Unemployment and Housing

HL Deb 16 December 1992 vol 541 cc596-626

5.24 p.m.

Lord Molloy rose to call attention to the link between unemployment and the provision of housing; and to move for Papers.

The noble Lord said: My Lords, a good job and a decent home are fundamental to the contentment of our people. Millions of people in this country have neither. While the world recession was not the Government's responsibility, some of their responses to the situation have been somewhat pathetic. Let me give one example. It is their abysmal, insane proposal to shut 31 pits. I do not suppose anyone in the Government knows what a coal mine is and how it operates. The Government merely think that they have miners. Of course they have miners. They never stop to think of the incredible machinery needed to keep those mines safe, of the scientists and technicians involved or even of those who make miners' helmets. The Government thought of none of those things, because they have little knowledge of this country's great industries.

The crisis may not be entirely the Government's responsibility. It is a world problem. It was not the nation's financial institutions that delivered the worst recession since the Second World War. It does not give me much pleasure to say this, but I must acknowledge on behalf of millions of working people that the Government were insensitive when they entered the ERM at the wrong exchange rate, kept interest rates too high for too long, and failed to respond to the calls for relief from consumers and business until the number of people in arrears with their mortgages had risen to an astonishing 1.9 million.

Great slices of manufacturing have been wiped out, and nearly 3 million people have been put on the dole. That is the Government's fault. They failed to respond to the incredible situation we found ourselves in due to the world recession. Unemployment is the curse of family life. It does not mean merely that the breadwinner is out of work. When young people are out of work—especially apprentices who cannot carry on because the firm is packing in—their souls are depressed. Unemployment endangers our nation's civilised discipline. It impoverishes our nation. Many of our young people believe that they have no future in this country. Economists and businessmen suffer the same grave anxieties.

We must acknowledge that there is no easy short-term solution. We must always be aware of the dangers of inflation. However, as Beveridge said, full employment in a free society is a real possibility. Immediately after the greatest war in the history of mankind, the British Government did remarkable things. They created full employment and the NHS. They were all achieved after millions of our men and women had been fighting a great war. It is about time we gave back to them their right to have jobs and houses. We need confidence. Job losses damage confidence. Our young people are affected. There are 750,000 young people unemployed. In Scotland the position is so disastrous that unemployment has risen by 133 per cent.

It is the nation's task not merely to reduce unemployment but to re-establish full employment. Unemployment is expensive for the Exchequer. All aspects of unemployment cost about £25 billion. That is the annual cost of our present level of unemployment. It is disastrous. Those who have done nothing about it are responsible for the disaster. It is frightening to have nearly 3 million people out of work. The claim has been made that it is economic lunacy for 400,000 building workers to he jobless at the same time as 140,000 families are homeless or, if not homeless, living in temporary accommodation. That in itself can be a disaster. Overcrowding and living in these depressing places affects a family in a savage manner.

Our political democracy must constantly put the welfare of ordinary men and women on the agenda of political discussion and concentrate on it. I sincerely hope that the Government will henceforth do that, for unemployment invades the deep serenity of a happy home. It is caused by the cold austerity of unbridled laissez-faire, greed and vulgarity.

The loss of work to an ordinary British workman is the loss of status, encouraging the degrading shadow of poverty. Yes, preventable poverty is a crime. Our people deserve better of us: let the TUC, the CBI and the Government get together to see whether somehow or other they can find a realistic answer to this dreadful problem.

When we look at housing alone, it has been said quite rightly that at one time people in the United Kingdom were the best housed in the world. We are now dropping right down to being one of the worst. It also once used to be said that an Englishman's home was his castle. Millions of our families in this country have not even a cellar to live in. It is a fundamental crime. Homelessness is now a nationwide crisis. More or better housing is a basic civil right, yet the Government and the councils have no real programme. Local authorities need guidance from the Government and the Government have failed them as well as the people.

Many problems are caused by the breadwinner losing his job. No job, no home for the family! In 1991, the private sector had the lowest level of completions since the First World War. The record of those wonderful people who do not believe in anything being publicly owned, the idiots who would not even mind privatising the British Army or the Royal Air Force, is a disaster. If we want to understand the problem, we should look at the massive, insuperable problems facing Westminster City Council.

Scotland has had an increase in homelessness of 133 per cent. over a couple of years. In general, local authority capital expenditure is to decline by £316 million up to 1995–96. That in itself is an incredible threat; it is a positive disgrace. It is the kind of attitude that led to people sleeping in cardboard boxes in the London streets. If I may say so, the thousands of cardboard box sleepers in London's streets are not merely a disgrace. They cause severe problems for our police who handle the situation admirably. If the police were not doing a good job on the streets of London with the people who cannot help sleeping in cardboard boxes, the situation would be serious.

Government spending in real terms has fallen from £11.5 billion in 1979 to £5.5 billion in 1991. Yet Shelter claims that the provision of homes costs less than homelessness. It is cheaper to put a family into a home of its own or a rented home than to treat it as homeless and cause the home to be repossessed when the family cannot afford to keep up payments on the house. The simple term "repossession" seems to be enough for the Government.

I believe that practical and compassionate understanding is necessary rather than just saying that so many have been repossessed. What that means is that there are many ordinary people whose lives have been savagely attacked and demeaned. The attack on homelessness and unemployment through government spending on public sector housing in England was £4 billion a year ago. Yet a programme to increase output to 100,000 homes would cost an extra £2 billion. At the same time, it would create employment with roughly 100,000 jobs.

The men and women who can design and construct a variety of homes are brilliant people—architects, designers, engineers and others. But they are not designing homes; instead, they are unemployed. I cannot understand why the Government cannot see that. It could be interpreted as an unrealised form of masochism by the Government. The general view of specialists is that the problem with the Government's approach to housing policy is that it offers decorated branches but no solid trunk.

We have heard the promises; we have listened at Question Time to all kinds of things that encourage us. Then when we wait for them to be made reality, they have gone with the wind. Our Government should respond to people and not be put off by the high prices which are always put up by the Treasury. It is better that the Government should talk to Shelter and the other organisations.

In the mid-1970s the UK was one of the best housed nations in Europe. If we wandered round Europe in those days, the point always made by the French, Dutch and Germans was our remarkable housing formula in the UK. Measuring housing expenditure as a percentage of GDP, we are now at the bottom of the table. At one time in the mid-1970s we were at the top. That should give the Government anxiety. The unemployed are those who have lost their homes—repossessed because they could not pay the mortgage. They feel bitter. That is dangerous for the nation and the Government must do something about it. When the breadwinner loses his job and has to surrender his house, which is repossessed, it amounts to a catalogue of despair for thousands of people.

I can just imagine it. I can remember it happening to my family. My father was a mercantile engineer of high standing. My parents were buying their own house; they had five children by that time. Suddenly, there came unemployment. My father was not wanted any more. He went up into the mountains of Wales to see whether he could find work among the miners. He went to the docks. He could find no work. So from our nice little house we had to move into one room to find shelter for the seven of us. As a youngster of about eight or nine, I asked, "What kind of government have we and what kind of country do we live in?"

Those questions are being asked today by millions of ordinary, decent people who may not have any particular political outlook. All they know is that the Government have allowed them to suffer this terrible embarrassment. Hundreds of thousands of people are suffering a catalogue of despair.

Another example of what happens when people lose their houses, as so many millions have, is the long-term separation of husband from wife, sometimes followed by divorce. The family is split. The grievous effect of those events on the children of such a marriage is too terrible to contemplate. But it happens. With unemployment and homelessness we are creating broken families.

So there is an urgent need for the Government to seek the guidance of Shelter and the CBI. On many of the sub-committees of the CBI are brilliant men and women who can give terrific advice. They are able and well experienced. The same applies to the TUC. We may be able to have guidance from the council of churches and representatives of local authorities. We should bring in the bankers who can help enormously and, I understand, wish to do so. What is wrong with the CBI, the TUC, the bankers and the housing associations that the Government cannot bear to listen to them?

I must say a few words in favour of the present housing Minister, Sir George Young. He has done his level best, and he is a good trier. He seems to understand the situation. It is about time he received more support from the Government. I hope there will be a genuine appreciation of all the bodies I have mentioned.

Homelessness and unemployment are the twin cancers that threaten our country. We were threatened before back in the 1930s and during the last war, but in the end we won the day. It is vital to erase the threats and help those in need and thereby raise the status of our nation. That is a worthwhile aim. I plead with the Government to understand what a lack of housing means to people and what it means to people when they lose the house for which they may have been paying over four or five years. I plead with the Government to understand what it means to an ordinary British family to be put out on the streets with their children. I ask the Government to give full consideration to housing and unemployment and to consult with the bankers, the TUC, the CBI and all the other organisations that understand the problems of housing and of the unemployed. If the Government do not do so, a desperate situation could arise in our nation. All I ask is for the Government to acknowledge that threat and be prepared to make a fresh start to erase ultimately unemployment and homelessness. I beg to move for Papers.

5.41 p.m.

Lord Skidelsky

My Lords, I am grateful to the noble Lord, Lord Molloy, for introducing this important topic and for giving us the opportunity to discuss it. I must say that I was puzzled to know how he would link up unemployment with housing provision. After he sat down I was still not quite sure what the economic link was. His argument seemed to be that the Government have created high unemployment, that high unemployment causes homelessness and therefore the Government ought to build lots of new houses. That seemed to be the gist of the whole matter.

However, the noble Lord did not look into or analyse the real relationship between unemployment and housing or consider the possibility that one cause of high unemployment is the nature of our housing market as it has developed over many years and the labour immobility that results from that inflexible housing market. The noble Lord did not consider how housing might be made more flexible to lower unemployment. I believe that is the gist of the economic case.

I agree completely that unemployment is too high. I also agree completely that there is a shortage of rental accommodation. But is the solution simply to go on adding to the municipal housing stock? I do not think it is. If we look at the housing tenure structure in Europe, one basic difference between the United Kingdom and the rest of Europe stands out; that is, we have the lowest private rental sector in Europe— about 7 per cent. Compare our housing position with that of Germany and France, our two most successful competitors. The figures for owner occupation, private renting and social renting are: for Germany 40 per cent., 42 per cent. and 17 per cent. respectively; for France 53 per cent., 20 per cent. and 17 per cent.; for Britain 67 per cent., 7 per cent. and 26 per cent. Compared with Germany and France we have a much larger percentage of home ownership, a substantially larger social rental sector and a much smaller private rental sector. The structure of our housing tenure is very different from that of the continent with a much higher proportion of privately owned houses, a much smaller proportion of privately rented houses and a larger municipal housing sector.

The automatic response of the Opposition parties to homelessness is to say that we must build more council housing units, even though, except for Holland, we already have the largest municipal housing sector in Europe. But there is one thing that is crucially wrong with that policy. The point can be put quite bluntly: the greater the proportion of the working population in municipal housing, the greater the immobility of labour will be. The reason is not the rent subsidy, but because once one has been allocated a council dwelling all the incentives are to stay put in it. Someone who rents a council house in one region will have the greatest difficulty obtaining one to rent in another area. In order to move he will have to rent or buy a house in the private sector and give up his council house together with his subsidised rent. That limits mobility among council house tenants, particularly among the unemployed who might otherwise move to take jobs. Thus, one of the main purposes of a rental sector, to encourage labour mobility, is strangled at source. From the point of view of mobility, the sale of council houses was a clear gain and for that the Government must be congratulated.

I would not, therefore, favour any substantial expansion in municipal housing provision at the present time unless a proper market is established in council housing tenancies, exactly as exists in the unregulated private rental sector. If rents were to be set at market levels there is no reason why local authorities should not advertise vacancies in the newspapers exactly as private landlords do. The market system here can be used to support the social housing sector and make it work for the benefit of the economy.

The main problem, as practically all who have studied the housing problem will agree, is the small size of the private rental sector. That is something to which I have already alluded. That has shrunk to 7 per cent.—by far the lowest percentage in Europe. But the position is worse than that. Of that 7 per cent., about one-half is accounted for by regulated tenancies; tenancies with controlled rents—that is, rents subsidised by the landlord—and rents with security of tenure. This means that one-half of the private rental sector is not part of the housing market at all. There is no more a market in regulated tenancies than there is in municipal tenancies. The incentive is for holders of these tenancies to stay put, irrespective of their employment prospects in that area, because if they move they lose not only their subsidised rent but also their security of tenure.

The fact that the great bulk of rented accommodation in this country is outside the housing market has an enormous bearing on the question of the shortage of affordable—that is, low rent—accommodation. Other things being equal, the narrower the market for goods or services, the higher prices will be. Rents in the unregulated private sector are much higher than they would be if there was more accommodation to let and the problem of homelessness is correspondingly increased.

I think we can now see, to my way of thinking, the real nature of the link between housing and unemployment. It is almost exactly the opposite of that postulated by the party opposite. The tenure system which applies in municipal housing and regulated lettings increases the rate of unemployment by reducing the mobility of labour. Patrick Minford, Michael Peel and Paul Ashton have calculated that, under present UK labour market institutions around 2 percentage points of today's unemployment is due to the immobility of unskilled labour induced by the Rent Acts and Council house subsidies". That is 2 per cent. on the natural rate of unemployment, or about 600,000 workers. That is a colossal figure. Yet that is the system which the party opposite has supported through thick and thin. Whenever the Government have moved towards decontrol, the Opposition have vowed to put the controls back, in strengthened form, if they return to power. Their policies and threats can be held directly responsible, unintentionally of course, for there being 600,000 more unemployed than we need to have. That fact should be better appreciated than it is.

In the Housing Act 1988 the Government decontrolled new private lets through the shorthold system, but on the whole that has not led to any noticeable expansion of the private letting market. The reason is that landlords and new investors have become too discouraged by the history of the Rent Acts since the First World War and too afraid of retroactive legislation, as occurred in 1974, to enter the market, especially at the lower end where the threat of reimposition of controls is greatest. I do not see any other explanation for the fact that at present there is admitted to be a large stock of unused accommodation, not only in London.

I do not believe that one should restrict oneself to analysis. One should propose constructive measures to improve the situation. What can be done to enlarge the market for rental accommodation? Three reforms follow from the arguments that I have put forward.

First, rents in the municipal and regulated sectors should be allowed to find their market-clearing level. For the regulated sector there are many suggestions but one that attracts me as a first step would be to amend Section 70 of the Rent Act 1977 so as to require the rent officer to have regard only to the rent allowable for housing benefit in fixing a fair rent for a regulated tenancy. Nothing is more absurd than the Government paying out £70 or £80 a week, or even more, in housing benefit whereas fair rents for regulated tenancies are fixed at half that amount on average. If tenants cannot afford the market rents they should be subsidised by the Government, not by the landlord.

My second proposal is that security of tenure should be ended on all existing tenancies with perhaps a two-year period of notice. New contracts could then be negotiated freely between landlords and tenants at market rents, or a mandatory repossession order could be served. I favour a scheme of compensating regulated tenants by establishing a procedure for commuting property rights established under the Rent Act 1974 into cash. Commuting property rights into cash is an old tradition and I believe that would be a fair procedure for bringing to an end security of tenure. However, the right of repossession on payment of agreed compensation must be automatic, except in the case of the elderly or sick.

Finally, all council house tenancies should be marketable. That would be an imaginative way of combining security of tenure, which would not be an issue in council house tenancies—and that would be the main difference between council house tenancies and private tenancies—with an incentive to move if a job became available in another place. If the tenant moved the lease would simply revert to the council.

The effects of those reforms taken in combination would be as follows. Their very first impact might be to raise the average level of rents somewhat but there would soon be downward pressure on rents in the whole of the rental sector, thus increasing the stock of affordable rental accommodation. They would put downward pressure on house prices by increasing the attraction at the margin of renting rather than buying. That must certainly be an advantage at present. They would encourage new residential building for rent. They would encourage the ownership of capital other than housing by making it more attractive to invest in shares, small businesses and so on. The ending of tax relief on mortgage interest would also pull in the same direction, but that is a topic for another time. Those reforms would also tend to lower the rate of inflation, which everyone thinks desirable, and they would lower the rate of unemployment substantially by increasing labour mobility.

Standing in the way of all those desirable consequences is the Opposition's obsession with rent control and allocating municipal housing by officials rather than by market forces. Is it so difficult to agree that the existing system of controls—a relic of former conditions—has served the economy exceedingly ill over the past 50 years? Is it so difficult to work together to find an equitable scheme for bringing this pernicious system of controls to an end?

We all accept the goal of an enlarged rental sector. That was true of the noble Lord, Lord Molloy, in his opening remarks. I have argued that the best way of bringing that about is to increase the size of the market for rental accommodation because that is the only method consistent with increasing labour mobility, which is one of the chief purposes of a rental sector. Economists are virtually united in considering that increased labour mobility would lower the rate of unemployment, which we all want. I believe that the Government would go ahead with a scheme of decontrol, subject to suitable safeguards, if the Opposition supported it. This should not be a party matter. The ball is in the court of the party opposite.

5.55 p.m.

Baroness Turner of Camden

My Lords, I thank my noble friend Lord Molloy for introducing a debate on the subject of unemployment, linked to housing, and in particular for the impassioned and informed way in which he did so. We debated unemployment as recently as 25th November when a large number of noble Lords indicated their interest in the subject by participating. Unfortunately, the response from the Minister on that occasion was disappointing. We argued then for the Government to develop as a priority a strategy to deal with unemployment, stressing that it should be given precedence over everything else. My noble friend has extended the debate today by including housing, and how right he was to do so.

I was surprised by the remarks of the noble Lord, Lord Skidelsky, who seemed to argue that unemployment was basically the result of immobility. That is not the case. There is now unemployment in almost every area of the country, and in some areas it is very substantial. Therefore, simply increasing mobility will not help to solve the basic problem.

The two most basic requirements of civilised living are a job and a home. Quite often, it is not possible to have one, and to keep it, without the other. That is seen in stark terms among young homeless people. They cannot get homes without jobs and no one will give them jobs if they do not have a permanent address, so they are permanently marginalised. It is hardly surprising that we are seeing an increase in petty crime, and sometimes violent crime, as such young people become increasingly alienated.

I do not want to go over again the worsening unemployment figures. My noble friend has already referred to them. Suffice it to say that in 1975, according to the system of assessment then in place, unemployment stood at 3.7 per cent. of the workforce. On the same basis—and one has to use the same system because otherwise comparisons are meaningless—we have unemployment now of 14.7 per cent. Much of that new unemployment is in the South East among people who would not in the past have imagined that such a thing could happen to them.

Many are in a desperate situation. Encouraged into the housing market in the 1980s they now find themselves with mortgages they cannot repay and houses they cannot sell at the prices they paid for them. In 1982 an average of 132 people a week had their homes repossessed because they were unable to repay their mortgage loans. One borrower in every 200 was six months or more in arrears with mortgage repayments. In the summer of this year one household in every 32 was in arrears and the weekly average of repossessions was 1,375–10 times the number of 10 years ago. Clearly we need, but do not have, a mortgage benefit scheme to assist owner occupiers who are at risk.

So we have an increasing problem of homelessness. We have been warned that it will rise. Homelessness will increase and council waiting lists will lengthen unless the Government double the number of new homes provided each year for rent, according to a recent study by the Housing Corporation. Yet the number of new private homes started by builders fell sharply during the summer, according to recent published figures. If the trend continued throughout the year, the total number of housing starts by private builders would be the lowest for more than a decade. The fall was offset by an increase in public sector starts including those made by housing associations. But overall public and private starts still fell by 3.6 per cent. compared with the same period last year. At the instance of the Government, housing associations seem to have taken over from local councils the role of providing social housing—a move that I personally do not find particularly acceptable, although I have no wish to denigrate housing associations which in the main do a reasonably good job.

I believe, in contrast to the noble Lord, Lord Skidelsky, that it should be a continuing role of local authorities to provide low rented housing and that the Government should facilitate that role. I agree with the noble Lord that we have a structure in this country that is far too heavily weighted in favour of private housing ownership—not really ownership at all, because the ownership is mostly with the building societies. That has arisen because of past government policies in that area. But municipal housing need not mean immobility. If there is enough municipal housing people will be prepared to move from one area to another.

It seems incredible that with all this obvious need there should be so much unemployment in the building industry itself. Employment in the industry has fallen by 400,000 in the three years to June 1992. Employment continues to fall sharply. In addition, there have been job losses in the materials and supply industry. Short-term prospects for employment in the industry are poor. The industry does not expect an upturn in the private sector until there is a return of consumer confidence.

In the public sector, completions are expected of the order of 30,000, reaching 35,000 for each of the two subsequent years. The increased capital receipts for local authorities are expected to be used largely for refurbishment of existing housing stock rather than new build. These statistics have to be seen against the need highlighted by organisations like Shelter, which argues for 100,000 new homes a year, and the Institute of Housing, which puts the figure at 130,000 a year.

The Trades Union Congress, as my noble friend said, has called for a major programme of house building to relieve homelessness. It points out that only 22,000 homes for rent were built last year, which itself falls short of the Government's target of an average of over 50,000 a year. It says that making money available to buy up 20,000 unsold properties will not create new homes and that while local authorities will at last be able to use some of their capital receipts from the sale of council houses, their overall capital programmes are being cut sharply.

A study undertaken some years ago claimed that each new house built created 2.5 new jobs. The Building Employers Confederation points out that the cost of supporting unemployed building workers, of whom there are now large numbers is costing the Exchequer £1.8 billion a year in unemployment pay and social benefits.

Building homes has a quick-acting effect upon employment. That is one of the reasons why I believe my noble friend was right to link employment and housing in this debate. New homes lead to a demand in other areas such as furnishing, kitchen equipment and other goods. This in turn helps to create employment in those areas. Until the Government act to restore confidence, either by building homes, or allowing or indeed encouraging local authorities to do so, we shall not get out of the vicious circle. Unemployment, not only in the building industry but across the economic spectrum, will continue.

The Government may be proud of the fact that inflation is now below the rate in Germany. But that has been achieved at a truly awful price: by the one in 10 people within the workforce now out of work (even on the Government's own figures); by those fearing loss of their homes or whose homes are already repossessed; and by the homeless, particularly the young homeless, who face a bleak and uncertain future.

I return to the theme of the debate, so ably introduced by my noble friend. Everyone has a basic requirement—a job, a place in society and the status that gives, and a home—without which it is impossible to lead a satisfying and fulfilling life. It is the job of government to facilitate those very modest ambitions. I await with interest the Minister's response.

6.5 p.m.

Lord Gisborough

My Lords, we hear about the unemployed and homelessness in London. But the situation is not confined to London. I would like to speak by reference to figures I have from my own county of Cleveland, which is probably representative of most other areas.

Many of the young unemployed there are second generation unemployed whose fathers were made redundant years ago, and there has been no pattern of example of going to work. Thus, in that county, 29 per cent. of unemployed people in the 18 to 24 bracket have never had a job. Thirty-seven per cent of those unemployed for six months have no skill.

Even if the young have succumbed to the encouragement to get training, they have found, or at least perceived, that there is no job at the end of it. Little wonder, when there are 35,000 unemployed in the county looking for work. Moreover, they see the Government taking away 180 jobs to go to Bath, a place where there is virtually full employment.

These youngsters without the skill to get a job, without the will to get a skill and without a home, look at the advertisements on television and feel that they can never partake of the goods on offer. They have no job; they feel no worth or self-respect; they have no income and no home. They feel outside the mainstream of society and that it is all the fault of what they call society. They just turn off and form a permanent alienation that can lead to a very dangerous situation, not least to those who have homes and cars. That is probably a substantial cause of the spread of drugs, for that is an occupation that not only enriches them but one in which they can get their own back on society. The drugs then promote further crime against property and person.

In nearby North Yorkshire, 77 per cent. of offenders are out of work. That is not only bad in itself, but those offenders cannot even be punished as they have no money from which to pay their fines. Many of them have a succession of appearances in court that make a nonsense of the unit fine system.

The biggest town in Cleveland is Middlesbrough, which has problems that probably are not unique in the country. Middlesbrough was originally a centre of heavy industry. In recent years, there has been a dramatic reduction in employment in the iron and steel, chemical and shipbuilding industries. The council is leading regeneration in the area and Middlesbrough was one of the successful contestants in the Government's City Challenge programme targeted for East Middlesbrough.

Unemployment is a major social and economic problem, particularly within the challenge area and on council housing estates. Unemployment rates in the challenge area average 22 per cent. The average for the Middlesbrough area is 14 per cent. Within the challenge area, long-term unemployment is more common combined with low educational achievements and low or redundant skill levels; 46 per cent. of the challenge area's economically active residents are semi-skilled or unskilled labourers.

The East Middlesbrough area consists mainly of post-war council estates, where unemployment is just a symptom of wider deprivation. On these estates the majority of tenants are receiving benefit—82 per cent. of council tenants receive housing benefit. Crime levels are high; burglary rates are 30 per cent. higher than in the rest of the borough. Residents experience higher infant and standard mortality rates. There are more overcrowded households and higher levels of single parents.

Although it is principally a council housing area, right-to-buy has introduced numbers of owner occupiers, but mainly in the better estates, concentrating deprivation in the less popular areas. The housing stock is generally in good condition. However, problems of poor environment, vandalism and litter are prevalent.

Employment is the key factor which would have the greatest beneficial impact on the area. The economic profile of the area is changing gradually with the introduction of economic and employment schemes under the City Challenge programme. City Challenge schemes are of great benefit, providing new stimulus to the housing market and helping to regenerate decayed areas. It has given skills activity, involvement and employment and has introduced economically active residents who have been able to become owner occupiers at affordable costs.

Unemployed people are being encouraged to improve their own housing situation by getting involved in self-building schemes. One scheme in the City Challenge area will provide 22 such homes. The participants will receive training in a construction trade as well as broader personal skills instruction. Once built the houses can be rented or occupied on a shared equity basis depending on the individual's employment and income situation.

High unemployment and resulting poverty have a significant impact on private sector housing. For example, the older housing is becoming increasingly unfit and house owners are becoming less capable of funding repairs. About 7,000 older private houses in Middlesbrough are now classed as unfit. That in turn puts increasing pressure on scarce resources available for renovation grants. Not only does it mean increases in terms of numbers of applications but each application costs more. For example, 76 per cent. of grant applicants are on income support or from low incomes and are entitled to 100 per cent. grants. The implications for the council's resources are therefore severe.

Outside the towns and in the country there is still homelessness, brought on by the high prices of second homes. One of the best and most imaginative schemes to help people into houses is the low housing cost schemes. Many of those depend on the generosity of land owners. One example reported recently was at East Harlsey where the land was not just undersold but was actually donated. Similar schemes are run elsewhere, and I think that the Development Commission has played a part along with district councils.

In June it was reported that a new scheme was underway which was recruiting householders to let out their spare room to someone who is homeless. The scheme has been successful and should be emulated elsewhere. It may even help some houseowners who are having difficulties with their mortgage repayments.

But both locally and nationally a lot has been done and is being done to tackle the evil of homelessness. More than 53,000 homes are being built per year and housing associations will be enabled to buy more than 16,000 houses for those in need. The Tenants Initiative will help first time buyers to the tune of £50 million. The drop in interest rates should make a significant difference to mortgage repayments, knocking off some £130 a month for the average house. Nearly £30 million a year is to be made available to help those sleeping rough in central London. One curious fact is that free beds are at this moment provided by the City of Westminster but the rough sleepers prefer not to use them. The housing investment programme and the revenue subsidy will help local authorities to cope with their particular problems, as will the ability in future for local authorities to spend some of their funds from the sale of their assets on new houses and other capital projects. The increase in the number of homes during the past decade has in fact exceeded the growth in the population. But more people now have second homes and more people are single or divorced, doubling the demand.

But the Government cannot be accused of just sitting back from it all. The noble Lord, Lord Molloy; went slightly over the top in his criticism and lost some of his credibility. I wish to point out that £4 billion a year has been given to Action for Cities involving 57 inner cities; 11 City Challenge round one have £82 million per year; 20 for round two have £150 million per year; DoE Urban Group programmes account for £1 billion going to inner cities and derelict land; £255 million of city grant has generated £1 billion of private sector investment in inner cities; and there were 8,700 Urban Programme projects in 1991. The list goes on.

No one can deny that the Government have made every effort to combat both unemployment and homelessness with a great variety of different and successful schemes to tackle both. But the fact remains that both evils are with us and will remain with us for a long time to come. They will continue to demand the closest attention by the Government for years to come, particularly in the north of England. Failure to deal with this demand may jeopardise the very fabric of society as we know it.

6.15 p.m.

Lord Ross of Newport

My Lords, I congratulate the noble Lord, Lord Molloy, on his choice of subject and on his bravery in coming to the House with the aid of two walking sticks. He fell off a horse and we welcome his speedy recovery. I am sorry that the noble Baroness, Lady Fisher of Rednal, is unable to be present. I understand that she is unwell. Only today the City of Birmingham announced 3,000 redundancies, some of which are in the building maintenance department.

The lack of any real debate on housing during the general election in May was extraordinary. I tried to stir it up in my own party, but that did not happen. We have, however, had some small but welcome initiatives since the election, in particular in the Autumn Statement. Much remains to be done and many of us believe that it could be done despite the financial restraints which curtail current government action. I read a despondent article in Building Material Producers dated 4th December which stated: Conditions in the housing market have deteriorated sharply since August and a steep decline in house building activity is anticipated as the year draws to a close. This is reflected in a downward revision in the forecast for starts in 1992 to 125,000 from the 130,000 expected in July. Dramatic redundancy announcements are deterring buyers who are so far failing to take advantage of low mortgage rates. House prices are expected to fall further over the winter months". That is a depressing story.

I have considerable respect for the housing Minister, Sir George Young, as does the noble Lord, Lord Molloy. He does not lack advice. Having recently vacated the chairmanship of the National Housing Forum, which I occupied for some three years, I have a pretty good idea of the number of professional and charitable bodies on the housing scene. They are deeply involved, well informed and have put forward some extremely well researched proposals. I imagine that many must land on the Minister's desk almost daily.

A major development within the past decade is the welcome consensus which covers the whole field of housing provision. I am sorry that the noble Lord, Lord Skidelsky, is no longer in his place because I wish to refer to some of his comments. No longer is "private" in renting terms a dirty word. During the latest general election a housing spokesman for the Labour Party said that it would be pleased to see the private rented sector rise to about 15 per cent. of the housing total. That attitude represents a change. Indeed, all political parties want to see the role of private landlords substantially enlarged. When I was a member of the other place and some 15 years ago made remarks to that effect I was nearly hounded out of court. We should pay due respect for that welcome state of affairs to the Rowntree Foundation and its director, Richard Best. It has funded so much good work, including the two reports chaired by His Royal Highness the Duke of Edinburgh and other reports through the National Housing Forum.

I wish to comment on some of the remarks of the noble Lord, Lord Skidelsky. He spoke of the immobility caused by the control on rent. I agree that there is a certain amount of truth in that. However, when the housing market and the building construction industry was booming in the South, particularly in places such as Docklands, vast numbers of people travelled down to work from the North East and the North West. One had only to be at Euston Station at 5.30 on a Friday night to see the Scouses going home to Liverpool and then coming back on the Sunday night train. I know personally many Geordies who came down from Newcastle to work. They were earning large wages but they came because the work was available and they went home at weekends. Mobility would certainly be helped if there were a bigger private rented sector.

The noble Lord, Lord Skidelsky, says that most people can face market rents. I invite him to look at the Evening Standard any night of the week. He will see columns of advertisements for accommodation to let, but they are mostly at rents upwards of £150 a week. Those in receipt of housing benefit cannot possibly face such rents. If they were able to they would not receive housing benefit because that would be ruled out by the rent officer as far too high an amount to pay. However, I agree with him that if we can get rents nearer to a sensible return on capital value—and, after all, house prices have come down remarkably over the past year or two; I understand it is even possible to buy a flat in parts of Wandsworth for about £10,000 at the moment—people could get a return on the rent. It is nearly there. It is a disaster for the people who own those places, and these are the poor devils who are being repossessed in large numbers at the present time.

Anybody who has bought a property auction catalogue or had one sent to him will see there are marvellous bargain auctions every month. It is a tragedy to see all these repossessed homes being sold by the building societies. Some are even sold by housing associations. I cannot understand it. The Network Housing Association has been selling some of its properties. There are a lot of greedy people about who buy these properties cheaply. They do not intend to occupy them. They put them back on the market with a £10,000 upward hike and sit back and wait. It is a nasty situation. I hope that the noble Lord, Lord Skidelsky, will read some of those remarks when he gets his Hansard.

The best article that I have seen from any political source in recent times is that by George Walden, MP, a former Conservative Minister. His main expertise is usually in foreign affairs and he is often seen on television. He is a very capable person. He quoted Mr. Tim Melville-Ross, who is the chief executive of the Nationwide Building Society, as calling for the end of mortgage tax relief. I had an argument with Mr Melville-Ross at a meeting at the Building Societies Association with the Council of Mortgage Brokers because he wanted to double it at that time. He seems to have changed his mind, and I welcome that.

Let me quote from what Mr. Walden said: Over the last few months, housing history has been made. Mr Tim Melville-Ross, chief executive of the Nationwide Building Society and chairman of the Council of Mortgage Lenders, has called for the end of mortgage tax relief. More than that, he said that home ownership in Britain is an 'obsession'. But Mr. Melville-Ross is as right as he is brave. As an MP, I have seen the raw end of our home ownership obsession. What do you say to the distraught mother in a council house, whose 23-year-old son responded to government incitement to 'get on the housing ladder' by buying a one-bedroomed flat for £55,000 which he had to sell for £30,000 two years later, so starting life more than £25,000 in debt? How do you deal with the middle-aged couple on a smart estate, when they tell you that their little building business has failed, they can't keep up the mortgage on their £90,000 semi-detached (now worth £65,000), and are going with their two children into bed and breakfast? In a street I know well in Ryde a house has just been repossessed. Sadly, a man was made unemployed and he had seven children. They are split up and have gone into bed-and-breakfast accommodation. What an appalling situation. They tried to break back into the house the next day—and, God knows, I sympathise with them—but they were turfed out.

At the end of this article Mr. Walden says: Telling 68 per cent. of the people they are worth less than they suppose is not popular politics. But the government could at least change the emphasis of its housing rhetoric to make clear that the overriding national need now is to make private renting a real option". I support that.

At present, the government can't win. Like everyone else, it knows that MIRAS is costly madness"— I think it is £6 billion plus— but can't say so. It has to pretend to be in charge, but the root causes of our housing problems are either out of its hands —such as our phenomenal increase in family break-ups—or untouchable, such as MIRAS. Conservatives have got their philosophical knickers in a twist on housing. Preaching home ownership is incompatible with free choice. MIRAS is incompatible with a healthy aversion to indiscriminate subsidy. A 'home-owning democracy' is a nannying slogan, and a 'property-owning democracy' never meant houses in the first place, but shares or whatever people chose to own—houses included. Modern Conservatives shouldn't be pandering to fetishes, but telling people the truth". I share Mr. Walden's belief that we have to get to grips with MIRAS and put much of the £6 billion that it currently costs the state to better effect. I am told by my deputy leader that it is nearer £8 billion. It is a large sum of money whatever it is.

Obviously the timing of such a move must be carefully considered and some measure of housing cost relief put in its place. Otherwise we put in jeopardy the low income owners who desperately depend on it. I do not see why it should go to all those people on £100,000 plus. They are the sort of people I would tackle first. Various suggestions as to how this could be done have already been circulated widely and will be well known to Her Majesty's Government.

Have they the courage to act? The suggestion was in the second report of His Royal Highness the Duke of Edinburgh. This is the time to act, in the early stages of the Government's term of office. This is the time to get to grips with it. People will see the sense of it in a few years' time. At least the suggestion ought to be openly discussed and not used as a party political football. If we take the case of the repossessed couple referred to in Mr Walden's article, which could be repeated many thousands of times, what nonsense it is that they cannot be helped before having to vacate their home.

The experimental mortgage to rent scheme which was talked about a year ago seems to have died a death. Even the housing associations currently seeking to acquire some 20,000 low-cost homes under the Government's £630 million scheme, which I welcome, have been told that they must acquire only vacant properties. Although I saw in the Observer on Sunday that something like one in 10 are claimed to be repossessed homes, certainly in Wales—I have to talk from Welsh experience as I sit on a Welsh housing association; incidentally we are buying 27 properties—we are told that they must not be properties with people in them which are about to be repossessed. The properties must be empty first. That is a great shame because we ought to be able to help them before they are evicted.

Putting families into bed-and-breakfast accommodation is the most soul-destroying and expensive way to house the homeless. Surely some of the money could have been used to acquire such properties before they were vacated. Once families qualify for housing benefit the chance of getting them back into low paid work recedes, and so more unemployment results. There is certainly a case for looking at the restructuring of housing benefit itself. Moreover, housing associations should be trying to provide accommodation for a whole cross-section of the community; otherwise they fall into exactly the same trap as the large local authority housing estates. I recently rejoined a management committee of a housing association in a rural area, and we estimate that at least 70 per cent. of our tenants are on housing benefit.

I hope the Minister will deal with this. There is a move that has been going on for the last few months in Wales—and I gather this is now happening in England—to restrict the number of housing associations carrying out actual developments. It is claimed that, with standardised designs and larger contracts, even if split between sites, the money will go further. That has rightly been condemned by the federation in Wales, and I hope it will be condemned by the National Federation of Housing Associations in England.

Before this movement takes off, I beg Ministers to look back at the mistakes of the 1960s when such ideas were again rife. The cost of putting right errors of design then has been phenomenal. One has only to go to Andover. It cost millions to re-roof the houses in Andover that were all built with flat roofs. Moreover, statistics from Rowntree also show that on average smaller housing associations build more cheaply. If we really want to put more of the smaller local builders, architects and surveyors—who are apparently surviving on work coming from housing associations—out of work, this is a good way of doing it —giving it all to the Laing's and Wimpey's of this world. But it is not the right way to go about this, and I hope the practice will die a quick death. I hope to get an undertaking from the Minister that this will be looked at.

Who, worth his salt, giving his time freely and willingly—and one gives a lot of time and reads a lot of paper—will want to serve on a housing association that deals solely with management and has little or no say on the construction side? We are there because we want to see houses built for the children in the area in which we live. Will housing associations in time be obliged, as is proposed for local authorities, to go out, if they are purely managers, to compulsory competitive tendering on management? The mind boggles at the way we might be dragged along in due course. We do not get paid, and we willingly spend much time and effort on the job, but our enthusiasm will be killed stone dead if that is the way we are to proceed.

But the Government may feel that this is the way they want to go. They have cut the Housing Corporation cash allocations for 1993–94 and 1994–95 by a total of £350 million, while claiming that the target of 50,000 houses can still be met—a target which is only half what it should be, because by common consent in the social market building sector we should be building over 100,000 a year. Even the Audit Commission said 70,000.

I am running out of time, but I should like to suggest that there are alternatives to bed-and-breakfast. Why on earth do we not use prefabricated units? Why on earth do we not use decent mobile homes on decently serviced sites, giving people a bit of privacy and somewhere for the kids to play? It would not cost the earth. I cannot understand why this is not being done. Actually, it has happened a little bit in Southwark and one or two other places. Also, what about all these empty offices all round London? I suggest to the Minister that he takes the Royal Institution of Chartered Surveyors latest journal as bedtime reading tonight. He will see that it is perfectly feasible to convert offices into living accommodation. If we do not do that we shall have thousands of offices —I say to him quite seriously—empty in the City and elsewhere.

Case studies show that conversions to residential units are perfectly feasible, and surely desirable. Seventy-two per cent. of sites in Islington are plainly suitable for residential use and only 17 per cent. for commercial use. We could at a stroke bring people back into our city centres, put the many empty office blocks to good use and reduce some of the traffic problems that now exist. "Planning" is a dirty word for the Government, but let us bring it back. Let us look at the transport problems. Do not let us shut down London's best hospitals and then bring everybody back into town. That is the way we ought to be going, and saving some of our countryside.

In July of this year the theme for National Housing Week, promoted by the NHF, was "Homes for our Children". We commissioned a report from Jean Conway, Jane Dark and Christine Holman of the Sheffield City Polytechnic. It was said that this was an excellent piece of research and was indeed commended by the Minister himself. I should like to quote from its conclusion, and then I promise to sit down. The heading is "What happens now?". Jean Conway says this: If there is no serious response to the housing needs of young people a number of consequences can be predicted. The short term emergency provision, the DoE's Rough Sleepers Initiative, is already full with nowhere for people to move on to. In the medium term those who are young and inadequately housed today will be in their 20s, establishing families and still inadequately housed in five or so years time: they will be the priority homeless of tomorrow and a more costly housing need to meet. Demographic trends show a decline in the proportion of the population of working age soon after the beginning of the next century. Yet young people without a decent home find it very difficult to obtain training and skills, get a job and maintain it. If they are not housed, they cannot be the workforce which will be needed to keep the economy going". Perhaps that is an argument for a development of the "Foyer" type which occurred in France, where hostels provided for young people also include training and leisure facilities, skills for living and counselling on employment. It is true that one such centre opened in Nottingham in March and others are under construction in Southwark and the North West. All the details, plus many of the excellent suggestions, are included in the publication Homes for Our Children. I hope that the Minister will take time to read it: I can lend him my copy.

6.33 p.m.

Baroness Hollis of Heigham

My Lords, as the noble Lord, Lord Molloy, said in his opening speech on this very welcome debate—and may I say, like the noble Lord Lord Ross, we are delighted to see him back here after his accident—the two things that matter most to people and that make possible decent and secure family life are a job and a home. The truth is that if you are unemployed in this country you are now increasingly likely to be homeless and if you are homeless in this country you are almost certain to be unemployed.

The Government's industrial policies have seen our manufacturing industry undermined. Unemployment has risen to nearly four million. New socially rented housing is down to a quarter of the starts of the late 1970s, and in consequence more and more marginal families are pushed into an owner occupation which they can barely afford in good times and which is impossible for them to maintain when unemployed.

Why? Because over the last decade we have not had a housing policy from this Government but a tenures policy: a switch from one tenure to another, from socially rented to owner occupation. Money, which could and should have been invested in new homes, has instead been spent on financing the debt with which to add not new homes to the stock but to change tenures within the stock. At the same time, the success of that policy, and in good times we would support it, has been subverted by the Government's own economic and industrial policies of mass unemployment. This has meant that families could not afford their homes when they had bought them. So, as the noble Lord, Lord Gisborough, described so eloquently and in such accurate detail, we face a landscape of mothballed factories, repossessed homes and crumbling stock while the unemployed become homeless and the homeless remain unemployed.

If you are unemployed you are increasingly likely to be homeless. Why? If you are unemployed your home is both secure and affordable only if you are in socially rented housing with full housing benefit. But if you are a private tenant your problems are very real because landlords of new tenants demand a month's rent deposit in advance and often a month's rent as well while benefit is paid fortnightly in arrears. If you are unemployed in any case many landlords will not take you. If they do, housing benefit often does not cover the full rent. As the Rowntree Foundation has shown, a third of tenants' claims for housing benefit were cut, usually on the ground that in 25 per cent. of all cases the rent charged was above the fair market rent. On average, therefore, the tenants had to find the extra £20 themselves out of income support already top-sliced for fuel, water and debts.

The noble Lord, Lord Skidelsky notwithstanding, it is the tenant who pays and not the landlord who subsidises. As the tenants seldom can do so, they are usually evicted for arrears and put on the streets, regarded as intentionally homeless, and not rehoused. Not only private tenants but owner occupiers are hard pressed. Over one million people at the moment cannot afford to move because their homes are worth less than they paid for them. Two-thirds of employers, as the noble Lord, Lord Skidelsky, rightly said, are complaining about rigidities in the labour market, but they are rigidities following the rigidities of a housing market dominated by owner occupation. After all, there are nearly twice as many vacancies in the private sector as there are in the local authority sector, but because families cannot sell they cannot move.

More alarmingly still, nearly a million families have heavy arrears on their mortgages, and in the last 12 months 80,000 families suffered repossession. As many of them were held to be intentionally homeless only 20,000 of those 80,000 families were able to seek and obtain decent affordable housing from the local authority. That is 200 families a day repossessed: twice the figure of two years ago. If such families become unemployed and they are owner occupiers on income support, half the mortgage interest payment is paid for the first 16 weeks. As a result, debts mount, from which many never recover, arising from the other 50 per cent.

Even so, they are the lucky ones compared with those families where perhaps a husband loses a full-time job and a wife remains in a modest part-time job—as a nurse or a shop assistant—where she is on family credit. As a result the family receives no help with mortgage payments at all. If that family is sensible, she too will stop work. She too will become unemployed in order to keep her home. That is perverse social policy.

Every government initiative so far to aid the situation has been an utter failure, as the Minister will confess if he is honest. I am sure that he will be. The housing associations' leased management scheme on behalf of building societies, which the Chancellor in another place proudly announced would acquire over 40,000 repossessed homes for families, in a year has helped just 120. Forty thousand was the bid and 120 is the result. The new vaunted scheme in the Autumn Statement, by which housing associations are going to get £580 million to buy 16,000 repossessed properties, will do no such thing, the noble Lord, Lord Gisborough, notwithstanding. It is already clear that they are going to buy new build and not repossessed homes. In any case it is not new money but money mainly brought forward from the next two years of housing association expenditure, and therefore at the expense of their own rents and building programme.

We have not had a housing policy but a tenure policy. We have seen the sale of 1.6 million council houses (which otherwise we would support) that has reduced stocks to let by pushing marginal families into owner occupation. Local authorities in many places now have to buy back those same homes from former council tenants who are too poor to pay for them and maintain them. We have seen the voluntary transfer of stock (71,000 houses) to housing associations and shared equity schemes. Of all the absurdities, we now see a rent-to-mortgages scheme that will push marginal families still further into the ranks of owner occupation that too few can afford at precisely the time when the opposite is needed—a mortgages-to-rent scheme to keep people afloat in their own homes and eligible for housing benefit.

One of the many items of research carried out by the Rowntree Trust has shown that less than 30 per cent. of young couples who are both working can afford to buy a new modest home. Barely 45 per cent. can afford to buy a modest Victorian terraced house. To ask them to do so in good times is a strain; to ask them to do so when one or both partners is unemployed is impossible. We would support the Government's initiatives to change tenure if they added to housing choice and to the housing stock. Instead, they have done neither and we see the results around us. As my noble friend Lady Turner said, only socially rented housing offers decent quality, affordable housing with rents covered in full by housing benefit. Only socially rented housing breaks the link between low income and what is often literally lousy housing that in the past has done so much to produce family poverty, ill health, illiteracy and deprivation. What the unemployed need, and increasingly cannot gain access to, is social housing. Notwithstanding what the noble Lord, Lord Skidelsky, said—and I believe he was wrong—the loss of private renting has not been because of the emergence of council housing; the loss has been to owner occupation. We accept that tax subsidies have artificially weighted owner occupation at the expense of both private and social renting alike.

In the early eighties social housing represented some 40 per cent. of new starts. It now accounts for only 23,000 of a much lower total of 163,000 properties. We have seen social housing go down to a quarter of what it was in the early eighties. I take my own authority of Norwich. In the 1970s as housing chairman I chaired a committee concerned with the building of 700 to 1,000 council houses per year. They were good quality semi-detached houses cherished by their tenants. The rent arrears were very low. We never saw any but the proverbial tramp sleeping rough. Never during the 11 years that I was housing chair did we put families into bed and breakfast accommodation for more than a weekend. Those houses have been sold off and the rungs of the ladder are no longer available to the next generation. In consequence, Norwich has £40 million of capital receipts, none of which it can touch. That is idle, wasted money. At the same time, people are sleeping rough in cars, under bridges along the River Wensom and trying to sleep in the shadow of the cathedral spire—something that people have not done since the days of the blitz. Walk around Norwich at night—and I invite the noble Lord, Lord Strathclyde, to do so—and you will stumble across bundles of black sacks and newspapers left out for the refuse collectors. Dimly in the dark one will see that there are fellow human beings there.

Homelessness has soared; it has tripled since 1978. As Shelter reminds us, nearly one million people applied to local authorities as homeless in 1991. Nearly half of that number, despite what the noble Lord said at Question Time today, are homeless because their present living conditions with families or friends have broken down. They have been living in spare bedrooms and have not been able to wait out their time on ever-lengthening waiting lists. Often husbands and wives sleep with their respective families. Twelve per cent. of those families are homeless because of mortgage arrears; 15 per cent. are homeless because private tenants have lost security of tenure, notwithstanding what the noble Lord, Lord Skidelsky said. In other words, three-quarters of those families owe their homelessness directly or indirectly to government housing policies.

In 1979 in the city of Norwich only one family in 10 was housed by the local authority on grounds of homelessness; the figure is now over one in two. Approximately 150,000 families, or some 500,000 adults and children, are officially treated as homeless by local authorities. As many again, though homeless, are not deemed to be of sufficient priority and have joined others in squats, have slept on floors or have remained with violent partners and at risk. If it is the case that once unemployed one is increasingly likely to be homeless, whether in the private rented sector or in owner occupation, so is the reverse true: if one is homeless one is almost certain to be unemployed.

During the general election I was working in Great Yarmouth. I was shown a corner house that had been empty since the previous August and was deteriorating badly. It had been owned by a couple. The husband whose wife had become pregnant was a carpenter and had lost the opportunity for overtime. Their income had been more than halved. As a result he could not keep up his payments and was repossessed. After bed and breakfast accommodation, he was rehoused. The only property that a good local authority could find was a cottage about 10 miles out in the countryside. He could no longer afford to run his car. He lost his home and as a result lost his job as a carpenter. What he swapped for both of them were debts. That was a story manufactured by government.

If people are unemployed they are likely to be homeless; if they are homeless they are almost certain to be unemployed. Eighty per cent. of the heads of homeless families are unemployed, and most of the homeless are families. Those families go largely into bed and breakfast accommodation; that is, shabby hotels and hostels, where on average they stay for nearly a year. Two-thirds of those families live in overcrowded conditions. On average 21 people share one cooker. The wiring, cooking and hygiene arrangements are downright dangerous.

What of the young single people for whom local authorities can and do take no responsibility? Shelter's night line received 23,000 calls from people, nearly half of whom were sleeping rough and 40 per cent. of whom were under 25. Many have no homes to go to. Only about 1 per cent. of young people are in local residential care. These people form one-third of all the young homeless on our streets.

The Government may talk of its London initiative but the £33 million this year is a cut in cash terms on the £38 million last year. The problem grows. As a result, youngsters sleep rough and risk drugs, prostitution and AIDS. They are our children.

The homeless need homes. As the noble Lord, Lord Ross, and others said, we need something like 100,000 new homes for social renting each and every year. That has been said by the Audit Commission, the National Audit Office, the Tory-led ADC, the Institute of Housing, the National Housing Forum, the Housing Corporation and all academic research. Where is that housing to come from? Nationwide £6.5 billion is tied up in capital receipts, of which £5 billion cannot be spent. The Government will point to the release of capital receipts for the next 13 months. The AMA estimate that it will be £300 million this year and £550 million next year, making £850 million in all—far from the £1.75 billion that the noble Lord was erroneously, in my view, quoting today during Question Time. Since £400 million of that £850 million will be taken away from credit approvals and Exchequer subsidy for improvement grants will fall from 75 per cent. to 60 per cent., as the noble Lord, Lord Gisborough, rightly reminded us, it means that government will be allowing local authorities to spend more of their own money this year to permit the Treasury to spend less.

We are certainly not seeing much new money. We are not even seeing much additional money. We are seeing the money of local authorities substituted for Exchequer subsidy. In the process local authority total capital spend will be restored to where it was two years ago. That is all that the much vaunted Autumn Statement initiative represents. So much for new initiatives. It means therefore that while my local authority still has £40 million of capital receipts tied up, it will probably only acquire and be able to spend £4 million under the Government's Autumn Statement and much vaunted new initiative. A welcome release, perhaps, but nowhere near touching the size and scale of the problem.

We know what needs to be done. We know that we need to reform housing benefit and give tenants in the private rented sector additional security. We know that we need to help owner occupiers who are unemployed or on low incomes to stay in their own homes either by converting the mortgages to rent to enable them to enjoy housing benefit, or by allowing those on family credit to receive a mortgage benefit so that they are not penalised perversely if they seek low paid work. Above all, we must build 100,000 new homes a year to rent.

The Government's figures, as my noble friend Lord Molloy reminded us, show that it costs twice as much to keep families in bed and breakfast accommodation —£14,000 a year—as it does to build them a new home, around £7,000 a year. As the National Audit Office said in 1990, Paying bed and breakfast charges in the long term, rather than as a temporary expedient, is more expensive than building new council accommodation". The benefits are that those newly housed may then become the newly employed. As my noble friend Lady Turner reminded us, new building feeds speedily and directly into employment; it releases demand without sucking in new imports and worsening the balance of trade. Every £20,000 spent on construction creates a job; every new house built creates a job on site, a job in the construction supply side offsite and probably half a job in retailing-related manufacture. Thereby those newly employed can acquire housing of their own. Build a rented house and in the process one earns enough pay to buy a home of one's own. Yet instead, in 1990 we saw 5,000 building firms become insolvent; in 1991 the figure was 7,000. There were 600 jobs lost every working day in the construction industry over the past three years—400,000 in total. Half of the cost of new building would immediately be recouped through the saving on benefit payments. In Norwich around one-fifth of the men out of work come from the construction industry; half would be back in work if we were able to release just half of our capital receipts.

I invite the noble Lord, Lord Strathclyde, to take a second walk around Norwich—a city with which I know he is familiar—and he will see thistles in the fields bought a decade ago for housing; he will see homeless families in bed and breakfast accommodation; he will see unemployed building workers at risk themselves of becoming homeless, and he will see £40 million of untouched, unusable capital receipts idling away—wasted money, wasted lives. I wonder what kind of economic madness afflicts us all, what blinds us to the misery of homelessness that we have constructed when instead we could have constructed homes.

6.53 p.m.

Lord Strathclyde

My Lords, I too join other noble Lords who have spoken in the debate in welcoming back the noble Lord, Lord Molloy, after his recent illness. He is in fine voice and has quite rightly drawn attention by his Motion to the link between housing and wider economic issues. As with so many other issues, achieving our aspirations for housing depends on what we can afford, not just as individuals but as a nation.

I thank the noble Lord, Lord Molloy, and the noble Lord, Lord Ross of Newport, for their accolade to my right honourable friend the Minister for Housing, Sir George Young. I understand the respect in which he is held in housing circles.

Of course, government cannot create jobs. It is industry and commerce that create employment by producing the goods and services that customers want. Government's role is to establish an enterprise economy that will generate sustained economic growth and jobs.

We are committed to low inflation and sound public finances as a sound basis for growth. British business is now well placed to take advantage of the lowest interest rates in the European Community and a highly competitive exchange rate. The benefits of that, and the measures to boost investment and confidence announced in the Autumn Statement, should be felt, and will be felt, in renewed growth, wealth creation and providing new jobs. But where homeowners have lost their jobs, income support ensures that they have sufficient funds to meet their reasonable housing commitments. The interest payments on a mortgage are included in the calculation of a claimant's weekly needs. For those who rent their home, housing benefit will help an estimated 4.5 million people meet their rent liabilities in 1992–93.

With Christmas approaching we have seen a rash of news stories lately about the problems of homelessness; and it is, of course, right that at this time of the year in particular we should recognise the difficulties faced not only by those sleeping rough in the streets of the capital and elsewhere but by those who are living in some of the unsatisfactory kinds of temporary accommodation. But this is not just a seasonal issue, as some people seem to think. This is a year-round problem, which demands year-round concerted action. If housing were considered more newsworthy throughout the year, perhaps we would have more reasoned coverage of how the problems are being tackled: by central Government, by local authorities, by the Housing Corporation and the housing associations, and by charitable and Church groups—exactly the kind of bodies mentioned by the noble Lord, Lord Molloy.

Real progress has been made and following the Autumn Statement of my right honourable friend the Chancellor, we are well placed to go on making progress over the coming years. The measures we have taken to help the housing market and the construction industry will not only give a boost to confidence but will be of particular value to those who need help with their housing.

First, the Chancellor announced an additional £580 million for the Housing Corporation in 1992–93 to help housing associations purchase new, empty or repossessed homes. We estimate that that will mean 16,000 new units of social housing stock. The target we have set of 153,000 new units of social housing over the three years from April 1992 should be comfortably exceeded; in fact, we now expect 170,000 homes to be made available over that period.

An excellent start has been made already with over 1,200 approvals given for housing associations to buy some £62 million worth of property by 10th December. The purpose of the package is to stimulate the housing market and to provide homes this year. Prompt action is vital if both those aims are to be achieved. We are satisfied that the Housing Corporation is well on course to meet our target that all transactions should be approved by the end of March. A further £20 million is being made available through the corporation to enable housing association tenants to buy homes in the private sector, and £30 million through local authorities to enable council tenants to do the same. The estimated 3,500 homes in the social sector which that frees up will then be ready for use by those in housing need, including homeless families.

Secondly, the relaxation in the rules on local authority capital receipts will give authorities an estimated £1.75 billion of extra spending power. We expect that they will devote around £1 billion of that towards the renovation of run-down council estates. Not only will that mean valuable improvements in living conditions for the tenants of those homes, but it will also provide employment in construction and building maintenance.

The capital partnership which we have set in place aims to encourage local authorities to direct their new spending power towards projects which will be of lasting benefit to their local communities. Government grant or credit approvals of £200 million will be available; and the Housing Corporation will seek to improve the output it can achieve from the £400 million it has available for new schemes next year by taking advantage of capital partnership opportunities. In addition, we have set up a £30 million Housing Partnership Fund to provide incentives to those authorities which are less able to raise receipts, but which nevertheless have worthwhile projects.

I know that the noble Baroness, Lady Hollis, and I can disagree about the exact numbers, but the principle of allowing local authorities to spend 100 per cent. of their receipts is one for which she has fought for a considerable amount of time. Instead of harking back to the money that was raised in the past, the noble Baroness and her local authority should look forward to the assets which they have in their local authority area and see how they can be put to sweat more for the needs of the local people.

Baroness Hollis of Heigham

My Lords, I thank the noble Lord for giving way. I entirely endorse every word of the final two sentences. In the light and spirit of those remarks, can we hope that the same attitude will be taken to the existing receipts which are held unused, idle and wasted by local authorities and not just as regards the receipts which are about to come to local government?

Lord Strathclyde

My Lords, the noble Baroness will know that I am not in a position to give her any comfort about the existing receipts. The announcement that we made is one clearly for future receipts.

Baroness Hollis of Heigham

My Lords, why not?

Lord Strathclyde

My Lords, I am quite happy to tell the noble Baroness why not. It is because this is a policy which has been in existence for many years. We believe that local authorities with the greatest amount of receipts are not necessarily the ones which need most money. Furthermore, we have public expenditure considerations to take into account. I am not at all convinced that it has been Labour Party policy, particularly at the last election, to release all past receipts to be used by local authorities. I am sure that this is an area which we shall come to again. The point is that over the next 13 months there is a magnificent opportunity for local authorities to demonstrate that they can do what they have always said they can do; namely, to spend money wisely and responsibly and to look after the needs of local people.

I have so far mentioned two points of action. Perhaps I may now move to a third. The Chancellor announced the continuation of the Rough Sleepers Initiative, with additional provision of some £86 million over the next three years. The programme has visibly reduced the number of people sleeping rough in central London. The latest count of people sleeping rough in central London, carried out by voluntary organisations last month, found 420 people sleeping rough, which is down on the 1,000 plus estimated before the initiative began. As I said at Question Time earlier today, what is particularly encouraging is that of the 420 people identified, only 20 or so were aged 18 or under, which would seem to indicate that young people in particular are benefiting from this initiative.

The noble Baroness, Lady Hollis, suggested that we had cut available resources. It is not a cut. It represents an additional £60 million over the resources earmarked for the Rough Sleepers Initiative before the Autumn Statement. At a national level, the Government give grants under Section 73 of the Housing Act 1985 to voluntary organisations concerned with the single homeless. This year resources of £6.1 million are going to support 150 projects across the country which are of direct help to single people who are homeless, or at risk of becoming homeless. Of those projects 81 are aimed specifically at young people, which we hope this year will secure supported or independent accommodation for around 8,700 young people; provide resettlement advice and training to around 21,000 young people, as well as aftercare and support to around 3,200 clients once they have secured more permanent accommodation. It should be noted that resources for Section 73 grants have been increased to £6.45 million next year; and, in total, over £20 million will be available for Section 73 grants over the course of the next three years.

As far as the benefit position of young people is concerned, the Government take the view that the majority of people aged under 25 are non-householders and that their average earning power is lower than that of older people. Benefit rates reflect that. Sixteen to 17 year-olds already have the positive options of continuing in full-time education, getting a job or taking up the guarantee of quality training through youth training. We believe that replacing income support for 16 and 17 year-olds with guaranteed YT places is an important step in steering these youngsters away from early dependency on benefit.

Baroness Turner of Camden

My Lords, I am grateful to the noble Lord for giving way. Is he telling the House that the Government are able to keep their guarantee to young people so that there are training places for everyone who wants one? Is that really the situation?

Lord Strathclyde

My Lords, yes. We have always made it clear that the guarantee is in place and it is exactly that. It is a guarantee of training for all those who require it in the age group. This is a well-trodden path. I have had many discussions with the noble Baroness, Lady Turner, on this subject. The point is that there are occasional gaps between people seeking a job and coming onto a YT place. But the principle of what I have said is one that should be supported from all parts of the House. We do not want to create a dependency culture. We want to provide good quality youth training. That is what we have done over the course of the past years and that is what we shall continue to do.

Baroness Hollis of Heigham

My Lords, I thank the noble Lord for giving way. He has been generous. In the light of and in the spirit of his remarks, and the fact that he has recognised in his reply to my noble friend Lady Turner, that there are occasionally "unfortunate" gaps between seeking and obtaining a YTS place, will the Minister therefore undertake to restore benefits in that place so that people—we estimate between 80,000 to 100,000 across the country—are not left destitute?

Lord Strathclyde

No, my Lords, that is not necessary. As I said in my initial comments, we are not seeking to create a dependency culture for people in this age group. There are other opportunities: getting a fulltime job themselves, staying in fulltime education, or taking the choice of a YT job. That is what is appropriate for people in that age group and that is what works. Youth training remains central to the Government's commitment to training. The employment department is ensuring that no TEC or LEC in Scotland is being prevented from meeting the guarantee through lack of funds.

I now turn to the title of this evening's debate. I feel that there is a misleading connection between unemployment and homelessness, as my noble friend Lord Skidelsky pointed out. For the vast majority of those who face the personal tragedy of unemployment, one does not necessarily lead to the other. Housing benefit is available for tenants and income support is available for owner occupiers to enable them to stay in their homes until they can find another job. The noble Baroness, Lady Hollis, made a valiant attempt at making the link. In her argument she created that link; but I do not believe that it can be generally applied that if you become unemployed you naturally become homeless or that, necessarily, if you are without a home that you are unable to find a job.

Baroness Seear

My Lords, I apologise for interrupting the noble Lord. Is he not aware that in order to meet the opportunities in the labour market it is often very necessary to leave your home and go to another part of the country? That is when difficulties arise. You cannot get into a council house and you cannot buy. What are you to do? When I was an area board chairman of the MSC we were constantly up against that problem. We had jobs in our area and there were people in the north-west of England who would have liked to have taken them, but there was no accommodation that they could afford either to buy or rent. Surely there is a connection with unemployment.

Lord Strathclyde

My Lords, I believe that the noble Baroness is right to raise this problem of housing and mobility. We as a Government are committed to helping people in the social sector who need to move for employment reasons. We currently provide 100 per cent. funding for the housing mobility agency homes to run a number of schemes, including the national mobility scheme and home swaps, as it is called, to help council and housing association tenants to move to the area of their choice for employment or social reasons. Perhaps this is an area which we need to investigate further in order to provide the opportunities. With the figure which my noble friend Lord Skidelsky used of a 2 per cent. reduction in unemployment, and if we can marry up job opportunities with people who need the jobs, that is a substantial advantage and something that we should aim to be doing.

Many noble Lords have drawn attention to the problems of the relatively small group of young unemployed people who have no home to hang onto—the rough sleepers on whom we are targeting help. That includes help not only in finding permanent accommodation, but also in finding appropriate training and jobs through, for example, job clubs and the Foyer initiative.

The aim of our housing policy is to ensure that a decent home is within reach of every family. Most people prefer owner-occupation, but there are many who either do not choose or who cannot afford that option. It is vitally important that we target public subsidies effectively on those families and individuals who are in greatest need and that we ensure that the resources that we are able to spend on housing are used as effectively as possible.

Lord Ross of Newport

My Lords, the Minister has been kind enough to give way several times, but perhaps I may raise just one more point. He said that housing benefit, or other forms of benefit, is available to those who need it, but there is a problem when the male earner loses his job if his wife is still in a low-paid job. In that case, they do not qualify for housing benefit. That is the problem, is it not? Those are the people whose homes are now being repossessed. They do not qualify for help because the wife is in work, albeit low paid work.

Lord Strathclyde

My Lords, in that case the noble Lord will be glad to hear that, through the reduction in interest rates and the negotiations between my right honourable friend the Chancellor of the Exchequer, the lenders and the banks, fewer and fewer homes are being repossessed. Naturally, we should like that to continue.

The noble Lord, Lord Molloy, and other noble Lords referred to the economic lunacy of 400,000 building workers being unemployed when thousands of people are not housed. Perhaps I may reiterate the measures that we took in the Autumn Statement. There will be £1.75 billion extra spending on capital projects; cash plans for road programmes are being maintained; capital spending on health is at an all-time high, and the Jubilee Line extension is to go ahead. This year, of all years, was a tight year for public expenditure, but the Government have done their utmost to provide the construction industry with a boost. The £750 million of additional money to boost the United Kingdom housing market by purchasing new, empty and repossessed homes will have a significant effect on confidence while providing an additional 20,000 units of social housing.

In a most interesting speech, my noble friend Lord Gisborough was right to draw attention to the importance of spending on inner-city improvements to tackle both housing and employment issues. I am grateful to him for pointing out so many of the initiatives that are taking place.

The noble Lords, Lord Molloy and Lord Ross of Newport, mentioned the huge expense of bed-and-breakfast accommodation. As I pointed out earlier at Question Time, in the 12 months up to 30th September the use of bed-and-breakfast facilities as temporary accommodation fell by 23 per cent. That is a considerable achievement. All sides of the House must agree that bed-and-breakfast accommodation is not always the most appropriate place for homeless people.

We recognise the difficulty, to which the noble Baroness, Lady Hollis, referred, that some homeless people face in raising a deposit to gain access to private rented accommodation. I hope that she will be encouraged to hear that we are funding a pilot scheme in London, run by the Notting Hill Housing Trust, to provide rent deposits for homeless people. In due course, we shall evaluate the success of that scheme to see whether it should be more generally extended.

There is clearly a great deal more to be done in housing the homeless and in providing more opportunities for people to find their own homes, whether in the private rented sector, through housing associations or local authorities, or through owner-occupation. The picture for the future is by no means a bleak one. We are providing extra finance for new homes. That will help to increase opportunities for employment. During the 1980s we built an enormous number of houses. We also provided unparalleled opportunities for increasing employment. I feel sure that what we did in the 1980s we can do again in the 1990s.

7.15 p.m.

Lord Molloy

My Lords, I was a little perturbed by the noble Lord, Lord Skidelsky, who seemed to suggest that people who might be placed in council housing could be sufficiently well off to buy a house of their own and that their income should be looked into. One of the most detestable Acts of Parliament in the United Kingdom's history involved the means test. I feel sure that the Government will not return to that.

I thank the noble Lord, Lord Ross of Newport, for his kind remarks and other noble Lords for their personal remarks about me. I am grateful also for the magnificent support that I received from my noble friends on the Front Bench. I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.