House of Commons Hansard Debates for 14 Jun 1993

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New clause

Property transferred for public benefit etc.

Lords amendment proposed : No. 92, after clause 62 insert the following new clause--

("After section 32 of the Leasehold Reform Act 1967 there shall be inserted --

32A.--(1) A notice of a person's desire to have the freehold of a house and premises under this Part shall be of no effect if at the relevant time the whole or any part of the the house and premises is qualifying property and either--

(a) the tenancy was created after the commencement of Chapter III of Part I of the Housing and Urban Development Act 1993 ; or (

(b) (where the tenancy was created before that commencement) the tenant would not be entitled to have the freehold if either or both of sections 1A and 1B above were not in force.

(2) For the purposes of this section the whole or any part of the house and premises is qualifying property if--

(a) it has been designated under section 31(1)(b), (c) or (d) of the Inheritance Tax Act 1984 (designation and undertakings relating to conditionally exempt transfers), whether with or without any other property, and no chargeable event has subsequently occurred with respect to it ; or

(b) an application to the Board for it to be so designated is pending ; or

(c) it is the property of a body not established or conducted for profit and a direction has been given in relation to it under section 26 of that Act (gifts for public benefit), whether with or without any other property ; or

(d) an application to the Board for a direction to be so given in relation to it is pending.

(3) For the purposes of subsection (2) above an application is pending as from the time when it is made to the Board until such time as it is either granted or refused by the Board or withdrawn by the applicant ; and for this purpose an application shall not be regarded as made unless and until the applicant has submitted to the Board all such information in support of the application as is required by the Board.

(4) A notice of a person's desire to have the freehold of a house and premises under this Part shall cease to have effect if-- (

(a) before completion of the conveyance in pursuance of the tenant's notice, the whole or any part of the house and premises becomes qualifying property ; and

(b) the condition set out in subsection (1)(a) or (as the case may be) subsection (1)(b) above is satisfied.

(5) Where a tenant's notice ceases to have effect by virtue of subsection (4) above--

(a) section 9(4) above shall not apply to require the tenant to make any payment to the landlord in respect of costs incurred by reason of the notice ; and

(b) the person who applied or is applying for designation or a direction shall be liable to the tenant for all reasonable costs incurred by the tenant in connection with his claim to acquire the freehold of the house and premises.

(6) Where it is claimed that subsection (1) or (4) above applies in relation to a tenant's notice, the person making the claim shall, at the time of making it, furnish the tenant with evidence in support of it ; and if he fails to do so he shall be liable for any costs which are reasonably incurred by the tenant in consequence of the failure. (7) In subsection (2) above as it has effect for the purposes of subsection (1) above--

(a) paragraphs (a) and (b) apply to designation under section 34(1)(a), (b) or (c) of the Finance Act 1975 or section 77(1)(b), (c) or (d) of the Finance Act 1976 as they apply to designation under section 31(1)(b), (c) or (d) of the Inheritance Tax Act 1984 ; and (

(b) paragraphs (c) and (d) apply to a direction under paragraph 13 of Schedule 6 to the Finance Act 1975 as they apply to a direction under section 26 of that Act of 1984.

(8) In this section--

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"the Board" means the Commissioners of Inland Revenue ; "chargeable event" means--

(a) any event which in accordance with any provision of Chapter II of Part II of the Inheritance Tax Act 1984 (exempt transfers) is a chargeable event, including any such provision as applied by section 78(3) of that Act (conditionally exempt occasions) ; or

(b) any event which would have been a chargeable event in the circumstances mentioned in section 79(3) of that Act (exemption from ten-yearly charge)." ")

Read a Second time.

Amendment made to the Lords amendment : (a), in subsection (7) leave out

as it has effect for the purposes of subsection (1) above'.-- [Mr. Baldry.]

Lords amendment, as amended, agreed to.

Lords amendments, Nos. 93 to 152 agreed to.

New clause

Property within cathedral boundary

Lords amendment proposed : No. 153, after clause 85 insert the following new clause--

(". There shall be no right under Chapter I or II to acquire any interest in or lease of any property which lies within the precinct boundary of a cathedral church, within the meaning of the Cathedrals Measure 1963.")

Read a Second time.

Amendment made to Lords amendment : (a), leave out from which' to end and insert

for the purposes of the Care of Cathedrals Measure 1990 is within the precinct of a cathedral church.'.-- [Mr. Baldry.]

Lords amendment, as amended, ageed to.

Lords amendments Nos. 154 to 169 agreed to.

New clause

Right to information

Lords amendment : No. 170, after clause 110 insert the following new clause --

(". After subsection (2) of section 104 of the 1985 Act (provision of information about tenancies) there shall be inserted the following subsection--

"(3) A local authority which is the landlord under a secure tenancy shall supply the tenant, at least once in every relevant year, with a copy of such information relating to the provisions mentioned in subsection (1)(b) and (c) as was last published by it ; and in this subsection relevant year' means any period of twelve months beginning with an anniversary of the date of such publication." ") Read a Second time.

Motion made, and Question proposed, That this House doth agree with the Lords in the said amendment.-- [Sir George Young.] 7 pm

Mr. Battle : The amendment deals with the right to information. It concerns, in particular, the public sector and the Government's intentions in providing such information.

The proposed new subsection refers to section 104 of the Housing Act 1985, which deals with the provision of information about a tenancy. Does that mean that that information will simply be limited to the right to buy, or will it include information about the Government's proposed rents-to- mortgage scheme, which also forms part of the Bill? The relevant section of the 1985 Act

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provides that when a tenancy is created, a local authority should give tenants information about changes to the tenancy. I hope that the information provided under the proposed subsection is not just confined to that about right to buy, but includes information about the Government's rents-to-mortgage scheme.

The Government have tried recently to boost the flagging right-to-buy programme by publishing another booklet that, set out that programme in fine detail. I understand that, this year, the Government have already spent £1.4 million on publicity. The latest publicity stunt will not help council leaseholders who exercised the right to buy but were not properly informed at the time of how they would have to manage and pay the lease. I remind the Minister that some 70,000 council leaseholders in London alone face massive repair bills. They are unable to sell their flats and now feel that they were not properly informed by the Government when they pushed the right-to-buy programme.

Ministers' energies would be better spent tackling the huge need for homes to rent rather than simply trying to create a demand where one virtually does not exist.

It might be helpful if, under the terms of right to information, Ministers gave an undertaking to the House that the relevant costs of providing such information would be fully met and that the provisions would be reviewed if, in the future, authorities could prove that meeting them was more onerous than the Government expected. Many believe that the rents-to- mortgage scheme is not relevant to current circumstances. In Committee, the Minister often quoted me as saying that the scheme was irrelevant. I cannot claim ownership of that description ; it should be claimed by Mr. Steve Wilcox, who wrote in Roof magazine in the September-October 1992 edition that the scheme

"will appeal to a limited number of tenants who cannot afford right to buy but are not in receipt of housing benefit."

In other words, the proposals for rents to mortgages, announced in July and based on pilot schemes in Scotland, new town Basildon and Milton Keynes, have not achieved anything near what the Government suggested. There is no real market for the scheme because rents are already at levels where many tenants could, if they so wished, buy under the right-to-buy scheme, with mortgage repayments no higher than their current rents. The scheme is still being sold by the Government, however, as a means of avoiding "future rent increases". All that the rents-to-mortgage scheme will do is highlight the financial squeeze on local authorities by claiming projected large increases as if they were an inevitable consequence of continued council ownership. It will not spell out the lack of resources to invest in the necessary repair and improvement of local authority stock.

Inside Housing magazine of 30 October 1992 described the scheme in an article entitled, "Rents to mortgage too obscure", which stateds :

"Difficulty in understanding rent to mortgage has been one of the main reasons for tenants not taking up the scheme, the Scottish Office has conceded."

That was conceded in the Scottish Office publication, "The Rent to Mortgage Scheme in Scotland". The article continued :

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"An official report into local authority and Scottish Homes rent to mortgage pilots claims success for the scheme in attracting purchasers who otherwise would not have been able to purchase their homes.

But the report says the main reasons why tenants did not continue with a rent to mortgage purchase after expressing interest included fear of unemployment and difficulty understanding the scheme." I can understand why people's fear of unemployment makes them unwilling to be pushed any further to purchase property.

Perhaps provocatively--although this is an expression that has been echoed by most people with experience and knowledge in the housing field--I have to say that in 69 per cent. of the housing stock in Britain, owner- occupation is proving untenable. Twenty-one per cent. of the stock is still with local authorities. The private rented sector still stagnates, despite the Government's efforts to revivify it, at 7 per cent. Housing associations, of which the Government demand so much, represent a mere 3 per cent. of the housing stock. I put it to the Minister that housing associations, with only 3 per cent. of the stock, can go hardly any way towards meeting the needs of people for housing to rent. The Institute of Housing suggests that there need to be 100,000 new dwellings a year provided in Britain. The Government are providing 53,000 dwellings at best- -that is just over half, and the figure is projected to go down next year, and down again the following year.

When it comes to providing information, why are the Government obsessed by a single track? Why do they not recognise people's need to rent? The Minister claims to speak of rights. Why could he not recognise the right to rent, and include that in the information to which this clause and the amendment refer?

I suggest, as we did in the Standing Committee on the Bill, that, instead of a rents-to-mortgage scheme, what is most needed in the present context is a scheme that takes people from mortgages to rents. That way perhaps we would not be in the ludicrous position whereby people faced with repossession lose their home and may go into a hostel or other housing accommodation. Then along comes a housing association with a housing market package, buys the property and suggests to the local authority that it can put a homeless person into it.

The difficulty is that people might not get back into the home which belonged to them and which they built up. Why not leave the family in their home and convert their mortgage into rent? That could be done with a bit of arithmetic, and would make far more sense than the Government's proposals for turning rent into mortgages. There are great difficulties in understanding the rents-to-mortgage scheme. I will not take the House through them now, but the arithmetic and the exclusion of people on housing benefit--to mention but two points--mean that the scheme is not only little understood but creates real dangers. Private lenders have first charge on the property and, if those low-income owners fall behind on what will then be described as their rent--that is, their mortgage--they will find that the property can be repossessed. That ought to be spelt out plainly in the information to tenants.

I suggest to the Minister that, in the booklets or information passed back to tenants, he should spell out that shared ownership, which the rents-to- mortgage scheme is effectively now to replace, offered tenants a better and a more secure deal.

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The Institute of Housing, in its response to the Department of the Environment consultation paper on the rents-to- mortgage scheme said that it was the wrong scheme at the wrong time, that it was ill conceived and inappropriate, and that the eventual take-up would be minimal. We concur with that view and urge the Government, when it gives information to tenants, not to keep pressing its single-tenure obsession. We need flexible tenure in Britain so that people can move within their lifetimes from renting to owning and back to renting, perhaps part-sharing or part-owning. They should not be locked into a form of tenure. Over the past 14 years, by pushing owner-occupation, the Government have developed, not a two-way flow and a flexible tenure, but a one-way street to owner- occupation, which is proving to be a cul-de-sac of repossession for far too many people.

I suggest that, as we set out in our document only last Friday, flexible tenure is what is needed in Britain, not a lock-in to owner-occupation. If the Government were to give tenants fair information on their real rights, they would include the right to rent, set out all the options, and, as it were, open up flexibility of tenures in Britain. They should not continue-- as I believe that the Minister does not really want to, because he does occasionally make comments to the effect that we need to develop the rented sector as well--on the present course, in which the system is clogged up and homes are empty while people are homeless.

7.15 pm

Sir George Young : I will begin by answering a question that the hon. Gentleman posed at the outset of his speech.

Yes, the amendment will require local authority landlords to reissue annually the information, not just about the right to buy, but about other statutory rights. Local authority tenants already have the right to rent ; they are secure tenants, and when they take out a lease from their local authority their rights are set out quite clearly.

The hon. Gentleman touched on two groups of people, the first being leaseholders in high-rise flats, who sometimes find it difficult to sell because the incoming purchaser finds it difficult to get a mortgage.

My hon. Friend and I are continuing to have discussions with the Council of Mortgage Lenders to see whether we can find a way through this problem, which, although not widespread, is a real problem for the people concerned.

Mr. Battle : I am grateful for the Minister's response on that point. It is the response which he gave us some five months ago. I appreciate that he is meeting the Council of Mortgage Lenders, but can he assure me that he is also meeting local authorities, many of whom feel that, at the end of the day, it will be up to them, particularly in tower blocks, to take back the properties and turn people's mortgages into rent, in order to solve that problem?

Sir George Young : The answer is yes, because the local authorities are the freeholders of these blocks of flats and have an interest in any difficulties that may face the leaseholders living in them. Those discussions are continuing.

The bulk of the hon. Gentleman's remarks were about the rent-to-mortgage scheme. Once again, we saw the hon.

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Gentleman sitting very firmly on the fence. He does not want to condemn the rent-to-mortgage scheme in case it turns out to be a wild success, like the right-to-buy scheme, but he finds it impossible to endorse it. I find that slightly strange, because only last week the Labour party put out a document entitled "Labour's charter for flexible tenure", and one of the things it says is :

"We want to see the end to the old division between rented and owner- occupied housing. There should be circumstances where people can change tenure without having to change their home."

That is exactly what the rent-to-mortgage scheme ensures. I cannot understand why someone who is in favour of flexibility of tenure finds it impossible to endorse the rent-to-mortgage scheme. The hon. Gentleman knows that we have made no forecasts of the take-up of this scheme. We are in the business of extending choice and opportunity to local authority tenants. It is then up to them to decide whether they want to take the opportunity that we have made available to them under the rent-to-mortgage scheme.

I take it from what the hon. Gentleman says that he has no particular objection to amendment No. 170, which simply requires local authorities to set out annually to tenants their statutory rights, so I hope that the House can now approve the amendment. Question put and agreed to.

Lords amendments 171 to 173 agreed to.

Clause 113

Provision of housing welfare services

Lords amendment : No. 174, in page 115, line 44, at end insert-- ("(4) The powers conferred by this section shall not be regarded as restricting those conferred by section 137 of the Local Government Act 1972 (powers to incur expenditure for purposes not authorised by any other enactment) and accordingly the reference to any other enactment in subsection (1)(a) of that section shall not include a reference to this section.")

Motion made, and Question proposed, That this House doth agree with the Lords in the said amendment.-- [Sir George Young.]

Ms Ann Coffey (Stockport) : The Minister will remember the discussion in Committee about the effect of immediate transfer of the cost of warden services from the housing revenue account to the general fund, and the effect that that might have on the provision of those services.

I want to explore further some of the difficulties of the original clause by reference to the situation in my constituency.

Stockport provides a warden care call service to its tenants which is currently being converted to a speech-based telephone system. That scheme is provided to 1,783 council tenants, of whom 1,341 live in group schemes-- special accommodation for the elderly. Wardens monitor and respond to calls and visits. All tenants are visited weekly and 15 per cent. of tenants are visited daily. This year there is a demand for a further 12 schemes for a total of 218 elderly people. The number of elderly people is increasing, and they often live alone--the care call offers them safety and peace of mind. Demand for the care call service is likely to increase.

At present, the cost of warden services is mainly provided through the housing revenue account. There are

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differentials in rent multipliers because the accommodation with access to the care call warden system is special accommodation, but the differentials do not fully reflect the cost of the provision. It seems that, from 1 April 1994, the Government intend to transfer from the housing revenue account to the general fund the cost of essential care services managed by the housing wardens. The definition of essential care is assistance with personal care, feeding, dressing and getting up. In Stockport that is unlikely to be a significant cost of the housing wardens service.

What is not clear at present is what, when or whether the Department of the Environment may issue regulations that would effectively lead local authorities to meet the cost of warden and care alarm services, which are not defined as essential care, through a service charge with the rent. The question is whether such a service charge would be eligible for housing benefit.

In general, the charge will qualify for housing benefit only if it is an essential requirement of the accommodation. If some degree of choice for tenants is involved, that service charge may not be eligible for housing benefit. If it is not, it will mean that the cost of the warden service will transfer to the general fund because certain tenants, including the elderly and frail, will not be able to afford the service charge. Clearly the authority will have to provide that service. If it cannot do so through the housing revenue account and tenants have no access to housing benefit, the cost will have to be provided through the general fund.

The issue caused me much concern because, as the Minister must realise, social services departments are under extreme pressure to cut their budgets in the forthcoming year. I would be concerned if, either directly or indirectly, the cost of those services was transferred to the general fund. That might well result in the dimunition of the provision of the present service to elderly people at a time when there is a growing elderly population, we are seeking to keep more people in the community and a crucial part of community care is the accommodation that those people are offered.

I appreciate that there is a long-standing argument about what constitutes housing welfare and what degree of responsibility a housing authority has to provide welfare to its tenants. The housing authority is not responsible merely for the maintenance of bricks and mortar--it must take into account the welfare needs of its tenants. Rightly or wrongly, over the years the welfare housing needs of elderly people have been met in countless authorities through care call warden services provided from the housing revenue account. Any sudden shift in responsibility for that provision would have disastrous consequences for the provision of care call and warden services to the elderly.

When he considers the amendment--resulting provisions will be provided through regulations--I hope that the Minister will carefully consider the position of elderly tenants and social services departments. I hope that he will introduce regulations to transfer the cost over a period so that it is affordable for both the housing and the social services departments. He must also ensure that elderly people continue to receive the same level of provision as they have in the past. That provision is crucial for them and in great demand by them.

Sir George Young : I can give the hon. Member for Stockport (Ms. Coffey) the assurance that she sought :

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there is no question of there being a sudden shift in responsibility for those services. We are talking about a vulnerable group of people and important wers, through the housing account, to pay for services. Clause 113 validates the status quo and gives local housing authorities the power to provide welfare services for their tenants. The amendment is merely a tidying amendment to ensure that the authorities can go on providing certain services for the private sector.

The Government have been consulting and have received more than 200 representations. We are currently considering the outcome of that exercise. As the hon. Lady implied, the subject is complicated. It is not merely a question of deciding what constitutes a housing service and what constitutes a welfare service ; it also involves the knock-on effect on housing benefit.

The Government are not minded to take dramatic action, for the reasons outlined by the hon. Lady. A number of options are available to us. One option would be to wait until local Government responsibilities are reorganised and we move to unitary authorities. We could take that opportunity to clarify the division of responsibilities between housing services and social services. There should be no disruption to services to tenants. That principle will inspire us as we resolve the matter. I hope that the hon. Lady will accept my assurance.

Question put and agreed to.--[Special entry.]

Clause 116

Management agreements

Lords amendment : No. 175, in page 116, line 39, leave out from beginning to ("there") in line 40 and insert

("At the end of subsection (3) of section 27 of the 1985 Act (management agreements), there shall be inserted the words "and shall contain such provisions as may be prescribed by regulations made by the Secretary of State".

(1A) For subsection (5) of that section")

Motion made, and Question proposed, That this House doth agree with the Lords in the said amendment.-- [Sir George Young.]

Mr. Deputy Speaker (Mr. Michael Morris) : With this it will be convenient to discuss Lords amendments Nos. 182 and 183.

Mr. Straw : These amendments and amendment No. 181 involve compulsory competitive tendering for housing management. Therefore, it may be for the convenience of the House if I address my remarks to both groups of amendments. I hope that the Minister agrees. I congratulate him on his elevation to Her Majesty's Privy Council. One of the major contentions between the Opposition and the Government when the issue was discussed earlier was the fact that the Government proposed to enforce compulsory competitive tendering for housing management and to remove the tenants' right of veto which they possessed under section 27 of the Housing Act 1985. Under that Act, they had the power to veto a change in the

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management of their housing. The matter was considered at great length in Committee, in the House and in their Lordships' House. With one exception--which is dealt with by Lords amendment No. 181--the Government stuck to their original position. They went through the rigmarole of explaining why a tenant's right of veto was no longer necessary and why, if it was necessary, the tenant's veto would be dealt with through other means. The Government did not offer much clarity over whether they wanted the veto or not.

The Government first claimed--as Lord Strathclyde did in another place-- that the veto was unnecessary because there was no proposal to change the landlord's or the tenant's basic rights under compulsory competitive tendering for housing, whereas there would be proposals to do so in the parallel cases involving housing action trusts or large-scale voluntary transfers.

Our view, which I believe was widely shared in the other place, was that, in practice, a competitive tendering process that led to the management of housing responsibilities being transferred to a private company involved at least as substantial a transfer as a large-scale voluntary transfer--which usually results in transferring responsibility for housing management to the same people as before. In a sense, it is in practice a larger transfer than that which is occasioned under a housing action trust, where tenants now have the right to go back to the local authority at the end of the period. Having dealt with that point, Ministers in another place argued that the veto was unnecessary, as tenants were being given better rights to consultation and involvement. I am always very suspicious of such arguments. I am always suspicious when a categorical right is removed, when one hears weasel words from Ministers--even words as elegant as those that dropped from the lips of the now right hon. Gentleman. Ministers may admit that a specific right is indeed being taken away but say that anyone going through the small print will see that tenants may be consulted. The truth is that tenants will no longer have the clear veto right that they enjoy under the current law. We believe that that right should be continued.

We believe that the determination to remove tenants' veto rights in respect of housing management--rights that are enjoyed in respect of compulsory competitive tendering and large-scale voluntary transfers--springs from the fact that the Government attach much more importance to the privatisation of public services than to the protection of tenants' rights.

In these debates we have tried to flush out the rights to which Ministers give priority. Do the Government regard as more important the right of tenants to a say in the running of their estate or the right of private firms bidding for the management of local authority housing stock? If there is a conflict, does profit come far above the rights of tenants? I am not suggesting that this is necessarily the Minister's own view. Indeed, it is likely that, if he were in control of Government policy, he would have scarcely nothing to do with privatisation and the rest of the now-rotting Thatcherite agenda, to which he is tied. In fact, we saw his attitude when the lady was still in office. As a Minister, however, he has to support pernicious nonsense of this type.

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