HC Deb 19 May 1992 vol 208 cc231-8

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Andrew MacKay.]

9.23 pm
Mr. Peter Viggers (Gosport)

This is the first opportunity that I have had to address you, Mr. Deputy Speaker, in your new role. I wish you well and congratulate you on your appointment. May all your Adjournment debates come up at 9.23 pm, and not much later, as many do.

I am glad to have the opportunity to raise the subject of the plight of 278 families who are living in flats and maisonettes in my constituency—specifically in flats and maisonettes that were previously in the ownership of the Ministry of Defence.

In the 1960s, John Laing, the builders, built for the Ministry of Public Buildings and Works, then for the Ministry of Defence, several blocks of flats under the system of construction known as the Jesperson 12M system. That system was originally Danish and was used satisfactorily elsewhere in the United Kingdom. However, there were serious problems in Gosport. The Jesperson 12M flats and maisonettes in Gosport were not built as they were elsewhere. In Gosport, most of them were built not with internal balconies but with external balconies. The idea was to provide more internal space. That type of construction seemed to work satisfactorily when the properties were owned by the MOD.

The MOD found that it needed fewer of its properties for MOD occupation and it decided to sell some of them and to lease others. Of the properties that are causing difficulty at the moment, 275 have been leased to the borough of Gosport and provide council occupation, and 278 were sold by the MOD initially to property developers and, through them, to owner-occupiers.

All was well until one day in September 1991, when, quite unexpectedly, a balcony on one of the blocks of flats in Sephton close collapsed. The inspection that took place immediately after the collapse rapidly revealed defects in the Sephton close blocks and in other flats in the development.

The balconies were held in position by large C-shaped joints, about 3m high, secured at top and bottom by a hollow rectangular shaft which ran from the balconies into a receiving hole in the buildings where the shaft was secured by bolts. The whole of the joint structure was covered in concrete, thus making it impossible to discover whether there are defects. After the first balcony collapsed, it became necessary to shore up the other balconies with scaffolding. That remains the position today. That was the beginning of the crisis.

The Government have been helpful and, through the MOD, have provided 350 housing units which the MOD will make available to housing associations, with the MOD retaining about half the nominations for five years, so that it will be able to rehouse returning service men, should that be necessary. The other half of the 350 units will be made available to the borough of Gosport. That will ease the borough's problem in housing its tenants and will help it to carry out the necessary redevelopment. However, the people in most severe difficulty are the owner-occupiers—the residents of the 278 privately owned blocks.

The Building Research Establishment, which is responsible to the Minister, has produced a paper which states: We attributed the cause of the failure to the corrosion of the hollow steel fixing caused by water penetrating the cladding and being held in the shuttering and mortar/concrete encasing the steel section where it passes through the timber cladding. The paper also states that access to the troubled area was gained by 'opening up' the construction from the outside of the building. It is clear from the Building Research Establishment paper that it was not possible to establish the defect prior to it manifesting itself in the most dramatic way through the collapse of the balcony.

What can the owner-occupiers do? They paid between £25,000 and rather more than £40,000 for their properties, depending on location and timing. However, they cannot sell because there is no market. One cannot sell if no one is prepared to buy and if people believe that the estate is blighted—as it is at the moment. Selling is not an option.

I pay tribute to the Minister's predecessor at the Department of the Environment, my hon. Friend the Member for Suffolk, South (Mr. Yeo) and to the Department of the Environment, which has been helpful in working out with Gosport borough council the possibilty of obtaining common parts grants under the housing renovation scheme. It seems that such grants will be available, ranging from £5,700 to £6,300.

A detailed scheme has been produced by Michael Dyson Associates, chartered structural engineers, of Southampton, and it seems to have some support. At the moment, the owner-occupiers are not minded to proceed along that route, because they do not regard repair as their way ahead. They want to be able to sell their housing units. I have urged the owner-occupiers to proceed along the repair route because that does not rule out other possibilities. I certainly urge them to bring together the necessary three quarters of residents in the owner-occupied blocks and to apply for common parts grants with the assistance of Gosport borough council.

The second route along which the residents may proceed is to take legal action. That, too, is in hand. It is very difficult to bring together a disparate group of 278 owner-occupiers who need initially to obtain legal aid and to obtain counsel's opinion on who they might be able to take legal action against. One possible defendant, of course, is John Laing, the builder of the blocks, who undoubtedly constructed a block with a very dangerous defect within it. Another possibility is the Ministry of Defence or its predecessor in terms of authority for construction, the Ministry of Public Buildings and Works. Certainly the Ministry of Defence was not only responsible for having the block built but ran it for many years and was responsible for selling the block to the ultimate owner-occupiers. The Ministry of Defence might be an appropriate target for action.

Also, there are the building societies that advised the owner-occupiers when they bought. In most cases, the owner-occupiers paid a modest surveyor's fee of £75. In other words, they did not have a proper structural survey. However, there is no doubt that the owner-occupiers were encouraged to use certain building societies, particularly the Halifax building society, and there may be an implication that the Halifax itself could be liable for that reason. There is a possibility of legal action.

It is difficult to see how that process can bring about a solution in the near term. We are looking for a shorter-term solution to that terrible situation in which the owner-occupiers find themselves—that is, of not being able to sell and not being able to move. There is no doubt that the dwellings are defective, and there is no doubt that the defect was not capable of normal discovery at the time of purchase. For anyone involved in housing legislation, that should begin to ring bells because it makes one think about the Housing Defects Act 1984.

That Act is intended to cope with exactly that situation. On Second Reading of the Bill, our late lamented friend, Ian Gow, the then Minister for Housing and Construction, said: The purpose of the Bill is to relieve the very serious distress and financial hardship of those who, often using all their savings, have bought their homes from public sector bodies in good faith and now find that those homes, through no fault of their own, have been very seriously devalued because of faults in design and construction which have since been discovered and confirmed by the Building Research Establishment."—[Official Report, 26 April 1984; Vol. 58, c. 894.] That is exactly what has happened in the case of the owner-occupiers on the Rowner housing estate.

I brought an all-party delegation from the borough of Gosport to see my hon. Friend's predecessor, my hon. Friend the Member for Suffolk, South on 11 February. It was a short meeting because it was disrupted by a bomb scare and had to be curtailed, but I put it to the Minister as forcefully as I could that the housing defects legislation should apply in the case of the Rowner flats. We from Gosport were amazed—all four of us on our side of the table remember the words very well—when the Minister's adviser said that the defect in the flats was discoverable at the time of construction.

I gather that that statement was denied subsequently, and we are told that the official said that the defect was discoverable at the time of purchase. However, that is not particularly significant to my case. The Minister ruled out the best route for my constituents, which is to use the housing defects legislation to require the local authority to buy their housing units at 95 per cent. of the defect-free price. That is what my constituents want.

The Under-Secretary of State, my hon. Friend the Member for Banbury (Mr. Baldry), who will answer the debate, has written to me, again referring to the meeting on 11 February. In his letter of 6 May he said: Defects legislation was reserved for dwelling types with serious inherent structural defects which could not have been known about or discovered on survey at time of purchase". I maintain that that is exactly what we have here, unless my hon. Friend has someone in his Department who is so clever that he can see through concrete. There was no way of discovering the defects. They arose as a result of water seepage through the concrete which corroded the metal within the concrete. No one could have discovered those defects until suddenly the balconies collapsed. I maintain that, on discoverability, the Rowner balcony flats fall precisely within the terms of the housing defects legislation.

I suppose that it could be maintained that the Jesperson 12M class generally did not have defects. Of course that is true, but the flats constructed with balconies in Gosport, of which there are several hundred, had defects. Therefore, I maintain that the proper class is Jesperson 12M with balconies, as constructed in Gosport. I see no reason why that should not be accepted as a proper class.

In his letter of 6 May, my hon. Friend the Minister pointed out that my constituents would be better off if they had their properties repaired than if they took advantage of the housing defects legislation to have the houses repossessed. He said that it would cost some £7 million to have the houses repurchased under the housing defects legislation, whereas it would cost only £1 million to repair them under the house renovation scheme. He says that the latter would be better from their point of view.

I walked around the area again last weekend and spoke to some of the residents. I can tell my hon. Friend that that is not what they want. I put it to him that it is not for him to tell me what I should tell my constituents is best for them. I am telling him on behalf of my constituents that they desperately want the opportunity to sell their flats and maisonettes under the housing defects legislation.

When our friend Ian Gow moved the Second Reading of the Housing Defects Bill, he said that he had had many letters describing the moving cases of people who were unable to sell their houses and flats—people in the most difficult situation. No case could possibly be worse than that of my constituents. They feel that they are stuck with blighted flats and maisonettes. Some of them work for the Ministry of Defence and have been relocated to other jobs in Bath or elsewhere. They cannot move. It is intolerable for them. Therefore, I ask my hon. Friend to think again.

If the advice that my hon. Friend has been given leads him to believe that he cannot designate the properties, I ask him to look again at that advice and the facts that back it up. I ask for designation under part XIV section 528 of the Housing Act 1985. If my hon. Friend discovers that he cannot designate the flats and maisonettes, that it is not policy for him to do so or that the law does not allow him to proceed along that route, I ask him to do exactly what my right hon. Friend the Member for Tonbridge and Mailing (Sir J. Stanley) did in 1982 when he realised that a special case had to be made of the Airey type of construction, and introduced emergency legislation.

I also ask my hon. Friend to do exactly what Ian Gow did in 1984 and to introduce legislation which will help a further group of 28 classes of housing. I ask my hon. Friend to be responsive to the special problem of my constituents. I have met them, and they are essentially decent, reasonable and deeply worried people. They are our kind of people. They are the kind of people who are anxious to get on the escalator of house ownership. They bought their first property, and it has let them down. I believe that the Government owe them some help.

9.39 pm
The Parliamentary Under-Secretary of State for the Environment (Mr. Tony Baldry)

I fully appreciate the concern of my hon. Friend the Member for Gosport (Mr. Viggers), and I shall endeavour to deal in full with the issues that he has raised. My predecessor, my hon. Friend the hon. Member for Suffolk, South (Mr. Yeo) met my hon. Friend and members and officers of Gosport borough council early this year. A further meeting was subsequently held with my noble Friend the Earl of Arran, the then Under-Secretary of State for the Armed Forces. That allowed ministerial colleagues to explore the issues involved in detail and to prepare a way forward which, it was hoped, would provide constructive assistance to the owners of the flats in as short a time as possible.

The facts are these: the defects in the balconies could and should have been discovered at purchase; but, that aside, at the second meeting with ministerial colleagues, Gosport council's officers confirmed that the owners should be eligible for 100 per cent. grant aid.

However, judging by various comments that have appeared in the media and elsewhere, misunderstandings persist and I therefore welcome the opportunity to set the record straight. I am also grateful for the chance to set the advice that we have alread given within the wider context of the Government's policy on ex-public sector housing stock in which structural defects become apparent.

Whatever their construction, all older houses may have defects. Sometimes they will be trivial and sometimes more serious, but, provided that they are recognised, the buyer will be able to take into account future maintenance and repair costs likely to be associated with the defects and to reflect those costs in the price that he or she is prepared to pay for the property—they may even decide not to purchase. That is why we advise all local authority tenants contemplating the right to buy to obtain an independent survey, and why we warn them that a survey carried out by the lending institution is for valuation purposes only and will not necessarily reveal structural problems. That is sound advice for any prospective purchaser. We then expect owners to make proper provision for future repair and maintenance.

Where serious, inherent, structural defects exist which could not possibly have been known about or discovered in a survey at the time of the purchase, that is a different matter. Research in the early 1980s by the Building Research Establishment revealed defects of that type in a number of prefabricated, reinforced concrete house types designed before 1960. As a result, owners who had bought from the public sector in good faith experienced a substantial loss of value. So, in 1984 the Government, with all-party support, introduced the housing defects legislation to ensure that their houses could be designated as inherently defective, and the owners could be assisted.

The BRE has since investigated the range of system-built dwellings in this country, but it has found no further types that meet the criteria that I have outlined. Last year's efficiency scrutiny of the legislation concluded that any further designations were highly unlikely.

The Jespersen 12M form of large panel system—LPS —construction, used in the flats at Gosport, was among the types surveyed by the BRE. Its report of LPS dwellings in 1987 revealed no cases of flats or houses which were structurally unsound, but BRE warned owners and purchasers to check that LPS buildings had been constructed to the standard system and that no one-off variations were present. Clearly, if such variations existed, they would need further investigation.

When the balcony failures occurred on the Rowner estate last year, Gosport borough council wisely called in BRE to advise, and it found that the balcony design was unique to the estate and represented the sort of variation that it had warned might exist. It further concluded that the crucial fixing detail was highly vulnerable to rain water penetration and the uncovery work that it then carried out confirmed that severe deterioration of the metal supports, through corrosion, had indeed taken place. However, there is no evidence that the flats, which were built to the standard Jespersen system, had any such problems.

I understand that the cost of replacing the balconies will fall far short of the substantial reduction in notional overall value required by the housing defects legislation and that the defective detail does not meet the policy criteria for designation. Ministers have clearly and consistently been advised that any building professional carrying out a structural survey on the flats could and should have recognised that the balconies were non-standard, realised the extreme vulnerability of the fixing details, and advised that uncovery work would be necessary to determine the current condition of the fixing.

We do not know what structural surveys, if any, were carried out when the flats were first sold, as found, on the open market by the Ministry of Defence to the three original property companies. Nor do we know whether the present owners commissioned such surveys when the flats were subsequently sold on. Various allegations have been made, but clearly it would not be right for me to comment further on questions of liability that might ultimately be for the courts to decide.

My hon. Friend has suggested that the detail should have been seen as vulnerable at the time the flats were constructed. As he knows, no such statement has been made by my professional advisers, but even if that were true, it would merely reinforce their advice that the defect could and should have been discovered on survey at the time of purchase. That should not be our immediate concern today.

The owners of leasehold flats and maisonettes are clearly in a very difficult position. Many, if not all, of them will be unable to fund the cost of the necessary repair works from their own resources. As every day passes, the cost of the temporary scaffolding, erected to make the balconies safe, mounts higher and higher.

As I have already said, designation of the dwellings under the housing defects legislation would not be appropriate. Nor, as I shall show later, would it in any event be in the best interests of the owners, the council and the lending institutions that have advanced mortgages on the estate. Furthermore, as was explained to my hon. Friend and Gosport council when they met ministerial colleagues, and as I hope that I have further explained in correspondence, a better solution is to hand.

As my hon. Friend has clearly and sensibly set out, since the housing defects legislation was passed, we have introduced the house renovation grants scheme to cover properties such as those on the Rowner estate, which were not previously eligible for repair grants. Since the scheme was started in 1990, local authorities have already agreed grant aid in just less than 40,000 cases, amounting to spending of more than £100 million, and targeted on owners—such as those on the Rowner estate—who would otherwise have real difficulty in carrying out essential repairs.

As I have said, Gosport borough council's officers have confirmed that, in their view, all the affected owners could be eligible for 100 per cent. grant aid toward the cost of repairs, under the common parts provisions of the scheme. That could cost as much as £1.5 million, which is obviously a lot of money, but that is very much less than the £6.5 million that the council would need to spend to repurchase these homes at current "defect-free" valuations under the housing defects legislation.

That £1.5 million would restore the flats to the valuations that they enjoyed before the balcony failure, and the owners could keep their homes. Contrast that with the effects of repurchase under the housing defects legislation. It provides for repurchase of designated flats at 95 per cent. of the current defect-free value. I understand that those valuations would average about £25,000 a dwelling.

However, I understand that the majority of owners have mortgages well in excess of that, since they bought at the height of property prices. Figures as high as £45,000 have been quoted, and it seems clear that, after repurchase, the average owner might be left with mortgage debts of as much as £12,000 to repay, on top of any rent, and without the value of a leasehold asset.

That obviously cannot make sense. It certainly does not make sense to the lending institutions, which agree that assistance under the house renovation grant scheme is the only viable option. It surely cannot make sense either to Gosport borough council, which would, after all, have to foot the bill. Nor does it make sense in terms of overall public expenditure.

I hope that my hon. Friend will agree that the only practical way forward for the owners is for them now to submit grant applications on the basis of the repair scheme that their structural engineers have already drawn up, and which will, I understand, be considered by Gosport council's planning committee as soon as 2 June. Once that has been done, the way will be clear for the council's officers to discuss with the Department's regional office how the resource implications for the council of grant aid can best be met, and the defective balconies replaced as soon as possible.

As I and ministerial colleagues have repeatedly said, we are keen to provide constructive assistance to the owners of the flats in as short a time as possible. If they submit grant applications and enable Gosport council's planning committee to consider them on 2 June, and then to consider that matter with my Department's regional office, I hope that we shall indeed provide that constructive assistance to the owners in as short a time as possible.

Question put and agreed to.

Adjourned accordingly at nine minutes to Ten o'clock.