Local Government Bill

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Mr. Raynsford: Of course he does. He looked at the matter in some detail and clearly wants to ensure that we have a proper framework for oversight of public

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finances. The NAO should rightly have that function. That does not in any way involve a confusion of the specific roles that I have outlined. The Audit Commission will perform an inspection role in relation to registered social landlords and the Housing Corporation will continue to perform its regulatory function.

Mr. Clifton-Brown: Yet again the hon. Member for Kingston and Surbiton has misrepresented what I was trying to say. My right hon. Friend the Member for Haltemprice and Howden was Chairman of the Public Accounts Committee when I was on it. We both support the Sharman recommendations. One recommendation was that the NAO should also audit the discharge of the Housing Corporation's functions to registered social landlords. In other words, there should be just one auditing body auditing all the functions of the Housing Corporation.

Mr. Raynsford: That would be a fundamental change and would seriously affect the role of registered social landlords, which are not public bodies. The hon. Gentleman asked whether they were public or private bodies. I was going to answer that. It would be a major departure to give the NAO a responsibility for auditing bodies that are not public bodies. I hope that the hon. Gentleman will recognise that that is not necessarily the right way forward.

The hon. Gentleman was wrong to say that until 1988 registered social landlords were funded purely from public funds. They were not. They are voluntary bodies. Some were set up in the 19th century. Many were in existence before 1974 when for the first time they became eligible for public money. They were mostly established as charitable or similar bodies such as friendly societies. They were non-profit making bodies and since 1974 they have been eligible for public funding, which was provided primarily via the Housing Corporation. That is their legal position. They remain essentially independent bodies. They might be deemed to be private by some people. I would describe them as independent because they are not for profit. Private often carries a connotation of profit-making, which they are not. They are certainly not public bodies.

Mr. Clifton-Brown: The Minister raises an important point. Does the power apply to all types of bodies such as almshouses, housing co-operatives, housing companies and not-for-profit companies? Is there any distinction or does the new clause cover all the bodies that are funded by the public sector? If bodies are not funded by the public sector—for example private co-operatives—will they still be covered?

10 am

Mr. Raynsford: The hon. Gentleman asks an interesting question, because a diverse range of housing associations exists. Some are in effect non-operative, having ceased to develop and having only small property holdings that were developed many years ago. They are not doing any active work or

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receiving any public money. It would be odd for a huge inspection to apply to all 2,000-plus registered social landlords when some of them are not active.

The focus will be on organisations that are operating as registered social landlords, and the Audit Commission will simply carry forward the inspection function that the Housing Corporation had put in place. As the hon. Member for Isle of Wight said, our intention is to ensure a proportionate regime. I will come on to the issue of proportion in a moment, because there are questions about small operations that can be risky. However, in general, the inspection regime is designed to focus on active housing associations that are in receipt of public money rather than those that are dormant.

The hon. Member for Cotswold asked about the audit fees charged by the Audit Commission and raised fears about parish councils. Although they are separate from the issues that we are discussing, it is right for me to remind him that the Audit Commission has introduced a new policy on the audit of parish councils, which specifically safeguards the position of the smallest parish councils by setting small maximum audit fees for small councils. Larger parish councils may require a more detailed audit because they are disposing of significant amounts of money, and we have covered that situation by introducing the provision, which we debated earlier, for grants of £30,000 for best value parishes. That will enable them to meet the best value obligations, including the more rigorous audit.

There may be individual cases in which parish councils have had increased audit fees, but many others have had substantial reductions as a result of the Audit Commission's policy, which is simply to cover its costs. There is no question of the commission trying to make a profit; it has simply to cover its costs and meet the obligations of efficiency savings of at least 2 per cent. per annum, which we rightly impose on it as well as local authorities. I have covered the issue of the budget transfer, but in case the hon. Gentleman is not satisfied, I should make it clear that there will be a transfer of £1.8 million from the Housing Corporation to the Audit Commission to cover 2003-04.

The right hon. Member for Skipton and Ripon raised some interesting questions. He will know that the future and role of the Housing Corporation has been debated as long as the corporation has been in existence, because its role has an interesting dualism. It is both the regulator of registered social landlords and the moneybags—the funder. That can provide a certain tension, and I have heard many debates over many years about whether it is right for a single body to fulfil both functions. In practice, it is right, as it makes sense for the body that is responsible for regulation also to ensure that public funds are channelled to the registered social landlords that are capable of using them to best effect. We do not see a problem or tension in the Housing Corporation continuing to perform those functions.

We also envisage the Housing Corporation having a considerable role in the communities plan, which my right hon. Friend the Deputy Prime Minister

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announced over a week ago. The right hon. Member for Skipton and Ripon is right to say that the Housing Corporation will be involved in the delivery of that plan and that are there interesting questions about its relationship with other delivery vehicles. However, it would not be right to speculate further other than to say, as someone who worked closely with the Housing Corporation as Minister for Housing and Planning—as did the right hon. Gentleman—that I have great confidence in it and I hope that the right hon. Gentleman shares my confidence. I firmly believe that the Housing Corporation has an important future in providing the necessary comfort to lenders by maintaining a robust regulatory regime and in ensuring the effective delivery of the Government's communities plan.

I thank the right hon. Gentleman for his reference to Sir Andrew Foster's recent observations, which made it clear that this Minister was adamant in defending the independence of the Audit Commission.

Mr. Davey: But not others.

Mr. Raynsford: I recall references to the role of the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), but I shall not comment further because it is irrelevant to our proceedings.

The hon. Member for Isle of Wight referred to the absence of competition for inspection, though he accepted the need for consistency. Consistency is indeed crucial, and we should expect a standard level of inspection for bodies delivering social housing, whether they be registered social landlords or local authorities.

Amendment (a) is aimed at ensuring that an inspection will cover arrangements for co-operation between local housing authorities and registered social landlords and for responding to the differing needs of tenants and applicants for housing in different areas. We intend inspection to assess services to tenants in the widest sense and to examine the extent to which they are tailored to customers or potential customers. Relationships between registered social landlords and local housing authorities are important, but the Housing Corporation will maintain an interest in the light of its continuing investment and regulatory functions in respect of resources and strategies, and policies relating to local area needs. Comprehensive performance assessment of local authorities also examines the relationships between authorities and their partners. The amendment is therefore unnecessary.

Amendment (b) is designed to amend the requirements on publication of reports to require summaries for each tenant and full copies to be made available at convenient offices. Tenants will be involved in the inspection process and will naturally have an interest in the findings and follow-up action. Both the Audit Commission and the Housing Corporation publicise inspection findings widely, making them available on the internet and providing free copies on request. It is up to the local authority or registered social landlord to arrange any further publicity to tenants and residents.

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Registered social landlords are required to communicate the executive summary of inspection reports in ways appropriate to the communities that they serve. Given that reports will be readily available, it is right to leave it to individual landlords to communicate with their tenants in the most appropriate way. As my hon. Friend the Member for Brighton, Pavilion (Mr. Lepper) pointed out, the requirements in the amendment would impose an excessive burden on registered social landlords.

Amendment (c) would make the demands of inspection proportionate to the size of registered social landlords. That level of detail is unnecessary to the Bill. The Housing Corporation's existing programme is already proportionate to size and levels of activity, as I made clear to the hon. Member for Cotswold, and we anticipate that the Audit Commission will adopt a similar approach. The key requirement is that the level of inspection be proportionate to risk. Size is one factor that determines risk, but not the only one. As Minister for Housing and Planning, I was involved with some significant cases where relatively small registered social landlords got into serious financial difficulty. It is incorrect to view the inspection as proportionate only to size, so the amendment is inappropriate.

Amendment (d) would place potentially onerous requirements on the Commission to hold meetings with tenants and to consult employees on findings as part of the inspection process. Again, it is unnecessary and unduly burdensome.

Finally, amendments (e), (f) and (g) are about consulting registered social landlords individually rather than their representative organisations. It is our practice to consult all registered social landlords as well as organisations representing them on key policy issues. I have already given an undertaking that there will be full consultation on the issue of fees. The new clause requires the Secretary of State to consult persons representing registered social landlords, and I am happy to reflect on whether it would be appropriate in practice to consult all registered social landlords before making an order authorising the charging of fees. There is nothing in the new clause to prevent our doing so.

I do not, however, think that it would be appropriate for the Audit Commission to be required to consult registered social landlords individually on fee scales. The requirement in relation to local authorities is for consultation with associations representing local authorities. Having responded to those points, I urge the hon. Gentleman to withdraw his amendments.

The hon. Member for Kingston and Surbiton asked why there was a requirement for continuous improvement. It is a matter of consistency of approach towards local authority housing departments and registered social landlords. Local authorities are already subject to a continuous improvement obligation and so, as the hon. Gentleman recognised, it would be odd not to expect a similar approach from

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registered social landlords, which, in many cases, are providing more housing than individual local authorities. Some registered social landlords are very large, and it is right that they should be subject to the same expectation of continuous efficiency gains and improvement as local authorities.

The hon. Gentleman asked whether the Housing Corporation guidance would apply. The answer to that question is yes. There will initially be a straight transfer of the existing approach from the Housing Corporation to the Audit Commission, but as the integration progresses there may be—we would expect there to be—changes in guidance. Initially, however, the Audit Commission will work specifically on the Housing Corporation plans and guidance.

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