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Session 2007 - 08
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General Committee Debates
Housing and Regeneration Bill

Housing and Regeneration Bill

The Committee consisted of the following Members:

Chairmen: Mr. Joe Benton, Mr. Roger Gale
Blackman, Liz (Vice-Chamberlain of Her Majesty's Household)
Blackman-Woods, Dr. Roberta (City of Durham) (Lab)
Brown, Lyn (West Ham) (Lab)
Burt, Alistair (North-East Bedfordshire) (Con)
George, Andrew (St. Ives) (LD)
Gwynne, Andrew (Denton and Reddish) (Lab)
Hurd, Mr. Nick (Ruislip-Northwood) (Con)
Love, Mr. Andrew (Edmonton) (Lab/Co-op)
Moran, Margaret (Luton, South) (Lab)
Öpik, Lembit (Montgomeryshire) (LD)
Raynsford, Mr. Nick (Greenwich and Woolwich) (Lab)
Shapps, Grant (Welwyn Hatfield) (Con)
Slaughter, Mr. Andy (Ealing, Acton and Shepherd's Bush) (Lab)
Smith, Ms Angela C. (Sheffield, Hillsborough) (Lab)
Syms, Mr. Robert (Poole) (Con)
Wright, Mr. Iain (Parliamentary Under-Secretary of State for Communities and Local Government)
Young, Sir George (North-West Hampshire) (Con)
Hannah Weston, Committee Clerk
† attended the Committee

Public Bill Committee

Thursday 17 January 2008


[Mr. Joe Benton in the Chair]

Housing and Regeneration Bill

9 am
Clause 34 ordered to stand part of the Bill.

Clause 35

Duties in relation to social housing
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr. Iain Wright): I beg to move amendment No. 109, in clause 35, page 15, line 12, leave out from ‘HCA’ to end of line 14 and insert
‘acquires, constructs or converts any housing or other land for use as low cost rental accommodation’.
The Chairman: With this it will be convenient to consider Government amendments Nos. 110 to 114.
Mr. Wright: Good morning Mr. Benton, it is good to see you back in the Chair. May I wish a good morning to all members of the Committee.
I realise that this is not a clause stand part debate, but I shall briefly set out the background. Clause 35 is needed as a result of the split of the |Housing Corporation’s regulatory and investment functions. Therefore it requires that this new investment body, the Homes and Communities Agency, takes steps to ensure that low-cost rental accommodation provided as a result of its activities is adequately regulated.
While we would normally expect the agency to provide low-cost rental accommodation indirectly—a debate that we have had already during the course of the Committee’s deliberations—in the ways described in clause 35(3), (5) and (7) the agency will be able to provide low-cost rental accommodation directly. Amendment No. 109 relates to this direct provision by the agency. It makes it clear that, when the acquisition, construction or conversion activity by the HCA is intended to result in low-cost rental accommodation, the agency must ensure that a relevant provider of low-cost rental accommodation is the landlord when it is made available for rent.
Lembit Öpik (Montgomeryshire) (LD): Does that mean that the Government intend the HCA not to end up operating as a landlord to tenants at any time?
Mr. Wright: It is in the scope of the agency’s powers to act as a landlord, but I had an earlier debate with the right hon. Member for North-West Hampshire about this matter. The anticipated main focus of the agency’s activities would be to assist work in partnership with others—registered providers, councils, or whatever—in that respect, rather than actually being a direct landlord itself. But the scope and flexibility is there for the agency to do that.
The Homes and Communities Agency can dispose of housing or land to a person, provide infrastructure to a person—which we debated in clause 7—or give financial assistance to a person, on condition that the person “provides low-cost rental accommodation”. Where the agency does this, it must ensure that, where the accommodation is made available for rent, the landlord is a relevant provider—as defined in subsection (9).
Amendment No. 110 defines and clarifies the phrase “provides low-cost rental accommodation”, for the purposes of this clause. It means to construct, acquire or convert accommodation for use as low-cost rental accommodation, or ensure such acquisition, conversion or construction by another. Amendment No. 110 will effectively define “provides low-cost rental accommodation” when this is not done directly by the HCA. We thought it important to clarify what is meant when someone other than the HCA is commissioned to provide the accommodation. This is especially the case where the term “provider” bears a different meaning in part 2.
Clause 35 requires the Homes and Communities Agency to ensure that the landlord of low-cost rental accommodation provided as a result of its activities is a relevant provider as defined in subsection (9). Amendment No. 111 amends the definition of ‘relevant provider’ to include arm’s length management organisations or other entities controlled by a local authority, as well as a local authority or a registered provider. At present, ALMOs have managed only housing owned by the local authority. ALMOs—I have spoken to them and think that they are an exciting model—are increasingly interested in owning stock themselves. The agency could provide financial assistance, infrastructure or land to an ALMO for it to provide low-cost rental accommodation. This amendment would allow the ALMO to be the owner when the agency-funded accommodation is made available for rent.
The other amendments in this group are not strictly speaking related to this clause. Government amendments Nos. 112 to 114 relate to clause 36, which gives the Homes and Communities Agency powers to require the repayment or recycling of social housing assistance. These powers broadly re-enact the Housing Corporation’s powers in relation to recovery and recycling of social housing grant. As the agency has a general financial assistance power rather than specific grant powers limited to social housing, we need to define when the grant-recovery and recycling powers are available to the agency. We do not want these powers to be available in relation to financial assistance given by the agency for other purposes. For financial assistance given for purposes not related to social housing, we think that ordinary grant conditions suffice. However, the flexibility given by clause 36 is needed for social housing assistance.
Clause 36(8) defines social housing assistance as
“financial assistance given under section 22 on condition that the recipient provides social housing (whether by itself or as part of a wider project).”
Government amendment No. 112 defines “provides social housing”. The definition of “provides” is wider in this clause than in clause 35 because we think it appropriate for the agency to have the grant-recovery and recycling powers for grants given for a wider range of activities, including improving or maintaining social housing.
Mr. Nick Raynsford (Greenwich and Woolwich) (Lab): I do not want to anticipate the debate on the subsequent set of amendments, but it does seem peculiar that there is this proper definition of social housing in relation to clause 36, but that does not apply in relation to clause 35. That seems to be working entirely against the principle of achieving mixed-tenure developments and greater flexibility in tenure and not dividing the home-ownership sector from the rented sector. I cannot understand why the formulation has applied in clause 35, which is more restrictive.
Mr. Wright: I understand my rt. hon. Friend’s point, and I do not want to pre-empt the debate that we are to have in a moment. The way I see the shaping of his amendments is that we need to be careful to have the most appropriate level of regulation. I think that that is the theme that will emerge from his amendments.
Government amendment No. 113 adds to the index of defined provisions for the purposes of part 1—in clause 60 a cross-reference to the definition of “provides social housing” in clause 36(8). Government amendment No. 114 clarifies the definition of arm’s length management organisations by reference to the local government legislation which defines when bodies are controlled by local authorities. ALMOs cannot, for the time being, register with the regulator as a provider of social housing, although, as the Committee will be aware, the Government intend to bring local authorities within the scope of the regulator within two years. For the time being, to avoid confusion and duplication, we have specifically excluded both local authorities and ALMOs from registration. As clause 35 makes clear, however, this does not prevent them from receiving financial assistance for social housing.
I hope that I have clarified the position with regard to the amendments.
Sir George Young (North-West Hampshire) (Con): I want to press the Government on amendment No. 109 because I am not sure that the Government fully understand the depth of concern within the housing association movement about the duties set out in clause 35 and in particular those set out in subsection (1), which Government amendment No. 109 effectively rewrites. This debate is to some extent the other side of the coin of the debates on clause 8 and clause 5. Those clauses dealt with the powers of the HCA, and the debate this morning is on the duties.
The defence that the Minister deployed when he defended the powers of the HCA is not available to the same extent when we deal with the duties because one can deploy the argument that certain powers are needed if X happens. That defence is not available when one addresses what are the duties and the functions, or indeed the business of the HCA as set out in chapter 4. The Minister did not convince me last week that the HCA would not have a much more interventionist role than the Housing Corporation has had to date. Let me remind him of what he said:
“I anticipate that that will not be the primary way in which it will support housing growth.”——[Official Report, Housing and Regeneration Public Bill Committee, 10 January 2008; c. 207.]
“However, where the circumstances demand, the agency will be able to take a direct role if it so wishes.”——[Official Report, Housing and Regeneration Public Bill Committee, 10 January 2008; c. 216.]
When we turn to chapter 4, which deals with the HCA’s functions in relation to social housing, however, we find that the first such function, which is set out in clause 35(1), relates to the circumstances in which the HCA itself
“acquires or constructs low cost rental accommodation”—
a provision that the Government now propose to replace through amendment No. 109.
The Minister may revert to what I call his model defence, which is that the clause is modelled on previous legislation. Were he unkind—he is not—he would refer to the Housing Associations Act 1985, which sets out the functions of the relevant authority, which, in that case, is the Housing Corporation. Section 75(e) of the Act refers to the relevant authority undertaking “to such extent as” it “considers necessary, the provision” construction, acquisition and conversion of dwellings. If the Minister were really unkind, he would ask who put that measure on the statute book, but he is not and he would not dream of doing so. However, the relevant point—perhaps he can address this—is whether the Housing Corporation has ever used the powers in section 75 of the 1985 Act, which are replicated in clause 35 of the Bill. My understanding is that it has never done so.
Mr. Raynsford: I share the right hon. Gentleman’s view that it is quite unlikely that the powers would be used in the framework of the existing Housing Corporation. However, the Bill creates a framework in which the corporation is merged with English Partnerships, which has land acquisition and development roles. The likelihood of the circumstances that the right hon. Gentleman describes applying will therefore be greater. Is that not a relevant consideration?
Sir George Young: I would stand that argument on its head and say that while English Partnerships may have needed those powers, the new body does not because it incorporates that part of the Housing Corporation that had a direct relationship with housing associations, which obviates the need for English Partnerships to be able to provide housing directly. If the Housing Corporation never used those powers, the Minister must make the case as to why the HCA, the new body—as the right hon. Gentleman said, it is a different body—also needs them.
If clause 35 goes through unamended, there is a real risk that it will change the existing relationship between the Housing Corporation and the housing associations. The Housing Corporation is not a competitor to the housing associations; it is an enabler, provider and funder. Under clause 35, however, it will become a competitor. To put it differently, it is rather like one’s father suddenly dating one’s girlfriend—it totally changes the nature of the relationship and someone who was a benevolent provider of funds is then seen as a direct competitor.
The HCA will have a whole range of information available to it, so it will be in a privileged competitive position; it will know what the housing associations plan to spend on buying and developing a site. With that privileged information, it will be able to undertake the duties in subsection (1), as amended, to do it all itself. When the Minister replies, I want him to recognise that there is concern in the housing association movement about these powers and about the possibility that the HCA will become a competitor. Will he go further than he did in his earlier contributions to reassure the movement that the powers, if used, will be used sparingly and only if there is no alternative means of developing and providing social housing? Will he assure us that the powers in the clause relate not to the broader powers of English Partnerships but solely to social housing? That responds in part to the point made by the right hon. Member for Greenwich and Woolwich.
Can the Minister, first, recognise the concern and secondly, go far further in assuring me and the housing association movement that the good relationship between the corporation and the movement will not be changed by the HCA’s enthusiastic use of the powers in amendment No. 109?
9.15 am
Mr. Wright: I enjoyed the questioning from the right hon. Member for North-West Hampshire. I would like to probe him further on the point about his father and girlfriend situation, but now is not the time—perhaps when the Committee is over and we are having a drink in the bar. I am clear about what the agency will do, and I hope that I can reassure the right hon. Gentleman. I am not certain I will be able to do so, because this is essentially a rehash of a debate we had on an earlier clause—clause 7, I think. The direct question from the right hon. Gentleman was about whether the agency would be building homes itself and, in effect, acting as a competitor to the housing association sector. The right hon. Gentleman should look at where we have come from. It is not my understanding that the Housing Corporation or English Partnerships have been involved in directly building homes in the recent past. I am not certain whether it happened a long time ago or if it happened at all.
I reiterate what I said to the right hon. Gentleman in the debate on the earlier clause; the powers are there for the agency to use, if they so wish. We see the agency’s role as facilitating, enabling and providing the skills necessary to help the RSLs, councils and other providers to step up to the plate and build houses. In our previous sitting we were discussing a culture change in the agency. It is important that we increase and accelerate the number of houses built, but even taking into account that culture change, I do not genuinely think that the agency will use its powers to provide housing directly, other than sparingly—to use the right hon. Gentleman’s words. More, it will act in partnership as a facilitator or an enabler for RSLs and others to do that job.
It goes back to a similar point about becoming the local planning authority and opportunity costs to the agency and what it could do with its resources, both staffing and financial. It can achieve an awful lot more by working in partnership and acting as a facilitator and enabling rather than directly providing. The power is there; we require the flexibility in the Bill, but I do not think that the power will be used frequently.
I hope that the right hon. Gentleman appreciates that clause 35 is a good thing. It ensures that low-cost rental accommodation is provided through registered providers and, therefore, can be regulated. As we come on to a subsequent part of the Bill, we see that we will be able to raise standards through the regulator.
Margaret Moran (Luton, South) (Lab): Will the Minister give us examples of the way in which he foresees that the HCA might develop itself? I understand that there might be emergency situations in which it might need to develop, for example, if an RSL was failing. Can he give us specific examples and clarify whether the HCA will retain funding for itself rather than dispersing it for precisely this objective?
Mr. Wright: It is difficult to envisage circumstances in which the agency will directly provide housing. I anticipate that it would be to provide confidence to the wider market. For example, it might enable a few units to be built to show what a development could look like, which might encourage other providers to come in. I imagine that it might do things at the start of a process to inspire confidence in the market. It might take action to get developments that are difficult to establish off the ground—quite literally. It is in those circumstances that I imagine the agency using a range of powers, of which the power directly to provide housing could be one. I hope that I have reassured my hon. Friend on that. I am happy for her to intervene, if she needs further clarification.
Margaret Moran: Perhaps the Minister can address the second point that I made on retaining funding for itself for that purpose.
Mr. Wright: I understand the point and in that respect it would be building directly the units and therefore would be funding those units. I imagine that at some point it would want to provide that unit to a relevant registered provider—a housing association. I hope that that provides reassurance to my hon. Friend.
Mr. Robert Syms (Poole) (Con): The Minister may remember that there were problems with the Canary Wharf development. It went into liquidation and then was restarted. If a similar development got into financial difficulty, would the agency have the power to take it over, with the prospect of selling on or getting somebody else interested in the development? Would it be able to go broader than the housing remit, if there were office or commercial developments within a site?
Mr. Wright: I draw the hon. Gentleman’s attention to clause 2(1), which says that the objects of the agency are
“(b) to secure the regeneration or development of land or infrastructure in England, and
(c) to support in other ways the creation, regeneration or development of communities in England or their continued well-being”.
So yes, it would certainly be able to do so in the circumstances that the hon. Gentleman outlined.
I hope that I have answered all the Committee’s questions.
Sir George Young rose—
Mr. Wright: I see that I have not.
Sir George Young: We have made substantial progress over the past week because the Minister has retreated from the earlier trench, which was that providing housing would not be the agency’s primary objective and that it would be able to take a direct role if it so wished. He has retreated from that to what he said just now, which was, “I think these powers will be sparingly used”. Then he went into a different trench, when he said that it was “difficult to envisage the circumstances in which—” they would be used. So a lot of progress has been made.
I have no objection to the rest of the powers which enable the HCA to fund other organisations and I hope those will be used and produce the same sort of output that was being produced some 10 or 12 years ago. I think that the National Housing Federation will want to reflect on the exact words that the Minister used in his response to see if it gives them the assurance they are looking for that the HCA will not use its powers to emerge as a direct competitor to housing associations. On that basis, I would not dream of seeking a Division on the Government amendment.
Mr. Wright: Perhaps I should not try to catch your eye, Mr Benton, when I am on a good thing. I am pleased that the right hon. Gentleman is reassured, but I do not think I have changed my position. We have always said that we expect that the primary function will be to enable others to step up to the plate in order to improve the supply of housing in England, and that the power to provide housing would be used sparingly, so I do not think I have been inconsistent. We would expect the agency to act as a partnership, but I am pleased that the right hon. Gentleman is reassured. Before I go into another trench, I think I had best sit down.
Amendment agreed to.
Mr. Raynsford: I beg to move amendment No. 51, in clause 35, page 15, line 13, leave out ‘low cost rental accommodation’ and insert ‘social housing’.
The Chairman: With this it will be convenient to discuss the following amendments:
No. 52, in clause 35, page 15, line 15, leave out ‘low cost rental accommodation’ and insert ‘social housing’.
No. 53, in clause 35, page 15, line 19, leave out ‘low cost rental accommodation’ and insert ‘social housing’.
No. 54, in clause 35, page 15, line 21, leave out ‘low cost rental accommodation’ and insert ‘social housing’.
No. 55, in clause 35, page 15, line 25, leave out ‘low cost rental accommodation’ and insert ‘social housing’.
No. 56, in clause 35, page 15, line 27, leave out ‘low cost rental accommodation’ and insert ‘social housing’.
No. 57, in clause 35, page 15, line 30, leave out ‘low cost rental accommodation’ and insert ‘social housing’.
No. 58, in clause 35, page 15, line 32, leave out ‘low cost rental accommodation’ and insert ‘social housing’.
No. 59, in clause 35, page 15, leave out line 38 and insert
‘“social housing” has the meaning given by section 67.’.
Mr. Raynsford: As we have already established, the clause to which these amendments relate is likely to have a limited application. The right hon. Member for North-West Hampshire conceded that the Government in which he served as a Minister put this provision in the Housing Associations Act 1985, so they envisaged circumstances in which it might apply, and that remains the case.
It is likely, as the powers of the Housing Corporation are being combined with those of English Partnerships, that there will be circumstances in which the agency, as part of its role in development and supporting regeneration, may wish to be a partner in a development, possibly with a private developer. It could perform this function before transferring the property across to an appropriate housing association or other body to manage. There may be more circumstances in which this would apply, but as my hon. Friend the Minister has made clear, these will probably be relatively limited in number.
The problem is why the clause has been written in a way that limits the provisions to cases in which low-cost rental accommodation is involved. In practice, the rest of the Bill is based on a formulation of social housing which embraces both low-cost rental housing and low-cost home ownership.
Clause 67 defines social housing as
“(a) low cost rental accommodation (defined by section 68), and
(b) low cost home ownership accommodation (defined by section 69).”
It seems odd that in clause 35, which is headed “Duties in relation to social housing”, not low-cost rental housing, the definitions are all limited to low-cost rental. There must be some purpose behind this. It is all the more odd to me because it runs completely counter to our understanding of the importance of mixed-tenure developments, in which one does not have rigid divisions between certain types of tenure—rented in one place and owner-occupied in another.
We understand that there is a need for greater flexibility, for people to be able to move between the rented sector and the ownership sector, possibly by means of low-cost options on the way. That is very much part of the current thinking. The Government are also strong in their advocacy of mixed communities. That does not seem to fit comfortably at all with a provision under the heading “Social housing”, which is clearly limited to only one part of that social housing.
We also know from experience that integrated management of new developments, where there is mixed tenure, is often critical to the success of those developments. If there is fragmented management, with different bodies managing different parts of the housing in an estate, there is a greater likelihood either for confusion or for lack of clarity and a failure to deal with problems as and when they arise. All good thinking at the moment is very supportive of integrated management. That all argues rather forcefully in favour of an approach that does not separate out provisions in relation to low-cost rental accommodation from provisions for low-cost home ownership.
A clinching argument can be found in clause 70, which is entitled “Shared ownership low cost rental”, and is very germane indeed. The clause states:
“Accommodation which is both low cost rental accommodation and low cost shared ownership accommodation is to be treated as the latter and not as the former.”
Therefore, if one has a combination of low-cost rental and low-cost ownership, it is to be defined as low-cost ownership, not low-cost rental. Why on earth are the Government seeking in this clause to apply these provisions only to low-cost rental rather than to the whole social housing field? That seems to be a pretty convincing case.
If one looks at this slightly further and thinks about the limited circumstances in which these provisions might apply, I can see all sorts of scope for perverse incentives if the formulation currently in the Bill is not amended. That is why I have tabled these amendments. Let us take, for example, a circumstance in which the agency, in partnership with a private developer, is undertaking a regeneration project to achieve the regeneration of an area in need of investment. That private developer says, “I don’t want any low-cost rental housing on this development. I want it to be a nice, upmarket development, with housing for sale and low-cost home ownership, but I do not want social rented housing.” Under the current provisions, that developer would have a rather persuasive case. It could say to the agency, “Let’s keep this development such as to exclude social rented housing. That way we won’t have to engage a provider of social housing in the management of it. As the developer, I can continue to manage the whole thing and you will have no responsibility to hand over to another body.” That would be a perverse incentive against the provision of social rented housing, which is exactly the contrary of what we are trying to achieve in encouraging developers to undertake mixed developments with social rented housing as well as low-cost home ownership.
There are other potential problems. The Minister implied, in his response to my intervention on the previous group of amendments that the reason for this formulation was to do with the burden of regulation.
I have to tell him that there is real concern in the housing association movement that the Bill does not achieve a level playing field regarding the regulatory arrangements applying to the housing association sector as against the private sector. If the provision continues to apply as way formulated in clause 35, the fears that private sector providers will be subject to a less onerous and less demanding regulatory regime than housing associations will be given added force.
I sincerely hope that the Minister will reconsider the matter and accept that there is an overwhelmingly strong case to apply the provisions of clause 35 to all social housing as implied by the clause heading. I hope, in the interests of diversity and flexibility of tenure, and the need for good, integrated management and a level playing field between tenures, that he is willing to accept the amendments.
9.30 am
Lembit Öpik: The purpose of the Committee stage of a Bill is to seek to improve it. Sometimes we have political arguments that come down to philosophical differences of view or, indeed, party political differences of view. This is not one of those occasions, as we are talking about something that is of great logical importance if we are to maintain the consistency of the clause in the context of the Bill as a whole. I need not repeat the argument made by the right hon. Member for Greenwich and Woolwich, but it is unequivocally clear from what he has outlined that low-cost rented accommodation is a subset of social housing. As he pointed out, clauses 68, 69 and 70 underline that point and go to some lengths—especially clause 69—to explain that all three constitute the sum of what social housing means.
This is not a semantic point. I hope that the Minister accepts that the amendment is a genuine improvement to the Bill, as its argument is compelling. I see no reason why he should not accept it. The only circumstance in which the Government should refuse to accept it is if they explicitly want to exclude owner-occupied social housing from the purposes of the clause. I am sure that the Minister does not intend to do so. I suspect that this is simply a drafting omission. I hope that he will accept what is inherently a simple and straightforward improvement to the Bill.
Mr. Wright: My right hon. Friend the Member for Greenwich and Woolwich and the hon. Member for Montgomeryshire have made a good case with their usual forthrightness and eloquence. The amendments are designed to replace the term “low cost rental accommodation” with the term “social housing”. Amendment No. 59 defines social housing in the same way as clause 67, as my right hon. Friend mentioned.
Clause 35, about which we have already had a bit of a debate, ensures that low-cost rental housing, whether provided directly or funded by the Homes and Communities Agency, remains in the social housing sector and has a landlord who is regulated. As I said earlier, that is necessary because of the regulatory and investment split that the Bill provides with regard to the agency and the regulator. If the landlord is a registered provider, tenants are protected by the Oftenant regulatory regime. Local authorities and arm’s length management organisations are regulated through statute and the local government performance regime involving the Audit Commission.
I listened carefully to what my right hon. Friend and the hon. Gentleman said. However, the amendments would require the HCA to ensure that homes for low-cost home ownership as well as for low-cost rental are owned by a registered provider, local authority or ALMO. That is not necessary. I return to the point that I trailed in relation to earlier amendments about the regulatory regime. My right hon. Friend made a very strong case about the need to ensure that we have a level playing field, but he will accept that low-cost home ownership requires a lighter regulatory touch than low-cost rental accommodation. We are confident that the appropriate degree of regulation for low-cost home ownership can be achieved either through the regulator or, crucially, through the agency imposing conditions on the financial assistance that it provides under clause 22.
Mr. Raynsford: In the aftermath of the sub-prime market problems in the United States, and given the position of the housing market here, I am not sure that I am convinced by the argument that the provision of low-cost home ownership should be subject to a lighter regulatory regime than the provision of social rented housing.
Mr. Wright: I take my right hon. Friend’s point, but what we suggest is similar to the low-cost home ownership schemes now provided under contract with the Housing Corporation.
My right hon. Friend spoke eloquently about rigidity and the fact that we want to provide mixed communities. I agree with him. The regime proposed under clause 35 provides the corporation—in future, the agency—with the flexibility to invest as it sees fit while ensuring that purchasers are protected. My right hon. Friend makes a strong case, but I should like to reflect on the matter to see whether we can address those concerns. What he said about the sub-prime market was valid, and I shall see whether we can do anything to reassure him at a later stage.
Lembit Öpik: It is obviously for the right hon. Member for Greenwich and Woolwich to decide whether that assurance is sufficient, but the Minister is taking the matter seriously. He obviously understands that if he does not accept the amendment or something similar it on Report, the Government will explicitly be excluding owner-occupied social housing from the provisions of clause 35.
Mr. Wright: I understand what the hon. Gentleman says, and I appreciate the depth of feeling on the subject, as expressed by himself and by my right hon. Friend the Member for Greenwich and Woolwich.
As I said, I come to this from the starting point that, in the main, low-cost home ownership schemes need a lighter regulatory touch, but I understand the concerns that have been expressed. However, I do not want to mislead the Committee. I have explained my standpoint: a light-touch regulatory regime is appropriate, and things should be regulated through contract and the housing ombudsman. If my right hon. Friend will allow me, I shall reconsider the matter, and I therefore hope that he will withdraw the amendment.
Mr. Raynsford: I am grateful to my hon. Friend for that offer. I hope that when he reflects on the matter that he will consider the importance not only of an appropriate regulatory regime for the low-cost home ownership market, but of integrated management and diversity. I hope, too, that he accepts the benefit of not creating a framework that might bring about perverse incentives that would work against the provision of social rented housing, such as the problem I cited in the example that I gave earlier. All those arguments are persuasive, and I hope that when he reflects on them, the Minister will see the case for tabling amendments broadly in line with those that I have tabled today. In the light of his undertaking, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Grant Shapps (Welwyn Hatfield) (Con): I beg to move amendment No. 67, in clause 35, page 15, line 15, after ‘ensure’, insert ‘either’.
The Chairman: With this it will be convenient to discuss the following amendments:
No. 68, in clause 35, page 15, line 17, at end insert
‘or that a relevant provider of low cost rental accommodation is the manager and another person is the landlord of the accommodation’.
No. 69, in clause 35, page 15, line 21, after ‘condition’, insert ‘either’.
No. 70, in clause 35, page 15, line 23, at end insert
‘or that a relevant provider of low cost rental accommodation is the manager and another person is the landlord of the accommodation’.
No. 71, in clause 35, page 15, line 26, after ‘ensuring’, insert ‘either’.
No. 72, in clause 35, page 15, line 28, at end insert
‘or that a relevant provider of low cost rental accommodation is the manager and another person is the landlord of the accommodation’.
No. 73, in clause 35, page 15, line 31, after ‘ensuring’, insert ‘either’.
No. 74, in clause 35, page 15, line 33, at end insert
‘or that the relevant provider of low cost rental accommodation is the manager and another person is the landlord of the accommodation’.
Grant Shapps: Good morning, Mr. Benton.
Mr. Wright: How is the hon. Gentleman’s hip?
Grant Shapps: Much better.
We have spent a little time discussing clause 35. The Minister knows of our concern from discussions soon after the Bill was published, and he has been constructive in his understanding and appreciation of the problematic impact that the drafting of the clause could have on the market. However, I am not convinced that the redrafting proposed in Government amendments Nos. 109 to 114 and in the amendments tabled by the right hon. Member for Greenwich and Woolwich, which are to receive further consideration, quite nail the point.
One of the difficulties of such discussions is the fact that the matter can be argued in such terribly technical terms that it would be difficult for anyone reading the Official Report to understand. We must therefore be clear about the subject of our discussion. It is my understanding that under the clause as amended, a builder, perhaps one of the Barratts of this world, who was creating a development on land owned by the HCA—that builder would normally construct a development and hand it over to a housing association to run—would, if the land continued to be owned by the HCA, have to be the landlord. There is a mix-up between the provider and the landlord, and I do not think that the clause as amended deals properly with that problem. I am certain from conversations with the Minister that that is not the Government’s intention but, none the less, it would be the outcome if the provisions were accepted in their current form.
In the spirit of co-operation displayed in relation to the previous group of amendments, will the Minister look again at the examples and reassure himself and us that the drafting will not inadvertently create a situation in which the provider and the landlord must be the same? Another obvious example would be a group trying to create one of the recently established shared ownership real estate investment trusts. It would own the stock, but would it be permissible for the housing association to end up managing it, as would normally happen, if the HCA were involved in the land deal? It seems to be the same situation as I described with the house builder, and I understand from the provisions as drafted that the answer would be no.
I do not want to labour the issue, because we have spent three quarters of an hour on it, and many relevant points have been made by my right hon. Friend the Member for North-West Hampshire and other members of the Committee, but will the Minister reassure us that he will take seriously the concern about mixing up providers and landlords, reconsider the matter and report back to the Committee later?
Mr. Wright: I have a great deal of sympathy with the sentiments behind the amendment. It is probably far too early in the morning for me—I am being far too amenable for my own good—and I prefer the later sittings. The hon. Gentleman is on to something and the motivation behind the amendments is sound. He is trying to give the agency more flexibility while protecting tenants.
However, that is where it stops. I think that the hon. Gentleman will agree with me that there are certain key aspects of regulation that can fall only on the owners of the property. Regulation, as he will accept, protects public investment in social housing by requiring owners to seek disposal consent from the regulator or the Secretary of State for Communities and Local Government before selling a property. It also, for example, requires the owners of a home sold to the tenant under the right-to-acquire scheme to reinvest the proceeds through the statutory disposal proceeds fund. Those are key protections, which it is essential to maintain.
Registered providers can appoint a manager to carry out day-to-day management of their properties. The regulator can operate or approve accreditation schemes for such managers, and if a commercial developer, as the hon. Gentleman suggested, wanted to appoint a manager or indeed another registered provider to carry out that detailed work, that would be perfectly possible within the existing framework. However, the fundamental point is that the owner must still be registered to ensure that investment from the public purse is protected. So, while I am sympathetic to his concerns, I ask the hon. Gentleman to withdraw the amendment.
Grant Shapps: We are getting close to clarification. Will the Minister confirm that it is his understanding that under the clauses a developer would be able, as happens now, to use a registered social landlord—a housing association—to manage the property? He referred just now to the possibility of bringing someone in to manage the day-to-day aspects of the property. That did not sound quite the same as what he said about a housing association being brought in. Will he just confirm that the relevant format could involve a housing association?
Mr. Wright: I shall try to clarify the position. The direct answer to the question about housing built by Barratt on land owned by the HCA is no: the point is that when the housing becomes low-cost rental housing, the landlord is a relevant provider. The provision does not force Barratt to register, or stop it making a transfer to a housing association. I hope that clarifies the point and reassures the hon. Gentleman. Although I have much sympathy with what he said, I hope that he will withdraw the amendment.
Grant Shapps: On that basis, and with the assurance recorded in Hansard, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendments made: No. 110, in clause 35, page 15, line 33, at end insert—
‘( ) For the purposes of this section, a person provides low cost rental accommodation if (and only if) the person acquires, constructs or converts any housing or other land for use as low cost rental accommodation or ensures such acquisition, construction or conversion by another.’.
No. 111, in clause 35, page 15, line 40, leave out from ‘authority’ to end of line 41 and insert
‘a county council in England or a person controlled by an English local housing authority or county council in England (and regulations under subsections (5) and (6) of section 110 apply for the purposes of this definition as they apply for the purposes of subsection (4) of that section)’.—[Mr. Wright.]
Clause 35, as amended, ordered to stand part of the Bill.
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