§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Sainsbury.]
12.11 pm§ Mr. Marcus Fox (Shipley)I declare an interest in this subject. I served for several years on a housing association before becoming a Member of the House. It is even more important to say that my wife has served for much longer on a more successful housing association. In a sense it is difficult for me to admit that, but it is true.
With that family background, I want to raise some matters in regard to the future of housing associations. I am not attacking the concept of housing associations. They have demonstrated in the past 20 years that they are able to adapt quickly to changing market conditions, which seems to contradict the way in which some local authorities operate. Perhaps housing associations are strictly non-political. Their aim is to provide housing and the management thereof. I believe, however, that those bodies could fulfil a number of new roles.
Again, I in no sense seek to attack the Government's and my party's policy of home ownership. If there is one area in which we can claim great success, it is in spreading home ownership among those who never thought to achieve it, so that hundreds of thousands of council houses are now owned by the people who occupy them.
Without disavowing the principle of home ownership, however, none of us believes that it can extend to 100 per cent. of the electorate. I am sorry that more Opposition Members are not present to hear me say this. I believe that the upper limit may be 75 or 80 per cent. The achievement of 80 per cent. home ownership would give me great joy, but I accept that there are certain categories of people who, for economic or social reasons, will never be able to purchase their own homes.
If we accept that some 20 per cent. of the electorate will never own their own homes, we must consider the rented sector very carefully. Why are we not using housing associations to better effect to manage a greater percentage of the rented housing stock? The fact that properties were not originally provided by housing associations should not preclude their being managed by such bodies. I am thinking here of properties owned by local authorities. One does not have to wander far from the Palace of Westminster to see run-down, council-owned properties not just in disrepair but, in some cases, unmanageable in their present state.
My hon. Friend the Minister will no doubt remind me that blocks of flats and other properties have already been handed over to private builders by local councils. That is true, and I welcome the improvements in that respect, but that has been largely in terms of sale. I believe that that could be extended to include modernised properties being taken out of the hands of local councils and handed over to housing associations to solve the problem of properties for rent and the many accommodation needs that can be satisfied only in that way.
Sheltered housing for the elderly, hostels for young people and accommodation for the disabled will always require a financial contribution from the public sector, but I am more concerned about the management of those properties. Housing associations have already shown their ability to offer a range of options in terms of tenure, and 483 it is important that that benefit should be appreciated. Few other housing development agencies, especially private developers, can offer such facilities.
It is most important at this time that we should also consider the decay that is now so obvious in our inner cities, and a single approach to the problem is not sufficient.
Before housing associations can take on this increased role, however, we must consider the state of what is a relatively small and compact industry compared with local authority housing departments. At present, there are more than 2,500 registered housing associations. In my view, that is far too many. I have no wish to criticise the smaller associations in which the committee members employ no staff but give their own time voluntarily for the public good without any hope of glorification. Nevertheless, they operate on a very small scale. Only about 35 of all registered housing associations hold stocks of more than 2,000 properties, and very few indeed hold stocks in excess of 10,000 properties. When one compares that with the position of local authorities which often have tens of thousands of properties, the problem can be seen in perspective.
I suggest that it is time that we had two divisions of housing associations. The first division would contain the 35 or so that I have described. They have a record of efficiency and progress which can be measured in terms of their finances. They are well managed and—my hon. Friend will appreciate this—in surplus. That is the real test. Many smaller associations are considerably in deficit.
The real test would be for the associations, however large, to rely less on public funds and to raise what they need from the private sector. For the expanding role that I have described, they need to enter into a different sort of partnership, not with the Government and Housing Corporation, but with building societies, banks and pensions funds. Less use should be made of public funds, but if they are used, there must be scrutiny. The Housing Corporation has a role to play in that way as public accountability is vital. I shall say about the 12 biggest housing associations only that they are geographically spread throughout the country.
My hon. Friend the Minister has for many years held the record for replying to Adjournment debates, and I shall not keep him up too late. I turn now to the biggest quango in town. It is time that we turned the spotlight on the Housing Corporation. This year it has £680 million to spend. As fewer schemes are pending, it should have less work to do, but that does not seem to be the case. It seems to create more and more work. It investigates the minutest details of proposed schemes. That is becoming increasingly unnecessary.
The biggest housing associations have more experience than the Housing Corporation in building and management. It must accept that when such associations are well run, it need carry out only spotchecks. Those associations are registered and must make annual returns to the Registrar of Friendly Societies, who must presumably be satisfied with their performance.
In the past 20 years those associations have shown that they are capable of running their own affairs. They have the professional expertise. They do not need big brother—the Housing Corporation—to tell them what to do. There would be spin-offs from that. Schemes would be more quickly approved. At present it takes two or three 484 years. A housing association can buy land, hold it for a year or longer, and pay interest on it before the scheme is given the go-ahead.
My suggestion could reduce delays by more than 50 per cent., which is a worthwhile objective. I do not rule out the role of the Housing Corporation. It must decide on the allocation of funds. Just as this House decides for local authorities, the Housing Corporation should decide on the funds for individual housing associations. A lump sum could be given to associations which have proved themselves. Instead of approving every housing project individually, the Housing Corporation could get on with another job, which I shall now describe.
As many of the 2,000 smaller housing associations are in deficit, they need to be wound up and amalgamated, and sound management policies must be introduced. They will always depend on the public purse for their funds. The Housing Corporation will continue to play a role in this respect, but only so long as the associations are in need of professional advice. When they become competent, they should be given more independence.
Finally, I turn to committee membership. The present limitations under the Housing Act 1974 are too restrictive about those who may serve on committees. I understand the reasons for that. In the 1960s there were vested interests on those committees, with some members making personal gains. Architects and others formed housing associations and made sure that business came to them. We have moved a long way since then, and we now have a professional organisation.
The restrictions go far beyond what we now need to accommodate public accountability. Adversely, they limit the full potential of housing association activity. Housing associations must change direction. I have already described the new role which will demand different skills of committee members. Are we saying that, if we can find funds from the private sector, a person who is employed by a bank cannot serve on a housing association if his bank provides funds to it? Under the existing regulations that is the case. Even an official of a building society that might be moving into this area to help cannot serve on a housing association. There are ways of coping with this problem. Hon. Members must declare their interests when they come to the House. Members of housing associations could declare their interests, which could be inspected, and guidelines could be laid down for them. It is essential to recurit such people on an even wider basis to give more expertise to committees.
I could name one or two large builders if I were on ITV. Just because a building firm is doing a first-class job, are we saying that directors of that company should not serve in their own time and provide the expertise which is lacking? I believe that that lack is costing much money.
I am simply seeking to give housing associations a wider role in the provision of housing for our nation. I hope that building societies, commercial banks, insurance companies and pension funds will co-operate to that end, because it can only be in the national interest.
§ The Parliamentary Under-Secretary of State for the Environment (Sir George Young)Usually when I see my hon. Friend the Member for Shipley (Mr. Fox) in his place at this hour, it is to nod through some minor change in the composition of a Select Committee or Standing Committee, a mission in which he is often frustrated by 485 third parties. But tonight he has raised a most important subject—the future of housing associations. I pay tribute to the work that he and his wife have done for that movement, and I am grateful for his kind words about our home ownership initiatives.
My hon. Friend rightly began by saying that many people, for a variety of reasons, wish to rent their property rather than to buy it, and that Government policies must take their wishes into account. He suggested that we should transfer or encourage the transfer of more vacant property from local authorities to housing associations. Ministers sanction such transfers in appropriate cases, but we are anxious to ensure that, in the first place, local authorities should consider other initiatives, such as homesteading or improvement for sale, before they make the case for transfer to housing associations.
My hon. Friend also mentioned the need to reduce the number of housing associations. It is now difficult to start a housing association and register it with the corporation, because it looks hard at the number of existing associations in any given area. However, there are problems if housing associations become too big. If that happens, they tend to replicate the bureaucracy and the remoteness that are a problem with local authorities, and often lose the personal contact and involvement of committee members with tenants and the development of the association, which is the strength of the movement.
My hon. Friend mentioned the deficits of housing associations, quite rightly because we are anxious that the funds available to the movement should, wherever possible, go to the development of new accommodation rather than subsidising existing properties. I think the deficit is not so much a function of the size of a housing association as the date when the properties were built. Obviously a housing association with an existing portfolio which was developed some time ago will generate a surplus because the interest is now quite a small proportion of the rents whereas the newer properties tend to generate a loss.
My hon. Friend rightly emphasised the need for partnership between housing associations and the private sector. If I have time later I should like to say a word about that because, if the movement can reduce its dependence upon the Housing Corporation and public funds, it becomes even more independent and able to develop fresh initiatives without Government measures or the Housing Corporation looking over its shoulder all the time.
We have tried to streamline the process of securing approval for projects. When my hon. Friend was in my Department the procedure of double scrutiny was abandoned and it was made easier for worthwhile projects to go ahead. I have some reassuring news for him in response to what he said about the need to give an inside track to those larger housing associations with a proven track record to enable them to make good progress with their plans. I can tell him that special arrangements apply to the larger housing associations, which he mentioned, with a proven track record. Associations which have a programme agreement with the corporation are now enabled to have their projects approved in exactly the sort of streamlined way that my hon. Friend outlined rather than to have to submit them one by one and secure approval for each individual project. We are making good progress with that.
486 Towards the end of his remarks my hon. Friend mentioned committee membership and the restrictions that were imposed. I should like to write to him about the specific points he raised about bank managers and members of building companies who may for good reasons wish to be associated with housing associations. As he knows, the provisions that are set out in schedule 16 to the Housing Act 1980 are basically there not just to prevent malpractice but to make certain that there can be no conflict of interest for committee members, officers and employees of housing associations.
This may have the consequence that some housing associations cannot help some deserving applicants simply because they are related to employees of the association. I think that can be justified by the need for certainty about the probity of housing association committees and their staff. As I said, I should like to write to my hon. Friend about the further points he raised about bank managers and other professions which raise a different issue from the conflict of interest that may have inspired schedule 16.
My hon. Friend mentioned some of the challenges that face the housing association movement at the moment and the way in which they can most effectively take full advantage of the range of experience that they have built up over many years. Like my hon. Friend, I have experience of the movement. I was chairman of a medium-sized housing association for seven years, so I have seen from the inside some of the problems and challenges facing the movement. I stress to my hon. Friend the importance that I know he realises the Government attach to the contribution of the voluntary housing movement to meeting local housing needs. We value highly the contribution that the movement has made to our policies in tackling the very real housing challenge that affects particularly the inner cities that he mentioned.
Our commitment is demonstrated by the very large public expenditure that we have allocated to housing associations in addition to the Housing Corporation's gross provision for the current year of £687 million. Local authorities are expected to contribute well over £100 million to projects carried out by local housing associations.
We recognise that the housing association movement provides good quality homes and manages and maintains them well. They cater for the special needs of the frail elderly and the disabled. They also cater for single people, one-parent families and others with special housing difficulties.
As my hon. Friend knows, the movement depends on the voluntary effort made by members of the committees and unpaid officers and their advisers. That is an impressive testimony to their commitment to solving housing problems. I greatly admire their devotion and that of their staff.
My hon. Friend mentioned the inner cities; housing associations are active in nearly all the designated housing action areas. Nearly half their programme is in the defined urban areas, where unemployment is highest and where the needs are greatest. The associations can take into account the special housing problems of ethnic minorities. Therefore, the resources that we have made available to the movement are well targeted in terms of the Government's priorities for the areas and categories of people who need them most. I see no sign of change there and therefore no diminution of interest by the Government in the work of the housing association movement.
487 Housing associations also offer an extremely valuable additional source of new and improved dwellings, augmenting significantly the output of local authorities and the private sector. That range of work has largely been made possible by the introduction, 10 years ago, of a new system of Government grants, paid through the Housing Corporation and local authorities, which has enabled the movement to expand to become a major provider of subsidised housing for those in need. About 2,700 registered housing associations now own and manage around 500,000 dwellings.
My hon. Friend mentioned the way in which the movement is expanding into new initiatives. It is right to point out that the housing associations followed our encouragement to develop low-cost home ownership using the mechanism and grant-aid introduced by the Housing Act 1980. The housing associations have built, renovated or acquired properties for sale to low income purchasers, mostly on shared ownership terms, which is a concept which most associations have experimented with successfully. A total of nearly 10,000 shared ownership sales have been completed by the movement in the past few years.
On the same theme, the housing associations have also pioneered leasehold schemes for the elderly and have participated in the rescue of rundown areas through improvement for sale. On the right-to-buy schemes, some 4,500 tenants in England have been able to purchase their homes from non-charitable housing associations, thanks to the 1980 Act. On top of that, co-ownership societies have been given the power to sell their properties to members, and over 23,000 dwellings have moved into conventional owner-occupation as a result of that initiative.
I understand that there have been some worries that the progressive take-up of the right to buy on the stock of rented dwellings might have had some impact on the non-charitable housing associations and perhaps on the motivation of those who run them. One has to put that in perspective. If the pattern is maintained for the next three years, about 1 to 1.5 per cent. of the housing association rented stock will have become owner-occupied. While I should like to see more homes bought, one has to recognise that the vast majority of those who are accommodated by the voluntary housing movement will not be able to buy their homes; therefore, the impact will be relatively small.
The Housing and Building Control Bill will extend the right to buy, and through it we have made provision for a scheme by which the tenants of charitable housing associations whose dwellings were provided from public funds will be able to purchase homes in the private sector at a discount similar to that which would have been available under the right to buy, and on shared ownership terms if necessary. That represents a significant new opportunity for those who do not have the right to buy their present property. Non-charitable housing associations will be asked to assist in the scheme, in much the same way 488 as they did last year with the do-it-yourself shared ownership programme, which proved so highly popular with many tenants and other first-time buyers.
I know that the movement believes that it could sustain a much larger programme than it has at the moment. Of course, we do not wish to see its capacity in any way dissipated or lost. The movement has put to Ministers a figure of about £1 billion on the resources that could be used and has specified a preferred balance between the provision of rented accommodation and the home-ownership initiatives. So Ministers know how much they think they could do and where they would like the balance to be. We are aware of and respect the emphasis that they place on sustaining the level of output of homes for rent and preserving their rented stock.
My hon. Friend will recognise that, as in other areas relying on Government financial support, there is a limit on the amount of public funding that we can afford, and the level of resources we are currently making available through the Housing Corporation for 1984–85—which, as I said, allows a gross programme of £687 million—is designed to ensure that the housing associations can continue to make a significant contribution to meeting housing needs.
Housing associations have also made a great contribution to home ownership and are carrying forward at the moment a range of new home ownership initiatives and implementing the right to buy. I hope that those activities can increase, in so far as the resources available will allow, because they enable people to have a stake in their own home—people who might otherwise not have that opportunity.
My hon. Friend mentioned private funding. New ways of funding these and other housing association projects are being explored. There is a need to take a much wider look at the opportunities for attracting private finance into the movement. As my hon. Friend rightly said, the National Federation of Housing Associations has put proposals to us at the moment, which we are studying urgently, for the use of alternative funding. We have to consider carefully the scale of any experiment and the extent to which guarantees may be needed from the public sector.
I pay tribute to the work of Sir Hugh Cubitt, chairman of the Housing Corporation, who has made a major contribution to the work of the movement, and also to the National Federation of Housing Associations under the directorship of Richard Best, whose assiduous efforts in representing the movement's interests to the Government have been extremely valuable, and will, I am sure, continue to be so.
I am convinced that the ability and capacity of the movement to innovate and adapt to changing needs will prove to be a major strength in the future in tackling the issues that my hon. Friend has rightly set out before the House tonight.
§ Question put and agreed to.
§ Adjourned accordingly at nineteen minutes to One o' clock.