Localism Bill

Public Bill Committee, 8 March 2011.

Clause 128

Andrew Stunell (Liberal Democrat, Hazel Grove)

I beg to move amendment 172, in clause 128, page 114, line 20, leave out ‘that Act’ and insert

It is good to start on what I hope will be the home straight, if I may make that small pun.

The amendment is straightforward. It clarifies that the Housing and Regeneration Act 2008 will include the new power under which the Secretary of State will direct the social housing regulator. The existing wording of the Bill was not precise enough. The amendment provides the minor but important clarification that the 2008 Act is the power behind the regulation.

Alison Seabeck (Labour, Plymouth, Moor View)

I am sure that you are looking forward to your last week as Chair of the Committee, Mr Bayley.

The clause is short, but it could have a significant impact on the way in which registered providers of social housing will operate. It gives yet another power to the Secretary of State, adding to his powers of direction the power to set a standard on tenure. The National Housing Federation, the representative body for housing associations, is unhappy with the clause as it stands and has set out in its notes to me the reasons why. I shall read them to the Committee as it will be helpful to have the Minister’s response to the federation’s concerns. It says:

“The clause creates a new power for the Secretary of State to direct the regulator about the contents of a standard covering tenure. This is not needed. The direction powers of the Secretary of State under the 2008 Housing & Regeneration Act already cover standards governing quality of accommodation, rents and tenant involvement. In addition, the Secretary of State must be consulted by the regulator about the contents of all standards.

It goes on to say:

“the further extension of the Secretary of State’s direction powers threatens registered providers’ independence of government and will create a vehicle for ‘policy passporting’.”

It will be helpful to have the Minister’s reassurance that the fears of the NHF are without foundation, and if there is genuine concern, perhaps he will reconsider the matter.

Andrew Stunell (Liberal Democrat, Hazel Grove)

Clause 128 gives the Secretary of State the power to direct the social housing regulator on the content of the standard under the terms of tenancies, as the hon. Lady said. Such a power is central to the delivery of our proposals on tenure reform because it is through a revised tenancy standard that the detail of the additional freedoms on tenancies available to registered providers and the constraints on those freedoms will be determined. It is therefore right that the Government can give a direction on the content of the tenancy standard to the regulator. Ultimately, it will be for the regulator to set those standards.

Equally, it is right that what we propose to put in the direction should be subject to close scrutiny by members of the Committee and a full consultation process. Hon. Members will be well aware of the fact that we held a consultation and that the Government’s responses to that consultation are in section 8 of the consultation document, in which we set out the broad policy aims that we expect a direction to the regulator to deliver.

That is part of the ongoing process of our taking account of views expressed by members of the Committee, by other consultees and in feedback. We intend to consult formally on a draft direction to the regulator on the content of a revised tenancy standard in the spring—which is now, I guess. Having taken account of responses to that consultation, and subject to parliamentary approval of these provisions during the passage of the Bill, we will direct the regulator on the content of that revised tenancy standard. We propose to do that at the earliest possible opportunity following Royal Assent. Although the clause is short, it is therefore at the heart of the implementation of our proposals on tenure reform.

Clause 129

Alison Seabeck (Labour, Plymouth, Moor View)

I beg to move amendment 261, in clause 129, page 114, line 33, at end insert—

We have no major objections to the clause, so I will speak briefly to the amendment, which is pretty self-explanatory. It would deal with the relationship between tenancy strategies and homelessness strategies by amending the Homelessness Act 2002 to add a requirement on local authorities to have regard to

“the homelessness strategy of neighbouring local authorities”

when formulating or modifying their homelessness strategies. That would be a sensible addition to the legislative framework to ensure that local authorities act in a co-operative manner and produce strategies that work together, rather than causing problems or tensions between local authorities, whose strategies might be in opposition to each another. For example, a local authority’s strategy might be simply to offload elsewhere anyone who presented as homeless. That would not be a responsible attitude, but we know that some authorities have considered and are considering taking it.

We want to avoid an unreasonable burden being placed on neighbouring local authorities, so to avoid such excesses, we hope that the amendment will be taken forward.

Andrew Stunell (Liberal Democrat, Hazel Grove)

Clause 129 will require local housing authorities, when formulating or modifying their homelessness strategies, to have regard to the allocation scheme, the tenancy strategy and, for London boroughs, the London housing strategy. The sort of objectives that local housing authorities set out in tenancy strategies will be for them to determine in the light of local needs and circumstances, but ensuring that the new flexibilities do not lead to increased homelessness is likely to be an important aspect.

The amendment would require that, when formulating its homelessness strategy, a local authority must have regard to the homelessness strategies of neighbouring authorities. The Government already encourage local authorities to work together to prevent and tackle homelessness, and many authorities already do so, either informally or through sub-regional partnerships, for example. Making such practice a legislative requirement would be bureaucratic and could give rise to practical problems. For instance, a local authority often has multiple neighbouring authorities—four or five in some London boroughs—and each might review its homelessness strategy at a different time. It seems impractical and unnecessary to legislate to force authorities to have regard to others when formulating the strategies.

The hon. Lady was concerned about offloading, but I am sure that responsible local authorities will work hard to avoid that. We have already debated their duty to have regard to the location of somebody who is placed in accommodation as a result of the authority accepting a homelessness duty. We all hope that best practice is always followed, but if there were a rogue local authority, as the hon. Lady suggested, it is not clear to me that the duty to co-operate with a neighbouring authority would prevent an authority deciding to leapfrog its neighbours. I do not think that her amendment would achieve the objective she set out, and it would be unduly bureaucratic.

Alison Seabeck (Labour, Plymouth, Moor View)

If there were a rogue authority or two, and it became evident that that was the case, particularly following the new duty that local authorities will have to put people immediately into the private rented sector, for example, what is the backstop for that? Who would pull those authorities in and say, “You are behaving unreasonably”? Who would be monitoring whether people were behaving in a rogue way, or would it simply come out by word of mouth?

Andrew Stunell (Liberal Democrat, Hazel Grove)

The hon. Lady tempts me into territory that is quite a long way from the clause and the amendment. Clearly, as we have previously debated, every local authority has a responsibility under existing legislation to take proper account and ensure that the accommodation offered is suitable. We had a debate about the factors that had to be taken into account. If an authority were acting contrary to its legal duties, it would be for the courts to rule on that.

Alison Seabeck (Labour, Plymouth, Moor View)

On the basis of the Minister’s remarks, I beg to ask leave to withdraw the amendment.

Clause 130

Nick Raynsford (Labour, Greenwich and Woolwich)

I beg to move amendment 254, in clause 130, page 116, line 33, after ‘subject’, insert

‘to the discretion of the court not to make an order if it considers the order disproportionate, and subject’.

Clause 130 introduces the so-called flexible tenancies. I am sure we will have a full debate on the thinking behind the tenancies and their impact on the public as part of a clause stand part debate. I do not intend to anticipate that now, because the amendment has a different purpose. The Minister has not been very sympathetic to most of the amendments that I have moved so far. I hope he will take a different view with this amendment, primarily because it is designed to help him and his right hon. Friend the Secretary of State to avoid embarrassment and an appearance in court, which is something that Ministers are now beginning to be aware is one of the consequences of ill-thought-out legislation.

The issue was drawn to my attention by Andrew Arden QC, one of the country’s foremost housing lawyers, and it arises from two significant judgments in the Supreme Court, to which I will refer in due course. First, a bit of background. Clause 130 creates flexible tenancies, which are in essence local authority tenancies that are secure for up to two years, but which subsequently are subject to mandatory possession hearings. The wording of proposed new section 107D of the Housing Act 1985, which will be inserted into the Act by this clause, reads as follows:

“Subject as follows, on or after the coming to an end of a flexible tenancy a court must make an order for possession of the dwelling-house let on the tenancy if it is satisfied that the following conditions are met.”

I will not go into details, but “the following conditions” are procedural. If the procedures are satisfied, the wording of the legislation is such that the court has no discretion and must grant possession. I think I am right in saying that that is clearly the Government’s policy objective.

Unfortunately that does not sit well with the Supreme Court judgments to which I have referred. The first of those was given on Manchester city council v. Pinnock. I will not go into detail, but I will read out the crucial part of the judgment. Paragraph 49 states that

“if our law is to be compatible with article 8”—

that is article 8 of the European convention on human rights—

“where a court is asked to make an order for possession of a person’s home at the suit of a local authority, the court must have the power to assess the proportionality of making the order, and, in making that assessment, to resolve any relevant dispute of fact.”

The subsequent judgment was on three cases that were heard together: London borough of Hounslow v. Powell, Leeds city council v. Hall and Birmingham city council v. Frisby. The Supreme Court’s conclusion was similar to its conclusion on Pinnock, but it was helpful in making it clear that the remit of the judgment did not apply only to a particular type of tenancy. The Pinnock judgment was specifically on a demoted tenancy, whereas the subsequent Powell, Hall and Frisby judgment was on introductory tenancies and other such circumstances. My reading of the second judgement is that it reinforces the first judgment, but it also makes it clear that it applies as a general principle to local authority possession actions in cases in which legislation provides for mandatory possession.

The Secretary of State has signed a statement that appears on the Bill’s front page:

“Secretary Eric Pickles has made the following statement under section 19(1)(a) of the Human Rights Act 1998:

In my view the provisions of the Localism Bill are compatible with the Convention rights.”

If the Supreme Court judgment is to be considered, however, the court has to have the option of exercising discretion in deciding whether to grant possession. In other words, the Secretary of State has signed a declaration of compatibility with the convention, which can be right only if the court acts in a way contrary to that prescribed by the Bill. The Bill states that, in the circumstances set out, the court must grant possession.

I readily accept that the second judgment—the Powell judgment—was delivered after the Bill was published and the first judgment, the Pinnock judgment, was delivered only a month before the Bill appeared, so the Secretary of State may not have had much time to consider the implications of those judgments before making his statement on compatibility, but we have now had adequate time and opportunity to digest those implications. It is clear that the Supreme Court is adamant that the English courts must have discretion to consider the proportionality of a possession order brought by a local authority in the light of the article 8 obligations.

That is why my amendment is not only desirable but essential. If we do not agree to the amendment, we would essentially be agreeing to a Bill that makes a mockery of the Secretary of State’s declaration of compatibility on its front page. As I said at the outset, the amendment is designed to help get the Government off a hook that they have created themselves by asking the courts to act in a way that is inconsistent not only with the Supreme Court’s judgment, but with the Secretary of State’s statement on the Bill’s front page. I hope, therefore, that the Minister will have no difficulty in accepting my amendment on this occasion. If he chooses not to do so, I must say that many people not only in this place or the other place, but in the Supreme Court will have quite a lot to say about that. I look forward therefore to hearing his response.

Andrew Stunell (Liberal Democrat, Hazel Grove)

The right hon. Gentleman comes bearing gifts, and one should be careful about that. Amendment 254 seeks to make it more difficult, if they decide not to extend the tenancy to a particular tenant, for local authorities to recover possession of a social property at the end of a flexible tenancy. The amendment does that by giving the court the discretion not to make a possession order if it considers the order disproportionate. That will have the effect of placing an obligation on the court to consider proportionality in all possession applications on the expiry of a flexible tenancy. If the amendment were accepted, that would be the case even if the tenant does not defend the application for possession. The amendment effectively changes the order for possession from being mandatory to being discretionary and would, of course, completely undermine the purpose of the clause, as I am sure the right hon. Gentleman fully intends.

The amendment reintroduces grounds for possession by the back door, when our flexible tenancy proposals are fundamentally about moving away from fault-based grounds for possession to a clearer and more straightforward deal between landlords and tenants. It is important that proper protection is in place for tenants where a landlord decides not to renew a flexible tenancy, and we expect that landlords will discuss housing options with tenants well in advance of the fixed term of their tenancy coming to an end. In many cases, we would expect the tenancy to be renewed when that was done.

I want to draw attention to one of the right hon. Gentleman’s remarks, which I am sure was made inadvertently, when he said that a tenancy could be given for up to two years. That is absolutely not the proposition. The proposition is that the shortest period of a flexible tenancy that could be offered is two years, and he will see from the Government’s response that we have accepted the view of consultees that that should be an exceptional minimum period for special circumstances. We would normally expect the shortest period of tenancy to be five years, and that will come up again in the stand part debate.

Where a landlord decides that a tenancy should not be extended, however, the tenant will be given the opportunity to challenge that decision as well as sufficient time to find alternative accommodation following advice and support from their landlord. Local authority landlords are required to serve a notice on the tenant six months before the end of the flexible tenancy when they are minded not to reissue it at the end of the fixed term. In addition to that, the landlord, having had to give the early warning, is then required to serve a second notice two months before seeking possession. Taken together, those are important protections for tenants to set alongside the new freedoms that we are giving to landlords.

The right hon. Gentleman referred to the Supreme Court judgments—the Pinnock case and the Powell, Hall and Frisby cases—which established that local authority landlords seeking to recover a property to which they have an unqualified right of possession, which certainly will include expired flexible tenancies, will need to consider the tenant’s rights under article 8 of the European convention on human rights in those cases where the tenant raises a defence based on the proportionality of the landlord’s decision. The right hon. Gentleman did not, however, provide all of the Court’s judgments in those cases, because if he had, it would have emphasised the strong presumption that if landlords have followed proper procedures—for example, giving tenants a right to review decisions—it will normally be proportionate to make a possession order. It is right that landlords should, in light of their tenancy policy, be able to make policy decisions about renewing tenancies without routinely having the basis for such decisions challenged in the courts. Landlords, rather than the courts, are best placed to make decisions about the best use of the housing stock in light of the local community’s needs.

The right hon. Gentleman came bearing a gift, and I would love to be sympathetic at least once during the passage of the Bill, but it would not be right on this amendment.

Nick Raynsford (Labour, Greenwich and Woolwich)

The Minister’s defence is that the Supreme Court made it clear that the exercise of discretion, in light of article 8, would not apply across the board, which is, of course, true. He made the point—and again, this was in the judgment, which I am glad that he has read—that the court’s exercise of discretion would depend on the individual tenant seeking to refer to article 8. He claimed that it will, to quote his word, “normally” be proportionate for the court to grant possession in cases of flexible tenures that have come to the end of their fixed period—and I accept that the wording is, as the Minister has said, a minimum of two years, and the Government are now saying that they hope that five years would be the norm. However, at the end of that period when that tenancy has elapsed, if the court seeks possession, it will still be the case that if the tenant says, “This exercise of a mandatory possession order is disproportionate in the circumstances,” the court will have the discretion to decide whether it is proportionate to grant it. That is my point, which the Minister has simply not addressed.

Andrew Stunell (Liberal Democrat, Hazel Grove)

The right hon. Gentleman correctly sets out the position in law. That will still be the position in law without his amendment, which is why I am resisting it.

Nick Raynsford (Labour, Greenwich and Woolwich)

The Minister cannot get away from the fact that, as currently drafted, the provisions of proposed new section 107D to the Housing Act 1985 are in contravention of the Supreme Court’s decision. One cannot have a situation where the legislation states that

“a court must make an order for possession”

when the Supreme Court has made clear what happens when such circumstances occur. Those circumstances might not happen often and they might not be the norm, but in such cases, the court must have discretion not to do what the legislation says it should. I cannot see how that is compatible with the wording of the statute that we have been asked to agree on, which states that the court must make a possession order. I certainly cannot see how the Secretary of State can sustain his statement of compatibility unless there is an amendment.

I am not suggesting that my amendment is necessarily the right one. I am happy to consider alternative wordings, but we cannot put ourselves in the position where we are asked to agree a wording that is clearly incompatible with judgments in the Supreme Court. The Supreme Court has made it quite clear that even if there is a mandatory possession order, in such cases the court must have the discretion to decide whether to grant an order in light of article 8 of the European convention on human rights.

Unless the Minister can come forward with an alternative wording that recognises the implications of article 8 and the court’s right to review possession in light of the Powell and Pinnock judgments, he is asking us to do something preposterous—to agree to legislation that is manifestly not in accord with the statement made by the Secretary of State on the Bill’s front page about the European convention on human rights. No amount of special pleading or saying, “It’s only going to be occasionally that such circumstances will arise” can possibly justify his position. It is a nonsense. If the Minister does not like my wording, fine, but if legislation is to have any meaning and not make a mockery of the process, he has an obligation to come forward with his own amendment.

Alison Seabeck (Labour, Plymouth, Moor View)

It is less than a year since we were told that the Conservative party had

“no policy to change the current or future security of tenure of tenants in social housing”.

That was a promise made before the election but we are here faced with the reality of the Government’s current prospectus for social housing. In looking to remove security of tenure, this part of the Bill is probably one of the most emotive. These changes will affect many families and individuals who are in the greatest need—people for whom a safe, secure and affordable home is the key to a successful and settled life. Why should that group deserve any less security in their homes than the wealthier home owner?

The clause gives local authorities the ability to offer a flexible tenancy for a fixed term of as little as two years. It sets out the circumstances in which a new tenancy becomes a flexible tenancy. We have been sitting as a Committee for well over a month and it would be useful now to revisit some of the evidence that we heard at the outset from the experts—the people whom the Government invited to speak because they valued their testimony. These are people to whom we should listen before voting on this clause.

David Orr, the chief executive of the National Housing Federation, said:

“One of my anxieties about this conversation is that a discussion about flexible tenure is in danger of closing off something that we know works very well for some people, providing exactly the kind of security that they need to feel confident about their role in the world.”––[Official Report, Localism Public Bill Committee, 25 January 2011; c. 62, Q104.]

Alison Inman, the independent chair of the National Federation of ALMOs, said:

“For most of the people that we house in council-owned properties, security of tenure is absolutely key to work, education—everything.”––[Official Report, Localism Public Bill Committee, 25 January 2011; c. 102, Q173.]

Campbell Robb, the chief executive of Shelter, when asked about flexible tenure, said:

“One of our most significant concerns will be that this just creates a disincentive for people to do well in communities because of the pressure they will be under and the changes they face. In particular, having a random two years to get people back on their feet and to change their lives around—with the movement away from schools, communities and support networks, while constantly putting a whole range of other things that exist in communities under threat—would be a real challenge for many people with whom we work. It would be a huge social change for them.”––[Official Report, Localism Public Bill Committee, 25 January 2011; c. 61, Q103.]

My hon. Friend the Member for Mitcham and Morden spoke with real passion in the debate on clause 121 about people who set an example, who hold communities together on estates and who get ahead. We had a submission this week from a young woman called Jessica Sim setting out her concerns about the abolition of security of tenure. She was divorced, had difficulty paying her mortgage and was luckily offered social housing. She writes:

“To get an affordable secure home was a great incentive to pursue my career. I also spent a great deal of time and money improving my council home and garden (all in a shockingly derelict state on arrival) and getting involved in my community association to improve the area, knowing that we could stay.”

She goes on:

“What if the people who are kicked out lose their job or get fed up being hardly better off working? Back on housing benefit, back in the queue, the bill will be enormous. Families have a better chance if they have a secure place to live. Moving people on does not solve a shortage of housing.”

I think her comments are extremely apt and absolutely to the point. The clause will bring an end to mixed communities on estates and bring an end to aspiration. It will sideline estates as nothing more than transitional areas, hallmarked not by long-standing communities, many of which stretch back across generations, but by alienation and deprivation.

We might have hoped, after the consultation and evidence from witnesses, and after we have asked again and again for the Government to consider this, that we might have seen Government amendments to the clause. Many housing professionals are deeply uncomfortable with the idea of asking someone to leave their home because their circumstances have changed in a positive way. Did the Minister consider the approach whereby, if a person’s circumstances changed positively, other elements of the tenancy could be reviewed—perhaps rent level, because that would fit in with the wider policy around “affordable” rents, or assistance into intermediate ownership? I am sure the Committee would be interested to hear the thinking behind that.

Housing associations are working frantically to try to work out the implications of the policy for them. There are still questions about human rights legislation and the implications for flexible tenancy policy. Under current legislation, landlords are not allowed to end tenancies on the basis of time, and we have heard a very well argued case from my right hon. Friend the Member for Greenwich and Woolwich. The Minister could not give an assurance that the measures would not result in a legal challenge in the courts.

New flexible tenancies set at 80% of market rate are seen as likely to increase instability and insecurity. They will increase pressure on the housing benefit bill and drive families out of certain areas. Good evidence published by Mark Lupton for Family Mosaic supports that argument and further supports the concerns raised by my hon. Friend the Member for Mitcham and Morden about incentives. Instead we have Ministers pressing ahead with the coalition’s plans to scrap security of tenure, a policy on which nobody voted in May 2010. Indeed, we might have expected something rather different from this Minister. It is not very long—sorry, I am going to do this again—since he put his name to an early-day motion calling for:

“'the urgent need to boost the economy by a massive programme of public investment to improve existing council homes and estates and build a new generation of first-class council housing to provide secure tenancies and low rents”.

I do not understand how that sits with the policy that he is now putting forward. I find it difficult to square that circle.

But times and positions change, and we now have a Liberal Democrat Minister supporting the clause to end security of tenure for social housing tenants. We do not claim that a reform agenda should not be considered. We claim that the Government are taking the wrong course—a damaging course. The consequences will not improve the social or economic condition of people who depend on social housing, nor develop any sense of community.

If the Minister wanted flexibility in tenure while offering protections to tenants— I am sure he talked about that in previous speeches in the House when he was not a Minister and was signing early-day motions—why did he not revisit the 2006 Law Commission report on a single form of tenancy? It was a far more considered piece of work than the policies for which the Government are now legislating, and it was widely supported. A number of colleagues pressed the previous Labour Government to add that to their housing legislation, but the legislation was deemed not to be the right vehicle. The Bill, however, with its clear focus on tenure and tenancy change, could well have adopted the proposals.

We want this and the next clause deleted because the measure simply proposes another tenancy agreement in addition to those already in existence. The proposal will add confusion and consequent management problems for social landlords, and it does nothing to address the anomalies highlighted in the Law Commission report. And that is before we come to the impact on tenants and the potential problems that they will face of possibly having to move home within two years if their income increases. I will return to that issue later.

A great deal of work has been carried out over the years on tenure reform. In 1997, the Chartered Institute of Housing commissioned an independent adviser to produce a report with proposals for a single form of tenancy, and intended for general consultation throughout the housing world. In June 1998, the report “One for All: A Single Tenancy for Social Housing?” was published as a discussion paper. Its proposals were developed following consultation by the author with 11 leading lenders to housing organisations, 21 housing associations, 20 local authorities of different sizes in different parts—urban and rural—of England, Scotland and Wales, and 29 tenants organisations, including the Tenants and Residents Organisations of England, which represents tenants throughout the UK.

The context of the original study has relevance for today—continuing Government emphasis on plurality and partnership in the social housing sector, and multi-agency and partnership approaches to delivering housing and housing services to make the best use of stock and to improve performance. In that respect, I suggest there is probably little disagreement in the Committee.

Throughout the social housing sector, there are many differences between landlords’ and tenants’ rights and obligations, not only between local authorities and housing associations, but within the housing association sector and even within individual housing associations. Those variations are caused by the different legal regimes under which local authorities and housing associations operate, and they have an adverse effect on the mobility and development of mobility schemes, the development of common housing registers and other initiatives aimed at breaking down barriers across the social housing sector.

Why did the Government opt for this particular flexible tenure option, with all its destabilising qualities, when the basis for a scheme with much broader support was sitting on the shelf—a scheme which ran across the rented sector, was landlord-neutral and might have replaced the complex existing letting arrangements? Many organisations have said that some flexibility in the system would be beneficial, but they all agree that the emphasis must be on offering tenants positive, supported choices to improve their housing options, rather than forcing change on them simply because their circumstances have changed over a short period. The proposals made by the Law Commission would also have helped to do away with the stigma attached to being a social tenant, by introducing two forms of tenure under which people would, in effect, become renter-occupiers, whether in the private or social sector. Lenders also felt that the clarity offered by that proposal was good for them.

Uncertainty surrounds the impact of the measures in the clause, because of its potential impact on revenue streams. There is likely to be greater churn and variation in the system. Why is this option worth considering? If the Minister does not feel able to rethink this and subsequent clauses, perhaps the other place, with all its expertise in such matters, will want to explore whether the Law Commission proposal would achieve a degree of flexibility, without some of the unintended consequences and unfairnesses inherent in the Bill. Its option would facilitate moves to increase stable communities by mixing tenure, income groups and levels of housing need in the same neighbourhoods. It would also assist in blurring tenure demarcations and our place in the social hierarchy, as reflected by the housing spectrum that stretches from outright home ownership, long leases, existing tenancy and landlord types, to those in temporary accommodation. Indeed, it might also facilitate stock transfer by enabling tenants to retain the same tenancy agreement.

There are arguments why the clause is the wrong one to deliver tenure reform. It is important to tackle the myth that the Government’s proposals are the only show in town, and to point out that careful and considered work has already been done on which reform might have been built, and which would have benefited from further exploration to see whether there was a less destabilising option than the one that we currently face.

We are told that people will be offered a flexible tenancy at the higher affordable—a bit of a misnomer—rent, after what one has to assume will be a pretty detailed examination of their personal circumstances, the need for which was set out in the debate on an earlier clause. After a minimum of only 18 months, perhaps having got their child into a local school, people’s circumstances will have to be re-examined. In the interests of transparency and fairness, that examination will have to be assiduously carried out by the landlord. If people’s income has risen over a certain level, they might be asked to leave their house.

What does that do for aspiration? Why would anyone risk losing their home, particularly in an area of high demand and with their child settled in a school, by taking a promotion? We will see people covering up what they are actually earning. We will see a single parent perhaps hiding the fact that they have a new partner living with them. What pressure is that going to put on housing managers who have to undertake the investigative work? Two years—I know that it is the minimum—is far too short a period. During the debate on clause 124, the Minister described three years in temporary accommodation as not giving families any security, so why is a two-year tenancy acceptable in any way, shape or form?

Heidi Alexander (Labour, Lewisham East)

Did my hon. Friend hear the Minister say, in the debate on amendment 254, that he envisages a five-year tenancy being the norm, as opposed to the two-year tenancy in the Bill? Does she agree that, if the Government expect that to be the norm, five years should be in the Bill?

Alison Seabeck (Labour, Plymouth, Moor View)

I thank my hon. Friend for her observation, and I am sure that it will not have been lost on Government Members. She is right that an arbitrary figure has been put in the Bill. During earlier interventions on clause 124, the hon. Member for Croydon Central expressed a view that two years was, in the main, too short. It is difficult to put a figure on, which is why we would rather have no figure at all. I am sure that we will come back to that again and again as we go through the rest of this clause and clause 131.

Two years is too short a period, and the comments of my hon. Friend the Member for Lewisham East about the five-year figure that has been bandied about suggest that. I half-expected to see an amendment from a Government Member that suggested either an extension to five or seven years or that a limited and fixed percentage of all new lettings could be let for a shorter period, but none of that has appeared. We are still stuck with what we have in the Bill, which is wholly unacceptable. The Council of Mortgage Lenders has said that its members are anxious about the risks involved in both affordable rents and the flexible tenancy scheme, because of the uncertainty in the system. The Minister needs to explain to the Committee exactly how he sees that working. Does he envisage a whole range of different-length tenancies spreading out across the social rented sector? If so, what discussions has he had with lenders about their assessment of the risks involved in their lending to, in particular, housing associations? We have deep reservations about the clause, and I urge my Opposition colleagues to vote against it.

Nicholas Dakin (Labour, Scunthorpe)

It is a pleasure to serve under your chairmanship again, Mr Bayley.

I support my hon. Friend the Member for Plymouth, Moor View and the points that she has made. The clause could have serious implications for people and communities. As my hon. Friend has said, there is no mandate for what is being proposed, and, if handled in the way that we fear it might, it will have an impact on individuals’ aspirations and on cohesion in communities. I want to draw attention to the submission from Age UK, which mentions the dangers for older new tenants:

“Most evidence demonstrates that older people require the security and stability of a lifetime tenancy to protect both their physical and mental well being. Older people consider security of tenure to be essential to both quality of life and well being in retirement. Over the years many tenants build up local support networks and use nearby services that enable them to remain independent. At the same time older tenants make a huge contribution to the health and vitality of their local community. A forced move under a flexible tenancy could undermine this position for many.”

Age UK has picked up some of the themes of concern expressed in discussions on housing, such as those mentioned by my hon. Friend the Member for Mitcham and Morden about what tenants with aspiration give to their community and how they enhance it, as well as the way in which prospering in the community saves the state money when it comes to supporting people in difficulty. The points made by Age UK about older people echo what my hon. Friend the Member for Plymouth, Moor View said in drawing on the submission on the young woman’s testimony. It illustrates the need to be very careful in proceeding down such a route with a massive stick, when it is an area where we should be using carrots. There is no mandate. I hope that the Government will think carefully before progressing in that way.

Heidi Alexander (Labour, Lewisham East)

I will make only a few brief remarks on the clause. Looking around the Committee, I wonder how many of us have lived in private rented accommodation at some point or how many of us are doing so now. I am fortunate at the moment. I live in a flat with a mortgage. Ten years ago, I lived in rented accommodation. I was quite lucky. The flat was nice. I had a one-year tenancy, with the possibility of renewal. I remember how that position affected me, and my need for stability and to be able to paint walls and do the garden. I desperately wanted to own my own home. That was partly to do with the sense of being rooted and not having the fear, each time the tenancy came up for review, that I would have to move on. I was in work. I did not have children. I was a single woman, who had moved to London. If that security was important to me then, it is much more important for the individuals and families whom I see time and again at my surgeries. I regard the provisions under the Bill as dangerous for the reasons outlined by my hon. Friend the Member for Plymouth, Moor View.

I shall put on record the comments of the London Tenants Federation about flexible tenancies in its response to the communities and local government consultation paper, “Local decisions: a fairer future for social housing”. It fears that

“references in this consultation paper to localism, fairness and flexibility are a smoke screen for failures to address the desperate need for social-rented housing, particularly in London…Instead of attempting to meet the needs in this respect of a significant percentage of people in London…the proposals for the introduction of flexible/short-term tenancies will condemn many to a life of being constantly on the move and leave social-housing estates to effectively become transit camps. This will damage communities, break up existing family and support networks and have a detrimental impact on health, well-being and educational achievements.”

I could not put it better myself. I do not wish to say any more on the subject, but that summarises the position well.

Gavin Barwell (Conservative, Croydon Central)

Does the hon. Lady think that her local authority will make use of the powers under the Bill?

Heidi Alexander (Labour, Lewisham East)

I honestly do not know the answer to that question, but I am sure that, when I meet the mayor of Lewisham, I shall discuss it with him.

My understanding of this part of the Bill is linked to the Government’s desire to introduce an affordable rent model that might sit alongside flexible tenancies. I wish to put on record my concern about the ability of my constituents, and the people in the communities I represent, to pay rents on short-term flexible tenancies of up to 80% of market rents. I see people in my surgeries who cannot afford to buy a washing machine; the idea that they could afford 80% of the market rent in zone 2 of London is quite ludicrous. Although there may be some people for whom it might offer a solution to their housing situation, I am not convinced that it will address the big problems that I see in my constituency, so I have deep concerns about the clause, and I support the comments made by my hon. Friends the Members for Plymouth, Moor View and for Scunthorpe.

Siobhain McDonagh (Labour, Mitcham and Morden)

We read articles in the paper, generally in the women’s section, about the most stressful things in life—divorce, moving home and all the rest of it—and how we should not do more than one or two of those things at the same time. Why are the stresses, anxieties and concerns of people in social housing of no matter? Why are we willing to introduce a rule that those people will face that situation at the end of a two-year period? The “who will take this up?” argument is not a good one, because if the Government do not want people to take it up they should not propose it in the first place.

Gavin Barwell (Conservative, Croydon Central)

I have already made my view clear. If I were a Housing Minister I would not use these provisions in the vast majority of cases, although here are cases in which I would not give a lifelong tenancy. The point I was trying to make is that one cannot argue that every housing professional in the country is against the clause and then say that it will lead to disastrous consequences. Either the hon. Lady believes that Labour-controlled councils in London are going to take up these powers and use them, or she does not, in which case the problems she is talking about will not occur.

Siobhain McDonagh (Labour, Mitcham and Morden)

I am not saying that housing professionals are right or wrong, and I am not saying what they believe; I am merely explaining how I feel about the clause based on the people I know and see and on the community in which I live.

When I had a proper job, before entering the House, my experience was in housing: I was the receptionist for Wandsworth council’s homeless families unit; I was a housing adviser in Wandsworth council’s housing advice section; and I was the person at Battersea Churches and Chelsea housing trust who looked for temporary accommodation for such families. I did not live in the world of policy or high-flying jobs; I did the bread and butter of making these things happen. I see my family and the people with whom I have worked, and I see how the disincentives that we create affect their lives and their life choices.

I do not want to detain the Committee with my zealous view that everybody should work—I have already done that—but if we introduce a ruling that states that councils with which we would not all agree can introduce two-year tenancies, we would be putting upon the families who can least support themselves and who have the greatest difficulties. Such families might have to move every two years while another Department is encouraging them to take risks, to go to work, to go to evening classes and to take day release. All the time that Department is trying to encourage such families, we are pushing them in the opposite direction and encouraging them not to make such choices.

Good people sometimes make bad decisions under pressure. The Minister mentioned that my council, Merton council, discharges 10 families a month to the private sector. Steve Langley runs Merton council’s housing department and has been around for almost as long as I have. He is a great man and is the least cynical public servant I have ever met, given his pressurised job as head of lettings in a London borough. He discharges those 10 families because he gets them out of the department, out of the council and into a home. The consequences for the families, whether they can get work and get on in life, are not part of his consideration. He is a great man, but if one is dealing with such a number of families looking for accommodation, one often makes decisions that are not in their long-term interests. We are handing local authorities and housing associations the ability, in desperate situations, to offload some of their tenants. It is not only those families who become wealthy that might have a problem.

Every member of the Committee should read the report, “Mirror, Signal, Manoeuvre”, by Family Mosaic housing association. It is incredibly well written. One does not have to understand the detail of housing finance to get the picture. It is one of London’s biggest housing providers and provides housing in inner and outer London and Essex. Its conclusion is that the increase in rents to 80% of market value may force them to offload their tenants who will not be able to afford the rents.

If housing benefit changes are brought in that are punitive on under-occupation, families moving out, children going off to university, there will be a huge gap between what people can pay in rent and their actual rent. Housing associations which apply for money from lenders to charge those rents will have to get rid of those people. That is not what anybody wants. Housing association staff are not bad people but they will be desperate to keep their housing float and to keep on developing. Developing is the glamorous part of a housing association’s work. It is what draws in the brightest, the best and the risk takers and getting rid of that will rid these organisations of their life blood.

The hon. Member for Croydon Central said that he was a special adviser to David Curry, the former Housing Minister. I went up before David Curry as a young councillor and chair of my housing committee and we discussed under-occupation, particularly by the elderly ladies who live on the St Helier estate. At no point did he suggest that moving them out was the answer. We all know that in order to move people out of accommodation we must provide a better alternative. If we want people to work and to study, we need to do the things that make that more possible. I am not against forcing people to do things. I completely agreed with the introduction of the introductory tenancies so that if people acted in an antisocial manner they could be moved on. I have no problem with that, but I have a problem with using a stick against a family that is doing its best. That will not work for anyone.

The 80% market rents on new housing association properties will simply shift the costs somewhere else. The Department for Communities and Local Government is shifting its cuts on to the Department for Work and Pensions. There is a lack of joined-up government. The report from Family Mosaic says that its tenants’ dependence on housing benefit will increase by 151%. That cost will go somewhere. We as taxpayers will still bear it. It will not be in subsidy to the housing associations, but in subsidies to individuals on housing benefits, which disincentivise work. We should look at the bigger picture. We should encourage good behaviour. We should not discourage people from getting on in life, which is all that the two-year tenancies can be about.

Ian Mearns (Labour, Gateshead)

I was not going to speak in this clause stand part debate, but a point has occurred to me. I lived in and represented a ward where there was a great deal of private sector rented accommodation. I was also on the chair of governors of a primary school. The head teacher and I were increasingly concerned about the amount of churn in the local community due to the uncertainty and short-term nature of private sector lets. We were often confronted by parents who had no certainty about where they would be in a month, let alone five months or a year.

We tried to bring parents into the family of the school and engage them in helping their children to learn, but quite often they were with us for three months, five months or a year, and then they were gone and they became someone else’s problem. Where possible, parents would try to let their children stay at a primary school. Quite often, however, because of the nature of the turnover in their household circumstances, additional travelling was involved. As other children came into the family, different children were placed in different schools because of where they now lived and the vacancies that were available. I am concerned that clause 130 will add risk, for families in particular, and that it will produce additional uncertainty, concern and worry in the lives—often already chaotic—of people who find themselves living such a churned lifestyle.

I am an advocate for education, and I certainly support the concept behind the previous Government’s policy—Every Child Matters. For a lot of families, and for an awful lot of children, school is one constant. It is one oasis of calm in lives that are sometimes otherwise chaotic. The additional pressure and uncertainty that the proposal will create for families who face so many other pressures, uncertainties and worries—including, sometimes, where the next family meal will come from—cause me great concern. What will happen to the children in those families? What will be their certainty? Where will be their oasis of calm? Where will be their one constant, if they face the prospect of being moved around because of the short-term tenancies with which they are provided?

Nick Raynsford (Labour, Greenwich and Woolwich)

This has been a revealing debate. A series of powerful, persuasive and convincing points have been raised by the Opposition. Apart from two interventions from the hon. Member for Croydon Central, we have not heard a word from Government Back Benchers, and I do not suppose we will hear anything from them. We will get the ministerial statement, and the Minister will have to explain why he has changed his mind. Clearly, he has done so, because what he is proposing now is diametrically contrary to what he and his party were saying as recently as a year ago, before the most recent general election.

The proposal that we are dealing with is a classic product of the coalition Government. It has been cobbled together in a hurry. It is all about a year zero mentality; everything must change, because everything that went before is wrong. There is a total lack of willingness to learn from the experience of the past and to talk to the people who understand the issue most clearly. The arrogant assumption is made that the new Government know best, and they will simply impose their proposals. They do not have the guts to stand up and defend those proposals in Committee, because ultimately they know that they are ill-considered and will not have the consequences that Ministers like to pretend they will.

Indeed, the only defence that has been offered is to ask why we are making a fuss about the proposal, as so many people in housing are so opposed to it that it will not happen. It is pretty extraordinary for a Government essentially to say, “It cannot be that bad, because it will not happen, so please do not blame us for doing it.” I do blame them. I blame them for what they are doing to damage the self-esteem, confidence and security of large numbers of people who will no longer have confidence that—providing they pay the rent and abide by the tenancy conditions—they can treat the place where they live as their home and continue to live there if they want to. That is a pretty important principle that most of us take for granted. Most of us would not want to live in a place where we did not have the security that if we behaved properly, paid our housing costs and did not cause a nuisance we could continue to live there.

My hon. Friend the Member for Lewisham East asked an interesting question about how many of us have lived in the private rented sector. I spent four years living in the private rented sector, at the end of which my landlord decided that he wanted to gain possession of the property and was able to do so. That was long before the era of shorthold tenancies, but I was in an insecure furnished letting back in the late 1960s. There was a simple reason. My landlord, with whom I got on perfectly well, was a rational man. He noticed that the area was coming up in the world, that prices were rising and that it would be sensible for him to clear out the tenants, from whom he was receiving a reasonable income, to cash in on the gentrification of that area of Fulham. Believe it or not, he proposed that the basement flat, which I had occupied for four years, be converted into an indoor swimming pool as part of the gentrification of the property. That gave me a wonderful gag: I said, “At last, he’s found a solution to the rising damp.” That situation was, however, an indication of what can happen. I lived there, looked after the place and paid the rent. I did not cause a nuisance to anyone, but I had to go at the say-so of the landlord.

I accept that it is probably reasonable, certainly in the majority of the private rented sector, for that kind of ethos to exist. It is a very different matter, however, for social tenancies. Ever since the Housing Act 1980—passed by a Conservative Government, though they took up the previous Government’s Housing Bill, which fell at the 1979 general election—there has been a bipartisan, or tripartisan, view that tenants of social landlords should have security. Now that is being removed. A whole category of new lettings are being created where tenants will not have that security. They will not have the ability to feel that, if they behave properly and do the right thing, they can treat the property as their home.

These proposals are not being introduced on the basis of any manifesto commitments. As my hon. Friend the Member for Plymouth, Moor View, rightly pointed out from the Front Bench in her powerful opening speech in this debate, there was no manifesto commitment. The proposals are not being introduced on the basis of evidence from the sector, because there has not been evidence from the sector telling the Government to do that. There has been a lot of interesting debate in the sector about how to provide for flexibility in the context of building communities and helping people to feel confident in their homes. That is absolutely right and proper. There is no support, however, across the sector for the proposals. They have been cobbled together in a hurry. They are being introduced for effect.

The most telling thing is how the proposals were announced. They did not come from any review; they came from a throwaway remark by the Prime Minister in a question and answer session in August. That bounced the Government—to the shame of the Liberal Democrat party, it allowed itself to be bounced, in contravention of everything they had ever said previously—into this ill-conceived and damaging set of proposals. We have heard quite enough from other Members, so I will not say any more about the inappropriateness of the solution and the damaging consequences that it would have.

Finally, I would like to reinforce the point made by my hon. Friend the Member for Plymouth, Moor View, about the Law Commission. That expert body looked at the issue and produced a series of proposals designed to give a degree of flexibility, a point on which we would probably reach agreement if we were to sit down in a room, work at it and find a solution. It had a way of doing that while also creating greater consistency in lettings in the social housing sector and maintaining the principle of security. The issue has been looked at and worked on; there are proposals that have been gathering dust for many years. As the Minister who asked the Law Commission to do that, I thought it was an excellent piece of work. I regretted my successors’ failure to implement it when we were in Government.

I put it to the current Government, however, that there is a fine piece of work that could be the basis of sensible legislative proposals to give flexibility and to maintain the basic principles that have been so important for security in social lettings. That could have been done in a consensual way. The way that the coalition Government have acted is an appalling comment on them. They have not based their decisions on evidence. They have not based them on manifesto commitments. They have not based them on logic. I am afraid to say that we are being asked to pass something that has very little support other than among silent Members on the Government Benches.

Andrew Stunell (Liberal Democrat, Hazel Grove)

It would be appropriate for me to respond as fully as I can to the various points made. Perhaps I will start by addressing a point that the hon. Member for Plymouth, Moor View, made in her speech opposing the clause. She referred back to amendment 254 and suggested that we had failed to answer the charge of the right hon. Member for Greenwich and Woolwich. In fact, that is not the case. Provisions in the Bill of any shape or form clearly still require authorities to comply with common law, and nothing that we do could overcome that. There is a perfect defence for local authorities based on article 8 of the European convention on human rights, and tenants would also be able to rely on that as a defence.

Mr Raynsford rose—

Hugh Bayley (Labour, York Central)

May I warn both the Minister and the right hon. Member for Greenwich and Woolwich, who is trying to intervene, that we have concluded the debate on amendment 254? We cannot return to it, unless the point is relevant to the stand part debate.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I heed your warning on that point, Mr Bayley.

Nick Raynsford (Labour, Greenwich and Woolwich)

As the clause that we are debating uses the word “must” in relation to giving possession, I believe that it is in order for me to say that the Minister must recognise that the Supreme Court judgments are subsequent to all previous legislation. It seems a nonsense to fall back on the argument that because there are existing mandatory possession grounds, they must be interpreted in light of the Supreme Court decision, but that does not in any way invalidate the new legislation. If we are to produce wording that means anything, it must be accurate in the light of recent Supreme Court judgments. I am sorry that the Minister did not feel that that necessitated an amendment, but I will move on; otherwise, I will incur your wrath, Mr Bayley.

Hugh Bayley (Labour, York Central)

It would be reasonable to allow the Minister to respond, but when he has done so, I hope that he will confine his remarks to the clause’s main purpose, which is to introduce the Government’s proposals on flexible tenancies.

Andrew Stunell (Liberal Democrat, Hazel Grove)

My response just consists of reminding the right hon. Gentleman that neither he nor I are qualified lawyers. If any issues arise from our discussion, I am sure that the lawyers will pick it up quickly.

Clause 130 gives local authorities the power to offer flexible tenancies to new social tenants—I stress that the power is for local authorities. A flexible tenancy is a secure tenancy of a fixed term of not less than two years. I have already drawn attention to the Government’s consultation response, and paragraph 8.6 on page 47 includes the following statement:

“We think, for example, that two-year tenancies should be an available option for landlords, though we would expect, and responses to the consultation suggest, the vast majority of tenancies to be provided on longer terms, particularly for vulnerable households or those with children.”

Subsequently, in paragraphs 8.10 and 8.11, we set out the policy aims and the factors that we believe should be taken into account. In response to an earlier debate, I said that it was the Secretary of State’s intention to publish a draft direction including those elements set in paragraphs 8.10 to 8.12. The document will be available for debate, so we will come back to the precise nature of the limitations on the power, which will provide an opportunity for further discussion.

Bearing in mind some of the misrepresentations that have flown around—and not only during this sitting—I want to make it absolutely clear that this is not a compulsory requirement for local authorities. A local authority can decide to make no change at all to the way in which it allocates tenancies, or it can decide that it will apply to a certain category or type of tenants. It might, for instance, specifically exclude older people. In many cases, one assumes that that would be the case. If a bungalow is allocated to a lady of retirement age, it would not be likely that there were any grounds for her having a flexible tenancy.

Nicholas Dakin (Labour, Scunthorpe)

It seems that the Minister’s explanation is that there is no need to worry because people will not use such tenancies, and that we can therefore feel reassured. The reality is that people are very concerned, and others will become so, and that the process will be haphazard over the country. We will be putting people in a vulnerable position and making them worry when they might not need to.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I remind the hon. Gentleman that we have already discussed clauses that will require local authorities to have both an overarching tenancy strategy and a tenancy policy, which will have to be transparent and open. The direction that we will give will be designed to make it absolutely clear what the boundaries of their discretion are. When a local authority decides to use that discretion, as opposed to deciding in principle not to do so, it will have to make that public, and furthermore—

Alison Seabeck (Labour, Plymouth, Moor View)

Will the Minister give way?

Andrew Stunell (Liberal Democrat, Hazel Grove)

If I may, I will finish my sentence. That circumstance will not be an unexpected outcome for any particular tenant. Tenancies will be granted for a particular period, and tenants will know what position they are in from the first day of taking up their tenancy.

Alison Seabeck (Labour, Plymouth, Moor View)

Does the Minister therefore expect people to look at tenancy strategies and the range of tenancies that are being offered, and then search for local connections in authorities that have more generous lengths of tenancy or security of tenure? Does he expect people effectively to start shopping around within the law as it stands?

Andrew Stunell (Liberal Democrat, Hazel Grove)

I really could not speculate on that, but I think it is rather improbable. As several members of the Committee have said, social housing is a very scarce resource. Despite the investment we are making and the increased number of social and affordable houses that there will be by the end of this Parliament compared with at the start of it, it will still be a scarce resource. We are aiming to get a better fit of people in social tenancies to the homes that we have.

We have 400,000 social homes that are under-occupied—those with more than one spare bedroom—and we have more than 200,000 social homes that are overcrowded, with families living in very unsuitable accommodation. I have given an example—

Siobhain McDonagh (Labour, Mitcham and Morden)

Will the Minister give way?

Andrew Stunell (Liberal Democrat, Hazel Grove)

I will in a moment, but I will give my example. Much direct experience and passion have been expressed, particularly by the hon. Lady, and I want to express some of mine.

During the passage of the Bill, a family has presented itself at my surgery, as happens to all of us all the time. The family members currently have a social tenancy, with three teenage children, not all of the same gender, living in a two-bedroom house. That is a very unsuitable circumstance, and they are desperate for a three-bedroom house. On the same estate, there are several three-bedroom houses that are occupied by a single, retired person—frequently a widow whose family has left. It would make great sense for the family I have seen to be allocated a three-bedroom home for 10 years. In 10 years’ time, the youngest child will be 22, and that will be the time to have a reappraisal of whether they should continue to have a three-bedroom home or should be offered a two-bedroom home. Otherwise, we will simply build in the misuse of the stock, with families in overcrowded and unsatisfactory situations on one the hand, and underused stock on the other.

I understand that in the flow of debate we have to say certain things, but this is not an ideological argument. It is about making proper use of a scarce resource, and about safeguards that will be set out fully in the Direction—with a capital letter—which have been clearly indicated in our response to the consultation.

Nick Raynsford (Labour, Greenwich and Woolwich)

Will the Minister give way?

Andrew Stunell (Liberal Democrat, Hazel Grove)

I will give way in a moment to the right hon. Gentleman and the hon. Member for Mitcham and Morden.

A large number of local authorities have said that they believe that the flexibility should be introduced. Some of them have said that while also saying that they themselves would not use it, but they can still see the importance of having it. My defence of the proposal is not that no one will use it, but that it should be used with discretion in certain circumstances, which will be set out in the direction and which individual housing authorities will be able to tailor to their circumstances as they see fit.

Siobhain McDonagh (Labour, Mitcham and Morden)

The 80-year-old ladies who are living on the St Helier estate in the three-bedroom houses in which they brought up their children and from which their husbands went to war are not misusing their council properties. They have a right to be there, and they should be there. If they need to be moved, we should provide accommodation to which we can encourage them to move.

What is the impact of the two-year rule on people who wish to accrue a discount on their property to use their right to buy or their right to acquire? Obviously, the two-year rule, if introduced by any authority, will prevent people from getting on, doing a bit more and buying their home, which I understood at least one of the parties in the coalition thought was a good idea.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I did not say—if I did, I certainly did not intend to—that those people were “misusing” the home. They are under-occupying it; that was the phrase I used. The situation will not arise for any tenant with an existing tenancy, but if someone were in a flexible tenancy with a defined end, there would be an opportunity at the moment of that end for the landlord and the tenant to appraise future accommodation need. Of course, the hon. Lady is right that it makes no sense—it would never make any sense—to terminate the tenancy of a single individual in a three-bedroom home without providing them with appropriate alternative accommodation, but there is nothing in the proposals that even hints that that is the direction in which we wish to go.

Nick Raynsford (Labour, Greenwich and Woolwich)

The Minister will know that the extent of under-occupation is far greater in the owner-occupied sector than in any other sector. I am sure that he would not think it appropriate to try to force under-occupying owner-occupiers to move into smaller accommodation, even though there is a chronic shortage of owner-occupied housing available for first-time buyers, for example. Will he please justify why he is doing this exclusively for social tenants? Secondly, why has he not paid heed to the Law Commission report to which my hon. Friend the Member for Plymouth, Moor View and I referred in our speeches? He has not mentioned it so far, but its proposals provide an opportunity for flexibility while at the same time maintaining security. Why will he not consider it?

Andrew Stunell (Liberal Democrat, Hazel Grove)

Let me answer that point directly. As I am sure the right hon. Gentleman knows, the Law Commission proposed an extensive and complex rewrite of housing law that would have left a confusing picture on the ground for many years to come. I understand that he was unsuccessful in persuading his successors in the Department to move ahead with it, and clearly his lack of success has gone forward for another generation.

One of the points that the hon. Member for Plymouth, Moor View raised was about the linkage between tenancies and income. Clearly, that is tied into housing benefit. She postulated that there might be a temptation to conceal income and matters of that sort. There is nothing in the Government’s response—I refer again to paragraphs 8.10 to 8.12—that talks about income as the driving force for a tenancy change. I agree with the hon. Lady that it could be a good option to have a linkage of that sort, but I agree with her also that it would be important not to create perverse incentives in doing so. The suggestion in some of the talk that seems to be floating around, that “if you get a job, you’ll lose your council house,” is absolutely not contained in the policy aims that we have published in response to the consultation, and is absolutely not part of the framework of our proposals.

The clause provides for the circumstances in which a new tenancy will be a flexible tenancy. It provides for the process by which a landlord may offer and terminate a flexible tenancy, and it provides for a tenant’s right to terminate a tenancy or to request a review of the landlord’s decision with regard to the offer of the termination process. It removes the rule that requires a landlord, without exception, to provide lifetime tenancies regardless of what sort of tenancy is best suited to the needs of the household.

As hon. Members have rightly said, freedom needs to have boundaries, and we propose to direct the regulator on the content of a new tenancy standard, which will set the parameters within which landlords can exercise the additional flexibility available to them. We have published our broad policy proposals, to which I have already referred extensively, and we are proposing that the tenancy standard places a requirement on landlords to publish a tenancy policy, which sets out the kinds and lengths of tenancies that they will grant, and the circumstances in which they will grant a particular tenancy.

I want to make it clear that a local authority that decides to move towards flexible tenancies is not thereby obliged to make every tenancy flexible. It is not obliged to apply that to every part of its area. It might take a geographically based view about where flexibility was better and where it was not, or about the category of tenants. However, local authorities will be required to publish that, it must be clearly in the public domain and, of course, any tenancy will be let in a transparent way to the tenant, who will be fully aware of the terms.

Heidi Alexander (Labour, Lewisham East)

I want to press the Minister on the question put to him by my hon. Friend the Member for Mitcham and Morden on the right to buy and the right to acquire. I am not sure that the Minister addressed that point. I was giving him time, because I thought he might reflect on it. Where would the accrual of time transfer? If individuals are forced to leave their property after two years, are they disadvantaged by moving properties?

Andrew Stunell (Liberal Democrat, Hazel Grove)

On the original point, the hon. Lady is right—I overlooked my response. We have included a provision that makes it clear that the right to buy endures for flexible tenancies as well as other tenancies let by local authorities. On her point about transfer, I will wait awhile for inspiration, but I will return to it.

There are important protections for tenants that we propose directing the regulator to set. We shall consult on the draft direction later in the spring. The clause itself provides important statutory protections for those who are granted a flexible tenancy. A person who is offered a flexible tenancy by a prospective landlord may request a review of the landlord’s decision on the length of term offered. The landlord will be required to look at their decision again and explain how it was reached in light of their published tenancy policy. Tenants will usually be able to terminate their tenancy at any stage, as we would expect, but they will still enjoy the same protections from eviction as a secure tenant during the flexible term. The local authority will need to demonstrate to the court that one or more of the usual grounds for possession is proven, and that it is acting reasonably in seeking possession before the end of the tenancy period.

We expect landlords to discuss housing options with tenants well before the fixed term of their tenancy comes to an end. What needs to be underlined is the fact that, in many cases, we would expect the tenancy to be renewed. If we take the example of the family that I mentioned earlier moving into the three-bedroom home with a tenure period, it might be worth while to report that the youngest child would then be 22 years old. There might be good reasons why the family still required their three-bedroom home, and a good reason to extend their tenancy for a further period. I am sure that there are other examples.

Ian Mearns (Labour, Gateshead)

I wonder, in the modern-day context, about the likelihood of the 22-year-old’s moving out of the tenancy. If they are one of the young people who are lucky enough to inherit £27,000 of tuition fees and go off to university, even at the end of that stage they might have to go back to the family home. We are seeing a growing social trend throughout the country of young people staying at home until their early 30s. The Minister’s example is good, but I am not sure that it well reflects the modern-day society in which we live.

Andrew Stunell (Liberal Democrat, Hazel Grove)

Perhaps the hon. Gentleman will accept that, in 10 years’ time, the landscape might be different. I fully understand that there needs to be a review with no automatic assumption that the status quo will or will not continue.

When the landlord decides that the tenancy should not be extended, it is essential that the tenant is given the opportunity to challenge that decision as well as sufficient time to find alternative accommodation following advice and support from the landlord. Local authority landlords will be required to serve a notice on the tenant six months before the end of the flexible tenancy. I can perhaps describe that as stage 1 of coming to the end of a flexible tenancy. That will tell the tenant that they are minded not to reissue the tenancy at the end of the fixed term.

The notice will set out the reasons for the decision, which should reflect the landlord’s published policy and give the tenant the opportunity to seek an internal review. When that review upholds the landlord’s original decision, the tenant will have a right to challenge the landlord’s right of possession as part of the possession proceedings in the county court. That will be on the grounds that the landlord has failed to conduct the review properly or made an error in law.

Nicholas Dakin (Labour, Scunthorpe)

As I listen to the Minister, I am becoming more concerned. He talks about the issue as a housing stock issue, which is about maximising the efficiency of plant. I fully understand that that is an issue, but these are people’s homes. My hon. Friend the Member for Mitcham and Morden talked about widows. These are homes in communities, which people have committed to. There is a big difference between a bit of housing stock and a home. I am very concerned about that.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I absolutely share the hon. Gentleman’s concern. It is absolutely right that people should feel that they have secured possession of their home. They will know what length of time they have their secure possession for, and they will know that at the end of that period, if their circumstances require it, they can continue to have that home. The hon. Member for Gateshead drew my attention to the possibility that older children might still be living in the house. In such circumstances, it would be absolutely appropriate for the tenancy to be extended.

Gavin Barwell (Conservative, Croydon Central)

We have heard Opposition Members discuss, with real passion, the case for security of tenure and the needs of people living in existing social housing stock. Does my hon. Friend agree, however, that it is important to set against that the thousands of people on waiting lists and their housing needs? Does he agree that it is reasonable for the Committee to look at the way in which social housing is allocated, so that a balance is struck between those who are given a tenancy initially and those who may be sitting on a waiting list? That is the key issue.

Andrew Stunell (Liberal Democrat, Hazel Grove)

Yes. That is correct. I want to pick up on another point that was made earlier when I was awaiting inspiration. The right to buy will be available for a tenant who has spent five years or more in social housing—even if they move to different social housing—and that also applies to the right to acquire in the registered social sector. I hope that reassures the hon. Member for Lewisham East that we will not be dispossessing those tenants from their rights to buy and to acquire under existing legislation.

I was saying that the first step is that notice will be served six months before the landlord seeks possession, and there is the possibility of a tenant challenging that intention in the county court. Step 2 is that the landlord will be required to serve a second notice two months before seeking possession. The court must make a possession order if all the conditions are complied with. Obviously, the debate that the right hon. Member for Greenwich and Woolwich and I had, which I am sure that you do not want us to repeat, Mr Bayley, dealt with the circumstances that might arise there. Taken together, there are important protections for tenants to set alongside the new freedoms that we are providing for landlords.

I want to respond to some of the points that arose in the debate that I have not dealt with so far. I have dealt with the significant points that the hon. Member for Plymouth, Moor View made from the Front Bench; I am sure that she will advise me if that is not the case. The hon. Member for Scunthorpe said that the proposals would be a particular problem for older people, and he quoted extensively from a submission from Age UK. I hope that I have said enough to make it clear that it is hard to see how any responsible landlord would see any need, in giving a tenancy in specialist accommodation, or even just a bungalow or a flat, to an older single person, to do anything other than provide a lifetime tenancy.

Bearing in mind that we are discussing the social landlord sector, some of the fears that have been expressed have seriously undervalued both the spirit and the integrity of social landlords. Under clause 129 we discussed the duty of the Secretary of State to set out those matters, and I have lingered perhaps slightly too long on the direction and what is in there, but I invite hon. Members with real concerns to look at pages 48 and 49 of the document dealing with the consultation responses, so that Members are fully aware of the Government’s intention.

The hon. Member for Lewisham East asked whether we had experience of the private rented sector. I wondered whether it was a bit of a revivalist meeting where we were supposed to put our hands up, but I put my hands up and say that I spent four years in the private rented sector at three different addresses, so if that qualifies me to know anything about it, I want to claim my badge.

Heidi Alexander (Labour, Lewisham East)

In asking that question, I was making the point that members of the Committee, if they have lived in rented accommodation of any sort—private or social—will probably recognise the feelings of insecurity and instability that come alongside having a short tenancy, where one does not know what will happen after the one or two years is up. Did the Minister’s experience in rented accommodation lead him to feel that way in any respect?

Andrew Stunell (Liberal Democrat, Hazel Grove)

I do not want to give a personal testimony to add to the revivalist feel. However, I would say that a tenancy that was given for only two years would be exceptional. My right hon. Friend the Minister for Housing and Local Government has cited an example from his own constituency on a couple of occasions in debate. That example concerns a gentleman who suffered serious injuries and disability, and who clearly needed short-term accommodation to get his life back on track. There will be special cases for which a two-year tenancy is appropriate but, as we have explicitly said, it would not be appropriate for vulnerable households, and particularly those with children. I hope that that addresses the point made by the hon. Member for Lewisham East.

The hon. Member for Mitcham and Morden is passionate about these matters and has practical experience of them, which I certainly do not discount. I shall read her words in Hansard because she made some important points that we must not overlook. What we aim to provide is a framework for this new proposal that will reassure vulnerable families that their future homes are not being put at risk. The Government well understand the points that have been made about the need to preserve the stability in a community, and to preserve people’s motivation to look after their homes and to play an active part in what we might rather grandly call civic society. They will certainly be considerations that should be taken into account, and if they do not appear in suitable words in the direction that the Secretary of State publishes, I am sure that plenty of Opposition Members will point to my words now and question whether we achieved that.

The hon. Member for Gateshead expressed concern about the stability of communities while drawing on his experience of churn in the private rented sector. In many large towns and cities, there are whole wards with significant numbers of private rented property, and I recognise that that can be a problem. London is an outstanding example of that. Our proposal clearly will not make a difference to the private rented sector, but I agree with the hon. Gentleman. I hope my response to the hon. Member for Mitcham and Morden shows that we are fully aware of the questions of stability and civic capacity that have to be considered.

Ian Mearns (Labour, Gateshead)

The ward that I represented had about 1,700 properties in the private rented sector. There were about 2,500 that were owner-occupied and about 450 in the local authority sector, which was relatively low for my borough. The small estates containing the local authority housing were made up of high-demand, low turnover properties, but outside my ward, where the local authority properties were at a much higher density, there were particular estates in which there was high turnover and relatively low demand. We always want to strike a balance in housing management by not destabilising very stable communities while at the same time bringing some stability to the areas in which there is not such high demand. At the moment, I fail to see how these provisions would help us to achieve that.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I certainly hesitate to give housing management advice to the Gateshead metropolitan borough. The hon. Gentleman might be right, and Gateshead may decide not to take advantage of this flexibility, but some authorities will. That brings me to the right hon. Member for Greenwich and Woolwich, who certainly waxed lyrical—or perhaps Wagnerian—about what the proposal meant. It is interesting that the London borough of Greenwich’s response to the consultation said that it welcomed the increased flexibility.

The right hon. Gentleman asked what the evidence base for the proposal was. I have given some of the evidence base—under-occupation and overcrowding. The consultation document gives us another bit of evidence, which is that many housing authorities believe that it would be useful to them, and useful to the social housing sector, if such flexibility was available. I am sure that the right hon. Gentleman has read the responses, so he will have seen that there is a wide range of responses on how that flexibility could be used, and that is as it should be. We are giving social landlords and local authorities a capacity—a new tool—that they can use if they choose within parameters that will be clearly set out in the direction, which will be subject to further discussion in this place in due course. This is a sensible clause, so I strongly urge the Committee to support it.

Alison Seabeck (Labour, Plymouth, Moor View)

We have had a very wide-ranging debate. The contributions from my hon. Friends the Members for Scunthorpe, for Lewisham East, for Mitcham and Morden and for Gateshead, and my right hon. Friend the Member for Greenwich and Woolwich, have raised the quality of the debate on the clause simply due to their vast experience, including from working in and around the housing sector for many years. We got the same message from them all: flexible tenancies do nothing to support families or communities, and add further churn, risk and worry.

We have talked about the private rented sector. I was recently at a conference where I talked to young people who were living in the private rented sector. I heard repeatedly that those people did not have any sense of community because they lived somewhere for a short period—six months or a year—and then moved on. Sadly, the introduction of flexible tenancies and the possible increase in their use will do nothing to help to make communities sustainable.

It would be interesting to hear from the Minister how many people who responded to the consultation said clearly that they had no intention of using flexible tenancies. The consultation document is not available in hard copy—it is available only online—and that presents problems to members of a Bill Committee, for whom it is helpful if hard copies are easily available.

The Minister repeatedly used the mantra that there is no need to worry and that the proposal will not be used in the way that it could be used. That argument simply does not wash, as my hon. Friend the Member for Scunthorpe pointed out.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I think there is a hard copy in the room, but I refer the hon. Lady to paragraph 3.2 of the consultation, which states:

“Around two thirds of landlords said that they expected to take advantage of the new flexibilities, with about a further fifth saying they were undecided.”

Alison Seabeck (Labour, Plymouth, Moor View)

That is helpful information and I will retrieve a copy, if indeed there is one in the room.

Given that housing is a scarce resource and tenants will be presenting in need, does the Minister not have any worries that there will be a sort of “take it or leave it” situation with people saying, “We are going to offer you a shorter tenancy; sorry, if you do not like it, tough”? I know tenants who have concerns along those lines and we are certainly not happy with the way in which the provision is written. The Minister has not persuaded Labour Members that any of his proposals will do any more than move the pieces around more frequently. The hon. Member for Croydon Central talked about the need to move people around different parts of the waiting list in the interests of fairness. Unfortunately, unless there is stock, all that happens is that people are moved from one place to another and there is no stability in the system. The supply must be increased.

Andrew Stunell (Liberal Democrat, Hazel Grove)

The hon. Lady raises the point about a “take it or leave it” situation. My presentation was diverted several times, so let me point out that the first step is the requirement to give tenants notification six months before the end of their flexible tenancy that the landlord is minded not to reissue it. At that point, the tenant has the right to challenge the decision—first, internally with the landlord and, secondly, if necessary, in the court. That is prior to the second notice two months before seeking possession.

Alison Seabeck (Labour, Plymouth, Moor View)

That is not quite the end of the process that I was discussing. I was talking about the up-front process where people are, in the first instance, offered tenancies but told that they can have only two years or five years when they might feel that they need, or are likely to need, a more secure form of tenancy. That puts them in a difficult place.

The Minister says that the Law Commission report would have required major changes. That is the case, but he cannot seriously be suggesting that the measures that the Government are introducing, whether in health, education or housing—it is certainly the case for housing—are not major changes that will not be more disruptive than something that has been talked about, thought through and discussed with every sector of the housing world. His argument does not stand up.

The hon. Gentleman talked about information around tenancy strategies and the length of tenancies going into the strategies, but what discussions has he had with lenders about how they would view different areas of the country with different strategies and tenancy lengths? Would they view those that had a smaller number of options as a better bet for investment because there would be more certainty in the system? Is he saying that he expects the market indirectly to influence the type of tenancies that are offered? Lenders might have expressed a view that they would prefer tenancies of certain lengths and certain types of security.

There are no further points that I want to make about the clause, other than to say that we are deeply unhappy with it. We do not think that it has been properly thought through, so we will press it to a Division.

Clause 131

Alison Seabeck (Labour, Plymouth, Moor View)

I think I speak for all Opposition members of the Committee when I express my regret at the decision to keep clause 130 in the Bill. Clause 131 is linked to that clause and prescribes the circumstances in which an introductory tenancy, on coming to an end, becomes a flexible tenancy. It also sets out the compensation arrangements available to secure tenants of local authorities and how that will not apply to the new tenancies.

This is largely a technical clause, but it raises a number of concerns. I would welcome clarification from the Minister on introductory tenancies that are to become flexible tenancies, which is the change to the Housing Act 1996 outlined in proposed new section 137A. Will the new tenancy be for two years, or will it take account of the year already spent in a home, meaning that a family will, in effect, have only six months’ tenure before their position is reconsidered and they may have to move on?

On demoted tenancies, proposed new section 143MA seems to suggest that a family who previously earned themselves a demotion because of their behaviour will be re-offered not a secure tenancy, but only a flexible one. Is that interpretation correct? We understand the need for demoted tenancies as a means of encouraging improved behaviour, but equally, we know that some families are dysfunctional—for want of a better word—for only a short period and, with appropriate support and intervention, can get themselves back on track as good members of their community. An incidence of mental health problems may have caused behavioural issues that led to the demotion, but with care and treatment that might be managed. Those are exactly the type of people who need a sense of security in their lives, so if they are further penalised and lose their right to a secure tenancy, that may well not have a positive long-term outcome. Is that the effect that the proposed new section will have, or will it allow people to revert to their secure tenancy? That is not clear, and I would welcome the Minister’s reassurance.

The Government have taken their position on compensation for work undertaken on cost grounds; that is understood. However, a great deal of evidence suggests that people living in short-term lettings do not, in general, worry about the upkeep of either the property or the wider area. I am concerned about how properties will be maintained, and I hope that the Minister can reassure us. I remember very well the appalling state of disrepair of social housing that was inherited by Labour in 1997 after 18 years of Tory neglect. Some of the stock was in such a poor state of disrepair that it was not possible to refurbish it, and some of it had to be demolished. Moreover, a significant sum of money that could have been put into building new homes went instead into the decent homes programme to deal with the backlog and to keep homes available for rent. I hope that the Minister can tell us that the clause will not risk a slow slip back towards those levels of disrepair after all the work of the past 13 years, which enabled so many local authorities to return much of their stock to a decent standard suitable for letting.

That brings me back to the issue of suitability. Another good reason for the Government to reconsider the two-year period—I touched on this earlier—is that there is less buy-in from the community where short-term tenancies of two years or perhaps a little longer are the norm. I would welcome the Minister’s view on that.

I am sure that you will rule this out of order if it falls outside the clause’s remit, Mr Bayley, but will the Minister confirm that housing associations with assured tenants are already able to use the ground 9 provision to manage stock as long as there is suitable accommodation to move tenants to? How does that fit in with this clause and the previous one?

Andrew Stunell (Liberal Democrat, Hazel Grove)

As the hon. Lady says, this is largely a technical clause. To clarify, the introductory tenancy period is in addition to the flexible tenancy period, and not deducted from it. Although I understand her perplexity at the clause’s language—I also sought clarification on it—I am reliably informed that its wording achieves our intention, which is that when demoted tenants come to the end of their demotion period, they get back whatever they had before.

Nick Raynsford (Labour, Greenwich and Woolwich)

I am sorry to raise the issue, but can the Minister say why, at the termination of a flexible tenancy, a demoted tenancy would be created? At the termination of a flexible tenancy, the landlord has the right of possession, subject to the matters that we debated earlier. If the landlord were unsatisfied with the conduct of the tenant, what on earth is the logic of offering a demoted tenancy? I cannot see the purpose.

Andrew Stunell (Liberal Democrat, Hazel Grove)

That is a really good question. I shall wait for the answer. I do not want to speculate before receiving divine inspiration, but probably both of us have slightly misunderstood the text. By way of introduction, I said that the clause was highly technical, and I have certainly found it problematic to interpret.

The intention is to make sure that demoted tenancies are essentially in the same position at the end as they were immediately before the commencement. The hon. Lady asked about the use of ground 9 to manage stock; both statistical evidence and feedback from landlords suggest strongly that that is not effective and that, in fact, landlords do have to offer suitable alternative housing in any case.

Why demote a flexible tenancy? I can now answer the right hon. Member for Greenwich and Woolwich. A landlord could demote a tenancy during a flexible tenancy. It might make sense if there was a long, fixed-term period in the same way as for a secure tenancy. Once the demotion period has been served, the provision allows the position to be reinstated. As I strongly suspected, both he and I were slightly misled by the technical phraseology of the provision.

Nick Raynsford (Labour, Greenwich and Woolwich)

I am most grateful to the hon. Gentleman. The Bill states:

That does not imply the application of a demotion in the course of a flexible tenancy. If he remembers, my question was: why on earth should an authority want to move someone at the termination of a flexible tenancy into a demoted tenancy when they have the right of possession? I still remain absolutely mystified. Perhaps the problem is the wording of the Bill, and if so, I should be grateful to know whether the Government will have a further look at it. It certainly implies something other than what the Minister suggested in his explanation.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I believe that the right response now is to say that I will write to the right hon. Gentleman.

One other point: I may have given a misleading impression about the termination of tenancies. The court challenge by a tenant would be at the six-month stage against possession action, when the landlord seeks possession on an error-of-law basis; that would be the same as for any possession proceedings. With that, I hope that members of the Committee are ready to let the clause stand part of the Bill.

Hugh Bayley (Labour, York Central)

Thank you all for making a technical clause more interesting than they usually are.

Clause 132

Alison Seabeck (Labour, Plymouth, Moor View)

The clause provides for tenants to be able to keep their secure tenancy rights if they mutually exchange with a tenant who does not have secure tenancy rights. Such as it is, we welcome the provision to enable people to keep their rights, as that is the only way to maintain some flexibility in the system. That issue has informed debates, including those prompted by the Hills review and those on how social mobility, specifically in the social housing sector, affects and restricts employment opportunities. We know from evidence that families are reluctant to move, and to sever local and family ties, if jobs are low paid and insecure. However, for those who want to transfer, a national scheme should be supported.

We are told that the existing rights of tenants will not be changed, and that tenants with a secure tenancy will always keep their secure tenancy rights. Last week, the Minister for Housing and Local Government told the House:

“there is no chance of, or way in which, a social tenancy can be broken or changed for anybody already in council or housing association homes.”—[Official Report, 28 February 2011; Vol. 524, c. 19.]

In November, the same Minister, in response to my question on whether he would give his personal guarantee that the rights would not be changed, gave the very brief but direct answer, “Yes.”

Will the Under-Secretary explain why the response to the consultation on his proposals—a document signed off by the Minister for Housing and Local Government—states, at paragraph 8.12, that the Government will

“Protect the security and rights of those who were social housing tenants at 31 March 2012 by granting them a tenancy with no less security where they choose to move to another social rent home (this requirement does not apply where a tenant chooses to move to an affordable rent home)”?

I am not sure whether that means the rights are protected or removed, because the wording is a little ambiguous. I am sure that the Under-Secretary will say that the rights are protected, but I am unclear how, during that mutual exchange process, if someone decides to move to a home that has an affordable rent, their rights will travel with them. I may have misinterpreted the provision; I would welcome the Minister’s clarification.

Andrew Stunell (Liberal Democrat, Hazel Grove)

Perhaps this is the way to look at it: paragraph 8.12 sets a floor below which the conditions offered to tenants may not fall. It means that if tenants move to another social rent home, they are absolutely protected; if they choose to move to one of the new affordable rent homes, there is not a floor that requires that to be the case. A landlord could easily determine to offer that continued protection with a move to an affordable rent, but the phrase in brackets indicates that that will not form part of the floor minimum offer available to tenants.

Nick Raynsford (Labour, Greenwich and Woolwich)

I have just heard the Under-Secretary state that the guarantee that the Minister for Housing and Local Government gave—that no existing secure tenants need worry—is not actually operative. We know very well that many authorities will have difficulty finding options for people who need to transfer into alternative secure tenancies. If they are in a position to say, “If you move into an affordable rent tenancy, you lose your security,” many tenants will feel that it is Hobson’s choice—either they have to move to get a decent home, or they have to stay in grossly overcrowded conditions to retain their security. That was not the pledge that the Minister for Housing and Local Government gave, which was that all existing tenants would retain their security. I am deeply concerned that the Under-Secretary is apparently conceding that that pledge was not fully operative.

Andrew Stunell (Liberal Democrat, Hazel Grove)

The right hon. Gentleman has made his point, but we are talking about the preservation of those rights in socially rented accommodation; that is the pledge made by both the Minister for Housing and Local Government and the Secretary of State. I am taking stock of what the right hon. Member for Greenwich and Woolwich and the hon. Member for Plymouth, Moor View, have said, and I will take stock of the precise nature of what we have announced. I certainly do not want to contradict anything that the Secretary of State has said on the matter.

In everything that we have introduced, we have been clear that existing social tenants are protected while they continue to have social tenancies, either in their current tenancy or if they transfer or move to another tenancy. That applies to the arrangements for flexible tenancies as well.

Nick Raynsford (Labour, Greenwich and Woolwich)

This is extremely important. The Minister has just said that existing secure tenants will continue to enjoy security if they remain in their existing tenancies or transfer to another tenancy. Those are the words that he used. That is not compatible with the passage in the response to the consultation paper that my hon. Friend the Member for Plymouth, Moor View highlighted. If tenants lose their security as a result of accepting a move to an affordable rent tenancy, what the Minister has just told the Committee is not the case. Will he clarify the position?

Andrew Stunell (Liberal Democrat, Hazel Grove)

Yes, I certainly will. I do not think we are talking about two different situations. The guarantee always applies if existing secure tenants or existing assured tenants are required to move by the landlord. But if a tenant chooses to move to an affordable rent property, it is reasonable that discretion should be available to the landlord as to whether that remains in place in that particular case. A tenant’s decision to choose to do that might be linked to what offer he or she thought the landlord was making about longer-term security. In a situation in which there is a requirement to move, the guarantee continues without exception. In a situation where a tenant chooses to move to affordable rent, it could be maintained by the landlord, but it is not part of what I have described as the floor requirement.

Nicholas Dakin (Labour, Scunthorpe)

I think the Minister is saying that there is no assurance to tenants in overcrowded conditions who need to move for personal reasons. They might have to choose to take a less secure tenancy to address those needs. My right hon. Friend the Member for Greenwich and Woolwich is clearly saying that there is no assurance to such people in that situation, which is disgraceful.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I have already given the example of my family with their three teenage children. Their route to getting a suitable home would be to take out a 10-year tenancy agreement on a three-bedroom house, which would be subject to review at the end of that time. That would be one option. They could choose not to do so. They could choose to remain and wait for another option to become available. I do not want to speculate too far how a local authority might arrange its flexibility, but they might go to part of the borough where the local authority had a different tenancy arrangement.

Alison Seabeck (Labour, Plymouth, Moor View)

When I stood up to speak on the clause, it was not my intention to press it to a vote. I thought I was going to receive reassurance from the Minister. In fact, he dug himself into an even bigger hole. To his credit, he said that he would go away and take stock of the comments made by my hon. Friends, and I hope that he will do so, but I have deep misgivings about the discretion of the landlord. If someone chooses to take a tenancy, they could lose the security that they were enjoying. It is still not clear what would happen in the case of a mutual exchange which, by default, is a choice that someone has made. Will all the people on mutual exchange registers find themselves in a position where they could move but lose their existing tenants’ rights? I am afraid that we are going to put the clause to a vote.

Clause 134

Alison Seabeck (Labour, Plymouth, Moor View)

I beg to move amendment 264, in clause 134, page 121, line 36, at end insert ‘or

The amendment will no doubt seem familiar to the Committee, as it is broadly similar to amendment 220, which we debated on 1 March as part of our consideration of clause 121. The Minister criticised that amendment as badly drafted, which is a pity, because it used the same language as clause 134, courtesy of his parliamentary draftsman.

With the amendment, we are again seeking to extend protection to carers—something on which I am sure my hon. Friend the Member for Worsley and Eccles South will have a view—to live-in siblings and to people who are in a relationship but are not married. Following from our debate on amendment 220, I am sure that the Minister will say that there is no need for the amendment, that there is provision for local flexibility and that therefore he is not minded to accept the amendment. However, I would like to draw the Committee’s attention to subsection (5), which states that the provisions apply if

“more than one person…fulfils the condition in subsection (1)(b)”,

The condition is subsection (1)(b) is that a person, “P”

“is the tenant’s spouse or civil partner.”

Under the clause, two or more people can be considered the spouse or civil partner of the tenant and have statutory succession rights, but carers or siblings cannot. There may be Liberals in the Government, some of whom are even still liberal-minded, but even I cannot believe that the Minister intends to legislate for bigamists’ rights ahead of those of live-in carers.

I am not alone in being concerned about the way in which the Government are seeking to remove succession rights for carers. Age UK said in its submission:

“Given the contribution of carers, they deserve to succeed to a tenancy or have an offer of alternative social housing with a lifetime tenancy.”

Our amendment would do that and give succession rights to carers. I appreciate that the Minister will say that there is provision for local councils to do so on a discretionary basis, but carers deserve better. Clearly, organisations with experience such as Age UK believe that the Bill as it stands offers inadequate protection, which is why we tabled the amendment. We would like to hear the Minister say that he will make his one acceptance of an amendment in this case.

Andrew Stunell (Liberal Democrat, Hazel Grove)

Clause 154 is needed, because at the moment different rules exist for secure tenants of arm’s length management organisations and councils, and for assured tenants of registered social landlords. Both types of tenants can be succeeded by a spouse or a partner, but secure tenants can also be succeeded by another family member. Importantly, there can be only one succession to a tenancy, so if the existing tenant was a successor they cannot by law be succeeded by anyone else, regardless of the circumstances. We propose an equalisation of rights for new social tenants with secure, assured, flexible or assured shorthold tenancies, with one mandatory succession for spouses and partners. I must say for the sake of completeness that we are looking at the case for a technical amendment to clauses 134 and 135, because there may be some confusion or ambiguity in the wording. It is not clear that a non-spouse or partner can succeed where there has not already been a succession, and we intend to correct that in due course.

We propose to give landlords the power to vary tenancy agreements to give whatever further succession rights they choose, which is a move in the direction that the hon. Member for Plymouth, Moor View is seeking. At the moment, the succession rights are clear and absolute, but giving landlords the ability to vary tenancy agreements means that they can, at their discretion, have a tenancy policy that covers the point that the hon. Lady has made. That will happen for the first time. This new freedom will allow landlords to act on a case-by-case basis; if they believe that the individual circumstances of the household merit a further succession, they can vary the tenancy agreement accordingly.

The proposed changes in the clause will bring flexibility to landlords and certainty to tenants. The ability of a landlord to customise succession rights means that before they move in, prospective residents such as adult children seeking to care for elderly parents will be aware of their position, and landlords can exercise more control over their stock. Landlords will not be limited by the one succession rule, nor will they be required to allow family members who would not otherwise qualify for social housing to take over a tenancy that they do not need. That seems to me to be the right position; it gives landlords flexibility to accommodate the cases to which the hon. Lady has drawn attention, but it does not impose a legal obligation on them to do so and perhaps to become involved in considerable discussions about whether the carer is in an appropriate relationship with the household, which is always an area of risk for a housing authority.

I hope that the hon. Lady will accept my assurances that the proposal gives landlords the opportunity for the first time to exercise their discretion in exactly the direction that she is requesting, and that that flexibility is better than having a legislative requirement that might result in local authorities giving succession rights in inappropriate cases.

Alison Seabeck (Labour, Plymouth, Moor View)

I understand the Minister’s comments about this being a tidying-up process, and I understand that clauses 134 and 135 need further tidying up. I also heard him say, “This is a move in the right direction, isn’t it?” Yes, it is a nudge, but I think we need a bit of a shove. We may want to return to this on Report, but I beg to ask leave to withdraw the amendment.

Hugh Bayley (Labour, York Central)

Before we conclude proceedings this morning, I want to inform Members that this is the last sitting of the Committee that I will chair, because my Select Committee is going abroad this afternoon and I am going with it. I have never before chaired a long Bill where the discussion has not veered away from the questions in the Bill. That is quite extraordinary, and it is a tribute to the knowledge and experience of Front Benchers and Back Benchers on both sides of the Committee. It is 25 years since I ceased being a local government councillor, and the expertise of Members on both sides has given me a fantastic refresher course in local government.

Clause 137

Alison Seabeck (Labour, Plymouth, Moor View)

I am pleased to be serving under your chairmanship, Mr Amess.

The clause relates to the courts making orders for possession on a flexible tenancy of no less than two years. In principle that is welcome, but what assessment has the Minister’s Department made of the potential backlog in the courts considering such cases, as a result of changes in policy elsewhere? Does the Minister have any concern, given the growing number of delayed cases and existing pressures on the court system, that some cases will be so delayed that the tenant may well be left living in a property which the registered social landlord wants to take possession of, for longer than the six-month notice period? There are also concerns about the cost implications of the changes included in the clause, with a potential additional £5 million in court fees. Will the Minister please confirm that figure?

Andrew Stunell (Liberal Democrat, Hazel Grove)

Clause 137, as the hon. Lady said, provides that a court cannot make an order for possession of a dwelling-house let by a housing association with a fixed term of at least two years, unless the landlord has given the tenant at least six months’ notice in writing, stating that they do not intend to grant another tenancy and informing the tenant how they can obtain help and advice. During the fixed term of an assured tenancy, the tenant will enjoy the same protections from eviction as an assured tenant. The landlord would need to demonstrate to the court both that one or more of the grounds for possession is proven and that they are acting reasonably in seeking possession.

We also want to ensure that when the fixed term of an assured shorthold tenancy approaches its end, appropriate protections are in place. We would expect landlords to discuss options with tenants well in advance of the fixed term of their tenancy coming to an end. In many cases, we would expect the tenancy to be renewed, and we debated aspects of that this morning in considerable detail. When the landlord decides that the tenancy should not be extended, it is essential that the tenant is given time to find alternative accommodation and is supported by their landlord in doing so. The six-month notice period before a possession order can be granted provides the tenant with a reasonable time in which to find a new home. Our proposals for the tenancy standard make it clear that social landlords will be required to grant general needs tenancies with a fixed term of at least two years, so that that protection will always be applicable. As we discussed this morning, two years is the shortest period for exceptional circumstances and the Government regard a five-year period as a realistic minimum, especially for vulnerable families and those with children.

Our proposals for the tenancy standard also make it clear that a tenant must have the right to challenge the landlord’s initial decision not to renew a tenancy. We propose that a landlord be required to provide advice and assistance to the tenant in finding new accommodation when a decision not to renew a tenancy is confirmed. The hon. Lady was seeking assurance that the potential costs of implementing the clause as stated in the impact assessment are correct. Let me assure her that all impact assessments are subject to a rigorous review process and signed off by the relevant Minister.

Finally, I will reiterate what I said earlier about security of tenure. Our commitment to protect and respect the rights of existing tenants extends to guaranteeing that they will receive a new secure and assured tenancy if they are required to move because, for example, their existing home is demolished as part of a regeneration programme, or if they choose to move to another social-rent property. Clauses 132 and 133, which we debated this morning, specifically make provision to ensure that even where an existing secure or assured tenancy exchanges with a flexible tenant, their security is retained, subject to any exceptions made in regulations. The large majority of available properties to which existing tenants could choose to move will continue to be at social rent.

In light of this morning’s debate, I will reflect further on the case for extending the guarantee of continued security where existing tenants choose to move to an affordable-rent tenancy. That is, rightly, part of the debate about what should be included in our direction to the regulator on the content of a tenancy standard. We want to ensure that disincentives for existing tenants to move are minimised. Equally, we must ensure that we do not prejudice the delivery of new affordable homes by limiting the flexibility of providers to generate new supply.

Nick Raynsford (Labour, Greenwich and Woolwich)

I welcome the move to clarify the position, as there was considerable worry this morning. However, the Minister’s last remarks, implying that the measures guarantee that existing secure tenants can keep their secure tenancy if they move to a new tenancy, even if that is not designated as a secure tenancy, fit very uncomfortably with what the Minister is saying, especially his remarks about giving the landlord the opportunity to develop new affordable-rent homes, because that would be a direct incentive to develop homes in which security did not apply if there was no clear guarantee that tenants moving into such accommodation would keep their secure tenancy, if they previously enjoyed one.

I shall be grateful if the Minister will clarify his intentions. Is he still saying, as he was this morning, that if tenants choose to move into an affordable-rent tenancy, they will not be guaranteed to keep their security? Or is he saying that the matter is being reconsidered and that the Government will try to maintain security of tenure to all existing tenants of secure tenancies, as has been promised?

Andrew Stunell (Liberal Democrat, Hazel Grove)

I invite the right hon. Gentleman to look carefully at what I said when it is written up in Hansard. I will repeat what I said: I will reflect further on the case for extending the guarantee of continued security where existing tenants choose to move to an affordable-rent tenancy. I am not in a position to go further than that this afternoon. In light of what I said about clause 137 and other matters, I hope that the hon. Lady is content for the clause to stand part of the Bill.

Alison Seabeck (Labour, Plymouth, Moor View)

At the end of this morning’s sitting, Mr Amess, your colleague, Mr Bayley, commented on the need to not veer off the path of any clause being discussed. In light of that, it is interesting that the Minister seems so nervous about what he has said in relation to earlier clauses that he has had to re-explain himself at the beginning of this afternoon’s sitting. I am still far from happy with his response, which is very much out of kilter with the statements made by the Prime Minister and the Minister for Housing and Local Government. I am interested to hear that he will look again at the issue, but it certainly does not fit with everything that has been said prior to today’s Committee sittings. I shall not, however, press the clause to a vote.

Clause 140

Alison Seabeck (Labour, Plymouth, Moor View)

The clause centres on the abolition of the housing revenue account and is welcome in the main, although I would not want the Minister to get too carried away with that response. A great deal of effort has gone into getting to the point where this running sore for local authorities can be dealt with. It was no mean feat to pick a way through the complex nature of the HRA and ensure that the outcome was seen as fair by the different authorities. I believe that the former Housing Minister, my right hon. Friend the Member for Wentworth and Dearne (John Healey), departmental officials and local government representatives deserve credit for advancing the issue, as do the present Government for picking up the baton and running with it.

The measures introduced by Labour were widely praised, including by the then chief executive of the Homes and Communities Agency, Sir Bob Kerslake, who is now the Department’s permanent secretary, and by the Campaign for Fair and Local Housing Finance and the Local Government Association. All councils were to have 10% more each year to spend on management and maintenance and there would be a one-off redistribution and allocation of debt between authorities. It was assumed that rental income in the proposed allocation of housing debt was based on the current rental policy, and that an additional 7% discount rate would enable councils to build or fund about 10,000 new homes each year after 2014-15. The coalition’s proposals mirror much of my right hon. Friend’s plan, but with some changes, including specific funding for the disabled facilities grant and a reduction from 7% to 6.5% for the discount rate.

The decision to retain 75% pooling does not go far enough. We have a number of concerns about that, and we may return to them later. Maximising the control that local authorities have over their housing finance will be welcome, but concerns remain about the Government’s final scheme, not least about some of the ongoing central control. However, the clause has our support and I hope that the Minister will continue to listen and respond positively to the concerns being raised both in this House and outside it.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I thank the hon. Lady for welcoming our reforms. As she says, they had a long genesis. Some of us believe that they are long overdue and I am delighted to be able to speak for the Government on this necessary change. The former system caused a lot of indignation and difficulty for local authorities, as well as direct and indirect costs for tenants. I am happy to endorse what she has rightly said about the work, when in government, of the right hon. Member for Wentworth and Dearne to make sure that progress was made, sometimes—this may appear in his diaries—in the teeth of opposition from other forces. It is good to see the reforms in the Bill and I am delighted to be able to speak in favour of them.

Clause 140 is accompanied by schedule 15, which relates to excluding Wales and is a technical measure to ensure that the reform relates to England alone. It provides for the repeal of the existing legislation governing the operation of the present council house finance system in England. The intention is that it will come into force at the point when self-financing is introduced. The associated framework power proposes that the National Assembly for Wales is given legislative competence to deal with the matter in Wales.

I have been provided with a variety of figures illustrating the impact on Committee members’ local councils, and indeed on every local council—I have sought to turn myself into something of an anorak on the subject—but I will be absolutely delighted if hon. Members are ready to take my word for it and concentrate on any political aspects of the measures that are of concern to them. As the professionals here know, the area is a nightmare of complexity. I am happy to give an account of it to the Committee if required, but I will not be at all dismayed if I am not required to do so.

Nick Raynsford (Labour, Greenwich and Woolwich)

I rise simply to say to the Minister that I endorse entirely his view of the technical nature of housing revenue account calculations and discussions. I remind him of the remark this morning in which he accused me of making Wagnerian observations. In light of that, does he think that the right description of the situation that we are dealing with is an echo of the wandering seafarer in “The Flying Dutchman,” or is it more akin to the end of the “Ring” cycle, the “Götterdämmerung”? Either way, it is certainly complex and messy.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I do not think that I can be lured any further into musical analogies. I rely on my wife for that, as the music expert in my household.

I think that Members from all parties recognise that the measures are well overdue. I hope that the framework set out in clause 140 and supported by subsequent clauses finds favour with the Committee in the shortest time practicable.

Clause 141

Sir David Amess (Conservative, Southend West)

With this it will be convenient to discuss new clause 20—Right to buy receipts—

Stephen Gilbert (Liberal Democrat, St Austell and Newquay)

It is a pleasure to be back under your chairmanship, Mr Amess. It will probably be an equal pleasure to give up the Bill for most of Lent, as my contribution to living a virtuous life.

I rise to probe the Government on clause 141 with new clause 20, which was tabled by my hon. Friend the Member for Bradford East and me. It is clear that there is agreement across the House that the reforms to the housing revenue account are welcome and that we must deliver more financial autonomy to local authorities, with the hope that that will lead to further investment in social housing.

In that context, the clause stands out slightly as continuing Whitehall interference in local authorities’ ability to manage their own budgets and revenue flows and ensure appropriate investment in social housing. It is at odds with the general localist approach of the Government and the Bill. We will not effectively give local communities the autonomy that we seek to give them if we continue to leave them dependent on Whitehall. I am keen to ask Ministers the rationale behind ensuring, as the Bill does, that the Treasury can still come and take 75% of net receipts from any right to buy sales, in a kind of grab and run on local authorities. How do they square that with the Bill’s overall intention of delivering greater autonomy and local decision making?

My hon. Friend the Member for Bradford East and I are usually supportive of the right to buy. It has extended to hundreds of thousands of people the ability to enjoy their own home. However, the scheme has failed to ensure that replacement housing stock was made available. As I understand it, over the past 10 years, almost 500,000 homes have been sold off under the right to buy scheme. That has benefited the people who availed themselves of that opportunity, but in the same 10-year period we have had only 200,000 new homes built. We will not get to grips with the level of social house building that is required until we enable local authorities to properly reinvest the money that they get from right to buy sales.

I have no intention of pressing new clause 20 to a Division, but I am curious to see what the Minister’s thinking is on this. Perhaps he can tell us the number of homes that have been sold off under right to buy during the past few years and the amount that that has been worth to the Treasury in revenue from the grab back on the right to buy receipts. Will he tell us what the Department projects for future right to buy sales and what that amount of revenue for the Treasury will be? If, as I suspect, the amount of revenue that the Treasury anticipates receiving from the 75% grab back of the right to buy receipts has gone down significantly, how does he square that with the localist approach that seems to embody the rest of the Bill?

Alison Seabeck (Labour, Plymouth, Moor View)

I agree with many of the comments made by the hon. Member for St Austell and Newquay, particularly on the issue of Whitehall’s interference. Under the clause, the Secretary of State has the power to set the framework that will be used for calculating the value of different payments. Local authorities have expressed concerns that the right to buy receipts should not be set at 75%. Local authorities should be able to retain a significantly larger proportion of the receipts, and some feel that 100% of those receipts should be retained locally to encourage the building of new homes. I understand that there is a concession that takes account of property losses so that local authorities take on less debt. However, there appears to be a very strong view from those same local authorities that that is not their preferred option. The pooling principle runs counter to the localist agenda. Can the Minister explain why the Government have opted to retain all but a quarter of the capital receipts?

I echo the remarks made by the hon. Member for St Austell and Newquay about the assumptions that the Minister may have made in relation to potential future right to buy receipts. I will be interested to hear the Minister’s answer to the figures that the hon. Gentleman requested. Does the Minister have any worry that retention on the current scale reduces the impact of local asset management in an area? How many homes does he expect local authorities to be able to build as a result of the proposed changes? What modelling has been done on the revenue stream for each local authority moving forward, and at what point does the Minister expect to see local authorities looking at net gains in council housing in their area as a result of the potential that they might have to build—or even five or 10 years down the line when his Department is seriously expecting local authorities to be able to build?

Andrew Stunell (Liberal Democrat, Hazel Grove)

I thank my hon. Friend the Member for St Austell and Newquay for his new clause 20, and give him my renewed and doubled thanks for his saying that he does not intend to press it.

Clause 141 sets out the framework for the valuation or determination of each council’s housing business and the resulting settlement payment that comes as a consequence of that. The level of each settlement payment and who pays who will be calculated in three stages. In the first stage, each council with housing stock will have the value of their business calculated over 30 years. That will be based on a formula that takes account of expected rental income from the local authority’s housing and their expected expenditure on management, maintenance and repair of the housing, which includes disabled adaptations.

The next step is that that 30-year cash flow of income and expenditure is converted into a capital sum or valuation, using a standard discounted cash-flow technique and a discount rate of 6.5%. The third step is that the capital valuation is compared with the housing debt currently held by a council to calculate the settlement payment between central Government and each council. The outcome for each council is different, and again, I have papers which I would be happy to circulate for the Committee, which show the projected impact on councils. This is the information that was circulated to councils in the most recent stage of consultation. It does not necessarily reflect the final arrangements that would be in place.

My hon. Friend the Member for St Austell and Newquay asked some practical questions about the progress on the right to buy. In the period between 1979 and 1997, there were 1.3 million sales of right to buy property. In the period between 1997 and 2010, there were just over 600,000 sales under right to buy. In the most recent years, in 2007, there were just under 12,000, but there was a very steep decline in 2008 to 2,800 sales, and in 2009-10, to 2,200 sales. That is clearly a product of the changing economic environment. It is also a reflection of the fact that the available stock—or, at least, the available marketable stock—is declining. We have not made any specific projections of the right to buy sales, but it would seem realistic to assume that that low level of right to buy sales will continue for a significant part of the next four years, for the same reasons: shortage of mortgage finance, the preference given to more marketable properties, and the capacity of tenants to become purchasers in the current economic environment.

That has a direct consequence on the impact of the 75% retention. In 2006-07, the amount of money that was retained or surrendered to central Government by local government as a result of right to buy was £831 million. By 2009-10 that had fallen to just £133 million, a reflection of the very much reduced level of sales. I therefore want to say to friends and colleagues on the Committee that whatever the merits or otherwise of this retention, it will have a small effect—certainly as compared with previous years—on the spending power or capital-raising power of local authorities.

In an ideal world I would agree with colleagues in local government who sought a 100% retention of receipts. However, for exactly the reason to which I alluded before—the reason that the right hon. Member for Greenwich and Woolwich, when he was standing on this side of the Committee, found it difficult to get his reforms a hearing—one has to arrange these matters so that there is a consensus that allows the reform to be delivered. This is part of the consensus-building in order to achieve that.

I hope that my hon. Friend the Member for St Austell and Newquay is, if not satisfied, at least slightly reassured that the amount of money being returned to the Treasury is now substantially less than it was even three or four years ago. We project that that reduced contribution will be the norm during the period of the comprehensive spending review.

Stephen Gilbert (Liberal Democrat, St Austell and Newquay)

I am grateful to the Minister for clarifying the numbers. I am reassured, although I am left with some concern. If we take the figure for 2006-07 of about £831 million being recouped by the Treasury and extrapolate that over the years that right to buy has been operating, we have lost literally billions of pounds from local authorities that they could have invested in social housing. If they had done so, perhaps we would not be in quite the predicament that we are now in, with the crisis in social housing.

Clearly, our job is to ensure that legislation is correct for the long term. I am quite confident that my hon. and right hon. Friends in government, with their unashamedly pro-growth approach to steering our country out of its current difficulties, will deliver a reversal of the trend. If we put this measure in place, when the good times return local authorities across the country may continue to lose the funding that would enable them adequately to prepare to meet the challenges of providing homes that are fit for all. I am reassured by the Minister’s comments, but I hope that the Government will return to this issue over the course of the Parliament.

Clause 142

Alison Seabeck (Labour, Plymouth, Moor View)

In this stretch of the Bill, clause 142 has probably drawn the most concern from local authorities and some were keen for it to be deleted altogether. I am interested to understand, therefore, before taking a view on whether we should vote against it, what the Minister’s argument is against the issues that local authorities have highlighted.

London Councils and the Local Government Association are extremely anxious about the clear message that they say that clause 142 sends. “Once and for all” and self-financing, which were so well trailed by the Minister for Housing and Local Government—he is quite good at trailing things—appears not to be “once and for all” but something that can be reopened at any time. Will the Minister explain why the Secretary of State needs the power to reopen the buy-out figure after the council has made the settlement payment? That potentially means that some councils would have to pay more. It provides significant new uncertainty for local authorities at a time when they are already struggling with front-loaded cuts to their budgets.

I am sure the Minister will say that subsection (3) is a protection, and that the Secretary of State will

“make a determination under this section only if there has been a change in any matter that was taken into account”.

Will he offer further reassurance that the circumstances for reopening will be extremely limited? Perhaps he will set out the type of instance in which the Secretary of State would invoke this power. How does this power enable long-term financial planning? How does the Minister envisage that local authorities will be able to borrow additional funds to build, given the uncertainty that exists here? They certainly have some worries about that.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I thank the hon. Lady for her legitimate questions, and I hope I can give her the reassurance that she is looking for.

Clause 142 provides, as the hon. Lady has said, for further payments between a local authority and central Government under certain circumstances. Those circumstances are arranged so that we are limiting payments to cases where there has been a change in one of the matters that was taken into consideration in calculating the previous payment, including rental income, expenditure needs and existing debt. By contrast, no assumptions about efficiency gains that could be achieved by councils under self-financing will be made in determining the settlement payments, so they cannot be a possible trigger to reopen the settlement.

In exercising the power in this clause, central Government would have to issue a further determination and consult on it. Exercising this power would represent a major change in policy and would entail a new and significant programme of work for both local and central Government. The purpose of the clause is to protect both parties to the agreement—both central Government and local authorities—from being locked into a deal that, because of changes in policy affecting either a landlord’s income or cost, no longer reflected a fair valuation and might have a material impact on viability. For instance, if the Government were to introduce a major change to national rental policy, or perhaps a significant increase in the environmental standards expected of council housing, that could upset the arithmetic of the equation. In those cases, it would be right for there to be an option for the reconsideration of the payment regime. I understand that councils may be concerned about that possibility, because they think that it may introduce instability and prevent effective long-term planning.

The hon. Lady drew attention to London Councils’ views on that. I want to place it on the record that we would only use this power on an exceptional basis, such as if a change to a relevant matter had made a substantial material change to the value of the landlord’s business. I hope that gives the hon. Lady the reassurance that she needs, and that councils reading the record will take that assurance and feel that they can accept with confidence that clause 142 is rightly part of the Bill.

Alison Seabeck (Labour, Plymouth, Moor View)

I thank the Minister for that explanation. We will not oppose this clause.

Clause 144

Alison Seabeck (Labour, Plymouth, Moor View)

The clause creates a borrowing cap. When set against the cuts to capital grant availability for investment in affordable housing, that cap means that local authorities—especially the innovative ones which the Secretary of State constantly prays in aid—will be looking to draw on a wider range of options to draw down resources. Local authorities of all political complexions feel that self-financing was a good start and that the Secretary of State therefore did not need to impose limits on the borrowing. If the Government can intervene and set unqualified arbitrary limits on how local councils run their local housing business, that freedom to think and act imaginatively is taken away. That is extremely centrist. If councils are already bound by a prudential code, which is effectively managed borrowing, this provision is wholly unnecessary. Can the Minister tell us what evidence there is that councils behave irresponsibly?

What will be the impact on authorities that have backlogs of decent homes, where the recent rebidding process has left them still short of the funding needed to complete the programme? London Councils feels extremely strongly about this clause. Councillor Gary Porter, chair of the environment and housing programme board at the LGA, who gave evidence to this Committee, did not mince his words. He is a Conservative council leader. He said:

“The current proposals are completely unworkable. Civil servants see social housing as a cash cow that they want to keep milking.”

I cannot quite see the Minister in milkmaid mode, but it is clear that feelings are running high. I urge the Minister to either reconsider the position or offer significant reassurance to his coalition partners in local government.

Andrew Stunell (Liberal Democrat, Hazel Grove)

Clause 144 provides a power for central Government to control the amount of overall borrowing held by local authorities in relation to their housing revenue account. That is the debt and the interest that relates to their landlord role. Self-financing will give local authorities direct control over a large income stream. Prudential borrowing rules have been effective in ensuring that local authority borrowing is affordable locally, but our reforms must also support the coalition’s first priority of reducing the national deficit, so borrowing under self-financing must be affordable within national fiscal policies, not just within local finances.

For most authorities, the borrowing cap will be set at the self-financing valuation. That will mean that local authorities whose notional borrowing for housing revenue account subsidy purposes is the same as their actual borrowing, will have a cap which is set at the level of their opening debt under self-financing. Our recently published policy document, “Implementing self-financing for council housing,” states that any council whose opening debt is above its self-financing valuation at the start will have its cap set at the higher level.

I can commit to the fact that the aggregate housing borrowing cap will not be reduced, nor will we reduce individual councils’ housing borrowing caps. The borrowing cap will place pressure on some councils in the early years of self-financing. Those pressures, however, should be seen in the context of the deal that significantly increases funding for all landlords and of a very tight fiscal position across the public sector in the next few years.

Alison Seabeck (Labour, Plymouth, Moor View)

The Minister spoke about the impact on some councils. Can he give any indication about roughly how many councils will fall into the category that he has just described?

Andrew Stunell (Liberal Democrat, Hazel Grove)

I am absolutely delighted that the hon. Lady asked me that question, because I have a graph, which of course Hansard cannot see, but does show the distribution of the amount by which there is borrowing headroom for local authorities, and the number of authorities who benefit from that headroom. On the reverse of the graph is a chart that lists each housing authority and its indicative borrowing amount. With your permission, Mr Amess, I would be very happy for that to be circulated to all members of the Committee.

Alison Seabeck (Labour, Plymouth, Moor View)

That would be very helpful.

Andrew Stunell (Liberal Democrat, Hazel Grove)

The chart gives probably in excess of the amount of information that the hon. Lady thinks she needs. I am very happy to do that.

To summarise the chart, there are 171 councils that have stock, and therefore have housing revenue accounts that are affected by this legislation. Somewhere between 20 and 30 of those will have no headway to increase borrowing under these reforms. The other 140 or so will have that headway. The names of those and their amounts, in both of those categories, are on the sheet that I will circulate to the Committee. I hope that the hon. Lady is at least a little reassured about that. The number of winners certainly exceeds the number of non-winners, but even the non-winners are not losers, because where there is a cap that would otherwise be below their notional spending, that spending will be protected. I am not sure that I mentioned this, but there is an assessment that the total amount of capacity that that will release is in the order of £3 billion to £4 billion.

Clause 148

Alison Seabeck (Labour, Plymouth, Moor View)

We broadly welcome any move that will help tenants who wish to move to do so. We rehearsed on both sides of the Committee the reasons why that is a good thing if we can achieve it. There are already some very good organisations working in the field, such as Housing Partners with its HomeSwapper scheme, that can deliver additional mobility. I am glad that the problems on the ownership and the protection of data, which arose prior to the publication of the Bill, seem to have been resolved. It must be possible, with modern technology, to inform and advise people of the benefits of moving to another area and offer them quite a lot of detail about the options available to them. Over the years we have seen schemes come and go, and for schemes to develop around a region as well as nationally, I think it is important that those are pulled together.

A mechanism appears to have been found, but there seems to be another little local difficulty: there appears to be a bit of a challenge with the Greater London authority, where the Mayor seems to want to commission a separate pan-London mobility project. I am not sure how that will sit alongside what is proposed in the Bill and whether it is necessary for the Mayor to go to these lengths. It would be helpful to know what discussions the Department have had with the Mayor about the different schemes and his logic in going ahead on his own.

Making effective use of this service, ensuring that sharing databases offers a smooth service, could potentially help to reduce the almost 60,000 under-occupied bedrooms—perhaps not on a massive scale, but to some degree. Our casework tells us that we all have people who would like to downsize but are reluctant to do so because they are worried about moving out of area, moving into the unknown. Clearly, with better communications and better data, some of those fears might be allayed and we might encourage a few more moves.

Targeting of information about this new scheme is incredibly important and today, on international women’s day, it is appropriate for the Committee to understand that most moves are instigated by the female in the family, not the male. The Minister perhaps needs to look at how any scheme that is established targets the female of the household in order to encourage moves.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I thank the hon. Lady for her warm welcome for the scheme that we propose. I am not in a position to comment on what the Mayor of London may be proposing, but we are putting in place a national scheme which, as she recognises, will have real benefits. As she also recognises, we have now provided the outstanding answers on ensuring that data are secure.

The hon. Lady makes the interesting but rather oblique point that it is the women of the household who instigate moves. There is a light-hearted reply, which is that it does not surprise me to hear that. On a more serious note, in many cases, of course, that is as a result of changes in relationships and often represents significant problems for families and I do not dismiss that lightly. Obviously, the scheme that we propose will be as accessible to female as to male tenants, or, indeed, to members of households who live in social accommodation and think that it might be a reasonable prospect to change—to downsize, to relocate or whatever it might be. I think that we have agreement across the Committee that there is a good scheme here which will benefit tenants. As the hon. Lady says, it is a modest improvement; we do not expect it to have a dramatic impact, but it will have a real impact which will improve the lives of a good number of social tenants throughout the country.

Alison Seabeck (Labour, Plymouth, Moor View)

I thank the Minister for his response. There is a great deal of cross-party agreement on this. However, I do have some concerns about what young Boris is up to in London, not least because there are costs to boroughs and to landlords of joining one of these schemes and clearly, these costs will increase if they are going to be duplicated because the Mayor of London thinks there should be a separate one for London when in fact there are a lot of benefits in having a national scheme and enabling people in London to move out if they choose. Does the Minister intend to meet the Mayor of London to try to discourage him from simply duplicating a scheme?

Nick Raynsford (Labour, Greenwich and Woolwich)

My hon. Friend will recall our earlier discussions on the question of entitlement to retain a secure tenancy in the context of a move of tenure. Clearly, if the Minister is not able to give the kind of satisfactory assurance that we were seeking, that would be an inhibitor on the potential effectiveness of any such scheme. Rather more importantly, I have been ruminating on a situation that could apply, where the local authority or landlord is in a position to choose whether or not to extend security on the part of a tenant who moves into another accommodation. If that discretion were to exist, different rules would apply in different areas. The likelihood of tenants being able to understand the likely implications of a move would be seriously prejudiced. This is a very serious point about measures that will not impede the effectiveness of a mobility scheme, which I think we all want to support.

Alison Seabeck (Labour, Plymouth, Moor View)

My right hon. Friend is always at his most dangerous when he is ruminating. However, he raises an interesting point, which I had not been quick enough to pick up. He is right; there is the potential for further complication in the scheme, as a result of the earlier discussion. I am sure the Minister will endeavour to explain his position.

Andrew Stunell (Liberal Democrat, Hazel Grove)

Our national scheme will enhance any local scheme, whether in London, across Greater Manchester or in other areas. As the hon. Lady rightly points out, it will particularly support households that want to move outside that local area, for instance, out of London to other parts of the country. There have not been any formal discussions between the Mayor and the Department on the issue. I have no doubt that, as the details of our scheme and his emerge, there will be the opportunity to do so. But they are not in conflict, and they do provide complementary opportunities for tenants to find suitable accommodation.

Alison Seabeck (Labour, Plymouth, Moor View)

I am sorry to drag this out, as we should be broadly in agreement on the matter. The Minister will be aware of the difficult conversations that happened in the run-up to the introduction of the Bill, between those currently holding data and running schemes, not only with each other but with the Department, about how those data are shared, and who benefits. Some of those bodies hold significant amounts of data, in which they have invested a lot of time, effort and money. It is important to see how that fits with what is proposed in London, to ensure that the scheme does not start to come unpicked because the individual providers have problems with it.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I agree with the hon. Lady that it is important to get it right. My understanding is that we are very far along the track of getting it right. If there are any outstanding questions, I undertake to write to the hon. Lady to clarify that point.

I shall pick up the less contentious point made by the right hon. Member for Greenwich and Woolwich. Existing secure tenants retain security of tenure if they move, even if they swap with a flexible tenant. I hope that reassures him on the specific point. There is a more general point. For the foreseeable future, the number of affordable-rent tenancies available, in proportion to the total number of social-rent tenancies, will be very small. So the large majority of new tenancies offered to people on the waiting list or people who are seeking to transfer will continue to be social tenancies, rather than affordable-rent tenancies.

Nick Raynsford (Labour, Greenwich and Woolwich)

I thank the Minister for that comment. If it is emphatically the case that tenants who are moving under a mobility scheme of this nature, from a secure tenancy into another—such as an affordable rent tenancy—retain their security of tenure, that is a very helpful commitment. However, it does not sit terribly well with what the Minister said this morning about tenants who opt for an affordable rent tenancy, not necessarily retaining their security. I press him to tell us whether he envisages that those tenants who transfer under a mobility scheme would enjoy a greater benefit than those tenants who wish to move within the same area, from a secure tenancy to an affordable rent tenancy. If so, what is the reason for the different treatment of tenants moving under the two different mechanisms?

Andrew Stunell (Liberal Democrat, Hazel Grove)

I have already read into the record twice this afternoon the response to the right hon. Gentleman’s question. I could do so a third time, but I suggest that he takes a careful look at Hansard and then writes to me separately if he is not content with what he sees.

Clause 150

Alison Seabeck (Labour, Plymouth, Moor View)

The clause requires only a brief mention now as it is linked to schedule 16 on which we shall have a wider debate. We have some worries about the movement of the Tenant Services Authority in the Government’s much publicised bonfire of the quangos. The watering down of the body that represents tenants in social housing is to be regretted. We have 50 years of evidence that there is a need for the legal rights of tenants, representation of tenants and support for tenants so that they can be involved fully in the management of their housing. It took more than 20 years until, interestingly, a Conservative Government recognised the rights of social housing tenants to be consulted. Indeed, it was not until the TSA was set up that tenants had the right themselves to hold their landlords to account.

We have seen that, by ensuring effective monitoring and enforcement of tenants’ rights alongside legislation for their rights, that has offered the best protection. Neither approach has worked on its own. Failure to involve properly and consult tenants has a cost—a cost that research shows has led to costly design failures and management mistakes. General alienation from housing will not be helped by a high turnover in the social sector as a result of some of the Government’s policies. It does not lead to successful communities.

Overall, performance did improve between 1998 and 2008, and the need for inspections diminished. The reorganisation of the Housing Corporation into two bodies, the Homes and Communities Agency and the TSA, offered the opportunity to continue and, indeed, to develop the tenant focus. It gave opportunities for tenants themselves to draw attention to any failure of agreed standards of delivery. Under the Bill, the rights of tenants are being reduced, their ability to build and form strong communities weakened and now the specific body to represent and respond to tenants’ rights issues and worries is being effectively abolished. Unless the Minister says something reassuring, we intend to vote against the clause.

Andrew Stunell (Liberal Democrat, Hazel Grove)

As the hon. Lady says, the clause introduces schedule 16, which transfers the regulatory functions of the Tenant Services Authority to the Homes and Communities Agency, acting through an independent regulation committee. The Housing and Regeneration Act 2008 created the TSA as a stand-alone regulator when regulation had previously been delivered within the Housing Corporation alongside its other functions. The TSA delivered a new regulatory framework, which is being amended under the Bill.

Last October, we published a review of social housing regulation and that report recommended that the Tenant Services Authority be abolished and its functions transferred to the HCA in line with the Government’s overall objective of reducing the number and cost of quangos. To maintain lender confidence, the review recommended that regulation be discharged by an independent regulation committee within the HCA with that independence enshrined in statute. That is exactly what we are doing under clause 150 and schedule 16. We are giving effect to the recommendations in that review on the transfer of the functions.

The changes are given effect by several amendments to the 2008 Act, which are set out under schedule 16. They include making it an objective of the HCA to support the discharge of the regulatory functions by the regulation committee and making it clear that the HCA must discharge those functions through the regulatory committee.

I am sure the hon. Lady has studied the legislation, and she will have seen that the report’s recommendations have been transposed precisely into it. The Government proposed the abolition of the TSA and the transfer of its functions to the HCA. The independent review set out the need for a free-standing regulation committee. The Government have accepted that, and the proposal has been built into the clause and the schedule.

The Government fully accept and agree with the hon. Lady’s contention that it is important that tenants should have protection and that their rights should not be weakened. We believe that we now have a mechanism that safeguards tenants and ensures that their capacity to have their rights enforced is as strong as it was under the preceding regulatory regime. I therefore beg to move the clause and the schedule.

Nick Raynsford (Labour, Greenwich and Woolwich)

May I ask the Minister a few questions about the schedule? Specifically—

Sir David Amess (Conservative, Southend West)

Order. I thought the right hon. Gentleman wished to comment on clause 150.

Nick Raynsford (Labour, Greenwich and Woolwich)

In concluding, the Minister said he hoped the clause and the schedule would stand part of the Bill. That is why I rose. I thought we might be debating the two together.

Sir David Amess (Conservative, Southend West)

I think the Minister inadvertently made a mistake.

Schedule 16

Alison Seabeck (Labour, Plymouth, Moor View)

I beg to move amendment 285, in schedule 16, page 341, line 16, at end insert—

Sir David Amess (Conservative, Southend West)

With this it will be convenient to discuss the following: amendment 286, in schedule 16, page 342, line 26, leave out from beginning to end of line 27 and insert—

Amendment 287, in schedule 16, page 343, line 5, leave out ‘, unfit or unsuitable’ and insert ‘or unfit’.

Amendment 288, in schedule 16, page 344, leave out line 29 and insert—

Alison Seabeck (Labour, Plymouth, Moor View)

I will speak briefly to each of the amendments, but I hope the Committee will not take that brevity for a lack of conviction.

Amendment 285 is fairly self-explanatory. It brings in a requirement for the HCA to provide a support team of regulatory staff should the regulation committee of the HCA request one. That will be necessary for the committee’s smooth running and efficiency, and I hope that the Minister will consider it. There could be unexpected pressures, and that additional capacity to ensure that co-regulation works and provides a good service could well be necessary.

Amendment 286 might sound a bit familiar to anyone who has knowledge of the Bank of England Act 1998, which I am sure is bedtime reading for Government Members. They all look a bit sleepy, so they were probably up last night reading it. I do not know whether any members of this Committee had the pleasure of sitting on that Committee, but this amendment is modelled on the language used to set up the Monetary Policy Committee. It would ensure that members are appointed for a set period of three years and that appointments take place by rotation to ensure some continuity while allowing for the committee to be refreshed with new members. It is good enough for the Bank of England, so I would suggest to the Minister that it is probably a rigorous enough structure for the HCA.

Amendment 287 removes the word “unsuitable” from proposed new section 92D(7)(d) of the Housing and Regeneration Act 2008. I am unsure what the Minister believes the legal definition of “unsuitable” to be, but I am sure there is one. I am sure it would be of benefit to the Committee if he could explain it to us in due course. Who would be the judge of that unsuitability? The other disqualifications listed in proposed new paragraph (d), being either “unfit” or “unable”, ought to be strong enough and we would have some worries about the use of “unsuitable” unless the Minister can convince us of its necessity. Once again this amendment is modelled on the legislation underpinning membership of the MPC. I do not believe the Secretary of State needs greater powers to step in and remove someone from the regulation committee than the Chancellor of the Exchequer needs with regard to the Bank of England.

Amendment 288 ties in with amendment 285 and would ensure that the regulation committee’s powers may be delegated only to specific regulatory staff within the HCA. That is a principle of good governance, and without it the Bill would permit those powers to be delegated to any staff within the HCA, including the chief executive. We feel the powers should be reserved for a specific category of staff, and I hope the Minister understands the reasons for this amendment.

Andrew Stunell (Liberal Democrat, Hazel Grove)

The amendments relate to schedule 16, which transfers the regulatory functions currently performed by the TSA, the regulator of social housing, to the HCA acting through an independent regulation committee. It is, of course, important for maintaining lender confidence in the social housing sector and for ensuring continued protection for tenants that the new regulation committee is strong, independent and properly supported, which will enable it to discharge its functions effectively. The legislation is designed to ensure that the committee is effective and independent and that all regulatory decisions are for the committee only.

Amendments 285 and 288 are intended to ensure that the committee is properly staffed and supported, but the details of how the committee will operate are surely for the chair of the committee, once he or she has been appointed in consultation with the HCA and the Department for Communities and Local Government. The legislation sets a requirement in section 2 of the 2008 Act on the HCA to facilitate the regulatory work of the committee. That means ensuring that it has the resources to deliver its objectives, which would, of course, include appropriate staff, but I do not see the need to specify precise details about staffing in the legislation. To do so would prevent flexible, efficient and effective working across the agency. It might, for example, prevent the sharing of common corporate services.

Amendment 286 addresses the terms of appointment and, again, the Government agree that it would clearly be sensible for appointments to the committee to expire at different times to ensure continuity and avoid all members leaving at the same time. But such detail is not appropriate in the Bill and would add to the complexity of the provisions. Our preference is that the terms and timing of appointments can best be handled through the advertising and appointment process, following best practice guidance set by the Office of the Commissioner for Public Appointments.

Amendment 287 relates to the power to remove regulation committee members on the grounds that they are unsuitable. It is important that the committee is able to function effectively, to retain the confidence of investors and the social housing sector, and the power allows the Secretary of State to intervene where necessary, if a member is considered unsuitable to carry out the necessary work of the committee.

The hon. Lady asks for a legal definition, but perhaps it would help if I just gave an example. A member might still be able to carry out his or her functions without being suitable to exercise them, and that might arise from an irretrievable breakdown in the relationship between the member and the committee. Perhaps the member so disagrees with a decision made by the committee that he or she engages in activities such as filibustering—thankfully we are never subject to that in this place—that deliberately disrupt the committee’s work but nevertheless fall short of qualifying the member as unfit.

Proposed new section 92D(7)(d) of the 2008 Act gives the Secretary of State reasonable scope, in allowing him to remove a member when he thinks that that member is unable, unfit or unsuitable to exercise his or her functions, and the formulation is much more likely to be workable in practice than if we sought to draw up an exhaustive list of occasions on which the power may be used. However exhaustive such a list were, one can be certain that the first situation that arose would not be on the list, which would have been written into primary legislation. The Secretary of State could only ever exercise the power reasonably; indeed, we would not expect it to be used other than in exceptional circumstances.

Interestingly, a nearly identical statutory provision already exists for the membership of the social housing regulator. Section 83(4)(e) of the 2008 Act provides that the Secretary of State may dismiss a member of the regulator,

“where a member has misbehaved or is for any other reason unable, unsuitable or unwilling to perform functions”.

and the power in the proposed new section is very similar to that. In fact, being unfit, unable or unsuitable are three fairly standard grounds. They apply to members of the Homes and Communities Agency itself, and feature in paragraph 2 of schedule 21 of the Bill in relation to appointments to the mayoral development corporation. I hope that that reassures the hon. Lady that the Secretary of State is not taking a new, novel or unusual path, and that the provision is a common-sense one, in all the circumstances. I urge her not to press any of her amendments.

Alison Seabeck (Labour, Plymouth, Moor View)

I thank the Minister for his remarks. I beg to ask leave to withdraw the amendment.

Alison Seabeck (Labour, Plymouth, Moor View)

I beg to move amendment 289, in schedule 16, page 346, line 8, at end insert—

The amendment seeks to ensure that the fee income within the HCA can be used only for present regulatory expenditure and not for any other purpose or historical liability. Income charged for regulatory purposes ought to be used for such purposes, and not linked back to historic gaps in expenditure, possibly even regarding pensions. I would welcome the Minister’s comments.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I recognise the hon. Lady’s concerns as reflected in the amendment. We agree entirely that any fee income should be used for current regulatory expenditure and not to meet any historic liabilities; we are absolutely in agreement on that. The right hon. Member for Greenwich and Woolwich got there before us, because the wording in the 2008 Act is designed to ensure that income from fees can be used only for regulatory purposes, and so the amendment would simply duplicate an existing provision. We will look further at the details for the fees regime, and will consult on them in due course. I hope, therefore, that the hon. Lady feels able to withdraw the amendment.

Alison Seabeck (Labour, Plymouth, Moor View)

I thank the Minister. He will appreciate that a number of people came to us with concerns. It is helpful to have that reassurance on the record. I beg to ask leave to withdraw the amendment.

Nick Raynsford (Labour, Greenwich and Woolwich)

I think that this is the right point to make my speech, Mr Amess.

Schedule 16 is an extremely important part of the Bill, as it defines the objectives, modus operandi and remit of the new body being created to take over some of the functions of the Tenant Services Authority, which the Bill will abolish.

The Minister will be aware that there is a long history of debate about how the social housing sector should be regulated and the possible tensions between the promotional role of the former Housing Corporation in funding housing associations, and its role in maintaining the integrity of the sector and looking after tenants’ interests. Given worries about a possible conflict of interest, the separation of the Housing Corporation’s funding and regulatory functions was at the core of the creation of two separate bodies: the Homes and Communities Agency, which took over the promotional role; and the Tenant Services Authority, which took over the regulatory role. That is now coming to an end. Although I might have doubts about the wisdom of what the Government are doing, I do not intend to challenge it in my comments. However, I want to try to get the Minister’s take on how the possible tension between those different responsibilities will be resolved in the current framework, as one body will once again perform those two functions.

I accept entirely that the Government have chosen a framework that establishes a quasi-independent role for the body that will have tenants’ interests at heart and manage regulatory rather than promotional responsibilities. That is fine as far as it goes, but the fundamental objective in proposed new section 92K of the Housing and Regeneration Act 2008 is a clear statement of the two separate responsibilities. The first is the economic regulation objective, which is landlord-focused and deals with ensuring that landlords are viable and develop more social housing cost-effectively, and without imposing unreasonable burdens on public funds—to put it crudely, those are the objectives. The consumer regulation objectives, which take a tenant perspective, are to support the provision of social housing that is well-managed and of appropriate quality, to ensure that tenants have choice, protection, and the opportunity to participate and hold their landlords to account, and to encourage registered providers of social housing to contribute to the wider well-being of the areas in which they operate. How will the tensions and possible conflicts between those two sets of objectives be managed when they will essentially be handled by the same body?

Let me set out three scenarios, the first of which involves rents. Under the Government’s policy, we know that new tenancies called affordable rent tenancies will be created—there is some irony in that choice of words, but I will let it pass for the moment—that could involve very high rents in some parts of the country. How will the promotion of that type of tenure, which would clearly be part of the role of the Homes and Communities Agency, be reconciled with the social objective to ensure that tenants of social housing have an appropriate degree of choice and protection?

I note that the word “affordability” does not feature at all in the definition of the consumer objectives. How will the body decide whether the kind of tenancies being created are producing rent levels that are genuinely affordable for tenants? That must be part of the remit of the consumer objective if that objective is anything more than a figment. Clearly, whether people can afford their tenancies is a fundamental question. However, in the absence of any mention of affordability in the Bill, how will the body judge whether the tenancies being created are affordable? How will it look after the interest of the consumer, which it will be supposed to do under the consumer regulatory objectives?

Secondly, we come on to the question of security, about which there has been a lot of debate, so I shall not take a lot of time. The protection of tenants’ interests is explicit in proposed new section 92K(3)(b), which states that the objective is

“to ensure that actual or potential tenants of social housing have an appropriate degree of choice and protection”.

That is clearly germane to our debate about whether tenants might lose security by transferring from an existing secure tenancy to a new affordable rent tenancy. I would welcome the Minister’s view on how that tension, if it arises, is to be resolved.

Thirdly, proposed new subsection (3)(c) sets out the objective

“to ensure that tenants of social housing have the opportunity to be involved in its management and to hold their landlords to account”,

which I am sure we would all say was broadly sensible. However, we live in a world in which many social landlords are expanding rapidly, both in size and in geographical remit. While it may be possible for tenants to play an active role in supporting the management with their landlord in one area, that may be difficult if that landlord operates across a much wider area. I understand that there are tensions within the existing framework, but they are likely to intensify in the years ahead simply because of the financial pressures that will push many landlords into going for growth and expanding the areas in which they operate. Again, how will the objectives of encouraging economic efficiency and cost-effective provision of social housing under the economic regulatory objectives be reconciled if there is tension and conflict with the consumer support objectives in the second fundamental objective?

There is not a great deal of clarity in the Bill about how conflicts between the objectives are to be handled. Will there be any machinery to ensure that the respective weight to be afforded to one objective against another is considered? Will that be a matter for the board? If so, how will it deal with the quasi-independence of the body that will deal with the social regulatory responsibilities taken from the TSA? Again, I cannot see evidence of how those tensions will be handled. If there was to be mediation between the two, it would be quite difficult to operate Chinese wall-type independence so that the regulator was not part of the same process that operates throughout the rest of the HCA.

The issues are complex, and the Minister may, as in our earlier exchange, choose to write to me rather than respond immediately. However, I would welcome some idea of how he envisages that the new arrangements will work. Such tensions and conflicts are not imaginary; they have been around for a long time, and have prompted the creation of two separate bodies—the HCA and the TSA—to avoid the risk of conflicts of interest. Now that the two are being put back together again in a new agency, those tensions are likely to resurface, so I would welcome an indication from the Minister of how the conflicts and tensions will be resolved.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I hope that I am able to reassure the right hon. Gentleman. First, the two objectives of economic regulation and consumer regulation are, contrary to what he indicated, already performed by the Tenant Services Authority, so there is already experience of how such things are handled by one body. I hope that its good practice will be available to the new regulation committee and transferred through to the Homes and Communities Agency’s behaviour.

We are not creating a new situation. We are transferring two regulatory functions from one body to another, so we can dispose of some of the straw men that the right hon. Gentleman erected without any difficulty. In addition, these objectives are regulatory, not investment ones. This is about setting a regulatory framework, not making a judgment about investments on the one hand and rents on the other.

Such matters are, of course, for the regulator to decide. Most statutory regulatory bodies have a number of different objectives, and their job is to take a balanced view of them. Not only is this different, but there are two broad areas in which there are objectives: one, as the right hon. Gentleman said, is economic regulation, while the other is consumer regulation. It is for the regulator to balance those objectives in the social housing sphere.

I would say to the right hon. Gentleman that we have not in fact done anything that is new or different in respect of the issues that he has brought to the Committee’s attention, and we expect that the existing mechanism will be as applicable in the new circumstances as it is now.

Nick Raynsford (Labour, Greenwich and Woolwich)

I am surprised that the Minister takes such a line because clearly the Government are doing something new. Under the previous arrangement, the Tenant Services Authority had a regulatory function. He is right to say that it considered the viability of landlords as well as the interest of tenants, but it did not have the role of promoting new development. The investment objective was not part of its remit, and one of the consequences of such an imperative—to get more homes built by pushing rents up, which seems to be very much part of the Government’s objective—is in conflict with most people’s view of what a responsible regulator should do about the affordability of housing for tenants.

I note that the Minister did not refer to affordability or the judgment of affordability in his comments, so I do not find his answer at all convincing. I suspect that in the years ahead we will see a number of conflicts of the kind that I have described. They will not be straw men, as the Minister inappropriately referred to them, but genuine issues that affect real people, housing associations and social landlords. When those problems arise, I hope that the mechanisms in place will be adequate to cope with them, but I do not feel reassured by the Minister’s suggestions that they will be.

Schedule 17

Alison Seabeck (Labour, Plymouth, Moor View)

I beg to move amendment 290, in schedule 17, page 351, line 40, at end insert—

I shall be brief. The amendment deals with a matter that was raised with us by the National Housing Federation, which is worried about how deregistration will be carried out. I shall put its words directly to the Minister so that he can respond:

“The 2008 Housing & Regeneration Act introduced a new test for voluntary deregistration, namely that the body in question is subject to regulation by another authority whose control is likely to be sufficient. This is a confusing provision that, in practice, has made deregistration much more difficult even for very small organisations with little outstanding grant who have fully consulted their residents about the implications of deregistration. The amendment does not affect the power of the regulator to set criteria for deregistration.”

It is clear that the National Housing Federation feels that confusion still reigns in this area, and it would ideally like some clarification.

Andrew Stunell (Liberal Democrat, Hazel Grove)

This is obviously a technical amendment, but the subject is important: the circumstances in which a regulator may approve a request from a private registered provider—a registered social landlord in old language—to deregister and thereby no longer be subject to regulation. It is right that there should be such a mechanism, and it needs to be appropriate and proportionate to the circumstances. It is crucial that there are also adequate protections for both tenants and public investment.

The amendment would remove one of the grounds on which the regulator may comply with the request for voluntary deregistration, which is that the provider is subject to regulation by another authority whose control is likely to be sufficient. As the hon. Lady said, that is particularly appropriate for smaller registered social landlords—or private registered providers, as we will gradually learn to call them.

According to the National Housing Federation, the aim of the amendment is to make voluntary deregistration easier, but it is hard to understand how that could be the case when it would remove one of the grounds on which the regulator may approve a request to deregister. In other words, it would take away some of the regulator’s capacity to grant a request to be deregistered. From the point of view of the Government, it seems entirely sensible that the regulator should be able to approve an application for deregistration on the grounds that there are sufficient protections in another form via a different regulatory regime. None the less, it does not make any sense, if that is the objective, to remove one of the grounds on which that approval can be given. The amendment, while well-intentioned, therefore misses the target that is being aiming for.

Alison Seabeck (Labour, Plymouth, Moor View)

I thank the Minister for his explanation and agree that there needs to be regulation. This is a technical amendment, so I am sure that if the National Housing Federation, after considering the Minister’s comments, has further concerns about the provision, it will get in touch directly with the Department, or with hon. Members with a view to us tabling further amendments on Report. I am happy to beg to ask leave to withdraw the amendment.

Alison Seabeck (Labour, Plymouth, Moor View)

I beg to move amendment 279, in schedule 17, page 352, line 1, at end insert—

Sir David Amess (Conservative, Southend West)

With this it will be convenient to discuss the following: amendment 280, in schedule 17, page 352, line 7, at end insert—

Amendment 281, in schedule 17, page 352, line 25, leave out from ‘is’ to end of line 27 and insert ‘repealed’.

Amendment 282, in schedule 17, page 352, line 28, leave out paragraph 6 and insert—

Alison Seabeck (Labour, Plymouth, Moor View)

I shall not move amendment 281. Amendments 279 and 280 deal with the nature of the powers of the regulator. The word “control” in amendment 279 has raised real concerns about the operational independence of housing associations. I am sure that the Minister does not want to risk their being seen as not operationally separate from the Government, and I would welcome his comments on that. He may well be able to reassure the Committee on that matter.

Amendment 280 would bring standards rules for the housing association sector in line with those in the charitable sector. A move from the word “rules” to “guidance” would be welcomed by the sector. We are all acutely aware of how important confidence is for lenders and investors. All the comments that I have seen, whether from the Council for Mortgage Lenders or others, suggest that we cannot risk weakening the financial monitoring. Most lenders do not want the existing intervention and enforcement powers changed, but we are where we are, and I hope that the Minister can offer us some reassurance on those points.

Amendment 282 would clarify and simplify the power of the Secretary of State to direct the regulator on standards, and explicitly limits the power of the Secretary of State to the standards set out in section 197 of the Housing and Regeneration Act 2008:

“the quality of accommodation, rent, or involvement by tenants”.

I am not quite sure why the Secretary of State needs powers that go beyond those in section 197. I await the Minister’s response.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I thank the hon. Lady for not proceeding with amendment 281. I believe that the other amendments were all inspired by the National Housing Federation, and it might be said, perhaps unkindly, that this is the landlords’ agenda. One consequence of the amendments would be to weaken protection for tenants, and I do not believe that we should go in that direction. Schedule 17 makes important changes to the statutory framework within which social housing is regulated, and those reforms were recommended by the review of social housing regulation that we published, to which I have referred.

Amendment 280 would appear to make the standards into optional guidance, but we do not believe that that should happen. They are minimum requirements that social landlords must meet for the protection of tenants and public investment. It is important that tenants of social landlords know what standards of service they can expect, and know that they can challenge their landlords to provide it. That is a crucial ingredient of landlord accountability, and describing consumer-related standards as being for the guidance of social landlords risks undermining the ability of tenants to hold their landlord to account for breaches of those standards. The amendment might not make any significant difference to the regulator’s powers, but it certainly would sow a great deal of unhelpful confusion.

Again, amendment 279, which would amend section 192 of the Housing and Regeneration Act 2008, probably would not have any legal effect, because the purpose of section 192 is to summarise the regulatory powers; the powers themselves would not be changed by the amendment. The only result would be to cause unnecessary and unhelpful confusion for the sector over whether substantive change had been made.

Amendment 282 relates to the Secretary of State’s powers. The Secretary of State has two levels of intervention under the 2008 Act. The Opposition, having introduced those powers, will understand that there is a top-level power to direct what will happen, and a power of lesser strength to set objectives to which the regulator must have regard. The amendment would not affect the Secretary of State’s capacity to direct the regulator. If the aim of the amendment is to reduce the Secretary of State’s powers, it is targeted at the wrong provision, because it is directed at removing the Secretary of State’s existing power to set objectives to which the regulator must have regard. That does not seem a logical progression of the case that the hon. Lady is making, and on some specific issues such as rents it may well be right for the Government to be able to direct on the content of standards. The amendment is therefore not necessary, and I hope that she will not press it to a vote.

Alison Seabeck (Labour, Plymouth, Moor View)

It is important to have the Minister’s comments on the amendments on record. I will not press the amendment to a vote.

Alison Seabeck (Labour, Plymouth, Moor View)

I beg to move amendment 283, in schedule 17, page 355, line 22, at end insert—

This is the final amendment to schedule 17. It would preserve the regulator’s ability to fill vacancies on registered providers’ governing bodies, and it allows it to appoint up to four additional members even if no vacancies exist. The logic behind that is to ensure that good governance can be maintained by the regulator and that weak boards can be strengthened. The amendment would also remove the existing provision that allows the regulator to appoint as many additional board members as it likes, as long as they remain a minority. The amendment puts a specific figure on that, and I would welcome the Minister’s thoughts on whether that is viable or sensible.

Andrew Stunell (Liberal Democrat, Hazel Grove)

The hon. Lady’s amendment proposes changing the existing situation, in which there cannot be a majority, and substitutes for that a requirement that there cannot be more than four members appointed. The simple problem is that if the board concerned happened to have only seven members, it would be possible to breach the current no majority rule simply by appointing the maximum of four. I think the hon. Lady would agree that it would be rather perverse if the protection given by existing legislation and the provisions could be undermined by specifying a number. In the case of small organisations, I understand that it is not unknown for there to be quite a small board, so the situation could arise. I understand the hon. Lady’s point, but the amendment would be counter-productive to her intentions.

Alison Seabeck (Labour, Plymouth, Moor View)

I beg to ask leave to withdraw the amendment.

Clause 153

Alison Seabeck (Labour, Plymouth, Moor View)

I beg to move amendment 266, in clause 153, page 130, line 21, leave out ‘must’ and insert ‘may’.

Sir David Amess (Conservative, Southend West)

With this it will be convenient to discuss the following: amendment 267, in clause 153, page 130, line 22, leave out ‘is not’ and insert ‘may be’.

Amendment 268, in clause 153, page 130, line 23, leave out ‘unless it is made’.

Alison Seabeck (Labour, Plymouth, Moor View)

We have deep reservations about the proposals in the Bill that allow tenants to make applications to the housing ombudsman only through an elected representative or a designated tenant panel member. There is broad support for the position that we are taking. We believe that what is proposed will act as a barrier to people coming forward, and create a process that it is difficult for some people to negotiate.

I know from constituency casework how frustrating people find it to have to go through me to access the ombudsman. They have often asked why they cannot go to them directly. I am not sure how assiduous all our colleagues and their caseworkers are in reading the applications that we receive fully before signing our name at the bottom. I do not understand why the Minister thinks that tenants are not capable of going to the ombudsman themselves, or why he believes that MPs or councillors are best placed to decide whether the tenant has a case that requires an answer from the ombudsman.

The Chartered Institute of Housing has the view that local representatives can certainly be involved prior to the approach to the ombudsman, in an advisory capacity, but they should not be the final arbiter. In my view, we may not have the technical expertise to make a sound decision and could inadvertently either disadvantage our constituent or send papers to the ombudsman when that is not the best place for them to go. I am sure that we have all referred constituents to the ombudsman, only to have the ombudsman refer the complaint back because he or she believes that the complaints process has not been fully exhausted, and it has to come back through us to the constituent. We are piggy in the middle. The ombudsman is perfectly capable of sending that message directly to the tenant.

The three amendments have broad support. Even housing associations want their tenants to be able to make direct complaints about them to an ombudsman. Removing the filter if necessary will allow people to make a quicker move to the ombudsman. As long as they understand the process that they must go through to get to that stage, they do not necessarily need to come through a Member of Parliament. The impact assessment suggested that there would be some additional pressure on councillors and MPs as a result of the measures. Our casework is already increasing as a result of some of the concerns arising from the Government’s measures, and I can certainly see the potential for further work. As it stands, the Bill has the potential to slow down and frustrate people’s access to the ombudsman, so the measures are not necessary.

Andrew Stunell (Liberal Democrat, Hazel Grove)

The hon. Lady correctly described the system as a democratic filter. It is intended to promote greater local decision making and give a stronger role in the complaints process to local councillors, MPs and tenant panels. She is right that cases come to us, but many people’s first stop will be either the tenant panel for their estate or neighbourhood or their local councillor. Our aim is to bring about quick, effective, local resolution of complaints.

In my 13 or 14 years’ experience as a Member of Parliament, I have had occasion to refer complaints about my local council to the ombudsman, but no housing complaints so far. I have a good housing authority, so I do not have a huge number of complaints, but it is surprising how often tenants come to me with housing complaints because communications have broken down or there has been some failure of service delivery or understanding. It is surprising that some of those tenants see their route as going to the ombudsman. Perhaps they had poor awareness of the Tenant Services Authority, in terms of where complaints might go.

If it is possible to resolve things locally, it is surely right that that should happen. I sometimes think that if public services were delivered to the standard to which we aspire, we would not have much casework, because the cases would be solved when the tenant or service recipient first complained to the authority. We are a long way from that, even in the best areas of service delivery.

Alison Seabeck (Labour, Plymouth, Moor View)

Will the Minister give way?

Andrew Stunell (Liberal Democrat, Hazel Grove)

I will in a moment. I want to develop my case. We are trying to promote local accountability. If councillors are getting complaints from tenants who cannot get resolution from their housing authority, surely that is the right place to lodge those complaints first. If the tenant panel is getting plenty of complaints, that is an important safety net and gives a clear signal that something is wrong with service delivery at the local level. If the matter gets as far as a Member of Parliament, how much better is it for the hon. Lady to become aware of deficiencies in service delivery in her authority than for the ombudsman to deal with the case?

It is clearly right that there should be an opportunity for local resolution when things break down, not just between tenants and the local authority but between tenants’ local representatives and the local authority, and things can be taken further forward if necessary. The Government’s view is that the filter that we have established is the best way to ensure that disputes are resolved locally and that the ombudsman focuses on addressing cases where effective local resolution is not possible. Intervention from the centre, whether by the Government or the ombudsman, should be the last resort and not the first port of call.

The hon. Lady is advocating a dual-track approach, where tenants can make either a direct or an indirect approach. We want to promote complaint resolution at the local level as far as possible, and to encourage a system where, ideally, the ombudsman is only brought in when local resolution is completely impossible. We are giving tenants more power. Local tenant panels will have the opportunity to resolve complaints before they reach the ombudsman. Tenants understand the issues that matter to them locally, and tenant panels are well placed to offer solutions and to recognise tenants’ interests and concerns.

Nick Raynsford (Labour, Greenwich and Woolwich)

The Minister makes a strong case for issues being resolved locally, and he mentioned the local MP being a vehicle. However, if he looks at the legislation, he will see that it does not say that the designated person must be the Member of Parliament for the constituency in which the property is located. It does say that the local councillor has to be

“a member of the local housing authority for the district in which the property concerned is located”,

but it just refers to

“a member of the House of Commons”.

That clearly leaves the door open for any dissatisfied tenant. The Minister shakes his head, but he will have received as many letters as I have from people in areas completely unrelated to our constituencies, asking us to get involved when they feel dissatisfied with the answer that they have had locally. He cannot have it both ways. He is either making the measures local and restricting the wording to democratically elected representatives of the relevant area, or he is opening them up, in which case he is simply inviting dissatisfied tenants to write to any MP. Frankly, that is a totally unworkable solution. The Minister can surely recognise that the wording is defective.

Andrew Stunell (Liberal Democrat, Hazel Grove)

It is getting a little bit late, and I think that the right hon. Gentleman has slightly over-cooked that one. I am sure that every Member of Parliament has a standard letter that says, “Unfortunately, you don’t live in my constituency.” There is no obligation placed on a Member of Parliament receiving a complaint. If I should receive one from Woolwich, there is no obligation on me to take it up. The proposal provides a route for complaints that arise locally to be resolved locally by locally elected representatives.

Ian Mearns (Labour, Gateshead)

I accept entirely what the Minister says, but the problem is that the way in which the legislation is drafted leaves it open for misguided tenants to go down that route. It is their time that we will be wasting. We may have a form letter that says, “Unfortunately, you are not in my constituency,” but we should not be guiding them down that path in the first place.

Andrew Stunell (Liberal Democrat, Hazel Grove)

There was a slight pause there while I counted to five. I really cannot see that the points that the hon. Gentleman and the right hon. Member for Greenwich and Woolwich are making have any legitimacy. What we are providing is nothing different from the current rights that a tenant, or any constituent of ours, has to approach us. The idea that they will go into some detail on how they choose to interpret the meaning of the Bill before they approach us is a little bit fanciful.

Heidi Alexander (Labour, Lewisham East)

Will the Minister give way?

Andrew Stunell (Liberal Democrat, Hazel Grove)

How could I not give way to the hon. Lady?

Heidi Alexander (Labour, Lewisham East)

I thank the Minister. He is being generous in giving way, particularly in this part of the Bill. Will the Minister not accept that it would be better to get rid of any ambiguity in the clause, and for him to say, “I will take this away and reflect on it”? Would it not be better to specify that only the local Member of Parliament can make a referral to the housing ombudsman?

Andrew Stunell (Liberal Democrat, Hazel Grove)

I do try to be helpful, although I recognise that that is not widely recognised among Opposition Members. I remind hon. Members, as I have just been reminded, that the existing legislation for the parliamentary ombudsman also provides that complaints may be made via any MP. There is no constituency limitation. We are simply using the phraseology of existing legislation; I hope that hon. Members will be satisfied on that point, so that we can move on to more substantive matters.

Alison Seabeck (Labour, Plymouth, Moor View)

I have listened carefully to the Minister’s response. As the existing legislation states that any MP can take a matter up, I am amazed that we have not had people beating a path to our door, saying, “You know how the legislation says any MP? I want you to take it up.” It is a bit like signing the back of a passport photo. As the shadow Housing Minister, I get a lot of mail from people who are not my constituents, but who want me to take issues forward. There is an argument for clarification of either this Bill or previous legislation, just to make the matter absolutely clear, not least because the Government seem to want to bring MPs, councillors and local representatives back into the system.

In the current system, people talk to their local tenants’ and residents’ groups about problems, and they may be told to see their local councillor. They then trot off to see their councillor and after that, they may well go to their MP. All of that already happens, but MPs do not always have power over local housing authorities and local councils, so I can see perfectly clearly why a tenant might say, “I just want to go straight to the ombudsman. I don’t want to bother with my MP”— or anybody else’s, as the legislation seems to suggest is possible.

What is the problem with allowing somebody to go to the ombudsman? Obviously, in the detail, it will have to be established that a person will need to jump through certain hoops—there could be an appeal process or something similar—before the ombudsman can consider their case. Labour Members have taken soundings from a range of people, and we cannot see why—tenants certainly cannot—that should not be possible. If tenants and landlords are saying, “There isn’t a problem with this,” I do not understand why the Government have one. I know that it is late in the day, but I am minded to press the amendment to a Division.

- Clause 159

Alison Seabeck (Labour, Plymouth, Moor View)

I beg to move amendment 284, in clause 159, page 143, line 6, at end insert—

Much to my relief, this is the probably the last clause to which I will speak. It has been a very long sitting.

Amendment 284 seeks to ensure that different levels of government in London work in harmony. [Interruption.] I am sure the Minister, when he has stopped chattering, will agree with me. Different levels of government should be totally harmonious. The Mayor should consult all 32 boroughs and the City of London when preparing his housing strategy and have regard to any published investment plans produced by the boroughs. We have five London MPs in Committee—all south London MPs coincidentally, including the Minister—and they will attest to the great diversity between boroughs.

It would be wrong for the Mayor to ignore the boroughs, given that it is within the boroughs that any new developments will be built. When introducing a strategy, the Mayor ought to have regard to their concerns. We want to encourage dialogue between the Mayor and the boroughs. Whichever party controls city hall, there will always be boroughs held by the opposing party or parties. That should not preclude consultation. I am not aiming to be contentious. I am merely trying to encourage better relationships across London and the wider boroughs.

Bob Neill (Conservative, Bromley and Chislehurst)

I am sorry if the hon. Lady feels a little weary. I am enabled under such circumstances to feel a little like great sporting idols of mine, such as Jonny Wilkinson and Steve Thompson as I have got to the age where I can come on for the last quarter.

I understand the sentiment behind what the hon. Member for Plymouth, Moor View seeks to achieve. I have spent a good chunk of my political life seeking one way or another to improve relations between the varying tiers of London government at various points in time. However, her amendment is unnecessary and I will explain why. Section 42 of the Greater London Authority Act 1999, as amended, already provides that the Mayor shall consult each London borough council. Section 43 requires that he send a copy of the strategy to each council at each stage of its development. So there is already a clear requirement to consult. It is worth saying that the Mayor’s consultation report on his current housing strategy states that London boroughs played a particularly active role in the consultation, with virtually all submitting a written response. For that reason, the legitimate points made by the hon. Lady are already covered.

The second half of the proposed amendment, that the Mayor should

“have regard to any published borough investment plan”

is therefore not needed, because in the responses the boroughs can—and I think do—draw attention to any area of concern, not just the investment plans. The point that the hon. Lady raised is met in existing legislation. I hope that she will therefore not press the amendment to a Division.

Alison Seabeck (Labour, Plymouth, Moor View)

I thank the Minister for reminding me—of course, I should have remembered that it was sections 42 and 43. Having sat through pretty much every single hour of the GLA Bill in Committee, it was silly of me to forget. However, I accept the Minister’s comments and I beg to ask leave to withdraw the amendment.

Clause 162

Jack Dromey (Labour, Birmingham, Erdington)

The Minister is right when he says that there is a high degree of consensus on many, if not all, of the proposals on London contained in the Bill. That is the product of what has been generally a very good dialogue between London councils, the mayoralty and others. I want to ask a question, however, about the clause and how it affects the transfer of assets. I can understand why assets might be transferred to the Greater London authority, and likewise to a functional body, a London borough council and even the common council of the City of London, although they are not exactly cash or asset strapped. Will the Minister explain the circumstances in which London assets might be transferred to the Secretary of State? Should London assets not be retained for the use of economic development in London?

Bob Neill (Conservative, Bromley and Chislehurst)

I am glad to see that the Opposition have brought on their equivalent of Damien Traille for these purposes. I take on board entirely the sentiment of the hon. Gentleman’s remarks. The whole of this part of the Bill is a testament to the maturity of London government and the way it has developed in the past 10 years, and that is why we are able to proceed, in large measure, by consensus. Broadly and as I am sure the hon. Gentleman will appreciate, the clause seeks to bring London into a position that reflects its circumstances in light of the abolition of the regional development agencies outside London, and the moving of the London Development Agency’s functions from a separate body into the mainstream of the Greater London authority itself, and therefore not accountable to Ministers.

The clause does not just relate to the transfer of assets. There are also various rights and liabilities that can include contractual liabilities, too. That is why a raft of people are included, with whom the LGA had, and continues to have, dealings in the course of its existence. For example, the LGA has, in its lifetime so far, acquired considerable land holdings, properly, as part of its site acquisition and consolidation roles. Sometimes those come from a raft of public agencies, as well as private bodies. There may be instances when it is appropriate, as part of the winding down or finalising of a project that LDA has worked on, that small areas could be transferred back to central Government, as much as they might be transferred, let us say, to the London borough.

Jack Dromey (Labour, Birmingham, Erdington)

Can the Minister give an example of where those powers might be used?

Bob Neill (Conservative, Bromley and Chislehurst)

The LDA is expected to close by March 2012. The Mayor will take a view on what activities are transferred across in the light of the spending review. There will be an inheritance of the regeneration portfolio and it will also become responsible for the management of the European regional development fund in London. It is conceivable that there might be occasions, because of the accounting arrangements, in which balancing payments need to be made. The bulk of the issue, as the hon. Member for Birmingham, Erdington rightly says, is not going to be to the Secretary of State. It is likely to be to other public bodies, and predominantly the boroughs, where we might get to the situation where the site has been resolved and there are bits of land that, conveniently enough, can be returned to the boroughs, as the hon. Gentleman will appreciate.

That probably covers the sorts of issues that we are dealing with. The power is very much seen as a residuary one, and I hope that the hon. Gentleman accepts that that is the case. The presumption is that the LDA’s assets will transfer to the Greater London authority by order of the Secretary of State but, equally, liabilities might transfer in the other direction in certain circumstances. The clause enables the transfer of liabilities as well as of assets, so there could be circumstances in which a residual liability as part of an agreement for the winding-down of a particular project might very properly be returned to the Secretary of State.

Gavin Barwell (Conservative, Croydon Central)

The concern is legitimate, and I am very grateful for my hon. Friend’s reassurance. Will he undertake to go away and look at subsection (3), which I understand to say that before any such transfer scheme can take place, the Secretary of State has to consult the Mayor? In addition, will he reflect on whether the London borough councils should also be consulted before any transfer?

Bob Neill (Conservative, Bromley and Chislehurst)

I will do that—it seems a reasonable proposal. Generally I anticipate that the transfer scheme will give effect to negotiations that have taken place and resulted in a voluntary agreement on the winding-down and ending of the process. It is unlikely, therefore, to be contentious, but I understand the point. We will come on to some broader points about consultation with the boroughs, and we could perhaps deal with the matter then. I think that the hon. Member for Gateshead wanted to pay a visit to London.

Ian Mearns (Labour, Gateshead)

I am interested in pursuing the matter, because we have been having a discussion with Ministers about the assets of the regional development agency in the north-east of England. We have written to the Prime Minister, the Chancellor of the Exchequer and the Secretary of State for Business, Innovation and Skills, asking what would happen to the assets of One NorthEast. On Monday, I had a letter from the Chancellor that clearly said that no decision had yet been made. In the north-east context, the regional development agency that is winding itself down has come to the conclusion that assets over liabilities comes to about £8 million or £9 million per year, being rental income from properties that have been developed as part of the property portfolio. So I just wonder whether the approach being taken with the London Development Agency is different to that being taken with regional development agencies in the other parts of the country.

Bob Neill (Conservative, Bromley and Chislehurst)

I will not be tempted into a forward pass. The simple reality is a practical one, and there is no hidden difference. The RDAs outside London are being abolished through a different legislative route, and it is right that there will be a netting-off process, which I anticipate will apply within London as well. It just happens that because of the different governance system in London, where there will be a direct transfer of the LDA into an existing democratically accountable body, it is appropriate to use this route. The proposal does nothing more than give the enabling power for those transfers to take place: it does nothing about the quantum, which is the process that the hon. Gentleman was talking about.

Ian Mearns (Labour, Gateshead)

I am sure that the Minister would not blame an hon. Member for trying.

Sir David Amess (Conservative, Southend West)

Order.

Heidi Alexander (Labour, Lewisham East)

I would like to explore what would happen if the Mayor of London and a London borough contested the transfer of the assets, because the clause is silent on that. Will the Minister say a bit more about the factors he would envisage the Secretary of State taking into account in a decision about whether it was appropriate that land be transferred to the Mayor of London or to a borough?

In my local authority, the LDA held moneys that were allocated to Lewisham as part of single regeneration budget funding, admittedly a number of years ago. That regeneration scheme has taken a long time to get off the ground—not helped by the recent problems in the economy—and I wonder, therefore, if the Minister could say a bit more about how those tensions might be resolved. He mentioned that it was envisaged that there would be consultation with the boroughs at some point in the process, but I would welcome a little more clarity.

Bob Neill (Conservative, Bromley and Chislehurst)

I am surprised the hon. Lady has used the word “tension”, because the striking thing about the package is that it essentially stems from a joint set of proposals from the Mayor, the assembly and the boroughs. Boroughs of all parties, through the London councils, are as signed up to these proposals as the Mayor and the assembly, where there is no overall majority. So this has not arisen from tension.

Heidi Alexander (Labour, Lewisham East)

Perhaps I can clarify my comment. It may be the case that the boroughs and the Mayor of London are happy with the proposals in principle, but that is not to say that there might not be one-off circumstances in which there is some controversy and disagreement about how assets are transferred and to whom they are transferred.

Bob Neill (Conservative, Bromley and Chislehurst)

It is theoretically possible. Remember that we are dealing not with ongoing circumstances, nor with future bodies that might be established, but with the one-off abolition of the London Development Agency and its folding into the mainstream of the GLA. So I do not think ongoing dispute is particularly likely.

The clause will enable the Secretary of State to make a transfer scheme—the Secretary of State has to have that power because the regional development agencies were the creatures of statute—in consultation with the Mayor, who has the democratic, London-wide legitimacy to make such schemes. The objective is to ensure that the agency’s ongoing activities may be transferred effectively. The bulk of those activities will go into the mainstream of the Greater London authority, which seems to be the intention. We are, however, giving flexibility for the Mayor to transfer some of those rights to other bodies, which could include a London borough or, as the hon. Member for Birmingham, Erdington has mentioned, a functional body.

One can see that, in some cases, it may be appropriate to transfer a parcel of land, to Transport for London, for example, because there is a logical use for it. It may be appropriate to transfer to a London borough a parcel of land that has some housing, recreational or educational use because, say, it abuts a school. It is in such circumstances that it is envisaged such a transfer would happen.

I hope the hon. Member for Lewisham East would accept that this clause deals with a one-off issue on which there has to be consultation. The Mayor has to act rationally, and the Secretary of State, having seen the Mayor’s proposal and the results of the Mayor’s consultation, would himself need to act rationally on it. I have no doubt, were there to be any significant dispute, that it would become apparent in the consultation. We do not want to impose and it is logical that we do not need to legislate for the bit of common sense that should see an agreement between the parties. It is worth stressing that this has not been raised as a potential obstacle by the boroughs themselves.

Clause 163

Jack Dromey (Labour, Birmingham, Erdington)

These powers are welcome. The requirements on the Mayor to conduct an assessment of London’s economic conditions and to prepare proposals for the economic development and regeneration of London are welcome. So, too, is the requirement to consult representatives of both employers and employees; so, too, is the requirement on functional bodies to have regard to the strategy laid down by the Mayor in the exercise of their functions; and so, too, is the specific reference made to skills being one of the areas of concern. Enhancing the development of skills in London for the purposes of economic development is, therefore, a key objective of the plan that the Mayor will be charged with preparing.

I wish to make two points. First, the proposals are welcome, going as they do to the heart of the need for sensible, regional, strategic planning in our capital city. It is also welcome that skills strategy is one of the areas for which the Mayor will have responsibility. I hope therefore that, when it comes to the next stage of welcome discussions that Ministers committed themselves to earlier about MEPs, their functions more generally and their inclusion under the Bill, there will be something of a read-across in that debate.

Secondly, the powers have immense potential. I have a long personal association with economic development in London. I was one of the founder members of the Greater London enterprise board in the 1980s, and served on the board for several years. It was a good model of public-private partnerships working to rebuild the economy of London. It is welcome that we have now moved on with a high degree of consensus with such ambitious powers being put forward. There is no question therefore that, properly exercised with ambition and vision, the powers have the capacity to make a real difference to the people of London. I hope that the Committee will join me in wishing Mayor Livingstone well in the exercise of them

Bob Neill (Conservative, Bromley and Chislehurst)

I welcome the hon. Gentleman’s support for the powers, but the Bill is not retrospective. I agree about the importance of a strategy. There was an LGA strategy, and the Mayor himself wants another. The hon. Member for Birmingham, Erdington is right to refer to spatial areas and the importance of skills and, of course, the Mayor has also taken an ongoing interest in skills. I also agree with the need to make sure that the dialogue takes that forward.

It is perhaps significant that the Mayor’s role as co-chair of the new local enterprise partnership, which will include not only business leaders from right across the sectors, but it seems as though the interim board is intended to have representatives of the skills sector as members. That seems a step in exactly the direction of which the hon. Gentleman and I are in favour. There is nothing between us and the Mayor on that.

Schedule 19

Bob Neill (Conservative, Bromley and Chislehurst)

I beg to move amendment 272, in schedule 19, page 356, line 3, leave out paragraph 1.

Sir David Amess (Conservative, Southend West)

With this it will be convenient to discuss Government amendments 273 to 278.

Bob Neill (Conservative, Bromley and Chislehurst)

The purport of the amendments is largely minor and technical. The amendments would not change the substantive legislative provisions that relate to the granting of housing and regeneration functions to the Greater London authority, but they are important to ensure that the GLA can exercise those functions flexibly and as the Bill intended. The first amendment would remove a superfluous provision. The Land Compensation Act 1961 already applies to the GLA, so deleting the provisions would simply remove a legislative anomaly. The consequential amendments would ensure that the GLA’s housing and regeneration functions and that its new town and urban development functions that it is acquiring historically are captured. They would ensure that the references to the GLA cover both the new town and urban development functions, and the housing and regeneration functions. That means, in effect, that they cover the whole of the GLA’s relevant activity, which equates to the treatment of the Homes and Communities Agency in legislation. Part of that is to deal with the transfer of the London office of the HCA into the GLA.

Clause 169

Nick Raynsford (Labour, Greenwich and Woolwich)

I beg to move amendment 126, in clause 169, page 148, line 34, leave out ‘must’ and insert ‘may’.

Sir David Amess (Conservative, Southend West)

With this it will be convenient to discuss the following: amendment 269, in clause 169, page 148, line 44, at end insert—

Amendment 127, in clause 169, page 149, line 3, at end insert

‘and any of the persons listed in section 168(4).’.

Amendment 270, in clause 169, page 149, line 4, at end insert—

Nick Raynsford (Labour, Greenwich and Woolwich)

I rise to speak to the amendments 126 and 127, which are in my name. They are specifically about the Secretary of State’s obligations in respect of a reference from the Mayor for the designation of a mayoral development corporation and the obligations on the Secretary of State to have regard to any representations received on that proposition. We know that mayoral development corporations will be powerful bodies. The other clauses make it clear that MDCs will take over specific powers, particularly on planning, from the relevant local authority. They will have a considerable influence on the area in which they operate.

We also know that the Government’s intention is to designate an MDC in the Olympic park area, which is widely supported and is not why I am rising to move these amendments. The Minister will be aware, however, that the legislation does not limit the scope of the Mayor in designating an MDC to only the Olympic park. It gives the Mayor carte blanche to come forward with proposals for an MDC in any area in London. I am not sure how compatible that is with the localist thrust of the Bill. There is not any provision for what happens if the Mayor proposes an MDC in an area where the local authority does not like the idea, and where a local neighbourhood forum has come into existence, and says, “We do not like the idea either.” That is unresolved and there is no mechanism for it. That is a curious omission in a Bill that is supposed to have a well worked out theory of localism. We shall let that pass for the moment.

Heidi Alexander (Labour, Lewisham East)

I am afraid that I cannot resist the temptation and let it pass, as my right hon. Friend suggests. Does he share my intrigue in this situation, where we could see a new Mayor of London suggesting, for example, that the London borough of Bromley be an MDC—I know that the hon. Member for Bromley and Chislehurst will have an interest in that—to try to tackle the severe shortage of affordable homes in the capital? Does the right hon. Gentleman think that that might be a possible outcome under, hopefully, a new Mayor of London?

Nick Raynsford (Labour, Greenwich and Woolwich)

My hon. Friend makes a good point, which the Minister, the hon. Member for Bromley and Chislehurst, is aware of because I put it to him on Second Reading. I will develop that further in due course. First, we have a bit of ground to get through.

If the Mayor decides to set up a mayoral development corporation, he is perfectly and properly expected to consult. The consultation obligations are set out in clause 168, which we have already approved, requiring the Mayor to talk to the London assembly, the constituency members of the assembly whose area contains any part of the proposed MDC area and any Member of Parliament whose constituency contains any part of the area, which is an interesting provision.

We were talking a moment ago about referrals to the housing ombudsman. I refer to the hon. Member for Hazel Grove, who has at last been given relief. Poor chap; I really felt for him because he was having to carry a huge amount of the burden, and I am pleased that the slackers who have been sitting next to him throughout much of the past two weeks of the Committee’s proceedings now have to take up their responsibilities.

Andrew Stunell (Liberal Democrat, Hazel Grove)

Hear, hear.

Nick Raynsford (Labour, Greenwich and Woolwich)

The hon. Gentleman gave us a good reason—or at least he thought it was a good one; we did not—as to why there should not be a designation of the area represented by an MP who would be in a position to make a referral to the housing ombudsman. He said, “No, no. Let us leave it to common sense and leave it open.” It is interesting that his colleagues think that only MPs representing the area in which an MDC is proposed should be able to make representations. I am sure that others will do so, but that is an interesting but obscure feature of the Bill.

The Mayor would then have to have regard to the views expressed by the people he has consulted, but he would not have to go along with them. Even if the assembly said that it did not agree with him by a two-thirds majority—the Minister, the hon. Member for Bromley and Chislehurst, will be aware of the significance of that threshold—as far as I can see in my reading of the Bill, the Mayor would simply have to set out a statement in writing saying why he did not agree with it. It would not be able to override him, even with a two-thirds majority. If I am wrong, I welcome a correction from the Minister. The Mayor would simply have to set out the reasons for not agreeing. If the Mayor then decided that he wanted to proceed, the Bill as drafted would require the Government to do as the Mayor requested.

As my hon. Friend the Member for Lewisham East presciently anticipated, that could result in a new Mayor of London—Mayor Livingstone—who has a track record in his relations with the London borough of Bromley, and who has a well-known concern for increasing housing output, presenting proposals for designating the bulk of the borough of Bromley as an MDC area. If that were to happen, the Mayor would of course have to consult. He would undoubtedly consult the people he is required to—the London assembly, the constituency members, the MPs for the area and the borough council. I do not think the common council for the City of London or the treasurer of the Middle Temple would be involved because the designation would not cover their areas. Then the Mayor would see clause 168(4)(h), which states that he should consult

“any other person whom the Mayor considers it appropriate to consult.”

There might then be an extensive consultation with the homeless and with organisations representing those in housing need throughout London, who, let us assume, were in favour of more urgent action to deal with the problems of housing. Even if the constituency members, the local MPs and the borough council for Bromley all said, “No, we do not like the idea,” and even if a plethora of neighbourhood forums sprung up in the area saying, “No, we do not want it,” the Mayor would only have to have regard to their view and not be bound by it.

Let us assume that the assembly, which would have been elected at the same time as the Mayor, shared his view about the importance of housing numbers. In that scenario, we could have a situation where the Mayor would not even have to give reasons for going against the assembly’s view because the assembly agreed with it. Here is the interesting point. At that stage, having completed his consultation and deciding to proceed, he would send a letter to the Secretary of State to say, “I want you to designate a certain part of the London borough of Bromley as an MDC area.” As I read the legislation—I invite the Minister to tell me if I am wrong—it states:

“The Secretary of State must by order establish a corporation for the area, give the corporation the name notified to the Secretary of State by the Mayor and give effect to any decisions notified under section 173(8) (decision about planning functions)”.

We will come on to consultation in a moment.

As I understand it, the Secretary of State, who is a busy man, will not personally want to handle this and he is likely to delegate the responsibility of preparing the order to a relevant member of his team. Who better placed to do it than the Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst? Here we have the delicious scenario of the hon. Gentleman who, as a constituency Member of Parliament, has sent in a very strong letter, saying, “I disagree strongly with you Mayor Livingstone. You should not designate a large part of my constituency as a mayoral development corporation area.” Because Mayor Livingstone has decided to proceed, and the Secretary of State has delegated it to the hon. Gentleman, he would have to bring forward the order to give effect to this.

Bob Neill (Conservative, Bromley and Chislehurst)

I am amazed that the right hon. Gentleman so forgets his basic public law. Of course no Minister who, as a constituency Member of Parliament, has made representations would possibly be involved in such a decision.

Nick Raynsford (Labour, Greenwich and Woolwich)

Of course the hon. Gentleman is absolutely right. He would have the uncomfortable task of watching his colleague, the Under-Secretary of State for Communities and Local Government, the hon. Member for Hazel Grove, who has not been let off the hook and who will not be able to have a brief relax after all the burdens that he has carried over the past two weeks, once again put to work to prepare an order to give effect to the Mayor’s aspirations. Just to rub salt in the wounds, he would look down the legislation and see subsection (5), which states:

“In exercising power under subsection (2) to make provision of the kind mentioned…the Secretary of State is to have regard to any relevant representations received from the Mayor.”

It does not say from Bromley borough council, the Member of Parliament from Bromley, or any neighbourhood body that has been set up in the area. It just says any relevant representations received from the Mayor. One can imagine what those representations will be. “Get on with it. Do it quickly. I want my mayoral development corporation as fast as possible.”

I cannot for the life of me understand why the Government are doing this. The normal convention is that the Secretary of State should have a proper degree of discretion in such matters. To bind or fetter the Secretary of State’s discretion in this way seems extraordinary. Surely this Bill should be amended as I proposed by substituting the word “may” for “must”. It is like that in most other references to the Secretary of State’s powers. Surely there should be an amendment that says that in carrying out these responsibilities, the Secretary of State should also have regard to representations from other people, specifically those whom the Mayor has had to consult about the proposition. These are fairly common-sense amendments. I hope that they will commend themselves to the Minister and I hope that the Minister accepts them. I certainly think that it is in his interests to do so. If he does not, I look forward to seeing the scenario developing some time in 2012-13 when Mayor Livingstone could have a great deal of fun at his expense.

Gavin Barwell (Conservative, Croydon Central)

It is a pleasure to serve under your chairmanship again, Mr Amess.

I wish to speak in support of the spirit, although not necessarily of the exact wording, of the amendments tabled by the right hon. Member for Greenwich and Woolwich. When I heard him make this point on Second Reading, I was rather torn, because on one level, looking forward to the 2012 mayoral election, I could think of nothing that would make the people of Croydon turn out in greater numbers than the prospect of a future Mayor Livingstone having the power to take over the planning powers of the London borough of Croydon. I am sure that the same argument would apply in the London borough of Bromley and a great many other London boroughs. On the issue of substance, however, the arguments are exactly as the right hon. Member for Greenwich and Woolwich set out. It cannot be in keeping with a localism Bill that the Mayor is allowed to ride roughshod over the opinion of local councillors, local Members of Parliament, London assembly members and public opinion in the affected areas.

The reason why I support the spirit of the right hon. Gentleman’s amendments rather than their exact wording is that I am not sure whether his proposed solution is particularly localist either. Amendment 126 would essentially give the Secretary of State discretion over whether he or she designates a particular mayoral development corporation. One can envisage a scenario in which the Secretary of State was of a different political persuasion from the Mayor of London and there was support for what the Mayor wanted to do, but the Government of the day did not want to give the Mayor the powers. I am not sure whether giving the Secretary of State discretion is a localist solution to the problem identified by the right hon. Gentleman.

I ask Ministers to consider whether there is a better solution. I know that the original legislation setting up the Mayor and the assembly allowed the assembly to block some mayoral powers with a two-thirds vote. Given the political balance in London, might an arrangement requiring the support of a certain percentage of the assembly be another way to ensure that we do not get into a situation where the Mayor has the power to ride roughshod over opinion?

The right hon. Member for Greenwich and Woolwich has made the case that the Bill does not strike the right balance at present, so I ask Ministers to determine whether we can come up with a better resolution to such issues.

Barbara Keeley (Labour, Worsley and Eccles South)

It is good to serve under your chairmanship again, Mr Amess. It seems like many days since I have spoken in Committee.

We have come to chapters 2 and 3 of part 7 of the Bill. I welcome the principle of devolving greater powers to the London boroughs, and I welcome the proposals that build on the Greater London Authority Act 1999—a Bill on which my right hon. Friend the Member for Greenwich and Woolwich spent a great deal of time—strengthen London’s devolution settlement, secure the legacy of the 2012 Olympic games, streamline the approach to mayoral strategies and increase the power of the Greater London assembly to scrutinise such strategies, as well as applying local government transparency requirements to Transport for London and its committees.

The hon. Member for Croydon Central asked for better solutions, so let us hope that we can come up with some in this short debate. As we have heard, these chapters of the Bill address mayoral development corporations, which will have substantial powers over the relevant area of mayoral development, whatever it is. We support the important principle of tackling regeneration, as we have already argued. However, as my right hon. Friend the Member for Greenwich and Woolwich said, the Bill gives the Mayor new powers to designate any area of land in Greater London as a mayoral development area. That is the tricky thing. The planning powers would be significant and would include making plans for an area, granting planning permission, compulsorily purchasing land, offering financial assistance in various forms and carrying on any business. We need much greater clarity.

We have heard about some of the issues, but I want to touch on the important issue of local oversight. We believe that the governing arrangements for a mayoral development corporation must include borough representation, which amendment 269 would introduce by ensuring that at least one sixth of the board members of a mayoral development corporation were borough council representatives. As we have said, a mayoral development corporation will have substantial powers, so we need a way to make that body accountable to local people. The best way to do so is through borough representation, as specified in the amendment.

The Mayor of London has laid out proposals to use the Bill’s provisions to create an Olympic park legacy corporation for the Olympic park in east London to replace the existing Olympic park legacy company, which we support. The Labour Government were committed to ensuring that the Olympic games led to long-term benefits for not only east London, but the UK. Under Labour, 75p in every pound spent by the Olympic Delivery Authority was an investment in the long-term regeneration of east London, and we want such work to continue.

The Mayor, however, has already acknowledged the possible conflicts that might come from overlap with existing local plans. His proposals for a mayoral development area for the Olympic park suggest he would exclude Stratford town centre. The consultation document published by the GLA states that the success of the Olympic

“Park and the success of Stratford Town Centre are interdependent”,

and that Stratford

“Town Centre is ripe for, and in need of, significant regeneration”—

we would agree. However, the Mayor

“acknowledges and respects the progress made by the London Borough of Newham and its partners in developing a masterplan for the Town Centre, and is therefore minded to exclude it from the boundary of the Olympic Park Legacy Corporation.”

We welcome the fact that the Mayor is apparently minded to allow Newham to continue its plan for the regeneration of Stratford town centre. The existing scheme is the result of a long period of planning and widespread consultation with local people. It is supported not only by Newham’s democratically elected councillors, but by local communities, which is important and in the spirit of the Bill. Any change now would be disruptive, and it would be against the spirit of localism. It is important that there is an attempt to come up with a localist solution. Some decision making and oversight must stay with local councillors and the local community, because they have shaped that current scheme.

The Mayor recognises that fact in the case of Stratford, but there is nothing in the Bill—these are great weaknesses —to ensure that he or future Mayors must take similar action if there were any similar cases. The Mayor has said that he wishes to improve the accountability of the regeneration of the Olympic park, which he intends to do by ensuring that “primary accountability” is through the elected Mayor. He says that the board of the new mayoral development corporation is

“likely to include representation from the affected boroughs”,

but that is far from a strong commitment. There is no guarantee that that would include borough representation on the board established under the powers.

It seems like many weeks since our evidence sessions, but during one of them, Andy Sawford, the chief executive of the Local Government Information Unit, told the Committee that the “big question” over the Localism Bill was the Government’s vision for

“local government’s place within…localism.”—[Official Report, Localism Public Bill Committee, 25 January 2011; c. 9, Q4.]

That is the important point in our debate. Our argument is that the best way of ensuring that local residents have a say in plans to shape their neighbourhoods is to ensure borough representation on the board of the mayoral development corporation, and the amendment would put that in the Bill.

I shall also speak to amendment 270. The creation of a mayoral development corporation—let us hope it is limited to this—is a targeted response to dealing with the particular strategic challenges of securing the legacy of the 2012 Olympic games. However, there is a worry, to which my right hon. Friend the Member for Greenwich and Woolwich referred. Once an MDC has been established for that purpose, there should be no other reason for the Mayor to seek to create additional development corporations, wherever they may be, because London boroughs are the authorities responsible for planning and shaping their areas. Amendment 270 would put a time limit on the Mayor’s power to set up a development corporation of two years from the date on which this chapter of the Bill comes into force. As my colleagues have said, without the amendment, there would be nothing to stop a future Mayor from establishing a new mayoral development corporation in Bromley, Westminster or many other parts of London, and then proceeding to act without regard to the plans and ambitions of locally elected representatives, which would not be within the spirit of the Bill.

Gavin Barwell (Conservative, Croydon Central)

Will the hon. Lady reflect further on amendment 270, about which I would also be interested to hear the views of the hon. Member for Lewisham East? There might be other areas of London for which a case could be made for such an approach. Crystal Palace is at the borders of my borough. It has a very defined centre, but it straddles five different London boroughs and presents many of the problems that have drawn the Mayor to his conclusion on the Olympic park. If there are sufficient safeguards on how the corporations could be set up, I am not convinced that there is such a case for the amendment.

Barbara Keeley (Labour, Worsley and Eccles South)

That is an interesting view, but we do not have the safeguards yet, so let us ensure that we do.

The amendments are attempts to find ways of ensuring that we do not cause fear, alarm and despondency in Bromley and other parts of Greater London because people are worried that their areas will be overrun by overreaching regeneration corporations. I hope the Committee will support the amendments.

Bob Neill (Conservative, Bromley and Chislehurst)

There is no fear, alarm or despondency at all—perish the thought! We are not put in fear and alarm by such unlikely scenarios that the hon. Lady postulates, although I am glad that she has done so, because she has given me the text for a new leaflet. It will be very useful to remind the voters of Bromley that, by giving greater powers to the Mayor of London, we are making participation in the elections for the Mayor of London all the more important.

Nick Raynsford (Labour, Greenwich and Woolwich)

The Minister quite rightly chided me about the conventions of probity in public office. Does he believe it is right to put out a leaflet arising specifically from his remit and responsibilities as a Government Minister?

Bob Neill (Conservative, Bromley and Chislehurst)

I shall ensure that it goes out from my position as a constituency Member rather than a Minister.

I enjoyed the right hon. Gentleman’s contribution, and he raised a legitimate point. With every respect, however, as my hon. Friend the Member for Croydon Central pointed out, his proposed solution is not appropriate. It is a bit rich that the right hon. Gentleman has set out such a proposal, given that Opposition Members have complained greatly throughout our consideration of the Bill about the number of powers that are being given to the Secretary of State. If there is a problem to be resolved, giving power to the Secretary of State is not exactly consistent with being localist.

I accept that there is potential for tension when there are two layers of governance in a city, both with democratic legitimacy, and when there might be differences of party control. However, I do not believe that that potential is as great as has been presumed for the purposes of debate, though I accept it exists. However, that does not mean that the localist solution to resolve that, within a mature system of devolved government—for which the right hon. Gentleman should take more credit than anyone in the room—is to bring in a centralist interlocutor, who might have a political view and with whom there might be just as much political tension as with one or other of the layers.

Regarding the background as to why the power is cast as it is, it was made clear in evidence by Sir Simon Milton, the deputy Mayor, that Mayor Johnson has no intention of going beyond the mayoral development corporation for the Olympic park. That has been broadly accepted and welcomed, and there has been a sensible and mature dialogue between the Mayor and borough leaders from different parties to find a sensible way forward, as was referred to by the hon. Member for Worsley and Eccles South in relation to Stratford town centre. I do not think that different political colours mean that there need be a destructive tension as opposed to a creative one. Equally, however, to have limited the proposal in the Bill to simply the Olympic park legacy corporation would have created all manner of technical and legal problems, which would prevent the timely setting up of a body that I know the right hon. Gentleman and I, as well as everyone in the room, would like to see. That is the reason why the provision is cast in such a way.

If there is a concern, it seems to me, after listening to the point made by my hon. Friend the Member for Croydon Central, that there is a better and more devolutionist route than to use the Secretary of State as the person who has the final say, which would be the ultimate effect of the amendments because they would limit the Mayor’s power to the view of the Secretary of State. There is no guarantee that the Secretary of State would not act in an arbitrary and partisan manner. It would be better to say that if we are going to address this point, let us examine the possibility of strengthening the checks and balances within the system of devolved London governance, which the right hon. Gentleman put in place, and in which I and others here had a practical involvement. The system that was set up under the 1999 Act gave the Mayor responsibility for economic development and economic strategy in London. That was initially exercised through the London Development Agency, and it will now be exercised directly through the strategy that we have just agreed to include in the Bill. It is therefore not unreasonable that the Mayor should be the democratically elected person who is in the driving seat in both the development of the strategy and of the appropriate delivery vehicles.

It is fair to say that we recognise that the London assembly has an important and sometimes underestimated role in providing checks and balances. The right hon. Gentleman proposed—or referred in passing to—the concept that there should be a weighted majority in the assembly. He will see that clause 199 will give the assembly heightened powers whereby it can, in effect, veto or reject the Mayor’s strategies by qualified majority, which is right, because it has matured as a body and a player in the London system.

In the spirit of attempting to find a constructive way forward, I want to reflect on the matter. Having made his point and hearing what was said by my hon. Friend the Member for Croydon Central, the right hon. Gentleman might think it appropriate to withdraw the amendment. My right hon. and hon. Friends and I will reflect on the means whereby we might find a proposal that is consistent with keeping the safeguard within the devolved London governance system—I think that I have indicated the way in which my mind is thinking. Such a safeguard would mean that it would be necessary for there to be a considerable groundswell of support in the democratically elected assembly for a Mayor to take a proposal forward. That might prevent any abuse of the system, while still ensuring that the decision would be taken by London’s representatives. Reflection on the issue on that basis might be a constructive way to deal with the right hon. Gentleman’s amendments.

Let me turn to the amendments 269 and 270, which were tabled by the hon. Member for Worsley and—

Barbara Keeley (Labour, Worsley and Eccles South)

Eccles South.

Bob Neill (Conservative, Bromley and Chislehurst)

I apologise that I am not as good on south Eccles as I am on south London.

Amendment 269 relates to the composition of mayoral development corporations. With respect, the proposal is not terribly localist. Under a two-tier set-up, I understand the importance of ensuring that the London boroughs are involved. As somebody who spent 16 years on a London borough and who comes from a party that has always championed the interests of the boroughs, I am not going to resile from their value. The danger, however, is that the hon. Lady has over-engineered a solution. The proposal is too centralist. It would be very prescriptive about the number of borough representatives on every development corporation. It is not localist to give power to central Government to dictate the composition of the board in such fine detail. The amendment would defeat the overriding objective.

Barbara Keeley (Labour, Worsley and Eccles South)

The Minister might say that, but he should know that London Councils want greater borough representation. It is okay for the Minister to say, “Let’s not be centralising; let’s just leave it,” but I do not believe that London Councils would be happy with that, so he might want to find another way forward. In the important matter of planning and regeneration, it is understandable, given all the powers of mayoral development corporations, that there is demand for a decent amount of borough representation.

Bob Neill (Conservative, Bromley and Chislehurst)

That is a fair point, but the answer is not prescription of the kind suggested in amendment 269. It important to bear in mind that both Sir Simon and Mayor Pipe from Hackney thought that there were sensible ways in which such problems could be resolved. To go down the route of prescribing exact numbers misses two points. First, it misses the point that more than one potential model for a mayoral development corporation can be envisaged under the Bill. The Olympic park development corporation is a substantial piece of work. It is anticipated, according to the consultation document, that it could take on planning powers and all that goes with that. It is conceivable, however, that we could have lighter-touch mayoral development corporations that might not be so extensive in scope, or might not take on all or part of the planning powers that are exercised by the London boroughs, so the argument about borough representation might be very different. Different circumstances could apply, but the hon. Lady’s amendment would place the situation into a straitjacket.

Secondly, the configuration of the mayoral development corporations, if there were others, might vary. The composition and size of board that would be appropriate in the Olympic park might be wholly different from that which would be appropriate in the suggestion that my hon. Friend the Member for Croydon Central has made. Again, a number of boroughs might be involved.

Thirdly, if we were to start prescribing the representation of the boroughs, given that we are, rightly, looking to work in partnership with other bodies, other bodies with public sector interests might feel that they were entitled to a degree of representation as well. With respect, the solution might create more difficulties than it removes. Perhaps we will return to the point that I have made to the right hon. Member for Greenwich and Woolwich. The view that the assembly might take—that it would take even under existing legislation—regarding its support for a proposal for a corporation would be coloured by the extent to which the proposed membership reflected the legitimate interests of the communities and their democratic members. Again, I think that ours is a better route to achieve that.

Finally, on amendment 70, localism does not have a two-year duration. We do not know what circumstances may develop in the future, in which mayoral development corporations might be appropriate. It would be wrong to close off opportunities for the future, when I think that most people accept that this is a potentially valuable tool. Similarly, we do not want that degree of prescription. It must be remembered that, however they are configured, the board members have a corporate responsibility—a responsibility to the corporation—as well as a responsibility to wherever they may have been appointed or selected to represent. Getting that balance right is important, so both the unduly prescriptive nature of amendment 269 and the arbitrary time limit in amendment 270 go against the spirit of what we seek to achieve rather than helping it.

The main concerns seem to be the issue that the right hon. Member for Greenwich and Woolwich has raised and the points that my hon. Friend the Member for Croydon Central has made. Given my undertakings to reflect on those, I hope that the Opposition will withdraw the amendments.

The rest of the debate is in Hansard.