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Grand Committee

Tuesday, 13 May 2008.

The Committee met at half-past three.

[The Deputy Chairman of Committees (Lord Faulkner of Worcester) in the Chair.]

Housing and Regeneration Bill

(First Day)

The Deputy Chairman of Committees (Lord Faulkner of Worcester): If there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.

Clause 1 agreed to.

Schedule 1 [The Homes and Communities Agency]:

Earl Cathcart moved Amendment No. 1:

The noble Earl said:I remind the Committee of my declarations of interest at Second Reading. The amendment would remove paragraph 1(1) of Schedule 1. That may be a little drastic, but I assure the Committee that it is a probing amendment aimed at provoking discussion on the composition of the board of the HCA.

The Government have set the HCA the target of contributing to the delivery of 3 million new homes by 2020. That represents a building rate of 250,000 homes per annum, of which 70,000 homes per annum will be social, affordable housing. It is an ambitious task—some would say that it is overoptimistic, even unachievable. I know that there was much debate in the other place about whether these targets would be met. I do not want to go down that road: we are where we are. During the past 11 years, in the period of a property boom, only 145,000 new homes per year were built on average.

Many noble Lords commented at Second Reading that those in the building industry will not build any new homes because they cannot sell those they have already built. For them, this makes sound commercial sense. The credit crunch has knocked out demand for the purchase of property. The prospects for new build are bleak, at least for the next two or three years. Even today, chartered surveyors have announced that the housing market has not looked so negative for 30 years.

So the HCA has a huge problem. But it should look at this not as a problem but as a challenge. If there is no demand for open-market housing, where is there demand? There is undoubtedly demand for affordable social housing. Eleven years ago, 1 million people were on the waiting list. Last year, the figure had risen to 1.7 million, and it continues to rise. Those who face repossession of their homes—an estimated 45,000 people this year and goodness knows how many next—will need rehousing. And now first-time buyers cannot get a mortgage. Last

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year, there were only 300,000 first-time buyers, the lowest number for many years—I have heard that it may be 25 years, but that may be an exaggeration.

At Second Reading, I suggested that the figure for applicants on the waiting list may be closer to 2 million, but even that may be a low estimate. Last Friday, when I visited my dentist, the receptionist was talking to a lady about how her son, who was divorced, had had to move into her spare room with his son. The other lady said that her daughter and child were sleeping on her sofa. I could not resist asking, “Are they on the waiting list?”. They both said, “No, they need housing now, not in 10 years’ time. What’s the point?”. There must be thousands, if not tens of thousands, of people like that. So my estimate of 2 million on the waiting list may be far too low.

The demand for social housing is there and the challenge for the HCA is how to supply and satisfy that demand. Many landlords and councils up and down the country have devised schemes to develop social housing, but they often come up against barriers to delivery. Perhaps I can cite one or two examples. My neighbour in Norfolk wanted to convert redundant farm buildings into five social housing units, but permission was denied as they were just outside the village boundary. There are barriers preventing councils which transferred their housing stock to housing associations providing further meaningful social housing—I think there is a limit of only 50. Seventy-five per cent of the proceeds from buy-to-let are removed by the Government, thus starving councils of the means to build more social housing. There are many other barriers—I have merely highlighted two or three.

I make no apologies for labouring the current state of the market, but it is vital that the board of the HCA continually undertakes this soul-searching about where to concentrate its endeavours. This brings me to the composition of the HCA board. Board members will need to think outside the box, to be flexible, to look at all the options and, above all, at the market conditions prevailing at the time. How will they deliver and what rules need changing to ensure delivery? It is not about words, promises and targets; it is about delivery. To build houses one obviously needs landowners—private, council or developers—housebuilders, planning permission and, above all, money.

I do not wish to be prescriptive on the face of the Bill about the composition of the board, but I would like to throw in a few ideas. There needs to be representation on the board from those organisations which operate at the coal face. Should there be representation from the local government associations as owners of land, providers, or would-be providers, of social housing and in relation to planning issues? What about the Home Builders Federation in relation to owners of land and builders of these new houses? What about the Country Landowners’ Association which represents private landowners? If the initial concentration of effort is to be on social housing, what about the National Housing Federation or ALMOs? Other Members of the Committee may have other

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suggestions: for example, on regeneration, creating communities and sustainable development. I would also like to see a champion for rural housing represented on the board. All too often rural housing has been an afterthought and it needs someone on the board to fight its corner.

The composition of the board needs to reflect the challenges and demands in the market at any given time. As market conditions and demand change, so too should the composition of the board to reflect those changes. That can be done by adding to the board at a later date. As the Bill stands, the board will be made up of members,

That immediately raises a flag in my mind. The challenges will not be met through yes men, nodding approval to any Government’s whim. The board must have broad and balanced representation from those organisations involved in front-line delivery. It needs members who can identify the problems and unlock the doors.

I look forward to hearing the thoughts of the Minister and other noble Lords on the composition of the HCA. I beg to move.

Baroness Hamwee: Amendment No. 2, which is tabled in my name, is in this group. It is perhaps not as high minded as the amendment tabled by the noble Earl as I am talking about expertise rather than souls. However, our purpose is the same as the noble Earl’s: to probe what the Government have in mind about the size of the board and, more importantly, who they will look to with what expertise to make up the board, its committees and sub-committees. In her letter to Members, the Minister mentioned the opportunities for particular expertise to be brought in to the different committees. My amendment refers to,

By that, I mean the different sectors, not bedsit to mansion, but public and private, the different types of public housing—rented, shared ownership and so on—and the experience of regeneration.

What prompted this amendment was that although the agency is to be a new body—a number of noble Lords have referred to the importance of it not being simply a continuation of the previous bodies—there might nevertheless be a temptation to appoint members who have experience of housing associations as distinct from other forms of provision. This is a probing amendment to ask the Government what they have in mind and is not so drastic as to take out altogether the possibility of board members.

Lord Graham of Edmonton: In this Room, the phrase comes to me,

In this Committee, we are setting out to put some flesh on the bones of a noble and worthwhile exercise. It is always dangerous to start at a certain date and say that is when something happened because these things evolve, but after a period of time, the Government have decided that we need to refashion

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the major tool that we hope will regenerate the housing situation in this country. Amendment No. 2 is perfectly sensible; as I see it, it seeks assurances from the Minister about the broad brush that will be applied to ensure that the HCA reflects housing experience. It would be unthinkable and unforgivable if it did not. Last week, with some noble Lords who are in this Committee, I attended a meeting at which we heard the prospective chief executive. He left behind a document that stated, among other things, that the objectives of the HCA are:

No one can object to those. The fourth major objective is:

I would hope that Members of this Committee are as one in subscribing to those objectives. I can well understand noble Lords wanting assurances from the Minister and her colleagues that the intention is to put flesh on the bones of those ideas in personnel and strategy to achieve those objectives. I hope that these are genuine probing amendments to get assurances from the Minister rather than a way of beginning the debate on this stage of the Bill by trying to chop off the head of the HCA, which is the kernel of the strategy, because otherwise we are in for a rough time.

I have every confidence that the Minister has come to this Committee with answers to questions that have been raised, but I hope that the thrust of what we are going to do over the next period is to try to achieve the objectives of the HCA, which we heard about from the prospective chief last week.

3.45 pm

Baroness Ford: I draw the Committee’s attention to the declarations of interest that I made at Second Reading. I am also an adviser to Stockland Halladale Europe Ltd.

An interesting set of issues is raised by this amendment and I would like to respond to the noble Earl's points from the perspective of someone who, for six years, chaired English Partnerships—one of the bodies that is coming together to form the Homes and Communities Agency. Some of the points that have been raised have been extremely interesting, because the composition of such boards and the way in which you get that expertise from non-executive directors and, critically, the leadership and tone that such a board sets, not only for the organisation, but on behalf of the Secretary of State throughout the whole sector, is really important. I welcome the opportunity for us to debate these points.

I was very fortunate over those six years to have a range of expertise at the disposal of the English Partnerships board because successive Secretaries of State made interesting appointments. It is undoubtedly the case that in the kind of agency that we are talking about here, with an annual investment budget of £4 billion and a wide range of powers, you need a really high calibre board and people who know what

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they are talking about. I welcome the noble Baroness's suggestion about a range of people who understand housing in all its aspects.

However, I part company with the noble Earl on the idea that you should have representatives on the board. Having representation in that sense on a board directly cuts across the governance that non-executive directors undertake on behalf of the body and could involve those people in a conflict of interest or, as a minimum, make it awkward for them to carry out their functions. Are they there on behalf of an organisation or to exercise really good supervision and governance over a substantial budget? But I agree with the noble Earl and the noble Baroness that it is important to have the right mix of expertise on that board—expertise that comes from people with experience in the voluntary housing sector, the funding of real estate and in corporate governance. As I said earlier, I was fortunate to have board members of the very highest quality. It is important to raise these issues and to encourage the Secretary of State to think widely in terms of making these appointments.

Finally, on the substantive point about whether this is the right corporate governance structure, it is massively helpful to have an NDPB structure because you have the ability to be clearly directed and guided by Ministers, but you have significant freedom to act, particularly around creating commercial joint ventures and other corporate entities that are important to carry out the work that we envisage this organisation undertaking. We need to have the widest possible, highest calibre expertise available to that agency if it is to carry out its job effectively.

Viscount Eccles: It is a pleasure to follow the noble Baroness. I apologise to the Committee for not having spoken at Second Reading. I completely concur with the noble Baroness. May I also say how wonderfully positive the response has been to these impending reforms? The noble Baroness says that members of the board should not be highly representative, but that can confuse a board.

In following the 1993 Act, “not less than six” does not follow English Partnerships or the Housing Corporation. I think that English Partnerships has 12 board members: one could think of them as two, but I suspect that, because of the group approach, it is more realistic to think of them as having been managed and governed as one. The Housing Corporation has, I think, 14 board members. I cannot think that six board members would ever be appropriate. It seems to be very loose drafting. Why does nothing in the Bill represent reality about the structure and number of members of the board?

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Andrews): That was a great way to start this debate. I am extremely grateful not just to the noble Earl, Lord Cathcart, who outlined why we need the HCA—although, last year, we built 200,000 homes, so we are doing much better—but also for the range of expertise around this Committee, so we will have some excellent debates. I was extremely glad to hear

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the noble Earl say that this is a probing amendment. Having read it, I thought that this Committee would get off to a pretty ropey start if I had to defend the existence of the HCA. Clearly, it has raised many questions around the Committee—for example, why is it an NDPB rather than, say, an executive agency? The noble Viscount, Lord Eccles, asked about the size of the board. The balance and composition of the board has also been raised.

My noble friend Lady Ford put much more powerfully than I can why it is an NDPB. As she said, we need the balance of an independent, flexible and powerful agency, which at the same time gives the responsible Minister a degree of control over its activities. Although we do not have a national housing policy, we certainly have a policy for housing the nation, and the responsibility of the Department for Communities and Local Government lies in setting those high objectives, values and targets. In the same way as we have created English Partnerships and the Housing Corporation, which have served us so well, we will create the HCA as an NDPB as well.

The agency is challenged by its task, which is why it needs to be as robust as possible. As I said at Second Reading, we have a budget of billions of pounds and its task is to be the best possible delivery partner. Again, I was grateful to the noble Earl, Lord Cathcart, for emphasising the word “delivering”. Whereas policy and strategy sit with Ministers, this board will bring together for the first time all the partners, investment, land and housing, regeneration, decent homes, and growth areas. It will have at its disposal an enormous range of expertise and the power to bring people and partners together for the first time in a new way, which not least determines that the Secretary of State should make the appointments to the board. As my noble friend Lady Ford said, we need to have a credible and strong board with a strong voice. We need to respect Cabinet Office guidance that in situations such as this, the responsible Minister appoints the board.

Amendment No. 2 refers to qualifications and experience. I take the point made by the noble Earl, Lord Cathcart, on the need to have expertise which reflects front-line experience; flexibility, so that as things change we may be able to modify the board; and balance, which goes beyond individual expertise. Combined, those factors will give us a broad range of expertise to address all these different interests. Indeed, paragraph 1(3)(a) of Schedule 1 provides that the Secretary of State must be satisfied that the board appointee is suitably qualified and experienced in matters pertaining to the activities of the HCA.

The board will provide strategic leadership and be the voice—the public front—of the agency. It will be the guardian of delivery and will champion the various elements of the work. The noble Viscount, Lord Eccles, is therefore right to ask whether six people will be enough. It is a minimum number. The fact that there are 12 members on the board of EP and the Housing Corporation—double the minimum number—reflects the fact that the figure can be increased. It is important that the Secretary of State has the ability to ensure that the board of the agency is sufficiently staffed. As I have said, there is a standard power to appoint board members and there

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are inbuilt accountability arrangements through the Office of the Commissioner for Public Appointment guidelines when making appointments. In practice, therefore, we expect the membership to be greater than the minimum number of six in order for the HCA to be led as we want it to be.

On the question of balance, as raised in Amendment No. 2, it is important that the Secretary of State is free to make appointments which will ensure that the scope of the HCA’s work is representative. I take the point entirely—it was very well made—that we are looking not for representation but for people who have credibility and experience and can rise to the task with which they will be faced. I say to the noble Baroness, Lady Hamwee, that, again, the priority of ensuring a balance and variety of relevant expertise on the board will continue to be governed by the OCPA guidance and will remain at the discretion of the Secretary of State. That flexibility is necessary because of a need, potentially, for modifications in some situations as time goes on. We are looking for demonstrated capacity.

The Secretary of State is making progress with the appointment of board members. I hope to be able to update noble Lords as we go through that process to make sure that they are fully informed as and when we can make public announcements about it. That will be during the course of the Bill.

I hope that I have addressed the issues that have been raised. If noble Lords would like more detail on any aspect of governance I shall be happy to write to them in due course.

Baroness Byford: I am grateful to the Minister for her response. I apologise for coming in at this stage and for having to leave early today, but I look forward to working on the Bill during its passage. Did I understand the noble Baroness to say that it is now policy that six members are appointed to boards?

Baroness Andrews: No.

Baroness Byford:A minimum of six is what I meant. Is that normal government policy for all boards?

Baroness Andrews: Each NDPB is different but there is a requirement for a minimum of six members on a board. But it is a minimum and the number on the board will be at the discretion of the Secretary of State, who will take into account the need to achieve balance.

Baroness Byford: I thank the Minister for that clarification. I am a little concerned that, as a minimum, six is not a lot. It is not for me to press anything but I think that is a very small number. We are currently considering the draft Marine Bill and if that refers to six members I shall certainly raise the same concern because it is not enough. If it is not laid down in stone it should be reconsidered.

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Baroness Andrews: I shall explore with officials whether it is a standard number and write to the noble Baroness if there are implications for other NDPBs.

Baroness Byford: Thank you very much.

Baroness Hamwee: I shall make one quick point. I realise that I did not refer to local authorities when I spoke originally. They would rightly come down on me if I left them out. Furthermore, paragraph 1(3)(a), to which the Minister referred, contains the phrase, “has shown some capacity”. I asked my noble friend Lord Greaves whether he understood what that meant and he thought that it might be about capacity-building—but I do not think that it is. Experience must be different from capacity, because otherwise one would not have the two phrases. Does that mean some sort of achievement? I do not quite understand what capacity is. Surely, it cannot mean personal capacity to go out with a JCB. I hesitated when I first read the schedule and thought that it was pushing it a bit to try to take the whole of this paragraph apart, but I have been unable to resist temptation at this point.

4 pm

Baroness Andrews: There may be a common-sense definition of capacity and it may well mean personal—but it may also be another way of saying “experience”. I do not know, is the answer to that question, so I shall have to explore it in writing to the noble Baroness.

Earl Cathcart: I think that that was a good opener for the Committee today. I should tell the noble Lord, Lord Graham, that I do not think that any side of the House does not want to see the housing targets succeed. We all want that; what we are debating is how we best achieve it. I do not think that anybody is going to argue that there is no need for it, and I think that my remarks indicated that.

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