I am announcing today decisions on the location and scope of the new social housing regulator following Professor Martin Cave's review of social housing regulation in England earlier this year “Every Tenant Matters: A review of social housing regulation, Professor Martin Cave, June 2007” and our subsequent consultation “Delivering Housing and Regeneration: Communities England and the future of social housing regulation, Communities and Local Government, June 2007”.
I am announcing that the regulator will be established as an independent, standalone body—called The Office for Tenants and Social Landlords. We intend to implement this through the forthcoming Housing and Regeneration Bill which was included in the Government's draft legislative programme published on 11 July 2007. I am also appointing an independently chaired advisory panel to give further advice on the technical work needed to bring local authority landlords within the Regulator's scope.
The Office for Tenants and Social Landlords will take on the regulatory functions of the Housing Corporation. The investment functions of the Housing Corporation will pass to the Homes and Communities Agency.
Unlike under the current regulatory framework, the new regulator will have the power to reduce red tape and regulation for Registered Social Landlords that are performing well, and will also have stronger and more wide ranging powers to take action where tenants are not getting a good service. The new regulator will therefore put a much greater emphasis on service to tenants, with tenants groups able to trigger inspections and interventions when problems arise.
Martin Cave published his review of social housing regulation in June, recommending the establishment of a new independent regulator, responsive to tenants and applying the principles of modern, risk-based regulation. He proposed that tenants should have a central role - and should be able to trigger intervention by the Regulator when they identified systemic failings by their landlord.
Government immediately accepted the bulk of his recommendations, but consulted on two key questions—the location of the regulator, and whether local authority landlords should fall within the regulator's scope.
Regulating local authority landlords
The Cave review recommended that the regulator's responsibilities should be cover all social housing providers—Registered Social Landlords, local authorities, Arms Length Management Organisations (ALMOs) and others. Government were clear in their response to Cave that tenants should be able to expect the same minimum standards of service and have similar opportunities for empowerment, to influence delivery and to seek redress regardless of their social housing provider. However we also recognised that the funding, governance and accountability arrangements vary significantly between providers, and we were mindful of our commitments in the Local Government White Paper to implement a new, single, performance framework for outcomes secured by local authorities working alone or in partnership. We therefore invited views on this issue through consultation.
Respondents to the consultation were overwhelmingly in favour of bringing local authority landlords into the scope of the regulator in principle. But a large number of them also highlighted the importance of recognising the significantly different governance and finance arrangements between the different sectors, and making arrangements which were consistent with the single performance framework for local authorities.
I am announcing therefore that whilst we see a strong case for bringing local authorities into the regulator's scope, we need to do further detailed work with stakeholders on a range of detailed issues. I therefore propose to appoint an independently chaired advisory panel to provide support on handling these issues. It is my intention that cross-domain regulation should be in place within two years of the regulator coming into operation.
The location of the regulator
The Cave review recommended that there should be a separation of investment and regulation functions—both currently carried out by the Housing Corporation. He said that the new regulator could be established as part of the Audit Commission, but that he would prefer a new standalone regulator.
Our consultation document recognised that locating the regulatory functions in the Audit Commission would build on its existing strengths and consumer focus, and it could be implemented quickly. However we also recognised that a standalone regulator may be better at this stage at commanding the confidence of those who provide private finance for social housing. We consulted openly on this issue.
In responding to the consultation document, Registered Social Landlords, tenant representative bodies and lenders all favoured a standalone regulator because of the greater clarity of purpose of an independent regulator, and because of the importance of the regulator maintaining expertise in private finance issues. As it is vital that the new regulatory arrangements command the confidence of lenders in order to support increasing new social housing, I therefore propose to establish the new regulator as a standalone body.