HL Deb 06 June 1996 vol 572 cc1434-80

8.15 p.m.

House again in Committee on Schedule 1.

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 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 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 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 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 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 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 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 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 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 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", 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 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 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.

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 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 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 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 moved Amendment No. 57: Page 7, line 28, leave out ("written").

On Question, amendment agreed to.

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 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 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.

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 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 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 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 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 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 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.

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.

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 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 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 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 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 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 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.

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 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 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 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 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 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 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 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 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—

  1. (a) the dwelling is one of a number located in a block designated as a special need scheme, or
  2. (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 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 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 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 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 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 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 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. 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 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 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, 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.