New Town Housing (Scotland) (Hansard, 22 February 1991)

§ Mr. Robin Cook (Livingston)

I am grateful for the opportunity to revert to my constituency role and to raise a matter that is of considerable concern to several thousand of my constituents who are tenants of Livingston development corporation. The matters that I will raise are common to the other four new towns in Scotland. The House will understand why I will confine my remarks mainly to Livingston, which I represent and which I know best.

Until last month, the future arrangement for the houses in the Scottish new towns was unsatisfactory from our point of view, but it was at least clear. Since last month, the position has remained unsatisfactory, but it has now become confused as well. There are two matters of contention that I want to raise, and I suspect that the Minister has anticipated the points around which I shall weave the argument.

First, what happens to the stock of the new towns when they are wound up? Until 1987, as the Minister will be aware, the position was fairly clear. It was anticipated that the housing stock would transfer to the appropriate district council. Indeed, a working party under the Scottish Office sat for two years and carried out considerable work on the management and financial arrangements for the transfer.

In 1987, a White Paper, without consultation or explanation, entirely reversed that position with the following flat statement: the automatic transfer of the entire housing stock to a local authority can no longer be regarded as consistent with the Government's aim of increasing diversity and choice. The Government have a mega-problem in reconciling that statement with the consistency that they seek in their housing policy. The mega-problem is that, for years, Ministers have promised tenants of new towns and elsewhere tenants' choice and they have made great play of that issue. Unfortunately for Ministers, all the evidence is that the tenants in the Scottish new towns who wish to continue to rent houses overwhelmingly wish to do so in future from the district council. That is the most popular choice of future landlord for those tenants.

The most recent survey was carried out by the Scottish local authorities for new towns in May 1990. The survey found that three quarters of tenants across the five new towns would choose the district council if they had to do so now, and two thirds of them gave a clear indication that they would choose the district council when the wind-up arrived.

The Minister comes to the debate with a fresh mind and a clean sheet. I will not seek to hang around his neck the mistakes of his predecessors. I trust that he will apply to the issue the clear thinking that we can expect of someone who is unencumbered by recent history. However, I warn him that his predecessor in the matter was on occasion forced to adopt a rather inelegant posture as he tried to find a position from which he could not see the clear majority.

When the matter was debated last year during the passage of the Enterprise and New Towns (Scotland) Bill, the Minister, who is today Secretary of State for Scotland, 619 referred to the Government's own survey of the opinions of tenants in the new towns. That survey was carried out before the survey whose figures I have just quoted to the House. During the debate, the Minister said that the Government's survey showed that barely 50 per cent. of tenants would prefer the district council. There is a thin dividing line between "barely 50 per cent." and a clear majority. Without quibbling over how to define it, I must point out that the figure was 58 per cent. who said that they would choose the district council if the new towns were wound up now.

Not only is 58 per cent. a comfortable working majority with which both I, and I suspect yourself Madam Deputy Speaker, would be content in the forthcoming general election, but it was twice as high as the total figure for all other landlords quoted for anyone else in the survey. It would be an outrage if the tenants who voted by such a large majority for the district council to be available to them as an option, were denied that option. It would also most certainly be inconsistent with the Government's policy of tenants' choice.

Since that debate, an even more pointed inconsistency has emerged. Since the House debated the Enterprise and New Towns (Scotland) Bill on Report, regulations were laid down last year by the parallel department with responsibility for new towns in England, which provides for the winding up of English new towns. Those regulations clearly and explicitly provide that every tenant of a new town house has the right to choose their future landlord, and that that choice shall include the local authority with housing responsibility. Nothing less will do for the tenants of Scottish new towns and there is no way in which he, or any of his colleagues in the Scottish Office, will be able to defend such a glaring inconsistency in Government policy as not to offer the tenants of Scotland what has already been offered to tenants in England.

We have moved a year on from that Report stage. When the Minister responds to the debate I hope that he will give us some sign of how the Government have reflected upon this matter and developed their thinking in the year since we last debated these matters in the Chamber.

Secondly, I wish to press the Minister on the matter that prompted today's debate. What makes it disappointing that Government thinking has not moved further on the future of the housing stock in the past year is that the Minister has found time for a dramatic change of policy on the management of the housing stock in the interval between now and the winding up. In anticipation of the winding up of Livingston new town, the development corporation formed its housing department into a non-profit making company. That was achieved in autumn 1989 and it was registered as a non-profit-making company in that year, so that the housing department, as a new legal entity, could take on a legally binding contract for management of the Livingston housing stock, with the clear intention that, when winding up arrived, that company would be available as one of the competing offers to provide for the ownership of the housing stock as a new landlord for tenants of the new town.

I have never made any bones about the fact that if the district council were not an option for tenants, probably the best solution would be if the present housing 620 department were to continue as a company, with its own standing, but maintaining the public service standards at present available. I say this to their credit that those people who took the initiative to register that company, to reconstitute the housing department in Livingston, have always made it clear that they would welcome the district council as one of the options to tenants in the new town, and that they were willing to take their chance on tenants choosing them rather than the district council, provided that that choice was available.

It will be clear from what I have said that we are not discussing a new proposal this afternoon. The proposal that the housing department should become a legal company, and that it should then enter a legally binding contract with the development corporation, has been around for a year and a half. During that time, considerable management work has gone into preparing the way for such a contract. Significant expense has been incurred in the process. Great effort has been made to inform and to involve the staff of the enterprise, and I understand that the staff of the housing department have been unanimous in backing the initiative, and that real steps have been taken to communicate the proposals for the development to tenants. I do not suggest that tenants have necessarily been in overwhelming support of the proposal or that they have been unanimous in their agreement to it, but every tenant has received a letter explaining the proposal. It is inconceivable that the Scottish Office did not know what was being proposed during that year and a half of activity. Indeed, it is inconceivable that the Industry Department for Scotland did not approve of the proposal.

The rules were changed suddenly last month. We have been told that it will be possible for the development corporation to place a contract for the management of the housing stock with the housing department or anyone else only if the contract is put out to open tender and if any private landlord or developer can bid. That might involve Quality Street. Mackay's flat agency or Wallace Mercer and David Murray forming a company.

It has been suggested that a reason for that insistence is the unfortunate publicity about the formation of the Waverley Trust which has embarrassed the Scottish Office. If that is so, that is a rather perverse response, because the Waverley Trust can, if it so chooses, put in a bid for the contract to manage the housing stock of the new town.

There is a grotesque conflict between the requirement that I have described and repeated promises by Ministers of tenants' choice. Ministers are insisting that on wind up, the tenants should choose their landlord. They will not be allowed to choose the district council, but they may choose any other landlord. However, in the proposal to transfer the management of everything in the housing stock except its ownership, Ministers insist that it should be settled by competitive tender. That cannot be squared with tenants' choice, because it could result in the management contract going to a developer or landlord who is flatly the reverse of what the tenants want.

To the housing department's credit, it has said that in those circumstances it does not propose to go ahead and develop negotiations for a contract for the management of the housing stock. It believes that it would not be fair to the tenants to proceed if the only basis on which it is allowed to proceed is to open the doors to bids from private developers who might be wholly unacceptable to the tenants.

621 I attended a meeting with the Minister when those points were discussed with the councillors from the five new towns. In his response to those discussions, the Minister said that he believed that in the circumstances the housing department should press ahead with its bid for the contract and beat off the competition. I can state candidly that if that course were followed the housing department would win the contract. However, if the Minister is certain of the outcome, why have the farce of open and competitive tender? If we cannot be certain of that outcome, how can we ask the housing department and Livingston development corporation to run the risk that the process might open the door to any outside developer?

Perversely, the credibility of the housing department with the tenants of the new town has never been higher, because the department has been seen to put the interests of the tenants before its own wish to secure a contract for the management of the housing stock. That credibility will be at risk if the housing department and the development corporation insist on taking a step that will open the door to all corners.

The Government's recent intervention and the imposition of competitive tendering as the basis for such a contract have stopped all progress. That must be perverse from the Minister's point of view. As I understand the preference of Ministers, they want to promote plurality of landlords in the housing stock. They want alternatives to local authorities, but on this occasion they are effectively stopping a new player entering the housing scene and widening the alternatives available to the tenants.

The new towns also have a real practical problem. How do they retain staff in the new circumstances? That problem extends beyond the housing department. Agency contracts have been discussed in four other sections of the Livingston development corporation. In the architects department, direct labour and legal services, there is a proposal either to form a new firm or to merge the present staff with an existing professional firm on the strength of agency contracts with the new town. All those measures are also now blocked by the parallel requirement that they must go to competitive tender. That will not only inconvenience staff but potentially inconvenience the people who live in the new towns if the new towns are unable to retain the staff who have made those new towns such a success.

I demonstrate the problem by reference to the housing department. It will come as a surprise to you, Madam Deputy Speaker, to hear that every member of staff of the Livingston housing department is younger than I. That is not such a stiff test as it used to be, but it is a clear sign that we are dealing with staff who cannot be content to wait for wind-up and the prospect of taking early retirement. They all wish their careers to continue beyond wind-up. With the collapse of the possibility of a management agency giving them security of employment beyond wind-up, there must be a real risk that those people will now necessarily look for careers outside the new towns.

In strict managerial terms, the Government's change of heart has been incompetent. The residents will be most affected if services cannot be maintained. Several questions arise from that change of policy. I fully appreciate that the Minister may not be able to answer than in this forum immediately, but I should be content if some were answered by letter.

First, when did the Industry Department know of the proposals for a management agency? Secondly, why did it 622 take so long to make it clear to the new towns that the process would have to go through competitive tender? Thirdly, is the same requirement of open competitive tender being made to Scottish Homes in the many cases in which Scottish Homes is now involved in coming to a management agreement with its staff? How could one possibly justify having two different standards of test applied to the new town housing departments as opposed to Scottish Homes? Fourthly, if competitive tendering is to be required, how can we reconcile that with tenants' choice and how do Ministers propose that tenants will be consulted?

Fifthly, if competitive tendering takes place—it will be obvious from my observations that I doubt whether that is an appropriate way in which to proceed—will the local district council be entitled to put in a bid as part of that process? Sixthly, when the Government arrive at wind-up, may we have an assurance that they will not insist on competitive tendering when they dispose of all the housing stock? I hope that the Minister agrees that that would be intolerable and unacceptable, but what possible logic is there in insisting on competitive tendering for the management of the stock which will not be subject to competitive tendering when its ownership becomes available?

It is evident to me and, I hope, to the House that Ministers have made a mistake that has caused immediate and serious problems for the new towns and for tenants. I am a reasonable man who is seeking to apply my mind to the matter as a constituency Member, not as a partisan politician. I therefore do not press the Minister to admit that there was a mistake. I should be perfectly happy if he chooses whatever form of words to conceal the fact that he made a mistake. However, I ask him to find a way quietly to reverse that mistake. I hope that the debate will assist in prompting the Minister to think again about a policy on which his predecessor should have consulted before making it. I hope also that the Minister will listen to the arguments for reversing it.

§ The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart)

I congratulate the hon. Member for Livingston (Mr. Cook) on providing this opportunity to consider Scottish new towns housing. He obtained the debate by acting speedily when one of his colleagues withdrew the original topic on the Order Paper. I shall carefully consider all the points that the hon. Gentleman has made. I shall reply in general terms, but I assure him that some of the detailed questions that I may not be able to cover in the time available will be answered by letter. The recent record of housing in the five Scottish new towns is one of outstanding success and it deserves recognition by the hon. Gentleman and his colleagues. The general prosperity arising from the success of the new towns corporations has provided some of the healthiest local housing markets in Scotland in recent years. The demand for housing to buy has attracted private house builders in strength and, without exception, all the towns can boast major housing developments which only a few years ago would have been impossible or difficult to anticipate. That is true of all the new towns. Home owners are now in the majority in all the five Scottish new towns 623 —in some, such as Cumbernauld, home ownership is running at over 60 per cent.—so home ownership has a convincing majority.

The second major contributory factor leading to increased home ownership has been the sale of corporation housing to tenants. That is another outstanding success story. One in every two new town development corporation houses will have been sold to its sitting tenant by the end of this financial year. The five corporations now own fewer than 35,000 houses.

The purpose of the hon. Gentleman's debate is to look ahead. Tenants will continue to have the choice of home ownership through right-to-buy and through the voluntary sales schemes, including our rents-to-mortgage scheme, which brings home ownership within the reach of yet another group of potential purchasers, as well as the private sector itself.

It is in the context of a varied and constantly evolving housing market in each of the five towns, each with distinctive characteristics, that we must consider the future arrangements for housing. As the hon. Gentleman told the House, the Government set out their policy in some detail in the 1989 White Paper. Prior to the publication of that White Paper, the consultation documents that preceded it raised the option of transfers to other landlords instead of to the district councils following wind-up. That White Paper stated that building programmes would be continued and that we would aim to accelerate completions of corporation housing developments. As the hon. Gentleman knows, the corporations have devoted substantial resources to housing capital programmes, both to modernise old stock and to undertake new building.

On the issue of housing for rent, on which the hon. Gentleman focused, as he properly stated, the White Paper made it clear that the corporations would be expected to continue to promote diversification of rented tenure in the towns. They may do that by seeking to attract other landlords to develop in the town, but the main opportunities revolve around the corporations' own housing stock. The White Paper gave an undertaking that no tenant would have to change landlord in the period before wind-up, but there has been good scope for initiatives to be taken within that undertaking. Corporations have been exploring the scope for diversification. There have been local initiatives involving the transfer of stock to housing associations and the creation of a housing co-operative in the hon. Gentleman's new town of Livingston. It is within that general framework of diversification that we intend to consider the future of each corporation's stock as wind-up progresses. On the issue of what happens at wind-up, the White Paper gave an undertaking to consult the interested parties once that process is well under way.

The hon. Gentleman referred to a number of surveys. He will not dispute that the independent survey of tenants before the publication of the White Paper confirmed that a clear majority of tenants agreed that the right time to take those decisions is much nearer the wind-up date than we are at present. We are not expecting the wind-up in the hon. Gentleman's constituency to start until 1995. In the meantime, the 624 Government, with the assistance of the corporation and of Scottish Homes—the hon. Gentleman will appreciate that the difference between the Scottish and English circumstances is that there is no comparable organisation to Scottish Homes south of the border—will try to ensure that a realistic range of options is available when the time comes to take those decisions.

The hon. Gentleman has referred to the widespread view among tenants that they would like to have their district council as one of their options. He suggested, and I should not disagree, that that is often how the view is expressed, but in practice tenants are saying that they want the transfer of their house to be to the district council. It would not be in line with the diversification if substantial portions of a corporation's housing stock went to enhance the existing stock of any other major landlord, whether public or private. We remain committed to expanding the contribution of housing associations in the new towns and to using the private sector to bring back into use those limited parts of the housing stock where improvements are needed. That has a lesser role in the new towns than in the older cities.

Equally, the Government have said that we shall first examine the scope for other initiatives. As the White Paper said, the residual stock of each corporation will be transferred to Scottish Homes with a view to pursuing further diversification. However, I should stress that the Government have said that we shall first examine the scope for other initiatives, including whether there should be any transfer to district councils—a point on which the hon. Gentleman has focused.

At the moment, we do not know—none of us can—just how many houses each corporation will have left when the closing stages of wind-up are reached. We also cannot know the location of their houses or their type, the needs and circumstances of their tenants or whether they are best served by a local authority or some other landlord. These decisions need to be taken much nearer the time. However, I hope that I can reassure the hon. Gentleman and his constituents on two points. First, the criteria that we would consider applying in the search for alternative landlords would include the ability of those landlords to preserve the high standards that tenants have come to expect from development corporations. I give tenants that clear assurance.

Secondly, the hon. Gentleman referred to the meeting that we attended. I have invited the district councils for the new town areas, through their representative organisation, Scottish Local Authorities with New Towns, or SLANT, to elaborate on the argument that they put forward at a recent meeting, that the Government's objective of diversification could be achieved while still allowing the district council to be a choice for which tenants might opt. I am grateful to SLANT for responding positively to the suggestion that it expands on that in any paper that it is preparing.

The hon. Gentleman also referred to the proposal from Livingston development corporation to establish a housing management agency from its own staff and to award it the contract for managing the corporation's tenancy stock. Let me make it clear that my right hon. Friend the Secretary of State and I welcome this initiative as one which appears to be entirely satisfactory for the tenants. However, there is a need to show that this is the best arrangement for tenants, and more generally. I hope that there will be a way to get through 625 the problems to which the hon. Gentleman referred. I give him the assurance that I will be happy to consider further with the corporation precisely how we might achieve that.