Mr.
Bone: While I understand that argument going forward, I do
not understand the argument about retrospection. Only recently, the
Housing Corporation
was proposing a general consent under section 9 to cover this particular
problem, so I am unsure why are we going down the route of
retrospective legislation. If we did not pass this legislation, I do
not think that anything that has been done in the past would be
challenged. There is no indication that it has been.
As I understand it, the issue
arose only becauseof an in-house seminar run by the Housing
Corporation—no challenge exists. I cannot believe that lenders
would suddenly withdraw support after years of profitable business. I
have great reservations about this retrospective
legislation.
Yvette
Cooper: We had extensive discussions with lenders. They
were extremely concerned that without this legislation, in order to
regularise the position, decisions might be challenged in the courts.
In addition, they were worried that some lenders might decide to
withdraw their confidence from the sector, and that that could have a
domino effect on other lenders. Financial institutions have about
£27 billion-worth of investments in the nation’s housing
associations. When those financial institutions raise concerns that
without this kind of legislation the investment might not be secure,
legislators and Ministers take them seriously.
There are issues about
confidence in the sector. Confidence matters when it comes to being
able to secure investment in housing stock and in social housing for
the future. That is why we take this matter seriously and why we think
it is simply not worth the risk to such an important sector to ignore
those lenders’ concerns. We should take them seriously and
ensure that proper certainty is in place and that there is a proper
basis on which the Housing Corporation can take decisions in the future
and housing associations and lenders can rely on the decisions that
were taken in the past. Any uncertainty about those previous decisions
should not be allowed to jeopardise an extremely important sector for
the more than 2 million tenants who live in social housing.
That is why we take the matter
extremely seriously. Nobody can predict the precise consequences when
financial institutions and lending decisions are involved. However, the
concerns raised by lenders were sufficiently serious for us to need to
respond according to this timetable in order to ensure that all that
uncertainty was addressed and everyone could feel confident in previous
decisions. Subsection
(1) is a standard delegation provision for bodies carrying out
functions similar to those of the corporation. It brings the powers of
the corporation into line with other such bodies and allows for
administrative efficiency. Given the number of statutory decisions that
it must take on a day-to-day basis, it is not practical for all of them
to be taken by the board
itself. Subsection (2)
gives the corporation and Housing for Wales a retrospective power of
delegation to anyof its members, committees, sub-committees
or employees, to ensure that the statutory decisions are not invalid by
reason of being delegated by the board on the presumption that it had
an implied power todo so.
On Second Reading, the hon.
Member for Wellingborough (Mr. Bone) asked whether a general consent
would suffice, rather than the type of legislation that is proposed.
There are two reasons why that is not possible. First, there is a
series of other decisions, such as registration of registered social
landlords, that would not be covered, and secondly, the uncertainty
around section 9 consents would not be fully addressed by such an
approach. That could have serious consequences for individual RSLs and
for the Government’s social housing
programme. As I said,
we have examined not just general retrospective consents but other
routes that might exist for resolving that uncertainty, and we have
concluded that our proposal is the only one that will work.
Retrospective effect is not intended to detract from the rights of any
parties, nor to create uncertainty—the usual concerns that are
raised in relation to it. Indeed, in the present case, retrospective
effect is necessary to protect such rights, and to restore what was
thought to be the status
quo. Subsection (3)
operates to validate past decisions if they were done or evidenced by a
document duly executed under the seal of the corporation or of Housing
for Wales. Subsection (4) provides that fixing of a seal is witnessed
validly if it was witnessed by any member or employee of the
corporation or Housing for Wales in the period before enactment of the
Bill. The two subsections draw a firm line under past decisions of the
corporation that were duly executed under seal and that were properly
authenticated by a member or employee of the corporation. Their aim is
to remove any doubt about the validity of such decisions, so that third
parties will be able to assume the validity of any decision properly
executed by the corporation under
seal. The purpose of
the clause is relatively clear; it is a relatively technical provision,
but the consequences of not introducing it would be significant and
wide-ranging.
Michael
Gove (Surrey Heath) (Con): It is a pleasure to serve under
your chairmanship this afternoon,Mr. Benton. I thank the
Minister for making her case with her customary authority and clarity
and I empathise with her, as she is clearly suffering from a seasonal
malady, as are so many of us at this timeof
year.
Angela
Eagle: It will be over your way in a
minute.
Michael
Gove: I am grateful for that intervention. I confess that
I was, as we say in Aberdeen, “thick with the cold”
during our debate on Second Reading on Tuesday, so it is my fault that
the Minister is infected—I got too close to her in every sense,
and those people who object to the Opposition being at one with the
Government on the Bill may read more into our relationship from the
fact that the Minister has contracted the cold as well. However, I
suspect that there were enough germs, or alien elements, in the House
of Commons to ensure that she was infected by some other
route. The Minister
correctly observes that the four subsections of clause 1 are all
intimately related. The
first two are the most important: subsection (1)
creates a new delegated power, and subsection (2) gives it
retrospective effect. Subsections (3) and (4) are principally ways of
explaining how subsection (2) should operate, and in that respect are
even more
technical. Before
allowing the Bill to pass its Committee stage, there are a couple of
questions that we on the Opposition side feel are important to raise.
As I emphasised when I began my remarks, and as anyone who read our
contribution to the Second Reading debate will know, we are as keen as
the Government to ensure that the legislation proceeds smoothly to the
statute book. However, the parliamentary process affords the
opportunity of asking questions and of scrutinising one or two of the
statements made by the Government in support of the legislation, and
certain of those statements merit scrutiny. I pay tribute to my hon.
Friend the Member for Wellingborough and to all my other colleagues who
spoke on Second Reading—they did a sterling job of subjecting
the legislation to the necessary
scrutiny. I have three
broad questions to ask about the legislation this afternoon. For the
ease of the Minister and her officials, they are questions A, B and C.
The A question is the audit question, the B question is the
“but” question and the C question is the consequences
question. I shall ask the audit question first. The Minister said that
the powers she hoped to vest in the Housing Corporation were powers
that had been vested in a majority of non-departmental public bodies
and that some of those non-departmental public bodies had been wound
up. Some non-departmental public bodies that did not have those powers
in the past now have them as a result of modernisation. However, I
stress that she used the word “majority”, rather than
“all”.
During the Second Reading
debate, the hon. Member for Carshalton and Wallington (Tom Brake) asked
the Government whether they would do an audit of all non-departmental
public bodies in order to ensure that we did not end up having to
introduce primary legislation for all those NDPBs that might find
themselves in the same position as the Housing Corporation. The House
and the public deserve to be reassured that there has been a
comprehensive audit of all NDPBs and that we will not see Bills
introduced for other NDPBs because the same lacunae exist in their
constitutions that have been exposed in the constitution of the Housing
Corporation. The
second question is the “but” question, which relates to
our willingness to support the legislation with a caveat that we enter
along the way. On Second Reading, we explained that we supported the
legislation, primarily because without it, there would be an additional
element of risk in the financial markets. At the moment, the section 9
consents referred to by the Minister mean that all private sector
lenders that have given money to housing associations have the absolute
knowledge that that lending is secured. That means that if a housing
association goes belly up, they have the first call on its assets. As a
result, they can lend money to housing associations at below the market
rate. As a result of the way in which the law was presumed to have
operated, a private-public partnership allowed social tenants access to
private finance at truly competitive rates. It is a
very good example of compassionate conservatism in action, and one that
we wish to see supported. The Council of Mortgage Lenders
has been adamant that without this legislation, there would be an
element of risk in the markets that would price the debt at a higher
rate than currently, which would mean one of two things. Either social
tenants would pay more, or the rest of us would be taxed more in order
to provide a necessary public service. For reasons of prudence—a
word dear to the hearts of those in my party—it is vital that
the legislation is passed.
However, even though we accept
that the Bill must be passed because of the need to give retrospective
effect to the section 9 consents, there is still a question mark over
some of the decisions that the Housing Corporation may have taken in
the past. We accept that the legislation is necessary in order to give
retrospective effect to section 9 consents, but I feel, as I suspect
that my hon. Friend the Member for Wellingborough does, that some of
the other decisions to which we are being asked to give retrospective
effect have been insufficiently clearly spelled out by the Minister and
her Department. The
Minister talks about decisions referring to the registration of
associations and one or two other decisions that have been taken by the
Housing Corporation in the past. It would be helpful if she made clear
what those decisions were and why they required the same legal
underpinning as the section 9 consents. It would also be helpful if the
legal advice that counsel gave to her Department and the Housing
Corporation were put in the public domain. We accept the overwhelming
need for the legislation, but we believe that the process of scrutiny
has exposed some areas where more information is required.
My final question is the
consequences question.
Mr.
Kilfoyle: I am grateful to the hon. Gentleman for giving
way before he goes on to his final question. I shall pass over the
oxymoronic phrase “compassionate conservatism”. Before
the hon. Gentleman deals with the consequences, will he explain what he
means by an audit of NDPBs in relation to delegated powers? Is he
suggesting that all of those bodies should have delegated powers? I am
not quite clear about
that. 4.30
pm
Michael
Gove: I thank the hon. Gentleman for giving me the
opportunity to return briefly to this issue, which is of great
importance. I stress that it was first raised in the House by the hon.
Member for Carshalton and Wallington. He made a good point, which I am
more than happy to endorse. The hon. Gentleman pointed out that the
Housing Corporation was presumed to have a power, but in fact lacked
it. We are now legislating to give it a power that everyone assumed
that it had. Fair enough, we all say. But it occurred to the hon.
Gentleman that there might be other NDPBs that everyone assumed had
this power but which, in effect, were merrily making decisions without
the required appropriate legislative
cover. The Minister
said that the majority of NDPBs that were set up when such powers were
not granted had either been wound up or modernised, and we are
satisfied that the majority of cases have been
reviewed. However, majority is not the same as totality. The
implication of her words is that there may be some NDPBs that everyone
believes should have the right to delegate powers to committees or
officers, but that are, in fact, operating in a legal black hole. We
want to ensure that a proper audit of every NDPB is undertaken in order
to ensure that in a few weeks or months or in a year’s time we
do not need another piece of primary legislation to tidy
up. Mr.
Kilfoyle: I understand perfectly that the matter was
raised initially by the Liberal Democrats, but is the hon. Gentleman
suggesting that there ought to be a trawl through the NDPBs to
determine where there are gaps? Has he considered the difficulties and
cost of doing
that?
Michael
Gove: We have considered the difficulties and cost of not
doing that. We have to legislate at this point because an element of
risk has been introduced into the lending process, which, unless it is
addressed, could lead directly to negative consequences for social
housing tenants, whom the hon. Gentleman and I wish to be in as secure
a position as possible. If other NDPBs are spending public money and
taking decisions in the public interest, but do not have the legal
authority to take such decisions, despite the fact that everyone
assumes that they have such powers, we could be in the position not
just of having to legislate but of having to bail out organisations
that have been operating in legal
limbo. I ask that some
of the civil servants in the Office of the Deputy Prime Minister use
some of the time and the resources that we have given them to ensure
that the same situation does not occur again in that Department or any
other.
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