Clause
81
Membership
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.
Mr.
Raynsford:
I shall withdraw the amendment, because I want
to make progress and there will be further opportunities to discuss
this. However, I must make it clear that I am not convinced by my hon.
Friend’s case. In the first place, he has not provided a basis
for an understanding of how this regulatory
function can be performed, and I have very considerable worries that it
will either be the worst form of tokenistic tick-box
exercise—has the landlord talked to the local authority?; tick,
satisfied—or, if it tries to do more, it will end up imposing a
completely unreasonable and disproportionate burden by trying to assess
the degree and effectiveness of the engagement, the output and the
outcomes. Frankly, many registered social landlords have stockholdings
of perhaps only a handful of properties in any individual area, and the
idea that the regulator should measure the degree in each area to which
those bodies have engaged and produced the outcomes required will
become a nightmare of bureaucracy.
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.
Lyn
Brown:
This relates to the bit of the amendment that I
tabled earlier, which was not addressed, and which might have got moved
later, but which is not going to get moved later. What I am really
saying is will the Minister seriously consider how we will provide
tenants in the private sector who are paid for from the public purse
with the safeguards that will be afforded to tenants in the social
rented sector in one way or the other? I obviously have huge sympathy
with what the hon. Member for Montgomeryshire is attempting to do,
because that is what I attempted to do in amendment No. 2. I am looking
for some comfort and some reassurance that consideration will be given
to what we might be able to do about those vulnerable
tenants.
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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