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My Lords, I shall speak also to Amendments 43 and 45. Clause 155 introduces the concept of settlement payments to facilitate the self-financing system that will replace the housing subsidy system when it is abolished. A devolved system of council housing, whereby councils are able to manage their stock using their own rents, will be achieved by a one-off debt settlement. We discussed this on Monday. The amount of debt allocated to each authority will be calculated on the basis of what its business plan shows it is able to support. The 30-year cash flow of income and expenditure is converted to a capital valuation using standard discounting techniques. If the valuation is below the amount of housing debt for which an authority currently gets support through the subsidy system, the Government will make a settlement payment. If the valuation is higher, the local housing authority will make a settlement payment.
The cash flows for the 30-year business plan will require the forecasting of rental income and of costs for repairing and maintaining stock, as well as debt servicing costs. Clause 155 gives the Secretary of State the authority to make determinations for providing the basis of calculation of the settlement payments. It covers the right to make assumptions about receipts and payments. Any determination can include an assumption even if it is not borne out by events. Further, it can include an assumption whether or not it is likely to be borne out. The amendment seeks clarification of this phrase. Does that mean that at the point when the assumption is made, it does not matter whether it is likely to be borne out? This probe is not just nitpicking; it is important to be clear on the evidence and analysis that will be needed to underpin the assumptions that will be used. These are the sorts of issues on which my noble friend Lord Whitty sought clarification when we last debated this.
I will take one example of an unrealistic assumption. It is understood that the calculation assumes that the initial year's income is available to offset the cost of the self-financing payment at the start of the year, whereas in practice it will accrue throughout the year. Similarly, the loss of rental income from right-to-buy sales is assumed to operate only from the end of each financial year. This is demonstrably unrealistic and operates against the interests of local housing authorities.
There are also, as I understand it, issues about demolitions. To the extent to which they are recognised, they obviously reduce income in the 30-year plan. However, it is understood that they are only recognised if a degree of actual planning for them has occurred or is under way. Clearly, over a 30-year period, this will not always be the case initially. What is the current position on this? I do not expect an answer to the technical points here and now; but, if correct, they support the proposition that some unrealistic assumptions are built into the calculations operating to the detriment of local housing authorities. What is the process of resolving these?
Amendment 43 focuses on Clause 157 and relates to settlement payments arising from the abolition of the housing revenue account subsidy scheme. Clause 157 covers certain aspects of settlement payments. In particular, it allows the Secretary of State to charge local housing authorities interest, if they pay late, an amount equal to any additional cost that the Government incur. This amendment simply provides for reciprocity should the Secretary of State not pay at the time determined. It may be considered that the Government will never default on a payment or, indeed, on a payment timetable, but we could be dealing with circumstances were there is administrative error or, indeed, an IT problem. As the sums involved could well be significant, it seems entirely reasonable that local housing authorities should be kept whole.
Finally, on Amendment 45, we originally added our name to this amendment which I think was tabled by the noble Lord, Lord Best, together with a small amendment. I am not sure why the noble Lord did not wish to pursue his amendment, and he may let us know. However, I am pleased to see that we continue to have common cause with the noble Lord in wishing to remove Clause 158 from the Bill. This is the essence of what we are dealing with. In place of Clause 158, our amendment would cause local authorities to determine and keep under review their level of housing debt consistent with their obligations under the Local Government Act 2003. As we discussed on Monday, Clause 158, in particular, provides for the Secretary of State to be able to impose limits on council housing borrowing. We agree with the LGA that this power contravenes the objective and spirit of self-financing.
I am grateful to the Minister for her letter of
"Your amendment proposed at Committee stage would have left the decision as to what constitutes 'affordable borrowing' to individual local authorities to determine, with central government only having the ability to issue guidance on this issue".
Why is the existing prudential regime not considered sufficient to cover the situation? It has worked effectively, and effectively to protect the Government. In any event, why is the protection of the Local Government Act 2003-in particular the provisions in Sections 3 and 4(1) and (2)-not sufficient? To date, the Government seem to have focused on Section 3 of the 2003 Act, not Section 4. Let me try again to draw attention to that, because I believe that it is crucial to this argument.
Section 4(1) of the 2003 Act states:
"The Secretary of State may for national economic reasons by regulations set limits in relation to the borrowing of money by local authorities".
Moreover, subsection (2) states:
"The Secretary of State may by direction set limits in relation to the borrowing of money by a particular local authority for the purpose of ensuring that the authority does not borrow more than it can afford".
We accept that, for national economic reasons, the Government should have the residual power to limit local authority borrowing. That was, after all, our legislation. But the Government should not be allowed to hide behind these powers to diminish the benefits of self-financing. On Monday we focused on the fact that the Government have already removed vital headroom from local authorities by charging a reduced discount rate. The capping of opening debt levels just reinforces this disadvantage. We need a better explanation from the Government on this point than we have hitherto received.
I do not propose to press Amendments 39 and 43 today. However, I reserve the right to test the view of the House when Amendment 45 is called, in the event that we do not receive a coherent and satisfactory answer on this very important point.
My Lords, I thank the noble Lord, Lord McKenzie, for moving his amendments, the first of which is Amendment 39. Clause 155 provides a power for central government to make determinations providing for the calculation of a settlement payment in relation to every council that retains its own housing stock. This payment is a mechanism for adjusting each council's housing debt to a level which it can sustain after meeting the costs of managing and maintaining its stock. It will leave every council in a position to finance its own housing stock from its own rental income without need for subsidy. The clause sets out that these determinations may be calculated according to a formula, and that this formula may include variables relating to income, expenditure needs and levels of existing housing debt.
The methodology that we will use to calculate these settlement payments has been extensively tested and refined with local authorities through two public consultations. It has also been the product of joint working with local authorities and others working in the sector. Subsequent to these consultations, we have issued two detailed policy documents this year confirming our intentions to make full reforms based on the key principles set out in these consultations. These policy documents include the models we will use to value the stock and working drafts of the determinations that we will issue. We will publish a further consultation in November on the final proposals, when we have the latest data.
It is therefore fair to say that this policy has been subject to unusually high levels of public scrutiny and debate. In valuing the business, the expenditure needs are rooted in unit costs identified in independent research which was itself published for consultation. The income assumed is that set out in the Government's national social rent policy. The settlement payments will reflect the difference between the value of each housing business and its existing housing debt. Where the debt is greater than the valuation, the Government will pay the difference to the council. Where the valuation is higher than the debt, the council will pay the difference to the Government.
The amendment which the noble Lord seeks would remove a degree of discretion available to the Secretary of State in setting the assumptions upon which the determinations will be based. This is unnecessary, as the assumptions will be based on the best information available at the time and have been extensively tested and consulted on. In addition, the determination setting out each settlement payment will be subject to a further consultation this autumn, during which councils will be able to correct any errors. Therefore I trust that this amendment will not be pressed.
On Amendment 43, Clause 157 sets out the practical provisions under which settlement payments should be made. It gives a reserve power to the Secretary of State to charge interest or recoup costs incurred if councils make their settlement payments after the time specified in the determination. I have described these as reserve powers as we do not expect to use them due to the excellent track records councils have in meeting their financial obligations. The noble Lord's amendment would establish reciprocal arrangements whereby the Secretary of State would make additional payments where any sum payable by the Secretary of State to particular local authorities was not paid on time. I can assure you that the Government will make its payments to local authorities on time.
That sounds grand, so I thought I would check it out a bit further. Presently housing revenue account subsidy is paid in 10 instalments in the year, and is paid on time. When councils receive regular revenue support grant, it is paid and it is paid on time. On the rare occasions, for some technical reason, it has not happened on time, the Government have voluntarily paid compensation. The determination setting out the payment date will be issued by the Government and detailed arrangements for the day have already been set out by the Department for Communities and Local Government in the policy document Self-financing: Planning the Transition, which was issued this July. Therefore, I do not believe that this amendment is necessary, and I trust it will not be pressed.
On Amendment 45, we had some discussion on these areas on Monday and we already debated the power we are taking to set a cap on housing debt as part of our reforms. As I noted previously, Clause 158 is not a minor or technical part of these reforms, it is integral to protecting the Government's central fiscal priority-to bring public borrowing under control. I understand that many councils do not want a centrally imposed limit on their ability to borrow for housing, but our reforms must not risk undermining national fiscal policy on public debt. Self-financing will give local authorities direct control over a rent income stream of around £6 billion a year. This could potentially be used to finance a large increase in public sector debt. It is not possible to say confidently how many councils might choose to borrow more but we know that councils will start out under self-financing with much less debt per dwelling than housing associations with similar costs and incomes. It is just not possible to take the risk that this deal might drive a big increase in public sector debt.
Noble Lords have asked why the prudential borrowing rules are not sufficient to protect against this. The prudential borrowing rules have worked very well but, as I said previously, our concern is not that local authorities will act in ways that are imprudent locally, it is that in aggregate these borrowing decisions may be unaffordable nationally. The amendment tabled by the noble Lord would remove this specific cap on housing borrowing and replace it with a power for the Secretary of State to issue guidance or regulations under the Local Government Act 2003. The Act does include powers to cap the debt of individual local authorities, but these are,
"for the purpose of ensuring that the authority does not borrow more than it can afford".
As I have said, our concern is not that a council would borrow more than it can afford, it is that in aggregate councils may borrow more than the country can afford. The bespoke powers we are taking ensure that this cap will only apply to housing debt and not any other borrowing by local authorities. Indeed, I have some sympathy with the intentions but I have to resist the amendment and I trust that this will not be pressed.
My Lords, I thank the Minister for his very detailed, if predictable, reply. In relation to Amendment 45, I honestly do not think that he has reasonably addressed that point about the power that already exists with the Secretary of State being able, for national economic reasons-which is why he wants it in this clause-to set limits in relation to the borrowing of money by local authorities. That power is there. Why is an additional power needed? I do not think that the noble Lord has dealt sufficiently with that point.
As regards Amendment 43, as I understand it the proposition is that should the Government be late with their payments for technical or any other reasons, as has happened albeit infrequently in the past, they will make a voluntary payment. Is that on the record and what we are dealing with here? The amendment simply seeks to enshrine that formally in legislation. But, as I have said, I will not push that point if the noble Lord is putting on the record that in those circumstances the Government anticipate keeping local authorities whole.
That would be the anticipation but the idea is that the Government pay on the dot at the appropriate time.
Of course it is. One would hope that they do and I accept that overwhelmingly they have, under the current subsidy system. But it is good to have that clearly on the record.
As to Amendment 39, I recognise and understand that there has been extensive consultation around these important provisions and that there is more to come. I was seeking to get a better view on the extent to which there may still be disagreement challenges over the technical aspects of how the settlements are proposed. What is the process for settling that? Consultation is all very well but it is a question of how the Government respond to that if there are at least residual challenges about those calculations. As I have said, I do not propose to press Amendment 39. We will see where those future consultations and discussions lead us. I made my point in relation to Amendment 43 and we have something on the record.
I am inclined not to push Amendment 45 today, although I urge the Minister to give us a better explanation of why proposed new subsection (4) is not sufficient to cover what the Government seek to achieve. Without that, I give no guarantee that I will not seek to bring that point back at Third Reading.
Amendment 39 withdrawn.
Amendment 40 not moved.
Moved by Lord Best
41: After Clause 155, insert the following new Clause-
"Proceeds of sale of social housing
(1) In section 11 of the Local Government Act 2003 (duty to determine affordable borrowing limit), omit subsections (2)(b), (3) and (4).
(2) Any regulation made under section 11(2)(b) of the Local Government Act 2003 shall cease to have effect from
My Lords, Amendments 41 and 51 are also about local authorities having greater freedom to organise their housing affairs without constant barriers being put in their way. These amendments concern the restrictions on local authorities that flow from taxing the sales of right-to-buy properties or any other sales of properties by housing authorities at 75 per cent of the money received by the local authority. Housing associations can sell properties, whether under the right to buy that they operate or on the open market where they have a vacant property. They can recycle 100 per cent of their receipts back into housing, to improving their housing stock and to building new homes.
The housing association of which I used to be chief executive, the Joseph Rowntree Housing Trust, had a programme of selling alternative vacant properties on our estates so that we could get a better mix of people of different incomes living in the same community. We could replace every home that we sold because we received 100 per cent of the funds from that sale to recycle into new homes elsewhere. However, local authorities have to pay 75 per cent of their proceeds back to the Treasury. Now that we are in the mode of reforming the housing revenue account, this seems to be the moment at which that restriction should be lifted and local authorities should be liberated to recycle the proceeds from sales.
I understand that the Treasury is very reluctant to forgo the receipts that it currently collects. That perhaps is understandable, because this is serious money that is coming into the Treasury. It has managed to scoop the pool here for many years, and tens of billions of pounds from right-to-buy sales have gone into the Exchequer. I understand that it does not wish to say goodbye to those arrangements. I also understand that in settling the debt in the new self-financing scheme for local authorities, account has been taken of the rental income that people will forgo once a property is sold. Nevertheless, saying goodbye to 75 per cent of the proceeds from right-to-buy sales, in stark contrast with the way housing associations are treated, seems to be an item on which reform at this time would be very significant.
Let me make it clear that it is not only right-to-buy sales that attract a 75 per cent tax-not a tax on the capital gain, but a tax on the sum received-as it is also imposed on the sale of bits of land and properties that are vacant and not subject to the right to buy. Where local authorities, like the Rowntree trust, would like to sell council houses to get a better mix of incomes across an estate, local authorities will not be able to recycle the proceeds from those sales, as they will have to pay 75 per cent to the Treasury. I think that the Treasury will argue again that it would like to see those receipts coming back to it since deficit reduction is top of the list of the Government's priorities, but the Treasury is not going to receive anything from the sale of properties outside of the right to buy if local authorities know that it is such a bad deal to sell them in order to regenerate an area using the money they raise. No businesslike authority will proceed with these sales in order to pay money to the Treasury as a voluntary act. Local authorities simply will not do it. The Treasury is not going to forgo capital receipts if the 75 per cent tax on councils is lifted for those properties where the right to buy does not exist-in other words, where the council can make a sale voluntarily rather than being compelled to do so, as with the right to buy. I hope that the Government will be able, if deficit reduction in this spending round is so paramount that nothing can be done about the right-to-buy receipts, at least to offer to some extent a reassurance in relation to the sales of other properties that are not subject to the right to buy.
During the summer I have had discussions and correspondence with the Minister, and I hope that she will be able to tell us this afternoon that there may be some change of the Government's mind about this very severe restriction on local authority activity, one where the ludicrous level of taxation makes it very difficult to run a business. I beg to move.
My Lords, the noble Lord referred to the 75 per cent tax levied on the proceeds of right-to-buy sales. It is interesting to note that at the moment there is a good deal of pressure on the Government to abandon the 50 per cent tax charged on those with substantial incomes and that, indeed, at least part of the coalition Government is interested in a mansion tax, which I suspect would be levied at substantially less than 75 per cent. In the context of housing, we should not be thinking in terms of taxation. The nation is paying a very heavy price in terms of housing need for the refusal of Government, initially in the 1980s, to allow any of the proceeds of the sale of council housing to be reinvested in housing and, it must be said, for the somewhat belated and modest change that was made to those rules by the previous Government. It does not seem to make any kind of economic sense.
The money raised by the right to buy would be ploughed back into housing provision. That would have two effects, the first of which would be that it would create assets on the balance sheet; it would not disappear into thin air. Secondly, it would give a much needed boost to the construction industry and therefore to the economy at a time when, as the Chancellor has belatedly conceded, things are not looking good in terms of the projected growth rate. Thirdly, it would lead to employment being taken up and thus a reduction in the cost of paying benefits. Most particularly, I suspect that the result would be that houses would be built rather more quickly than through the hoped-for gains to be made by the proposals in the national policy planning framework, which seem to assume that planning is the reason for the low number of houses being built, whereas of course the key issues are in fact finance and people's capacity to buy.
Looking at it purely in housing terms, the noble Lord's amendment makes a great deal of sense. I hope that the Government will rethink their position because it would make an immediate and much more significant contribution to dealing with the housing problem, as well as helping with economic growth without damaging the balance sheet. Indeed, in some respects it would strengthen the balance sheet with assets that are likely to appreciate.
My Lords, I hesitate to speak, having not taken part in previous work on this Bill, but my noble friend's amendment and his words bring to mind some research that was brought to my attention some years ago into lone mothers living in isolation with their children, scattered around cities. They were often forced to live a long way from their communities and extended family because there was insufficient housing stock to enable them to be placed closer by. So if my noble friend's amendment will help local authorities to supply enough housing to ensure that parents-more often than not mothers-bringing up children on their own had easy access to their communities and extended family, I certainly want to support it.
My Lords, I also strongly support this amendment. First, if we look retrospectively, had this provision applied from the start of right to buy, much of the pressure on social housing, and by extension on other housing sectors, would not have arisen. I am not saying that it would have completely resolved it, but it would have made a major contribution to stopping us being in the position that we are in.
The second point, which the noble Lord, Lord Best, emphasised, is that it would have enabled a lot of our worst housing stock to develop the manner of mixed tenure, creating a stable, reliable and interactive community instead of the isolation into which some of those estates have fallen.
The other point, also made by my noble friend Lord Beecham, is that I do not understand the economics of this. It would be an asset on the books of part of the public sector. Economically speaking, the deficit relates to the totality of public borrowing. In international opinion, raising money relates to the total deficit on public spending. The fact that it is in the Treasury's accounts rather than the local authorities' accounts economically makes no difference. It makes a bit of difference to the credibility of the Chancellor of the Exchequer from time to time, but economically this has always been nonsense and it is nonsense that we should now end. If we are to interpret localism and self-financing of the housing activities of local authorities effectively, surely this anomaly needs to be rectified. I hope, therefore, that at some stage the Government are going to recognise that.
My Lords, we have put our name to this amendment and support it thoroughly for the reasons that have been advanced by all noble Lords who have spoken in favour of it. I want to pick up the point my noble friend Lord Whitty made about how it all pans out in the Government's accounts. It seems to me that the Government's arguments on deficit reduction have not been entirely logical. They recognise the loss of rental income that arises with local authorities because the proceeds are snaffled by Government to the extent of 75 per cent. Therefore, debt that is imposed on local authorities is reduced by £862 million.
Correspondingly, the government debt is higher. If local authorities retained the proceeds, the government debt would be lower, presumably by £862 million, and local authority debt correspondingly higher. That seems to be a net nil. Local authorities would then have the proceeds either to pay down their debt or, as we would all urge and my noble friend Lord Beecham in particular urged, to reinvest in new stock. So I think the Government are entirely in the wrong place on this.
My Lords, I thank the five noble Lords who have spoken and I pay tribute to the noble Lord, Lord Best, and his work in housing over many years. The business of the amount gained when houses are sold and how the money is used is a subject that many of us have been debating for most of our years in public life.
What we have here is a total, and there are trade-offs in this element of the Bill. Although I understand the intention behind proposed new Clause 51, which is to end the surrender to central government of 75 per cent of receipts from the sale of right-to-buy and similar houses, and although I appreciate councils' disappointment that we have not been able to end the policy, its continuation is necessary to help with the country's huge fiscal deficit. The Government have ensured that the viability of the self-financing settlement is not affected by the decision. We are compensating local authorities for loss of rental income from future right-to-buy sales. To do this, we have included a forecast of right-to-buy sales in our valuation. The level of debt that authorities will take on has consequently been reduced in our latest estimate, as the noble Lord, Lord McKenzie, indicated, by £862 million. In addition, all councils will still retain 25 per cent of receipts. They will also be able to retain 100 per cent of receipts from other sales to spend locally on affordable housing or regeneration. It is worth noting that receipts generated from right-to-buy sales have rapidly declined, sales being now about 5 per cent of what they were at their peak.
I hope the noble Lord will draw some comfort from the fact that we issued a consultation on
The Minister said that the Government were reducing the level of debt that local authorities would otherwise take on because of this policy by some £860 million. Does it follow that central government debt is correspondingly £860 million higher than it would otherwise have been, and how does that help deficit reduction?
I might have to think that one through, because I see the contra. On the other hand, there is only one central Government. The problem that we have all along is that some 170 local government entities are involved in housing. At least you know where you are with central government and that £862 million. The position can be entirely different in local government.
I would like to think that there will be a time when this policy is not in place. However, as I indicated, it is no longer the big deal that it was, given that so many former council houses have been sold and the amounts coming in are nothing like they were at their peak, when this Government were not in business.
My Lords, the housing revenue account is often compared to the Schleswig-Holstein question. Of the only three people who understood it, one had committed suicide, one was in a madhouse and one was in a monastery. Following the debate on the housing revenue account today has been a bit like that.
I am very grateful to noble Lords who have spoken on this. The noble Lord, Lord Whitty, made two fundamental points. First, if only we had kept the receipts during the past 30 years, we could have built a lot of houses and renovated a lot more. That money has evaporated. If we could get that changed henceforth, that would be thoroughly commendable. The noble Lord also made the point that if local authorities had been able to sell vacant properties on some of their estates on the open market, they could have introduced people on different incomes and created mixed-tenure estates, which would have been better socially for everyone concerned. However, there is absolutely no reason why local authorities would do that, because they would lose all the money that they received from the sale and could not then replace the home that they had sold. I am very grateful for that intervention and for those of the noble Lords, Lord Beecham and Lord McKenzie.
I shall certainly bank the very important point that in respect of sales outside the right to buy-the voluntary sales by local authorities-the intention is that in future the levy will be lifted. That could be quite a significant change in the future. The leader of the London Borough of Hammersmith & Fulham, Councillor Stephen Greenhalgh, is very much in favour of this. He explained to me that he has properties which, going back to the days of municipalisation, are scattered in some streets and are now in need of substantial repairs or improvements, although they are also very valuable. Rather than spend a great deal of money on some of those properties when they become vacant, it would be much better for Hammersmith & Fulham to sell them on the open market and not spend the money on the repairs. That money would be recycled, getting two or three flats elsewhere for the price received for those properties in Parsons Green or wherever they happened to be in Hammersmith & Fulham. Therefore, the Minister's concession here may open some opportunities for councils to take in receipts to recycle in a very meaningful way, and I am very grateful for that concession.
In relation to the right to buy, we live to fight another day. For the moment, I beg leave to withdraw the amendment.
Amendment 41 withdrawn.
Clause 156 : Further payments
Amendment 42 not moved.
Clause 157 : Further provisions about payments
Amendments 43 and 44 not moved.
Clause 158 : Limits on indebtedness
Amendments 45 and 46 not moved.
Moved by Baroness Hollis of Heigham
47: After Clause 158, insert the following new Clause-
"Social housing rents
Landlords of social housing may levy a rent above the target rent for that dwelling to fund the capital cost of additional facilities requested by the tenant."
My Lords, this is a relatively small amendment but I think that it may have wider repercussions. First, I declare an interest as chair of Broadland Housing Association. It is a medium-sized, traditional-build housing association-not a stock transfer-which seeks to meet housing need in Norfolk and north Suffolk. Every one of our homes is of decency standard and properly insulated, and we are effectively at target rent levels.
Last year, a dozen or so middle-aged and older tenants in a small close of bungalows in sunny Norfolk asked us to install solar panels at a cost of some £3,000 to £4,000 a property. We did so and I understand that the tenants' fuel bills have fallen considerably. However, the cost of those solar panels has effectively fallen on other tenants, either in increased rents if they are below the target rents or in opportunities forgone-for example, in environmental works.
There is now a queue for work such as the installation of solar panels, which is understandable, but as a housing association we cannot afford it for all who wish it. We know that hundreds of thousands of tenants throughout the country are in fuel poverty. They may be elderly or disabled or they may be lone parents with large families, and they want and need to reduce their fuel bills. We, as a country, are investing in grants for loft and cavity wall insulation to cut fuel poverty and reduce energy consumption. Nearly half of all carbon emissions come from buildings. As a housing association we have done all that. However, many tenants now want us to go further with, for example, solar panels, but we cannot afford to help them as we would wish, and of course they cannot afford the capital cost of doing the work themselves under the feed-in tariff proposals, amounting to some £3,000 to £8,000 a household. The Green Deal is proposed for next year, but housing associations do not yet know how it will apply to them, if at all, and they doubt that it will.
We would like to suggest co-payment. If, say, the fuel saving from installation of a solar panel was £10 a week, the rent could rise by £5 a week above the target rent to contribute to the capital cost of the loan of that money. The tenant would keep as a bonus the other £5. Why can we not do that now? Very simply, we are at the target rent for properties, which takes no account whatever of energy efficiency. That is foolish. The Minister in her letter in August-for which I thank her-explained that she could not support the amendment. She said, first, that it would lead to increased rents, which was unacceptable, and, secondly, that this could lead to unacceptable rises in housing benefit. I challenge both those points.
The concept of the target rent that the Minister said cannot be exceeded has of course been exceeded by Government with the introduction of 80 per cent market; that is, affordable rents. In future, with two identical houses, side by side and currently up for re-letting, one will go for a rent of £90 as it is social housing, the other will got for a rent of £120 because it is at the new 80 per cent of market value. That increase is simply because we have relabelled the description of tenure over the lintel of that house.
Why does it make sense to have increased rent properties because we have renamed the tenure, adding nothing of value at all to the property, but not be able to increase the rents when we have markedly improved the property by reducing fuel costs? Why have we got to choose either a rent of £90 that equals social housing or one of £120 that equals 80 per cent of market value intermediate rents when it would make sense to have a rent of £95 because of investment in energy efficiency? Raising rents above the target, despite the Minister's letter, involves no new principles because government are doing that already.
But, says the Minister in her letter of August, it might come out of housing benefit. The Minister says that such increases are not affordable and that the taxpayer would not obtain value for money from this increased public expenditure. There are two points on that. First, her new 80 per cent of market rents will largely be financed by housing benefit. Virtually every tenant going to our housing association is on HB. Whatever the tenure label-social housing or intermediate rent-it will largely be met by HB if our housing association is anything to go by. Indeed, it is calculated that to fund Mr Pickles's building programme through 80 per cent market rents at DCLG will add £2 billion to the housing benefit bill of DWP. DWP is paying for the building programme of DCLG, which reflects no added value and cannot be used to fund improved facilities, as we would all wish.
The Minister then went on to say that such investment may not represent value for money for the taxpayer, at a time when the same government are urging energy companies and individuals to take up Government grants to increase loft and cavity-wall insulation, replace boilers or install wind turbines-which are, as is solar power, renewable. If a part of Government is urging all of us because it thinks it prudent to invest in energy reduction, why does DCLG oppose it? Indeed, why is DCLG not positively encouraging us to do what we wish and get housing associations to work with tenants to consider energy renewables such as solar panels? As I say, that will reduce fuel poverty and carbon emissions-both goals we all want. Therefore, I think that the Minister's letter in August, in reply to the original tabling of this amendment in Committee, is entirely invalid.
I would like to make a proposal to the Government. If increased HB would be the obstacle, because the increased rent would be met by housing benefit-
I apologise to the noble Earl. As I am so anxious to persuade him to agree with me, I will happily take extra time in spelling out the acronyms.
If indeed housing benefit is the issue-because an increase in rent of £5 would be covered by housing benefit-I put it the Government that any increase in rent above the target rent for such purposes should not be covered by housing benefit, quite simply. That way the housing benefit bill to the Government would be protected and the tenant could choose whether to proceed with solar panels by way of co-payment. If the tenant did so choose, the tenant would enjoy reduced fuel bills and contribute to lower energy consumption in this country. The choice would be with the tenant, there would be no additional cost to the Government, but the reduction in conventional energy and the substitution of green renewable energy would be a gain to us all. I beg to move.
My Lords, the amendment proposed by my noble friend Lady Hollis is most interesting and has considerable merit. She has considerable experience in the local government and social housing sectors. Where tenants want to make major improvements or improve other amenities, I can see the case for this being financed by an increase in the rent paid on the property. My noble friend makes compelling points in particular regarding fuel poverty and green energy and also dealing with the issue of housing benefit. If the Government are not able to accept the amendment, will the noble Lord at least agree to take it away and reflect on it? It could be explored further and perhaps introduced at another time following discussion with relevant departments.
My Lords, I thank the noble Baroness and the noble Lord for their contributions. It is more complicated than I thought. The amendment is clearly about additional facilities requested by the tenant, yet the points made by the noble Baroness have been about solar panels and, basically, energy. Clearly the amendment is about any form of enhancement required by a tenant. All I would say on the detail is that my noble friend Lady Hanham has shown me a letter that she wrote to the noble Baroness, Lady Hollis, on
I cannot accept the amendment because it would allow landlords complete freedom to charge rents above the target rent for particular properties in order to fund the cost of additional facilities. This would lead to an unacceptable rise in the housing benefit bill. There are two types of landlord to whom the amendment could apply: local authority landlords and housing associations. Both sectors are able to exercise some flexibility over rent setting but are subject to important constraints. In the case of local authority landlords, there is the "limit rent", which is the maximum that the Department for Work and Pensions is willing to pay in housing benefit. This cap is vital to control the welfare bill. For housing associations, a direction on rent is set each year by the regulator in order to achieve a degree of consistency in rent levels across the sector and to protect the housing benefit bill. Noble Lords may not be aware of this, but for two-thirds of all tenants in council and housing association properties, the rent comes from housing benefit. So it clearly would be significant.
The noble Baroness's amendment would remove an important control by Government over rents, which they will largely pay for. While this could pay for some improvements, it would result in uncontrollable increases in the housing benefit bill that we can ill afford. Furthermore, there would be no assurance that the taxpayer was obtaining value for money from the additional public expenditure. For this reason, I must reject the amendment. Councils and housing associations can charge affordable rents of up to 80 per cent of market rents as part of an agreement with the Homes and Communities Agency to build new homes. The extra rent must be used entirely to fund the new homes, which will produce a housing benefit saving as they are still at rents below those charged in the market.
I hope that, in the circumstances, the noble Baroness, Lady Hollis, will take up the offer from my noble friend Lady Hanham and that on this occasion she will not press her amendment.
My Lords, I regret that the noble Lord, Lord Shutt, did not actually listen to the arguments I sought to make. He has repeated the two points made by the noble Baroness, Lady Hanham, in her helpful letter in August, which I sought to rebut in my speech and on which the noble Lord, Lord Shutt, has not commented. It was as if the speech had not been made and that the arguments of August were still the only arguments in town.
I remind the noble Lord that I was not arguing for complete freedom for landlords, as he suggested. It was made very clear that this would be at the initiation of the tenant. The reason I used the solar panels example was because it had such obvious spill-over benefits for the tenant, fuel poverty, energy consumption, renewables and the reduction of carbon emissions, so we would all gain. I used the example, too, because it is consistent with the drive by this Government in the Department of Energy for the further extension of insulation and the use of renewables. So it is entirely consistent with government policy, though in a different department, and it would be initiated by the tenant and would therefore not give complete freedom to the landlord.
Secondly, the noble Lord argued, as was argued by the Minister's letter, that it would lead to an unacceptable rise in housing benefit. I hoped that I had made it clear that if the Minister so wished it could all be outside and above the rent covered by housing benefit. I am well aware of the role of housing benefit-I made that point explicitly-but the Minister has not replied to that offer as a way forward that would address the issue, which I understand, of housing benefit, but would equally allow us to respond to a perfectly proper and appropriate request by tenants to be able to reduce their fuel bills at no cost to the Government. That is what I sought. The noble Lord, Lord Shutt, has not answered that point at all.
Given that there is clearly no meeting of minds, because people are not listening to each other's arguments, I wish to take up the suggestion made by the noble Baroness, Lady Hanham, for a further discussion about this matter. I assure her that surveyors across the country are very interested in trying to proceed with such policies as a way of producing the nearest that we can get to things such as passive housing, and so on, which we need to see in this country. I beg leave to withdraw the amendment.
Amendment 47 withdrawn.
Clause 159 : Power to obtain information
Amendment 48 not moved.
Clause 160 : Determinations under this Chapter
Amendment 49 not moved.
Clause 161 : Capital receipts from disposal of housing land
Amendment 50 not moved.
Amendment 51 not moved.
Clause 162 : Interpretation
Amendment 52 not moved.
Clause 163 : Standards facilitating exchange of tenancies
Moved by Baroness Hayter of Kentish Town
52A: Clause 163, page 152, line 8, at end insert-
"( ) In section 36 of the Housing and Regeneration Act 2008 (information in relation to social housing) in subsection (1) after paragraph (c) insert-
"(d) engaging with the Housing Ombudsman.""
In moving Amendment 52A, I shall speak in favour of amendments in the same group, particularly Amendment 68, standing in the name of my noble friend Lord Whitty and myself, and of similar principles as set out in Amendment 69, which appears in my name and in the names of my noble friend Lord Kennedy and the noble Lord, Lord Best.
Clause 167 introduces what is called a "democratic filter" as regards the housing ombudsman. What it means is that all complaints that currently go to the housing ombudsman would instead have to be taken to an MP, a councillor, or a tenant panel member for a hearing. Not only that, but a tenant would not be able to take their case to the ombudsman unless agreed to by one of these people, giving them a veto over these citizens' access to the housing ombudsman.
I would like to go through seven reasons for resisting this clause. The first is the role of MPs untrained in this area and the conflicts of interest that might be involved, which I think are fairly obvious. It would be a brave MP or councillor who rejected a complaint maybe three weeks before an election. The councillor could, of course, be the provider of housing, which would be a serious conflict of interest. What if that MP or councillor had already heard of the complaint in their surgery in their role of representative? How could they then adjudicate de novo on a complaint? If the councillor happened to know the local housing official, it would hardly be seen as an independent hearing of the complaint.
Furthermore, our MPs and councillors, wonderful though they are, are not trained in alternative dispute resolution or complaints handling, or in the accurate recording of such findings and giving the reasons thereof; nor indeed are most of them well-versed in some basic rules of natural justice and fairness and the handling of evidence. They will not be accustomed to awarding redress and they will not have the authority to enforce their awards.
There could also be a threat to a tenant's privacy if they had to reveal some personal circumstances to an elected officer who was not under a code of conduct to respect confidentiality. There could be a lottery between the findings of different councillors and MPs. At present the housing ombudsman deals with about 5,000 cases per year, with a high measure of consistency to add to the centrality of fairness. It could, of course, also be a very heavy burden on an MP and councillor. I have to confess that I have been neither, but I do wonder whether they are ready for this extra little task.
It would also make MPs adjudicators. They would therefore lose their role as champions on behalf of their constituents, quite unable to advise them on how to formulate a complaint if they themselves were the people to hear the complaint. Furthermore, having rejected the complaint, how could they then promote it to the housing ombudsman?
So the first of the seven problems is about the role of the councillor and MP. Secondly, the British and Irish Ombudsman Association strongly opposes the proposed filter in the Bill. The association believes:
"Public service ombudsmen form an integral part of the administrative justice system and it is essential that citizens' access to justice should be unfettered. Any restriction on access is counter to the principles upon which the ombudsman institution is founded".
Indeed, one of the principal conditions for being an ombudsman is that citizens should have direct access. The Parliamentary and Health Service Ombudsman regards their MP filter as restricting access to their service.
Thirdly, let me quote from others. The Law Commission says that this clause as it stands could hinder investigations and it calls for the filter in this clause to be scrapped. The commission prefers a dual system whereby complainants could either go through a local representative or direct to the housing ombudsman, which is what these amendments set out.
The National Housing Federation believes that MPs and councillors should only be involved at the discretion of the complainant, not at the insistence of the Government. The federation strongly opposes the proposal in the Bill to deny access to the ombudsman without the MP or councillor's permission. It also notes that similar requirements have been abolished elsewhere, such as for the Local Government Ombudsman.
Coming from Kentish Town, perhaps your Lordships will excuse me if I also refer to the Camden Association of Street Properties and Kentish Town District Management Committee, which have said that they are angry at the proposed block on tenants' rights to access the ombudsman, which in their view has worked so well.
The consumer organisation Which? also supports the amendments in this group and, as a matter of principle, is opposed to the proposal in the Bill. It believes that consumers are empowered when they can take action themselves. It therefore wants a complainant to be able to go to the Housing Ombudsman. It is for the ombudsman to decide whether to accept that complaint, not a go-between. As Which? has said, given that the Government have a big agenda on consumer empowerment, it finds it very odd that the CLG is disempowering consumers in this way. Which?has said,
"It is our view that requiring complainants to refer any complaint via a MP completely undermines genuine consumer (or citizen) empowerment".
Which? points out that an MP filter goes against the grain of what the Government themselves would like to see, and refers to the Government's report, Better Choices:Better Deals, which is all about how people can help themselves. In that report, the Minister in the other place, Ed Davey, wrote:
"we want to see confident, empowered consumers able to make the right choices for themselves", and being able,
"to resolve problems when things go wrong".
Which? believes that complainants should be able to take their complaint directly to the ombudsman, as this will help complainants resolve problems themselves. As it says, tenants do not need a filter to double-check on their case. Incidentally, Which?'s opposition to the Bill is predicated on access to the ombudsman being possible only once a complainant has exhausted the relevant in-house complaints procedures.
If I may refer to tenants, an ICM survey shows that 73 per cent preferred either to go direct to the ombudsman or at least to have the choice of whether to use an MP. Councillor Stacy, leader of Islington Liberal Democrats, said,
"I believe it should be the tenant's choice as to whether they involve me or not", and he noted that the proposal was in neither the Liberal Democrat manifesto nor the Tory manifesto nor, indeed, in the coalition agreement. I hope therefore that the Liberal Democrats will be supporting us in the Lobbies on this.
The Housing Law Practitioners Association is against the removal of the right which tenants have had. It says that the Housing Ombudsman,
"has proved ... a valuable source of alternative remedies".
The Cabinet Office's own guidance requires that the term ombudsman "must be avoided" unless there is accessibility in addition to fairness and public accountability.
Fourthly, the July 2011 Open Public Services White Paper emphasises the role of redress where choice is not available. The new framework for choice in services will also give additional rights to individuals, but the Government have acknowledged that there needs to be a means to enforce these rights. They set out that that power of redress should sit with the ombudsman, who can specify remedial action. The White Paper even names the Housing Ombudsman covering social housing for this role-yet the Bill would neuter this very body so that most complaints would not come to it.
Fifthly, on the learning from the quantum of cases, knowing the similarity of complaints that have been made and what redress should be awarded gives a much better idea of whether complaints are likely to be frivolous or better dealt with elsewhere. There is a body of expertise that builds up, such that generic lessons can be learnt and fed back to legislators or providers.
My last two points are simple. No reason has been given for this: it was not in a manifesto. There is no evidence of a problem from the right of direct access to the Housing Ombudsman. There has been no consultation with tenants, landlords or their representatives. The Minister in the other place said that the measure was meant to re-engage politicians with social housing. It will do no such thing. Councillors and MPs can advise tenants, champion their causes and assist in disputes but they are representatives, not adjudicators.
Finally, the measure is wrong in principle. Why should we deprive tenants of a right that they have enjoyed-access to free, professional dispute resolution? Why should they be denied such access without the say-so of a councillor? The amendments in this group would allow a complaint to be heard locally by the MP or councillor if the tenant so chooses but would retain the right to go to the ombudsman.
Without these amendments tenants will lose that choice and will lose access to justice. Residents who just happen to be in social housing will be further stigmatised. No other category of citizen is having their right to an ombudsman removed in the course of remedying a perceived democratic deficit. In the light of that, I hope we can retain the right of direct access to the Housing Ombudsman. I beg to move.
Whereas the noble Baroness began by saying that she had been neither an MP nor a councillor, I begin by saying that I have been both. I was an MP for a rather short tenure a very long time ago but have been a councillor for the past 37 years, representing a ward with a substantial amount of social housing. Therefore, I have real and practical experience of some of the issues that have been spoken of. The noble Baroness will know well that I have considerable sympathy with much of what she has said. Indeed, my noble friend Lord Shipley and I have our names to Amendments 70 and 73 in this group. As I say, I have great sympathy with what the noble Baroness has said. My preference would certainly be to have unfettered direct access to the Housing Ombudsman. I feel strongly that tenants should have the right of direct access to the Housing Ombudsman when necessary, and I wish to spend a few moments considering when that is necessary.
It is for the Minister, and certainly not for me, to explain the Government's reasons for the proposals in the Bill and for wanting to tackle the matter in this way. However, we have to recognise that, certainly in the 37 years that I have been a councillor, the involvement of local authorities, and therefore of councillors, in housing management issues has decreased. We have had the wholesale stock transfer and the creation of ALMOs. Generally, the move has been away from involvement. It is fair to say that some councillors-I cannot say that this has been my experience-have much less engagement in the day-to-day business of housing management, and therefore of knowing and understanding the issues that their constituents, as tenants, experience. If the Government wish to bring politicians, particularly councillors, closer to these issues-I do not know what the relevant phrase is-that is an objective we all share. We might have varying degrees of cynicism about how effective that will be, but it is an objective that we all share. I certainly share the Government's objective in that regard.
If the Government's objective is also to ensure that, whenever possible, complaints and issues are resolved locally, I am sure that we all share that objective too. That is clearly desirable for all sorts of reasons. It is usually quicker, more effective and engages people. I would expect that, in most instances when a tenant has a complaint of this sort, normally the first port of call would be a councillor or MP, partly because they are better known-or at least their existence is better known-than the Housing Ombudsman and they are more accessible and accountable. Therefore, I would normally expect an issue to be raised first with a councillor or Member of Parliament. I would expect that, in pretty well every case, that representative would try to get the matter resolved locally as that is what councillors and MPs do. Instead of immediately going off to the ombudsman, they go to the relevant housing management authority to try to resolve the issue and then tell their constituent what a wonderful job they have done in resolving the problem. That is what happens in reality. When they are successful, that is good, right and proper.
The difficulty that I have with the Government's proposal is that, while I am sure that we all share those objectives, one of the-I hope unintended-consequences is that it will give councillors, Members of Parliament and tenants panels a right of veto. I have to say that that is wrong. I do not think that it is our job as councillors, Members of Parliament and so on to be the final adjudicator of the rightness or wrongness of the complaint. I would expect that in practice most Members of Parliament and most councillors would anyway refer something to the ombudsman-whether the Local Government Ombudsman or Housing Ombudsman. That was always my practice whether I thought the complaint was wholly justified or even unjustified. I felt that the complainant had the right to independent arbitration and to go to an ombudsman, and referred it that way.
I have had the opportunity to discuss this at some length with the Housing Minister, who says that as an MP that was what he always did. The reality, which I know from personal experience, is that some elected representatives, for whatever reason-and sometimes for no good reason other than personal idiosyncrasy-refuse to do that. That is wrong. I do not think that a Member of Parliament or a councillor should have the right to deny the tenant access to the ombudsman to have the complaint, whether justified or not in our view, properly investigated and independently decided upon.
A little later this afternoon we will get to Amendment 73A and those with it. Amendment 73A is a compromise to try to help the Government, which is always our objective on these Benches. Amendment 73A says that, if the designated person will not refer the complaint-we should have included the words, "or fails to do so within 30 days", or some other given period-the tenant has the right to go direct to the ombudsman. That amendment has been decoupled from this group for reasons that I understand, but I hope that when the Minister replies she can give us clear and strong words of comfort that it is not the Government's intention to give the right of veto to us councillors to decide whether or not a complaint is worth forwarding. We need to ensure that the tenant may do so when necessary-I come back to those important words-if a designated person who is willing to forward the complaint cannot be found. That is a pragmatic and sensible compromise to find a way through the entirely honourable and proper intentions of the Government, which we would probably all support, and the undesirable effects of the way in which they are trying to do it. I hope that the Minister can give us clear comfort on that. If she is able to do so, we will judge what to do with Amendment 73A when the time comes.
My Lords, like the Minister I, too, have been a housing chair in a local authority, for some 11 years. I am also chair of a housing association-an interest that I have declared-and regularly sit at stage 4 of precisely these complaints panels that are the subject of discussion. I am sure that the Minister knows but I wonder whether your Lordships realise how thorough the complaints procedure is, and rightly so, within housing associations and local authorities, particularly encouraged by the TCA of the Homes and Community Agency.
At stage 1, the tenant's complaint-often, it is a neighbour's complaint against the behaviour of a neighbour of some sort-is investigated by the local senior housing manager. If that is not resolved to the satisfaction of the tenant, stage 2 means that it will go to the housing manager at the top of the organisation, who will then seek to get all the information, build the file and see whether some resolution can be arrived at. If that is not satisfactory, there is a stage 3 where the complaint goes to the chief legal officer, who is usually the deputy chief executive of the housing association, who goes through the file, takes the evidence, makes further notes and attempts again a further resolution of the difficulty. If that is not enough-by this stage, most complaints have been reasonably addressed-the matter goes to stage 4, which involves the panel, chaired by someone like me, alongside the tenant board representatives of the housing association and the senior staff. Five or six of us spend perhaps a couple of hours going through a thick file and seeking as best we can to hear and resolve the tenant's complaints and concerns.
In my experience, the tenant nearly always finds that satisfactory. However, if on that occasion the tenant is still not satisfied, having gone through the four stages to the final panel hearing, putting in a fifth stage, bringing in who knows what-perhaps the councillor who sent the letter into stage 2 or the MP who sent a letter into stage 3-as an independent adjudicator, sitting on top of those four stages to decide whether to progress the complaint to the ombudsman, would be to add an absurd additional bureaucratic delay that would stand between a tenant whose complaint, legitimate or otherwise, should by rights be heard by the ombudsman if the appeals system locally has been exhausted.
When I, with my modest experience of chairing panels at stage 4 of an elaborate appeals and complaints process, saw these government proposals for a stage 5 to go in before there is the possibility of recourse to the ombudsman, I was baffled beyond belief. If we believe in reducing bureaucracy and regulation, what on earth are we doing putting this in the way of a tenant who feels that they have exhausted all the local appeals and who therefore wants to go to the ombudsman? It is an unnecessary, restrictive and undemocratic block on a tenant's rights.
My Lords, I ought to declare a string of interests. I am an ex-MP; my wife is a district councillor; I was chairman of the Administrative Justice and Tribunals Council, which had a close relationship with the British and Irish Ombudsman Association; and I know Mike Biles, the Housing Ombudsman, quite well. I should also apologise to the noble Baroness for not having added my name to her amendment, as she encouraged me to. I would happily have done so, and should have done.
I will make clear to my noble friend that I agreed with every word that she said, and every word that the noble Lord, Lord Tope, said. The starting point is that if this is administrative justice-and most people would say that it is-what right have the Government to say that somebody is to intervene in somebody else's right to seek administrative justice? It could not conceivably be argued that somebody should need an MP's or a councillor's permission before going to a tribunal, a court or anything comparable in the administrative justice field. Why should we have it here? All this comes at a time when the Parliamentary Ombudsman has a consultation document out, which I know she feels quite strongly about, for the removal of the MP filter in respect of the ombudsman. This was supported by unduly sensitive MPs 50 years ago when the ombudsman-a foreign creation-was introduced. However, as far as anybody can judge, now it is not supported by most MPs, who also think it should go.
Why should people be subject to the vagaries of what their councillor, tenant panel or even-dare I say it?- MP thinks about whether it is a case for the ombudsman? That is a matter for the ombudsman to judge. If there are procedures that the tenant should go through beforehand, such as those described by the noble Baroness, Lady Hollis, the ombudsman can make the point: "We are not looking at this until you have had it looked at along the other lines". It would be perfectly reasonable for him to do that, but there is no serious case for what the Government are proposing in the Bill. I very much doubt whether it was part of the coalition agreement or has been seriously endorsed by the Prime Minister or the Deputy Prime Minister, because it is just not the kind of proposal they would support. Individuals ought to have this right, and we in this House ought to be defending it.
I have one last question to which I would like an answer. We have lots of ombudsmen in this country. We have the Parliamentary Ombudsman with an MP filter; we have the Health Service Ombudsman, who is also the Parliamentary Ombudsman, in practice, with no MP filter; we have the Scottish Public Services Ombudsman, with no filter at all, for Scots; we have the Public Services Ombudsman for Wales with no filter at all in respect of matters that he or she can consider so, in a way, this is yet another form of discrimination against the English, and I am fed up with it. It is wrong in principle, it is daft and the Minister should take it away and get rid of it.
My Lords, I welcome the contribution of the noble Lord, Lord Newton, not least because he is only the second Conservative Back-Bencher to speak in seven hours of debate on Report. I dare say we will hear a great deal more from him and, I hope, others as we go forward.
I entirely endorse the remarks that have been made so far by noble Lords, and I share the experience of the noble Lord, Lord Tope, of serving as a local councillor. It is frequently a local councillor's task to take up tenants' complaints, as one does, with the relevant housing department or ALMO-many authorities have now transferred their stock-to help people through the council's complaints procedure and to help them move complaints to the ombudsman. Many of us have done that. I find it rather patronising of those who suggest that it is somehow necessary to reconnect councillors with social housing. Most of us who represent areas with social housing regard that as part of our daily, weekly and monthly routine.
However, there are some additional issues to which I would like to refer briefly. First, as I read the Bill, there need be no nexus between the individual making a complaint and the councillor for the area in which he lives, because the Bill speaks of a member of the housing authority. It could be from one end of Newcastle to the other in my own case. There is no necessary connection between the tenant and the member he approaches, and that is hardly sensible, even if one follows the line of the Government's thinking on this matter.
Secondly, I presume that under the adjudication by the ombudsman there may be the possibility of an award of compensation. That is not necessarily binding on an authority, but it is pretty indicative and most authorities, though I regret to say not all, comply with those recommendations and make a payment when one is indicated. On the face of it, it would seem that the individual member adjudicating would also have that responsibility. It seems distinctly worrying that there should be implicit pressure on a member not only to make a finding but also, perhaps, to award compensation. That does not seem to be a healthy relationship between an elected councillor or, for that matter, a Member of Parliament, and a constituent.
The third factor that we may have to bear in mind is that there are pending changes in the legal aid and advice system that will effectively strip people of their right to legal aid and advice. In this housing area, whether it be with local authorities, housing associations or other landlords, there is frequently a need for legal advice and support, and one fears that effectively removing that source will be unhelpful to tenants. Frankly, imposing the responsibility on elected members, whether councillors or MPs, is by no means a substitute for such proper advice.
All these factors tend to the same direction, namely that the amendment should be accepted by the Government. There is no huge political issue here. As we have heard, there is no demand for this outside, from tenants, their representatives or anybody else. There is no logical basis for the recommendations and I hope that the Minister will indicate that she will think again about the desirability of this additional superstructure on a system which is working perfectly well.
My Lords, my name is on Amendment 68, which provides for a dual system. I do not think anyone is arguing that the tenants or leaseholders should not have the right to call in their councillor, MP or tenant panel. The issue, as has been said, is whether they should also have-from the start, not just when they have already been to their councillor-the ability to go direct to the ombudsman.
I have two points on this. First, it is not only a contradiction to principles of administrative law, it is also a direct contradiction to most consumer practice in the rest of the economy. As the noble Lord, Lord Newton, said, there are numerous ombudsmen. Some were set up by Parliament, such as the financial services and energy ombudsmen, and some are industry-based, dealing with anything from double glazing to property. In none of those cases is there a filter after the initial filter of having to raise the complaint with the provider in the first place, as my noble friend Lady Hollis has said. After that point, there is not a single example where a third party, of whatever description, is required to intervene. That may be discrimination against the English, but it is certainly discrimination against tenants and leaseholders as compared with any other consumer.
Secondly-this ought to be an obvious point, but it has not yet been spelled out in this crude way-there are a lot of reasons why individual tenants and leaseholders may not want to go to their local councillor. They may have fallen out with them, or had a terrible decision from them, or they may be their political opponent. There are also all sorts of reasons why they may not wish to raise the issue through the tenant panel, although I believe that is a good innovation. They may know people on the panel whom they disagree with or they may not approve of earlier decisions made by the panel. It surely should not be for Parliament to say to them that, despite all their reservations and previous experience, they must go through one of these three channels. All three channels are important and should be there, and if they need to be put on the face of the legislation let us do so. But we must not deny the ordinary social housing tenant or leaseholder within social housing provision the right to go direct to the ombudsman. I plead with the Government to drop this absurdity.
My Lords, I was delighted that the noble Lord, Lord Whitty, referred more positively to the role of councillors than has been the case elsewhere, except for the noble Lord, Lord Tope. I am very supportive of stock transfer, but I do feel that with these arrangements there has sometimes been a reduction in the ability of councillors to be involved in housing activities in their area.
As we all know, in our role as councillors-and I declare that I am one-we are expected to be community leaders. One of the most important parts of the well-being of a community is how its housing operates and functions on behalf of tenants-the social housing aspect. I firmly believe that it is important that elected members have the opportunity to work closely with tenants. As the noble Lord, Lord Beecham, said, those of us who are active in that area already do not really understand why some people do not agree. It has become less obvious nowadays to tenants of housing associations and ALMOs that councillors really are their first port of call. I very much support the role of the councillors in this activity.
My Lords, I, too, support the role of councillors and their engagement in these processes, but I do not think that this is an either/or. My name is against Amendments 69, 71 and 72. If people do not wish to go to the councillor for any reason, surely they should have the opportunity to go directly to the ombudsman service. My interest is that I have been on the receiving end of the ombudsman's judgment, complaints having been made about organisations that I have chaired and run, and I think the ombudsman service is great. It resolves complaints that have been running sometimes for ages; the filing cabinet is full of going backwards and forwards, the ombudsman sorts it out, the decision is final. It is a professional service. The British and Irish Ombudsman Association thinks that an essential ingredient in any ombudsman service is that the consumer has a right of direct access to that service.
I chair the Council of the Property Ombudsman, which looks after the private sector, separate from the arrangements for the Housing Ombudsman in the social housing sector. In the private sector, of course, tenants can go direct to the ombudsman; they do not have to go to a council, an MP or a tenant panel. That system works extremely well. I have watched the process from both sides of the fence. Ombudsman services really work and direct access to them seems an important ingredient.
We have one example. The noble Lord, Lord Whitty, said he did not think that there were any examples of there being a bureaucratic filter of this kind, but I think the Parliamentary Ombudsman is the last outpost of this approach. It applied to the Local Government Ombudsman but was scrapped as it was found to be unworkable and unnecessary, but with the Parliamentary Ombudsman, going through your MP remains. However, Ann Abraham, the Parliamentary Ombudsman, says:
"The MP filter delays the resolution of complaints by the ombudsman and even deters some people from taking their complaints to the ombudsman at all".
I think it likely, as a result of the consultation now going on, that the filter will be dropped in that last case of the Parliamentary Ombudsman. So let us by all means engage councillors and encourage people to go to their councillor-sometimes that can be the best kind of mediation and local way of organising things-but let us allow people, if they wish, to go direct to the ombudsman service. It is there as a professional body and it sorts things out.
My Lords, I also declare an interest as a local councillor. I must say to the noble Lord, Lord Beecham, that my aged aunt, who has a great fear of spiders, says, "In September and October never talk about a spider, otherwise you will talk one up", and one invariably comes up. I heard what he said about the contributions of Members on this side to these debates. When he makes such comments, I have to point out that we made very little progress with groups yesterday and there may be some connection-not with the Conservatives but with other Members in the Chamber.
I wish to follow very strongly what my noble friends Lady Eaton and Lord Tope said. I have visited a number of authorities and it is true, sadly, that in many authorities where there has been large-scale voluntary transfer, there is a growing disjunction between the council side and RSLs. As I see it, aspects of this proposal from the Government may be designed to break that down and to reinforce the role of a councillor. In my authority we have introduced a tenants' champion system in order to encourage people to use the local resource of the council as a first resource for complaint and redress against social landlords. That is desirable. Surely in the spirit of this Bill things should be settled as locally as they can be. There are all forms of bureaucracy and the ombudsman system in itself is potentially that. I agree that tenants may not need a filter, but in some circumstances they may need a local champion.
I am not quite so absolutist about these proposals as some others who have spoken. However, I hope that my noble friend will listen to the debate, particularly to the points made by my noble friend Lord Tope, and see whether some middle ground can be found that will enable tenants to have this recourse, but perhaps in the normal course of events to encourage people to seek to settle matters locally.
My Lords, this is the first time that I have spoken on Report so I should declare a few interests. I am an elected member of a district council in Lancashire, a vice-president of the LGA, a vice-president of the Open Spaces Society and a member of the access, conservation and environment group of the British Mountaineering Council. Those are the interests I can think of that might come up during Report. If I have any others, I shall declare them later.
I apologise for having to nip out of the Chamber for the latter part of the speech by the noble Baroness, Lady Hayter, and the beginning of the speech by my noble friend Lord Tope. I can assure everyone that I probably agree with every word that they said, even when I was not here, on the basis of what they have said otherwise. We had a glowing account from the noble Baroness, Lady Hollis, about how wonderful the complaints and resolution system is in her housing association.
My Lords, I was not trying to say that. I was trying to say that, having gone through such an exhaustive system, I could not see what added value would come by having a fifth tier, an MP or a councillor, as opposed to going direct to the ombudsman.
I entirely accept that. However, in my experience, not all housing associations are the same and some do this better than others, which is inevitable with any type of organisation. In a sense, if there are housing associations or social landlords that do not do it quite as well as the organisation in which the noble Baroness, Lady Hollis, is involved, that is an even more important reason why tenants should be able to go to the housing ombudsman as easily and quickly as possible.
Like my noble friend, we on these Benches would have preferred that this proposal from the Government was not in this Bill. It seems to go back to a local government ombudsman system that, as noble Lords have said, used to exist in local government but that, frankly, was not necessary and in some cases was harmful. There is no doubt whatever that on some occasions councillors used to find reasons not to pass complaints on or tried to persuade people not to pursue them. I always took the view that unless it was clearly vexatious I would automatically pass it on, even on one occasion when it concerned a complaint against the borough council about a housing matter in which I had been closely involved. I was chairman of the housing committee and I still said, "I will pass it on because it is right and proper that it gets dealt with".
At Lancashire County Council, on one occasion I made a complaint against the education authority. Shortly after, I went to a reception of important people at county hall in Preston. As soon as I walked in the room, the then education officer came bounding across the room and at the top of his voice tore a strip off me for daring to question the reputation and organisation of that education authority. He then marched back to the other side of the room. I was much younger and a bit more timid than I am now but I still marched after him and, in an equally loud voice, tore a strip off him and told him that he was undermining democracy. In a sense, I should not have had to be there as part of that system. The people involved should have been able to go direct.
Along with other noble Lords, I think, around the Chamber, we have had quite a few discussions with members of the Government, particularly with Grant Shapps, who I believe is in charge of the housing parts of this Bill. We came to the view that we might win the argument but would not win the process of this legislation of removing these parts of the Bill or of putting in an amendment along the lines of that proposed by the noble Lord, Lord Whitty, which I would otherwise strongly support.
To help the Government, in these discussions we are looking for some compromise that at the very least provides a backstop so that, if any of these designated persons are not helpful and try to resist or are just incompetent in passing on a complaint, the tenant can nevertheless go direct to the housing ombudsman. It is a slightly messy process and it is not as good as now, but it can work and at the very least would maintain their right to go direct to make the complaint, even if someone else tries to persuade them otherwise or to block it.
My Lords, does not the noble Lord accept that if a tenant has reservations about their circumstances, which may be very personal, it is not just a question of whether if they go to them they may be rebuffed, but that they would be seriously inhibited about going to their councillor or their tenants' panel, or possibly even their MP, in the first place? We should take that into account.
Yes, I accept that and I think the noble Lord is quite right. All I would say is that I would expect that most Members of Parliament are used to dealing with that kind of sensitive information, and if they are not, they are not fit to be Members of Parliament. I think also that there are councillors who are prepared to help and are experienced in dealing with that kind of information. I do not entirely take the view of the noble Baroness, Lady Hayter, that they have to be skilled in the processes of assessment, conciliation and so on. All they have really got to do is say, "You have a reasonable case. I will sign this and you can send it on".
The objections to going to a councillor can be overstated. As the noble Lord said, the legislation states that you can go to any member of the housing authority, so you will have a choice of 40, 50 or 60 people to approach. I would have thought someone could be found who would pass it on, and not necessarily knowing all the details. Sometimes people come to me as a councillor and say, "I want to tell you all about this". I say, "Look, I am not an expert in this. It seems to be very personal and I really do not want to know. What I will do is put you in touch with the people who can help you and with the authorities who might be able to sort it out". So I think that this can be overstated.
Nevertheless, we are absolutely clear that we would like to support an amendment along the lines of that tabled by the noble Lord, Lord Whitty. We have a compromise amendment in an attempt to help the Government to resolve this in a way that is not as damaging as perhaps it otherwise would be, and perhaps not very damaging at all. However, we would really like an assurance from my noble friend the Minister that between now and Third Reading she will think seriously about this so that it can be considered again at that stage, either through a government amendment along the lines of our amendment or perhaps something a bit better. That is the assurance we are looking for and I hope that she will be able to give it. I should say that if we get it, I will not move my amendments when we get to them later on.
My Lords, I am pleased to support my noble friend Lady Hayter of Kentish Town in the amendment she has moved in respect of the Housing Ombudsman. I have known my noble friend for many years and we have worked together on numerous matters. As usual, she has hit the nail on the head, identified the problem and provided us with a sensible and reasoned solution which I think should command widespread support across the House. The Housing Ombudsman provides a free, independent and impartial service to the tenants of social housing providers. It is a respected organisation which provides resolutions for problems as well as valuable advice and guidance to the providers of social housing on how to get it right by developing effective complaints procedures.
As noble Lords are aware, tenants currently have the right to complain to and deal directly with the Housing Ombudsman where a complaint has not been resolved to their satisfaction. The Government propose to take away a tenant's right to make a direct complaint to the Housing Ombudsman. That is just wrong. It serves no purpose other than making matters more complicated for everyone concerned, and especially for tenants, who will feel that they have already suffered an injustice and are seeking independent redress for their complaint. If this amendment is not accepted, as we have heard today, tenants will in future have to go through their local Member of Parliament, a local councillor or a tenants' panel. Again, that is wrong. If the tenant wants their MP or local councillor to be fully involved and to make the complaint or support them, that is absolutely fine. I would welcome that. But to take away an individual's choice in this matter is bizarre in the extreme. Can the Minister tell the House why the Government think that this is the right approach? Also, what happens if the local MP or councillor refuses to take the matter to the Housing Ombudsman? Where can the tenant go then?
There is also a practicality issue in that, in more cases than not, the complaints the Housing Ombudsman deals with are complex issues, often evolving over many months or years. Local MPs or councillors, who are working hard for their constituents, may not have the capacity in their offices or the town hall to deal with these complex matters as effectively as the ombudsman could. No criticism of anyone is intended-it is just an observation. In conclusion, I congratulate my noble friend on bringing this matter forward and other noble Lords who have spoken in support of this amendment, and I ask the noble Baroness, Lady Hanham, to think again and accept my noble friend's proposal.
My Lords, it has been a very interesting and helpful debate, mostly coming from people who understand the process in place at the moment. There has been a lot of talk about arbitration. However, this is not about arbitration; it is about resolution. It is about somebody having a problem and needing it resolved. They need somebody to write a letter to the housing chairman. They need somebody to write a letter because they have been through the process and they have not got a reasonable answer. As former councillors, we have all done precisely this and made sure that there is some means of resolving a problem for tenants. To say that councillors, MPs, and now tenants cannot do this seems absurd.
One of the reasons for suggesting that people take their complaints through one of those filters-if that is what they are-is, as my noble friend Lord Tope said, that there is a strong belief that removing housing by and large from the direct control and interest of councils and taking it to ALMOs and housing associations means that councillors and MPs become disconnected from the problems. Councillors in particular ought to know what is going on in the housing stock in their borough. I am sure the noble Baroness, Lady Hollis, knows exactly what she is doing and has a very good complaints procedure. I am not sure that is true of every ALMO or even of the way council properties are run. So we want to reconnect councillors and MPs with what is going wrong within their area. Can we dump the suggestion of arbitration? Nobody is asking them to arbitrate. We are asking them to resolve a problem. If they cannot resolve the problem, they would be required to pass the matter on to the Local Government Ombudsman with the agreement of the complainant.
I do not want there to be any misunderstanding. We recognise that the Housing Ombudsman does an extremely good job. There is no doubt about that. It is responsive and it knows what it is doing. This is not about trying to exclude the ombudsman from the system. But the Housing Ombudsman has an enormous case load which went up by 72 per cent between 2007-08 and 2009-10. Maybe that reflects the fact that there are more complaints coming forward about housing, which could be dealt with locally if there was the opportunity to do so. An additional 11 per cent of complaints have been made in the past year.
We want to ensure that the ombudsman is not the first port of call. We do not want the immediate response to be, "Oh, I'm going off to the ombudsman". There should be a step before that; namely, going to one's tenants panel, a councillor or an MP and seeing whether the matter can first be resolved through them.
A dual-track model currently applies to complaints to the Local Government Ombudsman. In practice, although the ombudsman does not collect detailed statistics, complaints are almost always submitted directly to the ombudsman and not via local councillors. Therefore, we are not convinced that this model will help local complaint resolution.
I have listened carefully to what has been said and I know that these matters have been raised over a number of weeks. I understand what has been said about discussions passing a last barrier point between the council or tenants panel to the ombudsman. I am not clear that dual track increases the number of ways of resolving complaints, but I have heard what has been said. Bearing in mind what was said by the noble Lords, Lord Greaves and Lord Tope, and my noble friends Lord True and Lady Eaton, who all see the advantage of an initial stage, I am happy to look again at the second stage and how a matter would get to the ombudsman. I give a commitment to do that before the next stage of the Bill so that we can discuss how we think that could take over. We feel that this would be a good way to proceed. I hope that both my noble friends and the noble Lords opposite will be content for us to see whether there is a way through here without absolutely undermining the provisions that the Government wish to introduce. The Government believe that local people who are associated with local housing and have become disconnected from it should be aware of what is going on and be capable of dealing with a lot of the problems that tenants have without them having to approach the ombudsman.
My offer is one of discussions to see whether there is a way through. If we have not found one by Third Reading, we will be able to deal with the matter then. On that basis, I hope that noble Lords will not press their amendments.
My Lords, does the Minister accept that what has been proposed would enable tenants to keep their right to decide whether they want to go through their councillor or MP or go directly to the ombudsman? What the Government are proposing denies them that choice. That is the problem that we have on this side of the House.
My Lords, I do not think that it denies them the choice. I am happy to look into how the passing from one to the other can be done. We think that there should be an initial stage. Often, those initial stages work: a councillor intervenes; they see what is going on; and the matter is resolved at that level. If that does not happen and somebody goes directly to the ombudsman, it is very difficult for councillors and tenants panels to know exactly what people are thinking. People do not always want to go to the ombudsman and would quite like somebody to deal with the matter at a local level. That is why we think the initial responsibility for getting matters put right lies with one of those three groups. I am very happy to look at how we can deal with the question of whether it is a requirement for the MP or local councillor to be the final arbiter of when a matter is passed on to the local ombudsman.
My Lords, I thank the Minister for her response and, indeed, I thank all noble Lords who have spoken. We all support the idea that the service provider should be the first person to solve the matter and that there should be good ways of doing so. We all prefer local resolution and we all want councillor involvement. I do not think that there is anything between us on that. The only difference is in whether an extra layer should be added and whether we want a veto regarding whether people can, after that extra layer, go to the Housing Ombudsman.
Obviously I am addressing myself to those who I think have already reached a compromise. I hope that they have not, because some problems remain with the amendments, which may not now be moved. One, which has not yet been covered, is that the complaint is still required to be made in writing. Part of our amendment was intended to remove that requirement. I realise that we are on Report rather than in Committee, and therefore that may be a possibility. However, it would be a new statutory requirement. It would go against good practice and, indeed, the Law Commission has specifically recommended against it. Its latest report on public service ombudsmen states:
"We recommend that all formal, statutory requirements that complaints submitted to the public service ombudsmen be written are repealed".
That is because of vulnerable consumers.
Does the noble Baroness accept that our amendments are not intended to be a perfect answer? We tabled them to persuade the Minister and the Government not to resolve the matter finally today but to give us more time to discuss it before Third Reading and perhaps to come to a resolution that might be agreed around the House at Third Reading. The Minister has given a very clear assurance that that will now happen. The matter can be brought back at Third Reading and, on that basis, I wonder whether the noble Baroness will withdraw her amendment.
The problem that remains-and I shall explain why I think there is still a problem-is the Minister's final response, in which she did not give an assurance that the same right will remain for social housing tenants as exists for every other ombudsman-that of direct access to the ombudsman for justice without having a filter.
I should like to say one other thing about what I understand was an attempt to find a way through. Procedurally, I think that it is a bit of a nonsense to say that you must go to your MP or councillor in order to be able to go to the Housing Ombudsman but that if they say no, you can still go anyway. I accept that the wording was an attempt to get through this afternoon's discussion but it is a bit of a nonsense to say, "Go through your MP but, if they say no, you have an automatic right to go anyway". That does not seem to represent progress; nor does it remove the extra layer. If the councillor or MP is to become involved, they have to carry out another inquiry-they have to hear both sides of the case. That is all that I mean by natural justice. I believe that councillors and MPs are champions of their electors but I do not think that they are adjudicators. I deliberately use the words "adjudication" or "resolution". In other words, they resolve a problem where someone else cannot, and coming in with a fresh mind rather than being a champion seems to be very important. I believe that it would be a form of discrimination to say that just one group could not go directly to an ombudsman. The noble Lord, Lord Best, chairs the Property Ombudsman service. I was a member of the Surveyors Ombudsman Service. In all these cases, people are allowed direct access to an ombudsman.
This is a serious matter regarding justice and I should like to test the opinion of the House.
Moved by Lord Kennedy of Southwark
52B: Clause 163, page 152, line 8, at end insert-
"( ) In section 36 of the Housing and Regeneration Act 2008 (information in relation to social housing) in subsection (1) after paragraph (c) insert-
"(d) any accreditation or standards to be held by landlords of social housing.""
My Lords, in moving Amendment 52B, I shall speak also to Amendment 85. During the course of deliberations in this housing section of the Localism Bill, we have referred on a number of occasions to the private rented sector, which plays an important role in providing accommodation to individuals, couples and families. There are some excellent private sector landlords-there is no doubt about that. We should always be concerned with driving up standards and making provision better for all. Good quality housing that meets the needs of tenants in the private rented sector is an aim we can all sign up to.
However, as with all types of housing, there are landlords who are not quite as good as they should be, and property that is not up to the standard that it should be. The proposal for a landlord accreditation scheme is an attempt to address this serious problem. The proposal is for local authorities to operate one or more voluntary-and I stress the word voluntary-landlord accreditation scheme. The amendment also gives the Secretary of State the power, if he wishes to use it, to make regulations in this respect, in consultation with the local authorities. This proposal will have the effect, when the schemes are operating, of highlighting the good landlords-those who manage their properties well, deal with their tenants properly and provide a reasonable product for a fair price. That will give tenants more confidence, as they can have information on the landlords on the scheme and have a procedure for taking action if they are found wanting. It will also shine much needed light on those landlords who do not always come up to the mark and in a number of areas can be found wanting, who are letting down their tenants and providing a poor product for what they are charging. Those landlords will be registered and shown to be poor or, because they offer a poor product, they will seek to avoid participation in the voluntary scheme.
If the Minister is not prepared to accept my amendment, can he give us an assurance that the department will keep the matter under review, as this is a genuine attempt to address a problem which we know all too well exists. I beg to move.
My Lords, these amendments focus on the potential impact of accreditation schemes, both in the private rented sector and the social rented sector. I turn to the social rented sector first.
Amendment 52B would give the Secretary of State the power to require the Homes and Communities Agency, and from April 2012 the Greater London Authority, to supply information about any accreditation or standards to be held by landlords of social housing. I assume that the amendment relates to the HCA's future role as a regulator of social housing. The noble Lord nods. However, under the Housing and Regeneration Act 2008 the regulator is already obliged to consult on its own standards for social housing landlords and to bring those standards to landlords' attention. In practice, of course, the regulator's standards are freely available for everyone to view on its website, so I do not see a need to empower the Secretary of State to require that this information is published by law.
The amendment could also encompass accreditation or codes that might be adopted by social landlords on a voluntary basis. It is important that this kind of voluntary activity is owned by the sector itself, so I am not convinced that the regulator should be required to publish information about it. Indeed it is important that there is a very clear distinction between the regulator's standards, which are compulsory, and any codes or accreditation arrangements that are adopted by landlords on a voluntary basis. Of course, we would encourage such voluntary activity in the sector, but we do not believe that it would be helpful for the regulator to police it or to report on it.
Turning to Amendment 85, which deals with accreditation in the private rented sector, I think that we all agree that a good accreditation scheme can play an important role in developing a local authority's relationship with their local landlords. Many local authorities already run successful accreditation schemes, but as with the social sector, accreditation works best when it is owned by those involved. One of the main strengths of voluntary accreditation to date is that local authorities have been able to tailor their schemes to local needs, and experience shows that accreditation works best when it matches local circumstances.
Instead of allowing that local discretion, the proposals in front of us today would impose top-down burdens on all local authorities, including those who, quite legitimately, decide that accreditation is not appropriate for their area. Worse, they would force all existing and effective accreditation schemes into a straitjacket designed by central government. Schemes that did not match up would have to be, quite pointlessly, dismantled and reassembled at considerable administrative cost. This does not seem to make much sense and we cannot support it.
My Lords, these amendments are intended to support accreditation-and the noble Lord explained why he believes them necessary-but unfortunately they would have the opposite effect by undermining effective schemes that are already in place. Given this, I would ask the noble Lord to withdraw his amendment.
My Lords, I thank the noble Earl for his reply. However, I still think that there is an issue here that needs further consideration, so I hope that this will be kept under review. That said, I beg leave to withdraw the amendment.
Amendment 52B withdrawn.
Amendment 53 not moved.
Moved by Lord Best
54: Clause 163, leave out Clause 163
Amendment 54 is in the name of the noble Lord, Lord Kennedy and myself. Currently, the Secretary of State is able to direct the regulator to set standards for social housing in certain areas. In a strictly limited number of cases, he is able to direct the content of these standards. Clause 163 of the Localism Bill seeks to strengthen his powers in this area, allowing him to shape the contents of standards regarding tenancy exchanges in which tenants can swap properties. The view within the housing world is that this is giving the Minister too many powers to direct the behaviour of social landlords. The danger of accumulating more and more powers in the hands of the Secretary of State is that eventually, as one Minister after another brings their own fresh and no doubt good ideas to bear, you are effectively nationalising the housing associations; they are becoming creatures of government. They then run the risk of being regarded by the EU and others as public sector bodies. If the housing associations are no longer independent bodies and are regarded as public sector agencies, then all their borrowing becomes public sector debt and we have lost one of the key elements in having a social housing sector that is outside of public sector control.
So I am very sympathetic to standards about exchanges and the mobility of labour, and to the Minister's hopes that housing associations will behave in a particular way, but laying this down, through direction to the regulator over these standards, does seem a step too far. I beg to move.
My Lords, Clause 163 is important in increasing mobility for social housing tenants who may wish to move for work, or to give care to or receive care from family or friends. We want to increase opportunities for tenants to move through mutual exchange. We have been working with the existing main providers of home-swap services to develop a technical solution that will put in place a national scheme that enables tenants to receive information on all possible matches across all providers in a scheme. Alongside this, we want all landlords to be required to provide their tenants with access to good internet-based home-swap services. Indeed, the majority of landlords who responded to our consultation on housing reform also agreed with this approach and said they could see no good reason why landlords should not subscribe to such a scheme. We therefore propose, through using the powers in this clause, that the social housing regulator should set a mutual exchange standard to make sure that social landlords sign up to good-quality services.
The noble Lord also raised the issue of public sector debt. While I am not undertaking to reflect on that and come back at a later stage, I will undertake to satisfy myself, through discussions with my officials, that the problem which the noble Lord alludes to does not exist. While I accept that some noble Lords view this as an overly bureaucratic approach, we believe that the benefits of increasing choice and mobility for social tenants must be the priority and that we should seek to deliver this better service for them.
I am grateful to the noble Earl for that response. I agree entirely that improving mobility and exchange schemes is a thoroughly commendable line to pursue. I think that I am now on my 23rd housing Minister since I started in this world. They have all had important ideas to add to the things that housing associations ought to do; it is just that in the end, if one is not careful, the cumulative effect is the creation of an agency that is simply a government bureaucracy. I am grateful for the noble Earl's reassurances and beg leave to withdraw the amendment.
Amendment 54 withdrawn.
Moved by Lord Kennedy of Southwark
55: Schedule 16, page 374, line 4, after "means" insert "the Regulation officer of"
My Lords, I will be as brief as possible in speaking to this group of amendments. My Amendment 55 seeks to designate an individual within the Homes and Communities Agency to be responsible for regulation. The amendment has the support of the National Housing Federation, and it is important because it seeks to avoid a conflict of interest between the HCA's regulatory and investment functions. It will help to ensure that regulatory issues can be addressed, even to the extent of formal legal proceedings, without compromising the investment function of the HCA, and vice versa. The HCA would of course still be required to appoint a regulatory committee to oversee the regulation officer. The Government may say that this proposal will diminish rather than enhance regulatory independence but I do not accept that that is the case at all. I am in fact arguing the exact opposite. If that is the Government's position, I hope that the noble Earl will be able to give the House additional words of assurance on this matter. I beg to move.
My Lords, I am grateful for the way in which the noble Lord, Lord Kennedy of Southwark, succinctly moved his amendment. The Government are committed to ensuring the continued independence of the regulatory function once it transfers to the Homes and Communities Agency. However, our view is that the nomination of a single individual as a regulation officer would diminish rather than enhance regulatory independence. Rather than vesting the regulation function in an independent committee, these amendments, as the noble Lord explained, would confer the statutory powers on a single member of the HCA's staff. In moving his amendment, the noble Lord talked about the problem of a conflict of interest. However, this person could presumably be dismissed at any time by the HCA on normal employment grounds. It could prove difficult for a member of staff in that position to take decisions that were demonstrably independent of the HCA's other functions. In addition, where formal regulatory decisions are made by a properly constituted board or committee, there can be greater confidence that those decisions are broadly based and take account of the full range of relevant factors. I hope that the noble Lord will feel able to withdraw his amendment in view of my explanation.
My Lords, I thank the noble Earl for his response. Clearly we are not going to agree on this. Nevertheless, I beg leave to withdraw the amendment.
Amendment 55 withdrawn.
Amendments 56 to 59 not moved.
Moved by Lord Best
60: Schedule 16, page 375, line 33, leave out ", unfit or unsuitable" and insert "or unfit"
My Lords, this amendment concerns the terms of appointment of members for the new regulation committee. The intention is that "unsuitable" should be removed so that those who are indeed unfit or unable to serve could be removed by the Secretary of State but not those whom the Secretary of State deems to be unsuitable. That is extending the power a step too far-again, a theme of the amendments that I am bringing forward. "Unsuitable" could imply people being removed from office on grounds that would be comprehensible to the Secretary of State. It would not ensure the independence of those people to argue and, if necessary, to be a nuisance within that committee. They might do that in fear that they would be regarded as unsuitable somewhere down the line.
The Bank of England's Monetary Policy Committee uses the terms unable and unfit to describe the powers for the removal of any members of that committee. Those words would seem sufficient for the regulation committee as much as for the Monetary Policy Committee, which has done well and which has had some members who have been quite happy to raise objections-and to be quite forceful in doing so-but who might have been regarded as unsuitable if there had been powers of ministerial intervention. This amendment simply seeks to lose "unsuitable". I beg to move.
My Lords, I cannot resist it, especially since I am well known to be classified as unsuitable by my Front Bench. I have some sympathy with the argument that has just been advanced. It is quite difficult to see what is not included in "unable" or "unfit" that is then covered by "unsuitable" that ought not to be covered. It depends on matters of judgment that could include political or personal judgment that would not be a proper consideration. I just want to know what is thought to be desirably covered by unsuitable that is not covered by the other words.
My Lords, the Opposition fully support the amendment moved by the noble Lord, Lord Best. The amendment seeks to correct the use of what can only be described as an odd and unnecessary use of the term unsuitable. Like the noble Lord, Lord Newton, we ask the Minister to address that specific point of why unsuitable is being used. There is much concern that the Government are taking a much wider view and a much wider power and have additional intentions of using it. I hope that the Minister either accepts the amendment or that we have a very clear explanation about what this does and does not mean.
The Secretary of State already has the power to remove someone who is unable or unfit. As the noble Lord, Lord Best, said, this is adequate for the Monetary Policy Committee of the Bank of England, so we on this side certainly think that it is good enough for the HCA regulation committee.
My Lords, it is important that the regulation committee is able to function effectively in order to retain the confidence of investors and the social housing sector. In extreme cases, it may prove necessary for the Secretary of State to intervene to remove a member of the committee to ensure that its crucial work is not jeopardised. "Unable, unfit or unsuitable" are fairly standard grounds and a nearly identical provision exists for membership of the boards of the existing social housing regulator and the Homes and Communities Agency.
In answer to my noble friend Lord Newton of Braintree and the noble Lord, Lord Kennedy of Southwark, a member may be able and fit to carry out his or her functions without being suitable to exercise them. This might arise, for example, if there was an irretrievable breakdown in the relationship between the member and the rest of the committee. A member might engage in activities such as filibustering deliberately to disrupt the committee's work, but that falls short of being "unfit". He would be being very effective in disrupting the work of the committee, so I am sure that noble Lords can understand the need for "unsuitable".
My Lords, before the noble Earl sits down, does he see the problem that we on this side see: that somebody can be deemed unsuitable just because they are making a point that the others happen not to agree with? It is not filibustering but that they are making a perfectly valid point, which is not agreed with.
No, my Lords, that would not meet the test of what is unsuitable. If the Secretary of State tried to use his powers to say that someone was unsuitable because he or she disagreed with other members of the committee, he would leave himself vulnerable to judicial review.
My Lords, I would imagine that a committee could have very free and frank discussions, perhaps lasting all afternoon, without falling foul of the test of unsuitability. On the other hand, if a member of the committee regularly interfered with the operation of the committee so that it could not function, the Secretary of State would have to step in.
My Lords, I will certainly not press the matter further. However, it is important for the Government to know that the housing sector is very concerned that this regulation committee is independent and that the people on it feel able to say things that are contrary to what the Government might wish to hear. That independence is paramount. I hope that that point has been taken. I beg leave to withdraw the amendment.
Amendment 60 withdrawn.
Moved by Baroness Hanham
61: Schedule 16, page 381, line 15, at end insert-
"Housing (Scotland) Act 2010 (asp 17)
59A The Housing (Scotland) Act 2010 is amended as follows.
59B In section 18(2) (co-operation with other regulators: definition of "relevant regulators") in paragraph (a) for "the Office for Tenants and Social Landlords" substitute "the Regulator of Social Housing".
59C In section 68(3) (determination of accounting requirements for registered social landlords: consultation with other bodies) in paragraph (c) for "the Office for Tenants and Social Landlords" substitute "the Regulator of Social Housing".
Equality Act 2010 (c. 15)
59D In Schedule 19 to the Equality Act 2010 (public authorities) omit the entry for the Office for Tenants and Social Landlords."
Amendment 61 agreed.
Moved by Lord Shipley
62: After Clause 166, insert the following new Clause-
"Transfer of trusteeship of almshouses
In section 170 of the Housing and Regeneration Act 2008 (overview) at the end insert-
"(2) For the purposes of this Chapter, "disposal of property" shall include the transfer of trusteeship of an almshouse by a registered provider where, as a result of that trusteeship, the registered provider manages land or dwellings; and "disposal of land" and "disposal of a dwelling" shall be interpreted so as to refer to the transfer of trusteeship which entails management of land or dwellings accordingly.""
Amendment 62 relates to the transfer of trusteeship of almshouses. I am grateful to my noble friend the Minister for writing to me in the Recess to say that she was sympathetic to the case for this amendment and would be happy to consider the matter and discuss it further even though there was a need to be cautious about extending the scope of state regulation in relation to charitable bodies. I hope that discussions can continue between today and Third Reading.
At present, if a regulated housing association sells occupied social housing, that housing association requires the consent of the regulator, who in turn requires the housing association to consult its tenants. By contrast, when the control of an almshouse is moved from one corporate trustee to another, the ownership of the property remains with the Official Custodian for Charities. For that reason the regulator's consent is not required for the change even if the residents' homes are in effect being sold against their express wishes. The amendment would ensure that if a registered provider wanted to transfer the trusteeship of occupied dwellings, the consent of the regulator would be required. The regulator could in turn require the housing association to consult residents.
I move this amendment because a housing trust-the Anchor Trust-is transferring the corporate trusteeship of 11 almshouses spread through London and south-east England to another charity. Many residents oppose this proposal and would prefer to be transferred to a more local charity instead. The issue here is about the rights of tenants. If this was a stock transfer, say, of local authority housing, tenants would have the right to be consulted and, indeed, to give their consent to a transfer of their properties. The question that lies at the heart of this is: if there has to be consultation and consent given for a stock transfer, why when almshouses are being transferred is there not to be full consultation and consent? The legal situation is complicated because of the charitable status of the almshouses. I understand that in this specific case there have been meetings between Members of Parliament and the chief executive of the Anchor Trust and with the Charity Commissioners. However, we need to address this issue in Parliament because I cannot see why a different system should apply to tenants of almshouses as opposed to tenants in other forms of social housing.
I recognise the need for further work to be done on the legal issues. I also recognise that we are still on Report. However, I hope that there is time to look further at those legal issues to see what might be done about this situation. In the mean time, I hope that it might be possible for full consultation and consent to be obtained from those tenants affected by this and any other proposed transfer of almshouses. I hope that it will be possible for that further work to be presented to your Lordships' House at Third Reading.
My Lords, I offer my support and that of the Opposition to the noble Lord, Lord Shipley, as I have done on a number of occasions on Report. He has identified a problem that needs to be addressed. It involves real people with real concerns. If the matter requires further work, as he says, and it can be done-I hope that the Minister will comment on that-the issue may be sorted out. Given that we are discussing a charity, I understand that the issue may be more difficult than it at first seems, but I hope that the government Front Bench will give a positive response.
Amendments 65 and 67 in this group stand in my name. Amendment 65 would ensure that a parent company of a group of housing associations can be registered even if it owns no housing itself. This would allow the regulator to regulate group members via the parent rather than directly if he thinks that that would be more effective. Amendment 67 concerns the appointment of members to housing association boards. The law as it stands allows the regulator to make unlimited appointments to a registered provider's governing body provided that they remain a minority. For a 10-member board, it would allow the regulator to make nine appointments. My amendment limits the number of appointments the regulator may make to no more than four. This is a proportionate number of appointments and would enable the regulator to strengthen the board by adding members with sufficient skills and abilities to deal with any concerns that they may have about the board's performance. However, the number would not be too overbearing as this sort of appointment would be of a temporary nature to help the housing association board discharge its duties more effectively.
Amendment 67 stands in my name and that of the noble Lord, Lord Kennedy. It concerns the appointments made by the regulator. It is important to note that this amendment relates only to appointments made by the regulator where the housing association has not failed in any way. It is not a disciplinary measure but constitutes a voluntary helping hand for the organisation. In a number of cases that I know well additional members have been appointed by the regulator as new members of the board and have been very helpful. However, there are limits to the number of appointments that the regulator ought to make to the board. We suggest that these be limited in future to a maximum of four. In my experience three new people are usually appointed to strengthen a board that has become weak-four is quite enough. We are trying to protect the independence and sovereignty of these organisations.
My Lords, as regards the amendment moved by my noble friend Lord Shipley, I recognise the strength of local feeling in the case that he highlighted. We have looked at his proposal extremely carefully and have discussed it with the social housing regulator, the Charity Commission, the National Almshouse Association and the National Housing Federation. We have also received helpful representations from the United St Saviour's Charity and from residents of the Hopton's Almshouses in Southwark.
I fully understand the reasoning behind the proposed amendment. However, we are concerned that the amendment seems to require an increase in bureaucracy and potential state interference in the proper exercise of charity trustees' discretion. Currently, the identification of a new trustee is a matter for the existing trustee to decide and we are not convinced that new regulatory controls should be applied. The proposed amendment would apply only where the corporate trustee of an almshouse happens to be a registered provider of social housing. It is not clear that there is a strong rationale for requiring that these almshouse trustees, but not others, seek consent.
Registered providers are subject to a regulatory requirement to consult tenants on changes to management arrangements, and the Charity Commission's consent is required for changes to charities' objects. My noble friend tempted to me to say something about Third Reading, but I am not convinced that there is anything more that we can do with this Bill, so I shall resist that temptation. However, I suspect that this will be a live issue for some time to come. Our expectation is that, as a matter of good practice, housing associations should and would consult any residents affected by significant management changes that they are proposing to make.
Amendment 65 was tabled by the noble Lord, Lord Kennedy of Southwark. A transitional provision is already in place that allows non-stock-owning group parents to remain on the regulator's register, despite the fact that they are not social housing landlords as defined by the Housing and Regeneration Act 2008. In order to minimise uncertainty, I am happy to confirm that the Government have no plans to withdraw this provision. However I am not convinced that the regulator should be able to register new bodies that do not meet the landlord test provided by the 2008 Act. It is not clear that there is anything fundamentally wrong with the principle that regulation should apply to the landlord of the stock. This approach is consistent with wider legislation, which usually imposes legal obligations on landlords rather than on any parent companies they may have.
Amendment 67 was tabled by the noble Lords, Lord Best and Lord Kennedy of Southwark. The existing legislation provides that the regulator may not normally appoint more than a minority of the officers of a registered provider. I am not convinced that removing this restriction and replacing it with a prohibition on the regulator appointing more than four officers would strengthen housing association independence. In fact, it could well have the opposite effect. It is entirely possible that a housing association may have seven or fewer officers and, where this is the case, the amendment would effectively give the regulator the power to appoint a majority of the association's officers.
I am also concerned that this change could reduce the effectiveness of the regulator's response to a serious problem in an association. For example, where an association has no officers, as has occurred in the past, but its constitution does not specify a minimum number of officers, the amendment would permit the regulator to make up to four appointments only. That may not be sufficient to put things right and protect tenants and the taxpayer.
I know that the Minister was not tempted by the noble Lord, Lord Shipley, but can he give the House any assurance that the issue the noble Lord raised will be looked at seriously by the Government? I accept that this involves charity law, which is complicated stuff, but it also involves real people with real concerns and the Government should look at this seriously.
My Lords, I am confident that my department will continue to monitor the situation, but we cannot do anything further with this Bill.
Will it be possible for the evidence that the Minister referred to from the regulator, the Charity Commission and other bodies to be provided in the Library so that we can see exactly what evidence they have supplied to the Government that indicates that legally this is very complicated? Would the Minister agree that it would be good practice for consent to be received where a transfer is being proposed for almshouses? Would he consider and give advice on what other steps could be taken to ensure that consent for transfer from tenants is delivered?
With regard to the evidence, if I can give the noble Lord some more evidence I will, but I am not certain that I can. I believe there are some difficulties with his second request.
Before the Minister sits down, I shall press him on this point. In order to get time for this to be resolved, would he be able to facilitate a discussion between representatives of these organisations, the almshouses and their residents with officials and Ministers in the department?
My Lords, we will do whatever we can to assist a resolution of this problem. We will continue to monitor it, but my particular point is that there is not much more we can do with this Bill.
My Lords, when I moved Amendment 62, I quoted from the Minister's letter which said that she was sympathetic to this case, so I am pleased that we seem to have ended on a note of sympathy and understanding of the problem. I think we need to try to find a solution to this. I repeat myself, but I do not think it is tenable for tenants of almshouses to be treated differently from tenants of other social housing or local housing. There is a principle at stake here. There may be legal complexities to deal with in this Bill, but I am very grateful for the assurance from the Minister that we can enter further discussions prior to Third Reading.
My Lords, I said that we cannot enter further discussions. We cannot use this Bill to solve this problem. I gave no such undertaking.
I understand that situation. With that confirmation, I beg leave to withdraw the amendment.
Amendment 62 withdrawn.
Schedule 17 : Regulation of social housing
Moved by Earl Attlee
63: Schedule 17, page 384, line 33, at end insert-
"1A In section 122 (restriction on gifts and distributions by non-profit registered providers to members etc) after subsection (6) insert-
"(7) The Secretary of State may by order amend this section for the purpose of-
(a) adding to the permitted classes, or
(b) modifying or removing a permitted class added by order under this subsection.
(8) Before making an order under subsection (7), the Secretary of State must consult-
(a) the Charity Commission,
(b) the regulator, and
(c) one or more bodies appearing to the Secretary of State to represent the interests of registered providers.""
My Lords, in Committee, the noble Lords, Lord Best, Lord Patel, Lord McKenzie and Lord Beecham, tabled an amendment designed to liberalise Section 122 of the Housing and Regeneration Act 2008, which restricts the payments that housing associations may make to their members, and a similar amendment has been tabled again by the noble Lord, Lord Best.
The Government agree with the aim of the amendment and have put down our own amendments to achieve it. The amendments we have tabled would give the Secretary of State the power, by affirmative order, to add to the classes of permitted payments that housing associations may make to their members. Taking this matter out of the Bill will give us sufficient time to explore a new exemption that delivers greater flexibility while protecting public investment. Any order would be made only following consultation with the Charity Commission, the regulator and the housing association sector. I beg to move.
We are grateful to the Government for responding to the earlier amendment. I acknowledge that the noble Lord, Lord Best, will not move his amendment, but are classes 4 and 5 specified in that amendment classes that the Government would support and take forward under the process that they have set down?
Amendment 63 refers to,
"modifying or removing a permitted class added by order under this subsection".
Do the Government have anything in mind concerning modifying or removing a particular class?
My Lords, those are exceptionally good questions, but unfortunately I will have to write to the noble Lord.
Amendment 63 agreed.
Amendments 64 and 65 not moved.
Moved by Earl Attlee
66: Schedule 17, page 388, line 13, at end insert-
"17 In section 320 of the Housing and Regeneration Act 2008 (orders and regulations)-
(a) in subsection (3)(a) (orders subject to approval in draft by each House of Parliament), after "114" insert ", 122", and
(b) in subsection (7)(a) (orders subject to annulment by either House of Parliament, and exceptions from that requirement), after "114" insert ", 122"."
Amendment 66 agreed.
Amendment 67 not moved.
Clause 167 : Housing complaints
Amendments 68 to 73 not moved.
Moved by Lord Greaves
73A: Clause 167, page 153, line 35, at end insert-
"(3A) If a designated person who is asked to refer a complaint to a housing ombudsman declines to refer that complaint, the individual making the complaint may make it directly in writing to that housing ombudsman."
My Lords, I am in an interesting position. I offered discussions when debating the last group of amendments, but the offer was rejected forcibly by the vote. I have now been asked whether I will have discussions on these amendments, and I am happy to say that I am content to have them.
I think that that was an acceptable answer. I understand that we cannot bring back the amendment that was defeated in the vote, but there are plenty of things in these amendments that we can talk about in relation to what the Bill states. That gives us sufficient leeway to talk about what we want to talk about. Whether the Government will extend their offer of discussions to the Opposition, who rudely threw it back in their face on the previous group of amendments, I do not know. I would welcome their participation, but that is up to the Government.
Perhaps I may make it clear that we voted on the original proposition because we believed that it would secure the best outcome. As that did not succeed, it is not inconsistent to want to see a lesser position that nevertheless improves on what is in the Bill. That is entirely sensible and reasonable. Whether we will be involved in those discussions is up to the Government. If they are going to bring something back-and I believe that that is the wish of the noble Lord, Lord Greaves-we will have an opportunity in this Chamber to join in the debate.
Before the noble Lord withdraws the amendment, as I presume he will, I will express the hope that the House will go along with this. We got into a mess earlier over the vote because of the separation of these issues, which could have been linked. We now have an opportunity to take up the Minister's offer of discussion. I think that we should, and I hope that neither she nor we will dig in out of purism, and that the Clerks will have their ears open.
I will try to dig us out of this muddle. I am happy to have discussions and to include the Opposition. The discussions might be overshadowed slightly by the way in which we proceed on these amendments. However, it is perfectly proper that we should have them and include everybody.
On the basis that we are all happy pals together, at least for the moment, I beg leave to withdraw the amendment and look forward very much to the discussions.
Amendment 73A withdrawn.
Amendments 73B and 73C not moved.
Moved by Lord Palmer of Childs Hill
74: Clause 167, page 154, line 6, at end insert-
"( ) If having made a determination of pay compensation, the ombudsman must explain how the level of compensation has been calculated."
My Lords, this amendment also has the fatal "o" word-ombudsman-in it, but noble Lords need not be afeared because it is a very non-contentious issue to which the noble Baroness, Lady Hanham, has kindly replied, and I agree with her answer. I tabled the amendment about the ombudsman because, when reading the Bill, one notes that the Housing Ombudsman will make a determination, but no mention is made of any compensation element. Determination is all very well, but an applicant may want monetary payment or grovelling of some sort and that is not mentioned in the Bill.
When investigating this in advance of the helpful reply of the noble Baroness, Lady Hanham, I went back to Schedule 2 to the Housing Act 1996, which says, as the Minister implied, that the Housing Ombudsman may,
"order the member of a scheme against whom the complaint was made to pay compensation to the complainant".
It is already in law that compensation of a monetary sum can be paid. I will make what is almost a drafting point. The laws of this country are so entwined and confused that it is wrong that one has to keep referring back to previous Bills to understand the Bill that one is looking at. We are not talking only of lawyers who will go back and say: "Ah, that is in the Housing Act 1996". In this Bill one does not see any element of monetary repayment as compensation. I seek acknowledgement that, in whatever paper forms are produced, there will be a cross-reference to the 1996 Act so that people can see that there is a determination. I would be very happy if the Minister would confirm something on those lines. I beg to move.
My Lords, I will follow the noble Lord, Lord Palmer, on the question of compensation. Clearly, the ombudsman route provides the possibility of compensation. It is not certain whether that would apply to the alternative route, which we debated at some length earlier. Perhaps the noble Earl could indicate whether under the alternative method of the designated person-a councillor, Member of Parliament or tenant panel-there will be the opportunity for a compensation payment to be made by the designated person. If not, we would have two systems, one of which would afford the possibility of compensation while the other would not. I am sure that the noble Earl much appreciated that word in his shell-like ear. In the event that we will have two competing systems, will the Government ensure that guidance is given to tenants that that is the case-in other words, that under one system they may get compensation while under the other they will not? The matter could be discussed in the forum to which the Minister referred. Strange circumstances could arise if the situation were not clear.
My Lords, Amendment 74 highlights the Housing Ombudsman's power to order a member landlord to pay compensation to a complainant. I understand that my noble friend would like there to be greater clarity on how the ombudsman calculates the level of compensation to be awarded and I am grateful to him for raising the issue. Our view is that it is not necessary to include any new specific requirements in the Bill. In practice the ombudsman already provides a breakdown of any compensation he has decided to award, which is done in the context of what the ombudsman considers to be fair and reasonable in all the circumstances of the case. This arrangement allows flexibility to address specific issues and to provide a useful level of information, depending on the circumstances of each case. Clearly it would be difficult to attain this flexibility in a legislative duty on the ombudsman.
The ombudsman is intending to consult early next year on a revised statutory scheme to reflect the proposed extension of his jurisdiction to include complaints about local authority landlords, in addition to housing associations. I have no doubt that there will be further opportunities through that consultation process to engage on these and other issues. In answer to the question asked by the noble Lord, Lord Beecham, anything referred to the ombudsman means that compensation can be paid.
My question is in relation to the other routes that have been included in the Bill and which may be taken further in discussions before Third Reading. Would compensation be payable when the matter is dealt with by a local councillor, Member of Parliament or a tenants panel? If not, would that be made clear to the applicant, whereas the ombudsman would provide the possibility of compensation?
My Lords, I thank the noble Earl for his reply and the noble Lord, Lord Beecham, for his comments. I am quite confident that the monetary compensation would apply to all reports to the ombudsman, in answer to the comments of the noble Lord, Lord Beecham, so I have no worries on that score. My only comment is that for the sake of clarity in the ongoing negotiations and discussions, it would be useful for non-QCs to see that there is monetary compensation without having to go back to the 1996 Act. I very much thank the Minister for his reply and the reply from the noble Baroness, Lady Hanham. I beg leave to withdraw the amendment.
Amendment 74 withdrawn.
Moved by Lord Best
75: Clause 167, page 154, line 30, leave out from beginning to end of line 7 on page 155
This amendment is about the new powers for the ombudsman to apply to a court to make its rulings legally enforceable-in other words, to insist, having made a judgment through the courts, that the landlord complies with the ombudsman's decision. This is quite a big jump from the current scheme, which is based on informality. At the moment it is an inexpensive scheme. It is very accessible to complainants and people do not come with their lawyers. It is not part of the legal processes. It is feared that the new scheme will rather change the nature of the way in which the ombudsman works. It also carries the same risk that I have been harping on about today, that housing associations will slide into the public sector and become indistinguishable from public sector agencies, which has the effect thereafter that all of their borrowing will become part of the public sector debt, which I know the Government are very anxious to avoid. There is a risk that if housing associations are subject to legally enforceable decisions based on the opinion of a public authority-the ombudsman-they may not be regarded as being outside the public sector. That would be a calamity.
Once again, this is about trying to retain the independence and non-statutory nature of the sector. The removal of these new legal powers would be helpful in sustaining that independence and the success of the ombudsman's scheme to date, without making the ombudsman's rulings legally enforceable.
My Lords, I shall speak briefly to Amendments 75 and 76. They would ensure that the ombudsman's service is not damaged by unintended consequences. What is wonderful about the ombudsman's service is that compared with the courts, proceedings are informal, inexpensive and accessible. It is respected as its rulings are complied with by registered providers. The Government are proposing to solve a problem that noble Lords on this side of the House do not believe exists. We should be careful not to undermine the service. Will the Minister tell the House where the proposal has come from? Who has asked for it? How has it arrived here?
My Lords, the proposals relate to the proposed order-making power for the Secretary of State to enable the housing ombudsman to apply to a court or tribunal to enforce his determinations. One of our aims through our package of reforms to social housing regulation is to give a greater role to social housing tenants in the scrutiny of landlord performance. The Bill supports that by providing a clear role for tenant panels in the complaints process. In parallel, we are currently consulting on draft directions to the social housing regulator that will result in tenants having stronger tools with which to scrutinise landlords' performance. The regulator's consumer regulation role will be focused on setting clear standards and responding to failures that cause actual or potential serious detriment to tenants. Alongside these reforms we want to ensure that we continue to promise tenants an effective right of redress. The proposed power to enable the housing ombudsman to enforce his decisions through the courts-although I hope it is never needed-gives tenants confidence that effective redress will continue to be available.
The noble Lords, Lord Best and Lord Kennedy, give an accurate description of the current situation. There is not a problem. The Government would use this power only if levels of compliance with the housing ombudsman determinations declined significantly. At present compliance is high, as noble Lords have recognised. Only one recommendation has been rejected in the past seven years. We hope and expect that this will continue. If so, we have no intention of using this power.
My Lords, it is wise to make sure that we have the order-making power should we need it. It concentrates the mind. As I said, we have no intention of using it unless the situation deteriorates. I suspect that it will not, but it is always advisable to have something in your back pocket.
I remind the Minister of the thrust of the question of the noble Lord, Lord Best-the risk that because an order is enforceable, the RSL sector is regarded as being within the public sector, with consequential adverse effects on the financial status of its expenditure in relation to the Government's expenditure requirement.
My Lords, I am confident that my department has properly considered those matters. It is obviously a very important issue and I have already undertaken to write to the noble Lord, Lord Best. Other noble Lords will of course get a copy, and there will be a copy in the Library.
In the light of these comments I am delighted to withdraw the amendment.
Amendment 75 withdrawn.
Amendment 76 not moved.
Moved by Baroness Doocey
77: After Clause 170, insert the following new Clause-
"Statutory overcrowding: reform of overcrowding standard
(1) Part X of the Housing Act 1985 is amended as follows.
(2) For sections 324 to 332 substitute-
"324 Statutory overcrowding
A dwelling is overcrowded for the purposes of this Part when the number of persons sleeping in the dwelling is such as to contravene the standard specified in section 325 (the overcrowding standard).
325 Overcrowding standard
(1) The overcrowding standard is contravened when the number of rooms in a dwelling which are available as sleeping accommodation is smaller than the number specified in subsection (3), having regard to the number and description of persons who are ordinarily resident in the dwelling.
(2) For the purpose of calculating the number of rooms available as sleeping accommodation, no account shall be taken of a room which is of a type normally used in the locality as a living room or of a kitchen.
(3) The permitted numbers are specified in the table below.
|Description of persons||Number of rooms|
|Two persons who are spouses or civil partners of each other (or who live together as husband and wife or as if civil partners)||1|
|Each other person over the age of 21||1|
|Any pair of children both aged under 10||1|
|Any pair of children or young persons of the same sex both aged under 21||1|
|Any child or young person under the age of 21 not included in any of the above categories.||1|
(4) In applying the standard specified in subsection (3)-
(a) no account shall be taken of a room having a floor area of less than 50 square feet;
(b) a room measuring 50 square feet or more but less than 70 square feet shall not be taken to be available for anyone other than one child under 10;
(c) a room measuring more than 70 square feet but less than 90 square feet shall not be taken to be available for anyone other than one person of any age or two children under 10;
(d) a room measuring more than 90 square feet but less than 110 square feet shall not be taken to be available for anyone other than one person of any age or two persons of whom at least one must be a child under 10; and
(e) a room measuring 110 square feet shall be taken to be available for two persons of any age.
(5) The Secretary of State may by regulations prescribe the manner in which the floor area of a room is to be ascertained for the purposes of this section; and the regulations may provide for the exclusion from computation of floor space in a part of the room which is less than a specified height not exceeding eight feet.
326 Notice to abate overcrowding
(1) Where a dwelling is found to contravene the overcrowding standard, the local housing authority may serve on the owner or manager of the dwelling notice in writing requiring him to take reasonable steps to abate the overcrowding within 28 days from the date of service of the notice.
(2) For the purposes of subsection (1), a person shall be considered to have taken reasonable steps to abate the overcrowding if he takes such steps as are necessary in law to recover possession of the dwelling or to reduce the number of persons in occupation of the dwelling or if he does any other act which in the opinion of the authority amounts to a reasonable response to the abatement notice.
(3) If, within the period of 28 days following service of an abatement notice under subsection (1), or within such further period as the local housing authority shall in its discretion allow, the owner or manager has not taken reasonable steps to abate the overcrowding, the authority may apply for an order to the county court.
(4) On an application by the local housing authority under subsection (3), the court may order that vacant possession of the dwelling or part of the dwelling be given to the landlord within such period as the court may determine.
(5) An order under subsection (4) may be stayed or suspended for such period and on such conditions as the court shall decide.
(6) In exercising its powers under subsection (4), the court shall have regard to the interests of any tenant or occupier of the premises, and in particular to the security of tenure of any protected or statutory tenant under the Rent Act 1977 or any assured tenant under the Housing Act 1988.
(7) Expenses incurred by the local housing authority under this section in securing possession of a dwelling may be recovered from the landlord or manager by action.
(8) Service of an abatement notice under subsection (1) shall not prevent the authority from serving a prohibition order under section 20 of the Housing Act 2004."
(3) Omit sections 335 to 344."
This amendment seeks to deal with the nature and extent of overcrowding and to highlight why the present law is inadequate and needs reform. Overcrowding is an invisible problem compared with homelessness and rough sleeping. Consequently, it tends to be viewed as less of a priority. But overcrowding has a serious impact on children, especially their health and educational attainment, and it disproportionately affects larger households.
Overcrowding is a major problem in London. In 2008 London had more than 200,000 overcrowded households, almost 7 per cent of London's homes. That was an increase of one-third over the previous decade. About half of these overcrowded households are in the social rented sector; overcrowding is worse in that sector than in any other form of tenure. London has over 40 per cent of England's overcrowded households in the social rented sector, and nearly 400,000 London children live in overcrowded conditions. The overcrowding rate for black and minority ethnic households in London is about four times that for white British households.
There is no doubt that overcrowding is largely a consequence of housing supply shortage. Therefore this amendment is not a complete solution to overcrowding. For that, we need to build many more homes and, in particular, larger family homes. But this amendment is intended to deal with the abuse of the existing housing stock.
Breaching legal overcrowding standards is a criminal offence, but the official definition of overcrowding has survived unchanged since 1935 and is seriously outdated. Relatively few households are legally overcrowded even though some people have to sleep in living rooms and kitchens. There is little incentive for local authorities to tackle the problem if the law is not actually being broken. This amendment meets the need to provide an updated definition of statutory overcrowding based on the bedroom standard. This would realign the law with the actual problem and would therefore provide local authorities with an incentive to reduce overcrowding. Once there is a serious legal incentive in place for local authorities to tackle overcrowding, it may force them to reorder their priorities when it comes to housing allocation policies.
Overcrowding is a very serious issue. So if the Government are not minded to accept this amendment, perhaps my noble friend the Minister could outline what the Government propose to do to update the official definition of overcrowding, which has not changed for the last 75 years.
My Lords, even in your Lordships' House there are not many of us who were around when these standards were laid down in 1935, as the noble Baroness has pointed out. Housing conditions in general have improved since those days, but she is quite right to draw attention to serious issues around overcrowding. They are not confined to London, although her figures show these issues are extremely problematic in the capital. She is also right to draw attention to the particular problems faced by some BME communities, many of whom have large families and find it difficult to secure accommodation which is adequate to house them.
I have every sympathy with the amendment. I note that the measurements are given in "old money", when perhaps these days we should be looking at metric equivalents, but that is a trivial point. I am however somewhat at a loss as to how to respond to the Government's response to the amendment. It seems to be based, to put it crudely, upon facile optimism about the effects of the measures that are being taken around the duties to deal with homelessness and, in particular, the use of flexible tenancies as a means by which, apparently by magic, accommodation of the appropriate size in the appropriate location will become available. The Minister for Housing assured us at a meeting a couple of days ago that he does not expect flexible tenancies to go much less than 10 years in duration, as opposed to the two years that was thought to be the benchmark. In his view-I hope he is correct-that will in fact constitute only a handful of cases. Given that, I cannot see how this measure is going to free up significant accommodation in general, let alone for this particular category.
It seems to us in the Opposition that the noble Baroness has touched on a key issue and the Government's response thus far has not addressed it to any significant extent. Identifying the issue and improving the standards by which the question of overcrowding is to be judged does not in itself transform the situation, of course, but it would certainly allow housing authorities and the Government to have a better view of the reality of the situation.
I hope that the noble Baroness will not mind me quoting the example she gave in a conversation with me, of a recent case of a child sleeping in a bath which was deemed by the housing department to be acceptable because the child was in "a room". It is extraordinary for this situation to be acceptable to a housing department in 2011. It could hardly have been acceptable in 1935. But statutorily it is acceptable, and she has other examples of that kind. This is extremely worrying and I am sure the Government would be horrified if there were found to be a significant number of such cases.
Strengthening the framework will allow a proper measurement to be taken of the degree to which this is an issue that needs to be addressed, and with a greater urgency than is likely to occur simply as a result of the other changes that the Government have made. I hope that the Minister will talk further with the noble Baroness to see how this can be improved and, beyond that, agree that this is an issue that should be pursued outside the context of this Bill as the Government look into housing policy generally.
My Lords, I am sympathetic to the idea of the need for action on this. I was very distressed this week to meet someone in a studio flat, or self-contained bedsit, who told me it is impossible for her to sleep. The private accommodation units where she resides are listed as being for one person, but immediately above her, accommodation of the same size is shared by five people. She finds it impossible to sleep, or even live there. She is trying to find somewhere to move to in any case, as her small accommodation is going up from £600 per month to £800 per month, but she works as a cleaner and is experiencing great difficulty.
What worries me is that this is an illegal overcrowding, from what the noble Baroness has said, and yet the tenants are frightened to do anything about it for fear of being put out. I asked her why she did not report it and she said she did not dare because she would be put out and would have nowhere, and until she could find somewhere to go to she could do nothing. This is what worries me about this amendment. It is marvellous to make all these proposals but where is the accommodation going to come from to house all these people?
I come from a very big family and we were fortunate enough to have a house, and space is not so limited in Australia, but if you have a big family would you not rather be somewhere safe and secure, even overcrowded, than nowhere at all? I am very concerned about the impact of being too precise about things. As I say, in theory it is absolutely marvellous but I would really like to know how it is going to work in practice.
My Lords, I thank my noble friend Lady Doocey for bringing these amendments and indeed the noble Lord, Lord Beecham, and my noble friend Lady Gardner of Parkes for their contributions to this debate. It is an important issue and the Government view overcrowding as a matter of serious concern. My noble friend Lady Doocey mentions the impact it has on the lives of people, children in particular, and we have heard the evidence of my noble friend Lady Gardner.
Overcrowding adds to the stress of people, it damages health, it costs the community happiness and well-being, and interferes with children's upbringing and education. Despite the previous Government investing, quite rightly, thousands of pounds of taxpayers' money in helping councils tackle overcrowding, the number of families in overcrowded housing remains unacceptably high. My noble friends have provided a very detailed revised standard in their amendment but I have to tell them that the Government do not believe that changing the statutory overcrowding standard is the answer to overcrowding. It would increase, by definition, the number of families deemed to be statutorily overcrowded but it would not make it any easier for councils to help them, as my noble friend Lady Gardner of Parkes said. We need to provide the right tools so that we can put in place strategies that reduce overcrowding.
I have to assure my noble friend Lord Beecham that the Government are convinced that the reforms we are making to social housing through this Bill will assist this process. Perhaps I can elaborate on them. By taking existing tenants who are not in need out of the allocation rules, councils will be able to help under-occupiers to find a more suitable property, freeing up more family-sized housing for overcrowded households. I am sure that is something that we would all wish to see. By strengthening mutual exchange through the introduction of a national home-swap scheme, it will be easier for under-occupying and overcrowded households to help each other. By enabling councils to make greater use of the private sector to support homeless households, they will have more scope to use social housing to help others in housing need, and by retaining the reasonable preference provisions in allocation legislation, we will ensure that overcrowded families continue to get priority for social housing.
Over the longer term, new flexible tenancies will help councils provide housing that meets households' needs at the time they need it, but also just for as long as they need it. I am sure that this is the right way forward. We will be looking at the new statutory allocation guidance for local authorities and this will provide an opportunity to encourage all councils to adopt a more modern standard for assessing overcrowding when prioritising social housing. The Government believe that this would be a better way to ensure that families who live in cramped conditions get proper priority for appropriate social housing, rather than changing the statutory standard definition, because it would address the issue of social housing directly. That is the right way to reduce overcrowding and that is why I hope that my noble friends will withdraw their amendment.
My Lords, I am quite disappointed with the Minister's response. I find it astonishing that the Minister is arguing that a law that was put in place 75 years ago that allows people to sleep in kitchens and living rooms and still not legally be classed as overcrowded does not need reform. I find that very, very difficult to understand. I take note of the various things he has said about how the new system will work. I am perhaps not as convinced as he is that it will free up all of the accommodation, and one reason is that until councils have a legal duty to do something about families in overcrowded conditions, I cannot see that they are going to treat this as a priority. Would the Minister be willing to meet me to discuss this in a bit more detail? If that were the case I would be happy to withdraw the amendment at this stage.
Yes, I think we have made it quite clear that in our view this Bill is not the place to be putting this particular amendment. I have given an indication that new advice and guidelines are perhaps forthcoming. If my noble friend would find it useful to talk to officials about this matter before those guidelines are issued, I hope that she would be happy to participate in that discussion.
Thank you. On that basis I withdraw the amendment.
Amendment 77 withdrawn.
Clause 171 : Tenancy deposit schemes
Moved by Earl Attlee
78: Clause 171, page 159, line 27, leave out from "words" to "and" in line 31 and insert "for "if on such an application" substitute "in the case of an application under subsection (1) if the tenancy has not ended and","
My Lords, I beg to move Amendment 78 and speak to Amendments 79, 80 and 243. These amendments are four minor and technical amendments to the new clause that we introduced in Committee. These combine to remove a lacuna in the clause as currently drafted. They would mean that Section 214(3A), which enables the court to order that the deposit be repaid in part or in full to the tenant, would apply if the tenancy had ended at the date of the application to the court but not if it had ended after that date. Clearly this is not the intention of the legislation and I ask noble Lords to support this amendment. I beg to move.
My Lords, the Opposition accept that these are minor technical amendments and are happy to support them on that basis.
Amendment 78 agreed.
Amendments 79 and 80
Moved by Earl Attlee
79: Clause 171, page 159, line 34, at end insert-
"(6A) After subsection (2) insert-
"(2A) Subsections (3A) and (4) apply in the case of an application under subsection (1) if the tenancy has ended (whether before or after the making of the application) and the court-
(a) is satisfied that section 213(3) or (6) has not been complied with in relation to the deposit, or
(b) is not satisfied that the deposit is being held in accordance with an authorised scheme, as the case may be.""
80: Clause 171, page 159, line 36, leave out from beginning to third "the" in line 37
Amendments 79 and 80 agreed.
Moved by Lord Best
81: After Clause 172, insert the following new Clause-
"Exclusion of certain rural dwellings from the preserved right to buy
The preserved right to buy under section 171A of the Housing Act 1985 (cases in which right to buy is preserved) shall not be available in respect of a dwelling-house let by a registered provider of social housing in a rural area designated for the purposes of section 17(1)(b) of the Housing Act 1996 (right of tenant to acquire dwelling: supplementary provisions)."
My Lords, Amendment 81 is about the exclusion of some rural dwellings from the preserved right to buy. Quite a few tenants who were previously in the public sector have become tenants of a housing association, through large-scale voluntary transfers. Those tenants, and indeed others in social housing, have the preserved right to buy: the opportunity, if they move around, to buy the place to which they move if it is another social housing home. However, if they wish to move into a home that falls under a Section 106 planning agreement, which provides that the property must be retained in perpetuity as a rented social housing home-that is; it is a condition of planning that a certain number of homes are for renting-they will be unable to do so because the landlord would be in breach of the Section 106 agreement. The preserved right to buy is rather paradoxically preventing people moving out of the council house that they are in at the time and into a new property that has been built under a Section 106 agreement.
This amendment excludes certain rural dwellings from the preserved right to buy, allowing the people to move in and not then be able to exercise the right to buy that property because of the Section 106 agreement and the restrictions on that property. This amendment would be helpful to people moving around-to tenants. It is unfair at the moment that they have to be turned away, even though the case is good, because the properties are restricted and cannot be sold into home ownership on a permanent basis.
During the summer, I received a lot of helpful correspondence from Ministers and the civil servants have been very helpful. On this matter, I had a reply which I think indicated that the point had not been fully understood by the civil servants. They have been marvellous in every other respect, but with this one aberration I did not get a satisfactory response. I am not entirely sure that the point was fully understood, which must have been my fault when making it in the first place. If this small, unintended consequence of legislation could be cleared up in the Bill, it would be helpful to the mobility of people in rural areas and in places where there are restrictions in the properties that have been built, thus helping mobility. I beg to move.
The noble Earl was a bit too quick for me. The Opposition gives its full support to the noble Lord, Lord Best, in moving his amendment on the exclusion of certain rural dwellings from the preserved right to buy. He is seeking to deal with an unintended consequence of the planning system. Many social homes in rural areas are built through Section 106 agreements. An issue can arise where housing is transferred from the local authority to housing associations. In these cases, existing tenants are given a preserved right to buy. When Section 106 agreements are used to build new social homes in rural areas, there is often a planning obligation which means that they must remain for social let. In those cases, tenants with a preserved right to buy are unable to move into these properties.
The amendment fixes an unintended consequence and the tenants would then have the right to acquire, which does not apply in rural areas. Therefore, the problem would not happen and the tenants in those situations can seek to move to social housing in rural areas if they wish. I hope that the noble Earl, Lord Attlee, can see that we are trying to be constructive and sort out a problem for everyone's benefit.
My Lords, the noble Lord, Lord Best, in moving his amendment suggested that his point was not fully understood. He alarmed me somewhat because he talked about Section 106 and its consequences. Unfortunately, my notes do not refer to Section 106 and nor do the Q and As. If my response does not fully answer his question, I will of course write to him with further details.
Tenants who have been involved in a stock transfer from a local authority to a registered provider would have agreed to this transfer on the basis that they would retain their right to buy. We do not think that it would be proper to remove this right from the tenant. Equally, we do not think that it is right that secure tenants who are part of a future stock transfer should have their longstanding right to buy taken away simply because they live in rural areas and their homes have been transferred to a new landlord.
However, while we wish to ensure that transferred tenants are not denied their existing rights, there is statutory provision to ensure that the new tenants of these properties do not get the right to purchase their homes in order that the properties remain available to those in need of social housing. There are existing measures in place to ensure that homes in rural areas, which are sold under the preserved right to buy, remain available to people at affordable prices.
Landlords can already impose restrictions requiring owners who wish to sell to either resell only to people who have lived or worked locally for at least three years, or first offer their home to the landlord, giving them the opportunity to return the property to their existing housing stock if they wish to do so. These restrictions on reselling are already in place in a very significant proportion of our countryside and remain in place in perpetuity. In our view, this is sufficient.
I hope that I have met the noble Lord's points. If I have not, I will urgently have a meeting with him and officials in order to further examine the issues.