GRANTS FOR IMPROVEMENTS AND REPAIRS (Hansard, 7 November 1989)

§ The Minister for Housing and Planning (Mr. Michael Howard)
I beg to move, That this House doth agree with the Lords in the said amendment.

§ Mr. Speaker
With this, it will be convenient to discuss the following Lords amendments: Nos. 136 to 177, No. 178 and Government amendment (a) thereto, Nos. 179 to 215, No. 216 and amendments (a) and (b) thereto, and Nos. 217 to 255.

§ Mr. Howard
This group of amendments to part VIII falls conveniently into five broad headings, and I shall deal with each in turn. The largest group insert into this part of the Bill provisions to enable grant to be paid by local authorities towards the cost of repairs or improvements to the common parts of buildings and to houses in multiple occupation. These account for 62 of the amendments listed, of which 18 are substantive and the remainder minor or consequential. The main provisions for common parts grants are found in amendments Nos. 140, 151, 162, 186 and 197; and for houses in multiple occupation grant, these are amendments Nos. 142, 161, 201, 203 and 215.
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Three further amendments are proposed to clarify the operation of common parts grants. The first is a consequential amendment to clause 106, which provides for the test of resources to be applied in the case of a landlord's application for common parts grant. It inserts a new subsection which is the equivalent to that part of Lords amendment No. 185 which deals with HMO grants. It provides for the rental income of each dwelling in a building to be taken into account in the assessment of a landlord's income. Without this amendment there is doubt as to whether the aggregate rental income could be assessed.
The second is a minor amendment to Lords amendment No. 216. It clarifies the persons from whom grant can be recovered in the event of the sale of a building in respect of which a landlord has received a common parts grant.
The third is a consequential amendment to clause 117, which provides a similar clarification in respect of voluntary repayment of grant. It was always our intention to introduce these provisions, as was pointed out on Second Reading. The reason why it was not possible to bring them forward in time for consideration in this House at an earlier stage was simply one of drafting time. Both grant provisions were widely welcomed in another place.
936 The second group of amendments seeks to clarify our intentions as regards the working of the new grant system. I include within these the amendments—principally Nos. 144, 145 and 208—which enable the costs of fees and charges incurred by applicants in preparing their applications to be grant-aided. This is the case at present under the current grant system, but these amendments provide a specific power for the first time to avoid any doubt about the matter.
I also include amendments Nos. 179 and 180 which make clear that in assessing the income of a landlord for grant purposes it will be possible to recognise explicitly the fact that not all landlords are able to let on an assured tenancy basis. This mans that an authority, in applying the test of resources to a landlord letting on a registered rent, will be required to take into account the reduced rental income that will be available to that landlord. It also means, of course, that the tenants of a landlord letting on such a basis stand to benefit from the larger grant that would be available in those circumstances.
Amendments Nos. 181 to 185 also clarify the position as regards landlords who are charities. These have the effect of requiring local authorities to have regard to the income which might reasonably be available to such landlords from other sources, primarily resources which may specifically be earmarked for repairs and improvements within covenants.
Amendments Nos. 163, 187 and 188 form a third convenient grouping which have the effect of requiring a local authority to approve an application made by a landlord where that landlord has been served a notice requiring certain repairs to be carried out; grant entitlement, of course, will be determined by the appropriate test of resources. These amendments very much preserve the status quo in that grants are mandatory under similar circumstances where a notice has been served under the current system.
Amendments Nos. 191 to 195 have the effect of widening the range of purposes for which authorities are required to approve a disabled facilities grant. In particular, works for the purpose of providing a bedroom accessible to the disabled person, and of improving or providing the heating system, would be brought within the scope of the mandatory grant provisions. These amendments were welcomed by all sides in the other place.

§ Mr. Paul Murphy (Torfaen)
My hon. Friends and I will not oppose these amendments. Indeed, some of them are welcome, in particular those which provide grants for the provision of facilities such as heating systems for the disabled. We also welcome the way in which the new grant system will enable fees to be met partly by local government.
But we cannot welcome the fact that the basic principles underlying the clauses to which those amendments refer have not been changed. In our view, improvement grants generally should have the aim of improving the housing stock. Grants of this kind should relate to property as well as to people. We believe that the Government aim to shift the balance from public grant aid to private finance, as they have done with the social fund and as they propose to do with student loans.
Large parts of the United Kingdom, including Wales, will be seriously disadvantaged by the proposals to which minor amendments have been made because the Government did not change their mind while the Bill was 937 in the other place. Housing in Wales is older and in a worse condition than that elsewhere in the United Kingdom. Wales also has a higher percentage of elderly owner-occupiers and incomes are lower than in the rest of the United Kingdom. In Wales, 77 per cent. of owner-occupiers of unfit housing earn less than £9,000 compared with 62 per cent. in England and 75 per cent. of Welsh people live in poorly repaired housing compared with 45 per cent. in England.
Obviously no one would suggest that the complicated grant system that has operated in the past should continue. Everyone welcomes the simplified system, but the proposals before us are unsatisfactory for a number of reasons. A number of local authorities and local authority associations have already informed the Department of the Environment and the Welsh Office that the transitional arrangements from the old to the new system leave a great deal to be desired. There is a substantial backlog of grant applications. In Wales 40,000 applications are still outstanding, but they could be cleared with the capital expenditure of £200 million on a three-year programme. In Britain as a whole there are 300,000 outstanding applications.
Despite the amendments we are considering, it is clear that the costs of the new system will be extremely high. The Institute of Housing reckons that costs will increase by 5 per cent. because of the new system and the unnecessary bureaucracy. The Association of District Councils reckons that 20 per cent. more staff will he needed to deal with improvement grants as a direct consequence of this part of the Bill. The association is right to ask for at least a 90 per cent grant towards those extra costs.
It is also clear that the overall capital for improvement grants will be reduced as a result of cuts and the new capital control system. The Department of the Environment consultative paper, which is all we can go on at the moment, said that the Government contribution towards such grants is likely to be about 75 per cent. or even less. At the moment that contribution is between 75 and 100 per cent. All the local government associations have argued that that contribution should be 90 per cent. at least.
The proposals do nothing to stamp out cowboy builders. Rents for private rented accommodation will also increase despite the welcome changes that the Minister has just announced. Unquestionably the biggest drawback is that the Government have not changed their mind on means-testing for eligibility for improvement grants. That testing is opposed by 19 organisations directly associated with housing. The Association of District Councils, the Association of Metropolitan Authorities, the Institute of Housing, the Chief Environmental Health Officers Association, the Building Employers Confederation and the National Home Improvement Council have told the Government that the new proposals to means-test eligibility for improvement grants will effectively mean that fewer people, especially those who are older, will take up improvement grants in those areas in desperate need of them. The Government should heed that advice as it reflects a wide spectrum of opinion.
Under the present system, one in four applicants are eligible, but in future that will be reduced to one in nine. Only 35 per cent. will be eligible for grant under the new 938 system. A household with an average income that wants £4,000 worth of work undertaken will receive only £300 of improvement grant towards the cost of that work. Those earning more than £13,000 will not be eligible for anything.
We are concerned that first-time buyers in particular will he badly hit in the sense that those likely to receive grant will not get mortgages and those who can get mortgages will not get grants. The unfit empty houses in the north of England, Wales and elsewhere, which are normally purchased by first-time buyers, will be seriously at risk.
The means test will hit the Government's main supporters—elderly owner-occupiers. As the Association of Metropolitan Authorities stated, that group is increasing. They generally have neither the resources nor the interest in large-scale remedial work. The introduction of the means test will be a further disincentive to those people and will be a real deterrent. An old couple in their 60s or 70s will not want to be burdened by the complications of having to go through the new system. Even fewer older people will take up the grant. I am sure that my right hon. and hon. Friends will be able to say in a year's time, no matter where they come from, that, as a result of these clauses, fewer old people will have taken up the improvement grants. That will be to the detriment of our housing stock.
Household income should not be used as a means for determining the level of income for a property. A longer period should be used and mortgages should be taken into account when considering means testing. Despite the improvement which we welcome, the disabled will be hit. Means testing was always excluded from improvement grants for the disabled. We believe that a test of disability should govern eligibility. Savings of £20,000 and not £5,000 should he taken into account and those on the lowest incomes will not receive grant at all.
The Welsh Office and the Department of the Environment have already shown through their surveys that the present system is hitting those who are to be targeted by the Government's present proposals. At the moment, the people in Wales, the north of England and elsewhere who are applying for improvement grants, those who need them most, are receiving them. That is shown in the Government's surveys.
If means testing is to be introduced, why can there not be automatic grants for pensioners and those who claim benefit? We believe that the definition of earnings is too wide, the threshold level for 100 per cent. grant is too low, and the rate at which grant is reduced is too great.
The local authority associations and those who know most intimately and deeply about the problems of housing improvement grants have put those points to the Government and the Government have turned their faces against virtually all of them. The Building Employers Confederation has said that the new scheme will do nothing to restore our older housing. There is no incentive for those on middle incomes to apply for grant.
Despite the amendments which have been made, can the Minister give us examples of where grants have been badly targeted and are being badly targeted now? The Government must also explain the reasoning behind a major switch in policy in allocating grant. There is no question but that the new system will mean that fewer people will take up grant and that seems to be the opposite of what the Government intended. Also, our older housing 939 stock in areas where grants are most needed will deteriorate at a rate that is unacceptable to the community and, I would have thought, to the Government.

§ Mr. Howard
I am grateful for the welcome given to the amendments by the hon. Member for Torfaen (Mr. Murphy). He reserved his criticisms for matters which are not in these amendments. They are matters which have been the subject of controversy in the Chamber and in another place on numerous other occasions.
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It was very touching to hear the hon. Gentleman express his concern that those on higher incomes who need repairs to their penthouses in Mayfair and Belgravia should be entitled to grant.

§ Mr. Murphy
Would the Minister say that someone earning £13,100 a year was likely to have a penthouse in Mayfair?

§ Mr. Howard
No; but the hon. Gentleman's root-and-branch opposition to taking resources into account, which lies at the heart of the Government's proposals, would have that effect, too.
The worry expressed by the hon. Gentleman sat badly with his observations about the larger percentage of people on low incomes in Wales. If his figures were accurate, those people should welcome these proposals, because their whole point is to target the money that is available for home improvements on those who are least well off. That is the purpose behind the change in the system. I was also glad that the hon. Member for Torfaen recognised that the present system is extremely unsatisfactory.
There is nothing between us on these amendments, and I commend them to the House.