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Insolvency Act 1986 Part A1 Moratorium (Eligibility of Private Registered Providers) Regulations 2020

Volume 804: debated on Friday 24 July 2020

Motion to Approve

Moved by

My Lords, the purpose of these regulations is to disapply the moratorium powers under the Corporate Insolvency and Governance Act 2020 for private registered providers. A separate housing moratorium of 28 days already exists to support them should they get into financial difficulty.

The Corporate Insolvency and Governance Act 2020 introduced a range of measures, both permanent and temporary, to assist businesses. The Act gives companies the flexibility and breathing space they need to continue trading during this difficult time. The regulations being considered today relate to the moratorium provisions contained in that Act. The moratorium measure gives struggling companies a breathing space in which to explore their rescue and restructuring options, free from creditor action. During the moratorium, no legal action can be taken against a company without leave of the court. The measure ensures that companies that are struggling are given the opportunity to survive.

Private registered providers of social housing already have special arrangements for dealing with financial difficulties. These arrangements are set out in the Housing and Regeneration Act 2008 and the Housing and Planning Act 2016. This regime already includes a 28-day moratorium to allow a provider in difficulty, working with the Regulator of Social Housing, to resolve its problems. The arrangements we already have in place, combined with the economic regulation of the sector by the Regulator of Social Housing, make this new moratorium unnecessary.

Under powers within the Corporate Insolvency and Governance Act 2020, these regulations disapply the moratorium powers within that Act to private registered providers. This averts the potential of having two routes that a private registered provider in financial difficulty could follow. This could lead to having two moratoria operating alongside each other, which could be conflicting. This could undermine the ability of the Regulator of Social Housing to support a private registered provider facing financial difficulty, thereby limiting its ability to protect tenants. We seek to avoid this situation.

The housing association sector benefits from a record of no loss on default, meaning that no lender has lost money because of a private registered provider failure. This is important, because it allows private registered providers to borrow cheaply to build the homes we need. Ultimately, that strong financial performance protects tenants, because their homes are not put at risk.

While financial problems are rare, the housing association sector has changed significantly in recent years. The level of private finance has grown from £48 billion in 2012 to over £80 billion in 2020. That is why it is vital that we maintain a clear and robust regime to support a private registered provider facing financial difficulties.

These are straightforward regulations. They are necessary to maintain arrangements that allow the Regulator of Social Housing to effectively support a private registered provider in financial difficulty. They ensure there is a clear regulatory framework that applies to a private registered provider in financial difficulty. This will continue to safeguard investment in social housing and protect tenants. I commend these regulations to the House.

My Lords, I support this tidying-up exercise to remove a clash of moratorium provisions for private housing providers between, on the one hand, the housing Acts of 2008 and 2016 and, on the other, the new provisions in the Insolvency Act 1986 as amended by the Corporate Insolvency and Governance Act 2020.

I am unclear as to whether the slight messiness that these regulations aim to clear up was anticipated during the legislative passage of the recent insolvency Act, but given the fact that only 322 of the approximately 4 million companies in the UK are privately registered providers of housing, there could arise legal, financial and policy confusion from having two separate moratorium regimes applying to this small but important area of economic activity. Also, given that the new provisions do not offer greater protection for providers faced with Covid-related financial difficulties than the existing provisions, the regulations seem, at least to me, to be sensible and proportionate.

I will not detain the House for long because colleagues such as the noble Baroness, Lady Bowles, has much greater practical experience and expertise in this area than I do, but this is a subject that I have been interested in for some years and I have a couple of brief comments and questions to offer.

First, I commend the Government for their reform of the insolvency regime that has given rise to the need for these regulations. For years, Governments led by both main parties have been urged to borrow from the American insolvency regime that was brought in during the late 1970s. This new regime has learned from the American example and has stopped a situation, the curse of administrators in our system, in which a minority of creditors have had the power to stop a much-needed corporate restructuring process that could save both the company and many jobs. It may have taken the Covid crisis to propel the introduction of this new rescue culture to our insolvency laws, but the Government deserve credit for making it happen and for acting swiftly.

I want to ask about one of the few important objections that was raised on the Bill as a whole when it was proposed earlier this year: the concerns of pensioners’ organisations and pension funds that the new insolvency regime may make the process of recovering unpaid pension contributions more difficult. How are the Government seeking to allay those concerns now that the new regime is up and running? Could it be an area where further rule changes will be required, or are Ministers happy with the operation of the new rules with regard to the differential impact on different types of creditor?

The origins of the legislation lie, of course, in the effects of Covid on corporate viability, but they also give rise to a question I have about the permanence of the new insolvency regime. This has been puzzling me for the past two or three months. Which aspects of the new rules prompted by the Covid crisis are designed to be permanent in this new regime and which ones are temporary? For example, as I understand it—and I hope that I will be forgiven if this is wrong—the suspension of the wrongful trading rules which are designed to give directors a vital breathing space free of liability is, I believe, valid until the end of September. Will it be extended or made permanent? Similarly, what about the rules limiting the ability of creditors to present a winding-up petition? That change is excellent and in my view much-needed, but it is also temporary. Will it be made permanent?

I turn now to the specific regulations set out by the Minister. I have a couple of questions about the practical consequences of having one set of insolvency moratorium provisions for UK plc as a whole and a separate provision for a small subset of providers of social housing. As I have said, I understand the pragmatic reasons for this, and given where we are, this seems a sensible way forward, but I have a genuine question here. Are there any companies with holdings across economic activities that may result in some of their activities falling under the provisions of the 1986 Act while their housing activities fall under the separate moratorium procedures of the Housing Act? The answer may well be no, but this mixed regime problem is an issue elsewhere in corporate regulations, so I want to check on it.

Related to this, and lastly, I want to ask about the question of secondary legislation arising from the two separate bodies of primary law that underlie these two separate moratorium processes. Clearly, the fact that a small group of private social housing providers will be regulated under a different legal regime means that the rules may diverge, and indeed they already do so. That is not a problem in itself, but there may be good regulation principles in an ambition not to let that divergence grow over time. How will the co-ordination of secondary legislation under two separate bodies of law be achieved, particularly given that, as I think I am right in saying, they will be under the leadership of two different government departments and two different ministerial leads? Is this an issue of concern and, if so, how do the Government propose to ensure that that co-ordination happens?

My Lords, I first thank the noble Lord, Lord Agnew of Oulton, for alerting me that the Corporate Insolvency and Governance Act 2020 might throw up some problems for the social housing, charitable, mutual and social enterprise sectors and that these would be dealt with through statutory instruments, of which I assume this is one.

We are all concerned to make sure that tenants in social housing are fully shielded from any financial difficulties encountered by their private registered social housing providers; otherwise, they would risk losing their homes or face rent increases to market levels, especially if creditors were able to enforce security on their homes.

The Minister has made it clear that the purpose of this SI is to exempt private registered providers of social housing from the new moratorium provisions of the Corporate Insolvency and Governance Act on the grounds that the existing regime, established under the Housing and Planning Act 2016, ensures superior protection for tenants. In that case I have no objections to the purpose of this SI.

I have just two questions. The first is about cross-contamination; in a sense I am picking up a point partially made by the noble Lord, Lord Wood. As your Lordships will know, the business models for providers of social housing have become much more diverse, and a number are active in other parts of the housing market. In the wake of Covid, we are quite likely to see a number of those companies in financial difficulty. They may well seek the protection of a moratorium under the new corporate insolvency Act. How will the two moratorium regimes under two different pieces of legislation, affecting the same holding company, work out? What happens and who has priority?

In addition, as the Minister will know, my colleagues and I have been concerned that banks are quite likely to manipulate any moratorium under the new Act, both to achieve higher fees and to improve their priority position. HMRC’s provisions in the Finance Bill to give itself super-priority adds another complication. Given all these different factors in play, who will be responsible for co-ordinating and resolving the complexity of all this?

My second question is much briefer. Mutuals, charities and social enterprises are often not suited to the new provisions in the Corporate Insolvency and Governance Act, as the Government have recognised. When will we see the SIs to manage their problems?

My Lords, my interest in this statutory instrument is due to the fact that I served for nine years as a non-executive director of one of the largest housing associations in the UK. Naturally, therefore, the governance of registered providers of social housing—including routes to insolvency—was fairly uppermost in my mind, particularly as that period came before, through and after the financial crash.

When, after the financial crash, many housing associations diversified into different areas of business and took on considerably more debt to frame their portfolios—often with more risky undertakings as margins got tighter—we understood that the Housing and Planning Act allowed for the Secretary of State and the social housing regulator to apply for the new framework at the time, which was to apply for a housing administration order. Given that the HPA 2016 has reduced the amount of time that a moratorium will apply from the pre-existing regime of 28 working days to merely 28 days—I accept that the housing administration order can allow for much longer periods —it is not entirely clear to me whether that tightening of the timeframe has an impact on the viability of housing associations.

I wonder whether the Minister will be able to tell me how the social housing regulator will now assess the viability of housing associations caught in the current economic crisis, with several that are overextended and potentially may not survive. I know the department prefers consolidation, as with universities, to letting any housing association go under, as the Minister explained to us in his opening remarks.

However, there are a lot of housing associations that are now overexposed to student housing. We are aware of what is going to happen to universities in that regard with the tightening of the student housing market—I could say collapse, but I will not be that gloomy. There is another set of them which, in addition to overexposure to student housing, came into the private housing sector in quite significant numbers around 2010 to 2012 because it was seen as more lucrative at the time. What is the Minister’s department doing, in terms of working with the regulator, to have early warning systems to ensure that the financial health of these overexposed housing associations is monitored during this extreme time?

It is always a pleasure to follow both the noble Lord, Lord Wood, and the noble Baroness, Lady Kramer. I also wanted to press the Minister on how the two different regimes will operate. My own view is that housing associations will prefer to stick to the regime under the Housing and Planning Act 2016. For the avoidance of any doubt, I hope the Minister will be able to clear that up in his closing remarks.

Finally, I turn to an issue that the Minister might not be aware of but that came up in the Finance Bill on 17 July. This was an issue raised by several noble Lords—not least the noble Baroness, Lady Andrews—about what happens to rented tenants when the opportunities for landlords to use eviction orders are reinstated. There has been quite a lot about this in the media and we have seen that tenants in private rented accommodation are extremely insecure at the moment. They are in a situation where furlough is coming to an end, but they do not yet know whether they will be retained in employment, and currently landlords are moving quickly to serve eviction notices once the period of stay ends on 23 August. The noble Baroness, Lady Andrews, and a few other noble Lords drew attention to this in the Finance Bill. We did not get an adequate reply in the closure of that debate last Friday. I hope the Minister will be able to address that today.

My Lords, the Minister has introduced this statutory instrument with clarity and brevity; I congratulate him. The noble Lord, Lord Wood, has eloquently asked the question that I would ask. For me to repeat it would be superfluous and so I shall refrain from doing so.

My Lords, a few weeks ago, I thought I had seen the last of the Corporate Insolvency and Governance Act—CIG, for short—at least for while, but here it is again, or rather not here as this is an eligibility exclusion.

As a starting point, let us look at what the social housing sector is not getting. The main features of the CIG moratorium were to enforce continuity of supply by negating supplier termination clauses during the moratorium, with debt relating to ongoing supply going up the creditor pecking order in a subsequent insolvency.

There was also a new restructuring plan process that could be enforced on minority creditors, potentially making restructuring arrangements easier. There was quite a lot of concern that the changes to the priorities in the event of a subsequent insolvency handed too much power to financial institutions, which are probably the main beneficiaries of enhanced priority. This, it seemed, was going to be the price for having a moratorium.

There ends my familiarity with the legislation relevant to these regulations, so I went through parts of the Housing and Regeneration Act 2008 and the Housing and Planning Act 2016 to see what the social housing sector had instead. I soon discovered that there is both a moratorium and other detailed provisions that impose objectives that do not appear in the CIG moratorium. I agree that it would be complicated to try to blend the two together, although I share other noble Lords’ concerns about when both are in the same holding company. I am not sure that I found all that much in common, other than the fact of a moratorium and creditors having to agree to extensions of the moratorium after the first period. There were bits that could have been contradictory if both co-existed without amendment.

The Explanatory Memorandum says that the Government consider that the CIG moratorium provisions are unlikely to offer greater protection for private registered providers or their tenants. I agree with that. The moratorium possibility already exists, seemingly without having to buy it from financial institutions with enhanced priority. I am unsure whether not having the restructuring option is a loss, but with something as important as social housing, being cautious about new provisions must be right. If that provision proves useful and relevant in due course, maybe ways to extend just that part could be found.

That leaves the matter of essential supplies and the triggering of termination clauses. I presume that something has worked over time, and perhaps the Minister can enlighten me; it may well be that I have missed some provisions, or that this is where the regulator funding comes in. But broadly, it seems reasonable and maybe safer to keep with the present bespoke system for social housing and exempt it from the new, more general arrangements.

I could stop there, but since we have been given a bit more time than usual in recent times, I will pose a couple of questions about how the social housing system moratorium works, because I found my curiosity piqued. There is an important objective—in the Housing and Planning Act, I think it was—of keeping social housing in the regulated sector, although there are also conditions in other parts of the legislation that the position of creditors could not be made worse. I wondered how those twin criteria were met in practice, and, if banks were major creditors, how they were kept at bay long enough to find the right arrangements, not least because, like other creditors, they would have to agree to any extension to the moratorium. Maybe the regulator has the knowledge to be able to act quickly, or other powers or provisions can be used. I noted that there were potential restrictions on disposals.

The Explanatory Memorandum also mentions that the regulator can give financial assistance, which seems a key point in enabling continuity of operations. What level of assistance can be given, and does it have to be recovered? I have strayed somewhat from the regulations in hand, so if the Minister has not got a brief for those questions, I would be happy to have a written reply.

My Lords, it is a particular privilege to follow the noble Baroness, Lady Bowles. She really is the best ferret there is on your Lordships’ Benches in the areas where she has an expertise.

Many Members will realise that I have been interested in social housing from the days when I was elected to the London Borough of Islington—the first Tory leader in that century. I was not only the leader—I chaired the housing committee. That interest in the mutual movement has stayed with me, which is one of the reasons why I am making a short speech today. Your Lordships took through the Mutuals’ Deferred Shares Act 2015, so I have been fairly active in this world.

For once, I can actually say a firm word of praise for the Ministry of Housing, Communities and Local Government, and for Her Majesty’s Treasury. They thought ahead and have been in a position to help if, tragically, any of the private registered providers of social housing found themselves in real financial difficulty. To them I say thank you so much—it is really good that my Government have looked ahead and taken some action.

I have only a couple of questions. Is this likely to apply only to newcomers? We see in the briefing memorandum that there are 322 in toto. Is there any geographical spread that may lead to particular difficulties? Would I be correct in saying that this will not affect any of the traditional long-term trusts such as Peabody and all the others, some of which were created over a century ago?

I also wonder a little why Northern Ireland is not covered. When I was a PPS in Northern Ireland, I was very much aware of the social housing movement there. I wonder why it would appear from the memorandum that Scotland has been added but not Northern Ireland.

Finally, paragraph 7.2 of the Explanatory Memorandum says:

“Financial difficulties in the social housing sector are rare”—

yes, we know that—

“and where they have arisen in the past have been resolved within the sector.”

Is my noble friend on the Front Bench saying that because of the incidence of Covid-19 and the massive effect it is having across all sectors, there is a worry that this traditional route of solving problems will probably not work, which is why we have this SI in front of us today?

My Lords, in these difficult times, private registered providers should be protected. They could suffer losses due to the coronavirus affecting their tenants, who are unable to pay their rents, but the tenants should also be protected from being evicted. This provision will protect the tenants in their houses, along with providers such as housing associations and registered providers.

However, I wish to talk about the insolvency Act on the wider stage. During these difficult times, many businesses are suffering as they are having to deal with decreasing numbers of customers. Existing customers are unable to repay their debts; this poses cash flow problems for the companies, which in turn are unable to pay their creditors. It is a very vicious circle. The Act stops the creditors from taking legal action against such companies and forcing them into insolvency. Often, such companies are unable to pay their VAT and taxes to the Inland Revenue, which often takes priority over all other creditors. This Act is in some ways identical to the Chapter 11 legislation in the USA. This provision will allow many good companies the time to survive, as it will enable them to raise finance from other sources while finding new customers in the UK and abroad.

My Lords, in supporting these regulations I would like to explore some of the issues surrounding the remaining procedure, which derives from the 2008 Act, as amended. This remaining procedure provides, as we have heard, a 28-day or four-week moratorium for the regulator to establish and agree a proposal for ensuring that the homes remain within the social housing sector, and that tenants’ security is not affected by such a proposal.

The regulations before us apply only to England, so I would be grateful if the Minister could tell the House what the position is in respect of moratoriums in Scotland and Wales, where the duality of approach is still in place, given that the 2020 insolvency Act approach to moratoriums still applies across the United Kingdom.

These regulations put beyond doubt how special administration schemes for the 322 social housing providers in England will be approached, but I must comment on paragraph 10.1 of the Explanatory Memorandum. It says that ignoring those providers in the consultation which led to the 2020 insolvency legislation was because they were so few. That totally ignores the scale of the impact that these 322 providers have on the lives of millions of people. For those living in, or seeking to live in, the homes they provide and for their families, having a roof over their head is a fundamental part of their lives. I am sure that the Minister appreciates this, but I would be grateful if he could tell the House what steps the department has taken to ensure that they are not forgotten again.

The 28-day—four-week—moratorium provided through the earlier Act, which these regulations now confirm, is where I would like to explore a few issues. The clock starts on this moratorium, or space to work out a solution period, when one of a number of things occur, but, as the regulator states in its guidance, social housing providers should give it early warning. The guidance says it

“expects the PRP to notify the regulator”

where it has a potential problem or threat to its viability. I would be grateful if the Minister would reflect on whether an expectation is sufficient. Clearly, if it were a requirement, the regulator could step in earlier to assist. In that way, the danger of falling into housing administration, or even a moratorium, could be averted. It is this crucial relationship between the provider and the regulator that matters so much here.

The regulator has, by law, to see if it can rescue the housing provider, get a better result than it going into administration, sell the property in a portfolio or ensure that the housing remains in the regulated housing sector. I must add that I think these last two are somewhat contradictory and I would value some explanation from the Minister, but these are significant challenges if the regulator has only four weeks to complete this work. Of course, it can extend the moratorium if all the secured creditors agree. These creditors are, fundamentally, banks—the lenders which lend against the security of the property—and experience tells me that they are not always patient in seeking to get their funds returned. This will especially be the case with those housing associations which are highly geared. In that respect, I notice that the Minister, in his outline at the beginning, said that there was £80 billion of private sector money in the sector in 2020, whereas his colleague in the other place said that there was £100 billion in 2020. Can the Minister explain the difference of £20 billion between what he and his colleague told each House of Parliament? More than anything, will the Minister consider making the early warning a requirement, rather than an expectation?

The second issue is about the financial support that may be made available by the regulator to achieve its objectives, which are set out in statute. The guidance says that these funds are not a guarantee but, clearly, financial support would be very useful in retaining properties within the social fold, rather than selling them to realise an asset for repayment for secured creditors. Will the Minister indicate the level of financial support that has been provided by the Secretary of State in recent years upon an application by the regulator, and how often the Secretary of State has refused such an application?

Finally, and most importantly, these moratorium periods are very worrying for those occupying the homes. Tenants will understandably be concerned that their home can no longer be as secure as it was, with no guarantee that a second moratorium can occur, since that would require all secured creditors to agree. Providing comfort for tenants is critical at a time of great uncertainty. Emails and notes through the door might be welcome, but, in themselves, they are not as comforting as a face-to-face discussion with these home occupiers. Can the Minister reassure the House that face-to-face discussion is the required approach?

My Lords, I congratulate my noble friend on the clear and concise way in which he introduced these regulations. It is a pleasure to follow the noble Lord, Lord German, and to benefit from the contributions of the noble Lord, Lord Wood, and the noble Baroness, Lady Kramer.

I have a number of points for the Minister. Many have already been touched upon at least. What would my noble friend say in terms of how the two different moratorium regimes will operate and what concerns do the Government have in this respect? However, probably my major concern is around priority. With HMRC having super-priority status, how does my noble friend conceive that HMRC is likely to operate and use this priority? Secondly, and at least as important, what is the Government view on how banks are likely to operate to increase their priority and the opportunity, for want of a better word, in the way the current structure is set up?

I want to touch on the issue of student housing, because it is such a significant piece of the equation and Covid has made such a significant change to how this area is seen as a source of finance. I use that as an example in itself, but also as an opportunity to go broader and ask the Minister: what is happening across Whitehall to ensure that his department is able to get all the information and data that exists from other relevant departments that have such pertinence for the issue that we are debating this afternoon? Students are obviously one important piece but there is a whole series of departments that I envisage having useful data and intel; we could act sooner rather than later if there were such a cross-Whitehall structure. What is happening on that front?

Lastly, there is the question of cross-border issues. There will be circumstances where people operate in one home country and have resources and assets in another. What is the current thinking on that?

My Lords, this statutory instrument is largely uncontroversial. These are technical amendments to ensure that there is no conflict in legislation relating to private providers of social housing through both the Corporate Insolvency and Governance Act 2020 and the Housing and Planning Act 2016. The fact that it has been clarified that private registered providers have 28 days rather than 20 is welcome, although I share the questions of my noble friend Lord German about the feasibility of that time period. Anything that ensures that a provider of social housing has time to look into options for either rescue or restructure without the imposition of immediate creditor action, particularly in these challenging circumstances, is vital.

I asked the larger charities with legal expertise for whom social housing is a priority, such as Shelter and Crisis, for their view of this statutory instrument. They thought it looked sensible to offer registered social landlords this exemption, given that requirements already exist via the Regulator of Social Housing to restrict land disposal negotiations with creditors, thus enabling a focus on the potential sale to another social landlord. Again, though, I thought the description by my noble friend Lord German was particularly pertinent on this.

I noted that according to the Explanatory Memorandum, during a housing moratorium the consent of the Regulator of Social Housing is a necessary part of this process. I am also reassured that the website of the Regulator of Social Housing advises that moratoriums can be extended for a further 20 business days without creditor consent, or for a longer period with creditor consent, by filing relevant statements with the court. It can also be extended further on application to the court.

As we have already heard, the moratorium has an impact on a limited number of companies—currently 322, as described by both the noble Lord, Lord Wood, and my noble friend Lord German—but any social housing provider remains a critical part of the infrastructure, as explained by my noble friend Lady Kramer. That is particularly true given that year on year we are still dealing with a chronic shortfall in social housing provision —the current waiting list was 1.1 million even before the pandemic.

As the Minister set out in his opening remarks, financial stability is critical. This wide-ranging debate has therefore been useful in the usual way that detailed scrutiny provides and which this place fulfils. I look forward to hearing the answers, especially about where the £20 billion has gone missing—I am fascinated by that particular issue. Luke Hall, the Parliamentary Under-Secretary of State for housing, said that private finance had grown from £48 billion to £100 billion. If there is a spare £20 billion knocking around, I have a very good suggestion as to where it should go.

Other noble Lords, particularly my noble friend Lady Kramer and the noble Lord, Lord Wood, asked about the cross-contamination issue or “coherence versus regime” issues. I think that when it comes to comments by my noble friend Lady Bowles, every Member of this House is always tempted to say: “What she said”.

I have only one question for the Minister today. Given the lack of controversy about and opposition to this statutory instrument, why is time allocated to this when a hugely controversial statutory instrument has been tabled too late for proper consideration—namely, the Civil Procedure (Amendment No. 4) Coronavirus Rules 2020, which amends Part 55 of the Civil Procedure Rules 1998, which will resume possession proceedings for private renters from 24 August, as referred to by the noble Baroness, Lady Falkner? On Wednesday, Housing Minister Pincher, when pressed, confirmed that it will enable landlords to evict tenants from August onwards, with the courts unable to exercise discretion if a Section 21 no-fault eviction notice has been served.

Yet again, the private renter has been let down by this Government. The Housing Secretary’s promise in March, that

“no renter who has lost income due to coronavirus will be forced out of their home”,

has been abandoned. Stamp duty reductions have incentivised landlords to sell up, according to people contacting Generation Rent, and the housing benefit increase fell short of average rents in some areas, including London. Worse, the Government trailed this change in the rules as an eviction ban, but it is in fact the very opposite, as Generation Rent pointed out in its letter to Secretary of State Jenrick. This change has been introduced without guidance or scrutiny by Parliament. A Conservative manifesto commitment to scrap evictions could have gone through with the break-neck speed of other much more draconian measures the Government have introduced during this challenging period, but they did not do it.

Will the Minister explain why we are discussing this somewhat uncontroversial change when a substantive change for private renters is not discussed at all? If the Minister cannot answer that now, which I completely understand, I would appreciate a written response. It is estimated that 250,000 households are in rent arrears. Loss of a rented home is one of the main causes of homelessness, and the Government have just given the green light for 24 August to become known as “Evictions Day”, with 45,000 households in danger of being homeless. We will oppose that change in every way we possibly can, and I hope other noble Lords will support us.

That said, as I made clear in earlier comments, this statutory instrument holds no major concerns for us on these Benches.

My Lords, many noble Lords have asked interesting and apposite questions, displaying a depth of knowledge and insight into this specialist area of legislation. After an examination of the instrument, I am pleased to confirm that on our Benches we accept the need for the regulations and have no intention of opposing them today. These amendments appear technical, and the Government are right to eliminate issues arising from competing legislation.

I hope that I am already gathering a reputation for brevity in my speeches, and I have no desire to speak longer than necessary today, but none the less I would appreciate clarification of three areas. First, can the Minister explain the consequences if these regulations had not been agreed by both Houses before the impending Recess? Secondly, given that much of the legislation applies to Wales and Scotland as well as England, can the Minister briefly confirm that neither devolved Government raised any outstanding concerns in relation to the regulations? Finally, can the Minister update the House about wider regulations relating to breathing space? Is he satisfied that no further legislation is required?

My Lords, we have had an interesting and very wide-ranging debate on the regulations before us today. I thank noble Lords on all sides of the House for their contributions. I shall take this opportunity to provide some further detail on the points that have been raised.

I thank my noble friend Lord Naseby and the noble Lord, Lord Wood, for their support for the reforms of the insolvency regime and for recognising that this is very much a tidying-up exercise. I will have to write to the noble Lord, Lord Wood, on the detailed points that he raised with regard to the insolvency regime as that is not in my current brief.

Many noble Lords talked about cross-contamination. Private registered providers will have both social and private housing, and they asked how the two regimes will work in parallel. I point out to the noble Lord, Lord Wood, the noble Baroness, Lady Kramer, and my noble friend Lord Holmes that the insolvency arrangements we have in place through housing legislation reflect extensive engagement with the Regulator of Social Housing, lenders, private registered providers and their representative bodies. The regulations that we are considering today ensure that those arrangements remain unaffected by the new moratorium provisions through the Corporate Insolvency and Governance Act. I assure my noble friend Lord Naseby that there will be no deleterious impact on housing associations such as Peabody.

The noble Lord, Lord German, and my noble friend Lord Naseby raised the matter of scope. This statutory instrument focuses on insolvency arrangements in England and on providers registered with the England regulator. It applies to all private registered providers in England—those that are registered now and in the future—and my understanding is that both Scotland and Wales are considering this.

I thank the noble Lord, Lord German, for pointing out the missing £20 billion, and the noble Baroness, Lady Grender, for spending it very quickly. There is a disparity but it is between the borrowing that is available —£100 billion—and the borrowing that has been drawn down, which is £80 billion, so I am happy to clarify that point.

The noble Baroness, Lady Falkner, raised the issue of the viability of private registered providers. I point out that the Regulator of Social Housing is working closely with providers to monitor and support the sector through the very difficult impacts of Covid-19 on both its finances and service delivery. Hitherto, the sector has no loss as a default record. We will then get the early warnings if there are any issues. The sustainability of the sector will be helped by the commitment of some £12 billion to build affordable homes between 2021-22 and 2025-26, which is the biggest single cash investment in affordable housing for a decade.

The noble Baronesses, Lady Falkner and Lady Bowles, and the noble Lord, Lord Bhatia, raised the issue of the protection of renters in rent arrears. I highlight that the Government have brought forward a number of measures to remove the immediate risk of tenants being evicted or becoming homeless. Tenants who are unable to pay rent will continue to be protected by the three-month notice period for evictions, which was introduced through the Coronavirus Act and will last until 23 August 2020.

I will write to the noble Baroness, Lady Grender, on her points, specifically the reasons for this SI being debated rather than the recent one that was laid before Parliament.

All tenants remain liable for their rent. Those who can afford to pay should continue to do so but should contact their landlord if they are struggling. We have introduced an unprecedented financial support package, including the furlough scheme and changes to universal credit to help people to continue to pay their living costs, including rental payments, and to prevent them accruing rent arrears. We have been clear that there is a need for housing providers to offer support and understanding to tenants at this difficult time.

These regulations are necessary to maintain arrangements that allow the Regulator of Social Housing to effectively support a private registered provider in financial difficulty. This will continue to safeguard investment in social housing at unprecedented levels and protect tenants. The noble Baroness, Lady Wilcox, asked whether I could comment on what the impact would have been had this not been put before the House today. I am afraid I cannot give an opinion on the counterfactual, but I am assured that no further legislation is required.

In conclusion, the disapplication of the moratorium introduced by the Corporate Insolvency and Governance Act 2020 means that only one moratorium is available to private registered providers, avoiding the potential of two moratoria being in play together. Through housing legislation, the moratorium ensures the regulator has the tools it needs to maintain lender confidence and, as far as possible, protect tenants should a potential insolvency occur.

Before I end, the noble Baroness, Lady Bowles, had a forensic analysis of the provisions. Under the housing administration scheme, the first objective, to protect creditors, takes priority over the objective to retain social housing, but her points were so detailed that I will have to write to the noble Baroness further. This is an essential bit of tidying up and I commend it to the House.

Motion agreed.

House adjourned at 3.36 pm.