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.
Lembit
Öpik: It is not clear exactly who decides what is
high-risk and what is not. If one looks at how these are phrased, my
madness scenario is something that we see time and time again. When
something goes wrong out there and there is a scandal or financial
irregularity that occupies the Sunday papers, and a few weeks’
worth of headlines, the Government feel an obligation to react. I could
see a dramatic response, on a
wholesale basis. If the problem relates to housing, the response would
be, “We, the Government, have now decided to tighten this
up”, or “We have issued an edict to the regulator that
all of these individual organisations have to provide a certain
additional body of evidence.” That is expensive, time-consuming
and probably not very cost-effective. My personal judgment is that we
ended up with gun regulation legislation in this country as a knee-jerk
reaction to what happened in Dunblane. No one is likely to get killed
in the housing environment, but one can perceive the same kind of very
high-profile issue resulting in the over-importance of regulation. The
Minister needs to give me an assurance that there is not, in his
judgment, a risk of a knee-jerk reaction in the same way. That is what
I meant to say earlier
on. 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
115De-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
117Appeal
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
118Payments
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—
‘(1) Paragraph 2 (Payments and benefits to
officers and employees, &c) and paragraph 3 (Maximum amounts
payable by way of fees, expenses, &c) of Schedule 1 of the Housing
Act 1996 (c. 52) are hereby
repealed. (2) The Secretary of
State shall introduce regulations incorporating a code of conduct for
registered providers which deal with 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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