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Lord Higgins: I am most grateful to the noble Baroness. I am mindful of the point which the noble Earl made with regard to financial resolutions and so on.

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However, it seems to me that the noble Baroness has merely described what happened. Nonetheless, it would seem that money which was allocated by Parliament for one purpose was not used for it and that money which was not allocated, for example to the question of alcohol abuse or whatever, was actually used for such purposes. Indeed, the noble Baroness's letter refers to the fact that certain money--and this was a point that I made in my intervention to the noble Earl--was specifically precluded from being used on housing benefit. I presume that that was in the legislation. Otherwise, I am not clear why the noble Baroness's letter makes that particular point.

Once one says that all this is highly desirable and, "We would have spent the money on it if we had thought to get it authorised, but we have used some other money for that purpose", the whole system of financial control comes unstuck. I ask the Minister: is this something that the NAO or the PAC have looked at, or is it something that they will be precluded from looking at if we pass this amendment tonight? I still have not received an answer to the point about cost neutral, which I did not understand.

In answer to what happens now--the point made by the noble Earl--if I understand the amendment correctly, it says that we can go on spending the money in this way until 5th April 1998 or in other cases 31st March 1998. However, I am not clear what happens afterwards. On the one hand, this seems to be retrospective legislation but, on the other hand, it stops dead at this moment--or, at least more accurately, on 5th April or 31st March. As I said, I am not clear what will happen now. Where will the money come from in the future?

As to the Money Resolution, if indeed the other place did pass it, why was this matter not tabled as an amendment either in Committee or on Report in the Commons? Clearly the other place is better qualified to deal with such matters than we are, given the restraints under which we operate?

Baroness Hollis of Heigham: I shall take, first, the money point because I do not wish to mislead the noble Lord in any sense. On the noble Lord's primary point about being cost neutral, I can tell him that of course it is cost neutral. Indeed, if it had not come through this route, it would have come through another. That is absolutely correct. This sort of expenditure is proper local authority expenditure reimbursed by central government. The only dispute is which bit of central government it should have come from. That is what we have been discussing.

Lord Higgins: I am most grateful to the noble Baroness. She knows infinitely more about local government than I do. However, it is not the case that if it did not come from this route then it would have come through another. If it did not come from this route, Parliament would have needed to authorise it coming from another route.

Baroness Hollis of Heigham: Yes. I do not know what the philosopher's term is for sort of "counter factual" or whatever. But, given that Parliament wished local authorities to provide this kind of housing, it was clear that local authorities had to be reimbursed for the

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additional costs of providing not just the bricks and mortar, but the service element to enable such people to remain in the community, and to pay for that through their housing benefit costs.

When a local authority produces housing benefit for, say, a private home, 95 per cent. of that money is reimbursed by central government--that is, for private sector housing benefit. If that had not been the way of funding these additional service costs up to July 1997, it would instead have been funded by--as it was in some unitary authorities--the DoH through the revenue support grant being paid by DETR to local authorities through the personal social service element in the revenue support grant, which would then have gone into this form of expenditure. Either way it would have come through that route. However, it went through the housing route rather than through the social services route. The August 1997 decision legitimised as an interim arrangement the expenditure on those support services for local authority services which are covered by housing benefit. This amendment legitimises those local authorities which currently fund those personal counselling services--about 40 local authorities are doing so--in the private sector. That way we ensure that we do not see the unintended collapse of care in the community for the most vulnerable people because a legal judgment in July 1997 has subverted all of our understanding as to the basis on which the housing benefit writ may run.

On the point about housing refuges, I am advised that if the refuges were in existence at the time we are discussing--I refer to the interim arrangements which were introduced in August 1997--housing benefit would continue to meet all reasonable charges for general counselling and support in line with our commitment to maintain the supported housing sector pending implementation of long-term sustainable funding mechanisms. I believe therefore that the point that concerned the noble Lord has been fully addressed.

I am not sure that I can take this much further as we have such fundamentally different perceptions of the nature of public expenditure. I believe that what we are attempting here is a kind of technical adjustment to correct a legal decision to ensure that community sheltered housing does not collapse. It is broadly cost neutral because the money would come from public funds one way or the other. The court ruling has made irregular the funding by one route; in the longer term it will probably have to follow a different route. In the meantime we are trying to keep in place arrangements to legitimise the payments that have been made since July 1997, which otherwise would have been ultra vires. As I said, I am not sure that I can go much beyond that. However, if there are further questions relating to the Treasury aspects I should be happy to try to provide a fuller answer in writing to the noble Lord if he cares to write to me.

10 p.m.

Lord Higgins: I do not wish to detain the Committee any longer. I shall consider carefully the point which the noble Baroness has made about local government finance.

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Why was this not discussed in the Commons at the appropriate moment? Will the NAO and the PAC be able to consider this?

Earl Russell: Perhaps I can assist the noble Lord, Lord Higgins, on that point. When the Bill returns to another place it will have already approved the Bill. The only things the other place will have power to address will be our amendments. Those are the only things that will properly be before the Commons. If we have no amendment that bears on this subject, the Commons will have nothing to address. Unless we pass this amendment, we shall not give another place the vires to address the issue at all.

Lord Higgins: With respect, that was not the point I made. I asked why the provision was not debated in the Commons at an earlier stage.

Baroness Hollis of Heigham: I wonder whether I should share the joke that my noble friend has just conveyed to me. As I understand it, the provision was not discussed in the Commons because at the time it was not realised that it had to be discussed in the Commons. It was not realised that that was necessary. The Committee will appreciate that I am rather grateful that the hour is late and that the Chamber is as empty as it is before I confess to the failure of all sides in this matter. I include the Opposition's failure to hold us to account and our failure to realise that we had a problem to resolve. At least, I have included us all in the problem.

On Question, amendment agreed to.

Lord Morris of Manchester had given notice of his intention to move Amendment No. 104:

After Clause 67, insert the following new clause--

Disability Living Allowance: protection of awards for life

(" . After section 76 of the Contributions and Benefits Act, there shall be inserted the following section--
"Awards for life: protection.
76A. No provision of this Act shall be so interpreted as to give the Secretary of State power, by regulation or otherwise, to end the entitlement to disability living allowance, or a component thereof, of any living person to whom that benefit has been awarded for life, except where the Secretary of State can show that the benefit was originally awarded in error."").

Baroness Hollis of Heigham: My noble friend Lord Morris is unwell. That is the reason he has asked me to say that he is not in a position to move the amendment.

[Amendment No. 104 not moved.]

Clause 68 [Discretionary payments out of social fund]:

Earl Russell moved Amendment No. 105:

Page 46, leave out lines 18 to 34 and insert--("(b) payments of prescribed amounts to meet other needs, in accordance with directions given or guidance issued by the Secretary of State."").

The noble Earl said: With the leave of the Committee, it might be convenient if, in addressing Amendment No. 105, I speak also to Clause 69 stand part. The issues overlap considerably, and I do not wish to make the same speech twice.

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The Social Fund is divided into a series of different categories. We are particularly concerned with budgeting loans which are repayable, and community care grants which may not be. In the past the situation has been that if an application to the Social Fund was not perfectly fitted to the category for which it was designed, it was possible to consider whether there was an eligibility for another category. I have a copy of a Written Answer in another place on 2nd March. The number of applications for which this was done in the financial year 1996-97 was 13,837. In the current year to the end of January, it was 11,173.

The power to do that, as I understand it, is being limited by the Bill, save for a series of conditions which may be laid down in regulation. It seems to me that this can be a mistake. There are many cases where this ability may meet a very real need. There are cases every year where people are found to be too poor to be eligible for a loan under the Social Fund. There is something rather curious about the idea of being too poor to get help out of the social security system. Therefore the ability to convert from one heading to another where that seems appropriate, in order, and according to conditions and terms of relevance, should be left in place. It should not be controlled and limited to a series of regulations laying down specific exceptions.

The point continues to apply that in drafting regulations we cannot foresee all possible suitable cases. I beg to move.

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