THE KEEPING OF THE HOUSING REVENUE ACCOUNT (Hansard, 14 June 1989)

§ Mr. Matthew Taylor (Truro)
I beg to move amendment No. 212, in page 143, line 48, at end insert—

§ Madam Deputy Speaker
With this we shall discuss amendment No. 213, in page 143, line 48, at end insert—

§ Mr. Taylor
The debate on these amendments directly follows our previous debate and raises very much the same concern about the poor subsidising the very poor. The Minister has failed to resolve an argument that continues to rage and that severely worries tenants of council houses, namely, the effects of the ring-fencing of accounts.
The amendments aim to add to the list of items allowed through the housing revenue account. They would 946 alleviate the problems caused by the Government's phasing out of rent subsidies and the ring-fencing of the HRA. The arguments for tackling the problems have already been put by the Opposition and I am well aware that the Minister is not prepared to accept what we believe will be the impact of what he is doing. Nevertheless, the people are worried and generally the people are right.
The amendments would break the ring fence and remove the new poverty trap now being created. In fact, they are aimed at helping the Minister out of the pit that he has dug for himself because both impose a cash limit and both, especially No. 212, would reduce to nothing as council-owned homes are sold or transferred to outside management if the Government's policy is successful. It is not an open-ended sum of money; it is directly related to housing held by a council and to the costs that may be involved. Although the amendments break the ring fence, they do so in a precise and limited way.
I hope that the Minister will seize this opportunity to save himself from the difficulties in which he will otherwise find himself. It is almost an act of generosity, and I hope that he will accept the amendments.

§ Mr. Trippier
I was fascinated with the hon. Gentleman's remark that people were generally worried and that people were generally right. I find that odd. Presumably it is part of the twisted propaganda put out by the SLD. I shall seek to correct the hon. Gentleman in as brief a time as possible. He well knows that the whole purpose of not allowing money from the general rate fund in any way to subsidise the housing revenue account is to draw a clearer correlation between the management efficiency of that housing authority and the tenants that it is meant to serve as its customers.
It is illogical for the hon. Gentleman to table such an amendment. He appears to have plucked a figure out of the air. There is no reason or justification for that figure and, indeed, he did not attempt to give one. I can comfort him by saying that there is no necessity for the amendment, and I hope that he will be good enough to convey that to those who, as he put it, are generally worried.

§ Mr. George Howarth
During the last debate the Minister said that he would give me an opportunity to intervene, but he did not. He now speaks of plucking figures out of the air. By how much does he expect the private rented sector to grow during the next few years? As yet he has singularly failed to give any information on that.

§ Mr. Trippier
It would be hazardous for any Minister, of any Government, standing at this Dispath Box to be so reckless as to put a figure on that. It is the same sort of answer that the right hon. Member for Blaenau Gwent (Mr. Foot) gave when he was Leader of the Opposition, when he consistently refused to say what he thought the level of unemployment would be in X years. The hon. Gentleman's question was stupid and unworthy of him.

§ Mr. Howarth
The difference between the current position and that when my right hon. Friend the Member for Blaenau Gwent (Mr. Foot) was Leader of the Opposition is that last year the Government implemented an Act with the major purpose of expanding the private rented sector. The Minister must have a target in mind because it is clearly a central objective of Government policy.

§ Mr. Trippier
I do not understand why the Government have to set a target. With the largest public housing stock and the smallest private rented housing stock in the western world, it is clear that the position must be reversed. The balance is out of kilter. Even though this Government are efficient in introducing, developing and pursuing their policies, it is bordering on the ludicrious for the hon. Gentleman to suggest that since the Act took effect on 1 April there must have been such a dramatic incursion into the private rented sector that the results should be shown two months later.

§ Mr. George Howarth
rose—

§ Mr. Trippier
The hon. Gentleman knows that in Committee I was keen to allow him to intervene as many times as he wanted. We have debated these matters in the past and I have no doubt that he will return to them on other amendments. I want to respond to the SLD amendments.

§ Mr. Howarth
The Minister said that the proportion of private rented sector stock is too small. A few months ago the Government enacted legislation with the specific objective of increasing that proportion. The Minister must have some idea of what he expects that legislation to achieve during the next few years. That is all that I am asking him to tell the House.

§ Mr. Trippier
Obviously, we can estimate what we want to be developed through the housing association movement—

§ Mr. Soley
That is the public sector.

§ Mr. Trippier
I do not want to enter that debate again. The hon. Member for Hammersmith (Mr. Soley) has never accepted that the housing association movement is in the private rented sector. It does not really matter how he defines it; what matters is the way that we define it because we are subject to parliamentary questions. We regard it as being within the private rented sector, but with Government subsidy. If we link the housing association rented sector with the private landlord, it is difficult to predict precisely what the figure might be—

§ Mr. Soley
rose—

§ Mr. Trippier
No.

§ Mr. Soley
I wish to correct the Minister.

§ Mr. Trippier
I am sorry, but it is not a correction. The hon. Gentleman well knows that there is a difference of opinion between the Opposition and the Government.

§ Mr. Soley
rose—

§ Mr. Trippier
If the hon. Gentleman would just calm down for a moment, I shall give way to him. There is a difference of opinion between the Government and the Opposition about how to define the housing association movement. In all the statistics that we publish, we make it clear that it is in the private rented sector. The public rented sector covers council houses in the ownership of local authorities.

§ Mr. Soley
I do not dispute that there is disagreement between us, but when I have tabled questions the Minister has seen fit not to answer them but to ask the Housing Corporation to do so. The Housing Corporation does not 948 share the Minister's view on the definition of a housing association. I want that to be clear, not because I disagree about the differences between us but because it should be understood that not all parliamentary questions give the same answer as the Minister. Answers sent indirectly through the Housing Corporation are different.

§ Mr. Trippier
I respect the spirit in which the hon. Gentleman made his intervention. I have never been, formally or informally, approached by the Housing Corporation about the matter. If it disagrees with our definition of the private rented sector, I accept that that difference should be ironed out. Perhaps as a result of the hon. Gentleman's intervention the Government and the Housing Corporation will discuss it, but I have received no representations from it thus far.

§ Mr. George Howarth
It is important that we are given the information for which we are asking. For the purposes of argument, I accept the Minister's definition that the housing association movement can be considered as part of the same parcel as the private rented sector. Will he predict, by his definition, by how much he expects its housing stock to increase over the next few years?

§ Mr. Trippier
In saying by how much I expect it to rise, I must make it clear that it is my opinion. It is hoped that there will be a net increase in the housing association sector of at least 35,000 houses a year. We shall have to wait and see whether that target is attained. I suspect—my hon. Friends can draw comfort from this—that it might be exceeded, which is precisely the reason why I gave that figure. To have given a higher figure would have been rather reckless, would it not?
Under the budget-making provisions of clause 67, which we introduced in Committee, local authorities will not be required to avoid a deficit on their housing revenue account. We may not have made that clear in Committee, because I cannot remember us specifically dealing with that point.
Clause 67 requires authorities to formulate proposals that, so far as they can foresee, will not result in a deficit, and they must keep them under review, taking reasonably practicable steps throughout the year to avoid a deficit. However, if, despite their best endeavours—perhaps because of outside changes—a deficit arises, it is simply carried over to be cleared in the next financial year. Therefore, the flexibility that the hon. Member for Truro (Mr. Taylor) is seeking is built into the system. There is, therefore, no need for a last-minute balancing contribution from the rate fund. The HRA merely starts the following year showing a deficit.
I hope that I have reassured the hon. Member for Truro and that he will withdraw the amendment.

§ Mr. Matthew Taylor
The point that the Minister made at the end introduces flexibility, not autonomy, which cannot be a policy of a council. If it were, it would have to disguise it.
We debated the same issue on amendment No. 212. There is no advantage in the House having two votes on the same issue, but put in different ways, so I beg to ask leave to withdraw the amendment.

§ Mr. Soley
I beg to move amendment No. 182, in page 145, line 16, at end insert 'or 949 (c) expenditure insofar as the Secretary of State determines that it relates solely to the welfare of the occupiers of houses and other property; or (d) expenditure insofar as the Secretary of State determines that it relates solely or primarily to the provision of a service or services for the benefit of persons who are not occupants of houses and property within the account.'. The amendment is important and draws attention to the Government's ring-fencing proposals. It is not the amendment that I should have liked to be selected, but there are winners and losers and I did not get the precise wording that I should have liked. Again, because of the way in which the Government have handled the Report stage, I fear that the House will be unable to give sufficient attention to the ring-fencing debate.
The amendment aims to clarify the point that expenditure on the welfare functions of housing and services to the private sector, such as advice to private tenants, improvement grants and agency schemes, will not be debited to the housing revenue account.
The amendment raises the principle and practice of ring fencing. Under their ring-fencing proposals, the Government are saying that the ratepayer or, in future, the poll tax payer must not subsidise rents. The only fair aspect of their proposals is that they are saying that the reverse should not apply. The proposals have serious consequences. They will increase rents and reduce subsidies available to council tenants in some areas. As a consequence, council tenants will feel a further squeeze on their finances.
6.15 pm
We are trying to get the Minister to clarify the Government's housing revenue account policy. Will the HRA be limited to matters relating to buildings or will it include services? Should not the poll tax payer, rather than the council tenant, bear the cost of services that are provided for the benefit of the community? Let me take the example of an advice service to private tenants. Many local authorities are arranging for private tenants to be represented in one form or another, to deal with harassment and such matters. If the charge for such services is to be debited to the HRA, problems will arise. It is logical to allow expenditure on such matters from poll tax revenue as they are a general service to the public. One cannot help suspecting that such costs will be debited to the HRA, which will limit services available to people and, at the same time, increase councils' housing costs.
We believe that the ring-fencing proposals are unfair. The taxpayer generously and properly subsidises people who want to buy houses through grants in the form of income tax relief and grants for houses that they buy from the public sector.
The Minister will remember the slip that he made late at night some months ago when we were debating the squalid Rent Officers (Additional Functions) Order 1989, which reduced a person's housing benefit if he was in a house that was considered to be too large. The Minister said that the taxpayer should not subsidise a spare room. I asked him how many spare rooms he had in his house and how much subsidy he received through mortgage tax relief. He replied, "That does not apply because I do not receive housing benefit." That is how the Minister avoids such questions.
I appreciate that Labour Members are asking the Minister embarrassing and difficult questions, but the 950 reason why we press them is that we know, when proposals such as those on ring fencing are introduced, that a general attack is being made on council housing in an attempt to push up rents. In areas where rents have been subsidised from the rates—soon to be the poll tax—rents have been kept to a reasonable level. I hope that the Minister will not start talking about some rents being unreasonably low. In Committee, he was unable to define the words "unreasonably low". Tory and Labour-controlled authorities charge relatively low rents compared with other areas.
Most people connected with housing, outside the Government, are trying to find some definition of affordability, which is what matters. The Government have got themselves into a crisis on housing because they have never considered that definition. There is a lack of affordable accommodation for rent or sale. That problem is biting most on people who are trying to rent or buy. Under proposals such as ring fencing, councils are being increasingly constrained, thereby increasing rents and worsening the crisis. That is why we shall press the amendment today, although, sadly, it will not receive the attention that it deserves.

§ Mr. Allen McKay
I did not realise how important the amendment was until it was explained. I read it and reread it and wondered what it was about. It is about matters such as the housing advice centres set up by local authorities. Housing advice centres exist purely and simply because of the housing crisis in certain areas, which is a crisis in people's lives. The benefit for council tenants of having the right to buy, to which the Minister referred, has gone sour for many people who have found that they cannot afford the houses they have bought. Under the Housing Act 1988, local authorities cannot buy back the properties. The only alternative is to put the property on the open market and then to depend again on the local authority for housing.
Houses are not easily available. Local authorities have decided to set up housing advice centres, where advice is available for the residents of the area and people who want to come into the area. They can obtain advice on where houses are available and the waiting time for houses. It would be wrong for such centres to be included in the housing revenue account.
I remember a recent contribution I made. The authority to which I belong decided, quite a while ago, that it no longer wanted to be responsible to the treasurer and the treasurer's department. I suspect that the Minister has the same inclination in his present job. At the same time, the authority wanted nothing from housing, which rightfully belonged to housing, to go back to the treasurer's department. That is where we come to the previous argument.
I have not been convinced by what the Minister said. If the Minister had said that tenants who are now paying rent would not have an increase in their rents, except as a result of increased costs on housing, I would be more than satisfied. However, when we went through that exercise with the treasurer, we had to leave in place matters that, rightfully, belonged to the housing account, such as the various levels of subsidy, but we had to take out such matters as housing advice centres and the cost of grass-cutting in private areas, which at that time were borne by the housing revenue account. If anyone had a grumble, it should have been the council tenants. If the Bill 951 seeks to bring such matters into the housing revenue account, it is entirely wrong. The Government should accept the amendment.

§ Mr. Trippier
The hon. Member for Hammersmith (Mr. Soley) seemed to miss the point continually, as he did in Committee. At present, subsidy from the general rate fund bolsters the housing revenue account. I have no doubt that he is embarrassed by the sizeable sums we see in inner-city areas generally, not just in inner London. The general ratepayer, soon to become the community charge payer, is finding that money. The hon. Gentleman never says anything about that and the weight that falls on the shoulders of ratepayers.
With ring-fencing of the housing revenue account, the system will be different. We are talking about new housing subsidy coming, as I have tried to make clear, from the taxpayer. If one strips the cant out of the hon. Gentleman's contribution, he is on to quite a fine point. The examples he gave would be on the margin of the ring fence. The same is true of the interesting examples given by the hon. Member for Barnsley, West and Penistone (Mr. McKay).
The best way to give a simple definition is the way in which I tried to give a definition in Committee. Landlord functions which are provided for local authority tenants—and it might assist the hon. Member for Barnsley, West and Penistone to say that I would not use the example of housing advice centres which are available for a wider audience—would come within the housing revenue account. However, the hon. Member for Hammersmith was on to a good point because it is extremely difficult to say exactly what falls within that definition. He will recall that we took the view in terms of sheltered housing that the warden of sheltered housing provided a welfare function, whereas maintenance—and the only example I could think of at the time was changing light bulbs—would be a landlord function.
We have decided to have negotiations and discussions with local authority associations on all those points and we have also decided that the new regime will begin from 1 April 1990, with the situation as it is. We will run it for a year to see how successful it is. Negotiations with the local authority associations may mean that we are able to change the proposal in another place. I personally doubt it. Opposition Members should welcome the fact that we have decided, because of the complications and the marginal matters on the fringes of the housing revenue account, to deal with the proposal in that way.

§ Mr. Soley
That is an interesting response. The Department's talks with local authorities have not advanced, but I understand, from what the Minister has said, that he intends to continue with them. He seems to be slightly open-minded on the matter and I welcome that. I am always grateful for small mercies. I beg to ask leave to withdraw the amendment.