Housing and Regeneration Bill

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Mr. Wright: The amendments clarify the general processes of compulsory deregistration under the clause or requests for voluntary deregistration under clause 115. Provision for deregistration under the clause is based on that in sections 4 and 5 of the Housing Act 1996, which allows the Housing Corporation to deregister RSLs. Amendment No. 191 requires the regulator to inform a body that it has been compulsorily deregistered. It should be remembered that compulsory deregistration is at the regulator’s discretion. It may take place only if the provider has effectively ceased operation as a social landlord, having either ceased to carry out activities or ceased to be eligible for registration—if it no longer provides or intends to provide social housing in England, for example. If the provider does not already know that, it would be informed by the regulator as a result of amendment No. 191 that it no longer has to comply with regulation.
When a provider seeks deregistration, amendments Nos. 192, 193 and 197 replace paragraph (c) of subsection (2). Rather than the regulator being able to deregister a body simply on some other grounds that seem to the regulator to make deregistration appropriate, the regulator will be able to permit deregistration if the provider meets relevant criteria set by the regulator. That has the effect that the regulator must establish a policy in advance of considering cases rather than responding to each on an ad hoc basis. Amendment No. 197 requires the regulator to publish such criteria.
In addition, amendments Nos. 194 and 195 introduce a degree of discretion about consultation with local authorities on requests for deregistration. It would not generally be necessary for the regulator to consult each local authority in whose area the registered provider acts. The amendments mean that the regulator need not consult all local authorities in whose area the registered provider acts, only those that it considers appropriate. For example—and this is important—if a registered provider owns only two or three homes in each of several districts, and the vast majority of its stock is elsewhere, the regulator may decide that it would be appropriate to consult only those local authorities where the provider has a more significant presence.
Amendment Nos. 106 and 107 would remove the regulator’s discretion to deregister a body on the grounds that it is regulated by another authority whose control is likely to be sufficient.
Under the current regime, only a few, very small RSLs have deregistered, such as some alms houses. I would suggest that regulation can be a major burden on bodies that operate on a very small scale, and we are committed, as I have said time and time again, to reducing regulation for good providers. Deregistered bodies remain subject to restrictions on disposals, and tenants must have access to the local housing ombudsman. These are the basic tenants’ protections, but the regulator is perhaps more likely to retain such bodies as providers and to set a very low level of regulation for them because of the greater emphasis on a light touch, and on risk assessment in terms of regulation.
In short, the circumstances are limited, and likely to be used only rarely. It is implicit that the effect of deregistration on this test would be very largely deregulatory, and that there should be no loss of tenants or stock protection. If there were, that would be unlikely to meet the regulator’s fundamental objectives. On that basis, I hope that the Committee will accept the Government’s amendments and not insist on amendments Nos. 106 and 107.
Lembit Öpik: Our amendments are designed to test the working of the Government’s approach to the matter. I have two questions to raise. I accept that I am busking a little, but I was not paying particular attention to my own thoughts. My two macro-questions relate to two matters. First, the perennial concern of the housing associations is one of potential over-regulation. Secondly, the relationship between profit and non-profit making organisations is a recurring theme. To some extent, we have covered some of that already, so I shall reduce my questions to one point. Can the Minister provide some assurance—given that we have referred to the regulatory impact assessment before—that the burdens that have been put on organisations that are necessarily very small-budget and do not have huge administrative resources, have been considered in the round?
Mr. Wright: I hope that I made it clear, when I moved my own amendments, that we are very keen to ensure that the new regulatory regime has a light touch: it is focused on areas of major concern. Those small RSLs would be, I imagine, not classed as high-risk, and the level and burden of regulation would be shared accordingly. On that basis, I understand what the hon. Gentleman is saying, but I hope that he will not press his amendment.
11.30 am
Mr. Wright: I disagree with the circumstances that the hon. Gentleman outlined because I do not think that a scandal, to use his words, emerges or flares up without any warning. One of the true strengths of the regulatory regime that the Bill will put in place is that the risk factors, the traffic lights—for want of a better term—will be used appropriately and we will not have any heavy enforcement of regulation; it will be based on risk, loss to the public purse and risk to reputation. On that basis, I do not accept the hon. Gentleman’s premise. The regulator will have a light touch and will intervene where necessary, but these things do not flare up immediately. In terms of what the regulator will have to do with regard to objectives in clause 86, which we have already discussed, there must be a balance and we have got it about right. I cannot anticipate what the hon. Gentleman is suggesting, so I hope that he will not press his amendment.
Amendment agreed to.
Clause 114, as amended, ordered to stand part of the Bill.

Clause 115

De-registration: voluntary
Amendments made: No. 192, in clause 115, page 47, line 7, at end insert—
‘(ba) on the grounds that the registered provider meets any relevant criteria for de-registration set by the regulator.’.
No. 193, in clause 115, page 47, line 8, leave out paragraph (c).
No. 194, in clause 115, page 47, line 10, leave out ‘any local authority’ and insert ‘such local authorities’.
No. 195, in clause 115, page 47, line 11, at end insert ‘as it thinks appropriate.’.
No. 197, in clause 115, page 47, line 15, at end insert—
‘( ) The regulator shall publish criteria set for the purposes of subsection (2)(ba).’.—[Mr. Wright.]
Clause 115, as amended, ordered to stand part of the Bill.
Clause 116 ordered to stand part of the Bill.

Clause 117

Lembit Öpik: I beg to move amendment No. 332, in clause 117, page 47, line 30, leave out ‘to the high court’.
I rise with what remains of my focus and concentration, to put forward my views in an erudite and non-waffly fashion, for the benefit of the Committee and the Minister. I am grateful for the moral support of hon. Members. I feel as if I have arisen from a deep sleep to consider clause 117.
Mr. Wright: The hon. Gentleman is with the Liberal Democrats.
Lembit Öpik: That was not very nice of the Minister, but I am sure that he said it with the warmth I normally associate with his rapier-like wit.
The purpose of the amendment is to probe the potential cost of a body appealing through the High Court against the decision of the regulator, when it has decided to refuse to register that body, to de-register it or to refuse to de-register it. In other words, are we entering a situation of overkill by requiring the High Court to be the arbiter of an appeal? That will be fine for large organisations with a multi-million pound turnover and organisations with their own legal advice, but many of the organisations we are discussing are collections of individuals with an altruistic intent to resolve local housing problems. It would be colossal expenditure for them to appeal to the High Court against the decision of the regulator, a regulator that necessarily will have extensive resources at its command and will effortlessly be able to mount a defence of the decision that is taken. For smaller organisations, which amount to no more than a couple of individuals on occasion, the decision of the regulator is likely to stand because the organisation will be unable to afford to mount a defence through the High Court.
I have not proposed an alternative appeal process. There are of course a number of different ways of doing it, but I suggest that either the Government make it clear that those organisations will in some way be financially supported in making their appeal, or that we should seek a less expensive way of doing it. We all want an appeal process and we want to it to be fair. In my judgment, using the High Court is de facto unfair for small organisations because they cannot afford to launch a defence.
Finally, let us think about a situation in which a body appeals against the regulator, spends many thousands of pounds in that appeal and loses. That would involve tremendous opportunity costs in terms of the money spent on the appeal, so it is very likely that those who make the financial decisions within such organisations will be loth to take the risk. They will say, “We don’t like this decision, but it is cheaper and less risky to go with it than to find alternative ways of doing what we want to do, even if that restricts our room for operation.” In conclusion, will the Minister tell us why he feels that an appeal to the High Court is a proportionate system and one that is affordable to the many small organisations under consideration?
Mr. Wright: I disagree with the amendment on two grounds. From the hon. Gentleman’s comments, it sounds as if this is a new power, but it is not. Section 6 of the Housing Act 1996 provides for an appeal to the High Court against the Housing Corporation’s decision on registration and deregistration. Clause 117 similarly provides a right of appeal. A body may be unhappy with the regulator’s decision not to register it. On that basis, therefore, it is right and proper that we have an appeals process. As the hon. Gentleman said, he is not proposing an alternative body to which such an appeal should be made, so I was not entirely certain what he was trying to achieve with the amendment, other than a general cutting down of costs.
The appeals procedure is very important for the deregistered provider. On that basis, I cannot accept an amendment that would leave providers’ right of appeal so unclear. However, I feel sorry for the hon. Gentleman and somewhat guilty that I criticised his membership of the Liberal Democrats so I want to make amends. If the hon. Gentleman—I am trying to tempt him—wanted to suggest that the appeal process should be linked to some sort of tribunal, as suggested in the Cave review, that is something that I could take away and discuss with the Tribunals Service, the Ministry of Justice and others. I hope, therefore, that the hon. Gentleman will withdraw his amendment and allow me to make progress in the manner I suggest.
Lembit Öpik: We see once again, writ large before us, a Minister who is the exemplary form of an iron fist in a velvet glove. His fundamental disagreement sounds more like a practical objection. He rightly assumes that I envisage some kind of tribunal process. No doubt he is also aware from where my probing amendment is derived.
I am grateful for the Minister’s willingness to consider the tribunal approach, which I honestly think is a much better approach whether or not there is a precedent in past legislation. Had he and I been doing business in 1996 in this same Committee, I would have made the same point, so given his assurance, I do not feel any need to move the amendment to a vote. More than anything, if we can achieve a constructive outcome from the discussions about the tribunal, that would be appreciated not just by me but by the handling organisations whose concerns I have put forward. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 117 ordered to stand part of the Bill.

Clause 118

Payments to members etc.
Question proposed, That the clause stand part of the Bill.
The Chairman: With this it will be convenient to take new clause 4—Payments and benefits to officers and employees of housing associations
(3) Before introducing the regulations the Secretary of State shall consult with the Regulator of Social Housing, the Charity Commission and any body which appears to the Secretary of State to represent the interests of registered providers.’
Grant Shapps: This morning, the right hon. Member for Greenwich and Woolwich referred to the extent to which housing associations have the capacity almost to morph into a different type of organisation. He may have been reading from the annual report for “Places for People” when he said that the particular housing association did not refer to itself as a social provider, but as a developer or builder, possibly from a large corporate background with all the associated culture.
New clause 4 would recognise that housing associations are in a special category of their own and that when the Bill considers payments for members, it should take into account the aims and objectives of the housing associations. In particular, it should consider setting up a code of conduct that the Secretary of State would invoke, under the new clause, by getting together with the relevant parties, in particular bodies such as the Charity Commission. Through consultation with the social regulator, it would come up with a code of conduct to ensure that the slippage—the movement to which the right hon. Member for Greenwich and Woolwich referred—does not become a tidal wave.
It is possible to envisage a situation where there would be a shift towards corporate housing associations—we are already seeing housing associations gain upwards of 100,000 properties and become super-development companies. The Committee has rightly expressed concern that if that process continues we may have a very different form of housing association in years to come. The purpose of new clause 4 is to provide some limits and an additional framework in those circumstances. I hope that the Minister will carefully consider the Secretary of State’s ability through the legislation to consider payments and benefits to officers, to try to prevent an avalanche of housing associations turning into nothing more than corporate developers operating as they do in the private sector.
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