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Lord Selsdon: My Lords, before the noble Baroness sits down, perhaps I may say that every piece of evidence that has been given to me shows that it is more economic for the private sector to build and rent homes than it is for the public sector. If I am wrong, I shall apologise but it is a question of cost not of will. We all want to achieve the same thing.

Baroness Hollis of Heigham: My Lords, I am most grateful for the noble Lord's question. As the Minister will know, one of the differences between the two sectors is that private-sector housing rents are running substantially higher than local authority rents. Every homeless person going into a privately rented house will cost taxpayers an extra £20 in housing benefit. As a result of that policy, there will be a net addition of about £120 million to the DSS, although possibly some modest savings to the Department of the Environment. Therefore, the policy is self-defeating.

7.30 p.m.

Lord Lucas: My Lords, as the right reverend Prelate the Bishop of Oxford said to me this morning as I lay in bed, one of the strengths of the Church of England--

Noble Lords: Where?

Lord Lucas: He was appearing on television speaking in a different context. He said that one of the strengths of the Church of England--

Lord Williams of Elvel: What was the context?

Lord Lucas: I believe that the right reverend Prelate was talking about gay priests. He said that one of the strengths of the Church of England is that it encourages a vigorous, robust, debate. Indeed, he has participated in that today, as have many other noble Lords. I was particularly pleased that the noble Lord, Lord Monkswell, put down his name to speak. We all

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benefited from his experience during our debates on the previous housing Bill. He told us that he had worked as an electrician in this House. I wondered whether I should blame him for the fire in Cholmondeley's chop house or for the fact that when there was a fire over there the fire alarm sounded over here. I am glad that that is not the position.

The noble Lord took the opportunity to ask me a silly question to which I am delighted to be able to give a sensible answer. There are particular circumstances in the Isles of Scilly which may require a special consideration. We are considering whether to use the provision in Clause 197 in relation to the homelessness local connection provision.

The speech I enjoyed most was that of the noble Baroness, Lady Fisher of Rednal. She asked, "Where are the old Conservatives we used to have?". Of course, they are here. One could give the same answer to the question, "Where is the old Labour Party which we used to have?"--

Lord Graham of Edmonton: Over there!

Lord Lucas: My Lords, the noble Baroness made a speech which took me back 20 or 30 years to the pleasure I used to derive from listening to members of the Labour Party in full flow. Her unrestricted advocacy of socialism was a pleasure to hear and a great contrast to members of her Front Bench who today are subjected to such an authoritarian grip that not a whisper of policy is allowed to pass their lips. The great rapier of the noble Lord, Lord Williams, is blunted and the Thespian talents of the noble Baroness, Lady Hollis, are reduced to mime. Sitting opposite, it is a shame not to be able to enjoy them in the way that we used--

Lord Williams of Elvel: My Lords, that is enough small bedtime remarks about my rapier because I really do resent it.

Lord Lucas: My Lords, the noble Lord, Lord Williams, concerned himself with a pantomime horse. We finally gathered which end he was talking about because he was clearly holding a knife ready to geld or circumcise it. We shall do our best to avoid that eventuality.

The right reverend Prelate the Bishop of Oxford suggested that the Environment Select Committee said that there was a need for 100,000 new social lettings a year and that the Government are providing only 60,000. The Government's view is that the best estimate of the number of social lettings required each year is a range from 60,000 to 100,000. We are providing at the lower end of that range to allow for continuing growth in private rented housing and home ownership. That should be welcomed by my noble friend Lord Selsdon, not surprisingly. We could do with a much more varied, flexible and strong private rented sector. I believe that that would please the noble Lord, Lord Berkeley, even though it may not be welcomed by his Front Bench.

I now turn to the Bill. Part I covers the management of social rented housing. The Government are committed to the continued provision of social rented housing but such housing does not have to be publicly

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owned. The noble Lord, Lord Williams, agreed on the importance of this part of the Bill. He sounded as though he had a number of improvements to suggest. Given the record of the improvements that he suggested to the first housing Bill, I look forward to his amendments. In particular, he suggested that the Housing Corporation should be more accountable. I shall be delighted to read his amendments relating to that.

As regards purchase grant, we want the rights of housing association tenants brought closer to those enjoyed by secure tenants of local authorities. We want to make sure that sales do not result in a permanent reduction of social rented housing. Net receipts must be used to provide replacement properties to help those in greater need.

As regards charities, the scheme is compatible with the objectives of charitable housing associations. The new right applies only to housing built with public assistance. Any homes built with only charitable funding will not fall within the statutory scheme. Associations which decide to take part in the voluntary scheme may also decline to sell properties originally built with charitable funds.

The noble Baroness, Lady Hamwee, and others discussed the issue of part-funded properties, such as refurbishments of old schemes which would not be exempt. Yes, that is the way we want things to go. We want to see more opportunities for people in the private social rented sector to buy their properties.

The discount is funded by a grant and therefore the housing association receives the full market value of any home sold. Replacement properties built using sale proceeds can be used to give a home to others in need, helping to meet associations' charitable objectives.

The noble Baroness, Lady Hamwee, my noble friend Lord Swinfen and other noble Lords asked whether the right to acquire should apply to properties bought with private donations through, for instance, the free provision of land. We believe that that is adequately covered by the fact that if such properties are sold the housing association will receive the full market value of any home, the discount being covered by the grant. Therefore, the benefit of the donation feeds through to the replacement property which the housing association will be obliged to buy--

Lord Monkswell: My Lords, perhaps I may question the Minister's figures. He said that having sold the property for, say, £50,000 the housing association will be required to purchase or build another property. We still have some inflation and therefore it will cost more to build an exact replacement. On the other hand, if one uses the money to fund the replacement the replacement will inevitably be smaller. Therefore, we will in time see the size of houses reducing as the amount of money available to build them decreases as a result of current inflation rates. Can the Minister say whether that will be the case?

Lord Lucas: My Lords, I do not believe that that will affect a housing association with a large turnover of properties at a time of low inflation.

Lord Gisborough: My Lords, if houses are to be built in sensitive areas such as villages where will the

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land come from? There is no way in which a landowner, having supplied cheap land and seen the houses sold off at full price, will produce any more cheap land.

Lord Lucas: My Lords, I shall come to the question of villages.

Lord Swinfen: My Lords, before my noble friend does so--I am sorry to intervene at this stage--he gave me the impression that I was talking about charitable donations towards housing associations. I was not. I was talking about private financing which is borrowing private money, probably on a mortgage. I was referring to that aspect when a property or one of a block was sold. My noble friend may not be able to answer at this stage; he may wish to write to me.

Lord Lucas: My Lords, I believe that I shall cover that point later. As regards properties in rural areas, we recognise at the outset that there will be specific issues to address in rural areas. We have responded to those who pressed us on the need to safeguard villages where buying for building replacement properties can be difficult. The exemption for settlements with a population of 3,000 or under is clear and workable and built on a well-established threshold figure used for our rural housing programmes. I understand that the right reverend Prelate would like to see a higher figure.

We have issued a consultation paper which is available in the Printed Paper Office. We have already given detailed proposals for 30 areas of England. Those are available for scrutiny by Members of this House.

I believe that inner cities were a particular concern of the right reverend Prelate. The issue in inner cities concerns existing developments which fall within the voluntary scheme and so are not part of the Bill. But we have been involved in discussions with associations. We have accommodated their concerns about the difficulty of finding suitable replacements for properties sold on some of their long-established London estates. The voluntary scheme now also allows associations discretion to exclude properties built in the past using private charitable donations.

The right reverend Prelate mentioned in particular Notting Hill. It is an area in which I lived with enormous pleasure for 20 years. Indeed, the mixed community of Notting Hill is a vital part of that area. If a housing association has to sell a property in such an area it will do so at the full market price so far as it is concerned. It will therefore have the money to buy an exactly equivalent property in that area. Therefore, the area should not suffer in the way which concerned the right reverend Prelate.

The noble Lord, Lord Williams of Elvel, was worried that the right to acquire was not flexible enough to meet the needs of the elderly and that shared ownership might be more suitable. Elderly people can already apply for existing shared ownership development and the Housing Corporation funds a number of schemes directed specifically at the elderly. The noble Lord was also concerned whether the Housing Corporation would issue a code of practice on how the powers of the Bill would operate in practice in the event of insolvency and

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whether the code would be available during the Committee stage. We have discussed with the Housing Corporation the possibility of issuing a code of practice to be used in such event. There are complex issues which require much thought and discussion with the lenders. I am afraid that I cannot give the noble Lord the comfort that he requires.

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