Housing and Regeneration Bill

My Lords, I am deeply sympathetic to tenants being empowered to play a full role in the management of their organisations. The Bill has been amended in several important respects to get the balance right between the opportunities for residents to participate actively in the management of their affairs—indeed, in some circumstances to raise the issue of a change of management—and, on the other hand, the regulator’s powers to act on the residents’ behalf and to take into account the cost to the taxpayer of any changes and the viability of the provider; that is, whether it would stay in business if changes were brought about. We have got the balance about right. I have done this before, but just so that everyone is entirely clear, I declare that I chair a large housing association and can be accused of bringing a provider interest into the debate. I put that declaration up front. A transfer of management—which sounds like a relatively modest change in the affairs of an organisation—is no trivial matter. Only about 350 housing associations are currently active and developing, although about 1,300 exist. That means that around 1,000 are really managers of rented property. That is what they do. Although they may own the property in name, if they are denied the opportunity to continue to manage it, they will go out of business. Some of these organisations have been around for decades, some for longer. I absolutely accept that they have no God-given right to be managers of social housing; that is certain. However, it is not a trivial matter to end their management of their stock. The Housing Ombudsman is there to handle complaints and individual redress for the 4 million tenants whom the noble Lord, Lord Filkin, mentioned, who will have issues and complaints on a day-to-day basis. The ombudsman provides an effective service. I have been on the sharp end of it myself, and have been entirely content with its judgments. The ombudsman can arbitrate between tenants and landlords—between the housing associations and their residents—and it can fine the registered social landlord, the housing association. It can publish on a name and shame basis the offending housing association. It can draw the attention of the funder—currently the Housing Corporation but in future the Homes and Communities Agency—to the fact that the housing association has not acted properly. Those powers ensure that tenants with individual complaints on a day-to-day basis—the 4 million tenants—have redress and access to a higher authority to settle those disputes, without it being suggested that it requires a change of management or a wholesale shift in the management of the stock of the organisation to another enterprise. That should not be taken lightly, because it brings with it—although it probably should not—the imposition of VAT on the management process. There is a 17.5 per cent surcharge if someone else, apart from the owners, does the management. Therefore, if residents complain that service charges are too high and they want to see some cuts in the costs, then, to get a 5 per cent efficiency gain, you need a 22.5 per cent cut in cost to take on board the VAT at 17.5 per cent as well. So they should not enter into this lightly. We are trying desperately to get the right balance here. I should be very disappointed if the noble Earl, Lord Cathcart, does not see any of his amendments accepted by the end of the day, with some concessions from the noble Baroness. On this one, getting the balance exactly right is difficult. At the moment, the Bill, after the changes that the noble Baroness is bringing forward in the amendments before us now, will get it just about right.