The first group of amendments relates to tenant participation. The lead amendment in this group is amendment 1. I call on the Minister to move the lead amendment and to speak to the lead amendment and the other amendments in the group. Rebecca Evans.

Amendment 1 (Rebecca Evans) moved.

Thank you very much, Llywydd. I would again like to thank the Chairs and members of the External Affairs and Additional Legislation Committee, the Constitutional and Legislative Affairs Committee, and the Finance Committee for their detailed scrutiny of the Bill throughout Stage 1 and Stage 2. I would also like to thank the stakeholders who provided written and oral evidence and Assembly Members for their support for the Bill so far in its passage through the Assembly.

The Government’s commitment to tenants at the heart of regulation has been made absolutely clear throughout the scrutiny process. I hope it's clear that this Bill does nothing to change this, nor the regulatory expectation that registered social landlords consult with tenants and listen to their views. This is a fundamental requirement. RSLs are required to demonstrate that tenants are involved in shaping services and decisions and that services are high quality and improving. This is set out in performance standard 2 issued under section 33A of the Housing Act 1996. And, to confirm what I have said previously, we will be updating and issuing statutory guidance under section 33B of the housing Act, which will set out regulatory expectations on RSLs on various matters, including consultation.

However, having listened carefully to the debates, I committed to bring forward an amendment at Stage 3 to set out provisions on tenant consultation on the face of the Bill. My amendment does exactly this. It sets out provisions to require consultation with tenants when RSLs are considering certain constitutional changes such as voluntary mergers or amalgamations. I do not, however, propose to impose a duty on RSLs to consult in circumstances where I think that any such duty is not appropriate and would present additional risk to tenants and the RSL, for example when an RSL is in financial stress. This is because structural change, as caught by amendments 3 and 4, can be a means of dealing with RSLs in financial stress or facing potential insolvency. In these circumstances, the RSL and the regulator must be able to take very urgent, tailored action to intervene to protect tenants. Even where voluntary arrangements are put in place to deal with financial stress, often there will be a number of factors outside an RSL’s control—creditors, timescales and so on—that will have an influence on the proposals made by an RSL and may limit the ability of an RSL to carry out an effective and legally compliant consultation.

I am not, whatever the circumstances, saying that tenants should be left in the dark when such changes are being considered. I have made it clear, and I don’t think anyone disagrees, that there must be appropriate communication with tenants when these proposals are being considered and those communication arrangements will be subject to regulatory oversight. But communication is different to formal consultation. A duty to consult has a particular well-understood meaning in law.

My amendment also doesn't include a requirement for consultation where an RSL proposes to change from a registered society to a company or vice versa. In these circumstances, it will not result in a change of landlord for the tenant, only in a change of the legal form of the landlord. Amendment 1A, on the other hand, would have the effect of placing a duty to carry out consultation when an RSL proposes to change from a society to a company. I recognise that there may be concerns that a change from a society to a company may signal a change of ethos for an RSL, but there are safeguards against this. All RSL’s registered in Wales, including those that are companies, must be not-for-profit and their purposes must include the provision, construction, improvement or management of social housing. Diversification is monitored closely, as is the establishment of non-registered subsidiaries. In fact, progressing the core purpose of the business is central to performance standard 1 and subject to ongoing regulatory oversight.

My amendment has been developed to address issues discussed during the scrutiny process, taking into account the knowledge and experience of the RSL sector in Wales and the co-regulation approach that we take here in Wales. It's the most appropriate way of ensuring tenant consultation when there are planned changes, whilst allowing flexibility to respond to urgent situations.

David Melding referenced TPAS Cymru, the tenant representative organisation, when speaking to his amendment at Stage 2. As you might expect, officials have discussed my amendment with TPAS Cymru, who, whilst welcoming the proposal to set out provisions for consultation on the face of the Bill, also recognise that this may not always be practical in cases where RSLs are in financial stress or facing insolvency. We welcome the briefing provided to the Assembly from Community Housing Cymru, which supports my amendment, recognising that it deals with the concerns raised at Stage 2, ensuring that tenants are at the heart of decisions taken about the future of their landlord and the services it provides. Therefore, amendments 1A, 3 and 4 are unnecessary. My amendment therefore provides an appropriate requirement for consultation but without the operational difficulties that would arise if amendments 3 and 4 are passed.

Amendments 3 and 4 as drafted effectively place a duty for RSLs to consult before a wide range of constitutional changes, including those that may be driven by the need for an RSL to take steps to make arrangements with their creditors, or prior to taking certain steps relating to insolvency, which, as I have said, is not practical. The issue of the need to be able to step in and take action where an RSL's viability is in jeopardy is also recognised in Scotland, where the regulator can, for example, set aside the requirement for RSLs to consult tenants before it can became a subsidiary of another body where becoming a subsidiary can be one of the ways of avoiding insolvency.

Additionally, amendments 3 and 4 seek to invalidate certain resolutions. They may have unforeseen consequences—for example, creating uncertainty as to whether the Financial Conduct Authority or the Registrar of Companies can register those resolutions, or whether they must consider whether or not an RSL has carried out a lawful consultation. I therefore recommend that Members support amendment 1 and reject amendments 1A, 3 and 4 for the reasons I have outlined.

Before I speak to the first group of amendments on this Bill, can I firstly reiterate the fact that all of my amendments today, in one form or another, have derived from the recommendations of the sub-committee on this Bill or from the Constitutional and Legislative Affairs Committee's report?

Whilst this Bill's aims are unarguably in the public interest, given the judgment of the Office for National Statistics, we need to still keep in mind that this Bill is a significant act of deregulation within the housing sector and, consequently, it was identified in both of the committees' reports that it would, and I quote,

'require diligent risk management and effective monitoring.'

Given that my amendments have derived from the cross-party committee discussions and from the general principles of this Bill, which, again, have cross-party support, I think it is worth appreciating that no-one here wants to disrupt or slow down the reclassification process. This is about crafting good law. Llywydd, can I say that all the amendments that I have laid have had the full support and drafting skill of the Commission's lawyers, and I would repudiate any deficiencies in those amendments from a legal standpoint?

One of the amendments that I brought forward with the support of Plaid Cymru at Stage 2 has, indeed, now been adapted by the Welsh Government and put into their own format, and this amendment is the basis of the discussion we're now having. So, I should welcome the fact that the Government has responded. They're not doing what they originally intended to do; they have responded to the discussions that were held at an earlier stage in the legislative process, for which, rightly, they should get credit. 

So, having said that, and the recognition for the greater tenant participation in this process, I do believe that, in comparison with our amendments, what the Government is offering is a weaker and, I think, vaguer version, and that's why we have this disagreement. I'm now going to try to elaborate so that Members can make a judicious decision.

In group 1, the purpose of amendments 3 and 4 is to provide for a formal process for tenant participation and consultation where there are amalgamations and other structural changes to a registered social landlord. And I do think it's appropriate, when we are referring to the trade organisation, to remember that they clearly have an interest in this and it's appropriate that we hear it, but when the Minister quotes discussions that have been had with the various interested groups in this, they're not part of the legislative process. They give us advice, of course, and I think it's important that we reflect on it, and so I've certainly looked at Community Housing Cymru's note in that vein. They do, in a sort of off-hand compliment, welcome, and I quote,

'The numerous amendments brought forward by David Melding'.

Well, I have to say that 'numerous', I thought, meant something that could not be counted, like, 'There are numerous stars in the universe; they're beyond the ability to count.' I've moved 18 amendments. I hope the Llywydd doesn't think that's too arduous. I notice the alliance that's been formed with the Government with this key body, and, of course, that's in no way inappropriate. But I do think, from the start of this Bill, a lot of people have assumed that it's very technical, therefore not really worthy of full scrutiny and a proper and full legislative process. I am a little disappointed that, in some quarters at least, we haven't had perhaps the level of engagement that one could expect. I mean, law is a serious business, and deregulation, even when its forced on us and it's something we cannot avoid—I completely agree with that—does require rigour.

So, anyway, amendments 3 and 4 ensure that no amalgamations or other structural changes are valid unless the RSL concerned has first carried out a consultation in which all of the society's tenants have been invited to participate. These amendments also provide the Welsh Minister, by regulations, to set out the methods and the time frame to be applied to any consultation. And these regulations may not be made unless a draft of the instrument has been laid before and approved by the National Assembly for Wales, so that we have some control and influence on the nature of those regulations.

Now, in comparison to the Bill in Scotland on this same issue, these amendments are more relaxed and less restrictive in terms of tenant participation. I did not want to propose a veto for tenants, as, in effect, in the circumstances, can exist in Scotland. Because there are issues about managing potentially—even if they're rare—very difficult circumstances, and the Minister has referred to some of them as if they would apply to my amendments, although I do strongly repudiate that.

So, in sections 6 and 7 of the Scottish Bill, an RSL has to consult tenants and to obtain their agreement to the restructuring in cases where the restructuring would lead to a change of landlord for the tenant or the landlord becoming a subsidiary of another body. This was already part of the Scottish Bill, as introduced, so it's clear to everyone, I suppose, who is having to do this, as well as the situation in England, that the approach to reclassification of housing associations has to be undertaken with the rights and protections of the tenant fully considered, and, obviously, I'm seeking to provide a fuller form of protection to tenants, though not as restrictive as the Scottish case. So, I think that here in Wales, at this amendment stage, the least we should do is to guarantee that tenants have the opportunity to participate and engage, when such a huge change is going on around them in terms of the constitutional structure of RSLs. As I said in the Stage 1 debate, what is more powerful than putting a statement like that on the face of primary legislation? As I said, we have had some advance, though not as full as I would have wanted.

When we took evidence, and the Minister's already referred to this, we did have I think strong support from TPAS Cymru, the tenant organisation. I think that was very welcome in developing the thoughts of the sub-committee that looked at this and provided their report. I've not heard anything that dissuades me that those concerns were, in any way, inappropriate, and TPAS Cymru did frame their views by emphasising that the actual legislation was very important and, whatever happened, it shouldn't prevent the legislation reaching the statute book. Again, that's the view that we all have.

So, it is all a matter of balance, and I think that we've struck the right one. We need greater emphasis on the inclusion of tenants in the big decisions that happen around them. Effectively, these are their lives and homes, and I don't think it's too extravagant to expect RSLs at least to invite them to offer their views in a consultation.

For group 1, now, the Government, as I said, has recognised the issue, and has come up with its proposals, but I've already made it quite clear that I think the Government's response is a lot vaguer than mine. I think clarity in legislation is to be welcomed. So, I would say, whilst I welcome what the Government has done, I still think their approach is tepid and I don't think that's good enough in terms of protecting tenants. The wording of the Government's amendment dictates that

'a society must also provide the Welsh Ministers with a statement about the consultation carried out by the society with its tenants before passing the resolution to which the notification relates.'

Again, I don't think that's as strong as we should be aiming for. It is a little ambiguous and, while not perfunctory, I do feel that it does not have the rigour of amendments 3 and 4, which I'm moving today, to give Welsh Ministers the flexibility to determine the method and the time frame of the consultation via regulations over which we would have some say. But that would be a much, much firmer position.

So, if I can just turn to the point, again, that the Minister referred to—that an amendment is down in the name of Nick Ramsay, namely amendment 1A, and I've tabled this as a sort of insurance policy, I suppose, in the case of the Government's amendment 1 passing. It is our opinion that the consultation exclusion for circumstances set out in point (2B) that the Government is pursuing, and that's namely an event of a conversion from a society into a company, usually under financial duress—we believe that exclusion is not warranted.

Now, we've heard a lot from the Minister that there are cases when the financial skids are on and you've got to move quickly, otherwise the whole thing collapses. Well, let me just say that action in this area is still regulated by the Co-operative and Community Benefit Societies Act 2014, and for a society to be able to convert into a company, there is a requirement, which cannot be avoided, on the society to at first undertake a ballot of the society's membership. This ballot has some stringent conditions attached to it, such as the requirement for there to be 50 per cent of the membership present and for at least 75 per cent of those to vote for conversion. Now, in comparison to other situations where membership ballots are required, I'm sure you would agree that those conditions are highly stringent. Whilst the Welsh Government will argue that conversion isn't a significant change, I'd simply disagree. The Government's view is that it wouldn't really be of concern to them because their landlord doesn't change, it's just the nature of the constitution of the landlord. Well, you know, the rules behind the procedure for the co-op Act are highly significant and rigorous. If that change requires that level of endorsement by the members, why do the tenants get no say whatsoever? During the time that the stipulations of the co-operative Act have to be met, there's plenty of time for a consultation to take place. I think it may be reasonable that that is shaped by the circumstances, and so the Government could set out how that should then apply.

So, I think we should not be fooled that sometimes, even under financial duress, very significant changes could occur to the structure of what was a housing association. And under those circumstances of deregulation and change, a high level of protection of tenants should be required, and at least some consultation. So, should the Assembly decide to approve the Government's amendment 1 over our amendments 3 and 4, which offer the proper gold-plated protection—should you approve amendment 1, I hope that you will then approve our amendment 1A, which at least ensures that the Government's approach, limited as it is, is not disapplied to those cases of change that relate to a financial situation requiring a society to become a company. So, I so move.

Plaid Cymru will be supporting this legislation, and we are minded to support all the amendments in this group at this current stage, but I'd like to take this opportunity to explain our approach to this legislation, as David Melding has also done. We've supported the principle of this legislation, in a pragmatic way, ever since it became clear that the ONS decision to reclassify social landlords as public sector organisations would have significant impacts on the ability of the sector to finance new housing. On that premise, I should say, we are supporting it. But equally, it has become clear that there could be unforeseen consequences from this legislation that should concern us all, particularly over tenant participation. We've been consistent on this throughout, and this has been reflected in our amendments alongside David Melding at Stage 2, and in our narrative on this particular Bill. There are several examples where tenant participation has not been up to standard, even within the existing laws, let alone with what might happen following this legislation—for example, the lack of consultation that happened when Wales and West Housing took over Tai Cantref. And we've seen something similar is happening with regard to the recategorisation of further education colleges, where, for example, Denbigh college is closing with no consultation and massive disruption to the students—something only possible because of recategorisation.

Would the Member give way?

Yes, sure.

Just on that point—and if I can declare an interest, as a member of Wales and West—to the fact that Wales and West took over Tai Cantref, in that regard, there was no consultation at all with the tenants, as you say, under the current legislation. It created a great deal of unhappiness, which is still there, with people unsure as to whether this new landlord is actually answerable to them. So, it changes the culture of the relationship between tenants and the landlord if you don't have full participation, and that's why I think it's really important to examine these amendments to see where we can improve this Bill in that regard.

Yes, and I think that's exactly why we have raised concerns at each stage, and I think that's true to say of our concerns for the future, because if it's happening now, how can we put checks and balances in place via this Bill to make sure it doesn't happen in future? So, we will be listening carefully to the Government's response on these amendments, but we are currently minded to also support the amendments tabled by Nick Ramsay and David Melding, to help strengthen the protections available for tenants when social landlords go through major changes. And I've been listening to the debate already today, and I think, actually, have become stronger in my view that we need to put these amendments forward, because these are fundamental reasons, actually, as to how changes happen. If there are financial crises, or if an organisation does have to go into receivership, there's more of a reason, actually, to consult, because it may have a detrimental effect on the tenants and how they may live their lives. So, I think that's something that we need to consider further at this stage and at further stages of the Bill. We've got to recognise also that social landlords have a unique and different relationship with their tenants to that of other landlords, and it's entirely appropriate that tenants are consulted and, crucially, listened to.

There is a risk that this Bill may effectively lead to social landlords becoming more like private enterprises—and the deregulation point has been made already—and it may lead to housing associations diversifying how they build their stock, and we really do need to keep a watching brief on that. This is why I think it's important that we have protections in this Bill. I appreciate that there is a piece of work ongoing about tenant regulations and their participation by an independent body, but I think the Government would do well to understand that, when I visited—and I'm sure other Assembly Members have visited—housing associations and talked to their tenants, they want more engagement and more power, and not less engagement and less power. If we can do anything within any of our capacity with regard to legislation to enhance that, then I don't see that as being a negative.

We, in UKIP, were happy to support the general principles of this Bill and, as I said in the earlier debate here, we did so because we need to protect the provision of affordable housing in Wales. This Bill will have the effect of reversing the reclassification of housing associations as public bodies, with the resulting impact that that would have on public sector borrowing. So, it's clearly in the public interest, and for that reason the Bill has cross-party support.

That said, we are concerned that the rights of housing association tenants are protected. We believe that the amendments tabled by the Conservatives today improve the Bill. They provide an opportunity for tenants to engage and to have their voices heard when major changes are planned to their registered social landlord. In light of our recent debates here in this Chamber relating to freeholder rights and leasehold reforms, both of which UKIP supported, we see these amendments as logical and as a constructive attempt to enhance this legislation. For that reason, UKIP will be supporting all of the Conservatives' amendments today.

In terms of the Government amendment—amendment 1—we feel that it's somewhat restrictive, and that it could deny tenants a voice in the event that their housing association were to change hands. I know that, in Committee Stage, the Minister said that:

'in these situations, appropriate communication with the tenants features as part of the regulatory guidance, and it will be subject to regulatory oversight.'

We take her point on board, but on balance we would rather the rights of tenants in those circumstances were put into the Bill rather than into guidance. So, we won't be supporting the Government's amendment 1 today. Diolch yn fawr.

I'm pleased to move amendment 1A—David Melding's insurance policy, as he put it. We would rather, in the Welsh Conservatives, that the other amendments in the group be passed instead, but as David Melding said in his comments, should that not happen, then we do believe that there is a case to at least make sure that residents are consulted specifically in relation to that change between a registered society and a company.

I listened closely to the Minister's comments in opening, and you used the phrase, 'We want to put tenants at the heart of this process'—something that I actually wrote down myself, on my own notes here, before you'd said it. I think we would all agree that that is the aim of this legislation. We do believe here that, as things stand at the moment, if you don't accept our amendments, then the system will not be as robust as it could be. As David Melding said, if you put this on the face of the Bill, then that gives an assuredness to tenants of associations that they will be fully consulted when and as they need to be.

As Simon Thomas said, in his comments, there has been bad feeling hitherto because tenants don't feel that they've always been consulted when there has been a cultural change within the organisation that is responsible for providing them with their home. That hasn't been good enough in the past. We want to move away from that, so I would urge Members, first of all, to support the other amendments in this group, but failing that, to support this amendment.

I call on the Minister to reply to the debate. Rebecca Evans.

Thank you very much. I'd like to begin by recognising and welcoming the fact that all parties have recognised how important this Bill is, and how important it is that we achieve the reclassification of RSLs. It is, indeed, a serious Bill that deserves serious consideration and serious scrutiny, as David Melding quite rightly pointed out.

I would say that we haven't heard the last, certainly, of tenants' rights and participation. It's something I've taken a personal keen interest in, and just last week I met with the chair of the regulatory board for Wales to discuss the role that they might play, and particularly the piece of work that they're doing in terms of a strong and close look at tenants' rights and tenants' participation as part of one of their thematic reviews. I know that they'll be keen to hear from Members in terms of their views and experiences there as well.

Whilst RSLs will be private entities, it doesn't mean that strong, effective regulation has gone away. It's quite the opposite. We've taken really strong steps to revise and strengthen the approach to regulation in anticipation of the ONS reclassification in collaboration with key stakeholders including tenants. We don't just want to have tenants at the heart of regulation—actually, they already are at the heart of regulation thanks to our new regulatory approach, which has been recently introduced. 

Some issues were raised regarding conversions from societies to companies. So, an RSL that is a registered society can only convert to a new company as opposed to a pre-existing company, and therefore any new company created for a conversion is deemed to be an RSL. That brings with it all of the safeguards that that affords in terms of its core purpose and business. That core purpose and business for RSLs, including those that are companies, as I said in my introductory remarks, mean that they must be not-for-profit, and their purposes must include the provision, construction, improvement or management of social housing. Diversification is monitored closely, as is the establishment of non-registered subsidiaries, and in fact progressing the core purpose of the business is central to performance standard 1 and subject to that ongoing regulatory oversight.

I would close my remarks by restating that my amendment sets out provisions placing a duty on RSLs to consult with tenants. It's a duty that applies where there is a fundamental change that affects tenants by way of a change of landlord in response to the concerns raised by Gareth Bennett, but it is not a duty to consult where an RSL is in jeopardy and needs to take those urgent steps to protect its tenants. Again, I reiterate that this doesn't mean RSLs can leave tenants not knowing what's happening if their landlord is facing difficult decisions. Effective communication in any event is a regulatory expectation and it will be subject to regulatory oversight.

Turning to the duty itself, the requirement on RSLs to provide a statement about the consultation they have undertaken, effectively forces them to consult, and if they do not consult, they will be unable to provide the Welsh Ministers with the statement required, which then in turn would put them at risk of an adverse regulatory judgment, with the potentially very serious consequences that brings. So, therefore, Llywydd, I ask Members to support amendment 1 and to reject amendments 1A, 3 and 4. Diolch. 

The lead amendment in group 1 is amendment 1. As an amendment to amendment 1, amendment 1A will be disposed of first. Nick Ramsay, amendment 1A.

Amendment 1A (Nick Ramsay) moved.

Formally.

Thank you. The question is that amendment 1A be agreed to. Does any Member object? [Objection.] We proceed therefore to an electronic vote. Open the vote. Close the vote. In favour 23, no abstentions, 30 against, therefore amendment 1A is not agreed.

Amendment 1A: For: 23, Against: 30, Abstain: 0

Amendment has been rejected

The question is that amendment 1 be agreed to. Does any Member object? [Objection.] We therefore proceed to an electronic vote on amendment 1. Open the vote. Close the vote. In favour 37, no abstentions, 16 against, therefore amendment 1 is agreed.

Amendment 1: For: 37, Against: 16, Abstain: 0

Amendment has been agreed

David Melding, amendment 3.

Amendment 3 (David Melding) moved.

I move. 

The question is that amendment 3 be agreed to. Does any Member object? [Objection.] We therefore proceed to an electronic vote. Open the vote. Close the vote. In favour 23, no abstentions, 30 against, therefore amendment 3 is not agreed.

Amendment 3: For: 23, Against: 30, Abstain: 0

Amendment has been rejected

David Melding, amendment 4.

Amendment 4 (David Melding) moved.

 I move.

The question is that amendment 4 be agreed. Does any Member object?[Objection.] We therefore proceed to an electronic vote. Open the vote. Close the vote. In favour 23, no abstentions, 30 against. Therefore, amendment 4 is not agreed.

Amendment 4: For: 23, Against: 30, Abstain: 0

Amendment has been rejected