Housing Grants, Construction and Regeneration Bill [H.L.]

HL Deb 22 April 1996 vol 571 cc971-1010

Consideration of amendments on Report resumed on Clause 106.

Lord Howie of Troon moved Amendment No. 152: Page 60, line 39, at end insert— ("Adjudication is not arbitration, the main difference between them being that the decision on an adjudication is not binding except with the consent of the parties. It is an interim decision which must be accepted for the duration of the contract but which can be challenged later either by arbitration or through the courts.").

The noble Lord said: My Lords, I come to this amendment fresh from a dinner in Terrace Room A with the Construction Industry Group, although I was able to stay only for the first course. I hope to get back for the pudding with any luck, but who can tell. The group sent me here with an enthusiastic urge to persuade the Government to do their best, though we are not doing too badly so far.

Amendment No. 152 is by way of definition. I seem to recall that in the Second Reading debate my noble friend Lord Williams drew attention to the fact that, while there was a large battery of definitions in Part I of the Bill, there was none in Part II, which is the part that concerns us here tonight.

The amendment contains a kind of definition. I say "kind of definition because it does not actually say what adjudication is; it says what it is not. However, that is the important part in regard to the findings of adjudication in the whole ethos of the Bill. Everybody in the construction industry and those concerned with this Bill, with the possible exception of the Government, believe that the Government have confused arbitration and adjudication. There is no doubt that the majority of opinion is correct and that the Government are wrong. It would help us a great deal if the Government were to accept Amendment No. 152. I am not sure whether it is in the right place, but it should be included somewhere.

The definition is not complete. I notice that my noble friend Lord Berkeley has tabled a more judicial definition than I managed to; but I have drawn attention to the key factor which runs through a large part of the Bill and which caused so much annoyance within the construction industry. The confusion is on the government side; the annoyance is on the construction industry side.

The key to the amendment lies in the first four words—"Adjudication is not arbitration". On that simple proposition I rest my case, apart from reminding the Minister that the scheme also confuses the two. I believe it does that quite deliberately. It applies elements of arbitration law to adjudication. I beg to move.

Lord Berkeley

My Lords, in supporting the amendment of the noble Lord, Lord Howie of Troon, if it be convenient for the House, I would like to speak also to my amendment No. 152A. My purpose in putting down the amendment is to have the definition of "adjudication" included—exactly the same purpose as that of the noble Lord, Lord Howie. It follows on from the amendment which we discussed earlier this evening, Amendment No. 151, proposed by the noble Baroness, Lady Hamwee. The amendments have the same objective—to define adjudication. Again, I am not saying that my drafting is the right solution. We have a definition of "dispute"; we have had "construction contracts" defined previously in Part II, and also "construction operations", which we discussed at some length earlier this evening.

There should be a short and clear description of what adjudication is. I hope that the words "summary", which, I believe, means quick and easy, and "non-judicial" can also appear to emphasise the importance that the procedure, which we shall be discussing in later amendments, does not involve expensive lawyer time. The wording I have put towards the end of the amendment is my latest understanding of what the purpose of the scheme and Part II is about.

With those few words, I hope that the noble Lord the Minister will be able to look at both amendments with a view to putting in some definition which will help to clarify what we are all doing and what the Bill is all about.

Lord Williams of Elvel

My Lords, as the House will recognise, I am not against purpose amendments. I believe there is a case for saying, in the rubric to the clause: Right to refer disputes to adjudication. There should be some wording about what adjudication, as opposed to arbitration, really means. That would lead us into further discussion about the scheme and all the rest of it but, in supporting either of my noble friends, whichever amendment the Government wishes to accept—I am sure they will accept one of them—it would be sensible, in my view, to put something in as a purpose of adjudication, because the industry, as my noble friends have said, is unclear. We do not know whether the Government mean adjudication or arbitration. They would be wise to put something in Clause 106 to reflect what is meant by "adjudication".

Lord Lucas

My Lords, the difficulty we have with the two amendments is that we do not wish to restrict the contracting parties opting for something close to arbitration. We have discussed at length the difference between arbitration and adjudication; I believe that we are basically agreed on that. However, we do not wish to stop parties opting for arbitration if that is what they want. We believe that, within the context of making things work better, that would be acceptable. We do not therefore want to draw the definition in Clause 106 so tightly that people cannot go down that route if that is what they want to do.

As I said just before supper, we have accepted the arguments made in Committee and subsequently by noble Lords, and we have concluded that it would be right if disputes which are subject to the scheme adjudication could normally be re-opened at practical completion of a contract. That is making the whole scheme very much closer to pure adjudication than it was, and I am sure that that is welcome to the noble Lord, Lord Howie.

Lord Williams of Elvel

My Lords, I am sorry to intervene at this stage but, as I understand it, Clause 106 specifies: A party to a construction contract has the right to refer a dispute arising under the contract for a resolution by an adjudication procedure". It seems to me, subject to clarification, that if there were something saying: "This is what adjudication is about", that would be the right place in which to put it.

8.15 p.m.

Lord Lucas

My Lords, yes, I entirely agree. We have said as much as we wish to say. The argument behind our not wishing to say more is that we do not want to fetter parties to the contract more than we believe is necessary in order for them to achieve the effect we are looking for; namely, a satisfactory procedure for resolving disputes. If they happen to want something which is close to arbitration, we do not want to force adjudication on them. We want their freedom to contract to be as wide as possible concomitant with their having an agreement which does what we believe it should do in providing a disputes procedure. Clause 106(2)(a) to (d) sets out the limits on adjudication as we see it, with the qualities that the procedure must have. I agree that this need not be adjudication. It need not be adjudication, as the noble Lord, Lord Howie, knows it, as we shall now have it in the scheme; it could be something which is almost pure arbitration if that is what the contracting parties want.

We do not see the need to restrict the contracting parties just to go for adjudication. We do not see why we should draw things that narrowly if they happen to want to go wider. The question of whether there should be a definition of adjudication in the scheme is a matter for a later clause. This clause deals with what is acceptable in contracts and not what should appear in the scheme. That is at the heart of our objection to the two amendments; it is not that we disagree with either of the attempts to define adjudication. But at this stage of the Bill we do not wish to restrict contracting parties in that way.

Lord Howie of Troon

My Lords, I listened with care to what the noble Lord the Minister said, and with a great deal of sympathy. It seems to me that he has performed something not unlike the Indian rope trick; he has produced some form of magic. Also, he said that he did not really wish to say anything at this point. I have had periods in my lifetime when I did not wish to say things. I shall not alarm the House by drawing attention to what they were, but I have not always meant my intentions to be absolutely clear, although they were frequently successful or, put another way—to avoid boasting—not infrequently successful. It is not good enough to say that the Government do not wish to say something. The fact is this: we have a substantial clause on adjudication which, let me remind the Minister, is one of the three key factors from the Latham report which the Government have seen fit to legislate upon. Here is one of the key elements of that report—adjudication—and yet the Government are unwilling to say what it actually means.

There is a theme running throughout the Bill. It is most evident in the scheme, but it is also prevalent in the Bill itself. That theme is a confusion between arbitration and adjudication. It was even evident in the reply of the noble Lord the Minister. Let me agree. If the parties wish to go to arbitration instead of adjudication, that is all right. They can do so. There is nothing to hinder their agreeing to do that. But if they want to go to adjudication it should be made absolutely clear that adjudication is not arbitration.

That is what I have tried to do in Amendment No. 152 and it is what my noble friend Lord Berkeley has tried to do in Amendment No. 152A. The Minister has shown a certain amount of flexibility in his replies to us today. We shall hope that that flexibility in his replies is reflected in words on the Marshalled List when we come to Third Reading and eventually on the face of the Bill. I do not want to press the amendment. However, the amendment, or something like it—I shall not go to the gallows for my wording—should be in the Bill. It should be either where I have stated it should he or somewhere in the adjudication clause so that people know what is expected of them.

The Government are setting up parameters. The parameters ought to be clear so that people know the hurdles—if a hurdle can be a parameter or a parameter can be a hurdle—they have to leap over. It should be made clear. The Government have so far failed to do that. They ought to, either in my words or some other words. However, the Minister has been conciliatory. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 152A not moved.]

Lord Lucas moved Amendment No. 153:

Page 61, line 6, at end insert— ("(2A) The contract shall also provide that the adjudicator is not liable for anything done or omitted in the discharge or purported discharge of his functions as adjudicator unless the act or omission is in bad faith, and that any employee or agent of the adjudicator is similarly protected from liability.").

The noble Lord said: My Lords, in moving this amendment I wish to speak at the same time to Amendment No. 154. In Committee both the noble Lord, Lord Williams of Elvel, and the noble Lord, Lord Howie of Troon, introduced amendments which included some sort of legal immunity for the adjudicator. Initially it was the Government's view that this was something to be left for parties to cover in their contract but, on reconsideration, we believe that freedom from legal liability for an adjudicator acting in good faith is such an essential feature of the process that it should be specified in primary legislation. I hope that the noble Lords I have just mentioned continue to agree to that.

Amendment No. 154 is partially consequential on Amendment No. 153. However, noble Lords will note that the phrasing of subsection (3) of Clause 106 has also been clarified, since we felt it was vital that there should be no confusion about its meaning. What we are saying—and have always been meaning to say—is that, unless all the conditions in subsection (2) and the new subsection (2A) are met, the provisions for adjudication in the scheme for construction contracts will apply in their entirety. There is to be no "mixing and matching" between the contract and the scheme. One has either the contract operating; or, if the contract falls down on these provisions, one has the scheme in its entirety. Mixing and matching would be risky. We do not wish parties to be in any unnecessary doubt about what adjudication procedures are open to them. I believe this is a helpful clarification. I shall seek to move the amendment when its time comes.

Lord Williams of Elvel

My Lords, I am grateful to the Government for introducing this amendment. It certainly meets the concerns that we expressed in Committee about the legal liability of those persons who are appointed as adjudicators. It would be absurd if someone were to be appointed as an adjudicator and, in discharging his duties in good faith, were to be subject to legal action.

I prefer to reserve my comments on Amendment No. 154 until we reach it in the Marshalled List because there are points arising on it which I wish to address. I am grateful to the Minister for introducing this amendment which meets our concerns on the legal liability of an adjudicator.

Lord Howie of Troon

My Lords, I wish to add my thanks to the Minister for bringing forward the amendment. Several of us brought up this matter in Committee. Lest the noble Lord thinks that my thanks are not double barbed, perhaps I may say that the amendment, which I welcome, would have been very much strengthened if my Amendment No. 152 had been accepted so that an adjudicator knew what adjudication was and knew that it was not arbitration.

Lord Lucas

My Lords, with thanks to the noble Lord, Lord Howie of Troon, I commend the amendment to the House.

On Question, amendment agreed to.

Lord Lucas moved Amendment No. 154:

Page 61, line 7, leave out ("such a procedure, the relevant") and insert ("a procedure which complies with the requirements of subsections (1) to (2A), the adjudication").

The noble Lord said: My Lords, I have already said what we believe this clause to be for. I look forward to listening to the noble Lord, Lord Williams, and to discussing the concerns he may have on the amendment. I beg to move.

Lord Williams of Elvel

My Lords, the Bill as drafted states: If the contract does not provide for such a procedure, the relevant provisions of the Scheme for Construction Contracts apply". In place of, such a procedure, the relevant", the Government wish to insert, a procedure which complies with the requirements of subsections (1) to (2A), the adjudication". That seems to be slightly circular. I fully understood the Bill as drafted but I cannot quite understand what is meant by referring back to subsections (1) and (2A) the adjudication. If the Government had accepted my noble friend's amendment on the subject of adjudication, I would be quite clear on the matter. But since we are left slightly in the dark about the status of the scheme of construction of contracts, I should be grateful if the noble Lord could enlighten me on exactly what this amendment produces.

My next point may not be relevant to this amendment but it is certainly relevant to the discussions we had in Committee. There is a question of whether the adjudicator, under whatever procedure, is allowed to go beyond what is relevant to the case he is adjudicating on. In Committee we discussed the problem of adjudicators ranging far and wide. I should be grateful if, in the context of responding to Amendment No. 154, the noble Lord could reassure us that adjudicators will not be ranging far and wide in searching out information which may not be relevant either to their charges under Clause 106 or indeed under the amendment moved by the noble Lord. This is quite an important factor in determining what adjudication means and what adjudicators under the clause are allowed to do.

8.30 p.m.

Baroness Hamwee

My Lords, I do not see it as my brief to support the Government on this part of the Bill or, indeed, necessarily to oppose them. I am attracted by the approach which the noble Lord, Lord Lucas, used when he spoke to this amendment a moment ago. It is probably right to be clear about what scope there may be, if any, for mixing and matching, as the noble Lord put it. However, we might find it easier to discuss such amendments if we were dealing first with the scheme'. It is perhaps an oddity of the way in which these matters are approached that we come to the substance of it after we have dealt with the way in which the scheme is to be applied or not. I believe that this approach by the Government is probably helpful in practice.

Lord Howie of Troon

My Lords, I intervene briefly on Clause 106(3). If I am out of order, I am sure that a noble Lord will tell me, so I give due warning. Subsection (3) states, such a procedure, the relevant provisions of the Scheme for Construction Contracts apply". But in reading the Bill I notice that the clause understates the case. It refers to "the Scheme", when there are in fact two of them. We shall come to this matter later in the Bill in more detail. But, as I understand it, there is a scheme put forward by the Minister, whoever that person is, for England and Wales and another for Scotland. Each will produce a scheme of their own, but they will not necessarily be the same scheme because of the changes in the law which apply between our two united countries pro tem.

I am merely laying down a marker for a debate which we shall have later. I believe that the Government will have to take a little more care about this part of the clause. I had not thought about it early enough to table an amendment, which would have been kinder. I do not expect the Minister to reply at this stage because I am being a nuisance by inventing an amendment which I have not tabled. But there are two schemes, not one.

Lord Lucas

My Lords, perhaps I may begin by explaining how this new subsection would work. Under the clause as it stands, there is a description of an adjudication under subsection (2)(c) which satisfies the scheme. It states, impose a duty on the adjudicator to act impartially". As the Bill is written, if a contract were deficient in that aspect alone, that aspect alone of the scheme would be imported into the contract. As regards the amendment, if a contract is deficient in just that one aspect, the whole scheme is imported into the contract. We are saying that we do not believe that it would be satisfactory to try to mix and match bits of the contract with bits of the scheme and to pick out something which is deficient in the contract and substitute just that part of the scheme. As it emerges, the whole scheme will be an entity which ties in and works together. If one tries to bring parts of it into the contract for which there is no legal control, which is not necessarily related to the way in which the scheme is laid out, that is a recipe for confusion. We have always intended that the scheme as a whole should be imported if something was wrong with the contract rather than to include bits and pieces.

The noble Lord, Lord Williams of Elvel, asked about the ability of the adjudicator to range far and wide. That is something to which Amendment No. 189 addresses itself to a certain extent. Perhaps I may pre-judge that and turn to it. Amendment No. 189 would have the effect of restricting an adjudicator to consider material presented to him rather than letting him decide procedures. In reply to that, I say that we would not wish to restrict an adjudicator's ability to investigate cases without first considering the views of the whole industry. This is certainly a point that we shall look at, but in consultation with the industry rather than on our own initiative.

Lord Swinfen

My Lords, before my noble friend sits down, I point out that I was under the impression that the whole scheme would be imported into the contract if the contract had one part missing. What is the position if the original contract is drafted in such a way that it is in conflict with the balance of the rest of the scheme and not the part which is in there just to replace the missing part in the contract? One can have the original contract which is drafted in such a way that it conflicts with the scheme, which has to be imported as a whole. I realise that my noble friend would like the whole scheme imported rather than small pieces of it. I wonder whether there could be a conflict between the two. Perhaps my noble friend will give the matter consideration before Third Reading.

Lord Lucas

My Lords, yes, I shall do so.

On Question, amendment agreed to.

Baroness Hamwee moved Amendment No. 155:

Page 61, line 9, leave out subsection (4) and insert— ("(4) The Scheme may include—

1. (a) for England and Wales, such provisions of the Arbitration Act 1996 as appear to the Secretary of State to be appropriate, and
2. (b) for Scotland, so much of the law, practice and procedure relating to arbitration as appears to the Lord Advocate to be appropriate.").

The noble Baroness said: My Lords, the Minister referred to mixing and matching. My amendment is intended to seek to understand how much may he mixed and matched of the Arbitration Act for England and Wales and the law, practice and procedure of arbitration in Scotland. As Clause 106(4) is drafted, the scheme may apply the provisions of the Arbitration Act for England and Wales—similar provisions will apply to Scotland—with adaptations and modifications at the discretion of the Minister. Can the noble Lord, Lord Lucas, explain to your Lordships if it is intended that the existing provisions of the Arbitration Act can themselves be altered and then put into the mix of the scheme or if what is intended here is that the scheme may apply to some provisions but not others—that would clearly be sensible—of the Arbitration Act? The reason I am pursuing this matter is that it does not seem appropriate to give power to the Minister to start changing the provisions of the legislation, albeit for the purposes only of the scheme, but without bringing those changes before this House and another place. I beg to move.

Lord Howie of Troon

My Lords, is it convenient to the House if we discuss my Amendment No. 160 at this time? It stands alone in the groupings on the Marshalled List. I shall not pursue it unless the Minister agrees with me. I am asking that we consider two schemes, and not one. If the Minister agrees, then I shall continue, but if he does not, I shall wait my turn with the normal politeness that I always show. I shall babble on while the Minister makes up his mind. Does he find it acceptable? I am suggesting that we discuss Amendment No. 160 with Amendment No. 154, because they seem to have a kissing cousinship at least.

I admit to a certain dereliction of duty here, in the sense that I did not realise that there were to be separate schemes: one for England and Wales, and another for Scotland. Our debate in Committee did not make that clear. I absolve the Government from any blame in this matter, because if one looks closely at the Bill it implies that there are separate schemes produced by separate Ministers. We did not realise that at the time, and the Government did not feel inclined to remind us of it.

I received a letter from the Lord Advocate (the noble and learned Lord, Lord Mackay of Drumadoon), a man whom I do not know, although he seems to be a Member of this House. He may be a recent Member. He wrote me a kind and informative letter relating to matters I had raised at an earlier stage in relation to my native land and the Bill.

I was reading the noble and learned Lord's letter happily until I reached page 2, when I was drawn up short. He explained of course that his department (the Lord Advocate's Department) worked closely with the Secretary of State for Scotland, which did not surprise me because I think that the Secretary of State for Scotland is a man who would insist upon being worked closely with—if that is grammatical. The Lord Advocate went on to tell me that his officials have been in contact with representatives of the construction industry in Scotland, in order to discuss the terms of the Bill and the proposals for a Scottish scheme". That is direct. I am sure it is within the Bill's ambit, although no one reminded us of that. It was not thought to be appropriate, and we did not spot it. He continued: These discussions will assist in determining the nature of the Scottish scheme, and will in due course form part of the formal consultation exercise which I require to undertake before I make the scheme itself'. I could go on. There is an interesting paragraph which tells me about Scottish law, and matters of that nature, and things which will apply in Scotland and things which will not. The most important one is the fact that the Arbitration Bill will not apply in Scotland. Yet this "scheme" as we have called it so far, which is in fact a scheme for England and Wales, leans heavily on the Arbitration Bill and quotes from it extensively, without admitting it. The Arbitration Bill does not apply to Scotland, so what is the Scottish scheme to consist of? Will it spatchcock in bits of an Arbitration Bill which does not apply to Scotland? The Minister shakes his head, and I am glad to see that.

That brings me to a question which I must put to the Minister. We asked, I think in Committee, that this famous scheme be presented to the House in draft so that we could consider it, and even think about it, if the worst came to the worst. We may want to consider and think about the Scottish scheme. So is there any possibility that we may see a draft of the Scottish scheme before Third Reading so that we can consider it and possibly think of putting it down as a schedule to the Bill on Third Reading? I chuckle in a demonic way, but this is a serious matter.

If it is right that we should have a sight of the scheme for England and Wales, is it not right that the Scottish Office should lift its kilt just enough to let us have a look at the scheme for Scotland? Because it will he a different scheme. The Arbitration Bill does not apply, and there are all sorts of elements of Scottish law which do not apply. We should see the scheme in draft form before we go to the next stage of the Bill. I should have thought that round about Monday would be a good time.

8.45 p.m.

Lord Lucas

My Lords, I am pleased that the noble Baroness has recognised that it is legitimate for the Government to draw from arbitration law in the making of the two schemes for construction contracts. The Arbitration Act is, after all, the most up-to-date legislation on dispute resolution available.

Lord Williams of Elvel

My Lords, it is not an Act.

Lord Lucas

My Lords, it is a Bill. I do apologise. We believe that at least some of its provisions may be useful in one form or another when it comes to taking powers for the scheme. I believe this has been superseded by what was said by the noble Lord, Lord Howie, but, following full consultation on the scheme after Royal Assent, we should like to give the industry the fallback adjudication provisions which suit it best. It might prove difficult to do that if the relevant Minister were not empowered to make minor adaptations or modifications to arbitration law. That is as far as our English ambitions go.

The Scots may, as their view of their scheme develops—I am afraid that it will not have developed fully by Third Reading—feel that they need slightly greater powers. I am not in a position to say that yet. In short, we want to ensure that we have the powers to make schemes that work for the construction industry on both sides of the Border. That could be difficult if we were to accept the amendment. I hope that the noble Baroness will withdraw it, therefore.

Before I leave the Floor clear for the noble Baroness to do that, I should perhaps say that she produced an accurate sting in the tail when she asked why we do not have this back to look at it. Looking at it in that way, why do we not have the whole scheme back, subject to affirmative resolution? That is something that we are prepared to consider.

Lord Howie of Troon

My Lords, before the Minister sits down, will he satisfy me—I am not difficult to persuade, as he knows—why it is that the English and Welsh—estimable as those people are—should have a look at the scheme before it passes through this House while the Scots—of course we know that they are less estimable in some respects—have to wait until Royal Assent? That is an argument which cannot stand. Surely the Scots can have a peek at it.

Lord Lucas

My Lords, the intention is that the scheme should have the same effects north and south of the Border, but because the law is different the way in which the provisions work will have to be different. We have not yet reached our conclusions as to what they should be north of the Border so as to make the proposal one that is suitable for publication.

Lord Monkswell

My Lords, before the Minister sits down, perhaps he can clarify something. From what he said, I inferred that the amendment was right and required. The Minister said that we had a new Arbitration Bill—it is a Bill rather than an Act, as my noble friend pointed out—and when it became an Act the Government would modify it and put it into the scheme.

The reasoning behind the amendment of the noble Baroness, Lady Hamwee, was that it would be wrong for a Minister to be able to amend primary legislation without recourse to Parliament. That is exactly what the Government have suggested that they will do. I hope that I have not got hold of the wrong end of the stick. If that is what the Minister is talking about it seems to be a travesty of the whole parliamentary procedure.

Lord Lucas

My Lords, I believe that I said in my closing remarks in reply to the noble Baroness, Lady Hamwee, that we were very happy to consider the possibility of making the whole scheme subject to affirmative resolution so that that particular point should be covered.

Baroness Hamwee

My Lords, I am grateful for what the Minister has just said. Before I seek leave to withdraw the amendment, I raise one point which I ask the Minister to note, not to respond to at this stage. I ask that he lets me and other noble Lords know before Third Reading whether that is to be proposed by the Government. Otherwise, there will be a number of amendments that I and no doubt other noble Lords will wish to table at Third Reading.

It has crossed my mind more than once during this afternoon and evening that, given that the Government clearly have a number of major amendments in mind, it is a pity that this part of the Report stage could not have been deferred somewhat so that noble Lords could have seen those amendments. I believe that we might have moved faster and more constructively had the Government allowed that flexibility in their timetabling. Having noted that the Minister has heard my request, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 108 [Dates for payment]:

Baroness Hamwee moved Amendment No. 156: Page 61, line 30, leave out ("adequate") and insert ("effective").

The noble Baroness said: My Lords, Amendment No. 156 is another short probing amendment. Clause 108 (1)(a) provides that every construction contract shall provide an adequate mechanism for determining payments. I seek to understand a little better what is implied by the term "adequate". The clause could simply have said that every construction contract should provide a mechanism for determining payments. The term "adequate" must mean something. To me, it suggests a degree of quality, but I am not sure about what other than to ensure that the payments can be determined. I suggest the use of the word "effective", not as a synonym, but as a more accurate term for what is intended. I do not seek necessarily to redraft but rather to understand. I beg to move.

Lord Lucas

My Lords, I am afraid that once again the Government have considered the matter and like things the way they are. To us, an adequate mechanism is one that is proportionate and appropriate to enable the payments mentioned in Clause 108 (1)(a) to be determined; in other words, it is a mechanism that works. In contrast, the effectiveness of a mechanism brings in the concept of quality. Does it work well? Is it the best that there can be? It is a matter that is subjective rather than objective, which may vary according to the preferences and perceptions of the individuals involved. In this context, the word "adequate" is already used in building regulations and therefore has some kind of history. We feel that it is the right word for these circumstances. However, I thank the noble Baroness for raising the question. The Government are glad to have had a chance to look at the matter again.

Baroness Hamwee

My Lords, perhaps its use elsewhere is the most telling point. The argument used by the noble Lord against the adoption of the word "effective" is the one that I would use against the word "adequate". My further concern is that to provide for an adequate mechanism implies a retrospective assessment of that mechanism. However, having sounded off about it, it is perhaps appropriate to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 109 [Notice of intention to withhold payment]:

Lord Lucas moved Amendment No. 157: Page 62, line 10, leave out ("award") and insert ("decision").

The noble Lord said: My Lords, in moving Amendment No. 157 I shall speak also to Amendment No. 158. These amendments follow similar ones moved by the noble Lord, Lord Howie of Troon, in Committee, which we undertook to consider. Having done so, we remain unconvinced that the word "award" is wholly specific to the process of arbitration. However, we know that the noble Lord feels strongly on this matter. We are also aware that there are those in the construction industry who share his views. Rather than let the Bill arouse hostility in this way, we propose to remove references to an adjudicator's award and use instead the word "decision". Of course, the terminology in the scheme for construction contracts will be made consistent with this. I beg to move.

Lord Howie of Troon

My Lords, I thank the noble Lord for acceding so graciously to my request—I will not say demand because that is too severe—at Committee stage. The noble Lord said that I felt strongly about the matter. I am too mild a man to feel strongly about anything. The reason for using the word "decision" rather than "award" was that it was right to do so. It was not a matter of strong feeling but a matter of lowland Scots pedantry: we like to get it right rather than wrong. I am grateful to the noble Lord for accepting this small but proper amendment to the Bill. We are here to improve the Bill, and we have done it in a small way.

Lord Lucas

My Lords, I thank the noble Lord for his remarks.

On Question, amendment agreed to.

Lord Lucas moved Amendment No. 158: Page 62, line 12, leave out ("award") and insert ("decision").

On Question, amendment agreed to.

Clause 112 [The Scheme for Construction Contracts]:

Lord Howie of Troon moved Amendment No. 159: Page 63, line 25, leave out ("The Minister shall by regulations make a") and insert ("Schedule (Scheme for Construction Contracts) sets out the").

The noble Lord said: My Lords, I rise with a certain amount of alarm. My Amendment No. 159 is a trifling matter. It is a paving amendment. It is coupled with a substantial number of other amendments, some of which are in themselves quite big. At least two of them involve completely new schedules to the Bill. I am a little hesitant because in this House we like speeches to be relatively brief, provided they cover the points at issue in the amendments to which they speak. I cannot see how I can be brief in the normal sense of that word in the face of this grouping of amendments. I see that the noble Viscount, Lord Ullswater, has his head in his hands. I apologise to him. I hope he will understand that this is not my fault. I was not asked to agree, and did not agree, to this enormous grouping. It has the unfortunate effect that I will not he able to give each amendment its due weight. That worries me a bit. I should like each to be considered fully. I will try to do my best to consider them as fully as is appropriate within decent brevity. If my notion of brevity does not coincide with that of other noble Lords, I hope that no one will be so churlish as to propose the Motion that I be no longer heard.

9 p.m.

Lord Elton

My Lords, in an interpolation, perhaps I may ask the noble Lord whether it is right that a substantial number of his amendments are amendments to an amendment tabled by the noble Lord, Lord Williams of Elvel. Would it not be easier for the noble Lord to explain his amendments if we heard first what the noble Lord, Lord Williams, proposes to move which the noble Lord wished to amend? Therefore, might it not be easier if, now that the noble Lord, Lord Howie, has introduced the subject, the noble Lord, Lord Williams, explained his amendments and then the noble Lord can come back? It is a humble suggestion and if it is confusing I withdraw it.

Lord Howie of Troon

My Lords, it is an interesting suggestion but it comes up against a procedural problem. It is that we are at the Report stage and I am permitted to speak only once, which might take some time. The noble Lord's suggestion is extremely sensible and if there were some way in which the leave of the House could be gained I should not be opposed to such a procedure. Indeed, it would be of great help.

Lord Williams of Elvel

My Lords, I admit guilt in all this. When my noble friend and I tabled amendments I agreed from this Front Bench to the groupings. I thought that it was appropriate that we should have the debate on one—admittedly long—section because the amendments relate to the same business. I apologise to my noble friend if he was not consulted about the groupings and I hope that on some future occasion I can make it up to him. However, from this Front Bench I am happy with the groupings and moving on to Report stage requirements.

Lord Howie of Troon

My Lords, in view of that I must babble on for quite some time. I do not blame my noble friend in any way for his grouping. It has an intellectual consistency but it causes me a difficulty in that I may have to speak for longer than I normally speak. If any noble Lords wish to go away they are perfectly entitled to do so.

As regards Amendment No. 159, I need say no more about it than that it is a paving amendment. Amendment No. 161 leaves out subsections (2) and (3), which I do not believe are necessary. They deal with the scheme as regards the Minister's actions and relate to my Amendment No. 160, which we discussed earlier out of order. We have more or less dealt with that, therefore.

Amendment No. 162 has nothing to do with me and I wish to say nothing about it, apart from the tact that it is excellent in its construction. Amendment No. 178 goes to the heart of the matter. As the noble Lord. Lord Elton, said, many of my amendments are amendments to Amendment No. 178. Perhaps I may say in introduction that I do not think too much of the scheme, which has been tabled as an amendment in its totality. Your Lordships will remember that we considered doing that in Committee but did not do so. That was a pity but we are doing so now. Had we tabled the scheme in Committee, we could have spoken about it at greater length and in greater detail and given it closer consideration than we are able to give it at this stage.

Perhaps I may say in general terms what is wrong with the scheme. The Government have a strategy which in its aim is wholly correct and admirable. It is that construction contracts should be proper and should ensure that people are paid and so forth. We discussed that matter on Second Reading. The peculiar aspect of the scheme is that that is not its intention. The intention of the scheme is to frighten people into taking up contracts which they do not feel inclined to take up. The Minister and his colleagues admitted that in Committee when they described the scheme as being more draconian than the provisions of Clause 105, which is now Clause 106. That was not my word, it was theirs.

The scheme is more draconian. It has about it all the hallmarks of something that Michael Howard might have conceived. It is a boot camp solution. The Government are trying to frighten people into taking up contracts because if they do not the Government will be obliged to adopt a scheme which is more draconian and will put the frighteners on them. I find that odd. If the Government want people to adopt contracts under the provisions of Clause 106, that is fine and I do not dissent from that in any way. Indeed, I support it, except in detail here and there. If the Government want people to take up the provisions of Clause 106 why do they not make them compulsory or make the scheme the same as the provisions in Clause 106?

I am a great man for an easy life and so is the Minister, I am sure. At this stage of the Government's life they should be in favour of an easy life too and put forward propositions which people will find agreeable and acceptable. The provisions of Clause 106 are generally acceptable to those in the industry, with some minor dissensions, but the scheme is not. It is absurdly controversial and for no good reason whatever.

Those are general comments and I do not wish to detain the House too long. No, that is not true; I do wish to detain the House for quite a long time but I cannot do so because it would be unfair at this time of night.

I turn to Amendment No. 182, which provides that Clauses 20 to 28 of the scheme are needed only if adjudication is actually arbitration. Most noble Lords are agreed that adjudication is not arbitration. Therefore, those clauses should go because they are not needed.

I could go on. I do not wish to detain the House. I shall not go through these matters in any detail because it would he quite wrong for me to do so. The essence of an adjudication is that it should be quick. It should remove a source of disharmony from the contractual arrangements, a disharmony which could affect adversely the conduct of the contract and the successful conclusion of the project. As the Minister knows and as Clause 106 allows, that adjudication produces rough justice but it is a rough justice which can be put right at a later stage. There is absolutely no reason why the scheme should not adopt the same attitude and strategy. I am sure that the Minister will tell me that that is what he has in mind. If he does that, I shall be delighted.

Perhaps I may say a few words now about Amendment No. 191. My reason for tabling it is that it removes all references to the Arbitration Bill. I do that quite clearly in order to ensure that nobody confuses adjudication with arbitration. We had a short exchange about that earlier when we discussed the scheme which would apply to Scotland. We had not realised that there was such a thing, but there is.

Since the Arbitration Bill does not apply to Scotland, it is inconceivable that its provisions could apply to the Scottish scheme. If it did, that would be an act of imperialism far beyond Edward I, let alone the current Government. If it cannot apply there, why should it be imposed in England? Why should the Arbitration Bill be imposed upon a process of adjudication since we are all agreed that adjudication and arbitration are not the same? I have probably said enough at this stage although I have a substantial body of notes and I could go on for some time. However, that would be quite unfair.

I turn now to my Amendment No. 197. That introduces into the Bill as a new schedule a satinised version of the conciliation procedures of the Institution of Civil Engineers. I say that because those procedures are part of the sixth edition of the ICE Standard Conditions of Contract which are acceptable to and used throughout the construction industry. It includes that process of conciliation.

Conciliation is not exactly the same as adjudication but it is near to it. The idea of conciliation is to produce agreement so that the parties involved in a dispute agree to a resolution, as the noble Baroness, Lady Hamwee, wanted. Of course, that is an extremely sensible way to proceed. I have adjusted the conciliation process to make it an adjudication process with which the parties do not need to agree but where the adjudicator gives a decision which may be subject later to arbitration or resolution through the courts. The conciliation procedure was first introduced in 1988, which is quite some time ago. It has been in use since that time and has proved its worth in that period. On the basis of experience, the procedure was revised in 1994 and could no doubt readily be revised again, perhaps on the basis of the satinised version that I have tabled.

I have dealt with this rather large group of amendments quite inadequately. I say that because each one of them deserves much more attention and much more detailed consideration than I have been able to give. However, I am well aware of the fact that the House does not want to listen to me all night. Indeed, noble Lords have been most patient. I am most grateful: I beg to move.

9.15 p.m.

Lord Williams of Elvel

My Lords, I am grateful to my noble friend Lord Howie for being so reticent in moving his Amendment No. 159 and, indeed, for his restraint in dealing with the amendments which I confess I agreed to when grouping Amendment No. 159 with a whole series of amendments on the Marshalled List. The substantive amendment with which we are dealing is Amendment No. 159 on which is consequential my noble friend's schedule set out in Amendment No. 197. Therefore, if the Government were to agree, as I hope they might, to Amendment No. 159, it would follow that Amendment No. 197 would also be accepted.

Independently of my noble friend, I exercised the threat which I made in Committee to table the Government's scheme so as to allow amendments to be made to it. However, it is late in the evening and we have had a long day. I do not intend to go through all the pages of notes that I have with me as regards what is defective in the Government's scheme. But if noble Lords opposite wish me to, I will go through them.

Suffice it to say that we believe that the scheme produced by the Government is, first, unpopular; and, secondly, it is full of problems, starting from the procedure in appointing adjudicators, going on to the commencement of proceedings, and then to a stay of legal proceedings, failure of appointment procedure, and so on; indeed, every single provision in the Government's scheme—as set out in the schedule that I have proposed as an amendment—is wrong and has some particularly offensive matters in it. My noble friend is right to say that the Government's scheme as presently produced is more in the nature of arbitration than of adjudication. That is the fundamental problem that we have in the matter.

Noble Lords have tabled amendments to the schedule that I propose. Again, I do not intend to go through them in detail. However, suffice it to say that I substantively agree with the amendments that my noble friend Lord Howie has tabled to that schedule. If by any curious event the House accepted my amendment/schedule I would be most disappointed. I say that because the point of tabling it was to demonstrate to the Government that we do not think that that is the right way to proceed and that the industry does not think it is the right way to proceed. Therefore, I would accept all amendments to the schedule and I would also accept the Government saying, "We do not like this being put into a schedule to the Bill and, therefore, we are not going to agree to it". Indeed, I would vote in the Government Lobby if that were to be the case.

I turn now to my noble friend's schedule, with which I have a great deal of sympathy. There are two principles involved. First, the scheme should be in the form of a schedule to the Bill. It is not enough to put it in the form of regulations, even though the noble Lord may say that it will be the subject of the affirmative resolution procedure. As we all know, the affirmative resolution procedure does not allow us to amend. If we cannot amend, then there is no point in affirmative resolution: it is either yes or no. In this House we have what is sometimes called a "convention" but which at other times is called a "self-denying ordinance" not to vote for or against statutory instruments under the affirmative resolution procedure. The fact that this becomes something which requires affirmative procedure does not impress me.

Secondly, what I believe should happen is that the Government should take my noble friend's schedule away—perhaps together with the amendments of my noble friend Lord Berkeley—and make sure that it is produced as a proper schedule to the Bill before it is enacted, as nothing else will do. The consequence of doing that would be to reassure the industry—we are all trying to reassure the industry—that the Government will not change the scheme for England and Wales and that they are not going to produce provisions which are more dependent on the Arbitration Bill, as it now is, rather than on adjudication. We should all he quite clear what will happen if the parties do not accept adjudication in the first place. When the Scottish scheme finally appears, I would expect that to be another schedule to the Bill.

It is late and there is still much business to get through. That is our position. We believe that there should be a schedule to the Bill and we believe that the schedule spoken to by my noble friend is probably better than anything else, subject to the amendments of my noble friend Lord Berkeley who no doubt will speak to them. Simple affirmative resolution on regulation is not enough. The Government must do much better. They may not do much better in this House but they must do much better in another place.

Lord Elton

My Lords, both the noble Lord, Lord Howie of Troon, and the noble Lord, Lord Williams of Elvel, have helpfully reduced this to a debate about a major principle, and that is the way in which Parliament will be satisfied—and the industry will know—in relation to what the scheme will contain. Both of them have come to the conclusion, by different routes, that the scheme should be on the face of the Bill. I hope your Lordships will pause over that suggestion and not immediately say that it has the great attraction that it gives parliamentary control over what is happening and gives security to the industry because it will know what will happen for a long time.

As I understand it, the Bill breaks new ground in two respects: first, because it applies to an area which has not hitherto been subject to such legislation and, secondly, because it seeks to be as broadly as possible consensual in its nature. It is dealing with an area of great complexity in which there is insufficient experience in the official world of the relationships which will develop under this legislation. It follows, does it not, that however wise we may be in preparing the scheme we are likely to be surprised in some respects by its effect. As a result of that surprise we are likely to wish to change it. If it is inscribed in the statute, we may have to wait five, 10 or 15 years for an opportunity to do it. If it can be achieved in some other way, we are more likely to remedy defects before they have caused too much damage. The question then is what that alternative should be.

One way is to proceed by a statutory instrument which should be either subject to the affirmative or the negative procedure. That is a change. As I understand it, the Government originally had a proposal that the scheme should be written by Ministers and could be altered by Ministers at will. That has the great advantage that defects can be remedied almost overnight. It has the disadvantage that your Lordships and another place would be surrendering all control as to what happened in the field for the foreseeable future because it would be up to Ministers, and they would not be controlled by Parliament.

believe that we should choose between those two methods. It would be a mistake to inscribe the provision on the face of the Bill with the necessary rigidity and delay that that would cause.

Lord Williams of Elvel

My Lords, I am sorry to interrupt the noble Lord. Schedule 1 of the Financial Services Act has exactly that provision. It can be amended by affirmative resolution. That is what I am proposing.

Lord Elton

My Lords, that is a combination of the two approaches. I thought that a moment ago the noble Lord argued against affirmative action.

If your Lordships are in favour of affirmative resolution, you accept some delay in the effect of your Lordships' wishes in changing legislation. But once it is in print, as the noble Lord said, there is no further power to amend.

The answer to that is surely for the Government to consult extensively before they draw up their statutory instrument. Subject to what my noble friend on the Front Bench will say, my view is that that would be a happy issue. If the Government were to consult both industry and informally among those interested politicians before they drafted such an instrument, I believe that the affirmative resolution would be a sufficient safeguard. However, I would not recommend that it be put on the face of the Bill.

Lord Ackner

My Lords, I have not intervened at any stage of the Bill until now. It was certainly not my intention to do so until quite recently. I had anticipated a quiet, peaceful evening recovering from the frustrations of an unsatisfactory Answer to a Starred Question.

However, I was telephoned by the head of my old chambers who specialises in construction disputes. He had with him a senior representative of the Official Referees' Solicitors Association. They were both deeply worried about the scheme that the Government proposed. They were joined subsequently by the chairman of the specialist group of the Bar dealing with building and construction disputes—a very experienced QC.

Their concern was a fairly simple one. They reckoned that the Government were misunderstanding what was required by an adjudication. Their concern seemed to me to be wholly understandable. What I have always understood to be required by the adjudication process was a quick, enforceable interim decision which lasted until practical completion when, if not acceptable, it would he the subject matter of arbitration or litigation.

That was a highly satisfactory process. It came under the rubric of "pay now argue later", which was a sensible way of dealing expeditiously and relatively inexpensively with disputes which might hold up the completion of important contracts.

What is being proposed here is a speedy, fast-track arbitration which produces a binding conclusion, not open to any challenge after practical completion, but fixed and firm for all time in a wholly unrealistic timescale. I have been shown articles in the press that indicate that the industry is anxious about it and that Sir Michael Latham says that it is quite contrary to what he proposed. Hence the new scheme which has been suggested by the amendments to the schedule.

I invite the Minister to deal with the crucial point of principle. What on earth is the point of rushing through an arbitration which is to be final and binding in a situation probably of great complexity and, what is worse, one where the speed can be frustrated by applications to the court of the kind envisaged by the new Arbitration Bill which will become an Act in 1996? Because of the finality which it is suggested is to he ingrained in the adjudication, the courts will obviously be listened to. So there will be delay and frustration in the sense that payment will be put off and the adjudication process which is designed will be self-defeating for a reason which I find difficult to follow.

The Arbitration Bill is admirable. It has been praised in this House through all the stages which have so far been completed. But it is designed for arbitrations. It is designed to improve the arbitration procedure and to give the arbitrator more power. It is designed to stop the courts interfering in the way that they have been able to so far. That is a non-interference of which the courts thoroughly approve. My respectful submission to your Lordships is that the question of the adjudication ought to be dealt with clearly and firmly by the Government in answering the amendments.

9.30 p.m.

Viscount Ullswater

My Lords, Clause 106 does not allow adjudication to be struck out of a contract. That is where we started. Under the provisions of Clause 106 certain criteria will have to he fulfilled, and we are all clear about that. So the scheme that we are discussing, the subject of the amendment of the noble Lord, Lord Williams, is very much a fall-back provision. The scheme is still in draft, as everyone will accept, and therefore what we say about it in Parliament is important. However, the consultation that I believe is probably more important, very important indeed, is with the industry.

Before we went to dinner, my noble friend indicated that he was of a mind to bring in a proposal that would make a non-binding form of adjudication in the scheme.. That is welcome, and perhaps the noble and learned Lord, Lord Ackner, was not in his place to hear my noble friend's words. What is contained in Amendment No. 192 should command respect. The noble and learned Lord, Lord Ackner, is quite correct in that in preparing his report Constructing the Team. Sir Michael Latham recommended a simple form of adjudication to keep the contracts running and the payments flowing. In his summary, he states—and I paraphrase—that the award of the adjudicator should be implemented immediately; any appeals to arbitration or the courts should be after practical completion and should not be permitted to delay the implementation of the award.

I am, therefore, not in favour of putting a scheme and a method such as is proposed by the noble Lord, Lord Williams, into the Bill as a schedule. I understand and agree that it is a very useful way of discussing the contents of the scheme. Not only does the scheme need consultation during the course of parliamentary scrutiny both in this House and in another place, but, as I have indicated, the industry should be given constant access to consultation as the Bill is going through Parliament. Therefore it needs consultation up to and after Royal Assent. As my noble friend indicated, it may be possible to bring the scheme forward under a form of affirmative resolution. I suppose that the regulations to make the scheme in Clause 141 would be under affirmative resolution. That would be the right way of dealing with the matter.

In Committee, I started by saying that the scheme as proposed was draconian. I still believe that to be the case. Therefore I am extremely pleased to hear the way in which my noble friend on the Front Bench feels he can move. That is extremely practical. However, having said that, he must listen very carefully to what the industry says all the way through this process.

Lord Berkeley

My Lords, I shall speak briefly to my Amendments Nos. 197A to 197N, which support the amendment tabled by the noble Lord, Lord Howie of Troon. I do not need to say much about them. I was heartened by the wise advice from the noble and learned Lord, Lord Ackner, who has obviously examined the recommendations. I am pleased to hear his remarks about flexibility and speed and the problems of adjudication. All I tried to do in tabling my amendments was tighten up the procedures of the Institution of Civil Engineers, which I believe the noble Lord, Lord Howie, used in his drafting, to try to get decisions out of recommendations and a few consequential amendments.

All through the debate this evening and at previous stages of the Bill we have talked about consultation. This is not a political matter. All parts of the House want to see the industry flourish and receive support. As the Minister said earlier, he does not want to raise hostility.

Nevertheless, I have to mention a sheaf of press cuttings I have received in the past week which, frankly, express unanimous hostility, not to the Bill itself but to the scheme. I shall quote one or two: Furious construction professionals say they are no longer prepared to support the Bill". That is from Construction News. Latham gives warning on Construction Bill … The ACE [Association of Consultant Engineers] supports the aims of the bill, hut we reject the scheme entirely". So it goes on. I could continue for a very long time, but I shall not detain the House at this late hour.

The Association of Consultant Architects (you can have a consultant architect, returning to Amendment No. 142) says that the Government have, ignored the comments made by a large section of the construction industry". I shall end my quotations with that example. Consultation has to go on. But I have never seen such unanimity of criticism for the scheme that the Government put forward. I have no view as to where it should end up and whether or not it should be part of the legislation. However, I hope that as the Bill moves forward consultation will be wide and that the Government will listen to what the industry has to say. Like other noble Lords, I was very heartened to hear the Minister's remarks just before we broke for supper.

Lord Lucas

My Lords, we have now had several opportunities to debate Clause 112, which provides for the appropriate Minister to make a scheme for construction contracts. I hope I need not explain again why we are proposing the power to make such a scheme. However, it might be worth reminding noble Lords that we made it available to the House primarily to illustrate the relationship between the Bill and the scheme and to show what sort of things the scheme needs to cover.

Proposals for the scheme were, as my noble friend Lord Ferrers made abundantly clear when he introduced it, a first shot, a starting point, something to build on. We were not particularly surprised to find that they attracted criticism in Committee. For one thing, as a mechanism designed for use only when a contract is inadequate and for use across a very diverse industry, the scheme must be all things to all men. Such compromises are rarely attractive on first acquaintance. We are also well aware that many had a problem with a procedure which was binding unless parties agreed otherwise. We explained why we adopted that approach, but appreciated that it did not sit easily with current practice in the industry.

It gave me especial pleasure to say, as I did before supper, that we concluded that it would be right that disputes which are subject to scheme adjudication could normally be reopened at practical completion of the contract and that we propose to amend the scheme proposals when we consult, following Royal Assent, because otherwise I would have been faced with the inevitability of going down before the noble and learned Lord, Lord Ackner, as I have seen so many other Ministers do on earlier Divisions.

What concerns me rather more today is that certain noble Lords opposite do not seem fully to have grasped the significance of subsection (2) of Clause 112, which reads, Before making any regulations under this section the Minister shall consult such persons as he thinks fit". It is an enormous task to consult the whole of the construction industry. There are some 120 or more major trade groups within the industry, and we propose to consult all of them. We will also consult the major clients and client groupings, and specialists such as construction lawyers, insurers and academics. For the original consultation exercise on fair construction contracts, the Department of the Environment sought the views of around 1,500 institutions, companies and individuals. The exercise planned to follow Royal Assent on the scheme for construction contracts would be on a similar scale. But the noble Lords whose amendments we are considering would like to settle the scheme for construction contracts now, and impose something upon the industry which it has little chance to consider.

The scheme as it stands is in no state to be incorporated in the Bill. It is a document which is entirely open to discussion with the construction industry. We have not laid our life on the line on any aspect of it. It is an illustration of what a scheme has to do. It draws the industry's attention to the points that need to be addressed and we look forward to long and fruitful discussions with the industry so as to produce a scheme that is attractive to them. There is no way in which we can do that. Distinguished as the House is this evening, it is a very small House compared with the number of people in the construction industry with whom we must consult and the time available to us is limited compared with the time we intend to take.

It would be entirely inappropriate to embed into the Bill this scheme or any other possible version of it that we might dream up in the next few weeks and months. That would simply solidify something that would need to be completely changed by secondary legislation shortly thereafter and might well have been settled by secondary legislation anyway. We have no intention of implementing any scheme before a proper consultation exercise has been conducted. Because we were asked to do so by noble Lords, we produced a draft to demonstrate the sort of things which the scheme must cover. However, this is neither the time nor the place for settling matters of detail.

I recognise that noble Lords have legitimate concerns about the general shape of the scheme. By introducing amendments that relate to it, they are giving us an opportunity to consider their concerns and to indicate how they would have us adjust our proposals for the scheme. That strikes me as quite right and proper. On that basis, I am happy to offer some comments on the suggestions put forward by the noble Lord, Lord Howie, in Amendments Nos. 179 to 196.

On Amendments Nos. 179 and 183, the noble Lord conceded in Committee that complete independence may not always be desirable in an adjudicator. The Bill would require him to be impartial, and we believe that is clearer and more helpful from a legal point of view than specifying matters of spirit.

We have heard the noble Lord's arguments on Amendment No. 180 several times. What he outlines here may be relatively easy to achieve by contract, but will require careful consideration before we embark on a statutory instrument. However, we propose to provide for a resolution procedure where the dispute may be reopened on practical completion.

Amendment No. 181 would prohibit a firm or organisation from acting as an adjudicator. We have always believed that the adjudicator should he a single individual and, when it comes to drafting the scheme proper, we will make sure that neither a registered company nor a partnership can act as an adjudicator.

Amendment No. 182 concerns the right of a party to question an adjudicator's jurisdiction. We believe this is something for which we must provide. If the scheme were silent on the point parties would be much more likely to question jurisdiction in the courts. The section which the noble Lord, Lord Howie, would have us delete would reduce the prospect of court intervention rather than encourage it, as he seems to fear.

I mentioned Amendment No. 183. Amendments Nos. 184 and 185 concern time limits. These are clearly detailed matters on which we would like to take the views of the industry.

Amendment No. 186 would remove the right for an adjudicator to rule a dispute unsuitable for adjudication. This would be entirely inappropriate. It is a general rule of law that any tribunal required to adjudicate something can and should consider whether the matter brought before it is appropriate for decision by that tribunal.

Amendments Nos. 187 and 188 concern detailed procedural matters which should be left to industry consultation.

Amendment No. 189 would have the effect of restricting an adjudicator to consideration of material presented to him, rather than letting him decide procedures. However, we would not wish to restrict an adjudicator's ability to investigate cases without first considering the views of the whole industry.

Amendments Nos. 190 and 191 appear to concern the right of an adjudicator to award interest, but in fact they would have no effect upon the scheme description as drafted, short of removing the reference to an arbitrator. In Committee the noble Lord criticised us for lifting parts of the Arbitration Bill and "shoving" them into the scheme, but now we find him completing the process for us. Perhaps there are parts of the Arbitration Bill that he likes more than others.

What the noble Lord, Lord Howie of Troon, outlines with Amendment No. 192 will require most careful consideration. However, I would like to point out that our proposals for primary legislation are quite consistent with the intent of the amendment. Scheme details must await full consultations with the industry.

Amendment No. 193 affects paragraph 30 of the draft proposals for the scheme, which would allow an adjudicator to come to a provisional decision while he completed his deliberations. Clearly, any such decision would have to be confirmed or replaced by a final decision, even if the dispute were to be reopened later.

Amendment No. 194 would remove the right of a party to refer a dispute back to the adjudicator in the event that a non-monetary decision was ignored. Paragraph 52 of the draft scheme proposals was intended to allow a party to seek financial redress, through adjudication in such cases, and we think there is much to commend this. However, we will consult the industry on remedies for non-compliance.

Amendment No. 195 rather labours the point that an adjudicator should not he liable to anyone for an action taken in good faith. However, we have already said that an adjudicator should not be liable except where he acts in bad faith, so he could not then be liable to anyone in particular. Amendment No. 195 is simply unnecessary.

Lastly, Amendment No. 196 would give an arbitrator the same powers as the court in the event of a case being reopened. The noble Lord has made an interesting point, and we must look closely at the powers of anyone who is asked to rule on a reopened dispute. I thank him for drawing it to our attention.

I hope that that gives some indication of our openness on matters of detail and, indeed, on matters of principle that are there in the scheme.

I would like to turn my attention to the "rival" scheme of the noble Lord, Lord Howie of Troon, since he has offered it to the House, and since it offers my hard-pressed officials a chance to throw back at the noble Lord, Lord Howie, something of what he has been throwing at them over the past few days.

First, the noble Lord criticised the government version of the scheme at Second Reading for its length. A close reading of Hansard suggests that he then believed the whole matter could be dealt with in as few as 14 lines. Now that the noble Lord has tried his own hand, I hope he will agree that the matter is rather more complex than he first suggested. Indeed, I believe that the only reason his scheme is shorter than our own version is that, in many important respects, it is much less satisfactory.

As the noble Lord said, he has based his scheme on the Conciliation Procedure published by the Institution of Civil Engineers in 1994. Indeed, it almost looks as though the noble Lord has been through that publication and crossed out the word "conciliator" each time it appears, replacing it instead with "adjudicator". Perhaps that is why we see the adjudicator making parties meet each other in paragraph 9 and struggling to help them reach agreement in paragraph 11.

We must be quite clear—the noble Lord's scheme has been tailored for use in civil engineering, with little regard to the construction industry as a whole. No doubt this is why it allows upwards of three months to reach a decision, when many smaller disputes require movement within days or weeks. More importantly, it offers conciliation and not adjudication. In his report, Sir Michael Latham distinguished the two quite clearly. His conclusion was: Most disputes on site are, I believe, better resolved by speedy decision—i.e. adjudication". I wish to turn now to another point and one on which the government description of the scheme has been roundly criticised. We have been told over and over again by the noble Lord and others that what the industry wants is for disputes to be resolved until practical completion but that it should be possible to re-open them thereafter. That is what we will provide if—as I suspect it will—that view holds throughout consultation. But the Howie scheme, if I may call it that, makes no mention of the effect of adjudication. According to his scheme, the adjudicator produces a recommendation and then starts collecting his fees. Whether parties are bound by what he says, or for how long, or whether they have rights of appeal, is left entirely vague. That is one of the reasons why the scheme is shorter than ours.

Finally, I should like to consider briefly the nature of the decision-making process, if indeed this rechristened conciliator can be said to reach a decision at all. This is a strange process. In paragraph 10 we are told that the adjudicator may conduct proceedings, in any way that he wishes". In paragraph 11 we hear that the adjudicator may consider confidential information which he is not allowed to divulge. In paragraph 16 we are told that the recommendation, need not necessarily be based on any principles of contract, law or equity". And yet, from this quixotic, covert, inequitable creature—be he conciliator or adjudicator—there is no right of appeal. If parties wish to sign away their rights like this in contract, that is their own look out. But the noble Lord is surely not seriously telling us that we should enshrine it in statute as the back-up for people who do not have a proper contract.

It was with some relief that we saw the amendments put forward at the end of last week by the noble Lord, Lord Berkeley. They certainly make a bad scheme better, although they still do not make it right. It is helpful that the noble Lord, Lord Berkeley, should recognise that the adjudication procedure must have some force and be able to produce a result which requires the parties to act. Since the adjudicator must he called upon to resolve the dispute, the term "decision" is much to be preferred to "recommendation". The noble Lord is also to be congratulated on attempting in Amendment No. 197B to offer the industry a means of resolving its disputes which does not focus solely on the interests of civil engineers.

However, the noble Lord, Lord Berkeley, is still asking us to impose a dispute resolution procedure where the parties' legal entitlements are considered only, within the practical constraints of a rapid and economical adjudication process", whatever that may mean. Is this cheap and cheerful, or just quick and dirty? I am also more than doubtful about the adjudicator being asked to take a, fair and commercially reasonable view". Again, these may be matters for a contract, but not for legislation.

In addition, while I welcome the noble Lord's attempts to remedy the deficiencies in proposals that fail to indicate the effect of an adjudicator's decision, I have one or two reservations. In particular I am worried about the effect on certain common law rights of the last sentence of paragraph 16A, and I am also doubtful about decisions which may be immediately overturned by an arbitrator or in the courts. That would not help much in many construction disputes and runs counter to what most in the industry have told us they want.

I apologise for replying at such length. However, I thought it appropriate when noble Lords have taken a great deal of trouble to put down these individual amendments.

Lord Howie of Troon

Dear me. I thought the Minister was a little severe about civil engineers—as though they had nothing whatever to do with construction. They are right at the heart of it. The right of appeal is enshrined in the civil engineering contract anyway. My amendment, inadequate though it may be—all the amendments of my noble friend Lord Berkeley are a great improvement on my humble efforts—describes a method of adjudication, not a method of proceeding to arbitration and other things of that nature. So we can forget all that fustian that the noble Lord had written out for him. I cannot believe that he would have approached me in those terms off his own bat. I am perfectly sure that that is not so.

The noble Lord said that he was going to consult people. We in this House feel that in matters of legislation in an area of which many of us know something, we should be consulted and not just the industry as a whole. As far as we are being consulted, the noble Lord should remember that, few of us as there are, as he pointed out, we are the tip of an iceberg. That iceberg is represented by the comments which my noble friend Lord Berkeley produced. The noble Lord, Lord Elton, suggested that this should be a consensual matter. It is anything but that, as the comments of my noble friend Lord Berkeley showed.

I have no more to say except to welcome entirely the intervention of the noble and learned Lord, Lord Ackner. I wish I had been able to put the issue as concisely, correctly, totally and truthfully as he did. I also welcome the support of the noble Viscount, Lord Ullswater, for Amendment No. 192. It may be that my amendment has certain inadequacies, but we have here a parliamentary system where they can be put right, and they often are, as a Bill goes through both Chambers. I have to take the opinion of the House on this matter.

9.56 p.m.

On Question, Whether the said amendment (No. 159) shall be agreed to?

Their Lordships divided: Contents, 29; Not-Contents, 48.

Division No. 2
CONTENTS
Ackner, L.	Gould of Potternewton, B
Berkeley, L.	Graham of Edmonton, L. [Teller.]
Blackstone, B.
Carmichael of Kelvingrove, L.	Haskel, L.
Carter, L.	Hilton of Eggardon, B.
Dean of Thomton-le-Fylde, B.	Hollis of Heigham, B.
Donoughue, L.	Howie of Troon, L.
Dormand of Easington, L.	Jay of Paddington, B.
Dubs, L. [Teller.]	Judd, L.
Farrington of Ribbleton, B.	McIntosh of Haringey, L.
Gladwin of Clee, L.	Monkswell, L.

Morris of Castle Morris, L.	Turner of Camden,B.
Nicol, B.	Williams of Elvel, L.
Peston, L.	Williams of Mostyn, L.
Richard, L.	Winston, L.
NOT-CONTENTS
Addison, V.	Kingsland, L.
Annaly, L.	Long, V.
Blatch, B.	Lucas, L.
Bridgeman, V.	Lucas of Chilworth, L.
Carnock, L.	Lyell, L.
Chesham, L [Teller.]	Mackay of Ardbrecknish, L.
Clark of Kempston, L.	Mackay of Clashfern, L. [Lord Chancellor]
Courtown, E.
Cross, V.	Mackay of Drumadoon, L.
Cumberlege, B.	Marlesford, L.
Dean of Harptree, L.	Miller of Hendon, B.
	Pilkinpton of Oxpnford, L
Denton of Wakefield, B.	Rawlings, B.
Digby, L.	Renwick, L.
Dixon-Smith, L.	Seccombe, B.
Elles, B.	Skelmersdale, L
Elton, L.	Soulsby of Swaffham Prior, L
Glenarthur, L.	Strathclyde, L. [Teller]
Goschen, V.	Swinfen, L.
Harlech, L.	Trumpington, B.
Harris of Peckham, L.	Ullswater, V.
Hayhoe, L.	Wakeham, L.
Henley, L.	Wilcox, B.
HolmPatrick, L.	Wynford, L.
Howe, E.	Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

10.4 p.m.

[Amendments Nos. 160 to 162 not moved.]

Baroness Hamwee moved Amendment No. 163: After Clause 125, insert the following new clause—

SECRETARY OF STATE TO REPORT ON ANNUAL FINANCIAL ASSISTANCE (". The Secretary of State shall report on an annual basis on the exercise of his powers pursuant to section 123 including—

1. (a) the amount of financial assistance given under section 123;
2. (b) the form of such assistance;
3. (c) the terms on which such assistance was given;
4. (d) the numbers of bids addressing each of the activities referred to in section 123(2) at the stages of outline bids, final bids and approved bids;
5. (e) the role of community and voluntary organisations in the activities concerned;
6. (f) the methods used to assess priorities for assistance; and
7. (g) any distinctions between regions in the provision of assistance.").

The noble Baroness said: My Lords, Amendment No. 163 takes us to that part of the Bill which is concerned with regeneration and repeats an amendment that I moved at the last stage but with a number of alterations which I hope reflect the concerns expressed then by the Minister.

The operation of the single regeneration budget is very much lacking in transparency and accountability. My amendment seeks to go a little way—and no further—to rectify that. It proposes that the Secretary of State shall report certain matters on an annual basis in order that the public, including those who hid 14 assistance under the regeneration arrangements, can understand how the scheme is proceeding. Both national and regional regeneration strategies ought to be understood and be the subject of public discussion. I have been in correspondence recently with the London Planning Advisory Committee, which I used to chair. As its name suggests, it is an advisory body. That body tells me it is suspected that the Government Office for London has an internal regeneration strategy but that it is not public. That comment seems to me to encapsulate a great deal of what is wrong with the way in which the single regeneration budget is operated.

The amendment proposes that a number of matters as set out in paragraphs (a) to (g) are reported. In drafting those paragraphs I have taken into account the current procedure. In responding to the report of the Environment Committee on the budget, the Government have produced a helpful document. One item is a table that shows the percentage of bids which address the SRB challenge fund objectives at each stage of the bidding process. Those objectives list matters such as employment, education, economic growth, crime prevention, quality of life and so on. The table shows the percentage of bids which address those objectives. Very many bids will address more than one objective at the outline stage. The table then shows the percentage of bids encouraged by the Government to proceed to the next stage. It shows the percentages at the final stage of bidding and the bids approved. That fairly simple reporting mechanism puts into accessible form information about the workings of the SRB budget which is desirable and necessary. The budget is operated on a "quango" basis. However good the intentions of those who operate it, nevertheless democracy and accountability are quite distant from the operating mechanism.

The noble Earl, Lord Ferrers, at that stage said he was concerned about the imposition of a bureaucratic burden in the reporting provisions I then proposed. I understand those concerns. That is why I have based my amendment on the report that the Government have themselves recently provided, which I understand is likely to be an annual exercise. The noble Earl also said that he thought it was important to encourage people to think of the project as a whole and not in terms of separate activities. Certainly, I would not expect the percentages addressing different objectives to add up to 100. They should add up to several hundred per cent. because many objectives are likely to be addressed by successful bids.

The noble Earl added that the Government were keen to establish precisely what achievements are realised by projects. Therefore, partnerships are required to report regularly on the output of their projects. I hope that the amendment fits neatly with that approach by the Government.

It is important for those whose bids have not succeeded to understand how theirs compared with the successful bids. The process of competition requires considerable effort by people in the public sector and their partners in the private sector. It would be a most unhappy situation if, having put in that effort, an adequate attempt were not made to assist those whose bids failed to understand where they might have failed by seeing how the Government are spending the regeneration budget and how they are reacting as a whole to the various bids that are made. I beg to move.

Lord Lucas

My Lords, the amendment would require annual reports from the Secretary of State about financial assistance given under Clause 123. I am pleased that the noble Baroness seems to have accepted that the information sought in the amendment she tabled in Committee would place a considerable and unnecessary bureaucratic burden on partnerships. However, I have to say that the proposed new clause could lead to information overload of a quite significant degree. In relation to the single regeneration budget, the published annual report of the Department of the Environment gives details of the amount of financial assistance made and the output or results from the projects supported.

In addition, summary information about outline and final SRB challenge fund bids is published by region, and copies of individual bids are made available for public inspection by government offices for the regions. This information includes the type of project supported and the nature of the partnership, including the involvement of community and voluntary organisations.

The methods used for assessing priorities for assistance are clearly set out in the bidding guidance for the single regeneration budget challenge fund, the latest version of which was published on 29th March. The financial allocations to each region are also published. The form of assistance and the terms on which assistance is given are set out in SRB challenge fund guidance notes Nos. I and 4.

All this adds up to a great deal of published information which is readily accessible to those with an interest, including the local authority associations, community and voluntary organisations and other bodies. The Department of the Environment also co-operates fully with the University of Birmingham in compiling a detailed analysis of the challenge fund which, again, is published in full and summary form. We are not at all clear whose interests would be served by having yet another report setting out all this information in a slightly different form.

I am aware that the noble Baroness made a number of detailed arguments to which I may not have replied exactly. I shall study what she said when I read Hansard. If I believe that I might have given a fuller reply I shall write to her. I hope that with that scant assurance the noble Baroness will feel able to withdraw her amendment.

Baroness Hamwee

My Lords, I am afraid that it is scant assurance, but perhaps that is not the fault of the Minister. He suggested that if a provision of this kind were accepted we would be likely to provide for an information overload. He went on to explain the detailed but not statutorily required provisions for providing information in a number of places, not necessarily easily accessible or comparable.

I do not think that it is a good argument to say, "The information is there but we shall not commit ourselves to continuing to provide that information, and, if we provide it, heaven forbid that we should make life terribly straightforward for anyone who is attempting to use the funds available from the regeneration budget in the best interests of the community".

I feel quite strongly on this subject. On the basis of the noble Lord's scant assurance, I look forward to hearing from him. I hope that he will respond to the points that I have made both in moving the amendment and in responding to it in time for me to consider what to do on Third Reading.

While I accept that the requirements of the budget are evolving and that it is an organic process, nevertheless, I believe that they are considerable and that it is appropriate to seek to find mechanisms for making the whole process a great deal more transparent. There needs to be a degree of accountability, which is sadly lacking. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

10.15 p.m.

Lord Dubs moved Amendment No. 164:

After Clause 126, insert the following new clause—

REGENERATION COMPANIES IN WHICH LOCAL AUTHORITIES HAVE INTERESTS

(". Part V of the Local Government and Housing Act 1989 shall not apply to any company whose sole purpose is the regeneration of an area in line with the published regeneration strategy of the local authority concerned.").

The noble Lord said: My Lords, local authorities may set up companies in order to undertake regeneration work in their localities. The difficulty is that if what they do is constrained by Part V of the Local Government and Housing Act 1989, any capital expenditure incurred by a local authority will be set against the local authority's capital limits. That would act as a serious constraint upon the ability of local authorities to fund other capital projects. Therefore, the main purpose of the amendment is to take away that constraint and give local authorities more freedom with which to undertake regeneration in their areas.

However, Part V of the Local Government and Housing Act also has other disadvantages. When a local authority sets up a company by putting in a small proportion of the equity of that company, it may well discourage the private sector from participating because it may sense that the local authority is not willing to make an adequate commitment to the project. Again, I believe that it is right that local authorities should have the flexibility to vary the amount of equity which they put into a company to reflect local circumstances. It may well be that where the private sector sees that the risk is high, the local authority must make a greater contribution to the equity stake of that company.

There is also the further point that there is uncertainty as to whether the private sector controlled companies are eligible to receive European Union funds. Therefore, the effect of the amendment would be to give the same exemption to companies set up specifically by local authorities to undertake regeneration schemes according to statutorily approved development plans. That would be a sensible amendment and would give local authorities more freedom of action.

Finally, the amendment would have the added advantage that it would avoid the need for the Secretary of State to have to exercise his discretion to give exemptions from Part V on a case-by-case basis. That is a rather burdensome piece of bureaucracy and this amendment would allow a more consistent approach. I beg to move.

Lord Lucas

My Lords, one of the aims of the regulatory regime introduced with Part V of the Local Government and Housing Act 1989 is to encourage local authorities to enter into joint venture arrangements where the private sector is in the lead. The exclusion of all regeneration companies from the regime would undermine that objective.

In any case, as has been said, the Secretary of State already has powers under Sections 68(1) and 69(1) of the 1989 Act to exempt local authority controlled or influenced companies from the restrictions imposed by order under Part V. Applications from regeneration-orientated companies will be considered on their merits. A number of time-limited exemptions have been issued to city challenge and SRB challenge fund companies. I suspect that the difference between us on the matter is entirely one based on politics and, therefore, for the purposes of this evening, irreconcilable. However, I shall take up the small point mentioned by the noble Lord about European funding and write to him on the subject.

Lord Dubs

My Lords, I was not aware that the difference between us was simply a matter of party politics. I was about to say that the Minister obviously wanted to be helpful on various occasions today. Indeed, I was hoping that he would be equally helpful on this amendment. But, alas, it was not to be. I fear that we shall not make much progress with the amendment this evening. Therefore, as the Minister is being totally intransigent, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 127 [Resolution by local housing authority to pay relocation grants]:

Lord Lucas moved Amendment No. 165: Page 74, leave out lines 5 to 18 and insert—

1. ("(a) consider whether their resources are sufficient for the purpose of carrying into effect a resolution declaring the power to pay relocation grants to be exercisable as regards that area; and
2. (b) in deciding that question, have regard to such guidance as may from time to time be given by the Secretary of State.

(2) Where a local housing authority decide that their resources are sufficient for that purpose, they shall—

1. (a) consider whether to pass such a resolution: and
2. (b) notify every person on whom notice is required to he served under subsection (2B)(a) of section 289 of the Housing Act 1985 that they are so considering and invite him to make representations.

(3) In deciding whether to pass such a resolution, a local housing authority shall—

1. (a) have regard to such guidance as may from time to time he given by the Secretary of State: and
1003
2. (b) take account of any representations made by persons notified under subsection (2)(b).").

The noble Lord said: My Lords, in moving the amendment I shall, with the leave of the House, speak also to Amendment No. 166. Local authority associations have pressed us to make these two amendments, the purpose of which is to remove the obligation on local housing authorities to consult those who are to be displaced by area clearance about the possibility of giving relocation grants if the authority does not have the resources to make such grants available.

As currently worded, Clause 127 imposes a duty on authorities to consult people in the area clearance before they decide whether they should make the power to give relocation grants available in that area. The requirement could raise expectations that grant might be forthcoming even though an authority then finds that it does not have the resources to pay the grant. Clearly this is unsatisfactory from the point of view both of the authority and of the people who are being consulted.

Amendment No. 165 will enable authorities to consider the question of resources first so that they need only consult if they are satisfied that resources are available. They will be required to have regard to the Secretary of State's guidance on the matter. Amendment No. 166 is consequential. I beg to move.

On Question, amendment agreed to.

Lord Lucas moved Amendment No. 166: Page 74, line 25, leave out ("(2)(b)") and insert ("(1)(b) or (3)(a)").

On Question, amendment agreed to.

Clause 129 [Relocation grants: qualifying persons and qualifying dwellings]:

Lord Dubs moved Amendment No. 167: Page 75, line 23, leave out ("if') and insert ("whether it is new or existing, provided it is considered by the local housing authority to be of a suitable size and condition and").

The noble Lord said: My Lords, the purpose of the amendment is to ensure that local authorities have the opportunity to pay relocation grants not only for new build dwellings but also in relation to existing dwellings providing that the local authority considers them to be suitable. As I understand it, without the amendment there would only be the power to pay relocation grants for new build dwellings. That seems excessively restrictive.

The grants about which we are talking can be offered by local housing authorities to people who lose their homes as a result of clearance activity. The grants will supplement existing compensation provisions to enable the people affected to purchase a replacement dwelling within the same clearance area or within any other area designated by the local housing authority, having regard, of course, to any guidance issued by the Secretary of State. Again, it seems to me that the amendment would add flexibility and make it easier for local authorities to achieve their aim of clearing areas by offering the wherewithal for decent, alternative housing. I beg to move.

Lord Lucas

My Lords, I appreciate that this amendment is intended to give authorities some measure of control over the kind of dwellings which would qualify for relocation grant. The stipulation that the qualifying dwelling should be a new or an existing dwelling is, in our view, unnecessary since, in the absence of any qualification to the word "dwelling", both are implied. That is certainly what we intend, and we shall no doubt make this clear in our guidance to authorities on the new provisions.

The more substantive point is whether it should be a matter for local housing authorities to decide whether a dwelling is of a suitable size or condition for the person applying for grant. Clearly it is important that a person should not be given more funding than is necessary to buy a home which will meet his family's reasonable housing needs. Conversely, it may be a poor investment to fund the purchase of a home which is in poor condition or which is likely to lead to overcrowding. We had intended to meet these concerns by specifying conditions as to the size and physical state of the property using the powers in Clause 128(2)(c). Further, authorities will have the power under Clause 130(1) to decide the amount of grant that they are prepared to give in particular cases.

We believe that these powers should enable us and authorities to ensure that grant is only paid in appropriate cases. However, although I cannot promise anything, we will certainly look at the noble Lord's suggestion more closely to see whether additional local authority discretion would help here. I hope that in the light of that improved forecast compared with the previous amendment, the noble Lord will be prepared to withdraw the amendment.

Lord Dubs

My Lords, I am delighted that the Minister has changed tack and is being helpful and conciliatory. In the light of what the Minister has said, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 131 [Relocation grants: condition for repayment on disposal]:

Lord Lucas moved Amendment No. 168: Page 77, line 24, leave out from ("in") to ("as") in line 25 and insert ("a hospital, hospice, sheltered housing, residential care home or similar institution").

The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 12 on the first day of Report, but there was some confusion about whether the amendment was on a Marshalled List. To put the record straight, the purpose of this amendment is to extend the list of care institutions to which an elderly or infirm person may go to live without triggering the requirement to repay relocation grant, to include a hospital, hospice or similar institution, bringing Clause 131 into line with the corresponding provisions on renovation grants in Clauses 11 and 48 of the Bill. I beg to move.

On Question, amendment agreed to.

Clause 137 [Home energy efficiency schemes]:

[Amendments Nos. 169 to 172 not moved.]

Lord Swinfen moved Amendment No. 173:

After Clause 137, insert the following new clause—

PROVISION FOR DISABLED PEOPLE IN CONSTRUCTION OF NEW DWELLINGS

(" . The Secretary of State shall exercise his powers under section I of the Building Act 1985 to introduce an extension to Part M of the Building Regulations 1991 in order to ensure that in the construction of new dwellings reasonable provision shall be made for disabled people to gain access to and to use the dwelling, including sanitary conveniences.").

The noble Lord said: My Lords, this is a similar amendment to one that I moved in Committee. As can be seen from the wording, it is designed to ensure that, on this Bill becoming an Act, the Secretary of State shall exercise his powers to extend Part M of the building regulations so that, in the construction of new dwellings reasonable provision shall be made for disabled people to gain access to and to use the dwelling, including sanitary conveniences".

The Government have already indicated their intention of bringing in regulations under Part M for new residential dwellings. This will bring privately funded new housing into line with publicly funded housing as housing association and local authority housing is already built to this standard.

In January 1995 the Department of the Environment produced a consultation paper with representations to be submitted by the end of April last year. This matter has therefore been under consideration for nearly a year. In Committee my noble friend Lord Lucas stated that he was unable to say when there would be any movement in this matter. Perhaps, three weeks later, he will be able to give the House more encouraging information. I understand that the major concerns over the extension of these regulations to dwellings are, first, a general dislike of regulation. That, of course, is understandable, but unjustifiable in this case. Only a level playing field and clear, simple, minimum standards will bring about necessary change in practice. The construction industry had similar reservations about the introduction of Part M to non-domestic buildings 10 years ago, which have proved in practice to be unfounded.

Secondly, there are worries about cost. The Department of the Environment's cost compliance assessment (for Part M applied to new housing) demonstrated that cost is not a significant factor. It also showed that the application of Part M would not affect valuations—that is, that new housing would retain value vis-à-vis second-hand housing on the market.

Thirdly, there is fear of change. Current house types are popular. Will changes in design brought about by regulation put off potential house buyers? Accessible features are attractive and add rather than detract from the appearance of a new house. A recent user evaluation of Lifetime Homes (by the University of Humberside) established that all 62 respondents who were older but not necessarily disabled people held a very positive view and were impressed with the flexibility of use that the new houses offered.

Fourthly, there is the possible reduction on some sites in the number of dwellings that can be built. This, I think, would be on very few sites. But this was also the case when other regulations on light, air, parking and depths of gardens were introduced.

The question that should be answered then is not whether regulations should be introduced but what prevents their introduction. In recent housing debates the Government have argued that it is difficult to allow special treatment for particular groups of people; for example, the elderly and people with disabilities. Special treatment becomes necessary only if ordinary arrangements do not take everyone's needs into account. It has been amply demonstrated, through Lifetime Homes and the adoption of accessibility standards by housing associations over the past two to three years, that ordinary new houses can provide for most people, irrespective of age or disability.

In replying to the amendment, can my noble friend say whether he would be prepared to arrange a meeting with me to discuss this matter as it may well be the best way to resolve the difficulties? I beg to move.

10.30 p.m.

Lord Dubs

My Lords, I support the amendment moved by the noble Lord, Lord Swinfen, with his usual persuasive powers.

I believe that these arguments have been put forward on a number of occasions during Committee and this stage of the Bill. The Government have moved part of the way towards accepting the force of the argument but have never given the complete commitment that I and the noble Lord would like.

The proposition in this new clause is reasonable. If we do not achieve the aim of the new clause, we run the risk that new buildings will be built; they will not have the facilities for disabled people; and when occupied by people who eventually become disabled the cost of adapting those buildings will be much greater. Alternatively, people will have to leave those buildings and find other accommodation more consistent with their needs and developing disabilities.

There is a backlog. Many buildings in this country are occupied by elderly people who may become disabled and need adaptations. If we were to make the move now and undertake what the amendment provides, we would begin the process of ensuring that all buildings over a period of time are suitable for use by disabled persons.

It is a reasonable proposition. I hope that the Minister will accept it. It represents long-term economy. It represents the proper way of meeting the needs of disabled people and makes complete sense. It does not involve the Government in having to lay out a lot of money. I cannot understand why the Government do not accede to the persuasive arguments of the noble Lord. Lord Swinfen.

Baroness Hamwee

My Lords, when the noble Lord. Lord Swinfen, moved a similar amendment at the previous stage, at about the same hour of the evening. I felt that the response which he obtained was unhappy. It combined the astonishment of the Government at the large number of replies to their consultation on the White Paper and the apparent inability or lack of enthusiasm on their part to move speedily in assessing those responses with a request to the noble Lord, Lord Swinfen, to contain himself in patience. When he asked his noble friend whether he could give an indication of when there would be movement, the answer was entirely to the point. It was "no".

I remember being a little startled that after a response which seemed to be sympathetic to the subject matter of the amendment, the Government could not even produce an emollient and encouraging response. Perhaps one should admire them for their honesty. However, it is an appropriate point to raise again. I hope that this time the Government, having heard the arguments and had an opportunity to reflect on the bluntness expressed last time, may be more encouraging and constructive in their response.

Lord Lucas

My Lords, my noble friend asked three questions. He asked whether anything has changed since Committee. No, my Lords. He asked whether we will pre-judge the consultation which is taking place. No, my Lords. He asked whether we would have a meeting with him to discuss this. Yes, my Lords, I shall set it up tomorrow.

Lord Swinfen

My Lords, at last we appear to be getting somewhere, for which I am extremely grateful. I have not only raised the matter on this Bill, I have been raising it for a number of years in the House, as have other noble Lords. I am certain that honourable and right honourable Members in the other place have been doing the same. However, with my noble friend's assurance that he will set up a meeting, perhaps we will be able to move forward in that way. I know that it is not essential for the matter to be in the Bill because the powers are already on the statute book. Therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 139 [Housing action trusts: orders for dissolution]:

Lord Dubs moved Amendment No. 174:

Page 82, line 11, leave out subsections (2) to (4) and insert— ("(2) In subsection (2)(b)(ii) omit "any person" and insert "the relevant local authority". (3) In subsection (2)(b)(iii) omit "any person" and insert "the relevant local authority". (4) After subsection (4) insert— (5) When determining the financial terms for any such disposal or transfer mentioned in subsection (2)(b) above, the Secretary of State shall have regard to ensuring that no local authority is financially disadvantaged.".").

The noble Lord said: My Lords, the amendment stands in my name and that of my noble friend Lord Williams. In moving it, I wish at the same time to speak to Amendment No. 175. The amendments are concerned with housing action trusts, and Amendment No. 174 in particular deals with the requirement that where property is transferred and the rights and liabilities remain with a housing action trust at its dissolution to the relevant local authority the Secretary of State should be required to consider how to avoid financial disadvantages from such a transfer. Amendment No. 175 is to ensure that property occupied by secure tenants is not disposed of or transferred using the amended dissolution procedure introduced by the clause.

The Government have on a number of occasions given undertakings that when housing action trusts are dissolved, assets should be transferred to the local authority but that the local authority should not have to bear the burden of any outstanding liabilities that those trusts incurred. The housing action trusts were introduced by Part III of the Housing Act 1988. At that time, the Government's White Paper said: There are some areas of local authority housing, particularly in some of the inner urban areas, where social problems and housing disrepair are so serious that in the Government's view more direct action involving both public and private sectors is needed to obtain improvements over a reasonable timescale. The Government therefore proposes to take powers to establish bodies analogous to urban development corporations in designated areas to take over responsibility for local authority housing, renovate it and pass it on to different forms of management and ownership, including housing associations, tenant co-operatives and approved private landlords. These new bodies, to be known as housing action trusts, will provide scope for tenants in these areas to have a diversity of landlord and ownership. The HATs will have a limited lifespan. Their remit will be to secure the improvement of the stock transferred to them in their area and then to hand it over to other owners and managers".

As originally envisaged, HATs would have been established regardless of the wishes of the tenants in the local authority housing area affected. Subsequently, that was changed. To cut a long story short, when Sir George Young became housing Minister a different model of housing action trust was established, starting in 1991. That involved significantly improved levels of tenant consultation and involvement, including places on the board and an informal promise that tenants would be allowed to return to the local authority once the work of the HAT had been completed. So we are talking about undertakings given by the Government as regards the HATs that were then established.

With this amendment I want to achieve an easy transfer, and one from which a local authority will not incur any particular financial disadvantage. If that were to be the case, there could be a speedy transfer of HATs that were being dissolved to the local authorities. That is the proper way for such matters to be handled.

Property remaining with a housing action trust at the time of dissolution should be returned to the local authority in the area for a number of reasons. In most instances such property will originally have been in the ownership of the local authority. Therefore it is only right and proper that it should be returned to the local authority. Secondly, local authorities are clearly the most appropriate bodies to determine what part such a property should play in future housing provision for the area. Thirdly, and very importantly, local authorities are democratically accountable for the decisions they take. It is right and proper that housing action trusts should be returned to bodies that are elected and are democratically accountable to local people in the area.

As I said, it is important that no financial disadvantage should attach to the transfer of the property remaining with a HAT at its dissolution. If liabilities were to exceed assets it is right and proper that the local authority should be fully compensated for that. Indeed, Sir George Young said in the Commons at the Committee stage of what became the Leasehold Reform, Housing and Urban Development Act 1993: It might be helpful if I were to make clear at this stage that government policy is that any such transfers will be at nil cost. The local authority will not be required to pay for the properties".

That is a very clear undertaking and the amendment seeks to give effect to it. I beg to move.

Lord Lucas

My Lords, Clause 139 amends the provisions for winding up housing action trusts, making clear that residual responsibilities can be passed to an existing body, such as a residuary body, set up to handle matters from several public bodies. But other arrangements, including transfers to local authorities, are not precluded. In particular, the clause does not affect the right of secure tenants of a trust to return to being tenants of their local authority if they so choose. Those secure tenants have a right to choose where they go to. So most of the assets of a trust in that form are going where the tenants want them to go.

In practice, trusts will not be wound up until they have disposed of most of their assets, including their housing and their liabilities. In all probability what will be left is a mix of miscellaneous liabilities for which someone must take responsibility but which do not justify prolonging a trust's life.

The amendments tabled by the noble Lord, Lord Dubs, seek to direct such residual matters to local authorities only and to exclude any secure tenancies from the wind-up process. In my view it would not be sensible to restrict our options in this way; nor would many local authorities be keen on arrangements that see them as sole recipients of a bundle of miscellaneous liabilities, whether on financially neutral or any other terms.

We should retain flexibility to make wind-up arrangements that are best suited to the circumstances we find at the time—though I suspect that local authorities are a very convenient and apposite recipient for these liabilities in many instances. Accordingly, I invite the noble Lord not to press his amendment.

Lord Dubs

My Lords, I listened to what the Minister had to say. I would just make the point in relation to secure tenancies that Amendment No. 175 provides that, Property which is subject to the provisions of this section shall not include dwellinghouses subject to secure tenancies". I thought I had dealt with that point. However, it is late. I have heard the Minister's response and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 175 not moved.]

Clause 141 [Orders, regulations and directions]:

Lord Lucas moved Amendment No. 176: Page 83, line 14, after ("for") insert ("—

1. (a) orders subject to affirmative resolution procedure (see sections 103(5) and 104(4)),
2. (b)")

On Question, amendment agreed to.

Clause 145 [Commencement]:

Lord Lucas moved Amendment No. 177:

Page 84, line 21, at end insert— ("() The Secretary of State may by order under subsection (3) make such transitional provision and savings as appear to him to be appropriate in connection with the coming into force of any provision of this Act.").

The noble Lord said: My Lord, I spoke to this amendment with Amendment No. 104. I beg to move.

On Question, amendment agreed to.

[Amendments Nos. 178 to 197N not moved.]

Schedule 2 [Architects]:

[Amendments Nos. 198 and 199 not moved.]

House adjourned at thirteen minutes before eleven o'clock.