Housing Corporation: Finance (Hansard, 26 June 1990)

§ Parliamentary Under-Secretary of State, Department of the Environment (Lord Hesketh)
My Lords, the Housing Corporation's programme of grants and loans to housing associations is set to increase from £935 million in 1989–90 to £1,736 million in 1992–93. Because expenditure on schemes already approved for grant is running much faster than expected, many projects it had been hoped to start this year must now be deferred. The Housing Coporation greatly regrets the disruption to associations' programmes.

§ Lord Dean of Beswick
My Lords, is the Minister aware that we had the same Answer quite recently? Does he accept that unless additional finance is forthcoming for the Housing Corporation, housing starts in 1991 may grind to a complete halt? Is he also aware that the Housing Corporation has asked for an advance of £400 million for next year in order to keep the building programme rolling? Does the Minister not agree that that makes sense? Will he urge his right honourable friend the Secretary of State in another place to grant the Housing Corporation's request?

§ Lord Hesketh
My Lords, I am sorry that the noble Lord feels that the Answer is similar to an earlier one. But it was a similar Question and that is why he received a similar Answer. He will not be 1434 surprised that my supplementary answer to his supplementary question is that the expenditure which has taken place to date is above that forecast and that is the reason why less will be spent. The reality is that more houses will be completed sooner.

§ Lord Northfield
My Lords, perhaps I may ask again a question to which we tried very hard to get an answer last week. The Government are quite commendably providing extra money on an accelerating scale for the Housing Corporation over the next few years. Is it not the case that the housing associations are completing faster than expected and therefore it would be better to phase the increase in money differently? Does the Minister not agree that it would be better to allow some of the money allocated for future years to be brought forward to this year? Did not the Government allow that to happen last year, in that they allowed £120 million to be brought forward to this year? Since there is the great danger of cancellation of projects which are ready to start, does he not agree that the idea which was so successfully implemented last year can be sensibly applied this year?

§ Lord Hesketh
My Lords, as the noble Lord rightly said, there has been a considerable increase in the level of expenditure. It would be difficult to return to the Treasury to ask for a further draw-down on resources of about £400 million, which is the sum that has been referred to. We are not talking about cancellations but about early completions.

§ Lord Ross of Newport
My Lords, does the Minister not agree that it is a great waste of money for housing associations to get projects off the ground and then to have to suspend them? Properties that could be occupied therefore lie empty, damage is caused to them and the whole programme is put back for a year or more. Does he not agree that that in itself is a substantial waste of public money?

§ Lord Hesketh
My Lords, I return to the answer that I gave the noble Lord, Lord Northfield. The reality is that there has been an increase in the number of completions. That is the important point.

§ Baroness Fisher of Rednal
My Lords, is the Minister aware that the very small housing associations that provide specialised housing for particular groups of people are suffering great hardship and some of them will almost go into receivership? In view of the fact that affordable social housing will not be provided by the housing associations because of the cutback in capital expenditure, will the Government consider allowing local authorities to spend more of their capital receipts to fill the gap that will be caused by the lack of provision by the housing associations?

§ Lord Hesketh
My Lords, the noble Baroness is attempting to broaden the Question beyond the housing associations to local authority-provided housing. As I have pointed out on two occasions already on this Question, we are not talking about a reduction in the number of houses but about a reduction in the amount of cash available because 1435 of the additional money that has been spent to provide more units earlier due to improvements in efficiency by the housing associations.

§ Lord Graham of Edmonton
My Lords, is the Minister aware that the behaviour of the Housing Corporation rebounds on housing associations by producing a lack of confidence among councils in the performance of housing associations? Is he further aware that delays not only increase costs and deprive the homeless of a place to live but also cause schemes to be jettisoned? Will he comment on the latest announcement that in order to get out of the present crisis housing associations are being asked to accept a 5 per cent. slippage in their programmes? What exactly does a 5 per cent. slippage mean in this context?

§ Lord Hesketh
My Lords, I remind the noble Lord that the problems are brought about essentially by success and not by disaster. If more money is spent with the result that more houses are provided sooner, fewer houses will be built later. But the actual net effect should not be any different from that which was originally planned.

§ Lord Graham of Edmonton
Now answer the question!

§ Lord Northfield
My Lords, why was it possible to bring forward to this year £120 million from last year when the same thing is not being allowed for this year when it is equally necessary?

§ Lord Hesketh
My Lords, as I said to the noble Lord, Lord Northfield, earlier, the sum of money that has been mentioned for this year is £400 million and not £120 million.

§ Lord Dean of Beswick
My Lords, is the noble Lord aware that one of the worst facets of what is now taking place is that because of their financial situation some of the housing associations are having to dispose of land which they bought two or three years ago when prices were at their peak? They are now having to sell it in a depressed market at a much lower price, thereby further depleting their meagre financial resources. Will he consider that point to see whether assistance can be given in that direction?

§ Lord Hesketh
My Lords, I shall certainly draw the remarks of the noble Lord on the price of land to the attention of my right honourable friend the Secretary of State.

§ Lord Hylton
My Lords, is it not about time that we abandoned semantics and niceties of accounting and got on with the job of providing homes at rents that people can afford?

§ Lord Hesketh
My Lords, I am sure that that is applicable not only to my own department but to many other departments. It would result in the unbelievable situation of sympathy being shown to the Treasury.