§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Wood.]10.17 pm
§ Mr. John Denham (Southampton, Itchen)
Thank you, Madam Speaker for giving me the opportunity to raise an issue that affects at least nine of my constituents in Sholing, Southampton. I realise that that is a relatively small number of people to make the subject of an Adjournment debate, but their situation is a serious one, and one that I hope will be assisted by tonight's debate. Their homes are structurally unsound. They cannot be sold, and they could not be mortgaged. Yet there is no agreement about how they might be repaired, and there is no immediate prospect of any improvement in the situation.
I am speaking on behalf of innocent victims of a series of events outside their control. I hope that, by raising their plight tonight, through publicity and through seeking the support of my hon. Friend the hon. Member for Greenwich (Mr. Raynsford), who sits on the Opposition Front Bench, and that of the Minister, it will be possible to find a solution to their problems.
All my constituents who find themselves in the position that I have described have bought their homes from Southampton city council, some under the right-to-buy legislation and others under the voluntary sales policy that existed before the right to buy. All the homes are of pre-cast reinforced concrete. They are all of a particular model—"Wates".
Following widespread concern about the deterioration of PRC-built homes, the Government introduced the Housing Defects Act 1984. Under the Act, grants became available for the repair of properties and, in hardship cases, for re-purchase by local authorities.
Although there was little evidence of serious deterioration of homes formerly owned by the city council, the widespread bad publicity and the passing of the Act blighted all such homes, and most people took advantage of the repair grants. That is what my constituents did. It still grates on them that, shortly after their homes were supposedly repaired, there was a switch, and from then on most people used the grant money to have their homes rebuilt. My constituents were among the last in Southampton to have homes of this type repaired.
The homes were supposed to be repaired in 1990 and 1991. As the Minister knows, a licence and warranty arrangement was established to ensure that repairs to the defective houses were undertaken effectively, and that all repaired dwellings were mortgageable. That arrangement was set up and controlled by a subsidiary of the National House-Building Council called PRC Homes Ltd. The PRC Homes scheme involved the preparation and design of a series of repair schemes. The schemes were developed and had to be approved by a qualified appraiser, after which a licence was issued by PRC Homes to the designer of the repair scheme.
The repair scheme was usually also submitted to each relevant local authority for building regulations and planning approvals, and for grant assistance. That process made it possible to identify whether a licence needed to be amended to suit the particular condition in each local area. After that process, the work was usually tendered and a repairer—a builder—was appointed to do the work.
126 The reason for tonight's debate is quite simple. For my constituents in Sholing, that process broke down, and broke down badly. What is not in doubt is that the works that were carried out were not carried out to the licence. But there is some doubt whether the licence that was approved was suitable for the type of homes involved and for the working conditions that applied to my constituents' homes. What is at issue, and what I want to ask tonight, is what exactly is wrong, what now needs to be done to put it right, and who is responsible for carrying out and paying for the work.
I shall not go into great technical detail: I do not have the technical expertise to do so, and I shall limit the time that I take reading from other people's technical documents. The fundamental principle of the repair schemes seems to have been that the concrete panels, which were or could be defective, should no longer be load-bearing. Either they had to be removed and replaced, or additional structures had to be put in place that took the load instead.
In the case of the Southampton properties, those principles were breached in a major way. Concrete panels were left load-bearing, and replacement walls were built in such a way as to be incapable of providing a secure structure and a secure home.
To explain why I have asked for an Adjournment debate, I shall go over some of the history. PRC Homes had overall responsibility for the administration of the Housing Defects Act 1984. Michael Dyson Associates obtained the repair licence for the Wates homes in Sholing in Southampton. That company was the agent for thousands of different types of PRC homes up and down the country. The builders were S. J. Wickens. Incidentally, my constituents were refused a choice of builder by Michael Dyson Associates, even though work on other Wates properties in Southampton had been done by a different builder. The local authority was Southampton city council.
I shall not go into all the details, but I must point out that some variations to the normal licence were required to cope with the problem of Wates houses that had a party wall with a city council tenant rather than another home owner. That meant that all the work had to be carried out from one side of the party wall. The treatment of the party wall turned out later to be a significant problem.
The repairs in Sholing were in Coates road, Sullivan road and Parry road, and were carried out between 1990 and 1991. It is accepted that problems were identified during that time. It should be stressed that the problems were identified only because of the alertness and vigilance of some of the home owners. None were identified during the inspections of the properties. Indeed, Michael Dyson Associates signed off the properties as having had the works carried out to the licence conditions. It also issued inspection certificates, which were supposed to carry a 10-year guarantee that would satisfy a mortgage lender. I have one of those certificates, and it is quite worthless.
It is odd that an agent that had a financial interest in the progress of the work was able to approve work and release moneys to itself. A clear conflict of interest lies behind some of the problems. It was only because some of the home owners had some common sense and technical expertise and challenged what had been done to their homes, that the problems came to light.
127 The city council took the view, consistent with Department of the Environment circulars, that the presentation of a certificate from Michael Dyson Associates was sufficient for it to release grant money. I should say for the record that I chaired the Southampton housing committee in 1990 and 1991. I have checked the records carefully, and I can say that none of the issues was presented to members during that period.
Only after some home owners objected did city council officers refuse to release some funds on some properties. I stress the history, because some people have tried to make my constituents seem unreasonable in what they have done since. The truth is that, throughout this sorry story, my constituents have received a series of reassurances which, on their challenge, turned out to be useless.
I cannot give a blow-by-blow account of what happened in 1990 and 1991, but those who had complained were asked to allow Wickens the builder back into their homes a number of times. Some did, as many as three times, but it became clear that any work being done was cosmetic, and was not dealing with the major structural problems. Given the home owners' disillusionment, it is not surprising that court action seemed to them the only way forward.
In 1991, PRC Homes received correspondence from my predecessor, Christopher Chope; then from one of the home owners; then from solicitors representing seven owners. In my view, it is deeply disappointing that no systematic inspection of the properties in Sholing was carried out by PRC Homes at that time. PRC Homes will say that that was because of the threat of legal action. Later—under pressure from me—it relented, although legal action was still a possibility. By that time, it must surely have been clear that there was potentially a real problem with a number of homes in Southampton, and that it would have been better to intervene.
I understand that, during 1991 and 1992, various discussions took place involving Michael Dyson Associates, the city council and some home owners regarding potential repairs. The tone of those discussions suggested that the owners were being unreasonable in not letting anyone back in to do the work, but they were understandably reluctant to trust the company that had so clearly approved the shoddy previous repairs, or the builder who had let them down so badly.
After my election, I was approached by two of the owners, Mrs. Conroy and Mr. Hampton. I felt that the priority was to find out what needed to be done, and that argument about who should do it should take place later. In December 1992, I sought help from PRC Homes. On this occasion, it did respond, and agreed to inspect properties—but only the properties of Mrs. Conroy and Mr. Hampton: it would not look at others that might be defective.
That was, I believe, a fundamental error. All the onus was being placed—as it had been from the beginning—on home owners to know that there was something wrong with their properties. At that time, I was gradually becoming aware of more and more owners with potential problems.
An inspection took place, and on, 20 May 1993, PRC Homes wrote to Southampton city council saying that the timber frame party wall was fundamentally defective. By 128 that time, however, Wickens was in receivership. Over the summer of 1993, PRC Homes found out from the city council how much money had not yet been paid to the builder—a sum potentially to contribute to the cost of repairs. It was now being suggested that £10,000 would be needed to repair each home. That was far less than the home owners believed was necessary; rightly or wrongly, it reinforced the view that they would again be fobbed off.
For some home owners, it was now three and a half years since their homes should have been repaired. There was a fundamental breakdown of trust in relation to Michael Dyson Associates, the council and PRC Homes. There is no doubt that the situation had become complex, with some home owners seeking a negotiated solution, some taking or least threatening legal action and some supported in such action by legal aid. Access to the homes was not easy.
In February 1994, I again approached PRC Homes and suggested that we meet to discuss the position. I met Basil Bean, chairman of PRC Homes, here at the House of Commons. It was agreed that a new approach would be tried: PRC Homes would put together a repair scheme and offer it to the home owners, and the city council would provide "decant" accommodation. In June 1994, at Southampton civic centre, I chaired a meeting at which that approach was suggested.
By that time, I knew of nine affected home owners, far more than had contacted PRC Homes. PRC Homes had made no attempt to contact other people with similar property who had had work done by Michael Dyson Associates and Wickens.
By that time, some home owners had decided that the only way forward was either the complete demolition of their homes, and a rebuild, or for someone to re-purchase their homes. At the meeting in Southampton, some owners reserved their rights to press for those options. As those home owners knew, my hope was more modest. It was to achieve, through negotiation, repairs that would at least put people back where they thought they were going to be in the first place: with sound, mortgageable properties. None the less, the city council explored with the Department of the Environment whether the council could receive any extra funding to re-purchase the properties, but that was not possible under the Housing Defects Act.
Some owners were willing to consider repairs. In January 1995, PRC Homes wrote to all owners setting out its offer of repairs and the city council's offer of accommodation. I believed then that the problem was close to resolution, but, two years later, no work has started, although one home may be done in February. That is why I took up the issue again in the autumn.
One of the reasons for asking for this debate is that I could not obtain answers to my letters to PRC Homes. I have now had a reply, but I am sorry to say that we are not much nearer a solution. I accept that there has been a good deal of toing and froing with the owners, which has taken time. Not surprisingly, they want to be satisfied that the work to be done would do the job. I am sorry to say that the story is repeating itself.
Most fundamentally, each owner is being dealt with separately, although their problems are common. Those owners that have challenged the PRC Homes proposals have produced convincing evidence that the proposed repair scheme is inadequate. One of the owners, 129 Mr. Magee, has obtained, under legal aid, a structural survey of his property. That sets out clearly not only what was wrong with the original repairs, but what is wrong with the PRC Homes scheme.
Again, I stress that I am not technically qualified to assess the evidence, and all the properties are different, but I find the report persuasive. It confirms that a steel beam has been fixed to a concrete panel, a fundamental breach of the licence, and concludes:If the steel was severed from the concrete panel, as is required by the licence, we believe that the party wall framework would not be capable of carrying the imposed first floor and roof loading. The structural stability of the property would be seriously affected, resulting in potential partial collapse.That confirms the concern about the party wall, but the report, alongside a lengthy list of poor workmanship and licence breaches, also finds a major breach in the treatment of the non-party walls involving the removal of linings.
Again, I quote from the survey:this item has resulted in general misunderstanding by the repairer and designer alike, leading to major constructional defects and problems on site and large scale deviations from the licence. In effect, the removal of internal linings completely revokes the licence which was prepared on the basis of linings remaining.It goes on to say that a trial holeshows the fixing of the roof to the new blockwork to be structurally inadequate, the junction between external cavity wall and internal gable wall to be inadequately tied, and the walls to be poorly constructed. Large scale rebuilding works are urgently required to remedy these defects.I could go on, but those quotes illustrate the scale of the problem on one property. They have not been reflected in the PRC Homes response to date. The PRC Homes proposals are in respect only of the party wall framework. As they stand, they will not rectify the other major constructional defects.
As I have mentioned, there was originally talk of £10,000 per property being needed. Some owners have been told that the cost in their case may reach £20,000. The structural engineer's survey on this one property estimated the repair cost at £37,000. Every estimate puts the repair cost closer to the cost of a rebuild.
I cannot stress too much that it is not right that the scale of the problem should be revealed only by the individual initiative of my constituents. In this case, it is the taxpayer, through legal aid, who has funded the survey. Another constituent has already spent nearly £8,000 on surveys and legal fees in obtaining her own independent advice—all that because there has not yet been a commitment to a comprehensive and inclusive solution to the problem.
Of course I welcome PRC Homes's general acceptance of the need to respond to the crisis faced by my constituents, but PRC Homes must move more speedily and comprehensively to a solution than it has done so far. It is now seven years since the first work was done, four and a half years since I first became involved, and two years since PRC Homes offered to undertake repairs. That time scale is not good enough. There is no sense yet of an organisation that is committed to finding, urgently, a comprehensive solution.
I ask the Minister to support me, because PRC Homes was and is responsible for implementing the Housing Defects Act, which is Government legislation. Others, 130 such as Michael Dyson and the builders, Wickens, may bear responsibility for the original failure, but the ball is now in the court of PRC Homes. I ask the Minister to support my contention that PRC Homes must find a complete solution for all the properties. As part of that, it must satisfy itself that no other properties repaired by the same or similar people have hidden problems on this scale.
Given the distrust that now exists, a system of independent inspection or arbitration covering all the properties must be agreed and put speedily into place. Finally, PRC Homes should agree in advance to carry out the necessary remedial work, or to agree an alternative with the home owners. Any need to recoup funds from any other party to this sorry tale should be the responsibility of PRC Homes.
My concern is that my constituents, whose homes have been worthless for more than a decade, will be forced into a situation in which some will take an inadequate offer out of desperation, others will struggle to finance their own legal action, and yet others will have to be funded by the taxpayer through lengthy legal battles. That would be quite unfair, and I ask the Minister to use all his powers to press for a solution along the lines that I have outlined.
§ Mr. Nick Raynsford (Greenwich)
I am grateful to my hon. Friend the Member for Southampton, Itchen (Mr. Denham) and to the Minister for allowing me to speak briefly in the debate. I pay tribute to my hon. Friend for raising this important subject, which affects a number of his constituents. He has rightly highlighted the disturbing implications for them of the manifest failure of schemes, and the way in which they were put into effect, that were supposed to resolve the problems in their homes.
Some wider issues of public concern ought to be addressed, and I hope that the Minister will attend to them, if not now at least in the near future. First, my hon. Friend the Member for Itchen made a reasonable case for the need for some kind of independent verification and inspection of the quality and validity of the work. Those involved in the process, whether PRC Homes or Michael Dyson Associates, all had a vested interest in the way in which the work was carried out. There seems to have been no proper mechanism to ensure independent scrutiny and inspection.
Secondly, there is the issue of public money. The works carried out to the defective homes under the relevant legislation involved the use of public money, and my hon. Friend has said that more public money is being spent on legal aid to try to enforce remedial works because of the failure of initial work. It is unsatisfactory for public money to be brought into use for a second time by a different route to enforce repair work that would not have been necessary if the original remedial action had been carried out properly.
Thirdly, there is the wider issue of the remedies that are available to home owners. The Minister will be aware of growing concern that the systems, supposedly designed to reassure those who buy new homes, that are operated through the National House-Building Council and other bodies have sometimes not proved entirely satisfactory. PRC Homes, a subsidiary of the NHBC, seems to have failed to provide a speedy and adequate response to the 131 rightful concerns and grievances of home owners. I hope that the Minister will address those matters and ensure justice at long last for my hon. Friend's constituents, and that he will also address the wider issues.
§ The Parliamentary Under-Secretary of State for the Environment (Mr. James Clappison)
I appreciate the interest of the hon. Member for Southampton, Itchen (Mr. Denham) in this matter. Perhaps he and the hon. Member for Greenwich (Mr. Raynsford) will allow me to put these issues in the context of the housing defects scheme of assistance as a whole.
In the early 1980s, following discovery of cracking in the columns of an Airey house, the Building Research Establishment conducted a comprehensive investigation into all types of precast reinforced concrete houses built before 1960. The BRE discovered that, unfortunately, in a long-term chemical process known as carbonation, carbon dioxide interacted with the concrete to change its composition, so that the protection that it afforded to the steel reinforcement would eventually be lost, and in due course houses would become structurally unsound.
It is a slow process, and the BRE found that, in most cases, structural failure would not occur for some time. However, all dwellings of that type would eventually be affected, which meant that many former tenants—over 25,000 in England alone—had bought their homes at a valuation that did not accurately reflect the true likely dwelling life.
The homes had been sold in good faith by public sector landlords, in circumstances in which neither the vendor nor the purchaser could have been aware of the inherent defects. Therefore, with all-party support, we introduced the scheme of assistance embodied in the Housing Defects Act 1984. The scheme entailed that, over a 10-year period, owners would receive 90 per cent. grants, or 100 per cent. grants in cases of financial hardship, to reinstate their houses to the structural condition that their original valuation had assumed—the "defect-free" value.
Reinstating houses to that condition meant either removing and replacing the original PRC components or making them structurally redundant. In cases in which it was physically impossible to do so or it offered better value for money, or in hardship cases, the alternative form of assistance would be re-purchase. The primary form of assistance, however, would be through reinstatement.
It was a massive undertaking. In England alone, 22 different PRC house types were initially designated under the legislation as inherently defective, some of them with as many as 18 separate variants. Repair systems had to be designed for all of them that met the stringent standards on which lending institutions rightly insisted to accept houses as assets for mortgage purposes. Therefore, the National House-Building Council set up a subsidiary—PRC Homes Ltd.—to license repair systems that would meet the criteria, and repairers to carry out the work; to approve a list of inspectors to inspect the work; and to issue a 10-year warranty at completion.
132 PRC Homes Ltd. was fortunate in being able to call upon advice from technical experts from the local authorities, who were to administer the scheme, and from the lending institutions, BRE, and my Department. The assessment committee met regularly over a period of eight years to evaluate, line by line and drawing by drawing, the specifications for a total of 53 separate repair systems. As a result of their work, less than 1 per cent. of owners eligible under the scheme who have applied for assistance are still waiting for works to be completed, and we expect the vast majority of local authorities, including Southampton, to have completed their programmes by the end of this financial year.
Lending institutions have been supportive throughout. A survey of the largest building societies, conducted in 1986, suggested that almost all would consider on normal terms an application for mortgage on a repaired property, and that generally remains the case today. However, even the most watertight licence and inspection system is vulnerable to human frailty, and there is always a possibility of problems, which is why the PRC Homes Ltd. warranty makes provision for ensuring that defects or damage caused by failure to comply with workmanship, materials or design requirements of the repair system that are discovered in the first two years after completion are rectified by the repairer or—if the repairer becomes bankrupt—by PRC Homes Ltd. itself.
In the specific cases in Southampton which the hon. Member for Itchen has brought to our attention, the repairer did vary a detail from that shown in the licensed system. The variation was picked up by the inspector, however, who instructed the repairer to return to site to carry out remedial work—which he agreed to do, pending release of retention moneys. As I understand it, the variation in no way compromised the structural stability of the dwellings, but merely meant that the new works to render the existing party wall structurally redundant were not completely independent of the unrepaired property next door. A continuous beam linking the two properties had been left, rather than severed at the party wall, as required by the repair system. Until the matter was remedied, obviously the repair could not be accepted by a lending institution as conforming completely with the licensed repair system.
Unfortunately, it appears that at least some of the owners were unwilling to give the repairer access to their houses to carry out the work, and that, for the same reason, later attempts by PRC Homes Ltd. to carry out an independent inspection were also unsuccessful. A warning of legal action by six of the owners then meant that PRC Homes Ltd. did not feel that it could be further directly involved at that stage.
That state of affairs persisted until December 1992, when the hon. Member for Itchen wrote to PRC Homes Ltd. asking for their assistance as an "honest broker". A site meeting was arranged at three of the properties, in April 1993, to agree a schedule of works, but, in June 1993, PRC Homes Ltd. were advised that the repairer had ceased trading.
That meant that PRC Homes Ltd. was now directly involved under the terms of the insurance certificate. However, in October 1993, one of the owners telephoned PRC Homes Ltd. to advise the company that the owners did not want repairs done, and that she and three of the other owners were considering legal action against the 133 inspector. Nevertheless, PRC Homes Ltd. managed to obtain access to the properties to carry out inspections over the next three months.
In April 1994, one of the owners contacted an official in my Department, who advised her that the scheme of assistance was administered by local authorities, and that it therefore did not appear to be a matter in which the Department could become directly involved.
Southampton city council then wrote to my Department in October of that year in response to a request from the owners, inquiring whether it would be possible for the council to re-purchase the properties. It was pointed out that there was no provision in the legislation for assistance by re-purchase after an owner had already received assistance by way of reinstatement grant. That remains the case today, and, in any case, as I have already noted, re-purchase as a form of assistance is available under the legislation only in very specific circumstances, which Southampton city council had evidently decided in 1989 did not apply here.
Re-purchase is not a feasible solution to the owners' problems, and while I obviously sympathise with their desire not to undergo further disruption to their homes 134 while remedial work is carried out, nevertheless the fact remains that the only viable way forward is that provided by the terms of the warranty.
Both Southampton city council and PRC Homes Ltd. are, I understand, in agreement on the works to be done. I also understand that the council has offered the use of an empty house as alternative accommodation while the work is carried out, and that PRC Homes Ltd. is prepared to meet storage and removal costs, even though the original works were carried out with the owners in residence.
I do not see what more the two parties can do to advance matters, and indeed I understand that one of the owners has already accepted that, and has even agreed that work can proceed while he remains in occupation. If the other owners signal their agreement, they too can join the contract, and put an end to seven years of frustration and uncertainty. I very much hope that that proves to be the case, and that, having heard what I have had to say, the hon. Gentleman agrees with me that it is the only practical outcome.
§ Question put and agreed to.
§ Adjourned accordingly at fourteen minutes to Eleven o'clock.