§ Motion made, and Question proposed, That this House do now adjourn.—[Dr. Liam Fox.]10.18 pm
§ Mr. Michael J. Martin (Glasgow, Springburn)
I thank Madam Speaker for allowing me this Adjournment debate, and you, Mr. Deputy Speaker, for being here tonight to chair it. I also thank my hon. Friends who are present to give me moral support, and the Minister, who kindly allowed me to give some of the questions in advance so that we would have a full and constructive debate tonight.
I am deeply concerned about the behaviour of Scottish Homes, and particularly that of Mr. Peter McKinlay, its chief executive. I support the views of my hon. Friend the Member for Hamilton (Mr. Robertson), who put out a press release on behalf of all the Scottish Labour Members of Parliament, stating that Mr. McKinlay and the rest of the board should be sacked. As a lifelong trade unionist, I never thought that I would see the day when I would want anyone to be sacked, but Mr. McKinlay is an exception to the rule.
The problem is that Scottish Homes decided to follow the Government's rules and unload its property, thus ceasing to be a landlord. Ironically, although Scottish Homes has many other functions, it has been an exceptionally good landlord. It seems to be a case of "if it works, fix it", and I think that Scottish Homes is doing a great disservice to Scottish tenants. It was not the present board but its many predecessors that made Scottish Homes a good landlord, helped by the co-operation and hard work of many tenants' associations throughout Scotland.
Scottish Homes also has a staff worry. I understand the position, but Mr. McKinlay has not asked but ordered his staff to do what he wishes. In October 1992, he announced that they should find tenants who were prepared to enter into joint ventures and form housing associations.
In my area, officers of Scottish Homes recently formed a housing association, along with certain tenants. The association is called Gemini, and it has bitten off a big piece of housing stock to chew. It intends to acquire properties from Westercommon and Maryhill through my constituency, across the east end of Glasgow, to Rutherglen and Cambuslang. As the Minister will know, the Government recently introduced legislation to change local government in Scotland, which means that the housing association will be trying to acquire property in two separate local authorities. Anyone who knows anything about community-based housing associations will be aware that it is vital for the community to be contained within a single authority, because it will depend a good deal on that authority.
My area contains the Carron, Balornock, East Balornock, Robroyston and Garngad schemes—a total of 1,373 houses, almost half the number of Scottish Homes houses that are to be disposed of. Even if we assume a modest transfer price of £5,000 per house—the houses are worth more than that, but they are being sold with sitting tenants—given that there are 2,286 Scottish Homes properties in Glasgow, Gemini will be required to borrow at least £11.43 million on behalf of Scottish Homes tenants. However, none of the newsletters that have been 1192 issued specify the amount that will have to be borrowed; only the small print mentions the requirement to borrow from the private sector.
That worries me. Some 16 Labour Members of Parliament attended a meeting in the Copthorne hotel during the summer recess. At that meeting Mr. McKinlay stated that he would peg rent rises to between 1 and 2 per cent. above inflation and added that after five years there would be no help from the Government or from Scottish Homes.
Not long ago, the interest rate was 15 per cent. If that happens again and my constituents and those of other hon. Members borrow about £11 million, and if the only way to get revenue to pay the building society or other lending authority is from rents, it is inevitable that after the five years tenants will have to pay the full interest charges and maintenance costs. Nothing is being said about that in the propaganda that is being put out by Gemini.
The Minister knows that some officers in Scottish Homes are clearly involved with Gemini. That creates a serious conflict of interest. The acting director of Gemini is Mr. Simpson, who is a senior official in Scottish Homes in Glasgow.
That is not all, because the Springburn Possilpark housing association, a local body which has been in my area for 20 years and has a good track record, does not want all the 2,000 plus houses that Gemini is seeking. However, it has been invited by Scottish Homes to make a bid for those houses in my constituency. Scottish Homes is being devious in extending that invitation to Springburn Possilpark housing association. It is merely pulling in the local association for window dressing. It must be that, because the Minister knows that when a joint venture or what Scottish Homes calls a new landlord, such as Gemini, makes a bid anywhere in Scotland against a local community-based housing association, lo and behold, the staff organisation always wins.
Mr. McKinlay and the apology for a chairman, Sir James Mellon, should come clean and say that Springburn Possilpark does not have a chance. A housing association that has served the community and Scottish Homes so well is being unfairly treated.
I spoke about banks and lending institutions being involved. It is stated in Gemini's business proposal document that multi-storey flats will cause problems when it comes to borrowing money to buy them. I have said in the House before that the Carron scheme in my constituency consists mainly of multi-storey dwellings. They are excellent and anyone would be proud to live in them. They are a credit to the tenants. If banks are already saying at this early stage that they may not be able to lend money to buy those dwellings, the Minister must say what will happen to my tenants. It would be extremely unfair to have ballots when people do not know their future in buildings that have been there for the best part of 30 years. Many tenants have been in them all that time.
It is proposed that ballot papers should go out. It should be made clear on ballot papers that tenants are taking on a heavy commitment in borrowing all that money. The Minister should instruct Scottish Homes to make it clear on the ballot paper that people are entitled to remain with Scottish Homes. All the propaganda that is coming from Gemini and the other associations that are on the 1193 bandwagon gives the impression that there is no room at the inn to remain with Scottish Homes. That information must be put on the ballot paper.
The Minister has a responsibility to tell tenants that they have security of tenure. If the ballot is successful, even people who vote against or do not turn up and abstain will be required to sign up for a new tenancy agreement, which will make them assured tenants. They may have the right to buy—propaganda on that has been put out—but the fact that assured tenants are denied the right to go to a rent officer is hidden. Rents will no longer have the protection of a rent officer. The Minister knows that secure tenants in housing associations can go to a rent officer.
Mr. McKinlay told us at the meeting in the Copthorne—my hon. Friends will correct me if I am wrong—that, if the tenants decided to stay with Scottish Homes, he would introduce a private factor in relation to the property. That is unfair on those people, many of whom have been loyal tenants and have paid rent for 30 and sometimes 40 years. If they exercise a democratic right to remain with Scottish Homes, no official should take it upon himself to say that he will introduce a private factor. If people decide to remain with Scottish Homes, a team of officials should be able to look after their needs, instead of a private landlord being brought in.
I must give time for the Minister to reply. I have been involved with housing for 22 years, ever since I was a councillor in Balornock. Everyone, myself included, had a high regard for Scottish Homes as a landlord. Its houses have always been in high demand, whether they are back-and-front-door properties, multi-storey flats or tenements. The board is destroying something that has been built up over many years. I hope and pray only for the day when we have a Labour Government who will ensure that those tenants are given the rights for which they have fought for so long.
§ The Parliamentary Under-Secretary of State for Scotland (Lord James Douglas-Hamilton)
I congratulate the hon. Member for Glasgow, Springburn (Mr. Martin) on securing this debate and on the spirited way in which he has put his points. I shall seek to answer as many of his questions as possible. I shall study the record tomorrow and, if I miss any of his points, I shall reply to him later.
The Scottish Office has every confidence in the Scottish Homes board and the chief executive. I hope that tonight I can convince the hon. Member for Springburn about the background and describe the transfer process. In particular, I want to emphasise that the Scottish Office's policy is centred on maintaining tenants' interests, which are of paramount importance. We have declared our intention of ensuring that these interests are fully protected.
The hon. Member for Springburn raised a number of specific issues which I would like to address at the outset.
On the question of Scottish Homes making options known to tenants—particularly the option of remaining with Scottish Homes—I am aware of information leaflets which are given to all tenants at various stages in the 1194 transfer process which make it perfectly clear that if the majority of tenants vote against a transfer, they will remain with Scottish Homes.
The hon. Gentleman has also expressed concern about staff involvement, particularly regarding Gemini housing association, and he has recently asked a number of parliamentary questions covering operational matters of this sort. Those are, quite rightly, a matter for Scottish Homes and I have replied to the hon. Gentleman saying that I have asked the chairman to write to him on those issues.
On the specific point of conflict of interest and continuity of employment, Scottish Homes operates a code of conduct designed to eliminate such conflicts. It is expected that under existing employment legislation Scottish Homes staff would be offered continuity of employment regardless of who may be the successful bidder.
§ Mr. Michael J. Martin
Will the Minister bear it in mind that every organisation of this nature where the staff has been involved has always won the tender? That seems to be more than a coincidence.
§ Lord James Douglas-Hamilton
I am just coming to that point.
To avoid any conflict of interest, staff are required to state clearly to interested parties when they are acting on behalf of an organisation involved in developing proposals of Scottish Homes and not as representatives of Scottish Homes. In some circumstances, secondment of staff will be considered.
The hon. Gentleman mentioned management bids. It has been brought to my attention that, of the 18 proposals for transfer that have been approved by the Secretary of State, only one has involved a management bid. Scottish Homes' procedures ensure that all bids are treated objectively and even-handedly. The important point is that tenants should be aware of all options open to them and, ultimately, it is and will be for tenants to choose.
On the question of the initial disposal of Scottish Homes stock and subsequent resale—which would require the consent of Scottish Homes—the presumption is that all costs will be met by private finance.
With regard to rental policies, it is expected that tenants will transfer at their existing rent and will be fully aware of the rental regime proposed by the alternative landlord. This will be covered by tenancy agreements. The tenants will be aware of the terms of those agreements before the ballot. Scottish Homes will ensure through contractual arrangements that rental increases cannot be in excess of proposals put to tenants without its consent. Individual subsidies are, of course, available to tenants through housing benefit, of which £800 million is paid in Scotland.
The hon. Gentleman mentioned multi-storey flats. Scottish Homes is looking to mix multi-storeys with other traditional stock to make the housing package more attractive to lenders.
I appreciate the point made by the hon. Gentleman about the responsibility that tenants face when forming new organisations to take on a landlord role. However, Scottish Homes provides financial support to tenants to undertake training in housing management which is provided by staff from the Scottish Federation of Housing Associations.
1195 I understand the concerns that have been expressed by the hon. Gentleman and I should emphasise that the final decision on any transfer of stock is, under the present arrangements, a matter for my right hon. Friend the Secretary of State. I understand that, at present, Scottish Homes has received some outline proposals from interested parties regarding properties in the hon. Gentleman's constituency, but discussions and consultation are at an early stage and no decisions have been taken.
I re-emphasise to the House the fact that the promotion of greater housing choice is one of the major aims of the Government's housing policy. There are a number of ways in which we are seeking to achieve this. The first is our encouragement of further home ownership, but we recognise that it is not necessarily the right option for everyone and that there is clearly a continuing and important role for the social rented sector. It is, therefore, important that people who choose to rent should be offered the choice to do so.
We are, therefore, implementing policies to encourage diversification of tenure and to make certain that tenants have a wider choice of landlords outwith the public sector from whom to rent in the future. Consistent with the policy of increasing choice for tenants, Scottish Homes has been working towards shedding its landlord role. Over the past few years, it has worked up a large-scale voluntary transfer policy and a forward programme under which it expects to dispose of the majority of its stock within the next five years.
It was expected that different solutions might emerge in different areas which would reflect the wishes of tenants—solutions which would allow them to benefit from improved services and better housing conditions and have greater say and control in relation to their housing stock. It was made clear that changes of this kind would occur only at a pace in line with tenants' wishes.
I mentioned a moment ago that tenants' interests were paramount when considering transfer of stock. That was emphasised in the guidance which my right hon. Friend issued to Scottish Homes in 1989 and on which Scottish Homes' subsequent procedures have been based. The guidance concentrated on three main areas—fair and open competition between potential purchasers; protection of tenants' interests; and value for money.
The Scottish Office would generally regard competition as preferable in most circumstances and would expect that to be the case for Scottish Homes transfers. It is only in this way that tenants will have full access to the proposals of all the alternative landlords looking to take over stock. These might include initiatives from staff or tenants, or a combination of both, or from a quite separate body such as a housing association co-op or housing trust.
Within this framework of general principles it is, quite properly, a matter for Scottish Homes as owner of the stock to establish appropriate arrangements to govern its transfer. For this purpose, it has published procedures that promote substantial safeguards for tenants and which are designed to provide equitable treatment for all parties interested in acquiring its houses. These procedures are subject to continual review and account is taken of the experience gained and lessons learnt from the substantial number of transfers that have successfully taken place since 1991.
1196 One aspect that I must mention is how the procedures involve the establishment of local stock strategies. These are prepared in consultation with tenants and interested parties at local level in all areas where Scottish Homes holds housing stock. All of Scottish Homes' housing stock is currently covered by such strategies which provide a clear statement about what Scottish Homes wants to happen with its stock. These strategies define local aims and objectives for stock in specific areas and can be used as a framework to allow for the appraisal of outline proposals.
Within the local stock strategy, further breakdown of areas varies according to local circumstances and may reflect initiatives already under way or opportunities identified by tenants and areas where there may be an interest in transfer. Each local strategy was prepared in liaison with Scottish Homes' local development and housing management staff and involved consultation with tenants' representatives and potential alternative landlords and liaison with local authority housing departments.
Of course, one of the main benefits of allowing stock to transfer to a landlord outwith the public sector, such as a housing association, is that it involves the use of private capital. Promoting the use of private finance will ensure that public funds go much further.
On the specific point of transfer to local authorities, if it were to happen, the funds that the local authorities borrowed to finance the purchase of the houses would count as public expenditure and, unless total public expenditure were to rise, it would inevitably mean reducing public expenditure elsewhere. That could mean fewer resources available to improve other local authority housing. In short, by enabling people to transfer to new landlords such as housing associations, it is possible to lever in private finance and, in so doing, get more for the public resources available. That is an important point. I should mention that to date Scottish Homes has attracted more than £40 million of private finance. If that sum had come not from the private sector but from the public sector other important proposals would have been awarded lower priority.
There are, of course, other benefits to private finance. Involving banks and building societies introduces private sector skills and disciplines to the transfer process, alongside the best traditions of the public sector. That can introduce new approaches and perspectives and boost effectiveness. They can help ensure that the new landlord starts off on a sound and sensible footing, with a properly thought-out business plan, dealing with key issues such as rent levels and repairs provision. We can be pretty sure that a financial institution will lend money only to good landlords. That, of course, is good news for the tenants who share a common interest, with the private lenders, in wanting a landlord who is efficient and effective.
There have been suggestions that the arrangement of only one alternative is too restrictive. I do not believe that to be the case. It should be recognised that Scottish Homes will be consulting tenants throughout the transfer process and tenants will have access to free, independent advice to ensure that they are fully aware of all the options, including the proposals of all alternative landlords open to them. In that way, tenants are able to inform and influence the decision-making process under which Scottish Homes offers an alternative for the ballot paper. It is only when that whole process has been completed and tenants are in a position to take a 1197 well-balanced view and make informed decisions on the question of the future landlord that they will be balloted on a transfer proposal.
§ Lord James Douglas-Hamilton
I have much to say in reply to the hon. Member for Springburn.
If at the end of the day the majority of tenants wish to stay with the public sector, they will have the opportunity of doing so by voting to remain with Scottish Homes. If the majority vote to transfer, all tenants should transfer. It would not allow for practical management of the stock if the minority vote against transfer were allowed to remain with Scottish Homes. I mention to the hon. Member for Springburn that out of 19 ballots, involving more than 12,000 tenants, a majority of 61.5 per cent. were in favour of transferring. So a decisive majority has been in favour of transfers.
I have already answered the point about staff. It is to be expected that there will be many instances when existing staff will wish to promote initiatives, in many cases in conjunction with tenants. Many of Scottish Homes' staff will have been part of the housing management structure of 1198 the Scottish Special Housing Association and Scottish Homes. It is natural that they will wish to promote their employment opportunities and it would certainly be unfortunate if their expertise were lost.
Even in cases where tenants take the lead themselves, in many cases they welcome the active participation of Scottish Homes' staff, which is largely on a voluntary basis. There is clear evidence that this can be highly successful as in the case of WESLO Housing management in West Lothian. That is an independent organisation which incorporates—
§ Lord James Douglas-Hamilton
That case was at the very beginning of the whole process. There has been improvement in procedures since that time. What is significant about Waverley is that the interests of tenants were treated as paramount and the accusation was not that tenants had been exploited, but that they had had too good a deal—
The motion having been made after Ten o'clock, and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned accordingly at twelve minutes to Eleven o'clock.