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A key recommendation of Martin Cave’s review was that the new regulator should be independent of government, but that does not mean that there is no role for government. Professor Cave was very clear that the Government had a direct interest in the setting of rents and standards of service for tenants, which are the areas in which we have given the Secretary of State a power to direct the regulator. This limited power of direction, backed up by transparent processes, should give providers and tenants the certainty that they have previously lacked.

I am clear that this is much more faithful to Professor Cave’s recommendations. It is perhaps worth quoting what he said:

The Bill achieves that objective. The noble Viscount’s amendments would provide a new role for the Secretary of State that rather waters down the Cave recommendations.

The Secretary of State’s role under this Bill remains extremely limited. We have introduced amendments that would give the Secretary of State additional roles in two very specific areas, to which I referred earlier, but they do not undermine the basic principle of independence. First, we have given the Secretary of State a role in the process for setting the regulator’s fees. As the House will know, regulation in this sector has not previously been funded by fees, and providers are perhaps understandably nervous about how the new system might work. The role for the Secretary of State should help to reassure providers.

Secondly, we have given the Secretary of State a role in the regulator’s determinations on the disposals proceeds funds. In this area, the regulator takes on the

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role of the Housing Corporation in determining how proceeds from right-to-acquire sales are invested. That is how we ensure that proceeds of right-to-acquire sales are invested in new social housing. Although it is a regulatory function, it has important investment implications. The Secretary of State’s role here simply ensures that the status quo is maintained; namely, that government are able to ensure that right-to-acquire sales do not lead to the loss of social housing stock. I am sure that most noble Lords will agree that that is a desirable outcome. The Bill was not intended to make any substantial changes to the right-to-acquire system. Giving the Secretary of State a role here ensures that the status quo is maintained.

These small roles for the Secretary of State do not diminish the overall independence of the regulator. The Secretary of State will have only a limited role in setting standards and no role at all in other areas, including the registration of new providers, enforcement of standards or the disposal consents regime, where one could fairly argue that a guidance role is more appropriate. These are amendments that we have to resist.

5.45 pm

Viscount Eccles: My Lords, I thank the Minister for his reply. I shall deal first with the question of Professor Cave. We all have the greatest respect for the work that the professor has done on this subject, but none of us would expect him to be an expert on parliamentary procedure or the drafting of Bills and proper implementation of Acts of Parliament. That is not what we would expect—and Parliament would not wish to delegate the responsibility for such decision-making to anybody, however expert they were, if they were not themselves Members.

On the point made by the noble Baroness, Lady Hamwee, on the width of the directions clause, I remind the House that I suggested that if the Government thought it more appropriate they could use Clause 49 and thus put the regulator on exactly the same basis as the HCA. That clause is quite short; subsections (1) to (4) are the ones that count. It would do admirably. I chose Section 76 of the 1985 Act only because the Government kept citing it as the precedent on which they relied. Directions clauses are meant to be wide. There are many of them, in many Acts of Parliament, and when they are used as backstop or reserve powers, as is their usual use, they are wide, because it is not possible to foresee the purposes for which they may need to be used.

In Grand Committee, we had three uses of directions pointed out to us by the Minister, which were all to do with the Dome. That is an absolutely classic example of the need to use directions under an Act of Parliament because the circumstances of the Dome, as it was shut down after the millennium, could not have been foreseen. That is why they were used in that way. As a matter of precedent and parliamentary procedure, I believe that directions clauses should be wide.

There is much benefit in Amendments Nos. 121 and 123, and I wish to test the opinion of the House.

5.47 pm

On Question, Whether the said amendment (No. 121) shall be agreed to?

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Their Lordships divided: Contents, 76; Not-Contents, 168.

Division No. 1


Anelay of St Johns, B.
Attlee, E.
Blackwell, L.
Bridgeman, V.
Brougham and Vaux, L.
Byford, B.
Cameron of Dillington, L.
Carnegy of Lour, B.
Cathcart, E.
Colville of Culross, V.
Colwyn, L.
Cope of Berkeley, L.
Courtown, E.
Crickhowell, L.
Cumberlege, B.
De Mauley, L.
Denham, L.
Dixon-Smith, L.
Dundee, E.
Eccles, V. [Teller]
Eccles of Moulton, B.
Falkland, V.
Ferrers, E.
Glenarthur, L.
Hamilton of Epsom, L.
Hanham, B.
Henley, L.
Higgins, L.
Hooper, B.
Howard of Rising, L.
Howe, E.
Howe of Aberavon, L.
Howell of Guildford, L.
Hylton, L.
Inglewood, L.
King of Bridgwater, L.
Kingsland, L.
Laird, L.
Lamont of Lerwick, L.
Lawson of Blaby, L.
Lindsay, E.
Luke, L.
Lyell, L.
McAlpine of West Green, L.
Marlesford, L.
Masham of Ilton, B.
Mayhew of Twysden, L.
Miller of Hendon, B.
Montrose, D.
Morris of Bolton, B.
Morrow, L.
Naseby, L.
Noakes, B.
Norton of Louth, L.
O'Cathain, B.
Onslow, E.
Palmer, L.
Patel, L.
Reay, L.
Renton of Mount Harry, L.
Ryder of Wensum, L.
Sandwich, E.
Seccombe, B. [Teller]
Selkirk of Douglas, L.
Selsdon, L.
Sharples, B.
Shaw of Northstead, L.
Shephard of Northwold, B.
Skelmersdale, L.
Stewartby, L.
Verma, B.
Waddington, L.
Wade of Chorlton, L.
Wakeham, L.
Walpole, L.
Warsi, B.


Acton, L.
Adams of Craigielea, B.
Addington, L.
Adonis, L.
Ahmed, L.
Amos, B.
Anderson of Swansea, L.
Andrews, B.
Archer of Sandwell, L.
Ashdown of Norton-sub-Hamdon, L.
Avebury, L.
Bach, L.
Barker, B.
Barnett, L.
Bassam of Brighton, L.
Best, L.
Bilston, L.
Blackstone, B.
Blood, B.
Borrie, L.
Boyd of Duncansby, L.
Bradley, L.
Bradshaw, L.
Bragg, L.
Brett, L.
Brooke of Alverthorpe, L.
Brookman, L.
Campbell-Savours, L.
Christopher, L.
Clark of Windermere, L.
Clement-Jones, L.
Clinton-Davis, L.
Corbett of Castle Vale, L.
Cotter, L.
Craig of Radley, L.
Craigavon, V.
Crawley, B.
Darzi of Denham, L.
Davies of Coity, L.
Davies of Oldham, L. [Teller]
Dean of Thornton-le-Fylde, B.
Desai, L.
Dholakia, L.
Dixon, L.
Dubs, L.
Dykes, L.
Elder, L.
Elystan-Morgan, L.
Erroll, E.
Evans of Parkside, L.
Falkender, B.
Falkner of Margravine, B.
Faulkner of Worcester, L.

9 July 2008 : Column 791

Filkin, L.
Finlay of Llandaff, B.
Ford, B.
Foster of Bishop Auckland, L.
Foulkes of Cumnock, L.
Gale, B.
Gavron, L.
Gibson of Market Rasen, B.
Giddens, L.
Golding, B.
Gordon of Strathblane, L.
Graham of Edmonton, L.
Grocott, L.
Hamwee, B.
Harris of Haringey, L.
Harris of Richmond, B.
Harrison, L.
Hart of Chilton, L.
Haskel, L.
Haworth, L.
Hilton of Eggardon, B.
Hollis of Heigham, B.
Howarth of Newport, L.
Howells of St. Davids, B.
Howie of Troon, L.
Hoyle, L.
Hughes of Woodside, L.
Hunt of Kings Heath, L.
Jones, L.
Jones of Whitchurch, B.
Judd, L.
Kilclooney, L.
King of West Bromwich, L.
Kirkhill, L.
Kirkwood of Kirkhope, L.
Lee of Trafford, L.
Linklater of Butterstone, B.
Lipsey, L.
Livsey of Talgarth, L.
Lofthouse of Pontefract, L.
Macaulay of Bragar, L.
McDonagh, B.
Macdonald of Tradeston, L.
McIntosh of Haringey, L.
MacKenzie of Culkein, L.
McKenzie of Luton, L.
Maddock, B.
Malloch-Brown, L.
Mar, C.
Massey of Darwen, B.
Maxton, L.
Methuen, L.
Miller of Chilthorne Domer, B.
Moonie, L.
Morgan of Drefelin, B.
Morris of Aberavon, L.
Morris of Handsworth, L.
Neuberger, B.
Parekh, L.
Patel of Blackburn, L.
Patel of Bradford, L.
Paul, L.
Pendry, L.
Peston, L.
Pitkeathley, B.
Prosser, B.
Prys-Davies, L.
Puttnam, L.
Quin, B.
Radice, L.
Ramsay of Cartvale, B.
Razzall, L.
Redesdale, L.
Rendell of Babergh, B.
Rennard, L.
Richard, L.
Roberts of Llandudno, L.
Robertson of Port Ellen, L.
Rooker, L.
Roper, L.
Rosser, L.
Rowlands, L.
Royall of Blaisdon, B. [Teller]
Russell-Johnston, L.
Sawyer, L.
Sewel, L.
Sharman, L.
Sheldon, L.
Simon, V.
Smith of Clifton, L.
Snape, L.
Soley, L.
Steel of Aikwood, L.
Stevens of Kirkwhelpington, L.
Stone of Blackheath, L.
Symons of Vernham Dean, B.
Taylor of Bolton, B.
Thomas of Gresford, L.
Thomas of Walliswood, B.
Thomas of Winchester, B.
Thornton, B.
Tomlinson, L.
Tordoff, L.
Tunnicliffe, L.
Turnberg, L.
Turner of Camden, B.
Wallace of Saltaire, L.
Walmsley, B.
Warner, L.
Warwick of Undercliffe, B.
West of Spithead, L.
Whitaker, B.
Wilkins, B.
Williams of Crosby, B.
Williamson of Horton, L.

Resolved in the negative, and amendment disagreed to accordingly.

5.57 pm

Clause 195 [Direction by Secretary of State]:

Baroness Andrews moved Amendment No. 122:

“(ca) one or more bodies appearing to the Secretary of State to represent the interests of local housing authorities,”

On Question, amendment agreed to.

[Amendment No. 123 not moved.]

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Clause 213 [Use of intervention powers]:

Baroness Andrews moved Amendments Nos. 124 to 126:

(a) guidance about complaints to the regulator about the performance of registered providers, and(b) guidance about”(a) the procedure to be followed in making a complaint,(b) the criteria used by the regulator in deciding whether to investigate a complaint, and(c) periods within which the regulator aims to inform complainants of the result of complaints.”

On Question, amendments agreed to.

Clause 214 [Consultation]:

Baroness Andrews moved Amendments Nos. 127 and 128:

“(ba) one or more bodies appearing to it to represent the interests of local housing authorities,”

On Question, amendments agreed to.

Clause 215 [Accreditation]:

[Amendment No. 129 not moved.]

Clause 227 [Amount]:

Baroness Andrews moved Amendment No. 130:

The noble Baroness said: My Lords, this formidable-looking group of amendments can be broken into two. I shall deal first with Amendments Nos. 130 to 135, 148, 149, 194 and 197, which address four issues: they ensure that an order by the Secretary of State changing the amount that the regulator can set as a penalty will be subject to the affirmative procedure; specify what is covered in a warning notice for the penalty or compensation powers; tidy up Clause 236 to remove obsolete references to “occupiers”; and ensure a single definition of the word “officer”.

I have already written to the House on the size of the penalty. Amendment No. 110XD, tabled by the noble Lord, Lord Dixon-Smith, was accidentally accepted in Committee. It aimed to implement a DPRRC recommendation by ensuring that where the Secretary of State uses an order to change the maximum permitted penalty under Clause 227 above the inflation rate, it must follow the affirmative procedure. Sadly, the accidentally accepted amendment cannot be kept because it included a number of undefined terms.

In Committee, we had tabled our own amendments but then had to withdraw them as they were incompatible with the amendment which had by then been accepted. My Amendment No. 130 removes the text added by

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that amendment from Clause 227, and Amendments Nos. 194 and 197 ensure that the aim of the noble Lord’s amendment is met by ensuring that Clause 318, which sets out which procedure applies to each order-making power, applies the affirmative procedure to Clause 227. I apologise for the confusion caused over that.

6 pm

On the second issue, my Amendments Nos. 131 and 135 specify what issues need to be covered in the warning notices that the regulator must issue to a provider before using penalty and compensation powers. At present, Clauses 228 and 240 state that the notice must inter alia explain the effects of Clauses 229 to 233 and Clauses 241 to 243 respectively. The problem is that many parts of those clauses are not relevant to the provider and do not need to be in the warning notice.

The amendments clarify that the notice should explain issues affecting providers such as the representations procedure and the fact that the penalty/compensation and interest on that sum is treated as a debt to the regulator. However, the notice does not need to include issues such as the regulator’s duty to inform the HCA, or the process by which the Treasury may make regulations authorising the charging of interest.

On the third issue, my Amendments Nos. 132, 133 and 134 remove the word “occupier” from Clause 236 in three places. The definition of “tenant” in Clause 273 already includes “occupiers”, so they do not need to be separately mentioned.

Finally, my Amendments Nos. 148 and 149 ensure that the Bill uses a consistent definition of “officer”. Clauses 264 and 267 were taken virtually intact from the Housing Act 1996 and include a definition of “officer” that we are now removing. The Bill defines “officer” at Clause 268 for the three different types of housing association, cross-referring to other legislation. There is no need to retain two separate definitions with the same meaning.

The effect of Amendments Nos. 137 and 138 and 139 to 147 is to remove the ability of the regulator to use a number of its major enforcement powers—that is those usable only following, or in some cases during, an inquiry—on the ground of “breach of a standard” and to require the regulator to have the consent of the Secretary of State to use its new powers to amalgamate bodies and transfer management. I discussed those issues at some length with the noble Lord, Lord Best, when he tabled these and other amendments on the enforcement powers in Grand Committee. He was kind enough to accept many of the points that I made in response, and I have written to the noble Lord following that sitting.

For the benefit of the House, I shall briefly explain what the amendments mean. They are concerned with three major enforcement powers; transfer of land, amalgamation and transfer of management. Transfer of land, in Clause 251, is an existing power used as a last resort in extreme cases when a provider is effectively unable to govern itself or manage its homes. The corporation normally requires the provider to sell all

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its homes to another provider, and then it is wound up. Amalgamation is an alternative to transfer of land for industrial and provident societies, which does not involve winding up. Mandatory transfer of management was proposed by Professor Cave as a way of addressing very serious tenant concerns without the need to change ownership. All of those are major enforcement powers that must be preceded by an inquiry.

Under the Housing Act 1996, transfer of land is usable on two grounds: where the corporation believes that the affairs of the provider have been mismanaged, and where it believes that management of the land would be improved through transfer. In the Bill, we added a third ground; where there has been a breach of standards under Clauses 191 or 192. We did so because it seemed right that there should be a close link between standards and enforcement. We also applied all three grounds to the new enforcement powers of amalgamation and management transfer, for the sake of consistency.

I understood that the concern of the noble Lord, Lord Best, was that those powers should be usable only where there was mismanagement. The noble Lord was concerned about the new ground of “breach of standards”. I do not believe that there was any real risk that the regulator would be able to use extreme powers such as these on the basis of a minor breach of standards; it was certainly not our intention that it could do so. There are protections in the Bill against precisely that, such as Clause 216, which requires the regulator, when using enforcement powers, or deciding which ones to use, to have regard to the materiality and frequency of the problem and the desirability of the provider managing its own affairs.

However, after some consideration, I am content to make the proposed change, because this is a new ground, and removing it should not make it harder to use the transfer of land power than it already is. As I stated in Committee, my continuing objection to removing the “improve the management of the land” ground is precisely that it is an existing power and that removing it would make it harder to use in the interests of tenants and the security of assets than at present.

Amendments Nos. 137, 139, 140 and 142 to 147 therefore remove the ground of “breach of standard” from all enforcement powers which must be preceded by an inquiry or used during an inquiry; transfer of land, management transfer, amalgamation, and the powers to restrict dealings and suspend officers. That is in Clauses 254 to 259.

On Amendments Nos. 138 and 141, in Committee, the noble Lord, Lord Best, argued cogently that there was significant protection for providers built into the existing transfer of land power, because the consent of the Secretary of State was required; I agree. Although this was not included in his amendments, it is right that, just as the three key post-inquiry enforcement powers—transfer of land, management transfer and amalgamation—are usable on the same grounds, they should all be made subject to the consent of the Secretary of State, which is the effect of Amendments Nos. 138 and 141. That sends a powerful message that the powers cannot be used lightly, though I do not believe for a moment that the regulator would do so. I

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hope that the noble Lord is content that we have made those amendments in the way that he would have wanted and that we have got the balance right. I beg to move.

Lord Best: My Lords, I am well content with the amendments, and I am very grateful to the Minister for introducing them. The clinching argument for limiting the circumstances in which the regulator could transfer the management of property to another landlord was made by the noble Earl, Lord Cathcart, in Committee. He put it so well that it bears repetition. He said that it was,

That was such a good quote that I felt it was worth repeating. I am deeply grateful to the Minister for the amendments, which will definitely be well appreciated by the National Housing Federation and others.

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