§ Lord Sainsbury of TurvilleMy right honourable friend the Minister for Industry and the Regions, Jacqui Smith, has made the following Ministerial Statement.
To assist discussion of the Companies (Audit, Investigations and Community Enterprise) Bill in Standing Committee, it may be helpful if I outline how the Government intend the powers of the new regulator of community interest companies (CICs), created by Clause 24 of the Bill, to interact with those of other regulators in particular sectors of activity, and in particular the regulators of registered social landlords (RSLs).
The consultation paper on CICs which the Government published last year said that the CIC regulator,
will work with other companies' regulators, and with any sectoral regulators with relevant competences, to ensure that there is a single interface between CICs and their stakeholders on one hand, and regulators on the other".'The consultation confirmed that this is the right approach, and that simplicity of regulation is highly valued by social enterprises. The single most important step in achieving it is to integrate the new regulator with Companies House. The CIC regulator will therefore be located in Companies House, and the processes for setting up a CIC and making annual community interest company reports will he linked to the equivalent processes for all companies.
The consultation paper referred to "sectoral regulators with relevant competences" because CICs potentially have a wide range of uses. Some CICs may therefore operate in sectors that are already subject to legal and regulatory constraints in matters such as the use of assets. In such cases, the Government are determined that overlapping regulation should be avoided. We have already identified one sector where work is necessary to achieve this. Registered social landlords, or RSLs, are subject to statutory constraints on the use of their assets, and on their activities, under housing legislation. The RSL sector is regulated in England by the Housing Corporation, in Scotland by Communities Scotland, and in Wales by the Housing Directorate of the National Assembly for Wales.
RSLs currently use a variety of legal forms, and we believe that some may be interested in becoming CICs, or in establishing CIC subsidiaries. The Government are particularly mindful of the need to avoid complicating the regulation of RSLs that choose to use the CIC form, in the light of a recent report on the Housing Corporation by this House's Committee on Housing, Planning, Local Government and the Regions, which stressed the need to streamline the regulation of RSLs and to avoid duplication.
111WSWe intend to achieve this streamlining for RSLs using the CIC form, by making orders under the Deregulation and Contracting Out Act 1994, to enable the CIC regulator to delegate relevant powers to the appropriate RSL regulators in England and Wales. The orders will be subject to affirmative resolution in both Houses of Parliament. The position is rather different in Scotland because of the devolution settlement, and we are in discussion with the Scottish Executive and Communities Scotland about the appropriate way to arrange the delegation of powers.
The detail of which powers should be delegated to the RSL regulators is being discussed by the Government, the RSL regulators and the devolved administrations. The principle will be that the CIC regulator should delegate those powers that duplicate or overlap with those of the RSL regulators. Regulatory action in respect of RSLs using the CIC form will then normally be the responsibility of the relevant RSL regulator, using either their powers under housing legislation or the powers delegated to them by the CIC regulator.
The real value of delegating powers in this way is that it will allow the RSL regulators to take the clear lead in regulating RSL CICs. Those CICs can then be confident that the relevant RSL regulator in England, Scotland or Wales is the key body with which they must deal, in respect of their obligations both as RSLs and as CICs. Delegated powers will be exercisable concurrently by the CIC regulator and the sectoral bodies but we expect that the CIC regulator will only have a limited "backroom" role in respect of RSLs using the CIC form, for instance in agreeing their registration as CICs. Clause 39 of this Bill allows the CIC regulator to use his supervisory powers only to the extent necessary to maintain confidence in CICs, and it will not normally be appropriate for him to act where he has delegated those powers to a sectoral regulator.
1Enterprise for Communities: proposals for a Community Interest Company, para 46, published March 2003, available at www.dti.gov.uk/cics.