HL Deb 23 October 1980 vol 413 cc2123-32

My Lords, with the leave of the House and following my noble friend's undertaking earlier today that the Government would make a further Statement on the point raised by the noble Baroness, Lady Llewelyn-Davies of Hastoe, I should now like to make a Statement on housing investment by local authorities in the present financial year. Before doing so, I should like to tell the House that the Government certainly intended no discourtesy to the House. We formed the view that the announcement by my right honourable friend the Secretary of State was not one which should be made in the form of a Statement to Parliament. However, following Lady Llewelyn-Davies's remarks, the Government are now quite content to make the following Statement.

By means of a circular, my right honourable friend the Secretary of State for the Environment has today informed local authorities in England that the figures available to him indicate that there is a high risk of overspending this year on their housing investment programmes. The figures from the local authorities' returns of spending between April and June and from their more recent housing investment programme submissions for 1981–82 suggest that the overspend could be up to £180 millions.

The Government attach fundamental importance to ensuring that cash limits are observed, and my right honourable friend considers it essential to take all possible steps to ensure that the cash limit on housing capital expenditure is not overspent.

In these circumstances, the first need is to obtain the most up-to-date assessment possible of the spending in 1980–81 which will result from commitments which have already been made by local authorities under their housing investment programmes. Each local authority has therefore been asked to provide by Friday, 31st October, a revised estimate of capital expenditure on housing which they expect in 1980–81 on the basis of existing commitments, together with their estimated expenditure on statutory grants during the rest of the financial year. On the basis of these figures we shall then be able to see what action is needed in the longer term.

But, if there is a risk to the cash limit of the order of magnitude which appears at present, it would be wrong for the Government to allow spending to continue in the normal way while local authorities are providing new figures. At the same time as requesting revised estimates from the local authorities, my right honourable friend has therefore done, in essence, two things: first, he has asked local authorities not to enter any new housing commitments, except for those which follow from a statutory obligation; secondly, he has withdrawn the related borrowing approvals, except those needed to cover payments resulting from existing commitments.

When the latest estimate of committed expenditure for 1980–81 on housing investment programmes is available, my right honourable friend will consider what scope there is for additional commitments this year, and will make a further announcement.

Baroness BIRK

My Lords, first, may I thank the noble Lord, the Minister, for coming to the House to make the Statement and also for responding to my noble friend Lady Llewelyn-Davies, who raised the point earlier today? I must say right away that although the Statement says that the announcement was not one which should be made in the form of a Statement to Parliament, we all consider—certainly my noble friends beside me and behind me—that it is a matter so serious that it certainly should be stated to Parliament.

The Statement really must be taken in conjunction with the circular which has been sent to local authorities. It must also be seen in the context of a million families on the housing waiting lists and of 200,000 unemployed in the building industries, and with bankruptcies going up every week. We also have to remember the figure of unemployed that was given yesterday.

It is in this context that we have to look at what is a very serious position, added to the fact that up to now 75 per cent. of the cuts in public expenditure have in fact been borne by housing. This Statement means no further housing contracts for local authorities, for new building, modernisation, improvement or renovation; that there will be severe restrictions on borrowing approvals; and that there will be no more improvement grants at the moment in respect of private housing.

In addition, it seems a very extraordinary way to run a Government to put on this very severe, dramatic and drastic moratorium now, and yet ask local authorities for information to be delivered by 31st October. One would have thought the Government would have got the information first, perhaps issuing a warning to local authorities in the circular and then deciding what they would do when they got the proper assessment from the local authorities.

We believe that this is quite unjustified, because there is no record of overspending on capital expenditure by local authorities on housing expenditure since the HIPs have already been drastically reduced. The housing investment programmes have been cut by one-half for 1980/81, and the freezes and standstills caused by this mean that, for example, 42 per cent. of the 300 authorities have already stopped or restricted improvement grants, and 17 out of 28 metropolitan authorities have stopped or cut back their new council building. If there is to be an overspend of £180 million, as the Secretary of State alleges, that is not due to over-programming by local authorities but rather to the effects of the Government's economic and monetary policies on the building industries. To base the freeze on only one quarter's housing investment programme spending by local authorities is to do it far too soon and, as I said, with too little information.

The housing prospects have been made even worse by this. I do not know whether the Government really want to usher in a winter of misery for thousands of families in this country, especially when the Housing Act was fought hard and debated strongly in this House, and certainly help was given on the improvement grants. All that is now going to be eroded. I consider that this is a very serious situation, and that to have made a Statement to the House on it is really the least the Government could do in view of the anger and misery this is going to cause.


My Lords, from these Benches I should like to thank the noble Lord the Minister for his Statement. I should also like to say that it appears to us that this is another panic move by the Government. It is basically a further erosion of the liberty and independence of local government which we have experienced during the course of the Housing Bill, and particularly during the course of the Local Government, Planning and Land Bill. How is it, when housing expenditure generally over the past five years has been reduced by £2,454 million and when the housing investment programme has been slashed over the last 12 months by a cut of £1,092 million, that the Government can allege there is danger of overspending when they have not even got the results of the second quarter? Surely, as I understand it, they have sufficient results from some local authorities on the second quarter to give them an indication and to avoid the necessity to take this panic measure.

My Lords, if, as is suggested, £180 million may be overspent, rather than this being caused by the extravagance of local authorities, is it not caused by inflation brought about by the Government's policies, by the acceleration of building contracts due to the gross shortage of work in many parts of the country and, of course, by pressure on the contractors for early payment of their accounts? As far as we on these Benches are concerned, while we thank the Minister for his courtesy in making the Statement we reject completely the necessity to take this step.

7.8 p.m.


My Lords, perhaps I might comment first on what the noble Baroness, Lady Birk, said, which I felt was really rather more of a general speech on the Government's housing and economic policies than on the Statement itself. If I may pick up the points that she made, I think what we must either accept or not accept right from the beginning is whether or not a cash limit is sacrosanct. I think everyone is coming to realise that when the Government say a cash limit is a figure, that is exactly what they mean; and if there are indications that it is going to be, or could be, exceeded—even if it is only by £180 million—then what the noble Lord, Lord Evans, referred to as a panic measure I would have thought was the sort of measure that was long overdue by any Government; because if there had been the same willingness in the past to look at realities and at what was happening, as opposed to what one hoped would happen, we might not be in the mess that we are in today.

When the noble Baroness says that there is no record of overspending on HIPs, the fact is that this step is based upon three factors. The first of them concerns the first quarter's figures: what was actually spent. The second factor is the HIP submissions, in which the authorities give their own estimates of what they think they will spend. Thirdly, there is the fact that there is always an on-going dialogue between regional offices and local authorities on their submissions, and indeed these submissions still continue.

I would have thought that when all those indicators clearly show the likelihood of £180 million being overspent, it is not at all unreasonable for a Government to say: "Look, we are going to have these figures absolutely accurate now, and we have no time to hang around while we are getting them, so in the meantime we are immediately putting on a stopper". We are not cutting back anything. The £2.2 billion allocation is exactly as it was. In no way is that reduced. We are simply saying that there is a danger of a significant—and I consider £180 million very significant—overspend. In those circumstances, we want to be quite sure that we do not exceed the £2.2 billion that was allocated. That is really what we are doing.

I could very easily comment upon the other points that the noble Baroness made, by again pointing out, on her point that we cut the HIP allocations by a half, that they were 24 per cent. lower than the 1979–80 outturn, and that her Government cut the HIP allocations by 50 per cent. during their term of office. So let us keep everything in its proper context.

I do not at all consider this a panic move. I say again that, if we had been as positive in the past, it would not be so necessary today to show a firm line. That is why, when there is a danger of overspending of this kind, a Government would be failing in their duty if they did not take steps to say to authorities, "Come on. Let us have a look at this. It is very serious, and what are we going to do about it?"


My Lords, in his Statement the noble Lord referred specifically to England. May we take it that this dismal proposal does not, in fact, extend to Wales?


Yes, my Lords. The position of Wales and Scotland is an entirely separate matter for the Secretaries of State there.

Baroness STEDMAN

My Lords, at the beginning of his Statement the noble Lord said that a circular had gone out to local authorities today. Is he aware that my own district council in Peterborough received a telephone call from his department earlier this afternoon, giving them the gist of the Statement and saying that it took effect from the time of that telephone call? Is he further aware that local authorities will not take very kindly to this form of instant government by telephone?


My Lords, it is very easy to make a point that sounds so clever—


No. Withdraw!


My Lords, if I may be allowed to respond, the noble Baroness asked me whether I was aware. Of course, I was not aware that that phone call had been made. I am not sure of the significance of a particular authority being called by my department. It must be that they have some very special line into the authority. I really do not know why and I truly do not appreciate the significance of the point made.

Baroness STEDMAN

My Lords, the Government are talking about not spending money, but they are spending their time making these calls to all the district authorities.


My Lords, is the noble Lord aware that one of the things we are worried about is the peremptory and draconic way in which this Government are uttering diktats, and expecting a reply in a week or a fortnight from areas in which they have bulldozed thousands of houses, as in the case of Stoke-on-Trent? Private small builders have no chance at all; the cash flow is falling, and I believe sincerely that all that this is doing is increasing the depression. Finally, the right honourable lady the Prime Minister said that she wanted mobility, and thought that people should look elsewhere for work, but where the hell are they going to look if no houses are being built?


My Lords, I come back to my first point. Either we believe that a cash limit is what it says, or we do not. If we do, and say that this is what the country can afford on this item of expenditure, it is surely not wrong for a Government, seeing an indication of a very considerable overspend, to want to say, "You must look at it, because you cannot exceed it. There ain't any more money for it".

The Earl of ONSLOW

My Lords, is it not true that the Government said there should be no further spending by the Ministry of Defence, because it had overshot its cash limits by £500 million? Is it not also true that noble Lords opposite are basically saying, "We will spend more than Parliament has allowed us to spend"? That £2,000 million is money that has been voted by Parliament and we cannot afford to spend money as anybody feels like it, just for the hell of it, because that is the surest way to bankruptcy.


My Lords, I cannot comment on the individual figures that my noble friend mentioned. But I think it ought, also, to be said that if, when we have the information required, it proves that the figure is not to be that then the Government will decide what they have to do. But I do not consider it at all unreasonable to call for the information, and that is what this circular does, in the form that it does and within the time that it does. I think it is essential.


My Lords, am I to understand that the moratorium is for an unlimited period, but that the Government hope, when they get their figures, to be able to make a further Statement about that? Secondly, in all temerity—and I am sure that the noble Lord will be equally timorous in answering me—I ask whether a similar Statement is to be made which will be applicable to Scotland? I ask that only because the noble Lord has instant advice on his left, in the form of the Minister of State for Scotland.


My Lords, I am responding to this, and I cannot make any comment on Scotland. I have no information at all and I do not want to start to conjecture on that. I am sorry, but what was the noble Lord's first point?


My Lords, it was about a further Statement and the length of the moratorium.


Yes, my Lords. Clearly we hope to have the information by 31st October. As soon as we get it, we will immediately start to analyse it and see exactly what it shows. Of course, there will be a decision to be taken as to where we stand, once we see exactly what it means. As I said, if it proves that the indicators are wrong, then we shall know how to act. But, of course, another announcement will be made, based upon the outcome of what we find.


My Lords, may ask the noble Lord whether he will bear in mind that Mr. Macmillan became Prime Minister and kept the Tory Party in power for six years because he built houses, and far more houses than the Labour Government ever attempted to do? Therefore, I ask him no more than this. Will he also bear in mind that there are grave dangers—political and economic—in continuing the policy of stopping all housing construction, at a time of cruel shortage of houses, and that this should not be regarded as a permanent policy, but as a temporary policy to meet an immediate crisis?


My Lords, there is no intention whatsoever to stop building. The intention is that the £2.2 billion, which has been allocated for housing, should be spent. What we are concerned about is that there should not be spending in excess of that—certainly, not to the tune of £180 million. So you have to decide whether the £2.2 billion is indeed, in the context of present-day public expenditure, a figure which is fair and reasonable. That is the view which the Government took, and which we still take. We do not wish to reduce that by one penny. It is the excess above that, that we are concerned about.


My Lords, will the noble Lord answer one question? Does this blanket operation mean that it does not matter what are the needs of the community; it still remains the same? So that councils which need houses, and councils which have houses to spare, will both he treated the same?


My Lords, when the allocations were first made in February, the needs and requirements of authorities were then considered and allocations were made based upon that. It is those figures which it is still important that authorities spend—not more than that, but not less than that. Therefore, the question of need was decided in February. What we are now talking about is an increase above that, decided—if the figures prove to be so—by the authorities.


My Lords, will the noble Lord answer this question straight? If a need for more houses can be shown, will councils be prevented from meeting it by this edict? A council that does not need houses does not want them, and a council that needs them cannot go on with them.


My Lords, if I add more I shall be repeating myself. I am sure that the noble Lord does not wish me to do that. The time for deciding on the needs, on the one hand, and the availability of resources to go towards those needs, on the other, is when the allocations are made. That was done in February. If there is now to be a very substantial overspend of that, then that is something that breaches the figures and that we just cannot have, for the simple reason that we cannot afford it.