Considered in Grand Committee
My Lords, I shall speak also to the Housing and Regeneration Act 2008 (Registration of Local Authorities) Order 2010. The overall purpose of the orders is to allow the new regulatory framework for social housing regulation to be brought into effect on 1 April 2010.
These regulatory reforms were originally proposed in Professor Martin Cave’s report, Every Tenant Matters, published in June 2007. It recommended that a new independent social housing regulator be established to regulate all social housing landlords. The Government implemented Professor Cave’s recommendations through the Housing and Regeneration Act 2008, which provided for the establishment of a new independent regulator and for the creation of a new, cross-domain regulatory framework.
The new regulator, the Tenant Services Authority, came into being on December 2008, but it has continued to regulate housing associations using the regulatory powers previously exercised by the Housing Corporation. This transitional period has allowed time for the TSA to develop new performance standards in consultation with tenants and landlords. We now seek Parliament’s approval to bring into effect the new regulatory framework provided by the 2008 Act. That is the overall aim of the two orders before us today. I shall speak to each in turn.
The Housing and Regeneration Act 2008 (Registration of Local Authorities) Order would enable the TSA to register council landlords in order that they are subject to regulation. The Housing and Regeneration Act dealt only with the regulation of housing associations. We made it clear during the passage of the Housing and Regeneration Act that we would later legislate to apply the regulator’s powers in the Act, as appropriate, to council landlords. Section 114 was included in the Act to facilitate this, following cross-party support. The principle of having a single regulator for all social housing has received widespread support from both councils and tenants.
Our shared goal is to raise the standard of services for tenants no matter who their landlord is. The needs and experiences of tenants will be central to the new regulatory framework led by the TSA. Social tenants have limited leverage in the “market”: they cannot choose to move into another home or choose to rent from another landlord. It is important to ensure that tenants are offered opportunities to be involved in decisions that affect them and that they should have the protection that regulation provides where they receive an unacceptable level of service.
The policy intent underpinning the order is that the TSA be provided with the powers necessary to enable it to apply a common regulatory framework across all providers of social housing. We have also been clear from the outset that any new regulatory framework operating under the powers should support local delivery and accountability through the local performance framework. The TSA has made it clear that it shares our aims to reduce unnecessary burdens on local authorities.
Where differences arise between governance of local authority landlords and wider performance management, our aim has been that they should be addressed by the regulator through application of its regulatory framework rather than by seeking to add complicated provisions to the statutory framework. However, some tailoring of the Act and amendment of other legislation is necessary in connection with the registration of local authorities. The new regulatory framework, which would apply across all providers of social housing, has standards at its core. The TSA consulted on its proposed standards between December 2009 and February 2010. It described the outcomes that the regulator will want to see delivered, as well as any specific requirements it is expected to meet.
The TSA has made clear that it wants to place the main emphasis on the relationship between landlord and tenant, a relationship within which tenants help to shape, influence and monitor the service provided. A key element of that approach is that housing providers should agree local standards with their tenants. The regulator may require information of a provider, order an inquiry or commission an inspection. Where the regulator has established that there has been a breach of standards or general mismanagement, it would have a range of enforcement powers to help to ensure that tenants receive an acceptable level of service.
The regulations are relatively straightforward in that they largely amend provisions in the Housing and Regeneration Act as necessary for the registration of council landlords. The order provides that council landlords who currently retain ownership of social housing stock will be registered with the regulator from the outset. Existing council landlords would not therefore need to apply to be placed on the register. The order inserts a new duty on the regulator so that it will co-operate with the Audit Commission and, in particular, consult with the commission on matters relating to council landlords.
The order does not apply the power in the Act that enables the regulator to set financial management standards for housing associations. The financial governance of councils is already subject to regulation by the Audit Commission. The intervention powers granted to the regulator in the Act provide powers that it could use to address poor performance in the housing association sector. It is our intention that the same powers should apply to councils, but only where they repeat those powers that the Government hold in order to intervene in serious cases of local authority underperformance. In accordance with that principle, the order provides that powers to impose fines on providers and order a landlord to pay compensation to tenants should not be applicable with regard to councils. The order would also not extend to local authorities the powers to suspend and remove officers.
Finally, the order transfers from the Secretary of State to the regulator the powers in the Housing Act 1985 to give consent for the transfer of the management of a council’s housing stock to another provider. It makes sense for the regulator to take on this function as it will hold the relevant information about the performance of the landlord.
The consequential provisions order makes consequential amendments to primary legislation arising from Part 2 of the 2008 Act, which provided a new regulatory framework for social housing. These amendments are a matter of technical necessity, and most fall into one of two categories—that is, the replacement in England of the term “registered social landlord” with “registered provider of social housing”, and the transfer of the Housing Corporation’s regulatory functions to the TSA.
First, on registration, the TSA currently regulates registered social landlords, commonly known as housing associations. RSLs are non-profit, private-sector bodies that are independent of government. As part of the new regulatory framework that is due to be in place from April 2010 onwards, profit-making bodies will also be able to register with the TSA—a change that was recommended by the Cave review.
All registered social landlords are required to be non-profit-making. Given that profit-making bodies will be able to register after 1 April as well, the 2008 Act introduced the term “registered provider of social housing”—registered provider, for short—to denote bodies that are registered with the TSA. In order to protect the existing non-profit status of RSLs, the TSA will register non-profit and profit-making providers separately, and slightly different rules will apply in some circumstances. Therefore, we need to be able to differentiate between types of registered provider. The term “private registered providers of social housing” will refer to all bodies registered with the TSA that are not local authorities. The term “non-profit registered provider of social housing” will refer to those private registered providers that are non-profit.
In amending existing references in primary legislation to “RSLs”, we have had to consider whether in future these legislative provisions should apply to non-profit registered providers only, by which I mean only existing RSLs and any similar non-profit bodies that register with the TSA from April, or to all private registered providers—that is, non-profit and profit-making bodies. Our general approach in the order has been to apply these provisions to all private registered providers of social housing. Our aim, as far as possible, is for there to be a level playing field between providers, and that social tenants should not be any worse off due to the status of their landlord.
However, in specific cases there are technical or policy reasons to apply the existing references to RSLs to non-profit providers only—for example, in relation to charities legislation, where referring to profit-making bodies would not be meaningful, or in relation to RSLs’ existing anti-social behaviour powers, where we do not believe that it would be appropriate for profit-making providers to exercise these powers without proper consideration and consultation.
The second category of consequential amendments is much more straightforward. It reflects the transfer of the Housing Corporation’s regulatory functions to the TSA, or the Regulator of Social Housing, as it is referred to in the legislation.
The orders are concerned with making sure that all landlords who provide social housing, whether housing associations or councils, deliver high standards, and I commend them to the Committee.
My Lords, we on these Benches do not intend to vote against the orders but we have some issues with their practicalities. First, we agree that the TSA should cover local authorities. However, we are cautious about its ability to be an effective asset to the housing system, given what we know so far about its past financial management. We know that the Department for Communities and Local Government spent a total of some £230,000 appointing board members for the new Homes and Communities Agency and the Tenant Services Authority, despite 10 of the 22 appointees coming from the two organisations’ predecessors, the Housing Corporation and English Partnerships.
We also know that a typical council has to spend £2.6 million a year reporting performance information to central government. What a waste of money. Could it not be spent better on front-line services? The cost of the Audit Commission soared from £93 million in 1996-97 to £205 million in 2008-09. It is clear that the TSA is going to create more red tape and inspection, if only to justify its existence. This is neither helpful to, nor necessary for, an already struggling housing market. We do not see why more power could not be given to the Local Government Ombudsman to tackle individual complaints. What assurances can the Minister give us that bureaucracy will be kept to a minimum and that the work of the TSA will not become entrenched in a culture of duplication involving the Audit Commission?
Secondly, we understand that the reason behind renaming registered social landlords as registered providers of social housing is that RSLs are not-for-profit and that the Housing and Regeneration Act allows for profit providers to register with the TSA too, thereby needing to rename them all. However, it seems that in reality this may be unlikely to be hugely necessary. Why cannot different types of RSL simply register as either profit-making or non-profit-making? Can the Minister tell the Committee what the overriding justification is for the complete overhaul?
The orders amend the Housing and Regeneration Act 2008, so I am surprised that the Government do not use this opportunity to amend their new homes building target. At Second Reading of the Bill, the then Minister, the noble Baroness, Lady Andrews, said that the Prime Minister had announced that they would,
“deliver 3 million additional new homes by 2020 … a national target of delivering 240,000 new homes a year”.—[Official Report, 28/4/08; col. 41.]
If only. At the time, this wild and over-optimistic target was challenged. My noble friend Lord Patten said:
“I predict that the maximum number of new homes built in 2008 will be no more than between 100,000 and 110,000. That will not meet demand. The number in 2009 is unlikely to be much higher”.—[Official Report, 28/4/08; col. 76.]
Sadly, even those figures of my noble friend seem generous. Let us not forget that these warnings were made after the housing and building market had started to decline.
At Second Reading, I said of the Government:
“Sadly, during their 11 years, they have built only a pitiful 145,000 houses per annum … This is yet another example of the Government failing to meet their own targets”.—[Official Report, 28/4/08; col. 110.]
Would not today be a good opportunity for the Government to come up with a more realistic target? They want us to believe that, because they talk about more and better housing and regeneration, they will deliver it. This is quite clearly not the case.
Measures have to be introduced that make the taxpayer’s money go further and not go to waste. Given the vast amount already wasted on setting up the TSA, what assurances can the Government give that these orders will improve the housing system, provide real benefits and provide taxpayers with real value for money?
My Lords, first, I thank the Minister and his team for the very clear explanation of the draft statutory instruments. He will know that we supported the Housing and Regeneration Act in principle. The new regulations on the Tenant Services Authority are very much in line with our position. When we look at the issue of social housing, it would be appropriate to pay tribute to the organisation Shelter, which, since the days when my good friend Des Wilson was in charge of it, has done much to campaign for the cause of the homeless and decent housing for those who otherwise might not have it. Shelter says that it strongly welcomes the approach of bringing together the standards for service delivery to local authority and housing association tenants into a single regulatory framework. This is based on Professor Cave’s excellent work, and it must be the right approach.
Shelter makes the point that having one regulator will make life simpler for tenants and prospective tenants in identifying what they can expect from their landlord and will ensure greater transparency and consistency in providing services. Can the Minister comment on the issue that Shelter raised in its response to the TSA discussion paper—that temporary accommodation should be included in the scope of the TSA’s new regulatory framework? We accept the need for stronger regulation of the private rented sector. I understand that private registered providers remain subject to regulation only if they voluntarily register with the TSA. Should not the TSA take on this regulatory function for all privately registered providers?
The Local Government Association has also welcomed the establishment of cross-domain regulation, but has expressed some concerns about the new regulatory framework under the TSA. Will the Minister comment on the LGA’s assertion that the length and complexity of the standards cast some doubt on whether they focus on meaningful outcomes and will be comprehensible to tenants.
I ask the Minister to say a little more about the relative roles of the TSA and the Audit Commission. We looked last week at the code of practice for the Audit Commission in relation to local government. Can the Minister assure us that the value-for-money standard for the TSA does not duplicate or significantly overlap with the use- of-resources judgment of the Audit Commission?
My Lords, I am grateful to the noble Lord and the noble Earl. They were both supportive of these provisions, although I understand that each, particularly the noble Earl, Lord Cathcart, had some particular inquiries to pursue. The noble Earl asked about the costs of the TSA and whether it effectively adds value. For every £1 that the TSA spends on regulating, it helps RSLs to save £15 in lower interest costs. That amounts to a saving of £250 a year, or 70p a day, for every housing association home. The TSA will cut its running costs by about 10 per cent next year, in 2010-11, while extending its remit to cover local authority landlords from 1 April. The TSA has already identified £2 million in savings during its first year by reducing information technology and legal costs, and by sharing office space with other government agencies.
The noble Earl referred to the recruitment of board members and executives. Three former Housing Corporation board members and one former English Partnerships board member transferred to the TSA board at its inception in December 2008 without additional costs being incurred. Costs were incurred solely for recruiting new board chairs and members for the TSA and HC boards and for the TSA chief executive. On value for money, the LGA’s quango report card focused on the TSA, which has broadly welcomed the LGA’s findings. They indicated a strong start, although there is clearly still some work to be done in certain areas. The TSA was given several green ratings on specific issues, such as complaints handling and the elected representatives on its board. The LGA also recognised the positive steps that the TSA is taking to develop its relationship with local authorities, so I would certainly not accept a suggestion that the TSA is not necessary or superfluous.
The noble Earl asked about the approach that we are taking on profit-making and non-profit-making providers. Prior to the Housing and Regeneration Act 2008, there was no definition of social housing on the statute book, so it is not possible to differentiate between social and non-social housing when referring to RSLs in earlier legislation. We want to preserve the status quo as far as possible, so it is right that, where legislation currently applies to all RSL stock, it should continue to do so after those bodies transfer on to the TSA’s new register as non-profit registered providers. The noble Lord, Lord Rennard, asked whether it was voluntary for profit-making providers to register. The answer is yes; there is perhaps a broader and separate issue about the general regulation of people in the private rented market, which is being addressed as a result of recent consultations.
The noble Earl also referred to the Government’s record on providing new homes. We recognise that the current market conditions have had an impact. Until recent rises, house prices had fallen by around 20 per cent. People are finding it harder to find a suitable mortgage and house builders are experiencing more challenging business conditions. That is why the Government have been proactive in responding to the challenges. We are restoring stability by rebuilding confidence and reassuring consumers that there is practical support where needed. We are focusing on the key priorities: help for homeowners in fear of repossession; support for construction jobs and skills; support for first-time buyers, mortgage lending and the wider market; and support for long-term goals of recovery and sustainability. The Government are now committed to investing £7.5 billion over two years to deliver up to 112,000 affordable homes and around 15,000 private homes. Notwithstanding the challenges of the market, the Government have been proactive in helping to address these matters with a stimulus that has still not had the full endorsement of the Conservative Party. We remain committed to our overall target of raising house building to 240,000 homes per annum by 2016 as the right long-term goal.
The noble Lord, Lord Rennard, asked about the TSA and the Audit Commission. We looked at a code for auditors, not the Audit Commission. The Audit Commission is involved in appointing auditors, but the code was for auditors of local authorities and health bodies. The relationship of the TSA to the Audit Commission is important, which is why I tried to set out in my presentation that we would not seek to override the existing engagement of the Audit Commission to build on that so far as local authorities are concerned. That is part of the provision in these regulations for how the TSA will act in relation to local authorities.
The noble Lord spoke about the good work of Shelter. Like him, I am very supportive of that organisation and I acknowledge the great work that it has done. I remember the name Des Wilson from times gone by. I have forgotten where he ended up, but I know he did great work with Shelter.
The noble Lord asked whether temporary accommodation in total should be included. I am not the landlord for temporary accommodation; it is up to local authorities to ensure that temporary accommodation standards are sufficient to meet their duties to homeless people. That is where the duty lies. We do not think that adding TSA regulation would improve standards of temporary accommodation, but that it could add to costs. He also referred to the length of the framework that we are looking at in relation to regulation. The regulation has been subject to extensive consultation, and I think we are due to publish the final results shortly. I think there have been three consultations and the term “a national conversation” was applied to it. We believe that what comes out of the process reflects significant engagement.
I hope that that has addressed the points that noble Lords made. If not, I am happy to have another go. I am grateful for their input into our discussion of these regulations, which are important in moving to a new regulatory framework that places the needs, views and aspirations of tenants at its heart. That framework will ensure that all tenants, regardless of their landlord, can expect high-quality services with opportunities to influence service delivery and policies.