Housing and Regeneration Bill

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Clause 81

Question proposed, That the clause stand part of the Bill.
Sir George Young: I should like to press the Minister about clause 81(1)(a), in the light of yesterday’s statement about which key regulators are to be subject to pre-appointment hearings by Select Committees. I see from the list, to which I shall refer in a moment, that the regulator in question—one of the most important we have—will not be subject to such a hearing.
By way of background, the Committee may know that in the Green Paper “The Governance of Britain”, which was published in July, the Government proposed to increase parliamentary scrutiny of appointments to certain posts, by way of pre-appointment hearings with the relevant Select Committee. Yesterday the Government published the list of which regulators would be subject to the process. I have here the letter that the Minister for the Cabinet Office sent to the Chairman of the Liaison Committee, which says:
“Since publication of the Green Paper, we have consulted widely across Government to identify posts that would be suitable for pre-appointment hearings. In keeping with the principles in the Green Paper, we have focussed on posts which exercise statutory or other powers in relation to protecting the public’s rights and interests.”
It continues:
“As a result the final list comprises senior ombudsmen, HM Chief Inspectors and key regulators.”
The Bill as it stands states that
“The regulator shall consist of—
(a) a person appointed by the Secretary of State as chair”
but not that they will be subjected to the process in question. My anxiety at the exclusion of the social housing regulator was heightened when I checked which regulators would be subject to the process. They are the Commission for Local Administration in England, the chair of the Statistics Board, the chairman of the Office of Rail Regulation and the chair of the Office for Legal Complaints, as well, of course, as the chair of the Gas and Electricity Markets Authority. It is difficult to argue that the social housing regulator will not have more of an impact on people’s lives than the regulators whose names I have just read out.
Mr. Raynsford: The right hon. Gentleman makes a persuasive case, but of course all the regulators that he has mentioned already exist. Has he inquired whether the absence of the housing regulator from the list simply reflects the fact that the Bill has not yet been enacted, so that the post does not yet exist?
Sir George Young: That is an ingenious and heroic defence of the Minister, were he minded to accept it, but the Department was asked in July which posts would be suitable for pre-appointment hearings and the decision was announced yesterday. Yesterday, the existence of the regulator in question was a matter in the public domain; a Bill is under consideration. The fact that the regulator had not yet been appointed was not a reason to exclude it from the list of posts to be subject to scrutiny in future.
If the Minister uses, if I may put it in such terms, the Raynsford defence—[Interruption.]—or the Greenwich defence, that if the Bill had already been passed the regulator would have been included in the list, I shall accept that. However, I suspect that the Government do not propose to subject the post to pre-appointment scrutiny. If that is the situation, perhaps between now and Report, the Minister could go back, get the necessary clearance, and then tell the House that the social housing regulator, whenever he is appointed, will be subjected to the process to which other key regulators are exposed, and that he would have to go to the Communities and Local Government Committee for a pre-appointment hearing.
Mr. Wright: I thank the right hon. Gentleman for that line of questioning—he made a persuasive case. I can update the Committee on the appointment of the chair. The job description has been approved internally by the Minister for Housing. A job advert will be published in all appropriate press, including specialist press, in February, with a view to a closing date for applications around March and an appointment in May. The process is ongoing.
I am not going to hide behind the Raynsford, or Greenwich, defence. The right hon. Gentleman made an important point and, with his permission, I shall go away and look at the issue and clarify it, because it would be completely applicable for the chair of Oftenant to be subject to the kind of scrutiny he talked about. I shall certainly do that if he allows me.
Question put and agreed to.
Clause 81 ordered to stand part of the Bill.
Clauses 82 to 85 ordered to stand part of the Bill.

Clause 86

Fundamental objectives
Mr. Raynsford: I beg to move amendment No. 40, in clause 86, page 38, line 11, leave out subsection (7).
Now we come to the meaty part of the Bill. It sets out the fundamental objectives for the regulator and defines precisely the matters that will be the main focus of regulation. It is an important part of the Bill. The amendment would remove subsection (7), which is objective 6. It says:
“Objective 6 is to encourage registered providers of social housing to contribute to the environmental, social and economic well-being of the areas in which the housing is situated”.
I have no problem with that objective. We all recognise that the concept of place shaping, which was a focus of the Lyons review, is an important part of the agenda for local authorities and others who have a role to play. We want providers of social housing to engage in discussions with local authorities and others, and to make a contribution.
The reason why I tabled the amendment is that I do not understand how the objective can be regulated. If one looks at the recommendations of the Cave review, one will see that Cave had reservations about the feasibility of regulating that level of activity. In fact, there are a number of passages in the Cave review that indicate clearly a lack of sympathy for giving the regulator powers to regulate such activity. Paragraph 2.59, on the issue of policy passporting, states:
“The practice of securing the implementation of a range of government policies through the regulatory system is an endemic feature of the present arrangements — these are the policy costs of regulation. It is the main cause of ‘regulation creep’ and strongly discouraged by the Better Regulation Commission...imposing a stream of policy burdens on providers without regard to the costs is poor regulation”.
Paragraph 2.81 states:
“The review also concludes that there is considerable scope for reducing the burden of regulation, both the policy costs and the administrative costs which it imposes. Regulation and inspection should be more closely aligned to tenants’ wishes for good quality services. This should be done in a way which recognises the role of social housing providers in assisting the delivery of local government’s strategic goals”.
The clincher is the third section that I shall quote. Paragraph 4.34 states:
“It is not, in the review’s view, the role of the regulator to regulate the place shaping activities in which local authorities engage with both housing providers and many other organisations”.
That seems clear, so I am troubled that subsection (7) expresses a clear commitment to regulate the activities of social housing providers in respect of their contribution
“to the environmental, social and economic well-being of the areas in which the housing is situated.”
4.15 pm
If we think about how that regulatory task could be performed, what on earth would be the measures of performance? At the level at which Cave was sympathetic, I can clearly see that it is right to expect the provider of housing to engage in a discussion with the local authority, but in terms of actual contribution and outputs, let alone outcomes, I cannot conceive of a sensible framework that would allow a regulatory system to operate that would assess the contribution that those providers had made, other than simply asking the question, “Have they discussed this matter with the local authority?” That would be purely a matter of consultation and it would hardly be appropriate for a complex, regulatory procedure.
Furthermore, I can see a real problem of a very heavy regulatory burden if the regulator tried to put in place procedures for measuring the extent to which individual providers of social housing were engaged in the process, what their performance had been and what the outcomes and outputs of that performance were.
There is a serious risk of regulation creep, which is precisely what Cave warned against, and also of an overly heavy regulatory burden being imposed. The reason for tabling the amendment is to suggest that it might be appropriate to find ways of reflecting the clear recommendation of the Cave review that registered social landlords and providers of social housing should be engaged in constructive discussion on this issue, but that they should not be subject to a burdensome regulatory regime. That is my objective and I hope that the Minister will consider the amendment, which is in line with the Cave recommendations that prompted the establishment of the regulator.
Lembit Öpik: We very much support the amendment, but we have a few observations to make. First, however, has anyone else noticed the irony of the naming of the Cave review, or is it just me? [ Interruption. ] Perhaps it is just me. There is another review, I think; the Hill report on social housing. [ Interruption. ] “Hill Street Blues”, perhaps.
I support the amendment because it forms part of a list, which no doubt has not escaped the attention of the right hon. Member for North-West Hampshire. Also, the wording of clause 86(7) contradicts one of the arguments that the Minister has used to ask us to withdraw various amendments. He said that some of our amendments have been too vague or not well defined. Surely subsection (7) falls right into that category. It says that the aim is
“to contribute to the environmental, social and economic well-being of the areas”.
That is open to the broadest interpretation. How does one improve the “well-being” of an area? To elect a Liberal Democrat council would be one way that comes immediately to mind. [ Interruption. ] I am just getting my own back on behalf of the underdogs on the Opposition side of the Committee, Mr. Gale.
Perhaps it is to do with investing in social networks. Indeed, anything could come under that heading. I suspect that the phrase as it stands could easily be abused to enforce just about any dogmatic political intention of either a local authority or a Minister. If the Minister is intent on keeping this subsection, will he please desist from criticising us for tabling amendments that he says are ill-defined or too vague?
Mr. Wright: My right hon. Friend the Member for Greenwich and Woolwich is correct. This is an important clause, because it clearly sets out the regulator’s objectives. Amendment No. 40 would remove the regulator’s sixth objective, outlined in subsection (7), which is
“to encourage registered providers of social housing to contribute to the environmental, social and economic well-being of the areas in which the housing is situated.”
I accept that that is perhaps the regulator’s most controversial objective, but from speaking to tenants organisations about it, I have found that they are keen on it, so I shall stress why it is necessary. All hon. Members will appreciate that good housing is vital to an area’s well-being, and landlords, especially those with large concentrations of stock in a particular area, have an important role to play. Landlords of social housing need to be good neighbours, so as well as improving homes, RSLs and others need to improve neighbourhoods. Giving the regulator an objective on the landlords’ wider role in the community means that when the regulator performs its functions, such as setting standards, it will be able to recognise and take into account landlords’ wider activities in their area. Without such an objective, the regulator might decide that landlords would and should operate more economically or efficiently if they limited their activities to the core landlord role, without any regard for the well-being of the area in which their housing is situated. Indeed, the regulator might even set standards that sought to discourage such activity or ignored the benefits, and we all know, because we heard it in the oral evidence sessions from the National Housing Federation, that RSLs currently provide an enormous amount of wider, voluntary well-being activity. I cannot believe that the perverse consequences of removing that provision are what my right hon. Friend and the sector would want, so I shall offer some reassurance.
An objective to “encourage” contribution to local well-being does not necessarily mean that the regulator will regulate RSLs’ voluntary activities. In considering how to encourage a contribution to the well-being of an area, the regulator will need to consider how best to achieve its objective, already bearing in mind its 10th objective, which is
“to regulate in a manner which—(a) minimises interference, and (b) is proportionate, consistent, transparent and accountable.”
However, the regulator will also be able to set standards requiring providers to co-operate in certain ways with local authorities in local place-shaping, but clearly that contribution must be proportionate to landlords’ holdings in the area.
Mr. Raynsford: I accept the principal thrust of my hon. Friend’s argument; the issue is important and, rightly, it should not be totally excluded. The thrust of my argument, he will recall, was not that I do not regard the issue as important, but that it is inappropriate to regulate. How does he envisage a regulatory regime ascertaining whether a registered social landlord has met the objective? I cannot for the life of me see how a regulatory regime can do anything other than either simply tick a box, which is not the regulation that we want, and I wonder whether it will consult the local authority, or introduce a huge series of separate measures that would be completely disproportionate and burdensome.
Mr. Wright: Far be it from me to set what the regulator will want to do, but I imagine that involvement with the local community, by ensuring a contribution to the local strategic partnership and the sustainable communities strategy, and by having a real role, perhaps by participating in an appropriate local authority scrutiny role, will be important. The regulator will want reassurance that registered providers are going to engage in general well-being, such as the LSP and the sustainable communities strategy.
To some extent, I shall now argue against myself, because I have mentioned the importance of the measure and of standards, but conversely just because a regulator has a particular objective—on this occasion to encourage a contribution to local well-being—it does not necessarily follow that he has to set standards. I look forward with some relish to considering clause 173 on standards. At this point, however, standards are the regulator’s most powerful tool, but not the only one. I genuinely imagine that, like the Housing Corporation, the regulator will have other ways to encourage voluntary activity, such as helping to spread good practice, commissioning research and so on. I go back to my earlier point, which is that it will ensure that objective 6 is considered in the roundest possible sense. It will ensure that it is not just focused on the core housing function, that it does not consider efficiency and economy at the expense of other things, and that having a wider contribution to that place-shaping is important. That is why objective 6 is a crucial part of the regulator’s activity. On that basis, I hope that my right hon. Friend withdraws his amendment.
Lembit Öpik: The Minister has more or less covered all the points, but there remains the question of the non-specific nature of the edict. To be quite serious, he has criticised other amendments that have been tabled as being not very specific. How does he square that with the fact that the clause is open to the widest interpretation? I do not have an issue with that in a sense, but I have an issue with the Government on the one hand saying that they do not want certain amendments because they are not specific enough, and on the other hand defending such a clause.
Mr. Wright: I understand the hon. Gentleman’s concerns, but those issues will be interpreted by the regulator. I keep coming back to objective 10, which is important. I cannot imagine a circumstance in which the regulator will spend 90 per cent. of his time on objective 6. He needs to minimise interference, and I think that I have set out in a relatively clear manner what I would imagine the regulator doing with regard to this in terms of participation in local strategy partnerships and ensuring participation in the sustainable community strategy. I hope that that reassures him.
There is a serious issue to consider and I take comfort from my hon. Friend’s statement that he desires simply to promote engagement. That is exactly what Cave said, but I remind him that the Cave review very emphatically said:
“It is not, in the review’s view, the role of the regulator to regulate the place-shaping activities in which local authorities engage with both housing proprietors and many other organisations.”
Mr. Wright: I am conscious of my right hon. Friend’s concerns. I will say two things, one of which I have mentioned already; the other is in response to his point about Cave. First, I reiterate that the regulator would, I imagine, look at any sort of contribution towards economic, social and environmental well-being that would be proportionate to the registered provider’s holdings in a particular area, and would have to take a view on it. He rightly says that a handful of properties could be involved.
Secondly, Cave proposed a statutory duty to co-operate with local authorities in terms of a place-shaping role. I suggest that that is the best possible route to go down without imposing too many onerous duties on the registered providers. Does he agree?
Mr. Raynsford: I take comfort in that, because it seems to strike the right balance between seeking to encourage the range of housing providers to engage with local authorities in the place-shaping function and ensuring that they do so. However, as I said, the Bill currently puts that priority on an equal basis with other objectives. It does not say that it is simply encouraging engagement, but, rather, that it is one of the objectives, particularly as it is listed in clause 173 as one of the standards that the regulator may set out. Therefore, we are in serious danger of producing something either tokenistic or excessively burdensome. We must be careful about that, but I take comfort in the fact that my hon. Friend is keen to avoid excessively burdensome regulation. I hope that between now and the completion of our discussions, we can find a way to achieve that objective. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.30 pm
Lembit Öpik: I beg to move amendment No. 37, in clause 86, page 38, line 23, at end insert—
‘(12A) The regulator shall pursue these objectives in relation to landlords and their tenants in all cases where the tenants are in receipt of public funds.’.
The purpose of the amendment is to enable the regulator to pursue the objectives in clause 86 in relation to landlords and their tenants in all cases in which the tenants receive public funds.
In essence, we are trying to test the principle that if public funds are involved in paying a landlord, the landlord carries with that money a responsibility to honour the tenets of the clause. They buy into a responsibility that connects them with the standards we would expect in the public sector. It seems reasonable to us that tenants should expect the same benefits of protection and regulation from a private landlord as they would from social housing in public hands. If landlords do not like that, they do not have to take tenants who are in receipt of benefits, but I expect that most landlords would be fair enough and would go along with it.
What is the Minister’s perspective on the intention in the amendment to ensure that when public funds are being paid to private landlords they have a duty to fulfil the same regulations as if they were in the public sector?
Mr. Wright: I am keen to criticise the hon. Gentleman on the grounds of vague and ambiguous. I am not entirely certain what he means by “in receipt of public funds”. I assume that it is meant to cover all tenants in respect of housing benefits, though, as drafted, I think that it could also include things such as child benefit, unemployment benefit and child tax credits, which could be massive.
Tenants receiving public funds will have different landlords: registered social landlords, local authorities, private rented sector landlords, even some unregistered housing associations such as the Church Commissioners. However, the Bill only provides for the regulator to have powers over us and over any providers who register voluntarily.
Sir George Young: Is that true? In light of the debate we had earlier, I understood the Minister to have said that organisations that did not register would none the less come under the umbrella of the social housing regulator because of the objectives in clause 86.
Mr. Wright: No, in respect of the earlier point about the philanthropic organisation, it would have a choice as to whether to register voluntarily. I hope that is clear.
Sir George Young: If the organisation did not voluntarily register, would it not come under the embrace of the social housing regulator?
Mr. Wright: No, it would not. I hope that clarifies the matter.
Sir George Young: It clarifies the matter, but I am not sure that it is consistent with the debate that we had earlier on the clause. Closer examination of the record will doubtless reveal who is right.
Mr. Wright: It is clear to me what I think, but let me look back at the earlier clause and confirm it to the right hon. Gentleman.
Sir George Young: The Minister was clear. He said that the characteristics of the operation defined whether it came within the embrace of the social housing regulator. He has now said that it is not the characteristics, but whether the organisation voluntarily registers that is important. If so, that would have allayed some of the concerns that I expressed in our earlier debate.
Mr. Wright: I understand the right hon. Gentleman’s point about characteristics, but a strategic decision by an organisation to provide social housing would tend to require a degree of subsidy. It would be entirely for that philanthropic organisation to make the strategic decision as to whether it wished to be regulated—I hope that I am clarifying the point, although I suspect from the right hon. Gentleman’s face that I am not. I can check what I have said and confirm it, but that is certainly my clear intention as regards what the regulator will do.
Extending the regulator’s powers to cover various things, where that was dependent on whether the tenant received public funds, would require a significant set of amendments to the regulator’s other powers. It would not be enough merely to give the regulator objectives in relation to the relevant landlords, because it could exercise its powers only in relation to registered providers.
Indeed, without amending the regulator’s other powers to allow them to be exercised in relation to unregistered providers, there is a danger that the amendment could backfire and further limit the regulator’s ability to regulate registered providers, with the result that the regulator could act in relation to such providers only where they accommodated tenants in receipt of public funds.
Even if a way were found for the regulator to regulate the landlords of all tenants in receipt of benefits, the result is likely to be a very unlevel playing field. Private and local authority landlords would have to operate under two systems: one for tenants who were on benefits and another for those who were not. I understand the point that would naturally be raised that we do not have cross-domain regulation at the moment, but it would be a permanent feature of the system.
The degree of regulation would change over time—for example, if a tenant started or ceased to claim benefits. We have spent a lot of time discussing security of tenure, and the amendment could open up a can of worms in that respect. If the intention is to extend the regulator’s powers to all landlords with tenants who are in receipt of housing benefit, that could act as a major deterrent to private sector landlords to let to tenants on benefits—we discussed something similar in relation to an earlier provision. That would further increase the pressure on social landlords’ limited stock, and I do not believe that is what the right hon. Gentleman wants.
Mr. Wright: I can do no better than refer back to the private sector rented review, which I mentioned earlier. I set out in some detail the review’s terms of reference and what we hoped to achieve through it. I hope that that provides some comfort, because my hon. Friend raises an important point, which is that tenants from all sectors should have the best possible service.
I want to be brief, so I hope that I have made my point clear for the hon. Member for Montgomeryshire and that he will withdraw his amendment.
Lembit Öpik: The Minister has made a valid point about the drafting of the amendment; it probably would have unintended consequences. I understand his concern about the problem of squeezing the private sector, providing a disincentive for it to take in people on benefits, and his concern that there could be a negative effect on housing stock. On this occasion, therefore, I am willing to accept his proposal and to consider the matter further. Nevertheless, I hope that hon. Members recognise that the last thing that we want is a two-tier system, with unregulated and low-quality housing stock in the private sector and much higher-quality housing stock at a lower price in the public sector.
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 86 ordered to stand part of the Bill.
Clauses 87 to 93 ordered to stand part of the Bill.
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