By Roger Jarman, HQN Associate.

Just before the summer recess, the parliamentary select committee for DLUHC published its report on the regulation of social housing.

The committee began its investigation last November. In the course of its work, the committee received 102 written submissions (including one from HQN), held six oral hearings and undertook a survey of social housing residents about their experience of living in the sector.

The committee also conducted several site visits and held roundtable discussions with tenants about the issues they faced living in social housing. Amongst those called to give evidence to the committee were the regulator, the Ombudsman and the minister for rough sleeping and housing.

The report is timely. The Social Housing (Regulation) Bill was presented to the House of Lords in June. The parliamentary process for the introduction of this legislation has begun. Despite the political turmoil facing the country and the likelihood that new ministers will be in post in DLUHC in September, the betting must be on the bill proceeding through parliament with its essential tenets in place.

(But note that Liz Truss has called for a ‘bonfire of the quangos’ as part of her bid to lead the Conservative Party, so perhaps the passage of the bill under a Truss premiership is not certain.)

The committee’s report is peppered with suggestions to ministers about amendments that could be made to the bill as its proceeds through parliament. These include:

  • Abandoning the requirement set out in the Housing and Regeneration Act 2008 (HRA) that ‘systemic failure’ must  be evident before the regulator can intervene to deal with serious shortcomings in a provider’s performance
  • Requiring providers to self-assess against the Ombudsman’s complaint handling code
  • Increasing the compensation to £25,000 for tenants judged by the Ombudsman to be receiving poor services from a provider in line with proposals for the private rented sector
  • Establishing a ‘national tenant voice’ perhaps based on the social housing resident panel set up by ministers in March (interestingly, the committee report makes no reference to the remit and purpose of the ‘advisory panel’ being created under the current bill to work with the regulator on the implementation of the legislation’s various provisions)
  • Requiring boards to reflect the ‘diversity of communities’ where they have stock (through the regulator).

The select committee – and others – are exercised by the implications of enhanced regulation for the status of housing associations as private sector bodies. The report traces the decision of the ONS to classify associations as public sector bodies in 2015, following the implementation of both the HRA 2008 and the Localism Act 2011.

This put billions of pounds on the public sector’s balance sheet and threatened the ability of the sector to raise private finance to fund new house building (and other activities). The government responded by introducing de-regulatory provisions in the Housing and Planning Act 2016 and in the following year the ONS once again classified housing associations as part of the private sector.

Understandably, the committee is concerned that the regulatory changes proposed in the bill and the additional suggestions made by the committee itself should not fall foul of a further re-definition of the status of housing associations.

There are also concerns that introducing the Right to Buy for housing association tenants could prompt reclassification of associations as well. Consequently, the committee wants the ONS to give an early opinion on the repercussions for the status of housing associations with the proposed changes to social housing regulation as set out in the bill (and following other policy pronouncements).

The committee is frustrated by the regulator’s approach to developing the framework for consumer regulation. Within the report there are calls for the regulator to produce details – if only in draft form – about the consumer standards and the methods by which they will be reviewed and assessed.

The regulator falls back on the line set out in its publication from November last year – ‘Reshaping consumer regulation: our principles and approach’.

In this document the regulator claims that “most of these changes [to the regulatory framework] can only be made when parliament has passed legislation to change our objectives and legal powers”. What’s more, the regulator makes clear that details about inspection and other assessment methods will only be designed once the consultation on the new standards have concluded.

Given that the provisions in the bill are unlikely to come into effect before autumn 2023, it might be several years before the first inspections under the new framework take place. Contrast that approach with the one adopted by the Audit Commission when ‘best value’ inspections were introduced under the Local Government Act 1999.

The commission designed its inspection methods in a parallel with the passage of the relevant legislation through parliament. The first housing inspections of local authorities under this regime were undertaken in early 2000.

With the government’s plans for the regulation of social housing clearly spelt out in the 2020 White Paper, in the bill itself and in other policy papers, there would appear to be no good reason why the regulator could not expedite the process to develop the consumer standards and provide at least an indication of the methods it will use to assess the performance against those standards.

Furthermore, given the formal independence of the regulator, surely there is no reasonable impediment that prevents the agency working up the new framework for the regulation of social housing at speed?

The select committee is exercised by the future relationship between the Ombudsman and the regulator (in common with many observers of social housing in England). The bill tries to address this, but evidence reviewed by the select committee suggests that there is still the prospect that the roles adopted by the two bodies could overlap and thereby generate confusion.

In oral evidence to the committee the regulator argues that the Ombudsman looks at systemic issues affecting the sector while the regulator’s remit is focused on individual organisations. This seems muddleheaded not least because the Ombudsman also deals with individual providers when addressing maladministration cases in the sector.

The committee emphasises the importance of the regulator having powers to inspect individual properties under the bill, reflecting concerns about disrepair in parts of the sector and the unsafe nature of some social housing.

But perhaps this is overstated. A national regulator should have some responsibility for seeing that individual properties are of a ‘decent’ standard, but it is unrealistic to expect staff at the regulator to carry out inspections of such properties almost routinely.

It is disappointing that the select committee does not review the experience of the Audit Commission and its inspection of providers from 2000 to 2010, when 1,400 inspections of local authorities and housing associations were undertaken, all resulting in published reports subject to scrutiny by tenants and other stakeholders.

Although not perfect, the inspection methodology used by the commission does suggest a more proportionate and appropriate approach to reviewing provider performance by assessing service delivery at an organisational level – rather than by (in part) inspecting individual properties.

The select committee has identified some issues that DLUHC ministers and the regulator should address as the new framework for consumer regulation takes shape. Many of these are sensible suggestions that should be incorporated in the final legislation. Time will tell.

Note: a fuller briefing on the select committee report will be published shortly. Also, HQN members will be able to hear from the regulator about the plans for the regulation of local authority providers at an event on 24 August. More details can be found here. The author is also delivering a public training event for HQN, considering in detail the provisions in the Social Housing (Regulation) Bill on 11 August.