HC Deb 13 July 2004 vol 423 cc1257-77 12.31 pm
The Deputy Prime Minister (Mr. John Prescott)

I am delighted to welcome yesterday's announcement by my right hon. Friend the Chancellor of the Exchequer.

The 2002 spending review allows the Government to take the next steps towards the creation of sustainable communities across the country. By 2008 my office will have over £1.3 billion more to spend on our main programmes than it has this year, an average annual increase of 3.3 per cent. in real terms. By 2008 our spending on housing will also be £1 3 billion more than this year, an annual average increase of 4.1 per cent. in real terms. Since 1997, more than 1 million homes have been built, 1 million more homes have been made decent, and 1 million homes have gone into home ownership.

This is not just about housing, however. During the five years up to 2008, my office will spend £38 billion on creating sustainable communities. That is £16 billion more than the £22 billion in the sustainable communities plan that I launched in February last year.

As the Chancellor said yesterday, providing affordable homes for those who need them most is a key element of our programme to create sustainable communities. By 2008 the Government will have more than doubled spending on new affordable housing since 1997: it will have reached £2.25 billion. We will provide an extra 10,000 homes a year for social rent, 50 per cent. more than today, which means the provision of 75,000 new socially rented homes over the three years. On top of that, we will deliver more than 40,000 homes for essential public-sector workers, and low-cost home ownership in areas of high housing demand. Our programmes to increase the amount of affordable housing will also help to turn around the rising trend in homelessness.

The growth in affordable housing will be achieved over the next three years with money for the Housing Corporation and the regional housing boards, public finance initiative credits for new homes, and procurement savings. Altogether that is worth about £1.5 billion. Much of the new housing will continue to be on previously developed land. As the House knows, we set a target of 60 per cent. of new homes on brownfield land by 2008. We have already achieved 66 per cent., an increase on the 56 per cent. of 1997. At the same time, we are saving greenfield land by building at higher densities. I issued a direction to increase the density in London and the south east from 25 to 30 homes per hectare, a rise of more than 20 per cent., and we are well on the way to achieving that.

A good example of our approach is the way in which English Partnerships is leading the transformation of the Greenwich peninsula, the most polluted, poisonous piece of land in London, into a sustainable community. The Greenwich millennium village has the best in new design, eco-friendly housing and open space. As a whole, the Greenwich peninsula will have 12,000 new homes—33 per cent. of which will be affordable housing—new schools, a health centre, new transport links and new public spaces. It will be only a couple of stops from the new channel tunnel rail link, which will be here in 2007 on the new part of the Jubilee line. That was possible only because the Government were willing to invest in cleaning up the land, which has unlocked a further £4.8 billion of public and private investment.

We have increased the size of the green belt by some 19,000 hectares since 1997—an area larger than Solihull. I see that the hon. Member for Meriden (Mrs. Spelman), the usual spokesperson, is not present. Where is she? We shall probably hear later. It seems that we have only the shadow shadow Minister, rather than the real one—but we can talk about that later. Our commitment to sustainable communities is underpinned by our fundamental reform of the planning system with new legislation, new guidance and new resources.

The sustainable communities plan recognises that different parts of the country face different problems and need different solutions. As hon. Members will know, and as the Kate Barker report confirmed, house prices in London and the south-east have been rising faster than wage rates, which denies people on moderate incomes a home of their own. The Barker report called for more housing supply and recognised that we have already begun to unlock the huge potential of our growth areas, such as the Thames gateway, to provide more private and public housing. This spending review means that we are on track to build an extra 200,000 homes in the growth areas to tackle the urgent need for more homes and to respond to further proposals for growth. That means a total of 1.1 million new homes across London and the south-east by 2016, an increase of 20 per cent. on the original plan.

Across Government, we are working in new ways to co-ordinate our approach and support innovative public-private partnerships. One example is the ambitious joint venture that English Partnerships and Bellway Homes are forming to develop Barking reach. Altogether, more than 10,000 new homes will be built, creating a new sustainable community with affordable and market housing. Today, I can announce that we will be doubling the Office of the Deputy Prime Minister's expenditure on the growth areas outside the Thames gateway to help prepare sites and improve local infrastructure so that we can unlock the land for development. Working with my right hon. Friend the Secretary of State for Transport, the ODPM is also creating a new community infrastructure fund to provide an extra £200 million for transport infrastructure in the growth areas over the review period.

In London and the south-east, our aim is to meet the pressing need for more affordable housing, but in other parts of the country, we face the challenge of housing market failure and surplus houses. Many hon. Members have welcomed the nine market renewal pathfinders set up in the north and the midlands under the sustainable communities plan. Those market renewal pathfinders aim to create vibrant and attractive communities, where people want to live and do not want to leave—as is currently too often the case. They have been designed to turn round declining communities and lift the value of land and homes through public-private partnerships.

We are beginning to see early signs of success in overcoming the massive problems of negative equity, exploitation by rogue landlords, and a deteriorating public realm. This year's settlement means that I am trebling our spending on combating low demand and housing market failure from £150 million this year to more than £450 million in 2008. That will maintain the growth of the pathfinders, as well as widening our approach to other areas of low demand.

Creating sustainable communities involves not only building new homes, but improving the quality of existing homes. The refurbishment of an existing property may not show up in the statistics as a new house, but to the people who live there it is a new home. Many of us take facilities like modern kitchens, bathrooms, insulation and central heating for granted, but they mean a huge amount to people who do not have them.

In 1997, we inherited a £19 billion backlog of repairs in the public sector, which the previous Government left to deteriorate. With the help of our partners in local authorities and housing associations, we have made excellent progress in ending the appalling neglect of publicly owned housing. We have reduced the number of non-decent homes in the social sector by 1 million since 1997. The spending review will allow us to reduce that figure still further, by another 600,000 homes.

By 2008, more than 2.5 million people will have benefited from our decent homes programme. We have delivered that programme by increasing the funding that local authorities have available to repair and improve their properties through a programme of transfers, PFIs and arm's length management organisations for those authorities that want further investment to improve housing. We have committed £3.4 billion to PFI projects and ALMO programmes since 2002, and £5.3 billion of private sector finance has been raised since 1997 to fund repairs and improvements to homes transferred to new landlords. There have been 153 ballots for ALMO and transfer schemes, and 82 per cent. of them resulted in a yes vote. The settlement allows us to continue that ambitious programme, and I will make an announcement on the details in due course.

A number of local authorities and tenants have experienced a funding gap between income from rents and the cost of renewing homes. I can announce that we expect to provide £180 million for gap funding to enable transfers to proceed. I also welcome the fact that my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs will be delivering an additional £95 million a year by 2008 for the Warm Front programme, to help end fuel poverty for vulnerable households by 2010. Since 2001, we have doubled the amount of new social housing provided in small rural settlements. Rural areas will also benefit from the substantial increase in social housing in this settlement.

Our drive to create sustainable communities is about more than a roof over people's heads; it is also about people taking pride in the place where they live, so that they can feel confident and secure in their own neighbourhood. So as well as providing new and improved homes and infrastructure, we are determined to provide high-quality living environments for people to enjoy. Under the sustainable communities plan, we are already investing more than £200 million to help create cleaner, safer and greener communities. This will be measured by a new liveability target, as part of our public service agreement.

In addition, I can announce that my right hon. Friend the Home Secretary and I will bring together existing funding streams amounting to at least £660 million, in order to create a new safer and stronger communities fund. This will improve the quality of people's local environment and their safety. Such schemes, to which Members have previously referred, have been successful. This money could, for example, be used to provide up to 5,000 new wardens.

Tackling disadvantage is one of the key themes of this spending review. My right hon. Friend the Chancellor and I have been working with Government Departments to ensure that their new public service agreement targets help to close the gap between the most disadvantaged people and the rest of society. Again, this initiative will be welcomed. I am delighted to announce that we are maintaining the neighbourhood renewal fund, which the press predicted would be cancelled, at £525 million a year. alongside our continuing 10-year commitment to the new deal for communities. Such schemes have also been discussed in this House, and the National Audit Office found them to be very successful. Indeed, the NAO recently acknowledged the success of our approach to neighbourhood renewal by saying that the NDC has brought "significant benefit." That is indeed true.

We are convinced that creating sustainable communities is not simply a task for the Government. I want to thank a range of regional and local partners in the public and private sector who are delivering substantial change on the ground. The Housing Corporation and English Partnerships are finding imaginative ways to create new homes and communities. Regional assemblies, regional development agencies and the Government offices for the regions, all of which the Opposition want to scrap, are also critical to the success of our agenda. They are key delivery agents in the drive to achieve greater sustainable growth and regeneration throughout our English regions.

As the Chancellor said yesterday, the northern regional development agencies, supported by our Government offices for the regions, are working on a "northern way" growth strategy to help the north to achieve its full potential. Just think: if our three northern regions raised their performance to the national average, the gross domestic product would be £35 billion higher, and 200,000 more people would be in work. That is a huge prize worth working for, but the Opposition want to throw it away by scrapping the successful regional bodies, which will deliver jobs and growth. As my right hon. Friend the Secretary of State for Trade and Industry will outline in due course, we will be providing the RDAs with £4.7 billion over the next three years. Our funding of RDAs in 2007–08 will be virtually double the amount that they received in 2001.

Local government has a crucial role in supporting the development of sustainable communities and tackling disadvantage. Since 1997, we have increased grants to local government by 30 per cent. in real terms, which has contributed to rising standards in local services; 55 per cent. of councils are now "good" or "excellent". And we will provide an extra £7.2 billion in general grant by 2008 compared with this year—an annual growth rate of 2.7 per cent. in real terms.

My right hon. Friend the Minister for Local and Regional Government is making a written statement today about the outcome of the spending review for local government. We are having ongoing discussions with colleagues in local government about a 10-year vision for the role of local authorities and our relationship with them.

One key element of our approach is to simplify funding and bureaucracy. As my right hon. Friend the Chancellor said yesterday, there will be three-year budgets for local authorities, which they have been requesting for a good period of time. We will also pilot local area agreements to simplify the central Government funding streams going into those areas.

The House will also be aware of the concern that we should recognise and deal with the new threat from terrorism. The spending review will allow us to continue investing in the modernisation of the fire and rescue service. It will give increased funding to strengthen the ability of the service to counter terrorism. That will deliver a fire and rescue service fully equipped and trained to decontaminate and rescue the public in the event of a major terrorist incident, a new national communications system by 2008 and regional fire control rooms in each of the English regions.

A lot has already been done since I launched the sustainable communities plan in February 2003. We know that there is still a great deal more to do, and I shall publish a five-year strategic plan for my Office in the autumn, setting out in more detail our plans to create sustainable communities across the country. The spending review will allow us to move up a gear. We will be spending a record sum of —38 billion over five years on new homes, new infrastructure and new open spaces, as well as rebuilding and renewing existing towns and cities.

That is our agenda for reform and renewal. We aim to bring prosperity and pride across all regions, to work harder for the most vulnerable people in society and to create sustainable communities for all.

Mr. Bernard Jenkin (North Essex) (Con)

We certainly share the Government's stated objective of creating sustainable communities for all, but where is the evidence, on the basis of their past record, that the Government will ever achieve that? All the increases would be welcome if we could have real confidence that the money would be spent efficiently and that the Government knew how it would be paid for.

The Deputy Prime Minister claims that there will be efficiency savings in his Department of £6.45 billion by reducing waste in government. Conservative Members have been complaining about waste under the Labour Government ever since the Government were first elected. Why is the Deputy Prime Minister currently wasting £6.45 billion, unless it is as a result of his sheer profligacy and incompetence over the past seven years? How can we have any faith in his latest promises to save money when he has presided over an average 70 per cent. increase in council tax—a tax not mentioned in his statement, and I wonder why. Will the Deputy Prime Minister confirm that the spending review means that the council tax will rise again by 7 per cent. next year, the year after that and the year after that—at three times the rate of inflation as it has every year since 1997?

This is a tax-and-spend Government, and this spending announcement means that taxes will rise again. No doubt the Deputy Prime Minister will, in a moment or two, accuse us of threatening cuts as our alternative, just as the Chancellor of the Exchequer did yesterday. Let us go through it all again. Let me tell the right hon. Gentleman what our alternative actually is. As my right hon. Friend the Member for West Dorset (Mr. Letwin) said yesterday, it is indeed cuts. We will cut bureaucracy; we will cut inefficiency; we will cut quangos, regulations and the hordes of interferers who do nothing good for this country. We will cut borrowing; we will cut waiting lists; and we really will cut homelessness, as we did under the last Conservative Government. We will cut failure in schools and the £1 billion local government inspection regime. We will cut crime; and we will really cut this big fat Labour Government down to size.

Pride of place in the Deputy Prime Minister's statement goes to his housing announcements. Having presided over a 40 per cent. slump in social house building, an erosion of the green belt and a 27 per cent. increase in homelessness, he now expects plaudits for trying to unravel some of the damage that he has done. The increase in funding for social house building is welcome, but the Minister for Housing and Planning has rightly questioned whether we are getting value for money from this budget by channelling the funding through the Housing Corporation. Why is there no word in the Deputy Prime Minister's statement about the reform of Housing Corporation funding mechanisms?

The communities plan will chew up vast swaths of greenfield land, and concentrating house building in the prosperous south-east will widen the gap between north and south. The Deputy Prime Minister says that he is protecting and even increasing the green belt, but we all know that he is increasing it in places where there is less development pressure, while sacrificing it in areas where it was doing the job of preventing urban sprawl. His regional planning guidance is removing green belt designations. He says that 60 per cent. of homes will be built on brownfield land, but his definition of brownfield land includes the leafy suburbs and back gardens treasured by so many people in our cities.

The Deputy Prime Minister says that the comprehensive spending review will secure the implementation of the communities plan with its 200,000 additional homes in the south-east, but how will his £150 million community infrastructure fund begin to deliver the infrastructure required, when the Housing, Planning and Local Government Committee estimates that it will cost at least £20 billion?

On regional government, we welcome the proposal that local business people should help decide investment priorities throughout the country. We have not said that we will scrap the regional development agencies; I have never said that.[Interruption.] It is incumbent on the right hon. Gentleman to accept that I have never said it and it is not our policy. Perhaps he will correct the record. We want to reform the RDAs, not destroy them. What is the point of increasing the so-called "single pot" for the RDAs if the RDAs, like the rest of the increasing bureaucracy of regional government, are more and more dictated to by Ministers with targets, performance agreements, interference and diktats? That is centralisation, not decentralisation.

How can we take Labour seriously on decentralisation in England when elected regional assemblies will control less than 2 per cent. of the public money that they will be spending in those regions? The powers that they will exercise are not taken from central Government; they are stolen and stripped away from local government, which is increasingly controlled by central Government.

What do the Government mean by—I quote from the document published yesterday— strengthening the conversation between central and local government on shared priorities"? What does it mean when the Deputy Prime Minister wants to strengthen the conversation with local government? What sort of conversation is it when local government representatives' pleas for real freedom and flexibility so that they can innovate and lead their communities are answered by a punch in the face from the Deputy Prime Minister in the form of rate capping, comprehensive performance assessments and best value? How will he reduce the regional disparities that he talks about, when he is concentrating so much of the investment that he announced today in the south and the south-east?

Under Labour, fake savings are matched by fake decentralisation. Nothing the Government announced this week is designed to have any real impact before the general election. What the country needs is not more fictional figures and fake savings from failed Ministers, and not more synthetic statements leaked in advance to the press to win votes in the short term. Why does the statement fail to address so many of the real problems—soaring council taxes, urban sprawl in the countryside, the growing burden of central Government, growing bureaucracy and the ever-growing burden of taxation, which the people of this country will still be paying long after the Deputy Prime Minister has become the ex-Deputy Prime Minister?

The Deputy Prime Minister

Have I got to reply? That was pathetic. That response probably makes the shadow Chancellor look quite effective. I do not know where the real spokesman for the Tory Opposition is today, but she would have done a lot better than that.

Let me try and answer some of the points that the hon. Member for North Essex (Mr. Jenkin) made. I shall answer with the evidence of what occurred under the previous Administration—that is the only way we can judge the Opposition. The hon. Gentleman asks about the sustainability of our seven-year programme. Millions more of our people are back at work, and more are in education and in our hospital services. More houses are being built and more communities are being developed. All that is about sustainability and we have achieved it in seven years. In the years before, we had the boom and the bust, record unemployment and cuts in local authorities. It is a bit of a cheek for the hon. Gentleman to tell us that he is a friend of local authorities when, in the last four years of the previous Administration, their grants were cut by 7 per cent. in real terms, whereas we have increased grants by 30 per cent. in real terms. That is one of the realities.

If the hon. Gentleman wants to talk about tax, how much waste resulted from the poll tax? Everyone agrees that billions of pounds were spent on the poll tax, the Tories' alternative for the local authorities. How much was wasted in the millions unemployed under the previous Administration? The debts and the interest payments to meet the debts to pay for the unemployment were greater than the education budget. That is not only waste, but a wrong priority.

On council tax, I have heard the arguments over the course of the past few years. For example, last year the hon. Gentleman and his friends often predicted that the rise in council tax would be 15 or 20 per cent. In reality, it ended up at 5.9 per cent. on average, with Tory councils charging a lot more than Labour councils. We will wait and see w hat happens to council tax in the future.

The hon. Gentleman said, as did the shadow Chancellor, that the Conservatives were the party of cuts. We entirely agree. They are the party of cuts—cuts in support to local authorities, and cuts that went on in education, health and housing. In the last five years of the previous Administration, they halved the budget for housing. As I understand it from what the shadow Chancellor said, he intends to cut housing and local authority expenditure again, by a total of £18 billion in the first two years, and £400 million of that will be the housing programme, which he does not say much about. We on the Labour Benches all agree that the Opposition were the party of cuts in the past and they intend to be the party of cuts in the future£no doubt about it. We must take into account what they did in the past.

Let me deal with the point about brownfield land. The cheek of the hon. Gentleman to talk about brownfield and building on greenfield land! Does he understand that when we set a target for brownfield, that means the rest is greenfield? Has he worked that out? There is no pink or yellow land. It is brown or it is green. If he had a brownfield target of 50 per cent., as he did, that meant that the other 50 per cent. was on greenfield. As we set the target at 60 per cent. and it is now 66 per cent., he will be able to work out that we are building fewer houses on greenfield land and more on brownfield, despite his record. It is one hell of a comparison.

As for green belt, the previous Administration built more houses on greenfield and green-belt land than has ever happened under the present Administration. We have 20,000 more hectares of green-belt land in seven years, despite all the talk, which is just a load of rubbish.

On regional government structure, I shall look up the quote. We read it before. The hon. Gentleman is now saying that the Tories will not get rid of the RDAs. We welcome that, but w ill they keep the budget, which we have doubled? He had better talk to the shadow Chancellor of the Exchequer about that. Will he get rid of the regional assemblies, if many Tories are sitting on them, which they are apparently prepared to do?

Mr. Jenkinindicated assent.

The Deputy Prime Minister

The hon. Gentleman is nodding: he will get rid of the regional assemblies. Will he get rid of the regional government offices as well, as was predicted? They were set up by the previous Administration with no political accountability. The hon. Gentleman talks about decentralisation. It is a load of poppycock. It is a load of rubbish—typical of the Tories. They do not know what they will do in the future. If he has been brought on to give a better answer than the person who is supposed to be in charge of the Department, goodness knows what she would have said. The hon. Gentleman has shown that he does not understand and that he does not have an alternative. The people of this country will recognise that what we are proposing is in their interest.

Mr. Edward Davey (Kingston and Surbiton) (LD)

I thank the Deputy Prime Minister for his statement and for that response, which we all enjoyed. I welcome at least one element of the statement—the three-year settlements for local government revenue and capital. We have long championed that and it is very welcome.

Can the Deputy Prime Minister say how much of their new three-year budgets councils will be free to manage? Will ring-fencing go up or down as a result of the review? How does he reconcile his previous rhetoric on new localism with the increased centralisation that we have seen from the Government in recent days? How does he square massively reducing the role of local education authorities with the aim of giving councils more power?

On local government budgets, can the Deputy Prime Minister confirm that in a press release yesterday, the Office of the Deputy Prime Minister is assuming a 7 per cent. average increase in the unfair council tax next year? Can he also confirm that the Treasury is assuming that councils will raise local tax and charges by 8 per cent. in years two and three of this review? Given that, does the Deputy Prime Minister still intend to cap councils that do not keep rises to low single figures next year?

The Deputy Prime Minister has made pledges on cleaner, greener and safer public spaces. How does he square them with the real-terms cut in councils' environmental services grant? The Deputy Prime Minister may put a target on liveability, but district councils will have to live with that grant cut.If the difference is to be made up from central Government's new safer and stronger communities fund, how much of the cash allocation for that fund is new money, as opposed to money recycled from old schemes?

On efficiency savings, how does the Deputy Prime Minister propose that schools make the 40 per cent. efficiency savings earmarked for them? Will head teachers have to make 2.5 per cent. year-on-year efficiency savings in school budgets?

In total, the Chancellor is asking local government to make one third of the £20 billion in efficiency savings recommended by Gershon. How will that be delivered under new localism? How many local civil servants are to be sacked?

On housing, the Deputy Prime Minister was expansive in his boasts, but will he confirm that he proposes to build fewer than half of the new social homes demanded by the Barker review? Will he admit that more than half of the extra housing cash comes from an unsigned programme of private finance initiative borrowings, and an unproven programme of £355 million of efficiency savings? Will any of the PFIs be with Jarvis plc? How much of the PFI money is already signed for?

What discussions has the Deputy Prime Minister had with registered social landlords about the efficiencies that he assumes that they will make? What penalties will they face if they do not make those savings? Will the right hon. Gentleman say what the implications for his housing investment figures are if the efficiency savings are not made?

On the regions, the minor extra devolutions that have been announced—such as the Business Link service—are marginal to the real challenge involved in taking power away from Whitehall. What is behind paragraph 23.7 of the spending review, the most intriguing of all? It states: The Government will also consider whether devolution on transport could be accelerated in regions which vote for Elected Regional Assemblies. Is it the Deputy Prime Minister's objective to devolve transport budgets? Will people in the three northern regions hear about the proposals before they vote on 4 November, or afterwards?

The Deputy Prime Minister would have been better advised not to make a statement today. He is sandwiched between the Chancellor yesterday, and the Prime Minister tomorrow. He and local government have been kebab'd in the spending review.

The Deputy Prime Minister

It would be a pretty expensive kebab if that were the case. Anyway, the amount of money at stake is more than local government was given when the hon. Gentleman's party was last in power, in 1913 or 1914 or whenever it was.

The hon. Gentleman made some fair and proper points about my statement and the role of local authorities. Many of the matters that he raised were covered in the written statement on local authority expenditure from my right hon. Friend the Minister for Local and Regional Government. However, I shall answer some of the points that the hon. Gentleman raised, which are now under active discussion as a result of the Government's statements.

The hon. Gentleman was right to say that local authorities wanted the three-year review. I welcome that. I campaigned for the review, as did my right hon. Friend the Minister for Local and Regional Government. The review is what councils wanted: they have accepted it, and it is a good step forward.

Local authorities have received considerably more in resources, but the hon. Gentleman was right to point out that costs have to be met and that that will affect next year's council tax levels. I repeat that the Government expect that council tax rises will be confined to low single figures again next year. We were told that the target would be impossible this year, but the hon. Gentleman will agree that we achieved it—even though, unfortunately, Liberal Democrat councils set higher levels than we wanted. Perhaps he will help us and ensure that those councils set council tax at the levels that we want. I look forward to his assistance in that respect. He knows that there is an ongoing discussion between Government and local authorities on these matters, and today's written statement is another contribution to that.

The hon. Gentleman is right that efficiency savings depend on taking money from back-line services and giving it to front-line ones. My right hon. Friend the Chancellor made that clear yesterday, and I have confirmed it today. The Government have a part to play in that, and local councils will make a contribution equivalent to the money that they receive under the spending review—that is, they must make savings of about one third. We will begin discussions with them as to how that will be achieved.

The hon. Gentleman was right to say that the Barker report contained higher figures for social housing. There remains a long way to go. Ms Barker recommended that there should be between 17,000 and 25,000 new houses a year, and we have doubled the number being built to 10,000. We are studying how to achieve the Barker target. She made recommendations about extra resources, and I want to point out, helpfully, to my right hon. Friend the Chancellor that that is something to which we should give fair consideration. I think that we need to provide more than the 10,000 new houses that we are at present achieving, even though that is a doubling of the number being built and is a step in the right direction.

I note that Ms Barker has welcomed today's statement as a good step forward to achieving her targets. Also, the organisation Shelter has welcomed the progress being made—which is more than it ever did about the Tory Administration's approach to housing investment.

The hon. Gentleman was a bit unfair about Business Link. It is an important initiative, but I think that he was really asking about its powers. He must wait for the statement to be published shortly on what powers the Bill will contain. Also, there will be a debate in the House next week about some of the orders that will be brought in.

The hon. Gentleman also asked about transport. As I have said to him before, my right hon. Friend the Secretary of State for Transport has suggested in several statements to the House that he wants the regions to take more account of their expenditure in that area. I cannot pre-empt the statement that my right hon. Friend will make next Tuesday, but the Government are concerned to achieve a better balance in the resources given to the regions for that purpose, and better accountability.

Several hon. Members


Mr. Speaker

Order. I inform Back Benchers that they must ask only one supplementary question.

Andrew Bennett (Denton and Reddish) (Lab)

I congratulate my right hon. Friend on getting the extra money for housing, and especially the amount needed to ensure that the decent homes target is achieved for the vast majority of people in rented accommodation. However, will he look again at the small number of tenants in local authority housing who have voted not to transfer their stock and who would like their homes to reach the decent homes target by borrowing money against future rent income? Is it not time we let them have the same benefits as other tenants?

The Deputy Prime Minister

I thank my hon. Friend for his fair comments about what we have achieved in the spending review. He raises a serious point, over which he and I differ. When I faced the £19 billion disinvestment in housing, I had a choice: either I could get the money from tax and public sector borrowing, or I could raise it in other ways. In the end, I have done both. The amount of money given to local authorities for housing maintenance and management has increased, but I also offer different alternatives to those wanting to improve their properties at a faster rate. Those alternatives include the PFI and the transfer plan, but then I also introduced the new scheme involving arm's length management organisations. Under that scheme, houses still belong to the local authorities, which can then vote on what happens to them. Of those that voted, 82 per cent. voted to make improvements to housing—in kitchens and so on—at a faster pace than would have been allowed by borrowing through public expenditure in the normal way.

The hon. Member for Kingston and Surbiton said that a minority voted against that option, and he is right. We have asked the few who did to rethink, but the rules must be fair to all authorities. If I changed the rules half way through the process, why should authorities not say that they preferred to do things in another way?

The ALMO programme is owned by the local authorities, and tenants are represented on the decision-making body—

Mr. Ken Purchase (Wolverhampton, North-East) (Lab/Co-op)


The Deputy Prime Minister

Whether I like it or not, I am bound to say that administrative efficiencies of between 10 per cent. or 15 per cent. have been achieved. That means that I have more money available for housing, and that less is lost in administration.

Gregory Barker (Bexhill and Battle) (Con)

In point 8 of his statement, the Deputy Prime Minister blatantly admitted that homelessness had continued to rise, on trend, over the past seven years. Is not that a terrible indictment of seven years of Labour Government? If homelessness continues to rise, why should we expect that the crew that failed to tackle the problem over the past seven years should be any more successful in the future?

The Deputy Prime Minister

It is a fact that homelessness has continued to rise. It doubled under the previous Administration, but that does not help us. The Government intend to reduce—and probably eliminate—the homeless by 2008.[Interruption.] I am sorry, but the House knows that I have problems with English. I did not go 10 public school, so there is a limit to what I am able to say. Opposition Members can be such twits. We believe that we can eliminate the problem of homelessness by providing more resources, which is precisely what we are doing.

I do not think that the record of the previous Administration is anything to shout about. We inherited a tremendous amount of homelessness. We also inherited a tremendous number of families living in bed-and-breakfast accommodation, whom we have now put into proper accommodation. Homelessness is still a problem for us, and we are dealing with it.

Mr. Purchase

I welcome the additional expenditure that has been announced. On a narrower point following on from what my hon. Friend the Member for Denton and Reddish (Mr. Bennett) said, does my right hon. Friend remember a famous. socialist, Aneurin Bevan, saying that he would have to stuff the mouths of the doctors with gold in order to bring health services under democratic administration? Does he understand the disappointment felt in the Labour movement as a whole that we are stuffing local authorities with refurbished kitchens and bathrooms in order to take housing out of democratic administration?

The Deputy Prime Minister

If I remember rightly, Aneurin Bevan resigned because of the difficulties of finding the resources to meet that programme.

Mr. Purchase

Didn't they all?

The Deputy Prime Minister

That may well be, but I remind my hon. Friend of the problems even for Aneurin Bevan of making public resources meet public priorities. On his general point about democratic accountability, the houses managed by arm's length management organisations are owned by the local authorities. The ALMOs put tenants on the board, which councils do not do. That allows tenants to take part in the administration of the housing and the organisations are allowed to borrow from the public sector under certain conditions. That is probably a proper compromise. It is one that I thought was important to deal with public accountability. It is one of three measures that has led to a tremendous improvement.

My hon. Friend should not be too dismissive of the fact that people will have a decent kitchen and a decent home to live in. It is something that they welcome and it is why they are voting in overwhelming numbers for it.

Mr. John Horam (Orpington) (Con)

The Deputy Prime Minister referred to quality of life in his statement, and most of us would agree with what he said. Does he realise that in suburban areas he is reducing quality of life by, in practice, giving the green light to any developer who wants to grab any back garden or greenfield site, regardless of the quality of the development or the effect on the environment?

The Deputy Prime Minister

I recognise the point that the hon. Gentleman makes. There has been some speculation in the press about this. It is a point that has normally arisen under the planning rules when the grounds of some big houses have become available. Residents have complained that houses are being built in an area where they did not expect them. However, we are getting land used much more effectively than before, and that should be welcomed.

Suburban sprawl happened at a tremendous rate under the previous Government. If I remember correctly, the hon. Gentleman was a member of that Government. The number of out-of-town shopping centres increased from 150 to 1,050, and that aided suburban sprawl. We are now changing that. More people are coming back to the cities, we have increased the density of housing and we are getting more houses built on less land. That is something that the hon. Gentleman should welcome.

Helen Southworth (Warrington, South) (Lab)

I welcome my right hon. Friend's statement. He is well aware that in the north-west Warrington is a high-growth area. In my constituency, demand for affordable housing greatly exceeds supply. Will he invest in shared ownership schemes and other measures that allow affordable houses for sale to be kept within the affordable sector?

The Deputy Prime Minister

My hon. Friend makes a good point. What she says is true in both the north and the south. I am well aware that Warrington, where I started work, is a tremendous growth area— another success of Labour party policies. But that has created real problems in providing affordable homes. We are increasing the amount of money for affordable homes on a scale that has not been achieved before. Hopefully, that will help. As my hon. Friend knows, the Dean report suggests different ways in which people may be able to purchase their homes. We shall be reporting on that shortly. We have put some of the measures in the Housing Bill, and we hope that they will bring about an improvement. We are giving a tremendous amount of attention to our policy on affordable homes, because an awful lot of people have the desire to own a home but simply cannot afford one. Our doubling of the social housing programme will help in that.

Mr. Roy Beggs (East Antrim) (UUP)

I welcome the commitment to building new homes and improving existing stock. Those fortunate enough to get new or improved homes will no doubt have enhanced health in the future, and that will be a good contribution to the nation. Will the Deputy Prime Minister accept that the right to buy and access to home improvement grants in Northern Ireland have helped to transform estates and rural housing? Will he commit to further promoting those opportunities here on the mainland?

The Deputy Prime Minister

I do not know the exact details for Northern Ireland, but in the parts of the country for which I have responsibility, I am not sure that the right to buy has necessarily helped solve the problems in rural areas. In fact, people constantly complain to me that the right to buy is taking public housing away and denying people who wish to live in the area the opportunity to do so. The rule should have been that those who bought a house intended to live in it, but in my experience houses are purchased at the highest price by someone who lives in the area—that was one of the conditions laid down by the previous Administration—but they then rent it out as a holiday home. That denies people public housing.

Most of the —40 billion that was used to subsidise the right-to-buy programme simply led to the current —19 billion disinvestment in public housing. That is why we brought in certain restrictions on the right to buy. We do not deny that people want to buy their homes. One million people have bought their homes under the various measures that we have available. We will improve on that, but at the end of the day the right to buy has to be taken into account in acknowledging the right of people to live in a decent house.

Mr. Jim Cousins (Newcastle upon Tyne, Central) (Lab)

My right hon. Friend is to be congratulated on the introduction of the neighbourhood renewal fund and the housing market pathfinders. They were his personal initiative and they have proved their value. Does he think it is time to consider extending those schemes to whole areas such as Tyneside, Sunderland and Teesside rather than confining them to patches of those areas? Does he think that it is time to give the private as well as the public sector a strong signal to relocate in those neighbourhoods?

The Deputy Prime Minister

I am well aware from discussions with my hon. Friend of his concern for making sure that development does not all take place outside the inner cities. We have discussed some of those aspects as they apply to Newcastle. But at the end of the day, the £2 billion programme in the 39 new deal areas has proved successful. The neighbourhood renewal programme has also been successful; that is why we have announced another £500 million for it, when much of the press was predicting that it would be cancelled. We have found such schemes to be very successful. My hon. Friend's request that we extend them is limited by resources. We have set up a 10-year programme for the new deal. I will take into account what my hon. Friend says, but it is always about measuring how we can put resources into certain areas.

I am aware that when an area that is not getting such funding is next to an area that is, it causes tension. We are trying to do something to help, but I cannot promise that we will extend the programme in any major way.

Mr. David Curry (Skipton and Ripon) (Con)

Will the Deputy Prime Minister accept that one of the most important things that he has announced today is the gap funding to enable the transfer of estates with relatively low value cash flows and in large need of repairs? Is he concerned about the flagging transfer programme, as opposed to the ALMO programme, which scores against the public sector borrowing requirement? Does he hope that his announcement will accelerate the transfer programme? Will he send a clear message to those Labour Members of Parliament who wish to see councils funded to keep homes in their own management and bring them up to the decent homes standard that they are knocking their heads against a brick wall and that councils have no choice but to go in for transfers, ALMOs or PFIs on a small scale, unless they have the resources to improve housing by themselves?

The Deputy Prime Minister

I agree with the right hon. Gentleman, who shows a great deal of expertise and understanding of the judgments that we make about public expenditure, which are at the heart of the argument. The money that we raise from the private sector does not count as public expenditure and does not count towards our judgments about the handling of the economy, debt, interest rates and everything else. So we have to make a balanced judgment.

ALMOs are measured against public expenditure. If all 153 authorities that took up the proposal had gone ahead, it would have put billions on public expenditure. We had to make a choice about that. The right hon. Gentleman is right to say that the £180 million for gap funding is important. My hon. Friend the Member for Bethnal Green and Bow (Ms King) is very much responsible for pressing us on that matter. On some estates, the rent flow is not sufficient to raise the money that is necessary to make improvements and we thought that such estates were being penalised. That is why we announced the £180 million. But yes, we did take it off public expenditure. I have heard a great deal about it, but I have to say to my colleagues that the fourth option that they talk about is not an option.

Mr. Gordon Prentice (Pendle) (Lab)

My right hon. Friend knows that we have 80,000 low-demand properties in east Lancashire, 79,000 of which are in the private sector. That is why I welcome the trebling of resources for the pathfinder areas. However, can he give me some indication of the picture at the end of the review period in 2008 in east Lancashire? How many of those properties will be turned round?

The Deputy Prime Minister

I welcome the comments by my hon. Friend, who has been somewhat critical of the programmes and thought that they might not work. Indeed, until they begin to do so, it is difficult to judge, so he is right to have some reservations. The programme in north-east Lancashire has met with considerable acceptance. I thought that I had some information for my hon. Friend, but I have lost it. Many houses will be demolished, some will be improved and some will be rebuilt. I will write to him with the exact figures and I apologise for not being able to supply them at the moment.

Mr. Nick Gibb (Bognor Regis and Littlehampton) (Con)

Is the Deputy Prime Minister aware of the enormous concern in Felpham and Bersted in my constituency about the imposition of 1,350 new houses on what is mostly grade 1 agricultural land? Those new houses would put an enormous strain on the infrastructure and the effectiveness of the flood plain. There has been a huge amount of house building in Bognor Regis in the past 30 years, but local factors are ignored when allocating housing numbers to counties. Should not more say and power be given to local people when making those important decisions, because they directly affect the quality of life of people in those communities?

The Deputy Prime Minister

That question is frequently asked in the House and I have to tell the hon. Gentleman that the decisions about house building are partly taken by local authorities, working to the planning agreements that we make with them, and by central Government, who decide a number for the whole area. That is how we settle demand for housing, and we have to take proper account of the environment and the infrastructure. In the final analysis, we have to settle on a figure that meets demand in the areas in question. That question usually arises in southern areas, and people seem to suggest that the sons and daughters of local people who grew up in the area cannot live there. I do not accept that proposition and that is why we are increasing housing.

Mr. Chris Mole (Ipswich) (Lab)

I welcome the extra 10,000 homes a year announced in the statement, but I also note the doubling of spending on housing support in growth areas outside the Thames gateway. Can my right hon. Friend confirm that the new housing support will be available not only in growth areas, but to support significant development of affordable homes to rent in towns such as Ipswich, which are outside the growth areas but have been identified regionally as locations with strong growth potential?

The Deputy Prime Minister

I assure my hon. Friend that the support will be provided for all areas. As he knows, responsibility for housing was transferred to the regional bodies and they will make the decisions about distribution in their areas.

Mr. Desmond Swayne (New Forest, West) (Con)

Does the Deputy Prime Minister understand the frustration of residents in New Milton, Milford-on-Sea and Lymington about the transformation of their neighbourhoods for the worse by the application of densities that might be appropriate for urban redevelopment on brownfield sites but are inappropriate in suburban and more rural areas?

The Deputy Prime Minister

The consequence would be the need to use more greenfield areas for building. I thought that the Opposition's feeling was, "Please keep development off greenfield sites. Don't let Prescott and his bulldozer concrete over the south-east." I notice that the Barker report, which emphasises the increasing demand for housing, says that less than three quarters of 1 per cent. of land would be needed. Leaving that argument aside, the answer to the hon. Gentleman is that the density arguments are as applicable in towns as outside them.

Ms Oona King (Bethnal Green and Bow) (Lab)

I shall skip over the trauma of listening to the Conservatives talk about homelessness, when their Government removed the rights of homeless people—

Mr. Speaker

Order. The hon. Lady should indeed skip over that matter and ask her question.

Ms King

I shall skip quickly on to the subject of gap funding, which is so important in areas such as Tower Hamlets. I put on record my thanks to my right hon. Friends the Deputy Prime Minister and the Minister for Housing and Planning, but I would ask that they maximise the proportion of family-sized affordable housing for rent, improve security arrangements and provide decent homes, so that we can also tackle antisocial behaviour.

The Deputy Prime Minister

I am advised by my right hon. Friend the Minister for Local and Regional Government that those matters are under active consideration. Around 30 per cent. of expenditure will go on three-bedroom homes. We are aware of the issue and discussions continue. We have made some progress, but we are aware of the sensitivities that my hon. Friend has pointed out.

Mr. Steve Webb (Northavon) (LD)

The Deputy Prime Minister mentioned the regional control centres for the fire service. If he is determined to pursue that policy, I draw his attention to the situation in the southwest, where the Avon fire brigade headquarters at Lansdown has the capacity to serve the entire southwest, but because it is a public sector building the Government may insist on a PFI and refuse to use an existing public sector asset. Can he assure us that if a good public sector asset exists and could be used, he will use it?

The Deputy Prime Minister

The hon. Gentleman makes a fair point, as he often does on such matters. We are looking at a range of options, although some fire authorities have developed more centralised control rooms and that will have some influence on our judgments for each region.

Ms Karen Buck (Regent's Park and Kensington, North) (Lab)

I warmly welcome the extension of the neighbourhood renewal fund and the additional investment in housing. In my constituency, half of our council housing stock has been lost over the years and former right-to-buy properties resell for up to £400,000. My constituents face a crisis of affordability, overcrowding and homelessness. Can my right hon. Friend assure me that the extra investment will be distributed fairly within regions? Will he ask for an urgent review of the sub-regional allocations to ensure that constituents such as mine benefit properly from their share of the extra housing investment?

The Deputy Prime Minister

My hon. Friend makes some important points about new neighbourhood development and housing, and I am well aware of them. We will increase social housing from 19,000 to some 29,000, which is a fair increase. We are aware that the problem is huge and we will try to find what resources we can to meet it. To be honest, I know that what I have announced today will not solve every housing problem, but it will be a major step towards doing much more about it.

Mr. Michael Jack (Fylde) (Con)

At a recent meeting of Members from both sides of the House, support was given to the Deputy Prime Minister's objective of increasing the supply of affordable housing in the north-west. At the same meeting, concern was expressed that outside the renewal pathfinder area, his policies on new housing starts were inhibiting the flow of affordable housing. Will he review that policy, so that affordable housing stock can increase all over the north-west?

The Deputy Prime Minister

As I understand it, no moratorium is suggested and 13,000 or more could be built. The resources available are an important factor, as are the prices and subsidies we provide. The level of efficiency will determine the amount of resources. As the right hon. Gentleman knows, many of the decisions will be taken by regional boards. The north-west wants more accountable decision-making, and that is why we will decentralise decisions to the regional housing boards.

Lynne Jones (Birmingham, Selly Oak) (Lab)

The additional 10,000 new social homes will be a good start, but even my right hon. Friend has accepted that that figure is inadequate. In Birmingham alone, we need an extra 3,000 homes a year for the next five years. Those needs are urgent: when will the Government produce their proposals for meeting the Barker recommendation of 26,000 new social homes a year?

The Deputy Prime Minister

That too is a matter of resources, as my hon. Friend well knows. I have got a good deal from my right hon. Friend the Chancellor, given the resources that have been available. We are on the way to achieving the lower end of the Barker recommendations, but as the report said, if we want to achieve the recommended numbers by 2016, we will need to obtain increased resources from different sources. Kate Barker suggested one or two methods of funding which I favour, but my right hon. Friend the Chancellor has not yet made his mind up. We will continue to have discussions through the usual channels to see whether we can achieve what Barker said was necessary in social housing. The problem is the resources.

Angela Watkinson (Upminster) (Con)

The Deputy Prime Minister has announced additional investment in the fire service. He will recall the pay dispute in 2002 that was resolved by the promise of an additional 16 per cent. to be paid in three stages. The first stage, 4 per cent. in November 2002, was paid. The second stage, an additional 7 per cent. in November 2003, was not paid because of a dispute over working practices. The third and final stage is due now, in July 2004. Can he confirm that it has been paid or, if it has not, will he tell us what he will do to avoid another pay dispute that neither firefighters nor the taxpayer can afford?

The Deputy Prime Minister

The hon. Lady will know from the many debates that we held on the unfortunate dispute in the fire service that we came to an agreement, accepted by the Fire Brigades Union, that the increase in wages would be financed by changes and modernisation. That is a matter for local authorities and fire authorities but unfortunately it is still in dispute, although talks are continuing. There are threats of a fire dispute. I hope that that does not come about and that the talks, in which I think the TUC is involved, are successful. We are clear, however, that payment of the money will depend on modernisation.

Dr. Alan Whitehead (Southampton, Test) (Lab)

I congratulate my right hon. Friend on the introduction of the idea of three-year funding for revenue and capital settlements for local authorities. I warmly welcome that move. Will he introduce in his Department, and prevail on' other Departments to introduce, a no-surprises regime to ensure that orders or legislation with an impact on the revenue and expenditure of local authorities during the three-year periods are synchronised with the three-year funding cycles?

The Deputy Prime Minister

My hon. Friend has considerable experience in local government and we listen carefully to what he says. I am grateful for his endorsement of the three-year rule that local authorities have been asking for. He raises an important point about orders and new burdens for local authorities during the three-year periods. As he knows, there is an understanding that new burdens will not be put on local authorities once the standards have been set and I make that point vigorously to my colleagues. Nevertheless, I shall bring my hon. Friend's point to the attention of the Chancellor and others, and we shall redouble our efforts to try not to impose unnecessary extra burdens, through orders of the House, on local authorities after deciding on a financial agreement.

Mr. Damian Green (Ashford) (Con)

I am sure that the Deputy Prime Minister is sincere when he says that he wants to build sustainable communities, but will he consider one of his four high-growth areas—my constituency of Ashford? Despite his efforts and the very good efforts of Ashford borough council and Kent county council, although we are building 1,000 houses a year we are creating only 300 jobs a year, and thus creating a commuter dormitory town. What is there in his statement to help Ashford remain a sustainable community so that it does not become merely a dormitory town, which would be against the wishes of the vast majority of people in Ashford?

The Deputy Prime Minister

When I visited Ashford some time ago, the local authority made the useful point that we need to make sure that transport connections are included, as well as increased housing. We all agree that road connections are important and negotiations with the highway authority are in their final stages. Transport infrastructure is one of the aspects of the new funding and we are talking about it. Unless we achieve it, we cannot expect those new areas to be opened to housing.

The hon. Gentleman is also concerned about developing new jobs. We have been talking to local authorities and they feel that, once they are more connected to the system, that will help in developing jobs, which are a necessary aspect of sustainability, along with infrastructure investment, housing and education. Without them, we cannot achieve the sustainable communities that we are committed to providing.

Mr. Harry Barnes (North-East Derbyshire) (Lab)

Does my right hon. Friend remember Clay Cross and the Housing Finance Act 1972? Clay Cross is in my constituency and people are getting increasingly agitated about the absence of the option 4 that my right hon. Friend has unfortunately dismissed. As 70,000 new social rented houses will be built over three years, is there not scope—where it is wanted—for an element of council house provision and council house refurbishment under council control? That is what people in some areas want.

The Deputy Prime Minister

I tried to set out to the House the balance between private and public money in achieving a faster rate of property improvement. My hon. Friend asked whether part of the new housing could be council-owned. That is the case under arm's length management organisations: housing is council-owned and there is representation on the board. Council tenants own the properties.

I do not know what has happened in Clay Cross. My hon. Friend the Member for Bolsover (Mr. Skinner) has left the Chamber, thank goodness, so I do not have to face him, because I well remember the battle over Clay Cross with the then Member for Grimsby. Where there has to be a fourth option, give people the choice—choice is in, I hear. Let them choose the scheme they want—

Mr. Ken Purchase (Wolverhampton, North-East) (Lab/Co-op)

That is all they want—a choice.

The Deputy Prime Minister

Wait a minute. The figure is 83 per cent. They can either own their homes through the ALMO or go through the older system where the council owns and administers the houses, but the council has to be good at administration. Whether I like it or not—and I am not too happy about it—it is a fact that administration costs are between 10 and 15 per cent. less. I do not know why that is, but why pay more money for one form of house ownership when an ALMO is much more efficient?

Mr. Henry Bellingham (North, West Norfolk) (Con)

Is the Deputy Prime Minister aware that in King's Lynn in my constituency there are several council estates where a small number of drug addicts, hooligans, litter bugs and graffiti artists make life a misery for the vast majority of tenants? What will he do to ensure that housing associations get a grip on that problem? Will he come down to King's Lynn—

Mr. Speaker


The Deputy Prime Minister

As the hon. Member for North-West Norfolk (Mr. Bellingham) knows, antisocial behaviour orders are important in dealing with that problem. Another way, especially in private property, is licensing by local authorities, which is embodied in the new Housing Bill.

James Purnell (Stalybridge and Hyde) (Lab)

My right hon. Friend's announcement on gap funding will be very welcome in Hattersley where our previous transfer fell through due to a gap of £35 million. We are about to present my right hon. Friend with a new proposal and a new partner, so will he arrange for officials from the ODPM to talk to officials from Tameside and Manchester councils about whether that gap funding will he available?

The Deputy Prime Minister

I have always believed that it is good to talk, so I shall see whether we can arrange those discussions. I do not know the full facts of the case but I shall certainly see whether my officials can arrange to hold discussions on that matter with people from my hon. Friend's constituency.

Back to