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Housing and Regeneration Bill

moved Amendment No. 110C: 110C: Clause 194, page 82, line 28, at end insert— ““(ca) the Audit Commission for Local Authorities and the National Health Service in England,”” The noble Baroness said: I will speak also to Amendments Nos. 110D to 110W. The effect of the amendments is to add the Audit Commission to the list of consultees in three places. First, the regulator will be required to consult the Audit Commission when issuing or changing standards under Clause 194. Secondly, the Secretary of State would have to consult it when issuing directions under Clause 195. Thirdly and lastly, the regulator would have to consult it when issuing guidance about how it uses its powers under Chapters 6 and 7, which relate to standards, monitoring and enforcement, and to Clause 213. When we come to the bigger group in a moment, the significance of the Audit Commission will be self-evident; that will show why it needs to be added to the list of consultees. The Audit Commission has a wide range of skill and experience, which it can add to what the regulator does. It is important that the two bodies work together to improve services. I am sure the regulator will consult it anyway. However, there are two reasons why this should be mandatory. First, Amendments Nos. 110E to 110R propose changes to the system of inspection within the Bill—I will return to that in a moment—and require, in particular, the Audit Commission as an inspector whenever inspection is carried out on the provision of social housing. The Audit Commission will inspect against standards as its key role, so it is only right that it is consulted when they are being developed. Amendment No. 110W will amend Clause 213. Guidance can be issued on the regulator’s use of its inspection and enforcement powers, which will depend on evidence from an inspection. It is evident therefore that the commission should be consulted on those, too. Given that we are proposing—we have debated the matter at some length—that the regulator’s scope be extended to local authorities and ALMOs, which are inspected by the Audit Commission for most of their services, it is particularly important that if the regulator is issuing standards and taking other action which affects this burden it has input from the commission. That covers the role of the Audit Commission as a statutory consultee. I turn to the remaining government amendments in my name, which cover inspections of registered providers. We propose to change the current system of RSL inspections to make it fit the new regulatory regime. The amendments follow lengthy discussions with the Audit Commission and others on precisely how the system should work. At present, inspection of RSLs is carried out by the Audit Commission, but regulation is carried out by the Housing Corporation. Regulation and inspection based on separate systems and separate standards is confusing. Since the inspection of social housing should play a key role within the regulatory system, the regulator should be assisted in investigating concerns and providing evidence to justify where needed. I therefore want to ensure that inspection is carried out on the basis of risk, as the Cave review proposes, and reflects the way that inspection is by and large now going. Following the Cave review, we announced in June 2007 that, in future, good performance could expect minimal regulatory interference, including reduced inspections unless tenants raised concerns. That meant no more general inspections of RSLs on the current model, although I stress that there may be spot checks and good-practice checks where appropriate even on good providers. Although we want to lighten the burden on good providers, which is the balance that we are trying to achieve, it is important that it be known that good providers, too, are still within the system and can be checked. In other words, the balance of the inspection burden, which is a major cost and a burden to government and providers, will rightly fall much more on poor performers, whose tenants have concerns, than at present. As noble Lords will know, the Audit Commission inspects the overall management performance of all large housing associations every few years, which has been very useful in raising standards, but the system is not designed to address specific problems on particular estates. We are therefore seeking to replace it with a system whereby when the regulator finds that there may be serious concerns about a provider’s performance as a result of information it collects or concerns raised by tenants and others, it can investigate in a number of ways, including by inspection. For example, a group of tenants might identify a serious problem with repairs on their estate and inform the regulator, which would begin an immediate inspection of repairs and closely related issues on that estate. If the inspection showed that standards were not being met, the registered provider can be required to make the improvements. The Audit Commission has done an excellent job inspecting RSLs since it was appointed five years ago. We expect it to continue to do so under the new regime. However, we do not want to make the regulator an inspectorate in its own right as we are committed, as noble Lords will know, to limiting the number of inspectorates. Therefore, the amendments seek to make sure that the regulator must use the commission as its inspector in most cases, although we accept that it should also be able to use another organisation as inspector in certain cases such as governance and financial viability issues involving private bodies. Amendment No. 110E defines what may be inspected, who should be the inspector and payment for services. It states that there may be inspections of a provider’s performance on two types of issue: provision of social housing, which is roughly equivalent to standards issued under Clause 191, and its financial and other affairs—that is, standards under Clause 192. For housing provision, the regulator must use the Audit Commission as an inspector. For financial and other affairs, it may use anyone; for example, one of the big four accountancy firms. That can include the commission, but it may not do inspections itself. Another key, but less obvious, element in this new clause is that the regulator decides when an inspection needs to be carried out. It could also decide to discontinue an inspection. This is because the purpose of most inspections is to provide evidence to back up a regulatory activity to find out what is wrong and to fix it. There is nothing to stop the regulator commissioning spot checks when there is no breach of standards. We are also making sure that the regulator has a duty to pay the commission’s cost and a power to pay other inspectors. Let me be clear; in this system the regulator will decide who and what will be inspected. The inspections that have to be performed by the Audit Commission are limited to performance by reference to standards under Clause 191; that is, about whether the registered provider is meeting those standards. Most of the other amendments in the group are consequential. Amendment No. 110R adds a new definition of ““inspector”” at the end of Clause 200, who has to be a person authorised in writing by the regulator, the commission or someone else. Amendments Nos. 110F and 110J remove subsections (1) to (5) of Clause 199, because these issues are covered elsewhere. Amendment No. 110G is consequential on the new definitions. There are three minor changes to the system: Amendments Nos. 110K and 110L add the commission to the list of bodies that the regulator must consult on the level of fees paid by providers to the regulator for an inspection; Amendment No. 110H allows the inspector and the regulator to publish an inspection report—either or both may publish. That will make reports easier to access; and Amendments Nos. 100N, 110P and 110Q amend Clause 200, which deals with the inspector’s powers to require the provider to provide information, and to enter premises and inspect documents. These amendments specifically extend those powers to electronic information. The changes that we are making to the inspection regime will make it more effective and flexible. They will ensure that inspection targets what it needs to target and that it is a vital part of the regulatory system, which balances risks and requirements. These amendments are needed to clarify how the system will work. I beg to move.