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That slightly refutes what the noble Baroness said. The federation’s concern is on two fronts. The first is that the legislation was so prescriptive when it was introduced that the danger was that housing associations would have been classified as public sector bodies and thereby would have lost the right to raise money in the open market. I accept that the Bill has been largely amended in the Commons, so that this is not as much of a problem, although we need to look further at the matter. Secondly, because they see their function as putting their tenants first, housing associations are concerned that the establishment of the regulator provides it with powers to restrict that function. They think that the regulator should be required to ensure that what they do is legal, financially sound and is always—I repeat, always—in the best interests of their tenants. The National Housing Federation thinks that the

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regulator will be one step removed and will not have the detailed knowledge that housing associations have.

The Countryside Alliance has also written to me. It is particularly interested in the problem of housing in rural areas. It remains a fact that in urban areas social housing makes up 23 per cent of total housing provision. In rural areas that figure is only 5 per cent. Rural areas have huge problems. There is housing demand from within the community—as is the case everywhere else—and there is housing demand from outside rural areas, because everyone else is trying to get into them. I do not blame people for that, because I have been privileged and lucky to be a country man all my life. Sometimes I find it slightly hard to come up here to this place. We need to recognise that there is a particular problem in rural areas and we need to think carefully about whether we can do anything to help this situation.

I welcome the changes regarding housing for servicemen and, particularly, ex-servicemen. Perhaps one can say with the benefit of a great deal of hindsight that we should all have seen that situation a long time ago and done something about it.

My time is almost up. This Bill is here at a critical time. In a way we are fortunate; we have an opportunity to look at the Bill critically and see whether there is anything we can do to help the situation and to try to dig the industry out of a hole that is not of its own creation.

5.55 pm

Baroness Hamwee: My Lords, it is a delight to see so many speakers on a subject which not long ago attracted only a very few usual suspects, and it has been terrifically helpful to have had a number of briefings from organisations with interests in housing and regeneration. There are two notable absences from our Benches this evening—both of whom have good reasons: my noble friends Lady Scott of Needham Market and Lord Greaves. He said, “They’ll just have to wait and see my amendments”. In this case, “they” includes me. However, I am delighted that my noble friend Lady Falkner of Margravine has joined the team for this Bill and my noble friend Lady Miller of Chilthorne Domer could not keep away.

I need to declare two interests: I am joint president—one of three—of London Councils and I still have an interest as a Member of the London Assembly, but that will not be the case by the time we reach Committee.

As for the next stages of the Bill, I make a serious point on behalf of those of us who support it. A lot of amendments were made late in the Commons stages—I do not criticise that, because it is good that the Government respond to points that have been made—but there are rumours of many more amendments to come. If that is the case, I hope that we can see them well before the Committee stage, because the more time that we resourceless amateurs and the interest groups have, the more positive and constructive we can be. There will be a lot of detail to consider, and I am very grateful to those with an interest in the Bill for the material that they have sent.

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Perhaps I can use the medium of Hansard to thank them and to explain that it is simply not possible to do justice to their points at this stage—but we will.

For now, I shall confine myself largely to headlines—not about housing generally, but about the Bill, except that I cannot allow the noble Lord, Lord Dixon-Smith, get away with airbrushing history in the way that he has. I do not think that he noticed that comment. On the Housing and Communities Agency, there is general agreement that it is a good thing to bring its predecessors, the current organisations, together, but I have wondered about how we get from here to there, about the distraction and disruption of the amalgamation process and the bureaucracy which will inevitably be involved. I hope that forming the HCA will not be as debilitating as some seem to fear as a matter of process. Earlier this afternoon I sat through the Third Reading of the Regulatory Enforcement and Sanctions Bill. A new organisation, the Local Better Regulation Office, has been formed and its constitutional status will transform as a result of that Bill. That is an interesting model to follow.

An issue that runs through much of this Bill is governance—of the new regulator, of the providers and of the HCA. I understand that in London it is intended that the chief executive is to be the vice-chair, with the mayor chairing it. I am not making a party point here; I think it is right that the Mayor of London should chair it, but I wonder whether this confuses executive and board member responsibilities. That is an important point, as one of the HCA’s objectives is to uphold good governance. As has already been said, we will spend time on the HCA’s powers, and I hope that we can think about whether the proposals blur the distinction between a strategic role and delivery, or indeed whether there needs to be a combination of the two.

The Minister has been forceful in her promotion of the new agency and the benefits that it will bring. She talked about a new culture, which is often as important as the detailed powers, but I, for one, am not terribly clear whether the Government are introducing entirely new powers which neither of the predecessor bodies had. Perhaps we can come to that.

I share the concerns that have been expressed about the HCA assuming planning powers and a planning role. The White Paper said:

I emphasise its supporting role, but that is not to say that the HCA should not be more than a housebuilding agency. As has been said, we need to look at the use of land overall and not necessarily take the easiest development opportunities, and we need to consider in its widest sense the infrastructure needed to support communities.

The Housing Corporation was, in its early days, chaired by Lord Goodman. It may be impertinent of someone who, as a very young and green solicitor, worked for him to say that a passage from his Dimbleby lecture of 1974 seems to be as good an explanation of the importance of good housing as any, but I shall be impertinent and quote a part of it:

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Thirty-four years on, I look forward to discussing how we can progress on the issues of overcrowding, housing conditions, the quality of stock and so on.

I know that the Minister has done a great deal of work in dealing with housing for older people, and I dare say that we will talk about some of that at following stages of the Bill. When reading in preparation for today, for the first time I came up against the term “age-proofing”. I am not entirely sure that I like it because it sounds as though it is proofing against old people rather than for them. The demographics are important here, as is the environmental impact of what is done, although I do not want to reduce the importance of that by making only passing reference to it.

I turn to the role of the regulator in all this: the tensions between regulation to drive up standards and the best interests of individual organisations; the danger of over controlling without achieving good governance; and the danger of overlooking the very proper differences between different housing associations which reflect different circumstances.

What about tenants? We talk a lot about tenants’ involvement in management but I think that we focus less on their role in governance, and I am concerned about that role. I am also concerned about the accountability structure, which is a subject not only for anoraks. We need to see how tenants, as well as landlords, engage with the regulator.

There is clearly concern about the status of different housing providers, with scope for confusion, technical impacts and, as I understand it, very real impacts on the funds available. There are concerns about definitions of affordable housing and social housing, and, again, real impacts arise from that.

It is unusual to see a sector calling on the Government to include it within regulation, but local government wants to be within the scope of Oftenant from the start. Given that the Government have consulted and not just produced the Bill out of the blue, it is a pity that that is not reflected in the Bill and that the Government are still working on the issue. It is a good point that consistency for tenants of different landlords should be achieved. The ALMOs make similar points.

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This is a big Bill. It may of course get bigger as we cover issues from “ground 8” to community land trusts and much in between. Let us prepare for a great deal of work.

6.06 pm

Lord Best: My Lords, I declare my interests, from none of which I derive personal financial benefit, in the local government and housing association sectors and, indirectly, in the private rented sector. Not least because of those interests, I have received proposals for amendments to the Bill from the Local Government Association, the National Housing Federation, the Chartered Institute of Housing, Help the Aged, Shelter, RADAR, CDS Co-operatives, the National Federation of ALMOs, the Countryside Alliance, London Councils, UNISON, RIBA and others. However, despite this volume of interest in improving the Bill, I note that its fundamentals receive the approval of these many interested parties.

In its underlying intentions, the Bill is of considerable significance. It enshrines and underpins the Government’s recognition both that the UK is suffering from acute shortages of housing—leading to homelessness, overcrowding, inflated prices and big problems for the wider economy—and that efforts must be redoubled in tackling troubled neighbourhoods in need of regeneration.

For more than a decade, it has been clear that the building of new homes each year—the supply—has been falling further and further behind the growth in new households each year—the demand for extra homes. The misery caused by the resulting housing shortages not only affects young people trying desperately to get on the housing ladder—I fear that many tens of thousands have overstretched themselves and now face the horrors of mortgage repossessions already affecting more than 1,000 families a fortnight—but it affects those who are forced into accommodation for the homeless or are living in dreadful, overcrowded conditions that we thought had become history. Housing shortages also mean long-distance commuting that ruins family life and a scarcity of key workers because they cannot afford a home near the schools or hospitals or other services that need them. Housing shortages also distort the whole national economy.

Five years back, when the Prime Minister was Chancellor, he asked Kate Barker from the Bank of England to look at this problem. Her reports added credibility and precision to the case for boosting housing output. Targets are now set for an extra 240,000 homes a year by 2016, with rather less than 30 per cent of these being subsidised, affordable homes for rent or for low-cost home ownership. Although that target is clearly on the right lines, it will never be accomplished simply by hoping that the market will do what it has previously failed to do. Indeed the private sector housebuilding industry, as the noble Lord, Lord Dixon-Smith, has mentioned, is now going into a period of sharp decline, not growth. Housing output last year was around 160,000 homes, requiring a 50 per cent rise to reach the target of 240,000 a year. Yet for the year ahead, it looks certain to slump further. Last week, Persimmon, one of the biggest housebuilders, called a halt to new

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development in the face of mortgage difficulties for would-be buyers and the loss of confidence in the market. Other housebuilders have seen their shares slide and are cutting back too. Any expectations for rapid growth from the housebuilding industry, an industry that has benefited so much in the past from acute shortages in the market, must now be set aside.

Ever since the demise of council housebuilding, which used to run at a level comparable to that of the private sector, and the unwillingness of Governments for 20 years to fill that gap with housing association provision, dependency on the housebuilders has placed this country in a highly vulnerable position. That vulnerability is not just about the overall numbers of new homes needed, most particularly in London and the south-east; it is also about the improbability of the private sector being able to regenerate run-down areas where development of mixed use, mixed tenure can revive the local economy, reverse inner city flight and reduce the necessity to use up virgin land elsewhere.

For the big housebuilders, building on greenfield land, or only on the most upmarket of the previously developed brownfield sites, has been more profitable than addressing unpopular areas with social problems. Yet those problems will multiply if extensive and expensive revitalisation is not addressed urgently. We can see now so very clearly that both easing housing shortages and tackling urban regeneration cannot be left to the market. It requires energetic and imaginative intervention from central and local government. Hence the need for this legislation with the significant new approach that it heralds.

The creation through Part 1 of the Bill of a Homes and Communities Agency, with the powers and funds of both the Housing Corporation and English Partnerships, plus key functions from the Department for Communities and Local Government, responds to the necessity for a robust, well equipped and well resourced national body to act in partnership with local councils. It will have powers and skills for land acquisition and assembly; land reclamation and remediation; sometimes the use or at least the threat of a compulsory purchase order if an owner holds society to ransom; new public-private companies; and further use of social landlords who can build and manage mixed income, sustainable and accessible communities. The Homes and Communities Agency has the potential to be the answer to the major housing and regeneration problems which face the UK. It has an impressive chief executive waiting in the wings, Sir Bob Kerslake, from the local government sector who is well able to build those partnerships with councils that will be the bedrock of success.

We will be looking at the detail of Part 1 of the Bill, and I suspect that some noble Lords will have comments on the concept of eco-towns, which has already been noted. They could create some exciting new communities and, I hope, take on board the lessons that remain valid from the garden villages and garden cities which were built exactly 100 years ago. But with a target of around an extra 100,000 homes, which I suspect may not be accomplished, out of a total of 2 million homes, by 2016, the eco-towns represent a very modest 5 per cent of the whole.

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I am confining my remarks to the big issues in this Bill and after welcoming Part 1 with its plans for the Homes and Communities Agency, my remaining remarks relate to Part 2, the Office for Tenants and Social Landlords, Oftenant. At first, I had concerns that the role of regulator held by the Housing Corporation, alongside its funding role, was to be hived off to a separate body. The Housing Corporation has not only spent its annual allocation of government funds each year, but has protected taxpayers’ money and ensured no scandals, no bankruptcies and no loss of money by any private sector investor. It has done a good job and I congratulate it and would add the name of Peter Dixon to that of the noble Baroness, Lady Dean of Thornton-le-Fylde, to the roll-call of honours for the Housing Corporation. With the magnitude of the task facing the new HCA, I think, including the regulatory role too could have overloaded this new agency.

There have been three anxieties about the role of Oftenant, which I would like to address in turn. First, there is the anomaly in that an office for tenants does not include any of the tenants commonly regarded as most at risk of mistreatment. There are growing worries that the recent expansion of the private rented sector, with its growth from about 9 per cent of the nation's stock to about 12 per cent, has brought with it a huge number of amateur, and often speculative, landlords who are currently outside any regulatory control. While social landlords are subject to intense scrutiny, continuous monitoring of performance and inspection by the Audit Commission, and are part of the Housing Ombudsman scheme, there are more than 1 million landlords whose tenants are denied that whole range of protection and redress measures.

On the face of it, one would expect regulatory attention now to switch away from the social landlords to the letting agents and private sector landlords where potential abuses can currently be addressed only by court action, which is far beyond the resources of most tenants. I recognise that this major lacuna in the Bill is unlikely to be remedied this time round. I am certainly hoping for important insights from Dr Julie Rugg at the University of York whose review of the PRS for the Government will be published in the autumn. Nevertheless, it would be good to have reassurance from the Minister that there is a serious intent at the very least to introduce a redress and ombudsman scheme for this sector, comparable to that for estate agents and for other sectors, from telecoms to financial services and energy suppliers.

The second concern raised by the Bill is that even in relation to tenants outside the private sector, the role of the regulator is currently to be confined only to housing associations. Separate legislation will be needed to extend the remit to cover tenants still remaining in the council sector and, importantly, in the arm’s-length management organisations that lie between traditional council and non-public sector housing associations landlords. I know that the Government hope legislative measures will emerge to extend the regulator's role to cover all tenants and non-profit landlords at a future date, but there are no guarantees, of course, that such opportunities will arise.

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The Government’s expert group convened by Professor Ian Cole, from Sheffield Hallam University, which represents those from local government and from the ALMOs as well as those representing the interests of tenants, seems in agreement that there are no insuperable difficulties to achieving domain-wide regulation. While the Government have left it very late to put together the requisite clauses to this end, an enabling clause within the Bill could open the door to this natural extension that would put all social sector tenants on the same footing. After all, it is often a matter of chance whether a family in need of subsidised housing has moved into a home provided by a housing association, or an arm’s-length management organisation, or a local authority. With transfers of housing stock between these landlords, the same family can experience a different landlord without moving. It seems only sensible, and just, that tenants of all social landlords should enjoy the same measure of protection and redress as soon as possible. Perhaps an amendment here will find favour with your Lordships.

Finally, on the Office for Tenants and Social Landlords, there has been something of a campaign, orchestrated by the National Housing Federation but with cross-party support from Members on the Bill Committee in the other place, to moderate the degree of control exercised by the regulator. Certainly there are important points of principle at stake here. If every housing association were simply a creature of central government, forced to adopt a plethora of requirements imposed by the regulator who, in turn, was taking instructions from the Secretary of State, then all the advantages of using independent organisations, accountable to their own boards of management and able to innovate and be entrepreneurial, would be lost. It is precisely because they are not public bodies that the housing associations have enjoyed respect across political parties and have pursued a range of activities which may or may not have been priorities at the time for the current housing Minister but so often have shown the way forward. The housing associations are now a precious national asset, ready to make up for the deficiencies of past over-reliance on private housebuilders. To saddle them with overbearing regulatory controls would be to risk strangling the golden goose that the nation now needs so badly.

The good news—and I note the reassurances of the Minister—is that efforts in the other place have greatly improved the framework for regulating these independent bodies, the majority of them freestanding charities. Although there may be further tweaks to hone and polish the system, the Government are to be congratulated on moving a fair way already.

The challenges ahead remain daunting, but the Bill brings, perhaps in the nick of time, the instruments of change which could provide the necessary responses. I feel sure that the wisdom of your Lordships will lead to further improvements as the Bill moves forward but, at this stage, I give it a warm welcome.

6.20 pm

Baroness Dean of Thornton-le-Fylde: My Lords, I first declare an interest: I am a non-executive director of the Taylor Wimpey plc house-building board. I am

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also a trustee of East Foundation, a charity aligned with the East Thames housing association.

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