Local Authorities (Contracting Out of Allocation of Housing and Homelessness Functions) Order 1996 (Hansard, 17 December 1996)

§ Baroness Hollis of Heigham
My Lords, I am not sure that all is well in the best of all possible worlds as the noble Earl seemed to indicate in his introduction. The order gives local authorities the power to delegate to other bodies the exercise of most of their allocation and homelessness functions under Parts VI and VII of the 1996 Housing Act. It particularly applies to local authorities which have transferred their council housing stock to private companies under large-scale voluntary transfer arrangements and validates their work, excluding only certain listed functions set out in Schedule 1.
While it is right to allow local authorities as much discretion as possible as to how they operate this law, consistent with their legal responsibilities—and we therefore have no objection to that aspect of the order which insists that certain functions, especially the financial ones, cannot be delegated—we nonetheless believe that the order is far too narrowly drawn. In our view, other responsibilities should also have been ring-fenced and should not be available for delegation.
We believe that the order permits a local authority to delegate functions to another body so far as concerns homelessness which should not be so delegated. For example, I refer to such decisions as to whether an applicant is homeless, in priority need, is not intentionally homeless, and has a local connection. We believe that those key policy decisions should be determined by the local authority because it is held responsible for that under the law and is accountable in the courts for its actions.
1491 We believe, therefore, that the order fails to ring-fence enough of those functions. First, it allows the local authority to delegate the assessment of homelessness to an agent even though the local authority will remain responsible in law. I believe that any local authority which delegated such a function would be acting unwisely, putting itself and its council taxpayers at risk of a legal action on the lines of fiduciary responsibility. The Minister will be well advised to consider that issue. I believe that a local authority will put itself and its taxpayers at risk.
Secondly, I believe that the Government, to a degree, are acting somewhat in bad faith. I and the noble Earl were involved in handling this section of the Bill when it went through the House, as was the Minister. At no point that I recall did the Minister indicate that private companies should be allowed to exercise and determine these pivotal functions and decisions. Throughout the debates during the Bill the Minister emphasised that local authorities retained their responsibility under the law. We were led to believe that that meant that as a function they could not be delegated.
When at any stage during the passage of the Bill did the Minister clarify the distinction between delegation and responsibility, as he now does? We believe that it was inappropriate. These regulations were not encompassed by debate when the Bill was passed. It was not our understanding, and had the Government indicated that that was their intention, I for one, and I am certain the noble Earl too, would have moved amendments to exclude that possibility and to get on record in Hansard our concern about such a possibility. We did not do so because we did not understand that the Minister had that in mind. At no point did he make clear that that was his intention. I believe that that was not in good faith.
Thirdly—it is perhaps the point that really matters—these regulations will now make homeless people even more vulnerable than they are currently. The work in determining whether someone is homeless, and the right response to their homelessness, is highly sensitive work. Such homeless people may now find that private companies rather than their elected local authority and councillors will determine their rights to perhaps the most important asset in their life—a decent and stable home. We may find that private bodies, not necessarily working within the professional codes of local government, will be handling highly confidential material supplied by a general practitioner on physical and mental health, issues of domestic violence and abuse, immigration status, and the like.
Such matters should not be handled by private companies not controlled by the proper ethical standards of local government. It is quite improper, particularly as private companies and private landlords are not exactly well known for compliance with the law on such issues as race and sexual harassment. After all, increasingly people are homeless because the private sector has evicted them. The Government expect the private sector to rehouse them. On top of that they ask the private sector to lay down the rules and determine who shall be housed by whom and when. We think that that is unreasonable, inappropriate and unfair.
1492 The Government are effectively releasing local government from its statutory duties but not from its legal responsibility. We warn local authorities now to take the advice of the local authority associations not to go down that road because trouble lies at the end of it.

§ Earl Russell
My Lords, I, too, have misgivings about these regulations, to put it no stronger. I confirm what the noble Baroness said about there being no mention of this point at any stage during the passage of the Bill. It is not impossible—I choose words carefully—that at least one Division might have gone a different way had that information been available. It surprises me very much that there is no restriction in the regulations in terms of the competence of the body to which functions are delegated. For all we know it might be a body such as Group 4. There are no clear provisions about avoiding conflict of interest; and there are many chances of that.
While I was pleased to hear what the Minister said about the local authority being ultimately responsible, there are some quite big problems here. I am not convinced that they have been thought through. The local authority will be liable to judicial review because it is its duty. But how far can we answer for the conduct of people other than ourselves? Can we have a categoric assurance that the company to whom all functions are delegated will not be allowed to plead commercial confidentiality when the local authority's duty is at stake?
Can we be told whether the local government ombudsman will retain jurisdiction over functions carried out by a contracted body? Can we be told whether a review under Section 204 of the Act may be delegated? If so, we should remember that it is the basic principle of natural justice that a body may not be judge and party in its own cause. I should have thought that the risk of that principle being broken was perfectly obvious.
The Minister may not be able to answer all the points tonight. If not, I hope that he will write to me because these are serious questions and I am worried about them.

Earl Ferrers
My Lords, I am sorry that the noble Baroness did not find it in her mind to approve the regulations in the way that I had hoped she would. It was made perfectly clear throughout the Housing Bill that that was what was intended. We consulted local authorities in October and received no objections to the proposals.
The noble Baroness said that it would be quite wrong for the private sector to lay down rules as to who should be housed and when. That is where the noble Baroness is greatly mistaken. It is for the local authority to lay down the rules under which the contractor, for want of a better expression, will operate. It is up to the person who takes that responsibility on to abide by the contract. It will be for the local authority to determine who shall or shall not be a suitable person to be housed. It is only the executive function that will be carried out by the other body. I do not think that there is anything wrong or particularly unique in that. We have seen it in many other cases.
1493 Perhaps I might ask the noble Baroness to address her mind to a different sort of case, but one which caused all the fuss to start with; namely, when prisons were contracted out. The fact is that it depends on what is written in the contract. There is no reason to think that this will not be done just as well under the present system.

§ Baroness Hollis of Heigham
My Lords, perhaps the Minister will give way. The difference in his analogy is that Group 4 does not decide who is a prisoner. The point here is that, although the local authority may lay down the rules as to what counts as homelessness, it will be for the private company to determine whether an individual conforms to the criteria—in other words whether they are "Guilty, M'lord, as pleaded". That is why the case is not analogous with Group 4.

Earl Ferrers
My Lords, I do not know why the noble Baroness keeps talking about Group 4; I did not even mention Group 4. The fact is that the local authority will determine what are the criteria by which a person will be determined to be homeless. That is the position.
I remind the noble Baroness that all the actions of a contractor are, by virtue of Section 72 of the 1994 Act, to be treated as actions of the authority; and the authority therefore remains the one who is responsible. If anything is wrong in that action, the local authority will be responsible.
The noble Baroness said that private companies exercise these functions. That is perfectly true. However, we made it clear throughout the passage of the Bill that in large scale voluntary transfer we would expect to see the registered social landlord carrying out the functions. Registered social landlords are private companies in this sense, and they are responsible bodies. We consulted local authorities about this matter and no objections were raised.
The noble Earl, Lord Russell, referred to conflict of interest. Most contracts would be let to a registered social landlord, possibly a housing association. Those bodies are required by the Act to co-operate with local authorities in discharging their functions. They share the same objectives in meeting housing need.
The noble Earl also asked whether, after contracting out the homelessness functions, they would be subject to the local government ombudsman. The answer is that they will be. The noble Earl also asked how far an authority can answer for the actions of others. The authority will need to make arrangements with its contractors, who will usually be a responsible registered social landlord. That will ensure that if there is a successful challenge in the courts the authority can require the contractor to respect the decisions of the courts.
I shall certainly look at what the noble Earl said. If I have not covered all the points that he mentioned, I shall write to him. I hope that the House will agree the passage of this order. I commend it to the House.