HC Deb 15 December 1980 vol 996 cc23-31
The Secretary of State for the Environment (Mr. Michael Heseltine)

With permission, Mr. Speaker, I wish to make a statement.

I wish to inform the House of a number of housing decisions. My right hon. Friend the Secretary of State for Wales will be making a statement tomorrow. Some of the issues that I shall refer to are relevant to the recent report of the Select Committee, a response to which the Government are publishing today.

Local authorities need to know now where they stand on housing subsidies, on capital allocations for next year and on the future of the moratorium affecting this year's housing capital expenditure.

As regards public expenditure in 1981–82, my right hon. and learned Friend the Chancellor of the Exchequer referred in his statement on 24 November to a reduction of £158 million in the Department of the Environment's programmes. I intend to provide £69 million of this from housing. I wish to see current expenditure reduced rather than capital, because I recognise the desirability of investment and the need where possible to help the construction industry. Therefore, £64 million of the housing savings will fall on current expenditure and only £5 million will come from capital.

Regarding housing subsidies for 1981–82, the Housing Act 1980 leaves local authorities with the responsibility for determining their own rents, but it introduces a new subsidy system from 1 April 1981 which requires me to determine the annual amount to be taken into account as the local contribution in calculating subsidy entitlement.

Following my consultation with the local authority associations, I have now decided to set the increase in the local contribution at £2.95 per dwelling per week for 1981–82. In addition, local authorities have to meet housing costs which fall outside the subsidy system and on average these may require rent income of a further 30p per dwelling. Since local authority rents currently average no more than 6.5 per cent. of adult male earnings, I do not think that the rises that I have indicated are unreasonable. Moreover, 45 per cent. of council tenants are protected from the full impact of rent increases through supplementary benefits or rent rebates. Indeed, an estimated well over 1 million tenants effectively will face no increase in rent at all. It is also estimated that nearly one-quarter of households living in council houses have household incomes in excess of £8,000 a year.

On capital account, I have been able to provide £2,810 million at estimated 1981–82 outturn prices for gross capital expenditure on housing. I shall give the House the breakdown of this figure. The new towns will receive £118 million. The Housing Corporation will receive £491 million at outturn prices for distribution to housing associations; this is the same in real terms as this year.

I am providing £2,201 million at outturn prices for gross capital expenditure on housing by local authorities, including an allocation of £27 million for the homes insulation scheme. This is a reduction of 15.1 per cent. on this year's provision.

From 1 April, under the new system of capital expenditure control, local authorities can undertake additional spend on the basis of their capital receipts. I estimate that in 1981–82 they will be able to undertake £413 million of spending in addition to their allocations. Two million pounds must be allowed for the administrative costs of the homes insulation scheme. The amount distributed as HIPs allocations will therefore be £1,786 million.

I have discussed the method of distributing HIPs with the local authority associations and today I am informing local authorities of their individual allocations for 1981–82. Copies of the letter to authorities and of the schedule of allocations excluding their use of capital receipts are being placed in the Library.

A number of adjustments will be necessary in the light of any overspending or underspending by authorities this year. As I informed the House on 25 November, those authorities which underspend because of the moratorium will receive additional allocations and those which overspend will have their overspending deducted. A net total of £55 million of tolerance was outside the cash limit for 1980–81 and will therefore have to be excluded from these adjustments. My Department will advise local authorities shortly how these adjustments will be made.

I should now like to deal with the moratorium itself. Following my statement to the House on 25 November, I invited local authorities to give me their latest estimates of their commitments for this year. Their figures are about the same as when I last reported to the House and show that, on their forecasts, the cash limit is likely to be taken up. The Government have therefore no option but to continue the moratorium generally, but, having regard to the size of the local authority programme, it is, in my view, possible now to permit some small relaxation without jeopardising the cash limit. I have therefore decided to allow just the underspending authorities to approve discretionary grants and loans for home improvement. Every improvement grant approved will attract an additional sum of private finance, which will be of further help to the construction industry.

I am also proposing to lift the ban on the letting of new contracts before the end of the financial year where no additional expenditure will take place until after 1 April 1981. I shall keep the situation under review to see whether further relaxations of the moratorium are possible.

Mr. Gerald Kaufman (Manchester, Ardwick)

This is one of the most disgraceful and contemptible statements about housing ever made to the House—contemptible in its dishonesty and disgraceful in its content.

Is the right hon. Gentleman aware that the moratorium on new house building and council improvement schemes is to continue indefinitely despite his own admission in the debate on 25 November that his investigations revealed that at worst there might be a net overspend of £7 million?' Is he aware that the building employers told me last week of the devastating effect that his moratorium is having on the industry, where he has already brought about unemployment of 274,000? His statement will cause even more unemployment.

Is the right hon. Gentleman aware that what he has announced is a rent increase of £3.25 a week? This makes his fraudulent consultation exercise, which caused such anger in the House a month ago, a cynical farce. The increase turns out to be even higher than the £2.50 to £3 range put forward in his consultation document. It amounts to an additional tax of £875 million on 5.5 million tenants whose average income is 24 per cent. below the national average.

Is the right hon. Gentleman aware that he has announced a housing investment programme allocation in a manner that is once again deliberately calculated to deceive the House and the country? In February, he cooked his figures to purport to show that the cut was 21 per cent. when the cut for local authorities was, in fact, 33 per cent. Today, he has presented an even more indigestible dog's breakfast by adding notional capital receipts to his actual HIP allocation and coming up with what he pretends is a 15 per cent. cut. Is he aware that his actual allocation of £1,786 million is a scandalous reduction of 29 per cent. on his miserable figure of last year, which at present is producing new starts at the rate of only 22,800?

The right hon. Gentleman's fiddling of the figures is yet another of his scandalous attempts to deceive the House—an attempt in which he has once more failed. Even worse, this massive rent increase is an attack on tenants and those in need of a home, together with the deliberate destruction of the nation's housing programme. The Secretary of State has affronted the House. He has demolished the housing programme. If he had any decency, he would resign.

Mr. Heseltine

I hope that the House will not misunderstand me if, first, I welcome the right hon. Gentleman. We have been friends since Oxford days. I hope very much that the friendship will survive the onslaught that the House has just heard. I should like, in that spirit, to help the right hon. Gentleman with some of the figures.

When I gave the House the figures for the moratorium, I explained that, at that time, if the moratorium was allowed to remain in force, there would be a potential overspend of £7 million. I made clear that 262 authorities had an underspend at that time of £124 million. If, therefore, I had released the moratorium, the £124 million would have been added to the £7 million, giving a potential overspend of £131 million. On that basis, I was left no choice but to maintain the moratorium.

With regard to rent increases, the whole House will know that the previous Government constantly stated that there was a need to keep rent increases broadly in line with earnings but failed absolutely to live up to the responsibilities of their own statement. The result was that local authorities of all parties slashed the new house building programme and the level of maintenance of existing houses seriously declined, with all the consequences of such a decline.

As to the suggestion that I have set out to mislead the House, we have discussed time and again—the right hon. Gentleman understands this as much as I—the issue of local authority starts and the programme that local authorities administer. I have given the figures to the House many times. In 1976, the number of starts in Great Britain for public sector house building was 170,000. It was down by 1977 to 132,000, by 1978 to 107,000 and by 1979 to 80,000. If that does not add up to a cut, I do not know what does.

The difficulty is that the right hon. Gentleman is now trying to rewrite history. Housing under his Administration was significantly reduced in the public sector. The right hon. Gentleman knows that. The facts are clear. I do not see what purpose is served by the Opposition constantly coming to the House and trying to pretend otherwise.

Mr. Kaufman

I am grateful to the right hon. Gentleman for his congratulations and even more grateful that he proffered them to me after the Shadow Cabinet elections.

The right hon. Gentleman tries to have it both ways on the rent increases under the Labour Government. Is he aware that I for my part am proud that in the last two years of the Labour Government rent increases amounted to only 7 per cent.? I only wish that the right hon. Gentleman, instead of imposing this enormous £875 million tax on local authority tenants, would keep to the kind of rent increases that occurred under the Labour Government. Since he has been so free with his information about the number of local authority housing starts, and since he undoubtedly has the information in the Department and could not have placed the information before the Cabinet or the House without the figures, will he now give his estimate of local authority starts for 1981–82?

Mr. Heseltine

The right hon. Gentleman claims credit for the fact that rent increases during the last two years of the previous Labour Government rose by only 7 per cent. He is telling the House that a massive subsidy was poured into that sector of the community and paid for by others, many of whom had substantially lower incomes than those living in council houses. He has failed completely to tell the House of the public expenditure consequences of that sort of financial recklessness.

As for future estimates of council house building, the right hon. Gentleman will be aware that time and again there were forecasts from the labour Government of the level of starts that the local authorities would undertake. That Government were then left trying to explain away why the authorities made different decisions. We have given local authorities discretion as to where they spend their housing capital, and that applies to the whole of their capital allocation. Having given them that freedom, it is folly for me to try to forecast how they will use it.

Mr. A. J. Beith (Berwick-upon-Tweed)

Does the Secretary of State realise that the derisory relaxation of the moratorium does nothing for the many deteriorating council houses since none of the benefits of the relaxation will go to that area? Is it not irresponsible to cut the insulation grant so heavily at a time when the insulation of homes should be contributing to our energy policy? When will he show some concern for the three-quarters or more of council house tenants who do not have incomes of £8,000-plus a year and for the many more people who would like to live in council houses?

Mr. Heseltine

When the hon. Gentleman considers our treatment of housing insulation grants, he will find that the situation is better than he indicates. As for selling council houses and the impact that that may have, there is a clear understanding that there are benefits to be derived not only for indiviudal tenants but for those living in the public sector who will enjoy potentially, at the discretion of local authorties, some of the capital receipts that will flow into the hands of local authorities. Therefore, local authorities will be in a position to augment the level of their allocations for housing purposes.

Mr. Peter Tapsell (Horncastle)

Will my right hon. Friend bear in mind the considerable number of workers and families in my constituency who are on relatively low incomes, the great majority of whom have to live in privately rented property, who will regard his statement as an overdue adjustment in holding the balance fair between the two sectors of housing?

Mr. Heseltine

I am most grateful to my hon. Friend. I believe that he is exactly right. The sooner that we can shift the balance of emphasis away from public consumption to public investment in housing, the better we shall be able to help both the public sector and the private sector which depend on this sort of support.

Mr. Frank Allaun (Salford, East)

Is it not a fact that last year's council house building was the lowest since 1946, that this year it was to be lower still and that the level has now been halved because the embargo or moratorium will last from October to April? If that continues, it is virtually the end of council housing, on which most people depend because they cannot afford to buy their own house. I could take the right hon. Gentleman to a mother and father in my constituency who are living apart, the mother and the baby with her family and the father with his family, because there is nowhere for them to live. The Minister should resign before further disaster comes to the country.

Mr. Heseltine

I have heard the hon. Gentleman say these things many times. He fails completely to understand that I have announced that at 1981–82 outturn prices I am proposing to authorise expenditure on public sector housing of the order of £2.8 billion. Expenditure of that sort cannot be reconciled with the forecasts that the hon. Gentleman constantly makes, which are never borne out by the event.

Mr. Sydney Chapman (Chipping Barnet)

Will my right hon. Friend accept that, no matter how unpopular it may be to say it, there is an increasing number of people who have felt, under successive Governments, that the system of financing public sector housing is both unfair and increasingly ineffective? Will he therefore accept that, while some of us may be concerned about the reduction in capital expenditure on public sector housing programmes, we welcome the help that is being continued to the Housing Corporation? However, will he admit that it now becomes the Government to take an initiative in supporting and encouraging the private sector?

Mr. Heseltine

I am most grateful to my hon. Friend. If I may say so, I pay tribute to the work that has been done by my hon. Friend the Minister for Housing and Construction in recasting the HIP allocation in the subsidy system for housing to give a much better and more rational balance to the way in which these programmes are administered.

The Government have carried out a thorough and comprehensive review of all the constraints that operate within the private sector to stimulate wherever we can, to remove constraints prior to the upturn in the economy taking place and to help the private sector to cope with far more of its housing needs.

Mr. Douglas Jay (Battersea, North)

How many new dwellings, public and private, does the Minister expect to be started in 1981?

Mr. Heseltine

I am sure that the right hon. Gentleman knows enough about housing to know that the Minister will not be starting any houses. It is entirely a matter for the individual judgment of housing authorities, which will make their own judgments on how they use the allocations that are available to them. The right hon. Gentleman and the House understand that in recent years there has been a significant switch away from the construction of new council houses, each of which attracts over £1,000 in net loss in the first year, in favour of renovation and improvement, which reflects the deteriorating standard that has been seen in large areas of public sector housing. It must be a matter for individual authorities to exercise that discretion if the freedom that we have given them is to mean anything at all.

Mr. Den Dover (Chorley)

Will my right hon. Friend confirm that he is aware that most housing association schemes do not break even and that they need a subsidy? Does he expect, therefore, that the current levels of rent will increase over the next year or two?

Mr. Heseltine

My hon. Friend knows as well as I do that we cannot live in a society in which rates of inflation have been of the order that we have seen and expect rents to be immune from the process. The more that rents are immune, the more the quality of the housing stock will deteriorate.

Mr. Clive Soley (Hammersmith, North)

Does the right hon. Gentleman accept that this is only a method of introducing hopelessness and despair to the many thousands on waiting lists, including the 10,000 in my area, who see houses standing empty and decaying and hear self-employed builders saying that they have trouble in receiving social security because their businesses have collapsed? Is that not due to his policy and the moratorium? Is it not also true that in inner city areas there is no way in which the private sector can make up the difference unless an individual is earning more than £10,000 a year?

Mr. Heseltine

The hon. Gentleman has raised a number of important issues. First, I turn to the question of waiting lists in local authority housing. I hope that he realises that on the latest evidence that I have seen one-third of those on the waiting lists are already local authority tenants seeking transfers with other local authority tenants. Secondly, he draws attention to the significant number of empty houses standing idle in various local authority areas. Many of those houses are owned by the local authorites. Better management could undoubtedly secure a higher use of housing stock. The responsibility for houses in the private sector standing empty lies with the Opposition Front Bench, which has politically frustrated every attempt to bring those houses back into the private rented sector.

Mr. Tony Durant (Reading, North)

Some of us who are keen on insulation grants are anxious that my right hon. Friend should make it clear whether the insulation grants are part of the HIP allocation or whether they are treated separately.

Mr. Heseltine

The insulation grants are included in the HIP allocation and we are expecting to see an increase in the figures in the coming year.

Several Hon. Members


Mr. Speaker

Order. I propose to call five of the Opposition Members who have been rising in their places before we move on to the next statement.

Mr. Allan Roberts (Bootle)

If the Minister will not give the House his own prediction of what he thinks the number of starts will be in 1980–81, will he confirm or deny the prediction made by the Select Committee on the Environment that it is likely to be 30,000 in 1981, a catastrophic all-time low? Is he aware that he seems to he the only person who is not capable of assessing what the level of starts is likely to be next year? The estimate of 30,000 is made by Shelter, by the building industry, including many contributors to CABIN, by the National Council of Building Material Producers and by the Group of Nine as well as the Select Committee. Is the right hon. Gentleman aware that he is considered to be misleading the House by denying the facts about the likely level of starts in the next financial year?

Mr. Heseltine

But I must put the point to the hon. Gentleman again. The previous Government gave their estimates of starts and then had to come back to the House to explain why those figures were not achieved. I believe that that is more likely to be interpreted as misleading the House than telling the House frankly that this is a matter which individual local authorities must decide for themselves. We have given them much greater freedom to make these decisions, and they must now allocate their resources in the light of their own needs.

Dr. Oonagh McDonald (Thurrock)

When will the right hon. Gentleman come clean about his figures concerning the real cut in the HIP allocation for capital spending and answer the charge put to him by my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman)? Furthermore, when will the right hon. Gentleman stop juggling with figures and begin to show some sort of human concern for the young couples who are forced to live apart in their parents' council houses and for many others on the waiting lists who must look to the public sector for housing since they will not be eligible for mortgages and cannot turn to the private sector in any sense? [HON. MEMBERS: "Why not?"] When will the right hon. Gentleman show such human concern? [Interruption.] They do not earn enough money.

Mr. Heseltine

I should like to help the hon. Lady. If she had been a more frequent attender at our housing debates, she would probably have heard these figures, broadly, before. But, as she has asked me for the figures—

Mr. Andrew Faulds (Warley, East)

Shoddy little man.

Mr. Heseltine

—I am only too happy to provide— [Interruption.] I know that the Labour Party has a great difficulty. Labour Members ask for these figures, but they do not really want them because they are so embarrassing from their point of view. However, I have in front of me the figures for the years that we are now discussing. I shall willingly read them to the House, starting with 1975–76.

Mr. Ted Graham (Edmonton)


Mr. Heseltine

Oh, yes. I shall read them to the House and I shall go right through this year and next year in the same money values—1980 survey prices. The House will then be able to see, for local authority gross housing capital expenditure, what has happened since 1975–76 right the way through to next year. Starting with that year, I shall read the figures: £4.297 billion— [Interruption.] These figures relate to the money spent at 1980 survey prices. It is very difficult for the hon. Member for Salford, East (Mr. Allaun) to understand the significance of this.

Starting in 1975–76, the figures are as follows: £4.297 billion; next year, £3.690 billion; next year, £3.158 billion; next year, £2.759 billion; next year, £2.604 billion; this current year, £1.983 billion: and next year, £1.682 billion. That is a significant year-on-year reduction in the capital housing figure, which the Labour Party was quite happy to defend when it was in power.

Mr. Frank Allaun

The right hon. Gentleman has no feeling at all.

Mr. David Winnick (Walsall, North)

Will the right hon. Gentleman take note of the fact that there will be anger and bitter resentment from council tenants up and down the country about the type of rent increases which are being proposed by him? Will he also bear in mind that any rent rebate—and he has been misleading the House—will be on the new rent increases, so even those receiving rent rebates will undoubtedly be faced with quite a substantial increase? Bearing in mind the right hon. Gentleman's whole appalling record as the Secretary of State responsible for housing, may I ask whether he realises the amount of family misery which is being caused by the policies for which he has been responsible and which have meant the worst housing crisis that this country has faced for many years?

Mr. Heseltine

The hon. Gentleman talks about all this anger and bitterness, which he is so uniquely qualified to disseminate, but perhaps I may suggest that he points out to council tenants that if they have incomes of up to £120 a week and children in normal family circumstances they are likely to be eligible in the main for some form of protection from the increases about which we are talking.

Mr. David Stoddart (Swindon)

Is the right hon. Gentleman aware that even ardent Tories in my constituency are now describing his housing policies as "disastrous"? Is he further aware that the housing waiting list—not the housing transfer list—in my constituency has doubled during his term of office and that council tenants who in my constituency are paying £15 a week in rent already will not be impressed by his average of £8 a week for the country?

Mr. Heseltine

The hon. Gentleman obviously has a greater knowledge of his constituency than I have, but I am sure that his constituents will understand as clearly as the rest of the House that unless we keep the overall levels of public expenditure under control the future outlook for his constituents will be as bad as it was under the Labour Government.

Mr. Jack Dormand (Easington)

How has the right hon. Gentleman arrived at the figure of £118 million for allocation to the new towns? Is he aware that in Peterlee new town, in my constituency, one estimate for repairs and attention to houses and other buildings amounts to £40 million? Does he remember the very strong representations that were made to him by the Association of District Councils on this matter? Does he not, therefore, agree that £118 million is chickenfeed and will not meet the circumstances?

Lastly, does the right hon. Gentleman agree that this is not a matter for the local authorities but is a national matter and that the costs ought to be borne by the Exchequer?

Mr. Heseltine

There are two answers to the hon. Member's question. We are trying to switch the balance from public sector to private sector housing in the new towns generally. That means that we have been encouraging the new towns to dispose of land and to enable particularly starter schemes for young couples to begin there. But there is then the special problem, to which the hon. Member has drawn my attention, which arises because of the defects in past building techniques in the new towns. We are aware that there are special problems there. Conversations are due to start in the new year, and this has been made clear to the ADC.