Housing and Regeneration Bill

My Lords, I shall start where the noble Baroness finished, because her point goes to the heart of the argument. As I read the amendments, they would make the regulator subject to the Secretary of State’s direction and guidance. I understand the point about guidance, but that would apply for all its functions. When we discussed this matter earlier, I assumed that the noble Viscount, Lord Eccles, was much more keenly in favour of the regulator’s independence. It is a feature of the Bill, which I had thought was broadly accepted, that the new social housing regulator should be largely independent from government, subject to the Secretary of State’s direction only in the setting of a small group of key standards. This is in contrast to the status quo, where the Housing Corporation is subject to direction by the Secretary of State in respect of all its functions; so there is a change. A key recommendation of Martin Cave’s review was that the new regulator should be independent of government, but that does not mean that there is no role for government. Professor Cave was very clear that the Government had a direct interest in the setting of rents and standards of service for tenants, which are the areas in which we have given the Secretary of State a power to direct the regulator. This limited power of direction, backed up by transparent processes, should give providers and tenants the certainty that they have previously lacked. I am clear that this is much more faithful to Professor Cave’s recommendations. It is perhaps worth quoting what he said: "““It is right that regulation should be used to achieve policy objectives. But current and future social housing providers need to have more regulatory certainty about the extent and cost of policy burdens. The process for introducing and adapting policy requirements needs to be more structured, transparent and equitable””." The Bill achieves that objective. The noble Lord’s amendments would provide a new role for the Secretary of State that rather waters down the Cave recommendations. The Secretary of State’s role under this Bill remains extremely limited. We have introduced amendments that would give the Secretary of State additional roles in two very specific areas, to which I referred earlier, but they do not undermine the basic principle of independence. First, we have given the Secretary of State a role in the process for setting the regulator’s fees. As the House will know, regulation in this sector has not previously been funded by fees, and providers are perhaps understandably nervous about how the new system might work. The role for the Secretary of State should help to reassure providers. Secondly, we have given the Secretary of State a role in the regulator’s determinations on the disposals proceeds funds. In this area, the regulator takes on the role of the Housing Corporation in determining how proceeds from right-to-acquire sales are invested. That is how we ensure that proceeds of right-to-acquire sales are invested in new social housing. Although it is a regulatory function, it has important investment implications. The Secretary of State’s role here simply ensures that the status quo is maintained; namely, that government are able to ensure that right-to-acquire sales do not lead to the loss of social housing stock. I am sure that most noble Lords will agree that that is a desirable outcome. The Bill was not intended to make any substantial changes to the right-to-acquire system. Giving the Secretary of State a role here ensures that the status quo is maintained. These small roles for the Secretary of State do not diminish the overall independence of the regulator. The Secretary of State will have only a limited role in setting standards and no role at all in other areas, including the registration of new providers, enforcement of standards or the disposal consents regime, where one could fairly argue that a guidance role is more appropriate. These are amendments that we have to resist.