Lords Sitting of 10 July 1996

Preamble
The House met at half-past two of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Carlisle.): The CHAIRMAN OF COMMITTEES on the Woolsack.

Recruitment and Assessment Services: Privatisation
Lord McNally Lord McNally asked Her Majesty's Government:
Whether they are now able to provide evidence that the proposed privatisation of Recruitment and Assessment Services (RAS) would result in net savings in the future cost of the recruitment of civil servants.
The Lord Privy Seal (Viscount Cranborne): My Lords, indicative bids for RAS and for the fast stream contracts have now been received and are being evaluated. We are confident that we can secure value for money for customers and the taxpayer from the sale.
Lord McNally: My Lords, have Ministers any idea just how demotivated and demoralised civil servants are by the Government's constant ideological and political interference in their once proud independence? Is there not a case for Ministers to call a moratorium on such behaviour until they receive a mandate from the electorate, or a government take office which can restore pride to our Civil Service?
Viscount Cranborne: My Lords, I am sure the noble Lord would be absolutely astonished if I even thought of beginning to agree with his contention. As he well knows, the Government are wholly committed to an independent-minded Civil Service which will continue to flourish in the best traditions of the Northcote-Trevelyan settlement in the past century. He will be as aware as I am that the world changes, and that the evolution of the Civil Service—which has been endorsed by a Select Committee in another place, together with the code which it suggested and which we also endorsed—is entirely within the confines of that particular principle.
Lord Bancroft: My Lords, is the noble Viscount aware that last week the Deputy Prime Minister told the Select Committee on public service that it had been his settled intention to privatise RAS for some months regardless of what this place said or did? Does he agree that that places the government spokesman in this House—and indeed this House itself—in some difficulty? Does he further agree that the only course open to this House is to debate and decide on the merits of the Select Committee's report in the confident expectation that colleagues will shame the Deputy Prime Minister into accepting the requirements of good faith and the courtesies due to Parliament?
Viscount Cranborne: My Lords, as regards a debate on the Select Committee's report, I stand by the assurances that I have given your Lordships' House that if the Select Committee is in a position to deliver the first part of its investigation, which concerns RAS, to the Government in time for the Government to give it rapid but due consideration—the kind of consideration that the noble Lord and I agree should be given to the recommendations of a Select Committee—the usual channels will be encouraged by myself to try to find a time before the Recess in which the first part of the Select Committee's report can be debated. I understand that initiatives have been taken in that regard. I hope they will come to a satisfactory conclusion.
I read with considerable care the answers given to the Select Committee by my right honourable friend when he appeared before it. There is no doubt at all, as he made clear, that the Government have a settled intention to privatise. I would be wise to remind the noble Lord of my replies to the House in this respect. I used what may be considered too vernacular a term, but if the Select Committee suggests what the Government clearly understand to be a showstopper as to why the settled intention should become unsettled, we shall take that showstopper into consideration. That would, of course, unsettle the settled intention which my right honourable friend mentioned.
Lord Jenkins of Hillhead: My Lords, the noble Viscount the Lord Privy Seal used an uncharacteristically large number of words in that answer. He gave a somewhat defensive impression. The central point is: is the noble Viscount the Lord Privy Seal saying, or is he not, that whatever the Select Committee says, and whatever is said in this House in a subsequent debate, following the first debate with its overwhelming majority, the Government will take no notice of that?
Viscount Cranborne: My Lords, I can assure the noble Lord, Lord Jenkins, that the Government will always take careful note of what this House says. I refer him to what I said to the House on 11th June last. I said that,
"if there appeared to be by implication any suggestion which would make … a show-stopper to the project for privatisation, the Government could take note and act".—[Official Report, 11/6/96; col. 1572.]
Lord Dean of Beswick: My Lords, is the noble Viscount aware that at the meeting to which the noble Lord, Lord Bancroft, referred between the Select Committee and the Deputy Prime Minister, the latter, as I understand it, was asked a categorical question; namely, would the deliberations of the Select Committee be taken into account when it reached its decision? As I understand it, the answer from the Deputy Prime Minister was firm. He said that the decision had already been taken and would be proceeded with anyway. That is at odds with what the noble Viscount is telling us now.
Viscount Cranborne: My Lords, I refer to the phrase used by the noble Lord, Lord Bancroft. It is the Government's settled intention to privatise. If the

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Select Committee's report gives a judgment and a reason as to why we should not continue with that, the Government would, of course, be duty bound to take account of it. However, that must be within the Government's own judgment to decide. It is not a judgment that we can turn over to the Select Committee. However, it would, of course, be most unwise to ignore what the Select Committee says. It would be extremely wise for the Government to think carefully and to consider what the Select Committee says. Assuming that we can manage to arrange a debate through the usual channels before the House rises, I shall endeavour to give a reasoned reaction to the Select Committee's report during the course of that debate.
Lord McIntosh of Haringey: My Lords, is it not the case that the agreement that the noble Viscount the Lord Privy Seal reached to consider the report of the Select Committee, and to consider it seriously, was an agreement reached under pressure; in other words, under the pressure of the vote in your Lordships' House earlier this year? If that is the case, surely it is not open to the Deputy Prime Minister directly to contradict—as he appears to have done—the undertaking of the noble Viscount the Lord Privy Seal.
Viscount Cranborne: My Lords, I think that if I had been sitting where the noble Lord, Lord McIntosh, is sitting this afternoon, I should have been tempted to make the same mildly meretricious point. The truth of the matter is perfectly clear. I said to the House, in the wake of the debate that Friday to which the noble Lord, Lord McIntosh, refers, that we would take careful note of the views of the House. It was proposed to me through the usual channels that this would be a suitable matter for the Select Committee to look into in the first instance. I am sure the noble Lord, Lord McIntosh, would agree with me that I did not demur for a second that this was a suitable matter for the Select Committee to investigate; in fact I welcomed it. If that is pressure, then I hope that the usual channels would negotiate rather more forcefully on our behalf. The noble Lord clearly feels that such pressure could be effective in dealing with my noble friend the Chief Whip on this side of the House.
Lord Campbell of Alloway: My Lords, would my noble friend the Leader of the House agree that what the Deputy Prime Minister said or did not say to the Select Committee can in no way bind irrevocably the decision of another place, any more than the closing of 16 coal mines when Parliament was not in Session bound another place?
Viscount Cranborne: My Lords, I am glad that my noble friend is so familiar with the political career of my right honourable friend the Deputy Prime Minister. I stand precisely where I have always stood on the issue. I welcome very much the House's interest. The Government will take the report seriously when it appears. We shall react, I hope, with our normal courtesy, and will give reasons for our decision when the debate is held.

Gulf War: Illness Study
2.41 p.m.
The Countess of Mar: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In so doing, I declare an interest as patron of the Gulf Veterans Association.
The Question was as follows:
What was the source of funding for the contract for research into Gulf War syndrome to be conducted at King's College Medical School, and who is responsible for selecting those who will conduct the research.
The Parliamentary Under-Secretary of State, Ministry of Defence (Earl Howe): My Lords, the study to be undertaken by Dr. Simon Wessely at King's College Medical School is being funded by the US Department of Defense as a result of its calls for proposals on possible causes and treatment of Gulf War veterans' illness. Dr. Wessely's research project is one of 12 selected by the research working group of the US Persian Gulf Veterans Co-ordinating Board.
The Countess of Mar: My Lords, is the noble Earl aware that a great deal of concern is being expressed by individual Gulf War veterans, solicitors representing them and the organisations who support the Gulf veterans over the choice of Dr. Simon Wessely? He has written in The Times in uncompromising terms that Gulf War syndrome is caused solely by post-traumatic stress syndrome. Does the noble Earl appreciate that Gulf veterans who are ill will be unwilling to take part in the research because they believe that Dr. Wessely approaches the matter with preconceived ideas? Why do we have to rely on American money for research into our veterans? Can the Minister say how much we are spending on research and how many projects the Medical Research Council has already approved?
Earl Howe: My Lords, it is not for me to comment on the likely course of Dr. Wessely's research. His research proposal was selected by a team of US research experts asked to commission studies which were most likely to discover whether the Gulf War had any unusual or unique health effects on personnel who served in the conflict. It is a study commissioned by the US Government, not by us. We have nothing to do with the decision which the US authorities took.
The noble Countess asked about British research which is, of course, much more on my mind than the US programme. Work to commission research is proceeding under the oversight of the Medical Research Council. It will be resourced adequately by the Government for approved research projects. We are satisfied that the timetable is being adhered to. The MRC intends to make its decision on proposals to be accepted by the end of October and work will proceed thereafter.
Lord Ashley of Stoke: My Lords, if, as the noble Countess stated, the doctor has expressed preconceived ideas, does that not disqualify him from independent research?
Earl Howe: My Lords, I have said that this is work commissioned by the US Government. I understand that Dr. Wessely enjoys a high reputation in his particular field. I do not wish to make any further comment on that. The UK Government are not involved in the commissioning of the work.
Lord Williams of Elvel: My Lords, the Minister says that the UK Government have not been involved in commissioning the research and that it is funded entirely by the United States Department of Defense. What is the Government's view of the research? Do the Government support the project in general despite providing no funds or do they condemn it?
Earl Howe: My Lords, we have been in close touch with the US authorities on the work they have commissioned. We have no reason to doubt that the decision taken by the US authorities was not well founded. However, I cannot accept the allegation that Dr. Wessely is inherently biased towards the work he is undertaking. The article that I read concerning his approach to the subject emphasised the need for a rigorous scientific approach to research in this area, which I am sure is the only way forward.
Lord Desai: My Lords, can the Minister explain why it has taken such a long time for the MRC to commission research? It has not yet commissioned anyone. How long will it take to find the reasons for the Gulf War syndrome?
Earl Howe: My Lords, it is important that the eminent scientific and medical specialists appointed by the MRC to oversee the matter have sufficient time to assess the background material to matters related to Gulf War illness and to assess the proposals submitted. It was also important to give sufficient time to potential researchers to formulate their own proposals. I do not think that we dragged our feet. I believe that the research that the United States is undertaking, and the research that we shall be commissioning, will dovetail satisfactorily.
Lord Dainton: My Lords, will the Minister be kind enough to answer this question? Will the work undertaken by Dr. Wessely be published freely in the open literature? That seems to me a prime consideration in relation to its independence.
Earl Howe: My Lords, I do not know the answer to that question. I shall write to the noble Lord with an answer. I understand that Dr. Wessely's research will focus on the prevalence of unexplained illnesses including chronic fatigue-like symptoms in members of the UK Armed Forces deployed to the Gulf.

Armenia: Issue of Visas by British Embassy
2.47 p.m.
The Earl of Shannon The Earl of Shannon asked Her Majesty's Government:
When the British Embassy in Yerevan, Armenia, will be in a position to issue visas for visitors to this country.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, we hope to be able to start issuing visas in Yerevan for Armenian nationals this autumn. We are currently working on putting into place the necessary administrative arrangements.
The Earl of Shannon: My Lords, I thank the noble Baroness the Minister for that helpful and constructive reply. I hope that her department has always borne in mind that to ask someone to travel over 1,000 miles to obtain a visa is not helpful to that person or to us if we intend to trade with that country.
Baroness Chalker of Wallasey: My Lords, I could not agree more with the noble Earl. We have had to work out how to provide this service because, as I believe the noble Earl knows, the embassy has been established for only about a year. It is a very small post. However, between perhaps 600 and 1,000 Armenian nationals may want to come to this country. I fully agree with him that it is sensible to issue that limited number of visas in Yerevan.
The Earl of Lauderdale: My Lords, can my noble friend tell the House whether there is an Armenian Embassy in London?
Baroness Chalker of Wallasey: My Lords, yes. I am fairly certain that there is.
Baroness Cox:My Lords, does my noble friend agree that Armenia is among the most stable politically of all the countries of the former Soviet Union? It is also beginning to thrive economically despite the continuing blockades by Azerbaijan and Turkey. I hope that her answer will give some comfort to the Armenian people. They have felt immensely hurt by the inconvenience of having to travel to Moscow. They have seen it as a rather dilatory policy of initiating visas and there has been some anti-British feeling. Does she agree that her answer may give some comfort and reassurance?
Baroness Chalker of Wallasey: My Lords, I certainly hope that it will make it easier for the Armenian people who want to come to Britain to obtain those visas. That is why we are making the necessary arrangements. Perhaps I may underline that although at present commercial opportunities for British companies in Armenia are somewhat limited because of the state of the economy, there are now increases in exports to Armenia and in Armenian exports to the United Kingdom. Far more needs

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to be done to build that up and then perhaps there will be even more visitors. However, we are making a good start.
Lord Mackie of Benshie: My Lords, can the Minister tell us how many nationals of other former Soviet Union countries have to go to Moscow to get visas?
Baroness Chalker of Wallasey: My Lords, I cannot be sure of the figures as I do not have them in my file. I apologise to the noble Lord and will let him know.
Baroness Blackstone: My Lords, I hope the Minister will forgive me if my question is a little wider. Can she tell the House what steps the Government are taking, either through the European Union or with any other international agencies, to encourage new forms of co-operation in areas such as transport and communications between Armenia and its neighbours, Azerbaijan and Georgia? Does she agree that it is important to secure lasting peace in the region and that now would be a good time to start co-operation?
Baroness Chalker of Wallasey: My Lords, I am all for co-operation if the parties are also willing to discuss the issues in a sensible way. I hope that it will be achieved. The OSCE has been making efforts in the region and a good deal can be done. We have always regarded the Minsk group as the main forum for achieving progress towards peaceful settlements of the dispute in the area. It has created much more contact than there used to be, but everyone needs to work at it—all the countries in the region and not only members of the European Union. That includes Mother Russia.
Lord Pearson of Rannoch: My Lords, would my noble friend be too shocked to receive my heartfelt thanks for the answer she has given to the noble Earl, Lord Shannon? It will come as great comfort to many of us who wish to trade with Armenia and have Armenians here for training in know-how.
Baroness Chalker of Wallasey: My Lords, I am absolutely overwhelmed.

The Western Sahara
2.51 p.m.
Lord Wise: My Lords, in the unavoidable absence of the noble Earl, Lord Winchilsea and Nottingham, and at his request, I beg leave to ask the Question standing in his name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government:
Whether they are taking any initiatives other than through the United Nations, to find a political resolution to the crisis in the Western Sahara.
Baroness Chalker of Wallasey: My Lords, we regret the suspension of the identification process. We continue to believe that the best solution remains in
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supporting the UN Secretary General and his staff in their attempts to resolve the conflict in the Western Sahara. We urge both Polisario and Morocco to co-operate fully with MINURSO, the United Nations scheme in the area.
Lord Wise: My Lords, I thank the Minister for that reply. But what does she think the consequences will be for the people of the area, and also for the credibility of the United Nations, following its complete and absolute failure to bring about a fair and free referendum following the withdrawal of part of MINURSO? Does the Minister agree that the only option that unfortunately seems to be available to the Saharan people is a resumption of the war? If there is such a resumption, as I fear there will be, is there not a grave risk to the stability of the whole area? And what will be the consequences for Europe?
Baroness Chalker of Wallasey: My Lords, it is difficult to tell my noble friend what the consequences might be. I have already said that we have been concerned at the lack of progress in the identification process. When the Secretary General reported on 8th May, recommending the suspension of the identification process, we said that it was disappointing. My colleague, the Minister of State, the right honourable Jeremy Hanley, discussed the conflict with the Moroccan deputy foreign minister in Rabat earlier this month, in an effort to try to help the process.
What must happen is co-operation of both parties with the UN on confidence-building measures. If political prisoners are not released and if there is no exchange of prisoners of war, frustrations will further build up. The frustrations of the Polisario worry us very much because we believe that it is essential that the ceasefire be maintained. It is difficult to predict, but renewed fighting will achieve absolutely nothing. It risks drawing in the neighbours—something which the UN and the whole free world should seek to avoid.
Lord Avebury: My Lords, does not the main difficulty arise from the attempts by Morocco to introduce persons on to the register who are not properly qualified? Why has the Secretary General found it so difficult to develop alternative procedures for the proper identification of voters that will satisfy both sides but will ensure that persons who are not qualified are not placed on the register?
Baroness Chalker of Wallasey: My Lords, I must be honest with the noble Lord, I do not know the answer. I too should be fascinated to find out why it has happened. I shall do my best to do so and will drop him a line.
Baroness Blackstone: My Lords, can the Minister tell the House whether the Government have discussed the question of the Western Sahara with President Mandela, given his wish to recognise it formally and also given that he has already made an

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offer to do so to the leader of the Polisario Front? Will the Minister also say whether there is any prospect of the registration process being re-started?
Baroness Chalker of Wallasey: My Lords, in answer to the first question, not this morning, we did not have time; I shall try again tonight. The answer to the second question is that the door has been firmly closed on the current series of registrations. However, we continue to believe that it should happen and we will see what can be done. Some of us seek to follow that path, but at the moment it is not one that the United Nations seems to be willing to re-start.
Lord Bruce of Donington: My Lords, is the Minister aware that many in this House appreciate and agree with the cautious attitude that she is taking to the problem? Is she further aware that many interests are involved on the periphery of the Western Sahara? They would be only too delighted to stir the pot even further with a view to provoking trouble. Does she accept that her attitude towards the problem is acceptable to those of us who wish to establish real peace in the area?
Baroness Chalker of Wallasey: My Lords, I am grateful to the noble Lord for his question. We are right to be cautious. As he knows, we and other Security Council members not only supported Resolutions 1042 and 1056 earlier this year, but also in private we have encouraged the two parties. In the UN, we have encouraged them to consider additional ways in which new confidence might be created between the parties in order to facilitate the implementation of the settlement plan.

Procedure of the House: Select Committee Report
2.58 p.m.
The Chairman of Committees (Lord Boston of Faversham): My Lords, I beg to move the Motion standing in my name on the Order Paper.
As your Lordships will see from the report before the House, the Procedure Committee thought it right to draw attention to three matters of procedure where the conventions of the House have not always been followed in recent times.
Under Item 1, the committee reminds the House of the guidance set out in the Companion to the Standing Orders concerning supplementary questions. It draws particular attention to the guidance that supplementary questions should not be read.
Under Item 2, the committee reminds the House that it is undesirable to refer to strangers, whether in the public gallery or in any other part of the Chamber.
Finally, under Item 3, the committee points to the guidance in the Companion about the ways in which the Members of the House should be referred to in debate. They should not be addressed directly, nor should they be addressed as "you". I commend the report to the House.
Moved, That the Fourth Report from the Select Committee be agreed to (HL Paper 90).— (The Chairman of Committees.)
Following is the report referred to:
1. SUPPLEMENTARY QUESTIONS TO STARRED QUESTIONS
The Committee reminds the House of the following guidance set out in the Companion to the Standing Orders (page 85) concerning supplementary questions to starred questions:
"Supplementary questions may be asked but they should be short and confined to not more than two points. If a supplementary question exceeds these guidelines, the Minister need only answer the two main points. Supplementary questions are confined to the subject of the original question, and Ministers should not answer irrelevant questions. The essential purpose of supplementaries is to elicit information, and they should not incorporate statements of opinion. They should not be read. The Lord who tabled the question has no automatic right to ask a final supplementary question."
We draw particular attention to the guidance that supplementary questions should not be read.
2. REFERENCES TO STRANGERS
The Committee draws the attention of the House to the guidance in the Companion (page 69) that it is undesirable to refer to strangers, whether in the public gallery or in any other part of the Chamber.
3. APPELLATIONS
The Committee reminds the House that guidance is set out in both the Companion (page 75) and the Brief Guide (page 3) about the ways in which Members of the House should be referred to in debate. The term "you" should not be used.
Lord Boyd-Carpenter: My Lords, that was a most valuable contribution. I hope that my noble friend on the Front Bench will emphasise the intention of the Government to enforce the advice that is being given by the Procedure Committee. In particular, my noble friend did not refer to the very important line in the report:
"We draw particular attention to the guidance that supplementary questions should not be read".
Will my noble friend do all he can to enforce that extremely valuable recommendation?
The Chairman of Committees: My Lords, I am very grateful to the noble Lord. In answer to his final point, I must confess that I had hoped that that was precisely what I was seeking to do just now. But just to give him the additional reassurance that he clearly seeks, I shall continue to try to do my best to encourage those of your Lordships who are not as punctilious as the noble Lord in following the rules of procedure of the House to do so.
I thank the noble Lord for his opening remarks; and I would like to say that both I and the Procedure Committee of this House are indebted to the noble Lord, Lord Gisborough, and others who raised the point with the committee about supplementary questions being read. I am also grateful to the noble Lord, Lord Brabazon of Tara, who raised the point about strangers.
So far as the remaining point is concerned, perhaps that is not a matter for me to answer. It is probably safe to say that that, too, is a matter on which those concerned would seek to do their best.
Baroness David: My Lords, who is supposed to give tuition to new Members, and indeed to Whips, on both sides of the House about how to address the House? I have noticed that people in quite senior positions in the House make mistakes in this area.
The Chairman of Committees: My Lords, with the leave of the House, in answer to the first part of the noble Baroness's question, since in this House we have beneficially and admirably a collective form of order, the responsibility lies upon all of us. However, I know, and other noble Lords will be able to confirm, that the Clerk of the Parliaments is assiduous in briefing newcomers to this House and in particular draws to their attention the Standing Orders of the House and the Companion to the Standing Orders. After that, he cannot sit there while new Members read them. It is up to new Members to obtain copies—indeed, I believe that they are provided with them—and so far as is possible learn them, or certainly read them and try to digest them.
Others who might consider that they have a duty here as well are those who are invariably helpful; that is, the usual channels.
Lord McIntosh of Haringey: My Lords, ought we not to follow the example of the driving test and have an examination, including multiple choice questions?
The Chairman of Committees: My Lords, with the leave of the House, the noble Lord poses an impossible question for me. I do not know whether that would be a suitable way of doing things at all, bearing in mind that when I took my driving test I failed it the first time.
Lord Harmar-Nicholls: My Lords, in order to understand in detail the full effects of the report, was my noble friend Lord Boyd-Carpenter in order or not in reading part of his supplementary question?
The Chairman of Committees: My Lords, I must confess that I did not notice that.
Lord Donaldson of Kingsbridge: My Lords, has the noble Lord observed that Members on his Front Bench, when confronted with a question from behind, tend to turn round and address the answer there instead of addressing the House?
The Chairman of Committees: My Lords, again with the leave of the House, with respect, that is perfectly correct. It is an approach that we should certainly follow.
Perhaps I may say a word on the last question on the report from the noble Lord, Lord Harmar-Nicholls. In defence of the noble Lord, Lord Boyd-Carpenter, strictly speaking the question on the report put to me by the noble Lord, Lord Boyd-Carpenter, was not a supplementary question to a Starred Question.
On Question, Motion agreed to.

Housing Bill
3.5 p.m.
The Minister of State, Department of the Environment (Earl Ferrers): My Lords, I beg to move that the Bill be now further considered on Report.
Moved, That the Bill be further considered on Report.—(Earl Ferrers.)
On Question, Motion agreed to.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 123:
Before Clause 95, insert the following new clause—
MANAGEMENT AGREEMENTS ETC
(".—(1) Section 27 of the Housing Act 1985 (management agreements) shall be amended as follows—
(2) In subsection (5), before "the Secretary of State" insert—"Subjection to subsection (5A)".
(3) After subsection (5) insert—
"(5A) The Secretary of State's approval shall not be given in any case where he is informed by a local authority that—

(a) following such consultation as is required under section 27A (consultation with respect to management agreements), the authority is satisfied that the majority of the tenants of the houses affected by a proposal to enter into a management agreement do not wish the proposal to proceed, or

(b) following such consultation as is required under section 27AA (management agreements and compulsory competitive tendering) in relation to bids submitted by any person to exercise any of the management functions of the authority, the authority is satisfied that the majority of tenants affected would prefer that the authority exercise those management functions themselves.".").

The noble Lord said: My Lords, this amendment also stands in the name of my noble friend Lord Dubs.
This matter was not raised in Committee. I accept that the drafting of my amendment is somewhat complex. Nevertheless, I hope the purpose is entirely clear. It is to reinstate what is known as the "tenants' veto" on the contracting out of housing management services. Section 27 of the Housing Act 1985 enables a local housing authority to delegate its housing management functions to a managing agent under a management agreement, subject to approval by the Secretary of State. Such delegation may take place after voluntary competitive tendering, following compulsory competitive tendering or under an arrangement whereby management is delegated to a tenant-management organisation.
In the 1993 Act, the Government introduced a rather different system. Until that Act if local authorities proposed to enter into a management agreement to consult the tenants affected, if the majority of such tenants were opposed to the proposal the Secretary of State had a right to say, "You cannot go ahead". That was known as the "tenants' veto". The tenants' veto was removed by the Act. The Government's argument for doing so was that the tenants' veto was unnecessary given the new and more extensive rights to consultation that were introduced. That said, the justification for removing the veto as it applied to voluntary competitive tendering was never spelt out.
I shall not go into the progress of CCT, as it is called, which is being introduced in three phases. A number of authorities have not been required to expose their housing management service to CCT because the value of work falling within the defined activity falls below the de minimis level agreed by the Government. The number of authorities claiming exemption on the grounds of de minimis exceeded the Government's expectations; and the Government are now consulting on a proposal to revise the de minimis exemption to bring these authorities back within the requirement of compulsory competitive tendering.
The effect since the 1993 Act has been very interesting. The overall effect is that about 40 per cent. of the housing management work which will eventually be subject to CCT was exposed to competition in the period leading up to April this year. Local authorities have been very successful in winning contracts in the first round. The private sector, on compulsory competitive tendering, won a little over 2 per cent. of the work exposed to tender.
The result can be attributed to the small number of private contractors who are interested in the business. Experience of previous rounds of competitive tendering have shown that the private sector takes time to learn the skills—how to bid and in what form. It is far too early for either the Government or contractors to conclude that local authorities have been trying to freeze out private contractors. Nevertheless, following complaints from unsuccessful private housing management contractors, the Government have now issued a consultation paper proposing, as your Lordships would expect, a number of changes to the framework for CCT, admitting openly that the results of the first round were not as they expected; that is, that private contractors would do the business. In other words, too many contracts were won in competitive tendering by local authorities and that did not satisfy the Government.
A particular feature of housing management compulsory competitive tendering, compared with CCT for other local authority services, is the requirement to consult tenants under Section 27AA of the Housing Act 1985. That is because contracts for housing management services are classified as management agreements to which Section 27 applies and that is the reason for the drafting of the amendment I am putting before the House today.
In many authorities tenants have been involved in interviewing contractors and selecting tenders. But under the present arrangements tenants are not allowed to reject a contractor outright if they are satisfied with the price and quality of the housing management services they receive.
The consultation paper recently issued by the Department of the Environment starts off by saying that Ministers have reviewed the initial implementation of CCT and find that it is not entirely satisfactory. They accept that private sector bidders have won very few contracts. They accept that the Audit Commission expressed concern about the way in which bids were handled. They also accept that, on housing management, around 100 authorities are or will shortly conclude that
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they are de minimis and do not expose any work to competition. The paper says that that is many more than anticipated.
The review conducted by the Department of the Environment confirmed that all CCT contracts are being awarded in-house except in certain authorities. For example, 62 of the first 69 contracts were awarded to in-house teams, won by local authorities, which means eight contracts were awarded to external suppliers. It is our view—it is time that your Lordships had the opportunity of considering this problem again—that compulsory competitive tendering has not led to any improvement at all in management services to housing in local authorities. Furthermore, it is our contention that the tenants' veto—the right of the tenants to be able to say, "We do not want this"—should be reinstated. That is the object of my amendment. I beg to move.
3.15 p.m.
Baroness Hamwee: My Lords, if I am allowed to say "I"—following the advice earlier this afternoon—perhaps I can say that I support the amendment. This is not an argument against compulsory competitive tendering. There are times and places for that, and I would be happy to debate the good and bad qualities of CCT—but not this afternoon. It is an argument to reinstate a right which was taken away in 1983 and not replaced. It was taken away on the grounds that it was not necessary because of the amount of tenant consultation that would be carried out as part of the competition process but without the question "What harm would its retention do?" ever being answered.
Referring back to your Lordships' debates during the passage of the 1993 Bill, we were told by the Government that they proposed that tenants should be involved in every aspect of the delegation process: from drawing up the tender specifications to involvement in the shortlisting; from interviewing of tenderers to monitoring performance and service delivery; and, if need be, advising the local authority on enforcement and penalty procedures. That is involvement in every aspect except the decision itself.
We were also told that the Government have always believed that full and effective consultation with tenants should be an integral part of the preparation for management agreements. But those consultation arrangements should fit with the times. The Government argued that the tenants' veto was introduced when competitive tendering in the housing management area was voluntary and in making it compulsory the need for a tenants' veto was met by the process.
It seems to me, looking back with the benefit of three years hindsight—always better than one's consideration at the time—that when the process was voluntary and there was no compulsion on the parties to go down a road that they resisted, there was far more likelihood that involvement of tenants would be very good involvement. When the parties are compelled to do something, their resentment may show itself in a number of forms, one of which may be in failing to involve tenants with quite as much enthusiasm, despite the

301
formal requirements, as one would like to see. I think it is timely therefore to bring this matter back and I support the proposition.
Lord Monkswell: My Lords, I support my noble friend's amendment. It may be useful to the House if I try to explain some of the historical background to the situation with which we are faced in slightly different terms from those explained by my noble friend.
I shall not give an historical reprise of the whole of the past 15 years, but perhaps the House will bear with me. In the early 1980s, the subsidy that the Government provided to local housing authorities was massively cut. There were two consequences. One was that the resources available for housing management and maintenance were reduced which resulted over the years in a decline in the standards of management in many areas. But it also effectively required a massive increase in council house rents. That prompted local resistance—local housing authorities are after all elected by the local communities—with the result that finances were squeezed even more.
It has been realised that housing benefit pays for a lot of council house rents and therefore an increase in rents is effectively covered by housing benefit. That is part of the reason for the massive increase in housing benefit payments over the past few years. Local housing authorities have attempted to catch up.
The net result is that in most local authority areas the resources that have become available for housing management have increased. It is recognised that there needs to be an increase in resources to improve the standards of local authority housing management. That has effectively taken place in the vast majority of local housing authorities throughout the country.
We also have to recognise what I would describe as the almost personal relationship between housing management and tenants. Tenants get to know the local senior housing officers. A relationship develops which, as things improve, is positive, mutually beneficial and useful for the development of local authority housing. One of the difficulties is that compulsory competitive tendering creates a risk that a new housing management team will take over. That personal relationship, which can be very beneficial, is at risk of being lost. Part of the justification, and the reason for my support, for my noble friend's amendment is that it will enable tenants to hang on to something that is very beneficial to them, if they feel that way. I recognise that there may be alternative circumstances where there may be examples of bad housing management and tenants recognise that there is a need to get a new team to do a better job. In that case they would vote accordingly. This amendment effectively protects tenants and in a very real sense ensures effective local housing management. I hope that the Government will accept it.
Lord Lucas: My Lords, both the noble Lord, Lord Williams of Elvel, and the noble Baroness, Lady Hamwee, have said that they will not discuss CCT in general and that they wish to keep the debate to the
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subject of this particular amendment. I am sorry about that. If we were to discuss CCT in general we might have a chance to agree about something because I am sure that both noble Lords will agree that this is yet another successful Conservative policy which has, at last and at length, been adopted by the opposition parties, having seen the benefits that it can bring to local authorities and the amount of cash that can be freed for other activities.
From now on I shall confine myself to the amendment, as the noble Lord, Lord Monkswell, did, eventually.
Amendment No. 123 would, in effect, allow tenants to veto any proposal by a local authority to delegate its housing management functions either voluntarily or under compulsory competitive tendering. It is important that there should be some form of balancing check to secure the best interests of tenants where local authorities choose to delegate housing management. However, we believe that the current arrangements for tenant consultation achieve this more effectively than a power of veto.
The veto is a blunt instrument which allows tenants a stark choice between saying yes or no. Tenants already have considerable scope under current arrangements directly to influence constructively and positively the ways in which their homes are managed. Tenants are actively involved in drawing up specifications, setting standards of service, evaluating tenders and selecting contractors. Local authorities also have to involve them in monitoring the performance of the manager, whether this is an external contractor or the local authority's in-house team under compulsory competitive tendering.
Many authorities already have extensive consultation arrangements in place and are able to follow guidance that was issued two years ago. This guidance was issued following consultation with, among others, the local authority associations, local authorities, private sector contractors, the Chartered Institute of Housing and tenant advice agencies. It aims to set out the principles we would expect authorities to follow in setting up their own local consultation arrangements and we are keeping this guidance under review. We have existing powers to make regulations imposing consultation requirements on local authorities but do not consider it necessary to make any regulations at present because local authorities have been following this guidance, and in many cases going beyond what we expected.
We have included a provision in paragraph 3 of Schedule 16 to the Bill to correct a defect in the existing powers to make regulations under Sections 27A and 27AA of the Housing Act 1985 governing the consultation arrangements of local authorities with their tenants. This provision covers the same ground as the existing Sections 27A and 27AA but also allows regulations to be made for the case where the local authority continues to carry out the management itself following a compulsory competitive tendering exercise.
Tenant consultation is central to compulsory competitive tendering of housing management and has been a key factor in improving management standards. The CCT process is carried out in accordance with a

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strict statutory framework. It is open and transparent. If the local authority in-house team do not come up with the most competitive bid the authority has to delegate its housing management to another contractor. The authority cannot ignore the process.
Where local authorities decide to delegate their management voluntarily, the Secretary of State's consent will not be forthcoming unless the authority has consulted their tenants in accordance with the Department of the Environment's guidance and complied with certain competitive tendering arrangements. We firmly believe that the benefits of competition and tenant consultation on specifications, and the subsequent monitoring of the manager's performance under the specification, fully safeguards the interests of tenants.
Delegation of housing management does not take away any of the existing rights of tenants. The properties remain in council ownership. As I have explained, tenants are now directly influencing the delivery of housing services through current consultation requirements. To impose an additional burden on authorities—in effect requiring them to ballot their tenants before any future contract is let—would be onerous and inappropriate. It would certainly cut across the arrangements put in place by those authorities which have already delegated housing management functions.
We are delighted by the way local authorities are responding in this area and are venturing into compulsory competitive tendering for their housing activities. We see no reason to interfere with the arrangements that have been put into place, which seem to us to be working very well, and to revert to a system which we left behind, as the noble Lord, Lord Williams of Elvel, suggested, some while ago and which to us seems no longer appropriate.
Lord Williams of Elvel: My Lords, the noble Lord, Lord Lucas, said that he would be glad to have a general debate on CCT. I, too, would be glad to have such a debate because, despite the party political broadcast which the noble Lord started with, we have some ammunition on our side.
But I shall confine myself to the amendment. It would not remove any of the existing rights of tenants to involvement or consultation in CCT. All it would do is to act as a final backstop where tenants feel that they really have to resist the operation of Conservative dogma, as the noble Lord would probably have put it. The noble Baroness, Lady Hamwee, was right in saying that the more involvement and agreement that there is with tenants, the more they will feel happy and satisfied with their housing management. By introducing this measure as a final backstop—in other words, to go back to where we were before the 1993 Act—is a sensible move. My noble friend Lord Monkswell said quite rightly that this amendment would help to protect tenants further than they are protected at the moment.
Again, we come back to the same point. There is a serious political difference between ourselves and the Government. We do not believe that this
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amendment would spoil any of those lovely Conservative ideas that the Government have imposed on local authorities; it would simply give tenants a backstop right to prevent their houses being managed by someone they did not want. There is a serious disagreement and the only way to resolve it is to ask for the opinion of the House.
3.29 p.m.
On Question, Whether the said amendment (No. 123) shall be agreed to?
Their Lordships divided: Contents, 73; Not-Contents, 152.

Division No. 1

CONTENTS

Acton, L.

Kennet, L.

Addington, L.

Kilbracken, L.

Allen of Abbeydale, L.

Kintore, E.

Archer of Sandwell, L.

Lockwood, B.

Barnett, L.

McIntosh of Haringey, L.

Beaumont of Whitley, L.

McNair, L.

Blackstone, B.

McNally, L.

Blease, L.

Mar and Kellie, E.

Borrie, L.

Mason of Barnsley, L.

Bruce of Donington, L.

Mayhew, L.

Callaghan of Cardiff, L.

Meston, L.

Carlisle, E.

Milner of Leeds, L.

Carmichael of Kelvingrove, L.

Monkswell, L.

Carter, L. [Teller.]

Morris of Castle Morris, L

Cocks of Hartcliffe, L.

Nicol, B.

David, B.

Rea, L.

Dean of Beswick, L.

Robson of Kiddington, B.

Donaldson of Kingsbridge, L.

Rochester, L.

Donoughue, L.

Sainsbury, L.

Seear, B.

Dormand of Easington, L.

Dubs, L.

Simon, V.

Elis-Thomas L

Smith of Gilmorehill, B.

Ezra, L.

Stallard, L.

Farrington of Ribbleton, B.

Stoddart of Swindon, L.

Fitt, L.

Strabolgi, L.

Gallacher, L.

Taverne, L.

Taylor of Gryfe, L.

Geraint, L.

Thomson of Monifieth, L.

Gladwin of Clee, L. [Teller.]

Thurso, V.

Hampton, L.

Tope, L.

Hamwee, B.

Tordoff, L.

Haskel, L.

Wallace of Saltaire, L.

Hollis of Heigham, B.

Whaddon, L.

Holme of Cheltenham, L.

White, B.

Howie of Troon, L.

Wigoder, L.

Jay of Paddington, B.

Williams of Elvel, L.

Jenkins of Putney, L.

Williams of Mostyn, L.

NOT-CONTENTS

Aberdare, L.

Blatch, B.

Addison, V.

Blyth, L.

Ailsa, M.

Boardman, L.

Aldington, L.

Boyd-Carpenter, L.

Alexander of Tunis, E.

Brabazon of Tara, L.

Alport, L.

Bradford, E.

Arran, E.

Brentford, V.

Ashbourne, L.

Bruntisfield, L.

Astor of Hever, L.

Bumham, L.

Balfour, E.

Butterworth, L.

Belhaven and Stenton, L.

Caldecote, V.

Beloff, L.

Campbell of Alloway, L.

Berners, B.

Campbell of Croy, L.

Blake, L.

Carew, L.

Blaker, L.

Carnegy of Lour, B.

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Carnock, L.

Lucas, L.

Carr of Hadley, L.

Lucas of Chilworth, L.

Carrington, L.

Lyell, L.

Chalker of Wallasey, B.

McConnell, L.

Charteris of Amisfield, L.

Mackay of Ardbrecknish, L

Chelmsford, V.

Mackay of Drumadoon, L.

Chesham, L. [Teller.]

Macleod of Borve, B.

Clark of Kempston, L.

Marlesford, L.

Cochrane of Cults, L.

Masham of Ilton, B.

Coleridge, L.

Mersey, V.

Constantine of Stanmore, L.

Middleton, L.

Cornwallis, L.

Miller of Hendon, B.

Courtown, E.

Mottistone, L.

Cox, B.

Mountevans, L.

Cranborne, V. [Lord Privy Seal.]

Mowbray and Stourton, L.

Crathorne, L.

Munster, E.

Cross, V.

Murton of Lindisfarne, L.

Cuckney, L.

Noel-Buxton, L.

Cullen of Ashbourne, L.

O'Cathain, B.

Cumberlege, B.

Orkney, E.

Dacre of Glanton, L.

Orr-Ewing, L.

Davidson, V.

Oxfuird, V.

De Freyne, L.

Palmer, L.

Dean of Harptree, L.

Park of Monmouth, B.

Denham, L.

Pearson of Rannoch, L.

Denton of Wakefield, B.

Pender, L.

Derwent, L.

Pilkington of Oxenford, L.

Dundonald, E.

Platt of Writtle, B.

Elles, B.

Pym, L.

Elliott of Morpeth, L.

Quinton, L.

Elton, L.

Rankeillour, L.

Erne, E.

Rawlings, B.

Erroll, E.

Renfrew of Kaimsthorn, L.

Ferrers, E.

Renton, L.

Flather, B.

Robertson of Oakridge, L.

Gainford, L.

St. Davids, V.

Gainsborough, E.

Saltoun of Abernethy, Ly.

Gardner of Parkes, B.

Sanderson of Bowden, L.

Geddes, L.

Sharples, B.

Gisborough, L.

Shaw of Northstead, L.

Goschen, V.

Skelmersdale, L.

Gray of Contin, L.

Somerset, D.

Harding of Petherton, L.

Stodart of Leaston, L.

Harmar-Nicholls, L.

Strafford, E.

Headfort, M.

Strange, B.

Henley, L.

Strathclyde, L [Teller.]

HolmPatrick, L.

Suffield, L.

Howe, E.

Suffolk and Berkshire, E.

Hylton-Foster, B.

Swinfen, L.

Ilchester, E.

Swinton, E.

Inchcape, E.

Terrington, L.

Inglewood, L.

Thomas of Gwydir, L.

Ironside, L.

Trumpington, B.

Johnston of Rockport, L.

Vivian, L.

Kimball, L.

Wade of Chorlton, L.

Kinnoull, E.

Waterford, M.

Lauderdale, E.

Whitelaw, V.

Lawson of Blaby, L.

Wolfson, L.

Leigh, L.

Wyatt of Weeford, L.

Lindsay, E.

Wynford, L.

Long, V.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
3.38 p.m.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 124:
Before Clause 95, insert the following new clause—

TERMINATION OF SECURE TENANCY ON DEATH OF TENANT
(" In Section 89 of the Housing Act 1985 (succession to periodic tenancy), for subsection (3) there shall be substituted—
"(3) Where there is no person qualified to succeed the tenant, the tenancy ceases to be a secure tenancy when—

(a) it is vested or otherwise disposed of in the course of the administration of the tenant's estate unless the vesting or other disposal is in pursuance of an order made under section 24 of the Matrimonial Causes Act 1973 (property adjustment orders in connection with matrimonial proceedings), or

(b) it is known that when it is so vested or disposed of it will not be a secure tenancy.".").

The noble Lord said: My Lords, in moving this amendment, I should like to speak also to Amendments Nos. 125 and 126 standing in my name and that of my noble friend Lord Dubs. These amendments are, I accept, rather complex and address issues which we have not discussed before. They should therefore be seen in the nature of probing amendments to elicit a response from the Government.
Amendment No. 124 has as its purpose to remove an anomaly in the present drafting of Section 89 of the Housing Act 1985 which allows that when a secure tenant dies, the tenancy may remain secure for a period after his death even though it is known that there is no successor. Section 89 applies where a secure tenant dies and the tenancy is a periodic tenancy. Subsection (3) provides that:
"Where there is no person qualified to succeed the tenant and the tenancy is vested or otherwise disposed of in the course of the administration of the tenant's estate, the tenancy ceases to be a secure tenancy unless the vesting or other disposal is in pursuance of an order made under Section 24 of the Matrimonial Causes Act 1973".
The wording of the subsection implies that the tenancy remains secure after the death of a secure tenant until the tenancy is vested in the manner described. That seems to us to have certain defects. We contrast it with Section 90 of the 1985 Act which deals with fixed-term tenancies and in which rather different rules govern what happens when a tenant dies without a successor. My amendment would import a similar wording into Section 89. The effect, without any significant diminution in the rights of secure tenants, will be to ease the task of the local authorities in gaining possession of dwellings left vacant by the death of secure tenants without affecting any rights. In our view, that would allow more effective use of the housing stock and would reduce the number of empty local authority homes.
Amendments Nos. 125 and 126 seek to protect those who were living with the tenant when the tenant died. As it stands, the Bill would prevent an obvious successor to the person who has died from taking up succession if the person who had died was himself a successor. The amendments attempt to tackle that anomaly. As the noble Lord, Lord Lucas, is aware, these provisions were discussed in another place and I hope for some sympathetic response from the Government. I beg to move.
Lord Lucas: My Lords, secure tenants enjoy the right of succession. This means that their spouse, or a close relative who has been living in the home for the previous 12 months, may succeed to the tenancy on their death. There can only be one succession under the law as it stands.

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Amendments Nos. 125 and 126 would have the effect of granting succession in perpetuity by allowing more than one succession. I do not believe that that is necessary; indeed, I would go as far as to say that it would be undesirable.
There has been considerable discussion of succession rights both in this House and in another place. Examples were cited of unfortunate cases where the close companion—or indeed the adult child—of the tenant would not have the automatic right to inherit a tenancy. As a result my right honourable friend David Curry gave an undertaking to issue unequivocal advice to local authorities on how they should deal with such cases. The guidance was issued on 14th May. Circular 7/96, Local Authority Joint Tenancies, addresses the same problem as the amendments—the case where a member of the household dies and there is another member of the household who does not have the right to succeed, but in the context of local authorities' general role in ensuring effective use and fair allocation of their stock. Local authorities' first priority in assessing need is the provision of housing for families with children, and vulnerable individuals, who are trying to cope with wholly unsuitable accommodation. In our view, it would not be right to hamper the difficult decisions that have to be made by local authorities by tying up properties for generations.
The circular advises that where a member of the household dies and there is another member of the household who does not have the right to succeed, the local authority should, if certain conditions apply, normally grant a tenancy to the remaining person in the same home or in suitable alternative accommodation. The circumstances must be that the remaining person has been living with the tenant in the year before the tenant's death, or had been looking after the tenant, or had accepted responsibility for the tenant's dependants.
We therefore believe there is no need to extend statutory succession rights in the way the amendment suggests because of the substantive advice offered by the circular which has been well received by local authorities. A person left in a home after the death of a tenant who has no right of succession will be quite clear as to what he might expect the local authority policy to be and will be in a position to draw the Department of the Environment's advice to the authority's attention.
I think that that is quite enough of a disagreement to have with the noble Lord, so I am happy to be of a brighter mind when it comes to Amendment No. 124. We sympathise with the concerns expressed by the noble Lord on the subject but, as he has no doubt observed, this is an intricate piece of legislation and we should like to consider the matter further. If it should prove necessary to have an amendment to achieve what the noble Lord has in mind, we shall bring one forward on Third Reading. I hope that that gives the noble Lord sufficient comfort to enable him to withdraw his amendment at this stage.
3.45 p.m.
Lord Monkswell: My Lords, with the leave of the House, before the noble Lord sits down, I wonder whether he can clarify something he said. I thought I heard him say in the earlier part of his remarks that someone would have security of tenure if their mother or father died and if they had been living in their home for 12 months. The noble Lord said later that there would be some security of tenure and that the local authority could allow continued tenure if that person had been living in the house within those 12 months. There seems to be a clash there. On the one hand the Government appear to be saying that you need to have been living in the house for at least 12 months; on the other hand they are referring to "within a period of 12 months".
While the Minister is looking for the answer, perhaps I may give an example that I have come across of a son of a tenant who had grown up in a house, left home and gone to live elsewhere but the circumstances of his living elsewhere broke down and he went back to live with his mother who then died within 12 months. In practice, the local authority allowed him to assume the tenancy and within a few years he had moved on and the house had become available for re-letting. I wonder whether the discretion that local authorities enjoyed a few years ago is still available. Obviously, such a discretion would be useful in such human circumstances, as I am sure the Minister appreciates.
Lord Lucas: My Lords, one of the many virtues of guidance is that it allows local authorities to exercise some common sense in such situations. The circular refers to a person who has been living with a tenant for a year before the tenant's death, or who has been looking after the tenant, or who has accepted responsibility for the tenant's dependants. Clearly, if that period lasted for 11 months and 20 days there is nothing in the guidance to impose a strict cut-off and the local authority would be able to treat that period as if it had been a year. The guidance is merely there to give guidance, not to set strict rules which would result in silly decisions.
Lord Williams of Elvel: My Lords, I am grateful, as always, to the Minister for responding to the amendments. On Amendments Nos. 125 and 126, I fully accept the fact that there is guidance, but if the Government accept the principle of further successions in the circumstances described in the circular I fail to see why that should not be written into statute. The principle seems quite clear as explained by the noble Lord. So if it is included in a circular, why not in statute? I cannot see any impediment to that.
I am grateful to the noble Lord for giving me the assurance that he will look again at Amendment No. 124 to see whether it is necessary to produce a government amendment on Third Reading in order to clarify what is at the moment a rather obscure situation. In the light of that assurance, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 125 and 126 not moved.]
Baroness Hamwee Baroness Hamwee moved Amendment No. 126A:
Before Clause 95, insert the following new clause—

EXTENSION OF CERTAIN RIGHTS TO TENANTS OF REGISTERED SOCIAL LANDLORDS
(".—In Chapter I of Part I of Housing Act 1988 (assured tenancies) after section 19 (restriction on levy of distress for rent) there shall be inserted—
Extension of certain rights of tenants of registered social landlords.
19A.—(1) Unless otherwise stated, references in this section to a section or a Schedule are references to a section of or a Schedule to the Housing Act 1985.
(2) The provisions of sections 87 to 90 (succession on death of tenant) shall apply on the death of an assured tenant of a registered social landlord as if he were a secure tenant and section 17 of the Housing Act 1988 (succession to assured periodic tenancy by spouse) shall not apply in such cases.
(3) The provisions of sections 91 to 94 (assignment, lodgers and subletting) shall apply to an assured tenant of a registered social landlord as if he were a secure tenant and section 15 of the Housing Act 1988 (limited prohibition on assignment etc. without consent) shall not apply in such cases.
(4) Sections 96 to 101 (which deal with tenant's improvements) and section 105 (consultation on matters of housing management) shall apply to an assured tenant of a registered social landlords as if he were a secure tenant.".").
The noble Baroness said: My Lords, this new clause would extend certain rights, including certain rights of succession, which are enjoyed by law by secure tenants of registered social landlords to those same landlords' assured tenants. At present, that right is not a matter of law, but is enjoyed under the tenant's guarantee.
I moved a similar amendment in Committee (late at night or possibly even early in the morning) and the Minister said then that he thought that he could fully support the spirit behind it. I was grateful for that acknowledgement at least. He went on to say that the use of the tenants guarantee was adequate for the individuals in question and worked well. I do not believe that it is working well.
Having considered the matter further, I believe it is worth raising two points in response to the Minister. First, a contract is overridden by statute. Conversely, to put it in statute will override contract and ensure that the rights are properly in place.
The second point is related to privity of contract; in other words, someone who is not a party to a contract cannot take action to enforce the provisions of that contract. Other parties can do so for the benefit of that individual, but if those potential parties are dead—often that may be the situation, at least in relation to one of the provisions in question—it will be a matter for the individual's personal representatives. In that event, one may be entering the area of family disputes, which is better avoided. For example, if the contract states that the tenancy shall pass to the children and, if there are no children, to the grandchildren, it will have no effect. When the tenant dies the tenancy will go to the executors or administrators as part of the estate.
The Minister said that the current position was working reasonably well. I am advised that there are a significant number of cases of disputed succession in secure tenancies and court proceedings will follow. Many of your Lordships will feel that if proceedings can
310
reasonably be avoided by putting into statute something that is now a bit shaky, that is a good thing not only for those directly involved but for the workings of the court. I do not know what the Government will lose by giving rights by statute and I do not see the drawbacks. I beg to move.
Lord Lucas: My Lords, as the noble Baroness has said, this issue was considered in Committee. I explained then that, while we fully accepted that housing association assured tenants should be treated no less favourably than secure tenants, it was not necessary to make this a statutory requirement. Housing association assured tenants enjoy these rights by virtue of the tenants guarantee. Those rights go further than the statutory rights given to other assured tenants in the private sector. The noble Baroness has explained that, having considered this further, she feels that this mechanism does not provide the degree of protection enjoyed by secure tenants.
We have looked closely at the concerns of the noble Baroness and we do not believe that they are warranted. The tenants guarantee requires associations to give a right of succession for assured tenants but this need not be contractual. If there is a dispute about the facts of any particular case, there can be recourse to the independent housing ombudsman who under the Bill will have power to determine such matters and require them to be put right. I hope that that deals with the question of privity of contract. If an ombudsman is working well he can be a very powerful friend in such disputes.
In certain cases the tenants guarantee requires contractual arrangements. Disputes may arise, but the Housing Corporation has informed us that there is no evidence that the current arrangements do not work satisfactorily. If the noble Baroness has evidence to the contrary, I hope that she will let us in on it so that we may look at both sides of the question. There are sound reasons why the statutory route is not appropriate for registered social landlords. They are independent non-public bodies. While it is right that they should, as a matter of good practice and as a condition of registration with the corporation, undertake to give their assured tenants rights along the same lines as those enjoyed by secure tenants, they operate in a different environment from local authorities. We have always taken the view that to impose inflexible statutory requirements on the detailed management of their business can have significant implications for the development of registered social landlords. We do not believe that that is desirable.
For that reason, the Bill proposes that the corporation should continue to have power to issue guidance on such detailed matters with which landlords will be expected to comply. If they do not, the corporation can take the necessary measures to ensure compliance. That is the mechanism by which we prefer to deliver the benefits that we all agree housing association assured tenants should have. Although we may agree with the noble Baroness in spirit, when it comes to the method by which this is to be done we must agree to differ.
Baroness Hamwee: My Lords, I certainly agree that we differ. The Minister has made an interesting

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comment. He spoke about the freedom of registered social landlords to develop. I believe that he was referring to the freedom of housing associations, not necessarily other registered social landlords, particularly local housing authorities.
I am not terribly happy with the response. I believe that to bring in the ombudsman is to introduce yet another layer of regulation, or at least monitoring. It confuses the issue and certainly does not give the tenant an assurance that the rights are in place. It is dependent upon the judgment of yet another body which will need to look at whether there has been maladministration leading to injustice. That is a substantial hurdle to overcome. I agree that we differ. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Chairman of Committees: My Lords, I regret to say that there is a printing error in the Marshalled List. Amendment No. 127 should not appear under the heading "Clause 95" but under the heading "Before Clause 95".
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 127:
Before Clause 95, insert the following new clause—

RETALIATORY EVICTION: EXTENSION OF NOTICE
(". After Section 21 of the Housing Act 1988 there shall be inserted—
"Extensions of notice period for notice of proceedings for possession.
21A.—(1) If after an assured shorthold tenancy has been referred to the Rent Assessment Committee under section 22 of this Act, a notice of proceedings for possession of the dwelling under section 21(1) of this Act, to which the assured shorthold tenancy relates, is served by the lessor on the lessee at any time before the decision of the Rent Assessment Committee is given or within the period of 1 year thereafter, then the notice shall not take effect before the expiry of 1 year.
(2) If after an assured shorthold tenant has complained to the local housing authority or the authority has initiated or proposed to initiate enforcement action, a notice of proceedings for possession of the dwelling, under section 21(1) of this Act, to which the assured shorthold tenancy relates is served by the lessor on the lessee at any time before the local authority exercises its enforcement powers or within the period of 1 year thereafter, then the notice shall not take effect before the expiry of 1 year.
(3) If after an assured shorthold tenant has initiated or proposed to initiate legal proceedings or some other action to secure or enforce his rights as a tenant, a notice of proceedings for possession of the dwelling, under section 21(1) of this Act, to which the assured shorthold tenancy relates, is served by the lessor on the lessee at any time before the local authority exercises its enforcement powers or within the period of 1 year thereafter, then the notice shall not take effect before the expiry of 1 year.".").
The noble Lord said: My Lords, I beg to move Amendment No. 127 standing in the name of my noble friend Lord Dubs. This amendment deals with the difficult problem of retaliatory eviction. The effect of the amendment is to extend the notice period in such cases. The purpose is to stop landlords retaliating against tenants who try to exercise their legal rights. The Minister will be aware that this matter has given rise to considerable concern. There have been some very unfortunate incidents where landlords have abused the present system. These illustrate the need for measures to stop or delay retaliatory convictions.
I could go through a list of matters that I have before me but I do not want to weary the House with it. Retaliatory evictions, apart from being very distressing to those who are evicted as a result of something they may have done inadvertently, can seriously hamper a local authority's attempts to tackle poor housing conditions. There is little point in strengthening local authority disrepair powers when tenants whose fixed term tenancies have expired may be lawfully evicted so that the landlord can avoid the work. For example, the environmental health department of the London Borough of Camden has begun a programme of improvement works on HMOs in the area of Swiss Cottage.
Many landlords have evicted shorthold tenants to avoid doing essential improvement work to make these properties safe and fit for human habitation. It is believed that this has led to a 15 per cent. loss of accommodation. Figures from the environmental health department of Bristol City Council show that 10 to 13 per cent. of private rented accommodation is lost because of retaliatory evictions after notices have been served. Leicester City Council reports that it has come across examples of lawful retaliatory eviction on a very regular basis. It believes that that is a serious dilemma for enforcement officers. The City of Nottingham also faces the same dilemma.
What is retaliatory eviction? For instance, in a case in Kingston-upon-Hull, two sales representatives rented a flat. They discovered that the heating did not work, the toilet leaked, the cooker was dangerously faulty and there were cockroaches. They complained and the landlord started eviction proceedings. That is retaliatory eviction. The amendment is designed to deal with the problem and to extend the notice period in such cases. I beg to move.
4 p.m.
Earl Ferrers: My Lords, it would be appropriate to declare that I have a personal interest in some parts of the Bill that we are discussing. I own a lease and also a share of the freehold of a flat in London. I also have some responsibility for the care of some houses in the country, some of which are let. Having got that off my chest to the relief of the noble Lord, Lord Williams, perhaps I may reply to his amendment.
He has explained that the purpose of this new clause is to deal with an eviction which a landlord seeks when the tenant has complained, which is commonly known as a retaliatory eviction. The noble Lord put forward the view that where tenants have little security of tenure it is difficult for them to use any of their legal rights because if they do take action against the landlord they risk losing their homes. It is proposed to extend the period of notice that a landlord must give a shorthold tenant before he can seek possession of his property from two months to a year in cases where the tenant has complained or has exercised some legal right.
I have difficulty with what the noble Lord is proposing. It could prevent a landlord from regaining possession of his property for more than a year after the end of the initial six-month period or after the end of a

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pre-agreed fixed term—even if he had agreed with the tenant at the outset that the tenancy would be terminated at the end of six months or the fixed term. If the amendment were accepted it would mean that although the tenant had agreed a six-month term with the landlord, that could be exceeded by another 12 months. The tenant would simply have to apply to the rent assessment committee for a rent determination or to complain to the local authority and then he would get his tenancy extended.
If the local authority has served an enforcement notice on the landlord, the landlord may need to get the tenant out before he can do the required work because of the nature of that work. Or the landlord may not be able to afford to do the repairs and he may decide to sell the property instead.
In those circumstances, the landlord would need to be able to regain possession quickly. It would not be practical to require the landlord to give the tenant a year's notice of possession proceedings. Even after the notice of possession had expired, the landlord would still have to go to court to get possession and that would take at least another month. Even if the court decided in the landlord's favour, it could be several weeks before the landlord regained possession.
I can assure the noble Lord that I have considerable sympathy with the minority of tenants who have difficulty getting their landlords to carry out repairs or to meet some other obligation in the tenancy agreement. However, I do not believe that the noble Lord's amendment would in general help tenants. It would create so much uncertainty that many landlords would be deterred from letting their property. The fear of the cost of gaining possession when it is required is one of the major reasons why people with empty properties are reluctant to let. At present those fears are largely unjustified. This new clause would give a real cause for concern.
The whole objective of the deregulatory measures which we introduced in the Housing Act 1988 and the small measures which we have included in this Bill is to make letting easier so that more people would let spare property. That has worked and it would be a great pity to put it in jeopardy. Since 1989, the sector has increased by over 300,000 households. Many of the new lettings would not have come on to the market if the owner had not been confident that he could regain possession when he needed it. Increasing competition in the lettings market is good for tenants and tenants have benefited by it. By bringing more property on to the market we will be giving tenants greater flexibility and choice of accommodation.
Those landlords who provide sub-standard accommodation at unreasonably high rents will find that there is no demand for what they are providing. It will drive them out of the market or it will force them to provide decent accommodation at reasonable rents in order to let their property.
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It is for those reasons that I hope the noble Lord, Lord Williams, will consider that his amendment, although it is intended to help tenants, will prove to be to the long-term detriment of the tenanted sector.
Lord Williams of Elvel: My Lords, I am grateful to the Minister for his reply. Although I recognise that there may be deficiencies in the amendment, it is designed to ensure that we have a decent and well-ordered private rented sector. If we are to have that it is necessary that tenants can complain without fear of losing their home. That is not always the case at the moment.
I believe that the Minister and I are at one in believing that there are some rogue landlords who use the law to evade responsibilities for repair. While what I am insisting would have only a marginal impact on security of tenure, the small measure to stop retaliatory eviction would be supported by responsible landlords, of whom I am sure the Minister is one.
During the progression of the Bill through another place and this House, I understand that the Minister's department has shown interest in the idea of measures to prevent retaliatory evictions and has requested information on overseas legislation. It is difficult for me to say how far that has gone but perhaps the noble Earl, with the leave of the House, might wish to say a little more about that. We would welcome any proposals from the department which the Government may wish to put forward at Third Reading.
Earl Ferrers: My Lords, with the leave of the House, there is not a great deal between the noble Lord and myself on the basic principle that there are a few rogue landlords who do not do their job properly and who ought to be dealt with. The difficulty is whether to set up a bureaucratic structure and a rigidity of tenure over the whole of the private rented sector just in order to catch those few people. By doing so one would then be in difficulty with the rest of that sector because landlords will not wish to let their houses and therefore the tenants will suffer. Those are the difficulties that we face.
The noble Lord asked how we were getting on with other countries. We told the National Association of Citizens Advice Bureaux that if it knew of overseas systems which worked, as it claimed, we would certainly consider those. That is as much as I can tell the noble Lord. There may well be systems used in overseas legislation which could be applicable here. We would like to know if that is so, but at the moment what we have to do—and I hope the noble Lord will agree with this—is not to prejudice the whole of the tenancy sector which is working well in order to catch just the few people who are behaving wrongly.
Lord Williams of Elvel: My Lords, I am grateful to the noble Earl. As he says, there is nothing between us on the principle and I certainly will not press the amendment. However, I do believe that if there is evidence in other countries that sensible legislation or sensible guidance can be introduced it will be worthwhile for the Government to look at it. I am sure

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that the voluntary organisations which are involved in this sector will be studying the noble Earl's words with great care and will be making their submissions as and where appropriate. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Speaker: My Lords, I am sorry to say that there is a mistake in the Marshalled List. Amendment No. 148 has been wrongly marshalled, as it refers to Schedule 7. This is the right point at which the House should consider Amendment No. 148.
Schedule 7 [Assured tenancies: schedule inserted after Schedule 2 to the Housing Act 1988]:
Lord Dubs Lord Dubs moved Amendment No. 148:
Page 157, line 37, at end insert—
("Tenancies excluded by absence of written tenancy agreement
. An assured tenancy for which there is no written tenancy agreement.").
The noble Lord said: My Lords, I am a little disconcerted, because I was prepared to deal with Amendment No. 129. I beg to move Amendment No. 148, which stands in my name and that of my noble friend Lord Strabolgi. It is concerned with short tenancies for which there is no written tenancy agreement. The purpose of the amendment is to ensure that such a tenancy will automatically become a fully assured tenancy. The amendment seeks to create a new exemption from tenancies which are by default shorthold tenancies and would only allow a shorthold tenancy to be a full tenancy when there was a written tenancy agreement.
Currently, to create a shorthold tenancy which gives only limited security, a landlord has to give the tenant notice of this prior to the start of the tenancy. The benefits seem to me to be as follows. If the landlord is concerned that a tenancy would change, it is only proper that there should be written agreements. It seems to me not to be putting too much pressure on a landlord that he should have such a written agreement prepared, rather than let the matter go by default. After all, landlords are in the business of letting property and are therefore more aware of the legal position than are tenants who are in a rather vulnerable position in that they may not know the full impact of the changes. When there is a change in legislation it often takes some time before it becomes known to tenants, especially as some may become tenants only after the change has been made and the Bill enacted. They are faced with a situation of which they had little foreknowledge.
The amendment would change the balance a bit and give tenants more knowledge so that they would be in a better position to cope. The onus would be on the landlord to ensure that a written tenancy agreement was prepared, in the absence of which the tenancy would be a fully assured tenancy. I beg to move.
Lord Strabolgi: My Lords, I support this amendment, to which I have attached my name. As my noble friend said, without a written tenancy agreement tenants will not
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know their rights and their landlord's responsibilities. It is frequently the worst landlords who fail to tell tenants their rights and who seek to end the tenancy when the tenant complains that there is something wrong with the accommodation. By making tenancies automatically insecure, such tenants will have little chance of making their homes safe. Our amendment would require a landlord to issue a written tenancy agreement to create a shorthold tenancy and would allow tenants without such an agreement a fully assured tenancy, thus encouraging responsible renting and providing tenants with protection against irresponsible and incompetent landlords and indeed against landlords who are often both.
The Government maintain that if landlords and tenants wish to enter into a full assured tenancy they can do so. There is much talk about the free market, and so on, but the Government fail to acknowledge the weak bargaining power of tenants. Affordable accommodation is scarce—I repeat, scarce—and there is not a free market at all in many areas. If a tenant does not accept an offer of accommodation he may end up being unable to get any accommodation at all and having to sleep rough on the streets. Therefore, I hope the Government will look favourably on the amendment and consider realistically what happens in the real world, which is very different from the one they pretend to believe in.
4.15 p.m.
Baroness Gardner of Parkes: My Lords, I find the amendment rather worrying. I again declare that I have, and do, let property on shorthold tenancies. What worries me about the proposal is that there are a lot of informal agreements. For example, people may let a student into a property, and so on. As I understand it, if that was done without a formal written agreement, the student, or any living soul you allow into your property, under the provisions of the amendment, might become a secure tenant. That would be a deterrent and would catch many simple, innocent people who were acting out of goodwill. There are such things as verbal contracts in this country; I am worried about the position.
Australia has a very simple solution. Everyone renting a property in New South Wales uses a particular form. I suppose you could have a more elaborate document drawn up by your solicitor, but no one does. They go to the local paper shop and buy this text, which complies with New South Wales law. Everyone understands it and it seems to work very well. I know that you can get forms here from the Solicitors' Law Stationery Society, and similar places, and I do not know why more of them are not used. Perhaps it is because the legal profession rather likes the fees for drawing up something more elaborate. Even agencies who let properties often charge quite a high amount both to landlords and tenants for supplying a very simple type of agreement for an assured shorthold tenancy.
The amendment is worrying. I ask my noble friend, when he replies, to say whether it could be interpreted to mean that anyone you let into your property becomes a

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secure tenant. If that were to be the case, I think it would terrify people and they would not let anyone inside the door.
Lord Boyd-Carpenter: My Lords, leaving aside the interesting point raised by the noble Baroness and based on the earlier part of the discussion, it seems to me that there is a good deal of merit in the amendment. I hope that my noble friend will deal with it very fully.
Earl Ferrers: My Lords, the poor unfortunate noble Lord, Lord Dubs, found himself disconcerted in moving the amendment because, as he said, he was prepared to deal with Amendment No. 128. All of a sudden he found himself having to deal with Amendment No. 148. I find it rather disconcerting too; it is what is called keeping us all on our toes. If I may say so, the noble Lord acquitted himself remarkably well considering that he was not immediately prepared for the amendment.
The noble Lord said that the purpose of the amendment was to try to change the balance a bit. Frankly, that is what frightens us somewhat; I shall tell your Lordships why. The amendment seeks to exclude tenancies from being assured shorthold tenancies where there is no written agreement. A prudent landlord would of course want to have a written agreement, as indeed would the prudent tenant too. After all, it provides a perfectly clear statement to everyone as to who is responsible for what. It would also put the landlord in a much stronger position if anything should go wrong or if he needs to seek possession. A landlord can only recover his property, using the accelerated possession procedure, if he has a written agreement with the tenant. I was interested to hear the experience of my noble friend Lady Gardner of Parkes in New South Wales where, she said, you can purchase a document which is used throughout the country. I do not have too much personal experience of that, I must confess, but it would be interesting to discover more about it.
But I have difficulty with the noble Lord's amendment. It would create exactly the procedural trap for landlords that Clause 95 proposes to remove. It is much better for tenants and landlords to have written agreements and it is rather imprudent not to do so. But there is no reason why a landlord should face the disproportionate penalty of having a shorthold tenancy suddenly converted into a fully assured tenancy simply because the landlord has not provided a written tenancy agreement.
We believe, however, that tenants with oral agreements with their landlords should have a right to evidence of the main terms of the tenancy in writing if they want it. It is for this reason that we listened to concerns which were raised in another place and introduced Clause 96, which places a duty on the landlord to provide the tenant, on request, with written details about the important terms of the tenancy relating to rent and security of tenure.
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This will provide a safeguard against the minority of landlords who might seek to exploit the rights of their tenants. Where a landlord fails to comply with his tenant's request within a period of 28 days and there is no reasonable excuse for his failure, he will be liable on summary conviction to a fine of up to £2,500. That should slow up those people who are trying to pull a fast one on their tenants.
My noble friend Lady Gardner of Parkes was concerned that this would have a tremendous effect on everyone. I agree with her about the risk of letting, for example, a student into a flat only to find that you are stuck with the person. If that were to happen, that would be a very bad position in which to be. We do not wish to risk that happening.
Your Lordships may remember that some years ago people were concerned with precisely that, because if you let in a student, so the theory went, who was at, for example, Oxford, Cambridge or another university, he would have security of tenure. Therefore, so the argument went, everyone went rushing around trying to find Chinese or Greek students because they went home when they had finished their course and did not get security of tenure.
There is a standard tenancy: law stationers sell standard forms and most letting agents have a standard form. Therefore, they do exist; they can be useful; but they do not have the universality of the forms which are available in New South Wales.
Where the tenant does not agree with any of the terms in the statement, it is important that he should be able to pursue this with the landlord. Subsection (5) of Clause 96 therefore makes it clear that there is no presumption that the landlord's statement provides conclusive evidence of the terms agreed. A court would not be obliged to regard the written statement as a binding document but would take into account all the facts of the case, including the views of the tenant on the nature and terms of the tenancy.
In view of the new right which we have introduced for tenants to obtain written details, on request, on the main terms of the tenancy, which the landlord will be bound to provide, I hope that the noble Lord, Lord Dubs, will feel that that satisfies the majority of his concerns. It is odd that people are happy to have oral agreements, but the provisions which we have introduced to overcome the difficulties of that solve the problem which the noble Lord has drawn to our attention.
Lord Dubs: My Lords, I do not think that I am convinced by the Minister's arguments. I have a feeling that the Minister's heart was not totally in the argument that he was putting forward. I may be doing him an injustice. However, it seems to me that there is a weakness in the Government's argument.
Earl Ferrers: My Lords, I am mortified that the noble Lord thought that my heart was not in the argument. Of course it was. It was right there and he knows that perfectly well.
Lord Dubs: My Lords, in which case I can only suggest that the Minister's heart is not quite in the right place!

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The proposition is very simple, now that I have had time to think in more detail about the points which the Minister raised. We are dealing with something which, for the tenant, is one of the most important aspects of his life; namely, his home. In a variety of legislation, we find measures to protect consumers in all sorts of ways to prevent misunderstandings. I use hire purchase agreements as an example of that. In that case, there is legislation to protect people and to make sure that everything is written down. That is a matter which may be important but it is not as important as an individual's home.
There is a whole raft of other legislation which seeks to protect individuals when they enter into arrangements. And yet here we have a situation where, if the landlord does nothing, he puts the tenant in a more vulnerable position than he would otherwise be. Landlords are not stupid. Tenants are often not as well informed as landlords. And yet the suggestion is made that somehow it is too onerous for landlords to produce a written agreement to clarify the position, and that undermines Clause 95. That is stretching credulity a little too far.
The Minister said that Clause 96 provides a safeguard. It does of sorts, provided that the tenant knows what are his rights. But my contention is that tenants do not know what are their rights. They may be in a position in which they are ignorant and the landlord is almost invariably better informed. The tenant, through not knowing his rights, loses out.
But even if the tenant does exercise his rights under Clause 96, it can still take 28 days for any response to be forthcoming from the landlord. What about the housing benefit situation? The tenant may need to apply immediately for housing benefit, and yet for 28 days he may not have any statement from the landlord clarifying the terms of the tenancy. It seems to me that that leaves scope for a certain amount of fraud, because the arrangement is not sufficiently clear and the basis for giving housing benefit may also therefore not be clear. I understand that in a number of London boroughs fraud officers are very concerned that the arrangements which the Minister described open the door to the possibility of housing benefit fraud—something about which I know the Government are very concerned in a general sense.
But the basic proposition is that it is not a large burden on a landlord to produce an agreement. Even if the Minister's heart is totally in support of opposing the amendment, I fear that logic is not on his side. Very reluctantly, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Speaker: My Lords, I apologise to the noble Lord, Lord Dubs, for causing him confusion. I did not know that he had not been informed about the correction in the Marshalled List. We now return to Amendment No. 128.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 128:
After Clause 97, insert the following new clause—

RECOVERY OF POSSESSION
(".—(1) Section 21 of the Housing Act 1988 shall be amended as follows.
(2) In subsection (4) after "subsection (1) above" there shall be inserted "of the landlord under an assured shorthold tenancy to recover possession of the dwelling-house let on the tenancy in accordance with Chapter I above".
(3) In subsection (4)(a) after "the date the notice was given" there shall be inserted "and not earlier than six months from the commencement of the tenancy".").
The noble Lord said: My Lords, this is a very technical amendment and I hope that the Government will accept it as such. The purpose of the amendment is to avoid a problem which was caused by a judicial decision in the Shoreditch County Court in 1995 where the judge seemed to take the view that there was an ambiguity between subsections (1) and (4) of Section 21 of the Housing Act 1988.
The object of the amendment is to remove the ambiguity whereby Section 21(1) and (4) may be interpreted as alternatives and to prevent landlords from serving two months' notice seeking possession which ends before the end of the first six months of the tenancy.
I am sure that the Government are aware of the ambiguity caused by that judicial decision and I hope that they will accept the amendment in order to clarify the position. I beg to move.
4.30 p.m.
Earl Ferrers: My Lords, it seems that it is now the turn of the Opposition to keep us on our toes. Amendment No. 128 was tabled in the name of the noble Lord, Lord Dubs, yet the noble Lord, Lord Williams, speaks to it. That surprised me; but, nevertheless, it was a delightful experience to witness it.
Baroness Hamwee: My Lords, with the leave of the House, in that case, will the Minister give a different answer?
Earl Ferrers: My Lords, the noble Baroness will have to wait and see. Then she will have to work out whether the answer I give would have been the same as the one that I might have given to the noble Lord, Lord Dubs. Needless to say, I always tailor my answers to the individual noble Lord who addresses the subject, but the substance is usually the same. However, if I may say so, that is enough of the frivolity stimulated by the noble Baroness.
Clause 98 amends Section 21 of the Housing Act 1988 which sets out the procedures for a landlord to recover possession when a shorthold tenancy expires at the end of the initial fixed term. At present, the initial fixed term must be for a period of at least six months. An amendment is required because Clause 95 of the Bill will remove the requirement for a new shorthold tenancy to have an initial fixed term. Clause 98 will prevent a court from making an order for possession of a new shorthold tenancy until six months after the beginning of the original tenancy.

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The amendment tabled in the name of the noble Lord, Lord Dubs, and interpreted by the noble Lord, Lord Williams of Elvel—again, I have no doubt that the substance is the same; indeed, the noble Lord need not look so worried—
Lord Williams of Elvel: My Lords, it is all very well to say that the substance is the same, but the noble Lord, Lord Lucas, has been moving amendment after amendment tabled in the name of the Minister throughout the whole proceedings on the Bill; indeed, he did so while the noble Earl was in hospital. I do not mind but, once tabled, an amendment is the property of the House.
Earl Ferrers: My Lords, the noble Lord is perfectly right. I was just waiting for him to give such an elementary response. I knew that he would not be able to resist doing so.
The noble Lord, Lord Williams, said that the amendment refers to a judgment concerning Shoreditch County Court. In fact, no one has raised the matter with my department and, indeed, we are not aware of any ambiguity. However, I shall certainly look into the matter. If the noble Lord, Lord Williams, says that there is a genuine problem, I shall of course look at it.
I had prepared myself for the fact that the purpose of the noble Lord's amendment was something other than that which he outlined. I believe that the noble Lord would prefer it if I were to consider the substance of the amendment as he put it. As he said, it is a technical matter and one to which I cannot give him an answer straightaway.
Lord Williams of Elvel: My Lords, I am grateful to the Minister. The decision in question is on Ujima Housing Association v. Richardson (1995) CLW 46/95, Shoreditch County Court. Perhaps the noble Earl would be good enough to look at that judicial decision to see whether the amendment is well founded. If it is—and we think that it is—I hope that the Government will clear up the matter on Third Reading. As I said, it is a very small technical point.
Earl Ferrers: My Lords, with the leave of the House, I am grateful to the noble Lord, Lord Williams, for giving us details of the judgment. I am bound to say that I do not have the answer on the tip of my tongue at present, but I shall consider the matter and write to the noble Lord.
Lord Williams of Elvel: My Lords, I am always happy to receive letters from the noble Earl, but I would prefer to have the matter resolved by way of an amendment on Third Reading. Of course, I realise that the noble Earl does not pay unique and particular attention to every judicial decision, especially in the Shoreditch County Court; indeed, I would not expect him to do so. But, nevertheless, there is an anomaly here which I am advised is present in existing law. I very
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much hope that the Minister and whoever advises him will come forward with something on Third Reading, rather than just sending me a letter.
However, if I and my advisers are wrong and there is no ambiguity involved, I shall be delighted to receive a letter from the noble Earl explaining why I am wrong. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 99 [Applications for determination of rent: time limit]:
The Deputy Speaker: My Lords, I must advise the House that if the following amendment is agreed to I cannot call Amendment No. 130.
Lord Dubs Lord Dubs moved Amendment No. 129:
Page 70, line 38, leave out subsections (2) and (3) and insert—
("(2) In subsection (1) after "may" insert "at any time during the original tenancy or any replacement tenancy until such time as the landlord serves a notice under section 13(2)".").
The noble Lord said: My Lords, the above amendment also stands in the name of my noble friend Lord Strabolgi. While moving it, I should like to speak also to Amendment No. 130. The amendment's purpose is to give shorthold tenants a longer period during which they may apply to a rent assessment committee for a determination of rent. At present, they are constrained as regards the period during which they may apply. There may be many good reasons why they have not been able to apply as quickly as the Bill as drafted suggests they should—indeed, good reasons why a longer period would be better and more appropriate for a shorthold tenant to apply to a rent assessment committee.
If the situation as suggested by the amendment were to be the case, there would be a number of advantages. Some landlords charge rents which are significantly higher than market rents. Clearly it is right and proper that their tenants should be able to go to a rent assessment committee and have that rectified. Indeed, the existence of such a provision as outlined in the amendment would, I hope, encourage landlords to negotiate rent reductions with their tenants where appropriate.
The provision would provide a link between rents charged and accommodation standards, thereby providing an incentive for landlords to improve the quality of their lettings. It would discourage the distortion of the market by excessive rents being charged to housing benefit claimants and, therefore, reduce public expenditure on housing benefit. It would also reduce the number of cases where there is a gap between the rent being charged and the housing benefit paid; and, indeed, would reduce the number of possessions for rent arrears.
It has been estimated, based on current levels of rent restrictions, that there would be a saving in housing benefit of some £20 million if shorthold tenants were encouraged to apply to a rent assessment committee. Anything which prevents them from easy access to such a committee does, I suggest, lead to higher levels of

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housing benefit being paid. Therefore, there would be some compensating savings if such a provision were introduced.
Perhaps I may just reinforce that point by giving the House a few examples of situations where a six-month limit—that is the intended period under the Bill's provisions—is simply not enough. There may, for example, be a tenant who has a reasonable income and who is perhaps not aware—or, indeed, not too worried—that his rent may be excessive. However, that tenant subsequently becomes unemployed and needs to claim housing benefit. However, at that point it may be too late for him to appeal against the level of the rent.
Tenants whose housing benefit has been restricted will appeal to a housing benefit review board. Only if their appeal is not upheld will they then apply to a rent assessment committee. An HBRB frequently takes more than six months to arrive at a decision. Therefore, during that period the tenant has lost the opportunity of going to a rent assessment committee.
Further, tenants may move to an area previously unknown to them—perhaps in the process of looking for a job—with no knowledge of local rent levels. When one has moved into a new area, it can take some time to discover just what the local rent level might be. Clearly, for a newcomer to an area, six months is an unreasonably short time within which to discover local rent levels. Indeed, I put it to the Minister, it is very hard even in parts of London to discover the going rent. Such rents vary. Of course, one can consult various publications and magazines which advertise lettings and visit estate agents but it is quite difficult to find out what rent levels apply, especially if one moves to a different part of the country. As I said, it can take some time for a person to ascertain that information.
The amendment would bring another advantage; namely, that rent assessment committees can look into such matters in a wider sense than a rent officer, who would in the first instance deal with such applications. In the vast majority of cases, my understanding is that the rent officer has little scope to look into the quality of individual lettings. He works on the basis of local reference rents, rather than on a detailed assessment of the quality of any particular accommodation. Consequently, poor quality, sub-standard or even dangerous accommodation attracts as much rent as better quality lettings, and there is no incentive for landlords to bring their properties up to an acceptable standard. By contrast, rent assessment committees will, when asked to look into these matters, invite detailed submissions by landlords and tenants about the merits of particular properties and they may carry out their own inspections before determining the rent.
Landlords providing sub-standard lettings would therefore be penalised through the informed decision of a rent assessment committee. There would be advantages in that. This is an important point. It was raised at the Committee stage and the Government made a number of points to rebut the thrust of the arguments that were then put. Of course the Government want a healthy private rented sector. I do not believe that the amendment would damage that concept. It would not
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prevent landlords continuing to earn a reasonable return by charging a reasonable market rent. The amendment would only help tenants to curb those landlords who obtain unreasonably high returns by charging a rent which is significantly higher than a reasonable rent for a particular property.
At the Committee stage the Government said that referral to a rent assessment committee is a little used practice for determining rents. I believe they referred to a figure of under 1 per cent. of assured tenancies. However, given that rent assessment committees can play a valuable role, it surely is not an argument to make referral to them more difficult. Surely we should make it easier. In some inner city areas housing benefit claimants represent over 80 per cent. of all assured tenants. Without the independent rent assessment committee determinations, by which the rent officer may still be guided, the rent officer becomes to all intents and purposes a setter of the market as all comparable rents he may consider may be his own assessments for housing benefit purposes. That could lead to higher rents than would be seen in a true market.
The Government said they thought it unlikely that a landlord would be able to obtain a rent above the market rent from a new tenant. I suggest that that does not follow. How is it that rents charged to new tenants who claim housing benefit are restricted in over 40 per cent. of all cases? That seems to me to suggest that landlords sometimes try to obtain higher rents than are appropriate, even where there are safeguards in place. At the Committee stage the Government further stated that tenants would have an opportunity to negotiate with a landlord as to the level of rent for any replacement tenancy. The fact is that a tenant has little bargaining power when he has no security. I do not think it is proper, and it does not make sense, to restrict the time period during which a tenant can approach a rent assessment committee.
I wish to speak briefly to Amendment No. 130. That would give an additional six months' security when an initial tenancy is continued. Essentially, when a six-month tenancy expires, if the tenancy continues, a new six-month shorthold will in effect be created. I suspect I know what the Government will say to that. However, I rest my case mostly on the arguments that were made to Amendment No. 129. I beg to move.
4.45 p.m.
Lord Strabolgi: My Lords, I support what my noble friend Lord Dubs said. Obviously, the fewer lettings at rents significantly higher than market levels the fewer tenants there will be who accrue rent arrears, either through housing benefit restriction or other reasons. That will surely reduce the number of possession actions on rent arrears with a consequent reduction in homelessness.
Despite all the rule changes for the assessment of housing benefit, and the role of the rent officer in the process, in the vast majority of cases there is no scope for the quality of individual lettings to be taken into account, as my noble friend Lord Dubs said. Decisions on local reference rents—what is reasonable and what

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is suitable—are all based on generalities. They are rarely based on any detailed consideration of quality. Consequently, poor quality, sub-standard and even dangerous accommodation attracts as much rent as better quality lettings and there is no incentive for landlords to bring their properties up to an acceptable standard. The Government have often said they wish to sustain a healthy private rented sector. They believe that deregulation has allowed landlords to earn a reasonable return on their investment. The amendment does not prevent landlords continuing to earn a reasonable return by charging a reasonable market rent. It seeks only to curb those landlords who obtain unreasonably high returns by charging a rent which is significantly higher than a reasonable rent.
The Government claim that the rent assessment committees are little used for the determination of market rents. According to some survey—I do not know how valid it is—the figure is less than 1 per cent of assured tenancies. But, given the valuable role the RAC can play, that is surely an argument for making referral easier and not more difficult. The Government believe that tenants have the opportunity to negotiate with a landlord the new rent for any replacement tenancy. What bargaining power does the tenant with no security of tenure have if he or she wishes to remain in his or her home? This is the real world. It is naive, I think, to suggest that they are equal partners. That is not so at all. I support the amendment.
Baroness Gardner of Parkes: My Lords, several points have been raised which I feel I must respond to. One is the suggestion that rent assessment panels do not really assess quality. My husband sits regularly on a housing benefit committee. The information that is submitted to that committee by rent assessment personnel is amazingly detailed. Charts are drawn up. If there is any doubt about the quality of accommodation, the members of the committee go to view it. For example, there is a range of assessments from A to D for a studio flat. The committee will determine a fair and appropriate rent for a property within a particular area. Obviously, rents vary according to the area in which a property is located, as well as being affected by other factors. The other point—
Lord Dubs: My Lords, I may have misled the noble Baroness. I drew a distinction between the power and the practice of rent officers, and of rent assessment committees. I said that rent officers do not have the opportunity of looking into the quality of accommodation, but rent assessment committees do.
Baroness Gardner of Parkes: My Lords, I thank the noble Lord for those comments. I thought it was the noble Lord, Lord Strabolgi, who made the point that quality was not assessed. I was responding to that point. My other point is that I cannot accept that a tenant has no negotiating position. As regards this amendment, some people overlook the fact that the greatest desire of a landlord is to retain a good tenant. Therefore, such a tenant has a strong negotiating position. We have
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discussed this matter at previous stages of the Bill. I believe that any way of trying to extend or secure longer tenancies for tenants as secure tenants would be damaging in terms of the availability of rented properties. I believe it is dangerous to suggest such a course.
Earl Ferrers: My Lords, one of the major factors in the revival of the private rented sector—I am sure the noble Lord, Lord Dubs, will agree that there has been a considerable revival since 1988—was the removal of rent control and the introduction of market rents. There is always a danger that people will think that if market rents are introduced, rents will fly up. But, of course, if one does not introduce market rents, houses do not come on to the market. One always has to strike a balance here.
Under the existing legislation, shorthold tenants have a right to refer their rent to a rent assessment committee for a rent to be set during the initial fixed term of the tenancy. The two amendments in the name of the noble Lord, Lord Dubs, would extend the period during which a tenant could apply to the committee for a rent to be set. The difficulty is that it would impose new rent controls on landlords. I suggest to your Lordships that that would be a retrograde step and would undermine the progress that we have made since 1988. It would work against the provisions in the Bill which are designed to give further encouragement to property owners to let out accommodation that would otherwise remain empty.
Under Clause 99 a tenant would still have the right to refer a significantly high rent to a committee within a six-month period. Six months provides a reasonable opportunity for the tenant to make an application while giving the landlord the certainty that an appeal cannot be made after the deadline has passed. If the noble Lord's amendments were accepted, the landlord, having had a tenant for six months, during which time the tenant appeared to be happy with the rent, would continue to face the risk that the tenant might suddenly refer the rent to the committee and have it reduced. If the tenant has not challenged the rent in the first six-month period and is reasonably content with it, not having challenged it, it is reasonable to assume that he is happy that the rent is a fair one.
If the noble Lord's amendment were to be accepted, one could have this position. A person had a flat or a house for six months. He was content with it. He had three children. He had a job. Suddenly he is out of a job. He might find it difficult to meet that rent. I do not think that that would be an excuse for taking the rent to the committee saying, "After all, I'm now out of a job and I cannot pay that which I paid when I was in a job." That is the responsibility and liability, unpleasant though it may be, of the tenant and should not be passed on to the landlord.
The point was made in Committee that very few tenants use the existing right of referral. The point was made by the noble Lord, Lord Strabolgi that only 1 per cent. do so. The figures show that in 1990 there were 140,000 assured tenancy and 400 referrals. That is less than 1 per cent. The position now is that there are

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800,000 assured tenancies and about 1,600 referrals a year. That is about the same percentage. There is no reason to believe that a longer referral period would lead to a significant increase in referrals.
Because tenancies are already at market rents, there is little scope for the landlord to hike up the rent at the end of the original tenancy. This is particularly unlikely with the current low level of inflation. The average weekly shorthold rent increased by £1 between 1993–94 and 1994–95. If a landlord tries to charge an excessive rent he is likely to find that he has no market for his property. Nor is a landlord likely to go to the trouble of replacing a good tenant with a new tenant simply to increase his rental income by a few pounds.
The noble Lord, Lord Strabolgi, queried whether the tenant had any bargaining power. I think that he has. The bargaining power is that the landlord will not be able to find someone else to pay the increased rent if it were above the market level. If the landlord can find someone else to pay it, it is presumably a market rent. These are always difficulties. When people leave a house, the rent often goes up. But one cannot have the rent moving up the whole time during the passage of a tenancy. That is why one comes to an agreement beforehand.
The tenant will have the opportunity to negotiate with the landlord the new rent for any replacement tenancy. He will be able to negotiate on the basis of any determination by the committee during the original tenancy. If the original tenancy lapses into a periodic tenancy and the landlord serves notice of a rent increase, the tenant will have another opportunity under Section 13 of the Housing Act 1988 to apply to the committee for a determination. Any such determination will have effect for at least a year. If the landlord serves a further notice after a year, the tenant can apply to the committee again. I believe that those safeguards should satisfy the problem.
The noble Lord, Lord Dubs, made much of housing benefit. If I may say so, I thought that the noble Lord's argument was not particularly good. The rent officer already checks whether it is reasonable for the benefit system to meet the rent which is requested. He will take into account the rent level and, for example, the size of the family. On the other hand, if the tenant willingly paid the rent out of his own earnings, that makes it a market rent.
The noble Lord, Lord Dubs, said that the rent officer does not look at individual people and houses. But I understand that rent officers do exactly that. They look at the characteristics of individual properties. As my noble friend Lady Gardner of Parkes said, they often visit the properties, in particular if they feel that the rent is high.
There are those safeguards. To include the amendment suggested by the noble Lord, Lord Dubs, would curtail not just those safeguards but the whole operation of the rented sector. A rise from 140,000 to 800,000 assured tenancies indicates that the system is working, and working well.
Lord Strabolgi: My Lords, before the Minister sits down, there are two factors which he and the
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Government never seem to take into account when they are considering the equal bargaining power between landlord and tenant. First, due to government legislation over the last 15 or so years there is now hardly any security of tenure. Secondly, there is a great scarcity, in particular at the poorer end of the market. Those two factors put the bargaining power almost entirely into the hands of the landlord. The Government never seem to take those factors into account, if I may say so.
Earl Ferrers: My Lords, we always try to take these matters into account. One of the difficulties is that the noble Lord, Lord Strabolgi, seems incapable of taking account of the other side of the argument: that by having a free rented sector with certain restraints more houses are available. It is all very well to say that one or two people can obtain houses at conveniently low rents. The fact is that other people do not have the houses that are now available to them because it is not in the landlord's interest so to let them. The difference is that there has been a great increase and many people have benefited from the change.
The noble Lord, Lord Strabolgi, says that the Government will not understand the basic fact that there is no equal bargaining power. It is difficult to know what "equal" means. There is bargaining power on both sides. On the one side one has the landlord unable to let houses if he charges absurd prices. That is a basic fact of life. On the other, certain constraints are available to prevent the landlord from being unfair and unjust. That is the reason for the Housing Bill and earlier housing legislation.
We seek to free the situation so that more houses will become available. Where people are subject to housing benefit, the Housing benefit ought at least to pay most of the rent required, provided that the rent is reasonable.
Lord Dubs: My Lords, first, a correction. I may have made a point that was not totally accurate in response to the noble Baroness, Lady Gardner. My point was that rent officers do not consider quality of accommodation in setting local reference rents for housing benefit purposes. However, they can consider quality in determining a market rent for an individual property for housing benefit purposes. In the local reference sense, they do not look at quality but take the generality of rent levels in a particular area.
I turn to the Minister's comments. The Government said that they want a lively private rented sector and they have taken steps over the years to try to encourage it. I understand that. However, they have also put in place a number of safeguards to protect tenants against excessive rents. That is why we have rent officers and rent assessment committees. The Government believe that those safeguards are necessary for individual tenants, otherwise they would not have retained them in the Bill. However, I hope that, after my suggesting that, the Government will not immediately rush to take the safeguards out.
We are not talking of a provision which will drive a coach and horses through the Government's proposals in this part of the Bill. All we are saying is that if a tenant has safeguards for six months, is it so outrageous

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that in some circumstances he might wish to make use of the safeguards after, say, eight or nine months rather than six months? That is what the argument is about, not great principles as to whether it will undermine the whole private rented sector. We say that if it is proper and appropriate that a tenant should be able to go to a rent assessment committee after five-and-a-half months, but if for some reason he was not fully aware of all the circumstances, or if he was not impelled to do so, is it so outrageous that he should adopt the same safeguards two months later?
At one level it is a minor point. It is important to an individual tenant in some circumstances. But I hardly think it is a great point for the Government. They could easily concede it without undermining anything else in the Bill.
5 p.m.
Earl Ferrers: My Lords, with the leave of the House, perhaps I may reply. I understand the noble Lord's concern, which is that if a person has had the house for six months, why should he not complain about it afterwards? The person might find himself in different circumstances. Perhaps I may give an analogy to the noble Lord because he may understand much better. The noble Lord, Lord Dubs, is always impeccably dressed. He might go to his tailor and buy a nice new suit and wear it for six months. If he went back to his tailor after seven months and said: "This is a crummy old suit and I do not want to pay you that amount for it", his tailor would say: "You used it for six months and didn't complaint about it. Why complain now?" That is the point which underlies this part of the Bill.
Lord Dubs: My Lords, I thank the Minister for the compliment. I was so taken aback by it that I was unable to think of a good counter example. If one wears a suit, it wears out quickly—at least on these Benches. It is hard work bobbing up and down. It seems to me that we are dealing with something rather different from a suit which wears out. We are dealing with the accommodation in which a person lives. If the tenant were to be replaced, the next tenant would have every right, if the rent were the same, to go to a rent assessment committee. The concept is different from the one about the suit getting worn. Therefore it was not good enough to start with.
I repeat the example that I gave, as I did not explain it clearly enough, judging by the Minister's comment. There may be a change of circumstances. I gave the example of an individual who might feel that he had a good job, he was earning plenty of money, the rent was a little high but he was not too bothered. Then after six or seven months he loses his job. At that point he is forced to apply for housing benefit and would wish to challenge the level of the rent. He did not feel it necessary to do so earlier because a little more money did not matter much when he was earning plenty but it becomes critical when he loses his job. That illustrates that there can be ordinary, legitimate changes of circumstances which might make it proper to ease the situation in the way that the amendment suggests.
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The housing market is not a perfect market where if one landlord charges a little more for a flat than someone else, somehow he will no longer be able to let the flat. Given the housing shortage in the whole of London and in other cities, and given the difficulties that people have in finding rented accommodation, not at the top end of the scale but at the lower end, it is not easy for individual tenants to have bargaining power. Therefore, they need the safeguards. It takes time to find out whether one is paying over the odds.
I thought the amendment was so modest that the Government might be sympathetic. We seek no change in the principle in the Bill. I thought the amendment so reasonable that the Government would say: "Yes, there's something in it and there's no harm in accepting it". I am sorry that the Minister feels that he cannot concede the amendment. I beg leave to withdraw it.
Amendment, by leave, withdrawn.
[Amendment No. 130 not moved.]
Clause 100 [Mandatory possession for non-payment of rent: reduction in arrears required]:
The Deputy Speaker: My Lords, if Amendment No. 131 is agreed to, I cannot call Amendment No. 132.
Lord Dubs Lord Dubs moved Amendment No. 131:
Page 71, line 7, leave out from ("possession") to end of line 11 and insert ("Ground 8 (rent unpaid for certain periods) shall be omitted.").
The noble Lord said: My Lords, Amendment No. 131 deals with the grounds for possession of a flat. As the legislation stands, rent arrears represent a mandatory ground for possession. There is no discretion to say that if an individual has rent arrears, as proposed in the Bill, the individual can find a good reason which would prevent the ground for possession from being exercised. The Government have shortened the period and it seems to me that there may well be instances when an individual has a good reason for being in arrears. I give the example of housing benefit. The Government have changed the regulations somewhat and housing benefit may now be paid in certain circumstances four weeks in arrears. Perhaps I should correct that. Changes in the housing benefit regulations provide for housing benefit to be paid in arrears, leaving certain tenants with four weeks' rent arrears anyway. It is not difficult, therefore, to envisage a situation where a tenant can be eight weeks in arrears, which is the period stipulated.
It seems to me hard on the tenant if housing benefit arrives so late that the tenant is in arrears but he cannot say: "Don't evict me, don't throw me out. I have a perfectly good reason. The local town hall was slow. It made a mess in the procedures and my housing benefit has arrived late. I shall give you the evidence that the town hall has already apologised for the money coming late. In the circumstances would you please not evict me?" All the amendment does is to make that argument possible. At the moment, I understand that no such argument is possible and no matter how good the excuse

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or how many extenuating circumstances, the mandatory grounds cannot be altered. A little discretion would surely represent common sense. I beg to move.
Lord Strabolgi: My Lords, I should like to support the amendment. As your Lordships know, the Bill proposes to reduce the current mandatory grounds for possession for assured tenants from three months to two months. As my noble friend Lord Dubs said, this change is now of even greater concern, given the fact that changes to housing benefit regulations provide for housing benefit to be paid in arrears, leaving certain tenants with four weeks' rent in arrears.
The amendment would enable the courts to exercise their discretion over the merits of the case so as to avoid tenants losing their homes unreasonably, for example, as a result of housing benefit delays. This proposal surely will add to tenants' insecurity, while at the same time the housing benefit amendment regulations provide for payments to be made in arrears. This will surely increase the risk of tenants being made homeless for reasons beyond their control: for example, if the local authority is late in providing the housing benefit, even later than the agreed period in arrears. That may be either through inefficiency—they may have lost the case—or for other reasons. The one who pays is the tenant, who is then faced with eviction through no fault of his or her own.
There is widespread discontent with the way housing benefit claims are processed. Delays continue to plague the housing benefit system. As a result I understand that citizens advice bureaux frequently report clients facing rent arrears and being threatened with possession as a result of delays in the payment of their housing benefit. The citizens advice bureaux report the case of a woman in London who had accrued arrears of housing benefit that was due to her from the local authority which had been allowed to run up to £600. The local authority informed the citizens advice bureaux that the claim would not be paid for a further month. The woman had tried to borrow money to pay her landlord but had been unable to do so. I suppose the poor lady had no security. She had subsequently been evicted through absolutely no fault of her own. I hope, therefore, that the Government will look reasonably on this amendment. I hope they will consider these difficulties and accept it.
Earl Ferrers: My Lords, the noble Lord, Lord Dubs, disturbs me greatly. I long to be able to give him some encouragement and say he has produced the most reasonable amendment and of course we should like to accept it. My difficulty is that I find that most of his amendments, though delightfully and charmingly put, run counter to quite a lot of what the Government are trying to do. That is why I find myself in the position of having to say that it is difficult for us to meet them.
Clause 100 reduces the amount of rent arrears under the mandatory ground for possession for rent arrears in Schedule 2 to the Housing Act 1988. Schedule 2 sets out 16 grounds on which it is possible for a landlord to gain possession of his property. Ground 8 currently
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requires a court to grant a landlord an order for possession of his property if a tenant is in arrears with his rent by an amount equal to 13 weeks' or three months' rent, both at the date when the landlord serves notice of possession and at the date of the court hearing. So the person has to be three months out of date; application has to be made; and then the court hearing is held. By the time the case reaches court it is possible for the tenant to say, "Here is another month's rent". He is then only two months in arrears and the process begins again, until he becomes three months in arrears; proceedings are applied for; and there is another month's wait for the proceedings, by which time the tenant pays up another month's rent. That is an example.
The vast majority of tenants pay their rent on time and in full. The Survey of English Housing shows that in 1994–95 only 5 per cent. of tenants were in rent arrears, not of three months and not even of two months, but of two weeks. It follows that the number who will be in arrears of eight weeks or more is likely to be considerably lower. However, research shows that although the Housing Act 1988 made it easier for landlords to recover possession of their property, they continue to have problems when the tenant is in arrears with his rent.
A quarter of lettings are owned by a landlord with only one property. For those landlords, having a tenant who withholds the rent will be very difficult, particularly if the landlord has a mortgage or a loan to repay. Small landlords will let property only if they are confident that they can cover their loan or mortgage.
It is true that Grounds 10 and 11 of Schedule 2 to the Housing Act 1988 provide discretionary grounds for possession for lesser rent arrears or where the tenant is persistently late in paying the rent. But those grounds do not give landlords the certainty they need that they can repossess their property once a minimum level of rent arrears has accrued.
For a small landlord who relies on the rent to cover his mortgage it is bad enough to have to wait months with little or no rent coming in before he can get his property back. It would be much worse for him if he could not even be certain that the court would grant a possession order. Ground 8 provides that certainty.
The noble Lord's amendments seeks to remove that certainty altogether. Without it, I fear that many people would be dissuaded from letting out their properties in the first place. It would be a backward step for the private rented sector.
The noble Lord, Lord Strabolgi, was concerned about housing benefit. He gave the tragic example of a person who was £600 in arrears. Periodically, very uncomfortable and awkward circumstances arise. But even under the new levels proposed in Clause 100, a tenant is unlikely to be evicted until at least three to four months have elapsed since he first started to accrue arrears. That is because the landlord cannot begin any action until the tenant is at least eight weeks in arrears. He must then give the tenant two weeks' notice of possession proceedings. It will then take at least a month for the case to reach court. A court order can be made only if eight weeks' arrears still exist at the time

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of the hearing. So the whole process takes at least three or four months. That is a reasonable period for a responsible tenant to sort out his financial affairs.
While I sympathise with the example given by the noble Lord, Lord Strabolgi, it is very difficult to make law that takes into account some of the most extreme examples. I quote a phrase which the noble Lord knows; namely, hard cases make bad law. One has to try to produce reasonable law based on reasonable cases. I hope the noble Lord, Lord Dubs, will feel satisfied with the answer I have given.
5.15 p.m.
Baroness Gardner of Parkes: My Lords, before the noble Earl sits down, is he aware that the Greater London Council considered that to allow anyone to build up arrears beyond three weeks was very unkind and unfair? Under its policy it would view the eight weeks as far too long. Does the Minister think that the eight-week period is about right?
Earl Ferrers: My Lords, if I did not think it was about right I should not have advocated it. I am very grateful to my noble friend for pointing out the fact that the GLC thought that three weeks was about right and it was "unfair and unkind" to allow the period to go on longer. That is quite right. In many respects, if the time goes on too long the tenant falls into more and more difficulties. That is why we have tried to be reasonable in accepting that point and reducing the period from three months to two months (from 13 weeks to eight).
Lord Dubs: My Lords, had my amendment said that a tenant could build up arrears for six months or a year before there was ground for eviction, I suggest that the Minister's remarks would not have been very different. I was not arguing that point. I do not believe that it is proper for tenants to get themselves into arrears. Everything should be done to prevent that happening. That was not what the amendment was about.
The amendment said that the courts would have discretion, and that is all. Why should they have discretion? They should have discretion because there may be particular and highly exceptional circumstances; and the court could exercise discretion if it were convinced that the circumstances were sufficiently unusual and exceptional to justify not granting possession. I cannot think of a more modest amendment put from this Dispatch Box over the years, and certainly not on this Bill. Yet the Minister treats it almost as if I were giving a licence to tenants to be in arrears for months, if not longer. It is incredibly modest. By replying in the way he did, the Minister is saying to the courts in this country, "We do not trust you to use your discretion. We shall give you no choice at all". That is what the discussion is about. The Minister's remarks were not about discretion. They were about rent arrears, how awful it was for landlords and how wrong it was to allow large rent arrears to occur.
I wish this were Committee stage. One could then press the Minister harder. All that this amendment seeks is discretion for the courts to deal with highly
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exceptional instances. Perhaps the Minister will think again. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Dubs Lord Dubs moved Amendment No. 132:
Page 71, line 11, at end insert—
("(c) after paragraph (d) there shall be inserted—
"For the purposes of this ground, any amount of unpaid housing benefit to which the tenant is lawfully entitled shall be regarded as if it were rent by the tenant;".").
The noble Lord said: My Lords, had the Government seen fit to accept Amendment No. 131, Amendment No. 132 would not have been called. This amendment covers similar ground. I am sorry that it was not grouped with the previous one but there is a slight technical difference.
Amendment No. 132 seeks to enable the court, in considering grounds for possession under rent arrears, to set aside any element of the arrears arising from official error such as a slowness in the processing of a housing benefit claim. In other words, in ordinary language, a tenant who is in arrears could say, "I am in arrears to the extent of f100. The housing benefit authority owes me £120. Can that money be set against the £100 in order that I be judged not to be in arrears?"
This is another way of getting at the same point and one which may appeal a little more to the Minister than the previous one. Obviously the tenant would need to provide evidence as to the amount of housing benefit arrears to which he was entitled in order to demonstrate to the court that the money was owed to him from official sources and therefore it would not be appropriate to use Ground 8 as a way of achieving mandatory eviction from the premises.
The amendment is very reasonable. I suspect that it will hang on the ability of the tenant to produce evidence that the local authority has been slow in paying housing benefit. It is an even more reasonable amendment than the last one—I do not know how much more reasonable it is possible to be on this matter. Perhaps the Minister will feel that this amendment, being so reasonable, is worthy of further thought. I beg to move.
Earl Ferrers: My Lords, as the day goes on, the noble Lord, Lord Dubs, becomes more persuasive and makes me feel more of a heel because I cannot agree with him. I shall be careful if ever I should have a drink with the noble Lord—if he should ever offer me one—because I fear that, even if it were a poisoned chalice, he would say that it is a most delectable drink and that I should take it.
The noble Lord is enormously persuasive in this matter. He said that this is not the Committee stage, and that is true. He also said that Amendment No. 132 is similar to Amendment No. 131, which it is. He then made a remark which almost persuaded me to invite the leave of the House to allow me to make an intervention, but not quite.

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The noble Lord said that my speech did not answer his point. It was a gentle speech about the ability of the courts to use their discretion and I was referring to rent arrears. I had the same response the other day from the noble Baroness, Lady Hollis, who said that I had not addressed her point and had interpreted it wrongly. All I can say is that if the words of the amendment are included in the Bill they will have a certain effect. I tried to explain what the effect would be if the words of Amendment No. 131 had gone into the Bill. The noble Lord may have thought that they would have a different effect but, as we see it, it would have the effect that I stated.
The difficulty with this amendment is not dissimilar to the difficulty with the previous one. Under social security legislation, local authorities are required to process housing benefit claims within 14 days of all the required information being received. If the deadline is not met, local authorities have a statutory duty to make payments on account where the delay is not the fault of the tenant. The local authority is entitled to regard that a delay by an employer in providing information is not the fault of the tenant. Department of Social Security statistics show that over 80 per cent. of claims for housing benefit are now processed within that deadline and performance is steadily improving. That figure was queried during the debate in Committee. It has subsequently been checked with the DSS, which confirms it. The DSS also strengthened its guidance in April to remind local authorities of their legal duties to make payments on account. In view of the fact that the possession process is still likely to take three to four months, even under the change which we propose, housing benefit claimants should not be affected.
Local authorities must also ensure that the method and frequency of payments suit the reasonable needs of the tenant. The majority of tenants are paid on a two-weekly basis. Local authorities also have wide powers to pay housing benefit direct to the landlord. They have discretion to make direct payments if the tenant requests it or if it would be in the best interests of the tenant.
They must make payments direct if the tenant is eight weeks in arrears and recent guidance from the DSS recommends them to give serious consideration to direct payments if there are about six weeks' arrears. We would therefore expect that, where the tenant is receiving benefit and is in arrears with his rent, benefit will be paid direct to the landlord long before the case gets to court. A recent sample survey suggests that some 70 per cent. of payments are made direct to the landlord.
The noble Lord's amendment becomes a little unrealistic, even though he says it is the simplest and, astonishingly, the most modest amendment that has come from the Opposition Benches. The landlord is contractually entitled to his rent. It is not fair for him to be personally disadvantaged if his bankers say that he is not paying his bills and in fact he is being denied the rent that is contractually his. The lender will not consider the landlord's monthly loan or mortgage repayments to have been paid just because his tenant's housing benefit may be in the pipeline.
The argument I have given to the noble Lord, Lord Dubs, is fairly convincing. I know that the noble Lord does not like to he convinced, but I am sure
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that if he thinks about what I have said, he will find that he is convinced. My reasons indicate that the kind of situation about which the noble Lord is concerned is taken care of.
Lord Dubs: My Lords, first, I shall be delighted to buy the Minister a drink at any time when we are not sitting here engaged in discussion, and I promise him that it will not be a poisoned chalice; it will be whatever is his favourite tipple, and more than one. There is an offer!
I listened to what the Minister had to say. I am tempted to quote the Deputy Prime Minister, who said that his practice in business was to delay paying his bills for as long as possible. But perhaps it would be churlish of me to quote Mr. Heseltine in that context or to develop that argument. I hear what the Minister said: I am not convinced, but I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 101 [Recovery of possession where grant induced by false statement]:
Earl Ferrers Earl Ferrers moved Amendment No. 133:
Page 71, line 17, after ("by") insert ("(a)").
The noble Earl said: My Lords, in moving Amendment No. 133 I shall speak also to Amendments Nos. 134 and 185.
Clause 101 introduces a new ground for possession for assured tenancies where the landlord has granted a tenancy as a result of a false statement which was made knowingly or recklessly by the tenant. Local authorities and housing associations can already apply to the courts for possession of a secure tenancy which has been obtained by deceit under Ground 5 in Schedule 2 to the Housing Act 1985. Housing associations now let on assured tenancies but there is no comparable ground for possession for assured tenancies under the Housing Act 1988.
Amendments Nos. 133 and 134 extend Clause 101 to cover false statements which are provided by a third party at the tenant's instigation in order to persuade a landlord to grant an assured tenancy. False information by third parties may be provided so as to obtain social housing. Indeed, Clause 161 of the Bill will enable prosecution of third parties, and not just the tenant, for making false statements in connection with an application for housing through the housing register. Letting agents also report problems arising from false information in references provided by third parties. The extended provision will cover references and other written or oral statements provided by third parties.
The Government see Amendments Nos. 133 and 134 as a sensible and logical extension of Clause 101. Amendment No. 185 would make similar provision in Ground 5 in Schedule 2 to the Housing Act 1985 for secure tenancies. I beg to move.
On Question, amendment agreed to.
5.30 p.m.
Earl Ferrers Earl Ferrers moved Amendment No. 134:
Page 71, line 17, at end insert (",or
(b) a person acting at the tenant's instigation"").
On Question, amendment agreed to.
Clause 82 [Notice under s. 146 of the Law of Property Act 1925]:
Lord Lucas Lord Lucas moved Amendment No. 135:
Page 54, line 4, leave out ("any other part of the notice") and insert ("the notice—

(a) to indicate that the tenancy may be forfeited, or

(b) to specify the breach complained of,

whichever is the more conspicuous.")
The noble Lord said: My Lords, in moving this amendment, I shall speak at the same time to Amendment No. 263. Amendment No. 263 will commence Clause 82 at the same time as Clause 81: two months after Royal Assent. Amendment No. 135 is concerned with the provisions in Clause 82 of the Bill in relation to the service of a notice under Section 146 of the Law of Property Act 1925, which is concerned with forfeiture. The clause requires that any such notice should contain a statement of the effects of Clause 81 of this Bill. That provides that a landlord may not exercise the right of forfeiture in relation to a dispute about service charge payments unless the amount due has been agreed by the tenant or determined by a court.
The Bill as currently drafted requires that the words of advice in the notice must be in characters not less conspicuous than those used in any other part of the notice. The noble Lord, Lord Dubs, expressed concern in Committee about the possible ambiguity of this wording and we agreed to reflect on it. Paying attention to amendments tabled by the noble Lord, Lord Dubs, may, as my noble friend Lord Ferrers said, be a dangerous business. To choose an analogy, it may be akin to playing Russian roulette. If that is the case, I hope that the cartridge is a blank, because we have agreed to go along with the arguments that the noble Lord was putting forward at Committee. Therefore, Amendment No. 135 provides that the relevant information in the notice must be in characters no less conspicuous than those which specify that the tenant may forfeit his lease or the breach which the tenant has allegedly committed. I hope that the noble Lord, Lord Dubs, will agree that we have gone sufficiently far to satisfy the point that he was putting forward at Committee. I beg to move.
Lord Dubs: My Lords, I thank the Minister for having, as it were, met the point which we put forward in Committee. I am most grateful to him. He was tentative in saying that he will accept suggestions coming from these Benches. I hope that he does not feel like that. The suggestions are put forward in order to improve the Bill and everything is clear in what we are saying. I am grateful that the Minister has seen fit to accept the point that we put forward earlier.
On Question, amendment agreed to.
Clause 83 [Determination of reasonableness of service charges]:
Lord Archer of Sandwell Lord Archer of Sandwell moved Amendment No. 136:
Page 56, line 28, leave out from beginning to end of line 7 on page 57.
The noble and learned Lord said: My Lords, with this amendment it may be for the convenience of your Lordships that we discuss Amendments Nos. 137 to 139 and 141 to 143. It certainly gives me hope that we appear to be discussing them at a moment when the Government have moved into a more receptive mood. Perhaps I may at the outset repeat the declaration of interest which I made in Committee. This amendment expresses the deep concerns of the Council on Tribunals, which I am privileged to chair.
Noble Lords who were in their places at nine o'clock in the evening of 13th June may recollect that in Committee I moved a rather modest amendment to this clause. Your Lordships will be relieved to hear that I do not propose today to repeat everything which I said on that occasion. Clause 83 proposes to transfer from the county court to the leasehold valuation tribunals a jurisdiction to decide the reasonableness of service charges under Section 19 of the Landlord and Tenant Act 1985.
There are good reasons for that and the Council on Tribunals would welcome it, subject to two matters. First, legal aid is not available for advice and representation in proceedings before leasehold valuation tribunals. I shall not elaborate on that. I said something about it in Committee and the noble Baroness, Lady Gardner of Parkes, and I must resolve our differences on some other occasion.
Secondly, the clause proposes that the parties to proceedings shall be liable to pay fees which will amount, over a period, to the total cost of providing the tribunal's service. I am aware that it is proposed to apply a similar proposal to courts in civil proceedings. Those unfortunate enough to be involved in litigation will be required to pay for the cost of providing the machinery of adjudication. For myself, I find that an application of market principles which amounts to reductio ad absurdum, but it is not within the remit of the Council on Tribunals and this amendment does not seek to address that.
What alarms the council is the proposal in the Bill to extend that principle to tribunals. The Franks Committee in 1957 and the Donoughmore Committee in 1929 recognised that one advantage of tribunals is that they are relatively inexpensive and no one is likely to be deterred from pursuing their rights from a fear of the financial implications.
If that principle is to be breached, surely it should be after a clear proposal to that effect, preferably in a Green Paper, with wide consultation and, I venture to hope, a debate in both Houses. It ought not to be by a provision in Clause 83 of a Bill on a different subject applying to one part of the jurisdiction of one tribunal.
The noble Earl, Lord Ferrers, said a moment ago that what mattered was the effect of the words of an amendment on the Bill. I hope at least that the words of this amendment are quite unambiguous. This amendment seeks to remove the whole obnoxious provision from the Bill.
Perhaps I may add a word of explanation. Those of your Lordships who recollect the debate at Committee stage may have noticed an unusual feature of this amendment. It would be normal to move a fairly wide amendment in Committee and, after discussion, to move a more restrictive one on Report. It was at Committee stage that I moved a less ambitious amendment simply to provide for someone whose means were such that, if they were involved in civil proceedings in the courts, they would be entitled to qualify for legal aid with a nil contribution and to declare that such a person should not be required to pay fees under this provision since by definition they could not afford to pay them.
I am aware that the Government propose giving power to the Secretary of State to provide for the remission of fees on grounds of means and to empower the tribunal to order one side to reimburse the other for fees. But I believe that that fails to address the problem for two reasons. First, I believe that it should be made clear in primary legislation that those who by definition cannot afford to pay fees should be exempt from paying them and that that clear message should sound forth from the Bill itself. Even if there were an undertaking that an appropriate provision will be included in rules under the Bill, I do not believe that that would be satisfactory.
Secondly, in any event, no such undertaking has been forthcoming. It may be within the discretion of the tribunal to make such an order, but I do not believe that that is the way in which the matter ought to be dealt with. If someone is considering whether to enforce their rights—usually, in this class of case, against a property company—they should not be concerned that although it may be all right, no one can predict what the tribunal will order. They might be at risk of having to pay fees. Clearly they cannot take the risk.
I made that very modest proposal in Committee hoping that there might be a compromise because I do not believe that the best should be the enemy of the good. Alas, the good was not on offer. The Government opposed my well-intentioned compromise. When he replied in Committee the noble Lord, Lord Lucas, announced—going, I believe, as far as he reasonably could given his brief—announced that the Government proposed, presumably in regulations, to provide that a litigant, before embarking on proceedings, will know whether he will be liable for fees so that he can then either embark upon the proceedings without that fear or he can reconcile himself to the loss of his rights. That is a crumb of comfort but it falls a long way short of what we might have hoped.
I should add that in Committee the noble Lord, Lord Meston, who, at the moment is not in his place, pointed out that the wording of the proposed new Section 31(B)(6) is not as clear as some of us might have hoped, and I ventured to hope that the Government would respond at least to that point.
If it is intended to respond, even to that, there is no indication on the Marshalled List. Apparently, the Government do not consider it possible that they may be wrong about any aspect of this. I would have settled for my amendment in Committee in order to protect those who, by definition, cannot afford to pay fees from having to run that risk. I might even be tempted today in a certain eventuality to settle for Amendment No. 139 which stands in the name of my noble friend Lord Dubs although I make the offer without prejudice at this stage. But it appears that no compromise is on offer. Certainly no compromise was on offer in Committee.
Therefore I have tabled at this stage the amendment which I should have tabled at the outset to remove from the Bill the whole principle of justice for sale and to preserve inviolate the principle that justice is provided by the community as of right.
If the Government wish to introduce the principle of fees on a full cost recovery basis in the case of tribunals and to reverse a principle which has been established at least since the Donoughmore Committee in 1929, then I hope your Lordships will have none of it. I beg to move.
5.45 p.m.
Lord Gisborough: My Lords, I should like to speak to Amendments Nos. 138 and 142 standing in my name dealing with the same matter. Clauses 83 and 86 empower the Secretary of State to make provision by order for the payment of fees in respect of any application to the tribunal at a level so as to cover the reasonable costs of the service.
I welcome that proposal to take service charge disputes in long leasehold private residential property out of the county courts and into leasehold valuation tribunals because I supported the Government's aim to make it much easier and more affordable for lessees to challenge unfair service charges.
When this matter was originally discussed with the Government, it was understood that these fees would take the form of an application fee and would be set in the region of £500 per case. The Government now propose that the fees should vary from case to case and should be set at a level to cover the cost of each individual case. The Minister suggested during the Committee stage debate that a simple case, lasting for example two hours, might cost £500 whereas longer cases would need to be charged at a rate of about £2,000 per day. It is my understanding that service charge disputes are rarely simple and it is difficult to envisage what could usefully be achieved in two hours.
The Government's latest position appears to move well away from the concept of an application fee and is a major and most unwelcome departure in the administration of our justice system. No other judicial process requires the applicant to underwrite the court costs. Given that the tribunal will have discretion to make an award for the fees and that therefore ultimately it may become payable by the lessee, it also seems to move a long way from the Government's original concept of affordable justice for lessees. Also, the move from a fixed fee, which would have given certainty

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regarding cost to potential applicants, to a limitless variable fee will undoubtedly deter applicants from seeking redress via the local valuation tribunal. We must remember that many of the people who will be seeking to have a fair service charge may be old people on fixed incomes and those people who are the least able to risk having to pay a high and limitless cost for the tribunal.
My amendment will not hold up the passing of the primary legislation or frustrate its admirable intent. It will simply enable discussions to take place between the Government and interested parties on the most appropriate level and structure of the fees to be levied before any order is made in respect of them.
My amendments have been subject to wide consultation and have a great deal of support with regard both to their principle and the detailed drafting. I commend the amendments to the House.
Lord Dubs: My Lords, we have a series of amendments all expressing unease about the Minister's statement at Committee stage—which came as a shock to us—that he thought that the fees might be as much as £2,000 per day for access to the LVT.
It was a shock to many noble Lords listening to the Minister. Indeed, it was a shock to people who happened to be in the Public Galleries or who read Hansard and came to me and said they were absolutely astonished. Indeed, one individual concerned with an organisation representing leaseholders said that he thought that at that level it would be better if they took their chances in the county court than have to run the risk of paying £2,000 a day merely for access to the tribunal, to say nothing of any other costs that they might have to incur.
I very much agree with the points made by my noble and learned friend Lord Archer when he moved the first of this set of amendments. I received yesterday a briefing from the Bar Council—as perhaps did other Members of the House. I should like to quote from that briefing, which is concerned about the proposal to charge fees for access to the tribunal:
"It is the hallmark of a civilised society that its citizens should be able to seek to have their disputes resolved by an impartial tribunal at the cost of the state".
It goes on to say, in relation to service charge disputes,
"There is nothing special about service charge disputes that warrant these provisions. They are disputes about the cost of maintaining people's homes. They are no more or less worthy of the provision of free judicial services than any other civil dispute. In practice they are more important than many disputes that are determined in the County Court because they cause great anxiety and can arise out of circumstances of real distress, particularly where lessees are being exploited by lessors with greater resources who are unprepared to co-operate with or consult lessees on the provision of builders' estimates, specifications or quotations."
I appreciate that we are dealing with matters which are complicated. But that, of course, is a consideration which leaseholders or freeholders would have to consider. They might, of course, incur additional costs in seeking legal advice. But we are embarked here on a principle which is, as far as I am aware, quite novel in this country that one has to pay for access to a court or a tribunal. Of course people have to pay their legal costs when going to court or to a tribunal, but surely having
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to pay for access is an entirely different proposition. There is a cost in running tribunals and courts but, as the Bar Council said, it is the hallmark of a civilised society that access to a tribunal should be at the cost of the state. I should have thought that that was an elementary principle. Until now it has been accepted with regard to all courts and tribunals in this country.
I have tabled an amendment to try to ensure that the maximum cost will be £500, which compares with a possible cost of £2,000 a day. I should be happier if there were no cost, so in a sense I prefer my noble and learned friend's amendment to mine. However, I tabled my amendment because I understood that in so far as a compromise was possible, the sum of £500 might be such a compromise. I am, however, reluctant to accept a compromise on this and I regard my amendment as a very poor second choice to that of my noble and learned friend because my amendment breaches a principle. In practice, it might not represent as much of a deterrent as might result if the Bill is unamended, but I think that the Government are wrong in principle. They are setting a precedent which may deny justice to a lot of people. If they take that precedent further, they may deny justice to a lot more people. This is a very wrong move and I hope very much that the Government will see their way to modifying their position.
Baroness Gardner of Parkes: My Lords, I have added my name to that of the noble Lord, Lord Dubs, on Amendment No. 137 which I strongly support and to which I shall speak in a moment. However, I should like to comment first on Amendment No. 136 which the noble and learned Lord, Lord Archer, moved so well. I do not like Amendment No. 136 because I think that it is too sweeping. I agree with the noble and learned Lord that transferring from county courts to leasehold valuation tribunals is welcome. However, his amendment is too sweeping with regard to that process.
I have never agreed with the noble and learned Lord—I still do not—on the—
Lord Archer of Sandwell: My Lords, I am most grateful to the noble Baroness for allowing me to intervene, but nothing in my amendment in any way affects the proposal to transfer the jurisdiction to leasehold valuation tribunals. The amendment simply states that people should expect there what they have expected for generations in this country—that is, justice at the expense of the community.
Baroness Gardner of Parkes: My Lords, I thank the noble and learned Lord for that explanation. However, I disagree with him on the question of legal aid in relation to tribunals. The noble and learned Lord has heard me on this point previously. I would be appalled if legal aid were introduced for tribunals, because the whole purpose of tribunals is to have a cheap, simple and effective way of hearing cases. We have argued in the past about industrial tribunals and I have said that my experience is that people who present their own cases often do it very well—and inexpensively.

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Therefore, I do not believe that anyone is barred from bringing a case under the tribunal procedure—that is, if they are able to speak for themselves.
Lord Archer of Sandwell: My Lords, I am grateful to the noble Baroness again. Lest anyone should be misled, the noble Baroness and I have had this debate over quite a long period and I have no doubt that we shall continue until one or other of us leaves this mortal coil. However, this point has nothing to do with my amendment. Does the noble Baroness recognise that my amendment is in no way proposing to introduce legal aid?
Baroness Gardner of Parkes: My Lords, I thank the noble and learned Lord again. However, when moving his amendment he said that he wished to see legal aid being made available for those attending leasehold valuation tribunals. I am responding to that point. I do not want that to happen.
Perhaps I may return to the basic point of my argument and to why I have added my name to that of the noble Lord, Lord Dubs, on Amendment No.137. I repeat that I believe that we are looking for a cheap, simple and effective way of resolving disputes over service charges. Such a simple and cheap way should appeal to both landlords and tenants. I believe that it does. Even the richest landlord does not want to have to spend days and huge amounts of money defending some minor point. That is why a tribunal system is welcome.
As I have said, if you represent yourself, you can do it for nothing. That too is a merit of the system. I have said before that I believe that the noble and learned Lord is a little protective of the legal profession. He believes that everyone should be represented, but that is costly. If you are a tenant complaining about an over-charge of £1,000 on your service charge and it will cost you £2,000 to have the case heard, you are in a no-win situation because it will cost you £1,000 more to have the case heard than you would have gained if you had won the case. That is total nonsense.
I am glad that we are now talking about the reform of legal aid, but I shall not get into that debate now. However, I do think that the provision of legal aid would be unfair to property owners because people who would never entertain the thought of bringing a case if it depended on their own personal effort might well do so if the procedure was served up to them on a platter. That would be unfair to the other side. If we are to obtain a satisfactory position on this, we should recognise that both property owners and tenants would have their interests served if we had a simple, cheap and effective way of resolving disputes.
I am absolutely shocked—the noble Lord, Lord Dubs, said that he was shocked also—that there should be any suggestion that people should pay towards the whole cost of running a tribunal service. I believe that there is such a suggestion in this clause. I ask my noble friend on the Front Bench to clarify this because I take it to mean that not only does one have to pay costs if the case goes against one, but that one has to pay also towards the structure of the building and its staff, including for the judge in a court or the chairman in a
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tribunal. Are we saying that someone who wants to take a simple service charge dispute to a rapid determination will find that they are financially supporting the great structure of a tribunal? That would be impossible and unfair to all parties.
I am no expert on British justice and I defer to the noble and learned Lord on this, but I believe that it is totally contrary to British justice that someone should be asked to pay in that way. The taxpayer has always supported the system of justice. There are provisions in tribunal regulations to ensure that if someone brings a frivolous or vexatious case, costs can he awarded against them. I presume that there could be a similar protection in this system to ensure that people are not encouraged to waste the tribunal's time. I do not think that it is overstating the cost to say that it might amount to £2,000 a day. In fact, that might be an understatement of the cost at a tribunal because such costs can be very high.
As I have said, I do not agree with the amendment in the name of the noble and learned Lord. Nevertheless, I am impressed by his arguments on the legal aspects and by those of the noble Lord, Lord Dubs, and my noble friend Lord Gisborough. It was a lottery as to whether I would add my name to the amendment in the name of the noble Lord, Lord Dubs, or to that in the name of my noble friend. However, the noble Lord's amendment came first and covered more or less the same ground. That is why I added my name to that amendment.
The important thing is to establish the principle. I hope that this House will deplore any suggestion that we should ask those who are seeking justice to support financing the establishment of justice other than as taxpayers, as happens now.
Lord Monkswell: My Lords, we are all indebted to my noble and learned friend Lord Archer of Sandwell for introducing his amendment so cogently. I sense that there is wide agreement around the House for the concept behind it, if not for its technical wording, but, knowing my noble and learned friend as well as I do, I am sure that he has got that right also.
At this point perhaps I should declare that I have a vested interest in this subject in that the origin of my title and of my ability to be a Member of this House arises from a constitutional and legal change which bears on this argument. Those of your Lordships who are familiar with the works of Dickens will remember the case of Jarndyce v. Jarndyce which went on for years and years, eating up all the money, so that there was nothing left for the complainants at the end of it all. My ancestor on whom the title was conferred broke that logjam in chancery by introducing a new court to help reduce the cost and delays of British justice. I have a slight vested interest.
I remind the House of the remarks of the noble Lord, Lord Weatherill, last week during the debate on the constitution. He suggested that we needed to be careful about the unintended results of any changes that we made. I suspect that the Government's plans to charge people who wish to take a case to the tribunal will have

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unintended consequences. These have been alluded to already by a number of noble Lords, but I remind the House of three possible consequences. One is that justice may be denied to poor people. The second is that there is a high risk that, instead of going to the relatively cheap and less time-consuming tribunal, people will go to the courts, clog them up and cause problems for others who seek justice. The third consequence—which I do not believe has been mentioned but should be recognised—is that if people cannot obtain justice through the normal procedures and mechanisms provided by the legal framework, there is a high risk that they will take the law into their own hands. That may be one of the unforeseen consequences. How they might do that I hesitate even to postulate. But in considering what one suspects is a major constitutional change one must be very careful as to how justice is done in this country.
6 p.m.
Viscount Bledisloe: My Lords, I had not intended to take part in these proceedings but have been moved to do so by what I have heard. With regard to the points made by the noble and learned Lord, Lord Archer, if the Government are minded to make the courts fully cost-bearing, surely that is a matter which should be addressed head on in relation to the courts, with a full debate and Bill upon the matter. It represents a radical change in the philosophy of the centuries. If we are to have full cost-bearing courts, let us debate it with a Bill. It is wrong to slip that into a housing Bill in relation to a particular part of the jurisdiction of a tribunal and to have a minute portion of the tail of the dog before we have debated whether the philosophy of the dog is desirable. Surely, this should be postponed until a Bill comes forward which contains the entire philosophy of the Government on fully cost-bearing justice, if indeed that is to be their philosophy.
If there are to be fees, I am deeply impressed by the argument of the noble Lord, Lord Gisborough, against fees which vary with the length of the case. Presumably, the fee under subsection (2)(a) is to be paid by the applicant. If I am a devious landlord and I know that an application will be made and that the fee to be paid by the applicant will depend upon the likely length of the case, all I have to do is say to the applicant that it is a very complicated matter which raises many principles, that I shall call 14 valuers, 15 engineers and 14 roofing experts and the case will last three weeks. The lady or gentleman in question of modest means will then be told that the fee is enormous and will not be able to bring the case. It is no consolation to that individual to know that if he wins the case in the face of all those experts he may get back his fee. If the fee is to depend upon the likely length of the case, it will be very easy for unscrupulous people to deter applicants.
I strongly support the idea that for the moment these provisions should be left out and introduced in primary legislation directed to the sole question of whether justice should be fee paying.
The Earl of Kinnoull: My Lords, I should like to speak to Amendment No. 139A. Although it does not
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deal with precisely the same point, it has been tabled to cover the same matter. The noble Lord, Lord Monkswell, the noble Viscount, Lord Bledisloe, and the noble and learned Lord, Lord Archer, have struck a strong chord on the whole issue of charges levied by the tribunal. Like other noble Lords, I have received correspondence on this matter. I believe that the noble Lord, Lord Dubs, has received correspondence from the Bar Council. I have received correspondence from the Royal Institution of Chartered Surveyors and the Council of Mortgage Lenders, both of whom have an active and experienced hand in this matter.
When I consider the case put by my noble friend, I hope that it is not the Treasury that has insisted upon this issue. He appears to have a number of options to consider on these amendments. In principle, I support the case advanced by the noble and learned Lord, Lord Archer, that there should be no charges for the tribunal's costs. My second choice is the cap of £500 advanced by the noble Lord, Lord Dubs. My amendment introduces the concept of transference. One must remember that this is to do only with service charges and is not a major housing issue. Service charges can be dealt with by arbitration, the arbitrator normally being appointed by the President of the Royal Institution of Chartered Surveyors. The costs will be circa £150. The tribunal hearing may be a very simple operation. This is a recognised way of reaching a fair compromise.
The Earl of Lytton: My Lords, most of the points that I would have made have already been made and I shall not go over them again. I am chairman of the Leaseholding Enfranchisement Advisory Service, which is a joint government and industry funded advisory service. That body sets out to provide independent and impartial advice to long leaseholders who exercise their rights, principally under the 1993 Act but also under the 1987 Act.
The advisory service would have considerable concerns about this matter. My concerns have grown as I have considered the question of charging for the services of the tribunal in connection with service charges. First, I am concerned as to where the principle stops. Do we then have charges being levied for other aspects of the tribunal's work? What about other tribunals, as the noble and learned Lord, Lord Archer, has pointed out? That would give rise to real concern about giving advice, particularly in being able to persuade leaseholders—I believe the House recognises that they tend to be in a more vulnerable position—that they have a ready fallback in the form of access to the tribunal.
Two points need to be mentioned here. There are circumstances in which it is appropriate for the tribunal to charge: first, where recourse to the tribunal is a purely voluntary matter; and, secondly, where some kind of adjudication system arises out of a contractual agreement between the parties, such as a commercial rent review arbitration. But that is something which is imposed by statute and I feel that the circumstances are different. I do not advocate a free-for-all. It may be appropriate to have some kind of registration fee, in precisely the same way as one pays a fee to a local

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planning authority for a planning application which is intended to cover those costs. However, that is a contribution. It is not supposed to be the case that local authorities necessarily recover all their costs in those ways.
If it is intended that the costs should be discretionary, I should wish to know how that discretion is to be exercised and to have the benefit of that explanation before the Bill leaves this House. Short of that explanation, I should be nervous about the full costs of recovery. Even a cap of £500, as suggested by the noble Lord, Lord Dubs, in Amendment No. 139, could be unfair, especially if the disputed part of the service charge—it may a good deal less than the whole—is quite modest. I am talking about a few hundred pounds, which makes a great deal of difference to a pensioner in, say, a tenement block. I believe that the charging will create a barrier in terms of access to justice. We have heard about that and about the possibility that it is open to abuse by an adversary who possesses greater economic might. That is an important consideration and I wish to associate myself with that argument.
There is a further point. If the tribunal may determine costs on its own administration and decide how they are to be met, it is almost inevitable that it will be drawn into questions as to how the costs in the action of the parties are to be dealt with. If the tribunal is not going to consider those—for instance, if the conduct of one of the parties has exacerbated the costs of the tribunal hearing—how is that line to be drawn? That matter needs to be dealt with.
I do not advocate cheapness so that the facility is abused, but cost must not be a barrier. However, at the same time, it can justifiably seek to eliminate the frivolous repetitive application. If that is not correctly achieved in this House, there will be a form of "entryism", a syndrome which a colleague of mine referred to as hammering on the fingers of those trying to get into the lifeboat. I am increasingly nervous that that is happening here. No one in the country at large is asking for the tribunal to charge in the manner supposed in the Bill; not landlords, not tenants, not the property industry, nor the professionals. But the basic principle needs explaining.
Lord Northbourne: My Lords, as a chartered surveyor with some modest experience of these matters, but as a retired chartered surveyor who does not need to declare an interest, I wish to support Amendment No. 139A. These matters must be decided on the facts and could more easily be decided by a single arbitrator at much less cost.
Lord Lucas: My Lords, I have listened with great interest to the noble and learned Lord, Lord Archer of Sandwell, and to all noble Lords who have spoken. I have some sympathy with what they have said. We all want to keep the fee down to the lowest level possible. The Government's objective in giving this new jurisdiction to the tribunals is to establish a procedure for settling disputes which is cost-effective. We believe that tribunals can achieve that as they will be able to bring specialised knowledge to the disputes. We also
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believe that the less formal proceedings of the tribunal will mean that the cost of providing the service can be kept within reasonable bounds and will mean that leaseholders do have access to affordable justice.
The Government believe strongly, however, that the new system which we are seeking to establish should be self-financing. We have to bear in mind the constant pressures on public spending and have regard to the fact that there is no overwhelming case for a disputes procedure of this kind between landlord and tenant to be a burden on taxpayers. By "costs" we mean all costs, down to the milk for the office cat.
We have not yet worked out the detail of the fee scales, but I indicated in Committee that in order to be self-financing the fee might have to be about £500 for straightforward cases and possibly £2,000 a day for the more complicated ones. I believe that fees of this order will still represent good value for money for leaseholders, bearing in mind that in most cases it will be shared among the leaseholders in a block of flats or converted house. I cannot therefore agree that we should amend the current wording in the way envisaged by these various amendments which would seek to constrain the level of fees, in some cases to below the level of full cost recovery.
The noble and learned Lord, Lord Archer, also raised his concern that legal aid will not be available for anyone appearing before a leasehold valuation tribunal and seeks a reassurance that there will be an automatic waiver of fees for anyone who would qualify for legal aid before a court. Currently, the Bill provides that the order setting the fees may allow for them to be reduced or waived by reference to the financial resources of the applicant but is not specific about how this should be done.
I am afraid that I have some difficulty in giving such an assurance. The problem is that the arrangements for applying for civil legal aid are quite complex and it would greatly add to administrative costs if tribunal staff had to undertake a similar form of means-testing. As I said in Committee, in order to keep matters as simple as possible we would much prefer that exemption from the LVT fee should be passported on the back of some other benefit. We have not yet decided which regime to use and when we consult in the autumn on the fee levels and structures we will consider views on how the exemptions should work in detail.
My noble friend Lord Kinnoull has joined his Amendment No. 139A to this group. We certainly agree that arbitration can provide a very satisfactory means of resolving service charge disputes. Indeed, some leases make explicit provision for cases to be referred to arbitration.
Nothing in the Bill prevents landlords and tenants going to arbitration. Indeed, Clause 81(1)(b) explicitly recognises arbitration as a means of settling service charge disputes. We would certainly encourage landlords and tenants to consider using arbitration. However, we do not believe that it would be right for the court or the LVT to have the power to compel the parties to adopt this route. Therefore, we would not wish to accept my noble friend's amendment.

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I am aware that in the course of giving that answer I have left every noble Lord unsatisfied. As I have sat in my place I have felt the blows land on my body.I shall undertake to show my bruises to my right honourable friend the Minister and to discuss with him what has been said today. However, I do so with no commitment.
6.15 p.m.
Viscount Bledisloe: My Lords, before the Minister sits down, will he explain what is so peculiar about the nature of these disputes in that they and they alone merit full fee paying charges, whereas commercial disputes in the commercial court between two multi-million pound companies do not begin to try to make the books balance?
Lord Lucas: My Lords, at this exact moment I do not have an answer to that question. I shall discuss it with my right honourable friend.
Baroness Gardner of Parkes: My Lords, before my noble friend sits down, I hope that I speak for other Members of the House when I say that it is difficult to ask him to respond to such extremely detailed legal points. I hope that in seeking advice the matter will be raised again. I am hoping that the noble and learned Lord, Lord Archer, will do so. Will my noble friend understand that we appreciate that a Housing Bill is not the appropriate place to be changing the whole system of justice?
The Earl of Kinnoull: My Lords, before my noble friend sits down, in approaching his right honourable friend will he recall that professional bodies consider that charges of £2,000 a day are prohibitive for those involved in service charge disputes?
Lord Lucas: My Lords, I and my right honourable friend, I am sure, will pay careful attention to what my noble friends have said.
Lord Archer of Sandwell: My Lords, I am thinking on my feet. Earlier today your Lordships held a discussion about the location of the heart of the noble Earl, Lord Ferrers. I am sure that the noble Lord, Lord Lucas, knows the location of his heart better than I do. However, I think better of him than to believe that his heart was in what he was saying today.
Lord Lucas: My Lords, I believe that currently it is in my boots!
Lord Archer of Sandwell: My Lords, the noble Lord is irresistible. How could I press on in the face of that? I say only that the brief to which the noble Lord spoke was couched in terms as though the idea of a judicial service being self-financing was self-evidently right. Apparently, whoever drafted the brief was totally insensitive to the fact that for generations the people of this country have expected the community to provide a judicial service. Perhaps at least the noble Lord could
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explain that to them. If they would open the most elementary of history books we might begin the debate again. The noble Lord, Lord Gisborough, and my noble friend Lord Dubs reminded us of some of the alarming figures which the noble Lord mentioned in Committee, from which I do not think he resiled today. The figures we are dealing with are very alarming figures—astronomical figures—to some of those who will be involved.
My noble friend reminded us of the views of the Bar Council, and the noble Earl, Lord Kinnoull, reminded us of the views of many of the people who have occasion to use these tribunals. I was very tempted to say that in those circumstances I would test the opinion of the House, but who could resist what the noble Lord said to us a few moments ago? I think that possibly we may have an abler advocate in him than any of us could be, at least through the pages of Hansard. In hope, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 137 to 139A not moved.]
Clause 85 [Appointment of manager by the court]:
Earl Ferrers Earl Ferrers moved Amendment No. 140:
Page 59, line 42, at end insert—
("( ) After subsection (9) insert—
"(9A) The court shall not vary or discharge an order under subsection (9) on a landlord's application unless it is satisfied—

(a) that the variation or discharge of the order will not result in a recurrence of the circumstances which led to the order being made, and

(b) that it is just and convenient in all the circumstances of the case to vary or discharge the order.".").

The noble Earl said: My Lords, I beg to move Amendment No. 140. This concerns the proposal which is currently contained in the Bill that leasehold valuation tribunals shall deal with applications from leaseholders in blocks of flats for the appointment of a manager in cases of unsatisfactory management performance by their landlord. The new grounds which the tribunal must consider are set out in Clause 85 of the Bill and modify the provisions already contained in Part II of the Landlord and Tenant Act 1987.
The existing legislation also provides that where a manager has been appointed the court is required to consider, at any time, an application from any person to vary or discharge the order appointing that manager. The noble Lord, Lord Dubs, proposed an amendment in Committee to tighten up the procedures for the discharge of a management order, as he felt that the current rules could allow the landlord to come back to the tribunal with possibly some cosmetic changes to his management arrangements and ask to be given another chance. Quite obviously, there is some scope for abuse of these procedures.
My noble friend Lord Lucas agreed that the current provision was unsatisfactory and undertook to look at it further. This amendment is therefore designed to secure that tightening up. It would clarify that before a tribunal could vary or discharge a management order following an application from a landlord it would have to be satisfied that the new management arrangements would

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not result in a recurrence of the circumstances which led to the order being made in the first place. It would also need to be satisfied that it would be just and convenient to vary or discharge the order. The onus of proof that the landlord's management will in future be up to a satisfactory standard will lie with the landlord. We do not wish to prevent landlords from seeking a discharge of the order in all circumstances. Clearly there may be cases where the landlord has made a genuine effort to impose sensible management arrangements. At the end of the day, it must be the duty of the tribunal to decide, and they would have to decide whether in these situations a convincing case had been laid out which would be fair to all the parties concerned.
That is what this amendment seeks to achieve and I hope that the noble Lord, Lord Dubs, will feel happy that once again the Government have listened to what he and other noble Lords have said and have come forward with an amendment to meet the problems stated. I beg to move.
Lord Dubs: My Lords, indeed, I welcome what the Minister has said. I am grateful to him for having met the points that were made during the Committee stage of this Bill.
On Question, amendment agreed to.
Clause 86 [Appointment of manager: transfer of jurisdiction to leasehold valuation tribunal]:
[Amendments Nos. 141 to 143 not moved.]
Lord Dubs Lord Dubs moved Amendment No. 144:
After Clause 88, insert the following new clause—

COMMON PARTS: RIGHT TO SELF-MANAGEMENT
(". After section 34 of the Landlord and Tenant Act 1987 insert—
"Common parts: right to self-management.
(1) The Secretary of State shall have power by order to provide a scheme for the self-management by qualifying tenants of common parts of the premises which the landlord is obliged to maintain and for which the tenants contribute a service charge under their existing leases.
(2) An order under this section shall be made by statutory instrument and shall be subject to approval by resolution of both Houses of Parliament.").
The noble Lord said: My Lords, Amendment No. 144, standing in my name and that of the noble Baroness, Lady Hamwee, attempts to make possible a self-management scheme for the common parts of buildings in which there are leaseholders. I have looked carefully at the issue of Hansard covering a discussion of the same point, although on a different amendment, at the Committee stage. The Minister referred at that time to the fact that I had not only tabled an amendment which was about two columns in length but had also sent him a copy of an alternative scheme which was, I think, some 24 pages in length, for his comments. I did not think it appropriate to table such a complicated scheme for debate at the Committee stage; nor have I thought it appropriate to do so at this stage of the Bill. However, I should like, if I may, to quote a passage from Hansard at col. 173 during the Committee stage, when the Minister said:
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"I know the noble Lord has a more detailed proposal up his sleeve—and he was kind enough to show me a copy. Indeed, that would be a useful starting point. But there are many difficult questions to be addressed. There is a great deal of detail to be gone into. There is a requirement for extensive consultation if we wish to go down that route and it would quite clearly not be possible to incorporate such a proposal in this Bill without extensive Henry VIII provisions. Under these circumstances I hope the noble Lord will realise that even should we favour his proposals—which we do not—it would not be appropriate to proceed with them in this Bill."—[Official Report, 18/6/96; col. 173.]
Although the Minister said that the Government were not in favour of these proposals, I took some comfort from what he said. He suggested that developing a scheme of self-management for leaseholders was complicated, very detailed and would require extensive thought and consultation. With that I quite agree. That is why I was concerned that the amendment I had tabled for Committee stage did not meet all the requirements. I felt that the scheme which I sent to the Minister—the more detailed scheme which he said would be a useful starting point—actually went further towards trying to develop a self-management scheme for leaseholders.
However, it is quite clear that to put down an amendment which is virtually a Bill in itself was still quite an undertaking and probably not appropriate; so what I have here in Amendment No. 144 is something quite different. This amendment seeks to give the Secretary of State the power, if he chooses to exercise it, to develop a self-management scheme for qualifying tenants of common parts of premises, and that such an order would be made by statutory instrument subject to approval by both Houses of Parliament. In other words, if the Secretary of State felt that there was something in this and it would be appropriate to accept this amendment, it does not compel him to do anything at all. But should the Secretary of State feel, in the near or distant future, that there was merit in developing a self-management scheme, he would have the powers to do so.
This allows the Secretary of State on a future occasion, after consultation, to put forward a scheme; but I repeat that the Secretary of State is under no obligation to do anything. The wording of the amendment is quite clear: that the Secretary of State shall have the power by order to provide a scheme but that he does not have to do anything at all if he wishes not to do so. He is enabled to do this in the future. A great deal of concern has been expressed by many leaseholders about the management of their properties.
A self-management scheme would have much to commend it. It would give leaseholders certain rights of management; it would not take away ownership from the freeholder; but it would ensure that the management was carried out in a way which was sensitive to the needs and wishes of the people living in the flats and subject every day to the consequences of poor management, if that exists.
Therefore, it seems to me that this amendment would go some way towards meeting the wishes of leaseholders. It would certainly go a long way towards meeting what the noble Lord, Lord Lucas, said—and I repeat my quotation—that the scheme that I sent him would be a useful starting point. I believe that that was the case also with this amendment. I beg to move.
6.30 p.m.
Lord Gisborough: My Lords, the idea of a self-management scheme is seductive but I hope that the Minister will bear in mind the dangers. There may be cases where self-management would lead to problems. Elderly people whose central heating is in need of repair or whose roof needs mending may simply decide not to bother to have the necessary repairs carried out. It is a recipe for many buildings getting into serious disrepair.
Lord Monson: My Lords, I had considerably sympathy with the arguments of the noble Lord, Lord Dubs, on self-management when he raised the matter in Committee. Having said that, there are a great many problems involved, both problems of principle and considerable practical problems as those who have the slightest experience of self-management in the rare instances when it has happened will know.
The noble Lord, Lord Gisborough, mentioned one particular problem. It is very difficult to get a small number of people, even well-educated and intelligent people, to reach agreement about what is to be done in relation to the maintenance of the buildings concerned and it is even more difficult to get them to make a contribution towards the cost, whatever the technical, theoretical legal obligations may be. This is really a matter for primary rather than secondary legislation. Therefore, I could not support the amendment.
Earl Ferrers: My Lords, there was extensive discussion at Committee stage of the Bill in this House and at various stages in another place about whether leaseholders of flats should be given a right to manage in the form which is advocated by the noble Lord's amendment. The different amendments, which the Opposition have tabled at previous stages, have varied in length and complexity, although all have been incomplete and deficient in various ways.
The noble Lord, Lord Dubs, said that his scheme would run to 26 pages. As far as we can see, any scheme which would come close to working could be in the order of 25 clauses. Therefore, this is a fairly complicated proposal. I understand why the noble Lord, Lord Dubs, did not wish to table at this stage the equivalent of 25 clauses. If we wanted to run such a scheme, the idea of the noble Lord, Lord Dubs, might have been a starting point. But the real problem is that we do not wish to run such a scheme.
Amendment No. 144 is now reduced to the bare minimum as it provides the Secretary of State with an order-making power to introduce the scheme at a later date if the Secretary of State thought it appropriate. That is a whacking great Henry VIII clause. I agree with the noble Lord, Lord Monson, that this is not something which should be introduced in secondary legislation. If we were to do that, I fear that we should incur the wrath of the noble and learned Lord, Lord Simon of Glaisdale, not to mention the noble Earl, Lord Russell, who is not in his place. I did not see the noble Baroness, Lady Hamwee, rise up in wrath at the idea of introducing a Henry VIII clause but I have no doubt that she feels a similar sentiment.
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As the current amendment contains no detail of what sort of scheme is being envisaged it is difficult to make any further specific criticisms of it. But, in moving the amendment, the noble Lord, Lord Dubs, has indicated that he wishes to see the same sort of scheme as that set out in the previous amendment debated in Committee.
The Government have consistently opposed an automatic right to self-management at every stage of this Bill's progress through Parliament, and for very good reasons. The right would apply whether or not the landlord was doing a good job. Even if he were behaving impeccably, the leaseholders could say, "Thank you for what you have done and goodbye. We'll take over now", and the landlord receives no compensation. Noble Lords might ask why he should receive any compensation. Whether we like it or not, it is a fact that the price which the landlord pays for property does reflect the income which is available from management. Management should be a wholly reputable business; exploitation is not. If management is the landlord's job, then management has a value to him. Yet the noble Lord's proposal contains no provision for any element of compensation to the manager who has been discharged summarily from his responsibilities.
This right to manage would therefore be unfair to the many reputable landlords who undertake their responsibilities in a conscientious manner. It offends against the basic premise of the leasehold system, which is that a lease is a private contract freely entered into. It is a voluntary agreement between the landlord and the tenant which gives certain rights and obligations to each party.
The Government therefore think that the right to manage is not the right way forward. We believe that our proposals represent a better alternative. Perhaps I may state briefly what they are. We have already given leaseholders the right to buy out the landlord's interest in the property if they wish under the enfranchisement legislation. This Bill contains a number of proposals to improve that right in ways which we shall be discussing shortly. Enfranchisement provides a complete and clean break—the leaseholders take over all the landlord's rights and obligations, and they take over his interest in the property. They gain complete control over the property. And the landlord goes down the Suwannee with a cash sum.
For all those reasons, I believe that a right to remove a person who is doing his job properly is not correct. Therefore, I hope that the noble Lord will feel that his amendment is inappropriate.
Lord Dubs: My Lords, the Minister said that my amendment, if accepted, would represent a Henry VIII provision. I obviously defer to noble Lords who have far more experience than I in those matters but I understand that a Henry VIII provision allows primary legislation to be amended subsequently by statutory instrument. That is clearly not the case here. I would argue that this is not a Henry VIII provision. It is an amendment which gives the Secretary of State powers to devise a scheme concerning self-management. No amendment to primary legislation is envisaged in that. We would have a detailed scheme setting out the

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terms under which leaseholders might self-manage, the conditions, the methods, the qualifying periods and that sort of detail. It is not a Henry VIII provision by any means.
Amendment No. 144 is very similar to many other provisions in legislation which simply give the Secretary of State the power to develop schemes or detailed proposals which do not affect the primary legislation itself. That is the first point.
Secondly, although I had not specified any scheme in the amendment or, indeed, set out any details of one, the Minister said that it was clear that I had something in mind comparable to an earlier amendment that I moved in Committee. Well, that may or may not be the outcome. I favour the approach set out in Amendment No. 144. I do so because I am not entirely sure about the detailed points which were raised as a result of the earlier amendment. Indeed, I was told that there were some technical defects in it.
Moreover, the amendment would leave the Secretary of State free to do whatever he wishes; in other words, it is possible that the Secretary of State could meet the Minister's point and that there would only be a right to self-manage if there was a defect in existing management. I should have thought, therefore, that my proposal goes further towards meeting the Government's objections than the Minister conceded a few moments ago.
I had hoped that there would be a little more sympathy for the suggested approach. It would enable a self-management scheme to be more limited. Indeed, if the Secretary of State so chose, it would enable a self-management scheme to be developed as a result of intensive consultation and might well limit the right to self-management to individuals living in flats which are not well managed. However, I see that the Minister shows no willingness to concede the point that I am making. I hope that he will agree with me at some point that it is not a Henry VIII clause. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 89 [Notice required to be given by landlord making disposal]:
Lord Lucas Lord Lucas moved Amendment No. 145:
Page 62, line 11, leave out subsection (2).
The noble Lord said: My Lords, in moving the above amendment I shall, with the leave of the House, speak also to Amendments Nos. 146 and 147. Amendment No. 145 is a paving amendment for Amendment No. 147. Amendment No. 146 recasts the transitional provision in Clause 89 to cover all obligations, not just contracts: it is also consequential to the effect of Amendment No. 145.
In this Bill we have established criminal sanctions against landlords who fail to offer their tenants the right of first refusal when they wish to sell their interest. In the Bill as printed, those sanctions apply only to failure to serve notices under Section 5 of the Landlord and Tenant Act 1987—the primary offer. But, on reflection, that does not go quite far enough. A landlord might serve a Section 5 notice but then fail to follow the proper procedures
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subsequently. He might sell to a third party after Section 5 notices have been served, or sell on better terms within 12 months after negotiations with the tenants have broken down.
Therefore, Amendment No. 147 broadens the offence to cover contravening any prohibition or restriction in Sections 6 to 10 of the Landlord and Tenant Act 1987. These prohibitions refer to the sales to third parties which I have just described. The extension to the offence is set out in Amendment No. 147 as new Section 10A(1)(b), which is the only new element in this group of amendments. We believe that the principal responsibility for offering the right of first refusal lies with the vendor landlord. These amendments will ensure that he cannot avoid his obligations without penalty. I hope that the House agrees to them.
I have one further matter to mention before I move the amendment. I promised in Committee to return to the question of defining a "relevant disposal" for the purposes of the criminal offence. We have not yet been able to do this, but we intend to bring forward the necessary amendment on Third Reading. The noble Lord, Lord Dubs, may quail at introducing a 24-page amendment, but I fear that I may be doing exactly that. Indeed, very extensive amendments are necessary to various pieces of legislation and, indeed, to earlier legislation to achieve the effect that we desire.
We intend to lay the amendment on Monday. However, we will make available to all noble Lords who have spoken in Committee or on Report a draft of the proposed new clause on Friday so that they may have a chance over the weekend—that is, if they have nothing better to do—to look at it. If any noble Lords will not be in a position to receive mail directly from this House on Friday and would like to receive it by some other means, perhaps they will let me know and I shall ensure that that is done. I beg to move.
Lord Dubs: My Lords, perhaps I may comment briefly on what the Minister said about the definition of "relevant disposal". I am very pleased that the noble Lord is looking further into the matter. I thank him for his willingness to make the details of the proposed new clause available as early as possible. I hope that it comes out in the form that we would wish.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 146:
Page 62, line 39, leave out subsection (3) and insert—
("( ) The above amendment does not apply to a disposal made in pursuance of an obligation entered into before the commencement of this section.").
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 147:
After Clause 89, insert the following new clause—

OFFENCE OF FAILURE TO COMPLY WITH REQUIREMENTS OF PART I
(".—(1) After section 10 of the Landlord and Tenant Act 1987 insert—
"Offence of failure to comply with requirements of Part I.
10A.—(1) A landlord commits an offence if, without reasonable excuse, he makes a relevant disposal affecting premises to which this Part applies—

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(a) without having first complied with the requirements of section 5 as regards the service of notices on the qualifying tenants of flats contained in the premises, or

(b) in contravention of any prohibition or restriction imposed by sections 6 to 10.

(2) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 5 on the standard scale.
(3) Where an offence under this section committed by a body corporate is proved—

(a) to have been committed with the consent or connivance of a director, manager, secretary or other similar officer of the body corporate, or a person purporting to act in such a capacity, or

(b) to be due to any neglect on the part of such an officer or person,

he, as well as the body corporate, is guilty of the offence and liable to be proceeded against and punished accordingly.
here the affairs of a body corporate are managed by its members, the above provision applies in relation to the acts and defaults of a member in connection with his functions of management as if he were a director of the body corporate.
(4) Proceedings for an offence under this section may be brought by a local housing authority (within the meaning of section 1 of the Housing Act 1985).
(5) Nothing in this section affects the validity of the disposal.".
(2) The above amendment does not apply to a disposal made in pursuance of an obligation entered into before the commencement of this section.").
On Question, amendment agreed to.
6.45 p.m.
Lord Dubs Lord Dubs moved Amendment No. 149:
After Clause 94, insert the following new clause—

REGISTRATION OF RENTAL DEPOSIT MONEY
(".—(1) The Secretary of State may by order make a scheme or schemes authorising the registration and holding of all rental deposit monies charged by landlords letting residential properties.
(2) The Secretary of State may at any time by order vary or revoke a scheme.
(3) An order under subsection (1) shall be made by statutory instrument and shall be subject to approval by resolution of both Houses of Parliament.").
The noble Lord said: My Lords, we had a debate in Committee about elements of the point raised in this amendment; namely, that there should be a scheme to protect the rent deposits paid by tenants so that there would be some safeguards for the money being held. The Minister was not too convinced at that time about the proposals and, therefore, we have now brought forward an amendment which is somewhat different in form. It would enable the Secretary of State to develop a scheme which would authorise,
"the registration and holding of all rental deposit monies charged by landlords letting residential properties".
After all, it was recognised in our earlier debate that landlords can hold considerable sums of money. Indeed, on finishing their tenancies when their time is up and they wish to leave, some tenants have experienced difficulties in securing the money held on deposit. I do not believe that there would be any weakening of the position of landlords if there were a scheme to safeguard the way in which such deposits are held.
Tenants fail to get their money back at the end of a tenancy because sometimes there may be a letting company involved which acts like a bunch of cowboys or, indeed, which may have collapsed. Alternatively, the landlords sometimes claims damage to the property which is disputed by the applicant. The National Association of Citizens Advice Bureaux has pointed out that this is likely to be a matter of one or two months' rent and certainly not an insignificant sum of money. That is especially so if the individual concerned wishes to utilise that sum of money as a deposit for another property into which he or she might move.
Unlike other countries, we have no specific system as yet for tackling what is a growing problem: how tenants get their rent deposits back. The problem has damaged the image of the private rented sector and, indeed, is a sign that yet more modernisation is urgently needed. As we discussed earlier in Committee, other countries have recognised the need to modernise their whole private rented sector by tackling the problem of rental deposits and disputes. I believe that reference was made on the last occasion to a scheme in New South Wales which was developed in 1977, called the "rental bond scheme". I understand that such a scheme is favoured by both citizens advice bureaux and the National Consumer Council. It is an independent and impartial custodian of rental bonds taken on private residential tenancies.
From people who have examined the scheme in New South Wales, I understand that it has performed very well; that it is efficient and cost-effective; that it has not developed any significant faults; and that there are no major criticisms of it. Indeed, it has handled a large amount of money, and by all standards it has worked well.
I do not want to go into all the details of the scheme but it is more than a custodial service for holding money. It is also linked to tenancy services and to a tenants' advice and advocacy programme. There is also a residential tenancies tribunal. As I have said, I do not want to go into too much detail. However, the board in New South Wales has reduced bureaucracy and the need for court action. It has also reduced the number of disputes. It has therefore become popular not just with tenants but also with estate agents because it has saved time and it has taken away the unpleasant air of controversy which sometimes surrounds arguments about the return of moneys.
The moneys received by landlords are deposited with the rental bond board. At the end of the tenancy either party can claim the deposit. If the landlord does not claim within seven days, the full bond is returned to the tenant. Evidence from the board suggests that the return of deposits is on the whole dealt with in a satisfactory manner. Far from being bureaucratic, the system speeds up the process of the return of the money. There are some impressive statistics which show how well the system has worked. I understand that it has had all-party support in New South Wales.
At an earlier stage the Minister suggested that the small claims court offered a cheap and relatively simple way of dealing with disputes. However, I do not think

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that is as good a system. There are many doubts about whether the small claims system in county courts works as well as all that. Certainly evidence from the National Audit Office shows that 49 per cent. of plaintiffs surveyed thought the small claims procedure was either fairly or very slow. Fewer than 40 per cent. of arbitration cases were completed within six months, and one in five plaintiffs found that their case took more than a year to complete.
The small claims procedure has its faults. It may be cheap but it is not free. It takes rather a long time, whereas the New South Wales system works quickly, has all the advantages of a small claims court and appears to have none of the disadvantages. I think what we have here is an approach which is sensible and which should work well. The amendment would give the Secretary of State the power to develop such a scheme. The experience of New South Wales could be considered and the scheme could be amended in the light of different circumstances in this country. It would deal with a problem which has caused much upset and much anxiety to many tenants. It seems to me that there are simple ways of dealing with that anxiety, but doing nothing is not one of them. I beg to move.
Lord Strabolgi: My Lords, I should like to support this amendment so ably moved by my noble friend Lord Dubs. There is currently no regulation on how these sums are held by landlords or agencies and the money is often put in an agency's general office account or in a landlord's own personal account. All too frequently this leads to tenants failing to get back their deposit—as my noble friend has said—at the end of the tenancy, in some cases because the limited liability company has folded, or more commonly because the landlord simply claims there has been some damage or wear and tear to the property, or that professional cleaning is required. In other cases no reason is given and tenants are left with the feeling that the landlord clearly never had any intention of returning the money. We are not dealing here with the many good large landlords, but the small, rogue landlords. We are not dealing with great letting agencies and estate agents such as those one sees in Berkeley Square or Belgravia, but with small, fly-by-night, bucket shops which are often on the verge of bankruptcy and often disappear with the deposits. There is absolutely no protection at all for the tenant.
The problem is compounded by the fact that few tenancy agreements give any indication of the grounds on which a deposit may be withheld or of the cleaning and redecorating responsibilities which will be demanded at the end of the contract. There are also rarely any indications of the timescale within which a deposit should be returned. My noble friend has mentioned a scheme which seems to be working well in New South Wales. I gather that it has also been taken up by other states in Australia. I hope that the Government will study that and see how they can introduce a similar scheme over here. If it is working so well in Australia, why should it not work over here? I hope therefore that the Government will treat this suggestion with sympathy and consider some of the
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difficulties involved with tenants as regards these deposits. I hope that the Government will do what they can to help.
Lord Monson: My Lords, in comparison with Amendment No. 144, moved by the noble Lord, Lord Dubs, a few minutes ago, the issues at stake here are much simpler and less controversial. Any action taken by the Secretary of State—were this amendment to be agreed to—would be smaller in scale and effect, as well as being unlikely to have any adverse, unintended consequences. I should be happy therefore to support this amendment were the noble Lord to put it to a Division.
Baroness Hamwee: My Lords, I, too, support this amendment to which I have added my name. Recently I received a document—I imagine other noble Lords may have received such a document—from the director of trading standards of Suffolk County Council. The document refers to problems identified during the council's anti-poverty strategy. The trading standards department had undertaken a monitoring programme of accommodation within the county and reported that there were some 60 agencies operating, most of them entirely satisfactorily. However, the letter states:
"It is a matter of concern however that our officers have encountered one problem that appears to recur with alarming frequency".
That problem is accommodation agencies going out of business and deposits being lost as a result.
The lack of any safeguards as regards how deposits are held to me contrasts starkly with the stakeholder arrangements with which solicitors are used to deal in the transfer of property. To allow deposits to be put into a normal bank account undifferentiated from other funds gives obvious scope for problems. As has been said, those who may lose their deposits—either because the landlord has misused them, or refuses to return them, or because an agency holding them goes out of business—are not well placed to withstand such losses. Given the intention to increase the occupation of the kind of property and tenure for which deposits will often be payable, this is a matter that is worthy of the Government's attention.
Baroness Gardner of Parkes: My Lords, I believe I first referred to this matter at Committee stage when I tabled an amendment on similar lines. Since then I have received a letter from the Small Landlords Association. That body has statistics on the New South Wales experience which indicate that it is a great failure. That was interesting. The Government should consider this matter carefully, as I do not know the facts. I only repeat what I have heard from that association. In an earlier debate I said that on the whole the people in New South Wales seem to be reasonably satisfied with the scheme. The Government should check whether there is strong evidence one way or the other.
We also need to check the cost of running such a scheme. The noble Lord, Lord Dubs, said that the scheme in New South Wales is linked to various other services. Unless it was linked to other services, it might

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be an expensive system to set up. The prime point of importance concerns who is responsible for the money. An agent may be responsible for holding the money. If the agent is bonded for that amount, that is fine. As the noble Baroness, Lady Hamwee, said, we are concerned about those agents who go out of business. Those agents may, for example, have been using the money to pay wages. That is when the situation becomes hopeless. People should be protected from that situation. The landlord needs to be protected. If his lease or tenancy agreement entitles him to have the premises left in the clean order in which they were found at the beginning, he would be entitled to claim for cleaning at the end of the tenancy. There are procedures which deal with those matters.
I strongly support the principle of ensuring that a tenant's deposit is not lost through the vanishing of the deposit or of the person holding the deposit. To that extent I support the amendment. But the matter should be considered carefully in terms of what the Small Landlords Association said about the failure of the New South Wales system. Perhaps the Government will look into that matter before Third Reading to check whether or not the claims are accurate.
7 p.m.
Lord Finsberg: My Lords, I have had some experience of this issue over the years. I have great sympathy for what the noble Lord, Lord Dubs, said. However, the problem does not stop at deposits. Many of us know of the recent experiences of tenants of blocks of flats in Westminster and elsewhere where the agent did a bunk taking tens of thousands of pounds that had been collected for maintenance charges. The two issues are connected. I do not believe that it will be possible to legislate for that situation in this Bill. But I hope that the Minister will consider the general picture with a view to further legislation in due course which will cover both aspects.
Lord Selsdon: My Lords, I agree with my noble friend that questions arise not only about rental deposits and sinking funds, but the problem of someone running off with the money. However, the administration can be complex. Where does the money belong—the sinking fund or the rental deposits? What is its purpose? Its purpose is to pay for expenditure which may be incurred genuinely in order to bring a building up to scratch or to clean it after rental.
But there are complications. If the money is placed on deposit in a bank, to whom does the interest belong? Is that interest taxable? I have raised these issues previously. The administration can be extremely complex and costly.
If we introduce a further element of protection involving the Secretary of State, or registration, it causes even more costs. In most cases we are not talking about large amounts of money relating to individual blocks but of amounts often involving only a few thousand pounds. Your Lordships will be aware that these days the professional classes of this country have a tendency to charge relatively large amounts of money for each hour
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of work or advice. My worry does not relate to the principle, which I accept, but to the cost of making the provision more complex.
Earl Ferrers: My Lords, I am grateful to the noble Lord, Lord Dubs, for having put down the amendment. It has stimulated an interesting debate on a complicated subject. It is one on which the Government do not have firm views and convictions.
There is a problem here which ought to be addressed. The difficulty is how best to address it. The issue was considered in Committee. My noble friend Lady Gardner of Parkes tabled an amendment to allow a local authority or a body authorised by the local authority to register and hold rent deposit moneys. We have considered that but have come down against the proposal because it is likely to complicate and slow down arrangements which, in the case of the majority of landlords, are already working satisfactorily. It could also impose a considerable burden on local authorities. I know that a number of your Lordships shared this concern.
The noble Lord's amendment leaves open the question of who should oversee and operate such schemes. Presumably it could be a local authority, or it could be an independent public body as is the case with the Rental Bond Board of New South Wales, to which a number of noble Lords referred. Quite heavy costs are associated with that scheme which effectively deprives both the landlord and the tenant of any interest accruing on the deposited moneys. That is one of the points my noble friend Lord Selsdon made. Who gains the interest? If one is not careful, the interest goes on administration. But someone has to be the beneficiary of the interest, and someone has to pay the tax.
The noble Lord, Lord Dubs, said that the proposal had universal support, but the Small Landlords Association opposes the introduction of a scheme such as the one which operates in New South Wales. So it does not have universal support.
A criminal offence would need to be created if the scheme is to work properly. It is a point to which the noble Lord, Lord Monson, referred. Is that the right kind of provision to have in secondary legislation?
Other options have been presented to us as well. The Association of Residential Letting Agents favours bonded schemes run by recognised letting agents. However, there are also disadvantages with that proposal. Only about a third of lettings are organised through an agent, so the majority of lettings would not be covered by bonding. Since most landlords operate only on a small scale, it would not be practical for them to join bonding schemes individually and the requirement to hold deposits jointly would impose unwelcome burdens.
What I am saying is that this is not a straightforward or easy matter and there are a number of complicated issues to be resolved. First, there is the question of whether the problem is sufficient to warrant the cost and the bureaucracy of setting up such a scheme—and there will be both elements.

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Secondly, the main problem with rental deposits is disputes—to which my noble friend Lord Selsdon referred—over who has the best claim to the money at the end of the tenancy, and the interest on it during the tenancy. The key problem is finding a speedy and effective means of resolving who has the best claim. There will be cases where the landlord has a legitimate claim to some or possibly all of the deposit to cover theft or damage. In other cases, the tenant will have every reason to expect the full deposit back.
I am not clear whether we are to give schemes powers to act in lieu of the courts. I cannot see how that would be appropriate. If we do not give the schemes powers to act in lieu of the courts, I am not clear what benefits the scheme would bring. The small claims court—it was argued that it was not working well—offers a cheap and relatively simple way of dealing with disputes of this nature. If the claim is not contested, there is no need for a court hearing. If it is contested, the amount in dispute is likely to be sufficiently small for the hearing to be dealt with under the informal small claims arbitration procedure.
I understand and share the concerns of the noble Lord, Lord Dubs, and others who have spoken, that a small minority of landlords or agents should not be allowed to misappropriate their tenants' deposits. My noble friend Lord Mackay of Ardbrecknish made clear in Committee to my noble friend Lady Gardner of Parkes that the Government will look at schemes in other countries to see whether they have any advantages for our own situation. I was interested to hear the noble Baroness say that she has discovered since she made her remarks in Committee that not everyone in New South Wales likes that scheme. It might be surprising if everyone did. The noble Lord, Lord Strabolgi, seemed to think that the scheme was so good that it should be employed everywhere in this country and that everyone would enjoy it.
Lord Strabolgi: My Lords, I did not say that. I said that the scheme seemed to be working well in Australia and the Government might have a look at it.
Earl Ferrers: My Lords, the last thing that I wish to do is to put words into the noble Lord's mouth. Of course, if the scheme is working well in Australia, that is something to be considered in this country. Even if it is not working well in Australia, we shall still consider it.
Perhaps I may say this to the noble Lord, Lord Dubs. We have had an interesting debate in which, regrettably, I misappropriated the speech of the noble Lord, Lord Strabolgi, for which again I apologise. It indicates that there are problems. The difficulty is how best to resolve them without creating another bureaucratic and complicated set-up.
My noble friend Lord Finsberg is right that it would not be appropriate to legislate on the matter in this Bill. If your Lordships are content, I shall consider all that has been said and look at the scheme which works in New South Wales. I hope your Lordships will understand that it is unlikely that we would be able to reach a conclusion on a matter of this nature and complexity by Third Reading, but we will consider it.
Baroness Hamwee: My Lords, before the Minister sits down, as regards interest, does he agree that most
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provisions for a deposit with the landlord or an agency do not provide for interest? To that extent, the tenant does not normally receive interest on the deposit when it is returned. It is an open issue and is probably quite unfair to the tenant. However, it is not a major reason to discard the scheme because what is proposed is no different from the present situation.
Earl Ferrers: My Lords, the noble Baroness is correct that it is not a reason for discarding the scheme, but it is a factor which must be taken into account. If the Bill works well and in the way that everyone expects, there will be a certain amount of money in limbo which earns interest. If it does not do so, it has not been looked after properly. What happens to the interest is a matter of concern. As I understand it, in New South Wales most of the interest has gone into running the scheme. One might ask whether that is a good idea. There are complicated problems here which need to be resolved.
Lord Dubs: My Lords, I fully accept that the whole subject is complicated. That is why the amendment did not stipulate a scheme. It simply suggested that there was a way forward through giving the Secretary of State the power, if he chose to use it, to develop a scheme based on consultation, examining the New South Wales experience. I thought that the amendment went quite a long way towards meeting the Minister's objections. However, he said that he would consider it further. He could have done so while accepting the amendment, because it has not been couched in terms which oblige the Secretary of State to act unless he wishes. The amendment could have been on the statute book without compelling any further action, while giving the Minister time to look into it. However, he has said he would look into the scheme, and on that basis I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lucas: My Lords, I beg to move that further consideration on Report be now adjourned. In moving this Motion, I suggest that the Report stage begin again not before 8.15 p.m.
On Question, Motion agreed to.

Licensing (Amendment) (Scotland) Bill
7.15 p.m.
Read a third time.
The Parliamentary Under-Secretary of State, Scottish Office (The Earl of Lindsay): My Lords, I beg to move that this Bill do now pass.
This Bill has continually enjoyed all-party support at every stage of its parliamentary passage. It has also, I believe, benefited from being dealt with under the Scotland and the Union procedures which gave us several opportunities to consider and debate this Scottish Bill in Scotland.

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This process began, following introduction in another place, with Second Reading before a meeting of the Scottish Grand Committee in Glasgow. A Special Standing Committee was then set up and heard evidence in relation to the proposals in Clause 1 of the Bill at special hearings held in Stirling, Ayr and Inverness.
These sessions enabled the committee to consider the views of a wide variety of bodies and individuals with an interest in our proposals and enabled us subsequently to bring forward amendments in another place which we believe significantly improve the way our policy will be delivered.
The Bill has also been the subject of further intense scrutiny by your Lordships and I am grateful to the noble Lords who contributed so helpfully and constructively to those considerations.
I believe that we now have measures which will contribute significantly to the aim we all share of protecting our children from the evils of drug misuse.
Moved, That the Bill do now pass.—(The Earl of Lindsay.)
Lord Carmichael of Kelvingrove: My Lords, I am grateful to the Minister for his kindness and help during the passage of the Bill. I apologise for the fact that my noble friend Lord Macaulay is not able to be here today. He put two questions at an earlier stage of the Bill which the Minister promised to consider. He had the courtesy to write both to my noble friend and to myself. The issues with which we were concerned had been raised by local authorities. They related partly to interpretation but they also had substance.
There was the question, first, of licensing boards acting reasonably when implementing certain requirements in Clause I and, secondly, whether there should be an express provision in the Bill for a licence holder's representative to attend in his place at a board meeting called to consider whether the relevant liquor licence should be varied. In his letter to my noble friend of 4th July the Minister said that he noted from the Official Report that my noble friend suggested that:
"Clause 1 as presently drafted gives an absolute power to the licensing board with no provision for review. That is why you feel that a requirement should be placed on the licensing board to act reasonably when determining whether an event would be such that it was likely there would be a contravention of the Misuse of Drugs Act 1971".
I should like the Minister to put the contents of that letter on the record for the sake of the committee and also of the people who are most anxious that we raise those matters, even at this late stage. Other than that, I am happy with the way the Bill has gone so far.
The Earl of Mar and Kellie: My Lords, I too am pleased that we have before us what I believe will be realistic legislation to deal with the problems caused by some recreational drugs and that we have a framework here for health and safety measures to deal with those problems.
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At an earlier stage I mentioned the situation of the local authorities. There are 32 licensing authorities in Scotland and I believe that they will require considerable ingenuity in working out what the health and safety measures will be. The ingenuity will be required on the part of the applicants and the board members and their advisers.
The licensing activity was the responsibility of the district councils in the past and therefore the new authorities which were based on district councils will perhaps find the task even easier. I mentioned earlier the situation in Clackmannanshire. I am happy to tell the noble Earl that since the Clackmannanshire council used to be a district council, it will have adequate experience, even if it lacks members to deal with the problem of licensing.
In passing, I wonder when there will be a review of how all 32 licensing authorities are getting on. There is the suggestion that the Secretary of State will come forward with prescribed conditions, and perhaps a time will be set for that review.
The noble Earl was kind enough to write to me because I have raised the issue on all recreational drugs, rather than just illegal drugs. In his letter of 4th July he said that:
"The White Paper [Crime and Punishment] reports the Government's intention to fund a number of initiatives aimed at stimulating community action including measures to curb the supply of alcohol to underage drinkers".
I wish to reinforce the point that community action means not just action by the police and publicans. It also means the example and attitude set by parents, teachers and all adults. That is what "community" means.
The noble Earl went on to say:
"It is also our intention to legislate to give police the power to confiscate alcoholic drink from underage drinkers in public places".
That strikes me as a surprisingly realistic approach. I am surprised that it is not already on the statute book. It should be. The letter continues:
"The drinks industry also has an important role to play and the White Paper notes that the industry has adopted a new code that will deter firms from targeting young drinkers. In support, there is to be an increase from October in the duty on cider which is…popular with young people because it is relatively cheap to buy".
I agree with that approach. However, I hope that the noble Earl will include MD 20/20—or "Mad Dog 20/20"—and Buckfast as two other drinks which are of more interest to young people than perhaps they ought to be. The Bill is a good framework within which to deal with what is definitely a problem.
Viscount Thurso: My Lords, at Second Reading I gave the Bill a very warm welcome. However, I had certain reservations. I reiterate that welcome. It is a measure that will generally take care of the problems it was intended to deal with. The particular concerns I raised were addressed by the Minister. I am most grateful to the noble Earl for having answered all my questions. The question that remained was that of reasonableness, as referred to in the amendment tabled at Committee stage by the noble Lord, Lord Macaulay of Bragar.

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I am very grateful to the Minister for his letter to me in which he stated:
"we will be issuing comprehensive guidelines to local authorities aimed at ensuring that licensing boards implement the provisions in Clause 1 of the Bill reasonably and effectively".
I was very grateful for that, and I accept it.
At Second Reading I also mentioned my belief that the time was approaching for a general revision of licensing legislation. Today, by a fortuitous coincidence, the British Hospitality Association launched what it is pleased to call its "election manifesto". I hope that does not mean that hoteliers will be standing for Parliament everywhere! I believe it relates to provisions that the British Hospitality Association would expect from this Government or any future government. That document calls for a review and revision of licensing law in England, Scotland and Wales. I very much hope that the House will have the possibility of debating that subject on a future occasion.
The Earl of Lindsay: My Lords, I am grateful to the noble Lord, Lord Carmichael, the noble Earl, Lord Mar and Kellie, and the noble Viscount, Lord Thurso, for the general welcome they have continued to give to the Bill. The rest of the House will be grateful for the expert scrutiny that they have applied from their various backgrounds as the Bill has passed through its various stages. I also include my noble friend Lord Balfour and the noble Lord, Lord Macaulay, who I regret is not in his place, for the help that they gave us.
The noble Earl, Lord Mar and Kellie, was quite rightly concerned about the exact definition of "community action". I reiterate the statement in my letter. We see the action against under-age drinking and abuse by those who are under age of all products with which they should not be in contact as very important, and also as involving all players. It is not just a matter for central government, local authorities or the voluntary sector; it involves communities and the industry itself. As the noble Earl so rightly pointed out, it involves all of us as adults. We must help as well.
Whether Mad Dog 20/20, Buckfast and other refreshments which I have yet to experience should be included is a matter that I shall pass on to my colleagues. The Committee was certainly grateful when the noble Earl gave an expert lecture on recreational drugs. We all learnt a lot that night.
The noble Viscount asked about the review and revision of the whole licensing framework. The House would benefit if, through the usual channels, he brought this matter to the Floor of the House for general debate, especially given his background in this field.
I turn to the two main points set out by the noble Lord, Lord Carmichael, and touched upon today and at earlier stages by the noble Viscount and the noble Earl. The first involves the licensing board acting reasonably. As I stated in my letter,
"it is without doubt incumbent upon a licensing board, or indeed any other public body, to act reasonably in the discharge of any function given under legislation. If a licensing board unreasonably discharges the functions which the Bill will confer then that is a matter which can be subject to judicial challenge",
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either under Section 39 of the Licensing (Scotland) Act 1976 or by way of judicial review. We also recognise that one can perhaps prevent such actions by issuing sensible guidance. As the noble Viscount, Lord Thurso, quoted from my letter to him,
"we will be issuing comprehensive guidelines to local authorities aimed at ensuring that licensing boards implement the provisions in Clause 1 of the Bill reasonably and effectively".
The last point relates to the ability of a licence holder to be represented at a hearing before a licensing board. I remind the noble Lord that there are other provisions in the 1976 Act relating to the holding of hearings by the licensing board. As I stated,
"An example, which I gave in Committee, is section 31 of the Act which provides for the holding of a hearing when the licensing board is considering whether to suspend a licence following receipt of a complaint. That provision says that the board shall not suspend the licence without hearing the licence holder. It does not expressly say that the holder can, for that purpose, be represented. However, it is a long established practice that a holder can be represented for that purpose".
It is our intention that that long-established practice should continue. Guidance on that point could always be issued should it appear to be threatened.
I hope that, with the further assurances that I have been able to give tonight, noble Lords will continue to support the Bill as it goes forward to enactment.
Lord Carmichael of Kelvingrove: My Lords, I thank the noble Earl for his explanations. I hope he will agree that it was rather important to have those points stated on the Floor of the House so that the House knows exactly what was intended. While it was very kind of him to write to certain Members, the whole House should know about these matters. I am grateful to him for making the effort to explain to the House exactly what was meant by the comments in his letter.
On Question, Bill passed.
The Earl of Courtown: My Lords, I beg to move that the House do now adjourn during pleasure 8.15 p.m.
Moved accordingly, and on Question, Motion agreed to.
[The Sitting was suspended from 7.28 to 8.15 p.m.]

Housing Bill
Consideration of amendments on Report resumed.
Lord Lucas Lord Lucas moved Amendment No. 150:
Before Clause 104, insert the following new clause—

LOW RENT TEST: NIL RATEABLE VALUES
(".—(1) In section 4(1) of the Leasehold Reform Act 1967 (meaning of "low rent")—

(a) in paragraph (i) (cases where rent limit of two-thirds of rateable value on later of appropriate day and first day of term applies), for the words from "or (where" to "that date" there shall be substituted ",or on or after 1st April 1990 in pursuance of a contract made before that date, and the property had a rateable value other than nil at the date of the commencement of the tenancy or else at any time before 1st April 1990,",

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(b) in paragraph (ii) (other cases), for the words from "is entered" to "1990)," there shall be substituted "does not fall within paragraph (i) above,", and

(c) in paragraph (a) (definition of "appropriate day" by reference to section 25(3) of the Rent Act 1977), there shall be inserted at the end "if the reference in paragraph (a) of that provision to a rateable value were to a rateable value other than nil".

(2) In section 4A of the Leasehold Reform Act 1967 (alternative rent limits for the purposes of section 1A(2) of that Act)—
(a) in subsection (1)(b) (cases where rent limit of two-thirds of rateable value on the relevant date applies), for sub-paragraph (ii) there shall be substituted—
"(ii) the property had a rateable value other than nil at the date of commencement of the tenancy or else at any time before 1st April 1990,", and.
(b) in subsection (2), for paragraph (b) there shall be substituted—
"(b) "the relevant date" means the date of the commencement of the tenancy or, if the property did not have a rateable value, or had a rateable value of nil, on that date, the date on which it first had a rateable value other than nil;".
(3) In section 8 of the Leasehold Reform, Housing and Urban Development Act 1993 (leases at a low rent)—
(a) in subsection (1)(b) (cases where rent limit of two-thirds of rateable value on the appropriate date applies), for sub-paragraph (ii) there shall be substituted—
"(ii) the flat had a rateable value other than nil at the date of the commencement of the lease or else at any time before 1st April 1990,", and.
(b) in subsection (2), for paragraph (b) there shall be substituted—
"(b) "the appropriate date" means the date of commencement of the lease or, if the flat in question did not have a rateable value, or had a rateable value of nil, on that date, the date on which the flat first had a rateable value other than nil;".").
The noble Lord said: My Lords, in moving Amendment No. 150, I wish to speak also to Amendment No. 161. Amendment No. 150 deals with the treatment of properties which have hitherto been unable to meet the low rent test for leasehold enfranchisement because they had a nil rateable value on the relevant date. The problem was raised in Committee by my noble friend Lord Carnock, for which I thank him, and the noble Lord, Lord Dubs. The matter has also been raised outside Parliament with the Department of the Environment.
As noble Lords pointed out, the problem is quite widespread and has generally arisen in one of two ways. For houses, leases were granted at a reduced premium on damaged or derelict properties which were not fit for human habitation (and so had a nil rateable value) on the understanding that the lessee would restore the property to a good standard. For flats, leases were granted in conversions off the drawing-board; again, the property had a nil rateable value because it was not complete at the time.
Amendment No. 150 looks complex but it has a very simple effect. If the property had a nil rateable value on the date that would have been chosen for the low rent test, then the relevant date is the first subsequent date before 1st April 1990 when the property did have a
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rateable value. Noble Lords will recall that the domestic rating system was abolished on 1st April 1990, which is why that date is significant.
Amendment No. 161 is consequential in that it recasts Section 1(1)(a) of the Leasehold Reform Act 1967, which sets out the dates on which the rateable value limits are effective, to conform to the wording in Amendment No. 150. The amendment removes a potential lacuna in the current wording of Section 1(1)(a) as well. I beg to move.
Lord Carnock: My Lords, I am grateful to my noble friend for tabling this amendment. It will correct an anomaly and a number of injustices. However, in view of the extensive amendments that are being made to the Bill, perhaps consideration can be given to reprinting the section as amended as a schedule to the Bill. That was done with Schedule 15 of the 1993 Act in relation to a section of the earlier 1967 Act.
Lord Dubs: My Lords, I thank the Minister for responding with this amendment to concerns that were raised during the Committee stage. I am grateful to him for that.
Lord Strabolgi: My Lords, I welcome what the Government have done to meet this problem. We are grateful that they have seen the light and responded to requests from all sides of the House.
Lord Lucas: My Lords, I am delighted to begin the after-supper business in such good heart and good company. I am grateful to noble Lords for having shown us the light. I shall bear in mind what my noble friend Lord Carnock said and talk to my colleagues on the subject.
On Question, amendment agreed to.
Clause 104 [Low rent test: extension of rights.]
Viscount Caldecote Viscount Caldecote moved Amendment No. 151:
Leave out Clause 104 and insert the following new clauseߞ

ABOLITION OF LOW RENT TEST IN NON-RURAL AREAS
(" .—(1) The Leasehold Reform, Housing and Urban Development Act 1993 shall be amended as follows—

(a) in section 5, the words "at a low rent" shall be omitted in both places they occur; and

(b) section 8 shall cease to have effect.

(2) The Leasehold Reform Act 1967 shall be amended as follows—

(a) in section 1(1)(a), for the words "at a low rent" there shall be substituted the words "and is not an excluded tenancy under subsection (1A) below";

(b) after section 1( ) there shall be inserted—

"(1A) A tenancy is an excluded tenancy for the purposes of this section if—

(a) the house which the tenant occupies under the tenancy is in an area designated for the purpose of this section as a rural area by the Secretary of State;

(b) the freehold of that house is owned together with adjoining land which is not occupied for residential purposes;

(c) the tenancy was granted on or before the day on which Part III of the Housing Act 1996 came into force; and

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(d) the freeholder satisfies the Leasehold Valuation Tribunal that the house—

(i) is leased at an annual rent less than one-half of the current annual letting value of comparable properties in the designated rural area concerned,

(ii) is occupied by a member of the family of the freeholder or former freeholder of the estate within which it is situated or has been leased on terms related to such future occupancy, or

(iii) is occupied by an employee or former employee of that freeholder.

An application to the Leasehold Valuation Tribunal in accordance with paragraph (d) above shall be made by the freeholder within two months of his receipt of the relevant notice of the leaseholder's claim to enfranchise under the terms of this Act."; and.
(c) sections 4 and 4A shall cease to have effect.").
The noble Viscount said: My Lords, as I did at Committee stage, I must declare an interest in this amendment. I am a long leaseholder of a London flat. In moving the amendment I shall speak also to Amendments Nos. 155, 155A and 159. Amendment No. 155A is tabled in the name of my noble friend Lord Coleraine. He has asked me to make his apologies to the House. Because of another commitment he cannot be here tonight. He asked me to propose the amendment on his behalf.
All these amendments deal with limitations on the right to enfranchisement, specifically the low-rent test and the special limitations in designated rural areas. The principle of granting the right of enfranchisement to certain tenants has already been accepted on the basis that it is desirable and equitable, despite some objections made by noble Lords to revising contracts already made between freeholders and tenants.
These rights are given where the length of the lease is such as to give the tenant in effect an equity interest in the property. But where the lease is for a relatively short period, say, less than 21 years, it is almost invariably let at a rack rent based on the current market value. In such cases the tenant can claim no equity in the property and the lease should clearly not be enfranchisable.
However, it has been argued that there is an appreciable number of long leases let at or near rack rents and that these leases should be excluded tenancies for the purposes of enfranchisement. This is the justification for the low-rent test. The fact is that the evidence supporting this argument is extremely flimsy. Only six examples have been provided by the British Property Federation where it is alleged that long leases have been granted on a commercial rental basis where no premium has been paid. No detailed information has been provided on the ground that it is confidential. I understand that a few other cases have been quoted, but with even less information available. It is surely clear that these few examples, even if relevant at all, are very special cases and should not determine the content of an Act of Parliament.
Amendment No. 151 therefore seeks to delete the low-rent test entirely in both urban and rural areas by introducing a new Clause 104. The revised clause contains certain requirements which, if satisfied, will provide for the tenancy to be excluded from the rights of enfranchisement in rural areas. I draw attention
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particularly to the fact that paragraphs (a) to (c) of subsection (2) are "and" requirements—that is, all of them have to be satisfied if the tenancy is to be excluded—but that paragraph (d)(i) to (iii) contains "or" requirements; namely, only one of them has to be satisfied.
I believe that the provisions in this part of the amendment give adequate protection to the owners of estates and provide a fair balance between long leaseholders and freeholders. In rural areas they exclude from the right to enfranchisement properties forming an integral part of an estate which are required for the responsible stewardship of it.
As regards Amendment No. 159, since the sole purpose of the existing Clause 104 is to bring Schedule 9 into force, Amendment No. 159 is consequential to Amendment No. 151. If Amendment No. 151 is passed, then Amendments Nos. 155 and 155A will not be moved, for Amendment No. 155 deals only with the special exclusions for tenancies in rural areas. It is more restrictive as it does not deal with the low-rent test in general and therefore is less satisfactory than Amendment No. 151. However, it would certainly be an improvement on Schedule 9 as it now stands.
Amendment No. 155A will not be required if Amendments Nos. 151 or 155 are passed. It is more restrictive still than Amendment No. 155 but would remove some anomalies from the existing Bill including, for instance, those in the village of Adlestrop where, under the Bill as now drafted, some very long leases over 75 years will be enfranchisable and others will not.
It is surely inconceivable that categories of leases for which this exemption is sought will have been granted for more than 50 years. However, to be on the safe side, Amendment No. 155A limits the rural exception to leases of less than 75 years.
I realise that these are difficult issues with strongly held views on each side of the argument, but I sincerely believe that Amendment No. 151 both clarifies the law and provides a much more equitable and sensible balance between landlord and tenant. No doubt the amendment needs tidying up by experts. These are complicated issues. I hope very much that Her Majesty's Government will support the amendment in principle and bring forward a better worded amendment at Third Reading. I beg to move.
Lord Dubs: My Lords, I support Amendment No. 151. Indeed, I had intended putting my name to it. The amendment goes to the heart of the difficulties we have with the present system. There is a perceived sense of unfairness among leaseholders. I am sure that all of us have had letters from leasehold organisations and from individual leaseholders, complaining about unfairness and anomalies in the present system.
Amendment No. 151 seeks to put right the majority, if not all, of the anomalies that I have had drawn to my attention. It is a sensible way forward. I have some further amendments dealing with aspects of the matter which we shall come to later. In the meantime

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Amendment No. 151 establishes clearly the main point of principle. I hope that the Government will look at it sympathetically.
Lord Carnock: My Lords, I support these amendments for the reasons already given.
Lord Strabolgi: My Lords, I too support the amendment so ably moved by the noble Viscount, Lord Caldecote. The Government contend that many of the leases are really rented property and are not leasehold in the normal course of events. That is one of the reasons why, for some extraordinary reason, they increased the period from 21 years to 50 years.
The Leasehold Enfranchisement Advisory Service knows of no long lease that is at a market rent or anything approaching it. Ministers have not produced a single example. I have seen the paper that was sent to the department by the British Property Federation on which it is basing its decisions. It seems to believe that it is clear evidence, but, as the noble Viscount, Lord Caldecote, said to me, most of it appears pretty dubious. I understand that the department has not seen the leases in question. The British Property Federation has refused to give any further details, claiming that the matter is confidential. It looks pretty phoney to me.
There is a four-storey terraced house in Chelsea let at a peppercorn rent for nine months from £600 a year and now there is a current rent of £9,000. There is another four-storey house in Chelsea where, in 1975, it was claimed there was a rent of only £600 a year—£600 a year for a four-storey house in Chelsea!—and where the current rent is now £3,000. And so it goes on. This looks pretty dubious. I hope that the department will try to base its evidence on something wider and that it will consider doing away with the low-rent test altogether because it has driven a coach and horses through this legislation. All the landlords need to do is to put up the rent so the leaseholder does not qualify. As I said in Committee, do the Government believe in leasehold enfranchisement or not? Is it just something that is put into the Conservative election manifestos and then nothing is done about it, or is it something that they really want to proceed with? That is the test that they are required to apply. I hope the Government will consider these amendments seriously because I am sure it is the right way to proceed.
Lord Cochrane of Cults: My Lords, I am entirely persuaded by my noble friend Lord Caldecote's argument and agree that his amendment deserves support on all sides of the House. I hope my noble friends on the Front Bench will observe that possibly my noble friend's amendment is wiser than their proposals.
8.30 p.m.
Baroness Hamwee: My Lords, I too support the amendment. I supported amendments to a similar effect at the last stage and I am happy to stand my ground, despite having been duffed up orally on the basis that I was suggesting that contracts were things easily to be put aside. That was not what I said and it is not what
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I am saying now. But I do believe that enfranchisement and a fair scheme which does not leave certain leaseholders without rights is the correct way to go forward. Like the noble Lord, Lord Strabolgi, I am concerned about any scheme which allows landlords to find devices to avoid it. It is always difficult to exclude avoidance devices but this test seems to have been something of an open invitation.
I was initially concerned about the exclusion of the test in rural areas but I think that the noble Viscount's amendment is ingenious in hedging the matter with such conditions that it is only in very closely defined circumstances that the test would not apply.
Like the noble Lord, Lord Strabolgi, I too have had a number of items of correspondence from people who have expressed their disappointment that, despite a manifesto pledge from the Conservatives, the issue is still unresolved.
Lord Selsdon: My Lords, I had not intended to intervene on this amendment and I am slightly surprised by the agreement that exists across the whole House. But your Lordships' House is known for finding issues, however small, where there is an element of unfairness, and one can usually win an argument in your Lordships' House when one says, "This is unfair to the minority", however small that minority may be.
In my noble friend's intervention he indicated that there is a sense that there is unfairness to one group and perhaps fairness to another. The noble Lord, Lord Strabolgi, raised the issue of value or equity participation and rent. At Second Reading I took the liberty of pointing out that we have moved into a new world where inflation is no longer a worry. Historically, people bought fixed assets on borrowed money because in an inflationary environment they saw a capital gain. Hence property investors, whether they were the great, responsible estates or small speculators, would seek to own a leasehold or a freehold because of the capital gain. Arguments about a rent of £600 or a small amount are irrelevant. I know that people put them forward in order to defend their position, but we all know that the differential between rentals and capital values today no longer applies in the same way as it did a few years ago.
I do not think that the amendment is drafted in a way which would prevent further confusion, but it is an area that perhaps the Government ought to consider more closely because if in your Lordships' House we detect an element of unfairness to a minority it is worth looking at.
Lord Lucas: My Lords, I knew it would not last. Here I am, back on my own again, not a friend in the House in front of me or behind me. Still—there we are—that is the way it goes. But when my noble friends look at all the changes we have made and are making in this area of leasehold enfranchisement, and particularly in the area of the low rent test and associated parts of the legislation, I think they will agree that we have gone a long way to dealing with problems which have existed in the past, although we cannot go as far as they wish. My noble friend Lord Caldecote, and indeed the noble Lord, Lord Strabolgi, said that we

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should not legislate on the basis of a few exceptions produced by the British Property Federation. I entirely agree.
I also feel that we should not, when we come to the point, legislate on the basis of a few villages in Gloucestershire which happen to be left outside another more general provision. Our basis for liking the existence of the low rent test is that we feel there is a genuine overlap in lease lengths between leases let at market rents and those let at a premium on ground rents. If we abolish the low rent test for all long leases we should be introducing we feel an unnecessary rigidity into the market, making it impossible for anyone to offer more than 21 years' security of tenure at a market rent without risk of being deprived of the freehold.
We like the idea of two cut-off dates: below 21 years, and above a certain figure—presently 50 years but we will be discussing that later on and, I hope, coming to a view on what that figure should be. As I said at Committee stage, that is something which the Government have been considering. But between the two we feel that there should be the option. Either it should be possible to let on a lease at a premium or it should be possible to have a full market rent. A 25-year lease is not uncommon, and we do not see why that should be forced to be enfranchisable, even if it was intended to make it at full market rent, or why, alternatively, full market rents should be restricted to below 21 years. We prefer to leave the structure of the market with this flexibility. That is why we do not want to move on the existence of the low rent test.
Amendment No. 151 also deals with the rural exemption. It may help the House if I refer to the government scheme which is set out in Schedule 9. The tenancy will be excluded under the rural exemption if the house is in a designated rural area, the freehold is occupied together with non-adjoining residential land—and a later amendment will deal with that to tighten up possible abuses there—and the tenancy was granted on or before the day on which Clause 104 of this Bill comes into force. So it is a provision which is looking back, dealing with the way things used to be arranged and ensuring that this Bill does not upset them. I shall come in due course to the way in which things will operate in the countryside in future.
We want to preserve the integrity of rural estates where houses have been let on long leases so that the expectation that they will be restored to the freeholder for future generations is not frustrated.
My noble friend Lord Caldecote has built on the rural exemption set out in Schedule 9 by adding further restrictions to narrow the class of case which would qualify. These are that the annual rent is less than one-half of the letting value for comparable properties or that it is occupied by a member of the freeholder's, or former freeholder's family, or has been leased on terms related to such future occupancy, or that it is occupied by an employee or former employee of that freeholder. My noble friend has introduced a separate additional test in Amendment No. 155A which would remove leases exceeding 75 years in length from the rural exemption, so making them enfranchisable even if they fulfil all
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the other conditions for the rural exemption. It has been argued that alienation effectively for two generations should permit enfranchisement. We do not believe that it would be wise to permit the break-up of rural estates, even in these circumstances because of the disruption it would cause to the balance of rural life and the complexity which it would add to enfranchisement rights.
My noble friend has criticised the present version of the rural exemption for being too wide, but we feel that he has introduced something far too narrow. What I believe we should be looking at is the relationship between the house and the estate of which it is part, not the relationship between the leaseholder and the freeholder. The principle is not who occupies the house, but that it has been let on a long lease at a rent which exceeds the threshold for the low rent test. That would exclude from enfranchisement properties let at higher rents for estate management purposes. The rural exemption is framed to formulate that distinction.
As to the future, landlords in rural areas will be able to grant leases at rents above the threshold for the low rent test, up to the very long lease limit, whatever that may be. As I have said, we shall discuss that later. Secondly, and on a longer view, some tenancies terminable on a death or a marriage are not enfranchisable. The main excluded tenancies of this type are described in Section 3 of the 1967 Act and in Section 7 of the 1993 Act.
This is a somewhat recondite corner of property law and I do not propose to go into it in detail. However, the effect is that certain types of life tenancy do not fall within either Act and nothing in Schedule 9 changes that broad position. It would therefore be possible for a landlord to offer an employee or a relative a house for their life or for some known life and that would not be enfranchisable under the Act. We believe that that offers the rural communities sufficient flexibility to plan the use and occupation of properties associated with an estate in the future and we do not therefore need to continue the rural exemptions for the future, although we do need to look at them in terms of protecting what has happened in the past. For those reasons, I am afraid that I cannot give my noble friend any comfort on any of his amendments. Nonetheless I hope that he will feel able to withdraw them.
Lord Selsdon: My Lords, before my noble friend sits down, I should not like him to feel that he is friendless. I did not say that I was opposed to the low rent test. I simply think that it is a bit unfair that there has to be a transition. It is important to create an element of stability in the market whether the period is to be 21 years or 50 years. Let us ensure that all sides of the House accept that that is reasonable.
I should like to draw attention to one simple anomaly. The 1993 Act was not perfect. Following that Act, a number of freeholders decided in good will to grant longer leases (of over 50 years) to a number of people. Their fear now is that having

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granted those longer leases, the properties immediately become enfranchisable in terms of freeholds. Such elements create a certain instability. Perhaps the noble Lord, Lord Dubs, will be prepared to say that he thinks that 21 years or 50 years are acceptable so that at least we know where we stand, because people who tinker with the years cause lots of problems.
Viscount Caldecote: My Lords, in view of the wide support on all sides of the House, I am extremely disappointed that my noble friend on the Front Bench was not able to be more sympathetic to the amendment. He said that the Government have gone a long way to meet some of the points made in Committee. I submit that the Government have gone a short way and that we have not gone nearly far enough along the road that many of us would like. That is clear from the view that has been expressed today.
I did not think that my noble friend's arguments about the dangers and difficulties of abolishing the low rent test were at all convincing. He argued on the basis of maintaining the flexibility in the market. Is he really saying that there are going to be many long leases, however defined, let at rack rents? I do not think that that is true. As I have said, I am extremely disappointed by the Government's response. Although I do not want to press the amendment at this stage, I reserve the right to think about it again and, having read the reply in Hansard, to return with it at Third Reading. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 9 [Low rent test: extension of rights]:
Lord Lucas Lord Lucas moved Amendment No. 152:
Page 160, line 43, after ("purposes") insert ("and has been owned together with such land since the coming into force of section 104 of the Housing Act 1996").
The noble Lord said: My Lords, in moving Amendment No. 152, I should also like to speak to Amendment No. 154. Amendment No. 152 is an anti-avoidance measure for the rural exemption to the low rent test. In Committee, my noble friend Lord Coleraine pointed out that there was nothing to prevent the freeholder of a house in a rural area that would have been enfranchisable from buying an adjoining plot of non-residential land, thus taking advantage of the rural exemption.
The Government reflected on my noble friend's observation and concluded that adjoining land qualifying the house for the rural exemption must have been held together with the house continuously since the coming into force of the Bill. My amendment is to that effect. It ties in with the provision in new section 1AA(3)(c) of the Leasehold Reform Act 1967, which requires that the tenancy itself must have been granted on or before commencement. I believe that this is a useful anti-avoidance measure. I beg to move.
On Question, amendment agreed to.
[Amendment No. 153 had been withdrawn from the Marshalled List.]
8.45 p.m.
Lord Lucas Lord Lucas moved Amendment No. 154:
Page 160, leave out line 45 and insert ("that section came into force").
On Question, amendment agreed to.
The Deputy Speaker (Lord Burnham): My Lords, we now come to Amendment No. 155 and I must advise the House that if this amendment is agreed to, I cannot call Amendment No. 155A.
Viscount Caldecote Viscount Caldecote moved Amendment No. 155:
Page 160, line 45, at end insert ("and
(d) the freeholder satisfies the Leasehold Valuation Tribunal that the house—

(i) is leased at an annual rent less than one-half of the current annual letting value of comparable properties in the designated rural area concerned,

(ii) is occupied by a member of the family of the freeholder or former freeholder of the estate within which it is situated or has been leased on terms related to such future occupancy, or

(iii) is occupied by an employee or former employee of that freeholder.

An application to the Leasehold Valuation Tribunal in accordance with paragraph (d) above shall be made by the freeholder within two months of his receipt of the relevant notice of the leaseholder's claim to enfranchise under the terms of this Act.").
The noble Viscount said: My Lords, I have already spoken to this amendment. As drafted, it relates to Amendment No. 151, although it is much more restrictive and deals solely with rural restrictions.
My noble friend referred to the importance of not breaking up rural estates. This amendment would precisely prevent that by ensuring that all properties required in connection with the estate, and for the proper management and stewardship of the estate, are excluded from the enfranchisement provisions. I cannot see how my noble friend can say that that contributes to the break-up of estates. It simply enables properties to be enfranchised which now have nothing to do with the estate but which might well have had something to do with it 50 or 100 years ago when hundreds of people worked on the farms instead of two or three. Can my noble friend comment on that point? I beg to move.
Lord Hamilton of Dalzell: My Lords, my noble friend on the Front Bench says that he is friendless in this debate. I assure him that he is not. As there seems to be a sort of batting order about the number of noble Lords who speak, I think that perhaps I should voice my opinion on this, although I did so in Committee and I have not changed my opinion since then. The trouble with my noble friend Lord Caldecote is that he will not be satisfied until every single house in the country which was previously leasehold is taken over by the leaseholders. When I listen to these debates—
Viscount Caldecote: My Lords, that is quite unfair. I made a particular distinction in the amendment between those houses that are required for the operation of the estate—it is absolutely right that they should not be

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enfranchisable—and those that are not. I have no wish at all to make all houses enfranchisable, as my noble friend says, now or at any time in the future.
Lord Hamilton of Dalzell: My Lords, I hear what my noble friend says, but how is he to judge what is part of an estate and what is not? Personally, I have spent a vast sum of money on making sure that houses on my estate are free to be let to people on my estate because I do not depend on the fact that agriculture will always remain a profitable occupation. I have put myself in such a position that there are no longer any leaseholders at all on my estate.
During this debate and debates on other aspects of this Bill, I hear noble Lords from the other side of the House complaining that there is no security of tenure. Of course there is no security of tenure. Security of tenure has been destroyed. My noble friend Lord Caldecote would want to make a proper job of it and destroy it altogether.
Perhaps I may cite a particular instance. I had a chap on a 12-year lease who had done various improvements to his house to suit his own convenience. He asked me for another 12-year lease. I was just on the point of granting it to him so that he could do further things to amuse himself and make himself more comfortable when leasehold enfranchisement loomed on the horizon. He has now become a statutory rent holder on a rack rent and can do nothing in his house. That is much to his inconvenience. It is beyond belief that people like my noble friend should insist endlessly on forcing through this issue when clearly the intelligent course is to leave it as it is.
Lord Lucas: My Lords, I appear to be striking a reasonable balance between my noble friends on this matter. I understand what has been said by my noble friend Lord Hamilton of Dalzell, which illustrates some of the problems to which this amendment gives rise. I believe that we should be looking at the relationship between the house and the estate of which it is part, not the relationship between the leaseholder and freeholder. The principle should be based not on who occupies the house but on whether it has been let on a long lease at a rent which exceeds the threshold for the low rent test. We believe that that is the right way to treat it, rather than looking at family or employment relationships which do not describe the relationship between the two bits of property. The basis of my opposition to the amendment of my noble friend is practicality and trying to ensure that things work in the right way, rather than a matter of settled principle. The matter has been given considerable consideration since Committee stage, and we believe that we are striking the right balance.
Viscount Caldecote: My Lords, I do not wish to make life difficult for my noble friend, but I find his logic extremely difficult to follow. However, on the basis of what I said earlier, I beg leave to withdraw the amendment.
Amendment, by leave withdrawn.
Viscount Caldecote Viscount Caldecote moved Amendment No. 155A:
Page 160, line 45, at end insert ("and
( ) the tenancy was granted for a term of years certain not exceeding seventy-five years.").
The noble Viscount said: My Lords, Amendment No. 155A is a fallback if the House does not accept either of the other amendments in my name. It would remove some glaring anomalies in certain villages, of which I gave one example. I do not want to use that particular village as an argument in itself; it is merely an example. I believe that a period of 75 years provides a very much better balance than that which exists now in settling these difficult matters. I beg to move.
Lord Lucas: My Lords, this is not a matter that we can accept. Although I understand the argument that is advanced by my noble friend, the Government prefer to stick to the basic principle of trying to preserve the arrangements which have been made in the countryside in the past for the purposes of keeping together an estate. We should not try to alter the law of the land to rescue a few villagers in one village who find themselves unable to benefit from the Bill as it currently stands. We do not disadvantage anyone in this Bill, but that a few people may not benefit as a result should not weigh with us too heavily in making sure that we have the principle right. I believe that that is what we have done.
Viscount Caldecote: My Lords, on the basis of what I said earlier, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Dubs Lord Dubs moved Amendment No. 156:
Page 161, line 46, leave out ("50") and insert ("35").
The noble Lord said: My Lords, I beg to move Amendment No. 156 and speak also to Amendments Nos. 157 and 158. The noble Lord, Lord Selsdon, asked me what was the correct period of time. The purpose of these amendments is to make progress in answering that question. For the sake of consistency, I still prefer Amendment No. 151 in the name of the noble Viscount, Lord Caldecote. In principle, I believe that that is a better approach. However, in Amendment No. 156 I seek a compromise.
When this matter was discussed in Committee I was curious about where the 50 years had come from. The noble Lord, Lord Lucas, said:
"In all of my relatively short years as an accountant 50 years has been a figure of great significance as regards leases. Fifty years is the point at which a lease begins to depreciate. Beyond that, for longer terms, a leasehold is essentially freehold and can be treated in the same way for accounting purposes. Below that it is a depreciating asset. That is why the figure of 50 was chosen". [Official Report; 18/6/96; col. 194.]
I understand the point about depreciation. Perhaps I should put the arguments on the other side. First, there is a commitment by the Conservative Party to take firm steps to enfranchise leaseholders. Secondly, there is a move from 21 years to 50 years in this Bill. Fifty years is a long time. Many leaseholders who hope to have the opportunity to enfranchise now find themselves unable to do so because they have been in their homes for a

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number of years, and the period remaining is less than 50 years. If one chooses a period as long as 50 years it will be possible to circumvent the intentions of enfranchisement simply by having leases of a certain length.
Where does the period of 35 years come from? I am bound to say that it is the mid-point between 21 and 50. I cannot give any rational justification for it. I believe that the proposal is none the worse for that. There must be some basis for doing it. Logic suggests that 50 years is far too long a period. The Minister was reluctant that it should be reduced to 21 years. I put down the amendment in the hope that it will tempt the Minister to be conciliatory and agree that the proposal is acceptable. I admit that there is no particular reason for choosing 35 years other than that it is the mid-point between two different figures. However, it has the merit that it will do justice to a good many leaseholders who will be able to enfranchise but who would otherwise not be permitted to do so. I beg to move.
Lord Strabolgi: My Lords, I support the amendment. As I said in Committee, I was concerned and shocked when the Government suddenly increased the period from 21 to 50 years. It means that all leaseholders with fewer than 50 years cannot enfranchise. If landlords take advantage of the low rent test it makes the position virtually impossible. However, the Government have refused to budge. As my noble friend has said, this is a compromise, and it is one that I hope the Government will accept. Although it is a halfway house, I believe that it will go some way to solve the problem.
Baroness Gardner of Parkes: My Lords, I apologise that I was delayed in returning to the Chamber. I arrived just in time to hear the noble Lord, Lord Dubs, moving the amendment. This is a matter in which I have taken an interest throughout and I should like to speak to it. I am rather concerned about reducing the period from 50 years. I am a great supporter of enfranchisement, and it is a pity if we do not have it. However, I believe that the period of 35 years is neither here nor there. I would rather that 21 years or 50 years was treated as the figure. Having gone into the matter fairly thoroughly, I am convinced that if one does not take a period considerably in excess of 21 years—that is why I come back to the 50 years—people will not be prepared to invest in property. It means that they will have no firm possibility of buying or holding property as an investment.
Enfranchisement has been a disappointment for a number of people who have believed that they will get something for nothing. To enfranchise one's lease, whatever its length, appears to be a costly exercise. The shorter the term the more costly it is. People have been very disappointed by that. I believe that major developers who would be prepared to invest in the construction of flats would hardly be interested in doing it if everything was to be enfranchised under them. The position might be different if the property was built as commonhold and sold freehold from the start. That is the Australian system, which I very much favour.
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A sinking fund is established for a new building. I do not believe that 35 is a satisfactory compromise, and I am not in favour of the amendment.
9 p.m.
Lord Selsdon: My Lords, it is important that we should all agree on the year. In many parts of the world leases are granted for 49 years. The only reason why the term should be 50 years that I can think of is:
"Now of my three score years and ten
Twenty will not come again.
Take from seventy years a score,
That leaves me only fifty more,
And fifty years is little room
To see the cherry hung with bloom".
I do not believe that it matters, because people do not stay in houses for 50 years. They stay only for short periods. In order to produce stability in the property market we must give assurances to leaseholders, potential tenants, potential investors and banks which might lend that whatever is agreed as a result of the Bill will remain for a determinable period.
I do not see the point of 35 years. I do not believe in compromises. I believe that 50 years is reasonable because, as your Lordships will know, it is the period over which a bank will lend money. We should agree the period, whether it is 50 years or 21 years. If noble Lords opposite would agree not to alter whatever period is decided, we should introduce a certain amount of stability. I regard the period of years as being critical to the total market.
Lord Carnock: My Lords, I support the amendment. Under the Bill the particularly long lease is defined as a lease whose original term is for more than 50 years. In the human experience, a term of 21 years may be taken as approximating to the period of the minority and a term of 35 years as approximating to the period of generation. Therefore, I see human reasons for attributing significance to the periods of 21 and 35 years.
However, a term of 50 years has no significance in the context of the human experience. It is a term used in the context of capital gains tax, where leases of more than 50 years are assumed to have a value equivalent to a freehold. Even in that context, the depreciation in the value of the leasehold interest as the term is eroded by time from 50 years to 35 years is relatively small.
As the term reduces from 35 years, the value of the leasehold interest diminishes with ever-increasing rapidity until ultimately it reaches a value approaching zero. Moreover, 35 years is already recognised in our stamp duty laws as a significant boundary demarcation. Stamp duty on the grant of leases for terms of more than 35 years is very considerably higher than for shorter terms. For those reasons I support the amendment.
Baroness Hamwee: My Lords, I too support the amendment, although with the reluctance expressed by the noble Lord, Lord Dubs. I too should prefer to see a period of 21 years, which I have always regarded as accepted in the property world as meaning something. We have heard some interesting commentaries on

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35 years as a generation and on 50 years in a rather more extravagant explanation than the prosaic accountants' and auditors' explanation given at the last stage from the Government Front Bench. If we are unable to address the low rent test in the way that leaseholders have been asking, to fail to address the long lease part of the test seems to me to be something of a double whammy.
Lord Lucas: My Lords, we touched briefly on the problem when discussing the amendments tabled by my noble friend Lord Caldecote. As I said in Committee, the figure of 50 is not one to which we have any permanent attachment. I shall resist the suggestion of the noble Lord, Lord Strabolgi, that we have been moving it from 21. The figure of 21 has remained where it was fixed for some time. It is the boundary between something which, presumably, is always rented property and the zone above in which a leasehold can exist.
The question of the point at which the leasehold should exist used to be infinite but has been brought down by another place to 50. We are discussing whether we should move that further. Certainly it has never been in the Government's contemplation that it should be reduced to 21. As I said when replying to my noble friend's amendment, we are decided that there should be a period between 21 years and a higher limit where it is possible for it to be either an enfranchisable lease or a rented property. We do not feel comfortable with the idea that the property market should be restricted to giving 21 years' security. We wish it to be able to give a longer period.
The question of where that upper boundary should be clearly excites some differences of opinion. The noble Lord, Lord Strabolgi, and the noble Baroness, Lady Hamwee, would like 21 years. My noble friend Lady Gardner would like 50 years. I believe that if we move away from 50 years the concerns of my noble friend about investment are unlikely to be devastating in practice. The institutions which are building residential property in connection with commercial property—flats above shops, which will commonly be the case in inner cities and other situations—are protected from enfranchisement under the Bill—and properly so, because they have a great interest in the continuing good management of the property as a whole. Those who are building purely residential properties will generally be wishing to obtain the maximum money immediately. They will at least be selling long leases and the residual freehold will be of little interest to them. The fact that they will have to dispose of the freehold to those leaseholders who wish to buy it, should not, if they are selling leasehold properties, be of much weight in their overall investment decisions.
Therefore, we are prepared to consider moving away from 50 years and there are some good reasons why we should do so. A number of leases let about 50 years should, in all conscience, be enfranchisable. As noble Lords have pointed out, at 50 years a leasehold is considered equivalent to freehold in valuation for capital gains tax purposes and for general accounting principles. That would argue that at 50 years the value is with the occupier and not with the freeholder.
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Therefore it should be enfranchisable. We do not want to find ourselves in a position where people are constructing devices to avoid enfranchisement by putting together leaseholds of 50 years and finding that there is a real market for them. At 50 years, you could argue that you could get a 25-year mortgage and still have 25 years left at the end of it; so we are convinced of the need to drop the figure.
The noble Lord, Lord Dubs, has proposed 35 years. My noble friend Lord Carnock has pointed out that that is an existing threshold for stamp duty, which perhaps gives us some excuse for liking 35 years. It is also the point at which, as I understand it, the value becomes one-third with the freeholder and two-thirds with the leaseholder. Perhaps there is an attraction in 35 from that point of view. However, as the noble Lord points out, this is not really something which is an exact science. It is a matter of choosing something and, as my noble friend Lord Selsdon said, sticking by it so that people can be confident of what the pattern will be for some while in the future. Since the noble Lord, Lord Dubs, and his party like 35 and since 35 appeals to us, we propose to accept these amendments.
Lord Dubs: My Lords, one is permitted to be a little surprised at times. I am delighted by what the Minister says. It is an improvement. It does not go as far as I would have wished, given Amendment No. 151, but I think it will improve the situation for quite a number of leaseholders between the 35 and the 50 years. For that reason, I thank the Government for having come some way to meet us.
On Question, amendment agreed to.
Lord Dubs Lord Dubs moved Amendment No. 157:
Page 162, line 10, leave out ("50") and insert ("35").
On Question, amendment agreed to.
Lord Dubs Lord Dubs moved Amendment No. 158:
Page 162, line 14, leave out ("50") and insert ("35").
On Question, amendment agreed to.
[Amendment No. 159 not moved.]
[Amendment No. 160 had been withdrawn from the Marshalled List.]
Lord Dubs Lord Dubs moved Amendment No. 160A:
Before Clause 106, insert the following new clause—

COLLECTIVE ENFRANCHISEMENT: NOTICE BY QUALIFYING TENANTS
(".—(1) The Leasehold Reform, Housing and Urban Development Act 1993 is amended as follows.
(2) In section 13, in subsection (2), for the words after paragraph (b)(ii) substitute—
"and not less than 25 per cent. of the qualifying tenants must satisfy the residence condition and give notice to enfranchise".").
The noble Lord said: My Lords, I beg to move this amendment which stands in my name and that of the noble Baroness, Lady Hamwee. This is an amendment which, on the one hand, sounds a bit technical and, on the other hand, deals with a matter of some importance to leaseholders. It concerns the formula for qualification.
I have long been concerned about how one can establish whether anybody is resident. I appreciate there are many difficulties. If there were easier tests of what is a resident, no doubt we would have been able to suggest amendments accordingly. But this amendment deals with the residence test. In the way that the formula works at the moment there is a possibility that the outcome can be—I hesitate to use such a strong word—manipulated or the arithmetic of the ways in which people can claim to be residents can have a slightly distorting effect on the outcome.
As I understand it, the test is that no fewer than 50 per cent. of qualifying tenants who give the initial notice must satisfy the residence condition. The suggestion is that that residence condition should be reduced from 50 to 25 per cent. I have been told that there are occasions when, by persuading some people not to take part in the process, a smaller proportion of the leaseholders can achieve a particular outcome and this can be made more difficult by people who are absent and therefore do not take any real part in what happens in the block if they happen to own a leasehold of a flat within it.
Perhaps I could best explain this by quoting from a letter from a woman living in Bayswater which refers to the 1993 Act and the question of residential qualifications:
"The above Act, as it stands, is not helpful to lessees, in blocks of flats such as this one. The main problem being the very stringent residential tests.
By the very nature of such blocks, there are far more frequent changes of tenancy than in outer London or the provinces. Many of the flats here are studio or one-bedroomed—the largest have two bedrooms (not unusual in areas such as Bayswater) and so we have many 'first-time buyers' pending purchase of larger homes. Also, many people working abroad have homes here which they eventually intend to return to when their tours of duty are completed. This means that very long term residents, such as me, are virtually denied the right to purchase the freehold.
If the above Act is to have any relevance for lessees, such as me, and there are many of us, it is essential that the residential qualifications are made less onerous and that the residential qualification be reduced to 20% of households".
That is what this amendment seeks to achieve. It seeks to put into statutory form what is the spirit of the intention; namely, that it should not be too difficult for people who wish to enfranchise to do so and that the complicated formula of the residence test and people who do not live permanently in the blocks has made the formula more difficult.
I believe that, although this amendment does not go as far as I should wish it to, it helps in that respect. It will enable some leaseholders to enfranchise who otherwise meet all the criteria. I beg to move.
9.15 p.m.
Baroness Gardner of Parkes: My Lords, I find this extremely interesting. In the 1993 Act, it was only at the very last moment that the residential qualification was introduced at all, as I recall it. Certainly the introduction of a right to the extension of the lease was at a late stage.
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I must declare an interest. In the block in which I have a flat, there is no hope of enfranchisement because there are not enough residents. The flats are held by people who live abroad and let them. I do not live in the flat myself. If 25 per cent. enables enfranchisement, I presume that that 25 per cent. of people will then own the freehold and the other 75 per cent. of people in the block will become tenants of the 25 per cent. I am not clear on that point.
Lord Selsdon: My Lords, I was surprised by my noble friend when he went down from 50 to 35 years. I assume that that is because he is nearer in age to 35 than I am to 50. I hope that he may continue to surprise everyone because it makes the evening much more interesting, although I should still have preferred 50.
On this issue, as my noble friend pointed out, the residential test came in at the last moment in the 1993 Act. This is a difficult matter. I have worked internationally with many people who own flats in the United Kingdom. They have bought those flats either as an investment, for their retirement or for members of their family who may be at school or university here. In this international world, we are trying to attract foreign investment and we are trying to attract foreigners to live here in this new enterprise centre of Europe. Therefore, I do not think that we should differentiate and I do not think that the residence test is appropriate.
Equally, I believe that 50–50 is the fairest ratio. I do not see how this can be implemented when only a minority qualify. It is a difficult issue. We are talking about money and we should not be talking about strange windfall profits.
It may be that in a block 25 per cent. of people are entitled to enfranchise one day but that then changes the next day. The procedures are quite lengthy and in blocks of flats the average stay is not very long—a matter of a few years or in some cases a few months. The difficulty of determining who is a foreign resident or who is a resident is always difficult when there are trusts and others involved.
The noble Lord, Lord Dubs, thinks that 25 per cent. is the correct figure. I do not believe it matters so long as the majority are entitled to enfranchise. I personally would not have the residence test. I am not prepared to say that I would support 25 per cent. or 35 per cent. I feel sympathy for those people who are in a minority in a block who feel that they should have the right to enfranchise. On the other hand, I could say that it is rather unfortunate but just bad luck that they happen to be there because they have no control over the buying or selling of other flats. We are in a continually moving society. After the passing of this legislation, I hope that we shall stick to a fixed figure on which everyone is agreed.
Lord Carnock: My Lords, the drafting of Section 13 of the 1993 Act is so convoluted that it is extremely difficult for ordinary people to take on board its effect and full implications. The reason for that convolution is that the residence test was introduced at the last minute when the 1993 Act was passed.
I am sure that many professional advisers would have similar difficulties. Section 13 is crucial in the process of leasehold enfranchisement for blocks of flats as it sets

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out the qualifications required for those who sign the initial notice required to start the enfranchisement procedures. A mistake made at that point would invalidate all later steps in the procedure and the existing drafting contains traps for the unwary.
The amendment should make the section and its implications more intelligible. It would not change the existing law to any significant extent, if at all. That is my understanding of it. Under the section as it is, 25 per cent. of people who are resident can initiate the procedures. However, the detailed wording of the proposed amendment, if it is accepted in principle, needs the attention of the parliamentary draftsman. I support the thrust of the amendment.
Lord Strabolgi: My Lords, I also support the amendment. It is, of course, a problem of the minority in a block of flats or building where the majority do not want to enfranchise. While we feel sorry for the lady in Bayswater in her wish to enfranchise when she is not able to do so—indeed, it is always better to enfranchise if you can than to have a long lease—I seem to remember that, in the proceedings on the 1988 Act, we succeeded in gaining a last-minute concession in that respect from the noble Lord, Lord Strathclyde, on behalf of the Government on Third Reading. By way of that concession, people in such an unfortunate position who had a dwindling lease which was decreasing the whole time until, in the end, the period was probably so short that the lease was no longer saleable, were able to extend the lease for a further 90 years. I hasten to remind the noble Baroness, Lady Gardner of Parkes, that that was only obtained at a price. Nevertheless, people were able to do so. Am I correct in my understanding that that is still the position?
Lord Lucas: Yes, my Lords; the noble Lord, Lord Strabolgi, is indeed right. My noble friend Lady Gardner of Parkes also struck me as being right when she questioned whether 25 per cent. of the tenants should, effectively, be able to force the other 75 per cent. to enfranchise. That, I believe, would be the import of the amendment. If I may say so, that is the telling point against proceeding down the road proposed by the noble Lord, Lord Dubs.
The current position is that 66 per cent. of tenants have to say that they wish to enfranchise. Of those, one half have to be qualifying tenants. Therefore, the noble Lord, Lord Dubs, is not seeking to move very far in terms of the percentage that he proposes. At present the percentage is one third who qualify and he is moving it to one quarter. The difference is only a matter of 8 per cent. or so, and, in many cases, it would make very little difference; indeed, perhaps just one tenant. Therefore, I do not believe that we are looking at a large change. However, in terms of the way in which the amendment is phrased, we prefer our current arrangement where the process must at least be initiated by a majority of tenants, even if the question then arises as to what percentage of them need to be qualifying tenants.
As I mentioned at an earlier stage, we are undertaking research into the experience of those seeking to use the enfranchisement legislation. We are not yet persuaded
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that it would be right to relax the qualifying conditions. I would not hold out the hope that the Government would wish to do so in future. But if it does emerge that there is a significant difficulty in preventing what one might describe as "genuine" cases from going ahead—for example, if there is, as in the problem outlined by the noble Lord, Lord Dubs, a real and significant problem to be addressed—then obviously the issue will be examined in the light of our research. I appreciate that that is not the answer that the noble Lord, Lord Dubs, wanted. Nonetheless, I hope that he will feel able to withdraw the amendment.
Lord Dubs: My Lords, I thank the Minister for his response. Indeed, it was not quite the answer that I had hoped for. Nevertheless, I shall read his remarks in Hansard tomorrow and consider what he said. I may then possibly get in touch with him. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lucas Lord Lucas moved Amendment No. 161:
Before Clause 112, insert the following new clause—

MINOR AMENDMENT OF SECTION 1(1)(A) OF LEASEHOLD REFORM ACT 1967
(". In section 1 of the Leasehold Reform Act 1967 (tenants entitled to enfranchisement or extension), in subsection (1)(a)—

(a) in sub-paragraph (i), for the words from "or (where" to "that date," there shall be substituted ", or on or after 1st April 1990 in pursuance of a contract made before that date, and the house and premises had a rateable value at the date of commencement of the tenancy or else at any time before 1st April 1990,", and

(b) in sub-paragraph (ii), for the words from "is entered" to "I990)," there shall be substituted "does not fall within sub-paragraph (i) above,".").

The noble Lord said: My Lords, I spoke to the above amendment when moving Amendment No. 150. I beg to move.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 162:
After Clause 112, insert the following new clause—

COMPENSATION FOR POSTPONEMENT OF TERMINATION IN CONNECTION WITH INEFFECTIVE CLAIMS
(". Schedule (Compensation for postponement in connection with ineffective claims) (which makes, in relation to claims to enfranchisement or an extended lease under Part I of the Leasehold Reform Act 1967 and claims to collective enfranchisement or a new lease under Chapter I or II of Part I of the Leasehold Reform, Housing and Urban Development Act 1993, provision for compensation of the landlord where the claim has prolonged an existing tenancy, but is ineffective) shall have effect.").
The noble Lord said: My Lords, in moving this amendment, I shall, with the leave of the House, speak also to Amendment No. 163. Amendment No. 163 is of inordinate length. I think that the two amendments together occupy about 10 pages, or will occupy about 10 pages in the Bill, if they are accepted. They deal with what is essentially a fairly simple problem.
Noble Lords will observe that Amendment No. 163, long and complex though it is, consists of three parallel sets of provisions: for cases under the Leasehold Reform

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Act 1967; for collective enfranchisement under the Leasehold Reform Housing and Urban Development Act 1993; and for lease renewal under the same Act.
The problem which these amendments seek to resolve concerns the situation where a claim for enfranchisement or a new lease is made shortly before expiry of the existing long lease, usually in the final few months. If the term date of the lease is reached before the claim is settled, the legislation provides for the lease to be continued during the currency of the claim and for three months afterwards.
Where there is no claim for enfranchisement and a long lease expires, most tenants can hold over at or near a market rent. This arrangement is overridden when an enfranchisement claim is in progress, and so the landlord would only receive the ground rent in this period. This is seen to be unfair when the claim is unsuccessful because the landlord is denied the market rent from the original term date which he would have received had there been no claim. This could be a significant sum for high quality properties in desirable locations. We are aware of some persistent abuse along these lines and we do not see the people indulging in that abuse as a particularly deserving or needy class. The present arrangement can be an incentive for tenants to spin out procedures, even if they decide that they cannot go through with the claim, as they will prolong the period during which they pay only ground rent. In addition, the landlord will not have the benefit of a capital sum at the end of the process.
These amendments will apply only when the claim is made within two years of the expiry of the long lease term. Once such a claim has been determined as unsuccessful, the tenant would become liable to pay the landlord the difference between what the tenant would have paid in market rent and what he has actually paid in ground rent over the following period (called the appropriate period in Amendment No. 163). Broadly speaking, this period begins with the earliest date when the long lease could have terminated (this will usually be the date of expiry of the long lease term) and ends with the date when the claim for enfranchisement etcetera ceases to have effect. These amendments would remove any incentive for tenants to prolong the procedures. Provision is also made to cope with cases where there has been a change in the leaseholder's immediate landlord.
The provision will apply to claims made on or after 15th January 1999. This is the changeover date for the statutory regimes for holding over after a long lease expires (that is, Schedule 10 to the Local Government and Housing Act 1989, will replace Part I of the Landlord and Tenant Act 1954). Tenants will therefore have adequate time to prepare and submit a claim before these provisions come into force. I beg to move.
Lord Strabolgi: My Lords, as the noble Lord, Lord Lucas, said, this is of course a whopping amendment, about 12 pages long. I congratulate him on the brief and succinct way in which he has boiled it down to quite a small number of words. Having said that, I must say I am not really happy about it. This
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amendment seems to have been tabled virtually entirely for the benefit of the large estates, mainly in London. I hasten to say that I live on one of them, the Grosvenor Estate. I declare an interest as a committee member of the Belgravia Residents Association. I do not include the estate in any criticism because the Grosvenor Estate is an extremely good landlord and on the whole has a happy relationship with the people who live on the estate. It looks after the estate in a most magnificent way so that it remains one of the most beautiful—probably the most beautiful—parts of London. I hope it will never be broken up in the way that Pimlico was broken up when the previous duke but one died. I must say I would rather live under a duke any time than one of these new fangled property companies or overseas banks.
Having said that, I do not think that all the other estates are equally good in the way that they treat their tenants. Some landlords have for some years pursued a policy of not renewing or extending leases as they reduce in years but instead deliberately let them run out, with enormous resultant hardship, loss and misery to the many long-term tenants living on the estate.
In coming to an assessment of the price to be paid for the freehold or new lease, however, these tenants are profoundly disadvantaged by the fact that they were not granted an extension of lease at an earlier stage and are now coming, through absolutely no fault of their own, to enfranchise or buy a new lease with little equity on their side. The price will be high because they have to start from scratch. For many it will be a difficult business to complete the process. The whole undertaking is, therefore, fraught with anxiety and uncertainty for some tenants on some of the estates of London.
If this leasehold enfranchisement gets under way—and, I believe, collective commonhold is also on the far horizon—I hope that the Government will be able to fulfil what they promise when an election comes. I suppose that next spring they will promise it all over again. In the meantime, I hope that they will try to get the issue resolved so that we do not have to live with these large estates for much longer.
I do not believe that because someone owned a few fields 300 years ago they should be able to continue to let property on leasehold for 100 or 200 years, gaining it back after that period. I do not believe that that situation should continue until the end of time. I hope that one day this Government or a Labour Government will bring that situation to an end.
9.30 p.m.
Lord Dubs: My Lords, I have listened with interest and I largely agree with my noble friend Lord Strabolgi. I also listened to what the Minister said. Given the length of the amendment and the fact that it is marked with a star—although it was put down a few days ago, it was changed yesterday and we have this version today—it is difficult to engage with the details of the amendment and to make a proper assessment. The Government may have had good reason for bringing forward such a large amendment so late. It runs to some

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10 pages or so and is very complicated. The only information that I have received makes me concerned about its possible effects: that it will not be helpful to some people living on some larger estates.
Having said that, I wish to protest that we have been given such a complicated amendment without the benefit of the Government's view until a few moments ago. I appreciate that the Minister was succinct and clear in what he said. I sought to relate that to the amendment. It is rather difficult. I am not sure that we are in the best position to consider such a complicated amendment at Report stage when we cannot engage in any further discussion beyond one intervention in the debate.
I express a reservation about how the provision has been handled. It makes the position very difficult for us.
Baroness Hamwee: My Lords, I, too, have a reservation about this. It seems to me that if one has a cut-off period, whatever the period is, one plays the game by the rules set. If one happens to come close to the edge, costs and so on will fall where they fall.
Lord Lucas: My Lords, I appreciate what the noble Lord, Lord Strabolgi, said both in his praise for the quality of some of the London estates and the fact that they give us some of the most pleasant environments of any European city; and what he said about the future and the importance of people being able to own their own homes and do as they wish with them. The two are to some extent mutually exclusive. As the noble Lord recognises, we have moved some way from one towards the other over the past few years. At some stage perhaps some government will move further.
I agree with the noble Lord, Lord Dubs, that the amendments are tabled much later than I should like to have seen. I assure the noble Lord that the recent changes have been minor. We have not made major changes to the amendment. Nevertheless, it is a long amendment which contains many references to other legislation. It needs much examination and consideration. I apologise for the difficulty under which it will place the noble Lord in seriously criticising it. If he has any problems with the wording, I can assure him that my time and that of my officials is at his disposal to go through it. That is the best I can do in the time that remains for us.
That said, it is a desirable change, given the length of time that we leave before the provision comes into effect. There will be plenty of time for those nearing the end of their leases to make the necessary arrangements to begin the enfranchisement procedure without making themselves liable for paying what in some cases may be quite hefty rent for the year or two it takes the enfranchisement procedure to go through if they fail at the end to raise the necessary capital to buy the freehold.
I understand the picture painted by the noble Lord, Lord Strabolgi, but, given that we are leaving it until 1999 for the legislation to become effective, there will be plenty of time for people to take the necessary action. It is worthwhile making the change to prevent what shows signs of becoming a tiresome abuse.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 163:
After Schedule 10, insert the following new schedule—

COMPENSATION FOR POSTPONEMENT IN CONNECTION WITH INEFFECTIVE CLAIMS
Claims under Part I of the Leasehold Reform Act 1967
1.—(1) After section 27 of the Leasehold Reform Act 1967 there shall be inserted—
"Compensation for postponement of termination in connection with ineffective claims.
27A.—(1) This section applies where, on or after 15th January 1999—

(a) a tenant of any property makes a claim to acquire the freehold or an extended lease of it, and

(b) the claim is not made at least two years before the term date of the tenancy in respect of which the claim is made ("the existing tenancy").

(2) The tenant shall be liable to pay compensation if the claim is not effective and—

(a) the making of the claim caused a notice served under paragraph 4(1) of Schedule 10 to the Local Government and Housing Act 1989 to cease to have effect and the date on which the claim ceases to have effect is later than four months before the termination date specified in the notice,

(b) the making of the claim prevented the service of an effective notice under paragraph 4(1) of Schedule 10 to the Local Government and Housing Act 1989 (but did not cause a notice served under that provision to cease to have effect) and the date on which the claim ceases to have effect is a date later than six months before the term date of the tenancy, or

(c) the existing tenancy is continued under paragraph 3(1) of Schedule 3 to this Act by virtue of the claim.

(3) Compensation under subsection (2) above shall become payable at the end of the appropriate period and be the right of the person who is the tenant's immediate landlord at that time.
(4) The amount which the tenant is liable to pay under subsection (2) above shall be equal to the difference between—

(a) the rent for the appropriate period under the existing tenancy, and

(b) the rent which might reasonably be expected to be payable for that period were the property to which the existing tenancy relates let for a term equivalent to that period on the open market by a willing landlord on the following assumptions—

(i) that no premium is payable in connection with the letting,

(ii) that the letting confers no security of tenure, and

(iii) that, except as otherwise provided by this paragraph, the letting is on the same terms as the existing tenancy.

(5) For the purposes of subsection (2) above, a claim to acquire the freehold or an extended lease is not effective if it ceases to have effect for any reason other than—

(a) the acquisition in pursuance of the claim of the interest to which it relates, or

(b) the lapsing of the claim under any provision of this Act excluding the tenant's liability for costs.

(6) For the purposes of subsections (3) and (4) above, the appropriate period is—

(a) in a case falling within paragraph (a) of subsection (2) above, the period—

(i) beginning with the termination date specified in the notice mentioned in that paragraph, and

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(ii) ending with the earliest date of termination which could have been specified in a notice under paragraph 4(1) of Schedule 10 to the Local Government and Housing Act 1989 served immediately after the date on which the claim ceases to have effect, or, if the existing tenancy is terminated before then, with the date of its termination;

(b) in a case falling within paragraph (b) of subsection (2) above, the period—

(i) beginning with the later of six months from the date on which the claim is made and the term date of the existing tenancy, and

(ii) ending six months after the date on which the claim ceases to have effect, or, if the existing tenancy is terminated before then, with the date of its termination; and

(c) in a case falling within paragraph (c) of subsection (2) above, the period for which the existing tenancy is continued under paragraph 3(1) of Schedule 3 to this Act.

(7) For the purposes of this section—

(a) references to a claim to acquire the freehold or an extended lease shall be taken as references to a notice of a person's desire to acquire it under Part I of this Act and as including a claim made by a tenant not entitled to acquire it, and

(b) references to the date on which a claim ceases to have effect shall, in relation to a notice which is not a valid notice, be taken as references to the date on which the notice is set aside by the court or withdrawn or would, if valid, cease to have effect, that date being taken, where the notice is set aside, or would (if valid) cease to have effect, in consequence of a court order, to be the date when the order becomes final.

Modification of section 27A where change in immediate reversion.
27B.—(1) Where a tenant's liability to pay compensation under section 27A above relates to a period during which there has been a change in the interest immediately expectant on the determination of his tenancy, that section shall have effect with the following modifications.
(2) For subsections (3) and (4) there shall be substituted—
"(3) Compensation under subsection (2) above shall become payable at the end of the appropriate period and there shall be a separate right to compensation in respect of each of the interests which, during that period, have been immediately expectant on the determination of the existing tenancy.
(4) Compensation under subsection (2) above shall—

(a) in the case of the interest which is immediately expectant on the determination of the existing tenancy at the end of the appropriate period, be the right of the person in whom that interest is vested at that time, and

(b) in the case of an interest which ceases during the appropriate period to be immediately expectant on the determination of the existing tenancy, be the right of the person in whom the interest was vested immediately before it ceased to be so expectant.

(4A) The amount which the tenant is liable to pay under subsection (2) above in respect of any interest shall be equal to the difference between—

(a) the rent under the existing tenancy for the part of the appropriate period during which the interest was immediately expectant on the determination of that tenancy, and

(b) the rent which might reasonably be expected to be payable for that part of that period were the property to which the existing tenancy relates let for a term
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equivalent to that part of that period on the open market by a willing landlord on the following assumptions—

(i) that no premium is payable in connection with the letting,

(ii) that the letting confers no security of tenure, and

(iii) that, except as otherwise provided by this paragraph, the letting is on the same terms as the existing tenancy."

(3) In subsection (6), for "(3) and (4)" there shall be substituted "(3) to (4A)"."
(2) In section 21(1) of that Act (matters to be determined by leasehold valuation tribunal), after paragraph (c) there shall be inserted—
"(ca) the amount of any compensation payable under section 27A;".
Claims under Chapter 1 of Part 1 of the Leasehold Reform, Housing and Urban Development Act 1993
2.—(1) After section 37 of the Leasehold Reform, Housing and Urban Development Act 1993 there shall be inserted—
"Landlord's right to compensation in relation to ineffective claims.
Compensation for postponement of termination in connection with ineffective claims.
37A.—(l) This section applies where a claim to exercise the right to collective enfranchisement in respect of any premises is made on or after 15th January 1999 by tenants of flats contained in the premises and the claim is not effective.
(2) A person who is a participating tenant immediately before the claim ceases to have effect shall be liable to pay compensation if—

(a) the claim was not made at least two years before the term date of the lease by virtue of which he is a qualifying tenant ("the existing lease"), and

(b) any of the conditions mentioned in subsection (3) is met.

(3) The conditions referred to above are—

(a) that the making of the claim caused a notice served under paragraph 4(1) of Schedule 10 to the Local Government and Housing Act 1989 in respect of the existing lease to cease to have effect and the date on which the claim ceases to have effect is later than four months before the termination date specified in the notice,

(b) that the making of the claim prevented the service of an effective notice under paragraph 4(1) of Schedule 10 to the Local Government and Housing Act 1989 in respect of the existing lease (but did not cause a notice served under that provision in respect of that lease to cease to have effect) and the date on which the claim ceases to have effect is a date later than six months before the term date of the existing lease, and

(c) that the existing lease has been continued under paragraph 6(1) of Schedule 3 by virtue of the claim.

(4) Compensation under subsection (2) shall become payable at the end of the appropriate period and be the right of the person who is the tenant's immediate landlord at that time.
(5) The amount which a tenant is liable to pay under subsection (2) shall be equal to the difference between—

(a) the rent for the appropriate period under the existing lease, and

(b) the rent which might reasonably be expected to be payable for that period were the property to which the existing lease relates let for a term equivalent to that period on the open market by a willing landlord on the following assumptions—

(i) that no premium is payable in connection with the letting,

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(ii) that the letting confers no security of tenure, and

(iii) that, except as otherwise provided by this paragraph, the letting is on the same terms as the existing lease.

(6) For the purposes of subsections (4) and (5), the appropriate period is—

(a) in a case falling within paragraph (a) of subsection (3), the period—

(i) beginning with the termination date specified in the notice mentioned in that paragraph, and

(ii) ending with the earliest date of termination which could have been specified in a notice under paragraph 4(1) of Schedule 10 to the Local Government and Housing Act 1989 in respect of the existing lease served immediately after the date on which the claim ceases to have effect, or, if the existing lease is terminated before then, with the date of its termination;

(b) in a case falling within paragraph (b) of subsection (3), the period—

(i) beginning with the later of six months from the date on which the claim is made and the term date of the existing lease, and

(ii) ending six months after the date on which the claim ceases to have effect, or, if the existing lease is terminated before then, with the date of its termination; and

(c) in a case falling within paragraph (c) of subsection (3), the period for which the existing lease is continued under paragraph 6(1) of Schedule 3.

(7) In the case of a person who becomes a participating tenant by virtue of an election under section 14(3), the references in subsections (3)(a) and (b) and (6)(b)(i) to the making of the claim shall be construed as references to the making of the election.
(8) For the purposes of this section—

(a) references to a claim to exercise the right to collective enfranchisement shall be taken as references to a notice given, or purporting to be given (whether by persons who are qualifying tenants or not), under section 13,

(b) references to the date on which a claim ceases to have effect shall, in the case of a claim made by a notice which is not a valid notice under section 13, be taken as references to the date on which the notice is set aside by the court or is withdrawn or would, if valid, cease to have effect or be deemed to have been withdrawn, that date being taken, where the notice is set aside, or would, if valid, cease to have effect, in consequence of a court order, to be the date when the order becomes final, and

(c) a claim to exercise the right to collective enfranchisement is not effective if it ceases to have effect for any reason other than—

(i) the application of section 23(4), 30(4) or 31(4),

(ii) the entry into a binding contract for the acquisition of the freehold and other interests falling to be acquired in pursuance of the claim, or

(iii) the making of an order under section 24(4)(a) or (b) or 25(6)(a) or (b) which provides for the vesting of those interests.

Modification of section 37A where change in immediate reversion.
37B.—(1) Where a tenant's liability to pay compensation under section 37A relates to a period during which there has been a change in the interest immediately expectant on the determination of his lease, that section shall have effect with the following modifications.
(2) For subsections (4) and (5) there shall be substituted—
"(4) Compensation under subsection (2) shall become payable at the end of the appropriate period and there shall be a separate right to compensation in respect of each of the interests which, during that period, have been immediately expectant on the determination of the existing lease.
(5) Compensation under subsection (2) above shall—

(a) in the case of the interest which is immediately expectant on the determination of the existing lease at the end of the appropriate period, be the right of the person in whom that interest is vested at that time, and

(b) in the case of an interest which ceases during the appropriate period to be immediately expectant on the determination of the existing lease, be the right of the person in whom the interest was vested immediately before it ceased to be so expectant.

(5A) The amount which the tenant is liable to pay under subsection (2) above in respect of any interest shall be equal to the difference between—

(a) the rent under the existing lease for the part of the appropriate period during which the interest was immediately expectant on the determination of that lease, and

(b) the rent which might reasonably be expected to be payable for that part of that period were the property to which the existing lease relates let for a term equivalent to that part of that period on the open market by a willing landlord on the following assumptions—

(i) that no premium is payable in connection with the letting,

(ii) that the letting confers no security of tenure, and

(iii) that, except as otherwise provided by this paragraph, the letting is on the same terms as the existing lease."

(3) In subsection (6), for "(4) and (5)" there shall be substituted "(4) to (5A)"."
(2) In section 91(2) of that Act (matters to be determined by leasehold valuation tribunal), after paragraph (c) there shall be inserted—
"(ca) the amount of any compensation payable under section 37A;".
Claims under Chapter II of Part I of the Leasehold Reform, Housing and Urban Development Act 1993
3.—(1) After section 61 of the Leasehold Reform, Housing and Urban Development Act 1993 there shall be inserted—
"Landlord's right to compensation in relation to ineffective claims.
Compensation for postponement of termination in connection with ineffective claims.
61A.—(1) This section applies where, on or after 15th January 1999—

(a) a tenant of a flat makes a claim to acquire a new lease of the flat, and

(b) the claim is not made at least two years before the term date of the lease in respect of which the claim is made ("the existing lease").

(2) The tenant shall be liable to pay compensation if the claim is not effective and—

(a) the making of the claim caused a notice served under paragraph 4(1) of Schedule 10 to the Local Government and Housing Act 1989 to cease to have effect and the date on which the claim ceases to have effect is later than four months before the termination date specified in the notice,

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(b) the making of the claim prevented the service of an effective notice under paragraph 4(1) of Schedule 10 to the Local Government and Housing Act 1989 (but did not cause a notice served under that provision to cease to have effect) and the date on which the claim ceases to have effect is a date later than six months before the term date of the existing lease, or

(c) the existing lease is continued under paragraph 5(1) of Schedule 12 by virtue of the claim.

(3) Compensation under subsection (2) shall become payable at the end of the appropriate period and be the right of the person who is the tenant's immediate landlord at that time.
(4) The amount which the tenant is liable to pay under subsection (2) shall be equal to the difference between—

(a) the rent for the appropriate period under the existing lease, and

(b) the rent which might reasonably be expected to be payable for that period were the property to which the existing lease relates let for a term equivalent to that period on the open market by a willing landlord on the following assumptions—

(i) that no premium is payable in connection with the letting,

(ii) that the letting confers no security of tenure, and

(iii) that, except as otherwise provided by this paragraph, the letting is on the same terms as the existing lease.

(5) For the purposes of subsections (3) and (4), the appropriate period is—

(a) in a case falling within paragraph (a) of subsection (2), the period—

(i) beginning with the termination date specified in the notice mentioned in that paragraph, and

(ii) ending with the earliest date of termination which could have been specified in a notice under paragraph 4(1) of Schedule 10 to the Local Government and Housing Act 1989 served immediately after the date on which the claim ceases to have effect, or, if the existing lease is terminated before then, with the date on which it is terminated;

(b) in a case falling within paragraph (b) of subsection (2), the period—

(i) beginning with the later of six months from the date on which the claim is made and the term date of the existing lease, and

(ii) ending six months after the date on which the claim ceases to have effect, or, if the existing lease is terminated before then, with the date of its termination; and

(c) in a case falling within paragraph (c) of subsection (2), the period for which the existing lease is continued under paragraph 5(1) of Schedule 12.

(6) For the purposes of subsection (2), a claim to a new lease is not effective if it ceases to have effect for any reason other than—

(a) the application of section 47(1) or 55(2), or

(b) the acquisition of the new lease in pursuance of the claim.

(7) For the purposes of this section—

(a) references to a claim to acquire a new lease shall he taken as references to a notice given, or purporting to be given (whether by a qualifying tenant or not), under section 42, and

(b) references to the date on which a claim ceases to have effect shall, in the case of a claim made by a notice which is not a valid notice under section 42, be taken as references to the date on which the notice is set aside by the court or is withdrawn or would, if valid,
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cease to have effect or be deemed to have been withdrawn, that date being taken, where the notice is set aside, or would, if valid, cease to have effect, in consequence of a court order, to be the date when the order becomes final.

Modification of section 61A where change in immediate reversion.
61B.—(1) Where a tenant's liability to pay compensation under section 61A relates to a period during which there has been a change in the interest immediately expectant on the determination of his lease, that section shall have effect with the following modifications.
(2) For subsections (3) and (4) there shall be substituted—
"(3) Compensation under subsection (2) shall become payable at the end of the appropriate period and there shall be a separate right to compensation in respect of each of the interests which, during that period, have been immediately expectant on the determination of the existing lease.
(4) Compensation under subsection (2) above shall—

(a) in the case of the interest which is immediately expectant on the determination of the existing lease at the end of the appropriate period, be the right of the person in whom that interest is vested at that time, and

(b) in the case of an interest which ceases during the appropriate period to be immediately expectant on the determination of the existing lease, be the right of the person in whom the interest was vested immediately before it ceased to be so expectant.

(4A) The amount which the tenant is liable to pay under subsection (2) above in respect of any interest shall be equal to the difference between—

(a) the rent under the existing lease for the part of the appropriate period during which the interest was immediately expectant on the determination of that lease, and

(b) the rent which might reasonably be expected to be payable for that part of that period were the property to which the existing lease relates let for a term equivalent to that part of that period on the open market by a willing landlord on the following assumptions—

(i) that no premium is payable in connection with the letting,

(ii) that the letting confers no security of tenure, and

(iii) that, except as otherwise provided by this paragraph, the letting is on the same terms as the existing lease."

(3) In subsection (5), for "(3) and (4)" there shall be substituted "(3) to (4A)"."
(2) In section 91(2) of that Act (matters to be determined by leasehold valuation tribunal), after paragraph (c) there shall be inserted—
"(cb) the amount of any compensation payable under section 61A;".").
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 164:
After Clause 114, insert the following new clause—

LEASEHOLD VALUATION TRIBUNALS: PRE-TRIAL REVIEW
(".—(1) Procedure regulations may make provision in relation to proceedings before a leasehold valuation tribunal—

(a) for the holding of a pre-trial review, on the application of a party to the proceedings or of the tribunal's own motion; and

(b) for the exercise of the functions of the tribunal in relation to, or at, a pre-trial review by a single member who is qualified to exercise them.

(2) In subsection (1) "procedure regulations" means regulations under section 74(1)(b) of the Rent Act 1977, as that section applies in relation to leasehold valuation tribunals.
(3) For the purposes of subsection (1)(b)—

(a) a "member" means a member of the panel provided for in Schedule 10 to that Act, and

(b) a member is qualified to exercise the functions referred to if he was appointed to that panel by the Lord Chancellor.").

The noble Lord said: My Lords, this new clause concerns the procedures used by leasehold valuation tribunals. From the debate on the Bill, the House will be familiar with the role of the tribunals under the existing legislation in dealing with leasehold enfranchisement and under this Bill in dealing with service charge disputes and with the appointment of a manager.
The purpose of the new clause is to allow pre-trial reviews. Mrs. Susan Lloyd, the president of the London Rent Assessment Panel, from which leasehold valuation tribunals are drawn, has suggested that it would be extremely useful if, when dealing with complex cases, a preliminary hearing might be held, under a single member of the tribunal, to clear the ground in advance of the main hearing. She has suggested this in the light of experience in handling cases in disputes over the price to be paid for flats and houses being enfranchised. A pre-trial hearing would allow the parties to indicate to each other, and to the tribunal, the points on which they are agreed and the points on which they disagree, and to indicate broadly the evidence which they will be bringing forward. This will allow each of the parties to be better prepared, and to concentrate on the issues which are in dispute. This should save time and effort both before the main hearing and at the hearing itself. For example, it is not uncommon for parties to ask for an adjournment to prepare a response to unanticipated evidence.
There are often delays in setting up leasehold valuation tribunal hearings. These are primarily caused by the difficulty of finding a date convenient to the parties. A pre-trial review would provide a better opportunity to identify the length and complexity of a case and to negotiate on the spot a firm date for the hearing to begin.
Our informal discussions suggest that both landlords and leaseholders are likely to welcome this provision as a helpful step towards streamlining tribunal procedures—something which will save time and money, as noble Lords appreciate from earlier discussions. I therefore commend the new clause. I beg to move.
Lord Dubs: My Lords, on the face of it, the provision seems sensible. I wish to ask the Minister one question, going back to the charges made for applications to leasehold valuation tribunals. Will he say a little more about the implications of a pre-trial review? He may well say that it will shorten the number of days the tribunal sits and to that extent the daily charge of £2,000 or whatever it is will be reduced. The charge perhaps will not be reduced, but the total sum of the daily charges will be less because there will be fewer hearing days. Will the pre-trial review be a part of the process
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that has to be paid for? Or will there be some other way in which people can, as it were, have a pre-trial review before they start incurring charges?
Lord Lucas: My Lords, I will correct my statement in a letter if I am wrong, but my understanding is that the Bill constrains us to recover costs as a whole. How we charge for particular elements of the service—for example, a pre-trial review—is to be determined through consultation and discussion after the Bill receives Royal Assent. As yet, I know of no proposals, particularly on such a new element as this, as to how charging should be undertaken.
On Question, amendment agreed to.
Baroness Hamwee Baroness Hamwee moved Amendment No. 164A:
After Clause 114, insert the following new clause—

ASSIGNMENT OF SHORT TENANCY OF DWELLING BY PAROL.
(".—(1) Section 54 of the Law of Property Act 1925 (creation of interests in land by parol) is amended as follows.
(2) For subsection (2) substitute—
"(2) Nothing in the foregoing provisions of this Part of this Act shall affect the creation or assignment by parol of leases of dwelling-houses taking effect in possession for a term not exceeding three years (whether or not the lessee is given power to extend the term).
(3) Nothing in the foregoing provisions of this Part of this Act shall affect the creation by parol of leases not falling within subsection (2) above taking effect in possession for a term not exceeding three years (whether or not the lessee is given power to extend the term) at the best rent which can be reasonably obtained." ").
The noble Baroness said: My Lords, this amendment may appear more mysterious than it is. In principle, the creation and assignment of every lease or tenancy has to be by deed. Section 54(2) of the Law of Property Act 1925 contains an exception relating to short leases.
Assignment by way of exchange is a right of secure tenants and tenants of housing associations. Comments made during the course of the Bill suggest that noble Lords would probably applaud the fact that in such situations consultation with a lawyer is rare. It is certainly the case that lawyers rarely become involved. It must be very rare for assignments to take place by deed. If they are not executed by way of deed, their validity must be in question.
Fairly recently, alterations to the formalities required to execute documents by way of deed have been made. Even companies were not wholly observing the formalities. The physical aspects of impressing a deed and so on are not now required. It is expecting quite a lot of tenants in this kind of situation to observe all the formalities.
Where an assignment takes place on family break-up a similar situation arises. There is no exception for assignments to be other than by deed, even though the grant of the tenancy need not be. That was drawn to my attention; and I understand that some comments were made in the Court of Appeal five years ago. However, it still appears to be the case that assignments are required to be by deed. Speaking as a lawyer, I am more than happy to advocate circumstances in which people

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do not need to involve lawyers and to suggest a change in the formalities required as set out in this amendment. I beg to move.
Earl Ferrers: My Lords, the noble Lord, Lord Dubs, complained that Amendment No. 163 was a starred amendment and appeared on the Marshalled List only today. Curiously enough, this amendment is also starred, which indicates that it, too, appeared on the Marshalled List only today. I grant that the amendment tabled by the noble Baroness, Lady Hamwee, does not run to 10 pages, as mine did. Her amendment involves a modest single clause. When I examined it, I thought that she might be aiming—
Lord Dubs: My Lords, perhaps I may intervene. There is a world of difference between a very long government amendment to a government Bill which has been going through both Houses of Parliament for months and an amendment tabled fairly late by a Member of an Opposition party. With respect, there is no comparison.
Earl Ferrers: My Lords, I can assure the noble Lord, Lord Dubs, that there is a comparison; the comparison is that they both appeared on the Order Paper today for the first time. I agree that the government amendment was a long one, but for reasons explained by my noble friend it had to be.
I was simply pointing out that the amendment of the noble Baroness appeared today and we have had to consider what it meant and so forth. I am not complaining. When we looked at the amendment I thought the noble Baroness was aiming to reverse the situation. She spoke of a divorce settlement in which a husband gave an oral undertaking to transfer the tenancy to his wife but that nothing was put down in writing and the wife was judged to have no defence to possession proceedings.
I have great sympathy for anyone who is forced to leave their home simply because an assignment was made orally rather than in writing. In practice, many short-term leases cannot be assigned because it is prohibited by the terms of the tenancy agreement or the statute. Not only that, but since the introduction of assured shorthold tenancies there are few advantages to the tenant in being able to assign the tenancy.
I have difficulty with the proposal that a tenant might be assigned a tenancy on the basis of an oral agreement. In most cases where assignment is allowed the landlord's agreement is required. The amendment would increase uncertainty in this area of the law and it may lead to an increase in the number of cases whereby a tenant unwittingly tries to assign the tenancy where the law or the terms of the tenancy specifically prevent that or where the landlord has not given his consent. That may well be good for the legal profession, of which the noble Baroness is a distinguished member, but it is unlikely to be good for the tenants.
The landlord should also be entitled to know who the tenant is. There is a strong case for requiring leases to be assigned in writing. But there are dangers in rushing
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to change—in this case 24 hours—laws which have been settled and go back hundreds of years. I therefore hope that the noble Baroness will consider withdrawing her amendment.
Baroness Hamwee: My Lords, I am grateful to the noble Lord, Lord Dubs, for springing to my defence. One of the worlds of difference between the two sides of the House is that the House by its nature is an amateur House and the part-time nature of our role has its own problems. However, we should appreciate the contributions made by those observing the workings of this House and another place from outside and who bring matters to our attention, which is precisely what happened here. In fact, I understand that the department had a copy of the clause and the notes from which I spoke on Monday. I accept that that is not very long when one looks at the amendment in the context of the working of the Law of Property Act 1925—I am not so sure about hundreds of years.
I am not convinced that what the Minister said went to the point of the requirement of the deed. However, I accept that this is something that has been established, though, as I said, probably not working very well, for quite a long time. It is not the sort of thing one would want to alter on the hoof. To that extent, I take the slap over the wrist that came from the Minister.
Earl Ferrers: My Lords, perhaps I can explain to the noble Baroness that I did not want to give her a slap over the wrist. It was a gentle nudge because the noble Lord, Lord Dubs, gave me a gentle nudge a little while earlier.
When I said that the statute goes back hundreds of years, I meant that the current provisions of assignment of land and property go back 300 years to the Statute of Frauds of 1677. That is why I thought it may be a little rushed to alter that.
Baroness Hamwee: My Lords, I accept that this should not be done on the hoof. When there is a circle of us, as soon as someone gives a nudge that nudge will go round and round. I shall not over-react for fear of keeping the nudge going. Nevertheless, it is a serious point. This is not the opportunity to address it, but I hope that the department will take the point seriously and, if it believes that it is worth looking at the law again to bring it up to date, that it will find another opportunity to do so. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Dubs Lord Dubs moved Amendment No. 165:
Before Clause 115, insert the following new clause—

EXCEPTIONAL LEAVE TO REMAIN: BACKDATING OF ENTITLEMENT TO BENEFIT
(" . Any asylum seeker who is granted exceptional leave to remain shall be entitled to—

(a) housing benefit, and

(b) council tax benefit,

backdated to the date of their asylum application.").
The noble Lord said: My Lords, I realised that the time was close when this amendment was to be considered when I saw the noble Lord, Lord Mackay of Ardbrecknish, take his place on the Government Front Bench.
I do not apologise to the House for yet again raising the question of asylum seekers and refugees, although I agree that in two Bills going through Parliament simultaneously we have had a lot of debate on the issue. The reason for this amendment is very simple. The Government have already agreed that if an asylum seeker is granted asylum status, he shall be entitled to housing benefit and council tax benefit back-dated to the date of the asylum application. It is clearly an anomaly that that provision has not been extended to asylum seekers who are granted exceptional leave instead of full refugee status.
My understanding is that in every other respect as regards entitlement to benefits and all the other provisions that we discussed during the passage of the Asylum and Immigration Bill and the earlier stage of this Bill, asylum seekers granted refugee status and those granted exceptional leave to remain have been treated in a similar way. Therefore, it is clearly an anomaly that they have been missed out in this respect. I am confident that the Government will feel that this is the right occasion on which to rectify that anomaly. I beg to move.
The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, as the noble Lord rightly says, we have discussed these matters on a fair number of occasions during the course of both this Bill and the Asylum and Immigration Bill, which is now on its way to the other place. This amendment is interesting in that it introduces an entirely new concept into the income-related benefits. It actually provides that someone should be entitled to benefit simply by virtue of having a particular status. If a United Kingdom citizen seeks housing benefit or council tax benefit, he has to show a liability for rent or council tax and then that he fulfils and satisfies all the other entitlement conditions which apply to those benefits, including income.
A person with exceptional leave to remain under this amendment would gain entitlement simply by having exceptional leave to remain. That would be a most curious way to proceed. I understand that noble Lords opposite seek to refer to our proposals that those granted refugee status should be able to claim retrospective payments to cover periods when they have been excluded from income-related benefits. They seek to extend that proposal to cover those granted exceptional leave to remain. Even if the noble Lord's amendment was couched in more technically correct terms, I am sorry to say to him that it would still be unacceptable.
Perhaps I may explain the rationale which underpins our proposal to make retrospective payments available to refugees. The Government's policy on benefits for asylum seekers, which we shall seek to restore in the Asylum and Immigration Bill, aims to reduce incentives for people to make unfounded claims for asylum. To that end we shall restrict benefits to those who have
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claimed on arrival in the United Kingdom and who have not received a negative decision from the Home Office—in other words, we shall insist that in order to gain benefits under the United Kingdom system, people will have to claim at the port of arrival. If, after consideration, the Home Office decided that they were not eligible for consideration as asylum seekers, they would not then be able to claim benefit during the time they waited for their appeal to be considered.
As your Lordships know, the House took a slightly different view on this matter by a small number, a fortnight ago. Those people who apply at the port or within three days, according to the amendment carried against my advice, would receive benefit not merely up until the point when the Home Office made a decision, but actually beyond that point and during all the time they were awaiting an appeal decision.
Your Lordships will know that my right honourable friend Peter Lilley, the Secretary of State for Social Security, has indicated that it is the Government's intention to ask the other place to overturn that particular amendment which your Lordships passed.
But in a minority of cases, where an asylum seeker is found to be a genuine refugee, we think it is reasonable that they should, in effect, be retrospectively exempted from the measures designed to dissuade the bogus from claiming. Therefore, we proposed and inserted in the Asylum and Immigration Bill that refugees should be eligible for retrospective payments covering periods during which the benefit regulations had previously excluded them from benefit.
That would mean that those people who claimed in country and who were subsequently found to be genuine refugees would be able to have retrospective payments and those who appealed and were eventually found to be genuine—three out of every 100, as it turns out—would be able to have retrospective payments.
This, as your Lordships will recall, puts refugees on a similar footing to United Kingdom nationals who lodge a claim against refusal of benefit. During the appeal no benefits are paid, but if the appeal is successful benefit can be backdated.
We do not accept—as I have explained to your Lordships before—that people who are granted exceptional leave to remain should be treated in the same way. Refugees are accorded specific rights under the UN convention. We ensure that those rights can be exercised. Exceptional leave to remain is a discretionary concession made by the UK Government over and above its obligations under the UN convention. It seems to me entirely reasonable that a person granted exceptional leave to remain should be paid the benefit from the date that the status is awarded.
Tonight, I can see no case for making such payments retrospective to an earlier period. I have been over this argument before. I appreciate that the noble Lord, Lord Dubs, feels that I am making a rather narrow distinction between refugee status and exceptional leave, but we have argued it before and I am not convinced that I should change my position. The position of a refugee—somebody who is granted refugee status—is

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quite different from that of a person with exceptional leave to remain. It is only right that we retain that distinction in that we will pay retrospective benefit to those people who are granted refugee status but that we will not pay it to those granted exceptional leave to remain.
I appreciate that the noble Lord will find my reply disappointing but I suspect he will also find it predictable. I hope that he will feel able to withdraw his amendment.
Lord Dubs: My Lords, I find it disappointing but I am bound to say I have more faith in the Minister than to suggest that I predicted his answer. I appreciate that technically the amendment is somewhat defective, but the Minister directed most of his arguments against the principle. I would simply say this. This is the only occasion on which the Government have made a distinction between benefit entitlement on the part of refugees—people given refugee status—compared with those given exceptional leave to remain.
We are talking of very small numbers because if people are going to be given ELR they are normally given it in response to their asylum claim. Only in isolated cases are they refused asylum. They then appeal and, although refused asylum status, they are granted exceptional leave to remain. It does happen, but we are talking of a handful of cases. I should have thought that the principle was clear—and the sums of money are tiny. We are making a distinction between two groups of people who, in all other respects, are allowed to stay in this country and who ought to have the same rights. It seems to me that the Government are being a bit niggardly about this. It would have been generous to say, "Yes, this is an anomaly", and to do something about it. I am dismayed that the Government do not see it that way. Reluctant as I am to accept something like that, I do not think that I have any choice but to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
10 p.m.
Clause 115 [Payment of housing benefit to third parties]:
Lord Dubs Lord Dubs moved Amendment No. 166:
Page 79, line 30, at end insert—
(" "(5A) As it has effect in relation to housing benefit subsection (1)(h) above shall require a request for information or evidence by the determining authority to be made in such a manner and within such a target period as may be prescribed."").
The noble Lord said: My Lords, this amendment too relates to housing benefit, something that preoccupied us earlier today. The purpose of the amendment is to provide for regulations to ensure that, when applications for housing benefit are made, requests for information and evidence in relation to that housing benefit are made within a set or specified target period. We are concerned that delays in the determination of claims for housing benefit are a significant factor causing arrears of rent
406
and even homelessness, despite regulations requiring local authorities to make payment within 14 days of receiving full information on the claim.
One cause of the delays is the current lack of any time limit on the period for requesting additional information. The amendment seeks to tackle that by introducing target periods for time limits for requests by the determining authority for additional information and evidence.
Perhaps I may give one or two examples from the citizens advice bureaux. A CAB in Norfolk reported that a single parent moved into a housing association house in July and claimed benefit. By September no payment had been made and she received a notice to quit. In October she was threatened with court action for arrears of £683.88. Benefit was finally paid after 11 weeks. The housing benefit department claimed that it had been waiting for information from the Benefits Agency, but there was still a further month's delay even after the CAB sent it a copy of the Benefits Agency letter confirming the client's income. Those are long delays. If there were targets for getting the information, such delays could be significantly shortened.
Perhaps I may give another example, again from a citizens advice bureau but in this case from Devon. It reported that a client waited eight weeks for his claim to be processed. He had been served a notice to quit for rent arrears. When the CAB contacted the department, it was told that there was a backlog and that the claim could not be speeded up.
I think that having a time limit would be helpful. It is quite common to set targets for various authorities so that they can meet adequate standards of sensitivity for their customers. It would be appropriate for the Secretary of State to have the powers to set targets for the collection of such information. It is a simple point. I beg to move.
Baroness Hamwee: My Lords, I support this amendment, recognising that in doing so I am supporting some centralisation of a local provision. Nevertheless, I support the amendment for one particular reason: the importance to the smooth functioning of the private rented sector of the housing benefit system. My own experience, which I do not think is unusual, is of potential landlords refusing to make properties available to tenants on housing benefit because of their fears about problems in terms of getting paid—and getting paid promptly. It is important to keep properties available. That is why I believe the amendment is important.
Lord Mackay of Ardbrecknish: My Lords, the noble Lord, Lord Dubs, has come up with a variation of an earlier amendment which we debated in Committee and which would have required local authorities to request all the information and evidence they would ever need within seven or 10 days of the date of a claim for housing benefit. Now, the noble Lord is suggesting that local authorities must request the information and evidence they need within a "target" period. Regulations would be required to lay down the length of this period. But how long would that period be? Whatever the length

407
of the period, the real question is: would this amendment have the desired effect of delivering a better service to claimants? My view and that of my colleagues is that it would not.
If the "target" period is too long, local authorities could take their time about dealing with the majority of inquiries. This would defeat the purpose of the amendment, which is to speed up the process. Giving local authorities a shorter period of, say, seven or 10 days, to take the appropriate action would result inevitably—and for good reasons, such as staff sickness or an unexpected surge of claims—in some of them missing their target. That is when the problems would begin.
Local authorities would have two choices: they could do without the necessary evidence or choose to ignore the fact that they have no statutory power to ask for the evidence. Even then, claimants could refuse to provide it and there is nothing an authority could do about that. In consequence, some claimants would be refused benefit because they had not supported their claim—indeed under this amendment they might not even be told what further information was required—while others would be overpaid benefit or would suffer hardship because they were paid too little. That would be a very unsatisfactory situation.
The nub of the problem is that many claimants fail to provide the information and evidence requested on their claim form in the first place. If they did, most delays would be avoided. It is in the authority's own interest to obtain the information as quickly as possible. I am sure there is no suggestion that authorities deliberately delay taking the appropriate steps. Many authorities set their own administrative targets, which can be as low as five days, for getting information and replies to inquiries. The results are monitored by my department's officials through a programme of visits to local authorities. I can tell your Lordships that standards are undoubtedly improving. However, I am not complacent. I recognise the strength of feeling behind this amendment. I propose to monitor the position. If I am persuaded by the evidence that something needs to be done, I shall consider carefully whether a change can be introduced which meets the needs of claimants and local authorities.
But I do not believe that the way forward is to have a piece of primary legislation like this. We shall monitor the position. We appreciate the need for speedy and correct action as far as concerns these benefits. With that assurance, I hope that the noble Lord will feel able to withdraw his amendment.
Baroness Hamwee: My Lords, I indicated earlier that my support for this amendment was a little out of character. I was glad to hear his acceptance of the difficulties experienced by local authorities in meeting a target which is a short period of time. In reviewing the targets and the workings of this matter, will the Minister bear in mind and discuss with his colleagues in the Department of the Environment the appropriateness of certain performance indicators under the Citizen's Charter which perhaps give the public the false impression that local authorities are themselves at fault
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in failing to meet targets? The underlying reasons are, as he has indicated, rather complex and not necessarily of their own making.
Lord Mackay of Ardbrecknish: My Lords, the noble Baroness makes a valid point. On a number of occasions, I have said that it takes two to tango. If the claimant does not give the information quickly and in proper form, delay is inevitable because the authority is obliged to go back to the claimant to ask for further details. That is one of the difficulties about setting targets. None the less, it is important that an attempt is made to set targets. As the noble Baroness has said, it is important for claimants that decisions on their cases are made as quickly as possible. I will make sure that the points raised by the noble Baroness are borne in mind when we look at how authorities perform.
Lord Dubs: My Lords, although the Minister has rejected the amendment it is of comfort that he agreed to review the workings of the system and to see what can he done if it is not working well. On that basis, I thank him for what amounts to a small concession and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Dubs Lord Dubs moved Amendment No. 167:
Page 79, line 38, at end insert—
("(3) In section 5 of the Social Security Administration Act 1992 (regulations about claims for and payment of benefit) at the end of subsection (1)(k) insert "and where a claimant who is a local housing authority tenant is on income support and has included in the calculation of his applicable amount the pensioner, the enhanced pensioner or the higher pensioner premium, or although not in receipt thereof has included in the calculation of his applicable amount the pensioner, the enhanced pensioner or the higher pensioner premium, the award of benefit shall be made for an indefinite period."").
The noble Lord said: My Lords, the purpose of the amendment is to provide for regulations which will enable claims for pensioners who live in council housing to be determined for an indefinite benefit period. At present, housing benefit claimants must renew their claims every 12 months. I suppose that for the majority of claimants that is a reasonable process. However, the renewal claims increase the administrative burden on local authorities. They often delay sending out renewal claims, do not always explain why the claimant must reclaim and can delay or lose the renewal claim.
The amendment is concerned with elderly claimants who experience stress and even the threat of eviction because either they do not know that they have to reclaim housing benefit or are deterred by the claim form. The requirement of housing benefit authorities that claims must be renewed every 12 months is the subject of the amendment. Often clients in receipt of income support do not understand the need to reclaim because they are not required to do so for income support. There are two different procedures.
As regards people below pension age, perhaps the requirement for the 12 monthly renewal of claims is satisfactory. However, in the case of pensioners, perhaps they are subjected to too many bureaucratic requirements which some find difficult to understand

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fully. Perhaps I may give two examples. A citizens advice bureau in Sussex reported that many elderly clients seek advice as to why they have received a housing benefit renewal form. The form arrives in the post without explanation. There is no local council office to approach for advice. Furthermore, a CAB in London reported the case of an elderly housebound woman on income support who lives alone in a council flat. She received a notice seeking possession from the council for rent arrears, which left her in a very distressed state. That had been caused by the cessation of housing benefit following the failure of the council to send out the yearly renewal forms.
The point is fairly straightforward. In other respects we simplify the procedures for pensioners knowing that their circumstances are much less likely to change than those of younger people. Therefore, it is appropriate to ensure that pensioners' entitlements to certain benefits, once the case has been established, should not require the frequent and repeated renewal of claims. That is the purpose of the amendment. I beg to move.
Lord Mackay of Ardbrecknish: My Lords, the noble Lord has fairly described the objectives of his amendment. It may be helpful if I explain why we do not believe that it would be wise to put such an amendment into the Bill. Housing benefits are awarded for a fixed period called "a benefit period". The length of a benefit period is at the discretion of a local authority and it is up to a maximum of 60 weeks; in other words, just over a year. After that the local authority must invite a repeat claim.
In that way there is a formal statutory mechanism for ensuring that benefit is paid accurately and that it reflects the applicant's circumstances and any changes which have occurred in the previous year. The requirement to make a fresh claim for housing benefit applies to all claimants, not only to pensioners, and it ensures that local authorities are administering the scheme correctly by paying the correct amount of benefit and therefore preventing both overpayment and underpayment building up.
We have in the past consulted the local authority associations and asked them to provide evidence for improving administrative efficiency through adopting easements similar to what is suggested in the noble Lord's amendment. The evidence they provided was inconclusive. There was evidence of overpayments and some local authorities prefer to set even shorter benefit periods than the maximum of 60 weeks.
In addition, we remain unconvinced that any administrative easement following a move to continuous awards would justify the costs involved in identifying the cases affected. Such a move might result in overpayments, for which there would be subsidy implications for the local authority. Claimants could suffer because the complete absence of a review of their entitlement might result in underpayments for which they would not be fully reimbursed as there is actually a 52-week limit for paying arrears. If there were an underpayment and there was no need to review the claim at any given period, somebody could be underpaid
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for quite a considerable time and all they could get by way of arrears would be up to 52 weeks. Of course if there were overpayments they could be asked to refund the money and I think that could be particularly difficult over time. Therefore, far from making pensioners' lives easier, a move to indefinite benefit periods could result in actually causing some distress to at least a number of individuals in this group.
The noble Lord, Lord Dubs, pointed out that we do simplify procedures for pensioners in other regards, and I want to say to him that there is no need for the renewal claim form to be an onerous one. The practice varies from local authority to local authority, but they may at their discretion use a shortened form for repeat claims in order to avoid the need for claimants to repeat all the same details. I did write to the noble Baroness, Lady Hollis of Heigham, a noble friend of the noble Lord, Lord Dubs, following her withdrawal of a similar amendment during the Committee stage. I advised her that my officials would be having further discussions with local authority associations about this issue.
I further explained—and I do so again now—that any easement of the rules should, in our view, be permissive rather than a requirement. If we were to ease the rules, we should give a permission to do so rather than making it a requirement, so that local authorities can make their own decisions about granting longer benefit periods. If we come to that conclusion at some stage in the future we can change these rules by secondary legislation. We do not need primary legislation to do so, because the rules governing the length of benefit periods are decided in secondary legislation.
I can give the noble Lord these assurances. The first is that, if at some time in the future the Government decided that the rules could be changed, the powers to do so are there in secondary legislation and therefore primary powers are not necessary. Secondly, in our view, it would be right, if one were to go down that road, to give local authorities permission rather than to make it a requirement. I hope that, with those assurances, the noble Lord, Lord Dubs, will feel able to withdraw his amendment.
Lord Dubs: My Lords, I think the Minister has said no, but he has said it in a helpful and positive way. In the light of the assurances that he has given, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 119 [Introductory tenancies]:
Lord Dubs Lord Dubs moved Amendment No. 167A:
Page 81, line 11, after ("force,") insert ("except where subsection (2A) applies,").
The noble Lord said: My Lords, I beg to move this amendment standing in my name and, with it, I should like to talk briefly to Amendment No. 168B. We have now moved on to the question of introductory tenancies and this amendment is concerned with tenant management organisations—a term used to describe tenant management co-operatives or estate management boards. The amendment seeks to say that where TMOs exist they are likely to have a view on whether they

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wish to operate an introductory tenancy regime. This amendment proposes that, where the authority proposes to operate an introductory tenancy scheme, it should consult tenant management organisations where they exist. If, having consulted them, they are of the view that the TMO and the tenants managed by the TMO do not wish to operate an introductory tenancy scheme, then the amendment will give the local authority discretion to exclude the particular estate managed by the TMO from the scheme. In that sense, the issue is rather simple and I think that the point is a fairly obvious one. I am just considering whether there are any further aspects of this which are worth mentioning at this stage.
The reason that it is proposed that local authorities should have discretion as to whether or not to exclude an estate is that some tenant management organisations will take on all aspects of tenancy management, including the decision whether to seek possession against tenants for non-payment of rent or other breaches of the tenancy conditions delegated to them under the management agreement. Others operate differently and do not have as many powers.
Rather than attempt to specify in the amendment the precise degree of delegation of management functions beyond which the TMO should have the right to decide that it should be exempt from the introductory tenancy scheme, this proposal would leave local authorities with a discretion on the assumption that an authority would be more likely to accede to the TMO's request where the TMO was substantially responsible for managing anti-social behaviour and enforcing tenancy conditions. That is the nub of the argument. TMOs have a range of differing responsibilities and for some one particular approach would be more appropriate than for others. The point of the amendment is to allow that element of discretion.
Lord Lucas: My Lords, I shall follow the example of my noble friend Lord Mackay of Ardbrecknish and say no helpfully. We are quite comfortable with the idea of consultation. During Committee stage in another place my right honourable friend the Housing Minister explained that under Section 105 of the Housing Act 1985 local authorities are already required to consult their tenants on matters of housing management and, in particular, changes in practice and policy. He confirmed that a decision to have an introductory tenancy regime would fall into that category. This consultation would cover all the tenants of a local authority, including those whose properties are managed by a TMO.
We are not at all happy with the idea that a TMO should be able to exempt itself or should be exempted from the system. We have maintained consistently that introductory tenancies must apply to all new tenants and that there can be no cherry-picking. The reason underlying that is that we believe that exemptions would encourage discrimination and lead to the stigmatising of introductory tenants. We are not prepared to countenance that.
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It may be that, in putting forward these amendments, the noble Lord, Lord Dubs, is suggesting that the tenants involved in a TMO are unlikely to be the kind of tenants who need an introductory tenancy to keep them on the straight and narrow. That may well be true, but such tenants have nothing to fear from an introductory tenancy. We are not prepared to have a system in which introductory tenants are singled out as people who are somehow less worthy than others. If the authority needs the scheme, it should apply to everybody. For that reason, we are not content with the amendment proposed by the noble Lord, Lord Dubs, and I hope he will feel able to withdraw it.
Lord Dubs: My Lords, I heard what the Minister said. I am disappointed because I do not think that he recognises fully the difference between the responsibilities and the functions of one TMO compared with another. They cover a very wide range of responsibilities. Putting them all in the same position demonstrates a lack of sensitivity to their differing roles and functions. Having said that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lucas Lord Lucas moved Amendment No. 168:
Page 81, line 13, leave out ("have been") and insert ("be").
The noble Lord said: my Lords, in moving this amendment, I shall speak also to Amendments Nos. 169, 170, 178 and 182. Clause 119 enables a local authority or housing action trust to elect to run an introductory tenancy scheme. Clause 120 provides that the trial period for an introductory tenancy shall be 12 months. Clause 129 deals with assignments of introductory tenancies and Schedule 13 contains consequential amendments. The minor amendments in this group are all designed to clarify and tidy up the existing provisions and prevent the potential for abuse. They have no new implications for the policy on introductory tenancies.
At present, an introductory tenant who leaves his dwelling and who returns at a later stage would become a secure tenant by default, even though he had not completed the trial period. That is because the test of whether someone is an introductory tenant is established at the start of the tenancy. Amendments Nos. 168, 169 and 170 will close this potential loophole. They provide that the test of whether a tenant is an introductory tenant can be assessed at any time during the tenancy, rather than only at the start of the tenancy. The result will be that, should an introductory tenant leave the dwelling and return, he will not become a secure tenant.
Amendment No. 178 prevents an introductory tenant from leaving his home and assigning it to someone else with the result that the incoming tenant becomes a secure tenant. That could occur because, under Clause 120 as it stands, when an introductory tenancy has ended the tenant will still hold a tenancy at will. So he will not be bound by the provision in Clause 129 which prohibits the assignment of introductory tenancies. The incoming tenant would not be an introductory tenant because he succeeds to the tenancy at will held by the outgoing tenant. Further, if the

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incoming tenant occupies the dwelling as his only or principal home, he may well obtain a secure tenancy by default. Amendment No. 178 aims to prevent this potential for abuse by preventing assignment where the introductory tenant is not occupying the dwelling.
Finally, Amendment No. 182 is consequential on these amendments. It amends Schedule 16 to the Housing Act 1985 (the schedule that lists tenancies which are not secure) so as to ensure that if an introductory tenant—or, in the case of a joint tenancy, every tenant—ceases to live in the dwelling as his only or principal home he will not become a secure tenant.
I should point out to the House that these were serious unintended consequences of the wording as originally in the Bill. I am delighted that the diligence of parliamentary draftsmen has highlighted them. I beg to move.
On Question, amendment agreed to.
Baroness Hamwee Baroness Hamwee moved Amendment No. 168A
Page 81, line 19, at end insert ("; or
(c) in a case where the authority have adopted the tenancy, a regulated tenant or an assured tenant (otherwise than under an assured short hold tenancy) of the same dwelling-house.").
The noble Baroness said: My Lords, the amendment would add a further exception to the short list of exceptions contained in Clause 119(2) which deals with introductory tenancies. The clause establishes introductory tenancies preventing a tenant of a local housing authority becoming a secure tenant. Subsection (2) sets out two exceptions. However, why should a regulated tenant of a dwelling, for example, which is compulsorily purchased or otherwise acquired from the private sector—perhaps under threat of a CPO—lose his security of tenure if he has lived in the dwelling for a long period? It is the property that has changed, not the tenant.
I suspect that the amendment would be likely to apply only in a relatively few cases. However, it has been drawn to my attention—and I apologise for the fact that this is another starred amendment—that this is a group of people to whom it would be unfair not to give the equivalent protection to that already afforded to those protected under subsection (2). I beg to move.
Lord Lucas: My Lords, we may be discussing another starred amendment, but the noble Baroness has explained its meaning with admirable clarity which, if I may say so, is something which is entirely usual in her case. A similar amendment was discussed during the Committee stage in another place. I should emphasise that one of the principles behind the introductory tenancy regime is that all tenants should be subject to the trial period, and that there should be no picking and choosing. But we looked very closely at who should be exempt from the new arrangements and have provided exemptions only for established tenants of either a local authority or housing association. Private sector tenants are not subject to the same housing management regime as social landlords. We did not feel that we could therefore make comparisons between a tenant of a local
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authority or registered social landlord and one who has come from the private sector where his or her track record may be difficult to establish.
Introductory tenancies are designed to deal with problems that local authorities and housing action trusts face in their role as social landlords. Therefore it must be right that people with existing social housing tenancies of a secure nature should have the benefit of that continuity. However, where people come from different sorts of tenancy there can be no objection to their being asked to serve the trial period required under an introductory tenancy. As I explained under the previous amendment moved by the noble Lord, Lord Dubs, that is required of everyone coming into the system. As the Government have always said, good tenants have nothing to fear from introductory tenancies, and this applies equally to the small minority of tenants who have their tenancies adopted by the local authority. We are sure that in this as in other cases the vast majority of introductory tenancies will become secure. I therefore urge the noble Baroness to withdraw her amendment.
Baroness Hamwee: My Lords, if I were a tenant in this situation I would object to the slur in that I should not like to be asked to serve time, as it were. However, the Minister has explained the Government's thinking. It is another occasion where we beg to differ. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 168B not moved.]
Clause 120 [Duration of introductory tenancy]:
Lord Lucas Lord Lucas moved Amendment No. 169:
Page 81, line 31, leave out from ("which") to ("entered") in line 32 and insert ("was").
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 170:
Page 81, line 37, leave out from ("which") to ("adopted") in line 38 and insert ("was").
On Question, amendment agreed to.
Clause 122 [Proceedings for possession]:
Lord Dubs Lord Dubs moved Amendment No. 171:
Page 82, line 38, at end insert ("or it is unreasonable to make such an order").
The noble Lord said: My Lords, in moving this amendment I wish to speak also to Amendment No. 172. The amendments again are concerned with introductory tenancies. Their purpose is to give the courts discretion not to grant an order for possession if doing so would be unreasonable to the tenant, and to give additional protection to tenants by allowing the court to judge whether in seeking the order the landlord is behaving in an unfair or discriminatory manner.
The Government have made it clear that they accept that local authorities which establish introductory tenancies will need to have fair procedures for dealing with them. The problem is that the individual who may be the victim of these procedures will have no

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legislative defence if it is judged by the individual that the procedures are not fair. His only safeguard to make certain that the local authority is following fair procedures is that the courts should be given an element of discretion.
The issue of introductory tenancies and the way in which they will operate has caused a great deal of concern, as the Minister will know. I rely again on the citizens advice bureaux which have already reported instances where tenants have been threatened with eviction for anti-social behaviour where the full complexity of their situation has not really been considered. That is why there is a fear that these proposals may reduce the security of tenants in a way which is unfair to tenants. It is best to illustrate this by way of one or two examples. There was an instance from Dorset where an 80-year old tenant of a housing association had a son who suffered from manic depression. He lives in accommodation without a bath and visits his mother regularly in order to use her bath. Neighbours complained about his behaviour, and the housing association has threatened to take legal action to evict her if he continues to visit. So an elderly mother has a son with a severe depressive state; the son visits his mother; neighbours complain, and there is a threat that the mother will be evicted because of the son's visits.
I have an example from South Wales. A couple live in a council flat; they have an adult son with a mental health problem. Neighbours have complained about the son's behaviour, and the local authority wanted repossession. When the CAB visited the housing department, it said that it would rehouse the couple but not the son. Quite naturally and understandably, the parents did not want the family split up.
Some examples of threats concern racial harassment. For example, a client in Greater Manchester has five children of mixed race. Since moving into her present home she has been subject to verbal and written abuse. But the police and local authority have told her that they can do nothing. Again there is a danger that if this were an introductory tenancy that would lead to eviction.
I give another example. In south London an elderly Caribbean man was evicted from his council flat for making himself a nuisance to neighbours. However, he believed that he had been racially harassed and strongly contested the allegations made.
These and other examples demonstrate that there are ways in which, at least on the face of it, people can be under pressure. They may well be innocent parties, yet they face eviction. The vulnerable position of introductory tenants means that that could happen all too easily.
I have many other instances that I could cite. What is needed are better procedures for demonstrating complaints of nuisance. I accept that nuisance can exist. I do not say that there are not instances where it is absolutely right that action should be taken against a tenant who behaves in a very anti-social way and makes neighbours' lives miserable. But one needs a balanced approach. One needs to ensure that one is behaving fairly to these people.
If the courts were to have an element of discretion not to grant an order of possession, they would be able to look into these matters and arrive at a fairer and more balanced conclusion. There may be pressure, and a mistaken and unfair decision may be made to remove a tenant. The courts would provide the necessary safeguard. They would not protect tenants who behave in an anti-social manner but would protect tenants who were the victims of a misunderstanding or of neighbours who complained without all the facts being understood. I beg to move.
Lord Swinfen: My Lords, I support the amendment. It is odd that the court should not have the power not to make an order if it considered that to do so would be unreasonable. If the court has to make the order whether it likes it or not, as appears to me to be the case, that is not proper justice.
Baroness Hamwee: My Lords, I entirely agree with the last comment.
Lord Lucas: My Lords, we visited this matter at Committee stage with a similar amendment, if not the same one. I have not a great deal to add to what I said then, although if noble Lords wish I can repeat it. It is several pages long and is available in Hansard, but noble Lords present will remember what I said.
We appreciate the point being made but I am sure noble Lords also appreciate that we are not prepared to go down the road proposed by the amendments. They would effectively destroy the utility of introductory tenancies by opening up every case to trial in court in the way that existing ordinary tenancies have to be terminated. They would bring an end to the advantages we seek to gain through introductory tenancies of a quick and simple process.
In the following amendments, my noble friend Lord Swinfen proposes a different route and one which we might explore more fruitfully at this time of night. If noble Lords opposite wish me to go through the full arguments, I shall, but I hope that they understand that I have nothing to say other than what I said in Committee. The needs of vulnerable people whom the noble Lord, Lord Dubs, used to illustrate his argument are important. It is a matter of great moment for us that local authorities and others should take appropriate and sensitive decisions and look after the needs of those people as well of the communities of which they form part. I covered all that at Committee stage and I have nothing else to say.
Lord Dubs: My Lords, I do not wish the Minister to repeat exactly what he said at Committee stage. The hour is late. Normally one thanks a Minister for a concession that he has just made. I cannot do that because he has not made one, but I intend to thank him in advance for the concession he is about to make to the noble Lord, Lord Swinfen. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 172 not moved.]
Clause 124 [Right to request review of decision to seek possession]:
Lord Swinfen Lord Swinfen moved Amendment No. 173:
Page 83, line 18, leave Out ("a") and insert ("an impartial").
The noble Lord said: My Lords, I hope that the noble Lord, Lord Dubs, was prophesying. In moving Amendment No. 173, I wish to speak also to Amendment No. 174. They are very similar to amendments I moved at Committee stage. This time I seek to ensure that introductory tenants have the safeguard of an impartial review before they are evicted. At Committee stage I sought an independent review.
Under the proposals in the Bill, during the period of the introductory tenancy a landlord will be able to evict a tenant at any time. The landlord will have to obtain a possession order from a court but there will be no defence to the possession proceedings and the landlord will not have to prove to the court that tenancy conditions have been broken. There is nothing in the Bill to indicate on what grounds a landlord would issue such proceedings but debate around the Bill has indicated that the introductory tenancy is intended as a method to enable the speedy eviction of anti-social tenants.
The concern about the introductory tenancy is that it gives considerable power to landlords to make decisions about which tenants are behaving anti-socially and gives the tenant no defence against proceedings which may be unreasonable. There are particular concerns among representatives of disability organisations that people whose behaviour is unusual due to mental illness or disability may find themselves summarily evicted by a landlord who is under pressure from other residents or who is unwilling or unable to try to resolve problems in a more constructive fashion.
The only safeguard given to an introductory tenant faced with possession proceedings is that he is entitled to a review of his case. The Bill proposes, however, that such a review should be carried out by the landlord. Clearly, a review carried out by the landlord who has instigated possession proceedings is unlikely to be impartial and is certainly unlikely to be seen as such by the tenant.
When this issue was discussed in Committee, my noble friend the Minister stressed that there is the option of a judicial review open to tenants who are not satisfied with the internal review carried out by the landlord. This, however, is a very lengthy and costly procedure. If the local authority has to defend a number of judicial review hearings this will take up valuable staff time and cost public money. The tenant involved might also be entitled to legal aid, which would again be a drain on the public purse. Such a review is also unsatisfactory because it takes considerable time. In the meantime what will happen to tenants threatened with eviction? Will they be homeless, or will they be able to remain in their home, perhaps continuing their anti-social behaviour?
I noticed when reading the account in Hansard of our proceedings last Monday that my noble friend Lord Ferrers moved Amendment No. 18, which lays down a review procedure in Part VI of the Bill. I wonder whether he will bring forward a similar amendment at Third Reading to lay down such an impartial procedure for this part of the Bill if he is not prepared to accept my amendment this evening. I beg to move.
10.45 p.m.
Lord Lucas: My Lords, I do not wish to leave my noble friend wondering for too long. Clearly, he will understand that, whatever review procedures we have, we wish to avoid the pitfalls we felt were opened up by the amendments tabled by the noble Lord, Lord Dubs, introducing delays into the procedure which made introductory tenancies no longer useful in the way that we wish them to be.
At the same time it is essential to ensure that the tenant is treated fairly throughout the process. There will have been negotiations between tenant and landlord in an attempt to resolve matters before the eviction stage is reached, and impending eviction should not come as a surprise to the tenant. Even so, the landlord will be obliged to notify the tenant in writing of his intention to seek a possession order. At that stage the tenant will also learn of his right to request a review of the decision. Such a review must then be completed by the earliest date on which the proceedings against the tenant could begin, which would be 28 days after the notice had been served.
The Government are confident that local authorities will act fairly and impartially at all stages of this procedure. Local authorities are well practised in handling these kinds of problems among their tenants. The Department of the Environment will also be issuing detailed, firm advice to local authorities which will cover all stages of the tenancy, including deciding when to take action, what evidence is required to seek eviction and how a review should be handled.
To supplement the advice on the handling of the review, the Government have decided to bring forward at Third Reading amendments which will provide the Secretary of State with a power to make an order to lay down requirements for the review. We would certainly wish the order to provide that the person who made the original decision to evict should not be involved with the decision-making process in the review. Other matters to be dealt with might be when written or oral representations might be appropriate and whether the tenant might be represented and, if so, by whom. The local authority associations and other interested bodies, including tenants' representative bodies, will be consulted on this.
The Government believe that this strikes the right balance between giving the tenant a fair opportunity to have his case heard and the local authority effecting a prompt eviction in those cases where it has become necessary. We do not consider that to set up an independent review, whether it be styled after the Housing Benefit Review Panel or the child support reviews, is warranted. The additional bureaucracy and

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expense could not be justified when a perfectly good and impartial system of review can be offered through the local authority. We do not believe that there will be many introductory tenants who face eviction, and even fewer will have grounds to dispute their landlord's decision. Within the framework which the secondary legislation will provide such cases will receive a fair hearing. The secondary legislation will also give us the advantage of being able to change the arrangements in time if it proves that any of the worst fears expressed by noble Lords are realised and if partiality is creeping into the decisions being made on introductory tenancies.
I hope that will be sufficient comfort to enable my noble friend to withdraw his amendment.
Lord Swinfen: My Lords, I shall certainly withdraw the amendment because those are comforting words indeed. I look forward to seeing the amendment my noble friend proposes to table for Third Reading and hope that I shall not feel it necessary to improve upon it by moving amendments to it. However, at this stage of the Bill and at this stage of the night, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 174 not moved.]
Clause 127 [Cases where the tenant is a successor]:
Lord Lucas Lord Lucas moved Amendment No. 175:
Page 84, line 35, after ("proceedings)") insert ("or section 17(1) of the Matrimonial and Family Proceedings Act 1984 (property adjustment orders after overseas divorce, &c.)").
The noble Lord said: My Lords, I spoke to Amendments Nos. 175 to 177 with Amendment No. 5, and to Amendment No. 178 with Amendment No. 168. I beg to move.
On Question, amendment agreed to.
Clause 128 [Succession to introductory tenancy]:
Lord Lucas Lord Lucas moved Amendment No. 176:
Page 85, line 16, at end insert—
("(b) section 17(1) of the Matrimonial and Family Proceedings Act 1984 (property adjustment orders after overseas divorce, &c.), or
(c) paragraph 1 of Schedule 1 to the Children Act 1989 (orders for financial relief against parents).").
On Question, amendment agreed to.
Clause 129 [Assignment in general prohibited]:
Lord Lucas Lord Lucas moved Amendments Nos. 177 and 178:
Page 85, line 23, at end insert—

("(ii) section 17(1) of the Matrimonial and Family Proceedings Act 1984 (property adjustment orders after overseas divorce, &c.), or

(iii) paragraph 1 of Schedule 1 to the Children Act 1989 (orders for financial relief against parents).").

Page 85, line 25, at end insert—
("(3) Subsection (1) also applies to a tenancy which is not an introductory tenancy but would be if the tenant, or where the tenancy is a joint tenancy, at least one of the tenants, were occupying or continuing to occupy the dwelling-house as his only or principal home.").
The noble Lord said: My Lords, with the leave of the House, having spoken earlier to these amendments, I beg to move them en bloc.
On Question, amendments agreed to.
Clause 130 [Right to carry out repairs]:
Lord Dubs Lord Dubs moved Amendment No. 178A:
Page 85, line 27, leave out from beginning to ("section").
The noble Lord said: My Lords, in moving Amendment No. 178A I shall speak also to Amendment No. 178B. The purpose of these amendments is to give introductory tenants the right to have their properties repaired or improved. It is difficult to see why introductory tenants should not enjoy the same rights to repair as secure tenants. After all, the properties are all likely to be local authority properties and it is difficult to see why introductory tenants should live in property of a lower standard than secure tenants because it is in need of repair.
If the arrangements for introductory tenants are different from those applying to secure tenants, there is likely to be extra administrative work for local authorities operating the scheme. They would have to check the tenancy status of every tenant reporting a repair to see which procedure should be initiated. If the scheme for introductory tenants differs significantly from that for secure tenants, there will be other procedural and administrative issues for the local authority.
Whereas I fully understand the Government's thinking as regards introductory tenancies—but I am not happy about it—when tenants may be living side by side in adjacent flats and one has an introductory tenancy and the other a more secure tenancy, it is anomalous that the local authority should have a higher responsibility to carry out repairs and maintenance for one property than the other. It also means that the housing stock will deteriorate in condition because introductory tenants would live in flats in a less good state of repair than secure tenants. That makes for unfairness for tenants living side by side and means that local authorities have to behave in a curious way. It is surely better that the right of repair should be the same for introductory tenancies as for secure tenancies. I beg to move.
Lord Lucas: My Lords, the noble Lord's amendments seek to make absolutely sure that the right-to-repair scheme is applied to introductory tenants. I am happy to confirm that it has always been our intention that that will be the case. During Committee stage in another place my honourable friend the Parliamentary Under-Secretary of State, James Clappison, made it clear that introductory tenants would enjoy the same rights as secure tenants in relation to the right to repair. Clause 130, as drafted, enables the necessary regulations to be made for that to be effected.
We will be making regulations to apply those rights to introductory tenants. They will come into force at the same time as the provisions on introductory tenancies are commenced. The amendments proposed are therefore unnecessary; we will be doing what the noble Lord urges us to do. If he were to ask why we are not

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prepared to put the provisions on the face of the Bill, I should reply that I am advised that they would be too lengthy. In the context of amendments that I have proposed today and those that I shall be proposing at Third Reading, the noble Lord may think that that is a thin excuse but, nonetheless, I hold to it.
Lord Dubs: My Lords, I thank the Minister for making that clear and for giving me the assurance that, whatever is not on the face of the Bill, the effect of these amendments will be carried out. I derive some amusement from his reluctance to put forward a lengthy explanation, given all the others that we have heard at some length. I detect a certain inconsistency there, but not for the first time. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 178B not moved.]
Lord Lucas Lord Lucas moved Amendment No. 179:
After Clause 132, insert the following new clause—

JURISDICTION OF COUNTY COURT
(".—(1) A county court has jurisdiction to determine questions arising under this Part and to entertain proceedings brought under this Part and claims, for whatever amount, in connection with an introductory tenancy.
(2) That jurisdiction includes jurisdiction to entertain proceedings as to whether a statement supplied in pursuance of section 131(2)(b) (written statement of certain terms of tenancy) is accurate notwithstanding that no other relief is sought than a declaration.
(3) If a person takes proceedings in the High Court which, by virtue of this section, he could have taken in the county court, he is not entitled to recover any costs.
(4) The Lord Chancellor may make such rules and give such directions as he thinks fit for the purpose of giving effect to this section.
(5) The rules and directions may provide—

(a) for the exercise by a district judge of a county court of any jurisdiction exercisable under this section, and

(b) for the conduct of proceedings in private.

(6) The power to make rules is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.").
The noble Lord said: My Lords, this new clause imports similar provisions to those for the secure tenancy regime in Sections 110 and 111 of the Housing Act 1985 to make it clear that the county court deals with any disputes that arise about introductory tenancies.
The clause provides that for introductory tenancies the county court has jurisdiction to determine questions, deal with claims and entertain possession proceedings. In addition, it provides that my noble and learned friend the Lord Chancellor may make rules and give directions in relation to the handling of introductory tenancy cases in county courts. This mirrors similar provisions in existing legislation for secure tenancies. I beg to move.
On Question, amendment agreed to.
Clause 135 [Consequential amendments: introductory tenancies]:
Lord Lucas Lord Lucas moved Amendment No. 180:
Page 87, line 24, at end insert—
("( ) The Secretary of State may by order make such other amendments or repeals of any enactment as appear to him necessary or expedient in consequence of the provisions of this Chapter.
( ) Any such order—

(a) may contain such transitional provisions and savings as the Secretary of State considers appropriate, and

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

The noble Lord said: My Lords, Clause 135 provides that consequential amendments to the introductory tenancy provisions are set out in Schedule 13. Amendment No. 180 provides an order-making power so that any consequential amendments that have not already been identified in the Bill can be made when Chapter 1 of Part V is brought into force.
There is an extensive list of pieces of legislation that contain references to secure tenancies. Each of these references must be scrutinised to decide whether a reference to introductory tenancies should also be made. For example, in the Family Law Act 1996 it will be necessary to add a reference to introductory tenancies alongside that to secure tenancies. This sort of detailed provision is more sensibly dealt with by secondary legislation.
I emphasise that the use of this amendment will be strictly limited to minor consequential amendments. Clause 55 of the Bill contains a similar provision in the case of registered social landlords by providing a power to make an order for minor or consequential amendments. As under Clause 55, the order would be subject to negative resolution. I beg to move.
On Question, amendment agreed to.
Schedule 13 [Introductory tenancies: consequential amendments]:
Lord Lucas Lord Lucas moved Amendments Nos. 181 and 182:
Page 178, line 12, leave out from ("Part") to ("Chapter") in line 13 and insert (""introductory tenancy" has the same meaning as in").
Page 178, line 24, at end insert ("or
(b) by virtue of the tenant, or in the case of a joint tenancy every tenant, ceasing to occupy the dwelling-house as his only or principal home.".").
The noble Lord said: My Lords, I spoke to Amendment No. 181 with Amendment No. 25 and Amendment No. 182 with Amendment No.168. I beg to move.
On Question, amendments agreed to.
Clause 136 [Index of defined expressions: introductory tenancies]:
Lord Lucas Lord Lucas moved Amendments Nos. 183 and 184:
Page 87, line 35, after ("tenancy") insert ("and introductory tenant").
Page 87, line 39, after ("tenancy") insert ("and secure tenant").
The noble Lord said: My Lords, I spoke to these amendments with Amendment No. 25. I beg to move.
On Question, amendments agreed to.
Clause 137 [Extension of ground of nuisance or annoyance to neighbours, &c.]:
Lord Dubs Lord Dubs moved Amendment No. 184A:
Page 88, line 15, at end insert—
("( ) When considering whether to grant possession under this Ground on the basis that conduct is likely to cause a nuisance or annoyance and where there is no direct evidence adduced to the court that any person has been caused a nuisance or annoyance then, in deciding whether it is reasonable to make an order for possession, the court shall take into account any evidence provided by the landlord that witnesses are being or may be intimidated and the extent (if any) to which the court has used its powers effectively to protect any such witnesses from such intimidation.").
The noble Lord said: My Lords, In moving this amendment I shall speak also to Amendment No. 184B. These amendments are concerned with what might be called "professional witnesses".
That is to say, they would allow a local authority to provide evidence that witnesses have been intimidated and would ensure that the court considers all its powers to protect witnesses.
The amendment would apply when a local authority was seeking possession on the ground that conduct was likely to cause a nuisance and could not prove that there was an actual nuisance, because no tenants or neighbours were prepared to come forward. That situation, where there are threats and there is some element of intimidation is, regrettably, not uncommon. Therefore, tenants or neighbours are reluctant to come forward to testify. The amendment has the effect that when this occurs, in deciding whether it is reasonable to make an order for possession, the court has to take into account the degree of intimidation that exists and whether it can protect witnesses. In other words, it must take account of the difficulties that the local authority has had in bringing the case to court in deciding whether to make possession based on a likelihood of nuisance rather than actual nuisance. The more powers that the court has exercised to protect witnesses, the more reasonable it is to expect the local authority to produce those witnesses in court.
It is agreed that this can be a difficult situation where there can be threats and intimidation and it is difficult for the local authority to produce the witnesses who would provide the evidence that is necessary. On the other hand, one ought not to have a system which, in a sense, encourages intimidation because, if witnesses are intimidated and do not appear, people will say "Well, we have succeeded and we can go on behaving in an anti-social way towards other people living near us".
The purpose of the amendment is therefore to provide a safeguard against such goings-on. I think it would be helpful. It would certainly make dealing with such difficulties a little easier. I beg to move.
11 p.m.
Lord Lucas: Clause 137 amends Ground 2 of Schedule 2 to the Housing Act 1985. The schedule sets out the grounds for possession of dwelling houses let under secure tenancies.
Clause 137 strengthens the existing ground for possession based on nuisance and annoyance to neighbours in three ways. First, so that it applies to behaviour in the locality of the tenant's property; secondly, so that it covers behaviour by visitors to properties; and, thirdly, so that it covers the situation where the tenant, a person living with him or a visitor has been convicted of an arrestable offence in the locality of a house or flat.
For the purposes of Amendment No. 184A the key part of Clause 137 is that it will also enable local authorities to evict a tenant for behaviour which is likely to cause a nuisance or annoyance. The purpose of this new provision is that the victim of the behaviour may not have to give evidence. Instead, this might be provided by a professional witness.
As I indicated when we discussed a similar amendment from the noble Baroness, Lady Hollis, at Committee stage, the Government believe that Clause 137 achieves the intention of the amendment that is before us now which is to enable a local authority to secure an eviction on the basis of evidence given by a professional witness, rather than by the victims themselves. We know that some local authorities have already found themselves able to proceed successfully in such cases. Sunderland is a prime example. Other authorities have not fared so well.
Clause 137 makes it clear to the courts that there is statutory backing for the use of professional witnesses to prove that particular conduct is likely to cause nuisance. Ultimately we cannot tell the courts how to deal with individual cases—and that is right. But in the Government's opinion Clause 137 puts it beyond doubt that evidence from a professional witness can be accepted as grounds for eviction.
There are, of course, steps that can and should be taken to protect witnesses. For example, local authorities can apply for a non-molestation order. Where there is an adjournment the authority can ask for an undertaking from the defendant not to harass or interfere with the witness in the meantime. We have included such advice on the protection of witnesses in the Department of Environment's guidance Getting the best out of the court system in possession cases, which was prepared in conjunction with the Lord Chancellor's Department and which was sent to all local authorities in England and Wales in March this year. A number of practical steps can be taken to reassure and protect vulnerable witnesses when they attend the court, such as the use of screens or video evidence, and the provision of separate waiting areas.
The provisions of the Civil Evidence Act 1995 enable hearsay evidence to be admitted as evidence. The weight to be given to the evidence is for the courts to determine and will depend on the facts of each case, but the Act (which is due to come into force in the autumn) does say that one of the matters for consideration is whether

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it would be reasonable to have called the witness. Clearly, the likelihood of the intimidation of the witness would be a relevant consideration.
To sum up, we feel that in this Bill and related legislation we have created sufficient new powers to overcome the problems which these amendments are designed to solve. We therefore hope that the noble Lord will feel able to withdraw Amendment No. 184A.
Lord Dubs: My Lords, I thank the Minister for what he has said, but I am not totally convinced that all is as clear cut as he suggested. Obviously, there is provision for professional witnesses—I had thought that my amendments would make that clearer—but the phrase, "likely to cause a nuisance", in Clause 137 bothers me. I wonder whether the courts would think that the phrase "likely to cause" is as clear cut as the Minister suggests. It would be up to the courts to decide how to interpret the phrase—and that might not give the whole procedure the clarity and certainty that the Minister has suggested. Certainly, the court would have the discretion to interpret the matter rather differently. I had assumed that my amendments would make the position clearer, both as regards protecting witnesses and using professional witnesses. The phrase "likely to cause" therefore creates some doubt. I wonder whether, with the leave of the House, the Minister could clarify that because I am unhappy lest the consequence be not what he said that it would be.
Lord Lucas: My Lords, I am not happy that the noble Lord is unhappy. I shall discuss the matter again with my officials and doubtless they will do so with their legal advisers. As so far today I have managed to avoid promising to write to anybody, I hope that they will forgive me for promising to write to the noble Lord to allay his fears about how that phrase will be interpreted.
Lord Dubs: My Lords, I thank the Minister for that, especially as it puts me in the unique position of receiving a letter from him as a result of today's proceedings. This is an important matter and I appreciate the fact that the noble Lord is attempting to be helpful. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 184B not moved.]
Lord Lucas Lord Lucas moved Amendment No. 185:
After Clause 138, insert the following new clause—

EXTENSION OF GROUND THAT GRANT OF TENANCY INDUCED BY FALSE STATEMENT
(". In Ground 5 in Schedule 2 to the Housing Act 1985 (grant of tenancy induced by false statement) for "by the tenant" substitute "by—

(a) the tenant, or

(b) a person acting at the tenant's instigation".").

The noble Lord said: My Lords, we discussed this with Amendment No. 133. I beg to move.
On Question, amendment agreed to.
Lord Dubs Lord Dubs moved Amendment No. 185A:
After Clause 140, insert the following new clause—

INJUNCTIONS AGAINST PERSONS UNDER EIGHTEEN
(".—(1) This section applies to an injunction granted by a county court or by the High Court—

(a) in possession proceedings;

(b) in any proceedings for breach of tenancy relating to residential premises;

(c) in proceedings brought by a registered social landlord or a public sector landlord as defined in section 80 of the Housing Act 1985 for trespass or nuisance;

(d) in any proceedings brought by a local authority using its powers under section 222 of the Local Government Act 1972;

(e) in any proceedings brought by a local authority for a public protection order under this Act; or

(f) which is a witness protection order granted under the provisions of this Act.

(2) Where a young person is in contempt of court by reason of a breach of any injunction to which this section applies that court shall have the equivalent powers of sentence and punishment which would be available to any criminal court had the defendant been convicted of an offence liable to imprisonment for up to two years.").
The noble Lord said: My Lords, this amendment relates to young persons under the age of 18 and the use of injunctions against them granted by a county court or by the High Court in possession proceedings or in any proceedings for breach of tenancy relating to residential premises. The purpose of the amendment is to deal with the possibility of imposing sentences of detention on young persons for a period of up to two years. I believe that it is right there should be safeguards against the detention of young persons, although young persons can cause a nuisance and behave towards others living near them in an anti-social way. Nevertheless, young persons are more vulnerable than older ones and it is right that there should be certain safeguards.
My interpretation of the amendment is that the use of custody for those under 18 years of age will be resorted to reluctantly and that the powers suggested for the county court do not affect that: custody should be resorted to only for young offenders who commit serious offences or persistently offend. There would be no change to the nature of the circumstances in which young people might be given custody orders. The county court would have a discretion which it would use in the same way as a magistrates' court or juvenile court. The court would take into account the level of maturity and welfare needs of the young person.
Therefore, the amendment is not out of line with the principles that I have mentioned. Under the amendment, a court would not have power to impose a sentence of detention for up to two years on a 15 year-old unless that could also be done by a magistrates' court or juvenile court in similar circumstances. The provision would therefore act as a constraint. The practice of a magistrates' court or juvenile court would be that which would prevail for the county court or High Court. It is a safeguard. I beg to move.
Lord Lucas: My Lords, this amendment has been moved by the noble Lord, Lord Dubs, in substitution for his noble friend Lady Hollis, in the sincere hope that it

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will address the problem of young people who make life a misery for others on some local authority housing estates. As I said in response to the noble Baroness in Committee, there is no easy answer to this problem.
The Government do not believe that the answer is to be found in this amendment. The noble Baroness acknowledged this herself at Committee stage, when she said she was stumped as to the best way forward on such an intractable problem. She called for organisations outside and beyond this Chamber to come forward with ideas. The Government, too, would welcome those ideas. As I indicated when we discussed this in Committee, this issue straddles the responsibilities of several government departments: the Department of the Environment, the Home Office, the Lord Chancellor's Department, the Department of Health and the Department for Education and Employment.
The Department of the Environment has made what the Government believe to be a significant step forward in addressing anti-social behaviour on public sector housing estates by the measures in Part V of the Bill. Many of these provisions have resulted directly from working with the local authority associations, and that work will continue. As the noble Baroness suggested, ideas from other sources would also be welcomed. There is more to be done between departments and with the local authority associations before we can offer a comprehensive solution to this problem.
I turn to the substance of the amendment. The amendment would allow the county court or High Court to impose on a young person—a 14 to 17 year-old—who breached an injunction granted by the court in certain types of proceedings any penalty which would have been available if the young person had been convicted of a criminal offence which carried a sentence of imprisonment of up to two years. In effect, a young person who committed such a breach would be eligible for a range of penalties, from a financial penalty to a community or custodial sentence, depending on age. The use of custody is not something which we advocate generally for young offenders. It is reserved for those who commit serious offences or who offend persistently, to reflect the principle that the courts should take into account the level of maturity and the welfare needs of the offender. The amendment does not rest easily with that principle. For example, the county court would have power to impose a sentence of detention on a 15 year-old for up to two years to prevent the escalation of a relatively minor breach of a tenancy agreement.
We believe that there are more appropriate ways to deal with young people. To recap what I said at Committee stage, these are the youth court (rather than the county court), where magistrates can bring particular expertise to bear on the needs of young people, and a wide range of penalties for young people over 10 who commit serious anti-social acts amounting to a criminal offence (for example racial harassment), including fines, community sentences and the binding over of parents to take proper care and control of the child. At the extreme, custodial sentences are available for the serious and persistent offender and the period of detention has recently been doubled from one to two years. A new sentence of secure training orders is to be introduced.
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This will be available for the small but significant group of 12 to 14 year-olds who are already experienced and regular offenders and who have failed to respond positively to a community penalty.
This issue goes wider even than how young offenders should be punished. I do not believe that it can be solved here tonight by means of this amendment. I hope therefore that the noble Lord will feel able to withdraw his amendment, on the mutual understanding that this is a matter which the Government and others—evidently including the noble Lord—are addressing actively. However, sadly, we feel that there is not yet a solution.
Lord Dubs: My Lords, I fully understand the difficulty that the Minister has described. How we deal with young persons who behave in an anti-social and unlawful way is a very difficult problem which probably cannot be resolved at the end of a long day in relation to a particular provision in the Housing Bill. It is a much wider social problem than we can solve here and now, though we recognise that the manner in which young persons behave on council estates and elsewhere can be very upsetting to others. We must all struggle to find answers to these difficulties. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lucas Lord Lucas moved Amendment No. 186:
Before Clause 144, insert the following new clause—

POWER TO GRANT INJUNCTIONS AGAINST ANTI-SOCIAL BEHAVIOUR
(".—(1) The High Court or a county court may, on an application by a local authority, grant an injunction prohibiting a person from—

(a) engaging in or threatening to engage in conduct causing or likely to cause a nuisance or annoyance to a person residing in, visiting or otherwise engaging in a lawful activity in residential premises to which this section applies or in the locality of such premises,

(b) using or threatening to use residential premises to which this section applies for immoral or illegal purposes, or

(c) entering residential premises to which this section applies or being found in the locality of any such premises.

(2) This section applies to residential premises of the following descriptions—

(a) dwelling-houses held under secure or introductory tenancies from the local authority;

(b) accommodation provided by that authority under Part VII of this Act or Part III of the Housing Act 1985 (homelessness).

(3) The court shall not grant an injunction under this section unless it is of the opinion that—

(a) the respondent has used or threatened to use violence against any person of a description mentioned in subsection (1)(a), and

(b) there is a significant risk of harm to that person or a person of a similar description if the injunction is not granted.

(4) An injunction under this section may—

(a) in the case of an injunction under subsection (1)(a) or (b), relate to particular acts or to conduct, or types of conduct, in general or to both, and

(b) in the case of an injunction under subsection (1)(c), relate to particular premises or a particular locality;

and may be made for a specified period or until varied or discharged.
(5) An injunction under this section may be varied or discharged by the court on an application by—

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(a) the respondent, or

(b) the local authority which made the original application.

(6) The court may attach a power of arrest to one or more of the provisions of an injunction which it intends to grant under this section.
(7) The court may, in any case where it considers that it is just and convenient to do so, grant an injunction under this section, or vary such an injunction, even though the respondent has not been given such notice of the proceedings as would otherwise be required by rules of court.
If the court does so, it must afford the respondent an opportunity to make representations relating to the injunction or variation as soon as just and convenient at a hearing of which notice has been given to all the parties in accordance with rules of court.
(8) In this section "local authority" has the same meaning as in the Housing Act 1985.").
The noble Lord said: My Lords, in moving Amendment No. 186 I shall speak also to Amendments Nos. 187, 188, 189, 190, 191, 194 and 195. Amendment No. 186 introduces a new clause which provides local authorities with a specific power to obtain an injunction to restrain the anti-social behaviour of non-tenants on council estates. The existing Clause 145 enables a local authority to ask the courts to attach a power of arrest to an injunction obtained by the council to restrain a person whose anti-social behaviour affects its estates. It relies on a local authority using the general power under Section 222 of the Local Government Act 1972 to take legal action,
"for the promotion or protection of the interest of the inhabitants of their area".
In Committee the noble Baroness, Lady Hollis, tabled an amendment to clarify that councils were able to use Section 222 for the purposes of curbing anti-social behaviour. It transpired that some local authorities which used Section 222 had obtained legal advice that they would be unwise to rely on that power to restrain anti-social behaviour in premises owned by themselves on the basis that there might not be sufficient public interest to justify its use.
The Government believe that Section 222 is fully effective but we did promise to consider further any evidence to the contrary that was put to us. The noble Baroness, Lady Hollis, kindly arranged for us to see briefing material. From consideration of that it is clear that this matter has not yet been fully tested in the courts. Until that happens, local authorities and their advisers are reluctant to use Section 222 to take action against troublemakers on their estates.
Clause 144, in the same way as Clause 145, allows social landlords to request the court to attach a power of arrest to injunctions taken out to stop tenants behaving anti-socially where violence or threats of violence are involved. It is essential that local authorities also have an effective way of dealing with those who are not tenants and cause trouble on estates. As it is now clear that there are doubts among local authorities that Section 222 enables them to do that, we are bringing forward these amendments which do so.
The new clause contains an express power to allow councils to obtain an injunction in either the High Court or the county court to restrain anyone from engaging in anti-social behaviour on council estates. This power is supplemented, like Clause 144, with a power for the
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local authority to request the court to attach a power of arrest. This will enable councils to take effective action. The amendments will be welcomed by local authorities in their battle against anti-social behaviour. We are most grateful to the noble Baroness, Lady Hollis, for having brought the matter to our attention. I beg to move.
Lord Dubs: My Lords, I thank the Minister for what he said. Perhaps I may raise two points. First, it is my understanding that Amendment No. 186 does not cover damage to property. Is there a point that I have missed in that or related amendments, or has that matter been deliberately omitted? The amendment certainly deals with conduct likely to cause a nuisance or annoyance to persons and a variety of other types of behaviour. However, damage to property is also relevant and I wonder whether the Minister would care to comment on that.
Secondly, the phrase "or likely to cause" appears in subsection (1)(a). Perhaps, when the Minister writes to me in relation to the appearance of that phrase in an earlier amendment, he will consider the effect of it in this amendment. What will be the position if the court has to interpret that phrase given its relationship to professional witnesses? It is the same argument we had previously. Perhaps the Minister will be good enough to deal with the matter when he writes to me. In the meantime, I await his comment about damage to property.
Lord Lucas: My Lords, to allay the fears of the noble Lord, Lord Dubs, on both points, "causing a nuisance" must include damage to property, and damage to property is therefore covered under that heading. I shall certainly write to the noble Lord on the use of the phrase "likely to cause" in this amendment and also as related to previous parts of the Bill.
On Question, amendment agreed to.
Clause 145 [Power of arrest for breach of other local authority injunctions]:
Lord Lucas Lord Lucas moved Amendment No. 187:
Leave out Clause 145.
The noble Lord said: My Lords, I have just spoken to Amendments Nos. 187 to 191. I beg to move Amendment No. 187.
On Question, amendment agreed to.
Clause 146 [Ex-parte applications for injunctions]:
Lord Lucas Lord Lucas moved Amendment No. 188:
Page 94, line 22, leave out from ("its") to first ("to") in line 23 and insert ("power under section (Power to grant injunctions against anti-social behaviour)(6) or section 144 to attach a power of arrest").
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 189:
Page 94, line 32, leave out (" 144(5)(a) or 145(3)(a)") and insert ("(Power to grant injunctions against anti-social behaviour)(1)(a) or section 144(5)(a)").
On Question, amendment agreed to.
Clause 147 [Arrest and remand]:
Lord Lucas Lord Lucas moved Amendment No.190:
Page 94, line 41, leave out (" 144 or 145") and insert ("(Power to grant injunctions against anti-social behaviour)(6) or section 144").
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 191:
Page 95, line 9, leave out (" 144 or 145") and insert ("(Power to grant injunctions against anti-social behaviour)(6) or section 144").
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 192:
Page 95, line 24, leave out subsection (6) and insert—
("(6) Schedule (Arrest for anti-social behaviour: powers of High Court and county court to remand) (which makes provision corresponding to that applying in magistrates' courts in civil cases under sections 128 and 129 of the Magistrates' Courts Act 1980) applies in relation to the powers of the High Court and a county court to remand a person under this section.").
The noble Lord said: My Lords, I beg to move Amendment No. 192 and to speak to Amendment No. 193. Clause 147 deals with the power of a court to arrest and remand for a breach of an injunction. It is consequential on earlier Clauses 144 and 145, which allow a power of arrest for breach of injunctions involving anti-social behaviour where violence has occurred or is threatened.
Amendments Nos. 192 and 193 contain nothing new. They replace previous references in Clause 147 to the power of arrest provisions in the Family Law Act 1996 by substituting ancillary provisions about the power of a court to remand where a person is arrested for breaching an injunction for anti-social behaviour. We consider it preferable, on consideration, to have these provisions set out on the face of the Housing Bill rather than the landlord having to look to another statute for detail on this particular aspect of the Bill. I beg to move.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 193:
After Schedule 13, insert the following new schedule—

SCHEDULE

  ARREST FOR ANTI-SOCIAL BEHAVIOUR: POWERS OF HIGH COURT AND COUNTY COURT TO REMAND
  Introductory
  1.—(1) The provisions of this Schedule apply where the court has power to remand a person under section 147(2) or (5) (arrest for breach of injunction, &c.).
  (2) In this Schedule "the court" means the High Court or a county court and includes—

  (a) in relation to the High Court, a judge of that court, and

  (b) in relation to a county court, a judge or district judge of that court.

  Remand in custody or on bail
  2.—(1) The court may—

  (a) remand him in custody, that is, commit him to custody to he brought before the court at the end of the period of remand or at such earlier time as the court may require, or

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  (b) remand him on bail, in accordance with the following provisions.

  (2) The court may remand him on bail—

  (a) by taking from him a recognizance, with or without sureties, conditioned as provided in paragraph 3, or

  (b) by fixing the amount of the recognizances with a view to their being taken subsequently, and in the meantime committing him to custody as mentioned in sub-paragraph (1)(a).

  (3) Where a person is brought before the court after remand, the court may further remand him.
  3.—(1) Where a person is remanded on bail, the court may direct that his recognizance be conditioned for his appearance—

  (a) before that court at the end of the period of remand, or

  (b) at every time and place to which during the course of the proceedings the hearing may from time to time be adjourned.

  (2) Where a recognizance is conditioned for a person's appearance as mentioned in sub-paragraph (1)(b), the fixing of any time for him next to appear shall be deemed to be a remand.
  (3) Nothing in this paragraph affects the power of the court at any subsequent hearing to remand him afresh.
  4.—(1) The court shall not remand a person for a period exceeding 8 clear days, except that—

  (a) if the court remands him on bail, it may remand him for a longer period if he and the other party consent, and

  (b) if the court adjourns a case under section 148(1) (remand for medical examination and report), the court may remand him for the period of the adjournment.

  (2) Where the court has power to remand a person in custody it may, if the remand is for a period not exceeding 3 clear days, commit him to the custody of a constable.
  Further remand
  5.—(1) If the court is satisfied that a person who has been remanded is unable by reason of illness or accident to appear or be brought before the court at the expiration of the period for which he was remanded, the court may, in his absence, remand him for a further time.
  This power may, in the case of a person who was remanded on bail, be exercised by enlarging his recognizance and those of any sureties for him to a later time.
  (2) Where a person remanded on bail is bound to appear before the court at any time and the court has no power to remand him under sub-paragraph (1), the court may in his absence enlarge his recognizance and those of any sureties for him to a later time.
  The enlargement of his recognizance shall be deemed to be a further remand.
  (3) Paragraph 4(1) (limit of period of remand) does not apply to the exercise of the powers conferred by this paragraph.
  Postponement of taking of recognizance
  6. Where under paragraph 2(2)(b) the court fixes the amount in which the principal and his sureties, if any, are to be bound, the recognizance may afterwards be taken by such person as may be prescribed by rules of court, with the same consequences as if it had been entered into before the court.").
  The noble Lord said: My Lords, I have just spoken to Amendment No. 193. I beg to move.
  On Question, amendment agreed to.
  Clause 149 [The power of arrest: supplementary provisions]:
  Lord Lucas Lord Lucas moved Amendments Nos. 194 and 195:
  Page 96, line 7, leave out (" 144 or 145") and insert ("(Power to grant injunctions against anti-social behaviour)(6) or section 144").
  Page 96, line 15, leave out (" 144 or 145") and insert ("(Power to grant injunctions against anti-social behaviour)(6) or section 144").
  The noble Lord said: My Lords, I spoke to these with Amendment No. 186. I beg to move Amendments Nos. 194 and 195 en bloc.
  On Question, amendments agreed to.
  Lord Lucas: My Lords, I beg to move that further consideration on Report be now adjourned.
  Moved accordingly, and, on Question, Motion agreed to.

  Allied Irish Banks Bill
  Reported from the Unopposed Bill Committee without amendment.
  Housing Grants, Construction and Regeneration Bill [H.L.]
  Returned from the Commons agreed to with amendments and with a privilege amendment; the Commons amendments ordered to be printed.

  City of London (Approved Premises for Marriage) Bill [H.L.]
  Returned from the Commons agreed to.
  House adjourned at twenty-three minutes past eleven o'clock.