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The Lord Chancellor: My Lords, I beg to move that the Bill do now pass.

Moved, That the Bill do now pass.--(The Lord Chancellor.)

On Question, Bill passed, and sent to the Commons.

Employment Rights Bill [H.L.]

3.34 p.m.

Read a third time.

Clause 50 [Rights to time off for public duties]:

The Lord Chancellor moved Amendment No. 1:

Page 32, line 32, leave out ("National Rivers Authority or a river purification board,") and insert ("Environment Agency or the Scottish Environment Protection Agency,").

The noble and learned Lord said: My Lords, in moving Amendment No. 1, I should like to speak also to the other amendments which stand in my name. Amendments Nos. 1, 2 and 13 arise from the making of recent regulations under the provisions of the Environment Act 1995 to replace statutory references to the National Rivers Authority and river purification boards, which were abolished on 1st April, with references to the Environment Agency and the Scottish Environment Protection Agency, which have taken over their roles.

Section 29 of the Employment Protection (Consolidation) Act 1978, which is consolidated in Clause 50 of the Bill, confers on employees a right to time off from work to act as a member of various public bodies referred to in that section. Amendment No. 1 carries through an amendment made to Section 29 of the 1978 Act by the new regulations, substituting a reference to the new bodies for that to the National Rivers Authority and river purification boards. Amendment No. 2 is consequential upon that change. Given that the Bill, as amended, carries forward into primary legislation the change which the new regulations make to Section 29 of

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the 1978 Act, Amendment No. 13 repeals the relevant provisions of those regulations, as they are no longer required.

It is anticipated that the Reserve Forces Bill, which has now passed your Lordships' House and which is presently being considered in the other place, will receive Royal Assent either before or on the same day as the present Bill. Amendments Nos. 3, 8, 10 and 12 are necessary in order that the Bill consolidates the law as it stands once the new Reserve Forces Act comes into force. Amendment No. 9 makes transitional provision to allow for the possibility that the relevant provisions of the new Act may not come into force before the present Bill receives Royal Assent.

Amendments Nos. 4 to 7 and 11 correct a number of minor drafting errors in the Bill. Clause 203 consolidates similar provisions in Section 140 of the Employment Protection (Consolidation) Act 1978 and Section 6 of the Wages Act 1986. The former applies to "employees" and the latter to "workers", a wider notion which brings in some persons who are not employed under a contract of service. Amendments Nos. 4 to 6 correct a drafting slip in Clause 203 which presently refers only to employees. Amendments Nos. 7 and 11 tidy up some minor slips in the consequential amendments and repeals made in Section 579 of the Income and Corporation Taxes Act 1988.

This Bill has, of course, been considered by the Joint Committee on Consolidation Bills, and the amendments have been approved by the chairman of the Joint Committee, my noble and learned friend Lord Lloyd of Berwick, for whose assistance I am again most grateful. I beg to move.

Lord Monkswell: My Lords, I hesitate to intervene in what may seem to be a private party which the Lord Chancellor is having with himself, but I should like to ask two questions which may be easily answered. First, what precedent is there for incorporating into a Bill the provisions of another Bill which has not yet been passed? Secondly, from what the noble and learned Lord said earlier, I gather that the amendments he is proposing refer to the requirements of the Armed Forces Bill and the Reserve Forces Bill, neither of which has yet received Royal Assent. What would happen if, for example, prior to their receiving Royal Assent, there were a dissolution and a general election or some other occurrence resulting in the Government's inability to see the Bills through to becoming Acts?

The Lord Chancellor: My Lords, this is certainly not intended to be a private party. If I wanted to have one, I would have it in a different situation. In the course of developing a Bill, it is reasonable to take account of what is likely to happen with other Bills proceeding at the same time. As I explained, perhaps too briefly, in both cases we have inserted transitional provisions to ensure that the relevant clause will not come into force before the other Bills whose existence I predicated as part of the amendment process. The idea is that everything will fit together with anticipated events. I believe that that is wise, correct and, on the whole, carried out properly in this series of amendments.

On Question, amendment agreed to.

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The Lord Chancellor moved Amendment No. 2:

Page 34, line 10, leave out subsection (10).

On Question, amendment agreed to.

Clause 192 [Armed forces]:

The Lord Chancellor moved Amendment No. 3:

Page 112, line 45, leave out ("VI of the Reserve Forces Act 1980") and insert ("XI of the Reserve Forces Act 1996").

On Question, amendment agreed to.

Clause 203 [Restrictions on contracting out]:

The Lord Chancellor moved Amendments Nos. 4 to 6:

Page 122, line 18, after ("employee") insert ("or worker").
Page 122, line 23, after ("employee") insert ("or worker").
Page 122, line 29, at end insert ("or worker").

On Question, amendments agreed to.

Schedule 1 [Consequential amendments]:

The Lord Chancellor moved Amendment No. 7:

Page 150, line 20, after ("(5)(a)") insert ("and in subsection (4)(a) as it has effect for the purposes of corporation tax").

On Question, amendment agreed to.

Schedule 2 [Transitional provisions, savings and transitory provisions]:

The Lord Chancellor moved Amendments Nos. 8 and 9:

Page 163, line 11, leave out ("VI of the Reserve Forces Act 1980") and insert ("XI of the Reserve Forces Act 1996").
Page 163, line 19, at end insert--
(".--(1) If Part XI of the Reserve Forces Act 1996 has not come into force before the commencement of this Act, section 192 of this Act shall have effect until the relevant commencement date as if for "Part XI of the Reserve Forces Act 1996" there were substituted "Part VI of the Reserve Forces Act 1980".
(2) The reference in sub-paragraph (1) to the relevant commencement date is a reference--
(a) if an order has been made before the commencement of this Act appointing a day after that commencement as the day on which Part XI of the Reserve Forces Act 1996 is to come into force, to the day so appointed, and
(b) otherwise, to such day as the Secretary of State may by order appoint.").

On Question, amendments agreed to.

Schedule 3 [Repeals and revocations]:

The Lord Chancellor moved Amendments Nos. 10 to 13:

Page 164, leave out lines 35 and 36.
Page 166, line 18, column 3, leave out ("subsection (3)(b),") and insert ("subsections (2)(b) and (3)(b) and in subsection (4)(b) as it has effect otherwise than for the purposes of corporation tax,").
Page 168, line 52, at end insert--
("1996 c. 00.The Reserve Forces Act 1996.In Schedule 10, paragraph 17.")

Page 169, line 28, at end insert--
("S.I. 1996/593.The Environment Act 1995 (Consequential Amendments) Regulations 1996.In Schedule 1, paragraph 19.
S.I. 1996/973.The Environment Act 1995 (Consequential and Transitional Provisions) (Scotland) Regulations 1996.In the Schedule, paragraph 4.")

16 May 1996 : Column 560

On Question, amendments agreed to.

The Lord Chancellor: My Lords, I beg to move that the Bill do now pass.

Moved, That the Bill do now pass.--(The Lord Chancellor.)

On Question, Bill passed, and sent to the Commons.

Law Reform (Year and a Day Rule) Bill

Lord Dormand of Easington: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.

Moved, That the order of commitment be discharged.--(Lord Dormand of Easington.)

On Question, Motion agreed to.

Housing Bill

3.42 p.m.

The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, on behalf of my noble friend Lord Ferrers, I beg to move that the Bill be now read a second time.

The Bill shows our commitment to wider choice and better quality of life for home owners and tenants.

Each year, over £17 billion goes to help with housing in England alone, through public spending and tax reliefs. In the last five years, public investment has built or refurbished a quarter of a million homes for social renting or shared ownership and opened up an additional 70,000 lettings. This is a major investment of taxpayers' money.

The Bill will help ensure that public money is spent effectively and goes where help is most needed. It will ensure that those who get a long-term council or housing association home are those that need it most. It will help ensure effective management of social rented housing, with quicker and more effective action by the regulator when things go wrong.

This is a Bill which brings in private resources alongside public investment to improve council estates. It is a Bill which promotes sustainable home ownership by giving more housing association tenants the opportunity to buy the property they live in, at an amount they can afford, and which supports a healthy private rented sector.

It is a Bill aimed at making the quality of life better for the individual, whether tenant or home owner, by giving tenants protection against neighbours who intimidate them; by giving leaseholder home owners

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protection against unscrupulous landlords; and by improving the standards of housing in multiple occupation.

The White Paper Our Future Homes made clear the Government's commitment to investment in social rented housing. This is the most cost-effective way of making sure that people on long-term low incomes have a decent home.

Social housing does not need to be in public ownership. The track record of some housing associations shows that. Moreover, private bodies owning social housing have one great advantage over public sector landlords: their borrowing and investment are not constrained by the inevitable public expenditure limits. More investment means more and better housing for those in need.

That is why we are encouraging local authorities to transfer housing to new social landlords, and why we are making it possible in Part I of this Bill for the Housing Corporation to register as social landlords local housing companies, in which local authorities, tenants and others can have an interest. These will be able to take over council housing and bid alongside housing associations for grants to build new homes.

Some critics have suggested that this is "merely privatisation". If they mean that it brings in private money and private sector ideas about efficiency, they are right. That is all to the benefit of tenants, who get more investment and better service. If they mean that those landlords can charge high rents, offer poor standards, neglect their properties or throw tenants on to the streets, they are wrong.

We hope that councils and tenants in more and more areas will consider this solution to their housing needs, especially in the parts of our cities where those needs are greatest.

We want to extend home ownership and individual choice. Many housing association tenants, aspiring to home ownership, have only had the option of moving and buying on the open market. The new purchase grant scheme provided for in this Bill will let many more people buy the home they live in, and stay in the community they know.

Discounts of up to £16,000 will be funded by a grant from the Housing Corporation. This will bring the rights of housing association tenants closer to those enjoyed by secure tenants of local authorities. It will help to build motivated and responsible communities. There was widespread support for this objective in another place.

The housing association will receive the full market value of the dwelling. We did not wish to see the stock of social housing reduced, so we will require sale proceeds to be re-used. They will provide replacement homes to help house other families in need. We will protect the supply of social housing in small rural villages, where replacement could be particularly difficult. We propose to exclude homes in villages of 3,000 and fewer people.

The Bill also recognises the importance of the private rented sector in meeting the need for more homes. Since deregulation in 1988 the number of private rented homes

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in England has grown by 300,000 to 2 million. The Bill builds on that achievement. It makes some modest increases in flexibility for the often very small landlords operating here, reducing some of the red tape in establishing an assured shorthold tenancy and protecting landlords better against tenants who do not pay the rent. It improves subsidy and other arrangements for housing benefit.

The Bill acts to improve the quality of housing in multiple occupation. There is a package of measures. Landlords will have a new statutory duty to ensure that the property is fit for the number of tenants living there. Local authorities will have wider duties to check that certain houses in multiple occupation have adequate safety precautions. Local authorities will have stronger powers to establish houses in multiple occupation registration schemes and will be able to refuse to register sub-standard property. They will be able to charge higher fees to help pay for enforcement. Special control provisions will allow them to refuse registration if a property, by reason of its existence or the behaviour of its residents, is adversely affecting the character of the area. These are a substantial improvement on existing powers and should mean a real increase in standards.

Part III of the Bill also makes important provisions to strengthen the rights of long leaseholders living in flats. The leasehold system can work well, and there are very many honourable landlords who maintain their properties in a fair and responsible way and levy service charges which are reasonable. But unfortunately there are some landlords who abuse their powers. Your Lordships may have seen newspaper articles or television programmes about this, including the campaign in the Evening Standard last year.

The Government's approach to the problem has been to make it much easier for leaseholders to challenge bad landlords, while leaving good landlords free to continue doing their job. Leaseholders already have the right to challenge unreasonable demands for service charges, for example, but few have done so because of the potential cost and difficulty of going to court. We propose to make it easier to use that right. There are others who have advocated a more drastic approach, which would give leaseholders an unqualified right to take over the management, displacing even landlords who are doing a good job. That would not be fair. It would cut across the current clear division of responsibilities between landlord and tenant and it would not be in the best interests of maintaining the confidence of those who invest in and manage property, which is important in maintaining the nation's infrastructure.

The Bill provides additional rights for leaseholders. One of the most significant changes concerns forfeiture. In future landlords will not be able to use the threat of forfeiture of the lease to intimidate leaseholders into paying disputed service charges. Instead, the landlord will first have to establish that the service charge is due, by obtaining a court judgment if necessary.

The Bill makes a number of existing rights much more accessible. In future leasehold valuation tribunals will be able to deal with disputes about the

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reasonableness of service charges. They will also have the jurisdiction to appoint a manager where the leaseholders can show that there has been bad management--currently a jurisdiction of the court. The grounds on which an application can be made are also being extended considerably, to include, for example, exploitative service charges.

The Bill extends the scope of enfranchisement--the right of qualifying leaseholders to acquire the freeholds of their homes or to extend their leases. It will allow long leaseholders in blocks of flats to buy the freehold collectively where the ownership of the block has been split by creating "flying freeholds". This has been a device used by some landlords to defeat the 1993 legislation. The Bill will also give enfranchisement rights to long leaseholders with leases originally for more than 50 years, irrespective of the amount of rent they pay. This will simplify the procedures for the vast majority of leaseholders, removing the "low rent test" for them, as well as bringing some within the scope of the enfranchisement who previously have been outside it.

The Government will have some further, more technical and procedural measures to bring forward in the light of comments which were made in the earlier stage of the Bill and representations which we have received from the bodies representing landlords and leaseholders. These include improvements to the 1987 legislation on the leaseholder right of first refusal when a landlord wishes to sell, to make that operate more smoothly. The Master of the Rolls recently criticised the drafting of the legislation, and so we shall want to clarify certain points. We shall also want to make it possible for property to be offered at auction while still giving the leaseholders the right to pre-empt the sale.

Part V of the Bill brings us to a subject where we are all agreed that there is a problem and one which has been getting worse--anti-social behaviour. The Government have been asked by local authorities and the housing association movement to help them in their battle as landlords against the small but nasty minority of their tenants who can make life hell for the law-abiding tenant.

Social landlords (and to some extent private landlords) have a special relationship with their tenants with obligations enshrined in the tenancy agreement. The provisions in this Bill are about ensuring both sides to that agreement--both landlord and tenant--fulfil their responsibilities so that all tenants can enjoy a good quality of life.

Research shows that dealing with nuisance tenants takes up 20 per cent. of housing managers' time, although only between 2 per cent. and 10 per cent. of tenants on any one estate have been the subject of complaint. Clearly this is a matter which is both resource and time intensive. Local authorities already tackle the problem in a number of different ways--tightening up tenancy agreements and using injunctions for instance. However, it was put to us by local authorities that the statutory framework for dealing with the truly appalling cases of persistent anti-social behaviour, where it was concluded that as a last resort eviction must take place, has been failing in some cases.

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We have therefore drawn up a substantial package of measures to help landlords deal more effectively with troublemakers. There are three strands.

First, local authorities will be able to set up an introductory tenancy scheme for new tenants. Introductory tenancies will last 12 months, after which the tenancy becomes a secure one unless the local authority has been granted possession of the dwelling. It will be easier for authorities to evict, compared with secure tenancies, although the tenant will have the right to an internal review by the local authority of any decision to evict.

Secondly, we are strengthening the grounds on which social and private landlords can evict secure tenants for nuisance and annoyance to neighbours. The Bill will make it easier to use professional witnesses, overcoming the problem where other tenants feel too intimidated to give evidence. Domestic violence will be made a ground for possession. So will being convicted of committing an arrestable offence in the locality of the dwelling, rather than only in the home itself as now. This will help tackle drug dealing on estates. We will also speed up possession proceedings.

Thirdly, the Bill provides for a power of arrest to be attached to injunctions taken out by social landlords to stop anti-social behaviour where violence has occurred or is threatened.

This is a sensible package to get tough on nuisance tenants and improve other people's quality of life.

The Government are very concerned to ensure that the best use is made of housing to meet the needs of the whole community. The present arrangements for allocating social housing have evolved in a rather unplanned way. In part they reflect allocation criteria established over 60 years ago. In part they reflect the way in which the homelessness legislation has come to dominate housing allocation in some parts of the country, to the detriment of others on the waiting list. We want to ensure that long-term social housing goes to those with the greatest long-term needs, while at the same time maintaining an effective safety net for families and vulnerable individuals who are made homeless through no fault of their own.

The new provisions on the allocation of social housing in Part VI of the Bill will require each local authority to establish a register of people seeking social housing in its area, and (with limited exceptions) to allocate all long-term tenancies within its gift in accordance with a locally determined allocations scheme that reflects the principles set out in the legislation. These principles (which appear in Clause 148) will ensure that, in assessing housing needs, a local authority looks at both current housing circumstances and at the social and economic problems of a household that mean it may need long-term assistance.

The new allocation criteria will ensure that local authorities give proper priority to the housing needs of the most vulnerable--such as those released into the community from a long-stay psychiatric hospital, or to others with a community care assessment. The Government are very conscious of the need to ensure

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that housing and social services departments work together to provide a co-ordinated service for the most vulnerable members of the community.

Part VII of the Bill completely replaces the existing homelessness legislation, but it retains much of the existing structure. As at present, a local authority will owe a duty where a household with dependent children or some other vulnerable individual is homeless (or threatened with homelessness) through no fault of its own.

Where the new provisions differ from previous legislation is in the way in which a local authority should now discharge its duty. The new duty will be to secure accommodation for at least two years--either temporarily in local authority or housing association housing, or in the private rented sector. This is a more certain guarantee of assistance than the present legislation provides following the recent Awua judgment.

Often, homelessness is associated with some other change in life circumstances, such as relationship breakdown or loss of a job. Such events are traumatic, but the problem is often temporary. A recent study found that nearly one in five of those accepted for rehousing under the homelessness legislation had ceased to require assistance within a year of being accepted by the local authority. Where there is a need for longer-term assistance the two-year period of duty should, in most areas, be long enough for anyone with real long-term needs to secure permanent rehousing through the housing register. If not, the duty can recur.

The allocation criteria in Part VI do not provide for the special treatment of those owed a duty under the homelessness legislation because it is dealt with in Part VII, which ensures that they are guaranteed accommodation for at least two years during which time their needs will be compared with those of others on the waiting list.

The proposed reforms of the homelessness legislation introduce an important new concept. We are clear that the homelessness legislation must provide an effective safety-net for those people who have no alternative. But the Government are clear that people should be expected to help themselves to a reasonable extent in resolving their housing problems. The Bill therefore provides that, where suitable alternative accommodation is available within the local authority's area, the duty of the authority should be to assist the person concerned to secure that accommodation.

When this provision was discussed in another place, concern was expressed that the less diligent authority might try to use this provision to relieve itself of all responsibility by simply pointing an applicant to accommodation advertisements in the local paper. We are clear that that would not be enough to count as discharge of duty. We have discussed this with the local authority associations and the housing profession, and will, if necessary, be prepared to bring forward an amendment to strengthen this provision during our consideration of the Bill.

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Pursuing the idea of helping people to help themselves, the Bill also gives housing authorities a new duty to make advice on preventing homelessness available to anyone in the area who needs it. Timely advice can often prevent both the trauma of homelessness and the expenditure that flows from the duty to remedy it.

Taken together, the provisions of Parts VI and VII of the Bill represent a new approach to tackling housing needs. They emphasise the role of advice and help to prevent homelessness. They encourage those who need accommodation to make their own efforts to find it. They ensure that everyone seeking long-term housing gets proper consideration. Above all, they maintain an effective safety net for those families and vulnerable individuals who do lose their homes.

I commend the Bill to your Lordships.

Moved, That the Bill be now read a second time.--(Lord Mackay of Ardbrecknish.)

4.1 p.m.

Lord Williams of Elvel: My Lords, the House is grateful to the Minister for introducing this Bill. He does so in place of his noble friend Lord Ferrers, who has undergone a serious operation. I understand that the operation went well and that the noble Earl may soon be back among us in his usual rumbustious form. We look forward to that day and wish him a speedy and successful convalescence.

The Bill before your Lordships today is the second part of what I would describe as a "pantomime horse". Your Lordships may recall that in the Second Reading debate on the Housing Grants, Construction and Regeneration Bill, I reminded the House that the Bill was at its origin one part of a truly gargantuan Bill of 360 or so clauses which Ministers had previously prepared, but which was subsequently split into two. Your Lordships dealt with the first Bill as expeditiously and, if I may say so, as efficiently as is the custom of this House. The Government are now asking us to deal with the second part of the horse. For reasons of delicacy, I shall refrain from saying whether, in my opinion, this Bill is the front end or the rear end of the horse. I am sure that your Lordships will be able to judge, from what I say about the Bill, which end of the horse I believe it to be.

This particular animal had a colourful run, as the Minister described it, in another place. Proceedings had hardly started when the Government withdrew eight clauses and inserted a further 11. Further changes were made as the Bill went through Standing Committee, and were then reversed on Report. In the light of that we can confidently expect, as the Minister said, further movement of opinion in this House and we must prepare ourselves for government amendments to that extent. I propose to speak to the general purposes of the Bill; to indicate some of the places where we would like to see further amendment; and to explain how this Front Bench will handle the Bill when we move into Committee.

Part I deals, as the Minister told us, with social housing. I hope that I do not have to emphasise to your Lordships the importance of this sector, particularly to

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the elderly who will form an increasing proportion of our population in the years ahead. The right to buy for tenants in new housing association properties is all very well, but there are many who feel that the proposals being put forward are not flexible enough to meet the housing needs of older people. It seems to us that the Government have missed an opportunity, for example, to promote shared ownership and flexible tenure. Nor are we happy with the proposed exemptions.

As the Minister said, it is true that the Government agreed to exclude properties in settlements of fewer than 3,000 people. Without that safeguard the whole future programme of affordable housing in rural areas would be put at risk, largely because of the shortage of building land. But that is not good enough. The housing White Paper created a crisis of confidence in rural areas. We believe that the Bill as drafted does not deal with those concerns properly and we will wish to improve the Bill in that respect when we come to the Committee stage.

The same problem applies to other areas and other types of property where the situation becomes at least difficult, if not impossible. For instance, there are homes which are subject to restrictive covenants, such as those where the Church of England put land at the disposal of a developer for the express purpose of building homes to rent. There are homes where the cost of building or the cost of buying and renovating them is greater than their market value--particularly where social landlords buy run-down buildings and renovate them, to help preserve the character of the local area. Being forced to sell those properties at a loss would very quickly stop associations from engaging in that kind of activity.

Further, there are homes which were built for social housing without contribution from the taxpayer--for instance, private donors or other charities give money or land to housing associations specifically for the purpose of building low-cost rented homes for people in need. It would be absurd to compel a sale where no public money was involved in the first place. The Government seem to have accepted those points in the voluntary scheme which is in place for existing properties. The question that your Lordships will have to decide as we go through the Bill is whether they will now accept the same points in the compulsory right-to-buy scheme for new properties.

The Bill also makes provision for greatly increased powers for the Housing Corporation and Housing for Wales. Again, some of the originally proposed powers were diluted in another place. For instance, where a manager is appointed to take control of the housing of a social landlord where there is the possibility of insolvency. Such a manager would now have to consult widely before deciding on an appropriate course of action.

As I understand from debates in another place, we are also promised a code of practice as to how that power is to operate. I look forward to seeing a draft of the code of practice before we discuss the matter in Committee. I also look forward to the report of the Delegated Powers Scrutiny Committee of your Lordships' House, which I have no doubt will wish to remark on some of the powers which are to be delegated to subordinate

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legislation. We are also promised an amendment to ensure that a panel set up to inquire into the affairs of a social landlord should have at least one member who is independent of the Housing Corporation or Housing for Wales.

In all, we will have a whole raft of government business and of our business to discuss when we come to Committee. All that may be reasonable enough, subject to the Delegated Powers Scrutiny Committee. At least the Bill is better than when it started. But there is still the problem of accountability to Parliament. After all, as the Minister pointed out, the two housing corporations--the Housing Corporation and Housing for Wales--are major spenders of public money. At present they are subject only to periodic reviews by the Public Accounts Committee of another place and occasional investigation by the Environment Select Committee. There seems to us to be no reason at all why the corporations should not be subject to the same procedures as departments in the submission of their annual reports. I hope very much that the Government will accede to our request.

Part II deals with houses in multiple occupation. There are over 600,000 houses in England alone in multiple occupation, a large proportion of them houses converted into bedsits. Two-fifths of all HMOs are officially unfit for human habitation. The risk of death from fire is 28-times higher in HMOs than in the housing stock as a whole. Further, if the provisions of the Bill which the Minister has described are enacted, increasing numbers of homeless families will be living in private accommodation, including HMOs. It really does seem to us essential that HMOs should be properly registered and licensed by local authorities. For this to happen, any registration scheme must be mandatory and national. Nothing else will do.

Part III brings me personally on to familiar territory, as I debated from this Dispatch Box the Government's last effort at meeting their manifesto commitment to leasehold reform. I said then that the Act would not work and it did not. At the risk of sounding like the prophet Isaiah, I must say, "I told you so". I can confidently say, again at the risk of sounding like the prophet Isaiah, that this will not work either.

Having said that, I have to declare an interest in that I am a leaseholder covered by the provisions of the Act. Although I have not the remotest intention of enfranchising under the rather picturesque proposals of the previous Act, which is modified by the present Bill, I do not think that it would be right for me to engage in debate on such matters. I shall leave that part in the capable hands of my noble friend Lord Dubs. I can only hope that other noble Lords will take the same rigorous line as I do and abstain from pressing their own particular interests.

There is, however, a matter which deserves more than a moment's reflection and that is Chapter II of Part III. Clause 89 makes the assured shorthold tenancy the main tenancy agreement for private letting once the Act comes into force. At present, of course, a landlord has to serve a tenant with a prescribed notice when offering an assured shorthold agreement. The Bill proposes to

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reverse this position. I believe that we need to debate with a great deal of vigour the principle of basing the private rented sector on a short-term, insecure lettings regime. How can anyone--indeed, how can any family with children--create a home on such a basis? Further, anyone on an insecure letting is less likely to complain about disrepair and less likely to complain about dangerous conditions, let alone seek the intervention of the local environmental health or health and safety services.

There is no need to change the current system, and the Government gave no plausible reason in another place for doing so. They will have to do better in this House to explain why they have introduced, for no particular purpose, a provision which will almost certainly lead in time to a massive decasualisation of the private rented sector, and the danger and social disruption which will follow.

Parts IV, V, VI and VII will be dealt with by my noble friend Lady Hollis of Heigham and she will be dealing with the principles involved when she comes to wind up the debate this evening. I will confine myself to just two remarks. In the allocation of housing accommodation certain groups are mentioned as those to whom reasonable preference should be given. They are established according to what the Government perceive to be the greatest underlying need. The homeless do not appear on this list. But that is absurd; and it is absurd on two counts. First, of all the people who have an underlying need for a house, top of the list must come those who have no home at all. That seems to me to be obvious. Secondly, the principle is quite contrary to that expressed by the Government in their 1989 review of the homeless legislation. They said that,

    "there is little doubt that [homeless] people would and should expect to have priority in any system of housing allocation based upon need."
Quite so. Why then, in this Bill, have they gone back on their own word?

My second remark concerns the provisions of the Bill relating to the homeless. Homelessness is, as your Lordships are aware, a complicated phenomenon. It derives from a number of complex causes. But one thing has become clear in the many studies over the past few years. It is not a phenomenon which is susceptible to a short-term solution. The need of most homeless people is a permanent solution to their problem. A time-limited duty on a local authority, even one of two years as the Bill proposes, does not provide anything approaching an adequate solution. Indeed, there is every chance, as we will argue, that it will just compound the problem.

I said at the outset that I would confine myself to general points, as is appropriate for a Second Reading debate. There will be many points which need to be made and clarified, and I hope many amendments made, when we come to Committee. I also said how we on this Front Bench propose to handle the Bill in Committee. It should now be clear that I intend to take the lead on Parts I and II, helped by my noble friend Lord Carter on rural housing. My noble friend Lord Dubs will deal with Part III, and my noble friend Lady Hollis will deal with Parts IV, V, VI and VII. However, I must warn

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your Lordships that the Committee stage may well be long and difficult. This particular pantomime horse has quite a long way to run, but at least your Lordships will now be aware which half of the horse I believe this to be. It is a messy and miserable thing. It needs to be substantially amended in order to avoid its being relegated to what looks at the moment like its final permanent home, the knacker's yard.

4.18 p.m.

Baroness Hamwee: My Lords, I too must thank the Minister for his careful explanation of the Bill, although it did occur to me when he was speaking that beauty is very much in the eye of the beholder and that I am not one of those who regard this Bill as a thing of beauty. I was speaking last week to a group of people involved in providing housing advice. I had to explain to them that your Lordships' House cannot or will not wreck a Bill that has come from another place. That provoked from all quarters of the room the comment, "Shame". They of all people know that there is a housing crisis in this country and that the Bill does not tackle it. Worse, they know that the Government are abdicating responsibility, that the Bill is a huge step backwards in the battle against homelessness, and that it does little more than confirm the Government's lack of will to tackle the root of the problem, which is not the allocations system but a severe shortage of affordable homes to rent.

When my late noble friend Lord Ross of Newport introduced in another place his Private Member's Bill, the Housing (Homeless Persons) Bill, he paid credit to its sponsors from five political parties. He said that he looked for an all-party consensus to deal with what he called the "paradox" of homelessness. He said:

    "We have plenty of empty houses, but we still have homelessness ... There is no more extreme form of housing need".--[Official Report, Commons, 18/2/77; col.89.]
He did not claim that his was a perfect Bill. He said:

    "It is a disgrace that in this country today we have increasing homelessness".
In talking about the high number of homeless people, he said:

    "This is something that we have obviously got wrong and ought to be doing our best to put right. I am certain that when the Bill gets to the other place there will be some pleas, from clerics and others, to the effect that we have left out a vital group, namely, the single young homeless. I am sad that we have not been able to deal with them ... Nevertheless"--
this is important--

    "included in the Bill is the provision that further priority groups can be considered and I hope that as the country moves towards a more prosperous state we can give such persons greater consideration. I hope that whoever is Secretary of State in the future will be able to introduce the necessary measures to bring such people into the priority groups. I apologise to such people and to others who cannot be covered by the Bill".--[Official Report, Commons, 8/7/77; col. 1732.]
In other words, he looked to the Government in 1977 to take the issue forward. I doubt whether he dreamt that there would be a Government in 1996 who would be seeking to privatise housing problems.

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What, in a few words, does the Bill do? I read it as taking away the right of homeless families to stable long-term accommodation, decreasing the supply of affordable housing and making it easier for landlords to evict private tenants. Of course there are good things in the Bill. I acknowledge that there are things to be welcomed. But I believe that the Bill will do more harm than good.

As I was making notes and writing down the heading of Part I, "Social Rented Sector", I realised that we had stumbled over a piece of irony even before the first line of the text, because so much of it is about purchase and not rent. Yes, home ownership gives one a nice warm feeling. Or does it? Perhaps I feel the rosy glow of contentment at owning my own home--or at any rate myself and the Halifax Building Society--because I have been indoctrinated over the years to think that it is a good thing. But what nice warm feeling is there for those who have exercised their right to buy and whose equity is now negative?

The Bill is true to the White Paper, which said:

    "Home ownership must remain at the heart of our policies. It is after all what most people want".
Yes, they want it if it works. What society wants is a decent home for everyone irrespective of tenure.

Of course, there can be no intrinsic objection to the right to buy if stock is replaced, if the process is fair and if it is appropriate for different groups. The noble Lord, Lord Williams, referred to older people perhaps requiring the flexibility of mixed purchase and rent. That is a valid observation. I share the concerns being expressed by housing associations. One association has written to me and I am sure that your Lordships will have had similar representations from others. The association tells me that since 1900 it has had a long-term project to modernise all its properties by the year 2000. It says:

    "Most of the costs are met from our own reserves or through private borrowings but we have, on occasion, been supported by Housing Association Grant. Under the SPG proposals, new lettings that are created as a result of this modernisation ... will be subject to a right to buy. This will create the anomaly that part of a large old pre-war estate will be subject to the right to buy, whereas the remainder will not ... Unless the SPG proposals are changed ... the Trust will not seek grant for its modernisation work".
This is the important part.

    "The work will therefore proceed at a much slower pace and, to that extent, another government objective (keeping existing social housing in good condition and making the best use of the social housing stock) will be thwarted".

Much social housing has been built without the use of public funds. Private donors give money or they give land. We have had since the White Paper a clear warning from landowners that they will not in future contribute land as their contribution to society. They give it for the specific purpose of providing low cost rented homes for the people most in need. If those homes are sold, is that not some form of confiscation? Perhaps that is not surprising. Much of what many of us regard as being in the public realm or at any rate held in trust for the public is moving into private hands.

I acknowledge that the Government have moved to the extent of putting some flesh on the bones of the rural areas exemption. However, that flesh is meagre. I shall

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be joined by my noble friend Lord Beaumont of Whitley in dealing with rural matters. He asks, as I do, why areas that are the subject of Section 106 agreements--to be technical for a moment--are not included and why local authorities should not be given discretion themselves to designate exempt areas. How does that square with the White Paper statement:

    "The Government must ensure that its housing policies support sustainable development, getting the right kind of housing, in the right amount, in the right place and in the right way--so that the environment is protected and enhanced".

Are the Government prepared to publish an assessment of the environmental implications of the measures contained in the Bill? I hope that they are and that they will. I rather doubt that the Department of the Environment is getting a great deal of support for its draft circular on planning and affordable housing. My authority has said that the current proposals would seriously impede provision at a time of increasing reliance on the private sector and would completely undermine unitary development policy which has already been through statutory consultation, public inquiry and the DoE vetting procedures. I know of other district councils and other boroughs which have made similar points. Those concerns are rightly expressed today when we are dealing with issues of social housing. A district council in Hampshire has identified considerable need for further affordable homes. The council says that it has to use all avenues open to it to ensure the provision of as much affordable housing as possible. It is very concerned about how outside the Bill but at the same time the Government are making that increase well nigh impossible.

We are accustomed to regarding the Housing Corporation as a beneficent quango. Its quangocracy will be most under scrutiny in examining the increase in its powers contained in the Bill. I do not believe that the Bill provides for adequate accountability in any real sense. Are the provisions regarding HMOs adequate? HMOs will be increasingly important if the homelessness provisions are enacted, given the increasing number of families who will be living in private rented accommodation, including HMOs. Will they be in safe, well managed homes? The responsibility for that is the landlord's but the Government have a responsibility to regulate where necessary. Government at local level largely wants to do so. I accept that it is inconsistent for me to argue against local discretion but there are occasions when the imposition of duties is appropriate. Certainly I am not convinced that the provisions of the Bill are sufficiently strong.

The Joseph Rowntree Foundation published a report towards the end of last year with regard to the licensing of private rented housing. I shall not repeat the figures as to the problems in that sector but I can say that most local authorities are dissatisfied with the current regime. They find its complexity confusing. That is why they only take action on a very limited number of substandard properties.

The report indicates that a scheme covering all private rented properties could be self-financing with annual licence fees of £25 per room, saving £42 million currently spent from local authority general funds on

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enforcing standards. Figures like that are very well worth taking into account, resulting in large savings for small fees. We shall undoubtedly spend time on the part of the Bill concerned with private renting. I can well understand that leaseholders, having convinced the committee of another place, felt--how can I put it?--sold out at a later stage. I welcome the Government returning to the subject so soon after the 1993 Act and acknowledge the degree of humility involved. But have the Government learnt, and in particular how much, if at all, have they consulted with those who are affected?

Private provision is a key source of rented accommodation. That is the inevitable concomitant of the other policies contained in the Bill. Therefore, the measure must strike the right balance between security for the tenant and attraction for a landlord to rent his or her property. That balance is not an easy one to strike. I am not convinced that the right balance has been struck in the Bill. We need a real debate on the matter. We also need to be very certain--and I am not--that mandatory eviction, after a shorter period than now, will not lead to increased homelessness. It was at this point in making notes on the Bill that I began to wonder whether we were talking about a housing Bill or a homelessness Bill.

As regards housing benefit, we shall have the battle between my noble friend Lord Russell, the noble Baroness, Lady Hollis, and the noble Lord, Lord Mackay. That is a spectator sport we have come to enjoy. But for now I simply ask whether the provisions will jeopardise further the smooth working of private renting.

There will be both philosophical and practical issues to be addressed in the debate on probationary or introductory tenancies. No one who has been a councillor will under-estimate the distress that anti-social neighbours can cause. I wonder whether the provisions in this Bill will be effective. What is the justification for a two-tier system for local authority tenants? One passes the test of one year's good behaviour: to me that smacks of discriminating against the undeserving poor.

The parts of the Bill dealing with allocations and homelessness are likely to be of most concern, and rightly so. The knee-jerk reaction against the claim of queue jumping will not solve anything. There is no real evidence of unfairness after all. Perhaps I may give one statistic. Teenage single mothers actually take less than 0.3 per cent. of new council tenancies. Indeed, when I speak to local authority housing officers they are outraged at such claims and say things such as, "Our concern is, and always has been, for children. Our concern is for the family whatever sort of family it is".

The current legislation is only a very flimsy safety net-- that of "reasonable preference" for homeless families. But that net is to be snapped. Lord Ross of Newport said,

    "The need of most homeless people is a permanent solution to their problem which they have been unable to arrange for themselves".
It is an obvious point really, but the Bill is short-termism with a vengeance. It does not recognise--indeed, it turns a blind eye--to the needs of young people, immigrants

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and now those caught in the revolving door. I believe that the party of the family is yet again making false economies. After all, your Lordships have debated often enough the importance of health and education and the fact that they are among the casualties of homelessness.

I do not believe that it will embarrass the noble Lord, Lord Jenkin of Roding, because I agree entirely with what he said during the course of the Housing (Homeless Persons) Bill. In fact, Lord Ross quoted what the noble Lord, Lord Jenkin, had said on an earlier occasion. It was this:

    "One director of social services told me that he had calculated that over 50 per cent. of the time of the social workers in his department was devoted in one way or another to dealing with the consequences of homelessness. That seems to be the most appalling waste of resources. The work covers the whole range--battered wives, broken families, those who lose their homes for whatever reason, such as inability to pay the rent and so on".--[Official Report, Commons, 18/2/77; col. 898.]
That was nearly 20 years ago. The noble Lord was so very right. It is still the problem today.

Finally, I wish to refer to the amount that has been invested in housing. I quote statistics prepared by the Chartered Institute of Housing. In the period from 1980 to 1994-5, there was a reduction of almost 54 per cent. compared with an increased spend of nearly 82 per cent. on law and order. One acknowledges the spend if not perhaps the effect. Your Lordships will be very familiar with the figures for negative equity. Thousands of people are affected by that problem. In the south-east alone the figure is almost 400,000. Perhaps another way of expressing the statistics is, "It is hurting and it is not working."

4.36 p.m.

The Lord Bishop of Oxford: My Lords, I am grateful to the Minister for his clear introduction of this Bill. As I believe he will appreciate, Churches of all denominations throughout the country have a deep commitment to meeting housing needs through housing associations and other agencies.

The background to this Bill is that there is still an acute shortage of low-cost rented housing. The House of Commons Environment Select Committee recommended that something approaching 100,000 new social homes a year needed to be built in order to meet existing need. This estimate was entirely in line with that of housing experts. For example, a Rowntree study recommended that 120,000 units a year needed to be built. The Government have provided resources to provide no more than 60,000 new social homes a year for the next three years and now it is uncertain whether even that target will be met. Even if it is, that will not meet existing demand; nor will it go any way to meeting the shortfall which has built up in recent years. So the need for low-cost rented homes will become even more acute.

Buying one's own home is clearly a desirable goal for those who can afford it. But with no end in sight to continuing high levels of unemployment--more than 20 per cent. in some parts of the country--millions of people will never be in a position to buy their own home, even with government subsidies. Unfortunately,

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people who are homeless are all too often stereotyped as feckless and irresponsible. No doubt some are, but a very high percentage are ordinary, decent people who are simply trapped by circumstances beyond their control.

Recently, in the diocese of Oxford, we had conferences on housing in Reading and Oxford itself in which people who were homeless spoke for themselves and told their story. One was a carpenter with a wife and three small children, who at one time had a car and a house on mortgage. He said, "We were very ordinary, successful and able to support ourselves". Suddenly, the recession came and his orders disappeared literally overnight. He had to sell his house and before he knew where he was, he had entered a nightmare world with no secure housing and endless bureaucratic blocking, with all the consequent strain on his family life. He said, "I can only sum up the experience as being in hell". Like many others, he and his family suddenly found themselves in desperate need of secure low-cost housing. Even for people in paid employment, we live in insecure times as far as jobs are concerned. Moreover, a good number of jobs do not allow people to save enough to purchase a house, even with government assistance.

The Government's policy is to try to encourage more housing need to be met by the private rented sector. The private rented sector certainly has a vitally important role to play. It was good to learn of the Government's success in increasing the role of that sector. But can it really meet the need for good quality, permanent low-cost rented accommodation for all our citizens?

The Bill abolishes the duty of local authorities to provide permanent accommodation and limits their obligation to ensuring that accommodation of some kind is found for a two-year period; the two-year period being a welcome change from the one year that was originally specified in the Bill. But two years at a time is not the kind of security that anyone, especially a family with young children, can be easy about. Many households will be directed towards private rented accommodation, where security can be for as little as six months, so they could face the prospect of up to four separate tenancies during the two-year period in which there is a statutory duty to try to find housing for them.

Alas, there are unsympathetic landlords about, and there is not the kind of security which can be provided by local authorities and housing associations. Research by several reputable organisations has shown that the private rented sector will not adequately meet the needs of homeless families. Up to three-quarters of landlords actively discriminate against prospective tenants who are homeless or on benefit in favour of those in employment.

So, although the aim of the Bill is entirely admirable--namely, to put decent affordable housing within the reach of everyone--it must be doubted whether its specific provisions will achieve that.

I now turn to one point of detail in the Bill about which housing associations are seriously concerned. I have the privilege of being the president of the National Federation of Housing Associations. I refer to

16 May 1996 : Column 576

the right to buy for tenants of housing associations, to which the noble Lord, Lord Williams of Elvel, and the noble Baroness, Lady Hamwee, have already referred. As I understand it, housing associations can accept the voluntary purchase grant scheme, as it has been amended. Clearly there are occasions when it is not only in the interests of the tenant but in the interests of the housing association and the better meeting of housing needs in a locality for a tenant to buy. But the statutory purchase grant scheme continues to be of great concern. As we know, the Government propose to exempt rural settlements under 3,000 from the right to buy. This is important for in rural areas if housing association property is sold, it will often prove impossible to purchase land for rebuilding and the social character in the village is likely to change over a period of time. There are, however, questions about whether the 3,000 figure is too low. I have received correspondence from people in rural areas raising that question. Large villages and small towns could be seriously deprived as a result of losing housing association homes without the possibility, for various reasons, of purchasing replacements. The figure of 5,000 has been suggested as more appropriate.

In the past housing associations have been able to build low-cost housing on land given or sold at below market value by generous landowners, the Church or some other trust. Sometimes use has been made of Section 106 schemes, whereby land on the edge of a village which would not normally be used for housing, but which is not needed for agricultural use, can be made available for social housing. But will such land be made available in the future, if there is a possibility that the housing so built could in due course be purchased? Those who make over land at less than the market value do so because they wish to help those not able to purchase houses of their own and because they wish to ensure the mixed social character of their community. Because of those considerations and questions I understand that the diocese of Hereford and the diocese of Salisbury, as well as my own diocese, are having reservations about making any more land available for such schemes. Reassurance is needed that land made available for low-cost rented accommodation, in order to ensure the continuation of a mixed community, will continue to serve that purpose.

However, it is not only in rural areas, but also in some parts of cities that that concern is being expressed; for example, in an area like Notting Hill and North Kensington there are very few opportunities for development. Property values are among the highest in the country and housing associations will not be able to find or afford suitable properties to renovate. The principle of making exceptions to the purchase grant in areas where it is difficult or impossible to replace existing housing association properties has been accepted by the Government as far as rural areas are concerned, but the arguments are just as relevant in the case of high-cost urban areas such as Notting Hill and North Kensington. In areas like that, there is at the moment a mixed community which the housing associations are very anxious not to lose. It could easily be lost if people started to purchase housing association

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properties, which they would naturally want to do in such a sought-after area, and the housing association was not able to replace them.

The Churches as well as the housing associations would welcome amendments to this legislation to give some legal protection to Church land and other land which might be made available for the purpose of providing affordable rented housing and housing developed to meet specific local needs under Section 106 (exceptional planning agreements). We believe that such amendments will further the aim of this Bill of putting decent affordable housing within the reach of everyone.

4.47 p.m.

Baroness Gardner of Parkes: My Lords, before making my prepared speech, in which I strongly support the Bill, I should like to comment on a few points that have been raised in the debate so far. When introducing the Bill my noble friend Lord Mackay referred to people having a right, under the Bill, to question service charges. That is a marvellous improvement on what happens at the moment. I have a property which is subject to a service charge, but I am not quoting that. I am referring to the people in that building who have come to me saying that they are very distressed because when they attempt to question the service charge they are told that, if they do not pay up and pay up immediately, they risk forfeiture; and, indeed, their legal advisers have confirmed that to them. The provisions will make a valuable difference if people no longer face the risk of forfeiture merely for making a genuine inquiry about their service charge.

The noble Lord, Lord Williams of Elvel, was concerned about the assured shorthold tenancy notice. As I shall declare later, I have always had lettings and they are now on an assured shorthold basis. I have found that, on the whole, tenants do not seem to value those notices. I go to great lengths to be sure that they have received such notices and ask them whether they have noticed everything on them. They say, "Oh yes", but most of them just throw out the notice immediately. I do not think that doing away with those notices is any bad thing. Indeed, it is now written into many tenancy agreements that you have to confirm that you have received the notice before you sign the tenancy agreement, otherwise the tenant will say, "I do not remember getting that" and landlords have to spend their time getting receipts to confirm that they have served the notice. I am not sure how effective those arrangements are.

I should like to be assured that the Bill in no way alters people's right to extend an assured shorthold or to be granted a further term. Letting agents always seem concerned that, if you give someone a tenancy for six months, you might be running some enormous risk if you extend the term. Many landlords may have been happy with a tenant for six months. If that tenant says, "I'd like to stay for another three months", extending the term should be very simple. However, I cannot find anything in the Bill which clarifies that point. The noble Baroness, Lady Hamwee, said that there were plenty of

16 May 1996 : Column 578

homes and yet there were still homeless people. I should like to link that comment to the speech of the right reverend Prelate the Bishop of Oxford. In my Oxford village there was an empty alms house. I wondered whether there were too many restrictions placed upon such properties. That property was empty for a long period while an attempt was made to find someone who could meet the criteria which applied to that small but very desirable house. The person had to be above retiring age and local, having lived in the area for so many years. That little house would have suited a homeless family. Such a family would have become part of that small village community.

I have a particular interest in this Bill both because of my former responsibility in the social rented sector as an area housing chairman on the Greater London Council and my more recent involvement in this Chamber in the leasehold reform Act. That Act, to which the noble Lord, Lord Williams, has already referred, has been of benefit to leaseholders of houses which have been comparatively easy to enfranchise.

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