Low-Cost Housing Provision Incentives (Hansard, 20 June 1989)

The Minister of State, Department of the Environment (The Earl of Caithness)
My Lords, my right honourable friend the Chancellor of the Exchequer announced the extension of relief from capital gains and inheritance taxes to transfers of land and buildings to all registered housing associations, so that, when land is given or sold at less than best price, tax will be based on the actual proceeds of the sale rather than the market value. That will encourage landowners to provide cheap land for development of rented and shared ownership housing.

§ Lord Orr-Ewing
My Lords, while I thank my noble friend for that reply, will he say what other earlier measures are beginning to take effect and to provide extra low-cost housing? Will he perhaps tell 128 the House what number of low-cost houses to rent are likely to be completed in the next two or three years? There is a serious need for houses to rent and I hope that he will come forward urgently with satisfactory figures.

The Earl of Caithness
My Lords, my noble friend is absolutely right to say that there is a need for rented housing. It applies across the whole country. That is why we have undertaken a number of schemes. We have certainly taken action in the rural areas, where we have made three initiatives to produce low-cost housing which have been widely welcomed. There is the freeing of the private sector to take advantage of the new opportunities; there is the BES scheme, which has produced over £300 million already for assured tenancy lettings; and there is something that we must not forget—namely, that best use should be made of public sector dwellings both by central government and local government.

§ Lord Stallard
My Lords, the Question mentions low-cost houses to rent. Will the Minister tell us what he considers to be "low cost"? In the area where I live, the average cost of houses coming onto the market for rent is somewhere in excess of £150 per week. If one adds to that electricity, water, gas and the coming poll tax, housing costs themselves go above £200 per week. How does that help the thousands of people in bed and breakfast accommodation and the hundreds of thousands of homeless people who are waiting patiently for resources to be released to local authorities and housing associations to allow truly low-cost and affordable housing to be built?

The Earl of Caithness
My Lords, we are acutely conscious of the need to provide housing at rents that those on low incomes can afford. That is why we have specifically asked the Housing Corporation to allocate more resources in that area. We have given them more resources—an increase of 80 per cent. by 1991–92 to £1.3 billion.

§ Lord Carter
My Lords, the Minister mentioned the increase in the help given to rural housing. Will he confirm that that help amounts to a total of 600 houses? Is that not a minuscule addition to the solution of the rural housing problem?

The Earl of Caithness
My Lords, the help we are giving through the housing associations will soon be 1,000 units a year which is more than four times greater than a year ago. The noble Lord should not only be considering the subsidised housing through the housing associations. We have opened up a wide range of opportunities for local authorities to help in various ways as well as the private sector. One must not exclude those opportunities: I hope that advantage will be taken of them.

§ Lord Dean of Beswick
My Lords, the Minister must be aware that we on this side of the House naturally support any initiative that the Government may take to provide more houses both to rent and to buy. However, is he aware that the Government's 129 own figures have lately shown a rather serious deterioration in house building in all sectors? Is he further aware that the main reason for that deterioration is the very high mortgage interest rates that are being levied at the present time? Does he not understand that unless the Government are prepared to do something to reduce those rates as quickly as possible the downward spiral will continue and that this will not be to the benefit of anyone? Does he not agree that the situation ought to be reviewed as quickly as possible in order to get house building going again?

The Earl of Caithness
My Lords, the noble Lord has covered two points. The first concerns the number of dwellings that come on to the market each year. Last year there was the highest number in total for 10 years; in the private sector the figure was the highest since 1973. That is very encouraging. Last year saw too the highest number of first-time buyers for 10 years—two-thirds more than the number we inherited in 1979. With regard to mortgage repossessions, as I am sure the noble Lord knows the total number is very tiny. It is less than one-third of 1 per cent. of all mortgages granted. The latest figures show a decline in repossessions.

§ Lord Dean of Beswick
My Lords, I am sorry to come back so quickly. I referred to the Government's figures from the noble Earl's own department. These show a dangerous downward turn in the first quarter of this year. Will he take that on board and not rest on his laurels in speaking of last year and comparing the figures with 1979?

The Earl of Caithness
My Lords, I do not at all rest on my laurels. I appreciate that there is more to do. I gave the House some very useful figures showing where there had been enormous increases. I appreciate the point made by the noble Lord. I believe that he was fully answered last week by my noble friend Lord Hesketh.

§ Lord Mellish
My Lords, I understand and appreciate that the figures that have been given relate to last year. Surely, however, a fact that every Member of this House will know is that the housing market is stone dead, at least in the southern part of Britain. Is the Minister aware that even estate agents are complaining—and one has to be in trouble for that lot to complain—because property is being neither sold nor bought? Does he agree that there is only one answer—the fact that mortgage interest rates are very high? Will he tell the House of any plans that the Government have for the future?

The Earl of Caithness
My Lords, I appreciate that the market is flat in certain areas and certainly not as buoyant as it has been over the past three years. That is not surprising. However, the mortgage interest rate fluctuates. Of prime importance to all those who rent or buy is that we control inflation. That is the most important point.

§ Lord Peston
My Lords, will the Minister revert to the question put by my noble friend Lord Stallard? 130 The average industrial wage is about £10,000 a year or £200 a week and the average rural wage considerably less. I gather it is regarded as reasonable that someone might spend perhaps one-quarter of his income on housing rental. Will the noble Earl tell the House whether there is private sector housing available at approximately £40 to £50 a week and if so where it can be found?

The Earl of Caithness
My Lords, there is private sector housing available, and increasingly so, I am glad to say, to relieve some of the stress areas. We have given the Housing Corporation extra funds specifically to deal with those areas where low cost housing is required. We have therefore varied the grant rates in order to bring in private finance to make the public sector money go further and therefore obtain more houses.

§ Lord Glenamara
My Lords, will the Minister say how many council houses have been sold under this Government and are therefore no longer available to rent?

The Earl of Caithness
My Lords, I am delighted by the sale of council houses. People rightly aspire to own their own house and should be able to do so where it is built with public funds. The noble Lord misinterprets the situation. A family who were paying rent may now have bought the property but it does not mean that that house is lost to the market.

§ Lord Glenamara
My Lords, will the Minister say how many have been sold under this Government?

The Earl of Caithness
I believe, my Lords, one million.

§ Lord Orr-Ewing
My Lords, will my noble friend consider whether extra money should be released from the sale of council houses to encourage those responsible councils which are trying to look ahead to the needs of their electorate to build more low cost council houses to rent? Should this policy not be re-examined? Many councils are under tremendous pressure from one-parent families. Other families with as many, if not more, children are shunted down the housing list while new single-parent families take absolute precedence. The council has no alternative but to carry out its obligations. That does not seem right for the future. It is very unfair that the more orthodox families whose new housing is constantly being postponed should find themselves very far down the housing queue.

The Earl of Caithness
My Lords, I take my noble friend's point. Some of the evidence that we have received in the course of our review on homelessness has shown that, because of the priority list created under the Housing (Homeless Persons) Act 1977, which was introduced by the noble Lord, Lord Ross of Newport, those on the traditional—if I may call it that—council house waiting list find that the creation of a priority group means that other families in that group come in front of them on numerous occasions. Evidence has been brought to us to show that that creates some resentment. So far as new 131 houses are concerned, I re-emphasise the fact that we have given a substantial increase to the Housing Corporation and that we are encouraging local authorities to make better use of their existing stock.

§ Baroness David
My Lords, will the Minister say whether the Government are to take the advice of the Audit Commission which, after all, is their own creation? That body advises that even 20 per cent. of the money to be released from council house sales put toward the repair of houses would mean that there would be many more houses available to rent?

The Earl of Caithness
My Lords, the Audit Commission has made a number of very important points which we are assessing at the moment, as have a large number of other organisations. We are assessing that data and hope to come forward with our report as soon as possible.

§ Baroness Fisher of Rednal
My Lords, does the Minister agree that in order to enable local authorities to make better use of present housing more money needs to be spent on repairs? Anyone who visits properties built just after the war will see that there is an urgent need to spend money on repairs to put them back into use. If the Government continue to cut back on local authority finance for housing, local authorities will never build more houses and will never be able to make repairs.

The Earl of Caithness
My Lords, I think the noble Baroness misinterprets the situation. We are encouraging local authorities to improve their stock and capitalised repairs are not subject to any financial controls.