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Lord McIntosh of Haringey: My Lords, ought we not to follow the example of the driving test and have an examination, including multiple choice questions?

The Chairman of Committees: My Lords, with the leave of the House, the noble Lord poses an impossible question for me. I do not know whether that would be a suitable way of doing things at all, bearing in mind that when I took my driving test I failed it the first time.

Lord Harmar-Nicholls: My Lords, in order to understand in detail the full effects of the report, was my noble friend Lord Boyd-Carpenter in order or not in reading part of his supplementary question?

The Chairman of Committees: My Lords, I must confess that I did not notice that.

Lord Donaldson of Kingsbridge: My Lords, has the noble Lord observed that Members on his Front Bench, when confronted with a question from behind, tend to turn round and address the answer there instead of addressing the House?

The Chairman of Committees: My Lords, again with the leave of the House, with respect, that is perfectly correct. It is an approach that we should certainly follow.

Perhaps I may say a word on the last question on the report from the noble Lord, Lord Harmar-Nicholls. In defence of the noble Lord, Lord Boyd-Carpenter, strictly speaking the question on the report put to me by the noble Lord, Lord Boyd-Carpenter, was not a supplementary question to a Starred Question.

On Question, Motion agreed to.

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Housing Bill

3.5 p.m.

The Minister of State, Department of the Environment (Earl Ferrers): My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.--(Earl Ferrers.)

On Question, Motion agreed to.

Lord Williams of Elvel moved Amendment No. 123:

Before Clause 95, insert the following new clause--

Management agreements etc

(".--(1) Section 27 of the Housing Act 1985 (management agreements) shall be amended as follows--
(2) In subsection (5), before "the Secretary of State" insert--
"Subjection to subsection (5A)".
(3) After subsection (5) insert--
"(5A) The Secretary of State's approval shall not be given in any case where he is informed by a local authority that--
(a) following such consultation as is required under section 27A (consultation with respect to management agreements), the authority is satisfied that the majority of the tenants of the houses affected by a proposal to enter into a management agreement do not wish the proposal to proceed, or
(b) following such consultation as is required under section 27AA (management agreements and compulsory competitive tendering) in relation to bids submitted by any person to exercise any of the management functions of the authority, the authority is satisfied that the majority of tenants affected would prefer that the authority exercise those management functions themselves.".").

The noble Lord said: My Lords, this amendment also stands in the name of my noble friend Lord Dubs.

This matter was not raised in Committee. I accept that the drafting of my amendment is somewhat complex. Nevertheless, I hope the purpose is entirely clear. It is to reinstate what is known as the "tenants' veto" on the contracting out of housing management services. Section 27 of the Housing Act 1985 enables a local housing authority to delegate its housing management functions to a managing agent under a management agreement, subject to approval by the Secretary of State. Such delegation may take place after voluntary competitive tendering, following compulsory competitive tendering or under an arrangement whereby management is delegated to a tenant-management organisation.

In the 1993 Act, the Government introduced a rather different system. Until that Act if local authorities proposed to enter into a management agreement to consult the tenants affected, if the majority of such tenants were opposed to the proposal the Secretary of State had a right to say, "You cannot go ahead". That was known as the "tenants' veto". The tenants' veto was removed by the Act. The Government's argument for doing so was that the tenants' veto was unnecessary given the new and more extensive rights to consultation that were introduced. That said, the justification for removing the veto as it applied to voluntary competitive tendering was never spelt out.

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I shall not go into the progress of CCT, as it is called, which is being introduced in three phases. A number of authorities have not been required to expose their housing management service to CCT because the value of work falling within the defined activity falls below the de minimis level agreed by the Government. The number of authorities claiming exemption on the grounds of de minimis exceeded the Government's expectations; and the Government are now consulting on a proposal to revise the de minimis exemption to bring these authorities back within the requirement of compulsory competitive tendering.

The effect since the 1993 Act has been very interesting. The overall effect is that about 40 per cent. of the housing management work which will eventually be subject to CCT was exposed to competition in the period leading up to April this year. Local authorities have been very successful in winning contracts in the first round. The private sector, on compulsory competitive tendering, won a little over 2 per cent. of the work exposed to tender.

The result can be attributed to the small number of private contractors who are interested in the business. Experience of previous rounds of competitive tendering have shown that the private sector takes time to learn the skills--how to bid and in what form. It is far too early for either the Government or contractors to conclude that local authorities have been trying to freeze out private contractors. Nevertheless, following complaints from unsuccessful private housing management contractors, the Government have now issued a consultation paper proposing, as your Lordships would expect, a number of changes to the framework for CCT, admitting openly that the results of the first round were not as they expected; that is, that private contractors would do the business. In other words, too many contracts were won in competitive tendering by local authorities and that did not satisfy the Government.

A particular feature of housing management compulsory competitive tendering, compared with CCT for other local authority services, is the requirement to consult tenants under Section 27AA of the Housing Act 1985. That is because contracts for housing management services are classified as management agreements to which Section 27 applies and that is the reason for the drafting of the amendment I am putting before the House today.

In many authorities tenants have been involved in interviewing contractors and selecting tenders. But under the present arrangements tenants are not allowed to reject a contractor outright if they are satisfied with the price and quality of the housing management services they receive.

The consultation paper recently issued by the Department of the Environment starts off by saying that Ministers have reviewed the initial implementation of CCT and find that it is not entirely satisfactory. They accept that private sector bidders have won very few contracts. They accept that the Audit Commission expressed concern about the way in which bids were handled. They also accept that, on housing management, around 100 authorities are or will shortly conclude that

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they are de minimis and do not expose any work to competition. The paper says that that is many more than anticipated.

The review conducted by the Department of the Environment confirmed that all CCT contracts are being awarded in-house except in certain authorities. For example, 62 of the first 69 contracts were awarded to in-house teams, won by local authorities, which means eight contracts were awarded to external suppliers. It is our view--it is time that your Lordships had the opportunity of considering this problem again--that compulsory competitive tendering has not led to any improvement at all in management services to housing in local authorities. Furthermore, it is our contention that the tenants' veto--the right of the tenants to be able to say, "We do not want this"--should be reinstated. That is the object of my amendment. I beg to move.

3.15 p.m.

Baroness Hamwee: My Lords, if I am allowed to say "I"--following the advice earlier this afternoon--perhaps I can say that I support the amendment. This is not an argument against compulsory competitive tendering. There are times and places for that, and I would be happy to debate the good and bad qualities of CCT--but not this afternoon. It is an argument to reinstate a right which was taken away in 1983 and not replaced. It was taken away on the grounds that it was not necessary because of the amount of tenant consultation that would be carried out as part of the competition process but without the question "What harm would its retention do?" ever being answered.

Referring back to your Lordships' debates during the passage of the 1993 Bill, we were told by the Government that they proposed that tenants should be involved in every aspect of the delegation process: from drawing up the tender specifications to involvement in the shortlisting; from interviewing of tenderers to monitoring performance and service delivery; and, if need be, advising the local authority on enforcement and penalty procedures. That is involvement in every aspect except the decision itself.

We were also told that the Government have always believed that full and effective consultation with tenants should be an integral part of the preparation for management agreements. But those consultation arrangements should fit with the times. The Government argued that the tenants' veto was introduced when competitive tendering in the housing management area was voluntary and in making it compulsory the need for a tenants' veto was met by the process.

It seems to me, looking back with the benefit of three years hindsight--always better than one's consideration at the time--that when the process was voluntary and there was no compulsion on the parties to go down a road that they resisted, there was far more likelihood that involvement of tenants would be very good involvement. When the parties are compelled to do something, their resentment may show itself in a number of forms, one of which may be in failing to involve tenants with quite as much enthusiasm, despite the

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formal requirements, as one would like to see. I think it is timely therefore to bring this matter back and I support the proposition.

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