§ Motion made, and Question proposed, That this House do now adjourn. —[Mr. Douglas Hogg.]10.43 pm
§ Mr. Dafydd Wigley (Caernarfon)
I am pleased to have this opportunity to raise a matter which is of grave concern to district councils in Wales — housing renovation grants — and the financial embarrassment which is being caused to so many of those housing authorities because of Government policy. In a nutshell, councils may not have the money in 1984–85 to meet commitments.
The problem that I am outlining tonight was first brought to my attention by the two district authorities in my constituency — the Dwyfor district council and the Arfon borough council. I should stress, however, that the problem is in no way restricted to them. To judge from the 25 replies that I have received from district councils in Wales, there is great worry on this matter throughout the country. I shall return to some of those replies in a moment.
The nub of the problem is that the housing stock in Wales is much poorer than that of other parts of Britain. In Wales, more than 40 per cent. of our houses date from before 1919 as compared with only 29 per cent. for the rest of Britain. The Welsh house survey of 1981 showed that the total cost of repair of unfit houses in Wales would, at that time, have been as much as £1,500 million. It also showed, in the words of Val Feld, in an article in the magazine Roofan increase in private sector unfitness".In fact, 8.8 per cent. of the housing stock in Wales was shown to be unfit, with virtually no progress having been made by successive Governments. Calls were made for real measures that would have an immediate impact on the situation and for a long-term financial commitment to the funding of improvement and repair grants.
The Secretary of State for Wales acknowledged the problem on 10 November 1982, when in responding to that survey he said:Clearly, much remains to be done".In that context, the secretary of Meirionnydd district council, Mr. Williams-Jones, wrote to the Secretary of State on 17 November 1982 about the need for a firm Welsh Office policy on financing housing renovation work and stated:It is this element of uncertainty and, indeed, instability of policy at central Government level that is bedevilling local authority capital programmes … The Government should abandon its current policy of determining local authority expenditure on a year-to-year basis, and give a firm indication of the level of resources available for at least the next three years and let local authorities get on with the spending".A week later, on 24 November, the Welsh Office wrote to the district councils in Wales about housing finance for 1983–84. Paragraph 3 of that letter stated:Authorities' bids for expenditure on housing renovation grants have been met in full … The Secretary of State hopes that local authorities will be guided accordingly and will have a special regard for the serious incidence of disrepair reported in the 1981 Welsh House Condition Survey. In assessing bids for future years, full account will be taken of the expenditure patterns of local authorities on renovation work".Given the content of that paragraph, and the fact that the Welsh Office said that applications for housing renovation grants at a level of 90 per cent. could continue until 31 March 1984, local authorities assumed that the 120 Government had at last made a firm commitment on this matter, and in the words of the chief executive of the Arfon borough council, Mr. D. L. Jones:I think it reasonable for local authorities in Wales to conclude that this was a straightforward policy commitment by the Government, and to prepare for the demand from the public which was Government-led".That sentiment was encouraged by the Secretary of State himself, who said in the annual Welsh Affairs debate:Another area for concern is the condition of much of our housing stock. The Welsh house condition survey makes it clear that the rehabilitation of our older houses must continue to be a major priority. That is why I have told local authorities that in this financial year they may spend on rehabilitation without regard to their allocation ceilings and that in the coming financial year additional allocations will be available … At the end of December, local authorities had on their books 41,000 applications awaiting approval, with a face value of £109 million. This demonstrates both the scale of the need, and the Government's determination in tackling it. I hope that the local authorities will show an equal determination in tackling and dealing with the applications as quickly as possible." —[Official Report, 10 February 1983; Vol. 36, c. 1167–8.]There can be nothing clearer than the message given by the Welsh Office to local authorities in Wales that they should be spending and committing on housing renovations. The Government backed their statements with heavy press advertising campaigns, drawing the public's attention to these grants.
Not surprisingly, with a generous 90 per cent. grant available, the public responded, and as 1983 wore on the demand for grants rapidly increased. Blaenau Gwent council, for example, has received as many as 10,000 applications for such grants since the Government's campaign was launched and has employed 15 extra people to cope. Cardiff has received an average of 430 applications a month.
Some district councils became very worried about the implications of the policy. In February, Dwyfor council suspended the scheme because it was worried that its allocation for renovation for this year was only £400,000, whereas demand by then was running 10 times higher than the previous year and had passed £2.8 million in commitment.
Dwyfor was anxious about the effect this would have on both its revenue account, and hence local rates, and on the rate support grant formula for subsequent years. Dwyfor was virtually instructed by the Welsh Office to continue with the scheme, and, when I raised the matter at Welsh Question Time, the Minister who is responding tonight told me:Throughout Wales authorities are generally underspending on housing … I now urge them to try to deal with those applications".—[Official Report, 11 April 1983: Vol. 40, c. 540.]The Welsh Office wrote to the council on 29 April pointing out the implications of the Welsh house survey and concluded:The Secretary of State therefore considers it extremely important that maximum advantage should be taken of the higher grant levels that are available.Dwyfor recommenced the processing of these grants, a fact that I welcomed at the time as there has been a crying need for them in my constituency, but it did so with misgivings about the financial position.
Many other local authorities in Wales faced similar worries and problems. Glyndwr council felt obliged to stop processing applications and inquiries after 31 May, and Neath council resolved not to accept further applications after June 1983. Those councils, and the 121 many others which were forced to take similar steps later in the summer and autumn, do not want to deny their residents the benefits of these grants. But neither do they want to give the applicants a false belief that grants will be paid to them, when, quite frankly, the Government are not making the money available. But even as late as July, two weeks before the summer recess, the Under-Secretary of State was boasting at Welsh Question Time on 18 July that housing renovation grant approvals in Wales were running at three times the level of the previous year, and thatThis much-increased rate of grant activity should continue in the current year, and I hope that all local authorities will make every effort to meet the demand".—[Official Report, 18 July 1983; Vol. 46, c. 3.]I accept that the Minister, on that occasion and on others, made it clear that there would, during the present financial year, be additional resources for local authorities in Wales to meet the cost of those grants, by way of a retrospective adjustment in housing finance allocations to district councils. No one disputes that, and, as a consequence, there is no reason not to spend on housing renovation to the maximum extent up to 31 March 1984. The problem now causing a crisis to local authorities in Wales arises from the total failure of the Welsh Office to think beyond 31 March of next year. The problem is encapsulated in a letter to me from Mr. A. J. Park of Newport borough council, who says:The basic problem we face is that having geared ourselves up to spend as much as possible this year on housing improvement grants, we have no control over whether the moneys allocated by the approvals we give this year will be spent this year or later.That is the problem. Those who have received grants have up to 12 months, at least, under the legislative provisions, in which to take up the grants. The local authorities are not empowered to put a condition on the grant that it will be payable only if completed by 31 March 1984 if that places a limit of less than 12 months on the completion. But that is the condition that central Government have placed on local government. It is iniquitous, impractical and unrealistic.
The crunch for local councils came with the Welsh Office circular of 4 October. In this letter, despite the exhortations to spend, spend, spend, made only a few weeks earlier, the councils were told in a cynical and brutal fashion that, whatever their commitments into 1984–85 arising out of the policy of maximising the take-up of improvement grants, the Welsh Office would guarantee only a figure of 80 per cent. of this year's allocation. For many local authorities, the allocation this year is low, and grossly lower than the actual rate at which grant payments have been running. For Dwyfor, as I said, the allocation for renovation this year is only £400,000 while actual grant spending is running at £3 million. Eighty per cent. of £400,000, giving a mere £320,000.. is hopelessly inadequate. Yet the Welsh Office circular, in tough-talking terms, warned that the Secretary of Statewill not consider himself in any way bound to enable local authorities to honour any contractual commitments which they may have entered into in excess of the 80 per cent. level.What an appallingly irresponsible, cynical and brazen statement. As I quoted earlier, in November last year, the Welsh Office said that in assessing bids for future years,full account will be taken of the expenditure patterns of local authorities on renovation work.122 That was last year. Twelve months is a long time in politics, particularly if an election has intervened. And that is now what Welsh district councils have to learn to their cost.
As a consequence, in those local authority areas where there is a massive demand for the grants — the very areas most in need of help — including areas of rural deprivation in Gwynedd, as well as the old industrial areas, there is an enormous problem. In Dwyfor, there is likely to be a commitment of £1.2 million carried over into the next financial year, even though the council has now suspended grants. If it continues taking in and processing grant applications from now until 31 March, the commitment carried over will be nearer £3 million. Against that, the 80 per cent. level of this year's allocations for housing renovation will generate only some £320,000. If the commitments are to be honoured, other services will have to be axed. Council house repairs will have to be slashed, new building suspended and there is even doubt in Dwyfor about whether they can keep up the refuse disposal service.
In Arfon, there is a commitment of £1.6 million already likely to carry over into 1984–85, with a Welsh Office guarantee giving only some £900,000 — and that is without taking into account the 1,600 applications currently waiting to be processed, which could cost up to another £6 million. In Ynys Môn, there is a £3 million likely carry-over, with only a £1.5 million guarantee to cover it.
But the really big problems come in some of the valley areas. In Rhondda, for example, approvals up to 5 October 1983 will generate expenditure of about £9 million in 1984–85. The Government guarantee, based on 80 per cent. of current allocation, will give only £2.6 million, leaving a shortfall of £6.4 million.
I have calculated that, on the basis of replies that I have received from 25 district councils, the shortfall for Wales as a whole next year will amount to between £35 million and £40 million. Those are staggering figures which cannot be shrugged off by the Welsh Office. They represent thousands of families who expected to get grants and may not now get them, at least not next year. Alternatively, they will mean an axing of services by councils in order to keep their word to those to whom they have given grant approval. In either case, it means chaos for the building industry, which will be working flat out until 31 March and then face uncertainty—caught again by a Government "stop-go-stop" policy.
One aspect of the dilemma intrigues me. It is the difference in the way that local authorities in Wales have been treated compared with those in Scotland. The Under-Secretary of State for Scotland said on Second Reading of the Tenants' Rights, Etc. (Scotland) Amendment Bill:we shall fully cover all legally binding commitments entered into before 20 October in determining authorities' allocations for the next financial year."—[Official Report, 25 October 1983, Vol. 47, c. 232.]The hon. Gentleman amplified and confirmed that statement at Scottish Question Time on Wednesday last week.
I seek from the Under-Secretary a categorical statement that all commitments in Wales will also be fully covered in deciding on the allocations for housing for 1984–85. In other words, the Welsh Office must meet the full £40 million shortfall.
123 Furthermore, in view of the continuing uncertainty, I call for those allocations to be announced without delay—this week if possible. I also call on the Government to move towards a five-year rolling programme for housing renovation in Wales, so that householders, councils and the building industry can plan ahead effectively to conquer Wales' housing problems.
I ask the Under-Secretary to make clear that all those who have placed a valid grant application with a local authority will have it processed and honoured and that local authorities will be given the resources to do that. I also ask for a clarification of whether local councils in Wales now have the right to refuse to accept applications for grants between now and 31 March.
Finally, may I have an assurance that it is no part of Welsh Office policy that applicants should be nominally accepted for grant purposes and then be told that they may have to wait many years before the grant is paid? Such a policy would make a mockery of the strident advertisements that the Welsh Office sponsored only a few months ago entitled:Would a 90 per cent. home improvement grant make your wish come true?If the Welsh Office has any honour or dignity, or if it expects to be taken seriously in these matters in future, it must find a way of turning paper promises into reality.
§ The Under-Secretary of State for Wales (Mr. Wyn Roberts)
I am glad that the hon. Member for Caernarfon (Mr. Wigley) has raised this matter, because it has caused concern to many hon. Members, including my hon. Friends the Members for Newport, West (Mr. Robinson) and for Ynys Môn (Mr. Best).
I share the hon. Gentleman's view that the condition of Welsh housing is important and that the grant system is an essential part of any housing policy related to the Welsh housing stock, but his interpretation of recent events is at variance with the facts. The 1981 Welsh house condition survey showed clearly the problems that we face in terms of the deteriorating state of the housing stock. There is no need for me to rehearse the figures, which are well known to us all. They showed that, despite the efforts of successive Administrations, and despite some improvement in unfitness and lack of amenity, the condition of Welsh housing was such as to require a strong push, especially in the area of disrepair.
We have in Wales more than 400,000 houses built before 1919 and, as we might expect, most of the unsatisfactory houses are in that category. We therefore considered that to enhance the repair grant to 90 per cent—regardless of whether the house was in an housing action area—should prove a real encouragement to the occupants of such dwellings to apply for a grant and get their houses into a state of good repair. This was the purpose of our measure announced in the March 1982 Budget: we were making a direct attack on the serious problem of disrepair.
The public's response to this was immediate. In the first three months following the announcement more than 17,000 applications were received by Welsh local authorities. Successive months showed the same high level of demand, so the initiative was an indubitable success for the Government and for the public. This led my right hon. 124 Friend the Secretary of State to announce on 5 October 1982 that the measure would be extended by a further 15 months, to 31 March 1984, to relieve the considerable pressure which local authorities were under.
For some authorities that pressure was attributable wholly to the sheer volume of applications being made. But it was also clear that some authorities were not prepared to accord sufficient priority to our initiative and to the public demand that it had created. This was despite the fact that for repair grants we increased the Exchequer contribution to the local authorities to 95 per cent. This is a point worth emphasising: the local authorities were faced with only 5 per cent. of the capital costs of repair grants, although I acknowledge that they carried increased revenue costs.
The additional 15 months should have given every authority the breathing space necessary to re-order its housing priorities and to adjust its staff resources. The hon. Gentleman will know from the written answer I gave him on 28 March 1983 that a survey carried out by the Council for the Principality showed that only about 1 per cent. of district council manpower was engaged in processing renovation grants. The same survey showed that the additional staff needed to deal with the backlog of applications was only a further 0.3 per cent. of their manpower. It seemed to me then, and it still seems to me, that that was an entirely reasonble redeployment for authorities to make to cope with the demand.
I remind the hon. Gentleman that the terms of my right hon. Friend's October 1982 announcement extending the measure again made it clear that the higher rates were still a special, temporary, measure with a specific cut-off date of 31 March 1984. Let me clarify exactly what that cut-off date relates to. It is the deadline by which applications must be made to local authorities. It does not mean that payment of grants at the Budget rates will suddenly stop on that day. Applications which are received by 31 March and which are subsequently approved will still be entitled to the higher rate.
It would have been perfectly possible—indeed, given that we are talking about a two-year period, not wholly unreasonable—for us to have made the enhanced rates available only to those applications which had been approved by 31 March 1984. But we judged that this would have placed a heavy burden on the local authorities, so we limited the cut-off to the receipt of applications.
The hon. Gentleman's complaints are an endorsement of the success of our policy. He cannot reasonably complain that the shutters are going to come down. No policy of such, perhaps unprecedented, generosity can be open-ended and, as I have already made clear, we have constantly made it entirely plain that the policy was for a specific, time-limited period. This was obviously understood by members of the public, whose applications immediately flooded in. By the end of December—eight or nine months into the scheme — about 41,000 applications were in the pipeline, but, and as I have already mentioned, local authorities were devoting only 1 per cent. of their staff resources to the processing of grant applications. Many had made no adjustment at all. Despite the clear need to respond quickly to the Government's measure, and to ensure the maximum benefit to their ratepayers, many councils continued to employ metaphorically speaking, a man and a boy on the job. What was 125 needed was an immediate switch of effort from less essential work, and I am glad to say that some councils responded sensibly in that way.
The hon. Gentleman has also accused us of failing to provide the resources necessary to underpin the scheme: that we have willed the end but not the means. He seeks promises about additional allocations for next year. I can say only that he has completely failed to grasp the facts of the situation.
Of course, we fully realised that authorities would face greatly increased levels of expenditure and that they would not be able to cope from within their capital allocations. That is why, in the first year, 1982–83, we told councils that they would be given a retrospective additional allocation to cover any grant expenditure which carried them above their capital allocations. Given that the initial public response was, as I have already said, so immediate and substantial, I would have expected authorities to take the fullest advantage of this facility, but only 19 out of 37 councils sought additional allocations — in total, some £22 million.
That councils were not short of captial resources was further amply demonstrated by the fact that they underspent by more than £50 million, in 1982–83 having also underspent by £35 million in the previous year. This, quite frankly, was a picture which filled me with dismay, and time and again I exhorted local authorities to do better. Alas, I do not recall that the hon. Gentleman gave me much support. Given the needs of the Welsh housing stock, I said it was deplorable that £85 million which could have been spent on Welsh housing in the past two years remained unused.
Nevertheless, we recognised that, with the enhanced grants scheme continuing for the whole of the present financial year, some additional resources would be necessary. But, in the light of the underspend to which I have just referred, we were not prepared to make additional resources available for grant purposes while councils happily continued to divert part of their housing allocations to other, non-housing, purposes or put large sums of capital receipts into their coffers. My right hon. Friend the Secretary of State therefore decided that, to underline the priority we expected local authorities to give to renovation grants, they would receive an additional allocation for any sum spent on grants which exceeded 50 per cent. of their housing allocation. In other words, to those who gave a high priority to improvement grants, we were prepared to give additional help.
These arrangements were announced in November 1982 in the housing allocations letter. I reject any claim that authorities have had insufficient time to organise their affairs properly, to ensure that the greatest possible priority, was given to taking the fullest advantage of the Government's measure. But I have to report that many authorities have not responded. They have not decided to accord to grants work the level of priority which would allow them to clear their substantial backlog of applications.
Indeed, one authority took a deliberate decision to direct £0.5 million to other purposes, though I am glad to say that at the eleventh hour its members changed their minds and restored the money to grants. Another sought relief from the 50 per cent. threshold requirement since it wanted to use £1.5 million of housing money for a leisure centre. These decisions were entirely within the right of the authorities. But the local authorities concerned must 126 account for those decisions to the ratepayers who will have to wait much longer than was necessary to get their grants paid.
I know that some authorities claim that they have not had enough time to process all the applications. But again this is a question of priorities. I do not know of any authority whose members immediatedly grasped the nettle and said to themselves, "Since this bonanza is clearly not going to last, let us take the fullest advantage of it at once." The result is that many local authorities will be carrying large backlogs of aplications into next year and future years. Now they say to us, in effect, that since they did not take full advantage of the special allocation measure we gave them in the last two years, we must now make special arrangements for next year—and presumably the year after and so on.
Let me make the situation quite clear. My Department has given no local authority any grounds for supposing that the special arrangements would continue. On the contrary. Last March authorities were told that they could assume that their allocation for next year would be not less than 80 per cent. of this year's allocation. That was a definite figure for them to plan against and was given as a result of constant complaints from local authorities about the difficulty of planning ahead without any idea of their allocations. But that forward look carried no suggestion that, in addition to the 80 per cent., special arrangements would be made for grants. That 80 per cent. of this year's spending amounts to £111 million—no mean sum.
§ Mr. Roberts
I do not think that the situation in Scotland is precisely as the hon. Gentleman described it.
Some authorities have told my officials that they had assumed that the 80 per cent. figure, and other warnings about the pressure on public expenditure, would riot apply to grants. Frankly, I find that an astonishing assumption. Given all the specific statements about the life of the scheme and the very explicit terms of the additional measures available in this and the last financial year, I cannot begin to understand how any local authority could blithely assume—the hon. Gentleman used that word—that we did not mean what we said—that we would bail them out for any excess they incurred.
Despite all our warnings and categoric statements, when the HSIP bids came to the Department a month or two ago, it was clear that many local authorities were comtemplating contractual commitments which, by the end of the financial year, would be well in excess of the 80 per cent. figure that we had authorised. Indeed, five authorities claimed to have exceeded that figure by 31 July, only four months into this financial year.
My right hon. Friend the Secretary of State therefore decided that it was necessary to warn all local authorities that he would not consider himself bound to honour any commitments above the 80 per cent. figure. This was not a new policy, not an overnight change of heart arid not a departure from our policy of according grants a high priority within the resources available. It was no more than a restatement of the facts which should have been in the forefront of every local authority treasurer's mind since the grants measure was introduced in the 1982 Budget.
A number of local authorities have shown that they were indeed well aware of the points that I am making. Some authorities have been making it clear for many 127 months that applications will take a considerable time to process. In some cases this may mean that a grant applicant will have to wait a long time before his—
§ The question having been proposed after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at thirteen minutes past Eleven o'clock.