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The second thing that strikes me about this clause is that English Partnerships disposes of land at less then the best price, and for good reasons. Sometimes, when we—I am sorry; I should not say “we”. I have not been with that organisation for six months, but after six years I keep saying “we”. When English Partnerships takes land to the market and evaluates the bids for it, it takes explicit account of the quality of those bids. It does not just sell for top dollar so that any old tat is built on land, taking no account of environmental quality standards, space standards or whatever. It takes that land to the market with a clear development brief, and developers know that they have two hurdles to leap. They first have to leap the quality hurdle, and people will look at the best price thereafter. It is not simply a case of writing the biggest cheque to be able to acquire surplus or EP land.

This clause does not currently take account of, first, current practice and, secondly, what we were trying to do in bringing the organisations together. Will my noble friend consider having another look at this? I am now confused about the intent of these clauses.

Lord Greaves: I have Amendments Nos. 56 and 57 in this group, as an attempt to provide examples of the sort of circumstances in which it might be sensible for the HCA to dispose of land for less than it can get on the market. I am conscious that the Bill refers to the amount that may “reasonably be obtained”. That is altogether too vague a phrase. What may be “reasonably obtained”? Is it simply the amount of money you can reasonably obtain for open sale in the present market conditions? Or does it take into account exactly the kind of issues that the noble Lord, Lord Dixon-Smith, usefully raised—this is a very useful set of amendments—that were referred to by my noble friend and the noble Baroness, Lady Ford? If the purpose of the HCA is to achieve regeneration, it has to be put in the same position as English Partnerships is in at the moment.

Looking at it from the other end of the tube at a very local level, I know that English Partnerships disposes of land for nothing, in effect, because it puts it into a regeneration package that the public sector can operate. However, the HCA may not be able to do that. I am probing what “reasonably” means and whether it involves taking account of these other factors, but if that is the case it should be made clear because the phrase “best consideration” suggests an approach based merely on economics. Therefore, my Amendment No. 56 is concerned with regeneration schemes and specifically the ability to dispose of land to local authorities that are involved in such schemes in partnership with English Partnerships, and with the HCA in future, as a means of enabling these schemes to go ahead. If the HCA has always to insist on obtaining the maximum value for the land, a lot of these schemes will never go ahead. I cannot believe

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that is what the Government intend. The wording of the relevant measure seems to be wrong.

My Amendment No. 57 probes whether a reasonable consideration for land takes account of its existing planning status. It is one thing to say what that land is worth given its existing planning status, whether it be housing, industrial or amenity land. However, on the other hand we know that lots of companies in this country will buy land at its present value and “land bank” it on the basis of what they think might happen in 10 or 20 years’ time, or over a much longer timescale. Some land banking is very long term indeed. Companies may be prepared to pay over the odds for amenity land if they believe that they can get planning permission for housing on it in 20 years’ time. That is exactly what the big development companies do. They put that land in their land bank and register it in their accounts. The value of the land goes up, contributes to their profits and everybody is happy except the local communities because the land is occupied and owned by a company that may not look after it. The company may just sit on it in the hope that at some time in the future it may be able to develop that land.

The purposes of the HCA should be considered as regards disposing of land to local authorities. Further, the HCA should take account of the existing planning status of the land as opposed to its possible planning status in 10 or 20 years’ time that speculative purchasers might take account of. If the HCA cannot dispose of land in appropriate ways to appropriate bodies for less than it can get on the open market, it will not be able to do its job.

Lord Brooke of Sutton Mandeville: My noble friend, who moved Amendment No. 55, and the noble Baroness, who moved Amendment No. 55A, made common cause in expressing curiosity about what went on in the mind of the Secretary of State. If I may say so, if that curiosity were to become endemic, it would on the whole be a dangerous, not a good, development.

I am prompted by the debate about best consideration to ask a question that I do not expect the Minister to be able to answer on this occasion, although I should be interested to hear from him if he is able to follow it up. However, the issue may have come up in the debates on best consideration in the Commons, in which case his advisers may have something to add. In listening to the debate about best consideration, I was conscious of the general principle in charity law—I am not a charity lawyer—that the trustees of a charity have a responsibility to secure the best return or the best price for something that belongs to them in the interests of the charity. I wonder whether there are any caveats or considerations in charity law that influence whether the trustees can take something else into account rather than simply the value of the land. As I say, I am perfectly happy to wait until a later stage for an answer to that.

7.15 pm

Baroness Hamwee: Since we are in Committee, I wonder whether I can come back on something. I

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have found some notes. The Minister in the Commons—this picks up on the points that have just been made—made the point about Clause 4(2) providing that the HCA’s powers,

“are to be exercised for the purposes of its objects”.

As the objects—or objectives—of the HCA under Clause 2(1) include securing regeneration, supporting the creation, regeneration or development of communities and their continued well-being and contributing—this might not have been in the Bill when the Minister made the comment—to the achievement of sustainable development, I am puzzled about whether Clause 10(1) overrides those matters, or whether they in fact temper the term “best consideration”. I hope that question is clear.

Lord Bassam of Brighton: This has been a very useful debate, and I am grateful to all participants, who have been very helpful, in particular the noble Baroness, Lady Ford, with her experience of English Partnerships. I am sure that most noble Lords will be aware that, in most circumstances, the agency will be able to dispose of land in any way that it considers appropriate in accordance with its objects or objectives. However, Clause 10 carries on the current requirement for English Partnerships and the Housing Corporation, that if the agency wishes to dispose of land that was acquired through compulsory purchase, it must first obtain the consent of the Secretary of State.

Clause 50 qualifies that to the degree that it allows the Secretary of State to issue a general consent setting out the circumstances in which the agency may dispose of land without seeking specific consent in each and every individual case. As I understand it, officials have now begun to produce a draft of what that general consent order might look like. Perhaps, as this is Committee, I will outline what it will cover. The four proposed tests will be, first, that the disposal of land is for the purpose of the objects of the Homes and Communities Agency as set out in Clause 2(1) of this Bill; no surprises there. The second test will be the disposal of land meeting value-for-money requirements, which is fairly straightforward. The third point is that disposal of the land does not constitute unlawful state aid under Article 87 of the Treaty of European Community. Fourthly, the unrestricted value of the disposal should not exceed £400 million for disposals undertaken through an open and unconditional bidding procedure, or £5 million for other disposals.

That is some of our thinking, and we are going to consult on that with key stakeholders. That is where we have got to on the general consent regime. I suspect that in most cases the purpose of the amendments is to provide for more detail to be given on how the arrangements will work in practice. I have given some flavour of that, and I hope I can now give assurances that will satisfy noble Lords in this debate.

First, I shall deal with Amendment No 55. This amendment seeks to place an obligation on the Secretary of State when considering whether to give consent to the HCA to dispose of land for less than best consideration to take into account the benefit to the community where the disposal takes place. In a sense, this amendment pushes at an open door. Of

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course, that is what the Secretary of State will want to do and the potential benefits will be part of the proper consideration. But I am sure that the Secretary of State will also want to take into account the cost to the community of selling the land for a lower value than could have been reasonably obtained. I should stress also that “best consideration” is a term with a meaning. Generally it is understood to mean the best market value that can be obtained. Case law shows that matters of wider public benefit may be taken into account only if the benefit has a monetary value that can be assessed. We accept this because without it there would be no transparency of process for the public purse.

The amendment refers only to the benefits that may be brought to a community via a less-than-best consideration land sale and does not make reference to the cost to it of not obtaining the best possible price. What we have to consider is that every pound below best market value is money that does not go towards the wider objectives of the HCA. Given the significant role that the HCA will have in delivering new homes and generating older places, and working with communities to deliver solutions appropriate to the locality and the needs of local people, it is vital that in choosing to sell for less than the best price, the agency is assured that the wider public benefits it obtains as part of that sale at least offset the benefits that it will not be able to deliver elsewhere due to the lower return. On this basis, we think that Amendment No. 55 is unnecessary and that the current balance in the legislation is probably about right.

Amendment No. 55A in the name of the noble Baroness, Lady Hamwee, represents the other side of the same coin. As I understand it, the amendment seeks to ensure that in determining which offer to accept for land, the HCA should give equal weight to the social and environmental benefits of an offer as it does to the economic benefits. The noble Baroness argues that there are circumstances in which gain for the pure best financial value might not be the right thing to do and we do not disagree with that. However, I can offer an assurance that the amendment is unnecessary because, as we believe we have drafted it, Clause 10 already empowers the HCA not to accept the highest bid for its land subject to the Secretary of State’s consent. We do not want unnecessarily to fetter the activities of the HCA by requiring it to come to the Secretary of State on each and every occasion that it considers it can better achieve best value for public money by selling at a lower than best market price. I am sure that when I mentioned Clause 50 earlier, the noble Baroness will have picked up on our intention to create a general consent by setting out where disposal would fit into the specific circumstances without having to seek an individual consent. The general consent can address issues of wider public benefit, including the need to obtain better value for money for the public sector as a whole as well as ensuring proper accounting and reporting responsibilities, and, as I said earlier, compliance with state aid rules, the raison d’être for which is widely understood by Members of the Committee.

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Finally, I turn to the amendments tabled by the noble Lord, Lord Greaves, which I think he described as being probing amendments. The purpose of the first of the amendments, Amendment No. 56, would enable the HCA to sell land at less than best consideration or land which it has compulsorily acquired to local authorities for purposes which meet the agency’s objects without seeking the Secretary of State’s consent.

The noble Lord has argued today and on other occasions that local authorities are best placed to meet the needs of local communities and ought as a consequence to be treated as a special case when it comes to purchasing land from the HCA. I do not have any difficulty with the first part of that argument—indeed, my noble friend has assured the Committee that the agency will be working very closely with local authorities and regional partners to identify the best way to deliver those priorities.

However, I cannot agree that the HCA should have a blanket ability to provide subsidised land to local authorities, which would be the effect of the amendment. I see no justification for local authorities to be able to buy cheaply from the HCA, any more than any other organisation providing community benefits. The HCA cannot itself buy land cheaply and would need to be assured that the discount it was offering to a local authority would provide sufficient community benefit to at least offset the benefit that it would not be able to deliver elsewhere due to receiving a lower rate of return.

Moreover, if the HCA wants to sell land at lower than market price to a local authority because of wider public benefits in pursuit of its objectives, it may do so if it can demonstrate that the benefits have a sufficient monetary value to equal the market price. That is subject to the Secretary of State’s consent, but, as I said, the provision of a general consent will obviate the need for the HCA to seek permission in each case. We have given our commitment to working with stakeholders to provide a general consent that will enable the agency to dispose of land at less than best consideration where we feel that that is appropriate, while also protecting and providing for sufficient financial control to protect public investment. We will of course consult on that.

Lord Greaves: I understand what has been said about general consent, which is very useful, but I am not clear about what the noble Lord said. When assessing whether a piece of land can be sold to a local authority for less than the open market value, do you have to have a monetary test of the benefits that come from community use, community benefit and so on? I thought that he said earlier that that was not necessarily the case, but he now seems to be saying that it is and that a bogus sum—bogus is my word—has to be put together showing that the benefits add up to the cost of the discount.

Lord Bassam of Brighton: What I said is that if the HCA wants to sell at a lower than market price to a local authority because of what are perceived as being wider public benefits in pursuit of its overall objects, it may be able to do so if it can demonstrate that the benefits have a sufficient monetary value.

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Lord Greaves: How do you put that kind of monetary value on a park or piece of open space, a community centre or similar facility on land that otherwise could have high-value housing?

Lord Bassam of Brighton: The local authority would in any event have to value its assets, so I do not see why it should not be able to make a best estimate of that. In its audit function and financial control, the local authority would need to come to a view on the value of land or public space. Those things are very important in how local authorities conduct their finances. I take the point that the noble Lord is making.

Lord Greaves: Can we have a letter about this so we can understand it? I can go on asking questions all night, but we will not get anywhere. Perhaps the Minister could write explaining how that will work, in particular, how the gap between the price of the land being transferred to the local authority and the market value is calculated and assessed.

7.30 pm

Baroness Miller of Chilthorne Domer: I am terribly sorry to come in at this stage, but my noble friend is putting an important point. The Minister said that the local authority will be deciding. I see a lot of people with extensive local government experience in the Committee and in my experience the local authority sometimes cannot make that choice. The district auditor can make that choice, quite contrary to what the local authority would have chosen. It would be useful if the Minister could include in his letter the guidance that the Government would give the district auditor in this case.

Lord Bassam of Brighton: I suspect that it is something on which the Audit Commission would issue guidance, rather than the Government, but I take the point. Clearly, to deal with this issue, it would be of value if we set out more detail for Members of the Committee. We must ensure that there is probity in this process, to which I think all of us would sign up.

The noble Lord also has argued that the HCA should be able to take into account the planning status of any land it wishes to sell in assessing bids it receives for that land. In the past, he has argued that the HCA should be able to disregard any bids that are unusually high relative to that planning status, as they are likely to be attempts to “land bank”: to hold land fallow until planning permission can be secured and the value or usefulness of the land increases. In those circumstances, the noble Lord makes the point that going for what may be considered to be the pure best financial value may not necessarily be the right thing to do. The noble Lord may be right and we would agree. However, the amendment is not necessary. Whether land has planning permission, and the nature of that planning permission, is bound to have an impact on its market value. As I have explained, the HCA is already empowered not to accept the highest bid for its land, subject to the consent of the Secretary of State.

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On the noble Lord’s point about would-be purchasers speculatively paying over the odds in order to land bank, in a sense, that is their business. The HCA can decline the offer either by accepting a lower bid, but one where the public benefits have an assessable monetary value—

Baroness Ford: Perhaps I may make a suggestion to my noble friend. We are going down a route that may not lead us to a very sensible place. The amendment flies in the face of current practice. It is not unusual for a public agency to put out a development brief on land that does not have planning consent and explicitly expect the developer then, in meeting that development brief, to take account of the planning risk in the price. I go back to what I said earlier: it is really important that, in writing to the noble Lord and the Committee, we should also take account of absolute current practice and past practice because we might inadvertently be causing a real problem in terms of where we get to. I urge my noble friend to do that.

Lord Bassam of Brighton: I thank the noble Baroness for her helpful intervention. I was coming to that point. We are very conscious of the need to take account of current practice.

To summarise, Members of the Committee should be reassured by the points that I have made about how wider benefits can be taken into account. To pick up on the point of my noble friend Lady Ford, we have a commitment to draw up a general consent regime which is determined to satisfy and to safeguard public assets. We should reflect on the need to protect best practice in this field and take account of the need to ensure that we do not leave a gap that does not help us at all.

The noble Lord, Lord Brooke, asked a question about charity law that I ought to be able to answer, because I remember some debate and discussion about it when we did the Charities Bill twice. That is a slightly more complex question, and it is wide of the debate today, but the position would probably be that it would depend on what the trustees were trying to do in their particular charity. However, if we can find an answer for the noble Lord in due course, we will, and I will write to him on that.

I think I have covered most of the issues. If I have not, I am sure Members of the Committee will remind me; we have already committed ourselves to providing some answers in writing. This has been a useful debate and discussion. I have tried to suggest in my response that there is more flexibility there, and that we can use the general consent approach to provide for that and take into account the issues that the noble Lord, Lord Greaves, and the noble Baroness, Lady Hamwee, have rightly raised about the right conditions for disposing of land and assets at a lower-than-best consideration.

Baroness Hamwee: It strikes me that the Minister may be more comfortable about the general consent than some of the rest of us are. Obviously, he is rather closer to the current Secretary of State. If the

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considerations—forgive the pun—that a number of Members of the Committee have raised are capable of being reduced to writing in the general consent, I would hope that they were capable of being reduced to writing in the Bill. At the very least, however—because I cannot see that we can avoid coming back to this on Report—I ask that the work being done on general consent is shared with noble Lords so that it can inform that debate. That may be asking a lot of officials, but this is a hugely important point. With real respect, the Government might find it easier and quicker to get a general consensus rather than finding that we divide on something when there is actually no division between us on the issues.

Lord Dixon-Smith: It has been a useful and enjoyable debate, if only because I have my noble friend Lord Brooke advising us not to penetrate too far into the murky mind of a Secretary of State. That seems to be very sound advice. The Minister began with some fairly good capitalist principles, but then wrapped them up in so many layers of obfuscation than we all finished up more confused, rather than having our minds cleared.

There were two issues. The noble Baroness, Lady Hamwee, raised one, which the Minister has not really satisfied us on: whether Clause 10, particularly subsection (1), is in a sense contradictory to, or

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overrides, Clause 2(1)(c) dealing with the purposes of the Homes and Communities Agency. We will have to look at that difficulty very carefully. The noble Baroness, Lady Ford, said that the way in which the Bill was drafted appeared to be a step back from what is already actual practice. If that is the case, we must be very concerned about that. With the greatest respect to the Minister, we did not get a satisfactory answer on that.

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