Housing and Regeneration Bill

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Clause 178

Mr. Raynsford: I beg to move amendment No. 50, in clause 178, page 69, line 21, leave out subsection (1) and insert—
‘(1) The regulator may exercise its powers as set out in Chapters 6 and 7 in order to secure the proper management of the affairs of a registered provider. In considering whether mismanagement or misconduct has occurred, the regulator may have regard (among other matters) to the extent to which the standards are being or have been followed.’.
The Chairman: With this it will be convenient to discuss the following amendments: No. 347, in clause 223, page 82, line 22, leave out paragraph (a).
No. 348, in clause 225, page 83, line 34, leave out paragraph (a).
Mr. Raynsford: The Committee is probably relieved that this is the last group of amendments that I shall move. It tidies up one of the remaining concerns about the specific powers of the regulator, and how the regulator will look at standards and use evidence of a failure to meet standards as a basis for intervention with a failing provider. It is important for the regulator to have this power. It is right that the regulator should intervene if a provider has not met proper standards and that has resulted in substandard management, misconduct or other unfortunate circumstances that adversely impact on tenants or possibly on public finances.
There is no question about the importance of a regulatory regime that allows intervention. There is, of course, a question as to whether the regulatory regime is proportionate, encourages good practice and avoids the worst type of tick-box mentality that simply wants people to say that they have done certain things in order to satisfy the regulator that standards have been met.
The purpose of amendment No. 50 is to specify that the regulator, in exercising his powers to secure the proper management of the affairs of a registered provider, may have regard, among other matters, to the extent to which standards have or have not been followed when deciding whether misconduct or mismanagement have occurred. That seems to be a sound basis for the regulator reaching a judgment about the need to intervene or to take action to remedy a failure without the risk of becoming unduly prescriptive on the one side or unduly tokenistic—the tick-box mentality that I already described—on the other.
The other two amendments, which are about management tenders, are designed to leave out in clauses 223 and 225 the provision that states that a section applies if
“a registered provider has failed to meet a standard”
because it simply creates as the test the fact that a standard has not been satisfied. There is the danger, as I said, that people will look solely at the extent to which the letter of the provision has been satisfied when determining whether there has been a failure. Unfortunately, it will probably lead to a more mechanistic, more tokenistic approach to regulation than I would like.
The purpose of the amendments is to delete the automatic provision for intervention if there has been a failure to meet a standard. Instead, there is a wider provision for the regulator to have regard to the failure to meet a standard in deciding whether mismanagement or misconduct have occurred; therefore, there is a need for intervention.
I am sure that my hon. Friend the Minister will say that the amendments are unduly restrictive because they retain the tests of mismanagement and misconduct that are part of the current regime. I believe that those tests are important because, ultimately, regulation should not be about simply seeing whether people satisfy a particular test and ticking the box, but seeing whether they are managing properly and effectively, and are not guilty of misconduct.
I have not tabled the amendments with any great expectation that they will be accepted, but I hope that they reinforce the case that I have made that the whole regulatory framework needs to be reviewed to ensure that we have the right balance between effectiveness on the one side and appropriateness and proportionality on the other. For the reasons that I have outlined in previous debates as well as this one, I still think that there are grounds for concern about the clauses in this section of the Bill. I look forward to further discussion in due course on amendments that my hon. Friend may wish to introduce on Report or at subsequent stages to ensure that we have the best possible regulatory framework.
Mr. Wright: I am keen to meet my right hon. Friend’s expectations, which is why I shall ask him to withdraw the amendments. He is right that we are reviewing the matter, and, as I have mentioned on several occasions, we are discussing the wording of this part of the Bill with stakeholders. I hope that he will be involved in the process. As he rightly suggested, we may make amendments in due course to reflect any revision to our position.
The amendments are not strictly necessary, as the regulator’s powers under the new system in the Bill are consistent, even modelled, if I dare say that word, on modern regulatory practice. They are not substantially different from those in the existing system. However, I have made clear my intention to look at the matter again in close co-operation with my right hon. Friend, on which basis I hope that he withdraws the amendment.
5.30 pm
Mr. Raynsford: I am satisfied with my hon. Friend the Minister’s response and I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment made: No. 238, in clause 178, page 69, line 26, at end insert—
‘( ) Standards may be expressed by reference to documents prepared by others.’.—[Mr. Wright.]
Clause 178, as amended, ordered to stand part of the Bill.
Clause 179 ordered to stand part of the Bill.

Clause 180

Survey: supplemental
Mr. Wright: I beg to move amendment No. 239, in clause 180, page 70, line 24, at end insert—
‘( ) Proceedings for an offence under this section may be brought only by or with the consent of—
(a) the regulator, or
(b) the Director of Public Prosecutions.’.
This is a technical amendment that replicates existing provision in sections 37(4) and 38(3) of the Housing Act 1996. On that basis, I shall not detain the Committee further.
Amendment agreed to.
Clause 180, as amended, ordered to stand part of the Bill.

Clause 181

Mr. Wright: I beg to move amendment No. 240, in clause 181, page 70, line 26, after ‘may’ insert ‘arrange for an inspector to’.
The Chairman: With this it will be convenient to discuss the following: Government amendments Nos. 241 to 247.
Government new clause 41—Inspector’s powers.
Mr. Wright: The amendments in this group are largely technical and consequential on the fact that the regulator need not carry out inspections itself. Government amendments Nos. 240 to 243 clarify that the regulator may appoint an inspector from his staff, as we think will happen, and, as I mentioned in an oral evidence session, from others including, for example, the Audit Commission.
Government amendments Nos. 244 and 245 are necessary to clarify that a report, which must be published by the regulator, will be prepared by the inspector rather than by the regulator itself.
Government amendments Nos. 246 and 247 add the Audit Commission, as well as anyone else whom the Secretary of State “thinks appropriate”, to the list of those who must be consulted when the Secretary of State authorises fees to be charged. I anticipate and envisage that the Audit Commission will carry out the vast majority of inspections in line with the Government’s policy of limiting the number of inspectorates and minimising bureaucracy and regulation whenever possible. I hasten to add, however, that the regulator will decide on the matter.
New clause 41 gives the inspector powers similar to those available to the Audit Commission under the Local Government Act 1999, including to require documents, to have access to premises, and to be afforded facilities in which to carry out an inspection. Those powers are no more than the Audit Commission relies on at present, so they should not present a new or additional burden on regulated parties.
Amendment agreed to.
Amendments made: No. 241, in clause 181, page 70, line 26, after ‘inspect’ insert ‘—
(a) ’.
No. 242, in clause 181, page 70, line 27, at end insert ‘, or
(b) the financial or other affairs of a registered provider.’.
No. 243, in clause 181, page 70, line 27, at end insert—
‘( ) “Inspector” means one or more members of the regulator’s staff, or other persons, authorised in writing by the regulator for the purposes of conducting the inspection.’.
No. 244, in clause 181, page 70, line 27, at end insert—
‘( ) After carrying out an inspection an inspector must produce a written report.
( ) The regulator—
(a) must give the registered provider a copy of the report, and
(b) may publish the report and related information.’.
No. 245, in clause 181, page 70, line 29, leave out subsection (3).—[Mr. Wright.]
Andrew George: I beg to move amendment No. 335, in clause 181, page 70, line 33, leave out subsections (4) to (7).
This amendment has the vocal support of my hon. Friend the Member for Montgomeryshire. Its purpose is self-evident. RSLs would not wish to heap upon themselves unnecessary costs, but owing to the way in which the clause is drafted, inspection costs could be heaped at relatively short notice. One does not know what those costs will be, and they could be generated for purely vexatious but insubstantial reasons that might none the less need to be satisfied at the expense of the RSL.
Given that some of the inspections might need to be made at relatively short notice, they cannot be budgeted for. All the arguments are self-evident. As discussed previously, the clause will place RSLs at a disadvantage compared with competitors that do not need to meet those regulations and inspection costs. For all those reasons, RSLs will need reassuring that if costs are to be applied, they will be proportionate. As drafted, however, the clause does not provide that reassurance. It is best, therefore, that we delete subsections (4) to (7) to ensure that RSLs are properly protected from unplanned expenditure that in many cases might be brought upon them in a climate of over-regulation.
Mr. Wright: I disagree fundamentally with the amendment. On a point of principle, it is right that a registered provider suspected of failing to meet standards should be required to pay. The alternatives, about which we could argue, are that the costs be met by all registered providers or by the taxpayer. However, I disagree with both of those. In some cases, it might not be in the interests of the tenants for the registered provider to be charged the full costs of an inspection, which is why we envisage that the regulator’s scale of fees will provide for the size or turnover of the registered provider and other circumstances affecting the provider’s ability to afford the full fees.
The hon. Gentleman must agree that we need some controls on the power, which is why we have proposed that the Secretary of State may authorise the regulator to charge fees under clause 181(4) and that, before doing so, he must also consult with the regulator, the Audit Commission and persons representing providers, under subsection (6). Before charging fees, the regulator must prescribe a scale of fees, on which it should consult with the Secretary of State and persons representing providers, as set out in subsection (7). I am fairly convinced that the regime as set out in the Bill is appropriate and right in principle. On that basis, I hope that the hon. Gentleman will withdraw his amendment.
Andrew George: The Minister says that he disagrees fundamentally with the amendment. However, he said that the provision will apply if a housing association is “suspected” of breaching regulations and responsibilities. If there is a suspicion that it is failing to meet its regulatory requirements, standards and obligations, it might find itself the subject of perpetual and vexatious complaints and with the perpetual expectation of having to meet the bills of inspections.
Mr. Love: Taking up the point that the Minister made, if the hon. Gentleman pushes the amendment to a vote, is it not yet another example of a Liberal Democrat tax increase—and is it funded?
Andrew George: I think that I will sidestep that. There is a serious point here. If the Minister said that the charges would be applied only if a housing association were found guilty of the accusations behind the inspection, that would be reasonable. I am concerned, however, that the regulator might be perpetually inspecting a perfectly acceptable housing association that provides an excellent service but is simply under the cosh of complainants pursuing vexatious complaints against it, thereby forcing it to meet excessive costs.
Lembit Öpik: Does my hon. Friend agree that if this is a tax increase of any sort it is nothing compared with the outrageous tax increase by stealth that the Minister proposed earlier in relation to charging fees for the regulatory elements of the regulatory body’s activities?
Mr. Wright: Will the hon. Gentleman give way?
The Chairman: Order. I somehow suspect that that has nothing to do with the amendment.
Andrew George: Thank you, Mr. Benton. I wondered whether I might intervene in the debate. Given the nature of the two interventions that I have taken, it is clear that the debate is being undertaken in the context of a great deal of political froth.
It is important to seek reassurance from the Minister and the Government that inspection charges will be applied proportionately. I should think that it would be most appropriate to apply them retrospectively if a housing association were found not to have applied the regulations. If an inspection proves that a housing association is operating properly, it is quite improper that it should then have to meet the costs of the inspection.
Given the nature of the Minister’s comments, I hope that he will indicate that inspection costs will be applied proportionately. I hope also that before Report he will reflect on my points about inspection costs having a disproportionate impact on an RSL that is being over-inspected or disproportionately inspected, particularly if it is found to be meeting regulations. I am pleased that we have explored this issue and I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendments made: No. 246, in clause 181, page 70, line 37, leave out ‘and’.
No. 247, in clause 181, page 70, line 39, at end insert—
‘( ) the Audit Commission for Local Authorities and the National Health Service in England, and
( ) such other persons as the Secretary of State thinks appropriate.’.—[Mr. Wright.]
Clause 181, as amended, ordered to stand part of the Bill.
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