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Grand Committee

Monday, 23 June 2008.

The Committee met at half-past three.

[The Deputy Chairman of Committees (Baroness Gibson of Market Rasen) in the Chair.]

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

Housing and Regeneration Bill

(Ninth Day)

Clause 293 [Ballots before certain disposals to private landlords]:

Lord Whitty moved Amendment No. 113:

The noble Lord said: This amendment takes us into slightly different territory, which I have raised in the House on a couple of occasions; namely, that of ballots. I am very grateful to the Government for the provision in the Bill requiring ballots in relation to stock transfer. Previously, the requirement to hold ballots was at best obscure and was followed in some cases but not others. I should have liked the ballots to be broader in scope and to cover allocation of local authority stock to an ALMO or the re-awarding of such management contracts. I welcome the provision so far as it goes.

The problem with ballots is their fairness. Some basic principles of democracy are involved here. Ballots have been conducted by councils or landowners that wish to transfer their stock. They have been in charge of the propaganda in favour of a yes vote. Their staff have been used to agitate in favour of a yes vote, their publications have been distributed—in many cases several times—in favour of a yes vote and council premises have sometimes been used to present inducements in favour of a yes vote such as showing videos.

Parliament has on many occasions laid down rules for the conduct of elections and referenda. They provide for equivalence of information, equivalence of status between yes and no votes or of all the candidates in an election, and non-interference and equal access to the ballot box and the list of voters. That has occurred with many—I do not say all—ballots that have operated in this regard.

I and others have drawn attention to some abuses in the system, which include the imbalance of information. There have been cases in which one side is able to produce three or four glossy leaflets but the other side is refused access to the same facility. In the case that I am talking about—that of Merseyside—there was still a no vote but another ballot was held. That is reminiscent of more difficult areas of democracy. There have also been cases—I have details with me about one in County

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Durham—in which the side that advocated a no vote was denied access to the list of those entitled to vote until the final two or three days. There have been allegations that council officials in a voting booth wear stickers supporting a yes vote. There have also been more direct inducements and intimidation. We have an example in the Tower Hamlets case of ballot papers being for sale and acquired by the Evening Standard. That shows, as a minimum, that there is a lack of firmness about the rules; in fact, there are not many rules. I am asking through the amendment that the Government take on board the need to provide for fairness of rules here.

It should be pretty obvious from my presentation that, by and large, I am not in favour of transfers out of local authority stock unless the local authority has absolutely failed in its management. I am partisan in that respect, but I recognise the need to ensure that local authorities keep up to the mark and that there is therefore the possibility of transfer out of local authority control to keep local authority management on its toes. I should say that here I am not speaking on behalf of the National Consumer Council, which is in favour of all forms of provision in whatever circumstances, but I have a prejudice that is no doubt evident in my interventions on the issue.

The issue is fairness. Whatever question is put to tenants, they need to feel that it is put to them fairly, that they are not being pressurised—there are allegations in the opposite direction of intimidation and buying votes. This whole area needs some serious cleaning up. I am therefore asking the Government, if they are not prepared to accept my amendment as it stands, at least to accept the principle that where ballots on stock transfer are conducted, there will be clear rules that provide for equality, fairness and equal access to the ballot box and the electoral list. That is an absolute minimum of effective democracy.

We have to bear in mind that the tenants who are asked to vote in these ballots are probably those who are least likely to vote in a general election or a local election, and this is their most direct experience of our democracy. If they find a democratic vote that is so close to their central interests being corrupted in one form or another, their belief in the democratic system as a whole suffers. Therefore, it is incumbent on the Government, having rightly included a provision for ballots in the Bill, also to provide for the way in which the ballots will be conducted. I beg to move.

Lord Mawson: I shall speak to Amendments Nos. 113B and 113C. A well conducted ballot is widely thought to be the best way to interpret existing transfer legislation. The proposal is now to write the requirement for a transfer ballot more directly into the Bill. The value of ballots is hard to argue with, but it is worth considering wider unintended consequences and what often happens on the ground in housing estates.

In east London, we have had nine years of experience of dealing with mandatory stock transfer ballots, nearly all of which we have won with resounding majorities. However, the housing company of which I am a director—I must declare that interest—has experienced appalling delays in the refurbishment of the homes of very vulnerable families; that has resulted from the

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political knockabout that has so often surrounded the ballot process. Not only have those ballots often undermined public confidence, they have also for many months or even years distracted staff and resident directors from the core task of running a £300 million housing company on behalf of the residents.

At Poplar HARCA, we have counted the many hundreds of thousands of pounds that the ballot exercise has cost and have witnessed the confusion created among local residents who have so often felt consulted to death as a result of the process. The amendments are intended to save many housing estates across the country from that unhelpful experience and to leave the decision as to exactly how to test local opinion to those in the local context. There are different mechanisms available now to do that. What works in the London Borough of Newham may be quite different from what works or does not work in the London Borough of Tower Hamlets next door. It all depends on local circumstances. The amendments seek to recognise that fact and to leave it to those in the local context to decide which method of testing local opinion is best for their residents. In some cases, they will choose a stock transfer ballot and that is fine.

[The Sitting was suspended for a Division in the House from 3.39 to 3.49 pm.]

Lord Mawson: Before I was interrupted by the Division Bell, I suggested that there are now different ways to test local opinion. In some cases we will choose a stock transfer ballot, and that is fine, but the noble Lord, Lord Whitty, was correct to point out that if we do that, it has to be very well run. However, there are practical reasons why it is very difficult to do. Why not let the decision be made locally rather than introduce legislation which dictates that one size fits all? Housing transfers have become an established part of the regeneration scene. However, they are now highly politicised affairs. This means that often the ballot is not just an occasion where the residents assess a scheme and give their view. My experience is that people from all over the country come to these ballots with a particular axe to grind. They have become highly tangled, tortuous affairs full of accusation and acrimony.

What happens when a good scheme goes down or is delayed? There are resource issues for housing associations, so it is not just the cost of the ballot itself or the promotional material. To work up an offer, an association will have to invest many hundreds of thousands of pounds to develop a viable scheme for an estate or neighbourhood in need of comprehensive regeneration and redesign. There are unavoidable costs for surveying, master planning, pre-planning application discussions with the planning authority, business planning and financial forecasting. These resources are lost in the case of a negative ballot, however good the scheme and however necessary the regeneration. Where does the money come from? In the end, it comes from the existing tenants’ rent. Then there is the even greater loss of the regeneration resources transfer would bring. For example, in Tower Hamlets, the cost of negative ballots has been estimated at over £600 million of resources for deprived neighbourhoods.

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Lord Graham of Edmonton: How much?

Lord Mawson: I repeat, over £600 million. In many cases the estates are in need of complete remodelling and rebuilding, with a fresh look at how scarce land is being used, but there is now no resource to make that happen.

It might be argued that the association takes a known risk, one that it does not have to take. It is also argued that the ballot box gives residents an opportunity to speak. If they have spoken against a scheme, they must live with that choice. If they do not accept a scheme, they will pay the price. That is fine as far as it goes, but it is not the whole story. The voters in a transfer ballot are not the only stakeholders, and the consequences for a wider group of stakeholders must be acknowledged. Hands cannot be washed just because a particular result emerges from the ballot box. There will be a broader impact on the surrounding neighbourhoods where an estate or neighbourhood rejects an investment opportunity. The impact will be wider than the local constituency of voters. We must also consider the even greater impact on welfare costs and taxation—the deprivation tariff. If neighbourhood regeneration does not take place and immovable pockets of deprivation remain, it has an inevitable social cost in terms of lower education attainment, poorer health and higher levels of worklessness. These in themselves are unhappy human outcomes, so the wider cost needs to be understood and taken into account.

While independent ballots are rightly seen as important, the voters are not the only stakeholders. Their views are important, but in the longer term they may not turn out to be the most vital. This is not to disparage democratic processes, but to emphasise that there are unignorable wider consequences where no investment takes place and higher social costs are sustained. These overall consequences cannot be avoided and need to be weighed when judgments, sometimes quite difficult political judgments, have to be made. A ballot may seem to be a simple way to test local opinion, but experience shows that it may not tell the whole story, or even enough of the story, about an area. The Government need to reserve a wider range of instruments to ensure that change can take place in circumstances where the cost of no change is too high. Such decisions cannot be taken centrally; they have to be taken in the local context by people who are aware of all the complex needs and realities of an area. The amendments seek to leave the power of decision with local people; I commend them to noble Lords.

Finally, the amendments seek to alert the Government to the practical consequences of their present approach; while it is apparently laudable, that restricted approach will, if our experience in east London is anything to go by, ensure that the Government’s policy aspirations will not in many cases be carried through in practice. The budget that they have set aside for improved housing provision will not be spent. I hope that I am wrong, but history may prove otherwise. It might be good in a few years for us all to return to this Room and look at what the practical aspirations were and what actually happened to some of the poorest families in this country.

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Baroness Hamwee: My noble friend Lord Greaves has put his name to the amendments in the name of the noble Lord, Lord Whitty. I apologise for my voice. I hope that I will remain more or less intelligible—at least audibly, if not politically—for the rest of the day. My noble friend has kept his cold in Pendle and sends his apologies. He e-mailed me about those amendments—he is obviously in support of them—and said that good councils of course do all the things that are spelt out in the second amendment. He said that the mention of notice boards in subsection (2)(e) of Amendment No. 114 is curiously old-fashioned and that if the council is using its website, opponents should have a right to equal space there. That is probably covered by “other relevant resources”, in any event. My noble friend concludes his note by saying that,

I, like the noble Lord, Lord Whitty, am partisan, but I share the view that if there are to be ballots, they should be well conducted.

Lord Dixon-Smith: The noble Baroness said the key words. While it is clearly useful to have tenant ballots if only tenants are involved, the noble Lord, Lord Mawson, had a point when he said that if a council has made this matter an electoral issue and the election has been clear, and open and everyone understands what is going on, that is a fair process. We do not have to worry about that. The noble Lord, Lord Whitty, is discussing different circumstances in which, if there is a somewhat unscrupulous council—which is not unknown—it is possible to have a one-sided election.

The difficulty is how we establish a system that provides the flexibility that the noble Lord, Lord Mawson, rightly asked for and the security that the noble Lord, Lord Whitty, rightly asked for. At the moment, the noble Baroness, Lady Andrews has the job and the responsibility. All I would say to the noble Lord, Lord Mawson, is that he needs to remember that when the country votes in a general election, it gets the result it gets and has to live with it. You cannot complain if you have a ballot purely on a housing issue and you do not get the result you want. You have to live with it, because that is democracy, I am afraid. It may be tough, but democracy needs to be a tough and harsh discipline. It is good that it works.

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Andrews): That was an excellent debate. My noble friend Lord Whitty has a lot of passion and experience in this field. We have listened to him carefully regarding the instances he cited. I also listened carefully to the noble Lord, Lord Mawson, who described the wider context and implications. He gave a useful account of what is frail in the system. That is why we support the intention behind my noble friend’s amendments, because we can do better than we have done. I do not feel that his prescription is the right one—and I think that the noble Lord, Lord Dixon-Smith, may have been hinting at that—but I have come up with an alternative, which I hope noble Lords will accept.

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4 pm

The amendment would impose on councils an overly prescriptive procedure. They would be compelled to follow it, regardless of the nature of the proposal and, indeed, regardless of whether a council wanted to pass a few management responsibilities for, say, 25 or so homes to a group of tenants or to pass ownership of an estate of 500 or more homes to an RSL.

The code of practice has a very different effect, whether one is talking about a change of management or a change of landlord, and it is worth unpacking that a little. Councils seek to pass management responsibilities to other bodies where they believe that doing so will provide better value for money and a better service to their tenants. Sometimes management responsibilities are passed on to tenants because that is what they have asked for. Under a change of management, however, homes remain in council ownership and tenants remain council tenants. Tenancies do not change and tenants are less affected than under a change of landlord. That is right, and we encourage councils to keep their tenants fully informed where they propose a change of management and actively to seek their views. Equally, it is right that councils are free to manage this process as they think most appropriate, given the homes in question. It is obviously wrong to force a process on them.

However, a change of landlord is significantly different. The terms of people’s tenancies do change and therefore it is right that they are involved to a far greater degree. For that reason, we introduced Clause 293. However, I do not believe that in addition to a statutory ballot, which is the burden of Clause 293, a statutory code of practice is necessary, not least because much of what is proposed in the amendments is already part of the process and we encourage it through the existing guidance.

The guidance that we issue to councils on stock transfers is very clear about how tenants should be consulted. I am not convinced that councils are neglecting to follow it but I am concerned about the sort of experiences that my noble friend has relayed. I am concerned that he and others have the impression that some councils do not follow the guidance, and we need to address that. Equally, we need a transparent, fair, open, robust and flexible process. I very much take on board what the noble Lord, Lord Mawson, said about the need for flexibility and local character.

I hope that my noble friend and others will draw some comfort from the fact that we intend to table an amendment to this clause that would provide powers to the Secretary of State to issue statutory guidance on stock transfers. I hope that that will meet noble Lords’ concerns in a more focused way. It is not our intention to make the current guidance statutory. It is more than 250 pages long and much of it relates to best practice. It is this guidance that the Homes and Communities Agency will in future be responsible for producing.

To complement the work of the agency, we aim to consult on short, statutory guidance that focuses on the key issues that my noble friend and the noble Lord, Lord Mawson, highlighted, including what might

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be an adequate period of notice before a ballot and some prescription regarding the offer document put to tenants, and so on.

I hope that that will satisfy my noble friend and I now turn to the amendment in the name of the noble Lord, Lord Mawson. I am very grateful for his insight and he was extremely eloquent in describing the relationship between the ballot and the wider form of democracy that he would advocate. However, I cannot accept the amendment because there is a larger issue at stake here. The amendment seeks to remove the requirement to hold a ballot from authorities that have signalled their intent to seek consent to transfer in the manifesto upon which they were elected.

I also have a problem there with fairness. How would we know that any of the tenants in question had voted for the party in power? How could it be fair that people who did not live in the homes in question could decide the fate of those who did? I would have no objection—indeed, I would welcome it—if political parties made clear in their manifestos what they intended to do if elected, including how they would manage their housing, but essentially that should be the start of the process, not the process itself. Tenants must have the final say, and this clause as it stands provides that.

The amendment also seeks to exclude local authorities that can demonstrate by means other than a ballot the opinion of their tenants. All local authorities seeking to transfer stock currently carry out voluntary ballots because they recognise it is the clearest way of both demonstrating tenants’ opinion and ensuring that all tenants are involved. We concur with that and that is why we are ensuring such protection for tenants is enshrined in law. It is hard to imagine what other process could achieve the same result. It cannot be right that tenants of one authority are invited to take part in a properly conducted ballot, the result of which would be clear and unambiguous, while their neighbours across the border are subject to a different process.

I hope that what we have come forward with addresses the concerns and is acceptable. It will meet the critical criteria of fairness and robustness. It is also possible to craft it in such a way that it is flexible enough for local authorities to use it to their own benefit and to the benefit of their tenants.

Lord Whitty: I am grateful for the support of the noble Baroness, Lady Hamwee, on behalf of the noble Lord, Lord Greaves. I hope both the noble Lord and the noble Baroness will soon recover.

Most noble Lords who have contributed to the debate recognise that there is a problem. The amendment of the noble Lord, Lord Mawson, has, in one sense, let the cat out of the bag. I did not address the biggest imbalance—that if you vote yes you get the money; if you vote no, you do not. In the old days that used to be known as “treating” and was an electoral offence. However, I will put that to one side. But it demonstrates that the whole operation is in the context of a national policy which both major parties broadly support. It is therefore not sensible that the impact of the national

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policy and the way in which people are consulted about it should vary significantly from borough to borough and local authority to local authority. I do not accept the need for flexibility in that respect.

Even in relation to local authority manifestos, the local authorities are operating within a national policy and, as the Minister said, it is by no means certain that the tenants of the estates in question voted for the majority party when it came to its execution on those particular premises.

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