§ 7.36 p.m.
§ Report received.
§ Clause 1 [Designation of defective dwellings]:
Lord Skelmersdale moved Amendment No. 1:
Page 2, line 21, after ("dwelling") insert ("virtue of the designation in question").
The noble Lord said: My Lords, in moving this amendment, I should also like to speak to Amendments Nos. 14, 15, 16 and 30.
Amendment No. 14: Clause 11, page 17, line 17. at end insert—
("but a building does not cease to be included in a class designated under this section by virtue of its inclusion in a class designated under that section.").
Amendment No. 15: Page 18, line 2, after ("dwelling") insert ("by virtue of the designation in question")
Amendment No. 16: After Clause 11 insert the following new Clause:
§ ("Dwellings included in more than one designation.
§ .—(1) for the purposes of this Act, where a person is already eligible for assistance in respect of a defective dwelling at a time when a designation under section 1 or 11 of this Act comes into operation, being a designation of a class within which the building that consists of or includes the dwelling falls, that designation is to be disregarded in his case if either—
- (a) he would not be eligible for assistance in respect of the defective dwelling if it were the only designation, or
- (b) he is entitled to assistance by way of repurchase in respect of the defective dwelling.
§ (2) Where a person is eligible for assistance in respect of a defective dwelling and the building that consists of or includes the dwelling falls within two or more designations under section 1 or 11 of this Act, being designations which are not required to be disregarded in his case (in this subsection referred to as "applicable designations"), then, in relation to the dwelling, this Act (except sections 1 and 11) shall have effect as if—
- (a) references to the designation, or the provision, by virtue of which it is a defective dwelling were references to any applicable designation or, as the case may be, to any provision under which an applicable designation was made,
- (b) references to the qualifying defect were references to any qualifying defect described in any applicable designation,
- (c) references to the period within which persons may seek assistance under this Act were references to any period specified for that purpose in any applicable designation, and
- (d) the reference in paragraph 1(1)(c) of Schedule 1 to this Act to the maximum amount permitted to be taken into account for the purposes of that paragraph were a reference to the sum of those maximum amounts for each applicable designation.
§ (3) In any case where—
- (a) notice has been given to a person at any time under section 4(1) of this Act stating that he is, in the opinion of the appropriate authority, eligible for assistance in respect of a defective dwelling, and
- (b) the building that consists of or includes the dwelling falls within a class designated under section 1 or 11 of this Act by a designation coming into operation after that time,
§ (4) Subsections (5) to (8) below apply in any case where—
- (a) a person is entitled to assistance by way of reinstatement grant in respect of a defective dwelling at a time when a designation under section 1 or 11 of this Act comes into operation, being a designation of a class within which the building that consists of or includes the dwelling falls (in this and the following subsections referred to as the "later designation"), and
- (b) the later designation is not required to be disregarded in his case.
- (a) stating the effect of subsection (2) above and subsection (6) below and of the further designation, and
- (b) informing him that he has the right to make a claim under section 3(5) of this Act.
§ (6) Where it becomes apparent to the authority that this subsection applies in the case of any person, they shall as soon as it is reasonably practicable to do so—
- (a) make a further determination under section 3(2) of this Act (taking account of the later designation), and
- (b) give a further notice under section 4(2) of this Act in place of the previous notice,
§ (7) Where a further notice under section 4(2) of this Act stating that a person is entitled to assistance by way of repurchase is given in place of a previous notice and either—
- (a) he satisfies the authority that he has, before the further notice is received, entered into a contract with another to provide services or materials for the purpose of executing any of the work stated in the previous notice or in a notice under paragraph 3 of Schedule 1 to this Act (in this subsection and subsection (8) below referred to as the "relevant work"), or
- (b) any of the relevant work has been carried out before the further notice is received and has been carried out to the satisfaction of the appropriate authority.
§ (8) In any case where—
- (a) the relevant work is not completed but part of that work is carried out to the satisfaction of the appropriate authority,
- (b) the notice in question continues to have effect in relation to that part of the work by virtue of subsection (7) above, and
- (c) that part of the work is carried out within the period stated in the notice in question.
§ Amendment No. 30: Clause 23, page 28, line 25, after ("construed") insert ("(subject to section (Dwellings included in more than one designation) (2) of this Act)").
§ Under the Bill, dwellings could be subject to two designations; in particular, they could subject both to a national designation by the Secretary of State under Clause 1 and to a local designation by the local authority under Clause 11. It is important that the provisions should not apply in an overlapping or conflicting way in such cases. The Bill makes no provision to deal with overlap at present and the amendments are designed to make such provision.
§ These amendments, in fact. do four things. First, if the owner is entitled to assistance by way of repurchase under one designation, he shall not be eligible for assistance under a subsequent designation; that is, repurchase will continue to be the form of assistance in his case: there would be little point in processing an application under the subsequent designation if repurchase were already the means of assistance in his case, either because of the owner's personal circumstances or because the qualifying defect under the earlier designation was such that repurchase was the right solution.
§ Secondly, if it becomes apparent to the authority that a person entitled to assistance by way of 237 reinstatement grant under one designation is eligible for assistance under a subsequent designation, they should make a further determination as to the form of assistance in the light of the second designation and give the owner a further notice under Clause 4(2) stating the form of assistance to which he is entitled. In such cases it would not be necessary for the owner to submit a separate application in respect of the subsequent designation.
§ Thirdly, if assistance under the subsequent designation is also to be by way of reinstatement grant, the authority shall issue fresh notices as to the work to be required and as to the amount of expenditure. The clause provides that in such circumstances the expenditure limit shall be the aggregate of the expenditure limits applicable to both designations.
§ Fourthly, where the form of assistance as a result of the subsequent designation is to be by way of repurchase, the owner should be allowed to complete and receive payment for any work to which he may be committed or which he may have completed with a view to reinstatement under a previous designation. These are, in essence, technical amendments, and I beg to move Amendment No. 1.
Lord Stallard moved Amendment No. 2:
Page 2, line 38, at end insert—
("( ) No designation under this section may be made unless the Secretary of State and local authority Associations have agreed that local authority resources are adequate to cope with the additional requirements, or such other additional resources are made available as appropriate.").
§ The noble Lord said: My Lords, before I go any further, I should explain that I did not rise to the first set of amendments moved and spoken to by the noble Lord because on this side of the House we have accepted and we understand the reasons for the amendments that he moved, and in our view they seem to be fairly reasonable amendments. Therefore, we did not feel obliged to rise.
§ However, Amendment No. 2 is a different argument altogether. Under the Bill's proposals, local authorities are being placed under a statutory duty to provide financial assistance to private owners of dwellings which have been sold by private authorities and which are designated as defective. As I understand it, the assistance will either be in the form of a reinstatement grant or, in certain circumstances, by repurchasing the owner's interest in the dwelling. The Explanatory and Financial Memorandum of the original Bill assumes that the provisions of this Bill will be confined to 16,500 owners of prefabricated reinforced concrete dwellings, although it is true that Clause 1 is pretty general.
§ The total cost is estimated in the memorandum to be between £170 million and £250 million. We have disputed those figures in previous amendments, as we did on Second Reading, and I do not have to enlarge on that at this stage. We remain convinced that the problem will be far greater than the Government estimates suggest. All the expert opinion we have been able to obtain endorses that point of view.
§ I said on a previous amendment, as I said at Second Reading, that the AMA. for instance, and others estimated that there are 167 different types of industri- 238 alised houses, and they also estimated that there would possibly be involved 1 million-plus houses. That is a colossal problem, and we developed that argument some days ago. But in relation to this Bill, we know that there will be 150,000 prefabricated, reinforced concrete dwellings remaining in local government ownership, not including those of the 16,500 which will pass back to the local authorities, having been repurchased.
§ The Association of Municipal Authorities, using the Department of Environment figures for the cost of reinstatement, has estimated that local authorities will incur expenditure of no less than £1.5 billion in the future as dwellings deteriorate and need to be repaired. That is the size of the problem, and most people agree that even that will not be the end of it.
§ While we unequivocally welcome that part of the Bill which gives much needed assistance to those unfortunate private owners who find themselves in this predicament, we have also expressed concern about the lack of assistance—and about the partiality of the Bill—to tenants who will have to remain in defective dwellings. We have also questioned the failure of the Government to provide adequate resources to local authorities now and for future designations.
The Government intend to operate within the confines of the HIP allocation, but we have pointed out that this will create untold problems. This, too, is summed up fairly adequately by the Association of Municipal Authorities in a recent report, Defects in Housing Part 2, issued earlier this year. They say:
Unfortunately, the problems of both 'non-traditional' and system built dwellings are emerging now, at the very time when housing investment is being substantially reduced. The Government also proposes that Housing Investment Programmes are further reduced, in real terms, in 1984/85 and 1985/86. Capital receipts, from council house sales and sales of other assets, have not restored the level of housing investment. In fact, as capital receipts have risen HIP allocations have fallen with 'gross provision' declining in real terms very substantially. Local authorities are having great difficulty in funding the cost of remedial works programmes within their HIP provision. Inevitably the demands of existing tenants in existing housing will take priority in most programmes and therefore the proportion of HIP expenditure spent on renovation of the public stock has increased—but at the expense of other programmes, notably new housebuilding.".
§ This means that local authority repairs and maintenance programmes will be distorted by this whole process and tenants will be forced to live in substandard conditions for far longer than is necessary and than would normally be tolerated. If we are not alert to the difficulties now, we shall build up massive problems—as bad as those of the old slum clearance days.
§ It has also been accepted by those of us who have discussed these measures—and I think the Government, too, have accepted it—that the responsibility for the prefabricated reinforced structures lies fairly and squarely at the door of Governments. All Governments since the war have been responsible for these buildings. Again, I can quote from the same excellent report of the AMA, and this was endorsed by a Shelter report, as well as by reports from other housing authorities.
§ Of course all the local authorities which have written to us have said the same. They have said that the problem was created by the Government when they directly involved themselves in the housing 239 programmes of local authorities in the 1940s, 'fifties, 'sixties, and 'seventies in order to achieve massive targets. Those of us who were in local authorities remember what was almost a Dutch auction that went on. One party said, "We will build 300,000 houses a year", and so the others said, "We will build 400,000". The next election address stated 500,000. There was a great auction in regard to who could build the most. Sites were not available, nor were materials: and skilled labour was not readily available. Industrialised building was deliberately pushed by Governments of all parties. Incentives were given; so was assistance with sites and plans. Local by-laws were changed, and in many cases were superseded by national by-laws, in order to get rid of "nuisances", as they were then called, who were the people who objected. People such as us, who objected that it was going too fast, and who did not like high-rise building, anyway, were classed as nuisances, and by-laws were swept aside in order to make it easier for local authorities to comply with industrialised building. Subsidies were given, and the whole trend went on.
§ There cannot be any argument—and, to be fair, I have not heard one from anybody—about the responsibility of all Governments for this programme. It therefore seems to me that in the face of all this evidence and the reasonableness of the amendment and the arguments we have put forward, it would be no more than just that we should make sure that, because of all those problems, adequate extra resources should be made available by the Government. Those resources would then enable local authorities to cope with assistance to both private owners and tenants remaining in the dwellings, without using up funds which in many cases have already been earmarked for the planned programmes of urgent repairs and maintenance which are already in position in many local authority areas. Apart from that, the amendment is self-explanatory, and I beg to move.
§ Lord Dean of Beswick
My Lords, I rise to support the amendment so eloquently moved by my noble friend and colleague Lord Stallard. It is always easy to stand up and say, "I told you so", but I believe that in another place I raised the first warnings about the situation that the nation was in through the use of system building. The first move towards compensating people who had purchased houses from their local authority and then found themselves left with albatrosses occurred in another place. In order to appease one of their Back-Benchers the last Conservative Government two years ago, brought in the Airey house order which provided for financial assistance to be given for repair, or remedial, work to people who had bought Airey houses from their local authority. On that occasion I initiated a debate in another place on the problem we were then experiencing, and I said that the problem was "surfacing". What was being dealt with was only the smallest tip of a gigantic iceberg which would surface with frightening rapidity. That has been borne out by subsequent events.
The next thing was that other houses had to be surveyed by the Building Research Establishment and the same sorry tale began to emerge. It is not a party 240 argument. In the debate I initiated in another place I was strongly supported by Conservative Members with constituents who were facing the same problem. I have the greatest sympathy for people who are left with this problem; but the argument is about who pays to put it right.
Let me say immediately that most of the people who bought the houses initially had a very good deal. They bought what were substantial houses at a knock-down price, and everything seemed very good. Little did they know that in a short time it would be proved that they had bought a commodity that was no longer marketable. I have used these words before when I served on a Standing Committee with my noble friend Lord Graham on the Housing and Building Control Bill in another place, and I explained this then.
In an outstanding case, former constitutents of mine, a lady and her husband, bought what they called a Smith house in Leeds. They bought it 16 years ago when the present Minister of State was then the leader of the local authority in Leeds. That is not significant, but Leeds' policy was to sell council houses at that time. This lady bought the house at a handsome discount, which I think at that time was a maximum of 33 per cent. She came to see me just before the general election, just over 12 months ago, with the tale that the house had been in excellent condition. It had been surveyed and there was no structural deterioration whatsoever. The estate agent and surveyor had valued the house at nearly £20,000. She had down-marketed the house by £2,000 to try to dispose of the house. It was an excellent house, but because it was a system-built house the mark of Cain was on it, she had it advertised for sale for two years and not had one firm answer. She had had inquiries but as soon as it was known that it was a system-built house the offers evaporated.
§ Lord Graham of Edmonton
My Lords, I wonder whether my noble friend appreciates how valuable was his reference to the Smith houses in Leeds in the context of the current consideration by the Government. My honourable friend, Mr. Terry Davis, the Member of Parliament for Hodge Hill, has been attempting to persuade the Minister that as an additional system to be added to the designated 28, the Smith houses ought to be represented. The Minister is indicating that he is not too certain whether there is a national rather than a local aspect to this. The reference by my noble friend Lord Dean of Beswick that there are Smith houses in Leeds should considerably strengthen the case for including Smith houses as an additional case for designation.
§ Lord Dean of Beswick
My Lords, I do not think I ever had a reputation in another place or in this place for long speeches. I did not speak in the Second Reading debate because of the number of people involved and the time factor, and I did not speak at the further stages; but I am bound to say that I may take a little longer than normal to develop my case. That whole kernel of what the Bill is not about or what ought to be included is contained in the amendment in the names of the noble Lord, Lord Stallard, myself and my other noble friend.
I want to say why it is grossly unfair. It would appear—I repeat that it would appear—that the 241 Government are turning a completely blind eye to the people remaining in the public sector who have to live in the same type of house. It would appear that the Government are on occasions manifesting themselves as conducting a vendetta against people who are left to live in council houses. I have no particular objection to the provisions in the Bill that afford the compensation to owners that have bought these unmarketable houses.
It is significant that the building societies will not touch system-built houses with a barge pole. I understand that the Government are making strenuous efforts to try to influence them or cajole them into moving and into providing mortgages on this type of property. I understand that so far there has been no movement whatsoever. It is obvious that there is no future in the private market for these properties. What does the bill do? It says that the people who bought them can go in for remedial or repair grants for x numbers of pounds but that still leaves, on the Leeds calculation a couple of thousand pounds between the cost of the job and what it will attract in Government assistance.
The alternative is re-purchase by the local authority, not by option but mandatorily. This is where the total unfairness comes in. As I understand it—I do not know whether we have reached this part of the Bill yet but my noble friend Lord Graham will indicate—the Government will acquiesce where local authorities have taken over responsibility for former National Coal Board houses. They are prepared to make a concession that the local authority—which did not build them but became the landlord, then sold them at a discount to the tenant, not to themselves—will be refunded 100 per cent. They will bear no charge whatsoever. What is the justification for somebody living in a Coal Board house in South Yorkshire— that local authority may have a mass of them in the pit areas—to receive total compensation? I think that is correct and should be done, but I fail to understand the arguments, lack of conviction or sympathy by the Government for the fact that for every house that the city of Leeds has to buy back, 25 per cent. of the cost will have to be borne by other council house tenants or the ratepayers in Leeds. That is an appalling case of discrimination that may, when the Bill started off, have warranted an examination on the possibility of hybridity by not giving people in a similar situation similar protection or advice under the law.
In the next few minutes I shall put the case as I see it for Leeds. Leeds has more Airey houses in its stock than any other authority in the country. It has a variety of other houses that will be included in the Bill and others that may later be included in further Bills. This is a spreading cancer that cannot be stopped.
This document states that in Leeds:the Council's programme for remedying its defective 'Airey' properties envisages a five-year programme costing £20,750,000 or £4 million per year.Present funding restrictions suggest that this programme is likely to stretch to 15 years before completion.So we are saying that those who bought their houses at a discount and did very well at the beginning find that the matter is urgent, require an Act in this Parliament that can give them the fullest compensation possible. 242 The neighbour living next door in the council house that has not had such a benefit may have to wait 15 years under the present Government's cut-backs in finance. This figure relates only to council properties. It has nothing to do with those that have been privately bought and are still in private ownership. The document continues:Approximately 400 Airey house properties were originally sold by the Council.So far, 227 owner-occupiers have re-sold to the Council, following the decision to offer re-purchase assistance".Some are obviously pre-empting the Act, so it will catch up with them in any case. I would be surprised if it is not almost 100 per cent. who will opt for re-sale back to the council when the Bill becomes law.
The document continues:The cost to the council so far has been £3,726,538.A further 85 sales are in progress, and at an average buy-back cost of £17,000 this represents a further cost of £1,445,000.On my calculations, that means to say that of that money, the housing investment programme or the rates in Leeds will have to subvent the repurchase by the local authority amounting to £350,000. This is brought about by a Government Bill that is mandatory and not optional. So much for the fairness of the situation.
I could go into the question of repair grants. The average cost of repair is £9,700 and there is a further cost of an average £1,440 making an total cost of nearly £12,000. The maximum grant contribution is £9,500, and this leaves a personal debt of £2,250. To me, that is an indication that if you are in a situation where you had bought one of these properties, you will certainly not opt for repair, you will get rid of it on the basis that somebody is going to fund you totally.
The council's experience with Airey houses can be summarised. In all but a few cases, resale to the council has been preferred to the repair grant—and we have already made that point—which is not surprising, considering the personal financial contribution required. Building society attitudes as to the mortgage ability of rebuilt Airey properties are still negative, despite the fact that remedial works effectively convert the houses to traditional construction. This is the Leeds scheme of conversion where they enclose the walls in a brick cladding which then become the load-bearing walls.
What are the defects in this Bill? The document says—and I concur with this—that it is an extension and rationalisation of the ad hoc position provided to owner-occupiers of Airey houses. It would appear that the Government prefer to go to almost any lengths down this road to redeem a "clanger" of their making.
The Bill makes positive recommendations only for the financing of remedial works to privately-owned defective properties—which is one of the most unfair parts of the Bill because it means to say that Leeds, having bought back all these houses, will then do the remedial work on the property but they may—and there is no significance in this yet because the housing investment programme is being butchered—have to have it done under the housing investment programme. If you start talking in terms of £10,000 per house on this type of operation, you are not going to have much finance left to deal with anything else. But the Secretary of State—and here comes the punch 243 line—may make a contribution towards the cost of the public sector remedial programmes. I would ask the Minister if he would bring his mind to bear on that particular facet: the Secretary of State may make a contribution towards the cost of public sector remedial programmes.
The figures in Appendix 1 to the report, based on the Airey experience, show that the likely repair programme cost for Leeds could be approximately £50 million. This is in addition to the financial requirement for Aireys and the council's normal housing capital expenditure requirement, which already reflects significant needs for remedial expenditure on other non-traditional property types.
The point behind the amendment moved by my noble friend Lord Stallard is to indicate that we are a nation, I believe, that has a record second to none in giving our people even-handed treatment. This is no such thing. I warned the Government in another place when they acquiesced in the request of their own Back-Bencher, the honourable Member for Lichfield and Tamworth (as it was then) that they were opening a can of worms. They are, in fact, opening a can of worms but the only worms that they are catching and treating are the private-sector worms. The people in the public sector are to be left to carry a large part of the financial burden that is required to correct the Government's policies in dealing with this situation.
In the case of Leeds, I am not proposing to hold anything up or to bolt the gate tonight, but as far as I am concerned I would ask whether the Government can give some undertaking or understanding that they will look at this problem and find additional finance. I think my noble friend Lord Stallard is perfectly correct in saying that we are not criticising this Government. In my speeches in another place, I made the point that it was the fault of successive governments. My noble friend Lord Stallard was right. The national target at the time was 300,000 housing units a year. This monstrosity of a problem that we are left with arose because Ministers of various political colours periodically taking office and changing office wanted to inflate that total of 300,000 with 100,000 houses or flats or units of accommodation built by system building.
I close on this. During the debate, I think on Second Reading, in another place, the Member for Manchester, Central, spoke of the problems of Manchester. That is a problem different from that contained in the Bill. Manchester's problem is one of deck-access flats and system building and it is part of the iceberg which is surfacing in London and all over the place.
The first financial commitment that I read of nationally was a national appraisal given by the AMA of £5 billion. The second report 12 months afterwards was £10 billion. And so it goes on. I would suspect that of all the authorities in the country, Manchester—where I was the chairman of housing for a while and was bitterly opposed to system building but lost the vote on the basis of the way that the subsidy at the time was structured—would have a far bigger debt per capita of its population to pay than any other major city outside London. They are demolishing what were known as the "forts", which were built by Bisons, and 244 the cost on those is astronomical. They have not been built 15 years and now they are having to demolish them. I suggest that it is about time the Government—and I am not only blaming this Government: past governments and past Labour governments were as much to blame—took on board this responsibility and gave some hope to the authorities that they are grappling with the situation. Finally, let me say that if they are to do that—and, by all justice, they should—let it be separate from the housing investment programme and not be masked in that, leaving the authorities with insufficient funds to do what they wish to do to put this problem right.
§ 8.6 p.m.
§ Lord Sandford
My Lords, I should like to address myself to the amendment. All that the amendment asks us to do is to consider whether it would be helpful in dealing with this problem to impose a delay on designation by the Secretary of State until such time as he and the local authority associations have agreed about the resources required. I really do not think that that would be helpful. There is a major problem here: we heard all about it at Second Reading and on Committee and we have heard all about it again just now. The first way of tackling this is to define it with as much precision as is possible and the final stage in that definition is designation by the Secretary of State. So anything that would delay designation is going to be unhelpful. Therefore, I would not want to see this amendment incorporated.
I have no doubt at all that, as and when these classes are designated and the size of the problem is determined, that will make the tackling of it that much easier. It will certainly be very difficult for all the reasons that we have heard over and over again and not least because of the difference between the kind of problem faced by the private owner as compared with the kind of problem faced by the council tenant. But delaying designation will not help and I hope therefore that noble Lords opposite will not press the amendment.
§ Lord Skelmersdale
My Lords, I wish that all Second Reading speeches were constructed and delivered as well as that of the noble Lord, Lord Stallard, in moving this amendment. I make no complaint about this because he has a major point to make on the financing of this sector of local government expenditure.
With this amendment we return to an issue which has been dicussed at considerable length, as my noble friend Lord Sandford has reminded me, both in this House at Second Reading of the Bill and at Committee last week, and in another place. It gives me as much pleasure to tell the noble Lord, Lord Dean, that he is right in his survey of the scene, as it has been for him to tell me so. The amendment would require the agreement of local authority associations on the availability of resources before a designation could be made. I have read again with interest, as I promised, what the noble Lord, Lord Stallard, said in moving the amendment at Committee stage last week. But, with respect, I think noble Lords are still missing the point as to what the Bill is all about.
This Bill is not about tenants and the houses in which they live. The objective of the Bill is to provide 245 for a scheme of assistance to private owners of defective dwellings who bought in good faith—and at defect-free value—from the public sector. The Building Research Establishment has identified 28 types of dwelling that have inherent defects of design or construction, the existence of which has considerably reduced the value of those dwellings. The Bill recognises the public sector's responsibility to those private owners who bought such dwellings and proposes that they should be compensated for the loss they have suffered.
In the intervention of the noble Lord, Lord Graham, in the speech of his noble friend Lord Dean, on the relationship between the Department of the Environment, Smith houses and Leeds, I did not understand correctly the relationships—
§ Lord Graham of Edmonton
My Lords, the argument of the Minister in another place in hesitating about or not including Smith houses was that he was not too sure that the Smith house illustration in Birmingham represented a national situation rather than a special, local, built-on-shale situation. What my noble friend has been trying to do with some modest success is to demonstrate that Smith houses were built on a national scale and the problem is national. It was no more than that. I just saw the opportunity of reminding the noble Lord the Minister and those who read the debate that the matter is still open.
§ Lord Skelmersdale
My Lords, that is fair comment. The noble Lord, Lord Graham, is absolutely right.
What this short debate really centres on is the question of resources. I have said before that authorities' expenditure under the Bill in repairing their own stock has been, and will continue to be, taken into account in HIP allocations. We had quite a long discussion spread over several amendments at the Committee stage. I have said that the department is discussing with the local authority associations ways in which the HIP calculations could reflect authorities' needs for spending on defective housing. I brought up the point at Committee stage that local authorities' own stock and finance for it provided by central government will be allocated when local authorities have themselves put those repairs in their particular budget. I also said at the time that it is for the local authorities to decide how the general HIP allocation should be spent.
Under that arrangement, which was introduced in response to the request of the local authorities, it is of course difficult for the local authority to know how recognition has been given to a particular need. Here I must part company with the arguments of noble Lords opposite. It ought not therefore to be represented that no such recognition has been given, although I accept that unless you have a piece of paper in front of you it is sometimes rather difficult to accept that point.
Getting back as my noble friend did to this amendment, although I assume like him that it is on the Marshalled List to probe, it seeks to establish full agreement with local authorities about resources before a designation can be made. I believe that it is unrealistic ever to expect full agreement with local 246 authorities on an issue such as resources and that it is unrealistic to require that designations should be contingent upon such agreements. We all complain about money—in our personal lives, in our business lives and in our working lives. I think, however, that I illustrated to the House at earlier stages of the Bill that the Government do have and will continue to have regard to the expenditure needs of local authorities on defective houses. If local authorities need further discussions on this matter, my door or that of my noble friend is always open.
§ Lord Stallard
My Lords, I must first of all apologise for the absence of my noble friend Lord Dean, who was called out of the Chamber before he was able to hear the Minister's full reply. But as the noble Lord the Minister rightly says, the noble Lord was right in his survey of the problem. He used Leeds as an example and it was a perfectly good example to use because, as I understand from the department's own figures, of prefabricated reinforced concrete houses built during the 1940s and 1950s, Leeds still has 7,104 in local authority ownership. As my noble friend said, 227 are privately owned, and those 227 concern the people who will benefit from this Bill, and the 7,104 concern those whom we have been trying to bring to the attention of the Minister. Multiplied throughout the country that will be the size of the problem.
While I recognise and accept what the noble Lord the Minister has said about all the discussions that are going on, I do not think that we will ever agree—certainly not at this stage; perhaps he will at some future stage—about there being a grave problem —an administrative problem and a psychological problem—attached to the partiality of the Bill. Of two people living next door to each other, one will get the full compensatory rights arising from the Bill, which means financial compensation with a transfer to alternative accommodation and the right to buy that other accomodation; the other fellow will have to remain for all sorts of reasons in the rented accommodation. He will still be arguing for the transfer which he so badly needs because of his family and so on, but he will not be able to get it. Not only will he be convinced that he lives now in a defective dwelling but "defective" will take on the connotation of "unsafe" and we will see all the organisational problems that flow from that. I foresee great difficulties there as well as the local authority administrative problems.
Having said that, I recognise and accept what the Minister has said. I hope that the negotiations going on through the HIP channels and so forth will be fruitful, and that something will come out of the debates that we have had on this amendment. With those few words, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§ Clause 3 [Entitlement to reinstatement grant or repurchase]:
Lord Skelmersdale moved Amendment No. 3:
Page 6, line 3, leave out subsection (6).
§ The noble Lord said: My Lords, with permission, I should like to speak also to Amendments Nos. 6, 8, 9, 28, 29, 31, 32, 33, 34, 35, 36 and 37.247
Amendment No. 6: Clause 4, page 8, line 14, at end insert—
("(cc) the amount of expenditure which, in their opinion, may properly be incurred in entering into any associated arrangement;").
Amendment No. 8: Page 8, line 38, at end insert—
("(6) In this Act, "associated arrangement" means any arrangement which—
§ Amendment No. 9: Clause 5, page 9, line 2, at end insert ("and in respect of any associated arrangement.").
Amendment No. 28: Clause 23, page 28, line 8, at end insert—
(" "associated arrangement" has the meaning given by section 4(6) of this Act;").
Amendment No. 29: Page 28, line 18, at end insert—
(" "lending institution" means any building society within the meaning of the Building Societies Act 1962 and any of the bodies specified in paragraphs 6, 7 and 8 of the Schedule to the Home Purchase Assistance and Housing Corporation Guarantee Act 1978.").
§ Amendment No. 31: Schedule 1, page 32, line 13, at end insert ("and entering into any associated arrangement").
§ Amendment No. 32: Page 32, line 14, after ("work") insert ("and entering into any associated arrangement").
§ Amendment No. 33: Page 32, line 39, leave out ("or")
Amendment No. 34: Page 32, line 41, at end insert—
("(c) there is an amount of expenditure which may properly be incurred in entering into an associated arrangement but no such amount is stated in the notice under section 4(2) of this Act or a previous notice under this paragraph, or
(d) where such an amount is so stated, the amount of expenditure which may be properly so incurred is greater than that amount,").
Amendment No.35: Page 32, line 43, after ("to") insert ("that amount or, as the case may be,").
§ Amendment No. 36: Page 33, line 1, after ("grant") insert ("in respect of the qualifying work").
Amendment No. 37: Page 33, line 8, at end insert—
("(3) The appropriate authority shall pay reinstatement grant in respect of any associated arrangement when payment in respect of the expenditure incurred in entering into the arrangement concerned falls to be made.").
§ I think that this group of amendments will be welcomed by the whole House. During the passage of the Bill through this House and through another place concern has been expressed as to whether these houses will be mortgageable after repair. We have been asked to explore the possibility for warranties for the repairs themselves. In this context, the House will recall that we are discussing both issues with the National House Building Council and the Building Societies Association.
Lord Skelmersdale moved Amendment No. 4:
Page 6, line 10, after ("modify") insert ("or omit").
§ The noble Lord said: My Lords, this is a minor drafting amendment to Clause 3. I beg to move.
Lord Skelmersdale moved Amendment No. 5:
Page 6, line 30, after ("of") insert ("the").
The noble Lord said: With permission, my Lords, I should like to speak also to Amendment No. 7. Both are technical, drafting amendments. I beg to move.
Amendment No. 7: Clause 4, page 8, line 28, leave out ("(3)") and insert ("(2)").
§ Clause 4 [Notice of determination]:
§ Lord Skelmersdale moved Amendment No. 6:
§ [Printed above.]
§ The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 3. I beg to move.
§ Lord Skelmersdale moved Amendment No. 7:
§ [Printed above.]
§ The noble Lord said: I spoke to this amendment with Amendment No. 5. I beg to move.
§ Lord Skelmersdale moved Amendments Nos. 8 and 9:
§ [Printed above.]
§ The noble Lord said: My Lords, I spoke to both these amendments with Amendment No. 3, and I beg to move them en bloc.
§ Clause 8 [Purchase of certain land by authority possessing compulsory purchase powers]:
§ Lord Skelmersdale moved Amendments Nos. 10 to 12:
§ Page 12, line 24, leave out ("subsection (4) below") and insert ("the following provisions of this section").
§ Page 13, line 4, leave out ("and").
Page 13, line 11, leave out from ("and") to ("shall") in line 12 and insert—
("(c) any amount which, apart from this paragraph, would be payable by a housing authority under subsection (1) above").
§ The noble Lord said: My Lords, I beg to move Amendments Nos. 10, 11 and 12 en bloc. Clause 8 provides in compulsory purchase cases for a top-up payment to make up the difference between the price that an owner would have been paid under the Bill (that is, 95 per cent. of the defect-free value) and the amount of compensation he received as a result of the compulsory acquisition. The purpose of the amendments is to make it clear that any well-maintained payments received by the owner should be deducted from the top-up payment. Unless that deduction is made, there will be an element of double payment, which is clearly undesirable. I beg to move.
§ Lord Skelmersdale moved Amendment No. 13:
After Clause 8, insert the following new Clause:
("Rights of pre-emption etc.
.—(1) This section applies in any case where (apart from this section)—
(2) If the public sector authority concerned are the appropriate authority, the covenant shall be disregarded for all purposes in relation to anything done by the owner in pursuance of the rights conferred on him by section 6 of and Schedule 2 to this Act.
(3) If the public sector authority concerned are not the appropriate authority, then—
§ (4) For the purposes of this section, the defect-free value is the amount that would have been the consideration for the disposal if none of the defective dwellings to which the designation in question related had been affected by the qualifying defect and in subsection (3)(b) above and this subsection, "the consideration for the disposal" means, where the consideration for the disposal is required to be reduced by any amount under section 19(7) of the 1980 Act or any provision to the like effect, the aggregate of the consideration for the disposal (after that reduction) and that amount.
(5) If the public sector authority concerned are not the appropriate authority and the condition in subsection (3)(b) above is satisfied, section 9 of this Act shall apply in the case of the owner—
§ (6) A housing authority are not required to make a payment to any person under this section unless he makes a written application to them for the payment before the end of the period of two years beginning with the time of disposal.
§ (7) Where a housing authority refuse an application for a payment under this section they shall give to the owner a notice in writing stating their reasons for doing so.
§ (8) Any question arising under this section as to defect-free value shall be determined by the district valuer if the owner or the housing authority so require by notice in writing served on the district valuer.
§ (9) Before making a determination in pursuance of subsection (8) above, the district valuer shall consider any representation by the owner or the authority made to him within four weeks from the service of the notice under that subsection.
§ (10) A person serving a notice on the district valuer under subsection (8) above shall serve notice in writing of that fact on the authority or, as the case may be, the owner.
(11) In this section—
district valuer" has the same meaning as in paragraph 3(1) of Schedule 2 to this Act;
housing authority", in relation to a defective dwelling, means the housing authority in whose area the dwelling is situated; and references to the owner include a reference to his personal representatives.
(12) This section applies to Scotland as if—
§ The noble Lord said: My Lords, I beg to move Amendment No. 13, and I should like to speak also the Amendments Nos. 17, 18, 19, 20, 21 and 22.
§ Amendment No. 17: Clause 15, page 20, line 34, after ("8(6)") insert ("(Rights of pre-emption etc.) (8)")
§ Amendment No. 18: Clause 16, page 21, line 12, after ("8(6)") insert ("(Rights of pre-emption etc.) (8)")
§ Amendment No. 19: Clause 17, page 21, line 34, after ("8") insert (" or (Rights of pre-emption etc.)")
§ Amendment No. 20: Page 21, line 40, after ("8") insert (" or (Rights of pre-emption etc.)")
§ Amendment No. 21: Page 22, line 5, after ("8") insert (" or (Rights of pre-emption etc.)")
§ Amendment No. 22: Page 22, line 40, after ("8") insert (" or (Rights of pre-emption etc.)")
§ The noble Lord said: My Lords, among those amendments is a new clause. The purpose of the new clause and the consequential amendments to Clauses 15, 16 and 17 is to make provision for cases where there may be a conflict between the duty imposed on a housing authority under the Bill to repurchase the dwelling and a right of pre-emption applying to that dwelling. For example, under the Housing Act 1980, if a tenant exercises the right to buy in an area of outstanding natural beauty, the local authority can impose a covenant under Section 19 of that Act, giving it first refusal on any disposal within 10 years of acquisition. Unless the Bill provides otherwise, the pre-emption covenant could cut across the owner's right to assistance under the Bill because repurchase under the covenant would be at market (that is, defective) value.
§ This is a complicated matter. The new clause deals only with cases where pre-emption covenants have been imposed by public sector bodies; it does not attempt to interfere with rights of pre-emption as agreed between private individuals.
§ Essentially the new clause provides that if the beneficiary of the pre-emption covenant is the authority which is to repurchase the dwelling under the terms of the Bill, the covenant shall cease to have effect and the owner can get assistance under the Bill in the normal way. If the beneficiary is a public sector body other than the authority with an obligation to assist under the Bill, then the clause provides that the owner should, if he has to sell to the other body, be entitled to a top-up payment from the housing authority similar to the arrangement we have discussed in Clause 8 for compulsory purchase. The top-up payment will be equal to the difference between what he would have received under the Bill and what he actually receives under the covenant, which would have reflected the existence of the defects. We are seeking to place the owner as nearly as possible in the same position as owners who get assistance under the Bill but who are not affected by pre-emption covenants. I hope, with that explanation, the House will be able to accept the amendment. I beg to move.
§ Clause 11 [Designation under local schemes]:
Lord Skelmersdale moved Amendments Nos. 14 and 15:
[Printed earlier: col. 235.]
§ Lord Skelmersdale moved Amendment No. 16:
§ [Printed earlier: col. 235.]
§ The noble Lord said: My Lords, I beg to move Amendment No. 16. I spoke to this amendment with Amendment No. 1. I beg to move.
§ Clause 15 [Jurisdiction of county court and rules of procedure]:
§ Lord Skelmersdale moved Amendments Nos. 17 to 22:
§ [Printed above.]
§ The noble Lord said: My Lords, I beg to move Amendments Nos. 17 to 22 en bloc. I spoke to them with No. 13. I beg to move.
§ Clause 19 [Modification of Act in relation to shared ownership leases]:
§ Lord Skelmersdale moved Amendments Nos. 23 and 24:
§ Page 24, line 39, leave out (", Scotland").
Page 24, line 40, at end insert—
("(6) This section does not apply to Scotland.").
§ The noble Lord said: My Lords, I beg to move Amendments Nos. 23 and 24. The purpose of these amendments is to exclude Scotland from the scope of Clause 19, which was introduced at Committee stage.
§ Shared ownership leases in England and Wales are based on a well established concept of land tenure and are fully recognised and accepted by the legal profession. The position in Scotland, I understand, is rather different. Section 8 of the Land Tenure Reform (Scotland) Act 1974 largely precludes the creation of new residential leases exceeding 20 years. Indeed, the term "shared ownership lease" is unknown in Scotland.
§ Such shared ownership schemes as do exist in Scotland are of very recent origin and, I understand, do not operate on dwellings built in the period we are discussing in terms of defective housing under the Bill in hand. In any case, the arrangements fall some way short of the shared ownership leases found in England and Wales, although I hasten to add that they have proved entirely acceptable to building societies for the purpose of offering mortgages. There are no plans, given the existence of the 1974 Act to which I have referred, to introduce arrangements of this kind into the main corpus of land tenure law in Scotland. Therefore, as Clause 19 pertains to Scotland, it would be better to leave it out of the Bill. I beg to move.
Lord Skelmersdale moved Amendment No. 25:
After Clause 19, insert the following new Clause—
§ ("Application of Act in relation to mortgagees.
- (a) a power of sale (whether conferred by section 101 of the Law of Property Act 1925 or otherwise) is exercisable by the mortgagee, and
- (b) the mortgagor is eligible for assistance in respect of the defective dwelling.
§ (2) The rights that may be conferred on a mortgagee by regulations under this section are—
- (a) rights corresponding to those conferred by this Act on a person holding a relevant interest in the defective dwelling,
- (b) the right to require the appropriate authority to acquire in accordance with the regulations any interest in the defective dwelling to be disposed of in exercise of the power of sale, and
- (c) where the mortgagee is the appropriate authority, the right by deed to vest the dwelling in themselves, and the rights that may be so conferred may be conferred in place of any rights conferred on any other person by this Act.
§ (3) Regulations under this section may provide that, where the conditions in subsection (1)(a) and (b) above are or have been satisfied, this Act, the power of sale in question and any enactment relating to the power of sale shall have effect subject to such modifications as may be specified in the regulations.
§ (4) Where a defective dwelling is vested in a mortgagee in pursuance of regulations under this section or in pursuance of sections 112 and 113 of the 1980 Act or section 19 of and Schedule 5 to the Housing and Building Control Act 1984 (vesting of mortgaged dwelling-house in local authority etc.), the regulations may provide for the payment in respect of the vesting of an amount calculated on the assumption that none of the defective dwellings to which the designation in question relates are affected by the qualifying defect, and those enactments shall have effect subject to any such provisions.
§ (5) Regulations under this section—
- (a) may make different provision for different cases, and
- (b) may make incidental and consequential provision.
§ (7) This section does not apply to Scotland.").
The noble Lord said: My Lords, with permission, I should like to speak also to Amendments Nos. 26 and 27:
Amendment No. 26: After Clause 19, insert the following new Clause—
("Application of Act in relation to lenders on security of defective dwelling in Scotland.
.—(1) The Secretary of State may by regulations make provision for the purpose of conferring rights and obligations on any person who has granted a loan on the security of a defective dwelling where—
(2) The rights that may be conferred on a lender by regulations under this section are—
- (a) rights corresponding to those conferred by this Act on a person holding a relevant interest in the defective dwelling, and
- (b) the right to require the appropriate authority to acquire in accordance with the regulations any interest in the defective dwelling to be disposed of in exercise of the power of sale, and the rights that may be so conferred may be conferred in place of any rights conferred on any other person by this Act.
(3) Regulations under this section may provide that, where the conditions in subsection (1)(a) and (b) above are or have been satisfied, this Act, the power of sale and any enactment relating to the power of sale in question shall have effect subject to such modifications as may be specified in the regulations.
(4) Regulations under this section—
- (a) may make different provision for different cases, and
- (b) may make incidental and consequential provision.
(5) This section applies to Scotland only.").
Amendment No. 27: Clause 20, page 25, line 12, after ("19") insert ("(Application of Act in relation to lenders on security of defective dwelling in Scotland,)").
§ These amendments are being brought forward in response to representations from the Building Societies Association, and if the noble Lord, Lord Dean, were here, I could tell him that they are eager to help in this matter.253
§ The Bill as drafted provides that only private individuals, their trustees or personal representatives are eligible for assistance under the Bill. In most cases the houses will have been purchased with the assistance of a mortgage. The Building Societies Association have expressed concern that in cases where, for example, the mortgagor has defaulted or, for some other reason, the mortgagee has become entitled to exercise the power of sale, then the mortgagee should be entitled to obtain assistance on the mortgagor's behalf if the mortgagor does not take steps to obtain it.
§ This is a matter to which we have given careful consideration. The mortgagee already stands to benefit from the normal operation of the scheme—that is, where the indebted owner himself applies. However there is the case of the owner who, though in default of his mortgage payment, cannot be bothered or is unable through absence to take up the rights conferred on him by Parliament under this Bill.
§ The new clause is designed to enable the Secretary of State to make suitable provision for mortgagees who have become entitled to exercise the power of sale to be able to apply for assistance. We think that this is a sensible provision to make, and I beg to move.
§ Lord Skelmersdale moved Amendment No. 26:
§ [Printed above.]
§ The noble Lord said: My Lords, I beg to move this amendment. I spoke to it in connection with Amendment No. 25. I beg to move.
§ Clause 20 [Regulations, rules and orders]:
§ Lord Skelmersdale moved Amendment No. 27:
§ [Printed above.]
§ The noble Lord said: My Lords, I have spoken to this amendment with Amendment No. 25. I beg to move.
§ Clause 23 [General interpretation]:
§ Lord Skelmersdale moved Amendments Nos. 28 and 29:
§ [Printed earlier: col. 247.]
§ The noble Lord said: My Lords, I beg to move Amendments Nos. 28 and 29 en bloc. I spoke to them with Amendment No. 3.
§ Lord Skelmersdale moved Amendment No. 30:
§ [Printed earlier: col. 236.]
§ The noble Lord said: My Lords, I spoke to this with Amendment No. 1. I beg to move.254
§ Schedule 1 [Reinstatement grant]:
§ Lord Skelmersdale moved Amendments Nos. 31 to 37:
§ [Printed earlier: col. 247.]
§ The noble Lord said: My Lords, I beg to move Amendments Nos. 31 to 37 en bloc. I spoke to them all with Amendment No. 3.
§ The Deputy Speaker (Lord Aylestone)
My Lords, I should point out on Amendment No. 34 that in subparagraph (c), line 4, the word "on" should read "or".
§ Then, Standing Order No. 44 having been suspended (pursuant to Resolution of 23rd July), Bill read a third time.
§ 8.32 p.m.
§ Lord Skelmersdale: My Lords, I beg to move that this Bill do now pass.
§ Moved, That the Bill do now pass.—(Lord Skelmersdale.)
§ Lord Graham of Edmonton
My Lords, may I just take this very brief opportunity to express the satisfaction of the Opposition—at least, the Labour opposition; I am certain that if the noble Viscount, Lord Hanworth, were in his place, as he was on Second Reading and in Committee, he, too, would express his satisfaction—with this outcome. I want sincerely to thank the Minister who has been in charge of this Bill in this place, because he has had the difficult job of reconciling competing claims, which he has done to the satisfaction of Members on the Labour Benches and, I believe, throughout the House.
I am vey pleased indeed to see that the noble Lord, Lord Sandford, is in his place, representing not only his own attitude on the matter but also, very fairly and successfully, the view of literally millions of people who are represented in the councils which form the Association of District Councils. I represent my party as well as the Association of Metropolitan Authorities, of which I have the pleasure and the privilege of being a vice-president, as I am of the ADC. They will be satisfied that the Government have done the right thing by the 16,000 people and their families who have been caught up in a very difficult situation.
I believe that my noble friends Lord Dean and Lord Stallard, and perhaps myself, with our experience as leaders of councils and chairmen of housing committees, have been able to bring a dimension of understanding to the debates that others may not have been able to bring. All told, this has been a satisfactory outcome and I repeat that we are very grateful indeed to the Minister and his advisers, who have sought an accommodation which has made the atmosphere on this Bill a little happier than the Minister and I have experienced on others. I am very pleased indeed to support the Motion, That the Bill do now pass.
§ Lord Sandford
My Lords, I should like to do so, too. As my noble friend said a moment or two ago, the Bill deals with those houses which are now owned by council tenants who have exercised their right to buy and that is the problem that we are dealing with when 255 we are dealing with this Bill. But my noble friend must bear in mind that local housing authorities are dealing on the one hand with that problem, and on the other hand with the remedying of the defects in those same houses which are still occupied by council tenants. That poses a much larger problem in terms of scale and a different problem in terms of striking an equitable balance between those two groups. We have quite enough of a problem on our hands without having to worry about lack of resources, and I beg my noble friend to bear in mind the importance of ensuring that they are there.
§ Lord Skelmersdale
My Lords, I am grateful to both noble Lords, and to the noble Lord, Lord Stallard, who has not spoken in this very short debate, for their constructive attitude towards the Government and for being behind the purposes of this Bill. I think it was the noble Lord, Lord Graham, who said at Committee stage that I did not go all the way with them. But noble Lords know perfectly well that I would have been shot if I had. However, the points made at the last moment by my noble friend Lord Sandford are very well taken.
I have spoken on numerous occasions on the subject of HIP allocations and this is something that there will, very naturally, be discussions upon every year in the future, until perhaps—who knows?—at some stage in the future we get to a point where some other method of local authority finance for building maintenance and construction is arrived at. But that is very much for the future. For now, I beg to move.
Bill passed, and returned to the Commons with the amendments.