Clause 109
Housing and Regeneration Bill

Iain Wright (Parliamentary Under-Secretary, Department for Communities and Local Government; Hartlepool, Labour)

I beg to move amendment No. 190, in clause 109, page 44, line 18, leave out subsections (3) and (4).

Good morning, Mr. Gale. I was tempted to say that I woke up with you this morning, but it is probably better to say that I heard you on the “Today” programme this morning.

The amendment would remove a restriction that would otherwise have required registered providers to operate their social housing

“only or mainly in England.”

We want a growing market in the provision of social housing. We do not wish to exclude bodies simply because the bulk of their housing is elsewhere. On that basis, I hope that members of the Committee will approve the amendment.

George Young (North West Hampshire, Conservative)

The clause deals with eligibility for registration. Subsection (1) states:

“An English body is eligible for registration”.

That implies a voluntary element in the case for registration, whereas until now the assumption on which I was working was that social housing providers had to be registered with the regulator.

The Cave report covers domain regulation. Page 14 states that

“The review has also adopted two principles underlying the design of the regulatory system...to apply the same approach, where possible, across all providers of social housing”.

In other words, all providers will have to be registered rather than those who are eligible and who choose to be registered.

Page 16 of the report states:

“As noted above, an independent social housing regulator...should be established by statute, with specified duties and powers relating to the ownership and management of social housing.”

It seems that the Government adopted the same approach to the main regulation. Let us consider page 114 of the impact assessment, which states:

“The Cave review recommended that the regulator’s responsibilities should be cross domain (i.e. cover all social housing providers—Registered Social Landlords, Local Authorities, Arms Length Management Organisations (ALMOs) and private sector).”

The key sentence is that the 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.”

That means that the social housing provider should not be able to opt in or opt out of the system.

I was therefore slightly surprised when the voluntary element entered the debate just before stumps were drawn on Thursday. The Minister said:

“No, in respect of the earlier point about the philanthropic organisation, it would have a choice as to whether to register voluntarily. I hope that is clear.”

He then repeated his argument:

“It would be entirely for that philanthropic organisation to make the strategic decision as to whether it wished to be regulated”.——[Official Report, Housing and Regeneration Public Bill Committee, 24 January 2008; c. 570-71.]

Against the background of an earlier debate on the definition of social housing, I took quite a lot of stick from both sides of the Committee for suggesting that a social housing provider who had not received any public funds should not be obliged to come within the ambit of the scheme. The Minister made it clear that what really matters is not who provides the house, but the characteristics of social housing. He said:

“I believe strongly that this philosophical policy point—that social housing should be defined by means of its characteristics—is the right approach.”——[Official Report, Housing and Regeneration Public Bill Committee, 24 January 2008; c. 538.]

That is why he was not sympathetic to my amendment, which defined social housing as being in receipt of public funds.

Perhaps the Minister will explain whether we are going to have two types of social housing: that which comes within the ambit of the Bill—I assume that those currently registered with the Housing Corporation will automatically register with the regulator—and, possibly, future providers of social housing whose stock meets all the requirements that we discussed in relation to clause 67 but who choose not to register. As I understand it, the tenants will be social housing tenants, because they come within clause 67, but the body in charge of them would not need to register, because the Minister has said that that is voluntary. What has happened to the Cave principle of single domain regulation, if there is a voluntary element to whether people register?

Iain Wright (Parliamentary Under-Secretary, Department for Communities and Local Government; Hartlepool, Labour)

That is an important point. I will set out the current regulatory regime, which has been in place for around 30 years. With the current system, there is a clear divide between housing associations, which almost exclusively developed social housing for rent, and private developers, who had almost no involvement in social housing whatsoever. The world has moved on. It has become somewhat murkier, in a positive sense, than the system established by the regulatory regime 30 years ago, particularly with the  development of mixed tenure housing, which is central to the development of mixed communities and is something that I would like to see accelerated in years to come to secure high numbers of social houses and better standards.

In support of that, many non-profit providers are now developing market homes and using the proceeds to cross-subsidise their social homes. I suggest to the right hon. Gentleman that the Bill ensures that standards relating to social housing apply only to providers of social housing. On his specific question about those who are currently registered, I can tell him that those who are currently registered with the Housing Corporation will automatically be registered with the regulator. The Bill places exactly the same requirements on profit-making providers in respect of housing standards and standards for tenants, and the requirements are similar in other areas.

I propose tabling amendments to enable the regulator to set standards for financial management and governance of all providers, rather than current housing associations only, as well as amendments that will apply the moratorium regime to all providers. I do not think that there is a split or a two-tier system. We will have a single domain regulator in respect of social housing, with a clear intention, in terms of local authorities and ALMOs, that we will be moving towards that in two years’ time.

Nick Raynsford (Greenwich and Woolwich, Labour)

I agree with my hon. Friend on the objective of having a framework that covers all providers, and I fully understand that existing housing associations will be required to continue to register under the new arrangements. What is not clear, which is the point that the right hon. Member for North-West Hampshire has raised, is what obligation there will be on private sector providers who choose to provide social housing as part of these mixed communities to register. If they simply decide not to register, will there be any sanction? If they do not register, how can the objective of a common domain set of standards irrespective of the landlord be achieved?

Iain Wright (Parliamentary Under-Secretary, Department for Communities and Local Government; Hartlepool, Labour)

In the previous sitting, we discussed the case of a philanthropic organisation that chose not to register. Such a decision might be strategic, because, for example, if the organisation provides houses for its employees, it might feel that it did not need to. All existing housing associations will be automatically registered, as per clause 241. Others may choose to register, and they are required to register if they wish to receive grant from the Homes and Communities Agency for rented housing. That relates to the Liberal Democrat amendment on being in receipt of public grant, which I resisted. The key point on receiving HCA grant for rented housing and the retention of ownership is that it may well be that an organisation builds houses and then passes on the ownership to a registered provider in order to manage them. That is the key test.

Nick Raynsford (Greenwich and Woolwich, Labour)

I accept that entirely. Where a housing association is engaged in that process, it will, as under the current arrangements, undoubtedly be required to register. However, I cannot see any obligation on a  private sector provider. As the Minister has suggested, we could get a more fluid market, with some private sector providers possibly providing an element of the social housing required under section 106, cross-subsidised by the profits from outright sale. In that case, there is no obligation in terms of a capital grant from Government, so what sanction or obligation is there to require the landlord to register? If a landlord does not register, how can we be sure that the tenants, who are effectively tenants of social housing, get the same protection and standards that are the objectives of the Cave report, which they would get if they were tenants of a landlord who was required to register?

Iain Wright (Parliamentary Under-Secretary, Department for Communities and Local Government; Hartlepool, Labour)

It depends on what the provider wishes to do. I reiterate that if they want to retain ownership of those homes, they will be required to be registered under the regulator. I hope that that clarifies the point. In a fluid situation in which we are moving away from the regulatory regime where housing associations provided social houses to a market for profit developers to provide market housing and greater fluidity, the regime that we propose will provide stability. I do not think that I have convinced my right hon. Friend so I will give way again.

Nick Raynsford (Greenwich and Woolwich, Labour)

I understand that if a private provider receives a capital grant—a social housing grant, as it is now designated—for the provision of social housing, they will be required to register, which is absolutely right. What I do not see is what will happen if the private provider provides an element of social rented housing as part of a development that does not receive any capital grant in the form of a social housing grant, and where the subsidy comes either as a requirement of the local authority under section 106 or as a cross-subsidy from housing for outright sale. In those circumstances, housing for rent would, as I understand it, be occupied by people who were, to all intents and purposes, social housing tenants, but they would not get the same degree of protection, because the landlord would not be required to register with the regulator. I am unsure about that point, and I think that the right hon. Member for North-West Hampshire is equally concerned.

Iain Wright (Parliamentary Under-Secretary, Department for Communities and Local Government; Hartlepool, Labour)

I reiterate the point that new profit making providers can enter the market as a strategic organisational decision, because they receive a grant from the HCA. Certainly, if they wish to be the landlord, they must be eligible for registration. I would like to go away and consider the important question whether section 106 can be dealt with through planning policy and guidance. New profit making providers are not yet required to register, because they would benefit from section 106. However, the right hon. Gentleman has made an important point and I will look at it and write to the Committee.

George Young (North West Hampshire, Conservative)

This brief debate has raised an important issue. There will be two types of social housing tenants: those who come under the umbrella because of section 106 or because their landlords have registered, and those whose landlords have chosen not to register using the discretion mentioned on Thursday 24 January, Official Report, column 571, and who are  in receipt of no public funds, either directly through capital grant or through section 106. It is clear that there will not be a single domain regulator for social housing tenants, which is perfectly acceptable, because there are perverse consequences to obliging everyone to register. However, it should be understood that one of the objectives of the Cave review will not have been achieved.