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Secondly, to pick up my noble friend’s point, the system must maintain stability. We are talking about £35 million of investment. Stability is in everyone’s best interests: tenants, providers and the general community. Uncertainty over whether managers might be spontaneously sacked leads to perverse and difficult consequences of unexpected costs and disruption—maybe even a rise in the cost of capital if lenders perceive greater risk. It is important that we consider this, and Martin Cave raised it when he met with us.

Thirdly, housing associations are independent bodies, often charitable, with a strong record of innovation. Provided that the performance standard is good, they should be able to get on with their business. If they are not permitted to make decisions on how to achieve good outcomes on this basis, there could be issues over their independence. Fourthly, a direct tenant right to sack introduces a system of multiple regulation with a lot of scope for conflict. We are trying to achieve a proper consensus based on evidence and the balance of interests.

On balance, the regulator is best placed to make these difficult decisions. He will be proactive and take tenants’ influence into account, in all the different ways I have described. It is therefore clear why I cannot accept Amendment No. 103D, not least because I do not know what the trigger for management change would be. I do not know who would decide what core management was and how it would be judged.

On Amendment No. 104ZB, I think it unlikely that we could have specified in the Bill the structural barriers that Cave identified. The barriers he was talking about are real and their existence is a key reason for needing regulation. That is why the system of regulation gives the regulator levers to begin to address them. The objectives and the standards, and their interrelationship, will address the barriers. In objective 2 we do not specifically refer to the structural barriers, but I do not see anything in this amendment which would not be covered by objective 2.

5 pm

The point raised on VAT is very serious. All I would say, in the interests of brevity, is that I cannot change that rule. I am afraid that however much I would like to, I cannot hold out any hope—for reasons that the noble Lord knows full well—that the rule will be changed. I appreciate the reason for his raising it.

The third amendment is essentially about standards. Clause 191(2)(g) mentions,

I hope that I have sufficiently explained the workings of standards and especially standards which influence tenants influencing management. I hope I have been clear that standards could include both the appointment of new managers and major proposals. I shall conclude with that, as I take the point raised by the amendment as a way of facilitating debate.

I turn back to where I started. I hope I have clarified why I believe that the system we have means that the regulator will deliver the outcomes that the noble Lord wishes to achieve, and why we think that

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decisions on mandatory management change need to be under a system of regulation moderated by the regulator. I recognise that there is an underlying anxiety that the regulator might not act in a way that is conducive to the driving up of standards that we want to see. I do not think that will happen, but in order to address the concerns that have been raised, I am certainly willing to consider whether we should introduce an amendment which, while operating within a system moderated by the regulator, would put the onus on it to address directly tenants’ concerns and complaints. I am sorry to have spoken at such length, but I thought it was important to put all that on the record because it is central to the business of the Bill and to what we want to achieve. I hope the noble Lord will be satisfied.

Lord Filkin: I am particularly grateful for my noble friend’s tone and for the offer she has made to give thought to the kernel of these issues. I respect the fact that she has treated them seriously rather than using tangential arguments to dismiss them. I shall be delighted to work with her on that, if she so wishes.

Not for the first time and not for the last time, I am sure, I find that I agree very strongly with the noble Viscount, Lord Eccles. I think he signalled that he agreed with me. The only sensible thing I can say is that I invite him to join my party rapidly. Clearly, we need him. In a sense, he says from the basis of being a regulator and having deep experience, that you must have mechanisms to change the system. If you do not, ultimately, you will leave tenants disempowered, as they are now.

This debate is deeply imbued with paternalism and welfare-ism. Having been a landlord for more years than I care to remember, do we really believe that some consumers should have as many rights as others? As we are talking of the poor, do we really think that they cannot be trusted to do this? One little joke before I move on: like the noble Viscount, Lord Eccles, I have been involved on boards of collective leaseholders working together and I have found quite as many of the mad, the bad and the sad there as I used to when managing very large-scale council provision and seeking to give tenants the choice over major investment decisions on their estates. We are wrong if we think that there is a monopoly of wisdom with the traditions of the middle class.

Some of the arguments I heard against the need for this, which relied on mechanisms of detailed practice, felt like the traditional views of landlords and providers, rather than as though we were starting from the point of view of the noble Viscount, Lord Eccles—how would we empower tenants to have choice?—which, in time, would have the benefit of giving them a better service. Clearly issues such as protecting the asset and the debt are fundamental. That is why the amendment proposes a system that is proposed by the regulator, because it would have to be copper-bottomed and enshrined in law such that no one could give power to anyone who did not have a prime duty. I do not give too much attention to the argument that this could not be done because the staff might be affected, because we must put the interests of consumers above those of the producers.

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I am very grateful to all noble Lords who have spoken in the debate. I am particularly grateful to my noble friend and I look forward perhaps to having the opportunity to explore this further. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 103C to 104AZA not moved.]

Clause 88 agreed to.

Earl Cathcart moved Amendment No. 104AA:

The noble Earl said: This is a fairly simple amendment, the aim of which is to require the regulator to engage and involve tenants, and members of the public where appropriate, when carrying out its regulations and inspections of social housing providers. There is currently no specific duty to engage social housing tenants. We saw the list of duties in Clause 88, but there was no mention of engaging with social housing tenants.

Involving service users and the public is, we are told, a key part of the Government’s strategy for ensuring that people have an opportunity to have their say and to become involved in their local services. The amendment, which is supported by a number of organisations—including the National Consumer Council, the National Housing Federation, the Local Government Association, and the National Federation of ALMOs, to name a few—would also ensure that the regulator had a duty to engage with the National Tenant Voice, a new national body that represents the interests of social housing tenants.

The Minister has said that the Bill will ensure that tenants are at the very heart of the new regulatory system—I think she wrote that in a letter to us recently—but the Bill does not go far enough in meeting the proposals of the Cave report to ensure that tenants are at the heart of the new regulatory system. It is important that the Tenant Services Authority has a duty to engage with tenants in carrying out its functions. I beg to move.

Baroness Andrews: This is another extremely important issue, which is closely related to the long debate that we have just had. From the outset, as part of the Cave report, Every Tenant Matters, we have signalled the inclusive listening culture that I want from the new regulator. The whole purpose of the Bill is to establish a new deal for tenants. Indeed, the second objective is to ensure that the actual or potential tenants of social housing have appropriate choice and protection. The third objective is to ensure that tenants of social housing have the opportunity to be involved in its management. Those objectives frame everything.

I set out in the previous debate the arrangements for consultation and publishing information. Together, those powers and duties form a robust and transparent

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system so that tenants will know what they can expect from their landlord. Information will be available to them so that they know whether their landlord is meeting the standards, and they will be able to ask the regulator to take enforcement action. The spirit of the amendment is therefore aligned with what we want to see happening. It will need to be founded on a culture which takes tenants’ concerns seriously.

The problem is whether the amendment would achieve its aims. As I have said, we all want to see the regulator involving tenants, but the amendment gives the regulator a statutory duty to involve tenants in its own work, which is partly the problem. The regulator has an objective to ensure that tenants have the opportunity to be involved in the management of their own homes and it may set standards for landlords on this issue. However, the amendment looks at tenant involvement in a different way: it puts an explicit duty on the regulator to involve tenants in the exercise of its functions. I wonder how it would work with all the activities in which the regulator will be engaged. I am not sure precisely what forms of engagement with tenants, which are not already covered, the noble Lord believes are necessary, where the boundaries might be or the nature of the involvement.

Earl Cathcart: There seem to be four areas: namely, that it provides tenants with information about the exercise of its functions; it consults them about the exercise of its functions; it involves them in the inspection of registered providers of social housing; and it involves them in the process of national studies and how that affects them.

Baroness Andrews: I am grateful to the noble Earl for reminding me of the detail in the amendment. It still raises the question of where the boundaries would lie in such a way so as not to overwhelm the regulatory process, bearing in mind that this is a small body. We want to be sure that this focuses on its main tasks. The regulator clearly needs to consult with tenant representatives when setting standards and guidance, which are its principal activities.

The noble Earl raised inspection in particular, which is central to what he said; we will come to that in a later group. However, the Audit Commission, which will do most of those inspections under amendments that I will bring, customarily uses lay inspectors. I am sure that we would expect that to happen and I am equally sure that some of those lay inspectors will be tenants. I will be able to go into more detail when we reach that group.

I can also reassure the noble Earl on the tenant voice. He will know that we are making significant progress with the creation of the National Tenant Voice, which will provide a voice and expertise for tenants at a national level through advocacy, research and support for representative groups. It will work closely with the regulator to drive up housing standards. Therefore, it will be able to do many of the things that the noble Earl would want to see under his amendment.

On another recent development, we currently envisage that the board will comprise the chair, chief executive and seven members. Among the seven members, we

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want to see at least two with direct experience of being a tenant. On 6 June, my colleague, Caroline Flint, called for two social tenants to come forward to apply for two out of the four new positions on the board of the regulator. That kind of input will be a direct form of involvement and a significant contribution to the board. I hope that with those reassurances on lay inspection in particular, the National Tenant Voice and representation on the board, the noble Earl will feel that the objectives he wants to see in terms of involvement should be satisfied.

Earl Cathcart: I thank the Minister for that reply and some assurances in some areas. I look forward to the amendments on inspections. At this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 89 agreed to.

5.15 pm

Clause 90 [Conflict of interest]:

[Amendment No. 104AB not moved.]

Clause 90 agreed to.

Clause 91 [Committees]:

[Amendment No. 104AC not moved.]

Clause 91 agreed to.

Clauses 92 and 93 agreed to.

Clause 94 [Annual report]:

[Amendment No. 104B not moved.]

[Amendment No. 104BA had been withdrawn from the Marshalled List.]

Clause 94 agreed to.

Clauses 95 to 98 agreed to.

Clause 99 [Information, advice &c.]:

Baroness Hamwee moved Amendment No. 104BB:

“( ) undertake research in relation to levels of income and the affordability of housing;”

The noble Baroness said: The amendment would add something to Clause 99, dealing with information, advice and so on. I am aware that we have spent quite a lot of time already this afternoon on important matters, but I do not want to suggest that this is unimportant. I will be happy to be told at the end of what need not be a very long exchange that the research in my amendment is covered by the clause and, more importantly, although we do not have the regulator in place, that the Government have in mind that the regulator should pay serious attention to this.

The amendment is about research on levels of income and the affordability of housing. We talk about affordable housing in a rather glib way, without stopping to work out what is affordable. That will vary across the country, as will rents. Doing the arithmetic and bringing the income and outgoings together into the same calculation

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is not what we are necessarily addressing in this sort of legislation, which is all about words. The Greater London Authority, from which I stood down six weeks ago, has done quite a bit of work on a living wage in London and has taken account of housing costs. A living wage in London, GLA economics says, is a good deal more than the minimum wage.

I want to approach this from the people end as well as the bricks-and-mortar end. Unless attention is paid to what is affordable in reality, with an estimate of the needs of those who are not adequately served by the market—more than an assessment; some detailed, tough work on what is actually affordable—the final words in a Bill that is 222 pages long and growing will not deliver for a lot of the people whom we want to see the Bill deliver for. I beg to move.

Baroness Falkner of Margravine: I support the amendment tabled by my noble friend Lady Hamwee. It will add a significant amount of research-based evidence to the arguments on the dispensation of grants in particular, and will bring transparency to the decisions taken by the regulator and the Homes and Communities Agency by helping not just the providers but also the consumers of housing to understand why policy goes in one direction versus another.

Viscount Eccles: Amendment No. 105 in my name covers a rather different subject; I should perhaps have pointed that out. It is about the disappearance of the Treasury syndrome. The Minister said that she would write to my noble friend Lord Brooke, who is not in his place. That letter will no doubt come and Members of the Committee will receive copies of it. His point was that not having the Treasury appearing with great regularity in the Bill is a major change from predecessor legislation. If I take two or three predecessor Acts, the Treasury makes about 20 appearances in each. In this Bill, the Treasury appears once, in Clause 97(4), in brackets,

I wonder what the brackets are for. Perhaps it is not really meant to be there because it is an exceptional entry.

My amendment only goes to accounts. At the moment, the Housing Corporation and the Urban Regeneration Agency get an annual direction from the Treasury about their accounts. It is detailed and is repeated in their reports and accounts. In answer to the question about why the Treasury is no longer necessary, the Minister said it was okay because accountability was still ensured. I am not certain that accountability is the issue. As I understand it, when Secretaries of State are going to disburse moneys under an Act of Parliament, they do not have any money, so they have to go to the Treasury because the Treasury holds all the funds in its Consolidated Fund. Therefore, the Secretary of State needs to make a call on the Treasury for funds. I would have thought that that should be acknowledged in the Bill, if nothing else is acknowledged. I speculated about why this change of practice has come about. I wondered whether it was something to do with ultimate control and whether there was some issue whereby if you put the Treasury in too often, you would have to conclude that the ultimate control of the body concerned, the HCA and the regulator in this case, would lie with

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the Treasury. I wondered whether there was some problem attached to ultimate control. We need an explanation about why this change of practice has come about and why it is all right.

Earl Cathcart: When we were dealing with the accounts of the HCA, I asked the same question, and I shall ask it again. Clause 104(2) states:

My question is, when is that? It could be one year, two years or three years. For the HCA, I think I got the answer that it is six months. That seems reasonable. Clause 104(5) states:

Again, when will he do that? Is it one year, two years or three years, or is it a few months after it has been received by the regulator? Is the document a public record?

Baroness Andrews: We have had two rather different but equally important debates. On the amendment of the noble Baroness, Lady Hamwee, I am absolutely of one mind with her and her noble friend on the importance of this sort of research, irrespective of who does it. We need a much clearer idea of the living standards and choices that people make in terms of their income and the demands on them. I have seen some of Peter Ambrose’s important work—he is a professor in housing studies—which is quite well known in this field.

I reassure the noble Baroness that, as she knows, the regulator can already carry out a wide range of studies and research under Clause 99. The scope is limited in two ways. The purposes of the study must be to advance the objectives set out in Clause 88 and must relate to social housing. I am sure that a study of the type proposed would advance objective 2, as it is concerned with the protection of tenants and potential tenants; for example, protection from excessive rent levels. It is also likely that this sort of study would be research on social housing. If it is, the regulator should certainly be able to do it already if it wishes to. I hope that that will satisfy the noble Baroness on that point.

Swerving to the point about the Treasury, I am not sure whether Members of the Committee should look forward to the letter we are promising. I am told that it is now about 30 pages long on Part 1. We are scrupulous in our attention to detail, and honour our promises, but it will be indexed so that Members of the Committee do not have to read all of it. I am sure that it will deal with this point about the Treasury and many of the other wide-ranging issues raised on Part 1.

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