Prescott paves way for housing bill

John Prescott's choice of the Audit Commission as the sector's single inspector will require primary legislation, raising hopes of a housing bill and fears of excessive bureaucracy.

The move, announced by John Prescott at the Labour party conference in Blackpool this week, will effectively see the commission as a subcontractor of the Housing Corporation.

To counter concerns of possible duplication the National Housing Federation is to demand a "stakeholder group" consisting of the sector's key players to oversee the new arrangement.

Jim Coulter, chief executive of the National Housing Federation, added: "We would like the government scrutiny body – along with the corporation, the Office of the Deputy Prime Minister and the commission – to make sure that there's no risk of drifting from the principle of regulation and investment being one process – inspection informs that process and doesn't compete with it."

The main implications of Prescott's decision include:

• The corporation will remain the exclusive regulator for housing associations, despite concerns over split responsibilities. This is regarded as essential to keep lenders' confidence and maintain their willingness to back the sector.
  
• The corporation is expected to continue its published programme of 100 inspections this year as primary legislation is needed to permit the Audit Commission to carry out inspections of housing associations.
  
• Until this legislation is completed, an agency agreement will be used between the two organisations. The corporation said it would like to see a graded range of regulatory powers included in any new housing bill.
  
• From next year, the commission will report its findings to the corporation as independent inspector. The corporation will then draw up any action plan necessary to implement it.
  
• The Housing Corporation will lose about two dozen staff, who will transfer to the commission when it takes over in April 2003.

Lots of knowledge is transferable across the housing world and we want to see that happen

Roy Irwin, chief housing inspector, Audit Commission

General reaction to the news that Prescott is opting for the more experienced organisation over the Housing Corporation was mixed. Many registered social landlords are concerned about the possible introduction of star ratings, a system they see as unsuitable for grading their work. But local authorities will argue the commission is more suited to the task of wide-ranging inspection.

However, Audit Commission chief housing inspector Roy Irwin has pledged to consult users and tenants on the shape of the new inspector, including whether all organisations should be subject to star ratings. It will be possible to retain differences in the systems, he said. Irwin said the commission has experience of split regulation and inspection, and will ensure its protocols avoid confusion.

He added: "Lots of knowledge is transferable across the housing world and we want to help that happen. The important issue it to achieve improved services. That is the destination and the route is less important."