Regulation of Social Housing (Influence of Local Authorities) (England) Regulations 2017

Lord Beecham Excerpts

Tuesday 7th November 2017 Lords Chamber

[Lord Shipley (LD)]

My Lords, first, I remind the House that I am a vice-president of the Local Government Association. I thank the Minister for his explanation of this draft instrument. He referred to the Green Paper. I think that I recall his words correctly when I say that the consultation that the Minister for Housing has been undertaking is helping to frame that Green Paper. Perhaps, in summing up, the Minister will tell us when the paper will be published.

I concur with what the noble Lord, Lord Kennedy of Southwark, said about the need to build more homes, and in particular more social homes. Specifically, these regulations will not improve the accountability of housing associations, as he said—but, on the other hand, as the Minister has confirmed, only around 100 are affected directly. It is, however, a weakness in these regulations that no formal consultation was carried out with tenants. That has been identified by the Secondary Legislation Scrutiny Committee in its response to the statutory instrument. The problem is that tenants used to be council tenants, and they voted for a stock transfer in the expectation that the council would have a significant role. That role is now being reduced to 24%. As a consequence of that governance change, it would have been right to have consulted with tenants.

As the Minister explained, the regulation is being introduced to meet the decision of the Office for National Statistics to reclassify private-registered providers as public bodies, partly because of the powers of the Homes and Communities Agency and partly because of the residual role of local authorities. However, as the noble Lord, Lord Kennedy, pointed out, none of this builds new homes. It is, essentially, a governance issue. What is missing from the draft statutory instrument is any explanation as to why debt from building council housing should be treated as public sector debt anyway. This governance problem would disappear if the Treasury were prepared to define all local authority borrowing as off balance sheet.

The Prime Minister announced at the Conservative Party conference that on social housing it was her,

“mission to solve this problem”.

The Prime Minister will do so only if local authorities are freed up to borrow and that borrowing is treated, as it is in other countries, not as part of public sector net debt. That is a British measure only. In other EU countries, public corporations are excluded from the general government gross debt figure—the main international measure of debt—in which council housing is classified not as part of government but as a public corporation. An exemption in the UK specifically for council and social housing from the current British measure would comply with international measures of debt. If the Government undertook that change, it would enable more homes to be built and, in particular, more social homes. Therefore, I want to ask the Minister very specifically: why do Treasury rules not reflect international conventions on how debt is counted? If we change the convention, which we are perfectly entitled to do, it would enable those extra social homes to be built.

[Lord Beecham (Lab)]

My Lords, I endorse wholeheartedly the observations of the noble Lord, Lord Shipley, my erstwhile sparring partner in Newcastle City Council. He is absolutely right to draw attention to the anomalous position in which public expenditure on housing is treated. It is not, after all, a matter of creating debt; it is a matter of creating assets. Admittedly, the value of those assets is somewhat eroded by the right-to-buy at a ridiculous discount provisions, but nevertheless it is real. I do not see why the Government should refrain from adopting the noble Lord’s advice and getting this off the balance sheet completely.

On the mechanics of the operation, there is a curious figure of 24%. I do not know quite how you calculate 24% on, say, a board of 15—do you go up one or down one?—because it is a difficult figure and not quite a quarter. No doubt there is some obscure legal justification for having it at marginally less than 25%. I invite the Minister to say that associations should not be precluded from having in attendance at the meeting and participating in the meeting, but without a vote, more representatives of the local authority.

I repeat that they should not have the right to vote, but should have the right on behalf of the residents of the authority of which they are a member to ask questions, raise issues and perhaps make suggestions. Again, I repeat that they would not have the right to vote. Would that not be a sensible way of strengthening the local authority’s role in relation to the issue?