HL Deb 12 May 1988 vol 496 cc1280-5

7.7 p.m.

Lord Hesketh rose to move, That the draft order laid before the House on 22nd March be approved [21st Report from the Joint Committee].

The noble Lord said: My Lords, I should like to commend this order to the House. It also gives us an opportunity to discuss the progress we are making in implementing the housing defects legislation. That legislation had all-party support when it came before the House in 1984 and I am sure we shall be approaching the order today in the same spirit.

The noble Lord, Lord Graham of Edmonton, will recall that it was in this House that my noble friend Lord Skelmersdale introduced the amendment to the Housing Defects Bill which gave the Secretary of State the power to make orders of this type. The noble Lord, Lord Graham, agreed that it was sensible to have this power in case it might be necessary to amend the grant conditions and, indeed, that has proved to be the case.

As noble Lords will know, it was very much in response to the pleas from various local authorities in the Midlands and Wales, to the effect that grant condition test (d) was too restrictive, that we brought forward the proposal to drop that test altogether, and to rely on the more flexible test (c).

Perhaps it would help the House if I took a few moments to explain in a little more detail what this change will mean. As the Act stands, there are four tests, tests (a) to (d) set out in Section 538 of the Housing Act on which an authority has to be satisfied before it can offer assistance by way of grant for reinstatement. If it is not satisfied on any one of these tests grant for reinstatement cannot be given and the owner must be offered repurchase instead.

The first two tests, (a) and (b), require the repaired property to satisfy a durability requirement (30 years further life, though in practice the PRC Homes Ltd approved repairs will achieve 60) and for it to be mortgageable in the private sector. Again, PRC Homes Ltd approved repairs are designed to achieve that too. So there has been no suggestion that those tests should be altered and they are not affected by this order.

The next two tests—(c) and (d)—concern "value for money", if I can put it that way. Test (c) says that grant for repair has to be justified in the light of the likely value of the property after repair. Test (d) adds the condition that the expected cost of grant must not exceed—even by a small amount—the direct cost to the local authority of repurchase at 95 per cent. defect-free value plus the appropriate legal fees.

However, practical experience of operating the scheme has shown that, first, authorities and owners often much prefer repair to repurchase wherever repair is a sensible course of action: as the Act stands, they are prevented from doing so by test (d). Secondly, authorities have pointed out that the direct cost of grant on the one hand and repurchase on the other are not the whole story because, if the authority repurchases, it may well then face other costs, such as immediate repairs and maintenance, as part of its normal obligations as landlord. In the longer term, it might well have to deal with the qualifying inherent defect—or take some other radical steps, such as demolition and rebuilding. Again, that means further costs.

So we had the situation where authorities were being forced into decisions which they did not regard as "cost effective". Often the margins between the two courses of action were very small. The more we looked at this, the more we felt that it was something that we could usefully amend to everyone's benefit. We decided to consult on the proposal to drop (d) entirely, and henceforth rely simply on test (c).

The consultation responses were generally positive and so we have now put forward this affirmative order to implement that change. If all goes well it will come into operation on Monday 16th May, which is next Monday. That I know will be helpful to several authorities and owners, who have been waiting for it to come into force, so that they can take steps to obtain the grant assistance that they would so much prefer.

I should point out that there is a provision—Section 538(4)—which states that a change to the conditions, such as the one achieved by this order, does not affect owners who have already applied for assistance when it comes into force. Fortunately, the Act also allows owners who wish to take advantage of this change to withdraw their applications and then reapply. If they do that, their application is processed afresh under the new set of grant conditions, and they can then get the benefit of "no test (d)", if I can put it that way. But, by the same token, those owners who do not wish to have that benefit can persist with their original applications and the authorities will process them as if test (d) remained in force. I think that this is actually a very fair result. It gives owners and local authorities a degree of choice: if everyone is satisfied that repair is sensible, withdrawal and reapplication can be done easily and quickly; but if they are not, owners can continue under the old dispensation and get the assistance that they were entitled to on that basis.

In all, we believe that some 2,000 to 3,000 owners in England and Wales will benefit from dropping test (d), in the sense that they will be able to get grant-aided reinstatement, rather than the repurchase they would have had, if this change had not been made. It could also save money, because on some estates authorities were facing a "patchwork quilt effect" where some owners just got through test (d) (and could get repair) but others just failed (and so had to go for repurchase). All being well, those estates can now be repaired on a cost-effective block contract, in the way that all the people concerned wish to see.

I should like to take this opportunity to say that we are now making progress in implementing this legislation in England and Wales. I know that we had a slow start and that in the North particularly there is still quite a bit to be done. This order could be a help, because the costs and values there have been something of an obstacle. I know also that resources—or the lack of them—are often quoted as a problem or a cause for delays. I should just like to say now that it was always obvious that we should all need time to work the scheme through: that is why the designations themselves allow 10 years for assistance. Sensible phasing is, in fact, in everyone's interests. We are all learning as we go and, of course, more approved repair methods are coming through all the time. There are now 50 in all, covering all major designated types. There were over 30,000 eligible owners: we are now approximately 40 per cent. of the way through and grant for reinstatement is now overtaking repurchase in terms of numbers assisted. That is very much as we had all hoped of course and this order will help continue that trend.

I appreciate that we do not have too long this evening and I should like to be able to reply at the end of the debate. I therefore commend the order to the House.

Moved, That the draft order laid before the House on 22nd March be approved. [21st Report from the Joint Committee]—(Lord Hesketh.)

Lord Graham of Edmonton

My Lords, I appreciate not only the speed with which the noble Lord has brought this matter before the House but also the care that he has taken in putting before us the raison d'être of its introduction. This side of the House will raise no objection to fine-tuning the legislation upon which this order is based. However, there are one or two questions that I should like to put to the noble Lord for clarification.

Towards the end of his introduction he gave a broad indication of the size of the problem and the extent to which it had already been tackled. In preparation for this evening's debate I turned up the Second Reading debate of the Housing Defects Bill. A re-reading of that debate brought back to me the realisation—and I say this without being in any way patronising or offensive—that we are dealing with little people who quite literally may put the whole of their life-savings into the purchase of a property which is at the disposal of a public sector authority. When one speaks of local councils one must remember that they are of course public authorities, and of course the coal board and other interests were also involved.

I was staggered when I looked at the extent to which this reinforced concrete nexus, so to speak, affected so many people. I was involved as much as anyone in the 1960s in urging that those systems should be used. Nevertheless, following reports from the Building Research Establishment we found ourselves faced with a terrifying situation. The Minister is quite right. It was for the best of reasons that authorities in the Midlands and Wales erected buildings of that kind. On re-reading the debate to which I have referred, I was interested to see the types of housing involved. At that time the noble Lord, Lord Skelmersdale, said that there were 28 types, and those who know the business fairly well will recognise them. The debate on 6th July 1984 (Official Report, col. 526) mentions: the Airey, Butterley, Hamish Cross, Unity, Winget and Woolaway, among other names. One loses sight of these matters once they have passed from one's immediate interest but perhaps the noble Lord will tell us the extent to which the original lists were extended.

One of the agonies suffered by people who lived in houses with defects—and in the Midlands I remember that the Smith house was one of them—was that at that time they were excluded. The kind of building that is accepted has to be one which both the local authority and, perhaps even more importantly, the Government agree will qualify for the grant. Can the Minister tell the House whether there was any movement in the original base?

The original Act sought to give assistance to 16,500 people who immediately came under its provisions at that time. I heard the Minister mention a figure of 40,000—I am sorry, I stand corrected; the figure is 30,000 and it seems that there is to be no advance on that—which to me indicates that there must have been some later incorporation of housing types into the scope of the Bill. The Minister will appreciate that of course there are many more than 30,000 occupants of houses that have not been accepted.

Can he tell the House the difference in number over the past three years between those who went down the route of repossession and those who went down the route of reinstatement? I take his point. As a man of the world he will understand that in the past few years it has become a much better bet to hang on to one's property and have any defects put right than to claim one's money back, if only because of the escalation in prices. Can the noble Lord also deal with that point?

Since his colleague may be helping him in this matter, perhaps he would also say something about the attitude of the building societies. One of the problems was that building societies were chary of making their funds available for properties. One of the agonies of the owner was that he could not get money from the building society to assist in the reinstatement, even to the small extent that was needed.

The crux of the matter is that what we are trying to do is to assist people, many of whom thought that under the right to buy they were getting a bargain—and in broad terms of course they were—but then found that they had bought trouble for themselves. I understand, and put on record, that the Government have acted properly in trying to accept some responsibility for those people, but the Minister is well aware that there are far more people involved who suffer from defects in their housing than council tenants who bought their property.

This is not the occasion for the Minister or his advisers to go down that road, but I wanted to place on record that I am as concerned for the non-council tenant who bought property that subsequently proved to have a latent defect and wished to get redress over it. I agree with the Minister. Is it not remarkable that we are talking about Section 538 in this massive Act? It is a massive Act and a great deal was thrown into it of much more moment than the point we are discussing, but to the man or woman of perhaps 50, 60 or 70, what is happening to their house and how they will be able to get peace of mind is important.

I hope that the Minister can help me on those points, but I want to stress again that we on this side of the Chamber recognise that the Government have done what they can, with the limits to public resources, to try to ease the position for a great many people. We certainly in this House would like him to do a great deal more for other categories, but we have to be grateful for small mercies, and I certainly commend the order to the House.

Lord Hesketh

My Lords, before commending the order to your Lordships' House I shall attempt to answer some of the noble Lord's questions. His observation concerning the number of houses, or types of houses, included in the scheme and the discrepancy between the original figure and the figure we are at now is an entirely correct one. The number of houses, the types of houses, has only in fact increased by two, which is the Smith that he represented and the Boswell. The reason for the rather substantial increase in numbers which would give the impression that there were more than that is that the number of houses that would be eligible was rather underestimated in the first place, which is in fact where the rest of that differential comes about.

The other main point that the noble Lord wished to have answered was how many houses have been repurchased since the scheme came into operation. Since the Act came in the total number is between 7,000 and 8,000. Between 4,000 and 5,000 owners have had their homes repaired or have repairs under way. That figure is climbing at a far greater rate than the repurchase figure. Those repairs are obviously going to proceed, and that represents about 12,000 homes out of a total of 30,000.

Therefore I hope that there is more relief, particularly as, as the noble Lord, Lord Graham, so accurately pointed out, it is all very well to stand here at the Dispatch Box speaking dispassionately, but we are talking about people's homes, which is very important so far as they are concerned. I hope that we have been able to provide an opportunity this evening to discuss the matter.

Lord Graham of Edmonton

My Lords, perhaps it is not possible, but could the Minister give some indication of the attitude of the building societies to people in that position? Approval to do something is one thing. The Minister will well recognise the argument that, even though the house may be put in good order to the satisfaction either of inspectors or of the person, when the house needs to be sold the prospective purchaser of a once defective house has to get approval for a loan from the building society.

One of the agitations I recalled when I read this order was that there were some difficulties about building societies. I shall not say that they were not being generous, because building societies are not philanthropic societies. They are lending other people's money. But the building societies are there to be encouraged to co-operate with the Government, and I wondered not whether they had a bad attitude but whether the Minister was satisfied that they had been as helpful as they might have been.

Lord Hesketh

My Lords, since the introduction of the HDA-NHBC scheme there has been a positive attitude from the building societies and an improvement on that score. That is as far as I can go tonight. I hope that that satisfies the noble Lord.

Lord Graham of Edmonton

My Lords, the Minister made a general statement. I was anxious to know whether the building societies, in the context of being willing to advance money on mortgage on a previously defective house, were being fair, reasonable and understanding. The Minister may well be unable to give us the Building Societies Association's attitude on that point, in which case perhaps he could write to me later.

Lord Hesketh

Very well, my Lords. Without further ado, I commend the order to your Lordships' House.

On Question, Motion agreed to.

Lord Beaverbrook

My Lords, I beg to move that the House do now adjourn during pleasure until eight o'clock.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 7.26 to 8 p.m.]