§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lennox-Boyd.]11.56 pm
§ Mr. Robin Cook (Livingston)
I am grateful for this opportunity to raise on the Adjournment of the House the housing capital allocations for Scottish new towns. The timing could not be better. As the Parliamentary Under-Secretary of State for Scotland will be aware, he required the Scottish new towns to submit to him revised capital estimates by 31 January. I assume that this debate takes place as he is starting to mull over the revised capital estimates that have been submitted to him.
That brings me logically to the only detailed question that I will put to the House on statistics. That is the question that I put to the hon. Gentleman earlier so he might have the maximum time to reflect upon it. However, it would be interesting for us to know what the total bid has been from the five Scottish new towns. I personally very much suspect that the total bid from those five development corporations will well exceed the £30 million per annum that the Minister has allocated among all five of them. It may well exceed that figure because the Scottish Office has put the new towns in an impossible position. That position stems from the Minister's decision to lift the moratorium on housebuilding in the new towns. That moratorium, as my hon. Friends the Members for Cumbernauld and Kilsyth (Mr. Hogg) and for Cunninghame, South (Mr. Lambie), who are present, will know, generated a rapid housing shortage in the new towns.
In the new towns there is an expanding young population. The members of that population perfectly predictably get married and look for houses which they cannot find in the new towns. I will not dwell on that problem because the Minister was courteous enough to see a delegation last October when we explained the problem to him. Subsequently he resolved to lift the moratorium on housebuilding for general needs.
That decision was most welcome because it showed a recognition on the Minister's part of the fact that there was a real housing need in those new towns. At the time he proposed that the new towns should aim to construct 1,400 houses over the next three years. Among all five Scottish new towns that target of 1,400 is not so impressive, but it is a welcome first step.
However, there is no point in authorising those 1,400 houses unless the Minister also authorises the money with which to build them. That brings us to the capital allocations to the new towns.
Before I come to the figures, it is worth noting that the housing capital allocation to the Scottish new towns is something of a misnomer because, hitherto, the Scottish Office has got away with a cheap system of housing capital allocation to the new towns whereby those allocations are almost wholly funded out of the sale of the houses in the new towns. Next year the total allocation will be £24.2 million. That will be met, to the tune of £20.4 million, from the revenue from sales of houses in the new towns.
Although it is called an allocation, in effect for the most part it is permission from the Scottish Office for new towns to spend the money raised by selling their houses. If, however, the new towns are to build those 1,400 new 1032 houses, it will be necessary for that allocation to rise substantially above what the new towns can expect from the sale of existing houses.
The Minister has not yet recognised that need. In the figures that he released last December, he allocated an additional £3 million expenditure for the forthcoming financial year, but that comes nowhere near releasing the resources that are needed for new build. What is the solution that he proposes? It is contained in his letter to the new towns, in which it is said:Ministers have taken a broad assumption that corporations will peg their aggregate rehabilitation expenditure at around £10milion in each of the next three years.That word "peg" conceals a substantial cut, nor will it be possible for new towns to "peg" that expenditure to £10 million spread evenly over three years, because in the nature of things, most of the new towns already have rehabilitation programmes committed for the next year. They will then have to spend substantially more than £10 million in the forthcoming year, and the assumption among them — the Minister will correct this if it is wrong —is that if they spend substantially more than £10 million in the first of the three years, they will have to spend substantially less in the subsequent two years.
The consequences of this are dramatic. Livingston has submitted a revised capital estimate on the assumption that it should cut its rehabilitation programme to free resources to build houses. The figures show that the rehabilitation expenditure of Livingston development corporation will fall from £3.5 million in the current financial year to £670,000 in 1989–90. That is to say that its rehabilitation programme will fall to less than one fifth of its present value within a three-year period. The consequences of that dramatic cut will be dire.
Too many of the houses in the new towns were built in the 1960s. My hon. Friends will have had similar experiences with such houses in their constituencies. I know that my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton), whom I am pleased to see in his place, will have visited many similar types of houses in the course of his Front Bench duties. In the new towns, we have that legacy of houses put up in the 1960s, when system housing predominated. We now have the familiar problems of such housing.
Livingston still has 800 flats with flat roofs, which have turned out to be marvellous devices for catching the rainwater. I have a constituent who has had his flat roof repaired 14 times but still has rain coming in through the roof. In fairness to the development corporation, I point out that it admits that there is no final solution to the problem other than the creation of pitched roofs.
Livingston also has a large number of houses that I hope are unique to it, known as the Jesperson type of housing. These were designed by a pure genius who so constructed the flats that each has a balcony, with a drying area to the rear, which stands on top of the roof of the lounge of the flat below. The problems that flow from this are easily grasped by anyone other than the architect.
The development corporation has an ambitious and comprehensive programme to rehabilitate and convert these system-built houses. The programme has been in full swing in a number of streets and has been successful. It has resulted in much more attractive housing, and it is popular with the tenants. That programme will effectively halt on the figures that the development corporation now has to contemplate as a result of the December letter.
1033 In effect, the new towns are being asked to build new houses by halting the renovation of existing houses. That proposal is wrong on two counts. It is wrong first because it is irrational. The origin of the Minister's decision to lift the moratorium on housebuilding reflected the fact that there is real housing need in the new towns. That need can also be met by rehabilitating our existing housing stock. We have in Livingston, and I am sure that my hon. Friends have such a situation as well, houses that stand empty because they require substantial rehabilitation. There are 80 Bison flats standing empty because they are far too wet to let, and cannot be let unless there is substantial rehabilitation of the external cladding.
It is irrational to say that that rehabilitation programme must halt in order to release resources for new buildings when the resources will allow only the construction of a much smaller number of new houses.
Secondly, the decision is wrong because it is unfair. In effect, it is being said that tenants who live in houses that at present suffer from the problems of the system-built designs of the 1960s must expect to make the sacrifice to free resources for new buildings, and that families living in cold and wet houses must put up with it in order that we can build houses for those who have no homes at all and need new houses.
That is not a choice that the new towns should face. If the Minister forces that choice on the new town development corporations, he will turn his decision to lift the moratorium into a nightmare. I regret that. I welcomed the decision to lift the moratorium. It was a step in the right direction. It showed that the Minister recognised the need for new houses and that to meet the housing shortage in new towns we required additional homes for our people.
I ask the Minister to recognise that new towns cannot possibly meet the need for additional houses without extra resources. I urge him, as he considers the revised capital estimates that have been submitted to him by the Scottish new towns, to reflect on the total sums that they have asked for and recognise that he will need to put more resources on the table so that they can do the job that he has asked them to carry out.
§ Mr. David Lambie (Cunninghame, South)
I am grateful for the opportunity to speak on the Adjournment debate and to support the general argument put forward by my hon. Friend the Member for Livingston (Mr. Cook). Like my hon. Friend, I was grateful when Irvine new town in my constituency was given permission to build 60 new houses over the next three years. That will certainly go a long way to solve the problem of increasing waiting lists, especially for second generation families.
There was a big announcement recently in Irvine about the Finnish Paper Company, Caledonian Paper, coming to Irvine and providing 1,000 to 1,500 jobs over the construction period of the paper mill, and 900 permanent jobs upon its completion. Irvine Development Corporation needs more money to allow it to build not 60 houses but perhaps double that number to accommodate the people who will come into the area to take part in the Finnish Paper Mill's exciting project.
Because Irvine development corporation now has permission to build 60 houses a year over the next three years, and with the arrival of the paper mill, private developers are moving in and building more private houses. We are developing an education problem as well as a housing problem.
1034 In dealing with the financing of the new towns, will the Minister provide the money for Irvine development corporation to build a new primary school in the Girdle Toll area? This year, young pupils aged between four and six years will not be able to find a place in the existing local school and will have to be bussed to other schools within the area. Will the Minister allow Irvine development corporation the finances to build the school this year and to recoup the money over later years from Strathclyde regional council? If he does that, he will solve the problem and create a much happier new town.
§ 12.9 am
§ The Parliamentary Under-Secretary of State for Scotland (Mr. Ian Lang)
I am grateful to the hon. Member for Livingston (Mr. Cook) for giving us the opportunity to discuss the housing responsibilities of the Scottish new town development corporations. The new towns' achievements in housing have tended to be somewhat overshadowed by their outstandingly successful record in industrial promotion. I hope that this debate will help to gain recognition for the corporations' record on housing, to clarify their current housing policies and priorities and to confirm the importance that the Government attach to the corporations' continued exercise of their housing responsibilities.
At the beginning of his speech the hon. Gentleman asked me specifically — and I am grateful to him for giving me time to reflect upon his question—about the new total bid from the five development corporations. Among all the figures that I have with me in the Chamber, I regret that I do not have that one. However, the new towns with which I have had recent contact, including the Irvine development corporation, have expressed their appreciation both of the lifting of the moratorum—I am grateful for what the hon. Gentleman said about that—and of the capital allocations that we have announced.
The policies that the Government have encouraged the corporations to adopt are expressly designed to facilitate the growth of viable and balanced communities. Wider opportunities for home ownership are, in our view fundamental to that objective. The level of home ownership in the new towns has traditionally been low, by Scottish standards. Over the past six years we have sought to redress that imbalance by introducing the tenants' right to buy and by allowing corporations voluntarily to sell houses to tenants who may not qualify under the 1980 legislation.
The corporations have long recognised that increased home ownership will help the towns to reach a balanced maturity, and they have engaged in house sales with vigour and enthusiasm. Home ownership in Livingston has doubled in the past six years, although I have to add that at 26 per cent. there is still room for further growth. I do not believe that the hon. Member for Livingston has clone justice to the corporation's record on sales, nor to its significance in enabling new investment to be created., a point to which I shall return.
We also believe that corporations' housing activities should reflect the fact that the days of public housebuilding for overspill are past. The demand for new housing should, in our view, now be met in the main by the private sector. In line with this, over the past four years we have approved various initiatives by the corporations designed to increase the development of housing land by private builders and to encourage the provision of low-cost 1035 housing within private schemes. We gave the housebuilding industry a clear opportunity to consolidate its presence in the new towns by temporarily restricting the building of houses for general rental needs by the corporations. During my recent visit to Irvine new town I saw clear evidence of the success of this policy. That should help to meet the point raised by the hon. Gentleman in connection with the arrival of the Kymmene Stromberg paper mill.
I said that the private sector should be the main agent for newbuild. However, it should not be the only agent. The private sector cannot be expected to meet the complete range of housing needs of the new towns. By shifting the prime responsibility for the new general needs build on to the private sector, we have freed public resources for a range of special needs that the corporations are best fitted to meet, and for the improvement of the existing rental stock.
During the past six years the corporations have been free to make proposals for specially adapted and amenity housing, and we have allowed the new towns to bring forward substantial expenditure for the rehabilitation of their rental housing—a point to which I shall return, since it was rasied by the hon. Gentleman.
We have also been willing to reinterpret special needs in the context of the new towns. Last year my Department reassessed the case for a limited resumption of public sector housebuilding for general needs. I considered the corporations' views and listened to the representations of the local authorities concerned. I listened also to the representations of hon. Members, including those of the hon. Members for Livingston and for Cunninghame, South (Mr. Lambie), and I examined demographic evidence indicating substantial future growth in new town households arising from the second generation.
I concluded that the housing needs of young couples and single people formed a distinctive category of special needs in the new towns and that the corporations should be equipped to help to satisfy these needs in order to maintain the population balance of their communities. Therefore we decided to ease the restrictions on new housebuilding for rent by the corporations. Corporations are new free to exercise their own judgment in determining their housing priorities as between newbuild and improvement. The outcome of our review illustrates again our concern to frame and adjust housing policies to achieve the overall objective of creating viable communities.
Our policies are succeeding. The proportion of owner-occupied houses in the new towns has risen from 21 per cent. in 1980 to 36 per cent. now, compared with the Scottish average of around 41 per cent. In three new towns—Glenrothes, East Kilbride and Cumbernauld — the level is now at or above the national average. Over 20,000 new-town houses have now been sold to their tenants. This is some 30 per cent. of the corporations' housing stock. Early in 1986, we gave corporation tenants an improved opportunity to purchase their homes by permitting the corporations to sell houses on terms corresponding to those later embodied in the Housing (Scotland) Act. Sales of houses are continuing at record levels.
With regard to new private housebuilding, output and activity rates have risen dramatically. Corporations have introduced a wide range of incentives to stimulate the private development of housing land including accelerated 1036 site disposal programmes and disposals to firms specialising in lower cost housing. The combined effect of those measures has been a substantial increase in annual completions from just over 500 houses in 1982–83 to over 870 in 1985–86. Private sector completions are estimated to top 1,200 in the current financial year. Over the past three years the housebuilding industry has substantially expanded and consolidated its presence in the new towns. The towns' credibility as locations for private housing investment has strengthened immeasurably.
The corporations' record in housing improvement is equally impressive. Over the past six years. the corporations have in aggregate spent some £76 million on the repair and rehabilitation of their rental stock. In Livingston in the same period, £16.5 million has been spent on the improvement of the corporation's rental housing. Across all five towns, hundreds of houses have been brought up to today's standards in terms of plumbing, heating, insulation, roofing and external appearance. Seventy-six million pounds of repairs and modernisation is a substantial investment, by any standard. I want to explain in more detail how this programme was financed, since this bears directly on the issues raised by the hon. Member for Livingston.
Housing capital expenditure by the new town development corporations is financed by loans from the National Loans Fund—that is, external borrowing—and by net receipts from house sales — that is, internal revenue. A gross programme of new housing investment for the towns is fixed annually, taking account of the corporations' commitments and priority works. In determining how this gross programme is to be financed, account is taken of corporations' own forecasts of receipts from house sales. The more new investment can be internally financed, the less drain there is on the National Loans Fund and, hence, on the public sector borrowing requirement. In any one year, the difference between the aggregate receipts target and the approved gross programme represents the amount to be financed by external borrowing.
Our policy has been to allow corporations to retain any receipts in excess of the annual target and to apply those to extra new investment over and above the gross programme. There is, therefore, a direct incentive to corporations to maximise their receipts. Over the past five years, corporations have consistently out-performed their sales targets. In each of the years 1981–82 to 1985–86, corporations were permitted to retain the excess receipts and to apply them to new works of their choice. Some £45 million has been available to corporations in this way, extending the scope of gross programmes very substantially.
Corporations have therefore been able to bring forward substantial expenditure on repair and modernisation. Spending on rehabilitation has proceeded at a higher rate than originally provided for in the Government's plans. That is not a criticism; it is a statement of fact. By anticipating expenditure that would otherwise have fallen in later years, the corporations have significantly reduced the amount of rehabilitation work that remains to be done.
I am not suggesting that corporations' housing stock presents no further major problems. Of course some problems of design remain to be tackled and the need to repair worn-out facilities will remain, but the rapid pace at which work of this kind has already been carried out leaves less to be done in future. In discussing with my 1037 Department their cases for a resumption of new general needs housebuilding, the corporations recognised that choices within limited resources have to be made and that, if the moratorium were lifted, their priorities for the future would shift increasingly towards new build and that it might be necessary for modernisation work to proceed at a somewhat slower pace. But — and I stress this — it would he for the corporations to determine their investment priorities for 1987–88 and for later years. It is they who decide the relative need for improvement as against newbuild and they, within their overall allocations, will decide what resources will be applied to which purpose.
§ Mr. Robin Cook
Is the Minister saying that if the combined bids from the five Scottish new towns carry rehabilitation expenditure well above the £10 million figure that he recommended in his letter, he would be willing to sanction that form of expenditure on rehabilitation rather than newbuilds?
§ Mr. Lang
I think that that is a hypothetical question. The pressure has been for new build rather than rehabilitation. Given the substantial expenditure that has already taken place on rehabilitation, I do not think that the hon. Gentleman has presented a likely hypothesis. I should be willing to consider any such submission, of course.
I turn to the corporations' housing programmes for the next three years. When, last December, we announced the easing of the restrictions on new build, we made it clear that we intended to allocate extra resources to the development corporations to enable them to finance a new build programme. We said that £6 million more would be made available to new towns in 1987–88 for gross new housing investment than was allocated on a comparable basis in 1986–87. We said also that corporations would be permitted to plan ahead on the basis that, overall resources for housing investment permitting, they might expect to receive in aggregate a further increase of about £8 million on the gross programme, phased over the following two years.
The gross programme for 1987–88 stands at £24.2 million. Of that we expect the corporations themselves to finance some £20.4 million of investment, by applying receipts from house sales. The figure of £20.4 million takes account of the corporations' own forecasts and our assessment of the boost to sales given by the Housing (Scotland) Act 1986. In the current year, corporations are set again to break the aggregate receipts target of £18.3 million, and should achieve over £26 million in receipts. In the light of the corporations' current achievements, I am satisfied that the self-financing target for next year is both realistic and attainable.
The hon. Member for Livingston does not appear to endorse the principle of maximising the self-financing of new investment. I find this a curious position. My view is that if, as a result of tenants exercising their statutory right to buy, corporations achieve receipts with which to undertake fresh investment at no cost to public funds, this is to be desired. The investment is no less real because it is funded by the corporations. That programme that we have set for 1987–88 assumes a real increase in new investment over the last year. To the extent that this additional investment can be internally financed from 1038 house sales, this is in our view an entirely appropriate coupling of the corporations' role as willing sellers and as investors.
As for the level of receipts that we have forecast as accruing in later years, I have already explained that the target of £20.4 million for next year is entirely reasonable as against this year's probable achievement of over £26 million. As to later years, we acknowledge that future levels of sales cannot be predicted with complete certainty. We are therefore building in a measure of flexibility by assuming provisional receipts targets for 1988–89 and 1989–90 that are lower on average than the corporations have achieved in any year since 1982. If hon. Members representing the new towns reflect on this and recall from the Government's statement on 5 December 1986 that we have allowed corporations to plan on the basis of a gross programme of around £32 million by 1989–90, they will appreciate that we are planning for a substantial net contribution to the new towns' housing programme by the end of the decade. By that time, on present plans, our contribution to new town housing investment should increase by up to £18 million, depending on the overall resources available. This is a major supplement to the existing programme and it reflects our appreciation of the demands for rental housing which the corporations expect to face over the coming years.
The provisional allocations for 1987–88 were based on corporations' own reports on their committed and priority projects. In the case of Livingston, the gross allocation of £5.7 million covers a priority special needs development as well as commitments of nearly £4 million on major rehabilitation schemes, including those in Knightsridge 4 and Craigshill, which were approved by my Department last year. As the hon. Member for Livingston is aware, the corporation made no bid for resources for general needs housing in 1987–88. I am surprised that he does not appear to share the corporation's own appreciation of the extent to which its priorities in rehabilitation have been taken into account in setting the gross allocation. I should point out also that the receipts target set for the corporation for next year is lower than the corporation achieved in 1983 and 1984. The corporation itself appears to consider this not unreasonable.
The picture that emerges from the corporations' own forward programmes is not one of corporations starved of resources to meet housing needs. I freely admit that where corporations have appeared able in some measure to finance an increased programme from increased receipts we have allowed for this. In the case of Cumbernauld, East Kilbride and Glenrothes, we believe it reasonable to expect these corporations to finance their gross investment programmes for 1987–88 out of their own resources based on sales targets that are substantially lower than they have achieved each year since 1982. But that does not diminish the volume or value of new work that will be undertaken.
The Government have made provision for a new towns' gross housing capital programme that in three years' time will have increased by 65 per cent. We have done this in direct response to the case made by the corporations for a resumption of general needs housebuilding. We have made conservative assumptions about the extent to which this programme can be financed by reinvestment of sales receipts. On present plans net Government funding will he £18 million higher in three years' time than at present. We believe that the increased investment could provide up to 1,400 extra houses for rent by 1990—that is meeting 78 1039 per cent. of the rental housing needs identified by the corporations in their submissions to me. Within the forecast gross programmes, corporations will still be able to spend at least £10 million a year on improvements to their existing rental stock. If receipts should exceed forecasts, corporations will have freedom to spend the 1040 additional income on new investment according to their own priorities. These facts confirm that the Government's record on new town housing is sounc. Our policies work and there is and will continue to be adequate financial backing for them.
§ Question put and agreed to.
§ Adjourned accordingly at twenty-five minutes past Twelve o'clock.