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Lord Williams of Elvel: My Lords, before the noble Lord sits down, I know that we are on Report, but can he explain the intention behind the corporation selling off its loans portfolio? I understand that the corporation has loans. I understand that the corporation does not wish to be obligated to private interests. But what is the intention behind this provision? I have not quite understood it from what the noble Lord said.

Lord Lucas: My Lords, with the leave of the House, I may be misunderstanding the purpose of the transaction, but it seems to me that £1 billion has effectively been lent by the Government and that the Government would prefer it to be lent by commercial sources and to be able to remove that sum from the public sector borrowing requirement.

On Question, amendment agreed to.

Lord Lucas moved Amendment No. 237:

Page 146, line 41, leave out from beginning to end of line 2 on page 147 and insert--
("9. After section 2 of the Housing (Scotland) Act 1988 (general functions of Scottish Homes) insert--
Sale of Scottish Homes' loans portfolio.
2A.--(1) Subject to subsection (2) below, Scottish Homes may enter into arrangements of a description approved by the Secretary of State for the purpose of realising the value of the whole or part of its loans portfolio.
(2) Without prejudice to the power of the Secretary of State to give directions under section 2(10) above, the Secretary of State may direct Scottish Homes to enter into arrangements under this section and it shall be the duty of Scottish Homes to comply with any such direction.
(3) The arrangements may provide for--
(a) the transfer of any estate or interest of Scottish Homes, or
(b) the creation or disposal of economic interests not involving a transfer of an estate or interest,
and may extend to such incidental or ancillary matters as Scottish Homes or the Secretary of State considers appropriate.
(4) In this section, Scottish Homes' "loans portfolio" means Scottish Homes' rights and obligations in relation to any loans or related securities.
(5) Nothing in the terms of any loan or related transaction entered into by Scottish Homes shall be construed as impliedly prohibiting or restricting it from dealing with its loans portfolio in accordance with arrangements under this section.
(6) A direction given under subsection (2) above may be varied or revoked by a subsequent direction given by the Secretary of State.".").

On Question, amendment agreed to.

Clause 63 [Minor definitions: Part I]:

Lord Lucas moved Amendment No. 237A:

Page 35, line 34, leave out ("prescribed") and insert ("specified").

The noble Lord said: My Lords, this amendment corrects a very small drafting error. I beg to move.

On Question, amendment agreed to.

11 Jul 1996 : Column 520

Clause 65 [Making and approval of registration schemes]:

[Amendment No. 238 not moved.]

Lord Monson moved Amendment No. 238A:

Page 37, line 29, at end insert--
((3A) A registration scheme shall not apply to--
(a) a house which is occupied by persons who form only two households;
(b) a house which is occupied by no more than four persons who form more than two households;
(c) a house which is occupied by no more than four persons in addition to the person managing or having control of the house (if any) and any member of his household; or
(d) a house of such description as may be specified in an order made by the Secretary of State.
(3B) An order made under subsection (3A)(d)--
(a) may make different provision with respect to different descriptions of case; and
(b) shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament".").

The noble Lord said: My Lords, because we are running slightly later than anticipated and because my noble friend Lord Lytton has a very early engagement tomorrow morning, he has unfortunately had to leave the House and it now falls to me to move the amendment. I do so with considerable trepidation; first, because I lack my noble friend's expertise in property matters and, secondly, because I came to the issue very late having only recently been alerted to the dire consequences for both landlords and tenants if the Bill remains unamended.

It is probably right that I should now make it clear that I have absolutely no interest to declare. I am a landlord in a small way, but I have never been, and am never likely to become, a landlord of any property which might fall within the HMO designation.

The wording of the amendment is pretty self-explanatory. Provisions almost identical to those in this amendment were in the Bill when it received its Second Reading in another place. However, as a result of Opposition fears, chiefly concerning fire risks--mistaken fears, it is now evident--the clause was removed on the Bill's passage through the other place. When the Bill was still in the Commons almost everyone accepted the claim that fire risks in HMOs were a staggering 28 times higher than for other accommodation. By the time the Bill reached this House, the Government had realised that 28 was a ridiculous multiplier and they produced a guesstimate--it was a guesstimate rather than an estimate--that the real multiplier was about 10. However, even that is much too high. Using methodology suggested by the Office for National Statistics--you cannot find a more respectable source than that--the true multiplier works out at 1.8--less than one-fifteenth of the original claim and less than one-fifth of the amended government claim.

Obviously, that has an enormous bearing on the degree of expensive safeguards and restrictions needed. It is almost certain that if the Minister in the other place had been aware of the true multiplier of the fire risk at

11 Jul 1996 : Column 521

the time he would never have agreed to Opposition calls to withdraw exemption for smaller HMOs. This amendment, which, to conform to the Government's wishes, has been slightly fine-tuned in comparison with the clause in the original Bill, would ensure that the Bill accords with the Government's original intentions.

Let us not forget that if they are over-regulated the smaller dwellings that are used as HMOs will be swamped by regulations intended for genuine risk situations. A poll, admittedly a straw poll, in London indicates that 80 per cent. of landlords would simply give up. That would be sad for the landlords and an absolute tragedy for the tenants, given the overall shortage of such housing.

For all the bad publicity that HMOs have received from certain vested interests, they form a vital part of the housing provision, not least in relation to the Government's housing benefit calculations and also in relation to students and other young people. A number of HMOs are considered unsafe because of overcrowding or on environmental health grounds as opposed to fire risks, but those matters are actionable under existing powers. There is no need for a registration scheme to deal with these particular abuses. Therefore, it is important that relatively limited categories where problems are inherently less likely should be excluded, leaving the real risk categories to be dealt with by means of registration. I beg to move.

Lord Lucas: My Lords, as the noble Lord, Lord Monson, has said, the Government did an about-face on this aspect of the Bill in another place--and quite rightly, too. It became quite clear just how complicated and difficult an area this was. We decided that we wanted these powers in secondary legislation in order to use them flexibly. We wanted to give time and consideration to how to phrase them and update them when, for example, the results of our proposed research into fire risks in HMOs became available.

Therefore, we have sympathy with what the noble Lord, Lord Monson, and the noble Earl, Lord Lytton, are trying to achieve by this amendment, but we have no wish to see any of this on the face of the Bill. We are not attracted by the rather hybrid scheme--part regulation and part Bill--that is proposed. The problems are not restricted to the question of fire risks in HMOs. There are problems with drafting exclusions to cover self-contained flats, the majority of which are owner-occupied, and a number of other areas. Although the Government set out down this road originally, we are convinced that our conversion in another place was the right one. We have no attraction to this amendment whatsoever.

Lord Monson: My Lords, I thank the Minister for his reply. I am sorry to hear it. As my noble friend Lord Lytton will wish to study what has been said--whether he decides to do something at Third Reading is a matter for him--for the moment I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

11 Jul 1996 : Column 522

[Amendments Nos. 239 and 240 not moved.]

Clause 66 [Registration schemes: control provisions]:

[Amendment No. 241 not moved.]

Lord Monson moved Amendment No. 242:

Page 39, line 38, leave out ("such") and insert ("reasonable").

The noble Lord said: My Lords, I am caught slightly off guard. Although my noble friend Lord Lytton told me that he would be going I did not have the same warning from the noble Lord, Lord Peyton. I have not had time to do the necessary research into this matter, except to make the general observation that this country is over-litigious as it is and is getting worse. We are becoming like Californians. Surely, it is desirable to eliminate the prospect of litigation wherever we can. Referring to the second amendment in this group, I would have thought that the words "to impose reasonable conditions ... during the period of registration"--full stop--would be preferable from the point of view of deregulation, which the Government favour quite rightly. The words

    "impose such conditions ... as the authority may determine"
would leave an enormous area of uncertainty in the minds of landlords and prospective landlords. I look forward with interest to the reply of the Minister. I beg to move.

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