The alternative is to take action to enable ONS to reverse their classification decision, which will maintain the current funding arrangements and this is why I have introduced the Regulation of Registered Social Landlords (Wales) Bill. ONS has made similar decisions in respect of social landlords in other parts of the UK. The Scottish Government has already introduced compatible legislation, on a timetable similar to our own, while the UK Parliament has already passed legislation with a similar purpose to cover England, with associated UK Government regulations currently going through the parliamentary process. I’ve worked with the Cabinet Secretary for Finance and Local Government to secure a derogation from HM Treasury whilst we deliver the necessary legislative changes or the ONS reclassifies RSLs to outside the public sector accounting boundaries. The derogation is in place for 2017-18, ensuring there is no budgetary impact in this financial year. HM Treasury have confirmed that Wales will be treated no less favourably than England while the legislation is fully enacted, as it is in Scotland and Northern Ireland. HM Treasury does, however, expect to see progress in bringing forward legislation to enable the ONS to reverse its decision.

The reason for the ONS decision is that RSLs are subject to central and local government control, through provisions that are mainly set out in the Housing Act 1996. Therefore, the scope of the Bill is restricted to dealing only with the controls identified by ONS and to changing them only enough to meet the ONS requirements, while ensuring that the aim of the Bill, allowing ONS to reclassify RSLs and maintain current funding arrangements, is achieved. The Bill makes provisions covering disposal of land by RSLs as well as certain constitutional changes and changes to the structures of RSLs, local authority influence in RSLs, and when the Welsh Ministers can use powers in respect of inquiries, enforcement and intervention in relation to RSLs. I want to be clear: the Bill will not result in an unregulated social housing sector. There will still be robust and effective regulation after the changes it proposes have been made. The Welsh Ministers will still be able to take action when appropriate. We will still retain continuing intervention and enforcement powers and the Bill clarifies the circumstances in which these could be used.

In December 2016, partly in anticipation of the implications of the ONS reclassification, I launched a new regulatory judgment framework and performance standards. Judgments on RSLs’ governance, including landlord services and financial viability, will be published at least annually, and RSL boards are required to submit an annual compliance statement confirming they are meeting the performance standards. Therefore, the regulatory framework remains extremely robust.

The policy proposals and a draft version of the Bill have been discussed with ONS, and ONS has determined that, if the Bill receives Royal Assent in its current form, the totality of public sector influence exercised through central Government, local authorities and the existence of nomination agreements would not constitute public sector control. So, if the legislation is enacted as introduced, ONS will be able to reconsider its reclassification of RSLs here in Wales.

We have been engaging with stakeholders, including tenants, funders, RSLs and their respective representative bodies, since before the ONS announcement last year. We also conducted a public consultation on the proposals. Key stakeholders understand the need for the Bill and have generally given it their support. More importantly, Llywydd, perhaps, stakeholders understand the likely impact of not enacting the legislation that we are proposing with this Bill.

Assembly Members across the political spectrum have been clear about the need to find a solution that enables ONS to reclassify RSLs in Wales back to the private sector as soon as possible. I look forward to working with the committees and Assembly Members as we consider the Bill and make the necessary changes required to safeguard the supply of good, quality, affordable homes here in Wales. Diolch.