Clause
174
Management
Mr.
Wright:
I beg to move amendment No. 230, in
clause 174, page 68, line 26, leave
out
‘non-profit’.
The
Chairman:
With this it will be convenient to discuss
Government amendment No.
231
Mr.
Wright:
The governance and viability of registered
providers will be a central concern of the new regulator. A poorly run
or non-viable provider will inevitably be bad for tenants and might
become insolvent—something that has happened in recent weeks.
That should be avoided if possible and cannot be allowed to impact on
the security of tenants’ homes. Clause 174 gives the regulator
the power to set standards for registered non-profit providers relating
to the management of their financial and other affairs. The amendments
will also permit such standards to be set for profit-making providers,
but only in respect of the social housing that they own, because, for
example, the regulator might need to ensure that profit-making
providers make adequate financial provision to cover future repair
costs of social
housing.
As I have
mentioned on a number of occasions—certainly this
morning—during the Committee’s deliberations, we expect
social housing activities to form a much smaller proportion of the
overall business of registered profit-making providers than of existing
RSLs. As a result, it would be disproportionate for the regulator to
set standards for governance and viability for all of the affairs of a
profit-making provider. Shareholders and other owners hold to account
the board of a share-distributing, private company. However, to the
extent that threats to governance and viability might jeopardise the
necessary protections we are seeking to secure for social housing
tenants, the
regulator should have a more limited role in setting standards for the
proper conduct of a profit-making body’s social housing
business. The hon.
Member for Montgomeryshire is not here, but he raised a number of
issues this morning about amendment No. 230. He asked how it relates to
clause 123. The point is that good housing management might require a
provider to put aside enough money for repairs, as I mentioned earlier,
to which the ability to make accounting directions is relevant. The
provider might need contingent liabilities on a range of things that
need to be addressed, and it is necessary for accounts to show that.
Financial viability standards for profit-making providers are likely to
involve ensuring sufficient money or liability to make repairs a
practical concern. I hope that the hon. Member for St. Ives will pass
that on to the hon. Member for Montgomeryshire. This is a sensible
group of amendments that will ensure that tenants of social housing are
adequately protected. I hope that hon. Members will accept
them.
Andrew
George:
I have discussed this matter with my hon. Friend
the Member for Montgomeryshire, who welcomes the amendments, which are
in the spirit of those to which he spoke in this morning’s
sitting. I welcome the amendments. My only question to the Minister
concerns the restrictions in amendment No. 231, which
states:
“In
respect of profit-making registered providers, standards may be made in
relation to the management of their affairs only so far as relating to
the provision of social
housing”.
In that
respect, presumably by defining social housing as that part of the
stock provided by the profit-making registered provider, can a local
authority have some influence on allocations to those properties?
Perhaps there is another definition of what the social housing element
of the profit-making provider is. I encourage the Minister to expand
his definition of the extent to which regulation should apply to
profit-making
providers.
Surely, in
some circumstances, the public sector and the taxpayer have an
interest, for example when a property is occupied by a tenant who is in
receipt of housing benefit, when some form of grant aid has contributed
to the renovation or upkeep of a property, when public money has been
spent through a disabled facilities grant to enable it to be used by
someone who has a particular need, or when a property is sub-let by a
local authority. The latter circumstance is common these days in areas
of high housing demand stress. A private sector provider of rented
accommodation could make a property available, perhaps on a short-term
basis, to a local authority, so that the authority can meet its local
housing obligation.
It
would be helpful if the Minister explained a little more about the
extent to which amendment No. 231 will apply to profit-making
providers. How will the measure apply? To what extent can the measure
be extended to ensure that the tenants of profit-making providers of
such housing are protected by the
regulations?
Mr.
Wright:
I am not certain that I follow the hon.
Gentleman’s line of questioning. He made a number of points
about the definition of social housing. He should go back to the
comprehensive and detailed
deliberations on the definition that we heard when we debated clauses 66
to 69. From the manner in which he spoke—he can correct me if I
am wrong—it seemed that he was suggesting that he tabled an
amendment to introduce a similar measure, which he wanted to be a
back-door way of regulating the private rented sector. My hon. Friend
the Member for West Ham is nodding furiously at that. However, as I
said, that is not practical at the moment.
My basic premise on for-profit
providers is that it is sensible for the regulator to have assurance
that they will not go bust and leave tenants high and dry. The
regulator needs to ensure that the financial and governance
arrangements for that particular provision of social housing are
adequately addressed. I do not see that as moving any further towards
the regulation of the private rented sector, but I stand to be
corrected.
Andrew
George:
I am genuinely probing the Minister. Will he
enlighten the Committee, if only for my benefit, as to the kind of
stock that is provided by profit-making social housing providers and
the basis on which it is provided? The remainder of that stock is not
determined. I agree entirely that social housing has been debated and
defined previously, but if profit-making providers provide housing
other than social housing, what type of housing is it and why is it not
being brought under this
regulation?
5
pm
Mr.
Wright:
Again, the hon. Gentleman was not here this
morning when I talked about a sort of murkiness of providers. I meant
that in the best possible sense, not in a corrupt manner. I meant that
previously, from 1974 onwards, social housing was provided by housing
associations and market housing by private sector developments, and
that we now have much more cross-fertilisation, for want of a better
term. I also pointed out that private sector developments might provide
money and housing that would be available on the open market, and might
cross-subsidise by providing social housing in addition to grants from
the Homes and Communities Agency and other such public funding. That
cross-fertilisation is important. The regulator needs reassurance
regarding the financial viability of that element of social
housing.
My hon.
Friend the Member for West Ham wanted to intervene, and I do not know
whether the moment has passed. [Interruption.] The moment has
passed. Given that different types of provider are coming into the
social housing model and that we want more and better-quality social
housing, I hope that the hon. Member for St. Ives will agree that the
regulator needs to be reassured as much possible. Given the boundaries
of the regulator’s objectives—particularly objective 10,
on minimising interference—I hope that the hon. Gentleman is
reassured that tenants will not be left high and dry if a provider goes
bust.
Amendment
agreed
to.
Amendment
made: No. 231, in clause 174, page 68,
line 27, at end insert—
‘( ) In respect of profit-making registered
providers, standards may be made in relation to the management of their
affairs only so far as relating to the provision of social
housing.’.—[Mr.
Iain
Wright.]
Clause
174, as amended, ordered to stand part of the
Bill.
Clause
175 ordered to stand part of the
Bill.
Clause
176
Consultation
Mr.
Wright:
I beg to move amendment No. 232, in
clause 176, page 68, line 38, after
‘standards’ insert
‘or issuing,
revising or withdrawing a code of
practice’.
The
Chairman:
With this it will be convenient to discuss
Government amendments Nos. 233 and
238.
Mr.
Wright:
Government amendment No. 232 requires that
consultation take place when codes of practice are issued under clause
175, and when standards are issued under clauses 173 and 174.
Government amendment No. 233 requires that, along with other named
bodies, the regulator must consult on standards and codes of
practice—if amendment No. 232 is agreed to—with bodies
appearing to it to represent the interests of secured creditors. I hope
that the Committee agrees that lenders have a strong interest in
standards because they wish to ensure that providers will remain a low
investment
risk.
Sir
George Young:
I agree entirely that one
should consult registered providers. Why, then, has the Minister not
tabled similar amendments to clause 177(2), which contains a similar
list of consultees, and to clause
193?
Mr.
Wright:
Let me consider that more closely; the right hon.
Gentleman might have got me on
that.
Government
amendment No. 238 amends clause 178(3), which permits the regulator to
“revise or withdraw standards” following consultation.
The amendment
adds:
“Standards
may be expressed by reference to documents prepared by
others.”
The amendment
explicitly recognises that other bodies or stakeholders acting as a
group may propose and consult on documents that the regulator may then
approve and issue—for example, a standard device by providers
that has been approved by the regulator and been through the necessary
consultations. That would increase their involvement in and sense of
ownership of a standard. I hope that the Committee accepts the
amendments and that, not withstanding the pertinent point raised by the
right hon. Gentleman, we can move onwards.
Andrew
George:
I know that we are not debating it at present, but
Government amendment No. 235, which relates to the clause,
states:
“A
direction may disapply the requirement to consult under section 176 in
relation to specified
matters.”
It would be
helpful if the Minister said what type of specified matters the
Government have in mind in tabling that amendment, particularly in
relation to the amendments he has moved on this
clause.
The
Chairman:
Order. Under the circumstances, it would be more
appropriate to wait until we get to that
amendment.
Mr.
Wright:
I have said all that I need to say. I am happy to
address the points on Government amendment No. 235 as we move forward,
and I will look at what the right hon. Member for North-West Hampshire
has said.
Amendment agreed
to.
Amendment
made: No. 233, in clause 176, page 68,
line 41, at end
insert—
‘( ) one or more
bodies appearing to it to represent the interests of secured creditors
of registered providers,’.—[Mr.
Iain
Wright.]
Clause
176, as amended, ordered to stand part of the
Bill.
Clause
177
Direction
by Secretary of
State
Mr.
Wright:
I beg to move amendment No. 234, in
clause 177, page 69, line 8, at
end insert—
‘( ) In deciding
whether to give a direction the Secretary of State shall, in
particular, have regard to the regulator’s fundamental
objectives.’.
The
Chairman:
With this it will be convenient to discuss the
following amendments:
No. 49, in
clause 177, page 69, line 8, at
end insert—
‘provided that
any such directive is consistent with the regulator’s
fundamental objectives as defined in section
86.’.
Government
amendments Nos. 235 to
237.
Mr.
Wright:
This is an important clause. We have been made
very aware of that today, and I hope that the Committee will recognise,
from the points that I have made in earlier discussions and
deliberations on amendments, that I am going to look at this issue
comprehensively. I hope that interested parties, stakeholders and
Members will be involved in that process.
Government amendments Nos. 234
to 237 and amendment No. 49 refer to clause 177, which permits the
Secretary of State to issue directions to the regulator, to set a
standard or to advise on the content of standards with which the
regulator must comply. It is also required that the Secretary of State
consult on the directions and publish them. As I have said, I am aware
of concerns and I will try to do something about them; the amendments
are likely to be consistent with whatever final position I bring
forward.
Government
amendment No. 234 and amendment No. 49 seek to achieve the same
goal—to ensure that any directions given by the Secretary of
State do not conflict with the regulator’s fundamental
objectives, as given at clause 86. We can all agree that that is an
important control on the Government’s ability to tell the
regulator what to do, and in mitigating against the risk, which we have
mentioned many times in Committee, of policy passporting with regard to
registered providers.
The objectives include—I
have mentioned this important point time and again—requiring the
regulator to minimise interference. We do not believe that the
Secretary of State could compel the regulator to act outside its
objectives, even without the amendments, but it is worth while
addressing these concerns and making the point explicitly the Bill. The
two amendments are slightly differently worded, and in my view both
would probably work, although naturally I prefer Government amendment
No. 234 because it recognises implicitly that the objectives need to be
balanced, and that there will be trade-offs.
I again refer Members to clause
86, subsection (13) of which
states:
“The
order in which the objectives are listed in this section is not
significant; the regulator shall balance them as it thinks
appropriate.”
Government
amendments Nos. 235 and 237 deal with the potential problem of double
consultation; I hope that that addresses the point that was made in
connection with the earlier group of amendments. The Secretary of State
will consult on the issue of direction, and the regulator will have to
consult on it again, under the requirement in clause 176, before
issuing it as a standard. The whole Committee will be aware that that
could be very slow and duplicative process. That is why we have
included clause 177(5), which makes it unnecessary for the regulator to
consult when it is complying with a direction.
However, I have reconsidered that subsection. In some cases, the
Secretary of State could issue a detailed direction—on rent
policy, for example—which the regulator could then implement
without the need for further consultation because it had made no
substantive additions to the
direction.
In most
cases, we expect that a direction will be strategic, not detailed, and
that the regulator would add the detail. In such cases, the regulator
should be required to consult again. We think that the Secretary of
State needs more discretion here. Amendment No. 237 proposes to remove
clause 177(5), and in amendment No. 235 I propose adding a replacement
provision that would allow the Secretary of State, by direction, to
disapply the requirement in clause 176 for the regulator to consult on
matters specified in that direction. That would allow the Secretary of
State to decide whether additional consultation was needed on an issue
on which they had
directed.
Amendment
No. 236 proposes to add two lines to clause 177(4), which currently
requires the Secretary of State to publish each direction. The
amendment ensures that the Secretary of State will publish three
things: the proposed direction on which they have been consulted, all
responses to the consultation, and the final direction. That is
intended to improve and enhance the quality and transparency of
consultation. I hope that the amendments clarify the measure and that
they show the direction of travel that we want to move in. On that
basis, I hope that the Committee will accept the Government amendments
and reject amendment No.
49.
Mr.
Raynsford:
My hon. Friend the Minister
was kind enough to say that amendment No. 49 and Government amendment
No. 234 were largely comparable in their intention and effect. I am
delighted about that. He will be aware from the numbers that amendment
No. 49 was tabled before Government amendment No.234, so I am delighted
that the Government have taken stock on that and found a way to refine
the wording, so that they can put their own alternative in place to
achieve the same effect. I am delighted that good sense has been
accepted, and I am very happy to support the Government
amendment.
Alistair
Burt:
I have no wish to prolong the discussion, and
I think that we will come back to this matter on Report. Is the
Minister hoping that his proposals on consultation and the way in which
the clause is drawn will be done by the time the matter is discussed on
Report, or will it be done by the time we get to another
place?
I take issue
with the right hon. Member for Greenwich and Woolwich as regards the
similarity of these two amendments. The amendments are similar, but
they are not the same. I can have regard to something, but yet choose
not to make a decision entirely in line with what I have had regard to.
If I am acting consistently in relation to objectives, that is much
more binding. I can perceive in some distant future when there is not
as benevolent a Minister as the one in front of us
now—
Alistair
Burt:
It will be next week, given the present rate. I
sincerely hope not. The Minister would say that I am making a direction
under clause 177, after having had regard to the provisions under
clause 173. Nevertheless, I decided to do that. A court would hold
that, providing regard had been had to the powers, that was sufficient
to satisfy the
amendment.
5.15
pm
The bottom line
is that there is concern that the power of direction is extensive. It
is almost as far as that power in relation to the HCA, which is a
public body. Issues have been raised, such as whether the power will
have public sector borrowing requirement implications or whether we are
moving the whole sector into the public sector because of the degree of
direction and the like. We would just like to put on the record that we
have a fear of that happening and, accordingly, when the provision is
considered again, we are interested to make sure that the power of
direction should not be as strong and that there should be no doubt
about where the sector boundaries
lie.
Mr.
Raynsford:
I do not want the hon. Gentleman to
think that I had been light in accepting the Government’s
alternative. His interpretation of the Government’s intention is
slightly pessimistic. Had the Government’s amendment said that
the Secretary of State shall have regard to the regulator’s
fundamental objectives, and it was assumed that the Secretary of State
could then ignore items that she did not agree with, the hon.
Gentleman’s concerns might be justified. However, it would be
difficult for the Secretary of State, when deciding whether to give a
direction, to have regard to the regulator’s fundamental
objectives
and then to ignore them. If that were to happen, my learned friends
would have little or no hesitation in seeking judicial remedies. I put
that to the hon.
Gentleman.
Alistair
Burt:
We may be dancing on the head of a pin, but many
lawyers’ fortunes have been made on just that. I am merely
putting the case that I do not think that such matters are exactly the
same, although I concede that they are similar. I have said that,
provided we have had regard to something, we would have satisfied the
test of having regard. It means that we might be able to move in a
different direction. However, all will be cleared up in the future to
show that my pessimism was entirely unjustified and that matters will
not work that way. We have discussed the implications of the provision,
and I want to put it on the record that we share some of the
reservations that have been expressed. We look forward to further
debate on Report.
Andrew
George:
As someone who put his name to the amendment
tabled by the right hon. Member for Greenwich and Woolwich, I support
the argument of the hon. Member for North-East Bedfordshire that, as
drafted, the Government’s amendment would leave the defined
position of the Secretary of State in significantly more vaguely
drafted terms that would clearly increase her capacity to intervene in
future. Earlier, I spoke of my worry about the wording of Government
amendment No. 235 on the extent to which the Secretary of State may
disapply the requirement to consult in respect of “specified
matters”. It would be helpful to be told what specified matters
the Minister has in mind, and in which circumstances the requirement
for the Secretary of State to consult can be
disapplied.
I am
encouraged by the Minister’s welcoming remarks. I believe that
he is attaching himself to the spirit of the amendment tabled by the
right hon. Member for Greenwich and Woolwich. I am keen that we pin
down the extent to which the Secretary of State will have freedom to
intervene or to disapply the requirement to consult in the manner that
is suggested by the
amendment.
Mr.
Wright:
We have had an interesting debate on the
provisions under clauses 173 to 177. I want to move forward, but I
share the view of my right hon. Friend that hon. Members have been
unduly pessimistic with regards to this. I have made it clear on a
number of occasions that I will look at the provisions again and bear
in mind the points raised in the Cave report about raising standards
according to tenant need. I do not want to be accused of misleading the
Committee, so I put on the record that when I spoke today about
consulting with hon. Members, stakeholders and the wider RSL sector, I
did not want the Committee to think that I will be undertaking a formal
consultation process with regard to directions. I will be having
discussions with stakeholders, and on that basis it will be a lot
quicker.
The hon.
Member for North-East Bedfordshire asked a direct question about when I
expect that to happen: I think that it would be incredibly remiss of me
not to provide a clear line of travel on Report and I
hope that that reassures him. I do not think that the
concerns about secular classification and
micromanagement can wait until the other place. I do not want to repeat
the points I have made already with regard to the points made by the
hon. Member for St. Ives, and I hope that we can move
forward.
Amendment
agreed
to.
Amendments
made: No. 235, in clause 177, page 69,
line 15, at end
insert—
‘( ) A direction may
disapply the requirement to consult under section 176 in relation to
specified
matters.’.
No.
236, in
clause 177, page 69, line 17, after
‘publish’ insert
‘—
( ) each proposed
direction that is the subject of a
consultation,
( ) each response
to a consultation, and
( )
’
No.
237, in
clause 177, page 69, line 18, leave
out subsection (5).—[Mr.
Wright.]
Question
proposed, That the clause, as amended, stand part of the
Bill.
Sir
George Young:
May I encourage the Minister to jump a fence
that he refused to jump five minutes ago? It is in
relation to clause 177(2). He eloquently persuaded
the Committee to add an additional consultee to clause
176—namely those who represent the interests of secured
creditors of registered providers. That is eminently sensible in that
the regulator should not do anything that destabilises the financing of
housing associations. The question is, if it were sensible for the
regulator to consult those bodies before he did anything to the
standards, why are those bodies not included in clause 177(2)? It is
identical in every other respect except that it excludes the interests
of secured creditors. Is the Minister planning to introduce a similar
amendment to clause 177 on Report?
Mr.
Wright:
Obviously, I have a more positive interpretation
of this measure than the right hon. Gentleman. I do not think that I
was sitting on the fence. I thought that I had said that I would look
at the matter closely and come back on Report. I am happy to clarify
the position now if that would satisfy the right hon.
Gentleman.
Question put and agreed
to.
Clause 177,
as amended, ordered to stand part of the
Bill.
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