House of Commons portcullis
House of Commons
Session 2007 - 08
Publications on the internet
General Committee Debates
Housing and Regeneration

Housing and Regeneration Bill



The Committee consisted of the following Members:

Chairmen: Mr. Joe Benton , Mr. Roger Gale
Blackman, Liz (Vice-Chamberlain of Her Majesty's Household)
Blackman-Woods, Dr. Roberta (City of Durham) (Lab)
Brown, Lyn (West Ham) (Lab)
Burt, Alistair (North-East Bedfordshire) (Con)
George, Andrew (St. Ives) (LD)
Gwynne, Andrew (Denton and Reddish) (Lab)
Hurd, Mr. Nick (Ruislip-Northwood) (Con)
Love, Mr. Andrew (Edmonton) (Lab/Co-op)
Moran, Margaret (Luton, South) (Lab)
Öpik, Lembit (Montgomeryshire) (LD)
Raynsford, Mr. Nick (Greenwich and Woolwich) (Lab)
Shapps, Grant (Welwyn Hatfield) (Con)
Slaughter, Mr. Andy (Ealing, Acton and Shepherd's Bush) (Lab)
Smith, Ms Angela C. (Sheffield, Hillsborough) (Lab)
Syms, Mr. Robert (Poole) (Con)
Wright, Mr. Iain (Parliamentary Under-Secretary of State for Communities and Local Government)
Young, Sir George (North-West Hampshire) (Con)
Hannah Weston, Committee Clerk
† attended the Committee

Public Bill Committee

Tuesday 29 January 2008

(Afternoon)

[Mr. Joe Benton in the Chair]

Housing and Regeneration Bill

Clause 172

Overview
Amendment proposed [this day]: No. 345, in clause 172, page 67, line 29, leave out ‘compliance’ and insert ‘performance’.—[Mr. Raynsford.]
4 pm
Question again proposed, That the amendment be made.
The Chairman: I remind the Committee that with this we are discussing the following: amendment No. 44, in clause 173, page 68, line 3, after ‘may’ insert
‘, in accordance with subsection (2) and subject to subsection (3),’.
Amendment No. 41, in clause 173, page 68, line 3, leave out ‘as’ and insert
‘for the purpose of protecting investment in social housing or protecting the interests of tenants and residents in social housing. These standards may refer’
Amendment No. 45, in clause 173, page 68, line 7, leave out from ‘may’ to the end of line 8 and insert ‘cover-’
Government amendment No. 229.
Amendment No. 42, in clause 173, page 68, leave out lines 22 and 23.
Amendment No. 43, in clause 173, page 68, line 24, at end insert—
‘(3) In setting standards the regulator shall have regard (among other matters) to landlords’ contribution to the environmental, social and economic well-being of the areas in which their property is situated.’.
Amendment No. 47, in clause 174, page 68, line 27, at end insert—
‘(2) In setting standards, the regulator shall have regard (among other matters) to providers’ contribution to the environmental, social and economic well-being of the areas in which their property is situated.’.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr. Iain Wright): It is good to see you in the Chair, Mr. Benton. It seems like a long time since you were last presiding over us.
My hon. Friend the Member for Edmonton, who is not in his place at the moment, has mentioned the independence of the Office for National Statistics. The position is clear. It is not for Departments to approach the ONS directly as part of their development of Government policy, which would risk compromising the independence of the ONS. All discussions on such matters are conducted through Her Majesty’s Treasury, which has advised us that the changes proposed under the Bill are not salient to the classification decision. It is not therefore appropriate to consult the ONS on the changes. I suggest to the Committee that that is the proper process and, on that basis, I am clear that the proposed changes do not amount to direct management control, which has been suggested, and that the Bill does not change the classification process.
Mr. Nick Raynsford (Greenwich and Woolwich) (Lab): Reference has been made to a number of experts who have commented on the issue. Julian Ashby, who gave evidence on 13 December, said:
“When working on the Cave review...we sought advice about the classification...The aspect of the Bill that gives me concern relates to clause 177...It seems to undermine the purpose of having an independent regulator if the Secretary of State then determines the detail of the standards that were for the regulator to set.”——[Official Report, Housing and Regeneration Public Bill Committee, 13 December 2007; c. 87, Q140.]
I could go on, because he gave clear evidence. When he was on the Cave review, he took evidence from the Treasury, but he expressed concern that the Bill, as drafted, did not achieve the objective that the Cave review felt was the right way forward. Does my hon. Friend consider that there is really ground for worry and that, by some means or another, the view of the ONS should be sought before the situation becomes a fait accompli with disastrous consequences?
Mr. Wright: I agree with my right hon. Friend that it is important to make sure that we get matters right, and I am satisfied that we have followed the due process in that regard. I hope that he will intervene, if I have matters wrong, but at the evidence session Julian Ashby said something about the Secretary of State determining the detail of standards—I hope that I understood him correctly, because I do not have a copy of the report in front of me. I suggest that that is not even how the current regime that we propose stands. The Secretary of State will not direct in detail the nature of standards, and it will be a broad-brush approach. The regulator will undertake that direction, but we do not anticipate the Secretary of State taking part in direct detail.
Mr. Raynsford: Julian Ashby is recorded as saying:
“The aspect of the Bill that gives me concern relates to clause 177, in which the Secretary of State will have the power to direct the regulator not simply to set standards in particular areas but to set the content of those standards. It seems to undermine the purpose of having an independent regulator if the Secretary of State then determines the detail of the standards that were for the regulator to set.”
He goes on:
“The overall assessment of whether something is a public body is made on a rounded judgment. It is not a single issue matter, but the more the Government have the power to intervene directly, the greater is the risk of classification as a public body.”——[Official Report, Housing and Regeneration Public Bill Committee, 13 December 2007; c. 87-88, Q140. ]
The experience of foundation hospitals is such that we should be very wary indeed in respect of classification.
Mr. Wright: I agree that we should be absolutely certain. My firm feeling is that the Bill does not represent my right hon. Friend’s interpretation of it. However, I am aware of the worry about such matters. I hope that he agrees that the right approach is to work in consultation with stakeholders and that he and others will play a large role in ensuring that we get the matter absolutely right. I do not agree with the concerns about direct management control. However, I hope that we can move forward on particular areas such as directions, guidance and standards in which the Secretary of State is interested.
Amendment No. 42 proposes to omit clause 173(2)(k), which permits the regulator to set standards on
“landlords’ contribution to the environmental, social and economic well-being of the areas in which their property is situated”.
That was mentioned by my right hon. Friend this morning, and it has been reiterated several times during the Bill’s deliberations. There is concern that the regulator may be able to set and enforce standards on non-social housing issues, including local voluntary activities—we certainly do not want to discourage such activities.
As I explained in the debate on clause 86, while subsection (2)(k) would allow the regulator to regulate such activities, if they are linked to social housing, it does not necessarily follow that that power will be used. The regulator does not have to use that power, and there might be more appropriate ways of achieving the regulator’s sixth objective. Nevertheless, we believe that the regulator should have power to regulate registered providers’ wider community activities. Martin Cave recommended that all parts of the domain should have a statutory duty to co-operate with the convening and place-shaping role of local authorities. That obligation will be stronger in areas in which a provider has a significant number of homes. I share my right hon. Friend’s concern that any requirements imposed on registered providers in relation to place shaping should not be unduly or disproportionately onerous. That is why we rejected imposing a direct statutory duty, as the Cave review suggested. It would be difficult adequately to express in the Bill the idea that the strength of the obligation should vary depending on the extent of the landlords’ activities in an area.
Subsection (2)(k) was included to ensure that registered social landlords co-operate with local authorities in local place shaping, but in a reasonable and proportionate manner to their holdings in an area. By giving the regulator the power to set standards, acting in accordance with its objectives to regulate proportionately and in a way that minimises the burden of regulation, I believe that we are carrying forward the spirit of Cave’s recommendations, but in a manner that is less onerous and more flexible and practical.
My right hon. Friend the Member for Greenwich and Woolwich also expressed concern about what a standard under clause 173(2)(k) might require. However, that is not for me to say, because such standards will be set by the regulator. On that basis, I hope that I have reassured him on a whole range of things, and I hope that I have made it clear that the Government intend to move forward on the regulator, the setting of standards and the role of the Secretary of State. Therefore, I ask my right hon. Friend to withdraw the amendment.
Government amendment No. 229 is our only amendment to clause 173. It is a technical amendment that will insert
“policy and procedures required by section 218A of the Housing Act 1996 in connection with”
before “anti-social behaviour” in subsection (2)(j). The aim is to clarify that standards on antisocial behaviour should only be in respect of existing duties and powers of landlords under the 1996 Act and should not be a wider, open-ended power. In that way, I hope that we are mitigating the concerns and risks that stakeholders have expressed with regard to the antisocial behaviour standard as well. That is the approach that I aim to take forward as the Bill progress through all its stages.
I hope that I have explained my policy and position in detail and that I have reassured hon. Members.
Sir George Young (North-West Hampshire) (Con): I want briefly to respond to what the Minister said before he moved on to the Government amendment. I agree with him that this is one of the most important issues in the Bill, as the right hon. Member for Greenwich and Woolwich has also said. It is the obverse of the problem with Soci(c)t(c) G(c)n(c)rale, which thought that there was something on the balance sheet and then discovered that it was not. With this, the Government thought that something was off the balance sheet, but they may discover that it is inadvertently on it. That is the other side of the coin.
Before we rose for lunch, the Minister said that he would look at the issue again and engage opinions on it before Third Reading. That was helpful, but I am worried that he is relying on meetings with Treasury officials. Treasury officials are not omniscient. They were wrong about foundation hospitals—they said that they would be off balance sheet, but they turned out to be on balance sheet. There is a risk in relying on Treasury opinion. I am sorry to press the Minister, but I remind him what the Chief Secretary to the Treasury, the former Minister for Housing, said about the ONS:
“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.]
In other words, she asked the ONS for its advice. However, the Minister has not made it clear what the advice might have been.
The Minister said—I think that I understood him—that it would be improper to have a dialogue with the ONS, because it is independent. I do not follow that line of argument. Yes, it is independent, but what would be wrong with the Government saying, “We must get this definition right. This is what is in the Bill. Will you tell us whether we run the risk of having the debt classified as public sector borrowing?” What would be improper about such a dialogue, which seems entirely sensible? Indeed, the Chief Secretary to the Treasury thought it was sensible on 12 December. Now, there will be no direct dialogue with the ONS and the matter must go through the Treasury, which will not put the question to the ONS directly.
I want to press the Minister about the alleged impropriety of talking in advance to the ONS about the likely definition of housing association borrowings. I have listened to what he has said about the measure simply bringing the social housing regulator into line with other regulators. I do not know whether in his nightmare weekend he read the Centre for Economics and Business Research report that compared this regulator with all the others. The powers in this Bill go way beyond those of other regulators. For example, as we discovered a few moments ago, appeals against this regulator can be made only to the High Court, whereas other regulators have an appeal body. The Charities Act 2006 states that charity commissioners
“shall not be subject to the direction or control of any Minister of the Crown”.
The rail regulator, despite much pressure to the contrary, is only required “to have regard” to Government guidance. On Ofcom, there are a few occasions where the Secretary of State can make directions, but those are in the interests of national security, relations with a foreign Government, for securing compliance with international obligations or in the interests of public safety or public health. Those definitions are much narrower than the definitions in the Bill.
Having listened to the debate, my anxieties have not been allayed. The Government could go further than they have so far in getting the necessary assurances from the ONS that the debt likely to be incurred will not be scored as public sector debt. As a responsible Minister, he owes it to the Committee to come back on Report with better assurances than he has given today.
Mr. Wright: The matter is important, and I appreciate the way in which the right hon. Gentleman has set out his concerns. As I have said, I am satisfied that we have followed due process. I appreciate that the provision is a very important part of the Bill, and we want to get it right. There are concerns, and I have pledged to the Committee that I will go away and re-examine the matter to reassure the Committee and wider stakeholders that management control—direct micro-management by the Secretary of State—will not be enacted as a result of the Bill’s provisions. I recognise the point, but I want to reaffirm that I am satisfied that we have followed due process in liaising with the Treasury and discussing its interpretation of the issue. I understand the point about going directly to the ONS, but I am clear that what we have done will not comprise the independence of the ONS, notwithstanding what has been said about the matter.
4.15 pm
Mr. Andrew Love (Edmonton) (Lab/Co-op): I apologise to the Minister for not being present when he answered the question that I asked immediately before we broke for lunch. To follow up the comments made by the right hon. Member for North-West Hampshire, this area is incredibly complex. I understand what the Minister said about the propriety of speaking about independent organisations, but I shall choose just one particular complexity in relation to Network Rail. There has been constant discussion about whether Network Rail is in or out and whether it has public sector debt, which gives a flavour of the complexity. Before the Bill is enacted, it is important that reassurance is provided that what the Government intend to do with the Bill will actually be carried through and will hold firm into the future.
Mr. Wright: That is exactly what we all want. I am disappointed that my hon. Friend was not here, because my answer was, if I may say so, spectacular. It sorted out all the problems—I wish. My hon. Friend has made an important point about Network Rail, as has the right hon. Member for North-West Hampshire on foundation trusts.
When I was having my nightmare weekend reading about the Committee from 2003, I noticed a comment by the right hon. Member for North-West Hampshire on foundation trusts. He said that
“The Under-Secretary can provide no precedent”—
the Under-Secretary was my right hon. Friend the Secretary of State for Communities and Local Government—
“for the corporate vehicle that is envisaged in the Bill.”——[Official Report, Health and Social Care (Community Health and Standards) Public Bill Committee, 13 May 2003; c. 48.]
I suggest to the right hon. Gentleman that we are some way away from that. Foundation trusts were a new platform for the delivery and provision of health care, and we are in no way near that. I hope that that provides a degree of reassurance. In that Committee, the right hon. Gentleman also suggested to the then Under-Secretary that he wished to see her rapidly promoted to Minister of State, Office of the Deputy Prime Minister, but she has done one better than that, because she is now a Secretary of State.
The point about foundation trusts is important, and I hope that the right hon. Gentleman is reassured that we have not gone as far as that on innovative new vehicles, because RSLs are essentially the same as registered providers. We cannot get that important matter wrong. I shall go away and look at it to ensure that I can provide greater reassurance on Report.
Mr. Raynsford: We have had a good debate and aired a number of extremely important issues. I do not think that any of us should underestimate the significance of what we have been talking about, because if the classification issue is not got right, the whole strategy for delivering an expanded housing programme and for facilitating investment through housing associations is destroyed. Therefore, I am pleased that the Minister has accepted that there is a need for further reflection and that he has welcomed the participation of the stakeholders in that process. I shall be only too happy to continue to play a role in that, if he would welcome it.
We need to consider the structure of this part of the Bill, and the Minister has indicated that that will be examined. We need to be absolutely satisfied that the way forward does not have the malign consequences that have been pointed out by the right hon. Member for North-West Hampshire, my hon. Friend the Member for Edmonton and me.
This is the moment for me to seek leave to withdraw the amendment, and I shall do so. I will add the slightly mischievous comment that given the Minister’s concern that the consultation with the ONS should be done only through the Treasury, he is extraordinarily well placed, in that the Chief Secretary to the Treasury, the former Minister for Housing, can pursue her inquiries in her new role without any breach of propriety. I hope that the clarification of the position on the ONS proceeds and that we will have greater certainty when we return to the matter.
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr. Raynsford: I beg to move amendment No. 346, in clause 172, page 67, line 30, leave out from ‘regulator’ to ‘registered’ in line 31 and insert
‘certain powers relating to the governing instruments of’.
The Chairman: With this it will be convenient to discuss the following:
Amendment No. 350, in clause 188, page 72, line 31, leave out from ‘office’ to end of line 36 and insert ‘or,
(c) rules, except as provided in subsection (3).
(3) The regulator’s prior written consent is required to any change in the society’s objects, or any change in the society’s rules directing the application of its property in the event of its dissolution, or any change providing authorisation for any benefit to be obtained by directors or members of the society or persons connected with them.
(4) Any change requiring the regulator’s consent shall be invalid unless such consent has been obtained.
(5) In respect of changes requiring the regulator’s consent, the requirement in section 10(1) of the Industrial and Provident Societies Act 1965 (c. 12) (sending copies of amendment of rules to FSA) is satisfied only if the copies are accompanied by a copy of the regulator’s consent.’.
Amendment No. 351, in clause 190, page 73, line 10, leave out from ‘office’ to end of line 15 and insert ‘or,
(c) memorandum and articles of association, except as provided in subsection (3).
(3) The regulator’s prior written consent is required to any change in the objects clause in the company’s memorandum of association, or any change in the company’s memorandum or articles of association directing the application of its property in the event of its dissolution, or any change in the company’s memorandum or articles of association providing authorisation for any benefit to be obtained by directors or members of the company or persons connected with them.
(4) Any change requiring the regulator’s consent shall be invalid unless such consent has been obtained.
(5) In respect of changes requiring the regulator’s consent, the requirement in section 30 of the Companies Act 2006 (c. 46) (sending copy of resolution to registrar) is satisfied only if the copy is accompanied by a copy of the regulator’s consent.’.
Clause 187 stand part.
Mr. Raynsford: I will not detain the Committee, because the amendments are broadly similar to those that we have debated. Amendment No. 346 would amend clause 172(c), which gives the regulator a
“degree of control over the governance of non-profit registered providers”,
to give a slightly more felicitous wording, so that the regulator would have
“certain powers relating to the governing instruments of”
registered providers. Obviously, the purpose is to safeguard against a possible interpretation of the “degree of control” to be exercised over RSLs, which might lead to their being classified as public sector bodies. Those arguments have been rehearsed, and there is no point repeating them.
Amendments Nos. 350 and 351 are of a different nature. I am puzzled about the grouping, but that is not for me to question—it is your decision, Mr. Benton. The amendments concern the smaller issue of the consent that is required by RSLs who seek to change the rules. Under the Bill, the regulator must give prior consent for any changes in the rules. The amendments would limit that consent to important changes in the organisation’s objectives, changes in the rules that apply to the use of property in the event of an organisation going out of existence, or any changes
“providing authorisation for any benefit to be obtained by directors or members”
of the organisation
“or persons connected with them”.
Those would be proper safeguards. Prior consent for such changes from the regulator is appropriate, and more technical or trivial changes really ought not to require prior consent from the regulator. If we are seeking to act on the conclusions of the Elton review, which looked at the degree to which housing associations are subject to over-heavy regulation, this is a matter where there is scope for improvement.
I hope that my hon. Friend the Minister can at least reassure me on the objectives of the amendments, even if he will resist the precise wording. It is in all our interests that there is an effective form of regulation that does not involve over-detailed or over-intrusive examination of relatively trivial matters.
Andrew George (St. Ives) (LD): Will the right hon. Gentleman comment on the need to ensure cross-compliance between the regulations on housing associations proposed under the Bill, and the Charities Act 2006, which, I understand, contains similar wording to the amendments? Cross-compliance would surely add to the robustness sought by the amendments.
Mr. Raynsford: I am grateful to the hon. Gentleman for raising that germane point. We should ensure consistency between the different regulatory regimes that apply in general to housing associations, and specifically to those that are charities, and other charities.
Those are the purposes of the amendments, and I hope that my hon. Friend the Minister will give them sympathetic consideration.
Mr. Wright: I have a lot of sympathy with the motivation behind amendments Nos. 350 and 351. As my right hon. Friend has rightly pointed out, they identify the key areas of interest for the regulator in a provider’s constitution. However, I hope that my right hon. Friend accepts that I cannot accept the amendments without first considering a detailed analysis of the risks of removing the existing controls. I pledge to do that, and I hope to update him on Report.
On amendment No. 346, I agree that the regulator should not and will not have general control over a registered provider’s day-to-day management or activities. I suggest that that will remain the responsibility of registered providers’ governing boards, which is how it should be. Clauses 187 to 190 do not apply to profit-making bodies, and nor should they. The main aim of requiring the regulator’s consent to a non-profit body’s change of constitution is to ensure that it retains its non-profit status and housing focus and cannot realise and distribute publicly funded social housing assets. As my right hon. Friend is aware, we are introducing amendments to strengthen that system, and I suggest that that is irrelevant to profit-making bodies.
As I have said, I have much sympathy with amendments Nos. 350 and 351. I would like to carry out a detailed assessment of the potential impacts and risks, but I am amenable and willing to consider the matter further. On that basis, I hope that my right hon. Friend will withdraw the amendment.
Mr. Raynsford: The Minister has given a fair response, and I accept his undertaking to have a further look at the matter.
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 172 ordered to stand part of the Bill.
 
Contents Continue
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