Housing and Regeneration Bill

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Clause 36

Recovery etc. of social housing assistance
Amendment made: No. 112, in clause 36, page 16, line 25, after ‘project)’ insert
‘; and, for the purposes of this Part, a person provides social housing if (and only if) the person acquires, constructs, converts, improves or repairs any housing or other land for use as social housing or ensures such acquisition, construction, conversion, improvement or repair by another’.—[Mr. Wright.]
Question proposed, That the clause, as amended, stand part of the Bill.
9.45 am
Sir George Young: I refer the Minister to an exchange that took place on 11 December when the Council of Mortgage Lenders appeared before us and was exposed to some questioning from the Committee. In particular, I refer to column 65, which deals specifically with clause 36. Mr. Richard Hughes, the CML representative, stated:
“On our reading, clauses 36 and 37 seem to say that the HCA can demand its grant back and a return on it—we assume some sort of equity-style return.”——[Official Report, Housing and Regeneration Public Bill Committee, 11 December 2007; c. 65. Q102.]
I have to say that I did not share the CML’s concern, but I will not be lending any money. It is important that the CML is confident that the security their members have when they advance funds is such that they will continue to lend. Has there been any dialogue since that exchange on 11 December between the Minister’s Department and the CML that indicates that the organisation is no longer concerned about clause 36 and that it does not want the amendment it sent to members of the Committee but which no one tabled—a proposed new subsection (4)(c) to clause 36, which deals with the recovery of social housing assistance—and that the sort of difficulties that were envisaged in the exchange will not, in fact, occur if clause 36 goes through without its amendment?
Mr. Wright: I thank the right hon. Gentleman for that line of questioning. I do not have the Hansard for 11 December in front of me, but I seem to recall from my genning up for this debate that the right hon. Gentleman was extraordinarily helpful to me in respect of this matter. I believe he realises, because I think he made the point in December, that the provisions are not, in essence, a change in policy terms or in the legal framework. He mentioned in December that the Housing Corporation operates a similar system under the Housing Act 1996, and I believe he agrees that it is not unreasonable to require repayment of more grant than had been originally understood would go unchallenged.
On the direct point about dialogue between officials and the CML, I assure the right hon. Gentleman that my officials have been discussing the matter with the organisation. The discussion is ongoing, because we are keen to reassure the CML of the nature of the clause and subsequent relevant clauses, and to ease its concerns. I believe that the dialogue has proved fruitful, and I hope that I have reassured the right hon. Gentleman in that regard.
Question put and agreed to.
Clause 36, as amended, ordered to stand part of the Bill.

Clause 37

Section 36: interest and successors in title
Question proposed, That the clause stand part of the Bill.
Sir George Young: I am grateful to the Minister for what he just said about clause 36. It is a relief to us, and I hope that the dialogue ends with a happy resolution.
The CML also raised a specific problem with clause 37. I quote from the note that it sent to all members of the Committee:
“This section appears to pass on the requirement to repay grants...to successors in title.”
I do not think that anybody has any difficulty with that. The note goes on to state:
“If this is the case then security valuations would have to be adjusted to reflect the obligation of a successor in title to repay grant. This would mean that current registered providers could all be in breach of their loan covenants and would impact negatively on the financial capacity of registered providers going forward.”
I put the same question to the Minister as I did on clause 36: is there is a dialogue on the clause, and has his Department been able to satisfy the CML that the risks outlined in the passage that I have just read out do not exist, and that there is no impediment to its continuing to fund housing associations?
Mr. Wright: Once again, I thank the right hon. Gentleman. He is right to suggest that my response will be similar to that on clause 36. He will know that the provisions of clause 37 are the same as those in the Housing Act 1988 and the Housing Act 1996. We are looking into the CML’s point about how the operation of the determinations will interact with repossessions and so on. Dialogues are ongoing between officials and the CML, and they are proving fruitful. We are trying to reassure the CML as much as we can, which is having a productive conclusion. I hope that reassures the right hon. Gentleman.
Question put and agreed to.
Clause 37 ordered to stand part of the Bill.

Clause 38

Determinations under sections 36 and 37
Grant Shapps: I beg to move amendment No. 6, in clause 38, page 17, line 25, leave out ‘as it considers appropriate’ and insert
‘before making such a determination’.
The amendment is intended to clarify some vague wording in the clause. Its purpose is to ensure that the HCA must consult bodies representing the interests of registered providers of social housing before making a determination. On page 17, clause 38(2) states:
“Before making a determination, the HCA must consult...
(b) such other persons as it considers appropriate.”
The other day we debated who “other persons” might be. It was unclear at the time, but the Minister kindly gave some clarification later in the day. “Other persons” seemed to include people other than those whom I had suggested would be included, so I would be interested to know which “other people” subsection (2)(b) refers to.
The amendment would leave out the words “as it considers appropriate” and insert
“before making such a determination”,
to remove the vagueness of the wording and tighten up the fact that there should be more specific consultation before determination under clauses 36 and 37. Who are envisaged as “other persons” in that context, and will the Minister consider tightening up the language to ensure that specific consultation must take place?
Mr. Wright: I suggest to the hon. Gentleman that the amendment would not really add anything to the effect of the clause. I draw his attention to subsection (4), which states:
“The HCA must, in particular, consult such bodies appearing to it to represent the interests of registered providers of social housing as it considers appropriate.”
The amendment would leave out “as it considers appropriate”, and would thus apparently require the agency to consult all bodies representative of registered providers of social housing, rather than just those the agency considered appropriate, which would, I suggest, remove the agency’s discretion as to whom it may consult.
I know that the hon. Gentleman says that the amendment would avoid vagueness, but it would mean that the agency did not have discretion, which would increase the risk of the agency’s decisions being successfully challenged due to a failure to consult every single representative body, including those unaffected by particular determinations. That could be unwieldy and unnecessarily bureaucratic. I am sure that is not what the hon. Gentleman intended, although I understand the sentiment behind the amendment. To avoid that vagueness and ensure that the agency has a degree of discretion, I hope that he will withdraw the amendment.
Grant Shapps: I understand what the Minister says, and far be it from me to want legislation that is more cumbersome and bureaucratic than it needs to be, but I did not understand from his response who the “other persons” are. May I press him on that point?
Mr. Wright: I am afraid that I shall have to disappoint the hon. Gentleman. It would depend on the particular circumstances, and it would be whoever the agency considered appropriate.
Grant Shapps: Will the Minister at least clarify who he imagines the “other people” might be?
Mr. Wright: We could perhaps take a particular circumstance and then suggest who might be considered appropriate. A wide range of circumstances might be covered, and the agency needs considerable discretion when deciding who to bring forward. I, therefore, throw the question back at the hon. Gentleman: if he can suggest a particular circumstance, we could bat it about further.
Grant Shapps: I am still curious, because not a single name or organisation has been mentioned. I want to clarify whether the Minister understands the intention of the clause. The other day, it turned out that nobody in the Committee knew which persons were meant to be represented under a particular clause. It took some time, and a lunch break, to calculate the list. I should be grateful if the Minister could tell us what is meant by “such other persons”, and if he could provide us with examples of whom they might be. However, if he cannot but could undertake to find out and tell us later, I would be happy to withdraw the amendment.
Mr. Wright: I am happy to do that. However, I repeat that it would be extraordinarily helpful for me, in order to provide some clarification and to reassure the hon. Gentleman, if he could suggest particular circumstances in which we might consider the proposal appropriate.
Grant Shapps: I did not draft the legislation, and it needs to be explained by those who did—the Government. It is not unreasonable to ask what a particular line in legislation means, and it is for the Minister to provide that clarification to the Committee, rather than the other way around.
Mr. Wright rose—
The Chairman: Order. We cannot go on like this for too long. We have reached the point when either the amendment must be pressed or withdrawn. Having said that, I shall allow the Minister to reply one more time.
Mr. Wright: One of the groups that would usually be consulted is the National Housing Federation, but there would be others, too. I hope that reassures the hon. Member for Welwyn Hatfield.
Grant Shapps: I should be grateful if the Minister would send me a letter with further details about the matter, but, taking your advice, Mr. Benton, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 38 ordered to stand part of the Bill.
Clause 39 ordered to stand part of the Bill.

Clause 40

Duty to co-operate with Regulator of Social Housing
Question proposed, That the clause stand part of the Bill.
Sir George Young: I think that clause 40 is the first part of the Bill where the regulator of social housing is mentioned. We will have a much more substantive discussion about his role later on. This is rather like Beethoven’s opera, “Fidelio”, in which the hero does not appear until the second act. However, can the Minister, who has announced the chief executive of the HCA, say anything about who the regulator is? Has he been announced? If not, how far have the Government got in the process of appointing him?
The clause states that the HCA must co-operate with the regulator. At present, the regulator and the investor share the same building. Is it envisaged that the HCA and the regulator will be co-located, or that they will be separately accommodated? Furthermore, will the Minister shed some light on clause 40(2), which states that
“the HCA must consult the regulator on matters likely to interest the regulator.”?
What does that mean? We are imposing a statutory duty on the HCA, and in fairness to it we should shed some light on what information it will be legally obliged to pass on to the regulator.
Mr. Wright: The process of appointing the regulator is ongoing, but when we come to part 2 of the Bill, I might be able to update the Committee on progress. As for co-location of the agency and the regulator, that is an operational decision, but we do not intend that there should be a physical separation as well as an organisational separation.
10 am
The right hon. Gentleman’s third line of questioning was about the circumstances in which there would be co-operation between the regulator and the agency. That is crucial, because, as he rightly said, we have previously had a merging of the regulatory and investment functions. The regulator will be concerned to see that registered providers are responsive to tenants and that their businesses remain viable, because that will help to raise standards for tenants. Crucially, it will need to understand the stresses of business, particularly the ability to borrow money.
As the investing body, the agency will be also be interested in the ability to borrow money, and will need to have an understanding of such matters when making investment decisions. It would be sensible for the agency to consult the regulator when developing its investment policies to understand the overall ability of registered providers to deliver. It is in everyone’s interests to ensure that the capacity and delivery capability of the sector is advanced as much as possible. In short, a close dialogue will be needed, while the regulator should maintain a clear independence, as has been set out and universally acknowledged. I hope that reassures the right hon. Gentleman.
Sir George Young: Does the Minister propose to codify or clarify exactly what the relationship between those two organisations should be? At the moment, the measure says simply “must consult”, and the Minister has been good enough to outline the sort of information that ought to be exchanged. Should not that be formalised in some way, so that both partners in the new relationship know exactly what they are obliged to tell the other about?
Mr. Wright: Yes, the right hon. Gentleman makes a good point. We anticipate that there will be a memorandum of understanding between the agency and the regulator to codify such issues as much as possible. I hope that reassures him.
Question put and agreed to.
Clause 40 ordered to stand part of the Bill.
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