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Earl Russell: I thank the Minister for this amendment and for the great clarity with which she expounded it. I shall offer it at least one and a half cheers, but I still have one or two questions to ask. As the noble Lord, Lord Higgins, spoke off the top of his head, perhaps I might make some attempt to respond to him off the top of mine. First, the matter of the financial resolution: we in this place neither have, nor can have, any financial resolutions. We have no authority to do any such thing. Any decisions made in this place which have relevance to expenditure are, in effect, merely recommendations

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to another place which may act on them or not as it sees fit. So should there be any financial resolution, it would be for another place to make it when it arrives.

Lord Higgins: I entirely take the point that the noble Earl, with his great experience, makes. I fully understand. I am merely asking whether they exist.

Earl Russell: As I understand it, and again speaking off the top of my head, they cannot exist until another place has possession of the Bill, because it cannot make a resolution for a Bill that it does not have. As for why it has not been done earlier, this is a purely speculative point, and I shall be interested to know whether it is correct, but the timing of the appearance of the amendment suggests that it may have something to do with authority derived from the Budget, which, I am sure we all agree, we are not supposed to anticipate. I do not know whether that is the answer, but it is obviously a possibility.

As for the money which has been spent, that has been spent, as was then understood by many people--I have heard the matter discussed in exchanges at Question Time in this place before now--under what were believed to be valid vires. As far as I can understand, Parliament believed that the vires were sufficient to justify the spending of the money as it was being spent. The noble Lord, Lord Higgins, shakes his head. He may wish to respond, and I shall certainly give way to him if he does.

Lord Higgins: As I understand it, that is true of a great deal of the expenditure, but some of it was specifically precluded from being met by housing benefit; that is to say, I assume legislation said, "You must not spend money for housing benefit on these things".

Earl Russell: I am not aware of there being any such legislation. The point is that it was understood to be being spent in the support of housing. But as the Minister explained so lucidly, where one is dealing with supported housing of any sort, inevitably there is an overlap in which one cannot make a precise division between what is spent on the support services and what is spent on the housing. That applies just as much, say, to children's services in a women's refuge as it does to facilities for dealing with disabilities in a retirement home for the aged. That is inevitably the case. As I understand it--I have heard the Minister speaking of it previously--it was believed that Parliament had provided sufficient authority. As to why the matter should not be left to local authorities, the noble Lord, Lord Higgins, hits his own nail on the head: they would be liable to surcharge while we, mercifully, would not.

We have a curious mirror image of the debates we had earlier on the anti-test-case rule. The Government have responded in a way similar to that which I recommended not so long ago. I can and must welcome that with considerable warmth. The action that has been taken in respect of arrears was the easiest way of dealing with what could have been a severe practical problem. I am glad that the Government have done that.

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I also understand about the long-term review. I welcome the review in principle, without prejudice to any comments I may make on its findings. But what I do not understand is where the costs are falling now. The costs must fall somewhere and I would like to know whether a study has been made of the effects of the amendment on the financing of women's refuges. There is always a considerable overlap between the housing charges and the support service charges. If the costs do not fall on housing benefit, they do not just disappear or the whole nature of the housing is destroyed and it probably has to close down.

If the costs do not fall on housing benefit, where do they fall? If between now and the review they are supposed to be falling on the local authorities, they are capped and subject to standard spending assessment. The local authorities may well discover that they are in danger of having to find the money by defaulting on some other statutory obligation. That could create even further legal trouble. If the costs are not falling on housing benefit, where are they falling, or is the provision falling instead? Those are questions to which I should be grateful to have some answers.

9.45 p.m.

Baroness Hollis of Heigham: I hope that the Box notes will arrive in time for me to answer in particular some of the later issues raised by the noble Earl. I was much taken aback by the mild ferocity of Treasury assault on what I thought was a benign resolution. I console myself with the fact that the noble Lord, Lord Higgins, has forgotten more than I will ever learn about Treasury finance. But, equally, he is talking to someone who has chaired a local authority finance committee for many years and knows how such finance operates.

I wonder whether the noble Lord, Lord Higgins, is missing a substantive point. Much of the argument has been addressed by the noble Earl, Lord Russell, so perhaps the Committee will forgive me if I repeat what he so elegantly explained. Since the early 1970s, local authorities have been bringing people out of what would otherwise have been long-stay residential care, or avoiding the need for them to go into long-stay residential care, by offering supported housing. I refer primarily to housing for the elderly, in the public and private sectors, and halfway housing for those coming out of refuges for battered women. With increasing generosity, in the late 1970s and early 1980s, local authorities offered accommodation for people with severe learning disabilities. In my city there is such a sheltered housing scheme for people with severe learning difficulties.

Let us examine such a situation. You are a district council, which means that social services are run by a county council of a different political persuasion not necessarily sharing your philosophy of trying to support people in the community. You are a district council and you want to build a sheltered housing scheme for a number of people with severe learning difficulties. They and their families wish them to remain in the community. That means that the housing you build must have, for example, double sound insulation because

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people with severe learning difficulties can sometimes make a great deal of noise by head-banging or in using their equipment. There is also a need for extra warmth. That is clearly part of the cost of the property, the accommodation, reflected in subsidy and reflected, perhaps, in rent charges and housing benefit that people receive. That is not a problem.

But secondly, one must ensure that the caretaker, warden, good neighbours, on the site also check that the gas taps are turned off regularly every night. Is that an accommodation issue or a care, support, counselling issue? It can probably be argued that it is an accommodation issue but that is beginning to get into the grey area. It is covered by housing benefit.

But thirdly, some of the tenants need to be rounded up, if I may express the matter in that way, to get to the bus for the day centre. Is that covered by housing benefit or not? It is probably not now but until July 1997 it was widely believed that that was a legitimate extension of the sort of housing provision which needed to be made for a group of clients clearly identified as needing those services in order to remain in the community.

The problem was compounded when the social services department was run by one authority and housing services by another. If the housing authority did not provide the services, then the housing could not be provided, because the other authority would not fund the counselling and support services which were needed. Therefore, we were persuaded that that was the right, generous, decent and cost-effective way forward. We took that step and we took it with good grace. Up until July 1997, we all believed that we were operating within the law, although we accepted that, under housing powers, we were running services which were overlapping and could be shared with social services.

In July 1997, the courts ring-fenced very much more tightly and precisely what could be covered by housing benefit. That meant that local authorities which were providing such services needed to have the arrangements put on an interim footing. The matter became ultra vires only after the court had ruled. But, once the court had ruled, there had to be some immediate help available so that councils did not find themselves in the very situation which the noble Lord described of knowingly making payments for which they had no authorisation by law and therefore betraying their fiduciary duty to the ratepayers.

However, it would take time for that to get through to primary legislation. No legislation was coming forward. Therefore, in August 1997, the Government introduced their first tranche of interim measures to legitimise continued payment for those services. However, there was still an area of services left uncovered by those interim regulations which we are addressing this evening; that is, payment for counselling services which local authorities have continued to expend.

We all accept that this is not a permanent basis for funding but it is a holding operation until more permanent and satisfactory arrangements can be made. The noble Lord, Lord Higgins asked me whether or not

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that £500 million had been misspent. He asked me whether it had been legally misspent, however desirable the spending may have been.

It is not so much a matter of public funds having been misspent. It is more a case that money has come from the wrong pot. It has come via housing benefit moneys into district councils' housing services instead of coming via DoH and DETR funds into the revenue support grant for social services to fund those counselling services to add on to the housing support services offered by district councils. That is what the problem has been. I have no reason to believe that the total money spent would be £1 more or £1 less had it come by different routes. But in future it is clear that it would have to come by different routes to be legal. As that is a much more frail vessel, it is right to legitimise the arrangements that have been made and to seek to make permanent funding arrangements.

Therefore, the amount of money has not been overspent. It has been spent by one public body, thus saving money for another public body--the Department of Health and, through that, the DETR. Therefore, there has been no additional expenditure. It is merely that it has come through the wrong pipeline. We have been seeking to legitimise that and I am sure that that is right. The regulations of 18th August 1997 validated the making of such payments as part of housing benefit. With this measure, we are now introducing the principle into the Bill.

The noble Lord, Lord Higgins, asked about financial provisions. The financial provisions in Clause 76(2) cover that, as do the money resolutions for this Bill. The money resolution has already been taken in the other place. The wording is similar to that of Clause 76. I believe that we are covered in that respect.

I hope the noble Earl, Lord Russell, will allow me to write to him on the specific issue of refuges to see whether the problem that he fears exists. I have no reason to believe that it does, but perhaps I might double check on the situation.

I hope that I have assured the noble Lord that, first, no one was behaving irregularly or improperly before July 1997. It was only then that the law was clarified to limit what local authorities could properly do. Secondly, the powers taken in August 1997 were an immediate and speedy response to legitimise the position of local authorities so that they did not find themselves in ultra vires situations. Today, we are taking that on to the primary face of the Bill and legitimising it in that way. But obviously we need to have a permanent source of authorised funding to allow this to happen. There is no reason to believe that anyone has behaved improperly; indeed, they have not. There is no reason to believe there has been any over-expenditure; there has not been. Moreover, there is no reason to believe that it does not have the full support of the other place. I believe that those were the questions which were addressed to me by the noble Lord.

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