Lords Sitting of 18 June 1996

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Southwell.
Earl Waldegrave Earl Waldegrave—Sat first in Parliament after the death of his father.

Long-term Male Unemployment
Baroness Turner of Camden Baroness Turner of Camden asked Her Majesty's Government:
What steps they are taking to deal with the continuing problem of long-term male unemployment.
The Minister of State, Department for Education and Employment (Lord Henley): My Lords, we are continuing to pursue the economic and labour market policies which have seen long-term male unemployment fall by almost 230,000 since the beginning of 1994. We have in place a wide range of measures to help long-term unemployed people to compete effectively for jobs, and long-term unemployment has fallen faster than unemployment overall in recent years.
Baroness Turner of Camden: My Lords, I thank the Minister for that Answer. However, is he not aware that in the past three months 225,000 jobs have disappeared and that more than twice as many men as women were made redundant? Is the noble Lord also aware that the overall figure for male unemployment is 10.5 per cent., and that it is much higher in certain areas, especially in those where there was once heavy manufacturing industry? Is the Minister further aware that social problems can be involved in that imbalance?
Lord Henley: My Lords, obviously I am aware of the problems. That is why we devote a great deal of our energies within the Department for Education and Employment and through the Employment Service to the particular problems of the long-term unemployed. That is why most of our schemes are focused on the long-term unemployed. I can tell the noble Baroness that long-term unemployment is now a much smaller share of a smaller total. I think she should welcome that fact. The noble Baroness should also welcome the fact that the biggest improvements we have seen in long-term unemployment have been among the 18 to 24 year-olds and the 50 to 59 year-olds; that is to say, the youngest and the oldest. I believe that that highlights the success of our policies to focus on probably the most vulnerable groups of the long-term unemployed.
Lord Mason of Barnsley: My Lords, is the Minister aware that we welcome the falls in the unemployment figures? Indeed, anyone who has been on the dole would do so. However, is the noble Lord also aware that the figure for the workforce in employment has been
156
falling? In the first four months of this year manufacturing industry shed 46,000 jobs. Therefore, our industrial base is still growing smaller, while the number of service industries is on the increase. Is the Minister further aware that three-quarters of the new jobs created in the service industries were part-time? Does not that trend concern Her Majesty's Government?
Lord Henley: My Lords, I am very grateful for the welcome given by the noble Lord to the fall in the unemployment figures and to the rise in employment. I have to say that, sometimes, it does not feel as though we are receiving a welcome from the noble Lord. However, if the noble Lord looks at the Labour Force Survey figures for the winter quarter, he will see that there has been a rise in employment; indeed, the figure has increased by some 309,000 and some 733,000 since the recovery began.
As regards the number of part-time jobs, I make no apologies for the fact that there are a reasonable number of them. The simple fact is that many people want part-time jobs. Only 14 per cent, of those surveyed who have part-time jobs are actually looking for full-time work. Part-time jobs meet the requirements of a great many people.
Baroness Gardner of Parks: My Lords, does my noble friend the Minister agree with me that it is about time we changed our attitudes to work in this country? There are too many jobs which men believe to be beneath their dignity, whereas women are very willing to be flexible and look at whatever employment opportunities arise. I refer particularly to the service industries where, especially in London, no male waiter ever seems to be British. Is there not an opportunity for training and employment in all those fields?
Lord Henley: My Lords, my noble friend is quite right to draw our attention to the importance of training. Although long-term unemployment has been falling for both men and women, my noble friend is also right to draw attention to the fact that the proportion of men has increased. I believe that my noble friend makes a very valid point when she points out that it is possible that some men will not deign to take on a number of jobs that traditionally have been held by women.
Lord Monkswell: My Lords, are the Government aware that the unemployment figure is still over 2 million? If the Government will not adopt the sensible policies that were deployed by my noble friend Lord Callaghan when he was Prime Minister (under which unemployment never rose above 1.2 million), perhaps they would like to employ the policies espoused by the noble Lord, Lord Lawson, when he was Chancellor of the Exchequer and when the unemployment figure did in fact come down to almost 1.3 million under this Conservative Government.
Lord Henley: My Lords, what the party opposite wants to do, as we all know—I remind the House for the umpteenth time—is to sign up to the social chapter

157
and sign up to a minimum wage. We all know exactly what effect that would have on jobs. We would see unemployment rise very fast indeed.
The Earl of Lauderdale: My Lords, can my noble friend enlarge on his earlier replies and tell us what measures are under way in the areas of former mining employment, notably in Fife, Ayrshire and Lanarkshire among others?
Lord Henley: My Lords, I do not think I have time today to go into the detail of all the different Employment Service schemes to assist the unemployed. However, most of those schemes are designed to help particularly the long-term unemployed. That is why we have seen a fall in the proportion of long-term unemployed in relation to the total overall unemployed. As regards the figures for south Lanarkshire which my noble friend asked for, I should be more than delighted to send them to him.
Lord Molloy: My Lords, will the Government bear in mind that when it is the breadwinner of a family of three, four or five who loses his job that is a tremendous tragedy for that family? It is not just a question of unemployment; the tragedy of a breadwinner losing his job can affect an entire family. Will the Government take that into consideration?
Lord Henley: My Lords, as I have made quite clear, I accept that long-term unemployment is higher among men than among women. That might have the effect that the noble Lord points out, but I do not think it would be right to target the various schemes of the Employment Service in such a way as to bring in quotas or the sort of things that the party opposite would bring in. But we will do what we can to assist all long-term unemployed, which is why we shall continue to see the total number of unemployed fall.
Lord Stoddart of Swindon: My Lords, does the noble Lord agree that his noble friend Lady Gardner of Parkes raised an interesting point about male and female employment? Will he confirm that there are 1,600,000 men out of work as opposed to 500,000 women out of work, and the rate is two-and-a-half times greater for men than for women? Does he recall that a reply to this House only the other day revealed that in the Department of Social Security only 33 per cent. of employees were male as against 67 per cent. who were female? Is there something in those figures which might encourage the Government to investigate employment policies not only in the Department of Social Security but in all departments of state?
Lord Henley: My Lords, I do not think it is necessary to investigate the employment policies of all government departments, but I can confirm that the figures the noble Lord gave in relation to unemployment are broadly correct.
Baroness Farrington of Ribbleton: My Lords, is the Minister prepared to comment on the fact that people working, for example, in rail catering services are now
158
being expected to work for less than £1 an hour? Is the Minister not aware that labourers ought to be worthy of their hire, and that this Government are seeking to ensure that even those employers making vast profits are able to force pay rates down to a despicable level?
Lord Henley: My Lords, I accept that the labourer is worthy of his hire and I reject the allegations made by the noble Baroness. I remind her that, broadly speaking, for manufacturing the take-home pay of a British worker is much the same as that of a German worker. The simple fact is, however, that the British worker costs a lot less to employ because the non-wage costs are kept down by this Government, unlike the policies that would be pursued by the party opposite.

Museums and Galleries Commission: Report
2.47 p.m.
Baroness Lockwood Baroness Lockwood asked Her Majesty's Government:
What action they propose to take on the report of the Museums and Galleries Commission Museums and Coalmining.
The Parliamentary Under-Secretary of State, Department of National Heritage (Lord Inglewood): My Lords, the report Museums and Coalmining was written by an independent consultant for the Museums and Galleries Commission. It is for the Museums and Galleries Commission to consider the consultant's conclusions and recommendations.
Baroness Lockwood: My Lords, I thank the Minister for that reply. In pursuing the matter I first of all declare an interest as chairman of the National Coalmining Museum for England. Does the Minister agree that the report reveals a rich heritage indicating the contribution that coalmining has made to our economic, social and industrial history, and indeed to our imperial history as coalmining was fundamental to our becoming the workshop of the world during the industrial revolution? Moreover, is the Minister aware that there are only two of these museums that have an underground element: the National Coalmining Museum for England and the Big Pit in Wales? Both of those museums face an acute financial crisis. Have the Government any contingency plans to help those two museums until the Museums and Galleries Commission is able to establish a long-term strategy on the lines of the report?
Lord Inglewood: My Lords, the noble Baroness is absolutely right to outline the contribution of the coalmining industry. The Government are bringing forward a national museums review which is due in the summer. That will deal with the problem of museums in general. That will make particular reference to the kind of issues that the noble Baroness described.
Lord Ezra: My Lords, does the noble Lord recall that during the debates on the coal Bill this issue attracted all-party support and that as a result the Government

159
provided short-term financial help for three years for the three main museums? Nevertheless, that is not likely to solve the longer term problem to which the noble Baroness referred. Is the noble Lord aware that unless a long-term solution is reached fairly soon the underground elements in particular, which are fairly costly and have to conform with safety measures, could well have to be closed down? That would be a serious loss in Britain's industrial heritage.
Lord Inglewood: My Lords, I am aware of the point that the noble Lord makes about the underground galleries and the costs that they entail. I understand that the National Coalmining Museum for England is shortly to submit a lottery bid. It is not simply that the transitional funding is coming to an end. Wider problems afflict these museums; for example, admission numbers are declining and local authority support is not as strong as it was.
Lord Mason of Barnsley: My Lords, I reinforce the point made by the noble Lord, Lord Ezra. The continuation of these national coalmining museums has all-party support in this House. As the noble Lord has read the independent consultant's report which has been submitted to the Museums and Galleries Commission, can he give an indication to the House as to whether any recommendations in the report or funding proposals will be accepted?
Finally, have any discussions taken place on the long-term funding between the Government and RJB Mining with the Government helping, possibly with grant in aid, the survival of those museums? What is the possibility of a rate support grant as part of such a package?
Lord Inglewood: My Lords, the noble Lord asks a number of questions, most of which will be addressed in the museums' review to which I previously referred. RJB Mining is already contributing to the English museum.
Baroness Park of Monmouth: My Lords, does the noble Lord agree that those museums represent an important resource for archaeology? Does he also agree that we as a Conservative Party have a particular duty to remember and conserve the past? Those museums are an important part of that past. Brave men lived and worked there. I do not believe that we can treat this simply as an issue which the Museums and Galleries Commission will consider. It is a central, national issue.
Lord Inglewood: My Lords, my noble friend is right. This is an important issue. It is an important museum and is given the recognition of being a national museum by the Museums and Galleries Commission.
Baroness Masham of Ilton: My Lords, is the Minister aware that if he visited the mining museum in Yorkshire he would find some excellent facilities for all the community, including disabled people? Those facilities are much better than some nearer at hand.
Lord Inglewood: My Lords, I have not had the good fortune to visit the museum in Yorkshire but, like everything in Yorkshire, it sounds as though it is the best.
Baroness White: My Lords, the Pwll Mawr (Big Pit) is not a museum, it is an experience. Going right down into the pit is the kind of experience which I believe no one who has visited it will ever forget. It is far more important than simply looking around a museum and seeing various matters of interest. Such a visit is genuinely an experience which lasts for the rest of your life.
Lord Inglewood: My Lords, I have been down only one pit—the West Herrington Pit—when I was a Conservative candidate for County Durham. It was a very worthwhile experience. I have no doubt that the same applies to the Big Pit.
Lord Morris of Castle Morris: My Lords, perhaps I may declare with pride an interest as a former chairman of the Museums and Galleries Commission and ask the Minister whether he recalls the commission's own summary of the Shorland-Ball Report, which says:
"We would … call on the Department of National Heritage and the relevant departments in Scotland and Wales to give serious consideration to Museums and Coalmining and its recommendations, in the first instance within the DNH's major review of museum policy, which is now expected to be completed by Summer 1996".
Can the Minister tell the House what stage consultations with Scotland and Wales have currently reached and whether solutions are to be proposed in the DNH policy review?
Lord Inglewood: My Lords, the review is not complete and therefore I am not in a position to advise your Lordships of its conclusions. Neither am I in a position to advise your Lordships on the state of consultation with Scotland and Wales, but I shall write to the noble Lord and give him particulars.

Airport Baggage Halls: Evacuation Arrangements
2.56 p.m.
Lord Geddes Lord Geddes asked Her Majesty's Government:
What procedures or arrangements exist at Heathrow and other United Kingdom airports to enable passengers who have been evacuated from a baggage hall during a security alert to return there to retrieve their baggage.
The Earl of Courtown: My Lords, arrangements for the evacuation of passengers from baggage halls and their re-entry at UK airports are a matter for the airport concerned. They are responsible for drawing up contingency plans in consultation with interested parties and taking account of all relevant requirements, including those in respect of aviation security.
Lord Geddes: My Lords, I am most grateful to my noble friend for that reply. Is he aware that I pose the

161
Question from personal experience on 22nd May at Terminal 1, Heathrow, at approximately a quarter-to ten in the evening? There was an evacuation which included myself. We were sent to what I think is called the land side for perfectly reasonable reasons. We were then told that we could go back into the baggage hall to retrieve our baggage. Some 500 people, including myself, then spent 45 minutes trying to get back into the baggage hall through what I can only describe as rather poor facilities for necessary security checks. There were passport controls, baggage check controls and ticket controls. Will my noble friend draw this situation to the attention of those whose responsibility it is to deal with such matters and seek to have the facilities somewhat improved?
The Earl of Courtown: My Lords, the Government are satisfied that the airport has properly discharged its responsibilities for planning for evacuation. The noble Lord let me know the content of his inquiry. I am asking the managing director of Heathrow Airport to write to the noble Lord about the evacuation on the night in question.
Lord Dean of Beswick: My Lords, is the Minister not aware that it would be an act of great stupidity to take out of the hands of the security people involved in any incident the right to keep anyone outside the periphery of activity? Is he further aware that but for the magnificent performance of the Greater Manchester Police, the Greater Manchester Fire Force and other related services there could have been a holocaust in the centre of Manchester? Only the action of those services prevented loss of life. I believe that it would be dangerous to start wavering and to allow people back on a personal basis. If we take the matter out of the hands of the security forces, we are asking for a mountain of trouble.
The Earl of Courtown: My Lords, the noble Lord is quite right to congratulate the emergency services on their work throughout the United Kingdom. Of course security is of the utmost importance throughout all airports in the United Kingdom.
Lord Bruce of Donington: My Lords, is the noble Earl really telling the House that the Government disclaim all responsibility for matters of the kind raised by his noble friend Lord Geddes? Is it entirely a matter for the private interests involved, including the airports and aircraft companies? Surely the Government must have some responsibility as regards safety and possible retrieval and loss. It cannot be sufficient to leave it entirely to other authorities.
The Earl of Courtown: My Lords, the noble Lord does not have the true facts of the case. Since the disaster in Lockerbie in 1988 the Government have done a huge amount to improve transport security in the United Kingdom and internationally. Her Majesty's Government have taken a leading role in agreeing with other countries a range of measures to improve security—the review of the National Aviation Security Programme,
162
the cargo security regime and the Accounting and Authorising of Hold Baggage for Carriage (Triple A). A great many measures are involved
Lord Brabazon of Tara: My Lords, does my noble friend agree that of course it is the responsibility of government to lay down standards for security and ensure that they are enforced; but it must be for the management of the airport companies themselves to be in charge of the day-to-day operations?
The Earl of Courtown: My Lords, I entirely agree with my noble friend. Transec, a division of the Department of Transport, also holds a watching brief.
Lord Mackie of Benshie: My Lords, the Minister's noble friend makes a good point. If airports are incompetent about letting people back to collect their baggage, they are probably incompetent about clearing people from the area.
The Earl of Courtown: My Lords, I think the situation at Heathrow in which my noble friend was involved shows how efficiently the security services at airports work.
Lord Clinton-Davis: My Lords, does the Minister accept that there is surely no sustainable suggestion that the airport authorities at any airport in the United Kingdom are incompetent in dealing with emergencies of the serious kind that unfortunately have arisen from time to time? There may be a difficulty about getting back into the baggage hall, but that seems to me to be less significant overall.
Will the Minister accept that we on this side of the House wish to echo what has been said about the magnificent work of the emergency services in Manchester the other day? Undoubtedly it reflects the work of the emergency services in so many unacceptable situations that have arisen through the activities of the IRA. I am sure that the whole House will wish to condemn those activities in no uncertain way.
The Earl of Courtown: My Lords, I agree with the noble Lord. However, we must remember that security is impossible to guarantee 100 per cent. Her Majesty's Government, with the support of noble Lords opposite, are determined to ensure that ours remains among the best in the world.

Life Sentences: Home Secretary's Responsibilities
3.1 p.m.
The Earl of Longford The Earl of Longford asked Her Majesty's Government:
Whether they agree with the conclusion of the House of Commons Home Affairs Select Committee that the Home Secretary should no longer have the responsibility for setting the tariff for life sentence prisoners and taking decisions on their release.
The Minister of State, Home Office (Baroness Blatch): My Lords, we welcome the committee's

163
conclusion that the mandatory life sentence should be retained for the offence of murder. My right honourable friend the Home Secretary made clear in his evidence to the committee that the Government did not agree that the Home Secretary's role should be removed. However, we are carefully considering the report and will respond to it in due course.
The Earl of Longford: My Lords, I am not clear from that Answer whether the noble Baroness gave a yes or a no to my Question. I do not think anybody in the House will be aware as to whether she said yes or no. She is holding her breath. Are we to understand that the Government are still considering the possibility that the Home Secretary might be withdrawn altogether from the process, which is most inappropriate, of deciding the life sentence of somebody on electoral considerations? Are we to understand that that role is to be withdrawn from him? The Minister may be aware that there is a procedure readily available for discretionary life prisoners. Is she ready to apply that to mandatory life prisoners?
Baroness Blatch: My Lords, I was not avoiding the noble Earl's Question. What I said was that he will have to be patient, as we have not yet responded to the recommendations of the Home Affairs Select Committee. The Home Secretary gave a robust defence of the present position; but he has agreed to consider the report carefully and will respond to it in due course.
Lord Renton: My Lords, is my noble friend aware that in England and Wales the Home Secretary has the important constitutional responsibility of advising the Crown on the exercise of the prerogative of mercy? Will she confirm that it would be most unfortunate if that prerogative were interfered with in any way?
Baroness Blatch: My Lords, I have to agree with my noble friend on that point.
Lord Ackner: My Lords, does the Minister recall—I am sure she does—that in a recent Criminal Justice Bill, this House, by a sizeable majority, passed an amendment that there should be a right of appeal given in a murder case against a minimum sentence recommended by the judge? Does she recall that that amendment was nullified in another place? Will the Minister assure the House that since the committee whose report we are discussing advised very firmly that there should be such a right of appeal, provision will be made for such a situation in the next available criminal justice Bill?
Baroness Blatch: My Lords, I cannot give the noble and learned Lord that assurance. Both Houses rightly discussed the matter and each reached a different conclusion on that particular issue. The elected Chamber took a different view from that taken
164
by this Chamber. As I said, the Home Secretary will consider the report and will respond to it in due course.
Lord Jenkins of Putney: My Lords, will the Minister tell the House who in Scotland exercises the powers exercised in this respect in England and Wales by the Home Secretary?
Baroness Blatch: My Lords, my understanding is that it is the Secretary of State for Scotland.
Lord Avebury: My Lords, in how many cases has the Secretary of State settled a tariff that exceeds that recommended to him by the trial judge and the Lord Chief Justice? In how many of those cases has his decision been challenged by way of judicial review?
Baroness Blatch: My Lords, my understanding is that he has differed in 15 cases. In some five he settled at a figure lower than the recommendation from the trial judge; in the rest the tariff was increased. The vast majority of recommendations from both the trial judge and the Lord Chief Justice are accepted by my right honourable friend. At the end of the day, my right honourable friend has responsibility for considering the wider public interest and the safety of the community. That is not a consideration for the trial judge.
Lord Campbell of Alloway: My Lords, as we read today, the victim's views are now to be heard at every stage of the criminal process, including sentencing. Could further consideration be given as to whether there ought not to be a judicial determination in open court as to release or recall on licence? I do not of course include any reference to the prerogative of mercy. I refer to judicial determination on the available evidence, as distinct from an executive decision, which raises difficulties with the European Convention on Human Rights.
Baroness Blatch: My Lords, in anticipation of my right honourable friend considering the recommendations of the report from the Home Affairs Select Committee, we have to date taken the view that the procedures in place are the right ones, and we have defended them. So far as the European Court of Human Rights is concerned, we have already indicated that although we are disappointed, for example, about the decisions in the cases of Hussein and Singh we intend to comply with the ECHR ruling.
As to whether procedures for release and parole should be judicially decided, the current procedures for adult life sentence prisoners are the result of careful consideration by our own courts of appropriate procedures of the European Convention on Human Rights. In the case of mandatory lifers, the final decision on whether a prisoner should be released remains with the Home Secretary. To date, that has never been found unlawful.

Tribunals of Inquiry (Evidence) Act 1921
3.8 p.m.
Lord Lucas: My Lords, I beg to move the Motion standing in my name in the Order Paper.
Moved to resolve, That it is expedient that a tribunal be established for inquiring into a definite matter of urgent public importance, that is to say, the abuse of children in care in the former county council areas of Gwynedd and Clwyd.—(Lord Lucas.)
Lord Cledwyn of Penrhos: My Lords, is the noble Lord aware that we in North Wales in particular welcome this decision with a good deal of relief? Is he further aware that we also welcome the appointment of Sir Ronald Waterhouse as chairman of the inquiry?
Lord Allen of Abbeydale: My Lords, the Royal Commission presided over by Lord Salmon made recommendations about the procedure to be followed by tribunals of inquiry. Is the Minister aware that the tribunal of inquiry into the Crown Agents, on which I had the rather dubious privilege of serving, suggested some modification of those recommendations? Will the Minister assure the House that those suggestions will be brought to the notice of the chairman of the tribunal?
Lord Lucas: My Lords, I could not possibly answer the latter question without notice, but I will certainly do so in writing. I am delighted to have the support of the Benches opposite in an inquiry which it is important to get right for the sake of the children of Wales, and which is not a party-political matter.
On Question, Motion agreed to.

Housing Bill
3.10 p.m.
Lord Lucas: My Lords, on behalf of my noble friend Lord Ferrers 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 again in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Lord Dubs Lord Dubs moved Amendment No. 254C:
After Clause 88, insert the following new clause—

Housing Bill

  COMMON PARTS: RIGHT TO SELF-MANAGEMENT
  (".—(1) After section 34 of the Landlord and Tenant Act 1987 there is inserted—
  "Common parts: right to self-management.
  34A.—(1) The qualifying tenants of premises other than premises in respect of which the valuable reversion condition set out in Schedule 1 A is satisfied may at any time serve notice on the landlord requiring him to grant to a management company to be established in accordance with subsection (3) a management lease of all the
  166
  common parts of the premises which the landlord is obliged to maintain and for which the tenants contribute a service charge under their existing leases of parts of the premises.
  (2) The landlord shall within 3 months of service of such notice enter into the lease, which shall contain—

  (a) provisions for the demise of the common parts;

  (b) details of the term of the lease which shall be commensurate (except for a nominal period) with the longest of the existing occupational leases;

  (c) provisions for the payment of a peppercorn rent;

  (d) provisions entitling the landlord to enforce obligations and to forfeit such lease in the event of non-observance; and

  (e) obligations on the management company to observe the landlord's covenants in occupational leases.

  (3) Any management company established in accordance with this section shall be in the form of a company limited by guarantee with a Memorandum and Articles in accordance with Table C of the Companies (Tables A-F) Regulations 1985.
  (4) Any application to forfeit such management lease shall be made on notice by the landlord to the County Court.
  (5) Membership of the management company shall consist of all of the qualifying tenants and the landlord.
  (6) In respect of all blocks of flats exceeding 4 flats the management company shall appoint a firm of managing agents on such terms as may be agreed to manage the premises in accordance with the principles of good estate management.
  (7) No contract for the employment of managing agents shall extend for a period of more than 2 years and any contracts in existence at the time of service of notice under subsection (1) shall be deemed to come to an end within 9 months from the date of service of such notice irrespective of the contents of any contract and such notice and such termination shall not give rise to a claim for damages on the part of the managing agents.
  (8) Any managing agents appointed in accordance with this section shall be required as a term of their contract to observe any management code approved under section 77 of the Leasehold Reform, Housing and Urban Development Act 1993.
  (9) Any disputes arising under this section shall be referred for determination to the Leasehold Valuation Tribunal (save in respect of matters referred to in subsection (4)) which shall have full powers to determine all disputes arising under this section.
  (10) Where a landlord fails to comply with the provisions of this section, any rent or service charge otherwise due from the tenant to the landlord shall as from the date of expiration of any notice served by the qualifying tenants be treated for all purposes as not being due from the tenant to the landlord.
  (11) The qualifying tenants, by calling for a management lease, shall—

  (a) confirm the right of the management company to perform and charge for services included in their occupational leases, and

  (b) grant to the management company whatever rights as may be necessary to enforce such rights including the right to set up and maintain reserve funds.

  (12) Any such management lease shall not affect the tenants' rights to acquire the freehold under Part 1 of this Act.".
  (2) After Schedule 1 to the Landlord and Tenant Act 1987 there is inserted—

  SCHEDULE 1A VALUABLE REVERSION CONDITION
  .—(1) The following provisions shall have effect for the purpose of determining whether the landlord's interest in the premises satisfies the valuable reversion condition set out in this Schedule and referred to in section 34A ("the valuable reversion condition").
  (2) In the event that the valuable reversion test is satisfied, the premises shall be premises to which section 34A does not apply.
  (3) The valuable reversion condition is satisfied if the present value, as assessed in accordance with this Schedule, of the landlord's interest or interests (taken together) in the premises is equal to or greater than one fifth of the aggregate present values, as assessed in accordance with this Schedule, of each of the qualifying tenant's leaseholds.
  (4) For the purposes of this Schedule the present value of the landlord's interests in the premises shall be assessed as the sum of the present values of the landlord's interest in the reversion of each leasehold comprised in the premises together with the sum of the landlord's other interests if any) in the premises, the present values of which shall he assessed in accordance with paragraph 6 of this Schedule.
  (5) The present value of the landlord's interest in the reversion of each leasehold comprised in the premises shall be assessed as follows—

  (a) the value of each such reversionary interest shall be assessed as the sum of R+I# where—

  (i) R = the present value of the right to re-entry on the expiry of the term of years of the lease; and

  (ii) I# = the present value of the right to receive for the term of years of the lease the rent reserved by the lease;

  (b) R shall he assessed in accordance with the formula (100-x)/100∗f where—

  (i) x = the percentage figure for the unexpired term of years of the lease taken from the table at Schedule 8 to the Taxation of Capital Gains Act 1992 or such other curved line amortisation table for wasting assets as may be prescribed by the Secretary of State, and

  (ii) f = the open market value of the leasehold at the relevant date valued on the assumption that the leasehold has an unexpired term of 999 years and that all other terms, including the rent reserved, were unchanged;

  (c) I# shall be assessed by applying such arithmetic formula for the calculation of the present value of a known future stream of income as may be prescribed by the Secretary of State and if no formula is prescribed, 1# shall be assessed by applying any recognised formula.

  In applying the relevant formula, the 30 year Treasury Bond yield at the relevant date, or such other long-term interest rate as may be prescribed by the Secretary of State, shall be adopted as the relevant internal rate of return.
  (6) All of the landlord's other interests (if any) in the premises shall be assessed at their ordinary open market value.
  (7) The present value of each qualifying tenant's leasehold interests shall be assessed in accordance with the formula (x)/100∗f where—

  (a) x #x003D; the percentage figure for the unexpired term of years of the lease at the relevant date taken from the table at Schedule 8 to the Taxation of Capital Gains Act 1992 or such other curved line amortisation table for wasting assets as may be prescribed by the Secretary of State, and

  (b) f #x003D; the open market value of the qualifying tenant's leasehold at the relevant date valued on the assumption that the leasehold has an unexpired term of 999 years and that all other terms, including the rent reserved, were unchanged.

  (8) For the purpose of assessing the aggregate value of the qualifying tenants' interests in the premises, any leasehold that is the subject of possession proceedings, but in respect of which no unconditional court order for possession has been made, shall be included in the calculation.".").
  The noble Lord said: When a long leaseholder is faced with a bad freeholder or bad landlord, the leaseholder theoretically has two ways out of the dilemma. One way is to find some means so that the
  168
  leaseholder, with other leaseholders, can manage the common parts of the property; alternatively, the leaseholder and other leaseholders can secure enfranchisement of the block of flats in which they live. This amendment concerns the right to manage. The amendments in the group which follows relate to enfranchisement or seek to find better ways of achieving enfranchisement.
  With regard to the right to manage, the aim is to give the right to manage in such a way that leaseholders may choose who will manage the property on their behalf. That, therefore, will subject to market forces the property manager so selected. He will have to pass tests in order to demonstrate that he can deal with the management more effectively than others.
  At present, a freehold landlord can provide such services as he sees fit. Normally, he has a monopoly in the supply of maintenance, decorations, building works, insurance and other services. He can earn a profit in the form of a management fee for his work. In that situation, there is bound to be potential for abuse in that one party has a right to spend another's money.
  There would be safeguards under the scheme proposed by the amendment. If the leaseholders fail to organise the management properly, the freeholder can apply to the court to regain control of management. Under the scheme, the management obligations will be discharged by a professional managing agent, typically a member of the appropriate professional body.
  In contrast, the Government's proposals, as contained in the Bill, seek temporarily to replace a bad manager with a professional agent chosen by the leasehold valuation tribunal. But that managing agent would still be the agent of the freeholder, who could therefore still exert an influence over the overall management of the property. The LVT would be under the pressure of many applications. Indeed, at present it already takes several months for a leaseholder to obtain an enfranchisement hearing in the LVT, such is the pressure of work on that tribunal. Further, there would be the need to test the reasonableness of the proposition, which may be hard to prove. A difficulty may arise with what happens to the leasehold valuation tribunal order if the freehold interest were to be sold to another freeholder. In the meantime, the properties would be blighted and a leaseholder would find it very difficult to sell a property under that type of management.
  The Government have made clear over the years their wish and intention to give council tenants the right to manage their own property. Indeed, that was confirmed two years ago in the 1993 Act. It seems to me wrong in principle that the Government, who are willing to give council tenants the right to manage their properties, so far have denied a similar right to long leaseholders.
  The history of the scheme set out in the Bill is as follows. The right to manage was originally put into the Bill by the Standing Committee in the other place. It was removed by the Government at Report stage in the other place. That was when the Government, I think for the first time, invented the idea of giving the leasehold valuation tribunal the power to appoint a temporary manager.
  I am sure that other Members of the Committee will have received letters from leaseholders about issues contained in various parts of the Bill. Perhaps I may quote from just one letter from a leaseholder in W11 He speaks of the chance to improve the Bill and writes:
  "We cannot let this opportunity drop. I urge you to rigorously oppose the matter"—
  that is the present scheme—
  "in the Lords and pursue amendments which will give tenants, lessees, the right to manage. I am not at all persuaded that the European Court of Human Rights would overturn such legislation".
  The reference to the European Court of Human Rights is, I understand, because the Government used that as an excuse for not maintaining the change introduced by the Standing Committee in another place. The Government felt that there would be an appeal to the European Court of Human Rights. I do not understand that argument. I am not even sure that the Government still wish to sustain it. But that was the argument that was used. Without the right to manage, many leaseholders will be left with only one option, if they can exercise it—namely, to enfranchise—in order to escape from landlords who treat them badly.
  Perhaps I may make three final points. First, leaseholders typically in a block of flats probably own nearly 100 per cent—perhaps 98 per cent.—of the equity of the building. Theirs is the significant financial stake, not that of the freeholder who may have bought the freehold for a fairly small sum in relation to the interests of the leaseholders.
  Secondly, as I said earlier, it is the freeholder under the Government's scheme who is spending the leaseholders' money. Thirdly, it is the leaseholder's home which is at risk in these matters. It is not the freeholder who takes the risk. After all, he simply manages the block as a business proposition and may be doing it badly. I do not say that most freeholders do it badly.
  I argue that the amendment will protect quite a large number of leaseholders from the minority of freeholders who do not treat the leaseholders properly. It is a matter of a business proposition on the one hand for the freeholder, and on the other hand the very home of the leaseholder. In that rather unequal equation I believe that it is right that the leaseholders should have more say, if they wish it, in the management of the common parts of the properties in which they live. I beg to move.
  3.15 p.m.
  Baroness Gardner of Parkes: I have very mixed views on the amendment. I feel that it is desirable for tenants and leaseholders to have a significant say in how the money is spent in a block of flats. But I speak from my own experience when chairman of housing for an area on the Greater London Council. In those days, when we attempted to give tenants the responsibility to manage their flats, many did not want it. There were always just one or two people in a particular block who were keen to take on the responsibility and took an active part.
  170
  The suggestion in the amendment is that managing agents should be appointed to fulfil the management function. But someone still has to instruct and give directions to the managing agent. So I am not so sure about that part of the provision.
  The noble Lord covered very clearly the situation of a freeholder who manages the properties. But frequently the freeholder has a head lessee. The head lessee is not the freeholder but is the person who appoints the managing agents to run the properties. So there is an additional layer of management in the middle. The noble Lord did not mention that situation, and I wonder what would happen.
  I also wondered what the situation would be in terms of how much tenants and leaseholders would have to pay to compensate the head lessee for losing his business. That would be the case if they had the right to take over his management.
  I shall be grateful if those questions could receive answers.
  Viscount Montgomery of Alamein: My noble friend Lady Gardner is quite right. There is the problem of the head lessee, which is very important. Coming back to the main thrust of the amendment, I agree entirely with what the noble Lord is trying to do. I do not know whether the wording of his amendment is the right way to do it. It would be interesting to hear a few comments from my noble friend on the Front Bench.
  The fact is that the whole of the leasehold enfranchisement which was attempted in the 1993 Act has not worked. I was much involved with that legislation and at the time declared a number of interests and received a good deal of stick, mostly from my colleagues on this side of the Chamber, for my efforts in that Bill. No doubt I shall do so again today, but that is one of the hazards of this sort of activity.
  The leasehold enfranchisement Bill was emasculated by the activities of a number of senior landlords, and of course it has not really worked. I wonder how many enfranchisements have taken place. It would be very interesting to see whether the Government have any figures on this matter. I accept that I have not given my noble friend notice of this question so, if he does not have the information to hand, I should be quite happy if he writes to me subsequently. I believe that what the noble Lord, Lord Dubs, is trying to do is going in the right direction. Whether we get there in the end remains to be seen, but I do hope so.
  Baroness Hamwee: First, I apologise to the noble Viscount and to the Committee for having missed the first few sentences of the noble Viscount's speech. Nevertheless, I have no reservations in supporting what I suspect he will have said, and from these Benches we will do so. I should like to respond in particular to two points which have just been made and which go to the heart of the issue.
  During the passage of the 1993 Act there were a number of discussions about tenants wanting the opportunity to manage their own affairs, and for many tenants it was that rather than ownership which was at the heart of the issue. The noble Viscount mentioned

  171
  that he had received some "stick" for his position at that time. It seems to me that one of the problems with which we are dealing here—and we should not have to deal with it—is that somehow the landlord's position has become identified at one end of a very polarised spectrum and the tenant's position is at another end. I do not believe that we should be seeing the positions of either in that politicised fashion.
  To take up a comment made by the noble Baroness, Lady Gardner, in relation to the position of an intermediate head leaseholder and that leaseholder's business, is that not also one of the things that has led to such problems, that the leaseholder sees it as part of his business to make money on the term of "exercising management functions"? That is bound to disadvantage the tenant and, while I accept that in the case of a leaseholder who has bought an interest and therefore expects to be able to profit from it—one cannot disregard that there is an investment there—nevertheless, the sooner we can get away from that head leaseholder benefiting at the expense of the tenant as part of running a business, which is a business which has been interposed between freeholder and tenant, the better.
  Lord Lucas: I listened with great interest to what the noble Lord, Lord Dubs, had to say. I suspect that there are one or two things in his speech which I will need to think about and I will write to him later. But it is clear in general from what he and other noble Lords have said that what lies between us here is a political difference and one of principle. None the less, I hope to be able to persuade him to withdraw this amendment because we do not feel that there is any way in which this alternative road that he is proposing can be traversed satisfactorily in the time that we have available to us. I will come on to the detailed problems that we have with these proposals towards the end of what I have to say but, as my noble friend Lady Gardner of Parkes indicated, there are a number of difficulties with the detail.
  I will write also to my noble friend Lord Montgomery of Alamein, as I do not have the figures he requested with me. I promise to be polite to him and not to say anything rude either now or in the letter.
  The leasehold system is based on a clear set of responsibilities. The landlord normally has responsibility for the repair and maintenance of the overall structure and the common parts and for insuring the building as a whole. Individual leaseholders look after the interior of their flats, and meet through service charges the landlord's costs in discharging his responsibilities. The amendment of the noble Lord cuts right through that structure, by allowing the tenants—or presumably a group of tenants acting together—to elect to take over the management of the property. That right would apply whether or not the landlord was doing a good job or not.
  We have already given leaseholders the right to buy out the landlord's interest in the property if they wish, under the enfranchisement legislation. Through that they gain complete control over the property.
  172
  Under the "right to manage" proposed by the noble Lord, Lord Dubs, the leaseholders take on half the function of being a landlord. The landlord receives no compensation whatever for that. The price the landlord pays for property reflects the income available from management. If management is the landlord's job, then management has a value to him.
  As anyone who has lived in a block of flats which is well managed will know, having a good landlord who performs his function well is a worthwhile thing. It saves the tenants a great deal of trouble and argument which they would otherwise have in organising the management themselves and is a function well worth paying for if it is done well. It is a valuable business for the landlord, yet the proposal of the noble Lord, Lord Dubs, contains no provision for any element of compensation.
  As the noble Lord, Lord Dubs, said, this raises the question of whether this is contrary to the European Convention on Human Rights. The convention allows deprivation of a property right only where this can be justified in the public interest, which must be doubtful in this case, to say the least, and where fair compensation is paid. The noble Lord, Lord Dubs, proposes to pay no compensation whatsoever. I cannot see how he can think that his scheme would be certain or even perhaps likely to survive under scrutiny under that convention.
  This right to manage, to our mind, would therefore be quite unfair to the many sensible landlords who undertake their responsibilities in a conscientious manner. It offends the basic premise of the leasehold system, which is that a lease is a private contract freely entered into. It is a voluntary agreement between landlord and tenant which gives rights and obligations to each party with regard to the other.
  Of course, it is quite a different issue where the landlord is failing to behave in a reasonable manner, and it is clearly right in these circumstances for Parliament to intervene. It is because a minority of landlords are behaving in this way that we are discussing this Bill.
  This Bill includes the strengthened right for leaseholders to seek the appointment of an independent manager in cases where they can demonstrate that the freeholder has not been carrying out his responsibilities in a proper manner. Under existing legislation, leaseholders have to go to court to ask for the appointment of a manager. Clauses 81 and 82 provide an easier and more effective way for tenants to gain access to independent management in these circumstances.
  The jurisdiction for these cases is being transferred from the court to a leasehold valuation tribunal. That, in combination with the codes of practice to be issued by my right honourable friend, will provide a much easier and more sure method for leaseholders to achieve justice. It will be a much more accessible system, too.
  There is a further linked provision in the Bill in Clause 84 which will mean that once a manager has been appointed by the tribunal in cases where the landlord has misbehaved himself and once that manager has been in place for two years, the tenants have a

  173
  sufficient ground to apply to a court to acquire the freehold interest. This offers an attractive route for the tenants to purchase the freehold at a fair and open market value.
  Turning now to the particular proposals put forward by the noble Lord, Lord Dubs, I would like to draw to your Lordships' attention some of the difficulties as we see them. The new Schedule 1A attempts to define which groups of leaseholders would qualify for the right to manage and, as the noble Lord has explained, it would apply only where the landlord's interest was no more than 20 per cent. of the aggregate value of the leases. But we are not clear what is the case for setting the limit at 20 per cent. For example, the effect of this 20 per cent. rule would be to exclude properties where the unexpired term of the lease was 20 years or less. It would also exclude mixed-use blocks where the amount of retail floor space exceeded 5 per cent., which hardly seems consistent with other amendments to be moved by the noble Lord, Lord Dubs, in relation to the commercial element of a block and collective enfranchisement.
  Although the amendment which has been tabled is already complex, I do not think we will find that it resolves all the difficult issues in order to ensure that this right could work effectively. For example, the clause contains no definition of "qualifying tenant", or indeed of "common parts". Nor does it define what proportion of the qualifying tenants need to agree to activate the procedure. Much more needs to be done to flesh out what is only in reality a skeleton proposal.
  Any proposal would have to tackle the difficult issue of what is "management". Managing a building can involve many different functions. Obviously, it involves maintenance and repair, the sort of things for which service charges are paid. But it can also involve managing any flats let on short term tenancies, including choosing tenants and collecting the rent. It can involve developing parts of the land and insuring the structure of the building. To which of those does the "right to manage" apply? No doubt the noble Lord will say that all those issues can be solved. But his current proposal does not deal with them adequately, so he is rather asking the Committee to accept on trust that this intricate web of rights and responsibilities can be unpicked, and unpicked in a way that is both practical and fair to all parties.
  I know that the noble Lord has a more detailed proposal up his sleeve—he was kind enough to show me a copy. Indeed, that would be a useful starting point. But there are many difficult questions to be addressed. There is a great deal of detail to be gone into. There is a requirement for extensive consultation if we wish to go down that route and it would quite clearly not be possible to incorporate such a proposal in this Bill without extensive Henry VIII provisions. Under those circumstances I hope the noble Lord will realise that even should we favour his proposals—which we do not—it would not be appropriate to proceed with them in this Bill.
  3.30 p.m.
  Lord Williams of Elvel: As the Committee is aware I promised to take trapist vows on this part of the Bill because I am a leaseholder, but I wish to correct certain matters of fact. I am not speaking in my own interest but on matters of fact.
  The facts are that a freeholder sells a long lease under the terms of the definition of the 1993 Act. The freeholder sells the lease on the basis that the leaseholder will be responsible for paying rent, which may be low—that will be a matter which the Committee will discuss in due course—but also he will pay service charges. It is the service charge problem that has given rise to my noble friend's amendment and to the amendment in another place.
  It is not simply a matter of saying that the leaseholder will pay all service charges whatever they may be. It is not even a matter, as the noble Lord said, of a return to the freeholder. The freeholder sold a lease for a capital value and that is his return, plus the ground rent. Unless I am much mistaken, the freeholder does not expect to get anything out of the service charge. It is the manager who obtains the return from the service charge.
  Normally, freeholders appoint a manager. A number of estate agents of distinguished credentials run blocks of flats with long leases. The problem is that at the moment most leaseholders—I am trying to put this in the most objective manner that I can—do not know whether or not they are obtaining proper value for money from the service charges they pay to the agent. That is the problem that my noble friend is trying to address. It is nothing to do with the landlord or the head leaseholder; it is whether the leaseholder who has a flat, as I do, on a long lease, who pays a small ground rent, who could enfranchise— but as the noble Viscount, Lord Montgomery, said, I have no intention of enfranchising under the present arrangements, or at all—is receiving value for money.
  I speak for myself at this point. With regard to service charges—I am not complaining about my flat or the service charges I pay—leaseholders need to do what is called "market testing". I thought the Government were in favour of market testing. The estate agent in charge of the property may have decided that after five years or so the whole property should be refurbished on the outside. That is the landlord's responsibility. They may have commissioned painter X or decorator Y. But we do not know under what circumstances they have been commissioned; we do not know that they were commissioned under competitive procedures; we do not know what the estate agent management take is and we do not know whether there could be any better management of the properties in which we live.
  The intention is not to break through anything that the noble Lord described. We recognise, having signed and bought a long-term lease, the obligations. It is a question of market testing as to whether anybody—there are plenty of people in the business—could do it better than the present manager of the property. That is all my noble friend is saying.
  Viscount Caldecote: The noble Lord, Lord Williams, is perhaps confusing the issue. He said that it was

  175
  nothing to do with the situation of the head lessor. It is very much to do with the head lessor. If a tenant has a long lease from the freeholder he has certain obligations to keep the building properly painted, the structure maintained, and so forth. If he does not carry out those requirements then he may be sued by the freeholder.
  The problem arises when the freeholder sells a long lease to a head lessor and the head lessor then has to pass on the requirements for maintaining the buildings to the sub-tenants. The head lessor appoints a managing agent to carry out the work on his behalf. The problem arises because some head lessors act in a most improper way, as do their agents, and the sub-tenants have no comeback to deal with the situation when they are being done down by the head lessor. I declared an interest in this matter the last time we discussed it and I speak from the experiences I mentioned then.
  Lord Williams of Elvel: I am grateful to the noble Viscount for allowing me to intervene. I am trying to stick to the facts rather than pleading any interest. Whether or not the instruction of a manager is from the freeholder or the head lessor is, to my mind, irrelevant. Somebody has got to instruct a managing agent to manage the property, whether it is the freeholder or the head lessor. My problem is that I do not believe the Government are right in the facts of the matter; that is to say, the Government are not right in saying that there should not be some form of market testing whether it is from the freeholder or head lessor down to the person who actually holds the long lease of the property. I hope that I have made my factual contribution clear.
  Viscount Caldecote: I am not sure whether I understand the noble Lord when he says that he is dealing with the facts and perhaps implying that I am not. I am trying to do just that.
  The fact is that the head lessor can and does appoint managing agents and the tenants of the head lessor have to accept the service charges and other charges that the managing agents impose on behalf of the head lessor. If that is done properly, there is no problem. But how does the sub-tenant deal with a head lessor who is not acting properly and whose agents are not acting properly and where the charges are excessive?
  One way of getting round that problem is simple but may be expensive; that is, for the tenants to buy out the head lessor, which is a satisfactory solution. This Bill gives greater power to the sub-tenants to buy out the head lessor when the head lessor changes. He will not get out of his responsibilities so easily now in giving the sub-tenants the first right of refusal to buy him out as he could before this Bill.
  That is therefore a great improvement; but the problem still arises in a case where the head lessor does not sell on his interest. The sub-tenant still has to put up with the difficulties and disadvantages of overcharging by the managing agents. As I say, the solution is to buy out the head lessor. In my own experience we have found that to be extremely satisfactory. A great deal of money is saved by the sub-tenants, as they were, who have taken over the head lease and manage the flats on their own behalf and employ what agents and surveyors
  176
  they wish. The whole thing is much more open and a great deal of money is saved. I hope that the Government will look again at this problem of protecting sub-tenants from head lessors who do not act properly at a time when they are not proposing to sell and when they are now much better protected.
  Lord Monkswell: As something of an outsider in this kind of debate, it seems to me that the amendment my noble friend Lord Dubs is putting forward is trying to separate the service charges and management from the ground rent and the capital sums and returns on capital. The noble Viscount, Lord Caldecote, suggested that one way of resolving the problem is to buy out the head lessor. That obscures the problem. It is rather like the Government's argument, "You can enfranchise yourself".
  We should look at the two charges separately. There is the ground rent which is like a return on capital for the landlord. The other is the service charge which is for maintenance, repair and management of the building, which is an on-going function. It is not to do with a return on capital. One of the problems that we are faced with in the market place is that people operate as though the service charge was some sort of return on capital and do not use the money to maintain and manage the building. My noble friend's amendment effectively encapsulates that by saying, "The tenant should have the right to effectively manage the service charge and maintenance of the building". It should he taken away from whoever was previously responsible. The sub-tenants are paying the money and they are living in their own homes; therefore, they should have the right to ensure that the money is properly spent in the management and maintenance of the building and that it is done properly. I am just a simple guy, but that is the way I see it and that is why I support my noble friend's amendment.
  Lord Weatherill: I had not intended to participate, but listening to this debate I am very sympathetic towards what the noble Lord, Lord Dubs, said. I have recently encountered a problem where one of my former constituents lives in a block of flats in which some of the tenants are protected and others are not. The problem appears to be that those who have bought long leases pay substantial service charges to the landlord and in this particular instance no work is ever carried out. It seems that the landlord is using the money which he gets by way of service charge to do up the flats when the protected tenants die or leave for other reasons, and sell them on. As regards the former constituent, there appears to be no redress whatsoever. The amendment of the noble Lord, Lord Dubs, may not he absolutely correct in its wording, but I hope that the Government will agree to take it away for reconsideration and then bring forward an amendment which will cover this particular difficulty.
  3.45 p.m.
  Baroness Hamwee: Perhaps I may take up one point made by the Minister given that this is the first debate on this subject. He said that agreements between landlords and tenants are contracts freely entered into.

  177
  I do not dispute the importance of contract nor the importance of providing means for its enforcement; but it is worth recalling that in this area the contract is perhaps a little different from, say, a contract to purchase goods where there is a freer choice.
  In the housing market one is affected by a number of issues such as the location, price and so forth. It may well be that all that is available within one's price range and the place where one needs to move is a flat which is the subject of a lease and one purchases the, benefit of that lease. One may not even be in the position of making the contract afresh. These days I guess that there are rather more existing leases than there are new leases being created. A purchaser buys an existing lease and does not have the opportunity to alter its terms. So in talking about a contract I do not believe that we can regard this contract as being quite like others.
  Lord Lucas: I believe that Members of the Committee on all sides agree with the definition of the problem and are determined that it should be dealt with. Quite clearly, these abuses should not be allowed and that is what this part of the Bill is about. We have chosen a route which preserves the rights of landlords. Through Clause 79 onwards we are setting up a structure which allows tenants to deal with landlords who are misbehaving without expropriating the landlord's property and rights. The noble Lord, Lord Dubs, proposes to deal with the matter by jumping on landlords without compensation.
  Lord Williams of Elvel: No!
  Lord Lucas: I believe that that is the basic difference between us.
  Lord Williams of Elvel: I must correct the noble Lord. Again, let us stick to facts. There is a contract between a freeholder and a long leaseholder. That contract has one thing in it which is open-ended: the ground rent is closed. The capital value has been sold, whether it is an original lease or a lease which has been bought from somebody else. The one point which is open-ended is on the service charge, and that is a problem. It is not a question of shifting the balance between the landlord and tenant. My noble friend is trying to make sure that the leaseholders have the possibility of alternative arrangements should they find that they are paying excessive charges. What is an excessive charge can only be determined by, as I say, market testing. I should have thought that the Government were in favour of that.
  Lord Lucas: That is exactly what we are setting out to do within Clause 79(2A). I believe that the words are very clear. There are provisions in earlier legislation. Section 42 of the Landlord and Tenant Act 1987 states that service charges must be held in trust. The Leasehold Reform, Housing and Urban Development Act 1993 states that tenants can call for a management audit. Section 20 of the Landlord and Tenant Act 1985 states that the landlord is required to obtain alternative
  178
  quotations for any work undertaken. So there are provisions within existing legislation. In this Bill we are providing that,
  "A tenant by whom, or a landlord to whom, a service charge is alleged to he payable may apply to a leasehold valuation tribunal for a determination—

  "(a) whether costs incurred for services, repairs, maintenance, insurance or management were reasonably incurred,

  "(b) whether services or works for which costs were incurred are of a reasonable standard, or

  "(c) whether an amount payable before costs are incurred is reasonable".

  That deals with the kind of abuses which the noble Lord, Lord Williams, has outlined and will provide tenants with the sort of power that they need to make sure that the service charge they are paying is proper. But at the heart of it is our belief that the provision of the management service to tenants is a business which is owned by the landlord and ought not to be taken away from him lightly or without compensation.
  Baroness Gardner of Parkes: I must declare an interest in that I have a small flat for my retirement when I can no longer manage stairs, but I am not living in it at the moment. The ground rent is £50 a year and the service charge is £5,000 a year for a one-bedroom flat. Service charges can be very high. Even more irritating is that part of the electrical work that is being done this year was done last year. The people who are doing the work this year say that the work done last year was unsatisfactory. Tenants find it very disconcerting to have to pay twice.
  I like my noble friend's Clause 79. I believe that it gives people the right to go to a leasehold valuation tribunal. To go to court can be time consuming and expensive and it cannot be done by an amateur. Can my noble friend tell me whether, under Clause 79, an individual acting on his own behalf, and at comparatively low cost, can go to a leasehold valuation tribunal to query these matters, or will that be an expensive process?
  Lord Lucas: How expensive the action is depends upon the complexity of the case. We believe that the basic charge will be about £500. In relation to a £5,000 service charge for each individual that does not seem excessive. Any individual tenant can apply to the leasehold valuation tribunal or a number can get together as a body and challenge the matter. The cost is the same. The cost may be £500 for something simple or £2,000 a day for a more complicated case.
  Lord Williams of Elvel: Leaseholders respond to their freeholders. Generally, except in certain circumstances, leaseholders are not individuals who are aggravated by difficulties. Some are and some are not. In referring any matter to a leasehold valuation tribunal the leaseholder, whether individually or collectively, confronts the landlord. If as a leaseholder one confronts the landlord one is liable to find that the service charge next year is not £5,000 but £6,000. That is a major problem in many of the big estates in London and outside London. This problem does not apply simply to London. I have certain knowledge of this matter. To go

  179
  to a leasehold valuation tribunal (a) incurs costs and (b) requires confrontation with the landlord. On the whole, leaseholders who have brought a contract do not want that kind of confrontation. It makes good sense to say that perhaps a service charge of £5,000 should be put out for competitive tendering. There are plenty of people in London and elsewhere who manage properties.
  Earl Bathurst: I declare an interest as a leaseholder who hopes to be a freeholder. If leaseholders decide to take their case before a tribunal not only do they confront the landlord—which is a perfectly reasonable thing to do—but for perhaps four or five days they will confront a legal team of top QCs with whom they will have to do battle—and I mean "battle". That is a difficult, time-consuming and nerve-wracking business for an ordinary tenant. I hope that the Minister will give serious thought to accepting something on the lines of this amendment.
  Lord Lucas: I believe that my noble friend describes the current situation where these matters must be worked out in the courts. We propose and believe that the leasehold valuation tribunals will be much simpler, quicker and cheaper. As regards that procedure, to the extent that I am allowed to do so from the Dispatch Box I would back my noble friend Lady Gardner of Parkes against a landlord any day of the week.
  I deal with a number of other matters raised by the noble Lord, Lord Williams of Elvel. First, the landlord's right to develop the property further is a valuable right which the amendment of the noble Lord, Lord Dubs, may well extinguish. Secondly, the leasehold valuation tribunal fee may not be the same irrespective of the number of tenants. I am sorry that I gave a wrong answer in that respect. It is certainly cheaper than several cases, but it may be more than one individual case. We have not finalised the details.
  Lord Monkswell: Do the Government seriously suggest that it is quite legitimate for a service charge to be used to redevelop property? Surely, the person who develops a property should put his own money into it by way of capital investment rather than use the service charges. That is the implication of what the Minister has said.
  Lord Lucas: No. I said that the service charges must be held in trust and could not be used for other purposes. But the landlord has the right to develop the property further, and that right may be interfered with or taken away by the amendment of the noble Lord, Lord Dubs. The amendment would take away from the landlord the right to manage the roof, which might have to be removed in order to build on extra storeys, and give it to existing tenants.
  Lord Dubs: This debate has been extremely interesting. The noble Baroness, Lady Gardner of Parkes, referred to having a £5,000 service charge. The Minister said that he would back the noble Baroness against any freeholder. That is true. However, not all
  180
  leaseholders are as articulate, fluent or persuasive as the noble Baroness, Lady Gardner. We must have a system which works for the generality of leaseholders.
  The Minister said that I wanted to expropriate some functions of the freeholder. That is the last thing that I want to do. But where there is a contract between the freeholder and a leaseholder whereby the former provides certain services—which is the basis on which the original lease is acquired—we should not lock the leaseholder into that contract in perpetuity, because the freeholder may, for his part, fail to meet the terms of that contract. It seems to me that when leaseholders pay for services they ought to get something back. When that fails because the provider of services is not doing so adequately, or it is being done at too high a charge, it is reasonable that the leaseholder should have other options. It is called the market economy. It gives the consumer a choice.
  It is my contention that the scheme in the Bill is not adequate. It is bureaucratic and costly. To go to the leasehold valuation tribunal can be costly, particularly if the freeholder assembles expensive counsel for his part. It is costly and is a difficult burden for leaseholders. I believe it is possible to have a scheme that works more easily and effectively. I still believe that the balance ought to lie with leaseholders, because in almost all instances they account for 95, 98 or 99 per cent. of the equity. That is where people have made an investment in their own homes.
  The Minister has referred to the right of leaseholders to enfranchise as an alternative to my scheme about management. He omits to say that the majority of leaseholders are not able to secure enfranchisement. I understand that about 65 per cent. of leaseholders cannot do that. We will discuss that matter in more detail in the next group of amendments. To offer enfranchisement as a way out when dealing with a bad landlord is not the answer, unless the Government accept the other amendments. If they do that, it may change the terms of this particular debate.
  As regards intermediate landlords—head lessees—under my scheme the right to manage will be transferred, and the leaseholder will be able to secure the right to manage whether it is the freeholder or the head lessee who has appointed the managing agents. The point is the same in both instances.
  The Minister said that he did not believe it was appropriate to accept on trust some of the points within this particular amendment. I point out that the Government's system relies on a Royal Institution of Chartered Surveyors code of conduct which itself has not yet seen the light of day, so the Minister also asks the Committee to take matters on trust. As my noble friend Lord Williams of Elvel pointed out, there are three elements in the contract between leaseholder and freeholder: the purchase price or capital sum; the rent; and the payment for service charges. That is what we are talking about. We are talking about a particular service for which the leaseholder has agreed to pay in return for certain things happening. When they do not happen we need remedies. It is my contention that the

  181
  remedies proposed in the Bill through the complexities of the leasehold valuation tribunal are simply not adequate and will not work.
  The Minister gave the game away at the beginning when he said it was not a matter of the details, it was a matter of politics. Those were his words, not mine. He said "political principle" and the political principle seems to be that we do not want to weaken the position of landlords. I am sorry he takes that view because I thought the Bill was about the rights of leaseholders and giving leaseholders a fair chance in this particularly difficult market.
  I shall refer finally to a point the Minister made. He said I did have another amendment. I accept that given the complexity of the legislation and the procedures, my amendment may be—I think it is usually Government parlance—technically not fully effective, or technically slightly defective. Those are the normal words. Yes, I accept that. That is why I sent the Minister a longer and more detailed amendment which came to some 24 pages, in the hope that I could persuade him to show sympathy for that one and then he would not argue that there were technical flaws with this one. I am not sure where his comment leaves us. I did not want to have another rain forest bite the dust by having a 24-page amendment put down when it is a point of principle we are talking about. I very much regret that the Minister sees this as a political issue and not as one about the rights of leaseholders. I wonder whether I can tempt him to say a little more.
  Lord Lucas: No.
  Lord Dubs: In which case I should like to return to this on Report. In the meantime, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  4 p.m.
  On Question, whether Clause 98 shall stand part of the Bill?
  Lord Dubs: I beg leave to speak to this and also to the other amendments on the Marshalled List. It may be for the convenience of the Committee that we take all these amendments together, because they deal with closely related issues.
  We are talking about the low-rent test, and, related to that, the argument about whether the period should be 50 years or 21 years. The purpose of my amendment is to exclude agricultural or rural tenancies from the provisions of the clause. I have therefore used the same words as are contained in the appropriate paragraph in Schedule 8.
  My understanding is that the position is quite complicated. As regards a low-rent test there are in fact three separate tests depending on when the lease was first signed. For leases before April 1963 the calculation of the low-rent test is that the ground rent has to be less than two-thirds of the letting value estimated for that period. For the period April 1963 to April 1990, the
  182
  formula for the low-rent test is that the ground rent should be less than two-thirds of the rateable value; previously it was the letting value. Thirdly, for post-1990 properties the ground rent has to be under £1,000 in London and under £250 elsewhere.
  Those are arbitrary figures. There is a lot of scope for landlords to evade the figures by setting the rents in such a way that they can avoid the possibility of enfranchisement. Indeed, landlords have done that.
  Also, in the case of leases going back before 1963 it is very difficult to define what should have been the letting value at the time; and there are many hard luck stories of leaseholders who have failed, and are failing, to secure enfranchisement simply because they are caught by these particular provisions.
  In answer to the question, "Why is there a need for a low rent test at all?" the Government argued in 1993 that the absence of a low-rent test might undermine the rented market by allowing those paying a rack rent to enfranchise. There is no evidence that I or anyone else has been able to find of this as a likelihood, or any evidence that it has been happening.
  The original 21-year limit was a perfectly adequate safeguard because it clearly differentiated leasehold properties from rented properties. Anybody who had under 21 years of a lease would therefore not be able to enfranchise. That is the present position. For reasons which are not totally clear the Government have increased this time period to 50 years. It was virtually admitted by the Secretary of State in the other place that it is an arbitrary figure. It is far too long. No evidence has been produced to suggest there was anything wrong with the 21-year period. Indeed the Lord Chancellor's Department, when it consulted on commonhold in 1990, took the view that there was no justification for a low-rent test in relation to commonholds. The argument applies equally to this amendment as it does to commonholds.
  There are other difficulties with the low-rent test. It is inequitable between individual leaseholders. There may be leaseholders in the same block, of whom one would be allowed to enfranchise and one would not because of the way the formula works. The last domestic rate revaluation was in 1973. Rents have risen since then and the longer the period since 1973 when a long lease was granted, the less likely it is that the rent would have been fixed at less than two-thirds of a 1973 rateable value. In other words, the way in which the formula works is capricious; it is arbitrary, and it is very unfair.
  When the Bill was debated in the other place there was considerable discussion about how this place would react to the contents of the Bill. I wonder whether I could read from a letter sent by a Conservative Member of Parliament to one of his constituents. This is a letter dated 15th May. I quote:
  "There is very considerable resistance to leasehold reform in Parliament, principally in the House of Lords but also to an extent in the Commons.
  "The Leasehold Enfranchisement Bill was badly mauled by the Lords, resulting in a considerable weakening in the Government's original intention.
  "It is very important that the leasehold reform aspects of the Housing Bill should not be weakened in the same way.

  183
  "In fact, it became quite clear that the Lords would probably have struck out all of the leasehold reform aspects of this Bill had the reform been too radical.
  "Those of us who are in favour of radical reform, therefore, had to ensure that as much reform as possible was included in the Bill that was consistent with it being accepted in the Lords."
  The final paragraph states:
  "Although there is still a risk that the Lords may water down the leasehold clauses, I am now reasonably confident that they will grudgingly let them through."
  I am puzzled by that letter. I understand that there was some concern in the other place, prompted by the Government, that the Committee might be more resistant to these measures and to any improvements in them than even was the case in the other place. It is puzzling but I quote it just for the record.
  There is another difficulty about the low-rent test and the period involved. Between 1963 and 1990 a surprisingly large number of leaseholders had a nil rateable value. This is because of extensive building works which took place at the time they acquired their leaseholds, especially in the late 1970s and the 1980s when nil-rated houses were being converted into flats which were often sold off the drawing board. So we have the anomalous position that because of that accident of history leaseholders would have no right to be enfranchised.
  So, the low-rent test is essentially arbitrary and unfair. It affects not just people living in SW1 or in Kensington but people living in many parts of the country. Indeed, people in Kensington and SW1 may themselves be lacking in affluence. The case is that there is no need for a low-rent test at all. My proposition is that the low-rent test should not apply except in the case of agricultural or rural tenancies, and that the 21-year period is a sufficient qualification. The various amendments together would achieve that end.
  Lord Strabolgi: I support everything that my noble friend Lord Dubs has said about the low-rent test. Thousands of genuine long leaseholders throughout the country will be disqualified from any right to enfranchisement by that test. That is because the low-rent level is so low—on average it is probably no more than 5 per cent. of the full letting value—that landlords granting long leases have for some considerable time been able to fix ground rents just above the limit, without significantly affecting the premium paid for the lease.
  The low-rent test is therefore unnecessary and inequitable. The desired division between owned and rented property is preserved adequately by the restriction of enfranchisement to long leases. As the Committee will be aware, the low-rent restriction was removed entirely by Standing Committee in another place. It would have meant relief from impossible situations for very many leaseholders. When the Bill returned to another place on Report, the Government reversed that amendment which had been passed by Members of all parties in Standing Committe and imposed, for reasons of their own, their own amendment giving exemption from the low-rent test only to those with leases of over 50 years when granted and to those not living on country estates.
  184
  That is surely discriminatory legislation of a highly divisive nature and favours one long leaseholder over another in an unacceptable way. The test of a long lease has always, but always, been whether it was for over 21 years when granted. Anyone buying a lease of 21 years or more would always have expected that any legislation applying to long leasehold tenure would apply to him. What the Government have set up in that hastily thought through amendment is an entirely new and unjustifiable barrier of 50 years, which bears no relevance to the established criteria of lease lengths or even to the low-rent argument.
  I remember the departmental housing booklets over the years. They are booklets that the department brings out. It does it very well. They are for the information of the public and those who are not specialists. Those departmental housing booklets, giving advice to tenants and leaseholders, issued by the Government, have always defined a long lease as 21 years. They made it clear that leases below that figure did not qualify for enfranchisement.
  Now, at a stroke, the Government propose to alter that figure to over 50 years. Why that volte face? There seems to be no reason for it. The Government remind me of Humpty-Dumpty, who said:
  "When I use a word, it means just what I choose it to mean—neither more nor less".
  So, 21 now means 50—neither more nor less. It is a real looking-glass world indeed. I support the amendments.
  Lord Hamilton of Dalzell: I have one question that I should like to ask the noble Lord, Lord Dubs. I am advised that despite his intention not to remove the exemption from rural properties, his amendments would in fact do that. I wonder whether he will accept that his amendments are flawed in that respect.
  The noble Lord, Lord Strabolgi, and others have wondered why the time period has increased to 51 years. I have never understood why it should be 21. Did it have something to do with the fact that it used to be the age of majority for adults before that was changed by Harold Wilson?
  I used to speak in these debates as a trustee of Smiths Charity. It of course no longer has properties, so I no longer do that. Smiths started selling 60-year leases in response to demand from the tenants to be able to roll up their rents in a single payment in order to take advantage of the mortgage relief which the Government had offered them; 60 years is the point on the graph that reflects the way a leasehold diminishes. It was considerably to the advantage of tenants to do that.
  I asked what the statistics were. One could in 1960 have bought a 60-year lease of a good Smith flat for £10,000. When we were discussing leasehold reform in 1993, the freehold of that flat was valued at about £500,000 to £550,000. The remaining 30 years of the lease was worth £350,000, but the rack rent on the property had by that time increased to what would have been £35,000 a year. Therefore there is no logic in the 21-year period.
  When late in the debate on leasehold reform we began to discuss the low-rent test, the Government excluded any debate on the 1976 Act. Therefore we could not get

  185
  into the question of whether it should be 21 years or 60 years. It is high time that we debated that matter. There is every logic in the time being much longer than 21 years.
  4.15 p.m.
  Lord Boardman: I must first make it clear that I have no personal interest in this. I am not a leaseholder. I own my own home and I am a short-term tenant in my flat. I say that because when I spoke on previous occasions there was some suggestion that I had some interest in the matter, but I have not.
  I oppose the amendments for one simple reason: they amount to government interfering in a contract freely made between tenants, lessees of premises, and the freeholder. I was amazed to hear the noble Baroness, Lady Hamwee, in the previous debate saying that we should not worry too much about contracts relating to property because of the short supply. She suggested—I am sure that when she reads Hansard she will be surprised to see what she said—that there are two types of contract: one which is normal and the other relating to property which, because of the shortages and one thing and another, can be ignored or one need not be bound by it. If I have misquoted the noble Baroness, I apologise. She will be interested to see what she said on the subject.
  When a leaseholder enters a contract to take a lease—never mind for the purposes of this argument whether it is for 21 years or 50 years—the terms are agreed. The ground rent, the service charge basis, the term and anything else are agreed. Those are the terms of the contract which is entered into. It is suggested that Parliament should come into that and say, "We think you might have had a hard-luck story to tell. We believe that we should interfere and put it right". That cannot be right. It cannot be our duty to interfere in contracts freely and honourably made.
  If someone was badly advised when he entered into a contract, that person has another remedy. He had better go for his adviser. Let me give an example of a highly honourable man who in 1970 took a flat with a 50-year lease at a rent of £200 a year. At that time and today he had no power or right to enfranchise. There was no such right in 1970 when he took the flat. There is no such right today. Because he is just outside the over-50-years limit in the Bill which would entitle him to enfranchise, and because his rent is just too high to qualify as a low rent, he is outside the exemption. He feels—I understand this and have great sympathy for him—that he has had a raw deal. He is a highly honourable man.
  That man believes that Parliament should come into the picture and say, "All right, you have had bad luck. Your landlord told you at the time you took the place that sometime later if you wanted to buy the freehold you could do so". Now we are saying that we are not prepared to do that. That is bad luck, but it is not the responsibility of this place or of Parliament as a whole to say, "We will remake that contract for you". That is what the amendments tabled by the noble Lord, Lord Dubs, seek to do. They seek to remake a valid
  186
  contract that was honourably and properly made but which happens not to be as favourable as if it were amended as the amendments seek.
  I cannot support the amendments. I do not believe that it is our role to interfere with such contracts and to remake them in order to make them more favourable because we did not get it right first time. I oppose the amendments.
  Lord Strabolgi: But these contracts were not always entered into in the way in which the noble Lord, Lord Boardman, describes. Very often they were contracts which the tenants were forced to enter into because speculators took over blocks of flats and threatened them with expulsion—they were people with ordinary rentals—unless they entered into long leases. That is why they had to scrape together to get the money, by borrowing or raising mortgages and so on, in order to maintain themselves in their homes. I do not believe that one could describe them as contracts freely entered into, as the noble Lord, Lord Boardman, said. He used to say so in 1988, and I used to say the same sort of thing too. It rather took me back when he spoke just now. I am glad that he did, but I believe that historically this is a special case.
  Also, the Government believe in leasehold enfranchisement. They say so on almost every occasion. The Prime Minister has said so many times. They say so in theory and maintain it in theory, but when it comes to it, they do their best to undermine it.
  Viscount Caldecote: This is a very complex issue. I am slightly confused because the noble Lord, Lord Dubs, said that he was speaking to his proposition that Clause 98 should not stand part of the Bill and also to his other amendments, to some of which I have my name. Surely, since the whole purpose of Clause 98 is to give effect to Schedule 8, if Clause 98 does not stand part of the Bill then Schedule 8 falls to the ground and all the other amendments will not be called. I believe that that is the situation.
  However, I believe that it is in order to speak to Schedule 8 on the Motion that Clause 98 does not stand part of the Bill. As the noble Lord, Lord Dubs, said, Schedule 8 deals with the low rent qualification which applies to long leases of less than 50 years. I appreciate that the logic behind the concept of a low rent qualification is not to give to what may be described as temporary tenants on relatively high rack rents the same rights as tenants who are long leaseholders who regard the property as their permanent home.
  Long leases are now defined by Section 3(1) of the Landlord and Tenant Act 1987 as those exceeding 21 years. The schedule now proposes to increase that to 50 years. There seems to me to be no justification whatever for removing the rights of many long leaseholders through a low rent requirement nor for discriminating between long leases of 50 years and 21 years which has always been the custom in the past and as is now proposed under paragraph 1 of Schedule 8.
  But now I diverge from the noble Lord, Lord Dubs, who says that he wants to keep the exclusion of people who live in rural places. It has been pointed out that he

  187
  does not actually achieve that by removing Clause 98 and with it Schedule 8. But surely there is no justification in fairness or logic for excluding wholly from the right of enfranchisement people living in rural areas. I understand the argument that has been used to justify that exclusion; that it is to protect the freeholders of certain types of houses on country estates. That is a perfectly understandable point of view which others can put much more clearly than I can. But in general, it seems to me to be an unacceptable point.
  In my view, it is quite wrong to use that logic to exclude everyone who lives in a village house, on rural estates, from the right of enfranchisement. Surely the right solution to the problem is to withdraw Clause 98 and with it Schedule 8 and to insert a specific exclusion to deal with the houses which justify being kept separate on rural estates, and leave with the right of enfranchisement all the other village houses which many people have occupied all their lives and perhaps also in the lives of their parents. I have heard mention of dower houses and so on as being an example of those which should be excluded and they should be dealt with by a special provision.
  I hope that the Government will look again at this matter. Even if this amendment is not put to a vote, I hope that the Government will agree to look again at this whole question in relation to low rent disqualification, the 21 to 50 years and the rural disqualification. It is something of a muddle at present which needs to be looked at afresh.
  Perhaps I may comment briefly on what my noble friend Lord Boardman said. I entirely take his point that contracts freely made should not be upset by legislation. But I believe that to take that principle in this case is going rather too far. After all, before any of the recent Acts were passed, if you were a long leaseholder and your leasehold came to an end after, for example, 100 years, you had no rights at all. That was the condition on which you took on the original long lease.
  Parliament felt that that arrangement was so unjust and unfair that it should be altered, as it has been altered by a number of Acts which have been passed. Therefore, this proposal is merely an extension of that principle; namely, to ensure that long leaseholders, who have been occupying their property as their home for many years, are subject to fairer conditions. I support the proposition of the noble Lord, Lord Dubs, that Clause 98 should not stand part of the Bill, but I ask the Government to look very carefully at the whole of this problem. They should try to tidy this area and not use a blunderbuss, particularly in relation to rural areas, which causes great injustice.
  Lord Carnock: First, I must declare an interest. I am a leaseholder in the process of extending my lease but I have no financial interest in the subject of this debate.
  I had in mind to refer to two anomalies in the existing law, both of which have been referred to by the noble Lord, Lord Dubs. I shall say nothing about the first but I should like to enlarge upon the second. That concerns property which underwent major works of reconstruction after the war and at a time when it became uninhabitable so that its rateable value was
  188
  reduced to nil. Such a house does not meet the low rent test. But if you compare that with a property which was newly reconstructed, you will find that there is no rateable value at all when the house is under the process of construction and becomes first rated after the building is complete. Such a house would comply with the low rent test.
  I ask the Minister whether, if these amendments are not accepted, the Government would he prepared to amend the 1993 Act so as to avoid the anomaly that a property with a negative rateable value could qualify under the test.
  4.30 p.m.
  Baroness Gardner of Parkes: Having earlier declared my interest in a flat, I should indicate that that is non-enfranchisable and so does not come in any way into any further discussion on this Bill. The home I live in is already freehold. In my time on the estates committee of one of the major London hospitals we were faced with this problem of how to re-let the houses that were becoming vacant. At that time—I am going back 15 years—we were well aware that 20 years was not considered a long lease and that it was a safe period for a hospital to let their property on a rack rent. There has been an awareness of the 21-year term for a long time. I do not think there is anything new in that.
  A genuine matter of concern is the situation as regards properties on a rack rent. I feel that the 50 years might be significant if it were going to exclude properties on a rack rent, or market rent or full rent for today. This has been put to me in two different ways. The Leasehold Enfranchisement Association has said such leases do not exist, so I went to the British Property Federation and asked them to produce chapter and verse on it. The federation told me that they have produced chapter and verse to the Secretary of State, to the department, asking for proof that such leases did exist; and they do exist. There do not seem to be a great many of them, but the evidence had certainly been produced. Therefore, I will ask my noble friend the Minister to confirm that to me. If that is the case and such rack rent properties exist, then they should he treated differently from other properties.
  I would support the points made by my noble friend Lord Carnock about properties that were not on the rateable list. Indeed, everyone I have spoken to, including the British Property Federation, acknowledges that that is an anomaly and that it was unfortunate if your house was undergoing major repairs. Everyone wants to see that corrected so that people who are in that position are not disadvantaged through it.
  A very interesting point was made by the noble Lord, Lord Dubs, about the difficulty of tracing the rents that would have been applied to leases before 1963. I am unclear as to why there is such a difficulty because I thought this was a country full of documentation on everything going back hundreds of years. I would have thought it would have been easy to produce something. After all, 1963 was not that long ago.
  There are people who want to be able to buy a property at a lower value if they are buying a lease, and currently these people buy a short lease. There is a

  189
  problem that exists there, that if we reached the point where property owners were only prepared to sell really short leases, say, 20-year leases, in order to secure the return of their property at a later stage, would we then face a situation where people would not be able to get mortgages? In my time as a director of a building society I know that with any term less than 50 years it was not very easy to get a mortgage because the building society wanted 25 years remaining after you had paid off the 25-year mortgage, in order to give it a degree of security.
  That is something we should look at carefully. We should take care not to kill off a market in shorter leased, affordable property for people, but also make it financeable for people, because, unless they can afford either to rent or to buy, it is not much good creating a market for short leases, which landlords have opted for, in order to protect their property interests.
  None of these things is as simple and straightforward as we would like to think and whatever we decide in this law we will be affecting so many other decisions made by people. If we do develop a really short leasehold market and a longer leasehold market and enfranchisable and non-enfranchisable markets, we will definitely see differentials in values in the property market, and those people who have a lease that is enfranchisable will find their property worth relatively more than those who have one that is not enfranchisable.
  On the rural position, I have had a considerable number of letters on both sides of that argument. The people from Adlestrop in Gloucestershire, who I understand have written to many Members of this Chamber, are concerned that some of the village are able to enfranchise and others are not, but I have had just as many letters from other people saying that on no account do they want the rural exemption lifted and they would like to see it more restrictive. This is a very complex matter and the point made by my noble friend Lord Caldecote is an important one; namely, that if the Government would really consider reviewing this whole issue I would not oppose the present clause standing part. I would rather see that than nothing, but I really hope that there are many aspects of this matter that should be looked at again.
  Baroness Hamwee: I do not want to repeat any points that have been so thoroughly aired. Perhaps I may confine myself to saying that this should in no way be taken as a lack of strength in what I am saying. I wish to associate myself very much with the support for ending the discrimination with which we have found ourselves, and which was the thrust of the argument of the noble Viscount, Lord Caldecote. It is important that we take this opportunity to eradicate those discrepancies as far as we possibly can. In the best of all possible worlds it might be better to start again and have something that reads clearly and easily. I suspect that opportunity will not be before us.
  Lord Coleraine: We are debating the question that the clause stand part and I have tabled an amendment, Amendment No. 254E, which is designed to probe my noble friend as to the meaning and purpose of the rural
  190
  exclusion. If the question is put that the clause stand part and the noble Lord, Lord Dubs, is successful, then, of course, my amendment will not be debated. To some extent the amendment has already been pre-empted by my noble friend Lord Caldecott who has drawn clear attention to the problems of the rural exclusion.
  It seems to me that this is possibly the moment at which I should explain that my amendment is intended to be a probing amendment because I see some force in what I believe to be the desires of the Country Landowners' Association, which I believe is behind it. Yet, on the other hand, I suspect that it goes too far in some directions and not far enough in others. What I am trying to find out from my noble friend on the Front Bench is why there should be this rural exemption to the provisions of the Bill which sweep away the no-rent test in respect of leases over 50 years, and exactly what the exclusion is trying to achieve and how, if at all, it does so.
  I want to tease this information out of the Front Bench if I can, because in the debate in another place on Third Reading on 30th April the Secretary of State was not able to explain the rural exemption. The nearest he came was to comment (Official Report, Commons, 30/4/96 cols. 927–928) that some leases of under 50 years are found in rural areas where they are granted as part of a management strategy as regards looking after a farming estate. It remained for Mr. Nick Raynsford to bring up the matter in relation to leases over 50 years in length. Apparently advised by the Country Landowners' Association, he produced (at col. 939) the information that there are some 200 or 300 such leases in the whole country, where, as part of agricultural arrangements, properties are let for over 50 years without a premium. I would ask whether my noble friend agrees with this figure and, if so, why have the Government so singly failed to identify even one rack-rented lease granted for more than 21 years over the years in which we have been discussing this matter of the low rent test? Can my noble friend explain how the areas of rural exemption are to be worked out? Would the areas be the same as the rural areas referred to in Clause 17 of the Bill?
  During the passage of the 1993 legislation exception was taken by those concerned with both interests—landlords and lessees—to the power given in the Bill to the Secretary of State to allow to be changed by order the percentage area of the building used for non-residential purposes which would exclude the right to collect enfranchisement. That provision would have varied, according to the will of the department, the valuable property rights of landlords and lessees and, on that occasion, the Government gave way to the argument and that right to regulate matters by order was taken out of the Bill.
  What the Government are effectively doing by the arrangements that they have in place for the rural exclusion is achieving exactly the same undesirable result. There is also the case that the rural exclusion relates to houses in rural areas adjacent to other land in the ownership of the freeholder. That seems to me to be a definition which may have some pragmatic background, but one which is completely lacking in any principle because there is no particular reason why, if you happen

  191
  to be the lessee of a house and your freeholder landlord happens to own the land next door and not occupy it for residential purposes, you should not have the right to enfranchise. As I understand it, the provision would also leave open the possibility that a freeholder who found himself with an isolated house on the wrong side of the road could go and buy some land adjoining the house in question and thus collect the right to enfranchise. Again, that seems to me to be wrong in principle.
  My final question is to ask why the Bill provides no exemption for future leases granted in rural areas for more than 50 years? If there is a case for the exemption, it seems to me that it should operate in the future. It may well be that the answer is to be found in other parts of the Bill, but I have not as yet discovered it.
  So far as concerns the substantive matter regarding Clause 98 stand part—namely, the low-rent test—I believe I am right in remembering that it fell to me to move the amendment to abolish the low-rent test in 1993. I should like to declare my support for the amendments tabled in the name of the noble Lord, Lord Dubs, in so far as they would achieve that aim. I do not wish to make many points on the issue, but, having read the report of the Third Reading debate in another place, it seems to me that a great deal of misunderstanding still exists in the highest places as to what the low-rent test is meant to achieve.
  In that debate, my right honourable friend the Secretary of State said:
  "The policy has been to give enfranchisement rights to leaseholders who might be regarded as owner-occupiers. That policy lies at the heart of the discussions: how does one distinguish between those who are leaseholders, as one understands that term, and those who may be leaseholders in the sense that they hold a lease but who have been paying a proper market rent as tenants would?"
  I believe that to be a very fair way of setting out the question. Then, a few sentences later, my right honourable friend said:
  "Two tests establish whether the leaseholder is an owner-occupier. First, there is the length of the lease, which should generally he more than 21 years. Secondly, the tenant must pay only a nominal ground rent rather than a market rent".
  In the same debate, my right honourable friend also said:
  "An amendment was carried in Committee, to remove the low rent test. That decision was based not on the idea that renting tenants should be given enfranchisement rights, but on the fact that a low-rent test has caused difficulties in practice".—[Official Report, Commons, 30/4/96; cols. 921 to 923.]
  It is correct to say that the low-rent test has caused difficulties in practice, but that is not a reason why those who oppose it do so; they do so because it is conceptually flawed and because the low-rent test does not begin to meet the requirements set out previously by the Secretary of State regarding the justifications that he gives for having a low-rent test.
  Perhaps I may give Members of the Committee an example of a case where the low-rent test has caused difficulties in practice. It was one that was canvassed at great length during the debate in another place and it has been brought to my attention by Mrs. Joan South of the Leasehold Enfranchisement Association. It is a situation where one has to prove that before 1963 the rent was less than a certain percentage of the letting value. It has been
  192
  made perfectly clear many times that that has been almost impossible to achieve. Indeed, I do not need to refer Members of the Committee to the evidence given by Simon Marr-Johnson who is a very well-known and well-respected valuer with great experience in such matters. He made it quite clear that there are very few cases where you can actually show what the position was as long ago as, say, 1948. That is certainly a case where difficulties have occurred in practice.
  I should like to draw the attention of the Committee to two other ways, which have already been mentioned, where the whole low rent test is conceptually flawed. First, a lease granted for a premium in the 1980s, after the inflation which had taken place since the rateable revaluation of 1973, was certainly never going to satisfy the low-rent requirement. Yet, almost invariably the valuable property in the flat or house passed to the lessee without any doubt at all.
  Secondly, I should mention the position since 1990, where, in London, a property will fail to pass the low-rent test where the lease was granted after 1990 if the rent is greater than £1,000 a year. No one in their right mind would suggest that a lease at a premium of £1,000 a year in central London was one in which the property passed indisputably to the lessee. That clearly rebuts any suggestion that the low-rent test achieves the desired objective of differentiating between leases which are genuine rack rent leases and those where the property passes to the lessee. For those reasons—and, indeed, for others—I support the amendments tabled by the noble Lord, Lord Dubs.
  4.45 p.m.
  Lord Hamilton of Dalzell: Perhaps I may enlighten my noble friends Lord Caldecote and Lord Coleraine on the point of view of country landowners in requiring rural areas to be exempted from this enfranchisement. One has to realise that landowners who, basically, own agricultural property only own houses by default. They have acquired such property because of the vast diminution of the number of people required to work on farms. As such, they regard such properties as part of their estates.
  A country cottage is now worth an enormous amount of money. My noble friend Lord Caldecote talked about how one could exempt dower houses or houses in the village. But how does one define village and dower houses? Our children are now perfectly prepared to go and live in a cottage previously lived in by a country workman.
  We have made all sorts of curious arrangements as landowners. I can give Members of the Committee one instance regarding a house which was enfranchised as a result of the 1976 legislation. The agent of the property who worked for a firm in London asked to be able to live in the country on the property. That was thought to be a good idea. He was given a house which was in a state of extremely bad repair and he restored it on a 50-year lease. The agent spent his entire life making arrangements regarding agricultural properties on tenant relief where the costs of the improvements are written off over a number of years. But, of course, the

  193
  enfranchisement allowed him to enfranchise so that he bought, for an absolute fraction of its worth, a cottage which was made over to him in perfectly good faith under certain arrangements to enable him to use it for his own convenience and pleasure.
  The whole business of enfranchisement in the countryside has been riddled with such arrangements which have been overturned by laws and which have disrupted the rules of contract, as my noble Lord, Lord Boardman, said. Many landowners have become extremely angry about the situation—and quite rightly so. We are considering all sorts of requirements. For example, we have people we wish to live in houses from time to time and properties have been let over periods so they would be occupied until the families needed them. However, many such arrangements have been overturned. We are enormously grateful that the Government have produced a rural exemption. Anything which tended to upset it I would resist and vote against with all my heart.
  Viscount Caldecote: I wish to respond to my noble friend. I understand that there are great difficulties here—I said that when I spoke earlier—but is my noble friend really saying that a family who have lived in a house for perhaps two or three generations should not, when the lease comes to an end, have the same sort of enfranchisement rights as someone in a London flat in the same sort of situation? Surely that is totally inequitable. I entirely take his point about the difficulties and the unfairnesses in the other direction; all I am asking is that the Government should look at this with the Country Landowners' Association, and with other people who are interested in this matter from the other side, to see whether some reasonable solution can be found to what is an extremely difficult problem.
  Lord Hamilton of Dalzell: Is not my noble friend arguing my case? If he is talking about three or four generations living in the same house, that will involve a 75 to 100 year lease, and not one of 21 years.
  5 p.m.
  Lord Lucas: The noble Baroness, Lady Hamwee, said that these amendments were about ending discrimination—of course they are not. What we are arguing about is how the discrimination should be made. We have to discriminate between properties which may be enfranchised and properties which may not. What the noble Lord, Lord Dubs, proposes is that there should be a cut off at 21 years. Any term of fewer than 21 years is not enfranchisable; any term of more than 21 years is enfranchisable. What we are proposing is that there should be one cut off at 21 years—anything below that should not be enfranchisable—and another cut off at 50 years, or thereabouts—in that case any property with a lease longer than that should always be enfranchisable—with a grey area in the middle where a property could be one thing or the other, to be determined by the low rent test.
  The noble Lord, Lord Dubs, and my noble friend Lord Coleraine spent a good deal of time going into the details of the low rent test. But that is not what the
  194
  amendments of the noble Lord, Lord Dubs, address; they do not address how the low rent test operates, they just sweep it away. They sweep away the possibility of letting properties for a term of between 21 and 50 years at a rack rent, not subject to enfranchisement. When we look at the way in which we feel the property market should develop, we think that that is unreasonable. We think that it should be possible to let properties for a term, say, of 30 or 40 years and to have those as rack rent properties. That may well be a deal which suits both sides perfectly. People may want that length of lease and be happy to do it on rack rent terms. I do not see why we should restrict the property market to the essentially artificial cut off of 21 years, and make it impossible for anyone ever to be granted a lease which is longer than that without the danger of enfranchisement.
  The noble Lord, Lord Strabolgi, said that the figure of 50 years was without foundation. In all my relatively short years as an accountant 50 years has been a figure of great significance as regards leases. Fifty years is the point at which a lease begins to depreciate. Beyond that, for longer terms, a leasehold is essentially freehold and can be treated in the same way for accounting purposes. Below that it is a depreciating asset. That is why the figure of 50 was chosen. It may not be perfect but it is a good baseline to take in terms of ordinary business practice and common sense as regards the point beyond which it is not sensible to look at the thing as being a rented property. Those are the two options which are offered to the Committee. What we have—with the patch in the middle—to my mind represents the real world rather more than the cut off at 21 years.
  If the amendments of the noble Lord, Lord Dubs, were accepted, there would obviously be some properties which had been rented at proper rack rents for over 21 years which would suddenly find themselves enfranchisable. As my noble friend Lady Gardner said, we have been provided with a list of half a dozen of these properties. I do not suppose there is a great register of these, but certainly the British Property Federation knows of half a dozen. In the list the length of lease varies from between 50¼ years and 30 years. The basic question is, what sort of structure do we want to provide for the future development of the property market? To our mind, restricting rack rent arrangements to 21 years, making it impossible to give anyone a longer security of tenure than that without risking enfranchisement, would not be good for the future of the property market.
  We have wandered on to the question of Amendment No. 254E in the name of my noble friend Lord Coleraine. With the leave of the Committee I think it right to address that now because certainly if the Question that the clause stand part was disagreed to, my noble friend's amendment could not be put. He and others have asked a number of questions to which, if I may, I shall answer in writing in order to give a proper, full and correct answer. However, I shall provide an explanation of the basis for this exclusion.
  Schedule 8, in providing for the exclusion of certain houses in rural areas, looks to those which form part of larger estates. Even if these are let on leases of more than 50 years they will not—under the Bill—be able to enfranchise unless the low rent test is satisfied. The

  195
  reason for excluding rural areas is that some landowners, for good estate management reasons, have let property on relatively long leases at market rents. In these cases the landlord fully intends to use the property in future, but because the house may be surplus for a generation or more he may have offered tenants long-term security. In some cases the landlord would have left the property empty or demolished it rather than allow it to be sold from the estate, and so would not have let it with long-term security had there been any question of enfranchisement rights arising.
  The exemption applies only to houses (not flats) in designated rural areas where the land is owned with other land which is not used for residential purposes; for example, if it is on a farm or other estate. We aim to designate the same areas as will be designated under Clause 17 for the rural exemption from the right to acquire. The case for this exemption was accepted, I believe, by the Opposition spokesman in another place, and the amendments to Schedule 8 moved by the noble Lord, Lord Dubs, do not seek to remove it. A question has been raised as to whether they are technically effective in failing to remove it. I do not have an opinion to offer on that.
  Various of my noble friends referred to Adlestrop village. I believe that a number of noble Lords have been written to on behalf of that village. I am afraid to say that the villagers have neglected to write to me. However, I am aware that it appears to be a settlement of a number of leasehold houses, let for over 50 years, some on low rents and others on rents above that limit. Because, so I understand, it is a settlement of fewer than 3,000 people and the landlord owns agricultural land, it would appear to be covered by the exemption.
  I do not believe that it would be right to remove the rural exemption merely to bring the leaseholders of Adlestrop within the scope of enfranchisement. However we frame the rural exemption, there will always be some people who look to have a good case caught on the wrong side of the line. I recognise that we are moving the line, figuratively speaking, closer to Adlestrop, but the leaseholders there who will still be unable to enfranchise will not be worse off than at present, even though there will be others who will be better off. Nothing in this Bill removes the right to enfranchise from anyone; it merely gives additional enfranchisement rights, perhaps not to everyone who wants them, but that is what it does.
  Various noble Lords have raised specific points. My noble friend Lord Cannock asked about leases which have a nil rental value. That sort of question is one which we are quite happy to look at. There may be problems around the edges of our proposed scheme. It may be possible, for instance, to solve this problem by reducing the figure from 50 years to some slightly lower figure, perhaps rather than tackling the problem in the ways he proposed. I certainly look forward to amendments at Report stage which discuss the way in which the low rent test operates, which is really what the noble Lord, Lord Dubs, and my noble friend Lord Coleraine addressed themselves to, but which
  196
  these amendments do not. We are not caught on any point of principle. We are happy to look at ways in which matters might be improved.
  There is nothing further that I need say on the amendments but I can see that I shall be asked questions.
  Lord Strabolgi: Before the noble Lord sits down, perhaps I may raise this point. I have listened with great interest to his definition of the grey area between 21 and 50 years. But do the Government believe in leasehold enfranchisement or do they not? The issue was in their manifesto at the last election, as was commonhold, on which they are supposed to be working. It never seems to come to fruition. The matter is complicated but the Government are working on it. The Government make public their belief in leasehold enfranchisement. Yet at the same time they do their best to undermine it. Between 21 and 50 years there will be little leasehold enfranchisement because the landlord will hope to get round it by an increase in the low-rent test. Therefore, that belief means very little. The period is increased to 50 years. I note what the noble Lord says. However, the Government are undermining their own policy.
  Lord Lucas: It is a matter of how one regards leases of less than 50 years. They are not normal leases to the extent that one buys a leasehold as though it were a freehold. Such leases are difficult to mortgage. They are normally sold only to cash buyers and those who can raise bank finance. They are generally found on some of the London estates and in some rural areas where they are granted as part of the management strategy for looking after a farming estate.
  Some leases may be granted at low rent in which they will be considered as leaseholds with the leaseholder having the greater part of the equity. Some may be essentially long term contracts at a rack rent, in which case the equity remains with the freeholder.
  I understand that the noble Lord, Lord Strabolgi, does not consider that the low-rent test is perfect. These amendments are not aimed at that. The purpose of the low-rent test is to discriminate between those two types within the 21 to 50 year period. I am arguing that it is right to have the 21 to 50 year period: that that is the right structure for the future of the property market. The noble Lord may argue that we should discriminate within that in a different way. Yes, we believe in leasehold enfranchisement; and, yes, we think that the principle is right. But we do not believe that there should be one single cut-off at 21 years.
  Lord Dubs: I have listened with interest to the many contributions made in the debate. Perhaps I may make a few comments.
  First, the noble Lord, Lord Boardman, referred to interference with contracts. Yes, my amendment seeks to interfere with contracts: it seeks to change the legislative basis on which those contracts were originally entered into. But I suggest that all legislation on leaseholds over recent years has interfered with contracts. A great deal of the legislation in the Bill interferes with contracts. Therefore, the concept that legislation, in the sense in which the noble Lord defines it, interferes with contracts is not a new departure; and, yes, that is what my amendments will achieve.

  197
  The noble Baroness, Lady Gardner, was surprised, given the amount of paper that we have, that there was difficulty in establishing rent values prior to 1963. Perhaps I may quote from a letter from an eminent fellow of the Royal Institution of Chartered Surveyors. As regards the working of the present system, he states:
  "I have no hesitation in saying that section 4(l) of the Leasehold Reform Act 1967 is extremely difficult to interpret in any particular case. It affects only leases starting before April 1963, so the valuer is put to proof as to the letting value of a property more than 33 years ago. Frequently I find that the County Court has serious problems in understanding the valuation aspects of a case, and more often than not, the matter goes to appeal".
  He then gives examples of cases that went to court. Later he states:
  "From time to time I am instructed to advise on doubtful cases under section 4(1); only too frequently I am obliged to include words in my report such as 'I am certain that the rent at the start of the lease was indeed low within the meaning of the Act, but I am far from certain that I would be able to prove it in court'".
  Finally he states:
  "The section works in a capricious manner, and in my opinion it often does prevent proper claims under the Act from getting through the qualifying process".
  That is one expert. It seems to me that he speaks with some authority.
  As regards the key points of difference between ourselves and the Minister, I have had a number of letters from individuals concerned with the low-rent test and the 50 year period. I shall not take up time by quoting them, but they all say clearly that there are many unfairnesses and anomalies. I am not convinced that the Minister's reasoning underlying the low-rent test is persuasive. He states that the British Property Federation provided him with six examples of rack rents on the basis of which he believes that there is a case for the low-rent test. I find that hard to accept given the evidence put forward as to the sheer difficulty of making the low-rent test work, the unfairness between one leaseholder and another, and the many anomalies. To support legislation based on six examples is not a good way forward when we have so many instances of how badly the system works.
  The Minister said that as an accountant he regarded 50 years as a key figure. My understanding is that in the property market 21 years has normally been the accepted term. If someone has a lease of, say, 40 years that is a long term commitment to living in that flat. It is not a short term commitment saying, "I'm renting this for a couple of years between living in London and elsewhere". A 40-year lease, or one of that order, is a long commitment to a specific property. It seems anomalous that a Government committed to enfranchisement of leaseholders should then say that in many instances those who have the bad luck not to have been in the property for 50 years will simply not qualify. The last legislation failed to achieve its intent given the low number of instances of anyone managing to enfranchise. The present legislation will make it even more difficult.
  I understand the technical point as to whether I have achieved in the amendments the rural areas exemption that I sought. I concede that technically the system
  198
  would not work. But it would be fairly easy for me to amend Clause 98 in such a way that Schedule 8, as amended, still stands part of the Bill and, therefore, would have the desired effect.
  The Minister gave us a small crumb of comfort by saying that he would look at some of the details. Perhaps he will give us a larger crumb of comfort by considering the comments made from all sides of the Committee and taking them into account at Report stage. That would enable us to proceed on an amicable basis.
  Lord Lucas: I always pay great attention to what is said in this Chamber and this occasion will be no exception. I have not heard sufficient today to give me clear guidance as to the way forward that the noble Lord wishes us to take if we accept our proposal that there should be a grey area, and we are talking about how the low-rent tests should work. He may wish to make his own proposals on that matter on Report.
  However, it is clear that we believe in the enfranchisement of leasehold but not the enfranchisement of people who are merely paying a rack rent. It is necessary to distinguish between the two in some way.
  Lord Dubs: I do not wish to take up the time of the Committee. We have been debating these amendments for some time. The Minister will know the arguments as to what constitutes a rack rent, and why I do not accept the principle underlying his argument.
  I wish to reflect on what has been said and read carefully the comments made so clearly in support of some of these amendments. I reserve the right to bring these issues back before the House on Report. I withdraw my opposition to the Question.
  Clause 98 agreed to.
  [Amendments Nos. 254D to 254K not moved.]
  Schedule 8 agreed to.
  Clause 99 [Collective enfranchisement: multiple freeholders]:
  Lord Dubs Lord Dubs moved Amendment No. 255:
  Page 64, line 33, after ("enfranchisement)") insert—

  ("(a) in subsection (1)(b), for "10" substitute "25", and

  (b) ").

  The noble Lord said: I hope after the length of time spent on previous amendments we can dispose of one or two subsequent amendments in less time.
  The proposition is simple. At the moment for enfranchisement to be possible in a block of flats not more than 10 per cent. of the total floor space may be taken up by non-residential activities—usually shops on the ground floor of a block. The purpose of the amendment is to increase that to 25 per cent., thereby allowing more flats to be enfranchised.
  The difficulty is that flats above shops, as one sees all too often when travelling in parts of our cities, through not being able to be enfranchised, frequently fall into a dilapidated state. The figure of 10 per cent. is pretty arbitrary. I fully accept that 25 per cent. is also an arbitrary figure; but it is a better arbitrary figure than

  199
  10 per cent. It would achieve the aim of allowing more people to be enfranchised. I cannot see any disadvantage in doing that. In the past, people who bought a flat above shops may not have been aware of the disadvantages that would follow in regard to the 10 per cent. formula. Twenty-five per cent. is a better arbitrary figure. I beg to move.
  Lord Strabolgi: I support my noble friend's remarks. I shall speak very briefly. There is surely an added reason for supporting this measure. When the late Mr. Nicholas Ridley was Secretary of State for the Environment, he very much altered the rules in relation to changing domestic property into commercial property. A great deal of domestic property that had hitherto been reserved for that purpose and not changed to commercial use was allowed to be changed. Therefore there was a sort of infiltration of commercial property into what had been domestic. That is an added reason why the percentage should be increased in line with this new form of thinking.
  5.15 p.m.
  Lord Lucas: As the noble Lord, Lord Dubs, said, quite simply a balance has to be struck between the need to encourage commercial development and the rights of leaseholders`. It is our view that the 10 per cent. rule strikes the balance in the correct place. My right honourable friend the Secretary of State for the Environment spoke eloquently at Report stage in another place about the Government's strenuous efforts to protect and enhance the position of town centres. That is where most of the flats over shops will be found and why we do not want to do anything to harm the commercial element in these developments. We do not want to place any impediments in the way of further such developments.
  It has been made clear to us that many institutional investors, on whom we depend for the continued health of our commercial property market, would have severe doubts about investing in developments where there is a risk of being enfranchised. That is not unreasonable. If you run a commercial development and you particularly want to keep the property in good repair, looking good and generally a credit to the neighbourhood so that shop people are keen to have shops underneath and people are keen to shop there, you want to be in control of what happens in the whole property. To try to manage a shop property where you do not have control over what happens above it could turn out to be a complete nightmare. The property would certainly be worth a great deal less money than if you had control over the whole block. So merely from a practical point of view we want to encourage people, when they are putting shops in town centres, to build residential property above them. We feel that that is healthy for town centres and results in healthy communities. Merely from that practical point of view we do not want to include anything in the Bill that would discourage that from happening.
  I appreciate that this will be a disappointment to some leaseholders who will be denied enfranchisement, although it is important to realise that if there is a significant element of commercial development in a block, the cost of enfranchisement will be greatly increased and many leaseholders would not be able to
  200
  afford the price. With the 25 per cent. figure that the noble Lord, Lord Dubs, uses one would expect the cost of enfranchisement to be at least doubled by the commercial property—the property would represent at least half the purchase price. We think that the potential group of enfranchisers who are effectively denied by the 10 per cent. limit is much smaller than first appears.
  I also stress that we are not leaving these leaseholders entirely unprotected against the possibility of encountering unscrupulous landlords and bad management. They will still in most cases be able to seek lease extensions under the 1993 Act, and the rights and safeguards against unreasonable service charges, including the additional provisions contained in the Bill, will apply to them as to all long leaseholders. This includes the protection against forfeiture proceedings and access to the leasehold valuation tribunal to seek a determination about the reasonableness of service charges and the appointment of a manager. If the freeholder decides to sell the block, the requisite figure for the residential floor space becomes 50 per cent. In those circumstances many leaseholders will have the right to buy their property.
  Lord Dubs: I see that the Minister is not to be persuaded. I want to reflect on what he has said. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 99 agreed to.
  Schedule 9 agreed to.
  Clauses 100 to 105 agreed to.
  Lord Lucas Lord Lucas moved Amendment No. 255ZA:
  After Clause 105, insert the following new clause—

  POWER FOR LEASEHOLD VALUATION TRIBUNAL TO DETERMINE AMOUNT OF COSTS PAYABLE UNDER LEASEHOLD REFORM ACT 1967
  (". In section 21(1) of the Leasehold Reform Act 1967 (mailers to be determined by leasehold valuation tribunal), after paragraph (b) there shall be inserted—
  "(ba) the amount of any costs payable under section 9(4) or 14(2);".").
  The noble Lord said: This amendment makes a small change to the powers currently available to leasehold valuation tribunals when they are resolving disputes over cases concerning the enfranchisement of houses under the Leasehold Reform Act 1967.
  The amendment would provide that leasehold valuation tribunals may additionally determine the amount of any landlord's costs liable under the Act to be paid by the tenant. At the moment any dispute over these would have to be settled by separate court proceedings. This change would bring the 1967 Act into line with the Leasehold Reform, Housing and Urban Development Act 1993 which gives the leasehold valuation tribunals jurisdiction to determine costs incurred in the enfranchisement and lease extension process in relation to leasehold flats. I beg to move.
  On Question, amendment agreed to.
  Lord Lucas Lord Lucas moved Amendment No. 255A:
  After Clause 105, insert the following new clause—

  PRIORITY OF INTERESTS ON GRANT OF NEW LEASE
  (". After section 58 of the Leasehold Reform, Housing and Urban Development Act 1993 there shall be inserted—
  "Priority of interests on grant of new lease.
  58A.—(1) Where a lease granted under section 56 takes effect subject to two or more interests to which the existing lease was subject immediately before its surrender, the interests shall have the same priority in relation to one another on the grant of the new lease as they had immediately before the surrender of the existing lease.
  (2) Subsection (1) is subject to agreement to the contrary.
  (3) Where a person who is entitled on the grant of a lease under section 56 to rights of occupation in relation to the flat comprised in that lease was entitled immediately before the surrender of the existing lease to rights of occupation in relation to the flat comprised in that lease, the rights to which he is entitled on the grant of the new lease shall be treated as a continuation of the rights to which he was entitled immediately before the surrender of the existing lease.
  (4) In this section—
  "the existing lease", in relation to a lease granted under section 56, means the lease surrendered on the grant of the new lease, and
  "rights of occupation" has the same meaning as in the Matrimonial Homes Act 1983."").
  The noble Lord said: This amendment deals with the treatment of third party interests binding a lease when a leaseholder is granted a new lease under the provisions of Chapter II of Part I of the Leasehold Reform, Housing and Urban Development Act 1993.
  Section 58 of the 1993 Act already provides that if a lease is subject to a mortgage, then that mortgage shall take effect against the new extended lease in the same way as it applied to the old lease. Some uncertainty has arisen about the position where there is more than one third party interest to a lease.
  New subsection 58A(1) of the 1993 Act inserted by this clause clarifies that when a new lease is granted under Part I of the 1993 Act, the interests which applied to the old lease shall apply to the new lease in the same priority as they applied to the old. New Section 58A(2) provides that this rule is subject to agreement to the contrary.
  New Section 58A(3) provides that a spouse's rights of occupation under the Matrimonial Homes Act 1983 existing on the grant of the new lease is to be treated as a continuation of the rights to which he was entitled immediately before surrender of the old lease. That reverses the result that would otherwise follow under the Matrimonial Homes Act; namely, that the rights would be treated as created on the grant of the new lease. I beg to move.
  On Question, amendment agreed to.
  Lord Lucas Lord Lucas moved Amendment No. 255B:
  After Clause 105, insert the following new clause—

  ESTATE MANAGEMENT SCHEMES IN CONNECTION WITH ENFRANCHISEMENT BY VIRTUE OF SECTION 98
  (".—(1) Chapter IV of Part I of the 1993 Act, except section 75(1), (estate management schemes in connection with enfranchisement by virtue of that Act) shall also have effect subject to the modifications mentioned in subsections (2) to (4) below.
  (2) In section 69(1) (definition of estate management schemes), for paragraphs (a) and (b) there shall be substituted—

  "(a) acquiring the landlord's interest in their house and premises ("the house") under Part I of the Leasehold Reform Act 1967 by virtue of the provisions of section IAA of that Act (as inserted by paragraph I of Schedule 8 to the Housing Act 1996), or

  (b) acquiring the landlord's interest in any premises ("the premises") in accordance with Chapter I of this Part of this Act by virtue of the amendments of that Chapter made by paragraph 3 of Schedule 8 to the Housing Act 1996,".

  (3) In section 70 (time limit for applications for approval), for "two years beginning with the date of the coming into force of this section" there shall be substituted "two years beginning with the coming into force of section (Estate management schemes in connection with enfranchisement by virtue of section 98) of the Housing Act 1996".
  (4) In section 74 (effect of application for approval on claim to acquire freehold), in subsection (1)—

  (a) in paragraph (b), in sub-paragraph (i), the words from "being" to the end shall be omitted, and

  (b) after that paragraph there shall be inserted "and

  (c) in the case of an application for the approval of a scheme as an estate management scheme, the scheme would extend to the house or premises if acquired in pursuance of the notice."

  (5) Section 94(6) to (8) of the 1993 Act (estate management schemes relating to Crown land) shall also have effect with the substitution for any reference to a provision of Chapter IV of Part I of that Act of a reference to that provision as it has effect by virtue of subsection (1) above.
  (6) In section 33 of the National Heritage Act 1983 (general functions of the Historic Buildings and Monuments Commission for England), after subsection (2B) there shall be inserted—
  "(2C) In subsection (2B), references to provisions of the Leasehold Reform, Housing and Urban Development Act 1993 include references to those provisions as they have effect by virtue of section (Estate management schemes in connection with enfranchisement by virtue of section 98)(1) of the Housing Act 1996."
  (7) In section 72 of the Planning (Listed Buildings and Conservation Areas) Act 1990 (general duty as respects conservation area in exercise of planning functions), at the end there shall be inserted—
  "(3) In subsection (2), references to provisions of the Leasehold Reform, Housing and Urban Development Act 1993 include references to those provisions as they have effect by virtue of section (Estate management schemes in connection with enfranchisement by virtue of section 98)(1) of the Housing Act 1996."
  (8) In this section, "the 1993 Act" means the Leasehold Reform. Housing and Urban Development Act 1993.").
  The noble Lord said: Previously when Parliament has given lessees the right to enfranchise, Parliament has also made provision for the former landlord to be able to apply to have some continuing degree of control over property in the area. Landlords, or a group representing tenants, may apply for approval of an estate management scheme. A leasehold valuation tribunal may approve a scheme if the tribunal is satisfied that a scheme is necessary to maintain adequate standards of appearance and amenity or to regulate development. Landlords had two years from the commencement of the legislation to apply for such schemes. So the opportunity to apply under the 1993 Act expired on 31st October last year.
  Clause 98 enfranchises a new class of leaseholders. The new clause (Amendment No. 225B) provides a further two-year opportunity for any landlord to apply for an estate management scheme on the basis that the property will become enfranchisable after this legislation. The same procedures and criteria will apply to the approval of schemes as in the 1993 legislation. Landlords will be able to mount a case for a scheme only on the basis of property which becomes enfranchisable as a result of the current legislation, although if a new scheme is granted it can apply to all property within its area. I beg to move.
  On Question, amendment agreed to.
  [Amendment No. 255C had been withdrawn from the Marshalled List.]
  Lord Dubs Lord Dubs moved Amendment No. 255CA:
  After Clause 105, insert the following new clause—

  REVIEW OF EXTENSION OF COLLECTIVE ENFRANCHISEMENT
  (".—(1) The Secretary of State shall keep under review the effect of this Part together with the Leasehold Reform. Housing and Urban Development Act 1993 on the extension of the right to collective enfranchisement.
  (2) In conducting the review, the Secretary of State shall—

  (a) consider new or better ways of exercising the right of collective enfranchisement; and

  (b) consult such bodies as he considers representative of the interests of leaseholders.

  (3) The Secretary of State shall, within a period of two years after the date on which this Act is passed, make a report of the review carried out by him under subsection (1), and shall lay before each House of Parliament a copy of the report made by him.").
  The noble Lord said: This amendment stands in my name and that of the noble Lord, Lord Meston. There is a great deal of concern about how well the 1993 Act has been working as regards enfranchisement. Concern has also been expressed this afternoon as to how well the changes proposed in this Bill will work.
  The purpose of the amendment is to ensure that within a two-year period after the Act is passed, the Secretary of State will carry out a review and will report on the way in which the measures—that is, the 1993 Act and the Bill—are working as regards leasehold matters. I share the anxiety of those who say that the last Act could not have worked well because of the small number of instances of enfranchisement that are known and that leaseholders are finding it too difficult to put into practice the provisions which the 1993 Act should have given them. I contend that they will also find it difficult to deal with the changes proposed in this measure. Let me repeat the figure that I quoted earlier. It is my understanding that 65 per cent. of leaseholders will not be able to become enfranchised because of the measures in this Bill together with the measures in the 1993 Act.
  The purpose of the amendment is to put that proposition to the test—unfortunately, only after the event—so that the Secretary of State will publish the results of a full review to see how well the measures are working. I believe that it is a sensible course. We shall then have some objective—I hope—information which will enable us to judge whether further changes are
  204
  needed or whether the fears expressed today by several Members of the Committee in relation to the Bill are borne out in the event. I beg to move.
  Lord Strabolgi: I support the amendment. The noble Viscount, Lord Montgomery of Alamein—I am sorry to see that he is no longer in his place—said rightly that the Act was not working very well. Indeed, as my noble friend Lord Dubs pointed out, there have been very few cases of leasehold enfranchisement. I understand there have been only a few dozen. Therefore, it is crucial that the Government now have a commitment to a thoroughgoing review.
  If the Government's stated intention is still to make long leaseholders the full owners of their homes, they must now commit themselves to examining how the restrictions of the 1993 Act are serving to frustrate that aim—there will be further frustrations as a result of the present Bill—and how landlords are using loopholes to deprive leaseholders of their right to buy. It is clear that leasehold as a form of tenure has not come to an end. A commitment must be given to examining how the process of enfranchisement can be made simpler, cheaper and fairer, and so allow more leaseholders to become the full owners of their homes.
  What the Government continually say they want to do, although they do the opposite in legislation, is to bring the leasehold system of this country to an end, so that we can enter into the kind of tenure that is held on the Continent and in other countries, such as Australia. It is much more successful than the old-fashioned, 19th century system which still persists in this country. The Government believe in bringing it to an end. Therefore, it is time that there was a full examination of the legislation that has been brought in during their term of office to see whether we can make further improvements and ensure that the aim to which they subscribe can be fully realised.
  Lord Lucas: I agree entirely with the noble Lord, Lord Dubs, that it is our responsibility to keep the effects of our legislation under constant review. That is especially so with such an important and complex piece of legislation as the 1993 Act.
  That is exactly what the Government have been doing. Let me explain briefly two ways in which we are seeking to achieve it. First, at the outset we established the Leasehold Enfranchisement Advisory Service. We have already discussed the value of that body in debating a previous amendment with a view to strengthening its activities. Not only has it provided an excellent advice service to leaseholders and freeholders in relation to the enfranchisement procedures, but it also has a non-political role in advising the Government about the effectiveness of those procedures. It can do that because of its contact with an enormous number of leaseholders interested in enfranchisement. It received 4,000 inquiries in 1994 and nearly 5,000 in 1995.
  It was largely at the prompting of LEAS that the Government took action in this Bill to deal with the avoidance device of the creation of flying freeholds. I can assure the noble Lord that we shall continue to rely on its very helpful and sound advice. We shall also

  205
  consult groups representing leaseholders and freeholders, as we have done in the course of the preparatory work for this Bill and during its passage through Parliament.
  Secondly, we have commissioned a substantial research project which is being undertaken by staff from Sheffield Hallam University into the experiences of a sample of leaseholders drawn from inquirers to the Leasehold Enfranchisement Advisory Service who have shown an interest in enfranchisement. That study is understandably quite a lengthy process, but I expect that a full report will be made to the department in the spring of 1997.
  In moving his amendment, the noble Lord, Lord Dubs, suggested that the 1993 Act had proved ineffective and over-complicated and that that was why so few leaseholders had made use of the new powers. He quoted a figure of 65 per cent. who cannot enfranchise. I do not recognise that figure and do not know the basis of it. Perhaps the noble Lord will write and enlighten me. The 1993 Act was brought forward on the basis of principle—hence all the qualifying conditions. It is not something that we intend to change just to get the numbers up.
  I have to admit that the Government are faced with two difficulties in trying to refute the claim that the 1993 Act has proved ineffective. First, if leaseholders do proceed to enfranchisement, then, although they may be using the provisions of the 1993 Act, they may have come to a private agreement with their landlord. The Government have no automatic knowledge of how many such agreements there have been.
  Secondly, it may be that in many cases the exact procedures of the legislation are not closely followed. The two parties form a degree of mutual trust and come to a purely private arrangement. That does not mean that the legislation has proved unsuccessful because it is quite likely that in many cases, without the knowledge of the legislative powers as a reserve, no such private deal would have been reached.
  Those qualifications apart, the evidence that we have available suggests that there is far more activity going on than many of the critics of the Act would lead one to believe. I do not wish to prejudge the results of our research project, but the preliminary results of one part of the research, which was a survey of inquirers to LEAS, indicate that of those wishing to enfranchise, 18 per cent. had completed the process. That represented 67 cases of completed enfranchisement. Further evidence has been made available from LEAS itself, which has sought information from its own list of professional advisers, principally those solicitors and valuers working in this area. This has produced evidence of 164 completed cases of enfranchisement involving nearly 1000 flats and 154 cases of lease extension. This is, of course, only a very partial survey but it does indicate considerable activity.
  There have also been 39 cases under the 1993 Act provisions where there have been disputes resolved by the leasehold valuation tribunals. Although this is not a large number in itself, the resolution of some difficult
  206
  issues, such as the share of marriage value between landlord and leaseholders, has established some important ground rules which will add a degree of certainty for prospective enfranchisers.
  I accept that the numbers we have for successful enfranchisement is not large in relation to the 1 million or so leaseholders that exist, but the Government have never claimed that progress would be rapid. For example, there are still cases of enfranchisement being completed under the original 1967 Leasehold Reform Act provisions, so it is still early days. However, we do think that the evidence we have available suggests that there is a great deal of interest about enfranchisement among leaseholders and that the level of activity is markedly accelerating.
  The provisions in this Bill will enable more leaseholders to acquire their freeholds in a number of ways and we will, of course, keep the legislative framework under close review. I do not rule out further research work being commissioned.
  I do not, however, think that it would serve any useful purpose to place a requirement on the statute book requiring such a review to take place. With the assurances I have given to the noble Lord, Lord Dubs, I hope he will feel able to withdraw his amendment.
  Lord Dubs: I thank the Minister for his reply, which is reasonably helpful. I agree with him that it would not make sense to have such a requirement permanently on the statute book. I have achieved what the amendment sought, which is a positive response from the Minister. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 255CB not moved.]
  5.30 p.m.
  Clause 106 [Payment of housing benefit to third parties]:
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 255CBA:
  Page 70. line 29, at end insert—
  (" "( ) Regulations relating to housing benefit under subsection (1)(h) above—

  (a) shall require a request for information or evidence by the determining authority to be made in such a manner and within such a period as may be prescribed, not being more than seven days from the date on which the new claim is received at the appropriate Department of Social Security office, or the designated office, whichever is the earlier, and

  (b) where it appears to the determining authority that further information or evidence is required, shall require that request to be not more than ten days from the date on which the claim is received.").

  The noble Baroness said: With this amendment we move onto the next part of the Bill dealing with housing benefit. I do not know which noble Lord on the Government Front Bench is handling it but if, as I believe, it is, the noble Lord, Lord Mackay of Ardbrecknish, may I congratulate him on behalf of these

  207
  Benches on his appointment as a Privy Counsellor which is well merited. We are delighted to be able to express this here on the first occasion on the Bench.
  Noble Lords: Hear, Hear!
  Baroness Hollis of Heigham: As this is the opening amendment on this part of the Bill perhaps I may make a few general remarks before going into what is a fairly modest amendment. We are all very worried about the future administration of housing benefit. The system is breaking down. We have very high rates of error, very high rates of fraud and a too low take-up figure with too long delays in paying out housing benefit.
  Let me look at the first of these—fraud. I will come back to this in a later amendment. Somewhere between £1 billion and £2 billion of the £10 billion paid out in housing benefit may be fraudulent, mostly paid to fraudulent landlords who invent fictitious tenants. Until recently, local authorities had to pay back any money that they recovered, which was effectively a tax on crime-busting, so they did not do so. Wisely, however, the Government have changed their policy on this and given local authorities encouragement to pursue fraud. But it requires time, it requires staff and it requires detailed information—validating the income, perhaps, of the self-employed or checking the landlord's property and the identity of tenants in a floating ethnic minority community. There is a problem of fraud and all the evidence suggests that parties on all sides of this Chamber have under-estimated the amount of fraud that is occurring in housing benefit.
  Secondly, the Government have also, in my view very foolishly, introduced changes in housing benefit which allow landlords to repossess property after eight weeks rather than after 13 weeks in arrears. The more careful the local authority is to check on fraud—and that takes time—the longer it takes to pay out a housing benefit claim, the more impatient landlords get, and the more keen they are to evict.
  To that has been added a third pressure. Housing benefit is now paid four weeks in arrears, which I can tell the Committee is really popular with landlords. It is the requirement now that when a local authority has collected all the information it needs the clock starts ticking and the local authority has to pay the housing benefit within 14 days of receiving that information. Even so, only 70 per cent. of authorities achieve the target figure of meeting 80 per cent. of the claims within 14 days. It can take weeks—eight, 10 or 12 weeks—to collect information, especially if a claimant is self-employed or the employer is reluctant to co-operate or where there is a particularly difficult situation involving hours of work that fluctuate because of part time or casual labour. In the meanwhile, the landlord gets impatient and seeks possession. If the local authority does make a payment on account and it turns out not to be justified, which I suspect may be the ministerial answer, it is very hard to recover and the local authority may well be criticised by the district auditor.
  The Government have boxed in the local authority and the tenant. We need to have the claims thoroughly checked to avoid fraud but, in so doing, it takes longer
  208
  to pay out whereupon the landlord is more likely to evict. That process is made worse by the fact that housing benefit is now being paid in arrears. All that makes the tenant increasingly vulnerable.
  What we are trying to do with this amendment—it is a very modest amendment but I felt it was right to try to state the nature of our concerns—is to reduce the time that the local authority has in order to seek additional information before the clock starts ticking. This amendment would say to the local authority, "You have seven days to request the information you need to check on this claim and beyond that you have a further 10 days for any additional information." Thereafter the clock starts ticking. We bring a sense of urgency into the system and we hope that as a result we will be both scrupulous in the handling of public money vis-à-vis the landlord, but also I hope we will protect the tenant from coming under pressure from the landlord for eviction. I beg to move.
  Earl Russell: I must apologise to the noble Baroness for my discourtesy in missing the first minute of her speech. I have agreed with what I have heard and I am happy to support this amendment for the time being.
  Baroness Hollis of Heigham: And trust me on the rest!
  Earl Russell: I certainly trust the amendment, which is what I am here to support. One extra reason for supporting this amendment is that I hope the Minister might feel that it will save us from some occasionally fruitless and vigorous exchanges across the Chamber, the last of which happened while we were engaged on the housing benefit regulations only a few weeks ago.
  Before I go any further, I take this opportunity to congratulate the Minister most warmly on his elevation to the Privy Council, which is a very just honour in which I take a great deal of pleasure.
  The trouble is that the Minister is always expressing with confidence figures about housing benefit delay which appear to those of us with experience of the subject on the ground to be absolutely incredible—particularly incredible if our experience happens to come, as mine does, from the London Borough of Brent. The reason why we have this trouble with information is that we are measuring different things. The 14 days within which the landlord of the housing benefit authority is supposed to determine the housing benefit runs from the day it receives the last bit of information. When information does not come in, it is extremely easy and sometimes correct to blame the tenant, but it is not always correct to do so. Local authorities, especially if they are cash-strapped, overcome by a flow of business or generally crippled by the weight of what they have to do—as sometimes happens, particularly in inner city authorities—simply may not get round to sending out requests for additional information.
  I believe I am right in saying that the London Borough of Lambeth discovered three sacks of housing benefit mail which had been left unopened for three months. In such a case this amendment would apply, because it would mean that the clock would start ticking

  209
  and the local authority would have to get its finger out and do something about it. It would therefore relieve a great deal of hardship among tenants whose claims are frequently delayed through no fault of their own; it would relieve the pressure on homelessness (whatever we think of Part VII of the Bill, we all agree that that pressure should be relieved); and it would relieve public funds since homelessness tends to be expensive. It would also save a great deal of often useless acrimony in debate when we are not discussing figures on the same basis.
  For all those reasons I am delighted to support the amendment; I am glad it was tabled and I thank the noble Baroness for moving it.
  The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): I thank the noble Baroness and the noble Earl for their kind words on what the noble Earl described as his pleasure at seeing me elevated to the Privy Council—a pleasure I share. I thank them for their kind words and the Chamber for its assent in those congratulations.
  Amendment No. 255CBA would require local authorities to request the information or evidence required in connection with a claim for housing benefit within seven days of that claim being made and, if they need further information, that must be requested within 10 days of the claim being received. The noble Baroness indicated 10 days thereafter. In fact, though that may be what she meant it is not what the amendment says. The amendment allows only a further three days.
  The purpose of the amendment, as the noble Baroness and the noble Earl explained, is to speed up the claims process in order to get benefit to claimants more quickly. But it may well have the opposite effect.
  Under this provision, authorities would have just two opportunities to obtain all the information needed to determine and maintain a claim. Once the seven days had elapsed, a local authority would only be able to seek further information within the next three days, giving the claimant no realistic time to reply to the first inquiry. If they failed to request any item of information within the statutory time limits, no matter how important, they would either have to do without or press ahead with a request for which there would be no statutory backing. In the event of the latter, the claimant would arguably be within his or her rights to refuse to co-operate. Faced with that dilemma, an authority could only determine the claim on the basis of the available evidence, which might result in benefit being overpaid, underpaid, or in the claim being rejected.
  And the difficulties would not end there. Once the time limits had passed a local authority would not be able to seek any further information in connection with any subsequent review of a claimant's circumstances. Instead, the authority would have to rely entirely on the claimant reporting every relevant change correctly. The consequences of such a course and the opportunities it presents for fraudulent claims are unthinkable. I am sure that that is not the outcome the noble Baroness desires; indeed, she expressed quite contrary terms. But that may be one of the conclusions if the amendment is accepted.
  210
  There are already measures in place to help speed up the claims process, including demanding targets that staff must meet in connection with the determination of claims.
  In 1994–95 local authorities determined 83 per cent. of claims within the 14-day target. Of course there must be a target of receiving all the required information; it cannot be expressed any other way and local authorities are steadily improving their performance.
  The noble Earl suggested that some local authorities may not get round to sending out for the additional information and referred to three sacks of mail waiting for three months. I am sure the noble Earl would accept that that must have been due to different circumstances and would not be a deliberate policy of the local authority or its housing benefit staff. I am sure they try to get on with the job as quickly as they can and that the benefit claim is dealt with as speedily as possible. If it is not dealt with speedily and the tenant is not able to pay his rent for some weeks or months, then the person may land in the local authority's lap as a homeless person. It is not therefore in the authority's interest to stall those decisions, for whatever reason, and it is not in their interests to be inefficient.
  We know that most claims are dealt with promptly and I am sure that there is not a deliberate intention on the part of the authority staff to delay claims. One must therefore be careful when one lays down procedures in law because they may hinder rather than improve efficient customer service.
  I hope that with that exploration of the issue of the speedy determination of claims, the noble Baroness will be able to withdraw the amendment which makes the timetable extremely tight and could act in a contrary manner to the way in which we all wish to see local authorities act.
  5.45 p.m.
  Earl Russell: I am grateful to the Minister for that careful and thoughtful reply. But I wonder whether he puts a little too much weight on the argument that it is not in the local authority's interest to delay. It is not in anybody's interest to drive too fast for safety on the road; but it does happen from time to time. It is necessary that the law should restrain it, as it properly does.
  I admit that the example of three unopened sacks was unusual. It came from the London Borough of Lambeth which for a long time has been unusual. I make no party point; it was simply an exceptional authority. But these things happen. I take the point the Minister made that there are a considerable number of targets on the local authority. Perhaps he could clarify one specific point.
  Is there a specific target on the local authority for sending out requests for information within a certain time? If not, perhaps the Minister could give an undertaking that in future there will be such a target. That may go some way to meet the point of the amendment. It is a serious point. If the Minister does not want to meet it that way, perhaps when we come back to the Bill at Report stage, he can meet the point in a different way under Clause 94 which shortens the

  211
  period for eviction for non-payment of rent from 13 to eight weeks. It would help considerably if that period were to run not from the beginning of the request from the tenant for housing benefit, but from the completion of the requests for information.
  There are a great many delays in housing benefit which run well beyond the 13 weeks. Therefore, if nothing is done, people will be evicted through no fault of their own. Though the Minister made a lot of fair points, I hope that he made them with a view to finding a better way of meeting a genuine difficulty.
  Lord Mackay of Ardbrecknish: Perhaps I can try to respond. On the last day on which we discussed these matters I tried to outline the average timetable of a potential eviction. The eight weeks may start the trigger but it takes a few more weeks before anything happens in relation to eviction. Of course, through that time, if the rent is paid, the clock ceases to tick and the process stops. The time therefore is a little more than eight weeks.
  We are not quite up against the eight weeks' barrier. A tenant having trouble getting his housing benefit agreed would have a little more time than that. But timetables work both ways. I would be reluctant to suggest an alternative to the seven and 10 days contained in the amendment, which is what the noble Earl is inviting me to do. The fact that 83 per cent. of claims are determined and paid within 14 days is important and we would like local authorities to improve on and continue to live up to that situation.
  The noble Baroness drew attention to the fact—although, I believe, not meaning it to help my argument—that if a local authority was unable to determine a claim within 14 days it is required to make a payment on account. That can be done, although on that matter the noble Baroness put in the qualification that she believes that we should remember. The irony of it is that when asked for a piece of information the tenant has four weeks in which to supply it. The timetable is quite lax, if I may use that word, on the part of the tenant, although on the part of the authorities, 14 days after the claim is certainly quite tight.
  I always contemplate what has been said in these debates. I suspect that it would be rather difficult for the authorities to run on seven and 10 days. That could have consequences in some cases which are the opposite of those which the noble Earl is looking for. It may be unhelpful rather than helpful to the tenant. I hope that with my explanation we can leave the matter and all think about what we have said.
  Earl Russell: Before the noble Lord sits down, perhaps I may ask him one further point of clarification. He quoted the figure of 83 per cent. of claims being determined within 14 days. Can he clarify—within 14 days of what event?
  Lord Mackay of Ardbrecknish: I thought I had said that. It is within 14 days of receiving all the required information—in other words, the claim being available in a way in which it can be dealt with.
  Baroness Hollis of Heigham: I hope the Minister will agree that there is a real problem here. At the very
  212
  same time that the Government are empowering the landlord to evict the tenant earlier, usually for rent arrears, they are not willing to ensure that the money with which the tenant pays the rent is getting to the tenant or the landlord speedily enough. There is a real problem here, and the result is that if we do not do something about the supply side of the money as opposed to increasing the demand powers of the landlord, we shall see more evictions and more pressure on the local authority of homelessness, which is not the tenant's fault.
  There is a problem here and the Minister must help us address it. We are not particularly fixed on the wording of this amendment; there may be other ways of going about it, including the Minister making it much more clear in what circumstances payment on account may take place. Perhaps I may give one example. A CAB in Norfolk reported on a single parent who moved into a housing association property in July and claimed benefit. By September no payment had been made and she received notice to quit, with all the worry that comes with it. In October she was threatened with court action for arrears of £683. This is a good, social-renting association. Benefit was finally paid after 11 weeks. The housing benefit department claimed that it had been waiting for information from the Benefits Agency, but there was still a month's delay even after the CAB had intervened.
  It is not necessary that this should be the particular fault of any one person. It may be a problem of getting information for part-time employees and from, say, the Benefits Agency as regards family credit and from the claimant himself. There may be some slackness in the local authority system. But by putting those factors together one is increasing the landlord's powers to evict without at the same time ensuring that the money to stop that eviction will be paid on time. As I say, there is a problem here and we hope that the Minister will help us address it. At this stage I beg leave to withdraw the amendment, but I may seek to come back to it at Report stage.
  Amendment, by leave, withdrawn.
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 255CBB:
  Page 70, line 29, at end insert—
  (" "( ) As it has effect in relation to housing benefit subsection (1)(k) shall apply so that where a claimant is entitled to income support and—

  (a) has included in the calculation of his applicable amount the pensioner, the enhanced pensioner or the higher pensioner premium, or

  (b) although not in receipt thereof has included in the calculation of his applicable amount the pensioner, the enhanced pensioner or the higher pensioner premium,

  the award of housing benefit shall be made for the equivalent period of that entitlement.").
  The noble Baroness said: This is an amendment to bring the payment of housing benefit to pensioners in line with the payment to them of other social security benefits. At the moment current housing benefit claimants have to renew their claim every 12 months otherwise they are struck off the list and the housing

  213
  benefit fails to be paid. That is obviously sensible for someone of working age whose circumstances may change significantly. They may be in and out of work or the family size may alter. It is right that there should be an automatic check and reapplication, not merely relying on the tenant to notify the authority of changes in circumstances, which might just slip the mind.
  As we know, the situation is not the same for pensioners. Their income fluctuates very little indeed, if at all. They are not in and out of work and family circumstances remain constant unless there is some major change such as the death of a husband or wife. The Government have accepted this provision in the field of income support. Pensioners are not required to sign on: they get special SPI forms. That means that income support is paid indefinitely unless the pensioner notifies the department of a change of circumstances.
  We are seeking to do the same thing with housing benefit. There will be several advantages. It will simplify unnecessary investigation and administration. It will leave the local authority free to handle the paperwork of those whose circumstances fluctuate and who need annual renewal. It will also avoid the situation where an elderly person perhaps becomes confused and fails to return the forms on time and as a result, to their surprise and bewilderment, find themselves cut off from housing benefit altogether. As a former councillor I have had to handle quite a number of such instances in which claims have had to be renewed and back-dated because a pensioner was confused by what was happening.
  Housing benefit is complicated to administer, but there is one group for whom it is relatively simple; namely, the pensioner. If it was paid indefinitely, subject to the pensioner reporting any significant changes, it will free the local authority for the more difficult and cumbersome work. It will free the pensioner from unnecessary worry and simplify proceedings. I believe it is a very useful little amendment. I beg to move.
  Lord Mackay of Ardbrecknish: As the noble Baroness has explained, this amendment would enable regulations to be made requiring local authorities, who have responsibility for administering housing benefit, to make an award for an indefinite period for those claimants and their partners who are in receipt of, or have included in the calculation of their applicable amounts, the pensioner, the enhanced pensioner or higher pensioner premium. That would mean that that group of people would not have to reapply for housing benefit at regular intervals.
  Perhaps I may put this amendment into context and, in doing so, explain why I am not content with it and would not suggest to the Committee that it take it on board. Housing benefit is awarded for a fixed period called "a benefit period". The length of that period is at the discretion of the local authority, but it is up to a maximum of 60 weeks. After that time the local authority must invite a repeat claim. Generally, the period is 52 weeks for the majority of claims. There is a simple reason for that. It accommodates things like annual rent increases and therefore the benefit is
  214
  reviewed. It is likely to pick up any annual rent increase which has been made since the last time the level of benefit was decided.
  In that way there is a formal statutory mechanism for ensuring that the benefit paid accurately reflects the applicants' circumstances, and not just their income, which the noble Baroness was concentrating on, but the rent being charged. The requirement to make a fresh claim for housing benefit applies to all claimants and not just to pensioners. It ensures that local authorities are administering the scheme correctly by paying the correct amount of benefit and thereby prevents either over-payment or under-payment building up.
  In the past we have consulted local authorities and asked them to provide evidence for improving the administrative efficiency of the schemes through adopting easements similar to that which this amendment suggests. The evidence that they provided was inconclusive. There was evidence of over-payment. Some local authorities prefer to set even shorter benefit periods than the maximum 60 weeks.
  In addition, we remain unconvinced that any administrative easement following a move to continuous awards would justify the costs involved in identifying the cases affected. Such a move may result in over-payment for which there would be subsidy implications for the local authority. Claimants may suffer because less frequent reviews of their entitlement may result in under-payment for which they would not be fully reimbursed as there is a 52-week limitation on paying arrears. So if it took a little time to pick up something that was indefinite, one could only go back for up to 52 weeks before any arrears were due.
  There are some problems here and over-payment is in the same position. People may be asked to repay money which they have long ago spent. While I understand the argument of the noble Baroness, I think that distress may be caused in the way that she suggested and the other way round because of an indefinite review, allowing a good deal of time to pass and therefore missing some change which over time has built up.
  There is no need for the renewal claim forms to be onerous. While the practice varies from one local authority to another, a local authority may at its discretion use a shorter claim form for repeat claims in order to avoid the need for claimants to repeat the same detail. I hope that local authorities that do not use this procedure will consider making use of it in order to help them and people such as pensioners who have no change of circumstance and for whom the shorter claim form may be perfectly suitable. I hope that with that explanation and some sympathy and understanding of the points that have been raised, the noble Baroness will feel able to withdraw her amendment on the basis that distress may be caused in one direction but, with indefinite payments, in certain circumstances distress may be caused in the other

  215
  direction if changes have not been picked up within 52 weeks, or the outside limit of 60 weeks, of the change occurring.
  6 p.m.
  Baroness Hollis of Heigham: I thank the Minister for his reply and sympathy. He referred to indefinite circumstances on the pension side. That applies equally to income support where the Government continue to pay unlimited benefit. I take the Minister's point about rent changes. I just wonder whether the Minister may be prepared to consider at a later stage an amendment which would allow the local authority discretion to go beyond the 60-week period. I envisage that discretion being exercised in the area of local authority tenancies covering the bulk of pensioners where the rent is entirely covered by the benefit and computers simply talk to each other. Therefore, there is no need to send out forms. One can simply make an in-house adjustment of the housing benefit claim to reflect increased rent, because all of that falls within the local authority purview. I accept that this would not cover the situation of a private tenant where the landlord's rent is a much more individual matter. Would the Minister be willing to consider extending local authority discretion so that the position of the two-thirds or so of pensioners whose housing benefit is paid because they live in council houses or flats, where none of the obstacles that he fears need arise, can be reviewed?
  Lord Mackay of Ardbrecknish: I shall have to study this matter. However, standing here and thinking about it, it appears to me that, even if it is one computer talking to another computer, a review of housing benefit is taking place. It may not require a form to be sent out and sent back, but nonetheless it is a review within the 60-week period to which I referred. If it is the wish of the noble Baroness that I look at that aspect, I see the point that she makes. If it is being done automatically by the local authorities and sending out a form has no consequence, I shall certainly have a look at that in particular. But as far as concerns the generality certainly in the private sector, I must stand where I stood earlier.
  Baroness Hollis of Heigham: I believe that we have made a little progress. With the leave of the Committee, I should like to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendments Nos. 255CBC to 255CBE not moved.]
  Clause 106 agreed to.
  Earl Russell Earl Russell moved Amendment No. 255CBF:
  After Clause 106, insert the following new clause
  (". In section 63 of the Social Security Administration Act 1992 (adjudication of housing and council tax benefit) in subsection (3) for "reviews" substitute "appeals to social security appeal tribunals".").
  The noble Earl said: This amendment provides for housing benefit appeals to social security tribunals rather than minor scale reviews. With reference to the first of the housing benefit amendments we heard how contentious some of the issues arising out of housing benefit could be and how vital they could be to some of the people
  216
  involved in them. In those circumstances, it seems that a full-scale appeal procedure may be rather useful. I hope that the Minister will consider it. I beg to move.
  Lord Mackay of Ardbrecknish: This amendment would transfer the responsibility for carrying out housing benefit reviews from an internal review by the local authority, with a right to a further review before a housing benefit review board, to an appeal to a social security appeal tribunal, though with no provision for any further appeal. The current housing benefit appeal system has two tiers: the first is an internal review by the local authority that made the original decision on housing benefit entitlement. The second is a statutorily independent review board which comprises local authority councillors.
  In 1988 the Government commissioned a report by the Social Policy Research Unit based at York University to look at ways in which the review system could be improved. It published its report in 1991. One of its major criticisms was that review boards lacked true independence because of the way in which they were constituted, but it also found very little evidence that boards were being influenced by financial or political considerations. Since publication of the report much has been done to improve the review system. My officials have issued good practice guides on each of the two stages of the review system for use by local authorities and review boards. Regulations were also tightened up to ensure that authorities dealt with a request for a review within 14 days of its receipt or as soon as practically possible thereafter. We have good reason to believe that this has led to an improvement in standards. Appeals dealt with by this means are brought to fruition a good deal quicker than appeals before social security tribunals.
  I am advised that councillors treat this responsibility very seriously. I have no reason to believe otherwise; indeed, the noble Earl made no suggestion to the contrary. If the present system works reasonably efficiently and effectively and the councillors who form these appeal committees take their work seriously and there is no evidence of any extraneous considerations creeping into their deliberations—and it is, dare I say, a relatively cheap system to run compared with the social security appeal tribunal system—perhaps we should stay with the system that we have. Currently, we are looking at the whole question of decision-making and appeals in the benefits system. In any case we will be looking at the question of housing benefit and all other benefits. I am not persuaded that we should move in the direction suggested by the noble Earl. I do not believe that the authorities would themselves welcome such a major structural change to housing benefit when there are so many other changes taking place.
  Having started off the afternoon with such good spirits, I shall not begin to tease people about not being prepared to trust councillors. There appears to be evidence, and I am so advised, that councillors take this seriously, and the training courses that are run are attended in a serious way by those councillors who fulfil the obligation. In the absence of solid proof that the system is not working

  217
  properly, I am inclined to suggest to your Lordships that we stay with the system that we already have. I ask the noble Earl to withdraw his amendment.
  Earl Russell: I thank the Minister for a thoughtful and full reply. I did not suggest any impropriety in the way that the present system was run. I have no special reason to distrust councillors, but I believe that it is proper to distrust all power and to distrust it rather more if one happens to hold it oneself than one would under any other circumstances. I make no apology for a degree of mistrust because I believe that it is only proper. I think that anyone whom one respects will expect it. There is some force in the point that justice should not only be done but should be seen to be done, and the show of independence is worth while in terms of acceptance of decision.
  But when the Minister mentioned the cost of the system he also set me thinking about what the effect of the changed programme will be over the next three years: that is, the Committee may remember, a programme for a 25 per cent. cut in the DSS running costs. Whether when that comes in everything will be working quite as well as in some places it is at present is quite another question. So we should bear that in mind as we watch the way the evidence develops over the next year. But I am certainly not going to make an issue of it tonight, so I shall accept the Minister's suggestion that I withdraw my amendment if the House will give me leave to do so.
  Amendment, by leave, withdrawn.
  Clause 107 agreed to.
  Schedule 10 [Administration of housing benefit, 8c]:
  Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 255CC:
  Page 160, line 35, at end insert—
  ("( ) For subsection (5) (agreements with other authorities for carrying out of functions) substitute
  "(5) Authorities may—

  (a) agree that one shall discharge functions relating to housing benefit on another's behalf, or

  (b) discharge any such functions jointly or arrange for their discharge by a joint committee.

  (5A) Nothing in this section shall be read as excluding the general provisions of the Local Government Act 1972 or the Local Government (Scotland) Act 1973 from applying in relation to the housing benefit functions of a local authority.".").
  The noble Lord said: With this I shall speak to Amendments Nos. 255CD and 255CE. These amendments to Schedule 10 to the Bill will make further changes to the powers in the Social Security Administration Act 1992 under which local authorities administer housing benefit and council tax benefit and the Secretary of State for Social Security pays subsidies to them in respect of their expenditure on those benefits. The proposed amendments would make good a limitation on certain of the powers in Part VII of the 1992 Act under which the Secretary of State makes his subsidy payments. They would also remove a doubt which has arisen about the powers in Part VII for local authorities to discharge another's function and how these interact with general local government legislation in England and Wales and in Scotland for such joint workings.
  Section 134 of the 1992 Act (as regards housing benefit) and Section 139, which is its equivalent for council tax benefit, empower local authorities to arrange to discharge responsibilities relating to benefits on one another's behalf. Lawyers have questioned whether these specific provisions unintentionally ousted the general provisions for such working contained in the relevant local government legislation. We had all assumed that the two sets of provisions would work together.
  Amendments Nos. 2555CC and 255CD will remove any element of doubt that in making such arrangements relating to benefits the authorities concerned are still empowered or bound by the relevant general provisions for joint working. They will also allow those housing authorities that are not local authorities to discharge their functions with others by a joint committee if they so wish.
  The problem addressed by Amendment No. 255CE concerns payments by the Secretary of State for Social Security in respect of subsidies for administration or benefit expenditure arising from such joint action. Those powers require him to make such payments to "each authority"; that is, he must in all circumstances make a separate payment to each authority. In other words, the authorities can act together but the Secretary of State must pay his subsidies to each of them separately. That is inefficient, it is out of line with what Parliament intended for the operation of the authorities' functions in those areas and it gives rise to a multiplicity of payments, authorisations, audit trails and the like.
  The problem has been highlighted for us by a joint proposal to my right honourable friend the Secretary of State from the London boroughs wishing to work together in a pilot scheme for London organised fraud teams to tackle organised landlord fraud in housing benefit. My right honourable friend has agreed to the proposals from the Association of London Government. He has made funding of up to £1 million available to get the pilot scheme going. The boroughs wish to develop the scheme with one of their number as the lead authority. That authority would take responsibility for the payment from my right honourable friend and account for it. But as matters stand he cannot meet that particular, sensible aspect of the boroughs' proposals.
  There are three lessons in that example, assuming that the pilot is successful and there is a desire to continue the scheme. First, it concerns a matter raised by agreement by the local authorities concerned. Secondly,it is aimed at dealing actively with a major and unacceptable threat to the system. Thirdly, my right honourable friend is unable to respond to it in an efficient and accountable way, the way he would wish to do.
  Amendment No. 255CE would open the way for my right honourable friend to match his payment arrangements with the voluntary operational arrangements Parliament has empowered the authorities to enter into.
  I recommend these amendments to the Committee. They are, as I said, wholly within the spirit of the 1992 Act and very much in response to what I believe everyone will welcome as a sensible initiative between my right honourable friend and the London boroughs. I beg to move.
  On Question, amendment agreed to.
  6.15 p.m.
  Earl Russell Earl Russell moved Amendment No. 255CCA:
  Page 160, line 43, leave out from beginning to end of line 2 on page 161.
  The noble Earl said: The amendment draws attention to a passage in the Bill on which I would like to hear the Minister's comments before I take my arguments very much further. This is the passage in Schedule 10 which appears to be introducing a cap on the total amount of subsidy in housing benefit that can be paid to any one local authority. In Schedule 10, paragraph 1(7) we see:
  "The Secretary of State—

  (a) shall by order specify the permitted total of housing benefit payable by any authority in any year, and

  (b) may by order specify one or more subsidiary limits on the amount of housing benefit payable by any authority in any year in respect of any matter or matters specified in the order".

  So, if I have understood this correctly—and I am not sure I have—there is an attempt to put a total limit on the amount of housing benefit to be spent in any one borough.
  There has been some discussion of such a proposal knocking about since 1994. I have in the past had correspondence with the Secretary of State about it. I thought, if I understood him correctly, that he was of the opinion that such a proposal was impracticable because housing benefit is an entitlement. It is essential to people's ability to work that it should be because one cannot work without being housed. But if there is a way of combining a strict cash limit in the form of a cap with an entitlement, then I have not seen it. If the Minister tells me that I have misunderstood this passage I shall be delighted. I look forward to hearing his reply. I beg to move.
  Lord Mackay of Ardbrecknish: I will simply do as invited by the noble Earl and explain the background to this paragraph in the schedule. Local authorities have powers to make discretionary payments in certain circumstances; for example, in cases of exceptional need where a claimant is temporarily without funds or of exceptional hardship where the maximum housing costs allowable under the housing benefit scheme do not meet the claimant's contractual rent. As discretionary spending does not receive full central government funding, the permitted total protects local authority general funds by placing a limit on that spending.
  Currently, under the provisions in the administration Act, the permitted total for any year has to be calculated by reference to benefit expenditure in that year. Consequently, authorities can only estimate at the beginning of the year, and as an ongoing process throughout the year, the extent to which they can make payments. The purpose of the express powers which the noble Earl's amendment would remove would be to allow the permitted total for a particular discretion following consultation with local authority associations to be fixed in advance of the financial year. Consequently, local authorities could manage their budgets more efficiently and the risk of inadvertently
  220
  making illegal payments would be removed. The amendment would remove this amelioration, and I must say to the noble Earl that our change has been welcomed by the local authorities.
  The noble Earl asked whether there was a total limit: no, there is not a limit. It is only a discretionary expenditure. As I said, the provisions in the schedule are beneficial to local authorities. I understand they are welcomed by them. With that explanation, I hope that the noble Earl will feel able to withdraw the amendment.
  Baroness Hollis of Heigham: The advice I have had is that we welcome the new form of the schedule. It gives local authorities additional financial protection. So, as the Minister said, I hope the noble Earl will not press his amendment.
  Earl Russell: I am grateful to the Minister for that reply. I must apologise for taking the time of the Committee. That is in part the result of the crossword method of legislation adopted in social security legislation and in part the result of the fact that we are, and remain, an amateur Chamber. When one is reading a Bill, often late at night and at home, one does not always have all one's works of reference to hand. That is the explanation of a misunderstanding for which I must offer apologies. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 255CCB:
  Page 161, line 2, at end insert—
  ("( ) In section 135 of the Social Security Administration Act 1992 (housing benefit finance), after subsection (5) insert—
  "(5A) The additional sum mentioned in subsection (5) shall include specific provision in respect of the costs of measures to prevent fraudulent claims for housing benefit.".").
  The noble Baroness said: Like the noble Earl, I find trying to piece together the movements between housing benefit and DSS legislation at times extremely perplexing. This is a more straightforward amendment. It is obviously a probing amendment at this stage. There is a serious argument here about housing benefit fraud and how central government may best help local authorities to pursue it, recover it and stop it.
  We believe that at the moment the Government's way of supporting the local authorities' tackling of fraud is in some dimensions perverse rather than helpful. I wonder whether the Minister may come to agree as we go on.
  I believe that we all accept that social security administration is, as I say, bedevilled by the three interlocked problems of unacceptably high rates of departmental error in paying out benefit, unacceptably low take-up rates of people claiming benefit in fields like family credit and a worrying and unacceptable amount of fraud in areas such as housing benefit. I do not believe that there is any division between us on that matter.
  Fraud, as I am sure the Minister will agree, is unacceptable wherever it occurs. Money claimed fraudulently is at the expense of other claimants or taxpayers. Most DSS fraud—not housing benefit

  221
  fraud—occurs where typically the claimant misrepresents his position: he claims unemployment benefit or income support when in fact he or she is in part-time work, or when the claimant, more deliberately, has acquired several fictitious identifies by accessing missing national insurance numbers and claiming benefit for all of them.
  Housing benefit fraud, however, is more complicated even than that because it involves three parties, not two: the landlord and the tenant as well as the local authority. Some housing benefit fraud is like most DSS fraud: a tenant, so to speak, falls into it. His circumstances change, he obtains some part-time work, but he does not report the changed circumstances and therefore obtains more housing benefit than he should. It is reprehensible, but in cost terms relatively minor.
  The tenant is often fairly poor and the facts are fairly easy to cross-check. It is small-scale, fairly petty stuff. I repeat, I do not defend it, but a six-month rule which applies to family credit, introduced into the housing benefit system, would, I suspect, wipe out almost all tenant housing benefit fraud. I do not know, but it would be worth looking at.
  The difficult area—this is where fraud most occurs—is landlord fraud, because for everyone's benefit the Government permit housing benefit cheques to be paid directly to the landlord rather than to the tenant, where the tenant requests it and agrees to it. Many landlords make it a condition of the tenancy that they receive the housing benefit cheque direct. A landlord may request it, perfectly reasonably, because the tenant has an unreliable record of passing on that housing benefit.
  However, equally, direct payment is a charter for cheating. The local authority can refuse to pay the landlord the housing benefit cheque only if it believes that it is in the tenant's best interests to do so. Otherwise the local authority has little discretion. For example, local authorities have little right to refuse to make such direct payments even where they may have doubts about the landlord's probity.
  Some 65 per cent. of private sector housing benefit payments are made directly to the landlord. It is within that 65 per cent. that we suspect most fraud occurs, because around that fact many rich landlords have built themselves a web of organised crime. I use those words deliberately. I repeat, most housing benefit fraud is landlord fraud. They are crimes of greed. It is widespread, organised and costly and it flourishes. The Government estimate that it costs £1 billion of the £10 billion housing benefit bill. The Select Committee of the other place estimates that it may well exceed £2 billion of the £10 billion bill—a very serious sum indeed.
  As I said, I do not defend the tenant who fails to declare some casual earnings, but by far the more serious problem is the fraudulent landlord milking the system of perhaps £100,000 a year by lying and cheating. We know that such landlords claim for tenants who do not exist. They claim for tenants who speak so little English that they cannot contradict the landlords'
  222
  claims. They claim for tenants who have moved to other properties owned by the landlord. Such fraud must be stopped.
  Let me give a couple of examples. Hackney checked 1,800 claims. It found fraud in 21 per cent. of them. What is more, it found that up to two-thirds of the managing agents were misrepresenting the claims and pulling in a fraudulent income of about £5,000 a week. Haringey in 1994–95 spent £200,000 on employing nine fraud visitors. It saved over £4 million, most of which of course went back to the DSS.
  Until recently, local authorities were under pressure to speed up their payment of housing benefit to avoid the tenant being evicted by the landlord if benefit was not received promptly while at the same time they were penalised because they had to repay to the department if they found that they had made an over-payment; in other words, that they had uncovered error or fraud. Because of the pressure on speed and the penalty for detecting fraud, it is not surprising that until recently local authorities gave priority to increasing take-up and speed and were relatively less aware and did relatively less about the scale of organised landlord fraud.
  Since 1993, the Government have wisely given local authorities an incentive to detect fraud. Each year local authorities are set a target of fraud that they are expected to identify. For savings above that figure, local authorities may keep 25 per cent. and the department recovers 75 per cent. Local authorities are, however, penalised if they fall below half their target figure which is set at some £270 million-odd this year.
  That is fine, and an improvement on the situation as it was, but the problem is that it encourages one to invest effort in tracking down fraud once payments have been made in order to keep one's 25 per cent. The system offers no incentive to invest resources to ensure that fraudulent payments are not made in the first place. Indeed, one is still penalised if one prevents fraud occurring, because then one is less likely to reach the target of fraud detected.
  The amendment seeks to address those perversities. It assumes that it is better and more desirable to have an efficient anti-fraud culture and prevent fraud in the first place than to tolerate less efficient payment of housing benefit and to detect fraud afterwards. The amendment stresses prevention rather detection. At the moment, the Government give a modest subsidy to detection. They actually penalise prevention by cutting the housing benefit administration subsidy. As a result, not surprisingly, local authorities will spend less time on preventing fraud and more time on detecting it in order to receive their reward. That is perverse.
  What is even more perverse is that those authorities which have in place efficient strategies for the prevention of fraud, and therefore which have low figures for detected fraud because there is little fraud to detect, will, under the Government's new regime, be penalised for not uncovering enough fraud.
  Chiltern District Council reported on that to the Select Committee. It had invested so much money in preventing fraud that it was not reaching its target for detection and therefore was being penalised for producing an efficient prevention strategy. That is folly.
  As I say, this amendment seeks to tackle some of those perversities. It requires the Secretary of State to make specific provision for measures to prevent fraud which would be paid to local authorities, especially in larger cities, so that they may build up specialist investigative teams; for example, to make home visits before a housing benefit application is granted; checking out whether the tenants for whom the landlord is claiming reflect the number of rooms in the property and so on.
  The Government have produced £8 million of challenge funding for fraud protection and detection. That is utterly inadequate because £5 million of that has been found by slicing off money from the housing benefit administration subsidy. New money is not being put into challenge funding. What is needed is a strong and improved administrative subsidy to prevent fraud occurring in the first place.
  I suggest that this amendment must be sensible. It will not stop all landlord fraud. Local authorities will still need other measures: for example, the ability to prosecute more readily; they should, along with decent data protection, have access to the Benefits Agency's computers and the register of national insurance numbers so that it can be checked to see whether false claims are made. Local authorities need to be able to stop the redirection of giros to false addresses and ensure that their instructions not to redirect are followed. Local authorities still need to co-operate with the Benefits Agency to overcome the hurdles of the finders/keepers rule which encourages each body to hug information to itself and not to work together to check fraud.
  If the Government really had the political will to tackle landlord fraud and to work properly in partnership with local authorities, I believe that we could see a saving not of £270 million but of £500 million or more per year. This amendment is just a beginning. But it would encourage local authorities to seek to prevent fraud—at the moment, they are penalised for it—as opposed to merely rewarding them if they detect it after fraud has occurred.
  If the Government reject this amendment, we can only conclude that they are soft when it comes to housing benefit fraud committed by landlords, who do so out of greed, while they are harsh on income support fraud which is committed by smaller people who are often doing it out of need, ignorance, illiteracy or error. I beg to move.
  6.30 p.m.
  Earl Russell: The objective of this amendment is clearly sensible. Prevention is obviously better than cure. If this amendment contributes to prevention, then it may be useful.
  I am not quite certain that if the Minister were to reject the amendment, he would do so for any improper motive. There may be all sorts of technical reasons why
  224
  it might not be useful, to which I should listen with interest and care. But I cannot pronounce on that until I hear his reply.
  I also recall the noble Lord, Lord Boyd-Carpenter, who I regret is not at present in his place, asking the noble Viscount, Lord Astor, who was then where the Minister is now, how he could know the amount of undetected fraud. The noble Viscount said that, of course, it could only be an estimate. For the time being, all estimates must remain provisional. The disagreement between the Government and the Select Committee on the amount of benefit fraud involved is conjectural and must remain so until we have solid evidence on that.
  It is clear that we are all in favour of preventing fraud whenever we can do so. I hope that it is clear also that we are all agreed that because fraud is a crime, it must be proved beyond reasonable doubt. There is always a risk, especially when you find something which may fill a hole in Treasury projections, when a very tight financial argument is in progress, that there should be controls and suspicion.
  I take the point about incentives, but incentives can be overdone. I have recently read the Government's reply to the Select Committee on this subject. In paragraph 71 of that reply, the Government expressed considerable doubt about the Select Committee's proposal that there should be incentives to prosecute fraud because they thought that that might tend towards a perversion of justice. On that, I feel some sympathy with the Government and, indeed, I may tell them that there is legal authority for their position in a ruling of the judges in the year 1604 which is, I understand, still good legal authority. I agree with the thinking behind it.
  The noble Baroness said a good deal about the situation in Hackney. I am not certain what is the situation in Hackney, and I believe that we would be wise not to be too certain on that point.
  The proposal for a team to visit and check whether a tenant in fact exists is sensible. The suggestion that that cannot be financed unless money is made available to finance it is sensible. But I hope that we shall avoid leaping to conclusions that there is a certain amount of fraud or that we should reward prosecution for fraud in a way which might diminish respect for justice. We have more than one objective here and I hope that we shall remember all the objectives.
  Lord Mackay of Ardbrecknish: As the noble Baroness explained, this amendment would require the Secretary of State to identify a specific sum of money for local authorities' fraud prevention measures. The purpose is to encourage local authorities to do more to combat fraud. I am sure that we all support that and indeed, at the risk of embarrassing her, the noble Baroness may find that all three Members of the Committee who have taken part in this short debate are absolutely four-square on the prevention of fraud in the whole social security system and in the housing benefit system in particular, which we are discussing today. Indeed, there appears to be a considerable amount of that fraud and I shall return to that point later in my speech.

  225
  But we do not believe that the amendment is the best way in which to proceed and to achieve further gains in the fight against fraud. As the noble Baroness knows, I never try to make anything of defective amendments but the amendment is defective. However, my case does not rest on that.
  Local authorities have a statutory duty to protect public funds, including housing benefit. But we think that this amendment would tie the Secretary of State's hands in meeting authorities' efforts to combat fraud. The provision of a specific sum to meet the cost of measures to prevent fraud is contrary to our general approach, which is to pay subsidy according to the results achieve. The amendment would pay for anti-fraud work but we prefer to pay for the results of that work. Therefore, the amendment calls into question the method by which the benefit subsidy mechanism works which, as I say, rewards authorities by allowing them to share in the weekly benefit saving which they achieve.
  The noble Baroness made some play on the point that we may be spending more on detecting fraud rather than on preventing it. I understand that point, but I hope that I shall be able to explain to her that her fears on that score are groundless. She postulated an authority which had taken such effective anti-fraud measures that in fact no fraud was attempted in that area. I do not think there is any evidence that any local authority is yet in that happy position.
  Baroness Hollis of Heigham: I quoted the specific authority, Chiltern District Council, which gave evidence to the Select Committee which showed that it would struggle to meet half the target figure, at which point it would fall into areas of penalty, even though auditors had showered praise on the council, and the like, for its ability to stop fraud. It was being penalised for what it believed to have been a very effective strategy to prevent fraud rather than to detect it. Had the council not invested in preventing fraud, but instead let it occur and then detected it, it would perversely have been rewarded.
  Lord Mackay of Ardbrecknish: I thought that that was what the noble Baroness was saying. I preface my remarks by saying I suppose one can either stop the fraud happening by detecting it when the claim comes in and before the claim is paid or one can detect it once the claim is in payment. The position is that both count as a form of reward to the local authority. If the claim has gone into the local authority and in the course of processing it is discovered to be fraudulent, even before it has come into payment, then the saving is, so to speak, chalked up and the local authority receives part of the benefit of the saving in reward, and of course we do, as central government, by not having to pay all that money out in benefit.
  The noble Baroness is not quite right when she says that there is no reward to a local authority which runs the system and detects and stops the fraud before any money is paid out. As I understand it, that is allowed
  226
  for in the situation in this country. Indeed, in the last financial year almost 90 per cent. of authorities earned additional subsidy for their anti-fraud efforts.
  We accept that there is a role for special measures in the anti-productivity of local authorities. That is why the Secretary of State has focused his recent strategy on rewarding local authorities for their anti-fraud efforts. The recent government amendments to pay subsidy to one authority on behalf of a group of authorities provide the flexibility that we are trying to achieve. Indeed, the Committee accepted those amendments without any debate because we are all agreed on the objective, and the amendment passed earlier this afternoon builds on the measures that we have already introduced.
  In 1993 my right honourable friend the Secretary of State introduced a financial incentive scheme for the detection of fraud. Savings have increased from £92 million in 1993–94 to £171 million in 1994–95. Figures for 1995–96 are expected to exceed £200 million. The scheme for 1996–97 has been stiffened still further, with greater rewards for high performing authorities and tougher penalties for those who are failing in their duty to protect public funds—a kind of carrot and stick approach.
  The noble Earl asked what I always think is a pertinent question: how much fraud is there—how many people are smuggling things into the country, as I was asked the other day—and how many people are claiming benefits? The truth is that people are not putting up their hands and indicating that they are doing any of these things; otherwise they would be fairly easy to measure. The Government have taken their figures from a fairly detailed benefit review of fraud and the correctness of major social security benefits which we undertook between September and December 1994.
  We had over 200 specially trained investigators and they took a random sample of customers: 3,000 unemployed, of which 1,000 were on income support only; 1,000 on income support and unemployment benefit; 1,000 on unemployment benefit only; 1,000 lone parents; 1,000 pensioners; 1,000 disabled, and others. The investigator undertook a full investigation of the clerical records and computer records that we hold. He carried out an unnotified visit to the customer's home, so if the house was not there or the tenant was not there it was as sure as night follows day that one kind of fraud was detected without any doubt. He verified the customer's identity and probed all the details held to verify income, savings and so on. It is from that very detailed investigation that we have arrived at the rough figure—and it can only be a rough figure—of £1 billion in housing benefit fraud.
  The Select Committee in another place, on the basis of one person's evidence from one London borough and then a piece of extrapolation, thought it might be up to £2 billion. I have explained from where we got our £1 billion. It was not conjured up out of the air; we undertook a fairly detailed study in order to come to these conclusions. Whether it is £1 billion, as I suspect it is, or £2 billion, as the Select Committee suggested it is, one sure thing is that it is all wrong. As the noble

  227
  Baroness said, it is either money that the taxpayer could be saved or money we could spend on the benefit system elsewhere.
  We have undertaken several new fraud initiatives. Perhaps I could briefly spell them out to the Committee in suggesting that they are the best way to go and not the way suggested in the amendment by the noble Baroness: £1 million has been made available to fund and train specialised teams to crack down on organised housing benefit fraud across London. The fact of the matter is that this is a crime which is a good deal easier to commit in the anonymity of a big city—especially a city like London, which is extremely large—than it is in the country, in small towns and villages.
  A housing benefit data matching service is to be set up next month to detect fraud and inconsistencies in claims. That is an important step forward. The noble Baroness mentioned that £8 million has been set aside via a challenge fund for innovative anti-fraud work. A study is taking place into the costs and benefits of a unified housing benefit computer system. The Department of Social Security and local authorities are working together to draw up a verification framework to prevent fraud getting into the system in the first place. Lastly, a rolling campaign of increased anti-fraud activities, headlined Spotlight on Benefit Fraud, has been operating at various locations across the country throughout the spring and summer.
  That Spotlight on Benefit Fraud is undoubtedly bringing in considerable dividends, not just on housing benefit but across the whole benefit area as people report suspicious circumstances, circumstances in which they think someone is making fraudulent claims. They range all the way from, as the noble Baroness said, people forgetting that their circumstances have changed, or owning up to the fact that their circumstances have changed, to pretty major frauds such as the one the Committee may have read about in the papers yesterday and today of the lady who was using—it seems doubly indecent to be doing this—the birth certificates of dead children in order to perpetrate a major fraud on British taxpayers.
  We are taking this matter very seriously indeed. A great deal of anti-fraud work is under way across the whole field and particularly with regard to housing benefit, but I do not believe that the amendment produced by the noble Baroness today would secure an increase in fraud activity. The methods we are using and the investigations we are undertaking are the right way to go about it. With that explanation of what we are doing, and total endorsement of the point made by the noble Baroness that we are out to crack down on people who think they can perpetrate this kind of fraud, I hope that she will be able to withdraw her amendment.
  6.45 p.m.
  Baroness Hollis of Heigham: I thank the Minister for that reply. As he made clear, it is certainly not a party issue and we welcome the Government's initiatives. Like him, I think the local authorities would be the first to admit that they too are not able precisely to estimate the scale of fraud.
  228
  I would like to correct something the Minister said. He gave the impression that the figure of £2 billion that I was quoting, drawn from the report of the Social Security Select Committee, was based on one officer from one London borough. On the contrary, he was the head of a team operating across and speaking for all the London boroughs. Therefore, far from this being a single, one-off, eccentric figure which could not be multiplied or extrapolated from, it represented all London boroughs. The more we explore the matter, the more evidence comes to light from similar large cities—and the Minister was right to focus on that aspect—which suggests similar levels of deception. I believe that the Minister would be advised to take the figure of, perhaps, £2 billion reasonably seriously. All the evidence coming in suggests that the figure of £1 billion may be far too low.
  My second point concerns the technicalities of financing. As part of their initiatives, the Government listed challenge funding of £8 million. That is silly. The Government have top sliced £5 million off the existing administration subsidy of local authorities and put it into a pot with only £3 million of new money to hid for. Therefore, it means that the general level of everyone's administrative subsidy has been depressed and a few lucky authorities which bid for it will get a little more. That is batty; it should actually be the other way around. This is not an area in which it makes sense to top slice off the general administrative subsidy for the, perhaps, less efficient authorities, and thereby discourage them from doing more work, while giving more money to the few that are in a position to bid and compete for it, which will tend to be the better organised authorities.
  If we are to have challenge funding, it must he new money. It would be far more sensible to combine that with a strengthened administrative grant, separately identified as the Audit Commission recommended. I hope that the Government will look more thoroughly at the matter. Nonetheless, the general point remains: what the Government are currently doing—and I am not criticising this aspect—is to reward to a modest degree those local authorities which detect fraud in the process of paying out, or after payment has been made. I do not criticise that; indeed, I believe that to be both sensible and welcome.
  However, in addition there must be a more positive incentive for local authorities to create an anti-fraud culture in the first place to prevent it occurring. All the evidence suggests that local authorities which have created that culture so that landlords never make fraudulent claims (because they know they are likely to be prosecuted and the like) may now struggle to reach their targets of detecting fraud because they have prevented it and, therefore, may find themselves penalised.
  Nothing the Minister said in his response has answered that basic perversity—namely, that if an authority is successful enough at preventing fraud it is then penalised for not detecting it. I can assure the Minister that I am correct in that respect. I see that the Minister shakes his head. In that case, perhaps the noble Lord would like to write to me and explain to me exactly where I have misunderstood the system. Certainly my

  229
  advice from the local authority associations which are at the sharp end of the spectrum believe that to be the case. Therefore, I hope that the Minister takes what we are saying very seriously. We all want to see fraud eradicated, but, while the Minister has done part of that by encouraging and rewarding local authorities for detecting fraud, he is not doing enough to prevent fraud occurring. Moreover, he will be actively penalising those authorities which fail to reach half their target figure. I see that the Minister wishes to respond.
  Lord Mackay of Ardbrecknish: Of course I shall look into the matter and, if I believe there is anything to be said, I shall certainly write to the noble Baroness. However, our experience is that authorities which undertake the most thorough checks and verification on claims are often those which achieve the best savings from their anti-fraud work.
  Baroness Hollis of Heigham: There is no disagreement between the Minister and myself on that point. It is clear that those authorities which have been rewarded for detecting fraud are those which have detected fraud most successfully. Indeed, that is true by definition; it is a truism. However, I am concerned about the other end of the equation; namely, where authorities have been successful at preventing fraud occurring in the first place and where, therefore, there is no fraud to detect. In such cases, authorities may be penalised for not reaching their targets.
  Having said that, I believe that we have made our point. I hope that the Minister will look into the matter because all of us are extremely worried about it; indeed, that applies both to local authorities and to taxpayers. The Government really must review their method of supporting local authorities in seeking to prevent as well as to detect fraud. At present the Government are sending out perverse and contradictory signals, which cannot be in anyone's interest. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 255CD:
  Page 161, line 10, at end insert—
  ("( ) For subsections (4) and (5) (agreements with other authorities for carrying out of functions) substitute—
  "(4) Nothing in this section shall be read as excluding the general provisions of the Local Government Act 1972 or the Local Government (Scotland) Act 1973 from applying in relation to the council tax benefit functions of a local authority.".").
  On Question, amendment agreed to.
  Earl Russell Earl Russell moved Amendment No. 255CDA:
  Page 162, leave out lines 28 to 31.
  The noble Earl said: In moving the above amendment I shall, with the leave of the Committee, speak also to Amendment No. 255CDB. The amendments refer to two related points about drafting but, nevertheless, they are important. I shall read some of the words in the legislation that I propose to delete so that Members of
  230
  the Committee will be able to understand what is worrying me. New Section 140C(1) to the Social Security Administration Act 1992 says:
  "Subsidy shall be paid by the Secretary of State in such instalments, at such times, in such manner and subject to such conditions as to claims, records, certificates, audit or otherwise as may be provided by order of the Secretary of State".
  If those words do not say that the Secretary of State may do whatever he likes, then I do not know what they mean.
  So far I have made a perfectly conventional point, but what has begun to interest me is the effects on the relationship as regards the legislature, the executive and the judiciary of drafting legislation in that manner. I say that because a Secretary of State to whom those words are applied is, I believe, effectively entirely freed from statutory restraint in relation to the power there described. In fact, he is put back in the position that the executive was in before Parliament first evolved of not being controlled by parliamentary statute because it was used to freedom from control.
  However, nature does abhor a vacuum. People do attempt to control power, so the natural result of leaving power thus unfettered by statute is that the only way it can be controlled is through judicial review. In speaking in a debate on 5th June my noble friend Lord Rodgers of Quarry Bank offered statistics for applications for judicial review. He said that in 1976 there were 500 applications, but that there were 3,000 in 1993.
  I have many times heard the blame for that rise in applications being placed on the judiciary, and I have many times heard it being placed on the executive. The question I want to raise is: if we draft legislation which leaves Secretaries of State that free from statutory restraint, ought we not to desist from blaming either the judiciary or the executive? Indeed, should we not really be blaming ourselves? I beg to move.
  Lord Mackay of Ardbrecknish: When I looked at the content of the noble Earl's amendments I suspected that the argument we have just heard would indeed be the one put forward. Perhaps I may tell the noble Earl that I am not entirely sure that the Secretary of State is given such unfettered powers by virtue of the two new subsections. In fact, they are fairly well defined: they refer to the subsidy, the instalments and the times that he should pay them in, and so on. They also refer to the,
  "claims, records, certificates [and] audit",
  that he might require in order to satisfy himself that public money is being properly spent.
  I am well aware that the noble Earl is always suspicious—I nearly said rightly suspicious—of the executive asking Parliament to give itself lots of power. If the noble Earl is worried about these two minor pieces of legislation I invite him to look at a clause passed in the other place only yesterday which is winging its way to this Chamber and which, I believe, gives a Henry VIII power to at least one of my clan of considerable breadth and scope. However, that is another matter.
  Perhaps I may tell the noble Earl what those two subsections are about. I hope he will then be persuaded that it is not unreasonable—and, indeed, that it is in the

  231
  interests of good government, both from our point of view and that of local authorities—that we should have such powers.
  Local authorities are currently required to submit estimates before and during the course of the year on the basis of which payments on account of subsidy are made pending the receipt of a final audited claim after the end of the financial year. The provision at Schedule 10 for subsidy to be paid by instalment is intended to put the payments on account of subsidy on a statutory basis so that they are local authorities' by right rather than an exercise of discretion. If such payments were not made, an unacceptable burden would be placed on local authorities' budgets and cash flows.
  Apart from denying authorities the right to receive subsidy in advance of incurring benefit expenditure, the amendment would also remove the power to require authorities to submit a claim for subsidy, to have it audited, to keep records and otherwise satisfy the Secretary of State as to the propriety of their claim for subsidy and the awards of benefit on which it is based. I suggest that the latter is obviously unacceptable as there would be no check on the accuracy of the claim or the propriety of the expenditure incurred. In the interests of both local authorities and the public purse I hope that the noble Earl can see the merits of new Section 140C(1).
  Turning to new Section 140C(2), there are often cases where local authorities submit inaccurate or incomplete claims for subsidy which are qualified by auditors. After inquiry as to the reason for the inaccuracy, or after these claims have been qualified by the auditors, it may transpire that it is not possible for the matter to be properly quantified. Generally there is no real doubt that the local authority has incurred proper expenditure, even if its precise extent is open to question. The accepted, although infrequent, practice in these cases is for the Secretary of State to employ his powers of estimation in order to resolve the matter. The amendment, by removing the power to estimate subsidy, would leave no alternative but to withhold or claw back any subsidy for expenditure which cannot be properly quantified by auditors, or where a claim is incomplete.
  I believe that it is in the interests of local authorities and local council taxpayers who would ultimately fund and subsidise benefit expenditure that the Secretary of State should retain powers to estimate subsidy. Therefore I do not believe that the Secretary of State is being given fairly unfettered power here, entirely free of any restraint. New Section 140C only fills out duties which are set out in new Sections 140A and 140B. I believe that is the way we have to proceed in order that we can set up a reasonable administrative system for paying these subsidies in a sensible way without—dare I say?—cluttering primary legislation, and without the problem of having to come back for primary powers when we need to make changes of a fairly minor nature for administrative reasons. I hope with those remarks and assurances the noble Earl will feel able to withdraw his amendment.
  7 p.m.
  Earl Russell: I am grateful to the Minister for that reply. He has perhaps inevitably taken the amendment in a somewhat literal manner. He has taken it as an attack on the existence of a power of any sort, whereas in fact my concern was rather with the drafting. I put it down in this form to probe the drafting because I had no intention of putting it to a Division. The Minister must by now have read the report of his noble friend Lord Renton on the preparation of legislation. I am fully in accord with the general arguments of that report. One could perhaps have said that subsidy should be paid in a reasonable manner and subject to audit, which would have been a general statement of principles by which the power was governed, and which would then be subject to interpretation by the courts. The courts would have had something to bite on. But in this drafting I really do not see what the courts can bite on, especially with the addition of the words "or otherwise".
  In all the Minister said, I heard no justification at all for including the words "or otherwise". It is this full and fussy drafting which at the same time does not actually create any restriction which may be judicially investigated, which is giving me considerable cause for concern. Even if we were going to have a power, it could have been drafted a great deal better than it is here. This type of drafting invites judicial review. However, I shall not solve that problem at this time of night. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 255CDB not moved.]
  Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 255CE:
  Page 163, line 28, at end insert—
  ("Financing of joint arrangements.
  140DA.—(1) Where two or more authorities make arrangements for the discharge of any of their functions relating to housing benefit or council tax benefit—

  (a) by one authority on behalf of itself and one or more other authorities, or

  (b) by a joint committee,

  the Secretary of State may make such payments as he thinks fit to the authority or committee in respect of their expenses in carrying out those functions.
  (2) The provisions of sections 140B and 140C (subsidy: calculation and supplementary provisions) apply in relation to a payment under this section as in relation to a payment of subsidy.
  (3) The Secretary of State may (without prejudice to the generality of his powers in relation to the amount of subsidy) take into account the fact that an amount has been paid under this section in respect of expenses which would otherwise have been met in whole or in part by the participating authorities.").
  The noble Lord said: I have already spoken to this amendment. I beg to move.
  On Question, amendment agreed to.
  Schedule 10, as amended, agreed to.
  Clause 108 [Functions of rent officers in connection with housing benefit and rent allowance subsidy]:
  Earl Russell Earl Russell moved Amendment No. 255CF:
  Page 71, line 2, leave out ("specified in the order in connection with") and insert ("required for the purpose of determining").
  The noble Earl said: This is another drafting point. This is another case where the Secretary of State seems to me to have been given extremely wide powers which cannot really be judicially controlled. Clause 108(1) states:
  "The Secretary of State may by order require rent officers to carry out such functions as may be specified in the order".
  I wonder whether one could tighten that by including a purpose requirement, and state instead,
  "required for the purpose of determining housing benefit and rent allowance subsidy".
  That, again, would fit the principles of drafting which would allow a statement of general principle which could be made the subject of some judicial control.
  Similar points apply to the second amendment in this group which concerns our old friend, transitional provision. The noble and learned Lord, Lord Simon of Glaisdale, will doubtless remember the first regulations under the Child Support Act where major provisions were changed under the transitional provision and held to be transitional simply because the Minister had changed his mind. For some time afterwards the noble and learned Lord queried the word "transitional" every time it appeared in a Bill.
  All I really want to know here is exactly what the Secretary of State can do under these transitional powers, and why he needs to have such transitional powers as appear to him "to be desirable" rather than such transitional powers as are necessary for a particular purpose. Because, after all, as Dr Faustus knew, we can all desire powers for all sorts of purposes, but it is not always good for us to have them. I beg to move.
  Baroness Hamwee: I support my noble friend on this amendment having teased him on a previous amendment when I said that it could have been even worse and could have referred to matters "otherwise howsoever". At least the draftsmen did not go quite that far. I hope the Minister will explain the relationship between subsections (1) and (2) of this clause. Subsection (1) gives powers which appear to be a matter of discretion. Without prejudice to those, subsection (2) suggests some of the provisions that may be contained in the order. Will the Minister also explain—and I hope confirm to the Committee—that the Secretary of State must act reasonably in specifying matters in an order under this clause?
  Lord Mackay of Ardbrecknish: The final question of the noble Baroness is easy to answer in that my right honourable friend always acts reasonably. In the case of the provisions we are discussing he has to act in regard to housing benefit and rent allowance subsidy. Clause 108 replaces Section 121 of the Housing Act 1988 which enables the Secretary of State to make an order requiring rent officers to carry out certain functions in connection with housing benefit and rent allowance subsidy. Since 1989 rent officers have reviewed all deregulated private sector rent allowance cases to check that the amount of rent being covered by housing benefit is reasonable. Clause 108 would provide a new statutory basis for this work.
  234
  From 2nd January 1996 a prospective tenant has been able to apply, with the landlord's consent, through the local authority, for a pre-tenancy determination. This enables the prospective tenant and the landlord to find out the likely level of rent which will be eligible for housing benefit purposes before the tenancy is agreed.
  Clause 108 extends this existing power to allow the Secretary of State to make an order to allow a prospective landlord to establish, in advance of offering the tenancy, the level of rent which housing benefit is likely to meet if a housing benefit claim is made in respect of that tenancy. It will make it possible for landlords to obtain a pre-tenancy determination for housing benefit purposes without involving a prospective tenant.
  The effect of the noble Earl's amendment on the face of it would be to limit the functions that a rent officer could undertake under Clause 108 to those which were required only for the purposes of determining housing benefit. This seems directly to contradict subsection (2) of the clause which allows a prospective landlord to apply for a pre-tenancy determination. The result would appear to be that rent officers would be prevented from carrying out pre-tenancy determinations for landlords and probably also for tenants since these would relate to prospective tenancies which, although likely to result in benefit claims, may not always do so.
  The fact that tenants have been able to apply for pre-tenancy determinations has been widely welcomed. It enables the tenant and his landlord to know how much of the proposed rent is likely to be met by housing benefit before the tenant commits himself to the tenancy. Clause 108 seeks to allow landlords to discover this information without having to have a prospective tenant lined up. I believe that these provisions are a positive step forward. From the noble Earl's remarks, I did not detect objections to the policy in principle. I detected a feeling, as usual, that he was unwilling to see the Secretary of State granted the powers via secondary legislation.
  Amendment No. 255CG would prevent the Secretary of State from making any transitional, incidental or supplementary provisions to an order made under the powers conferred by Clause 108. The transitional provisions in any benefit change are sometimes the most difficult and can cause the greatest problems for the administration. By and large, we are all agreed that as regards making benefit changes it is important to have some transitional protection for those people whose benefit may be changed, sometimes adversely. We believe that in general it is fair to make transitional protection. Therefore provisions such as those in this clause are not unusual in social security legislation.
  I realise immediately that that will not be considered a defence by the noble Earl, but I thought that I would slip it in as quickly as I possibly could, while accepting that it may not allay his suspicions. However, there may be cases where the rules are changing and there is need to make special provisions which arise at the point of change when such change has to be made. If we do not have these provisions, unforeseen hardship or inequity could result. The fact that the hardship or inequity is

  235
  unforeseen makes it important that transitional provisions should be given to my right honourable friend the Secretary of State—indeed, to any Secretary of State. I do not believe that it would be right to prevent such flexibility. It is a common enough feature of such order-making powers. I hope that the noble Earl is not about to tell me of recent instances when the power has been abused. Therefore, I hope that I am on fairly firm ground in saying that there is nothing unusual and nothing underhand about this subsection. It seeks to ensure that such changes are made in as fair a way as possible.
  While I realise that the noble Earl may be reluctant to accept my assurances on these matters—his suspicion of this kind of legislation is well known—I hope that he will feel able to withdraw the amendment.
  7.15 p.m.
  Earl Russell: I thank the Minister for that reply and my noble friend Lady Hamwee for a crucial contribution.
  I am glad that the noble Lord, Lord Irvine of Lairg, is now in the Chamber. The amendment arose from thoughts following a debate which he initiated in this House on 5th June. The noble Lord will remember that we discussed the growth of judicial review. Since he was not present at the beginning of these exchanges, perhaps I may explain that I was concerned with the reasons that judicial review has increased. I suggest that one reason is the style in which legislation is drafted. Where one has a power which says that the Secretary of State may carry out such functions as may be specified, or that he may have such transitional powers as may appear to him to be desirable, it is difficult to control his powers by the use of statute. As my noble friend Lady Hamwee crucially pointed out, the only way that one can control him is to require him to be reasonable. Instead of sending him to Coventry, one sends him to Wednesbury. It is the only penalty we have available. I seek to suggest that this style of drafting is a substantial reason for the growth of judicial review.
  The Minister was quite right. I have no objection to the policy intention. In fact, I believe that I was the first person to ask in this House for pre-tenancy determinations. I am grateful to have achieved them. However, I wonder whether yet again I can ask the Minister to consider the principles of drafting set out in the Renton Report: the statement of the general principle whose interpretation may then be tested by the court. We might then return to having our cases on statutes instead of searching for the town of Wednesbury. However, in the meantime, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 255CG not moved.]
  Clause 108 agreed to.
  Earl Russell Earl Russell moved Amendment No. 255CH:
  After Clause 108, insert the following new clause—

  HOUSING BENEFIT: DETERMINATIONS
  (". In section 5 of the Social Security Administration Act 1992 (regulations about claims for and payments of benefit), after subsection (1)(r) insert—
  236
  "(s) for enabling requests for reasons for a determination affecting a claimant for housing benefit, and for a review of such a determination, to be made by an agent for the claimant." ").
  The noble Earl said: The Committee will be relieved to hear that this amendment has nothing whatsoever to do with drafting. It is concerned with the use of agents to ask for determinations for housing benefit or to request a review on behalf of the claimant. There are many reasons why claimants may not be able to do that themselves. They may be extremely old or infirm; they may be ill; or they may have language difficulties. In all those situations, it may be easier for the claimant and the administrators, and, indeed, cheaper, quicker and more comfortable for all concerned, if the use of an agent is allowed. That may also apply for people with learning disabilities or with difficulties in communication.
  I believe that it is a practical proposal. I hope that the Minister will consider it. I beg to move.
  Lord Mackay of Ardbrecknish: Procedures are already in place to facilitate the arrangements which are the focus of this amendment. We in the Department of Social Security are not aware that these arrangements create difficulties for those who use them. Therefore I hope that the noble Earl can see that the amendment would mean an unnecessary addition to the statute book.
  The appointment of an agent to deal with a specific issue arising out of a person's claim for benefit is a long-standing feature of the social security system. Typically, an agent may be appointed to collect the claimant's benefit payments if, for example, he or she is unable to get to the post office themselves. Where the issue in question is the basis on which a determination has been made or the scope for a review of that determination, the relevant information may be provided to a third party if the claimant consents. Where the request is made under the aegis of a reputable organisation such as a citizens advice bureau or a trade union, consent on the part of the claimant is assumed. In housing benefit, requests for a statement of reasons or review by an agent or representative simply have to be countersigned by the claimant. So there is no great bureaucratic structure surrounding the treatment of a representative whose aim is the resolution of a particular area of concern to the claimant. The aim is, of course, to sort out any problem to the satisfaction of the claimant while minimising the administrative burden on all concerned.
  Where a person is unable to act on his or her own behalf through mental incapacity or some other cause, as in the case raised by the noble Earl, the Secretary of State has power under Section 5 of the Social Security Administration Act 1992 to deal with the problem. Regulations made under that power provide for a person to be appointed to act for the claimant. In such circumstances, the appointee stands in the shoes of the claimant in all respects. I hope that helps to address one of the issues raised by the noble Earl.
  I am not sure whether the noble Earl has any specific problems. If he does, we should be interested in hearing them. However, we do not believe that there are any problems with this procedure of people acting as agents

  237
  for others who for any reason cannot act on their own account. If there are any, we shall be happy to hear of them, examine them and try to refine the arrangements if necessary.
  What worries me a little is that the one group that might benefit from the amendment, were it to stand, would be landlords seeking to take advantage of their tenants through the housing benefit scheme—in other words, setting themselves up as agents. I know that that is not in any way what the noble Earl intended, but it could be one of the consequences of an amendment like this. We already have the procedures in place in this area to deal with the kind of examples where somebody requires help from a third party. Given that assurance and explanation I hope the noble Earl can withdraw his amendment.
  Earl Russell: I am grateful to the Minister for that very helpful reply. I take great pleasure in the fact that it is helpful. In recognition, nevertheless, that the subject continues to need thought, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 255CJ:
  After Clause 108, insert the following new clause—

  ADMINISTRATION OF HOUSING BENEFIT NOT TO BE A DEFINED ACTIVITY
  (". The determination of claims for, and payment of, housing benefit and council tax benefit shall not be defined activities for the purposes of Part I of the Local Government Act 1988 (Competition).").
  The noble Baroness said: This amendment relates to the interlocking of housing benefit with some changes introduced by the Department of the Environment on compulsory competitive tendering.
  A few weeks ago the DoE Minister issued a consultation paper which, if adopted, will dramatically affect local authority work that goes out to CCT. Financial services, which in most local authorities include housing benefit and council tax benefit administration, will have to expose 65 per cent. of their work to CCT. That is truly very foolish. Housing benefit in particular is under strain. We have already debated half a dozen amendments today relating to that.
  First, the Government rightly want—and tenants rightly need—to have housing benefit paid more speedily than in the past. Otherwise, as already made clear, tenants will risk eviction by impatient landlords who have not received the rent. It is essential to prevent that and to avoid adding to the problems of homelessness. So local authorities must speed up the delivery of benefit.
  Yet at the same time, as we discussed in relation to an amendment some 10 minutes ago, the Government rightly want and encourage local authorities to prevent and detect housing benefit fraud, often of a fairly sophisticated sort. Therefore, local authorities should not cut corners, but should take enough time to be fastidious.
  Thirdly, at the same time, the Government are continually changing the regulations under which housing benefit is allowed. There were regulation changes in January; there will be further changes in October. This is a system in which we need to speed up payments, while simultaneously decreasing fraud, while at the same time coping with government changes to regulation. This is the system that the Government propose to put out to compulsory competitive tendering. The prospects are horrific.
  My first objection is a management one. Housing benefit is a stressed system. Rightly, there are conflicting objectives. Yet to these strains will be added another one; namely, exposing the work to CCT. That means not only asking hard-pressed staff to draw up the specifications of their work for CCT, but expecting those same staff to go through the trauma of bidding for their own jobs while continuing to run a department. Precious energy and effort will be diverted away from the job in hand. If they themselves win, they will be likely to have done so by cutting their own staffing costs and thus reducing their ability to pay benefit on time and without error or fraud. If, however, they lose and the administration of housing benefit is handed over to an outside company, because housing benefit is so complex we are likely to see errors, delays and fraud mount while the staff of the new company start from scratch and learn the system.
  Look at the difficulty that the DSS is currently experiencing in moving over from IS to JSA. It has had to slip six months because the systems could not deliver. Look at the problems the DSS had when part of its most routine work in handling order books was privatised. People went without money for weeks. Has the Department of the Environment talked to the DSS about the implications of imposing CCT'? I cannot imagine a worse time at which to throw all local authorities' housing benefit administration up into the air by imposing CCT. I find it quite unbelievable.
  Where local authorities wish to use private companies, that is fine. The staff will have geared up to that and will have worked out a partnership which may now be of several years' standing. But I predict that where an outside company wins against the local authority's own in-house bid—in other words, where privatisation is imposed on housing benefit administration—there will be chaos. Systems will break down; giros will be lost, delayed, underpaid, over-paid. Every time the housing benefit regulations change—and at the moment they are changing every six months or more frequently—the entire contract has to be renegotiated with the local authority at considerable cost and effort. Who will be held accountable when landlords start evicting tenants because the housing benefit cheques have not arrived and the rent goes unpaid? Will it be the councillors who have had CCT forced upon them, or senior housing and treasury management staff who have had CCT imposed? It is appalling.
  I accept that housing benefit adjudication will not be put out to tender. But in practice that is not a distinction that can hold, especially when dealing with fraud. So our first objection is that there will be management and administrative chaos.
  Our second objection is that housing benefit and council tax benefit administration is extremely sensitive, just like income support or disability payments. To administer correct benefit staff will need to handle sensitive and confidential information about a couple's marital situation, when for example a pregnant woman may expect the birth of a child; their finances; their employment; their relationship with their children; their domestic life; their debts; their relationship with the landlord; and any arrears they may have. It is some of the most confidential and sensitive information that local authorities ever handle. Local authority staff are well trained to handle such information sensitively and professionally and to regard confidentiality as of the utmost importance.
  What confidence can we have that a company that wins a bid merely because it has submitted the cheapest, lowest tender will apply the same professional standards in handling such sensitive questions? We know what happens. We have had experience of what happens when local authorities do as the Government require and accept the lowest tender. They pay the staff least; therefore the staff turn over rapidly; therefore little is invested in training. We know that customer complaints then mount and systems collapse. Those are the facts.
  My third objection is that, as late as November 1995 (six months ago), the DoE confirmed by circular to local authorities:
  "given the sensitivity [of the administration of revenue services and benefits] Ministers have undertaken that authorities will not he compelled to market test any of this work, and the competition requirement has been set at a level to take this into account".
  Only six months later, without publishing any supportive evidence, the Government have gone back on their word. Following consultation, local authorities may be forced to expose this most sensitive work to CCT. Why is that? As the entirely impartial and professional Institute of Revenues, Rating and Valuation says, the only explanation can be that the DoE is responding:
  "to private briefs from a group of disappointed contractors".
  That is interesting. I wonder what the Tory Government hope to get in return. I beg to move.
  7.30 p.m.
  Lord Mackay of Ardbrecknish: The noble Baroness rather ingeniously added that argument to this part of the Bill, although it has little or nothing to do with the four clauses and schedules that we are discussing now. Nonetheless, she seized the opportunity to run one of the Labour Party's favourite hobby horses—its objection to any competitive tendering within the services of local authorities. In this case, it is the financial services of local authorities. But, frankly, the position is the same regardless of the service of the local authority. Whether it be in the collection of dustbins or any other service, the noble Baroness's party believes very firmly that the private sector has no part to play and cannot teach local government anything in regard to efficiency or effectiveness.
  Baroness Hollis of Heigham: Did I hear the noble Lord correctly? Is he suggesting that collecting rubbish
  240
  in dustbins is the same as administering housing benefit claims? Does he believe that there is any comparison between the two?
  Lord Mackay of Ardbrecknish: I did not make that suggestion at all. I simply pointed out that it was an objection to the whole contracting-out policy and that encompassed services such as the collection of dustbins, which is done very efficiently indeed in many local authority areas by the private sector. We are discussing now what I might call a sub-set of that policy, which affects the financial services of local authorities.
  The noble Baroness advanced arguments of which my ministerial colleagues in the Department of the Environment are very well aware. They understand and have examined them. They have concluded that there is no special case for benefit work not to be taken into account when local authorities calculate whether they have fulfilled their competition requirements.
  We believe that there are substantial savings to he made in the administration of benefit work. With that in mind, as the noble Baroness knows, we have recently proposed increasing the competitive requirements for financial services work (into which this activity falls) from 35 per cent. to 65 per cent. We believe, however, that there are some elements of benefit work—mainly determinations—where the functions cannot be transferred to another party and we have no intention of forcing local authorities to do so.
  It is very unlikely that an authority could not meet its competition requirements without exposing work to competition where it has no power to do so. In other words, there is enough headroom, so to speak, in the 35 per cent. which remains to accommodate work such as the determination work. But if that were to occur, we should certainly be prepared to examine the case and provide an exemption if the case were shown to be justified.
  I suspect that the noble Baroness was referring to a little more than determination in the adjudication officer definition and that she was thinking about the day-to-day administrative processes used to assess and pay claims on housing benefit or council tax benefit—the collection of information and subsequent payment of the benefit. Her amendment, if accepted, would simply mean that all aspects of benefit administration carried out by local authorities would be outside the scope for the exposure to competitive tendering. That is certainly not the Government's intention.
  The point about competitive tendering in this and every other field is to deliver a more efficient service in the most cost-effective manner. There are clear specifications laid down in all those contracts for the delivery of the service—for the outcomes achieved—so that whoever does the work, whether it is in-house or a private contractor, he is paid not just for processing the claims but paid on the basis of the outcomes. The outcomes are well described as "paying the right money to the right person at the right time". I should have thought that those were specifications that we should demand from everybody, whether it is an in-house person or a private contractor.

  241
  There are local authorities which already use private companies for part of the housing benefit work. The experience of those who have already contracted out is not one which I recognise from the noble Baroness's description. CCT is about getting the best services for the local charge payer at the best price. The policy is about ensuring that the service is delivered well to the customers who need it and costs as little as possible to the taxpayers and the council tax payers who have to pay for it. I am afraid that the noble Baroness's amendment is designed to remove the need for local authorities to expose large amounts of their financial services to competition, thereby ensuring that we do not gain the competitive and financial advantages that we believe come from competitive tendering.
  I hope that, with those remarks, the noble Baroness, having aired her point of view very clearly, will feel able to withdraw her amendment.
  Baroness Hollis of Heigham: Before I comment more fully and decide what to do about the amendment, perhaps the Minister will tell me how I should understand the quotation that I gave. Why, six months ago, in November 1995, did the DoE say in a circular:
  "Given the sensitivity [of all this area] Ministers have undertaken that authorities will not be compelled to market test any of this work"?
  Would the Minister like to explain to me what that sentence means?
  Lord Mackay of Ardbrecknish: I do not have the circular to hand and so I am not sure of the context from which the noble Baroness took the quotation. But I have made it clear, and my ministerial colleagues at the Department of the Environment as well as my right honourable friend at the Department of Social Security have made clear, that the determination—the adjudication work—is work that cannot be transferred to another party. As I made perfectly clear, we have no intention of forcing local authorities to contract out that part of the housing benefit work. The other parts of the housing benefit work are perfectly capable of being contracted out, as has already happened in certain local authorities.
  Baroness Hollis of Heigham: The quotation was in reference to the administration of revenue benefits and services, not to determination. Clearly, the Government's word lasts for six months. Six months ago local authorities were assured that the 35 per cent. rule would remain in place and that housing benefit administration would be protected from CCT. Six months later, we have a volte face. I give way to the Minister.
  Lord Mackay of Ardbrecknish: It is not a volte face at all. It is simply ensuring that the policy is succeeding in those areas in which it has been started and therefore it is sensible to expand the area over which the benefits can be sought. I should have thought that it was
  242
  perfectly sensible to start slowly and simply expand further in order to gain maximum benefit for the council tax payer and best service for the customer.
  Baroness Hollis of Heigham: If the ties on parliamentary language did not preclude me, I would use the word "rubbish" to that, but it does, so I will not, except when talking about the dustbins that the Minister is so fond of quoting. The point is that throughout all CCT work, ever since Government first initiated this, going back now some 10 years—and many of us on these Benches have been involved in those debates over those 10 years—Government have always allowed local authorities, given that commitment, to ring fence that work which is particularly sensitive in handling confidential information. That position which applies to housing benefit was reconfirmed by the Government in November.
  The Minister talks airily about increments and learning from experience; it is simply not true. It has never applied to this area of work. He is pulling arguments out of the air in the hope that because it has been done in dustbins we are now ready to apply it to housing benefit and confidential material. That is not the case. This work has always been regarded and recognised as sensitive and therefore not appropriate to go out to CCT, where it would perhaps go to a company who has gained the work simply because they have put in the lowest bid. The lowest bid to the specification has to be the one that is accepted. We had debates on that subject when we introduced that Bill many years ago. The cheapest bid is the one which pays its staff the least; it pays its staff least because it trains them least and, as a result, there is the fastest staff turnover and the lowest level of staff reliability. If the Minister knew, as would the Department of Environment Minister, about the workings of CCT he would recognise that what I am saying is a faithful and accurate description of what has happened to wide swathes of white collar CCT work.
  The Minister made a couple of other points. He said that the Government were protecting the determination of housing benefit claims. It was only the administration that was going out, as though somehow in local government work one can make a clean distinction between the two. One cannot do so. The collecting of information is a crucial part of the determination of the final result. Only then will one know what additional information one will want in order to make a determination. The determination will be done by one set of officers, apparently, in-house to the local authority; the collection of information, which is essential to that determination, will presumably be done by a private company outside. How service standards can be specified under this, I really do not understand. It is an absurd distinction which cannot, in practice, be held or delivered. I promise the Minister that; it will not work.
  Secondly, the Government emphasise efficiency and say that the whole benefit of CCT has been in relation to efficiency, but the whole problem of housing benefit is the risk of fraud and error that occurs. The very management problems that will occur in the switch from

  243
  the existing system to one going out to CCT will encourage inefficiency rather than reduce it. There will be very high lead-in costs indeed.
  Where such CCT work is voluntary, I was very careful to say in my opening remarks that that is fine. It is for the local authority to decide and develop partnership schemes. However, I repeat that housing benefit, as we know, is a stressed system. Fraud is increasing. Errors are high. Take-up is inadequate. This is a system where, at the same time that the Government are continually changing the structure within which it works, the Government are throwing it out to CCT, having reversed something like a decade's commitment to protect sensitive work away from commercial considerations. The Government have sought to reverse 10 years' policy in the last six months and, as the IRRV, an independent professional body of rating officers said, the only explanation they can come up with, and I quote, is that:
  "the [Government] is responding `to private briefs from a group of disappointed contractors'".
  I just wonder whether the approach of a general election and the necessary finance for that has anything at all to do with this decision. None the less, with the permission of the Committee, I withdraw this amendment.
  Amendment, by leave, withdrawn.
  Clause 109 agreed to.
  Schedule 11 agreed to.
  Clauses 110 to 112 agreed to.
  Lord Lucas: I beg to move that the House be now resumed. In moving this Motion I suggest that the Committee stage on this Bill be resumed not before 8.45 p.m.
  Moved, accordingly, and, on Question, Motion agreed to.
  House resumed.

Right of Establishment for Lawyers
7.45 p.m.
Lord Slynn of Hadley Lord Slynn of Hadley rose to ask Her Majesty's Government, in the light of the 14th Report, Session 1994–95, of the European Communities Committee on the Right of Establishment for Lawyers (HL Paper 82) and the judgment of the European Court of Justice dated 30th November 1995 in Case C-55/94 Gebhard v. Milan Bar Association, whether it is likely that the proposal for a Directive on the Right of Establishment for Lawyers will now be modified so that it can be adopted in a form acceptable to Her Majesty's Government and the legal professions in the United Kingdom.
The noble and learned Lord said: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. The subject-matter of the Question is one of considerable concern to the legal professions of England, Wales, Scotland and Northern Ireland. It is scarcely of less concern to those who are or may become their clients.
The Treaty of Rome clearly envisaged that restrictions on the provision of legal services, as with other services, and on the right of establishment would go. This was the parallel of rights which were given to workers to move freely around the member states. For some professions this should not have been too difficult to achieve. For doctors and architects, for example, I imagine that appendicitis is not very different in Athens from that in Copenhagen.
For lawyers it has not proved to be at all easy, as was to be expected. Different systems of law, different procedures, different methods of qualifying exist in the various member states. It is especially difficult because, despite an increasing familiarity with community and international law, lawyers are trained and admitted to practise in a single jurisdiction. Steps have been taken. In 1977 the Council of Ministers adopted a directive which laid down the conditions under which lawyers could carry out occasional and temporary services in other states, using what is called their home state title. If a solicitor went to Paris to practise he still called himself a solicitor. He could advise on law on that basis. That directive has been useful and was a good move, although it has not been used as much as might have been expected.
After that directive there were two outstanding tasks. One was to make it easier for lawyers from one state to qualify in another member state. That meant adopting a system by which qualifications were recognised mutually between the member states. It took 17 years for agreement to be reached on a directive relating to architects, which I suggested might perhaps have been one of the simpler professions, and it took a little less time for several other professions. It was not at all surprising, therefore, that the noble Lord, Lord Cockfield, as the commissioner responsible, began to despair of achieving by the agreement of the member states a directive for each profession. The Commission adopted a general directive, leaving it to the professions to come up with an agreed scheme. I pay tribute to the initiative of the noble Lord, Lord Cockfield, in ensuring that this step was taken.
The general scheme was that after a three-year course which would be recognised people would be able to practise their professions in the light of their experience, but there would be an aptitude test. In order to move in the same profession into a different state it was necessary to take a test.
The second problem was of a different nature. What ought the rules to be by which a lawyer from one state can go and practise his own law, or community law, or international law, or even what is called the host state law in another state? For another and different 17 years the Council of European Bars of the member states worked on a draft directive and they produced this in 1992. Many, perhaps most, lawyers thought that the scheme advised by the Council of European Bars was a very good scheme, but the Commission had other ideas, which were made available to the European Parliament in 1995.
When the Select Committee looked at this matter most witnesses agreed that the directive was necessary in order to make it easier for lawyers to practise, not

245
just on an occasional or temporary basis, but on a more continuing and permanent basis in a state other than that in which they qualified. It was recognised to be particularly necessary in order to provide for cross-border legal services becoming more prevalent and necessary. It would seem to be necessary also because it was found that in seven member states only locally qualified lawyers could practise. Lawyers from other states therefore, if they wished to practise there, had to become members of the local Bar or the local lawyers' association and become integrated.
A proposal for a directive was therefore put forward by the Commission. I do not need to go into detail on that. I mention just two or three relevant points. It proposed that lawyers should be entitled to practise in another member state under their home title for a period of five years, so long as they registered with the appropriate professional authority in the host member state to which they went. They used their home title—a solicitor in Paris would call himself a solicitor—and would be subject, under the proposal, to the professional control of both his home Bar and the host Bar in the state to which he went.
The second matter I want to mention is that it was proposed that if a lawyer from one state practised for three years in another state—the host state—he would not be required to take a professional aptitude test, unless he had never practised in law other than the law of the host state, when he would be required to take a test limited to procedural law and rules of professional conduct.
The Select Committee took the view that it is important to improve the free movement of lawyers throughout the Community while protecting and providing adequate safeguards for clients. The proposed draft directive is good in that it complements the existing two directives I mentioned—the 1977 directive and what I may call the "Cockfield directive". It would make it easier for a lawyer to become established on a continuing and relatively permanent basis in another state. By providing that a lawyer will be subject to the deontological rules of both professional bodies in the home and the host state, it provides a system of disciplinary control.
Two matters remained controversial. The first was that a lawyer could only practise in another state for five years and then, under the proposal, he would need to leave the host state or qualify as a local host state lawyer. The Select Committee, Sub-Committee E, felt that that was unjustified. It seemed absurd on the face of it that someone who had practised—say an English solicitor in Paris or Bonn—for five years, should have to leave at the end of that period when he had built up a practice with clients who wanted him. It seemed to us that there was no justification for that restriction and as a matter of principle we did not feel that practice under the home state title—solicitor in Paris—should be considered merely as a stage towards the full integration of the individual lawyer into the host state profession.
It seemed to us that it was a desirable end in itself that a solicitor or barrister should be able to go into Paris or Bonn, or wherever in the Community, and practise
246
using his English or Scottish title. Indeed, the fact that he continued to practise as a solicitor or barrister was the sole indication to his client that he may not have the same detailed knowledge of the host state law as someone qualified in that state. So we come out very firmly against that.
The second matter in issue was how far the host state should be allowed to test the lawyer's knowledge of the host state law and practise before he could become a member of the local Bar. That is a more difficult question. It seemed to us, as it seemed to the legal professions in the United Kingdom, that a balance has to be established between ensuring that the client is adequately protected in that his lawyer has the requisite knowledge and qualifications on the one hand and, on the other, avoiding sitting tests which really constitute a discriminatory barrier against nationals of other states.
In the result we concluded that the Commission's proposal was wrong and that some testing would be justified but that, in deciding whether a lawyer from a foreign state should be admitted to the local Bar, full credit should be given for individual experience and qualifications; there should be some flexibility. I do not believe that we in this country would want to make it too difficult for a good, experienced lawyer from another member state to be integrated into our profession here any more than we would want barriers to be erected against our lawyers integrating abroad.
The Commission's present proposal is that a lawyer may be admitted without a test if he has practised for an unbroken period of three years, subject to his taking a test if he has not practised in the host state law. Recently the European Parliament, in a careful and well-thought-out report—with Madame Fontaine as the rapporteur—put forward more detailed proposals which would leave out of account any aptitude test, but which would require that effective and regular activity be taken into account before someone was admitted into the legal profession of the host state.
Those are the two matters which remain for negotiation and on which both the Select Committee and the legal professions of the United Kingdom are in agreement. The five-year proposal is a bad one and we feel that, with some flexibility, it is right that there should be aptitude tests. But they must not be discriminatory. This is an important question and I hope that the Minister will be able to give some information as to how far the aims of the Select Committee and of the United Kingdom professionals—solicitors, barristers and advocates—are likely to be achieved.
7.58 p.m.
Lord Irvine of Lairg: My Lords, your Lordships will be grateful to the noble and learned Lord, Lord Slynn of Hadley, both for bringing this matter before your Lordships' House and for his lucidity in explaining an issue which may seem esoteric to many of your Lordships. Putting it in my own way, I would like to compare the present position with the position that would obtain under the proposed new directive.
If I, as an English Queen's Counsel, wish to practise in either English or Italian law in Florence, then I can do so on one of two bases: first, as a temporary service

247
provider under Article 59; or, secondly, as a fully fledged member of the Florence Bar. For the second, I would have to pass an aptitude test in Italian law. But if I opt for the first route, then I may provide English law services on a temporary or intermittent basis. If, however, I want to stay in Florence permanently as a practising lawyer, my only option under the present regime is to pass an aptitude test in Italian law and so become a fully fledged member of the Florence Bar.
Now, under the Commission's proposed Directive on Freedom of Establishment for lawyers, in its current form, I could practise as an English lawyer in Florence for a limited period of five years. But after that five years, I would have to become a fully fledged member of the Florence Bar, or go home and abandon the good will that I have built up. The fact that I will be as well qualified to go on doing what I have been doing for the past five years, but that I am to be disabled from doing so, strongly suggests to me an arbitrary restrictive practice. After the decision of the European Court in Gebhard, which is mentioned in the noble and learned Lord's Question, I believe that this five-year restriction might be held contrary to Article 52 of the treaty as an unjustifiable obstacle to trade. Since in my example I have practised English law in Florence for the past five years, consistently, no doubt, with the public interest in Italy, why, rationally, should I not be free to continue to do so? That is the first point.
Next, I turn to what the new directive proposes in relation to aptitude tests. The present position, as I understand it, is that if I want to become a fully fledged member of the Florence Bar, Italy can require me either to pass an aptitude test, which will examine my knowledge of the law of Italy, or to serve a certain number of years as a lawyer in Italy before I can become a fully fledged member of the Bar. In fact, all member states, apart from Denmark, as I understand it, have opted to require an aptitude test. True, there have been some complaints that some countries, although not the United Kingdom, make their tests so difficult to pass that foreign lawyers are effectively excluded. True, there are these complaints, but the remedy for that lies in Article 52. If aptitude tests are operated in such a way as to amount to an unjustifiable barrier on free movement, then they are in any event unlawful under Article 52.
So, if there is this problem, that is the appropriate remedy. The remedy is not to introduce a blanket rule excluding aptitude testing and as a result to penalise those states which operate aptitude tests reasonably because others may not operate them reasonably. What the new directive proposes is that the obligation to pass an aptitude test in a foreign system of law, as a condition of becoming a fully fledged member of a foreign Bar, should be dispensed with where the individual has practised for three years in a practice involving the application of the law of the host state. For my own part, I firmly agree with the Select Committee of your Lordships' House, which, at paragraph 62 of its report, expressed the opinion:
"To relax these principles so as to confer the host country professional title on lawyers unqualified and untested in the law of the host country would in our view be unacceptable".
248
The Commission's current proposal would dispense with the need for an aptitude test where, if I may continue with my example, I pursued for an unbroken period of three years, which is the Commission's version in the new directive, or regularly for three years, which is the better European Parliament version, a practice which involves the law of the host member state, Italy. Where the three-year requirement is not met, the draft envisages that I may still ask the Italian authorities to take into consideration such experience of Italian law as I may have.
This new regime would result in entry to the legal professions of the countries in the European Union without any formal examination in the relevant legal system or without any objective testing of aptitude to practise in that system.
Initially, the CCBE was opposed to this change. Its original draft allowed for national authorities to insist upon an aptitude test, provided that they took into account and gave full credit for any relevant experience of domestic law. That is the present position with the United Kingdom aptitude test. My understanding—and I look forward to hearing whether this may be confirmed by the noble and learned Lord the Lord Advocate—is that the UK delegation for the CCBE is proposing to vote in favour of the European Parliament report, which substantially retains the Commission's proposal. I have to say that I am disappointed by that.
I believe that the Select Committee of your Lordships' House was correct. I do not think that an obligation to pass an aptitude test in a foreign system of law, as a condition of becoming a fully fledged member of a foreign Bar, should be dispensed with simply because of some practice over a three-year period involving some application of the law of the host state. In my view, that would let into legal practice those who had not, by objective standards, demonstrated their capacity to practise as professional lawyers in a foreign system of law—a plain and obvious danger not only to the standing of the profession, but also to the protection of consumers of legal services. So my position is that the aptitude tests should be retained as an available option for member states in the interests of the maintenance of high professional standards in the law. I certainly look forward to hearing the views of the noble and learned Lord the Lord Advocate on this important subject.
8.6 p.m.
Lord Lester of Herne Hill: My Lords, as the noble Lord, Lord Irvine of Lairg, has just said, we are grateful to the noble and learned Lord, Lord Slynn of Hadley, both for initiating this debate and for his very skilful chairing of Sub-Committee E of the Select Committee on the European Communities whose report we are now considering. I had the privilege of serving as a member of that sub-committee and contributing to its report. We noted there that the right of establishment is among the fundamental freedoms accorded by the European Community treaty to nationals of member states and that there is a powerful case for a directive on the right of lawyers to establish themselves in member states other than their home state.

249
For the single market to function effectively, obviously it is very important that qualified members of Europe's legal professions should be able to practise in every member state in the interests of their clients, subject to adequate and effective safeguards for professional standards and for the public.
To achieve that, as the noble and learned Lord, Lord Slynn, has indicated, has involved a very protracted exercise of complex consultation. At the invitation of the Commission, the Council of the Bars and Law Societies of the European Community (CCBE) laboured for 17 years to produce a draft directive on the right of establishment for lawyers. In addition to the pioneering role of the noble Lord, Lord Cockfield, I should like to pay a particular tribute to the dedicated and patient work done by Mr. John Toulmin QC, in his capacity as the former president of the CCBE. Mr. Toulmin reminded the sub-committee that as companies, employees and individuals become increasingly mobile within the Union, they need more cross-border legal advice on matters involving both Community and national law. How, he rightly asked, could a prohibition on obtaining such advice in the country of the potential migrant lawyer, rather than in the home state, be objectively justified either under the provisions relating to the establishment or under those relating to competition. The answer is that such a restrictive practice in favour of vested local or national professional interests cannot be objectively justified.
Since we published our report a year ago, the Court of Justice has decided the Gebhard case. The facts of that case exemplify the reason why European law is needed in the interests of the citizens of Europe, whether as members of the legal profession or as clients and users of legal services. Since neither the noble and learned Lord, Lord Slynn, nor the noble Lord, Lord Irvine of Lairg, has mentioned those facts, I do so briefly because they are quite informative. Mr. Gebhard, a German national and a qualified member of the German legal profession, had lived for many years in Italy, practising law in Milan, with no criticism of any kind being made of his activities in the set of chambers with which he was associated. When he opened his own chambers in 1989 together with Italian colleagues a number of Italian practitioners, including his former associates, now his competitors, complained to the Milan Bar Council of his use of the title Avvocato on the letterhead of the chamber's notepaper and of his having appeared using that title before the local Italian courts. He was forbidden by the Milan Bar Council from using the title Avvocato and was suspended from practice for six months.
It was not the function of the Court of Justice to decide whether Mr. Gebhard had been properly disciplined in favour of his Italian competitors, though I am bound to say that the facts illustrate how easy it is for, say, British lawyers to be discriminated against when practising in other member states, and vice versa, unless there are adequate safeguards against abuse and against the perpetuation of unjustifiable professional restrictive practices purporting to be in the wider public interest.
250
Happily, however, the European Court rejected the argument that Mr. Gebhard could not be regarded as being established in Italy unless he belonged to the Italian professional body. The Court made clear that, although the host state might restrict the practice of certain activities or the use of their professional title, those restrictions must be necessary and must be applied in a non-discriminatory and proportionate way.
It is those safeguards which protect the people of this country against unscrupulous and unqualified overseas lawyers, whether from Europe or elsewhere, who seek to practise here, and protect British lawyers like myself or the noble Lord, Lord Irvine, if we wish to practise abroad. We would be protected from unjustifiable barriers in seeking to practise law in other member states.
There were two problems about the draft directive which particularly concerned Sub-Committee E. The first related to the rigid and arbitrary five-year limit on practice under home title. We strongly disagreed with the view of the European Commission that a five-year limit of that kind was justified. We preferred the CCBE draft directive which made provision for an indefinite right for a lawyer to practise under his home title in another member state. We suggested that Article 2 of the proposals should be amended so as to make similar provision.
I agree with the noble Lord, Lord Irvine of Lairg, that it is strongly arguable that a rigid five-year limit of that kind is arbitrary and violates European Community rules. I very much hope that the Commission will be persuaded to adopt this view. The fact that the Legal Affairs and Citizens Rights Committee of the European Parliament has put forward an amended proposal on these lines will, I hope, carry weight in the corridors of power in Brussels.
The other, more difficult question concerned aptitude tests. We pointed out that clients in the host country must be able to have confidence that a lawyer qualified under the legal system of that state had the necessary knowledge. The relevant professional body of the host state must be able to ascertain that this is so, if necessary by adopting tests, so long as such tests do not create unjustified discriminatory barriers. We did not consider, on the basis of the evidence about aptitude tests which we received, that artificial or discriminatory barriers were being created by the application of the principles of the Diplomas Directive. We observed that if they were they would be likely to be struck down by the European Court. To relax those principles so as to confer the host country professional title on lawyers unqualified and untested in the law of the host country would be wholly unacceptable.
Most of the witnesses maintained that the CCBE draft directive had achieved a balance appropriate to the Diplomas Directive. We made it clear that we favoured a solution whereby testing was retained but with a positive obligation on the authorities in each country to give full credit to individual experience.
The Legal Affairs Committee of the European Parliament has proposed that, where a lawyer has not practised the local law, his or her competence may be

251
assessed by reference to professional experience and knowledge gained in the host state, with an interview where necessary, rather than by a formal aptitude test. This suggestion is broadly in line with stronger amendments suggested by the CCBE—which I prefer—applying to all migrant lawyers, whether they have practised the local law or not. They would allow the host state to require attendance at specified courses in the host state's legal system.
I fully accept the force of the comments of the noble Lord, Lord Irvine. I am as anxious as he to preserve professional standards, but it is strongly arguable that the CCBE amendment—which is stronger than that of the European Parliament—would represent a sensible compromise. It would create a presumption that a person who is professionally qualified as a lawyer and has practised under his or her own state title for a number of years would have gained sufficient experience in the law of the host state to gain exemption from the aptitude test. Something rather similar applied traditionally in this country if one wished to change status from barrister to solicitor. In order to be exempt from certain tests one had to show seniority in the profession, and that seemed to work fairly well.
Most importantly, the CCBE amendment would also protect consumers and the administration of justice, provided it worked properly, by enabling the competent authorities in the host state to satisfy themselves on a flexible case-by-case basis of the migrant lawyer's competence. Provided they did that, that would seem to be perfectly satisfactory as a formal aptitude test. It would meet the legitimate concerns of some other member states about aptitude tests without permitting the test to be used as a device for discriminating against migrant lawyers. I hope that the Commission will agree to a sensible compromise which has built-in safeguards against abuse. If not, I would be strongly opposed to a blanket prohibition on aptitude tests for the reasons so clearly and powerfully expressed by the noble Lord, Lord Irvine of Lairg.
Our report expressed belief that a directive on the establishment of lawyers could open up new opportunities for enterprising lawyers, give clients access to greater choice of services and enhance the process of enrichment and cross-fertilisation among the legal systems within the European Union. Safeguards requiring knowledge of or experience in host country law are surely necessary to protect the consumer. It is no less essential that a directive does not permit the erection of unnecessary barriers. What is required is modification of the Commission's proposal on the two points of principle where it departs from the CCBE draft directive. I look forward keenly to the speech of the noble and learned Lord—the first that I will have heard from him in his capacity as Lord Advocate—and any indication as to the likely approach to be taken on this subject.
8.19 p.m.
The Lord Advocate (Lord Mackay of Drumadoon): My Lords, the Question that we are considering this evening arises out of a campaign that has been pursued by lawyers throughout Europe for the
252
best part of two decades. I welcome this opportunity to inform your Lordships, the wider public and the profession in the United Kingdom, of the Government's assessment of the Question posed this evening by the noble and learned Lord, Lord Slynn of Hadley.
As the noble and learned Lord said, the directives of 1977 and 1988 made some progress in achieving the objective of lawyers being able to establish themselves in different parts of the Community, but that progress has unfortunately been more leisurely than many would have wished and, despite the best efforts of government and individual lawyers, the matter has progressed at a pace which has caused a measure of frustration and, I suspect, a measure of irritation on occasions.
It is right, therefore, that your Lordships should appreciate, as was recognised by the report to which I shall turn in a moment, the valuable role played by the Council of the Bars and Law Societies of the European Community in trying to drive matters forward. It was in 1992 by a majority, I understand, of 10 to two that the CCBE agreed a draft directive which provided a framework for the establishment of lawyers in member states other than those states in which the individual lawyers had obtained their qualifications.
By coincidence that draft was published during the period of the United Kingdom presidency of the European Community. My noble and learned friend the Lord Chancellor commended it to the Commission at that time and again sought to give some impetus to the Commission in the work that required to be done. The Government and the professions, working closely together, kept up the pressure thereafter and at the end of 1994 the Commission published its proposals which form the basis of our discussion this evening.
Unfortunately, the proposal, as drafted and put forward by the Commission, was not one which either the Government or the professions in this country could accept without qualification. That was the position which was reflected in a number of other member states throughout the Community. For that reason, negotiations with officials of the Council required to commence but, most unfortunately, after a few months these became deadlocked. It was only when the Legal Affairs Committee of the European Parliament took a hand, at least as far as the European organs are concerned, that some progress was made.
By a remarkable coincidence, this very evening the European Parliament, at a plenary session in Strasbourg, will consider its Legal Affairs Committee's opinion on the draft directive. As we speak, the debate is going on and, as I hope to indicate later, the Government are optimistic that some progress will be made.
There can be little doubt that in considering the matter the Legal Affairs Committee was assisted, as your Lordships will be assisted, by the very detailed scrutiny of this matter which was carried out by your Lordships' Select Committee on European Communities. Its deliberations were, of course, chaired by the noble and learned Lord, Lord Slynn. I personally, and on behalf of the Government, wish to pay unqualified tribute to all members of the committee for the very fair and thorough manner in which they examined the issues. A

253
reading of the report makes clear that not only did they bring their own personal expertise and experience to bear on the issues, they spent considerable time hearing evidence from organisations within this country, from the Lord Chancellor's own department, the professions, and various bodies within other European countries.
The report is a most impressive document. The conclusions are clear and carefully argued and reached. The Government are very grateful to the committee and accept the views which the report sets out.
At the same time it would also be right to acknowledge the work carried out by members of the United Kingdom delegation to the CCBE who have worked over the last few years at their regular meetings and, more informally, in lobbying interests in Europe in trying to drive the matter forward. I know that the UK delegation, the previous chairman who was mentioned by the noble Lord, Lord Lester, and the current chairman, Matthew Clarke, have dedicated a lot of time and effort in bringing the matter forward and, in particular, briefing and lobbying members of the European Parliament at the present time. At the risk of tempting fate, the signs are favourable that some fruits of their long campaign will become clear once the discussions in Strasbourg have been concluded this evening.
All noble Lords who have spoken have dealt in detail with the draft directive and the objections to it. For that reason it is unnecessary for me to deal in detail with the nature of these objections other than to make clear that in both matters the Government share the concerns that have been expressed in this House. The first objection is that the directive gives lawyers the right to practise under the home state titles in another member state but that would be limited to a period of five years. After that, as the noble Lord, Lord Irvine of Lairg, indicated, the lawyer would be faced with a stark choice of packing up and going home or alternatively becoming a fully qualified and enrolled member of the local Bar. That is a very stark problem which, there seems little doubt, is unacceptable on all sides.
The next objection is the question of the "fast track" entry to the legal profession of the host state by showing some three years' "effective and continuous" practise in the host state. Those who could show that their practice included host state law, including Community law, would be entitled to be admitted without any aptitude test at all. If the three years' practice did not include host state law, the aptitude test would have to be limited to procedure and professional ethics. The Commission sought to justify this approach on the ground that practise under home state title was a step in the way to integration as a member of the host state profession but, as noble Lords have pointed out, that is viewing a practice in another jurisdiction using one's home state title, whether it be advocate, solicitor or barrister, in an unacceptable manner.
As I indicated, the Government are quite clear that both these matters are objectionable and every effort is being made to address them in discussions with the active support of the CCCB.
254
By another stroke of good fortune the case of Gebhard v. Milan Bar Council came along. As the noble Lord, Lord Lester of Herne Hill reminded us, the court rejected the Bar Council's argument that a lawyer cannot be regarded for the purposes of the treaty as being established unless he belongs to, or acts in association with, a member of the professional body of the host state. The court also held that although national measures which restrict certain activities to those possessing a particular qualification or membership of a professional body were permissable, restraints on the exercise of a fundamental freedom guaranteed by the treaty—and of course the right of establishment is one such fundamental freedom—must comply with four conditions familiar to those with a knowledge of Community law. First of all they must be applied in a non-discriminatory manner. Secondly, they must be justified by imperative requirements in the general interest. Thirdly, they must be suitable for securing their objective and, fourthly, and importantly, they must be proportionate; that is, that they should not go beyond what is necessary in order to attain their objective.
In those circumstances it appears to the Government that what is proposed in the draft objective, in so far as it imposes a time limit, cannot be valid because it appears to impose an arbitrary and blanket restriction on the exercise of the right of establishment by lawyers under the home state title. I am heartened by the contributions of all the noble Lords who have spoken this evening in that they would appear to accept that view.
The Legal Affairs Committee of the European Parliament has proposed amending the directive so as to provide for a right of establishment under home title without limit of time. If, as can confidently be expected, that amendment is adopted by the European Parliament this evening, it is reasonable to hope that the Commission will revise the text accordingly. That would be a major advance towards achieving not just the Government's policy towards the directive but the wishes of the legal professions throughout the UK.
I turn now to the other major area of controversy which is undoubtedly more difficult. It is the provisions concerning admission to the host state professions. It remains the Government's aim to ensure that these provisions are such that legal professional standards are maintained and that consumers are not misled as to the nature of the qualifications possessed by the lawyers who are practising and available to provide legal services. The Commission's proposals, which provided that joining the host state profession after five years was compulsory if the lawyer were to continue to be allowed to practise in the state concerned, and that in certain circumstances the lawyer could join the profession without his competence being tested at all, were not acceptable either to the Government or to the legal professions of this country.
While I understand the view expressed by the noble Lord, Lord Irvine of Lairg, about abandoning aptitude tests, there may be some room for compromise in dealing with the second major area of controversy. There may be adequate methods of assessing competence falling short of an examination or aptitude

255
test. The competent professional authority of the host state could assess an applicant's competence, taking into account professional experience and knowledge gained in the host state. One possibility could be attendance at courses of the nature that has been mentioned. In appropriate cases that might require the lawyer to prove his competence at an interview, to produce proof of attendance at courses, as I have said, or to practise for a period under the supervision of a host state lawyer. In seeking a compromise, it is important to bear in mind the existence of the CCBE code of conduct which applies to lawyers engaged in cross-border practice throughout the EU.
That code provides, among other things, that a lawyer should not handle a matter which he ought to know that he is not competent to handle. The code has been adopted by the majority of Bars and Law Societies throughout the Community and is part of the practice rules for solicitors both north and south of the Border.
Such an approach appealed to, and was adopted by, CCBE in a meeting it held in Dresden last autumn. The approach it adopted there was consistent with the Government's policy which is to seek a compromise in this difficult area. It may be for the CCBE to speak for itself as to why it adopted that attitude, which involved abandoning a commitment to the aptitude test, but clearly it felt that some compromise was necessary, and as all the Bars and Law Societies throughout the Community are represented, no doubt by eminent leaders of their respective professions, the House can have some faith that the compromise was reached for good, sound reasons after many years of reflection and discussion.
Unfortunately, the compromise proposed by the CCBE has not yet found favour with the Legal Affairs Committee of the European Parliament. Under its proposals, lawyers who have practised under their home titles in another member state for three years would be entitled to membership of the host state profession if their practice had included host state law. If the practice did not include host state law, the competent authority would be able to require the applicant to attend an interview. In an important change, however, put forward by the Legal Affairs Committee, the competent authority of the host state would be able to refuse to allow the applicant to benefit from those provisions, particularly if it considered that that would constitute a threat to public order, or because of disciplinary proceedings, complaints or incidents of any kind.
The Government's view is that the drafting of that amendment put forward by the Legal Affairs Committee is somewhat unclear and leaves something to be desired. It is an amendment which will have to be considered carefully, and when the matter goes back to the Commission further discussions will be necessary. As always in this matter the Government intend to consult closely the legal professions whose support throughout the years has been welcomed warmly.
It follows, therefore, that provided decisions are taken in Strasbourg this evening in the manner anticipated, some substantial progress is being made. To answer the question posed by the noble and learned Lord, it is
256
hoped that if the European Parliament adopts the amendments which are being put to it by the Legal Affairs Committee, and if thereafter the Commission revises the draft directive, taking account not just of those amendments but of further representations being made to it by this and other governments, there is reason to believe that at long last a common solution will be found.
Indeed, I can go further and say that there is a serious hope with, it is believed, a measure of justification, that a common position may be found during the Irish presidency during the latter part of the year. In conclusion, I thank the noble and learned Lord, Lord Slynn of Hadley, for raising this issue, and I thank other noble Lords for the support they have given to the Government. I shall look forward to reading tomorrow's newspaper to see what was decided as Strasbourg this evening.
Baroness Trumpington: My Lords, I beg to move that the House do now adjourn during pleasure until 8.45 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.37 to 8.45 p.m.]

Housing Bill
House again in Committee
Clause 113 [Proceedings for possession]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 255D:
Page 73, line 36, at end insert ("and subject to subsection (2) below, sections 83, 84 and 85 of the Housing Act 1985 shall apply to such proceedings as if the word "introductory" were substituted for the word "secure" ").
The noble Baroness said: In moving this amendment, I shall speak also to Amendments Nos. 255E and 258. I thought for a moment that I might achieve acceptance of these amendments extremely quickly but perhaps I have too much of a sense of fair play.
Although the amendments may appear to be quite long and rather complicated, their purpose is relatively straightforward; it is, that tenants shall not lose their tenancies without recourse to the courts except in cases of neighbour nuisance.
In its current form, the scheme of introductory tenancies gives local authorities extremely wide powers to terminate the tenancy and to evict the tenant during the first year of the introductory period. There are no restrictions on the local authority's discretion and the involvement of the court is purely procedural. For example, it would be open to a local authority to terminate a tenancy for minor breaches of the tenancy agreement: failure to maintain a garden, small amounts of rent arrears and other matters which might not even constitute breaches of the tenancy agreement at all. The tenant has no recourse to the courts other than by an application for judicial review. That is a matter which has been touched on more than once in our discussions today. I am sure that the Government do not wish to

257
encourage even greater use of that remedy, if one can even call it a remedy as it is merely a review of procedure rather than a review of the outcome.
I suggest that the scheme of introductory tenancies is wider than the consultation process proposed. The Government's paper consulting on anti-social behaviour expressed concern about the major drain on resources and time caused by tackling neighbour-nuisance cases and was concerned to identify the minority whose lifestyle and behaviour is incompatible with the quiet enjoyment of neighbours.
The scheme which is now proposed is far broader than is necessary to address those concerns. Under the new scheme, in, for example, a rent arrears case, there would be no inquiry by the court as to whether the alleged arrears exist or why they had arisen. It is the experience of housing practitioners that often it is only when a matter comes before a court that the tenant's situation becomes clear. There may be a breakdown in the relationship with the housing officer. There may be language difficulties giving rise to a misunderstanding. A relatively high proportion of those in local authority accommodation are vulnerable for one reason or another and may face special difficulties. Dealing with local authority bureaucracy is a challenge to them.
The amendment seeks to provide that in the first year of the tenancy, the local authority may seek a possession order on the same basis as for a secure tenancy. I have referred to cases of neighbour nuisance which perhaps stand on a different footing from other reasons for eviction, in that the interests of other people are very directly at stake. I accept, at any rate for the purposes of this amendment, that it is important for the local authority to be able to act swiftly against tenants as soon as they start to cause problems for other people. With this amendment and in those limited circumstances, I am therefore suggesting that it is perhaps easier to justify bypassing the court procedure, although from the way in which I put the matter the Committee will understand that I am not even wholly enthusiastic about that one exception. I beg to move.
Baroness Hollis of Heigham: I accept that anti-social behaviour on council estates can be a major problem and is probably a growing nuisance. But I am not sure that introductory tenancies are the right way forward. From my experience of 25 or 26 years as a ward councillor, in only a few cases that I recall did anti-social behaviour manifest itself within the first year of a tenancy. I found, from my own experience, that it tended to be associated with established families where there was a marital breakdown, where there was shouting, screaming and fighting and disturbed children, or possibly where you had a lone parent and as the children grew into their teens they became out of control or started inviting in other youngsters from outside the estate. In all such cases anti-social behaviour was from well-established tenants and had nothing to do with first-year tenants.
Secondly, those who exhibit anti-social or inappropriate behaviour in the first year tended, from my experience, to be people with some form of mental
258
illness or mental health problem. That does not mean that one should not protect adjacent residents against someone whose home, for example, has become a fire risk because he insists on keeping every newspaper, which he has piled high, or against someone who perhaps has learning difficulties is keeping open house for every child on the estate and children from outside the estate. The right approach is to assess the tenant and bring in support, and a move may very well be necessary to a more sheltered environment.
Similarly, it worries me that one could appear to license streets ganging up on an ethnic minority family living in a white street, especially if tenants have recently exercised their right to buy and are trying to go in for up-grading the estate, which they wrongly believe means getting certain other families out of the estate in order to keep up the property values.
I do not think that introductory tenancies address the problem of anti-social behaviour; nor are they particularly relevant, either one way or the other. The right way forward is in the amendments which we will be discussing later today that will grant local authorities mandatory possession where the courts agree that there has been serious anti-social behaviour. From my experience, this is much more likely to occur in an established tenancy than in the first year of a tenancy.
Some local authorities want this power and others do not. I would reluctantly acquiesce to a voluntary scheme, which of course this one is. We need stronger safeguards than currently exist against abuse. The next series of amendments may deal with some of the safeguards against abuse that we need to see in place. But before any scheme is adopted there must be consultation with tenants.
I do not believe that introductory tenancies are a relevant solution to the problem of anti-social behaviour. It seems to me that they could license inappropriate behaviour by the local authority or, more possibly, result in pressure being exerted on the local authority from other tenants. We need convincing that not only are introductory tenancies relevant, but that there are proper and adequate safeguards to ensure that there is no victimisation.
Lord Lucas: I share many of the concerns expressed by the noble Baroness, Lady Hollis. I hope I shall be able to convince her, in not too long a speech, that we have taken the right measures to introduce the appropriate safeguards.
The purpose of introductory tenancies is to get trouble-making tenants out quickly. To that extent the amendments, particularly Amendment No. 255D proposed by the noble Baroness, Lady Hamwee, would effectively drive a coach and horses through the new regime by putting introductory tenancies on exactly the same footing as secure tenancies when it comes to eviction. Only a minority of cases will ever come to court because the vast majority of new tenants will, like most secure tenants, keep the peace and their tenancies too will become secure after a year. But where eviction is thought necessary—and such action should never be undertaken lightly by an authority—it is important that it takes place quickly and with the minimum of fuss.

259
Introductory tenancies are designed to send a clear message to those who engage in persistent anti-social behaviour that such behaviour will not be tolerated and that tenants will lose their homes as a result.
We know that Manchester City Council, with 13,000 new tenants a year, and Gateshead, in particular, are looking forward to bringing in these provisions as soon as they are able to. They clearly think that their problems will be addressed by these provisions. As the noble Baroness, Lady Hollis, said, this is a discretionary and voluntary scheme. For those, like her own council, which are lucky enough not to suffer from these problems, it would not be necessary; and it would be an expensive scheme to introduce if it was not needed.
Towns like Manchester and Gateshead would not introduce this scheme; indeed, there would be little point in introducing it if they were saddled with the same eviction procedures as they have to go through now with their secure tenants. Those are authorities that have put anti-social behaviour at the top of their housing agenda and want to embrace introductory tenancies. We must not shackle their ability to get rid of the hooligan element which has contributed to the spiral of despair in some estates.
A secure tenancy is a lifetime tenancy and introductory tenants can only earn that right by behaving themselves during the trial period. That is the message authorities like Manchester wish to hammer home to some of their tenants.
It may give comfort to the noble Baroness, Lady Hamwee, to know that those authorities which bring in an introductory tenancy regime must have in place fair and rigorous procedures. The Department of the Environment will be issuing guidance to local authorities and housing action trusts on the matter.
Landlords—that is, local authorities and housing action trusts—are already aware that tenants can challenge their decision to evict by applying for judicial review in the High Court, and so they cannot evict a tenant on a whim or for a reason totally unconnected with the occupation of the dwelling. Before making a decision to evict they should undertake investigations to ensure that the action they propose to take is reasonable. For example, they would want to be sure that the complainants are reliable people. They would also assess the seriousness of the complaint to ensure that the annoyance is such that it would annoy a reasonable neighbour and not just one who is unreasonably sensitive.
Vulnerable tenants are an issue with which landlords are fully familiar and particular attention to their needs is essential to ensure that no injustice occurs. We will return to the matter on a later amendment. To achieve that aim the landlord should liaise with the welfare services. I believe that all of these are matters with which landlords are already familiar and our guidance on the subject will be crystal clear.
Turning briefly to Amendments Nos. 255E and 258, we feel those would be too prescriptive and would tie the hands of local authorities unnecessarily. The Government want local authorities to have a free hand in deciding what sort of behaviour could lead to an
260
introductory tenancy being brought to an end. There might be frequent breaches of a tenancy agreement or rent arrears. It must be right that authorities can act to get rid of a tenant in such circumstances. But neither of these would fall within the scope of Ground 2. In fact, they are covered by Ground 1 of the 1985 Act. I hope that what I have said will be enough to persuade the noble Baroness to withdraw her amendment.
9 p.m.
Earl Russell: I believe that the noble Lord, Lord Lucas, was not in the Chamber before dinner. I listened with great interest to his opposition to the attempt to bring in prescriptive powers on the grounds that they were not necessary because the power of judicial review existed. However, the noble Lord will not know that I was arguing before dinner that the absence of statutory restraint tended to multiply the number of judicial reviews. If the noble Lord were setting out to illustrate my argument, he could not have done it better.
Lord Lucas: The noble Earl is quite correct. I believe that I was in the Chamber for most of the time before dinner, but of course I missed that particular argument. If I had heard it, I should have been able to repeat it. I also take the opportunity to apologise to the noble Baroness for not having been present right at the beginning of the introduction to her amendment. I was rather taken aback by England's third goal and, as a consequence, was not watching the clock.
Baroness Hamwee: The reason for me being a little late this afternoon was due to the number of Dutchmen circulating in central London; I knew that they were Dutch because they were wearing inflatable clogs on their heads.
My noble friend is quite right about judicial review. I do not believe that the Minister's answer stands up. Certainly, it cannot be a remedy to be recommended. The noble Lord said that my amendment would "drive a coach and horses" through the provisions regarding introductory tenancies, but of course that was part of the idea. I entirely share the feeling expressed by the noble Baroness that the message which will be sent out to introductory tenants is not that they have to earn the right and show that they can behave well, but that they should not behave badly for the first year.
While I accept that we are discussing an elective procedure, I have considerable reservations about the whole proposal. However, points have arisen as a part of this group of amendments to which we shall return later this evening. Therefore, I think it best to review—non judicially, in my case—the totality of the debate and possibly return to the matter at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 255E not moved.]
Lord Swinfen Lord Swinfen moved Amendment No. 256:
Page 73, line 38, at end insert ("or it is unreasonable to make such an order").
The noble Lord said: In moving the above amendment, I shall, with the leave of the Committee, speak also to Amendment No. 257. During the 12-month period of the introductory tenancy, a landlord will be able to evict a tenant at any time. The landlord will have to obtain a possession order from a court but, as I understand the Bill, there will be no defence to the possession proceedings and the landlord will not have to prove to the court that tenancy conditions have been broken. There is nothing in the Bill to indicate on what grounds a landlord would issue such proceedings, but debate around the Bill has indicated that the introductory tenancy is intended as a method to enable the speedy eviction of anti-social tenants.
The concern about the introductory tenancy regime is that it gives considerable power to landlords to make decisions as to which tenants are behaving anti-socially and gives the tenant no defence against proceedings which may be unreasonable. There are particular concerns among representatives of disability organisation that people with unusual behaviour due to mental illness or disability may find themselves summarily evicted by a landlord who is under pressure from other residents, or who is unwilling or unable to try to resolve any problems in a more constructive manner.
I turn specifically to Amendment No. 256. As I have already said, in order to evict an introductory tenant, a landlord will have to obtain a court order. Under the proposed legislation there will be no grounds on which the court can refuse to give a possession order to enable a landlord to evict an introductory tenant. The amendment seeks to ensure that, if the court does not feel it to be reasonable to make such an order, it will not have to do so. It would thus ensure that in cases in which eviction was not in the eyes of the court the most appropriate way to deal with a problem a tenant could not be evicted. As the proposals are currently set out, there is no incentive for a landlord to first try to solve problems more constructively because he will have the total power to evict an introductory tenant in all circumstances.
The concept of "reasonableness" in courts issuing court orders for possession is already well established. There are at present a number of grounds for possession of assured and secured tenancies where the court must be satisfied that it is reasonable to make an order. These include possession due to a breach of the conditions of the tenancy and for rent arrears in certain circumstances. The courts are, therefore, experienced in making decisions as to whether it is reasonable to grant possession orders.
Amendment No. 257 goes one step further than the previous amendment. It states that the court must order a possession order only where it is reasonable and, in addition, lays down criteria which the court must take into account in determining reasonableness. The amendment would help ensure that local authorities which establish introductory tenancies have fair procedures for taking action against such tenants. While the Government have indicated that it is their intention that that should be the case, in the Bill as constituted
262
there is no legislative safeguard for a tenant whose landlord does not act reasonably or follow the Bill's procedures.
It is important, for example, that in the interests of natural justice an introductory tenant who is threatened with eviction should be given ample warning of the fact that such action is to be taken and given the opportunity to correct his behaviour. It would also seem appropriate that, in the case of tenants with disabilities or mental illness which may be leading to perceived anti-social behaviour, the landlord should take that into account and make every effort to liaise with the social services department or any other body involved in providing care and support to the individual. The amendment would also ensure that any action taken against the tenant was not discriminatory on the grounds of a person's race, sex, sexual orientation or disability. I beg to move.
Baroness Darcy (de Knayth): I should like to express my support for the amendments to which I have attached my name and which have been so clearly explained by the noble Lord, Lord Swinfen. The introductory tenancy scheme is new; it gives much power to landlords and provides very little comeback to tenants. As the noble Lord said, disability organisations are genuinely concerned that people with mental illness or disabilities may find themselves evicted peremptorily for supposed anti-social behaviour, either because their landlord is unsympathetic or because of a lack of understanding on his part; or, indeed, because of pressure from other tenants, as mentioned by the noble Baroness, Lady Hollis of Heigham.
Amendment No. 256, whereby the court does not have to grant a possession order if it feels that that is unreasonable, and Amendment No. 257, which describes the yardstick by which to judge reasonableness, would ensure that the landlord considers carefully before taking action against a tenant. I hope the Minister will feel that these modest amendments have value. I look forward to hearing his reply.
Baroness Hollis of Heigham: I have much sympathy with the purpose of these amendments—they are consistent with what we were discussing earlier on the previous amendment—particularly as I do not like the concept of introductory tenancies. However, I hope that the noble Lord, Lord Swinfen, will not disagree with the point I am about to make. In a sense the provision is slightly the wrong way round because noise from a tenant suffering from schizophrenia, for example, is no more tolerable to the nextdoor neighbour than if the noise is being made by a teenager who will not turn the hi-fi down and who is not under the control of his parents and who has no such mental illness. The right response is not necessarily to say that the landlord should not be granted possession, either under an introductory tenancy or under any other tenancy, but that the requirement should be on the landlord to produce more satisfactory alternative accommodation; that is, accommodation with appropriate support structures and the like.
In other words, where this sort of situation blows up—if I may use that phrase—it is usually because there has been an inappropriate placing of a vulnerable tenant

263
on an estate or in a property where there are no support services. The right answer is not necessarily for that tenant to remain there, or for the courts to decide whether that tenant should remain there. However, an obligation should be placed on the local authority as regards seeking possession of a property where the tenant has mental or physical health problems. There should be a duty—not merely a permission—on the local authority to provide more suitable alternative accommodation. That would seem to me a more helpful way forward because it then makes it appropriate for the other tenants to have quiet enjoyment of their property. It also ensures that the tenant who may have mental or physical health problems continues to enjoy proper and decent, but now supported, accommodation.
Earl Russell: I wish to support these amendments. Legislating is a little like firing a shotgun. One is aiming to hit something. It may be a perfectly legitimate purpose to want to get rid of anti-social tenants. It may be a perfectly legitimate purpose to want to get rid of pigeons. However, in both cases some of the pellets are likely to go to places where they are not intended. We create powers; quite rightly we do not thereafter have a continuing control over how those powers are exercised. They may be exercised in all sorts of ways. As we in this Chamber cannot sit down and decide whether each several tenant is anti-social—and if we did, we would never do anything else—the restraint of reasonableness, as proposed by the amendment of the noble Lord, Lord Swinfen, is very much the right one.
I take the point that the noble Baroness, Lady Hollis of Heigham, made; namely, that noise made by a schizophrenic is just as annoying to the neighbour as noise made by a careless teenager. But the fact that it is just as annoying may be compatible with it being rather more tolerable. In most decent roads—certainly including my own—people feel that there is a balance to be struck between the reason a disturbance is made and the amount of nuisance it creates. To take an example from my memory, I remember when my nextdoor neighbour at school decided to learn to play the tuba. I decided that I had to make a great effort to tolerate that when he was playing it himself, but when his friends came to exercise their lungs upon the instrument I did not feel the need to extend the same tolerance. This is where it may be relevant that the tenant may have some form of mental handicap. He may be schizophrenic, for example. The pacing late at night can be trying but because we know this sort of thing can happen to any of us we stretch a point and tolerate it. That is an important part of common humanity which I would not want these introductory tenancies to destroy.
It is also a vital point, one that has been made before in this Chamber many times—I repeat it only quite cursorily—that where one is dealing with tenancies for people with physical disabilities, there may be a question of purpose building which would be entirely wasted if one thought that the person might be chucked out after a year, and where one may have to have a process of learning to live and let live which may take a little longer. The reference to grounds for writs is of course also well taken.
264
A power which is as uncontrolled as the power created by Part V of the Bill could be dangerous in future in the hands of someone with prejudice. The reference to the power is important, but the test of reasonableness which is implied in Amendment No. 256 is right.
Therefore, again, we need to have restraints on the exercise of power. One cannot have absolute power without restraint. It will come in under judicial review if we do not put it in the statute. However, I believe that it is tidier, more limited, more specific and more predictable if the provision is put in statute.
9.15 p.m.
Lord Lucas: As with the previous group of amendments, we do not wish to fetter the way in which the power works in practice, to reduce it to the level of existing powers. We want it to be quick and easy in operation.
It is, of course, of vital importance that tenants who are in some way vulnerable, have adequate safeguards under the new system. I am thinking here particularly of the disabled—those individuals receiving community care, and those who do not speak English as a first language.
Councils will already be aware of the needs of those of their secure tenants who are vulnerable and that they will also need to act fairly and reasonably with regard to every aspect of the introductory tenancy regime. The Department of the Environment guidance, which will be sent to all local authorities, will reinforce this message and will contain advice on the special arrangements that need to be made to protect vulnerable introductory tenants. The initial information given to prospective tenants should be easy to understand so that tenants are aware of their duties under the tenancy. Where a tenant has special needs (for instance, people with learning disabilities), the authority should choose communication methods carefully to get across what is required of them and what support services are available. Carers and helpers should also be involved.
Liaison with social services will be essential. Authorities should make arrangements for automatic notification to social services at an early stage once any problems arise. Liaison should be on a formalised basis with each party (the housing department, social services, NHS and the tenant) aware of their role.
Vulnerable introductory tenants should be visited regularly either by the staff of the housing department, or by a care agency involved. Regular visits will enable any problems to be highlighted quickly.
I cannot emphasise too strongly how important it is for authorities to ensure that vulnerable people are fully protected. It will he essential that local authorities are fully alive to the needs of those tenants and to their relationship to the community as a whole.
The points made by the noble Baroness, Lady Hollis of Heigham, about support and placement are particularly relevant. However, I think in particular of the point just made by the noble Earl, Lord Russell. He spoke of the importance of our living as a community with people who suffer from disabilities which

265
neighbours may find a little upsetting. We must make sure that councils are vigilant in ensuring that neighbours are not able to make a case for eviction against a vulnerable tenant whose behaviour they find upsetting. Such situations will require sympathetic but firm handling by the local authority. Eviction of the vulnerable tenant in those circumstances is not an acceptable result.
Clearly, as drafted the amendments suffer from the same deficiencies as those from the first group and we would not be able to accept them. With the assurances that I have given to the noble Lord, Lord Swinfen, of the attitude that we take to the problem, which will be communicated to landlords through our guidance, and which we would expect to be echoed through the application of judicial review should that prove necessary—given the general practice of local authorities and housing action trusts in this matter we would not think it to be necessary in all but the very occasional case—I hope that he will feel able to withdraw the amendment.
Baroness Hollis of Heigham: The Minister answered one of two questions that I would have asked. He confirmed that, as currently drafted were the Government not to accept the amendments, the Bill provides that the decision of the local authority to evict on the basis of an introductory tenancy was subject to judicial review. That was good.
May I put another question. If someone with mental or physical health problems made himself or herself the object of an eviction order, would he or she be regarded as having made himself or herself intentionally homeless? Where someone was vulnerable and in priority need, some of our concerns would be overcome if there were a continuing duty on the local authority to continue to have a duty to rehouse under the Act. In other words, I refer to the case of the schizophrenic where the noise level was intolerable. In a 1950s or 1960s flat, the sound levels between the second and third floors can be intolerable for the people underneath, perhaps with children trying to sleep. Possession is sought. In that situation would that person be regarded as having made himself or herself intentionally homeless; or could we hope that the local authority would continue to have a duty under the Bill to provide perhaps more appropriate accommodation?
Lord Lucas: I find myself in total sympathy with the noble Baroness but unable to be sure of giving her an accurate answer. If she will allow me, I will write to her.
Baroness Hamwee: It is something that we need to know very quickly. If it is not possible to have the answer later in the debate tonight, perhaps we may have it in time for us to take it into account when we debate these matters later in the Committee stage.
On another point, it is suggested that it is inappropriate to place too much reliance on judicial review. As I understand it, judicial review is a review of the process, not of the reasons for a decision being made. Without amendments, or without a local authority
266
having adopted publicly known guidelines of the sort we have debated, the process can be quite unrelated to what we agree are all appropriate reasons.
Earl Russell: I listened with very great interest to the Minister's reply. I am in entire sympathy with the ideas he wants to put into guidance. I have no argument with his intentions. However, he is leading local authorities into temptation. Housing stock is scarce in many local authority areas. Many people want it. So the temptation to get rid of a tenant may, on occasion, be acute for a great variety of reasons. The Minister is creating a temptation and then telling people not to succumb to it. He is telling them not to eat the apple. I think that is beyond his powers.
Baroness Fisher of Rednal: I came in late to the debate, but I believe the problem arises from a health authority being able to re-house people that it wants out of the hospitals but without the back-up to go with that. In other words, the local authority is carrying the can for another area of government. The authorities have no back-up. People suffering from all kinds of mental problems should not be penalised for that. The local authority should be able to say to the hospital authorities: "Will you please come in with your workers to see whether, through resettlement, we can keep them in housing, instead of putting them through this gamut which might mean eviction?". Better co-ordination is preferable to a strict requirement that they be got rid of, which is detrimental to them and to all the people they have disturbed.
Lord Swinfen: Before my noble friend responds to the points made, can he tell me what is the cost of judicial review? He mentioned it on a number of occasions in relation to different amendments. Would the introductory tenant be likely to receive legal aid to obtain a judicial review? What would be the cost of introducing reasonableness into the Bill as against the cost to tenants and local authorities of having to apply for judicial review?
Lord Lucas: To deal with the latter point first, the cost would be that the system of introductory tenancies would thereby become ineffective. The key remedy that the provision gives to landlords is the ability to get rid of a tenant quickly without having to go through lengthy court procedures.
As to the cost of judicial review, I shall chance saying that this is a matter for which legal aid could clearly be obtained. If not, it is not likely to be a very effective defence available to local authority tenants. The High Court, on judicial review, has the power to quash a decision if there are procedural errors in the decision-making process. It can also do so if the decision is one which no reasonable council would make. That is the level of test at which we are looking.
I do not believe that the noble Baroness, Lady Fisher, missed anything by coming late to the debate. Perhaps she was watching England's fourth goal. Clearly, we all share the same concerns. I have listened and will read with great care what has been said this evening. We want to achieve the same result, which is to make sure

267
that the considerable new power that we are giving to local authorities, fettered only by the right of judicial review, is not one which, in practice, will be abused as this evening people feared that it might be abused. It is a concern that we all share. We believe that we have taken the necessary steps but we are not so arrogant as to say that we are sure about it until we have listened very carefully to what other noble Lords have to say.
Baroness Hollis of Heigham: I am sorry to delay the noble Lord, Lord Swinfen, again. It would help enormously if the Minister were able to come back, perhaps at Report stage, with an amendment to the Bill in relation to certain defined categories of vulnerable people—particularly those with mental health problems, learning difficulties and the like—to the effect that if the local authority, whether under an introductory tenancy or a secure tenancy, seeks possession of that property by virtue of alleged anti-social behaviour, nonetheless the person in question should not be judged to have made himself intentionally homeless and therefore the local authority should continue to have a duty to house. That would meet some of our worries. Otherwise, we leave local authorities very vulnerable to unpleasant pressures.
Baroness Hamwee: Let me prolong the discussion for just one short moment. I understand that for secure tenants, the practice of the courts in the case of intolerable nuisance by people who are mentally ill is to make an order for possession on condition that an offer of suitable alternative accommodation is made. I wonder whether the Minister could give an assurance—possibly not at this moment—that there is nothing in the Bill that would restrict the court in imposing a similar condition in the situation that we have been discussing.
Baroness Gardner of Parkes: Like the noble Baroness, Lady Fisher, I too came late to the debate. I am not sure about the last statement with regard to suitable alternative accommodation. Some cases are extremely difficult. From my own housing experience, I recall a tenant who constantly set fire to the wastepaper bin and therefore the flat. It was terrifying for everyone who lived within reach of that flat. What suitable alternative accommodation is available for such a person? Such problems can be extremely difficult.
Let me respond to the point made by the noble Baroness, Lady Fisher. I am chairman of a hospital trust where there are a great many psychiatric and mental health cases. We provide care in the community—continuing care. Now there is a new register, which is also a continuing register. One of the difficulties is that accommodation suitable for people suffering from mental illness is limited, particularly if one wants to put them not into secure housing or individual housing but into a place within a building where they are supported by other people. The minute that the building is filled and there is nowhere to move people on to the next stage, the whole system becomes gummed up. So it is not a very easy situation.
Lord Lucas: I can reply briefly to the noble Baronesses, Lady Hamwee and Lady Hollis. Perhaps
268
they will permit me to look at the problems on the questions that they raised with a view to returning to them at Report stage or earlier.
Lord Swinfen: I thank everyone who has taken part in this short debate. Possibly I agree with the noble Baroness, Lady Hollis, that this situation has been put the wrong way round and that suitable accommodation should be given in the first place. I have a series of amendments that we will be dealing with at a later stage of the Bill, and I hope that when we come to them, even if the noble Baroness does not support the actual amendments because she does not like the wording, she will support the idea behind them.
Guidance is all very well, but I feel that the court should be able to use the test of reasonableness in the Bill on this occasion with introductory tenancies. I quite agree that judicial review is possible. It sometimes takes time to get to court and it costs a great deal of money. It would be much better if reasonableness were there in the first place, and the court could deal with the matter at a much lower cost then than having to go on to judicial review, which is going to come out of the tax and ratepayers' as well as the tenants', pockets.
I am not very happy with the response of my noble friend Lord Lucas on that point. I will, however, read the debate with care. At this stage of the evening I beg leave to withdraw the amendment, but I may well come back to it at a later stage.
Amendment, by leave, withdrawn.
[Amendment No. 257 not moved.]
Clause 113 agreed to.
Clause 114 [Notice of proceedings for possession.]
[Amendment No. 258 not moved.]
Clause 114 agreed to.
9.30 p.m.
Clause 115 [Right to request review of decision to seek possession.]
Lord Swinfen Lord Swinfen moved Amendment No. 260:
Page 74, line 18, leave out ("a") and insert ("an independent").
The noble Lord said: I beg to move Amendment No. 260 and to speak at the same time to Amendment No. 261. I see that Amendment No. 261A in the name of the noble Lord, Earl Russell, is also grouped with these amendments; no doubt he will wish to speak to that amendment in due course.
The only safeguard given to an introductory tenant who is faced with possession proceedings is that he is entitled to a review of his case. The Bill proposes, however, that such a review shall be carried out by the landlord. Clearly, a review carried out by the landlord who has instigated the possession proceedings is unlikely to be impartial and is certainly unlikely to be seen as such by the tenant.
This amendment suggests that an introductory tenant faced with possession proceedings should be entitled to an independent review by someone other than his landlord. An independent review panel could be made up of lay people from the local community, in a similar

269
way to the use of lay people who sit as justices of the peace, school governors or on social security tribunals. It would be possible to ensure that there was one representative from the local authority if this seems suitable. It would also seem appropriate to have tenant representation on such a body.
Given the very strong powers which introductory tenancies will give to local authorities—in essence, the right to evict any tenant with whom they are dissatisfied—it seems vital to me that there is at least some independent safeguard of the tenant's rights. The landlord is unlikely to be seen as giving an impartial review of the case. This may lead to introductory tenants choosing to challenge evictions via the judicial review process, causing expense to local authorities, individuals and, potentially, to the legal aid system, clogging up the court system. Some of this might well be avoided if the tenant felt that his appeal had been considered by a truly independent review panel as I propose in this amendment. I beg to move.
Earl Russell: I support the amendment. In speaking to my amendment, I would not like necessarily to suggest that it is in any way better than that of the noble Lord, Lord Swinfen. I do not intend to push my amendment to a Division, first, because it was drafted at home late on a Sunday night and, secondly, because I have some doubts about attempting to import the common law concept of natural justice into statute.
The point to which I wish to draw attention is the same as that made by the noble Lord, Lord Swinfen; that is, the need for an independent panel for review. It is in effect a judicial panel and somebody is being given something which is certainly in effect a punishment. Judging by much of what has been said about the purpose of the introductory tenancy, it may even be construed to be an intentional punishment.
It is a fundamental breach of the principles of natural justice for anyone to be judge and party in their own cause. The noble Lord, Lord Irvine of Lairg, recently gave a lecture on the judiciary, which attracted a good deal of attention and was the subject of a debate in this Chamber. In that lecture he referred, with some disapproval, to what is commonly taken to be the last case in English history when a judge attempted to strike down the provisions of an Act of Parliament in the reign of King James I. That was done on precisely this ground of natural justice, but in that case it made the Royal College of Physicians judge and party in its own cause.
The clause before us is the absolute carbon copy of the clause which was struck down by the judge in the reign of King James I. Drafting statutes in that way tends to lead Her Majesty's judges into temptation. Not only does the Bill make local authority judge and party in its own cause, it also purports, in Clause 115(2), to free the landlord from all the normal procedural safeguards which are also associated with natural justice. It says,
"the landlord shall carry out the review in such manner as it considers appropriate".
270
That is the same style of drafting to which I have been referring all evening. It says in effect that the landlord may do whatever it likes. But one cannot do that at common law, even if one is permitted to do it by statute. So again it is something which invites the intervention of the courts.
As my noble friend Lady Hamwee pointed out, judicial review can only be concerned with the procedure of a decision. It is a great mistake to legislate in a way which substitutes a judicial review of the procedure for a judicial examination of the merits. That is why we would be so much better advised, as the noble Lord, Lord Swinfen, suggested, to have something which lays down guiding principles which local authorities shall observe rather than purporting to give them an absolute power to do what they like, which is something which, under common law, the courts will not leave to them, in spite of the statute. Therefore it will not achieve the effect it intends. It will bring the legislature and the judiciary into conflict and it will not work.
The noble Lord, Lord Swinfen, has gone most of the way to showing how it should be put right and I hope that the Government will listen to him.
Baroness Darcy (de Knayth): I too support the amendment which will ensure that the review is independent and not carried out by the landlord. That seems to me to be essential if we are to protect the rights of tenants. It is essential that it should be unbiased, and visibly so.
I waited to hear the noble Earl explain his admirably worded amendment. I wondered whether it was the sort of thing one put into statute. However, I agree totally with what he said. I hope that the Minister will agree with the amendments and provide the necessary counterbalance to the strong powers the introductory tenancies give to the landlord. Originally I had intended to say that I hoped that he would accept the amendments or bring forward something of his own at Report. I am not sure that that is not Cloud-cuckoo-land, having heard his reply to the previous batch of amendments. However, I am ever optimistic and hope that he will at least give an encouraging reply.
Baroness Gardner of Parkes: I oppose these amendments. As I read this section of the Bill, I understand that it applies only to local housing authorities or a housing action trust. Therefore we are not talking of private landlords; we are talking about social housing. The setting up of an independent process would be a costly affair and may not work very well.
At the present time local authorities have methods of review for all sorts of things and they call upon serving councillors to sit on those committees. They try to detach themselves completely from any view and deal with the cases in an impartial way. That is very correct. In theory the suggestion of my noble friend Lord Swinfen sounds delightful that one might have people who are on local school boards or those who are helping in some other way in society such as local justices of the peace. That is all very well in theory, but in practice it would take a great deal to set up. It is

271
extremely difficult now to get enough people to serve on school management committees and as JPs who are unpaid in this country. These people are already giving a tremendous amount of their time for nothing in order to help the community. It will be very difficult to get them to take on this added responsibility. It could so slow the process down or snarl it up that the whole purpose of the introductory tenancy could be lost. That is a point that we are overlooking.
One of the real arguments in favour of an introductory tenancy is that people will be more likely to get a tenancy of that type much earlier than they might otherwise because it is of an introductory nature and subject to review. I consider that the allocation of points, for example, might enable one to give an introductory tenancy at an earlier stage than a secure tenancy. If one is going to introduce tremendous disincentives and great bureaucracy and make it almost impossible for the local authority to operate the scheme in terms of cost and logistics, I do not believe that it will be wise to do so. For that reason I oppose the amendment.
Lord Swinfen: Before my noble friend sits down, perhaps I may say that I do not want to make everything costly. I appreciate the point that she made. I also appreciate that local authorities have set up reviews already, but do they set them up when they are either the plaintiff or the defendant in a case?
Baroness Gardner of Parkes: I am unable to answer that specifically. I believe that they do, but someone currently involved in local government might be able to give a more accurate answer.
Baroness Hamwee: I intended to raise a question on that very point. As regards school admissions there are appeals procedures. The local education authority will set up the procedure providing, according to my experience in my own authority, a panel to deal with the appeal. My question to the Minister is this: Is there any other situation where the statute calls for a review, using the term "review"? I share with other Members of the Committee a concern that this matter should be dealt with in a proper, quasi-judicial manner.
Earl Russell: I listened with care to the noble Baroness, Lady Gardner of Parkes. I take her point about the difficulty of getting people to go through this process. I cannot help feeling that that argument does not help the Bill. Unless we can get people to do the review work, who are independent of local authorities, the whole procedure of the introductory tenancy cannot work at all. That is a conclusion which the Government may wish to resist. The noble Baroness used at one point the phrase, "slow down or snarl up". In my experience it is much more often speed that snarls you up rather than slowness.
Lord Lucas: The noble Earl is quite correct in that we are here dealing with another part of the Bill where the backstop is judicial review. We have in place procedures which are intended to be quick and where those operating them are bound by statute to be reasonable. If they act in a way which is not reasonable the backstop to that is judicial review. We believe that
272
in adopting that structure we have a combination of a quick process which in the vast majority, if not in all cases, is likely to be fair and effective with the power of the court to review that available as a backstop.
I begin by setting out the reasons why we prefer the system that we propose rather than that proposed in these amendments. Clause 115 gives an introductory tenant the right to request a review of the landlord's decision to seek possession. Amendment No. 260 would require this review to be independent. Amendment No. 261 is consequential. We cannot see the advantage of an independent review over an internal review by the landlord. The local authority or housing action trust will have been involved in the case from the beginning and will have access to all the information on which the decision was based. Moreover, an independent review would take longer because of lack of familiarity.
Let us consider the system as set out in the Bill. The tenant receives a notice to quit and has 14 days to exercise his right to ask the landlord to review his case. The landlord must complete the review and notify the tenant of the result by the earliest date on which proceedings against him could begin, which would be at least 28 days after serving the notice. There are good reasons for a prompt timetable. We fear that the inevitable consequence of an independent review would be to drag the whole affair out interminably. Introductory tenancies are intended to help landlords to deal promptly and effectively with tenants who prove to be troublemakers and make other tenants' lives a misery. Hence, quick but fair procedures are required. Landlords will want to have in place fair and rigorous procedures that enjoy the support of tenants. Guidance from the Department of the Environment will not dictate how a landlord should conduct such a review, but will point out the need for impartiality—for instance, officers involved with the eviction should not be involved in the review. We can see no advantage in an outside body reviewing the local authority's actions. The obvious alternative to the local authority itself conducting the review is for the courts to do so. I have already addressed that matter. We believe that it would slow down the process to the point where it had no advantage over the existing system.
Amendment No. 261A in the name of the noble Earl, Lord Russell, does not, as the noble Earl points out, belong in statute. That safeguard is there ultimately in judicial review. We rely on the availability of the courts through that process to ensure that, should there be an abuse of this system, it is properly corrected.
9.45 p.m.
Earl Russell: The Minister's last remark about reliance on judicial review is extremely interesting. It will not have escaped the Minister's attention that recently Ministers of the Crown in other departments have complained bitterly about the growth of judicial review; indeed, in one or two instances they have complained about the existence of the power itself. I cannot help feeling that that sits a little oddly with the Minister's frank admission that he is creating a power that leads people to exercise the power of judicial review. I was also a little taken aback by the Minister

273
saying that he could not see the point of an independent review. He is flying in the face of one of the basic principles of English law for at least the past five centuries—that a person shall not be judge and party in his own cause.
Before we return to this matter at another stage, I ask the Minister to look at the debates on the Child Support Act 1991 when a procedure was introduced to allow another officer in the agency to conduct a review of a decision taken by the first officer. In particular, I ask him to look at the speeches made on that proposal by the noble and learned Lord, Lord Simon of Glaisdale. If he refers to those speeches he will appreciate the shock that some of the things he has said tonight may create in those who read them in the Inns of Court. This is a very unwise series of remarks, and I hope that the Government will think better of it.
Lord Lucas: I shall look at that precedent and others that I can find. With reference to the question posed by the noble Baroness, Lady Hamwee, I am sure that there are quite extensive review procedures in social security, although I am not familiar with them. Certainly, I am familiar with the schools procedures, some of which are not totally independent and involve appeals to a panel of governors who happen not to be the governors who took the first decision. There are precedents and parallels, perhaps, in previous practice, but given what has been said I shall certainly look carefully at those and, in particular, at the ones drawn to my attention by the noble Earl, Lord Russell.
Turning briefly back to the subject of judicial review and the comment by the noble Earl that reliance on judicial review is odd—not at all! Judicial review will be very much a backstop. We expect local authorities to act fairly in all matters concerned in introductory tenancies. Recourse to judicial review, we are confident, will be very unusual.
Lord Swinfen: At the beginning of his speech my noble friend said that the landlords have to act reasonably as laid out in the Bill, yet on my last group of amendments he resisted strongly my wish to put into the Bill that they should not act unreasonably. Where in the Bill do they have a duty to act reasonably?
Lord Lucas: It is not in the Bill; it is a basic duty.
Lord Swinfen: I am not very satisfied with my noble friend's response. The feeling I get from what other Members of the Committee have said is that a number of them are not satisfied either. We should not be relying solely on judicial review. There should be some form of independent review. In the long run it will be cheaper, appear to be a great deal fairer and, I suspect, more effective.
I also suspect that if we go down the route that we appear to be travelling at the moment according to the Bill, it will not be over-long before some tenant who is removed from his tenancy is funded by someone to take the matter to the European Court of Justice. I would
274
suspect that the local authority, the housing authority, would lose in that court because there would not be effective justice given or certainly not seen to be given.
It is late and therefore I will not divide the Committee on this matter tonight, but I reserve my right to come back at a later stage. I beg leave to withdraw this amendment.
Amendment, by leave, withdrawn.
Baroness Hamwee Baroness Hamwee moved Amendment No. 260A:
Page 74, line 18, leave out ("a") and insert ("an independent").
The noble Baroness said: I beg leave to move Amendment No. 260A and speak to Amendments Nos. 262 and 262A, which are still concerned with the matter of review. The Minister said in that last exchange that the Government were relying on the remedy of judicial review but were certain that it would not often be required. There seems to be an inconsistency in that approach. However, as the noble Lord, Lord Swinfen, said, no doubt we will come back to this matter.
My first amendment proposes the addition of a sub-section requiring that a date before which the tenant is to be notified of the outcome of the review will be specified. Clause 115 assumes that the local authority has specified in the notice of proceedings a date before which the tenant will be notified of the outcome of the review, but none of the clauses actually requires the landlord to specify a date. If it did not specify a date it would be quite hard to apply Clause 115(4) in particular. I wonder whether the Minister can explain how that is to operate without the requirement that I am proposing.
Amendment No. 262 adds a requirement for written notice. My concern that notice should be written is greatly strengthened by the exchanges that we have had over the past hour or so. Whatever mechanism there is to be for review, unless reasons are given in writing it will be very hard to pursue the matter. I hope that the Government, if not agreeing to put this small amendment on the face of the Bill, can at least give some assurance as to the guidance that they will provide.
Finally, Amendment No. 262A proposes that a period of not less than 14 days be inserted into Clause 115(4) as the date to be specified which:
"shall be earlier than the date specified in the notice of proceedings as the date after which proceedings for the possession of the dwelling-house may be begun".
In other words, a decent period of notice shall be given.
Perhaps I may, in a slightly unorthodox fashion, ask that my noble friend Lord Redesdale make an important announcement to the Committee when I have moved the amendment. I beg to move.
Lord Redesdale: I support my noble friend Lady Hamwee, and I must ask the Minister whether he is aware that England has beaten Holland four to one?
Lord Lucas: Among many other things, no, I was not aware of that. Unusually for this evening, I am delighted to find out.
Clause 115(4) already requires the review to have been carried out and the tenant notified of the outcome before the date specified in the notice of proceedings as

275
the one after which proceedings can begin. There is no question, therefore, of a tenant being evicted before a review of his or her case has been carried out, or before the tenant has been informed of the result of that review. For that reason Amendment No. 260A is unnecessary.
Amendment No. 262A would require the tenant to be notified of the outcome of the review at least 14 days before the date after which possession proceedings may be begun. That too is unnecessary. The Bill already requires the local authority to complete the review and notify the tenant before proceedings may be begun. The requirement to have at least two weeks' grace between the outcome of the review and the beginning of possession proceedings will merely drag out the procedure, which would be of no benefit to either the local authority or the tenant. If the review reverses the decision to evict, all well and good for the tenant, but if it does not, the need for a prompt eviction remains. If we were to accept Amendment No. 262A, other tenants affected by the anti-social behaviour would have to ensure an unwarranted additional two weeks of aggravation.
Under Amendment No. 262 the noble Baroness wants the tenant to be told of the outcome of the review in writing. I believe that is too prescriptive. It will be sensible for local authorities to write and I believe in the vast majority of cases they will do so. That is normal good practice for local authorities dealing with eviction cases. However, if they choose some other method of communicating that is rightly a matter for them.
I have no illustrations to offer of how else they might convey the decision to evict. Perhaps a couple of heavies turning up and dumping the tenant over the balcony might suffice. However, they may do it, the legislation already requires them to notify the tenant, and that is the key point. With those words, I hope that the noble Baroness will be able to withdraw the amendment.
Earl Russell: The Minister suggests that allowing two weeks for the people to find somewhere else to live might drag out the proceedings. Might it not be preferable to drag out the proceedings rather than to drag out the tenants?
Lord Swinfen: I feel that the notice to tenants should be given in some way that they have a record of it. I agree that it is not always appropriate to do it in writing. It may be necessary to use an alphabet sign language for people who have profound hearing problems or a tape for those who have visual problems. There should be some record that they can have in front of them if they need it.
10.00 p.m.
Baroness Hollis of Heigham: I support that. I cannot believe that a local authority would not give notice in writing. It may be that the Government will cover this
276
matter through a code of practice or guidance. However, if there is any doubt, it should be written onto the face of the Bill.
Lord Lucas: I shall certainly consider what has been said.
Baroness Hamwee: On the basis that it will be considered, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 261 to 262A not moved.]
Clause 115 agreed to.
Clause 116 agreed to.
Clause 117 [Persons qualified to succeed tenant]:
Earl Russell Earl Russell moved Amendment Nos. 262AA:
Page 75, line 20, leave out ("resided") and insert ("been normally resident").
The noble Earl said: I hope that we can dispose of this briefly. In moving this amendment I should like to speak also to Amendment No. 262AB, which basically covers the same point.
This concerns the conditions for a successor tenant. The Bill states that a person is qualified to succeed the tenant if:
"he is another member of the tenant's family and has resided with the tenant throughout the period of twelve months".
It occurred to me that that may tend to rule out a child of the previous tenant who was, at the relevant time, a student. That is why I seek to insert the words "normally resident" and to substitute the word "during" for the words "throughout". It may be that my concerns are unnecessary and, if so, I should be happy to be told that. I beg to move.
Lord Lucas: I had not addressed myself to the particular concern raised by the noble Earl, Lord Russell. As a matter of general principle, if a particular place is a person's main residence, he is resident there despite the fact that he may be on holiday or away for short periods of time. Obviously that will depend on the exact circumstances.
However, as I said, I had not addressed myself to the question of whether a student away at university would or should qualify for those purposes. I hope that the noble Earl will allow me to write to him on that matter.
Earl Russell: That is precisely the reply for which I had hoped. I am aware of the point which the Minister made about main residence. In view of the way in which my children have been treated in relation to the electoral register, I am aware that people are in great confusion as to whether they normally reside with us or at their universities. That confusion has become much greater over the past five years.
I am merely concerned to suggest that succeeding one's parents in a tenancy is not improper. Therefore, I shall await with great interest the Minister's answer. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 262AB not moved.]
Clause 117 agreed to.
Clause 118 [Cases where the tenant is a successor]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 262B:
Page 75, line 33, leave out subsection (2) and insert—
("(2) A tenant to whom the tenancy was assigned in pursuance of a family order is a successor only if the tenant who assigned him the tenancy was a successor.").
The noble Baroness said: In moving this amendment, I shall speak also to Amendments Nos. 263, 263ZA, 263ZAA, 263ZAB, 263ZAH, 263ZA 270C and 270D, and, for good measure, although it is not in the grouping, Amendment No. 276A.
The explanation is probably shorter than reading the list of amendments. They are designed to cover transfers of tenancies in all forms of matrimonial and family proceedings where the effect of the transfer is to assign the tenancy from one spouse or former spouse to another, or from a parent for the benefit of a child under the Children Act 1989, or from an estate.
These are drafting amendments intended to provide a comprehensive definition of "family order", although my noble friend suggests that once the Family Law Bill completes its passage there may need to be yet another revision of the matter. I beg to move.
Lord Lucas: These amendments seek to extend references to cover assignments made under other pieces of matrimonial and family legislation which Amendment No. 270C defines under the heading of "family order". I do not propose to dwell on the detail of these amendments now. Amendments with a similar intention but restricted to the Children Act 1989 were debated in another place. An undertaking was given to introduce amendments to this effect at a later stage. As we pointed out then, and as the amendment demonstrates, there are several complex pieces of legislation involved. We wish to ensure that each of these and the consequential effect on both this Bill and existing housing Acts is correctly reflected in any amendment which we bring forward. We will be tabling amendments on Report and in doing so we will reflect on the amendments. I hope that is sufficient reassurance for the noble Baroness to be able to withdraw her amendment.
Baroness Hamwee: Of course, I am perfectly happy to return to the matter at the next stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 263 not moved.]
Clause 118 agreed to.
Clause 119 [Succession to introductory tenancy.]
[Amendment No. 263ZA not moved.]
Clause 119 agreed to.
Clause 120 [Assignment in general prohibited.]
[Amendment No. 263ZAA not moved.]
Clause 120 agreed to.
Clause 121 [Right to carry out repairs.]
On Question, Whether Clause 121 shall stand part of the Bill?
Earl Russell: I assure the Committee that my concern with this clause is only probing. I have no objection whatever to the carrying out of repairs. In fact, I am strongly in favour of it. My concern is with the effect of the one year introductory time limit on the carrying out of repairs. It is my experience—and it may be that of some others among Members of the Committee—that builders are occasionally dilatory. If we require people to conduct repairs, perhaps in the last three months of their tenancy, they will be conducting repairs which will be completed in time for the arrival of a new tenant. We may find people showing a little reluctance to repair a property at great expense in ways in which only their successor will benefit. There will be a good many technical problems in pro-rating the cost and, indeed, on occasion in dividing the responsibility which may exercise people quite considerably.
I put down the opposition to the clause in order to find out whether these problems have been foreseen. If they have been foreseen, I wonder whether there is any solution prepared for them, or whether the Government will suggest that it will all be all right on the night. Alternatively, I wonder whether they are going to take the line that this is all the responsibility of the local authorities and that somehow they are bound to solve it. I should like to think that there were some constructive ideas available on how this should be done.
What was once described by the former leader of another place as the process of osmosis, by which information reaches a Minister in this House, is occasionally rather slow in operation so one does have to exercise one's soul in patience. I wait with great interest to know what the Minister is going to say about this. I beg to move.
Lord Lucas: I hope I can give some rapid comfort to the noble Earl. On the first point—the effect of the one year period—we expect the vast majority of introductory tenants to go on to secure tenancies. Secondly, what we are dealing with in the right to repair, as at present envisaged, is concerned with things like blocked sinks, unsafe power or light fittings and toilets that do not flush—items that have to be repaired very quickly. The time-scale given for some of those is of the order of 24 hours and really quite short even in relation to an introductory tenancy.
Earl Russell: That is a reassuring reply but if the noble Lord has found that items that have to be repaired quickly are always repaired very quickly he has been luckier than I have, and I congratulate him. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 121 agreed to.
Clauses 122 and 126 agreed to.
Schedule 12 agreed to.
Clause 127 [Index of defined expressions: introductory tenancies]:
[Amendment No. 263ZAB not moved.]
Clause 127 agreed to.
Clause 128 [Extension of ground of nuisance or annoyance to neighbours, &c.]:
Earl Russell Earl Russell moved Amendment No. 263ZABA:
Page 79, line 13, leave out (or illegal").
The noble Earl said: I cannot help thinking of this amendment as zabaglione. It is only a probing amendment, as, indeed, is Amendment No. 263ZAGB which is grouped with it and to which I should also like to speak.
The amendments cover the phrase in paragraph (i) of the clause which refers to,
"using the dwelling-house or allowing it to be used for immoral or illegal purposes".
I am sure that the Committee will take it for granted that I have no wish to encourage illegal purposes. However, I should like to know quite how widely the clause extends. Obviously, if the dwelling is used to organise a drug pushing racket, that will not do; similarly, if it is used by a den of thieves, that will not do. However, let us suppose that we are talking about the property of a journalist who happens to be unsuccessful in a libel case. I should have thought that such a situation would have been outside our intention as Parliament. However, I would welcome the Minister's reassurance that that sort of situation would not be covered under the clause as drafted. In the sure hope that I will receive that reassurance, I beg to move.
Lord Lucas: Clearly I share the noble Earl's opinion as regards the meaning of the word "illegal". However, rather than chancing my arm by offering a reassurance now at this stage, perhaps I may do so by letter. I do not expect that our answer will be otherwise—nor, indeed, that we would wish it to be otherwise—than the noble Earl supposes.
While I am on my feet, I should like to record the fact that I have been told by my Bill team that another place uses a different method of numbering amendments in Committee which is altogether easier to understand. I must say I find that very hard to believe.
Earl Russell: I share the Minister's scepticism and I welcome his answer, which is everything that I hoped to hear. In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
10.15 p.m.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 263ZAC:
Page 79, line 15, at end insert—
(" When considering whether conduct is likely to cause a nuisance or annoyance under this Ground the court shall take into account evidence provided by the local authority that witnesses are or may he intimidated and possession may be granted notwithstanding that there is no direct evidence that any person has actually caused a nuisance or annoyance and that the only evidence available is from police officers or employees or agents of the authority.".").
The noble Baroness said: In moving the above amendment I shall, with the leave of the Committee given the time of night, group with it Amendments Nos. 263ZAD, 263ZAE, 263ZAF, the substantive Amendment No. 263ZAG, and No. 263ZAGA. I must say that it is somewhat difficult trying to recite those numbers. I should also like to notify the Committee of something which may be of interest. The amendment almost at the bottom of the groupings list, Amendment No. 263ZAGDA, has failed to get its number printed on the Marshalled List. However, I can assure your Lordships that it will actually be moved, even though it has become temporarily invisible.
The amendments raise the issue of grounds for possession not for those on introductory tenancies but for those on secure tenancies. Some of those arguments have already been rehearsed on introductory tenancies, but perhaps I may try a little bit of scene-setting before turning briefly to the original amendments.
One of the most troubling problems on local authority estates is anti-social behaviour which may be caused by problem neighbours when tenants act against other tenants, perhaps because teenage sons are out of control or perhaps even because daughters may be on the game, with customers lingering outside the dwelling. It can also be caused by thugs and hooligans coming into the estate from outside to peddle drugs, to pick a fight, to break a window or, indeed, to harass a particular family, especially if it belongs to an ethnic minority group or has a disabled member. The perpetrators of such problems may be under 18 and, therefore, the law can do little to control them, even though they may be the worst offenders. They make life intolerable for those living on such estates. We should not tolerate it.
At present, I believe that we would all accept—and certainly the Government do—that a local authority is poorly equipped by law to deal with such problems. As regards its own tenants, a local authority finds it difficult to regain possession of a property. Neighbours and witnesses are intimidated and threatened and are reluctant to give evidence. It takes a long time to bring a case to court—a minimum of 34 weeks, as far as we can tell, and it can be as long as two years—during which time the tenants have to endure continued nuisance and continued intimidation. When such a case finally does come to court, the courts do not always grant possession. In any case the local authority has power only as landlord over its own tenants. It has no powers to regulate the behaviour of thugs or hooligans coming in from outside the estate looking for trouble, and of course it cannot use an injunction on anyone under 18, and they are often in my experience the worst offenders.
We shall move a series of amendments which we hope the Government will seriously consider. I believe that the concerns are shared by noble Lords around the Chamber. I hope, if these amendments cannot be accepted, similar amendments will be supported by the Government, or perhaps even introduced by them at Report stage. The major amendment in this group seeks to give a local authority mandatory rights of possession in defined circumstances against the most severely

281
anti-social tenants. There is an amendment to give victims and witnesses protection from threats and intimidation. Without such amendments, the more serious the violence, the less likely it is that it will come to court because of the fear felt by witnesses.
There is also an amendment to bring young people under the age of 18 within the law. They are often the main culprits. There are also some amendments to clarify Section 222 of the 1972 Local Government Act to make it clear that it can be used by the local authority to exclude non-residents from sections of its council estates; in other words, so that a local authority has a public order as well as a landlord power. Finally, there are amendments which provide for information to be shared with the police and to ensure that information does not fall foul of the Data Protection Act.
We believe that this package of amendments will transform the ability of local authorities to check criminal and serious anti-social behaviour on council estates. After all, council tenants, like everyone else in the country, are entitled to quiet enjoyment of their homes. Those of us who are fortunate enough to live in semi-detached or detached houses, or houses which were built long enough ago to have thick walls and enjoy reasonable sound proofing, or who have generous gardens, are not always aware of the nightmare that can arise when one shares a thin party wall with someone else.
The first amendments I wish to address seek to give the local authority mandatory grounds for possession against tenants guilty of serious anti-social behaviour. Since 1985 council tenants have enjoyed security of tenure. To get possession a local authority has to prove to the courts that one of 16 possible grounds for possession applies. The grounds range from anti-social behaviour of the tenant to regaining a house that is tied to a shop or a school, or perhaps because the property needs to be demolished for whatever reason. When dealing with anti-social behaviour as the ground for possession, a local authority has to show that there has been a breach of tenancy, nuisance or annoyance to neighbours or damage to property. I remember vividly having to seek possession against one tenant who burnt his floorboards to keep warm until he was restricted to a fairly narrow area of the house in which he could move around. In all possession cases local authorities must give four weeks' notice to tenants. Courts in all but a few cases have discretion to grant or refuse possession to the local authority. In all cases so far where possession is mandatory, the local authority is required to rehouse the family.
The second group of amendments to which I am speaking would do three things. First, they would allow a local authority to have a fast-track procedure for serious cases of anti-social behaviour. A serious case would involve violence, threats of violence, damage to property or drug dealing. In that situation the local authority could go to court without first serving four weeks' notice on the tenant. Why is that necessary? Let me give one example. One local authority served a notice in July, 1993, following complaints of harassment including fire bombing. Between October 1993 and
282
October 1994 the defence failed to serve a certificate of readiness to proceed to trial despite several requests that it do so. The local authority had to request the court to proceed to trial and the case was eventually heard in February, 1995, 18 months after the fire bombing incident. In all that period the tenants who were the victims were living in real fear of what might next happen to them. Therefore the amendment would grant a fast track.
Secondly, the granting of possession would be mandatory if, but only if, the judge were satisfied that the new grounds for possession exist—that is, serious anti-social behaviour including violence, threats of violence or drug dealing. If the local authority cannot establish that such serious anti-social behaviour exists, the judge would not grant possession. But if the local authority has established it to the judge's satisfaction, then the judge must grant possession.
Again, why? Let me give another example. During 1994 one local authority received a litany of complaints against the 17 year-old son of a tenant, including excessive noise, chopping up the neighbours' fences, throwing bricks and scaffolding at windows, threatening neighbours with an air rifle which he occasionally fired off, directly threatening a disabled witness, and damaging the disabled witness's car to the extent of £2,000 worth of damage. In August 1995 an injunction gained no improvement in behaviour. At the possession hearing in December 1995, by which time he was over 18, the court would grant only a suspended possession order.
In another case the local authority detailed 110 cases of nuisance involving drunkenness, violence and excessive noise. When the case came to court the judge intervened after only one witness had been heard, even though many witnesses had summoned up the courage to bring evidence, and gave a suspended possession order. When that was breached, possession was finally secured in April, 1995, 15 months later. Through all that time the witnesses, including disabled witnesses, were harassed and threatened.
The second part of the amendment would establish that where serious anti-social behaviour had been established to the judge's satisfaction, mandatory possession would be granted. Thirdly, in these circumstances, the local authority would not be required to rehouse.
Such a group of amendments to some degree fetters judicial discretion. But the experience of local authorities represented by associations across the country suggests that when local authorities take possession proceedings in very serious circumstances—possession proceedings are relatively rare given the difficulties of obtaining evidence, of persuading witnesses to take the stand and of securing charges against those under 18—it is a matter of utter chance whether or not they gain possession, especially when the case depends on the willingness of neighbours who have been intimidated and threatened.
If neighbours know that following their evidence, and establishing that such violence has occurred—we are talking about virtually criminal violence—the local

283
authority will be granted possession, they are more likely to give evidence. At present—I exaggerate not at all—the most serious offenders are never brought to court because neighbours are frightened to give evidence. Other noble Lords who have been councillors will know that time and again they have been given information but the people giving that information have begged to be kept anonymous because their house, windows, car or children would not be safe if their name were mentioned, if they were brought into the matter, or if they were asked to give evidence.
Finally, Amendment No. 263ZAC offers a protection for victims. I repeat that it is difficult for neighbours living in a nextdoor flat, or in the flat underneath or above, to give evidence against a threatening or violent neighbour knowing that it may take at least six months before the case is finally heard in court; and that even then the judge may not grant the local authority possession and they will have to continue to live with such violence and intimidation.
In some cases local authorities have tried to protect tenants by using professional witnesses, including their own rent officers, environmental health officers on grounds of noise, and the like. But some judges, I am sorry to say, have refused to accept their evidence and the cases have been dismissed.
I shall give another example. A local authority began to receive complaints of very loud music, shouting, swearing and the slamming and kicking of doors at all times of the night and day. The authority used its power under the Environmental Protection Act to seize equipment. The problems continued, but the neighbours were too frightened to give evidence. The noise was frequently witnessed by environmental health officers and the tenant was prosecuted again for contravening a noise abatement notice. However, the local authority was unable under the law to issue possession proceedings and evict the tenant in the absence of evidence from at least one resident witness. The resident witnesses were too terrified to give evidence. The professionals, such as environmental health officers, who could and would have given evidence were not permitted to do so.
Amendment No. 263ZAC allows grounds for possession to be sought where a person is guilty of serious misconduct causing, or likely to cause, a nuisance to people other than immediate neighbours. That would permit the use of evidence from other than resident neighbours.
It is clear that a judge will be able to give such evidence proper weight, knowing that it is not from a resident witness and not hearsay evidence but evidence from a professional witness. It would allow such cases to come to court and avoid neighbours, often frail, elderly and disabled, being afraid that such a case will never be pursued. The whole cluster of amendments leads to the ability of local authorities, with, I hope, the support of noble Lords on all sides of this Chamber, to
284
begin to tackle effectively the problems of serious and severe anti-social behaviour within the framework of the law. I beg to move.
Lord Mottistone: I am very taken with the argument of the noble Baroness, Lady Hollis. I sympathise greatly with much of what she said. However, when she tabled her amendments they greatly alarmed the National Schizophrenia Fellowship, which advises me on these matters. When I entered the Chamber during the debate on Amendment No. 256, I was interested to hear the noble Baroness, Lady Hollis, among others, saying how important it was for severely mentally ill people not to be harmed by the measures under discussion.
Although I believe that something like the proposals in this group of amendments could usefully be included in the Bill, my fear is that severely mentally ill people need protection from them. The problem is that conduct likely to cause a nuisance or annoyance under the new Ground 17 to Schedule 2 to the Housing Act 1985 can result from severe mental illness as well as from drug taking or dealing. Court proceedings are sometimes initiated now under that type of ground against people suffering from schizophrenia who cause a nuisance when in a severe psychotic state; for example, by incessantly playing music at night. In such cases at present a court may order possession but is not required to do so.
Amendments Nos. 263ZAF and 263ZAG introduce draconian new powers which would mean that any tenant guilty of "serious anti-social behaviour" in the locality where he or she lives must be evicted. By virtue of Amendments Nos. 263ZAD and 263ZAE no notice would be required of that action.
Subsection (1B) of Amendment No. 263ZAE would turn the screw further by suggesting that if the court dismissed a claim for possession under the ground proposed in Amendments Nos. 263ZAF and 263ZAG it should consider making an order for possession under Grounds 1 to 4 of Schedule 2 to the 1985 Housing Act, and doing so without notice.
I and the NSF do not condone severe anti-social behaviour; nor do we wish to minimise the unpleasant repercussions for those at the receiving end. However, we think it important to emphasise that an illness like schizophrenia can cause someone to behave in a way which results in disturbance, damage to property and occasionally violence and that sometimes behaviour of the same or similar nature is repeated. Summary eviction of a person who is ill cannot be in his or her best interests.
The provisions of Parts II and III of Schedule 2 to the 1985 Act should apply. They empower a court to order possession if suitable alternative accommodation is available. That, of course, is what various noble Lords and the noble Baroness, Lady Hollis, were talking about earlier. But the noble Baroness has not put it in her amendments. That is where it needs to be. That accommodation might need to be provided by health or social services authorities rather than a housing authority or private landlord, as more intensive care and support could well be needed under the circumstances which I described.

285
I have some examples of the kinds of people about whom we are talking but I am sure the Committee is well aware of the kinds of people who can cause such trouble. I simply say that, if the Government are minded to pursue the line that the noble Baroness, Lady Hollis, invited us to follow, they should qualify it by including protection for the severely mentally ill, which is not provided in these amendments. It is an awful pity that it is not.
Earl Russell: When one proposes to this Chamber an amendment, one needs to try to show four things. One needs to show first, that there is a problem to be solved; secondly, that the amendment will purchase on that problem; thirdly, that the amendment will not accidentally purchase on all kinds of other problems on which it is not intended to purchase; and fourthly, that the cure is not worse than the disease.
I shall stipulate that the noble Baroness has abundantly proved the first of those points. She has proved that there is a problem. She is undoubtedly right about the right to quiet enjoyment of one's own property. That is vital to preservation of the peace. She is clearly right that that is now far too often under threat. She is clearly right that attempts to put it right sometimes lead to intimidation. So, if I may, I shall stipulate that she has established the existence of a problem.
I am not so certain about the other tests that the amendment has to pass. To some extent, the amendment purchases on the problem; but the point made by the noble Lord, Lord Mottistone, is well taken: there must be somewhere else for the people to go instead. In some cases, which may involve mental illness, we may have to say, not for the first time, that the policy of closure of long-stay mental hospitals can be overdone. But there are people—the noble Baroness has already drawn attention to them—who are simply anti-social or criminally disposed. Those people will go somewhere else. We shall have to pay attention to where else they will go and whether they may cause as much trouble all over again as where they went in the first place.
As to whether the amendment will purchase on other problems as well as the ones that it is designed to meet, when I look at the drafting I have some anxiety on that score. Let me take first Amendment No. 263ZAC. I entirely accept the problem to which that amendment is directed. Line 3 of the amendment brackets together the similar propositions that:
"witnesses are or may be intimidated".
From a legal point of view those are two fundamentally different propositions. If it can be proved that the witnesses are being intimidated, that is a conspiracy to pervert the course of justice. It is also threatening behaviour. It is a crime in its own right, and I believe that the law has power to deal with it. But to say that witnesses "may be intimidated" is rather like my favourite crime story from my childhood of the people who were prosecuted for loitering with intent to press button B. There was no proof that any crime had ever
286
been committed. I really could not accept a drafting which took witnesses being intimidated or "may be intimidated" as two interchangeable propositions.
In the later part of the amendment there seems to me to be a contradiction between the proposition that they can proceed if there is no direct evidence that any person has actually caused a nuisance and that the only evidence available is from police officers or employees. I am not particularly worried about who the evidence is from, but there must be evidence that a nuisance has been caused. If there is any doubt about whether an offence has been committed, then no proceedings should be taken. It is the old proposition of Perry Mason: the prosecution must first prove the corpus delicti.As this amendment stands, it does not prove the corpus delicti. That, I find, is something I really could not accept. "No notice" has been commented on. I say no more about it at present.
The noble Baroness herself touched upon the case for making orders mandatory under Amendment No. 263ZAG. I understand the point she makes, but she cannot have it both ways. Either she has to have the proceedings mandatory and then the grounds have to be made less all-inclusive because no discretion is allowed or, if she wants the ground spread wide, to cast her net wide to catch all the possible offences, then it cannot be mandatory.
Perhaps I may explain what I mean. Amendment No. 263ZAG, referring to "serious anti-social behaviour"—which is, incidentally, a term of sociology rather than of law—goes on to state in paragraph (b) that this shall include,
"any damage to property in the locality".
I should declare an interest. When my son was under 10 years of age and fancied himself both as a cricketer and as a footballer he would, under this clause, have got me evicted from four consecutive properties and his grandparents from one. Any 10 year-old breaking a window would be covered by that clause. It is the effect of the amendment, and can only be the effect of the amendment, as I understand it, to have mandatory eviction every time that a 10 year-old breaks a window.
I know that there should be more school playgrounds; I have said so quite often—but to evict a family every time a 10 year-old breaks a window! That is what the amendment says and if the noble Baroness does not mean it I hope that she will come back with a better amendment at a later stage. The amendment is unacceptable and I am not convinced that it purchases effectively on the problem.
Also, as always, we cannot assume that if we intend a power to be used for a particular purpose it will never be used for any other. I remind the noble Baroness of what I said about an earlier amendment, that legislation is like using a shotgun with pellets going lots of places where they are not intended to go. I consider the effect of this amendment if it were to be applied in an American township where the Ku-Klux-Klan is powerful. It may be said that we do not have that here. I would be reluctant to legislate on the assumption that we never will. That is the way in which bad legislation

287
is passed. This is the sort of use of powers under which one gets what is proverbially and, indeed, literally, known as a witch hunt.
When I was arguing with the right honourable friend of the noble Baroness, Mr. Straw, on "A Week at Westminster" a couple of weeks ago, he argued at some length that the powers he was proposing could not possibly be arbitrary because they were not being exercised from the top down but by the community. But Mill was quite right that the people may desire to oppress a part of their number.
Power exercised by the community, as anybody who has been run out of town in the United States knows painfully well, can be just as arbitrary as any power exercised by any despot of whom we have ever heard. There is a problem. We do not have a solution. I am perfectly happy to sit down round a table and try and work out what the solution may be; but I do not believe it to be this one.
Baroness Gardner of Parkes: I have great sympathy with these amendments. I do not intend to go into the semantics of the words or the details; I want to speak to the principle behind them.
It is essential to have a rapid and sure process of regaining possession. Points have been raised in this debate that the mandatory phrasing is too demanding. That could be qualified in such a way that it is mandatory "unless". It would be wise to make it clearer to the judiciary that the onus is on the giving of the order to grant the vacant tenancy rather than the other way round. Cases have been quoted, and I know of cases, where action was not taken and a lengthy slow process followed.
My noble friend Lord Mottistone mentioned the Schizophrenia Fellowship. I have a great respect for that organisation, which does a marvellous job. There must be ways of wording the process to protect such people. It may be—I refer the Committee to my Noise Bill which is passing through your Lordships' House at the moment—that it is not a question of who is creating the noise or intolerable conditions for the neighbour; it is a question of who is suffering the noise or nuisance. That is a sound principle to be followed in this case.
Today in your Lordships' House a member of the staff asked to have a word with me, being aware that the Housing Bill was before the Committee. The family are living in a block of flats where it is impossible to get any sleep because an anti-social family also live there. I said that they could complain and gave all sorts of advice about what they could do. They said that the trouble was that they would be much too frightened to do that—exactly the point being made. They said that no one in the block would be game or foolhardy enough to front up as a witness against those people because they know the retribution would be swift and unpleasant. I greatly respect the comments made by that person and that person was saying what so many other tenants would say. We have heard the story many times and it is therefore extremely important for there to be protection from intimidation.
288
I should like the Minister to comment on the position quoted by the noble Baroness, Lady Hollis, regarding the under-18s. I do not understand what remedy exists in that regard. Does Clause 128 mean that if the tenants are the parents of the under 18 year-old they are evicted because of the behaviour of the young person; or is the young person only asked to leave? What is the position? It seems very unsatisfactory if parents who in themselves are not unreasonable, but have no control over someone young who is living with them, can be evicted. I can see that problems will arise.
The noble Earl, Lord Russell, talked about people being run out of town. I recall reading in a newspaper a year or so ago about a family in a village. Everyone in the whole town was so fed up with the damage that they were causing and the robberies that they were carrying out that they were eventually moved out by the pressure of all their neighbours. That cannot be right. There should be a proper and legal process for doing that.
I do not say that I support these amendments in the way that they are worded—many faults have been pointed out—but I support the principles of a rapid and sure process of gaining possession and protection against intimidation. The objective giving of evidence which applies in the Noise Bill means that no witness would have to come to court. The evidence will be given by the officer who measures the noise. Equivalent processes must be available in the form of an environmental health inspector inspecting damage done to the property or something of that kind. It must be possible to have independent, authorised people able to give such evidence. That would be great protection for people against intimidation.
10.45 p.m.
Baroness Hamwee: When the noble Baroness considers the thrust of her amendment after tonight, I ask her to take two procedural but important points into account. The first is to allow the court to make a suspended order which will be effective if the tenant does not comply with provisions for good behaviour. We do not want to add to the problems of homelessness if other measures can assist. Secondly, there is the place of interlocutory injunctions. I am going the other way now. A court can move very quickly, if it wants to, in extreme circumstances. It is possible to order a tenant to leave pending the final hearing.
Lord Lucas: I, too, will read very carefully what the noble Baroness, Lady Hollis of Heigham, has had to say. I suspect that there are some points that she made in her opening speech which I shall fail to address. Perhaps that is because I found myself rather taken aback by the beginning of her speech, feeling that I was being outflanked on the right by the noble Baroness. After a while I realised that she was just being a great deal more authoritarian than I feel comfortable with and, as the noble Earl, Lord Russell, said, that is becoming quite a feature of new Labour in various pronouncements. It is something which shines out of Peter Mandelson's book as a key part of the party's vision of community. I do not believe that it is part of the noble Baroness's make-up to be that way. I hope

289
that she will look carefully at the matter. It chimes so oddly with her great passion and the feeling that she has expressed so often on other subjects.
I turn to the subjects of these amendments. Clearly, we share the anxieties that she has expressed. But we believe that we have better solutions to them. I turn first to Amendment No. 263ZAC. Clause 128 amends Ground 2 of Schedule 2 to the Housing Act 1985. That schedule sets out the grounds for possession of dwellinghouses let under secure tenancies. The clause strengthens in several ways the existing ground for possession based on nuisance and annoyance to neighbours so that it applies to behaviour in the locality of the tenant's property. It covers behaviour by visitors to the property and the situation where the tenant, a person living with him or a visitor, has been convicted of an arrestable offence in the locality of the house or flat.
But the key part of the clause for the purposes of this amendment is that it will also make it possible for local authorities to evict a tenant for behaviour likely to cause a nuisance or annoyance, so that the victim of the behaviour may not have to give evidence. Instead, that might be provided by a professional witness or local authority officer.
We feel that Amendment No. 263ZAC is unnecessary, as Clause 128 achieves its intention to enable local authorities to seek eviction where victims do not feel safe to give evidence in court, by allowing evidence to be provided by the local authority or its agent, such as a professional witness.
On a related matter, the provisions of the Civil Evidence Act 1995 enable hearsay evidence to be admitted as evidence. The weight to be given to that evidence is for the courts to determine and will depend on the facts of each case. We do not feel at all comfortable with saying that that is something which should be automatically assumed to be reasonable. But the Act, which comes into force in the autumn, provides that in doing so one of the matters for consideration is whether it would be reasonable to call the witness. Clearly, the likelihood of intimidation of the witness would be relevant to that consideration.
I turn now to the large group of amendments to which the noble Baroness spoke. I thought that I heard her refer to Amendment No. 263ZAGDA, which is not grouped with these amendments. I now understand that she did not. That amendment is the subject of a separate note.
Clause 130 substitutes a new Section 83 of the Housing Act 1985 which deals with the notice of proceedings for possession. Most of the clause re-enacts existing legislation. The new provisions in the clause allow the landlord to start possession proceedings at an earlier stage than previously in cases related to anti-social behaviour and to dispense with the requirement to serve the notice in appropriate case.
The purpose of these amendments is to introduce a mandatory ground for possession in cases of serious anti-social behaviour. We do not believe that the loss of someone's home should be made mandatory. To do so
290
would fetter the discretion of the judiciary and fail to take into account those cases, which might not be great in number, where there were mitigating circumstances. It is important to strike a balance between giving local authorities stronger powers and protecting the rights of tenants. Eviction is, after all, a serious business. We maintain that the package of measures in the Bill gets that balance right. Mandatory grounds would tip the balance against the tenant, unfairly in some cases.
The discretion that the court can exercise will relate largely to the circumstances of the household as a whole. This is important. In some cases the tenancy may not be held by the offender but his mother, for example. She may have no control over an adult son. This point was raised by my noble friend Lady Gardner. In such a case the court will wish to consider whether she should be evicted for the wrongdoing of someone else. Under the present proposal the court would have no option but to evict her. In other circumstances the wife of the offender may be the tenant and may be left with a young family to look after. There will always be case where it is essential that judicial discretion can be exercised; otherwise, the court will be forced to evict those who may have had no knowledge of the criminal activity because the offence is mandatory. I believe that my noble friend Lord Mottistone has underlined the need for the courts to be involved.
We recognise that many local authorities have difficult relations with the courts on these matters. We have published a booklet, Getting the Best out of the Courts, with a view to encouraging better contact between local authorities and the courts. We feel that perhaps there is fault on both sides in getting it right. After that paean of praise for the judicial process, I am sad to see the Judicial Benches empty this evening. It would have been a rare opportunity to see a smile on the faces of noble and learned Lords. On many occasions I have seen the opposite.
There are difficulties at a practical level with some of these amendments. Amendments Nos. 263ZAD and 263ZAE in particular give local authorities two bites at the cherry when seeking an eviction. We feel that cannot be fair. Where a local authority loses its case in court on one ground, surely it cannot be equitable for the court to be allowed to consider repossession on another ground which is so similar. Amendments Nos. 263ZAF and 263ZAG seem to us not to be even-handed. For example, any damage to property in the locality is defined as serious anti-social behaviour. Of course, mindless vandalism must be punished, but we feel that eviction for any damage goes too far.
As the noble Earl, Lord Russell, has said, a boy who plays football and breaks a window will fall foul of the clause. Under the proposal a family could be evicted because of that damage. The court could not take mitigating circumstances into account. There must be countless other examples of minor, possibly unintentional, damage that could lead to families losing their homes. That would not be fair to tenants. Our package of measures to deal with anti-social behaviour in the social rented sector is a strong one which is designed to cover all aspects of such behaviour.

291
I believe that it goes as far as it should. I remain unconvinced of the need for mandatory grounds for possession.
I am aware that on occasions judges appear reluctant to grant possession orders, but I do not believe that the answer lies in cutting out the judiciary by giving mandatory grounds for possession; rather, it should be approached in other ways. One of these is the general raising of the profile of the issue, making judges aware of the deleterious effect that all anti-social behaviour can have on a community. More particularly, we are impressed by the work of the noble and learned Lord, Lord Woolf, as part of the Commission on Access to Justice, which recognises the unique nature of possession cases on the grounds of serious anti-social behaviour and the need to organise the civil justice system to deal with these matters as effectively as possible when they come before the courts. We expect to hear something from the noble and learned Lord on these subjects next month.
I hope, with the considerable comfort that I trust I have been able to give to the noble Baroness, that we are addressing the problems which she has identified in so far as we can without being unfair to tenants and that she will feel able to withdraw her amendments.
Baroness Hollis of Heigham: First, I should like to thank—I think—the noble Lords who took part in the debate. Perhaps I may try to respond to some of the individual points because the debate is central to this section of the Bill.
If I may first respond to the noble Lord, Lord Mottistone, I suspect that the gap between us is not very wide. I accept his reproof that there is not, in this amendment, a statutory duty to rehouse, and I will certainly look at it when we come back at report stage because I doubt whether we are in disagreement about this.
If somebody is, as he described in his National Schizophrenic Fellowship briefing, in a severe psychotic state, he believes that that should be a reason for not granting eviction. Again I think that that is the wrong way round. It may be a reason for seeking possession of that particular property which that tenant is inappropriately occupying because of the intolerable nuisance he is causing to his neighbours but—and I think this is where we would be on the same side—I would in no sense wish to remove from the local authority a continuing duty to be responsible for ensuring that that person has appropriate and secure accommodation perhaps in a sheltered environment.
As somebody who was responsible for building sheltered housing schemes for those with learning difficulties and those with mental health problems, I am well aware of some of the issues. So I suspect that the gap between us is not very wide. Perhaps inadequate drafting failed to pick up the point.
I have to say that we only realised the significance of the issue as a result of an earlier debate this evening, and, had that earlier debate, when we were exploring just this issue, come up on a previous day, we might have been able to amend the amendment. So I think we share a common position on this.
292
If I may comment on the remarks of the noble Earl, Lord Russell, he accepts that there is a problem. He worries first that those exhibiting such severe anti-social behaviour—and we are now talking not about those who have a mental health or physical health problem but about those who are simply bloody-minded, if I may use that phrase—who have severe anti-social behaviour will go elsewhere. Yes, I think that that is true by definition. They will go somewhere else.
I say again from my own experience that, particularly where there were dependent children, we were faced with a very real dilemma. You either moved them on knowing that the threshold of tolerance in the average street was about 18 months, after which you then moved them on again, each time interrupting the children's schooling and being extremely disruptive, or you took those children into care, which was even more disruptive for the family. What the "respectable" wanted was a ghetto of such problem-families: out of sight, out of mind, out of there and not here.
If you try to avoid that and integrate such families in the hope that at least the children will not inherit the behaviour patterns of their parents, you are asking other people to accept behaviour which imposes severe strain. We know that one or two such families can very quickly send a street into a declining spiral in the course of a year or two. It may take 10, 15 or 20 years to rebuild a degree of self-respect in that street. From my own experience, we have had to move tenants on every 18 months or so as other people's tolerance breaks down. It is a very difficult problem, but that is not to say that the street on which these families first descend should be asked to bear it for the sake of everyone else. We have to respond in other ways.
The second point the noble Earl made related to the words, witnesses "may be intimidated", as opposed to "been intimidated" and he was very unhappy about that as a basis for law. Perhaps he misunderstood—I am sure not wittingly—the thrust of the amendment. The concern was not for this amendment to seek to establish whether witnesses have or have not been intimidated. The concern was to establish the right of the courts to hear—in fact the requirement that the courts should hear—professional witnesses. And such professional witnesses are going to be people like the police, housing officers employed by the authority, and environmental health officers.
I do not know why any Member of the Committee should think that those busy, overworked, understaffed services would willingly waste their time hanging around and taking cases to court in a vexatious way. EHOs normally only turn out with their machines at one o'clock or two o'clock in the morning after there have been continual complaints or continual telephone calls to the police. Only then will they start to act. The problem is not that they will act in a vexatious or frivolous way, but how long it takes to collect and bring such evidence to court. It may take many months.
The noble Lord's criticism that witnesses may be intimidated, and that we must be sure that they have been intimidated, is irrelevant. The amendment seeks to establish that professional witnesses may be used where

293
there may be a problem with resident witnesses. One may want professional and resident witnesses, but if resident witnesses cannot be called because the threat of intimidation is more severe, cases will collapse. The amendment will deal with that problem.
To believe that professional officers are going around trying to catch the unwary who are guilty of the most trivial of offences is not faintly to understand local government and the pressures on its staff.
11 p.m.
Earl Russell: Perhaps I may clarify what I was saying. I was by no means questioning the sincerity of witnesses, but sincerity is not necessarily synonymous with accuracy. There must be clear proof that an offence has been committed.
Baroness Hollis of Heigham: I should have thought that with evidence from the police, professionally trained EHOs and professionally trained housing officers in pursuance of the law, it is not just a question of sincerity, it is a question of their professional integrity. I am sorry, again, that I fail to understand the noble Earl's point on this. Such people will be producing evidence in a professional way through their professional training, and if they fail to do so they will be disciplined professionally.
I cannot believe that any judge would not listen to the evidence of such people and attach to it the weight that it properly deserves. I have to say from my experience that EHOs would not take a case to court unless there were several instances testified to by their environmental noise machines and all the rest.
The third point that the noble Earl made—it was a point made also, to my surprise, by the Minister—was that the net was cast too widely, and that under the amendments the child kicking around a ball that just happened to bang against someone's fence would be grounds for mandatory eviction. When I listen to those worst possible case scenarios, I sometimes wonder in what sort of a world we are living. There is a reference to serious anti-social behaviour. If the judge did not believe that the damage to property amounted to serious anti-social behaviour, the case would not be established and he would throw it out. It is as simple as that.
I do not understand the examples of kids and so forth. The noble Earl referred to the Ku Klux Klan and witch hunts. I am sure that he did not intend any insult to thousands and thousands of elected, serving, unpaid councillors, but they might take what he said as such.
The noble Earl is right—he is ferociously right—to protect the minority from the intimidation of the majority, but I am also worried about the intimidation of the majority by the minority. Perhaps I may remind the noble Earl that John Stuart Mill was equally good on that. The alternative is to send a street into decay.
I welcome the contribution of the noble Baroness, Lady Gardner of Parkes. The answers to the questions posed by the noble Baroness, Lady Hamwee, about a suspended order, are that she may well be right. We would all prefer to see a tenant remain rather than be
294
evicted, and to transform his, her or their behaviour. Perhaps we should look at this further. I am anxious to ensure that we do not have the sort of delays of two years, two and a half years from incident to eviction, in the course of which tenants live in fear and intimidation. That is what I have sought to document.
I shall have to take advice in relation to interlocutory injunctions. My knowledge of that aspect of the law is not sufficiently secure to respond to that matter. However, my knowledge of the Government's existing social security measures is sufficiently secure to challenge the Minister on his reference to authoritarian policies. That is rather rich coming from a Minister and a Government who are introducing introductory tenancies, on which these Benches have very real reservations, which will remove all rights from tenants in the first year; who have introduced the jobseeker's allowance, including benefit penalties for breaking dress codes when you turn up for interviews, and benefit penalties for not looking sufficiently hard for work which is not there to find; who have introduced tough penalties, including top-slicing of 40 per cent. for a parent with care who is not prepared to name an absent parent to the CSA when she is in fear of violence. I find that accusation of authoritarianism quite extraordinary and of mind-baffling hypocrisy.
Or is it that the Government are willing to be authoritarian when on the side of the Treasury, but are indifferent and accuse others of being authoritarian when they are seeking to protect the right to quiet enjoyment of council tenants? Those people are infinitely more vulnerable to the problems of noise, nuisance and intimidation than is, I suspect, anyone in this room. We live in our comfortable houses with gardens and, in some cases, many broad acres and will never know what it is like to have a noisy neighbour.
It is a pity that more former councillors have not spoken in the debate. I realise that that is because of the lateness of the hour. I do not know whether the noble Baronesses, Lady Hamwee and Lady Gardner of Parkes, share my experience of local government, but when I was involved with housing issues, I spent my time chasing repairs and managing transfers. During the last few years, I spent most of my time seeking to manage the problem of anti-social behaviour and neighbour disputes.
These amendments may not be quite the right way in which to deal with the problem. Local authorities need to be able to manage their estates so as to secure for their tenants the quiet enjoyment of their property to which they have every right, just as Members of the Committee have. At this stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 128 agreed to.
Clause 129 agreed to.
Clause 130 [Proceedings for possession or termination]:
[Amendment No. 263ZAD not moved.]
Baroness Hamwee Baroness Hamwee moved Amendment No. 263ZADA:
Page 79, line 36, leave out from ("section") to end of line 38.
The noble Baroness said: This amendment seeks to delete Section 83(1)(b) from the proposed new Section 83 of the Housing Act 1985; in other words, to ensure that a landlord of a secure tenancy serves a notice specifying grounds on which the court will be asked to make a possession order.
The insertion of a general power to waive the requirement of notice in all cases, not just nuisance cases, is new in relation to secure tenants. Notices are very important. The courts insist on them in many areas of life. For example, in employment matters, it is important to give warnings and notice to ensure that an employee whose job is in jeopardy is warned of the likely outcome of his continued conduct, if that is what is at issue. A notice is a warning shot across the bows. In any event, it seems to me to be fair that before the step is taken of seeking possession with the likely result, or at least possible result, of homelessness, the tenant should be given the opportunity to remedy the complaint.
One cannot know whether the courts would restrict to narrow circumstances the waiver of written notice, but it seems to me to be clear that there are great advantages in written notice, in that there should be far less room for confusion or dispute. I am concerned both about the erosion of existing rights and also about the practical implications. I beg to move.
Lord Lucas: Clause 130 re-enacts Section 83 of the Housing Act 1985 which provides for the proceedings for possession or termination of a secure tenancy. In doing so it makes some important amendments to help to speed up those processes. It is one of those amendments that would be deleted by Amendment No. 263ZADA tabled in the name of the noble Baroness, Lady Hamwee.
One of the concerns that local authorities have brought to the attention of the Government during the discussion which we have been having about how to tackle anti-social behaviour has been the length of time that the possession procedures take. Eviction is often very much a matter of last resort after all other remedies, such as mediation or an injunction, have failed. By the time the local authority seeks a possession order the level of nuisance or annoyance to the neighbours, or even the whole estate, is clearly way beyond an acceptable level. Therefore, the possession order needs to be obtained quickly so that the neighbourhood does not continue to suffer, and so that those who have come forward as witnesses are not deterred because of the length of the procedures.
In such serious cases we considered that it would be useful for local authorities to be able to ask the court whether they could dispense with the issuing of the notice of possession proceedings. Where such a notice is issued a local authority cannot normally start the possession proceedings for at least 28 days. There could, therefore, be a considerable saving of time. Our view
296
that this was a useful proposal was reinforced by the fact that a similar provision already exists for assured tenancies, the regime applied generally to housing association tenants.
Nevertheless, the discretion to dispense with the notice remains with the court which must be satisfied that it is just and equitable to do so. It seems unlikely that the courts would agree to do so unless the case before them was of a very serious nature, and some of these do involve extreme physical violence and abuse. I believe, therefore, that tenants have nothing to fear from the provision. Indeed, the great majority of tenants have something to gain if it helps rid estates quickly of the very worst offenders.
Baroness Hamwee: There seem to be some inconsistencies in comments made in response to earlier parts of this evening's debate. I am not convinced by that answer, but I think that if the court considers that the situation is serious then it is a matter, is it not, for an interlocutory order rather than for moving straight to a position where I believe that the tenant might be prejudiced? It is perhaps a little late to pursue those detailed procedural points at this time of night, but, as I say, I remain unconvinced as to whether this is the right way to proceed. However, for the moment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 263ZAE to 263ZAGA not moved.]
Clause 131 [Extension of ground of nuisance or annoyance to adjoining occupiers &c.]:
[Amendment No. 263ZAGB not moved.]
Clause 131 agreed to.
Clauses 132 to 140 agreed to.
Baroness Hamwee Baroness Hamwee moved Amendment No. 263ZAGC:
After Clause 140, insert the following new clause—

Housing Bill

  WITNESS PROTECTION ORDER
  (".—(1) In the circumstances set out in this section, when requested by the applicant the High Court or a county court may make a witness protection order in the form of an injunction.
  (2) The applicant is—

  (a) a local housing authority;

  (b) a housing action trust;

  (c) a registered social landlord; or

  (d) a charitable housing trust.

  (3) The application is made immediately before or during the course of proceedings for—

  (a) possession of any dwelling;

  (b) an injunction relating to the breach of any tenancy;

  (c) an injunction relating to the breach of any restrictive covenant applying to any freehold land;

  (d) an injunction relating to the breach of any agreement made with any occupier of any dwelling owned or managed by the applicant or in the vicinity of a dwelling owned or managed by the applicant;

  (e) an injunction relating to trespass or nuisance committed against the applicant's property;

  (f) an application for an injunction by the local authority using its powers under section 222 of the Local Government Act 1972.

  (4) The court is of the opinion that there is a risk—

  (a) to any person who has been, is, or may be a witness in any such proceedings;

  (b) to a member of the household or of the family of any person mentioned in paragraph (a);

  (c) to the property of any person mentioned in paragraphs (a) or (b).

  (5) The risk referred to in subsection (4) is a risk of violence, threats of violence, harassment or intimidation to any person by reason of a person's role or likely role as a witness in the proceedings, or the risk of removal of or damage to the property of any such person.
  (6) A witness protection order may contain such provisions as the court considers necessary to protect the persons or property referred to in subsection (4) and may include—

  (a) an order restricting the respondent from a specified area or several such areas either completely or at specified times;

  (b) an order requiring the respondent to remain within the curtilage of a dwelling or other premises at specified times;

  (c) an order requiring the respondent to enter a specified area or specified premises only when escorted by a specified person or with the written consent of a specified person;

  (d) an order prohibiting the respondent from approaching a specified person or persons;

  (e) an order requiring the respondent not to approach specified premises or enter within a specific area around such premises;

  (f) an order prohibiting the respondent from contacting specified persons in any way or in specified ways.

  (7) Where subsection (6) requires a person to be specified this may be done by naming that person or by a description of a class of persons.
  (8) A witness protection order shall contain a power of arrest and the provisions of sections 137 to 140 of this Act shall apply to such power of arrest.
  (9) A witness protection order may be for a fixed period or for an indefinite period and may be made or continue after the conclusion of the proceedings but where it is indefinite it shall be subject to review and at the time of making the order the court shall fix a time for a review.
  (10) A witness protection order may be varied or discharged on the application of any party to the proceedings or the witness or potential witness who is protected by the order.
  (11) For the avoidance of doubt, a witness protection order can contain provisions requiring the respondent not to request, permit, or allow other persons to carry out specified acts on his or her behalf.
  (12) For the avoidance of doubt, a witness protection order may require the respondent to vacate any premises that he or she uses as a home or for other purposes.).
  The noble Baroness said: I beg to move this amendment standing in my name and that of the noble Baroness, Lady Hollis of Heigham. I hope that the Committee will forgive me if I do not go through the detail of this amendment at this time of night. I think that what it seeks to provide is fairly clear so I will, if I may, restrict myself to the "why".
  Part of the reason behind the amendment is that it is important for direct evidence to be given. On this matter, I take a slightly different view from the noble Baroness regarding her earlier amendment. In proposing the scope for a witness protection order it is intended to assist the giving of direct evidence by a witness rather than direct evidence by, for instance, a police officer, who is not necessarily himself a witness to the event and might not have been there at the time. Indeed, he would have to make a judgment himself on having heard
  298
  evidence from the person directly affected; he would have been put in the position of having to make a judgment; in other words, the court would be at two removes from evidence of the matter which is complained of.
  I accept that it would be new to allow a witness protection order in housing proceedings and that it might be argued that all proceedings should allow for such an order. However, I believe that it is particularly in the context of housing proceedings—possibly only in that context—that witness intimidation of the kind described to the Committee has been identified. Therefore, I suggest that it is appropriate to consider special powers for the courts in such proceedings.
  I do not believe that I need to repeat the experiences that have already been shared with the Committee, because I am sure that it is generally accepted that there is problem. Having, I appreciate, briefly introduced a long and important amendment, I beg to move.
  11.15 p.m.
  Lord Lucas: When responding to the same proposal in another place, the Government acknowledged that it had been put forward with the best of intentions to offer protection to witnesses in cases of anti-social behaviour. It is a serious problem and the Government have been working with local authorities to find ways in which to strengthen existing laws and improve their use so that victims of such behaviour are not frightened to come forward and give evidence.
  The Government are keen to help, but we do not feel that the kind of witness protection as set out in the proposed new clause offers any more than existing provisions, except in one small area, for the following reasons. Local authorities are already able to take out an injunction to restrain the behaviour of an individual from intimidating witnesses. Where there has been violence or threatened violence, Clauses 135 to 141 of the Bill allow the courts to attach a power of arrest to such an injunction. That is a very powerful weapon because if the injunction is breached it will offer immediate protection to the victim.
  I appreciate that a witness protection order could be granted and a power of arrest attached in cases where there is a risk of removal or damage to the property of a witness, but such behaviour, reprehensible though it is, does not alone warrant the proposed new clause. Otherwise, we are clear that the proposed new clause does not offer any more effective means of protection than can be offered by existing means.
  We seek to address the problem of witness intimidation in other ways too. Clause 128 contains a revised ground for possession based on nuisance and annoyance. It will enable a landlord to evict on the basis of behaviour likely to cause nuisance or annoyance. That will enable a third party to give evidence. We have in mind here particularly the use of professional witnesses or the police. Some local authorities—for example, Sunderland—have had considerable success with that approach. The Civil Evidence Act 1995, which I understand will be coming into force shortly, will also help in that it will make it easier to adduce hearsay evidence.

  299
  Much of the work done on the issue of anti-social behaviour has been designed to speed up the process involved in gaining eviction. The more quickly a landlord acts, the less time there is for the perpetrator of the harassment to continue his activities and the more likely it is that witnesses will feel able to continue their involvement in the case. Clause 130, for example, makes certain provisions for shortening the timetable of the possession procedure.
  Additionally, the Government have issued advice to local authorities on how to get the best out of the court system in order to ensure quick and effective evictions. There is no simple solution to the problem of witness intimidation, and work on this issue must continue. As I said earlier, the Commission on Access to Justice of the noble and learned Lord, Lord Woolf, has acknowledged this in looking at the problem and other issues relating to anti-social behaviour on estates. His report is to be published shortly and we look forward to seeing his final recommendations and what scope he as an experienced member of the judiciary identifies for tackling this problem further. I hope that that gives some comfort to the noble Baroness.
  Baroness Hamwee: I am obviously reassured that the Government take the matter as seriously as the noble Lord appears to indicate. Despite what I said in opening this discussion, I have some sympathy with an approach which tackles the general position of witnesses rather than selecting protection in one area. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 263ZAGD:
  After Clause 140, insert the following new clause—

  YOUNG PERSONS: BREACH OF WITNESS PROTECTION ORDER
  (".—(1) This section applies to an injunction granted by a county court or by the High Court—

  (a) in possession proceedings;

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

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

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

  which is a witness protection order granted under the provisions of this Act.
  (2) Where a young person is in contempt of court by reason of a breach of any injunction to which this section applies that court shall have the equivalent powers of sentence and punishment which would be available to any criminal court had the defendant been convicted of an offence liable to imprisonment for up to two years.").
  The noble Baroness said: This amendment concerns the problems presented by under 18 year-olds in civil law. Where an adult breaches an injunction, he or she is in contempt of court and can be imprisoned for up to two years. This amendment would give the county court or High Court powers to deal with someone under 18 as if he or she had committed an equally serious offence.
  We find that a large number of cases of abuse, violence, harassment or serious damage to property are committed by juveniles. If these were criminal proceedings, the court could act and the actions would range from fining the parents to sending the young offender to an appropriate institution. But in civil law there is no appropriate punishment; indeed, there is barely any punishment at all.
  According to Wookey v. Wookey, one cannot take out an injunction against someone under 18 because he cannot be imprisoned, nor is he likely to have an income which could lead to the payment of a fine, and imprisonment could not again come into it if he defaulted on payment. This was brought home to me when Exeter City Council obtained an injunction against someone who was either 16 or 17—a young man who had a history of making threats and committing acts of violence culminating in a threat to burn down a council house. The young man broke the injunction by further violent acts. When the city council pursued the matter, the official solicitor stepped in and said the injunction should never have been granted in the first place as the young man was under 18. The city council had to drop the case; the local authorities were entirely powerless to act. This amendment would bring the powers of civil courts into line with those of the criminal courts when dealing with juveniles. I beg to move.
  Lord Lucas: Clearly the new clause of the noble Baroness highlights an important and intractable feature of life on some local authority housing estates. There may be gangs of youngsters, some below the age of criminal responsibility, who indulge in various forms of anti-social behaviour. It is not easy to devise an apt remedy in terms of public policy. A number of government departments have an interest: the Department of the Environment, the Home Office, the Lord Chancellor's Department, the Department of Health and possibly the Department for Education and Employment. The measures in Part V of this Bill represent the first fruits of the Government's work in the field of anti-social behaviour. That work has been undertaken in close consultation with the local authority associations. But it does not end here, with this Bill. There is a great deal more work to do, co-operatively between departments and with local authorities.
  That said, we are not comfortable with the route pursued in this amendment. It would allow a county court or a High Court to impose on a young person who breaches an injunction granted by a county or High Court any penalty which would have been available if the young person had been convicted of a criminal offence which carries a sentence of imprisonment of up to two years.
  The use of custody for those under 18 years of age is something that we resort to reluctantly. That is why the law only provides that it may be used for those young offenders who commit serious offences or who persistently offend. This reflects the long held principle that young people who appear in court should be treated in a way that takes into account their level of maturity and their welfare needs. This new clause is out of line with these important principles. Under the new clause, a county court would have the power to impose a sentence

  301
  of detention on a 15 year-old for up to two years; for example, for a breach of an injunction which had been issued to prevent the escalation of a relatively minor breach of the tenancy agreement, such as persistently loud music.
  We feel that in any case the Youth Court will be the appropriate forum for dealing with people of this age. We certainly agree that when young people commit serious anti-social acts which amount to a criminal offence then such firm action is needed. That is why we have provided the courts with a wide range of penalties to deal with those aged 10 and over who have been convicted of a criminal offence. Courts also have powers to ensure that parents of young offenders support and care for their children to help prevent re-offending.
  For the relatively few young people who offend in a serious and persistent way a custodial sentence must remain an option. That is why we have recently widened the custodial powers available. The Youth Court is experienced in dealing with those serious sentences and we would not wish to widen that area of jurisdiction to the county court. But it is quite clear that the noble Baroness and I are aiming in the same direction with much the same ambition—to achieve an effective solution to these problems.
  I hope that the noble Baroness will understand that we cannot support the specific solution she proposes and will withdraw the amendment.
  Baroness Hollis of Heigham: I propose to withdraw the amendment. I agree with the noble Lord that it is an intractable problem. I think the truth is that none of us knows what to do about it. None of us likes, wants or seeks custody for young people under 18, especially as they may end up more damaged at the end of it. However, if custody is inappropriate, and those people cannot pay fines, what does one do? We are not talking about the child of 10 who kicks a ball, or anything at that level. We are talking about people of 15, 16 or 17 who commit arson, threaten violence and terrify elderly and frail people.
  Again, I do not know whether community service orders, or some version of a sentence within the community, is a way forward. We are clearly on the cusp between what is civil and criminal in much of this area. Obviously we shall have to return to the issue. However, currently local authorities are absolutely powerless to do anything against young people under 18. Many teenagers, largely but not invariably young men, are responsible for a major amount of serious harassment and intimidation which occurs, and they go free because custody is inappropriate. They do not have an income with which to pay a fine and, therefore, an injunction is not appropriate because if that were broken there would be contempt and a fine which they could not meet.
  We shall have to return to the issue. Whether such people could be required to do a number of hours of work
  302
  in the community, I do not know. We need some help on the matter. It is simply unreasonable at present for so many people to do as they do: to criticise local authorities for the management of council estates and then deny them the powers needed against those people who cause not simply a minor nuisance but serious intimidation.
  The noble Lord is right. I shall withdraw the amendment. We should revisit the issue. I am stumped as to the best way forward on such an intractable problem. It would be helpful to hear from organisations outside and beyond this Chamber as to what might be the most appropriate way of dealing with this very real problem. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  11.30 p.m.
  Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 263ZAGDA:
  After Clause 140, insert the following new Clause—

  RESTRAINING ORDER
  (".—(1) Section 222 of the Local Government Act 1972 shall he amended as follows
  (2) After subsection (1) there shall be inserted—
  "(1A) On the application of a local authority under this section in their own name the High Court or a county court may issue an injunction restraining any person from—

  (a) engaging in or threatening to engage in conduct likely to cause a nuisance or annoyance to a person residing in, visiting or otherwise engaged in a lawful activity in qualifying premises or in the locality of such premises, or

  (b) using or threatening to use such premises for immoral or illegal purposes,

  and may attach such ancillary provisions to ensure compliance with an injunction as the court thinks fit including provisions restraining any person from entering qualifying premises or the locality of qualifying premises.
  (1B) The following are qualifying premises for the purposes of this section

  (a) dwelling houses held under introductory, secure or assured tenancies, or

  (b) accommodation provided under Part VII of the Housing Act 1996, or Part III of the Housing Act 1985 (homelessness).")

  The noble Baroness said: This amendment seeks to amend Section 222 of the Local Government Act. Where a person living on a council estate has been verbally abused or harassed, has had threats made against them, their house attacked, rubbish thrown into their garden and so on, the only person who has suffered and can take private law action is the victim, the individual resident, not the local authority. All that the local authority can do is act as landlord and seek possession against one of its own tenants for breaching its conditions of tenancy.
  If the person responsible for the violence and harassment is not a council tenant but, let us say, an owner-occupier, possibly a right-to-buy former tenant, a visitor, a private rented sector tenant, or a housing association tenant, in all such situations the local

  303
  authority cannot use private law but only public law remedies, which in this field are in short supply.
  When this issue was raised in the other place in terms of debates about community safety orders, public protection orders and the like, one argument used by Ministers was that local authorities already have sufficient powers under Section 222 of the Local Government Act to deal with the situation.
  Work that we have done shows that that is simply not true. If Section 222 was sufficient, local authorities would already be using it successfully. They do not, and cannot, because it is not sufficient.
  Section 222 of the Local Government Act 1972 states that,
  "Where a local authority consider it expedient for the promotion or protection of the interests of the inhabitants of their area … they may prosecute or defend or appear in any legal proceedings and, in the case of civil proceedings, may institute them in their own name".
  Such measures have been used by local authorities to prevent, for example, Sunday trading or breaches of planning law—in other words, where commercial companies were willing to flout the law repeatedly because they were willing to pay the fine at the end of the day.
  However, when local authorities have tried to use Section 222 for serious anti-social behaviour, as the Minister in another place suggested they could, those local authorities which to my knowledge on several occasions have used it have had to withdraw or face surcharge because courts have ruled that there was not a wide enough public interest at stake.
  I quote the notorious Finnie brothers case. Coventry City Council, in March 1995, tried to use Section 222 against the Finnie brothers, aged 26 and 29, to exclude them from a small section of one Coventry housing estate. Neither of the brothers lived there. They were not tenants, but they had friends and relatives on the estate. Together, they ruled the estate. They were held responsible for burglary, intimidation, harassment, violence and fire-bombing. Law-abiding tenants left the area, and the local authority found it difficult to get new tenants to live there. School rolls actually fell—people were voting with their feet. People were terrified of giving evidence. Councillors, MPs, the police and community representatives all gave sworn evidence.
  The city council obtained a temporary injunction against the two brothers, who lived outside the estate but came in to produce that litany of offences. However, the city council's counsel, Sir Louis Blom-Cooper, advised it to withdraw the action as there was a risk of failure and therefore the court costs that would result would render it liable to surcharge. It had to follow counsel's opinion and the case fell. Some local authorities have been able to get Section 222 injunctions in cases of domestic violence; others have failed because judges have deemed that Section 222 did not cover it.
  What is to be done? One could seek a brand new clause on the basis of public protection. I am very
  304
  reluctant to go down that route. This area is difficult. It is a mixture of hybrid civil and criminal law. There is also an issue as to how robust the evidence would need to be on which a local authority could seek an injunction with powers of arrest, as the noble Baroness, Lady Hamwee, mentioned.
  However, there may be a simpler route. I hope with all my heart that the Minister will feel able to support it. If this amendment is not appropriately drafted perhaps he will be able to come back with his own amendment on Report. This may cut through a lot of our problems. It could be made clear on the face of the Bill and without doubt that Section 222 of the Local Government Act 1972 may be used, just as the Minister said in the other place, by a local authority as the basis for an injunction to exclude anyone, not just its own tenants, from coming into a defined area of its estates if the judge agrees that serious anti-social behaviour has occurred or is likely to occur.
  The Minister in another place said that Section 222 could bear that interpretation. I have to say that several learned counsel have disagreed with him and local authority cases have fallen as a result because the councillors feared surcharge. The right way to do what the Minister says can be done, but QCs say cannot, is to make it clear on the face of the Bill that Section 222 can do the job that the Minister wants.
  I very much hope that the Minister will feel able to support the principle of the amendment and, if this is not the appropriate amendment, will come back with a broadly similar one on Report. I beg to move.
  Earl Russell: I listened with very great interest to that speech. I am pleased to say that here the noble Baroness has successfully matched the remedy to the problem. The evidence in that Coventry case and counsel's opinion from Sir Louis Blom-Cooper I found extremely compelling.
  It is possible that the amendment says only that the law is what it is already. But, as the amendment puts it, for the avoidance of doubt I think it would be a very good thing to have in the Bill, and I am happy to support the amendment.
  Lord Lucas: The short answer to the noble Baroness's amendment is yes—yes, we agree with what she says—but the long answer is rather more complicated than that.
  First, let me issue a caveat. The local authority's power under Section 222 is very flexible. Any attempt to codify it in the way proposed in this amendment for particular uses would, we fear, reduce that flexibility. I have some counter examples to offer to the noble Baroness of cases where it has been used effectively. The London Borough of Hackney, for example, issued injunctions under Section 222 to prevent a gang of youths from outside the estate—in this case, the Kingsmead Estate—from coming on to it and causing untold serious problems by anti-social behaviour. They included attacking local authority officials and burgling and destroying council property.

  305
  Injunctions provided the solutions and we believe that one of the youths was subsequently jailed. I can also offer the case of Stoke City Council v. B&Q, where the court considered that it was in everyone's interest, particularly in urban areas, that a local authority should do what it could do to establish and maintain an ambience of law-abiding community and that what should be done for that purpose was for the local authority to decide.
  Having listened to the noble Baroness, it is quite clear that our positive views of what can be achieved under Section 222 are not shared by some serious members of the legal community and have not been followed by a number of local authorities which have serious problems to deal with. That is a situation that concerns us greatly. If the noble Baroness will agree to work with my officials and provide us with the evidence that she has, we shall put all the effort we can into providing a suitable remedy for whatever problem may exist, before the Bill leaves this Chamber.
  Baroness Hollis of Heigham: I am very grateful indeed not only for the support of the noble Earl, Lord Russell, but for the Minister's response. I am delighted to take up his offer and very much hope that we can strengthen the Bill in that way. With the leave of the Committee, I shall withdraw the amendment, in the expectation that we shall revisit it.
  Amendment, by leave, withdrawn.
  Baroness Hamwee Baroness Hamwee moved Amendment No. 263ZAGE:
  After Clause 140, insert the following new clause—

  DATA PROTECTION: CRIMP AND TAXATION
  (". At the end of section 28 of the Data Protection Act 1984 there shall be inserted—
  "(5) For the avoidance of doubt a local authority is acting for the purposes referred to in subsection (1) (a) and (b) when, in the exercise of any powers under Chapter III of Part V of the Housing Act 1996, they are investigating any matters which amount to or could amount to a criminal offence notwithstanding that the local authority may be considering civil rather than criminal proceedings as a result of those investigations.".")
  The noble Baroness said: This amendment stands in my name and that of the noble Baroness, Lady Hollis. The proposed new clause deals with the matter of data protection. Its purpose is to ensure that the police and local authorities can exchange information held on computer when they carry out joint investigations or strategies to tackle crime in an area, recognising the value of a multi-agency approach to dealing with crime.
  The problem, as I understand it, is that some police forces are advised that they may release information to a local authority; others are advised that they are not to do so. Some police forces argue that local authorities are involved in the prevention of crime, even when they are taking action for possession or seeking injunctions; but others have been advised that the position is not clear cut and they should not
  306
  release information. The effect of the proposed amendment is to make clear that a local authority is acting to prevent or detect crime or to apprehend or prosecute offenders when it is investigating matters that might amount to criminal offences, even if in fact the decision subsequently is to take civil action rather than pursue criminal proceedings or to encourage the police to prosecute. I beg to move.
  Baroness Hollis of Heigham: I would like to support this amendment whole-heartedly.
  Lord Lucas: This new clause seeks to alter the Data Protection Act provisions on disclosure of police data. Under the Data Protection Act 1984, data users have to comply with eight data protection principles, including one that says:
  "The information to be contained in personal data shall be obtained, and personal data shall be processed, fairly and lawfully".
  Processing is interpreted by the relevant enforcement body, the Data Protection Registrar, to cover disclosure of data. So, to summarise, data must be obtained, processed and disclosed fairly and lawfully.
  It is accepted practice, endorsed by the Association of Chief Police Officers and the Registrar's Office, that provided they have properly registered the purpose the police may disclose to other public bodies data originally collected for or relevant to the prevention or investigation of crime. The acceptable purposes of such disclosures include not only direct action under the criminal law but also helping local authorities deal with difficult tenants; for example, using houses for drugs or immoral purposes in breach of tenancy agreements. If, however, local authorities feel that they have encountered problems in this area, it is open to them to contact the Association of Chief Police Officers' Data Protection Working Group to discuss any proposals they may have.
  Therefore, we feel that the new clause is not necessary to provide the power for police disclosure which we believe local authorities want in this case. It already exists. Of course neither it nor the present Data Protection Act would force police to share data; that is and should remain a matter for their collective judgment.
  If the noble Baroness, Lady Hamwee, has any particular examples where the systems that I have set out in my answer are not working well, perhaps she would let us know so that we might follow them up.
  Baroness Hamwee: I thank the Minister for that response. I was not seeking by this amendment to require a police authority to share information if it did not wish to do so but merely to ensure that it had the assurance that it was entitled to do so. I will take advice as to whether what the Minister has said by way of putting the matter clearly on the record is adequate. I am not sure that it will be, given the

  307
  powers of the registrar. I will take up his offer, if necessary, to come back to the matter. In the meantime, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 141 agreed to.
  Lord Mackay of Ardbrecknish: I beg to move that the House do now resume.
  Moved accordingly, and, on Question, Motion agreed to.
  House resumed.

Allied Irish Banks Bill
Brought from the Commons, read a first time, and referred to the Examiners.

Armed Forces Bill
Reported from the Committee in the Moses Room without amendment.
House adjourned at sixteen minutes before midnight.