Voluntary Housing Associations (Hansard, 18 July 1994)

Viscount St. Davids
My Lords, the Government have no plans for legislation to extend the right to buy.

§ Lord Dean of Beswick
My Lords, although I am extremely grateful for the noble Viscount's Answer, he must be aware that there are repeated press reports that the Government are actually considering that policy; but I take it from his Answer that they have no intention of doing any such thing. Is the noble Viscount aware that if the Government embark upon such a policy they will be reneging on undertakings given by successive Secretaries of State in regard to houses to let built by charitable or voluntary organisations? If that situation is tampered with in any way, the provision of new houses to let would almost certainly dry up completely.

Viscount St. Davids
My Lords, there are all manner of issues upon which the press will speculate. I made it clear in my Answer that there are no plans to legislate in the area. But, at the same time, the Government are indeed keen to encourage voluntary sales and they will continue to encourage housing associations to reap the benefits of such a policy.

§ Baroness Hollis of Heigham
My Lords, the Minister's clear Answer is indeed most welcome. 2 However, is he aware that 40 per cent. of housing association new finance is now raised from the private sector? Therefore, do the Government appreciate that, even apart from the threat of the right to buy, upon which the Minister has now given assurances, the other threats to housing associations—namely, the threat of lower grant rates and, therefore, rising rents and the threat of tampering with housing benefit—make the asset basis of housing associations vulnerable? Consequently, private lenders have made it clear that they are increasingly reluctant to lend to housing associations. Is the Minister aware that, if that happens, their building programme will close?

Viscount St. Davids
My Lords, we have no evidence to suggest that lenders are standing in the way of associations developing voluntary schemes. However, it is the case that private loans will contain covenants that require the association, if it disposes of a property that is part of the security for a loan, to replace the sold asset with a security of the same value. Many associations find it quite workable to operate sales under those terms. Where associations would have a problem is if there were to be a statutory obligation to sell, as that could leave an association unable to meet the security covenants required by lenders.

§ Lord Jacques
My Lords, will the Minister bear in mind the fact that in the case of charitable housing associations the members not only give the capital but they also provide the time and expertise? Therefore, it would be quite unreasonable to impose upon them the right to buy and so deplete their stock. Is the Minister also aware that where there has been a government grant and, thereafter, the Government wish unilaterally to change the contract that was made, they would be doing something which none of us can do? That, too, would be quite unreasonable.

Viscount St. Davids
My Lords, the matter has twice been before your Lordships' House in proposed legislation and was rejected on both occasions. I can only remind noble Lords that my right honourable friend 3 the Secretary of State for the Environment made a categorical statement on 29th June that there were no immediate plans further to extend the right to buy.

§ Lord Dean of Beswick
My Lords, I quite openly welcome the Minister's first statement. However, on my supplementary question, I am a little suspicions of his reply that the Government will not discourage people in the voluntary sector from selling houses if they wish to do so. Where a charitable housing association wants to sell some of its houses, can the Minister say whether it will be allowed to keep the total receipts from such sales in order to build other houses, or will the Government renege on the matter as they did on the sale of council houses when all the promises given in this and the other place were broken?

Viscount St. Davids
My Lords, encouraging associations means, for example, having arrangements in the bidding process for new allocations of public funding which take account of the financial contribution that associations propose to make from their sales of property to tenants. Such arrangements already operate in England.