Lords Sitting of 11 June 1996

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Bishop of Worcester.

The Lord Chancellor: Leave of Absence
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, before the commencement of Business, I take the opportunity to inform the House that I am to undertake a long-standing engagement to address the Windmill Business Group in Lytham St Annes on Friday 14th June. Accordingly, I trust that the House will agree to grant me leave of absence on Friday 14th June.

War Crimes: Investigations
2.37 p.m.
Lord Mayhew Lord Mayhew asked Her Majesty's Government:
How many suspected war criminals were identified by the Hetherington-Chalmers inquiry in 1988; and how many suspects are now under police investigation.
The Lord Chancellor: My Lords, the Hetherington-Chalmers inquiry identified 301 cases. Of those original 301 allegations, six remain under investigation by the Metropolitan Police. Three other cases that subsequently came to the attention of the Metropolitan Police also remain under investigation. In addition, proceedings have commenced in one case.
Lord Mayhew: My Lords, is the noble and learned Lord aware that this demonstrates a very long and drawn out process? Does he recall that, after the war, some 200 war criminals were sentenced to death by British courts, thousands were sentenced to imprisonment and that in 1948, with general consent, prosecutions ended? Will he say what we are gaining today, 48 years later, in this long, drawn out attempt to start the trials again? Will the noble and learned Lord bear in mind that attempts to bring suspects to trial have now been abandoned in Scotland? Would it not be sensible to follow suit in the rest of the United Kingdom?
The Lord Chancellor: My Lords, my understanding is that as regards Scotland, my noble and learned friend the Lord Advocate decided that, in the light of the investigations that had been carried out there, it was not right to instigate any prosecutions. The noble Lord asked the fundamental question to which the attention of Parliament was directed when the legislation on which these investigations are based was passed into law. I well understand the noble Lord's feelings about
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that. I believe that he expressed them eloquently at the time, but the views of another place ultimately prevailed.
Lord Campbell of Croy: My Lords—
Lord Campbell of Alloway: My Lords—
Lord Campbell of Croy: My Lords, this Campbell is coming first!
Noble Lords: Order!
The Lord Privy Seal (Viscount Cranborne): My Lords, far be it from me to intervene in inter-tribal matters. Perhaps the noble Lord, Lord Campbell of Croy, may speak first. I am sure that we shall have time for his clansman in due course.
Lord Campbell of Croy: My Lords, I am grateful. Does my noble and learned friend know why war crimes legislation was not enacted in this country in 1948, when the international tribunal at Nuremberg was closed down, since that tribunal tried only the major figures, including Goering and Hess, and the British courts, which have just been mentioned, were military government courts in Germany? The noble Lord, Lord Mayhew, may know the answer because he was a Minister at the Foreign Office at the time. Other countries have been prosecuting in their own courts ever since. Have not any war criminals, who entered this country after the war disguised among the many thousands of refugees, been able to enjoy immunity? Now, nearly 50 years later, is it not very difficult to find conclusive evidence?
The Lord Chancellor: My Lords, some of your Lordships are much better equipped than I to know what the position was in 1948. My understanding is that on the information available at that time, it was believed that no war criminal had entered the United Kingdom, and that it was unlikely that sanctuary would be sought in the United Kingdom as one of the victorious nations. That being the belief at the time, there was no requirement to extend jurisdiction for murder committed outside the United Kingdom by persons who had entered the United Kingdom from Germany or German-occupied territory and who were then citizens or resident within the United Kingdom. Of course, there are difficulties inherent in the passage of time; but these are matters that have to be dealt with on an individual basis as regards the instigation of prosecutions.
Baroness Mallalieu: My Lords, perhaps I may trouble the noble and learned Lord to give a rather more detailed progress report? In May last year we were told that 13 cases were under investigation and that seven cases had been reported by the police to the Director of Public Prosecutions. Will the noble and learned Lord be good enough to tell the House, first, whether there have been any new cases in which investigation has started since then; secondly, of the 21 cases that we were told

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about last year, how many have been resolved and how many are still outstanding? Of those that have been resolved, are any to result in prosecution?
The Lord Chancellor: My Lords, as I said in my original Answer, my understanding is that there are nine cases under investigation by the Metropolitan Police about which decisions have not yet been reached by the prosecuting authorities. As I understand the position, the only case where such a decision has been taken in favour of prosecution is where that has commenced. So if the noble Baroness will subtract these figures from those that she had on the last occasion, I believe that she will find where it has been decided not to carry investigations further or not to instigate prosecutions.
Lord Campbell of Alloway: My Lords, can my noble and learned friend confirm that, according to his two Written Answers, the continuation of these investigations is an operational matter for the police, who never close the file on a murder inquiry? Does that mean that as long as these men may live the investigations shall continue? If so, compared with the sane approach north of the Border where investigations were ended some years ago, is this considered satisfactory?
The Lord Chancellor: My Lords, the point at which investigations are concluded is a matter for the police. Once investigations are concluded, a decision whether or not to prosecute will be taken. The question of files remaining open indefinitely is perhaps not to the point. The practical question is when the investigations are completed. My understanding so far as concerns Scotland is that such investigations as were required were completed and my noble and learned friend the Lord Advocate was able to take a decision. In respect of England and Wales, the Director of Public Prosecutions will take decisions as and when the investigations are completed. One decision in favour of instigating a prosecution has been taken. The committal proceedings have been held and the accused has been committed for trial.
Lord Renton: My Lords, what has been the cost to the taxpayer up to now of this long-delayed and mostly unproductive exercise?
The Lord Chancellor: My Lords, my recollection is that the cost to the Metropolitan Police is in the order of £6 million. When one thinks of the nature and complexity of the investigations, it is perhaps not surprising that such a figure should be involved. My noble friend says that the investigations are largely unproductive. In a sense, any investigation which does not lead to a prosecution by the prosecuting authorities or the police is of that character. On the other hand, part of the system of justice is that matters in respect of which there is an allegation should be investigated appropriately. To that extent, the expenditure is productive; namely, it is used to carry out a proper investigation of matters which are subject to the jurisdiction of the courts under the Act of Parliament.
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For the same period, expenditure by the Crown Prosecution Service stood at approximately £1.8 million.
Noble Lords: Order!
Viscount Cranborne: My Lords, I know that this is a matter of great interest to your Lordships' House, particularly in view of the history. I am mindful of the fact that, in view of the final Question today, your Lordships will require full answers upon it. I am in your Lordships' hands, but your Lordships may feel that perhaps the time has come to move on.

Gulf War Medical Information: Disclosure
2.45 p.m.
The Countess of Mar The Countess of Mar asked Her Majesty's Government:
Whether they consider that the strict application of the Official Secrets Act takes precedence over the disclosure of information which would assist in the diagnosis of the health problems reported by members of the Armed Forces who were involved in Operation Granby.
The Parliamentary Under-Secretary of State, Ministry of Defence (Earl Howe): My Lords, no. It is our practice to release available information which would assist in the treatment of health problems experienced by members of the Armed Forces who served in Operation Granby. Clearly it is important that relevant information is made available to medical practitioners for their professional use.
The Countess of Mar: My Lords, I am grateful to the noble Earl for his reply. Is he aware that witnesses who gave evidence to the Defence Committee in another place stated that they had been prevented from making a proper investigation of their ill-health by the threatened imposition of the Official Secrets Act? I have received letters from individuals who served in the forces and who say the same. Can the noble Earl say what is to be done about the allegations within the Ministry of Defence—of which I know he is aware—that up to 10,000 medical incidents have been "removed, lost or corrupted" from Ministry of Defence computers, and that these events relate to health problems from the Gulf War? Will the noble Earl instigate a ministerial inquiry without prejudice to the person who reported this matter?
Earl Howe: My Lords, I will gladly look into the matters raised by the noble Countess, as I always try to do. With reference to the evidence given to the Defence Select Committee, we have consistently released information about what treatment was administered to individuals on a need-to-know basis. Therefore, doctors and GPs have had access to the information. It is not true to say, however, that even where, let us suppose, medical records have been mislaid a Gulf War soldier has no access to the

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necessary information. All personnel should be in possession of an individual immunisation card. When he leaves the service he receives a summary of his medical record and an address to which his GP can apply for further information. The mechanisms are in place for release of all the necessary information.
Lord Williams of Elvel: My Lords, in responding to the noble Countess's Question, the Minister started by saying no. Looking at the Question, is the answer not yes? The strict application of the Official Secrets Act takes precedence over anything which is an official secret. Is that not right? The question therefore resolves itself into whether the material about which the noble Countess is talking is or is not an official secret. That, I imagine, is something that should be tested sooner or later in the courts. Does the Minister agree?
Earl Howe: My Lords, as I made clear to the noble Countess a moment ago, what we have consistently tried to do is to release information to specific individuals on a need-to-know basis. That is a common procedure. On the other hand, what we have sought to avoid is to broadcast to the world at large what is our anti-nerve agent capability. I am sure the noble Lord would agree that would not be a sensible thing to do. I believe that the course we have taken is the right one.
Lord Monkswell: My Lords, in an earlier answer, the Minister mentioned the fact that relevant information would be made available. Will he advise the House who will judge whether or not the information is relevant? Will it be the person's general medical practitioner who will determine what is and what is not relevant?
Earl Howe: My Lords, full details of what was administered to a specific serviceman would be released to his or her GP. Alternatively it is open to servicemen and servicewomen, or ex-servicemen and ex-servicewomen, to come forward to be assessed by the medical assessment programme run by the MOD. In that event there would obviously be no question of anyone determining what was or what was not relevant. The key point however is that there is no reason for any GP to be in doubt about what was administered to a particular individual.
Lord Burnham: My Lords, in an article about the noble Countess in the Mail on Sunday there was much play on the use of chemical weapons in the Gulf, which I have no doubt largely gives rise to her Question. Has not the work of Senator Riegel and Mr. Tuite, who were mentioned in the article, and of the Czech medical teams in the Gulf been largely discredited? Have the Government any information as to whether there are any changes so that allegations of the use of chemical weapons can be in any way substantiated?
Earl Howe: My Lords, I am grateful to my noble friend. Let me make it clear that we have no confirmed reports of any Iraqi biological or chemical agents being present in the Gulf theatre of operations. Claims of Iraqi chemical attacks and chemical agents dispersed by Allied bombing have been found on investigation to have no basis in fact. There were some earlier Czech
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reports of positive chemical agent readings, but those have not been subsequently confirmed by the US authorities.

Housing Benefit
2.53 p.m.
Lord Stallard asked Her Majesty's Government:
Whether they intend to introduce changes to housing benefit following recent court cases which found against the Department of Social Security.
The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, we await the Social Security Advisory Committee report on proposed legislation which would ensure that, as a general rule, housing benefit only meets charges for those services which relate to the fabric of the dwelling. The proposal was introduced after a commissioner's decision in an income support case cast some doubt on the meaning of current case law. It would be wrong to prejudge consultation.
Lord Stallard: My Lords, I am grateful to the Minister for that reply. Is he aware that the existing rules regarding eligible and non-eligible services are complex, as demonstrated by the court case he has just mentioned? Is he aware of the concern caused to voluntary organisations and housing associations responsible for the care and attention of elderly people by the fact that the latest proposals are capable of being interpreted as implying that many of the services associated with the management of residential accommodation should be withdrawn, leading to the possibility that some residents would be asked to find a further £20 to £50 per week to fund the shortfall in housing benefit? Surely it would have been far better to have awaited the outcome of consultations with the voluntary organisations and housing associations before making the recommendation.
Lord Mackay of Ardbrecknish: My Lords, we are awaiting the outcome of consultation on the SSAC report. The SSAC has been out to consultation and will give us a report on our proposals to clarify the legislation. The noble Lord is right to mention the complexity in this area. It is complex. The position is that we now have two cases, one recently from Commissioner Mesher and the north Cornwall judgment three years ago, which appear to be pulling in two different directions. It is clearly in everyone's interests, including our own in the DSS, to clarify the position regarding the legality of the payments we make.
Baroness Hollis of Heigham: My Lords, were not schemes such as Abbeyfield developed precisely because the frail elderly need not just accommodation but communal and warden facilities? Housing benefit has paid for almost all of that. If the Government's proposals to cut housing benefit go through so that housing benefit does not cover the cost of heating, lighting and cleaning of corridors, lifts and communal rooms in a sheltered housing scheme, or does not cover

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the full cost of warden services, what then? Who will make up the shortfall of £30 or £50 a week if the Government will not, and the tenant and the housing association cannot? What will happen? Will we see 85 year-olds evicted because they cannot meet their bills in Abbeyfield?
Lord Mackay of Ardbrecknish: My Lords, the noble Baroness has, as usual, hugely overstated her case. There is no doubt that the facilities she mentioned and the communal areas—the lifts, corridors, and so forth—clearly fall within the scope of housing benefit. It is necessary to draw a line between what services can be met by housing benefit, which is designed to meet housing costs and the related service charges which go with housing costs, and those other services which have more to do with the personal day-to-day care of the people involved. That is a difficult line. I do not think that it does anyone any good for the noble Baroness to exaggerate.
Earl Russell: My Lords, the Minister will, I am sure, agree that the cost of services for people in sheltered housing who cannot perform those services for themselves has to fall somewhere. Will he therefore give the House an undertaking that he will not shift those costs out of social security until he has reached agreement with the Department of Health and the Department of the Environment about what is the most cost-effective way of meeting those costs from public funds as a whole?
Lord Mackay of Ardbrecknish: My Lords, we are looking carefully at the issue. Indeed, my officials met the leaders of the Abbeyfield Society yesterday in St. Albans to discuss all these matters. As I said, we shall wait for the report of the SSAC. Officials and Ministers will be discussing with their colleagues how we should proceed with this difficulty.
Lord Stallard: My Lords, the Minister has not really answered the questions we have asked. The court cases he mentioned were many months ago, and some many years ago. Why is it taking so long to bring forward this set of proposals? Is it not a possibility that the recent universal support for the Government's proposals to increase the disregard for residential accommodation from £3,000 to £10,000 means that people now feel that an attempt is being made to recoup some of that money by cutting the housing benefit? Would that not be just another cynical case of paying with the one hand and taking back with the other?
Lord Mackay of Ardbrecknish: My Lords, the noble Lord has a very unworthy thought. The position came about because three years ago the north Cornwall judgment pulled in one direction, defining these issues rather tightly, while last year Commissioner Mesher defined them in a rather more relaxed fashion. That has led to considerable doubt about the propriety of some of the payments of housing benefit which the DSS is making. We have an obligation to the public purse, the National Audit Office and everyone else to ensure that the payments we make have proper legal backing. We
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are looking at the matter very seriously. I can assure the noble Lord that we are well aware of the importance of organisations like Abbeyfield. We wish to do nothing that would destabilise them.

Recruitment and Assessment Services
3 p.m.
Lord Taylor of Gryfe Lord Taylor of Gryfe asked the Leader of the House:
In view of the decision of the House on Friday 8th March, whether Her Majesty's Government will delay the sale of Recruitment and Assessment Services (RAS) until after the Select Committee on the Public Service has reported on the subject.
Viscount Cranborne: My Lords, completion of the sale has already been postponed from July to September, which will allow the Select Committee an opportunity to report to the House, and the Government to respond, before the sale is completed.
Lord Taylor of Gryfe: My Lords, will the Minister recall the debate which took place in this House on 8th March, instigated by the noble Lord, Lord Bancroft, from the Cross-Benches and supported by Members in all parts of the House, resulting in a vote of 124 to 64 on a Friday afternoon rejecting the Government's proposals to privatise the RAS? A committee was appointed to look at the principle of the proposal and to report back to this House. Since then the Government have proceeded with the privatisation of the RAS. Does that not represent a contempt of this House, since we shall be in no position to report on the matter and to influence the Government's decisions? Will the Minister explain what is the urgency on this matter, which has not been demanded or supported in this House or in the Civil Service?
Viscount Cranborne: My Lords, of course, I remember as though it were yesterday not only the debate in your Lordships' House but the resulting vote to which the noble Lord referred. I also remember the suggestion from all parts of your Lordships' House in the wake of the vote in this House that the matter would be a suitable first subject for discussion by the Select Committee, of which the noble Lord is such an ornament. That suggestion was very much subscribed to not only by the noble Lord, Lord Richard, but also by the noble Lord, Lord Jenkins, among other distinguished Members of your Lordships' House. It was thought sensible that that committee should be enabled to report to your Lordships' House in the form of an interim report, should it so desire, before the Summer Recess, which would enable the Government to take careful note of what was in that report, and if therefore there appeared to be by implication any suggestion which would make—if I may put it in the vernacular—a show-stopper to the project for privatisation, the Government could take note and act.

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Therefore it is sensible for the Government to have delayed their original programme of privatisation from July to September, and for the Government to be able to give careful consideration to the Select Committee's interim report, assuming that it reports on time. In view of the uncertainty, particularly for the employees of the RAS, it is perfectly sensible in that respect to continue with the mechanics of privatisation up to the point when the final decision can be taken, but the private and final decision need not and will not be taken until the Select Committee concerned reports, assuming that it maintains its projected timetable.
Lord Jenkins of Hillhead: My Lords, is the noble Viscount aware that when, following that overwhelming and decisive vote and an almost unanimous debate in your Lordships' House, he had to deal with the matter subsequently many of us thought that he did so with great courtesy relating to the setting up and composition of the Select Committee? However, if we are now in effect to be told that the decision is pre-empted, I am afraid to say that our sense of courtesy will evaporate quickly.
Is the noble Viscount saying that the decision has been taken independently of what your Lordships' Select Committee says to privatise in September? If so, it makes a mockery of the work of that Select Committee, and I believe that it is a contempt of your Lordships' House. If, on the other hand, the Government are willing to consider the position, following the report of the Select Committee, it seems to me that September is too short a timetable. It should be when this House returns—which we hope will not be the case in September—and it ought to be done in the autumn, if it is to be done at all, after due consideration of what the Select Committee says.
Viscount Cranborne: My Lords, I hope that the noble Lord knows me well enough by now at least to assume that it would take something which is quite out of my own nature to presume to treat your Lordships' House with contempt. I have to say to the noble Lord that, in view of, admittedly, the minority but nevertheless a substantial number of votes in favour of the Government's proposals, his view of what constitutes "almost unanimous" and mine seem to differ in almost every material respect. I have to say to the noble Lord that there were a considerable number of votes in favour of what the Government proposed.
The decision is not pre-empted. I gave an undertaking, as the noble Lord perfectly clearly says, that the Government would consider carefully what was said in the debate and the views expressed. It seemed perhaps, if I may presume to say so, doubly courteous on the part of the Government to undertake to delay any reaction—a reaction that I undertook to give—until the Select Committee had given its interim report—
Lord Richard: Two minutes to go!
Viscount Cranborne: Of course we shall do so; and if the committee sticks to its timetable, the Government should have time to give a considered opinion before the House rises for the Summer Recess.
Lord Bancroft: My Lords, we are of course immensely grateful to the noble Viscount for his
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courteous reply; but it does not go nearly far enough. Is he not aware that I have been rubbing shoulders with governments for 50 years—sometimes very intimately? I have to say that I have never before encountered a government who have conducted themselves with such impatient guile—and I choose my words carefully—and such lack of attention to the requirements of good faith on a matter affecting the public service, which would normally be resolved by consensus.
Is it yet too late for the noble Viscount, whose integrity we utterly respect, to persuade the more feverish of his colleagues that, "quiet, calm deliberation disentangles every knot"—a quotation much favoured by a former Conservative Prime Minister?
Viscount Cranborne: My Lords, I defer to no one in my admiration for the guile that has been displayed by the noble Lord himself in this matter. I would merely emphasise, in view of the remarks that I have already made, that the Government have bent over backwards to accommodate the requests of your Lordships' House in acceding with enthusiasm to the request that the matter should be considered by the Select Committee and, indeed, acceding with enthusiasm to the requests by the Shadow Chancellor of the Duchy in another place—I quote his letter of 12th March 1996—that my right honourable friend Mr. Roger Freeman should:
"now bring the matter to the House of Commons so that the House can come to a view".
We bent over backwards to do that and it is perfectly open to the Select Committee to come to a decision. If the Government agree that this matter should be either pulled or postponed, we shall have an opportunity to respond before the House rises. I can think of nothing which would support in that rigmarole any of the accusations which the noble Lord has made.

Nursery Education and Grant-Maintained Schools Bill
3.10 p.m.
The Minister of State, Department for Education and Employment (Lord Henley): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That it be an instruction to the Committee of the Whole House to whom the Nursery Education and Grant-Maintained Schools Bill has been committed that they consider the Bill in the following order—

Clauses 1 to 4,

Schedule 1,

Clause 5,

Schedule 2,

Clauses 6 to 9,

Schedules 3 and 4,

Clause 10.—(Lord Henley.)

On Question, Motion agreed to.

Party Wall etc. Bill [H.L.]
Lord Strathclyde: My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Party Wall etc. Bill, have consented to place their prerogatives and interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
Bill read a third time.
The Earl of Lytton: My Lords, I beg to move that this Bill do now pass.
It is customary at this stage of the Bill to make some comments about those who have been of great assistance. I should like to do so very briefly.
First, I express my appreciation for the support that I have received in this House. I particularly valued the support from the Opposition Benches and from the noble Lord, Lord Dubs. I thank the Opposition Chief Whip who sat patiently through the Committee stage; I am extremely grateful to him. I am grateful for the expressions of support which I received from the noble Baroness, Lady Hamwee, and from my fellow chartered surveyor the noble Earl, Lord Kinnoull. I should like to express my sincere thanks to the Minister, the noble Lord, Lord Lucas, for his support and wise counsel.
Through the Minister, I should like to thank the officials of the Department of the Environment, in particular Mr. Paul Everall, Caroline Cousins, Mr. Ian Day and Mr. Andrew Viner of the legal section of the department. My thanks are also due to parliamentary counsel for his input.
I pay tribute to the officers of this House and in particular to the Public Bill Office for its advice and assistance in my novitiate in taking this Bill through your Lordships' House. I thank the Government Whips' Office for its help at all times. I thank also the staff of the Library who have dug up for me arcane documents and references. I am grateful for the support and advice of the Pyramus and Thisbe Club, which is a body of practitioners in party wall matters which has devoted time and energy to giving advice on the Bill.
This Bill goes to another place with all-party support. It has the support of many bodies outside the House—the Construction Industry Council, the Royal Institute of British Architects, the British Property Federation, the Architects and Surveyors Institute, the Incorporated Society of Valuers and Auctioneers and my own professional body, which is the Royal Institution of Chartered Surveyors. I have received many unsolicited letters of support from private individuals and professionals, and the number of articles expressing support in professional journals as well as the national press convince me that the tried and tested provisions of the London Building Acts, which this Bill seeks to emulate, will indeed be of lasting net benefit to the rest of England and Wales.
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Moved, That the Bill do now pass.—(The Earl of Lytton.)
On Question, Bill passed, and sent to the Commons.

European Communities (Definition of Treaties) (The Energy Charter Treaty) Order 1996
3.13 p.m.
Baroness Miller of Hendon Baroness Miller of Hendon rose to move, That the draft order laid before the House on 20th May be approved [21st Report from the Joint Committee].
The noble Baroness said: My Lords, this order relates to the Energy Charter Treaty which was signed by the United Kingdom and 42 other parties (50 by the closing date), including the European Community and all member states, in December 1994. The order specifies the treaty as a European treaty under Section 1(3) of the European Communities Act 1972.
The concept of an energy charter—a political declaration to encourage investment and trade in energy—was conceived in 1990 as a response to the need for economic recovery in the then Soviet Union and Central and Eastern Europe. The charter was signed in December 1991. The treaty text, which gives legal effect to most of the provisions of the charter, was completed in summer 1994 and signed in Lisbon in December that year. I commend the order to the House. I beg to move.
Moved, That the draft order laid before the House on 20th May be approved [21st Report from the Joint Committee].—(Baroness Miller of Hendon.)
Lord Bruce of Donington: My Lords, I am most obliged to the noble Baroness for outlining the provisions of this order. Will she tell the House why it has taken 18 months for a comparatively simple treaty, as I understand it, to reach this particular stage?
In view of a certain amount of dubiety as to whether or not Ministers read treaties, will she assure the House that this treaty went before the Cabinet and was approved by a Minister who is willing to acknowledge that he or she, as the case may be, has read it?
Further, will the noble Baroness tell the House what benefits the Government anticipate as a result of entering into this particular commitment on behalf of the United Kingdom and the likely costs which may conceivably result from incorporating it into Community legislation?
Baroness Miller of Hendon: My Lords, I am unable to tell the noble Lord why this matter has taken so long to reach this stage. I must say that I thought that the first time that the noble Lord, Lord Bruce, asked me a question it would be on a matter which contained the word "European". I imagine that it took a long time because it had to be given extremely careful consideration. I cannot give the noble Lord an assurance that every single word in the treaty was read by everybody because I have not asked Cabinet Ministers whether or not they have read the treaty. I can assure the noble Lord that I certainly read my briefing extremely carefully.

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There will be definite advantages in due course arising from this order, not only with regard to energy but also with regard to trade generally. I am not sure about the benefits which it will bring but everybody is of the view that the provisions of the order will be extremely beneficial.
Lord Thomson of Monifieth: My Lords, before the noble Baroness sits down, perhaps I may remind her that when we discussed a treaty which was before the House for approval a few weeks ago, the noble Baroness, Lady Chalker, said that she would ensure that methods by which your Lordships' House could have an opportunity to consider treaties more effectively would be looked into. It was suggested that perhaps there should be an explanatory memorandum available for us in the Printed Paper Office, or perhaps a Scrutiny Committee. The noble Lord, Lord Bruce of Donington, supported those suggestions at that time. Perhaps the noble Baroness will give me an assurance that she will remind the noble Baroness, Lady Chalker, of that undertaking which was given to look at our methods of dealing with such matters.
Baroness Miller of Hendon: My Lords, I can give the noble Lord that assurance. I shall certainly speak to my noble friend Lady Chalker about that. There is a document called The Energy Charter Treaty: Key Points for British Business in the Library which outlines all the benefits to be derived from this order. Perhaps the noble Lord, Lord Bruce, may wish to read that document.
On Question, Motion agreed to.

Housing Bill
3.19 p.m.
Lord Lucas: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Lucas.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
[Amendment No. 68 not moved.]
Clause 17 [Right of tenant to acquire dwelling: supplementary provisions]:
Lord Stanley of Alderley Lord Stanley of Alderley moved Amendment No. 69:
Page 11, line 17, leave out ("may").
The noble Lord said: I move this amendment on behalf of my noble friend Lord Peyton of Yeovil. I hope that Members of the Committee and my noble friend on the Front Bench will forgive me for intervening on this Bill but I shall do so only in relation to rural housing because I took a passing interest in the subject during the passage of the 1989 Act. However, I should like to put on record at the start the fact that I am extremely grateful to the Government—as, indeed, are the organisations with which I am in touch—for the progress made over the problem of rural housing since the passing of the 1989 Act. I hope that my noble friend
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will find that the amendments to which I have attached my name are at least helpful, even if he is unable to accept all of them.
Although Amendments Nos. 69, 71, 73, 77, 82 and 83 are grouped together, perhaps Members of the Committee will allow me to address Amendments Nos. 69, 71 and 73 at present. The three amendments tabled in the name of my noble friend Lord Peyton would make it a duty for the Secretary of State to make regulations designating certain rural areas, although he would still have the right to specify the rate of discount.
The amendments are really paving amendments for the substantial amendments, Amendments Nos. 82 and 83, tabled in the name of my noble friend, and Amendment No. 77, tabled in the name of the noble Lord, Lord Carter. It may be better, after I have formally moved Amendment No. 69, if the noble Lord, Lord Carter, introduces his amendment, which is of substantial merit, before we all speak to the whole group of amendments. I beg to move.
Lord Carter: In speaking to this group of amendments I should, first, declare an interest as a trustee of the Rural Housing Trust. However, I should point out that the amendments which are tabled in my name do not necessarily reflect the views of that trust. However, we think it important on this side of the Committee—indeed, it applies to other parts of the Committee—to use the Committee stage to probe the whole of Clause 17 with a view to ascertaining the Government's intentions and to see whether we can improve the wording of the Bill. That is the function of this Chamber. We wish to give the Minister the chance, which we are sure he will welcome, to give us an assurance on a list of undertakings. We also wish to give the noble Lord the opportunity to reflect upon what we say and to revise and improve the Bill before the Report stage.
There is no need for me to repeat the history of how Clause 17 came into being. That was covered on Second Reading. All of us involved in the rural housing field welcome the change of heart on the part of the Government. The housing White Paper proposed the removal of the exemptions policy for rural areas. However, that has now been restored through Clause 17. I am glad to have the opportunity in today's proceedings on the Bill to congratulate the Rural Housing Trust, the CLA, the NFU and many other organisations on their efforts in persuading the Government that it was right to bring back the rural exemptions and put them in the Bill.
In the group of amendments we deal with all aspects of Clause 17. We wish to see whether we can get the Government to think much more clearly about the way in which the rural exemptions will work and to examine the problem. I sympathise with the Government in their efforts to get at what we mean by a "settlement". They have used the very exhaustive procedure of examining all the various parishes and settlements and, indeed, have sent out consultation papers. They have made a valiant effort to meet the point. However, we still wonder whether the definitions should be clearer and

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whether there should be more on the face of the Bill than is left to regulations at present. We also want to see a degree of permanence in the arrangements.
There is a fear that the supply of land will dry up if landowners feel that the policy may be reversed again. We know that no Parliament can bind its successor but if the permanence of the exemption arrangements is set out on the face of the Bill it will be that much harder to alter them. However, as I said, the Government have made a valiant effort, and we congratulate them.
It is possible that the approach in the amendments is not exactly the best way to deal with the matter. However, we believe that the proposals would be a good start. Indeed, our approach may be better than that of the Government; we hope to convince them that that is so. I believe that it is a proper use of the Committee stage to probe the whole operation of Clause 17. Then, depending on what the Minister tells us regarding the Government's intentions, we may wish to return to the matter on Report.
I shall deal with the amendments briefly. As the noble Lord, Lord Stanley, said, Amendments Nos. 69, 71 and 73 are paving amendments. Amendment No. 77 is the substantive amendment in the group. I have to admit that I drafted it myself. Therefore, I shall be entirely happy if the Minister tells me that it needs redrafting. Nevertheless, the amendment has a simple approach. Once one has decided on the houses which have received rural exemption, we propose that a register should be made of them. I believe that I am correct in saying that every local authority will have a list of all the houses in its area which have an agricultural exemption as regards use. It would not be a big task—there will not be an enormous number of houses involved—but it would be extremely helpful if the relevant local authority were to maintain what I have described as a register of exempt rural properties. I take no pride in the name. If the Government prefer another form of words, I shall be happy to accept it.
The second subsection of Amendment No. 77 reads:
"Dwellings entered on the Register of Exempt Rural Properties shall not be removed from that Register and their exemption from the purchase grant scheme shall be permanent".
That is a fairly straightforward way of achieving the degree of permanence I believe we all want to see. The amendment accepts the principle of Clause 17(1)(b), namely, the designation of rural areas. We shall certainly return to that aspect. However, if the Government's designation approach turns out to be the one that is finally adopted, which is very likely, I feel that the properties which are so designated should be registered and that such designation should be permanent.
As I said, I drafted the amendment myself simply to get the Government's reaction to the idea. Of course, if they like the approach, I shall be happy to withdraw the amendment and for the Government to redraft it. The purpose of the amendment seems so obvious that I should have thought the Government could at least accept the principle behind it.
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The other amendments in the group, which were originally tabled by the noble Lord, Lord Peyton, and to which the noble Lord, Lord Stanley, and myself added our names, are Amendments Nos. 82 and 83. Obviously, Amendment No. 82 deals with technical points about the granting of planning permission for "construction" and so on either side of the grant of that permission. The wording of the amendment is straightforward.
The proposed subsection (8) of the amendment seeks to meet the point. I am not sure that,
"a population of more than 10,000 people",
is the right figure, but it is an attempt to try to lift the fairly artificial barrier of 3,000 to ascertain what the Government intend to do. I believe that the Government have said that they are prepared to see some variation around the margin of 3,000, but I am not sure whether they are prepared to see a variation from 3,000 to 10,000. I am sure the Minister will understand that this is an attempt to find a slightly more flexible way to deal with the problem of the enlargement of a rural settlement. For example, what happens if an exempt property is in a settlement of, say, fewer than 3,000 people and the settlement then grows? I am sure that the Minister will be prepared to answer that point.
Amendment No. 83 deals with settlements the other way round, that is to say,
"all settlements with a population of fewer than 3,000 people, and other settlements"—
and this is a most important part—
"in relation to which the Secretary of State is satisfied that there are likely to be particular problems for a registered social landlord in securing further land on which to provide additional dwellings".
That approach is picked up in a slightly different way in Amendment No. 79. However, I am sure that Members of the Committee will understand what we are trying to achieve by way of this group of amendments, and those which follow, as regards Clause 17. The amendments are an attempt to persuade the Government that although their approach to the problem is welcome the clause could he improved and a degree of permanence should be built into the exemptions once they are granted.
3.30 p.m.
Lord Stanley of Alderley: I am sorry to repeat myself but as I have added my name to the noble Lord's amendment, and I have also been asked by my noble friend Lord Peyton to move his amendment, I perhaps ought to say a few words now. As the noble Lord has explained, Amendments Nos. 77 and 82 both have the same important objective; namely, to make sure that once an area is designated exempt it always remains exempt. The amendment of my noble friend Lord Peyton spells out clearly—as the noble Lord pointed out—that all settlements with a population of fewer than 3,000 people must be designated exempt and remain so even if the population grows, unless the area changes its character or its population rises above 10,000. However, I understand the noble Lord's reservations about that figure.
Amendment No. 83, to which the noble Lord, Lord Peyton, has added his name, seeks to reflect the views expressed in the Secretary of State's consultation

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paper and gives him the power to include other areas if he thinks fit, for example, national parks or green belt areas. As the noble Lord, Lord Carter, explained so well, Amendment No. 77 is far less restrictive than Amendments Nos. 82 and 83. I shall be interested to learn of the preference of my noble friend Lord Mackay. Needless to say, I want to be on the winning side. The Government should be as definite as possible about this matter, otherwise land will not be forthcoming. It is essential that these houses are not lost to the local community. We have been through this matter before in this Chamber many times. However, I understand that if any house is sold, the proceeds will be reinvested in other local accommodation. I should be pleased if, when he replies, my noble friend will spell out what "local" means. I suspect it is considerably less local than what I might consider local.
I repeat my considerable thanks to the Government for having come so far since the 1989 Act. The Committee may remember the somewhat vitriolic exchanges that took place then, followed by a somewhat disastrous Division. The situation today is totally different. I am sure that the noble Lord, Lord Carter, would agree with that as he took part in the proceedings on that Bill. I think that we are all agreed on what we want to achieve.
Lord Carter: The noble Lord said that the Division was disastrous. Why did he say that when we won the Division?
Lord Stanley of Alderley: It is well known that any Division that I win is considered disastrous by my noble friends on the Front Bench. That is why I said it was disastrous. I should add that I did not win the Division by myself; the noble Lord was greatly involved in it and, for all I know, probably egged me on. However, we must get back to the business under discussion.
As I said, the situation today is totally different. I think we are all agreed on what we want to achieve, not least because the Government have accepted that there is a problem and have produced their plan. It is now a matter of whether we proceed by regulation—which, as I understand it, is the way the Government would like to proceed—or whether we need something more reassuring. My view is that we need something on the face of the Bill to ensure confidence and continuity. I should not have thought that it was beyond the wit of the Committee and my noble friend to propose a form of words, perhaps along the lines of the amendment of the noble Lord, Lord Carter, to achieve that aim. I look forward to hearing my noble friend's reply.
Baroness Hamwee: The name of my noble friend Lord Beaumont of Whitley is added to Amendment No. 77. He is unable to be present but on his behalf, and indeed on my own, I wish to support that amendment. I share the concerns of those who believe that the limit of 3,000 dwellings is too low. I take the Government's point about the difficulty of being absolutely precise, given, at the margins, that a car crash or a multiple birth could take
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the figure above or below the limit, but nevertheless as a general principle the figure of 3,000 is too low. I support the attempts to increase the figure as regards exemption.
Lord Hamilton of Dalzell: I strongly support this series of amendments, particularly the flexibility given to the Secretary of State in Amendments Nos. 82 and 83. In Surrey, where I have property interests, there are 70 villages designated as rural with a population of 10,000 or under. Of these, 20—which I calculate as being 28.5 per cent.—have populations of more than 3,000. I know that Surrey social services is immensely anxious about its ability to produce social housing. That will depend on the roll-over producing incessant planning consents which are extremely hard to come by in Surrey. I have no doubt that the same thing applies in many of the other home counties.
Lord Hylton: I support all these amendments. I do not discriminate between them. We have been over this ground many times in this Chamber as regards I do not know how many different housing Bills. It must be extremely well known by now that there are a number of perfectly valid reasons why it is not possible to replace certain housing in certain villages and small settlements. There may be planning reasons, green belt reasons, sewerage reasons or a whole stack of reasons why that is not possible. I hope that by now the Government have become extremely familiar with those reasons and will look upon these amendments with favour.
Lord Mackay of Ardbrecknish: I am grateful to those Members of the Committee who have taken part in this debate. As my noble friend Lord Stanley of Alderley said, it seems that we are all agreed on what we want to achieve, give or take a thousand or two, having heard the words of the noble Lord, Lord Hylton. However, we are generally agreed on what we want to achieve. The amendments in front of us are attempts to probe me, or to move the goalposts a little, or to put on the face of the Bill the aspects that we wish to see considered as regards designating rural areas which will be excluded from the right to buy.
The whole of Clause 17 is concerned with the Secretary of State's power to designate rural areas. Obviously the Committee is interested in the criteria that we plan to use to identify exempt rural areas, and the permanence of those designations once we have made them. I hope that I can reassure the Committee on those matters and that those Members of the Committee who have tabled amendments will feel able to withdraw them. Clause 17 specifies that the Secretary of State may designate rural areas where the new right to acquire will not arise. It is our intention that in England this will cover small rural villages of 3,000 people or fewer. In Wales an approach using population density is proposed. However, in England we shall be looking—and we are looking—at the population density in parishes. We are identifying those parishes which have no settlements with more than 3,000 people. That is the key point. It is not a question of the parish in total having a population of fewer than 3,000 people; it is a question of the settlements in the parishes having a population of fewer than 3,000.

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Amendments Nos. 69, 71 and 73 together would remove the Secretary of State's discretionary power to designate rural areas and make it a requirement to designate exempt rural areas. As the Committee will know, we have published a consultation paper explaining the general approach that we propose to take in England to identify and exempt rural areas using a settlement population of 3,000 as our guideline. We are consulting on detailed, specific proposals for particular areas. We have already put forward detailed proposals for 30 English counties, and proposals for Wales. The remaining English counties will be consulted shortly. In England we propose to base exclusions on parish areas wherever possible, but where a parish contains both a small settlement and a larger settlement we shall use a map to delineate the excluded area. The settlement assessments are based on the previous census. We shall listen to views either that we have misunderstood particular areas, or propose not to exclude areas with an equally good claim.
Our intention to make rural designations is therefore clear, and the criteria on which we are consulting, and propose to use, are also clear. The Committee has already had the advantage of seeing some of the consultation papers although I accept that they may not concern the part of England in which particular Members of the Committee are interested. A number of consultation papers have been produced. There are two different kinds. There is the general one which lists the places in each county in England. By some accident I am looking at the document concerning Wiltshire. It lists the parishes in alphabetical order. It is followed by a second document for each of the counties in which maps are used to delineate those parishes where a split is required and the whole parish is not to be included, perhaps because one part of the parish contains a large town but outside is a rural area in which no settlement is greater than 3,000, and which we believe ought to be designated. The documents contain much information for noble Lords to see how the Government are carrying out the powers given to the Secretary of State under Clause 17.
I do not believe that the criteria need to be written on the face of the Bill as Amendment No. 83 would do. Indeed, this would prevent the flexibility we need to take account of the different circumstances in Wales, where a different approach is needed.
We have made clear in the consultation paper that we will consider any special cases made for other settlements with higher populations to be excluded. Amendment No. 83 also includes provision for special cases where the Secretary of State is satisfied that there is likely to be particular difficulty securing land for replacement properties. I explained at the end of the last Committee day that replacement properties do not only have to be newly built. Landlords will also be able to use the sale proceeds to buy existing properties on the open market as a replacement for social renting. Specifying a single criterion under which further exemptions could be made severely limits our discretion to deal properly with special cases, on whatever grounds they are made.
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Amendment No. 82 attempts to ensure that once a property is within a designated area tenants would not gain the new right unless the settlement population rose to over 10,000. Under our proposals, if a settlement's population goes over the 3,000 mark, tenants will not suddenly gain the new right. This would only happen if the rural designations were changed. We cannot rule out the possibility of revision where a small village, over the decades, grew into a new town. Amendment No. 82 recognises that a rural exemption would no longer be appropriate in such circumstances.
I recognise that there has been concern about the duration of our rural exemptions. But once the rural exemptions are made we would not intend to revisit them. It is unlikely that any new information would be available anyway, except at the 10-yearly census. It might be appropriate to review the designations more generally at some time in the future, but it would certainly be possible to conduct a review using a different, higher population limit to take account of general population growth in rural areas.
The fact that making rural designations proposed in the noble Lord's Amendment No. 82 would be an obligation implies that rural designations will have to be continually reviewed and updated. Our intention is that once rural areas are designated they should remain designated unless circumstances change substantially. I hope that that answers one of the questions asked by the noble Lord, Lord Carter. For the great majority of settlements the exemptions are never likely to change. Once the orders are made, we will not want to revisit them continually.
As it stands Amendment No. 82 would cause particular difficulties if an exempt settlement's population reached 10,000. As the noble Baroness, Lady Hamwee, said, a single birth, multiple births, or a fatal car crash could bring the provision into play or take it out. That cannot be workable. Moreover, it would limit the scope for any errors in designations, once made, to be corrected.
I understand the concerns of landowners who play an important role in the provision of social housing. But landowners need have no worries about continuing to give land at a discount for social housing. As I have explained before, where they have donated land and the tenant subsequently buys, the benefit of their generosity is simply rolled over into the replacement housing, and used to help another family in need.
We have recognised that this process of replacement could be particularly difficult in small villages, where there may be no land to build a replacement, and where there is less opportunity to buy existing homes on the open market. Our rural exemption is designed to protect such small villages.
In Amendment No. 77 it is proposed that every local authority should be required to keep a register of dwellings in exempt areas. Listing all the exempt parishes for the proposed statutory instruments has been a considerable undertaking. To list each and every exempt dwelling, I suggest, would be a somewhat bureaucratic nightmare. There was concern in another

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place that the size of the statutory instruments that we proposed would require a wheelbarrow. I think that a register of dwellings would require a pantechnicon.
The amendment suggests also that exemptions for properties should be permanent. I understand those concerns. However, again I have to underline my assurance to the Committee that the Government have no intention of revising designations except in exceptional circumstances. However, we need the flexibility to be able to revisit designations if an error has been made or there has been a major growth in population which substantially changes the nature of the settlement. However, if Amendment No. 77 were to be taken on board, the consultation documents produced, say, for Gloucestershire, might be a good deal thicker than this slim volume.
3.45 p.m.
Lord Carter: I am grateful to the noble Lord for giving way. I believe that he has misunderstood the amendment. This proposal would not involve a statutory instrument. The local authority would keep the list in exactly the same way that it now does for houses with an agricultural restriction on them. There would not be that many in each area. The Minister will be better briefed on this issue than I am, but the number of houses involved will not be that great. It would be up to the local authority to keep the register.
Lord Mackay of Ardbrecknish: I believe that I misunderstood. I came to the conclusion that the register of dwellings would include the statutory power. I accept the noble Lord's assurance that is not what he intended. I shall consider again what he said. Equally, if local authorities were to keep a register, that involves lists, and so on. I see no advantage over the documents and maps which the Government propose should form the statutory basis of the exemption scheme.
I have sought to explain how we propose to set about this task. Indeed, we have already begun. The Committee can see how we propose to set about it in the case of those parts of England and counties for which we have already produced the documentation. The proposals that we have put forward indicate quite clearly how the Secretary of State will use the power to designate areas and allow us the flexibility we need to ensure that designations make sense on the ground, thus assuring landowners who wish to give land in those areas that if they do so there is a certain fairly fixed permanence in the proposals that we shall put forward, and that change in designation will take place only in fairly exceptional circumstances.
With that explanation, the assurances that I have given, and the explanation of how we believe the amendments would impinge sometimes adversely on what we think is the correct way forward, I hope that noble Lords who have amendments in the group will feel able to withdraw them.
Lord Carter: Before the noble Lord, Lord Stanley, decides what to do with the amendment, having dealt with the point on Amendment No. 77, perhaps I may raise two brief points on what the Minister said.
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For reasons that I entirely understand, it is becoming clear that the Government are concerned with the designation of areas. Those who wish to maintain the exemption are concerned with the designation of property, of the individual house. We seek to achieve some means of maintaining designation of a house which is exempt because it is in an exempt area. I understand the reasons for the Government adopting the attitude that they do. I shall return at Report stage to the issue of the designation of property once it is exempt. The Minister said that the problem would be considered through the 10-yearly census. I cannot believe that it would be so accurate that a car crash or a multiple birth would be reflected in the 10-yearly census.
Lord Mackay of Ardbrecknish: Perhaps I may help the noble Lord. The only figures likely to be available if one wished to reconsider the problem are those from the 10-yearly census. I hope that I indicated firmly that it did not mean that we would review the situation every 10 years. We envisage that many areas would never be reviewed and those that may require review will be reconsidered perhaps because of new town growth or some other change that one cannot foresee at the moment. I hope that in the great majority of cases the permanence of the arrangements can be accepted.
Lord Stanley of Alderley: Before I withdraw Amendment No. 69, I wish to make two points. I may misquote my noble friend, but I believe that he said that the Government did not intend to alter the designations. He also said that once an area was designated as rural, it would remain so, or words to that effect. Those assurances are extremely helpful. However, being a somewhat doubting person, I believe that they are only assurances. Surely something on the face of the Bill as a real assurance would be better. Perhaps we can draft something later on at Report stage.
Apart from that, I am grateful to the Minister for all that he said and agree with him with the possible exception—to take the line adopted by the noble Lord, Lord Carter—that perhaps we should look at the individual house rather than the individual area. However, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 70 to 78 not moved.]
Lord Gisborough Lord Gisborough moved Amendment No. 79:
Page 11, line 21, at end insert—
("() The rural areas designated under subsection (1)(b) above shall include areas where—

(a) there is a shortage of affordable housing demonstrated by the local authority's housing register and other relevant evidence; or

(b) the release of land to provide replacement stock for dwellings in the social rented sector acquired under the right conferred by section 16 would be contrary to planning and environmental policies for that area.").

The noble Lord said: I am concerned that the effect of the Bill will be to reduce the supply of affordable housing in rural areas. It fails to take into account the environmental and land use implications of the proposals for the extension of the right to buy. The

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Government recognise that there are particular problems in providing affordable houses in rural areas. However, I believe that the proposals to exempt small rural settlements, identified on the basis of an arbitrary population threshold, is too crude. It fails to recognise the large number of rural communities above 3,000 in population where problems of providing affordable housing are just as acute. The proposal also fails to recognise fully the factors which influence and determine the ability to meet affordable housing needs within the acceptable environmental limits.
In another place, the Government claimed that extending the right to buy to housing association tenants will not have any environmental consequences. I do not believe that that is the case. In areas where tenants exercise their right to buy, providing replacement stock could have important environmental implications. That will be particularly true in areas where suitable land or buildings in the locality to provide replacement dwellings is not available and green field sites have to be provided.
I am also concerned that the current proposals are creating a degree of uncertainty about the future status of social housing stock. This uncertainty is undermining the co-operation of landowners in providing suitable sites for local needs housing and risks exacerbating problems of supplying social needs housing in areas where suitable sites may be difficult to identify.
In tabling the amendment, I sought to ensure that the Bill is sensitive to the different circumstances of different rural areas. I believe that the amendment will allow for the continued extension of the principle of the right to buy while safeguarding the supply of affordable homes in rural areas. It addresses two key concerns: first, retaining a supply of affordable homes in areas where shortages already exist; and, secondly, ensuring that the replacement of dwellings purchased under the right to buy does not contradict existing environmental and planning policies.
The amendment defines on the face of the Bill those areas where the right to buy will not apply. It adopts a criteria-based approach in which environmental and land use criteria, as well as evidence of housing shortages, are taken into account. Its effect would be to ensure that in identifying areas which should be exempt from the right to buy, the particular circumstances of individual rural areas would be considered. This would help reduce the impact of tenants exercising the right to buy on affordable housing stock in areas of constraint and avoid conflict with other planning and environmental policies for that area. It would also create a greater sense of security about the future status of social housing stock in exempted areas than the current proposals which rely entirely on the use of statutory instruments. I beg to move.
Baroness Hamwee: My name is also to the amendment. I do not wish to repeat the detailed arguments put by the noble Lord, Lord Gisborough, with which I agree. I support the amendment in particular because it allows, within proper constraints, for local
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diversity. It would reflect local needs and, most important, it would allow those needs to be determined locally by those who are best placed to analyse them.
Lord Carter: My name is also to the amendment because if we consider the discussion on the previous group of amendments, this is another example where we might be able to obtain more flexibility and diversity in the approach, as the noble Baroness said. We should be able to ascertain whether there is a shortage of affordable housing which we agree would be the triggering factor in granting the exemptions. That is what it would be about; it would be another arrow in the Government's quiver when dealing with the problem. If we have the provision on the face of the Bill, it would help.
Lord Hylton: I support the amendment for the reasons that I gave as regards the previous group. The problems are particularly acute in what one might describe as affluent areas where housing prices are already high and will tend to rise still further. I give one example of where I live which is within the commuting area surrounding Bath and Bristol. There the problem is quite severe.
Lord Mackay of Ardbrecknish: My noble friend's amendment seeks to extend the application of the rural exemptions. It proposes that rural exclusions should cover areas where there is a high level of housing demand or where releasing land for replacement properties would be against planning and environmental policies for that area. I cannot accept the justification for either of those cases. We are now entering a number of small debates in which we must be careful that we do not pay lip service to the idea of the right to acquire property by a tenant of a housing association and then salami-slice away that right until we are left with half a dozen tenants in a small part of the country.
We must be careful about the exemptions we bring forward and put into the legislation. Every time we make an exemption, we are saying that the tenants in the exempt area will not share with tenants in other areas the right to acquire their house. If we have all signed up to the principle that the tenant should have the right to acquire, then we should remember that we are taking away that right from tenants. We should only do that when we feel it is absolutely justified. We all feel that it is justified in certain rural areas and we have already had a debate about them.
The first part of this debate concerns housing demand. The scheme should in fact help landlords to meet housing need. I do not believe that my noble friend's concern has any basis as regards that aspect. If a tenant buys the property in which he is living, he thereby provides a receipt which can be re-invested in a home for a family on the waiting list. That is either by new build or by purchase. That should solve a problem rather than create one.
As concerns environmental and planning policies, I must stress again that replacement properties do not have to be newly built. It is the same point. Existing properties can be bought on the open market. Since the receipt will be the market value of the property sold, it

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should be sufficient to buy another similar existing property in the same area which can then be used for social renting.
The purpose of rural exclusions, to which my noble friend's amendment would add new exclusions, is to exempt small country villages and rural areas where land is limited and where there is also limited scope for buying existing property. In larger rural towns, we believe there is ample scope for buying replacements on the open market or for new build. Therefore I do not believe we should extend the "protection" of the rural areas policy to the areas falling within the definitions my noble friend suggests. I hope with that explanation my noble friend will be able to withdraw his amendment.
4 p.m.
Baroness Gardner of Parkes: Will my noble friend clarify one point that I do not quite understand? He said that the proceeds from the sale would enable someone to buy a comparable property in the same area. As I understand it, the proceeds will be discounted. I know that a grant is to be given to enable people to buy. Would the grant make up the value sufficiently to purchase a similar property?
Lord Mackay of Ardbrecknish: I am not entirely sure I understand my noble friend's question. If an association sells a house to a sitting tenant at a discount, it obviously receives from the tenant the market price less the discount and then receives the discount from the Housing Corporation. From those two routes the association receives the market value of the house it sold. The money that the housing association receives from such sources is to be ring-fenced to provide another rented house. I hope that that answers the question.
Baroness Gardner of Parkes: I thank my noble friend, but there is another point that has arisen previously; namely, what happens when the amount provided by both the grant and the tenant's purchase still does not cover what was land at an unrealistically low price in the first instance? The case has been raised again and again of someone selling land at an artificially low price. Surely local properties would not be saleable at the same figure.
Lord Mackay of Ardbrecknish: If the land is sold at a low price and a house on the land is then sold to a sitting tenant, the market price will reflect the proper market value of the land. The housing association will gain that additional money and will therefore be able to fulfil the purpose for which the land was originally given; namely, to provide social housing. It will provide another social house.
The Earl of Dundonald: Who will be responsible for carrying out the valuation? Will it be the district valuer?
Lord Mackay of Ardbrecknish: I am not entirely sure whether that is the name used in England. My noble friend comes from north of the Border. In Scotland it will certainly be somebody like the district valuer. I am
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not entirely sure whether the district valuer exists in the south but some such person will do the valuations. As I understand it, that is how it works currently with the sale of local authority houses.
The Earl of Dundonald: In that case, perhaps I may put another point to my noble friend. It is normal practice for the district valuer to set the value slightly lower than the open market value. Therefore there would be a difference.
Lord Mackay of Ardbrecknish: I shall take advice on whether district valuers set valuations lower than the market value and perhaps write to my noble friend.
Lord Carter: Perhaps I may take up a point made by the Minister in referring to the "salami" technique of gradually removing the right to buy slice by slice. I suggest that if the criteria were on the face of the Bill, the problem would not exist.
Lord Monkswell: I have a slightly different question. At present local authority tenants who have a right to buy are locked into the private sector. Once they have bought their council house it is virtually impossible for the local authority to buy it back. From what the Minister says, it will be possible for a housing association to sell a house to a tenant under the right to buy; the tenant will receive a discount; three years later the housing association could buy back the property at the market price and almost immediately sell it again to the tenant, whereupon the tenant would receive a discount. It would seem logical in that sort of situation for the housing association and the tenant to come to an agreement that every three years they go through such a transaction and split the difference in terms of the discount. Have the Government thought of that? Do they think it a sensible use of the public funds involved in the discounting procedure?
Lord Mackay of Ardbrecknish: The noble Lord allows his imagination to run away with him on hypothetical cases. I cannot see a housing association and a tenant entering into successive deals in which the tenant moves from being a tenant to being the owner, to being a tenant again, and then to becoming the owner again. That is very unlikely. I suspect that something would stop any such procedure dead in its tracks. Common sense might do so in the case of a tenant who had become the owner and had to become a tenant again. Perhaps we should leave the matter to one side. In case I have misunderstood the noble Lord's intervention, I shall certainly look into it. If I feel that he has a point that should be addressed, I shall come back to him.
Perhaps I may use this opportunity to save writing to my noble friend Lord Dundonald. The landlord can use anyone to make a valuation. But if the tenant disputes it, there is a right to go to the district valuer. The legislation states clearly that the valuation must be the open market value. I refer my noble friend to Section 127 of the Housing Act 1985 where that is clearly spelt out. The valuation must be the open market value.

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To return to the nightmare scenario suggested by the noble Lord, Lord Monkswell, any tenant's discount in the circular dance he suggested has to take into account any earlier discount that the tenant received.
Lord Hamilton of Dalzell: It may be clear to other Members of the Committee. It is not quite clear to me. Will the open market value that is decided be the open market value as if the house had a tenant? Or will it be the freehold market value? Before you can put another tenant in another place you have to buy the freehold, not a leasehold.
Lord Mackay of Ardbrecknish: As the Committee knows, I am not a lawyer; nor am I an estate agent. I am afraid my noble friend takes me into territory to which I shall need to give a little thought. I suspect that the Housing Act 1985 may be helpful. I can advise my noble friend that the open market value, which must be taken, must be on the basis of vacant possession.
Lord Gisborough: I thank my noble friend for that explanation. I am not totally convinced. I do not totally understand how the value can be maintained for continually replacing the houses. However, I shall read his remarks. At this stage I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 80 to 83 not moved.]
Clause 17 agreed to.
Lord Carter Lord Carter moved Amendment No. 84:
After Clause 17, insert the following new clause—
TENANTS' INCENTIVE SCHEME: ALLOCATION OF FUNDS
(". Allocation of funds for the Tenants' Incentive Scheme shall take into account the fact that tenants whose dwelling is entered on the Register of Exempt Rural Properties do not have the right to buy the dwelling which they occupy.").
The noble Lord said: We can be extremely brief with this amendment. It seems to me worth exploring the attitude of the Government on the matter of taking away the right to buy through the exemptions policy. This is a community benefit and it is being done for social purposes. But, in a sense, the tenant is a loser. I feel that there should be some form of quid pro quo because a tenant in that situation has lost the right to buy.
Would it not be fair to allow the tenants of exempted properties to be taken into particular account when the allocations of the incentive scheme are being made? That would give them a new freedom, if their exempted property remains within the stock of rural and social housing, to have the chance to pick up the right that the exemptions policy removed from them? It seems to me that the community should give some kind of quid pro quo to the individual tenant in respect of the right that he is losing as a result of the social purposes, which are the intention of the legislation. I beg to move.
Lord Mackay of Ardbrecknish: The purpose of the tenants' incentive scheme is to make housing association property available for a family in housing need by giving the existing tenant a cash grant to help
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him buy a property on the open market and thus free the tenanted property for another tenant. Approximately £81 million was spent on the tenants' incentive scheme in 1994–95 and around 7,000 grants were distributed.
As with any cash limited programme, clearly it is essential that funds are targeted at areas where there is the greatest housing need. Approximately 53 per cent. of all TIS, as it is called, grants in 1994–95 were distributed to the London and South-East area where there is the most acute need for social housing. We expect that trend to continue.
Many housing associations in rural areas simply do not bid for TIS grants as there appears to be very much less demand for those grants in rural areas. But if they were to bid, they would be considered, just like everybody else. With that assurance, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Carter: I thank the Minister for that helpful answer. I understand that they do not bid because they do not believe they will get an allocation. I understand that that is the problem. And that is the reason for the amendment. We want to have it clear that, if they wish to bid, they can do so. It is to be hoped that the particular circumstances of the exempted tenants can be taken into account when the allocations of the TIS money are made. I shall read what the noble Lord said. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 18 [Social housing grants]:
[Amendment No. 85 not moved.]
Clause 18 agreed to.
Clause 19 agreed to.
4.15 p.m.
Clause 20 [Purchase grant where right to acquire exercised]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 86:
Page 13, line 14, leave out from ("be") to end of line 15 and insert—

("(a) the aggregate of the discounts given in that year;

(b) the replacement costs; and

(c) the interest.

(2A) The rate of replacement costs per dwelling shall be set in each September for the following year by the Corporation and different provision may be made for different cases, and in particular may be made in relation to different values, different areas, different descriptions of housing accommodation and different descriptions of registered social landlord, and may be a composite sum allowing for actual items of expenditure.
(2B) Before setting the replacement costs the Corporation shall consult such bodies appearing to it to be representative of registered social landlords as it considers appropriate.
(2C) In this section—
"replacement costs" means the estimated costs of disposal, including processing the person's claim, valuation and legal expenses, and of acquisition of a replacement dwelling, including search, valuation taxes and legal expenses and with an appropriate allowance for abortive disposals and acquisitions, at a rate as determined by the Corporation in accordance with subsection (2B); and

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"interest" means interest on the discount and replacement cost from the date of disposal to date of payment at the rate of interest on judgment debts in the High Court.").
The noble Baroness said: This amendment is grouped with Amendments Nos. 87, 88 and 89. My later amendments, Amendments Nos. 92 and 95, which I do not intend to move, cover rather similar ground.
On a number of occasions the Minister referred to the replacement of the value of houses which are sold at their full market value. This amendment seeks to ensure that there is a proper reinstatement to the housing association since I believe that more than simply the value of the house is needed in order to put the housing association back where it started, especially in respect of replacement costs. I refer to paragraphs (b) and (c) of the amendment which add to paragraph (a), the words of which already appear in the Bill. That proposal is to take account in particular of the cost of selling and purchasing. Members of the Committee who have been involved in property transactions, from the smallest to the largest, will know that they do not come without associated costs. Any organisation which arranges a transaction will have to cover at the least staff time, fees, valuation costs and all the costs involved in searching for a replacement dwelling. There will be—dare I say?—lawyers' fees. There will be stamp duty, land registry fees and even costs in dealing with the Housing Corporation with regard to expenditure from the disposal proceeds fund.
The amendment mentions interest. I am not necessarily wedded to interest at the very high rate—I believe it is now 15 per cent.—proposed in the amendment. But it is a fact that interest would recompense the housing association for not having the cash represented by these amounts in its own account and earning interest.
The Housing Corporation is a quango. As such its dealing in these matters tempts me in one or two places to raise issues which I might otherwise not wish to bring to the Committee. I feel, however, that it is important to have some detail on the face of the Bill, given the difficulties of raising at a later stage questions about the way in which the schemes are being operated, since there is indirect rather than direct accountability. Therefore, I seek a proper reinstatement.
Amendment No. 88 allows the corporation to borrow and is essentially a timing matter in order to ensure that funding is available to the corporation. Since reimbursement to housing associations is not a precondition, it will follow the event. I hope that the Minister will take the opportunity to give the Committee assurances that the funding will be secured to the fullest extent possible in order to ensure that the intention of reimbursing housing associations can be implemented. I do not intend to move Amendment No. 89. I beg to move.
Lord Mackay of Ardbrecknish: This group of amendments seeks to amend the provisions relating to the payment of grant to registered social landlords to cover the new right-to-buy discounts. I do not believe that any of the amendments would improve the scheme.
Clause 20 requires the corporation to pay grants to registered social landlords in respect of discounts given by them to tenants exercising the right to acquire. The
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amount of the grant will be the aggregate value of discounts given in that year. Amendment No. 86 would increase the amount of the grant to cover the cost of disposing of a property and providing a replacement, and interest on the discount and replacement costs. Registered social landlords who sell under the new right to buy will receive, as I said, the market value of the property. That should be sufficient to provide a replacement. I cannot therefore see any need for the amendment, which would simply add to the Housing Corporation's costs.
Clause 20(4) provides that the corporation, when paying a grant, may provide that the grant is contingent on compliance with such conditions as it may specify. The type of conditions which the corporation is likely to specify will relate to matters such as audit, record keeping, and so on. Amendment No. 87 would remove that power. It is clearly useful for the corporation to be able to specify these matters as it will help it keep track of what is, after all, public funding. I see no justification for the proposal in Amendment No. 87 to remove that power.
Amendment No. 88 would add a new subsection to Clause 20, providing that the corporation may borrow from any person such sums as it requires to make payments of grant to social landlords under Clause 20. The corporation already has borrowing powers under Section 92 of the Housing Associations Act 1985 which are subject to the Secretary of State's approval. Therefore, we believe that the amendment is superfluous.
I believe that I heard the noble Baroness aright when she said that she would not move Amendment No. 89. With my explanation, I hope that she will feel able to withdraw the amendment she has moved.
Baroness Hamwee: I do not feel that the Minister answered Amendment No. 86 at all. He repeated that the market value will be provided. I do not intend to pursue the point further but I shall take the opportunity between now and the next stage of the Bill to attempt to gather further detailed information of the cost of the transaction. I hope that the Minister will be prepared to consider the perfectly practical and commonsense points which may be made in order to deal with what I believe will be a funding gap. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 87 and 88 not moved.]
Clause 20 agreed to.
Clause 21 [Purchase grant in respect of other disposals]:
[Amendment No. 89 not moved.]
Clause 21 agreed to.
Clause 22 [Assistance from local authorities]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 90:
Page 14, line 14, leave out subsection (4).
The noble Baroness said: Amendment No. 90 deals with the subsection providing that,
"A local housing authority may sell or supply under a hire-purchase agreement furniture to the occupants of houses provided by a registered social landlord, and may buy furniture for that purpose".
In moving the amendment I do not wish to suggest that local housing authorities should not have this power. I simply ask the Minister whether they do not already have the power under Section 111 of the Local Government Act 1972. That is the section which allows local authorities to,
"do any thing … calculated to facilitate, or is conducive or incidental to, the discharge of any of their functions".
The point may seem a frivolous and unnecessary one. However, in the wider context of local authorities having to justify everything they do on the basis of legislation, I am concerned that, rather than relying on the Section 111 power to deal with matters which are ancillary, the powers of local authorities will become much narrower as a result of the general thrust of legislation. I beg to move.
Lord Mackay of Ardbrecknish: Clause 22 enables local authorities to promote and provide assistance to registered social landlords. As the noble Baroness, Lady Hamwee, points out, subsection (4) allows local housing authorities to sell, or supply under a hire purchase agreement, furniture to the tenants of registered social landlords.
The noble Baroness is concerned that this is an additional power we are giving to local authorities which is not necessary because it can be swept up under Section 111 of the 1972 Act. However, the provisions simply re-enact earlier legislation, and that earlier legislation was contained in Section 61 of the Housing Associations Act 1985.
I suspect that if we did not carry this legislation forward people would assume that we had removed it and that, rather than being swept up by Section 111, it may be swept out. The provision provides local authorities with a practical way of providing help to those who are setting up home for the first time or those who, because of a change in circumstances, would find it difficult to meet the full costs of providing furniture for their home. For example, it could be used to help tenants who need rehousing as a result of a fire. Many local authorities have taken advantage of the provision when working with registered housing associations to provide furnished accommodation in their area.
This is a useful provision which should be retained rather than relying on any hope that it can be swept up by Section 111. I am sure that the noble Baroness will withdraw her amendment in the light of that explanation.
Baroness Hamwee: The Minister cannot always be quite so certain as he is on this occasion. As I said when moving the amendment, it is important that local authorities go on doing useful work in this area. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
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Clause 22 agreed to.
Clause 23 agreed to.
Clause 24 [The disposal proceeds fund]:
The Deputy Chairman of Committees (Lord Strabolgi): I must advise the Committee that if Amendment No. 91 is agreed to I cannot call Amendments Nos. 92 to 96.
[Amendment No. 91 not moved.]
[Amendments Nos. 92 to 95 not moved.]
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 96:
Page 15, line 39, leave out from ("section") to ("do") in line 40 and insert ("27 below (recovery, &c. of social housing grants) and section 52 of the Housing Act 1988 (recovery, &c. of grants under that Act and earlier enactments)").
The noble Lord said: In moving Amendment No. 96 in the name of my noble friend Lord Ferrers, I shall speak also to Amendments Nos. 102 to 104 and 108.
Clause 27 refers to the recovery of social housing grants. Clause 28 refers to grants made under earlier powers. In certain situations grants need to be recovered; for example, where an association disposes of a property originally built with grant. For the new social housing grant the corporation already has a power to direct grant to be paid to it or that it should be unrecovered but used for purposes it specifies. We agreed in another place to extend this power to direct unrecovered grants to housing association grants paid under earlier enactments too. Amendment No. 108 replaces an earlier amendment to meet this commitment, which we decided was not sufficiently detailed.
The remaining amendments are of a technical nature to provide for the way in which interest is dealt with on unrecovered social housing grants or housing association grants, extending the corporation's scope to abate or reduce interest payments where grants are re-used by the date the corporation specifies, and to correct minor technical errors in Clauses 24 and 27. I beg to move.
Amendment No. 96 agreed to.
Clause 24, as amended, agreed to.
Clause 25 [Application or appropriation of disposal proceeds]:
The Deputy Chairman of Committees: If Amendment No. 97 is agreed to, I cannot call Amendment No. 98.
[Amendments Nos. 97 and 98 not moved.]
The Deputy Chairman of Committees: If Amendment No. 99 is agreed to, I cannot call Amendment No. 100.
[Amendments Nos. 99 and 100 not moved.]
Clause 25 agreed to.
Clause 26 agreed to.
Clause 27 [Recovery, &c. of social housing grants]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 101:
Page 16, line 18, at end insert ("in accordance with guidance which the Corporation shall issue before the commencement of this Part").
The noble Lord said: In moving Amendment No. 101 it may be for the convenience of the Committee if I speak also to Amendment No. 109, which is perhaps the more important of the two.
Amendment No. 101 invites the corporation to give guidance. The effect of Amendment No. 109 would be to give the corporation the express power, within the principles it determines for applying Section 52(2) of the Housing Act 1988, to direct a registered social landlord which has received housing association grant under that Act to use the amounts specified for the purposes and objects of the landlord set out in Clause 2 of the Bill.
Amendment No. 109 relates to grants paid prior to the enactment of the Bill before the Committee today; that is, under the 1988 Housing Act or earlier enactments. The corporation's powers to recover social housing grant powers enables it to take action when property funded by grant is sold or transferred to a non-social housing use. That is because public finds have been involved. I accept that. I have no problem with the principle that some control must be exercised over the proceeds of sale or the outcome of a new use. However, I should be grateful if the Government could either agree with Amendment No. 101 or at least give a considered response to Amendment No. 109, because we believe it is important that the corporation should observe this principle if the Bill is enacted. I beg to move.
4.30 p.m.
Lord Mackay of Ardbrecknish: The noble Lord has explained the purpose of his amendment. I hope that when I have explained the position he will feel satisfied and be able to withdraw it.
As the noble Lord explained, Amendment No. 101 would require the corporation, when issuing a determination governing the events in which its powers to recover grant under Clause 27 are exercised, to do so in accordance with guidance issued before commencement. The corporation, as a matter of course, consults before it issues determinations. It may help if I explain to the Committee how it intends to proceed in this case.
The corporation is planning a staged approach. The bidding guidance will draw bidders' attention to Parliament's general intention in introducing the new social housing grant regime. That will be issued around the end of August. The corporation then aims to consult on the various determinations that need to be in place in the autumn so that all the details can be agreed in time for the introduction of social housing grant from 1st April 1997. It would seem unnecessary to require two statements of the principles that the corporation would adhere to—both guidance and a determination. Moreover, the guidance would have to be issued before commencement and could not therefore be altered to take account of any consultation process.
Amendment No. 109 would provide that if the corporation requires an association to use amounts of unrecovered grant for purposes it specifies, these amounts must be used in pursuance of the landlord's purposes and objectives. Those would be in accordance with Clause 2 of the Bill. While I understand the noble Lord's concerns that associations do not use unrecovered grant for other,
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perhaps non-housing purposes, I do not believe that that would be possible in any case. Associations must act in accordance with their permissible purposes and the corporation could not direct them to act outside those purposes, whether in their use of grant or of unrecovered grant. With that explanation I hope the noble Lord will see that his fears are already covered and that he can withdraw the amendment.
Lord Williams of Elvel: I am most grateful to the noble Lord for his response. This is a problem. However, what the noble Lord has said has covered my substantial concerns. I shall have to read Hansard and decide what precisely we should do at the next stage. However, on balance, at the moment, I think I am able with a clean conscience, if I may put it in that way, to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendments Nos. 102 to 104:
Page 16, line 38, leave out from first ("the") to second ("paid") and insert ("principal amount is applied, appropriated or").
Page 16, line 42, leave out ("that amount is so") and insert ("the principal amount is so applied, appropriated or").
Page 17, line 11, leave out ("or") and insert ("to").
The noble Lord said: I have already spoken to these amendments. I beg to move.
On Question, amendments agreed to.
On Question, Whether Clause 27, as amended, shall stand part of the Bill?
Baroness Hamwee: Perhaps I may take this opportunity to ask the Government about the relationship between Clause 27 and Clause 18(3). Under Clause 18(3), the corporation, in making a grant, can provide that the grant is conditional on compliance with such conditions as it may specify. Clause 27 refers to powers which are exercisable in such events as the corporation may from time to time determine in connection with a grant received by a registered social landlord. Although one or two parts of Clause 27 may not be covered elsewhere, it seems to me that the two clauses cover quite similar ground. I should be grateful if the Minister could explain the need for going into quite so much detail in Clause 27. The clause is permissive in nearly every part. It says that the direction shall specify interest, but no doubt the corporation could specify a rate of interest of nil per cent.
Lord Mackay of Ardbrecknish: The provisions of Clause 27 are not new. They are similar to those in Section 52 of the Housing Act 1988. The existing provisions apply to housing associations in respect of housing association grant. The new clause applies these rules to registered social landlords in receipt of social housing grant.
The provisions are perfectly sensible. Their purpose is to apply controls to the use of public funds. After certain events determined by the corporation, the corporation may reduce or suspend any grant which it pays to the landlord or recover grant which it has already paid. The main addition to the new clause is the provision of a power for the corporation to direct

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landlords to use unrecovered grant for purposes which it specifies. Clause 27 specifically covers the recovery of social housing grant whereas Clause 18 concerns the terms on which the grant is given. That is the distinction between the two.
I could go on at some length explaining what the clause does but I think it is easier to answer the noble Baroness's question quickly. If she is still not satisfied, perhaps she could write to me or talk to me about it. Clause 27 specifically covers the recovery of social housing grant whereas Clause 18 concerns the terms on which the grant is given. There is a distinction between recovery of a grant and a grant being given in the first place. I hope that helps to explain the matter to the noble Baroness.
Baroness Hamwee: In thanking the Minister I would observe that if the corporation makes a grant and makes conditions, one of those conditions, whether the Government provided for it or not, would, I hope, be that if the registered social landlord does not comply with the conditions it will have to pay back the grant. That is what I thought was covered by Clause 18(3). If there is more than that, perhaps I may turn around the burden of writing letters and ask the Minister to write to me if I am missing the point.
Clause 27, as amended, agreed to.
[Amendment No. 105 not moved.]
Clause 28 [Grants under ss.50 to 55 of the Housing Act 1988]:
Lord Lucas Lord Lucas moved Amendments Nos. 106 to 108:
Page 17, line 21, leave out ("Part") and insert ("subsection").
Page 17, line 23, leave out ("Part") and insert ("subsection").
Page 17, line 26, leave out subsection (3) and insert—
("(3) Section 52 of that Act (recovery, &c. of grants) is amended as follows—

(a) in subsection (2)(c), for "to pay to it" substitute "to apply or appropriate for such purposes as the Corporation may specify, or to pay to the Corporation,";

(b) in the closing words of subsection (2), for the words from "requiring" to "interest on that amount" substitute "may require the application, appropriation or payment of an amount with interest";

(c) in subsection (7), for the words from "requiring" to "to the Corporation" substitute "requiring the application, appropriation or payment of an amount with interest";

(d) in subsection (8)(a), for the words from "the amount" to "is paid" substitute "the principal amount is applied, appropriated or paid";

(e) in subsection (8)(b), for "that amount is so paid" substitute "the principal amount is so applied, appropriated or paid".").

The noble Lord said: I spoke to Amendments Nos. 106 and 107 with Amendment No. 2 and my noble friend Lord Mackay spoke to Amendment No. 108 with Amendment No. 96. I beg to move.
On Question, amendments agreed to.
[Amendment No. 109 not moved.]
Lord Lucas Lord Lucas moved Amendment No. 110:
Page 17, line 38, leave out ("this Part") and insert ("section 1 of this Act (the register of social landlords)").
The noble Lord said: I spoke to this amendment with Amendment No. 2. I beg to move.
On Question, amendment agreed to.
Clause 28, as amended, agreed to.
Clause 29 [Commutation of payments of special residual subsidy]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 111:
Page 18, line 6, leave out ("or greater").
The noble Baroness said: This amendment is grouped with Amendment No. 112. In Clause 29(3) provision is made that,
"if after a commuted payment has been made to a housing association … smaller or greater than it should have been, the Secretary of State may make a further payment"
in order to make up the shortfall if the payment was smaller or require repayment by the association if the payment was greater.
I am seeking to confine subsection (3) to making up payments that were smaller than they should have been. It is tough to require repayment of an amount which has been overpaid when the Secretary of State has had further thought about what he should have done in the first instance and come to the view that he has been a little over-generous. That provision would allow the Housing Corporation to keep on reviewing its decisions. Even though one appreciates that there are uncertainties in the future and matters can appear over the horizon which can change one's business plans, to add the problem of the Secretary of State requiring repayment increases the difficulty of the housing organisation operating in a businesslike fashion. I do not believe that I would want to do business with someone who says, "I reserve the right to consider in a general way whether I shall ask you to pay some money back". That does not lead to efficiency quite apart from justice. I beg to move.
Lord Lucas: I believe that the noble Baroness exaggerates the problem. I also believe that she has been playing too much Monopoly: "There is a Housing Corporation error in your favour, collect £100". That is not the Government's idea of how this Bill should be put together. It is in the interests of good financial management that provision should be made to enable any overpayment to be recovered. These calculations are complex. On occasions there will be mistakes made in both directions by the Housing Corporation and whatever their direction they should be corrected.
Baroness Hamwee: My concern is with the words,
"greater than it should have been".
That allows a discretion which goes beyond the explanation that the Minister has given. Perhaps this matter can have a little further attention; we should not disallow efficiency. In opening I said that I felt that efficiency should be encouraged. However, it should be made quite clear what the limit should be on the Secretary of State's determination. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 112 not moved.]
Clause 29 agreed to.
Clause 30 [General power to obtain information]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 113:
Page 18, line 31, leave out (", or has been,").
The noble Lord said: In moving this amendment it may be for the convenience of the Committee if I also speak to Amendments Nos. 114 and 116. Amendment No. 116 is slightly dissociated from this, and I shall be speaking to it in greater detail as I go along. Amendments Nos. 113 and 114 give rise to certain problems. A notice under the general powers of the corporation may be served on somebody who has been, in the words of subsection (2)(b),
"an officer, member, employee or agent of a registered social landlord".
It is odd that the corporation may serve a notice even though many people may resign from being,
"an officer, member, employee or agent of a registered social landlord".
Nevertheless on some future occasion the corporation has the right to serve notice on him or her. Amendment No. 114 is very broad. The corporation can serve a notice to obtain information on,
"any person whom the Corporation has reason to believe is or may be in possession of relevant information".
That is enormously broad. I very much hope that the Government will reconsider that wording.
Amendment No. 116 leads us into this matter. It is designed to address what I consider to be a clause in the Bill which cuts straight across the banking secrecy provisions under both legislation and normal procedure. As far as I am aware—and I hope I am aware—bankers are not entitled to give any information about a client's account other than by a request under a court order. Looking at the Bill as drafted, the wording seems to cut right across that matter. It is something which the Government may well wish to look at again because I do not believe that it is consistent with proper banking practice or with the banking law as it stands at present. I beg to move.
4.45 p.m.
Lord Boardman: I support the three amendments of the noble Lord, Lord Williams of Elvel. Perhaps I may just comment on the third one as regards banking, while declaring a former interest in that occupation. As the Bill is currently drafted, there is a very deep intrusion into the confidentiality between the bank and the customer. It is a complete disregard of the Jack Committee report which referred to the degree of confidentiality that should be kept between the bank and the customer, which should not be intruded on unless there were very special circumstances. As I understand it, there has been no consultation with the bankers about this particular clause. I ask my noble friend to consider carefully either adopting the amendment proposed by the noble Lord, Lord Williams of Elvel, or propose a similar amendment which will meet the point that he makes.
Lord Hylton: The fact is that the Housing Corporation has very considerable powers already. Have any
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representations been made by that corporation pointing out that its powers are not sufficient? This clause is very widely drawn and probably far too widely drawn.
Lord Lucas: The powers that we are looking at in this clause are rather more restrictive than those enjoyed by the Charity Commissioners as regards charities. They have a very widely drawn power to require any person to furnish them with any information in his possession which relates to any charity and which is relevant to the discharge of their functions or the functions of the official custodian. That is not subject to the limitations under this clause of the Bill. We are looking here to give the Housing Corporation a set of powers which are, relative to the nearest obvious comparison, restricted. Nonetheless, I am happy to go through them in order and discuss the particular reasons for them. The corporation must ensure that it does not abuse its power, but it has a statutory duty to protect public funds and tenants, and it must be able to obtain the information that it requires.
In practice, the majority of registered social landlords will readily respond to requests for information. However, if the corporation meets resistance it needs to be able to take effective action. The provision in Clause 30 will enable the corporation to specify in a notice the information and documents to be made available to it. Should a registered social landlord without reasonable excuse fail to comply enforcement action can be taken under Clause 31.
The noble Lord, Lord Williams, has proposed an amendment to the powers of the corporation to obtain information from the banker of a registered social landlord. The corporation is the guardian of the substantial public funds invested in registered social landlords. Its regulatory interest is not limited merely to public funds; it has a duty to protect tenants, and also needs to be assured that the registered social landlord can meet all its commitments, including the private loans that it holds. This aspect of the corporation's regulatory function also provides a degree of comfort to private lenders—something upon which they have frequently commented favourably.
There may be occasions when the corporation needs to obtain information from bankers. I believe it is right that it should on request be granted relevant information about an individual registered social landlord. I recognise that that power should not extend to other customers of the bank. I am assured that the present wording of Clause 30(5)(b) limits any request to the social landlord's banker to information about the registered social landlord itself. I hope that that provides some comfort to my noble friend Lord Boardman. For the additional comfort of my noble friend and that of the noble Lord, Lord Williams, I will undertake to look again at the extent to which we are giving the corporation powers to request information from bankers. We have been in touch with the British Bankers' Association on the detail of this part of the Bill. That association has not raised this particular problem in relation to the clause, except that it would like to be able to charge fees for providing the information.

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It has been suggested that this power will override the confidential relationship between banker and customer. I recognise that that special relationship exists and is protected by statute, but if the corporation is to perform its statutory function it must be able to obtain all relevant information on the financial position of a registered social landlord. Therefore, it is right that it should be able to require a banker to provide, in confidence, information about a registered social landlord who is a customer. Clause 33 provides that restrictions can be placed on further disclosure of information. This power is not unique to the corporation. The Charity Commissioners enjoy much more widely drawn powers, and the Companies Acts provide similar kinds of powers which enable the Secretary of State to require documents to be made available.
In moving Amendment No. 113 the noble Lord, Lord Williams, seeks to prevent former employees from being required to provide information about a registered social landlord. We believe that often former employees may well have relevant information that they have gained during their employment. This may fill important gaps in the corporation's knowledge. We consider it essential that it can legitimately take steps to obtain such information. We also consider it right that the corporation should be able to obtain information from others where it has reason to believe that they may hold something that is relevant. In this context, we will look at the way in which that power would apply to their bankers. If the corporation is to have effective powers it must be able to obtain information from those who it has good reason to believe are holding relevant information. I ask the noble Lord, Lord Williams, to withdraw his amendment. I hope that he will not move either of the others.
Lord Hylton: While the Government are examining this question, will they look at how long the obligations will endure, whether they are covered, for example, by the Statute of Limitations and, if so, whether a shorter period is appropriate?
Lord Lucas: I will come back to the noble Lord, Lord Hylton, on that question.
Lord Williams of Elvel: As always, I am grateful to the noble Lord for explaining the Government's reasoning behind this. I find it difficult to accept that just because there is a precedent under Charity Commission law it can be translated into Housing Corporation law. Once one has a precedent in Charity Commission law one can translate it into Housing Corporation law and then into anything else. Any other measure proposed by the Government under which a regulatory body is entitled to look at the banking records of a client will quote this Act, just as the noble Lord has quoted the Charities Act. Hitler operated in this way. A notice may be served on almost anybody. Almost any person has been involved in one form or another in a registered social landlord. I am sure that this applies not just to members of my family but to members of the noble Lord's family and others. Without any restriction whatever, notices carrying legal
1604
force—involving a contempt of Parliament if they are not obeyed—can be served on anybody who has been involved in a voluntary organisation if he is not prepared to give the kind of information that the Housing Corporation, in its great wisdom—I am sure that it will have great wisdom—requires. The Housing Corporation can serve notices on people who may be completely innocent of any offence and may not have known what on earth was going on five years ago when they were members of a housing association, registered social landlord or whatever. The notice can be served on any other person who the corporation has reason to believe is or may be in possession of relevant information.
Hitler would have been proud of this clause. It gives the corporation blanket authority to serve notice on anybody who it believes is able to contribute. The only protection is that afforded to solicitors. I understand why solicitors want to be protected on the basis of privileged communications, but if they are to be protected I see no reason why bankers should not enjoy the same protection. I am not here to defend bankers. The noble Lord, Lord Boardman, is a good advocate for bankers. But I believe that the Government have to watch this very carefully. I hope that the noble Lord will take on board what I say. The whole of this matter, as regards bankers and anybody else who the corporation believes may have information that it wants, gives rise to general disquiet. I very much hope that before we come to Report stage the noble Lord will reconsider the clause and amend it accordingly. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 114 to 117 not moved.]
Clause 30 agreed to.
Clause 31 [Enforcement of notice to provide information, &c.]
[Amendment No. 118 not moved.]
Lord Lucas Lord Lucas moved Amendment No. 119:
Page 19, line 16, at end insert—
("() Proceedings for an offence under subsection (1) or (2) may be brought only by or with the consent of the Corporation or the Director of Public Prosecutions.").
The noble Lord said: I spoke to Amendment No. 119 with Amendment No. 46. I beg to move.
[Amendments Nos. 119A and 119B, as amendments to Amendment No. 119, not moved.]
On Question, Amendment No. 119 agreed to.
Clause 31, as amended, agreed to.
5 p.m.
Clause 32 [Disclosure of information to the Corporation]:
Lord Lucas Lord Lucas moved Amendment No. 120:
Page 19, line 40, leave out subsection (5).
The noble Lord said: I shall speak at the same time to Amendments Nos. 123, 192 and 276.
Clauses 32 and 33, which deal respectively with disclosure of information to and by the corporation, contain definitions of "enactment". A definition is

1605
necessary in order to determine the information which may be disclosed and which may be subject to restriction on disclosure. There is currently no definition of "enactment" in the Bill: a consequence no doubt of splitting what was once one Bill into two, one of which this place has already looked at in some detail. A definition of "enactment" is required for the Bill as a whole. Amendment No. 276 inserts it into Clause 202. That definition, which is the same as that currently used for the purposes of Clauses 32 and 33, will, by virtue of Amendment No. 192 to Clause 63, apply to the whole of Part I. Amendments Nos. 120 and 123 therefore dispense with the definition in Clauses 32 and 33. I beg to move.
On Question, amendment agreed to.
Clause 32, as amended, agreed to.
Clause 33 [Disclosure of information by the Corporation]:
[Amendment No. 121 not moved.]
Lord Lucas Lord Lucas moved Amendment No. 122:
Page 20, line 27, at end insert—
("Proceedings for such an offence may be brought only by or with the consent of the Corporation or the Director of Public Prosecutions.").
The noble Lord said: I spoke to this amendment with Amendment No. 46. I beg to move.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 123:
Page 20, line 30, leave out subsection (7).
The noble Lord said: I spoke to this amendment with Amendment No. 120. I beg to move.
On Question, amendment agreed to.
Clause 33, as amended, agreed to.
Clause 34 [Standards of performance]:
[Amendment No. 124 not moved.]
Clause 34 agreed to.
Clause 35 [Information as to levels of performance]:
[Amendment No. 125 not moved.]
Lord Lucas Lord Lucas moved Amendment No. 126:
Page 21, line 9, at end insert—
("Proceedings for such an offence may be brought only by or with the consent of the Corporation or the Director of Public Prosecutions.").
The noble Lord said: I spoke to this amendment with Amendment No. 46. I beg to move.
[Amendments Nos. 126A and 126B, as amendments to Amendment No. 126, not moved.]
On Question, Amendment No. 126 agreed to.
Clause 35, as amended, agreed to.
Clause 36 [Issue of guidance by the Corporation]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 127:
Page 21, line 42, at end insert—
("() the devolution to tenants of decisions concerning the management of housing accommodation.").
The noble Baroness said: The amendment proposes the addition to Clause 36(2) of another subject for guidance by the corporation. In this case, it is the devolution to tenants of the decisions about the management of housing accommodation. Although I have my reservations about guidance, and would in many cases prefer something a little firmer than allowing guidance to include certain matters, I recognise that in listing those matters the Government are giving their support to the subjects that are set out.
The amendment seeks to build on an amendment moved by my honourable friend the Member for Southwark and Bermondsey when he sought to introduce a new clause which he called the democratisation of social housing management. The amendment does not go as far as his amendment. I have attempted to take account of the Minister's comments in response to my honourable friend.
The Committee will, I am sure, share my concern that tenants who are, in this sense, customers of the housing services provided, have the greatest stake in the accommodation which they occupy. Almost invariably they are the best people to comment upon how best that accommodation should be managed. They may well be the best people to take the decisions. I seek to ensure that the corporation raises the issue of devolution of decision making to the tenants in the guidance which it produces.
Clearly tenants in different types of accommodation, possibly in different communities, will differ one from another. Fully to take account of tenants' views and make the management of their accommodation not just accountable to them but their own management as far as possible is essential to good housing and good social policy.
In response to my honourable friend, the Minister said that he shared many of the sentiments behind his proposal for democratisation, and that tenants have an important part to play in management. He said that the degree to which they would want to become involved would vary, and that it was not possible to draw up a blueprint. Of course I accept that. I would go further and say that in providing for devolution of decision making it is essential that the body that devolves the decision making should assist in the process. One cannot expect people who are not used to taking certain decisions to move from possibly not even being present to listen to taking the decision without—I hope that this does not sound too paternalistic—having some assistance in ensuring that the process works as well as possible.
Encompassed in these two lines is a great deal of work for the Housing Corporation and the tenants, but it is something which should be on the face of the Bill. I beg to move.
Lord Lucas: We agree, if I heard the noble Baroness aright, with everything that she said. Clause 36 is not exclusive. We do not have to list everything in the clause. She will remember that on the last Housing Bill we had extensive discussions with the noble Lord, Lord Howie of Troon, who wanted to amend and add

1607
to such lists. I hope that the fact that we propose to accept the amendment will not upset the noble Lord too much.
On Question, amendment agreed to.
[Amendment No. 128 not moved.]
Baroness Hamwee Baroness Hamwee moved Amendment No. 129:
Page 22, line 14, leave out subsection (7).
The noble Baroness said: The amendment seeks to take out subsection (7) of Clause 36, which provides that the corporation may have regard to the extent to which guidance has been followed when considering action to secure the proper management of the affairs of a registered social landlord, or whether there has been mismanagement. I wonder whether using guidance to decide whether there has been mismanagement is giving too much scope for abuse. That may be putting the matter a little high but I believe that it compromises the independence of housing associations.
Clause 36(2) provides that guidance may, in particular, deal with the demands for which provision should be made and how; the allocation between individuals; and the terms of the tenancies and rents set in principle. Subsection (7) provides that the Housing Corporation may have regard to the extent to which that guidance, as well as other guidance, has been followed. Might that not give inappropriate scope for government views, for instance, to be given rein to; perhaps views on allocation to asylum seekers?
We must remember that the voluntary housing movement comprises independent bodies, most of which are charities. I suggest that government interference should be resisted and kept to the minimum that is necessary to deal with oversight. If there has been actual mismanagement there has been mismanagement, but choosing whether or not to follow Housing Corporation guidance should not put an association in fear of Housing Corporation intervention. I beg to move.
Lord Lucas: I appreciate what the noble Baroness said. It is true that the clause provides only for the issue of guidance on various matters. However, the issues to be covered by such guidance are of considerable importance. They include allocation policies; services to tenants; terms of tenancies and calculation of rents; standards of maintenance and repair; complaints procedures for tenants; and consultation and communication with tenants.
It does not appear to us acceptable to say that when considering whether or not to use these important powers the corporation cannot have regard to the extent to which a registered social landlord is following the guidance issued under this clause. The guidance represents accepted good practice. Failure to follow good practice could have major implications for tenants. It could also have implications for taxpayers where, for instance, there is inadequate maintenance and repair. These are clearly matters of relevance to the management of public stock.
This is not a matter of the independence of registered social landlords. The proper independence of the social housing sector will be recognised in the guidance which
1608
is issued. The provision is about the failure to follow that guidance. I understand the noble Baroness's anxieties but I hope that she will be prepared to withdraw the amendment.
Baroness Hamwee: I do not believe that I should push my luck. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 36, as amended, agreed to.
Clause 37 [Powers of entry]:
Lord Lucas Lord Lucas moved Amendment No. 130:
Page 22, line 30, at end insert—
("() Proceedings for an offence under subsection (3) may be brought only by or with the consent of the Corporation or the Director of Public Prosecutions.").
The noble Lord said: I spoke to this amendment with Amendment No. 46. I beg to move.
[Amendments Nos. 130A and 130B, as amendments to Amendment No. 130, not moved.]
On Question, Amendment No. 130 agreed to.
Clause 37, as amended, agreed to.
Clause 38 [Penalty for obstruction of person exercising power of entry]:
Lord Lucas Lord Lucas moved Amendment No. 131:
Page 22, line 45, at end insert—
("() Proceedings for such an offence may be brought only by or with the consent of the Corporation or the Director of Public Prosecutions.").
The noble Lord said: I spoke to this amendment with Amendment No. 46. I beg to move.
On Question, amendment agreed to.
Clause 38, as amended, agreed to.
5.15 p.m.
Baroness Hamwee Baroness Hamwee moved Amendment No. 132:
After Clause 38, insert the following new clause—
STANDARDS OF PERFORMANCE OF THE CORPORATION
(". The Corporation shall, after consultation with persons or bodies appearing to it to be representative of registered social landlords and any other persons or bodies that it thinks fit, from time to time—

(a) publish a statement of the standards of performance that it intends to achieve in connection with its duties under sections 30 to 38 of this Part:

(b) arrange for publication, in such form or manner as it considers appropriate, of the standards so determined;

(c) arrange for publication, in such form or manner as it considers appropriate but at intervals of no more than one year, of a comparison between its actual performance and the standard of performance determined under paragraph (a), and a statement of the action that it is taking to correct any shortfalls in its performance.").

The noble Baroness said: The amendment inserts a new clause to provide for the Housing Corporation and its equivalent in Wales to be required after consultation to publish from time to time a statement of the standards of performance which it intends to achieve and to arrange for that publication.
The amendment addresses a fundamental anxiety which I can express without in any way making pejorative remarks about the Housing Corporation as it exists. It is not intended to be an attack; it is intended to be a positive move to make the corporation more accountable to the public and to registered social landlords for the way in which it carries out its routine regulatory functions.
The Bill re-enacts and extends the powers of the corporation to regulate, to give guidance on and to monitor the activities of housing associations and, in the future, all registered social landlords. I do not seek to challenge that role. It is, of course, a counterpart to the channelling of public funding through the corporation. I appreciate too that private lenders who invest in housing associations need the reassurance that monitoring is being properly conducted.
However, any system of supervision and regulation should have a basic principle that is transparent to all concerned. That allows decision makers and those who are affected by regulation to assess the risks involved and also to understand the way in which their performance is being measured. One of the anxieties about the increasing use of performance indicators is that they can be read out of context and it is important to make measures of performance clear.
The amendment would require the corporation to publish a statement drawing the links between the risks that are envisaged and the actions that it will carry out to guard against or to mitigate them. Social landlords have costs imposed upon them by regulation. The regulatory decisions affect their day-to-day activities. They have a need to know. The amendment provides for procedures and timescales and it also requires the corporation to compare its intended performance with its actual performance.
Since the Bill was published I have received, as no doubt have other Members of the Committee, the Housing Corporation paper entitled Changing Responsibilities: The Housing Corporation's Priorities and Targets for the period 1996 to 1999. It may well be that the Minister will tell me that the fact that such a document is published should allay my fears. Of course, it does not do so because arrangements can change. However, it is useful to point to two or three words in the document. In talking about the achievements since the 1988 Housing Act, the report refers to the corporation's tasks as having increased in both scale and complexity and refers to its business responsibilities. It also has a section on administration and efficiency. That is rightly a very businesslike approach to what is very big business. But it is big business conducted on behalf of the public. It is public sector money, public sector business. I believe that, accordingly, public sector accountability to the relatively limited extent I am proposing is the minimum which the public is entitled to expect. I beg to move.
Lord Williams of Elvel: I support the amendment. As I said on Second Reading, one of the fundamental problems in the Bill is in relation to the accountability of the Housing Corporation. This amendment addresses that problem. It may not do so in words which the
1610
Government like and it may be that there are other points which we should wish to build in. But there is a fundamental principle which at present is not observed that the Housing Corporation should be treated, as I think I said on Second Reading, like any other government department. In other words, it should produce an annual report, and that annual report should be scrutinised by Parliament. It should produce an annual report, in the words of the amendment,
"after consultation with persons or bodies appearing to it to be representative of registered social landlords and any other persons or bodies that it thinks fit from time to time".
It must publish a statement of standards of performance. It must justify its existence and how it operates, and Parliament must approve.
The amendment covers a large part of my argument. I hope very much that the Government will not simply brush it aside. As I said on Second Reading, the Housing Corporation is to be given massive powers. Our discussions on Clause 30 have shown them to be even more massive than I had originally expected. If that is so, it is only right that the corporation should come under proper parliamentary control and be properly accountable. For that reason, on this side of the Committee, we strongly support the amendment moved by the noble Baroness, Lady Hamwee.
Lord Lucas: I hope that I shall be able to give the noble Baroness some comfort on this matter. We are very much ad idem as regards wanting this body to be properly accountable. What we are doing and what we propose to do, we believe, will be as good as that which the proposed amendment seeks to achieve. Responsibility for the corporation rests with the Secretary of State. He allocates funding to the corporation and sets the broad targets which he expects it to achieve in support of government policy.
Lord Williams of Elvel: I apologise for interrupting the Minister at the beginning of his speech, but there lies the problem. The Housing Corporation is responsible to the Secretary of State. If the Housing Corporation and Housing for Wales are to be properly accountable, they should be properly accountable to Parliament and not the Secretary of State. We have heard time and time again that the Secretary of State cannot answer questions because the organisation involved is a quango or a new next steps agency. That is the problem which appears in the first sentence of the noble Lord's brief.
Lord Lucas: I understand that that is an argument advanced in relation to quangos. However, we believe that it is a structure which has great advantages in some circumstances; namely, it can be allocated clearly defined tasks in a limited policy area where some distance from day-to-day politics is a positive advantage. We believe that that applies to the Housing Corporation and that it is better off with its present status. The noble Lord, Lord Williams, may not be aware that the noble Lord, Lord Carter, on 3rd July, will be advocating that powers be taken away from the Ministry of Agriculture and given to a new quango.
Lord Williams of Elvel: I am all in favour of my noble friend advocating that powers be taken away from the

1611
Ministry of Agriculture since it made such an absolute, total nonsense of the beef crisis. In view of that, I believe that all powers should be taken away from the Ministry of Agriculture. That has nothing to do with the present argument.
Lord Lucas: It illustrates the point that, in the right circumstances, the noble Lord's party is prepared to advocate the use of the particular structure which is used for the Housing Corporation. It is something which has positive advantages, and we believe that that is so in this particular case. Nevertheless, it must be made properly accountable.
Baroness Jay of Paddington: I hesitate to intervene in a debate which is certainly not my concern. However, the noble Lord, Lord Lucas, referred to my noble friend's Starred Question which is tabled for 3rd July. I do not wish to read my noble friend's mind but I believe that he is suggesting that the Food Standards Agency should be placed within the Department of Health rather than remain a responsibility of MAFF. That is certainly my understanding of the phrasing of the Question. If that is the reference which the noble Lord makes, I suspect that he is mistaken.
Lord Lucas: I shall wait to see whether I am correct. I may have misunderstood the noble Lord.
The corporation is required to report annually to the Secretary of State who, in turn, is required to lay copies of the report before Parliament. Parliament exercises its oversight of the corporation's performance through its normal processes. It may require the Secretary of State to report to it on any specific aspect or it may call the corporation to account for its performance to any of the committees established for that purpose in another place. It is also subject to the oversight of the Comptroller and Auditor General.
The corporation supports and assists the Secretary of State to meet government policies and objectives. It rightly falls to the Secretary of State to set targets for the corporation covering each of its functions. That is done through the annual corporate plan prepared by the corporation and discussed and agreed with the Secretary of State. In setting out its proposals for approval the corporation is expected to have regard to the impact its plans will have on the sector and to ensure they make a contribution towards the Government's objectives. The corporation has also established a practice, referred to by the noble Baroness, Lady Hamwee, whereby it publishes annually at the commencement of the financial year a three—year planning document where it sets out in detail the objectives agreed with the Secretary of State.
The committee chaired by the noble and learned Lord, Lord Nolan, has recently examined public spending bodies, including housing associations. One aspect it looked closely into was the openness and accountability of the corporation in its regulatory function. It recommended that the corporation give more consideration to bringing into the public arena more information on its performance as a regulator and the lessons learned from its regulatory interventions in housing associations and registered social landlords.
1612
The corporation is actively considering those recommendations and will be giving effect to them later this year.
In general, the Housing Corporation, like other public bodies, takes its responsibilities seriously and is striving to be more open and consultative. Following debate in another place, we introduced a series of statutory duties to consult. But there is a danger of over—prescription.
The noble Baroness proposed that the corporation be required to consult annually before setting its performance targets under its regulatory powers as detailed in Clauses 30 to 38 of the Bill. The corporation is required to take soundings from the sector and those involved in it before submitting its proposals covering all of its functions to the Secretary of State for approval. A separate exercise here would appear to be unnecessary.
The noble Baroness also proposed that the corporation publish its proposals and arrange for publication, at least annually, of a comparison of performance against the targets set. We support the thought which lies behind that, but the corporation already publishes an annual report which is presented to the Secretary of State and laid before Parliament. That would seem to be the appropriate vehicle for such comparisons.
The corporation is taking forward a number of measures designed to improve its accountability to Parliament, the registered social landlord sector and the wider public. It strives to be a best practice organisation. It is accountable to the Secretary of State and serves a vocal and well-informed sector. To introduce a further requirement for consultation and publication would be an unnecessary administrative burden and would be unlikely to add to the information already in the public domain, particularly in view of the further assurances that I have given today. I consider the new clause to be unnecessary. I invite the noble Baroness to withdraw the amendment.
Baroness Hamwee: The Minister said that the Housing Corporation and Housing for Wales are responsible to the Secretary of State. He then went on to say that they should be distanced from politics. I do not believe that I need do more to ally those two comments than say that the Minister cannot have it both ways. What the noble Lord described could be put in rather different words; for example, a rather cosy tête-à-tête between the corporation and the Government, not the consultation that the amendment proposes.
The Minister told us that the Nolan Committee has recommended that more information be put into the public arena. He also gave us assurances that the corporation is actively considering those recommendations and that it will take action later this year. We are so often reminded about the shortage of parliamentary time. However, we have a big housing Bill before us which deals with the Housing Corporation. Why do the Government fear using the Bill as a vehicle for widening the responsibilities of the Housing Corporation in the area of openness, transparency and consultation; and, indeed, as regards working with others in the sector?
The Bill seems to me to be the most appropriate vehicle for taking all those activities further and putting into legislative form the assurances that we are being asked to

1613
take account of this afternoon. Virtually everyone else in the sector suffers prescription from the Bill; I do not believe that the Housing Corporation should be an exception. I should like to test the opinion of the Committee.
5.32 p.m.
On Question, Whether the said amendment (No. 132) shall be agreed to?
Their Lordships divided: Contents, 74; Not-Contents, 146.

Division No. 1

CONTENTS

Addington, L.

Jenkins of Putney, L.

Allenby of Megiddo, V.

Judd, L.

Archer of Sandwell, L.

Kilbracken, L.

Barnett, L.

Lockwood, B.

Beaumont of Whitley, L. [Teller.]

McIntosh of Haringey, L.

Berkeley, L.

Mackie of Benshie, L.

Blease, L.

McNair, L.

Borne, L.

Mar and Kellie, E.

Broadbridge, L.

Masham of Ilton, B.

Carmichael of Kelvingrove, L.

Mason of Barnsley, L.

Carter, L.

Merlyn-Rees, L.

Clinton-Davis, L.

Methuen, L.

Cocks of Hartcliffe, L.

Mishcon, L.

Dahrendorf, L.

Monkswell, L.

David, B.

Morris of Castle Morris, L.

Dean of Beswick, L.

Nicol,B.

Dean of Thornton-le-Fylde, B.

Rea, L.

Dormand of Easington, L.

Rochester, L.

Dubs, L.

Rodgers of Quarry Bank, L.

Farrington of Ribbleton, B.

Russell, E

Fisher of Rednal, B.

Seear, B.

Fitt, L.

Sefton of Garston, L.

Gallacher, L.

Simon, V.

Geraint, L.

Stoddatt of Swindon, L

Glenamara, L.

Strabolgi, L.

Graham of Edmonton, L. [Teller.]

Taylor of Blackburn, L.

Gregson, L.

Tenby, V.

Grey, E.

Thomas of Walliswood, B.

Hamwee, B.

Thomson of Monifieth, L.

Harris of Greenwich, L.

Tordoff,L

Haskel, L.

Turner of Camden, B.

Hilton of Eggardon, B.

Wallace of Coslany, L.

Hollis of Heigham, B.

Wallace of Saltaire, L

Howie of Troon, L.

Wharton, B.

Hylton, L.

White, B.

Jay of Paddington, B.

Williams of Elvel, L.

Jeger, B.

Winston, L.

NOT-CONTENTS

Aberdare, L.

Brabazon of Tara, L.

Ailsa,M

Braine of Wheatley, L.

Aldington, L.

Bridgeman, V.

Alexander of Tunis, E

Brougham and Vaux, L.

Ashbourne, L.

Bruntisfield, L.

Astor of Hever, L

Cadman, L.

Balfour, E.

Campbell of Alloway.L

Barber, L.

Carew, L

Berners, B.

Carnegy of Lour, B.

Biddulph, L.

Carnock L.

Birdwood, L.

Chalker of Wallasey, B.

Blake, L.

Chelmsford, V.

Blatch, B.

Chesham, L. [Teller.]

Blyth, L.

Clanwilliam, E.

Boardman,L.

Clark of Kempston, L.

Bowness, L.

Courtown, E.

Boyd-Carpenter, L.

Craigavon, V.

1614

Cranborne, V. [Lord Privy Seal]

Mowbray and Stourton, L.

Crickhowell, L.

Moyne, L.

Cuckney, L.

Munster, E.

Darcy (de Knayth), B.

Napier and Ettrick, L.

Dean of Harptree, L.

Nelson, E.

Denton of Wakefield, B.

Newall, L.

Dixon-Smith, L.

Norrie, L.

Eden of Winton, L.

Northesk, E.

Ellenborough, L.

O'Cathain, B.

Elton, L.

Onslow, E.

Feldman, L.

Orkney, E.

Ferrers, E.

Orr-Ewing, L.

Gainsborough, E.

Oxfuird, V.

Gardner of Parkes, B.

Palmer, L.

Gisborough, L.

Park of Monmouth, B.

Goschen, V.

Pender, L.

Gray of Contin, L.

Peyton of Yeovil, L.

Gridley, L.

Pilkington of Oxenford, L.

Grimston of Westbury, L.

Plummer of St Marylebone, L.

Halsbury, E.

Quinton, L.

Harding of Petherton, L.

Rankeillour, L.

Hardinge of Penshurst, L.

Rawlings, B.

Harmsworth, L.

Reay, L.

Hayhoe, L.

Rees, L.

Henley, L.

Renfrew of Kaimsthorn, L.

Holderness, L.

Rodney, L.

Hothfield, L.

Romney, E.

Huntly, M.

Saint Albans, D.

Hylton-Foster, B.

St. Davids, V.

Inchyra, L.

St John of Bletso, L.

Kimball, L.

Saltoun of Abernethy, Ly.

Kingsland, L.

Sandford, L.

Savile, L.

Lane of Horsell, L.

Seccombe, B.

Lauderdale, E.

Sharples, B.

Leigh, L.

Shaw of Northstead, L.

Lindsay, E.

Simon of Glaisdale, L.

Lindsey and Abingdon, E.

Soulsby of Swaffham Prior, L.

Long, V.

Stevens of Ludgate, L.

Lucas, L.

Stockton, E.

Lyell, L.

Strange, B.

McConnell, L.

Strathcarron, L.

Mackay of Ardbrecknish, L.

Strathclyde, L. [Teller.]

Mackay of Clashfern, L. [Lord Chancellor.]

Sudeley, L.

Swinfen L.

Mackay of Drumadoon, L.

Tebbit, L.

Macleod of Borve, B.

Teviot, L.

Marlesford, L.

Thomas of Gwydir, L.

Massereene and Ferrard, V.

Trumpington, B.

Mersey, V.

Ullswater, V.

Middleton, L.

Wade of Chorlton, L.

Miller of Hendon, B.

Weatherill, L.

Milverton, L.

Whitelaw, V.

Monteagle of Brandon, L.

Wilcox, B.

Montgomery of Alamein, V.

Wise, L.

Mottistone, L.

Wynford,L.

Mountevans, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
5.41 p.m.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 133:
Before Clause 39, insert the following new clause—
SOLVENCY TEST OF SOCIAL LANDLORD
(". The tests of solvency or otherwise of a registered social landlord shall be those specified in section 123 of the Insolvency Act 1986.").
The noble Lord said: It may be for the convenience of the Committee if I also speak to Amendment No. 134. The problem of solvency is one which has exercised many people and many minds which are

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more learned than mine. At the moment I am wholly unclear about what the Government mean by solvency in the case of a registered social landlord. Having followed the progress in this Chamber of the Insolvency Act, as it now is, in 1986, I think I am aware of what is insolvency in terms of a company under the Companies Act. Where I am in doubt is how the Government recognise—or how anyone recognises—solvency or insolvency in the case of a registered social landlord; in other words, in the case of a housing association.
I shall refrain from drawing the attention of the noble Lord, Lord Lucas, to the problem involved with the possible differential definition of solvency between a Companies Act company and a housing association or a registered social landlord which is not a Companies Act company. No doubt we shall discuss those matters further on Report. However, there seem to me to be some serious differences at the moment between the two. I should be grateful therefore if, in response to my amendment, the Minister would give the Committee a clear definition of what insolvency means in terms of a social landlord. What is the solvency test? Is it the same solvency test as in Section 123 of the Insolvency Act 1986, and, if not, what is it? If that is the case, how does that chime with other insolvency regulations? If, indeed, the Minister cannot give a true explanation, will he take this away and consider giving such an explanation when we reach Report stage?
I hope that I do not have to emphasise to the Minister that this is a question of enormous importance. Those who trade—even people who trade for non—profit, however that is defined, and we are not entirely clear on that—when insolvent commit criminal offences. That is particularly true of companies under the Companies Act 1985. I very much hope that the noble Lord will be able to give the Committee a clear and defined view of what solvency means in the case of a registered social landlord. If he cannot do that, I hope that he will take it away and give us such a definition when we reach the Report stage. I beg to move.
Lord Lucas: At the risk of getting a hasty note from the Box, I think the answer to the noble Lord's question is in the words "Insolvency, &c.". This is not really a section about insolvency; it is a section about insolvency and that sort of thing with "and that sort of thing" being rather loosely defined, and powers being there to modify and extend it to deal with any sort of problem which may arise which could tip a registered social landlord into the sort of difficulties from which the corporation would want to be able to dig it out.
Looking first at the particular amendment which the noble Lord, Lord Williams, has proposed—
Lord Williams of Elvel: Before the noble Lord goes on, he has referred to "Insolvency &c". That is in the rubric of the clause. The rubric of the clause, when it is enacted, is not part of the legislation.
5.45 p.m.
Lord Lucas: I quite agree, but I hoped that it might give a clue as to where this part of the Bill is heading. We are not trying to redefine insolvency; we are trying to define a set of circumstances where the Housing Corporation should have to take action. Insolvency is the base of that. I address myself first to the particular amendment that the noble Lord, Lord Williams, has proposed. He will see that this section deals with much wider circumstances because the amendments he has proposed would prevent the powers in Clauses 39 to 49 taking effect where creditors are enforcing security for other reasons—for instance, where a property is being used for purposes not specified in the charge deeds. One such example, is if the housing association was running a bordello, and another is where a landlord who has received transferred local authority stock has failed to meet designated right-to-buy targets. These are clearly nothing to do with insolvency but they trigger events and securities and create the sort of problem one would meet with insolvency.
It is that whole set of circumstances that we are dealing with in these clauses. One might also suggest the case where lenders dissent from the terms of a proposed merger of two social landlords. We are dealing in these clauses with a much wider set of circumstances than insolvency. Financial failure among housing associations is, thankfully, as yet unknown. There are severe difficulties but, to date, meltdown has been avoided with help from the Housing Corporation. Therefore the use of the new powers that we propose will clearly not be an everyday occurrence. Indeed one might look at them as a backstop. The fact that they are there may well mean that under normal circumstances they are never used.
Lord Williams of Elvel: I am sorry to interrupt the noble Lord in mid-flight but he says that these are almost unknown circumstances. Nevertheless the clause deals with interventions by the corporation under the circumstances which—leaving aside the rest of it—I have described; that is, insolvency. It may be "Insolvency,&c.", but it is also insolvency. The question that I am putting to the noble Lord is not whether there has been any case of insolvency in housing associations; it is not even whether there has ever been a case of insolvency in Companies Act companies, because there have been many cases of insolvency of Companies Act companies; I am trying to elicit from the noble Lord a definition of what constitutes insolvency in a housing association. Is it that it cannot pay its bills over the next 12 months? Is it, alternatively, that it has a negative net worth? Is it, alternatively, that it has negative current assets? Is it, alternatively, that it is trading at a loss and that in the short term it cannot meet the provisions of that loss? I search for a definition. If a housing association is registered as a social landlord, should the Bill be enacted, what should it and the corporation regard as an issue which justifies intervention under this clause?
Lord Lucas: I hope that as I continue I shall throw some light on the noble Lord's question. However, the

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fundamental answer is that the Bill does not define insolvency. Those definitions are contained in other Acts. The Bill is concerned with consequences of events which occur when a company becomes insolvent.
Lord Williams of Elvel: I am sure that the noble Lord will throw a lot of light on the matter when he responds. However, perhaps he will be good enough to tell me in which sections of which Acts insolvency is defined for housing associations, or registered social landlords as we now call them. I know about the Companies Act. That information would remove the need for my amendment referring to the Insolvency Act 1986.
Lord Lucas: It is the Act which contains the governing law on insolvency. That is the Act which we would expect to apply to housing associations, not through the instrument of this Bill but because that legislation applies to them anyway.
The Bill is designed to deal with the consequences of insolvency, and events which have a similar effect to insolvency, to make sure that housing can be retained within the social sector rather than having to be disposed of on the open market with all the consequences that that would have for tenants.
I shall come to the ways in which the Bill works with the insolvency laws, but I do not believe that it is intended that the Bill should create any separate definition of insolvency. The triggering point is a step taken by someone, usually a secured creditor, which results in the social landlord being in danger of dissolution and its assets being sold in the private sector.
Clauses 39 to 49 are triggered by an event. I do not believe that there is any necessity in that process to define insolvency. One merely defines the set of events which trigger those clauses, some of which might involve an insolvency process, and some of which might be matters totally unconnected with insolvency but connected with the specific terms of a charge that a lender has over a piece of property.
Lord Williams of Elvel: I believe that this will be a continuing debate. Under the Insolvency Act 1986, the main burden of declaring a company insolvent is not on a secured creditor or a shareholder. It is on a board of directors which takes the view, on advice, that its company should no longer be trading. In other words, if it goes against the advice it will be trading when insolvent and trading unlawfully.
The noble Lord recognises the problem that I put forward. He states that events are triggered by a secured creditor. They are not triggered by a secured creditor but by a director of the company—under the Companies Act in the case of a Companies Act 1985 company.
Will the same arrangements be relevant for the council of a housing association? Are they relevant at present? If the council of a housing association decides under the terms of Section 123 of the Insolvency Act, even if it is an industrial provident society, "We cannot go on trading because we are insolvent", does that
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trigger the matters which the noble Lord explained to me under Clause 39 of the Bill? If that is the case, let us know it.
Lord Lucas: We are in some difficulty because we are referring to different things. The noble Lord talks about matters governed by the governing legislation of the specific type of vehicle. It may be a Companies Act company, an industrial provident society, a charitable trust or various other types of vehicle. Whether or not they are insolvent will depend on the legislation governing those types of vehicle.
This Bill is concerned with the consequences of insolvency: that the housing may be put in danger of being sold on the open market. It concerns the corporation's power to deal with that, whether or not the event is due to insolvency.
Perhaps I may be allowed to make some progress in my general peroration on the subject. I do not count on giving the noble Lord the comfort that he requires but it may at least help.
The consequences of insolvency for all parties could be disruptive and expensive. The housing and public funds invested could be transferred from the social rented sector to the private rented sector. Rents could and very likely would rise to market levels. Housing benefit expenditure would rise. The Government, taxpayers and tenants would lose the benefit of the sub-market rents secured by the original capital subsidy.
This Bill introduces a moratorium following insolvency during which creditors will not be able to dispose of the landlord's land. During this period the corporation will develop a proposal which will retain the housing within the social rented sector, if necessary transferring it to an alternative landlord. With the secured creditor's consent the corporation will be able to appoint a manager to implement all or part of its proposal.
The provisions in the Bill represent a major improvement on the current position. Existing legislation does not give the corporation any right to intervene or any powers to assist if a housing association faces insolvency. The matter is dealt with entirely informally at present.
The Bill provides a statutory role for the corporation to draw up proposals which protect tenants and taxpayers' funds. It ensures that there is no leakage of social housing out of the sector until the corporation has tried to sort things out.
The earlier versions of these clauses were unacceptable to lenders because they put the corporation in control and removed lenders' automatic right to enforce their security in line with their charge deeds. After extensive discussion, the clauses were radically revised so that the corporation could act only if it had the unanimous consent of secured creditors. Lenders are now broadly content with the clauses.
The main body of existing law governing insolvency is contained in the Insolvency Act 1986. By and large the provisions in Clauses 39 to 49 run parallel with this legislation. Thus, while Clauses 40 and 41 require creditors of a registered social landlord to give notice to

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the corporation before and after they take a step to enforce their security, creditors are not prevented from taking such steps. So receivers or administrators could be appointed to manage the landlord's assets. A liquidator could be brought in to wind up the landlord or the creditor could take over as mortgagee in possession of the landlord's housing.
There are, however, two ways in which Clauses 39 to 49 affect the operation of established insolvency law. First, as soon as any step is taken to enforce security over a landlord's land there is, as I mentioned, a time-limited moratorium on the disposal of that land. This means that for the duration of the moratorium, which will be a minimum of 28 days, neither the landlord nor any creditor or insolvency practitioner can dispose of the land. They can engage in other activities. For instance, a receiver could take over the management of the housing, but he would not be able to sell it. The moratorium provides essential protection to the landlord's tenants and taxpayers' money which has been invested in his housing. During this period, the corporation will put forward a proposal which seeks to retain the housing within the social rented sector. The agreement of all secured creditors will be needed before the proposal can be implemented. This is the second area where these clauses affect existing insolvency legislation.
The proposals put forward by the corporation, once agreed by secured creditors, bind both those creditors and any insolvency office holder appointed over the landlord. An insolvency officer's powers may be derived from statute case law or from contract. Whatever the basis on which an office holder, for instance, a receiver, administrator or liquidator, has been appointed, his action must not frustrate the implementation of the corporation's proposal. For instance, an insolvency office holder would not be able to derail the implementation of a proposal by selling property which was affected by the proposal.
It is possible that the corporation will not be able to put together a proposal that secures the unanimous consent of the insolvent landlord's secured creditors. If the moratorium ends without an agreed proposal in place, then the corporation will bow out and creditors will be free to proceed without further corporation involvement. The restraint on the disposal of the landlord's housing will be lifted. There will then be no guarantees that it will remain within the social rented sector. This is a situation which the corporation would strive to avoid; but the Government have accepted that if an acceptable corporation proposal is not available, then lenders must be able to protect their investors and take whatever action is open to them to recover their money. There are a number of amendments later which will clarify some of the particular aspects of the ways in which the proposals will work.
The noble Lord, Lord Williams, asked earlier whether the Companies Act insolvency arrangements would be appropriate for a housing association. If a housing association decides that it cannot go on trading, it would tell its bank which would enforce its security or
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it would resolve to be wound up, both of which are events mentioned in Clause 40(2) as triggering the provisions of this part of the Bill.
6 p.m.
Lord Hylton: I am very much in sympathy with the Government's intentions in the clauses. It is most important to protect tenants and to ensure, so far as possible, that social housing remains available for its primary purpose. The same applies to land intended for social housing. However, I urge the Government to take into account also the interests of unsecured creditors. I think particularly of builders, contractors and suppliers of a wide range of goods and equipment. Such people may well think that they are dealing with strong, well-endowed associations, trusts or authorities. If they go bankrupt, the consequences for employment are likely to be rather serious. I do not know whether the Government can do anything to give protection in that direction. I do not expect an immediate reply, but it is worthy of consideration.
Lord Williams of Elvel: I am sure that the Government will give their reply in the course of time. I am grateful to the Minister for explaining the purpose of Clause 39. I still have problems about insolvency and what constitutes insolvency across the range of those organisations under different governing Acts who could be registered social landlords. I hope that when we come to Report the Government will have sorted out their position on it because I believe there is a difference between a Companies Act company, an industrial provident society and a charity, as well as the duties of directors of a Companies Act company and a member of the council of a housing association under the Housing Act, and so on. This lends force to Amendment No. 135 which I shall move later. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 39 [Insolvency, &c. of registered social landlord: scheme of provisions]:
[Amendment No. 134 not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 135:
Page 23, line 16, at end insert—
("() The Corporation shall establish and publish a Code of Practice as to the use of its powers under the sections listed in subsection (1) above, taking account of the interests of the tenants of the registered social landlord and the interests of the landlord and its creditors, both secured and unsecured, and shall—

(a) consult such bodies appearing to it to be representative of tenants, registered social landlords and lenders as it considers appropriate, before establishing the Code; and

(b) review and amend the Code if requested to do so by the Secretary of State or whenever it considers this to be necessary, and in doing so shall consult the bodies referred to in paragraph (a) above.").

The noble Lord said: This amendment stands in my name and that of the noble Baroness, Lady Hamwee. It is exactly what I was trying to get from the Government in our last discussion, that the corporation should establish a code of practice on how it will use its powers under Clause 39(1). It seems to me, from what the noble Lord, Lord Lucas, said, that it would be a worthwhile

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exercise and we could all understand better than I do at the moment what the Government intend by the legislation. I beg to move.
Lord Lucas: In considering this amendment, I ask the Committee to remember that the new powers in Clauses 39 to 49 are likely to be used on very few occasions. There is no telling when these powers will first be used—it could well be several years from now—or what circumstances the corporation will face when it finds it has to use them. Given this unpredictability, we do not believe that the general code the noble Lord has in mind would be particularly useful. The corporation and others would have to engage in some highly speculative thinking about the wide range of circumstances the corporation might confront in real life. It is quite possible that lenders, the National Federation of Housing Associations and tenants' organisations, would labour for months to produce a statutory document which is then not used for several years and which, when it is at last used, does not actually help the corporation to tackle the case that it is confronting.
The powers in these new clauses are important, and we have no doubt that the corporation will want to think carefully about how it might use them. My honourable friend in another place agreed to consider whether a code of some description would be appropriate. The Government have concluded that there is merit in drawing up a code of guidance on the procedures that each party would follow when the powers are used. This would help to ensure that the new powers worked smoothly, so that there are no procedural hiccups—for instance, on the giving of notice, or on the way in which the corporation consults and has regard to various parties' interests.
However, I do not think that the kind of statutory code that the noble Lord described in his amendment would be an especially helpful or useful document when it came to a messy real life situation. Indeed, the existence of a rigid statutory code drawn up on a basis which must necessarily at present be speculation and guesswork could frustrate the successful use of the clauses, whatever the situation that they might be called upon to deal with. In the light of those comments, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Williams of Elvel: The Minister has put his finger on the point. The clauses have been arrived at after a great deal of negotiation between the Government, the Housing Corporation, private lenders and the NFHA. All admit, as the Minister admitted, that there are certain to be flaws, rough edges and difficulties in their application, if occasion ever arises for the clauses to be invoked.
We shall come to subsection (3) and the power of the Secretary of State to amend Clause 39 as he wishes. The problem is that registered landlords do not know how the Housing Corporation, the Secretary of State or anyone else will approach the powers under Clause 39. All we ask is that the delicate balance between lenders, tenants, social landlords and the corporation should in
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some form be set out so that people could be a little more certain than at the moment flow Clause 39, which was scrambled together in something of a hurry, might operate in the future.
I am not asking for a code of practice that is set for ever in stone. It is simply a statement which may come in a ministerial statement at Report stage and we would welcome it. The statement would be on how the clause might be operated by the Housing Corporation. Having heard what the Minister said, and with those comments, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 136:
Page 23, line 21, leave out ("(including a floating charge)").
The noble Lord said: The order of the wording on page 23 line 21 is a little odd. A "floating charge" is a floating charge; in other words, it is a charge over the assets of an organisation. It is transferable from one asset to another. That is the definition of a floating charge. There can be no such thing as a floating charge over land. In the Bill as worded, it seems to be a floating charge over land; but, as any qualified accountant or banker could tell the Committee, that is not sensible. I ask the Government to look at the drafting.
It may be for the convenience of the Committee if, while I am on my feet, I address Amendment No. 137. Although it is not formally in the grouping, it might be useful for me to do so, if it is acceptable to the Committee in order to get proceedings moving.
Amendment No. 137 allows the Secretary of State to make provision defining the purposes of the section. This relates to Amendment No. 135, which we discussed. I find it an odd and uncomfortable situation whereby a clause is produced in a Bill; the Secretary of State can amend the clause as he wishes and any such order is by negative instrument. That is the purpose of Amendment No. 137. I hope the Committee will not mind my speaking to the two amendments together. The one relating to the floating charge is a technical one. I beg to move.
Lord Lucas: I am in complete agreement with the noble Lord, Lord Williams, as to what a floating charge is and what its definition is. The reference to a floating charge in Clause 39 is intended to make it clear that the term "secured creditor" encompasses a creditor holding a floating charge over a landlord's assets which happen to include his land. There is nothing in the present wording that would lead us to adopt a more unusual or restrictive interpretation of the term "floating charge". The present wording therefore appears to us to be adequate. Nevertheless, we shall reflect on the noble Lord's remarks and check again as to whether there is any need to amend it. I hope that will enable the noble Lord, Lord Williams, to withdraw that amendment.
Turning to Amendment No. 137, in order for these clauses to work effectively, lenders and the corporation must have a clear idea of the triggers that will activate a moratorium. In the large majority of cases the steps being taken to enforce security will be familiar ones—for instance the appointment of a liquidator, administrative receiver, or receiver.

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But these are not the only actions that secured creditors may take. Lenders may also decide to use their mortgagee in possession powers. There may be specific terms within a charge deed that we would wish to define as constituting a "step". We need to bear in mind, too, that lending practices to this sector are evolving and becoming more sophisticated. The forms of security that lenders are taking are becoming more varied. The provisions in Clauses 39 to 49 need to be able to keep up with such developments.
We therefore need to discuss with lenders whether there are any other actions that should be included in the definition of a "step". These would then be set out in a statutory order, to supplement the specific notice provisions on the face of the Bill. I hope that explains why we feel that we need that particular part of the Bill.
Lord Williams of Elvel: I am grateful to the Minister for his response. The question of the floating charge is a matter of drafting. I suggest that line 20 on page 23 of the Bill might read: "'Secured creditor' means a creditor who holds a floating charge or a mortgage or charge over land". Then, as a banker, I think I should understand it. The wording as it stands seems to confuse what is a floating charge with a mortgage or charge over land. I offer that suggestion in the friendliest possible spirit to the parliamentary draftsman.
Turning to the question of the Secretary of State amending Clause 39, I am grateful for the Minister's remarks. He said that the Secretary of State would consult widely before making such provisions. That is the point that we are trying to get at. It cannot just be for the Secretary of State, on a whim or whatever, to make an order subject to negative resolution procedure. On the assurance that the Secretary of State, whoever he or she may be in the future, will consult widely on the application of subsection (3) of Clause 39, I beg leave to withdraw Amendment No. 136.
Amendment, by leave, withdrawn.
[Amendment No. 137 not moved.]
Clause 39 agreed to.
Clause 40 [Initial notice to be given to the Corporation]:
Lord Lucas Lord Lucas moved Amendment No. 138:
Page 23, line 31, leave out ("in writing").
The noble Lord said: I spoke to this amendment with Amendment No. 56. I beg to move.
On Question, amendment agreed to.
6.15 p.m.
Lord Lucas Lord Lucas moved Amendment No. 139:
Page 24, line 10, leave out ("charitable trust") and insert ("registered charity (other than a company registered under the Companies Act 1985)").
The noble Lord said: In moving this amendment, I shall speak also to Amendments Nos. 140, 147 and 148.
Clauses 40(4) and 41(4), as drafted, do not apply to registered charities which are neither Companies Act companies nor trusts. Such registered landlords should be covered by the requirement to give notice contained in these clauses. Amendments Nos. 139 and 140 achieve this.
Clauses 40(5)(a) and 41(5) exempt certain bodies such as the Attorney-General and the Charity Commissioners from giving notice to the Housing Corporation. The assumption is that the corporation will not require notice, because these are public bodies and the corporation will know what they are doing without requiring formal notice.
In reality the corporation will not always have close contacts with such bodies. The exemption on giving notice effectively places an onus on the corporation to keep abreast of what these other bodies are doing, and on those bodies to keep the corporation informed. On balance, it seems simpler to extend the requirement to give notice so that it applies to these bodies, and Amendments Nos. 147 and 148 achieve that. I beg to move.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 140:
Page 24, leave out lines 15 to 17.
The noble Lord said: I have just spoken to this amendment. I beg to move.
On Question, amendment agreed to.
[Amendment No. 141 not moved.]
Clause 40, as amended, agreed to.
Clause 41 [Further notice to be given to the Corporation]:
Lord Lucas Lord Lucas moved Amendment No. 142:
Page 24, line 23, leave out ("in writing").
The noble Lord said: I spoke to this amendment with Amendment No. 56. I beg to move.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 143:
Page 24, line 24, leave out ("events") and insert ("steps").
The noble Lord said: In moving this amendment, I shall speak also to Amendments Nos. 144 to 146, 149, 150, 155, 158, 180, 189 and 193.
Amendments Nos. 143, 144, 145, 146, 149, 150, and 155 replace the terms "events" and "occur" with "steps" and "are taken", thereby standardising the terminology used in Clauses 39 to 49.
Amendments Nos. 158, 180, 189 and 193 ensure that the references to trusts in Clauses 44, 57 and 63 and paragraph 7(6) of Schedule 2 tie in with existing charities legislation. I beg to move.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendments Nos. 144 to 148:
Page 24, line 24, leave out ("occurs") and insert ("is taken").
Page 24, line 29, leave out ("events") and insert ("steps").
Page 24, line 38, leave out ("events") and insert ("steps").

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Page 25, line 5, leave out ("charitable trust") and insert ("registered charity (other than a company registered under the Companies Act 1985)").
Page 25, line 10, leave out subsection (5).
The noble Lord said: I have spoken to these amendments. I beg to move.
On Question, amendments agreed to.
Clause 41, as amended, agreed to.
Clause 42 [Moratorium on disposal of land, &c.]:
Lord Lucas Lord Lucas moved Amendments Nos. 149 and 150:
Page 25, line 16, leave out ("events") and insert ("steps").
Page 25, line 16, leave out ("occurs") and insert ("is taken").
The noble Lord said: I spoke to both of these amendments with Amendment No. 143. I beg to move.
On Question, amendments agreed to.
Lord Lucas Lord Lucas moved Amendment No. 151:
Page 25, line 21, leave out from ("or") to end of line 23 and insert ("any person having a power of disposal in relation to the land").
The noble Lord said: In moving this amendment I shall speak at the same time to Amendments Nos. 153 and 154.
The current drafting of the Bill fails to include certain parties, such as mortgagees in possession, in the moratorium on the disposal of land. In order to be effective the moratorium should apply to any person who has a power of disposal in relation to the land. Amendment No. 151 achieves that.
It is possible that any of the steps described in Clause 39 may be rescinded during the period of a moratorium. The landlord might, for instance, have been able to satisfy the requirements of the creditor who sought to enforce their security. In those circumstances the threat to the future of the landlord's social housing will have receded, and the corporation will no longer need to develop a proposal. The need for a moratorium on disposals will also have disappeared.
Amendments Nos. 153 and 154 recast Clause 43 to give the corporation the power to terminate a moratorium if it believes that the continued management of the landlord's housing by a registered landlord can be achieved without making a proposal. I beg to move.
Lord Williams of Elvel: I am a little concerned about the wording:
"any person having a power of disposal in relation to the land".
I understand from the Minister's explanation that that means that organisations, such as banks, building societies or whatever, will have a charge over the land which is the subject of Clause 42. Whether that contains a power of disposal is a moot point as is the question of whether a charge in itself constitutes a power of disposal.
This may be a drafting point, but I should be grateful if the noble Lord could clear it up.
Lord Lucas: I cannot clear it up on the hoof. But I shall certainly write to the noble Lord.
Baroness Hamwee: This is similar to a point about charges, assignments and disposals which occurred earlier in the Bill. I believe that the noble Lord will find
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that he is satisfied with the response that comes via the Minister, because charges generally do contain assignments.
On Question, amendment agreed to.
[Amendment No. 152 not moved.]
Clause 42, as amended, agreed to.
Clause 43 [Period of moratorium]:
Lord Lucas Lord Lucas moved Amendments Nos. 153 to 155:
Page 25, line 35, leave out subsection (1) and insert—
("(1) The moratorium in consequence of the taking of any step as mentioned in section 41—

(a) begins when the step is taken, and

(b) ends at the end of the period of 28 days beginning with the day on which notice of its having being taken was given to the Corporation under that section,

subject to the following provisions.").
Page 26, line 7, leave out subsection (4) and insert—
("(4) If during a moratorium the Corporation considers that the proper management of the landlord's land can be secured without making proposals under section 44 (proposals as to ownership and management of landlord's land), the Corporation may direct that the moratorium shall cease to have effect.
(4A) When a moratorium comes to an end, or ceases to have effect under subsection (4), the Corporation shall give notice of that fact to the landlord and the landlord's secured creditors.
(4B) When a moratorium comes to an end (but not when it ceases to have effect under subsection (4)), the following provisions of this section apply.
The Corporation's notice shall, in such a case, inform the landlord and the landlord's secured creditors of the effect of those provisions.").
Page 26, line 11, leave out ("occurs") and insert ("is taken").
The noble Lord said: I spoke to these amendments with Amendments Nos. 151 and 143. I beg to move them en bloc.
On Question, amendments agreed to. Clause 43, as amended, agreed to.
Clause 44 [Proposals as to ownership and management of landlord's land]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 156:
Page 26, line 27, leave out (", so far as is practicable,").
The noble Lord said: Clause 44 deals with the proposals as to ownership and management of the landlord's land. Subsection (2) of the clause, as drafted, states that:
"In drawing up its proposals the corporation…shall consult the landlord and, so far as is practicable, its tenants".
I am not entirely certain that "so far as is practicable" is the right expression. I can understand that there may be some difficulty in consulting all the tenants, but I do not believe that such a general let out should be available to the corporation. I hope very much that the Government will find some rather better expression or give some better assurance as to what is meant than appears on the face of the Bill as drafted. I beg to move.
Lord Lucas: We have considerable sympathy with the sentiment behind this amendment. The period during a moratorium will be an anxious one for tenants as they wait to see how the future ownership of their homes will be determined.

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Were it not for the corporation's intervention at this stage, future ownership would be determined solely by the creditors; tenants would be completely sidelined, and their homes could be sold to an unregistered private sector landlord. The corporation will want to work for the benefit of tenants to avoid that—that is the primary purpose of Clauses 39 to 49—and will want, so far as possible, to consult tenants as it prepares its proposal.
We must bear in mind the constraints under which the corporation will be operating. It will have a very short period of time—possibly as little as 28 days—to undertake the complicated task of putting together a workable proposal. A detailed analysis of the landlord's assets and finances will be needed; intensive discussions with all the secured creditors will have to be held; possible alternative registered landlords will need to be identified and approached; and suitable arrangements will have to be made for the appointment of a manager to implement the proposal.
We should also bear in mind that the landlord may have hundreds, if not thousands, of tenants. While tenants are in many cases organised into representative groups and associations, that is not always the case. In times of stress, such as those confronting the tenants of an insolvent landlord, differences of opinion and factionalism among tenants' groups can all too easily develop.
It is right that the corporation should be required to consult tenants. But in the circumstances that I have described, that requirement must be tempered by a sensible appreciation of what can realistically be achieved. Placing an unqualified duty on the corporation to consult tenants could not only make the preparation of a proposal immeasurably more difficult, but would also expose the corporation to an increased possibility of legal challenge by any tenant who felt that the corporation had not discharged its duty fully. That could frustrate the implementation of a proposal, to no one's benefit.
I believe that the noble Lord agrees with the direction of our thought and merely questions the particular wording that we have chosen. We are content that the wording we have chosen will achieve the effect that we want; namely, the duty to look after the tenants is there but the corporation is not required to do anything which is impracticable. It has to take practical decisions, given all the constraints upon it.
We shall return to the wording when we come to Amendment No. 157. I hope that the noble Lord will feel that for this amendment and for Amendment No. 157 it is a reasonably well tried phrase, which will produce the right result if ever we come to such an unhappy pass.
Lord Williams of Elvel: I am grateful to the Minister for his response and for recognising my concerns. What he said makes very good sense. It must be the right direction in which to go. If I questioned the wording, it was simply to elicit from the Minister the kind of response that he gave. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lucas Lord Lucas moved Amendment No. 157:
Page 26, line 42, at end insert—
("() So far as practicable no proposals shall be made which have the effect that unsecured creditors of the landlord are in a worse position than they would otherwise be.").
The noble Lord said: I hope that this amendment will answer some of the questions raised earlier by the noble Lord, Lord Hylton.
Clause 45 provides that a proposal may be implemented only if the corporation has obtained the unanimous consent of the landlord's secured creditors. That clearly puts secured creditors in a powerful position. Each secured creditor has an effective power of veto, which none of the other parties—the landlord, tenants, or unsecured creditors—enjoys.
This balance acknowledges the reality of an insolvency situation. When a landlord has become insolvent it is the secured creditors' interests that come to the fore. They will have effective control over the housing on which they have secured their loans. If the corporation is to protect tenants and publicly—funded assets, it is the secured creditors with whom it must deal.
A landlord will have unsecured creditors, too, however, and the Bill as currently drafted makes little provision for them. In an insolvency situation unsecured creditors generally come off pretty badly and have to share between them whatever value is left after secured creditors have taken their cut.
So unsecured creditors will be at the back of the queue. But they should not then be further disadvantaged when the corporation steps in with its proposal. Because of the strong position of secured creditors, the corporation may feel under pressure to protect their interest in developing its proposal, to the possible detriment of the already weak position of unsecured creditors. That would not be acceptable.
We therefore want to amend the current Clause 45 to make it clear that the corporation must not develop a proposal which either deliberately or inadvertently leaves unsecured creditors in a worse position than they would be in were the corporation not to intervene. I hope that gives the comfort sought by the noble Lord, Lord Hylton, that there is no way in which secured creditors can put pressure on the corporation successfully to have the corporation develop a proposal which would disadvantage unsecured creditors.
Amendment No. 157 requires that, so far as practicable, no proposals shall be made which would leave unsecured creditors worse off than they would have been had a proposal not been made. The corporation will have to engage in a certain amount of speculative thinking about how unsecured creditors might fare if a proposal was not being made. It will not have a great deal of time in which to do so. That is why the qualification covering practicability has been built into this clause.
However, the corporation will be expected to take all steps practicable in the time available to assess the position of unsecured creditors and ensure that the proposal the corporation develops does not leave such creditors worse off than would otherwise be the case. In many instances unsecured creditors may be better off as

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a result of a proposal. For instance, the transfer of an insolvent landlord's debts to another, financially sound, landlord should put unsecured creditors in a better position. I do not say that that will always be the case; but it may often be. Whatever the situation, the implementation of a proposal should certainly not leave unsecured creditors still further out of pocket. The amendment is designed to avoid that possibility. I beg to move.
6.30 p.m.
Lord Hylton: I am somewhat reassured by the Minister's explanation in relation to unsecured creditors. I am also happy to note the reference to them on both pages 26 and 27. However, if the Minister felt able to write to me regarding the employment considerations and how these measures will work in practice I should be extremely grateful.
Lord Williams of Elvel: I am not certain about this amendment. I accept that the corporation has a duty under Clause 44 to put forward proposals. In spite of what the noble Baroness, Lady Hamwee, said earlier, secured creditors have different types of security which may or may not involve the assignment of assets. As the noble Lord rightly points out, unsecured creditors, in Companies Act terms, come just before the shareholders.
I am not certain how the corporation can form proposals which protect the secured creditors—which they must do, as I understand it—leave the unsecured creditors no worse off than they otherwise would be and, at the same time, secure certain things that the corporation needs. Something has to give, so far as it is practicable.
What is going to give? In normal circumstances, if an administration takes control of a company and disposes of the assets, a receiver takes control and winds up the company or there is a voluntary winding-up of the company, the unsecured creditors take their lumps, as the noble Lord said; they are unsecured.
At the moment I am unclear, and hope that the Minister can help me, as to how unsecured creditors can be no worse off than they would be were the corporation not to intervene and yet the corporation have power—given the protection of the secured creditors—to intervene in the way the clause invites it to?
Lord Lucas: It may not always be the case, but in principle it should often be the case. A block of flats owned by a social landlord will be a difficult asset to sell on the open market. If it is sold to a private-sector landlord there will be a large number of extremely angry and disaffected tenants, which will not make it an attractive proposition for many landlords. On the other hand, if it is sold or transferred under Housing Corporation aegis to another social landlord which is better managed and is used to dealing with those matters, then it will be trusted by the tenants and have a higher potential value.
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It is a question of the difference between realisation value and going-concern value when it comes to accounts. If the Housing Corporation can work the trick, the asset should be worth more than it would be if there was subsequent liquidation.
Lord Williams of Elvel: I accept that and that is absolutely right. The problem is, assuming that there is no going concern, how can the Housing Corporation produce a proposal—as the amendment requires—which leaves the unsecured creditors no worse off than they would otherwise be? I do not understand how the Housing Corporation can fulfil that requirement. I can understand how it can take over a block of flats and sell it under its aegis at a going—concern value which would protect the unsecured creditors. However, that is not what the amendment says.
Lord Lucas: I find myself at a loss in encompassing the problem envisaged by the noble Lord, Lord Williams. However, I shall consider what he said and write to him. So far as I can see, there may be occasions when the Housing Corporation cannot work this trick and therefore cannot produce a proposal. But one would hope that in most cases it would be able to do so.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 158:
Page 26, line 44, leave out ("charitable").
The noble Lord said: I spoke to Amendment No. 158 with Amendment No. 143. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 159 and 160 not moved.]
Clause 44, as amended, agreed to. Clause 45 [Effect of agreed proposals]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 161:
Page 27, line 28, at end insert—
("but nothing in this subsection shall require the members, directors and trustees referred to in this subsection to act in a manner contrary to their fiduciary or other obligations as members, directors or trustees or affect their rights, including their right to resign.").
The noble Baroness said: In moving Amendment No. 161 I shall speak also to Amendment No. 162, which is a government amendment.
Amendment No. 161 provides that directors, members and trustees are not required to act in conflict with their fiduciary or other obligations since it would be unreasonable and probably unlawful for them to do so, and that the provisions of Clause 145 shall not affect their rights, including their right to resign.
The clause requires directors, members and trustees to co-operate in the implementation of the corporation's proposals. However, it is conceivable that they could be placed in a difficult or even an impossible position—there may be a conflict between their duties under this clause and their fiduciary duties. The corporation has wide powers but I do not believe that they should be so wide as to place the persons referred to in that situation.
The government amendment contains similar provisions, though it does not go so far as to deal with the question of the right to resign. I beg to move.
Lord Lucas: We are clearly ad idem on the first part of this amendment because Amendment No. 162 covers the situation. In relation to the right to resign, our legal advice is that, in the absence of express provision, the requirement to co-operate contained in Clause 45(3) would not affect the right to resign and therefore that part of Amendment No. 161 is unnecessary.
Baroness Hamwee: I am glad to have that assurance. On that basis, and on the assumption that the noble Lord is about to move Amendment No. 162, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lucas Lord Lucas moved Amendment No. 162:
Page 27, line 28, at end insert—
("This does not mean that they have to do anything contrary to any fiduciary or other duty owed by them.").
The noble Lord said: I have just spoken to Amendment No. 162. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 163 and 164 not moved.]
Clause 45, as amended, agreed to.
Clause 46 [Appointment of manager to implement agreed proposals]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 165:
Page 28, line 2, leave out ("of the registered social landlord").
The noble Lord said: At present, the wording of Clause 46 implies to us that the manager will take over the whole running of the association. I am not sure that that is what the Government intend. Nor is it borne out by the powers of the manager, which do not include the convening and holding of board meetings, but are largely related to transactions dealing with land. This point was debated in another place but there was a somewhat inconclusive result. I believe it is worth hearing what the Government feel about this because it seems to us that the wording of Clause 46 as presently drafted is defective. I beg to move.
Lord Lucas: It seems only fair, having given an amendment to the noble Baroness, Lady Hamwee, to give one to the noble Lord, Lord Williams, as well. The quality of his draftsmanship is well known but it is very rarely that the parliamentary draftsman cannot find any reason to argue. This is one occasion.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 166:
Page 28, line 4, at end insert—
("() If the landlord is a registered charity, the Corporation shall give notice to the Charity Commissioners of the appointment.").
The noble Lord said: In moving this amendment, I wish to speak at the same time to Amendment No. 167. Amendment No. 166 places an obligation on the corporation to notify the Charity Commissioners if it
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decides to appoint a manager under Clause 46. The Charity Commission itself has powers to appoint managers under certain circumstances and it is important that the commission knows if and when the corporation decides to appoint a manager under these provisions. Amendment No. 167 removes the Secretary of State's power to make an order stipulating the qualifications that a manager appointed under Clause 46 should possess.
The corporation's proposal will have been drawn up after close consultation with the landlord, his secured creditors and the tenants. It will be in the interests of all parties to ensure that any manager appointed to implement the proposals should possess the necessary qualifications and experience. He must command the confidence of all the parties involved. The qualifications that are required will depend on the nature of the tasks that the manager has been appointed to carry out. In some instances, an experienced housing manager may be the most appropriate appointment. In others, someone with an insolvency or accounting qualification might be more suitable. It would be difficult for the Secretary of State to make an order covering all these eventualities. The judgment on what kind of manager is needed is best left to the corporation and the other parties to the proposal. I believe that we can trust to their good sense to ensure that a suitable appointment is made. I beg to move.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 167:
Page 28, line 8, leave out subsection (3).
The noble Lord said: I have just spoken to this amendment. I beg to move.
On Question, amendment agreed to. Clause 46, as amended, agreed to.
Clause 47 [Powers of the manager]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 168:Page 29, line 17, at end insert—
("(The manager shall consult and inform, so far as is practicable, the tenants of the landlord on such matters in the exercise of his powers as are likely to affect them.").
The noble Baroness said: It sounds as though the Minister may be in a giving mood. I hope that may extend to this amendment. Under Clause 44(2), the corporation is to consult tenants in drawing up its proposals so far as is practicable. It is consistent with this that in implementing proposals the manager should keep the tenants well informed of his actions and consult them "so far as is practicable". I hope that a manager would consider it appropriate to consult tenants affected by his actions without requiring a legislative obligation to tell him so. I think it is appropriate to add this protection since tenants are not specifically protected by the clause against actions by a manager not in accordance with agreed proposals. We referred earlier today, in the amendment which the Government accepted, to the importance of informing and consulting tenants. The importance of the general interests of tenants was accepted. I hope that the Government can accept the intention, and possibly even the words, of this amendment. I beg to move.
6.45 p.m.
Lord Lucas: We understand the reasoning behind the amendment but we hope very much that the noble Baroness will understand that the parliamentary draftsman must be allowed some pride. On this occasion he would wish to consider the precise wording of any such provision.
Baroness Hamwee: I hope I may take that as "We shall take this away and consider how we may implement the notion behind the amendment". I think I understand the noble Lord to be saying that and of course the parliamentary draftsman should put it into proper language. After all, there are jobs to be protected. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lucas Lord Lucas moved Amendment No. 169:
Page 29, line 18, leave out subsection (3).
The noble Lord said: In moving this amendment, I wish to speak at the same time to Amendment No. 171. One solution to the housing association's insolvency that the corporation might propose is a transfer of engagements between industrial and provident societies. This is currently addressed by Clause 48(3). This subsection makes it clear that the manager may be given power to effect a transfer of engagements but does not make provision for the Registry of Friendly Societies to register such a transfer as it would if the transfer were being effected under the Industrial and Provident Societies Act 1965.
Amendment No. 169 removes Clause 47(3), and Amendment No. 171 subsumes that subsection and makes suitable provision for the registration of the instrument of transfer. The amendment also preserves the rights of creditors of the original—in this case, insolvent—society so that they have the same rights in relation to the receiving society. Equivalent provision is contained in Section 54 of the Industrial and Provident Societies Act 1965. I beg to move.
On Question, amendment agreed to.
[Amendment No. 170 not moved.]
Clause 47, as amended, agreed to.
Lord Lucas Lord Lucas moved Amendment No. 171:
After Clause 47, insert the following new clause—
POWERS OF THE MANAGER: TRANSFER OF ENGAGEMENTS
(".—(1) An order under section 46(1) may, where the landlord is an industrial and provident society, give the manager power to make and execute on behalf of the society an instrument transferring the engagements of the society.
(2) Any such instrument has the same effect as a transfer of engagements under section 51 or 52 of the Industrial and Provident Societies Act 1965 (transfer of engagements by special resolution to another society or a company).
In particular, its effect is subject to section 54 of that Act (saving for rights of creditors).
(3) A copy of the instrument, signed by the manager, shall be sent to the appropriate registrar and registered by him; and until that copy is so registered the instrument shall not take effect.
(4) It is the duty of the manager to send a copy for registration within 14 days from the day on which the instrument is executed; but this does not invalidate registration after that time.").
The noble Lord said: I spoke to this amendment with Amendment No. 169. I beg to move.
On Question, amendment agreed to.
Clause 48 [Assistance by the Corporation]:
Lord Monkswell Lord Monkswell moved Amendment No. 172:
Page 29, leave out line 34.
The noble Lord said: This amendment seeks to delete the reference to the Housing Corporation lending staff to a registered social landlord. There is confusion with regard to staff in that situation. Would they be responsible to the Housing Corporation or would they be responsible to the registered social landlord? Bearing in mind the powers of the Housing Corporation to install a manager to sort out the affairs of a registered social landlord, there will be confusion as to the position of a loaned member of staff. I hope the Government will accept that what they propose is probably not the best way to go forward. I beg to move.
Lord Williams of Elvel: I support my noble friend's amendment. The expression "lend staff— is pretty odd. Staff are not there to be lent; they are human beings. They can be sent on secondment or detached, but they cannot be lent. I query whether the drafting is right and whether it is appropriate that the corporation should detach or second any staff, whether we are talking about the Housing Corporation or Housing for Wales, to give assistance for the purposes of Clause 48. Who and how should they be responsible? And what is the chain of command? My noble friend has put his finger on an interesting point. I hope that the Government have taken note of it.
Lord Lucas: I trust that I can give some comfort to the noble Lords, Lord Monkswell and Lord Williams, on this occasion. The corporation will be acting in very difficult circumstances to protect tenants' and taxpayers' money if this particular part of the Bill is to come into effect. We are concerned that it should be given maximum flexibility to carry out its difficult task, which should include the ability to lend staff to assist the landlord or the manager. On our reading of the corporation's powers, we are uncertain at the moment that it has the ability to do that. We do not expect that the corporation will want to very often.
The careful control exercised by the Government over running costs means that it is very unlikely that the corporation will ever be able to spare staff for such a task for very long. But there may be occasions when this approach is the most sensible and cost-effective way of achieving a particular task. An individual may have been responsible for looking after the affairs of a particular social landlord for a long while. He is the most reliable person who knows the details of that social landlord's operations and the person best placed to advise the manager appointed under the Bill.
The noble Lord, Lord Monkswell, was anxious about a possible conflict of interest. I can reassure him. The loaned member of staff will be appointed to implement a part of the corporation's proposal or to assist the landlord in some specified way. The corporation, the landlord and the creditors should by that time be

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working towards a common goal and the loan of a member of staff would be designed to help in the achievement of that goal. I hope that that gives the noble Lord the comfort he requires to enable him to withdraw his amendment.
Lord Monkswell: I am reassured to some extent by what the Minister said. I would have thought that the provision of assistance to the registered social landlord by the Housing Corporation would be incorporated in the wording of the clause. I suspect that the ability to loan staff will give rise to difficulties to a greater extent than it will provide assistance. On the basis of the Minister's assurance, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 173 not moved.]
Clause 48 agreed to.
Clause 49 [Application to court to secure compliance with agreed proposals]:
Lord Lucas Lord Lucas moved Amendment No. 174:
Page 30, line 17, leave out subsection (3).
The noble Lord said: Clause 49(3) restricts the legal challenge to which a manager may be subject under Clause 49(1). This provides the manager with very wide immunity which, given the significant responsibilities he may exercise, might be regarded as too generous. The manager may, for instance, be in a position of fiduciary duty and there is no reason why he should not be open to proceedings for breach of such duty. Amendment No. 174 removes Clause 49(3) thereby removing the limitation on legal challenge. I beg to move.
On Question, amendment agreed to.
Clause 49, as amended, agreed to.
Clause 50 [Schemes for investigation of complaints]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 175:
Page 31, line 2, leave out subsection (4).
The noble Lord said: In moving this amendment it may be for the convenience of the Committee if I speak to Amendment No. 176 standing in the name of the noble Earl, Lord Ferrers. I believe that both amendments are in search of the same point. The Secretary of State has to go through some procedure in order to amend the description of landlords. The government amendment meets my anxiety and I hope that the Minister will be able to move it. I beg to move.
Lord Lucas: Both amendments concern the Secretary of State's powers to make changes to the description of the landlords who are to be treated as social landlords for the purposes of membership of an improved ombudsman scheme. Amendment No. 175 would prevent the Secretary of State from adding to, or amending by order, the description of landlords who are to be treated as social landlords. Subsection (2) of the Bill identifies the categories of landlord currently appropriate to be regarded as social landlords.
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As the noble Lord, Lord Williams, will appreciate, the world of social housing is not static. In time other categories of landlord may need to be brought into the statutory scheme. I instance housing investment trusts. We are here looking just at the ombudsman scheme rather than it being brought into the Bill as a whole.
While we do not have any particular category of new landlord in mind, it is important that when they do appear we are able to ensure straightaway that tenants have recourse to the approved ombudsman as soon as possible. To achieve that we are proposing that the Secretary of State should have the power by order to amend the description of social landlord. That will not affect those landlords who, under Schedule 2, can voluntarily choose to join the scheme.
Amendment No. 176, which I propose to move, is required to rectify an omission identified by the Delegated Powers Scrutiny Committee. We are grateful to it for doing so. Because any amendment to the description of landlords is likely to be relatively simple, we had intended that the Secretary of State's order-making powers should be subject to negative resolution procedures. However, due to an oversight, the necessary provision was omitted. The purpose of the government amendment is to correct the omission. I am pleased to say that in its report the Delegated Powers Scrutiny Committee agreed that the negative procedure would be appropriate.
Lord Williams of Elvel: I am grateful to the noble Lord for his response to my amendment and for acknowledging the oversight that took place in the Government's deliberations. On the assumption that the noble Lord will move Amendment No. 176, I beg leave to withdraw Amendment No. 175.
Amendment, by leave, withdrawn.
Lord Lucas Lord Lucas moved Amendment No. 176:
Page 31, line 6, at end insert—
("( ) Any such order shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.").
The noble Lord said: To give the noble Lord, Lord Williams, the required comfort, I beg to move.
On Question, amendment agreed to.
Clause 50, as amended, agreed to.
Schedule 2 [Social rented sector: housing complaints]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 177:
Page 131, line 24, at end insert—
("(16A. A duty of the Housing Ombudsman annually to consult its members on its activities and costs.").
The noble Lord said: We now move to Schedule 2. It may be for the convenience of the Committee if I also speak to Amendment No. 178 standing in my name and that of the noble Baroness, Lady Hamwee. As drafted, Schedule 2 does not oblige the housing ombudsman to consult members on activities and costs. Ombudsman schemes, if I may call them that, might draw up annual budgets in a fashion without regard to the costs for members or for value for money. The amendment that

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I propose will provide a formal mechanism for members of an ombudsman scheme to comment on the activities, costs and budgets and, therefore, it will provide a degree of influence over the level of contributions that they may have to make. We want to ensure that the independent housing ombudsman schemes which are established are responsive to their members and have regard to value for money in the service that they provide.
Amendment No. 178, if accepted, will require that consultation takes place with the representatives of social landlords before any ombudsman scheme, or any amendment to a scheme, is approved. In general, housing associations welcome the Bill's provisions for an independent statutory ombudsman. Membership of an ombudsman scheme will be compulsory for registered housing associations and, in future, for all registered social landlords. These landlords will have to meet the costs of the scheme, which is not unreasonable, and they will be affected by decisions taken by the ombudsman under the scheme. In our view, it is equally reasonable that registered social landlords should be properly consulted about the ways in which such schemes will operate. To date, the clause has been phrased to allow for consultation to be carried out either by the Secretary of State or anyone else who proposes an ombudsman scheme or changes to a scheme. We believe that the Secretary of State should be obliged to consult such bodies representative of social landlords as he thinks fit, and that is the object of Amendment No. 178. I beg to move Amendment No. 177.
7 p.m.
Lord Lucas: If the Committee agrees, I should like to speak to both Amendments Nos. 177 and 178. Both amendments concern the scheme to be submitted by a prospective independent housing ombudsman. We fully appreciate the concerns that lie behind the first amendment in the name of the noble Lord, Lord Williams, which would require the ombudsman to consult annually with its members on its activities and costs. The noble Lord may be concerned that in setting the annual charge the ombudsman may not have regard to the impact of the costs of the service on member landlords, or to the importance of achieving value for money from the scheme. I should like to reassure the noble Lord that the Secretary of State will consider carefully the quality of any scheme and how the costs are to be defrayed by the members; in short, the value for money that the scheme provides. He will, of course, wish to ensure that the scheme is capable of being sufficiently responsive to its prospective members, while at the same time it is properly independent. If he is not satisfied on this point, he may decide not to approve the scheme.
Amendment No. 178 in the name of the noble Baroness, Lady Hamwee, would require the Secretary of State to consult with bodies representative of social landlords before approving a scheme, and is unnecessary. In submitting a scheme for the Secretary of State's approval, the prospective ombudsman will be expected to have demonstrated that social landlords and
1638
their representative bodies have been fully consulted. Given this, we see no reason for these bodies to be consulted separately by the Secretary of State.
I hope that that gives the noble Lord, Lord Williams, enough comfort to withdraw his amendment and the noble Baroness, Lady Hamwee, enough comfort not to move hers in due course.
Lord Williams of Elvel: I am grateful to the Minister for his response. He provided the comfort for which I was looking. On balance, I do not believe that it is necessary to have something on the face of the Bill. A ministerial Statement such as the one that the noble Lord has given the Committee suffices. I am grateful to the Minister for what he has said. I accept his arguments about Amendment No. 178. Unless the noble Baroness has any objection, I beg leave to withdraw Amendment No. 177. I leave it to the noble Baroness to decide whether or not she wishes to move Amendment No. 178.
Amendment, by leave, withdrawn.
[Amendment No. 178 not moved.]
Lord Lucas Lord Lucas moved Amendment No. 179:
Page 132, line 25, at end insert—
("Proceedings for such an offence may be brought only by or with the consent of the Corporation or the Director of Public Prosecutions.").
The noble Lord said: I beg to move Amendment No. 179 to which I spoke with Amendment No. 46.
[Amendments Nos. 179A and 179B, as amendments to Amendment No. 179, not moved.]
On Question, Amendment No. 179 agreed to.
Lord Lucas Lord Lucas moved Amendment No. 180:
Page 133, line 32, leave out ("charitable").
The noble Lord said: I spoke to Amendment No. 180 with Amendment No. 143. I beg to move Amendment No. 180.
On Question, amendment agreed to.
[Amendment No. 181 not moved.]
Schedule 2, as amended, agreed to.
Clause 51 [General provisions as to orders]:
On Question, Whether Clause 51 shall stand part of the Bill?
Lord Williams of Elvel: I have some difficulty with this clause. It seems to me to be, if not a Henry VIII clause, at least a Henry VII clause. The clause reads:
"(1) The following provisions apply to any power of the Secretary of State under this Part to make an order.
(2) An order may make different provision for different cases or descriptions of case…
(3) An order may contain such supplementary, incidental, consequential or transitional provisions and savings as the Secretary of State considers appropriate".
All of that is very well, and Henry VII would have been very proud of it.
Can the Minister say whether there is any restriction on the power of the Secretary of State under this clause and, if so, what it is? How does the Secretary of State,

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or a future Secretary of State, intend to use the powers under the clause? Perhaps this could take the form of a ministerial Statement. Over the years I have seen this clause before in Bills with which I have been concerned on the Opposition Bench. I have raised the same point but have never received a satisfactory answer as to how the Secretary of State may use these powers. I would be grateful if the noble Lord could give me some reassurance as to my worries.
Lord Lucas: This clause gives the Secretary of State the power to make orders containing different provisions for different cases, including provision for different housing activities and areas. For example, this may allow an order to specify different levels of discount to apply to different parts of the country when a tenant exercises a right to acquire under Clause 16, or different provisions for England and Wales. I do not believe that the Secretary of State has any thought of using these powers in a more dangerous way than that. But I am conscious that the concerns expressed by the noble Lord, Lord Williams, perhaps run deeper than I can give comfort to by those brief illustrations. I will give thought to what he has said, and if I can say anything more helpful I will write to him.
Lord Williams of Elvel: I always enjoy receiving letters from the noble Lord. He stated that the Secretary of State could order different discounts in different places in England and Wales and not be responsible to anybody for such an order. If I have misunderstood what the noble Lord has said he will tell me. It seems to me to be very odd. We are invited to pass a clause which allows the Secretary of State to make an order which determines what price someone shall pay, what discount shall or shall not be paid and what premium shall or shall not be paid without any supervision or accountability whatever. Before he sits down to write his letter, I would be grateful if in this Committee he would be kind enough to say whether or not my interpretation of the clause is correct.
Lord Lucas: To the best of my understanding the noble Lord, Lord Williams, is right in his interpretation of the clause, within of course the usual constraints that in fact the Secretary of State is responsible to Parliament.
Lord Peyton of Yeovil: I do not want to be tiresome to my noble friend, but I thought I heard him say that he did not believe that the Secretary of State had any more dangerous intention than to do those trifling things. Such knowledge as one has of Secretaries of State and such fears as one has of Secretaries of State in the future, do not leave one all that happy with my noble friend's rather hopeful mixture of hope and thought that the Secretary of State does not intend anything particularly dangerous or menacing.
Lord Hylton: On previous housing Bills it has sometimes been proposed in amendments that the level of discounts should be varied from that set out on the face of the Bill. That has pretty well always been
1640
resisted. So I find it rather surprising that it should be suggested that this or any future Secretary of State might wish to vary the discount just at his personal whim.
Lord Monkswell: This is the first time the Minister has said that the responsible Minister might vary the rate of discount depending upon the particular area or circumstances in the country. Perhaps we may probe the Government a little further on that and ask what sort of criteria he might use in reaching the judgment that a discount should be higher or lower in a particular area.
Baroness Hamwee: Perhaps I may add to the list of questions. One generally debates "son of rather than "father of', and despite Henry VII being a fairly well organised king, the points that have been made demonstrate how much there is in the clause. When the Minister responds, either this evening or on paper, could he deal with the slightly different wording of the different subsections? Subsection (3) provides for the Secretary of State to be able to make:
"supplementary, incidental, consequential or transitional provisions and savings as",
he considers appropriate. What is the import of the words, "as he considers appropriate"? Common sense tells us that he would not make such provisions if he did not consider them appropriate, but does the inclusion of the phrase import an objectivity that they must be reasonably appropriate? If that is so, why does that not apply to Clause 51(2), which is perhaps the more extensive part of the clause?
Lord Lucas: Perhaps I am now in a position to enlighten the Committee slightly more than I was before. It would appear that the order—making powers referred to in this clause are all subject to parliamentary procedures, at least negative, and that therefore all orders made under this clause will come before Parliament. What this clause does is merely to give flexibility in the design of those orders.
There is nothing in the Bill which specifies the rate of discount which should be given. That is not something which is already set down or is proposed to be set down in statute, it is something which is determined by order. What we are taking here is the power to make that a different rate in different parts of the country, and in other ways to give flexibility to the powers of the Bill to deal with particular problems which may arise on a geographical basis or between different types of landlords. However, as I have said, any proposals coming forward under this clause would find themselves before Parliament, under the negative procedure at least.
7.15 p.m.
Lord Williams of Elvel: I am moderately grateful to the Minister for that reassurance. I look forward with even greater anticipation to receiving his letter on this matter, which I am sure will enlighten me much more than I am enlightened at the moment.
Clause 51 agreed to.
Clause 52 [General provisions as to determinations]:
On Question, Whether Clause 52 shall stand part of the Bill?
Lord Williams of Elvel: Clause 52 refers not only to the Secretary of State's determinations but also to determinations made by the corporation. In the rather general manner to which we have become used, it says that this is a determination by either the Secretary of State or by the corporation (the Housing Corporation or Housing for Wales) which:
"may make different provision for different cases or descriptions of case".
I do not have to read through the whole clause for the benefit of the Committee because I am sure the Committee has read it. However it does again seem to me slightly odd that the corporation can make such determinations either of a general or, apparently, specific nature without any accountability to anyone. A general determination as defined in subsection (3) means a determination which is not particular. Obviously if it made a particular determination, it would fall under subsection (2), as I understand it.
I wonder whether the Minister can enlighten me as to what sort of determinations the corporation, leaving aside the Secretary of State because we dealt with the Secretary of State under Clause 51, is liable to make—that is, the Housing Corporation or Housing for Wales—and whether there will be any parliamentary scrutiny of any of those determinations.
Lord Lucas: Not having a ready list of the determinations in front of me, and not being able to read with sufficient speed to pick them out of the preceding parts of the Bill, I cannot give the noble Lord the exact collection of powers that he requires, but determinations are restricted to matters which we do not feel need to be brought before Parliament. Hence the corporation's power to make such determinations. The sort of matters which would be covered are grant conditions and rates, particular requirements for information to be provided by social landlords. The reason for the powers under this clause is to allow those to be varied so that different grant conditions and rates may apply, for instance, to housing designed for families, hostels, or housing designed for the disabled, according to the particular needs and requirements of those particular types of development or, when one is coming to information requirements, different information requirements, say, for a small, old, fairly static almshouse, as compared with a large and active social landlord.
Lord Williams of Elvel: Before the Minister continues, am I right in thinking that such determinations have the force of law?
Lord Lucas: Yes, Clause 52(4) requires the corporation to consult before making such determinations. Clearly, if the corporation determines that such and such information is to be required from a social landlord, there have to be some powers to back up its determination. They are in the Bill to ensure that
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where the corporation exercises the powers given to it by the Bill, those subject to the powers (social landlords) comply with them.
There is a wide range of grant rates for different types of development. We feel that is inappropriate for the Secretary of State to become involved in, let alone Parliament. We are getting down to the detail of the operation of the corporation. I do not see any sinister import in the clause. It seems to me to be a sensible provision for the flexible application of the corporation's powers which are granted elsewhere in the Bill. If the particular powers cause the noble Lord, Lord Williams, any concern, perhaps they should be addressed in the parts of the Bill which give the corporation those powers, rather than with this clause which merely gives the corporation power to use those powers flexibly and sensibly. I hope therefore that the Committee will allow the clause to stand part of the Bill.
Clause 52 agreed to.
Clause 53 agreed to.
[Amendment No. 182 not moved.]
Clause 54 [Minor and consequential amendments: Part I]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 183:
Page 32, line 7, leave out subsection (2).
The noble Lord said: It may be for the convenience of the Committee if in moving Amendment No. 183 I speak also to Amendment No. 184 in the name of my noble friend Lord Monkswell.
Whenever I see a clause entitled "Minor and consequential amendments" I become rather suspicious. Here we have it again. Subsection (2) provides that:
"The Secretary of State may by order make such amendments or repeals of any enactment as appear to him necessary or expedient in consequence of the provisions of this Part".
I understand that that does not apply to the Bill of Rights because I assume that under this clause the Secretary of State cannot make amendments to that Bill. However, I should like an assurance from the Minister that that is the case.
I have seen such a provision in previous Bills but it is odd that it is introduced without any qualification. It is carried out under negative procedure and it amends primary legislation; it is "any enactment". It is normal for the Delegated Powers Scrutiny Committee to insist that amendments to primary legislation by order are made under affirmative procedure so that Parliament at least has an opportunity to discuss them. I beg to move.
Lord Monkswell: In rising to speak to Amendment No. 183 and to the next amendment which stands in my name there is little I need add to what has been said by my noble friend Lord Williams. The Government appear to be taking rather draconian powers. On the basis that the Bill of Rights is an Act of Parliament it is therefore capable of being amended by this provision.

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We hope that the Government can assure us that their intentions are limited. However, it appears that giving themselves the power described in the clause is somewhat excessive.
Lord Lucas: The noble Lords, Lord Monkswell and Lord Williams, are right in saying that the terms within which Clause 54 is drawn are wide. They are restricted to amendments or repeals which appear to the Secretary of State to be necessary or expedient in consequence of the provisions of this part. However, they are certainly not restricted as to any particular enactment. Although I am not aware of anything in this part of the Bill which could render amendment to the Bill of Rights necessary, there is nothing in the clause as drafted which would prevent such a thing. However, in practice it is a matter which the Secretary of State's colleagues would wish to know about before he embarked on such a course of action.
Perhaps I may give comfort to the noble Lords as to why we want the clause. I am also aware that the Delegated Powers Scrutiny Committee drew the attention of the House to the provision and perhaps, with the leave of the Committee, I may take a little time to explain what, for our purposes, it means.
Clause 54 enables the Secretary of State to make, by order, such amendments or repeals of any enactment as appear to him necessary or expedient in consequence of the provisions of Part I of the Bill. I would emphasise that what is to be done must be "in consequence". We intend to use the provision to ensure, for example, that existing statutes will henceforth apply to registered social landlords, which is the term being introduced by the Bill, as they apply to registered housing associations.
In most instances, it will be sufficient to substitute "registered housing associations" with "registered social landlords". And where appropriate, a definition of registered social landlords may also be needed. An example would be amendments to Section 37 of the Land Compensation Act 1973 to provide for an entitlement to a disturbance payment in certain specified circumstances. Similar amendments are also required to the Leasehold Reform Act 1967; the National Health Service Act 1977; the Finance Act 1981; and a number of other Acts.
In a few instances, the amendment will need to reflect that the provisions in Part I of the Bill apply to registered social landlords in England and Wales only. For Scotland and Northern Ireland the existing provisions will continue to apply. An example of that would be the Inheritance Tax Act 1984.
I suspect that one of the questions which lies behind the noble Lord's amendment is why the proposed amendments are expedient as well as necessary. I can assure him that there is nothing sinister in the use of this terminology. It has been used before. Examples of that would be Section 30 of the Landlord and Tenant (Covenants) Act 1995; Sections 48 and 62 of the Agriculture Act 1993; and Section 181 of the Local Government etc. (Scotland) Act 1994. It means that we can use the powers to put beyond doubt the position
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with regard to other enactments, even if it may not be strictly necessary to make an amendment, because the courts may imply a reference to registered social landlords.
Considerable care is being taken to ensure that the amendments to be made by order will essentially be minor. Where a substantive change is justified we have proposed that it should be clearly shown on the face of the Bill, in Schedule 3, where it can be considered in detail. An example of this is the Government Amendment No. 186, which we shall consider later, affecting Section 75 of the Housing Associations Act 1985.
Turning to Amendment No. 184, I should like to reassure the noble Lord, Lord Monkswell, that we are not hiding anything in this provision. I would draw attention to the fact that the Bill, when it was in another place, originally included a list of consequential amendments at Schedule 3. I have the list, which runs to about 15 pages. We decided that they should be removed from the face of the Bill and introduced by secondary legislation precisely because they are routine in nature. They are typical of the amendments which we shall make by order.
I hope that the noble Lords, Lord Williams and Lord Monkswell, feel sufficiently comfortable to withdraw their amendments.
Lord Williams of Elvel: I am grateful to the Minister. He has certainly enlightened me as to what this extraordinary clause is about. I must read carefully what he has said. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 184 not moved.]
Clause 54 agreed to.
Schedule 3 [Social rented sector: minor amendments]:
Lord Lucas Lord Lucas moved Amendment No. 185:
Page 136, line 35, at end insert—
(". Section 33 of the Housing Associations Act 1985 (recognition of central association) shall cease to have effect.").
The noble Lord said: In moving Amendment No. 185 I shall speak also to Amendment No. 271. The amendment is introduced to amend Schedule 3 to repeal Section 33 of the Housing Associations Act 1985. Section 33 permits the Secretary of State to recognise and provide grant-in-aid for expenses to a central association or other body which is established for the purposes of promoting the formation and extension of housing associations. This provision is not used and should be repealed accordingly.
Amendment No. 271 is introduced by the Government to record the repeal of Section 33 of the 1985 Act in Schedule 16, Part I, which lists present enactments which are repealed by the Housing Bill. I beg to move.
On Question, amendment agreed to.
Lord Mackay of Ardbrecknish: I beg to move that the House be now resumed. In moving this Motion, perhaps I may suggest that the Committee stage begin again not before 8.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Damages Bill [H.L.]
7.30 p.m.
Bill read a third time.
Clause 1 [Assumed rate of return on investment of damages]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 1:
Page 1, line 8, after ("return") insert ("(if any)").
The noble and learned Lord said: My Lords, I wish to deal with Amendments Nos. 1 and 2 together. This also deals with an amendment to Clause 4 which was moved on Report by the noble Lord, Lord Meston. The amendments are technical amendments clarifying the manner in which the power conferred by Section I may be exercised.
In response to the amendment to Clause 8 moved by my noble friend Lord Chelmsford at Report, I said that I was willing to consider putting into Clause 1 more express words to achieve more clearly that the power can be exercised in relation to different claims in different ways. That is what I have done, and that is what is achieved by these two amendments. Unless and until the power has been exercised in relation to any particular class of case, the court's assessment of the damages will not be affected by Section 1.
I have already indicated what my intentions are in relation to the probable first exercise of this power, but I should add that my approach to the first exercise would not in any way restrict the discretion of the Lord Chancellor or the Secretary of State on the occasion of any future exercise of the power. Indeed I believe it to be inevitable that those who may subsequently exercise this power must adopt a different approach.
Once the power has been exercised, the courts will follow the direction in subsection (1) to take into account the prescribed rate unless satisfied that some other rate is more appropriate in the case in question. If it then appears that some other rate—perhaps some rate which is not even available in the present market—may be more appropriate for general application, then it would be open to those exercising the power to prescribe that other rate to replace that which the courts had up till then been using. The intention is to assist the courts with guidance and to enable them to take advantage of developments in the market which may provide even more accurate indicators to use in the difficult task of assessing damages for future pecuniary losses.
Finally, I should like to inform your Lordships of the progress we have made in investigating the problem mentioned by the noble Lords, Lord Meston and
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Lord Irvine of Lairg, when the Bill was last before your Lordships' House. That was a problem which had arisen where an insurance company was in provisional liquidation, and the annuitant under a structured settlement had not been able to recover compensation from the Policyholders Protection Board.
I understand that the difficulty arose, not because the company (Municipal General Insurance Ltd) was in provisional liquidation, but because the structured settlement annuitant was not the policyholder, and to some extent because there were doubts as to whether the liabilities for which he was seeking compensation actually arose from the insurance policy. That structured settlement had been entered into before the reforms which we introduced in the Finance Act 1995 took effect.
Those reforms rationalised the arrangements for structured settlements so that life offices are now able to make payments under annuities bought by defendants with personal injury damages free of tax direct to the plaintiff. That was not previously possible, and that is why, in the case mentioned, the plaintiff was not the policyholder.
The present practice is that for new structured settlements, annuities will be bought in the beneficiary's name. For settlements set up under the old arrangements, the policy can now be assigned to the beneficiary by the general insurance company which purchased the annuity, thus ensuring full protection under the Policyholders Protection Act.
I understand that events had moved too fast in the case in question for that to have been done, but it is highly unlikely that the same situation would arise again. In any event, simply to specify that those provisions should apply where there is a provisional (rather than final) liquidation, would not be necessary or effective, since the Policyholders Protection Board already has powers to make interim orders (under Section 15 of the 1975 Act) and could do so when an insurer was in provisional liquidation. As I have said, it was not the fact of the liquidation being provisional which caused the problem, but the absence of a direct relationship between the beneficiary and the insurance company which was in provisional liquidation.
However, as your Lordships will be aware, my right honourable friend the President of the Board of Trade has already announced his intention to make changes to the Policyholders Protection Act 1975, and to bring forward legislation when parliamentary time permits. We are continuing our inquiries to ensure that there will be no gap in coverage. These will take some time to complete, and if it is found that there is after all still a potential gap, we shall have the opportunity to do something about it when my right honourable friend introduces his reforms.
I shall of course pursue this matter as this Bill goes forward. But my present view is that nothing is required under this Bill and that nothing effective can be done on the basis of the amendment which we considered on Report. I beg to move.
Lord Irvine of Lairg: My Lords, I have some concern about this amendment and I desire to be enlightened by the noble and learned Lord.
I am referring to the addition of the words "if any" to Clause 1(1) so that it will read:
"take into account such rate of return if any as may from time to time be prescribed by an order made by the Lord Chancellor".
Therefore, it appears to me that the words envisage that the noble and learned Lord may decide not to set any prescribed rate of return which the courts will have to take into account in determining the appropriate discount of future pecuniary loss due to its accelerated receipt in the hands of the plaintiff victims. Perhaps I may introduce a slight note of levity. I say that because I imagine that those words do not herald a government pessimism about investments earning no return at all in future.
Therefore, if Amendment No. 1, by the words "if any", signals a retreat from the principle that the Lord Chancellor should, from time to time, set a prescribed rate in the interests of legal certainty so as to ensure that the plaintiff victims are compensated fully, then I regard that as a troubling change of position on the part of the Government.
Therefore, I should welcome the noble and learned Lord's comments on that point. The issue will obviously have to be pursued further when the Bill is considered in another place and this House will have the benefit of returning to it in the light of the discussions there. But I should welcome the noble and learned Lord's observations as regards my anxiety.
Lord Meston: My Lords, my reaction to the first amendment was exactly the same as the reaction of the noble Lord, Lord Irvine of Lairg. Do the words "if any" emphasise or indicate that the Lord Chancellor may well decide not to prescribe any rate at all in the foreseeable future, notwithstanding the enactment of this Bill and it coming into force two months after enactment, as is provided in Clause 8?
It strikes me that that could add uncertainty in an area of law and practice where there is already considerable uncertainty. That uncertainty may not be resolved for several months ahead, particularly as the question of rates of return is to be considered by the Court of Appeal and may, quite possibly, be considered further on appeal by this House in its judicial capacity. My concern is the uncertainty which may be brought about by that situation.
Viscount Chelmsford: My Lords, I should like, first, to thank my noble and learned friend the Lord Chancellor for the words he used on Report which enabled me to withdraw the amendment that I had moved. So far as concerns Amendment No. 1, I understood my noble and learned friend to be using
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the amendment to reinforce the discretionary nature of his power. If that is so, it would be helpful if he could indicate the circumstances in which he would take the discretionary power and those in which he would not. Alternatively, if that is difficult—and I imagine that it might be—perhaps he will at least explain certain circumstances where it is quite clear that he would use it and other circumstances where it is quite clear that he would not. In that way, we will have some feel for the middle ground.
So far as concerns Amendment No. 2, I wonder whether I have fully understood the definition that my noble and learned friend intends to use regarding the words "different classes of case". If that means, as my noble and learned friend said on Report on 4th June (Hansard, col. 1234), that,
"the power can be exercised in relation to claims not yet accrued in a way that might be different from the way in which it affects claims already accrued",
then I think we will be very happy with the statement. However, if it means, for example, that interest rates could vary as between an award for, say, a motor injury and one for an industrial injury. I believe that the insurance industry would be concerned and, perhaps, also puzzled.
Lord Simon of Glaisdale: My Lords, I share the concern that has been expressed, but from a slightly different angle. I should like, first, to say that the practice of this House is highly convenient for allowing parliamentary draftsmen to have second and third thoughts, so that when a Bill which originates in this Chamber goes to another place it should do so without any blemish.
I can only speak to Amendment No. 1 at the moment, because Amendment No. 2 has not yet been called. I cannot for the life of me see why Amendment No. 1 is necessary. The noble Lords, Lord Irvine and Lord Meston, suggested that it may actually be mischievous. But why is it necessary at all? If the Lord Chancellor does not prescribe any rate of return, obviously the courts cannot have regard to that which does not exist. Therefore, why are the words "if any" necessary?
I shall have something to say on Amendment No. 2, on which the noble Viscount spoke valuably. However, I believe it would be helpful if, before I do so, my noble and learned friend has a chance to deal with the arguments raised on Amendment No. 1 and to comment on what was said on Amendment No. 2 by the noble Viscount.
The Lord Chancellor: My Lords, the emphasis on the words "if any" which I propose in Amendment No. 1 is simply to deal with the point that I tried to make clear on the last occasion; namely, that I would not wish to put in place a rate of return until the courts had decided the current cases. I believe that it is right and appropriate to emphasise that, unless and until a rate is prescribed, the courts must decide in accordance with their own appreciation of the present law. It is possible, as my noble and learned friend Lord Simon said, that that is assumed. However, I think that it is desirable in the context of this particular discretion to make that clear. That is why I have done so.

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I turn now to classifications. When looking at the way in which, for example, the Court of Appeal may decide such matters, I believe it to be perfectly possible that it may think that different rates of return might rightly be taken into account in different classes of case, possibly, to some extent, by reference to the size of the award and the nature of the portfolio on which it would be based; or, indeed, in relation to the period over which it was anticipated that the damages should run. For example, if a comparatively short period were envisaged for the loss anticipated, the rate might be different from that applicable to a longer period. I cannot tell.
I believe that one should retain as much flexibility as possible. I certainly wish to maintain flexibility to deal with the matter which my noble friend raised on the last occasion. If there were any question of the rate being different from that which the law would in any event carry as a result of the decisions under existing law, it would be right in my submission to distinguish between cases in respect of which the right of action had already accrued at the date upon which the matter was in question and cases in respect of which the right of action had not accrued. Of course, that would involve a degree of change in the law and that is certainly not something that I would contemplate. I hope that the provision will last for a long time. However, circumstances can change and it is right to make it clear that there is a wide discretion.
I have already spoken to Amendment No. 2. I am certainly anxious to deal with any points which arise upon it either now or when I come formally to move the amendment.
On Question, amendment agreed to.
7.45 p.m.
The Lord Chancellor The Lord Chancellor moved Amendment No. 2:
Page 1, line 12, at end insert—
("() An order under subsection (1) above may prescribe different rates of return for different classes of case.").
The noble and learned Lord said: My Lords, I have already spoken to the amendment, but I should remind the House that my moving of this amendment is subject to a correction in that instead of the word "present", the amendment, as set out on the Marshalled List, should read,
"may prescribe different rates of return for different classes of case".
I believe that that error was due to a misprint. I need not, perhaps, further investigate the precise place where it occurred.
Lord Simon of Glaisdale: My Lords, I hope that my noble and learned friend will forgive me if I say that he left me utterly unconvinced that Amendment No. 1 is necessary. Amendment No. 2 is more doubtful, but presumably its purpose is to meet the case. If the Lord Chancellor prescribes different rates of return for different classes of case, as evidently my noble and learned friend envisages from what he just said, would that not be ultra vires, or would it be acceptable? It seems to me to be absolutely incredible that any court could conceivably hold that the Lord Chancellor was
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going beyond his powers if, in the circumstances that my noble and learned friend described, he prescribed different rates of return in different cases. If so, once again, the amendment is unnecessary.
Among his other multifarious duties, my noble and learned friend is responsible for the state of the statute book. The statute book becomes more and more inflated. The format is enlarged but it soon needs as many volumes as it did before, even in a larger format. It is time that we took some notice of the interests of the user of the statute book and also of the taxpayer who has to pay for printers, ink, secretaries, wordprocessors and all the paraphernalia of publicising an Act of Parliament. Unless it is really necessary to have either of these two amendments—in my respectful submission it is not—they should not be put into this measure.
Then there is the question of what my noble and learned friend says may be a misprint. I rather suspect that the Public Bill Office was unable to read the handwriting of parliamentary counsel. I had that experience, together with parliamentary counsel, on a recent amendment that I submitted. In any event there is on the Marshalled List the word "present" instead of "prescribe". We can only pass the amendment in the form in which it appears on the Marshalled List. If it makes nonsense, my noble and learned friend should withdraw it and submit it in the correct form to the other place.
On the first amendment I said that we were under a duty, when we pass any measure that originates in this House, to see that it goes to the other place in an impeccable condition. That will not be so if Amendment No. 2 is incorporated. Of course if one could make a manuscript amendment on Third Reading, the matter could easily be put right. I have raised the matter on a number of occasions. On the first two occasions, when it caused great inconvenience, I made a submission to the Procedure Committee and got nowhere. As a result I ceased troubling the Procedure Committee or the various people who had to type my documents. It is just another example of how inconvenient this irrational rule is. There are times—on Report or during consideration of Commons amendments—when manuscript amendments can be accepted. On this occasion they cannot. That is highly inconvenient. It is time that the Procedure Committee looked at the matter again.
The Lord Chancellor: My Lords, with regard to Amendment No. 2, the view I have formed is that on the wording of the clause as drafted it is not clear that I would be acting within my powers, therein specified, if I prescribed different rates of return for different classes of case. I understood, in the light of discussion on a previous occasion, that it was highly desirable that that should be made clear. That is why I tabled the amendment.
As regards the point my noble and learned friend made, the notice of amendments is the basic document; that is, amendments to be moved on Third Reading by the Lord Chancellor. Amendment No. 2 states:
"An order under subsection (1) above may prescribe different rates of return for different classes of case".

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Therefore my noble and learned friend's diagnosis of the reason for the misprint on the Marshalled List happens, on this occasion, to be incorrect. If it had been my handwriting that was being read I could well understand that a problem might arise. However, that is not the problem in this case.
Lord Simon of Glaisdale: My Lords, I am much obliged to my noble and learned friend for allowing me to intervene. I do not know in what form he will ask us to pass the amendment. Is it with the word "prescribe", and if so how does he get there? Or is it with the word "present" as it appears on the Marshalled List? So far as I know—subject to correction from those who know better—that is the only amendment that can be submitted at this stage.
The Lord Chancellor: My Lords, the amendment I ask your Lordships to pass uses the word "prescribe" because that is the amendment of which I gave notice to be moved on Third Reading. The rules certainly allow the amendment, as notified, to be passed. There is a misprint on the Marshalled List of amendments. However, the actual notice of amendment to be moved on Third Reading uses the word "prescribe". Therefore I submit that I am perfectly in order to move the amendment with that word in place.
Lord Simon of Glaisdale: My Lords, will my noble and learned friend be kind enough to cite the passage in the Companion to the Standing Orders on which he is relying?
Lord Irvine of Lairg: My Lords, is it not the position that Standing Order 46 requires amendments to be tabled in sufficient time to be printed and circulated in the form in which these amendments are to be moved? That was done. There was, however, a printing error but as I understand the position—with the leave of the House—the error can be corrected and obviously should be corrected.
The Lord Chancellor: My Lords, with the leave of the House, what is definitive, for the purposes of the rule to which my noble and learned friend takes objection—I can quite understand why he would like to have manuscript amendments on Third Reading, although the Procedure Committee has not so far agreed with him—is the form in which the amendment was printed and circulated. That is what I am referring to; namely, the list of amendments to be moved on Third Reading by the Lord Chancellor in which Amendment No. 2 uses the word "prescribe". That is what I am asking to give effect to. I have so moved.
The Question is that Amendment No. 2 be agreed to in the form,
"An order under subsection (1) above may prescribe different rates of return for different classes of case".
Lord Simon of Glaisdale: My Lords, I must protest at the Question being put in that form. The word is "present" not "prescribe".
The Lord Chancellor: My Lords, the amendment I am moving states:
"Page 1, line 12, at end insert—
"An order under subsection (1) above may prescribe different rates of return for different classes of case".
That is on the circulated list of amendments to be moved on Third Reading by the Lord Chancellor, as printed. The fact that on the Marshalled List, which is before your Lordships, there is a misprint does not preclude my moving the amendment in the form I have intimated in terms of the Standing Order to which the noble Lord, Lord Irvine of Lairg, has referred. Therefore I move the amendment in that form.
On Question, amendment agreed to.
An amendment (privilege) made.
The Lord Chancellor: My Lords, I beg to move that the Bill do now pass. The Bill is of a fairly simple variety intended to facilitate the proper application of the law of damages at present. As your Lordships know, it is based on the work of the Law Commission and I am sure that all of us are grateful for that work.
I thank the noble Lords, Lord Irvine of Lairg, and Lord Meston, for the part that they have played on their respective Benches; my noble and learned friend Lord Ackner and my noble and learned friend Lord Simon of Glaisdale for their participation on a variety of issues in particular in relation to Clause 1; my noble friend Lord Chelmsford for the way in which he explained the concerns of the insurance industry throughout the Bill's passage in a way that I believe we have been able to accommodate; the noble Lord, Lord Mishcon, for amendments to Clauses 5 and 7 which he raised during Committee; and my noble friend Lord Balfour in relation to consideration of Clause 3 as regards Scotland. For all those participations I am grateful. I hope that with your Lordships' expert help on the Bill it may go forward to the other place with reasonable hope of passing into law in due course.
Moved, That the Bill do now pass.—(The Lord Chancellor.)
8 p.m.
Lord Simon of Glaisdale: My Lords, my noble and learned friend showed quite exceptional charitableness in thanking my noble and learned friend Lord Ackner and myself for our participation. I am afraid that I shall trespass upon his indulgence just a little further on the same point as regards whether it is correct, or permissible, that the Treasury should be consulted on the rate of return when, as my noble and learned friend Lord Ackner pointed out, a government department may be a party to the action.
My noble and learned friend, having raised the matter at Committee and on Report, quite rightly did not table an amendment again, even with a misprint, at Third Reading. However, at this stage we are contemplating the Bill as it stands and as it goes to another place. Perhaps I should say at the outset that it seems to me a valuable Bill and it is a great pity that it should have this blemish.

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There are only two possibilities. The first is that my noble and learned friend is entitled to consult the Treasury in the circumstances of Clause 1. If so, the words are unnecessary because, as I ventured to point out, the ordinary machinery of Government provides for constant consultation of that kind, and that has not been controverted. So if my noble and learned friend is entitled to consult the Treasury, and the Treasury is entitled to be consulted, those words are unnecessary. As we mourn over the constant inflation of the statute book, surely we should not neglect any opportunity to pare it somewhat. That is the first possibility.
The second is the point that was argued by my noble and learned friend Lord Ackner: that it is improper for the Treasury to be consulted when it has an interest, or a possible interest, in the matter. That again has not been controverted. Not only should justice be done, but justice should manifestly be seen to be done. If an interested party is consulted, that fundamental rule is set at nought. It is no use to say that the Treasury knows a great deal about these matters; so it does. But it is still an interested party.
With all his wisdom, you do not consult King Solomon if a question of monogamy is at issue. You do not consult any interested party in any matter where his decision may be seen—whether or not with justice—to be liable to be influenced by his interest.
In presuming to give a general blessing to the Bill, I presume once again to draw attention to the great pity that those words are included. The Bill is now going to another place, which I trust will take up that point.
Lord Meston: My Lords, I thank the noble and learned Lord the Lord Chancellor and his officials for the obvious care and attention which has been given to the Bill. The impact of the Bill remains unknown for the reasons that we have been discussing earlier this evening. But it seems to me to have at least considerable potential to give certainty on the question of damages in an area which, as I have already observed, is presently in a state of some uncertainty. Any reduction of uncertainty must be to the benefit of litigants and of insurers.
As regards the point repeatedly and properly raised by the noble and learned Lord, Lord Simon of Glaisdale, it is regrettable that the Treasury as a potential defendant has to be consulted. Nevertheless, whether or not the provision is on the face of the Bill, it seems inevitable that the Treasury will be consulted given the structure of the Bill; and the Treasury, like the Lord Chancellor's Department, will inescapably be a participant in the machinery of the Bill if it becomes enacted. From time to time they will themselves be defendants in personal injury actions. It occurred to me at an earlier stage of the Bill in debate on this point that perhaps I should have declared an interest. I once acted for the Lord Chancellor's Department when it was sued by a lady who had slipped over in a corridor in the Law Courts. The case involved a fascinating comparative analysis of the different types of floor polish used by various government departments. However, the risk of
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such litigation, or more serious litigation, cannot be a reason for not allowing the Bill to go forward in the form in which it now appears.
The Lord Chancellor: My Lords, I am grateful to the noble Lord, Lord Meston, for pointing out that the Lord Chancellor, who has given the power to make these orders, may from time to time himself have a liability. I do my best to eliminate or minimise such liability, and I shall continue to do so. However, those of us who have potential interests in litigation are perfectly entitled to be consulted. From time to time, I would expect to consult, in addition to Her Majesty's Treasury and the Government Actuary's Department, the potential litigant—insurance companies—those who represent them and those who represent plaintiffs. Obviously one has to be sure that that is done in a proper way and that the matters which the Treasury raise are taken into account in a proper consultation. I should certainly have regard to what my noble and learned friend Lord Ackner said about it on the last occasion. In principle it is right. The issue has been raised and it is particularly important that it should be expressly dealt with in the final form of the Bill.
On Question, Bill passed, and sent to the Commons.
Baroness Trumpington: My Lords, I beg to move that the House do now adjourn during pleasure until 8.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.10 to 8.30 p.m.]

Housing Bill
House again in Committee on Schedule 3.
Lord Lucas Lord Lucas moved Amendment No. 186:
Page 136, line 38, at end insert—
(". In section 75(1) of the Housing Associations Act 1985 (general functions of the Corporation) for paragraphs (a) to (c) substitute—

"(a) to facilitate the proper performance of the functions of registered social landlords;

(b) to maintain a register of social landlords and to exercise supervision and control over such persons;

(c) to promote and assist the development of self-build societies (other than registered social landlords) and to facilitate the proper performance of the functions, and to publicise the aims and principles, of such societies;".").

The noble Lord said: In moving this amendment, I shall also speak to Amendment No. 187.
As a consequence of the proposed introduction of new social landlords in Part I of the Bill, we have been considering whether the Housing Corporation's general functions need to be amended. In particular, we have been looking at its statutory duty under Sections 75 and 87 of the Housing Associations Act 1985, to promote, and provide financial assistance for, the development of registered associations.
Since promotional duties were first given to the corporation in 1974, the housing association sector has grown and matured. The promotion of associations to private lenders was important during the introduction of private finance because the housing association sector was largely unknown to private lenders. Now, however, associations are able to promote themselves, either individually or collectively, or may seek assistance from financial intermediaries to promote housing associations to lenders.
Given these changes, we are proposing that the corporation's activities be refocused so that they encourage the efficient and effective use of housing resources through continued promotion of good practice based on findings from the research programme and value for money scrutinies and refocusing their promotion and advisory grant programme to improve service outcomes rather than support any particular provider group.
To achieve this, we propose modifying the corporation's powers so that they can facilitate the proper performance of the functions of social landlords. We also propose (in Amendment No. 187) that the corporation has powers to provide financial assistance to achieve this new function.
We appreciate that self-build societies are not comparable to registered social landlords. Because of their smaller size and limited scale of operations we propose that the corporation should continue to have a power to promote and assist in the development of such societies.
We also propose that one of the corporation's general functions should be to maintain a register of registered social landlords. This replaces the corporation's current responsibilities for maintaining a register of registered housing associations. I beg to move.
Lord Williams of Elvel: The Committee will be grateful to the noble Lord for introducing these two amendments. I have one or two questions. In the phrase,
"facilitate the proper performance of the functions",
what does "facilitate" mean in law? Does it mean that the corporation is simply standing by, or does it mean that it has an active role beyond the role that it is granted in the Bill as presently drafted?
My second question relates to,
"financial assistance to any person to facilitate".
Will the Minister explain what sort of person that might be?
Lord Lucas: I am sorry, but just for the moment I do not see the second item to which the noble Lord refers.
Lord Williams of Elvel: I refer to Amendment No. 187:
"The Corporation may give financial assistance to any person to facilitate".
My question is: what sort of person might that be? If it is Lord Hanson—
Lord Lucas: I did not wish to leap up before the noble Lord was ready. I did so merely to admit that he
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has asked two interesting questions to which I do not have interesting answers. If the noble Lord will allow me, I shall write to him with answers to both questions raised. In my understanding, "facilitate" is no more than a posh way of expressing "help" with such matters as general guidance and assistance. As to who might be contemplated to be paid to give such general guidance and assistance, I shall have to write to the noble Lord. I do not have an answer.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 187:
Page 136, line 49, at end insert—
(". In section 87 of the Housing Associations Act 1985 (financial assistance for formation, management, &c. of housing associations), for subsection (1) substitute—
"(1) The Corporation may give financial assistance to any person to facilitate the proper performance of the functions of registered social landlords or co-operative housing associations.".").
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 188:
Page 137, line 35, at end insert—
(". In section 79(2) of the Housing Act 1988 (permitted disposals of land by housing action trusts) for paragraph (a) and the word "or" at the end of the paragraph substitute—
"(a) to a registered social landlord (within the meaning of Part I of the Housing Act 1996), or".").
The noble Lord said: In moving this amendment, I shall also speak to Amendment No. 273.
These amendments are stimulated by the introduction of registered social landlords. First, they amend Section 79(2) of the Housing Act 1988; secondly, they repeal Section 79(6) to Section 79(10) of that Act; and finally, they make minor amendments to Section 92 of that Act as a consequence of the other amendments.
Sections 79 to 92 of the 1988 Act deal with housing action trusts. They established the arrangements under which such trusts can dispose of land, including of course dwellings, to another landlord. Section 79(2) of the 1988 Act provides that disposal of houses subject to secure tenancies can be to a person approved by the corporation, or to a local housing authority or other local authority. Section 79(6) and 79(10) make provision in respect of the approval of such a person by the corporation.
The introduction of the new registration procedures for social landlords, and the approval that registration implies, means that it is no longer desirable or necessary to continue with a parallel approval mechanism for housing action trust disposals. No person who is not a registered social landlord would be an approved person for these purposes. But there is no point in requiring a registered social landlord to go through a quite separate approval process in order to become the recipient of housing action trust stock. It is sufficient to rely on its registration as a social landlord.
Amendment No. 188 therefore substitutes for the requirement that a transferee landlord which is not a local authority must be a person approved for the purpose by the corporation under Section 79 the requirement that it is a registered social landlord within the meaning of Part I of this Bill.
Amendment No. 273 repeals Section 79(6) to Section 79(10) of the 1988 Act, which govern the approval processes. It also makes a minor amendment to Section 92, to repeal that part of the definition of 'Corporation' relating to such approval. I beg to move.
Lord Williams of Elvel: It all sounds very reasonable. However, the noble Lord read his brief rather fast. I shall have to study the matter in Hansard with my advisers and decide whether we wish to challenge the noble Lord's view on Report.
On Question, amendment agreed to.
Schedule 3, as amended, agreed to.
Clauses 55 and 56 agreed to.
Clause 57 [Definitions relating to charities]:
Lord Lucas Lord Lucas moved Amendment No.189:
Page 33, line 4, leave out ("has") and insert ("and "trusts", in relation to a charity, have").
The noble Lord said: I spoke to this amendment with Amendment No. 143. I beg to move.
On Question, amendment agreed to.
Clause 57, as amended, agreed to.
Clauses 58 to 61 agreed to.
Clause 62 [Minor definitions: Part I]:
[Amendments Nos. 190 and 191 not moved.]
Clause 62 agreed to.
Clause 63 [Index of defined expressions: Part I]:
Lord Lucas Lord Lucas moved Amendments Nos. 192 and 193:
Page 36, line 3, at end insert—
("enactment section 202")
Page 36, line 33, at end insert—
("trusts (in relation to a charity) section 57(1)(a)")
The noble Lord said: I shall move Amendments Nos. 192 and 193 en bloc. I spoke to Amendment No. 192 with Amendment No. 120 and to Amendment No. 193 with Amendment No. 143. I beg to move.
On Question, amendments agreed to.
Clause 63, as amended, agreed to.
8.45 p.m.
Baroness Hamwee Baroness Hamwee moved Amendment No. 194:
Before Clause 64, insert the following new clause—
POWER TO PROVIDE FOR MANDATORY LICENSING SCHEME
C.—(1) The Secretary of State may by order provide that for the provisions of sections 64 to 69 (registration schemes) there shall be substituted a national mandatory licensing scheme for houses in multiple occupation.
(2) Before making an order under subsection (1), the Secretary of State shall consult local housing authorities and other relevant organisations.
(3) Any order under subsection (1) above shall be made by statutory instrument which shall be subject to approval by resolution of both Houses of Parliament.").
The noble Baroness said: With this amendment we move to the part of the Bill concerned with houses in multiple occupation. This new clause proposes a strengthening of the provisions in this part by providing
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for a national mandatory licensing scheme as distinct from the registration scheme for which the Bill provides, on the basis of a reserved power given to the Secretary of State to bring in such a scheme.
Clauses 64 to 69 of the Bill, replacing certain parts of the 1985 Housing Act, will leave to the discretion of local authorities whether or not they have an HMO registration scheme, whether the scheme adopted is to cover the whole or only part of their area and whether it is to provide tenants of all or only some HMOs with the protection of registration. In addition, the Secretary of State is likely to use his powers when drawing up model registration schemes under the new Section 346B(1) to exclude from registrability at least half of the houses in multiple occupation in the country.
I normally argue for local discretion. It is a measure of the importance of the provisions concerning houses in multiple occupation that, on this occasion, I argue for a national scheme. Safety is not discretionary.
The Committee will be aware of tragedies that have occurred in houses in multiple occupation which, sadly, it appears are less safe even than other houses and units of accommodation in the private rented sector. I say "even" than those because, in general, it is a sector in which there are many problems. I recall some months ago hearing a programme on the radio about unsafe gas boilers and the series of tragedies which had befallen tenants, often young tenants who had been overcome by carbon monoxide poisoning in circumstances which hardly bear repetition. I recall the case of two brothers who died together. Recently, there was the first trial of a landlord, who was found guilty of manslaughter, I believe, as a result of the condition in which he kept a house, leading to the case of a 19 year-old student who was gassed by a defective appliance in her bedsit. As I said, safety should not be discretionary.
The Department of the Environment estimates that there were some 638,000 households of multiple occupation of various types in England last year. One fifth of private rented lettings are unfit for human habitation. The figure is two fifths in this sector. The figure comes from the English House Condition Survey. The risk of death from fire is 28 times higher in HMOs than in the housing stock as a whole and that figure comes from research by the Campaign for Bedsit Rights, supported by the Joseph Rowntree Foundation. The highest proportion of deaths from carbon monoxide poisoning caused by faulty and unserviced domestic gas appliances in the home occurs in private rented accommodation.
If the private rented sector, including HMOs, is to play the role that the Government want, there must be an effective framework to encourage long-term investment and good quality and professional management and to provide consumers with safety, security and affordability. Landlords and investors need a framework which regulates standards in ways which are predictable, stable and avoid unnecessary and needless bureaucracy. It would encourage responsible landlords and investors and drive the unscrupulous out of the market so far as that is possible.
Local authorities also need a clear and efficient legal framework for enforcing standards and for placing responsibility on landlords to tackle substandard conditions. Above all, existing and prospective tenants of HMOs must be given real guarantees that their homes will be made safe and healthy as soon as possible.
There is widespread support for a national mandatory licensing scheme. In 1994–95, the DoE published a consultation paper on licensing and 76 per cent. of the respondents favoured a new system of licensing. Among local authority respondents, that figure was over 90 per cent. The current regulatory framework is regarded as ripe for replacement, for a number of reasons. It is complex and confusing. I understand that one local authority, Birmingham, has listed 17 different Acts of Parliament and regulations which seek to control conditions in the private rented sector. Inevitably, there are different policies and enforcement practices employed by different local authorities. It is difficult for landlords and tenants to know the standards which are regarded as acceptable. If landlords find the law to be arbitrary, it can be no incentive for them to raise the standards. Tenants are not tenants whose voices can be made to be heard loudly and clearly. In this sector, the tenants are, by definition, those with the least means and, probably, therefore, those with the least will to complain because they fear for their security of tenure as a separate matter from their safety.
The system is inherently inefficient because it depends on tenants making a complaint or on the local authority tracking down every individual substandard property, and that is not easy. As I indicated, the risk of harassment and eviction on the part of a tenant who does complain cannot be underestimated.
Though this may seem a rather petty matter after the plea that I have made, it is worth noting that there are no financial incentives inherent in the current system and that a system which generates income is worth considering because the income that it generates can be used to improve the whole system.
The Government appear to be in favour of a national licensing scheme, according to various comments made in the consultation paper that I mentioned. It argued that it would secure high standards throughout the sector, focus on the types of housing with the worst problems and ensure a more consistent approach. But the Government argue against those points on three bases.
First, they say that powers are already available to local authorities. But, in bringing forward new provisions in the Bill, the Government recognise that the current powers are inadequate. Secondly, they argue that excessive bureaucracy would be created. I believe that varied schemes as between authority and authority in themselves create more bureaucracy. Thirdly, they argue that raising standards to an unrealistically high level would mean that landlords may withdraw accommodation from the market. I understand the point in regard to ensuring that accommodation remains available, but it must meet certain standards of safety and decency.
The licensing regime which I propose is supported by a wide range of organisations in the voluntary and statutory sectors. The scheme is believed to be one—here I rely on the views of the Joseph Rowntree Foundation—that could pay for itself after five years. I have said that safety should not be discretionary. A fit place to live should not be discretionary and licensing should not be discretionary either. I beg to move.
Lord Dubs: I support Amendment No. 194. The background is that in many of our inner city areas at least there are people who are badly off and facing extremely difficult housing circumstances. It is often difficult for them to find accommodation. Therefore the laws of the market place do not apply. For many years we have had government intervention to provide some measure of protection for people who cannot compete in the market for homes. Among the people who are less well off are those who have to accept accommodation in houses in multiple occupation.
The history of government legislation to give some measure of protection is a long but not a happy one in that we are constantly made aware of the difficulties and inadequacies in the framework which should provide protection for people living in that type of accommodation. The aim should be twofold. First, to provide adequate protection for tenants so that they can live in reasonable safety; and, secondly, to devise a method of doing that which provides maximum encouragement for good landlords and maximum discouragement for bad landlords. Indeed, some of the arguments for better regulation in this area are precisely that the good landlord will welcome it and it is only the bad landlords who will object because they will be caught out or found out.
Under the government scheme in the Bill it is up to each local authority to decide whether or not to introduce a licensing scheme at all. But that is rather random. With the best will in the world local authorities may not get round to it; they may have their own motives for not wishing to be tough in the licensing area. Indeed, the Government's illustrative examples, as given in the standing committee in the other place, suggest that, if a local authority decides to adopt these measures, the Government will help with the scheme but that it will be limited in its scope and exclude a number of houses in multiple occupation. If I am wrong in my assessment of what was said in the other place, I am happy to be corrected.
Having said that, this is a limited amendment. All that it asks the Government to do is accept a provision which would give the Secretary of State a reserve power to bring in a national mandatory licensing scheme. It does not oblige the Secretary of State to do so; it merely gives him the power to do so if at some time in the future he feels it is appropriate.
That is not imposing anything; it is saying that, given the sorry history of legislation in this area and the inadequacy of repeated attempts to do it properly, why not, while we are dealing with the Bill, include a reserve power so that if, even with the best will in the world—

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being generous to the Government—the provisions in the Bill do not work, the Secretary of State can take the reserve powers so that it can be done better?
Lord Gisborough: HMOs play an important role in the provision of housing in the private rented sector. According to latest government figures, HMOs house just over 3 million people in England—around 7 per cent. of the population. They clearly have an important role in providing affordable accommodation in a form that is likely to suit a large proportion of people at some point in their lives—students, young people at the start of their careers, single people and so forth. We must be conscious of the fact, therefore, that if we introduce inappropriate or draconian legislation in this area, responsible landlords may, probably will and already do, sell their properties and leave the market, thus creating even more homeless, as the noble Lord, Lord Dubs, feared.
To introduce overly onerous regulations, the cost of which would have to be borne by the landlord, would jeopardise the supply of an important source of accommodation from both current and future landlords, thereby ultimately damaging the interests of those it seeks to protect.
Statistics were cited regarding the relative fire risk in HMOs. Some Members in both Houses have suggested that there is a 28-times greater risk of dying in a fire in an HMO than in other types of dwelling. That figure is based on research carried out on behalf of the Campaign for Bedsit Rights. While not wishing to play down the risk of fires in HMOs, the Campaign for Bedsit Rights' figures merit some examination.
If we are to ensure that HMO regulation is appropriate, we must correctly understand the size of the problem. The campaign's figures do not stand up to much critical analysis when one examines the various government figures. If one looks at the government figures for the proportion of the population housed in HMOs, we get a figure of approximately 7 per cent., as I mentioned earlier. Home Office fire statistics, on the other hand, indicate that 12.5 per cent. of domestic house fires occur in HMOs. That is a high figure and the Government are right to take action to improve standards in HMOs. However, if we do the calculations, the risk of fire in HMOs using the Government's statistics is less than double the risk in other dwellings and falls well short of the "28-times" figure given by the Campaign for Bedsit Rights.
That is supported by other Home Office fire statistics, which suggest that 6.2 per cent. of HMO residents experienced a fire in 1993 as against 3.9 per cent. for the population as a whole. Statistics can be used to prove any point but the campaign figure seems to be particularly inaccurate and overstates the problem. We should not use it, therefore, as a basis for legislation. Ideally, the Government would have carried out research of their own to determine the exact nature of the risk posed by HMOs before deciding to legislate. That did not happen. I urge the Government to consider commissioning some research before drafting the secondary legislation.
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I believe that the Government's action is therefore proportionate to the risk and I am pleased that they resist the pressure for a mandatory national licensing scheme. A full-scale licensing scheme would have been costly and over-bureaucratic and would have involved local authorities without HMO problems in unnecessary regulation. It would also, I understand, have covered all types of HMOs, and we would therefore have found ourselves in the position of regulating, among others, owner occupiers in self-contained blocks of flats. Surely that is not necessary.
Licensing is unnecessary, especially when one considers that there is already a large body of legislation to enforce good standards in let property. This includes the wide-ranging powers which already exist under the Housing Act 1985, where local authorities can require work to a property, carry out the work themselves in the landlord's default, or ultimately make an order that the property should come under local authority control or be closed down. Legislation also exists relating to fire and gas safety and the use of fire retardant fillings in furniture.
Some have suggested that the way to improve standards in HMOs is to amend the definition of an HMO, taking out self-contained flats and shared houses, so that the regulation could be concentrated on the properties that are likely to cause the most problems. The Government did not accept this suggestion either. Instead they have proposed that the current ad hoc registration scheme system should be formalised with a model scheme drawn up. I broadly support that proposal. It will mean that those local authorities that consider they have a particular problem with HMOs will be able to set up a registration scheme to give them greater control powers. The proposal that a model registration scheme is to be drawn up is also welcome. Landlords' current experience of registration schemes is that they vary widely between authorities, leading to much uncertainty among landlords as to their responsibilities. The Government are proposing that certain categories of HMOs will be exempt from the model registration scheme. Again, that is welcome and will ensure that local authority resources are targeted at those properties that cause most problems.
My amendments to come are intended to ensure that the relationship between landlord and local authority is an effective one, and that they work together to improve standards in their area. Most landlords are happy to make sensible achievable alterations to their properties and wish to encourage good tenants with good standards. In recent years, however, many private landlords have found the requirements made of them by local authorities to be unnecessary, and the mechanism for changing them has involved expensive litigation. My amendments seek to redress this imbalance, which, I should add, licensing would have accentuated. I hope that this amendment for the mandatory licensing scheme will be resisted as it would amount to over-regulation and unnecessary red tape.
9 p.m.
The Lord Bishop of Worcester: I support this amendment, even though I hate over-regulation and

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bureaucracy. Nevertheless, recently, as chairman of the Children's Society, I was at a presentation by young people who spoke of their own experience. Of course it is possible for young people to exaggerate, but these were young people with ambition to get on in the world, and not to be at the bottom of the pile for the whole of their lives. Most of them had had to leave home because of family disagreements. Sometimes they had to leave because of abuse and sometimes because there just was not room in their own homes. They were not people that we should want to make into lifelong rebels. They had ambition and they wanted to do well. The stories which they told made it clear to me that some form of regulation is necessary.
As has already been said this evening, safety is not negotiable. There should be safety. There should be healthy premises for young people to live in. These young people have no financial capacity to bid for a better place. If they are 16 year-olds on a training course they receive £29 a week, or £35 if they are 17 year-olds. These young people require our protection. Surely as a society we do not want to see them going on to the streets. One of the things that I think is most reprehensible is the number of people sleeping in shop doors in the Strand. I cannot think what that says to visitors to this country. We should be ashamed of it.
I support the amendment. In London alone there are 3,800 young people living in this kind of accommodation. I have heard from their own mouths the difficulties against which they have to contend. The noble Baroness, Lady Hamwee, has said all that I wanted to say. I support the amendment.
Lord Monkswell: In rising to support the amendment, I can advise the Committee that I have lived in HMOs on a number of occasions. I did so when I left home for the first time. I lived in a room in a house that was apparently condemned as unfit for human habitation. I survived that. My experience of living in HMOs on a number of different occasions advises me that some are good and some are bad. When they are bad, they can be absolutely atrocious. As we have heard from a number of different speakers, that can lead to increased risk to life and limb.
When I initially saw the amendment, I was a little hesitant about it. One of the things that I have been concerned with is limiting Ministers' powers. It is worth pointing out that the amendment will give Ministers an extra power which they can exercise if it is felt warranted. It does not require them to set up this national registration scheme, but it gives them the power to do so if it is felt warranted.
One of the things we all do as parents is to ensure as far as we can the safety of our children. As responsible people we can put pressure on our local council to ensure that there is a satisfactory scheme in our local area. However, when young people leave home it is very difficult—I would say impossible—for parents to say to their children, "You shall live in a local authority area where there are decent standards" and to dissuade them from living in some other local authority area. We must bear in mind that a large number of young people leave
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home to go to university, which is usually many miles from their own homes, and in the first year they may be in student accommodation provided by the university. But the chances are that in the second and third years they will be at the mercy of the vagaries of the private market. A large number of those young people, who are our sons and daughters, will end up in houses of multiple occupation. As responsible parents how do we ensure that those houses of multiple occupation where our sons and daughters live are of a satisfactory standard which will ensure their safety and that of their friends?
I hope that the Committee will support the amendment. It gives a fall-back power to Ministers to set up a national scheme which some of us believe should be brought in immediately. However, it may take a little time to persuade the Government to do so. If the provision appears on the face of the Bill at least the Government will have the power to act without recourse to primary legislation, which is always difficult given the pressure on parliamentary time. I hope that the Committee and the Government will look with favour on the amendment.
Lord Lucas: I listened carefully to the arguments put forward by the noble Baroness, Lady Hamwee, the noble Lord, Lord Dubs, and others, in favour of the amendment. I am aware that there were similar substantial debates on the need for national licensing both at Committee and Report stages in another place.
Like the noble Lord, Lord Monkswell, I have lived most of my life in HMOs. My parents' house, which is a large one, had a flat at one end which was occupied by another family; therefore, it is an HMO. When I moved to London I rented a room in a large house occupied by friends of the family, and that makes it an HMO. The first property I bought in London was a flat that had been converted from what was originally a house and therefore was an HMO. When I finally bought a whole house of my own I let the top floor to friends and that made it an HMO. That illustrates the sort of problem we would create by introducing an indiscriminate national licensing scheme. A large number of houses and properties, which had no business being there, would be brought within the rigours of a scheme aimed principally at the sort of places which the right reverend Prelate the Bishop of Worcester was talking about, which I have lived next to, but, fortunately not in, where about a dozen people are crammed into a space which would comfortably accommodate about four. They live in conditions of considerable squalor. We are aiming the legislation at places where the majority of problems exist. We wish to give local authorities discretion in identifying the properties which are causing problems in their areas and avoid the blunderbuss effect of having to deal with great numbers of properties where there are no significant problems.
The Government remain unconvinced of the need for a national mandatory licensing scheme for houses in multiple occupation. As the noble Baroness, Lady Hamwee, said, our consultation document was admirably even-handed. I wish therefore to explain the reasons why we have come to our conclusions.

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I emphasise that the Government accept that there is a problem of poor standards in part of the HMO sector and that urgent action is required. We estimate that there are over 600,000 properties in England of various sorts ranging from bedsits and shared student houses to larger hostels and bed and breakfast hotels. This type of housing makes a very important contribution to meeting the need for flexible and low cost accommodation, as my noble friend Lord Gisborough said. The demand is unlikely to fall in the foreseeable future. It is important therefore to ensure that such properties are of a reasonable standard and, above all else, that they are safe, particularly from the risk of fire. My noble friend Lord Gisborough rightly pointed out that some estimates of the fire risk in HMOs has been exaggerated. I do not believe that we would go as far as my noble friend in discounting the risk. We would settle on a figure of about 10 times higher than normal. That risk is clearly far too high, and that is why we have brought forward our package of measures. There is therefore clearly a good deal of common ground on all sides of the Committee in the demand for tougher powers enabling local authorities to improve conditions in those properties.
Perhaps I may set out briefly the principal elements of the Government's package. We are giving local authorities the option of establishing a much tougher kind of HMO registration scheme. Any local authority will be able to introduce a registration scheme for the whole or part of its area if it thinks that there is a serious HMO problem. That will allow local authorities to refuse registration if properties are sub-standard to an extent that is beyond remedy or if the manager is not a fit and proper person. Local authorities can also impose as conditions of registration that works are carried out to make the HMO suitable for occupation and relating to the management of the house. Registration will be renewable every five years and the new control and special control provisions may provide that registration can be revoked if the authority considers that there has been a breach of the conditions relating to the management of the house. We also propose substantially to increase the level of fees payable on registration and re-registration, and these resources can be used to supplement the local authority enforcement effort. So, if only for this reason, we expect most local authorities to make much greater use of registration schemes. We have also made available to local authorities a system of special control provisions which can be adopted with the consent of the Secretary of State. They will allow much tougher control of, and in certain cases, closure of HMOs which are having a serious adverse effect on local amenity. These provisions have been warmly welcomed in another place by Members who represent constituencies with coastal resorts. They acknowledge that the powers we have given local authorities are very wide indeed.
I also emphasise that the HMO package in Part II is not entirely a discretionary package which local authorities can simply choose to ignore. First, Clause 72 places a duty on HMO landlords to keep their property fit for the number of occupants. Local authorities will be able to prosecute landlords who fail to do so. Secondly, we propose to extend substantially the mandatory duty on
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local authorities to check that there are adequate fire safety precautions in all HMOs falling within the net of the model registration scheme and which are over two storeys high. This will be a major task for the authorities and will ensure that all high-risk HMOs are checked and monitored.
What is at issue is that the Opposition want a national mandatory licensing system which would be imposed on all local authorities. The Government's proposals are different in that we propose a package of measures, some mandatory and some discretionary, which will lead to effective action but at the same time leave local authorities with a degree of extra flexibility in how they tackle the problem. The Government firmly believe that these proposals are preferable to the straitjacket that national licensing would impose. It comes down to whether one trusts local authorities with this element of discretion. Both the Liberal and Labour Parties through their spokesmen have said that they do not. They are prepared to trust the education of our children to local authorities but will not trust them with a small element of discretion in the management of HMOs. I find that extraordinary. I fail to understand what lies behind that lack of trust, unless it be that because most local authorities are now under the control of one or other of the parties opposite they have a better understanding of those bodies than I do. But I cannot believe that that is the case and that the Opposition are right not to trust local authorities in the way that they should.
References have been made to the particular qualities of the proposed amendment. The amendment is a fascinating one. It would create criminal offences by order. Albeit at a rather late stage, it is changed to an affirmative resolution. That is a principle to which we do not subscribe, and it is a course that has been urged against us on several occasions by the Benches opposite. I find it extraordinary that they should put forward an amendment which would involve that.
The Opposition have failed to demonstrate that licensing would add anything to the powers available to local authorities. The Government's package is a tough one, with new powers which were welcomed by local authorities when we consulted them on the details. It is clear that they intend to use them. I have no doubt that these new policies will lead to a substantial improvement to conditions in the HMO stock. We are happy to trust local authorities with the discretion that we propose to give them; I am sorry that the Opposition are not.
9.15 p.m.
Lord Dubs: I am amazed that the Minister has begun to be aggressive so early in the evening. Although I am sure that the Liberal Democrats can speak for themselves, the Minister said that the Liberal Democrats and the Labour Party did not trust local authorities. As an example, he quoted education. This debate is not about education, but in so far as the Minister raises that issue he speaks on behalf of a government who have taken away large amounts of discretion from local authorities in education and many other fields. If ever there was a government in the history of this country who had not trusted local authorities it is this one, with capping, controls on finance, the removal of large areas of

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discretion from local government and turning local authorities into agents of central government. The Minister has the gall to say that we in the Opposition do not trust local authorities. I believe that he has gone too far by a long chalk. It was also a weak argument.
When the Minister spoke of his life history in a series of houses in multiple occupation I almost began to feel sorry for him. It tugged at the heart strings. This poor man had had a difficult time and he was to be the beneficiary of all this legislation. I thought how wonderful it was and that we would be helping a government Minister had this legislation been in place. But the Minister then departed from the thrust of the argument. If there are the full rigours quoted by the Minister, why is it that the kind of accommodation in which the Minister has been living for most of his life, to judge from what he has said, would not meet the standards referred to? If it would, it would be mere child's play to conform to these standards. The whole point is that the setting of standards ensures that those landlords who care more about short-term profits than the well-being and safety of their tenants will be called to order. Those other landlords who do well will surely not find it at all onerous or rigorous to have to comply with these requirements. The Minister has not made his case. Indeed, he weakened it significantly by his diversion into education policy.
Baroness Hamwee: My experience in local government has been that when the Government depart from their usual practice and give discretion to local authorities it is because the issue is one that central government find they cannot tackle because they do not have either the imagination or the will. That has been the increasing experience over a number of years.
I am afraid I do not take seriously the Minister's suggestions that the amendment is being proposed because of any lack of faith in local authorities. I am not going to trade statistics, although I am glad to have heard the Minister say that there was a serious risk. The tone of the Minister's answer suggests a complacency about the issue which I hope is not a real complacency.
The suggestion is made that such a scheme would lead to a reduction in the stock of accommodation. Among the supporters of such a scheme are the Institute of Housing, Shelter, and the National Consumer Council. I cannot imagine that they are organisations that would wish to see the stock reduced. I do not believe that that is a real argument. The cost to landlords, on the information I have—I have referred to research by the Joseph Rowntree Foundation—would be about £30. These are not large sums. If the suggestion is that it is not the registration fees but the cost of putting properties back into order which will be a disincentive to landlords, that does not need answering.
Lord Gisborough: Perhaps the noble Baroness will give way. She mentioned £30; but is she aware that many of these houses are old? This morning I was told of houses which it would be uneconomic to bring up to the required
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standard. I was told of one old house which had to have metal supports put around it in order to comply. Such houses would just go out of the market.
Baroness Hamwee: I am aware that there is a number of large old houses which would cost a great deal to bring up to standard; but is that an argument for approaching the housing problems in this country in this way? I do not believe that it is. I shall have to disagree with the noble Lord.
The amendment is proposed as a reserve power. We know the problems of shortage of parliamentary time. We have a thick Housing Bill. One would have hoped that the Government might see the sense in providing for themselves a power which they could implement if other provisions of the Bill for the discretionary scheme appeared not to be working as well as the Government clearly hope they might.
I had some difficulty in suggesting that additional powers should be handed over to the Government, lock, stock and barrel to introduce something if it is not the intention to start the scheme off in this way. But as I have said, the issue is serious. It is a matter of safety. It is not just a matter of amenity, as important as that is. The noble Lord referred to the special control provisions, but that is not what the amendment addresses. I shall conclude by asking the Minister a question. A good deal of his argument appeared to depend on many types of houses in multiple occupation being ones for which there should be no concern. I understand that a flat at the top of a house, or in a wing of a house, being let to a family other than the owner occupier of the rest of the house would be one of the exceptions which the Government are considering applying to the scheme as proposed in the Bill. If the Minister is saying that some types of division do not require registration, will the Government consider a mandatory licensing scheme for the types which they admit require registration and, as I would put it, licensing?
Lord Lucas: The question does not arise because we like the scheme as we have written it. We do not see the need for a national mandatory scheme. We believe that the flexibility that we have is the flexibility that is desirable.
Baroness Hamwee: Without being discourteous to the Minister, I do not believe that that is a satisfactory answer. The hour is late but it is a matter to which we must return. At the moment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 64 [Making and approval of registration schemes]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 195:
Page 36, line 39, leave out ("may") and insert ("shall").
The noble Baroness said: In moving Amendment No. 195 I shall speak also to Amendments Nos. 196 and 221. Amendment No. 195 provides that a local authority "shall" make a registration scheme rather than leaving the matter to its discretion. Amendment No. 196 deletes subsections (2) and (3) thus requiring that the scheme shall apply to the whole of the local authority's district. Amendment No. 221 provides for the Secretary of State

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to take steps to publicise the registration scheme in concert with local authorities as an alternative to the provision in the Bill, which leaves the matter to each local authority. I beg to move.
Lord Lucas: The amendments would make it a mandatory requirement for each local authority to introduce a registration scheme covering the whole of its district. That would carry with it the same objections as we have to national mandatory licensing by going unnecessarily far in dictating to local authorities how they shall tackle problems associated with HMOs.
If local authorities decide to introduce one of the new registration schemes they will, under our proposals, have maximum flexibility in the method of introduction. In many cases they may decide to introduce a scheme only for those parts of their district with the most HMOs and where the problems are worst. They will then have scope to phase in the scheme to other areas if they so wish. I understand, for example, that Bristol City Council, which is under the control of a Labour council, is gradually introducing registration schemes throughout the city on a ward-by-ward basis according to risk priorities and resources permitting. We congratulate the council on the innovation and effectiveness with which it is pursuing that course. Indeed, some authorities will not wish to use registration schemes, believing instead that they can work effectively with the other HMO powers available to them. These amendments would remove such flexibility.
We are keen to make sure that local authorities do have available to them effective registration schemes. However, unlike the parties opposite, we do not wish to be over prescriptive, telling local authorities exactly what they must do. We find it preferable for them to have choice and flexibility.
I turn now to Amendment No. 221. The Government's proposals will not require a national registration scheme and, therefore, publicity for it. But Clause 68 requires local authorities to carry out local publicity if they are planning a registration scheme in their area. The Government are planning national publicity for the code of practice which will be approved by the Secretary of State using the powers in Clause 74. Our view is that, together, those provide an adequate degree of publicity and that Amendment No. 221 would be unnecessary, even if it were phrased to tie in with our approach to the scheme as a whole.
9.30 p.m.
Baroness Hamwee: I did not expect anything different given the debate that we have just had. I note what the Minister says on Amendment No. 221 and the question of publicity. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 196 not moved.]
Lord Lucas Lord Lucas moved Amendment No. 197:
Page 36, line 51, at end insert ("and to renew the registration as and when required by the scheme.").
The noble Lord said: In moving this amendment I shall speak also to Amendment No. 205. Amendments Nos. 197 and 205 are designed to clarify the operation of Clause 64, which introduces greatly improved powers for local authorities to operate registration schemes.
One of the key changes is that registration will in future need to be renewed. We shall be debating how frequently when we come to Amendment No. 198. Amendment No. 197 clarifies the duty on landlords to make it explicit that registration schemes require not only that they must register, but also re-register as necessary.
Amendment No. 205 makes it clear that the power of the Secretary of State to fix different fees is in respect of different cases. Currently the word "different" is not included. For example, there is likely to be a higher fee for a first registration than for a re-registration, since in principle, a re-registration should involve less work. And, as now, the fee is likely to be related to the size of the property. I beg to move.
On Question, amendment agreed to.
Lord Dubs Lord Dubs moved Amendment No. 198:
Page 37, line 3, after first ("of") insert ("not less than one year and not more than").
The noble Lord said: In moving this amendment, I shall speak also to Amendment No. 199. The point here is very simple. Under the scheme in the Bill, registration is set at an initial period of five years and renewable at five-yearly intervals. This amendment would provide some flexibility for local authorities so that initial registration and the re-registration could take place in a period of time longer than one year.
The point is that a good and conscientious landlord could reasonably be given a lengthy period of registration whereas a landlord who had not behaved well could be given a shorter period so that he might be, as it were, on probation so that he could demonstrate his management qualities before being given a longer period of registration. The amendment would merely provide some flexibility which the Bill, as it now stands, does not provide. I beg to move.
Lord Hylton: This is an important amendment. It is quite surprising the extent to which a house can deteriorate in five years, particularly if it is a house in multiple occupation. One has only to think of the turnover of tenants, the methods of heating and cooking and many other such matters. Therefore, I hope that the amendment commends itself to the Government.
Lord Lucas: I hope that I can convince the noble Lord, Lord Dubs, that he has misunderstood the significance of the five-year period which we are proposing. The five-year registration period will set the maximum interval between inspections by the local authority. Local authorities have separate discretionary powers at any time to enter and inspect an HMO and if conditions have declined they may require improvements to be made or, in extreme cases,

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de-register the property. So in practice there is common agreement on all sides of the Committee that some properties will be more at risk and will need more frequent inspections.
There is an additional significance about the five-year period. We have provided that if a property is accepted for registration because it meets the standard set by the local authority, and provided that conditions do not then decline, it cannot be made the subject of further enforcement action by the authority for a further five-year period. That is to protect landlords who have made significant investment to meet the standard and require some assurance that they will not have to carry out further work for a reasonable period of time because the local authority has changed its mind about the appropriate standards required in that kind of HMO. A five-year registration period will, therefore, offer some protection to responsible landlords who have improved and maintained their properties.
Finally, I have already mentioned the fee income to local authorities which will be generated by the new registration schemes. We will be discussing fees in more detail shortly. But we have to be careful to strike the right balance here. The extra resources will be useful to the local authority, but they must be paid for by the landlord and there is the possibility that some might be passed on to tenants. There is also the danger that excessive fees might force the landlord to withdraw his accommodation from the market. That is why we think that paying a fee every five years represents the right balance and why there is a danger that fees every year would be unfair to the landlord. I hope the comfort that I was able to give the noble Lord, Lord Dubs, at the beginning of my reply will enable him to withdraw the amendment.
Lord Monkswell: I cannot help wondering whether the Minister really appreciates the realities involved. Perhaps I may give the noble Lord the example of one property in which I have no direct interest but about which I have a little knowledge. The landlord I have in mind bought a property in London for £50,000 three years ago. It was in multiple occupation at the time. He was required to make major repairs to the property under the current regime of inspection and housing Act notices, but has blatantly refused to take any notice of such requirements.
To my certain knowledge, that landlord has taken £10,000 out of that house for three years. Therefore, he has made £30,000 out of the house but put virtually nothing into it. He has now sold the property for just under £45,000, having done no work to it at all under the current regime—and we are talking about a regime that will be even more relaxed. The Government are saying, "Yes, let's register this guy for five years. We can inspect the property", and so on.
However, as we have heard, houses can deteriorate quite significantly over a period of time; indeed, in less than five years. The Minister seems to me to be very protective of landlords. The fact that the Government are giving them five years in which to carry on their business with the security that they will be able to do
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so, actually flies in the face of the reality of the situation as regards some of the most degrading and unsafe accommodation which exists in this country, not to mention the lack of teeth, if I may put it that way, of local authorities to do much about it. In my view, the Government ought to think seriously about the way in which they are approaching the whole subject.
Lord Lucas: I am sure that the noble Lord is mistaken in thinking that what we propose is a more relaxed regime; indeed, we are discussing a much heavier regime than that which currently exists. Certainly a landlord behaving in the way described by the noble Lord would, I hope, be subject to an order from the local authority—that is, if the authority was attentive—stating that he should make the improvements required and that action would be taken if they are not made.
I cannot believe that an efficient local authority would allow such matters to continue for anything like three years before it ultimately took effective action to deregister the property. I believe that our proposal will be a much more effective remedy for the sort of problems outlined by the noble Lord than any system which exists at present.
Lord Dubs: The Minister said that I had misunderstood the Bill. I do not think that I did, although that is always a possibility. The point of this amendment is to give a local authority the flexibility to adjust the period to its assessment of the quality of landlord. The Minister says that under the present scheme if a landlord is a bit suspect, a local authority can carry out an inspection and deregister the landlord. It is a matter of judgment as to which is the more appropriate method. I still think that the method in the amendment of giving a local authority the initial flexibility to set different periods of registration is preferable to having to inspect after giving a five year registration period because the landlord may not be one in whom the local authority has complete confidence. However, I do not wish to take up more of the time of the Committee than is necessary. Therefore I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 199 and 200 not moved.]
Lord Lucas Lord Lucas moved Amendment No. 201:
Page 37, line 11, leave out from ("scheme") to second ("to") in line 12.
The noble Lord said: In moving Amendment No. 201, I wish to speak at the same time to Amendment No. 202. This clause already makes it a duty for the person specified in the scheme to register a house covered by the scheme, in what will be subsection (1) of new Section 346A, which is referred to at lines 49 to 51 on page 36. Government Amendment No. 201 deletes what amounts to a restatement of that requirement in subsection(3)(b). I think that would have covered the point that my noble friend Lord Peyton identified in his Amendment No. 200. Amendment No. 202 is consequential on Amendment No. 201. I beg to move.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 202:
Page 37, line 13, leave out ("such").
On Question, amendment agreed to.
Lord Dubs Lord Dubs moved Amendment No. 203:
Page 37, line 19, leave out (", subject to subsection (5)").
The noble Lord said: I wish to move Amendment No. 203 standing in the name of my noble friend Lord Williams of Elvel. I shall speak at the same time to Amendment No. 204. It was only a few minutes ago that the Minister chided the Opposition parties and accused us of not trusting local authorities. Let us put him to the test. This amendment is, fortuitously, one that we tabled some time ago, although it would have been even more relevant to what the Minister said a little while ago. The effect of the amendment would be to give local housing authorities the discretion to set reasonable fees for registration, and for renewal of registration, by removing the Secretary of State's power to provide by order the maximum permissible fee payable, and when no fee is payable. Therefore, the question is simple: do we trust local authorities or do we not? I beg to move.
Lord Lucas: We seem to be back in our accustomed positions on this one. The freedom that the noble Lord is proposing in these amendments is one which would have been denied to local authorities by his earlier amendments, but consistency is not required of the Opposition! I am afraid that I have to say for the Government that I do not think it would be right to abandon the idea of the Government setting a maximum amount that should be charged. We feel that such an abandonment would lead to a situation of widely varying charges throughout the country, and the danger that a small minority of local authorities might abuse their position. We do not think it would be right for the Government to allow that to happen.
Baroness Hamwee: So we trust local authorities, but not now, and not very much! Is that what the Minister is saying? I think it is. I do not wish to take up a great deal more time but I support the amendment which the noble Lord, Lord Dubs, has just moved—indeed, my name is added to it. I hope the Government understand that while this may be our second preference, nevertheless we take our duties as a revising Chamber sufficiently seriously to consider and seek to amend the provisions of the Bill with some seriousness, even though it might not be our Bill in the first place.
9.45 p.m.
Lord Dubs: The Minister said a moment ago that he is afraid that local authorities might abuse their position. Yet we are talking about a situation in which local authorities have complete discretion whether to adopt a scheme. It seems odd to say that they might abuse their position by charging too much even though they do not have to enter the scheme. I think the answer is that the Minister does not trust local authorities and that is why he said what he said.
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I do not wish to take up the time of the Committee unnecessarily. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 204 not moved.]
Lord Lucas Lord Lucas moved Amendment No. 205:
Page 37, line 34, after ("to") insert ("different").
The noble Lord said: I spoke to this Amendment when I moved Amendment No. 197. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 206 and 207 not moved.]
Baroness Hamwee Baroness Hamwee moved Amendment No. 208:
Page 37, line 41, at end insert—
("( ) In preparing any model registration scheme, the Secretary of State shall consult such bodies representative of landlords, and such bodies representative of local authorities, as he thinks fit.").
The noble Baroness said: The amendment provides that in preparing a model registration scheme, the Secretary of State will consult bodies representative of landlords and local authorities. Sufficient faith is shown in the Secretary of State for the amendment to provide that they will be such bodies as he thinks fit.
In another place, the Minister indicated that there would be consultation before model schemes are issued by the department. I welcome further information on that point from the Minister. It would be helpful to have the matter on the face of the Bill.
In addition, perhaps the Minister will take this opportunity to tell the Committee when the Government intend to start consultations; whom they will consult; the timetable—when they expect to have model schemes available for adoption; how many different types of model scheme the Secretary of State has in mind to offer authorities; and, lastly, what scope the Bill will leave for authorities to adopt schemes different from the model scheme which reflect local priorities.
I have been contacted, as I dare say have other Members of the Committee, by the Committee of Vice-Chancellors and Principals of universities. It raises questions with regard to registration. Perhaps I may add a request for confirmation that universities' purpose-built accommodation will be excluded from registration schemes given that such accommodation is subject to close controls at present. I beg to move.
Lord Hylton: There is nothing wrong with Amendment No. 208. However, I regret that the noble Baroness, Lady Hamwee, did not move Amendment No. 207 which seemed by far the best amendment out of a series dealing with national model schemes. Had that amendment been agreed, it would have placed a considerable onus on any local authority to show cause why it had not adopted the national model scheme. My experience goes back a few years so it may not be quite so relevant now as it was then. However, the greatest amount of housing stress arose through houses in multiple occupation. In those days the majority were totally unsuited to families that included small children.

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It ought to be an obligation to prepare a national model scheme which should be capable of being adopted in many local authority areas.
The Lord Bishop of Worcester: I had intended to make the point before but I wish to make it now. A comparison can be drawn between the standards required in accommodation and those required in MoT tests for cars. We do not shrink from having high standards for our cars on the grounds that people would not pay the money to implement the requirements because we know that human safety and well being are involved. Therefore, we should not shrink from having the highest possible standards in accommodation for families and young people.
Lord Lucas: I fully share the views of the noble Baroness, Lady Hamwee, on the benefits of consultation and I can assure her that the Government agree entirely with the need to consult on the content of any model registration scheme made under Clause 64 of the Bill. This is precisely what my right honourable friend the Secretary of State for the Environment intends to do: he will, in fact, be consulting even more widely than the duty proposed in this amendment, which refers only to landlord groups and local authorities. For example, we will be talking to tenant groups as well.
This autumn we expect to talk to local authority associations, the Campaign for Bedsit Rights, the Small Landlords Association and the universities. During that consultation we shall cover the question of university halls of residence and will consult a number of other organisations to ensure that the consultation is properly comprehensive.
Consultation on the model registration schemes will be particularly important as a result of changes to the Bill made in another place. When the Bill was first presented to Parliament there were provisions on registration schemes on the face of the Bill which excluded certain categories of HMOs from being included in a registration scheme. Those categories were principally the smaller properties with only a handful of tenants, but houses divided entirely into self-contained flats were also to be excluded. Following the debate in Committee in another place, the Government brought forward amendments at Report stage deleting the exclusions but making it clear that exclusions of the smaller HMOs regarded as low-risk properties would be incorporated into the model schemes.
The Government also undertook to look again at the exclusion of self-contained flats and to try to ensure that houses divided into such flats which were predominantly let out to renting tenants would be registrable. Discussion on these points will therefore form part of the consultation process on the model schemes which I hope will take place later in the year.
With those assurances, I hope that the noble Baroness will feel able to withdraw her amendment.
Baroness Hamwee: I take it from the assurances that it is implicit that the Government will consult with a view to the possibility of a number of different types of
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model scheme. They will listen to representations made about the adoption of schemes which are different from model schemes and which will reflect local priorities. After all, the point of consultation is to make the best use of the views that are shared with the consultor.
In response to the noble Lord, Lord Hylton, Amendment No. 207 was in any event the property of the Committee, had anyone else wished to debate it. I did not move it because I thought that for this evening we were beginning to exhaust the issue of local discretion. We may well return to it at a later stage. Having commented on the Government's consultation, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 209 not moved.]
Clause 64, as amended, agreed to.
Clause 65 [Registration schemes: control provisions]:
[Amendments Nos. 210 to 212 not moved.]
Baroness Hamwee Baroness Hamwee moved Amendment No. 212A:
Page 39, line 33 leave out from ("or") to ("or") in line 34, and insert ("in the case of paragraph (d), where paragraphs (a) to (c) above do not apply, within 12 months of the application").
The noble Baroness said: This amendment deals with the question of appeal. Although it looks a little complicated and legalistic, the principle behind it is that if a local authority is neither granted nor refused an application, there should be a right of appeal from the five-week point, but not a 21-day time limit. In other words, it seeks to leave a little more scope and flexibility for dealing with the issues that arise in the matter of appeals and in the rather tight time limit laid down in the Bill. I beg to move.
Lord Lucas: The noble Lord, Lord Monkswell, drew our attention to the dangers that can come from landlords failing to comply with requirements of legislation for some considerable period of time. They can profit greatly from that while doing things that everyone would consider undesirable. That is the principal reason why we do not wish to give way to this amendment.
I can understand that a landlord may feel aggrieved if he misses the limited time period of three weeks in which he may go to court. However, the change proposed in the amendment would be neither sensible nor helpful to the landlord.
The reason why the appeal time is fairly short is that we want such applications to be dealt with quickly, in the interests of tenants' safety. There should therefore be adequate pressure on all parties—local authorities and landlords—to process the applications for registration as quickly as possible and for any appeal to follow soon after the decision has been made.
The clause as drafted allows an extension of those time periods if all the parties can agree. That applies to the five-week period that must be allowed for the local authority to process the application and the three-week period for appeal. These provisions should be sufficient to cope with the vast majority of cases.

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In exceptional cases where the local authority has failed to respond to an application for registration and the landlord inadvertently misses his chance of appeal, there is no bar on his submitting a fresh application for registration and beginning the process again. He would not have to pay a repeat fee, as payment is made on first registration. I hope that those assurances are enough to enable the noble Baroness to withdraw her amendment.
Baroness Hamwee: As I made entirely clear at the start of the debate on this part of the Bill, I regard safety as of the utmost importance. I therefore take the Minister's point seriously. However, I am less convinced by the argument that a landlord can go back and start the process again. There is a balance to be struck between providing a period within which the parties affected can operate without its being too protracted and a period so short that it is difficult to comply with and tempts the applicant to give up on one application and start the process again. There has been criticism of additional bureaucracy proposed from these Benches. That seems a fair recipe for additional bureaucracy. However, I shall not press the point at this time. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
10 p.m.
Lord Lucas Lord Lucas moved Amendment No. 213:
Page 40, line 5, after ("registered") insert ("or revoke the registration").
The noble Lord said: In moving this amendment, I shall speak also to Amendment No. 214. These amendments make some minor changes to the provisions in Clause 65 which allow the local authority to vary the terms of the registration or revoke it, if conditions in the HMO begin to deteriorate. The clause as currently drafted in the Bill is not quite right as the grounds for revocation do not, in the Government's view, cover every possibility that might occur.
Amendment No. 213 concerns the situation, which is likely to be very rare, when for some reason the registered property becomes unsuitable and incapable of being made suitable for multiple occupation. As presently drafted, the clause allows the local authority to vary the number of households for which it is registered, but to cover every eventuality the amendment would allow the registration to be revoked in these circumstances.
Amendment No. 214 would further allow the local authority to revoke registration if additional facts came to light after the property had been first registered or renewed to show that the manager of the property was not a fit and proper person. I beg to move.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 214:
Page 40, line 22, after ("that") insert‗
("(a) the person having control of the house or the person managing it is not a fit and proper person, or
(b)")
On Question, amendment agreed to.
Clause 65, as amended, agreed to.
Clause 66 [Registration schemes: special control provisions]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 215:
Page 40, line 43, leave out ("their existence or the behaviour of their residents") and insert ("the way in which the houses are managed").
The noble Baroness said: In moving this amendment I shall speak also to Amendments Nos. 216 and 218. All the amendments stand in the name of myself and the noble Lord, Lord Williams of Elvel.
With these amendments we move to Clause 66, the special control provisions to deal with matters of amenity. That may sound trivial. I accept that the presence of large numbers of houses in multiple occupation can have particular effects on a district. But I feel that in a number of ways, the provisions go rather far.
The effect of the amendments would be to remove the "existence of the house or the behaviour of the residents" as a trigger for local authorities' consideration of the use of these provisions. The amendment replaces those terms with wording which places the burden of the use of the powers on the way in which an HMO is managed. Where serious nuisance problems occur in HMOs, it is frequently because of bad management. These amendments are intended to make that clear and lay the responsibility on the manager.
The powers in Clause 66 are very strong indeed. They allow an HMO to be closed down if, in the view of the local authority and after consulting the local residents and others, the:
"existence [of the house] or the behaviour of their residents … [is] adversely affecting the amenity or character of the area in which they are situated".
I believe that it would be better if there were powers to control poor management rather than to shut down houses to the detriment of the occupants. After all, there is legislation, including provisions in the 1985 Housing Act.
The reference to the behaviour of the residents appears to be an open invitation to attack HMOs on the NIMBY (not in my back yard) principle. I do not believe that that will encourage good standard HMOs as the Government suggest. I believe that the proposed words would provide a more objective test and a better form of control. I beg to move.
Lord Dubs: I support Amendment No. 215. In answer to a question that the Minister may put to me, yes, I do trust the majority of local authorities but I do not always trust every local authority. I have enough examples to support both contentions.
One of the points that bothers me about the provisions contained in the Bill—after all, this amendment, if accepted, would provide some safeguards—is that they not only give local authorities powers to deal with existing HMOs, but they can also prevent a new HMO being opened. That means that local residents can say, "We do not like the sort of residents the HMO will house." That opens the door to a great deal of prejudice and not much rational argument and may pander to some of the less healthy instincts one occasionally

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comes across when people do not like people of different lifestyles living in the same street or not too far away. It is important therefore that the amendment provides for the way in which the houses are managed. That is a much better approach than a provision regarding the behaviour of the residents or the existence of the HMO itself.
Perhaps I can take up the time of the Committee for a little longer to give an example from Wandsworth council. It so happens that it had other powers exceptionally, but I fear that it could use these powers if it did not already have those other powers. The example concerns an empty old people's home which the organisation of which I used to be the director—the Refugee Council—wanted to occupy for a few months to house Bosnian refugees coming to this country under a Home Office scheme.
Wandsworth council said that it would not allow the organisation to use that property for the Bosnian refugees because the local residents would not like it. In fact, that was not true. The local residents and the local church were quite happy about it. However, the council used its powers to say, "These are not the sort of people we want in this part of the borough." It was Balham.
My fear is that there may be occasions when local authorities will use their powers in a way which is undesirable. The majority of local authorities will not do that; the minority may. The amendment will provide at least something of a safeguard against the abuse of such powers.
Lord Lucas: I am glad that the noble Lord, Lord Dubs, and I are again thinking the same thoughts. Neither of us wants to see a situation where we get into some form of ethnic cleansing as a result of these provisions. For the sake of avoiding argument at later stages of the Bill, I note that if we had agreed to Amendment No. 209, tabled by the noble Baroness, Lady Hamwee, to which the noble Lord, Lord Williams, lent his name, we would have got into a position where local authorities were free to do whatever they wanted in that regard. The provisions under Clause 66 will be subject in every case to the approval of the Secretary of State. I can assure the noble Lord that the scenario that he paints of councils trying to shift what they regard as undesirable people out of one ward into another or out of their area altogether is not something which will be permitted.
Local authorities need to deal with social and economic problems which can arise from a concentration of HMOs in a specific area where they are badly managed or where there are simply too many of them. That has been a specific problem in a number of seaside resorts such as Blackpool, Scarborough, Margate and Bournemouth. Many of the hotels or guesthouses that used to cater for the tourist trade have converted to become hostels offering bed and breakfast. Many of them cater for single, young people who rely on income support and housing benefit and who often move considerable distances to live in those seaside towns. For example, the magazine, Loot, which circulates in the London area frequently carries advertisements placed by hostel operators in Margate
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offering, "Free breakfast and evening meal, free Sky TV, no bills, move in today, DSS welcome, help with all forms". If all these extra benefits can be provided, it throws into interesting contrast the question of whether benefit levels are adequate.
Offering accommodation to people in need of housing is, of course, commendable. But too often there is a concentration of HMOs in particular areas, and many of them are not particularly well-managed. The result is that the whole character of an area can rapidly change. Unfortunately, social problems such as drunkenness or drug taking can become rife. Once an area begins this downward spiral, it becomes increasingly difficult for the remaining hotel businesses to attract custom—holiday makers simply do not want to walk in streets where they may face drunken abuse or where they may have to pick their way through used syringes.
In response to these concerns, the Government have brought forward the proposals in Clause 66 to allow local authorities to adopt "special control provisions". If an authority does adopt these provisions in an HMO registration scheme, it will be empowered to refuse registration (or revoke an existing registration) if the existence of the HMO or the behaviour of its residents has an adverse effect on the amenity or character of the area in which it is situated. In the case of an existing HMO, the local authority will be able to do this only if the person controlling or managing the HMO has failed in some way to take steps to prevent that adverse effect. For new HMOs, the authority can take into account the number of existing HMOs in the vicinity before deciding whether to permit or refuse registration.
Amendments Nos. 215, 216 and 218 remove the references to the existence of the HMO and to behaviour of the residents in the three places in which they occur in Clause 66, and replace them instead by a reference to "the way in which the house is managed". That would have the effect of considerably weakening the proposals. For it is often the behaviour of the residents in, or in the vicinity of, the HMO which causes the adverse impact on the area, and so this is something which the local authority should clearly be able to take into account in exercising its powers. It seems much better to us that these powers should be directed at the insult which neighbours are suffering rather than to some vague term about the quality of management of the HMO which is much more remote from that insult.
The fact that the local authority can take into account "behaviour" will not give it carte blanche to hold landlords responsible for anything which their tenants do. The authority may only act against an existing HMO if there has been some failure by the management to take such steps as are reasonably practicable to deal with any problems arising from the behaviour of the tenants. This will be a matter for local authorities to consider, and also for the courts if a landlord appeals against a local authority's decision. But I should have thought it might be regarded as reasonable for a landlord to deal with, for example, excessive noise or drunkenness arising within the HMO or its vicinity. The landlord could take steps, if necessary by evicting tenants who cause the problem, if the HMO is, to put it colloquially,

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ruining the area. General anti-social behaviour elsewhere in the town would not, of course, be within the control of the landlord.
I therefore cannot accept the amendment which has been put forward. By focusing solely on the performance of the manager, without implicitly requiring him to manage the property so as actively to reduce any nuisance caused by the behaviour of its tenants, it considerably weakens the scheme and would not give those local authorities which have been pressing for additional powers the scope they need to deal with the social problems they face.
Similarly, by removing the reference to the "existence" of the HMO, the amendment would prevent local authorities effectively controlling the rate at which new HMOs may be opened. The local authorities most affected by the problems are clear that they want a power of this type. It may give some comfort to the noble Baroness to know that Scarborough has written to my honourable friend to indicate that it would not expect, when it has these powers, to use them in more than five instances, and that number would be reduced even further once the initial weeding out process was concluded. This is not a problem which will need the kind of draconian measures which appear to be feared by the noble Lord, Lord Dubs. It will be one which, when the powers are there, should, we hope, fade away.
10.15 p.m.
Lord Monkswell: It seems to me that this is a question of whether one requires the management of an HMO to control the tenant or one says that one will not allow these tenants in the area because they will create problems and a bad situation. I suggest that one of the risks in looking at the two extremes, if I may call them that, is that one runs the risk of trying to get the manager of an HMO to control the behaviour of the tenants which has nothing to do with where they live but with the behaviour outside in the street and in the community, which are not amenable to decisions by the manager. There is also the risk of pointing the finger at the tenants for bad behaviour and saying, "If you have HMOs you will have bad people here and it will be very difficult for people living in the community".
I do not want to digress too much, but it is rather like the discussion we had the other day about unemployment and crime. While it is wrong to blame an individual unemployed person for being a criminal, which he is not, one needs to recognise that if there is a high proportion of unemployment in society there is a commensurate increase in crime. There should be enough sociological evidence to show that if one has a density of HMOs in a particular area, there is a consequent risk of disturbances in the community and anti-social behaviour. Therefore, rather than targeting the individual who is living in an HMO and saying, "You are likely to be a bad person who should not be here", we need to ensure that there is not too high a proportion of HMOs in an area which is likely to lead to social problems. It is trying to find some balance in
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not blaming the tenants and the managers, but in saying that we all need to consider something which is likely to be problematical.
Lord Lucas: I quite agree with the noble Lord, Lord Monkswell, that these are provisions which have to be handled with great care and discretion in order not to create the sort of problems he has alluded to.
Baroness Hamwee: I have become rather more alarmed, rather than comforted, about the special control provisions as I have listened to this debate. I know that is not what the noble Lord intended. In general, the question of an area changing is a matter for planning rather than this kind of provision which, as I read it, gives scope for putting the blame in the wrong place or at any rate putting more blame on only some of the people who deserve it.
As I have said, the local authorities have power to control the poor management of HMOs. They can use the control provisions that we have already debated. They can prosecute through management regulations under Section 372 of the 1985 Act. They can remove control from a bad landlord where there is a risk to health, safety and welfare under Section 379 of that Act; and where a property is unfit they can use closing order powers.
To provide in legislation for the existence of a house giving rise to the possibility of applying certain control provisions seems to undermine what the Government have been saying about needing to encourage and support the stock. It may lead to some authorities outlawing HMOs whatever the Minister may say. It may undermine other government initiatives and joint initiatives with voluntary organisations including the use of private rented accommodation by homeless people and the expansion of accommodation under the Rough Sleepers' Initiative and various community care and other initiatives.
The arguments adopted by the Minister appear to lay the blame in the wrong direction. I fear, even more than when I read this clause, that it could be used to pander to some of the less deserving calls for changes in the character of the neighbourhood in order to reverse a movement. It is too late to pursue the matter now, but it will be interesting to come back to this matter and to review, in the light of what the Minister has said—I will read it in Hansard—whether these draconian powers should be allowed to remain in the Bill in quite such an extensive fashion. For the moment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 216 not moved.]
Lord Lucas Lord Lucas moved Amendment No. 217:
Page 42, line 24, at end insert—
("( ) Where the decision of the authority was to impose conditions of registration, the court may direct the authority to grant the application without imposing the conditions or to impose the conditions as varied in such manner as the court may direct.").
The noble Lord said: This amendment makes a small change to the powers available to the court when an appeal is made against the use of special control

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provisions as set out in Clause 66. As presently drafted, the court is allowed to direct the authority to grant the application for registration as made or as varied in such manner as the court may direct. The amendment would additionally provide that the court might, when registration was granted subject to conditions, direct that the authority delete or vary the conditions which the authority had imposed. This change would mean that the powers available to the court on appeal against the use of special control provisions would more closely mirror the appeal procedures in relation to normal control provisions as set out in Clause 65.
I beg to move Amendment No. 217.
On Question, amendment agreed to.
Baroness Hamwee Baroness Hamwee moved Amendment No. 217A:
Page 43, line 33, leave out from ("brought") to end of line 36 and insert—
("(b) if a further appeal to the Court of Appeal is brought, a decision on that appeal is given and the period within which an appeal to the House of Lords may be brought expires without any such appeal having been brought, or
(c) if a further appeal to the House of Lords is brought, a decision on that appeal is given confirming the direction (with or without variation).").
The noble Baroness said: I beg to move Amendment No. 217A. The short point is: what about an appeal to the House of Lords? The Bill provides for appeals to the Court of Appeal. Can the Government comment on appeals stopping at that point?
Lord Lucas: I share the objective of the noble Baroness that an occupancy direction should not bite until all avenues of appeal have been exhausted. But it may be that this amendment is unnecessary. An appeal to this House in its judicial capacity is always by leave. If leave is granted by the Court of Appeal that court has power to make an order suspending the effect of the decision or direction which is the subject of the appeal. It also has power to grant a stay until the time for seeking the leave of the House has expired or the case is disposed of where the appeal court has itself refused leave. It is for this reason that when dealing with rights of appeal to the courts housing legislation contains no explicit provision on the face of the statute staying the effect of the decision beyond the decision of the Court of Appeal.
I shall consider whether there is any advantage in having something on the face of the Bill. If so, I shall bring forward an amendment at the next stage. I hope that the noble Baroness will feel sufficiently comforted by those words to enable her to seek leave to withdraw the amendment.
Baroness Hamwee: For the moment, the explanation of the Minister is helpful. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 218 not moved.]
Lord Dubs Lord Dubs moved Amendment No. 219:
Page 43, line 48, at end insert—
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Special control provisions: guidance to local housing authorities.
("348G.—(1) The Secretary of State shall issue guidance to local housing authorities concerning their exercise of special control provisions under this Part.
(2) In drawing up the guidance under subsection (1), the Secretary of State shall consult local housing authorities and other relevant organisations.
(3) In exercising special control provisions under this Part, the authority shall have regard to the guidance issued by the Secretary of State under subsection (1).'"').
The noble Lord said: I beg to move Amendment No. 219 in the names of my noble friend Lord Williams of Elvel and the noble Baroness, Lady Hamwee. The arguments in favour of this particular amendment are similar to those used for Amendment No. 215. However, the solution is slightly different. In Amendment No. 215 we talked about the way in which houses were managed, whereas in Amendment No. 219 the amendment simply requests that the Secretary of State shall issue guidance to local authorities as to how to use these powers. In his reply to Amendment No. 215, the Minister said that local authorities would not be allowed to abuse their powers, for example by way of ethnic cleansing at local level to which the Minister referred. This was based on an example that I had given. However, he did not say by what means local authorities would be prevented from abusing their powers. Amendment No. 219 gives a straightforward model. There would be guidance given by the Secretary of State to which local authorities would have to have regard. I beg to move.
Lord Lucas: I have considerable sympathy with the concerns expressed by the noble Lord. I accept that the powers available to local authorities under these provisions are considerable. There will be a clear need for them to be exercised with due care and consideration. However, there are a number of safeguards implicit in the legislative provisions setting out the special control conditions and, within those parameters, I think local authorities will be best placed to exercise their discretion in using the powers at their disposal.
There are a number of important points. First, special control provisions will not be available to local housing authorities as a matter of routine. They will be available only when an authority makes out a case for their use to the Secretary of State. At that stage, we shall make guidance available to local authorities on how these special control conditions can be incorporated into a registration scheme, although, as I have said, we shall not formally be issuing a model scheme which incorporates them.
There are important safeguards in relation to the service of an occupancy direction which will require the manager of the HMO to take all necessary steps, within a period not less than 28 days, to bring all tenancies to an end. First, Clause 66 provides that in deciding to make an occupancy direction the local authority shall take into account the interests of the occupants of the house and the person having control of the house as well as the interests of local residents and businesses; in other words, the local authority is required to take a balanced approach.

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Secondly, the clause also provides that any person aggrieved by an occupancy direction may appeal against it to the county court. Thirdly, following discussion in Committee in another place, an amendment was brought forward by the Government to provide that the statutory protection of tenure afforded to Rent Act tenants cannot be affected by an occupancy direction. That will prevent the exploitation of the use of special control provisions by landlords to gain vacant possession in these cases.
The special control conditions are designed to deal with particular problems which have arisen in a number of resort areas due to the proliferation of HMOs. It is important that they can be used to deal effectively with those problems; but at the same time the safeguards I have highlighted are designed to prevent them being over-zealously applied by local authorities.
I therefore see no immediate need for the comprehensive further guidance envisaged by this amendment. Of course, the Government will keep under close review the use of these powers and take any further steps necessary if problems occur. That may include the issuing of such further guidance, and the provisions under Clause 74 which allows the Secretary of State to approve codes of practice in relation to those matters would provide for that to be done.
In the light of those assurances, I hope that the noble Lord will feel able to withdraw the amendment.
Lord Dubs: I thank the Minister for his answer. As I understand it, he says that if a local authority applies to use the special control provisions, the Secretary of State would give guidance to the local authority. If I were a local councillor considering the use of those powers I should want to know what the guidance was before I asked to have the powers. It is becoming a little circular. I suspect that local authorities would get to know what was the guidance in a general sense. The Minister is being uncharacteristically difficult about this proposal. Nevertheless, to save time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 220 not moved.]
Clause 66, as amended, agreed to.
Clause 67 agreed to.
Clause 68 [Information requirements in connection with registration schemes]:
[Amendment No. 221 not moved.]
Lord Gisborough Lord Gisborough moved Amendment No. 222:
Page 45, line 27, at end insert—
("( ) After a scheme is confirmed, the local housing authority shall—

(a) ensure the register of all properties is open to inspection by the public free of charge at all reasonable hours; and

(b) on request, and on payment of any such reasonable fee as the authority may require, supply copies of the register to any person.".").

The noble Lord said: I welcome the Government's proposal for registration schemes. The new proposals will ensure greater consistency in local authorities' approaches to registration schemes, and the landlords will better understand what is expected of them. Where
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a local authority has put a registration scheme in place, landlords must register their HMOs, and local authorities will be able to refuse registration if the HMO is below standard, overcrowded, or if the management arrangements in the HMO are unsatisfactory. It follows, therefore, that those HMOs which have been registered by the local authority will be of an approved satisfactory minimum standard. Good landlords will therefore be encouraged to participate fully in registration schemes as it will be to their commercial advantage to do so. If they are able to demonstrate to tenants that their HMO has been registered and therefore conforms to the minimum standards tenants are more likely to take a room in their property than in another which has not achieved registration. Tenants will also be able to take comfort from the scheme as they will be able to establish with the local authority whether the HMO is registered and, if so, will be reassured about standards.
For the scheme to work effectively, however, it is important that the information concerning registered properties is freely available to landlords and tenants alike. It is not clear that the Bill as currently drafted would require local authorities to publish details of the properties registered under the scheme. It would appear that the only requirement which local authorities currently have under the Bill is to make information about the nature and mechanics of the scheme publicly available, not necessarily the properties listed in the register. If the details of the properties themselves were available it would reinforce the role of the local authority, give reassurance to tenants and give accreditation to landlords of registered properties. That would raise public confidence in the whole scheme and increase transparency.
It is worth noting that both the planning system and the rent register system already operate with open registers and I would encourage the Government, through my amendment, to adopt the same principle with regard to HMO registration schemes. I beg to move.
10.30 p.m.
Lord Lucas: We find ourselves in sympathy with my noble friend's amendment but I should like the opportunity to consider the precise wording in further detail and to return to it on Report. I hope that with that assurance my noble friend will withdraw his amendment.
Lord Gisborough: I am most grateful to my noble friend. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 68 agreed to.
Clause 69 agreed to.
Clause 70 [Restriction on notices requiring execution of works]:
Lord Gisborough Lord Gisborough moved Amendment No. 223:
Page 46, line 11, leave out ("they consider that").
The noble Lord said: In moving Amendment No. 223 I shall speak also to Amendment No. 224. I warmly welcome Clause 70 of the Housing Bill, which amends

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Section 352 of the Housing Act under which local authorities are empowered to require works to a property to render the premises fit for the number of occupants. Many landlords have found in the past that they have been served with a succession of Section 352 notices at relatively short intervals. That may result from the fact that the standards required by the local authority become more onerous rather than the conditions in the HMOs becoming worse.
Under Clause 70, if an authority serves a notice and the works specified are carried out the local authority may not serve another notice within a five-year period unless the authority considers that there has been a change in circumstances in relation to the property. This new five-year period is important and will give landlords greater certainty with regard to the management of their property and the clause will be welcomed by landlords in the private rented sector as a useful attempt to prevent undue disturbance in the management of HMOs.
My amendment seeks to tighten the drafting of Clause 70 and remove some of the discretion which local authorities will undoubtedly have under the new provision in the Housing Act 1985. As currently drafted, a local authority would be able to serve another notice before the end of the five-year period if there had been any change in circumstances in relation to the premises, however small that change of circumstance might be. It also states that a local authority may serve a notice if it considers that there has been a change in circumstance. That appears to provide plenty of grounds for dispute regarding, first, whether there has been a change of circumstance significant enough to merit a further notice and, secondly, whether the local authority is right to consider that there has been a change of circumstance.
My amendment will mean that only material changes to the property could trigger the possibility of another notice and ensure that the identification of those changes is not restricted to the discretion of the local authority. It will ensure that the new provision in Section 352 of the Housing Act is used on a more objective basis. Without the amendment, over-zealous local authorities may be inclined to serve additional notices where there have been, in their opinion, even insignificant or minor technical changes to the property. I beg to move.
Lord Lucas: We are content with Clause 70 as it stands. We feel that if the landlord thinks that the relevant change in circumstance is only trivial, he can appeal to the court. A court is likely to use the de minimis principle and uphold the appeal if the change has indeed been insignificant. Under those circumstances, we feel that the proposed changes not only introduce an unacceptable element of uncertainty into the Bill but also achieve nothing.
Lord Gisborough: I thank my noble friend and withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 224 not moved.]
Lord Dubs Lord Dubs moved Amendment No. 225:
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Page 46, line 14, after ("premises") insert (", the nature of its occupation").
The noble Lord said: There is a very small point at issue here. Under Section 352 of the Housing Act 1985 a local authority can serve notice requiring specific works to render an HMO suitable for the numbers of occupants and the households in occupation. Those requirements enable provision to be made for sufficient and suitable amenities such as toilets, baths and showers, and also to provide adequate means of escape in case of fire or adequate fire precautions.
However, the provisions do not enable the local authorities to allow for changes in occupation of the premises. That seems to be something which may alter quite rapidly over a period of years and certainly within the five-year period stipulated. The amendment would enable the local authority to take into account changes in the nature of the occupancy of the HMO in addition to the other criteria which they can already take into account. I beg to move.
Lord Northbourne: I support the amendment in the light of the amendments which I propose to table later in respect of the special needs of children and young families.
Lord Lucas: It is beyond our imagination to think of any change in the nature of occupation which would not also entail a change to the availability or use of the facilities. Those circumstances are already provided for in the clause as drafted. If the noble Lords, Lord Dubs and Lord Northbourne, can envisage anything else, perhaps they will write to me.
Lord Dubs: In the light of the Minister's comments, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 70 agreed to.
Lord Gisborough Lord Gisborough moved Amendment No. 226:
After Clause 70, insert the following new clause—
PERIOD OF COMPLIANCE WITH AND APPEALS AGAINST NOTICES SERVED
(" .—(1) In section 352(4) of the Housing Act 1985, for "21" substitute "42".
(2) In section 353(1) of the Housing Act 1985, for "21" substitute "42".").
The noble Lord said: Amendment No. 226 introduces a new clause to the Bill to increase the period of compliance with, or appeal against, notices. Section 352 of the Housing Act 1985 gives local authorities the power to serve a notice on the owner of an HMO requiring works to the property. The notice will specify what works the local authority believes should be carried out to the property. In the notice, the authority must also specify a date by which the works must be commenced. That can be as soon as 21 days after the date of the notice.
During that 21-day period, landlords have an opportunity to lodge an appeal against the notice. My amendment proposes that both those periods should be extended to 42 days to allow landlords sufficient time to assess their position and either commence the works or lodge an appeal.
Twenty-one days is far too short a period for proper consideration of the notice received from the local authority and the works which need doing. It is too short a period in which to obtain estimates and quotations from contractors and to commission the work. It is also too short for proper consideration of the possibility of an appeal against the notice.
The majority of owners of HMOs are private landlords rather than corporate bodies who may be unfamiliar with the complexity of the legislation and may not have access to legal resources. For the average private landlord letting, say, two or three houses on a part-time basis, the receipt of a notice under Section 352 may well be his first encounter with a local authority's housing department. If served with a notice, the landlord would have three weeks in which he would need to read up and become conversant with the law and regulations, consult with lawyers and surveyors, obtain quotations for the works; assess the validity of the notice, consider the possibility of an appeal, and, perhaps more importantly, attempt to discuss the issue and negotiate with the local authority environmental health officers. Therefore, it is appropriate that the limits in question should be extended to 42 days. I beg to move.
Lord Lucas: I accept that it would be quite unreasonable in nearly all cases for landlords to receive an enforcement notice without any prior warning and then have only a three-week period in which to take the necessary steps. The reason for such a tight time limit is that, if the property is in such a state of disrepair that the tenants' welfare is at risk, the authority must be in a position to demand urgent action. It is general practice for local authorities to allow much longer.
When we come to deal with Amendment No. 240 we shall be looking at some provisions which I believe will ameliorate the situation. That amendment will require a local authority to give written notice of its intentions to serve an enforcement notice under Section 352 or Section 372 of the 1985 Act and to hear representations before any formal enforcement action can commence. That would mean that taking formal enforcement action by serving a Section 352 notice would only occur as a last resort or when urgent action is necessary to protect the safety or welfare of the occupants of an HMO. Under those circumstances, when that amendment is incorporated, I believe that my noble friend Lord Gisborough should find the legislation agreeable to him.
Lord Gisborough: I thank my noble friend the Minister for that response. On the face of it, it would seem that that would be satisfactory. Therefore, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 71 agreed to.
Clause 72 [Duty to keep premises fit for number of occupants]:
Lord Gisborough Lord Gisborough moved Amendment No. 227:
Page 47, line 21, at end insert ("which may expose any tenant or other occupant of the premises, or any other person, to risks to their health or safety").
The noble Lord said: In moving Amendment No. 227 I shall, with the leave of the Committee, speak also to Amendments Nos. 229, 231 and 232.
Clause 72 is a key part of the Government's package of measures to improve standards in houses in multiple occupation. Under the clause, which amends the Housing Act 1985, landlords will be under a general duty of care to ensure that they manage their properties in such a way as to prevent the necessity for the service of a Section 352 notice.
Breach of that general duty of care will, under the Government's proposals, be a criminal offence. That is a quite wide-ranging and, some might say, draconian new power which local authorities are being given. Some landlords have expressed considerable unease at this new duty of care, not because they are unwilling to promote good standards in their properties but rather because they fear that they may be criminalised for trivial matters, or in respect of things which are outside their control. Therefore, we must ensure that there are appropriate safeguards to ensure that that power is not abused.
Amendment No. 227 seeks to ensure that a landlord could only be prosecuted for a breach of his duty of care where there is an actual risk to the health or safety of any person in the premises and that circumstances falling short of a threat to health and safety would not put the landlord in breach of the duty of care. The amendment is particularly important when one considers that landlords have been threatened in the past with Section 352 notices for relatively trivial matters, such as a requirement that each unit in an HMO should be provided with its own refrigerator and individual wash-hand basins, even though such facilities had not been requested by the tenant.
The duty of care is intended to prevent landlords from supplying unsafe or unhealthy accommodation. There is a danger, however, that the duty of care will go further than this and include matters which go beyond health and safety and are much more to do with amenity standards. Is it right, for instance, that a landlord might face a £5,000 fine because a tenant's partner has moved into the property, possibly without the landlord's consent and as a result, the house should now, according to the local authority, have three lavatories rather than two because the number of residents has increased by one? The duty of care must not be so severe as to discourage prudent law abiding landlords from having anything to do with residential letting, leaving only the cowboys who will ignore the law, whatever legislation the Government put in place.
Amendment No. 229 further amends the duty of care so that a landlord who had breached the duty of care but had a reasonable excuse for doing so would not be prosecuted. In all these issues we must remember that

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housing is of an infinitely variable character and form. This amendment makes allowance for the practicalities of carrying out work under particular circumstances. For instance, a landlord may wish to enter the premises to carry out works to ensure that he is not in breach of his duty of care but finds that the tenant is being obstructive and is refusing access to the property. I have experienced that. It would be quite unreasonable if a landlord were to be penalised for failing to comply with the general duty of care when matters were beyond his control. Many HMOs are let to students who may ask that the landlord does not carry out work to the property during term time. It would be unreasonable of the landlord to ignore this request and to do so may leave him open to a charge of harassment. On the other hand, he may be obliged to ignore his tenants' request because if he does not carry out work to the property he would find himself in breach of the general duty of care.
My amendment is not intended to be a let out for those landlords who have no intention of bringing their property up to a required standard. It will, however, allow for unforeseen circumstances to be taken into account. It is worth remembering that when the Bill was originally drafted the landlord was only deemed to have committed an offence if he had knowingly failed to comply with the duty of care. The "knowingly" provision was removed from the Bill at the Committee stage in another place. The Government suggested, however, that an alternative form of words should be put in its place. That has not happened. My amendment suggests that those words should be, fails to comply "without reasonable excuse". I hope the Government will be able to adopt this as an appropriate compromise.
When considering whether a landlord is in breach of the duty of care, Amendment No. 232 will ensure that the local authority can have regard to all the circumstances of the particular case and take account of the infinitely variable characteristics of buildings and circumstances in the private rented sector. In particular, the local authority in considering whether there has been a breach of the duty of care will be able to look at the physical nature of the building and the cost of remedial work. It will ensure that where there are inherent but reasonable obstacles to meeting the standard, the duty of care may not necessarily be breached. The local authority may want to consider, for example, circumstances where the house is shortly to be demolished; houses about to undergo a change of use; houses where the work for good reasons cannot be undertaken for the moment; and houses that nearly meet the requirements but cannot be further upgraded without disproportionate expenditure or disruption. In all of these cases it would be unreasonable for a local authority to require extensive works to the property. My amendment would ensure that the duty of care would be implemented flexibly and with discretion.
Amendment No. 231 seeks to ensure that landlords have adequate advice about their new duties in order that they are able to perform them economically and promptly. Under my amendment local authorities would be required to provide information to assist landlords with their duties. The local authority is in a good
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position to provide this as its officers are already in possession of extensive specialist experience in the field, and the advice required by my amendment could be given by local authorities' existing environmental health departments. Without the amendment there is danger that the new duty of care will be seen as an unreasonable and intolerable burden. The requirement to provide landlords with advice should foster a greater spirit of co-operation, and break down some of the barriers which currently exist between landlords and local authorities. I beg to move.
Baroness Hollis of Heigham: I had not intended to speak because this is not the section of the Bill in which I am most closely involved. However, I cannot resist asking the Government to reject Amendment No. 227.
Some of the worst housing that exists is at the bottom end of the HMO sector. Local authorities' powers are still often too modest and too hard to enforce to ensure that appropriate accommodation is provided for people for whom it is home. Any efforts to dilute already not very strong powers would be greatly regretted.
I refer, for example, to the notion that it is not the landlord's fault if there are insufficient toilets because additional people have arrived. The whole point of having standards is to ensure that there is adequate sanitation, water supply, safe storage, fire protections, lighting, safety on the stairs, and such considerations. It is hard enough now for local authorities and environmental health officers to make those standards stick. If the Committee were minded to accept the amendment in the name of the noble Lord, Lord Gisborough, the task would be made even more difficult and the housing conditions for many people would become even poorer.
Lord Lucas: I am sure that the noble Baroness realises that we accept only Opposition amendments apart from our own. It would be bad for morale on our Back Benches if we were to encourage them by accepting their amendments!
However, I hope that I can give my noble friend some comfort. I do not believe that Amendment No. 227 takes us beyond what the Government already propose. The duty on landlords under Clause 72 is framed by providing that the landlord must prevent standards falling in the HMO to a point where the local authority could serve an enforcement notice. But authorities can only do that if they feel that the facilities in the property relating to cooking, washing, sanitation or fire safety are not reasonably suitable for the number of persons occupying the property. I am sure that the whole Committee would agree that if any of those circumstances occurred then the tenant's health or safety could arguably be at risk.
Amendment No. 229 modifies the offence in relation to the new landlord's duty by providing that an offence would occur only if the landlord failed to comply with the duty without reasonable excuse. I have several points to make. First, the duty is already qualified by stating that the landlord should take only such steps as are reasonably practicable to comply with the code.

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Secondly, and perhaps more importantly, the code of practice which can be approved by the Secretary of State under Clause 74 will provide guidance to the landlord on how to comply with this duty. The code will be evidential in a court of law which means that if a prosecution is brought for breach of the duty, then the code shall be admissible in evidence. But it will be free for either party to produce reasons for departure from the code. So there is no need to qualify the criminal offence under the duty in Clause 72 as proposed by the amendment. The same argument applies to Amendment No. 232.
There is a further point. The Government's intention is that the proposed code of practice, while setting out a new consistent national standard for HMOs, should not be over-prescriptive concerning what must be done in each case. The aim will be for a goal-based code with recommended action being focused only on the high risk properties. HMOs with a lower risk should be subject to a lighter touch in relation to enforcement procedures. It will not be easy to achieve such an aim, but, if successful, I think many of my noble friend's concerns and those of many landlords will be met.
Finally, Amendment No. 231 requires that local authorities should be required to publicise the duty and advise landlords how they can carry it out. My response again relates to the HMO code of practice which the Government propose to make and which will set out the standards necessary to fulfil the duty. There is specific provision in Clause 74(2)(a) which states that the Secretary of State should only approve a code if he considers that it has been published in such a manner that it has been brought to the attention of those likely to be affected by it. So I can assure my noble friend of two things: first, that when the HMO code of practice is published, arrangements will be put in place for it to be widely publicised; and, secondly, that the landlord's new duty under Clause 72 will not be brought into force until a reasonable time after the code is available so that landlords have time to study it and take the necessary action to improve their properties.
I hope that these assurances are sufficient to persuade my noble friend to withdraw the amendment.
Lord Gisborough: I am grateful to my noble friend for that explanation. It will be read by my advisers and we will see where we go from there. I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 228 and 229 not moved.]
Lord Dubs Lord Dubs had given notice of his intention to move Amendment No. 230:
Page 47, line 29, at end insert—
("( ) The Secretary of State shall take reasonable steps to ensure that—

(a) he publicises the duty under this section nationally to persons having control of houses in multiple occupation and to persons managing houses in multiple occupation; and

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(b) he consults local housing authorities to ensure that they publicise the duty under this section to persons having control of houses in multiple occupation and to persons managing houses in multiple occupation in their districts."").

The noble Lord said: In the light of the assurances that the Minister gave on earlier amendments, I shall not move Amendment No. 230.
[Amendment No. 230 not moved.]
[Amendments Nos. 231 and 232 not moved.]
Clause 72 agreed to.
Baroness Hamwee Baroness Hamwee moved Amendment No. 233:
After Clause 72, insert the following new clause—
GAS APPLIANCES: DUTY OF OWNER OF APPLIANCE
(". After section 368 of the Housing Act 1985 insert—
"Gas appliances: duty of owner of appliance.
.—(1) It shall be the duty of the person who owns a gas appliance or any installation pipework, chimney or flue installed in a house in multiple occupation or any part of it let by him, to ensure that a certificate showing safe installation, maintenance and chimney and flue cleaning shall be given to the tenant a reasonable time before he signs the tenancy agreement and every twelve months thereafter during the term of that tenancy.
(2) The aforesaid certificate shall specify the name, address and, where it is gas work, the CORGI registration number of the person who did the relevant work and the date the work was done.'"').
The noble Baroness said: Amendment No. 233 is grouped with Amendment No. 234. Both are in the names of myself and the noble Lord, Lord Williams of Elvel. The amendments propose new clauses to be inserted in the Housing Act 1985 dealing with gas appliances. They involve in one case the duties of the owner of the appliance and in the other of the person managing or having control of the house in which the appliance is situated.
The first amendment places a duty on the owner of an HMO to provide a prospective tenant with a certificate showing the safe installation and maintenance of gas appliances and of installation pipework, chimneys or flues before a tenancy starts and annually thereafter. This would reverse the current position under the relevant gas safety regulations whereby a tenant can request written information from the landlord, but the regulations are dependent on that request. Subsection (2) provides for the particulars in the certificate and requires the landlord to show that the engineer who checked the appliances was properly qualified to do so.
We have referred, more briefly perhaps than the subject requires, to a number of deaths every year in the home as a result of carbon monoxide poisoning caused by faulty appliances. Many of the deaths occur in private rented accommodation. Of the deaths in private rented accommodation, a disproportionate number—perhaps I may put it that way without seeking again to trade figures with the noble Lord, Lord Gisborough—take place in HMOs.
As I said on an earlier amendment, there have been a number of tragic deaths. Carbon monoxide poisoning is particularly insidious. It is not easy—it may be impossible—to detect the problem and anticipate it.
The Gas Safety (Installation & Use) Regulations 1994 depend on the tenant requesting evidence. As Members of the Committee, in particular the right reverend Prelate, have said, the tenants in properties affected are in the worst possible position to seek such evidence. They do not have the strength that financial means would give them; they do not wish to put their security at risk.
It is late and the seriousness of the position will speak more strongly than I can of the need for these or similar amendments to ensure that there is a better enforced regime. Although I have spoken briefly, I hope that the Committee will accept that that should not be taken to indicate that I do not regard it as a serious matter. I beg to move.
11 p.m.
Lord Dubs: I support Amendments Nos. 233 and 234. It might save the Committee's time if I also speak briefly to Amendments Nos. 235 and 236, which deal with a similar point but relate not to gas appliances but to appliances powered by combustible fuel—that is, wood, oil, gas, peat or solid fuel. The principle is the same as in Amendments Nos. 233 and 234.
Lord Gisborough: I support the principle of the amendment. A great number of deaths are caused by faulty gas appliances. I am advised that it is now possible to have the equivalent of an electrical fuse box in the gas industry. Such a system would be a great asset and would save a lot of lives.
Lord Lucas: We are of one mind with the noble Baroness, Lady Hamwee, except that we wish to see these changes made through the gas safety installation and use regulations. We accept what the noble Baroness said about the weakness of those regulations in requiring tenants to complain. That will be changed. The Health and Safety Commission has agreed to bring forward an urgent amendment on the lines proposed and intends to issue a consultative document in July with the intention of introducing new regulations to take effect around the end of October. I hope that will be sufficient for the noble Baroness.
Lady Hamwee: For once I am very happy to rely on regulations. I am sorry that the matter requires recognition, but glad that the Government have recognised it.
Lord Lucas: Before the noble Baroness withdraws the amendment, since the noble Lord, Lord Dubs, spoke to the following group of amendments, perhaps I might reply to those too.
This is clearly an area of concern. A coal-burning fire does not present the same magnitude of problems as a gas fire generally. Very few of them blow buildings up. Clearly, however, a number of people die every year as a result of the burning of other fuels. We know from government research that that is so. We have some information about the types of fuel and the part of the system that is involved in such accidents. However, we
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do not know the underlying cause of the deaths—whether it is, for example, poor insulation in the first place, poor maintenance, lack of any maintenance, abuse, or some other cause.
We do not know for sure how many such accidents occur in HMOs or in the wider rented sector; nor do we know whether legislation in this area would be appropriate or effective. The Government will undertake further research to determine the size and nature of the risks. When we have completed that research, we will respond to it appropriately.
Lord Dubs: I thank the Minister for his very helpful reply.
Baroness Hamwee: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 234 to 237 not moved.]
Lord Dubs Lord Dubs moved Amendment No. 238:
After Clause 72, insert the following new clause—
POWER TO LIMIT NUMBER OF OCCUPANTS IN HOUSE: SUPPLEMENTARY
(". In section 354 of the Housing Act 1985, at the end insert—
"(8) A direction under this section is a local land charge."").
The noble Lord said: I beg to move this amendment standing in the names of my noble friend Lord Williams and Elvel and the noble Baroness, Lady Hamwee.
The amendment has to do with local land charges and directions that can be made under Section 354 of the Housing Act 1985. If there is a change in ownership, by inserting this stipulation regarding a local land charge, that charge will stay with the premises should there be a new owner. A new landlord would therefore be made fully aware of all legal obligations attaching to the property before such a purchase was made. The new landlord would therefore either have to accept the implications of what was in the local land charge or could decline to purchase the property. In that way there would be a safeguard as to the continuity of this provision when property changed hands from one landlord to another.
Lord Lucas: The noble Lord explained his amendment with great eloquence. I cannot in any way improve on what he said.
On Question, amendment agreed to.
Clause 73 [Means of escape from fire]:
The Deputy Chairman of Committees (Lord McColl of Dulwich): If Amendment No. 238A is agreed to, I cannot call Amendment No. 239.
Baroness Hamwee Baroness Hamwee moved Amendment No. 238A:
Page 47, line 39, leave out from beginning to end of line 4 on page 48 and insert—
("(3) The local housing authority shall consult, and have regard to the views of, the fire authority concerned before exercising any of the powers mentioned in subsection (2) and shall include the views of the fire authority in any notice issued under section 366.").
The noble Baroness said: The purpose of this amendment is to ensure that the consultation process with the fire authority is one which recognises the

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first-hand knowledge and experience of fire officers in all aspects of fire safety and response to fire and other emergencies. If the Minister can give me assurances as to the extent of the consultation, that will be a welcome response to this amendment. I beg to move.
Lord Lucas: It goes without saying that we would expect the local authority to take the views of the fire authority on board before taking any action. In view of other circumstances in the property, it may not, however, always be appropriate for the local authority to adopt exactly the solutions recommended by the fire authority; nor could we support them, including the views of the fire authority, in any notice issued under Section 352. Although we do not anticipate many cases where the local authority would serve a notice with different requirements, it could lead to confusion for the recipient if the works required were not exactly the same as those recommended by the fire authority.
Safety is, of course, paramount. We want to ensure that fire authorities are fully aware of the high risk of HMO properties in their areas. With that explanation, I hope that the noble Baroness will feel able to withdraw her amendment.
Baroness Hamwee: I understand the point about the difficulty of including the views in notices. However, I was not suggesting that the Government took every point that was made by the fire authority but that they had regard to them, which is not quite the same. However, having heard the Minister, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hamwee Baroness Hamwee moved Amendment No. 239:
Page 48, line 3, at end insert ("and
(b) after "different areas, and" insert—
"(aa) in particular, shall apply the duty under subsection (2) to houses in multiple occupation which are three or more storeys in height."").
The noble Baroness said: The effect of this amendment is in regard to Section 365 of the 1985 Housing Act. That section gives the Secretary of State the power to specify HMOs towards which local housing authorities have a duty to require that landlords provide adequate means of escape from fire and other fire precautions. The amendment is to provide that all HMOs with three or more storeys would be covered.
I could give to the Committee details of different types of HMOs and houses which would be covered by this provision. I do not believe that I should win Brownie points by reading those details on to the record at this hour. However, I hope that the Minister will take the opportunity to explain to the Committee what he has in mind with regard to the scope of the extended duty and the timetable for consultation.
I understand that the Government indicated in another place that they are to undertake research into fire risks in HMOs. Perhaps the Minister can explain to the
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Committee what timetable would apply to that and whether the research to be undertaken will inform the scope of the extended duty. I beg to move.
Lord Lucas: We have indicated that we would wish to make the duty apply to all HMOs which would be potentially registrable if a local authority were to adopt the department's model registration scheme, providing that the property had three storeys or more. But we want to firm up on the precise coverage of the duty only when the consultation we have promised on this Section 365 order and on our model registration schemes are complete.
Amendment No. 239, if I have understood it correctly, would place a requirement on the face of the legislation to ensure that every HMO with three or more storeys was covered by any new order under Section 365.
We wish to be able to consider excluding such categories as university halls of residence, subject to what may emerge in the consultation. We therefore prefer the freedoms we have under the Bill but quite clearly we are thinking along the same lines as the noble Baroness.
Baroness Hamwee: I do not know whether the Minister can indicate the timing that is likely to apply to the consultation.
Lord Lucas: I do not immediately have any answers as to the timing of the consultation period. It is a matter of prime importance because on it rests the whole HMO scheme. The noble Baroness also asks about the timing of the research. That will start later in the year and will take a year or two as we have to study individual cases.
Baroness Hamwee: I suspect therefore that we shall return to the subject when we see the result of the research. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 73 agreed to.
Lord Lucas Lord Lucas moved Amendment No. 240:
After Clause 73, insert the following new clause—
WORKS NOTICES: IMPROVEMENT OF ENFORCEMENT PROCEDURES
(". After section 377 of the Housing Act 1985 insert—
"Works notices: improvement of enforcement procedures.
377A.—(1) The Secretary of State may by order provide that a local housing authority shall act as specified in the order before serving a works notice.
In this section a "works notice" means a notice under section 352 or 372 (notices requiring the execution of works).
(2) An order under this section may provide that the authority—

(a) shall as soon as practicable give to the person on whom the works notice is to be served a written notice which satisfies the requirements of subsection (3); and

(b) shall not serve the works notice until after the end of such period beginning with the giving of a notice which satisfies the requirements of subsection (3) as may be determined by or under the order.

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(3) A notice satisfies the requirements of this subsection if it—

(a) states the works which in the authority's opinion should be undertaken, and explains why and within what period;

(b) explains the grounds on which it appears to the authority that the works notice might be served;

(c) states the type of works notice which is to be served, the consequences of serving it and whether there is a right to make representations before, or a right of appeal against, the serving of it.

(4) An order under this section may also provide that, before the authority serves the works notice on any person, they—

(a) shall give to that person a written notice stating—

(i) that they are considering serving the works notice and the reasons why they are considering serving the notice; and

(ii) that the person may, within a period specified in the written notice, make written representations to them or, if the person so requests, make oral representations to them in the presence of a person determined by or under the order; and

(b) shall consider any representations which are duly made and not withdrawn.

(5) An order under this section may in particular—

(a) make provision as to the consequences of any failure to comply with a provision made by the order;

(b) contain such consequential, incidental, supplementary or transitional provisions and savings as the Secretary of State considers appropriate (including provisions modifying enactments relating to the periods within which proceedings must be brought).

(6) An order under this section—

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

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

(7) Nothing in any order under this section shall—

(a) preclude a local housing authority from serving a works notice on any person, or from requiring any person to take immediate remedial action to avoid a works notice being served on him, in any case where it appears to them to be necessary to serve such a notice or impose such a requirement; or

(b) require such an authority to disclose any information the disclosure of which would be contrary to the public interest".").

The noble Lord said: In moving Amendment No. 240 I hope to speak to it at slightly less length than the amendment.
This amendment meets a commitment given by David Curry, the housing Minister in another place last November, to reflect the principles of enforcement set out in Section 5 of the Deregulation and Contracting Out Act 1994. It introduces a new clause providing for the Secretary of State to make an order to improve the procedures for enforcement of amenity or safety standards, or management standards under Part XI of the Housing Act 1985. Those new procedures are designed to improve the transparency, fairness and consistency of enforcement processes.
The main effect of a deregulation order made under this clause would be to allow the existing enforcement procedures to be modified so as to require a local authority to give written notice of its intentions to serve an enforcement notice under Sections 352 or 372 of the 1985 Act, and to hear representations before any formal enforcement action in instigated.
The new enforcement procedures will meet the concerns of some HMO landlords who, when faced with a notice under Sections 352 or 372, have no other recourse than to appeal within 21 days to the county court if they do not think the works demanded are necessary or wholly appropriate—a point raised by my noble friend Lord Gisborough. We believe that formal action should always be looked on as a last resort, and by modifying the procedures of enforcement action in the way provided for by an order under this clause it will help local authorities to reach sensible decisions in consultation with HMO landlords, and ensure that formal enforcement action is only taken where absolutely necessary. I realise that in many areas local authorities have already adopted such a procedure, and have built up good working relations with HMO landlords. This amendment will ensure that such enforcement practice is adopted universally.
We are aware, however, that there are occasions when a local authority needs to take urgent action to protect the safety or welfare of the occupants of a property. Nothing in an order made under this new clause will prevent an authority from taking immediate enforcement action in any case where they believe it is necessary.
On Question, amendment agreed to.
Lord Dubs Lord Dubs moved Amendment No. 241:
After Clause 73, insert the following new clause—
CONTROL ORDERS: SUPPLEMENTARY
(".—(1) In section 379 of the Housing Act 1985 (making of control order), at the end insert—
"(5) Within eight weeks of the date of service of the control order, the local housing authority shall serve on the dispossessed proprietor notice of their intention to—

(a) retain the control order;

(b) revoke the control order; or

(c) make a compulsory purchase order.

(6) Where the authority have exercised their powers under subsection (5) above, the dispossessed proprietor may appeal within twenty-one days to the county court on the grounds that the decision of the local authority was unreasonable."
(2) In subsection (2) of section 384 of the Housing Act 1985 (appeal against control order), for the words "local authority serve a copy of a management scheme relating to the house in accordance with section 386, or such longer period as the authority may in writing allow"substitute the words "control order was made and served".
(3) For section 386 of the Housing Act 1985 (duty to prepare management scheme), substitute—
"Management accounts etc.
386.—(1) After a control order has been made, the local housing authority shall maintain management accounts which record income and expenditure in respect of the property.
(2) The authority shall balance such accounts at six monthly intervals, and at the point of revocation of the control order, and shall pay any surpluses to the dispossessed proprietor.

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(3) In the event of any deficit on an account, the local housing authority shall seek payment from the dispossessed proprietor and shall have the powers conferred by Schedule 10 to this Act where accounts are not settled."
(4) Section 389 of the Housing Act 1985 (compensation payable to dispossessed proprietor) shall cease to have effect.
(5) In Schedule 13 to the Housing Act 1985, Part I (management schemes) and Part II (payment of compensation to dispossessed proprietor) shall cease to have effect.
(6) In Part III of Schedule 13 to the Housing Act 1985, for paragraph 16(1) substitute—
"16.—(1) When a control order ceases to have effect, a final balance shall be struck in the management accounts.
(2) Where such balance is—

(a) in surplus, it shall be paid to the dispossessed proprietor, and

(b) in deficit, it shall be recoverable from the dispossessed proprietor in accordance with the provisions of Schedule 10 to this Act."

(7) In Part III of Schedule 13 to the Housing Act 1985, for paragraph 18 substitute—
"18. If a control order is revoked by the county court on an appeal against the order, the local housing authority shall strike a final balance in the management accounts and shall deal with such surpluses or deficits as may exist as set out in paragraph 16."
(8) In Part IV of Schedule 13 to the Housing Act 1985, for paragraph 22 substitute—
"22. The provisions of this Part of this Schedule apply where the local housing authority make a control order with respect to a house, and within eight weeks of the making of that order determine to make a compulsory purchase order for the acquisition of the house."
(9) In Part IV of Schedule 13 to the Housing Act 1985, paragraph 23 shall cease to have effect.
(10) In Part IV of Schedule 13 to the Housing Act 1985, for paragraph 25 substitute—
"25.—(1) Where a control order ceases to have effect by virtue of paragraph 24, the local housing authority shall pay to the dispossessed proprietor such surplus on management account as may have accrued.
(2) Where any deficit on account exists, the provisions of Schedule I0 to this Act relating to recovery of expenses shall apply."
(11) In Part IV of Schedule 13 to the Housing Act 1985, paragraph 26 shall cease to have effect.").
The noble Lord said: Amendment No. 241 in the name of my noble friend Lord Williams of Elvel and the noble Baroness, Lady Hamwee, deals with control orders, which are the strongest powers available to local authorities to deal with dangerous houses in multiple occupation. Because those powers are particularly strong ones, the amendment concerns itself with a number of points of detail. The difficulty is that there have been changes to the rented sector over the years and one of the areas of particular concern has been houses in multiple occupation.
Perhaps I may set out briefly what the amendment will do. It introduces a new requirement for a local authority to reach a decision within eight weeks of making a control order on its future proposals for what it wants to do with the property. Secondly, it will simplify procedures by substituting a requirement for the local authority to make a management scheme with a requirement merely to maintain management accounts. Thirdly, it will streamline the final accounting methods when the new management accounts are closed. Fourthly, it will streamline the arrangements when a
1702
control order is ended following confirmation of a compulsory purchase order. The amendment helps in the way in which control orders are exercised by local authorities. I beg to move.
11.15 p.m.
Lord Lucas: I have listened with interest to the noble Lord's arguments. I am aware that the current system seems rather bureaucratic and can be complex to administer. The Committee will appreciate, however, that the power to make a control order is the most drastic power available to a local authority. We think it is correct that it should require careful consideration before it is embarked on and fastidious handling while the order is in place. After all, a local authority is in effect confiscating an asset and running it on behalf of the owner. Control orders are not often used but they provide an essential last resort.
The noble Lord's amendment suggests radical changes to the control order provisions. First, it seeks to abolish the requirement on a local authority to prepare a management scheme shortly after it makes a control order. Under existing legislation, as part of a management scheme, a local authority must list the works it intends to carry out to the property and the owner has a right to appeal if he considers that those are excessive or unreasonable. Removing this right of appeal would be unfair to an HMO owner who, in the long run, will have to pay for any works which are carried out.
The amendment also removes the automatic right of the owner to receive an amount of compensation every three months. Surpluses, to which the amendment refers, are most unlikely to accrue if there are major works. The owner may well have obligations such as a mortgage to keep up on the property. It would be totally unacceptable, therefore, to remove his source of income when the authority is not prepared to buy the property. In the long run, a local authority can still recover compensation payments when the control order ceases.
For these reasons we are unable to accept the major elements of the noble Lord's amendment. There is one aspect, however, about which we are happy to think further. I refer to the provision to stretch the time limit from four to eight weeks, which would give the local authority a more sensible deadline in which to decide what is the best way forward. We should like to reflect on this point. I hope that, with that very small crumb of comfort and the recognition that giving in to three Opposition amendments in a day without a murmur is an extraordinary event, the noble Lord will feel able to withdraw the amendment.
Lord Dubs: I hope it is the merit of the Opposition amendments rather than the quantity which influences the Minister's reaction to them. I should like to read in Hansard what the Minister said and reflect more fully on his response to the amendment. In the meantime, I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Clause 74 [Codes of practice]:
Lord Gisborough Lord Gisborough moved Amendment No. 242:
Page 48, line 43, at end insert—
("Codes of practice: disputes.
395B. Where the Secretary of State has under section 395A approved a code or codes of practice giving guidance on the requirements of subsection (1A) of section 352 or on the duties referred to in section 353A if—

(a) a dispute arises between a local housing authority and the person having control of a house subject to the provisions of such a code or codes—

(i) as to whether the house complies with the requirements of the code of practice, or

(ii) as to whether works being carried out or proposed to be carried out will enable the house to achieve compliance with the code; and

(b) the local housing authority has given notice that it is minded to issue a notice under section 352, the matter may, at the request of the person having control, be referred to the Secretary of State for determination.".").

The noble Lord said: Amendment No. 242 relates to the proposed code of practice on standards in HMOs. My amendment proposes that there should be an appeal mechanism where disputes arise between landlord and local authority over interpretations of the code. As the Bill is currently drafted, if there were a dispute over the requirements of the code, there is no mechanism for resolving that dispute other than the local authority serving a Section 352 notice requiring works, and the landlord appealing through the county court against that notice.
This strikes me as being particularly unsatisfactory. County courts are ill-equipped to deal with, and make judgments on, technical matters relating to building standards. My amendment to the Bill seeks to ensure that there is a simple, quick and cost-effective way of resolving disputes between landlords and local authorities over the interpretation of the code. Planning applications, building controls and fair rent determinations all have appeal procedures that do not involve the court system.
I know that organisations as diverse as the British Property Federation and the National Federation of Housing Associations favour an alternative approach to dealing with disputes of this type.
In my amendment I have suggested that these disputes should be resolved by reference to the Secretary of State. Such an appeal system would encourage a fair, reasonable and consistent interpretation of the code both within individual authorities and between different authorities. Moreover, the very fact that an appeal procedure was in place would encourage both landlords and local authorities to have a constructive and co-operative approach to the implementation of the code of practice and the improvement of standards in HMOs in their areas.
It may be that an appeal to the Secretary of State is not the most appropriate mechanism. The National Federation of Housing Associations has suggested that the model appeals mechanism introduced by the Deregulation and Contracting Out Act 1994 should be
1704
used in respect of the code of practice and that might provide a suitable alternative appeal mechanism. It would also be consistent with the Government's original proposal that the local authorities' powers should be implemented in line with the model enforcement regime recommended by Section 5 of that Act. This proposal seems, however, not now to feature in the Bill.
Whichever mechanism is deemed most appropriate, I would urge the Government to give very careful consideration to the possibility of approving an appeals system that does not involve the courts. I beg to move.
Lord Lucas: As I believe my noble friend Lord Gisborough has realised, my right honourable friend the Secretary of State is not at all amused at the thought of having to spend his time in the way that my noble friend suggests that he should. My right honourable friend believes, and I think quite rightly, that his input should be restricted to the code of practice that he will have to approve using powers under Clause 74. That code will be evidential in court proceedings. We believe that it is appropriate for the court to decide on individual cases which are brought before it. With that thin comfort I hope that my noble friend will be able to withdraw his amendment.
Lord Gisborough: I thank my noble friend for that answer which does not answer the fact that planning applications and building controls do not involve the court system. However, it is too late to dispute it now. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 74 agreed to.
Clause 75 agreed to.
Clause 76 [Minor amendments]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 242A:
Page 49, line 30, at end insert ("or unless the individual is to take up residence in order to care for a person residing in it who requires such assistance.").
The noble Baroness said: Clause 76 deals with Section 355(1) of the Housing Act 1985, which is a direction limiting the number of occupants. This amendment proposes that in the case of a carer who comes into the premises to care for someone who already resides there and who needs assistance, the carer is deemed not to exist for the purposes of calculating the number of occupants. I imagine that the number of times when this situation arises must be very limited indeed and these matters are always something of a balance. It has been put to me that in this case the interests of the individual requiring care should override the general proposition. I beg to move.
Lord Lucas: We feel that if premises are suitable for only 10 people then they are suitable for only 10 people. If one introduced an eleventh to care for one of the others the person being cared for might gain some net benefit, but only at the expense of other residents' convenience and, more importantly, safety. We believe

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that the limits on the population in HMOs are important and should be respected, although we understand the concerns expressed by the noble Baroness.
Baroness Hamwee: I believe that this is a matter of balance, and sometimes it is a difficult balance. I will not pursue the matter at this stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 76 agreed.
Clause 77 agreed.
[Amendment No.242B not moved.]
Lord Mackay of Ardbrecknish: I beg to move that the House do now resume.
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Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Community Care (Direct Payments) Bill [H.L.]
Returned from the Commons agreed to with amendments; it was ordered that the Commons amendments be printed.
House adjourned at twenty-seven minutes past eleven o'clock.