The next group of amendments is group 3, which relates to failure to comply with an enactment. The lead amendment in this group is amendment 6. I call on David Melding to move and speak to the lead amendment and the other amendments in the group. David Melding.

Amendment 6 (David Melding) moved.

Thank you once again, Llywydd. The three amendments in this third group, namely amendments 6, 11 and 12, ensure that a failure to comply with the regulatory framework and the associated performance standards is explicitly recognised on the face of the Bill as a failure to comply with a requirement imposed under an enactment. Again, this amendment arises from a recommendation of the sub-committee. Ultimately, Llywydd, this is an area of deregulation, as I've repeatedly emphasised, and will require careful risk management. The protections that are afforded by the revised regulatory framework would became more important in terms of regulating RSLs when the legislative changes that are proposed come into force—and they will come into force, because they have all-party support. So, we really must look at the regulatory framework and the way it is going to work, because of the added weight that it will carry. 

At Stage 2, the Minister rejected these amendments on the basis that, quote:

'If we were to include a statement in the Bill that standards issued under section 33A are requirements imposed under an enactment, there is a risk that this could cast doubt on the interpretation of other requirements imposed by or under enactments that made no similar statement.'

However, these amendments were drafted so that the regulatory framework would only be included in the definition of 'enactment' for the purpose of determining whether an RSL had failed to comply with an enactment in the relevant Schedule or sections of the Housing Act 1996. The framework would therefore not be included in the definition of 'enactment' when used elsewhere in the Act. So, it's quite focused. If the Welsh Government wanted to rely on a breach of the framework rather than the performance standards to, say, appoint an officer or manager, then this amendment would assist them in doing so.

Llywydd, the positive consequence of this amendment is the increase in confidence for financial lenders. UK Finance emphasised this point in their evidence, when they stated, and I quote:

'we expect funders could take comfort from the wide definition of failure proposed in the legislation...which we take as including a failure in relation to the regulatory framework. For absolute clarity, however, we suggest that consideration be given to ensuring in the legislation that the “failure to comply with a requirement imposed by or under an enactment” is clearly defined as including a failure in relation to the regulatory framework.'

So this, Llywydd, is exactly what the amendment seeks to do. With such high levels of uncertainty surrounding deregulation, I think we can at least, by adding a duty to comply to this Bill, give lenders the confidence they need to help finance the important work that this sector does, especially if they are somewhat distant investors and not fully familiar with the operation of our law. They would get clarity, and those advising them would be confident to give that. So, I move the amendment.

I call the Minister—Rebecca Evans.

When an RSL fails to perform satisfactorily, there is a range of powers available to the Welsh Ministers. The current threshold for taking action is generally where there has been mismanagement or misconduct. We have had to make this threshold more specific as it was one of the issues of control identified by the ONS. Therefore, the Bill amends the threshold to a failure

'to comply with a requirement imposed by or under an enactment.'

This threshold includes a failure to comply with the performance standards imposed under section 33A of the Housing Act 1996 and published in the regulatory framework.

David Melding, speaking in the Stage 2 debate, quoted UK Finance, which stated in their submission:

'we suggest that consideration be given to ensuring in the legislation that the "failure to comply with a requirement imposed by or under an enactment" is clearly defined as including a failure in relation to the regulatory framework.'

UK Finance have, however, since confirmed to my officials that, having considered my evidence to committee, the performance standards issued under section 33A are requirements 'imposed under an enactment'. They are content there is no need for this to be restated on the face of the Bill. I again confirm that standards issued under section 33A of the Housing Act 1996 impose requirements on RSLs. They are clearly requirements imposed under an enactment and therefore already have 'the significant statutory weight' that David Melding called for at Stage 2 during the scrutiny debate.

I can also confirm that I have reviewed the explanatory notes following Stage 2, as I committed to do, and that they are clear that standards issued under section 33A are a requirement under an enactment. Therefore, I do not consider that there is any ambiguity about whether the performance standards are requirements under an enactment, and, if they were breached, intervention powers would be available to the Welsh Ministers. 

If we were to include a statement in the Bill that standards issued under section 33A are 'requirements imposed under an enactment', there is a risk that this would cast doubt on the interpretation of other requirements imposed by or under enactments that made no similar statement, and this can have unintended adverse consequences. For example, if there was express mention of the performance standards but not directions, were directions subsequently to be issued, people might question whether or not they were a requirement imposed by or under an enactment. I do not support any amendments that may cause any doubt as to their interpretation or the interpretation of provisions in this or any other legislation. 

Amendments 6, 11 and 12 all refer to the regulatory framework for housing associations registered in Wales and its associated performance standards. Performance standards are standards that are issued in accordance with section 33A of the Housing Act 1996. The phrase 'performance standards' is the colloquial term for such standards. The standards form a central part of the regulatory framework, however the regulatory framework itself does not have a statutory basis. The framework sets out the process for how regulatory judgments that reflect the regulator's assessment of an RSL's compliance with the standards are reached.

As the amendments, as drafted, refer to documents that do not have a statutory basis and do not correctly identify section 33A of the Housing Act 1996, at the moment these amendments would not operate effectively, even if they were to be accepted. In any event, they are unnecessary, as performance standards, under section 33A, are already caught by the definition of a requirement imposed by or under an enactment. To clarify that position further is unnecessary and might cast doubt on the interpretation of other provisions where such clarity is not provided. So, I would ask Members to reject the amendments.

David Melding to reply to the debate.

This one is for the purists. All I can say is that I've taken detailed advice from our advisers in terms of the legal requirements. It's often the case that the Government will say, 'Ah, if you emphasise this by putting it on the face of the Bill, it will cause ambiguity elsewhere where you've not done the same', and you'll have this massive Bill, all of a sudden, because you want to make doubly sure.

This is about ensuring that the new regulatory frameworks are going to be effective. The weight, as I said, on them is going to be much, much heavier than it was previously. We accept that we're doing this not from our own free will, but because the Office for National Statistics requires it because of—and in fairness to them—international accounting standards, and that has an effect on international organisations and how they determine the level of public expenditure in Britain and other such matters. But it's really important that we give this area of the Bill the importance that it deserves, and we can do that by making it very clear in terms of its status as an enactment.

I have to say, in terms of UK Finance, I think their original advice stands: what do you do about those more distant finance sources and investors that may be put off if they feel there's a level of ambiguity and the nature of the regulatory framework will not be strong enough to ensure proper good governance? And that could have an effect on all our housing targets in the social housing sector.

Now, in fairness, the Minister has shared with me the exchange of e-mails with UK Finance and I welcome that; it's open government, but it is fairly cursory, I have to say. FootnoteLink This happened in late March. It's an e-mail detailing why UK Finance needn't be worried, and that runs to a little over half a page of A4 not closely typed, and then they get, a week later, a one-liner back from UK Finance. Well, I have to say, that doesn't quite satisfy the obligations of scrutiny that I think fall upon this Assembly. And frankly, if you're relying on that, it should've been perhaps made available to the Assembly more widely—

The Government wishes to note that: 'The email referred to in paragraphs 400 to 404 was in connection with amendments in Group 5. The position of UK Finance in relation to the Group 3 amendments was received verbally by officials.'

Will you take an intervention? Could you tell us what the reply from UK Finance says?

They do say they're satisfied, yes, so—

Well, you can read it, because it's in your hand.

But they've not gone through the issues that they raise and the issue of the distant sources of finance and there is no way you can verify whether they've had a full discussion, what that discussion was or what is the evidence on which they're basing their different view. It is a one-liner. The Minister wants me to read it, so I suppose I better had: 'Dear X'—X being the official—'I can confirm, having taken account of the views from our members, we have no issues with this proposed approach.' And then you've obviously got to read the justification that the Government has now provided, which, in a little bit of detail, basically just said what the Minister has told us. Now, are we satisfied with what the Minister has told us? That's the judgment we have to make, and, as I said, I think UK Finance were a little nearer the mark when they came in and freely gave their opinion to—or gave, through written evidence, their views to the committee. I so move.

The question is that amendment 6 be agreed to. Does any Member object? [Objection.] We therefore proceed to an electronic vote. Open the vote. Close the vote. In favour 16, no abstentions, 37 against. Therefore, amendment 6 is not agreed.

Amendment 6: For: 16, Against: 37, Abstain: 0

Amendment has been rejected