Previous SectionIndexHome Page

Mr. Bone: I am interested in the number of board meetings. I believe that board members meet once a week for a meeting that is not exceptionally long and receive a salary of £250,000. I am not sure, therefore, that there is a significant strain for the directors.

Yvette Cooper: The board has to consider a series of things that it did not expect to consider under the previous understanding. It will be able to operate differently as a result of the Bill. It is not a sensible use of board members' time if they have to make every single statutory decision. Board members must decide the most appropriate use of their time and which decisions should sensibly be delegated to committees, sub-committees or officers. That is a matter for them. It hampers their ability to do their job if the board has to run through every decision. Of course there are obligations with respect to the time that members put into doing the job, but if they have to take decisions that are not a sensible use of their time, they do not have the time to put into other aspects of the Housing Corporation's work that might benefit more from their input and experience.

Subsections (2), (3) and (4) address the historic decisions taken by the Housing Corporation and consequently by housing associations and lenders. Subsection (2) gives the corporation and Housing for Wales a retrospective power of delegation to any of its members, committees, sub-committees or employees. That is intended to ensure that statutory decisions already taken are not invalid just because they were delegated by the board on the presumption that it had an implied power to do so. The provision will remove any doubt about the validity of such decisions on the grounds that they were not taken by the board itself, and essentially restores what was assumed to be the status quo.

Although it is retrospective, the provision does not have any of the undesirable elements generally associated with retrospective legislation. No rights are affected by it and no parties are left worse off. It returns us to the position that everyone thought we were in until the end of last year. It is likely that without the retrospective provision, there would not be complete legal certainty about decisions, and the chances of parties being left worse off would be greater.

Grant Shapps (Welwyn Hatfield) (Con): The House takes retrospective legislation seriously—that might
25 Apr 2006 : Column 508
explain why a number of Members are present—and it must consider carefully whether such legislation tramples over previous decisions. Perhaps in this case it does not, because of the nature of the Bill, but has the Minister fully considered that possibility?

Yvette Cooper: We have taken the matter seriously. We considered seriously whether we needed legislation at all or whether there were other ways of addressing such concerns. We had extensive discussions not only with the Housing Corporation, but with the Council of Mortgage Lenders and other lenders. They raised with us issues of legal certainty and the difficulties that they would face if there was uncertainty about previous decisions, which might involve lending decisions and decisions about the transfer of resources. Even though we were able to offer reassurance—for example, about the provisions of the Land Registration Act and other measures—it became clear that the retrospective provision was necessary in order to end the legal uncertainty about past decisions. Many of those past decisions have consequences for future lending and investment decisions, it was important to ensure that we addressed concerns about uncertainty with respect to the past.

The role of subsection (3) is to validate past decisions taken or evidenced by a document duly executed under the seal of the corporation or of Housing for Wales. Subsection (4) provides that where the fixing of the seal has been witnessed by any member or employee of the corporation or Housing for Wales in the period prior to the Bill, it has been properly witnessed. The intention of these subsections is to end any uncertainty created by this technicality in respect of past decisions. The last two subsections effectively draw a line under past decisions of the corporation that have been duly executed under seal and authenticated by a member or employee of the corporation, removing any doubt about their validity. Consequently, third parties can assume that a decision properly executed by the corporation under seal is valid.

The Bill will have effect in Wales in respect of decisions of the corporation relating to housing associations in Wales before the establishment of Housing for Wales, and during the later period when the corporation's former functions were carried out by Housing for Wales. Since 1999 these functions have been carried out by the National Assembly for Wales and there is no question about the validity of such decisions.

The Bill will also have effect in Scotland in respect of decisions of the corporation relating to housing associations in Scotland before the commencement of the Housing (Scotland) Act 1988. That Act established Scottish Homes, which took over the Housing Corporation's responsibilities in relation to housing associations in Scotland. Those responsibilities were subsequently transferred to Communities Scotland, an agency of the Scottish Executive. At the end of March, the Scottish First Minister gave the go ahead to a Sewel motion proceeding through the Scottish Parliament. When that process is complete, it will allow the Bill to apply to Scotland. The corporation has never operated in Northern Ireland and as such the Bill does not extend there.

As I have said, the Bill is of a technical nature and rectifies an anomaly in the legal basis of the Housing Corporation, which is basically a result of its age. The
25 Apr 2006 : Column 509
corporation was founded in a less litigious age, when founding legislation operated differently from how it does today. As I have said, the Bill does not give the Housing Corporation any new powers. It will act to protect the Housing Corporation's legal position, innocent third parties and to ensure that those living in social housing have the proper protections to which they are entitled. I therefore ask hon. Members for their full support for this Bill and to help ensure its passage through Parliament as swiftly as possible.

4.6 pm

Michael Gove (Surrey Heath) (Con): I thank the Minister for her courtesy to Opposition Front Benchers in the discussion before the Bill was brought before the House. We had the opportunity to meet her officials, who went a considerable way in reassuring us about certain aspects.

The Bill is presented as a necessary administrative correction—a technical tidying up of existing legislation—which we are being encouraged to pass with as much expedition as possible. Hon. Members are understandably wary when they hear this Government commend legislation in that way. They suspect that an inferno of devils may lurk in the detail. The House's recent experience with the Legislative and Regulatory Reform Bill reminds us that it is often under the guise of administrative tidying up that Ministers try to smuggle significant changes by us. On this occasion, however, I am satisfied that the Government are right to want the Bill passed, and I sympathise with their desire, and that of many interested parties outside the House, to see it speedily enacted.

The Bill necessarily engages with two issues of principle—the principle of legislating retrospectively, which my hon. Friends the Members for Welwyn Hatfield (Grant Shapps) and for Wellingborough (Mr. Bone) have mentioned, and the principle of proper accountability and delegation of powers within the public sector. I shall say a brief word about both in due course, but first I want to explain why we believe that the Bill is necessary on practical grounds. I specifically want to address the practical consequences of failing to give it a Second Reading and of not allowing it to pass relatively quickly on to the statute book.

The stability and buoyancy of housing associations—their ability, therefore, to maintain and enhance housing stock, not to mention building the new housing that we need—increasingly depend on access to private finance. Although the Housing Corporation continues to support housing associations and registered social landlords with grant funding, private lenders have extended some £36 billion of loans to housing associations, which is a huge sum—one almost as big as the Chancellor's current budget deficit. That money has been lent on the basis that the loans are secured and that security depends on consents granted to housing associations under section 9 of the Housing Act 1996.

The 1996 Act allowed the Housing Corporation to give consent to the disposal of land by registered social landlords, and consent was so defined as to cover the sale of land, mortgages raised on that land or charges placed on that land. The giving of that consent has been vital in securing loans at highly competitive rates. Housing associations have been able to borrow at below
25 Apr 2006 : Column 510
prevailing market levels, because lenders have known that their loans are effectively secured on that land. Another factor that has helped in gaining access to finance at competitive levels is, of course, the regulatory function of the Housing Corporation, which has given lenders an assurance that the organisations to which they lend are effectively managed and following good practice.

The legal advice that the Housing Corporation received earlier this year, to which the Minister has referred, has placed housing associations' continued access to funding in jeopardy. Because the Housing Corporation did not have the power to delegate its functions below board level, the granting of section 9 consents is in question. An element of additional risk has been introduced into the lending process, and the security of lenders' money may be being jeopardised. If a housing association or other registered social landlord that had been granted a section 9 consent were to collapse financially, there would longer be the same absolute guarantee in law that mortgage lenders would have the first call on its assets.

Because that risk exists, and unless the situation is corrected, there is a risk that lenders might be under pressure to call in loans that are technically unsecured, and access to finance for housing associations would become more difficult. The cost of capital would rise and the losers would be those who rely on associations to maintain, improve and build the social housing that the country needs. The Bill seeks to avert that danger by giving the corporation the power that it always believed it had—indeed, that we all believed it had—to delegate functions such as the granting of section 9 consents below board level. As the Minister said, the Bill retrospectively covers all consents, given in good faith and unquestioned at the time, that allow housing associations to function effectively and to gain access to capital cheaply.

Next Section IndexHome Page