Circle Housing and Orchard Village

Lord Barwell Excerpts

Thursday 12th January 2017 Commons Chamber

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

I congratulate the hon. Member for Dagenham and Rainham (Jon Cruddas) on securing this debate on Circle Housing and Orchard Village. It is an issue that I am familiar with, for two reasons. First, I am sure he is aware that the hon. Member for Bethnal Green and Bow (Rushanara Ali) raised in an Adjournment debate at the end of last year issues relating to Old Ford and the impact on her constituents.

The hon. Gentleman referred to Colin Nickless and his role on behalf of residents of the Orchard Village estate. I can tell him that Colin Nickless communicates regularly with me on social media, raising concerns about the quality of development at Orchard Village. I am therefore familiar with the issues that the hon. Gentleman has raised and I am grateful to him for doing so. He speaks powerfully on behalf of his constituents. There have been several developments since the previous Adjournment debate and I look forward to updating hon. Members about those as well as responding to the hon. Gentleman’s particular concerns.

If the hon. Gentleman will forgive me, I will start in general terms by setting out the Government’s vision for affordable housing and the important role that housing associations play in that. I do not need to remind hon. Members of the chronic housing shortage in this country. It is clear that we need to build more homes and that we have not been building enough homes for 30 or 40 years. The Government are determined to put that right and provide more homes for those who need them. Nowhere in this country is that need more acute than in London in constituencies such as mine and the hon. Gentleman’s. We are already making progress: housing supply rose by 11% in 2015-16; the highest level for eight years. However, I accept that much more needs to be done. As the hon. Gentleman said, housing associations have a crucial role to play in that. Let us not forget that, during the financial crisis, housing associations kept on building. The sector is responsible for about a third of all new housing in England each year. That is why we are increasing investment in the housing association sector. Just last week we invited bids to the expanded shared ownership and affordable homes programme. As well as the additional £1.4 billion that the Chancellor announced in the autumn statement, we have introduced greater flexibility into the programme, which will allow housing associations better to respond to local needs and markets.

As I said, the situation is at its most acute in London. We need new homes of all tenures but in particular we need to ensure that there are affordable homes for sale and rent. In November, we announced a £3.15 billion funding package for London, with an ambitious aim to build significantly more affordable homes over this Parliament. The Mayor of London was generous enough to say that that was a record level of funding for City Hall for affordable housing. He has since opened registration to his own affordable housing programme using that money. Bidding will be open from the end of this month to mid-April. We look forward to housing associations building more homes so that more Londoners get a decent and secure place to live.

Before I come on to Circle Housing, I want to respond clearly but gently to the hon. Gentleman’s challenge about the changing role of housing associations. He is right to say that their role has changed over time. Many, particularly those that are engaged in large developments, have become increasingly commercial in their practice. Often, they are building market housing and using that to subsidise increased provision of affordable housing. However, I would like to challenge the hon. Gentleman in two regards. First, I have not yet come across a housing association that thinks of itself as equivalent to a private sector developer. All the people I had the privilege of meeting during my six months as Housing Minister are still very conscious of the original purpose behind housing associations.

Generally, housing associations come from three main routes. Some are the old Victorian philanthropic bodies—Peabody is a good example. Many emerged from the “Cathy Come Home” movement and others emerged through local authority stock transfers. At one point in his speech, the hon. Gentleman posited that perhaps there was a tension between the housing associations’ role in developing new homes and their historical purpose. I disagree. To me, their historical purpose was to meet housing need in our communities, and at this time, particularly in London, but all around the country, there is a desperate need for more affordable housing. In trying to meet that need, housing associations are fulfilling their historical purpose.

There is common ground between the hon. Gentleman and me on the point that as housing associations engage in increasingly commercial activity to help them provide more affordable housing, they must not lose sight of their historical purpose or their obligations to their existing tenants. I am completely with him on that. He was honest enough in his speech to recognise why the Government are deregulating. Historically, we have viewed the housing association sector as part of the private sector, and that remains the Government’s view, but the Office for National Statistics has reclassified them into the public sector. If we allow that situation to continue in the long term, it will have a damaging impact on housing associations’ ability to develop new housing, because not only the funding that the Government give them, but the money that they raise through private markets would be counted as Government spending and fall within the Treasury’s control. It is therefore very important—I hope there is a political consensus on this across the House—that they are returned to the private sector. That means we need to address the concerns raised by the ONS. Again, there is common ground between us. We need to ensure the funding we give to housing associations is used in the interests of public policy and for a clear purpose, and that we do not lose sight of that.

The hon. Gentleman raised a whole suite of serious concerns in relation to Circle Housing and Orchard Village. Many of his constituents have been seriously let down by their landlord. I congratulate him on championing their cause. I very much share the concerns he set out.

The regulator received a large number of complaints and referrals regarding Circle’s repairs service across east London, in particular the quality of new build properties at Orchard Village. The information provided by residents was part of the regulator’s wider investigation into Circle and it informed the notice issued in December. The regulator found that Circle had breached consumer standards and risked serious detriment to its tenants in its repairs service across east London. It is worth noting that I believe this is the first time the regulator has made such a finding in relation to an ordinary repairs service. The regulator also concluded that the specific issues at Orchard Village did not, of themselves, constitute a separate breach of standards, but it will continue to examine any new evidence provided by the residents of Orchard Village. This is still a live issue—the regulator is still looking at it.

As the hon. Gentleman said, Circle has merged with Affinity Sutton to form Clarion. It is the responsibility of Clarion to address the issues raised by the regulator. I met the chief executive of Clarion earlier this week, and I believe the hon. Gentleman met him, too. He is committed to resolving these problems quickly. Clarion has a responsibility to protect the needs and welfare of its tenants and leaseholders, and it needs to meet that responsibility. He is clear that Clarion needs to work with the regulator and provide assurance on how the issues are going to be fixed. I am encouraged, although I will continue to pursue to the issue, that Clarion is investigating what has led to the problems. It is making immediate improvements where it can, such as: improving call waiting times at the relevant call centre used by Orchard Village residents, and improving systems to ensure calls are properly logged and actioned. It is also trying to increase engagement with tenants.

Clarion has established a dedicated project team to manage and resolve the issues with Orchard Village specifically. It has put in place new contractors to develop the final phase of regeneration, as the hon. Gentleman mentioned in his speech, and repairs to properties. It has appointed a specialist property consultant to undertake a full survey of build quality. I also understand that Havering’s environmental health department is launching an investigation following reports of the presence of methane gas at Orchard Village. Clarion has appointed a specialist consultant to undertake its own investigation and is taking the potential risk to public health very seriously.

There has been some concern regarding the potential impact of Circle’s merger on tenants. Having spoken to Clarion’s chief executive, I see the merger as presenting an opportunity to sort these problems out—and to sort them out quickly. That is clearly what the hon. Gentleman, in raising these issues in this debate, wants to see. The new organisation should bring the skills and expertise to transform the service that tenants receive, putting matters right and ensuring they do not recur. I am sure that that is what the hon. Gentleman and his constituents want.

In a wider context, I welcome Clarion’s vision to build 50,000 new homes in the next 10 years. I think the hon. Gentleman and I agree that if the organisation wants the Greater London Authority and London boroughs to work with it, it will need to demonstrate progress on these issues before anyone will want it to be given funding to develop new housing. I welcome its ambition, but it will need to be seen to be putting this matter right before local authorities in this part of the country will want to work with them on further new supply.

The role of the regulator presents the real challenge in both this case and that raised by the hon. Member for Bethnal Green and Bow, who wants to know whether the Government are satisfied that the arrangements are working properly. Through its framework, the regulator is meant to support and create the conditions for a flourishing housing association sector and ensure that housing associations are properly managed, provide good-quality homes and serve the needs of their tenants and communities. The Government are committed to upholding a strong and independent system of regulation for social housing, which is why before Christmas we announced we were establishing the regulator as a stand-alone public body, following the recommendation in the HCA’s tailored review.

At the moment, the regulator forms part of the HCA, which is also responsible for delivering many of my Department’s programmes, but the review recommended that it be set up as a wholly separate body, and we will take forward that recommendation. We are consulting on the legislative process to do that, but I want to make it clear that that change will not diminish the regulator’s powers or objectives. The regulator will continue to have a vital role in encouraging and challenging the sector to improve efficiency and asset management and to maintain robust governance so that the sector remains attractive to commercial lenders. If we want private organisations to lend money to housing associations to help them deliver affordable homes, they must have confidence in the quality of the governance.

Finally, and most importantly and relevantly to this case, the meeting of tenants’ needs is a vital aspect of housing associations’ purpose. While it is commendable that they explore different commercial models, their tenants’ needs must not be forgotten. Indeed, they must have a mechanism in place for tenants to have a say in how the organisation is run and deals with complaints when tenants think that the service they are receiving is not satisfactory.

Finally, I want to explore why the threshold for action was quite high, as the hon. Gentleman would see it. The regulator does not have an active role in monitoring compliance with consumer standards. The ombudsman is the starting point for such complaints. The regulator can intervene only where there is judged to be a risk, or there has been risk, of serious harm to tenants. That is the threshold at which the regulator takes action. As the regulator is independent, I cannot personally intervene in those decisions, but it is my role, when Members or others draw concerns to my attention, to make sure the regulator is aware of them. I am confident that the regulator takes all complaints it receives from tenants seriously and investigates where necessary. I have undertaken to the hon. Member for Bethnal Green and Bow, however, to look at the interaction between the ombudsman and the regulator to make sure that those processes work well so that when the ombudsman spots a spike in complaints about a particular association or element of an association’s work, it is drawn to the regulator’s attention speedily so that these situations can be resolved as quickly as possible.

Tonight’s debate serves as a reminder of the importance of robust governance, accountability and transparency within the housing association sector. As the sector evolves and becomes more complex in its diversification and commercialisation, it is vital that housing associations continue to uphold their responsibilities to their existing tenants. The regulator has a crucial role in maintaining standards in the sector and upholding both financial viability and management. In the case of Orchard Village, there is a clear expectation from me, as the Minister, from the hon. Gentleman, as the constituency MP, and from residents that Clarion will follow through with its assurances and address the issues he has raised tonight. It will be held to account by him, me and its tenants if it does not do that. I thank him for securing this debate on such an important and timely issue.

Question put and agreed to.