Social Housing: Regulation

Lord Barwell Excerpts

Monday 31st October 2016 Commons Chamber

[The Minister for Housing and Planning (Gavin Barwell)]

I congratulate the hon. Member for Bethnal Green and Bow (Rushanara Ali) on securing this debate on local authorities and the regulation of social housing and on raising the wholly unacceptable conditions that some of her constituents have been experiencing as tenants of the housing associations to which she referred.

Let me start by setting the scene. I am sure that all Members will agree that everybody needs the security and stability of a decent, affordable home, and nowhere is that need greater than in our capital city, which both the hon. Lady and I have the privilege of representing in this House.

As a Government we have gone some way to try to address the problem. In 2014-15, we saw a record year for London house building. Some 27,000 homes were delivered, including more than 18,000 affordable homes—the most since records began in 1991—but we need to do much more. That is why the Government are doubling the housing budget to more than £20 billion over the next five years to support the largest housing programme by any Government since the 1970s.

We are also building a strong working relationship with the Mayor of London’s team to deliver our shared goals to build more homes and to help more people to own their own home. Indeed, I am due to speak to the Mayor about that tomorrow.

As the hon. Lady acknowledged, the housing association sector has a strong track record on house building. It has delivered nearly 300,000 affordable homes since April 2010. That equates to about a third of all new housing in England every year. To help the sector to continue to build more homes, the Government have already committed £8 billion to deliver a range of affordable housing starts by 2021, and we have made it very clear that we will prioritise housing in London.

In April this year, we published the prospectus for the shared ownership and affordable homes programme. The bidding round closed in September, and the Homes and Communities Agency is currently assessing bids. We expect to announce successful bidders in December. This programme will get more homes built and help some people take the first step on to the housing ladder.

Building new homes is only part of the picture. One of the key roles of housing associations is to manage their existing stock. I wish now to turn to the role of the regulator, on which the hon. Lady touched during her speech. It has a strong regulatory framework to make sure housing associations are well managed, provide good-quality homes and serve the needs of their tenants and communities.

The hon. Lady may be aware that the Government are committed to deregulating the sector. She touched on that and asked us to rethink our policy. There are two reasons why we are taking such action. The first reason, with which she will not have a great deal of sympathy, is to do with the deal with housing associations to deliver the voluntary right to buy. The second reason, with which I hope that she and the shadow Secretary of State will have a lot of sympathy, is to allow the Office for National Statistics to return the sector to the private sector where it belongs. If we want to deliver more housing through the housing associations, it is very important that we end this decision to treat housing associations as if they are part of the public sector.

To help achieve those aims, a package of measures was included in the Housing and Planning Act 2016. They include the removal of the regulator’s disposals consents regime, so housing associations will no longer need the regulator’s permission to sell their own stock or to charge it for security. The regulator’s constitutional consents regime will also be abolished. That will remove the need for housing associations to seek permission before they make organisational changes.

What will not change is the strong regulatory framework. The regulator’s monitoring powers will remain unchanged and it will continue to take action where necessary. It will also continue with its vital role in encouraging and challenging the sector to improve efficiency and asset management. Its role is to help maintain a viable and well governed sector that attracts commercial lenders to continue to invest at preferential rates, so that we get the new housing that we need, and crucially to do a good job for the tenants whom those housing associations serve.

[Rushanara Ali]

I am concerned by the Minister’s response. I cannot understand how that helps to deal with my constituents’ concerns and how they are being treated. It is complacency yet again and does not address the effects on the public. On his point about privatising housing associations, they have received billions in subsidies, so deregulation must go with responsibility and accountability to the public because of that public investment. Surely, the Minister can understand that.

[Gavin Barwell]

I understand and share the hon. Lady’s desire to ensure that, in return for the very significant public investment that the Government are putting into the housing association sector, we not only get the new homes that we so desperately need—I do not think there is any difference between us on that—and that the housing associations do a good job for their existing tenants. If she will allow me to make a little progress, I hope that I can provide her with some reassurance.

The new freedoms that come with the deregulation measures will undoubtedly bring new challenges and may alter the way that the sector approaches decision making and business planning. The sector has a long history of meeting housing need. The majority of housing associations are still charitable and non-profit making organisations. Although some of them are running very large businesses in terms of the money involved, the hon. Lady was right to allude to the key social value that they provide. They must not lose sight of that, and I am confident that housing associations will continue to be responsible social landlords, acting in the best interests of both their current tenants and those in housing need.

Housing associations must have a process in place for tenants to have a say in how the organisation is run and to deal with complaints when tenants think their service does not come up to scratch. The housing ombudsman has the main role in dealing with complaints where tenants feel that matters cannot be resolved directly with their housing association. However, the regulator considers all the information it receives to determine whether there has been a breach of its standards and serious harm to tenants—as clearly happened in the case that the hon. Lady brought before the House tonight—and acts where it judges that to be the case.

I hope that the hon. Lady will understand that, as the regulator is independent and that independence is very important, I cannot directly intervene in individual cases. I am confident that the regulator takes all complaints seriously and investigates where necessary. I apologise to her for the fact that she has not yet received a reply to the letter that she wrote to me in August. If she has any concerns in future, she should speak to me in person. I want to be kept informed of exactly what the situation is and whether the progress that we both want to see is being made.

We heard a lot from the hon. Lady this evening about her concerns in relation to Circle 33 and Old Ford, two of the housing associations in the Circle group. As she may know, the regulator found that Circle’s long-standing poor emergency repairs service for two of its housing associations, Circle 33 and Old Ford, put its tenants at risk of serious harm. That is a very serious matter. The regulator took decisive action in April last year and downgraded Circle as it judged that Circle fell far short of the required standard and ordered it to make urgent improvements. That is not a decision that the regulator took lightly. I am pleased to say that Circle did take action to improve its performance. The hon. Lady referred to Kier, the contractors. My understanding is that that contract was terminated. The regulator has now upgraded Circle’s rating to compliant standard—so-called V2— but that is not good enough. It still has not reached the level that we all have a right to expect, and I will be monitoring that situation carefully.

The hon. Lady referred in her speech to the proposed mergers. As part of Circle’s drive to improve its governance arrangements, it plans to merge its nine separate housing associations, including Old Ford, into one. It believes that this will create a more efficient organisation. Housing associations need to take the views of their tenants into account before making such organisational changes. Indeed, it is one of the requirements of the regulator that they must do so, along with consulting their local authority—Tower Hamlets in this case—and lenders.

Old Ford will need to make its case for this change as part of that consultation. Until the deregulation measures come into force, it will need the regulator’s permission to make this change. The regulator’s criteria for taking a decision include whether the change will lead to simple, clear governance structures and whether it will deliver improved services to current and future tenants. I understand that the regulator has yet to receive an application from Old Ford in this regard. Again, as befits the regulator’s independence, the Government—that obviously includes me—do not have a role in such decisions. It will be up to the regulator, and the regulator alone, to carefully consider the application and to make its decision.

The hon. Lady referred to the merger of the whole Circle group with another housing association, Affinity Sutton. This merger would create a new organisation, to be called the Clarion group, which would manage about 128,000 homes. That would make it the largest housing association in the country. Circle has said this will help to deliver better services to tenants and build it more homes. In this case, I am told it has already consulted tenants, and I am told—the hon. Lady clearly believes otherwise—it did not receive many responses to that consultation. The regulator has given conditional approval to that merger, but it has not yet taken a decision on the nine associations in the Circle group.

I hope that the new organisation will continue to house and protect its tenants in a transparent and accountable manner. The regulator’s job is to ensure that it does. The hon. Lady clearly has real concerns about that. I would say to her that Affinity Sutton’s performance in relation to the repairs service is significantly better than Circle group’s, so there are clearly signs that Circle is merging with an organisation that is doing a much better job for its tenants, and the hope must be that that improved service will be brought to bear for Circle’s tenants. However, it is clear from the hon. Lady’s speech that she does not share the confidence the regulator has in that, and I am happy to discuss with her in detail after the debate the reasons for her concern.

I acknowledge that there has been a lot of change in the social housing sector in recent years. It is becoming increasingly complex, and it continues to diversify into a range of new commercial ventures and relationships. The hon. Lady referred to the internal review the Government have conducted of the Homes and Communities Agency. We will publish the results of that review shortly, but I want to reassure her that foremost in my mind in considering that review is making sure that, when we look at the functions the HCA has at the moment—parts of it increasingly resemble a bank that is making commercial lending decisions—we have a strong, clear and robust role for the regulator to look after the interests of tenants.

It is important that housing association boards’ skills and governance structures continue to evolve to match this increasing complexity. Overall, I believe the sector is rising to this challenge, indicating ambitious plans for building the homes this country desperately needs. It continues to invest in increasing supply to help the Government achieve our commitments.

As independent organisations, it is up to housing associations themselves to explore options thoroughly and openly and to make well-informed decisions about what is best, given their particular circumstances. Mergers will not be the answer in every case, but it should be of concern to us all if associations do not explore options that would help them to make better use of the resources they have and to provide an improved service to their tenants.

Finally, I thank the hon. Lady for securing this debate on a very important issue. I have, as Housing Minister, received correspondence from some of her constituents, who are very concerned about the service she has received. I want to apologise again that she did get a reply from me in timely fashion. I mean what I say: if she has ongoing concerns, she should feel free to come and talk to me in the House or to make an appointment to come and see me at the Department, because I would very much want to work with her to ensure that her constituents get the service they have every right to expect from their landlord.

Question put and agreed to.