Housing and Regeneration Bill

My Lords, I should like to speak to Part 2 of the Bill, but before doing so I should, as usual, make one or two confessions of a guilty past. For the first 20 years of my working life, I was involved in housing and housing aid, local authority housing and housing associations. However, noble Lords are safe because I have forgotten it all, so I shall not drone on too much. I find when looking again at the regulation of housing that I am reminded how important the issue is. I would like to make a few comments about why it matters. I want to take the House back to what the Cave review said and why I thought that it was such a powerful, impressive and progressive report about social housing regulation. I also want to raise questions for my noble friend on why some of the important Cave recommendations seem to have been lost on the way. I start with why housing regulation matters. It affects 4 million homes and 10 million people and this is the first regulatory change for this sector for 30 years, so it matters that we get it right. It also matters because housing is a vital service. It affects people in their own homes—you cannot have a more important service than that—and it affects tenants, some of whom are the poorest and most disadvantaged people in our society with little political power or influence. I am sure that this House will be even more concerned to ensure that we promote and protect their interests in the passage of the Bill. Something that we have not made much mention of so far is that the Bill is about trying to protect and empower consumers in the face of monopoly providers. We do not normally think of registered social landlords, local housing authorities or ALMOs as monopolies, but they are monopolies because, for most tenants, given the state of the housing market, if they do not like the services that they are receiving, they cannot easily move. A prime function of regulators has always been to try to protect tenants where monopolies are in place. What did Cave say? I congratulate the Government on choosing an eminent person to produce a major report on regulation. The review looked at broadening choice, improving the quality of information provided for tenants, enhancing accountability to tenants, strengthening their voice and addressing some of the structural challenges to empowerment and choice. It saw, as do the Government, all those as central measures to empowering tenants so that they have much more of a voice, a choice and influence. Let us look first at choice. Cave identified a number of collective choices—I shall not talk about individual ones—such as tenants having a choice about the range of estate services that they receive; a choice about a change of manager and the choice of the individual; a choice about additional services, as long as tenants are prepared to pay the costs for them; a choice about changing maintenance providers; and a choice about self-management options. However, as we can see, the Bill defines choice in an excessively narrow way. When the Government consulted after the report, they put most of the weight of their consultation on tenant management choices; that is, tenants having the right to take over the management directly of their properties. Amen to that—it is a good thing—but most of us do not want to spend our lives running co-operatives. We want to be able to receive the services that we feel we should get from suppliers and, if they do not deliver them, we want some power, influence and the choice to make changes. Because of the Government’s narrow focus on tenant management options, they have squeezed out consideration of a number of other things that matter a great deal to tenants. They have defined choices narrowly and have not addressed the structural impediments to choice that tenants experience. Secondly, Cave quite rightly saw that choice and accountability require information. You cannot make informed choices without it. That is why all regulators are concerned about information. To hold anyone to account you need information about what they are doing and you need comparisons. All noble Lords have said that comparisons at local level, across all three types of social housing, are essential. Cave said that the regulators should play a key role in ensuring that core information is available across all areas. This must be at a local level, because people will want to know how their RSL is performing compared to another social landlord in the area. We are in the remarkable situation where the Local Government Association, the National Federation of ALMOs, the National Consumer Council and the Chartered Institute of Housing all say that there should be a single system of collective performance information. The specialist body HouseMark, with one or two significant challenges about the small sample size, says that this is perfectly possible. Yet although the Government have known for a year that Cave was going to recommend this, we have the sad situation where they are still saying that they do not have time to do it in the Bill. To many of us, that is not where we want to be. I look to my noble friend to do something about it, because we cannot leave this as a hole in the Bill. If that requires a power and the creation of secondary legislation, I can assure her, as ever, that the Merits Committee will look on her with the kindness that she is used to receiving. The Bill says nothing in Clause 88 about enhancing accountability being one of the fundamental objectives of the regulator. I would have expected it to do so. To give further instances, there is no clarity about the processes to strengthen accountability to tenants, about key triggers in how they can involve the regulator in an inquiry and about their right to sack a manager or to choose a manager in first principle. Cave said that there is an overwhelming case for establishing a national voice for tenants of social housing. I agree. I am delighted that the Government agree and that they are going to do something about it. In part, the Bill is in this state because there was not a powerful voice by tenants making these arguments. Officials and Ministers look to where the pressure is coming from and, if there is no pressure from a consumer quarter, the producer interests—the traditional vested interests—tend to have more than their fair shout. The Bill and the process, unless I have missed it, are silent on whether tenants will have a voice over the sale or merger of their homes. It is fundamental that they should be given the right to express a view—there cannot always be a deterministic view—and the regulator and RSLs should have a statutory responsibility to listen to tenants. Finally, I turn to what may seem a rather dry fundamental: addressing the structural obstacles to empowerment and choice, as Cave described it. This has always been a key role for regulators when trying to address monopolistic provision. How do you change the structure of the service that so disempowers tenants? We now have a choice of telecom providers—they are not all good and they are not all bad—because previous Governments put in place over a 10-year period processes to ensure that the market supply changed. We have a mess with the London airports because we have failed adequately to regulate and address the market supply with BAA in ways that actively produce the effective competition that empowers users and gives them choice. Addressing structural issues is phenomenally important. Cave said that part of the reason why social housing exhibits so many signs of failure is the consequence of ““deeply embedded structural features””. He said that, "““any regulator has a proper interest in proposing amendments that will help to address identified failures and thereby promote consumer empowerment and choice””." Any regulator worth their salt would say the same. Cave talked about some issues for consideration in the future, such as separating the development and the ownership role from the management. Indeed, some are seeing RSLs on a scale of 50,000 properties. When we were managing the housing of local authorities, we thought that that was the problem, but now we have RSLs with that scale of ownership. By definition, the head office will be remote from tenants, whereas in the past, when I used to run housing associations, the tenants could walk round the corner and give you a good kicking, as they often did. Even though there may be economies of purchasing power on development, buying and financing that we may wish to retain, we ought to be looking, as should the regulator, at whether we should be unbundling to give tenants more choice and control over their management—in other words, the contestability of housing providers at the instigation of consumers collectively. When you have a good provider at a local level—whether it is a local authority, an RSL or an ALMO well able to do management—and scattered housing stock, tenants should be able to have their management carried out by whoever is the best provider and best manager. Cave said that the regulator should introduce measures to stimulate competition for management of social housing services across the domain, to give tenants choice and to enhance service delivery. There is no clarity whatever in the Bill about the tenants’ right to sack or choose their management. All they can choose to do is set up their own management organisation if they are an RSL. There is no clarity that the regulator has to promote appropriate supply options or to address structural deficiencies in the market, but there ought to be. The VAT issue is a sad, anoraky instance of a structural impediment. An ALMO or a local authority can get a registered social landlord, albeit in a wicked private sector organisation, to undertake the management for them. But if a registered social landlord wants an ALMO, another registered social landlord or a local authority to undertake the management, it suffers a 17.5 per cent VAT impediment. This matters a great deal, because many registered social landlords have small pockets of stock, which, by definition, means that their housing management function is remote and that they do not provide economies of scale at a local level or, necessarily, a locally sensitive understanding. Yet the national process of rationalising some of that—if that is what tenants want—is frustrated by the VAT impediment. The Bill, the process and the Government are silent on that. I can guess why—the Treasury would not like it—but we should put on the regulator a duty to work progressively to overcome structural impediments to empowering tenant choice, and this is one of those. It may take five or 10 years, but it should be on the agenda. Among the people to whom I have talked about this sad return to housing on my part, I have identified a great deal of support for the objectives and aims of the Bill but also concern that the Bill in its present form does not achieve the objectives around tenant choice and empowerment. This matters because the Government have stated that it is one of their major objectives. I and many organisations, as well as, I trust, many others in this House, would be pleased to work with the Minister—it is a long time before Committee stage—to try to plug some of these gaps. I look forward to doing so.