Housing and Regeneration Bill

moved Amendment No. 121: 121: After Clause 194, insert the following new Clause— ““Guidance by the Secretary of State (No. 2) (1) The Secretary of State may give guidance to the regulator as to the exercise of any of its functions. (2) Before giving guidance under this section, the Secretary of State must consult such persons as the Secretary of State considers appropriate. (3) The Secretary of State must publish any guidance given under this section as soon as reasonably practicable after giving it. (4) The Secretary of State may revoke guidance given under this section. (5) The Secretary of State must— (a) consult, before revoking guidance under this section, such persons as the Secretary of State considers appropriate, and (b) publish the fact that the guidance has been revoked as soon as reasonably practicable after the revocation. (6) The regulator must, in exercising its functions, have regard to any guidance for the time being in force under this section. (7) References in this section to giving guidance include references to giving guidance by varying existing guidance.”” The noble Viscount said: My Lords, I shall speak also to Amendment No. 123. What would these amendments do if agreed? First, they would remove Clause 195 with its unprecedented and prescriptive provisions; secondly, they would split Clause 195, in effect, into two clauses, one of which is a widely drawn, flexible guidance clause which is a replica of Clause 48 in Part 1, except that the amendment changes the name ““HCA”” to ““the regulator””. Finally, the amendments include a directions clause, the wording of which is taken directly from Section 76 of the Housing Associations Act 1985. Section 76 is the precedent cited by the Government in its submission to the Delegated Powers and Regulatory Reform Committee and in Grand Committee. However, if the Government were minded to replace the proposed Section 76 clause with a replica of Clause 48(1) to (4) in Part 1, thus putting the regulator into the same position as the HCA, that would be entirely appropriate. Either clause would do what the two amendments intend. What would be the effect of these amendments? First, they would provide the Government with the powers they have argued they need. Secondly, they would put the HCA and the regulator on all fours and subject to a similar scheme of powers. Thirdly, they would deal with and put to rest the disagreement between the Delegated Powers and Regulatory Reform Committee, of which I am a member, and the Government. Finally, they would retain a conventional power of direction as included in many Acts. I will give my reasons why these four improvements to the Bill deserve a welcome from the Government. First, with regard to powers, the Minister has herself argued that in dividing the functions of the Housing Corporation in separating out regulation—I quote from the letter of May last to the Delegated Powers and Regulatory Reform Committee— "““one of the aims of the Bill is to establish a regulator which is more independent of the Secretary of State””," but that the, "““Government has a legitimate public interest in the regulator's functions””," and, further, that, "““in relation to the issues referred to in Clause 195(2) the Secretary of State has such an interest””." I believe that these propositions will be met with general agreement: first, that the regulator should be more independent, and, secondly, that the Secretary of State indeed has an interest in the regulator’s functions—including, I would judge, those in Clause 195(1) as well as those in Clause 195(2). The question is how we satisfy those twin goals in the most elegant and effective way. Guidance is a better way than directions. Guidance allows dialogue to proceed at any required pace, allows any depth and detail of consultation and enables compromise—although the regulator must have regard to guidance, whether in full agreement or not. Thus compulsion is avoided. In contrast, directions would entail compulsion. It is certain that any direction that enforced a realignment of the regulator’s method of delivering performance under Clauses 190 to 194 would be highly disruptive both to the HCA and to social housing providers. That is inherent in the language and the process of Clause 195. Would the inevitably slow progress towards a direction take a year? Given Clause 195(4) and (5), it seems likely, thus creating great uncertainty in a difficult and demanding market. Surely guidance is the much more appropriate power, serving to achieve both more independence and the Secretary of State’s legitimate pursuit of the public interest. The second issue is the keeping of the HCA and the regulator on all fours. People in both public bodies will be drawn from the Housing Corporation and from English Partnerships, where they are colleagues. They will need to continue to be colleagues in a joint endeavour. The HCA and the regulator face a stern test: 70,000 high-quality completions by 2010-11, as the noble Lord, Lord Bassam, reminded us. That is a 40 per cent increase on the current 50,000 completions, split more or less down the middle between rented and owned. I believe that there is agreement that the most acute shortage is in rented property. The average Housing Corporation grant for rented housing is about £60,000. For owned property it is about half that figure, confirming that rented property is the most demanding sector in the social housing market. Both the HCA and the regulator, continuing to work in close harmony, will need to be both innovative and imaginative if they are fully to succeed. They will need the independence that they have been promised, and anything that puts one into a different relationship with the Secretary of State from the other will not help. They need to be on all fours. I turn to the third issue. There has been, as my noble friend Lord Dixon-Smith pointed out in Grand Committee, a disagreement between the Delegated Powers and Regulatory Reform Committee and the Government. The committee demurred at Clause 195, saying in its Eighth Report that the, "““delegations have a legislative character but are not subject to a parliamentary procedure … it is not clear that section 76 of the Housing Associations Act 1985 is a relevant precedent””." Despite the fact that the Minister continues in a state of disagreement with the committee, it will be to the advantage of the House if this disagreement is peacefully resolved. Amendments Nos. 121 and 123 achieve this; neither the proposed guidance clause nor the proposed directions clause is of a legislative character, and both are well precedented. The final issue is that of the conventional inclusion of a directions clause. Directions are a draconian power and are meant to be so. They are not intended for the review of detailed operations under the provisions of an Act; they are intended for the unforeseen—for exceptional circumstances when rapid action is needed. This is why directions clauses such as that in Section 76 of the 1985 Act have been acceptable, despite the fact that they are subject to no parliamentary procedure. Amendment No. 123 restores directions to their well precedented place in legislation. I shall say a word or two about assurances. Directions clauses attract assurances, and we have had some about Clause 195. However, two questions always arise. The first is that of the cook’s pie crust—are assurances made to be, after a time, broken? The second is more serious. Why put an extensive and complicated clause in a Bill if it is very unlikely to be invoked? The language and intent of Clause 195 is all about the performance of functions. Guidance will be a more effective way to find improvements to performance, leaving directions for use in extremis. I am seeking to meet the needs of all the principal players—the Secretary of State, the HCA, the regulator and the Delegated Powers and Regulatory Reform Committee. I believe that the providers as well as the tenants and owners will also benefit. I beg to move.