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Lord Williams of Elvel: The Minister has put his finger on the point. The clauses have been arrived at after a great deal of negotiation between the Government, the Housing Corporation, private lenders and the NFHA. All admit, as the Minister admitted, that there are certain to be flaws, rough edges and difficulties in their application, if occasion ever arises for the clauses to be invoked.
We shall come to subsection (3) and the power of the Secretary of State to amend Clause 39 as he wishes. The problem is that registered landlords do not know how the Housing Corporation, the Secretary of State or anyone else will approach the powers under Clause 39. All we ask is that the delicate balance between lenders, tenants, social landlords and the corporation should in
some form be set out so that people could be a little more certain than at the moment how Clause 39, which was scrambled together in something of a hurry, might operate in the future.I am not asking for a code of practice that is set for ever in stone. It is simply a statement which may come in a ministerial statement at Report stage and we would welcome it. The statement would be on how the clause might be operated by the Housing Corporation. Having heard what the Minister said, and with those comments, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Williams of Elvel moved Amendment No. 136:
The noble Lord said: The order of the wording on page 23 line 21 is a little odd. A "floating charge" is a floating charge; in other words, it is a charge over the assets of an organisation. It is transferable from one asset to another. That is the definition of a floating charge. There can be no such thing as a floating charge over land. In the Bill as worded, it seems to be a floating charge over land; but, as any qualified accountant or banker could tell the Committee, that is not sensible. I ask the Government to look at the drafting.
It may be for the convenience of the Committee if, while I am on my feet, I address Amendment No. 137. Although it is not formally in the grouping, it might be useful for me to do so, if it is acceptable to the Committee in order to get proceedings moving.
Amendment No. 137 allows the Secretary of State to make provision defining the purposes of the section. This relates to Amendment No. 135, which we discussed. I find it an odd and uncomfortable situation whereby a clause is produced in a Bill; the Secretary of State can amend the clause as he wishes and any such order is by negative instrument. That is the purpose of Amendment No. 137. I hope the Committee will not mind my speaking to the two amendments together. The one relating to the floating charge is a technical one. I beg to move.
Lord Lucas: I am in complete agreement with the noble Lord, Lord Williams, as to what a floating charge is and what its definition is. The reference to a floating charge in Clause 39 is intended to make it clear that the term "secured creditor" encompasses a creditor holding a floating charge over a landlord's assets which happen to include his land. There is nothing in the present wording that would lead us to adopt a more unusual or restrictive interpretation of the term "floating charge". The present wording therefore appears to us to be adequate. Nevertheless, we shall reflect on the noble Lord's remarks and check again as to whether there is any need to amend it. I hope that will enable the noble Lord, Lord Williams, to withdraw that amendment.
Turning to Amendment No. 137, in order for these clauses to work effectively, lenders and the corporation must have a clear idea of the triggers that will activate a moratorium. In the large majority of cases the steps being taken to enforce security will be familiar ones--for instance the appointment of a liquidator, administrative receiver, or receiver.
But these are not the only actions that secured creditors may take. Lenders may also decide to use their mortgagee in possession powers. There may be specific terms within a charge deed that we would wish to define as constituting a "step". We need to bear in mind, too, that lending practices to this sector are evolving and becoming more sophisticated. The forms of security that lenders are taking are becoming more varied. The provisions in Clauses 39 to 49 need to be able to keep up with such developments.
We therefore need to discuss with lenders whether there are any other actions that should be included in the definition of a "step". These would then be set out in a statutory order, to supplement the specific notice provisions on the face of the Bill. I hope that explains why we feel that we need that particular part of the Bill.
Lord Williams of Elvel: I am grateful to the Minister for his response. The question of the floating charge is a matter of drafting. I suggest that line 20 on page 23 of the Bill might read: "'Secured creditor' means a creditor who holds a floating charge or a mortgage or charge over land". Then, as a banker, I think I should understand it. The wording as it stands seems to confuse what is a floating charge with a mortgage or charge over land. I offer that suggestion in the friendliest possible spirit to the parliamentary draftsman.
Turning to the question of the Secretary of State amending Clause 39, I am grateful for the Minister's remarks. He said that the Secretary of State would consult widely before making such provisions. That is the point that we are trying to get at. It cannot just be for the Secretary of State, on a whim or whatever, to make an order subject to negative resolution procedure. On the assurance that the Secretary of State, whoever he or she may be in the future, will consult widely on the application of subsection (3) of Clause 39, I beg leave to withdraw Amendment No. 136.
Amendment, by leave, withdrawn.
[Amendment No. 137 not moved.]
Clause 40 [Initial notice to be given to the Corporation]:
Lord Lucas moved Amendment No. 138:
The noble Lord said: I spoke to this amendment with Amendment No. 56. I beg to move.
On Question, amendment agreed to.
Lord Lucas moved Amendment No. 139:
The noble Lord said: In moving this amendment, I shall speak also to Amendments Nos. 140, 147 and 148.
Clauses 40(4) and 41(4), as drafted, do not apply to registered charities which are neither Companies Act companies nor trusts. Such registered landlords should be covered by the requirement to give notice contained in these clauses. Amendments Nos. 139 and 140 achieve this.
Clauses 40(5)(a) and 41(5) exempt certain bodies such as the Attorney-General and the Charity Commissioners from giving notice to the Housing Corporation. The assumption is that the corporation will not require notice, because these are public bodies and the corporation will know what they are doing without requiring formal notice.
In reality the corporation will not always have close contacts with such bodies. The exemption on giving notice effectively places an onus on the corporation to keep abreast of what these other bodies are doing, and on those bodies to keep the corporation informed. On balance, it seems simpler to extend the requirement to give notice so that it applies to these bodies, and Amendments Nos. 147 and 148 achieve that. I beg to move.
On Question, amendment agreed to.
Lord Lucas moved Amendment No. 140:
The noble Lord said: I have just spoken to this amendment. I beg to move.
On Question, amendment agreed to.
[Amendment No. 141 not moved.]
Clause 40, as amended, agreed to.
Clause 41 [Further notice to be given to the Corporation]:
Lord Lucas moved Amendment No. 142:
The noble Lord said: I spoke to this amendment with Amendment No. 56. I beg to move.
On Question, amendment agreed to.
Lord Lucas moved Amendment No. 143:
The noble Lord said: In moving this amendment, I shall speak also to Amendments Nos. 144 to 146, 149, 150, 155, 158, 180, 189 and 193.
Amendments Nos. 143, 144, 145, 146, 149, 150, and 155 replace the terms "events" and "occur" with "steps" and "are taken", thereby standardising the terminology used in Clauses 39 to 49.
Amendments Nos. 158, 180, 189 and 193 ensure that the references to trusts in Clauses 44, 57 and 63 and paragraph 7(6) of Schedule 2 tie in with existing charities legislation. I beg to move.
On Question, amendment agreed to.
Lord Lucas moved Amendments Nos. 144 to 148:
The noble Lord said: I have spoken to these amendments. I beg to move.
On Question, amendments agreed to.
Clause 41, as amended, agreed to.
Clause 42 [Moratorium on disposal of land, &c.]:
Page 23, line 21, leave out ("(including a floating charge)").
Page 23, line 31, leave out ("in writing").
6.15 p.m.
Page 24, line 10, leave out ("charitable trust") and insert ("registered charity (other than a company registered under the Companies Act 1985)").
Page 24, leave out lines 15 to 17.
Page 24, line 23, leave out ("in writing").
Page 24, line 24, leave out ("events") and insert ("steps").
Page 24, line 24, leave out ("occurs") and insert ("is taken").
Page 24, line 29, leave out ("events") and insert ("steps").
Page 24, line 38, leave out ("events") and insert ("steps").
Page 25, line 5, leave out ("charitable trust") and insert ("registered charity (other than a company registered under the Companies Act 1985)").
Page 25, line 10, leave out subsection (5).
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