Housing and Regeneration Bill

[back to previous text]

Alistair Burt: I am following the Minister intently. Yes, that is where the weight of Government interest may be. However, the Government are subject to other swathes of opinion. The problem with the clause as it is drawn is that there is no guarantee that there may not be other matters—beyond the regulator’s stated objectives—that the Government might press on the regulator in order to force direction under clause 177. That is what the right hon. Member for Greenwich and Woolwich is getting at. I am not sure if he is making a clear enough distinction between the powers that the regulator should be using and the drive that will come from the Government.
12.45 pm
Mr. Wright: I have put on record my intention to look at the matter again. Although I am very keen to engage with my right hon. Friend the Member for Greenwich and Woolwich, with stakeholders and with others to reassure them as much as possible, a balance needs to be struck. The whole point of our proposed regulatory regime is to maintain and improve standards for tenants. Cave has suggested that that will take place in three broad areas: rents, physical maintenance of the estate and tenant consultation and engagement. That is important. I used my words very carefully, and I think that that is where the weight of Government interest will lie. Amendments will be brought forward to that effect. I do not want to pre-empt what I will do or pre-empt discussions that I am going to have with my right hon. Friend the Minister for Housing, and with stakeholders, but I think that I am hinting, as much as I can, what I intend to do.
I do not want to seek to direct very detailed standards. That is the job of the regulator. I do not wish to see or intend to use the power to secure detailed management control of registered providers on the part of the Secretary of State. We do not want to achieve that. I still maintain, regardless of all the concerns that have been raised, that it would not be possible to have any such detailed management control from the Secretary of State or the regulator.
In a previous sitting, we discussed the fundamental objectives of clause 86, which are a very important part of the Bill. Clause 86(11) states:
“Objective 10 is to regulate in a manner which—
(a) minimises interference, and
(b) is proportionate, consistent, transparent and accountable.”
That important objective should not be disregarded. The whole basis on which standards are set will be based on that 10th objective. I hope that that reassures the Committee.
Bearing in mind my commitment to look again at this whole area, I now come on to the extremely important issue of public sector classification, which gave me nightmares over the weekend. I am aware of the great concern over the private sector status of registered social landlords and Office for National Statistics classification, and I want to clarify the Government’s position. David Orr of the National Housing Federation and Lord Best mentioned their concerns in the oral evidence sessions. They do not want to see a change in the status of RSLs. Frankly, neither do the Government and we do not want to seek direct management control. What I hope to do is to liberate from the burden of regulation well-performing, viable RSLs, which have satisfied tenants.
As regards current powers and current ONS classification, let me make it very clear that ONS has already classified RSLs as being in the private sector for the purpose of national accounts. That classification was there before any changes in the Bill. It is true that the Housing Corporation already has certain strong powers. For example, it can already put directors on the boards of RSLs, it can hold an inquiry and transfer assets to another owner. It can also require consents to disposals of social homes. Such powers exist already and do not affect classification and we have no intention of changing them.
Mr. Raynsford: My hon. Friend is perfectly right to say that the Housing Corporation has significant powers. As I said earlier, that is appropriate and necessary, and is compatible with the non-public sector status and classification of housing associations. The important distinction is that under the existing regulatory framework, the Secretary of State does not have the powers in clause 177 to give direction to the Housing Corporation on standards to be complied with. That is the nub of my anxiety. The new legislation will create a direct chain of command: the Secretary of State can direct the regulator who can in turn impose standards on regulated bodies and require compliance with those standards. That is a new element that will—informed commentators have considered this—put at risk the non-public sector status.
Mr. Wright: I accept my right hon. Friend’s point. Under the Bill as it is currently drafted—I stress “as it is currently drafted”—the regulator’s standard-setting powers could be subject to direction from the Secretary of State. We are reconsidering that, and I pledge to keep the Committee and in particular my right hon. Friend informed on that issue.
My right hon. Friend made an important point about the Bill containing additional powers, but those powers are limited. They enable the regulator to impose fines and obtain compensation for tenants, and they require the transfer of management of poorly performing RSLs. The additional powers are much like those for normal, private sector utilities, and are modelled—to use the word of the moment—on the current, modern regulatory regime. They bring regulation into line with other regulated industries and are not, in any sense, management control.
Sir George Young: May I press the Minister on the evidence that the former Minister for Housing, now the Chief Secretary to the Treasury, gave to the Committee? She said:
“We have had considerable discussions with the Treasury. I have asked about potential arrangements for taking advice from the ONS in advance of the Committee stage, as opposed to the normal approach in which the ONS gets asked afterwards. It would be helpful to have its advice in advance, and I have asked for it.”——[Official Report, Housing and Regeneration Public Bill Committee, 13 December 2007; c. 142, Q233.]
What has happened to it?
Mr. Wright: I vividly remember that the right hon. Gentleman responded by saying something like, “Not half.” If he will allow me, I shall come to that important point in a moment or two.
First, let me explain the general thrust of my argument. The additional powers are similar to those for private sector utilities and are part of the regulatory regime. Nothing is changing in that regard. The powers bring regulation into line with other regulated industries and are not in any sense management control. I want to stress that point.
The regulator setting standards and fining bodies for transgressing them is no different from the water regulator fining a utility, or the Health and Safety Executive imposing fines. No one is saying that the bodies that are subject to that sort of regulation are public bodies. Let me give a few examples. Ofwat has powers to fine water and sewerage companies if they breach statutory duties or licence conditions or if they do not meet required standards of performance. The areas for which they are subject to licence conditions and standards of performance and for which they have statutory duties include breaching rules on training arrangements and providing substandard services to customers by failing to meet guaranteed standards of service.
Mr. Raynsford: I accept entirely the Minister’s analogy. He will know from what I argued earlier that I have no difficulty with standards being set for the core functions of protecting public finance and the interests of tenants. However, I do not know of any power requiring private utilities such as those delivering water to make a contribution to the environmental, economic and social well-being of an area. If there is such a power, I would be interested to hear about it. That is the worry about the formulation in the Bill—there is scope for mission creep. That point was raised by the hon. Member for North-East Bedfordshire, but I am also concerned that because of the wide range of issues on which the regulator can specify standards, and the ability of the Secretary of State to direct the creation of standards, there is the risk of a wider chain of command that might put the classification at risk.
Mr. Wright: I fully understand and appreciate the point raised by my right hon. Friend. We have already discussed issues about environmental and social well-being. Can I give notice to the Committee that, following my point about the utilities, I will go on to address the points made by the right hon. Member for North-West Hampshire with regard to what we have done about getting clarification from the ONS. I will then come on to the specific point about environmental, social and economic well-being.
The Health and Safety Executive is another example of a regulated body. It regulates and can impose fines for breaches of the Health and Safety at Work Act 1974—for example, a failure to ensure the health, safety and welfare of employees. Again, private companies remain classified as private sector for the purposes of national accounts. Ofgem regulates the gas and electricity networks and has powers to take enforcement action including imposing financial penalties for breaches of requirements imposed under various Acts—the Gas Act 1986 for example, or issues of unfair customer practices. The private sector classification of utilities such as the gas and electricity networks are not in any doubt. I am reluctant to mention this point, as I know that the right hon. Member for North-West Hampshire has a whole range of knowledge with regard to it. However, in terms of Network Rail and the whole rail infrastructure, the Office of Rail Regulation has a range of statutory powers under the Railways Act 1993. It issues licenses with a number of conditions or provisions with which the licence holder must comply. Given those important examples, the message is clear. There can be significant obligations placed on companies with regard to their regulations, without any question of their private sector status. I hope that reassures hon. Members.
The point raised by the right hon. Member for North-West Hampshire is important in terms of dealing with the ONS and the Treasury. There has been considerable discussion with the Treasury about the matter. During his review, Martin Cave discussed his emergent thinking with Treasury officials, to understand the implications for the classification of his proposed changes to the regulatory system. My own officials have discussed the changes proposed in present legislation with the Treasury during the detailed drafting and development of the Bill. A meeting took place on 2 October 2007. After the introduction of the Bill to the House, my officials again considered the changes in the Bill with the Treasury. That took place on 21 December 2007 after the oral evidence sessions.
Earlier this month on 7 January, the Chief Secretary to the Treasury, my right hon. Friend the Member for Pontefract and Castleford,who was then Minister for Housing, and I met with departmental and Treasury officials. We asked the Treasury at that meeting about the arrangements for taking advice from the ONS—precisely as my right hon. Friend the Member for Greenwich and Woolwich said in response to the question put by the right hon. Member for North-West Hampshire. We asked the Treasury in its capacity as experts on the production of the public finances, and, for want of a better term, the owner of the Government-ONS relationship—
Mr. Love: I am listening intently. As the Minister has indicated, this is a complex area. However, he will be aware of the recent Statistics and Registration Service Act 2007, which gives the ONS and statistics generally much greater independence from the Treasury. I wonder whether he has sought reassurance from the Treasury that his view would be reflected in the new ONS and statistics structure.
Mr. Wright: My hon. Friend has no idea how grateful I am for that intervention.
It being One o’clock, the Chairman adjourned the Committee without Question put, pursuant to the Standing Order.
Adjourned till this day at Four o’clock.
Previous Contents
House of Commons 
home page Parliament home page House of 
Lords home page search page enquiries ordering index

©Parliamentary copyright 2008
Prepared 30 January 2008