Clause 174
Housing and Regeneration Bill
4:45 pm
Iain Wright (Parliamentary Under-Secretary, Department for Communities and Local Government; Hartlepool, Labour)
I beg to move amendment No. 230, in clause 174, page 68, line 26, leave out ‘non-profit’.
Iain Wright (Parliamentary Under-Secretary, Department for Communities and Local Government; Hartlepool, Labour)
The governance and viability of registered providers will be a central concern of the new regulator. A poorly run or non-viable provider will inevitably be bad for tenants and might become insolvent—something that has happened in recent weeks. That should be avoided if possible and cannot be allowed to impact on the security of tenants’ homes. Clause 174 gives the regulator the power to set standards for registered non-profit providers relating to the management of their financial and other affairs. The amendments will also permit such standards to be set for profit-making providers, but only in respect of the social housing that they own, because, for example, the regulator might need to ensure that profit-making providers make adequate financial provision to cover future repair costs of social housing.
As I have mentioned on a number of occasions—certainly this morning—during the Committee’s deliberations, we expect social housing activities to form a much smaller proportion of the overall business of registered profit-making providers than of existing RSLs. As a result, it would be disproportionate for the regulator to set standards for governance and viability for all of the affairs of a profit-making provider. Shareholders and other owners hold to account the board of a share-distributing, private company. However, to the extent that threats to governance and viability might jeopardise the necessary protections we are seeking to secure for social housing tenants, the regulator should have a more limited role in setting standards for the proper conduct of a profit-making body’s social housing business.
The hon. Member for Montgomeryshire is not here, but he raised a number of issues this morning about amendment No. 230. He asked how it relates to clause 123. The point is that good housing management might require a provider to put aside enough money for repairs, as I mentioned earlier, to which the ability to make accounting directions is relevant. The provider might need contingent liabilities on a range of things that need to be addressed, and it is necessary for accounts to show that. Financial viability standards for profit-making providers are likely to involve ensuring sufficient money or liability to make repairs a practical concern. I hope that the hon. Member for St. Ives will pass that on to the hon. Member for Montgomeryshire. This is a sensible group of amendments that will ensure that tenants of social housing are adequately protected. I hope that hon. Members will accept them.
Andrew George (St Ives, Liberal Democrat)
I have discussed this matter with my hon. Friend the Member for Montgomeryshire, who welcomes the amendments, which are in the spirit of those to which he spoke in this morning’s sitting. I welcome the amendments. My only question to the Minister concerns the restrictions in amendment No. 231, which states:
“In respect of profit-making registered providers, standards may be made in relation to the management of their affairs only so far as relating to the provision of social housing”.
In that respect, presumably by defining social housing as that part of the stock provided by the profit-making registered provider, can a local authority have some influence on allocations to those properties? Perhaps there is another definition of what the social housing element of the profit-making provider is. I encourage the Minister to expand his definition of the extent to which regulation should apply to profit-making providers.
Surely, in some circumstances, the public sector and the taxpayer have an interest, for example when a property is occupied by a tenant who is in receipt of housing benefit, when some form of grant aid has contributed to the renovation or upkeep of a property, when public money has been spent through a disabled facilities grant to enable it to be used by someone who has a particular need, or when a property is sub-let by a local authority. The latter circumstance is common these days in areas of high housing demand stress. A private sector provider of rented accommodation could make a property available, perhaps on a short-term basis, to a local authority, so that the authority can meet its local housing obligation.
It would be helpful if the Minister explained a little more about the extent to which amendment No. 231 will apply to profit-making providers. How will the measure apply? To what extent can the measure be extended to ensure that the tenants of profit-making providers of such housing are protected by the regulations?
Iain Wright (Parliamentary Under-Secretary, Department for Communities and Local Government; Hartlepool, Labour)
I am not certain that I follow the hon. Gentleman’s line of questioning. He made a number of points about the definition of social housing. He should go back to the comprehensive and detailed deliberations on the definition that we heard when we debated clauses 66 to 69. From the manner in which he spoke—he can correct me if I am wrong—it seemed that he was suggesting that he tabled an amendment to introduce a similar measure, which he wanted to be a back-door way of regulating the private rented sector. My hon. Friend the Member for West Ham is nodding furiously at that. However, as I said, that is not practical at the moment.
My basic premise on for-profit providers is that it is sensible for the regulator to have assurance that they will not go bust and leave tenants high and dry. The regulator needs to ensure that the financial and governance arrangements for that particular provision of social housing are adequately addressed. I do not see that as moving any further towards the regulation of the private rented sector, but I stand to be corrected.
Andrew George (St Ives, Liberal Democrat)
I am genuinely probing the Minister. Will he enlighten the Committee, if only for my benefit, as to the kind of stock that is provided by profit-making social housing providers and the basis on which it is provided? The remainder of that stock is not determined. I agree entirely that social housing has been debated and defined previously, but if profit-making providers provide housing other than social housing, what type of housing is it and why is it not being brought under this regulation?
Iain Wright (Parliamentary Under-Secretary, Department for Communities and Local Government; Hartlepool, Labour)
Again, the hon. Gentleman was not here this morning when I talked about a sort of murkiness of providers. I meant that in the best possible sense, not in a corrupt manner. I meant that previously, from 1974 onwards, social housing was provided by housing associations and market housing by private sector developments, and that we now have much more cross-fertilisation, for want of a better term. I also pointed out that private sector developments might provide money and housing that would be available on the open market, and might cross-subsidise by providing social housing in addition to grants from the Homes and Communities Agency and other such public funding. That cross-fertilisation is important. The regulator needs reassurance regarding the financial viability of that element of social housing.
My hon. Friend the Member for West Ham wanted to intervene, and I do not know whether the moment has passed. [Interruption.] The moment has passed. Given that different types of provider are coming into the social housing model and that we want more and better-quality social housing, I hope that the hon. Member for St. Ives will agree that the regulator needs to be reassured as much possible. Given the boundaries of the regulator’s objectives—particularly objective 10, on minimising interference—I hope that the hon. Gentleman is reassured that tenants will not be left high and dry if a provider goes bust.