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Housing and Regeneration Bill

moved Amendment No. 103B: 103B: Clause 88, page 40, line 26, at end insert ““and to devise and promote mechanisms for tenants to change providers in the event of poor management”” The noble Lord said: I shall speak also to two other amendments in this group standing in my name. I want to express my thanks to the noble Earl, Lord Cathcart, for his vigilance and for helping me to get all three in the same group. All three amendments focus on the Government’s and the Bill’s objectives to empower tenants, and therefore a legitimate question for the Committee is whether the duties, the roles and the form of the regulation are appropriate to realise this end. Before advancing into more detail, I would like to express my thanks to staff at the Chartered Institute of Housing, the Tenant Participation Advisory Service, the National Consumer Council and the National Federation of ALMOs and others. Many of them would agree with much of what I have said but I doubt whether any of them would agree with everything I have said. We are broadly in the same territory on these concerns and issues. I am also grateful to the Minister and her officials for the time and the courtesy that they have advanced on these matters. I want to take some of the Committee’s time to go back to Cave to see why he saw tenant empowerment as so important. On page 48, Cave quoted, first, that, "““tenants of affordable housing are particularly disenfranchised. Many are captive consumers, with limited choices and very significant barriers to switching””," and, secondly, that, "““the relationship between most landlords and tenants is unequal and one-sided””." Both those quotations are from the National Consumer Council, which Cave is quoting with clear support. A third quote comes from the Chartered Institute of Housing, which said, "““customers are rarely able to make a positive choice about the type of provider that is responsible for their housing. … it can still be very difficult for households to enforce their rights or demand improvements””." Those of us who for more years than they care to remember have worked to manage, or mismanage, or who seek to improve and empower tenants, well know how true those statements are. They are therefore central to what I hope the Government are trying to achieve. It is legitimate for the Committee to ask the Government specifically how tenants will be empowered as a consequence of the Bill and through what mechanism. As ever, Governments sometimes know more than they have revealed. Through this process we may therefore be better sighted on what exactly is intended and how this is to be worked out. I very much hope so. Some of our concerns are perhaps reinforced by the fact that the Government’s consultation on Cave's recommendations was partial, and I could not see what seemed to some of us to be Cave’s critical recommendations in the consultation document issued. I shall illustrate that very briefly although I may return to it. First, Cave clearly saw that we should have a system of co-regulation; in other words, it was not just a top-down central state model but a model of consumer protection and consumer empowerment. Secondly, Cave saw addressing the structural impediments to choice referred to in the third amendment in the group as fundamental. Finally, Cave saw it as essential that there was an expansion of the availability of choice, in practical ways, to tenants; otherwise any amount of information has little meaning in practice because you cannot do anything with it. So Cave saw all those issues as absolutely central to the regulatory model he was proposing. Perhaps I am slow, but I felt that the clarity with which that has come through in the Bill is slightly lacking. I hope that through this process we will find out where the Government stand on these issues and what their policy is on it. It is particularly important because, as my noble friend Lady Andrews indicated, the Bill says that the regulator has, as one of his or her fundamental objectives, to ensure that tenants have an appropriate degree of choice. That clearly begs the question: ““Appropriate to whom?””, in the judgment of the regulator, who may be progressive or may be deeply conservative. I do not use that word in a political sense; I use it in a different sense. Secondly, is it a tenant’s view of what is appropriate, or what have you? It also has the flavour of being a slightly passive view of the world; it is asking whether tenants can choose what they want within the world as it is, as we know it and are used to it. Cave was in a different space; he saw clearly that there had to be mechanisms to promote choice in a great variety of ways, otherwise you would not get tenant empowerment. As I have signalled, consumer empowerment is to many of us an end in itself, but Cave saw it as central to the regulatory model that he proposed. He said that consumer empowerment had the greatest potential to address the underlying problems of market failure. Of course, he would say that because that has been almost a leitmotif of most regulators of monopolistic services over the past 20 years—the attempt over time to try to change the nature of the market so that the regulator’s detailed involvement is less necessary, because there is more effective market choice operated by consumers. I do not think that we will disagree on that; the debate is about whether, effectively, these clauses and the mechanisms that the Government propose are likely to do that. As I said, choice is central to consumer empowerment. Cave identified perhaps five areas of choice—although maybe it was four: a choice over the range of services; a choice over the manager; a choice over maintenance; and choice over additional services. I think that there were probably others. In other words, Cave saw that tenants having choice over those areas was fundamental if empowerment was to mean anything. I shall bore the Committee with one further quotation. Cave quotes with approval what the National Consumer Council, the Audit Commission and the Housing Corporation all said, which was: "““The truth is that, in the absence of effective consumer choice, there would indeed continue to be limited consumer pressure on providers to drive quality and efficiency. Tenants would be in the hands of benign landlords, who would risk drifting into self-serving patterns, as have public service monopolies before them””." I shall weary the Committee no longer but start to focus this down on to the specifics. The first amendment in my name, which is supported by many of these whom I have quoted, seeks to address what tenants can do in practice if they are dissatisfied with the cost or quality of the housing management services that their landlord is providing in a locality—or they may think that another is better. What we have understood from helpful discussions with my noble friend and officials is that effectively the model proposed for this is that the regulator will set standards and, if tenants are unhappy, they will apply to the regulator and say, ““Our housing manager is not meeting those standards—please, regulator, intervene””. There are three things wrong with that. First, most tenants are dissatisfied at some point with their landlord; it is the nature of life. Often it is for good reasons, but not always. But with the multimillion tenancies that will be subject to the regulator and have a single domain, when we have all had our way, whether sooner or later, it is impossible to conceive of tenants, every time when they are dissatisfied with their housing manager and want something done about it, having to go to the nanny central state and ask it to intervene. So it is flawed in terms of process. But it is, secondly, flawed in that it does nothing to empower tenants but empowers only the regulator to sort out the problem. It is clear that you need both those things, but you have to try to get the regulator to work towards empowering tenants at locality, so they can get things sorted out themselves with their landlord rather than going up to the central state. The amendment specifically says that the regulator should devise, in consultation with social landlords and tenants organisations, a mechanism that would put in place just such choice opportunities for tenants in a locality if either they thought that their landlord was not very good or, equally, if they thought that another landlord nearby was likely to give them a better service. This is not Utopianism. This is exactly what I can do as a common freeholder—I think that is the term—of a block of flats in Pimlico. To put it simply, if we, as a group of tenants, are dissatisfied with the managing agent, we can vote on the matter at an AGM. The landlord’s agent then goes to the market and gives us a choice of alternative providers. We did that two years or so ago. It is perfectly possible, and is part of a normal form of collective choice. The regulator should be able to devise such a system—I will not weary the Committee by going into excessive detail, although I spent at least 10 minutes in the garden on Sunday thinking about it so I shall give a little detail. In effect, there is a mechanism for making this work at a local level. If we believe in empowerment, we want this to happen. I remind the Committee that I am talking about one of Cave’s key recommendations in paragraph 2.85; these are not the ramblings of a Member of your Lordships’ House with nothing better to do. I therefore have two questions for the Minister. First, does she think that it is desirable in principle for tenants to have such a choice in their locality without having to go to the central regulator? Secondly, if she does believe that that is appropriate—I hope that she does and that she says so as a political statement; it is hardly one for officials—does she believe that the Bill puts a duty, not a power, on the regulator to promote such choices? The second of my amendments relates to structural impediments; I have said previously why these are fundamental. Cave gave a specific section of his report to the importance of addressing the structural obstacles to consumer empowerment and choice. This is on page 55, for those who wish to address the issue. He says that, "““any regulator has a proper interest in proposing amendments that will help to address identified failures and thereby promote consumer empowerment and choice””." In other words, it is the central job of the regulator. My concern is that there is no mention in the Bill of the responsibility for what you would have thought was a central issue. No doubt the Minister will say that the regulator has the power to address these issues, but I am saying that there should be a duty to do so. Cave gives, I think, five illustrations of this; no doubt he could have given more. First, he talks about separating the housing development role from the ownership and management role, so that achieving economies of scale in procurement and financing are not left to ever larger monopolistic housing providers at a local level. Many of us feel that that may have been the story with RSLs for a few years. Secondly, he talks about overcoming the present VAT disincentive to outsource housing management so that tenants can have a choice of housing manager without suffering a taxation penalty. Thirdly, he talks about the contestability of housing services at the instigation of consumers collectively, which we have just talked about. Fourthly, he talks about the rationalisation of management services on estates in multiple ownership. Lastly, he talks about the local management of dispersed housing stock. There may have been another topic. In essence, Cave, as a good specialist on how to regulate a system, identifies present structural failures. His argument, and mine, is that unless there is a duty on the regulator to work to promote the removal of those impediments, we will still have the same disempowered tenants suffering under the same paternalism of which we are all guilty to a large extent. Does the Minister agree with Cave that it is necessary to work towards removing structural impediments? Clearly it would be naïve to think that the regulator can get rid of VAT by himself; we are talking about taking five or 10 years. If she does agree with Cave, why is this not in the Bill? I will not weary the Committee by talking in detail on Amendment No. 104ZB, because it is another variant of what we talked about before. Given that we are in Grand Committee, these are no more than probing amendments, but I look forward to hearing what the Minister says, and perhaps to having further discussions with her or with her officials, if she wishes, and to reflecting on the position of a number of us who are working on this to see whether we should table an amendment that is sharper and less probing at the next stage of the Bill. I beg to move.