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Lord Hylton: It is well known that large institutions such as pension funds, insurance companies and provident and friendly societies control a very considerable amount of money. In recent years they have not used those funds for providing housing. In many ways it would be extremely desirable if they used at least a proportion of the funds perhaps to provide housing for their own beneficiaries, or--going further afield--for the general public at, if not the lowest level of housing association rents, somewhat below full open market value.

I shall be interested to hear from the Minister whether that possibility is in the Government's mind, and, if so, how they believe it should be achieved. Would they like to see such institutions registering housing subsidiary companies in their own right and therefore qualifying under this Bill? Alternatively, would they prefer to see such institutions providing funds to existing housing associations perhaps by way of a loan so that they could then be blended with other funds coming from the Housing Corporation and possibly involving housing association grant?

Lord Williams of Elvel: The noble Lord, Lord Hylton, has put his finger on yet another point to which the noble Lord, Lord Lucas, did not reply. I refer to the acquisition of local housing companies, if there are to be local housing companies. It is the duty of any director to respond to the interests of the shareholders. It is also the duty under the Companies Act--frequently neglected--to respond to the interests of employees. It has not been tested in the courts. I leave the point with the noble Lord.

The shareholders of a local housing company may be a pension fund. That is very desirable. There may be tenants. It may be a minority local authority. Someone comes along--I do not say who that someone will be--and says, "That's fine. It is an interesting company. It owns a lot of land. At the moment it is a social landlord but"--we discussed Ministry of Defence housing for

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families recently--"we think that this could be rather an interesting property company. We should like to deregister as a social landlord, take this over as we are entitled to do under the Companies Act, and make it into a formal property company." Is there any provision which would prohibit that other than the Housing Corporation making bleating noises?

The noble Lord is not right to say that private companies are excluded from the operation of the Financial Services Act. I am glad to hear that he will write to me on the matter. I make a perhaps rather niggling point. We have so far reached the end of Clause 1. On the Minister's advice, the Committee agreed to one amendment put forward by the Government on the ground that it had been neglected, the Bill having been through full debate in another place. In another case, on Clause stand part, I am informed by the Minister that the Government will write to me with a full response to the issues I have raised, the Bill having been debated at length in another place. I am full of the virtues of this House and this Committee. However, I feel that these issues might have been addressed by the Government before they reached another place, let alone this House.

Lord Lucas: I know that the noble Lord is as much a fan of this House as I am. I am sure he realises that it is the function of this House to act as a revising Chamber. It is a function which it performs extremely well. In the previous housing Bill this Session, the noble Lord demonstrated just how well this Chamber can perform its function. We are having the opportunity to do so again. The fact that the talents of the noble Lord, Lord Williams, are clearly required in the scrutiny of this Bill merely demonstrates what a good job this House does, how necessary it is, and what an important part of our British constitution it is. I am glad to have the support of the noble Lord on that, even though he did not state it explicitly.

I should like to read in Hansard what the noble Lord, Lord Hylton, said, before replying to him to ensure that I do not miss anything. However, the basic principle is that institutions lend to housing associations and increasingly they supplement government grant. We expect to see that continue. We also expect to see institutions investing in housing investment trusts for private rented housing. It is a direction we are clearly interested in supporting. However, I wish to read again exactly what the noble Lord said.

As regards the transfer of shareholdings and the consequences it might have, I agree with the noble Lord, Lord Williams, that there is nothing in the Bill which would prevent those evils. It is intended that such problems should be prevented by the requirements which the Housing Corporation makes on companies which wish to become social landlords as regards their articles, restriction on the transfer of shares, and restrictions on the ways in which they can change any item in their articles of association without the permission of the Housing Corporation.

The noble Lord, Lord Williams, will realise that one can set up the articles of association of a company to be pretty restrictive on the way in which shares are

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transferred. I agree with him that the point should be set out in full in writing to the noble Lord. I undertake to do that, if not immediately during this Committee stage then before Report.

4.30 p.m.

Baroness Fisher of Rednal: Before the Minister sits down, will he give me an assurance that we shall not fall into the trap of the Rachman period? I do not know that we would call him a social landlord; we prefer to call him a grasping something else. Will the legislation make allowances for a man or an organisation being prevented from sabotaging what should be a good set of regulations?

Lord Lucas: It is clearly of prime importance to prevent a social landlord falling into the hands of Mr. Rachman, Mr. Maxwell or, indeed, anyone of similar inclinations and, shall we say, lack of general morality. As I said to the noble Lord, Lord Williams, we shall address the point in the requirements that the Housing Corporation sets out for companies which apply to become social landlords. However, the matter needs to be set out in detail and I shall send the noble Baroness a copy of what I write to the noble Lord, Lord Williams.

Lord Swinfen: The Housing Corporation's rules for management of social property will probably prevent a Rachman-like situation. However, like the noble Lord, Lord Williams, what concerns me is that social landlords would be at the low-value end of the market because such organisations would be non-profit-making organisations operating at low rents. It could well be that a carnivore company would come along, intent on buying up a company, changing the way in which it operates, increasing the rents considerably and possibly selling off part of the land bank that it was waiting to develop. There could be extremely attractive morsels to carnivore companies.

The Housing Corporation may well set limits on how a social landlord may dispose of its own assets and what it does with the proceeds of the disposals, but we ought to ensure that such companies are not available to be swallowed up by carnivores, with the whole tenet of that social landlord being changed.

Lord Beaumont of Whitley: I wish to pick up the point made by the noble Lord, Lord Williams, with which I feel that the Minister did not deal properly. Concerning the state in which the Bill reaches your Lordships' House, is the suggestion being made that, because your Lordships' House is a noble and competent organisation, there is no duty on the Government to produce Bills in the right state when they come here? This House is a good revising Chamber, but surely it should not have to revise often or very much. It is the Government's duty to produce Bills in the right state. I hope that the Minister will not at any future time produce as an excuse the suggestion that it gives us an opportunity to do our duty. It is rather like the theological suggestion that there should be more and more sin in order that grace should abound. It is faulty and I hope that the Minister will give it up.

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Lord Lucas: Dealing with the last suggestion first, it is plainly ridiculous. If civil servants were perfect, we would not need Ministers; if Ministers were perfect, we would not need another place; and if all three together were perfect, we would not need this place. It is clear that we need this place and I glory in that fact.

Lord Williams of Elvel: Perhaps I may end the debate on a positive note. I offer a suggestion to the Government. It seems to me that the only way in which the Government can or we can protect local housing companies is for the Housing Corporation to have what is known as a "golden share" in each local housing company. That is a well tried and well established mechanism for ensuring that carnivores, as the noble Lord, Lord Swinfen, said, cannot take over companies and realise a great deal of profit. I recommend the golden share solution to the Government.

Lord Lucas: I clearly recognise that the House will wish to consider and discuss this matter in detail. I am committed to providing the House with the information which it will need in order to do so at Report.

Clause 1, as amended, agreed to.

Clause 2 [Eligibility for registration]:

Baroness Hamwee moved Amendment No. 7:

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