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I have done this before, but just so that everyone is entirely clear, I declare that I chair a large housing association and can be accused of bringing a provider interest into the debate. I put that declaration up front. A transfer of management—which sounds like a relatively modest change in the affairs of an organisation—is no trivial matter. Only about 350 housing associations are currently active and developing, although about 1,300 exist. That means that around 1,000 are really managers of rented property. That is what they do. Although they may own the property in name, if they are denied the opportunity to continue to manage it, they will go out of business.
Some of these organisations have been around for decades, some for longer. I absolutely accept that they have no God-given right to be managers of social housing; that is certain. However, it is not a trivial matter to end their management of their stock. The Housing Ombudsman is there to handle complaints and individual redress for the 4 million tenants whom the noble Lord, Lord Filkin, mentioned, who will have issues and complaints on a day-to-day basis. The ombudsman provides an effective service. I have been on the sharp end of it myself, and have been entirely content with its judgments. The ombudsman can arbitrate between tenants and landlords—between the housing associations and their residents—and it can fine the registered social landlord, the housing association. It can publish on a name and shame basis the offending housing association. It can draw the attention of the funder—currently the Housing Corporation but in future the Homes and Communities Agency—to the fact that the housing association has not acted properly.
Those powers ensure that tenants with individual complaints on a day-to-day basis—the 4 million tenants—have redress and access to a higher authority to settle those disputes, without it being suggested that it requires
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That should not be taken lightly, because it brings with it—although it probably should not—the imposition of VAT on the management process. There is a 17.5 per cent surcharge if someone else, apart from the owners, does the management. Therefore, if residents complain that service charges are too high and they want to see some cuts in the costs, then, to get a 5 per cent efficiency gain, you need a 22.5 per cent cut in cost to take on board the VAT at 17.5 per cent as well. So they should not enter into this lightly.
We are trying desperately to get the right balance here. I should be very disappointed if the noble Earl, Lord Cathcart, does not see any of his amendments accepted by the end of the day, with some concessions from the noble Baroness. On this one, getting the balance exactly right is difficult. At the moment, the Bill, after the changes that the noble Baroness is bringing forward in the amendments before us now, will get it just about right.
Baroness Hamwee: My Lords, I had the good sense in Committee to let the noble Lord, Lord Best, speak before me on this issue, and I am very glad that I did so again, because he put it so well. There is a need for guidance, or a regime, to enable tenants, in the most serious situation, to prompt a change of management. As the noble Lord said, this is not by any means a trivial matter. That prompts me to ask about the application of “mismanagement”. If there is mismanagement, various mechanisms can be brought into play. Mismanagement is defined as including affairs conducted “improperly or inappropriately”. Is the Minister able to explain how that would apply to the concerns that are being voiced?
I do not want to take out the reference to “control” in Clause 191(2)(g), but whether or not that provision is amended in this way, again I ask how that fits with the issues. Like the noble Lord, I do not think that it is necessarily a service to tenants to enable an easy flip-flop, which I think is the term that was used last time, and that is the concern. On Amendment No. 138A, I am unclear about how these matters are linked to the standards that are being spelt out in the Bill, because they seem to come in from a different direction, or at least to allow for a different direction.
The noble Lord, Lord Best, referred to the VAT issue, which is not a trivial matter either. These are really difficult issues, and we are feeling our way around them and moving forward. It is hardly for me to say this, but the noble Earl ought to bear in mind that raising matters such as this one will have led the Government to reconsider things. None of us gets an amendment labelled with our initials into a Bill, but the process is very worth while.
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Baroness Andrews: My Lords, I thank my noble friend Lord Filkin for enabling us to have this important debate. His amendments in Committee prompted rethinking on the Government’s part; likewise, my noble friend Lord Whitty, who is not in his place,
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Amendments Nos. 120, 122 and 128 would add a body considered representative of the interests of local housing authorities to the list of bodies which must be consulted when issuing or changing standards under Clause 194, issuing directions under Clause 195 and issuing guidance under Clause 214. The amendments are a direct response to the argument made by the noble Baroness, Lady Hamwee, in Grand Committee that the regulator should be required to consult local authority representatives on standards. It was the first time the issue had been raised with us, which is another testament to her forensic abilities. I have considered her points, and on balance I certainly agree that it would be preferable to include bodies representing their interests in the list of mandatory consultees. For consistency’s sake, it should apply to directions and guidance as well.
I turn to my own amendments, Amendments Nos. 95, 96, 97, 116, 124, 125, 126 and 127, and will discuss the amendment tabled by the noble Lord, Lord Filkin, in that context. They are important and address two key issues: how the regulator will involve tenants in its own functions, and how it will address complaints. We had a good discussion on this in Committee, and I am pleased to offer the amendments, which help to deliver a truly tenant-focused regulatory system. I very much hope that they have reassured my noble friend; I think that they have, from what he said. They have certainly been widely welcomed by those who represent the interests of tenants: the National Consumer Council, the National Federation of ALMOs, the Tenant Participation Advisory Service and the Chartered Institute of Housing.
Now I come to what will give me great pleasure. The noble Earl, Lord Cathcart, tabled a good amendment in Grand Committee to give the regulator a “duty to involve”, to ensure that tenants are involved in the exercise of its functions. I responded that I was concerned about how that would work in practice and within the structure of the Bill, but I took the principle away. I am pleased to put forward Amendment No. 97, which fully meets the requirements outlined by the noble Earl and my noble friend Lord Whitty, who has also been of great help in this. I hope that it restores the noble Earl’s amour propre and good humour. I am bound to explain how the amendment works.
The amendment puts a duty on the regulator in three parts. It requires it to promote awareness of its functions; to consult and discuss where appropriate with tenants on the exercise of its functions, such as through tenant focus groups or other meetings; and to involve them where appropriate in the exercise of functions, such as by including them on committees. It is a signal provision; it flags up the relationship that we hope the tenants and the regulator will have, which
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The second key issue is of course how the regulator addresses complaints. We call that the tenant trigger, in shorthand. In Grand Committee, my noble friend Lord Whitty put forward an amendment proposing requirements on the regulator as to how it achieves that, which helped greatly in clarifying our own thinking. He won the support of many noble Lords in doing so. These amendments, which are the culmination of the hard work of my officials, take forward what we are doing.
My starting point is the Cave review, which recommended that the regulator works with the National Tenant Voice and others to develop a range of ways in which interventions can be triggered, by which Professor Cave meant that the regulator should ensure a constant flow of information to allow it to intervene on the basis of clear evidence from a range of sources. That evidence will frequently come from tenant complaints.
As I think the House knows, while the regulator will certainly use tenant complaints as evidence and will have strong powers to intervene, it is not set up to address most individual complaints. That is a core responsibility of landlords, and by issuing standards on complaints procedures the regulator will ensure that they do it well. Where landlords fail to address individual complaints, tenants have the right to put their case to the ombudsman, who delivers a very good service. Indeed, if he has captured the noble Lord, Lord Best, the ombudsman is obviously providing an extraordinary service. We want the ombudsman to work closely with the regulator. We do not want to interfere with those arrangements, but it is for the regulator to address systematic breaches of standards.
Amendments Nos. 124 and 125 are the most important of my amendments. They amend Clause 213, which requires the regulator to issue guidance on how it will use its powers under Chapters 6 and 7. The best way to include the complaints procedure within the regulatory system is for the regulator to issue guidance specifically dealing with complaints about the performance of providers. This is a powerful requirement. The regulator must issue guidance, must consult—including with tenant representatives—and must have regard to its guidance. We thereby ensure that guidance on complaints handling is produced alongside guidance on how the regulator sets standards or uses its enforcement powers, because that link, as the noble Baroness implied, is extremely important and makes it more likely that complaints will influence the rest of the regulatory system.
The guidance issued on this subject also must address specific issues. Three are mentioned: procedure followed in making a complaint, criteria used in deciding whether to investigate, and periods within which the regulator aims to inform complainants of the results. The regulator will, therefore, have to publish a document committing it to stating broadly which complaints it will handle and which are for other bodies to deal with—in particular
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Our amendments make the regulator more accountable and its activities more transparent. It must publish guidance and consult on it, but we have added an extra requirement at Clause 94. Amendments Nos. 95 and 96 require that the annual report includes a general description of complaints made to the regulator that year about performance of providers, and how complaints were dealt with. The amendments would not only clarify the culture that we are trying to achieve and the processes whereby the regulator will have as a priority dialogue and involvement with tenants, but, crucially, would give tenants the clarity and confidence that their concerns will be addressed and resolved in the most appropriate and helpful way.
Amendment No. 94 is tabled in the name of my noble friend. He was most generous and helpful, and I hope that I can answer his specific questions about how the Government intend to respond to the issues raised by the noble Earl’s Amendments Nos. 136 and 138A and how we want the regulator to work to achieve the best results.
I have explained how my amendments will ensure that the regulator will be open and responsive to tenants, but that is only part of the story. My noble friend is quite right about the need for a rapport between the regulator and tenants that is driven by tenants themselves, and the need to inspire and create a new and confident ecology which means that tenants feel genuinely empowered to raise their own concerns and living standards. That is what we both want to see.
It is not our intention that the only route open to tenants who deserve a better service from their landlord will be to formally complain to the regulator. Again, my noble friend and I agree on that. It would not be practical or desirable, because tenants should not have to seek redress from the regulator in order to receive a decent service. If we were to rely on central intervention, we would not be providing what true tenant empowerment is about. It is not the cultural shift that we want. My noble friend understands that point very well; it is what his amendment is driving at. I agree with him entirely that the new regulatory system that we are introducing should be about not just fundamental tenant protection but also behavioural and cultural change—a culture of expectations that will make it clear to tenants that they can be confident that they are entitled to ask for a good service. I believe that the Bill will deliver this. That is the first part of my answer to my noble friend, who asked how we see the system working if we do not agree to later amendments.
I assure my noble friend that promoting dispute and complaint resolution at the local level is something that the regulator will be empowered to do, through setting standards for landlords. We have a link with standards at that point. There will be standards on procedures for addressing complaints by tenants against landlords, methods for consulting and informing tenants
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These empowerment mechanisms relate to the relationships between tenants and landlords. They do not depend on regulatory intervention in order to happen on a day-to-day basis. The regulator’s role will be to set standards on these areas, in consultation with tenants and providers, and to take enforcement action when necessary to ensure that tenants are receiving a satisfactory service. Some of the regulator’s standards will use tenant satisfaction as a measure of compliance. Poor complaint handling by RSLs would show up very clearly in these data.
I also anticipate that the guidance that the regulator will now be obliged to publish on how it will respond to tenant complaints will make it clear that the regulator will support a culture in which tenants can proactively resolve problems with landlords at the local level without having to seek redress.
The regulator will promote local dispute resolution through standards, as I have explained, but it will also promote it in the way it regulates. The regulator will not be swooping in to deal with disputes unless that is necessary. That imperative is already in the Bill. The regulator will have a statutory objective to minimise interference, as we have discussed. It will also be required to comply with the statutory code of practice for regulators. Before exercising its enforcement powers, the regulator must consider the desirability of providers being free to choose how to conduct their business. The Bill provides that RSLs can give the regulator voluntary undertakings. The regulator must have regard to any such undertakings.
I assure my noble friend that the regulator will have no interest in crowding out dispute resolution at the local level—quite the reverse. It is also right that, through the tenant trigger, we should provide a mechanism for tenants to escalate complaints where there are systemic problems that landlords are not addressing. The regulator will focus on setting good standards for complaint resolution, backed up by a good procedure to handle complaints where there are systemic problems.
My noble friend has been a champion of this issue throughout this Bill, and I am sure that the whole House recognises the great contribution that he has made. I hope that he feels that the amendments that I have tabled today have been useful.
I turn to Amendments Nos. 118 and 119, in the names of the noble Lord, Lord Dixon-Smith, and the noble Earl, Lord Cathcart. The noble Earl was right: we slightly misunderstood the intention behind the amendment when we discussed it in Grand Committee. I now understand the noble Earl’s point that Clause 191(2)(e) should not refer exclusively to,
that might imply that a landlord could never have a legitimate complaint against a tenant—it should be a two-way street.
I need to go back to the Cave review briefly; Professor Cave was the original author of Part 2. He found that the closed market for social housing resulted in tenants
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- “a system in which tenants cannot switch and are put at risk of poor treatment by providers, which face limited pressures to offer good service and choice, or even to operate efficiently ... makes a strong case for regulation to protect tenants”.
Cave did not find that landlords were similarly disempowered. The fundamental challenge of Part 2 is to address that lack of tenant empowerment and choice. That is why Clause 191(2)(e) is drafted as it is.
The Bill does not assume that the tenant is always right; nor does it assume that RSLs will never have legitimate complaints against tenants. However, there are already well established routes for dealing with such complaints under tenancy contracts, up to and including evicting the tenant in some circumstances. As the noble Earl said, RSLs also have anti-social behaviour powers, which are highly effective in dealing with troublesome tenants, and standards can be issued on this as well. Tenants simply do not have powers of this nature. I hope that that explanation will satisfy him.
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Amendment No. 119 would limit the regulator’s ability to set standards in relation to tenants controlling the management of their homes. It is crucial that tenants have opportunities to be meaningfully involved in the management of their homes, and that can take many forms. They can be members of boards or involved in other decision-making forums, and they can be directly involved through tenant management organisations. It is right that the regulator should be able to set standards in this area to encourage greater tenant participation in the management of social housing and to make the arrangements work effectively.
The noble Earl was concerned that setting standards in this area might mean that the regulator could force providers to move to tenant management. That is not our intention. Perhaps I may reassure him by drawing his attention to subsection (3) of Clause 191, which states:
“In setting standards the regulator shall have regard to the desirability of registered providers being free to choose how to provide services and conduct business”.
It would not be consistent with that if the regulator attempted to force providers to adopt a particular management model. However, where tenant management arrangements are already in place, the regulator should be able to set standards in this area to ensure that they work well, and that might not be possible under the noble Earl’s amendment. I believe that the regulator has a legitimate role in encouraging greater tenant involvement, including through the standard-setting process.
Finally—to the relief of noble Lords, I am sure—I turn to Amendments Nos. 136, 137A and 138A, which are an important group. I am very grateful for the support that the noble Lord, Lord Best, gave for Amendment No 138A. Again, I know that my reply will be very disappointing because I cannot accept the amendments. However, I assure noble Lords that we have thought constructively about them as the amendments themselves are very constructive. I am
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My first point of reassurance is that the amendments would do several things that the Bill already covers. First, they would require that guidance be issued on use of the management transfer power. That is already required under Clause 213, which stipulates that the regulator must issue guidance on how it will use all its enforcement powers, including how tenants will be involved. That guidance, unlike the guidance proposed in the amendment, must be consulted on.
Secondly, they specify that tenants can apply directly to the regulator for change of management under circumstances to be specified by the regulator. That is effectively covered by the tenant-trigger amendments that I introduced a few moments ago. If a tenant or group of tenants send a complaint about management and the complaint meets the criteria in guidance, the regulator must say how it intends to address the complaint. Tenants can write saying that there are serious problems and that they want a new manager, although the regulator may of course decide that it is more appropriate to use another power. However, that is how tenants will be able to influence change.
The issue of tenant influence on the choice of manager is also already covered in other ways. The regulator’s second fundamental objective is to ensure that tenants have an appropriate degree of choice. Its third is to ensure that they are involved in the management of their homes—and that means involvement in decisions on the management service they receive. The regulator has powers, under Clause 98, to consider evidence and opinions provided by tenants and tenant groups when considering using investigation and enforcement powers. Furthermore, when management tender occurs, there must be representation of tenant interests on the selection panel. I hope that, together with what I said earlier, those details will help to reassure the noble Earl and my noble friend Lord Filkin about how the processes will work.
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