Lords Sitting of 6 June 1996

Preamble
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Bristol.

Arthur Andersen: US Court Action
Lord Peyton of Yeovil Lord Peyton of Yeovil asked Her Majesty's Government:
Whether, following the judgment in the United States courts in the action brought by the Northern Ireland Office against Arthur Andersen, it is their intention to pursue the case further, and what have been the costs of the action to date.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Baroness Denton of Wakefield): My Lords, in the recent judgment in the United States courts in the matter of Her Majesty's Government v. Arthur Andersen, the judge ruled that the Government's claims against Arthur Andersen in respect of negligence, breach of contract, fraud and aiding and abetting fraud should be allowed to proceed. Preparations are being made for the trial. The amount of costs in the case are a matter between government and their lawyers and disclosure while the action continues would not he in the public interest.
Lord Peyton of Yeovil: My Lords, would my noble friend be good enough to confirm that the events with which this action is concerned took place 16 years ago and that the case has been hanging around in the neighbourhood of the American courts for at least 10 years? If the Government will not tell me—I am sure they will not want to—what the costs have been, may I please guess that so far £15 million would just about cover it and that if they persist in the case, which they are likely to lose, the figure will be more like £40 million? It seems to me to be one of the most expensive pieces of face saving and cosmetics in history.
Baroness Denton of Wakefield: My Lords, I am pleased to confirm to my noble friend that there is no question of face saving whatever. There is competent legal advice that there is the opportunity to recover taxpayers' funds and in that matter I think the timescale is irrelevant.
Lord Williams of Mostyn: My Lords, when one deals with the question of taxpayers' funds, is it not the position that if the Government are successful a sum in excess of 300 million dollars is likely to be recovered, bearing in mind pre-judgment interest? Does the Minister agree that if there is a prima facie case supported by a judge in a competent jurisdiction in respect of allegations of negligence, common law fraud,
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security law violations and breach of contract, the British Government have a public duty to pursue those allegations?
Baroness Denton of Wakefield: My Lords, I am not a lawyer. To have the advice and comments of such a distinguished lawyer is exceedingly helpful.
Lord Howe of Aberavon: My Lords, perhaps I may divert my noble friend with a slightly different flavour of loyal advice. Has she had the opportunity of studying the 50-page report of the Public Accounts Committee produced some 12 years ago which said that this enterprise was impracticable from the start and should never have been assisted and made not one reference to Arthur Andersen, the defendants in this case? Does she not agree that the judgment of the American courts to which she referred dismissed at least half the alleged grounds of Her Majesty's Government's claim, including all of those which would give rise to so-called RICO triple damages? Is it not time for a fresh mind to be brought to bear on the wisdom of this litigious excursion?
Baroness Denton of Wakefield: My Lords, I am pleased to reassure my noble and learned friend that I have examined this matter with fresh expert advice. I believe that the matter of the Public Accounts Committee is outside the range of this Question and I believe the advice to continue to be very sound.
Lord Blease: My Lords, the noble Baroness will probably know that I was part of the body involved in the early negotiations concerning this case. We were quick to acknowledge that many mistakes were made. There is a past still to be pursued in collecting what was due because of corruption and other matters. The trade union movement and employers in Northern Ireland fully backed any methods used to redress the situation. The matter had a dampening effect on many aspects of life in Northern Ireland at that time. However, I am glad to say that many lessons have been learnt. Today, there is much American investment which is wholeheartedly supported and welcomed.
Baroness Denton of Wakefield: My Lords, I am grateful to the noble Lord for his comments. It is important that we learn from issues in the past. We continue to attract inward investment to Northern Ireland, because the best cement for peace is jobs.
Lord Peyton of Yeovil: My Lords, I would quite understand if, in present circumstances in Northern Ireland, Ministers there had not been following this matter with the closest concentration. They have other matters on their hands. I hope very much they will now take a serious look at what has been happening.
Baroness Denton of Wakefield: My Lords, I must question my noble friend's assumption that a Question of his would not be taken seriously or considered in depth. I assure him that I am not only representing Northern Ireland. I cast a Yorkshire eye over the issue.

National Lottery: Profits
3.14 p.m.
Lord Donoughue Lord Donoughue asked Her Majesty's Government:
Whether they consider that the profits achieved by Camelot through its monopoly contract to run the National Lottery have been appropriate.
The Parliamentary Under-Secretary of State, Department of National Heritage (Lord Inglewood): Yes, my Lords.
Lord Donoughue: My Lords, we on this side of the House fully supported the lottery legislation and welcomed the efficient launch and the benefits to good causes. But is the Minister aware that the pre-tax profits in only 18 months are heading for £100 million, which is more than the total capital invested in this operation and represents a return on capital far higher than in most of British industry, which operates in a competitive climate and does not run a monopoly licence to print money? Is he further aware that only three weeks ago the National Heritage Select Committee concluded that, in the light of the additional and unanticipated profits, Camelot should hand over a proportion to charity? Does the Minister agree with that? Would it not at least be elegant if it handed over £50 million to good causes?
Lord Inglewood: My Lords, Camelot has been an extremely efficient organisation. The main beneficiaries of that efficiency have been the Exchequer and the British people. We believe that charitable giving is an entirely desirable activity. We also believe that it should be for the individual who has the money to decide what to do with it.
Lord Wyatt of Weeford: My Lords, is the Minister aware that it is a very easy and simple thing to run a lottery? By this time, should we not have reverted to the original concept of two or more lotteries throughout the country so that there was real competition between them, more efficiency and greater amounts for good causes? Is the Minister aware that that is exactly what happened in the United States, where the state lotteries in various parts of the country rival each other? Does he not agree that that is the surest way of getting good competition, greater efficiency and more money for good causes?
Lord Inglewood: My Lords, it is glib to say that running a lottery is easy. Recently in the state of Arizona the newly-appointed lottery organisation had its licence withdrawn after six months because the operation was a shambles and the participants in Camelot, who made such a great success of the lottery in this country, have been called in to deal with the mess.
Lord Boardman: My Lords, can my noble friend confirm that the contract was awarded to Camelot in competition with many other firms and by an independent source? Can he also confirm that the risk-reward ratio at the time the contract was awarded was very much less favourable than it is in the light of the experience we have had to date?
Lord Inglewood: My Lords, my noble friend is right. The decision to award the lottery to Camelot was strongly underscored by the National Audit Office.
Lord Jenkins of Putney: My Lords, if the Minister believes, as he says, that the scale of profit is appropriate, does he agree that the word "appropriate" acquires a new meaning; namely, "grossly excessive"?
Lord Inglewood: No, my Lords, I do not accept that.
The Viscount of Falkland: My Lords, does the Minister agree that one should be wary of too much outrage over profit in this area because there is no doubt that the lottery has been run efficiently so far, no matter what one's moral position may be? Does he further agree that you run the risk, if only the profit of this operation is considered and if you say that someone else should run it, that the new organisation may not run it so efficiently, may not make such profits and may be unable to give bonuses to its directors, but it may nevertheless take more out of the lottery than the 1 per cent. taken by Camelot to achieve all those profits and bonuses?
Lord Inglewood: My Lords, the noble Viscount is absolutely right. Efficiency is a very good quality, and that applies in running a lottery, as in almost everything else.
Baroness O'Cathain: My Lords, can my noble friend confirm that of all the lotteries in the world, Camelot contributes more to good causes and to government than any other single lottery?
Lord Inglewood: My Lords, that is right. As the recently published La Fleur research pointed out, the British lottery, Camelot, contributes more to good causes and government than any other lottery in the world and also contributes a higher proportion of its total sales.

EU Anti-Fraud Measures: UK Position
3.18 p.m.
Lord Thomson of Monifieth Lord Thomson of Monifieth asked Her Majesty's Government:
What position they took about proposals to reduce fraud in the European Union at the most recent meeting of the Council of Ministers.
The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, on 3rd June, ECOFIN considered a draft regulation providing additional powers for the Commission to carry out on-the-spot checks against fraud in member states. My right honourable friend the Chancellor indicated support in principle for this measure. However, he made it clear that, in line with the policy outlined by the Prime Minister in another place on 21st May, the United Kingdom would be unable to agree to the draft regulation until there was an

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agreement to lift the export ban on beef derivatives and until there was agreement on a clear framework leading to a lifting of the wider ban.
Lord Thomson of Monifieth: My Lords, the Government have taken a leading role in the fight against fraud in the Community, encouraged by your Lordships' Select Committee. Therefore, is not this policy to block and veto proposals to take action against fraud the most absurd, self-defeating policy that we have so far supported? Has the Minister seen the article by the chairman of the CBI European Committee, Mr. Niall FitzGerald, who speaks about a "European nightmare" if the Government pursue such a policy? Would it not be wiser to take advantage of the good will of the Italian Presidency and of the modest concession that the Government made yesterday in connection with recognising Slovenia, in order to retreat from this cul-de-sac which they have got themselves into instead of announcing in the press today that they will be proposing another nine vetoes on Monday?
Lord Mackay of Ardbrecknish: My Lords. if I understand the noble Lord correctly, he is suggesting that one should block only those measures with which one does not agree. That is no different from what happens anyway. To make the point to our European partners, we have to block even those measures with which we do agree, including the regulation on fraud. The result is that we now have a decision from the Commission to lift the ban on beef derivatives. We recognise that that was not an easy decision and we are grateful to the Commission and to the Italian Presidency. Because of the interest of the Italian Presidency in Slovenia, we have indicated that, as we are prepared to review all such cases on a one-to-one basis, we shall not block that case when it comes up.
Lord Healey: My Lords—
Lord Barnett: My Lords—
Lord Taverne: My Lords—
Noble Lords: Healey!
Lord Healey: My Lords, I thank you. I congratulate the Minister on the noble example of self-sacrifice which the Government have set by vetoing measures with which they agree in order to achieve what they wish. However, does not the Minister find it a little odd that a government who oppose the power of the bureaucrats and the possibility of qualified majority voting should rely entirely on bureaucrats and qualified majority voting to get rid of the ban on beef derivatives?
Lord Mackay of Ardbrecknish: My Lords, I am sure that the noble Lord understands full well that we are grateful to the Commission for the sensible view that it has taken of the ban on beef derivatives. We are equally grateful to those member states, including the Presidency, which have supported us so far. However, the fact remains that other member states are determined to prevent any progress being made on the difficult
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question of beef. We believe that it is important that we stand up for the UK's interests and the interests of our important farming industry.
Lord Clark of Kempston: My Lords, does my noble friend agree that the British Government's stance is to protect the beef industry in this country plus our abattoirs and food processors? Does my noble friend further agree that it is extraordinary that HMG should be criticised for adopting a policy which has been adopted by France and Italy when the European Union has never criticised those two countries for it?
Lord Mackay of Ardbrecknish: My Lords, my noble friend is correct to point out that in the past other member states have taken even more drastic measures than that which we have felt obliged to take on behalf of the UK's farming industry and the many people whose jobs have been put at risk in industries which are downstream of the beef industry. My noble friend is right. We believe that it is as a result of our policy that we are beginning to see progress. The decision to lift the ban on beef derivatives is one step in what we firmly believe to be the right direction.
Lord Barnett: My Lords—
Lord Taverne: My Lords—
Lord Bruce of Donington: My Lords—
The Lord Privy Seal (Viscount Cranborne): My Lords, I am aware that this issue arouses great interest. Perhaps we can proceed expeditiously and in an orderly fashion, and begin with the noble Lord, Lord Barnett; I am sure that we can then fit everybody in.
Lord Barnett: My Lords, is the Minister aware that I pay tribute to the Government for what they have done to attempt to reduce fraud in Europe? However, given that the beef ban could well last for years not months, is it not now a question of the Government doing what they have done in relation to Slovenia and conceding that at least in this area they should agree with the rest of the European Community?
Lord Mackay of Ardbrecknish: My Lords, I think that the real point came in the second part of the last sentence of my Answer when I referred to,
"agreement on a clear framework leading to a lifting of the wider ban".
That makes it clear that it is not just a question of waiting for the wider ban to be lifted, but of waiting for agreement on the methods and the steps that will be taken along the road to the lifting of that wider ban. No such framework is yet in place. We firmly believe that it is important for our industry that such a framework is put in place. That is why I am afraid that we shall have to continue our blocking policy—except, as I said earlier, in the case of Slovenia—until all our European partners see some sense.
Lord Taverne: My Lords, will the Minister now confirm or deny that the Government might apply the same convoluted logic to all the other 60 non-European

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nations which have imposed a ban on our beef? Are we to seek to disrupt our relations with those countries also in order to have the ban lifted?
Lord Mackay of Ardbrecknish: My Lords, I am sorry to have to point out to the noble Lord that if another country bans imports of our beef, that is something that we shall have to negotiate with that country. The current ban is a ban on this country being able to export its beef and beef products anywhere in the world. I should have thought that there was a significant difference which even the most Euro-phile of noble Lords would be able to see.
Lord Renton: My Lords, may we get away from the beef ban for a moment and return to fraud? To what extent is fraud in the Community considered to be due to abuse of the common agricultural policy?
Lord Mackay of Ardbrecknish: My Lords, the common agricultural policy is a fairly rich source of fraud in various parts of the Community, and measures are already in place for dealing with that part of the European budget. The current regulation relates to a broader area than merely the question of the common agricultural policy. It would allow the Commission to go into member states to help them to detect fraud by on-the-spot checks.
Lord Bruce of Donington: My Lords, I have with me a copy of the proposal to which the Question refers, together with the Government's explanatory memorandum. Are we to take it from the Minister's Answer that the Government have abandoned the queries that they raised in paragraph 30 of their memorandum which states that before the Government can agree the proposal, they require further explanation and reassurances? Have the Government had those reassurances? If so, they must have received them within a remarkably short time since the memo is dated 9th May.
Is the Minister aware that in any event the regulation gives quite undesirable powers to the European Commission in connection with powers of inspection, but that it ignores the specific question of the possibility of irregularities occurring within the Commission itself or the rights of the Belgian police to be able to gain access to the documents that they require?
Lord Mackay of Ardbrecknish: My Lords, the position with regard to the draft regulation is that although, of course, we are never entirely satisfied, our reservations were both positive and negative. We had considerable reservations that other member states might attempt to water down the regulation. That has not happened. That is why I said that in principle my right honourable friend the Chancellor had indicated his agreement at ECOFIN.
Turning to the noble Lord's other points, if he is to widen the issue, we shall need a lot longer than the time available to us this afternoon. However, it is true that such regulations would give the Commission and its officials the power, along with member states, to carry
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out on-the-spot investigations. Given that the noble Lord is so keen on attacking fraud in the European Community, I should have thought that he would welcome that step.
Lord Wright of Richmond: My Lords, can the Minister confirm that the Government have taken note not only of Mr. Niall FitzGerald's remarks about a "nightmare", which were quoted by the noble Lord, Lord Thomson of Monifieth, but also of his remarks about the very real damage to British interests and British business which is being caused by the apparent diminution of the Government's commitment to the European Union?
Lord Mackay of Ardbrecknish: My Lords, it is in no way a diminution of our commitment to the European Union. We are continuing to work in the European Union, but we have made it clear that because of the very great damage that the policy of the ban on exports is causing to many fragile rural areas of our country, we have some responsibility to put our fellow countrymen first. That is what we are doing. The matter can be easily resolved. We will remove this policy immediately if our friends in the European Union start to build the framework which I mentioned in my earlier answers.
Lord Eatwell: My Lords, does the noble Lord agree that any responsible government before embarking on an adventure of this nature would give some consideration to the likely cost both to the Exchequer and the British taxpayer? On Tuesday we heard that the Government were prepared to give comfort to organised crime by vetoing anti-smuggling measures. We now hear that the Government are prepared to give comfort to fraudsters. The CBI tells us that damage is being done to British industry. Can the Treasury tell us its responsible forecast of the overall cost to Britain of this policy?
Lord Mackay of Ardbrecknish: My Lords, I say to the noble Lord, Lord Eatwell, that a few weeks' delay on these issues will not make any difference to a matter upon which we are agreed in principle and will be unblocked the moment that British interests are satisfied. I understand, as I did two days ago, that the noble Lord, Lord Eatwell, does not particularly want a British Government to stand up for British interests. I oppose that absolutely, as do the Government. I tell the noble Lord that the farming industry in this country is with the Government in a resolute stand on this issue and not with the noble Lord and his party.
Lord Eatwell: My Lords, am I to understand from the Minister's answer that if the framework is not in place within a few weeks the policy will have failed?
Lord Mackay of Ardbrecknish: My Lords, the policy will succeed, as it has begun to do, in that the beef derivatives ban has now been lifted. Would it not have been lovely if we had heard one word of welcome for the lifting of the beef derivatives ban from the noble Lord who speaks for the party opposite? This Government will continue to defend British interests.

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The blockage can be removed immediately our partners come forward with a framework which we believe will eventually lead to the ban being lifted.
Viscount Cranborne: My Lords, we have one more Question. I believe that your Lordships will agree that we have had a long and enjoyable run on the present Question.
Noble Lords: Hear, hear!

Euro '96: Measures to Combat Violence
3.34 p.m.
Lord McNally Lord McNally asked Her Majesty's Government:
Whether they are satisfied with the measures in place to deter and combat violence and hooliganism inside and outside soccer grounds during Euro '96 which begins on Saturday 8th June.
The Minister of State, Home Office (Baroness Blatch): My Lords, I can confirm that the regional police intelligence centres and the national co-ordinating centre in central London are now open and fully staffed in preparation for the competition. Intelligence about known and suspected hooligans is already being disseminated using the latest technology to ensure that local police have up-to-date information to assist them in ensuring that any trouble can be quickly dealt with.
Lord McNally: My Lords, I thank the Minister for that Answer. I sincerely hope that the confidence that the co-ordination and resources are adequate is justified. This is one game that the hooligans must not be allowed to win. Is the Minister prepared to say that any foreigners who are arrested for hooliganism during the competition should be removed from the country forthwith, and if they are British hooligans they should be banned not just from the competition but from soccer games for life?
Baroness Blatch: My Lords, I am sure that the whole House will agree that this is a great sporting occasion. We wish it well and hope that it will be a great success. It is worth putting on record that the majority of fans who will be coming to support their teams will be well behaved, law abiding and genuine supporters of the game. We believe that everything that can be done to pre-empt any trouble is being done.
There has been enormous collaboration between the countries and all the organisations in this country. I can give an assurance that there is plenty of legislation in place which provides the police with powers of arrest. We hope that anyone causing trouble will be dealt with speedily and in the manner suggested by the noble Lord.
The Viscount of Falkland: My Lords, can the noble Baroness tell the House of any specific plans to control the number of young people who are under the influence of drink on our streets during this competition? Violence is not necessarily connected with alcohol in this area but
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hooliganism, to separate the two, often is and can be a matter of great distress to the citizens of our country who may not necessarily be terribly interested in football.
Baroness Blatch: My Lords, there are so many measures in place that it would take too long to mention all of them at the Dispatch Box. For example, there has been good collaboration between the police and local authorities. The local authorities are the bodies that deal with the licensing hours in their localities. I refer to the following measures: Sporting Events (Control of Alcohol Etc.) Act 1985; the Public Order Act 1986; the Football Spectators Act 1989; the Football (Offences) Act 1991; and the Criminal Justice and Public Order Act 1994. The powers are all there. In addition, a great deal of forward planning has gone into this event. A good deal of information and intelligence has been gathered about known troublemakers. As the noble Viscount has probably read in his newspapers recently, quite a number of those people will not be attending any of these matches as a result of the work that has already taken place.
Lord Stoddart of Swindon: My Lords, whereas I fully support the police in their pre-emptive strike against well-known football hooligan spectators, can the noble Baroness say whether they will also carry out pre-emptive strikes against hooligan players who have recently caused so much trouble in Hong Kong and on a Cathay Pacific aircraft?
Baroness Blatch: My Lords, I am not sure whether there has been trouble in Hong Kong, but certainly we know about the trouble on the aeroplane. I have much sympathy with what the noble Lord has just said. What is to be done about it is a matter for the Football Association and the airline. The noble Lord will also know that there is an important piece of legislation waiting to go on to the statute book which we believe will give extra power to the police to deal with that kind of troublesome behaviour in the air. I do not believe that any Member of this House should condone it.
Lord Elton: My Lords, does my noble friend agree that the tone of these exchanges suggests that football is principally a producer of disorder, whereas the vast majority of the games are carried out in a good spirit and the game is enjoyed by the country as a principal sport? Does my noble friend also agree that the introduction of amateur football teams on a small charitable basis in large numbers does a great deal to keep young people out of crime and trouble? Until recently they were well supported by the Football Trust, whose funds have been so curtailed by the effects of the National Lottery that that has now ceased. Can Her Majesty's Government perhaps come to their aid?
Baroness Blatch: My Lords, I am pleased that my noble friend has emphasised the importance and enjoyment of this sport and the good that it can bring to the lives of young people and the not-so-young. I take this opportunity to tell him that up and down the land individual football clubs and the Football Association support participation by local communities and have a

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number of very imaginative schemes which engage the energies of young people in a productive way. I hope that that will continue. We certainly support it.

House of Lords Offices: Select Committee Report
3.38 p.m.
The Chairman of Committees (Lord Boston of Faversham): My Lords, I beg to move that the third report from the Select Committee on House of Lords Offices be agreed to.
Moved, That the third report from the Select Committee be agreed to (HL Paper 83).—(The Chairman of Committees.)
Following is the report referred to:
1. AVAILABILITY OF PAPERS IN CD-ROM FORM
The committee agreed to accept the laying of the appendices to the Scott Report in CD-ROM form. Two paper copies of the 24-volume appendices would be available for examination by Lords in the Library, and the CD-ROM would be accessible through the PDVN. In addition, it was agreed that the Library would introduce a loan service of CD-ROMs of government and parliamentary papers.
2. ACCOMMODATION FOR BLACK ROD
The committee approved the purchase of a flat outside the Palace for Black Rod.
3. X-RAY SCREENING OF MAIL AND DELIVERED ITEMS
The committee agreed to the introduction of X-ray screening facilities for mail delivered to the Palace of Westminster. The cost will be shared with the Commons in the ratio 78:22, Commons: Lords.
4. REGULATIONS FOR PHOTOGRAPHY, FILMING, SOUND RECORDING, PAINTING, SKETCHING AND MOBILE TELEPHONES
The committee approved the issuing of new regulations for photography, filming, sound recording, painting, sketching and mobile telephones in the Palace of Westminster.
5. CD-ROM OF THE PALACE OF WESTMINSTER
Subject to satisfactory negotiations, the committee agreed to allow a commercial company to make an interactive CD-ROM of the Palace of Westminster which would focus on the historical and architectural aspects of the Palace.
6. FACILITIES FOR THE DISABLED IN THE PALACE OF WESTMINSTER: PROPOSED TACTILE MODEL
The committee approved the purchase of a tactile model of the Palace of Westminster to aid partially sighted visitors to Parliament. The model would be placed at an appropriate point on the line of route, probably in the Robing Room or the Royal Gallery.
7. FIRE PROCEDURES
The committee agreed to proposals to paint red lines on the road surface from Black Rod's Garden to the inner courts to aid access for the fire services; and agreed to a proposal to hold a fire practice.
8. 1996 PAY
Following HM Treasury's delegation of pay and grading of staff at Grades 6 and below to departments from 1 April, the committee took note with approval of the pay offer to House of Lords staff for 1996. The paybill cost will be 4·99 per cent.
9. LORDS REIMBURSEMENT ALLOWANCES
The committee was informed of the annual up-rating of the motor mileage allowance in line with the increase in the retail price index. From 1 April 1996, the rate of motor mileage allowance was increased by 1·2 pence to 47·2 pence for the first 20,000 miles for the period to 31 March 1997. Further mileage in this period would be payable at the rate of 21·7 pence per mile.
Lord Cocks of Hartcliffe: My Lords, I confine my remarks to paragraph 2 of the report: accommodation for Black Rod. The committee approved the purchase of a flat outside the Palace for Black Rod. I had the opportunity of speaking to Black Rod before the House assembled and was able to assure him that I raised this matter entirely without animus towards him personally and that I was full of admiration for him. Some time ago I asked one of the very senior members of the Offices Committee why Black Rod and the Yeoman had flats within the Palace. I was told that it was a matter of security and it was absolutely essential that they were on the premises in case of emergency or some incident occurring. I am sure I will be told that the House approved this on 5th April 1995 when it considered the Second Report of the 1994-95 Session. I quote the last passage dealing with accommodation:
"alternative residential accommodation for Black Rod and the Yeoman Usher in the vicinity of the Palace".
I must confess a lack of vigilance on my part, because I did not pursue this matter having had that previous assurance about security. I felt that the phrase "within the vicinity of the Palace" must mean somewhere within the confines. I never for one moment imagined that premises were being sought outside.
We should not proceed with this. There is a particularly pertinent reason why. On Monday your Lordships discussed the Second Reading of the Armed Forces Bill. During the course of that debate a large number of contributions were made from all sides of the House which touched upon the likely effect of the sale to developers of the married quarters estate. The noble and gallant Lord, Lord Bramall, mentioned all those contributions and said that the situation could lead to a national disgrace.
Can your Lordships imagine the comments being made in the barrack rooms and mess rooms when our service personnel, who have this corrosive fear about the roof over their heads, hear that your Lordships' House is sanctioning the expenditure of £385,000 to purchase a flat for one of the staff? It is not just a purchase price of that nature, but there is an on-going revenue cost of £5,000 a year in service charges. I do not wish to be too harsh on the authorities: there must have been an absolutely savage negotiation to get the price down to £385,000, because the asking price was £390,000.
We are supposed to set an example here. How do we tell the bus driver and the nurse paying tax that their money is going on this accommodation? If I were a service wife worried about the prospects—whatever the merits or demerits of the Government's proposals—I should not feel very comforted if I read about this.
Measures of this type are always justified in your Lordships' House, because it is said that we are making more space available for your Lordships. We hear that refrain so often that I wonder how on earth the House has managed to cope with its business over the years until now. That phrase is being used to justify everything that is happening. It has become some sort of formula which has only to be mumbled for the House to give carte blanche to whatever is proposed.

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I do not believe that this House is so selfish and demanding that our own needs preclude every other consideration. The effect of this decision, when it becomes widely known throughout the services, will be extremely bad. That is quite apart from the effect on the general public. I ask the Chairman of Committees whether at this late stage the committee might take the matter back and have another look at it.
Lord Harris of Greenwich: My Lords, I hope that the Chairman of Committees will not agree to look at this matter again. It has been looked at over a substantial period of time by an all-party committee of this House. The accommodation requirements of Black Rod and the Yeoman Usher are well known. It is clearly necessary in the interests of the House that they should have accommodation within the House or close to it. This proposal ensures that Black Rod will have accommodation close to the House, which is, as I have said, highly desirable in itself.
All I would say to the noble Lord, Lord Cocks, is that those, like him and myself, who have access to a room in this House should not perhaps be so dismissive of those who do not have accommodation of their own in the House. Black Rod has agreed to move fairly expeditiously to make accommodation available within the House to working Peers. It seems to me that the price of the accommodation that has been negotiated has not been unreasonable, given the price of accommodation in this area. That being so, I very much hope that the Chairman of Committees will maintain the committee's position.
The Chairman of Committees: My Lords, I am grateful to the noble Lord, Lord Cocks of Hartcliffe, for having warned me well in advance that he proposed to raise this matter today. I shall try to deal with the points that he has raised and those raised by the noble Lord, Lord Harris of Greenwich. I understand the proposal made by the noble Lord, Lord Cocks, but I should let your Lordships know at the outset that I shall be seeking to obtain your Lordships' approval for this report of the Offices Committee. So that neither the noble Lord, Lord Cocks of Hartcliffe, nor your Lordships generally, are under any misapprehension, I should say that I am not defending this policy; I am advocating it, because I believe that it is right.
As the noble Lord, Lord Cocks, said, it stems partly from a decision of your Lordships' House of 5th April last year on the recommendation of the Offices Committee Report of 28th March last year. Your Lordships' House approved this policy. I should like to remind your Lordships of one or two fundamental points in connection with it. The first is that for many years your Lordships' House has provided accommodation for Black Rod and the Yeoman Usher. That has therefore been a cost to public funds. They have hitherto, and up until now, been accommodated within the Palace of Westminster. That must be an expensive way of dealing with the matter.
What we have a duty to do, and what your Lordships' committees have sought to do, is to make the best use of the accommodation within the Palace of Westminster. That leads me to my second fundamental point which has been in the minds not just of your Lordships but of the
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committees—that is, there has over the past years, particularly in recent years, been increasing pressure to find additional space within the precincts of the Palace of Westminster for your Lordships, Members of the House, and the staff of the House. If the House is to continue with its public duty of serving the nation in the way that it seeks to do, it must ensure that provision is made for Members and key staff within the Palace of Westminster.
I am grateful, and I know that the committees are too, to Black Rod and the Yeoman Usher. First—I believe this partly answers one of the points made by the noble Lord, Lord Cocks of Hartcliffe—they are among the hardest working public servants within the realm. They are tied to this place. They work very long hours indeed. It would not be right for them to cease to be provided with accommodation, if not within the Palace of Westminster, then within very easy reach of it. That is if your Lordships accept this Motion.
One of the reasons why there has been increasing pressure in your Lordships' House to find accommodation for Members and for staff is that the work has been increasing. It has increased tremendously. It is right that people outside the House should be well aware of what is the precise position. As your Lordships will know, it is that this is the second hardest working parliamentary Chamber in the world. It is beaten only by another place which is the longest sitting parliamentary Chamber in the world. Your Lordships' House is the second longest sitting Chamber. With that, and with the number of your Lordships who come frequently and in many cases, contribute regularly to the work of your Lordships' House, they deserve attention.
I am grateful to Black Rod and the Yeoman Usher. I know that the committees are too. This decision stemmed from a decision of your Lordships' House, and all the short-listed applicants for Black Rod's post, when we appointed our Black Rod last year, were told that this move was in the offing. Neither Black Rod nor the Yeoman Usher has waited to be pressed as a result of the decisions of your Lordships' Committee. In fact, over these past months they have taken upon themselves the initiative to pursue that decision. That is very good indeed.
The noble Lord, Lord Cocks, also referred to security. I understand the anxiety about that matter and I am not surprised it has been raised—indeed, I should have been disappointed if the point about security had not been raised. All matters which your Lordships believe to be relevant in considering this proposed move were taken into account and security was one such matter. Neither Black Rod nor the Yeoman Usher, in view of their considerable background, is short of an experience or two in relation to considering security matters.
Therefore, for all those reasons, I have no hesitation whatever in recommending to your Lordships, after the most thorough consideration by your Lordships' committee, that the Motion should be agreed to, including that aspect of policy.
On Question, Motion agreed to.

Dogs (Fouling of Land) Bill
Read a third time, and passed.

Housing Bill
3.51 p.m.
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Mackay of Ardbrecknish.)
Lord Williams of Elvel: My Lords, before the House resolves itself into a Committee, I must declare an interest and I apologise to the House for not declaring it before Second Reading. I ruled myself out of discussion on Part III on leasehold reform on the grounds that I was a leaseholder who could be affected by the provisions of the Bill.
On studying the Bill further, I found that there could be an interest which I should have declared to your Lordships. It is that my wife is a member of the council of Stonham Housing Association. She is unpaid and performs that service on a voluntary basis. Indeed, at the risk of betraying marital secrets, she does not want to be paid, somewhat to my displeasure, but I leave that aside. I took advice from the Table as to whether that was an interest I should properly declare and the advice I received was that in view of the resolution which your Lordships passed last November about Peers being cautious about interests which may affect them, I should declare an interest. I do so very willingly. My wife has offered to resign from the membership of the council of management of Stonham Housing Association but I do not believe that your Lordships would consider that to be an appropriate measure. I certainly would not.
I mention the matter because this is the first point of—if I may so express it—case law under the resolution which your Lordships passed last November. I am sure that noble Lords will have been listening extremely carefully to what I said and will have noted the advice I received from the Table. I wonder whether, in some respects, we are not going too far. Therefore, I declare that interest.
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Clause 1 [The register of social landlords]:
Lord Williams Lord Williams of Elvel moved Amendment No. 1:
Page 1, line 11, after ("office") insert ("and regional offices").
The noble Lord said: In moving Amendment No. 1, I shall speak also to Amendment No. 3. The whole matter of registration and how it is to be publicised was considered at length in another place. If the noble Baroness, Lady Hamwee, will permit it, it may save the time of the Committee if I ask the Minister to intervene at an early stage because I am advised that Mr. Curry, the Minister responsible for the Bill in another place, wrote to my honourable friend Mr. Raynsford with,
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among other things, a note from the Housing Corporation about how it proposes to handle the statutory register of social landlords and how it proposes to make available the relevant information. Members of the Committee may have been to the Library to read a copy of that letter but just in case that is not so, it may be useful if the Minister were to give a summary of its contents before we move on with the amendment. I beg to move.
Lord Lucas: Yes, I hope that I can give the noble Lord, Lord Williams, the summary he requests. It is proposed that the new statutory register of social landlords will comprise the registered number, name, address and relevant board minute of registration in hard copy. In the light of the requirement in Schedule 2 regarding the independent ombudsman scheme, the register may also include the name and number of the approved scheme that each social landlord registers.
In addition, there will be maintained a new public information file which will contain for each registered social landlord a copy of the rules and governing instrument with all amendments and consents to amendments since registration, formal registration documents, the completed application form for registration, the latest annual return, which will provide details of board membership, the number of members of the board, the principal solicitor's name, and such items as that, one set of audited accounts for the registered social landlord's last three financial years, complete with transfers of engagements where relevant, and, for larger associations, key policy documents on tenant selection and allocations of policy.
On a regional basis, it is proposed to develop a system whereby an abstract of key information from the PIF for each landlord is made available at each corporation regional office, probably through the computer network. The sort of information available will be key information on the annual return and a summary of the income and expenditure accounts and balance sheet. That would be accessible on a screen from a network channel or provided as a print-out. Members of the public requiring hard copies could obtain them by giving three days' notice of a request at the regional office. Those will then be provided by the head office. I believe that that is as much information as I can give as to what will be on the register.
Lord Williams of Elvel: I am grateful to the Minister for putting that on the record. I am sure that Members of the Committee, having heard what he said, will wish to look at the full proposals from the Housing Corporation, available, I understand, in the Library. As far as I can see, they meet the anxieties we had when proposing Amendment No. 1 and, indeed, Amendment No. 3.
There is only one point I wish to raise. Will the Housing Corporation consider the need for devolution of its responsibilities, particularly in relation to the information from the board, which is a central board? Such a devolution would not only increase the ability of the corporation to give information as and when required at a suitable place and in a reasonable time, but could also involve some form of democratic

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representation on regional boards which would provide a greater level of accountability than is the case at present in the Housing Corporation centrally.
The matter was debated at length in another place. The Minister has outlined what the Housing Corporation has in mind and has endorsed that on behalf of the Government. I am grateful to the noble Lord for that fact. I see that the noble Baroness wishes to comment. I give way.
Baroness Hamwee: I am much obliged. I am also grateful to the Minister for putting the information on the record. As this is the first amendment that the Committee is considering, perhaps I may explain why I, too, felt that that was important. The Housing Corporation is a quango, and we will no doubt have many debates during the Committee stage on questions of accountability. I shall certainly support requests for as much as possible to be placed on the record as regards the way in which the Bill will operate. I believe that that will be our best opportunity and the best record for us to refer to in the future when asking the Government how matters are progressing. It is important that the Government should set the context for what the Housing Corporation is doing, as we will not have the opportunity to question the corporation directly.
4 p.m.
Lord Lucas: I appreciate the remarks made by the noble Lord, Lord Williams, and the noble Baroness, Lady Hamwee, about accountability. Doubtless we will have to deal with that issue again at a later stage. Such points as whether there should be local representation on local boards for the Housing Corporation fall outside the scope of the amendment now before us, but we may have an opportunity to return to the matter later.
I turn now to the main question raised by the noble Lord, Lord Williams; namely, whether the information function should be delegated. We feel it is important that the register and the associated files, which are important documents, should be kept well, up to date and properly. We also feel that they should exist in a single place so that one can be sure that such functions are indeed carried out properly. To the extent that information then needs to be disseminated from that correct, confirmed register to other offices, we will certainly look at ways in which that might be improved. However, we believe that there needs to be one proper register upon which people can rely and which is maintained as a responsibility by one organisation rather than that responsibility being disseminated and, therefore, possibly not so easy to enforce.
Lord Williams of Elvel: I am grateful to the Minister for his response. I did not necessarily mean to suggest that different registers should be kept in different places for different regions. I accept that there has to be a central register. Nevertheless, with modern technology, it is not impossible for that central register to be disaggregated among whatever region and in whatever manner might be appropriate.
As I am sure the Minster realises, we are discussing an important matter. Anyone who is a tenant, or going to be a tenant, of a social landlord will wish to know—
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and, indeed, should wish to know—first: whether that landlord is on the register; secondly, what the condition of that social landlord is; and, thirdly, who the people are who will actually run the property of which he or she is, or may become, a tenant. In our view it is vitally important that that information should be available as soon as possible at any reasonable time.
I believe that the Minister and I are at one on the matter and that it is a question of technology. However, I very much hope that it will not be a matter of the Housing Corporation centrally simply saying, "That is the register and it is available on the Internet", or whatever it may be. I hope that there will be proper facilities for those who are, or who will become, tenants of social landlords to enable them to have access to such information at a suitable place and at a reasonable time. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lucas Lord Lucas moved Amendment No. 2:
Page 1, line 13, leave Out ("Part") and insert ("section").
The noble Lord said: In moving the above amendment, I shall speak also to Amendments Nos. 61, 106, 107 and 110. Amendment No. 2 allows Clause 1 to come into force on a date to be specified by order. That is necessary to enable the corporation's register of social landlords to be introduced in the correct sequence of events. It is consistent with the commencement provision for the Bill as a whole (in Clause 204), which provides for the provisions at Part I of the Bill to be brought into effect at different times.
The other amendments in the group provide for the commencement of various other clauses to come into force on a date to be specified by order. Amendment No. 61 concerns the commencement of provisions relating to the right of tenants to acquire dwellings. Amendments Nos. 106, 107 and 110 all concern the commencement of provisions relating to grants under Sections 50 to 55 of the Housing Act 1988. I beg to move.
Lord Williams of Elvel: In themselves, the amendments seem to be unexceptionable. However, can the Minister say why the provisions were not included in the Bill in the first place?
Lord Lucas: I think it would be honest to say that they were neglected.
On Question, amendment agreed to.
[Amendment No. 3 not moved.]
Baroness Hamwee Baroness Hamwee moved Amendment No. 4:
Page 1, line 16, after ("it") insert ("satisfies the conditions in subsection (2) and").
The noble Baroness said: In moving the above amendment I shall, for the convenience of the Committee, speak also to Amendments Nos. 5 and 6 which are grouped with it. Indeed, it would make no sense if I were not to do so. We are now dealing with a simpler point than might at first appear to be the case from the drafting of the amendments. Clause 2(1) describes bodies which are eligible for registration as social landlords and sets out three groups:

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"(a) a registered charity,
(b) a society registered under the Industrial and Provident Societies Act 1965 which satisfies the conditions in subsection (2), Or
(c) a company registered under the Companies Act 1985 which satisfies those conditions".
In the case of the second and third bodies, they are required to satisfy the conditions in subsection (2) of the clause. My amendment is designed merely as a means to ask the Minister to explain why those conditions do not have to be met by a charity. One of those conditions is that the body should be "non-profit-making". Of course, I can understand why it is not necessary to spell that out in the case of a charity. However, the "objects" of the non-profit-making body are dealt with later in the clause.
I wonder whether any charity which does not deal with housing matters—perhaps a medical charity, a dogs home; indeed, the list is almost endless—might be eligible to register. I suppose it is a rather picky point and I apologise to Members of the Committee for using prime time to raise it. Nevertheless, the issue arises at the start of the Bill and, therefore, I have raised it in its place. I beg to move.
Lord Lucas: The noble Baroness, Lady Hamwee, is right to say that it is a rather picky point. We are most concerned that charities should come forward where they feel able to play a part in the provision of social housing. However, looking at the amendments put forward by the noble Baroness, we feel that, picky though they are, they are probably right. Nonetheless, we would like time to look at the wording to see whether we agree with it absolutely or wish to propose something better. With those words of comfort, I hope that the noble Baroness will feel able to withdraw the amendment.
Baroness Hamwee: I shall not be quite as grudging as the Minister. I thank him for noting the point and for having regard to it. I have no particular proprietorial interest in my drafting; it is simply important to get the Bill to say what we want it to say. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 5 and 6 not moved.]
On Question, Whether Clause 1, as amended, shall stand part of the Bill?
Lord Williams of Elvel: Before we leave Clause 1 there is a matter of which I hope I have given substantial notice to the Government; namely, the whole question of what is a social landlord and what should be on the register. In Clause 2, which we shall come to, there is a provision for companies registered under the Companies Act 1985.
The problem with social landlords who may be registered under one Act or another is that the governing Act of a social landlord is the Act under which he will be registered. In the case of, for instance, local housing companies—the principle of which we support—which may be registered under the Companies Act 1985, there
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seem to me to be some problems which the Government should consider. We have no particular difficulty with housing associations registered under the Housing Associations Act 1985. That is referred to in Clause 1. However, we have some problems with the Government's approach as regards other social landlords who may be registered under the Bill as it is at present drafted.
I give the Committee some examples. There may well be a company registered under the Companies Act 1985 which is governed by that Act as amended by later companies legislation. The duties of directors under the Companies Acts are quite different to the duties of members of a council of housing associations registered under the Housing Associations Act 1985. As your Lordships will be aware, the Companies Act is a rather complex and difficult measure. It imposes a variety of obligations on directors and on shareholders and contains a variety of measures about who can call general meetings and what those general meetings can decide and many measures as regards mergers, acquisitions and various other matters of that nature. I do not wish to go through the whole of the companies legislation before the Committee this afternoon.
It therefore seems to me that before we move on the Government would be wise to spell out in a certain amount of detail how they see local housing companies—as opposed to those housing associations which are registered under the Housing Associations Act 1985 mentioned in Clause 1—and companies registered under the Companies Act 1985 conforming with the provisions which we shall discuss later in the Bill. This is a general point which I wish to raise at the outset.
The whole matter of companies legislation is one thing but it appears from what I have heard that local housing companies will be encouraging widespread ownership, perhaps ownership by tenants of the properties of the local housing company. I can envisage that the local authority may be a shareholder in such a company. I can envisage that private interests—pension funds and others—may be shareholders. Under those circumstances, if that is what the Government's thinking is, the placement of those shares would come under the Financial Services Act. That raises all sorts of rather more complicated questions about the nature of due diligence and of the criminal penalties for those who offer shareholdings in companies without due diligence. The maximum penalty for recklessness under the Financial Services Act is seven years' imprisonment.
It therefore seems to me that the Government have to—and I hope at this stage will—make a general statement which we may well come back to in the course of our discussions. I hope the Government will wish to make a general statement about how they see social landlords who are not registered as such under the Housing Associations Act 1985. There may be similar questions in Clause 2 about those registered under the Industrial and Provident Societies Act 1965. However, I shall come to that later. As the noble Lord, Lord Lucas, will be aware, I have raised this question before. I repeat that I hope that he will be able to make a general statement to which we may well come back in the

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course of amendments which we move. It is to us rather a serious problem to find out exactly what the Government's intentions are.
4.15 p.m.
Lord Lucas: Yes, indeed, the noble Lord made known his concerns to the Government some little while ago. If I may say so, they are entirely reasonable. It is important that these two powerful pieces of legislation should work together, particularly when they are governing the same company. I hope I may be allowed to take up some small amount of the Committee's time to go through the basic principles which we see underlying how these two Acts will work together when applied to the same housing association.
The present situation is that the Housing Corporation may register as a housing association, a registered charity or a society registered under the Industrial and Provident Societies Act 1965 which meets certain conditions. These conditions are in outline that the society does not trade for profit and is established chiefly for the purpose of providing housing for letting. It is for a body which wishes to become a social landlord to decide which form of incorporation best suits its purpose. A registered charity will be subject to the supervision of the Charity Commissioners. A registered charity which is a Companies Act company must comply with the requirements of the Companies Act. An industrial and provident society will be subject to the supervision of the Registrar of Friendly Societies. If such a body succeeds in achieving registration as a housing association, it will be subject to the monitoring and regulation of the Housing Corporation using the powers conferred on it by the Housing Associations Act 1985, as amended.
We have a situation therefore in which a registered housing association will be subject to two or three sets of requirements emanating from different sources and governed by different legislation but each reflecting legitimate interests of regulatory and supervisory bodies. This Bill extends eligibility for registration to those companies registered under the Companies Act 1985 which satisfy certain conditions. These are in brief that they are non-profit-making and are established chiefly for the purpose of providing housing for letting. This will permit non-charitable Companies Act companies to register which they have hitherto been unable to do. In large measure the Bill re-enacts with minor changes the powers conferred on the Housing Corporation by the Housing Associations Act 1985 as variously amended.
The most significant new provisions are those relating to the right to acquire and to cases of insolvency. Thus non-charitable Companies Act companies will be subject to the regulatory requirements of the Housing Corporation, as charitable companies have thus far been, and will be subject to the new provisions like all other registered social landlords.
The Bill does not seek generally to replace, override or amend the Companies Acts. The duties, functions and other prohibitions placed upon directors, shareholders and others by those Acts remain unchanged. The powers in the Housing Bill supplement and overlay the
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Companies Acts with additional requirements designed to allow the Housing Corporation to fulfil its remit of protecting public funds and protecting tenants. The corporation needs separate, often parallel, powers because it will have different legitimate interests from those of directors, shareholders and others. It may wish or need to act when they do not. We need to ensure that it has the powers it requires to do its job.
Any Companies Act company considering bidding for social housing grant or taking over transferred council housing stock, or anyone thinking of setting up such a company for these purposes, will be able to see in the Bill and in the published criteria guidance and so forth from the Housing Corporation of what will be required of them. It will be for the company or the individual to judge whether this is acceptable to it.
It may be helpful to the Committee if I illustrate how the basic principle of separate but overlapping legislative provisions might work. The corporation has certain powers which parallel those of the shareholders of a company—for example, to remove a director in certain circumstances, Schedule 1, paragraph 4, and to appoint a new director in certain circumstances, Schedule 1, paragraph 7. This does not remove the shareholder's power to do the same thing. The corporation needs the power independently in order to be able to take action when the company is failing to manage its affairs so as to deliver adequate housing to its tenants. It must be able to act in the public interest whether or not any or all of the shareholders agree or are concerned. It is still the case that shareholders may dismiss directors and could, therefore, dismiss directors appointed by the corporation. They may seek to reappoint directors whom the corporation has dismissed. That kind of battle can develop now between rival factions of shareholders.
However, if in doing that shareholders put at risk the proper management of the company as a social landlord, with all that that implies for tenants, the corporation has further powers to bring into play. It may direct an inquiry into the affairs of the company. If the corporation embarks on this course it has various associated powers, in effect, to take control of the company's finances and staff. Again, therefore, in pursuit of the protection of public funds, the corporation can act without the agreement or against the wishes of shareholders but cannot remove their rights.
A director appointed to the board of a company by the corporation may call an extraordinary general meeting at 21 days' notice. Shareholders may also require an EGM to be held. Typically an EGM will be called to dismiss or appoint directors. These powers operate in parallel. This could lead to a succession of EGMs in the same way as the actions of different groups of shareholders could cause a series of EGMs to be held in an ordinary Companies Act company. It is unlikely that that would be an efficient way of resolving disagreements but company law permits it and the Bill does not change that.
The noble Lord, Lord Williams, asked about the issue of shareholdings in local housing companies to tenants and local authorities. It is likely that local authorities

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and tenants will wish to be shareholders in local housing companies. But those companies will not be publicly quoted companies. Shares will not be offered freely to members of the public. Therefore I believe that the noble Lord's concern about the full weight of the Financial Services Act being brought to bear may not arise. However, this is clearly an area of great importance and I do not wish to be drawn too far into what is a difficult and complicated area with a large number of teeth in its jaws. If the noble Lord will allow me, I shall write to him and to others who speak in Committee between now and Report stage to give a detailed picture of how we see this procedure operating under the Financial Services Act.
There are obviously other illustrations I could give of how the Companies Act will work with this Bill. For instance, perhaps I may draw the noble Lord's attention to paragraph 16(1) of Schedule 1 where the corporation determines the form of a company's accounts. The noble Lord, Lord Williams, asked whether that will lead to companies producing two sets of accounts, as people are rumoured to do in Italy. Yes.
Lord Hylton: It is well known that large institutions such as pension funds, insurance companies and provident and friendly societies control a very considerable amount of money. In recent years they have not used those funds for providing housing. In many ways it would be extremely desirable if they used at least a proportion of the funds perhaps to provide housing for their own beneficiaries, or—going further afield—for the general public at, if not the lowest level of housing association rents, somewhat below full open market value.
I shall be interested to hear from the Minister whether that possibility is in the Government's mind, and, if so, how they believe it should be achieved. Would they like to see such institutions registering housing subsidiary companies in their own right and therefore qualifying under this Bill? Alternatively, would they prefer to see such institutions providing funds to existing housing associations perhaps by way of a loan so that they could then be blended with other funds coming from the Housing Corporation and possibly involving housing association grant?
Lord Williams of Elvel: The noble Lord, Lord Hylton, has put his finger on yet another point to which the noble Lord, Lord Lucas, did not reply. I refer to the acquisition of local housing companies, if there are to be local housing companies. It is the duty of any director to respond to the interests of the shareholders. It is also the duty under the Companies Act—frequently neglected—to respond to the interests of employees. It has not been tested in the courts. I leave the point with the noble Lord.
The shareholders of a local housing company may be a pension fund. That is very desirable. There may be tenants. It may be a minority local authority. Someone comes along—I do not say who that someone will be—and says, "That's fine. It is an interesting company. It owns a lot of land. At the moment it is a social landlord but"—we discussed Ministry of Defence housing for
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families recently—"we think that this could be rather an interesting property company. We should like to deregister as a social landlord, take this over as we are entitled to do under the Companies Act, and make it into a formal property company." Is there any provision which would prohibit that other than the Housing Corporation making bleating noises?
The noble Lord is not right to say that private companies are excluded from the operation of the Financial Services Act. I am glad to hear that he will write to me on the matter. I make a perhaps rather niggling point. We have so far reached the end of Clause 1. On the Minister's advice, the Committee agreed to one amendment put forward by the Government on the ground that it had been neglected, the Bill having been through full debate in another place. In another case, on Clause stand part, I am informed by the Minister that the Government will write to me with a full response to the issues I have raised, the Bill having been debated at length in another place. I am full of the virtues of this House and this Committee. However, I feel that these issues might have been addressed by the Government before they reached another place, let alone this House.
Lord Lucas: I know that the noble Lord is as much a fan of this House as I am. I am sure he realises that it is the function of this House to act as a revising Chamber. It is a function which it performs extremely well. In the previous housing Bill this Session, the noble Lord demonstrated just how well this Chamber can perform its function. We are having the opportunity to do so again. The fact that the talents of the noble Lord, Lord Williams, are clearly required in the scrutiny of this Bill merely demonstrates what a good job this House does, how necessary it is, and what an important part of our British constitution it is. I am glad to have the support of the noble Lord on that, even though he did not state it explicitly.
I should like to read in Hansard what the noble Lord, Lord Hylton, said, before replying to him to ensure that I do not miss anything. However, the basic principle is that institutions lend to housing associations and increasingly they supplement government grant. We expect to see that continue. We also expect to see institutions investing in housing investment trusts for private rented housing. It is a direction we are clearly interested in supporting. However, I wish to read again exactly what the noble Lord said.
As regards the transfer of shareholdings and the consequences it might have, I agree with the noble Lord, Lord Williams, that there is nothing in the Bill which would prevent those evils. It is intended that such problems should be prevented by the requirements which the Housing Corporation makes on companies which wish to become social landlords as regards their articles, restriction on the transfer of shares, and restrictions on the ways in which they can change any item in their articles of association without the permission of the Housing Corporation.
The noble Lord, Lord Williams, will realise that one can set up the articles of association of a company to be pretty restrictive on the way in which shares are

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transferred. I agree with him that the point should be set out in full in writing to the noble Lord. I undertake to do that, if not immediately during this Committee stage then before Report.
4.30 p.m.
Baroness Fisher of Rednal: Before the Minister sits down, will he give me an assurance that we shall not fall into the trap of the Rachman period? I do not know that we would call him a social landlord; we prefer to call him a grasping something else. Will the legislation make allowances for a man or an organisation being prevented from sabotaging what should be a good set of regulations?
Lord Lucas: It is clearly of prime importance to prevent a social landlord falling into the hands of Mr. Rachman, Mr. Maxwell or, indeed, anyone of similar inclinations and, shall we say, lack of general morality. As I said to the noble Lord, Lord Williams we shall address the point in the requirements that the Housing Corporation sets out for companies which apply to become social landlords. However, the matter needs to be set out in detail and I shall send the noble Baroness a copy of what I write to the noble Lord, Lord Williams.
Lord Swinfen: The Housing Corporation's rules for management of social property will probably prevent a Rachman-like situation. However, like the noble Lord, Lord Williams, what concerns me is that social landlords would be at the low-value end of the market because such organisations would be non-profit-making organisations operating at low rents. It could well be that a carnivore company would come along, intent on buying up a company, changing the way in which it operates, increasing the rents considerably and possibly selling off part of the land bank that it was waiting to develop. There could be extremely attractive morsels to carnivore companies.
The Housing Corporation may well set limits on how a social landlord may dispose of its own assets and what it does with the proceeds of the disposals, but we ought to ensure that such companies are not available to be swallowed up by carnivores, with the whole tenet of that social landlord being changed.
Lord Beaumont of Whitley: I wish to pick up the point made by the noble Lord, Lord Williams, with which I feel that the Minister did not deal properly. Concerning the state in which the Bill reaches your Lordships' House, is the suggestion being made that, because your Lordships' House is a noble and competent organisation, there is no duty on the Government to produce Bills in the right state when they come here? This House is a good revising Chamber, but surely it should not have to revise often or very much. It is the Government's duty to produce Bills in the right state. I hope that the Minister will not at any future time produce as an excuse the suggestion that it gives us an opportunity to do our duty. It is rather like the theological suggestion that there should be more and more sin in order that grace should abound. It is faulty and I hope that the Minister will give it up.
Lord Lucas: Dealing with the last suggestion first, it is plainly ridiculous. If civil servants were perfect, we would not need Ministers; if Ministers were perfect, we would not need another place; and if all three together were perfect, we would not need this place. It is clear that we need this place and I glory in that fact.
Lord Williams of Elvel: Perhaps I may end the debate on a positive note. I offer a suggestion to the Government. It seems to me that the only way in which the Government can or we can protect local housing companies is for the Housing Corporation to have what is known as a "golden share" in each local housing company. That is a well tried and well established mechanism for ensuring that carnivores, as the noble Lord, Lord Swinfen, said, cannot take over companies and realise a great deal of profit. I recommend the golden share solution to the Government.
Lord Lucas: I clearly recognise that the House will wish to consider and discuss this matter in detail. I am committed to providing the House with the information which it will need in order to do so at Report.
Clause 1, as amended, agreed to.
Clause 2 [Eligibility for registration]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 7:
Page 2, line 34, at end insert—
("(g) engaging in other activities for the promotion of the social and economic well-being of residents, provided that these shall be incidental to its purposes under subsection (2).").
The noble Baroness said: This amendment stands in my name and that of the noble Lord, Lord Williams. Clause 2 provides for what I may call the main objects of the registered social landlords and permissible additional objects and purposes. I seek to place on the face of the Bill, through this amendment, a permissible additional purpose. I readily concede that subsection (7) allows the Secretary of State to add to the list by way of an order. However, the objectives contained in the amendment are important enough to be on the face of the Bill.
The amendment's purpose is to extend the criteria to include wider urban regeneration, to ensure that the potential of a local housing company can be maximised. I appreciate that the terminology,
"the promotion of the social and economic well-being of residents",
is wide. However, it is intentionally wide. Members of the Committee have frequently discussed the connections between housing, health, education, employment and so on. Many noble Lords have considerable expertise on the issues raised by care in the community. It is perhaps one of the faults of our administrative system that it is not always easy to cross disciplines. I hope that in the overarching view that the Committee is able to take of legislation, it is appropriate to suggest that an overarching provision should be included at this point.
Care in the community raises matters not just of housing in the sense of a roof over the head of the tenant but of the way in which that person's overall care is organised to enable him or her to live as fulfilled and

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independent a life as possible. That is wider than the simple provision of accommodation in its narrowest sense.
The matter was raised in another place and at that time the Minister said that, although he was willing to consider the point, he thought it was rather loose and wide. I am grateful to the Government for agreeing to consider it. I had hoped that since the stages of the Bill through another place, there would have been an opportunity to give further consideration to the issues raised. I think it important enough for the point to be on the face of the Bill. If that is not possible, then I should be interested in hearing the Minister's assurances about the issues. I beg to move.
Lord Williams of Elvel: I support the noble Baroness, Lady Hamwee, in proposing this amendment, which is important. It was discussed at some length in another place. It has the purpose of widening the role of local housing companies, particularly in urban regeneration. It also has the effect of allowing local housing companies to act for the benefit and social well-being of their tenants outside the main purposes for which they were set up by a sponsor. Other objectives might be to encourage local employment, improve health and all sorts of other things which in our view local housing companies should do.
The Minister in another place thought that such an amendment was slightly woolly and should not be on the face of the Bill. My view is that it should be. It would determine what local housing companies are meant to do. It goes beyond the rather narrow definitions that the Government had in mind. For that reason, the Government ought to pay very great attention to the remarks of the noble Baroness, and I certainly support her.
Lord Monkswell: One of the matters that we need to appreciate is the effect of size and scale. To take the Committee back to the 1930s, when the estate of Wythenshawe—which is rather like a new town—was being built on the outskirts of Manchester, it was built by the city council on land that it had bought. It included not only housing, which was the main purpose of the estate—namely, to rehouse people who lived in slums in the inner-city—but also factories, schools, hospitals and even churches and public-houses. They were either wholly owned by the local authority or let to the organisations, with ownership of the land and property being retained by the local authority. It was a very large development to house some 50,000 or 60,000 souls.
I think we all appreciate that in a development of that size there is a need to include schools, hospitals, factories, shops and leisure and religious facilities. While we may not envisage the building of a new town for 50,000 or 60,000 people happening very often in modern Britain, looking at the other end of the scale we see that if the local housing company is building one or two houses, there is very little requirement for it to consider any of the other social and economic amenities that may be required. As the operation becomes larger, the scale of the activities becomes more enveloping; the number of people involved and the geographical area
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become larger. There will then be a need for housing associations to take on board the social and economic needs of the people that they will house. If they are not to be involved in that directive themselves, they need to have some regard for it in the developments they propose. It is very important that we include a measure such as this. I strongly support the amendment.
4.45 p.m.
Lord Lucas: Registered housing associations have traditionally had a range of additional permissible purposes beyond the specific provision of housing for rent. These allow them to use their expertise more widely for the benefit of tenants. The Bill contains a list of such purposes or objects.
We recognise that there is scope to go beyond the present provisions, but the limitations placed on these activities are an important part of regulation. The primary purpose of registered social landlords is to provide housing for rent. We do not want registered landlords undertaking activities which extend beyond the expertise and competence of the management committee. This could threaten the commercial viability of a landlord and put at risk tenants and public funding.
We have a lot of sympathy with the ideas behind the amendment and behind the remarks of the noble Lord, Lord Monkswell. It is obviously clearly important that we build not just houses, but communities, and that they should have in them all that is necessary to make for a full life for the people who live there. However, the experience and finance available to an individual housing association are limited.
Therefore, the noble Lord will see the provision in Clause 2(4)(a) that housing associations or social landlords may work,
"either exclusively or together with other persons".
That is specifically to envisage the possibility that where what is required is more than plain and simple housing, and where, for instance, cinemas and shopping centres are required, the development should be done in conjunction with people who take the risk of those commercial activities and who are expert in providing and managing them. I believe Clause 2(4)(a) also covers the concerns expressed by the noble Baroness, Lady Hamwee, about care in the community.
Clause 2 covers the list of objects and purposes as enshrined in the Housing Associations Act 1985. It allows additional purposes to be added if new activities are identified that would be appropriate. A commitment has already been given during earlier stages of the Bill to consider possible additional purposes for inclusion in the order that the Government propose to bring forward at commencement to cover the additional purposes that have been added since 1985 by secondary legislation—principally, that is a particular long and complicated scheme for Wales.
Such additional purposes might, for instance, include the provision of community alarm systems, not just for the tenants of housing associations, but more widely. We can see merit in activities like these. However, the wording of this amendment is very wide and could

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encompass a range of activities which, while providing benefits for tenants, could nevertheless expose landlords to considerable financial risk.
In earlier considerations of the Bill in another place an offer was made to consider any clearly defined proposals for inclusion in the order that will need to be brought forward at commencement. We feel that that is the way to proceed. We would be happy to consider whether a more clearly defined proposal could be made which we could take forward. If the noble Baroness is able to devise such a proposal, we shall be happy to discuss it with her or on Report. For now, I should be grateful if she would withdraw the amendment.
Lord Williams of Elvel: I am grateful to the Minister for indicating that there might be some sympathy within the Government for the noble Baroness's amendment. Is it really right that the noble Lord expresses sympathy and then asks the noble Baroness to produce an amendment with which the Government have sympathy? Would it not be proper for the Government to take the matter away and say, "Yes, we understand what the noble Baroness and the Committee say and we will bring back an amendment on Report"? Is that not the correct procedure?
Lord Lucas: If this were an initiative of the Government on which we had ideas that we wished to bring forward, then we would. From previous experience we are aware that the noble Baroness, Lady Hamwee, is quite capable of having ideas that appeal to us. We hope that that might be the case this time.
Baroness Hamwee: We know that the Government are bereft of ideas but I had not expected to hear it in quite such blunt terms. I wish to pursue one or two matters further. The Minister said that the activities which will be allowed under this additional object might expose a landlord to risk. First, this is a subsidiary activity. I am not suggesting that it should be the main activity. Does the Minister accept that house building is a very risky business indeed and that it is perhaps a little paternalistic to be reacting against, if I may use the shorthand, the social responsibilities encompassed in this quite wide-ranging but nevertheless subsidiary matter.
Secondly, perhaps I may ask about his comment on care in the community activities coming within subsection (4)(a). He mentioned an alarm system—a community alarm system. Alarm systems are very valuable. I quite take his point that it is desirable to use the technology that is installed to make such systems available perhaps beyond just a small group of houses and flats. The example was used by his honourable friend in another place. That example surely fits within subsection (4)(a), so I fail to understand why it is used as an example of what might be dealt with specifically under something like my new clause. Can he confirm that subsection (4) is about permissible additional purposes and objects and not mandatory ones? His opening comments seemed to suggest that we were seeking to impose this on landlords. I assure the Committee that that is not the case.
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Finally, I think in opening—I may have misheard the noble Lord—he referred to regulations which the Secretary of State might make under Clause 2(7) containing a condition or limiting criteria. If I understood that correctly, it worries me somewhat because it suggests that the regulation-making power might be rather wider than the words on the face of the Bill suggest. Can the Minister respond to any or all of those points?
Lord Monkswell: Can the Minister advise us a little further? He suggested that subsection (4)(a) would allow the activity that might be beneficial. Yes, it would allow some activities, but let us think of the most significant problems faced by landlords generally and social landlords probably more particularly. One problem is what one might describe as bad neighbours—neighbour nuisance problems—and the other is marital breakdown. Surely it would be in the interests of the housing association to take steps to prevent, mitigate or reduce the incidence of bad neighbourliness and also the incidence of marital breakdown. That is not normally recognised as the activity of a landlord. However, the amendment would enable activities such as those to be carried out by the social landlord which would contribute significantly to the beneficial organisation and operation of his activities. However, as I read the Bill, a social landlord would be prohibited at the moment from undertaking such activities.
Lord Lucas: The noble Lord, Lord Monkswell, illustrates the problems with the amendment very neatly in terms of the ways one could extend the housing association's or social landlord's activities. The landlord might think that in a large development it was appropriate for him to run a betting shop and take all the risks himself. That might well be something that would fit in the terms of this amendment as it is.
Housing is a risky business but it is a business which most housing associations—indeed, all good housing associations and social landlords—understand and specialise in. It is important that in terms of the management of any organisation the management time and effort, which with a social landlord is likely because of the largely amateur nature of its board to be restricted, is directed at the main purposes of that operation and does not deviate to all kinds of subsidiary activities which then let it take its eye off the ball and which may in themselves go wrong and cause a lot of problems and whose existence may cause problems to occur in the main activity which would otherwise have been dealt with. So we think it is important to restrict what a social landlord can do.
However, I can give the noble Baroness the comfort that she asked for. These are permissive powers. We are not looking for housing associations and social landlords to take these on if they do not want to. The powers that may be added under subsection (7) are also permissive. They can extend the powers. They cannot impose restrictions on them. An alarm system just for the housing association's residents would come under Clause 2(4)(a), but something which extended to other premises would not. It is the extension to other premises which would come in the order under subsection (7).
Lord Williams of Elvel: Before the noble Baroness decides what to do with her amendment, perhaps I may ask the noble Lord to clarify exactly where we are in Committee. As I understand it, the noble Baroness has moved an amendment. We have debated it. The Minister has said that the Government have some sympathy with the aims of the noble Baroness. He then went on to say, as I understood him—I am open to correction—that if the noble Baroness produces on Report something similar the Government will consider it sympathetically. Am I right so far?
Lord Lucas: I do not think I used the word "similar". What I was trying to get across was that if the noble Baroness came forward with a more clearly defined proposal, one which did not carry the dangers of extension into all kinds of undesirable activities—we are currently proposing that such extensions should be made through orders under subsection (7)—we would look at it with an open mind. We are all headed in the same direction. It is merely a question of how we achieve it.
Lord Williams of Elvel: As I understand the words "clearly defined", they mean properly drafted by parliamentary counsel. Would the Government therefore be prepared to lend the noble Baroness the services of parliamentary counsel in order to devise a more clearly defined amendment at which the Government might look sympathetically?
Lord Lucas: If the noble Baroness cares to come to talk to me about it, I shall be very happy to discuss it with her as a preliminary to doing that. However, I do not think the noble Lord should confuse the concepts of parliamentary draftsmanship with "clearly defined". The two are not always the same.
Lord Williams of Elvel: I certainly do not confuse parliamentary draftsmanship with a clear definition. As I understand it, the Government are not prepared to draft their own amendment in response to the noble Baroness. Therefore, it seems only right that if the noble Baroness is to be invited to produce something on Report the Government should give her some assistance.
Baroness Hamwee: I was going to ask the Minister if I might discuss this matter with him in any event for a reason which has occurred to me as we have been debating the matter. I am becoming less clear about the relationship of the permissible additional objects and provisions such as one sees in the memorandum of association of a company which provide a range of ancillary powers and objects which support the main object. Quite frequently they refer to dealing with ancillary matters—an activity which supports the company's main object.
For instance, to take the example of an alarm system a little further, it may well be that it is not economically practicable to install an alarm system for a limited number of properties, but it would become very practicable to install it for a larger number of properties. It is the relationship of the powers under the landlord's constitution, however constitutionally it is organised, and the permissible purposes and objects under this clause, where I would welcome some clarification.
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Perhaps, having bowled that further matter at the Minister, he might want to say another word now—or perhaps not. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5 p.m.
Lord Lucas Lord Lucas moved Amendment No. 8:
Page 2, line 44, leave out ("by the landlord to the tenants") and insert ("of the houses by the body").
The noble Lord said: In moving this amendment I shall speak also to Amendments Nos. 9, 10, 12, 13 and 14. These amendments to Clause 2 have the purpose of clarifying the provisions. Amendment No. 8 amends subsection (5)(c) of the clause to enable the registered social landlord to be able to repair and improve houses sold or leased, possibly on a shared ownership basis, to prospective tenants as well as to existing tenants.
Amendment No. 9 reinstates the definition of "disposed on shared ownership terms" from the Housing Associations Act 1985. Amendment No. 10 extends the definition of "resident" to include a person occupying a house managed by the registered social landlord. The amendment reinstates the definition of "resident" from Section 4 of the Housing Associations Act 1985.
Amendment No. 12 seeks to provide that, where an order is made to add further additional permissible purposes, it may contain such provision as the Secretary of State thinks fit regarding,
"the priority of mortgages entered into in pursuance of any additional purposes, objects or powers".
Amendment No. 13 is a minor drafting improvement. Amendment No. 14 removes a duplication with Clause 51. I beg to move.
Lord Williams of Elvel: I am grateful to the noble Lord for proposing the amendments. I have a certain amount of difficulty with Amendment No. 9, which mentions:
"a premium calculated by reference to a percentage of the value of the house or of the cost of providing it".
In paragraph (b) reference is again made to the "value of the house".
Can the noble Lord tell me how the value of the house is to be calculated and how the cost of providing it is, in turn, to be calculated? Unless one knows that with absolute certainty, it is rather difficult to determine the premium calculated by reference to a percentage. While I am on that point, will the noble Lord be good enough to say what kind of percentage of the putative value of the house or the putative cost of providing it is appropriate?
Baroness Hamwee: That is a different point. Perhaps the Minister wishes to respond to it.
Lord Lucas: Yes. In order to keep my mind clear, perhaps that is best. As I understand the matter, this is a definition for the purposes of the rest of the Bill of what is meant by "disposed on shared ownership terms". It is a definition that has been in wide use since the 1985 Act and is, I believe, well understood. But if there is any difficulty or confusion with it, I shall certainly write

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to the noble Lord. I understand that the procedure is that the house is valued—we are not laying down in the Bill how it should be valued, merely defining that there shall be such a process—and then the amount that the person indulging in share ownership pays obtains a share of the property with the rest on lease. The amount that the person buys is commonly 40 per cent. but will rise over time, perhaps to full ownership, if the circumstances of the tenant improve. It depends on the particular terms envisaged by the social landlord.
I am not sure that there is any fixed arrangement on how the house should be valued or any fixed arrangement on what percentage of the house should be in the ownership of the social landlord and what percentage in the ownership of the tenant. I am not sure that we intend that there should be any fixation in those matters.
Lord Williams of Elvel: The noble Lord will surely be aware that in raising the question of the value of the house, we start again on the enormous hornets' nest which was the subject of endless debate regarding council tax: who values the house at what, and whether it is simply some estate agent who goes round and says, "That is valued at this, and that is valued at that." We have to go beyond that and ask how and who—how the house will be valued and who will value it for these purposes. It is more than a technical point. With the greatest respect, the 1985 Act had nothing to do with that matter. That Act appeared before the council tax was introduced.
Baroness Hamwee: I hope that the Minister can come back with something which will not have too much scope for argument in the future. The noble Lord, Lord Williams, in his capacity as a Member of the revising Chamber, has done the Chamber and, if I may say so, the Government, a service by asking those questions.
My points concern Amendments Nos. 12 and 14. With regard to Amendment No. 14, the reference to transitional provisions seems to have been lost. It is not contained in the provision that this clause replicates. It may be that the Minister will say that there is no need for transitional provisions. Perhaps he could clarify that point.
As I read Amendment No. 12, it allows the Secretary of State to impose a new order of priority of mortgages. That seems a very strange and rather worrying concept. Mortgages take priority in the world generally according to the order in which they are granted, subject to agreement between the various parties concerned. Frankly, I find it a little worrying to allow the Secretary of State to alter that arrangement.
Lord Lucas: I turn to the noble Baroness's second point. This is already a matter of fact in the existing order, which, as I said earlier, deals with a particular Welsh scheme under the 1985 Act. The concept of loans provided for different purposes having different levels of priority in a repayment and their rank vis-a-vis other repayments to different people is one which has been created for that purpose. We need, therefore, to recreate it to continue that scheme, and it may come into play in
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the future. I shall be happy to ask my colleagues in the Welsh Office to write to the noble Baroness to explain the necessity for this scheme. But since it is in place, and they wish it to continue, we are now merely wishing to ensure that they have the necessary powers to provide for its continuation.
So far as the transitional provisions are concerned, I believe that Clause 51(3) will provide the comfort that the noble Baroness requires.
Baroness Hamwee: I shall be grateful for an explanation of the point raised in Amendment No. 12. But I shall also be glad to have whatever assurances the Minister can give that the power will not be used any more widely than it is used at present. It appears to give quite considerable scope. I look forward to receiving letters on the subject.
Lord Lucas: I shall certainly do as I said. I shall also consider the points raised by the noble Lord, Lord Williams. My understanding of the purpose of this particular definition is merely to explain what that term means when we define the powers that a social landlord may have in its constitution. Therefore, I am not becoming involved in the mechanism of how that happens. I understand that in practice the landlord must employ a recognised valuer in order to arrive at the price, and the share is a matter of agreement between the landlord and the tenant. It is commonly 30 per cent. or 40 per cent., but that is very much a matter of agreement and flexibility.
I do not feel that in a definition for the purpose of this particular clause we need put our hand into the hornets' nest. But I shall look at the question and hope to make sure that we do not have to do so.
Lord Williams of Elvel: I am grateful to the noble Lord for that explanation. The amendment moved by the Government states:
"the value of the house or of the cost of providing it".
We are uncertain whether that is the value of the house on the market, whatever it might be, valued by somebody or the cost of providing it. The two things may be quite different and may be totally removed. Who is to choose whether it is the value of the house or the cost of providing it? Do the Government intend that it should all be done by negotiation?
Lord Lucas: As I understand it, we are merely trying to provide a wide definition of what shared ownership means and what is involved rather than trying to say that any particular type of scheme would be advisable, acceptable or permissible. I do not believe that they are questions which enter into the definition, which is just for the purpose of making sure that the social landlord has the power to enter into this kind of scheme. Then one can either say that a particular house is worth £50,000 and therefore a 40 per cent. share is £20,000; or it may be said that the house cost £50,000 to build and, therefore, whatever its value may be, a 40 per cent. share will cost £20,000. That is the way I read the

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clause; but, as I said, I do not see that the problem that the noble Lord raises, which is real enough, has an impact on this particular clause.
Baroness Hamwee: Can the Minister tell the Committee whether a shared ownership lease is defined elsewhere in legislation? The Minister need not necessarily tell the Committee at this moment.
Lord Lucas: The definition is taken from the Housing Associations Act 1985. As I understand it, the amendment makes sure that it reappears in this Bill exactly as it appears in the earlier Act.
Lord Williams of Elvel: That is precisely why, because the 1985 Act came before the council tax legislation, we might get into problems of the valuation of property and the cost of replacing it. This definition of shared ownership may well be out of date in the light of the debates which took place about the council tax and banding. I ask the Government to look at it again to see whether they can do something better.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendments Nos. 9 and 10:
Page 3, line 1, leave out ("shared ownership lease") and insert ("lease—

(a) granted on a payment of a premium calculated by reference to a percentage of the value of the house or of the cost of providing it, or

(b) under which the tenant (or his personal representatives) will or may be entitled to a sum calculated by reference directly or indirectly to the value of the house;").

Page 3, line 5, after ("provided") insert ("or managed").
On Question, amendments agreed to.
5.15 p.m.
Deputy Chairman of Committees (Lord Murton of Lindisfarne): If Amendment No. 11 is agreed to, I am unable to call Amendments Nos. 12 to 14 inclusive owing to pre-emption.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 11:
Page 3, line 8, leave out subsections (7) and (8).
The noble Lord said: This amendment concerns the powers of the Secretary of State to change primary legislation, which is proposed in Clause 2(7) and (8). I am a little surprised that the Delegated Powers Scrutiny Committee of your Lordships' House did not focus on this matter rather more clearly than it did. I very much hope that it will wish to consider the matter. It is a general principle that amendments to primary legislation, if the recommendations of the Delegated Powers Scrutiny Committee are followed as they have been in the past, are normally achieved by the affirmative procedure rather than the negative process.
The Government should try to get their legislation right when it comes before your Lordships, and there should not be amendments saying, "We may have left something out and the Secretary of State can put something in as and when circumstances require or when they develop". Subsections (7) and (8) should not be there. They were only put in by the Government
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because they believe that they may have left something out. I am surprised that the Delegated Powers Scrutiny Committee has not focused on this point. It is wise for this Committee at least to have a discussion on the matter. I beg to move.
Lord Lucas: These two subsections are not here because we believe that we may have left something out, but because we know that we have left something out. The subsections are put in here quite deliberately. They are here because, as we discussed the amendment of the noble Baroness, Lady Hamwee, and the power suggested in that amendment—which in many ways is desirable—we felt that it ran too wide and offered many opportunities for social landlords to become involved in things in which they should not become involved. Nonetheless, we recognise that opportunities and ideas will occur from time to time, such as extending alarm systems into properties not owned by the social landlord, but which it will be appropriate for social landlords to deal with. These matters will need tight definition. They are concepts which will develop as the market develops. We need a way of including them in legislation because we have set our face, at least for the moment, against having any general permissory power as suggested in the noble Baroness's amendment.
I have explained at length why we do not agree with the noble Baroness's amendment and why we are uncomfortable with it. But we must have some way of bringing in these further minor permissory powers. The way we have chosen to do it is by individual scrutiny of the powers by the Secretary of State. In recognising that we need to make these additions from time to time, we must have the power for the Secretary of State to approve each individual extension. That is what we have. One way or the other, we need something within the Bill which allows it not to fossilise.
Lord Williams of Elvel: As always, I am grateful to the noble Lord for his response. He began by saying that it is not that the Government thought that they may have left something out, but because they knew they had done so. Perhaps the noble Lord can explain what the Government know they have left out and then we can begin discussing the Bill before us in the light of the Government's knowledge of what they have left out.
Having said that, would it not be appropriate in an amendment produced by the Secretary of State affecting primary legislation, and in accordance with the normal procedures of this House, for it to be put forward through the affirmative resolution procedure rather than the negative procedure?
Lord Lucas: We believe that in this particular case the negative resolution procedure is appropriate and the Delegated Powers Scrutiny Committee agrees with us. It is open to the noble Lord to disagree with us, but we hold to our view that for this particular power the negative resolution procedure is appropriate.
Lord Monkswell: I rise to support my noble friend Lord Williams of Elvel on this matter. I believe that he has got it right. It is curious that we have a long clause with detailed provisions, which the Government have

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seen fit to place before Parliament to have written into the Bill, and therefore to give the strength of legislative imprimatur to the matter. Yet they see fit to say that if they want to change these matters which they thought were so important to be in the Bill, that change will not be very important. Therefore, the provisions will not be worthy of the higher degree of scrutiny of the affirmative procedure. The Government cannot have it both ways. The matter is either of significance, and, therefore, changing the provision is a significant act and worthy of closer parliamentary scrutiny, or it is not. It is something which is worthy of what one might describe as "Executive diktat" rather than legislative authority. If the Government want to retain the powers of subsections (7) and (8), we must have the affirmative procedure rather than the negative procedure.
Lord Lucas: All that I can say is that I do not agree with the noble Lord. I said that we know that we have left something out because while the Bill was in another place we committed ourselves to re-enacting the Housing Associations Permissible Additional Purposes (England and Wales) Order 1994, which principally concerns a scheme which is in force in Wales and which is of a detailed nature which we did not consider belonged in the substance of the Bill.
As the noble Baroness, Lady Hamwee, mentioned, we have said that we should like to consider the question of alarm systems. It is possible that we can do that along with the re-enactment of that 1994 order, together with any similar proposals which are brought forward and meet with our approval. I do not regard these as major factors; they are additions rather than alterations to what is in the Bill. The power is restricted to adding rather than changing or deleting. Given that we intend to restrict the provisions to measures such as community alarm systems, I do not think that this should cause the Committee any alarm.
Baroness Hamwee: It is perhaps wrong to say that I am torn on this matter. However, not only are our obligations as a revising Chamber sometimes extremely onerous, but I have much sympathy with the notion that any order from the Secretary of State should be made under the affirmative resolution procedure. After all, as our debate on my earlier amendment showed, such matters are not necessarily straightforward. It is essential that the appropriate and widest suitable powers are given to landlords. It is because I believe that it is appropriate to ensure that their powers are as wide as is reasonable and appropriate that I do not feel that I can go along entirely with the noble Lord, Lord Williams.
However, I hope that the Government will take seriously our expressions of concern about the work that still requires to be done on this clause in order to ensure that we have clear and workable provisions which have received the proper amount of parliamentary scrutiny. The noble Lord is right that it is not appropriate for the Government to say, "We know that we have not been as imaginative as we
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might have been, so we shall give ourselves the opportunity to be more imaginative, but shall do so more or less in private".
Lord Williams of Elvel: The noble Lord, Lord Lucas, said that it was up to me to agree or disagree with what the Delegated Powers Scrutiny Committee said. Indeed, I disagree with what the Scrutiny Committee said and I very much hope that that committee will take the views of these Benches into consideration.
I am perfectly content that there should be some provision which would allow the update or adjustment of these clauses. Nevertheless, it is true that under past Bills amendments to primary legislation have been made by affirmative orders, not by negative orders. I very much hope that on Report the Government will take another look at this and perhaps change the procedure. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lucas Lord Lucas moved Amendments Nos. 12 to 14:
Page 3, line 9, at end insert—
("The order may (without prejudice to the inclusion of other incidental or supplementary provisions) contain such provision as the Secretary of State thinks fit with respect to the priority of mortgages entered into in pursuance of any additional purposes, objects or powers.").
Page 3, line 10, leave out ("Any such order") and insert ("An order under subsection (7)").
Page 3, leave out lines 11 and 12.
The noble Lord said: I spoke to these amendments with Amendment No. 8. I beg to move them en bloc.
On Question, amendments agreed to.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 15:
Page 3, line 15, at end insert—
("(9) In relation to bodies to which local authorities have transferred properties under section 135 of the Leasehold Reform, Housing and Urban Development Act 1993, they shall not be ineligible for registration as a social landlord solely by virtue of the number of properties so transferred.").
The noble Lord said: The purpose of the amendment which stands in my name and that of the noble Baroness, Lady Hamwee, is to ensure that there is no arbitrary limit on the number of properties that a registered social landlord should possess or have transferred to it from a local authority. The proposed limit of 8,000 homes on transfers to any one landlord is, in our view, an arbitrary maximum. A more flexible system which avoids the creation of a monopoly landlord would be to set the limit at 8,000 homes or one-third of the local authority's housing stock, whichever is the higher. We believe that it is essential to allow local authorities to package estates to secure private finance, as well as to benefit from economies of scale and to avoid setting up several separate companies which in the present circumstances would incur substantial and unnecessary establishment costs. A number of urban local authorities have indicated that the proposed limit will inhibit

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transfers. Therefore, I very much hope that the Government will reconsider their position on this. I beg to move.
Baroness Hamwee: The amendment stands in my name also and is grouped with Amendment No. 105, which has my name and that of the noble Lord, Lord Williams, boxed and coxed rather than coxed and boxed, but it relates to a similar point. One of my concerns about the Bill and some of the Government's responses so far to the criticisms that have been made of it is its restrictive and constrained nature. It is important to allow as much flexibility as possible.
We have reached nearly 5.30 p.m. without even one sentence being said about the need for the supply of affordable housing. I appreciate that in Committee it is not appropriate to make Second Reading speeches, but I think that it is appropriate simply to say that I hope that the Government will keep in mind the fact that underlying practically every amendment is the concern of many noble Lords, of very many of those who work in the housing sector outside this place and of their customers, as well as of those who fail to be customers because of the lack of supply, that we must use the Bill to assist that supply as far as possible, not restrict it.
Lord Hylton: It is only in recent years that it has become possible for local authorities to transfer part or all of their housing stock to housing associations. It would be helpful if the Government could give their view of how that process has worked in practice because there were some criticisms of it when it started. The question of accountability has rightly been raised. Anything that the Government can say on how the process has worked would be helpful.
5.30 p.m.
Lord Lucas: We have heard a clear explanation of what the two amendments seek to do. I do not agree that we should allow an unlimited number of properties to be transferred from a local authority registered landlord. My understanding is that the noble Lord, Lord Williams, does not believe that either. We are talking merely about a matter of degree. I shall explain why we end up where we are. Transfer brings a number of benefits to both the local authority and tenants. One of these is greater investment in the stock. But it also provides an opportunity to improve efficiency in the management of the stock, and the responsiveness of managers to the wishes of the tenants. Splitting large amounts of stock into smaller more manageable units helps this process. While there may be certain diseconomies of scale caused by splitting a stock of, say, 12,000 dwellings into three units of 4,000, there are also significant opportunities for greater efficiency and responsiveness.
Having a size limit is also important for trying to get more diversity and choice in the social rented sector. I accept that this may not always be the case in some shire districts where we have allowed all their stock to be transferred to a single new housing association. But in urban areas where an authority has a large amount of stock there are clearly opportunities to increase choice
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and competition between landlords. The ceiling of 5,000 is one that we want to keep. But we want to be pragmatic. There are cases where it would be appropriate for a transfer to exceed this limit. Where a larger urban authority progressively transferred its stock, an average of 5,000 properties would seem to be right: for example, where an authority with between 30,000 and 50,000 dwellings considered transferring part or all of its stock. In those circumstances it will naturally do it in a number of tranches and it is sensible to provide some flexibility to enable area or location-based transfers over the 5,000 limit. It is true, however, that in the case of many partial transfers in urban areas, which will often be estate based, the size of the transfer will be below the current limit.
We are also willing to make exceptions in rural areas where splitting the stock can occasionally be arbitrary and affect viability because of geography and the way the stock is managed. Where it is not practical to split the stock we will allow transfers over the 5,000 limit. We have said that even where an authority is working to an average of 5,000, the maximum size of any one transfer will be 8,000 dwellings. We feel that at this level there is no argument about economies of scale. Housing organisations do not need to be any bigger to be viable and provide a good level of service to their tenants.
I hope that this explanation of our policies and the flexibility that already exists make it clear to the Committee that subsection (3) of the new clause in Amendment No. 105 would be an unhelpful constraint on the Secretary of State's discretion. Amendment No. 15 and subsection (2) of the new clause in Amendment No. 105 have no material effect on their own, since at the point of registration newly established transfer landlords have no stock, the transfer taking place usually shortly thereafter. More importantly, there is no practical purpose in preventing the corporation establishing a size criterion for registration when it is the Secretary of State's policy and the exercise of his discretion which establishes whether there is to be a maximum size limit.
I turn to the comments of the noble Lord, Lord Hylton. Last year's White Paper expressed the Government's continuing support for housing transfers. Some 50 authorities have done this, all with the support of the tenants who have to vote for it. It is my understanding that the process is proving a success.
I do not have any particular expectation that the noble Lord, Lord Williams, will have been convinced by my arguments. I have a feeling that there is a basic difference of policy, perhaps with politics underlying it, but I hope that my explanation has at least given him a clearer idea of why we take this position.
Lord Williams of Elvel: The noble Lord is quite right. We have basic political differences on this matter. I said that a number of urban local authorities had indicated that the limit would inhibit transfers. The noble Lord has adduced no evidence to support the particular limit that has been chosen. I am sure that the Committee accept that there is here a basic political difference. The only way to resolve such a difference is to test the opinion of the Committee. I beg to move.
5.34 p.m.
On Question, Whether the said amendment (No. 15) shall be agreed to?
Their Lordships divided: Contents, 53; Not-Contents, 105.

Division No. 1

CONTENTS

Addington, L.

Hylton, L.

Archer of Sandwell, L.

Jenkins of Putney, L.

Ashley of Stoke, L.

Kennet, L.

Avebury, L.

Kilbracken, L.

Beaumont of Whitley, L.

McNair, L.

Berkeley, L.

McNally, L.

Blackstone, B.

Mar and Kellie, E.

Bristol, Bp.

Monkswell, L.

Broadbridge, L.

Morris of Castle Morris, L.

Bruce of Donington, L.

Nicol, B.

Carter, L.

Oxford, Bp.

Clinton-Davis, L.

Rea, L.

Cocks of Hartcliffe, L.

Redesdale, L.

David, B

Richard, L.

Russell, E.

Donaldson of Kingsbridge, L.

Sandwich, E.

Dormand of Easington, L.

Shaughnessy, L.

Dubs, L.

Simon, V.

Foot,L.

Simon of Glaisdale, L.

Freyberg, L.

Stoddart of Swindon, L.

Gladwin of Clee, L. [Teller]

Strabolgi, L.

Graham of Edmonton, L. [Teller]

Taverne, L.

Halsbury, E.

Taylor of Gryfe, L.

Hamwee, B.

Thomas of Walliswood, B.

Harris of Greenwich, L.

Wallace of Coslany.L.

Hayman, B.

White, B.

Hollis of Heigham, B.

Williams of Elvel,L.

NOT-CONTENTS

Aberdare, L.

Feldman, L.

Addison, V.

Forbes, L.

Alexander of Tunis, E.

Gainsborough, E.

Allenby of Megiddo, V.

Gardner of Parkes, B.

Ashbourne, L.

Gisborough, L.

Astor of Hever, L.

Goschen, V.

Balfour, E.

Gowrie, E.

Berners, B.

Gridley, L.

Bethell, L.

Hamilton of Dalzell, L.

Birdwood, L.

Harding of Petherton, L.

Blaker, L.

Hayhoe, L.

Blatch, B.

Hemphill, L.

Boardman, L.

Henley, L.

Boyd-Carpenter, L.

HolmPatrick, L.

Brabazon of Tara, L.

Hooper, B.

Campbell of Alloway, L.

Hylton-Foster, B.

Campbell of Croy, L.

Ilchester, E.

Carnegy of Lour, B.

Inglewood, L.

Carnock, L.

Ironside, L.

Chalker of Wallasey, B.

Kinnoull, E.

Chelmsford, V.

Lane of Horsell, L.

Chesham, L. [Teller.]

Lauderdale, E.

Clanwilliam, E.

Lindsay, E.

Coleraine, L.

Liverpool, E.

Colwyn, L.

Long, V.

Courtown, E.

Lucas, L.

Cranborne, V. [Lord Privy Seal.]

Lyell, L.

Denham, L.

Mackay of Ardbrecknish, L.

Denton of Wakefield, B.

Mackay of clashfern, L. [Lord Chancellor.]

Digby, L.

Dixon-Smith, L.

Marlesford, L.

Downshire, M.

Massereene and Ferrard, V.

Ellenborough, L.

Mersey, V.

Elton, L.

Miller of Hendon, B.

1394

Milverton, L.

Renton, L.

Monk Bretton, L.

Romney, E.

Monteagle of Brandon, L.

Saint Albans, D.

Mottistone, L.

Seccombe, B.

Mountevans, L.

Shuttleworth, L.

Mountgarret, V.

Soulsby of Swaffham Prior, L.

Munster, E.

Strathcarron, L.

Murton of Lindisfame, L.

Strathclyde, L. [Teller.]

Nelson, E.

Strathmore and Kinghorne, E.

Newall, L.

Sudeley, L.

Norrie, L.

Swansea, L.

Northesk, E.

Swinfen, L.

Orkney, E.

Swinton, E.

Orr-Ewing, L.

Teviot, L.

Oxfuird, V.

Trumpington, B.

Pilkington of Oxenford, L.

Ullswater, V.

Rawlings, B.

Vivian, L.

Rees,L.

Wyatt of Weeford, L.

Rennell, L.

Wynford, L.

Resolved in the negative, and amendment disagreed to accordingly.
5.42 p.m.
Clause 2, as amended, agreed to.
Clause 3 [Registration]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 16:
Page 3, line 16, leave out ("may") and insert ("shall").
The noble Baroness said: I shall speak also to Amendments Nos. 17 and 19 in my name. Amendment No. 18, tabled by the noble Lord, Lord Williams, is grouped with these amendments. The list of groupings attaches Amendment No. 25 to this group, but it might be more convenient to debate it with the next group of amendments to which it more appropriately belongs.
My amendments are probing amendments, and the questions that I shall ask, are, I hope, straightforward. Clause 3 deals with registration of social landlords and provides that the Housing Corporation may register social landlords which are eligible. My first amendment to change the word "may" to "shall" is to enable me to ask the Government what scope for discretion they feel the Housing Corporation should appropriately have.
My second amendment provides that a social landlord which is eligible is registered if it applies for registration; in other words, the matter is not automatic.
Clause 3(2) refers to an application but the first part of the clause does not seem to require it. My third amendment (Amendment No. 19) is to ask the Minister to explain the reason for what is a dual set of registrations. Clause 3(3) provides for notice of registration as a social landlord to be given to the various registers upon which the particular social landlords are registered as a result of their own constitution as a company, charity, and so on. Is that to provide the investigator with a clue—a track—as between the different registers? I ask the question having partly in mind the scope for confusion that may arise if the bodies are required to register in different places, and there are different requirements for registration for each of them. Perhaps the Minister will explain why it is necessary to make that cross reference. I beg to move.
5.45 p.m.
Lord Williams of Elvel: Apart from the amendments to which the noble Baroness has spoken, there is also Amendment No. 18 in the group standing in my name. I shall be interested to hear the Government's response to the questions which she has put. The question I put—again mine is a probing amendment—is on what basis and how shall the corporation determine a fee for registration?
I understand that there is a general duty on the corporation to be reasonable, but social landlords may wish to have some indication as to what they may be charged for registration. The words "if any" imply that, as the Bill is drafted, the corporation may not wish to charge a fee. Is that the case? If it is not the case, under what circumstances might the corporation determine to charge a fee? In that case, what sort of fee and on what sort of scale will the corporation so determine? Will that be publicised in a manner which will allow those who wish to be registered to be properly cognisant of what they have to pay in order to get on the register?
Lord Lucas: I shall deal first with Amendment No. 16. The noble Baroness asks, quite reasonably, what sort of discretion are we giving to the corporation here. The answer is we are giving it a wide and unspecified discretion in order that it shall be able to refuse to register, effectively, landlords which it does not consider viable or suitable. Of course it has to exercise those powers reasonably. That is the control on it. There can be all manner of reasons why a company might not be suitable for registration.
Registration opens up a number of privileges, including the receipt of large quantities of taxpayers' money. It is right that the corporation can take action to keep companies which are in a dodgy financial position, or are in other ways deemed unsuitable, off the register. I do not believe that I can be much more specific than that in telling the noble Baroness how it will be exercised, except of course to re-emphasise that it will be exercised reasonably.
Amendment No. 17 adds the words "and which applies for registration" to that same sentence. I had, I am afraid, read that in conjunction with Amendment No. 16, and thought that the two just went together. The noble Baroness has described it separately. As she described it separately, it seemed to me to have some sense, but I should like to take it away to consider whether it should be included; otherwise, as the noble Baroness suggests, it will open the way for the Housing Corporation to register all sorts of people who did not wish to be registered. They might find that inconvenient.
Amendment No. 19 would remove the requirement for notification. That is required principally because in various parts of Schedule 1 we require the registrars not to take particular action unless permission has been received from the Housing Corporation, such as registering an amendment to the articles of association. Unless there is a mechanism for informing the registrar that those are companies or charities where those rules apply, which is what the subsection provides, the registrars could not carry out the duties we place upon them later in the Bill.
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Amendment No. 18 in the name of the noble Lord, Lord Williams of Elvel, deals with the introduction of a charge for registration with the corporation. The basic reason for this is to give the corporation protection which it does not need at the moment but may eventually need against frivolous applications. This is a question which the noble Lord raised on the housing grants Bill, when he proposed to purchase the mansion of my noble friend Lord Ferrers. He wished to protect local authorities against such frivolous applications.
Lord Williams of Elvel: I did not propose in that Bill to purchase the mansion of the noble Earl, Lord Ferrers. I was using that as a hypothetical possibility which the noble Earl indeed ruled out.
Lord Lucas: The noble Lord was indeed making a frivolous proposal, which was exactly the sort of thing he wished to protect local authorities against. I hope that we were able to convince him that local authorities had sufficient powers to enable them not to incur expense if such frivolous applications were made.
This is not the case with the Housing Corporation. It has to take applications seriously and investigate them properly. Therefore, if it were to occur that a significant number of frivolous applications were being made, this ability to charge a fee would be useful. But there are two key points to be made. Any charging proposals would have to be included in the new determination on the manner of applications. The corporation is required to consult on that determination. It could not introduce a charging system without warning and it would have to take representations into account.
Secondly, the corporation is required to follow the principles set out in government accounting. Any fee would have to be related to the costs involved. For example, it would be reasonable for it to charge a relatively nominal fee for standard applications, with additional charges for organisations with complex business plans. With those safeguards in place it is reasonable to allow the corporation to charge fees in the future if it deems such a procedure to be necessary.
Lord Hylton: The noble Lord the Minister has said in relation to Amendment No. 16 that he believes it to be desirable that the Housing Corporation should have a wide discretion. Let us suppose that it exercises that discretion to refuse an application; will there be any right of appeal against the decision? Also, would it not be most desirable that the criteria for non-registration should be published so that they can be known in advance?
Lord Lucas: I do not immediately have an answer to the very reasonable questions asked by the noble Lord. I shall write to him before Report stage.
Baroness Hamwee: At the risk of sounding a little impertinent, may I say in response to the Minister's comments that it is perhaps appropriate to wait and see what the Committee does with Clauses 4, 5 and 6, which deal with the criteria and appeals against decisions,

1397
because the points I have raised are probably better taken in context with the clauses that we end up with there. The Minister wishes to intervene.
Lord Lucas: Having received sudden inspiration, I am now able to confirm to the noble Lord, Lord Hylton, that a right of appeal is indeed contained in Clause 5 and the criteria will be published.
Baroness Hamwee: I was trying gently to say the same thing. I shall withdraw this amendment but, before I do so, perhaps I may say that the Minister said, quite sensibly, that the Housing Corporation needs to alert, to take one example, the registrar of companies to the fact that a company has particular conditions which will attach to it. Has it not come to a very cumbersome pass that such a straightforward matter as that, entirely ancillary to the general powers of the Housing Corporation, needs to be spelt out? That takes one-third of a page of legislation. We need then to be sure that those words are precisely right and give no scope for confusion. That also raises questions about whether other ancillary matters which are not spelt out are then within the powers of the Housing Corporation.
I believe that we sometimes need to stand back and consider rather more laterally the implications of the way in which we approach some of these matters. However, having got that off my chest, I withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 16 to 19 not moved.]
Clause 3 agreed to.
Clause 4 [Removal from the register]:
The Deputy Chairman of Committees (Viscount Allenby of Megiddo): Before calling Amendment No. 20, I should inform the Committee that if this amendment is agreed to, I cannot call Amendment No. 21.
Baroness Hamwee Baroness Hamwee moved Amendment No. 20:
Page 3, line 39, leave out from ("shall") to end of line 40 and insert ("give the body at least 14 days notice that it intends to remove the body from the register.
( ) Where the Corporation receive a response to that notice they shall consider it and notify the body of their decision.
( ) Where the corporation decide to remove the body from the register they shall not do so until after the time for an appeal to the High Court under section 6 below (appeal against decision on removal) has expired.").
The noble Baroness said: I rise to speak to Amendment No. 20, grouped with Amendment No. 21 in the name of the noble Lord, Lord Williams of Elvel, and Amendment No. 22 in my name. It may be convenient if I refer here to Amendment No. 25, which is to take out a clause of the Bill that my other amendments seek to replace. I hope that this is a fairly straightforward matter, proposing an alteration of the process of removing a registered social landlord from the register. It makes it clear that the Housing Corporation is to notify the landlord of its intention, then make a decision and allow time for appeal before implementing the decision. The Housing Corporation notifies the companies registrar and other registrars only
1398
when it removes the landlord from the register. The structure under the Bill is perhaps a little unclear. Is it intended—this is the point of the amendment—that the registrar should be notified before removal, pending appeal? I beg to move.
Lord Williams of Elvel: I would like to speak to Amendment No. 21 standing in my name. It seems to me that 14 days, which would be, I imagine, calendar days rather than working days, is rather short notice when a social landlord is to be removed from the register. There may be holidays, there may be bank holidays, there may be all sorts of intervening matters. This is purely a probing amendment, and I would question whether 14 days is sufficient notice to allow proper consideration by the social landlord of what is being done.
Presumably, the social landlord would be in a position, having been given the notice, to correct the deficiencies which have led to the notice in the first place. That is what I understand, and I hope the noble Lord will correct me if I am wrong. If that is the case, I should have thought that 14 days is not long enough, having received the notice, for the social landlord to act in the manner in which it should act in order to remain on the register. It is really to try to help social landlords that I suggest 14 days might be insufficient.
The Earl of Kinnoull: I have not perhaps fully understood the matter further on in the Bill, and I wonder whether my noble friend could say what the financial consequences would be if a social landlord were to be removed from the register.
6 p.m.
Lord Lucas: Clause 4 of the Bill establishes the conditions to be satisfied before a social landlord can be removed from the register and the procedures that the corporation has to follow. It may be worthwhile to rehearse what they are. They are that the landlord is a body no longer eligible for such registration or has ceased to exist or does not operate.
Amendment No. 20 would require the corporation to notify a landlord of its intention to remove it from the register. Should it make representations to the corporation, it would, if it decided to proceed, be required to wait until completion of the period for an appeal to the High Court before effecting the removal.
In Amendment No. 21 the noble Lord, Lord Williams, proposes that the corporation be required to give at least 28 rather than 14 days' notice to a body before removing it from the register. The changes proposed here are unnecessary. The corporation can only remove a body from the register where it is no longer eligible, or has ceased to exist or does not operate. The corporation is required to give at least 14 days' notice, and is able to use its expertise and judgment in these matters to apply a period of notice in excess of 14 days where it is sensible to do so. Any active social landlord who is to be de-registered, will have had plenty of warning of what is afoot. This will not come as a surprise and he will be ready to appeal if he feels that is justified. The corporation must be able to take decisive action.

1399
The noble Baroness, Lady Hamwee, has further proposed that before taking a decision to remove a body from the register, the corporation should consult with a relevant local authority in whose area the landlord has assets. In practice the corporation will have consulted long before reaching such decisions. It would want to alert a local authority which has plans to work with a questionable landlord before de-registration became an issue.
I believe these amendments to be unnecessary and invite the noble Baroness to withdraw Amendment No. 20.
Baroness Hamwee: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 21 and 22 not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 23:
Page 4, line 6, after ("body") insert ("owns assets or").
The noble Lord said: I am rather concerned about the word "operates" as it appears in the Bill as drafted. Social landlords of varying descriptions "operate" in the sense of "manage" and "operate" in the sense of "owning assets". The two do not necessarily go together. I should have thought that an amendment along the lines which I propose, which would clarify exactly which local authorities are to be consulted before a social landlord should be removed from the register, is appropriate because a social landlord may own assets in a local authority area and not manage them. Conversely, a social landlord may operate assets in a local authority area but not own them.
Therefore, the Bill will be drafted properly if it encompassed both owning assets and operating. They are two quite different functions and I believe that the Bill would be better drafted if my amendment were accepted. I beg to move.
Lord Lucas: I am informed that "operating" subsumes "owning" assets. If a social landlord owns assets in an area, then he is operating in that area. However, I appreciate the noble Lord's concern. I shall check this matter again with lawyers and come back on Report if there is any need to remove doubt.
Lord Williams of Elvel: I am grateful to the noble Lord. On the face of it, it seems a matter of plain English. However, the noble Lord says that "operates" may mean something else and I understand that lawyers sometimes think differently from the rest of us.
I am grateful to the Minister for saying that he will look again at this matter to make sure that although we all understand the intention in this regard, it is properly expressed in the Bill. Even if the noble Lord decides, on advice, that the expression in the Bill covers that at which I am aiming, I should still wish to have confirmation from him in the form of a statement clearly on the record that that is the case so that if ever there is a dispute about this matter, the courts can refer to a ministerial statement saying that "operates" means "owning assets". However, the noble Lord has said that
1400
he will seek advice on that matter and we shall see what happens at the next stage of the Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 agreed to.
Clause 5 agreed to.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 24:
Before Clause 6, insert the following new clause—
DELEGATION OF CORPORATION FUNCTIONS
(". The Corporation shall have the power to delegate any part of its monitoring functions under this Chapter in respect of a registered social landlord to a relevant local authority after full consultation with them.").
The noble Lord said: The purpose of this amendment is quite simple. It is to enable the corporation to delegate any part of its monitoring functions, under the chapter which we are discussing, in respect of a registered social landlord to a relevant local authority, after consultation. By "relevant local authority", I mean an authority which is concerned in the area in which the social landlord operates or owns assets or, if the two are the same, simply operates.
The purpose of the amendment is to allow local authorities to take on regulatory responsibilities, particularly for local housing companies in which local authorities may well be shareholders. We must remember that that is a distinct possibility. In my view, the Government should allow the delegation of the corporation's functions to such local authorities in order that they may be in a position to be at least involved and control the companies within their relevant area which are part of their own business as a local authority in providing housing.
I understand that this was an amendment which was tabled in another place but was not selected for debate. Therefore, it is important for this Chamber to debate in Committee amendments which were not selected for debate in another place.
This runs along the lines which the noble Baroness, Lady Hamwee, and I have been working along throughout our debates in this Session. We have been trying to get local authorities more involved and more responsible and we have been trying to give more delegated powers to local authorities rather than having everything centralised. At the moment, the corporation seems to be centralised, whether it is for England or Wales. In our view, it seems to be a good idea that some of these activities, particularly where they concern local housing companies, should be delegated to the relevant local authority. I beg to move.
Lord Hylton: I am very much in favour of increasing, where possible, the powers of local authorities. However, if a local authority happens to be a shareholder in the registered company, it occurs to me that a conflict of interest may arise. Therefore, in those cases it may not be desirable to achieve such delegation.
Lord Lucas: We have considered the ideas put forward in this amendment but we remain of the view

1401
that the monitoring functions of the Housing Corporation belong with the corporation and that that responsibility should not be dissipated.
I agree with the noble Lord, Lord Williams of Elvel, that registered social landlords must work with local authorities to meet local housing needs.
Local authorities need to be reassured that the registered social landlords operating within their boundaries are providing good and effective services. They have an interest in all registered social landlords assisting them to meet their housing needs, regardless of size. I recognise that they will take a closer interest in a landlord that has taken over stock and tenants from the local authority; be it few houses by a small local housing association or a large-scale transfer to a local housing company established for the purpose.
The statutory responsibility for regulating registered social landlords rests with the corporation. It is accountable to Parliament to whom it must report, through the Secretary of State, annually. It is also subject to the oversight of the various committees established by the other place.
The corporation has a duty to ensure that the public funding invested in registered social landlords is protected. It also has a duty to ensure that the interests of tenants are protected and acceptable service levels provided. To enable it to fulfil its statutory function the corporation has been given a wide range of powers. These enable it to act quickly and effectively to redress any identified failings.
Only the corporation can exercise its functions. It can enlist the support and assistance of other bodies and organisations to help it to collect and interpret relevant information. Where it needs to buy in specialist expertise, it will approach private sector bodies or use existing public bodies; for example, the proposed involvement of the Audit Commission which is being provided for within the Bill. It can seek assistance from a local authority, and we have provided in the Bill, in Clause 32, for the exchange of information in support of any of the corporation's functions.
Registered social landlords operate across the whole of England and Wales. Some are small, locally-based organisations; others are very large landlords with properties and tenants in many local authority areas. The corporation, when exercising its regulatory function, must treat all registered social landlords equally. It must act consistently. Should it fail to do so, it would be open to judicial review.
If regulation is to be imposed consistently, the corporation must be in control of all decisions. Delegation of its monitoring for any individual registered social landlord would open up the possibility of a variation in standards. A local authority will have its own views based on local circumstances; it will not be able to judge performance across the whole sector.
The noble Lord, Lord Williams, suggested that the provision for consultation would enable the corporation to offer the relevant guidance to a local authority. It would, though, still allow a local authority some freedom and so leave open the possibility for varying standards being set.
1402
There is nothing to prevent the corporation keeping in contact with local authorities; indeed, that is to be encouraged. If there is to be consistency in the regulatory function, we consider that the decision-taking needs to rest with a single body. For that reason, we would not go along with the thought behind the amendment that there is scope for delegating some of that particular function of the corporation.
Lord Williams of Elvel: Of course, under the Bill the regulatory function of social landlords will not rest with a single body. It will rest with the Housing Corporation which is the regulator for England and with Housing for Wales which is the regulator for Wales. They are two different bodies. They may work to the same principles, but my general experience in how things apply in practice in Wales versus England means that there may be differences in the application of those general rules between both bodies. Therefore, having split the regulatory function in two—and I do not want to talk about Scotland at this stage, because it is not referred to in the Bill—and, presumably, having another regulatory power for Scotland and, indeed, one for Northern Ireland, it is no case to say that there is one regulator for all registered social landlords in the United Kingdom.
Having decided that that is not the Government's case, I have a suggestion to make for what, I agree, is a relatively small number of registered social landlords and, perhaps, for the small local housing associations of which there are many. Why not take advantage of the powers and knowledge of local authorities, subject to agreed standards which would have to be agreed between, for example, Housing for Wales and the Powys district council, or between the Housing Corporation and an English local council? Why not disaggregate the arrangement even further? Once you split it into two, three or four—as the case may be in the United Kingdom—why not introduce an effective regulatory power for the smaller operations using the local knowledge of the authorities whose properties many of the social landlords will take over? I am not entirely convinced by the Minister's argument. Perhaps he would like to respond to that point because it is particularly relevant to Wales.
6.15 p.m.
Baroness Hamwee: Before the Minister responds, I should like to express my strong support for the amendment for the many reasons outlined by the noble Lord, Lord Williams of Elvel. Perhaps the Minister can share with Members of the Committee the suggestions that the Government may make to the Housing Corporation as to how it should work with local authorities. It is important that such arrangements work smoothly. I understand the point made about delegation, but I am not clear how far the noble Lord thinks it would be a good thing for the Housing Corporation to take seriously the recommendations that are made. If it does

1403
not delegate, it could at any rate use the expertise of local authorities as much as possible without actually going as far as delegating.
Lord Berkeley: I rise to express my support for the amendment moved by my noble friend Lord Williams. For many years I have heard the principle espoused by this Government that subsidiarity is a good thing. It is particularly good when it relates to Brussels and Westminster. But, suddenly—as, indeed, we have just found in the Minister's response—it becomes the worst thing ever when it goes below Westminster, so to speak, to local authorities. Surely they have the local knowledge to deal with local matters.
Of course there must be common standards across the country, but they must take into account local variations and local knowledge. I detect a slight paranoia here about giving local authorities any involvement in what I see as being a pretty vital function. Again, subsidiarity bites the dust because no one seems to be prepared to let go. Surely it is possible within the overall control of the corporation to delegate or subcontract—or whatever the right word may be—work to local authorities in the areas with which they are familiar and in which they were elected to operate.
Lord Lucas: I appreciate the remarks made by the noble Lord, Lord Williams, that there are two housing corporations, both being separate, individually, empowered statutory bodies. To overcome the objections that I raised in my reply to the amendment, one would have to consider having an individual statutory body for each local authority. But, in that case, one would not have a satisfactory body to deal with the many housing associations which are spread widely between local authority boundaries.
I believe that Members of the Committee are trying to address the question of whether there is some mechanism for looking after the small local housing association or similar body which could reasonably be delegated to local authorities, where such authorities could be involved to the benefit of everyone concerned. Given the objections that I outlined earlier, I believe that that is likely to be more of a working arrangement than a statutory transfer of responsibility.
However, I shall certainly consider enlarging upon my description on how local authorities might work together with the Housing Corporation to deal with those small local operations. If the noble Baroness will allow me to do so, I should like to write to her on the matter before the Report stage.
Lord Williams of Elvel: Perhaps as this is also my amendment the noble Lord will write to me too before Report stage.
Noble Lords: Oh!
Lord Williams of Elvel: I do not insist. I am grateful to the noble Lord for his comments. However, I think there is a serious problem here and that the noble Lord now sees the point. I hope I may yet again mention the case of Wales. I have no particular experience of the
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Housing Corporation in England, but Housing for Wales needs the support of local authorities in monitoring the activities of local housing companies particularly. There are, of course, housing associations which spread across local authority boundaries, and indeed the Housing Corporation and Housing for Wales will have that authority. But it is the smaller bodies—particularly the local housing companies, if we are going in for that—where the local authority could easily do what Housing for Wales is perhaps not able to do at the moment. We do not want a big bureaucracy in Housing for Wales, do we? I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 6 [Appeal against decision on removal]:
[Amendment No. 25 not moved.]
Clause 6 agreed to.
Baroness Hamwee Baroness Hamwee moved Amendment No. 26:
Before Clause 7, insert the following new clause—
INDUSTRIAL AND PROVIDENT SOCIETIES: REGISTRATION
(".—(1) In this section an exempt society is a society—

(a) which is a society registered under the Industrial & Provident Societies Act 1965;

(b) whose objects are exclusively charitable; and

(c) which is registered as a social landlord,

and references in this section to a section or Schedule are references to provisions of the Industrial and Provident Societies Act 1965.
(2) In respect of the exercise by an exempt society of its functions as a social landlord—

(a) a society shall be deemed to fulfil the condition in paragraph (b) of section 1(2) (society which may be registered), and

(b) the words "provisions of this Act" in section 10 (amendment of registered rules) do not include section 1(2) and, for the avoidance of doubt, in respect of paragraph (b) of section 1(1) and paragraphs 4 to 6 of Schedule 1, the appropriate registrar shall only be concerned that provision is made and not with the manner of provision save that the rules as amended ensure compliance with section 20 (members under 18).").

The noble Baroness said: I apologise that the drafting which has been used to encompass the matter of concern is inevitably complicated. To say that it is opaque would probably not be putting it too strongly. I hope that I shall be able to make clear the point that underlies it. Increasingly over the past 20 years or so, it has been seen as right and appropriate that tenants of a housing association should be involved in the association as, if you like, its consumers.
Provision, for instance, has been made for direct election by tenants—as well as tenant shareholders elected as shareholders—to management committees. In one instance of which I know that was done on the basis that the tenants should not be in a majority. Rules such as that have received the consent of the Housing Corporation and have been registered by the Registrar of Industrial and Provident Societies. As I say, many associations are taking steps such as this to alter their rules. I have been advised of one association which, having done this with Housing Corporation consent, has found that the registrar recently appears to have altered his position on tenant involvement in a housing association. That registrar is insisting that, whenever an

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association seeks a change in its rules, its rules limit the shareholding by tenants; limit membership of an association's committee by tenants—in both cases to one-quarter—and make provision as regards quorums.
By and large, housing associations incorporated under the Industrial and Provident Societies Act have rules which are based on model rules drawn up by the National Federation of Housing Associations. This conflict, as it appears, between the registrar's views, those of the NFHA and those of associations which are seeking rule changes and which are pursuing progressive programmes in the involvement of their tenants is causing no little confusion and difficulty.
My amendment seeks to ensure that the registrar's concerns do not have such a wide effect as to inhibit a social landlord being registered as a social landlord and fulfilling the necessary conditions. I appreciate that, on the face of it, this is perhaps an obscure point, but it is right to raise it within the context of this Bill. I shall be grateful for any help that the Minister can give now or following today's debate. I beg to move.
Lord Lucas: I do not know whether the noble Baroness believes in reincarnation, but if so perhaps in another life she was a parliamentary draftsman. Certainly, as she said, this is a clause of great opacity, but I think we know what she is after. We recognise that tenants have an important part to play in the management of their homes. This is something the Government have supported and taken forward for many years now. It is right that tenants should not only be able to make their views known; they should also be able to ensure these views are reflected in the management decisions affecting their properties. Registered social landlords have generally welcomed these initiatives. Many have welcomed tenants onto their management committees where they have an opportunity positively to influence management decisions.
The noble and learned Lord, Lord Nolan, in his report on local spending bodies, which included housing associations, called for tenants to have a greater say and for them to have more opportunities to become members of their associations. Consideration is being given to this and the other recommendations in the report, and the Government will be responding formally at a later date. We understand the concerns of registered social landlords expressed by the noble Baroness, Lady Hamwee, regarding the recent announcement by the Registrar of Friendly Societies that where an industrial and provident society seeks to amend its rules then he would expect these to limit the percentage of tenants that can be members to no more than 25 per cent. of the total membership. He has also indicated that members should not comprise more than 25 per cent. of the places on the management committee of an association.
Our policy is clearly that tenants should not be in the majority. If I might put things diplomatically, I believe that discussions have been held between the corporation and the registrar on this matter and that these are to continue. The registrar has a duty to regulate all industrial and provident societies, not just those that are
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registered social landlords. This dual regulation can on occasions create some minor difficulties, but with good will on all sides they can generally be overcome.
The proposal in this amendment would effectively involve an amendment to another Act which has not been considered in any detail in the passage of this Bill. There needs to be further discussions to see whether the apparent difficulties can be overcome. We doubt that amendments to primary legislation are necessary but we shall certainly bear that possibility in mind. With that comfort, I hope that the noble Baroness will feel able to withdraw her amendment.
Baroness Hamwee: I am grateful for those comments. The Minister has indeed been extremely diplomatic and careful in what he said. I, too, must be careful not to be so seduced by those words as to let the matter go at a later stage in this Bill if it appears that those discussions—I think that was the term the Minister used—are not proving as productive as the Government might hope. Can the Minister give any indication of the likely timetable as it relates to the timetable of this Bill? If he cannot, can he give an assurance before the next stage that the matter can be handled outside the scope of primary legislation as without some such comfort I would feel the need to return to the matter? In other words, I need to know that I am not letting pass a good opportunity to deal with something which is clearly of widespread concern.
Lord Lucas: If I have not been able to satisfy the noble Baroness by the time we reach this matter on Report, I would expect to see another amendment from her to the Bill. I am quite clear therefore that I shall have to answer her one way or another.
Baroness Hamwee: I thank the Minister. On that basis I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 7 agreed to.
6.30 p.m.
Schedule 1 [Registered social landlords: regulation]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 27:
Page 116, line 7, after ("gift") insert ("or make a loan").
The noble Lord said: In moving Amendment No. 27, it may be for the convenience of the Committee if I speak also to Amendment No. 28 in the name of the noble Baroness, Lady Hamwee, Amendment No. 30 in our joint names, and Amendment No. 31 which stands in my name.
Amendment No. 27 concerns the remuneration of members of the council of the housing associations, and of the board of directors (if that is the case) of other social landlords. The Committee will he aware that before the House went into Committee I declared an interest in that my wife was a member of the council of Stonham Housing Association. Therefore, I enter particularly sensitive territory. Despite that, and on advice, I believe that I am able to speak on the matter.
Paragraph 1 of this schedule begins with the rubric,
"Payments by way of gift, dividend or bonus".
It does not mention making a loan. There are certain restrictions in companies' legislation on making loans. I imagine that Companies Acts would apply where a social landlord who is registered is a Companies Act company. I also imagine that such restrictions would apply to other organisations which may be registered as social landlords which are not Companies Act companies. In other words, there should be parity treatment between the different types of legal organisations.
I shall leave the noble Baroness to speak to her Amendment No. 28. Amendment No. 30 in our joint names refers to the remuneration of members of the council or board of directors, or whatever it might be, of a registered social landlord. As the Minister said in another place, the Government do not seek to change the ethos of the housing association movement. I am glad to hear that because I believe that the housing association movement has persisted for many years on the basis of voluntary service. It is only right that it should do so. Nevertheless, there is the nagging question not just of refunding the expenses of those involved in housing associations but also as regards loss of earnings. Again, I speak from a certain amount of marital experience. Being involved as a member of the council of the housing association involves an enormous amount of time, effort, reading papers and making decisions. Loss of earnings can be a major problem if a housing association wishes to have on its council people who are not supported either by private income or other means. It seems to me that some formula along the lines of jury service could be right.
It is an important matter. So far as I am aware—I am open to correction—it is the first time that it has been proposed that housing associations should cease being organisations run on a purely voluntary basis by people who give time and effort to them and become possibly professional organisations with directors or members of the council who are professionals in the sense that they are paid for that specific job. It is an important principle that I believe the Committee would wish to discuss.
Amendment No. 31 is simply a probing amendment which seeks to encourage the Government to explain why the corporation has the power to specify maximum amounts even in the case where shareholders of a company registered under the Companies Act decide that the managing director may qualify for substantial bonuses if the company, although non-profit-making, may have done particularly well. I question whether the corporation is not cutting across some of the provisions of the Companies Act in that respect. It is purely a probing amendment. I beg to move Amendment No. 27.
Baroness Hamwee: I do not need to add to the comments of the noble Lord in support of Amendment No. 30 which also stands in my name. Amendment No. 28 is entirely straightforward. It enables the
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Government to confirm that a gift does not include a benefit as set out in paragraph 2, to which the amendment refers.
Lord Lucas: As the noble Lord, Lord Williams, records, the housing association movement is supported by the commitment of voluntary committee members of registered social landlords. There are in England and Wales more than 25,000 such people freely giving of their time serving on the committees of housing associations. Many more contribute to the running of the registered social landlords as members of local, area and tenant committees. We are considering part of the Bill which proposes the possibility that they may receive some compensation for loss of earnings or for the time that they give in such service. Perhaps I may take time to set out the Government's position in this area.
First, let me explain the present controls over the granting of payments and benefits to board members of registered social landlords and members of their families. Paragraphs 1 to 3 of Schedule 1 of the Bill broadly re-enact the provisions of Section 15 of the Housing Associations Act 1985. Payments to board members are limited to the refund of expenses directly incurred. The provision provides for the corporation to be able to specify the maximum amount which may be paid.
Last year the National Federation of Housing Associations conducted a review under the chairmanship of Sir David Hancock, of the governance of housing associations. In their report the review team recommended that consideration be given to the introduction of a loss of earnings regime. In taking forward the provisions from the 1985 Act we have taken the opportunity to clarify the provision to enable loss of earnings regime to be introduced, subject to the corporation using its powers to specify the maximum amounts that might be paid.
I turn to the Nolan review. During his review of local spending bodies, including housing associations, the noble and learned Lord, Lord Nolan, was asked to consider the question of payment to board members. He concluded that at the present time there was no case for departing from the voluntary principle. Many long-standing members apparently suggested that they would be offended if offered money. Perhaps that applies to the wife of the noble Lord, Lord Williams.
The noble and learned Lord, Lord Nolan, also considered whether compensation for loss of earnings should be forthcoming. His committee concluded that at present it could not be justified. Nor was it necessary to attract new people.
Our position is that we are not advocating the introduction of payment to board members. But there is a continuing demand for new people to come forward. Should the position change, then we need to ensure that there are no unnecessary restrictions in place.
The noble and learned Lord, Lord Nolan, in his report suggested that where there was flexibility over the timing of meetings, this was another consideration against loss of earnings compensation. We have to recognise that employment practices are changing

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radically. For many there is no standard working day; some work flexible hours, others fixed shifts involving both early and late hours. If we are to recruit people from a wide cross-section of backgrounds, we may find that some form of compensation will be necessary.
Amendment No. 30 proposes that any payments to board members be limited to the amounts payable under the Juries Act 1974 for loss of earnings. I recognise there are benefits to be gained from using an existing scheme and I am sure the corporation will consider it before specifying maximum limits in accordance with its powers in paragraph 3 of Schedule 1. I shall return to that later.
The corporation's initial intention is to consider the possibility of a small token payment. However, it is possible that in some instances there may well be justification for some modest payment for such groups as the self-employed, the low paid or the unemployed. The jury service analogy, while helpful, may not be exactly what is required.
The corporation's good record was recognised by the noble and learned Lord, Lord Nolan. He considered that decisions on possible exemption should be the sole responsibility of the corporation and should not require the approval of the Secretary of State. We consider there are good grounds for also leaving decisions on the maximum level of payments to it and do not see any need to impose any separate limit. The corporation will consult on any proposals.
In Amendment No. 27, the noble Lord, Lord Williams, has proposed that the limit on gifts or payments granted by a registered social landlord to members should extend to loans. I am grateful to the noble Lord for his explanation of the purpose of his amendment. I share his concern that members should not be granted any unlimited benefits by registered social landlords. I recognise that at present loans are not explicitly mentioned. I do not believe that any amendment is necessary, but we shall check the position with our legal advisers and inform the noble Lord of the results.
In Amendment No. 28, the noble Baroness, Lady Hamwee, has proposed that to avoid any doubt an amendment be made to the effect that a gift does not include a benefit within the meaning of paragraph 2. I believe the paragraph already adequately covers gifts and do not think further clarification is necessary. I hope that that assurance will satisfy the noble Baroness.
I understand that the final amendment in this group is a probing amendment. The noble Lord, Lord Williams, would like some background on how this power is to be used. The first point is that it will be subject to public discussion. The corporation's board has given preliminary thought to these issues. Leading on from my points earlier, it has agreed two general matters of principle: first, if anything other than token payments are allowed, they should be modest and based on a loss of earnings concept; secondly, any system which is put in place should derive from an established regime, such as jury service or magistrates' allowance.
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The noble Lord, Lord Williams, also asked whether the power to set the maximum payment cuts across the Companies Act. The simple answer is yes. This is an extra limitation and the power allows the corporation to set maximum limits on certain payments. The shareholders of a Companies Act company are free to decide what to pay the managing director, but subject to the limit set by the corporation, which is an additional restriction, together with those in the Companies Act.
I hope that what I have said reassures the noble Lord. If the paragraph were to be removed, it would significantly weaken the corporation's powers, and we feel that it has its place in the Bill.
6.45 p.m.
Lord Swinfen: Before my noble friend sits down, perhaps he could help me. I have been looking through paragraph 2 of the schedule and wonder whether a social landlord will be able to make a loan to an employee or officer who moves from an area where housing is at a reasonable cost to an area of expensive housing. The loan would allow him to find somewhere for himself and his family to live and therefore to take up the employment with the social landlord. It may be to the benefit of the social landlord that that person should be employed because of his skills and knowledge, but he might not be able to take the job if he were not able to obtain a loan to buy property in that way.
Lord Lucas: Under paragraph 2(1)(a) a contract of employment which offered such benefits would allow them to be paid. I do not believe that there should be any difficulty if they are regularly offered to employees.
Lord Swinfen: What is the position if the point is not dealt with in the contract of employment? It does not have to be, because it could be separate from the contract of employment.
Lord Lucas: I see no other way in which the offer could be made under the schedule, but I shall write to the noble Lord if there is one.
Lord Monkswell: The employee could be issued with a new contract of employment which included those terms. Perhaps I may press the Minister about the power that the Housing Corporation will have to allow payment to members of a housing association. From what the Minister said, we currently have a voluntary system where people are not remunerated or paid or even given expenses. Apparently there is no demand for it according to what the Minister said. Yet the Government say that it may be necessary to recruit people. What is the responsibility of the Government to recruit people into, for example, a voluntary organisation?

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Previous changes that we have seen in what we might describe as public service—whether it be local authority members or magistrates—have required Acts of Parliament to determine their levels of remuneration or the level of expense claims that they may make. Surely it is not just that the power to determine the possible payments for a public service should be vested in the Housing Corporation rather than in parliamentary determination. There seems to be no mechanism whereby Parliament can be involved either by primary legislation or secondary legislation. There is no mechanism for Parliament to be involved in determining what levels of remuneration or expenses might be allowable or whether there should be any. It appears that the power is given totally to the Housing Corporation to determine the matter.
I suggest that it is a big departure from custom and practice in the way that public service has been considered that the power should be vested in the Housing Corporation rather than there being recourse to parliamentary determination. Can the Government respond to that point?
Lord Lucas: It is a matter of judgment. Earlier I quoted the noble and learned Lord, Lord Nolan, in support of the attitude that the Government take that the matter could reasonably be delegated to the corporation. I appreciate that the noble Lord, Lord Monkswell, and other Members of the Committee may believe that the noble and learned Lord does not get it right all the time. On this occasion, we agree with him and are comforted by his agreement with us. It is open to the noble Lord, Lord Monkswell, to take the opposite view but we take our view based on the same evidence before us.
Lord Williams of Elvel: I thank the Minister for his response to the amendments. I understand that he will consider Amendment No. 27 on the making of a loan and let me and other Members of the Committee know what the Government's legal view is. I wish to emphasise to the Minister that the housing association movement is absolutely committed to the principle of voluntarism. There is no question of it wishing to go professional, but housing associations recognise that a basic level of remuneration may be necessary in order to attract certain people to serve as members of the council.
The Minister adduced the report of the Committee on Standards in Public Life in aid of his view. Again there may be disagreement, but our view is that the amendment on the limitation to jury service meets precisely the terms of the Nolan Committee's second report. It reflects the spirit of the recommendations of the Nolan Inquiry. I find difficulty in understanding why the Government seem to leave matters rather in the air. I should have thought that some provision on
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the face of the Bill, perhaps better drafted than the amendment I have proposed, would be right. Perhaps the Minister would care to comment on that point.
Lord Lucas: It is certainly a matter that we shall think about. But there is no possibility of my even hinting to the noble Lord that we might actually agree with him.
Lord Williams of Elvel: A nod, as they say, is as good as a wink.
Baroness Hamwee: It is better to nod.
Lord Williams of Elvel: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 28 not moved.]
Lord Lucas Lord Lucas moved Amendment No. 29:
Page 117, line 6, leave out from ("Corporation") to end of line.
The noble Lord said: This amendment concerns the powers which the corporation has to determine what payments or benefits a registered social landlord which is an industrial and provident society or a company registered under the Companies Act 1985 may make. These powers are not new. Under Section 15 of the Housing Associations Act 1985 the corporation currently has the same powers in respect of industrial and provident societies. They are sometimes known as "Section 15 exemptions" since, in effect, they exempt associations from the strict rules of that section designed to avoid conflicts of interest. Section 15 is re-enacted, with amendment, by paragraph 2 of this schedule.
In his second report the noble and learned Lord, Lord Nolan, supports the retention of these powers, but recommends that they should be fully devolved to the corporation to simplify the procedures.
We are still considering the main recommendations made by the noble and learned Lord in that report. But this is a relatively minor matter, and one on which we can agree that the corporation, as regulator, is better placed than we are to determine what exemptions from the general rules as to payments and benefits should be allowed. This amendment therefore removes the requirement for the Secretary of State to approve any such determination. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 30 and 31 not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 32:
Page 119, line 36, leave out from ("receive") to end of line 39.
The noble Lord said: The Committee will be aware that I return once again to the provisions of the Companies Act and how they might affect local housing companies.
The Bill as drafted allows the corporation to appoint someone to be a director of a registered social landlord and goes on to allow that person,
"to require an extraordinary general meeting of the company to be convened within 21 days of a request to that effect made in writing to the directors of the company".
It is almost unprecedented that one director, as opposed to a group of shareholders, should be appointed by a regulator and then be allowed to call an extraordinary general meeting of a company. Certainly that is not the case, so far as I know, unless the noble Lord corrects me, with any of the regulators of the utilities. It seems a very extraordinary power to include. I hope very much that the Minister will be able to justify it. I beg to move.
Lord Lucas: Paragraph 7 of Schedule 1 provides the corporation with power to appoint a new director to a registered social landlord which is a registered company under the Companies Act 1985. Paragraph 8 of Schedule 1 provides the corporation with similar power to appoint a new committee member to a registered social landlord which is an industrial and provident society.
The purpose of this provision is to allow the corporation to exercise its judgment on when additional expertise or guidance is necessary and to enable the new director to help influence the existing directors to ensure that a registered social landlord is managed in an effective and proper manner.
Amendment No. 32 would prevent a director appointed by the corporation from calling an extraordinary general meeting. This power conferred on a director appointed by the corporation runs parallel to the powers under the Companies Act for shareholders and directors to call an extraordinary general meeting. It does not remove those powers. Rather this specially appointed director can act independently to call an extraordinary general meeting where he believes this would help to achieve the purpose for which he has been appointed—the proper management of the company's affairs. This director is acting in the public interest, which may quite legitimately differ from the interests of individual shareholders.
Extraordinary general meetings will typically be called to discuss the dismissal and appointment of directors. The corporation-appointed director will be concerned to restructure the Board to overcome management problems. Others could try to frustrate him. We cannot prevent this without removing their rights, which we have not sought to do.
What we have done is give the corporation further powers which we shall come to in later parts of this schedule to take more decisive action, if their appointed director or directors cannot get things under control.
I hope that explains to the noble Lord our logic in wishing the director to have these particular powers. I agree with him that it is unusual, though I can think of many instances in corporate practice where a particular investing organisation has been given particular powers through the board of directors or through its shareholding to call an EGM which would not run with the ordinary concept of majority control. This is a device which we feel fulfils the requirements we have in this particular case. We do not believe that it creates any problems under the Companies Act. However, I wait to hear the noble Lord's remarks.
Lord Williams of Elvel: I am grateful to the Minister. I am sure that it does not create problems
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under the Companies Act; it is just wholly unprecedented. It runs in parallel with the normal provisions of the Companies Act. The Minister mentioned groups of shareholders. Certainly 10 per cent. of shareholders can summon an EGM. That applies to any company under the terms of the Companies Act. I cannot think of any regulator—Ofgas, Oftel, Ofwat, off anything else—which has the power to summon an EGM of a Companies Act company. That is the power that the Government are giving to the corporation.
The noble Lord made the point that this would be to summon an EGM which would usually be used to sack the director. An EGM is also required for increasing capital. It may well be that the corporation will wish to increase the capital of a company. Presumably, the corporation will be allowed to make that suggestion and put propositions to an EGM. It is not stated anywhere that the corporation or the director can move a motion at an EGM; it simply says he can call an EGM. He cannot even necessarily speak at the meeting except as a director. It all seems very confused. The Government should examine this matter to see what would happen at an extraordinary general meeting, if convened by a director appointed by the corporation. Would that director then be allowed to move any resolutions at the EGM? It has to be assumed that he cannot unless he has the approval of the board under the Companies Act. I should be grateful if the Minister would look into the matter. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Dubs Lord Dubs moved Amendment No. 33:
Page 123, line 25, after ("Corporation") insert ("together with the Accounting Standards Board").
The noble Lord said: In moving this amendment standing in the name of my noble friend Lord Williams of Elvel, I shall also speak to Amendments Nos. 34 and 35.
I was a little surprised when in an earlier debate, I believe on Clause 1 stand part, the Minister, in reference to paragraph 16(1) of this particular schedule, said that there would be two sets of accounts for those registered social landlords that came both under the Companies Act and under the Housing Corporation. I was rather puzzled by that, and I have tried to think my way through the significance of this particular provision. The Government risk causing some confusion.
As I understand it, some registered social landlords are also incorporated companies and therefore have to conform to Companies Act requirements. That means that the way in which they present their accounts would have to be in accordance with the Accounting Standards Board. Other registered social landlords may not be registered companies. Therefore, they would simply come under the requirements of the Housing Corporation. But, in addition, those which come under the Companies Act would also have to come under the Housing Corporation. It is difficult for me to take comfort from an outcome which means that the corporation may set different requirements for the whole

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range of social landlords, some of whom will also have to conform to the standards of the Accounting Standards Board.
In a nutshell, it seems to me that that is excessively complicated and will cause confusion. I trust that I am right in having quoted the Minister as saying that there would be two sets of accounts. If not, if the Minister will indicate, perhaps we can clarify that. But, as I heard him fairly clearly, no doubt he goes along with that. The Minister also used the expression "separate but overlapping".
The result is likely to be that for some registered social landlords there will be two sets of accounts; or certainly some social landlords will prepare accounts in one way and others will be obliged to prepare accounts in another way. I do not see how that will help clarify the financial position of those bodies. Moreover, I should have thought that the Accounting Standards Board would require the accounts to be prepared, as it says in the schedule:
"in a proper form and … give a true and fair view of … the state of affairs of the landlord … and … the disposition of funds and assets".
I cannot understand why there should be those different conflicting and confusing requirements. It seems to me that Amendment No. 33 helps clarify matters. The amendment simply requires that the Corporation:
"together with the Accounting Standards Board may from time to time determine accounting requirements".
That seems to me a very simple change which will add clarity and consistency to the way in which those bodies prepare their accounts.
Turning to the other two amendments which concern the requirements for audit, I have looked hard at that part of the schedule which refers to this matter. The expression "a qualified auditor" comes up more than once. My understanding is that when companies come under the Companies Act, they have to appoint auditors who are members of the Institute of Chartered Accountants (I think it is that), which means that they must conform to certain specific requirements. But some social landlords may not come under the Companies Act, as has already been made clear. Therefore, I assume that the reason for this provision is that they need to have qualified auditors because they are not obliged to provide auditors with particular qualifications under the Companies Act.
I ask who such a qualified auditor would be and to what would he have to conform if they were not the same requirements as those that come under the Companies Act. It seems to me that it would be much simpler if all social landlords had to have their accounts audited by people who conform to the same standards. That is the purpose of Amendments Nos. 34 and 35. I beg to move.
7 p.m.
Lord Lucas: These amendments raise two questions: first, whether there will be two sets of accounts, as I said earlier. It is quite clear that for a company incorporated under the Companies Act 1985 and for a
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registered social landlord under this Bill, which is also such a company, there are two sets of requirements to produce accounts. There is the requirement in the Companies Act and the requirement in this Bill. The two exist not in opposition but parallel. So, in principle, there is a requirement to produce two sets of accounts.
But the Housing Corporation confirms that there are no substantial differences between its requirements and those of the Companies Act. But the corporation requires more detailed information in some areas in order to fulfil its regulatory function. It says that in practice there may not be a need for completely separate sets of accounts; all that may be required is to supply the supplementary information alongside the Companies Act accounts. Ordinary commercial companies encounter that difference when producing accounts according to the English standard and the American standard. The accounts look different and are different but they apply to the same company and the same affairs. But one is looking at a different set of regulatory regimes and a different set of purposes.
We do not feel that Amendment No. 33 is appropriate. Page 123, line 25 of the Bill applies to the accounts required by the Housing Corporation. The Accounting Standards Board is interested in the Companies Act accounts. So we do not believe that the Accounting Standards Board has any function to fulfil in that set of accounts. The two are conceptually separate. But probably in practice one set of accounts, with an additional set of notes, will satisfy the housing corporation.
With regard to Amendments Nos. 34 and 35, I agree with the noble Lord, Lord Dubs. I find the phraseology on page 124 of the Bill—paragraph 18(4)—a little confusing. What it amounts to is that an auditor has to be a Companies Act auditor. In other words, any social landlord has to be audited by an auditor who is qualified to audit a company under the Companies Act. For the noble Lord's enlightenment, that consists of the Institute of Chartered Accountants in England and Wales, Scotland and Ireland, the Chartered Association of Certified Accountants and the Association of Authorised Public Accountants. They can all audit Companies Act companies and those people will be required to audit any social landlord.
Therefore, I do not believe that there is any case for a restriction to the Institute of Chartered Accountants in England and Wales because those people are already quite happily qualified to audit any company. We do not need to look for more than that. I understand that these amendments were put forward in the fear, which I agree could easily be gathered from the wording here, that there might be some possibility of a relaxation, allowing in people who would not be qualified to audit a company to audit a social landlord.
Lord Monkswell: The Minister has satisfied me to a certain extent with regard to the arrangements for the auditing of the accounts. But I must say that he has not satisfied me with regard to the preparation of the accounts and the accounting requirements.

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I am a comparative layman when it comes to accounts. I must admit that in the past I have had some difficulty in determining what the accounts of different organisations and companies mean. Quite often they are arranged in different ways and it is difficult to work out what they signify. When it comes to housing associations or arrangements under the Housing Corporation, we must recognise that there is a need for some transparency and visibility over what is going on. We are also dealing with a large body of volunteers who almost by definition will not be qualified in accountancy. It is useful to recognise that. We must ensure, as best we can, that the accounts that may be determined by the Housing Corporation are not significantly different from accounts that may be required for companies.
I was interested in the Minister's remarks that the requirements of the Housing Corporation were supplementary and additional to enable it to perform its regulatory functions. We can all recognise that and it is probably very useful to have extra information in accounts to make them more understandable and more transparent to the regulatory authorities, members of the Housing Corporation and others involved in this area of activity. It would be useful if, when the Housing Corporation is determining its requirements, it could be involved with the Accounting Standards Board to ensure that the accounts required by the Housing Corporation are supplementary and additional rather than in a different form, which could quite easily happen.
I hope that the Government will think about this problem. Although they may not accept this amendment, I hope that they will think of other ways of ensuring that two sets of accounts are not produced but that all the information that is needed can be enshrined in one set of accounts. The Minister's remarks about supplementary or additional information would be the way to do it. It is rather disturbing to hear that we are likely to see two sets of accounts. Unless this problem is resolved, we shall only add to the confusion of people trying to determine what is going on.
Lord Dubs: Perhaps I may briefly make a further comment. I thank the Minister for clarifying the position regarding the auditors. He has confirmed that the Bill as drafted means what the amendment is intending to achieve, so I am happy to have that assurance. However, I am less happy about the Minister's comments in relation to the question of how the accounts should be kept.
The Minister said that the Housing Corporation would not require accounts to be presented in a different form from those normally required by the Accounting Standards Board but that the corporation might in some respects want more detailed information to supplement the normal Accounting Standards Board requirements. That is fairly clear. If the amendment to which I was speaking is accepted, the Bill would say:
"The Corporation together with the Accounting Standards Board may from time to time determine accounting requirements".
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I should have thought that those words would actually meet what the Minister said and clarify the position beyond doubt so that we would not run the risk of having accounts presented in two different ways by the same social landlord. It would have the other advantage that all social landlords, whether or not they come under the Companies Act, would present their accounts in a similar way and conform to similar standards. I should have thought that the Minister's argument leads to the outcome which the amendment would achieve. I wonder whether he would think again about the merits of the suggestion in Amendment No. 33.
Lord Lucas: What paragraph 16 of the schedule achieves is that all social landlords will produce their accounts in the same format. It also says that the format will be determined by the Housing Corporation alone. We think that is right. It has its own requirements and it should be able to insist on accounts which show what it wants in the way that it wants.
I am sure that the Housing Corporation is made up of sensible people. It certainly is at present and it probably will be in the future. It will wish to work as far as possible with the grain; and that will mean, as far as possible, with accounting standards recognised for companies and in general for other bodies. That is why the Housing Corporation at the moment says that in practice all it would expect to be needed is a certain amount of supplementary information presented with the accounts and reported on by the auditors. We think that the powers should be there to enable the Housing Corporation to get what it wants in the way that it wants without being forced to comply with the wishes of some other body which has a different set of interests.
Lord Dubs: I see that the Government are not to be persuaded. I still regret that that is the Minister's position. We may well find that those social landlords who come under the Companies Act, if they wish to avoid producing two sets of accounts, may, in conforming to the Housing Corporation requirements, be departing from the requirements of the Accounting Standards Board. The Minister said that the Housing Corporation will be sensible and that—I am paraphrasing what he said—it will take account of the standards of the Accounting Standards Board in order to achieve a satisfactory outcome. In other words, the Minister is saying that he will not put it in the Bill but the Housing Corporation had better do what the amendment says. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment Nos. 34 and 35 not moved.]
Lord Lucas Lord Lucas moved Amendment No. 36:
Page 125, line 40, after ("with") insert ("the").
The noble Lord said: This amendment corrects a drafting error. It inserts the word "the" between the words "with" and "consent" in paragraph 19(4) of

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Schedule 1. While "with consent" may make sense in certain circumstances, in this one it does not. I beg to move.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 37:
Page 126, line 7, at end insert ("or persons").
The noble Lord said: In moving this amendment, I wish to speak at the same time to Amendments Nos. 38 to 45. These amendments are necessary because the current wording of paragraph 20(7), which deals with the conduct of an inquiry by more than one person, is ambiguous and unclear. Paragraph 20(7) was introduced as an amendment at Commons Report, consequent on another amendment providing that more than one person can be appointed by the corporation to conduct an inquiry. These amendments therefore represent a certain amount of polishing that is required. I beg to move.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendments Nos. 38 to 45:
Page 126, line 8, leave out ("considers") and insert ("consider").
Page 126, line 11, after ("person") insert ("or persons").
Page 126, line 11, leave out ("he thinks") and insert ("they think").
Page 126, line 12, leave out ("him") and insert ("them").
Page 126, line 14, after ("person") insert ("or persons").
Page 126, line 15, leave out ("and in such form").
Page 126, line 15, at end insert—
("( ) An interim or final report shall be in such form as the Corporation may specify.").
Page 126, leave out lines 16 to 20.
The noble Lord said: I have just spoken to these amendments. I beg to move.
On Question, amendments agreed to.
Lord Mackay of Ardbrecknish: I beg to move that the House do now resume. In moving this Motion, perhaps I may suggest that the Committee stage begins again not before 8.15 p.m.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Healthcare 2000 Report
7.17 p.m.
Lord Hacking Lord Hacking rose to ask Her Majesty's Government what is their response to the issues raised in the Healthcare 2000 Report.
The noble Lord said: My Lords, my purpose in tabling this Unstarred Question is to draw attention to the Healthcare 2000 Report and to seek the considered response not only of Her Majesty's Government but of Her Majesty's Opposition to the report. I am therefore delighted that the noble Lord, Lord Rea, a general practitioner in London, is speaking from the Opposition Front Bench and, although I am sad that my noble friend
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Lady Cumberlege is unwell and is unable to participate in the debate, I am delighted that my noble friend Lady Miller is replying on behalf of the Government.
Lord Graham of Edmonton: Hear, hear!
Lord Hacking: My Lords, I am glad to have support from the noble Lord, Lord Graham. Perhaps I may also say that I am delighted that a dental practitioner in London, the noble Lord, Lord Colwyn, is taking part, as indeed is the noble Lord, Lord Butterfield, who has held a number of very distinguished appointments both in hospitals and in academia. Although this report was published in September of last year, this is the first occasion that either House of Parliament has considered it. When the report was published there was comment from the political parties which, alas, was more political than constructive in its response. Perhaps, in fairness to my noble friend the Secretary of State, I should state that he was asked questions somewhat early in the morning on the "Today" programme and probably at a time before he had had an opportunity to give the report full study. Comment from the media was also more of the hysterical than the thoughtful kind. The so-called informed press was more hysterical than other organs of our other press. Indeed, to a leading article in the Independent of 20th September 1995 there was the heading, "Faulty diagnosis … dangerous".
This is not the only report that has been recently issued which expresses concern about the future of healthcare in this country. The Royal College of Physicians published a recent report. In a press release the report is described as saying:
"The criteria and procedures for determining priorities are inadequate and rationing in the National Health Service should be more openly discussed".
The British Medical Association and the NHS Consultants' Association also issued reports.
Therefore, I shall be arguing in my short speech that this is a thoughtful report that deserves and merits a thoughtful response. There have been enormous changes in the needs of patients and in the services of the National Health Service since it was founded in 1947.
The report has been funded by a number of leading pharmaceutical companies based in this country. The composition of the steering committee, chaired by Sir Duncan Nichol, was of very wide composition, consisting of doctors, clinicians, patients associations, academia and healthcare directors. There was also the widest consultation including not only critics of the National Health Service but also of the pharmaceutical industry. No fewer than 50 healthcare organisations were consulted. I make it plain that I have no interest whatever to declare under the rules of the House, including the latest resolutions, but I am most willing to tell your Lordships, as some noble Lords know, that I am in practice as a lawyer in the City of London and among my clients there are pharmaceutical companies.
The thoughtful report begins in Chapter 2 with an analysis of the challenges that face the National Health Service now and in the years ahead. The major advances in surgery and in treatment, computing and information technology have resulted in a widening gap between the

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provision of resources available to the NHS and the ability of National Health Service patients to receive those resources.
In Chapter 3 there is a very careful evaluation of the purposes and values of the National Health Service. As regards Chapter 2, I draw to your Lordships' attention one very important matter; namely, the analysis of demographic changes. The report identifies the fact that there are 9 million people currently over the age of 65 and 900,000 persons in the United Kingdom over the age of 85. By the middle of the next century, in the year 2050, there will be 15 million persons over the age of 65 and 3 million over the age of 85. A rather graphic way of describing this demographic change is that when Her Majesty first came to the Throne in 1953, I believe that she sent 270 telegrams to those who had reached the age of 100 years. I understand that Her Majesty is now sending nearly 3,000 telegrams, faxes—perhaps she is even using E-mail—to those who have reached the age of 100.
Similar demographic changes have been identified in the United States of America where there are 6,000 more Americans celebrating their 65th birthday as every day passes. By the year 2030 it is calculated that in the United States of America there will be more persons over the age of 65 than there will be persons under the age of 18 years.
Chapter 4 of the report deals with patients' need and the great need for better information passing from the health carer to the patient. Chapter 5 analyses the healthcare professions. Page 32 gives a very interesting example of a patient scenario, which I shall read to your Lordships because it describes how, with better integrated healthcare, the patient's position is greatly improved:
"Alan Christie had been depressed for most of his adult life. He had not consulted his doctor for a few years—not since he had a course of pills that didn't work. When the practice nurse was taking his blood pressure one day it all came out, how he couldn't concentrate, sleep or experience any joy from life. She referred him to the clinic run at the practice by the community psychiatric nurse. Alan attended the clinic and the nurse soon arrived at a diagnosis of clinical depression which needed active treatment. She assessed Alan's case with the family doctor. The doctor saw Alan within twenty four hours and decided, in consultation with the psychiatric nurse, on a plan of shared care. For the first time in years, Alan feels at ease—he no longer feels divided between the inner pain he felt and the mask he always wore to hide it".
Chapter 6 of the report analyses the funding of healthcare. Chapter 7 deals with the purchasing and provision of healthcare. It was those chapters that received the most publicity in the media because the report bravely grasped a number of nettles and asked central questions. As I said to your Lordships earlier, it identifies an increasing gap between resources and demand, which naturally brings into place proper questions that should be asked about the future funding of healthcare in the United Kingdom and whether we can continue still just to rely on general taxation as the major source of income for the National Health Service.
The plain facts are that the increasing cost of healthcare goes up year by year. I give noble Lords the figures: in 1970 the cost of the National Health Service was just under £2,000 million; in 1980 it was, in round
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figures, £11,600 million; in 1990 the figure was £27,760 million. The latest figure for 1996 estimates is that the cost will be £41,427,000. So in the past five years the cost of the National Health Service, despite a number of steps that have been taken to reduce it, has almost doubled in size.
The other fact is that from the outset of the National Health Service every government have had to seek more resources for it. As I have said, the NHS was introduced in 1947 and there were no prescription charges. However, within three-and-a-half years Hugh Gaitskell, who was then the Chancellor of the Exchequer, sought to introduce a prescription charge, which resulted in him being called, if I recollect correctly, "a desiccated calculating machine". That issue also caused the resignations of Aneurin Bevan, John Freeman and Harold Wilson. However, the Labour Party was driven to introduce a modest prescription charge of 5d within three-and-a-half years of the foundation of the NHS and, although the Labour Party abolished the prescription charge when it came back to power in 1964, by 1968 Kenneth Robinson, the Secretary of State for Health, had to reintroduce prescription charges.
An example from the other side of the political divide is that the Conservative Government have recognised the need for other funding within the National Health Service in terms of private health funds and in their NHS reforms. The trouble is that the debate about the NHS has always had a political cloud over it. That point was made by Dr. David Green in his dissenting opinion on page 60 of the report—
Lord Graham of Edmonton: Time!
Lord Hacking: My Lords, as I end my remarks—well within the time-frame—I am asking your Lordships for a constructive discussion—
Lord Graham of Edmonton: Twelve minutes!
Lord Hacking: My Lords, according to my note I have 15 minutes, but I am now ending my remarks, so let us not have a debate about whether I have 12 or 15 minutes, which was the time that I understood was available to me for opening the debate.
Let us have a constructive discussion. Above all, let us look at the valuable contribution which this report has made to the debate on healthcare in the future. I shall not read it out because there is not the time, but I draw your Lordships' attention particularly to the moving patient scenario which is identified on page 47. I commend the report to the House.
7.32 p.m.
Lord Butterfield: My Lords, as the lone Cross-Bencher, I am pleased to enter the debate which the noble Lord, Lord Hacking, has so wisely and kindly initiated. The Healthcare 2000 Report comes from a very prestigious committee led by Professor Sir Duncan Nichol, who has produced a penetrating and comprehensive report, which is not surprising because for a long time he was at the centre of the NHS. His committee is a powerful one and its report reflects the

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growing interest in such matters as the new roles of, and responsibilities for, the well-informed patient and how we are to make patients well informed. It raises interest in the movement of the centre of gravity of healthcare towards community services and it probes the questions of trials in the organisation of medical care and the flexibility of payment.
There is no doubt that it is very important for all of us who are concerned with the health service that we do not allow the fact that the examination is arduous to mean that people do not even try to take it. I urge noble Lords to read the report because they will find that a wide network of healthcare ideas is incorporated into the committee's deliberations. There will have to be a good deal of debate about the points raised in it well on into the millennium.
We are always concerned about training in the health service and I have been intrigued by the Chinese philosopher who urged that when facing complicated questions, leaders of organisations should always try to find the key link of the net of complexities, because if you find that key link, you can cast your net onto the river where it will settle evenly and enrich the chance of a good catch of fish.
For me, the key link is buried on page 8 of the report. Your Lordships will not be surprised when I say that it reads:
"It will be important for the caring professions to continue to attract the most able young men and women into their ranks. The growing diversity of need for the different types of professional ability requires people of varying characteristics and abilities".
To that, I should like to add that we must ensure that we attract the most ethical and sensitive young people. I believe that that is likely to happen only if the right philosophy lies behind healthcare. Students, whether they are nurses, doctors, physiotherapists or social workers, must be selected from the cohorts of young people who can be expected to put the patient first and not see patients simply in economic or profit terms.
I spoke earlier today to the President of the Royal College of Physicians, Sir Leslie Turnberg, who was involved for a time with the healthcare committee, and he is particularly anxious that we do not allow the funding of the NHS, and particularly the education of workers in the NHS, to fall behind in the eyes of either the public or the Treasury. I agree, but I think that that interest will be maintained only if the demographic problem in particular is constantly put before Parliament and the public.
It is equally important that the students selected for the health service have a philosophy of helping people to stay fit and that they see health promotion not as a bore but as a vital part of their co-operative work with their patients. David Green recognised the increasing burdens of self-inflicted disease on the health system and wrote an interesting note of dissent. As an economist, he was intrigued by the idea that health planners appreciated the power of individuals over the maintenance of their individual health programmes. That brings one face to face with the concept of patients
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planning their own care. It is expensive and, in my experience, even the rich are not able to work out particularly good health programmes for themselves.
The whole idea of an individual organising his healthcare programme is fairly common in America where the public are genuinely concerned about their personal responsibility for healthcare costs and where people are used to looking over and paying health bills. The idea of choosing the best buy becomes a feasible family procedure in America, but it is a strange sort of occupation for the great majority of the British people. To me, it seems best to leave the responsibility for determining the best health buys over the next 20 years or so to those general practitioners who are fund-holders and therefore have some authority in this area. I think that that is the sort of solution which the British would find most acceptable after 50 years of the NHS. However, I must add that it is important that such matters are debated.
When David Green considers the cost distribution of health between people of different ages, he recognises that the elderly are more expensive, but I do not think that he allows a high enough variation in their direction. I believe that the elderly can cost between three and five times as much as the middle-aged for the very expensive care and therapies that they need.
Of course, when people pass the ages of 60 or 65, they move into difficulties with the healthcare insurance folk. If they want to start a health insurance programme, they find that they can be covered into the future only for conditions which will be new to them. If they are discerning, they will notice that the financial premiums rise at the rate of 3 per cent. or more per annum. In effect, it seems that the diseases with which the elderly have been wrestling as their own weaknesses, such as osteoarthritis, emphysema, chronic lung disease, dementia or incontinence, are the very conditions that will bring them into difficulties with the health insurers who say, "We will be delighted to cover you for new conditions, but not for those which you already have". As chronic diseases last a long time and doctors strive to recognise diseases as early as possible, they are likely to lead to conditions which will put elderly people into difficulties in obtaining private health insurance. There is a great deal of scope for discussion about this matter in future. I suspect that one of the issues to be faced is the reopening of the question of euthanasia. I apologise for introducing that thought. However, the more one hears of the age spread, the more we shall hear about that subject in future.
I conclude by speaking about the role of exercise in staving off immobility, which so often mars old age and adds to the cost of caring for the elderly. In a speech I made in the House last year I believe that I amused one noble Lord by stressing the importance that I attached to the need for all of us elderly people to keep our thigh muscles, the quadriceps, strong and firm to keep us mobile and enable us to get up from chairs and so on.
On this occasion I feel compelled to bring to the attention of your Lordships, and your Ladyship, a small illustrated booklet—which I hold up and will place in

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the Library—entitled Exercise for Healthy Ageing. That booklet is published by Research into Ageing, a charity that I had the privilege to help launch in the 1970s. This booklet was first published in December 1994, and by March of this year it had reached its 11th impression. It makes the important point that it is never too late to start exercising. A commitment to stay active and exercised is an investment to help one remain independent.
My gesture in this short debate, which can touch only the tip of the huge iceberg covered by the report of Healthcare 2000, is to place a copy of the booklet in the Library in the hope that it will be a practical contribution to people's health and so to the NHS and the cost of the caring programme. I am not naêve enough to believe that this approach—the provision of guidance—solves the problems. The publication of a booklet only starts the process of health promotion. We are still only at the beginning of what can be done to promote the nation's health and the health of the elderly and, most particularly, to stave off the difficulties and disabilities experienced by an increasing number of people in future.
7.43 p.m.
Lord Colwyn: My Lords, I am grateful to my noble friend Lord Hacking for introducing this short debate this evening. I welcome him to the ranks of the medical speakers of this House. I also welcome my noble friend Lady Miller who is deputising this evening. I hope that my noble friend Lady Cumberlege will be back with us soon and regains her good health.
I read the report and found it interesting, provocative and challenging. Surprisingly, I found myself in agreement with the two previous speakers and much of the note of dissent written by Dr. David Green. In particular, I agree with his regrets that party politics and partisan affiliation are intricately involved in the NHS debate. In one way or another I have been involved in debates on the NHS in your Lordships' House for nearly 30 years. I sincerely believe that successive Governments have provided and always will provide funding and instigate changes that they believe are beneficial to the service.
It was not until I arrived this evening and realised there were so few speakers in the debate that I regretted having prepared only a four or five-minute contribution. I should like to say a few words on integrated care management which features in chapter seven of the report under the title "The Purchasing and Provision of Healthcare". The report states:
"The integration of purchasing for primary and secondary care will allow the purchasing of a co-ordinated package of care within which a clinical pathway becomes the basis for disease management".
I declare an interest as a dental practitioner and the director of a biotechnological company. Disease management is not a concept; it is reality. It is not a marketing tool for the pharmaceutical companies; it is a fundamental change in the nature of managing chronic disease that is happening now and will affect every participant in the health care industry from scientist to manufacturer to consumer. Disease management is the marker and the means for the shift from a component
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based to an overall integrated approach to diagnosis and treatment. Healthcare is a system, and there will be great financial savings for the health budget if the UK Government are able to use the system's new tools for making much needed improvements. The report states this as a challenge. It states that information technology will increase the quality, quantity and accessibility of information.
Disease management encapsulates the economic and social cost of disease, methods for detection, treatment and prevention. In assessing the cost and benefit of any one product, these issues must be considered by government, industry and patients. I believe that my noble friend the Minister will agree that an understanding of the economic and social costs of disease and a reduction of those costs are paramount in effective disease management. Having identified an illness and a section of the population for disease management, there are many decisions that need to be made. In some instances those decisions require funding to be made available now in order to realise significant long term savings.
Osteoporosis is one disease state which illustrates the point well. In the UK there are approximately 3 million osteoporosis sufferers but, as Healthcare 2000 points out, there are signs that not all patients who would benefit from some new treatments are obtaining them. Only 250,000 are treated at a cost of £640 million annually. The majority of costs occur as a result of fractures. One in three orthopaedic beds is occupied by an osteoporosis victim. It is only after suffering a fracture that an individual can be identified as having osteoporosis. Prevention is too late, and hence the £640 million associated costs follow. If the remaining 2.75 million patients are undiagnosed and untreated, it is only a matter of time before there will be an explosion of costs associated with osteoporosis.
Looking ahead, new innovations which can enable the diagnosis of disease in the doctors surgery must be promoted by the Department of Health. The improvement in diagnostics, developments in medical imaging and access to centres of specialist expertise can take treatment of diseases such as osteoporosis out of the hands of healthcare institutions and back to the general physician. Going the other way, it is my belief that oncology disease management should be taken away from the general physician and placed in the hands of specialised out-patient centres. The majority of general physicians are not comfortable with or completely knowledgeable about competing therapies and their costs. We have recently seen examples where breast cancer patients are treated differently in different parts of the country and have different chances of survival. If oncology patients are treated in specialised centres, I envisage improved outcomes and convenience together with a reduction in costs.
Disease management is no longer a concept. The Government must accept its arrival and take advantage of the new opportunities it will offer. Diagnostic and therapeutic tools exist today which have the ability to put disease management into practice and new

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developments in the same must be carefully assessed for their ability to contribute to the reduction of healthcare costs.
I hope that my noble friend will have time to comment on some of Dr. Green's remarks. The report believes that patients should be given statutory recognition along with clinicians and management. I agree with Dr. Green that giving patients statutory recognition is irrelevant to the exercise of personal responsibility and assumes that we are not capable of any personal responsibility and must have all aspects of healthcare managed for us. He refers to the Government's Health of the Nation report, where some of the national targets set by the Department of Health give officials responsibility for matters which should be strictly personal.
Declaring another interest as President of the All-Party group for Complementary and Alternative Medicine and the Natural Medicines Society, I agree that to a large extent our health status depends on our lifestyle: on what we eat, how much we exercise, and whether we smoke and drink. I agree with the noble Lord, Lord Butterfield, that this has to be a personal responsibility. I was sorry not to have seen anything in the report about the increasing national interest in complementary medicine and nutrition and the role that they will play in the future. I suppose that that is not unusual for a report funded by the pharmaceutical companies.
In conclusion, the report is a useful document to encourage discussion. I congratulate the members on their comprehensive analysis. Disease management and managed health-care are factors about which we will hear much more in the future. I feel sure that many of the recommendations are likely to be considered by the Government, and I look forward to hearing what my noble friend has to say.
7.52 p.m.
Lord Rea: My Lords, I am grateful to the noble Lord, Lord Hacking, for giving us the opportunity to discuss the report, although I am sorry that he chose today, because today is my birthday and I was perhaps hoping to do something else this evening. There is still time!
When the report was published, it received, as the noble Lord said, a great deal of publicity, but much of it was critical, from the Left to the moderate Right, including, as he said, the Secretary of State. As the noble Lord said, the matter has not been raised in Parliament except as an Unstarred Question in your Lordships' House on 17th October last when it occupied precisely three minutes. Clearly it had not exactly excited the House. An explanation for that may be that it was the first day back after the Summer Recess.
The noble Baroness, Lady Cumberlege, said on that occasion that while not agreeing with all the conclusions, it was a useful contribution to the health debate. I would put it the other way and say, "While agreeing with some of the conclusions, it is not a particularly useful contribution to the health debate,
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despite the time, trouble and expense obviously given to it". The report was financed wholly by the pharmaceutical industry. The authors however claim:
"It is entirely independent of both its sponsors and of any other sectional interest either within or without the National Health Service".
Therefore a great deal depended upon the outlook of the steering group and its chairman, Professor Sir Duncan Nichol, wearing his academic hat for the publication—which did not, incidentally, mention that he is also a director of BUPA.
My broad brush criticism of the report is that it barely touches on how the health of the nation could best be improved but concentrates almost entirely on how the health service can best respond to a demand for care which is painted as virtually spiralling out of control. One sentence refers to the fact that:
"Alleviation of poverty, improvements in housing and environment rather than the NHS, may be the best way of improving the health of individuals".
It went on only to dismiss that as impractical since:
"all political parties are committed to sustaining and increasing the funding of the NHS".
That suggests that these major, highly desirable and necessary improvements in the fabric of the nation can be achieved only by cutting the percentage of GDP going to health.
One of the deficiencies of the report leading to such a mistake may be that of the 68 experts who were consulted only two were public health specialists or epidemiologists, and one of those told me that his evidence was not used in the report, although his name is given as one of the advisers.
In 12 minutes, it is impossible to do justice to a 70-page report. The best way to tackle the task may be to address one or two of the areas which the briefing for the report kindly sent to us by the publishers suggests the Government and opposition parties should be asked to clarify. First, do we agree about the pressures on the NHS? The answer of course is yes, in so far as those are due to an increase in the number of elderly people, increasing technology, and increasing public expectation, but those will not continue to escalate for ever. They will eventually tail off.
Only one elderly person in four is in need of care. Although more people are surviving to 85 plus, they are now much fitter. Technological improvements can lead to reduced costs as well as increased costs. However, I agree that the balance is likely to be upward. Some of those extra costs are excessive. The Government need to continue to be firm in their pricing negotiations with the pharmaceutical industry and in their efforts to reduce prescribing costs.
Yes, public expectations are bound to rise. What is interesting however is that better off and better educated people are fitter and use the NHS less than poor or less educated people. That applies even to those who do not use any private care. They live longer, but they are more self-reliant. As society has increased its standard of living, a higher and higher proportion of the population moves into the professional and skilled sector. It is those who are left behind who have the worst health and the greatest burden of illness which falls on the NHS.

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Dr. Richard Wilkinson of Sussex University and UCL has shown in a series of papers that the health of a country improves in proportion to the equity of distribution of income between the better and less well off.
The second question the briefing asks is: do we agree with the conclusions of the report? In brief, those relate to patients' views, healthcare professionals and funding. We feel that current avenues can be developed rather than that a new system be brought in to discover the views of patients. The community health councils need to be strengthened. The CHC members must have a right to be present and speak at all meetings of health authorities and trusts.
The membership of trusts and health authorities needs to be more representative than it is now. We spent many hours in this House talking about the membership of health authorities as the National Health Service and Community Care Bill went through the House. I thoroughly agree—this is the best part of the report—that healthcare professionals should explore the merits of a common core curriculum and greater flexibility between the professions.
It is the funding proposals with which we have the greatest problem. The report suggests that more private resources should be brought into the NHS; that those who wish should be able to buy certain extras within the NHS. The reason given for that is that it is unreasonable to expect the public sector to go on increasing its share of taxation revenue when other countries have a higher proportion raised privately.
In the table on page 34 of the report, four other countries which are wealthier than the UK are shown to have a higher proportion of healthcare spending in the public sector than we do. In fact, it is not given in the report; but they also have a higher proportion of their total GDP spent on health as a whole. The countries are Norway, Luxembourg, Sweden and Iceland. All of them have health statistics equal to or a little better than the United Kingdom. There is no great move that I know of in any of those four countries to change its system. I dare say that governments are in difficulty all the time about keeping up with the costs of those health services, but their health service systems are effective and popular.
To conclude, this expensively produced report is, to my mind, flawed because although some of its suggestions are excellent, it is inconsistent and cannot claim to be representative. It has not consulted widely enough, nor does it properly represent the views of the professions who work in the National Health Service. That is a great pity because the report took a great deal of time and expense to produce.
8 p.m.
Baroness Miller of Hendon: My Lords, my noble friend Lady Cumberlege is very disappointed that she is unable to be here tonight for this debate, as it was she who originally replied to a Question by the noble Lord, Lord Dean of Beswick on 17th October last year. However, it has given me the opportunity of listening to this interesting debate, and I would like to thank my
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noble friend Lord Hacking for making that possible. He started his speech by saying that he hoped I would give a thoughtful reply and I very much hope that he will consider that my reply is a thoughtful one.
Also, while I am making these pious wishes, perhaps I may say that I hope that the noble Lord, Lord Rea, enjoys the rest of the day, and we all wish him a very happy birthday.
Noble Lords: Hear, hear!
Baroness Miller of Hendon: My Lords, while not agreeing with all its conclusions, Her Majesty's Government consider the Healthcare 2000 report to be a useful contribution to the debate on the future development of health services. It is timely that we are debating this issue on the day that the annual NHS Priorities and Planning Guidance is issued. This provides the overall national framework and the context for the planning and delivery of health services in England for the coming year. Comparable guidance is also issued elsewhere in the United Kingdom.
As my noble friend Lord Hacking told us, the report UK Health and Healthcare Services, Challenges and Policy Options was published by the Healthcare 2000 Forum in September last year. The forum was established and funded by Pharmaceutical Partners for Better Health, an international group of research-based pharmaceutical companies.
The Government do not accept the report's central contention that the need for healthcare will necessarily increase faster than the availability of tax funding. I know that the noble Lord, Lord Rea, agrees with that. Nor, therefore, do we accept that we face a stark choice between increasing user charges and/or patient co-payments and reducing the services provided by the NHS. The Government are firmly committed to the founding principle of the NHS—that it will remain open to all on the basis of clinical need and regardless of ability to pay—and we would not contemplate any system of funding that jeopardised this.
The other main issues raised in the report, which I will address in turn later, are: a proposal for a statutory body to represent the patient's voice at national and local levels; consideration of a common core curriculum for all entrants to the healthcare professions; the development of integrated care management to allow the purchase of packages of care; and consideration of the introduction of competition between health authorities and a mix of public and private franchises in healthcare purchasing.
This Government are justly proud of our record on NHS funding. I note that my noble friend Lord Colwyn felt that all governments do their very best to put whatever is necessary or whatever they are able to into the National Health Service. Since 1978–79 spending by the health service in the United Kingdom as a whole has increased by more than 70 per cent. in real terms. At the same time we have greatly improved value for money in the NHS. In England, for example, efficiency in Hospital and Community health services has increased by over a quarter between 1978–79 and 1994–95.

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The report is probably right in concluding that pressure on health service resources is likely to grow. One key pressure arises from demographic change. However, it is a pity that there is no acknowledgement in the report that demographic pressures are relatively modest for the next decade or so, giving us a window of opportunity before the real challenges of the second and third decades of the next century.
The long-term growth in demand for hospital and community health services from demographic pressures is expected to be lower over the next decade than over the last. Demographic pressures are expected to add only around 0.5 per cent. per year to costs for the next 10 years compared with 1 per cent. a year in the past 10 years. Again, taking figures for England, at a time when demography was adding 1 per cent. a year to demand pressures, real resources for hospital and community health services were rising by 3.4 per cent. and activity was increasing by 2.6 per cent. per year. Recent experience therefore is that extra money used more efficiently has not only enabled the NHS to accommodate the pressures on it but to increase the level and range of treatment that has been provided. In relation to demographic pressures, this task should be easier over the next 10 years than over the last.
The Government welcome the rapid development of medical science, which is contributing enormously to improvements in healthcare. The rate of advance may well accelerate but this will not necessarily mean an acceleration in cost pressures. The impact of medical advance on overall healthcare expenditure is a complex one. Some highly effective innovations increase both treatment costs and overall expenditure. But others can reduce expenditure across the health sector as a whole and also enable us to improve quality in healthcare while simultaneously reducing resource pressures.
To enhance our knowledge of such significant clinical advances, the United Kingdom was the first country in the world to establish research and development as a core function of public healthcare. Since 1993 over 300 studies have been funded by the NHS Executive under this strategy in priority areas, including mental health, heart disease and stroke, cancer and the links between primary and secondary care and health technology assessment. Related activities have also taken place throughout the United Kingdom. The Government will continue to monitor the impact of medical advance on overall healthcare expenditure. There is so far no evidence that the pressures will prove to be unaffordable.
Although we recognise that priority setting is a fact of life, we reject the centrally determined approach to priority setting that appears to be proposed by Healthcare 2000. Instead, the Government favour priority setting at three levels: Ministers set out a framework of national priorities and targets for improvement; health authorities (or health boards in Scotland and health and social service boards in Northern Ireland), and GP fund-holders assess the needs of their population and the services required to meet them; individual clinicians decide the most clinically appropriate treatment and clinical priority for each
1432
patient. This overall approach was endorsed last year by the Health Select Committee in its inquiry on priority setting in the NHS.
Improving the effectiveness of NHS clinical services has been a central objective for a number of years now. An example of this is the NHS Executive's approach for England which is set out in Promoting Clinical Effectiveness and was launched in January this year. Similar initiatives are also under way in Wales and Scotland. The Healthcare 2000 Report also rightly refers to Health of the Nation, with its aim of reducing avoidable ill health and premature death and promoting longer and healthier lives. Similar strategies are being taken forward in all four home nations.
Health Ministers and officials regularly meet patient groups in a wide variety of different contexts. We do not see a need to create a statutory body to represent the patient's voice at national and local levels as Healthcare 2000 proposes. This would compromise the independence of patient groups and could present a false and bureaucratic picture which underplayed the great diversity and richness of their views.
However, the Government welcome the report's emphasis on improving patient information and representation. I know that the noble Lord, Lord Butterfield, is concerned about this. In England, for example, it is one of the six medium-term priorities for the NHS to:
"Give greater voice and influence to users of NHS services and their carers in their own care, the development and definition of standards set for NHS services locally and the development of NHS policy both locally and nationally".
We are also developing a programme of action throughout the United Kingdom at both national and local level, building on the Patient's Charter programme. We are seeking to foster a variety of local good practice and avoid inflexible national blueprints.
Under an information systems strategy for NHS research and development, arrangements are in place to make information from research findings accessible to patients, carers and self-help groups. This is being addressed in different ways. The NHS Centre for Reviews and Dissemination is tasked with reproducing research findings in a user-friendly way to the public by, for example, publishing information leaflets on maternity services. I have other examples, but in view of the time, I must move on.
Like the noble Lord, Lord Rea, we welcome the report's suggestions about the developing role of healthcare professionals as a valuable contribution to an ongoing debate, and I know that that is of interest also to the noble Lord, Lord Butterfield. We are encouraging and promoting inter-professional learning opportunities. We have commissioned a survey of inter-professional learning initiatives in England, the results of which will be shared when available. The NHS Executive has also commissioned a major programme of research into human resource effectiveness and one key strand is the issue of role boundaries of healthcare professionals and the educational implications. Comparable work is under way elsewhere in the United Kingdom. But it is a matter for individual university medical schools to determine

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their own undergraduate medical curriculums. The noble Lord, Lord Butterfield, is right to say that we must attract the best people into the medical profession.
Among the competencies required of the next generation of doctors are: flexibility and appreciation of the benefits of multi-professional working, which both noble Lords opposite mentioned; better communication skills; an ability to empathise with patients and colleagues; a greater appreciation of the opportunities and challenges of primary and community care; and a greater understanding of ethics. The noble Lord, Lord Butterfield, was so right to mention that. These are major developments in undergraduate medical education which will not fully work through until well into the next century.
I turn now to the report's proposals for integrated care management. These are precisely what we are aiming to achieve through a primary care led NHS, the aim of which is to empower patients and primary health care teams to oversee the entire programme of care for particular patients or groups of patients. However, unlike Healthcare 2000, the Government wish to see the primary healthcare team, with their better understanding of an individual patient's needs and requirements and the ability to make appropriate links to social services where necessary, playing the leading role in purchasing and managing integrated care.
The noble Lord, Lord Hacking, referred to a gentleman who had a problem with mental health services. Yesterday I had the great pleasure to stand in for my right honourable friend the Secretary of State at the opening of a GP fund-holding practice. It was extremely good to see counsellors present in the practice.
Lord Rea: My Lords, before the Minister sits down, she implied that the fact that the counsellors were with that practice was because of its fund-holding status. The practice with which I have been involved has had counsellors present for something like 15 to 20 years.
Baroness Miller of Hendon: My Lords, I am very glad to hear what the noble Lord said. That makes it even more interesting.
We are extremely proud of our National Health Service. It provides patients with treatment and care which are both clinically effective and a good use of taxpayers' money. We were extremely pleased to see that the Royal College of Nursing's parliamentary brief for this debate endorses that view. The National Health Service will continue to strive to meet the needs of individual patients and will adapt as their needs change and as medical knowledge advances.
Lord Hacking: My Lords, before my noble friend finally sits down, if I understood her correctly, she said that the pressure of demographic changes on health costs will be less during the next decade. Perhaps she will tell the House what is the basis of that assertion, particularly in view of the figures which I gave to your Lordships
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which indicate a substantial increase in health costs year by year and that there has been an enormous increase between 1990 and 1995.
Baroness Miller of Hendon: My Lords, my understanding is that we do not accept the figures in the report on this matter. We believe that demographic pressures are expected to add only about 0.5 per cent. per year to costs for the next 10 years compared with 1 per cent. per year for the past 10 years. However, if I am not correct about that I shall most definitely write to the noble Lord.
Lord Hacking: My Lords, but I am asking what is the basis for that assertion.

Housing Bill
8.15 p.m.
House again in Committee on Schedule 1.
Lord Lucas Lord Lucas moved Amendment No. 46:
Page 128, line 42, at end insert—
("( ) Proceedings for an offence under sub-paragraph (1) may be brought only by or with the consent of the Corporation or the Director of Public Prosecutions.").
The noble Lord said: In moving this amendment, shall speak also to government Amendments Nos. 119, 122, 126, 130, 131 and 171 and also to Amendments Nos. 46A, 46B, 119A, 119B, 126A, I 26B, 130A, 130B, 179A and 179B in the name of the noble Lord, Lord Williams of Elvel.
All these amendments concern proceedings for offences. The amendments we are proposing bring Clauses 31, 33, 35, 37 and 38 and paragraph 26 of Schedule 1 and paragraph 4 of Schedule 2 into line with provisions in Schedule 1—paragraphs 19, 23 and 24—whereby proceedings for offences may be brought only by or with the consent of the corporation or the Director of Public Prosecutions. They also bring them into line with current powers, under which the corporation brings proceedings from time to time.
There is no justification for different provisions in the Bill for what are in essence similar offences with similar penalties. The amendments we have proposed remove that discrepancy.
The effect of the amendments in the name of the noble Lord, Lord Williams, would be, among other things, that the corporation could not bring proceedings in certain cases without the consent of the Director of Public Prosecutions. This does not seem to us to be sensible. The issues on which proceedings may be brought are not generally matters of wide public interest; they are relevant to the corporation's regulation of social landlords. They are the result of non-compliance with requirements of the corporation; for example, failure by an association to supply information on its accounts. These are important matters for regulation, but do not warrant the routine involvement and additional bureaucracy of the DPP.
I look forward to hearing what the noble Lord, Lord Williams, has to say on his amendments, having heard our reasons for tabling our amendments.
Lord Williams of Elvel Lord Williams of Elvel moved, as an amendment to Amendment No. 46, Amendment No. 46A:
line 3, leave out ("by or").
The noble Lord said: It may be for the convenience of the Committee if, in moving this amendment, I speak to the amendments as they are on the groupings list.
I have a certain worry about this, as I explained to the Minister in earlier conversations. After all, we are dealing with criminal offences and with a number of criminal offences which up to now the corporation has been in charge of. But given its new powers, I wonder whether it is right that criminal prosecutions which involve penalties of a criminal nature should be brought by the corporation and not the DPP or the Crown Prosecution Service.
I am concerned, not on behalf of myself or my wife but on behalf of others, that there may be occasions when, for one reason or another, compliance with, say, the accounting requirements in paragraph 19 of the schedule may not be achieved by anything other than a casual approach—I do not say "negligence" because that is a legal term—simply because people do not understand what is required. The problem that I have is that "every responsible person" (to use the expression in paragraph 19) who is directly concerned may be open to prosecution by the corporation.
As I understand it—and the Minister may wish to correct me if I am wrong—all the offences which the corporation can proceed against are appealable. If they are appealable, then they must be appealable on a reasonable basis, without having the corporation exercising its muscle in the first place. As a probe, more than trying to amend the Bill, I am really asking the Government whether they have thought the matter through. In other words, should the corporation be allowed to bring criminal proceedings against individuals who may for one reason or another be unwitting? Is that right and proper in our law? I beg to move.
Lord Monkswell: I rise to support the amendment moved by my noble friend Lord Williams. I believe that we need to think in terms of the wider perspective and also bear in mind the experience of recent years. One can see very clearly the difficulties which arose when Customs and Excise had the ability to prosecute independently of the Crown Prosecution Service; indeed, that culminated in the investigation and the report of Lord Justice Scott.
I am not saying that that sort of thing is likely to happen. However, it raises the issue of the test of public policy which is quite important when prosecutions are involved. Two sets of standards may apply: one that the Housing Corporation would apply in terms of its prosecuting endeavours and one which the DPP would follow. As my noble friend suggested, we are talking
1436
about criminal offences and the criminal justice system. Therefore, it is quite important that common standards of prosecution should apply throughout the land.
One of the improvements that would result from the Government's acceptance of my noble friend's amendment is that we could rest assured that common standards would be applicable throughout the criminal justice system which might not obtain if the Bill is left in its present form, as proposed by the Government.
Lord Lucas: I understand the concerns expressed by the noble Lords, Lord Williams and Lord Monkswell. However, they should bear in mind the fact that we are discussing effectively routine matters of regulation. One hopes that the powers will not be used frequently, but they apply to relatively minor matters and would enable the corporation to enforce on social landlords the retention of information in the form in which it is supposed to be kept.
I appreciate that we are talking about criminal matters and, of course, they will be tried in a criminal court. It is not as if the corporation will be acting in any judicial capacity; it will merely be the prosecuting party. The Director of Public Prosecutions is, shall we say, strongly of the view that he would rather not have his staff burdened with such relatively small matters if they can be handled reasonably by the corporation.
Lord Williams of Elvel: Before the Minister continues, can he tell the Committee what would happen in the following situation? For the purpose, I have in mind paragraph 19 of the schedule. Let us say, for example, that a social landlord is not conforming with the accounting procedure, and so on. It is an offence not to do so. The corporation then brings a case and, according to paragraph 19 of the schedule, certain criminal penalties apply to such an offence; namely,
"a fine not exceeding level 3 on the standard scale".
In that case the corporation is a prosecuting authority, as the Minister rightly said. However, is there any other case involving, say, Oftel, Ofgas or Ofwat, where an organisation is a prosecuting authority and can act as such as opposed to referring a criminal offence to the DPP? I would be grateful for an answer to that question because, if such a precedent exists, it would solve many of our problems.
Lord Lucas: I am not aware of any precedent. However, I shall certainly carry out some research into the matter and, whether or not I am successful, I shall write to the noble Lord. I am sure that the noble Lord realises that the regulatory authorities such as Ofgas, Oftel and Ofwat are generally dealing with very large companies and that, therefore, different means of control are perhaps appropriate for them rather than for several thousand, mostly small, social landlords.
Lord Williams of Elvel: That may be so; indeed, I understand that. However, if a company under the Companies Act does not do what it should do and, say, fails to produce its accounts, the prosecuting authority would not be the DTI; the matter would be handed over to the DPP. It is the Government who prosecute, not a quango or a regulator. Can the Minister say whether any

1437
quango or regulator has any powers of prosecution regarding criminal offences? If not, then I believe that we shall have to look rather carefully at the matter.
Lord Lucas: I am sure it is quite right that we should look carefully at the matter. As I said, I am not aware of any precedents. The organisation that we are discussing is something of a unique body as regards the amount of money which it dispenses and the variety of organisations to which it dispenses it. We need to look at it in terms of the appropriate ways in which that organisation should control the people to whom it passes the money. The solution that we have put forward is that it should be done by means of giving the corporation the power to initiate criminal prosecutions. Of course that is something which does, as the noble Lord said, require serious consideration; indeed, we have given it serious consideration. However, we are very happy to listen to the views of noble Lords opposite, and others, as to whether it ought to be done in a different way.
8.30 p.m.
Lord Williams of Elvel: I am grateful to the noble Lord. However, it does not seem to me that the quantum really matters; it is the principle that matters. The Housing Corporation is a quango and Housing for Wales is a quango. The members of those quangos are appointed by the Secretary of State. They are not elected and they are not accountable to Parliament other than in a way which we shall discuss later in the Bill. When I was chairman of the Price Commission and the head of a quango I had no power at all to prosecute anyone who had contravened the pricing regulations. It was up to the Department of Trade and Industry to refer that matter to the DPP at the time. All I can say is that I shall be quite happy if the Government can produce any serious reason why this should not be a DPP matter—a criminal offence—and why it should be handed over to a quango which is unelected, unappointed and which has no real substantial experience of criminal matters.
Lord Lucas: I am certainly unable at this time to produce the parallels which the noble Lord, Lord Williams, asks for. I shall certainly undertake research and write to him and, as I have said, I shall also consider carefully the points which he has made about the principle involved. That is important and I shall be happy to express our considered views to him and, I hope, convince him that what we are doing is the right thing. To the best of my knowledge, what we are doing is a new procedure and therefore requires consideration. To the best of our knowledge it is the best and most practical thing to do. As I say, we are certainly conscious that we need to listen carefully to what may be said by others as regards their views on the solution we have proposed.
Lord Monkswell: How do the Government envisage this working in practice? The Government intend the Bill to say that the Housing Corporation will be the regulator and the prosecuting authority. That raises concerns about the powers of a regulator to get people to do what it wants if it can say, "If you do not do what
1438
we want, we will take you to court". I am sure that the Minister would not want that to occur. Therefore, presumably, there would have to be some practical separation within the Housing Corporation of the regulatory function and the prosecutorial function. We learnt from the Scott Report about how the system worked within Customs and Excise. There was a separate department within Customs and Excise that exercised the prosecutorial function. It is important that we get some idea from the Government as to how they envisage this new procedure will work in practice. Will the Housing Corporation be required to have a separate department within its organisation that specialises in the prosecution aspect, or is it envisaged that the same department within the Housing Corporation would carry out both the regulatory and the prosecuting functions? It would be useful if we could get some idea of how the Government envisage this system working in practice.
Lord Berkeley: Perhaps I can suggest a similarity between this discussion we are having about judge, prosecution and jury, and rail privatisation. In the case of rail privatisation, there is a rail regulator who is totally separate from the franchising director who hands out well over £1 billion a year to the passenger train operators in return for their operating a certain pattern of services. The two organisations are totally separate and to my knowledge neither has any capability at all to bring criminal prosecutions against a train operator for non-performance. That is not perhaps quite so likely as in the case of some landlords but the principle is the same. I support the amendment of my noble friend Lord Williams of Elvel.
Lord Lucas: I am still struggling somewhat to imagine what lies at the heart of the concerns which are being expressed by Members of the Committee on the Benches opposite. It does not seem to me that this is anything more than a sensible and convenient way for things to be done. One example has been drawn to my attention which relates to the Companies Act 1985. Sections 447 and 451 of that Act concern prosecutions which may be brought by the industrial insurance commissioner. To some extent the powers that we are looking at today have been in existence for a long while also in the Housing Act.
Lord Williams of Elvel: With respect, the industrial insurance commissioner is not a regulator. This is the problem; namely, that one has a regulator who regulates, and a regulator who is also a prosecutor. That seems to me to be the problem. The noble Lord said that he did not understand the problem of Members of the Committee on this side of the Chamber. However, that is the problem. One either has a regulator or one has a prosecutor because we have an adversarial system of justice in this country, or at least we did until recently—
Lord Lucas: I hear what the noble Lord is saying. I clearly need to give myself more time to get my mind around the difficulties which he envisages. A solution does not immediately spring to mind. As I said, this is a system which has been operating for some years, albeit to a smaller extent within the previous Housing Act. Indeed, another place has criticised the Housing

1439
Corporation for not employing its powers more frequently than the two or three times a year on which it does so. It is only an infrequently used power and does not require a special department, any more than bringing a private prosecution requires a special department in the case of an individual. It is just something which is done by the corporation when it is required to be done, in the way that any ordinary prosecution would be brought. I do not see the problems which seem to be in the minds of Members of the Committee opposite. However, I am quite happy to contemplate this dichotomy of the regulator and prosecutor to see whether there is anything which comes to our mind that suggests that the two cannot live in the same body.
Lord Williams of Elvel: I am grateful to the noble Lord for what he said. He does not see the problem. It seems to me there is a clear problem which I have tried to explain on about three occasions now. I am sure he will go away and think about it. The Housing Corporation has been given massive new powers by this Bill. That is not given without our approval; I am not trying to quarrel about the new powers. I repeat that I do not see why there should not be some restraint at some point on the corporation. The point at which it seems to me there might be a restraint—depending on whether the Government think it is right or wrong—is the point of being prosecutor, because if the Housing Corporation is going to prosecute, it means that the Housing Corporation will be adversarial. The idea of a regulator is that he should not necessarily be adversarial. The whole point of the Housing Corporation—and any regulator—is that it should try to encourage, and to a certain extent regulate, the industry which it is regulating or encouraging. If at the back of it—unlike Customs and Excise and other departments—there is a prosecuting authority there, I believe that the role of the Housing Corporation slightly changes. I accept that these are minor matters but they are matters which this House, as a guardian of the constitution—if I may put it like that—should consider rather seriously. I beg leave to withdraw the amendment.
Amendment No. 46A, as an amendment to Amendment No. 46, by leave, withdrawn.
[Amendment No. 46B, as an amendment to Amendment No. 46, not moved.]
On Question, Amendment No. 46 agreed to.
Schedule 1, as amended, agreed to.
Clause 8 agreed to.
Clause 9 [Consent required for disposal of land by registered social landlord]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 47:
Page 5, line 37, at end insert ("which shall be set out in guidance issued by the Corporation before the commencement of this Part").
The noble Lord said: We are now back to the main part of the Bill as opposed to the schedule. We are dealing with the control by the two corporations—that is to say, the English and the Welsh corporations—of transactions in land and disposal of land. In Clause 9 the
1440
consent of the corporation is required for any disposal of land by a registered social landlord. As drafted, the clause states:
"The consent of the Corporation … may be given subject to conditions".
Amendment No. 47 is a probing amendment which asks the Government to explain the conditions that the corporation might have in mind when it gives its consent. Social landlords would find difficulty in accepting an open ended "subject to conditions" provision. When the noble Lord replies, perhaps he will specify the conditions and in what circumstances they might be applied. I beg to move.
Lord Lucas: As the noble Lord said, Clause 9 requires a registered social landlord to seek the consent of the corporation before disposing of land, including houses and other property on it.
Subsection (2) provides that when the corporation gives its consent to the disposal of land, this may be given subject to conditions. Amendment No. 47 proposes that the corporation must issue guidance on these conditions and do so before the Bill is enacted.
The corporation is required under subsection (3) to consult on any general consent. It may be helpful if I outline how the existing provisions work in practice.
The corporation revised its general consent last year after extensive consultation. The object was to reduce bureaucracy while maintaining adequate accountability for public funds. There are only two main categories where specific consents are still required: first, where a charge is granted to a private lender. The corporation must be satisfied that this will not endanger the viability of the landlord, and hence past public investment. And, secondly, where existing stock financed by public funds is to be sold on the public market. Neither of these cases is suitable for general consents. Nor do they lend themselves to establishing key principles, except at the highest level of generality.
There is no intention to make any significant change to this tried and tested approach. On that basis, I hope that the noble Lord, Lord Williams, will agree that we are in practice going as far as we can in the direction that the amendment suggests.
Lord Williams of Elvel: I am grateful to the noble Lord for his response. However, will these matters be spelt out in some guidance from the corporation, or are we to rely on what the Minister said this evening?
Lord Lucas: I am sure that the noble Lord can always rely on what I say, as long as I am right.
Subsection (3) states:
"Before giving any consent other than a consent in relation to a particular landlord or particular land, the Corporation shall consult such bodies representative of registered social landlords as it thinks fit".
That process embraces most required consents. The resultant general consent is consulted on and published. Other than the two main exceptions, and others, that I have described this evening, there is in effect a document which constitutes guidance because it is the

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general consent which has been consulted on. That is what the noble Lord, Lord Williams, appears to be seeking.
The guidance is either covered by parts which are in the general consent or involves bits which could not easily be covered by guidance. Therefore there is no need for more guidance than that provided by the general consent.
Lord Williams of Elvel: I am sure that whatever the Minister says is right. However, I cannot understand why we have the expression "may be given subject to conditions". Subsection (3) states that the corporation shall consult such bodies, as the Minister said. Why do we have the expression "subject to conditions"?
Lord Lucas: I do not immediately see how one can avoid the expression "subject to conditions" if one wishes to be able to give a consent in any terms other than "yes". If one wishes to say, "Yes, if you do such and such", one has to be able to put a condition in place, particularly if one is considering a rather complex proposal of the type that I described as a difficult area. It is quite reasonable for the corporation to be able to put conditions on its consent. The general consent would presumably not be subject to conditions. If it is a general consent, people can do it; the consent is given.
Lord Williams of Elvel: I do not wish to prolong this argument. If there is a general consent which is agreed, and a specific consent which is covered by subsection (3) involving consultation and so on, why do we need those words in the Bill? They arouse suspicions in some people who are not as familiar with the Bill as is the noble Lord. Nevertheless, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 48:
Page 6, line 1, leave out ("A disposal") and insert ("An agreement to dispose").
The noble Lord said: In moving Amendment No. 48, it may be for the convenience of the Committee if I speak also to Amendment No. 49.
It is a small and possibly legal point. What is a disposal? I have always believed that there was something called an agreement; that an agreement provided for certain matters including a disposal; and that an agreement can be void, but a disposal cannot be void because it is only the result of an agreement to dispose.
It is a drafting point that I have raised previously with the Minister. However, I shall be glad to hear his views on whether I am right or wrong. I beg to move.
Lord Lucas: I find myself asking the same question. I have not yet been able to satisfy myself that the problem which the noble Lord describes does not exist, although many are confident that it does not. I hope that the noble Lord will allow me to assure myself one way or the other as to what this wording means when viewed by a lawyer as opposed to a rather confused accountant. Perhaps I may come back on the matter before Report stage.
Lord Williams of Elvel: I am grateful to the noble Lord for sharing my confusion. However, the Government have put forward a Bill which contains the text. I am not a lawyer by training, but certain of my noble friends who are take the view that I have described. An agreement can be void; a disposal can only result from an agreement. Therefore, a disposal by itself cannot be void. I understand that although I gave the Minister notice, he wishes to take advice. I look forward to hearing from him before the Report stage as to what the advice was. It may be that the advice will be disputed, if it comes down in what some of my noble friends feel is the wrong way. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 49 not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 50:
Page 6, line 16, after ("sale") insert ("or").
The noble Lord said: It may be for the convenience of the Committee if, in speaking to Amendment No. 50, I speak also to Amendment No. 51. The definition of "disposal" gives me and some of my noble friends trouble. I can easily accept that if the rubric of the clause were "disposal of land or interest in land", then the words in Clause 9(7) would be appropriate. I understand that the rubric is not part of the Bill and will not be part of the Act in law. Nevertheless "disposal" in ordinary language means "sale", but it does not mean "mortgage, charge or any other disposition". That is a disposal of an interest in land. I do not believe that the drafting is quite correct. Having given notice of the point to the Minister, I am sure that he has considered the matter with great care. I beg to move.
Lord Lucas: I am sure that the noble Lord and I are of one mind that mortgages and charges should be subject to the protection given by this clause. At issue is the difference between the ordinary English meaning of the word "disposal", which does not include a mortgage, and the meaning given to it in this clause, where it does. I am advised and am myself sure that within its context the clause achieves what it sets out to by misusing—if you will have it that way—the word "disposal" to bear meanings that it does not ordinarily bear.
I am not concerned that the clause will do less or more than it is supposed to do. I share the noble Lord's distress that the poor word "disposal" should be abused in that way. We cannot devise anything better that satisfies us and certainly not in the time that we have had to consider it since the noble Lord brought his amendment to our attention. Our distress is merely at the abuse of the English language rather than any possible consequences for people affected by the Bill. In the absence of any suggestions as to how the problem might be got around without damaging the Bill, as the amendment would, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Williams of Elvel: Yes, I have some suggestions. It seems to me easy to produce them. If we take the rubric of the clause:
"Consent required for disposal of land",

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and add to that, "or disposal of an interest in land", it would then feed through in the drafting of Clause 9. It seems to me that it covers the point. "Disposal" is a word used not just in this Bill but also in many other Acts of Parliament. It seems odd to have a definition of "disposal"—and I accept that if the Bill says "disposal" should mean that, then it is right—which cuts across disposal of shares under the Financial Services Act, disposal of interests in property under the Housing Act and disposal of companies under the Companies Act, and all kinds of other things.
It seems to me that the wording could easily be drafted to take account of disposal of interest. That would cover lease, mortgage, charge or other disposition, because that is what it is about. I would have no problem with it. However, it seems odd to use the word "disposal" when we could easily use the words "disposal or disposal of interest in". I offer that suggestion. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 51 not moved.]
Clause 9 agreed to.
Clause 10 [Lettings and other disposals not requiring consent of Corporation]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 52:
Page 6, line 24, after ("paragraphs") insert ("3, 3A and").
The noble Baroness said: With Amendment No. 52, I wish to speak to Amendments Nos. 53, 54 and 55 all standing in my name. Amendment No. 52 seeks to refer to two additional paragraphs of Schedule 1 to the Housing Act 1988. Many housing associations are charities and will look to let homes to persons at rents which their prospective tenants can afford. For example, it could be a rent of less than £1,000 a year in Greater London or £250 elsewhere. The housing associations can do that if there is a secure tenancy but they cannot do it without Housing Corporation consent where the tenancy is not a secure tenancy because of the exclusions contained in the paragraphs.
The accommodation may be, for example, not self-contained; housing associations may let a room with the shared use of a kitchen. That will not be a secured tenancy and may not be an assured tenancy. I query the need for Housing Corporation consent. In the amendment, I seek to extend the scope of the work that can be done by a registered social landlord without consent.
Amendment No. 54 also seeks to allow a letting without consent to another registered social landlord. Earlier today we referred to the management of housing association properties by another body. A management agreement may include a letting. A housing association may think it quite right to let a building to another registered social landlord which may specialise in a particular field. One area of work could be hostels for special needs clients. In the amendment I suggest that Housing Corporation consent ought not to be required when both parties are registered social landlords.
On Amendment No. 55, it has been suggested to me that as registered social landlords have a statutory obligation on the face of the Bill under Clause 16 to
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dispose of dwellings to tenants under the right-to-buy, they ought to be able to do so here on the face of the Bill. It is a drafting amendment which has been put to me as being useful, although it is perhaps less of a substantive point than the first three amendments. I beg to move.
9 p.m.
Lord Lucas: Clause 10 specifies certain categories of lettings and other disposals by registered social landlords which do not require the consent of the corporation under Clause 9. These include an assured tenancy or an assured agricultural occupancy, or which would be regarded as such other than they are used for the purposes listed in paragraphs 4 to 8 of Schedule 1 to the Housing Act 1988—that is, including business purposes, licensed premises, agricultural land and holdings, holiday lettings and lettings to students.
Amendment No. 52, tabled by the noble Baroness, Lady Hamwee, would extend the list of disposals not requiring corporation consent to include tenancies under which for the time being no rent, or a defined low rent, is payable. This amendment would, if accepted, enable a registered social landlord to set a rent for a particular tenancy at an artificially low rent or not charge rent at all, for a short undefined period, as a means of avoiding the need for corporation consent and circumventing the sensible safeguards contained in Clause 9 of the Bill.
Amendments Nos. 53 and 54 would extend the categories of letting not requiring corporation consent to include the letting of land, and dwellings on them, by one registered social landlord to another.
This amendment would again reduce the effectiveness of the corporation's regulatory powers as the arrangement proposed would provide an opportunity for a non-charitable registered social landlord to let land to a charitable subsidiary as a means of avoiding creditors if it is in difficulties.
I now turn to Amendment No. 55, which seeks to state that the provision in Clause 10(2) is to be extended to include disposal under Part V of the Housing Act 1985 (the right to buy) and Clause 16 of the Bill (the right to acquire).
These categories of disposal are already exempt from the need to seek corporate consent by way of subsection (3) of Clause 8 of this Bill. The amendment is therefore unnecessary.
I am sorry that I gave the noble Baroness comfort only in relation to what she indicated was the least important of her amendments. I hope, nevertheless, that she will feel able to withdraw them.
Baroness Hamwee: I shall withdraw the amendment and not seek to move the others in this group. However, I am interested in the Minister's reply, which is all to do with anti-avoidance rather than the more positive way in which I put the points. I am surprised if the anti-avoidance provisions are confined to these clauses. I shall take that away and have another look at it. I take the point that the Minister makes about seeking to avoid creditors. My immediate reaction was that it was an interesting but perhaps slightly strained response. For the moment, I beg leave to withdraw the amendment.

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Amendment, by leave, withdrawn.
[Amendments Nos. 53 to 55 not moved.]
Clause 10 agreed to.
On Question, Whether Clause 11 shall stand part of the Bill?
Lord Monkswell: First, I apologise to the usual channels for not being available this morning when the Marshalled List was determined and therefore being unable to have an input where my name appeared on the list of amendments. At this stage, I shall speak only to the Question whether Clause 11 stand part, and then speak separately to the Question whether Clause 12 stand part. I had intended to speak to Amendment No. 70 as part of the "global debate" on this subject; but it would probably be best for the Committee if that amendment is taken separately at its rightful place on the Marshalled List next week, and similarly with the Question whether Clause 20 stand part, which might have been included in a much larger debate than we need to have in relation to Clause 11.
While speaking about the arrangement of the groupings, it may be useful if I advise the Committee that my Amendments Nos. 59 and 81 can be debated separately rather than being grouped together.
In relation to Clause 11 stand part, I seek some government explanation as to why the normal procedures of the market place and our property-owning democracy should be departed from in this particular case. I refer to the inclusion within the clause of what is effectively a covenant requirement that if a house is disposed of within three years, any discount given to the purchaser should be repaid, albeit in declining amounts depending on the time.
Normally when one buys something in this country, one buys it outright. One then has the right to do what one will with it. That is the free expression of the market. The Government have made great play of that aspect. It is curious that when we talk in relation to this clause about the purchase of a home for people to live in, for three years they should not have the unfettered right to dispose of it without penalty.
Let us think of various different situations that might pertain. It may be that those living in the house find alternative employment some way away as a result of which they need to move house. It may happen that, by conscious decision and acts on their part, they have improved the house and thereby increased the value of their property and seek to dispose of it in order to realise the extra value to enable them to move on in the market. Why should there be this restriction on the new owners of the house to dispose of it as they see fit in an unfettered way without penalty? I suspect that I may have some inkling of what the Minister may say, but it would be interesting to hear the Government's response to the questions I have raised on this subject.
Baroness Gardner of Parkes: Having listened to the noble Lord. I feel that he shows no understanding at all of the fact that people are being given a large discount. There is no question of people not being free to sell at
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full price if they repay that discount. The whole argument that he put forward is completely fallacious. I cannot agree with it.
Lord Monkswell: Perhaps I may respond to those remarks. If the discount is so significant, why is it expunged after three years? Why should it not last for 10 or 20 years? Why should it last for only one year? The Government need to answer why there should be that penalty and why that particular timespan is enshrined in the Bill.
Baroness Gardner of Parkes: That is not the point that the noble Lord raised in his speech on this matter. He has now introduced an entirely different point. Arbitrary dates are chosen for many things: for inheritance tax and lifetime gifts, for example. In this country there are many occasions on which we are used to a specific time over which things are phased out. It is not at all an unusual practice.
Baroness Hamwee: I have no sympathy with the first remarks of the noble Lord, Lord Monkswell, but he has raised a point on which it is worth spending a moment or two; namely, the period of time within which—I shall not call it a penalty; it is not a penalty but simply repayment of a discount—that repayment is to have effect. Clearly, there has to be a balance in these matters. However, the repayment is not payment of a penalty; it is repaying a benefit. That is the whole thrust of this legislation. But I too would be interested to know the Government's thoughts on the choice of the three-year period.
Lord Lucas: There are two points to make. One is obvious; namely, that this is a provision which has been in force since 1985. It has been running for some time. Secondly, I do not know the Government's original reason for proposing the three-year period, but I can suggest a very good reason for a period to be retained.
If there were a short period, or none at all, there would be a great trade in these goods. There would be middlemen coming along who would say, "Buy your house. I'll buy it off you two weeks later and we'll split the profit." The length of time needed to avoid that is the length of time over which the interest on the amount that the tenant has to pay would extinguish the discount that he was getting. In my rough calculation that would be about three years. I should view it as an anti-avoidance provision, so that the people who can take advantage are the real tenants and not people motivated by middlemen looking to share a quick profit.
Lord Monkswell: I am rather curious about the Minister's explanation that after three years the interest has been paid. I may have misheard him, but it seems a curious view to take of the situation. I can understand the argument that to prevent a trade in housing and people benefiting from that trade, the point at which they can reasonably put the house on the market is delayed.
It is a penalty in the sense that one has to pay something extra for doing what would otherwise be one's own unfettered right to do. Surely, if the

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Government believe in the market place, they would see nothing wrong in people making an arrangement with a third party to buy something and then sell it on. I should have thought that that was exactly what happens every day on the Stock Exchange. In happens every day in market places and in shops. Surely the Government are not saying that this is a bad thing to happen in the market place.
We have probably chased this argument round enough. I shall not press my opposition to the clause standing part of the Bill.
Clause 11 agreed to.
Clause 12 [Priority of charge for repayment of discount]:
Lord Lucas Lord Lucas moved Amendment No. 56:
Page 7, line 24, leave out ("in writing").
The noble Lord said: In moving this amendment, I shall speak also to Amendments Nos. 57, 138 and 142. The effect of these amendments is to correct a minor drafting error in Clauses 12, 40 and 41. Each of the clauses requires a notice to be in writing, but it is not necessary to specify that as Clause 62 gives the definition of "notice" as being in writing. I beg to move.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 57:
Page 7, line 28, leave out ("written").
On Question, amendment agreed to.
Lord Dubs Lord Dubs moved Amendment No. 58:
Page 7, line 40, leave out ("purports to authorise") and insert ("authorises").
The noble Lord said: As the Bill stands, Clause 12(4) states:
"in so far as it purports to authorise".
The amendment would delete the words "purports to authorise" and replace them with the word "authorises". I am puzzled as to why the subsection says "purports to authorise". I have looked up the word "purports" in the Concise Oxford Dictionary. It says that "purports" means "be intended to seem" or "the ostensible meaning". Although this may seem a little circular, the word "ostensible" means "professed for show" and so on. It seems to me that if someone purports to authorise, the person is not actually authorising. He is giving the impression of authorising. I do not see how that can be void. Surely the only thing that could be void is the full authorisation. I do not see the force of this provision. It would be much clearer if the subsection stated,
"is void in so far as it authorises",
rather than it is void if someone may seem to have authorised. I beg to move.
9.15 p.m.
Lord Lucas: The problem is that if the agreement authorises a forfeiture, it does not purport to authorise the forfeiture and is therefore not void. It is only void if it purports to authorise the forfeiture without authorising it and therefore it is of no effect anyway. As the noble
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Lord said, it is a question of circularity. Which comes first: the chicken or the egg? One way or another, this is a confusing set of words which may not achieve what it sets out to achieve. We all understand, having read the clause, what it means to achieve and we are uncertain as to whether the particular wording chosen actually achieves that. We shall look at it again and return to it in one form or another at Report.
Lord Dubs: I thank the Minister for agreeing to look at the subsection again. As I listened to his explanation, I became even more confused than I was to begin with. Therefore, I am grateful that he is going to have another look at it to see whether we can get it into a form of English which means what it is intended to mean. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 12, as amended, shall stand part of the Bill?
Lord Monkswell: One of my concerns about Clause 12 relates to subsection (4) which the Government have now accepted is in need of rewording. I shall maintain my opposition to Clause 12 if only to enable any other Member of the Committee who had intended to speak on this point to do so. Failing that, I shall not pursue my objection to Clause 12 stand part.
Clause 12, as amended, agreed to.
Clauses 13 to 15 agreed to.
Clause 16 [Right of tenant to acquire dwelling]:
Lord Monkswell Lord Monkswell moved Amendment No. 59:
Page 10, line 30, leave out from beginning to ("sector") in line 31.
The noble Lord said: This is a probing amendment to ask the Government why there should be certain restrictions on the right to buy. It has been accepted now for a good many years that council tenants should have the right to buy. It has been accepted, although there is still some tidying up to do, that leaseholders—private tenants—should have the right to buy. What we are discussing in this clause is the right to buy for people living in what one might generically term housing associations.
If there is a general agreement—it is almost a cross-party agreement—that the right to buy is a good thing, why should that right to buy which is so widely accepted be restricted? Why should some people have the right to buy and others not have the right to buy? The intention of the amendment I am moving is to take out of Clause 16 those provisions which seek to restrict the right of people to buy. I am interested in the Government's response to this amendment. I beg to move.
Lord Mackay of Ardbrecknish: Perhaps, if only for my benefit, but I suspect also for the benefit of the rest of the Committee, I can be clear that the noble Lord is moving only Amendment No. 59 at this stage, that he has unbundled Amendments Nos. 70 and 81 and that we shall come to them in their turn. He is simply asking—I do not know if "simple" is quite the right word—that Clause 16(1)(b) be deleted from the Bill.

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The noble Lord gave us a fairly eloquent account of his views on the right-to-buy at Second Reading. I hope that I am not paraphrasing him wrongly, but essentially he feels that the system is unfair. He is in favour of tenants being able to buy their homes. He recognises the benefits this has brought to communities in breaking up huge monolithic estates and creating mixed and responsible communities. But he does not want to see public money used to support this policy. If tenants want to buy, he told the House, they should pay the full market price. In the interests of fairness, he would also like to see all tenants, even those with private landlords, given the right to buy their homes. This amendment and the others which have been unbundled, and his opposition to Clauses Nos. 20 and 21, are all in pursuit of what I hope I have fairly described as "his position".
As regards this particular amendment and the removal of paragraph (b), that is a condition that in order to qualify for the new scheme the property shall have been provided with public money. Where a property has been provided with private donations—for example, by a charitable foundation—the landlord can participate in the voluntary purchase grant scheme and sell to the tenant, if he chooses. But I do not believe, and I suspect that not many of the charitable foundations will believe, that it is right that we should compel a landlord to sell where absolutely no public funding has been given. That would be unfair. There would be some reasonable voices raised in complaint if I came forward with that proposition. Perhaps there may be opposition from the Bench of Bishops because all the Churches are involved in housing of various kinds across the country where they have provided the land and the money either themselves or with other institutions and without the use of any public money.
I do not believe that it would be right for Parliament to legislate in order to compel those landlords to sell to their tenants. As I say, they can do so voluntarily if they wish, but I do not believe that it would be right to compel landlords in these circumstances to join in this particular scheme. With that explanation of the Government's firmly held position, I hope that the noble Lord, Lord Monkswell, will withdraw his amendment.
Lord Monkswell: I am curious about the way in which the Minister has articulated the Government's opposition. He has suggested that it would be forcing private or charity landlords to sell their properties. But that is not what we are talking about. We are talking about conferring on others the same rights that apply to some of our citizens. It seems to me that that is rather different from the way in which the Government describe the position. They describe it as forcing people to sell. But that is not what I understand to be the purpose of this legislation. If that is the Government's intention with this Housing Bill and they are forcing social landlords to sell their properties, I suspect that that is not the way most people will view this particular section of the Bill. I am rather disturbed that the Government should use that language.
I return to my original argument. Why should some tenants, citizens of our fair country, not have the same rights as other tenants? I can see that there are certain
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fairly good reasons for some tenanted properties being considered differently from others. We shall consider the situation in rural areas and small communities later. I suspect that there may be other exceptions that could be made for very good social reasons. However, to suggest that a blanket denial of the rights of tenants to buy the house in which they live should be required in this situation is wrong.
Furthermore, why is there such a distinction between public money and private money? We shall consider that point in later debates, but I raise this point now: what is the situation where a house is procured or built with a combination of public and private money, and perhaps with charitable money also? The Government have not explained how we shall tease out such problems. I should be interested to hear any comment from the Government about the way in which they have described their opposition to my amendment as forcing people to sell rather than as giving tenants a right to buy their property.
Lord Mackay of Ardbrecknish: I shall try to help the noble Lord, Lord Monkswell, who seems to be making a mountain out of a molehill. It all depends which side of the coin you are looking at, because it is the same coin. Clause 16(1) states:
"A tenant of a registered social landlord has the right to acquire the dwelling of which he is a tenant if',
and paragraphs (a), (b) and (c) then follow. Paragraph (b) states:
"the dwelling was provided with public money".
If the tenant has a right to acquire that dwelling, that must mean that the landlord has an obligation to sell it. I do not think that I am splitting hairs because, if a tenant has a right to buy and if he exercises that right and buys the property, the landlord must be selling. However, it is totally wrong to jump from that and to say that we are placing on landlords a compulsion to sell. The trigger, if I may call it that, will be pulled by the tenant. That is what happens in all the right-to-buy legislation that we have introduced. We have said that tenants have a right to buy and Clause 16(1) states that a tenant has the right "to acquire".
I believe—the noble Lord and his party may not believe this—that there is a distinction to be drawn between money provided by the public purse and private or charitable money. That distinction is obvious to me. If the noble Lord is saying on behalf of his party that the Opposition want to give tenants the right to acquire their property even if absolutely no public money has been involved in any way, shape, or form, I believe that they will find themselves in some dispute with many of the charitable organisations which are involved in the social rented sector and which have not needed public money for their developments.
I think that my position is perfectly clear. I am sorry that the noble Lord does not agree with me. We shall come to some of the other arguments when we reach other amendments which stand in the noble Lord's name. As he has unbundled his amendments, I shall unbundle also and stand my ground and say that I believe that in the social rented sector there is the

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distinction to be drawn between those dwellings that have been provided by public money and those which have not been provided in that way.
Lord Monkswell: I thank the Minister for his response. We are gradually getting to an acceptance by him that the right to buy is not the same as a requirement to sell. He has not quite got all the way there yet, but, on the basis that he is heading in our direction, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
9.30 p.m.
Baroness Hamwee Baroness Hamwee moved Amendment No. 60:
Page 10, line 38, at end insert ("which accounted for 20 per cent. or more of the total cost of the dwelling").
The noble Baroness said: I beg to move Amendment No. 60. I speak also to Amendments Nos. 66 and 75 in my name, which are grouped with Amendments Nos. 62, 65, 72 and 78. Two of those amendments are in my name and that of the noble Lord, Lord Williams, who will no doubt speak to them, and two are in the name of the noble Lord, Lord Berkeley.
Amendment No. 60 pursues in greater detail the issue just addressed: what is meant by the provision of public money within the definitions set out in the clause. Clause 16(2) allows for dwellings to be bought, and therefore required to be sold—it can be put the other way round, but I do not think it much matters—if they are wholly or partly provided with public money. My concern is what is meant by "partly". The amendment proposes that dwellings are to be regarded as being provided by public money and so included if that money accounts for 20 per cent. or more of the cost of the dwelling. It is perhaps the other side of the coin, or rather quite a lot of coins in the case of property. If the other source of funding accounts for 80 per cent. of the cost, the dwelling will be excluded from the right to buy.
The Minister has referred to resources raised by donations from charitable organisations, individuals and an association's own reserves. I believe that in circumstances where the large majority of funds for a dwelling do not come from public funds the right of tenants to force the association to sell should be questioned. The Minister may say that if there is a particular percentage cut-off there will be anomalies, but "provision in part" may, to take it to extremes, mean the provision of a few pence. One may say that there is a cut-off somewhere. But my real concern is the macro-effect. We are aware that already associations and organisations have placed moratoriums on the development of affordable dwellings. They are concerned that their investment of charitable funds may rapidly be turned to private use and their objective may be thwarted. Quite understandably, they await the outcome of this legislation. Many noble Lords referred to that matter at Second Reading. We should not create a disincentive for the building of more affordable homes; indeed, I suggest the opposite.
Amendment No. 66 proposes that the right to buy will not arise where the dwelling requires repairs that are essential for it to remain habitable within the following
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three years. Many of your Lordships are aware of the problems encountered by leaseholders in blocks of flats because they are leaseholders and their neighbours remain tenants. There is a small, but nevertheless significant, minority of people who have been saddled with high repair bills, sometimes amounting to tens of thousands of pounds. A quite separate situation is one where a housing association may purchase a property which it intends to refurbish in a major way. Long term plans for redevelopment or improvement may be thrown into chaos if a tenant exercises the right to buy at an early stage. For those two reasons it would be fair to both tenants and housing associations if properties which are likely to require major works of repair or improvement within three years—I accept that that is an arbitrary time, or perhaps not; one can perhaps relate it to the discount period—are excluded from the right to buy.
The amendment is confined to dwellings situated in a building, so we are therefore talking about flats. An exemption which is broadly in that form is being included, I understand, in the voluntary purchase grant arrangements, although it is on a discretionary basis.
Amendment No. 75 is similar to Amendment No. 66, but gives the Secretary of State power to use his discretion rather than introduce a statutory exemption. I beg to move.
Baroness Gardner of Parkes: I find the first amendment about a fixed percentage of public funds to be sensible. It would be a pity to designate the dwelling as funded publicly if, as was said, just a few pence had gone in. I do not know whether 20 per cent. is the right figure, but there is an interesting point here.
I am more concerned about major repairs. I do not know whether the amendments solve the problem. When people buy social housing, there is a need for some form of indemnity or insurance to be built into the purchase. I do not know how that could be best done. I do not know whether the Government could write it into the Bill or whether it should be done by the purchaser.
Something should be considered to cover those people who find themselves faced with the most alarming, major structural repairs; for example, where buildings have been found to be constructed of concrete of the type which rusted inside the concrete shell. That is the type of thing which can create terrifying bills for the people who have bought those properties. It is something that has caused great distress. I shall be interested to hear my noble friend's reply to those points.
Lord Hamilton of Dalzell: I have not yet spoken in this debate, so I should declare my interest in the property world. I own estates is Surrey and Shropshire, which include a considerable number of houses, some of which are social houses. I have had no connection with housing associations, but I have been involved in a deal in Shropshire in which the provision of social housing was part of the arrangement for obtaining planning consent.
I am tempted by the amendments, because, unlike the noble Lord, Lord Monkswell, I stand on the other side of the equation. I have never been totally happy with

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the blanket right to buy. I sometimes ask myself whether one's house is a financial asset or liability. If my noble friend Lord Ferrers were here he would probably admit that some houses—I believe that he owns some of them—are liabilities.
To define the matter more accurately, a house in which one lives is only an asset if its price is rising faster than the rate of interest one is paying for the mortgage. Ultimately there are substantial liabilities involved in keeping the property in good repair. Also, if one owns houses in which one does not live, if the rent is too low they become liabilities because ultimately over time they stoke up large bills for keeping them in repair. I wonder whether in this right-to-buy scheme people are being induced into arrangements which they may in the end not be able to afford. I feel that the Government have decided that they do not wish to be a landowner, and I believe that one of the reasons behind the sale of council houses was that they made a very substantial loss on the rents that they charged. Personally, I have been spending quite substantial sums of money restoring houses because they can at last be let at economic rents under assured shortholds. Some restrictions on what actually happens and who is allowed to buy a house would be welcomed.
There is another aspect. I quite understand the philosophy of the Government that when these houses are sold the money should be rolled over to buy more. In the operation which we have carried out in Shropshire, the provision of social housing was regarded by the developer as part of the planning game. It actually amounted to 20 per cent. of the proceeds of the land. Therefore, if you add capital gains tax to that it reaches an effective tax rate of 52 per cent. If one is going to have to keep on rolling over these houses, there are going to be more and more cases in which the planning game element will have to be chipped back into the social housing regime.
As landowners, we are inclined to take the view that as social housing is appearing in the area in which we live perhaps that is pro bono and we ought to put up with it. But we did have the land investment levy which had a tax rate of 60 per cent. A tremendous amount of land belongs to people who simply hold it in land banks and the land investment levy caused a drying up of the supply of land. I was reading in the Telegraph that my right honourable friend the Secretary of State for the Environment thinks that we have to build 4 million houses over the next 20 years. For both purposes—for the provision of land for social housing on a voluntary basis and also in the broader context of making sure that there is a supply of land—I would like my noble friend the Minister to let me know how he believes that will work out.
Lord Berkeley: I rise to speak to Amendment No. 62, standing in my name on the Marshalled List and, if it is convenient, to Amendment No. 72 standing in my name and also to Amendment No. 65 in the name of my noble friend Lord Williams of Elvel and the noble Baroness, Lady Hamwee.
The purpose of these amendments is to protect housing associations against having to sell their houses at a loss, or perhaps I should say below the cost of
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construction, while at the same time not unduly restricting the rights of tenants to buy, effectively through no fault of their own, because they happen to be in a house which might show a loss.
The William Sutton Trust which, I believe, is the sixth largest housing association in the country, has expressed serious concern to me about this since it affects the ability of the trust to invest in new affordable housing stock. This really gives rise to the macro effect mentioned just now by the noble Baroness, Lady Hamwee.
My amendments begin by trying to define a dwelling. That may seem simple. But that trust, and possibly many others, recognises that there is a need to have what it would like to call a cost floor to protect those cases where, for quite proper reasons, the cost of providing the house is greater than its market value. This is rather difficult. Why should the cost of a new housing association house ever exceed its open market vacant possession value? The open market vacant possession capital values are set by the market for private owner-occupied houses, both new and those for resale. However, housing associations often have to provide houses, or homes, with a higher technical specification than in the private sector in order to achieve low maintenance and running costs. For example, double-glazed or UPVC windows, as I call them, are often installed rather than soft wood windows. They are encouraged to do this by the Government and the Housing Corporation, which expects housing associations to keep their running costs low. That is obviously commendable.
The Government strongly advocate energy efficiency measures in new homes and housing associations tend to go further than the private sector in reducing energy costs for their tenants. There are many occasions when one sees a group of housing association houses next to private sector houses and one can see the difference in the standard of construction and the quality of the housing association houses for those reasons.
In support of other government initiatives to create communities on estates, housing associations often expend money outside the dwelling on local offices, good community landscapes, children's play areas and community halls. All those facilities have a cost which does not add to the value of individual properties but adds to the whole. The amendment which I have tabled tries to create a definition of a dwelling which includes that.
It is true to say that the better housing associations tend to build to the same high standards everywhere and construction costs are very much the same throughout the regions. But of course, in some areas, the market value is significantly lower. How do the housing associations achieve those higher standards? It is usually by putting some of their own reserves into the schemes or taking out higher private sector loans. But if there is house price inflation over time, any difference between capital values and the cost of provision may be eroded and that may sort out the problem. But as we heard earlier, the tenant may buy on the first day of occupation if he already has two years of tenancy with another social landlord. Therefore, there is quite a serious problem.

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I can also see some problems which the Government may well put back to me. For example, how could a cost be included in a definition of a dwelling in relation to a community feature? It could cover anything provided that at the same time that the dwelling was built, the construction was an amenity for or to provide services for a dwelling. That would eliminate any subsequent initiatives or expenditure which came after the initial building.
It could be argued that the trust's proposals will take away people's right to buy, but that can be answered with two suggestions. The Government could provide a larger grant so that the tenant could still exercise his right to buy and the housing association would not then lose out; or, secondly, the tenant could be given priority through a tenants' incentive scheme, which is another grant given by the Housing Corporation to enable a tenant to move out and buy a property in the private owner-occupied sector.
I believe that without these amendments there is a real risk that the quality of new, affordable housing or the quality of the upgrading in existing houses which is necessary, and is still covered, I believe, by the Bill, will be reduced and/or the number of new social houses built to replace those sold will also be reduced.
I am not sure that the drafting of the amendments is correct. I certainly commend Amendment No. 65 in the name of my noble friend Lord Williams and the noble Baroness, Lady Hamwee. However, I hope that the Minister will recognise the concern of some housing associations and will be able to respond positively.
9.45 p.m.
Lord Williams of Elvel: Following the intervention of my noble friend Lord Berkeley, I should like to speak to Amendment No. 65 which stands in my name and that of the noble Baroness, Lady Hamwee.
As I understand it, the Government have accepted that there should be an exemption from the right-to-buy where the private loan debt is greater than the open market vacant possession value of the property. But whether or not the Government accept that, it is not on the face of the Bill, unlike the rural exemption. We believe that it should be. If there is to be an exemption like the rural exemption, it should be on the face of the Bill.
The exemption contained in my amendment will be most relevant for local housing companies and large-scale voluntary transfer initiatives, which the Government, with our support, seek to promote. They have a rising debt profile in the early years of their life. In the amendment, we have added to that exemption a complementary one; namely, that,
"the cost of provision (but not repair) of the dwelling",
should not exceed the,
"open market vacant possession value".
The argument here is, first, that that has been accepted in the context of voluntary purchase grant. Therefore, it is hard to see why it should not be accepted equally on the statutory scheme giving right to buy.
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Secondly, although the Government will be contributing social housing grant to the sort of scheme which might be affected by the exemption, the association itself is often contributing its own resources in order to ensure good space standards, high technical energy efficiency, and housing plus environment. That is in order to reduce the cost to both the landlord and tenant over the lifetime of a rented home. If tenants can purchase at a value, further assisted by the Government to meet a discount, which is below the cost of provision, both public funds and the housing association will lose out. Moneys available for the disposal proceeds fund will be less than is needed for replacement, and so there is certain to be a loss of lettings.
For local authority right to buy there is a cost-floor mechanism which is missing from the Bill's provisions as presently drafted. The direct read-across, if I may use that expression, from right to buy is, therefore, broken. It is not easy for us to see how a cost floor could easily operate with the grant and discount system proposed. The mechanism proposed by the amendment is, in our view, simple and straightforward. It would determine very easily, subject to valuation, whether or not a sale could go ahead.
The amendment was debated in another place but without, in our view, a satisfactory answer being obtained. It would exclude homes where the market value was less than the cost of erecting or the cost of acquiring and improving or the amount of outstanding private loan debt available on the dwelling from the effects of Clause 16. In other words, those properties would not carry a right to buy.
Baroness Gardner of Parkes: We have now started to debate a different series of amendments, but, as we are in Committee, I should like to make a few comments on them. I received a brief from the Sutton Trust and I have considerable sympathy with its views. However, there is one part of the brief that I do not understand. It states:
"Private sector homes tend to be under-occupied, whereas the Government encourages full occupation of social housing to make the best use of the asset".
That is clear enough. But the brief goes on to say:
"Therefore the better housing association homes have higher space standards than the private sector, which is not necessarily reflected in value".
That sentence worries me because it takes me back to the days when all local authority housing was built to Parker Morris standards which were far in excess of anything that any builder could afford to build if he was building commercially with a view to sell. In fact, it took many years before it was decided not to continue with such standards.
It worries me if housing associations are now building to an unrealistically high standard. I believe that they should be building to a good standard. Indeed, I agree with the point made by the noble Lord, Lord Berkeley, that such constructions should be of a type that will not require additional maintenance. It is often cheaper to have a better standard at the beginning of the process. If housing associations are actually providing people with

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more space than they could possibly afford if it were a private house, that seems to me to be an argument against themselves.
The point that concerns me most and most encourages me to support the Sutton Trust argument is its statement that at the moment it has a rolling programme to upgrade all its old property. We all know that the Sutton Trust has long-established and old properties, many of which need upgrading. Unless it gets back at least what it has paid to construct the new buildings, it will not continue to invest money to keep the old properties up to standard, as it will not be in its interests to do so. I believe that to maintain old buildings is as important as to construct new ones, as so many people have lived in those old buildings for so long. In principle I support the amendments spoken to by the noble Lord, Lord Berkeley.
Lord Mackay of Ardbrecknish: It may be helpful if, before I address the amendments before the Committee, I try to explain as briefly as I can how the new scheme will work and which properties it will apply to. The right is subject to various exclusions and applies only to properties provided in the future with public money. We have already debated that to a certain extent. The new right does not extend to any existing housing association property. A similar scheme for existing properties was introduced on 1st April this year. But participation by housing associations in this is voluntary. We have already agreed a set of proposals for the voluntary purchase grant scheme. We have based this primarily on the same rules as the proposed statutory grant, although we have agreed certain additional exceptions, reflecting the fact that investment decisions were made before the scheme existed. Housing associations are able (and will still be able) to dispose of particular property subject to approval by the Housing Corporation, without the use of grant.
Where a tenant purchases a property under the statutory purchase proposals (or under the analogous voluntary proposals) he will be required to pay the full market value of the property less a discount. In England this will be a fixed sum of between £9,000 and £16,000 depending on the location. In Wales it will be a fixed percentage or rate. The sums have to be established by secondary legislation. That discount will be paid in the form of government grant to the housing association, so that the housing association will receive the full market value. Once any loans or other legal obligations have been settled, the balance will be kept in a ring-fenced fund to be used to acquire or build further property in the locality.
This is an important feature and one which has often been overlooked in discussion. It means that, in effect, the housing association will have the resources to acquire a property at full market value. In almost all cases, where the property has been partly funded by loan, the association should be in a position to re-finance the loan component when another asset is acquired. Those who have criticised the proposals on the basis that in some areas it will be expensive to acquire replacement properties, should recognise that in those
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areas the market value received by the housing association will be correspondingly high—equivalent to the price of replacement property.
The provisions of the Bill mean that any properties built, acquired or renovated without public money will automatically be excluded from the right to acquire. We have already discussed that. Property renovated by housing associations out of their own resources will not be liable to statutory acquisition. Similarly, properties built on free or cheap land which, as a result of this effective subsidy do not require grant, will be outside the provisions.
I now address a matter which occurs later in the Bill and is a matter which I understand we shall not discuss this evening. I shall not comment on the rural aspect this evening. However, there are powers in Clause 17 to enable the Secretary of State to provide other exemptions, adaptations and modifications to the right to buy provisions in Part V of the 1985 Housing Act. We have already confirmed that the following exceptions will apply: first, the types of supported group developments for the physically or mentally disabled, or the elderly which are excluded from the existing right to buy; secondly, supported housing schemes for special needs accommodation—we have still to define the details of this—and, thirdly, properties where the attributable private debt is more than the market value.
Various proposals have been made this evening about further exemptions. Our position is that we wish to promote home ownership and to establish a clear statutory right. The statutory purchase grant scheme has been introduced so that in the future tenants of registered social landlords will have the same kind of right to buy their own home as do secure tenants of local authorities now. We do not think it is right to introduce a whole raft of additional exceptions which would apply only to those tenants who are now being given the right to buy for the first time.
This group of amendments would limit the number of tenants who will be able to benefit from the schemes. I do not think that noble Lords will be surprised to learn that I am not happy with any of the amendments.
Given the background that I have portrayed, perhaps I may now move to the amendments. Amendment No. 60 in the name of the noble Baroness, Lady Hamwee, would restrict the right-to-buy to tenants of housing association stock which had been produced with at least 20 per cent. public money. The amount of housing association grant paid on a scheme varies by region. At current rates it varies between about 40 per cent. and 70 per cent., but some schemes may receive less HAG; for example, if cheap land has been provided. The noble Baroness's amendment would, therefore, reduce the number of tenants eligible to purchase their homes.
We do not believe that there is a need for this amendment. Registered social landlords will be required, as I explained, to use the sale receipt to provide replacement property for social renting, regardless of the original amount of grant. The benefit of any contribution from reserves or donations in homes which are sold will, therefore, be retained in social housing. I believe that that is an important point which

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I hope allays the fear which I suspect underlies many of the amendments that the quantity of social rented housing will be reduced. In fact, the scheme we have devised prevents that by ensuring that the money is ring-fenced to be recycled into either new build or purchase for new social renting.
The figure of 20 per cent. appears to be an arbitrary one. I believe that it would be difficult to justify it to tenants who would not be too interested whether the contribution was 19 per cent. or 21 per cent.
Amendment No. 62 in the name of the noble Lord, Lord Berkeley, initially puzzled me a little. I have explained that there will be categories of housing which would be exempt—for example, sheltered accommodation which has common rooms and the like used largely but not exclusively for the elderly. As I have already explained, these current developments will be covered in secondary legislation.
However, I listened to the noble Lord. He seemed to be considering examples where there were community facilities, perhaps in housing which was not designed specifically for the groups that I have mentioned. I am sure that he approves of our decision about the specific groups of sheltered accommodation of the kind that I have mentioned.
His fears seemed to concern general social housing which had some community facilities built in, if I understood him correctly. Those community facilities may well add to the value of the individual dwellings, which would be reflected in the purchase price. If the community facilities remain, as I presume they will, in the registered landlord's ownership, they will still be available to the remaining tenants and to any new tenants who become owner-occupiers. Therefore, I hope that his fears on this point are groundless, especially against the background of the exemptions that I have already outlined.
Amendment No. 65 in the name of the noble Lord, Lord Williams of Elvel, would exclude properties where either the cost of provision or the private loan debt was greater than the open market value. Amendment No. 72 in the name of the noble Lord, Lord Berkeley, seeks to introduce a cost floor so that discount will not reduce the receipt below the market value.
Under the purchase grant scheme, the landlords will always receive the full market value of any property they sell. Even if this is less than the development costs, public subsidy will generally cushion them against loss. On the second point, I have already announced that landlords will have a discretion about selling where costs are greater than the outstanding private debt. But, like the other exceptions, this will be included in the regulations amending Part V of the Housing Act 1985, rather than on the face of the Bill. While I know that it only answers one aspect of the concerns of the noble Lord, Lord Williams, I hope that he will be satisfied by my assurance on the point.
Amendments Nos. 66 and 75 from the noble Baroness, Lady Hamwee, would exclude properties where essential repairs were to be carried out in the following three years. My noble friends Lady Gardner
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and Lord Hamilton commented on the issue. The exemption of excluding properties where essential repairs were to be carried out in the following three years does not apply to the traditional—if I may call it that—right to buy which has been operating successfully for the past 16 years. I see no need for the exemption in the new scheme. Registered social landlords will be required to provide tenants with an estimate of any service charges they will have to pay for repair costs in the first five years of their lease. The social landlords will not be allowed to charge more than the estimate. I hope that protection will help to allay some of the fears of the noble Baroness and my noble friends.
Turning to Amendment No. 78 from the noble Lord, Lord Williams, we have already made sure that landlords—
Lord Williams of Elvel: I am sorry to interrupt the Minister. Although I agreed to the grouping of Amendment No. 78 with these amendments, quite properly, it trespasses on rural areas. I should be grateful if the Minister could restrain his comments because many Members of the Committee would like to take Amendment No. 78 with amendments on rural areas with which we shall deal later.
Lord Mackay of Ardbrecknish: I am content to do that since the phrase that springs to mind is that it will help to shorten the evening. I have covered all the amendments in the group. Perhaps I may sum up the situation. The new right to buy which Clause 16 introduces concerns what we believe are important new choices for social tenants. I hope that I have explained the way the exemptions will work and how they were brought about in secondary legislation. So far as they go, I hope that those assurances will be helpful to Members of the Committee who have spoken and that if my explanation of why we are not prepared to go further on exemptions does not satisfy some noble Lords, it will at least allow them to see how the Government have come to their conclusions on the matter.
Lord Hamilton of Dalzell: Before my noble friend sits down, I am totally satisfied concerning tenants of the social housing organisation that the repairs will be done. The question that I raised is this. The Government are encouraging people to buy with liabilities which they may not be able to afford. I wondered what would happen to the housing stock after people had bought the properties if they found that they could not cope with the repairs. I foresee that we may be building up slums for the future.
Lord Mackay of Ardbrecknish: The same point could be made about anyone buying a house, whether it is a tenant or anyone else buying a house on the open market. It is something which people have to take into account. That is why I gave my assurance that any repairs and the costs over the following five years would have to be notified to the tenants so that they would be able to take them into account in calculations.
I can only speak in Scottish terms where the examples are more numerous. I know that the Bill does not apply to Scotland; but if I were to take my noble friend around

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any council estate—for example, in the town which carries his name—he would be able readily to pick out the houses which have been bought. That will not be because they look dilapidated—quite the contrary—it will be that work has been put into improving the houses immeasurably and they will probably stand out from the houses still in local authority ownership.
Lord Monkswell: The Minister makes a rather specious distinction between the short term and the long term. It is quite true that on council house estates one can see where people have exercised the right to buy. Quite often the houses look different.
But looking over the longer term at the difference between the private, owner-occupied sector and the council sector, experience over 30, 40 and 50 years has shown standards of maintenance in the public sector to be markedly superior to those in the private sector. That is borne out by statistics; it has been evaluated many times. We need to recognise the important distinction between the short term and the long term.
We all know of horror cases where people have exercised their right to buy and within a very short space of time have either found that they could not afford the mortgage, or have found faults with the building that were not apparent at the time of the sale. The problem has become insurmountable for them.
The Government may say that people who exercise their right to buy should take out insurance to cover the costs of unforeseen problems with their property. But if you have lived in socially rented accommodation for many years, the chances are that you are already on a low income. The extra cost of the insurance is something in which you would not necessarily engage.
I should like the Minister to reflect on one point that he made. It related to the community facilities about which my noble friend Lord Berkeley was so concerned. Concern was also expressed by the noble Baroness, Lady Gardner of Parkes. The Minister suggested that, as people exercise their right to buy, they will still have rights to make use of the community facilities. I am not sure that that is a sensible approach. Surely, if there is a community facility that is funded effectively out of rent income borne by tenants and one of those tenants decides to exercise the right to buy, that tenant will no longer be making any contribution to the running costs of that facility. Why should the tenant then continue to have the right to make use of that facility? That would surely be the logical way in which the situation would be approached by managers of the facility.
Let us take the situation a stage further. As more and more people within that particular community exercise their right to buy, one could end up with a situation whereby the housing association is stuck with a community facility with no income stream to keep it maintained and provide running costs. Almost by definition one has excluded all those who have exercised the right to buy. One ends up with a community facility that has no funding mechanism and to which those for whom it was built, those living in the community, have no access. It becomes very difficult to see how the situation will work. I hope that the Minister will reflect
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on the response he gave to my noble friend Lord Berkeley on that particular subject and that he will perhaps reconsider.
Lord Swinfen: I hesitate to intervene on this group of amendments since I was not here at the beginning. However, the remarks of the noble Lord, Lord Monkswell, have rather taken me by surprise. A well-known Labour local authority, when costing for people who wished to exercise their right to buy in relation to local authority property, included in the cost to the purchaser the cost of community facilities. Then, after they had bought, the authority insisted on them also paying additional sums on top of their rates to continue using those facilities.
10.15 p.m.
Lord Berkeley: I am grateful to the Minister for his comments on my two amendments. I was aware of the exemptions that he mentioned for certain categories of tenants. I was also aware that this particular clause was confined to new properties that will be built in the future. I understood that it would also include properties which would be subject to major renovation in the future.
I turn to the costs of building—we have been round that subject several times—and whether the costs of affordable houses are more than they should be. I do not know, but from the information that I have been given it looks as though the Housing Corporation encourages building to very high standards with or without the community centres about which we have spoken. But we still end up with the fact that there will be many instances when the associations sell their properties at a price which is lower than the cost, however we define the cost.
I know that the money will be ring-fenced for new properties—I am sure that we shall revisit this matter later tonight or another day—but I was interested in the Minister's reply. If I took it down correctly, he said that public subsidy will push up the market or sale price to the cost of building. Am I correct in assuming, therefore, that the housing association will receive the full cost of building if it is higher than the market price? If that is the case, I am sure that they will all be very happy. I shall be glad to hear the Minister's explanation of that matter.
Lord Mackay of Ardbrecknish: Let me deal with a few of those points and perhaps take first the last point of the noble Lord, Lord Berkeley. I am afraid that he must have misheard me. I quite understand. It was rather a long contribution on a fair number of amendments.
The social landlords will always receive the full market value of any property that they sell. I should have thought that, if the houses are of a higher standard—I do not want to get into an argument about whether they are or not—they will fetch more in the market. Their market price will be higher when that comes to be judged. I do not see a huge gulf between building a new house (if they decide to build) to those high standards and selling a house of equally high standards. I should have thought that the market would reflect that and I do not think there is a problem.

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I am in a little difficulty with the concept of community facilities. It is all rather theoretical. Nobody has given any examples. Those of which I can think are the ones which will be excluded anyway because they are usually in sheltered accommodation or specially designed accommodation for special groups. I can certainly think of things such as community grounds—the grounds around an estate, which have to be maintained. Often in the private sector currently, in the terms of the sales, contributions or service charges are attached to what in England I understand are called freeholds. I believe that in selling to a sitting tenant, a social landlord will be able to take steps to make sure that the costs of any community gardens or the like are shared among all the people in the development, whether they are tenants or owners.
I am not sure that I understood the noble Lord, Lord Monkswell. If any tenant buying his house requires a mortgage—I assume that he will—the mortgager will insist on insurance policies on the property. Indeed, the mortgager may arrange them himself and charge the owner the cost of the premium on the insurances every year when the date comes round.
On the noble Lord's more general point, he seems almost to be saying that because of the risks of private ownership no one should be a private owner. Everyone knows that there are risks. There are risks in us all going home this evening. There are risks to private ownership. I think I explained that if work had to be done to the property within five years it would be notified to the tenant. I have to tell the noble Lord that I suspect that when the tenant consults his man or woman of business the tenant will be advised of the responsibilities one takes on if one becomes an owner-occupier. That refers to absolutely everyone, whether they buy as a tenant or as someone who wants to find a house in the open market.
I made the point initially that if we go around council estates we will see that most tenants who have bought improve their properties far beyond the way they were looked after by the local authority. Certainly I have never seen these mythical local authorities which look after their properties better than the private sector.
Lord Monkswell: Perhaps I may try to explain the problems that occur. The noble Lord said that the mortgage will require insurance. That is true. However, that insurance is usually for total loss, where earthquake or fire leads to the complete destruction of the property and it needs to be rebuilt. That is the kind of insurance my building society requires on my mortgage.
I can give a concrete example of the kind of problems that arise. It concerns some constituents of mine when I was a councillor in the City of Manchester. A couple had exercised the right to buy on their council house on the basis that they thought that as they became older they would have the ability to sell their house and move into a bungalow. That was sensible planning for the long-term future. The husband became disabled and had to retire early. They put the house on the market with a view to moving to the bungalow which, because of the
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husband's disability, became a necessity. When it came to selling their house they found that there was a structural fault and they could not get a buyer. No prospective buyer could raise a mortgage on the house, even if he wanted to.
I agree that that kind of problem is not faced by every tenant who exercises the right-to-buy. However, we have heard of whole estates where there are problems. The noble Baroness, Lady Gardner of Parkes, mentioned the problem of houses that had been built with substandard concrete and had steel rusting from the inside. Those are the kind of problems that can and do occur which are not necessarily covered by insurance and with which the ordinary owner occupier has to deal. It is a problem quite often for people in the vulnerable sectors of society who, almost by definition, do not have the funds to which owner-occupiers historically have had access. It is beholden on the Government to recognise a problem which people will possibly face when they exercise the right-to-buy in the future.
Baroness Gardner of Parkes: My noble friend raised one or two points in his reply to which I feel I must respond. Yes, the housing trust would get full market value but it would be wrong to imagine that one always gets back the money one puts into building. One has only to read the property page in any magazine to be told that if one puts in an indoor swimming pool one should not expect to recover the cost. At present, if one adds on a lean-to conservatory, which is a great current attraction, one will probably get the money back. If one puts in central heating, one will get the money back. However, with many additions—the noble Lord, Lord Berkeley, mentioned the special PVC windows—there is no way one can be guaranteed to get one's money back. So there may well be a gap between the market value of the property and its cost. That can be half dealt with by the housing trusts themselves looking at the way in which they are spending their money in terms of what is good investment and what is not.
I also understood from my noble friend's earlier reply that he was saying that the housing trusts would not lose. I believe that in Hansard tomorrow we shall see such a phrase as, "I do not believe that they will be too much out of pocket". I took that to be good news for the housing trusts, but from his later answer the situation did not appear to be quite so good as what was indicated by the earlier answer.
As regards the case which the noble Lord, Lord Monkswell, spoke about, I would go back to the surveyor and have a word with him about it. If a major structural fault is found in a house which one has bought and which one is moving from quickly, there should be someone to whom recourse can be made. I believe that the real problems are not with the houses, because the surveyor can look at them and come to a pretty good opinion on them. It is the tower blocks which are the trouble. A surveyor is not paid to survey the structure of the whole block. He is asked by the building society to give an estimate of the value. It is in the tower blocks that people are having so much trouble in trying to sell their properties. These are very real problems.
Lord Mackay of Ardbrecknish: Perhaps I may try to clarify one or two points. I am sure that I did not read out my notes wrongly. I shall read them again. Under the purchase grants scheme, landlords will always receive the full market value of any property they sell. Whatever the discount, that is sent to them by the Housing Corporation. I have now said that for the third time and I hope that it is quite clear. I hope that I have not confused anybody. I too shall read what I said in Hansard tomorrow.
Perhaps I may make it clear about charges for repairs. My noble friend Lady Gardner of Parkes, has given me the opportunity to do that. The point of the repairs I am speaking about is that they make for huge bills for major renovations which people who have bought high-rise flats have to pay. I hope the fact that a social landlord has to notify any that may occur in the next five years will be of some help to my noble friend. I was trying to make the point by saying that people have to be aware of such matters wherever they buy a house. I have little doubt that the tenants will be advised—if they do not think of it themselves—to get a surveyor's report and then there can be some comeback on someone if something quite disastrous occurs. As I said earlier to the noble Lord, Lord Monkswell, his criticism of home ownership in this regard is a totally general one because this kind of problem could happen tomorrow to a person buying a house in the private sector.
Lord Hamilton of Dalzell: When the social housing people sell at the full market price, does that mean that they profit from the contribution of the original owner of the land contributed at below the market price or for nothing?
Lord Mackay of Ardbrecknish: Again, I thought that I had made the position clear. Yes indeed, they will get the full market price, which will include that item. In response to people who feel that someone has walked away with their generous charitable donation, the social landlord has that money because he has the gain of the land. He has that money, which is ring-fenced, to supply another house for social letting. If the landowner has given the land for social letting, although it may not be a house on the piece of land that he has given, there will still be a house which can trace back its lineage—if I can call it that—to the value of the land given.
10.30 p.m.
Lord Hamilton of Dalzell: I am sorry to pursue my noble friend on this topic, but does that mean that in due course the planning directive—which insists that local authorities, when giving planning consent, should insist on there being an element of social housing at below the market price—will cease?
Lord Mackay of Ardbrecknish: We shall come to amendments on that very matter later—I am not sure whether that will be tonight or tomorrow. My noble friend Lord Lucas has pointed out to me that the greater
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risk is not of us getting home this evening, but of us not getting home this evening if I go on, so perhaps we can leave this point for now.
Lord Monkswell: I must apologise to the Committee for intervening. It is very late but I ask the Government to think about one point. The Minister advised us that service charges—if I may put it like that—will have to be fixed for five years. The Minister shakes his head. Have I misunderstood what he is saying? It seems to me that a five-year period is a bit short. One of the significant costs facing home owners is external painting, which is generally recommended at seven-year intervals. It could happen, therefore, that the service/repair charges do not include that significant item of expenditure and that they therefore understate the liabilities with which the person exercising the right to buy will be faced.
Lord Mackay of Ardbrecknish: We are moving away from what I would call essential repairs to general maintenance. If the noble Lord does not mind, perhaps I may consider all that has been said in the past hour, especially by his good self, and write to him to try to clarify the point because I suspect that we are talking about different situations. I am referring more to the cataclysmic events mentioned by my noble friend Lady Gardner while the noble Lord is beginning to talk about what most of us consider to be the rather tedious and expensive—and sometimes difficult, if one does it oneself—general maintenance work of painting that has to be done on any house, whether owned by an individual or a local authority. With the promise that I shall look at all that has been said and write to the noble Lord, I hope that we can bring at least this little dual to an end.
Baroness Hamwee: Almost! I shall not attempt to respond to all the points made in the past hour and three minutes, but it is important to say that my approach to this—and, I believe, that of most noble Lords who have taken part in this debate—is not to restrict the right to buy, but relates to ensuring a continuing supply of affordable housing. I should like to put the amendments very firmly in that context.
The Minister rightly talked about the full market price of the property, and I look forward to debating with him at a later stage whether that properly reimburses the landlord. There is a cost to selling as there is a cost to buying. Later amendments have been tabled to ensure that the Bill provides that the landlord is fully reimbursed for all the costs associated with the exercise, but that is a matter for later.
On the question of the 20 per cent.—or whatever other arbitrary figure one applies—the Minister says that there is no need for the provision because of the money to be reinvested. If we can get right the other provisions on reimbursement, I may be persuaded but, at the moment, I am not. My concern arises directly from the comments which are not my comments but which have been made to me by the providers of social housing about the disincentive to creating new lettings or upgrading accommodation which they fear for the future. The other major area is repairs. I do not wish to

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appear to be too paternalistic about this. It is entirely right that prospective purchasers should take decisions for themselves and landlords and noble Lords should not say rather arrogantly that people ought not to buy because they do not know what they are doing. These amendments arise because of the experience of right to buy in the past and the problems in which people have found themselves. It may be that, in a rather different market where tenants have encountered the problems of negative equity, they no longer see home ownership at any price as something to go for, and future possible liabilities will receive rather greater attention than in the 1980s. It is to be hoped that we shall not experience structural problems such as those presented by precast reinforced concrete. As the noble Baroness Lady Gardner has said, in blocks of flats there are future repairs, such as repairs to lifts, which may result in very large bills for the purchaser.
Both my main amendments are born of experience and forecasts which have been made. This is undoubtedly an area to which we need to return, but the Minister has made a good many comments which deserve serious consideration. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lucas Lord Lucas moved Amendment No.61:
Page 10, line 43, leave out ("Part") and insert ("paragraph").
The noble Lord said: I spoke to Amendment No.61 with Amendment No.2. I beg to move.
On Question, amendment agreed to.
[Amendment No.62 not moved.]
The Lord Bishop of Bristol The Lord Bishop of Bristol moved Amendment No.63:
Page 11, line 16, at end insert—
("( ) The right conferred by this section shall not arise where the dwelling is subject to a restrictive covenant which restricts its provision and future use to affordable housing.").
The right reverend Prelate said: I speak for the first time in Committee. Perhaps I should declare that I am a Church Commissioner and also president of a diocesan board of finance, which means that I may have an interest in relation to some of the matters that I deal with.
I thank the Minister for his explanation of Clause 16, but, when I have shared with the Committee my concerns, some aid and comfort may be required in understanding the implications of the proposals. I say to the noble Lord, Lord Monkswell, that I believe the debate which was concerned with the right to buy and the requirement to sell has to be seen in a wider context. Sometimes rights have to be given up for the sake of the responsibility to the whole so that all may have homes in which to live. Therefore, our major concern is the loss of affordable rented accommodation. I do not believe that the issue is about full market value. The issue is whether one can replace in the right places, both in urban and rural areas, housing which is exactly the same as that which one has to sell. It is that major issue that I wish to address.
In 1992 the General Synod passed a motion which called upon the Church Commissioners, parochial church councils, diocesan boards of finance and glebe management committees together to manage their resources to increase the nation's stock of housing at rents affordable to those on low incomes. It was never the intention to provide housing for sale; the aim was to charge rents which could be afforded by those on low incomes. In response to that Synod motion, which was carried by a large majority, several dioceses and the Church Commissioners found ways of making Church land available to housing associations for the development of rented accommodation. There have been 11 dioceses which have involved themselves in those schemes, both in rural and urban areas and from small schemes to large ones.
At present, housing associations, as we have heard, may choose whether or not to confer the right to buy on their tenants, but in future it appears that any accommodation developed with social development grant from the Housing Corporation will have to be available for purchase by tenants.
We are concerned about that, and all the signs are now, since the publication of the White Paper, that at least three dioceses have put a moratorium on providing the land for the creation of rented accommodation, which will be at low levels for those on low incomes. We are concerned that we want, as a Church, to enter into partnership with the society in which we live, and for that partnership to provide that kind of rented accommodation. It is with those concerns that the amendment is put down in my name. I beg to move.
Lord Mackay of Ardbrecknish: The amendment seeks to exempt from the new right properties with any form of restrictive covenant requiring their continued use as affordable housing. I understand the concerns that lie behind the amendment. The right reverend Prelate explained them briefly, and I shall attempt to answer briefly, as he has set a good example to some of the rest of us. It is a problem as regards landowners which my noble friend Lord Hamilton of Dalzell addressed in an earlier debate. I believe that both can reasonably be taken together.
Of course private landowners and the Church have used their glebes, for example, for social housing. The clergy, whether in the Church of England or the Church of Scotland, seem to have decided that part-time farming is no longer something that interests them. They want to dispose of the land in a sensible and excellent way. They wish to ensure that their gift will be of lasting benefit to the community.
I hope that I can assure the Committee, as I have already tried to do, that the fear that the principle behind the gift will be lost is unfounded. The original tenants will continue to live within the community, but as owner occupiers. They will not have to move away in order to fulfil what are quite reasonable and proper aspirations of being home-owners. And, as I tried to explain earlier, the money that the landlord association receives for the property will be re-invested within the area to provide another home for a family in need. That seems to me to be a good outcome to the community. The tenant who

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wishes to buy has the right to buy and can remain. There is then a mixed ownership which I believe everyone agrees is a good thing, but the value of the property, which will include of course the value of the land that has been given, whether it was given by the Church, a charitable organisation or the landowner, will fall to the social landlord who will then have to use that money to provide this other house. Therefore the money, the principle, the kind thought—if I may call it that—will not be lost. It may not be in the same place or the same bricks and mortar as it started out being, but it will be in a nearby place and equally in bricks and mortar.
If we were to exempt any property where a restrictive covenant applied, as the amendment suggests, my fear is that that could effectively undermine the whole scheme. I know that that is not the right reverend Prelate's aim, but such covenants could be applied freely at the discretion of landlords, and could be used as a device to prevent tenants buying. That would be to the detriment of those tenants who would then be deprived of the right to buy.
As I said, I believe that landowners, the Church, and other charitable bodies should have no worries about continuing to give land at a discount, because if the property is sold the tenant will not receive the windfall gain from their generosity. It will be the social landlord who will receive that windfall gain. It is recycled by that association into a replacement property, which means that the benefit for which the land was originally given will continue. I hope that, in view of that explanation, which largely comes within the larger explanation I gave at the beginning, the right reverend prelate will be able to withdraw his amendment, and—much more importantly—his colleagues around the country will feel able to give land in the generous way that they have done.
Baroness Hamwee: I support the amendment. I have no land within my gift but, if I had, or if I had a connection with an organisation that had, I do not think that I would be reassured by that response. The right reverend Prelate began by explaining that the concern of the associations and organisations for which he spoke was with regard to replacement. I do not believe that one can easily say that the property will be replaced; it may be replaced not quite in the same place, but it will not be very far away. We will come on to debates about rural areas and we will also have debates about urban areas, no doubt, later in this Committee. But those who seek to build property know that it is not that easy to find sites for property, particularly sites which may be developed in an environmentally acceptable way, but which are on land that does not require investment in order to get it up to the point at which one can start to develop. I am talking now about brown field sites.
There are a number of issues raised by this. It is late, so I am not going to speak at too much length about them. I hope that we can return to the difficulties of replacement, which I do not believe are anything like as straightforward as the Minister has suggested. He thought that any landlord might impose a restrictive covenant, restricting the use of a property to affordable housing and, in that way, stop it being sold. That seems
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to me to be fairly unlikely, because he would be cutting off his nose to spite his face, as he would not be getting the income. By definition, if it is affordable, then the rent is going to be low.
I am also interested—and it had not occurred to me until the right reverend prelate began to speak—in the relationship between covenants such as are referred to here and the right to buy. Does the covenant become unenforceable because of the legislation? It seems to me that is the case. If that is so, the Government should say so quite directly.
Lord Berkeley: I rise very briefly to support the right reverend prelate in this amendment. I am astounded that a restrictive covenant placed by the Church or some other body on a new potential development for affordable housing can be overturned by anybody coming along and saying that they would like to buy it. It is like compulsory purchase, by any other name; it is appropriation. I am not persuaded that there would be another piece of land or property around the corner which could conveniently be substituted. Life is not quite like that and, as the noble Baroness, Lady Hamwee said, we should come back to this later. It seems to me that this requires much more examination and consideration if people are to continue to covenant land for this very important purpose without the fear that, in two or three years' time, just after the house has been built, it may be sold off to whoever happens to be in there at the time.
The Lord Bishop of Bristol: I thank the Minister for his response. While I accept his explanation about market value, I still do not believe that he has answered the issue about replacement within a community, the availability of land and the possibility of rebuilding. That is one of the major concerns that we have.
I thank those Members of the Committee who have supported me. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hamwee Baroness Hamwee moved Amendment No. 64:
Page 11, line 16, at end insert—
("( ) A registered social landlord may with the approval of the Corporation decline to sell a property which is part of a group of properties with special facilities or support which enables them to cater for vulnerable tenants, and where the sale of individual dwellings might jeopardise the economic viability of the development if—

(a) the dwelling is one of a number located in a block designated as a special need scheme, or

(b) the dwelling is isolated but identifiable as part of a number of dispersed properties which have been together designated as a special need scheme, and where the provision of the support facilities cannot practicably be transferred to another dwelling.").

The noble Baroness said: In moving this amendment, I shall speak also to Amendment No. 80. They are similar.
This amendment seeks to exclude special needs dwellings from the right-to-buy provisions. I believe that in another place the Government expressed sympathy for that approach, understanding that without it, the viability of well-established supported housing

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schemes might be jeopardised. Of course, if the Government are proposing to bring forward their own amendments, I shall be more than happy to withdraw my amendment.
The principle is to exclude homes which are part of special needs schemes where the special supported facilities cannot easily be transferred to other homes. The amendments propose regulation and monitoring by the Housing Corporation to ensure that the exclusion is not abused. The Housing Corporation could, of course, lay down guidelines about the sort of properties which would be covered by the exemption.
It may be that the Minister will suggest that Clause 17 brings in the provisions of Part V of the Housing Act 1985 and that, therefore, this amendment is unnecessary. If that is so, perhaps to pre-empt that I should say that that provision is not sufficient. Since the introduction of the right-to-buy scheme in 1980, special needs housing has become very much more diverse and far more integrated into general needs housing. It requires different definitions from those contained in the original right-to-buy legislation. It is important to exclude self-contained supported housing in the community where lost dwellings would mean loss of revenue and would threaten the viability of a particular scheme. I beg to move.
Lord Williams of Elvel: I support this amendment. It was discussed at some length in another place and I do not wish to rehearse all the arguments. I very much hope that the Government have taken on board the arguments which were put forward in another place. They expressed some sympathy and I hope that that sympathy will be translated into some action in this Chamber.
Lord Mackay of Ardbrecknish: I can go further than merely expressing sympathy. I fully support the purposes behind these amendments. We have already confirmed that we intend to exclude certain supported housing schemes for special needs accommodation from the purchase grant scheme through the regulations, as the noble Baroness, Lady Hamwee, predicted I would say, amending Part V of the Housing Act 1985. We are currently working on the draft wording for that exclusion and we shall be consulting on the regulations in due course.
We believe that neither of these amendments is necessary to achieve the result which we all agree is desirable. It is a difficult drafting problem to define precisely the kind of properties we wish to exclude, as the noble Baroness pointed out when she said that there had been considerable changes to the arrangements which were made. We are agreed that a dwelling in a block that is designated for vulnerable tenants, and which has special facilities and perhaps a resident warden, should be kept out of the scheme. But, generally, we should not wish to deny the right to acquire to tenants just because they need additional support. There is no reason why, for example, an ex-offender who is now working should not be able to buy his home if the support that he has been receiving could equally well be provided to someone with similar
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needs living in another property. Therefore, it perhaps should not be just property-related, as is the sheltered home for the elderly or physically or mentally handicapped.
The current wording of subsection (2) of Clause 17 allows the amending regulations to make other exceptions to the new right to acquire in addition to those already provided for under the traditional right-to-buy. We shall use that power to exclude further special needs dwellings, such as, for example, groups of houses for women who have suffered domestic violence. Part V of the 1985 Act already excludes certain properties for people with mental or physical disabilities and for the elderly.
Before the regulations are finalised, we shall consult widely with housing associations and others to ensure that the new exclusion is both workable and fair. With those assurances, and the suggestion to the noble Baroness that it would be quite difficult to devise on the face of the Bill the kind of all-encompassing exclusions that I am sure she wishes—and, indeed, we certainly wish to see many exclusions in this regard—I hope that she will feel able to withdraw the amendment.
Baroness Hamwee: Clearly it would be churlish not to withdraw the amendment in the light of that assurance. However, can the Minister tell us exactly when "due course" will be? I understand the point that he made regarding the fact that the definitions are difficult; but the very fact that they are so might suggest that it would be better for us to deal with them on the face of the Bill rather than leaving them to regulation, in which case noble Lords would have less input into the final outcome. Can the Minister give us an idea of what he thinks the timetable may be for the consultation and the proposals?
Lord Mackay of Ardbrecknish: I normally hear such argument about secondary legislation from the noble Earl, Lord Russell, who is the noble Baroness's friend. However, in this case, I am sure that the noble Baroness appreciates the complexities of the necessary instruments which we will have to bring forward in order to cover all the exclusions that we want. I am afraid that I cannot tell her what kind of timetable we envisage, but clearly this is one of the things that we want to deal with as soon as we possibly can. To a certain extent it depends on the responses to consultation and how many difficulties are encountered, and, thereafter, how long the whole process takes. Before the legislation can be enacted and the procedure introduced, the necessary negative resolution will need to be placed before both Chambers. As I said, I cannot give the noble Baroness a timetable, but if one is being considered in the back of our minds, I shall write to her on the matter.
Lord Williams of Elvel: The Minister used the words, "before the legislation is enacted". Does he mean before the Bill leaves this Chamber?
Lord Mackay of Ardbrecknish: I am sorry; I must be clear on the matter. Clearly, before the provisions can be brought into effect so that the tenant can have the right-to-buy, the negative resolution in respect of the

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exclusions will have to be approved. Indeed, we cannot have the right-to-buy being exercised before the nature of the exemptions is known.
Baroness Hamwee: I am glad that I have learned something from my noble friend Lord Russell. As I said, it would be inappropriate to pursue the matter at this late hour. Therefore, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 65 and 66 not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 67:
Page 11, line 16. at end insert—
("( ) The right conferred by this section shall not arise where the dwelling is provided in pursuance of the affordable housing policy in a local authority's local plan and is subject to a planning obligation under section 106 of the Town and Country Planning Act 1990.").
The noble Lord said: In moving the above amendment I shall, for the convenience of the Committee, speak also to Amendments Nos. 68, 74 and 76. The proposed amendment would exclude homes from the purchase grant scheme if they had been built specifically to meet local need for affordable housing as required in the local authority's local plan. Such plans are controlled by what are known as Section 106 agreements. I am sure that the Minister is familiar with those agreements and that I shall not have to elaborate at this time of night on what they are because, when informal conversations took place, I mentioned that we would be moving proposals to this effect.
The Government acknowledge the need for affordable housing and Ministers require each local authority to prepare a local development plan—so we are on common ground there. That plan must convey the local authority's plans and objectives for development in the area. Government planning guidance PPG3, issued in 1992, states that,
"a community's need for affordable housing is a material planning consideration which may be taken into account in formulating development plan policies".
Affordable housing is defined as both subsidised housing and low cost market housing.
Therefore it is in line with local authority development plans under the Town and Country Planning Act to build affordable homes. It seems to us that it is appropriate that the Bill should not cover Section 106 housing. This matter was debated in another place and I am sure the Government will have plenty of arguments against it. But it seems to me if the Government do not accept the amendment that I am proposing, they are cutting right across the planning procedure under the Town and Country Planning Act 1990 and the guidance they have given to local authorities. I beg to move.
Baroness Hamwee: I support this amendment with regard to housing provided under a Section 106 agreement. It is too late to spend too long discussing this matter; but I believe that people who have seen the limited benefits of Section 106 feel strongly about it. Planning cannot achieve projects if the resources are not
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there, and affordable housing is more an issue of resources than it is of planning. But nevertheless limited assistance can be given by the use of the section. Local plans and unitary development plans are for the medium and long term. They are subject to local consultation, local discussion and to inquiries. If the Government do not accept an amendment such as this, they will be breaking faith with local people who have contributed to the making of local plans which allow for agreements of this type.
I shall take 30 seconds to share with the Committee a recent experience of a proposal for a development by a housing association where the neighbours were concerned about certain environmental matters, principally parking, and the implications for them as neighbours. The matter was fairly marginal but what swung it and what enabled the neighbours to support the development—it was important that they supported it—was that it fulfilled a socially useful function. It was not just another piece of infill development; it was important, and they saw it as such. They were part of it. These things need to be understood. It is the experience of seeing the reaction of individuals who may not often get involved in this process that is quite telling.
We have talked tonight about the disincentive for future investment in affordable housing. If there is no amendment such as this, it will be impossible to negotiate Section 106 agreements. I cannot see that a developer would be enthusiastic seeing that he might be scuppered by the effects of the Bill.
I now turn to what is quite a long amendment, Amendment No. 68. It proposes the introduction of what I have called a protected area. In a simplified form, it follows a similar amendment proposed in another place by my honourable friend the Member for Christchurch. It proposes local discretion. It is a large topic for this late hour. However, the experience of a local housing authority which sees the effects of a specific policy in its area enables it to have direct involvement and to contribute to the protection of affordable housing. The local authority sees that it is needed because,
"there is substantial unmet demand for affordable housing",
and difficulties in providing replacement dwellings.
The amendment attempts to balance consultation and local input against excessive administration. That was a criticism made in another place. However, the important point concerns local flexibility and the opportunity for local assessment of local needs.
Baroness Gardner of Parkes: The noble Lord, Lord Williams, said that we all know what a 106 agreement is. I am not clear. When my noble friend replies, perhaps he will clarify that point. Does such an agreement permit the building of social housing in a green belt area? My noble friend Lord Hamilton referred to a gift of land. Is a gift of land provided at a reduced price covered by a 106 agreement? I should like to be clear exactly what we are referring to.
Lord Mackay of Ardbrecknish: I have explained this point a few times in the past few moments. I do so again because I believe that it is the basis of the policy that the Government put forward. In this way it differs

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from the traditional right to buy which the Government put on to the statute books in the early 1980s and which has proved to be so successful.
As regards social landlords, when a tenant buys he has to pay the full market value less the discount. Therefore, the social landlord receives from the tenant the full market value less the discount. He then receives that discount from the government grant. The landlord association, therefore, receives the full market value. After any private loans are settled—we shall discuss this, I believe, next week—the balance will be set aside and used to buy or build other property for social renting. These replacements can be used to help other families in housing need.
Hence I do not accept the need for Amendment No. 74 in the name of the noble Lord, Lord Williams, which would allow a power to designate "other" areas as well as rural ones where the new right would not apply. I think that this amendment seeks to address concerns about areas where it would be more expensive to acquire replacement properties such as inner city areas. But in such areas the market value received by the landlord, and the funds therefore available for replacement property will also be correspondingly higher.
The exclusion proposed in Amendments Nos. 67 and 76 could apply widely in both non-exempt rural areas and urban areas. We have agreed—we shall debate the issue at the beginning of the next Committee day—to exclude small rural villages because of the particular difficulties there could be in replacing properties. The supply of land is limited, and there is little scope to buy an existing property in a small village. I have no doubt that we shall discuss that issue on the next Committee day.
However, I do not agree that in larger rural towns and villages the new right needs to be constrained in the way suggested in the two amendments. By using recycled sale proceeds, associations can build or buy replacements on the open market. The social stock therefore should not be reduced over time. The Government endorse the use of planning mechanisms and Section 106 planning agreements to assist in the provision of affordable housing. To try to help my noble friend Lady Gardner, perhaps I may explain that local authorities have wide powers to impose Section 106 agreements in both rural and urban areas. An exclusion could apply widely to the detriment of many tenants who would be deprived of the right to buy their own homes.
An exclusion would be difficult to define in law because a wide range of conditions can be secured using a Section 106 agreement relating to many other factors than affordable housing criteria. Planning guidance states that a Section 106 agreement should not normally be used to control tenure. It may commonly limit occupancy to people with a local connection. But tenure is not normally a concern of the planning process.
To return to the concern that I understand, I believe that our endorsement of the use of Section 106 planning agreements to assist in the provision of affordable
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housing is fully consistent with extending home ownership through this new right to buy and with landlords recycling the sale proceeds for the continued benefit of the local community.
Amendment No. 68 in the name of the noble Baroness would give local authorities the power to designate protected areas. Exclusions from this new right need to be as clear, straightforward and simple as possible. Tenants, landlords and landowners need to understand them clearly. Exclusions need to be fair and they need to be straightforward to administer. The amendment proposed by the noble Baroness would be a bureaucratic nightmare. As local authorities would have the power to decide on designations, there is every likelihood that designations would be applied very inconsistently across the country by different authorities. This cannot be fair to tenants. The designations will need to be continually revisited. They might be reviewed as frequently as every two years and must be reviewed at least every seven years.
We have heard much about the degree of certainty that landowners and others wish to see in exclusions. How can they be reassured by a measure which would introduce so much uncertainty? Our proposed rural designations, which we will come to, will clearly identify the areas where building or buying replacement homes can be particularly difficult. A simple guideline criterion of a population threshold is applied, with provision for special cases. It will not need continual revision. That is the best way to deal with the problem so that a uniform test is applied throughout England and a slightly different uniform test is applied in Wales. With those assurances and explanations of how we see the system operating, I hope that noble Lords and the noble Baroness will feel able to withdraw their amendments.
Baroness Hamwee: Without wanting to go through my proposed Amendment No. 68 line by line, I understand the need for certainty and to some extent for uniformity, but the problem is not uniform. I dare say we will come back to mechanisms for assessing where there should be exclusions. As I said earlier, it is not to do with excluding the right to buy so much as assuring the supply of affordable housing.
In defence of local planning authorities which negotiate Section 106 agreements, without going into the detail of how they operate, perhaps the Minister will allow me to put on record his agreement, if only by a nod, that a Section 106 agreement is an agreement. It is not something which is imposed. I am looking hopefully at him.
Lord Mackay of Ardbrecknish: A Section 106 agreement is a planning agreement. It is what it says.
Baroness Hamwee: The Minister used the term "imposed". I should not like the world to think that we were talking about impositions of such sensitive matters.
Lord Williams of Elvel: I confess that I find the Minister's response rather disappointing. I thought that the Government were open to using the planning system in order to increase the supply of affordable housing.

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That is done at the moment through the procedure of Section 106 agreements by which the use or development of land requiring a certain number of spaces for this, that or the other is authorised for building so long as there is a certain section for affordable housing.
If the Government have now decided that they do not wish to use the planning procedure in order to increase the supply of affordable housing, they ought to come up front and say so. At this hour of the night it is too late for this sort of argument. We shall return to the matter at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 16, as amended, shall stand part of the Bill?
Lord Berkeley: I shall not detain the Committee too long at this hour. Our discussions over the past two hours or so have indicated a major concern about the supply of affordable housing. This clause allows associations to sell off houses to tenants to whom government subsidy is given. There is no obligation on the associations to purchase or build new stock in the same area; and there is no assurance, as we have just heard in relation to planning, that land is available. The Government seem a little unsure about how much affordable housing for rent should be provided.
A Department of the Environment memorandum dated 17th May 1995 suggests that a range of between 60,000 and 100,000 new social homes a year are needed; but the expenditure plan targets the lower end of the scale. That is no great surprise.
A report by the Environment Select Committee in another place published in February 1996 states that,
"The lower end of the range of the Government's estimate of the need for social housing is below all the estimates produced by respected organisations and academics".
At a conference yesterday (I quote from the Independent, as a previous speaker quoted from the Telegraph) the Secretary of State for the Environment said that there was a need for 4.4 million new homes in 20 years' time. He said that that was in general largely due to the greater increase in single occupancy. He said that 80 per cent. of the new homes (3.5 million) would be for single occupancy. That leaves only 900,000 homes with more than one person in them over 20 years.
As we have already heard, the Housing Corporation encourages full occupation of social housing. Therefore we must assume that the 900,000 quoted by Mr. Gummer is yet a further reduction in the number of affordable houses. By my calculation that brings the figure down to 45,000 a year, less than half the figure quoted by the Select Committee.
Do the Government have a plan as to where these affordable houses should be built? One hopes that it will be where the need is, because targets are going down and down—120,000 to 55,000 new lettings in just a year. That is an extraordinary reduction in the likely market.
I am forced to conclude that the Government are tending towards a feeling that homelessness is self-inflicted. I almost mentioned this at Second
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Reading. Perhaps there is something in this. There is a will to provide only the minimum in affordable housing. The targets are halved in a year and there does not seem to be any plan for where the 55,000 will go.
This clause seems certain to reduce significantly the supply of affordable housing, for whatever reason. I genuinely support the right to buy; but I believe that the provision of an equal and increasing number of affordable rented houses is an essential prerequisite before selling off the present stock. I am afraid I am not persuaded that the clause as it stands will achieve any of those objectives.
Baroness Gardner of Parkes: The same fallacy arose in the remarks that we just heard as seems always to exist. People imagine that, because someone owns a house, it has suddenly vanished and is no longer there as a dwelling—whereas, whether it is rented or owned, it is still the same house and is still there. We may be talking about the need for more houses, but the fact that they will be sold will not make those houses that exist vanish.
Lord Mackay of Ardbrecknish: I also read the speech yesterday of my right honourable friend Mr. Gummer, in which he looked forward to the year 2020 and the likely growth in the number of households in the UK. I may have read the speech rather hurriedly, but I did not get the impression that the figure was 4.4 million households which all needed social housing. Quite the contrary, that was the total extra that may be needed because of the number of households coming about for a number of reasons. The figure always strikes one as odd in a fairly static population. But there are considerable social factors involved which mean that more and more people wish to live on their own and not in the more traditional family arrangement. However, that is a very much larger debate and I do not want to begin it.
This clause, which the noble Lord has decided to oppose, is the very centre of the way in which we wish to give tenants in the social housing sphere the right to buy, the same right to buy that we gave in the early 1980s to council tenants. If I were to look up the speeches that I gave in the other place during the Committee stage of the first Tenants' Rights (Scotland) Act, I should then have been countering what I fear are exactly the same arguments this evening; namely, that suddenly the housing disappears, as my noble friend said. There are not great gaps in the council estates around the country where people have bought their houses. There are houses there which are still occupied by people. That is the fundamentally important thing.
The Government's right-to-buy policy has helped over a million families in England. Indeed, without going on for too long at this time of night, I say to the noble Lord, Lord Berkeley, that if he checks, he will find that it is the policy of his party to continue the right-to-buy policies. So he will have to be careful when he opposes Clause 16 of the Bill. We are trying to extend the right that council tenants have had to the tenants of housing associations and tenants of the new social landlord. We believe that those tenants should

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have the same kind of rights to buy as their brothers, sisters and cousins who live in council houses. I am sorry that perhaps the noble Lord disagrees with that, but that is the position. We are quite prepared—we had quite a long discussion about the matter—to accept that there have to be exclusions. We have already discussed them and I had hoped that that might have helped the noble Lord a little.
The noble Lord seemed to suggest that anyone in social housing who wishes to buy his own home has to move out and buy in the open market. In fact, the new purchase grant scheme addresses the housing associations' concerns; namely, that they tend to lose the more economically active tenants if that happens. It is important that we try—and we have succeeded in many council estates—to get a better mix of tenancy and owner-occupation. That is to everyone's advantage. We want to help tenants to buy on that open market. Indeed, the successful tenants' incentive scheme has helped over 22,000 tenants since 1990 to buy privately.
As I tried to explain, we give as much importance to the need for social housing as does the noble Lord. But we believe that we can marry together the two principles: the principle that the tenant ought to have the right to buy and the principle that the social landlords ought to be able to keep up their rented stock. That is why the tenants' discount is funded by government grant, ensuring that the landlord selling receives the full market price and, once he has settled any private loans,
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the balance can be set aside and used either to buy an existing property or build new property for further social renting. That is an important aspect.
We shall discuss the problem of rural areas, small rural villages and sparsely populated areas on the next Committee day. I believe that our proposals there ought to satisfy anybody who is concerned about these matters. I hope that with the discussions we have had the noble Lord will see that we take seriously the need to preserve social housing and keep it going. But equally we believe that tenants in social housing have that right to buy. With those remarks, I hope that the noble Lord will be able to withdraw his objection to the clause.
Lord Berkeley: I am grateful to the Minister for his reply. When I referred to 4.4 million new houses there was no question of saying that they should all be affordable or were affordable. I am not against the right to buy. I support it fully. My concern is that there should be no reduction in the amount of affordable houses for those people who will still need them. New people will need affordable houses but cannot afford to buy just yet. The stock should be there and should be increased.
Clause 16, as amended, agreed to.
Lord Lucas: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
House adjourned at twenty-six minutes past eleven o'clock.