Housing and Regeneration Bill

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Clause 197

Amendment made: No. 264, in clause 197, page 75, line 11, at end insert—
‘( ) The action specified in an enforcement notice may include publishing the notice in a specified manner.’.—[Mr. Wright.]
Clause 197, as amended, ordered to stand part of the Bill.

Clause 198

Amendment made: No. 265, in clause 198, page 75, line 34, after ‘224’ insert ‘, 226’.—[Mr. Wright.]
Clause 198, as amended, ordered to stand part of the Bill.
Clauses 199 to 203 ordered to stand part of the Bill.

Clause 204

Grounds for imposition
Mr. Wright: I beg to move amendment No. 266, in clause 204, page 77, line 2, at end insert—
‘( ) Case 4A is where the registered provider has failed to pay an annual fee under section 113(2).’.
The Chairman: With this it will be convenient to consider the following: Government amendments Nos. 267 to 271.
Government amendments Nos. 273 and 274.
Government new clause 45—Notifying HCA (No.2)
Mr. Wright: Government amendments Nos. 266 to 271, 273 and 274 and new clause 45 relate to clauses 203 to 212, which permit the regulator to penalise failures by registered providers with a financial penalty or fine. Again, and as with similar amendments, the measures are technical.
The amendments will allow penalties to be used if registered providers fail to pay an annual registration fee, require a penalty notice to specify how that must be paid, and what interest or additional penalty is payable in the event of late payment. They will allow the notice to require that the provider publishes information about the penalty. They explain details of how the penalty and interest is to be paid and enforced, appeal rights, and the consequences for prosecution of a penalty imposed for a criminal offence. They also refer to clause 206, which I shall come to later and which we propose to remove from the Bill.
The amendments remove an erroneous reference to clause 232 in the context of combining warning notices before enforcement action, and require that a copy of the penalty notice is sent to the Homes and Communities Agency. As I said, the measures are technical and I hope that hon. Members will accept them on that basis.
Alistair Burt: The Minister is right—the amendments are technical. On the other hand, they set out new powers in the Bill.
Does the Minister have any idea of the amounts that we are talking about? Bearing in mind that whatever charges are made in penalties, they will ultimately find their way back to the tenants of the providers. Presumably, they will be required to find the money to help the providers to pay the fines.
Mr. Wright: As the hon. Gentleman is aware, we will discuss penalty notices in the clause 206 stand part debate. The regulator will have the power to set the general level of penalty notices for registered providers. We propose that it should be able to require financial penalties of no more than £5,000. The point has been made, certainly on Second Reading, that what we are trying to do is almost an exercise of naming and shaming rather than financially penalising registered providers. I should not like penalties to be imposed because I hope that registered providers will give tenants a good service, but it is a means by which we can publicise it when housing services have not been what they should be. So the fines will be subject to a limit somewhere around the £5,000 mark, but we will consider that further.
Alistair Burt: The Minister has helped me there but we are talking indicative rather than penal. That is the sense that we are trying to get, bearing in mind who is going to pay ultimately.
Mr. Wright: Absolutely, the hon. Gentleman has it spot on.
Amendment agreed to.
Clause 204, as amended, ordered to stand part of the Bill.

Clause 205

Amendments made: No. 267, in clause 205, page 77, line 19, leave out ‘and’.
No. 268, in clause 205, page 77, line 19, at end insert—
‘( ) how the penalty must be paid.’.
No. 269, in clause 205, page 77, line 20, at end insert ‘, and
( ) any interest or additional penalty which, by virtue of section 211(2), is payable in the event of late payment.’.
No. 270, in clause 205, page 77, line 20, at end insert—
‘(2A) The notice may require the registered provider to publish information about the penalty in a specified manner.’.
No. 271, in clause 205, page 77, line 20, at end insert—
‘( ) The notice must explain the effect of sections 211(1), (3) and (6) and 212.’.—[Mr. Wright.]
Clause 205, as amended, ordered to stand part of the Bill.

Clause 206

Question proposed, That the clause stand part of the Bill.
Mr. Wright: As I have mentioned, I propose that the clause should not stand part of the Bill. It is one of a group of clauses on the penalty notices that we have just been discussing. It specifies that
“when the regulator is considering whether to require a registered provider to pay a penalty”
it must consider
“the likely impact of the penalty on the registered provider’s ability to provide services.”
We have just discussed fines of £5,000, and the Government take the view that that figure is somewhat excessive, and that there should be a name-and-shame approach. On that basis, I am about to introduce new clause 46, which will insert an identical clause into the part of the Bill dealing with compensation to tenants, which, unlike fines, is not limited to a total of £5,000 and could, therefore, have an adverse impact on the organisation, if the impact was not fully considered—something that we wish to avoid. On that basis, I hope that the clause does not stand part of the Bill.
Question put and negatived.
Clause 206 disagreed to.
6.15 pm

Clause 207

Amendment made: No. 273, in clause 207, page 78, line 2, leave out subsection (1).—[Mr. Wright.]
Question proposed, That the clause, as amended, stand part of the Bill.
Mr. Raynsford: We have already had a brief debate on the matter before us, but clause 207 deals with the amount of a penalty charge. I have a number of points to raise with the Minister about the thinking behind the clause. First, in subsection (2), a clear link is made between the amount of a penalty in case 5—in which a registered provider has given an undertaking and failed to comply with it—and the maximum amount of fine that a magistrates court could impose for the relevant offence. That linkage does not apply in any of the other cases.
We have been told that the figure of £5,000 stated in subsection (3) might be subject to reconsideration, because the Government are anxious that it should not jeopardise a provider’s viability. However, for many of the larger providers, £5,000 will not present a serious risk to their viability, and would probably have very little impact on their thinking. I suppose that my second point, therefore, is about the concept of proportionality in fines relating to the size and capacity of the organisation and to its ability to deliver services. The degree of the offence that has merited the fine does not appear to be set out in the Bill. Will guidance be given to the regulator on introducing the concept of proportionality?
Thirdly, the Minister mentioned compensation to tenants as a further option, in the light of which he withdrew clause 206, which required the regulator to consider the impact of a penalty on a provider’s ability to provide services or on its financial viability. That, of course, raises questions about the extent to which compensation to tenants should be an overriding entitlement, owing to the landlord’s failure to provide services that he ought to, and about whether such a penalty will be considered in proportion to its possible impact on the viability of an organisation and its ability to deliver services. There is probably quite a lot of uncertainty, and scope for some pretty messy decisions, if greater thought is not given to how the regime will operate. I would welcome the Minister’s thoughts on that, not necessarily today, but certainly before the Bill completes its passage in this House.
Mr. Wright: I appreciate my right hon. Friend’s last point about providing an outline of where I think that this needs to go. He was extremely kind and gracious on that.
I shall expand on points that I made earlier in discussion with the hon. Member for North-East Bedfordshire. The setting of penalties requires a careful balance. It is quite right that £5,000 could be a very low-level fine for some large housing associations, but for others it could represent a significant financial penalty. In any case, the aim of the fine is explicitly not to bankrupt the provider, or to inhibit in any way the provider’s social housing activities. I see it as a way publicly to rebuke the provider for minor problems, and to prevent those problems from getting worse. There are a range of powers at the regulator’s disposal should the breaches get worse, to the point at which it could intervene much more directly. However, I think the question of balance is important.
I come back to one of my favourite parts of the Bill, clause 86, and objective 10 regarding proportionality, which my right hon. Friend mentioned. Proportionality is important both for objectives and for penalties, and the regulator will have to have regard to that. On that basis, I will take up my right hon. Friend’s invitation to write and express my thoughts more clearly. I hope, however, that I have reassured him.
Clause 207, as amended, ordered to stand part of the Bill.

Clause 208

Amendment made: No. 274, in clause 208, page 78, line 32, leave out ‘, 228 and 232.’ and insert ‘and 228.’.—[Mr. Wright.]
Clause 208, as amended, ordered to stand part of the Bill.
Clause s 209 to 213 ordered to stand part of the Bill.

Clause 214

Grounds for award
Question proposed, That the clause stand part of the Bill.
The Chairman: With this it will be convenient to take Government amendments Nos. 275 to 281.
Government new clause 46—Impact .
Mr. Wright: This group of amendments and new clause 46 relate to clauses 213 to 222, which permit the regulator to require registered providers to compensate tenants for the provider’s failures. The amendments are technical. They require the regulator to take account of the provider’s financial standing and the effect on services when issuing compensation notices, a point that we have just touched on. They require the compensation notice to specify what interest or additional compensation is payable in the event of a late payment. They allow the notice to require that the provider publish information on the compensation; they require the notice to explain how payment of the compensation and any interest on it are to be enforced, and to explain appeal rights. They require the regulator to consult the ombudsman before issuing a pre-compensation notice—that is, a warning notice—to avoid dual compensation for the same failing. They also require the regulator to say whether a voluntary undertaking could be accepted in place of a compensation notice, as per other powers.
Margaret Moran: I share some of the concerns that my right hon. Friend the Member for Greenwich and Woolwich raised earlier regarding these issues. In relation to this group of amendments, one concern could be the length of time it might take for a victim of poor performance by an RSL to receive their compensation. Will the Minister also clarify under what circumstances the regulator would accept a voluntary undertaking rather than compensation? Obviously, that would impact on whether the tenant’s just demands were granted, with regard to the kinds of offences that the regulatory body had identified the RSL as having failed to deal with.
Mr. Wright: I do not want to sidestep the issue, but it will be up to the regulator to decide how to enforce compensation notices. My hon. Friend raises an important point about the length of time involved, and I shall certainly reconsider it.
As for voluntary undertakings, I point out to my hon. Friend that, as the clauses and amendments on enforcement notices and penalty powers suggest, the regulator will be required to state in a notice whether it will consider a voluntary undertaking. In many cases it might not, but that is for the regulator to decide. I shall be frank with my hon. Friend: it was an oversight that that provision was not also included in the compensation power. I suggest to her that voluntary undertakings could encourage a provider to resolve its problem in its own way without the need for top-down intervention. That would be a good thing and might help the regulator to ensure that tenants’ concerns are addressed. I hope that she is reassured by that.
Question put and agreed to.
Clause 214 ordered to stand part of the Bill.
Clause 215 ordered to stand part of the Bill.
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