Clause
173
Provision
of social
housing
Amendment
made: No. 229, in clause 173, page 68,
line 21, before ‘anti-social behaviour’
insert
‘policies and procedures required by
section 218A of the Housing Act 1996 (c. 52) in connection
with’.—[Mr.
Wright.]
Mr.
Raynsford:
I beg to move amendment No. 46, in
clause 173, page 68, line 24, at
end insert—
‘(3) No standard
may be set that would require a registered provider to act in any way
that is inconsistent
with—
(a) its rules,
memorandum and articles of association, or equivalent governing
instrument;
(b) any legal or
contractual commitment, including any loan covenant, for the time being
binding upon it; or
(c) or if
applicable, its status as a charity (whether or not it is registered as
such).’.
The
Chairman:
With this it will be convenient to discuss
amendment No. 48, in clause 174, page 68,
line 27, at end
insert—
‘(2) No standard may
be set that would require a registered provider to act in any way that
is inconistent with—
(a)
its rules, memorandum and articles of association, or equivalent
governing instrument;
(b) any
legal or contractual commitment, including any loan covenant, for the
time being binding upon it;
or
(c) if applicable, its
status as a charity (whether or not registered as
such).’.
Mr.
Raynsford:
This is another take on the
classification of housing associations, but it also raises an important
question about their rightful independence and their ability to manage
themselves. The amendments would avoid a conflict between the standards
set by the regulator and the rules, memorandums and articles of
association or equivalent governing instruments of the registered
bodies.
The
amendments provide
that:
“No
standard may be set that would require a registered provider to act in
any way that is inconsistent
with”
its rules and
articles. That is a sound principle for regulation, and it would
provide a safeguard in relation to the classification issue, which we
have discussed already—I do not intend to repeat the details,
because the arguments have been well rehearsed. I shall say no more
than that the amendments would provide one
further safeguard. I expect the Minister to say that he will consider
the amendments along with the other issues identified as part of the
general appraisal of the structure of this part of the Bill. If he can
provide that undertaking, I shall happily seek leave to withdraw the
amendment.
Mr.
Wright:
In order to make progress, I am tempted just to
say yes and sit down, but I cannot do that. I intend to consider the
matter further, but I would prefer to provide a slightly longer answer.
As with most things that my right hon. Friend does, I have much
sympathy with amendment No. 46. As he has said, it is designed to
maintain the independence of RSLs. However, I do not believe that the
amendments are necessary, because I am satisfied that the Bill
preserves that independence. Having said that, I shall reconsider the
whole matter.
I have
several concerns about how the proposal would work in practice. I am
concerned that providers would exploit it in order to evade standards.
Furthermore, constitutions cannot be changed easily. Under clauses 188
and 190, non-profit providers will require the regulator’s
consent to such changes, or the Charity Commission’s consent if
the provider is a charity. Given that profit-making providers can
change their constitutions without the regulator’s consent, such
a provider could, in theory, change its constitution so that a
particularly disliked standard did not apply. Without first checking
every provider’s constitution, it would be impossible for the
regulator to be absolutely certain that its standards were not in
conflict.
4.30
pm
Contracts can
easily be entered into by providers. The regulator cannot restrict such
transactions, save during a moratorium when a provider is insolvent or,
under Government new clauses 55 and 56—should they be
accepted—during or following a public inquiry into a
provider’s affairs to protect the provider’s tenants or
assets. I would be concerned about allowing providers such an easy
means of evasion.
My
second concern is that such opt-outs might lead to a multi-speed
regulatory system in which every provider has a different set of
standards. Our aim is to have a clear set of standards that deliver
equivalent outcomes to tenants, regardless of the identity of their
landlord, notwithstanding our debates on a whole range of issues in
this regard. I suggest that the amendment would make that harder to
achieve.
Thirdly, and
most vividly, the amendments would make it unclear who should judge
whether a standard violates a constitution, contract or charitable
status. If it is not the regulator or provider, the issue might end up
in the courts, which would be expensive and time-consuming. We do not
want this issue to dominate the regulator’s time or to delay the
standard-setting process if that can be avoided. As regards charitable
status, we would have to be absolutely sure what it meant, especially
with unregulated
charities.
Amendment
No. 48 does the same as amendment No. 46 but in relation to clause 174,
and some of the same issues apply. I recognise that the regulator needs
to handle governance according to the nature of the organisation, and
that it already has slightly separate powers in relation to charitable
housing associations.
Whatever standards it sets in considering what enforcement action, if
any, to take in the event of a provider’s non-compliance, the
regulator will have discretion. It will have to act within its
fundamental objectives, including, as I am fond of
saying, minimising interference and acting proportionately within its
compliance code. The
new enforcement powers in chapter 7 will give providers an opportunity
to make representations before the regulator acts, and to offer
undertakings. If a registered provider has genuine, good reasons for
not complying with a particular standard—for example, if its
constitution does not permit it to carry out a particular
activity—I imagine that the regulator would act
sensibly.
Andrew
George:
The Minister has painted the social housing
providers that would be regulated as bodies that would seek not to
co-operate with the guidance and regulations set down by the new
regulator. Will he describe the problem for which this regulation is
the solution? To what extent do RSLs perpetually seek to avoid their
responsibilities? From the comments that he has just made, one
would assume that they are not co-operative and perpetually
seek to avoid their responsibilities.
Mr.
Wright:
I do not want to paint a bleak picture full of
dark foreboding. In my experience, the RSL sector, on the whole, steps
up to the plate a great deal to ensure that tenants are well provided
for. However, I am sure that the hon. Gentleman sat, as I did, through
Second Reading. My hon. Friends the Members for West Ham and for
Islington, South and Finsbury (Emily Thornberry) have talked about
rat-infested estates in which tenants are being let down. The whole
point of having a regulatory regime is to ensure that we raise
standards. That is the purpose of the measures and I hope that the hon.
Gentleman agrees with
that.
Lyn
Brown (West Ham) (Lab): I rise only to say that in my
inbox today I had yet another poor response from a housing association
that has not responded to two letters of mine sent three months apart.
I am really looking forward to the regulation kicking in
pronto.
Mr.
Wright:
I am very grateful to my hon. Friend. In response
to the hon. Member for St. Ives, I would say that that is his
answer.
Mr.
Raynsford:
The Minister’s case against accepting
the amendments is twofold. First, there might a temptation for some
providers—possibly private sector providers—to abuse the
powers in order to limit regulatory burdens. Secondly, it could result
in excessive complications and possibly litigation if the regulator
were to set standards that were, in any respect, in conflict with the
articles of any legal registered body. There are answers to both those
points. The whole purpose of the regulation should not be driven by the
tail, but by the dog. As the hon. Member for St. Ives pointed out, the
vast majority of registered social landlords are only too happy to have
articles and memorandums that are consistent with the standards that
are likely to be set. Therefore, there is a sense of an
argument being used on the basis of a minority, rather than majority.
Nevertheless, I accept that it is a concern that the Minister
raises.
On the second
issue, frankly, the regulator will take legal advice on any standards
that are set. The regulator will be satisfied if the standards are
compatible with the aims, objectives, articles and memorandums of the
majority of bodies that are registered with it. It would be very
foolish for them to be otherwise, as that would inevitably invite
litigation. I do not see that as a really serious obstacle,
particularly if there are models, rules and articles that will be
adopted by the overwhelming majority of bodies that seek registration.
They will probably seek advice from the same legal experts who will be
advising the regulator. One thing that we can be quite certain about is
that the lawyers will do well out of this process. I am not sure that I
entirely go along with the Minister’s arguments, but I accept,
with a degree of sympathy, his good faith in wanting to look at the
matter further. I therefore beg leave to withdraw the
amendment.
Amendment,
by leave,
withdrawn.
Question
proposed, That the clause, as amended, stand part of the
Bill.
Sir
George Young:
I want to press the Minister on subsection
(2), which looks remarkably like a list to me. It sets out the
standards with which registered providers have to comply. Subsection
(2)(e) is on the levels of rent. I would have said that the level of
rent is what one pays for a standard, rather than its being a standard
itself. I am concerned that some very sensitive decisions about rent
levels will be subcontracted to the regulator. I want to press the
Minister on the freedom that the regulator might have. Rent levels are
enormously sensitive economic and political indicators. They impact on
inflation, on public expenditure through housing benefit and on the
number of new homes that are going to be built, because that affects
the income of a housing association.
I wonder whether the Minister
is going to leave to the regulator this total discretion on rent
levels, including provision for minimum or maximum levels, or whether
the Secretary of State will give a direction on this under clause 177.
When local authority homes come within the embrace of the regulator,
will he really set the level of local authority rents, as well as
housing association rents? The Minister looks puzzled, and I am waiting
to hear what the answer might be. If the social housing regulator is
going to set the level of rents for local authorities, that is a
serious move in respect of the autonomy of local authorities
and the consequences on the housing revenue account. Also, such a move
might have consequences for any attempts to harmonise rents if they did
not come within the ambit of the social housing regulator. If he is
going to have this level of discretion under subsection (2)(e), do we
have any idea what principles he will follow? Will he move towards
market rents, or towards cost rents? Will he use the existing rents
plus the retail price index? This is an enormous discretion to give
him. I suspect that the Minister may say that under clause 177, the
Secretary of State will constrain that discretion for the reasons that
I have given. If so, when we come to clause 177, perhaps the Minister
might outline what parameters he will put around subsection (2)(e), so
that
housing association tenants know roughly what sort of regime will be
introduced by the social housing regulator.
Mr.
Andy Slaughter (Ealing, Acton and Shepherd's Bush) (Lab):
I entirely agree with the right hon. Member for North-West Hampshire
about the wide ambit of the provisions under subsection (2), even
though they may be qualified by intervention and direction, and so
forth. In my view, it is right to keep that ambit wide—the
assumption must be that it will be used in the exception rather than
the rule. However, a problem has been articulated by a number of
members of the Committee, and when social landlords are not fulfilling
the function that I am sure most of us would wish to see them fulfil,
tinkering at the edges will not be an acceptable provision.
When I spoke on Second Reading
I alluded to an example of getting the balance right in a particular
area in terms of housing supply. It may be a question not simply of the
number of units but the type of units—mixed tenure estates, for
example—and the emphasis being on renting rather than shared or
intermediate ownership. That is a particular problem, as I have said,
with both local authority and RSL provision. On Second Reading, I was
highly critical of a number of RSLs operating in west London. I
received a comment from one of the leading RSLs that I
criticised—Notting Hill housing trust—and this is an
example of why it is necessary to have this stick in reserve, as it
were.
I said that in
the rush to home ownership, renting tenants of that association were
being neglected. Its response was that it was true that it gives a lot
of emphasis to helping tenants fulfil their home ownership aspirations,
but it did not do that at the expense of those tenants who did not
want, or could not yet afford, to take on the responsibilities and
costs associated with home ownership. Nor did it proceed at the expense
of those who were not able to secure social housing. That language has
exactly the same ring as the paragraph that I quoted during last
Thursday’s sitting, about the Opposition’s policy review
document. I hope that I am not digressing too far—it may be more
of a point of order than a contribution, but we will see.
The quotation
in question came from the Conservative policy review, and I never tire
of repeating
it:
“Living in
social housing should be viewed as a transition during which support is
temporarily required before moving up the ‘ladder’ to
some form of shared or outright
ownership,”
That
quotation, which I constantly see parroted by RSLs as well as by
Conservative local authorities, was not attributed in the Official
Report. In other words, there is no indication at that stage,
although I am certain that I gave it, as to where that quotation came
from. I know where it came from, because when the hon. Member for
Welwyn Hatfield leapt to his feet, or got slowly to his feet, a column
later, at column 544, in an anxiety to put some distance—some
clear blue water—between his own policy review and his Front
Bench, he
said:
“Such a
claim simply cannot go on the
record.”——[Official Report, Housing and
Regeneration Public Bill Committee, 24 January 2008; c.
544.]
I feel rather sad that the hon.
Gentleman has been taken at his word and that has not gone on the
record. I make no criticism of the Official Report, other
than to make the correction in parentheses. Few people take much notice
of what the hon. Gentleman says on housing policy, nor am I sure that
they should. I am slightly deviating from the subject, but the point is
clear. Opportunities are being taken daily now, particularly when
problems arise in high-value land areas with RSLs and local authorities
straying
off—
4.45
pm
The
Chairman:
Order. We are moving slightly away from
the clause. I ask the hon. Gentleman to come back to the debate on
clause stand
part.
Mr.
Slaughter:
The point has been made. I understand the
criticisms made by the right hon. Member for North-West Hampshire, but
over-limiting the criteria under subsection (2) will not deliver the
purpose of the Government’s
proposal.
Andrew
George:
I seek reassurance from the Minister with regard
to subsection (2)(k) on
“environmental, social and
economic well-being of the
areas”
in which RSLs
provide their property. I want confirmation that their contribution
will be in proportion to their interests within the area. There are
many circumstances in which they might have a small collection of
properties that have been developed as a result of a quota on a site,
which is primarily and predominantly private sector development.
However, it would be inappropriate if, as a result of the standards set
by the regulator, RSLs had to provide a disproportionate contribution
to the environmental, social and economic well-being of the area and,
thus, let off the private sector provider of the bulk of the
properties. There are many times when, particularly in rural
areas, the local playing field or local environmental parking
arrangements and other facilities provide for the whole of the
community, not only those living in the small collection of houses
provided by RSLs. I would much appreciate the Minister putting it on
record that the regulation would be applied
proportionately.
Mr.
Wright:
The right hon. Member for North-West Hampshire
made a good point about standards and rents. I think that I am clear
about such matters: the regulator will be able to set standards for the
rent policy for registered providers. Under clause 177, I expect
directions from the Secretary of State to apply with regard to
standards in respect of registered provider rents. I have said that I
will look again at the issue. The Cave report was clear that standards
should be set with regard to the rent-setting regime. That is an
important line in the
sand.
As the right
hon. Gentleman hinted during his contribution, rent-setting is
important to the whole housing benefit bill and wider Government
economic policy. It is right and proper that the Secretary of State has
the ability to direct the regulator to set a standard with regard to
registered provider rents. Initially, I expect that to operate along
the same lines as the rent-influencing regime, but the right hon.
Gentleman
mentioned an important point about local authorities. In a sense, he hit
the nail on the head as to why we cannot have the single domain
regulator. There are
real practical difficulties. The right hon. Gentleman said that huge
issues would need to be addressed, which is what the advisory group
headed by Professor Ian Cole from Sheffield is doing at present. We are
considering how regulations and standards could apply to the local
authority stock, which is one of the reasons why we could not move more
quickly to a single domain regulator.
The right hon. Member for
North-West Hampshire asked—I think—about subsection
(2)(k). I do not know whether he was here for the start of
today’s sitting when I explained, in response to a point made by
my right hon. Friend the Member for Greenwich and Woolwich, that
compliance will be proportionate to a provider’s stock in the
particular area. I do not want to labour the point, but hope that the
right hon. Gentleman and my right hon. Friend are reassured.
Question put and agreed
to.
Clause
173
, as amended,
ordered to stand part of the
Bill.
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