HL Deb 29 March 1993 vol 544 cc676-714

House again in Committee on Clause 115.

Baroness Hollis of Heigham moved Amendment No. 176AZA: Page 116, line 37, at end insert: ("() 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—

  1. (a) counselling, monitoring and support in connection with tenants well being and health and their personal needs, other than those directly related to housing;
  2. (b) the provision of monitoring and alarm schemes to reflect the increased personal dependency and frailty of tenants;
  3. (c) cleaning tenants' rooms and windows and their laundry services, to the extent that this reflects tenants' reduced ability to do so themselves;
  4. (d) organising social and leisure activities and functions;
  5. (e) liaising with medical and social services staff and GPs about tenants' health needs;
  6. (f) providing and supervising restaurants, meals and ancillary services thereto;
  7. (g) counselling and liaising with relatives;
  8. (h) running regular errands because tenants are unable to do so themselves;
  9. (i) administering first aid;
  10. (j) responding to out of hours calls by tenants;
  11. (k) helping tenants into and out of bed;
  12. (l) toiletting, dressing, feeding, bathing and shaving tenants;
  13. (m) administering tenants' medication;
  14. (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 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 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 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 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 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.

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 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 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 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 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 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 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 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 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 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 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 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 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.

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 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 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 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 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 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 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 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 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—

  1. (i) the terms of the agreement (including in particular the standards of service to be required under the agreement),
  2. (ii) the identity of the person who is to be manager under the agreement, and
  3. (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 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 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 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 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 moved Amendment No. 176FYG: Page 117, line 32, leave out ("those terms") and insert ("the proposal").

On Question, amendment agreed to.

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 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 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 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—

  1. (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
  2. (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 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—

  1. (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;
  2. 708
  3. (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;
  4. (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
  5. (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—

  1. (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;
  2. (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;
  3. (c) requiring the agreement to take effect immediately after the expiry or other determination of any previous agreement; and
  4. (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—

  1. (a) for particular questions arising under the regulations to be determined by the authority;
  2. (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
  3. (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—

  1. (a) may make different provision with respect to different cases or descriptions of case, including different provision for different areas, and
  2. (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—

  1. (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
  2. (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—
    1. (i) the provisions of section 27A (consultation with respect to management agreements), and
    2. (ii) in the case of secure tenants, the provisions of section 105 (consultation on matters of housing management).

(8) In this section—

(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 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 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 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 (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 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 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.