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Lord Williams of Elvel: As always, I am grateful to the noble Lord for his response. He began by saying that it is not that the Government thought that they may have left something out, but because they knew they had done so. Perhaps the noble Lord can explain what the Government know they have left out and then we can begin discussing the Bill before us in the light of the Government's knowledge of what they have left out.

Having said that, would it not be appropriate in an amendment produced by the Secretary of State affecting primary legislation, and in accordance with the normal procedures of this House, for it to be put forward through the affirmative resolution procedure rather than the negative procedure?

Lord Lucas: We believe that in this particular case the negative resolution procedure is appropriate and the Delegated Powers Scrutiny Committee agrees with us. It is open to the noble Lord to disagree with us, but we hold to our view that for this particular power the negative resolution procedure is appropriate.

Lord Monkswell: I rise to support my noble friend Lord Williams of Elvel on this matter. I believe that he has got it right. It is curious that we have a long clause with detailed provisions, which the Government have

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seen fit to place before Parliament to have written into the Bill, and therefore to give the strength of legislative imprimatur to the matter. Yet they see fit to say that if they want to change these matters which they thought were so important to be in the Bill, that change will not be very important. Therefore, the provisions will not be worthy of the higher degree of scrutiny of the affirmative procedure. The Government cannot have it both ways. The matter is either of significance, and, therefore, changing the provision is a significant act and worthy of closer parliamentary scrutiny, or it is not. It is something which is worthy of what one might describe as "Executive diktat" rather than legislative authority. If the Government want to retain the powers of subsections (7) and (8), we must have the affirmative procedure rather than the negative procedure.

Lord Lucas: All that I can say is that I do not agree with the noble Lord. I said that we know that we have left something out because while the Bill was in another place we committed ourselves to re-enacting the Housing Associations Permissible Additional Purposes (England and Wales) Order 1994, which principally concerns a scheme which is in force in Wales and which is of a detailed nature which we did not consider belonged in the substance of the Bill.

As the noble Baroness, Lady Hamwee, mentioned, we have said that we should like to consider the question of alarm systems. It is possible that we can do that along with the re-enactment of that 1994 order, together with any similar proposals which are brought forward and meet with our approval. I do not regard these as major factors; they are additions rather than alterations to what is in the Bill. The power is restricted to adding rather than changing or deleting. Given that we intend to restrict the provisions to measures such as community alarm systems, I do not think that this should cause the Committee any alarm.

Baroness Hamwee: It is perhaps wrong to say that I am torn on this matter. However, not only are our obligations as a revising Chamber sometimes extremely onerous, but I have much sympathy with the notion that any order from the Secretary of State should be made under the affirmative resolution procedure. After all, as our debate on my earlier amendment showed, such matters are not necessarily straightforward. It is essential that the appropriate and widest suitable powers are given to landlords. It is because I believe that it is appropriate to ensure that their powers are as wide as is reasonable and appropriate that I do not feel that I can go along entirely with the noble Lord, Lord Williams.

However, I hope that the Government will take seriously our expressions of concern about the work that still requires to be done on this clause in order to ensure that we have clear and workable provisions which have received the proper amount of parliamentary scrutiny. The noble Lord is right that it is not appropriate for the Government to say, "We know that we have not been as imaginative as we

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might have been, so we shall give ourselves the opportunity to be more imaginative, but shall do so more or less in private".

Lord Williams of Elvel: The noble Lord, Lord Lucas, said that it was up to me to agree or disagree with what the Delegated Powers Scrutiny Committee said. Indeed, I disagree with what the Scrutiny Committee said and I very much hope that that committee will take the views of these Benches into consideration.

I am perfectly content that there should be some provision which would allow the update or adjustment of these clauses. Nevertheless, it is true that under past Bills amendments to primary legislation have been made by affirmative orders, not by negative orders. I very much hope that on Report the Government will take another look at this and perhaps change the procedure. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Lucas moved Amendments Nos. 12 to 14:

Page 3, line 9, at end insert--
("The order may (without prejudice to the inclusion of other incidental or supplementary provisions) contain such provision as the Secretary of State thinks fit with respect to the priority of mortgages entered into in pursuance of any additional purposes, objects or powers.").
Page 3, line 10, leave out ("Any such order") and insert ("An order under subsection (7)").
Page 3, leave out lines 11 and 12.

The noble Lord said: I spoke to these amendments with Amendment No. 8. I beg to move them en bloc.

On Question, amendments agreed to.

Lord Williams of Elvel moved Amendment No. 15:

Page 3, line 15, at end insert--
("(9) In relation to bodies to which local authorities have transferred properties under section 135 of the Leasehold Reform, Housing and Urban Development Act 1993, they shall not be ineligible for registration as a social landlord solely by virtue of the number of properties so transferred.").

The noble Lord said: The purpose of the amendment which stands in my name and that of the noble Baroness, Lady Hamwee, is to ensure that there is no arbitrary limit on the number of properties that a registered social landlord should possess or have transferred to it from a local authority. The proposed limit of 8,000 homes on transfers to any one landlord is, in our view, an arbitrary maximum. A more flexible system which avoids the creation of a monopoly landlord would be to set the limit at 8,000 homes or one-third of the local authority's housing stock, whichever is the higher. We believe that it is essential to allow local authorities to package estates to secure private finance, as well as to benefit from economies of scale and to avoid setting up several separate companies which in the present circumstances would incur substantial and unnecessary establishment costs. A number of urban local authorities have indicated that the proposed limit will inhibit

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transfers. Therefore, I very much hope that the Government will reconsider their position on this. I beg to move.

Baroness Hamwee: The amendment stands in my name also and is grouped with Amendment No. 105, which has my name and that of the noble Lord, Lord Williams, boxed and coxed rather than coxed and boxed, but it relates to a similar point. One of my concerns about the Bill and some of the Government's responses so far to the criticisms that have been made of it is its restrictive and constrained nature. It is important to allow as much flexibility as possible.

We have reached nearly 5.30 p.m. without even one sentence being said about the need for the supply of affordable housing. I appreciate that in Committee it is not appropriate to make Second Reading speeches, but I think that it is appropriate simply to say that I hope that the Government will keep in mind the fact that underlying practically every amendment is the concern of many noble Lords, of very many of those who work in the housing sector outside this place and of their customers, as well as of those who fail to be customers because of the lack of supply, that we must use the Bill to assist that supply as far as possible, not restrict it.

Lord Hylton: It is only in recent years that it has become possible for local authorities to transfer part or all of their housing stock to housing associations. It would be helpful if the Government could give their view of how that process has worked in practice because there were some criticisms of it when it started. The question of accountability has rightly been raised. Anything that the Government can say on how the process has worked would be helpful.

5.30 p.m.

Lord Lucas: We have heard a clear explanation of what the two amendments seek to do. I do not agree that we should allow an unlimited number of properties to be transferred from a local authority registered landlord. My understanding is that the noble Lord, Lord Williams, does not believe that either. We are talking merely about a matter of degree. I shall explain why we end up where we are. Transfer brings a number of benefits to both the local authority and tenants. One of these is greater investment in the stock. But it also provides an opportunity to improve efficiency in the management of the stock, and the responsiveness of managers to the wishes of the tenants. Splitting large amounts of stock into smaller more manageable units helps this process. While there may be certain diseconomies of scale caused by splitting a stock of, say, 12,000 dwellings into three units of 4,000, there are also significant opportunities for greater efficiency and responsiveness.

Having a size limit is also important for trying to get more diversity and choice in the social rented sector. I accept that this may not always be the case in some shire districts where we have allowed all their stock to be transferred to a single new housing association. But in urban areas where an authority has a large amount of stock there are clearly opportunities to increase choice

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and competition between landlords. The ceiling of 5,000 is one that we want to keep. But we want to be pragmatic. There are cases where it would be appropriate for a transfer to exceed this limit. Where a larger urban authority progressively transferred its stock, an average of 5,000 properties would seem to be right: for example, where an authority with between 30,000 and 50,000 dwellings considered transferring part or all of its stock. In those circumstances it will naturally do it in a number of tranches and it is sensible to provide some flexibility to enable area or location-based transfers over the 5,000 limit. It is true, however, that in the case of many partial transfers in urban areas, which will often be estate based, the size of the transfer will be below the current limit.

We are also willing to make exceptions in rural areas where splitting the stock can occasionally be arbitrary and affect viability because of geography and the way the stock is managed. Where it is not practical to split the stock we will allow transfers over the 5,000 limit. We have said that even where an authority is working to an average of 5,000, the maximum size of any one transfer will be 8,000 dwellings. We feel that at this level there is no argument about economies of scale. Housing organisations do not need to be any bigger to be viable and provide a good level of service to their tenants.

I hope that this explanation of our policies and the flexibility that already exists make it clear to the Committee that subsection (3) of the new clause in Amendment No. 105 would be an unhelpful constraint on the Secretary of State's discretion. Amendment No. 15 and subsection (2) of the new clause in Amendment No. 105 have no material effect on their own, since at the point of registration newly established transfer landlords have no stock, the transfer taking place usually shortly thereafter. More importantly, there is no practical purpose in preventing the corporation establishing a size criterion for registration when it is the Secretary of State's policy and the exercise of his discretion which establishes whether there is to be a maximum size limit.

I turn to the comments of the noble Lord, Lord Hylton. Last year's White Paper expressed the Government's continuing support for housing transfers. Some 50 authorities have done this, all with the support of the tenants who have to vote for it. It is my understanding that the process is proving a success.

I do not have any particular expectation that the noble Lord, Lord Williams, will have been convinced by my arguments. I have a feeling that there is a basic difference of policy, perhaps with politics underlying it, but I hope that my explanation has at least given him a clearer idea of why we take this position.

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