HC Deb 08 June 1982 vol 25 cc182-8

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

5.38 am
Mr. Joseph Dean (Leeds, West)

Although the hour is very late—or early, depending on how one determines it—I am delighted at my good fortune in obtaining this debate on the subject of the effect of industrialised building on the housing revenue account of the city of Leeds. The facts and figures that I quote will relate to) a development known as Hurtslet Grange, which is in fact situated not in my constituency but in that of my right hon. Friend the Member for Leeds, South (Mr. Rees). However, the situation can be multiplied over and over again where local authorities, with full Government encouragement and approval, have built house and flat accommodation using industrialised and semi-industrialised systems.

The main thrust of my argument will be that the blame lies almost entirely with previous Governments. I make no particular criticism of the present Government's role in the production of this type of housing. It was determined some years ago with full Government encouragement for the design, construction and types of building to be used.

To emphasise my point, I refer to circular 76/65 issued by the Ministry of Housing and Local Government on 7 December 1965, when the then hon. Member for Coventry, East, the late Mr. Richard Crossman, was Minister. The circular contained certain recommendations that local authorities were expected to observe, the idea being that in some areas of high population as much as 40 per cent. of the building programme must be carried out by these means.

Some almost copper-bottomed undertakings and promises were also given in the circular by the Government of the day. The circular said, for instance, that prices for flats (both high and medium-rise) … are already on average slightly cheaper than traditional. For two-storey houses industrialised building is not yet cheaper on average but efficient organisation of supply and demand can bring down the production costs". That is completely wrong, because costings across the board on the construction of industrialised housing show that it is in fact 20 per cent. dearer.

The circular further states: On constructional quality: industrialised methods facilitate quality control. They should therefore provide houses of a more even and reliable standard of quality, and be able increasingly to provide a higher standard than can generally be obtained by traditional methods at comparable prices. I challenge any hon. Member or any Minister to look at some of the property and see whether that promise holds good today.

The most damning paragraph of the circular is paragraph 7 of section C, in which the then Government say: Appraisals: The first step has been the appraisal of systems, which is being done by the Agency. That is the National Building Agency. Where a system is found satisfactory an appraisal certificate is issued. This certifies that the system is sound and suitable for 60-year loan sanction.

That is where I start to differ from the Government's reasoning. In this connection, I refer to a reply from the Minister for Housing. and Construction received by my right hon. Friend the Member for Leeds, South, who has fought a battle for many years about this very poor accommodation in his constituency. My right hon. Friend wrote some time ago pleading the case of the tenants there and suggesting certain courses of action. I am rather surprised at the answer that the Minister gave. Having discussed certain matters with my right hon. Friend in the past, the Minister replied: I am, of course, concerned about the special problems being experienced by tenants in these flats, but the management and maintenance of council-owned dwellings is, by law, the responsibility of the relevant local authority, and the decision to build them in the first place was of course made by the City Council. The passages that I have quoted from the circular give the lie to that. There is no doubt that the plans were fully the brainchild of the Government and spawned by them. It is a little less than fair for the present Government to hide behind that letter.

When Hunslet Grange type of construction was being built, a number of us in local government were bitterly opposed to it, but we were over-ruled. It was an excellent and opportune time, during the 10 to 15 years when the massive slum clearance programme was under way, to give Britain a new face. However, I charge the architects, the planners, the large building concerns and successive Governments, who, in the rush to clear slums, failed the nation and left local authorities with problems far worse than the original ones. I see no reason for the local authorities to shoulder the residual financial burden with which they have been left.

I shall give the details now concerning Hunslet Grange and the type and size of the problem that Leeds is left to pick up. If the Minister tells me that the Leeds city council took the decision to demolish the flats, I assure him that no other decision could have been realistically reached. If there is any doubt in the Minister's mind about that, I suggest that he pays a visit to that disgraceful development to see the condition that it is now in.

Hunslet Grange was built over a two-year contract period. Originally the cost was £4.93million. Over 14 years its remedial costs have been almost £1.5 million. That is almost £100,000 a year. The outstanding loan debts now stand at £4.763 million, which includes the remedial work. At 14 per cent. the loan debt repayments are £710,000 per year plus £93,000 for various forms of demolition and compensation, including the loss of revenue, which will be lost because no rents will be taken. The total is £803,000 per year, which will have to be borne by the Leeds housing revenue account for the next 46 years. That also means that 22p per week will be put on the rent of every council tenancy in Leeds for over 40 years.

The Minister may say that nearly half the people receive social security or rent rebate. Surely that is not the argument because at least 50 per cent. of the people will be loaded with an unfair burden. He may say that Leeds did not accept the Government's diktat and put up the rents by £2.50. If it had done so, there would have been about £11 million more of revenue to play with. However, that is not the argument because it would have been grossly unfair to expect the city of Leeds completely to fund the replacement.

One of the more frightening aspects is that Leeds has a severe housing problem, with over 20,000 families still on the waiting list. Hunslet Grange has almost 1,250 family flats, with two or three bedrooms. It follows that the decision taken to demolish them will mean that Leeds, as soon as the finance is available, will have to build the same amount of accommodation of the more traditional low-rise type. At the time of building Hunslet Grange, the average cost of constructing a council house was £3,500. The debt charges over 60 years were about £50,000. A pretty accurate estimate of the cost when Leeds tries to build almost 1,250 houses to compensate the housing stock and replace the flats is £20,000 for each house. If that is taken over a 60-year period, it means a minimum of £150,000 for each house in the long run. I suggest to the Minister that this is grossly unfair.

Because of the concern felt in Leeds, is the Minister prepared to receive a delegation of hon. Members representing the city together with the appropriate officers and repesentatives to discuss the case in detail? I have already stated that I place no blame on the Government for this type of system. What has happened in Leeds is, however, only the tip of an iceberg that is surfacing at an increasingly rapid rate. A written answer that I received today shows that since 1964 nearly 500,000 industrialised or semi-industrialised houses and flats have been built. This shows the dimension of the situation facing the nation.

We have been badly served by the architects and planners involved, by the advice of the National Building Agency and by the building concerns that undertook the contracts. Not only the people and the local authority of Leeds will be interested to hear the Minister's reply. I believe that the hon. Gentleman will also know that an early-day motion with 150 names deals with this very problem.

If this is not the worst problem facing the publicly owned housing stock in this country, it is certainly frightening to consider the consequences. I shall be interested to hear what the Minister has to say.

5.52 am
The Under-Secretary of State for the Environment (Sir George Young)

I am grateful to the hon. Member for Leeds, West (Mr. Dean) for raising this important subject, albeit at a rather unreasonable hour.

The hon. Gentleman has presented his case in a well researched and plausible manner. He has underlined problems in industrialised building which directly affect ratepayers and council house tenants in Leeds, and also tenants in other authorities elsewhere in the country. As a result, the points which the hon. Gentleman has raised and my response to them both have wider application, although I shall deliberately focus on the specific position in Leeds.

I should like to stress at the outset two general points. First, it would be mistaken and unfortunate if industrialised building as a whole were to become synonymous with the kind of defects which have come to light in certain blocks or on certain estates. As my hon. Friend the Minister for Housing and Construction brought out in his answer of 21 May 1982 to the hon. Gentleman, about 1 million dwellings in England and Wales have been built by industrialised methods. These are not solely houses and flats built over the past 20 or 30 years. The process was being used as early as 1919, and continued to be used over the following years.

In the majority of cases, these dwellings, whether built in the 1970s, the 1960s or, indeed, well before, provide homes that are either acceptable by present-day standards or can be made acceptable once works to remedy the natural processes or ageing or to install modern amenities have been carried out. This does not mitigate in any way the very real difficulties experienced in cases where there are defects to be dealt with. Tenants living in the houses and flats where problems have emerged have had to endure conditions ranging from the irritating to the downright intolerable, and we genuinely sympathise with them. In no way do I wish to underrate what those tenants have experienced.

At the same time, I want to try to put these difficulties into perspective so as to offer a much-needed sense of reassurance to the many occupiers, notably council house tenants, and to the many authorities where dwellings built by industrialised methods have not given rise to the kind of cases that we are now debating.

Secondly, I want to make clear the Government's position in relation to the programme of industrialised buildings, which was concentrated in the late 1960s and 1970s. The hon. Gentleman has already referred to circular No. 76 of 1965, which the Labour Government issued to English local authorities. The circular was clearly intended as a positive encouragement to local authorities to expand and accelerate their housing programmes by looking to the latest developments in building techniques and by exploiting fully system building wherever this could appropriately be employed.

But, as I emphasised in replying to a supplementary question by the hon. Gentleman on 19 May, it does not follow that this absolves local authorities from the consequences of decisions they took locally to adopt a particular system and for construction work that they were responsible locally for supervising. Nor does it offer any kind of guarantee of indemnity against the consequences of failing to observe specifications of inadequate workmanship or of construction defects generally.

On the contrary, I remind the hon. Gentleman that a local authority was required to certify to the Department that the materials and form of construction were appropriate to a building that was to have a life of 60 years or more.

The hon. Gentleman referred to the appraisals conducted by the National Building Agency as set out in the circular. Over the years, the NBA did indeed appraise a considerable number of particular systems, although this did not cover the entirety of cases. The issue of a certificate did not relieve local authorities of the necessity to ensure that specific applications of the system were satisfactory, and that was made plain. Nor did it relieve those commissioning or constructing industrialised buildings from ensuring that the requirements of the system in question were fully and properly supervised and carried out, especially in cases where those requirements imposed stricter conditions and limited tolerances.

To take one example, to which I shall return in a moment, the system evolved by the Yorkshire Development Group was not the subject of NBA appraisal, still less of any Government approval. The authorities participating in the Yorkshire Development Group chose to go it alone, and the responsibility for that decision is theirs.

Against those two points of general background, I turn to the particular Leeds position. It is only right that I should commence by offering the hon. Gentleman reassurance on the Leeds housing investment programme. The Government's task is to allocate between authorities the resources they see as available nationally for investment in the housing stock.

It is clear that in an area such as Leeds there is a need for refurbishment of certain industrialised dwellings, and in some cases there may even be a need to provide replacement dwellings, as the hon. Gentleman indicated. Our HIP allocations take account of needs that are particular to individual authorities, and I can assure the hon. Gentleman that we shall give careful consideration to the case made both by him and by Leeds city council for the level of its allocation in 1983–84 in the light of the HIP returns.

The hon. Gentleman asked whether I would receive a deputation. I suggest that he sends a copy of what I say to his colleagues in. Leeds, but, if they still wish to see me, I shall be happy to meet them.

I shall now deal in particular with the case that has already featured prominently in correspondence—the Leeds council housing at Hunslet Grange. The system of construction was commissioned by the Yorkshire Development Group. The layout of the estate was designed, and its construction supervised, by the local authority. At no stage were the Government, directly or indirectly, involved. Nor was any other statutory body such as the NBA. Responsibility lies inescapably with the Yorkshire Development Group.

The hon. Member has asked whether the Government are prepared to assist Leeds financially with the costs of either refurbishment or replacement. I want to deal first with capital, then with revenue help.

On the capital side, I have already made it clear that our HIP allocation will take account of the needs that arise from the failures of industrialised dwellings in Leeds, as elsewhere. Performance on capital expenditure is not simply a matter of Leeds looking to the Government. It can take positive steps to help itself.

I hope that the hon. Member will not take it amiss if I say that Leeds could improve substantially on its record last year, which gives every indication of considerable underspend. Taking into account its housing capital receipts, its spending accounts for just over 70 per cent. of its allocation. Even if the capital receipts are ignored, it accounts only for just over 80 per cent., so there is apparent scope for doing better.

Secondly, Leeds could augment its capital receipts and thus its gross allocation by more rapid progress on selling houses to its tenants claiming the right to buy. Leeds has been notably obstructive towards its tenants, advising them to seek guidance from the Department on points that are the responsibility of the local authority. In the 18 months between the beginning of November 1980 and the end of April this year, my Department had to deal with no fewer than 3,687 personal visits and some 12,500 telephone calls from Leeds tenants. As long as that attitude persists, it is difficult to take seriously the Leeds city council claim either that it has the interests generally of its tenants at heart or that it is serious in trying to enhance its capital spending—or, for that matter, its revenue income from sales.

With regard to revenue, I should emphasise that the Government have widened the scope of housing subsidy. Housing subsidy entitlement now takes into account expenditure on management and maintenance of the housing stock and loan charges in respect of repairs financed by borrowing—that is, "capitalised repairs". We have also abolished the so-called 30-year rule whereby improvement to dwellings built within the previous 30 years were generally excluded from the subsidy calculation. I should also remind the House that we take the costs of demolition into account where housing is to be relocated on the cleared site.

It is not right to imply that the Government have done nothing to help deal financially with the problems arising in industrial dwellings. The hon. Member wanted to argue for special help, and in particular had in mind special financial assistance in respect of loan charges on demolished dwellings. I should be misleading him if I were to suggest that I was able to agree to a general case for a continuing call on the taxpayer for dwellings that no longer exist. My reservations are inevitably reinforced by the fact that, as I have mentioned, expenditure arising from demolition itself counts in the subsidy calculation, as does expenditure on new dwellings to replace those demolished. In the particular case of Leeds, it would be even more difficult to justify special assistance in the light of the rent policy operated by Leeds in recent years. The hon. Gentleman touched on that.

By its own decision, which it is entitled to take, Leeds has deliberately forgone rental income. For example, had it increased its rents for 1981–82 and 1982–83 in line with our national assumptions, its housing income could have been greater by a total of almost £15 million—that is, by about £5 million last year and between £9 million to £10 million this year.

Mr. Joseph Dean

The £15 million figure is in excess. I think that the figure is about £11 million.

Sir George Young

I shall go into those figures and write to the hon. Gentleman. The calculations that my Department has made have produced a figure of £5 million for 1981–82 and about £10 million for this year. That more than accounts for the £1 million figure that was quoted in Hansard on 19 May as falling to the housing revenue account if Hunslet Grange were to be demolished without special assistance being made available.

I do not dispute Leeds's right to exercise its discretion over its rent levels. However, if it has already chosen to maintain rents at a relatively low level, it is more difficult for the hon. Gentleman to allege that the repair and renewal programme which it may face is likely to impose a disproportionate burden on the rents.

I appreciate that what I have had to say will not have come as wholly welcome news to the hon. Gentleman. However, I must make it clear that local authorities must assume the responsibility for the dwellings that they themselves selected and constructed. We are prepared to take into account the capital implications in the HIP allocation. We have already made several subsidy changes that are helpful to authorities in Leeds's position. However, I should not see it as equitable to other authorities to promise Leeds any special treatment such as has been sought on its behalf. If the hon. Gentleman wishes to press this and to bring a deputation to see me, in accordance with the usual custom of Ministers I should be happy to see it.

Question put and agreed to.

Adjourned accordingly at five minutes past Six o'clock am.