Housing and Regeneration Bill

moved Amendment No. 130: 130: Clause 227, page 94, line 35, leave out subsection (3) and insert— ““(3) The Secretary of State may by order amend the amount specified in subsection (2).”” The noble Baroness said: My Lords, this formidable-looking group of amendments can be broken into two. I shall deal first with Amendments Nos. 130 to 135, 148, 149, 194 and 197, which address four issues: they ensure that an order by the Secretary of State changing the amount that the regulator can set as a penalty will be subject to the affirmative procedure; specify what is covered in a warning notice for the penalty or compensation powers; tidy up Clause 236 to remove obsolete references to ““occupiers””; and ensure a single definition of the word ““officer””. I have already written to the House on the size of the penalty. Amendment No. 110XD, tabled by the noble Lord, Lord Dixon-Smith, was accidentally accepted in Committee. It aimed to implement a DPRRC recommendation by ensuring that where the Secretary of State uses an order to change the maximum permitted penalty under Clause 227 above the inflation rate, it must follow affirmative procedure. Sadly, the accidentally accepted amendment cannot be kept because it included a number of undefined terms. In Committee, we had tabled our own amendments but then had to withdraw them as they were incompatible with the amendment which had by then been accepted. My Amendment No. 130 removes the text added by that amendment from Clause 227, and Amendments Nos. 194 and 197 ensure that the aim of the noble Lord’s amendment is met by ensuring that Clause 318, which sets out which procedure applies to each order-making power, applies the affirmative procedure to Clause 227. I apologise for the confusion caused over that. On the second issue, my Amendments Nos. 131 and 135 specify what issues need to be covered in the warning notices that the regulator must issue to a provider before using penalty and compensation powers. At present, Clauses 228 and 240 state that the notice must inter alia explain the effects of Clauses 229 to 233 and Clauses 241 to 243 respectively. The problem is that many parts of those clauses are not relevant to the provider and do not need to be in the warning notice. The amendments clarify that the notice should explain issues affecting providers such as the representations procedure and the fact that the penalty/compensation and interest on that sum is treated as a debt to the regulator. However, the notice does not need to include issues such as the regulator’s duty to inform the HCA, or the process by which the Treasury may make regulations authorising the charging of interest. On the third issue, my Amendments Nos. 132, 133 and 134 remove the word ““occupier”” from Clause 236 in three places. The definition of ““tenant”” in Clause 273 already includes ““occupiers””, so they do not need to be separately mentioned. Finally, my Amendments Nos. 148 and 149 ensure that the Bill uses a consistent definition of ““officer””. Clauses 264 and 267 were taken virtually intact from the Housing Act 1996 and include a definition of ““officer”” that we are now removing. The Bill defines ““officer”” at Clause 268 for the three different types of housing association, cross-referring to other legislation. There is no need to retain two separate definitions with the same meaning. The effect of Amendments Nos. 137 and 138 and 139 to 147 is to remove the ability for the regulator to use a number of its major enforcement powers—that is those usable only following, or in some cases during, an inquiry—on the ground of ““breach of a standard”” and to require the regulator to have the consent of the Secretary of State to use its new powers to amalgamate bodies and transfer management. I discussed those issues at some length with the noble Lord, Lord Best, when he tabled these and other amendments on the enforcement powers in Grand Committee. He was kind enough to accept many of the points that I made in response, and I have written to the noble Lord following that sitting. For the benefit of the House, I shall briefly explain what the amendments mean. They are concerned with three major enforcement powers; transfer of land, amalgamation and transfer of management. Transfer of land, in Clause 251, is an existing power used as a last resort in extreme cases when a provider is effectively unable to govern itself or manage its homes. The corporation normally requires the provider to sell all its homes to another provider, and then it is wound up. Amalgamation is an alternative to transfer of land for industrial and provident societies, which does not involve winding up. Mandatory transfer of management was proposed by Professor Cave as a way of addressing very serious tenant concerns without the need to change ownership. All of those are major enforcement powers that must be preceded by an inquiry. Under the Housing Act 1996, transfer of land is usable on two grounds: where the corporation believes that the affairs of the provider have been mismanaged, and where it believes that management of the land would be improved through transfer. In the Bill, we added a third ground; where there has been a breach of standards under Clauses 191 or 192. We did so because it seemed right that there should be a close link between standards and enforcement. We also applied all three grounds to the new enforcement powers of amalgamation and management transfer, for the sake of consistency. I understood that the concern of the noble Lord, Lord Best, was that those powers should be usable only where there was mismanagement. The noble Lord was concerned about the new ground of ““breach of standards””. I do not believe that there was any real risk that the regulator would be able to use extreme powers such as these on the basis of a minor breach of standards; it was certainly not our intention that it could do so. There are protections in the Bill against precisely that, such as Clause 216, which requires the regulator, when using enforcement powers, or deciding which ones to use, to have regard to the materiality and frequency of the problem and the desirability of the provider managing its own affairs. However, after some consideration, I am content to make the proposed change, because this is a new ground, and removing it should not make it harder to use the transfer of land power than it already is. As I stated in Committee, my continuing objection to removing the ““improve the management of the land”” ground is precisely that it is an existing power and that removing it would make it harder to use in the interests of tenants and the security of assets than at present. Amendments Nos. 137, 139, 140 and 142 to 147 therefore remove the ground of ““breach of standard”” from all enforcement powers which must be preceded by an inquiry or used during an inquiry; transfer of land, management transfer, amalgamation, and the powers to restrict dealings and suspend officers. That is in Clauses 254 to 259. On Amendments Nos. 138 and 141, in Committee, the noble Lord, Lord Best, argued cogently that there was significant protection for providers built into the existing transfer of land power, because the consent of the Secretary of State was required; I agree. Although this was not included in his amendments, it is right that, just as the three key post-inquiry enforcement powers—transfer of land, management transfer and amalgamation—are usable on the same grounds, they should all be made subject to the consent of the Secretary of State, which is the effect of Amendments Nos. 138 and 141. That sends a powerful message that the powers cannot be used lightly, though I do not believe for a moment that the regulator would do so. I hope that the noble Lord is content that we have made those amendments in the way that he would have wanted and that we have got the balance right. I beg to move.