Housing Defects (Newton Aycliffe) (Hansard, 27 March 1985)

§ Mr. Derek Foster (Bishop Auckland)

I make no apologies for detaining the House on this crucial matter for many families in the town of Newton Aycliffe. This is a sad story of Newton Aycliffe folk whose dreams have turned into nightmares. They are the victims of the right-to-buy legislation—the sale of the century. They were stampeded into buying their council houses. They thought they had a bargain. They now know they have a millstone around their necks.

There are 429 houses on the Horndale ⅔ estate built by the Aycliffe development corporation in 1970 and 1971. Of these, 106 are now owner-occupied; 86 were bought from the Sedgefield district council under the right-to-buy provisions of the Housing Act 1980; the rest were bought from the Aycliffe development corporation before the transfer of housing to the Sedgefield district council in 1978.

The council proposes to re-roof 323 of the rented houses on this estate as part of its programme of remedial work under section 51 of the New Towns Act 1981. The district council will receive Government grant towards this work.

The council has offered to re-roof the owner-occupied dwellings at the same time, with the owners meeting the cost which is likely to be about £3,000. This will enable the owners to benefit from the economies of scale and will permit the council to re-roof more of its own dwellings.

Unfortunately, partly because of the very high rate of unemployment in my constituency, many of the owners are quite unable to find £3,000, even if loans were to be made available to them. If the owners cannot afford the work, they may prevent some of their tenant neighbours from benefiting from the Government grant. Moreover, the work will have to be done sooner or later. If it is done later, the cost will be much greater.

How have these unfortunate circumstances arisen? First, the Government ignored the warnings of the Sedgefield district council in its response to the Government's consultation document on the right-to-buy legislation in 1979. In its response the council suggested that there were three categories of houses that should be excluded from the right-to-buy legislation. Among these categories were dwellings where constructional defects are known or suspected", particularly houses in respect of which surveys have established the existence of severe defects in large numbers". The council said at that time that it would be improper to sell properties containing defects before remedial works have been carried out". The Department of the Environment undertook to see that the council's comments would be "studied thoroughly". It has since admitted to the Sedgefield district council that it did not study those documents.

The Department and Ministers brought pressure upon the council not to provide such full information about the defects to prospective buyers, even though earlier advice had been for full disclosure.

It is obvious from scrutiny of the correspondence and of the record of meetings that the Minister was interested 631 only in implementing the right-to-buy policy with indecent haste, without caring about the consequences for unsuspecting buyers. I have the documents and I shall make them available to the Minister or to anyone else who wishes to see them.

I further contend that the spirit of those meetings was an insult to elected members and to professional council officers, and a betrayal of the constitutional relationship between central and local Government.

As a result of contemptuously ignoring advice from councils such as Sedgefield, and as a result of Ministers' eagerness to boast of the number of houses sold, the Government landed themselves and unsuspecting owner-occupiers throughout the country in a costly mess which led to the Housing Defects Act 1984.

The Government estimate that expenditure under that Act will cost between £170 million and £250 million. The estimate for Sedgefield district council is about £5 million — but by no means all defective houses have been designated under the Act. The houses in Horndale ⅔ are certainly not designated. I cannot understand why those houses have not been designated, especially since the council is to receive a grant for rented houses of the same type on the same estate for the same repairs.

It is open to the council voluntarily to designate the houses, but it would receive no grant towards the £320,000 cost of meeting the repairs since the most severe restraints upon capital spending are being imposed by the Government.

It is also open to the council to seek a special dispensation to allow it to make repair grants available. However, the council has already received between 300 and 400 applications for such grants which it cannot meet because of the same Government constraints on capital spending.

I urge the Minister to designate these houses under the Housing Defects Act, thus guaranteeing grants to the owner-occupiers of Horndale 2/3.

The Minister for Housing and Construction was in Newton Aycliffe on Tuesday this week. He ignored my challenge to see the houses for himself, in spite of knowing about tonight's debate. While he was there he said: We did not force Sedgefield district council to sell these houses and they need not have done if they thought they were full of faults. I have documents to prove the Minister's statement to be wrong. I challenge him to retract his statement, to apologise to the district council and to make clear the Government's responsibility to the residents of Horndale.

I do not have time to quote chapter and verse, but I shall quote from one letter. A letter from the Department of the Environment dated 10 May 1982 states: I am therefore instructed to write to your Council —that is, Sedgefield district council— to give form[...] warning that the Secretary of State is contemplating giving your Council notice of his intention to use his powers under Section 23 of the Housing Act 1980 to enable tenants to exercise the right to buy and the right to a mortgage. That is force in anyone's language. In my contention, the Minister of the day — the right hon. Member for Tonbridge and Malling (Mr. Stanley) — forced the council to sell those houses against all advice, and his successor should now admit that.

One of the undeclared objectives of the right-to-buy policy was to shift the burden of housing repairs from the public to the private sector, from the public purse to the 632 home owner's back. That the unfortunate home owners of Horndale now understand only too well, and they will not readily forgive the Government.

§ The Parliamentary Under-Secretary of State for the Environment (Sir George Young)

The hon. Member for Bishop Auckland (Mr. Foster) has spoken movingly on behalf of his constituents, the owner-occupiers on the Horndale estate. I understand the predicament in which they find themselves. I should like to try to outline the Government's view of the position because it varies a little from the description given by the hon. Gentleman.

I should like to deal first with the recent visit to the hon. Gentleman's constituency by my hon. Friend the Minister for Housing and Construction. I also have seen the reports in The Northern Echo and been in touch with my hon. Friend. He seems to have been misreported. What he actually said was that there was no reason why the council should not have sold the dwellings at open market value —in other words, reflecting the defects. As I understand it, he did not make the statement attributed to him in that paper.

While Sedgefield might have wanted certain types of defective houses excluded under the terms of the Housing Act, the tenant has the right to buy, and the important thing is that he should be given full knowledge of the condition of the property — he should be fully aware of the defects. Then it is up to the tenant to make a final decision on whether he wants to buy in the light of the information about his home. I shall return to that matter.

I understand that the owner-occupiers face substantial bills for repairs to the roofs of their homes. My hon. Friend the Minister for Housing and Construction has also made it clear that he is quite happy to return to the hon. Gentleman's constituency and to meet the owners on a subsequent visit, which I understand will be arranged later this summer.

As the hon. Gentleman knows, the Government are willing to assist Sedgefield with roof repairs to the properties that it owns on the estate, and he drew a contrast between that assistance and the fact that no financial assistance is apparently available to owner-occupiers. During the passage of the Housing Defects Bill last year, the Government were accused of exactly the opposite, of favouring private owners of defective houses, while doing nothing to help local authorities with similar dwellings. I would not dispute the basic figures that the hon. Gentleman mentioned. I understand that about 125 people have purchased houses on the Horndale estate, about one quarter of them from the development corporation in the 1970s, and about three quarters from Sedgefield council under the right to buy. However, there is some dispute as to whether Sedgefield council made available information about the defects to the roofs to those who bought under the right to buy. That is crucial to the present dispute.

The council has told my Department that it advised individual purchasers of the findings of the Ove Arup consultants' report on defects at Newton Aycliffe, and it also advised purchasers to have a detailed structural survey of their properties. I cannot comment on the veracity of those statements, but they appear to have been made in good faith by the council.

In his opening remarks, the hon. Gentleman suggested that the tenants had been "stampeded" into buying their homes, and that my Department had so pressurised 633 Sedgefield council to see that council houses were sold quickly under the right to buy that it destroyed an attempt by that authority to make special arrangements with tenants buying houses on that estate.

My Department closely monitored the right to buy progress in Sedgefield from November 1981 until December 1983, and we had two meetings with the authority. We were anxious to ensure that tenants received offer notices under section 10 of the Housing Act 1980 as soon as was practicable, and that tenants could in general exercise their right to buy effectively and expeditiously. At no time was it suggested that that should be achieved at the expense of neglecting the interests of tenants in houses that were known or suspected to be defective.

Sedgefield council brought to our attention in 1981 the problem of selling houses at Newton Aycliffe that were known to be defective. My Department advised that while there could be no question as to the tenant's right to buy where he met the conditions laid down in the Housing Act 1980, it was in both the landlord's and the tenant's interest that there should be full disclosure of any actual or potential defects that could affect the valuation of the property and the tenant's future liability for repairs. That is crucial to the debate on whether information was available. We advised that the basic principle should be that of full disclosure of information, particularly where the local authority was aware of a risk of structural defects that might not be revealed by a normal surveyor's survey.

As far as we are aware, Sedgefield council has advised tenants purchasing dwellings under the right to buy in Newton Aycliffe to have the properties surveyed. Some tenants may not, of course, have heeded that advice.

In widening the opportunities for home ownership, the Government have never underestimated the extra responsibility that new purchasers take on board. In general, it is for an individual purchaser to satisfy himself that the house he wishes to buy is in a good state of repair. That is why, in our right-to-buy booklet, we advise that individuals should have their houses surveyed before they take the final decision on whether to buy. We also make it clear that after purchase the individual owner-occupier will be responsible for the repair and maintenance of his or her property.

As well as the local authority giving advice about the condition of these dwellings, the building societies, solicitors and surveyors, where employed by purchasers, may also have been expected to give advice.

I understand that Sedgefield council called together representatives of those professions operating in Newton Aycliffe to advise them of the content of the Ove Arup report and its implications for the right to buy.

It would be difficult for the Government to take sides in this dispute between the local authority and owner-occupiers. It is essentially a local matter. If owners consider that the authority has been guilty of maladministration, they may refer the matter to the local ombudsman, and I believe that has already been done. They might also seek individual legal advice as to whether they have an action in the courts. Let us look forward and see what might be done to help them.

As the hon. Gentleman will know, the Housing Defects Act 1984 was introduced specifically to provide assistance to private owners of dwellings which had formerly been owned by the public sector and which had been found to 634 be defective. Assistance is available by means of a reinstatement grant, or in some cases by repurchase, for eligible owners of dwellings which have been designated for the purposes of the Act either by my right hon. Friend or by a local housing authority. The criteria for designation in both cases are that the dwellings are considered to be defective by reason of design or construction and that their value has been substantially reduced as a result of the defects becoming generally known.

Under the terms of the Act, my right hon. Friend, in making a designation, may not describe a class of dwelling by reference to the area in which the dwellings are situated. In other words, a designation by my right hon. Friend must apply to every dwelling of a particular class in the country as a whole.

The only dwellings that meet the criteria for designation nationally by my right hon. Friend are prefabricated reinforced concrete types designed before 1960, and my right hon. Friend has already designated those types under the Act, which came into force on 1 December 1984. I understand that the houses are of traditional design and construction built in the 1970s, not the 1960s, which is why they have not been designated.

Section 12 of the Act provides for a local housing authority to be able to designate dwellings within its area if it considers that they meet the criteria for designation locally.

Assistance to owners under the Act is exactly the same in respect of houses designated by a local housing authority as for houses designated nationally by my right hon. Friend. Although there is no provision for Exchequer contribution in respect of dwellings repurchased under a local designation, my right hon. Friend will contribute 90 per cent. of the cost of reinstatement grants under such a designation.

Assistance under the Act is intended for those who purchased from the public sector in good faith and in ignorance of the fact that their homes were inherently defective. I referred to the confusion surrounding the circumstances of the sale of the houses concerned, and as to whether or not the present owners were adequately informed about the problems associated with this type of roofing. It is for Sedgefield district council, however, to consider in the first instance whether it could be satisfied that the criteria for designation under the Act would be met with respect to these particular dwellings.

Local designations are subject to veto by my right hon. Friend and I cannot, of course, anticipate the outcome of his consideration in any particular case.

The next port of call for the hon. Gentleman, who is clearly diligent in pursuing this case, is Sedgefield district council. If I may give him a little encouragement, I remind him that my right hon. Friend, in the House on 13 March, said that he was prepared to consider sympathetically applications from local authorities which have particular difficulty in meeting their statutory obligations under the Housing Defects Act. Further guidance to authorities on how to bid for additional resources is given in a circular issued today by my Department. That may offer some encouragement to the hon. Gentleman and to his constituents.

Turning to the offer to which the hon. Gentleman referred, Sedgefield council has offered to provide new pitched roofs for owner-occupiers on a rechargeable basis at a cost of about £3,000. I understand that that is £1,500 less than the owner-occupier would have to pay if he did 635 the work himself. Owners would not be charged for fees and supervision, and there are economies of scale to be achieved. It is for the individual owners to decide whether they wish to take up this offer. Of course, £3,000 is a lot to add to anyone's existing mortgage borrowing, but I think that owners will need to take into account whether the work will make their property more saleable and add to its value. Clearly, the more owners who take up the council's offer, the better, since that will improve the appearance of the estate, which would otherwise be blighted by the current dispute, and the estate would certainly look a little odd if it were left as a mixture of flat and pitched roofs.

636 I may not have been able to offer to the hon. Gentleman all the comfort that he wished, but it seems that there may be a way forward. As I said, my hon. Friend will be in the constituency again later in the summer, and he has made it clear that he would be happy to meet residents of the estate who handed him a petition when he visited it a few days ago.

I hope that the debate has not been totally without hope for those people with whose problems I very much sympathise, and that there may be a way through this rather tangled dispute.