Housing (Scotland) Bill: Stage 2
The Convener (Duncan McNeil)
Good morning. Welcome to the 21st meeting in 2010 of the Local Government and Communities Committee. I remind members and the public to turn off all mobile phones and BlackBerrys.
Item 1 is day 1 of stage 2 consideration of the Housing (Scotland) Bill. I welcome Alex Neil, the Minister for Housing and Communities and, from the Scottish Government: William Fleming, branch head in the tenant priorities team; Linda Leslie, bill team leader in the tenant priorities team; Ian Shanks, assistant Scottish parliamentary counsel; and Gillian Turner, a principal legal officer.
Sections 1 and 2 agreed to.
Section 3—The Regulator’s functions
The first group of amendments is on social landlords and their contribution to, and promotion of, environmental wellbeing and regeneration. Amendment 128, in the name of Mary Mulligan, is grouped with amendments 130 and 134.
Mary Mulligan (Linlithgow) (Lab)
The title of the group of amendments indicates that social landlords’ contribution to and promotion of environmental wellbeing and regeneration are well recognised. Sometimes we do not recognise that role enough, but social landlords have been playing it for some time. Through my amendments, I seek to ensure that we recognise in legislation the wider role that social landlords play. The bill provides us with an opportunity to do that.
Amendment 128 seeks to ensure that the regulator, in performing its functions, recognises the role that social landlords play in environmental wellbeing and regeneration. Amendment 130 seeks to ensure that that role is included in the outcomes of the Scottish social housing charter, examples of which are suggested in section 32.
I move amendment 128.
Patricia Ferguson (Glasgow Maryhill) (Lab)
It is my contention that the wider role of housing associations and the additional activities and services that they undertake in, and on behalf of, communities need to be recognised in legislation. I do not want to waste the committee’s time by duplicating Mary Mulligan’s arguments—we are singing from the same hymn sheet.
Alasdair Morgan (South of Scotland) (SNP)
I am a bit puzzled about why it is necessary to include the provisions in legislation. Social landlords may have a wider role to play, but if we include that in the regulator’s duty, as amendment 128 suggests, it will become one of the social landlord’s duties that must be regulated. I am not sure that the case for that has been made. It is one thing to say that social landlords make a contribution, but it is a totally different thing to say that it should be a regulated activity.
Bob Doris (Glasgow) (SNP)
I understand that the amendments seek to place a duty on the regulator to monitor, assess and report on social landlords’ wider role activities, but I am concerned that that could have a knock-on effect by increasing the financial burden on the regulator. It could also be overly bureaucratic for the housing association movement to have to complete a tick-box exercise to enable it to be held to account on its wider role activities.
My understanding is that the housing charter that will be drawn up will set out the wider role and that at that time there will be an obligation on the regulator to come to a view on how well housing associations are performing wider role activities. As a result, it could be argued that amendment 128 is simply duplicating things, although I have every sympathy for what it is trying to achieve.
The Minister for Housing and Communities (Alex Neil)
I share Mary Mulligan’s assessment of the wider role activities that many social landlords perform and the significance and importance of what they achieve through them, and I agree that we need to recognise those achievements. However, I do not believe that widening the regulator's functions, as amendment 128 proposes, is the right means of ensuring such recognition.
The general functions in section 3 define the new regulator’s principal purposes and are tightly focused to ensure that the new body concentrates its efforts on the core housing services that are provided by all social landlords. That tight focus is necessary if the regulator is to concentrate its efforts on driving forward improvements in the basic housing services that all tenants receive.
In its stage 1 report, the committee highlighted the importance of driving continuous improvement in the whole sector. In its response, the Government confirmed that it agreed, and it described the range of powers that will be available to the regulator in pushing for that improvement, including the publishing of reports on performance and the setting of performance improvement targets. As introduced, section 3(1)(b) lays the foundation for that by requiring the regulator to monitor, assess, report and, if necessary, intervene in respect of social landlords' housing activities. That task is in itself large and challenging, but it is feasible because of its clear focus on the services that are provided by all landlords. If we were to widen it to include wider role activities, we would place the core task at risk and would—at the very least—dilute the regulator’s effectiveness in driving forward the improvements in tenants’ services that we all want.
In effect, we would, through amendment 128, require the regulator to give the same attention to the varied and wide-ranging activities that some, but not all, landlords undertake on a discretionary basis, as it must give to the core housing services that all landlords provide. That would be a mistake, because it would mean requiring the regulator to look at activities as diverse as running credit unions or child-care facilities. For example, the regulator would have to monitor, assess, report on and perhaps intervene in what a group of Inverclyde RSLs is doing through the Grand Central Savings initiative in that area, or try to regulate the Working Rite employability and training projects in which West Highland Housing Association and various other housing associations are involved. Although those activities are all extremely important and worth while, that does not mean that the regulator should be monitoring them, let alone intervening in them, particularly as they are monitored already through their individual grant-funding arrangements.
Finally, giving the regulator the permanent function of monitoring, assessing and reporting on landlords’ wider role activities would place a greater burden on landlords because the matters on which they would have to be monitored, and therefore have to be reported on, would be wider than the bill provides for at present. I suspect that many landlords who undertake wider role activities would be concerned if such discretionary activities were to be subjected to the same weight of regulation as their core activities.
For those reasons, I believe that it would be a mistake to put the assessment of wider role activities on the same footing as the assessment of core housing services. Instead I commend the approach in section 32(1)(i), which provides that outcomes may include wider role activities and gives ministers flexibility in the light of stakeholder views to determine whether a charter should or should not provide for an outcome related to wider role activities. In coming to that view, ministers will be able to take account of the regulator's views on whether it would be able to monitor, assess and report on any outcome that they might propose. That is preferable to imposing an onerous permanent duty that will undermine the new regulator's ability to focus on what matters to all tenants. I am, however, happy to support Mary Mulligan’s amendment 130, which develops and expands subsection (i).
Accordingly, I invite Mary Mulligan to withdraw amendment 128 and urge the committee to support amendment 130.
I am less concerned by the effect of amendment 134, which is in the name of Patricia Ferguson, because it is simply an enabling power. However, its purpose is provided for already by the general power that is set out in section 39(2)(c) for the regulator to report any information on the performance of social landlords. Consequently, the amendment is unnecessary. On that ground, I invite Patricia Ferguson not to move amendment 134.
As the minister has indicated his acceptance of amendment 130, for which I thank him, I will keep my comments to amendment 128.
The issue is very simple and comes down to whether one feels that the additional roles that are played by social landlords are important or are side issues that do not need to be included as part of their business. I understand why the minister does not wish to place additional burdens on the regulator, but I invite the committee to consider the current system of soft-touch regulation, in which the regulator gets involved only when issues or concerns are raised. In any case, I do not quite agree with the minister: I do not think that amendment 128 would add to the regulator’s burden unless he or she wished to examine certain problems.
Surely in looking at the role of social landlords the regulator will find it difficult to separate their core functions from the other jobs that they perform. Indeed, if you accept that social landlords play a comprehensive role, such a division is false. For that reason, I believe that the wider role activities should be included among the regulator’s function; I will therefore press amendment 128.
Finally, I point out that if members have been convinced by the minister’s comments and feel unable to support amendment 128, amendment 134 in the name of Patricia Ferguson would not place a statutory duty on the regulator to report but merely suggests it. Members might well feel that such a halfway house is more appropriate.
The question is, that amendment 128 be agreed to. Are we agreed?
Members: No.
There will be a division.
For
Ferguson, Patricia (Glasgow Maryhill) (Lab)
McNeil, Duncan (Greenock and Inverclyde) (Lab)
Mulligan, Mary (Linlithgow) (Lab)
Against
Doris, Bob (Glasgow) (SNP)
McLetchie, David (Edinburgh Pentlands) (Con)
Morgan, Alasdair (South of Scotland) (SNP)
Wilson, John (Central Scotland) (SNP)
The result of the division is: For 3, Against 4, Abstentions 0.
Amendment 128 disagreed to.
Section 3 agreed to.
Sections 4 to 7 agreed to.
Section 8—Disqualification and removal from office
10:15
Amendment 1, in the name of the minister, is in a group on its own.
I will be a bit more brief, convener, with what is essentially a technical amendment. Amendment 1 seeks to ensure that the board of the independent Scottish Housing Regulator is able to act in the interests of tenants and homeless people. As I consider that there would be a conflict of interests if a current employee of either a local authority or an RSL were able to serve on the board, the bill will disqualify such individuals from holding office. The same is true for current employees of local authorities that are no longer landlords but which continue to provide homelessness services. Amendment 1 is a technical amendment that will ensure that all current employees of RSLs and local authorities, including those that are no longer landlords, as well as local authority councillors and officers of RSLs, are disqualified from holding office in the Scottish Housing Regulator.
I move amendment 1.
Amendment 1 agreed to.
Section 8, as amended, agreed to.
Sections 9 to 13 agreed to.
Schedule 1 agreed to.
Sections 14 and 15 agreed to.
Section 16—Fees
Amendment 2, in the name of the minister, is in a group on its own.
Section 16 will give the new Scottish Housing Regulator a power to charge fees. The power is based on one that ministers already have under the Housing (Scotland) Act 2001, and could be exercised only with the approval of ministers. Ministers have not used the power in the 2001 act to charge fees. Instead, they have preferred to fund the work of regulation from public expenditure. The Government has stressed its commitment to continue that approach when the new regulator is established.
However, in my discussions with tenant groups, they have expressed concern that subsequent Administrations might decide that landlords should be charged some or all of the costs of regulation and that, ultimately, those costs would have to be met by tenants through their rents. The Government appreciates those fears and wishes to allay them by removing the regulator’s power to charge fees.
In addition, I believe that it is wrong in principle for a regulator to rely for part or all of its income on charging those whom it regulates.
Amendment 2 will achieve the objective that I have set out. I hope that tenants will support it and will welcome the certainty that it will give them on the issue. I believe that landlords will support it, too.
I move amendment 2.
David McLetchie (Edinburgh Pentlands) (Con)
I thank the minister for his clarification. I am interested in the general principle that he enunciated, whereby regulators should not charge fees to those whom they regulate. I am afraid that I am not familiar with the work of every regulator that has been established by the Scottish Government, but from my limited knowledge of the Office of the Scottish Charity Regulator, I think that it charges the charities that it regulates.
Is the minister signalling a change of Government policy, whereby in the future the charging of all regulated persons by all regulators will be abolished? If that is not the case, would the minister like to tell us why although no fees are to be charged by a housing regulator, the Government apparently thinks that it is quite all right for other regulators for which it is responsible to continue to charge the people whom they regulate fees?
I am much more positive and I think that the minister has taken the right decision. At stage 1, a number of concerns were raised about the fees section of the bill, so I am pleased that the minister has taken action to allay them. I support the principle that the housing regulator should continue to be publicly funded.
I give the minister the opportunity to wind up and to respond to the issues that have been raised.
I have two points to make. First, Mr McLetchie raises an interesting debate about the general principle. I think that there are examples in the past of the independence of a regulator being called into question because of one of its sources of funding. The Financial Services Authority is probably the most recent example of that. However, that is a general debate for another day.
As far as the present debate is concerned, the second point is the more important of the two. It is that, despite the existence of the relevant power under the 2001 act, it has been made clear that neither ministers in the previous Administration nor ministers in the present Administration have had any intention of using it, so why retain a power that we have no intention of using?
Amendment 2 agreed to.
Sections 17 to 23 agreed to.
Section 24—Legislative registration criteria
Amendment 3, in the name of the minister, is grouped with amendments 129, 4, 5 and 105. I point out that if amendment 3 is agreed to, I cannot call amendment 129.
I lodged amendments 3, 4, 5 and 105 in response to concerns that were raised by this committee and the Subordinate Legislation Committee as well as by stakeholders such as the Glasgow and West of Scotland Forum of Housing Associations. I invite Patricia Ferguson not to move amendment 129.
Amendment 3 will remove the power, which was of such concern to this committee and to the Subordinate Legislation Committee, for ministers to prescribe the types of body that will be eligible to be a registered social landlord. It will bring into the bill the core objects and additional permissible purposes that a registered social landlord can have. In broad terms, those are the same as are currently in the Housing (Scotland) Act 2001. Ministers will be able to amend the additional purposes by order, but will not be able to amend the core objects.
In addition, amendment 3 makes it clear that any body that seeks registration must carry out its purposes, objects or powers in Scotland, so that the regulator is able to protect those assets and safeguard the interests of tenants. I thank the committee for its suggestions on how section 24 of the bill might be improved, and I recognise that the amendment will strengthen the legislation along the lines that have been suggested by the committee.
Amendment 4 is a technical amendment to the ministerial power in the bill in relation to bodies that are not registered societies—industrial and provident societies—or registered companies. The amendment is needed because of the proposed restructuring of section 24.
Amendment 5 requires ministers to consult specific stakeholders on a draft order under section 24(5); it makes provisions in respect of bodies other than registered societies or registered companies. The amendment will ensure that tenants’ representatives, existing registered social landlords and lenders to the sector are able to comment on the provisions before any order is laid before Parliament.
Amendment 129 appears to be an alternative means of achieving what new section 24(1)(c), as proposed in amendment 3, is intended to achieve. I suggest that it does so in a less clear manner, in posing questions to which it does not provide answers. Amendment 3 is clear that a body that is seeking to be considered for registration should carry out its purposes and objects in Scotland. Amendment 129 requires that
“A body is principally concerned with Scottish housing”
and provides for ministers to determine what that means. It implies, but does not make clear, that that determination is to be on a case-by-case basis and appears to leave it to ministers to decide what constitutes owning housing mainly in Scotland or activities principally undertaken in Scotland. I suggest that that lack of clarity over the role of ministers and the criteria that they might have to apply is unsatisfactory and would lead to confusion among those contemplating applying to register as a social landlord. Accordingly, I invite Patricia Ferguson to withdraw amendment 129. I would be happy to discuss with her afterwards how we might produce an amendment at stage 3 that would address what I believe are our shared objectives.
I move amendment 3.
I call Patricia Ferguson.
Thank you Presiding Officer—I am sorry, convener; I am giving you a title that you do not have.
The amendments that the Government has lodged to section 24 are welcome to me and to others with whom I have discussed the matter. Given the assurances that the minister has given today about future discussion and the possibility of further amendments to the bill, I am happy not to move amendment 129.
Amendment 3 agreed to.
Amendments 4 and 5 moved—[Alex Neil]—and agreed to.
Section 24, as amended, agreed to.
Sections 25 to 29 agreed to.
Section 30—Communication with other regulators
Amendment 6, in the name of the minister, is grouped with amendments 40 to 45, 47 to 49, 51, 54 to 57, 61, 63, 65 to 67, 69, 106, 113, 115, 117, 118 and 121.
The 27 amendments that are in the group with amendment 6 are technical amendments to replace the term
“industrial and provident society”
with the term “registered society”, and to replace references to the Industrial and Provident Societies Act 1965 with references to the Co-operative and Community Benefit Societies and Credit Unions Act 1965. The changes are a consequence of the Co-operative and Community Benefit Societies and Credit Unions Act 2010. That act was passed at Westminster after our bill was introduced in January this year.
I move amendment 6.
Amendment 6 agreed to.
Amendment 7 moved—[Alex Neil]—and agreed to.
Section 30, as amended, agreed to.
Section 31—Scottish Social Housing Charter
Amendment 8, in the name of the minister, is grouped with amendments 9, 10, 12, 15, 16, 20 to 22, 26, 29, 32, 34 and 119.
Section 31 requires ministers to prepare a Scottish social housing charter that sets the outcomes that social landlords “should aim to achieve” in performing their housing activities. It defines an outcome as being either a standard or an objective which landlords “should aim to achieve”.
I discussed the plans for a charter with my stakeholder sounding board on the bill. Members generally, and tenants in particular, welcomed the idea of a charter describing what landlords should be aiming to achieve. There was some uncertainty, however, over what we mean by an “outcome”, and some concern that section 31 provides, in effect, for outcomes to be either standards or objectives—this is the talk of the steamie, convener.
Members of the group were keen that the legislation be as clear as possible on the intended meanings. They argued that a standard is different from an outcome, and that a landlord might achieve one but not the other. For example, a landlord might meet a standard for the physical condition of their stock by installing new windows, but leave tenants unhappy because the windows were hard to clean or unattractive or otherwise did not meet their reasonable requirements. In such a case, the outcome for the tenant would be poor, even though the standard had been met. I hope that the example illustrates that this is not just a semantic point. It is important that we get this right for tenants and that we provide clarity for the charter to set outcomes.
The Government wants the charter to encourage landlords to focus their efforts on the outcomes—or the end results—that they deliver for tenants, homeless people and other service users.
Amendment 8 seeks to clarify the position. It recognises that sometimes it might be necessary for the charter to set standards and provides that those can be set in their own right and that, where they are set, they are distinct and separate from outcomes. If accepted, it will give a clearer indication that ministers have the flexibility to set a mixture of standards and outcomes if consultation of stakeholders suggests that that is warranted.
Amendment 8 gives rise to a number of consequential amendments that are required to reflect the new approach elsewhere in section 31 and at sections 32, 35, 39, 42, 45, 52, 53, 54 and 150.
I move amendment 8.
10:30
I think that the minister is correct in what he is proposing, even though it might seem fairly minor. However, the important thing for tenants will be the delivery of the outcomes that the legislation speaks of, so the monitoring and any means of redress will be equally important. I am sure that the minister will come on to that when we have further discussions about the introduction of the charter.
Amendment 8 agreed to.
Amendment 9 moved—[Alex Neil]—and agreed to.
Section 31, as amended, agreed to.
Section 32—Outcomes
Amendment 10 moved—[Alex Neil]—and agreed to.
Amendment 130 moved—[Mary Mulligan]—and agreed to.
Amendment 11, in the name of the minister, is grouped with amendments 28 and 31.
Amendment 11 provides for a possible charter outcome on tenant participation to encompass participation in a landlord’s review of proposals for housing services, as well as their formulation. Section 32 sets out examples of the kind of areas of activity that the charter might cover. Tenant participation is one of them.
Amendment 11 does not directly require landlords to involve tenants in reviewing policies or services but, by allowing for the charter to set a broader outcome around participation, it will help to strengthen the scope for tenant involvement in landlords’ housing policy proposals.
Amendment 28 provides for social landlords to involve tenants and other service users in the preparation and validation information that is submitted to the Scottish Housing Regulator. The amendment responds to concerns raised at stage 1 by the committee—and by members of my stakeholder sounding board—about the shift from cyclical inspections to a more risk-based approach to regulation.
Tenants and their representative bodies and equalities and consumer organisations all expressed concern about the validity of a system that is based on landlords’ self-assessment. I know that the committee shared that concern and agreed that self-assessment must be meaningful, robust and transparent, and that it must involve tenants.
The SHR’s powers to obtain information from landlords will allow it to collect a range of information to monitor and assess performance against the charter. The amendment requires the SHR to publish guidance for landlords, setting out its expectations on service user involvement in collecting and reporting information. The SHR will be required to consult tenants and other stakeholders in preparing or revising guidance. Landlords must comply with the published guidance. If they fail to do so, they can expect the SHR to intervene.
I believe that this amendment will establish clear expectations on tenant involvement and put in place the right checks and balances for landlords when they present a picture of their performance.
Amendment 31 provides for social landlords to involve tenants and other service users in the preparation of performance improvement plans. It, too, responds to concerns that were expressed by members of my stakeholder sounding board and a number of other stakeholders at stage 1 about the shift from cyclical inspection to a more risk-based approach to regulation. As I have noted, the committee shared those concerns.
The bill gives the SHR the power to require a landlord to submit a performance improvement plan where it sees a need to drive up performance.
The amendment adds a power to require landlords to involve tenants, and other service users where appropriate, in developing their improvement plans. That will ensure that plans reflect the interests and views of tenants. I believe that the amendment will further strengthen the role of tenants and other service users in regulation, and reinforce the expectation that landlords will involve them in assessing and improving their own performance.
I move amendment 11.
Amendment 11 agreed to.
Amendment 12 moved—[Alex Neil]—and agreed to.
Amendment 131, in the name of Patricia Ferguson, is grouped with amendments 132 and 133.
The purpose of amendment 131 is to recognise that housing associations and registered social landlords vary hugely in type and scale. That point was made in the stage 1 report on the bill, and the Government responded by saying that the regulation should be blind to the type of provider.
In fact, the bill already recognises housing associations as being different from local authority providers, for example. Many housing associations are very small organisations that have 10 or fewer members of staff. Amendment 131 and the two consequential amendments seek to recognise the sensitivity of that situation, to give the regulator the opportunity to categorise the organisations that it is to regulate and to give people a clearer idea of the scope and the scale of that regulation.
I move amendment 131.
I have a number of concerns about amendment 131. It appears to confuse the role of ministers and the regulator in respect of setting standards and outcomes in the charter. The amendment suggests that that is a role for the regulator, and on that basis places duties on it to categorise social landlords and registered social landlords. In fact, section 32 provides for ministers to do the setting, so, in that sense alone, the amendment is unsatisfactory.
The amendment is also unsatisfactory in that it provides no reason or purpose for making a list of the required categorisations, whether that is done by ministers or the regulator. In that sense, a potentially time-consuming and cumbersome exercise would be required without there being any stated object or purpose of it.
In so far as the amendment might have a purpose, I infer that it is to provide for the regulator to perform its functions with some regard to the nature, size and circumstances of the social landlords that are to be subject to those functions. If that is the case, the duties that section 3(2) places on the regulator—to be proportionate and targeted and to apply best regulatory practice—appear to achieve all that is required in that respect.
Amendment 132 is therefore unnecessary, and amendment 133 does not add anything, because it provides only for a performance report to contain the list of categories. Accordingly, I invite Patricia Ferguson to withdraw amendment 131 and not to move amendments 132 and 133.
I thank the minister for his contribution to the discussion, but it is important that we recognise the different types and size of housing association and registered social landlord in Scotland. I hoped that the minister might have been able to see the need for those aspects to be considered when the standards are being set. I still think that it is a job for the regulator to indicate that it takes those aspects seriously when it goes about its business—not with a view to having a different set of standards but to ensure that we have consistent standards that reflect the existence of those basic sensitive differences. On that basis, I shall press amendment 131.
The question is, that amendment 131 be agreed to. Are we agreed?
Members: No.
There will be a division.
For
Ferguson, Patricia (Glasgow Maryhill) (Lab)
McNeil, Duncan (Greenock and Inverclyde) (Lab)
Mulligan, Mary (Linlithgow) (Lab)
Against
Doris, Bob (Glasgow) (SNP)
McLetchie, David (Edinburgh Pentlands) (Con)
Morgan, Alasdair (South of Scotland) (SNP)
Tolson, Jim (Dunfermline West) (LD)
Wilson, John (Central Scotland) (SNP)
The result of the division is: For 3, Against 5, Abstentions 0.
Amendment 131 disagreed to.
Section 32, as amended, agreed to.
Section 33—Scottish Social Housing Charter: supplemental
Amendment 122, in the name of Mary Mulligan, is grouped with amendments 123, 124, 28A and 126.
The amendments in this group add to the various sections that require consultation on regulatory matters a requirement to consult homeless people or organisations that represent homeless people. Such consultation would be in addition to the consultation that the bill rightly specifies as involving tenants, social landlords, secured creditors and the Accounts Commission. I suggest that the omission of a reference to consulting homeless people is an oversight by those who have drafted the bill, given that protecting the interests of homeless people is clearly and properly identified as an objective for the regulator. The prevention and alleviation of homelessness is also listed as one of the possible outcomes for the Scottish social housing charter. My amendments would rectify that obvious anomaly by ensuring that homeless persons or the organisations that represent them are properly consulted in the implementation of the new regulatory framework that is set out in the bill.
I commend the amendments in this group to members.
I move amendment 122.
I agree with Mary Mulligan about the need to include homeless persons and their representatives among those who should be consulted under sections 33 to 35 and 48, and in the new section to be inserted by amendment 28. Amendments 122 to 124, 126 and 28A provide for that and thereby strengthen and improve the bill. I welcome the amendments and I urge the committee to support them.
I am grateful to the minister for his support.
Amendment 122 agreed to.
Amendment 13, in the name of the minister, is in a group on its own.
The Government is committed to involving equalities groups in the development of the Scottish social housing charter. It has invited the Scottish Disability Equality Forum and the Equality and Human Rights Commission to form part of the sounding board that it has established to inform the development of the charter. The Government accepts the principle of the forum’s argument, and amendment 13 will ensure that the Equality and Human Rights Commission is a statutory consultee, alongside the other organisations that are cited at section 33(2).
I move amendment 13.
Amendment 13 agreed to.
Section 33, as amended, agreed to.
Section 34—Performance improvement targets
Amendment 14, in the name of the minister, is grouped with amendments 17 to 19, 23, 27, 30, 33, 127 and 116.
Amendment 14 is a technical amendment that clarifies that the performance improvement targets can cover any area of a social landlord’s activity, as well as the level or quality of housing services. That removes any doubt that performance improvement targets can cover the same kinds of activity as the social housing charter.
The other amendments in the group, apart from amendment 127, provide for the regulator to set financial management or governance targets for registered social landlords. Strong governance and financial management are vital to sustaining a flourishing RSL sector. Private lenders have told us that they value the assurance that robust regulation gives them, as is demonstrated in the favourable borrowing rates that RSLs enjoy.
The power to set improvement targets for RSLs’ financial management and governance is similar to the section 34 power that allows the regulator to set performance improvement targets for housing activities. It complements the section 34 power and adds to the lower-level powers that are available to the regulator to address performance issues among RSLs.
The committee has rightly emphasised the need to drive continuous improvement in the sector, and I fully concur with its view. The amendments add to the range of regulatory tools that the regulator can use to promote improvement in the management of RSLs.
10:45
Amendment 127 relates to the regulator’s powers to appoint a manager to assist an RSL with its financial and other affairs and is intended to adjust the test for the exercise of those powers. At present, the bill requires the regulator to prove, before appointing a manager, that there has been misconduct or mismanagement. That is less flexible than the equivalent power at section 71 of the Housing (Scotland) Act 2001, which allows ministers to appoint a manager when they consider it to be necessary or expedient. Amendment 127 would retain that position and allow the regulator to act quickly when it needs to protect tenants’ interests or to secure the affairs of the RSL.
I do not propose to say any more, unless members see a need to explore the issues in more detail.
I move amendment 14.
Amendment 14 agreed to.
Amendment 123 moved—[Mary Mulligan]—and agreed to.
Section 34, as amended, agreed to.
Section 35—Guidance: housing activities
Amendments 15 and 16 moved—[Alex Neil]—and agreed to.
Amendment 124 moved—[Mary Mulligan]—and agreed to.
Section 35, as amended, agreed to.
Section 36 agreed to.
After section 36
Amendments 17 and 18 moved—[Alex Neil]—and agreed to.
Section 37 agreed to.
Section 38—Assessment of social landlords
Amendment 132 moved—[Patricia Ferguson].
The question is, that amendment 132 be agreed to. Are we agreed?
Members: No.
There will be a division.
For
Ferguson, Patricia (Glasgow Maryhill) (Lab)
McNeil, Duncan (Greenock and Inverclyde) (Lab)
Mulligan, Mary (Linlithgow) (Lab)
Against
Doris, Bob (Glasgow) (SNP)
McLetchie, David (Edinburgh Pentlands) (Con)
Morgan, Alasdair (South of Scotland) (SNP)
Tolson, Jim (Dunfermline West) (LD)
Wilson, John (Central Scotland) (SNP)
The result of the division is: For 3, Against 5, Abstentions 0.
Amendment 132 disagreed to.
Amendment 19 moved—[Alex Neil]—and agreed to.
Section 38, as amended, agreed to.
Section 39—Performance reports
Amendment 133 not moved.
Amendments 20 and 21 moved—[Alex Neil]—and agreed to.
Amendment 134 moved—[Patricia Ferguson].
The question is, that amendment 134 be agreed to. Are we agreed?
Members: No.
There will be a division.
For
Ferguson, Patricia (Glasgow Maryhill) (Lab)
McNeil, Duncan (Greenock and Inverclyde) (Lab)
Mulligan, Mary (Linlithgow) (Lab)
Against
Doris, Bob (Glasgow) (SNP)
McLetchie, David (Edinburgh Pentlands) (Con)
Morgan, Alasdair (South of Scotland) (SNP)
Tolson, Jim (Dunfermline West) (LD)
Wilson, John (Central Scotland) (SNP)
The result of the division is: For 3, Against 5, Abstentions 0.
Amendment 134 disagreed to.
Section 39, as amended, agreed to.
Sections 40 and 41 agreed to.
Section 42—Inquiries: survey powers
Amendments 22 and 23 moved—[Alex Neil]—and agreed to.
Section 42, as amended, agreed to.
Section 43 agreed to.
Section 44—Reports on inquiries
Amendment 24, in the name of the minister, is grouped with amendments 25 and 125.
Amendments 24, 25 and 125 relate to reports on inquiries by the regulator.
The regulator may prepare and publish a report on any inquiry that it carries out, and it must publish a statement that explains the types of inquiries on which it will publish—as opposed to simply preparing—a report.
Amendment 24 seeks to ensure that the regulator brings that statement to the attention of ministers, tenants, lenders and the Accounts Commission as well as social landlords. Amendment 25 requires the regulator to send to relevant registered tenants organisations copies only of those reports that it has published in accordance with its statement.
It is important that the regulator has the flexibility to carry out an inquiry without necessarily publishing a report—if, for example, publication would compromise commercial confidentiality, undermine the lenders’ confidence or put tenants’ interests at risk.
I have some reservations around amendment 125. It deprives the regulator of discretion when it prepares its code of practice, and instead imposes a duty to prepare the code with particular regard to homeless persons and those who are threatened with homelessness. I have two concerns about that.
First, changing the power to a duty would restrict the regulator's flexibility to prepare a code of practice in the light of prevailing circumstances and priorities. I am not sure that we would want to be so prescriptive in that regard.
Secondly, by casting the prescription so strongly in terms only of homeless persons, the duty would ignore tenants. If we are to impose a duty at all, it must be in respect of all persons whose interests the regulator is to safeguard and promote, including homeless persons, tenants and other users of housing services.
In the light of those concerns, I invite Mary Mulligan not to move amendment 125. If she and the committee believe that a duty rather than a power is required in that regard, I would be prepared to lodge an amendment at stage 3 that would provide for a prescription to be cast in terms of all those whose interests the regulator is to safeguard and promote.
I move amendment 24.
The powers in part 4 that allow the regulator to collect information and conduct inquiries have clearly been designed to facilitate a change to a more risk-based and proportionate system of regulation that draws on self-evaluation and self-assessment. The committee’s stage 1 report noted that that reflects a broader trend in the regulation of the public sector in Scotland, but endorsed the view of some stakeholders that self-assessment must be meaningful and robust.
Section 48 requires the regulator to issue a code of practice that sets out how it intends to make inquiries and use the other powers in part 4. That could be helpful in meeting legitimate concerns about an overreliance on self-assessment, but it says very little about the content of the code—it merely suggests that the code
“may, in particular, set out examples of situations”
in which the various powers in part 4 are to be used.
I have a particular concern about the regulation of homelessness services. Inspections have revealed a range of weaknesses in councils’ homelessness services, particularly in the assessment of homelessness applications. For example, in the pathfinder inspections of five local authorities, which were published in 2005, two councils were given the lowest—D—grade and two others received a C grade. I am therefore looking for an assurance from the minister that he expects the code of practice to include full details of how the new powers will be used and, where clear weaknesses have been noted in previous inspections, that he will expect performance in those areas to be thoroughly assessed and, if necessary, inspections to be undertaken.
I take on board the comments that the minister has already made and look forward to his response to what I have said. I assure him that I do not seek at any stage to dilute the coverage for tenants as opposed to homeless people—it is clear that both are important; I merely seek to ensure that the rights of homeless people are recognised as well.
I am happy to give Mary Mulligan the assurances that she seeks and to discuss with her a better way of achieving things in the bill through an amendment at stage 3 rather than through amendment 125. For the reasons that I have outlined, her proposal is not the best way of doing things. If she accepts that, I would be more than happy to work with her and to lodge an appropriate amendment at stage 3.
Amendment 24 agreed to.
Amendment 25 moved—[Alex Neil]—and agreed to.
Section 44, as amended, agreed to.
Section 45—Information from tenants on significant performance failures
Amendments 26 and 27 moved—[Alex Neil]—and agreed to.
Section 45, as amended, agreed to.
Sections 46 and 47 agreed to.
After section 47
Amendment 28 moved—[Alex Neil].
Amendment 28A moved—[Mary Mulligan]—and agreed to.
Amendment 28, as amended, agreed to.
Section 48—Code of practice: inquiries
Amendment 125 not moved.
Amendment 126 moved—[Mary Mulligan]—and agreed to.
Section 48, as amended, agreed to.
Sections 49 to 51 agreed to.
11:00
Section 52—Performance improvement plans
Amendments 29 to 31 moved—[Alex Neil]—and agreed to.
Section 52, as amended, agreed to.
Section 53—Enforcement notices
Amendments 32 and 33 moved—[Alex Neil]—and agreed to.
Section 53, as amended, agreed to.
Section 54—Appointment of manager for housing activities
Amendment 34 moved—[Alex Neil]—and agreed to.
Section 54, as amended, agreed to.
Section 55—Appointment of manager for financial or other affairs
Amendment 127 moved—[Alex Neil]—and agreed to.
Section 55, as amended, agreed to.
Sections 56 to 61 agreed to.
Section 62—Appointment of new officers
Amendment 36, in the name of the minister, is grouped with amendments 37 and 120.
Amendment 36 adds to the bill a power that section 70A of the Public Services Reform (Scotland) Act 2010 gives to the Scottish ministers in respect of charitable RSLs. The power is useful for non-charitable RSLs, which could find themselves in the situation of having insufficient officers on their board and unable to act unless the regulator intervened.
Amendments 37 and 120 provide the regulator with the power to require an RSL to take out indemnity insurance for someone whom the regulator has appointed to the RSL’s board, to minimise the possibility of such a person being personally liable for the RSL’s debts. Such a situation could arise if an RSL were at risk of insolvency. There is the potential for governing body members to be held personally liable if an organisation is accused of trading while insolvent.
I propose to say no more about the amendments, but I am happy to provide further details if members wish.
I move amendment 36.
Amendment 36 agreed to.
Amendment 37 moved—[Alex Neil]—and agreed to.
Section 62, as amended, agreed to.
Section 63 agreed to.
Section 64—Transfer of assets following inquiries
Amendment 38, in the name of the minister, is grouped with amendment 135.
Amendment 38 provides an alternative test for the regulator to use as a basis for directing the transfer of an RSL’s assets to another RSL. The amendment gives the regulator the option of transferring assets where there has not been misconduct but there are concerns about the viability of the organisation or the standard of its services. It will allow the regulator to act quickly where it needs to protect social housing assets if, for example, an RSL is in danger of collapse.
Whether the transfer is because of misconduct or mismanagement or on grounds of viability, the regulator must be satisfied that it would improve the management of the assets. This safeguard provides an additional check on the SHR’s use of its powers and responds to concerns raised by the Glasgow and west of Scotland forum of housing associations that the provision gives the regulator significant powers.
Amendment 135, in the name of Patricia Ferguson, raises a number of issues. First, there is the point of principle. Parts 1 to 10 of the bill establish the new regulator as a body that operates independently of ministers. That intention is made clear by the provisions in section 6 that prohibit ministers from directing how the regulator performs its functions. Amendment 135 is completely at odds with that principle, which is sound and should not be undermined by making some of the regulator’s functions subject to direct ministerial approval.
Secondly, the amendment would create practical problems arising from the fact that the bill provides for ministers to transfer to the new body staff who are currently engaged in the work of regulation. Consequently, and quite deliberately, the new body will through its staff possess the knowledge and expertise necessary to come to informed judgments on all aspects of regulation, including whether a transfer of assets from one RSL to another would be necessary in the interests of tenants.
Given that no comparable expertise or knowledge is available to ministers, I do not see what would be gained by providing for ministers to second-guess the regulator. Indeed, I would go further and say that the need for ministerial approval would lengthen and add uncertainty to the process at what could be a critical time for an RSL. The risk of delay and uncertainty would neither be in tenants’ interests nor be welcomed by the private lenders whose support for the sector is of growing importance in the current difficult public expenditure climate. I therefore invite Patricia Ferguson not to move amendment 135.
I move amendment 38.
Under the Housing (Scotland) Act 2001, a directed transfer of assets must be preceded by an inquiry conducted independently of the regulator. The bill removes that particular requirement. I do not have a problem with that, but the move gives the regulator sole responsibility for carrying out the inquiry and deciding that the ultimate sanction of a directed transfer of assets should be applied. I take the minister’s point about the way in which we want the regulator to work, but we are not interfering with the regulator’s functions. Instead, we are seeking to ensure that the ultimate sanction is subject to the greatest possible scrutiny.
As a result, I believe that checks and balances in the form of ministerial approval are needed. It is the position under English legislation and there are parallels in Scotland, where ministers—instead of the Accounts Commission, which examines such issues—-can exercise statutory action against local authorities. With regard to uncertainties that might arise over timing, a housing association would have to be in grave difficulties for the regulator to move so quickly to transfer assets. I do not think that the issue should be handled in that way.
For those reasons, I will move amendment 135 at the appropriate time.
Patricia Ferguson is right to say that a similar provision exists south of the border, but that is not to say that it benefits tenants or the others who are required to be looked after by the regulator.
I reiterate that the proposal will not only undermine the principle of independence but involve a not so timeous process in what might be fairly urgent circumstances. I therefore urge the committee not to agree to amendment 135.
Amendment 38 agreed to.
Amendment 135 moved—[Patricia Ferguson].
The question is, that amendment 135 be agreed to. Are we agreed?
Members: No.
There will be a division.
For
Ferguson, Patricia (Glasgow Maryhill) (Lab)
McNeil, Duncan (Greenock and Inverclyde) (Lab)
Mulligan, Mary (Linlithgow) (Lab)
Against
Doris, Bob (Glasgow) (SNP)
McLetchie, David (Edinburgh Pentlands) (Con)
Morgan, Alasdair (South of Scotland) (SNP)
Tolson, Jim (Dunfermline West) (LD)
Wilson, John (Central Scotland) (SNP)
The result of the division is: For 3, Against 5, Abstentions 0.
Amendment 135 disagreed to.
Amendment 39, in the name of the minister, is grouped with amendments 68, 93 and 108 to 111.
I will speak first to amendment 39, which deals with the regulation of charitable registered social landlords.
Of the 210 RSLs in Scotland, 154 have charitable status, which allows them to benefit from significant tax breaks, which I hope will continue. It also means that they are subject to regulation by the Office of the Scottish Charity Regulator as well as by the Scottish Housing Regulator.
Under charities law, the charitable assets that are held by a body that is registered as a charity must continue to be used for charitable purposes if they are transferred from that body. Amendment 39 will require the SHR to consult OSCR about the transfer of assets from a charitable RSL, to ensure that those assets continue to be used for the same or a similar charitable purpose. Amendment 68 will also require the SHR to consult the charities regulator before transferring the charitable assets of an RSL that was a charity. I regard that as a sensible approach to ensuring that the interests of both regulators are satisfied.
The other amendments in the group also deal with charitable RSLs. The transfer of ministers’ powers to the modernised independent Scottish Housing Regulator will, in effect, mean that it could operate powers of inquiry under the charities legislation—at present, those powers are delegated to ministers—as well as its own powers of inquiry under part 4 of the bill. That would be overly burdensome and complex and could lead to the regulator being subject to challenge in the courts, for example for using powers under the housing legislation rather than the charities legislation, which, in turn, could prevent it from taking swift action to safeguard the interests of tenants. That situation is unhelpful, and I know that RSLs are concerned about the burden of regulation. That is why I asked Professor Russel Griggs and the regulatory review group to look into the area.
Amendments 108 to 111 are technical amendments to remove the duplicate powers of the SHR under the charities legislation. They provide that the SHR and the charities regulator should regulate for their own purposes using their own powers. Given the nature of the two regulatory bodies, there is a need for close working between them. Amendment 93 will require the housing and charities regulators to exchange information, co-ordinate activities and prevent unnecessary duplication in relation to any inquiries that they carry out in respect of charitable RSLs. They will have to agree and publish a memorandum of understanding that sets out how they will work together.
I know that the two regulators already work well together, but it is important for the sector that there is clarity about their respective powers and how they will be used. The proposed provisions will formalise the existing strong working relationship between the two bodies.
I move amendment 39.
Amendment 39 agreed to.
Section 64, as amended, agreed to.
Thank you. That concludes day 1 of stage 2 of the Housing (Scotland) Bill. At next week’s meeting, the committee will consider amendments up to the end of section 131.