Insolvency Act 1986 Part A1 Moratorium (Eligibility of Private Registered Providers) Regulations 2020

Motion to Approve

Moved by

That the Regulations laid before the House on 29 June be approved.

My Lords, the purpose of these regulations is to disapply the moratorium powers under the Corporate Insolvency and Governance Act 2020 for private registered providers. A separate housing moratorium of 28 days already exists to support them should they get into financial difficulty.

The Corporate Insolvency and Governance Act 2020 introduced a range of measures, both permanent and temporary, to assist businesses. The Act gives companies the flexibility and breathing space they need to continue trading during this difficult time. The regulations being considered today relate to the moratorium provisions contained in that Act. The moratorium measure gives struggling companies a breathing space in which to explore their rescue and restructuring options, free from creditor action. During the moratorium, no legal action can be taken against a company without leave of the court. The measure ensures that companies that are struggling are given the opportunity to survive.

Private registered providers of social housing already have special arrangements for dealing with financial difficulties. These arrangements are set out in the Housing and Regeneration Act 2008 and the Housing and Planning Act 2016. This regime already includes a 28-day moratorium to allow a provider in difficulty, working with the Regulator of Social Housing, to resolve its problems. The arrangements we already have in place, combined with the economic regulation of the sector by the Regulator of Social Housing, make this new moratorium unnecessary.

Under powers within the Corporate Insolvency and Governance Act 2020, these regulations disapply the moratorium powers within that Act to private registered providers. This averts the potential of having two routes that a private registered provider in financial difficulty could follow. This could lead to having two moratoria operating alongside each other, which could be conflicting. This could undermine the ability of the Regulator of Social Housing to support a private registered provider facing financial difficulty, thereby limiting its ability to protect tenants. We seek to avoid this situation.

The housing association sector benefits from a record of no loss on default, meaning that no lender has lost money because of a private registered provider failure. This is important, because it allows private registered providers to borrow cheaply to build the homes we need. Ultimately, that strong financial performance protects tenants, because their homes are not put at risk.

While financial problems are rare, the housing association sector has changed significantly in recent years. The level of private finance has grown from £48 billion in 2012 to over £80 billion in 2020. That is why it is vital that we maintain a clear and robust regime to support a private registered provider facing financial difficulties.