HC Deb 18 March 1996 vol 274 cc147-54

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

11.42 pm
Mr. Chris Davies (Littleborough and Saddleworth)

This is the third Adjournment debate that I have been lucky enough to secure during my five months in the House. I am delighted to have the chance to face the Minister so soon after the last one. I hope that he will recall that this is my third time and that he will ensure that I am third time lucky by granting my requests on behalf of my constituents and others throughout the country.

I am becoming something of an old hand at these debates. I have learnt that Ministers tend to speak from a prepared brief in reply, usually without hesitation or deviation but sometimes with a little repetition.

I am concerned about the fact that the best housing stock owned by our local authorities is deteriorating rapidly. The problems are, in essence, to do with money. The funding is being reduced year after year. It is therefore time that the Government held out some prospect of change.

This debate is about older housing. I offer the Minister, as examples, the Alt and Roundthorn estates in the Lees ward of Oldham, where there are about 800 houses and a few flats and bungalows. On the Holt, Bentgate and Hough estates in the Milnrow and Newhey ward of neighbouring Rochdale, there are some 500 properties. Almost all are houses, but a few are bungalows. All were built in the 10-year periods either side of the war. Roundthorn was started in 1936 and Alt was finished by the mid-1950s.

The houses are typical examples of some of the best council housing built in Britain in the middle years of this century. They are mostly semi-detached, they have gardens to the front and rear, they were well constructed and they are good, solid, middle-of-the-road housing. Generally, because of their age, they are now paid for, and there are very few debts outstanding to be paid by the local authority.

Hundreds and thousands of such council houses were built throughout Britain. They proved popular with people when the right-to-buy legislation was first introduced and they are typical of the houses that were snatched up on council estates. As it happens, not many of the properties on the estates that I have mentioned have been sold—only 10 per cent. have—but they are pepper-potted around the estates and are a clear demonstration of the commitment of local tenants, now owner-occupiers, towards the areas in which they live.

For all the good qualities of the bricks and mortar and the design of the homes, people on the estates now all too often feel somewhat forgotten. They see work being carried out in other parts of the boroughs, but nothing substantial done to their own homes. The local authorities' position is understandable. With limited finance, it is almost inevitable that the money that is available goes to properties in greatest need.

Unfortunately, the qualities of such mid-century council housing do not always carry on, decade after decade, without decline. Buildings constructed from the 1950s onwards, such as mid-rise walk-ups and system-built concrete structures, have generated real problems that local authorities have to face and treat as priorities. That housing has caused difficulties that are expensive to resolve, and the result is that estates that are sliding gently into decline, such as those I have mentioned, are overlooked time and again. They never get priority attention and they can, at best, look forward to getting some of the crumbs from the table.

The simple truth is that 50-year-old housing, which was good for its time, is not so good now. The refurbishment work that is needed is important to the very fabric of the buildings—it involves pointing and cleaning brickwork as it becomes unsightly. From across the street, one can see that the roofs are starting to sag. Besides essential maintenance on a scale greater than the day-to-day repairs budget will ever provide, the properties really need full refurbishment to equip them for another 50 years of life.

The stock simply no longer meets modern expectations. Ideally, it should be refurbished from top to bottom and the kitchens and bathrooms modernised. The entire interior layout should be remodelled after—in these days, when tenants' wishes are taken into account—a proper period of consultation. That does not happen because the money is not available. On the Alt estate, the best that local residents can expect is a window replacement programme, but the programme is on such a small scale that it is likely to take years to complete.

Other details of the estates are likely to require attention. For example, the roads were not designed with the expectation that cars would be parked all over them. It was never in the architect's mind that minibus services would operate around the estate. That has happened, of course, as a result of deregulation, greater competition and some innovation in the bus industry.

In the absence of proper refurbishment, there is gradual decline. I have no doubt that, for many years, the properties will be comparatively popular and easy to let. That is bound to change, however, as time passes. As the fabric decays, demand will gradually lessen. The deterioration will affect both council tenants and home owners.

The Institute of Housing estimates that Britain needs additional investment of about £20 billion to catch up with the backlog of council housing refurbishment. That is in addition to the money that is already being spent by councils throughout the country in accordance with the housing investment programme allocations that are awarded to them annually.

I hope that the Minister will accept what to most is an obvious truth—that the size of the repair bill will inevitably increase the longer we wait for the problems that I have outlined to be recognised and dealt with. If the problem is not addressed, property is bound to decay further.

The resources that are available for the task are hopelessly inadequate. Even taking account of the money that is being devoted to the tail-end of estate action schemes—they are no longer being authorised afresh— and moneys in single regeneration budgets, the cake is becoming smaller. Investment in council housing in 1979–80 was £7 billion. I understand that last year it was about £3 billion.

Rochdale housing department tells me that essential planned maintenance is now being financed from the revenue account. It points, however, to the urgent need for rewiring, the replacement of heating systems, re-roofing and window replacement merely to maintain the basic fabric, let alone any attempt to modernise to meet the wishes of tenants who look to property that is appropriate for the 1990s.

Rochdale housing department argues, as do local authorities throughout the country, that more resources are urgently needed. Oldham housing authority tells me that it could easily spend 10 times its current allocation, and that it would still take years to make a mark on the need, such is the scale of the backlog.

The Institute of Housing has proposed some changes to the Treasury rules, which restrict the way in which allocations are made to council housing. Its thoughts are not entirely dissimilar to those of my party. The Liberal Democrats would argue strongly for increased capital investment in housing. Local authorities should be allowed to spend their capital receipts. There is a need to change the Treasury rules to allow local authorities to deal with the backlog that I have described.

The Institute of Housing suggests that there should be a shift of emphasis from the Treasury's reliance, as its marker, on the public sector borrowing requirement towards the general Government financial deficit, which is not a term that I had come across before preparing for the debate. I understand that such a move would bring the United Kingdom into line with general European practice.

The institute proposes the establishment of local housing corporations and the transfer of estates to organisations controlled and established by local authorities, with elected councillors serving on them. By a change in the paper work and a reinterpretation of the rules, local authorities would be allowed to invest more in the housing stock.

I have now been associated with local authorities for some 16 years. I have been a councillor on two authorities and the chairman of the housing committee of one. When I looked round some of the rapidly deteriorating estates in Liverpool in the early 1980s and saw the poor quality of some of the housing built in the immediate post-war years when the problems caused by the blitz and the need for slum clearance were so acute, I would never have believed that, in the closing years of the 20th century, we would still not be able to deal with the problems. In fact, the problem has got worse. I see no end to it.

I should like the Minister to offer to my constituents in Oldham some hope, and some suggestion that the time is coming when, in practice, the capital resources necessary to deal with the rapidly growing problems will at last be made available to local authorities.

11.55 pm
The Parliamentary Under-Secretary of State for the Environment (Mr. James Clappison)

I do not know whether the hon. Member for Littleborough and Saddleworth (Mr. Davies) will consider that he has been lucky for the third time, but I welcome this opportunity to set out to him and to the House details of our policies for housing. I hope that he and his constituents will find in what I have to say answers to a number, if not all, of the questions that he posed.

I commend to the hon. Gentleman as a starting point the White Paper on housing which we published last year, "Our Future Homes", which set out the Government's housing policies for the next decade. The White Paper highlighted the key role of local authorities in setting strategies for their areas—shaping the provision of new social housing, making effective use of existing houses in all sectors and getting new investment in council housing.

Every year, each local housing authority prepares its housing strategy and publishes a statement setting out its main objectives, policies and programmes for the next three years. When preparing its strategy, the authority has to consider its priorities in the context of the resources that it has available and it is up to the local authority to identify where these resources should go.

The strategies play a major part in central Government decisions on how capital resources are allocated to authorities under the housing investment programme. This programme is the main source of Government funding for local authority housing, and in 1996–97 local authorities will receive more than £1.2 billion under the programme. Within that, £943 million is for general purpose allocations, the housing annual capital guidelines, which are distributed to individual local authorities—40 per cent. on a formulaic basis and 60 per cent. competitively.

The formula used to guide the ACG allocations is something called the generalised needs indicator, which is a relative measure of the need for investment in each local authority area. To ensure that the distribution of capital housing resources was based on robust and stable indicators of the need to invest in each area, the Department recently carried out a comprehensive review of the generalised needs indicator. The purpose of the review was to establish indices which were based on the relative need to invest, which derived from the most reliable data sources available, which took into account both supply and demand and which were as straightforward and comprehensible as possible. The review was completed last year, and the 1996–97 allocations are based on the revised indicator.

The main criterion for the competitive portion of the allocation is the relative efficiency and effectiveness of an authority in meeting local housing needs. One of the key factors used to assess that is the quality of the local authority's housing strategy. The others are programme delivery, performance in the enabling role, management practices in the landlord role, and tenant and resident consultation and participation—something by which we set great store.

The Government believe that this allocation on the basis of need and performance has stimulated improved strategic planning and service delivery. Our Government offices for the regions, which assess all the authorities in their region each year, consider that the competitive system has led to an improvement in local authorities' performance. In 1994, Capita Consultants was employed to conduct a review of the HIP process. In its report, it wrote: According to both the Government Offices and the local authorities the present competitive HIP process appears to be succeeding in its primary objective of improving local authority performance in relation to housing strategies and the delivery of housing programmes". The Government therefore propose to increase the competitive element of the housing investment programme, and we are consulting the local authority associations on that matter.

The housing investment programme is, of course, not the only source of Government funding for investment in council housing. Over the past 10 years—the hon. Gentleman adverted to this in passing—the Government have provided considerable additional resources to council estates through estate action and, within the single regeneration budget, £256 million of resources will provide support for the estate action programme in 1996–97.

I understand that the local authorities in the hon. Gentleman's constituency have benefited from estate action schemes. I see that the hon. Gentleman appreciates and fully accepts that point. Oldham has received about £18 million from the estate action programme towards improving nearly 6,000 properties on eight estates, while in Rochdale more than 6,000 properties have been improved on 16 estates at a cost of more than £36 million to estate action.

The improvement of housing and housing conditions for local people through physical improvement, better maintenance, improved management and greater choice and diversity is a key objective for the single regeneration budget and schemes with a significant housing element are among those receiving funding from the SRB challenge fund.

Mr. Chris Davies

I give credit to the estate action money. Within the ward I represent as a councillor in my constituency—the Holt village ward—almost 1,000 properties have benefited hugely from the project. Down the road, the estates to which I referred—Alt and Roundthorn—have identical housing, but as a result of being unlikely to meet the single regeneration bid rules, they could well languish in an unmodernised state while, across the road, their neighbours have benefited. Does the Minister hold out any prospect of the overall size of the cake being increased?

Mr. Clappison

I am pleased that the hon. Gentleman accepts that the estate action programme has benefited the parts of his constituency to which he referred. He has referred to other parts of his constituency—the Alt and Roundthorn estates. I will draw attention to ways in which such estates can benefit, especially from new sources of capital funding. I draw the attention of the hon. Gentleman and his constituents to those sources of funding.

The challenge fund for the single regeneration budget promotes an integrated approach to local regeneration, and it is not possible to identify separately the exact resources directed at housing. However, about 70 of the schemes approved in the first round of the single regeneration budget challenge fund have a significant housing content. Those schemes received about £70 million of SRB resources in 1995–96 and will receive a further £150 million in 1996–97. Schemes with a significant housing content were even more successful in the second round of the challenge fund, and will receive more than £100 million in the first two years.

Both Oldham and Rochdale have been successful in bidding for the SRB challenge fund—Rochdale in rounds 1 and 2 for Canalside and Middleton Pride respectively, and Oldham in round 2 for Westwood. The local authorities will receive more than £30 million in total from the SRB for those schemes. I hope that they will bid for the third round of the challenge fund, which will be launched at Easter this year, and be equally successful.

I turn to other sources of funding and begin with the housing partnership fund under which local authorities can also bid for resources. In 1995–96, £30 million has been awarded to 220 housing schemes and the combination of public and private sector money means that up to £108 million will be invested to meet local housing need, help stimulate local economic growth and create jobs. The projects funded involve a wide range of schemes, from conversion of warehouses to provide social housing, to energy efficiency schemes, and they bring long-lasting benefit to local communities.

Last December, we invited bids from local authorities for the 1996–97 scheme. This year, we will be placing particular emphasis on schemes that bring empty properties into use from both the private and the public sectors. The response from local authorities has been very encouraging, and we will be making an announcement on the successful bids shortly.

Challenge funding of local authority spending has developed rapidly over recent years, and has proved its value. It drives up standards of service and ensures that public funds are directed where they can achieve most. We intend to build on the success of current programmes and continue the drive towards challenge funding. We are therefore considering the introduction of a capital challenge fund for distribution of Government support for local authorities' mainstream capital spending. Consultation on that proposal ended on Friday 15 March, and we are now considering the responses.

Government funding is, of course, not the only source of resources for expenditure on housing. Local authorities can also fund capital expenditure on housing from revenue contributions to capital and from their usable capital receipts. Of course, local authorities must set aside 75 per cent. of housing receipts and 50 per cent. of other receipts for debt repayment. We believe that it is right that local authorities should set aside a portion of their receipts for the repayment of debt. That reduces the burden on council tax payers of servicing local authority debt and has wider benefits for the economy. However, local authorities are free to spend the remainder as they wish. They should therefore regularly consider whether they can generate additional capital receipts.

In addition, as public funding is limited, local authorities should consider ways of increasing private investment. The single regeneration budget challenge fund and the housing partnership fund have shown that local authorities can form partnerships with the private sector, thus securing private finance in addition to public funds for projects that benefit the community.

I come to another important option in the context of the hon. Gentleman's remarks. We would urge all authorities to consider the transfer of their housing stocks to a private sector landlord. We have in place a very successful programme of voluntary transfers, bringing considerable benefits to local authorities and to their tenants. Transfer is one of the best ways of bringing in private finance to improve the condition of social housing stock. Authorities gain a sizeable receipt, which is used first to pay off housing debt.

In addition, authorities will usually also have receipts that they can invest in social housing in their area. Tenants benefit from improvements to their homes, rent guarantees from their recipient landlords and a greater say in the management of their homes. To date, 47 local authorities have transferred almost 213,000 properties to new landlords. Those transfers have attracted almost £3.5 billion of private sector funding and have generated receipts of well over £2 billion for local authorities.

Transfers to date have not been confined to the south of England; there have been a number in the north of England not too many miles away from the hon. Gentleman's constituency, including areas such as South Ribble. We expect that Manchester city council will shortly be transferring 1,400 properties on its Partington estate to Manchester and District housing association.

So far, most large-scale voluntary transfers have taken place in shire districts where the stock is small and in relatively good condition, but we are keen to bring the benefits of transfer to urban and inner-city areas with non-traditional housing. We are committed in the Housing Bill, which is currently being considered by the House, to widening the range of recipient landlords to include local housing companies. The proposed legislation will, for the first time, enable a wider range of non-profit-making landlords to provide social housing—either by receiving stock transferred by local authorities or by acquiring or constructing houses with Housing Corporation grants.

In addition, last year the Secretary of State announced a new challenge fund, the estates renewal challenge fund, designed to facilitate the transfer of poor-quality council housing estates to new social landlords to secure their improvement through increased investment. The type of estates that will benefit are those where low or negative valuations or poor asset cover means that transfer in the usual way, which I have just described, is not a viable proposition.

More than £300 million will be made available through the scheme over the next three years. Grant may be paid towards a range of costs associated with transfer, including the costs of dowries to new landlords where the stock has a negative value, essential repair, maintenance and capital works and the preparatory and set-up costs for the new landlord. The scheme is, of course, voluntary, and transfers will go ahead only where both the local authority and the tenants are in favour.

Grants will be awarded on a competitive bidding basis. Local authorities were invited just before Christmas to start drawing up outline bid proposals to be submitted by mid-February. There has been a very encouraging response. More than 30 local authorities have submitted bids for funding, totalling some £100 million during the first year. They are being considered and authorities will be invited to work up the most promising into detailed bids for submission by the end of April.

We will invite bids for the second year, 1997–98, in September 1996, and I understand that both Oldham and Rochdale will consider the applicability of the fund to them when preparing their housing strategies in 1996.

In summary, local authorities have a key role to play in ensuring that housing needs are met in their areas. They are responsible for setting housing objectives and implementing strategies to meet them, while making best use of the resources available. However, public expenditure will always be limited and local authorities cannot spend as much as they would like on improving their housing. They should therefore consider some of the options that I have outlined, including transferring their stock to private landlords because that can benefit both the tenants and the local authority.

I hope that I have answered many of the hon. Gentleman's questions and set out ways in which his constituents in the estates to which he referred can benefit from our housing policies.

Question put and agreed to.

Adjourned accordingly at twelve minutes past Twelve midnight.