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Page 132, line 43, at end insert--
("(6) Notwithstanding any provision of this paragraph, no director or auditor shall be required to sign two or more sets of accounts, each or all of which purport to give a true and fair view of the Company's state of affairs.").

The noble Lord said: My Lords, I beg to move Amendment No. 206 standing in my name and that of my noble friend Lord Dubs. It appeared from our discussion in Committee on this topic that there might be circumstances in which the corporation insisted on a certain number of accounting principles which a local housing company had to adopt and the law under the Companies Act, as amended, insisted on certain other principles, and both sets of principles were intended to represent a true and fair view. I believe that I pointed out to the noble Lord, Lord Lucas, that this was something of a nonsense. It is another reason why no one should become a director of a local housing company. No director can properly sign two sets of accounts both of which purport to represent a true and fair view. Having raised the matter with the noble Lord I hope that he has an elegant solution to offer to obviate what I perceive to be a complex difficulty. I beg to move.

Lord Lucas: My Lords, I agree entirely with the noble Lord, Lord Williams, that the problem he imagines existed in our minds when this matter was discussed in Committee did exist. Since that time we have had the opportunity to make a thorough review of the wording of the Bill as it now stands. If I go through the Government's interpretation of the wording I hope he will accept that it avoids the problem that we mutually raised at Committee.

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Paragraph 16 or Schedule 1 gives the corporation power to determine accounting requirements for registered social landlords with a view to ensuring, first, that they are prepared in a proper form and, secondly, that they give a true and fair view of the landlord's housing activities and the disposition of funds and assets held by it in connection with such activities. Before determining such requirements the corporation must consult representatives of registered social landlords. In practice, it also consults others, such as the Accounting Standards Board, the Auditing Practices Board and the other regulators with an interest in the sector, including Companies House. Once it has done that it must obtain approval for what it proposes from the Secretary of State.

The provisions of paragraph 16 bite only on the accounts relating to an organisation's housing activities. Our legal advice is that the requirement that such accounts are prepared in a proper form must mean, in the case of a Companies Act company, accounts which comply with the requirements of that Act. That provision appears at line 28 of paragraph 132.

The corporation may well, for reasons connected with its regulatory role, require information which is additional to that required by the Companies Act or by the legislation relating to charities and industrial and provident societies. But in such cases it should be capable of being supplied as a supplement to the accounts. We do not believe that directors or auditors will face difficulty in complying with these requirements.

On consideration, we are convinced that there is no need for separate accounts and no need for conflict in providing this supplementary information. When I spoke in Committee I thought that ultimately there might be two sets of accounts. However, there will be one set of accounts; that demanded by the statute which forms the basis of whatever the entity is. It will be the Companies Act in the case of a company. The corporation may require supplementary information which the auditors will report as an addition, not as an alternative, to what is required by the Companies Act.

I hope that in providing that carefully revised interpretation of what is in the Bill the noble Lord will be satisfied that the problem which we both imagined existed does not exist.

6.30 p.m.

Lord Williams of Elvel: My Lords, I am grateful to the Minister for the carefully revised interpretation. It will be studied with interest by the Institute of Chartered Accountants of England and Wales. It may well be that it has objections to the idea that a supplementary set of accounts in addition to those required by the Companies Acts may be produced by the corporation, in accordance with the instructions of the corporation, on more detailed matters or different aspects of the company's business, which also give a true and fair view.

For the moment, I agree that the Government have studied the problem. I am sure that departments other than the Department of the Environment have studied the matter too. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Lord Lucas moved Amendment No. 207:

Page 137, line 17, after first ("on") insert ("summary").

The noble Lord said: My Lords, I spoke to Amendment No. 207 with Amendment No. 200. I beg to move.

On Question, amendment agreed to.

Clause 15 [Relevant and exempted disposals]:

Lord Lucas moved Amendments Nos. 208 and 209:

Page 10, line 9, leave out from third ("of") to end of line 14 and insert ("any such order as is mentioned in subsection (5A);").
Page 10, line 25, at end insert--
("(5A) The orders referred to in subsection (4)(b) are orders under--
(a) section 24 or 24A of the Matrimonial Causes Act 1973 (property adjustment orders or orders for the sale of property in connection with matrimonial proceedings);
(b) section 2 of the Inheritance (Provision for Family and Dependants) Act 1975 (orders as to financial provision to be made from estate);
(c) section 17 of the Matrimonial and Family Proceedings Act 1984 (property adjustment orders or orders for the sale of property after overseas divorce, &c.); or
(d) paragraph 1 of Schedule 1 to the Children Act 1989 (orders for financial relief against parents).").

The noble Lord said: My Lords, I spoke to these amendments with Amendment No. 5. I beg to move.

On Question, amendments agreed to.

Clause 16 [Right of tenant to acquire dwelling]:

Lord Berkeley moved Amendment No. 210:

Page 11, line 18, after ("dwelling") insert (", which shall include any community facilities or amenities provided in support of, and at the same time as, the dwelling,").

The noble Lord said: My Lords, in moving Amendment No. 210 I shall speak also to Amendment No. 214. I thank the noble Lord, Lord Mackay of Ardbrecknish, for his letter to me explaining about the repair costs and service charges for housing. It was most helpful.

We discussed similar amendments in Committee, but I remain concerned that the Bill provides a disincentive to housing associations to build in future to high standards of construction, insulation, low operating costs, community facilities and so forth. Furthermore, I am concerned that it provides a disincentive to build in certain locations.

In Committee the noble Lord, Lord Mackay, said that he thought I was talking about sheltered accommodation. I wish to confirm that that is not the case. The amendment refers to ordinary social housing perhaps with high standards and community facilities. The noble Lord, Lord Mackay, commented that if housing was to be sold the value of the community facilities and the high cost of the extra insulation and so forth would be reflected in the sale price. I refer your Lordships to col. 1459. That may or may not be the case. My concern is that we need to refer to the market or to the purchase price of houses built in the future and compare that with the cost of building.

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I consulted again the William Sutton Trust, which is the sixth largest housing trust in this country. It raised four serious concerns which it believed should be reconsidered. The trust builds to high standards and low maintenance, but it believes that if that is not to be reflected in the sale price either it will make a loss or it will decide to build all its houses to a lower cost. Of course, when it builds houses it cannot know which ones will be sold and which will not. If it keeps the houses for a long period it will opt for low operating and maintenance costs, but if it sells them at a loss it will have less money for the construction of new houses.

Secondly, the trust pointed out that it and possibly other trusts may stop building new flats as a result of the complex legal arrangements which will arise not only under this Bill but in connection with other legislation relating to owner occupiers of flats. The trust thought that there was a real likelihood that it would stop building flats.

It also expressed concern that if house prices fall they will lose, as my noble friend Lord Williams said in our debate on Amendment No. 197. However, that applies to anyone. Its greatest concern, which I share, is that in locations where the market price is below the building costs trusts might stop building completely. Where are those areas? Not surprisingly, they are areas such as Liverpool, Stoke-on-Trent and the North East where such housing is probably required most.

All those problems and concerns arise because housing associations are no longer to be in control of their complete housing stock. I believe that they accept the change, but if they must carry on building and replacing what has been sold I strongly believe that wording such as that in my Amendment No. 204 is highly desirable. We run the risk of housing trusts completely stopping building flats or houses in areas where they are most required. If there were a floor market price related to the cost that problem could be mitigated and there would be a continuation of social housing in those areas where it is most required. I beg to move.

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