§ Motion made, and Question proposed, That this House do now adjourn.—[Sir George Young.]
2.41 pm§ Mr. Patrick Ground (Feltham and Heston)I am grateful for this opportunity to discuss the future of the Beaver estate in Hounslow. It gives me great pleasure in doing so to be able to welcome my hon. Friend the Member for Salisbury (Mr. Key) to the Front Bench and to give him my best wishes for his work there.
In 1967, the Greater London council bought the leasehold interest in the Beaver Farm estate, Hounslow and proceeded to build 631 dwellings on the site. In designing the estate, the architects sought to avoid the mistakes made in previous GLC estates. They set out to ensure that the estate would not be like any other GLC estate. It was to be low-rise, spacious and green, and laid out and managed as if it were a private estate. There were five acres of open space, and hundreds of mature trees and saplings. By 1972, most of the dwellings were occupied.
In 1973, the GLC assigned its lease to a housing association, the United Housing Association Trust, for £4.5 million and agreed to cover the deficit between the rental income, and the running costs and mortgage payments for 15 years. As a result of mergers, the housing association eventually became the United Kingdom Housing Trust.
The method of construction used for building the estate was known as Bison wallframe, which involved the use of pre-formed slabs. By March 1973, it was found that 393 out of the 631 dwellings were suffering from dampness. In many cases, the roofs, walls and windows were not properly keeping out the rain. The bathrooms and bedrooms were cold due to an inadequate heating system.
In 1983 and 1984, consultants recommended the renewal of the roofs and the bolting of the concrete panels. Subsequently, a pilot project was launched to renew the roofs of six blocks, with the aid of a GLC grant. In 1985, it was found that all types of dwelling on the estate contained asbestos, which was potentially dangerous—and, if disturbed, would certainly be so.
Although 17 years have passed since the first surveyors' reports were carried out in 1973, many of the dwellings still suffer from dampness. The condition is severe in a number of the properties whose roofs were renewed as part of the pilot project. Large amounts of asbestos remain unremoved.
The tenants believe that, if their properties are to be restored to a decent standard, it is not enough to provide new or additional roofs and bolt the concrete panels. They believe that the leaking windows should be replaced, the asbestos should be removed, new, adequate central heating should be provided and the interiors should be refurbished. The Beaver Estate Tenants Action Association, set up in November 1983, has a committee of 15, which has done an immense amount of work on the tenants' behalf. In a recent report, the committee said:
In view of all the surveys that have been done on this estate over the last 19 years, the future would be no different from the past as far as the inside of our homes is concerned unless the United Kingdom Housing Trust or others can afford to remove the asbestos, replace the windows and refurbish to a decent standard the inside of our homes.1544 A recent consultants' report indicates that the necessary internal work to the dwellings will cost at least £7 million over seven years.Over the years, there has been no shortage of consultants' reports, but the amount of money required to bring the estate up to a satisfactory standard has never been available.
The method of construction was not the only problem that confronted the estate. The landlord's lease contained a clause under which the ground rent could be reviewed every 10 years. In 1967 the ground rent was set at £32,500. In 1977 it was increased to £96,000. In 1987, the freeholder's valuer contended that the rent payable according to the rent review formula would be £1.2 million, and it was evident from the advice received by the housing association that the rent fixed by the arbitrator would not fall far short of that figure.
The United Kingdom Housing Trust made it clear that it was unable to afford to pay more than a few instalments of the new ground rent. Moreover, it faced further increases at 10-yearly intervals. The housing association therefore faced the prospect of liquidation and forfeiture of its lease, while the tenants faced the prospect of losing their security of tenure and becoming assured tenants of another landlord.
Faced with that crisis, the Housing Corporation provided the United Kingdom Housing Trust with a £5 million grant. The United Kingdom Housing Trust agreed to borrow £12.4 million from a merchant bank, and a further £2 million from a public company, to enable it to buy the freehold and initiate a repairs programme. In order to be able to repay the banks, the housing association drew up a programme of intended sales of vacant dwellings on the estate, and embarked on a pilot sales project.
No properties on the estate have yet been sold, and the United Kingdom Housing Trust is unable to pay the interest or make the repayments that are due in respect of the loan from the merchant bank. Its position has been transformed from inability to pay the rent to inability to pay the mortgage.
I have been involved with the Beaver estate since 1983; during that period, the relationship between landlords and tenants has been generally unsatisfactory, and at times very bad. For much of the time there has been an atmosphere of distrust and a severe loss of confidence on the part of the tenants.
The tenants have also been concerned that, under the housing legislation passed since 1980, although the estate started as a council estate and has subsequently been owned by a housing association, they have not been entitled to buy their homes because the United Kingdom Housing Trust was a charitable housing association. Moreover, those tenants who moved away were not entitled to the cash discounts that were subsequently introduced for housing association tenants who did not have the right to buy because no housing association grant had been paid in respect of the construction of the estate.
Nevertheless, over the past year some progress has been made. Following an angry meeting of tenants, which I attended, and representations that I made to the landlords and the Housing Corporation, a Beaver estate working group was set up in which the landlords and the tenants consulted each other regarding building work and repairs to be carried out on the estate. That group has done useful 1545 work. The United Kingdom Housing Trust has agreed also to sell properties to tenants at a discount even though they have no statutory right to buy.
From that brief history of the experience of the Beaver estate so far, I believe that three important points emerge.
First, the combination of the structural problems caused by the Bison wallframe method of construction and the financial effects created by the rent review clause in the ground lease, which led to the "rescue" package, make the Beaver estate an exceptional problem for the voluntary housing association movement, which calls for an exceptional solution.
Secondly, the unusual experience of the tenants of that estate points to the need to review housing association tenants' rights in respect of security, the right to buy, and cash discounts.
Thirdly, the failure of the pilot project and the pending change of ownership of the estate make this the right moment for the new landlord, the Housing Corporation, and the Department of the Environment to review the future of the Beaver estate.
The tenants have been informed that the UKHT is to be merged with the North British Housing Association.
Neither I nor the tenants have heard anything but good of the North British Housing Association, and its appearance on the scene in place of the UKHT is certainly a source of encouragement. However, the tenants are concerned at the virtually total lack of consultation that has taken place regarding the proposed change of ownership. That again contrasts with the position of council estate tenants who are faced with the possibility of a change of ownership of the estate. A meeting has taken place between the tenants' representatives and the chief executive of North British Housing Association. It was evident that North British was far from fully informed about issues affecting the estate.
When they asked what funds North British would have to carry out the remedial work needed, the tenants were told that North British would seek funds from the Housing Corporation to carry out the necessary repairs and that the merger would give the Housing Corporation more options for allocating funding to the estate for improvements, but that priorities for expenditure would be determined by the local authority. That sounded to the tenants very like the discussions that have been taking place for the past 17 years.
The cost of the outstanding remedial work on the estate and of bringing the interiors up to a decent standard is very substantial. A recent consultants' report showed that the rebuilding of the whole estate in brick on existing foundations would cost about £20 million, and many of the tenants feel that a phased rebuilding programme in brick, starting with the most defective housing, is a solution that must receive serious consideration. If such a solution produces readily mortgageable and lettable dwellings, that may in the long run provide the soundest proposition for the estate.
With the proposed transfer of ownership, it is important that attention should be focused on the future of the estate. I urge that four steps should be taken.
First, where there is a proposal to change the ownership of an estate from one housing association to another landlord, the Secretary of State and the Housing Corporation should use all their influence to ensure that 1546 there is full consultation beforehand between the new landlord and the tenants' representatives, which should cover all issues of policy and practice relevant to the estate.
Secondly, in the case of the Beaver estate, that should include the question of transfers, sales at a discount and the future of the Beaver estate working group. It should include a full up-to-date analysis of the structural problems of the dwellings on the estate and discussions between the new landlords and the tenants to achieve an agreed plan of remedial action that will face up to all the defects in the properties and make a realistic estimate of the cost of refurbishing the dwellings to a decent standard. If a realistic assessment shows that a phased rebuilding in brick on the existing foundations appears to be the right solution for parts of the estate, that is an option that should be followed.
Thirdly, the tenants, the new landlords and the Housing Corporation need an assurance that the necessary funding will be available to carry out the remedial work and repay the loans that were incurred to the banks to buy the freehold in 1989. The failure to remedy the defects in the estate has now continued for 17 years and I believe that the time has now come when those defects must be tackled effectively and with the necessary resources.
Fourthly, I believe that the experience of the tenants of the Beaver estate shows that my right hon. Friend the Secretary of State for the Environment should review the rights of housing association tenants with regard to security, right to buy and cash discounts. There is a strong case for the view that security should depend on the relationship between landlord and tenant and not on a change in the personality of the landlord and for the view that, with regard to the right to buy, tenants of different sorts of housing associations should be treated in the same way.
I hope that my hon. Friend the Minister and his colleagues at the Department of the Environment will make it their business to ensure that these four steps are taken. The voluntary housing association movement plays an important role in Government housing policy. I believe that those steps are important not only for the future of the Beaver estate, but for the credibility of the voluntary housing association movement.
§ The Parliamentary Under-Secretary of State for the Environment (Mr. Robert Key)First, I congratulate my hon. and learned Friend the Member for Feltham and Heston (Mr. Ground) on securing this Adjournment debate and thank him very much for his kind words. It is entirely appropriate and in keeping with my approach to politics that my maiden appearances are made in an empty Chamber. I recall that my maiden speech in 1983 was made at precisely 6 pm on a Thursday evening when the entire parliamentary Conservative party was at a meeting of the 1922 Committee. However, that means that we can concentrate on quality rather than quantity, and that is what I want to do.
I am grateful for this opportunity to lay out the background to this particular problem and to make some comments of a more general nature about the voluntary housing sector. My predecessors have taken a close interest in the welfare of the Beaver housing estate and I intend to maintain that interest. Of course, it does not fall to the Government to intervene directly in housing 1547 association management which is the statutory role of the Housing Corporation. However, this case throughout its turbulent history has illustrated the importance of, first, the supervisory and monitoring role of the Housing Corporation over registered housing associations and, secondly, the participation of the tenants themselves.
The good work of the tenants' association has rightly been commended. The residents have remained committed to a single principle, in their own words,
to try and create a better place for all the residents to live, not just for today but for the future".How right they are. The Government are committed to promoting meaningful tenant participation throughout the subsidised rented sector. The Beaver estate tenants are pursuing the ideal of participation which the Government recognise and for which, in the shape of my hon. and learned Friend the Member for Feltham and Heston, they have found a worthy champion.The background to this case spans 23 complicated years. I thank my hon. and learned Friend for leading us so clearly through that history, which is no easy matter. The two fundamental difficulties that were to plague the management of the estate existed from the outset, when it was developed by the Greater London council. When the GLC purchased the leasehold interest in 1967 it accepted a ground rent review clause with a width of scope that was later to prove an intolerable burden for the estate. The GLC also chose to build the housing using the Bison wallframe construction method—an industrial building method of the time which used pre-formed slab construction. As the years have gone by, there have been severe problems—including, as my hon. and learned Friend said, rain penetration of the flat roofs, weakness in the concrete panels, the presence of asbestos, and condensation. Thus, when the United Housing Associations Trust—later the United Kingdom Housing Trust—took over the leasehold interest, those difficulties had already been created, even if the effects were not at that stage apparent.
The construction defects came to notice in the early 1980s, but it was in 1987 that the future of the Beaver estate tenants was thrown into serious jeopardy. The second 10-yearly ground rent review saw the freeholders seeking an annual payment of £1.2 million—30 times greater than the original 1967 rent charge. It was at that stage that the Housing Corporation demonstrated both a watchful eye and considerable flexibility. It felt able to provide £5 million to UKHT in grant to enable UKHT to relieve the burden of the rent review clause by acquiring the freehold. That was an exceptional decision, made in response to the exceptional circumstances of the case. The corporation's prime commitment for its development programme is to provide additional low-cost housing. Yet it took the broad view and accepted that UKHT would be meeting an urgent housing need. In this case, even if no new units would be forthcoming, it decided to proceed. Thus the money was supplied and UKHT carried out the transaction, aided by a loan facility of some £12.4 million supplied by a consortium of bankers.
It was unfortunate that no one at that stage could foresee the cash flow problems that were subsequently to hit UKHT. It is true that it was by no means the only organisation to be caught off guard by changing conditions in the housing market. Unfortunately, UKHT 1548 had considered that grant support of £5 million would suffice and at that time the Housing Corporation was in no position to provide further funding. I know that criticism has been levelled at UKHT and even at the corporation, but perhaps today we should concentrate on the tenacity and determination of the corporation and UKHT in trying to find the best solution available to tackle the enormous problems posed by the Beaver development.
One of the major statutory functions of the Housing Corporation is the monitoring and supervision of registered housing associations. The securing of high standards of performance by associations is one of its key strategies in the overall task of working with voluntary housing bodies to provide good homes for those in housing need.
On top of a sound monitoring and supervision framework, the corporation has developed systems for associations to improve their performance, most notably through the published performance expectations. They work in conjuction with the tenants' guarantee which lays down the minimum standards of housing management expected by the corporation. It is also a major benchmark for tenants to consider whether they are being given a fair deal. Two of the key principles of the guarantee are that associations should consult and involve tenants in major maintenance decisions and management changes, and that there should be a regular flow of information between landlord and tenant. I have noted my hon. and learned Friend's remarks about the tenants' views on consultation in this particular case.
The Housing Corporation used its statutory powers and its knowledge of the situation to confirm North British Housing Association as the right partner for UKHT in order to secure the future of the Beaver estate. UKHT considered various options before identifying North British Housing Association as a potential partner. The corporation was concerned to safeguard both the interests of the tenants and the earlier injection of public funds. Knowing the robust financial position of North British, the corporation was content with UKHT's decision. Thus, UKHT has now become a charitable subsidiary of North British. There has been no transfer of landlord. The tenants retain the same tenancy status as they did before.
That brings us to the crux of the matter for the tenants. What does the merger hold for them? My hon. and learned Friend has raised several of their anxieties and uncertainties and I now wish to address some of them.
First, is North British fully aware of what it has taken on, and when will the tenants see proposals designed to tackle the estate's problems? Here there is no doubt that the tenants have made their points very clearly, notably at an important joint meeting held on 18 September. Having said that, I am sure that North British, for its part, appreciates the special problems of Beaver estate but wants to avoid making any guarantees lightly. I am sure that the Beaver tenants have felt let down enough times during all the years to appreciate the association's reticence. However, one clear principle has been cited—a guarantee that UKHT tenants will enjoy at the minimum, the same quality of service as they received in the past. That is a baseline and a fair one on which to build.
The rescue package put together when the freehold was purchased included about £6 million for structural and external improvements to bring the properties up to a mortgageable standard. The first of two phases of that is due to be completed shortly. That programme was heavily 1549 reliant from the start on a programme of sales which, for the market reasons already mentioned, did not materialise. That sales programme is still required, now to be backed by a substantial sales and marketing campaign, and I hope that it will command the active support of the existing tenants. The important difference now is that North British can provide financial underpinning of UKHT should there be any shortfall in the sales programme.
It is estimated that a further £7 million is required for internal improvements of the dwellings. North British will be seeking major repairs funding from the Housing Corporation to help finance that, as my hon. and learned Friend said. Obviously, it is not certain that that funding will be provided and it is not for my Department to become involved in individual investment decisions when it is the corporation's responsibility to manage a very complex development programme. However, the corporation was fully supportive of the merger and it has been prepared to consider major repair proposals carefully and on their merits.
In short, I think that the tenants will need to be a little patient with North British in terms of detailed proposals. There is no point in the association rushing into schemes that prove not to be viable. North British merged with UKHT as a matter of some urgency. It must now be given a little breathing space to evaluate the options for dealing with the problems it has taken on. I know that it has assigned to its UKHT subsidiary the task of undertaking a thorough review of all options for the estate before any further major decisions are made. I know that the tenants tend to favour the phased redevelopment of the estate using traditional brick building methods. If that is a viable option, I am sure that it will be carefully considered.
One specific grievance that some of the tenants hold, and to which my hon. and learned Friend alluded, is that as UKHT is a charitable association, they have no statutory right to buy their homes. The Government have tried on a number of occasions to give secure tenants of charitable associations that right, only for the proposal to be rejected in another place. However, our commitment to helping people purchase their own homes remains and there are alternative schemes designed to help such tenants into low-cost home ownership. For example, the tenants' incentive scheme is designed to enable associations to offer grants to assist their tenants to move out and buy homes of their own. At the same time, that releases vacancies for reletting to homeless families and others in housing need. There are also shared ownership initiatives and self-build schemes available.
1550 Some tenants are also aggrieved that UKHT is offering to sell homes voluntarily, but at discount prices below those allowed under right-to-buy provisions. I am afraid that it is not for me to try to influence the levels of discount. Those were determined by the association in the light of legal and valuation advice and considered defensible under the constraints of charity law.
Let me turn finally to a quite proper tenant concern that I raised at the start of my reply—their right to be informed and consulted. I must say straight away that I was delighted when I heard that North British was to become involved with the Beaver estate tenants. Its track record for working alongside tenants is admirable and I am aware that communications with the Beaver estate tenants are already open and expanding. On 11 September the North British director of finance and UKHT's regional director met four members of the Tenants Action Association. A week later, as I have already said, the chief executives of both North British and UKHT met the Tenants Action Association and members of Hounslow council. The tenants were able to give a presentation of the history of the association and to fire a full range of questions at the chief executives. I gather that they received a full range of considerably detailed responses, and I am sure that that is only the beginning of the partnership.
With the strong reinforcement from North British now in place, I believe that the Beaver estate tenants can look to the future with some confidence. North British is one of the leading associations in the country, with 25,000 homes in management. It is renowned for the quality and responsiveness of its service to tenants. Both the association and the corporation are determined to work constructively with the tenants. I realise that the tenants themselves are still somewhat ill at ease. As I have said, that is not surprising considering the many years of frustration and grievances that they have suffered. After all, the estate was designed to be different, to be better, to be more open and to be more green. In the end that has, sadly, gone wrong.
After the turbulence that the tenants have experienced, I am not surprised that they are ill at ease. Let us hope that they will now put aside any scepticism and enter into a positive partnership with North British, working constructively to provide a new period of security for the Beaver estate.
§ Question put and agreed to.
§ Adjourned accordingly at ten minutes past Three o'clock.