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Housing Corporation (Delegation) etc. Bill

I thank the Minister for her courtesy to Opposition Front Benchers in the discussion before the Bill was brought before the House. We had the opportunity to meet her officials, who went a considerable way in reassuring us about certain aspects. The Bill is presented as a necessary administrative correction—a technical tidying up of existing legislation—which we are being encouraged to pass with as much expedition as possible. Hon. Members are understandably wary when they hear this Government commend legislation in that way. They suspect that an inferno of devils may lurk in the detail. The House’s recent experience with the Legislative and Regulatory Reform Bill reminds us that it is often under the guise of administrative tidying up that Ministers try to smuggle significant changes by us. On this occasion, however, I am satisfied that the Government are right to want the Bill passed, and I sympathise with their desire, and that of many interested parties outside the House, to see it speedily enacted. The Bill necessarily engages with two issues of principle—the principle of legislating retrospectively, which my hon. Friends the Members for Welwyn Hatfield (Grant Shapps) and for Wellingborough (Mr. Bone) have mentioned, and the principle of proper accountability and delegation of powers within the public sector. I shall say a brief word about both in due course, but first I want to explain why we believe that the Bill is necessary on practical grounds. I specifically want to address the practical consequences of failing to give it a Second Reading and of not allowing it to pass relatively quickly on to the statute book. The stability and buoyancy of housing associations—their ability, therefore, to maintain and enhance housing stock, not to mention building the new housing that we need—increasingly depend on access to private finance. Although the Housing Corporation continues to support housing associations and registered social landlords with grant funding, private lenders have extended some £36 billion of loans to housing associations, which is a huge sum—one almost as big as the Chancellor’s current budget deficit. That money has been lent on the basis that the loans are secured and that security depends on consents granted to housing associations under section 9 of the Housing Act 1996. The 1996 Act allowed the Housing Corporation to give consent to the disposal of land by registered social landlords, and consent was so defined as to cover the sale of land, mortgages raised on that land or charges placed on that land. The giving of that consent has been vital in securing loans at highly competitive rates. Housing associations have been able to borrow at below prevailing market levels, because lenders have known that their loans are effectively secured on that land. Another factor that has helped in gaining access to finance at competitive levels is, of course, the regulatory function of the Housing Corporation, which has given lenders an assurance that the organisations to which they lend are effectively managed and following good practice. The legal advice that the Housing Corporation received earlier this year, to which the Minister has referred, has placed housing associations’ continued access to funding in jeopardy. Because the Housing Corporation did not have the power to delegate its functions below board level, the granting of section 9 consents is in question. An element of additional risk has been introduced into the lending process, and the security of lenders’ money may be being jeopardised. If a housing association or other registered social landlord that had been granted a section 9 consent were to collapse financially, there would longer be the same absolute guarantee in law that mortgage lenders would have the first call on its assets. Because that risk exists, and unless the situation is corrected, there is a risk that lenders might be under pressure to call in loans that are technically unsecured, and access to finance for housing associations would become more difficult. The cost of capital would rise and the losers would be those who rely on associations to maintain, improve and build the social housing that the country needs. The Bill seeks to avert that danger by giving the corporation the power that it always believed it had—indeed, that we all believed it had—to delegate functions such as the granting of section 9 consents below board level. As the Minister said, the Bill retrospectively covers all consents, given in good faith and unquestioned at the time, that allow housing associations to function effectively and to gain access to capital cheaply.