§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Newton.]8.57 pm
§ Mr. Robert Hicks (Bodmin)
Since May 1979, whenever I have been called upon in my constituency or elsewhere to explain, or, indeed, to defend, the Government's basic economic strategy I have invariably used the analogy of this policy being essentially an exercise in good housekeeping. I have pointed out to my constituents that no country can go on indefinitely paying out more than it earns, any more than a typical family can continue ad infinitum to live beyond its means. At some stage the realities catch up and one has to adjust. This can be a difficult, indeed often painful, process. I am sure that in our private lives all of us in the House have been through that 1574 process at some time, and now the nation as a whole is having to do likewise.
I find it somewhat ironical that in attempting to pursue those laudable objectives in local government a serious situation has been created, largely as a direct consequence of the statement about two weeks ago by my right hon. Friend the Secretary of State for the Environment, when he suspended local authority housing investment. The result is that those local authorities that have been responsible and have conformed to his Department's financial constraints will now be penalised for their prudent actions.
One such local authority is the Caradon district council, which forms part of the Bodmin parliamentary constituency. Caradon's allocation for its housing investment programme for the current financial year, 1980–81, was £2,253,000, and together with the tolerance factor it gained a total allocation of £2,285,000. Those figures hardly represent large sums of capital expenditure when compared with the potential national overspending of £180 million, which was the figure quoted at the time of the announcement by my right hon. Friend of the moratorium that has been imposed.
I think that it is relevant to point out that since 1974, when Caradon district council came into existence, only once has it exceeded its basic housing investment programme allocation from the Department, and even in that year—1979–80—it adhered to the rules of the scheme, since it was within the accepted tolerance levels.
Furthermore, it is worth adding, as part of this background of responsibility on the part of Caradon that I am attempting to establish this evening, that the net general rate fund expenditure of Caradon in 1979–80, in terms of 1973–74 general price levels, was only 4 per cent. above the combined expenditure level in 1973–74 of the six former local authorities that were amalgamated to form Caradon on 1 April 1974. I should add that that increase of 4 per cent. was accounted for mainly by loan charges—something beyond Caradon's control.
I believe that these two groups of figures demonstrate clearly not only that the Caradon district council is far from being an irresponsible local authority but that 1575 it is cautious and sensible and has constantly practised what the Prime Minister seeks of the nation as a whole, namely, good housekeeping. It was, therefore, no small wonder that, locally in South-East Cornwall, we were all shaken—indeed, amazed—by the Secretary of State's recent moratorium on housing investment in the public sector. Councillors, council officials and, above all, those on Caradon's housing waiting list—who number about 1,686 families, and of whom 735 are pensioners—felt that they were being victimised for the sins of others.
It has been pointed out to me that the Secretary of State for the Environment and others in the Government constantly say that the country must adhere to the constraints and limits of public expenditure. Yet in our case, having done just that, we were victimised. Of Caradon's allocation of just over £2¼ million for 1980–81, its committed expenditure at the time of the moratorium was approximately £1.9 million. Therefore, contrary to the amount that it thought it could spend, there was a shortfall of £323,000.
That figure may not seem too high a ratio of Caradon district council's total annual allocation for the current year, but such financial statistics do not convey the essential structure and nature of a council's HIP. I refer to its continuity, or rolling characteristic. My hon. Friend has experience of local government, and he will appreciate the need for continuity and good planning. Something is hidden in the curtailed figure of £⅓ million. The clampdown has prevented construction from starting on three projects. First, it has prevented a start on the construction of 32 local authority houses at Torpoint—which were allocated £72,000 out of this year's financial investment programme. Secondly, it has prevented the start of construction on four bungalows for disabled persons, which were to have been built at To-point, and for which £20,000 had been allocated from this year's programme. Thirdly, construction has been prevented on 40 local authority houses at Looe, for which £32,000 had been allocated.
According to Caradon's housing committee's projected planning, the two Torpoint programmes were to have been started in November, and the Looe pro- 1576 ject was to have been started in early January. In July Caradon district council started work on 40 dwellings for old-age pensioners at Saltash. In September work began on 10 flats and two bungalows for the disabled in Looe. Last month work began on eight dwellings for old-age pensioners in St. Germans. I mention that because I hope that the Minister will understand that they are all part of a rolling, and sensibly and carefully planned HIP. The curtailment of the two schemes at Torpoint and the curtailment of the Looe project will mean that, out of a total of 136 anticipated housing starts, 76 may not be made during this financial year. That represents about 60 per cent. of the anticipated housing starts. That will have serious social consequences for our area.
Sadly, the tale of woe does not end there. The suspension means that Caradon district council will not be able to proceed with the purchase of land at Callington. A sum of £13,000 had been allocated for that. A sum of £20,000 had been allocated for Pillaton, and that would have provided a total of 26 dwellings for retired persons. In addition, Caradon district council will not be able to proceed with providing access to four acres of land at Liskeard. That land is owned by Caradon district council and was intended for housing purposes. Incidentally, once access has been established the way will be open for further development of housing in the private sector.
Finally, this decision has meant a halt to the purchase of five cottages at St. Mellion, which was the subject of extensive correspondence between the Minister and myself. It means the suspension of the replacement of a number of roofs on the existing local authority housing stock and prevents the provision of more residential caravans at the council's homeless centre at Liskeard. I hope that this brief description will have demonstrated the adverse effects that the suspension of funds will have on Caradon's carefully planned and phased housing investment programme.
It might be said that Caradon was rather slow in getting off the mark with its housing investment programme at the beginning of the year. I respectfully remind my hon. Friend the Under-Secretary of State that this year it was only in 1577 February that it knew what its housing investment programme allocation was to be, whereas normally it knows it in the autumn of the previous year.
I shall make a number of brief observations that are relevant to the situation that I have described. First, I deal with the effect on local employment, especially in the already depressed building and construction industries. I know that this is a matter of national concern as well. The Timber Trade Federation has kindly sent me a copy of the letter that it sent to the Secretary of State, in which it draws attention to the consequences of his announcement for its members. The South-West Building and Construction Confederation has made its views known about the adverse consequences of my right hon. Friend's decision.
It is relevant to observe that Caradon does not employ a large direct labour force. It employs only 42 men. That is the labour force that is required for essential minor works and maintenance. Caradon's total housing stock is about 4,500 housing units, so 42 is a minimal direct labour force. All the other work is undertaken by local private builders.
I remind my hon. Friend that unemployment in my constituency is in excess of 12 per cent. When the tenders for the 40 new houses at Torpoint were opened—they would have been opened on the Wednesday following my right hon. Friend's announcement—it became clear that the contract would have gone to a local builder, thus guaranteeing work for his employees for the next two years.
The second point of relevance is that South-East Cornwall is a low-income area. Average earnings are 16 per cent. below the national average, and 18 per cent. of my constituents are living on retirement pensions or fixed incomes. Therefore, Caradon has to fulfil particular but essential social functions arising from the problem of retired people who are living on fixed incomes and who, at a time of high inflation, find that they can no longer afford to live in the private sector. Therefore, they have to join the waiting list in the public sector.
At the other end of the scale there are young people in my constituency, first-time owners, who find that they can afford only older properties, which are often in 1578 a poor condition. Therefore, they are totally dependent on the district council for housing advances, because the building societies are not interested in their situation. I remind the Minister that Caradon makes it a condition before it gives anyone a housing advance that he must first have applied to a building society.
My third general point is that the particular problem that Caradon faces, being in a desirable part of the United Kingdom, in the South-West, is its statutory obligation to house the homeless. People often come from other parts of the country, and there is a large residual group of people who often live in substandard and condemned houses. The figures for April to October of this year indicate that Caradon was obliged to rehouse 50 such cases. In addition there are still on the waiting list 18 families whom Caradon has a statutory obligation to rehouse and five families who formerly lived in agricultural tied cottages. The Minister will recognise that the 73 cases in total represent a high percentage of the council's total lets since April, particularly when one realises that the average number of lets per year in Caradon of existing properties is only just over 200.
I hope that I have demonstrated to my hon. Friend that Caradon is a responsible local authority. It has an excellent track record. It genuinely and urgently requires permission to continue its phased housing investment programme. There is a very strong case for saying that, on a selective basis, local authorities should be allowed to continue with their housing investment programmes, provided that they have acted within the guidelines and constraints laid down by the Department during the current financial year.
My right hon. Friend the Secretary of State for the Environment has powers of control over certain parts of the housing investment budget. He or his regional officers have to authorise contracts for new housing projects and for land acquisition. A degree of control already exists. The blanketing effect of imposing a moratorium is misplaced. District councils like Caradon have had to suffer unnecessarily. I do not believe that there was a need for this. One consequence has been the victimisation of responsible authorities. I hope that my hon. Friend 1579 can give me some encouragement when he replies to my request.
§ Mr. David Penhaligon (Truro)
All of us from the peninsula that the hon. Member for Bodmin (Mr. Hicks) and I both represent are greatly indebted to the hon. Member. I congratulate him on having an Adjournment debate at such a sensible time. It has enabled me, perhaps uninvited but I am sure not unwelcome, to say a few words.
As someone who comes from outside Caradon I can genuinely say that that authority is recognised in the county of Cornwall as being a good authority, which has attempted, within the limits imposed, to build a gradual rolling programme to cope with the problem. However, as I am sure that the hon. Gentleman will concede, tragically, the problems are not unique to Caradon. If they were the problem could be solved without too much anguish. The problem is growing throughout the South-West, and I am extremely disturbed about it. I welcome this unexpected opportunity to give the Minister some indication of what is happening in the far South-West.
The truth, quite simply, is that in Caradon and other areas in the far South-West of Cornwall the housing position is very near to collapse. I am sure that, like myself, the hon. Member meets people at his surgeries with an overwhelming case to be rehoused and who look to the local authority for housing; but, as we both know, there is little prospect of anything being achieved for them.
I understand from the building societies to which I have spoken in the South-West that it is impossible for anyone at the moment to borrow much more than one and three quarters or perhaps twice or two and a quarter times his earnings. House prices in the far South-West are fixed by the wealth and purchasing power of those who come into Cornwall to settle there. Local people who wish to buy have their purchasing power fixed by the local levels of income.
We are told that the national average wage is now £124.50 a week. I am sure that the hon. Member will confirm that the mention of such figures in the South-West produces hollow laughter. The people in my area never get that mad about these statistics because I suspect 1580 that they do not believe them to be true. Any young person in my county who earns £100 a week knows just how lucky he is. It means that he can borrow £11,000 or £12,000. Perhaps the only real answer to the housing problem in the far South-West is to get around to building rows of houses for £10,000 or £12,000 each. Tragically, we know that that is impossible. Therefore, the young people are increasingly forced to look to the local authority for some relief of their housing difficulties.
My local authority is Carrick. It has 10 families in a place called Trennick House. It is a large old house and each family is given one room. My authority has another eight families at Falmouth. It also has 28 families on a caravan site in my constituency. On the last occasion that I inquired I was told that there were another six families living in bed and breakfast accommodation.
When housing in the more urban areas is discussed in this House, reference is often made to "hard to let" council houses. I have heard that expression so many times since I have been in this House that I decided to ask one of my colleagues what was meant by a hard to let council house. He told me that it is a council house that is built, furnished and equipped to such standards that no one can be persuaded to accept it.
I understand from my hon. Friend the Member for Liverpool, Edge Hill (Mr. Alton) that there are 1,700 hard to let—in other words, empty—council houses in that great city. I do not denigrate Liverpool, and I know that it has many economic problems, but such a concept in the far South-West is beyond imagination. If I happened to be lucky enough to get one of my constituents rehoused, I should have very little sympathy with him if he came back to me and said that the house was not suitable for his needs. But that simply could not happen, because the people in my area are only too well aware of how lucky they are if they are able to get a council property.
I have no reason to believe that the position will get other than worse. In Caradon, in Carrick, in Restormel and in all the local authorities——
Mr. Deputy Speaker (Mr. Bryant Godman Irvine)
Order. The hon. Gentleman will be aware that we are discussing Caradon and Caradon alone.
§ Mr. Penhaligon
I recognise that, Mr. Deputy Speaker, but in supporting the hon. Member for Bodmin I was trying to show that his arguments apply to a general area.
Mr. Deputy Speaker
At some early date there may well be a general debate about the difficulties in the South-West, but today we are talking about Caradon.
§ Mr. Penhaligon
Thank you, Mr. Deputy Speaker. The point has probably been made. There is one other matter that affects the good people of Caradon who are seeking aid and advice as to how they are to deal with their housing problems. The good people of Caradon, like many others, look to an organisation called the Devon and Cornwall Housing Aid for advice in a no-housing situation. This is a small local body that tries to serve the whole of Devon and Cornwall—an area some 150 miles long—funded on £9,000 from Shelter, £6,000 from the Government, and whatever it can raise by its own charitable efforts locally. The Government, tragically in my view, have decided to end their £6,000 contribution—a paltry sum. The good people of Caradon, seeking advice in the rural areas of that locality, have few other people to whom they can turn for professional, specialist advice on housing other than the hon. Member for Bodmin and this body with its specialist knowledge.
I am sure that the hon. Gentleman and I, as Members representing Cornwall, recognise how useful it is. There is general dismay that this teeny-weeny, miserable, £6,000 is being saved at the expense of closing down this body. I do not expect the Minister to say tonight that he will change his mind. I would, however, ask him, especially if housing problems are to increase because of the stopping of the current investment programme, to give the House an assurance that another look, possibly favourable, will be taken at that grant.
I recognise that the Government find themselves in some financial difficulty. I have more sympathy with them than some hon. Members have, because I recognise that they inherited a difficult situation. I cannot believe, however, that the Government are hard up for £6,000.
§ The Under-Secretary of State for the Environment (Mr. Geoffrey Finsberg)
I should like to deal first with the points unexpectedly raised by the hon. Member for Truro (Mr. Penhaligon). His remarks went wider than the subject introduced by my hon. Friend the Member for Bodmin (Mr. Hicks). I shall confine myself to those elements of his remarks which have a direct relevance to the actual subject that my hon. Friend raised.
Much of what I want to say to my hon. Friend will cover the broader aspects to which the hon. Member for Truro referred. I assure him that the advice organisation to which he referred was a matter to which I gave my personal attention. I looked carefully into the proposal. After careful thought, I came to the conclusion that it was not possible for the grant to be continued.
It would not be fair if I said that I would look again at the matter. I do not believe that I could come to a different conclusion. The matter was not left to officials. I looked at it myself and I came to a conclusion. I confess that I have not put into eloquent words, as the hon. Member for Truro did, the invaluable advice that those seeking housing can obtain from my hon. Friend the Member for Bodmin. That is self-evident. There are also a number of highly competent local councillors. I would have thought that, between them, they are in a position to give the advice that may be needed in that area.
I hope that the hon. Gentleman will accept that I will have another look at the papers. I would not wish him to believe that I can hold out a scintilla of hope that I will change the position. I shall have a further look to satisfy myself, in the light of what has been said, that the decision is still justified.
I thank my hon. Friend the Member for Bodmin for the careful and moderate manner in which he has presented the issues, from his own knowledge, as they have been put to him by the local authority. It is a refreshing change from some of the more emotive, mischievous and misleading statements that I have been reading in the press over the past 1583 few days since my right hon. Friend issued a circular about the moratorium.
Whatever else the House may learn from this debate—and I hope that hon. Members will bear with me while I deal with the detail of the issues raised—there should be no doubt in anyone's mind of the Government's determination to hold very firm to the cash limits that we have determined. Spending on housing will be brought under control.
I have no doubt that Caradon is now faced with a new set of problems in managing its housing programme and I sympathise with the difficulties that it is facing as eloquently put by my hon. Friend the Member for Bodmin (Mr. Hicks).
Caradon is not alone. Hardly an authority in the land is not having to reappraise its programme in the light of recent events. My hon. Friend has detailed the effect on Caradon of the Government's recent announcement of the action that it has been necessary to take to correct overspend on this year's programmes, and I shall deal with that in a moment.
There are in fact three issues with which I must deal. First, there is Caradon's housing investment allocation for 198081. Then there is the effect of the Government's actions on their current programme, and, finally, the problem of next year's allocation. I shall deal with them in turn. They are separate issues, but in one sense they are linked like pieces of a jigsaw puzzle and they have one feature in common—the underlying need for us all to cut our coats according to our cloth. The amount of money available for housing is a finite sum, and there is no way in which it can be exceeded.
First, I shall deal with the allocation for 1980–81. Caradon received an allocation of £2.25 million, which, together with the allocation for insulation grants and a tolerance brought forward from 1979–80, gave it a total allocation of £2.28 million. This fell some way short of its bid for £3.79 million, but I must say that, overall, that is slightly better than most authorities in the South-West region.
In its HIP submission earlier this year, Caradon estimated what its payment would be. It was estimated that these would come within the allocation, and it would be ungracious of 1584 me—indeed, it would be monstrously unfair of me—not to applaud the efforts that Caradon made to achieve this. However, this was not the case generally. There were alarming indications from the returns that we were getting from local authorities that unless special actions were taken there would be an unacceptably high risk of substantial overspend on the total housing investment programme. This was so nationally and was also the case for the South-West region.
The Government could not allow this. We had to take immediate steps to ensure that the cash limits were not overspent. The painful decision was therefore taken to ask local authorities not to enter into further contracts for housing purposes, for the acquisition of land and building or for building works; not to start further capital housing projects by their direct labour organisations and not to give further undertakings to make grants and loans for housing purposes, except of course when they are required to do so by statute.
Furthermore, local authorities were also told that they would not be allowed to anticipate any sums which may be allocated for the next financial year. Accordingly, and for the time being, we have stopped giving any further borrowing approval and have withdrawn any unused sanctions and approvals.
I wish to make it crystal clear—my hon. Friend did so, but there has been too much misrepresentation—that this is not a cut. All that we have said to local authorities is, in effect, "For the time being you must stop taking on new work. Let us know exactly what your commitments are, to enable us to determine as quickly as possible whether these commitments generally will take us over the top. When we have that information we will consider what scope there is for additional commitment this year". We have promised to let local authorities know of our decisions as quickly as possible.
Let me spell out what this temporary standstill will not do. It will not affect work that is already proceeding, or for which tenders were accepted before the date of receipt of our circular 19/80. It will not affect any undertaking, formal or informal, that an authority may have given, before receipt of the circular, to 1585 make grants or loans for housing purposes, and it will not prevent it from entering new contracts or approving grants in cases where the expenditure results from a specific statutory obligation. Finally, neither the homes insulation scheme nor the giving of mortgages on council house sales is affected by the circular in any way.
I fully recognise that our action must seem desperately unfair to any authority that has done its best to contain its expenditure for the year within its allocation. Why should it have to suffer the consequences of the failure—deliberate in some cases—of other authorities to do the same? The immediate answer is that the size of the prospective overspend gave us no alternative. Local authorities submitted, in their HIP returns, estimates of spending in 1980–81 that exceeded their allocations by £180 million, or 8 per cent. It is fundamental to the success of our strategy for beating inflation that when we set cash limits for public sector expenditure we should stick to them.
The only way to be certain of containing housing investment within the limit for the year was to call a halt to new commitments by all authorities, whatever their spending records and whatever their forecasts of spending for the year, until such time as we could establish just how much expenditure was already committed.
We are now hard at work analysing the estimates of commitments that authorities have supplied. We hope to he able to announce our conclusions very shortly. Will there be any comfort for those authorities with commitments well below their allocations for the year? I cannot say. But my hon. Friend will know that in other contexts we have taken steps to prevent the consequences of overspending by some authorities being visited on the heads of others. That is one of the main principles of the new block grant arrangements for which we are providing in the Local Government Bill.
In the case of housing investment, too, we will see whether anything can be done, now or for the future. I make that clear to my hon. Friend, who will understand that I can make no promises.
1586 Local authorities have been shocked by the action that we have had to take. Many have been equally shocked to realise just how profligate some of the other authorities have been. But generally local authorities are wisely refraining from making excited comment. They, like the Government, realise that it is too early to make sensible comment about what it all might mean.
We now know that Caradon is committed to an expenditure of £1.9 million this year. Within its budget it has been able to take up virtually all that it allowed for housing improvement grants; it is true that it has had to stop issuing approvals for the moment, but its committed expenditure is only £25,000 or so short of what it decided it would spend at the beginning of the year. Similarly, it is only £30,000 short of what it said it would spend on housing advances and it has fully taken up the allocation for insulation grants.
My hon. Friend has described dramatically and fairly the effect of the stop on the other parts of Caradon's programme. He mentioned villages and towns whose names are bywords to those who enjoy their holidays in that delightful part of the world. I might at some stage even visit the area personally to examine for myself the facts that my hon. Friend has been putting forward.
The main impact has been felt in Cara-don's programme for new house building, for the purchase of land, for some cottages, and for repairs to some council houses. But let me put that in the context of this year's allocation. It has committed itself to all but £300,000 of what was allocated. It really is not right for Caradon to claim that the stop on its activities has seriously affected its ability to take up its allocation for 1980–81.
The main effect—and this is a holding operation—has been to stop a number of housing starts where the bulk of the expenditure would count against next year's allocation. Those are the houses at Torpoint and Looe, to which my hon. Friend referred, half of which would not be starting until December. I do not underestimate the implications that has for its running programme. As my hon. Friend said, any intelligent local authority will provide itself with a running programme. But it is overstating the case to 1587 say that the recent announcement has cut those from the programme. Inevitably there will be some delay. How long that delay will be I cannot say at the moment.
The effect of the temporary halt is to give a new and, I hope, helpful meaning to the range of initiatives that we have proposed for the promotion of low-cost home ownership and in the use of capital receipts. That refers to one point raised by the hon. Member for Truro, namely, that there is no reason in some local authority sales where equity sharing should not be started and where stair-casing should not be introduced so that the young first-time buyer does not have to make the sudden jump to total purchase. That is one of the initiatives put forward by my hon. Friend the Minister a short time ago.
The low-cost home ownership programme will incur only a small, in some cases even a nil, call on a local authority's HIP allocation, and there can be great advantage, as Ministers have said on numerous occasions, to a local authority from selling council houses to sitting tenants, from selling local authority land to private builders with planning permission for starter homes, from providing starter homes for sale on local authority land in partnership with private builders, and from acquiring properties for improvement and for sale, or for selling unimproved houses for improvement by the purchaser. As I said earlier, I urge local authorities to consider offering shared ownership as an alternative to outright sale wherever possible.
My hon. Friend raised a point about the problems of people in Caradon obtaining mortgages from building societies. The hon. Member for Truro alluded to that also. I remind the House that there are adequate provisions that can be used by local authorities to use the mortgage guarantee powers that exist to facilitate down-market lending by building societies. My regional officers have discussed those initiatives with Caradon, and Caradon has approached them realistically but perhaps a little too tentatively to date.
1588 I hope that my hon. Friend will draw Caradon's attention to some of the initiatives to which I have referred, to see whether he can spur it on to make more use of some of the facilities.
I said that I would deal with the 1981–82 allocations. I can do so only very briefly. We have not yet determined them and there may be some apprehension about the levels at which they may have to be fixed. But I can assure my hon. Friend that the arrangements that we are proposing are directed towards the need to ensure that broad equity is maintained between competing claims—whether that be a village, a district authority in Cornwall or a major city in the North-West—and that proper scope is given for the circumstances and the problems of individual local authorities to be taken into account.
I hope that my hon. Friend will feel that my Department understands the problems in Caradon. We will take account of its specific housing need in determining its allocation for next year, although I do not need to remind Cara-don or the House of the continuing need for severe overall constraint on public expenditure. That is the message that Ministers have put to the House for a considerable time. I do not apologise for having started tonight by putting that message again both to the House and to my hon. Friend; neither do I apologise for finishing with it. It must be realized fat there is only a limited amount of money for capital investment in housing. We shall do our best to ensure fairness within that limitation.
I repeat what I said to my hon. Friend. As soon as we have analysed the figures that have been coming in since we issued the circular and brought the moratorium into force, the sooner we can make an announcement about what is to happen for the future. We shall not overlook the particular problems of Caradon, which my hon. Friend has so reasonably put to the House.
§ Question put and agreed to.
§ Adjourned accordingly at fourteen minutes to Ten o'clock.