Lords amendment: No. 112, in page 78, line 8, after "1926" insert—
(dd) any property which—
was brought within the corresponding account kept under Part XIII of the Housing Act 1985 for years beginning before 1st April 1990;
§ The Parliamentary Under-Secretary of State for the Environment (Mr. Christopher Chope)
I beg to move, That this House doth agree with the Lords in the said amendment.
§ Mr. Deputy Speaker (Sir Paul Dean)
With this it will be convenient to discuss Lords amendment Nos. 113 to 118, 119 and amendments (a) to (f), and Lords amendments Nos. 120 to 138, 318 to 327.
§ Mr. Chope
Part VI and schedule 4 are concerned with revenue finance for local authority housing. It might help the House in its consideration of the various provisions if I set out some of the background and outline our objectives.
The House may know that part VI encapsulates the principles that underlie the Bill—accountability, efficiency, fairness and targeting. The present financial framework in which authorities provide their housing service gives insufficient incentives for efficiency, does not make the best use of public resources, and does not give council tenants a clear view of what their accommodation and the housing service are really worth. Local authorities are required to account for their day-to-day expenditure and income on council housing separately, in the housing revenue account, but they can transfer money freely between their housing revenue account and the rest of their general rate fund. In other words, they can use ratepayers' money to subsidise the housing service, or conversely use surpluses from the housing revenue account to pay for non-housing services. That distorts accountability to tenants and ratepayers, and engenders inefficiency.
The discretion to move resources in and out of the housing revenue account makes it difficult to ensure that the available Exchequer subsidies to council housing are directed to those authorities which most need them. The Government provide about £3 billion of subsidies in support of expenditure on the housing revenue account, but that money is paid through three separate channels 869 —housing subsidy, rent rebate subsidy, and an element of rate support grant in support of contributions from the rate fund.
Anomalies are almost bound to result from such a system. Some authorities which receive those subsidies can make surpluses which they can use outside the housing revenue account, so Exchequer money for council housing is used for other purposes. The other side of the coin is that fewer resources are then available to target on authorities which need extra help with their housing expenditure.
One further consequence of the present financial framework is that the pattern of council rents around the country does not reflect the variation in the value of council housing or the standard of service provided by different councils in different parts of the country. Rents are based instead on historic values. Council tenants cannot clearly see what their accommodation is worth or whether they are receiving an efficient service, and they are not given the signals that they need to exercise freely the choices we have made available in the housing market.
In that context, we have established our new financial regime, which has three objectives—to tighten the financial discipline of local authorities in the provision of the housing service; to target taxpayer subsidies more effectively; and to encourage more sensible, realistic council rents, which come to reflect the pattern in the value of housing around the country. Those objectives are set in the context of the total level of housing revenue account subsidy, remaining roughly at this year's level—£3 billion per annum.
There are two main elements of the new regime. First, housing revenue accounts will be ring-fenced from the rest of the authorities' funds, preventing ratepayers' money from being used as a discretionary subsidy to council housing, and restricting the use of housing surpluses outside the account.
Secondly, the three existing sources of Exchequer subsidy will be combined to prevent a single housing revenue account subsidy, paid where on our assumptions authorities need additional help to balance the ring-fenced account. In combination, those two elements will help us to achieve our three objectives.
§ Mr. Martin Redmond (Don Valley)
Is it right that private owners who contribute nothing via their rates should be on bungalow waiting lists? A senior citizen has a right to go on the senior citizen list and to be provided with accommodation, but ring fencing makes it extremely difficult for all local authority residents to be treated fairly.
§ Mr. Chope
I have to disagree. There will not be any inequalities under the new system. There are inequalities under the existing system. It is unreasonable that those who are still waiting for council housing should be contributing, through their rate bills, to the existing council housing revenue account which is there for the benefit of existing tenants. As soon as people on the waiting list become tenants, they will be paying rents which go into the housing revenue account.
§ Mr. Allen McKay (Barnsley, West and Penistone)
Does the Minister agree that some authorities have not used the rate fund for years to subsidise their council house rents, and that council tenants are paying taxes to subsidise mortgage interest relief?
§ Mr. Chope
I do not accept that either. The pattern of historic costs of council housing varies significantly. Some housing estates were built largely in the 1930s, and other councils have a majority of estates built in the 1960s and 1970s, so they have higher historic costs. But it is unreasonable that people, just because they are living in properties built in the 1930s, should enjoy lower rents than people living in properties which are more modern. The essence of our proposals is to make the regime much fairer and more equitable.
The majority of the Lords amendments are technical, designed to clarify the accounting treatment of various items within the housing revenue account. A group of amendments to clause 71 and schedule 4 was intended to clear up an anomaly concerning property that is disposed of. The amendments reflect the common-sense view that such property should no longer be counted as housing revenue account property.
Amendments were also made to clause 78, and to the schedule dealing with the way in which rent rebates are shown in the account, and providing for the cost of discretionary extensions made by the authority to the housing benefit system. That group took in the change made in Commons Committee at the instigation of my hon. Friend the Member for Ealing, Acton (Sir G. Young) regarding rebates for war widows and the war disabled.
There were also amendments to the list, in schedule 4, of permitted debits and credits to the account, regarding the relationship between the account and its sub-account, the housing repairs account. Amendments were also made to correct obvious omissions, providing specifically for expenditure from revenue resources on housing capital works, and funds to cover rent arrears.
Two important groups of amendments were made in Committee in another place, both of which were foreshadowed on Report in this House. The first concerns the new residual debt subsidy, or RDS. The RDS provisions in clauses 79 to 81 were introduced to clear up some of the anomalies in the present accounting and subsidy arrangements, which exist when large amounts of an authority's housing stock are disposed of. RDS was to be payable to authorities that disposed of stock for which the receipt did not cover the outstanding debt.
Following development of our proposals on housing revenue account subsidy, and consultation with local authorities and the local authority associations, my hon. Friend the then Under-Secretary of State announced our conclusion that a separate residual debt subsidy would be needed only for the current year, 1989–90, and only in the case of authorities not in receipt of main housing subsidy. Amendments Nos. 121 to 128 amend the provisions to give effect to that change in approach.
The second major amendment to this part of the Bill is amendment No. 119, which is intended to ensure that provisions dealing with the calculation of the main housing revenue account subsidy are in line with our stated policy. The first part concerns the Secretary of State's powers to make assumptions for subsidy purposes about credits or debits in the housing revenue account. Housing revenue account subsidy is to be paid to enable an authority to balance its housing revenue account on certain assumptions about its expenditure and income. The main such assumptions concern the level of rents and expenditure on management and maintenance of the 871 housing stock. My right hon. Friend the then Secretary of State announced on Report our intentions regarding council house rents.
§ Mr. Clive Soley (Hammersmith)
In case any hon. Member is not clear on this, may I make it clear that the assumption is intended to give the Government an opportunity to set rent levels that they believe should be set throughout the country?
§ Mr. Keith Bradley (Manchester, Withington)
The Minister has said that he intends to clarify the assumptions. A letter from his predecessor, the hon. Member for Rossendale and Darwen (Mr. Trippier), to Manchester city council states:To the extent that the repairs capitalised were of a normal day-to-day nature, this should be reflected progressively in the M and M allowance … in the new HRA Subsidy.Following yet another change by the Department of the Environment, Manchester, for example, will lose £20 million in subsidy because of the change in treatment of capitalised repairs. That means that rents will have to rise by £10.50 just to stand still. Can the Minister explain why his Department continually changes the subsidy rules, why capitalised repairs are being treated differently and why commitments given by his predecessor have been changed, to the detriment of Manchester's rentpayers?
§ Mr. Chope
I was intending to deal specifically with capitalised repairs when we reached an amendment on the subject tabled by the hon. Member for Hammersmith (Mr. Soley). Let me say to the hon. Member for Manchester, Withington (Mr. Bradley), however, that, if he reads the consultation document, he will see that Manchester benefits greatly from the new system. Under our proposed system, it is deemed to need the minimum increase of 95p a week, whereas, under the existing system, this year's assumed increase is £1.95 a week.
I shall deal with the issue of capitalised repairs in more detail later. The main point is, however, that Manchester has been spending a good deal on capitalised repairs that were not truly capitalised: in other words, it was spending money on decorating and routine maintenance that no sensible person would regard as expenditure that could properly be capitalised. If Manchester continues to do that, it will not be able to use capital moneys for such purposes. Under the new system, however, it will be able to capitalise genuine capital repairs, as it has been able to do in the past.
§ Mr. Soley
The Minister has confirmed what I said a few moments ago: in effect, the Government will determine rent levels. As is known by every Conservative councillor in the Association of District Councils, and by every Labour councillor throughout the land, the Minister is deciding—to use his words—what is sensible. Unfortunately, he is the only person who agrees with his definition of "sensible"; none of the Conservative or Labour councillors in the ADC agrees with it. Why is the Minister the only sensible person around?
§ Mr. Chope
I am grateful to the hon. Gentleman for accepting that I am sensible, but I do not regard myself as 872 the only person to take what I consider the sensible view that capital moneys should not be spent on routine house decoration, and that ordinary revenue income should be used for that kind of revenue expenditure. My view is that capital expenditure should be incurred on capital assets: that means truly capitalised repairs that are in the nature of either major long-term maintenance that would probably be incurred only every 30 years, or other capital improvements.
That, I think, is the view that most accountants would advise us to take, and I am surprised that the hon. Gentleman disagrees with it. I know that his authority in Hammersmith has interpreted "capital repairs" very liberally. My Labour-controlled authority in Southampton, however, has taken my view, that it would be wrong to incur capital expenditure on what should normally be revenue items.
§ Mr. Soley
I thank the Minister for giving way again: he is very generous with his time.
Is it not a fact that almost all industries would think it appropriate to use capital moneys for revenue purposes at times? If the Minister sold his house and moved into a cheaper one, he might well use some of the capital accumulated from the sale to repair and renovate the new house. That is a very normal thing to do. In the words of the Prime Minister, it is the normal everyday economics of the family.
§ Mr. Chope
No, it is not. I think that responsible authorities would say that, when public money is involved, existing tenants should pay for existing decoration carried out in their flats and houses, and that the cost should not be a burden on successive generations. For that is effectively what is happening: if capital moneys are used to carry out today's routine decoration, debt will be incurred on which interest must be paid by generations of successor tenants.
§ Mr. Robert Litherland (Manchester, Central)
Manchester found that it was more economical to have programmed repairs—for example, the replacement of rotting window frames and the repainting of houses on a massive estate programme. Would that come under the heading of capital expenditure?
§ Mr. Chope
What could be described as the cyclical painting of estates every three, five or seven years, depending on the area, is an ordinary revenue item. If one wanted to replace windows by means of a major replacement programme which would only be necessary every 20 or 30 years, that would be a legitimate item to 873 capitalise. That is the distinction to be drawn between ordinary expenditure items and items that can properly be capitalised and upon which capital resources can be spent.
Under the rent guideline system that we are introducing, we start by assuming a national total of rent income for the year. Our proposal for next year is that this should reflect an increase of 5 per cent. in real terms, plus 5 per cent. for inflation. That is exactly the same increase as we have assumed in the existing subsidy system for each of the last two years.
The net result of the rent proposals is that the proposed guideline increase is nowhere less than 95p and nowhere more than £4.50. Of 366 local housing authorities in England, 66 receive the maximum guideline increase, 170 receive the minimum increase and the remaining 130 fall somewhere between the two. For almost one half of all local authorities, there will be a guideline rent increase of less than the national inflation figure. I am prepared to guarantee that that is a figure and a fact to which Opposition Members will not draw attention.
The proposals are fair and reasonable. They will start the process of encouraging a more logical pattern of rents which will reflect the true variation in the valuation of property. They will also ensure that rents do not move out of the reach of ordinary people. They certainly do not reflect the dramatic claims made by the Opposition at Report.
While discussing the subsidy calculation and the proposals made on 23 October, it might be helpful if I were to say a few words about the other main assumption in the subsidy calculation—the allowance that we shall be making for expenditure on management and the maintenance of the stock. Our proposed assumption is that each authority will increase its spending by 5 per cent. to take account of inflation, plus an increase of 3 per cent. in real terms. That should enable all authorities to provide a good standard of day-to-day maintenance. The proposal, as with all the other elements of subsidy, is now open to consultation. The authorities have until 4 December to submit their comments.
§ Mr. Soley
My immediate response is that those whom the gods wish to destroy they first make mad. I have never before heard such an incredibly blind view of the housing crisis, not least the crisis over rents. The Minister knows that what he has said about rents is only a very small part of the picture. Rents will increase dramatically.
The Government have not referred to the extent of the housing crisis which affects local authority tenants, housing association tenants and private tenants. This wide-ranging group of amendments provides us with an opportunity to debate both the housing revenue account and homelessness. Some local authorities will not be required to keep a housing revenue account, which raises the issue of what will happen to the homeless. The amendments also provide us with an opportunity to discuss rent arrears and rent levels.
One would have thought, from what the Minister said, that there is no problem. The reason that I was so anxious to intervene during his speech was to use for his benefit the Association of District Councils' evidence. That is not a Labour-controlled organisation; it is almost solidly 874 Conservative controlled. When I spoke at a conference of the association in the Minister's constituency, Southampton, I received overwhelming support from Conservative councillors when I said that in the Labour party's view the Secretary of State does not have the right to take away the money that they have gained from capital receipts—from selling council houses—and make them use it to repay debts, although they want to use it to repair, renovate and rebuild the housing stock. I was cheered when I said that, so I say to the Minister, simply in terms of his own political survival, that he ought to be wondering why it is that he is so totally isolated and why it is that he is the only one who knows what a sensible rent is.
The Government have consistently refused to tell us what a fair rent is. At first they referred constantly to market rents, but when market rents became a little embarrassing, because they were increasing so rapidly, we began to hear about affordable rents and low rents. Nowhere have the Government referred to what they think rent levels should be in the local authority sector, the housing association sector or the private sector. Such is the extent of the housing crisis that the Government cannot bring themselves to face either the purchase sector problem or the rented sector problem.
That is why the Minister who, we are told, is responsible for housing, although I sometimes doubt it—the hon. and learned Member for Folkestone and Hythe (Mr. Howard)—chose not to speak about mortgage interest rate rises when he addressed his own party conference. Mortgage interest rates have no effect, apparently, on the housing problem, yet we know that they are hitting people badly if they are trying to buy for the first time or if they are trying to sell and buy another house. They are also having a grossly distorting effect on the housing market because of the combination of house price inflation over a number of years—which will resume again in due course—and a distorted subsidy system, brought about by the cut in subsidy to the rented sector. It is that which has created the chaos that the Government have inherited.
As there is now a housing crisis, the Government have decided that they had better not have a Minister for Housing. We were told initially that the hon. and learned Member for Folkestone and Hythe was going to be the Minister for Housing. Then we discovered that he was in charge of water privatisation. However, we were told that when he had finished privatising water he would deal with housing. When the hon. and learned Gentleman has finished with water and deals with housing, which presumably will be some time in the new year, what the hon. Member for Southampton, Itchen (Mr. Chope) will know for sure is that his position is unassailable. He will no longer be what he is supposed to be now, I assume—the Minister for Housing, although he never actually confesses to being the Minister for Housing.
§ Mr. Soley
Yes, will he do so? In a way it is farcical, but really it is very serious. The major housing crisis that we face is due to a lack of affordable accommodation either for rent or for sale in both urban and rural areas, but we do not have a Minister for Housing to deal with it. There is not even a recognition of the problem.
§ Mr. George Howarth (Knowsley, North)
Will my hon. Friend join me in congratulating the new Ministers and welcoming them to their various responsibilities? Will he also point out to them that they are respectively the twelfth and thirteenth holders of those posts since 1979? Will my hon. Friend also join me in saying that if we hold a similar debate on a similar Bill in 12 months time, it is almost certain that the hon. Member for Southampton, Itchen (Mr. Chope) and the hon. and learned Member for Folkestone and Hythe (Mr. Howard) will not be sitting on the Government Front Bench?
§ Mr. Soley
My hon. Friend is quite right. A number of the Ministers who passed through while I have been doing this job were in post for only 12 months. To be fair, one of the better Ministers held his post for only 12 months. Because he realised the seriousness of the problem and decided to do something about it, he was moved.
To put the problem in context, rural areas of England which did not have a housing problem before now have one. Sons and daughters of people who live in good housing in villages in the south of England suddenly find that they cannot afford to buy or rent. People who have lived in the area for a long time, the people who drive the trains, teach in the schools or nurse in the local hospitals cannot afford to buy or rent. House price inflation has pushed house prices out of their range, and rents are going up to market levels and are therefore unaffordable. In Dorset, an average family house costs about £90,000, a market rent is approximately £100 a week and the average male unskilled wage in that area is £90 per week. It is impossible to square the equation.
§ Mr. Christopher Hawkins (High Peak)
The hon. Gentleman referred particularly to the south, but the problem is just as bad in many parts of the north. In my constituency of High Peak there are many villages where families who have lived there for many generations can no longer afford to buy or rent. In most of the villages and towns there is a desperate shortage of rented accommodation and council housing and there are no private-sector houses that ordinary people can afford.
§ Mr. Soley
I am grateful for the hon. Gentleman's support. I am not saying that the problem occurs only in the south, but the picture is more extreme in the south because house price inflation has had a much more dramatic effect there, for many reasons of which we are all aware. But the hon. Gentleman is absolutely right that in some areas of Yorkshire the figures are similar to those in the south, and that must apply to many other areas.
In addition to that general pain is something that I never thought I would live to see in my own country—teenage children sitting in our streets with cardboard signs saying, "Homeless and hungry". They are under 18 and they have nowhere to go. To have a Minister, whether or not he is responsible for housing, who is so blind to that appalling problem that he can introduce a Bill that not only does nothing about it, but because of certain conditions will prevent local authorities from doing something about it, is absolutely disgraceful. I cannot face seeing many more youngsters sitting homeless and hungry in the street.
There was a time when one did not give money to people who were begging because one knew that there was a support system. One could stop and talk to them and persuade them to go to their local DSS office or to 876 emergency night shelters. During the last years of the Labour Government and in the early 1980s, even in London one could always get someone a roof over their head. Nowadays one cannot do that. That is why increasing numbers of the public, myself included, give money without asking questions because the housing crisis is so desperate. It is one of the worst examples of the typical Tory picture of private affluence and public squalor. Sadly, that public squalor is endured by the most vulnerable people. The Centre Point report shows that about one third of those youngsters have come out of care—the care that we operate in the Dickensian Conservative 1980s where apparently it is all right to leave kids out in the streets when they are no longer the responsibility of the local authority. They drift around and are likely to be drawn into crime, drug abuse and alcohol abuse which are strongly associated with homelessness.
Rent levels are central to much of our debate. The Government should face many of the problems concerning rent. They admit that they are trying to push up council rents, although they argue about how fast and how far. However, they rarely recognise or admit that they have dramatically pushed up housing association and private sector rents, so there is no escape. Some Conservative and other councils consider that if they transfer council housing to housing associations or private landlords somehow people will be safeguarded from rent increases. That is not true. Last year housing association rents increased by an average of 24 per cent. Market rents in the private sector are leaping ahead to such an extent that it is difficult to predict how high they will rise. My judgment is that the market rate will approximate towards what the property would fetch if it were sold and the owner invested the money and took a return on it. The interest rate that they would get would be roughly the market rent. That is why market rents are going through the roof.
Just to make that appalling picture worse, the Government have introduced capital value rents. On 1 April 1990 the Government will bring in a new system of calculating rates based on the capital value of the property. The Ministers occasionally say that Labour's alternative to the poll tax includes an element of capital values. Our system would be fully rebatable, but there is no rebate on the capital value basis that they are using to set rent levels.
§ Mr. Chope
To bring the debate closer to the hon. Gentleman's home territory, does he support and approve of the rent policy in the Labour-controlled London borough of Hammersmith, where the average rent last year was £35.8 and where there has already been an increase this year far in excess of those prevailing in other local authority areas? Does he recognise that, whatever the level of rent, people are eligible for rent rebates? Under the existing system and under the new system there will be no alteration in rent rebate entitlements.
§ Mr. Soley
I agree entirely with my council when it says that it is being forced to increase rents by a Government who have progressively cut the money that goes to every local authority, regardless of whether it is controlled by the Labour party, the Tory party, the Liberal party or anything else. That is what is forcing up rents. There is always a case for increasing rents at sensible levels—using my definition of sensible and not the Minister's—but what 877 is not acceptable is that in recent years the Government have removed the subsidy from the rented sector so that people are forced to pay more.
The Minister says that housing benefit is available, but it has been cut eight times by the Government, to the extent that many hon. Members on both sides of the House have constituents who have lost up to £10 a week in benefit. That is why the Government had to introduce phased transitional arrangements.
Still worse, late at night, the Government introduced that wicked Act in which they cut the benefit of people who have a spare room. If someone has a two-bedroomed home and a member of his family dies or moves out that person will suddenly lose housing benefit because he has a spare room. The Minister should try telling people that they will lose mortgage income tax relief if they have a spare room. How many spare rooms does the Minister have and how much mortgage tax relief does he get? If he thinks that it is fair that he gets mortgage income tax relief on his spare room, he should conclude that people in rented accommodation with a spare room should also receive some subsidy.
§ Mr. Battle
Does my hon. Friend agree that the Minister's statement that the Bill proposes no changes in housing benefit was quite incredible? I know that the Minister was not on the Committee considering the Bill, but he might have had the courtesy of reading the reports of its proceedings before he spoke. It is absolutely plain that one of the most iniquitous proposals in the Bill is the suggestion that those paying rent who are not on benefit will end up paying the difference in housing benefit when the subsidy is withdrawn from the DSS. That is in the Bill.
§ Mr. Soley
My hon. Friend is absolutely right. I was going to mention that in due course, but I am sure that my hon. Friends on the Back Benches will do so. What is happening is quite wicked because the poor will subsidise the very poor. I do not know why the Minister is shaking his head. His predecessor accepted that the aim was for those people receiving benefit to be paid in certain circumstances—there will be many cases in local authorities—by people who were not receiving benefit. The next door neighbour not receiving housing benefit, but who has a job, will be subsidising in his rent level the housing benefit being paid to the person next door. It will not be paid centrally in the way that it used to be. It is incredible that the Minister is not aware of that.
§ 6 pm
§ Mr. Chope
The hon. Gentleman is misrepresenting the position. Under the new ring-fenced housing revenue accounts money from the taxpayer—the taxpayers' subsidy—will be used to meet the needs that exist. For example, if there is a need for more housing benefit to be paid out of that ring-fenced account by a given local authority because of the needs of its tenants, all things being equal, that will be compensated for by increased subsidy. It is a misrepresentation to suggest that the poor tenants will be subsidising the even poorer.
§ Mr. Soley
Before he reads the message being passed to him by the civil servants, will the Minister give the House a guarantee that if any local authority finds itself in a 878 position where the people receiving housing benefit are having that benefit paid for by other tenants it will receive an increase in subsidy so that that will not have to happen?
§ Mr. Chope
This is the first time that I have debated across the Chamber with the hon. Gentleman and I have come to the conclusion that he is selective in his choice of examples. He said that Government support for Hammersmith and Fulham has been cut causing rent increases. Does he accept that in 1986–87 housing subsidy in Hammersmith and Fulham was £10.5 million and in the current year it is £21.6 million? It has more than doubled but the hon. Gentleman was asserting that the Government have cut support to Hammersmith and Fulham. If he cannot get his facts right concerning his own local authority, I cannot take him seriously.
§ Mr. Soley
I will deal with both points. The Minister used 1987 as an example. I too would choose that year as an example. However, we are worried about the past 10 years during which time the Government cut money to local authorities by about £24 billion. Hammersmith and Fulham has borne more than its fair share of cuts, even when it was under Conservative control.
I thought that the Minister was going to give the House the commitment for which I asked. He said that I was being selective and misleading but I know that he would not want me to mislead the House. If I find an example of a local authority where housing benefit is being paid to some tenants and that benefit is being paid for by other tenants through the rents, will he give a commitment that he will ensure Exchequer subsidy to prevent that happening? Can we have a straight answer to that question because every local authority whether Labour or Tory is in that position?
§ Mr. Chope
We will ensure that where an authority cannot raise sufficient income to cover all the costs in its housing revenue account, including the cost of rebates, subsidy will be paid to make up the shortfall. There is no question of tenants having to pay more because of an increase in the rebates bill. If the cost of rebates increases, subsidy will increase to meet the extra costs. That subsidy should go to the authorities that need it and not to cover costs that authorities can meet for themselves. The closer we stick to that basic principle the more we can do to assist in meeting real needs. The further we stray from it, the more we will leave real needs unsatisfied. Perhaps that is what the hon. Gentleman wants.
§ Mr. Soley
The Minister is avoiding the change in the wording. Clearly he is not familiar with the Bill. Clause 78(1) of the pre-amended Bill says:In subsection (2) of section 30 of the Social Security Act 1986 (housing benefit finance), for the words 'total housing benefit' there shall be substituted the words 'relevant benefit' and there shall be added at the end the words 'and in this subsection "relevant benefit" means total housing benefit excluding, in the case of a local authority in England and Wales, any Housing Revenue Account rebates granted by them'.Will the Minister give the House a commitment that he will ensure that any local authority finding itself in the position which I have described and which is set out in the Bill will receive the subsidy that the Minister said it should receive? Will the Minister answer yes or no?
§ Mr. Chope
I have set out the position clearly. The hon. Gentleman is mischievously trying to suggest that where a 879 local authority is in need, tenants will have to pay more because of an increase in the rebates bill. He may not find that he has much material in the Labour party's policies on housing but he ought to get our policies right and understand them before he criticises them.
§ Mr. Soley
Getting it right involves reading the Government's clause, which I have just done. The Minister's position will be unassailable much sooner than I thought. He will not last long in the job if he makes such gaffs. It will not be missed that the Minister said that there would be subsidy from the taxpayer to ensure that the poor did not subsidise the poorest and then retreated to the position that he now holds.
Capital value rents will force considerable rent rises. The Minister skated over that lightly saying that the average rent rise would be quite low. I cannot remember the figure he used, but I think that he said it would be about 95p minimum and £4.50 maximum. The Minister could use this point against me if he wanted but the places worst hurt will be the southern areas of Britain. One of the people most hurt would be the chairman of the Conservative party—the man who encourages the team approach. The man in Mole Valley will not be clobbered on the poll tax but every one of his council tenants will have to pay an increase of £4.50 a week in rent.
Can the Minister try to understand what it is like to live on the average wage of an unskilled person which is about £100 a week and then have to pay a rent increase of £4.50 per week? Can he envisage a situation where, because of housing benefit tapers and cut-offs, many people will not receive any benefit towards that, or if they do, it will be minimal benefit? What will the Minister say to the tenants in many Conservative areas in the south who next year will face rent increases of up to £4.50? He could tell them to do what they are doing in Canterbury or Elmbridge, which is to abandon council housing altogether and hand it over to a housing association where tenants can expect another massive rent increase. The increase was 24 per cent. last year and it will be high again next year, although at present it is hard to predict just how high it will be.
There is also the question of capitalised repairs. Council rent levels are further threatened by the plan to stop local authorities spending capital receipts on repairs. In the past that has been accepted as entirely legitimate by the Department of the Environment. All of a sudden, the Minister has discovered that that is not what accountants would do. In fact, it is what accountants do in private business, in the public sector or in everyday life. It is a normal, sensible way of managing one's affairs. That is why I can pray in aid Lady Anson and the Conservative-controlled Association of District Councils and most of the other Conservative authorities which are not in the ADC. All of them agree with me that they should be able to use the money that they have accumulated to meet their repair and renovation expenses.
I am not alone in saying that the anxiety that is being caused to tenants is unacceptable. I have a cutting from the Hemel Hempstead Herald and Post about Dacorum council, another Tory-controlled authority. It states:tenants could face huge rent increases if the Government ties levels to the local private housing market.Chairman of the borough council's Housing Committee"—a Conservative, of course— 880Councillor Peter Benton, told the Herald and Post he is waiting 'quite anxiously' for information on new Government orders.'It really could he a muddle of things. The point is that we are already an efficient council with our housing stock of 15,000 homes,' said Councillor Benton.'This is just another step in reducing our responsibility and one can only regret that.''They are figures'"—I do not know whether I entirely agree with this—'drawn up by bald-headed civil servants eating their salmon sandwiches in the Department of the Environment in Marsham street'.I have not seen many bald-headed civil servants eating salmon sandwiches in the Department of the Environment, but that is what councillor Benton thinks.
He went on to state:'it will be an order of the Government"—that is absolutely right—which the council can do nothing about'.I shall offer the Minister an opportunity to intervene. He thinks that there is everything that he can do about it. Will he give an assurance to the Conservative leader of Dacorum council that he will ensure he gives it sufficient subsidy so that it need not do what councillor Benton thinks it must do?
§ Mr. Chope
Dacorum council is Conservative-controlled. The hon. Gentleman also referred to Mole Valley. He seems to think that it is wrong for a political party to impose fairer policies which may have an impact upon its supporters in certain areas. The Government do not share the hon. Gentleman's cynical view of politics. Last year, in Mole Valley, average rents were £19.74, and in Dacorum they were £18.99. There is plenty of scope for reasonable rent increases in those areas, having regard to the fact that, in the hon. Gentleman's own borough of Hammersmith, average rents were £35.88 last year. Also, this year in Haringey, which most hon. Members regard as a borough with considerable needs, rents increased not by £4.50 but by two tranches of £4.50—one in the spring and one in October.
§ Mr. Soley
Let me try to help the Minister, as he is clearly getting into some difficulty. He should sit back and relax and imagine that everything that I say to him is designed to help him out of a hole—funnily enough, it is. He should abandon his absurd approach to setting rents and should sit down with his officials—he had better bring in one of his senior friends or he will quickly find himself out of a job—and start asking, "What is an affordable rent?" He could start from the position that many people in the housing movement have taken. If people are spending more than 20 per cent. of their net disposable income on rent or housing costs generally, they will quickly get into serious economic trouble.
I do not expect the Minister to say that 20 per cent. of one's net disposable income is a satisfactory rent level. It is not—it is too high. That percentage should be the highest. However, we know that, increasingly, it is the case for council tenants, housing association tenants and, above all, private sector tenants. Many tenants in housing associations, the private sector and, increasingly, in the council sector, are paying between 40 per cent. and 50 per cent. of their net disposable income on housing costs.
If the Minister bought a house and mortgaged himself up to the hilt, he would be terribly worried if he found himself paying 40 per cent. or 50 per cent. of his net disposable revenue on housing costs for more than a year 881 or two. He knows that he could not do it. If one cannot do that on a Minister's salary, I am damn sure that one cannot do it on the salary of a skilled, semi-skilled or unskilled person. I implore the Minister to give up the daft argument that he is getting himself into about whether councils can set levels. We all know that they cannot. We know that the Government have been centralising local authority powers like mad. The issue is not just about that. It is about what people can pay for rent and the subsidy that is being taken from them in the private sector, the housing association sector and the council sector.
Unless the Minister gets this matter right, he must soon face up to the fact that not only will more people be pushed into homelessness and economic despair because they cannot afford their rents, but, setting the personal problem aside, the economic effects will be disastrous. Not only in London but in many other parts of the country now employers cannot find employees in areas in which housing costs are high.
Yesterday, on the Radio 4 "Today" programme, the Secretary of State for Education and Science volunteered the information—I did not prime him to say it—that the Government cannot recruit and retain teachers because housing costs are too high. If Conservatives—councillors and Ministers alike—are saying that, there must be something seriously wrong. If I cannot convince the Minister that this matter is deadly serious by referring to kids in the streets with their "homeless and hungry" signs or by getting him to examine mortgage rates and so on, what on earth can I do to convince him?
Matters have been made worse by what the Government are trying to do. They set out their proposals in their consultation paper of 23 October. It states:It is essential therefore that the introduction of the new system should not of itself introduce any sharp change in the level of rents or management and maintenance spending in any individual authority … The effect of these proposals will be to ensure a smooth transition to the new regime.The new regime involves rent increases of up to 173 per cent. in some areas, again including Mole Valley. The document went on:For the tenant, the immediate effect should be indistinguishable from what would have happened if the current system had remained in force.The Minister should tell that to the tenant in Mole Valley when he pays £4.50 a week extra. The commitment was known as the soft landing. If that is a soft landing, and if the economy is also in for a soft landing, we had better emigrate before it is too late.
§ Mr. Chope
One question is at the root of the hon. Gentleman's argument. If rents of £35.88 in Hammersmith are affordable, why must we permit Mole Valley rents to go up by no more than £1.95 a week? Why should Mole Valley rents of £19.74 not be allowed to increase so that they are more in line with costs in that area?
§ Mr. Soley
Apart from capital values, which are relevant, the real problem is that the Government are embroiled in a situation in which the housing subsidy system is now chaotic. They have allowed the purchase sector, subsidy to expand and expand—not only through income tax relief but through discount sales and so on—at the same time as they cut the subsidy to the rented 882 sector. That distorts the housing market to the extent that there is enormous house price inflation and people are unable to buy. Because the Government have moved literally 1.2 million homes out of the rented sector into the purchase sector, and because the building of new premises has come to a grinding halt because of interest rates, there is nothing to replace the rented sector. That is why people cannot find anywhere to rent or to buy. It is basic economics—supply and demand. The Government do not seem to understand those basic mechanisms.
The effect of the proposals of 23 October is that 66 authorities will have an assumed rent increase of £4.50—the Minister will correct me if I am wrong—170 authorities at the minimum rate of 95p, and the rest will be somewhere in between. The £4.50 increases are overwhelmingly in London and the south-east, where rents are already higher than in the rest of the country. On 24 October, the then Minister, Lord Caithness—another one who lasted only a short time; some people did not notice his departure, let alone his arrival—tried to pretend that the Government had achieved a soft landing. Indeed, they said that they had already achieved a soft landing, so if the £4.50 was still to come, presumably that is where one would hit the barrier. Lord Caithness said that the average assumed increase was £2.08—that is about 10 per cent. in cash terms—and was because so many authorities, especially in the north, had increases of 95p—below the rate of inflation.
However, that is not the whole picture. It was stated that the new system should notof itself introduce any sharp changes in rents … in any individual authority.However, that is clearly what it has done. In terms of that commitment, the average figure is irrelevant. The Minister should look at the figure of £4.50. The Government's proposals also stated:for the tenant the immediate effect should be indistinguishable from what would have happened if the current system had remained in force".The Minister should tell that to the Mole Valley tenants and to those in the other 65 authorities. The average is irrelevant to tenants in Hackney, Lambeth, Mole Valley or Cambridge. What matters to them is the amount by which the provisions will affect them. The figure of £4.50 for those 66 authorities is over 50 per cent. higher than any determination that has ever been made under the existing system. Even if the 1981–82 figure of £2.95 is increased to allow for inflation, it is still only an increase in 1990–91 prices of £4.41. I hope that the Minister will give some thought to that in due course.
I turn now to the issue of bad debts and rent arrears and to Lords amendment No. 320. I refer to the Minister's earlier remarks about the subsidy available. Local authority tenants are having increasing difficulty in paying their rents. Although local authorities generally are devising new forms of management systems to make it easier for tenants, if a person's rent is taking an increasing amount of net disposable income, that person will get into arrears.
I should like the Minister to respond to my next point when he replies to the debate. The Audit Commission is about to issue a report, the contents of which are well known, demonstrating that there has been a massive increase in rent arrears in virtually all local authorities. The Audit Commission is equally clear about the cause. It states that the cause is the housing benefits cuts. Will the 883 Minister address himself to the challenge that the Audit Commission is putting to this House—and especially to the Government—and do something to prevent rent arrears from escalating in local authorities across the country because of the housing benefit cuts rightly identified by the Audit Commission and about which many of my hon. Friends have known for ages?
We shall seek to divide the House on amendment (b) to Lords amendment No. 119, which deals with the repair and renovation issue.
§ Mr. Tony Banks (Newham, North-West)
I am grateful to my hon. Friend for giving way because I want to point out to him that, while he was commenting on the dramatic increase in rent arrears following the housing benefit changes, the Minister was shaking his head in disagreement. I agree that it is his own head—and he is welcome to it because it is not a particularly clever or pretty one—but the fact is that all the evidence is so overwhelming that I cannot understand why the Minister is in dispute. I can give him the figures for my own London borough of Newham, where arrears increased by 30 per cent.—in line with the average increase in arrears throughout the country, in both Tory and Labour authorities. Can my hon. Friend explain why the Minister does not seem able to understand the facts?
§ Mr. Soley
What I can explain to my hon. Friend, who rightly pointed out that it is the Minister's head and he is entitled to shake it if he wants, is that the reason the Minister shook his head is that if he had said, "No", it would have appeared in Hansard, whereas the shaking of a head does not often appear in Hansard. If the Minister has not discovered this already, he will discover pretty shortly that what I have said about the Audit Commission is absolutely right.
§ Mr. Soley
We shall seek to divide the House on amendment (b) because we do not want any rent increase over and above the highest agreed by the Government in the last three years, which is about £1.95. As I have said, they will increase this year by £4.50 for many people. We shall seek to divide the House because we believe that the increase should be held to a maximum of £1.95, given that the increases that the Government have brought about over the previous eight or nine years have been well above what would normally have been expected by tenants.
I turn now to amendment (a) to Lords amendment No. 119. As capitalised repairs will increase costs, when setting the Government's prescribed rent levels, I should like the Secretary of State to take their effect into account. As my hon. Friend the Member for Manchester, Withington (Mr. Bradley) said in an intervention, the danger is that if the new capital value rents are taken into account together with the capitalised repairs problem, there is no doubt that several local authorities around the country—again, of all political colours—will face rent increases running into two figures—in other words, of over £10 per week. Furthermore, the authorities will not be able to do much about it. They could stop doing some of the repairs, with all that that implies for a worsening in living conditions and a decline in the housing stock. However, even if they leave some repairs, they cannot ignore them all and will then face rent increases in some areas of over £10 per week.
884 I am simply asking the Secretary of State to take into account capitalised repairs before setting the rents. The Government's assumed maintenance figure for capitalised repairs may be wrong for 1990–91. Indeed, I am sure that it will be wrong. At this stage I simply want to put on the record the fact that I believe that there will be strong evidence to support that.
I have spoken for longer than I had intended, but as hon. Members will agree, I have taken several interventions. These issues are incredibly important. I end where I began, by saying that we are facing a housing crisis in this country the like of which we have not faced since the end of the second world war. The position is now desperately serious. I pray in aid again the Association of District Councils, which has produced a report entitled "A Time to Take Stock", stating that we need to spend between £36 billion and £50 billion just to maintain the existing stock in good repair or rather to improve its condition. When sentiments such as that come from Conservative organisations which are pleading with the Government to do something, I know that what my hon. Friends and I have been saying for many years is correct.
The housing crisis that is tearing apart the fabric of our society is not confined to the inner cities. It does not just affect the high-priced areas of the south. It is tearing apart the lives and the communities of people in urban and rural parts of Britain, in the north, south, east and west. Its worst form is the homeless child begging in the streets. Its everyday form can be seen in the people who cannot afford to pay their rents or mortgages and who become homeless as a result.
§ Mr. Gerry Steinberg (City of Durham)
I rise to support the Opposition amendments. My hon. Friend the Member for Hammersmith (Mr. Soley) has just delivered what I and many of my hon. Friends regard as an excellent opening to our debate, telling a few truths which, unfortunately, the Government are not necessarily prepared to accept. I have watched the Ministers on the Treasury Bench shaking their heads like nodding toy dogs in the backs of cars. It is a disgrace that they should do that and then simply read out the notes passed to them by the civil servants in the Box when they do not have a clue what this is all about.
All Opposition Members and the majority of people in the country know that costs are increasing alarmingly in every sector of housing. We have all heard about the plight of home owners. The mortgage increases and high interest rates have been given great publicity by the press and many of us are, of course, subject to those increases ourselves. The increases in local authority rents, however, have received little attention. Local authority tenants have faced huge increases over the past few years, yet these have been largely ignored by the press, and even by this House. Housing association tenants and tenants in the private sector have also been badly hit in the past few years. However, I wish to speak about local authority tenants.
Council rents in England this year have gone up by an average of £1.44 per week, representing an increase of 9.6 per cent. That is bad, but it is not half so bad as what will happen if the part of the Bill with which we are dealing passes unamended into law. Further major increases in council house rents will be inevitable.
885 In considering the housing revenue account subsidy, I will cite my local authority in the hope that the Minister will reconsider the situation. If the Bill is unamended and the notional housing revenue account turns out to be a minus, the amount in question will have to be paid over to the general rate fund irrespective of whether it equates with the actual revenue housing account. For my local authority of Durham, that will mean about £1 million more, or £2 extra per week per council house tenant. That sum will have to be passed to the general rate fund account or to one of the other accounts mentioned in the Bill. That is daft because one need not be a brilliant accountant to know that the notional account will become £2 million in deficit terms in view of the £1 million that is pushed over and the other £1 million that has to be found to bring the account into credit.
Nowhere in the Bill can I see what should be done with that additional £1 million when it is notionally put into another account. I suppose that it will be used notionally to subsidise the poll tax.
§ Mr. Peter L. Pike (Burnley)
Has my hon. Friend considered, in relation to Durham's housing revenue account, what the effect would be on the interest element if tenants were allowed tax relief in the way that mortgage payers get tax relief on their mortgage interest, whether or not they need that subsidy?
§ Mr. Steinberg
My hon. Friend makes a valid point and I wanted to intervene in the Minister's speech to put that question. The Minister argued that a local authority's general rate fund should not subsidise council house tenants. He asked why the ordinary ratepayer should subsidise council tenants. But does he not also regard tax relief on mortgage interest as a subsidy from the taxpayer to the mortgage payer? If so, will he accept that a council tenant who does not have a mortgage but who pays all his other taxes is contributing to what is, in effect, a subsidy to mortgage payers? Would it not therefore be fair for ratepayers to contribute to a subsidy for council tenants?
As the Bill is drafted, the Secretary of State can dictatorially control the rents of every local authority. He can control the management functions and, by using the subsidy formula, he can control the quality and range of repairs that local authorities may carry out. There must be safeguards in the use of that power. Under the Bill as drafted, councils will have to decrease the overall service that they provide to their tenants or substantially increase rents. Common sense dictates that a further deterioration of council properties will occur unless council rents are subsidised to the necessary extent.
Does the Minister want to see the nation's local authority housing stock deteriorate? Is it, indeed, his aim to see council houses deteriorate due to lack of money to repair them? If not, and if he believes that authorities should look after their houses adequately and have the necessary funds to do so, he must amend the calculations in the Bill.
I again take my local authority of Durham as an example in considering the issue of capitalised repairs. It is not a large authority. I recall the Minister visiting Durham some years ago and meeting me and fellow councillors in the authority's hospitality room. We shared a drink, which 886 was coffee; because the drinks have to be paid for out of the rates and it is a prudent local authority, that is all that we are given to drink.
It is estimated that by 1991, £2.335 million will have been channeled into the housing revenue account for capitalised repairs out of the capital receipts from the sale of council houses. But the Bill will prevent capital receipts from being used for capitalised repairs. In future, 25 per cent. of capital receipts will be available for capital work and the other 75 per cent. must go to redeem debt. In other words, 75 per cent. of the capital receipts that some local authorities were using to carry out capitalised repairs will no longer be available to them. If Durham council wants to continue its capitalised repair programme—in other words, if it wishes to do the equivalent amount of work that it planned to do—the money will have to be found from elsewhere, and the only way to raise it will be by raising the rents.
Local authorities have been forced to use their capital receipts for capitalised repairs because their HIP allocations have been cut dramatically over the years. For example, whereas in 1982 Durham received £2.85 million, this year it will receive £1.26 million. That is why Durham and other authorities took the opportunity of using capital receipts to do capitalised repairs. If Durham wishes to maintain the same programme but substitute the sum involved with a rent rise, it will have to increase rents by about £4.70 per week per tenant. Will the Minister cushion such an appalling increase and compensate for the necessary capital allocation? Will he take such matters into account when fixing management and maintenance allowances for subsidy purposes?
The Durham architects department has made substantial profits on contracts in recent years. Those profits have been made even though the department has tendered against private building companies. The department, having won those contracts, has made huge profits for the local authority. In the past, those profits had to be credited to the general rate fund. The city council then transferred it back to the credit of housing repairs in the housing revenue account. In other words, Durham was able to use its direct labour organisation profits to carry out further major housing repairs.
While the Bill was in Committee I wrote to the then Minister to ask him to clarify whether it would still be valid for DLO profits to be used in the housing revenue account. The letter that I received in reply was difficult to understand, but it seemed to say that that practice would remain legitimate after the Bill had been enacted. Having studied the Bill more closely, it appears to me that because of the ring-fencing regulations it will not be valid for those profits to be used, although that had been the impression gained by the local authority and by me.
In 1989–90 about £1.2 million went into the housing revenue account from DLO profits. If my local authority wants to continue its programme of work next year at the same level as this year, council house rents will have to increase by £2.42 per week per tenant. I hope that the Minister will clarify this. If he cannot do so tonight, I hope that he will write to me. Such clarification is vital to Durham city council and I suspect that it is equally important to many other local authorities which use their DLO profits in that way.
The rent rebate subsidy takes up part of the housing revenue account. Admittedly, at the moment 97 per cent. of that subsidy is paid by the Government and only 3 per 887 cent. comes from the general rate fund. Because of the ring-fencing regulations, however, the authority will have to find the extra 3 per cent. as it will no longer be lawful to take it from the general fund. That does not represent a large amount of money in Durham—it is probably chicken feed to the majority of local authorities—but it does amount to £130,000, and to raise that money in the future the council will have to increase the rent paid by council house tenants by 26p per week.
Given the possible increases that may be incurred as a result of the Bill, what will the proposed changes mean to tenants living in Durham? If the local authority wants to carry on with the work that it has undertaken for the past few years, rents will have to increase by £9.30 per week—and that does not take into account any increase for inflation or anything else. Rents will have to increase by 45 per cent. next year merely to allow the level of repairs to stand still. I do not believe that that is fair and I am sure that even Ministers in the present Government would not regard it as fair. One must remember that that rent rise would not take into account any general increase in rents—it would be needed just to do the work necessary to stand still. When calculating the housing revenue account subsidy the Minister must take into account the likely changes that will result from his decisions. Failure to do that will be a disaster for my local authority and for the majority of council house tenants.
I doubt that local authorities will increase their rents by 50 per cent.—tenants could not afford to pay such an increase. My hon. Friend the Member for Hammersmith has already explained what a person expects to pay for his housing out of his general income. It is simply not on to increase council house rents by 50 per cent. Without such increases, however, repair programmes will be slashed. Properties will deteriorate and fall into further disrepair. The Minister may question whether such repairs need to be done in the first place. A recent survey conducted in my local authority showed that properties needed about £66 million to be spent on them to bring them up to a reasonable standard. The amount of money that needs to be spent throughout the country to bring all local authority housing up to a reasonable standard of repair runs into billions. That money must be spent and I hope that the Government will take that into account when considering the housing revenue account calculations.
The Government encouraged local authorities to use their capital receipts for repairs and, having done so, it is not right for them to leave those authorities in the lurch. Local authorities acted in good faith, they took the advice of the Government and they used their capital receipts to carry out capitalised repairs. The Government now intend to withdraw that money. The Government have said that rents will not rise as a result of the Bill, but we all know that that is a ludicrous claim. The Minister may give us the information that is passed to him from the officials' Box, but we all know that council house rents will rise steeply unless he changes the method by which he calculates the housing subsidy.
I hope that the Minister will take cognisance of a Department of the Environment consultative paper issued on 27 July 1988 which said:It is essential therefore that the introduction of the new system should not of itself introduce any sharp change in the level of rents or management and maintenance spending in any individual authority … The effect of these proposals will 888 be to ensure a smooth transition to the new regime. For the tenant, the immediate effect should be indistinguishable from what would have happened if the current system had remained in force.If the Bill goes through unamended, the new system will be far from indistinguishable from the present system. I plead with the Minister to consider the calculations to ensure that local authorities are given subsidies for their housing revenue accounts to enable them to carry out the necessary work as that will ensure that tenants do not face astronomical rent increases to pay for that work to be done.
§ Mr. George Howarth
I recommend that the newly appointed Ministers should look at the statements on housing policy made by their predecessors since 1979. I spent some time doing just that. It is an increasingly interesting exercise as one realises that there has been a common thread running through Government policy which brings us to what we are discussing today: what is a sensible rent to expect people to pay for their council house or flat? I want to consider what the Government's housing legislation has amounted to since 1979.
No Conservative Member would deny that the Government originally had only one housing policy. They believed in universal owner-occupation. They thought that there was only one way in which the market could resolve the problems that people faced in finding suitable housing, and that was through owner-occupation. That policy led to the Housing Act 1980, which conferred on sitting tenants the right to buy with discounts according to the length of time that they had been tenants.
The way in which the Government responded to the effects of the Housing Act 1980 was very interesting. They did not stop by giving council tenants the right to purchase their properties with discounts relating to the time that that person had been a tenant. Between 1981 and 1983, when he was a Minister, the right hon. Member for Henley (Mr. Heseltine) regularly appeared at the Dispatch Box, with other Ministers, to say that he expected local authorities to introduce rent increases of £2.50, and over three or four years that increased to more than £6. That was no accident. It occurred because the Government regressively withdrew subsidies to local authorities which would have allowed them to cushion the effects of rent increases.
For the first time we saw the carrot-and-stick approach which the Government have consistently adopted towards housing policy. Indeed, that is the only consistent thing that the Government have done in housing in their entire 10 years in office. The carrot was the opportunity to exercise the right to buy; the stick was that if a tenant did not exercise that right, he would inevitably face increasing rent bills. As a consequence, it would eventually become sensible, to use the Minister's words, to exercise the right to buy instead of remaining a tenant.
To some extent, in the Government's terms, the right-to-buy policy was a success. Perhaps against their initial inclination, many people decided that it made financial good sense to purchase their council houses. Some people in London made huge profits. On a day-to-day budgeting basis, over five or 10 years, it probably made sense for many people to cut their outgoings in rent by purchasing their council homes because their rents would inevitably overtake what they would be expending in mortgage payments had they purchased the council house with a discount.
§ Mr. Pike
There is another aspect to the stick approach. In addition to direct subsidy to housing, local authorities had to consider grant-related expenditure housing factor E7. If they had not taken account of the kind of increase which the Government were advocating, they were penalised through factor E7. The stick was double edged.
§ Mr. Howarth
I am grateful to my hon. Friend for reminding me of that. My hon. Friend and I have both worked in local authorities. I was a chairman of a local authority housing committee and I know that such factors played a major part in assessing rent increase limits. Year after year it became depressingly repetitive having to make those calculations. Cuts in rate support grant and withdrawal of subsidies in general made it almost impossible to avoid large rent increases.
By the mid-1980s, the Government's housing policy seemed to be failing. It was not failing because they had not succeeded in selling council houses; they succeeded in doing that on a large scale. It failed for other reasons. Economists such as Professor Mintford concluded that the lack of opportunity to rent property was acting as a brake on the mobility of labour.
That meant that young people in my constituency, where we still have a major unemployment problem, could not come to London or the south-east to find jobs because they had nowhere to stay. I will not go into Professor Mintford's recommendations to the Government in detail. Perhaps the Minister will read over those recommendations and assimilate them. The major thrust of Professor Mintford's argument was that there was a need for rented property, certainly in the south-east and London.
Professor Mintford has a peculiar brand of economics. He considered the problems of Merseyside and decided that there was too much of it. The logical solution therefore was to remove half of it. I am not sure which side of the Mersey he had in mind, but—
§ Mr. John Heddle (Mid-Staffordshire)
On a point of order, Madam Deputy Speaker. I am trying to follow the hon. Gentleman's arguments is so far as they relate to the Lords amendments. It is very interesting to hear his general views on the Government's housing policy. However, is not his contribution more of a Second Reading speech than one specifically related to the amendments under discussion?
§ Madam Deputy Speaker (Miss Betty Boothroyd)
I remind the hon. Gentleman that that is for me to judge. If the hon. Gentleman looks at this group of amendments, he will see that they cover a wide range of issues.
§ Mr. Howarth
As usual, the impatience of the hon. Member for Mid-Staffordshire (Mr. Heddle) overtakes his intellectual gift for following the debate. I have no difficulty in following his point of order, and I am sure that at the appropriate time he will intervene and make his own comments which, as usual, will be well wide of the mark.
Until Professor Mintford and others rode on to the housing scene, the Government had only one panacea—owner-occupation. Professor Mintford believed that the revival of the private rented sector—and he suggested direct incentives for that from central Government—was the key to providing the accommodation needed in London and the south-east to bring the unemployed down from the north from constituencies like mine to work in Wimpy bars in London and rent in the private sector.
890 Professor Mintford's suggestion about developing the private rented sector led to the Housing Act 1988. Many of us spent three and a half months trying to fathom out the logic of that Act. It was obvious that the Government accepted the suggestions of Professor Mintford and others that there was a need for rented accommodation, and they decided to create that through the private rented sector.
The Government embarked on a programme of privatising the housing association sector. I have given that phrase some thought; I have not simply thrown it out. If we consider the development of Government policy towards the housing associations over the past two or three years, effectively, as the present Minister for the Environment and Countryside used to say frequently at the Dispatch Box, they are pushing what was a voluntary sector into the private sector. They are doing that through financial means.
The Government were in favour of expanding the private rented sector. Secondly, they were in favour of deregulating housing associations. Thirdly, they created a series of devices under part IV of the Act to bring about the breaking up of local authority housing. They made no bones about that—
§ Madam Deputy Speaker
Order. I have given the hon. Gentleman quite a lot of rope; I do not want him to hang himself. If he came back to the housing revenue accounts, I should be much obliged.
§ 7 pm
§ Mr. Howarth
I am grateful for your guidance, Madam Deputy Speaker, and I would not dream of straying from the subject.
The Government's general attitude towards housing is summed up in the proposals on ring fencing as they apply to all these matters.
In the 1988 Act the Government set out, through the use of housing action trusts and the pick-a-landlord—strictly speaking, the pick-a-nant—schemes, to give people the opportunity to opt out of local authority housing—
§ Madam Deputy Speaker
Order. The hon. Gentleman is now going very wide. I have asked him once to return to the point.
§ Mr. Howarth
I am grateful, Madam Deputy Speaker.
These provisions have universally failed—no one has opted out. I have described the carrot, which was the offer of somewhere else to go, but the stick is contained in this Bill. It is to be seen in the Government's treatment of council house rents and housing revenue accounts. Having failed with the carrot, they now introduce the stick. As in the early 1980s and subsequently, new arrangements for rents and for the way in which council house finance is treated are being introduced to make it increasingly attractive to tenants to opt out of a local authority.
The Government hope that tenants will opt either into the newly deregulated housing association sector or into some other form of housing. The Minister is nodding as I point out last year's carrot and this year's stick.
Instead of taking a sensible view of housing policy and of choice, the Government have chosen to victimise council tenants, because of their own ideological predictions, so that they can force them into a financial position in which they have no choice but to follow the Government line. If the Government were so worried 891 about the situation, why did they not look into some of the points that my hon. Friend the Member for Hammersmith (Mr. Soley) mentioned? Why did they not recognise that billions of pounds are needed to put all the housing stock of all the various types of tenure in good order? Why did they not devise a new system to do that effectively? They did not even attempt to think about it. Despite their protestations, why did not the Government consider doing something through local authorities—they are responsible for homelessness—to try to resolve the problem of homelessness?
One of our amendments deals with homelessness. It is no accident, given that the Government have removed 1.2 million properties from all types of rented accommodation, that somewhere along the line something has to give. What gave is visible on the streets of London and across the country. It is not a problem that affects only London; 43 per cent. of all the people who registered as homeless last year were outside London—in towns, rural areas and other cities. These people have nowhere to go. Even when there is surplus local authority accommodation that can be brought on to the market, the Government will so arrange the housing revenue account and other factors that affect local authorities that these people will probably not receive the right combination of benefits to support their efforts to rent a council house or flat.
The Government can pump a few million pounds here and a few million there into new schemes and claim to be a caring Government who are doing something about homelessness, but they know that the problem will get worse until more houses are built. Since 1979, 19,000 fewer council houses a year have been built and there have been 9,000 fewer housing association completions every year. Clearly no effort has been made to deal with the problems of homelessness.
The Government talk about subsidies. I served on the Standing Committee of this Bill, and it was absolutely clear to us that the way in which the rate fund contributions and housing benefit will work is that the poor will be bound to subsidise the even poorer, perhaps to the advantage of the taxpayer but definitely to the disadvantage of those who are trapped in the system.
It is worth discussing who gets what out of the housing system. Housing benefit, whether we like it or not, is the subsidy that applies to those in greatest need. Over the past two or three years the Government have been intent on reducing it. They have not had the guts or the foresight to look at mortgage income tax relief, which is the comparable system—
§ Madam Deputy Speaker
Order. The hon. Gentleman himself said that he was a member of the Standing Committee. As such he is familiar with this clause and with the amendments, and I must refer him to them.
§ Mr. Howarth
This is a wide group of amendments. I am not sure how I can talk about the subsidy system that applies to local authority tenants without comparing it with housing subsidies for others in the community. I suggest that mortgage income tax relief is directly comparable—
§ Mr. Howarth
It was worth a try.
892 As my hon. Friends have said, council tenants will not benefit from all this. Those in other sorts of tenure will continue to receive other sorts of benefits.
The tragedy of this Bill is that the Government had an opportunity to examine all the problems that contribute to the housing crisis, but they have refused, or were too stubborn or too stupid, to deal with the problems. Instead they have carried on with a Bill that does nothing to resolve this country's housing problems. Our amendments would go some way to alleviating the problems that the Bill will cause, and I strongly commend them to the House. Some time in the next two or three years, however, my hon. Friend the Member for Hammersmith will be at the Dispatch Box with Labour's housing Bill, and only then will we start to deal with the problems of housing.
§ Mr. Battle
I shall speak to Lords amendment No. 117 and amendments (a) to (f) in the name of my hon. Friends. I shall also refer to amendment No. 121 on homelessness and to the amendments dealing with capitalised repairs.
My hon. Friend the Member for Knowsley, North (Mr. Howarth) was right to deliver a wide-ranging speech because the Bill is becoming increasingly threadbare. The Government are in increasing difficulty in finding someone who is prepared to defend it. For weeks we have not been clear about who is the Minister for Housing. I gather that it is traditional for the Government to send a Minister to see the housing associations. However, they could not find one to send this year and a civil servant was sent. Obviously he cannot answer about policy.
No one on the Government Front Bench has seen the Bill through every stage of its consideration in the House and in Committee. That means that for the benefit of the Ministers who are now with us we have to go over old ground again because Ministers now give us answers that are completely different from the answers that we received from former Ministers. I shall give one practical example. In this debate the Minister decried capitalisation of repairs. I remind him that his predecessor, who is now the Minister for the Environment and Countryside, said that he felt that capitalisation was entirely legitimate. Perhaps the Minister will say whether he agrees with his colleague or whether there has been a policy change.
At least the policy of the former Minister was consistent with that of the present Minister of State, Foreign and Commonwealth Affairs, the hon. Member for Bristol, West (Mr. Waldegrave), who went round the country 18 months ago encouraging local authorities to use all their capital receipts for repairs. What is that if it is not legitimate capitalisation? Perhaps the Minister will explain whether policy changes with the Minister or whether it remains according to the content of the Bill as it is discussed in the House, in Committee and in the other place.
§ Mr. Chope
If that is the case, the hon. Gentleman should recall that I specifically differentiated between true capital and capitalised repairs and captitalised repairs that are not for true capital purposes but for the purpose of, for 893 example, carrying out routine decoration works which most people would regard as not an appropriate use of capital resources.
§ Mr. Battle
I know that the Minister has not been in post for long. He should refer to Hansardand the debate in Committee on the Bill and on the 1988 Act which was on this precise topic. I am happy to assure him that former Ministers took a different view from the subtle distinction that the Minister is now trying to draw.
§ Mr. Robert G. Hughes (Harrow, West)
I know that the hon. Gentleman would not want to mislead the House. Can he give us chapter and verse of any occasion when any former junior Minister or Housing Minister told the Standing Committee or the House that small matters such as outside painting should be part of the capital programme? I do not remember that, and I do not believe that it happened.
§ Mr. Battle
I am surprised that the hon. Gentleman intervened. I seem to remember that he was on the Committee that examined the 1988 Bill. Perhaps he was writing Christmas cards and not paying attention. If he reads the Committee report, he will see that it contains a thorough discussion on the difference between capitalised repairs and the need to use capital receipts to carry out those repairs.
§ Mr. Battle
The hon. Gentleman should go to the Vote Office and ask for the Standing Committee documents. If he spends the next two hours going through them instead of having his meal, he may find the information there.
There is a key issue in the housing revenue account that will affect tenants. The Minister may not recall it, but I am sure that other hon. Members who took part in the debate and those who attended and listened will remember that we had a thorough discussion about the balancing of the housing revenue account. I remember pressing the Minister hard on the issue. One side of the housing revenue equation consists of income in the form of rents. The expenditure column contains the management and maintenance costs, the repair costs and the housing benefit costs. I am sure that from the briefings that he has been given the Minister will recall that at one stage the ring fencing of that account included the housing benefit to be paid to private sector tenants. That obviously caused a great loophole, because if landlords hyped up their rents the local authority would have had to use its housing revenue account to subsidise the high rents of the private landlord. That was ludicrous and was not then included in the Bill.
At one point the Minister suggested that there had been no changes in the rebate structure, but I suggest that there have been because clause 78(1) of the Bill quite categorically states:In subsection (2) of section 30 of the Social Security Act 1986 (housing benefit finance), for the words 'total housing benefit' there shall be substituted the words 'relevant benefit' and there shall be added at the end the words 'and in this subsection "relevant benefit" means total housing benefit excluding, in the case of a local authority in England and Wales, any Housing Revenue Account rebates granted by them'.894 That illustrates the difficulty that we encountered right in the middle of the Committee. When we were in Committee discussing this Bill, another Committee on which I also had the privilege to serve was discussing the Social Security Bill. The Government had not got their act together and had not connected the proposals in the Social Security Bill to the Housing Act 1988. The reason for that is apparent because many council tenants are on housing benefit. If, as the Minister proposes, all housing rents go up in line with capital values, then the bill for social security and in particular housing benefit will increase incredibly as well. Therefore, a cut-off clause was introduced.
The Minister needs to study the interaction between the Social Security Act 1988 and the Bill. If he does that, he will find that if rents rise for council tenants they will get their personal rebate but the local authority will not get its money back from the Department of Social Security. That shortfall in the accounts will have to be met from increases in the rents of tenants who are not on social security. There is no other way. That means that the poor or people on modest incomes will have their rents increased in order to pay the deficit in the housing benefit of those who are unemployed or have low incomes. Before the Minister and Conservative Members leap up and say that this will not affect people on benefits, they should look carefully at the detail of the Bill.
There is a parallel to which I shall briefly refer. Many Conservative Members say that the poor will have the poll tax paid for them, but we all know that there is also a cut-off clause. The suggestion is that everybody will pay 20 per cent., and that means that the maximum rebate is only 80 per cent. The notion that the Government are protecting the poor from increases is false. It is quite wrong to use the Bill and housing policy as a means of sorting out income maintenance. That should be done through the social security system and not by insisting on cuts in the repair programmes of local authorities by putting pressure on the housing revenue account.
I hope that the Minister will take that on board and will withdraw the proposals in the Bill before local authority rents go up and the social security offices refuse to reimburse local authorities for the housing benefit costs. As a result, local authorities will be penalised on the repair and maintenance work that they could provide for their tenants. It will mean that local authorities will put in the rebates and that the income maintenance which should come from the tax system through the social security system at the centre will be pushed back to local level. Perhaps in line with the Government's approach to poverty we will be pushed back again in the direction of a kind of retrograde parish relief system at local level.
I asked the new Minister a question earlier today. It is relevant to amendment No. 112, as it deals with the homeless. I asked him:what is the Government's estimate of the number of homeless people under the age of 18 years.The reply was:The numbers of people under the age of 18 years among the households accepted as homeless are not reported by local authorities and my Department has no estimates.Given the new scientific age of computer calculation, and the emphasis that the Government put on collecting accurate information and statistics, I find an amazing complacency in that reply, not least because it is well known that in my city of Leeds every month 300 young 895 people present themselves as being homeless or threatened with homelessness, and that at least a third of them are aged under 18. I hope that the Minister is not suggesting that he will shuffle off responsibility for the homeless by saying that, as the Department cannot keep figures of those who are under 18, they are not a problem.
The Minister should say that there will be a change of policy. The Bill, with its proposals to ring-fence the housing revenue account, will simply add to the ideological almost-addiction of the previous Secretary of State, who was hooked on the free market. He believed that the price was all—push rents up and the housing problems will be resolved. Already one of the Minister's colleagues has said that the Government will introduce no more legislation on housing, because they have "done housing".
I take the view which I am sure many others take, that the Government's housing policies have resulted in a housing disaster in terms of improvement of stock and a housing tragedy in terms of human lives for those who are homeless. I hope that this rag-bag of amendments, whose acceptance would make the Bill even more shoddy, will mean that increasingly Ministers are unprepared to defend it, with the result that, even at this late stage, they will be prepared to withdraw it.
§ Mr. Ronnie Fearn (Southport)
I did not have the pleasure, if I may call it that, of serving on the Standing Committee on this, or any other, housing Bill. Therefore, like the Minister, I am new to the job. When I looked at the amendments and the Bill, this amendment dealing with ring fencing was the one that stood out. It seems to me to be a deliberate attempt to raise rents and work towards the elimination of all council housing. This may be the Government's aim.
There is no doubt that there is a terrific housing shortage. I used to think that I came from a rather affluent society in my home town of Southport, which is in Sefton. However, when Sefton was created in 1974, we gathered Bootle, Crosby, Formby, Southport and many other little parishes. Within that group, I realised that there was a big and growing housing shortage. In my own home town of Southport, 3,000 families are waiting for housing. I cannot see that the Bill will improve that by one iota.
The housing shortage is not contained merely within my Merseyside area. It stretches throughout the country, and since I live part of the time in London, I have been able to see the many homeless young people in the capital city. They are now moving out of the cardboard cities and into the concrete jungle because winter is coming. On many nights I have spoken to the police and to the homeless and they tell me that the problem continues to grow, not only in London but in other major cities, and now the towns. I cannot think that the Bill will help those homeless people.
The deterioration in property will get worse. Some authorities have not been good at looking after their housing stock, and many have come to the attention of the Association of Metropolitan Authorities. They are of many persuasions—all political parties have had that trouble. What the Minister is proposing will not help in any way to improve the housing stock, much of which now needs a great deal of money spent on it. The housing subsidy account and the housing revenue account have been able to cope with many of the repairs that need to be done to council housing, but from here on that will be much more difficult.
896 It has been said that the Minister claimed that rents would not rise. He did not say that—he was misquoted. He said that rents will not be out of the reach of ordinary people. I should like to know what the term "ordinary people" means.
I do not know. I hope that the Minister will explain what he means, because this is the yardstick on which the Government will work. I should find it difficult to spotlight the ordinary person by using that yardstick. Can he guarantee that when he comes to define ordinary people, rents will not be out of the reach of those people?
It is morally wrong that better-off council tenants should be paying, through their rents, for the welfare benefits given to other tenants. Private and housing association tenants will not be put in that position. It will place council tenants in the difficult position of having to pay a little extra. This is particularly bad as better-off council tenants are a long way from being well off. There is no such thing as a well-off council tenant. A well-off person is one who owns his own property with only a small mortgage and there are few like that these days. To say that we are subsidising council tenants is untrue. It has never been true and it will not be true. It is another case of the poor subsidising the poor.
We have here greater central Government control over local authorities' housing activities, thus once more stifling local initiative—something at which Whitehall has been very good, especially since 1979. I can see that the Bill will do nothing to alleviate the growing housing shortage. lf the Minister can explain one or two of those points, I for one shall have my eyes opened.
§ Mr. David Winnick (Walsall, North)
Rent levels are already far too high, and the Bill will continue the substantial increases in rents that have already taken place. Those increases in rents result from the elimination of housing subsidies and are not the fault of the local council, certainly not mine, which recognises that much of the rent increases has been unjustified, but has simply no alternative, like every other local authority. These substantial rent increases have been aggravated by the substantial reduction in housing benefit. The phasing out of transitional benefit—a benefit which came about only as a result of the outcry, particularly by Opposition Members—will mean that many of those who will be expected to pay full rents will not be in a position to do so.
I receive many complaints from constituents about rent levels. They come to see me at my surgeries and show me the amount of rent that they are paying out of a relatively small income. I can hardly believe that they can be paying so much in rent. As one would expect, I write to the housing department, but it is nearly all in order in most cases. Usually there has been no mistake and the responsibility falls on the Government who, since they came to office 10 years ago, have deliberately pursued the policy of making life more and more difficult for local authority tenants.
One of the reasons why rents have gone up, apart from the substantial reduction in housing subsidies, is the Government's wish for council tenants to buy. They are pressurised to buy. They are told, "Why remain a council tenant? It is easier to buy." In many cases they have no wish to buy the property in which they live. The ring fencing that is included in the Bill will ensure that tenants 897 who are certainly not well off, but who are somewhat better off than others, will subsidise poorer tenants. As my hon. Friend the Member for Hammersmith (Mr. Soley) said, the poor will subsidise the very poor.
We have not heard much from the Minister about the private sector. He would be boasting if there were any justification for boasting. We know the junior Minister's record before he came to the House. He is a fanatic about the privately-rented sector. He and other Ministers told us that there would be a revival of that sector, that that would solve much of the homelessness and the difficulties experienced by so many people.
I wonder how many more rented accommodation has come about in the private sector since the new legislation was put on the statute book—not much. That demonstrates what we said at the time—that the revival would not come about for all the reasons that we gave at the time. We are confronted by an acute housing crisis, as my right hon. and hon. Friends have said.
I shall give an illustration. Some constituents of mine, who are not in the worst housing plight, came to see me last Saturday. They are a young couple who have been married for two or three years and have one child. They live with the wife's mother. The situation in the household is tense. They are high on the waiting list, but every time they go to the local neighbourhood office, they find that other people are higher. That is understandable because, presumably, other people are considered to be in greater housing need.
The couple have been married for nearly three years and they have never had any accommodation of their own. They told me that, about 18 months ago, they considered buying a place but it was not possible then, let alone now. Theirs is not the worst case—far from it—but it illustrates some of the problems of people who are being punished and penalised, day in and day out, by the Government because they cannot afford a mortgage. What can they do? They can wait for years to be rehoused by the local authority. I am not exaggerating. Housing associations cannot help them, and it is a joke to mention the private rented sector to the people who come to my surgeries and who write to me about their housing problems.
Why should our fellow citizens be penalised because they do not have the income to buy? I accept that they are a minority, but they are a sizeable minority. If we leave the main building here and turn right, we will find that a vigil is taking place opposite Downing street. It is a vigil for the homeless and I understand that it has been organised by Shelter. This Christmas, there will be more homeless people than in any year since the end of the war. That is certain. There will be more families in bed-and-breakfast hostels this Christmas than ever before. Imagine what it must be like to stay in bed-and-breakfast accommodation for the Christmas holiday and not to know when one will be rehoused.
The Prime Minister likes photo-opportunities and she likes to be photographed in favourable circumstances. Will she visit a bed-and-breakfast hostel on Christmas day? Will the Secretary of State or the Under-Secretary of State go to a hostel and see their fellow citizens living in squalid conditions because of the Government's policies? Nowadays one cannot go to a main line railway or 898 Underground station in central London without seeing young people with boards saying, "I am homeless". They are begging. They do not appear to me to be social victims in the sense of being drunkards. In the main they are young people who are encouraged to come to London by the Government. Once they are here, even if they find a job, they have no means of finding accommodation. That is the crisis that we have to deal with and to which the amendments refer.
Many accusations can be made against the Government. One of the worst is that they have shown a callous disregard for people who are not able to solve their housing problems by buying. They have shown a callous disregard for people who desperately require rented accommodation. Had I been told before 1979 that there would be a substantial reduction in the rented sector, I would have found it almost unbelievable. I shall not go into the argument about whether it is right for local authorities to sell houses, as it is not a part of this debate, but it is only right and proper that when accommodation is sold it should be replaced. Yesterday, in a parliamentary answer, I was told that the number of local authority starts last year was approximately 13,000 and that it is likely to be even less this year. That is disgraceful and scandalous.
I do not apologise for the fact that I have raised these issues in the House before and I shall continue to do so because the Chamber of the House of Commons is the right place to raise them. There is not much concern on the Conservative Benches. Ministers are well off. None of them has ever suffered the indignity of being without accommodation. None of them understands what it means not to be able to resolve housing difficulties. The hon. Member for Grantham (Mr. Hogg) may mutter as much as he likes—Ministers do not understand the problems that I am trying to explain to the House.
I say again that it is scandalous that our fellow citizens should have to spend Christmas or any other time in the conditions that I have described. That is why we are right to object to the Bill. It is the duty and responsibility of Labour Members to explain what is happening at every opportunity, in the House and outside, and to point out the indifference that the Government show to the homeless and near-homeless in Britain.
§ Mr. Geoffrey Lofthouse (Pontefract and Castleford)
What will be the effect on the housing revenue account of the Rent Officers (Additional Functions) Order 1989—a statutory instrument which was shoved through the House in the early hours of the morning without any publicity? I honestly believe that it is the most nasty, vindictive piece of legislation that I have seen go through in all the time that I have been in the House.
The statutory instrument will affect the housing revenue account. It means that the rent rebate system for poor people will not be based on the rent of their dwelling, but will be calculated by a rent officer. He will decide how much of that dwelling can be taken into consideration for rent rebate. There is a formula. For example, if Mr. and Mrs. Bloggs, a married couple, are living together, it will be one room plus a little bit. Aged couples will wonder what will happen when one of them unfortunately passes away. How much increase in rent will the survivor have to face because of the reduction in rent rebates?
I concede that Ministers have not understood the implications for housing revenue accounts if some local authorities meet the cost of such a shabby statutory 899 instrument. The House may recall that what were National Coal Board houses were sold off to Mickey Mouse landlords, or racketeers. The houses are in the private sector now, and they will be caught by the statutory instrument. Again, there will be implications for HRAs. High rents are being charged on some of the estates of ex-NCB houses, and when tenants are entitled to a rent rebate, someone has to find the cost of the rebate. Under the old system, the Government met the cost. Under the new system, the burden is borne by local authorities' HRAs.
Some of the ex-NCB houses were defective and came within the terms of the Housing Defects Act 1984. In accordance with that legislation, local authorities had a duty to repurchase. Some houses are now owned by local authorities and will not be subject to the statutory instrument, but others are in the private sector. Any responsible local authority would not take the decision lightly that for some dwellings on privately owned estates it should have to find the difference between the provisions of the rent rebate system and the system that applies under the statutory instrument. The local authority can use the HRA, or rent rebate can be reduced to the extent that the rent officer becomes involved. In any event, money will have to be found from capital accounts.
Have Ministers ever considered tenants on private estates of the sort to which I am referring? It seems that they have not. There will be chaos on some estates. One local authority may take a sympathetic view and use its HRA, while the adjoining authority will not. That cannot be just. It cannot be fair.
Many tenants have been thrown to the wolves by the policy of the Government and British Coal. Many tenants do not know who their landlords are. These people will not have the protection that is enjoyed by local authority tenants. I hope that the Minister will tell us whether he has any plans to alleviate the problems of former British Coal estates.
§ Mr. John Fraser (Norwood)
The Government's proposal that there should be a ring fence around the income and expenditure of local authorities' housing revenue accounts has been discussed for about a year. I do not have any great objection in principle to having a ring fence around an HRA providing four conditions are met. First, as a result of ring fencing, the rents that will be paid by tenants must be reasonable, and by "reasonable" I mean affordable by the sort of people for whom the accommodation is designed, the sort of people who will occupy the accommodation that is provided by the local authority. Secondly, the system which is devised must be fair and reasonable.
Thirdly, the system must not inhibit good management and repair policies. It must not stand in the way of a local authority ensuring that its estates are well managed, and in inner city areas good management is not an easy task. Repairs must be of a high standard and performed quickly, to the satisfaction of tenants. Fourthly, the deficit which results from the first three objectives—there will inevitably be a deficit in places such as Lambeth and Southwark—must be met by the taxpayer instead of the ratepayer. That would be welcome in the borough within 900 my constituency, where the burden that is placed upon ratepayers generally to subsidise the HRA is a pretty heavy one.
My fourth condition is not an unreasonable one, because it would not cost the Government very much money. It would not cost them more than a few hundred million pounds to make up the deficit, and that is a fleabite compared with the £4,000 million or £5,000 million that is paid out each year by taxpayers generally to support the cost of the mortgage interest relief scheme.
Does the system that is being introduced meet the criteria that I have outlined? In my view, it does not. My first criterion is that rents should be reasonable for those who are likely to occupy the accommodation that is provided. We know from an amendment that the Government introduced on Report that the level of rents which they propose for local authority dwellings should be related between authorities to the prices that are obtained when houses are sold under the right-to-buy scheme.
It is comparatively easy to predict the relativities of rents between one part of the country and another. There is not much variation between the comparative prices of houses being sold under the right-to-buy scheme between one area and another and house prices generally. For example, we know that in Rossendale the cost of a house for a working-class family will be about £15,000 to £20,000. There are some who will be able to buy a terraced house for rather less than that. In Lambeth, which is within my constituency, or Wandsworth, which is the borough that the Minister used to represent when he was a councillor, the capital cost of housing is about three or four times higher than in somewhere such as Rossendale, Burnley or Bury.
We can deduce from those relativities that, if £20 or £15 a week is the right sort of rent in Burnley or Rossendale, the comparative rent based on right-to-buy figures within Lambeth, Wandsworth or Southwark will be £60 or £80 a week. That, however, is not the market rent. If market rents are to be charged for local authority accommodation, which may be the long-term effect of housing action trusts, in my part of London, rents would be between £100 and £200 a week. That can be checked easily by looking through the local paper, the Evening Standard or Loot. They are not exaggerated market rents. Those two sets of figures illustrate the comparison between one part of the country and another. Ring fencing and the Government's formula for gradually increasing local authority rents will lead to rents in a borough like mine being pushed beyond the means of the people for whom the housing was designed.
Secondly, is the proposed system fair? As other hon. Members have said, because of changes in the housing benefit system, ring fencing will mean that some council tenants will pay more rent to subsidise their poorer neighbours—the reverse of the previous system. Poorer tenants will subsidise the poorest in the housing revenue account. That is a strange system.
In Belgravia, people pay more rent because they live next door to rich people. In Hampstead, people pay more for their houses for the same reason. In Pimlico, Chelsea and other areas, the values of property and the rents that people are prepared to pay are often greater because of the affluence in which they live. In an odd reversal of that position, in poorer parts of the metropolis, on the other side of London, poorer tenants will pay more because they live next door to the poorest tenants. They will pay 901 towards the cost of their neighbours' housing benefit because of changes in the social security arrangements and the new system of ring fencing.
Thirdly, will the new system satisfy the test of more adequate provision for repairs and management? I have a quarrel with many local authorities. Often—I have to say that to protect myself against anyone who says that this is not true of their local authority—rents are low, but the quality of housing management and repair is also low. If I had to make a choice between a slightly higher rent with better management and repairs and lower rents with poorer management and repairs, I know what I would choose. I should prefer to pay a little more rent to have a little more quality.
In some housing authorities people tell me that the rents are very high. When I ask about the rents for housing association property in the same area, they tell me that they are much higher. One deduces that a huge crush of people must want to move from housing association properties into local authority properties. However, when the transfer applications are examined, it is often found that that is not the case. People do not mind paying more in return for higher quality.
The problem is political as well as financial. Often it is politically difficult to defend the case for putting up rents. Sadly, there is often resistance to increasing rents a little to spend more on repairs. Nothing in the Bill will make it easier to do so. Ring fencing will drive up rents to pay for the reduced subsidy. If local authorities want to follow my suggestion to increase rents, with tenants' consent to raise money for better repairs, they will find that they have been pre-empted.
If rents in Lambeth have risen from £20 to £60 a week to pay both for eliminating the subsidy to poorer tenants who will lose benefits and for the costs of administering housing benefit, there will be no margin to allow an extra pound or two on the rent to pay for good management. Indeed, the converse will happen. Councils will be under pressure to reduce spending on repairs and management because tenants have already swallowed enough rent increases. That is why the amendments are important. In setting notional rents, the Government need to take account of the effect of their proposals on management and repairs.
About two thirds of the cases raised with me in my constituency relate to housing problems. I do not have a monopoly on that. At the end of my Friday night advice sessions, I despair about what I can do to help my constituents. The same kind of cases come up time and time again. Sometimes a husband and wife or partners may live with their two children in a bed-sit. What kind of privacy or life can they have in such accommodation? Such cases are not isolated. Many such families come to me within the same evening and ask, "What are the Government doing about it?"
There was a time when Ministers genuinely cared about housing problems. They thought that we in the Labour party had got it wrong and that their new formulae would get it right. There was a honeymoon period when we gave them credit for their intentions, if not for their achievements. Because of the direction of housing policy and the removal of subsidy from local authority housing, when people ask whether the Government care, I have to 902 reply, "They don't care if you die of despair. They don't care if they are driving you into inner-city concentration camps without any hope or prospect of bringing up a family in dignity." Many poorer people in the community, who rely on their local authority for housing, cannot avoid reaching the conclusion that that is the Government's attitude.
§ Mr. Harry Cohen (Leyton)
I support what my hon. Friend the Member for Norwood (Mr. Fraser) said. Like him, I see many people at my surgery who are in a desperate housing plight. As a result of the Government's policies, there is virtually nothing that I can do for them. I also agree with him about ministerial attitudes.
The amendments are about housing revenue accounts and rents. I wish to deal with the serious implications for Waltham Forest. I know that there are similar problems in other hon. Members' areas but I have the provisional figures for my area which I want to share with the House and the Minister. I am not sure that he is aware of the serious implications in my area for rents, capital investment, repairs and the local authority's ability to tackle homelessness, which is an immense problem. All the available accommodation in my area is taken up by the homeless, so that there is little movement of other people on the waiting list, even if they are in dire need.
Withdrawal of housing subsidy according to the Government's guidelines will mean a loss of about £4.7 million to Waltham Forest. That will mean a rent increase of 21 per cent. with effect from 1 April next year. To that will have to be added the cost of unsubsidised management, and maintenance costs, inflation, charges from the current year and provision for bad debts, which the Government have not taken into account in their notional figures. The actual figures will be greater than the notional figures set by the Department of the Environment. That is another £3.75 million, which pushes up the rent rise to 38 per cent. In addition, there is a shortfall on the capital account, which again arises out of the Bill and which must be met by the housing revenue account so that the capital books can be balanced. It is another £7 million in Waltham Forest, which pushes the rent rise up to 70 per cent. Why must there be such a rise in rents under the Bill? Even if it were 20 per cent.—although 70 per cent. is more likely—it would not be in line with inflation, which is much lower. It is between three and 10 times the rate of inflation. What is the justification for that ?
The Government proclaim that fighting inflation is their top priority. If so, why are they pushing through a measure that will have such an impact on rents? Does the Minister really understand the implications of the Bill, especially as they affect tenants? If not, the Government should urgently review the Bill. If they do, they are effectively saying they do not care a fig about the problems that the Bill will create.
The figures that I have for the capital account for 1990–91 show an HIP allocation for the borough of £10 million, and that is being optimistic. If we add to that capital receipts of £6 million, the total resources amount to £16 million. That is only half the 1989–90 resources. The Bill provides three main reasons for that. First, councils cannot use the previous year's capital receipts. Secondly, they cannot use their prescribed receipts—that is, the 903 right-to-buy money—for repairs as opposed to major investment. Thirdly, 75 per cent. of the right-to-buy money cannot be used for investment; it must be used to repay past debts.
The capital programme was set about a year ago, so it cannot simply be cut. It includes mandatory grants in excess of £ 1 million and contractually committed schemes, which are unavoidable without penalty, of £15 million. In other words, that £16 million is already committed. There are urgent 1989–90 schemes that Waltham Forest must fulfil, and they amount to another £7 million. There are only a few of them—for example, Northwood tower where there is serious structural and fabric disrepair. There is Cogan avenue, which is needed because Whitebeam tower has similar disrepair problems and 100 families must be decanted to Cogan avenue.
Three housing association schemes are also included which are intended for people with mental and learning disabilities. Those crucial schemes must be fulfilled. That brings the capital programme to a total of £23 million, yet the resources available under the Bill will be only £16 million, a shortfall of £7 million.
Will the Minister guarantee that the new system under the Bill will allow the same current level of investment to continue? The figures show that that will not be the case, but there will be cuts in capital investment of 50 per cent. or even more. The only way that that could be avoided is for the additional burden to fall on the rents, as I have already explained. What is the Government's intention? Do they really understand the impact on local authorities such as Waltham Forest? If they do not, they should review the Bill. If they do, they are cynically uncaring.
The Bill has implications for the fight against homelessness. One method to deal with homelessness is leasing, and Waltham Forest has a programme to secure about 500 leases in three years. It is a central part of its strategy of avoiding the use of bed-and-breakfast accommodation, although other boroughs are forced to use that option. Waltham Forest should be congratulated on not putting people into bed-and-breakfast accommodation, and the leasing scheme plays a great part in that success. The Bill includes regulations that will penalise councils that swap short-term leases. If a council takes out a lease for more than three years, the total capital value of the lease is assessed and the amount that the local authority can then borrow is reduced by that amount. That is iniquitous.
If a local authority leases a property for three years and then releases it, and then my authority, Waltham Forest, takes up that lease, the first authority's holding of the lease counts against the credit limit of Waltham Forest. Councils such as Conservative-controlled Westminster and Liberal-controlled Tower Hamlets have already taken up at least 300 properties in Waltham Forest. That will restrict Waltham Forest's right to lease homes in its own area.
That is wrong. A local authority should be able to take out a lease for longer than three years. The homelessness problem will not be solved in anything like three years; it will take much longer to tackle it. Therefore, Waltham Forest is effectively being penalised for trying to sort out its homelessness without having to resort to bed and breakfast. Is the Minister really suggesting that Waltham Forest should use bed-and-breakfast accommodation? That would be the effect of the regulations.
904 I ask the Minister to review the position. The Government are doing precious little to tackle the problem of rising homelessness. At the very least, they should riot be imposing restrictions that will hamper the legitimate attempts of a local authority to tackle the problem. I ask the Minister seriously to consider those points.
§ Mr. Redmond
I had not intended to make a speech but having listened to the Minister I felt that I must make a few comments. I am concerned that this Minister is no different from those who went before him in his attitude towards housing. The Government's hatred for the council house tenant is crystal clear, and it appears to increase each year. I used to think that the Government hated the miners more than anything else, but it now appears that they have turned their hatred towards the council tenant. Their policies are detrimental to a section in our society that requres cheap accommodation because they cannot afford to purchase in the private sector. I am a little worried that that hatred is blinding the common sense that should prevail in order to meet the needs of that section of our society.
Since 1979 there has been no long-term planning for local authorities, never mind housing. For a housing authority to function properly it needs a long-term strategy. However, when the Government interfere with the money available to an authority, the needs of council tenants cannot be met successfully.
The Minister talked about the fairness of the legislation and, in particular, of the group of amendments. I listened to him carefully, but I cannot see any fairness within the system. One thing is sure: when the Bill is enacted the council tenant will be a damn sight worse off than he or she is now. Compassion for and understanding of the needs of the council house tenant are in short supply.
The Minister talked about the Government meeting a housing authority's needs, coming along with a pocketful of money and doling it out if the council proved that a need existed and that it had acted within the guidelines laid down by the Government. He cannot live in the same world that I live in. When Doncaster, like I am sure every other local authority, submits its housing investment programme, it usually finishes up with 50 per cent. of what it requires to meet its needs in the forthcoming year. However, the Government have seen fit to cut that allocation, which has a knock-on effect.
The money from the sale of council houses is the tenants' money which should be invested in a local authority's housing stock. However, the Government appear to say one thing and do another. They have allowed housing authorities to spend only a percentage of capital receipts when all of it could have been spent to improve conditions for tenants.
The Minister appeared unable to say what he thought a fair rent was. I do not know how long a piece of string is, but the Minister appeared unable to say any more than that rent increases would depend on this, that or the other. However, I have no doubt that rents will continue to escalate. It is no good the Minister saying that they will go no higher than inflation, or whatever. Experience shows that not to be true and that is a great pity.
The Minister talked about fabrication versus repairs. He appeared to accept that the cost of installation of new window frames would form part of the HIP allocation but said that the cost of painting window frames would not, and that is a tragedy. Local authorities struggle like hell to 905 try to maintain their properties in a reasonable state of repair, but older properties require more money spending on them to ensure that they are maintained to a reasonable standard. Unfortunately, the money is not there to maintain them, so a gradual deterioration is taking place. It is a great pity that the Government will not provide money to invest in fabrication while authorities continue with their repair programme. Fabrication reduces the need for repairs. One-off repairs are a damn sight more costly than a fabrication programme, which can lead to savings in the long term. It is a tragedy that the Government are not interested in long-term solutions to housing problems.
Between 1975 and 1979, when there was a change of Government, Doncaster council had 1,500 new starts a year. That figure dropped in 1979. Those new starts were made possible as a result of Government money and the Government's permission to borrow money to meet a need within the community where housing waiting lists were growing. Those 1,500 new starts comprised houses to meet the needs of large and small families and decent bungalows to meet the needs of our senior citizens. However, the ring fencing that the Minister talked about will stop investment in such bungalows, for which the need is escalating. As people in our community become older, they become more infirm and need suitable accommodation. I regret that the Government are treating the elderly with contempt.
Doncaster, like many other authorities, provides accommodation for senior citizens from all sections of the community—private and public. Unfortunately, ring fencing means that the council house tenant is being asked to pay an increased rent to provide accommodation for the private sector, and that is wrong. Money should come not only from the Government but from the rates to provide accommodation to meet the needs of the elderly in our society. There is a complete lack of understanding about what will be needed in the future. It will be a great pity if the Government do not stop to reflect and then come back to the House with a sensible policy for that section of the community which they can view with pride.
Yet again, the Government are trying to kid the public that they are providing something when they are not. When the public come to taste the fruits of that policy they will find that they are bitter fruits indeed. At the next election many Conservative Members will have cause to condemn their Ministers for not providing suitable and sensible policies which meet the needs of the community.
§ Mr. Allen McKay
The Bill and the Government's attitude towards the Lords amendments suggest that they have launched a continuing attack on local government and all that it stands for. It would have been far better for the Government to be honest and to say at the outset that the Bill represented a continuation of their policy of moving all local authority housing into the private sector, with the possible exception of free sheltered accommodation.
I should like a categorical statement from the Minister about what is meant by the proposals in the amendments concerning the housing revenue account, rents and rent rebates. I expect rents in my area to be forced up to £50, £55 or £60. The Government say that that is fine, because there is a system of rebates—which, over the years, has 906 caused problems that we are now gradually surmounting. According to the Government, a group of people who do not receive the rebates will bear the brunt of the attack.
I cannot help but think that the Government's policy is to try to force that group out of their chosen status as council tenants, leaving them no alternative but to buy their houses. If the Government had made that clear, fair enough, but they have tried to cover it up.
The reason for my continued opposition to the Government's ring-fencing policy is the fact that my authority ring fenced years ago, long before the Government ever thought of doing so. For years we have taken nothing from the rates to help with housing. Some of my colleagues in other authorities have said that we are wrong. Fair enough: they have their views, and we have ours.
In my area council housing, by and large, has financed itself, but we always had a plan for housing development that was 10, 12 or 14 years in advance. We increased the rents of existing council houses to pay for the void during which no rents would be received for houses that were being built, and did not take the money from the rates.
Under our system, elderly people could be moved out of three-bedroomed houses into bungalows, leaving the houses free for families. Under the Bill and the Lords amendments, housing benefit will be cut if the Government consider that the recipients are living in houses too large for them. If that happens, those people will of course turn to the local authority, hoping to be rehoused; but many houses have been sold. The Minister shakes his head, but what I have said is true, and we can prove it.
Will ring fencing force tenants to pay for the rebates of other tenants? That is what was intimated by the previous Secretary of State. Will tenants have to pay for the rent arrears of others? That seems likely to me. If the Minister can refute what I have said, let him tell us from the Dispatch Box that every treasurer of every local authority who submits an account of rent rebates and arrears will continue to receive money under the present system.
The Minister has talked of targeting subsidies, and has said that the Bill will make things simple. When a Minister in the present Government talks about making things simple, I immediately assume that he has found a way of saving money, for they never make anything simple unless there is something to be gained. Everything that the Government have said suggests that they intend to load council house tenants with the debts of others: the poor will pay for those who are poorer still, as my hon. Friend the Member for Knowsley, North (Mr. Howarth) has pointed out.
All that we want is for the Government to be honest about what they are doing and what it will mean. Will rents be raised by as much as I have suggested? Why should a housing account not pay for itself? When we accused the Government of centralising the rent scheme, they denied that they were doing so. The Minister, however, mentioned a minimum of 95p for each council house, which must mean that rents are to be controlled centrally. What is to stop a Minister—whatever his party—from increasing rents time and again without the local authority's permission? Will the 95p minimum and the £4.50 maximum be based in such a way that the authority will be left free to decide how to spend the money?
If an authority is paying its way in council housing, as mine is, why should it have to put 95p on the rent if it does 907 not need that money? What authority has central Government to impose such a requirement on a council that has achieved what local government has wanted to achieve for years, and has managed to make council housing responsible for itself?
Moreover, it is the houses that have paid for themselves—the houses whose rent has contributed to the "global" sum of the housing revenue account—that have been sold, although they are the seedcorn of the council housing system. Far from helping local authorities and their tenants, the Government are destroying a housing system that has lasted for years, for the sake of a purely ideological concept of house ownership.
As the Minister knows, I agree wholeheartedly with home ownership. My local authority bought land and put in sewers and roads at the ratepayers' expense to ensure that those who wished to build could do so more cheaply than many others elsewhere. Houses were purpose built for sale. Much of what the Government have done, however, has ruined such policies, in my area and others, and I find that very sad.
It is even sadder to know that some tenants will be paying through the nose—unless the Minister can tell us that that will not happen. I wish that he would say that all housing rebates will be paid as they are now rather than being taken from other tenants, and that rent arrears will not be paid by tenants either. Council tenants in my area should be crying out. There may be six houses in a row, four of which may have been sold. The others will be occupied by council tenants. In their rents those council tenants are paying, for example, for the grass to be cut in the gardens of the other four houses.
If the Bill is passed, as I expect it will be, my local authority will have to look again at what belongs to housing and what belongs to rates. If the Minister honestly and truly looks at the position, I am sure that he will acknowledge that council house tenants are being imposed upon. He will then come to the Dispatch Box and say exactly what is to happen. Our council house tenants will have to pay for the rebates of others. They will also have to pay for the rents of other people. We should be given the answer to that question. Council house tenants ought to be able to decide what their future is to be.
§ Mr. Pike
I have waited for some time to take part in the debate. I did so quite deliberately because I had expected to hear contributions to the debate from a few Conservative Members. It is surprising that no Conservative Member has taken part in the debate on these important Lords amendments and the amendments that have been proposed to them.
My hon. Friend the Member for Barnsley, West and Penistone (Mr. McKay) spoke about housing subsidy for those in receipt of benefit. He also referred to ring fencing. I listened carefully to the Minister's interventions during the speech of my hon. Friend the Member for Hammersmith (Mr. Soley). Whenever the Minister was pressed on those issues, he changed the question that my hon. Friend had asked and gave the answer that suited him. At no stage did he answer the questions that were put to him. Every time that the Minister rose to his feet, which he did several times, he deliberately changed the question because notes were being pushed at him. We want to be convinced that at no stage will the poorest tenants who are 908 able to pay their rents and other council house tenants be asked to meet part of the housing subsidy that is to be given to those who need it. Do the Government intend to meet the shortfall that arises from any additional burdens that local authorities have to bear as a result of the proposed changes?
§ Mr. Soley
My hon. Friend knows that the Bill, as drafted, clearly states that the poor will have to subsidise the poorest through the housing benefit system. The Minister got himself into trouble when he said that any difference would be made up by the taxpayer. He had to retreat from that position during the series of interventions that my hon. Friend has rightly identified. We need to know whether the Government's intention is to make people pay for the housing benefit of others in the area, or whether the taxpayer will have to pick up that bill.
§ Mr. Pike
That is an important point. If the Bill becomes an Act, it is what the legislation says that will count, not what the Minister says. If the Minister meant what he said—that the taxpayer, not council tenants, will meet the bill—that must be spelt out clearly in the legislation. Even at this late stage an amendment ought to be tabled to make that clear.
The Bill has been altered at every stage. I was not a member of the Committee, but I know that the Bill was altered in Committee. It was considerably altered on Report and it was almost completely redrafted in the other place. If the Bill is still not right at this stage, the Government must get it right. We need to know whether the Minister's original statement was correct—that taxpayers will have to bear the cost, not council house tenants.
It is regrettable that local authorities have been made to bear the burden of administering housing benefit. They were never fully recompensed for their work. The burden was shifted from the Department of Social Security to the local authorities. They had to carry out the Government's dirty work.
The Government have deliberately discriminated against those who want to live in rented housing, particularly in council houses. They have encouraged people to buy their homes, a point that has been made on several occasions during the debate. In 1979 the Government's subsidy to the housing revenue account in Burnley was £1.6 million. That was rapidly eroded, over a period of two years, to zero, and it has been at zero ever since. Furthermore, housing factor E7 in the grant-related expenditure assessment is affected if councils do not increase rents in accordance with the Government's wishes. We want council tenants to be given a fair deal. If the Government are not prepared to do what we wish them to do, council tenants will, once again, be unfairly penalised.
A person who is buying his house gets tax relief, whatever his income. If he is paying tax at the higher rate, his tax relief will be at the higher rate, subject to the £25,000 limit. His position has to be compared with that of a council tenant. I hope that the Government are prepared to accept that they have made a mistake. They ought to make a concession to council tenants and treat them fairly and equitably. However, the Government do not believe in fairness and equity, so I shall not be surprised if they are not prepared to go down that road.
909 We deal with capital receipts in one of our amendments to the Lords amendment. It would enable councils, if they so wished, to use capital receipts for repairs. It is important that we should allow local authorities the right to do that. I have never agreed with the way in which the Government imposed restrictions on the use of capital receipts through the 20 per cent. factor and I certainly do not believe that they should now prevent them from being spent on repairs. If they do that, there will be an immediate shortfall on the housing revenue account. Local authorities either will have to put the rents up even more to ensure that important repairs are carried out, or, worse, the repairs will not be carried out and there will be a further deterioration in our housing stock.
The Government should be concerned that in the past 10 years there has been a deterioration in public and private sector housing. We do not have a housing crisis. We have a number of housing crises which have all been created by the Government.
When I was a local council member I did not agree that capital receipts should be used for repairs to council property. However, I strongly believe in local government and I believe that local government should have the ability to take such a decision. That is the fundamental difference between the two sides of the House. Although we might not always agree with what local authorities choose to do, we certainly believe that they have the right to choose. I believe that that money should not be used in that way, but I might be in a minority. Nevertheless, that is the view I took when I was on a local authority. However, I recognise that, due to further reductions in their HIP allocations, pressure to increase rents by other measures has forced local authorities to consider that option. They have no alternative. I do not blame local authorities, as I recognise why they have been forced into that position. I stopped being leader of Burnley council in 1983 and the situation has continued to worsen year by year. I appreciate why local authorities have had to do that.
I hope that the Minister recognises the importance of our amendment. If the Minister does not want to force up rents to totally unacceptable levels, if he does not want council houses to deteriorate and the housing stock to worsen, and if he is a reasonable man, he should agree with it. I wait to be surprised some day by a positive response from the Government. I hope that tonight the Minister will choose to surprise me.
The Government must recognise that the further turning of the screw on local authorities, and particularly on council tenants, is becoming increasingly unacceptable. If they believe that council tenants will support them in the next general election, they are sadly mistaken. The categories of people to whom they can appeal for support will dwindle as they increase the numbers of people that they attack.
I hope that the Minister has taken note of the points that have been raised by my hon. Friends. We have had a constructive debate, although no Conservative Member has contributed to it. I assume that either Conservative Members are not interested in council tenants, particularly those on housing benefit, or that they accept our argument and hope that the Minister will respond favourably. Perhaps they will join us in the Lobby. I hope that the Minister responds positively and at least meets my two 910 specific points by ensuring that council tenants do not have to pick up the tab for any housing benefit payable to the poorest among them, as that would be wrong and unacceptable. I hope that he also recognises the importance of ensuring that capital receipts can be used to maintain and repair council housing stock.
§ Mr. Tony Banks
I hesitated before I stood up because I saw the hon. Member for Harrow, West (Mr. Hughes) poised in his seat and, in view of what my hon. Friend the Member for Burnley (Mr. Pike) said about the lack of speeches by Conservative Members, I thought that we would hear from the hon. Member for Harrow, West.
I have a programme from the Institute of Housing, Northern Counties. There is to be a conference called, "Housing—Moving into the Nineties". It is to be held on Wednesday 8 November. That is tomorrow. There will be an official opening of the conference and an opening address by a Mr. R. Hughes, MP, who, as we all know, is the hon. Member for Harrow, West. He is the parliamentary consultant to the Institute of Housing. I was hoping for a little taster of his opening address. Unfortunately, I cannot make the conference tomorrow, but I shall be speaking there on Thursday when I shall be talking about the Local Government and Housing Bill, so I shall have to rely on an accurate report of what the hon. Member for Harrow, West will have said about housing following the debate tonight and the passing of the Bill.
§ Mr. Robert G. Hughes
I hope that the hon. Gentleman can assist me; he is taking so long over the preamble to his speech. Is there any chance that I will be able to get away from the House after the votes to catch my plane at 8.30 am tomorrow?
§ Mr. Banks
I cannot give the hon. Gentleman that assurance, but I will certainly urge my hon. Friends to make way as speedily as possible so that we can hear the learned words of the hon. Member for Harrow, West. I suspect that he will catch his plane quite comfortably and will be able to say what small contribution he made to the debate this evening. It is certainly far more substantial than that of any other Conservative Back Bencher so far, so perhaps that is to his credit.
The Opposition amendment (a) to the Lords amendment is designed to ensure that, before the Secretary of State makes a determination with regard to the amount of allowance he is to make in calculating housing revenue account subsidies for 1990–91, he has regard to the likely changes which will result from such a determination. We raised many of our arguments in Committee, but we have to return to them here, because, as we see it, the new financial system which will be introduced as a result of the Bill is designed to give the Secretary of State even greater power over the affairs of local authorities.
There seems to be no small part of local authority activity over which central Government do not wish to exercise some form of control. In many ways it is yet a further nail in the coffin of local democracy and accountability. I cannot understand why so many Conservative Members, including the Under-Secretary of State, who have a background in local government are prepared to connive at the unwinding of local democracy throughout the country. This is only one aspect of it—the further control over the housing revenue account, making 911 sure that there can be no discretionary payments from general rate income into the housing revenue account. We know what will happen. Either rents will go up alarmingly, or the standard of repairs and maintenance will fall from fairly lamentable levels, at least in London.
I cannot understand why Conservative Members with so much background in local government are prepared to go along with this. I understand that all things are now done in the name of the Prime Minister and that all decisions emanate downwards from No. 10 Downing street. She has no background, feeling or taste for local government. She seems to have a total abhorrence of it. However, I should have thought that one or two Conservative Members would be prepared to say to the Prime Minister, "This has gone too far. You are destroying the local democratic structures of the country and creating a social and economic crisis, particularly in the inner cities, that will be appalling for the country and even more disastrous for the fortunes of the Conservative party at the next election."
§ Mr. Nigel Spearing (Newham, South)
Does my hon. Friend agree that he is acting on an assumption that may be incorrect? Is it not possible that many of the hon. Members to whom my hon. Friend refers will have gone into local government not with a sense of enthusiasm for its place in the country but with a mission to minimise it or, in some cases, disrupt it? That may sound cynical, but in my experience it is possible.
§ Mr. Banks
My hon. Friend has a good point. Some hon. Members on both sides of the House have used local government as a jumping-off board for a career in Parliament. They are the careerists that we know are among us, and lamentably they are not wholly confined to the Conservative Benches.
When I was elected to the House in 1983, it did not even occur to me that I should stand down as a member of the Greater London council. I acknowledge the debt that I owe to the GLC for training and teaching me about local government and for being an example to the country of how an efficient local authority can be run. It brought a great deal of credit not only to the Labour party but to local government generally through the policies that it pursued. I acknowledge that debt and will continue to pay for it.
I am one of those who never forget an insult. Local government in this country has been insulted by Conservative Members and a council has been destroyed. If nothing else, that will keep me in politics because I want revenge. The old saying "Don't get angry, get even" runs through my political psyche and will continue to do so. I want to see Tory blood on the walls and on the carpets. It will be running thick through County hall and through the county halls and town halls of the country. I am grateful to my hon. Friend the Member for Newham, South (Mr. Spearing) for sparking me off on a subject about which I feel strongly. I did not use local government.
§ Mr. Deputy Speaker (Mr. Harold Walker)
Order. Now that the hon. Gentleman has got that off his chest, perhaps we can return to Lords amendment No. 112.
§ Mr. Banks
I am sorry, Mr. Deputy Speaker; I got carried away by the moment. Feelings are running high on the Opposition Benches.
912 I thought—and I still believe—that some Conservative Members enjoyed being in local government, thought that it contributed a great deal to democracy and that it underpinned parliamentary democracy in many respects. I cannot understand how those right hon. and hon. Members can now agree to a further dismantling of local government.
We are dealing with the problems that will arise in the housing revenue account and the maintenance of local authorities' housing stock because of the Bill. When my hon. Friend the Member for Hammersmith (Mr. Soley), in his excellent speech, talked about the homelessness crisis in London, the Under-Secretary of State, a former leader of Wandsworth borough council, was shaking his head in disagreement as if my hon. Friend's speech was being made up on the spur of the moment from his fevered imagination rather than from factual evidence.
Anyone who knows anything about London will realise just how appalling the housing crisis is. One only has to leave the House, perhaps on the way to a reception to which hon. Members are constantly invited, and walk along the Embankment to see people sleeping in the boxes of the cardboard cities. If one goes to an excellent concert at the Festival hall, the Queen Elizabeth hall or the Purcell room—they were built, paid for and excellently maintained by the London county council and the GLC—one will see homeless young people. Surely one or two Conservative Members still have a heart and a conscience after 10 years of serving Polly Pot in No. 10. Surely they will feel a twinge of conscience when they see what is going on. We are not making any of this up. The crisis is real. Homelessness in London has doubled since the Prime Minister took office in 1979.
§ Mr. Pike
I recognise the problem of homelessness in London. I wonder whether my hon. Friend realises that, due to the benefit changes that have taken place this year, homelessness is occurring in many towns where it never existed. Many bed and breakfast hostels are being closed because the amount of benefit being paid to them no longer enables them to remain open and provide even minimum accommodation. The problem does not exist only in London and the big cities but now covers the length and breadth of Britain.
§ Mr. Banks
I agree entirely with my hon. Friend. I have a cutting that I was going to introduce later but I will introduce it now as it is apposite. It comes from The Sunday Correspondent this week. It is on the back of the two pages containing that weird interview with the Prime Minister. There is an even weirder picture—she has clearly lost her marbles. Page four says:Patten acts on cardboard cities.The two points are closely linked. When they were changing the social security regulations we warned the Ministers about what would happen. We pleaded with them, but they said they were just scare stories and alarmism that the Minister said could be expected from us. However, the facts are in the newspaper. It says:Homeless school-leavers may again be allowed to claim social security as part of a Government campaign to stop them begging and sleeping rough. Action to cut the growing 'cardboard city' population in London and other towns by providing more hostels is to be announced later this month by Chris Patten, the Environment Secretary. It will form part of a wide-ranging review of homelessness…ministers have been forced to recognise that their virtual ban last year on social 913 security payments to unemployed 16 and 17-year-olds acts as a formidable deterrent to teenagers who might otherwise come in from the cold.A report this morning by Shelter, or SHAC, said that large numbers of youngsters were being forced into prostitution and drug trading because they were desperately trying to scrape together the money to exist on the streets of London.
The hon. Member for Harrow, West played a good and useful part in the Greater London council. I cannot understand why he does not rant and rave at the Government, as I do from time to time. They do not listen to me, but they might listen to him, because he represents an authentic voice and is an expert on local authority housing. He has sat quietly and said nothing. I find that difficult to understand.
§ Mr. Soley
My hon. Friend's point is made even more powerful by the fact that, until the GLC was abolished, 4,300 extra beds were available for youngsters and single homeless people. With the abolition of the GLC, those 4,300 beds went, and, with the abolition of the other metropolitan counties, even more beds went. That is why homeless people, particularly young people, are more vulnerable in London and other cities and, increasingly, in rural areas. We now find homelessness in Exeter, Bristol and other towns where we never found it before. As I said, in 1979 I could always get someone a roof over his head. Nowadays, I cannot do that.
§ Mr. Banks
My hon. Friend makes a good point. All over the country, the Government's policies are inevitably leading to greater homelessness. My hon. Friend the Member for Hammersmith could say that so-called care in the community, which has meant that many people have been turned out of long-stay mental institutions, has caused distressed people to go wandering on to the streets.
I must continue to refer to London. Other hon. Members can make their own points about their own cities, but I know a little about London. In recent years I have noticed that two categories of people have suddenly appeared on the streets of London. The first category is the young. They are on the streets because of changes in social security provision and unemployment. They are being forced to move around, like an army of the dispossessed, from one cardboard city to another and from one railway arch to another.
The other category includes the many more people who are mentally incapable of looking after themselves. They have been turned out of long-term mental institutions and, in many cases, put into the so-called community, which means that their own families, who might be hard-pressed in terms of their living, social and environmental conditions, cannot manage. That creates more problems in the homes to which these people go. It may mean that they are told, "Sorry, we cannot look after you any more," and are pushed out into the street. Those two categories of people include the most appalling and dramatic statistics that we have seen for several years.
§ Mr. Soley
It is extremely important that Conservative Members should understand the causes of those problems. My hon. Friend is absolutely right to say that income support changes are crucial. Obviously, unemployment 914 also had a part to play. However, the other crucial factor for young people is the catastrophic decline in council house building and, at the same time, the drying up of the private rented sector. The very sector that the Government said would expand has contracted. There are 500,000 fewer houses and flats available for rent in the private rented sector than there were before, precisely because the Government pushed people to buy rather than to rent.
§ Mr. Banks
As ever, my hon. Friend is correct. One does not need a PhD in housing administration to work out that, if we create a situation in which local authorities are not allowed to build any council houses, there will be an upsurge in homelessness. It is obvious. I should have thought that it was well within the intellectual grasp of Conservative Members to work that out.
I do not need rhetoric to argue the case. We need only to examine the statistics. A good article in "City Limits" coincided with the week-long protest against homelessness in London. If the Prime Minister would venture out of her bunker in No. 10 Downing street—the railings are not there yet, but no doubt she will have them erected at some stage; I bet that she will manage to get out every day even with the railings there—and go to the other side of Whitehall, she will see the young people and others who are involved in a vigil there. Why does she not talk to them and listen to them? I do not think that she listens to anybody. She would want to tell them how to tidy up their cardboard boxes to make them look more comfortable. She would say, "Wouldn't it look better if you cut a few holes and put up chintz curtains?" If she were to listen for a while, she would know a little more about what is going on in the streets of London.
The facts in "City Limits", which were taken from statistics provided by Shelter, the London research centre, and the Association of London Authorities, clearly show us the picture. The article states:In September 1987 there were 18,906 people living in temporary accommodation in London. By March 1989 there were 24,578, an increase of 30 per cent.Homelessness has more than doubled since 1979. The article continues:By the beginning of 1989 over 106,000 council properties had been sold to their sitting tenants. Until the end of 1987, some 30,000 had sold up and moved on.In 1975 local authorities started building 20,100 new homes.That is in London.
In 1986, the figure was 1,200. The key to this whole issue is that in the mid-1970s local authorities in London were building about 25,000 new units of accommodation per year. They are now building about 1,500 per year. That is one of the main keys to homelessness in this country. As I said, one does not need a PhD or even a CSE to work out that statistical correlation.
The article continues:In 1988 30,000 people were squatting in London.There were 2,000 people sleeping rough in central London.London boroughs spent almost £88 million on bed and breakfast accommodation in 1988–89. In 1981, the figure was £4.3 million.As we in Newham will be affected by this appalling Bill, I can tell the House that we have moved on from the appalling situation in 1981 when we had nine families in a hostel because in January 1989 we had 1,151 families in bed-and-breakfast accommodation, non-secured lettings, private leasings and hostels. Whereas we were spending a 915 few thousand pounds in 1980–81 on bed-and-breakfast charges in the London borough of Newham, last year we spent £5.2 million.
We cannot afford that waste of resources. We should be putting people into decent homes, and for £5.2 million we could build a lot of them. This is craziness. It is the economics of the madhouse which, I suppose, is where the Prime Minister will end up. It is cheaper to build new units of accommodation than to house people in inadequate bed-and-breakfast accommodation.
§ Ms. Diane Abbott (Hackney, North and Stoke Newington)
Does my hon. Friend agree that there are several unique aspects to the problem of homelessness in London which the Government have signally failed to address in the past decade? The first is that the appalling cost of private rented accommodation and of private homes in London forces those on average wages to look to the public sector. Those people are suffering under the Government's policies and from their refusal to allow council house building.
The second aspect is the appalling conditions in which many homeless people have to live in the bed-and-breakfast hostels that scar our capital. Hon. Members will remember the terrible fire at a bed-and-breakfast hostel in Bayswater many years ago. Many families are in danger of perishing because of the fire risks in bed-and-breakfast accommodation.
A further unique dimension—my hon. Friend has referred to this—is the millions of pounds that boroughs such as Hackney have to spend to keep people in bed-and-breakfast accommodation.
Finally, it is impossible for those on low and middle incomes to find accommodation in the inner cities. That factor might appeal to Conservative Members because it is one reason why employers in the inner city encounter such huge problems in getting labour.
§ Mr. Banks
I agree with my hon. Friend who emphasises the point that I am making from the "City Limits" article, which also states:In Kensington and Chelsea, the average price for a home is now £167,000; luxury lettings are as high as £1,000 a week; some council rents are over £100 per weekPeople simply cannot afford those levels of rent. Surely Conservative Members can understand that. I do not know what happens in their advice surgeries—
§ Mr. Banks
Yes, the hon. Gentleman seems to be laughing. I assume that he is not laughing at the plight of the homeless in London because, frankly, he should hang his head in shame as should every other Conservative Member who has ventured into the Chamber this evening.
This is not a crisis that has been visited upon us by God because we are a sinful people; it is a crisis created by Government policies. Sometimes one can say that Opposition Members stir things up a bit and blame the Government for bad weather or whatever—and that might 916 be considered a little unreasonable—but on this occasion one can point the finger with unerring accuracy and say that the responsibility for the housing crisis in this country lies with the Government's policies. That is where the responsibility lies, and that is where we are determined that it will remain until these policies change.
§ Mrs. Audrey Wise (Preston)
I accept everything that my hon. Friend is saying about the crisis in London. I warn Conservative Members, lest they feel that it is a purely London matter and that they can be complacent on a national scale, that in Preston the homelessness situation is worsening rapidly. We have been able to avoid using bed-and-breakfast accommodation for some years. But tomorrow the local housing committee will be considering having to resume the use of bed-and-breakfast accommodation. In other words, it is a national problem.
§ Mr. Banks
All local authorities are affected by this legislation. All council rents are likely to go up. It will become more difficult for all authorities to deal with the homelessness crisis. We have always been used to a degree of homelessness in London. Some people have always slept rough on the streets of the capital. That is a sad fact, but it is a fact. But it is now obvious that this depressing feature is spreading to cities throughout the country. More and more people are wandering the streets looking for somewhere to sleep at night. It is criminal of the Government to have inflicted that level of social misery on people.
§ Mr. Spearing
Some Conservative Members will say that people are attracted to London and exacerbate the problem. Is my hon. Friend aware that in the south of Newham, in the borough which we both represent, half of my constituents live in municipal dwellings, but that due to the policies of the Government—introducing market rents bit by bit across the whole housing sphere—there will be no opportunity for the young people of Newham to obtain, own or in some way live in council accommodation? When recently I have told the members of residents associations about the Bill, saying that many would have to live in tents in Epping forest, they have not dissented from that statement. That is what the Government are forcing people to do.
§ Mr. Banks
My hon. Friend, like me, is affected by the severe crisis in the London borough of Newham. I have not yet had an opportunity to describe in detail the situation that we face in Newham. We have tried to explain it to Ministers, but Ministers at the Department of the Environment come and go with bewildering regularity. I congratulate the Under-Secretary on being one of the few who has stayed the course, probably because he is so unnoticeable that the Prime Minister has not realised he is there. Perhaps anonymity in politics is sometimes useful. Alternatively, the right hon. Lady may know that he is such a ruthless Right-winger who is prepared to d o anything on instructions from No. 10 that she feels confident in having him in his present office. If that is so, I am surprised that he has not yet become Foreign Secretary. But given the number of shuffles we have each week, even he may end up as Foreign Secretary or as some other exotic figure of state.
On Fridays at my advice surgery young people come to see me with their children and, having been put in bed-and-breakfast accommodation, wonder what the 917 future holds for them. For a number of reasons which I cannot fully understand, Newham is not a centre for hotels. We must move our people out to other parts of London, putting them in Westminister, Paddington, Ilford and Romford. Imagine the destruction that that inflicts on the family unit. The education of the children is disrupted and many of the people involved find it impossible to hold down a job.
Those are the human realities behind the policies that are pursued ruthlessly and relentlessly by the Government. They do not seem to care. I can only assume that some calculation has been made to the effect that as the people about whom we are talking are so depressed over what is happening—struggling hard to survive on an hourly basis from morning to night—they do not provide any political threat to the Government.
No hon. Members will have to sleep rough on the Embankment or go to the type of bed-and-breakfast accommodation that I have described; they will stay in decent hotels because the allowances are good. I know an awful lot of people in the borough of Newham who would like to receive the overnight allowances that are given to hon. Members who live outside London to enable them to have a decent dinner and a decent sleep. I do not object to Conservative Members having a decent dinner. They get many decent dinners—in many cases it is someone else's dinner and it is certainly paid for by someone else. Why should they vote for decent dinners and decent homes for themselves and deprive others of exactly those benefits? That smacks of hypocrisy, but that is what one associates with the Conservatives.
I do not know how people are surviving in London or Preston on a daily basis. All I know is that the Opposition must stand up and fight for them because they cannot fight for themselves. No hon. Member has to suffer their deprivations, so we shall continue to speak for them even though, with the poll tax and the new regulations, more and more of those people are moving out of the political process altogether. That is why Conservative Members do not care. Those homeless people do not pose any political threat as voters to the fortunes of the Government. They are a threat to those fortunes, however, because the conscience of the nation has been aroused by their plight. We are able to articulate their plight in this place and we are able to campaign for changes not only in policies but, ultimately, in Government. It is only with a change in Government that the homeless of London, Preston, Burnley, Liverpool and elsewhere will have a decent chance.
§ Mr. Eric S. Heffer (Liverpool, Walton)
My hon. Friend is right that the situation is getting worse. Just after the war, when we were faced with the destruction of so many homes, the Government of the time, which happened to be Labour, gave hope to the people because they built council houses. I lived in two rooms for 12 years and I know about housing problems. At least we had the hope, however, that, sooner or later, we would get council accommodation. It so happened that I did not take up that accommodation. After the war we got all the people off the streets, apart from those who wanted to stay out there. After the war one only saw a few people living on the 918 streets. Now there is no hope. Masses of youngsters come to London from Liverpool and the like looking for jobs, but they end up under the arches or elsewhere. The indictment against the Government is that they have taken hope away from people.
§ Mr. Banks
My hon. Friend speaks with great experience and wisdom. We know that it was Conservative and Labour local authorities that gave people the opportunity of a decent home. That chance has been destroyed and, as far as the Government are concerned, local authorities are rather like the trade unions, enemies within.
§ Mr. Robert G. Hughes
On a point of order, Mr. Speaker. I am reluctant to interrupt the hon. Gentleman as he is talking about an important subject. I have looked carefully at the amendments in this group, however, and I do not believe that a single word of the hon. Gentleman's speech, important though it may be, relates to those amendments.
§ Mr. Speaker
I have been in the Chamber for 10 minutes and I do not believe that the hon. Member for Newham, North-West (Mr. Banks) is out of order as this is a pretty wide debate on housing. The hon. Gentleman should look at the amendments, however, and ensure that his comments relate to them.
§ Mr. Banks
I have kept the amendments under my thumb all the time. I have made sure that I stayed in order and I wait for you, Mr. Speaker to decide when I am out of order rather than the hon. Member for Harrow, West. That hon. Gentleman, notwithstanding the things I said about him and his contribution to local government, has chosen not to intervene positively in this debate even though he has had ample opportunity to do so.
The Opposition amendments will ensure that the Secretary of State takes into account the impact of the proposed changes in the Bill on rents and housing maintenance before he makes any determination. Those amendments must be illustrated and that is what I have been doing by showing what effect the Bill will have in areas like Newham.
No doubt the hon. Member for Harrow, West feels very uncomfortable. He knows that I am speaking the truth. It must be a very uncomfortable experience for him to hear the truth. He must be feeling very guilty, despondent and ashamed, and so he should.
§ Mr. Soley
The hon. Member for Harrow, West (Mr. Hughes) emphasised that this debate is about the housing revenue account. He is right. Under this group of Lords amendments local authorities will not have to keep a housing revenue account. As I said in my opening speech, if they do not keep the account, what will happen to the homeless?
§ Mr. Banks
That is precisely the point. The hon. Member for Harrow, West knows a bit about this. I hope and trust that he will have a very difficult time tomorrow when he tries to act as a craven apologist for the Government's policy on housing when he talks to housing experts.
In Newham, we have tried desperately to advise Ministers about the likely impact of the Bill and why our amendments to Lords amendment No. 119 should be accepted to ameliorate the position. We have taken several 919 Ministers around Newham and our last briefing was for the current Minister for the Environment and Countryside. We are grateful for the opportunity to talk to Ministers. We would sit down with the devil himself—and we did in terms of the previous Secretary of State for the Environment. My hon. Friends the Members for Newham, South and for Newham, North-East (Mr. Leighton) and I want to get the best deal possible for Newham. The problems in our borough are bad and they will be made so much worse by the Bill if it is not amended tonight.
Newham has the highest number of unsatisfactory dwellings of any London borough. Those dwellings are unfit and lack basic amenities. There is a severe shortage of dwellings in Newham and we have the fastest increase in homelessness in London. I have told Conservative Members just how dramatically that has increased over the past four or five years. Newham also has more dwellings lacking inside WCs and baths than any other London borough and the highest proportion of dwellings lacking facilities in England. Fifty-five per cent. of the borough's housing was built before the first world war, and 80 per cent. of the private sector stock is of the same age. It is estimated that the total cost of repairing the private sector stock is £328 million. The proportion of unfit private properties increased from 21 per cent. in 1979 to 36 per cent. in 1985 while in London as a whole the proportion fell from 10 per cent. to 6 per cent.
There is also severe overcrowding in Newham, a problem that is suffered disproportionately by ethnic minority households. My hon. Friend the Member for Newham, South knows more about the public sector than I. In that area, Newham has a specific problem with 107 tower blocks of more than eight storeys. Many of those blocks suffer from structural problems or have reached an age when services need renewing. Nine complete tower blocks in south Canning Town in the constituency represented by my hon. Friend the Member for Newham, South are currently vacant. Others are being decanted and Ronan Point has been demolished.
How on earth can we deal with those problems with the extra restrictions which this Bill will introduce? We just want to deal with the problems. We are not trying—[Interruption.] Clearly, the hon. Member for Lancaster (Dame E. Kellett-Bowman) has had a very good dinner. I welcome her to our proceedings, although she has come very late.
§ Mr. Spearing
My hon. Friend mentioned Ronan Point and its sisters. Is he aware that the borough made strenuous efforts to fulfil the Government's objective of going into partnership with private firms to redevelop these areas so that people could afford the rents in the houses with gardens that would replace the thousand empty flats in the sky? However, the economics of housing and interest rates made that very difficult, even with the best will in the world. Will my hon. Friend ask the Minister to take account of that, because we have done our best to try to meet the Government's criteria? The sums just do not add up.
§ Dame Elaine Kellett-Bowman
The hon. Gentleman referred to a vast number of tower blocks. Why were they built? It so happens that I was vice-chairman of housing in the London borough of Camden. We inherited many tower blocks, both built and being built, but we did not build a single one during the time of our Conservative administration because we did not believe in them. The hon. Gentleman has been landed with the problem because he built the blooming things.
§ Mr. Banks
I shall excuse the slight hint of hysteria because hysteria and lunacy are catching among Conservative Members. Because of cost yardsticks and because of requirements laid down by Conservative and Labour Governments, local authorities thought that tower blocks were the best way to meet their housing problem—
§ Mr. Banks
Yes. I am no hack; I do not go around defending past decisions that I would not have supported. I was on Lambeth borough council when we were still being pressurised into building tower blocks, and I resisted that Labour council's attempts to construct more of them. They are not the sort of environment in which people should be placed.
Wandsworth has sold some of its tower blocks. Such blocks can provide luxury accommodation, but that means swimming pools, porterage, security alarms and all sorts of facilities that no local authority would be allowed to put in. We could turn all our tower blocks, even though I do not like them, into small heavens on earth if we were given the resources by central Government—but will we get them, and will the hon. Lady help us to get them?
§ Dame Elaine Kellett-Bowman
Why not imitate what was done in part of Liverpool and go into partnership with the private sector? When we took over in Camden we housed exactly the same number of people per acre by building in six steps—two storeys, then another two and then another two—with lifts to alternate floors. In that way we housed the same number of people without the appalling way of life involved in tower blocks.
§ Mr. Banks
I do not disagree. I have said that many decisions taken by Tory and Labour-controlled Labour authorities under Governments of both complexions are not defensible in retrospect. They were explicable and understandable, but they were indefensible in social terms. I am trying to deal with the problem that we haw inherited. It is no good the hon. Lady saying that we should not have built these blocks. Rightly or wrongly, we built them and now we have to try to deal with them. The problem is not only in Newham; it is found in Leeds, Manchester, Sheffield, Glasgow and many other cities.
It was not only Labour local authorities that built tower blocks; all local authorities built them. Apart from anything else, they were part of the fashion, and architects and planners wanted to destroy all the existing properties and start from a green field site and build vertical streets. I should like to get hold of some of those architects and planners, put them on the 22nd floor, nail the door and 921 leave them there for a few years to see what it is like. Architects, planners and developers do not live in such places; they just build them for other people to live in. They live in nice rural retreats deep in the country.
I say to those people and to hon. Members that by all means they should have the good things in life, but they should not deny them to other people. That is precisely what the Government do day in day out with the sort of policies that they pursue. I have made my point about the amendments. The Minister should remember that we have not invented the housing crisis in London. It has been created by the policies of the Government. If the Government are not prepared to change those policies, they should go, and every homeless person will throw his hands in the air and cheer to the echo the end of this Government and their damnable policies.
§ Mr. Chope
At times during the debate Opposition Members have been hysterical but I suppose they can be congratulated on demonstrating that they are still in quite good voice and capable of filibustering. The Opposition have certainly indulged in much bluster on the issue.
I find it rather depressing that most Opposition Members have continued to repeat the misunderstandings and misrepresentations of Government policy. In Committee and subsequently, those Opposition views have been shown to be totally inaccurate. They are short of policies of their own and are therefore trying to attack policies that they are inventing and attributing to the Government. I assure the House that Government policy on these matters is very different from the policy that has been represented by the Opposition.
We heard in the debate the familiar but false accusation about the rents policy. The Government do not intend to push council rents to market levels. We want only market-related patterns of rents. We are not interested either in capital value rents. It should be obvious from our proposals for 1990–91, with minimum increases of 95p and increases damped everywhere, that we are not seeking to establish market rents, except perhaps in areas where rents are very low.
The hon. Member for Barnsley, West and Penistone (Mr. McKay) said that we are seeking to control council rents. The hon. Gentleman interpreted our 95p guideline as the imposition of a 95p minimum increase whether or not councils want it. That is nonsense. The Bill explicitly allows authorities to determine their own budgets and they may set rents higher or lower than the guideline if they wish to budget for an appropriate level of service.
The hon. Members for Walsall, North (Mr. Winnick), for Knowsley, North (Mr. Howarth), for Leeds, West (Mr. Battle), for City of Durham (Mr. Steinberg), for Pontefract and Castleford (Mr. Lofthouse) and for Don Valley (Mr. Redmond) failed to understand that their council tenants will benefit next year as a direct result of the Government's policies on rents. The hon. Member for Hammersmith (Mr. Soley) said he thought that rents should go up next year by about £1.95. Opposition policy is that there should be the same increase everywhere. That is an absurd proposition and that is why we want to have the new system. Under that system the constituencies of 922 the hon. Members that I have mentioned will benefit. It is surprising that none of those hon. Members was able to recognise that during the debate.
Rent rebates have also been mentioned tonight.
§ Mr. Chope
If I have time, I shall try to answer some of the points that the hon. Gentleman made.
We have also seen an extraordinary distortion of the Bill's provision for rent rebates. The hon. Member for Hammersmith persists in asserting that the better-off tenants will pay the rebates of their neighbours. This is nonsense, as has been said in earlier debates. We shall simply be proposing rent guidelines at sensible levels. Where an authority can meet the costs of those rebates, partly or in full, it is right for it to do so. However, most authorities will always require assistance from subsidy, and we can say categorically that if an authority gets its rents higher than the guidelines for any reason, then the higher cost of rebates will be met in full by our subsidy. Other tenants will not have to meet it.
§ Mr. Chope
No, I will not give way. The hon. Member spoke for 45 minutes and now wishes to deprive me of some of my time.
The hon. Member for City of Durham was one of the many who got things completely wrong about rates rebates. I understand that he actually served on the Committee examining the Bill, so I can be less forgiving towards him than I might be towards an hon. Member who had not done so. The hon. Gentleman has asserted that the housing revenue account will have to bear 3 per cent. of the cost of rebates. He was wrong. Although the present rate of subsidy on rebates is 97 per cent., under the new system we shall take 100 per cent. of the cost of rebates into calculation of the housing revenue account subsidy.
§ Mr. Speaker
Order. The hon. Member for Hammersmith (Mr. Soley) knows that if the Minister does not give way, he must resume his seat.
§ Mr. Battle
On a point of order, Mr. Speaker. I have sat through debates in which we considered amendments from the other place, and I thought that the tradition was that we clarified the detail. In that case, if a Minister makes a statement, surely it is incumbent on him to allow us to challenge it, or it will not be questioned. Some of the Minister's remarks clearly demonstrate that he does not understand the Bill.
§ Mr. Speaker
The hon. Gentleman has been here long enough to know, as the House knows, that if an hon. Member, or a Minister, does not wish to give way, then those wishing to intervene must not persist in rising.
§ Mr. Chope
I shall continue with examples of the way in which Opposition Members have this issue so wrong. The hon. Member for City of Durham asserted that Durham would have a negative subsidy entitlement. That is extremely unlikely. Negative subsidy entitlement arises only when, in the notional account, income from rents plus interest on receipts is more than expenditure on management and maintenance, loan charges and rent rebate. Try as I might, I cannot draw up a notional account for Durham in which that happens. I suggest that the hon. Gentleman goes away and does his sums again.
The hon. Member for City of Durham made another point, about the shortage of resources for investment. If capital receipts have been used for genuine capital works, we have said that we will take that into account in housing investment programme allocations.
§ Mr. Chope
Discussions are taking place at the moment on the housing investment programme allocations for the coming year. Those meetings are taking place at present.
The hon. Member for City of Durham expressed fears about the lack of allocations. I suggest that before he makes such alarmist remarks he waits for the statement by my right hon. Friend the Chancellor of the Exchequer. The hon. Member also asked about direct labour organisation profits. They should go to the general fund. If they are then transferred to the housing revenue account, that is another form of rate fund contribution. The ring fence will prevent such contributions, but—I do not think that the hon. Member understood this—subsidy will cover the gap caused by loss of those contributions so that there will be no extra rent increase as a result.
§ Mr. Chope
That is a guarantee. I have just told the hon. Gentleman how the new system will work. I find it depressing that so many Opposition Members, although they have served on the Committee, do not understand the way in which the new system will operate.
Many right hon. and hon. Members have talked during the debate about the plight of homeless people. Homeless people, whether young or old, deserve better than to be used as pawns by the Opposition.
The Opposition seem to will the end, but deny the means. They and their local authorities preside over tens of 924 thousands of empty council properties. They fail to collect rents from existing council tenants and thereby deprive the homeless of further resources.
§ Mr. Chope
We have considered a number of reports about homelessness and the problems of the homeless while undertaking our review of legislation on the homeless. My right hon. Friend the Secretary of State expects to announce our conclusions shortly.
Planned public investment in housing during the next three years will total nearly £13 billion. The thrust of our housing policy is aimed at helping areas with the greatest need, by extending the role and funding of housing associations and by expanding the private sector, which so many Opposition Members seem to despise. To tackle the important issue of the single homeless, we are encouraging people to take in lodgers.
§ Mr. Chope
Furthermore, we are targeting resources on the greatest need. That is why we have made revisions to the new capital control system.
The new housing revenue account system, which is the basis of the debate, will make local authorities more accountable to tenants, promote efficiency and encourage a fairer, better-targeted means of distributing taxpayers' money to those who need it. That is the best way to help the homeless.
We have a genuine concern for the homeless. If Opposition Members were genuinely concerned, they would try to put something into action at a local level.
§ Mr. Speaker
Order. This is not the way that we conduct the proceedings of the House. We often hear things in the House with which we disagree, but we must listen.
§ Mr. Soley
With the permission of the House, I should like to make a short supplementary speech. I had not planned on making it. On Report, no fewer than 606 amendments were put before us. Many of them were introduced by the Government. For the Minister to fail to give way to my hon. Friends who wished to intervene in such an important debate is a sign of weakness, and it will 925 do him no good. I wished to raise the issue which he failed to deal with in his opening speech, which is that rentpayers in one area will subsidise the housing benefit of people in the same area. That means that the poor will subsidise the poorest. I refer to clause 78, which remains unamended after the Bill's consideration by another place. The Minister's predecessor and the previous Secretary of State for the Environment accepted that what we were saying was basically true although they would not accept the phrase—I understand why—"the poor subsidising the poorest". They accepted, however, that our argument was right.
I shall try to quote as accurately as I can the Minister's words. He tried to slide them through quickly, but I shall repeat them to the best of my memory. We can check my recollection with the report in Hansard. He said, "If there is a surplus, they will have to use that to meet rent rebates." The surplus can accrue only from other people's rents. The Bill ring-fences accounts so that rents must be used only for housing. They cannot be used in any other sector. It is not possible to translate money from the rate fund to the rent fund.
In other words, the rebate bill is met in part by using surplus rent money when there is some. The only way in which the Minister is partially right is that, when there is no surplus, that option does not arise. As soon as there is a surplus, however, the local authority has no option but to use it to pay the housing benefit bill. We say that that is a classic example of the poor subsidising the poorest. It was the Minister's failure to respond to that issue that led him into so much trouble.
I understand why the Minister would not give way. I can interpret what he said thereafter only as that somehow the bill would be met. Is he giving the House a commitment that, where there is a surplus which must be used to meet the housing benefit bill, the Government will step in and pay the difference? If the Minister cannot answer that question, he either does not understand it or, more likely, he is deliberately trying to avoid the issue because he appreciates that it is embarrassing for the Government.
§ Mr. Chope
There is no dispute among my right hon. and hon. Friends. If there is a surplus, it will be taken into account when it comes to a subsidy. If there is a surplus on the housing revenue account, it is likely that there will be less subsidy entitlement than if there is not. I thought that Opposition Members would consider that a sensible and fair way of proceeding.
§ Mr. Soley
We had to drag the truth out of him but he has now conceded that where there is a surplus, it will be used to pay the housing benefit bill. That will mean that poor rentpayers who are just outside the housing benefit net, will end up paying the housing benefit of their neighbours. That is the truth, the Minister knows it, and in effect he has conceded that it is true.
In his reply, the Minister referred again to rent collection. It was noticeable that he did not answer the question that I put to him in my opening speech about the report that the Audit Commission is about to produce, of 926 which he and his colleagues may be aware. The report states clearly that rent arrears are increasing in local authorities of all political complexions because of cuts in housing benefit. Yet he chose to start the hare that some people who could afford to do so are not paying their rent. Does he think that the Audit Commission report is wrong or right?
§ Mr. Soley
This would be hilarious if it were not so tragic. Housing benefit has increased, despite cuts, because the Government have driven up housing costs and cut income support. As the previous Secretary of State conceded, expenditure on housing benefit has increased dramatically in some areas of the south where rents are high. An unemployed person living in a private-sector flat with a market rent of £70 a week—which is not unusual in London, certainly not in my constituency—has all his rent. paid through housing benefit. The system is daft. It does not even save public expenditure as the Government wish it to do. It has never helped people to pay their rent, as it should.
The Minister also referred to the old canard of empty local authority flats. He has not heard about this matter before, so he had better remember it well. The average number of empty local authority properties is 2.5 per cent. of the housing stock. For housing associations it is 3.2 per cent.—slightly higher but both are good. For the private sector, it is 4.5 per cent. The worst offenders of all are the Government. Nearly 6 per cent. of their properties are empty. I do not refer only to Ministry of Defence properties. One in five Metropolitan police houses are empty.[Interruption.] The hon. Member for Ealing, North (Mr. Greenway) knows nothing about that. His own local authority has built a good housing development which he tried to prevent. That is why he walks by on the other side of the road when he sees the "homeless and hungry" signs. When he was a head teacher, I took my children away from his school because I did not want them to have his morality.
The Minister forgets that 6 per cent. of Department of the Environment properties are empty. [HON. MEMBERS: "Disgraceful."] Will the Minister take immediate steps to fill them? No, a year ago, his predecessor said that the Department would try to sell them. It is still trying to do so. The constituency of the right hon. Member for Suffolk, Coastal (Mr. Gummer) has more empty Department of the Environment properties than any other. That is the sort of nonsense that the Government get into.
§ Mr. Soley
I am not interested in that. Someone with a small number of properties should be a good landlord. If a landlord has thousands of properties, I would expect difficulties. Someone with only a few hundred, a few dozen or tens of properties should be a good landlord. The Minister's Department is an incompetent landlord. The 927 properties have been empty for years. In my constituency, no fewer than 30 fiats and houses, 60 if we include under-occupied houses, have been empty for nine years. What will the Department of the Environment do with them? It will demolish four and five-bedroomed Victorian houses and flats. At the same time, the hon. Member for Ealing, North is walking by on the other side, away from the homeless and the hungry.
My last point relates to the contraction of the private sector. A few hon. Members, including the Minister, said that the answer to the problems lay in expanding the private sector. Let us leave aside the issue of what happened some years ago and stick to what has been happening recently. We must remember that since 1980 the Government have been saying that they were abolishing the Rent Acts because it would be easier for private developers to let property. In fact, the private sector is continuing to decline. There are 500,000 fewer homes available for rent in the private sector than there were nine years ago. In London, where the Rent Acts have not really applied for several years, well over half the lets are outside the Rent Acts. As the Government make it easier to evict, the contraction of the private sector actually accelerates.
The reason for that is not hard to find. We need only to go back to 1957, when the word "Rachmanism" was introduced into the English language. The strange fact is—it is one that the Minister does not understand—that Rachman was not a bad landlord; he was just a bad property developer. He did not want to be a landlord, any more than Hoogstraten wants to be one. They only want people in their properties for a very short time, and then want to sell, because buying and selling houses is more profitable than renting them. That will remain true even when the Minister achieves market rents, as he has now done, because of the subsidy system for the owner-occupied sector. That is why the private sector is declining. The big mistake that the Government have made is to axe the council house sector without providing an alternative.
Our amendments are an attempt to redress the balance by allowing local authorities to build, repair and renovate. The Government are preventing them from doing that, and that is why we shall divide the House on amendment (b).
§ Question put and agreed to.
§ Lords amendments Nos. 113 to 118 agreed to.