Housing Corporation (Delegation) etc. Bill

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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.
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.
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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