: My Lords, I beg to move.
Moved, That the draft regulations laid before the House on 11th March be approved [24th Report from the Joint Committee].—(Lord Fraser of Carmyllie.)
On Question, Motion agreed to.

Civil Legal Aid (Financial Conditions and Contributions) (Scotland) Regulations 1993
Lord Fraser of Carmyllie: My Lords, I beg to move.
Moved, That the draft regulations laid before the House on 18th March be approved [24th Report from the Joint Committee].—(Lord Fraser of Carmyllie.)
On Question, Motion agreed to.

Advice and Assistance (Scotland) (Prospective Cost) Amendment Regulations 1993
7.52 p.m.
Lord Fraser of Carmyllie: My Lords, I beg to move.
Moved, That the draft regulations laid before the House on 11th March be approved [24th Report from the Joint Committee].—(Lord Fraser of Carmyllie.)
On Question, Motion agreed to.

Royal Assent
The Chairman of Committees: My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:
Consolidated Fund (No. 2) Act,
Judicial Pensions and Retirement Act,
Prisoners and Criminal Proceedings (Scotland) Act,
Alliance and Leicester (Girobank) Act,
British Railways Act.
The Earl of Strathmore and Kinghorne: My Lords, I beg to move that the House do now adjourn during pleasure until eight o'clock.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.53 to 8 p.m.]

Housing and Urban Development Bill
House again in Committee on Clause 115.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 176AZA:
Page 116, line 37, at end insert:

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("() An order under this section shall only apply to one or more of the following services, and only where such services are provided in relation to accommodation occupied by elderly, sick or disabled persons—

(a) counselling, monitoring and support in connection with tenants well being and health and their personal needs, other than those directly related to housing;

(b) the provision of monitoring and alarm schemes to reflect the increased personal dependency and frailty of tenants;

(c) cleaning tenants' rooms and windows and their laundry services, to the extent that this reflects tenants' reduced ability to do so themselves;

(d) organising social and leisure activities and functions;

(e) liaising with medical and social services staff and GPs about tenants' health needs;

(f) providing and supervising restaurants, meals and ancillary services thereto;

(g) counselling and liaising with relatives;

(h) running regular errands because tenants are unable to do so themselves;

(i) administering first aid;

(j) responding to out of hours calls by tenants;

(k) helping tenants into and out of bed;

(l) toiletting, dressing, feeding, bathing and shaving tenants;

(m) administering tenants' medication;

(n) nursing care.").

The noble Bareness said: We come to a series of fairly brief amendments. The significance of this amendment is to constrain the power of the Secretary of State to repeal the provisions of Clauses 113, and 114 and restrict them to the matters upon which, as the Minister said earlier, he is currently consulting local authorities.
We fear that, as presently constituted, the power of the Secretary of State to make arrangements in terms of welfare functions is very widely drawn. It could apply, for example, to the counselling functions for homeless families, or to families in arrears, to those with neighbourhood disputes, and so on. I believe he could, for example, repeal the right of the housing authorities to extend their concept of housing management in a wide range of fields. The point about this amendment is to restrict the argument over repeal simply to the functions as listed associated with sheltered housing of the elderly. I beg to move.
Lord Strathclyde: The effect of this amendment would be that any order made by the Secretary of State to withdraw welfare services powers in Clauses 113 and 114 would be limited to the 14 welfare services listed in our consultation paper, in so far as they are related to services for the elderly, sick or disabled.
We want to see what local authorities and others have to say in response to our consultation paper, which invites comments by 23rd April. Clause 115, under which my right honourable friend could withdraw some or all of those powers, is drafted flexibly so that we can respond flexibly to comments received. We do not think that, before the comments received in response to consultation have been considered carefully, it would be right to remove any of this flexibility. However, the power in Clause 115 which would enable my right honourable friend the Secretary of State to withdraw the powers for authorities to provide and account for welfare services can be exercised in several ways. In particular, the Secretary of State can specify the different categories of welfare services which they can provide and can
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account for in the housing revenue account, or he can specify the welfare services which a housing authority may not provide or account for in the HRA. The department's current intention is to specify the welfare services which should be excluded.
It is the department's intention to consult representatives of local government and others on any order made following the current consultation exercise to withdraw the power to provide or the power to account in the HRA for welfare services from 1st April 1994. We will also consider consultation nearer the time when any other such orders are drafted, provided of course that consultation is practical.
I can also reassure the Committee that any proposals to widen the scope of welfare services to be excluded from the HRA would also be subject to wide-ranging consultation including the representatives of local government and housing authorities. For those reasons, I hope that the noble Baroness will feel able to withdraw her amendment.
Baroness Hollis of Heigham: I thank the Minister for his reply. We are obviously happy to take his assurance about consultation. But I believe he will bear in mind that there is a genuine concern that the Government, being quite properly concerned about the charging of welfare services, appear increasingly minded to restrict the role of housing management to exclude welfare services. That is the distinction we continuously try to draw. But on the assumption that the noble Lord will honour his commitments to consult, as I am sure he will—and I am sure those points have been made fully and amply by the local authority associations—I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 176BZ:
Page 116, line 37, at end insert:
("() No order under this section in relation to the provisions of section 113 above shall be made in relation to counselling, monitoring and support in connection with tenants' well being and health, and their personal needs other than those directly related to housing.").
The noble Baroness said: In moving Amendment No. 176BZ, I should like to speak to all the amendments through to 176QZ standing in my name and that of my noble friend Lord Williams.
These amendments follow the same issue and are still associated with the powers of a housing authority, as opposed to charging, which we shall come to in just a moment. Again, the point in this amendment, and the sequence of amendments, is to prevent the repeal of the powers given by Clause 113 for local housing authorities to provide counselling, monitoring and support in connection with the well-being of tenants and their personal needs other than those directly related to housing management, regardless of any order requiring the authority to charge expenditure under this heading to the general fund.
This is a set of what I call "salami" amendments dealing with each individual aspect under debate. The amendments seek to prevent the repeal of a local authority's housing powers to provide those services as a housing authority. We list them separately; we are

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happy to have them grouped. We want all local housing authorities to be able to provide those care functions which we believe flow out of the housing management rule for the elderly irrespective, as I say, of how they are announced.
The argument behind the amendments is an argument about what housing management is. Our argument is that housing management is always customised, if I can use that word, to the particular needs of particular sets of tenants within its local authority boundaries—tenants of different need, at different stages in their life cycle. All of these may involve a concept of housing welfare wider than that narrowly drawn by the landlord function. It may, for example, include the situation where young people come out of care and need to furnish their flats; or, when one has shared flats for young single people, one may need to provide a caretaker and warden service to ensure good neighbourliness. It means, for example, that when one seeks to organise transfers, one may wish to consider the needs of family members to be near the elderly.
When trying to help tenants for whom English is not a first language, one may need to interview, say, the fuel or water authorities to prevent the cutting off of fuel and utilities. When someone is unemployed one may need to move into the area of debt counselling, and the like. All of us can cite many examples over and beyond that simply of the elderly and their support services.
We argue, therefore, that it is meaningless to provide housing management for the elderly as though they are not elderly. We say that although welfare services flow from care for the elderly, they are not thereby social services as we understand it, needing to be provided by professional social workers. On the contrary, the array of services reflected in these amendments are the sort of services that a relative would provide, or a good neighbour might provide, and they are properly within a generous definition of housing management. After all, specialist housing associations provide such services. No one suggests that social services or the county council should reimburse them. By these amendments we seek to confirm that we share with the Government a generous and comprehensive view of housing management which properly includes a housing welfare function, as listed in the amendments. I beg to move.
Lord Strathclyde: I understand the concern that the term "welfare service" is a wide one and that the powers in Clause 115 could be used to restrict the ability of housing authorities to provide a whole range of welfare services to their tenants in addition to those supplied by wardens through monitoring and alarm schemes. However, the power in Clause 115 which would enable my right honourable friend the Secretary of State to withdraw the powers for authorities to provide an account for welfare services can be exercised in several ways. In particular, the Secretary of State could specify the different categories of welfare services which they can provide and can account for in the housing revenue account; or he can
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specify the welfare services which a housing authority may not provide or account for in the HRA. The department's current intention is to specify the welfare services which should be excluded.
I explained that we are currently carrying out a wide-ranging consultation exercise proposing that the power of the housing authorities to provide welfare services to tenants who are elderly or disabled, or to those who require personal care for other reasons, should be left in place until after the review of local government structure is complete.
The consultation paper also proposes that the cost of specific welfare services provided to such tenants should be excluded from the HRA from 1st April 1994, which would give the early and comprehensive clarification that some authorities have sought. The consultation paper also proposes an alternative option of excluding a smaller list of welfare services relating to essential care from the HRA from 1st April 1994 and other services, which can be loosely termed "extended landlord", from a later date. Once again the current intention is that the order would list the items to be excluded. However, I must emphasise that no decision on the withdrawal of the powers will be taken until the responses to the current consultation paper have been carefully considered. As I said, we shall consult representatives of local government on any order made following the current consultation exercise.
Having said that and having repeated my assurances about consultation with as many people as possible, I hope that the noble Baroness will feel that she can withdraw her amendment.
Lord Williams of Elvel: Can the noble Lord say whether the Delegated Powers Scrutiny Committee has looked at this provision in Clause 115? Has it also looked at Clause 135 which we proposed to discuss on the question of whether the clause should stand part of the Bill?
The rubric of Clause 115 reads:
"Power to repeal provisions made by sections 113 and 114";
and the rubric of Clause 135 reads:
"Power to repeal provisions relating to housing welfare services",
which is the object of the previous clause. Both clauses give the Secretary of State blanket power to amend primary legislation at whatever time or for whatever purpose he sees fit. The noble Lord said that there will be consultation and so on. Why has the legislation come before us in the first place if the Secretary of State is going to rewrite it?
Lord Strathclyde: The noble Lord makes a valid point in the sense of having regulations in legislation. But in dealing with this kind of issue—there is precedent in legislation—it is important to leave the details of how the scheme will work in practice for consultation and then for regulation. There is a reason for that. In dealing with such issues there may be a requirement to change things slightly during the course of operation. To return to both Houses of Parliament every time in terms of primary legislation

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could cause the kind of hardship that both noble Lords opposite and the Government are keen to avoid.
The Delegated Powers Scrutiny Committee has not asked to look at the Bill yet. It may well do so.
Lord Williams of Elvel: I very much hope that it will. The noble Lord spoke about the "details" and having "to change things slightly". If one reads the legislation as presented in the form of a Bill to the Committee, it gives a power to wipe out the whole of the provisions. It does not just alter details here and there or change one part of the schedule. It is a power to wipe out whole clauses—to wipe out housing welfare. If this Government or a future government decide that they do not want to provide for local authority housing welfare services, should this legislation receive Royal Assent they will have the power not to pr provide it. If this or any other government decide that they want to stop local authorities providing housing welfare services, they have the power under the Bill to do precisely that. That seems an astonishing way to produce legislation.
Baroness Hamwee: Perhaps I may repeat a comment that I made on an earlier amendment; namely, how extraordinary I find the clause, for the reasons given by the noble Lord, Lord Williams. Clauses 113 and 114 are not mandatory. They give powers to local authorities to use their discretion. To allow the Secretary of State then to wipe out that discretion is, as I said, quite extraordinary.
Baroness Hollis of Heigham: I wait for the Minister to respond to those well placed comments and criticisms. May I invite him to comment?
Lord Strathclyde; How can I resist such an invitation from the noble Baroness? I am not sure that I have very much more to add. The Bill has gone through another place. It has been discussed at some length in Committee and passed through the procedures in another place, which is content with the matters that are before us. Clauses 113 and 114 are emergency powers and are intended to be temporary. They are powers that housing authorities do not now have and that we will give them. Going back to the comments I made earlier, it is important that we consult on these issues in as realistic a manner as possible in order to make sure that we get them absolutely right.
Baroness Hollis of Heigham: I am again slightly surprised by the Minister's reply. He said that these are powers which the local authorities do not have but which are being given to them and that the Secretary of State may seek to withdraw at some future stage. I beg to differ from the noble Lord. He is reinstating powers that were presumed to hold good before the Ealing judgment intervened to make it questionable whether they could be funded within the housing revenue account, whether therefore they were properly landlord functions, and whether those services could properly flow from a local authority in its housing capacity.
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The noble Lord may prefer to accept that reading of the situation. It is, I believe, correct. The point of the amendments is to address the point made by my noble friend and the noble Baroness, Lady Hamwee. They are probing amendments and we do not particularly seek to see them on the face of the Bill. We seek the Minister's agreement that these housing welfare functions properly flow out of housing management functions and therefore, irrespective of the means by which they are funded, they are properly powers belonging to a local authority in its housing capacity. We fear that the Secretary of State at some subsequent point may say that this is not a housing function but a social services function and that the money should come from the social services.
That brings up the whole issue of the structure of local government that we explored earlier today. We seek from the Minister—I invite him now to give a categorical assurance —that he respects the fact that, however they are funded, the welfare functions as listed are a proper outflowing of housing management functions and therefore are properly a function of a local authority in its housing capacity.
8.15 p.m.
Lord Strathclyde: I do not wish to sound obtuse but the noble Baroness knows that if I could have given her a categorical assurance I should have done so some time ago when we discussed earlier amendments. I cannot give her a categorical assurance. I have explained at length what we are doing and why we are doing it.
Baroness Hollis of Heigham: I have listened to the arguments, as has the noble Lord. Does he accept the argument put from different parts of the Chamber to the effect that those housing welfare functions flow out of housing management? Does he accept that argument?
Lord Strathclyde: The noble Baroness and I have had a discussion on those aspects of the Bill. But, as I explained, whether or not the noble Baroness is right or wrong will be confirmed by the consultation process that we are undertaking. At this stage one cannot make a categorical assurance either way.
Baroness Hollis of Heigham: We have probably gone as far as we can. These are powers that have been exercised by housing authorities over many years. As the Minister in another place said, they are part of a civilised array of local authority services which properly flow out of the housing role. Therefore I and my noble friend remain baffled as to why the Secretary of State seeks to retain the power to repeal them at some unspecified future date.
We have expressed our concerns. No doubt we shall return to this matter at Report stage, perhaps after consultation with the local authorities. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 176CZ to 176QZ not moved.]
The Chairman of Committees: I should say that there is an omission from the amendments of one with the alphabetical letter O; otherwise what we have just done is correct.
[Amendment No. 176RZ had been re-numbered 176AZA.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 176SZ:
Page 116, line 37, at end insert:
("() An order under this section shall not provide that sub-paragraph (3) (a) of paragraph (3A) of Part III of Schedule 4 to the Local Government and Housing Act 1989 shall cease to apply to counselling, monitoring and support in connection with tenants' well being and health, and their personal needs other than those directly related to housing, where such services are provided by the local authority or its agent through an employee, are incidental to the greater part of the work he is employed to do, and that greater part is work in connection with repairs, maintenance, supervision or management of the authority's houses or other property.").
The noble Baroness said: In moving Amendment No. 176SZ I shall speak to amendments up to and including Amendment No. 176FY, as indicated on the Marshalled List.
Whereas the previous discussion concerned the powers of a housing authority, this cluster of amendments concerns the funding of those welfare functions. Up until the Ealing judgment, housing authorities could fund those functions in a variety of ways. They could fund them within their housing revenue account through the rents of other tenants on the grounds that all tenants, at some point in their lives, might enjoy some aspect of so-called welfare functions; or, as in the case of my authority, they may decide to make a general contribution from general funds to the housing revenue account in recognition that they are care services rather than a narrower definition of landlord functions such as the collection of rents and the handing out of keys.
In some authorities there may still be a contribution from social service authorities where they are two-tier or virement across from social service committees, particularly where they have developed part two-and-a-half of a sheltered housing scheme which obviously permits them to support more frail and heavily dependent elderly people in the community than would otherwise be the case.
The amendments seek to prevent the Secretary of State from removing a local authority's discretion to charge such services to the housing revenue account where they see fit. At the moment the majority of local authorities—about 90 per cent. of district councils and 60 to 70 per cent. of other local authorities—charge those services to the housing revenue account; others bring contributions into the general account in a few cases from the county social services. We want that discretion to continue so that local authorities can make local judgments. The amendment therefore seeks to restrict the Secretary of State's powers to limit local authority discretion in how they should fund those aspects of housing management. I beg to move.
Lord Strathclyde: These amendments would prevent the Secretary of State from withdrawing the powers of housing authorities to debit the housing revenue account with the costs of certain categories of
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welfare services. It is our longer term intention that the housing revenue account should be a landlord account, in which welfare services would not be accounted for. Tenants generally would then not have to cross subsidise through higher rents welfare services provided to specific groups of tenants and would only have to pay for the landlord services they received. However, I hope the noble Baroness will take comfort from the fact that we will take no final decisions until we have considered the responses to the consultation exercise. The amendment would pre-empt the outcome of that consultation process. For that reason I hope that the noble Baroness will feel able to withdraw the amendment. If we are not willing to consult with an open mind, there is not much point in consulting.
Baroness Hollis of Heigham: With respect, what is the point of conducting pilot studies and passing a Bill before we receive the results? What is the point of having consultation papers and passing a Bill before we obtain the results of the consultation exercise? What exactly are we seeking to do?
Lord Strathclyde: I thought that was quite clear. There are aspects of the Bill where we have conducted pilot studies and consultation exercises and have been able to reflect the results in the Bill. In other aspects, dealing with specific issues such as that before us now, we have not. In anticipation of unitary authorities coming potentially in future years, we feel it is right to consult in this way.
Baroness Hollis of Heigham: The Minister seems to be saying that he will have a consultation exercise but pass the legislation before the results of the exercise are known. As a result—referring to a point made earlier by my noble friend Lord Williams—he needs to include wide-ranging discretionary powers for the Secretary of State to amend the legislation, scrutinised by this Chamber, in the light of whatever the consultation process throws up. With respect, that is not a fit and proper way to conduct legislative business.
Lord Strathclyde: Surely the noble Baroness recognises that there will be plenty of opportunity for Parliament to discuss the regulations when they come before the Chamber. Secondly, local authorities will be fully involved in the consultation process, and that is the area with which the noble Baroness is concerned. Thirdly, and perhaps most important of all, this part of the Bill is necessary because of the Ealing judgment that we have already discussed at some length.
Baroness Hollis of Heigham: I accept that point. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 176TZ to 176FY not moved.]
Clause 115 agreed to.
Clauses 133 and 134 agreed to.
Clause 135 [Power to repeal provisions relating to housing welfare services]:
On Question, Whether Clause 135 shall stand part of the Bill?
Lord Williams of Elvel: My noble friends put their names forward to oppose Clause 135 standing part of the Bill. It is the same point that we have made with a fair degree of consistency before and there is no need to go over it again.
It is curious that the Government not only have three Bills, as I said on Second Reading, but in fact three Bills plus enabling Bill which enables the Secretary of State to do all sorts of other things. If the Government can pilot this through Parliament they would say that it is justified. But it is a curious way to approach the legislative process.
Lord Fraser of Carmyllie: There has already been detailed and knowledgeable discussion of the Ealing decision which brought about the necessity for these extensive provisions on both sides of the Border. The situation which it was believed obtained in England and Wales was equally believed to obtain north of the Border. The provisions seek to correct the position and bring it to the state of affairs which it is believed is the most sensible way to handle matters.
I do not propose to go through the provisions. They are essentially repetitive in the clauses that relate to Scotland. However, with regard to the Scottish aspect, we have to regard the introduction of new welfare services by Clause 133 as a modest, if useful, extension of local authority powers to meet specific problems. We do not consider those problems to be permanent. The introduction of community care and the reorganisation of local government will mean that local housing authorities will no longer need specific powers to provide welfare services since, as social work authorities, they will already have the wider and more extensive powers of social work legislation in Scotland. It would then be safe to repeal the more specific powers of Clause 133.
Assurances have already been given elsewhere that the Government have no plans to make use of the repeal powers in Clause 135 before local government reorganisation in Scotland later this decade. I repeat those assurances today. I do not claim to have any familiarity with the reactions of local authorities south of the Border. However, it may be worth noting that our intentions with regard to Clause 135 have been made known to the Convention of Scottish Local Authorities, which has raised no objection to our proposal. That is probably because it appreciates the background against which it is included and the assurance that the powers would not be exercised prior to the reorganisation that has been widely mooted, most notably in the White Paper which is being prepared by the Secretary of State.
Lord Williams of Elvel: Can the noble and learned Lord tell me whether the Welsh local authorities have been informed of the situation? We are told that its local government reorganisation will take place as of April 1995.
Lord Fraser of Carmyllie: I am afraid that I cannot. I indicated that if I offered any view on the reactions of local authorities it would be strictly on the basis of those north of the Border. The noble Lord may be interested to know that the convention is a powerful
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and observant body in Scotland. It is well aware of what is contained in the Bill and it has made no objection to the proposal, although it was specifically made known to it.
Lord Williams of Elvel: Perhaps either the noble and learned Lord or the Minister could find the answer to my question and let me know.
Clause 135 agreed to.
Clause 116 [Management agreements]:
8.30 p.m.
Lord Strathclyde Lord Strathclyde moved Amendment No. 176FYA:
Page 116, line 39, leave out from beginning to ("there") in line 40 and insert ("At the end of subsection (3) of section 27 of the 1985 Act (management agreements), there shall be inserted the words "and shall contain such provisions as may be prescribed by regulations made by the Secretary of State".
(1A) For subsection (5) of that section").
The noble Lord said: Amendment No. 176FYA is the first of a series dealing with the delegation of local authority housing management and thus with compulsory competitive tendering—CCT—of housing management. It may be useful for me briefly to set the scene for the Government's proposals.
CCT has been in place for some local authority services for over 10 years and the improvements in those services have been noticeable. This has not been the case only when a private contractor has won the contract. The disciplines of competition—the need to specify clearly what service is required and how it should be supplied—have also enabled local authority staff to provide a better service to their customers. That is a widely shared conclusion. The Government do not see either intrinsic or practical objections to extending CCT to those areas of a local authority's work. I believe that we all agree that local authority housing management has improved in recent years. As the Greenwich Tenants' Federation said in response to the consultation paper Competing for Quality in Housing:
"Handling of both rent and housing benefit arrears has improved greatly over the last two years as has the turnover of voids and the gradual elimination of illegal occupancy. Monitoring of repairs and maintenance has improved indirect consultation with tenants".
But there are still problems in housing management. There are still too many estates where management breakdown is evident. Empty properties are boarded up for long periods or taken over by squatters and common areas display numerous signs of neglect—lifts inoperative, rubbish chutes blocked, the results of vandalism left unrepaired and litter and graffiti disfiguring much of the available space. These sights are familiar enough, and that is the problem. They show that there are tenants who are receiving a worse deal than they deserve. The Government's intention is to ensure that the standards of services in the worst authorities and on the worst estates are raised to at least the best that are presently available. But CCT offers the chance to improve not only the worst, but also the best. It will have benefits and be an additional spur to good management, even for the most efficient and effective local authorities. They will be encouraged to think further about the standard of

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service which they offer, whether they have got the best form of organisation to deliver those services and whether estates are being run in the most cost-effective way.
Local authorities are increasingly conscious of the value of competitive tendering to the management of their housing stock. Some have already contracted out the service on a competitive basis, and my department has had a number of inquiries from other authorities that want to follow suit.
Wandsworth, again, is an authority which is fully aware of the benefits which the rigours of competition offer. It has been at the forefront of introducing competition to housing management as it has been in other services. It has recently done a tendering exercise for part of its housing stock. I quote a letter from the council to the Secretary of State:
"We have just completed in Wandsworth our first tranche of competitive tendering for our housing management function, the majority of which have been won by our existing in-house team. The whole essence behind CCT has been vindicated, in that despite running a very efficient and well organised Housing Management Department we have saved £500,000 of the annual running costs of a very small number of dwellings, whilst maintaining existing service capabilities".
The advent of CCT to housing management does not mean that authorities will no longer be able to conclude voluntary management agreements. My honourable friend the Minister for Housing said in December that there were three ways in which a local authority could delegate its housing management. First, it could delegate to a tenant management organisation. This Bill contains in the right to manage a clear legal framework for these delegations. Secondly, the authority could delegate its housing management to another outside organisation that could be a housing association or a private company. Thirdly, if an authority does not choose to go down either of the first two routes there is delegation through CCT. Once housing management has been made a defined activity under the Local Government Act 1988 CCT will apply, and apply only when an authority intends to undertake the work itself. It will still be able to do so but will have to go through a competitive procedure first. The effect of CCT is that whichever tenderer is able to provide the service most effectively and efficiently will do so. That can only be good for the recipients of the service, in this case the tenants.
I return to the amendment. It provides for proper linkage between the various forms of delegation. The consultation paper recognised the need for tenant management organisations (TMOs) to be able to take over the management of their houses once tenants had voted in favour. It would not be acceptable if they then had to wait until an existing contract had expired. The consultation paper suggested that some form of break clause might be a possible means of overcoming the problem. The reason for the amendment is to enable the Secretary of State to require authorities to put break clauses or other suitable mechanisms into their management agreements so that TMOs can take over management properly. I commend the amendment to the Committee.
Lord Williams of Elvel: I am grateful to the noble Lord for speaking to the amendment. He gave us a somewhat operatic introduction to the whole scheme of CCT, but I did not bother to follow that very closely. It seems to me that Amendment No. 176FYA contains yet another example of "such provisions as may be prescribed by regulations made by the Secretary of State". Again, it is a purely enabling amendment that allows the Secretary of State to do whatever he wishes when he gets out of his bath in the morning. I believe that a point must come when the Government say what the Secretary of State intends to do and that he will tell Parliament exactly what it is: otherwise, I see no point in going on with this legislation.
Baroness Hamwee: I thought that perhaps this amendment was here in order to allow the Minister to give a party political broadcast for CCT. If tomorrow he reads the Official Report he may find that what he has said about Wandsworth is a terrible indictment. He said that Wandsworth claimed to have saved £500,000 because of compulsory competitive tendering. What was there to stop that authority going out and saving it before competitive tendering became compulsory? Since Wandsworth is a flagship borough to be emulated, could they not have done it without prompting from the Government?
On Question, amendment agreed to.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 176FYB:
Page 116, leave out lines 41 to 46, and insert:
("() A local housing authority shall not enter into a management agreement if it appears to them that a majority of the tenants of the houses to which the agreement relates do not wish the proposal to proceed."
() In subsection (1) of that section the words "with the approval of the Secretary of State" shall cease to have effect.").
The noble Baroness said: This is the occasion when we have a go at giving a somewhat operatic version of the considerations of CCT. I will not go into the broad, long-standing criticisms of CCT made by local government. At this stage I wish to restrict my remarks to its application to housing. We have three fundamental criticisms of CCT in the Bill as it applies to housing. First, we do not believe that the housing service as such is broadly suitable for CCT, although individual aspects of it may be. Secondly, we believe that the costs quoted yet again in regard to Wandsworth have been underestimated and the savings over-estimated, which undermines much of the argument. The reorganisational consequences are inappropriate and tenants will pay the price. Thirdly, we believe that tenants who will pay for CCT are not able to control it. If you like, that is the "democratic deficit" argument embodied in the Bill. In the whole of Part II the "democratic deficit" issue is the most significant aspect that we wish to explore.
I turn to the first of our criticisms of CCT as it applies to housing. Given the nature of housing services, we do not believe it is right to send some of those services out to compulsory competitive tendering knowing that organisations, including

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property organisations and possibly foreign companies, may tender for such services on the basis of price. I remind your Lordships of the kind of functions we are talking about. We are talking about the assessment of housing need under allocation and lettings. Will that be done by a property company or foreign agency? We are talking about the selection of tenants. Admittedly that is within the broad strategy of local authority policy, but even within that to whom does one give priority given the elements of their needs?
When it comes to tenant management, does the Minister really think that these services are appropriate for compulsory competitive tendering? Is information and advice to tenants on rights, duties and welfare matters appropriate for competitive tendering? Is liaison with tenant groups appropriate for CCT? Is CCT appropriate for liaison with other local authority departments such as social services? Is it appropriate for liaison with voluntary groups? Is it appropriate for dealing with complaints from tenants about racial harassment? Is it appropriate for how to consult tenants? Is it appropriate for supporting tenant participation? That is just tenant management. I could go on.
Is CCT appropriate for rents and services charges and on non-payment, including making judgments about who should be made homeless? Is it appropriate to have CCT possibly even for some benefit work? I realise that there is a question mark about that, but is it appropriate bearing in mind some of the confidentiality in that area? Is it appropriate for the administration of right-to-repair schemes in which one contractor will therefore be supervising another contractor, with no accountability back to the local authority? Is it appropriate for this general study of housing supply and demand, for neighbourhood office management and for research? Are the Government serious that this highly sensitive material and these highly sensitive services, which are delicate in their confidentiality and in their support of tenants, should be competitively tendered for on a price basis?
Can the Minister tell us how one specifies in a contract the appropriate level of service one expects when one is dealing with harassment or information to tenants about welfare matters? How does one specify that in a contract? Perhaps the Minister can give an example of two or three phrases that could be put into a contract so that the Committee knows what people will be expected to bid for. Can he tell me perhaps how we would monitor the performance of a contract in debt counselling—more counselling, less counselling, longer counselling or shorter counselling? Can the Minister please give me some guidance? I do not understand. Who is responsible for what? Is it right, for example—this is the basis of CCT—that those competing in these tenders should seek to make a profit (presumably 5 per cent.) out of counselling homeless families? In the past any such profits or surpluses have been looped back into the housing revenue account for the benefit of tenants. In future they will be creamed off for the benefit of shareholders.
How comfortable are we with the Government's proposal that some contractors should be paid by results; for example, in their ability to reduce rent arrears? I am sure the Minister will agree that there are two ways of reducing rent arrears—the expensive way and the cheap way. The expensive way is debt counselling; the cheap way is to evict families and make them homeless. Guess which way the private contractor will go when faced with that choice!
As the noble Baroness, Lady Hamwee, has said, many aspects of local government work have already been voluntarily contracted out by local authorities on the basis of their judgment. I refer especially to small rural authorities which do not always have a full range of expertise in house. But with the possible exception of Wandsworth, I know of very few where housing has been contracted out. Can I ask the Minister to tell us why—perhaps he will ask himself why—when so many Tory authorities are anxious to do the Government's bidding, anxious to be praised for being a government flagship and anxious to introduce a contract culture, they are reluctant to Balkanise housing management? Why is that the case? Why are they not willing to do so? Why has there been such a slow interest? Why has there been uniform resistance across the whole of local government to these proposals? The answer is that local government, of whatever political complexion, knows that there are no realistic alternative providers which are appropriate or suitable or which can overcome the problem of the democratic deficit in housing management. The first problem, therefore, is that we simply do not believe that the broad raft of housing services as listed in the Government's own consultative document is appropriate for CCT. I invite the Minister to tell me how one specifies these matters—for example, debt counselling—in tender documents.
Our second concern is the implication of cost and reorganisation. The cost of introducing CCT across the country as a whole so far has been about 10 per cent. of annual contracts. The Minister theoretically believes that this will generate around 6 per cent. worth of savings. If one takes out cleaning, where savings often go up to around 15 per cent., one is left with 2 or 3 per cent. on savings which, over the course of a five-year contract, just about cancel out the cost of setting up the contract in the first place. At best this is likely to be financially neutral. The costs may well be higher than that. I shall give one example.
A local authority with 48,000 properties has 32 decentralised offices each suitable for a CCT package. That means that the offices over a five-year cycle will be putting out a CCT contract document every two months, with enormous implications for workloads. Where will the savings come from? They can only come either from cuts in services or cuts in staff pay. If they come from cuts in staff pay, that will generate higher turnover and poorer quality staff, less training and more tenant discontent. In any way the tenants will be paying the bill.
The third argument—in a way this is perhaps the most serious argument of all—is the question of tenants' rights. The Government did not need this Bill to apply CCT to housing management. The Secretary

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of State already has that general power under the 1985, 1989 and 1992 Acts. What the Bill does do, however, and why it was necessary, is to remove from legislation Sections 105 and 27 of the Housing Act 1985 which require the Secretary of State to take tenants' views into account. That is essentially a tenants' veto which was inserted by this House against the wishes of the then government who sought to override tenants' views. In this Bill the Government are seeking to remove the right to a tenants' veto which this House introduced against the Government's wishes in 1985.
In the same consultation document the Government say:
"The principal consideration is the welfare of the tenant".
Earlier today the Minister made much of the fact that he did not want to see extended paternalism towards tenants. He said that tenants were moral adults, competent to make their own decisions, and that neither local authorities nor the Secretary of State should interfere with that. In that case, as the Tory-led ADC says, why do we assume that tenants do not know best where their welfare lies? Why is it that only a distant and remote Secretary of State can tell us? Why does empowerment under the Citizen's Charter mean everything except precisely tenants' control over who manages their homes?
We are arguing in a series of amendments, which we shall reach subsequently, that tenants themselves should decide whether they wish to trigger the CCT procedure, and that if they do, they, and not the Secretary of State, should decide whether the proposed contractor is acceptable to them. We are arguing that if the tenants are content with their landlord—the Audit Commission and the ADC remind us that there is no evidence to the contrary —why should they be forced to pay through their rents for a CCT procedure which they do not want and which may cost them dear? We are arguing, secondly, that if, say, an alien property company in which the tenants have little confidence as a body to manage their homes should win the CCT contract, they should have the right of veto over that change.
After all it is worth reminding ourselves, and apparently it is worth reminding the Minister, that it is tenants—not us, not the local authority and certainly not the Secretary of State—who pay for housing management. It comes from tenants' rents. If they wish to decide who provides the service for which they pay, that, I believe, is their inalienable right and a right which the Bill seeks to take from them. The tenants' views are unambiguous. One hundred tenants' organisations have responded. Many have written to me. Not one is in favour of these proposals. As the Hounslow Tenants' Federation stated:
"Compulsory CCT disempowers tenants".
That is precisely so. The National Federation of Housing Associations, whose members might be thought to be contractors in the market place, argues that C'CT is contrary to tenants' statutory rights. The National Housing Forum, which represents all
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organisations in this field—professional organisations, housing associations and local authorities—states:
"Tenants should be able to decide if CCT is the best option for their housing".
We spent the first three days of the Committee stage determining leasehold enfranchisement, which ensures that tenants wishing to buy their lease should have that right and that choice respected even against a reluctant landlord. We empowered leaseholders in that part of the Bill. Secondly, we have already argued today and accepted that council tenants who wish to buy through right to buy or through rents to mortgages should have that right even against reluctant landlords. In both cases we have empowered tenants. Thirdly, housing action trust tenants, whom we debated just before supper—in this respect we compliment the Government—have the right not only to determine whether to enter a HAT but also the right to determine how and to what body they go when they leave it. We are empowering HAT tenants. But those very same council tenants, who do not necessarily want to buy but want to remain as local authority tenants will, uniquely in this Bill, have their rights not added to but taken away.
We must be unambiguous about this. This Bill takes away tenants' rights introduced by this House in 1985. They will have their express views disregarded and, whether they want it or not, they will be forced at considerable cost into contract procedure and then, whether they approve or not, they will have their landlord managers changed over their heads and they will be powerless to do anything about it.
We have awarded rights to leaseholders with the support of this side of the Committee for the Government. We have awarded rights to housing action trust tenants and again we supported the Government. We have awarded rights to purchasing tenants although we have some queries on that. Those are the very selfsame rights which were awarded by this House to council tenants in 1985 and which will now be taken away by this Government in this Bill unless the Committee decides otherwise. I beg to move.
Baroness Hamwee: The fact that I shall speak only briefly to this amendment does not indicate one jot of lack of strong feeling on my part. I kept making mental notes of things which I might add to what the noble Baroness, Lady Hollis, said, only to find two minutes later that she said them. Perhaps we may go back to earlier this afternoon. I was arguing against the noble Baroness when I introduced the need to be a little careful about paternalism. The Minister leapt to agree with me. I shall be interested to hear what he has to say on that concept in this context.
Is it not shocking that, with legislation which sets out so extensively the requirement to go to CCT, a Bill has been introduced to remove tenants' rights to veto contracting out —in other words, to veto other people running their lives for them—and even withholds the right to be consulted on matters such as choice of contractor? We spent three days in Committee ensuring that leaseholders in the private sector were able to a greater extent than hitherto to have control

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over their own lives in terms of their own property. Surely that concept should be extended into the local authority sector.
I wish to put on record words from the consultation paper of December 1992 with which I agree:
"It should be for tenants and tenant organisations themselves to choose, from a wide range of options and models, the level of their involvement".
I believe that tenants' choice and tenants' rights must be protected. This Committee must not retreat from the triumph which it had in securing those rights: it must not now be prepared to discard them.
Lord Strathclyde: A few minutes ago I was accused of being operatic. My opera was nothing compared to what we have just heard from the noble Baroness, Lady Hollis. She came up with a long list of reasons why CCT would not work and how it would not work. The noble Baroness asked a number of questions and then went on to discuss the amendment about tenants' rights which is currently before us.
I refute the list which the noble Baroness produced and the idea that we have taken away tenants' rights. First, briefly and generally on CCT: there is a fundamental division between the other side of the Committee and this on CCT. The noble Baroness feels that it cannot work and she produced a long list setting out the areas where it would not work. The question she did not ask is: why not? Why could it not work? If the services are already in the hands of the local authority, why could they not work equally well under private sector management?
Why is it that the noble Baroness cannot accept that the same people working in those jobs would not be able to do so outside the control of the local authority? For example, as regards soft services—controlling neighbourhood disputes and debt counselling and so on from the great list which the noble Baroness produced—if local authorities cannot specify at the moment what it is that those services are providing, then I agree that they will have a very difficult job in specifying for a contractor what those people are to do.
However, is it not right that local authorities should know what all their workers are doing? What happened to good management, their action plans, mission statements and so on? This is the discipline which the local authority will provide. Furthermore, the contracts can deal quite flexibly with services like debt counselling which are demand-led. We appreciate that. It can specify levels of service; for instance, response times. How long will it take to deal with things and how long will someone have to ring before the telephone is picked up? This is an area where the noble Baroness is completely stuck in a rut.
Furthermore, some Labour authorities are among the nine pilot schemes working with the department to develop CCT procedures. They include Newham, East Staffordshire and Mansfield, where the local authorities are involved in working towards making the scheme work. Authorities will be able to award contracts on the basis of quality and price. It is not just about price alone.
Having refuted that, perhaps I may now turn to the amendment. It is an important amendment and it is an
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important issue. I understand the concern of the noble Baronesses, Lady Hamwee and Lady Hollis. I regard the amendment as misconceived because I believe that the noble Baroness has failed to grasp the true range of the Government's proposals, which we believe represent a major extension of tenant consultation, involvement and accountability.
When our CCT consultation proposals were originally published last summer we heard much suggestion that the tenants' right to veto housing management delegations would no longer be relevant or necessary. I accept that there was widespread anxiety on the part of tenants and housing organisations. But recently the position has changed. In the past few months we have had barely a handful of letters of opposition or doubt. The fact is that most anxieties were expressed before tenants had the opportunity to see the Bill's provisions, let alone our detailed consultation paper on Tenant Involvement and the Right to Manage, published in December. What I believe is now being recognized is that what we are proposing is in fact a radical extension of tenants' real and effective rights.
The fundamental question that must be addressed and which the proposers of this amendment have failed to answer is: why should a veto be required? The key reason why it is not necessary is that there is no proposal to change the landlord, nor to change tenants' basic rights, as there is, for instance, with HATs or LSVTs. If there were, a veto would be relevant. But here the issue is simply the services to be provided to tenants and the standards to which they are to be performed. So long as the local authority remains the landlord and remains responsible, as it will under our proposals, for management policies and standards of service, I submit that a ballot is irrelevant and unnecessary.
Perhaps I may demonstrate this by inviting the Committee to consider the practicalities. Let us consider what the question would be if there were a ballot. Would it be: Do you wish your council not to tender housing management to see if others can provide better, more cost-effective services? Surely tenants could only answer one way. Or should the ballot be later with the question: Do you want to reject the tender from the organisation shown to be the best able to provide cost-effective, quality services to your estate?
Those are the questions that a ballot would address, if there were one. They demonstrate that it would be irrelevant, misplaced and of no real value to any party, least of all the tenants.
By contrast, I suggest that our new framework provides a better way ahead. It envisages a process in which the twin themes of competition and consultation are central and in which the wishes of tenants are woven so finely from the start that a ballot would be pointless, even if a relevant question could be framed.
The Government propose that tenants should be involved in every aspect of the delegation process—from drawing up the tender specifications with the council, to involvement in the shortlisting and interviewing of tenderers, to monitoring the performance and service delivery of the managing

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organisation to which the management functions are delegated and, if need be, in advising the council on enforcement and penalty procedures in case of default. What possible purpose does a ballot serve in that context?
Moreover, for the first time the Government are proposing a quite specific role for representative tenants' organisations. The consultation paper Tenant Involvement and the Right to Manage envisaged an active role for tenants' organisations, whereas earlier consultation processes only saw a place for tenants as individuals. That is not all. The paper proposed that local authorities should be encouraged to establish and support such organisations where none exists so that there will be a vigorous and effective tenants' voice in discussions with the council and the organisations managing estates.
What this amendment is proposing is the wrong time and the wrong circumstances. Let me sum up the reasons why the notion of a veto is an unhelpful distraction. First, the current veto has little real effect because of the way current legislation operates. Secondly, there is no sufficient case for a veto anyway. There is no change of landlord or tenancy rights, for which ballots, we agree, would be appropriate. Thirdly, the real issue is standards of service and how tenants can influence them. The only effective way is by consultation and competition. A ballot would be a clumsy and ineffectual tool for an issue like standards of service. Finally, the proposals which figure in the new consultation paper envisage a far stronger and more effective process of consultation than has operated so far, including a role for tenants' organisations.
It may be that the noble Baronesses, Lady Hollis and Lady Hamwee, were not aware of the extent of the Government's proposals, our desire to consult and our real commitment to CCT. I hope that that is the case and that the noble Baroness will now withdraw her amendment.
9 p.m.
Baroness Hollis of Heigham: I suppose that it would be grudging not to thank the Minister for that lengthy reply 'which takes the issue seriously, even though several of his arguments seemed deeply flawed. I hope that I may be able to persuade some of your Lordships that that is, indeed, the case.
The Minister started his reply by saying, "CCT, why not?" He then went on to say—and I wrote down his phrase—that, after all, many of the "same people" will do the same job. That is actually part of our complaint. If that is the case and if the same people are doing the job, where do the Government think that the much-vaunted savings will come from except by worsening the conditions of employment, pay and training?
Lord Strathclyde: Surely the noble Baroness recognises that the in-house team may well win the contract.
Baroness Hollis of Heigham: Indeed, but in that case why put tenants through the cost of the contracting-out procedure which they will have to pay for through their rents?
Lord Strathclyde: But it is a test to see whether the in-house team is the best. One has to go through that process to check whether it really is the best. That is the way that people do such things every day of the week in normal private sector companies and there is no reason why local authorities should not do the same.
Baroness Hollis of Heigham: Would the Minister like to tell me how one can best test whether a local authority's in-house team or an outside team is the best when it comes to debt counselling?
Lord Strathclyde: I do not think that it is helpful to have this kind of argument across the Dispatch Box. I have indicated, with the example of debt counselling, that there will clearly be some flexibility in the contract given. However, a local authority—whatever the local authority—must be able to judge for its own performance indicators whether its debt counselling service is providing the service that the tenants actually want.
Baroness Hollis of Heigham: If a local authority is required to judge whether a service is being provided in the way that tenants want, why then is the Minister saying that the tenants should not control it through the exercise of their ballot?
Lord Strathclyde: This is the last time that I shall intervene in the noble Baroness's winding-up speech. The whole point of this, which the noble Baroness does not make, is that it is a test to make sure that the local authority is being as effective as possible. If the internal team can win that test, so much the better; and if it cannot, so much the better as well. The only people who can win from this are those who pay for the service—the tenants themselves.
Baroness Hollis of Heigham: I do not think that there is any meeting of minds on this. I honestly cannot believe that the Government understand, have ever experienced or have ever run a housing authority or a housing committee or delivered a housing service. If they had done so, I am sure that the Minister would appreciate the nonsense (if I may say so) of talking about "housing services" in the same breath as "commercial businesses" and "commercial companies" when we are dealing with some of the most vulnerable and poorest people.
We have spent half the evening arguing that housing management is not simply collecting in rents and handing out keys, but that it is about providing a service through people, to people, throughout their lives. If it is the case that savings are to be found by the existing in-house staff doing the work, for the most part the staff will win the contract only if their conditions of service and employment are worsened, because otherwise they would be vulnerable to outside competition—but we have already exchanged views about that.

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The Minister's second point related to specifying the contract. He said that if a local authority could not specify the contract, what did it think it was doing with its service. Perhaps the noble Lord could help me. When it comes to cases of racial harassment, should the local authority specify in the contract that the service provider may deal with 500 but not 505 cases? I should welcome the Minister's reply on this because I am still baffled as to how one can specify in a contract, to which one attaches a price, services that are demand-led, such as dealing with neighbour disputes, harassment cases, debt counselling, sheltered housing and support functions for the frail and confused. Perhaps the Minister could tell me how one can price such things. Could the Minister give me some guidance?
Lord Strathclyde: I do not wish to try the patience of the Committee any further. We could go on like this all night with the noble Baroness giving examples of where it may be difficult for local authorities to specify the standards of service that they want. It is not impossible to write a specification for the kind of services that are required. It has been done before and when the Bill is enacted local authorities will be obliged to do it. Surely it is better to go forward with that kind of spirit than to do what the Labour Party has done on every single reform of local authorities that has been pasted during the past 13 years, which is to say, "It is not possible. It will not work", and to have to eat its words within a few years.
Baroness Hollis of Heigham: Again, there is no meeting of minds, but the Government appear to believe that the handling of housing services is the same as emptying dustbins in terms of what one can count. I cannot conceive how one will measure input versus output, and therefore value for money. If the Minister, with all due respect, was familiar with housing services he might share that view.
The third point that the Minister made related to the extent to which tenants' concerns and complaints have dried up. He sees that as evidence that those concerns and complaints have been met by government. I am sorry to disillusion him, but I have received a sheaf of tenants' complaints and concerns during the past fortnight. Far from them having dried up, they have not been allayed by anything the Government have said, as far as I can see, either in Committee in the other place or here. As the Sheffield Stannington Tenants' Association says:
"Unless tenants can actually vote against the proposal, any consultation is meaningless".
Fourthly, the Minister asked why there should be a veto in this service as opposed to any other area of local authority life. We are talking here not just about a business but about housing management. Should those managements change as with the right to buy, that can affect people's lives fundamentally. How their homes are managed, how their complaints are handled, how the repairs are done, how problems are solved, how transfers are arranged, how liaison is carried on with the police, the social services, utilities and voluntary agencies and services for the disabled, they all affect people's lives intimately. This is not
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some business transaction. The Minister seriously asks why tenants should have a veto over something for which they pay, which affects their lives intimately and over which they claim they want a veto. They currently enjoy a veto which the Minister is removing.
The obligation does not lie with us to show that tenants need a veto; it is upon the Minister to show why a veto that has been enjoyed by tenants, which was inserted into legislation by this place in 1985 and which has worked successfully should now be withdrawn by government against the wishes of tenants and the views of local government. I remind the Minister of the letter from Greenwich which he quoted. He did not quote one part which the Committee might like to hear. It states:
"We are led to believe that this Government believes in giving more choice to tenants over the running of their homes, not in taking it away. CCT does not allow us to chose. It rules that the cheapest is always the best. We do not necessarily agree. The important point is that we should be able to decide by whom and at what cost our homes are managed".
If the Minister cannot appreciate the argument about the democratic deficit, then I regret there is no meeting of minds, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 176FYC:
Page 117, line 20, at end insert:
("() The provisions of the Transfer of Undertakings (Employment Protection) Regulations 1981 shall apply to any management agreement entered into under this section.").
The noble Baroness said: The amendment relates to the Transfer of Undertakings (Employment Protection) Regulations 1981. We are seeking to require that those regulations should apply to management agreements and therefore most housing management CCT contracts. The background lies with the European directive of 1977, which was implemented in this country in 1987 and which is required to be embodied in our legal system.
During the 1992 local government debates, the then Minister, the noble Baroness, Lady Blatch, accepted that European law superseded British law on the issue of the transfer of undertakings. Under European law, the transfer of an undertaking means that where a business or undertaking is transferred as a going concern, usually with many, if not most, of its staff, the existing conditions of employment, pension rights and conditions of pay and work should be protected. In other words, the employees should be regarded as having continuity of employment. It means that new contractors cannot buy the work and jobs of existing staff merely by cutting down wages and worsening their conditions of work. Prior to that it was held at common law that a transfer of undertakings terminated all existing contracts of employment.
The debate was, first, whether blue-collar and white-collar local authority contracts were undertakings within the law; and, secondly, whether they were being transferred. The test, according to European law, is whether staff, customers and assets, including good will, are being transferred. So far as concerns local government, European law seems to indicate that not only white-collar contracts but blue-collar

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contracts come within the European directive. We argued that in 1992 against the then Minister. She hotly denied it, but since last November the Foreign Office has suspended contracting out because of the workings of TUPE. Since the autumn the Welsh Office has suspended NHS contracting out because of the workings of TUPE regulations. The Home Office has actually stated that it expects its contract to reflect the TUPE directives. The Department for National Savings has stated that TUPE applies to catering contracts. The Inland Revenue has stated that TUPE applies to contracting out. The Attorney-General has increasingly edged forward towards accepting that TUPE applies to local government contracts. If necessary, I can quote the statement that he made on 21st January 1993.
At the same time as most government departments and the Government's chief legal officer are accepting that TUPE applies to local authority contracts, the Secretary of State for the Environment insists that if such TUPE clauses are inserted into any contracts which are up for competitive bidding they will be deemed by him to be anti-competitive, illegal and the local authority may be required to re-tender and be subject to judicial review.
So, local authorities are guided by the European Community to say that we must obey European law; the Attorney-General is warning local authorities that they may have to obey European law; but the Secretary of State for the Environment is saying that if they do he will have them up for anti-competitive behaviour. The amendment, therefore, seeks to clarify a situation in which the whole army except for the Secretary of State is marching in step. It will ensure that TUPE applies. After all, as the Minister said only 10 minutes ago, they are services in which the contractor may expect to take over in-house staff. That is one of the EC's criteria for the application of TUPE regulations. Where would he obtain the staff except in-house? But if TUPE does apply, the easy profits that come from cutting wages will make competitive tendering totally unattractive, as one of the leading contractors stated.
Obviously we are awaiting legal judgments such as the Eastbourne judgment; but if Ministers wish to change European directives they must do so in Europe. Indeed, they are seeking to change the directive but they would not try to do so if they did not believe that it applied to local government. If it does apply to local government not only should that be reflected in the contracts which we shall now be forced to offer to white collar workers but, under the judgment of the Francovich case, thousands of blue collar staff will be able to extract compensation from central government for having misdirected themselves over blue collar CCT, despite the best arguments from this side of the Committee. I beg to move.
9.15 p.m.
Lord Strathclyde: TUPE basically provides that, wherever an "undertaking" is transferred from one owner or operator to another employees' terms and conditions are protected and the new employer is
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liable for any redundancies. The Government made it clear on 11th March that whether TUPE applied in cases of CCT would depend entirely on the particular contract or management agreement. As my right honourable friend the Attorney-General said:
"The contracting out of a service is not a transfer of undertaking unless it involves enough of the elements of the original operation such as premises, staff, goodwill or customer base to constitute the transfer of a going concern … The case law makes it clear that it is the overall sum of what is transferred which determines whether there has been a transfer of an undertaking".
But the amendment would go beyond that and seek to apply the regulations in all circumstances regardless of whether there is a transfer of an undertaking within the meaning of the regulations, which would be against both the wording and the spirit of the directive. I am sure that Members of the Committee will consider it an undesirable practice to start making any regulations apply in cases where those regulations themselves state that they do not.
As regards the second amendment I am afraid that I do not see the need for it. There certainly can be no need for it in terms of practicality. We have said that we would not expect the first contracts to be let until the beginning of 1996–97, allowing time for the local authorities to prepare for CCT; for example, by separating the client and contractor roles within the authority, consulting staff and tenants, drawing up contract specifications and inviting and judging tenders.
Clearly authorities will want to start planning for CCT as soon as possible and we recognise that they will want to know the final form of secondary legislation both under this legislation and the Local Government Act 1988, which will list housing management as a defined activity. But the timescale that I have set gives plenty of time for preparation thereafter. Indeed, my department has been discussing the details of housing CCT at length with the local authority associations and no request has been made to delay the first year of contracting to 1997.
On that basis I hope that the noble Baroness will withdraw the amendment.
Baroness Hollis of Heigham: I am still not entirely clear on whether the Minister believes that TUPE will apply to local authority contracts and, therefore, whether the insertion of those clauses will be regarded as anti-competitive behaviour.
Lord Strathclyde: TUPE applies where the law states it should apply. It is not for me to interpret the law.
Baroness Hollis of Heigham: Which law?
Lord Strathclyde: TUPE is in law under the Transfer of Undertakings (Employment Protection) Regulations 1981, which incorporated into UK law the acquired rights directive. That is the law which we are discussing today. That is what TUPE is all about, is it not?
Baroness Hollis of Heigham: I understand that, but the European Commission seems to indicate that it applies to local authority contracts. Certainly, all other government departments appear to believe that

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it does, except for the Secretary of State for the Environment. Therefore, I ask what law the Secretary of State refers to when he tells local authorities that to invoke TUPE is to act uncompetitively.
Lord Strathclyde: We are certainly not encouraging anyone—least of all local authorities—to break the law. As I described earlier, we have the advice of the Attorney-General. What he says is quite clear. Local authorities may need to obtain legal advice on their particular case. The contracting out of a service is not a transfer of undertaking unless it involves enough of the elements of the original operation to constitute the transfer of a going concern. That is the judgement that they have to make. I hope that we shall not get into a long discussion on the matter because I cannot help the noble Baroness very much further.
Baroness Hollis of Heigham: That is becoming clear. Let us take, for example, a case involving housing management, as we described it, in which, as the Minister said, the majority of staff—indeed, the bulk or all of the staff—transfer. Does it mean that that housing management tender, taken over by a private contractor as a going concern with staff, assets and goodwill, would therefore fall within the TUPE regulations?
Lord Strathclyde: It is the overall sum of what is transferred which determines whether there has been a transfer of an undertaking. I shall not reply to the noble Baroness any more. It is not a matter for us to decide across the Dispatch Boxes; it is a matter of law.
Baroness Hollis of Heigham: I find it exceedingly baffling. There appears to be one law for all other government departments and another for the Department of the Environment when it applies to CCT. However, I do not doubt that it will have to be tested in court on many occasions. However, I warn the Minister that if he does not now allow local authorities to insert such clauses in their contracts, then individual staff members who may lose either their employment or some of their protective packages as a result—for example, as regards salary levels, pension rights, maternity pay, holiday pay, sickness benefit, and so on—will have a case in law for compensation against the Minister on the basis of the Francovich case. I hope that the Minister has noted what I say. If the Government do not move in that direction, they will find themselves with some very large bills. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hollis of Heigham Baroness Hollis of Heigham had given notice of her intention of move Amendment No. 176FYD:
Page 117, line 20, at end insert:
("() The Secretary of State shall not before 1 April 1997, require that any management agreement under this section shall be entered into as a consequence of regulations under Part I of the Local Government Act 1988.").
The noble Baroness said: I should like to speak briefly to the amendment. I apologise to the Committee as I should have spoken to it in relation to an earlier point. The intention was really just to flag the point that we have pilot schemes running with about six authorities but, as was mentioned
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previously, the Government are nonetheless going ahead with legislation before they have received the results of those studies.
More generally, I do not know what is the more irritating for those of us on this side of the Committee: for the Government to proceed without information, as in some cases like low-rent questions; to proceed in advance of information, as with having pilot studies but not yet having the results; or to proceed, flying in the face of information, as is the case with some of the repair schemes. We have examples of all three in the Bill. But no major initiative in the legislation has been preceded by pilot studies which are favourable or by a consultation paper which is welcomed and which has been reflected faithfully in the Bill. So much for partnership.
If the Minister is determined to proceed in advance of the results of pilot studies, and despite boroughs like Newham, which he cited earlier, being most concerned about the practicalities of the scheme, so be it. I believe that we shall find ourselves picking up the pieces on another round of legislation.
[Amendment No. 176FYD not moved.]
Clause 116, as amended, agreed to.
Clause 117 [Consultation with respect to management agreements]:
Lord Strathclyde Lord Strathclyde moved Amendment No 176FYE:
Page 117, leave out lines 27 to 30 and insert:
("(a) to be informed of the following details of the proposal, namely—

(i) the terms of the agreement (including in particular the standards of service to be required under the agreement),

(ii) the identity of the person who is to be manager under the agreement, and

(iii) such other details (if any) as may be prescribed by regulations made by the Secretary of State, and").

The noble Lord said: My Lords, in moving this amendment I wish to speak also to the other amendments grouped with it. The amendments deal with a range of issues, some of them questions which Ministers took away from Committee in another place to consider further and some which are needed to give effect to the proposals contained in the consultation paper Tenant Involvement and the Right to Manage, issued in December.
I am sure that Amendment No. I76FYE will have general support as it extends the range of questions on which tenants should be consulted. The issue it specifically mentions is the identity of the intended manager. Tenants should be informed of this and given an opportunity to comment. Where tendering is involved, authorities will know this at a different time in the process than when they will be considering the standards of service needed under the agreement; so authorities will have to talk to their tenants twice. I should emphasise that the provision does not give tenants a right to choose the manager, but it does give them a right to be informed and to comment.
The remaining part of the amendment is a sensible development. The Bill as it stands would allow regulations to deal only with consultation on the specification for a management agreement and the arrangements for monitoring the contract. If tenants

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are to get the most from the process, it is sensible to allow regulations which could specify further issues for consultation. One possibility, for example, would be to involve tenants in the assessment of tenderers, a suggestion put forward in Tenant Involvement and the Right to Manage. The following two amendments are consequential.
Amendments Nos. 176FYL and FYN deal with the application of Section 105 of the Housing Act 1985, which is concerned with tenant consultation on general matters of housing management. The second amendment is identical to one tabled by Members of the Committee opposite, which I am naturally happy to accept. In cases of housing management delegation it would clearly be confusing and unnecessary for a local authority to have to follow both the consultation procedures in Section 105 of the 1985 Act and the more specific consultation set out in Clause 117. In the Bill as it stands, this is only avoided in relation to changes required as a result of CCT. The amendments would make the situation consistent for all delegations of housing management. That follows the precedent and wording of the existing legislation in Section 27A of the Housing Act.
The final amendment, inserting a new clause dealing with consultation on management agreements under CCT, is the result of one of the points which Ministers took away from Committee in another place; namely, to ensure that the legislation would encompass housing management CCT, as was always intended.
Clause 117 as it stands would apply to delegation under CCT, but there are enough differences between the procedures an authority would follow when delegating voluntarily and those it would follow under CCT to merit specific mention of the CCT case. That is what the new clause does.
Finally, I should like to mention briefly Clause 118. Following discussion in Committee in another place, we have drafted a replacement clause which is contained in Amendment No. 176FYQ, which we will be considering later. Therefore, Clause 118 is overtaken and I invite the Committee to delete it.
All of these amendments are intended to clarify how the provisions on management agreements and consultation will work in practice. I hope that the Committee will support them. I beg to move.
Lord Williams of Elvel: I am grateful to the Minister for speaking to the amendments. It is a little unclear exactly how they apply. It is not immediately clear to which management agreement the Government envisage the arrangements introduced by Clause 117 would apply. In the consultation paper, and in debate in another place, the Government accepted that very few, if any, management agreements had been entered into under the existing legislation except in the case of tenant management co-operatives or estate management boards.
Everyone had assumed that Clause 117 was introducing new arrangements to allow for CCT. That appears now not to be the case. What situation do the Government envisage that the new Section 27A will apply to? Is it to apply to cases where local authorities
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voluntarily enter into management agreements with managing agents, in some cases ahead of, or in order to avoid, CCT arrangements? When an authority enters into a contract with a private contractor, there is no requirement to invite competitive tenders. However, if that is the case, there is a problem. Government Amendment No. 176FYE reinstates the requirement for a local authority to consult on the identity of the person who is to be the manager under the management agreement.
That requirement is present in the existing legislation but was removed by Clause 117 as it appears in the Bill. It is confusing that the Government now appear to envisage Clause 117, as amended by Amendment No. 176FYE, to apply only to a situation where a local authority is negotiating with a single managing agent. An authority which chooses to invite competitive tenders on a voluntary basis, however, might find itself in precisely the same difficulty as the Government envisage would exist if the present legislation applied to the CCT case. Therefore there is a problem and I should be grateful if the noble Lord would explain the problem he is addressing.
We accept Amendment No. 176FYN because, as the noble Lord said, we put down an identical amendment ourselves. We are happy that the other amendments are consequential, but there is the central problem as to what exactly the principal amendments apply to. If the Minister can explain that to me and I am clear on the matter perhaps we can deal with it quickly.
9.30 p.m.
Lord Strathclyde: I certainly hope that I can offer reassurance to the noble Lord and the Committee on this point. If I cannot perhaps I may follow the matter up by writing to the noble Lord and explaining in detail what we intend.
Clause 117 will apply to all delegations, whether voluntary or by CCT, except for tenant management organisations, which are dealt with by Clause 118.
Lord Williams of Elvel: I understand that everybody assumed that that was the case and that Clause 117 introduced new arrangements to allow for CCT. In other words, all CCT arrangements would be included in the remit of Clause 117. I hope that I have understood the Minister so far. However, that appears not to be the case under the amendment as drafted, or so I am advised. There seems to be a difference of interpretation of the amendments. I shall accept the noble Lord's offer to write to me and explain what the Government mean in this case.
On Question, amendment agreed to.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 176FYF:
Page 117, line 30, at end insert:("of the identity of the person who is to be the manager under the agreement, or the identities of the persons from among whom the manager is to be chosen, and").
The noble Lord said: In moving Amendment No. 176FYF, it may be for the convenience of the Committee if I speak also to Amendments Nos. 176 FYJ, 176FYK and 176FYM.
The Government appear to have a problem in giving the authority the alternative of consulting on the identity of the managing agent where it is negotiating with .1 single managing agent or on the short list of contractors where it is choosing from among competing tenders, whether on a voluntary basis or as a consequence of CCT. Amendment No. 176FYF seeks to get round that problem.
The amendment reinstates the requirement in present legislation for an authority to consult individual tenants and not merely representative organisations of tenants before entering into a management agreement. We have been over some of the ground but it is worth restating it.
Again, the requirement is to consult on the identity of the managing agent or the short list as well as on the standard of service to be provided. The amendment also reinstates the specific requirement to allow at least 28 days for tenants' views to be considered.
The amendment is put down on the basis that, unless there is good reason for removing statutory guarantees enjoyed by tenants, they ought to remain. Nothing that the Government have said in previous discussions of the Bill has justified the removal of the specific requirement to consult individual tenants. It is an important safeguard.
Amendment No. 176FYK is intended to strengthen local authority duty to have regard to the views expressed by tenants in consultation. If the Government are not prepared to accept the existence of a tenants' veto, they presumably are prepared, if I read the Minister aright, to consider strengthening the duty of local authorities to have regard to the views expressed by tenants. At present the requirement is only that local authorities consider tenants' views. That would seem to be little more than window dressing. The local authority has to receive the views, to spend some time considering them and then to reach a decision. The amendment places a specific duty on authorities to have particular regard to views expressed by tenants.
The wording "have regard in particular to" has been chosen because a note on the Local Government and Housing Act 1989 when the same wording was used—it was used earlier in Part I of this Bill—states that "particular regard" is a stronger formulation than the usual "have regard to".
The amendments seek to address some of the problems that we envisage arising from management agreements. We hope that the Government will give them a fair wind. I beg to move.
Lord Strathclyde: I should like to begin with Amendment No. 176FYM since it causes no difficulty. Indeed, the government amendment that we have just debated addressed the issue. I therefore hope that noble Lords opposite will withdraw it.
However, I wish that I could say the same of the remaining amendments in this group. They would, in effect, undermine the very basis of what the Government seek to achieve by extending compulsory
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competitive tendering to the management of council housing. Collectively, their effect would be to put in place a mechanism to allow tenants to reject a tenderer. That would have one simple effect. It would deter others from bidding for housing management contracts. Where competition did take place they will place such restrictions upon authorities that they will have little choice but to block a management agreement where tenants press for it.
Under an earlier amendment the Committee considered very carefully a proposal to give tenants a veto. The effect of the amendments will be to restore the effect, but by other means.
But these amendments have other effects which are more subtle and which we are unable to accept. They go to the very heart of CCT in that they have the effect of removing the level playing field which we have sought under CCT. On the face of it, the amendments seek to tip the balance of advantage in favour of the tenants; but in effect they tip the balance away from tenants in favour of local authorities —and in particular those bad and inefficient authorities which have much to fear from the drive for efficiency that CCT will bring. They will give those authorities an unfair advantage. That cannot be a good thing for tenants.
As I have made very clear, the Government fully support full and meaningful tenant consultation, tenants' right to know and the right to have their views taken into account, and we have placed the necessary provisions in the Bill. The amendments seek to go much further than that. I am sure that they have sought to do so in a way that is positive and beneficial to tenants. But I believe that the effect of the amendments in practice is to undermine the very principles on which fair play and open competition can take place. I am sure that that was not the intention of the noble Lord, Lord Williams. Perhaps he will withdraw the amendment.
Lord Williams of Elvel: It is clear that there is a major difference of opinion between the two sides of the Committee on this issue. It is a matter to which we shall have to return at a later stage. At this time of the night, there is no point in continuing to debate it. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Strathclyde Lord Strathclyde moved Amendment No. 176FYG:
Page 117, line 32, leave out ("those terms") and insert ("the proposal").
On Question, amendment agreed to.
Viscount Goschen Viscount Goschen moved Amendment No. 176FYH:
Page 117, line 34, leave out ("those terms") and insert ("the proposal").
On Question, amendment agreed to.
[Amendments Nos. I76FYJ and 176FYK not moved.]
Viscount Goschen Viscount Goschen moved Amendment No. 176FYL:
Page 118, line 22, leave out ("nothing in this section prejudices the application") and insert ("the provisions of this section apply in place").
On Question, amendment agreed to.
[Amendment No. 176FYM not moved.]
Viscount Goschen Viscount Goschen moved Amendment No. 176FYN:
Page 118, line 26, leave out subsection (2).
On Question, amendment agreed to.
Clause 117, as amended, agreed to.
Viscount Goschen Viscount Goschen moved Amendment No. 176FYP:
After Clause 117, insert the following new clause:
Management agreements and compulsory competitive tendering.
(". After section 27A of the 1985 Act there shall be inserted the following section—
"Management agreements and compulsory competitive tendering.
27AA.—(1) This section shall apply if the Secretary of State makes an order under section 2(3) of the Local Government Act 1988 ('the 1988 Act') providing for the exercise of any management functions to be a defined activity for the purposes of Part I of that Act (compulsory competitive tendering).
(2) The Secretary of State may by regulations provide that in any case where—

(a) a local housing authority propose to make an invitation to carry out any functional work in accordance with the rules set out in subsection (4) of section 7 of the 1988 Act (functional work: conditions), and

(b) the proposal is such that any decision by the authority that the work should be carried out by the person or one of the persons proposed to be invited would necessarily involve their entering into a management agreement with that person,

the provisions of section 27A shall have effect with such modifications as appear to the Secretary of State to be necessary or expedient.
(3) Nothing in section 6 of the 1988 Act (functional work: restrictions) shall apply in relation to any functional work which, in pursuance of a management agreement, is carried out by the manager as agent of the local housing authority.
(4) In this section 'functional work' has the same meaning as in Part I of the 1988 Act.
(5) Regulations under this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament." ").
On Question, amendment agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 176FYQ:
After Clause 117, insert the following new clause:
Management agreements with tenant management organizations
(".—(1) After section 27AA of the 1985 Act there shall be inserted the following section—
"Management agreements with tenant management organisations.
27AB.—(1) The Secretary of State may make regulations for imposing requirements on a local housing authority in any case where a tenant management organisation serves written notice on the authority proposing that the authority should enter into a management agreement with that organisation.
(2) The regulations may make provision requiring the authority—

(a) to provide or finance the provision of such office accommodation and facilities, and such training, as the organisation reasonably requires for the purpose of pursuing the proposal;

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(b) to arrange for such feasibility studies with respect to the proposal as may be determined by or under the regulations to be conducted by such persons as may be so determined;

(c) to arrange for such ballots or polls with respect to the proposal as may be determined by or under the regulations to be conducted of such persons as may be so determined; and

(d) in such circumstances as may be prescribed by the regulations (which shall include the organisation becoming registered if it has not already done so), to enter into a management agreement with the organisation.

(3) The regulations may make provision with respect to any management agreement which is to be entered into in pursuance of the regulations—

(a) for determining the houses and land to which the agreement should relate, and the amounts which should be paid under the agreement to the organisation;

(b) requiring the agreement to be in such form as may be approved by the Secretary of State and to contain such provisions as may be prescribed by the regulations;

(c) requiring the agreement to take effect immediately after the expiry or other determination of any previous agreement; and

(d) where any previous agreement contains provisions for its determination by the authority, requiring the authority to determine it as soon as may be after the agreement is entered into.

(4) The regulations may also make such procedural, incidental, supplementary and transitional provisions as may appear to the Secretary of State necessary or expedient, and may in particular make provision—

(a) for particular questions arising under the regulations to be determined by the authority;

(b) for other questions so arising to be determined by an arbitrator agreed to by the parties or, in default of agreement, appointed by the Secretary of State; and

(c) requiring any person exercising functions under the regulations to act in accordance with any guidance given by the Secretary of State.

(5) Nothing in subsections (2) to (4) above shall be taken as prejudicing the generality of subsection (1).
(6) Regulations under this section—

(a) may make different provision with respect to different cases or descriptions of case, including different provision for different areas, and

(b) shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(7) Except as otherwise provided by regulations under this section—

(a) a local housing authority shall not enter into a management agreement with a tenant management organisation otherwise than in pursuance of the regulations; and

(b) the provisions of the regulations shall apply in relation to the entering into of such an agreement with such an organisation in place of—

(i) the provisions of section 27A (consultation with respect to management agreements), and

(ii) in the case of secure tenants, the provisions of section 105 (consultation on matters of housing management).

(8) In this section—

'arbitrator' means a member of a panel approved for the purposes of the regulations by the Secretary of State;

'previous agreement', in relation to an agreement entered into in pursuance of the regulations,

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means a management agreement previously entered into in relation to the same houses and land;

'registered' means registered under the Industrial and Provident Societies Act 1965 or the Companies Act 1985;

'tenant management organisation' means a body which satisfies such conditions as may be determined by or under the regulations."

(2) Section 27C of the 1985 Act (which is superseded by this section) shall cease to have effect.").
The noble Lord said: As I said earlier, this amendment is a substantial and thoroughgoing revision of Clause 118 which gives the Secretary of State power to make regulations to establish a new right to manage for council tenants. This new clause has exactly the same purpose but strengthens the requirements and procedures which will be needed to make this important new right work.
The Committee will recall that the Government's consultation paper Tenant Involvement in the Right to Manage was issued in December. By the consultation period's close at the end of February, officials had received 101 responses to the document. Most welcomed the broad thrust of our proposals, though perhaps understandably some respondents were cautious about the detail of their implementation.
This new clause is a radical step forward in tenant empowerment. As such, it is unlikely to be trouble-free, and in cases where disputes arise, I am sure that the Committee will agree that it would not be helpful for tenants or local authorities to find themselves locked into expensive and protracted arbitration. For that reason, to safeguard the interests of all concerned, subsection (4) (b) and (c) and subsection (8) of the new clause give the Secretary of State power to specify a panel of arbitrators from whom the parties may choose and the form of arbitration to be followed.
There has been some confusion about the procedures which tenants' organisations may wish to use to achieve their goal of self-management. This new clause sets out on the face of the Bill the broad elements of a robust new right to manage and these will he given fuller substance in the regulations which follow.
However, at the moment tenants' organisations follow the voluntary route of delegation under Section 27A of the 1985 Act. We have taken very careful stock of the argument for retaining that looser voluntary route for would-be tenant managers, but find more compelling the argument for giving all tenants the protection and benefits offered under the detailed provisions of this new clause. For that reason, subsection (7) (a) provides that all agreements made with tenant management organisations must follow the right to manage procedures.
I am sure that Members of the Committee opposite will welcome this sensible and equitable measure. In sum, I hope that the Committee will recognise that the new clause represents a strengthening of our earlier proposals. I beg to move.
On Question, amendment agreed to.
Clause 118 [Management agreements with tenant management organizations]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment. No. 176FYR:
Page 119, line 49, at end insert:
("() This section shall not apply to any management agreement between a local housing authority and a tenant management organisation entered into with the approval of the Secretary of State before the coming into force of this section.").
The noble Baroness said: With the permission of the Committee, I should like to move Amendment No. 176FYR and speak to Amendment No. 176FYS standing in the names of myself and my noble friend Lord Williams.
The subject of tenant management organisations was introduced quite fully by the Minister in the previous amendment. The Minister in another place, Sir George Young, in what we popularly call his "three pillars" speech, referred to TMOs in the following terms:
"The Government have over the years strongly supported and provided resources for the development of tenant management bodies. We believe we need now to go further and provide a clear legal framework for delegation to tenants' organisations".
We on this side entirely support that. Given that, why does the Minister say that TMOs, a self-managing body, should have prescribed for them by the Secretary of State that, whether they wish to or not, they have to apply CCT procedures to the services they currently take from local authorities? We are entirely happy that TMOs should have a free choice as to where they seek their services. But to require those bodies to undertake the expense and problems incurred in forcing them to go through the elaborate CCT procedures when they with the clear, delegated legal powers just given to them by the Minister in the last amendment do not wish to do so, seems to undermine the very stance of self-government that the Bill sets out to enshrine.
Not only, apparently, under CCT do individual tenants "not know best"—here we hear the authentic note of paternalist central government, which alone knows best—but it appears to be the case that a properly constituted, democratically organised and legally constructed management organisation is also to be denied the right to exercise its proper managerial judgment as to where and from whom it purchases its services. I beg to move.
Lord Strathclyde: Let me deal first with Amendment No. 176FYR, which seeks to exempt from the procedures and requirements of the clause those tenant management organisations whose management agreements receive the Secretary of State's approval before the provisions of the clause come into force. That is a sensible proposal. I am able to reassure the noble Baroness that the Bill will not have retrospective force. Existing approved management agreements will be unaffected. Therefore, I hope that she will see that her amendment is unnecessary.
However, Amendment No. 176FYS seeks to prevent local authorities' provision of services to tenant management organisations becoming subject to the requirements of Part I of the Local Government Act 1988. I am aware that 14 such arrangements exist at the moment, generally involving local authority

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staff working on a seconded basis for a tenant management organisation while retaining their tenure as council employees. I can understand that those tenant management organisations which are generally happy with such arrangements are keen to preserve them. The amendment would drive something of a coach and horses through the government proposal to bring to all council tenants the benefits which compulsory competitive tendering for housing management is able to offer.
If a TMO is particularly keen to retain the individual members of staff who provide services on the estate, it can exercise its option to employ them directly, providing of course that the staff agree. There is the further option that a council team might wish to form itself into a private housing management company and provide services to the tenant management organisation on a straightforward contractual basis. The option can also offer council teams a freedom to operate in the market which they would not otherwise enjoy. I suspect that I shall disappoint the noble Baroness in not being able to accept her second amendment, but I hope that she will understand why.
Baroness Hollis of Heigham: I thank the Minister for that reply. I am obviously happy that he effectively accepts the first amendment, Amendment No. 176FYR. As for the second amendment, I ask the Minister why he thinks tenants cannot make their own judgment as to whether they wish to go through CCT procedures?
Lord Strathclyde: Without CCT procedures, how can they possibly have the information to know whether or not they want to go for it?
Baroness Hollis of Heigham: Having gone through CCT procedures, why should the Minister not think that the tenants will then know whether they wish to accept the winning bid?
The Minister does not reply to that question, which asks why tenants do not know what is in their own best interest. With the leave of the House, I withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 176FYS not moved.]
On Question, Whether Clause 118 shall stand part of the Bill?
Viscount Goschen: The Committee has just discussed the amendment of my noble friend Lord Strathclyde, which substitutes a new clause in place of the existing Clause 118. In the light of that discussion I hope that the Committee will understand why we oppose the Question that Clause 118 stand part of the Bill.
Clause 118 negatived.
Clause 121 agreed to.
Clause 122 [Levy on disposals]:
Lord. Strathclyde Lord. Strathclyde moved Amendments Nos. I76FYT to 176FYV:
Page 125, line 21, leave out from ("any") to ("and") in line 24 and insert ("sums received by the authority in respect of the disposal which are, by virtue of section 58 of the 1989 Act
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(capital receipts), capital receipts for the purposes of Part IV of that Act and do not fall within a description determined by the Secretary of State").
Page 125, line 27, leave out ("the notional capital receipt") and insert ("any notional capital receipts").
Page 125, line 35, leave out ("formula determined") and insert ("determination made").
The noble Lord said: These three amendments are technical. The first is necessary to allow some flexibility in respect of right-to-buy receipts. The second amendment similarly makes it clear that the series of notional capital receipts can be taken into account. The third and final amendment is purely a technical drafting amendment. I beg to move the amendments en bloc.
On Question, amendments agreed to.
Clause 122, as amended, agreed to.
Clauses 123 to 125 agreed to.
Lord Strathclyde Lord Strathclyde moved Amendment No. 176GY:
After Clause 125, insert the following new clause:
("Calculation of Housing Revenue Account subsidy
. In subsection (1) of section 80 of the Local Government and Housing Act 1989 (determination of formulae for calculating Housing Revenue Account subsidy), the words "and for any year the first such determination shall be made before the 25th December immediately preceding that year" shall cease to have effect.").
The noble Lord said: The Government's new clause would remove the requirement in Section 80(1) of the Local Government and Housing Act 1989, whereby the first housing revenue account subsidy determination for a year must be issued before 25th December. These determinations set out how housing authorities' entitlement to housing revenue account subsidy is to be calculated for the following financial year. The new clause proposed by noble Lords opposite would replace the statutory deadline of 25th December with a new statutory deadline of 11th January.
The background to these amendments is the Chancellor of the Exchequer's announcement in last year's Budget speech that the Government have decided to change the annual Budget timetable, so that tax and spending proposals can in future be presented to parliament at the same time in the form of a unified Budget. As announced by the Chancellor in another place on 18th February, the Government are planning on the basis that the date of the unified Budget in 1993 will be no later than the last week of November.
We are required by the legislation to consult representatives of local government on the proposed subsidy determinations, which include levels of management and maintenance allowances and guideline rents, before they are issued in their final form. My department's practice is to consult each housing authority on the draft determinations; indeed, it is right that we should consult them. But we will generally have to await the Chancellor's unified Budget announcement of the Government's spending plans before doing so. In such circumstances there will be insufficient time to allow authorities a reasonable period in which to comment on the draft determinations, and for my right honourable friends to consider those comments and then issue the determinations in their final form before the 25th December deadline.
I understand the intention behind the amendment. It gives greater certainty to local authorities in knowing when they will receive final information on the HRA subsidy determination which they require in order that they may set their rents for the following year. But the effect of the amendment will not assist with the desired objective and it might cause difficulties. The department shares the wish of local authorities to minimise the delays caused by the new unified Budget arrangements. Every effort will be made to issue the subsidy determination as soon as possible after Christmas, and the department has stated its intention to do so by 10th January. This has been made possible by the helpful suggestion of local government representatives, which the Government have accepted, to shorten the consultation period on the draft determination so that it can end before Christmas.
The 10th January will therefore become a real target for the department and only something unexpected and untoward will prevent achieving it. No real purpose is served by a statutory deadline for the first determination and the consequences of missing such a deadline are unclear. For all those reasons we feel that the work on producing the final subsidy determinations will better be unfettered by concern about a statutory deadline.
Furthermore, I should also point out that this will be the first year of the new unified Budget arrangements and there will be considerable interest and discussion about how well they work in delivering the benefits that a unified Budget will bring. Setting a new statutory deadline could impose an unhelpful rigidity in the new arrangements, where a flexible approach might be preferable.
For those reasons the Government's own new clause would remove the statutory deadline altogether, returning to the situation which existed prior to the introduction of the Local Government and
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Housing Act 1989. Given that explanation, which I appreciate was given at some length, I hope that the noble Lord will withdraw his amendment and accept mine.
Lord Williams of Elvel: I am grateful to the noble Lord for that explanation. It slightly worried some representatives of local authorities. I accept that it may be that the formula proposed by the noble Lord will work better than a statutory deadline and we shall have to see what the outcome is. In the meantime we shall not oppose the amendment.
Baroness Hamwee: I did not want to let this moment pass without reinforcing the justified anxieties of local authorities that flexibility may turn out to be extension and extension upon extension. I received today a telephone call from a friend who is working in a local authority on the introduction of community care. Her authority has been thrown into a complete tizz because it discovered today that it is £4 million light of what it expected. That is not because it did its sums wrong but because the information that it was given was wrong. That comes two days before the introduction of community care.
I give that as an extreme example, but it is right to place on record that, while noting what the Minister said, local authorities will come down heavily on him if he or his department put them in a position which makes it difficult for them to organise their budgets.
On Question, amendment agreed to.
[Amendment No. 176GZ not moved.]
Clauses 136 to 140 agreed to.
Viscount Goschen: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
House adjourned at two minutes before ten o'clock.