HC Deb 21 July 1975 vol 896 cc261-8

2.13 a.m.

Mr. John Hunt (Ravensbourne)

After the procedural fun and games in which we have been engaged, it is with much pleasure that I turn to a matter of vital interest and importance not only to many of my constituents but also to many ratepayers in the neighbouring London borough of Lewisham. I refer to the acquisition by Lewisham Council of a newly built estate of 28 houses in Coniston Road in my constituency and the Government's subsidy approval for this deal.

The history of this affair began for me early in November of last year when I first heard of Lewisham's intentions. I wrote at once to the Minister for Housing and Construction urging that the necessary loan and subsidy consents should be withheld in view of the financial restrictions being imposed upon local authorities at that time which since then have been intensified still further. In his reply to me dated 5th December 1974 the then Under-Secretary of State said that local authorities had been told that they could acquire new dwellings from developers provided that they were available in the right place to meet urgent housing needs and were of an appropriate standard and price. The letter concluded: I cannot say whether approval for subsidy purposes will be given to the scheme you mention in the absence of any application or detailed information from Lewisham. It depends on whether they are of the right standard and represent good value for money. I shall return to those two important criteria.

In the meantime the three Bromley councillors representing the Martins Hill and Town ward, in which these properties are situated, presented a petition through me to the Minister signed by 124 residents living in the Oaklands Road and Spencer Road areas of Bromley adjoining the properties being acquired by Lewisham. The petition referred to the excessive price of acquisition, then rumoured to be £500,000, and also to the fact that the development was originally planned for the private sector and, as it put it, had been "architectured" to conform to local environmental conditions. This is not an aspect of the matter which I have raised in my own representations. I have concentrated solely on the public expenditure implications.

There is understandable apprehension in Bromley about the intentions of Lewisham council with regard to the tenancies of these 28 properties. They were built as three-bedroomed houses but I understand that Lewisham council has since converted a study into a fourth bedroom in each house, and this makes them substantially larger than the average council property. I therefore warn Lewisham Council and the Minister that any attempt to use this accommodation as a means of exporting Lewisham's problem families into Bromley will be bitterly resented and strongly resisted.

Returning to this saga, I report that, having continued to press the Department of the Environment on the mater, I was finally told in a Written Answer on 7th May this year that approval for the first purchase of the properties for subsidy purposes was given on 24th April. Subsequently, on 21st May, I asked for full details of the subsidy arrangements, including the capital cost of the acquisitions, and was referred by the Minister to Lewisham Council. I therefore wrote at once to the Town Clerk of Lewisham, who informed me in a letter dated 4th June that it was the council's policy to treat as confidential financial information relating to individual purchases of property. This was said to be partly because vendors might not wish the prices to be made public and partly because disclosure might compromise future council negotiations for similar property. This remarkable coyness on the part of Lewisham Council showed scant concern for the interests either of its ratepayers or of the taxpayers, from whom money was being taken and used for these highly expensive acquisitions, aided and abetted by the Department of the Environment.

The Town Clerk's letter to me went on: I have informed Councillor Pepper, Chairman of the Housing Committee, of your request and he has asked if you would let him know your purpose in seeking this information. He would, of course, have no objection to it being supplied to you on the basis that you would maintain its confidentiality. To that I replied as follows: I was rather surprised to learn that you did not feel able to supply the information which I requested, particularly in view of the fact that the impression which I gained from the ministerial reply was that the details I required would be forthcoming from your Council. In response to Councillor Pepper's enquiry, the purpose of my seeking this information is to expose the inconsistency of a Government which preaches economy in public expenditure while sanctioning a deal of this kind. I am, frankly, not interested in receiving the information on a confidential basis, and I hope that the matter can be reconsidered. If you still feel unable to supply the details I have requested, I shall have to go back to the Minister again. In the meantime, in view of the widespread interest in Bromley in this purchase by your Authority, I am releasing to the press a statement regarding our correspondence. That seemed to do the trick, and I am happy to say that it produced a reply by return of post telling me that the matter had been reconsidered and that the information would now be supplied.

When it came the information was to the effect that the total cost of acquisition of the 28 houses was estimated at £576,720. I have been informed by Councillor Eames, who is leader of the opposition on Lewisham Council, that, in addition to this, the rate fund subsidy to the scheme borne by Lewisham's hard-pressed and long-suffering ratepayers works out at £10 per week per house while the Exchequer subsidy works out at £20 per week per house. Perhaps the Minister in reply would be good enough to confirm whether those figures are correct.

I also understand that Lewisham Council has assessed the reasonable rents of these properties at between £10.55 and £ 10.85 per week, excluding rates. These figures illustrated the degree of financial madness involved in municipalisation schemes of this kind, for the estimate of £576,720 for 28 houses works out at more than £20,000 apiece.

Bearing in mind that such expenditure does not add a single extra unit of housing accommodation to the total stock in Greater London, how can this acquisition possibly be justified, and how can it possibly meet the Government's criteria, laid down in a letter to me, of "good value for money"? I regard it as an outrageous waste of public funds. One is bound to ask what is the point of the Secretary of State telling local councils that the party is over when in the very next breath he sanctions a spending spree of this kind by Lewisham Council within my constituency.

There has been an interesting postcript to the affair in the form of Circular No. 64/75 issued to local authorities by the Department of the Environment on 9th June. This circular sets out significant changes in the permitted categories for municipalisation. I should be grateful if the Minister would confirm tonight that the Coniston Road deal would not now qualify under the terms of the latest circular. If that is so, I hope that we can equally have a firm assurance from the Minister tonight that Lewisham Council will never again be allowed to infiltrate into my borough in this way acquiring properties which were designed for the private market and for which there was no lack of private purchasers. If that assurance is forthcoming, as I hope it will be, all my efforts in this affair will not have been in vain and my constituents, as well as Lewisham ratepayers, will be greatly relieved and reassured.

2.24 a.m.

The Under-Secretary of State for the Environment (Mr. Ernest Armstrong)

I must say to the hon. Member for Ravensbourne (Mr. Hunt) that I find it difficult to understand why so much heat has been generated by what in its context is, in fact, an unexceptional transaction.

The Coniston Road Estate, which lies just within Bromley's border with Lewisham, consists of 28 6-person town houses. The total price paid was £551,241, of which £175,000 represented the cost of the land.

The hon. Gentleman seems to be upset about three things, with which I shall deal. The first is that Lewisham Council has purchased an estate within Bromley for letting to council tenants, the second is that the cost is too high, and the third is that this kind of property is unsuitable for people who have to look to a local authority to provide a roof over their heads. I should like to deal with these points in that order, but before doing so I think that an explanation of the background to the transaction would be helpful.

In April last year the Department issued a circular, No. 70/74, entitled "Local Authority Housing Programmes". This circular recommended ways to secure an immediate increase in council housing programmes which had suffered a serious decline over recent years. It was admitted that some of the methods suggested would necessarily take time. But one way in which an immediate increase could be achieved was through the acquisition of new houses from developers. It was known that, because of the then current mortgage famine, developers were having difficulty in selling their houses. As a result, a substantial number of dwellings were standing empty at a time when, particularly in places such as London, homelessness was on the increase and waiting lists were rapidly rising. It was, therefore, only common sense to bring together purchasers badly in need of a commodity—housing is still the greatest social problem this nation faces—and those with that commodity who were only too anxious to sell.

The only snags were that many privately built houses are not up to Parker Morris standards on which approval of council built housing for subsidy purposes normally depends, and that dwellings which had been designed to attract buyers might be outside the price range of ordinary council housing. It was also important to ensure that only dwellings in places where there was real need would be bought.

Accordingly,—the hon. Gentleman will be aware of this—Parker Morris conditions were temporarily waived in the circular, provided the schemes complied with the standards of the National House Building Council. It was made clear that the dwellings should be available in the right places to meet urgent—and I mean urgent—housing needs. Prices had to be those recommended by the district valuer, and the dwellings had to be of an appropriate standard. It was specifically stated that dwellings in the upper price bracket should not be acquired.

The circular also pointed out that purchase of developers' schemes was only an emergency measure. That, in part, is an answer to the particular question the hon. Gentleman raised—although I shall read very carefully what he had to say and write to him if any further explanation is necessary.

Although the latest circular on the subject, No. 24/75, mentions the possibility of purchasing dwellings already under construction by private developers in areas where there is a local shortage of building land, the acquisition of completed schemes by local authorities does not now have the urgency that it had when this transaction took place.

I turn now to the question whether a council should build or acquire property in the area of another authority. Under the Housing Act 1957, the Act which lays down the general powers and duties of local authorities for the provision of housing accommodation to meet local needs, the area in which a local authority could acquire land—which includes dwellings—is not limited. The only exceptions originally were the London metropolitan borough councils, which could acquire land outside their area only with the agreement of the then Minister of Housing and Local Government. The London Government Act 1963 changed this to the extent that a London borough council is prohibited from exercising its powers without ministerial consent outside the Greater London area.

I think that the House will agree that in cases where a local authority has certain rights it would be wrong to prevent it from exercising them by administrative action without very good grounds indeed. Accordingly, it is not the practice of the Department to withhold approval of a scheme merely because it is outside the area of the London borough which is building or acquiring it. However, in my opinion—and I am sure that most boroughs generally agree with this—poaching in another's area should not be encouraged because of the bad feelings it arouses and because prices can be forced up. Accordingly, the Department normally asks any London borough proposing to buy land or a developer's scheme outside its own area whether the local council is also interested in acquiring it. If the answer is "Yes", the borough is usually told that priority must be given to the local council.

In the case of the Coniston Road scheme the Department was assured that Bromley was not interested in purchasing the estate and that the GLC, to which it had also been offered, had withdrawn from the field.

Mr. Hunt

The reason Bromley was not interested in purchasing was that the council was more aware of the needs of the ratepayers of the area and was not prepared to squander money on this scale.

Mr. Armstrong

That does not contradict what I have said. There is a balance between families and public expenditure, and this is something we could argue about for some time.

It is of great concern to the Government that the cost of providing houses, in both the public and the private sectors, has become so high. Indeed, steps have already been taken to bring about economies without cutting down the supply of new housing. However, the kind of measures which have been recommended cannot be effected overnight and are certainly impracticable where the dwellings have already been erected.

What the Department had to decide in its survey of Coniston Road, after receiving a certificate from the district valuer that the cost was not in excess of the current market value, was whether the dwellings compared roughly with equivalent council dwellings in standards and costs and that the cost of the land was not too high. In the first exercise it constructed a yardstick for a local authority scheme of this kind, including appropriate allowances, and found that the building costs compared favourably with those prevailing at the time for council dwellings of this size in London, taking into account slightly different standards. The land costs were considered high for an outer London borough but not unduly so, and it would have been unreasonable to refuse approval to the scheme on this ground. I therefore conclude that the hon. Member's criticism on grounds of cost is completely unjustified.

I referred just now to different standards. The dwellings do not quite come up to Parker Morris standards since the total floor area is slightly deficient, and, as they were designed for the private market, they contain such higher standards as neo-Georgian details to elevations and a few frills like a bay window, a window seat and an artificial vent to some of the bathrooms. These extras are not subsidised.

To suggest that these dwellings are unsuitable for council tenants is, of course, nonsense. The design and quality of council housing stand up very well with those built for sale. If the hon. Gentleman does not believe me, I invite him to look at the award winning schemes, details of which are published by the Department. He may also like to know that town houses in a more modern idiom are not an uncommon feature in council schemes these days.

I understand that there is concern in some quarters that these houses, because of their size, will be occupied by problem families. The hon. Gentleman referred to the fears of his constituents. It is not for me to interfere in the way Lewisham manages its properties. Parliament has laid the duty for this on the shoulders of local authorities. But the Chairman of Lewisham's Housing Committee has been reported as saying that the borough tries to match families with the properties they go into for the purpose of avoiding problems. There is, of course, some element of risk in having too many families in one scheme. But good behaviour is not a quality confined only to small families or, indeed, to one class of society.

As I said at the beginning of my remarks I cannot understand the fuss made about the carrying through of this project. Here on one side we had a builder with empty dwellings on his hands through no fault of his own. He was willing to sell them at a reasonable price. He had no expectation of assistance from Bromley. On the other hand there was Lewisham just a stone's throw away from the scheme, a borough with all the usual problems of inner London boroughs—very little land for new building, a long waiting list of people in desperate need of homes and growing homelessness—and only too anxious to lay its hands on empty properties. If Lewisham had not been permitted to buy these houses, what would have happened? The dwellings themselves, or at least some of them, might have been left empty and the builder might have had to hold stock at a time when many builders were running into liquidity probelms.

Therefore, having listened carefully to the matter, I am satisfied that I have no reason for criticising Lewisham for taking the action that it did in this case.

Question put and agreed to.

Adjourned accordingly at twenty-five minutes to Three o'clock am.