Housing Corporation (Delegation) etc. Bill

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The Committee consisted of the following Members:

Chairman: Mr. Joe Benton

† Bellingham, Mr. Henry (North-West Norfolk) (Con)

† Bone, Mr. Peter (Wellingborough) (Con)

† Borrow, Mr. David S. (South Ribble) (Lab)

Brake, Tom (Carshalton and Wallington) (LD)

† Cooper, Yvette (Minister for Housing and Planning)

† Eagle, Angela (Wallasey) (Lab)

† Fitzpatrick, Jim (Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister)

† Gove, Michael (Surrey Heath) (Con)

† Hesford, Stephen (Wirral, West) (Lab)

† Kilfoyle, Mr. Peter (Liverpool, Walton) (Lab)

Main, Anne (St. Albans) (Con)

† Mann, John (Bassetlaw) (Lab)

† Rogerson, Mr. Dan (North Cornwall) (LD)

† Shapps, Grant (Welwyn Hatfield) (Con)

† Starkey, Dr. Phyllis (Milton Keynes, South-West) (Lab)

† Watts, Mr. Dave (Lord Commissioner of Her Majesty's Treasury)

† Wright, David (Telford) (Lab)

Mark Egan, Mark Oxborough, Committee Clerks

† attended the Committee

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Standing Committee D

Tuesday 2 May 2006

[Mr. Joe Benton in the Chair]

Housing Corporation (Delegation) etc. Bill

4 pm

The Chairman: There is a good chance that we will finish our proceedings this afternoon, but in the event of a second sitting, I do not intend to call starred amendments.

The Minister for Housing and Planning (Yvette Cooper): I beg to move,

That—

(1) during proceedings on the Housing Corporation (Delegation) etc. Bill the Standing Committee shall (in addition to its first meeting at 4.00 p.m. on Tuesday 2nd May) meet at 10.30 a.m. and 4.00 p.m. on Tuesday 9th May;

(2) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 7.00 p.m. on Tuesday 9th May.

I welcome you to the Chair, Mr. Benton, and I welcome Committee members. As hon. Members will know from our debates in the Programming Sub-Committee and on Second Reading, we have had extensive discussions with Opposition parties about the content and background of the Bill and the need for it. I hope that we can proceed with a broad consensus on the need for the Bill and on its main provisions. For that reason, we have scheduled time today and on9 May for Committee discussions. We stand ready to have further discussions or provide further briefing if Committee members so request. I commend the programme motion to the Committee.

Question put and agreed to.

Clause 1

Power of Housing Corporation to delegate functions etc.

Question proposed, That the clause stand part ofthe Bill.

The Chairman: I propose to allow reasonably wide-ranging debate on the Bill at this point, but I stress that it is not an opportunity to talk generally about the Housing Corporation.

Yvette Cooper: Clause 1 sets out the purpose of this relatively short Bill. We discussed many issues concerning the clause on Second Reading, but nevertheless it is worth rehearsing some of the key points and details today.

The clause has four subsections that aim to address the technical difficulties that we face as a result of an omission in the legislation governing the powers of the Housing Corporation. The first subsection will give the corporation an express power to delegate the exercise of its functions to individual members of the board, sub-committees, committees and employees.

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When the Housing Corporation was created, it was common for public bodies and non-departmental public bodies not to be given an explicit power of delegation. At that time, powers of delegation were more readily taken to be implied. Since then, the majority of bodies set up without explicit powers have been wound up or have had their legislation modernised to confer such powers.

Mr. Peter Bone (Wellingborough) (Con): I understand the Minister, but I do not see what practical difference it will make to give delegating power to the Housing Corporation. At the moment, all that happens is that the board is required to make the decision. An officer prepares the report and it is presented to the board. Under the new proposals, the officer will prepare the report, but it will not need to go to the board. In practical terms, that will remove a safeguard. As far as I can see, such provision does not do anything to improve the efficiency of the Housing Corporation.

Yvette Cooper: Practically, the measure will allow the Housing Corporation to operate in exactly the same way as a series of other NDPBs—English Partnerships, English Heritage, the Commission for Healthcare Audit and Inspection and the Commission for Social Care Inspection. A series of bodies have that kind of power nowadays. Such power will allow the board to take responsibility for deciding which decisions it needs to scrutinise properly, which issues it needs to debate and discuss, where it can add the greatest value to the running of the organisation and which decisions could be delegated far more effectively to officers or sub-committees. It allows the board to have the kind of flexibility that many organisations already have, and it was also presumed that the Housing Corporation already had that power.

Throughout the Housing Corporation’s history it has been clear that the corporation and the Department, as well as housing associations and lenders, thought that the corporation had an implied power. That was clear not only in discussion of previous legislation enacted before 1997, but in the most recent debates on the Housing Act 2003. It was clear that the corporation, the Department and all the lenders thought that the implied power was in place.

The Bill simply restores to the Housing Corporation and all the stakeholders who need to engage with it something that everyone had previously thought already applied. It is therefore not practical to expect the board to operate in a different way from similar bodies. This is about simply giving it a sensible administrative basis on which to work.

Mr. Peter Kilfoyle (Liverpool, Walton) (Lab): I understand perfectly that the Bill is regularising an irregular situation. However, my experience of delegating powers at a local level causes me concern—under a Lib Dem council, it cost the city of Liverpool hundreds of millions of pounds. Although such an approach might be efficient on one level, it can be very costly to the parent organisation.

I am not as diligent as many of my colleagues and I was not present on Second Reading, but it appears

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from clause 1(3) that no matter what has been done in the name of the Housing Corporation, the Bill gives it legality and authenticity. The Bill seems extremely vague about what it covers. Can the Minister enlighten me? I would hate to think that in retrospectively approving what has been happening for the past20 years, we were regularising something that should be looked at in a different way.

Yvette Cooper: My hon. Friend makes an important point. I asked officials the same question during our detailed discussions about the need for the Bill and about its drafting. Its purpose is to regularise decisions that have been taken on the presumption that an implied power existed when it did not do so, according to our most recent legal advice.

It is important to ensure that we can address the many decisions that have been taken previously and not leave housing associations, the corporation and lenders in a state of limbo about previous decisions that have been taken. It is important to put the previous decisions on a particular footing; the issue is the uncertainty that might arise and the fear that previous decisions might be challenged. Even when people do not believe that there is a fundamental basis on which they can be challenged, the uncertainty could cause all kinds of problems for housing associations and lenders in the future, as many of the decisions taken in the past still have ongoing consequences today in terms of investment in stock, new homes and so on.

As my hon. Friend said, it is important to ensure that this is not simply about giving authority to any and every previous decision even should that includea fraudulent decision, for example. That is why subsection (3) refers to decisions being

“evidenced by a document duly executed under its seal.”

That was the lawyers’ response on how to ensure that the provisions would cover decisions that were taken appropriately and duly executed; in other words, decisions that were taken on an appropriate basis according to the Housing Corporation’s procedures.

Mr. Kilfoyle: The Minister has reassured me that no one who has done something palpably wrong will be immune from the appropriate strictures. May I ask her a further question, however? What specifically prompted the introduction of the Bill at this time? Is a specific case pending or has the Bill been dusted down as a sort of plan 54(b) to fill up a bit of parliamentary time?

Yvette Cooper: My hon. Friend asks an important question. Originally, the issue was raised with the Department just before Christmas, as a result of legal advice received by the Housing Corporation. Like the Department, the corporation had previously understood that the implied power existed. However, I understand that advice sought as part of routine training raised questions about whether there was such a power. As a result, the Housing Corporation sought further, detailed legal advice, including leading counsels’ advice, to clarify the position.

The advice was that such power could not be implied from the existing statute. The Housing Corporation therefore changed its procedures so that it would be

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able to take all further decisions at board level, rather than delegating them, and also raised with the Department the need to address the previous decisions. As the time of the House is extremely important and there are many other issues to debate, we considered whether those previous decisions could be addressed in ways other than primary legislation. After extensive discussions with various stakeholders, however, we eventually concluded that primary legislation was the only way to regularise the situation.

Angela Eagle (Wallasey) (Lab): The issue that we are discussing is very technical. On my reading of things, everybody assumed that the power was there until somebody suddenly discovered that it was not, the penny dropped and leading counsel said, “Oops”. What would the situation have been if that small technical correction had not been brought to us? What would Parliament be risking if what appears to be a technical piece of work is not put into effect? If we were informed about those issues, we might have more of an idea of what has been going on, beyond a lawyer with a light bulb above his head suddenly realising that something that he should have seen long ago was staring him in the face.

Yvette Cooper: My hon. Friend raises an important point that we discussed on Second Reading. The Housing Corporation was assumed to have powers to take at officer level or through sub-committees decisions on a series of things. Such things might have included the registration of housing associations, what are referred to as section 9 decisions, which deal with the transfer of assets from one housing association to another, and issues around borrowing against assets.

Clearly, such decisions have important implications for the future of social housing, new build and the levels at which housing associations can borrow. Although legal advice assured us that, through provisions in the Land Registration Act 2002, housing associations could continue to borrow against their assets, regard their homes, which might have been transferred from another housing association, as their own and make decisions about the future on that basis, it was also clear that there remained some legal uncertainty around those decisions—particularly the decisions taken by the Housing Corporation.

That situation raised questions about decisions that could have important long-term impacts for the future of social housing. For example, the rate at which housing associations can borrow against their assets, the draw-down of loans and the confidence that lenders might have in individual housing associations, or in social housing more broadly, might all be affected in the long term. Maintaining confidence in the social housing sector in those long-term decisions was a serious issue for us. We want this to be an area in which lenders feel they can continue to invest and in which tenants, who depend on social housing, can feel assured of the financial viability of their organisations.

4.15 pm

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Prepared 3 May 2006