Clause 177

Housing and Regeneration Bill – in a Public Bill Committee at 5:00 pm on 29 January 2008.

Alert me about debates like this

Direction by Secretary of State

Photo of Iain Wright Iain Wright Parliamentary Under-Secretary (Department for Communities and Local Government)

I beg to move amendment No. 234, in clause 177, page 69, line 8, at end insert—

‘( ) In deciding whether to give a direction the Secretary of State shall, in particular, have regard to the regulator’s fundamental objectives.’.

Photo of Joe Benton Joe Benton Labour, Bootle

With this it will be convenient to discuss the following amendments:

No. 49, in clause 177, page 69, line 8, at end insert—

‘provided that any such directive is consistent with the regulator’s fundamental objectives as defined in section 86.’.

Government amendments Nos. 235 to 237.

Photo of Iain Wright Iain Wright Parliamentary Under-Secretary (Department for Communities and Local Government)

This is an important clause. We have been made very aware of that today, and I hope that the Committee will recognise, from the points that I have made in earlier discussions and deliberations on amendments, that I am going to look at this issue comprehensively. I hope that interested parties, stakeholders and Members will be involved in that process.

Government amendments Nos. 234 to 237 and amendment No. 49 refer to clause 177, which permits the Secretary of State to issue directions to the regulator, to set a standard or to advise on the content of standards with which the regulator must comply. It is also required that the Secretary of State consult on the directions and publish them. As I have said, I am aware of concerns and I will try to do something about them; the amendments are likely to be consistent with whatever final position I bring forward.

Government amendment No. 234 and amendment No. 49 seek to achieve the same goal—to ensure that any directions given by the Secretary of State do not conflict with the regulator’s fundamental objectives, as given at clause 86. We can all agree that that is an important control on the Government’s ability to tell the regulator what to do, and in mitigating against the risk, which we have mentioned many times in Committee, of policy passporting with regard to registered providers.

The objectives include—I have mentioned this important point time and again—requiring the regulator to minimise interference. We do not believe that the Secretary of State could compel the regulator to act outside its objectives, even without the amendments, but it is worth while addressing these concerns and making the point explicitly the Bill. The two amendments are slightly differently worded, and in my view both would probably work, although naturally I prefer Government amendment No. 234 because it recognises implicitly that the objectives need to be balanced, and that there will be trade-offs.

I again refer Members to clause 86, subsection (13) of which states:

“The order in which the objectives are listed in this section is not significant; the regulator shall balance them as it thinks appropriate.”

Government amendments Nos. 235 and 237 deal with the potential problem of double consultation; I hope that that addresses the point that was made in connection with the earlier group of amendments. The Secretary of State will consult on the issue of direction, and the regulator will have to consult on it again, under the requirement in clause 176, before issuing it as a standard. The whole Committee will be aware that that could be very slow and duplicative process. That is why we have included clause 177(5), which makes it unnecessary for the regulator to consult when it is complying with a direction. However, I have reconsidered that subsection. In some cases, the Secretary of State could issue a detailed direction—on rent policy, for example—which the regulator could then implement without the need for further consultation because it had made no substantive additions to the direction.

In most cases, we expect that a direction will be strategic, not detailed, and that the regulator would add the detail. In such cases, the regulator should be required to consult again. We think that the Secretary of State needs more discretion here. Amendment No. 237 proposes to remove clause 177(5), and in amendment No. 235 I propose adding a replacement provision that would allow the Secretary of State, by direction, to disapply the requirement in clause 176 for the regulator to consult on matters specified in that direction. That would allow the Secretary of State to decide whether additional consultation was needed on an issue on which they had directed.

Amendment No. 236 proposes to add two lines to clause 177(4), which currently requires the Secretary of State to publish each direction. The amendment ensures that the Secretary of State will publish three things: the proposed direction on which they have been consulted, all responses to the consultation, and the final direction. That is intended to improve and enhance the quality and transparency of consultation. I hope that the amendments clarify the measure and that they show the direction of travel that we want to move in. On that basis, I hope that the Committee will accept the Government amendments and reject amendment No. 49.

Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

My hon. Friend the Minister was kind enough to say that amendment No. 49 and Government amendment No. 234 were largely comparable in their intention and effect. I am delighted about that. He will be aware from the numbers that amendment  No. 49 was tabled before Government amendment No.234, so I am delighted that the Government have taken stock on that and found a way to refine the wording, so that they can put their own alternative in place to achieve the same effect. I am delighted that good sense has been accepted, and I am very happy to support the Government amendment.

Photo of Alistair Burt Alistair Burt Opposition Whip (Commons), Deputy Chair, Conservative Party

I have no wish to prolong the discussion, and I think that we will come back to this matter on Report. Is the Minister hoping that his proposals on consultation and the way in which the clause is drawn will be done by the time the matter is discussed on Report, or will it be done by the time we get to another place?

I take issue with the right hon. Member for Greenwich and Woolwich as regards the similarity of these two amendments. The amendments are similar, but they are not the same. I can have regard to something, but yet choose not to make a decision entirely in line with what I have had regard to. If I am acting consistently in relation to objectives, that is much more binding. I can perceive in some distant future when there is not as benevolent a Minister as the one in front of us now—

Photo of Alistair Burt Alistair Burt Opposition Whip (Commons), Deputy Chair, Conservative Party

It will be next week, given the present rate. I sincerely hope not. The Minister would say that I am making a direction under clause 177, after having had regard to the provisions under clause 173. Nevertheless, I decided to do that. A court would hold that, providing regard had been had to the powers, that was sufficient to satisfy the amendment.

The bottom line is that there is concern that the power of direction is extensive. It is almost as far as that power in relation to the HCA, which is a public body. Issues have been raised, such as whether the power will have public sector borrowing requirement implications or whether we are moving the whole sector into the public sector because of the degree of direction and the like. We would just like to put on the record that we have a fear of that happening and, accordingly, when the provision is considered again, we are interested to make sure that the power of direction should not be as strong and that there should be no doubt about where the sector boundaries lie.

Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich 5:15, 29 January 2008

I do not want the hon. Gentleman to think that I had been light in accepting the Government’s alternative. His interpretation of the Government’s intention is slightly pessimistic. Had the Government’s amendment said that the Secretary of State shall have regard to the regulator’s fundamental objectives, and it was assumed that the Secretary of State could then ignore items that she did not agree with, the hon. Gentleman’s concerns might be justified. However, it would be difficult for the Secretary of State, when deciding whether to give a direction, to have regard to the regulator’s fundamental objectives  and then to ignore them. If that were to happen, my learned friends would have little or no hesitation in seeking judicial remedies. I put that to the hon. Gentleman.

Photo of Alistair Burt Alistair Burt Opposition Whip (Commons), Deputy Chair, Conservative Party

We may be dancing on the head of a pin, but many lawyers’ fortunes have been made on just that. I am merely putting the case that I do not think that such matters are exactly the same, although I concede that they are similar. I have said that, provided we have had regard to something, we would have satisfied the test of having regard. It means that we might be able to move in a different direction. However, all will be cleared up in the future to show that my pessimism was entirely unjustified and that matters will not work that way. We have discussed the implications of the provision, and I want to put it on the record that we share some of the reservations that have been expressed. We look forward to further debate on Report.

Photo of Andrew George Andrew George Liberal Democrat, St Ives

As someone who put his name to the amendment tabled by the right hon. Member for Greenwich and Woolwich, I support the argument of the hon. Member for North-East Bedfordshire that, as drafted, the Government’s amendment would leave the defined position of the Secretary of State in significantly more vaguely drafted terms that would clearly increase her capacity to intervene in future. Earlier, I spoke of my worry about the wording of Government amendment No. 235 on the extent to which the Secretary of State may disapply the requirement to consult in respect of “specified matters”. It would be helpful to be told what specified matters the Minister has in mind, and in which circumstances the requirement for the Secretary of State to consult can be disapplied.

I am encouraged by the Minister’s welcoming remarks. I believe that he is attaching himself to the spirit of the amendment tabled by the right hon. Member for Greenwich and Woolwich. I am keen that we pin down the extent to which the Secretary of State will have freedom to intervene or to disapply the requirement to consult in the manner that is suggested by the amendment.

Photo of Iain Wright Iain Wright Parliamentary Under-Secretary (Department for Communities and Local Government)

We have had an interesting debate on the provisions under clauses 173 to 177. I want to move forward, but I share the view of my right hon. Friend that hon. Members have been unduly pessimistic with regards to this. I have made it clear on a number of occasions that I will look at the provisions again and bear in mind the points raised in the Cave report about raising standards according to tenant need. I do not want to be accused of misleading the Committee, so I put on the record that when I spoke today about consulting with hon. Members, stakeholders and the wider RSL sector, I did not want the Committee to think that I will be undertaking a formal consultation process with regard to directions. I will be having discussions with stakeholders, and on that basis it will be a lot quicker.

The hon. Member for North-East Bedfordshire asked a direct question about when I expect that to happen: I think that it would be incredibly remiss of me not to provide a clear line of travel on Report and I  hope that that reassures him. I do not think that the concerns about secular classification and micromanagement can wait until the other place. I do not want to repeat the points I have made already with regard to the points made by the hon. Member for St. Ives, and I hope that we can move forward.

Amendment agreed to.

Amendments made: No. 235, in clause 177, page 69, line 15, at end insert—

‘( ) A direction may disapply the requirement to consult under section 176 in relation to specified matters.’.

No. 236, in clause 177, page 69, line 17, after ‘publish’ insert ‘—

( ) each proposed direction that is the subject of a consultation,

( ) each response to a consultation, and

( ) ’

No. 237, in clause 177, page 69, line 18, leave out subsection (5).—[Mr. Wright.]

Question proposed, That the clause, as amended, stand part of the Bill.

Photo of George Young George Young Chair, Standards and Privileges Committee, Chair, Standards and Privileges Committee

May I encourage the Minister to jump a fence that he refused to jump five minutes ago? It is in relation to clause 177(2). He eloquently persuaded the Committee to add an additional consultee to clause 176—namely those who represent the interests of secured creditors of registered providers. That is eminently sensible in that the regulator should not do anything that destabilises the financing of housing associations. The question is, if it were sensible for the regulator to consult those bodies before he did anything to the standards, why are those bodies not included in clause 177(2)? It is identical in every other respect except that it excludes the interests of secured creditors. Is the Minister planning to introduce a similar amendment to clause 177 on Report?

Photo of Iain Wright Iain Wright Parliamentary Under-Secretary (Department for Communities and Local Government)

Obviously, I have a more positive interpretation of this measure than the right hon. Gentleman. I do not think that I was sitting on the fence. I thought that I had said that I would look at the matter closely and come back on Report. I am happy to clarify the position now if that would satisfy the right hon. Gentleman.

Question put and agreed to.

Clause 177, as amended, ordered to stand part of the Bill.