HC Deb 14 March 1994 vol 239 cc629-76

[Relevant documents: second report from the Environment Committee of Session 1992–93 on the Housing Corporation (House of Commons Paper No. 466-I and II) and the Government's response thereto (Cm 2363)]

Motion made, and Question proposed, That a further supplementary sum not exceeding £213,686,000 be granted to Her Majesty out of the Consolidated Fund to complete or defray the charges which will come in course of payment during the year ending on 31st March 1994 for expenditure by the Department of the Environment on subsidies, improvements and investments, payments to the Housing Corporation, payments to commute loan charges on grants to local authorities including the urban programme and urban development grant, and other sundry services.—[Sir George Young. ]

4.2 pm

Mr. Robert B. Jones (Hertfordshire, West)

I know that estimates debates are not necessarily the most gripping of the matters that come before the House, Madam Speaker, but you will know as a student of political history that they are key to the powers and privileges of the House because the scrutiny of Government policies and expenditure is the heart of the House of Commons. I take seriously the Select Committee's responsibilities with regard to that function.

We have devoted two or three evidence sessions every year to hearings on the Department of the Environment estimates and annual reports. We have produced a report on each of the subjects. By that means, the Committee has tracked the progress of the Housing Corporation for several years, noting its triumphs and difficulties and following its development as the funding and regulatory body for non-local authority social housing in England. About 15 months ago, my colleagues on the Committee and I judged that the time was right to launch a full-scale inquiry into the activities of the corporation. The Committee's predecessors had resolved to do that, but, for one reason or another, it did not seem right to have a full investigation at that time.

The inquiry that we held and the report that came out of it marked something of a return to housing as a subject for the first time for some years, although, of course, we looked at some aspects in our annual estimates hearings. At least those in the Department's environmental and countryside divisions, who had had the focus of our spotlight on them for some 10 years, were able to retire, albeit temporarily, into the darkness while we looked at housing.

The key is for a Select Committee to consider a balanced range of issues. I pay tribute to my colleagues on the Committee for their non-partisan, consensus approach to the inquiry. If a Committee is effectively to bring issues to the attention of the public and the House it can best be done by co-operation. Together, we were able to agree conclusions that did not lack bite or duck the issues, as I am sure that my right hon. Friend the Minister for Housing, Inner Cities and Construction will agree. Apart from the work that the Select Committee put into the report, I must also pay tribute to the two men who advised us during the inquiry—Richard Best and Peter Chapman—who gave us sterling guidance, which was most helpful.

During its inquiry, which lasted from February to April last year, the Select Committee questioned 16 groups of witnesses, visited housing association developments in Leeds, rural Yorkshire and east London, and considered 140 written submissions. Since I read every page of those submissions, I can confirm that they contained much high-quality evidence, not merely from housing associations and interested bodies but, in some cases, in movingly written notes from members of the public and tenants. We did not need to travel overseas because the Housing Corporation is a peculiarly British animal—a public sector body which funds and regulates a disparate collection of private sector organisations.

I hope that it will be helpful to the House if I proceed by summarising the main proposals in the Committee's report and in each case comment on the responses from the Government and the corporation.

We began by considering the relationship between the corporation and its sponsoring Department—the Department of the Environment. The Housing Corporation is a quango and is therefore quasi-autonomous, whatever that means. Some people told us that the corporation was a creature—usually a poodle—of Government. No one told us that it was too autonomous.

The Committee's view is that under the out-going chairman, Sir Christopher Benson, to whom I pay tribute, the corporation behaved in a correct but unpoodle-like manner. The Committee was given a copy of the corporation's top secret corporate plan. Frankly, we were surprised at its tone. Sir Christopher and his colleagues did not shrink from giving strong advice, whether it was welcome or not.

The Committee felt that the relationship between the corporation and the Department was about right. The corporation spends a lot of public money and is rightly closely supervised in that. As a non-governmental organisation, however, it must remain free to express its views on policy matters—but only in private.

When people first learn that the Housing Corporation's corporate plan is not published they are surprised, given the huge sums of public money involved. The frank advice to which I referred is partly the reason why it remains a private document. The Committee felt strongly that the plan should be published, as a contribution to the continuing public debate on social housing. The Government did not feel able to accept the Committee's recommendations, for reasons that I understand, but the corporation has at least been able to produce its first three-year statement of plans and priorities.

That statement is effectively an agreed version of the corporate plan, without the discussion of alternatives that characterises the latter, but retaining an encouraging tone of frankness. The statement is certainly more useful than the annual report, which has not been terribly useful to anyone who has taken a close interest in the corporation's work. The Housing Corporation should be congratulated on producing its new document. There can be no doubt that future editions could be improved by greater openness and more discussion of the relative merits of policy options.

Openness is also required in the appointment of the corporation's board which, in the Committee's view, did not fully reflect the breadth of experience desirable in such an organisation. I therefore welcome the recent appointment of new members with experience of housing—in one case, a local authority housing manager and in another, a housing association tenant. The fresh perspectives that those new board members will bring will be of great value to the corporation and to the Government.

The announcement last Tuesday that Sir Brian Pearse, the chief executive of the Midland bank, is to succeed Sir Christopher Benson as chairman, is also to be welcomed. I trust that Sir Brian will continue his predecessor's robust approach to his work. I think that my right hon. Friend has brought off a considerable coup in managing to secure the appointment of Sir Brian Pearse. There is absolutely no doubt that the relationship between housing associations and those who are increasingly financing them will be of key importance in coming years.

The Committee gained the impression both at first and at second hand that, at regional level, the corporation works effectively as a partner of housing associations. Like many partners, the corporation can at some times be a little interfering and bossy and at others less helpful than some would wish. In most respects, however, it is supportive and effective. We suggested some improvements, such as aligning the corporation's regional structure with that of the Department and seeking feedback, through a consultative process, with local interests. In each case, the Government responded positively, for which I am grateful. I hope that my right hon. Friend will be able to inform us of progress on realignment, especially as it affects London and the home counties, and on the twice-yearly consultative meetings, which I understand may start as early as next month.

Important as it is to get the structures and personalities right, there are other, more important issues that the Committee identified. The first is the question of housing association grant rates, together with affordability of rents and availability of private finance. The Committee recognised, as do most observers and those more closely involved, that those apparently separate considerations are in fact interwoven and interdependent. As the Government quite properly seek to contain public expenditure and attract a higher proportion of private capital into the development of social housing, so they must face the likelihood that housing associations will find it increasingly difficult to secure their loans, that many of them will find it necessary to increase their rents and that, at the end of the chain, increasing numbers of tenants will find it ever more difficult to escape the protective embrace of housing benefit.

Whether we term that state of affairs somewhat emotively "the poverty trap" or whether we characterise it as housing benefit dependency, the effect is the same. The Exchequer necessarily spends vast amounts of public money on housing benefit, yet everyone—including those in receipt of the benefit—wishes that it were otherwise. The Committee did not pretend to know how to resolve the dilemma of how to provide an affordable safety net without, at the same time, creating a disincentive to work, but all Members were as one in calling on the Government to get on with tackling the problem. It is surely in no one's interest that we should continue to subsidise that powerful deterrent to self-betterment.

Therefore, I was disappointed that, in their response, the Government were apparently content to refer to the existence of an inter-departmental working group that discusses such issues "on a regular basis". Having heard nothing since of the discussions of the group, may I ask my right hon. Friend the Minister what is being done to counter housing benefit dependency and, in particular, to investigate the relationship between HAG rates, rent levels and benefit entitlement?

Mr. Den Dover (Chorley)

I have read the report with much interest, and note its concentration on tenants and their importance in housing associations. Did the Committee consider secured, as opposed to assured, tenancies, and what direct measures can be taken to bring down tenants' rents to a more manageable level?

Mr. Jones

I think that the two issues are slightly separate. We certainly addressed the former issue, albeit tangentially. The latter issue depends very much on addressing the relationship that I have just described.

My right hon. Friend the Minister has exercised delicate judgment in setting HAG rates for 1994–95 at 62 per cent. I know that the announcement was not universally welcomed but, in revising the original objective of a cut to 60 per cent., my right hon. Friend has shown that he is willing to listen and reconsider. So far, and despite the small reduction in HAG rates announced my right hon. Friend, the great majority of housing associations appear to have been able to continue to raise private finance for development.

It is worth repeating here the Committee's concern that if the Government waits until a funding crisis arrives, any action it then takes may be too late. Can my right hon. Friend assure the House that he will take a long-term view and, in particular, that he will consider seriously the need to set housing association grant at a level that will enable associations to avoid running out of loan security or finding that they are no longer able to raise money from private institutions?

The second major issue that I wish to raise is that of standards. There are two quite separate concerns here. One relates to standards of housing provision and the quality of the accommodation that associations provide and the other to standards of housing management. On the former, I do not count myself among those who mourn the passing of the Parker Morris standards, which applied to all public sector housing. However, if they build houses that are inappropriate to people's housing needs and aspirations, housing associations will run the risk of replicating some of the social problems that have arisen as a result of the misguided policies of the 1960s and the 1970s.

Therefore, I welcome the recent evidence of a shift towards the rehabilitation of existing property and away from new build, not least because such property is likely to provide tenants with more space and better facilities as well as address the issue of urban regeneration.

Mr. Peter L. Pike (Burnley)

The Government are encouraging the rehabilitation of property and everyone would accept that that should be achieved. However, does the hon. Gentleman accept that in areas where property is of extremely low value, such as in the north, it is difficult for either an owner-occupier or, for the very same reason, a housing association to invest properties that are worth less than the cost of those improvements?

Mr. Jones

One of the experiences that I have enjoyed in the House has been my period of common service with the hon. Member on the Select Committee on the Environment. One of the facts that I will retain until my dying day is that the problem to which the hon. Member referred exists in places such as Burnley. It needs to be tackled in the broad context of urban regeneration, not just through housing association grant but through our approach to home improvements. That is absolutely key to solving the problem.

Can my right hon. Friend the Minister tell the House whether the Government now accept that rehabilitation offers several important advantages over new build'? Does he intend to increase still further the proportion of rehabilitated property? On the subject of specialisation, the focusing of housing association work not just on rehabilitation but, for example, on the disabled, other specialist groups and rural housing is extremely important and welcome.

As for standards of management by housing associations, the Committee learnt that those vary widely. Such is also my experience as a constituency Member, because I have known excellent housing associations and also pretty poor ones. I suggest that that experience is shared by hon. Members on both sides of the House. I therefore welcome my right hon. Friend's announcement last week that the Department is to fund the Institute of Housing's good practice unit for the next three years.

One of the unit's first tasks might be to consider the evidence that the Committee received, which suggested that small, local associations are more popular with tenants than the larger, national ones. Some of the latter came in for strong criticism because of their remoteness and lack of responsiveness. Some evidence, however, suggests a trend towards ever-larger associations, whether through merger or large-scale transfer of local authority stock.

Some large housing associations have an excellent record, either because they really care about delivering quality maintenance or because they have been organised in such a way as to overcome the argument about remoteness. The Paddington Churches housing association, for example, has a development in my constituency. People were naturally worried about a housing association that had its headquarters in Paddington. They have overcome their concern because the association has established an office on the estate to which people can go with their problems about maintenance or queries about their rent. The Sutton housing trust also has its headquarters in my constituency and it has an excellent record of attentiveness to the problems of its tenants.

Do the Government accept, as the Committee has, that a diverse housing association movement, encompassing a range of providers meeting specialist or general needs at local level, represents the most attractive and effective option for enlightened housing management? If so, what can my right hon. Friend say tonight to reassure those who fear that the Government's policies will lead to the creation of even larger, more remote landlords?

May I ask my right hon. Friend, purely from my point of view rather than that of the Committee, whether he has considered the scope of rent officers, given the increasing number of assured tenancies? I wonder whether the jurisdiction of rent officers over housing associations is appropriate any longer and whether it might be better for rents to be set by housing associations, obviously after consultation with their tenants.

Thirdly, I wish to mention tenants' rights, which emerged as one of the main themes of the Committee's inquiry and was the subject of the concluding chapter of our report. In all the discussion of bureaucracies, finance, policy initiatives and so on, it is all too easy to lose sight of the fact that the Housing Corporation, housing associations and associated paraphernalia exist to provide a service not to Government, not to Parliament, but to tenants.

The Committee met and spoke to housing association tenants during its inquiry and received written evidence from several more. Although no national organisation was able formally to represent to us the views of all tenants, we heard oral evidence from the Tenants' Participation Advisory Service, an organisation with which I was extremely impressed.

I think that we gained a pretty good idea of what tenants want. In addition to affordable rents, to which I have referred, tenants want access to information, a prompt and effective repairs and maintenance service, to participate in decisions that affect them and to know that any complaints will be dealt with fairly. The news on all those fronts is good.

In their response to the Committee's report, the Government promised that the corporation would seek the views of tenants as part of its monitoring of associations' performance. The corporation also undertook to monitor more closely associations' performance on repairs and maintenance and to improve associations' performance on tenant participation. To what extent have those fine words resulted in action? What feedback has been received from tenants about the effectiveness of the measures announced in the Government's response to the Committee's report?

The announcement that a tenants' ombudsman would be appointed preceded the Committee's inquiry but was not divorced from it. In our report, we had much to say about the way in which the proposed service should be constituted and should operate. Although I understand the difficulties involved in proposing primary legislation, I am disappointed that the new ombudsman is not demonstrably independent of the corporation. I wish Mr. Jeffries well and it is to be hoped that he will prove his independence in practice, but I and my colleagues were worried lest confidence in that important service be dented due to its close association with the corporation.

With his characteristic fairness, my right hon. Friend the Minister left the door open by promising to keep the new service under review and to place it on a statutory footing, should that prove necessary at a later date. Perhaps he would expand a little on that statement tonight and tell the House how he proposes to review the work of the ombudsman and when he expects to decide whether to legislate.

No right is more important to tenants than the right to buy. The situation pertaining to charitable housing associations remains unacceptable to me and to many Conservative Members. I know that in the more enlightened charitable housing associations there has been a growing realisation that they are causing themselves as much damage as they are the tenants because, inevitably, they are driving the most motivated and ambitious of their tenants to leave their estates and to find their homes outside. That is not good for the community, it is not good for the housing association and most assuredly it is not good for the tenant. Therefore, I hope that my right hon. Friend the Minister will send a clear message to the other place that people who own more than one house should not stand in the way of the aspirations of ordinary people who are tenants of charitable housing associations.

Mr. Nick Raynsford (Greenwich)

I have listened attentively to the hon. Gentleman's speech, which faithfully followed the course of the Committee's consideration and report until he reached the last point, on which I recall no recommendation of the Select Committee. I think that he should make it clear that he is expressing his own view, rather than the view of the Select Committee, on that subject.

Mr. Jones

I am happy to underscore that because not only is it my view, but, over the years, it has been one of the points that have most characterised the differences between Conservative Members and Opposition Members. We believe in the aspirations of those people who wish to buy their homes, even if the hon. Gentleman does not.

I could go on at greater length, but I think that many Members wish to catch your eye, Madam Speaker. In conclusion, I welcome the opportunity to consider the work of the Housing Corporation and to acquaint the House with the important work of the Environment Committee. I am also pleased to be able to pay tribute to my right hon. Friend the Minister for his constructive approach to the inquiry and his helpful response to the report. However, there remain some items of unfinished business. I warn my right hon. Friend that today's debate marks only another stage in the process and that, in the best tradition of the Environment Committee, we shall follow up our report before the dust of Marsham street has settled on his files.

4.24 pm
Mr. John Fraser (Norwood)

The Select Committee inquiry has done a service in focusing on a subject that is, in my view, of great economic and social importance. It is of economic importance because, at least in London—housing problems vary in different parts of the country—the capital cannot work efficiently unless there are affordable homes for those who work and receive moderate incomes. I am thinking of people employed in transport, education, health and other essential services; people begining their careers, who cannot yet afford to buy homes; and those who are training—often after university—and are still on moderate incomes.

I shall concentrate, however, on the social importance of housing, to which the Committee referred. We do irreparable damage to the fabric of society by gearing housing in a way that adversely affects the construction of society and the preservation of values. There is, for instance, something very wrong with a society that does not enable people to live near their parents. Enormous social reinforcements are provided when grandmothers can look after children and do some babysitting and other members of the family can provide a stimulus. That is an important ingredient in the health of the inner city.

It is equally important for parents to live near their own parents. Like many other Members of Parliament, I am visited every week by people who ask why their elderly mothers, aunts or other close relatives cannot live with or close to them, where they can be taken care of, rather than having to live in expensive old people's homes, sometimes unhappily.

Housing policy, albeit unintentionally, is not just breaking up families but making self-help and sustenance from within the family impossible. That is certainly happening in my borough. It is difficult to rebuild an inner city when the children who grow up successfully there cannot afford to live in the area—near their parents—and must move away. Rebuilding inner-city society depends on values as well as bricks and mortar; one reinforces the other.

There is a further dimension to the social aspect: social housing must be truly affordable for those who work or want to return to work. We need to provide housing that is not a trap and does not create a poverty ghetto. What I find offensive is an apartheid in housing, based on social and economic status.

There are examples in my constituency, where housing has been built on reduced grant for assured tenancies. We are building homes with gardens where people cannot afford to buy a spade; we are building homes with picture windows and greater floor space, where people can hardly afford curtains and carpets. Children are being brought up by parents who have 'no money to provide any social stimulus, entertainment or holidays—all of which are important to the growing-up process. We are building housing that imposes heavy penalties on those who want to return to work, to stay in work or to gain promotion.

Let me illustrate the problem by referring to some recent building by housing associations in my constituency. New three-bedroomed homes have been built: the rent is £70 a week, in addition to council tax, charges for heat and lighting—soon to be taxed—and water rates. Let us take the example of a person who is in work, but whose spouse is not; they have two children, aged 12 and four. If that person's net income is £125 a week—about £150 gross—he or she will pay no rent, being very close to income support levels. If he or she receives an extra £1 in pay, they will lose 65 per cent. of it in a taper on the loss of housing benefit and 20 per cent. in the taper on council tax benefit. Thus, the result of an additional £1 a week will be a net gain of 15p.

Let us take another example—a person with the same family structure but earning £175 a week net. That person's rent becomes £38.05 a week—22 per cent. of a low income. If he or she starts to move up the salary scale, every extra £1 earned will result in the loss of 65p in housing benefit taper and the withdrawal of 20p in council tax benefit—leaving 15p. That is a hell of a loss of benefit for someone earning only £175 a week.

The penalty goes on and on. The figures are not substantially different in the case of a single-parent family and they are very much worse in the case of a single parent who has to pay for child care. Thus, people of moderate income are financially pinned into the home. Despite what has been said about rehabilitation and about concentration on the building of new estates, they are also corralled geographically. We are beginning to build houses with basements again. But they are proverbial basements. They are poverty basements, out of which it is very difficult to climb to the next floor. Such is the housing that is now being constructed with housing association grant.

In a way, the position is even worse than that. Because of the indicative costs, and because of the uncertainty of the cost of converting a street property, housing associations—at least those in my area—are buying fewer properties for rehabilitation. Here we have another reason for the greater difficulty. Every time an individual property is bought, one is up against the private financial bureaucracy that housing associations now have to face. People have to cope with increasing isolation and are not securing the street properties that they want so much.

If I sound very pessimistic about the new type of housing on assured tenancies, my pessimism is increased by the fact that what is happening, in terms of the poverty trap, to the new assured tenancies—properties built with reduced grant—is happening also in the case of the older housing association properties that were the subject of secure tenancies, with rent control by the rent officer. The Milkwood estate in my constituency is run by the London and Quadrant housing association. That association applied for a rent increase, as, under Housing Corporation procedures, it was obliged to do. It asked the rent officer for an increase of £12 a week, but the rent officer decided on a figure of £14 to £15 a week. Typically, those tenants have had their rents increased from £37 to £51—a rise of 37 per cent. at a time when, for example, people who work for a local authority have had their income frozen.

The same kind of trap is being constructed in the case of the older housing association estates. The rents under private assured tenancies are dragging up those under secure tenancies. The cure is reproducing the complaint. As we try to eradicate the problems of the 1960s—I am thinking of housing problems associated with poverty and with the poverty trap—the Government are driving down the grant and pushing up rents under assured tenancies. Thus, we see the creation of exactly the same phenomenon as prevailed in the past.

And the prospects are even worse than that, I am afraid. It is not just that housing association tenants have to suffer penalties and disincentive. The situation can only get worse as the grant, which at one time was 80 per cent., comes down to 55 per cent. We know that the Government have massacred council housing. During the last Labour Government's final two years, the average rate of building social housing was 120,000 houses a year. The number is now down to 11,000, which is why I refer to the massacre of council housing. It is no wonder that the level of homelessness has gone up. It is not being replaced—

Mr. Peter Ainsworth (Surrey, East)

Will the hon. Gentleman give way?

Mr. Fraser

No, I shall not give way. We are short of time.

Housing is not being replaced by housing association production, which is running at only 21,000 homes a year and is set to decrease according to the Government's projection of its expenditure.

The Government are creating a greater handicap for housing associations in three ways. The first is caused by cuts. Tulse Hill school in my constituency was knocked down—the Minister will know it well from his time as a councillor in Lambeth—and the site was bought by a housing association to provide homes for 160 people. It lies idle this year and will be idle for the next financial year because the Government have run out of housing association grant, even at reduced rates. It is disgraceful that we have the land and building workers available, but we cannot get on with building houses in an area which has a high level of homelessness.

Secondly, the Government are imposing—

Mr. Peter Ainsworth


Mr. Fraser

I said that I shall not give way.

The Government are imposing a form of financial cannibalism on housing associations. Associations are having to charge their reserves and existing stock, but the time comes when they can no longer eat their own flesh which, in financial terms, is what they are being asked to do. There will be a point at which private finance will say that there is no more security left on the balance sheet on which it can lend.

Thirdly, private finance is beginning to get nervous about the housing association movement. I do not want to be overly pessimistic, but it is getting nervous because it is looking in part to security that is gradually running out and to what is called the rent stream. On the newer housing estates in my constituency which I have described—they are typical of those in the rest of the country—there is not a rent stream but a housing benefit stream. The Department of the Environment does not have complete control over the housing benefit stream and will eventually come up against the golden rule of politics which is, "It can only go on for so long." I give examples of that rule: it was true of the powers and rights of trade unions—the Government said that they could only go on for so long; it has been true of local government expenditure; and it is true of housing benefit. As rents go up, as grants are reduced, as the poverty trap tightens and expenditure on benefits goes up, the Treasury will one day—

Mr. Warren Hawksley (Halesowen and Stourbridge)

Will the hon. Gentleman give way?

Mr. Fraser

No, I shall not give way.[Interruption.] Many hon. Members wish to speak and I shall best serve my colleagues by getting on and finishing my speech as quickly as possible.

Eventually, housing benefit expenditure itself will be challenged, which will create a great deal of nervousness in the City, among the building societies and banks, many of them foreign.

I am sorry to close on a pessimistic note. I have only one piece of optimism, which is that the golden rule of politics may yet help me out: "It can only go on for so long" must also apply to the Government.

4.37 pm
Sir Fergus Montgomery (Altrincham and Sale)

I am very glad to be called to speak. I must first declare an interest as my wife is chairman of a housing association—

Mr. Fraser

On a point of order, Mr. Deputy Speaker. I too, should have declared an interest as I belong to a firm that advises some housing associations. I apologise for not declaring it at the beginning.

Mr. Deputy Speaker (Mr. Michael Morris)

I an grateful to the hon. Gentleman.

Sir Fergus Montgomery

My interest is not the same as the hon. Gentleman's. I declare an interest as my wife is chairman of a housing association and a member of the Housing Corporation.

This is an important issue which was brought to my attention by a group of ladies who came to my advice bureau some time ago. They represented various religious beliefs and wanted to talk to me about housing. As my wife knows more about the subject than I do, I twisted her arm and made her attend the advice bureau with me. We listened carefully to the ladies who spoke with great sincerity and were clearly very concerned about people less fortunate than themselves. We all agreed on one point—the vexed question of affordable housing. I have raised the matter in the House before and I will continue to raise it because it is so important.

Some time ago, the Select Committee on the Environment warned of the serious consequences if the housing association grant should fall below 67 per cent. In fact, it has fallen to 62 per cent. today. The problem is that with less grant, housing associations have to borrow from the private sector and as a consequence, rents tend to rise. The net result is that we get rents that are not affordable by low-income households, and that causes great concern.

I am told that in the north-west of England, housing association rents for new homes are nearing market rents. The consequence is—this point has already been raised in the debate—that there are people receiving housing benefit living in those homes because they can better afford to live on the new estates. I am told that on some new estates in the north-west, as many as 95 per cent. of properties are let to tenants who are on housing benefit. They are often single parents with young children.

My right hon. Friend the Secretary of State for Social Security is giving serious consideration to the £9 billion that is spent on housing benefit. Nobody can blame him for that. After all, the social security budget is the largest budget of any Department and housing benefit is the third largest item in the social security budget. It is exceeded only by the state retirement pension and by income support.

If the amount that we spend on housing benefit had been fairly constant for years, one could understand leaving it alone, but the fact that it has risen dramatically in recent years and has now reached £9 billion has led my right hon. Friend carefully to scrutinise it. However, I sometimes wonder whether there is any co-ordination between the Department of the Environment, the Department of Social Security and the Treasury on such issues.

Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury)

Has my hon. Friend considered two factors that may affect the affordability ratio? First, there are now far lower interest rates than was the case hitherto and, secondly, with construction costs that are far more reasonable than they were at the peak in 1988–89, it is possible to build and refurbish houses far more cheaply than before.

Sir Fergus Montgomery

I accept my hon. Friend's point. The fact that interest rates are far lower is beneficial, although it does not alter the fact that there are still too many people who find it difficult to get housing that they can afford. That is the point I am trying to make.

One of the recommendations of the Environment Select Committee is that the Government should try to develop a strategy for easing the problems faced by housing association tenants and others caught in the poverty trap. As rents increase, the disposable income of tenants who are not receiving housing benefit drops and the possibility of the poverty trap increases.

The National Federation of Housing Associations has defined affordability. It says that affordability exists if the majority of working households taking up new tenancies are not caught in the poverty trap because of dependency on housing benefit or because they are paying more than 25 per cent. of their net income on rent. The association stresses that rents are not affordable when more than 50 per cent. of working tenants are either caught in the poverty trap through being dependent on housing benefit or, if not on housing benefit, are paying more than 25 per cent. of their net income on rent.

I do not want a growth in the dependency culture. I want to encourage people to stand on their own feet—that was one of the things that drew me to the Conservative party. Of course there are people who we must look after, such as the sick, the elderly and the disabled. However, I want to ensure that young people are encouraged to find work rather than believing that the state should provide for them.

I worry about the people who try to help themselves, such as those who take low-paid jobs and then find that they might have been better off if they had not gone out to work because they would have been more secure financially with benefits. It cannot be right, it is nonsense and economic madness for someone to be better off by not going out to work than by looking for a job. We must also think about the children who are brought up in such an environment. What sort of life will they have if they can honestly believe that they will be better off by not working than by seeking work? That is an example of initiative being penalised.

Thrift by the elderly is also penalised; I make no apology for returning to the matter yet again. All of us must know of elderly constituents who, during their working lives, have put money aside, who have done without things and who have saved for the proverbial rainy day. They find that when they retire, their thrift is used to penalise them. As the rules currently apply, people with capital of between £3,000 and £16,000 find that interest is assumed—"assumed" is the all-important word—at the rate of £1 a week for every £250 of capital. As I have said before, I wish that some kind person would offer me such terms because I would transfer my savings immediately and I would live happily ever after.

What incentive does the scenario I have described give to anyone to save? For years, I have repeatedly posed that question and I have never had an answer. I hope that I shall get an answer today. I should like an assurance that the ridiculously high assumed rate on savings will be considered urgently.

Good housing is vital. As a nation, we can take pride in the fact that we have eliminated the awful slums that were such a blot on our industrial areas years ago. However, I often wonder whether we were wise to build the multi-storey tower blocks and to build the great council estates that sprawl on the outskirts of towns and which took people away from where they had lived as part of a community.

We might have been better off spending money on the Coronation streets of this world—the old terraced houses which were well built. If we had only spent some money on modernising them and on making them more pleasant for people to live in, people would have been happier because there was far more community spirit there than one experiences today. However, I realise that there is no point in harping on about what happened in the past. Instead, we must try to ensure that we get things right in the future.

The construction industry needs a boost. I am told that about half a million construction workers have lost their jobs over the past few years. If the estimate that every unemployed person costs about £9,000 per annum is right—that is the amount paid in benefit and the amount that is lost in taxation—a great deal of money is involved. If we could get those people back to work, there would be a tremendous boost to the economy. We desperately need more low-cost housing.

Mr. Charles Hendry (High Peak)

Is my hon. Friend aware that there are 850,000 empty houses in this country? That translates into about 1,000 empty houses per constituency. Would he not rather those empty houses be brought back into use than more and more new houses being built over the green fields in his constituency?

Sir Fergus Montgomery

I do not disagree with my hon. Friend. I watched him speaking effectively on this very point on television yesterday. I think that he said that Manchester city council was just about the worst in the country for unoccupied houses.

Mr. Hendry


Sir Fergus Montgomery


Mr. Raynsford


Sir Fergus Montgomery

I do not think that Westminster is top of the list. The hon. Gentleman should verify his facts before he interrupts.

Mr. Tony Banks (Newham, North-West)

You do not.

Sir Fergus Montgomery

I am sorry; I did not hear.

Mr. Banks

You do not—

Mr. Deputy Speaker (Mr. Michael Morris)

Order. Sir Fergus Montgomery.

Sir Fergus Montgomery

I am very grateful, Mr. Deputy Speaker, to have your protection from the hon. Member for Newham, North-West (Mr. Banks).

By reducing unemployment, we would help the building industry and we would rehouse people who are in urgent need. I hope that we would also do something about homelessness. I get depressed at the sight of all those people sleeping rough in our cities today. There are, of course, many reasons for that. Some are there as a result of divorce and broken homes; divorce has increased enormously over the years. Young people tend to leave home far earlier than they did and that has caused problems. Whatever the reasons, I hope that we can do something to try to solve at least part of that problem.

I praise my right hon. Friend the Minister for Housing, Inner Cities and Construction. He does a great job in housing in the Department of the Environment. He is one of the most caring Ministers and he has earned enormous respect from people in the housing association world. However, I end by making the plea that the Housing Corporation is given adequate funds to enable housing associations to provide housing at affordable rents for people who are desperately in need.

4.49 pm
Mr. David Rendel (Newbury)

This morning, I took the opportunity to attend a meeting of Newbury district council's annual housing forum—an excellent institution which has proposed a number of good ideas in recent years—where I spoke to the council's housing manager and asked his advice on what I should say in the debate this afternoon, were I lucky enough to be called. He said that he could summarise what I should say in just two words: "not enough". He said that there was not enough in terms of the approved development programme, not enough in terms of the proportion of housing association grant allowed for housing association schemes and not enough cheap rented accommodation.

If it is true that there is not enough of those things in Newbury, how much more must it be true that there are not enough of them in deprived inner-city areas.

Mr. Peter Ainsworth

The hon. Gentleman is playing true to the form of members of his party, who frequently castigate the Government for not spending enough and, once the Government do so, then say that they are spending too much. Is he aware that total spending on housing of the type that we are discussing has risen by about 60 per cent. since 1988–89 and now stands at about £12 billion a year?

Mr. Bendel

I hope to show that, in practice, if the Government spend more on housing it is likely to pay for itself and that, therefore, whatever the Government are now spending, it would be beneficial to put more money in.

The housing manager to whom I spoke said that it was wrong for the Government to place more emphasis on shared ownership, for which there is limited demand: only a certain number of people can benefit from that form of tenure.

I recently visited a new housing association being built in Basingstoke by Wimpey, whose people kindly took me round the estate and showed me the different forms and sizes of housing and different forms of tenure. They told me which of the forms of tenure had been the easiest to fill. Interestingly, they said that the hardest to fill was shared ownership accommodation. When I asked why, they said that the answer was obvious: much of shared ownership costs more than outright purchase or renting, which is why people are unwilling to take it. A move towards more shared ownership, therefore, will have only limited applicability in trying to solve our housing crisis.

To a large extent, I welcome the emphasis on rehabilitation in the report of the Select Committee on the Environment. We should all like the standard of housing in this country to be raised. Much housing is in far too poor a condition nowadays and there are many advantages to be gained from rehabilitating older housing stock wherever we can. But a balance should be struck.

There is no point in putting all available resources into rehab or new housing. We must get the balance right. As long as the Government do not go overboard on rehab, I would welcome any moves to put money into that part of the housing movement.

The Government claim that they wish to spread their resources more widely by reducing the amount of housing association grant to each housing association property. One can understand their reasons for wanting to do that, but here again there is a danger in going too far. If Government resources are to be spread more widely, more money will be needed from the private sector and, as has already been said, there is a limit to which the private sector will be prepared to meet its share of housing costs.

Obviously, the more housing sector finance is demanded, the more rents of such housing will rise because interest on that finance will have to be paid. In addition, the larger the proportion of the money from the private sector, the higher the interest rate is likely to be, because the private sector will wish to have a higher interest rate if the risk is large. Clearly, there is a point at which it becomes counterproductive to continue to lower the percentage of housing association grant into each housing association property. The Government's new proposals go beyond that point.

What will happen? Rents will inevitably rise and much housing will no longer be affordable. At the same time, the Government's proposals on homelessness will push more homeless people into the private sector, where rents will also increase, leading to more dependence on housing benefit.

Housing benefit is due to be capped. Somewhere, we shall come to a crunch point. Sadly, for various reasons, many people are losing homes that they have owned for a long time. For instance, people lose their jobs or face difficulties with the Child Support Agency. If they are vulnerable—for example, they may have young families—they will be housed by the local council and the costs of that housing will be met by housing benefit.

When such people find another job, they may be worse off. Even in the present situation, with people being housed in comparatively cheap rented accommodation by local councils, they may face difficulties in paying the rent. For the many who are housed in private rented accommodation at higher rents, the problem will be exacerbated. I foresee a difficulty because if someone loses their job and then their house, they will be rehoused, but if they find another job, they may lose their house again. The Government are leading us into the position whereby people can either have a job or a house, but not both. I am sure that that is not a position which the Government will wish to endure.

Mr. Peter Ainsworth

Is the hon. Gentleman aware that the rate of repossessions has been falling significantly in recent months? Will he pay tribute to the efforts of lending institutions in achieving that? Does not he accept that the housing market is on a stabilised, if not improving, trend?

Mr. Rendel

I accept that there are some signs that the housing market is picking up. We have yet to see whether that will benefit or harm those who need cheap rented accommodation.

The Government say that the housing benefit tapering system will ensure that people cannot lose their house and their job. The problem with the taper, however, as I think all housing professionals accept, is that it is much too sharp. That is why people are often better off remaining on benefits than getting a job.

The tapering effect is 85p in every pound just on housing benefit and council tax, but when one takes on a job one may have extra expenses—for example, with the CSA or because of the costs of travelling to work. With the taper as sharp as it is at present, one may be better off remaining on benefit and not getting a job. We need an integrated tax and benefit system, but were Ito discuss that now I should stray wide of the subject of the debate.

I commend two aspects of Government housing policy. The first is their living-over-the-shop initiative, which, if implemented across the country, would contribute a great deal to solving homelessness. It has many advantages. Shopkeepers can gain income and security for their shops. It can bring life back into the town centre and lead, therefore, to crime prevention. It can offer convenient places to live for young couples who have no children, or perhaps elderly people, who often do not have transport to get them into town centres. I was proud to have promoted that policy long before the Government took it up and I was especially proud recently to have been able to open a scheme of that sort, as the housing spokesman for the Liberal Democrats, in my constituency in the centre of Newbury. Now that the scheme has been launched, it will encourage other people to open similar schemes. That scheme was for six flats and it has already been indicated that we may be able to get 12 more flats next door in the near future.

The second aspect of Government policy that deserves some praise is mentioned specifically in the Select Committee report. It said: We believe that, if and when there is a depressed property market, the Corporation should be ready to put in place a programme for acquisition of existing, unsold houses … The housing of homeless families in property integrated into the community as a whole may represent a more constructive approach than the growing concentration and segregation of such families on newly-built estates. I certainly agree. The Government's response was: The Government believes that the Housing Market Package in 1992–93 was very successful. There were faults with that package. It involved no new money. Money was simply brought forward from future years—that was a pity—and involved mainly the purchase of new homes on large estates which could otherwise not find a buyer.

However, there are many benefits to the scheme. It makes purchase under the right to buy less risky. Many people are unwilling to purchase their own homes because they fear that they may never be able to sell them again. If that scheme were renewed, it would clearly give housing associations a chance to take back those homes and thus make it less risky for tenants to purchase their own homes.

Mr. Clifton-Brown

May I correct the hon. Gentleman on the housing market package about which he was so disparaging? It enabled 18,000 homes to be purchased in 93 days, admittedly at a cost of £577 million brought forward from future years, when the housing market was especially depressed. Therefore, surely it encouraged the housing market to recover quicker.

Mr. Rendel

The hon. Gentleman cannot have been listening. I was saying that that was one of the two aspects of the Government's housing policy of which I approved. Perhaps if he had listened more carefully, he would not have bothered to intervene.

Mr. David Alton (Liverpool, Mossley Hill)

Does my hon. Friend agree that, in a city such as Liverpool, where there are some 13,000 empty properties—some 7,000 in the private sector—there is a desperate need to use such properties to assist people who will not only drift away from that city to the south of England, but who are homeless?

Mr. Rendel

I entirely agree. Indeed, it was one of the benefits that I was about to mention. One of the benefits of that system is that it allows housing associations to spread their properties throughout a community and thus leads to less of a ghetto-type situation, which we are moving towards.

It is also true that it is a quick way in which to bring more cheap, rented accommodation into the housing association sector. In spite of the difficulties of buying a house in this country, it takes a lot less time to buy a house that is on the market than to build a house from scratch. At present, housing is comparatively cheap and we need to use that sort of a scheme before the housing market takes off again. How sad that the Government's response went on the say: The Government has no plans at present to repeat the initiative. When they do something right, it is a pity that they cannot carry it through for a longer period.

In housing, the Government are their own worst enemy. Failure to invest in housing leads to rising homelessness, to fears about queue jumping—the cause of their latest document—to increases in housing benefit, which is a cause of worry to the Treasury, to a deepening of the poverty trap and to lower work incentives. The answer is two-fold. First, we must release the receipts from council house sales for further council accommodation and secondly we must have more direct Government investment in housing. Housing investment often pays for itself. Poor housing can lead to families breaking up; indeed, it is one of the most common causes, with all the involved costs to the Government.

Housing investment can lead to lower benefit costs, better social conditions, less vandalism and other crime and more stability, especially for families with children, whose education will benefit as a result. We are discussing the level of housing investment by the Government. To use the words of Newbury district council's manager, which are echoed by almost all those professionally involved in housing and by councillors of all parties in local authorities throughout the country, the present level of Government investment in housing is simply not enough.

5.4 pm

Mr. Barry Field (Isle of Wight)

Without wishing to be a founder member of the mutual admiration society, it should be incumbent on myself or at least somebody on the Committee to pay a tribute to the chairmanship of the Committee which produced the report. Many pundits in housing and in politics generally thought that the subject was a minefield and my hon. Friend the Member for Hertfordshire, West (Mr. Jones) guided us through it excellently. In our press release when the report was published, we said that it showed that a controversial subject, such as housing, need not necessarily lead to a Select Committee being bogged down in some of the problems that we have seen elsewhere in the House. It is certainly a long-held tradition of the Environment Select Committee that it strives for some consensus in its reports because it believes that they pack a greater punch as a result when they arrive on the Minister's desk.

Many of us have experience of housing and for some of us it has been a great joy. I share the happy distinction with the Prime Minister of having chaired a housing committee, although he seems to have done rather better than I have. One of my happier housing stories was that of the archetypal little lady who had several piles of rubble outside her back door and her front door, which seemed to be alarming her neighbours. The housing manager of the local authority went to see what was the problem and discovered that, single-handedly, she had knocked down all the internal supporting walls in her house so that when one opened the front door, one could look straight through to the back door and the kitchen. When asked why she had done it, she said that it was to give the budgie more room when she let it out of its cage to exercise.

There is nothing more personal to all of us than our homes and that is why the report and the work of the Housing Corporation is so important. My hon. Friend the Chairman of the Committee has already welcomed Sir Brian Pearse, whose deputy chairman, Peter Cook, was appointed the other day by the Secretary of State. I questioned the outgoing chairman, Sir Christopher Benson, on a particular point. I made the point in Committee that there would not be a company with which Sir Christopher was associated which would not introduce an age debtor scheme to the board of directors. I was therefore rather surprised that Corporation does not require or report to the Minister the length of time that housing associations hold on to cash, liquid assets, without reinvesting them. I ask the Minister to consider that specific point. I know that it was something of a soap box issue of mine during the compilation of the report, but if the housing association movement stands for anything, it is for the provision of low-cost housing, as my hon. Friend the Member for Altrincham and Sale (Sir F. Montgomery) said. It is essential to make assets work hard and to invest in housing stock. There are a few housing associations—not many—who seem to accumulate the loot but do not invest it.

Mr. Roy Thomason (Bromsgrove)

Does my hon. Friend agree that that point is indicative of an attitude, which some Select Committee members noted, of the Housing Corporation—that its audit role is seen as being more that of accountant than of adviser? Perhaps in future the Housing Corporation should consider putting more effort—it already makes some—into the dissemination of good practice and giving guidance to housing associations on better management practice.

Mr. Field

I hear what my hon. Friend says. I recall that, in the evidence that we heard in Committee, several housing associations felt that Sir Christopher's regime in respect of financial reporting—of which there was very little or none before his arrival at the Housing Corporation—was rather onerous.

My experience as a chairman of a housing committee and as a director of a building society and of various other financial posts tells me that if we do not get the finances right or the debits and credits in order, nothing else flows. In respect of taxpayers' money, we must get the finances right and the debits and credits in order. I know of no business or organisation that got into trouble when its finances were properly managed and reported upon. I slightly disagree with my hon. Friend the Member for Bromsgrove (Mr. Thomason) in that regard, but that brings me to my next point. There is no doubt that Sir Christopher did a great job reforming the reporting structure and tightening up the way in which associations operate generally.

My next point was not included in the Select Committee report—we could not include everything that we wanted to. However, I believe that the Chairman shares my view that there should be three levels of audit function on the part of the corporation, depending on the size of housing associations.

I have referred to three levels, but that number is arbitrary. Perhaps there should be four or five levels. However, if we consider the example taken by the Department of Trade and Industry for auditing companies, it is clear that there are various points with which they must now comply in the way that they report. The smallest companies can even dispense with the services of their auditors. Companies of the next size up can have abbreviated accounts. Full-sized companies must have the full works. There should be a small, medium and large structure for housing associations' requirements.

Some of the smaller associations made a fair point when they told the Select Committee that there was a feeling that a sledgehammer was being used to crack a nut. I hope that that point might yet commend itself to my right hon. Friend the Minister for Housing, Inner Cities and Construction.

My next point has already been referred to by the Chairman of the Select Committee. During Environment questions the other day, I paraphrased Shakespeare to my right hon. Friend the Minister for Housing, Inner Cities and Construction, saying that we want Sir George for England and for housing tenants."—[Official Report, 16 February 1994; Vol. 237, c. 937.] We want a right to buy for housing association tenants.

I have been working with the North British housing association which, to recap briefly, took over the Greater London council's seaside homes when the GLC was quite rightly abolished. It was a moribund and useless organisation if ever there was one. In those days, the Liberal Democrats on the Isle of Wight concentrated entirely on politics and not on progress.

Mr. Tony Banks

Will the hon. Gentleman give way?

Mr. Field

I will give way to the hon. Gentleman in a moment if he will allow me to finish this point.

The very first housing committee and council committee meeting that I attended as candidate on the Isle of Wight, debated the transfer of the GLC's seaside homes. As committee chairman, I had done a deal with the GLC for the transfer of the GLC homes in Horsham. Those homes were financed for a very nominal increase in nomination rights.

The Liberals on the island went on and on about the fact that if the Government wanted them to acquire those properties, the Government should make the money available through the Housing Corporation or whatever. If the Liberals had concentrated less on the politics and more on progress, they could have had those houses for the benefit of the people of the Isle of Wight.

Those houses went to the North British housing association, which has not commended itself to its island tenants. I have had some strong correspondence with its chief executive, Eric Armitage, who has tried to bamboozle me about the nomination rights for the properties concerned and on the opportunity for those tenants to purchase their properties. I will give way now to the hon. Member for Newham, North-West (Mr. Banks).

Mr. Tony Banks

I shall pick up on that later.

Mr. Field

I am much obliged to the hon. Gentleman. I like it when he picks up points from my speeches.

The North British housing association had refused to allow several tenants to purchase their properties. Let us be quite clear about this. We are not talking about the right to buy in terms of discount. We are talking about the fact that the Minister has legislative power to allow those tenants to purchase their properties where those properties do not have specialist functions and are not warden assisted, but are stand-alone properties. A small number of the tenants have the money to buy their properties and it is quite wrong that my hon. Friend the Minister and the North British housing association should stand in their way.

Of 41 tenancies that have been allocated over the past five years, 29 went to London borough nominations, six went to internal transfers within the seaside and country homes lettings, and the Isle of Wight received just five nominations—which is why I say that the Liberal Democrats sold the Isle of Wight so badly down the river by not taking up that opportunity—and the housing association nominations for tenants living in the Greater London area amounted to just one.

I am concerned about the way in which the North British has operated because, on its estate in Wootton, there is a small ransom strip of land which gives way to a quite valuable building plot. The association consulted its tenants about whether to sell that ransom strip which would have accommodated only two dwellings. The tenants said no, so the plot remains growing weeds in the middle of that housing estate.

I have no objection to that. However, I cannot marry up the housing association consulting its tenants on the sale of that ransom strip with the fact that it obdurately refuses to allow some of the tenants to purchase their properties, which they would dearly like to do.

I do not wish to finish on that sour note, particularly in view of the plaudits received by the Environment Select Committee's report on the Housing Corporation. I will finish on a more positive note. In Committee, we were assured that a housing ombudsman would be established as soon as possible and we felt strongly that the ombudsman should be independent of the Housing Corporation. However, the Minister told us that primary legislation is required to make the ombudsman independent, so as a pro tem measure, and to ensure that the housing ombudsman was available very quickly, it was set up under the aegis of the Housing Corporation.

One of the great difficulties in the housing association world was the liquidation of the Legion Leasehold housing association. I am told, although I have not had this confirmed, that the ombudsman has taken up those concerns and worries and the tenants of Birch close at East Cowes are pleased about that. That good news story has arisen from our report. I am absolutely delighted and, may I say—not in a trite way—very proud to have been associated with the report because I believe that it is a major contribution to the housing debate in our country.

5.17 pm
Mr. Tony Banks (Newham, North-West)

I should tell Conservative Members that it is a pity that there is a Pavlovian response or knee-jerk reaction whenever someone mentions the Greater London council—[HON. MEMBERS: "Hear, hear."] There it goes again—as if its abolition was all good. If one consults Londoners, one would find that two thirds of Londoners, according to the latest opinion polls, have said that it is a great pity that the GLC was abolished and that London needs a strategic authority.

If Conservative Members do not want to believe me, they should believe the hon. Member for Falmouth and Camborne (Mr. Coe), who made it clear, in respect of London's Olympic and Commonwealth games bids, that there is no way in which London will ever acquire international events like that because there is no one to sign on the dotted line on behalf of London as a whole. The hon. Member for Isle of Wight (Mr. Field) should not assume that it has all been gain so far as London is concerned. That is not how we see it.

The hon. Member for Isle of Wight referred specifically to the seaside and country homes initiative of the GLC and the London county council. Only a strategic authority could have carried out such an initiative. That initiative gave elderly Londoners, particularly those in the east end, the opportunity to go to a part of the country where they could breathe the air rather than chew it first to enjoy their retirement. No one does that now. When the GLC was being abolished, we warned the Minister who is now Minister for Housing, Inner Cities and Construction that transfer to the North British housing association was likely to prove to be a bad thing for the former GLC tenants. The hon. Member for Isle of Wight is now proving that point.

Mr. Barry Field

My point is that the Greater London council was the greatest piece of political gerrymandering that the nation has ever seen, costing millions of pounds of taxpayers' money to reinforce the Opposition vote in a number of Conservative-held borough councils such as Hastings.

Mr. Banks

If we are talking about political gerrymandering, we need look only at Westminster to see what it has been doing.

Mr. Deputy Speaker

Order. We are debating the report of the Select Committee on the Environment on the Housing Corporation. Perhaps we could come back to that now.

Mr. Banks

Indeed, Mr. Deputy Speaker, but I am only responding to the points made by the hon. Member for Isle of Wight in his speech.

Mr. Deputy Speaker

Order. I have now blown the whistle, so we should get back to the debate.

Mr. Banks

Mr. Deputy Speaker, I say with the greatest respect that it is a great pity that the whistle was not blown a little earlier. However, I understand what you are saying.

I welcome the report. In Newham, we are particularly dependent on housing associations. The London borough of Newham, works very closely with the East London housing association, London and Quadrant, the Family housing association and Circle 33. As more and more pressure is put on the local authority's housing stock, we are especially indebted to the housing associations for their ability to provide for single people when there is no statutory obligation on the part of the local authority.

Mr. Peter Ainsworth

The hon. Gentleman speaks with knowledge and some feeling about his constituency. In what way would his constituents be better off if the £11 million of council rent arrears in Newham were collected and redistributed to the people whom he represents and the councillors were elected to serve?

Mr. Banks

I suppose one could suggest that that question is not relevant to the report, but I shall answer it because Mr. Deputy Speaker has not ruled it out of order. The answer is that they would be much better off.

It is not as though the London borough of Newham is not taking all measures to get the rents. No one wants rent arrears. We do not encourage rent arrears in the London borough of Newham. However, the hon. Member for Surrey, East (Mr. Ainsworth) should realise that, for example, 69 per cent. of all council tenants in Newham are in receipt of housing benefit, which shows the level of poverty in my area. In 1992–93, 97.2 per cent. of all rents were collected by the London borough of Newham. If the Government were 97.2 per cent. successful in terms of running the country, I suspect that they would have a much better standing in the opinion polls than they do at present.

Mr. Peter Ainsworth


Mr. Banks

I shall give way if the hon. Gentleman wants me to, but there are other hon. Members who want to speak.

Mr. Peter Ainsworth

Of course, rents cannot be collected from vacant properties. Does the hon. Gentleman have any comment to make about the 400 empty properties which are currently standing idle in Newham and which could be serving local people?

Mr. Banks

Of course there are empty properties in the London borough of Newham. A much greater proportion of them are in the private sector than in the public sector. In the London borough of Newham, we do not deliberately encourage people not to pay rent, or deliberately set out to keep properties empty. I do not know what point the hon. Gentleman is trying to make, because I can assure him that in my borough we take all the steps we possibly can to, first, collect rent and, secondly, ensure that there are no void properties.

One of our problems is the inability to spend the sort of money that we want to spend on bringing unfit properties up to a state of decent habitation. There are many, empty properties in the London borough of Newham with which I am sure the hon. Gentleman would not soil his hands. He certainly would not want to go and live in them and therefore we should not expect other people to do so. The hon. Gentleman touches me on a raw nerve.

I return to the point that I was trying to make with regard to the report. Paragraph 157 states: We recommend that assessments of housing need—whether expressed as a range or as a precise figure—should be published by the DoE, using widely accepted methodology, on a regular basis. The Government's response, which I thought was very disappointing, was that there is no single accurate figure estimating the potential demand for social housing.

One of the things that the Government should do is take far more pains to discover the extent of homelessness in my borough and, indeed, in London as a whole. We do not know the accurate figure with regard to homelessness in London. We do not know how many people are sleeping rough on the streets. The Greater London council used to collect the figures. However, now that it has gone, the Department of the Environment is not particularly interested in doing so. The Department always works on the assumption that if the statistics are not collected, ergo the problem has gone away. Of course, we must now rely on organisations such as the Salvation Army to know how bad the problem is.

As the hon. Member for Altrincham and Sale (Sir. F. Montgomery) said, it is distressing to walk round London and see so many more people living rough on the streets. That is the important point. It is not anecdotal evidence—it is the evidence of one's own senses. Tory Members know that to be a fact. I know that some of them are very young and wet behind the ears, and know very little about what goes on in London, but surely even they must have appreciated, when they were brought up to London in their earlier years, how many more homeless people are on the streets of London now. Whatever the figure, it is greater than it was in 1979, and that is the indication that I go by. It seems that the Government—

Mr. Thomason


Mr. Banks

I think that it would be best if I did not give way. I am more than happy to give way to Tory Members, but I appreciate that other hon. Members want to speak and I do not want to fall foul of the Deputy Speaker.[Interruption.] If the hon. Member for Bromsgrove (Mr. Thomason) thinks that I am afraid of him, I shall give way.

Mr. Thomason

I am grateful to the hon. Gentleman. I am especially grateful when he refers to some of us as being young. I hope that that included me, as I think that I am roughly the same age as the hon. Gentleman.

Earlier, the hon. Gentleman referred to the problems of vacancies in the private sector in his constituency and housing pressures. Can he tell us what action his party would propose which would bring into greater use some of the private sector accommodation to remove the very straits about which he is complaining?

Mr. Banks

As the House knows, I do not speak as a party spokesperson, so my comments are without authorisation. There is much that we could do. We could go into compulsory purchase in the private sector, especially with properties that have been vacant for a considerable period. It is offensive for homeless people or those living in particularly straitened circumstances to see houses that have been empty for such a long time, whether they are publicly or privately owned. That is one thing that could be done, and I would be very much in favour of doing it. Of course, I am sure that my hon. Friend the shadow Chancellor would say that it could be done only when resources allow.

I return to the report. It is a great pity that the Government are not prepared to look more closely at housing problems in London and collate figures and statistics in such a way as to make them understand the difficulties that people face. The right hon. Member for Ealing, Acton (Sir. G. Young) is often given the reputation as a decent, humane and warm-hearted Minister. That is a fairly rare accolade for anyone on the Government Front Bench these days. However, he should pay perhaps a little more attention to what is going on in Tower Hamlets at the moment, which is under the control of the Liberal Democrats.[Interruption.] I hope that the hon. Member for Newbury (Mr. Rendel) will pay a little attention to what I am saying.

My late and much-lamented dear colleague, Ron Leighton, who died recently, wrote a letter to the Secretary of State about Tower Hamlets adopting the policy of placing its homeless families in private rented accommodation outside the borough. The council was doing that to fulfil its statutory duties under the homelessness legislation. Ron Leighton made four points to the Secretary of State, including the fact that the London borough of Tower Hamlets are predominantly using this for Bengali families. He said that Tower Hamlets are 'exporting' their homeless families and expecting the receiving authority to pick them up in future years, as well as provide education and social services support. Families placed in this way were being charged up to £250 for a 3 bed house in Newham, an obviously inflated and unrealistic rent. Of course, because such rents are above housing benefit levels, they lead to rent arrears and the problem then of people being evicted and made homeless, but homeless in the London borough of Newham. I quote: Families are being given no choice in this exercise. The Minister received a letter from the Bengali National Association in Newham which made precisely the same point. Mr. Osman Gali, the president of the association, said that up to 3–4 hundred families have been forced out of Tower Hamlets. The Council have adopted a policy of misleading the families by offering short-hold tenancies, and evidently the families were given false hopes of perm anent rehousing by the Council. Most homeless families who were already living temporarily in Newham, Waltham Forest, Hackney, Dagenham and other areas have been subjected to intense pressure by the Council officers. The letter goes on to refer to instances of harassment from Liberals in Tower Hamlets. One does not need to look at the racism of the British National party in Tower Hamlets—the Liberals can provide all the racism one would need in that part of east London.

Mr. Gali also referred to "ethnic cleansing". That is an emotive phrase, but I get his point.

I now turn to paragraph 157 and how it relates to paying attention and collating statistics, which is why I am disappointed with what the Government have said in response to the Select Committee report. Baroness Denton of Wakefield, the Minister responsible in the House of Lords, replied to my late colleague Ron Leighton in terms of the letter that he had written to the Secretary of State. She said: Authorities should look carefully at the terms on which the accommodation is being offered, and in particular at the landlord's intentions once the minimum period for a tenancy has passed. They should assure themselves that accommodation will continue to be available for a reasonable period, and should consider every case on its merits in light of the circumstances of the household they are placing. Where a household is placed in such accommodation in the area of another authority, this should be done in liaison with that authority … I would be concerned if one authority was consciously adopting a policy of transferring homeless households into another authority's area in the expectation that this would off-load any future responsibility. That is precisely what Tower Hamlets is attempting to achieve, particularly with the Bengali families. The council is exporting them into other parts of the east end and transferring what they see as a problem to other areas.

The noble Lady went on to say: we are watching developments with interest. We will consider whether there are any problems for us to address when we reform the homelessness legislation. I hope that the Minister will say something about paragraph 157 and how he is responding in terms of monitoring the situation.

The leader of Newham borough council, Councillor Timms, has written on number of occasions to Councillor Peter Hughes, the Liberal Democrat leader of Tower Hamlets council, and he has not even had the courtesy of a reply. That is how rude the Liberals in Tower Hamlets are, so on top of racism they add on a large dollop of rudeness. That is typical of Liberals, who like to come here and pose as decent people when the reality on the ground is completely different. The word hypocrisy comes immediately to my mind when I think of Liberal Democrats here and in Tower Hamlets.

Mr. Robert B. Jones

As a resident of Tower Hamlets, I entirely share the hon. Gentleman's views about the racism of the Liberals in Tower Hamlets and the appalling management of the council. However, exporting the problem of homeless families beyond a council's boundaries is not limited to Tower Hamlets. In my constituency, through both housing associations and local authority housing, that is precisely what the old GLC did, and what agents of some Labour authorities in London are still doing.

Mr. Banks

We are going back to the GLC, Mr. Deputy Speaker. Under the mobility scheme, the GLC was able to give people a wider range of opportunities or a choice in terms of the location. It was, after all, the GLC and the London county council which provided substantial estates outside the Greater London area and on the periphery of that area. No one ever said that the GLC was exporting its problems, unless one thinks that giving a senior citizen the opportunity to move into a seaside or countryside home was exporting problems. If someone desperately wants that, why should they not have the opportunity when they retire? That can hardly be described as exporting problems. It was giving them the sort of opportunity which unfortunately they do not now enjoy and certainly will not enjoy until we have a strategic authority restored once again to the citizens of London.

In conclusion, I hope that the Minister will respond to the following points. I think that it is now necessary to have a ministerial inquiry into what is going on in Tower Hamlets. We have tried hard to work with the Liberal authority and we know they have housing problems. We all have housing problems in the east end, but we do not expect councils to take the dogmatic, disgraceful and racist attitude which Tower Hamlets has been taking in terms of its housing and the question of homelessness. I hope that the Minister will be able to announce that he intends to look critically and urgently at the terrible racist housing policies in Tower Hamlets.

5.35 pm
Mr. Charles Hendry (High Peak)

I am grateful to have an opportunity to speak in the debate and particularly to follow the wide-ranging remarks of the hon. Member for Newham, North-West (Mr. Banks). I shall start by declaring an interest, in that I am a newly appointed chairman of a company called Home Rent 16 to 23 plc, which is a private rented sector company.

I congratulate the Select Committee on the report and on the thoroughness with which it has gone about tackling a detailed and complicated subject. I particularly welcome the fact that the Committee decided to look into it in the first place. The basic fact is that this year some £1.5 billion of public money is going to the Housing Corporation, which will enable some 58,000 new houses to be built for letting. The Government's reduction of the housing association grant rate, and thereby the bringing in of money from the private sector, has enabled the building of a significant number of new houses that would not have been built had we relied purely on public sector funding. During the past five years, the increase is estimated at some 55,000 additional units of housing.

We must look at the balance between the number of houses that we want to achieve and the rent that is to be charged for those houses. The Government are absolutely right to say that we should be shifting the way in which funding is contributed from subsidising bricks and mortar to subsiding the individuals who live in the houses. In other words, just because someone has a local authority or housing association house, it should not be built and provided for him at a below-average rent if he can afford to pay the realistic market rent. Those who cannot afford to pay that rate should be helped through the housing benefit system.

I am sorry that the hon. Member for Norwood (Mr. Fraser) has left the Chamber, because he refused to take interventions during his speech. He was fundamentally wrong to look at the number of new houses that are built when we should be looking at the number of new lettings every year. We are concerned about the number of people who are able to move into social housing who would not otherwise be given that opportunity. The combined number of housing association and local authority lettings last year is the highest ever and is significantly higher than the number that applied in 1979 when the Government came to power.

Mr. John Battle (Leeds, West)

If the Government's policies for access to local authority and housing association housing go through, and as a result of that landlords use shorthold assured tenancies or six month lets, if the same family is in a place for two years, will not that count in the Government's statistics as four lettings, although no other family has been housed?

Mr. Hendry

I am more than happy to divert from the debate on the Select Committee report into the consultation document to which the hon. Gentleman refers, if you will allow us to do so, Mr. Deputy Speaker.

If the private sector is to be used—most of my hon. Friends agree on that as an absolute principle—inevitably we shall see greater use of short-term assured tenancies. The hon. Gentleman does not understand that a short-term assured tenancy can provide in many cases a better quality of accommodation than local authority housing and can also provide security. Many of us live in short-term assured tenancies and, according to the statistics that the hon. Gentleman has bandied about, we are considered to be homeless.

We must move from the negative attitude that the Opposition have continually taken towards the private rented sector and accept that it has a much more important role to play. One of the benefits that will result if the proposals in the consultation document are enacted is that there will be a better use of the private rented sector. In terms of the Housing Corporation and the money that is allocated to that, we must be certain that every penny of public sector money is being used to the best effect. The only way to do that is to squeeze the resources from time to time.

To make sure that they are lean and efficient and use their resources sensibly and effectively, private companies, from time to time, clamp down the hatches and tighten their belts. That applies equally to the Housing Corporation. If we are to continue to be sure that every year we can put more money into the Housing Corporation, we must first be satisfied that every pound and every penny that go into it and into housing associations are used to best effect. If hon. Members on both sides of the House ask themselves honestly, they cannot say with their hand on their heart that that is the case.

We have concerns about the administration and running costs of the Housing Corporation. The squeeze that it is going through will make it look carefully at how its money is used. As my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Clifton-Brown) said, we can reduce the current grant rate in view of two factors that he outlined clearly. First, interest rates are lower than we have seen for a considerable time so the money that the housing associations are expected to borrow can be borrowed much more cheaply.

Secondly, the difficulties that the building industry has faced in recent years have made it possible to build houses much more cheaply than for many years. That means that we can expect the housing associations to continue to provide a significant number of houses for letting. Indeed, there is no doubt that the 153,000 houses in the next three years to which we committed ourselves in our election manifesto will be comfortably exceeded, conceivably by as much as 25,000.

Mr. Peter Ainsworth

My hon. Friend makes an extremely good point. Does he agree that the fact that the Housing Corporation exceeded its targets last year has a great deal to do with the points that he has just made? Does he also agree that that will continue to play an important role in the funding and development of that part of the market in the years to come?

Mr. Hendry

My hon. Friend is undoubtedly correct. The other element, to which tribute has already been paid, is last year's housing market package. It did much to bring back into use some of the empty properties available in the private sector. I am glad to see that the package has the backing of the Liberal Democrats.

I understand the concern expressed by my hon. Friend the Member for Altrincham and Sale (Sir F. Montgomery) about housing benefit. We need to be careful that we do not create ghettos that are the only places in which people on housing benefit can afford to live. If we are to have a balance and if the amount of money that goes into bricks and mortar is to be squeezed, we have to accept that there is a limit on how much we can squeeze housing benefit. That point emphasises that there must be a right to buy for housing association properties.

It is proper that the increasing number of people who live in housing association properties should have the same right to buy that they would have in local authority housing, if they wish to exercise it. Of course some sectors such as warden-controlled properties or properties specifically for the elderly need to be excluded. However, increasingly housing association developments are suitable for a much wider range of population. It is proper that they should also be bought under the right-to-buy scheme.

I am also pleased to see that more attention is being paid to rehabilitation programmes. I have banged on endlessly in the House about the need to bring back into use the 850,000 empty properties in Britain. I am astonished by the recommendation from the hon. Member for Newham, North-West (Mr. Banks) for bringing back into use properties in the private sector.

There are 750,000 empty houses in the private sector. We all accept that that is too many. However, the new policy initiative suggested by the hon. Member for Newham, North-West would involve taking the properties back into public ownership under compulsory purchase. Assuming that the properties were bought at £20,000 apiece, which is a modest assessment, the hon. Gentleman has just developed a new Labour party policy that would cost £15 billion. No wonder he did not have the backing of the hon. Member for Dunfermline, East (Mr. Brown). It is a barmy, barking mad idea and one which is fundamentally hostile to all the principles of freedom to which Conservative Members adhere.

Why do Labour Members come up with every excuse in the book when considering why properties owned by Labour local authorities are empty, yet wish to introduce the most draconian powers that they can think of to tackle the empty properties in the private sector? If one is an incompetent local authority, one has the backing of the Labour party, but if one is an individual exercising one's freedom, one does not: The message is, "Do not let your granny die without selling her house first." The little politburo people from the Labour party will come round and say, "The house is empty. The old lady is dying. We had better buy it under compulsory purchase."

We can bet one more thing for certain. Under the new policy suggested by the hon. Member for Newham, North-West, people would not get a market purchase price. They would get the least favourable price at which it was possible to buy the property. Then we would be looking forward to another Conservative Government at the earliest possible time to allow those properties to be bought back by the people to whom they rightfully belong.

Mr. Jim Cunningham (Coventry, South-East)

Does the hon. Gentleman agree that in the acquisition of council property the district valuer decides the price level, which could affect either the owner-occupier or the tenant? Does he not understand that?

Mr. Hendry

I do not think that the hon. Gentleman was in the Chamber when the hon. Member for Newham, North-West outlined his new policy involving compulsory purchase of empty properties in the private sector, although he did not elaborate on how his policy would work. Valuation may be done by the district valuer or it may simply be based on whatever price the hon. Gentleman cares to work out on the back of an envelope. Unless the hon. Member for Newham, North-West is willing to elaborate on his policy—sadly he is not in the Chamber now—we cannot know how it would work.

Mr. Robert B. Jones

In view of the confusion on the Opposition Benches about the compulsory purchase option canvassed by Opposition Members, does my hon. Friend agree that it is incumbent on the Labour Front-Bench spokesman to make clear how the policy would operate in practice or to say that the policy is not a policy of the official Opposition?

Mr. Hendry

I am sure that it is not merely incumbent on the Front-Bench spokesman. I am sure that the hon. Member for Leeds, West (Mr. Battle) will wish to outline his approach and that of the Front-Bench team to that policy development. I hope that he has the backing of the hon. Member for Dunfermline, East and will be able to say from where the £15 billion to which the hon. Member for Newham, North-West has just committed the Labour party will come.

Mr. Rendel

The hon. Gentleman mentioned the large number of empty houses in the private sector. He accepted that it was too large and that he would like to do something about it. Does he also accept that some of the houses remain empty because the owners want to sell them but cannot find a buyer and that, therefore, one of the quickest ways of bringing those houses back into occupation is for the Government to continue to give money to the housing associations to purchase second-hand homes and put them back into the cheap rented sector?

Mr. Hendry

Clearly, we have a competition on the Opposition Benches for who can spend the most public money in the shortest possible time. Several initiatives designed to bring back into use empty houses in the private sector have already been introduced. To name just one, under the housing associations as managing agents—HAMA—initiative, housing associations can take over the letting and management of houses. So if people are worried about letting their property themselves, they can let it in a much more constructive and safe way than might otherwise have been the case.

A huge amount of money—the best part of £1 billion—went into the housing market package. Although I broadly welcome the package, one element that worried me was that too often housing associations went to a local builder and bought up all the houses on a newly built estate. The hon. Member for Newbury (Mr. Rendel) spoke of a desire to see those houses bought around the community. I welcome that, but it has not always happened. Too often, an entire estate is bought up, with the result that anxieties about the same sort of people living in estates can materialise.

I urge the hon. Member for Newbury to go back to Liberal authorities—particularly Tower Hamlets, which is one of the worst offenders in terms of sitting on empty local authority housing—with the same imagination and suggest that they do more to bring their empty properties back into use. Perhaps he could suggest some measures as draconian as those proposed by the hon. Member for Newham, North-West. For example, if people see local authority housing left empty too long, perhaps they should be allowed to buy it back from the local authority.

Mr. Rendel

Does the hon. Gentleman accept that although Tower Hamlets council is desperately trying to bring back into use empty properties owned by the council, as a result of the Government's housing policies, the lack of finance coming through and the capping of local authority finances, it is impossible for the council to do so faster than it is now?

Mr. Hendry

The hon. Gentleman is overlooking some basic facts. If Tower Hamlets were slightly better at collecting rents and the council tax it would not have that problem. If the council had not achieved an indebtedness to which some third-world countries can only aspire, it would be paying far less in interest rates and could spend that money on services for the community instead.

Mr. Robert B. Jones

My hon. Friend is being too generous to Tower Hamlets borough council. He has not mentioned its shambolic organisation of local services. Bureaucracy between the centre and the community, via all those neighbourhood councils, is slowing down lettings and administration and causing much of the problem.

Mr. Hendry

I understand my hon. Friend's argument. We know the sort of election tactics that the Liberal Democrats have had to resort to in Tower Hamlets to ensure that they continue to get their constituents' vote in spite of the way in which they are running the local authority.

In recent years, housing in my constituency has improved significantly. The housing condition survey shows that people in the country as a whole are living in better housing than ever before. I was delighted that my right hon. Friend the Minister was able to visit my constituency last week to see the improvements being made on the Fairfield estate, where, under the estate action programme, money has been used radically to improve living conditions in nearly 200 houses. The estate was built in one of the coldest parts of my constituency, which is one of the coldest parts of the country. Even a duffle coat was scarcely enough to protect the Minister from the elements. Houses on the estate have been radically improved with better insulation and new windows and that has been possible only because of the money made available to the local authority under the estate action programme.

I was especially pleased that my right hon. Friend the Minister used his visit to encourage people to take part in the rent-to-mortgage scheme, whereby they can change their rents into mortgages without paying a penny more. Their aspirations for home ownership can thus be met and it is an imaginative policy, for which my right hon. Friend should take much credit. People who aspire to ownership but are worried about the commitment involved in taking on a mortgage can gradually take over ownership of their property. I hope that my constituents will take that policy to heart.

I welcome the tenants incentive scheme to encourage people who live in local authority housing and housing association properties to take a cash sum to buy a property elsewhere. As the hon. Member for Newbury will appreciate, that is a boost to the private sector, as it will enable some private houses to be bought and will immediately make available additional houses in the social rented sector.

If we are to debate the subject sensibly—today's debate has been sensible—the distortions must be removed. It saddens me greatly that no organisation has done more to damage sensible discussion than the charity Shelter. I have been in regular contact with Shelter for some years, especially as chairman of the all-party group on homelessness and have built up a great respect for its work. However, the publicity material that Shelter is publishing now is in breach of its charitable status. There are clear guidelines on what it is acceptable for a charity to do and it is regrettable that Shelter has passed beyond that barrier. As that organisation receives £1 million a year in public funds, it has a direct duty—

Mr. Raynsford

Will the hon. Gentleman give way?

Mr. Hendry

No. Shelter has a duty to ensure that it does not distort deliberately the facts and continually exaggerate. I have therefore written to the Charity Commissioners to ask—

Mr. Deputy Speaker

Order. I am not aware that Shelter is a housing association.

Mr. Hendry

Indeed it is not, but affordable housing is one of the issues that Shelter has been discussing most and it is also a core issue in the debate. If we want a sensible debate on affordable housing we must do without the distortions that Shelter has put about in its packs for schools and letters to subscribers. It is important that we draw those distortions to the attention of the relevant authorities. In view of your comments, Mr. Deputy Speaker, I shall not pursue the matter, but it is crucial that Shelter should be aware that its campaign has been rumbled and will not be further tolerated.

We must be aware of the amount of money that has been put into the Housing Corporation and housing associations. That money has enabled many more of our people than ever before to live in better conditions. It is a record of which the Government can be proud and I hope that it will encourage hon. Members to endorse the Select Committee's report.

5.54 pm
Mr. Andrew F. Bennett (Denton and Reddish)

I am disappointed by the contribution of the hon. Member for High Peak (Mr. Hendry) and especially by his attack on Shelter. It is pretty despicable to attack an organisation for exercising its right to free speech, which I thought was a fundamental principle in this country. His attack is appalling and I am certain that the hon. Gentleman's predecessors, who represented High Peak with such distinction, would not have sunk to such an activity. It was unfortunate that the hon. Gentleman introduced such a note into the debate, as it had been useful and constructive.

I hope that the Minister will take rather more notice of the contributions made by my hon. Friend the Member for Norwood (Mr. Fraser) and the hon. Member for Altrincham and Sale (Sir F. Montgomery). I would not normally agree with the views of the hon. Gentleman, but his contribution was a clear warning to the Government that major problems will result if they insist on pushing housing association grant down.

I must pay tribute to the Select Committee's advisers, who served us extremely well, and to its officials. I join the hon. Member for Isle of Wight (Mr. Field) in also paying tribute to the Chairman of the Committee, the hon. Member for Hertfordshire, West (Mr. Jones), who demonstrated that a Select Committee can deal with a politically controversial issue effectively without getting into the yah-boo of party politics. The Committee's report is a valuable contribution to the housing debate and the Chairman should take credit for that. Although I do not like praising Conservative Members, on this occasion I do so warmly.

In my constituency, the housing shortage is a fundamental problem. When I was first elected as the Member for the old constituency of Stockport, North, about 4,000 people were on the housing waiting list in the metropolitan borough of Stockport, but more than 8,000 people are on the waiting list now and the authority has fewer properties at its command because some have been sold. There are fewer homes to rent. Homeless people on the waiting list in Stockport spend far more time in hostels and bed-and-breakfast accommodation than they did for almost the whole time that I represented the constituency.

In Tameside, the situation is not as bad, because it has a larger stock of council dwellings and there is more private rented accommodation. During the years that I have represented that area, however, the position has got steadily worse.

One of the key facts in the report is that we are producing between 70,000 and 80,000 fewer dwellings than are necessary to meet the need. It does not matter how much the Government want to change their approach to homelessness; unless they deal with our failure to build sufficient houses, they will merely be changing the statistics and not the underlying reality. If, by the turn of the century, we are about 500,000 houses short, however much we change the definition of homelessness the position will get worse. It is essential that we build those houses.

The hon. Member for Altrincham and Sale explained to the Government how crazy it is to add so many building workers to the numbers of unemployed, rather than giving them the opportunity to produce the houses that we so desperately need. I do not mind how the Government do it and whether they use housing associations or council building programmes, but I plead with them to deal with the shortage of dwellings, because until they do so, they will not solve the problem of homelessness.

I should prefer the Government to go for an approach that involves both housing associations and local authorities in doing some of the building. In both Tameside and Stockport, the local authority and the housing association have developed some very good partnership schemes whereby the local authority provides the land and the housing association does the building. That is clearly appropriate for some of the bigger sites.

In respect of three areas of my constituency, however, I do not believe that that is the right approach. The first area is Haughton Green, which has a substantial Manchester overspill estate. It is an extremely well-run estate, built in the 1960s and consisting of high-quality dwellings that are extremely well looked after. A couple of the tower blocks have problems, but the rest of the houses are much appreciated by the tenants. That estate was built on a plan that involved a great deal of open space. Some of that open space is useful for young people to play on, but some of it is not really usable. It would be possible for Manchester to build a small number of dwellings to infill some of those spaces. Whereas it would be complicated to set things up so that housing associations could put two houses here and two small bungalows there, it would be very easy for Manchester to do that infilling. I only wish that the Government would allow it to get on and do it.

The same applies to the Yew Tree estate in Tameside. Admittedly, that estate was built over old pit workings and some of the open spaces on the estate are probably necessary because of what is underneath them. But much of the open space on that 1970s estate is not necessary, and a substantial number of infill dwellings could be accommodated. Again, that would be a complicated process for a housing association to undertake. It would be far more logical to let the local authority build.

The third area of my constituency is in the Stockport part of my constituency at Brinnington, where several blocks of flats have been pulled down. Again, it would be far more logical to allow the council to build replacement dwellings of the type that people want than to insist on the task going to housing associations.

When the Committee started its inquiry, one of the big issues was whether the Housing Corporation would insist on a super-league consisting of a small number of housing associations, not showing much enthusiasm for small housing associations. It appeared during the inquiry that the idea of a super-league had disappeared. In a sense, however, the Government are bringing the idea back by the way in which they are changing the grant levels. As they bring the grant level down, they make life difficult for all housing associations. But at least the big housing associations—those with a lot of existing stock—can share out the problem by increasing the rents of some of their older properties to cross-subsidise newer developments. But many of the small housing associations—especially those that I thought that the Government wanted to encourage, to deal with the problems of ethnic minority groups and people with learning difficulties, for example—will be disadvantaged.

Small associations designed to specialise in providing accommodation for those particular groups do not have the big stock necessary for cross-subsidisation. For those specialist housing associations, the reduction in the grant level is particularly harsh. The Government are returning to the idea of the super-league by insisting that grant levels come down. Moreover, as grant levels come down, so the poverty trap gets worse.

The Government have been chided about family values. On one or two of the housing association properties in my constituency, the Government, by the way in which they are setting the rules, are doing everything to destroy the family and to make it difficult for people to create new families. When the housing association offers dwellings to the local authority as agreed lettings, the local authority tends to offer those dwellings to people who are on benefits, because it does not believe that in my constituency people who are in work can afford the rents. The dwellings therefore go to people on benefits—more often than not, to women on their own with one or two small children, probably following a failed marriage or liaison.

The woman may quickly become involved 'with someone else, but there is absolutely no chance that that man will move into the house because the rent that he would then have to pay is so high as to make such a move prohibitive. The man may visit on a pretty regular basis and in some cases may take a considerable amount of responsibility for the children, but it is not a state of affairs which anyone should be encouraging and it has been created solely as a result of the existing benefits system.

If the Government are concerned to encourage people to establish new households, they must examine that problem. They must recognise that major difficulties exist in relation to the present level of dependency on benefits of people in those circumstances.

I want to refer briefly to the role of the ombudsman. I do not believe that the ombudsman can have any credibility as long as he functions within the Housing Corporation set-up. I think that it is a mistake to go on setting up ombudsmen for insurance, for banking and so on. It would be far better to increase the powers of the national ombudsman to cover all those areas.

Certainly as regards the Housing Corporation, it would be far better for the powers of the national ombudsman to take in the Housing Corporation and the housing associations rather than keeping them separate. I have received a considerable number of complaints about housing association property provided for the elderly and about the promises that were made about housing associations managing such property, especially in shared ownership schemes, to take away the worry. In many cases, the charges for providing the services have caused a great deal of concern.

I do not want to trade questions about empty properties across the Floor of the House today. I do, however, want to make a plea to the Government about empty properties. On three or four of the council estates that I know well, individual properties have been empty for six months and, in one case, for over 12 months. Those properties were bought by tenants under the right-to-buy provisions. Relatively soon afterwards, the buyers got into mortgage difficulties and the properties were repossessed by the building society. They have remained empty ever since. They are proving virtually impossible to sell.

The building societies are extremely reluctant to go on knocking the price down to dispose of them; they are hanging on in the hope that, at some stage, they will get the asking price. Some of those houses are pretty dilapidated. One of them was more or less vandalised by the owner before he moved out. They are detracting from the appearance of the estate and are making the council the subject of criticism, as many people think that they belong to the council and that it is leaving them empty, not realising that the estate agent's board, long ago knocked down, is lying in the garden.

It would be a simple matter for the Government to give local authorities permission to buy back properties on council estates and put them back into use. That would not involve a great change of policy and it would make a lot of sense. I should like the Government to allow local authorities much more freedom over their capital receipts. If they cannot give them that general freedom, however, I plead with the Minister to let the council buy properties back—especially the very small number of houses that were bought from the council and which cannot now be sold—and put them quickly back into use.

The hon. Member for Newbury (Mr. Rendel) mentioned the question of living over the shop. I advise him not to get too enthusiastic about it because some of the worst property to let in my constituency is over shops. It is often pretty appalling accommodation. If one is to live over the shop, the accommodation must be properly renovated to a high standard.

6.9 pm

Mr. Peter Thurnham (Bolton, North-East)

I congratulate my hon. Friend the Member for Hertfordshire, West (Mr. Jones) on his chairmanship of the Committee and on his report, which gives us the opportunity for the debate.

I should like to consider a number of paragraphs in the Government's response to that report, starting with paragraphs 31 to 34, on the role of the private rented sector. The report states: The Government is keen to see a revival of the private rented sector … the Government will consider the case for further assistance to increase the supply of private rented accommodation". When my hon. Friend the Minister replies, I hope that he will give some idea of the Government's further thinking on exactly what is being proposed. He will be aware of the proposals in my pamphlet. He might consider that the Deregulation and Contracting Out Bill, which is currently in Committee, represents a convenient opportunity to table new clauses to allow tenants to select a new landlord without that landlord necessarily having to be approved by the Housing Corporation. That approval denies choice to tenants who wish to opt for a new landlord. Why can they not choose their own landlords? Why should they have to seek the approval of the Housing Corporation or anyone else? That restriction should be removed.

If new lettings of council houses were offered on the basis of the Housing Act 1988, under assured tenancies, councils' ability to sell rented accommodation, if they so wished, would not be restricted.

The Labour party's current document on housing states that the private rented sector badly needs a boost. Exactly what the Opposition mean by that and what they intend to suggest has not been made clear. Although the hon. Member for Denton and Reddish (Mr. Bennett) said that he did not mind how the shortage of housing was addressed, he did not suggest any positive ideas on how the private rented sector could contribute.

The size of the British private rented sector is well below that of other countries; it is half the average size in the OECD countries and under one quarter of that in west Germany. In Switzerland, the private rented sector accounts for 56 per cent. of all housing. The average useful floor space per head in Britain is 32 sq m in comparison with 36 sq m in the other 11 member states of the European Community. It is possible that the greater contribution made by the private rented sector in other countries in comparison with that in Britain has made it possible for those countries to provide more floor space per head.

Dr. Lynne Jones (Birmingham, Selly Oak)

Will the hon. Gentleman give way?

Mr. Thurnham

We are short of time, so I will not give way.

Paragraphs 39 and 40 of the Government's response to the Committee's report refer to housing benefit. I notice that a working group has been established by the Departments of the Environment and of Social Security to discuss that matter regularly. I should be grateful if my hon. Friend the Minister could tell me whether that working group is producing a report and whether, under the provisions of open government, mentioned elsewhere in the Government's report, its work might be made more available. It would be interesting to see exactly what is proposed for housing benefit. Would it be possible to consider it in a different way so that the growth of that benefit can be controlled?

Paragraphs 66 and 69 of the Government's response refer to special needs. I understand that some friendly societies would be interested in investing in housing for people with disabilities. It would be worth exploring that possibility further because of the current restrictions in financing such projects.

The hon. Member for Newham, North-West (Mr. Banks) has departed, but he made a strong attack on Tower Hamlets, which probably stems from the fact that it was subject to 30 years of uninterrupted, complacent Labour rule, before electoral change. If Tower Hamlets was under a Conservative administration, some of the recent developments would be worth considering. It is interesting to note that the local authority has been broken down into seven neighbourhood units. Considerable savings have been made by the business services unit, which I visited last week. I was extremely impressed by the savings that have been made by breaking down centralised services and running them on a decentralised basis. Lessons could be learnt and it was suggested that the Government should set up an inquiry to consider what has happened in Tower Hamlets. I dare say that there would be much to consider on the political side, but we could learn positive lessons from the way in which the authority is run now that services have been decentralised.

Mr. Robert B. Jones

As a resident and council tax payer in Tower Hamlets, I do not share my hon. Friend's perception of Tower Hamlets as an efficient devolved administration.

Mr. Thurnham

As he is a resident of Tower Hamlets, I bow to my hon. Friend's greater knowledge, but I believe that lessons could be learnt about the way in which the business services unit is run. I would enjoy discussing with my hon. Friend some of the points that were made to me during my visit. I am grateful for that intervention, and I feel that I should now give the hon. Member for Birmingham, Selly Oak (Dr. Jones) the opportunity to intervene.

Dr. Lynne Jones

The moment has passed by, but I wanted to intervene when the hon. Member made a comparison between our rented sector, including the private sector, and that of other countries, which is so much stronger. Perhaps that is due to the fact that in those countries renting is given parity of esteem with owner-occupation. Conservative Members give the game away when they talk about aspiring to owner-occupation as if that was somehow superior to renting. Until that argument is dropped, we will not be free of the ghettoisation of rented and social housing. Conservative Members should address that important issue.

Mr. Thurnham

The hon. Lady is looking at the matter from the wrong angle, because the issue is whether property is privately or publicly owned. The advantage enjoyed by the countries that I mentioned is that they have a large privately owned sector—whether it is privately rented or owner-occupied is subsidiary to the advantage gained by the size of that sector. What distinguishes our country is that we have a high level of socially rented accommodation. I accept that the national figure for such accommodation has come down to 21 per cent., but in my constituency in Bolton the number of council houses has only fallen from 26,000 in 1983 to 23,000 today.

Council houses represent part of the enormous assets of councils. I asked Bolton council officials for the total value of its assets. Although they did not have an up-to-date valuation, they estimated that, on the basis of insurance values, its total assets were worth £600 million. I estimate that housing may account for half of that figure. Substantial assets are held in public ownership and the issue should be how to get those assets transferred into private ownership.

The Mail on Sunday listed the debts of local authorities and compared them with those of third world countries. The hon. Member for Denton and Reddish might be interested to learn that Manchester's debt, which currently stands at £1.3 billion, is second only to that of El Salvador. I advocate that more council houses should be sold to reduce that debt. The total amount of all local authority debt is £37.5 billion.

Mr. Raynsford

That has nothing to do with the debate.

Mr. Thurnham

It has everything to do with it, because the private sector represents the way in which to solve our housing problems.

Dr. Lynne Jones

Will the hon. Gentleman give way?

Mr. Thurnham

No. I have given way to the hon. Lady once.

The private sector has played a great role in Switzerland, for example, which has a socially rented accommodation sector of just 14 per cent., according to the latest figures that I have seen. Why do we have a social rented sector twice that level? I am satisfied that resources could be made available far more efficiently through the private rented sector than through the public sector.

6.18 pm
Mr. John Battle (Leeds, West)

I welcome the opportunity to debate the report on the Housing Corporation by the Select Committee on the Environment. Some hon. Members on that Committee may recall that in December 1991 I asked whether the previous Chairman, Sir Hugh Rossi, would lead the Committee's debate on housing associations, with particular reference to their affordability and the impact of housing benefit. Therefore, I am especially pleased that a substantial piece of work on the Housing Corporation has been undertaken by the Committee under the chairmanship of the hon. Member for Hertfordshire, West (Mr. Jones), and I hope that it will not be another decade before the Environment Select Committee finds time to consider housing issues again.

Since the publication of the Committee's report, time has moved on for all of us. I add a word of welcome to the newly appointed chairman of the Housing Corporation, Sir Brian Pearse. Although we welcome the Committee's report and its unanimous consensus in its recommendations and compliment the Committee on its work, I must register disappointment at the thinness of the Government's official response. That response, published in October last year, seems to have deliberately played down, if not side-stepped, the thrust and urgency of the Select Committee report's recommendations—the need to tackle the problem of affordability of housing association properties, squeezed between reducing grant rates on the one hand and inevitably high and increasing rents on the other, caught between housing association grant cuts and now the threatened housing benefit cuts.

Although Ministers have tried to reassure us and suggested that people on no or low incomes have no reason to worry because, in the words of the Housing Minister, housing benefit will take the strain", in recent weeks the threatening noises off from the Secretary of State for Social Security suggest that housing benefit may now prove to be the strands of a fraying rope. Housing benefit represents £8.7 billion of public expenditure and the Secretary of State for Social Security has made it clear, in articles that appeared in the newspapers on 3 March this year, that it is now to be targeted by his Department.

It is also appropriate that the debate takes place in the context of the estimates, because that supportive arithmetic is crucial to the survival of housing associations as well as to the ability of tenants to pay their rent. In other words, the funding arrangements are at the core of the discussion. I hope that the Minister will not give us that new evasive expression, "I hear what you say" but mutter under his breath, "but I shall not do anything about it".

Recently, the Housing Corporation published the report "The Next 3 Years: The Housing Corporation's Plans and Priorities 1994–1997", partly in response to the Select Committee's recommendations. That welcome document takes on board the need for regional development, with the newly established regional consultative meetings, the improvement of the tenants' guarantee and tenants' rights, continued support for tenant participation and the setting up of the housing associations ombudsman service—all positive responses, and all warmly welcomed by Opposition Members. The report also, encouragingly, says that this year's focus will be on care in the community provision. That is welcome, too.

However, I suspect, thinking of the ombudsman's service, that already many housing associations' tenants are writing to the ombudsman—as they are doing to Members of Parliament—complaining about their rent increases. Rapidly increasing rents are the main bone of contention, increasing at well above the inflation rate and pricing out those people who are not on middle incomes or who depend entirely on housing benefit. As the Select Committee report succinctly put it in paragraph 5, In considering housing association grant rates the Government will have to bear in mind the likely consequences of its decisions in terms of affordability, availability of private finance and benefit dependency". The Minister will have to take seriously the words and reported comments of the Secretary of State for Social Security because he has been reported as saying that he wants measures to discourage local authorities from paying housing benefit for unnecessarily expensive property". That is precisely the problem which confronts many housing associations, because their properties are proving expensive. Notably, in his chairman's foreword to The Next 3 Years", Sir Christopher Benson remarked: There are occasions when given the nature of our relationship with the Department of Environment it is inappropriate for us to enter into open debate. These occasions arc in the main in the period prior to annual decisions being announced on public expenditure. Although it is easy to understand the difficulty that the Housing Corporation faces in publicly challenging the Government on setting housing association grant rates, it is not so easy to understand why the Housing Minister, in paragraph 2 of the Government's response, simply says: Many of the recommendations are primarily addressed to the Housing Corporation. The Government's response takes account of the Corporation's views. If the corporation cannot take a public view on the arithmetic, I suggest that it is unacceptable for the Minister to push the Select Committee report back in the Housing Corporation's direction, thus fobbing off the key recommendations that the Select Committee spelt out—again I quote from the report: Unless the poverty trap consequences of the Housing Benefit tapers are addressed, or procurement costs fall, proposals to make further reductions in HAG rates should be dropped. That is a strong statement. Although Sir Christopher Benson feels that he cannot comment publicly, the Minister cannot dismiss the recommendations as being primarily addressed to the Housing Corporation. The core recommendations of that consensus report are primarily addressed to the Government and to the Housing Minister and perhaps to that most powerful background voice of all in this connection—that of the Chief Secretary to the Treasury.

In spite of the Select Committee's unanimous and strong call for further HAG rate reductions to be dropped, on 4 August last year the Housing Minister went ahead and announced a HAG level for 1994–95 fixed at a national rate ceiling of 62 per cent. Either he did not hear or did not want to respond to the thrust of the Select Committee report, or he ignored it because he was overruled by the Treasury. He cannot simply pass on Treasury cuts and hope that the housing associations survive.

The Government plan to reduce HAG to 55 per cent. by 1995–96. That will again massively increase rents and in turn increase the housing benefit bill.

Last week, the Department of Social Security's annual report was published. It showed that rent allowances for private and housing association tenants are increasing by an average of 6.5 per cent. in real terms compared with 14.3 per cent. during the past four years. Yet figures from the National Federation of Housing Associations show rents increasing between 17 and 20 per cent. in 1993–94. As a result of rent increases of that nature, people will be priced out of housing associations and housing associations will be priced out of development entirely. They will be forced to cease to build and will have to live off their seed corn.

It is important that the question of the so-called benefit trap, poverty trap or work disincentives is clearly understood. The Select Committee report recommended that the Government instruct a Cabinet Committee or inter-Departmental working group to review the relationship between HAG rates and benefit entitlements and to develop a strategy for easing the problems faced by housing association tenants and others caught in the poverty trap. In the Government response, the Minister stated: The Government maintains that in general it is a more efficient use of public resources to target subsidy on individuals through the benefits system, rather than on bricks and mortar through HAG. We have heard echoes of that policy from Conservative Members today.

Although the Minister claimed, in his response to the report, that The Department of the Environment, Department of Social Security and the Treasury work closely together to ensure that the interaction between the different subsidy systems is understood and appreciated", that is not what comes through. We believe that that approach is economic nonsense in the long term. Bricks and mortar are more efficient in the long term, and in housing we need to reinstate subsidies that go in the direction of bricks and mortar. I would rather direct towards the language of future investment. It is also difficult to believe that the Government have done the arithmetic.

I recall that, at the time of the deregulation of the private rented sector, the Housing Bill of 1988 was passing through the House. In Committee, I asked the Minister what impact he thought that high market rents would have on the Department of Social Security budget. He replied that he did not expect them to have any impact.

At that time, some of us were having to serve on two Committees simultaneously. The Social Security Bill was in Committee just along the Corridor, and I went to ask the Minister involved whether he knew that subsidised high rents in the private rented sector would absorb most of the social security budget, because they would absorb housing benefit.

Last week, the Downing street press office was telephoned about information in the newspapers concerning the intention of the Department of Social Security to target and cut housing benefit. Apparently, the press office responded to that serious inquiry by saying that housing benefit was solely a matter for local authorities, and was increasing because of high council rents. It did not spell out the fact that local authority rented properties are less expensive than housing association properties, which in turn are much less expensive than properties in the private rented sector. There seems to be great confusion at the heart of Government—a difficulty in understanding the link between housing benefit and rents across the board.

The real problem is not experienced by the pensioner on full state pension, without the £2 supplementary occupational pension that floats such people out of housing benefit; nor is it experienced by the unemployed person on full housing benefit who takes on a housing association flat. Let us suppose that an unemployed person on full housing benefit visits a jobcentre and is offered a job at £140 a week—such offers are still a reality. If that person's rent is £65 a week once housing benefit has been discounted, he may well feel that he must turn down the job because he will lose his benefit. Many people are now describing that position as a work disincentive.

The Social Security Bill Committee to which I referred earlier—the Committee that was sitting at the same time as the Committee considering the Housing Bill of 1988—spelt out that anyone who turned down a job offer would lose all entitlement to benefit. That is worse than being asked to choose between job and home: unless the matter is sorted out, people may well lose both. They are being caught between high rents and the difficulties involved in having to depend on benefit to cover those rents. That is because we have a Government who are addicted to a policy of high rents, and are unable to understand that that, does not square with high unemployment and low wages unless a huge housing benefit bill is to be created. This year's bill is £8.7 billion, the projected figure for next year is £10 billion, and that for the year after is £12 billion.

According to the Secretary of State for Social Security, the only way out is for the Treasury to cut housing benefit. In practice, that means that people will be unable to make up the difference to pay their high rents, and will have to move out of their homes.

Interestingly, the Minister has revealed that the Government's own affordability formula assumes that working households without any housing benefit can afford to spend 35 per cent. of their net incomes on rent. That is contradicted by the work of the National Federation of Housing Associations, which recently adopted the following policy: Rents are affordable if the majority of working households taking up new tenancies are not caught in the poverty trap (because of dependency on housing benefit) or paying more than 25 per cent. of their net income on rent. In other words, rents are not affordable when more than 50 per cent. of working tenants are caught in the benefit trap through dependency on housing benefit, or—if they do not receive such benefit—spend more than 25 per cent. of their incomes on rent. Yet an increasing proportion of housing association rents in new lettings exceed that crucial criterion.

Responding to recommendations that particular proposals for further reductions in HAG rates be dropped until the resolution of the problems, the Minister said—in paragraph 50 of the Government's response— The Government's decision was taken after consideration of a range of factors including the likely effect of lower grant rates on housing association rents, likely changes in procurement and borrowing costs, in income levels; the implication of likely changes in rent levels for housing benefit expenditure. Does the Minister for Housing Inner Cities and Construction—unlike his Treasury colleagues—recognise that the incomes of those at the lowest levels are falling, and that, as a consequence, housing benefit must inexorably rise to cover the gap between incomes and rents? More and more of the disposable income of tenants who do not receive housing benefit will be absorbed by their rent.

On 1 February, on Radio 4, Anthony Mayer said: At a rent of £55, a couple with a child has to earn over £12,000 a year … to escape the poverty trap. According to paragraph 53 of the Government's response, however, The Government took account of findings from the Housing Corporation which indicated that the effects on rents of lower grant rates would be offset by changes in procurement and borrowing costs and in income levels. When the Minister appeared before the Environment Select Committee on 21 April 1993, he refused to comment on the question posed by my hon. Friend the Member for Greenwich (Mr. Raynsford) about Housing Corporation advice to the Minister on HAG levels. He said that that was not a matter to be dealt with by the Committee. Since then, Anthony Mayer—who is chief executive of the Housing Corporation—has spoken to the committee members' conference of the National Federation of Housing Associations. He is reported to have said, on Friday 21 January, that the Housing Corporation board recommended retention of 67 per cent. HAG rates for 1994–95. I hope that the Minister will tell us why he rejected the Housing Corporation's advice when all the comments in the Government's response suggest that they were taking the Housing Corporation's findings on board.

At a private seminar for lenders, Anthony Mayer went on to reveal that the Chief Secretary to the Treasury had made it clear that the Government would do nothing to housing benefit that would compromise the position of housing associations, adding: If the Government did make significant cuts in housing benefit the result would be immediate catastrophe. I would advise you all to resign immediately. The pack of cards would fold very quickly. In other words, there was a real danger that, as well as pricing out tenants, the removal of housing benefits would frighten away private investors and destabilise housing associations.

Already, housing benefit is regarded as an insecure political variable—an unreliable income stream, subject to the cuts imposed by the Secretary of State for Social Security. That is why private investors are now backing off from all but the largest housing associations—those that can pool larger amounts of rent.

It is difficult to discern where the Government's housing policy is headed. The Housing Corporation and housing associations are now caught in the centre of conflicting policies. Paragraph 68 of the Government's response stresses that the real strength of the housing association sector lies in diversity of management, particularly when an association can bring specialised management skills to bear, or can offer a localised base for effective and sensitive housing management.

We agree with that entirely; yet, in practice, Government policy pulls in the opposite direction. The Government are squeezing out special needs provision, and undermining the special needs management allowance with the Treasury cap on revenue support. That has led to a reduction in the supported housing association programme to 2,500 units for 1994–95.

Furthermore, at the recent Housing Corporation conference, the Minister announced the introduction of arrangements to promote competition for capital and revenue needs in regard to supported housing. That will pile more pressure on the special needs sector. Smaller associations, particularly in rural areas, are still locked in the impasse of what charitable organisations can do—not least because, in such areas, those on low incomes cannot take up what the Government are promoting as share ownership schemes.

Support has been withdrawn from self-build and co-ops. The Housing Corporation's capital support for housing co-operation developments has reached an all-time low: it is 1.54 per cent. of the Housing Corporation's approved development programme for 1994–95.

The crucial issues of affordability, high rents, benefits, housing association rates and the effect of driving away private finance, as well as the key issue of diversity, have been side-stepped in the Government's response. As a result, housing associations will be forced simply to recreate the worst conditions of the large local authority estates of the past. The fundamental problem is lack of Government direction, the absence of a cohesive housing policy. Britain needs more homes for renting rather than a further Housing Corporation cut of £500 million, as happened in this year's Budget. We do not need more incentives to buy through tenant incentive schemes. We do not need more shared ownership schemes. What we need are policies that will result in the provision of more homes for renting.

Dr. Lynne Jones

Does not the tenants incentive scheme demonstrate the lack of coherence in the Government's policy? The resources for that scheme have been increased massively, but there has been no evaluation of the effectiveness of the policy. When I was involved in the scheme, I found that many of the people taking advantage of it would have bought homes and, therefore, moved out of housing association property in any case. This is yet another example of the residualisation of the social rented sector.

Mr. Battle

I am grateful for my hon. Friend's intervention, which proves that the Government are facing two ways. On one hand, a Secretary of State announces that there is no further need to build homes in Britain—in the homelessness review, the Government have a line about future generations who will not thank us for building more homes—but, on the other, there is more and more pushing in the direction of expanding home ownership at the expense of the rented sector. That is why the Government are in real difficulty. On the question of housing association policy, they are between a rock and a hard place.

Labour believes that there is an absolute and acute shortage of homes to rent. We believe that unemployed building workers could be used now to provide homes for renting. Capital receipts could and should be released for investment. We believe that housing associations, although they account for only 3 per cent. of the housing stock in Britain, have a dynamic and vital innovative role to play in the full panoply of housing provision and homes to rent. They ought not to be abandoned or priced out. Housing associations should be locally rooted and locally accountable to tenants and communities. They should be strengthened so that they may reassert their traditional role, including vital specialist provision. They should be allowed to develop and expand rehabilitation and to provide positive support for diversification. There is a positive vision for housing associations, but, referring to the Government's response to the Select Committee's report, I have to say that we are looking not for comment but for action.

6.42 pm
The Minister for Housing, Inner Cities and Construction (Sir George Young)

Like other hon. Members, I am grateful for the opportunity of this debate to acknowledge the work of the Select Committee on the Environment. As we discovered during a Supply day debate on housing a few weeks ago, this is a subject on which we do not always manage to achieve unanimity. However, the Committee, under the chairmanship of my hon. Friend the Member for Hertfordshire, West (Mr. Jones), has produced a consensus report, which makes a very valuable contribution to the Housing Corporation's future "Operations in social housing. I congratulate the Committee on its achievement. Indeed, it has led to a moderate and consensual debate today.

To the extent to which the confusion referred to by the hon. Member for Leeds, West (Mr. Battle) has existed, one detected some signs of incipient tension among Opposition Members. On one hand, we had the Dunfermline decree that there should be no new public expenditure commitments; on the other hand, we heard the expansionist ambitions of several Opposition Back-Bench Members. I see some trouble ahead. One of my constituents said to me at the weekend, "What is the point in supporting the Labour party if it does not intend to spend any more than the Tories?" The incipient tension to which I have referred is demonstrated by the contrast between what the Opposition would like to do—

Dr. Lynne Jones

Will the right hon. Gentleman give way?

Sir George Young

Sorry, no. I have been done out of a couple of minutes by the hon. Lady's hon. Friend the Member for Leeds, West.

The Government's response was published last October. We indicated our acceptance of the majority of the recommendations and our intention to act on them. Many have already been implemented, and others are being taken forward. I shall try to deal with the key points raised by the Committee's Chairman. There will not be enough time to get through all of them, but I shall write to my hon. Friend about those to which I do not manage to refer and shall, perhaps, copy the letter to other members of the Committee.

The hon. Member for Norwood (Mr. Fraser) rightly invited us to put housing in a slightly broader social context. He referred to a constituent confronted with a rent of, I think, £70 a week for a new housing association property. There is a trade-off between rents and output. If we had not taken our decisions on grant rates, the hon. Gentleman's constituent might not have had any property to move into.

My hon. Friend the Member for Altrincham and Sale (Sir F. Montgomery) made a thoughtful speech, which touched on the issue of affordability. He raised a number of questions—for example, deemed interest on savings—for which the Department of Social Security is responsible. He rightly identified the mistakes that we made in the 1960s and the 1970s—some of the developments that were undertaken with the best of intentions but with disastrous results. I welcome the work that my hon. Friend's wife does on the Housing Corporation and as the chairman of a very substantial housing association.

The hon. Member for Newbury (Mr. Rendel) referred to a conversation with his authority's director of housing. That officer is somewhat unusual in that his housing stock has been transferred. This is a policy on which the Government are keen, as it not only generates capital receipts, which can be recycled into investment in social housing, but enables the local authority to concentrate on its strategic and enabling role.

The hon. Gentleman mentioned the difficulty, in the case of one estate, of promoting shared ownership. If he looks at our plans, he will see that that is not the only home ownership initiative. There is the tenants incentive scheme, which is very popular and has nearly always been oversubscribed, and there are the low-cost home ownership proposals, which do not involve shared ownership and represent a growing part of the Housing Corporation's programme. The objections to which the hon. Gentleman referred do not apply with the same force to these other aspects. The hon. Gentleman talked about the flats over shops scheme—something on which I am keen. The Government have put about £25 million of public money on the table to drive the policy forward.

My hon. Friend the Member for Isle of Wight (Mr. Field) was right to refer to the financial management of housing associations. Where there are substantial reserves, the Government encourage local housing associations to plough the funds back into fresh development. My hon. Friend was right to suggest that those resources are meant for investment in housing. In the case of a non-charitable housing association, there is normally an associated right to buy. But that does not cover certain properties that are particularly suitable for letting to the elderly. I should like to write to my hon. Friend about this matter.

The hon. Member for Newham, North-West (Mr. Banks) raised a number of points. I should like to deal with one of them—the issue of transporting families from one borough to another. I have made it clear on a number of occasions, and I repeat, that one borough should not export its problems to another unless the latter has so agreed. Each borough should develop a strategy to sort out its own problems. If it has greater needs, it will be provided, through the allocation process, with greater resources with which to tackle them.

I enjoyed very much the speech of my hon. Friend the Member for High Peak (Mr. Hendry). It was cold in High Peak the weekend before last, but the visit was very worth while. My hon. Friend rightly focused on the key currency of lettings as opposed to new build. My hon. Friend was right to concentrate on the potential for bringing 850,000 empty properties back into use—not, as was proposed by the hon. Member for Newham, North-West, by purchase, which would involve the expenditure of a very substantial amount of public money, raising the eyebrows of the hon. Member for Dunfermline, East (Mr. Brown), but by the promotion of management arrangements whereby the public sector would not have to own the properties but would have the benefit of letting them, using housing associations as an intermediary.

Dr. Lynne Jones

Will the Minister give way?

Sir George Young

If I am to do justice to the debate and deal with the questions that have been raised, I shall have to plough on.

The hon. Member for Denton and Reddish (Mr. Bennett) said that the local authority housing stock had been diminished through the right to buy. One must put on the other side of the scales the increased nominations to housing associations through new lets and relets. One must look at the total picture. Last week, I had a chat with the ombudsman, Roger Jeffries. I was impressed by the way in which Mr. Jeffries was making progress with complaints and, in particular, by his work on the promotion of mediation as a means of bringing disputes to a satisfactory conclusion. That is a matter in which I am very interested.

My hon. Friend the Member for Bolton, North-East (Mr. Thurnham) rightly reminded us of the importance of the private rented sector. The latest figures show that the decline has been arrested and that sector now accounts for a growing percentage of tenure, which I welcome. My hon. Friend had some radical new ideas on tenant ownership on which the Government are reflecting.

The hon. Member for Leeds, West made a rather alarmist speech. We have made it clear that we are reducing the housing association grant rate to get more units out of the given amount of public funds and it would be absurd to pursue those policies to the extent that one got no units because there was no funding. At the end of his speech, he worked himself up into a minor frenzy about the absence of housing policy. I suggest that he reads the editorial in the latest edition of Roof magazine, which contains some punchy criticism of any new thinking on housing by the Labour party. The editorial in Roof magazine does not usually spring to my support, so the hon. Gentleman might like to reflect on what thoughtful people who write about housing are saying about the vacuum in Labour party policy.

In the remaining time available, I shall deal quickly with some of the issues raised before I mention affordability. The Select Committee on the Environment referred to the constitution of the corporation's board and how appointments are made. Although it recognised that members of a public board could not be representative, it wanted a slightly broader mix of appointments. I am pleased to report that, as my hon. Friend the Member for Hertfordshire, West said, earlier this month we appointed to the board two new members with precisely the skills for which the Select Committee invited us to look. Derek Waddington has had a long career in local government and is currently director of housing in Birmingham, which is the largest housing authority in the country. We also appointed Roger Council, who is a welfare benefits adviser and a tenant of Yorkshire Metropolitan housing association. In 1992, he became the first elected tenant representative on its management committee. I am sure that both will both make a valuable contribution to the work of the Housing Corporation.

Last week, we appointed Sir Brian Pearse as chairman of the corporation from 1 April. I am grateful for the kind words of all hon. Members about Sir Brian. I take this opportunity to express my thanks to Sir Christopher Benson for his important contribution to the changes that have been carried through in the past four years. It has been a difficult and challenging time for the corporation.

My hon. Friend the Member for Hertfordshire, West invited me to give a progress report on regional committees. We were not persuaded that a formal structure of regional committees was necessary, but we agreed that a forum to provide for regional consultation might be helpful. The corporation has taken the idea on board and I am pleased to announce that the first round of consultative meetings with local authorities, housing associations and tenants will commence in each region from next month. The first meeting is to be held on 13 April in the west midlands and, thereafter, meetings will be held every six months.

My hon. Friend the Member for Hertfordshire, West also asked about regional office boundaries. There are benefits to be gained from conterminous boundaries between the corporation and my Department. I can therefore announce that the corporation proposes, with our approval, to revise its regional boundaries from 1 April 1995 to bring them into line with those of the Government's integrated regional offices, except in Merseyside where the present boundaries will be retained. The Yorkshire and Humberside and northern regions will continue to maintain a joint office to cover both regions from Leeds, and the east and east midlands regions will operate a joint office in Leicester. In both cases, the corporation will structure operations to produce data to the two regions covered by each office separately. The changes will produce valuable operational benefits.

I deal now with grant rates, which were a recurrent theme in many of today's speeches. An important element of the Select Committee's work concerned the issues surrounding the HAG rate paid to support the corporation's capital programme. We have heard a great deal about the impact of falling grant rates on housing association rent levels and on the affordability of those rents. Even more has been said about how high rent levels have forced an increasing number of housing association tenants on to housing benefit and into the poverty trap, to use the words of Labour Members, or into the protective embrace of housing benefit, to use the words of my hon. Friends.

I remind the House that we have not heard about the many additional homes that have been created by the reduction in HAG rates. We have not heard about the many additional families who have been decently housed as a result of the decisions and who would otherwise be homeless or waiting in inadequate accommodation. Each reduction in grant rate means that more private finance is levered into the programme and the available public resources are made to stretch further.

Since 1988, when we decided to introduce the concept of mixed funding, a total of £2.6 billion of private finance has been raised to support housing association development, which is the equivalent of about 55,000 new homes. There is a real choice between, on the one hand, reducing grant rates and increasing the supply of housing and, on the other, keeping grant rates high which, will indeed reduce rent levels but at the expense of the number of new homes that we can provide.

At a time when development and borrowing costs have fallen fast, I make no apologies for taking the opportunity to use the savings to concentrate the funds available for housing investment on boosting output, especially as our benefit system focuses help on those people who might have difficulty paying their rent. I believe that it is a more effective use of resources—

Dr. Lynne Jones

Will the Minister give way?

Sir George Young

I can perhaps save the hon. Lady's energy by assuring her that I do not propose to give way.

I believe that that is a more effective use of resources than bricks and mortar grants which benefit all tenants, irrespective of income.

I deal now with the question asked by the hon. Member for Leeds, West. The Environment Select Committee specifically recommended that I should not cut grant rates for next year unless procurement costs fell further. All the signs are that procurement costs in 1994–95 will continue to fall. The Housing Corporation and the National Federation of Housing Associations accepted that, and it was clear from the corporation's model that I could set an average HAG rate of about 64 per cent. without affecting the affordability of the rents charged.

In the event, having considered the likely impact on actual rents and on the ability of associations to pool rents across their stock and to make further efficiency savings, I felt justified in reducing the average HAG rate to 62 per cent. In fact, the continuing fall since then in gilt yields has meant that financing costs are likely to be even lower than we anticipated, which will further reduce the rents that associations need to charge.

I also considered carefully the likely impact of lower grant rates on the availability of private finance. From our discussions with private lenders, and from the work done for the Housing Corporation by European Capital, I was confident that private finance would be available to support the development programme at an average grant rate of 62 per cent. In view of the number of bids for housing association grants received by the corporation—£4 for every I accepted—it seems that housing associations share my confidence and are coping well with the lower grant rates. The reduction of the average grant rate to 62 per cent. next year should result in an additional 2,600 new homes.

To put the debate on rents in a broader perspective, the average rent for all housing association tenants on 31 March last year, which is the last full year for which figures are available, was just £34 a week. Even excluding those who are still paying fair rents, the figure was only £38 a week. For new tenancies the average is £43 a week. It is important to keep that perspective.

We have heard a great deal about the poverty trap. As the House will know, benefit system policy is a matter for the Secretary of State for Social Security. The system is designed to ensure that maximum benefit is targeted on those who need it most and the rules ensure that people are better off as their gross incomes increase. Only a very small proportion of those receiving income-related benefits face marginal deduction rates at the highest level, some of which we have heard about this evening.

I assure the House that my Department and the Department of Social Security meet regularly in a working group that was set up to provide a forum to discuss, among other things, the relationship between policies on HAG rates and housing benefit. I and my right hon. Friend the Chief Secretary, who has been mentioned once or twice today, attended a seminar of private sector lenders last September when he said: Housing benefit rules may well change from time to time. But we have an enduring commitment to making sure that people can afford the rented housing they need. Although the benefits review is a matter for my right hon. Friend the Secretary of State for Social Security, I can tell the House that no conclusions have yet been reached, and hon. Members would be better advised to wait for a statement from my right hon. Friend than rely on press speculation.

I mentioned the ombudsman a moment ago. So far, he has received 234 complaints, of which 85 per cent. have been accepted and are already being pursued. We shall keep the matter under review.

The challenges facing the Housing Corporation demonstrate that it clearly has a sizeable task ahead. My view is that housing associations, their members and their officers have responded positively to the changes introduced in 1988. I am sure that they will face the next challenges with enthusiasm.

Social housing is a constantly changing environment in which innovation and co-operation must be the key words. Housing associations have a good record and I am sure that they will continue to develop and to work with local authorities and private landlords to make the best use of all the rented housing stock, not simply to meet housing needs, but to create thriving communities. As I have already said, we have given full consideration to the Select Committee's recommendations—

The debate was concluded and the Question necessary to dispose of the proceedings was deferred, pursuant to para (4) of Standing Order No. 52 (Consideration of estimates).