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Baroness Maddock: Is the Minister saying that the clause will enable the Government to allow certain local authorities—he referred in particular to those that may set up arm's-length management companies—not to have housing revenue accounts? Was that what he implied? He is receiving mixed messages from behind him.

Lord Bassam of Brighton: I think the nods are now in the one direction, so the answer is yes.

Baroness Hanham: I heard the word "flexible". I thought that I would; that is wonderful.

Lord Bassam of Brighton: I will bring my thesaurus next time.

Baroness Hanham: No, that was good; I do not like to be disappointed.

There was a great deal of detail about the provisions in Part 6 of the 1989 Act, which I do not have immediately before me. I want to read carefully what the Minister so ably read out. I am not sure whether his grasp of Part 6, Section 87A, and so on, is deep; mine is not. I am worried that the provision still leaves too much to the Government's discretion, which is precisely what the Select Committee was trying to hinder. I shall reconsider that and, if necessary, return to it later. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Lord Rooker moved Amendment No. 184:

    Page 49, line 20, leave out from first "of" to end of line 21 and insert "sections 74 to 76 and 78 of, and Schedule 4 to, this Act;".

[Amendments Nos. 185 and 186 not moved.]

Clause 92, as amended, agreed to.

Clause 93 [Local housing authority houses: rents]:

Baroness Hanham moved Amendment No. 187:

    Page 50, line 8, leave out subsection (1).

The noble Baroness said: Our Amendments Nos. 187 and 188 focus on Clause 93, which concerns local housing authority rents. The point of subsection (1) is to limit Section 24(3) of the Housing Act 1985 so that it applies only in relation to Wales and not to England as well. Subsection (2) allows, at some later date, for Section 24(3) to be repealed by order by the National Assembly.

According to the Explanatory Notes, Section 24(3),

    "requires authorities, when setting their rents, to have regard to the principle that rents of houses of any class or description should bear broadly the same proportion to private sector rents as the rents of houses of any other class or description".

They continue that the reason that that is to be changed is because,

    "in certain circumstances, the requirements of section 24(3) might make it difficult for authorities to comply in the longer term with the Government's rent restructuring policy in England".

The amendments are designed to be probing only. Can the Minister shed light on the Government's longer term rent restructuring policy? On what basis has it changed or will it change from previous policy? I understand that subsection (2) is intended to take into account the devolved status of Wales, but what will be the effect of having a change only in England but not in Wales on cost and revenue?

Furthermore, can the Minister explain in detail why he thinks that Section 24(3) is obstructive? My honourable friend Philip Hammond commented with considerable foresight on Report in another place when he stated:

    "My understanding of section 24(3) . . . is not that uniform rentals—or fixed percentages for public-sector rents by comparison with private-sector rents—have to apply across the country, but that there should be an equivalence of proportionality, in a local authority area, between public sector and private sector rents across different types of dwelling. That is surely sensible".—[Official Report, Commons, 5/3/03; col. 857.]

I agree wholeheartedly with my honourable friend's stance. The approach in Section 24(3) seems to be commendable in terms of balance and proportionality. Can the Minister explain why it sits uncomfortably with the Government's longer term rent restructuring policy?

I notice that in answer to Mr Hammond in another place, the Minister, Nick Raynsford, stated that to remove Clause 93 would be to stop the removal of an obstacle to the policy of rent reform. I look forward to hearing the reasons why Section 24(3) is an obstacle to rent reform and what alternative the Government intend to put in its place. I beg to move.

Lord Rooker: I hope that I can give a satisfactory explanation. When we consider the grand scale of

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things, we may think that the provision is about nit-picking lawyers trying to deal with every little nuance that may arise. But in the context of the rent restructuring policy—which is not a five-minute job, of course, it is a job for a decade—I hope that I can explain the reasons for the clause.

As the noble Baroness said, Amendments Nos. 187 and 188 both relate to the policy of encouraging local authorities and registered social landlords to restructure their rents in line with a national formula, announced in The Way Forward for Housing in December 2000. Prior to the introduction of rent restructuring, in some areas rents being charged by neighbouring councils for similar properties—in fact, identical properties; I can think of roads divided by the local authority boundary in which the dwellings on both sides of the road were originally built by the same builder and are exactly the same—varied by a third or more, while housing associations were able to charge over half as much again as councils for similar properties in the same area.

In time, the rent restructuring policy will produce a coherent pattern of rents across England. That will send the right signals, enabling social tenants to make real choices about where they live while keeping rents affordable.

In contrast, if social rents were allowed to approach market levels, some housing providers in areas of low demand would be unable to operate, while in areas of high demand, such as London, those on modest incomes would be priced out of the market altogether.

Amendments Nos. 187 and 188 together would effectively remove Clause 93, which deals with a potential obstacle to our policy of rent reform in England. Clause 93(1) effectively repeals Section 24(3) of the Housing Act 1985 in England. Section 24(3) requires local authorities in England and Wales, when setting rents, to have regard to the principle that rents of houses of any class or description should be broadly in the same proportion to private sector rents as the rents of houses of any other class or description.

Section 24(3) does not require local authority rents to be the same as those in the private sector—local authority rents are of course generally well below market levels. Section 24(3) requires local authorities, in setting rents, to have regard to the proportions between rents for different types of property in the private sector.

Some local authorities have suggested to us that the requirement in Section 24(3) might make it difficult for them to follow our policy of social rent reform in England, particularly towards the end of the 10-year restructuring period, as their rents might approach the Government's national rents formula. That is because the pattern of formula rents in an area might differ from the pattern of private sector rents in that area. Clause 93(1) is intended to address those local authority concerns by removing that potential obstacle to achieving social rent reform. So, first, it is a potential obstacle and perceived that it may be a problem towards the end of the rent restructuring programme—which is, of course, some years away.

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Amendment No. 188 would remove subsection (2), which allows the National Assembly for Wales by order to repeal Section 24(3) as amended by subsection (1)—that is, in Wales only—if it wants to do so in the future. Colleagues in the Welsh Assembly are currently undertaking research into social rent levels in Wales. Following that, the Welsh Assembly will want to decide its social rents policy for Wales, and to have the flexibility to remove Section 24(3) in Wales should it become a similar obstacle to reform, as it is perceived to be in England, some years away. So it is really giving the Welsh Assembly that flexibility.

Before anyone else points this out, I am aware that in the border areas between Wales and England, the same problems may arise as exist between local authorities in England. That is a highly technical point and no one is saying that it is a major problem that we must deal with tomorrow. However, the potential problem has been spotted and it is right to take the opportunity of the Bill to provide the facility to deal with it, if it becomes a major issue. I hope that that explanation satisfies the noble Baroness.

5.45 p.m.

Baroness Hanham: I thank the Minister for his explanation. I am slightly surprised that the provision is advanced at this stage of the rent restructuring process—there are a good few years to go before it is complete. I am sure that there will be another local government Bill before then, into which it could have been inserted.

Lord Rooker: I nearly said that.

Baroness Hanham: It is amazing how they turn up at four-year intervals.

I thank the Minister for his comprehensive reply, which I shall of course study carefully to decide whether we need to return to the matter, but this was a probing amendment designed to elicit that response, so I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 188 not moved.]

Clause 93 agreed to.

Clause 94 [Power to charge for discretionary services]:

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