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

Tony Lloyd Excerpts

Monday 6th November 2017 General Committees

[Tony Lloyd (Rochdale) (Lab)]

Before going into the substance of the regulations, may I ask the Minister to clarify a point of terminology? They refer continuously to “officers”, a term that normally refers to the paid employees—rather than the members—of local authorities. I assume that the word “officers” is all-embracing of elected members and non-elected officials, but I would be grateful if he put on record who will and will not be caught by the regulations.

We do not intend to vote against the regulations, partly because I am looking around the Committee Room and I can count, as the Whips can.

[The Vice-Chamberlain of Her Majesty's Household (Chris Heaton-Harris)]

I can’t.

[Tony Lloyd]

Well, perhaps they can’t.

I understand why the Minister has brought the regulations before the Committee: they have been dictated by a decision of the Office for National Statistics. I must say that the ONS has put the Government in a slightly bizarre position. Frankly, housing associations obtain the bulk of their resources from public sector funds. They trade as well, of course, but they do so on the back of moneys provided by the public sector. It is an accounting rule that dictates that one lump of money applies to central Government funding while another applies to private bodies; it makes no material difference, because the bulk of the borrowing will still be obtained through Government sources. I accept that the Minister is caught by the ONS ruling and that something therefore has to be done. However, we need to seriously consider the impact and what we mean by accountability.

The hon. Member for Rochford and Southend East (James Duddridge) raised ALMOs. I understand his distinction between the housing associations that will and will not be caught by the regulations, but in both cases it is public money that is being used for a wider social good. It should not be for any one group—even tenants—to determine the long-term future of their housing at the potential expense of future generations. There needs to be some recognition of the wider social interest.

The Minister raised consultation. The explanatory memorandum states openly:

“No formal consultation has been carried out for these regulations.”

I put it to him that he should compare that with the actions of the Welsh Government, who carried out quite extensive consultations in Wales—much wider than those done by the Government in England. He said that the general view of those consulted was that they want the Government to get on with the job. That is not exactly the view that the LGA has portrayed to me. It was suspicious and concerned about the lack of public accountability and the potential that arises from the diminution of the local authority roles. We need to look at how we maintain legitimate public interest.

The Minister rightly referred to the human tragedy at Grenfell Tower, where it was quite obvious that the Kensington and Chelsea Tenants Management Organisation’s stewardship simply was not up to the kind of scratch that we would expect from those who deal not only with public money and tenants’ interests but the fundamental issues of quality and safety. Everyone on this Committee and beyond knows that people were very badly let down—those are mild words to describe what took place there.

I do not often quote The Mail on Sunday but I am happy to in this context. In the run up to the cladding of Grenfell Tower, the tenant management organisation employed a fire risk assessor named Carl Stokes at a cost of £250,000. According to the newspaper’s reports, which have been denied, he wrote to the Kensington and Chelsea Tenants Management Organisation that

“You do not have to give a copy of your fire risk assessment to anybody, not even the fire authority, if you do give them a copy this could be used against you at a later date.”

That kind of profligacy of approach by those who make decisions on behalf of tenants cannot be acceptable. It cannot be acceptable to create a closed world of self-serving, self-reinforcing and self-appointing people who take decisions that can have such dramatic consequences for those housed by our housing associations. The issue of what kind of decisions can be made, and transparency, matter.

Again, in the context of Kensington and Chelsea, it is astonishing that three of the leading officers were paid 10% of the total tenants management organisation payroll, yet they were responsible for around 3.7% of the total turnover. That is an astonishing ability of officers to abuse the public body’s resources for their own private interests. If the Government are intent on moving the local authority role, we must have some kind of guarantee of proper stewardship, a properly independent approach and proper transparency to prevent the subversion of public moneys for private advantage of any kind. I could go on at length about other situations where tenants have been let down by the decisions made by the people who manage on their behalf, but I will not.

If we reduce the role of the local authority, the reasons for which I understand, the Minister must examine as part of his consultation on the protection of tenants how to make sure that there is independence, adequacy of scrutiny and transparency of decisions made, so that the public interest test can be certain. The public interest is not associated with individual members of the board; it has to be set at a wider level.

There is no intention to oppose the regulation, but the Minister has to satisfy this Committee and beyond that he recognises that when things go wrong, as in Grenfell Tower, we must make sure that they can never happen again, and that there will be stewardship and the level of scrutiny that can make a material difference.

[Alok Sharma]

I thank the hon. Gentleman for his remarks. I will respond to some of the points he made. First, from a perspective of clarification, an officer in these regulations is taken to mean both a local authority councillor and a local authority officer.

The hon. Gentleman raised borrowing by housing associations. Of course, such associations receive grants from Government but they also borrow in the private markets. These changes should assist. He also talked about a consultation and why there was no formal or public consultation. As I have noted, the regulations apply to only about 100 of the 1,500 housing associations—those where there was a stock transfer from a local authority. Where that occurred, tenants did vote for the transfer to take place. I should point out that when the regulations change, tenants will have more rights as a result of the change in shareholding structures.

The hon. Gentleman raised the perspective of Grenfell. We all very much share the view that there is an enormous amount we have to learn from this tragedy. There is a public inquiry under way and we will await the outcome of that. Of course, there is also an independent review of building regulations being led by Dame Judith Hackitt. Let us wait and see what comes out in her interim and final reports.

I thank hon. Members for their contributions. We have had an interesting debate. Ultimately, this is the final piece of the jigsaw in terms of removing unnecessary controls from essentially private sector organisations. The regulations go only as far as is necessary to allow the ONS to consider the reclassification of private registered providers back to the private sector.

[Tony Lloyd]

I can see the Minister is coming to the end of his remarks. Of course, I understand there is an inquiry into Grenfell and we are going to look at building regulations, but we do know—we do not need an inquiry to tell us—that the decisions made were not acceptable, and the decision-making structure was not acceptable.

The invitation to the Minister is not to give us an answer today on what the future will look like, but he did say that he would consult on the structure of governance of housing associations and organisations dealing with tenants. I would like him to place on the record that he recognises the need for robust scrutiny of decision making. There has to be some measure of independence on those bodies to ensure that the tenants’ interests and the wider public interest are respected.

[Alok Sharma]

The hon. Gentleman makes an important point. The voice of tenants is incredibly important, which is precisely why I am undertaking a set of events around the country, talking not just to those who run housing associations and councils but to individual social housing tenants. I am very much in listening mode, and what comes out of that will feed into the Green Paper. When the Green Paper comes forward, I am sure he will want to share his views on that.

Subject to the ONS decision on classification in the light of these and other changes, we expect that, with these regulations, about £70 billion of debt will be removed from the national accounts. I therefore commend the regulations to the Committee.

Question put and agreed to.