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Mr. Nick Raynsford (Greenwich and Woolwich) (Lab): May I at the outset draw attention to the interests stated in my declaration in the Register of Members Interests, and also say how much I welcome the Bill, which gives effect to many of the commitments set out in the housing Green Paper published last July, and how deplorable I found both the Conservative and Liberal Democrat Front-Bench speeches?
Listening to the trivial speech of the Conservative spokesman, the hon. Member for Welwyn Hatfield (Grant Shapps), I found it hard to believe that it came from a representative of the party that was proud to have played a role in setting up two organisationsthe Housing Corporation and English Partnershipsthat have played a major role in meeting housing needs in recent years, and which are the nucleus of a new body established in the Bill. It was difficult to believe that he is from the same party that took responsibility for housing policy in previous decades; that shows how much todays Conservatives have abnegated their responsibility for meeting some of the most pressing needs of our society.
Listening to the hon. Member for Chesterfield (Paul Holmes), I was reminded of nothing more than the old days of the Militant Tendency. We heard a glibly offered targetYes, we want to have 3 million homesand then any means of ensuring delivery was given away when it was said, We will just leave it to local authorities, and, of course, weve got no plans to deal with the situation if they choose not to build those houses. That creates the impossibilist demand that then allows the cry of Betrayalthe classic tactic of the militant. Frankly, that is non-credible and the hon. Gentleman should recognise that that type of politics was discredited and thrown out some decade and a half ago. I am sorry that the Liberal Democrats of today appear to have gone back to it.
The Governments programme was set out in their Green Paper of July. It is an ambitious programme, which involves both a substantial increase in the output of new housing for sale and rent and at the same time a real advance in energy efficiency standards in our housing in order to meet wider sustainability objectives.
Let us be under no illusion: these are very challenging targets and the Government will have a genuinely hard task in meeting them. We should all be aware of just how ambitious they are, and it is essential that we have the agencies in place to enable delivery. One of themthe most important in my viewis the Homes and Communities Agency established under part 1 of the Bill. Importantly, it has a wide remit: not just improving the supply, quantity and quality of housing, but securing the regeneration or development of land or infrastructure, and supporting the creation and maintenance of sustainable communities. Those objectives are ambitious. My overarching concern is that the process of setting up the new agency, and merging the various existing organisations that will make it up, should be pursued energetically and swiftly so that the HCA can make the significant impact that it is expected to and will need to if the Governments targets are to be achieved.
Up until now, the process has been rather lengthy. It is some 18 months since the proposed merger of English Partnerships and the Housing Corporation was first publicly mooted. We all know that a long period of uncertainty, particularly when organisations are being merged, can be debilitating and damaging. The sooner we reach a point at which it is quite clear that there is a new management structure in place to take forward the new agency and build confidence that it is going to be there to deliver its objectives, the better. It is essential that the Government act quickly. I understand that formal, legal requirements have to be satisfied, so the agency cannot technically be in operation for a while yet. However, that should not delay the process of getting a shadow management team in place and ensuring that all the steps are taken to enable the agency to deliver. A suitably qualified chief executivethe post demands an exceptional personmust be in post as soon as possible, with a remit to pull together all the elements of the new agency so that it can make its mark and chart the way forward in the coming months. I know that my right hon. Friend the Minister is well aware of that and I hope that she can make rapid progress in setting up the core of the new agency in the coming months.
Part 2 of the Bill sets out a new framework for the regulation of social housing, based on the recommendations of Martin Caves fine review. I was disappointed that when I intervened on the Conservative spokesman, he did not appear to have read the Cave review. His failure to reply to my question implied that he was not familiar with the reviews contents. I broadly support the proposed framework involving a new domain regulator to cover all providers of social housing and promote the interests of social housing tenants, irrespective of their landlord. However, the devil lies in the detail. I urge my right hon. and hon. Friends to give the closest attention to this matter in the coming weeks, to ensure that we have a regulatory system that delivers the desired outcomes, as set out in the Cave review, and that does not have unwelcome and unforeseen consequences.
First, there is the extension of the regulators remit to cover local authority and ALMOarms length management organisationhousing. That is essential if we are to have the domain regulator proposed by Cave. I understand why the detailed provisions for achieving that are not yet in the Bill. There are some difficult
issues relating to governance and accountability that will need to be bottomed out. However, the risk with the two-stage approach implicit in the Billregistered social landlords first, and local authorities and ALMOs lateris that there will be inconsistencies and tensions that will be less easily ironed out over time than if the whole regulatory framework had been put in place from the outset.
Secondly, there is the relationship of the regulatory regime to registered social landlords. Many people with a deep understanding of the issues have voiced real fears that the framework set out, particularly in clauses 173 and 177, is incompatible with the continued classification of RSLs as not public sector bodies. The nub of the argument is that clause 177 allows the Secretary of State to direct the regulator to set standards and rules that, under clause 173, registered social landlords will be required to comply with. These cover a plethora of issues, including the type of housing needs to be met, allocation criteria, the terms of tenancies, rent levels, housing maintenance, estate management, dealing with complaints and tenants concerns, dealing with antisocial behaviour, and the landlords contribution to the economic, social and environmental well-being of the areas in which they have properties.
No one can object to good practice guidance on all those matters. That is what currently applies. The Housing Corporation, which is currently the regulator of RSLs, issues guidance on how RSLs can best approach their responsibilities. If concerns are raised about the performance of individual RSLs, the regulator can quite properly have regard to how the organisation has responded to the guidance and that may well influence the decision on whether the relevant housing association has been guilty of mismanagement or misconduct, justifying intervention by the regulator.
An important distinction is that failure to follow guidance is not of itself misconduct or mismanagement. RSLs are independent bodies whose boards must have the freedom to determine how they can best meet their objectives. That is essential to their classification as non-public sector bodies whose privately raised finance does not count as public expenditure. It is a moot point whether that classification, which is of course vital to the ability of RSLs to raise billions of pounds of private investment to supplement public funding, can be sustained if they are subject to a direct chain of command requiring their compliance with rules and standards that can be imposed by a Minister of the Crown.
There is also a related point about the extension of the regulatory regime to local authorities and ALMOsbodies with their own democratic accountability structures, separate from Government. Requiring them to comply with detailed rules and standards laid down by Ministers does not sit comfortably with the Governments stated objectives of reducing the burden of centrally imposed regulation and giving local authorities more discretion to respond as they see fit to local circumstances. Nor does it accord with Martin Caves clear recommendation for a proportionate regulatory regime that does not impose unnecessary burdens and that avoids unnecessary red tape. I hope, therefore, that my right hon. and hon. Friends will take a further look at the parts of the Bill that I mentioned, and will be willing to consider
amendments that ensure that the regulatory regime is effective but not unduly burdensome or damaging to the classification of RSLs as independent bodies.
Finally, I must raise concerns about the loss of the current requirement that RSLs be non-profit-making organisations. I fully understand the need for the regulatory regime to allow the regulator to oversee profit-making bodies that choose to get involved in the provision of social and affordable housing. That naturally flows from the Governments entirely sensible approach of encouraging private developers and house builders to become more involved in mixed-tenure developments, and indeed to be able to bid for social housing grant in certain circumstances. There must be a level playing field, with common requirements for all, whether they are profit-making or not-for-profit. However, it is a different matter to open the door to existing RSLs converting from not-for-profit to profit-making status, as the new formulation in clause 111 appears to do. That would, at a stroke, give credence to all the scaremongering of organisations that are opposed to the transfer of tenancies between sectors, who claim that a transfer from a council to a housing association is privatisation that would expose tenants to potentially rapacious profit-making landlords.
RSLs can and do cross-subsidise their work, and several are involved in directly building for sale, knowing that the profits made from that part of their activity can be ploughed back into supporting other very necessary social objectives. There is no need for the new definition to enable such activity, which takes place at present, and I urge my right hon. and hon. Friends to look again at the provision.
The Bill contains a number of other important, laudable provisions, including measures to promote higher standards of energy efficiency and sustainability, measures to clarify procedures for consulting tenants, and the option for local authorities to explore new financial freedoms outside the housing revenue account. Those, and the other points on which I have focused, are all good reasons for welcoming the Bill and supporting it through all its parliamentary stages, as I do. Inevitably for such a long and complex Bill, points of detail will require amendment, and I hope that that can be achieved as the Bill makes progress, but that is no reason to oppose a measure that will be vital to the delivery of the Governments commitments on one of the most important social issues facing our society.
Sir George Young (North-West Hampshire) (Con): It is a pleasure to follow the right hon. Member for Greenwich and Woolwich (Mr. Raynsford), who has forgotten more about housing than most of us ever knew. I am only sorry that there is not room in the new Brown Administration for his talent. As for the Front-Benchers speeches, I thought that my hon. Friend the Member for Welwyn Hatfield (Grant Shapps) made a robust speech, and I found the Minister for Housings speech much more partisan than the one that the right hon. Member for Greenwich and Woolwich would have made if he had been introducing the Bill.
I begin by mentioning clause 267a clause that no one else has mentioned, but that represents a triumph
by Housing Ministers over the Treasury. As the House will know, many local authority tenants have voted to transfer from a local authority to a housing association in exchange for guarantees on rents and commitments to investment in their homes. For theological reasons, the Treasury has insisted on rationing the number of transfers each year, and as a result a number of tenants have had to wait for the improvements, and the local authority has had to wait for the receipt of capital that it would have reinvested in new social housing.
Clause 267 prises the clunking fist of the Treasury away from this process and, we hope, brings an end to the rationing of large-scale voluntary transfers. My welcome for that clause at the end of the Bill is balanced by an unforgivable omission in chapter 4, which deals with the functions of the new Homes and Communities Agency. One of the aims of the Bill, which I applaud, is to empower tenants and give them more choice, but there is nothing in the Bill that requires the landlords of social housing to work together to enable tenants to move from one landlord to another.
Unlike owner-occupiers or private sector tenants, who can up sticks and move, social housing tenants are not in control of their destiny. The stock distribution of their landlord is often based on local authority boundaries, and if they want to transfer it can take a long time so to do. The popular and successful national mobility scheme, which was inherited by the Government in 1997, collapsed earlier this year owing to mismanagement. There is now no way that a tenant in, say, Andover can move to another constituency except through laborious methods such as those which existed when I first became an MP 33 years ago, with a tattered reciprocal exchange book and the individual negotiating skills of housing officers.
I had a debate on this fiasco earlier in the year. It remains my strong view that there should be in the Bill a statutory basis for a national mobility scheme, and I hope the Bill will be amended in Committee in order to secure that. Without it, the promise of empowerment and choice for social tenants rings rather hollow.
Margaret Moran (Luton, South) (Lab): The right hon. Gentleman and I both spent time on the homes board in previous years. I agree with his point. Does he further agree that for the Bills objective of increasing social and economic mobility and opportunities for social tenants, the statutory homes-type organisation will be critical so that tenants can move where employment is available?
Sir George Young: What I want is a provision in the Bill that obliges somebody to run a national mobility scheme. I hope that if an amendment along those lines is tabled and if the hon. Lady is on the Committee, it might have her support.
The main thrust of the Bill is basically to split the Housing Corporation into two, and it adds extra functions to each half. On to the investment half is tacked English Partnerships, and on to the regulatory half is tacked Oftenant, which will eventually cover all social tenants. The social housing landscape will change significantly when the Bill goes through. It is worth pausing to reflect that the most successful private finance initiative that the country has ever seen
has been the Housing Corporation. Some £35 billion has been invested in social housing, with not one default. If one compares that with private finance initiatives in health, transport or defence, one can see that it is a fantastic record. One could argue that instead of abolishing the Housing Corporation, the Government should be cloning it.
It is vitalI pick up a point that the right hon. Member for Greenwich and Woolwich madethat, in the new landscape, we continue to generate substantial private capital to invest in social housing, and nothing in the Bill should prejudice that aim. In particular, the new regulator must not cause housing associations to be reclassified as public sector bodies. I remember the so-called Ryrie rules, which meant that the private funds raised by housing associations scored as public expenditure, wholly negating the advantage of borrowing from the City. We must not return to those days, and we need to address the concern of the National Housing Federation that the regulator might inadvertently so reclassify. That would be a shot not so much in the foot but much higher up.
On the case for the abolition or splitting of the Housing Corporation, which was set up some 40 years ago, there has been a rather academic debate as to whether the dual responsibilities of the corporationregulation on the one hand, and investment on the othercomplemented or compromised each other. I tended to be in the complementary camp, for the reason that I have just mentioned. There was an implicit reassurance for investors that regulation of housing associations would have an eye on the lenders, as well as on the tenants. Having both functions under one roof meant that money was not lent to housing associations, for example, where there were doubts about corporate management, and there was a one-stop shop for housing associations.
I hope that under the new regime we are not heading for a Northern Rock-type scenario by spreading responsibility for housing associations over more than one institution, with the new HCA being a sort of Bank of England in control of the money supply, and the new Oftenant being in control of regulation, with a possibility of confusion and regulatory failure.
As the Minister said when she introduced the Bill, the HCA is about supply, and there has been much emphasis on the need for 3 million new homes. Supply should, of course, be increased, and we all want to see faster help for those in housing need. However, I must make a basic point: the quickest and cheapest way to help those on the waiting list is to create vacancies for them in the existing housing stock. For those on the waiting list, the statistic that matters is not the number of new social houses built, but the number of re-lets in the existing housing stock. We should be doing far more to accelerate the number of re-lets by helping those whose circumstances have improved to do what many of them want to do, namely become home owners. The part of the Housing Corporation budget that promotes mobility has been squeezed, and I hope that the HCA will revisit that balance. In turn, that would help to encourage demand at the lower end of the housing market and give confidence to house builders. If we are to hit the ambitious target, we must look to the private sector as much as possible to build the new homes rather than the public sector.
Andrew Stunell (Hazel Grove) (LD): The right hon. Gentleman has rightly pointed to the need to increase mobility, but surely someone who can buy and therefore leave a council house is most likely to buy that council house. How does he propose to prevent that mechanism coming into play, which would result in not more council housing but less?
Sir George Young: In the scenario that the hon. Gentleman has described, there would be a capital receipt, which could be reinvested in new housing stock in order to help the person on the waiting list, so one would achieve the same goal by a different route.
Mr. Love: One of the most interesting findings in the Hills report is that the number of re-lets in the public sector is decreasing rapidly and that the only way to address that problem is to build new supply.
Sir George Young: I agree that if one is going to incentivise existing tenants to move out, it should be accompanied by measures to increase supply in the private sector; otherwise one will simply drive up house prices. If one were to do the first, one would need to do the second in order to avoid house price inflation.
On a related question about the balance of the budget, there is nothing in the Bill about private sector renewal, because the funds come from elsewhere. However, the emphasis on affordable housing, which has been brought forward from the Green Paper, has pre-empted a huge chunk of the overall housing budget. If, for example, one examines the small print of the comprehensive spending review 2007the public service agreement 2007, as wasone sees that the target for decent homes has been deleted. The improvement of social rented homes to decent standards is now one of 198 optional indicators in local authority agreements. There are now no indicators relating to the improvement of private stock or to the specific delivery of adaptations. The housing pot will be under enormous pressure to deliver the targets for new affordable homes, and the initial indications are that there will be substantial reductions in other parts of the housing budget and particularly those parts of it that go to private sector renewal.
I am the chairman of a small national charity, the Foundations Independent Living Trust, which helps elderly or disabled people on low incomes to stay in their homes, or to return to their homes after they have been in hospital, by working through home improvement agencies. More and more older people are home owners and want to live with dignity in their own homes for as long as possible. Home improvement agencies face enormous pressure on improvement grants, and there is a real risk that by putting so many eggs in the new build social housing basket, the Government will pay a price elsewhere on the housing front.
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