Lord Mawson: The key point that I was attempting to make before I was interrupted by the Division Bell is that the housing association movement was begun by social entrepreneurs of their day who used their independence from the state to begin to pioneer new and innovative ways of creating social housing. The capital development programme has often been used as a mechanism for stimulating innovative approaches to social problems. This amendment seeks to encourage housing associations to continue to use their capital investment as a means of stimulating social innovation and questions the wisdom of allowing the Secretary of State any further say in what social innovation housing associations may become involved in.
Let me share with the Committee the reasons why this point is particularly important. Objective 6 of the new Tenant Services Authority’s remit is,
“to encourage registered providers of social housing to contribute to the environmental, social and economic well-
The regulator will begin to regulate housing associations’ non-
While some regulation may be valuable, even inevitable given the increasing degree and scope of community investment activities, we must be alert to the costs of regulatory creep. This danger was well identified in the Cave review and reassurances have already been given at a prior stage that this should not be a cause for concern. However, it is worth looking at some of the arguments proposing limits to the size and extent of the regulatory shadow.
First, on enterprise and service innovation, many housing associations have engaged in community development work because they have believed that there is a need for a step change in the provision of all local and neighbourhood services in deprived areas. The greatest challenge is to do this so as to re-
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impact of social entrepreneurs within the housing associations and the local communities has been greatest. Without the impact and example of social entrepreneurs, the prospect of transforming not just neighbourhood services but the neighbourhoods themselves is diminished. Increased levels of regulation will tend to discourage and dampen enterprise and will tend to make housing associations more cautious. The entrepreneurial spirit will tend to evaporate as it has elsewhere in many parts of the public service.
Secondly, in the most deprived areas it is not just specific services—a community facility here or a training opportunity there—but the whole culture of the neighbourhood that needs to be transformed and needs to transform itself. Additional layers of regulation—it is not as if there is no regulation at all out there at present—will again send out the wrong signal to those who are seeking to change the culture of some of these new emerging places.
Thirdly, there is a need for regulation-
Fourthly, regulation cannot promote innovation. Social invention, together with the changes and added value it brings, cannot easily be regulated. Invention is unpredictable and comes in the most unexpected of places. It often comes in places where everyone is certain that there is nothing to find. It frequently takes time to be acknowledged and have its value appreciated and understood. You cannot easily regulate for change and you cannot regulate what will change. Unless we have a system that widely promotes and encourages innovation and experiment, where will the stream of future improvements actually come from? A Highway Code is a great idea, but someone had first to invent vehicles and a highway that they could travel on. Those golden eggs and the geese that can lay them must be able to flourish.
Fifthly, many community activities are initiated precisely because of resident demand and local support from an association’s board. Things are done precisely because local conditions and people determined what the need was, and that it should be met. If these activities are now done because the regulator directs that they should be done, in ways that the regulator deems appropriate, this will tend to undermine the potentially enormous social power of local initiative. There is a world of difference between saying, “We did this because the regulator requires it”, and, “We did this because you wanted us to”. There are existing checks and balances. If an association launches into exotic activities without getting the basic services right, residents will be the first to criticise and express
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dissatisfaction. This was amply illustrated in the report Every Tenant Matters. Local energy and inventiveness, both at board and neighbourhood level, need to be nurtured. Elsewhere in the Bill the aim is clearly to strengthen governance and resident involvement.
Sixthly, community investment is frequently undertaken with non-
Seventhly, there is a trace of a central controlling tendency in the legislation; just a trace of that baleful tendency to treat everything as if it was ultimately no more than an arm of government. If government, either central or local, wishes to influence the work of non-
What additional benefits would there be from more direct regulatory control that would not be outweighed by the damage resulting from constraining the independence of associations? Stronger partnerships emerge from independent parties than from constrained ones. The autonomy of housing associations was once thought to be an important part of their value; it would be disappointing if that insight were lost.
My eighth point is about perverse incentives. Extending regulation to this area may have several unwanted and unintended consequences. Obvious examples are that it could encourage tick-
Finally, the argument from monopoly supply does not apply here. The monopoly argument supporting close regulation applies to many of the services provided by housing associations, ALMOs and local authorities. If we assume that they are all going to be brought under the same regulatory umbrella within a year or two, as the Bill suggests, it is apposite for many core functions, but that argument does not apply in the same way for non-
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the mainstream, the third sector and the private sector. Where competition is stronger, a case can be made for much looser regulation.
These are the nine strands of argument in favour of a loose regulatory touch on community investment activity. The arguments overlap and are linked in various ways. However, the most important strands concern the need to encourage enterprise and innovation. To make the step changes in service provision and housing supply which in large part motivate the Bill, more innovation than ever, and at a greater rate, is going to be needed. This is clear from the recent report from the Smith Institute, The Public Value of Social Housing, which was recently launched by the Housing Corporation. It states that social change and the profile of people now predominantly housed in public housing will give this contemporary housing and regeneration its hardest challenge yet.
To begin to meet this challenge it might be helpful if the Government could require the regulator, when evaluating housing associations, specifically to look for innovation activity and to comment if there is none or not much evidence of it. Social innovation will not happen by magic. It needs to be encouraged in the Bill. This amendment, plus simple little measures like this, can have considerable impact in setting the tone for future house-