HL Deb 24 March 2003 vol 646 cc536-9

7.46 p.m.

Lord Evans of Temple Guiting rose to move, That the draft regulatory reform order laid before the House on 24th February be approved [13th Report front the Regulatory Reform Committee].

The noble Lord said: My Lords, this is the third order from the Office of the Deputy Prime Minister to be brought forward under the Regulatory Reform Act 2001.

The order proposes changes to the way local housing authorities in England and Wales can delegate their housing management work under Section 27 of the Housing Act 1985 which it replaces. The changes are aimed at giving authorities more flexibility about the way in which they can let contracts for housing management. It also brings the section more into line with current legislation in clarifying the liabilities between the parties in these circumstances.

Currently, as landlords, local housing authorities are obliged to provide housing management services to their tenants. Section 27 of the Housing Act 1985 enables them, with the Secretary of State's approval, to delegate these functions to others by virtue of a management agreement agreed between both parties. However, Section 27 is framed in such a way as to prevent the "other party" from further subcontracting the work.

This may not sound a significant restriction on local housing authorities and it may help if I explain the context of the proposed order. This particular piece of legislation was amended in the days of compulsory competitive tendering when single, short-term contracts were the order of the day. Ideas have moved on since then and we now expect authorities to be more imaginative about how they achieve value for money and how they provide best value to their tenants and residents. Consequently they need to be able to enter into arrangements with providers where those providers can perhaps offer better value by subcontracting some or all of those services.

For instance, a housing association may be able to provide good quality housing management services to an authority, but to do so it needs to call on specialist suppliers such as those for sheltered housing or warden services. Under the current legislation, the authority would not be able to enter into such a contract which proposed sub-contracting the work. The changes proposed by the order enable management agreements to include clauses that enable the contractor further to sub-contract the work with the approval of the Secretary of State. In considering the proposed changes, it was recognised that there may be problems for a contractor should it want to replace a subcontractor as a matter of urgency. That is likely to be particularly true where there must be compliance with the statutory and ODPM requirements to consult with tenants on such changes and seek the Secretary of State's approval. Consequently, the order allows for a moratorium period for a maximum of six months to be provided, during which the Secretary of State's approval is not required.

One further point to note is that the current Section 27 refers to the relationship between the contractor and the authority as that of "agent". In considering the changes to Section 27, it was felt that the term "agent" did not adequately reflect the liabilities between the parties, and the opportunity was taken to address that. The new provisions make the authority liable for the acts and omissions of a contractor or "manager" except where the management agreement states otherwise and where criminal liability is concerned.

The Office of the Deputy Prime Minister consulted widely on that proposal. The majority of respondents—82 per cent—supported it. The Select Committee on Delegated Powers and Regulatory Reform concluded that the proposal was a suitable subject for a regulatory reform order and was satisfied that it should be submitted to the House for affirmative resolution. I thank members of that committee for the time that they spent scrutinising the proposal and recommending it to the House.

The Regulatory Reform Committee in another place also felt that the proposal was appropriate to the regulatory reform procedure. It recommended that clauses replacing the term "agent" should be redrafted for greater clarity. That we have done, and we feel that the result is much clearer and more easily understood. The committee agreed and unanimously approved the order. I commend the order to the House. I beg to move.

Moved, That the draft regulatory reform order laid before the House on 24th February be approved [13th Report from the Regulatory Reform Committee].(Lord Evans of Temple Gieiting.)

Baroness Hanham

My Lords, I thank the Minister. Even I would recognise that 82 per cent in favour was a majority. Once again, the order is almost non-controversial. Perhaps at some stage I should declare my interest as a member of a local authority, and as leader of one of the first councils to turn the tenants' management organisation into one cross-borough organisation. I am in some sympathy with what is proposed in the order, which is the further possibility of delegation of housing management to other organisations, and more flexibility with that.

The Minister probably mentioned a couple of the points that I am making, so I am sorry if I am going to labour them a bit. If he did not say so before, will he say whether PFI contracts will be part of the housing management delegation? Will it be possible for them to be PFI, or will there simply be a direct delegation down to another organisation, such as a housing association or another tenants' group? Indeed, presumably a private company could be brought in by the housing department to take over the management.

The Minister made a point about tenants and the restriction on sub-contracting. It seems extremely important that the tenants are involved if there is any question of a contract being sub-contracted. The suggestion was that the Secretary of State would be able to delay such a proposal for six months. However, it is very necessary that tenants know exactly who their management is and under what basis they are managed.

Will the share of liabilities between sub-management, management and the authority—three parties are involved—have to be properly delineated in law, so that tenants understand exactly the situation and relationship between one body and another?

Baroness Maddock

My Lords, I do not think that the issue is particularly controversial. We on these Benches would be in favour of local government having more discretion about its decisions. Like the noble Baroness, I was very interested to know how the order fits in with PFI. We have so many different branches and ways of organising things these days that sometimes I become a little concerned about how they fit in with each other.

That said, if the Government were in favour of giving local government the power of general competence, we would not have to go through so many complicated orders and so much legislation. We have made that point many times. I also understand that there were certain recommendations, to which the Minister referred, from the House of Commons Regulatory Reform Committee and from the House of Lords Select Committee on Delegated Powers and Regulatory Reform. I am pleased to say that the Government took notice and changed the order accordingly.

Lord Evans of Temple Guiting

My Lords, may I first say a few words about PFI, which is obviously an important issue. The Commons Select Committee's report showed that it was slightly concerned about the government policy of using PFI for council housing and wished for a wider debate on the matter. It rightly felt that it was not appropriate to use the regulatory reform order to do that. However, the report makes it clear that the committee looked to the Government to instigate such a debate, and it is our intention to make arrangements for that.

Tenants will be consulted, and the Secretary of State will want confirmation of that in order to give approval. The noble Baroness, Lady Hanham, asked how liabilities were delineated. The local authority remains ultimately responsible under the order, except in two circumstances—where it is defined in the contract otherwise, or where there is criminal liability.

On Question, Motion agreed to.