Housing and Regeneration Bill

The simple answer is that we have never considered that housing associations performed functions of a public nature in providing social housing. I shall come on to the contrast with the social care provision and the noble Earl will appreciate the point I shall make about the differences in those functions. Housing associations have always been private bodies. Why is that? I can give several reasons. This is what we would have said to the committee had we been able to submit a more substantial response. Housing associations are not controlled or owned by the state. There are about 2,000 of them, they are independent and most of them are charities. They have long and very honourable histories, often rooted in the personal benevolence of benefactors providing housing as a private function. That is what makes them so unique and independent. We are committed to that independence. I accept that they have one very limited public function. They were recently given statutory powers to deal with anti-social behaviour. While we accept that they have a public function in that context, that is very different from their core business which is to own and manage social homes—I think that the noble Lord and the Committee saw the letter from my honourable friend Iain Wright to the Joint Committee—so anti-social behaviour is very much the exception. As I say, there is no logic or tradition which suggests that the provision of accommodation below the market rate, as in social housing, is in any way inherently a public function. For 40 years the Housing Corporation supervised the provision of social housing by most housing associations and these bodies raise most of the money they need to build houses from private sources. They do not rely on public money to own and manage them, and have no role in the allocation of that process. So I agree with the noble Earl: it is not the nature of the organisation providing the function, it is the nature of the function provided. On that basis, you could draw a parallel with some of the functions carried out by commercial organisations. Provision of social accommodation is almost identical to providing market housing except that the price and distribution of the service are controlled through regulation. In summary, social housing is not a public service which has been recently privatised, it is a regulated voluntary activity which local authorities become involved in. For these reasons, we disagree in principle with the Joint Committee’s conclusion that social housing is an inherently public function. By implication, I therefore also disagree with the amendments and the noble Baroness, Lady Hamwee, that registered providers—whose core functions are about social housing—should be public authorities for HRA purposes. The practical implications are not an excuse, as the noble Earl suggested. I am arguing this case from a position of principle and logic. The consequences are serious not just for the sector, but for the whole provision of social housing in this country. The first point is relatively minor, but it will not be minor to the associations themselves. Putting the provision of social housing as a public function under the Human Rights Act will obviously impose additional costs on the sector in preparing for and dealing with the possibility of legal challenge. This is not a minor issue; some of these RSLs are very small and would not be able to cope with these sorts of legal challenges. Those costs would need to be met by increased rents and, unlike local authorities, they would not be subsidised by government grant and would clearly not be of benefit to tenants. As a principle, we seek not to impose burdens or costs on independent organisations without at least a consultation. However, the most serious point raised by the noble Baroness and the noble Earl is that classifying social housing provision—or, indeed, RSLs themselves—as ““public”” for the purposes of the HRA could affect the present classification of housing authorities as private-sector bodies. The noble Earl and the Joint Committee argued that treating the provision of social housing as a public function would not necessarily imply that any organisation that performed the function was institutionally connected with the state, nor that the state would be required to exercise control over its management or operation. That is true: it would not necessarily do that. However, it is a serious risk. Even if the probability is low—and I do not think that it is—the impact would be very serious indeed for the future of housing supply in this country. The point is that if the current ability to borrow were choked off, £35 billion would be added to the public balance sheet. We would simply be unable to build the social homes we so desperately need in this country. This question of risk was seriously examined in the other place, changes were made to the Bill to ensure that those risks were not run and relationships were clarified in such a way that everyone could see that these remain private functions. Those were important changes. If we were to make the core service—the raison d’être of the housing associations—a public function, it might pose a material risk of reclassification. Far from being an excuse, that is a terribly serious implication. As I say, that is not my prime argument. Finally, there is the question of case law. In considering the amendment, we need to take account of emerging case law. The noble Baroness referred to it in the amendment, and the JCHR did so too. The current position of the courts supports our view that the provision of accommodation by private bodies, including housing associations, does not amount to a function of a public nature for the purposes of the HRA. The noble Earl referred to the recent decision by your Lordships’ House in YL and Birmingham City Council. The ruling in that case held that an RSL-owned residential care home was not undertaking functions of a public nature for HRA purposes, despite the fact that the appellant’s care had been arranged by her local authority under the National Assistance Act. However, it remains the Government’s view that, in general, the provision of publicly-arranged health and social care should be considered a function of a public nature. Amendments have been tabled to the Health and Social Care Bill by my noble friend Lady Thornton to restore the Government’s intention in relation to that function. Why is that consistent with our position that social housing does not constitute a public function? There are two reasons. First, unlike social housing, care homes provide both accommodation and, critically, social care. They are restricted to extremely vulnerable people and are very heavily regulated. The same is not true of social housing, which caters to a much wider client group and covers accommodation only. Social care inspections are frequent and intrusive; the inspection of social housing provision happens about once every five years. Secondly, social care tenants do not have the sort of contractual relationships that are governed by and govern the relationships that tenants and social housing have under the Landlord and Tenant Act. An important point is that YL affects only publicly-arranged care home places. General needs social housing provided by housing associations is not normally publicly arranged. Most of the funding is sourced from rents, private borrowing and the RSL’s own resources; not grants. It is not carried out under contract, but as a private function with appropriate regulation. So stark are the differences between social housing and care homes that I suspect that, if it was accepted that social housing provision was a public function because it was similar to care home provision, the next argument might be that private rented sector provision is a public function because of its similarities to social provision. I want to conclude on a positive note. I have gone into that detail for all the reasons that the noble Earl invited me to; these are complex and important issues. This whole debate has raised important issues about definitions. As part of the Government’s response to the YL case, my honourable friend the Minister for Human Rights intends to undertake a consultation on the scope of the Human Rights Act. We think that this is the best way of taking forward the broader question of what should and should not be considered subject to the Human Rights Act. I was grateful that the noble Earl said that he did not think that this Bill was the right place to address this much larger issue, and he is right in that judgment. The preparatory work for that is under way, but we do not have a strict timetable for it. In summary, I hope that in that context, and for all the reasons that I have mentioned, the noble Earl will have the confidence not to press his amendment, now that the question has been addressed before a larger audience.