HC Deb 24 February 1982 vol 18 cc960-6

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lang.]

11.20 pm
Mr. Nigel Spearing (Newham, South)

I am glad to raise this evening the question of the sales of council houses and the availability of housing in the borough of Newham connected therewith. I am pleased to see the Under-Secretary of State in his guise as representative of that Department for multicultural affairs. Newham is certainly a multicultural borough these days, with all the stresses that go with it. It is interesting that the preliminary census shows that it has lost less population than any other of the inner London boroughs with which it is classed for census purposes.

I am glad to read in the press that the Minister has a sense of humour. Perhaps we know that. However, I did not know that he watched "Fawlty Towers". We have plenty of faulty towers in Newham. There are over 60 of them. Rowan Point in my constituency fell down. Stratford Point and Newtown Point in the constituency of my hon. Friend the Member for Newham, North-West (Mr. Lewis) were blown up. Again in my constituency, Westland Point, Dunedin Point and Queensland Point on the Pier estate, North Woolwich, have had to be evacuated because they are not really safe or habitable. That means that in the last five blocks to which I referred 340 dwellings have been lost to the council by those causes alone.

Newham is not a one-type-of-house borough. About a third of the housing is private accommodation, a third is owner-occupied and a third is municipally owned. It is the policy of the Labour council and that of the Labour Party to encourage housing of all types, including housing to rent, housing for private ownership and housing for housing associations. That policy is being pursued in the borough. There are 34,000 municipal dwellings of which no fewer than 6,800 are high rise. There are 15,000 low rise dwellings and maisonettes and 11,500 houses, the latter being the most popular. There are over 7,000 family units on the waiting list, 1,527 of which have over the minimum points that entitle them to a needs rehousing allocation. Together with the homeless applications there are over 250 applications a month. The needs are great. We acknowledge that the HIP allocation in the last financial year has been better than in some authorities but, as I have said, the needs are great.

The Minister may refer to the legislation that has been enacted by the Government that requires local authorities to sell houses where application has been made by the sitting tenant. There have been discussions and over 2,000 tenants at one time were thought to be interested. I think that the Minister will agree that there are now fewer than that and that the original target set by his Department is being reduced. They are trying in the housing department to meet the target that has been set. I understand that there are now 400 fewer applicants. There are staffing difficulties and other difficulties because of the pressure of work on the district valuer.

It is not those houses to which I wish to refer because they are part of a well-known argument that is taking place across the country. I am concerned with the extraordinary position that there are over 60 new houses built for sale by the borough of Newham that have been lying empty for over six months, both in my constituency and that of my hon. Friend the Member for Newham, North-East (Mr. Leighton), and more will be coming up to completion, making about 169 houses in that category.

Mr. Ron Leighton (Newham, North-East)

Does my hon. Friend accept that there has been grave public concern that brand new houses have been boarded up? There have been visits from the chamber of commerce to complain about the boarding up. The council has done its best to sell the houses, but it has not been able to do so, although the houses are modestly priced at £25,000 to £28,000, because local citizens cannot pay the deposits and do not have the requisite salaries of £7,000 to £8,000. We are worried that the London Docklands Development Corporation has taken virtually all the land that is available to us and will devote virtually all of it for houses for sale. That means that the people who come to see us at our surgeries will not be able to buy them and our housing waiting lists will remain for ever.

Mr. Spearing

I thank my hon. Friend, because he has given a preview of the points that I intend to make to the Minister.

On the face of it, it appears unusual for a London borough such as Newham to have and to build houses for sale. A scheme was started by the council in 1971 under which young married people who might otherwise have had to move out of the borough were allocated council accommodation where they could save for a deposit. They could then put down the deposit and buy houses built by the council for that purpose. On 10 July 1973 the then Minister, now the Minister for the Arts, opened the Amity Road scheme and praised it to the skies. Since then about 394 houses have been sold. Over 300 couples are waiting in tower blocks to go into the houses which are now available.

The difficulty is that with the mortgage rate going up the threshold is about £7,000 or £8,000. With the best will in the world, they cannot afford that, although the houses are attractively built and priced, and are as near Parker Morris standards as makes no difference. A total of 169 houses are coming on stream and another 150 houses in the dockland area have been contracted for by the borough council with private builders for priority home purchasers. That over 300 houses are being made available for sale by the borough will put down the myth that borough councils, and Labour-controlled councils in particular, are not interested in private purchase.

The houses have been left empty. Some time ago the borough went to the Department of the Environment and said that it wanted sitting tenants to buy council houses. It said "Why cannot you let us sell these empty houses to tenants who wish to buy, allow us to put them in on the same terms and reductions as they would have if they were buying their own home, and move people from tower blocks into the vacated houses so that more tower block dwellings are available for people on the waiting list?" Unfortunately, the Department did not agree to that. It did not agree that the houses should be given the normal Exchequer subsidy for renting. So they have remained empty.

I am glad to say that more recently, and perhaps none too soon, the Department has given permission for share ownership schemes to be adopted in respect of those homes. Under the scheme the occupiers buy half the house and rent the other half. That will bring down the mortgage threshold, but it may not be sufficient to enable people who have been saving in tower blocks to purchase them.

At the same time, in the Beckton development area in dockland, there was an agreed scheme for a mix of public, mid-tenure and houses for sale. That has been upset by the London Docklands Urban Development Corporation. Although housing associations are now allowed to purchase 120 homes, there is no guarantee that they can get the cash from the Housing Corporation. Even that scheme may be frustrated. It is important to Newham because many of the houses would be available for nomination by the borough.

The irony is that next Friday the Secretary of State for the Environment is ceremonially to open some of the show houses put up one of the four private builders in the Beckton redevelopment area. Those houses are priced at approximately the same level as those of the borough. My hon. Friend the Member for Newham, North-East has mentioned the borough prices. Three-bedroomed accommodation on this site will be £27,950. There will be a six weeks' option period for the 600 homes being built for all council tenants in Newham. However, I very much doubt, for the reasons that we have made clear, whether many of those tenants would be able to buy.

We are glad that some people in the area may be able to, but they will not be the people who deserve priority treatment. They will not necessarily be people in the borough. Some of the houses are priced more reasonably—£19,000 to £20,000 for what is described as a studio flat or one-bedroom flat, but local people who have looked at them call them Heseltine's hutches. 'They would not necessarily represent good value for money for anybody purchasing them.

The irony goes on. The key justification for the establishment of the London Docklands Development Corporation was that it would be able to provide private housing when it was assumed, in spite of evidence to the contrary, that none, or very little was already available. I quote from the House of Lords Select Committee report No. 198 on the development corporation order: Private investors will not put money into docklands on any large scale unless they are encouraged by the presence of an environment attractive to them, including the availability of some private housing. Furthermore the evidence which the Committee have heard suggests that low-priced private housing might not be beyond the reach of some young people in docklands and that the present lack of it may be one of the causes of their drifting away from the area. On the other hand, it is to be remembered that council tenants now have the right to buy their homes, and this may contribute to a solution of the problem. It will not contribute very much to a solution to the problem because the houses being built by the LDDC are not on the whole at a price that will enable the very young people that the House of Lords Select Committee suggested should be able to buy these houses to stay in the borough.

This means that the London Docklands Development Corporation has been established for purposes that it is apparently unable to carry out. The borough was already fulfilling that function beforehand. The houses were there, unoccupied. Another 80 in Liverpool Road in my constituency are due for completion in the next couple of months.

I suggest to the Department of the Environment, therefore, that the corporation is not fulfilling the objectives envisaged for it. I do not blame the corporation.

It has had a very difficult job. I suggest that the corporation's priorities are more in the realms of employment and an agreed plan for the Royal group of docks, which everybody from the Department to Mr. Ken Livingstone and all the local authorities wish to see. Let it concentrate on those matters and let the borough get on with the job that it was doing very well before—providing the sort of homes of a higher standard than those that private builders are able to provide, so that it will be possible for people who have been born, bred and brought up in the area, to purchase homes of their own if they wish, and contribute to the very lively community that is the London borough of Newham.

11.33 pm
The Under-Secretary of State for the Environment (Sir George Young)

I am very grateful to the hon. Member for Newham, South (Mr. Spearing) for raising this issue, and I thank him for his kind words about my new responsibilities.

He made some forthright statements about the Labour Party's commitments on home ownership, but I have to tell him that the performance of the London borough of Newham on delivering on the right to buy has been exceptionally disappointing, and, indeed, one of the worst in the country. My right hon. Friend the Secretary of State is looking very carefully at the council's performance in the light of the warning that we gave it on 22 October last year, and he is again contemplating giving the authority notice of intention to use his powers of intervention under section 23 of the Housing Act 1980.

If the hon. Gentleman is committed to giving council tenants the right to buy, as he said in his speech, I urge him to use his influence with his local authority so that those who have applied in the London borough of Newham to buy their homes—and some 2,000 are still waiting to hear from the council—may realise their aspirations. I am grateful to the hon. Member for what he said about the HIP allocation to Newham, which we have managed to increase.

I shall deal first with the issue of the young married couples' scheme. This was set up in 1969 to cater for young couples getting married who did not qualify for council accommodation and who could not afford at that stage to buy a house. The couples were allocated flats in tower blocks on a rental basis but were at the same time required to undertake to save regularly towards buying a new house that the council, meanwhile, would build.

That seems a very commendable scheme. It encouraged young couples to stay in the borough and made good use of tower block accommodation, which is unpopular with other tenants, and help youngsters to get their foot on to the bottom of the home ownership ladder.

For a number of years the scheme worked quite well. Provided it covered its costs, the Newham council was able to offer discounts to buyers of up to as much as 30 per cent. below the market value of the properties. The council has sold over 300 properties to young married couples under its houses for sale scheme.

Newham has been building houses under the scheme at various sites around the borough. In the late summer and autumn of 1980, 78 further houses on the Talbot Road, Langdon Road and Atlas Road sites were completed and these were offered for sale at prices averaging over £27,000. The properties are all three-bedroomed and the majority—including all the town houses—have garages. As the hon. Member said, the prices were higher than those that had applied in other Newham developments under the sale scheme and proved to be largely out of the reach of first-time buyers. Moreover, the market values were generally below cost and Newham was, therefore, unable to offer the usual discounts. The council, finding the properties were beyond members of its young married couple's scheme, decided to extend the offer of sales to all council tenants and as a result managed to find a few more purchasers, with some prospective buyers waiting to see what happened to the rest of the properties before committing themselves.

I understand that, in the face of its inability to sell these houses as originally planned, Newham then considered a number of options open to it. It looked at the possibility of a leasehold scheme with an option to purchase the freehold at the end of the option period. It also considered selling the houses to developers or putting them for sale on the open market, as well as exploring the possibilities of a shared ownership scheme. In the event, Newham council came to the conclusion that from its point of view the best solution would be for it to take all the unsold houses into its rented stock.

The council then approached my Department seeking agreement to the Talbot Road and Langdon Road properties being taken into its rented stock and to the costs of these properties being eligible for housing subsidy purposes. The council left aside the question of the 18 unsold houses at Atlas Road which it had funded from capital receipts and which would, therefore, involve the council in making a rather more detailed application.

On 27 November last my Department wrote to the Newham council saying that it could not agree to the council's request for the unsold houses at Talbot and Langdon Roads being transferred to the council's rented stock. Instead, we urged the council to consider either selling the unsold houses on the open market or making sales under a shared ownership scheme.

The borough council has not so far raised with my Department the question of unsold houses at either Sheppard Street or Liverpool Road sites. I gather that the Sheppard Street development is quite small, amounting to seven houses, all of which have been completed and of which five remain unsold. Liverpool Road is a much bigger development amounting to 86 houses. None of these has as yet been completed and the first houses from this development are now expected to be ready in April. The development is expected to be completed by about October 1982.

I believe that these two options that were put to the Newham council provide the best way forward for dealing with the problem of these unsold houses and I hope very much that sales can be arranged quickly to bring these properties into use.

Sale on the open market has many attractions and it would, of course, be open to the council, if it chose to adopt this course, to give priority to applications from those in accepted housing need in the borough. However, I understand that the Newham council has now decided that rather than outright sale it would prefer to opt for a shared ownership scheme.

I am pleased that Newham council is prepared to adopt this course because it has proved to be enormously successful in bridging the gap between owning and renting. In response to the intervention of the hon. Member for Newham, North-East (Mr. Leighton), may I say that this brings home ownership more within reach of couples on average incomes because they have to purchase only half the property.

The London borough of Newham has taken an important step forward in deciding to adopt shared ownership schemes for these unsold dwellings, and the initial capital payment and monthly mortgage payments may be less than if an outright purchase had been made. Of course, the outgoings may be higher than if the property had simply been rented, but the purchaser is then enjoying a capital stake in his or her own home, which carries with it the possibility of tax-free capital appreciation.

Mr. Spearing

I do not agree with the sale to sitting tenants of the house, although that is the law. I am in favour of the sort of arrangement that the Minister is now describing. Can he confirm that the houses in Liverpool Road are of the same price range as those being built elsewhere by private builders and are not markedly more expensive—indeed, that they may be of a higher standard and better value for money?

Sir George Young

The hon. Gentleman is right, but the crucial difference between the ones built by the council and those built by the private developers is that the council has never put its property on the open market. It has always restricted the sale to sitting council tenants. Therefore, it has not got the broad market that it might have, whereas if the option is not exercised in the first month, the private developer has the right to broaden the market.

The second crucial difference is that the private developers have invested their own money in the schemes. Therefore, they have satisfied themselves that there is a market. They are commercial people operating in an area that they know very well. My understanding is that they would not have made these decisions unless they thought that there was a market. It may be that the sites or properties are more appropriate, but clearly they have done their homework and think that there is a market for the types of property they are building in these locations.

We must hope that the shared ownership scheme proves a success so that the houses we have been talking about can be occupied quickly. I also hope that the council will in due course be prepared to consider extending the scope of the scheme to other properties in its ownership.

I turn to the question of docklands. Both hon. Members have consistently refused to recognise the co-operation that exists between the LDDC and Newham borough council. The corporation is contributing £750,000 to borough housing schemes in docklands to enable them to proceed forthwith, and borough tenants, waiting list applicants and clearance area families are being offered first option to purchase the homes that are now being built by the private sector in Newham.

I accept that housing associations can make a positive contribution to docklands regeneration. As I think the hon.

Gentleman knows from the letter that he received from the Housing Corporation, officials of the two corporations are meeting to work out exactly what can be provided.

The hon. Gentleman mentioned the Cyprus 3 site, which is a good example of what the private sector can achieve. Four major builders have committed themselves to a substantial investment of more than 600 low-cost homes, and my right hon. Friend will be opening the first phase later this week, just four months after construction began.

Discussions are taking place about the possibility of making a proportion of these homes available to housing associations to introduce a mix of tenures. It would be premature to anticipate the results of these discussions, but I understand that the housing corporation is hopeful that it might fund such an arrangement.

The hon. Gentleman suggested that builders operating in docklands will run into the same sort of problems ever sales as the London borough of Newham. As I said earlier, I do not think that there is a parallel. The builders' activities in docklands represent a substantial investment on their part, which means that they are convinced that there is a market here. After an initial period of a month, during which council tenants and those on the waiting list have preference, the builders will then throw open sales of their houses to anyone interested. That is perhaps where Newham council has run into difficulty with its sales scheme. Had the council been prepared to offer its dwellings on the market without any restriction, we might not be having this debate tonight.

When hon. Members say that the rest of Docklands should be developed for rent rather than for sale, they ignore one crucial ingredient—money. The option is not between private developers developing docklands and the local authority developing it for rent, because the money is not there. If the private developers do not develop the land, no one will, because Newham's HIP allocation, or the Housing Corporation's money, will not stretch to that. It is sensible, in view of the employment position arid housing stress in London, to make progress with low-cost home ownership and to involve the private sector and its resources whenever we can.

That part of London needs a substantial injection. of owner-occupation to get the tenure balance right. I am delighted that we have been able to help to tackle the problems in this part of London by harnessing the energy resources of the private sector. I hope that the buildings being constructed will be popular and that hon. Members will do what they can to encourage people to invest in them. That is the only way forward, given the restraints on public expenditure, if we are to tackle the housing stress that both the hon. Gentleman and the hon. Member for Newham, North-East face.

Question put and agreed to.

Adjourned accordingly at fifteen minutes to Twelve o'clock