Clause 4 - Power to charge fees

Social Housing (Regulation) Bill [Lords] – in a Public Bill Committee at 10:45 am on 29th November 2022.

Alert me about debates like this

Photo of Dehenna Davison Dehenna Davison Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities) 10:45 am, 29th November 2022

I beg to move amendment 1, in clause 4, page 3, line 40, leave out “follows” and insert

“set out in subsections (2) to (6)”.

This amendment is consequential on Amendment 2.

Photo of Edward Leigh Edward Leigh Conservative, Gainsborough

With this it will be convenient to discuss the following:

Government amendment 2.

Clause stand part.

Photo of Dehenna Davison Dehenna Davison Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

Clause 4 and Government amendments 1 and 2 deal with the regulator’s fee-charging powers. As we heard from a number of hon. Members on Second Reading, the Regulator of Social Housing must be provided with the necessary funding to enable it to deliver the outcomes the Bill is designed to achieve.

Once the new consumer regime is implemented, the regulator will see substantial growth in its regulatory activity, which means its costs will increase significantly. It is Government policy to maximise the recovery of costs of arm’s length bodies, so clause 4 will refine the existing fee-charging power to allow for the cost of some additional functions to be recovered, and to charge fees that cover costs of activities that may not be connected to the specific fee payer, such as the cost of investigation and enforcement. Any significant changes to the design of the regime will be consulted upon and require ministerial approval.

Government amendments 1 and 2 also address the regulator’s fee-charging powers. The amendments remove specific provision allowing the regulator to charge following the completion of inspections, if authorised by the Secretary of State by order. The existence of that special provision relating to fees for inspections is no longer necessary given the changes we are making to the regulator’s general power to charge fees. That power will now allow it to cover the cost of inspections in its fees for initial and continued registration.

Leaving the provision in legislation erroneously risks causing confusion and casting doubt on the regulator’s ability to set fees to cover inspections as part of its general fee-setting power. As such, the change serves to ensure that there is greater clarity and consistency in this legislation.

Clause 4 establishes the parameters to the regulator’s fee-charging powers and makes clear that it can charge the sector for costs that may be unconnected to the specific fee payer. Government amendments 1 and 2 support clause 4 by delivering a technical change that will ensure there is no confusion over the powers available to the regulator to deliver maximum cost recovery. On that basis, I commend the clause to the Committee and beg to move the amendments.

Photo of Matthew Pennycook Matthew Pennycook Shadow Minister (Levelling Up, Housing, Communities and Local Government)

I thank the Minister for that explanation of Government amendments 1 and 2. As she makes clear, clause 4 amends section 117 of the Housing and Regeneration Act 2008 to clarify the extent of the regulator’s fee-charging powers. New subsection (4A) adds to the 2008 Act and makes it clear that the regulator has the power to recover the cost of activities it does not currently charge social housing providers for.

If I understood the Minister correctly, Government amendment 2 revises section 202 of the 2008 Act because the powers in new subsection (4A) are sufficiently broad to cover charging providers fees for inspections. In short, as I hope she agrees, this is just a tidying-up exercise, the rationale for which is that the power is being omitted from section 202, concerning inspections only, because it more properly fits within section 117, concerning fees generally, to ensure that references to fee charging are all in one place in the 2008 Act. If that is the case, and amendment 2 in no way prevents the regulator from charging fees for inspections, we take no issue with it, because it is important that the regulator is able to charge fees to cover the significant costs involved in overseeing the comprehensive and rigorous Ofsted-style inspections regime that the Bill introduces.

The amendment raises wider issues relating to the resourcing of the regulator. Since the Bill’s publication, we have consistently expressed concern about the very real risk that the regulator will struggle to discharge its new functions and that it will not be adequately resourced to perform its enhanced role, in particular in relation to inspections. Prior to the Bill’s publication there were already concerns, expressed by the Select Committee and others, as to whether the regulator had the resourcing, skills and capacity to continue to regulate economic standards adequately, given the complex financial and corporate structures proliferating in the sector.

The new consumer regulatory regime will impose significant burdens on the regulator. The Minister stated on Second Reading that the Government are

“firmly committed to ensuring that the regulator has the resources that it needs not only to deliver the new consumer regulation regime but to ensure that it continues to regulate its economic objectives effectively.”—[Official Report, 7 November 2022; Vol. 722, c. 83.]

She also suggested that the Government were potentially minded to introduce changes to the fee regime to ensure that the regulator is funded appropriately. We accept that the Government have made limited additional funding available this financial year to support the new regime, but we are concerned that there may still be a resourcing challenge for the regulator. I would welcome any further assurances from the Minister that the regulator will have all the resources it needs to discharge the enhanced functions that the Bill requires of it.

Photo of Dehenna Davison Dehenna Davison Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

I am grateful to the shadow Minister for raising the question of resourcing. We touched on this on Second Reading, as he highlighted. He is right that in this financial year we are providing £4.8 million to aid the regulator in its vital work, but this is why it is so important that we get the fee charging regime right—to ensure that the regulator is properly resourced. As we have discussed today, on Second Reading and in the other place, the regulator needs the teeth to be able to do its job, and a huge part of that is resourcing. He is right that, effectively, we are tidying the legislation up to make it a bit neater and ensure further clarity, so I hope he will support these amendments.

Amendment 1 agreed to.

Amendment made: 2, in clause 4, page 4, line 16, at end insert—

‘(7) In section 202 of the Housing and Regeneration Act 2008 (inspections: supplemental) omit subsections (4) to (7).’—

This amendment repeals the provisions of the Housing and Regeneration Act 2008 which provide specific powers to enable the regulator to charge registered providers of social housing fees for inspections.

Clause 4, as amended, ordered to stand part of the Bill.