Housing and Regeneration Bill

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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.
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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—
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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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