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Clause 219 [Warning]:

On Question, Whether Clause 219 shall stand part of the Bill?

Baroness Andrews: Clause 219 is part of the group of clauses which relates to the use of enforcement notices. It requires the regulator to give the registered provider a pre-enforcement warning before issuing an enforcement notice. I propose to remove this clause and Clause 220, which deals with provider representations, on the grounds that the requirements are excessively bureaucratic. I am sure that the Committee will warm to that. The regulator should not have to issue a notice warning a provider that it is about to issue a notice. A number of minor consequential amendments remove references to Clauses 219 and 220 from other clauses.

I do not propose to do this with any other enforcement power. It is absolutely necessary that the regulator is required to issue a warning notice and to allow 28 days for representations when it considers the use of a penalty notice or compensation award. Several stakeholders have expressed concern that that is too bureaucratic, but the enforcement notice is a different matter. It does not carry a penalty for its breach. Without a pre-enforcement warning and a period for representations, the enforcement notice will be a useful way of dealing with genuinely urgent cases. I do not wish the regulator to be forced to go through an unnecessarily lengthy process.

The eight amendments in the group are consequential. They remove the requirement that the regulator, before issuing an enforcement notice, issues a warning notice. They allow 28 days for the provider to make representations.

Clause 219 negatived.

Clause 220 negatived.

Clauses 221 to 225 agreed to.

Clause 226 [Grounds for imposition]:

[Amendment No. 110XC not moved.]

Clause 226 agreed to.

Clause 227 agreed to.

Clause 228 [Amount]:

Lord Dixon-Smith moved Amendment No. 110XD:

On Question, amendment agreed to.



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Clause 228, as amended, agreed to.

Clause 229 [Warning]:

Baroness Andrews moved Amendment No. 110Y:

On Question, amendment agreed to.

Clause 229, as amended, agreed to.

Clauses 230 to 236 agreed to.

Clause 237 [Nature]:

6.30 pm

Baroness Hamwee moved Amendment No. 110YA:

“( ) an applicant for social housing, or each member of a class of such applicants, who has applied to the registered provider for an allocation of its housing.”

The noble Baroness said: The amendment brings us to the provisions for compensation and seeks to add a category of persons to whom an award can be made. Clause 237(1) states:

The amendment is the result of a matter that was brought to my attention by the Housing Law Practitioners Association, which does what its title suggests and practises housing law. Other amendments, to which we will come on Monday, also arise out of its practice and experience.

The amendment is designed to allow the regulator to award compensation to anyone who has applied to a registered provider but has been treated unfairly by the provider. The circumstances under which a provider may be required to pay compensation include cases where the provider fails to meet a standard. The one which is most relevant here is the criteria for allocating tenancies. The clause as drafted benefits existing tenants and occupiers and does not extend the possibility of compensation to someone who has applied for housing. I foresee problems with regard to actions taken by tenants as a group; on the other hand, someone who has not been allocated may have suffered as a result of a failure. Existing tenants and occupiers should not have any problem with an extension.

Those who might be affected by such a failure are people on the provider’s waiting list or on the housing register. If the Minister will not accept the amendment, can she explain why someone who has suffered a loss or hardship in such circumstances should not be included in this category? If this is not the way to deal with the issue, is there another way of extending compensation to those who have suffered? I beg to move.

Baroness Andrews: The noble Baroness has drawn attention to a complex issue. I shall not be able to give her satisfaction but I hope I can explain what I see as the real difficulties in trying to solve this.

The amendment specifies that the regulator can give compensation not only to current tenants of social housing but to applicants who have applied for housing. The noble Baroness knows from her long

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experience how complex the allocation system is. Local authority allocations are governed by Part VI of the Housing Act 1996 and registered social landlords’ allocations are subject to Housing Corporation regulatory guidance, which can cover how they allocate their own stock and how they co-operate with local authorities. It is usual for RSLs to accept 50 per cent or more local authority nominations on the empty units in their own stock. Most allocations are, therefore, for the local authority. That process falls under the statutory homelessness duties, which are always for the local authority. So we already have a complex, interrelated system.

Under the Bill, compensation can be given only where there is a breach of standards or a breach of a voluntary undertaking by a provider to resolve a breach of standards in its own way. Standards in the list at Clause 191 can be set on the allocation of social homes by providers. Therefore, it is perfectly possible for the regulator to set and enforce standards on allocations, including in areas such as how the provider should co-operate with the local authority. Given that that is possible, it may address some of the underlying problems that the noble Baroness has raised in the amendment.

When setting and enforcing standards under Clause 191(3), the regulator must consider the desirability of the provider being free to run his own business, which echoes a recurring theme in our debates in Committee. It will need to be careful that its standards do not prohibit charities making arrangements to house specific groups in order to meet their objects. That is one reason why the regulator must consult the Charities Commission because we would not want to inhibit that. However, when setting allocation standards, the regulator also needs to consider objective 2 to ensure that actual or potential tenants have an appropriate degree of choice and protection, and so the potential tenant is brought into the frame. I agree that it is the role of the regulator to be able to address general or systemic allocation problems but I do not think that a compensation power is the best way to deal with them. Better results will be achieved through enforcement notices, penalties or, frankly, by changing a manager.

I am concerned that the regulator might spend valuable time judging individual cases for compensating people who feel that they should have been, but have not been, offered a home. The notion of the potential applicant is also very wide. There are so many potential applicants for social housing that we run the risk of imposing a major burden on the regulator of having to judge individual cases, and the existence of the power would in itself generate pressure to award compensation to potential tenants who had lost out. I can see that resolving individual cases could become a heavy burden.

I have other practical concerns. As I said, responsibility will normally lie with the local housing authority, not the housing association or other provider. The regulator is not responsible for regulating the allocation functions of local authorities. Indeed, it seems rather unfair on housing associations and other providers if the only potential tenants who can get compensation are those who are rejected by an association. That brings us back to the level playing field argument.



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I am also, quite reasonably, concerned about public resources. What should a potential tenant who has been denied a home for an indefinite period be paid? It is not as easy as working out the compensation due, for example, for a leaky roof. We could get into an extremely expensive frame of reference because social housing is such a valuable prize that the sums might be so large that the regulator would often not be able to make awards, because under Clause 240 by doing so he would jeopardise the viability of the provider or prevent it providing services to its existing tenants.

I think that the noble Baroness will accept that these are issues that the regulator can and should deal with where a registered provider is at fault, but through means other than compensation awards. However, she has identified a complex situation and so, in order to make clear to noble Lords how the allocation system works at present, I should like to write and explain the background to the sort of judgments that go into the making of allocations and the relationship between local authorities and providers. On that basis, there will be a better understanding of how complicated this challenge to the providers would be.

Baroness Hamwee: I welcome that further explanation. At this juncture, I want to make a few points. The amendment refers not to an enormous number of potential tenants but to someone who has actually applied. It is not intended to be everyone who, if they thought about it, might have applied and been rejected. To answer a point that was not quite made, I understand the desirability of not having a system that allows someone to make a quick buck by applying where there is no hope of being allocated housing, but I should have thought that the fairly full provisions that come under the heading of compensation—10 full clauses—form an adequate safeguard for how individual claims, including claims of this sort, might be dealt with. I agree absolutely, of course, that enforcement generally is desirable, but it does not assist the individual. I look forward to hearing further from the noble Baroness and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 237 agreed to.

Clauses 238 to 240 agreed to.

Clause 241 [Warning]:

Baroness Andrews moved Amendment No. 110Z:

On Question, amendment agreed to.

Clause 241, as amended, agreed to.

Clauses 242 to 246 agreed to.

Clause 247 [Section 246: supplemental]:

Baroness Andrews moved Amendments Nos. 110AA and 110AB:



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(a) be a period of at least 28 days, and(b) begin with the date on which the registered provider receives the notice.”

On Question, amendments agreed to.

Clause 247, as amended, agreed to.

Clause 248 [Management transfer]:

Lord Best moved Amendment No. 110ABA:

The noble Lord said: I shall speak to the amendments standing in my name in this group. They are intended to apply some gentle constraints on the powers of the regulator. The Bill already extends the regulator’s powers beyond those that the Housing Corporation currently holds. An inquiry may be called by the regulator at the behest of the residents, if the amendment of the noble Lord, Lord Whitty, supports that line, at the request of the local authority or on the regulator’s own initiative. If mismanagement is uncovered by that inquiry, the regulator can direct that the management of the provider’s homes be transferred to another manager, or he can directly appoint other managers or new staff—in effect, he can take control.

This is pretty heavy-duty stuff. It would mean that most providers of social housing would be out of business because they would not be managing the homes that they had built or acquired. However, they would have to continue to pay the mortgages on those properties and they would have legal obligations in relation to the premises as the owners of those properties, although they would not be allowed to manage them. Therefore, this is a heavy-duty power and I support this extension to the powers that currently exist for a regulator to intervene in the affairs of providers of social housing. Indeed, I would go further and extend the powers to include profit-making providers who take grants and therefore should accept all the obligations towards tenants and the properties they manage that go with accepting government funds. I think that the noble Baroness agrees with the extension of a number of these provisions to profit-making bodies, and I look forward to hearing her comments in due course.

6.45 pm

So far, so good. But the Bill spoils it all by overextending these powerful new measures. It goes further than giving the regulator the power to remove the management or to appoint new staff in cases where mismanagement is unearthed. The powers in the Bill can be applied if the registered provider has breached any one of the standards—and a good many standards could be devised by the regulator—that cover every conceivable aspect of the social landlord’s affairs. Indeed, the powers can kick in if the regulator feels that a transfer,

I chair a highly reputable housing association, the Hanover Housing Association, which manages a large stock. I think we do very well, certainly in terms of the Audit Commission’s inspections of our affairs. However,

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even the best run organisations may have somewhere within their affairs a failure in relation to one of a possibly long list of standards devised by the regulator. If we fail in some regard we need to be told to improve, we need to be reprimanded, and if appropriate, we need to be fined, as the Bill enables the regulator to do. We need to compensate our tenants if they have been treated poorly, as the Bill enables the regulator to insist on. I suggest, however, that it is going too far, if no mismanagement is proven as a result of an inquiry, for the regulator to have the power against any failure, not just mismanagement, to bring in new staff or transfer the property to another organisation.

Is the test of mismanagement too strong? Is it too high a hurdle? Would it be difficult for the regulator to prove mismanagement? We have already discussed the definition of the term. I repeat that mismanagement is,

It does not sound too high a hurdle to prove mismanagement, and if none is proved, I suggest that these draconian powers go too far. A moment ago the Minister gave us an example of something that was inappropriate: failure to have sufficient insurance, which is not perhaps the most heinous of crimes. It should be insisted that that is rectified quite quickly, but it should not trigger the collapse of the organisation and its takeover by new management.

This far and no further. It is our duty to be vigilant in looking at the role of the regulator and to draw some lines where we believe that powers are being extended an inch or two too far. This is one of those cases. I beg to move.

Baroness Falkner of Margravine: I, too, support the amendment. Triggers are an important lever for the regulator when dealing with mismanagement. Most RSLs will accept that that is the case. We recognise the precedent laid out in the Housing Corporation zone rules, which are fairly strong. The amendment leaves in paragraph (b) but takes out (a) and (c), and thus meets the criteria by leaving them broad enough for negotiations to take place. Paragraph (b) allows for the inquiry to be undertaken or, as the noble Lord, Lord Best, has so eloquently argued, to allow for remedies to be put in place. To have triggers of this order of magnitude seems slightly disproportionate, which is why earlier we argued so strongly for the insertion of “proportionate” at the front of the objectives.

Earl Cathcart: I support the noble Lord, Lord Best. He has set out the issue far more eloquently than I could, so I shall not try to do so. However, what he described is rather like a court trying someone for murder, finding him innocent of murder but guilty of shoplifting, and then deciding, “Well, we’ll hang him anyway”. I think he is saying that we must let the punishment fit the crime.

Baroness Andrews: I could not disagree with that. I am grateful to the noble Lord for moving his amendment, as I hope it will enable me to provide reassurance

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about the proportionality that we have provided here. The amendments raise issues of principle. I shall set out some technical explanations as to why we are taking this approach, but they are serious issues that affect a range of the regulator’s most serious enforcement powers. I should stress that most of the existing powers are held by the Housing Corporation. The most important of these is the ability to transfer land, which in the past has been used most sparingly in cases where a provider is not viable in order to pass its assets, including social housing, to another provider before winding it up. The amendments would also affect the regulator’s powers to restrict providers’ dealings and to suspend or remove the officers of a provider during or following an inquiry. They would also affect some new powers, such as those relating to the transfer of management, appointing managers and amalgamation. These are mainly new powers taken to meet Cave’s recommendations that the regulator should intervene more flexibly and proactively in the interests of tenants. The amalgamation powers were added in another place following a proposal by colleagues of the noble Lord, Lord Dixon-Smith, and the noble Earl, Lord Cathcart, for a more flexible approach to the regulated transfer of land of industrial and provident societies.

The problem I have with the noble Lord’s amendments is that I see them as making these powers rather more difficult to use. His argument is essentially that the regulator should not be able to use its more serious powers, such as those in relation to the transfer of land, on the basis of a trivial breach of standards; nor should it be able to transfer land on the basis that the transfer would be likely to improve the management of the land or that it would be likely to improve the management of some or all of its social housing. The noble Lord also queried how action could be taken on the basis of a breach of standards or improved management when an inquiry under Clause 203 can be held only where the regulator suspects that there has been mismanagement.


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