Housing and Regeneration Bill

Public Bill Committee, 11 December 2007.

Roger Gale (Conservative, North Thanet)

Good morning. Before we begin, there are various preliminary announcements to make. First, while I am in the Chair, if hon. Members wish to remove their jackets for their comfort they may do so. It is up to Mr. Benton whether he extends the same courtesy. Will all hon. Members please ensure that their mobile phones, pagers and all electronic devices are switched off? For the purposes of this Committee, laptops are not allowed to be used.

There is a money resolution in connection with the Bill and I am advised that copies are available in the room. Adequate notice should be given for amendments, because, as a general rule, Mr. Benton and I will not call starred amendments.

The process of taking evidence in public that we are shortly to embark on is relatively new, so it may be helpful to hon. Members, as it has been to me, to be advised as to the procedure. The Committee will first consider the programme motion on the amendment paper. That process will take up to half an hour. We shall proceed to a motion to report written evidence, followed by a motion to permit the Committee to deliberate in private in advance of the oral evidence sessions. I would like to think that we could take those latter two motions formally.

Assuming that the second of the motions has been agreed to, the Committee will move into private session for discussion prior to the evidence taking. Once the Committee has deliberated, the witnesses and members of the public will be invited into the room and the oral evidence session will commence.

To concentrate minds, the witnesses have been invited to attend at 11 o’clock. That means that you have half an hour, but if you choose not to take it, it will help the witnesses. If the Committee agrees to the programme motion, it will hear all evidence today and on Thursday, moving on to the more familiar proceedings of clause-by-clause scrutiny as a Public Bill Committee in sittings commencing in the new year.

You will notice that the first evidence session, when we come to it, will be with the Local Government Association and London Councils. That session must terminate at 11.45 am under the terms of the programme motion, if you agree to it; so the witnesses do not have very long. Regrettable and discourteous though it may seem to some people, at 11.45 am the Chair must terminate the evidence session. You should be aware of that when we come to take the evidence.

Without further ado, I call upon the Minister to move the programme motion.

Iain Wright (Labour, Hartlepool)

I beg to move,

That—

(1) the Committee shall (in addition to its first meeting at 10.30 a.m. on Tuesday 11th December) meet—

(a) at 4.00 p.m. on Tuesday 11th December;

(b) at 9.00 a.m. and 1.00 p.m. on Thursday 13th December;

(c) at 9.00 a.m. and 1.00 p.m. on Thursday 10th January;

(d) at 10.30 a.m. and 4.00 p.m. on Tuesday 15th January;

(e) at 9.00 a.m. and 1.00 p.m. on Thursday 17th January;

(f) at 10.30 a.m. and 4.00 p.m. on Tuesday 22nd January;

(g) at 9.00 a.m. and 1.00 p.m. on Thursday 24th January;

(h) at 10.30 a.m. and 4.00 p.m. on Tuesday 29th January;

(i) at 9.00 a.m. and 1.00 p.m. on Thursday 31st January;

(2) the Committee shall hear oral evidence in accordance with the following Table;

Roger Gale (Conservative, North Thanet)

Copies of any memorandums that the Committee receives will be made available in the Committee Room.

Written evidence to be reported to the House

Roger Gale (Conservative, North Thanet)

Good morning, ladies and gentlemen, and welcome to the first evidence session for the Housing and Regeneration Bill. I will open with an apology: normally, I would stand to welcome you, but technology apparently dictates that Members and witnesses must remain seated so as not to go off the microphone, which makes life difficult for the Official Report. For that, I apologise. This morning we will hear evidence from representatives of the Local Government Association and London Councils. Thank you for joining us and please be kind enough to identify yourselves.

Roger Gale (Conservative, North Thanet)

Mr. Day, I have been asked to ask our witnesses to speak up for the benefit of the Official Report, so perhaps you could do so. I heard you, but it was a little sotto voce.

Before calling a Member to ask the first questions, I remind all Members that they must limit their questions to matters that are within the scope of the Bill. I am afraid that I have to caution the witnesses that, under the terms of the programme motion agreed by the Committee this morning, I have to conclude this session of questioning at 11.45 am precisely, irrespective of the importance of what you are saying or whether you are in mid-sentence. Those are the courtesies under which we operate. Without further ado, Mr. Hurd.

Nick Hurd (Conservative, Ruislip - Northwood)

Good morning. The aim of part 1 of the Bill is to secure an increased supply of housing. In your view, is the creation of a mega-quango the right way of going about it?

Nick Hurd (Conservative, Ruislip - Northwood)

Thank you for that answer. May I draw you on to the ground of how this new agency will co-operate with other stakeholders, particularly local authorities, because concern has been expressed? The Bill includes the requirement for the HCA to be on the list of partner authorities that have duties to local authorities. In your view is that sufficient to allow it to engage effectively with local authorities?

Nick Raynsford (Labour, Greenwich and Woolwich)

In the Second Reading debate the Minister for Housing said:

“the Housing Corporation is tasked to deliver the Mayor’s affordable housing strategy in London and we certainly envisage the Homes and Communities Agency being able to do the same thing.”—[Official Report, 27 November 2007; Vol. 468, c. 152.]

That seems to be a rather different concept from the one you are putting forward.

Nick Raynsford (Labour, Greenwich and Woolwich)

But the Mayor has expressed a view that some local authorities in London are not signed up to his strategy. What do you propose should be done to deal with such cases if the power is not available to the HCA that the Minister implies?

Nick Hurd (Conservative, Ruislip - Northwood)

Are you satisfied, Sir Simon, that the Government have consulted adequately on the question of how the HCA will engage with local authorities? Do you believe that the rules of engagement are sufficiently clear today?

Andrew Love (Labour, Edmonton)

I am sorry to come in a little late, but I wanted to pursue Mr. Day about the answer he gave to the previous question. There is a great deal of concern in London that a number of local authorities are not complying with or not living up to the overall plan that the Mayor has laid out about the need for affordable accommodation. I did not think that the answer Mr. Day gave us about the role that London Councils should play in that plan was adequate, so I thought that I would give him a second chance to tell us how we can ensure that all local authorities are playing their part in the overall plan for affordable accommodation in London.

Nick Hurd (Conservative, Ruislip - Northwood)

May I take a slightly different angle on this issue? My constituents, in Ruislip-Northwood, are not asking, “Is my local authority complying with the Mayor’s housing targets?” Instead, they are asking, “How on earth do I get my voice heard in this process, where the hierarchy in planning seems to be national planning, the Mayor in some form or other, and then my local authority?” Do you think that the creation of the agency, given where it sits in that hierarchy, simplifies that question in my constituents’ minds, or complicates it further?

Andrew Love (Labour, Edmonton)

Sir Simon has gone on to explain in greater detail, but I was picking up on the idea that only the local views matter. Surely, what we are looking for is a balance. Perhaps Sir Simon could elaborate more clearly on how he thinks the balance between regional and national priorities and local voices should play out.

Grant Shapps (Conservative, Welwyn Hatfield)

On that last point, in one of the clauses the Bill appears to try to redefine social and affordable housing in order to call all affordable housing social housing, thereby massively increasing the stock of social housing. Is that an issue of concern to you, or is it something that you have noted? Do you want that clause of the Bill to be amended?

Grant Shapps (Conservative, Welwyn Hatfield)

I am not clear what you are saying about the Bill in relation to this matter and the HCA. Is your concern that the HCA will help to promote the right agenda as you see it or that it is going in the wrong direction? Can you clarify that for us?

Roger Gale (Conservative, North Thanet)

Before we leave this line of questioning, Minister, do you wish to make any observations?

Iain Wright (Labour, Hartlepool)

May I explore what my hon. Friend the Member for Edmonton has mentioned, which is a fundamental point? It is relevant and pertinent to London, but in the era of multi-area agreements, it is important across the rest of the country as well. Can you envisage circumstances in which the HCA could override the wishes of a local authority in either a London setting or a multi-area agreement setting, where one local authority was perhaps dragging its heels? Are you suggesting that we need to use the lowest possible level, or is it relevant in some circumstances for the agency to override the wishes of a local authority, given a regional market?

Roger Gale (Conservative, North Thanet)

Are there any other questions on that issue? Otherwise, Mr. Raynsford, do you wish to come back in?

Nick Raynsford (Labour, Greenwich and Woolwich)

Can we turn to the issue of the new regulator? The LGA’s evidence clearly states that

“council landlords are willing to accept the same responsibilities and scrutiny as other providers. We support the remit of the new social housing regulator...The LGA will support amendments to enable Oftenant to operate domain-wide from its inception.”

Are there areas where you do not feel that it is feasible for the provisions of the Bill to apply to local authorities in the short term, or do you see the Bill as extending to local authorities at the earliest possible opportunity?

Nick Raynsford (Labour, Greenwich and Woolwich)

I agree with that. Indeed, I voiced similar views on Second Reading. However, I asked was whether there was anything within the current formulation of the Bill that you would be uncomfortable with applying to local authorities. Can I press you on that, because I think that there are some difficult issues?

Nick Raynsford (Labour, Greenwich and Woolwich)

Let me pursue this. This legislation will give very considerable powers to the regulator to intervene where a body subject to regulation has failed to meet a standard. That standard could include things such as “the extent to which demand is to be supplied”. That sounds to me like the regulator being able to intervene, if an authority fails to provide adequately in terms of output. You can see the point that I am making. We are going back to the earlier discussion about what happens if there is under-provision. Are you happy with that particular power?

Nick Raynsford (Labour, Greenwich and Woolwich)

That is precisely what is provided for in chapter 7 of part 2 of the Bill. There are very clear intervention powers

“where the registered provider has failed to meet a standard”;

“where the affairs of the registered provider have been mismanaged”;

and

“where the interests of tenants ... require protection”,

and so on. Those powers are extensive. If you are uncomfortable with those provisions, how can you possibly support the immediate application of them to local authorities, which I understood to be your position?

Nick Raynsford (Labour, Greenwich and Woolwich)

Given your earlier concerns, which I share, about a two-tier outcome if we were immediately to proceed with the provisions relating to registered social landlords and were to introduce different powers applying to local authorities at a later date, how would you advise us to proceed? You are clearly uncomfortable with the provisions in the Bill relating to RSLs.

Nick Raynsford (Labour, Greenwich and Woolwich)

May I turn to Mr. Day? I refer to your evidence, which seeks to give

“local authorities the power to serve notices on RSLs that are performing poorly in their area, and require that RSLs respond to the local authority.”

Do you seek those powers?

Nick Raynsford (Labour, Greenwich and Woolwich)

I am pleased to hear that answer, because your written submission to us did not seem at all compatible with the approach in the Cave review, which has led to the proposed regulator. The review makes it clear that Cave does not envisage placing

“local authorities in either a regulatory or a super-ordinate role in relation to social housing providers”.

So I am pleased to hear that you are backing away from what appeared to be an inconsistent demand.

If you are seeking this greater power of involvement, which I understand, how do you avoid a complete nightmare in the scenario that you have described in which there may be a large number of registered social landlords in any one local authority area—in London and other parts of the country—and, indeed, where RSLs will operate in a number of different local authority areas? How will you get consistency and avoid RSLs being pushed in one direction by one authority and in a completely different direction by another next door?

Nick Raynsford (Labour, Greenwich and Woolwich)

It seems to me—

Roger Gale (Conservative, North Thanet)

Order. I do not wish to curtail your line of questioning, Mr. Raynsford, but I have an indication from two other Members, one of whom is the Minister, that they want to come in on this area. I am afraid that we also have another area that we need to cover.

Lyn Brown (Labour, West Ham)

We will not need to cover the other area, because I will get it in here. I thought that that would be wise.

Roger Gale (Conservative, North Thanet)

Well, Mr. Holmes has another area that he wishes to cover.

Lyn Brown (Labour, West Ham)

I was interested to hear your views about the regulation of the social rented sector. However, given that many councils, of necessity, are having to house their homeless community in the private rented sector and in temporary accommodation, I wonder whether you think there is scope for greater regulation in the private sector. If so, do you think that that is possibly an omission in the Bill?

Lyn Brown (Labour, West Ham)

I would love to spend some time talking to you about the impact of the letting market on house prices in London and whether the market is artificially inflating prices because it is possible to place people in such appalling accommodation in many cases, but I am not sure that I will get the time to do that. Can I talk to you about what Shelter described in its briefing before the Bill was published? It talked about extending regulation from just a three-storey home to homes containing five or more people, which would give local councils greater authority and powers to regulate overcrowding in the private rented sector. Could you see that having benefit, given that you want to avoid inflicting unintended consequences on the private rented sector?

Lyn Brown (Labour, West Ham)

You do not.

Lyn Brown (Labour, West Ham)

I understand the regulation for HMOs. You can only really be effective if you are looking at three-storey accommodation and not two-storey accommodation. The idea was to change the regulation from being about the building to being about the numbers of people and giving greater powers to your environmental health teams to ensure that Rackman-type landlords were not screwing the economy for every penny that they could get while failing to provide the people whom they were housing a service that they could live comfortably with.

Roger Gale (Conservative, North Thanet)

Before you respond, could I bring in the Minister and then ask you to respond to both questions?

Iain Wright (Labour, Hartlepool)

Forgive me, Sir Simon, but I am confused by the points that you made earlier to my right hon. Friend the Member for Greenwich and Woolwich. My understanding comes from the LGA’s briefing to us on Second Reading which states:

“We support the creation of Oftenant to promote better performance and tenant focus across all types of social landlords. Council landlords are willing to accept the same responsibilities and scrutiny as other providers.”

Given that, but also given what you have said in evidence today, could you just reaffirm that that is the LGA’s view? Is it possible for me to infer that you believe that the regulatory regime proposed in the Bill with regard to Oftenant is more focused, more appropriate, has a lighter touch and is more risk-based than councils and ALMOs have to deal with in the current regulatory regime?

Roger Gale (Conservative, North Thanet)

Again, I apologise for truncating the discussion. Mr. Holmes.

Paul Holmes (Liberal Democrat, Chesterfield)

About half of local authorities have transferred stock to RSLs and about half still provide council housing—140 directly managed and roughly 60 ALMOs. Clause 269 talks about giving the Secretary of State power to consider how the housing revenue account works so that perhaps after 2010-11 at the earliest councils will be able to retain the rent and the right to buy. Have you any thoughts on that process?

Robert Syms (Conservative, Poole)

Picking up what you are saying, essentially we have a pool for the national rent of which something like £120 million comes out of two thirds of authorities and is redistributed mainly into London, I have to say, and to some northern cities. Are you saying that the LGA’s view is that you prefer money raised from tenants locally to remain locally for the provision of housing within each area?

Paul Holmes (Liberal Democrat, Chesterfield)

Where stock has been transferred to RSLs, they can keep the rents and 75 per cent. of the right to buy and the overhanging debt is written off at transfer. The suggestion from the six pilots that the Government have been looking at is that councils that still manage stock will have to buy out the overhanging debt. The impact assessment for the Bill says that that is not viable; the amount that they would have to borrow to buy out the debt would mean that they still did not have any money to invest in housing, to build new housing. Have you any thoughts about the terms on which the change to HRA should take place?

Roger Gale (Conservative, North Thanet)

Thank you. By dint of some heavy-handed regulation rather than a light touch, we have got to where we are now and it is coming up to 11.45 am. Sir Simon and Mr. Day, I thank you very much indeed for joining us this morning. I believe that the Hansard report of this sitting will be available within a couple of days.

A number of questions were asked, not least by Lyn Brown, and I am afraid that I had to curtail that conversation. If, in the light of reading Hansard, you wish to make further comments, the Committee will be pleased to receive written evidence from you.

Roger Gale (Conservative, North Thanet)

Order. May I welcome the representatives of the Chartered Institute of Housing? For the benefit of the Official Report, I ask you both to identify yourselves.

Roger Gale (Conservative, North Thanet)

I want to put it on record that I did not make it clear—it is my fault and nobody else’s—at the start of the previous witness session that hon. Members are required to declare interests. If there is any challenge about that, I will take full responsibility. I misunderstood what the Committee wanted to do, which was that as hon. Members spoke for the first time, they would declare their interests. I invite hon. Members as and when they next speak to declare an interest if they have one. As I said, I take full responsibility for their not being declared from the outset.

Alistair Burt (Conservative, North East Bedfordshire)

May I take this opportunity to apologise for not being present at the start of the sitting; I was speaking to the Local Government Association finance conference. As I missed the preliminaries, may I ask whether you have already allocated lines of questioning? I have two areas that I want to raise. How would you like me to appeal to you with those?

Roger Gale (Conservative, North Thanet)

We have agreed a broad line of questioning, but I have made it absolutely clear—thank you for the opportunity to restate this—that any hon. Member may catch my eye and intervene at any point. The first two lines of questioning have been laid down, the first of which is designed to give the Chartered Institute of Housing the opportunity to make a brief opening statement, after which it will be open season for all hon. Members.

Lyn Brown (Labour, West Ham)

My job was to give you the soft ball. In one of the statements that you made to us, you stated:

“We need to grasp this opportunity and make a real difference to residents and tenants.”

Does the Bill do that? Which bits of it do you like and which do you not like?

Roger Gale (Conservative, North Thanet)

You have been given the Floor and the opportunity to say something. If you wish to say it, take your chance now.

Roger Gale (Conservative, North Thanet)

Order. Mr. Capie, I am desperately sorry, but the acoustics in this room are not as good as the many millions of pounds that were spent on it suggest that they ought to be, so I ask you to speak up just a little.

Lyn Brown (Labour, West Ham)

You have said that we could go back to the issue of the private sector. When a council needs to place someone in the private sector because there are only a number of places available, do you think that there is any case that in such circumstances there should be domain regulation protection for the tenant?

Alistair Burt (Conservative, North East Bedfordshire)

I have two questions. First, the Government’s record on the delivery of housing has not been particularly good. What do you think have been the main factors holding that back and why should the merger of English Partnerships and the Housing Corporation make a significant difference to those problems? Secondly, there has been, not unnaturally, a concentration on urban housing. Will you say a little about how the Bill will have an impact on the problems of affordable rural housing?

Alistair Burt (Conservative, North East Bedfordshire)

In general, but particularly social housing, yes.

Alistair Burt (Conservative, North East Bedfordshire)

Do you think that the Bill needs to take powers away from local authorities’ planning authorities? Is that a necessary power?

Iain Wright (Labour, Hartlepool)

I have two questions. One leads on from what we have been discussing on the role of the agency. I am very interested in the relationship between the agency and the local authorities, and I understand your point about the default setting. However, your briefing on Second Reading states:

“in the CIH response to the consultation on housing and regeneration, CIH asked the Government for the new agency’s remit to go beyond housing delivery and to cover sustainable communities. CIH considers that the Bill does not go far enough in this respect and the HCA should have a much clearer duty to ensure communities are sustainable and cohesive.”

Will you expand on that and indicate the broad parameters?

Lyn Brown (Labour, West Ham)

I was interested to hear you talk about sustainable communities, mixed communities and “place shaping”, an approach I totally agree with. Do you think it possible to plan for a mixed-tenure community and, at the end of the day, not to get it because of market forces?

Lyn Brown (Labour, West Ham)

In my community, we have a huge buy-to-let market, so when one is building new private sector homes, one is not necessarily providing for owner-occupation but possibly providing for further rented accommodation in a high rent area, which may well mean that people are not able to work and to pay rent for the roof over their heads. Thus, when you add that to the social rented housing in an area, what you actually have is a community that is not mixed, because owner-occupation is either not there or is reducing.

Lyn Brown (Labour, West Ham)

Do you have any ideas about how one might find a remedy for that situation? Do you think that it could be placed within this Bill?

Andrew George (Liberal Democrat, St Ives)

First, I apologise for my earlier absence, Mr. Gale, but I am also sitting on a Select Committee this morning. Secondly, I want to declare an interest as a founder member 21 years ago and a current board member of the Cornwall for Rural Housing Association, for which I have no pecuniary interest.

Will you expand more on your opening remarks, with particular regard to seeking the best social outcome for publicly owned land? How do you intend to get the best outcome, as you described it, when a public authority is selling land? That is a continual challenge for many public authorities, because a social outcome has no financial value attached to it. Do you intent to attach a value to it?

Nick Hurd (Conservative, Ruislip - Northwood)

On sustainable communities, it was my privilege to take the Sustainable Communities Act 2007 through Parliament as a private Member’s Bill, with Government support. Its whole premise is that when it comes to shaping the future of communities, local communities and the authorities that represent them know best. Do you have any concern that the HCA, with its big powers, will risk running into conflict with that localist agenda? Do you believe that adequate safeguards are in place to ensure that local authorities have the powers that they deserve?

Angela Smith (Labour, Sheffield, Hillsborough)

You talked earlier about the role of local authorities as strategic enablers of mixed sustainable communities and also, let us face it, as the deliverer of the extra housing that we know we all need. How effective do you think that the housing needs assessment can be as a planning tool in delivering these mixed sustainable communities, given that local authorities will have to work with other local authorities, with the HCA—which will have an overarching role—with housing associations and with developers to plan the housing needs?

Angela Smith (Labour, Sheffield, Hillsborough)

Would you recommend the production of definitive guidance at a national level as one of the outcomes of this parliamentary process?

Angela Smith (Labour, Sheffield, Hillsborough)

I support that entirely, given that I live in a city where there are swathes of local authority housing and very little sign of market investment. On the other hand, parts of the city are almost exclusively filled with market housing and increasingly there is the encroachment of what we call the university set into that housing, which pushes up prices, bound with infill development rather than strategic planning for housing need. I think that that is in danger of producing an incredibly difficult housing market in the coming years, which is where London is now, of course.

Roger Gale (Conservative, North Thanet)

Order. I ask that all electronic devices—I mean all electronic devices—are switched off. That is what that noise on the acoustic system is.

Roger Gale (Conservative, North Thanet)

Order. I am conscious of the fact that this evidence session has to end at 12.30 pm under the terms of the sittings motion, so we must now move on.

Nick Raynsford (Labour, Greenwich and Woolwich)

I declare interests, as chairman of the Construction Industry Council, the National Housebuilding Council Foundation and the National Centre for Excellence in Housing; as a non-executive director of Hometrack; as an honorary fellow of the Royal Town Planning Institute and of the Royal Institute of British Architects; as vice-president of the Town and Country Planning Association, and as a member of the Notting Hill Housing Group. Sorry about that rather long list.

Alistair Burt (Conservative, North East Bedfordshire)

Can we take that as read in the future?

Nick Raynsford (Labour, Greenwich and Woolwich)

I am following the Chairman’s ruling.

Can we pick up your twice or thrice repeated support for the creation of a national housing agency—the HCA? To quote your own words, it would be an agency

“with the potential to create a step change in housing supply”.

Do you believe that the Bill, as it is currently formulated, gives the necessary powers to the HCA to achieve that, or are there any areas where you feel that additional powers should be granted or where powers should be transferred from the Department for Communities and Local Government to the HCA in order to achieve that objective?

Nick Raynsford (Labour, Greenwich and Woolwich)

You will be conscious that the National Audit Office and the Public Accounts Committee have expressed concern about delivery by the DCLG in certain areas, most recently Thames Gateway. I understand that the director of Thames Gateway has recently resigned. Do you think that it is right that Thames Gateway is not defined as within the responsibility of the HCA?

Nick Raynsford (Labour, Greenwich and Woolwich)

You seem to be getting there in the end, because if the largest single area of growth in the country, with the greatest potential for new house building, is not included in the remit of the agency, it might not be able to deliver.

Nick Raynsford (Labour, Greenwich and Woolwich)

Turning briefly to regulation, you expressed a view that the new regulator being created in the Bill should scrutinise the strategic housing role of local authorities. That does not fit totally comfortably with some of the things that you have been saying about the HCA’s role in relation to local authorities’ strategic functions. Is there potential for a muddle here?

Nick Raynsford (Labour, Greenwich and Woolwich)

You said earlier that there could be a situation in which a local authority failed to make adequate provision for social housing in its area. That would clearly be a failure of its strategic function. Who, then, should identify that failure and take action on it—the regulator, the HCA or who?

Nick Raynsford (Labour, Greenwich and Woolwich)

Are you suggesting that that should be the model?

Roger Gale (Conservative, North Thanet)

With four minutes of the session remaining, this seems an appropriate point at which to bring in the Minister.

Iain Wright (Labour, Hartlepool)

Miss Webb, you spoke about thrashing things out and how there is a bit of a muddle at the moment over who does what. The Government’s role in the regulatory regime and direction of travel are very clear: we want to move to a single domain regulator within two years. However, you acknowledged the complexities in the comprehensive area assessment process and in local government performance frameworks. Given those complexities, is it right that we regulate for social housing tenants through RSLs and then move to a framework in two years, working with stakeholders such as yourself? Is that the right approach? From listening to you, I am convinced that it is. Do you agree, or should we have gone headlong into it?

Roger Gale (Conservative, North Thanet)

Thank you. Once again, we have been beaten by the clock. As I said to the previous witnesses, Hansard will be published within the next few days. If, when you read it, you wish to place other matters on the record, the Committee will be delighted to receive further evidence from you. Miss Webb and Mr. Capie, thank you very much for joining us. We are most grateful to you for your assistance.

One housekeeping issue before I wind up this sitting: we are on a learning curve and I made an observation this morning. I was asked earlier whether hon. Members should address each other in the traditional House of Commons fashion—as hon. Friends or hon. Members. However, this is a quasi-Select Committee. I noticed that Sir Simon Milton thought it necessary to refer to Members by name, and it strikes me that we are in danger of creating an artificial atmosphere for guests. That being so, I shall make a ruling now, which might become a precedent, that when I am in the Chair Members should refer to each other as they would in a Select Committee—in other words, by name. That will not apply when we move to full Standing Committee mode, when exchanges will be as is traditional.

Further consideration adjourned.—[Liz Blackman.]

Joe Benton (Labour, Bootle)

Good afternoon, Mr. Orr. You are welcome. We have a series of questions to put to you.

Margaret Moran (Labour, Luton South)

In the Bill, housing associations or registered social landlords—

Margaret Moran (Labour, Luton South)

Back when I was involved it was RSLs. Under the Bill, housing associations can lower the amount of public subsidy that they must invest in affordable social housing by cross-subsidising through sales at market rates. I have asked some parliamentary questions about that, which you might be aware of. Do you think that there is sufficient regulation? In other words, are some registered social landlords simply selling off at open market rates to bolster their reserves, rather than to create more affordable housing? Secondly, in the context of the Bill, will the separation of the Homes and Communities Agency and Oftenant—we should think of a better word for that—prevent RSLs that are genuinely using the mechanism to create more affordable social housing from doing so? I stress the word “genuinely”.

Margaret Moran (Labour, Luton South)

The second part of the question was whether the new proposals for the Homes and Communities Agency and Oftenant would prevent such practices.

Margaret Moran (Labour, Luton South)

I challenge your point about having to make sales to bridge the gap; it is borrowing from equity, surely. However, to come back quickly to the first question, are you assuring us that the current regulatory framework does not allow within an RSL’s business plan, for example, the sale of property on the open market, not just to boost reserves but to pay extremely inflated wages to chief executives?

Joe Benton (Labour, Bootle)

Before I call the next question, I apologise because I should have asked you if you wish to say any words of introduction. I shall give you the opportunity now, if you wish to do so.

Joe Benton (Labour, Bootle)

Thank you very much indeed.

Andrew Love (Labour, Edmonton)

As always at times like these the debate still continues about whether a housing association is voluntary and non-profit-making or whether it is tending towards private profit-making activity. We have already had a discussion about what the regulator will regulate. Considering the balance between the private profit-making activity and the voluntary non-profit-making activity, should not the regulator be involved in ensuring that voluntary, not-for-profit housing associations do not transmute into something quite different, which would be of concern in relation to the delivery of social housing into the future?

Andrew Love (Labour, Edmonton)

Can I interrupt you for a second? There seems to be a gap opening up—tell me whether you agree—between the large associations that build and the other more specialist associations, and there is concern about the large end. For example, Places for People now has some 4,750 market rent properties. The balance has been changed. A lot of that has been encouraged by the Government. I am not holding that body responsible, but the balance is changing. Are you at all concerned about that? Should the regulator have a role in that respect?

Grant Shapps (Conservative, Welwyn Hatfield)

Thank you for that introduction, Mr. Orr. I want to pick up on a couple of points. You mentioned welcoming the Homes and Communities Agency. A concern with the Bill that has struck many of us is that the highest price will be the required criterion for whether a piece of land is sold. Many of us feel that the public good might require more than simply a judgment on the highest price; I believe that the Government may be looking at this again. I would be interested to draw you on that point.

If I may get two points in in one go, there has previously been talk of lessening the red tape for good or excellent housing associations. That is not forthcoming in the 208 clauses of the Bill. Is it something that you had hoped to see, and, out of the 1,200 housing associations, what proportion do you think might have benefited from such legislation?

Grant Shapps (Conservative, Welwyn Hatfield)

Thank you.

Lyn Brown (Labour, West Ham)

I was interested in boards, not regulators, and I am obviously interested in the tenants. I could go into numerous cases in which I have seen housing associations behave in what I believe to be an appalling way towards my constituents. I have no levers to use against them and, more importantly, neither do my tenants. They cannot run against them at a local election, they cannot vote against them, they do not have any power to wield against an offending housing association.

On Second Reading there was a fabulous speech by my hon. Friend the Member for Islington, South and Finsbury, in which she talked about the rats, and the lack of heating and hot water for young mums as well as elderly tenants. I am interested in taking that idea a little further, because for me, it is public money, public service, public accountability. I am interested to hear your response.

Lyn Brown (Labour, West Ham)

Before you start—sorry, I know I am mean—let me add that I am sure that many of the housing associations that I take issue with would be considered excellent using other indicators: they may, for example, be the bigger ones. Therefore, when I hear someone say, “Wonderful housing association: it’s big, it’s huge, it’s wonderful, it does great things”, for me that does not deliver where it needs to, which is in the interest of my tenants.

Lyn Brown (Labour, West Ham)

So you are not worried about Oftenant, you are worried about the HCA?

Andrew George (Liberal Democrat, St Ives)

I follow on from that theme. Throughout your paper, and the comments that you have made, you refer to your concern about the threat to housing associations’ non-public body status. I know that that is an accepted piece of terminology, and I do not want to get into semantics. However, to what extent would you say that housing associations are public bodies? They are non-profit-distributing organisations, they work for public benefit with public bodies, local councils and others; they accept public funds and resources and they are state-regulated to a significant extent, although not to the extent that you fear they are in the Bill. To what extent are they public bodies and to what extent is it important to differentiate them from public bodies?

Andrew George (Liberal Democrat, St Ives)

But what would happen if the state withdrew its funding and these non-public bodies were not in receipt of public resources? They would presumably not be able to develop at all.

Iain Wright (Labour, Hartlepool)

May I go back to a point that Lyn Brown talked about, Mr. Orr, because it relates to one of your fundamental concerns—the Secretary of State’s power to the direct the regulator to go into micro-management areas of a housing association’s operations? May I suggest that the Bill brings housing regulation up to date and takes into account the statutory regime and framework that are in place at the moment, including the Legislative and Regulatory Reform Act 2006? The Hampton principle says that everything should be proportionate, encourage economic activity and prosperity wherever possible and look to scale back regulatory boundaries where necessary. However, is the key point not that that balance needs to be struck and that tenants need to have the rights and responsibilities that Lyn described incredibly eloquently? In that respect, the framework that we are proposing is right. With the greatest respect, Mr. Orr, you are probably exaggerating the ability of the Secretary of State to direct, which is not going to happen.

Iain Wright (Labour, Hartlepool)

In the federation’s example to the Committee, it mentions the risk that community-based initiatives such as crèches could be stopped because the regulatory regime is too onerous. However, again, I return to the sense that regulation must be proportionate. One Hampton principle is that we must ensure that economic progress is advanced as much as possible. The principle states:

“Regulators should recognise that a key element of their activity will be to allow, or even encourage, economic progress and only to intervene”—

this is the key point—

when there is a clear case for protection.”

Is that not what the Bill does?

Angela Smith (Labour, Sheffield, Hillsborough)

I want to return to the best consideration issue and put two points to Mr. Orr. First, the key principle of allowing local authorities to sell or lease land to charity or community groups is accountability to politicians. The politicians—the cabinet, the leader or the executive—take the decision to offer the land at less than best consideration. Do you agree that, as far as housing associations are concerned, accountability to elected members of one kind or another should be the key principle, if land is offered at less than best consideration?

Secondly, on another key principle, if land is offered at less than best consideration, and, for instance, homes are passed on to owner-occupation, there should be provisos in the agreement to recompense the public sector for the loss of the social benefit. In other words, if the benefit of the subsidy on the land is to remain, there should be a proviso whereby the homes concerned are always be on a shared equity or rented basis, if the benefits given by the subsidy on the land are to stay in place.

Angela Smith (Labour, Sheffield, Hillsborough)

What about accountability?

Angela Smith (Labour, Sheffield, Hillsborough)

In terms of offering land at less than best value, and accountability for making that offer, the decisions have to be taken by elected members whether that is through guidance from Government or a final decision in difficult areas by the Secretary of State. There has to be some mechanism for ensuring that land offered at less than best consideration is offered by an elected representative of some kind or another, because we are talking about public sector land.

Angela Smith (Labour, Sheffield, Hillsborough)

What I am interested in is at what point would the decision be made to offer their land? Who would make it? In your view, who is the best body to make that decision and under what terms and guidance?

Nick Raynsford (Labour, Greenwich and Woolwich)

First, I apologise that I could not be here for the start of the sitting. I want briefly to turn your attention to clause 111 of the Bill, which defines the registration of profit-making or non-profit-making organisations. This is different from the existing framework, which requires registered social landlords to be not for profit. Is it your understanding that that would, as it is currently drafted, enable registered social landlords to convert from not-for-profit organisation status to plc status?

Nick Raynsford (Labour, Greenwich and Woolwich)

But as there is no proviso, unlike the current Housing Corporation guidelines, it appears to prevent a registered social landlord from seeking registration as a profit-making organisation. Is that possibility not at least there?

Nick Raynsford (Labour, Greenwich and Woolwich)

Have some expressed an interest in doing so?

Nick Raynsford (Labour, Greenwich and Woolwich)

Would it be helpful, in your view, to try to clarify that?

Joe Benton (Labour, Bootle)

Order. I am sorry, but we have come to the end of this session. I thank you, Mr. Orr, on behalf of the Committee, for your attendance and for the evidence that you have given.

Joe Benton (Labour, Bootle)

Good afternoon, Mr. Walters, and welcome to the Committee. Thanks for coming. I wonder whether you would like to say a few words of introduction.

Joe Benton (Labour, Bootle)

Order. Sorry to interrupt you, Mr. Walters, but I think that that is a sufficient introduction. Thank you very much indeed. We have some questions for you.

Alistair Burt (Conservative, North East Bedfordshire)

My first question is on one of the issues that you have just raised. The definitions of social housing in clauses 67, 68 and 69 appear to create a relationship between an individual’s ability to pay and whether they should be in social housing. Why do you think the clause has been drawn that way, and are you content with how the current Housing Act 2004 defines low-cost rental? What do you think the reason for the change is?

Alistair Burt (Conservative, North East Bedfordshire)

Do you want the Bill to be amended to maintain the existing law?

Alistair Burt (Conservative, North East Bedfordshire)

The Bill seems to open up greater opportunities for local authorities to build their own houses than has been the case recently, although a later question will ask how real that opportunity is. Do you draw a fierce distinction between local authority-built housing and housing run by housing associations and others in the social rented sector? Do you feel that there is a market in itself for council housing and, if so, what sort of proportion should it be?

Roberta Blackman-Woods (Labour, City of Durham)

Mr. Walters, do you think there are any circumstances in which it might be useful for tenants to have an independent body to set standards in their interests? I shall give an example from my constituency. About two weeks ago, I saw some tenants whose homes had supposedly been brought up to the decent homes standard, but the workmanship was shocking—I mean shocking—and they should not have been expected to live in houses in such a state.

The ruling group on the council is not elected by council tenants, so council tenants have little voice in getting policies changed. From where they are sitting, it would be useful to have an independent body to tell the council, or anyone else, that it should treat tenants properly and bring their homes up to a decent standard. What can tenants do if they do not have a democratic voice, because they are too small a group and do not vote in the right way to elect the ruling group?

Robert Syms (Conservative, Poole)

May I ask about the housing revenue account and the subsidy system? Poole has an arm’s length management organisation but nevertheless has to pay 20 per cent. of its council rents into a national pool, which is money that could be used locally. We have quite high house prices, and so the situation is difficult. Do you have a view on whether that system should remain, or do you think that the money that has been paid by tenants should stay in the political district or borough in which it has been paid?

Iain Wright (Labour, Hartlepool)

On ring-fencing the money, does that not relate to the wider community issue? You have mentioned a swimming pool. I think that you meant it in a flippant manner, but the point is that communities are about not only bricks and mortar, but cultural and leisure opportunities. Are you outlining what you want far too strictly?

Margaret Moran (Labour, Luton South)

I just want to clarify your position on the housing revenue account. You have quite rightly referred to a £1.8 billion surplus. Is there not an argument for using that surplus not only to manage and maintain, but to enable local authorities to build new homes? As regards ring-fencing, I am particularly confused. As you will be aware, some local authorities are in great surplus. Arm’s length management organisation are in surplus to the extent that they could fit jacuzzis in some of their properties, because they have achieved decent homes standards several times over. Broomleigh housing association is one such example. On the one hand, some authorities are over-providing, if that is possible, but London councils have a massive deficit in their housing investment. Can you explain your argument on ring-fencing in that context?

Andrew Slaughter (Labour, Ealing, Acton and Shepherd's Bush)

How far are you pushing this means-testing point? If there is a criticism of the clause, I should have thought that it is that the phrase “below market rent” could mean anything. Wandsworth Council at one stage called properties at 99 per cent. market rate affordable homes. My local authority is targeting its affordable housing at people on between £50,000 and £60,000 a year. That is the criticism that could be made: it is slightly vague. Surely council housing, even in its heyday, was targeted towards people in housing need to some extent, whether they were people in substandard housing or people who were homeless. I entirely agree that there is a need for such housing for people who are in overcrowded conditions, but should you not be focusing on that issue—the need for the supply of genuinely affordable housing—rather than trying to recreate some sort of halcyon day that never existed?

Andrew Slaughter (Labour, Ealing, Acton and Shepherd's Bush)

Do you want to do that?

Andrew Slaughter (Labour, Ealing, Acton and Shepherd's Bush)

I know the problem that you are talking about—it is a big problem for me—but those disruptive properties are often the ones that are being let out at market rents, because they are right-to-buy properties that have been bought by companies on a buy-to-let basis and are being rented back to housing associations or local authorities as short-term lets. Often there are also people renting at commercial rents living in them. You cannot designate exactly who you want to live everywhere. We are not living in the sort of society where you can say, “You live here” and “You live there.” I really think that you are trying to capture some sort of visionary world that never really existed. In doing so, you are rather ignoring the problem, which is that thousands of families, particularly in places like London, are living in extremely overcrowded conditions and need new social homes. You are rather blurring that issue.

Nick Raynsford (Labour, Greenwich and Woolwich)

What is your view of the Cave review?

Nick Raynsford (Labour, Greenwich and Woolwich)

Why should a group of tenants that has a poor standard of service from its council landlord not seek a ballot on the transfer to an alternative one?

Nick Raynsford (Labour, Greenwich and Woolwich)

Mr. Martin Cave, in his review, specified three principal objectives for the regulation of social housing: to insure the continued provision of high-quality social housing; to empower and protect tenants; and to expand the availability of choice of provider at all levels in the provision of social housing. Do you agree with those objectives?

Nick Raynsford (Labour, Greenwich and Woolwich)

To expand the availability of choice of provider at all levels in the provision of social housing.

Alistair Burt (Conservative, North East Bedfordshire)

I want to return to the definition of social housing and clarify your thinking on that. Do you feel that the provision of council and rented housing generally is an issue of principle and that, if you want to rent, you should feel able to, regardless of who you are or where you come from?

Alistair Burt (Conservative, North East Bedfordshire)

There is an argument that many fewer people rent in this country than do elsewhere, such as the continent, because there is a stigma attached to renting. Is it your belief that, if we introduced a means-testing provision, we would add to that sense of stigma and the public would never have the chance to rethink renting in such a manner, as they obviously do on the continent?

Joe Benton (Labour, Bootle)

Order. I have learned that you have a bad back. Is there any way in which you can make yourself more comfortable?

Alistair Burt (Conservative, North East Bedfordshire)

I am interested in whether you read the Bill as I do. The clause states that accommodation should be made available in accordance with rules that are eligibility designed to ensure occupation by people who cannot afford to buy or rent at a market rate. That implies that if people begin living in a property because their income is X, and they improve their circumstances such that their income is X-plus, somebody will come along at some stage and say, “You’ve got to go.”

Alistair Burt (Conservative, North East Bedfordshire)

Rather than being means-tested before they go in?

Andrew Gwynne (Labour, Denton and Reddish)

I apologise for not being present when hon. Members declared their interests. I declare for the record that until May I shall be a member of Thameside metropolitan borough council, which is a housing authority.

There is no pretending that stock transfer and large-scale voluntary transfers are not controversial. Two ballots have occurred in my constituency—one in Thameside in 1999 which produced a favourable vote for new charter housing, and another in Stockport in 2003 which rejected proposals for LSVT, although eventually an ALMO resulted. Given what you said in response to an earlier question, do you not recognise that the mere fact of housing being in the control of a local authority does not necessarily imply democratic control? The large overspill estates were created in the 1960s, when slum clearance took place and people were shifted out of one local authority to live in a new estate that was often in the back of beyond in another local authority. Councillors for areas with overspill estates can find it very frustrating that they have no representation on the authority that runs the housing, from which they often feel quite detached. Similarly, tenants sometimes feel very detached from their landlords. They feel that they do not have a voice and that they are second-class tenants who come after other tenants of the authority. In the light of all that, what are your objections to housing associations being interested in running such estates—particularly those associations that already operate in the area?

Andrew Gwynne (Labour, Denton and Reddish)

If I had been a councillor representing the Haughton Green overspill estate in Tameside in my constituency when it was the responsibility of Manchester city council, I would have had no voice on Manchester city council and no way in which to force the council to do anything. How is it different now that Irwell Valley housing association is responsible for Haughton Green estate? Surely the only difference is that major investment is now going into that estate, whereas before there was none. Where is your argument about democracy there?

Andrew Gwynne (Labour, Denton and Reddish)

In the Stockport part of my constituency, where they rejected stock transfer, one of the issues for tenants was the protection of their rights under the local authority and fears that they would not be protected following stock transfer. However, where transfer has taken place, do you think that the provisions in this Bill will strengthen tenants’ rights through Oftenant? Do you think that it will provide a level of protection not currently in place?

Paul Holmes (Liberal Democrat, Chesterfield)

I want to explore a little further the issue of democratic choice. We have just heard examples of what I would have thought were fairly unusual circumstances around the country in relation to overspill estates. Where I used to work in Buxton, there was an example of a Manchester overspill estate, so I have seen it there, but in the case of most councils, surely there is a very direct relationship. In Sheffield, on the council estate where I grew up, there was a direct relationship between tenants, votes and the council—a relationship that has now gone because the council has gone to ALMOs and housing associations. In Chesterfield, people were able to vote against a council with low satisfaction ratings and elect a council to which they now give high satisfaction ratings. Presumably most councils have a fairly direct link, do they not?

Paul Holmes (Liberal Democrat, Chesterfield)

Further to that point, in about 120 or 140 authorities, the tenants have voted at least once—four times, in Camden’s case—not to transfer. However, they are offered a choice—correct me if I am wrong—whereby if they transfer to the housing association, the housing association keeps all the rents and reinvests them, but the council keeps only whatever percentage it is allowed by the Government. Money is taken away from three quarters of councils. The housing association keeps 75 per cent. of right-to-buy money; the council keeps 25 per cent. The historical debt of the housing association is written off; that does not happen for the council. Even though it is a pretty loaded, undemocratic choice, there are still 120 or 140 areas where the tenants have said, “We want to stay with the council.”

Iain Wright (Labour, Hartlepool)

A quick question: on principle, are you opposed to the use of private borrowing to help to allocate additional social housing?

Joe Benton (Labour, Bootle)

Order. We are about to come to the end of this part of the sitting, Mr. Walters. On behalf of the Committee, I thank you for your evidence and hope that your back gets better.

Joe Benton (Labour, Bootle)

Order. Good afternoon, Mr. Gelling, Mr. Bliss and Mr. Edis. Welcome, and thank you for coming. Would you like to make an introductory statement, Mr. Gelling?

Joe Benton (Labour, Bootle)

Thank you for your attendance.

Paul Holmes (Liberal Democrat, Chesterfield)

We have heard in previous evidence that there has been controversy in the past about ballots on transfer and how they have been run. There have been suggestions that ballots are not always run openly and fairly. Clause 257 of the Bill tries to introduce principles such as making a ballot mandatory, if it has not been so before, and establishing a fixed period for tenants to make their views known during the process. Will that solve the problems that used to exist in respect of ballots on stock transfer?

Margaret Moran (Labour, Luton South)

Can I get your views on the right-to-manage proposals within the Bill? Do you think that they go far enough? Are they likely to be effective? Are there changes that you would like to see? And are you aware—I guess that you are very aware—of the proposals for resident-led self-regulation, with tenants and residents being involved, for example, in inspection procedures, particularly within RSLs? Do you think that such measures should be included in the Bill? Would they help to assure you that the Bill truly has tenants’ concerns at its heart?

George Young (Conservative, North West Hampshire)

Mr. Gelling, you talked a moment ago about empowering tenants. Have you considered the position of tenants who want to move from one area to another but who, in the absence of any national mobility scheme, find it difficult to do so? Have you addressed that issue in any way?

Nick Raynsford (Labour, Greenwich and Woolwich)

We are going to receive evidence later from the Council of Mortgage Lenders. Its written evidence states:

“While accepting that some tenants can and do participate successfully in management, lenders will be uncomfortable with the reference to control.”

Is that an issue in relation to housing associations?

Nick Raynsford (Labour, Greenwich and Woolwich)

May I move on to a slightly different, if related, issue? You commented on the lack of opportunity for housing association tenants to comment on transfers in the sector. However, I must say that that is not always the case. In a previous incarnation, I advised housing association tenants who were considering a transfer to another association, so it can happen in certain cases.

There are circumstances, however—let us take what has happened in the past few weeks with Ujima—in which an association that is in serious financial difficulty would go to the wall, literally, with the risk to tenants’ tenure, if it was not transferred rapidly to another association with greater financial strength and the ability to provide that safeguard. That seems to be difficult to reconcile with the procedures that apply—you would probably like to apply them—to having some degree of tenant say on a transfer.

Nick Raynsford (Labour, Greenwich and Woolwich)

My point was that there are certain circumstances in which safeguarding the security of tenure, and protecting tenants from the risk of having their homes repossessed, might justify something that is slightly less than ideal.

Nick Raynsford (Labour, Greenwich and Woolwich)

I accept that point entirely.

Nick Raynsford (Labour, Greenwich and Woolwich)

That takes me to my third point, which is about the role of the regulator in the new legislation. As spelt out, the legislation will enable the regulator to keep a close watch on the range of things, such as those we described, that might indicate poor management and financial control by an organisation. Would you like to make an observation on the definition of the remit and role of the regulator? Do you think that the regulator will be effective on those terms, or do you think that they could be improved?

Iain Wright (Labour, Hartlepool)

I want just to push you a little further on the point that Nick Raynsford was making about the whole regulatory framework and the Secretary of State’s ability to direct the regulator. We heard evidence earlier from the National Housing Federation, which has expressed concern about that. Will you reaffirm that you are happy with that regulatory framework, in terms of the direction from the Secretary of State down to the regulator, and on to housing associations? Secondly, in terms of standards, clause 173 states that

“Standards under subsection (1) may, in particular, require registered providers to comply with specified rules”

A range of things are then specified, such as

“the nature of the housing demands...the extent to which demand is to be supplied...terms of tenancies...anti-social behaviour...landlords’ contribution to the environmental, social and economic well-being of the areas”.

Are you happy with those standards?

Angela Smith (Labour, Sheffield, Hillsborough)

I want to tease out the issue of tenants’ empowerment because I think that most people, if not everybody, around this table would accept that tenant empowerment should mean at least some meaningful control over the management of your home. I will for ever hate the colour maroon because when I was a child all our houses had to have their front doors painted maroon. We had no choice whatever about the colours or the maintenance of our homes. We have all moved a long way since then, and I hope that that is now accepted, at least.

I want to tease out your ambitions with regard to the more difficult management issues in the tenanting sector in relation to allocations, which is where it gets difficult. For instance, I have a difficult case at the moment involving an individual whose wife has left him and taken the children with her. He has now been told by Sheffield council, which incidentally for the record is not a shining example of tenant empowerment, that he will have to move to a one-bedroomed flat—and that he will be moved back to a three-bedroomed property if he gains access to the children. Such situations of powerlessness are not acceptable.

Angela Smith (Labour, Sheffield, Hillsborough)

On the other hand, allocations can be difficult when vulnerable people and vulnerable families are involved—those that no one wants to live next door to. I would be interested to hear your response, as the voice of tenants, on how you see tenant empowerment working when it comes to the difficult issues of allocation and tenancy—basically, the management of limited supply.

Angela Smith (Labour, Sheffield, Hillsborough)

That statement implies the belief that tenant management on that sort of scale is more successful in ensuring a fair and flexible interpretation of allocations policy than you might get with a large-scale local authority landlord. Is that so?

Joe Benton (Labour, Bootle)

Order. I ask not only members of the Committee, but members of the public to check their mobile phones to see if they are switched off.

Andrew Slaughter (Labour, Ealing, Acton and Shepherd's Bush)

Do you see a role for TMOs as being an exceptional alternative to other forms of social housing, whether council or RSL? Do you think that TMOs should be a sector that stands alongside other forms of social housing, such as council housing and RSLs if the right for TMOs and RSLs is granted, or do you see it as more of an exceptional circumstance? I ask that question because, in theory, there is no reason why TMOs should not have grown at the same rate as RSLs, but they clearly have not. If you think that TMOs should be a substantial sector, why has that not happened?

Usually, a bad existing landlord or a very good and motivated group of tenants, or possibly both, are needed to make that happen. Although local authorities do not often say publicly that they are anti-tenant management, some will often do everything that they can behind the scenes to prevent that from happening. We could argue that the sort of comments that we have heard from the CML imply that there is something flaky about TMOs. Those are my reasons, but should like to hear your reasons.

Andrew Slaughter (Labour, Ealing, Acton and Shepherd's Bush)

I think I am implying that there is not a level playing field. Barriers are put in the way of tenants when they want to manage their own estates.

Andrew Slaughter (Labour, Ealing, Acton and Shepherd's Bush)

What one or two things would you do to make it more of a level playing field?

Nick Raynsford (Labour, Greenwich and Woolwich)

The second of the three objectives spelt out in the Cave review for the regulator is to empower and protect tenants. Let us assume that the regulator is established; if you had to advise him on examples of good practice, which two or three would you each select as really good examples of tenant empowerment and involvement and why would you recommend them? What are the characteristics that have made them successful?

Joe Benton (Labour, Bootle)

Order. I am sorry, I have to stop you there, as we have come to the end of our session. On behalf of the Committee I thank you very much, Mr. Bliss, Mr. Gelling and Mr. Edis, for your submissions here this afternoon.

Good evening, gentlemen. Mr. Stevens, Mr. Hughes, Mr. Heywood, would you like to say a few words by way of introduction, one on behalf of the three of you?

Joe Benton (Labour, Bootle)

Thank you, Mr. Heywood. We shall begin with a question from Sir George Young.

George Young (Conservative, North West Hampshire)

May I ask two questions? The first relates to what you have said in your memorandum: that clause 37 should be deleted. I have looked at that clause, and it basically states that if you sell a property that has had a social housing grant, the person to whom you sell it has the same obligation that you had to repay it. As far as I can see, it simply replicates what is in the 1996 Act. Why do you want it deleted?

George Young (Conservative, North West Hampshire)

You are not saying that the Government should not have the right to claim back the grant if the property changes hands, are you?

George Young (Conservative, North West Hampshire)

As far as I can see, the Bill simply replicates the present position.

You make it quite clear that you value effective regulation, which has enabled you to lend money at a lower rate than would otherwise have been the case. If we abolish the existing regulator and set up a new one, the risk is that the baton may be dropped as they go around the course, so what undertakings are you looking for to ensure that the collective regulatory wisdom that has been built up in the Housing Corporation is carried through to the new organisation?

Alistair Burt (Conservative, North East Bedfordshire)

I wanted to come in on what Mr. Stevens said about the pulling out of Bradford & Bingley. Can you help us out? Is it a temporary blip, or something based on a fundamental distrust or dislike of the sector? And how will the Bill make a significant difference to that?

Alistair Burt (Conservative, North East Bedfordshire)

I return to a point that I made earlier to other witnesses: the Government’s record of providing social housing has not been good. What in the Bill would make a difference to the access-to-capital problem that you have just outlined?

Alistair Burt (Conservative, North East Bedfordshire)

But there is always going to be a rented sector, so why is it not a better bet?

Alistair Burt (Conservative, North East Bedfordshire)

A better bet for lenders to get into. If they are worried about confidence and security, you could argue that it will be a rather more stable market than the home ownership market, which is bound to fluctuate more.

Nick Raynsford (Labour, Greenwich and Woolwich)

Can you help me, as I am a bit puzzled by this. Over the last 20 years or so, you have probably managed to raise around £32 billion to £35 billion for the sector and I think that I am right in saying that there has not been a single failure. Can you name any other market sector of that scale that has a similar record of no losses through bankruptcy or failure?

Nick Raynsford (Labour, Greenwich and Woolwich)

Why, then, are you all so nervous about the sector?

Nick Raynsford (Labour, Greenwich and Woolwich)

We had evidence earlier today from the National Housing Federation expressing nervousness that the regulatory regime was being tightened, which might jeopardise the standing of RSLs as non-public sector bodies. Why do you see that as a risk?

Nick Raynsford (Labour, Greenwich and Woolwich)

You have obviously considered the Cave report. In fact, I am sure that you all contributed to Martin Cave’s considerations. What is your feeling about the blueprint in that report? Do you feel that it is sensible to go for domain regulation rather than simply the current housing association regulation system?

Nick Raynsford (Labour, Greenwich and Woolwich)

My puzzlement is getting worse because we have established that this is a successful market, that there have been no failures, that you have been fully consulted about the new regulatory regime, you have fed into it and you are broadly sympathetic to it. Yet you say to us that it is all very risky and the chance of continued investment is not certain.

Nick Raynsford (Labour, Greenwich and Woolwich)

The tone of what seems to be coming across is that you are nervous about continued investment in the sector.

Nick Raynsford (Labour, Greenwich and Woolwich)

But their balance sheets are very much stronger and larger than they were about 15 years ago.

Nick Raynsford (Labour, Greenwich and Woolwich)

I turn to the issue raised by the National Housing Federation about whether the new regulatory regime might put at risk the classification of RSLs as non-public sector bodies. Have you given consideration to that issue?

Nick Raynsford (Labour, Greenwich and Woolwich)

I am sure that that is the intention; I cannot believe that it is not. The Cave report said that the possibility of the Department for Communities and Local Government being the regulator would have disadvantages because it would cast doubt on the private sector classification of housing associations. A concern that has been voiced to us is that the Secretary of State for Communities and Local Government could direct the regulator under the legislation, and that might imply a chain of command. That is essentially the argument. I do not believe that it is the intention, but it could be a consequence, and that would be unfortunate.

Iain Wright (Labour, Hartlepool)

Gentleman, I suggest that you are excellent and worthy successors to Alan Greenspan. You have been speaking for a while, but the cryptic tone of your message is such that I do not understand what you are saying. Let me try to obtain clarity.

In the current political environment, with housing at the top of the agenda and substantially increased public investment in the housing sector, I would have thought that you would regard this as a sure-fire bet. You seem to be suggesting that the relationship between the risk profile of some housing associations and the margins in terms of increasing the risk for RSLs is such that you might consider your investment. I thought that this would be a good and key area of business for you, and that it would grow over the next 15 years. I also thought that the regulator’s risk-based analysis in the regulatory approach and focusing on performance would help to achieve that. Have I got that completely wrong?

Iain Wright (Labour, Hartlepool)

To summarise, following a very turbulent summer in the financial markets, you are probably more risk-averse than you would normally be. Given that there is a change in the regulatory regime, you are a bit nervous, but there is nothing to suggest that the safeguarding of your investment is being compromised in any way. It is just that you might be slightly apprehensive about anything new. Is that fair?

Iain Wright (Labour, Hartlepool)

That is very helpful, thank you.

Andrew Love (Labour, Edmonton)

I hope that the Minister has heard that loud and clear, but I want you to spell out your concerns about ranking. What is it that makes you think that there is the possibility of a change in your ranking and of not being above the possible retaking of grant?

Andrew Love (Labour, Edmonton)

I am sure that the Minister will think very carefully about that. I do not want to raise your anxiety levels, but I fear that I am going to. In the previous section, when we were dealing with the right to manage, we heard that it has not been, or is not likely to be, extended to housing associations. The reason given by the Government is a potential loss of lender confidence. Would you lose confidence in a situation where the tenants of a housing association were given the right to manage it?

Andrew Love (Labour, Edmonton)

Let me press you on that. The last report that I am aware of—there may have been subsequent reports as this one dates back a few years—showed that tenant-managed organisations were more efficient, collected a higher proportion of the rents and ran the organisation with fewer staff as compared to local authorities or indeed housing associations. Does that not reassure you that the reality is that where there is a strong group of tenants, they can do it better than others?

Nick Raynsford (Labour, Greenwich and Woolwich)

But your written evidence—

Joe Benton (Labour, Bootle)

Order. I call Mr. George.

Andrew George (Liberal Democrat, St Ives)

Those are two sides of the regulatory coin, particularly in relation to Oftenant. Given your opening remarks in which you indicated that you obtain comfort from increased regulation, and given that Oftenant will only be regulated with respect to the provision of social housing, are you concerned that it is so restricted—so many housing associations have different arms to their operations, dealing with shared equity, low-cost home ownership and other private investments? Would you like to see that regulator extend its reach? Would you get greater comfort from that?

Andrew George (Liberal Democrat, St Ives)

At the moment, you are content with, and would not wish to expand, the current draft of the proposal, or what is contained within the regulatory powers of the proposed regulator. You do not think that the Council of Mortgage Lenders would seek to give greater comfort through extended regulation?

Andrew George (Liberal Democrat, St Ives)

The other side of the coin is that there are many parts of the country in which an intermediate market has developed. That is because the open market is dysfunctional. There are many families who fall between the ability to obtain any kind of social housing and the ability to make the stratospheric leap into the full market. The creation of this intermediate market is contained within the Bill itself, and yet there is some difficulty in getting that market going. Is there anything that can be done within the Bill to give you greater comfort to create a more dynamic intermediate market, which includes shared equity accommodation and so on?

Andrew George (Liberal Democrat, St Ives)

On many occasions, it is the notional unfettered value of the land that counts if it were released on to the open market. Often it is not necessarily money, it is a notional value which is held in equity by social landlords.

Andrew George (Liberal Democrat, St Ives)

Yes, okay.

Andrew George (Liberal Democrat, St Ives)

Both the potential residents of those properties and the housing association are saying, to an extent, that they have difficulty in getting mortgage lenders to back many of these schemes. Therefore, is there anything more that can be done within the Bill to give you the greater comfort to enable the intermediate market to take off to a greater extent than it has?

Andrew George (Liberal Democrat, St Ives)

It is primarily the individuals. You need to have the buyer coming into that market, and able to take advantage of what the housing associations bring forward. There have been many difficulties in getting agreements for those part-purchases to go ahead.

Nick Raynsford (Labour, Greenwich and Woolwich)

May I take you back to the issue of tenant control? Your written memorandum specifically asks us to remove the reference to control from clause 173(2)(i), which deals with rules applying to regulators. I understood Mr. Stevens to be saying that there is nothing inherently wrong with tenant-controlled organisations, and that the key issue is the nature of the management. Are you really asking us to remove a reference that would allow tenant-controlled organisations, when you do not appear to be inherently opposed to them? Or are you just expressing caution, once again?

Nick Raynsford (Labour, Greenwich and Woolwich)

I do not think that it does.

Nick Raynsford (Labour, Greenwich and Woolwich)

The other way of looking at it is that if they wanted to get involved and to have that degree of control, would you say that they must pull back and be in a position only to influence the more professional managers?

Andrew Love (Labour, Edmonton)

I would have thought that that would discriminate against them.

Nick Raynsford (Labour, Greenwich and Woolwich)

You would not want to be labelled as the people who say that tenants should not be involved?

Nick Raynsford (Labour, Greenwich and Woolwich)

You do not want to be prescriptive in either way?

Nick Raynsford (Labour, Greenwich and Woolwich)

Or to preclude them from being involved if they are interested.

Joe Benton (Labour, Bootle)

Order. We have come to the end of the session. I thank you, gentleman, on behalf of the Committee, for your attendance.

May I also take the opportunity to remind Committee members that we are meeting on Thursday in the Grimond Room, so do not leave any papers here.

Alistair Burt (Conservative, North East Bedfordshire)

Could you arrange on Thursday to have a beautiful musical accompaniment?

Joe Benton (Labour, Bootle)

You read my thoughts, Alistair.

Further consideration adjourned.—[Liz Blackman.]