§ 4.12 p.m.
§ The Parliamentary Under-Secretary of State, Department of the Environment (Lord Bellwin)
My Lords, with the leave of the House, I will now repeat a Statement which is being made in another place by my right honourable friend the Secretary of State for the Environment. The Statement is as follows:
§ "I wish to inform the House of a number of housing decisions. My right honourable friend the Secretary of State for Wales will be making a statement tomorrow. Some of the issues I shall refer to were raised in the recent report of the Select Committee, a response to which the Government is publishing today. Local authorities need to know now where they stand on housing subsidies, on capital allocations for next year and on the future of the moratorium affecting this year's housing capital expenditure.
§ "As regards public expenditure in 1981–82, my right honourable friend the Chancellor of the Exchequer referred in his statement on 24th November to a reduction of £158 million in the Department of the Environment's programmes. I intend to provide £69 million of this from housing. I wish to see current expenditure reduced rather than capital because I recognise the desirability of investment and the need where possible to help the construction industry. £64 million of the housing savings will, therefore, fall on current expenditure and only £5 million will come from capital.
§ "Regarding housing subsidies for 1981–82, the Housing Act 1980 leaves local authorities with the 895 responsibility for determining their own rents, but it introduces a new subsidy system from 1st April 1981 which requires me to determine the annual amount to be taken into account as the local contribution in calculating subsidy entitlement.
§ "Following my consultation with the local authority associations, I have now decided to set the increase in the local contribution at £2.95 per dwelling per week for 1981–82. In addition, local authorities have to meet housing costs which fall outside the subsidy system and on average these may require rent income of a further 30 pence per dwelling. Since local authority rents currently average no more than 6.5 per cent. of adult male earnings, I do not think that the rises I have indicated are unreasonable. Moreover, 45 per cent. of council tenants are protected from the full impact of rent increases through supplementary benefits or rent rebates. Indeed, an estimated well over 1 million tenants effectively will face no increase in rent at all. It is also estimated that nearly a quarter of households living in council houses have household incomes in excess of £8,000 a year.
§ "On capital account I have been able to provide £2,810 million at estimated 1981–82 out-turn prices for gross capital expenditure on housing. I will give the House the break-down of this figure. The new towns will receive £118 million. The Housing Corporation will receive £491 million at out-turn prices for distribution to housing associations. This is the same in real terms as this year. I am providing £2,201 million at out-turn prices for gross capital expenditure on housing by local authorities, including an allocation of £27 million for the homes insulation scheme. This is a reduction of 15.1 per cent. on this year's provision.
§ "From 1st April under the new system of capital expenditure control, local authorities can undertake additional spending on the basis of their capital receipts. I estimate that in 1981–82 they will be able to undertake £413 million of spending in addition to their allocations. £2 million must be allowed for the administrative costs of the homes insulation scheme. The amount distributed as HIPs allocations will therefore be £1,786 million. I have discussed the method of distributing HIPs with the local authority associations and today I am informing local authorities of their individual allocations for 1981–82. Copies of the letter to authorities and of the schedule of allocations excluding their use of capital receipts are being placed in the Library.
§ "A number of adjustments will be necessary in the light of any overspending or underspending by authorities this year. As I informed the House on 25th November, those authorities which underspend because of the moratorium will receive additional allocations and those who overspend will have their overspending deducted. A net total of £55 million of tolerance was outside the cash limit for 1980–81 and will therefore have to be excluded from these adjustments. My department will advise local authorities shortly how these adjustments will be made.
§ "I would now like to deal with the moratorium 896 itself. Following my statement to the House on 25th November I invited local authorities to give me their latest estimates of their commitments for this year. Their figures are about the same as when I last reported to the House and show that on their forecasts the cash limit is likely to be taken up. The Government have therefore no option but to continue the moratorium generally. But having regard to the size of the local authority programme, it is, in my view, possible now to permit some small relaxation without jeopardising the cash limit. I have therefore decided to allow just the under-spending authorities to approve discretionary grants and loans for home improvement.
§ "Every improvement grant approved will attract an additional sum of private finance which will be of further help to the construction industry. I am also proposing to lift the ban on the letting of new contracts before the end of the financial year where no additional expenditure will take place until after 1st April 1981. I shall keep the situation under review to see whether further relaxations of the moratorium are possible."
§ 4.19 p.m.
§ Baroness Birk
My Lords, the Statement we have just heard on housing is a long and fairly complicated one, but the overall message at this time, just before Christmas, must be one of the gloomiest messages to be put out to the people of this country. At a time when we are in the middle of a deep recession and when unemployment is going up daily, we now have this absolutely depressing, devastating and unnecessary cutback on housing.
If I may deal first with the moratorium, to continue it indefinitely seems to me absolutely outrageous, because the Secretary of State himself made it clear in the House of Commons last month that, at worst, there will be an overspend of £7 million. I could explain all these figures, but, in view of the length of the debate that we shall shortly be continuing, I shall be brief. Last week I met a group of building employees who spoke of the devastating effect of the moratorium, added to the cutbacks that there have been in housing. With unemployment in the construction industry at 274,000, this very slight, minute chink bears little hope for them.
I now come to the rent increases. Again, I find it most extraordinary that the Secretary of State is supposed to have consulted with all the parties, local authorities and organisations concerned. Yet the consultative exercise seems to have been a complete charade, because before us today we have an increase of £3.25 per week, which is in the nature of something over 30 per cent.; that is, adding together the £2.95 and the 30p. But, in reality, the 30p is completely unrealistic, because, as the Statement itself says, the authorities will be responsible andmay require rent income of a further 30p per dwelling".If all this falls outside the subsidy system, it is very likely—and this is a view which is held by a number of people who specialise in this subject—that the increase will be as much as an extra £1 a week.
The Statement goes on to say:Moreover, 45 per cent… are protected from the full impact of rent increases through supplementary benefits or rent rebates".897 Here we go again. Instead of leaving rents where they were, or, if the Secretary of State is intent on raising them, raising them by a small amount, large sums of money and many worker personnel will be needed for increasing the supplementary benefits and rent rebates, so that more than the great majority of council house tenants will be entitled to them. This is absolutely crazy. It is exactly the same as having large numbers of unemployed and, instead of spending money on investment in industry, having to pay unemployment benefit. The Statement refers to household incomes in excess of £8,000 a year. I do not know how many of those there are. Nevertheless, we have a tax system and all these people are paying tax. Therefore that is a way of taking back the money of the high-earners in council dwellings.
Finally, and most important, when we look at the housing investment programme, we find that in February the Secretary or State announced that the cut would be in the region of 21 per cent., but it worked out at 33 per cent. Today, if one takes into account the capital receipts and the allocations of £1,786 million, the 15.1 per cent. cut is, in fact, a cut of well over 20 per cent. This is at a time when more and more houses are falling into disrepair. One-third of the stock built before 1919 is in disrepair, and in 1976 the figure was 1 million. London conducted a survey in 1979, which showed that 10 per cent. of London's housing is now unfit; and the more this goes on, the worse the housing will get.
By 1983–84, on the Government's own predictions, public housing starts will be down to 30,000. In the private sector this year the starts are running at about 100,000 and they cannot rise, even in the best economic circumstances—and, unfortunately, I am doubtful about there being the best economic circumstances—to more than 150,000. Waiting lists are on the increase and they will continue growing. As the mortgage terms get easier, there will be a price explosion and more and more young people will be unable to get houses, which will add to the misery that there is at the moment. This is an absolutely disastrous Statement and it indicates the Government's equally disastrous policy on housing.
§ 4.25 p.m.
§ Lord Wigoder
My Lords, this is a Statement of great importance. It is clearly impossible to do it justice, or even mercy, in the course of a very short comment at this moment. I am tempted to suggest to the noble Lord that he recommends to the Government that it might be preferable if information of this kind were released by way of a Written Answer to a Parliamentary Question. What is really needed is a full-scale debate on proposals of this magnitude. No doubt, that can be arranged at the earliest possible moment.
In the meantime, may I ask the noble Lord, the Minister, three specific questions? First, we on these Benches would welcome the relaxation that has been indicated, so far as it goes. May I ask the noble Lord whether he can say how many authorities will thus be affected by these proposals, and whether they are, on the whole, in areas where there is high unemployment in the construction industry? Secondly, we would agree that if there have to be cuts it is clearly preferable 898 that they should be cuts in current expenditure, rather than in capital expenditure. Can the noble Lord be a little more specific as to what is meant by "current expenditure" within the terms of this Statement? Does it indicate that the Government have a continuing commitment to cut back money spent on housing in the public sector and in housing association areas? Thirdly, will the Minister help us as to whether the effect of this Statement is that contracts, which have already been permitted and tendered for, will now have to be cancelled?
§ 4.27 p.m.
§ Lord Bellwin
My Lords, so far as the observations of the noble Baroness, Lady Birk, are concerned, she said that to continue the moratorium would be outrageous. May I just repeat what needs to be said, but which, apparently, has not been said often enough; namely, that the HIPs allocation of £1,786 million has not been cut one penny piece at all. The indications which we received at the time of the first returns that came in, showing that there was to be a considerable overspend, have been entirely justified by the later figures which have come in. Therefore, the intention is to ensure that the total cash limit is not exceeded.
I have to say something which I think I have already said on this and on other matters, which is that the time has come when we have to accept that a cash limit really is a cash limit and cannot be exceeded. That is why there is this moratorium. The amount of money allocated is not cut back by one penny piece. The intention is to ensure that it be not exceeded. That is what the moratorium is about and nothing else.
The noble Baroness said that the consultation exercise as regards rent increases had been a charade. I happened to be at the consultative council meeting when this was discussed with the associations, and no one there said that it was at all a charade. Indeed, the final figure of £2.95, which has been decided, is very much a consensus figure. There were those among the associations who suggested that it should be more. The fact is that rents are currently 6.5 per cent. of earnings. The noble Baroness said that the Government should leave rents where they are, or should make only a small increase. May I remind her that it was several spokesmen of her Government who said, when they were in power, that rents should be raised in line with increases in earnings. Had they done that, today we should not be faced with the situation in which we now are. The fact is that rents would be averaging quite a substantial figure more than they are at present. The situation arises because we are having to put right some of the things that were left undone.
§ Baroness Birk
My Lords, while the Minister is on this point, may I say that never have council house rents been put up by an amount of over 36 per cent., which is a low estimate of what is happening today. The Minister cannot get round that.
§ Lord Bellwin
My Lords, the Minister does not have to get round that. He only has to point out that this highlights the enormity of the failure by the previous Administration to do what they should have 899 done. The fact is that the rent picture has to be kept in perspective in relation to the rate of earnings and to the percentage of rebates, which is now substantial: some 45 per cent. What we are trying to get is some semblance of reality into the position. The noble Baroness expressed concern about the fact that there is lack of investment in housing. May I ask her where the money is to come from to invest in housing if there is no proper rent policy? That is one of the basic elements which goes into the provision of money for housing. Money just does not come out of the air. Until such time as we can get that home to everybody, we shall go on having these kind of situations to deal with.
§ Lord Bellwin
My Lords, the noble Baroness may say that, but it is a matter of difference between us. If I may turn to the observations made by the noble Lord, Lord Wigoder, he said that a Written Answer might have been better. Need I remind the noble Lord that it was only very recently in another place that there was a lot of adverse comment about statements being made in the form of Written Answers. One really cannot win!
§ Lord Bellwin
My Lords, I was sure that the noble Lord was aware of it. As to his question about how many authorities are affected by the proposals, all of them are affected by them to a greater or lesser extent, depending upon their current individual situations. The noble Lord also asked where the cuts were to be made in current expenditure. This is part of the rent adjustments. Some of the details still have to be ironed out. Perhaps the noble Lord will allow me to write to him with a detailed list. I think that the noble Lord raised a third point. Would he refresh my memory?
§ Lord Wigoder
My Lords, it related to whether contracts which have already been committed will now have to be cancelled. While I am on my feet, may I remind the noble Lord that I was asking not how many local authorities will be affected by the proposals, but in how many' of them the relaxations will have a material benefit and whether they are the areas in which at the moment there is particularly high unemployment in the construction industry.
§ Lord Bellwin
My Lords, on the noble Lord's last point, I do not have the figure. However, I will include it in the information which I shall give when I write to the noble Lord. As to the point about contracts which are committed, I think it would be helpful if I were to say that the moratorium will not stop authorities from incurring expenditure where they might otherwise be legally liable as a result of contracts already placed.
§ Lord Sandford
My Lords, may I thank my noble friend for repeating this Statement and encourage him 900 to continue to do so whenever meetings of the Housing Consultative Committee are dealing with such important matters. Since that meeting, I have been in touch with the officers of the Association of District Councils and confirm that that meeting was as my noble friend described it, and not as the noble Baroness would like to assume. I confirm that in the light of the circumstances and of the figures which my noble friend now has, it seems that his right honourable friend the Secretary of State was justified in imposing the moratorium in the first instance. That does not mean we would want him to make a habit of behaving in this way because it causes enormous inconvenience and not a little cost to local authorities.
It is all the more welcome that, even though he cannot lift the moratorium entirely, he is at least able to lift it partially. It probably is the right decision to lift it in respect of improvements. May I urge on my noble friend that if a further partial lifting proves to be feasible, the possibility of allowing renovations to be continued is another suitable candidate. As to the rent increase, in the light of the national economy, the state of salaries among the majority of council house tenants, and the failure of the previous Government to do anything about rent increases, the increase which is now proposed is reasonable, and I certainly confirm that the associations take that view.
§ Lord Mishcon
My Lords, may I ask the Minister, whom I should like to thank for repeating the Statement, however miserable it may be, to be good enough to deal with the point made by my noble friend Lady Birk, which to some of us seems to be extremely important. The Minister was at pains to say that at least 45 per cent. of those upon whom this increase would fall would be able to get it back by way of supplementary benefit and by means of the normal rent rebate scheme. It seems to my noble friend, and it seems to me also, to be a somewhat extraordinary way' of saving money if what you have to do is to take something from one pocket of the Government in order to put it in another. When we deal with the 55 per cent. would not the Minister agree that to some of us this seems to be somewhat extraordinary economics? So far as they are concerned, it represents a very substantial increase in their cost of living, and therefore affects wage claims and the policy of restricting wage claims which the Government understandably have in order to assist us in our fight against inflation. I wonder whether, for the benefit of those of us who are interested in the economy of the country, the Minister would deal with both of those points.
§ Lord Bellwin
My Lords, I am very grateful to my noble friend Lord Sandford for his confirmation of what I had said regarding the consultation procedure. I listened carefully to what he said about a further relaxation in the moratorium and took special note of his plea that renovations should be allowed. I will gladly discuss this point with my right honourable friend. His observations on rent increases generally supported the points which I had made, and I thank my noble friend for that.
Turning to the observations regarding the rebates which were made by the noble Lord, Lord Mishcon, I can confirm what I said previously as regards the 45 901 per cent. But it is not quite so simple as that. Families with two children in certain areas can earn up to £120 a week and receive some form of rebate. Earnings change, and hopefully they will change at not the same rates as those at which rent levels change. It has always been a fact that the intention is to help those most in need. The key to this is that rents have to keep pace with earnings if we are to get any semblance of sense into the economics of housing finance.
I take entirely the noble Lord's point that the higher the percentage who receive rebates then the less the net amount which comes into the "kitty". Of course that is so, but this is an attempt to ease the burden upon those who most need to have it eased. It in no way detracts from the equity of those who can afford to pay a reasonable rent, to do so.
§ Lord Sandys
My Lords, if I may remind the House of the Companion to the Standing Orders, ministerial Statements are made for information in the House, and although brief comments and questions for clarification are allowed, such Statements should not be made the occasion for an immediate debate. According to our clocks we have so far taken 28 minutes on this first Statement and there is a second Statement to follow. Perhaps if my noble friend Lord Harmar-Nicholls were to ask one further question and the House would then be willing to move on to the next Statement, that would be for the benefit of those who will be speaking later today.
§ Lord Harmar-Nicholls
My Lords, is the noble Lord aware that, despite at least three circulars which to my knowledge his department has sent to local authorities, asking for less rigidity in planning and a speedier decision, there is still excessive rigidity and excessive delay? If the department can use its powers in a Statement such as this, or an addendum to it, to get local authorities to speed up their decisions on planning it would go a long way towards meeting the point raised by the noble Baroness about getting investment into the building industry. Very many private developments are awaiting decisions which will take up much of the slack which has occurred owing to the cutback in public spending. Will the noble Lord use this Statement and all that flows from it to ensure that local authorities indulge in a little self-help instead of merely wanting to spend only public money channelled from the Exchequer or from their own rate funds?
§ Lord Bellwin
My Lords, I have heard what my noble friend has said on this. I am quite sure that the exhortations we have been making about planning have not as yet had the whole effect we would want them to have. I will look carefully into what has been happening currently and if I can be of help I need hardly say that I shall be glad to do so.