Housing and Regeneration Bill

My Lords, the noble Baroness has invited me to put on the record our response, and I am happy to do that. We are committed to developing a general consent to make clear the circumstances under which the Homes and Communities Agency may sell land at less than best consideration without first obtaining the Secretary of State’s consent for that transaction. Officials are currently developing that, so it may be published for further discussion, but I am happy to do my best to set out here what it is likely to cover and again to state that I will share a draft with noble Lords when it is published for discussion in the near future. As noble Lords will know, the extent to which the Homes and Communities Agency should be able to make decisions regarding the disposal of land at less than best consideration has been the subject of extensive debate during the passage of the Bill. It is our view that, in the majority of cases, the agency should be empowered to dispose of land in the manner that best enables it to pursue its objects. We accept that this may not always mean selling land for the highest price, but we also accept that there must be appropriate and adequate safeguards in place to protect the public purse. The Bill currently contains a provision at Clause 10 precluding the Homes and Communities Agency selling land at less than best consideration without permission from the Secretary of State, but it also contains a provision at Clause 50 empowering the Secretary of State to give consent in general or specific terms. These provisions mirror those that apply to English Partnerships. As I have said, we intend to publish for discussion with stakeholders a document setting out the Secretary of State’s general consent to the Homes and Communities Agency for the disposal of land at less than best consideration. That document will set out the general circumstances in which we suggest that the Homes and Communities Agency could dispose of land at less than best consideration. For any disposal of land that did not meet the terms set out in the final version of that document—the general consent—the Homes and Communities Agency would have to obtain the Secretary of State’s specific consent. It will set out, at a high level, the circumstances in which the disposal of land for less than best consideration would not require the specific consent of the Secretary of State. The draft consent will set out a series of tests that deal with the public benefit and seek to protect the public purse as follows: first, any disposal at less than best consideration must meet the objects of the agency which incorporate a public benefit test; secondly, undervalue land sales must meet the value-for-money tests set out in Managing Public Money and the Green Book, which, as noble Lords will know, are Treasury publications that explain how accounting officers can take account of wider benefits when judging whether they are achieving value for money; thirdly, the disposal must not constitute state aid under Article 87 of the treaty of the European Union. This requirement would require the agency to either dispose of the land under an open and unconditional bidding procedure or rely on an existing exemption or approval which incorporates a public interest test. To provide further protection for the public purse, the draft also places a limit on the maximum size of the unrestricted value of any transaction that the agency may undertake in these circumstances without seeking permission from the Secretary of State. We are considering a limit of £40 million for sales conducted through competitive tender and a limit of £5 million for single-tender sales. These limits are thought likely to capture about 10 per cent of the Homes and Communities Agency’s land sales. Drafting the consent in this general way inevitably raises comparisons with the general consent available to local authorities when they wish to dispose of land at less than best consideration. This is not a fair comparison. Local authorities are required to seek consent from the Secretary of State when the difference between the restricted and unrestricted value of land sales is greater than £2 million. This means that if local authorities wanted to sell land worth £4 million for £1 million, they would have to obtain the Secretary of State’s consent. The HCA would not have to do that. However, if a local authority wished to sell land valued at £42 million for £40 million, it would be able to do so under the terms of its general consent. The HCA would have to seek the Secretary of State’s specific consent. The monetary values for the HCA are likely to be higher because it is expected frequently to be engaging in large-value land transactions and its staff will have extensive experience and expertise in this field. Also, we are leaning towards total transaction values for the HCA, whereby for local authorities the difference between the figure that they could have obtained for the land and the figure they accept would determine whether they had to obtain the Secretary of State’s specific consent. As for local authorities, cases that do not fall within the general consent will need to be referred to the Secretary of State for a specific decision. In general terms, a monetary value that can be attached to a wider public benefit—for example, a right to repurchase land for the selling local authority—should be included within the assessment. If the value attached to such wider benefits when added to the monetary value received gives a total equivalent to the best consideration which can reasonably be obtained, then no consent is required. If, even after including the value attached to wider benefits, the total does not reflect the best consideration which can reasonably be obtained, the specific consent of the Secretary of State will be needed. This will also be the case when it is not possible accurately to allocate a value to a wider public benefit, which we accept will sometimes happen. In those circumstances, it is entirely appropriate for the Secretary of State to make an assessment in order to ensure the appropriate use of public funds. The debate in Committee at times seemed to equate a requirement to seek consent with a prohibition. That is clearly not the case; the requirement to seek consent is in fact a means of ensuring a proper assessment of the facts of a particular case. I hope that noble Lords see that this renders their Amendment No. 13 unnecessary. The amendment seeks to place in the Bill 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 when such a disposal takes place. Of course, she will, but she will also take into account the cost to the community of selling the land for a lower value than could reasonably have been obtained. I hope that noble Lords are satisfied and that Amendment No. 13 will not be moved. I trust that the noble Baroness is also satisfied by the response that I have given and that she will withdraw Amendment No. 12. My noble friend Lady Ford asked a question, to which the response is simply as follows. The powers that we seek to put in the Bill are similar to those that were in legislation governing English Partnerships. I assume that for those powers the same arrangements will pertain in relation to disposals of the sort to which she referred. A question arose about consulting on the limits. The answer is that we are consulting on the limits of £40 million and £5 million in a general-consent approach. I hope that that answers a point that has clearly disturbed noble Lords.