Eighteenth Report Contents

Draft Legislative Reform (Regulator of Social Housing) (England) Order 2018

Introduction

7.This draft Legislative Reform Order (LRO) was laid on 28 February 2018 by the Ministry of Housing, Communities and Local Government (MHCLG), together with an Explanatory Document (ED). It is proposed to be made under section 2 of the Legislative and Regulatory Reform Act 2006 (“the 2006 Act”) which allows a Minister to make provision by order to promote principles of better regulation.

Proposed changes

8.The draft LRO would amend the Housing and Regeneration Act 2008 to transfer the function for social housing regulation from the Regulation Committee of the Homes and Communities Agency (HCA) to a new, separate “Regulator of Social Housing” (which is established by the LRO). This is to avoid a potential conflict of interest between the regulatory and the investment activities of the HCA. The HCA is responsible for providing investment to support social housing providers’ delivery by March 2021 of housing supply in areas of acute pressure. The HCA’s Regulation Committee is responsible for assessing more than 1,600 registered providers of social housing against a set of standards, covering issues such as financial viability, rent and the quality of homes.

9.The draft Order implements one of the recommendations of the Tailored Review of the HCA,2 which proposed (in November 2016) that responsibility for social housing regulation should be separated formally from the HCA. While the Tailored Review made clear that the HCA’s governance arrangements and an operational ‘ethical wall’ had ensured that information had not been inappropriately exchanged between the two divisions, it also found that these arrangements had not been tested, and recommended a formal separation of the regulatory function was advisable. MHCLG states that the proposed reform is purely administrative and does not make any policy or operational changes to the exercise of existing regulatory powers. The draft LRO does, however, allow the HCA to share back office functions such as human resources staff, with the new regulator, to maximise efficiencies.

Consultation

10.During consultation on the draft LRO to which there were 41 responses, 88% agreed that the proposal to split the regulatory function from the HCA was compliant with better regulation principles, and 93% agreed that the proposed reform would address the risk of potential conflict of interest. Some respondents expressed concern about the potential cost of setting up a stand-alone regulator, and that this may impact on the fees currently charged to private registered providers. MHCLG has provided reassurance that the proposed reform will not impact on the level of fees charged.

Conclusion

11.We are satisfied, on the basis of the explanations provided in the ED, that the Order meets the tests set out in the 2006 Act and is appropriate for the Legislative Reform Order procedure; and that the affirmative resolution procedure proposed by MHCLG is also appropriate.


2 The report of the Tailored Review can be found at https://www.gov.uk/government/publications/tailored-review-of-the-homes-and-communities-agency [accessed 22 March 2018]




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