§ 3.7 p.m.
§ Lord Dean of Beswick rose to call attention to the housing needs of the nation and the ability of financial institutions and of the construction industry in general to meet these needs; and to move for Papers.
§ The noble Lord said: My Lords, I hope that as a result of the debate we shall have some indication of measures that may be taken to deal with the present situation. There is no doubt that all the figures produced on any aspect of housing show a deteriorating situation.
§ The first part of my Motion calls attention to the housing needs of the nation. The second part deals with the building industry. Noble Lords will know that over the years I have from time to time asked questions as to why in the past few years we have had half a million building operatives on the dole, building firms across the spectrum working below capacity, and huge sums of money which belong to local authorities locked up and subject to restrictions which prevent those authorities from building at the rate they would like. I do not know what the Government are waiting for.
§ It is not as if a bolt from the blue has suddenly caused a housing crisis—and it is a crisis. It is the result of deliberate government policy, introduced under the present President of the Board of Trade, the Right Honourable Michael Heseltine, when he took office as Secretary of State in 1979. The first thing he did was to set about removing government subsidy for council house building. The Government compounded that by making the insane decision—and I still think it is insane—to stop local authorities building housing for rent. Historically, since the early 1920s they were the biggest provider of low rent housing. I do not say that they were perfect, but they were far and away the best landlords in the country.
§ It is about time that the Government ceased their vendetta against local authorities and their council houses and started giving authorities the facilities and finance to enable them to eat into the problem regarding the appalling current housing situation.
§ Over the years the Conservative Party has claimed to he the party of the owner-occupier. Literally every owner occupier in the country has been hit by what has occurred in the house purchase industry. An enormous number of people are now trapped in negative equity. From an item 275 on the news this lunch time, I understand that the problem of negative equity is not reducing; it is increasing. Approximately 1,000 houses a week are still being repossessed. Those of us who are fortunate enough to own our own homes have a diminishing asset because of the Government's policy. It was rather naughty of the Prime Minister to suggest in a speech a few weeks ago that the problem of negative equity was people's own fault for daring to buy their houses.
§ Ministers always fall back on the success of the sale of council houses. That policy was a success based on enormous cuts in prices through the goodwill that the Government were able to engender and trade on. However, I have figures which indicate that in some areas of London some people received as much as a £50,000 cut in the price of their council house so they could purchase it. Yet in the same area young couples purchasing a similar type of house were being dispossessed because they owed a far smaller sum than the figure to which I referred. That does not seem to me to be equal treatment of people of the same nation.
§ I understand the situation now is that, if one deducts council houses from the number of houses being purchased, for the first time for many years in this country the figure is on the downturn.
§ What has happened over the years regarding provision of council housing or housing for rent? A number of reports have been instigated by prominent people in this country. They were not from political parties. We can go back to the Duke of Edinburgh and his commission. A group of people with expertise across the board on housing—it was in no way politically motivated—put forward proposals to assist housing in this country. Did the Government take action? There were some comments about parts of the reports with which they did not agree, but no action was taken.
§ We then had the report of the commission of the former Archbishop of Canterbury, the noble Lord, Lord Runcie, Faith in the City. It was a superb report for anyone to read in depth. It pointed the way forward. Once again the report was not politically inspired. But nothing happened; it just gathered dust.
§ The reports were supported by reports from other people—not from a political background—who took the same view. Those reports indicated, sadly, that deterioration in the housing stock of the owner-occupier section of the country is reaching alarming proportions. Between £8 million and £10 million will be required to bring those houses up to standard for the public sector. But nothing has happened and those houses just deteriorate.
§ I referred to costs that were first commenced by Mr. Heseltine. Figures have proved conclusively that had the Government continued with housing finance and allowed the councils to continue to build we would have gained between half a million and a million more houses available for rent in this country. There is no point in saying that an accident happened. That accident was a result of deliberate government policy. I have said this before in this Chamber, and I say it again: it was the Government's fault and no one else's.276
§ It is about time that the Government turned away from some of their political ideology now that the number of homeless people, and those in bed and breakfast accommodation, is increasing. If the money spent on providing bed and breakfast facilities were spent on building houses it would create a considerable number of houses for occupation. That is the current situation.
§ I have gone through most of the major points with regard to housing problems as we see them today. I now turn to the building industry. The Government, rightly, set up a committee under a former Member of another place, Sir Michael Latham, to consider the question of reorganising the building industry. He produced a very fine document which, I believe, in the main was accepted by the overwhelming majority of people involved in the building industry—certainly the builders themselves. There were some areas of disagreement, but, basically, it was accepted that a package was available which should be in the legislation to benefit the building industry.
§ What has happened? Yet again, we are going sideways, not forward. It seems strange to me that a major piece of legislation dealing with the building industry has now been handed to a Parliamentary Under-Secretary in the Department of the Environment. I make no criticism of that junior Minister, but that does not give a high profile to a building industry which is in serious trouble. In the circulars and correspondence from building organisations and suppliers to the building and civil engineering industry there are no projections regarding an expanding workload in this country. Having said that, there are some outstanding successes in the export field—building abroad—which I commend.
§ I attended a working lunch a few weeks ago to discuss the Latham Report. We were disappointed to hear the Minister state that there can be no action in the current parliamentary Session. From the way he spoke, it appears that there will be none in the next Session because the matter has now gone back for further consultation.
§ The Government ought to take this strong point on board—it has been raised in your Lordships' House by noble Lords on all sides of the Chamber—regarding the reluctance of some of the large building companies to pay their bills on time to the smaller builders and suppliers. Because of cash flow problems that reluctance often results in the smaller builders going to the wall. I should like to see the Government giving attention to that factor because it is a very real worry to people.
§ The debate gives us the opportunity to discuss the present housing situation in this country. Members of your Lordships' House will know that over the years I have led several debates in your Lordships' Chamber on housing. I have always found that the Government take not a bit of notice if they do not agree with what someone says, irrespective of party, even if the logic of the argument is pointed out. If the Government had listened a little more instead of hiding behind their political dogma on housing, many of the problems that we now face would not exist. In my opinion, enormous sums of money will be necessary to put right the errors that have accrued over the years.
§ We are going backwards in the housing of our people. When I was a chairman of housing in Manchester we were almost out of the tunnel. We were building houses so fast 277 that keys were going out by the hundred each week. It was the same in all areas. Then suddenly someone in the Conservative Party thought, "We can't have local authorities doing this", and it was stopped. It is the first government ever to have stopped such building. As regards previous Conservative Governments, one has only to remember Harold Macmillan when he was in charge of the housing programme. He produced 300,000 council houses a year. I wonder what he would have thought if he had seen the shambles which the present Government are observing today. About 2,000 council houses will be built this year. A few weeks ago, when I questioned the Minister, I said that we were always told that, under the Housing Corporation, the HATs were the Government's answer once they had stopped councils building houses. We were promised that housing associations would have a yearly target of 60,000 houses. What is the Government's answer? That we will be lucky if there are 30,000 this year because of the enormous cuts created knowingly and intentionally by the Government in the allocation of cash to the Housing Corporation for general distribution. Those are the actions of a Government who are supposedly interested in dealing with a situation in which housing is greatly deteriorating.
§ I mentioned homelessness and other speakers will refer to the details; I have had to give a broad sweep. In conclusion, I believe that your Lordships' House should send out a message in regard to a situation which will not improve. I hope that for once the Government will listen to and not ignore that message. I beg to move for Papers.
§ 3.25 p.m.
§ Lord Harding of Petherton
My Lords, I am grateful to the noble Lord, Lord Dean, for initiating the debate. I wish first to answer the point made by him that it was deliberate government policy to reduce council house building. I do not deny that; I do not believe that councils are the best people to build houses. The noble Lord, Lord Dean, referred to Harold Macmillan's building programme. It was no fault of Harold Macmillan's, but that programme included many high-rise flats which have since had to be bulldozed.
The rapid fall in house prices which started in 1989 and continued for two years to the level we have today is affecting many people. As this period also corresponded with a great increase in unemployment, especially among people with high mortgages, it has caused a lot of hardship. I feel very sorry for all those people who have had their houses repossessed or who are unable to move because of negative equity. Thousands of construction workers have been thrown out of work.
In the late 1980s, the housing market became a gigantic bubble which eventually burst. The absurd situation arose when a cupboard in Kensington was sold for an astronomical price. House prices were rising by incredible amounts each year and everyone who was able to scrambled to get on the ladder. The government of the day—I am ashamed to say that it was a Conservative one—allowed that to happen.
It is absurd, however, to say that my right honourable friend the Prime Minister was party to the policy of neglect in high economic decisions made at that time. As 278 Financial Secretary to the Treasury, he took no part in interest rate policy, but he was quite right to point out the other day, as the noble Lord, Lord Dean, mentioned, what happened in the late 1980s. He was not blaming house buyers or building societies; he was merely stating what happened then and that it must not happen again.
Anyway, it is no good looking back. We must address the situation today and look at the future. We now have low inflation with house prices lower in relation to average earnings than has been the case for possibly 20 years. It is a good time to buy houses for those who can afford to. Unfortunately, although many are doing so, it is not enough to keep the housing market moving. This is due mainly to the feeling of job insecurity. Different patterns of employment must also be a factor. In the past few years, whole rafts of long-term jobs have gone; part-time working and short-term contracts have become more common.
Of course, the Government's reductions in mortgage tax relief—or MIRAS—have not helped. However, MIRAS, even at the level of £30,000, created a huge distortion of resources towards housing, besides costing the Exchequer millions of pounds in lost revenue. It is no answer to turn the clock back and try to kick-start the housing market by reversing the reductions. I doubt anyway whether it would have much effect. Because of low interest rates, mortgages are much cheaper anyway than they were when MIRAS was at a higher rate in real terms than it is now.
I turn to protection for mortgage interest on income support. The current system is highly unsatisfactory. It leaves 70 per cent. of people with mortgages without any help if they lose their jobs. People with working spouses, redundancy money or savings, or who have part-time or early retirement income, do not qualify. As a result, about 150,000 people on unemployment benefit receive no income support for their mortgages and 50,000 people a year have their homes repossessed. The cost of income support for mortgage interest has risen from £30 million to over £1 billion in 15 years.
The availability of government support and a belief among home buyers that it is all-embracing have discouraged the growth of comprehensive private mortgage insurance. The Government have rightly said that private insurance should ensure that everyone taking out a new mortgage has proper protection, by insurance or otherwise, against the threat of a spell of unemployment.
There have been screams from the Society of Mortgage Lenders which, in my view, is entirely self-interested; the society would much rather that the Government should bear the burden. Surely, though, if someone satisfies a lender that he qualifies for a mortgage he should also be a good insurance risk. Spreading the insurance cover over many people, as all insurance companies do, would mean that the premium should be at a reasonable level.
The private lending sector must also he encouraged by the Government. Many people seem to think that renting is in conflict with home ownership. That is not the case. Many people, especially the young, do not have the resources to get a mortgage and buy a house. The Government went some way to freeing the private renting sector by passing the 1988 Act. Before that Act 279 was passed, it was almost impossible to find a privately rented house or flat. I know that from personal experience. When my daughter left university to work in London she wanted to rent a small flat. The letting agent would not countenance a rental agreement with her; it had to be with a company. The reason was that there could be no certainty that she would not become a permanent tenant because of the rent Acts. Luckily, my family had a small private company, which had been set up by my parents to buy the village post office and some other property where we live. At that time, the company owned only six garages. I was therefore able to get the company to rent the property on her behalf. The majority of people would not have been able to do that.
The rent Acts first appeared in the First World War. Labour governments in the 1960s and 1970s made them even more restrictive and included furnished lettings. That means that Britain alone among industrial nations has a tiny private rented sector. The 1988 Act improved the situation. Only recently, however, have owners of houses taken advantage of the terms of the Act. I have recently seen for the first time I can remember houses with "To Let" signs outside them. In Yeovil and Taunton, near where I live, I have recently seen construction sites with advertisement boards showing that houses or flats are being built to let. That is very good news.
However, the 1988 Act did not go far enough. Obviously, there has to be some protection for tenants. Landlord and tenant relationships are often not easy. The law is still far too biased against the landlord. Thousands of privately owned buildings across the country are empty. Because of the existence of the rent Acts for 70 years, many have been allowed to go derelict. Owners will still not go to the expense of doing them up for fear of getting a tenant whom they cannot remove and being stuck with an uneconomic rent. Even when a tenant does not pay the rent for a time, there are tremendous legal difficulties in getting the tenant out. The Government have promised a White Paper on housing in the near future. I hope that it will address the problem.
There are a great many people who cannot afford an economic rent, even if houses and flats were available. By setting up housing associations, the Government have introduced private capital to social housing needs. Council estates are often badly run. I have dealt with that matter previously.
My main message is that the present situation is not as bad as it is painted. It is true that thousands of people have had their houses repossessed, and this year many more will suffer the same fate. That is very sad, but it cannot be avoided. The best prospect for housing in Britain is offered by sustainable, non-inflationary growth. The rising prosperity that the Government's policies will bring is the best hope for restoring confidence in the housing market and the construction industry. As in so many other aspects of policy, there arc no quick fixes. Politicians arc being dishonest when they try to persuade the public that there are.
§ 3.31 p.m.
§ Lord Ezra
My Lords, the noble Lord, Lord Dean of Beswick, has effectively introduced a debate on an issue of fundamental and topical importance which covers many aspects. Obviously in the short time available speakers cannot cover more than one or two aspects. I propose to concentrate on the need to improve the condition of the nation's existing housing stock. I should point out that for many years I have been president of the National Home Improvement Council.
Bearing in mind the relatively small contribution that new building can make to overall housing requirements, the maintenance of as many existing homes as possible in a reasonable state of repair is essential, especially in view of the Government's own forecasts of a 23 per cent. increase in the number of homes needed in the next 20 years.
The last major surveys into the quality of housing stock were made in 1991 and 1992. It emerged from the English House Conditions Survey that there were 24 million houses, or over 13 per cent. of the housing stock, in need of urgent repair. These are the homes of nearly 6 million people.
The official survey is now four years old. A survey undertaken recently by the National Home Improvement Council, which involved detailed responses from some 75 local authorities, showed that an increasing number of homes failed to meet the fitness standards. The situation appears to be deteriorating.
A relatively high proportion of sub-standard properties represents older stock. They tend to be inhabited by people on low incomes, and particularly by older people. So there is quite a social problem. The situation has serious health and safety implications. Britain has noticeably higher relative rates of winter mortality than other European countries, much of which is attributable to inadequate living conditions. There are also safety risks, particularly where faulty heating systems and wiring could be involved.
The present structure for providing grants for improving property remains as set out in the 1989 Local Government and Housing Act. The Act defined the circumstances under which grants could be made and introduced means testing for the major grant categories. Grants to achieve basic fitness standards became mandatory for those meeting the means test criteria, and provision was made for discretionary grants in special circumstances in addition.
In spite of those clearly stated intentions, I regret to say that the Act has failed to deliver—and for the simple reason that there has been a steady reduction in central government funding towards the grants from a peak of £1.3 billion in 1985–86 to the current level of no more than £260 million. As a result, many of the grants agreed under the means test arrangements have not been met. Furthermore, there has been virtually no scope for discretionary grants.
The Government are currently considering a reform of the grant system, and are concentrating on removing mandatory requirements and increasing the emphasis on area renewal projects. I quite agree that an area approach, which was tried before, is well worth attempting.
281 However, it still leaves the question of the major backlog of people who were promised grants but have not received them and who could get into an even worse situation as a result of the proposed reforms.
Apart from the review of the grant system and measures to deal with the backlog of applications, other measures are needed if a serious attempt is to be made to deal with the progressive deterioration of the nation's housing stock. Three measures in particular require serious attention. The presence of the noble Lord, Lord Mackay, on the opposite Bench makes me hesitant to mention my first proposal in view of his reaction to a Question earlier today. It is a reduction of the VAT rate to 8 per cent. on housing renovation and repair work. I hope that the noble Lord's colleague who will reply may not have quite so closed a mind as he had on the subject. My researches show that this would be permissible under European Union regulations. Householders would be encouraged to undertake repairs and improvements to their property; and it could be made much more cost-effective for owners of vacant properties to undertake the necessary repairs. The reduced fiscal proceeds could be offset by increased activity in the construction industry, which, as the noble Lord, Lord Dean, pointed out, is sorely needed.
One of the most serious weaknesses in existing homes is the lack of adequate standards of insulation and other ways of using energy efficiently. Much is already being done by Neighbourhood Energy Action, an organisation with which I have been connected for some years, to insulate the homes of people on low incomes, particularly those of the elderly. I am glad to say that government support for this scheme was recently increased. The scheme has already improved the homes of nearly 2 million people on low incomes. It needs to be further extended and made more flexible to cope with changing circumstances. The Home Energy Conservation Bill, introduced by my noble friend Lady Hamwee and passed in this House on 8th June, should go a long way to identifying where further action will be required to improve energy efficiency in the home. Electricity and gas undertakings could play a larger part in stimulating energy efficiency by their domestic consumers. This could be done, for example, by the provision of loans on favourable terms to install energy-efficient equipment.
The use by local authorities of capital receipts from house sales for housing investment has long been a bone of contention. A suggestion which the Government might be prepared to consider is that the proceeds of future receipts (leaving aside past receipts) might be put into improving the condition of local authorities' existing housing stock. This was attempted in a limited way in the 1992 Budget but there was not enough time for it to bear fruit. The reintroduction of such a measure in the next Budget could have a positive effect.
To conclude, my Lords, there is no doubt that the condition of the nation's housing stock presents a serious problem. The fact that over 13 per cent. of the total stock, involving nearly 6 million people, requires urgent repair can no longer he ignored. But unless concerted action is Quickly taken. further deterioration will undoubtedly set 282 in. That could add immeasurably to the many other problems that beset the housing market.
§ 3.39 p.m.
§ The Lord Bishop of Oxford
My Lords, I am grateful to the noble Lord, Lord Dean of Beswick, for the opportunity of debating a subject of such fundamental importance. The Church of England has a long history of concern for housing provision both in a practical way and as a matter of public policy. Parish priests throughout the country know that poor housing conditions are related to so many of the other ills of our society. Conversely, adequate, affordable housing provides a sound base from which children can develop as they ought. Without the basic security of a home, the sense of belonging and rootedness needed for personal growth is virtually unattainable.
The noble Lord, Lord Dean, referred to Faith in the City. That major report produced by the Archbishop's Commission in 1985 concluded that the structure of housing in urban priority areas was "totally inadequate". The authors continued:It is clear to us that the prevalent housing situation of UPAs is quite unacceptable".Five years later, in 1990, a follow-up report, Living Faith in the City, reported:Sadly the analysis of housing issues presented in Faith in the City remains accurate. The number of homeless people has increased, more dwellings have become unfit for habitation"—as was emphasised by the noble Lord, Lord Ezra—and new legislation has, for many people, rendered their continuing occupation of their current accommodation uncertain".
The housing shortage in rural areas for those on low incomes has also given rise to concern. Faith in the Countryside, the report of the Archbishop's Commission on rural areas, also published in 1990, said this:One issue above all others—housing—has been at the centre of the evidence which we have received, especially on our regional and diocesan visits".
The figures we have already heard and will hear again in this debate show starkly that the position since then has worsened further. There is still a desperate need for more and better affordable housing. Recent research commissioned by the Joseph Rowntree Foundation emphasises in particular the need for more rented accommodation. I was pleased to hear the noble Lord, Lord Harding, emphasise that.
Home ownership is certainly a desirable option for those who can afford it. But many millions cannot and it may not be suitable for the growing number of people in insecure employment and those who need the flexibility to move for job reasons. Among young people in particular there is much less confidence in the prospect of home ownership than there was 10 years ago. Renting for many is the only option and for a good many more the only realistic one. Yet today there are 1,609,000 fewer council and housing association properties to rent than there were in 1979—a 50-year low. In the past two years the Government have cut funding to housing associations by more than £600 million. Local authority constructions arc now minimal.
283 I have the honour to be president of the National Federation of Housing Associations, which represents 1,600 housing associations, which together provide low-cost rented housing for more than 2 million people. They are the only major providers of new social housing in England today. The NFHA considers that between 130,000 and 150,000 new social rented homes are needed each year between the present day and the year 2001 if the extra demand created by demographic and unemployment changes is to be met. Yet on present funding levels only 51,000 new tenants will be provided with social rented homes in 1996–97. That is well below even the Government's own projection of housing needs, which ranges from 60,000 to 100,000.
I have a table of the investment in social housing from 1979 to the present day and it looks extremely dismal. There has been a year-on-year decline, even taking into account the private finance which is available to housing associations to match grants. The cutting of grants to housing associations means that the number of new rented homes started by housing associations in the current year will fall from an original plan of 40,000 to the very disappointing figure of 17,000.
Housing associations, which have all-party support, remain the key players in the provision of rented housing. But the need is so great that only a combination of private, local authority and housing association initiatives can begin to provide the response required. I emphasise again that the millions of people on low incomes, unemployed or with little job security cannot afford to own their own homes. In 1994 37 per cent. of households in Britain earned less than the Council of Europe's "decency" threshold, compared with 28 per cent. in 1979. And the increase in low paid, part-time work, self-employment and job insecurity all highlight the need for substantial investment in the rented sector at this time.
I know that other noble Lords will stress the relationship between that investment, the decrease in unemployment and the promotion of national prosperity, all of which have been urged in recent reports and are the subject of the last part of this Motion. I want simply to stress the human need and the necessity, one way or another, for all the agencies involved to tackle this problem and to make the provision of rented accommodation in particular a high priority for government over the next five years.
§ 3.45 p.m.
§ Lord Howell
My Lords, I start by expressing appreciation to my noble friend Lord Dean of Beswick for raising this matter. I totally agree too with the speeches of the right reverend Prelate the Bishop of Oxford and the noble Lord, Lord Ezra.
I had intended to begin by talking about mandatory housing grants, but yesterday the Prime Minister made some comments in that connection in regard to the city of Birmingham which I regard as quite disgraceful and I feel called upon to raise them here. I gave notice to the Government's spokesman that I intended to do so.
284 Yesterday the Prime Minister decided to libel Birmingham City Council and the members of that body. He was referring to the report on Monklands and in a throw-away line he said that the Monkland council had created,jobs for the boys and jobs for their families".—[Official Report, Commons, 20/6/95; col. 149.]He went on to say, referring to wrongdoing and corruption, that it was not an isolated example. He said that Birmingham was another such city; it was on the list. That is a disgraceful slur not only upon the city council but also on the good people of Birmingham. If the Prime Minister had made that statement outside, they would be able to take libel action against him.
At the moment he was speaking the city itself was releasing the results—I am sorry that the Government's spokesman seems to think this amusing—of its internal inquiry into allegations in relation to house improvement mandatory grants. It was an internal audit conducted by the chief executive and the auditors in consultation with the district auditor. It found no evidence whatever of corruption in Birmingham but it found that it was inevitable that Birmingham had to ration mandatory renovation grants to meet the insufficient resources provided by the Government.
The time has come therefore to ask the Prime Minister to put up or shut up. If he possesses any evidence of wrongdoing in Birmingham he should publish it or refer it to the appropriate authorities, who could investigate it. The problem with housing improvement grants in Birmingham is not malpractice by the city council; it is total ineptitude and disarray on the part of the Government. The law states that applications for mandatory improvement grants must be dealt with in six months. Ten thousand such applications now await Birmingham City Council's attention—10,000—and that requires £100 million of allocation to deal with them, as required by the law. The Government are making £14 million available to Birmingham. They refuse to provide the funds that will enable the city to meet the requirements of the law. That is a duplicity or fraud on the householders of Birmingham, and I have no doubt that similar things happen in other parts of the country.
I must ask the Minister when he comes to reply—if I may have his attention again—to tell us whether the Government will provide the funds for Birmingham to meet the legal obligations imposed on it by the Government, or how they expect it to deal with the outstanding millions of pounds when it does not have the resources.
The housing situation in Birmingham mirrors the position described by the noble Lord, Lord Ezra, and the right reverend Prelate the Bishop of Oxford. The city council's housing stock now stands at 99,500, a decline of 20 per cent. in the past 10 years. There are 16,000 applicants on the waiting list for council housing. Nearly 23,000 council tenants want to transfer to another property. Nearly 10,000 households approached the city as homeless in 1994. Almost two-thirds of those were in priority need, meaning that the city had an legal obligation to house them.
285 So far as concerns the housing stock, we estimate that we require around £1.3 billion to remedy the problems in the council's own housing stock. More than half of the city's 377 high-rise blocks of flats require urgent attention to the external structure. We have 15,000 inter-war council dwellings which need to be modernised. In the private sector there are 47,000 unfit homes. A further 80,000 are considered to be on the borderline of unfitness. Fifty-seven per cent. of private properties in the city need comprehensive repairs, costing £370 million, but the HIP allocation to Birmingham this year is £20 million. The 27,000 privately rented dwellings in the city have an unfitness rate of 24 per cent. Many houses in multiple occupation are both squalid and dangerous. As I have said, the financial resources available to the city are totally inadequate.
We have been allowed this year to build only 40 houses. The great city of Birmingham has that problem. The housing associations have seen their financial allocation fall from £58.2 million in 1993–94 to £22.4 million in 1995–96, a reduction of 60 per cent. in two years. I could give further examples but I want to make my final point about the future of the construction industry.
I was brought up in the belief that when the construction industry was in good heart the country was in good health. That is certainly not the case today. I mention particularly apprenticeships, on which the whole future of the building industry must depend. The number of apprenticeships has dwindled from the 1988 figure of 90,000 to 1,200 over the past 12 months. In other words, even if the housing market picked up, the skilled labour necessary to build the houses would not be available. The Construction Industry Training Board hopes to get between 12,000 to 15,000 new entrants next year, but it wants to know where the money will come from to provide the jobs for the apprentices if it trains them.
I conclude by asking some questions. First, what are the Government doing to sustain confidence among employers and employees in the construction industry? Are they ensuring a stable workload for the years ahead? Secondly, what are the Government doing to encourage the take-up of modern apprenticeships? Will the TECs and the Construction Industry Training Board have sufficient funds available to them to deal with the matter? Thirdly, what are the Government doing to ensure that our construction industry workforce are properly trained and qualified?
On every front of housing finance and construction we face a disaster. I hope that the debate will provide some answers from the Government to the searching questions being asked on all sides of the House.
§ 3.54 p.m.
§ Lord Sefton of Garston
My Lords, first I should like to deal with the Latham Report because current news about London disturbs me greatly. One of the claims in the Latham Report—the Government have accepted the report—is that there could be savings of 30 to 40 per cent. in the building industry if certain steps are taken. That claim was made 12 months ago and the report has been in abeyance ever since. The Labour Party has accepted the 286 report completely and says that it will implement Latham as soon as it gets control. Unfortunately, it will not get control that quickly. This Government may hang on. So it is very pertinent to ask the Government what they intend to do about Latham.
It will not take long to put the legislation through. There is the question of the resolving of disputes between contractors and sub-contractors. There is the question of the savings in administration and the question of employing project managers in order to ensure that the job the building industry is starting on behalf of a client goes on in an efficient manner. I should like to ask several more questions but I am sure that the Minister is fully aware of all the questions that Latham poses and the solutions the report suggests.
What do the Government intend to do about Latham? They know what the problems are. They have had the report for 12 months. There is no reason to delay implementing it any further. I ask the Government to implement it now because we have a wonderful example of what happens when we let the private trade, without any restrictions or suggestions by the Government, go ahead and do whatever it wants. The problem is right here at home. The National Audit Office has stated that the London Docklands Development Corporation put pressure on the Treasury because Olympia & York, the developers of Canary Wharf, needed the scheme to regenerate the area. What am I talking about? I am talking about a large site. There was the Jubilee Line extension, the London Docklands railway and the road that has now cost £450 million a mile to build. That is what I am talking about. And we are talking about possible savings of 30 to 40 per cent. inside the building industry with the Government as the client. It was a scandalous state of affairs and it was the reason why at 10.30 p.m. in this Chamber I tried to stop the Government from going ahead with these proposals, especially with the proposal for the Docklands Light Railway, in order that we should give them some further consideration. That consideration was not given and now the consequences are coming home to roost.
I talk like this because I want to see the building industry become more efficient. I came into the building industry at the age of 14 and started to serve my time to be a plumber. I then found that I could not get a job. Why could I not get a job? I could not get a job because the building industry sub-contractors were going out of business because of the big boys. That was 70 years ago but it is still going on. So I am interested in the building industry and I am interested in ensuring that people like me who spent years on a pittance learning a trade and trying to contribute to the building industry at least get a job when they finish. The point has been well put by my noble friend Lord Howell. It is important that we do that, but we do not have too much time.
I do not want to sit down before I have dealt with the issue that really concerns me. I hear people say that home ownership is a good thing. The Motion itself refers to the "needs of the nation". At the moment I am not very interested in the needs of the nation with regard to housing because the needs of the nation seem to be getting served by the decisions of the money institutions. That even applies to housing associations. I am concerned about the 287 people mentioned by the right reverend Prelate the Bishop of Oxford—the people who cannot afford home ownership. Why should someone on a margin of about £2 or £3 a week be compelled, in order to get a shelter, to invest in a property which he or she will never experience as an owner? We have to recognise that there are, and always will be, such people. They have been persuaded by the Government's propaganda to buy their own home.
The working classes knew that the great deterrent to buying your own home was the tremendous commitment. There was the commitment to repair and to the regular payment which was based, more or less, on interest being paid over a period of 30 years. That was all right while there was a residue from the employment market that was left behind by the Labour Government, who had a considerably better record than this one. While some people were still working they could manage home ownership. Now it has been proved.
When I hear the opposition today boasting about the success of privatisation it makes me think about where that success came from. Let us be honest: it came through the application of efficiency measures in order to improve profitability. What were they? Does one believe that the managers of these wonderful privatised industries work harder? Their only contribution is in giving themselves bigger salaries.
Where did the efficiencies come from? They came from 2.5 million people who were deliberately made unemployed in order to make profits. That is the lesson to be learnt. That caused more growth in the number of people who could not afford home ownership. That is the consequence. We cannot look at this matter unless we consider the whole economy. That is why I say that if we are going to waste millions of pounds on one mile of road and if we are to persuade ourselves to build other projects just to get Olympia & York out of a financial embarrassment (in which they involved themselves by not planning properly in the first place) then we had better look at the economy as a whole. We need to establish its relationship to ordinary people and then do something about it.
The solution is Liverpool. Because of the nature of the town itself, before the war it had one of the worst slum problems in the world. It got out of that and had reached a situation in 1960 where that problem had been solved—I do not need telling from the Front Bench that I ought to shut up. I have not taken half as long as the noble Lord opposite and I have one minute to go.
I finish on this note. One reason why we were able to get out of that problem was the assistance given by the Public Works Loan Board. Some noble Lords on the Government Front Bench and in this Chamber will not remember it. It ironed out all the fluctuations which took place in interest rates over a certain period. But that does not happen now. Local government has been made a slave to the interest rates of the financial markets in Great Britain and that is why we are not getting sufficient money to solve the housing problem. We need to go back to the 288 Public Works Loan Board and allow local authorities to do the job which they do best—that is, to provide houses for people in need.
§ 4.3 p.m.
§ Lord Stallard
Follow that, my Lords. I too wish to congratulate the noble Lord, Lord Dean, on introducing this extremely important debate. If it finished now I believe that a case is established by all that previous speakers have said. Following the noble Lord, Lord Sefton, with his usually robust but accurate assessment of the situation, I shall try to flesh out some figures to make the subject a little more realistic. It has been proved in the past hour or so that this country has a crying need for affordable, rented housing. I would like a pound for every time I have raised that matter both here and in the other place in the past 25-odd years.
The cost of housing need in terms of homelessness, overcrowding, family breakdown and alienation is immense in social and economic terms and far too great even to contemplate, let alone examine, in terms of figures. We all know that. The right reverend Prelate and others mentioned Faith in the City—a tremendous document. We had great hopes for it, but it went the way of all flesh and was destroyed in this Government's hands in the same way as everything else.
There is a need for affordable, rented housing. Every voluntary organisation in the country knows what that means and knows that there is not any. It is not just a question of a shortage; there is none at all. In the district where I live there are scores, perhaps hundreds, of flats and apartments for rent. But the minimum rent for a two-bedroomed flat is between £150 and £200 per week. It goes up to between £350 to £375, and even higher, in some places; for example, Hampstead. No one can say in any language that that is affordable. There are thousands of people waiting for houses, but none of the properties I have mentioned is available to them. Therefore, there is a shortage of available, affordable rented accommodation.
The right reverend Prelate rightly quoted the Government's own figure of a need for between 60,000 and 100,000 homes. The higher figure would be the more accurate. According to the voluntary organisations it is clearly in excess of 60,000. The Housing Corporation has also recognised the need for at least that number of houses—that is to say, between 60,000 and 100,000 affordable, new homes.
But the Government have been systematically under-investing in affordable housing. In 1975 almost 175,000 new homes were started in the social rented sector: by 1980 that figure was just over 56,000. The past decade has seen an annual average of under 34,000 social homes for rent being started. It is estimated that for the current year 1995–96 the figures are the lowest for 50 years with fewer than 20,000 affordable homes likely to be built.
That is just a rough summary of the situation in terms of the numbers needed. When we consider the people who are looking for such homes, we see the gross distortion. The Department of the Environment's projection is between 60,000 and 100,000. If the Government stand by those figures they will have to concede at least two points.
289 They will have to say that the independent bodies and the housing charities are correct in calling for the provision of 100,000 affordable homes in new build and renovation, as the noble Lord, Lord Ezra, mentioned, and that the Government have been wrong in ignoring the warnings they have had from all those organisations.
Even now the Government would have to concede that they recognise the level of need put forward by their own department and that the Government's investment is failing to meet it. This year only around one-fifth of the new homes needed will be built. That is a dramatic problem as regards the needs of everyone concerned.
The historic shortfall in affordable homes has resulted in massive increases in homelessness. In 1978, 53,100 households were accepted as homeless by local authorities in England. Last year there were 122,660 acceptances. In other words, the figure is now running at an average of 2,500 households a week in England alone being accepted as homeless. They have fulfilled all the terms of acceptability outlined in the legislation. The number of households qualifying for the term "homeless" is now 2,500 a week. As the numbers grow, so the number of homes available has declined, and the problem of homelessness continues.
In their consultation document of January 1994 the Government had some proposals to change the homelessness legislation. One of their arguments was that the current system operates in favour of the homeless at the expense of those on the local authority waiting list. People on local authority waiting lists are just as much victims of the Government's policy of cutting back the building of affordable houses as homeless people are. Instead of setting two vulnerable groups against each other in competition for scarce resources the Government should recognise the desperate need for more affordable houses all round. The idea of "divide and rule" as a means of solving problems is no longer valid.
There is now a greater need than ever for affordable housing. It has been argued that home ownership is likely to reach its maximum level by the turn of the century. Therefore, further expansion of the rented sector will be needed. Trends in the labour market were mentioned by the noble Lord, Lord Harding. We have moved away from people having a secure, lifetime job with a pension at the end of it, and a secure home. That has now gone. The Government have completely destroyed it. We now have insecure employment with part-time working and no security whatever. That means that people need to be more mobile, whether they like it or not. That in turn means that they will be even less willing, or able, to take on mortgage commitments. That is especially true at this time of loss of confidence in the housing market. So the needs of the economy demand far more rented and affordable homes to enable people fully to participate in the labour market.
A knock-on effect is that the disabled are suffering greatly because of a lack of adequate housing for them. There is also a lack of residential accommodation for elderly people who are in real difficulties.
As I said, there is a great need for more investment in affordable houses. The benefits of such investment are only too clear. I do not have time to explain them, but the need is for a dramatic increase in the amount of 290 investment. Economic models show that if £1 billion were invested in social housing, 30,000 new jobs would be created over two years and that between one-third and one-half of the original outlay would be recovered through increased tax receipts and a decreased benefits bill. Now that the Government have begun to recognise that, I hope that they will follow their recognition with some real investment to help solve the problem.
§ 4.11 p.m.
§ Lord Elton
My Lords, one would not expect the noble Lord, Lord Dean of Beswick, sitting as he does on the other side of the House, to give undue credit to the Government for their policies or undue praise for the results of those policies. Therefore, perhaps it will be in order for me to start by mentioning one or two of the products of those policies which he did not. I refer to the facts that 2.4 million extra houses have been produced; that owner-occupation has risen from 56 to 70 per cent; and that 1.6 million council tenants have been able to buy their homes.
It will no doubt be rejoined to the last two points that the cost of owning a home is now excessive. We have already visited the field of negative equity—and a very tragic field it is. However, it is perhaps worth mentioning that, as my noble friend Lord Harding said, the cost of a mortgage has fallen dramatically. The cost of an average mortgage of £33,000 is now £130 a month less than it was at its peak in 1990. Indeed, surveys have shown that home ownership continues to be popular in spite of the risks and that houses are now at their most affordable level in relation to incomes since 1985.
However, that does not remove the problems to which the noble Lord, Lord Stallard, the right reverend Prelate the Bishop of Oxford and other noble Lords referred. That brings me to the central problem. I agree entirely with the noble Lord, Lord Sefton of Garston, that we must consider housing in relation to the economy as a whole. We cannot look at it on its own. I believe that I am right in saying that the result of noble Lords opposite doing that is that they stick to their belief that the way to stimulate and improve the housing market and make it more affordable, and the way to stimulate the building trade, would be to release local authority capital balances acquired by the sale of council houses. I can see the considerable intellectual and political attraction of that. However, if that were to be done on any scale, which would have an acceptable effect, it would have a further effect on the other half of the economic equation. I refer to the rate of inflation. The conundrum with which all governments are faced is to pull off a balancing trick between restarting the construction industry without increasing inflation. I agree that the construction industry is, and always has been, the motor of the economy. When you build and sell a house, you also give business to carpet manufacturers, washing machine makers and electric bulb suppliers. Therefore, that is highly to be desired.
There is a great political temptation at any moment of political exposure or risk to restart that engine in order to achieve an improvement in the short-term political position. I think that the Government deserve commendation for resisting that in the knowledge that the medium-term result would be an acceleration of inflation.
291 The noble Lord, Lord Williams, being an economist, will doubtless destroy my case at the end of the debate and I shall be unable to reply to him, but I might as well make my case so that he can do that. He may find it a little more difficult than he thinks.
The effect of releasing significant sums from reserves in that way would be to accelerate inflation, which would increase the level of both rents and mortgages payable, and so increase the number of people who are unable to find affordable accommodation. That is not the way to break the circle. I believe that in a period of world recession which is almost unprecedented—it is certainly unprecedented since the Second World War—to have achieved a continuous reduction in unemployment for the longest period since the Second World War and to have maintained low levels—
§ Lord Elton
My Lords, the reduction in unemployment has been consistent over a long period. Noble Lords opposite are crowing because the rate of reduction is now slowing down. However, there has been a real achievement. I am glad to have the Opposition talking among themselves about this. No doubt that will enable them to have a uniform reply at the end of the debate.
In the meantime, I want to make the point that the Government have kept their heads in difficult circumstances and have maintained an economy in which it will be possible for the construction industry to return to growth. I declare an interest as a director of a company which runs the biggest building materials and handling exhibition in the English-speaking world, and I have as much interest as anybody in that industry returning swiftly to profit. However, I would not want that at the cost of the national interest. I would not want to prejudice the beating of inflation and of unemployment in the long term.
There are also less central issues. The noble Lord, Lord Ezra, raised one which is close to my heart. I refer to the House Condition Survey. I became interested in this area back in 1986 when there was an earlier House Condition Survey. I remind the noble Lord that we have always had a problem with maintenance. It fluctuates, and the situation is not good now. However, I commend to the Government measures which will enable both the private and public sectors, and housing associations which fall between them, to recover some of the lost ground of maintenance. Anybody who has been responsible for a house knows that if you delay spending £5 for a year, you will find yourself spending £50. Therefore, assistance to those bodies which tackle that problem is money exceedingly well spent. If there are means of assisting the local authorities to improve the maintenance of their housing stock, they should be taken.
That could be done in association with another of the Government's cherished projects. I refer to the activation of the voluntary sector. Your Lordships will have seen the document Make a Difference and the resources being put by the Government into the voluntary sector. There are voluntary agencies working in the maintenance area. I have the honour to be president of the Upkeep Trust, 292 which is a very small body which has a large effect by training housing associations and local authority officials in the diagnosis of maintenance needs and the management of maintenance. It also seeks to educate the private home-owning public in elementary matters such as emptying gutters before you start getting wet rot in the ends of your roof. That sort of effort can, at minimal cost, have a very considerable effect on the cost of maintaining our housing stock. Therefore, it adds to its value and consequently to the resources available for new and refurbished dwellings, which is what this debate is about.
I hope that my noble friend will not be rattled by the attack of the noble Lord, Lord Williams, on the thesis that you have to control capital expenditure from public sources in order to control inflation. I believe the Government have got it right and I hope they continue.
§ 4.21 p.m.
§ Lord Ewing of Kirkford
My Lords, as distinct from the noble Lord, Lord Elton, who observed that my noble friend Lord Dean of Beswick, sitting as he is on the Opposition Benches, could not he expected to give the Government undue credit, I fully expected the noble Lord, Lord Elton, to give the Government undue credit. However, if ever a government were not due any credit on housing, it is the present Government. The housing market—housing for people in general—is in crisis in this country. I bring in support of my argument statistics of just yesterday in Scotland and of today in relation to the whole of the United Kingdom. Yesterday, the Scottish Federation of Housing Associations, in conjunction with Shelter, published the findings of a survey carried out on their behalf by Gallup showing that nine out of every 10 respondents put housing higher than health and education on their list of concerns. In other words, housing is now people's greatest concern. That is manifesting itself in all sorts of situations over the length and breadth of Scotland.
In your Lordships' House today we were given a response on the question of the increased number of house owners suffering from the ever-growing disease of negative equity. The number has increased, on the Government's own figures, by 200,000. When I hear the noble Lord, Lord Harding, say, "Well, some people are going to lose their house this year and unfortunately nothing can be done about it" it takes me back to my political roots. Housing is now, as it always has been and always will be, a social question. Therefore it will need a government with a social conscience to deal with the problem. I give one further statistic, published the day before yesterday by the Scottish Council for Single Homeless. Every day of every week five elderly people join the homeless queue. When, at a press conference, it was asked what was meant by elderly people, the age group given was 60 to 80 years of age.
That is a new dimension of homelessness. We have always taken the view that homelessness was a major problem among young to middle-aged people. Yet in Scotland—I do not know the figure for England—five elderly people every day of every week join the homeless queue. That is an absolute scandal: in 1995 no government should try to defend that position. The problem has arisen because the Government do not believe in social housing. Indeed their whole objective 293 since being elected in 1979 has been to remove housing from the control of local authorities. I am sorry that the right reverend Prelate the Bishop of Oxford is not with us now because in many ways that was the wrong reason for setting up the housing associations. The Government are using housing associations—in Scotland, through the vehicle of Scottish Homes—to remove houses from the control of local authorities. The evidence exists. The noble Earl the Minister will know that when Scottish Homes, formerly the Scottish Special Housing Association, comes to dispose of its stock it fights might and main to stop local authorities being on the ballot paper as an option for a tenant transferring a house. There is only one instance that I know of in Scotland where a local authority has been included on the ballot paper as art option.
So we have this major problem. It is easy to identify, but I share with the noble Lord, Lord Ezra, the belief that we have to modernise the existing housing stock. Yes, we need new build. I leave to my economist friend on the Front Bench the job of demolishing the argument of the noble Lord, Lord Elton, regarding the capital sums that local authorities have and how they should be used. We certainly need new build but we also need to modernise the existing housing stock. Some of that housing stock, built in a hurry for perfectly good reasons at the end of the Second World War, is now in a bad state of repair and desperately in need of modernisation and of upgrading.
We need to allow local authorities to be involved in new build. I support the housing associations in what they are doing, although I have one reservation about them. That concerns what I describe as the gap site developments. Some of the sites that housing associations have been given to build houses on are simply not suitable for the building of houses. I see that in Kirkcaldy every day as I pass a development at a busy traffic junction. The only advantage is that you can plug your standard lamp into the traffic lights. It really is not on for housing associations to be given difficult gap sites on which to build houses. That is just storing up problems for the future.
There is a serious shortage of housing for people with disabilities. We need to concentrate much more on barrier-free housing. I know of patients being detained in hospital for week upon week upon week because there is not a house to which that patient can be discharged.
My final point relates to the sale of council houses. I shall say something now that I know will not be popular, not even with some of my noble friends. I have never known anything to be so socially divisive in all my political life as the sale of council houses. I have known families who lived happily together for 40 or 50 years but as soon as one member of that family purchased a house they stopped speaking to each other. A six-foot high fence is built and they are away to the council to claim that the driveway is theirs and theirs alone. Lifelong friendships and the social cohesion of communities have been destroyed on this myth of the sale of council houses. I feel that we are talking among ourselves here, and I do not believe that the Government will attempt to solve the 294 problem. I hope, however, that when we get a change of government we can make a beginning on the massive job that requires to be done in housing.
§ 4.29 p.m.
§ Lord Howie of Troon
My Lords, I am extremely glad that my noble friend Lord Dean put down this Motion. Apart from anything else, it gives me the opportunity to congratulate the noble Lord, Lord Elton, on a quite remarkable speech. He knows that I hold him in high regard. With his interest in building materials, he gave us a marvellous demonstration of how to make bricks without straw. It also gives me the opportunity to draw attention to an impending construction disaster. It is that London Underground proposes to line the Thames Tunnel between Wapping and Rotherhithe with concrete. That is unnecessary. It is a desecration of a remarkable historic monument. It was the first underwater tunnel in the world, engineered by Marc Brunel, a British engineer, with his son, Isambard Brunel, as a site engineer. The tunnel has been listed as a Grade 2* monument. In a Written Question I have asked that there should be a public inquiry before the work is permitted to go ahead.
The planning director of the London Dockl ands Development Corporation has justified the passing to the Secretary of State of the application to do the work in the following words:The Tunnel requires repair and is potentially unsafe. Furthermore, it leaks. This was confirmed by the panel of independent and eminent engineers appointed by English Heritage".That was in a letter to the New Civil Engineer, a magazine with which I have been associated for the past 20 years, as many noble Lords will be aware. But it is not true. The tunnel does not leak. What the eminent engineers appointed by English Heritage said was:In our opinion the Tunnel is in remarkably good condition for its age of 152–169 years and with considerable reserves of strength, even against accidental damage".This is the important bit:With normal periodical maintenance, we believe that, under present usage, it can be expected to have a further life of comparable length".That is, the eminent engineers think that the tunnel can last for another 150 years with normal maintenance and without the extravagant lining which London Underground proposes.
I shall say just one more thing about that. I said that I had put down a Written Question. About half an hour ago I received the Answer from the noble Earl, Lord Lindsay, who is sitting listening attentively to me. The Answer is:Very careful consideration is currently being given to whether the application should be called in for determination by Her Majesty's Government. It would not, therefore, be appropriate to comment on whether a public inquiry should be held".I understand that, and I thank the noble Earl for that reply. I sincerely hope that when consideration is given to calling in the application the Secretary of State will decide that it should be called in.
§ Lord Elton
My Lords, in view of the noble Lord's earlier remarks about myself, perhaps I may ask him whether he would regard it as a help or an embarrassment if I were to say that I agree entirely with what he has just said.
§ Lord Howie of Troon
My Lords, it would not be an embarrassment to me. As the noble Lord knows, he and I have frequently agreed and we have frequently disagreed, but when we agree, we agree in an amiable manner.
Let me turn to something more general. My noble friends Lord Dean and Lord Sefton mentioned the Latham Report. It was set up some time ago by the Government to inquire into the construction industry, with the hope of making it a more coherent industry. As noble Lords will know, I am a civil engineer. I have spent a lifetime in the construction industry. It is acutely incoherent. It is a preposterous industry. It consists of a vast number of small firms (there are 2,000 firms in the industry) and a few very large firms employing the small firms, often as sub-contractors, with the problems to which my noble friend Lord Sefton drew attention.
The industry nowadays employs about 750,000 people. It used to be considerably more. And it provides something like 10 per cent. of GNP. It is an important part of our economy. But it is incoherent and inefficient. Latham thinks that construction costs could be reduced by about 30 per cent. That is one of the aims which he puts at the end of his report. He bases that on the fact that a good deal of tidying up of contractual arrangements could be made. He makes a number of recommendations as to how that could be done. There are payments, for example. A sub-contractor does a piece of work; he puts in his bill for the work that has been done and he is paid eventually. He is paid eventually—when the main contractor feels that he would like to pay him. But payment should be made when the work is done. That is one of Latham's proposals.
Latham proposes something else which is interesting. He proposes that there should be a register of consultants. As a consulting engineer I applaud that. It was, after all, one of the proposals of the Finniston Committee, of which I was a member, which reported as long ago as 1980. Needless to say, that proposal was abandoned. Latham is now making it again. He suggests a similar register for contractors and specialists. Those registers relate, of course, to public works.
The report also makes another most interesting proposal. It is that public authorities should accept tenders which offer best value for money. That is important. Noble Lords will remember that an important part of the local government Bill we dealt with a year or two ago produced compulsory competitive tendering for architects, engineers and other professional people. We argued throughout the Bill's passage that the criterion should be quality and not cost. That is what Latham recommends. It is essential that Latham's recommendations should be put into practice through legislation.
That brings me back to Finniston, because noble Lords will remember that Finniston's proposal related to the reorganisation of the engineering profession. He proposed that there should be an engineering council set up by statute. The Government left it to the profession to come together voluntarily. This is an area where voluntaryism does not work. It will not work in Latham any more than it worked in Finniston.
§ 4.38 p.m.
§ Lord Cocks of Hartcliffe
My Lords, it is said that confession is good for the soul. I am going to confess something now out of cowardice, because when my noble friend Lord Howie found out, had I not said it now, he would be more than outraged. I must tell him that I was a member of the planning committee which made the decision to which he has taken such great exception. I only wish that I was in such a condition for my age as is the tunnel.
I should like to thank my noble friend Lord Dean for giving us the chance to speak about the housing situation in this country. I hope that it will be recognised by noble Lords that I try to be as assiduous as I can about the conventions of the House, but because it is a three-hour debate I fear that at the end of it I shall have to leave because of other arrangements. I hope that I shall be excused. If it is any expiation, I am going to Docklands to try to improve housing conditions there. So it is not entirely ungermane.
My noble friend Lord Ewing of Kirkford mentioned the problems of an ageing population. There is one thing upon which I should like to touch. It is the growing debate about what happens to elderly people. It seems to me that we are moving away from what I have always regarded as a fundamental obligation—that one should look after one's parents when they become elderly. Indeed, I find it sad that these days there are elaborate articles in the financial press advising people on how they can arrange their affairs so that the cost of looking after their parents falls basically on the taxpayer and they can preserve their own means. We talk a lot about people earning a great deal of money, but bus drivers and people cleaning offices pay taxes. It is not fair for those who are better off in society to expect to off-load what most people would regard as their obligations.
Unlike many, I believe that lobbying is perfectly reasonable when it is done properly. I am sure that, like myself, many other noble Lords have received submissions from various groups about today's debate. That is perfectly legitimate and often extremely useful. But pressure groups and lobbyists sometimes develop a compartmentalised attitude and do not look at the wider picture. They pursue their own interests to the exclusion of everything else.
It would be extremely invidious of me to take an example of what I mean from any of the literature that I have received for this debate. Therefore, perhaps I may illustrate my point by reference to another group on which I have touched before in this House; that is, Charter 88.
In the Guardian of 14th June I saw this advertisement:Charter 88 Director Applications are invited for the high profile position of Director of Charter 88. the leading organisation promoting constitutional reform".Your Lordships may recall that this group believes that we are one of the most down-trodden nations of the world and that the only way in which to regain our rights is to have a written constitution so that we have rights and 297 those rights are protected. Your Lordships may say that that is fair enough, but perhaps I may read the last paragraph of the advertisement:We encourage applications from all sections of the community. Unfortunately our 3rd floor office is inaccessible to wheelchairs".That is really a case of don't do as I do, do as I say; or physician heal thyself.
People may say, "Cocks is being very unfair again" because the charity probably cannot afford to make the office accessible. But noble Lords may feel that that point is overstated when I tell the House that in the past few years Charter 88 has spent well over £½ million on newspaper advertisements.
Some of the literature that I have received has been about the private rented sector. The noble Lord, Lord Harding, mentioned that, as did the right reverend Prelate and others. That is one of the serious aspects of the problem. The Joseph Rowntree Foundation study made a number of points about the private rented sector—that it should be boosted; that most countries subsidise their private rented sectors; and that financial institutions should be encouraged to move into the private sector. Various suggestions are made as to how the situation could be improved.
However, there is a very much simpler way which I have mentioned before in this House; that is, to try to ensure that far more students take courses nearer their homes so that they do not have to move away from home in order to pursue their studies. That happens in Scotland. Most Scottish students live at home; and nobody says that Scottish education is inferior to English education. It is perfectly natural to live. at home. People say that going away to study is all part of the experience of growing up. But if that is so, it is part of the experience of growing up which working-class children are deprived of. I never hear academics and student bodies say how sad it is that working-class people cannot develop properly because they do not have that opportunity. It is a vested interest of the ablest and the wealthier children in our society.
Bristol University has been particularly bad in that regard. For more than 25 years I have pursued it to try to ameliorate its admission policy. At the moment, something like 1 per cent. of its students live at home and the rest are accommodated in the private rented sector or in halls of residence. When I was the Member of Parliament for Bristol, before a majority of my local management committee decided that I was not a fit and proper person to be a public representative, most of the problems with which I had to deal were in relation to housing. The local people were desperate for housing and yet hundreds of units of private rented accommodation were taken up by students who really did not require that luxury.
Coincidentally, this morning I received a letter from a person living in Goldney Road, Clifton asking for my support against the university. The letter refers to:the concerns of residents to the gradual encroachment of Bristol university on the grounds of Goldney House Clifton".298 Some noble Lords may know that that is a beautiful house with a wonderful grotto in the gardens. The letter goes on to say, referring to the university:They have just completed a refurbishment of the Halls of Residence in the paddock, greatly increasing the student population and there are now fears that they intend to apply for further planning on the lower slopes of the ground, as they object to the Deposit Bristol Local Plan—October 1993".
It really is time that establishments of higher education took seriously the problem. They should realise that we do not live in compartments and that their responsibilities extend to helping the least able in society.
§ 4.46 p.m.
§ Lord Beaumont of Whitley
My Lords, I too thank the noble Lord, Lord Dean of Beswick, for introducing this subject for debate today. There are so many aspects that one could talk about but I propose to concentrate on two: first, the swing that we have had from housing for rent to housing ownership and the necessity for a swing back; and secondly, the need for proper ecological and environmental housing.
In the memory of many here, we have moved from an era in which housing to rent was almost the rule for all classes to one where it is almost politically incorrect to say that you should ever wish to live in a house which is not your own. As with all swings of the pendulum, we have gone from one undesirable extreme to another.
When my grandfather, who was a younger son, married, he rented a house and lived in it for the rest of his life. It was not a small house: it was a copy of the centre block of Buckingham Palace. He rented that house for 20 years. That ability to live in rented housing went down through the tenant farmers of all the large estates through all ranges of society. It had its drawbacks, difficulties and problems caused by powerful landlords and powerless tenants. But it was still something which was taken for granted.
We reached a stage in the early stages of this Government's regime at which it was considered to be almost not respectable not to try to own your own house. That is not suited to what most people want. It has flourished on the back of propaganda which suggests that the citizens of rich countries are home owners and those in poor countries are not. That is not true. In a list of countries ranked in order of home owning, Bangladesh has 90 per cent. owner-occupancy and Switzerland has 33 per cent. Therefore, that is entirely contrary to what most people believe.
The truth is that neither extreme is desirable and we need to look at what houses are needed for. Your Lordships' House must be one of the few places left where a large proportion of people have houses which they reckon to hand on to their children. Most of us do not and our children would not thank us if we did. But to trap a wide range of the middle classes in a myth which encourages them to borrow money which they do not have on security of jobs which they may not keep in order to own their houses is extremely stupid.
However, having said that we should now go into reverse and encourage a climate of providing houses to let 299 so that families can move easily according to their size at any given moment, I should now like to pass on to discuss what kind of houses they should be. Unfortunately, I do not have time today to go into many of the important points, but I should like to dwell on one of them. It is very simple: they should be healthy for the people who live in them and for the world from which their materials come. That means being choosy with materials, but it does not mean abandoning diversity.
To stray outside of housing for a moment, St. Albans Abbey, which I gather is still in quite good nick, was built 900 years ago with what were already 1,000 year-old bricks from nearby Roman ruins. At the other extreme, many houses in California, on the other hand, are built from "gridcore", which is recycled newspapers, cardboard boxes and timber moulded to maximise strength and minimise weight. Both of those examples have more virtue in their own way than, say, the Fawlty Towers of Marsham Street.
First, we must build to last. It is a fallacy to think that we must build only to last a short time because new technology will make our old houses obsolete. It is the solid buildings which for the most part can be adapted. The standards which we use for building today are unlikely to produce buildings which are acceptable in 30 years' time, let alone 300.
We must build to last and we must build to the highest standards. At present, we do neither. The energy conservation requirements of the latest building regulations just about reach the level adopted in Sweden 60 years ago. If we adopted current Swedish standards we could reduce the amount of domestic heating to a quarter of the current average in this country.
We must concentrate on building in such a way that we can save energy without ruining the poor. Where in northern Europe housing standards are much higher than ours—and where are they not?—energy taxation which is essential if we are to shift taxes from labour to resources (which is essential for a sustainable economy) is feasible without making the poor suffer.
A whole new climate of opinion is needed before those matters can become mainstream in this country, but we have made a start. Among other things, we have made a start with the recent Home Energy Conservation Bill brought through Parliament by people from all parties but chiefly, I am proud to say, by the pertinacity of Alan Beith, Diana Maddock and my noble friend Lady Hamwee, who is to speak shortly. Let us build on that start and move in that direction, remembering that to build cheap and nasty now is to lay up disasters for the future.
§ 4.52 p.m.
§ Lord Haskel
My Lords, I too am most grateful to my noble friend Lord Dean for giving us the opportunity to debate housing. My noble friend is a very lucky chap because it is such a topical matter. Indeed, it was very good of him to suggest such a topic at this time. Fifteen years ago home ownership equalled security. It was encouraged because it was right to give people a stake in society. But good things abused become disasters. That is what happened with housing. It became a lottery.
300 Financial deregulation and the favourable point of the economic cycle allowed households throughout the UK much greater access to credit. This, and tax incentives, fuelled a rapid rise in house prices. With house prices rising inexorably at the beginning, it was a one-way bet. You borrowed from the banks; you bought a house. The value of your house rose without any action on your part. Although it helped, you did not actually have to look after your asset—the value went up faster than it depreciated. Contrary to what the noble Lord, Lord Elton, said, government policy during the 1980s did not ensure that there was more and better housing. What it ensured was that the price of houses went up and up.
Unlike the National Lottery, everyone won or appeared to win at the beginning—home owners, banks, the Government (they won votes), the estate agents, the builders, and the DIY suppliers. Everyone benefited. Many people sold their houses and took profits. Some £20.4 billion of equity was withdrawn at the peak in 1988—certainly a boost to consumption but, I would ask the Minister, what additional resources were being created? Much of the economic boom of the 1980s was based on house price inflation. People withdrew equity on the increasing value of their houses to fuel a spending boom. But what new capital was created? Where is the new wealth now? Where are the new factories, services and infrastructure?
Nothing was created. Prices simply rose and some people won. Now it is the loser's turn in that lottery. As my noble friend Lord Dean said, repossessions are running at nearly 1,000 a week. Moreover, 117,000 plus households are more than 12 months in arrears with their mortgages. Negative equity is estimated at some £8.5 billion and rising.
It does not take much imagination to appreciate the human misery caused by the distress of either losing or being close to losing your home. Homes and jobs are the two pillars on which the lives of most people rest, and repossessions are increasing. There are thought to be nearly 1 million home owners whose houses are worth less than the mortgage taken out on them. Last week we learned that the building societies, insurance companies and banks are adding to the problem by levying extra charges on those in trouble. Measured in human misery, they are very high numbers indeed.
What are the Government doing about it? They seem determined to make a bad situation worse. We have had reductions in mortgage interest tax relief from a high of 40 per cent. to 15 per cent. now but that overlooked the fact that mortgage interest tax relief was built into the price of a house. The reduction in that benefit is reflected in reduced house prices. Added to that is the reduction in income support for mortgage interest payments for those who are unemployed from October. That means that mortgage lenders will be faced with either insuring themselves or making insurance a condition of lending.
The initiative by the Skipton Building Society is helpful but once it ceases to be a competitive advantage and all firms do it it will simply be added to the cost. I can tell the noble Lord, Lord Harding, who called for compulsory insurance, that insurance companies estimate that it will add some £22 a month to the cost of an average mortgage. Even so, the Minister knows as well as I do that 301 insurance for mortgage risks is extremely difficult, if not impossible, to define. I am therefore not surprised that two-thirds of the people who have taken out the insurance found, when they came to claim, that their claim was rejected. Let us not forget also that insurance premium tax has to be added.
I am not criticising those actions. I am criticising the timing. When a company or an industrial sector is in trouble, government should not add to the difficulties. Yet at the very time when we need to sustain housing the Government have chosen to add to the problem. In doing so they have turned a problem into a crisis. The situation is made worse by Ministers, and some noble Lords opposite, giving uninformed or biased opinions about whether now is or is not a good time to buy a house.
It seems to me that the Government could do a number of things. The first is to remember the wise counsel of my noble friend Lord Healey. If you are in a hole, stop digging. They should therefore stop playing around with mortgage interest tax relief. The next thing they could do, which is part of Labour policy, is to allow a phased release of the housing capital receipts in the possession of local authorities. I disagree entirely with the noble Lord, Lord Elton, but I do not have time today to explain my reasons to him. The money could be spent on affordable rented accommodation. Private sector building for rent is not replacing public sector housing which has been discontinued. The resources are available; they simply have to be harvested. A further action the Government could take is to help first time buyers on a limited scale and for a limited time.
I hope that the Minister will not be blinkered to the usefulness of Labour proposals in solving the current problems. Our policies are designed to promote a stable housing market, not a lottery, and a real choice for people in the rented sector. That is what we call social justice.
§ 5 p.m.
§ Lord Desai
My Lords, one of the advantages of being almost the last speaker in a debate is that practically everything one wanted to say has already been said. I am not an expert on any practical matters, unlike many of my noble friends, and therefore I shall stick to theory. Indeed, the housing tragedy that we are currently facing, as my noble friends have pointed out, is very much a sad story of dogma and half-baked economic theory.
I first arrived in this country in 1965. Until then I had lived mainly in rented accommodation, some of it in the public sector and some of it in the private sector. It was only when I arrived in this country that I realised there was a great belief that to own a house was somehow better than to rent it. If one wants housing services, a shelter, comfort and accommodation it should make no difference whether one buys a house or rents it, or whether the house is in the public or private sector. One should have choice in that respect and one should get on with it. But already by the early 1960s the tax structure was being badly manipulated to subsidise ownership relative to renting.
When the noble Baroness, Lady Thatcher, became Prime Minister in 1979 that bias was twisted further and deeper because she was convinced, first, that home ownership was absolutely a sacred goal of public policy, 302 if not a virtue in itself, and, secondly, that in order to aid it interest rates had to be so manipulated that home owners would always feel cushioned and protected.
At the same time, mortgage relief was not seen to be a subsidy to the home owner. Home owners were not considered to be scroungers on the public budget—oh no! However, council tenants were considered to be scroungers on the public purse because it was thought the subsidy to council tenants was a great distortion. That again is a fallacy but we shall deal with many fallacies as we proceed. Through the 1980s the subsidies to council tenants were reduced mercilessly and the subsidies to home owners were increased. Indeed, by the time the noble Lord, Lord Lawson, embarked on his 1987 and 1988 budgets the distortion to home ownership was so exaggerated that double mortgage reliefs were being given.
The double mortgage relief given, I believe, in the budget of 1988, was the single most important case of almost criminal folly in economic policy making because that pressed people into buying when they could not afford to do so. It pressed people to buy property at prices which they could not afford. At that time Government policies were fuelling inflation, regardless of all the talk about monetarism and all that sort of thing at that time. Inflation was accelerating and many people entered contracts which any prudent government would not have let them enter into.
Anyone who really believes in the market would have said long ago that these kind of distortions constitute a major diversion of economic resources away from what not just a country needs but what individuals need. To that was added the sale of council houses. People who had never before been in a position of indebtedness became indebted, little realising that even after concessions the prices they were paying for their council houses were inflated. In the late 1980s after having had two bouts of double digit inflation in 10 years—when finally, and quite prudently, it was decided that the country had to put its economic house in order and join the exchange rate mechanism—it should have been known by anyone (as I said publicly) that what occurred was a great deflationary shock and that the country was not used to deflationary shocks. The negative equity which we are witnessing now is, in a sense, basically the simple consequence of trying to adjust to a much lower level of inflation than we had before.
In a world like we have today, home ownership or renting makes absolutely no difference, or should make no difference. Of course the Government will say, "But that is our current policy" forgetting that all the previous policies were also their policies. The Government will say, "We are going to encourage a private rented sector"; but where is the private rented sector? It has not arrived on the scene. While they have wrecked the public rented sector quite badly by selling off council houses and not allowing the building of new council houses, the private rented sector has not arrived on the scene. People with negative equity cannot sell their property and cannot move. People with incomes which are not rising very fast cannot afford to buy, even while prices are stagnant, because mortgage interest relief—quite rightly in my view—has been severely cut. That is why the problem of 303 homelessness occurs with the old and with the young. The old are becoming homeless because they have negative equity or they cannot service their mortgages as their incomes have fallen. They are being thrown out. The young cannot afford to buy houses because mortgage interest relief has been so drastically cut.
It would be easy in the circumstances—if sense prevailed—to say, "OK, let us build for the time being a sufficient amount of low cost housing, either through the public or the private sector". There is no question of resources. I will not go into the fallacy mentioned by the noble Lord, Lord Elton, as regards the PSBR. Even if it were true that releasing council receipts would add to the total demand, given the excess capacity of the construction industry which many noble Lords have referred to, it would not cause inflation. But let us not go into that. As I said, there is no shortage of resources but there is a shortage of good sense. We ought to be able to say, as my noble friend Lord Ewing said, that housing is somewhat special. It is not like hamburgers; it is a commodity which has special social consequences. It is society's duty to provide decent housing for everyone at a price that people can afford. After that one can discuss choice, variety, the provision of big or small houses, good architecture and other such matters.
The population of this country is by and large stagnant—it is not galloping—and it should not be beyond our imagination to provide housing in sufficient quantity for those who need it. People are living longer and people want more sophisticated housing, but there are not that many extra families to house. What we need is good sense in this matter. Given the record of the present Government, good sense would require a new government.
§ 5.8 p.m.
Lord Bruce of Donington
My Lords, this is the third or fourth time over the past two years that the House has been grateful to the noble Lord, Lord Dean, for having raised this important question. One rather hopes in view of the very factual speeches that have been made on all sides of the House that we can have reasonable replies to the questions that have been raised. It will no longer suffice to be informed that in real terms it is the intention to spend a billion over the next five years or that the position since 1987 has vastly improved. Serious questions have been raised which need rather more than the ambiguous reply that we customarily receive at the end of important debates like this.
Noble Lords opposite were not assisted by the noble Lord, Lord Harding of Petherton, who rather admitted that the Government had been seriously at fault in encouraging home ownership by a sustained campaign in the 1980s. He suggested that we ought to put that behind us and move on to better things. We entirely agree.
As for the noble Lord, Lord Elton, who gave us a dissertation on inflation, he really ought to examine his facts again because he talked complete nonsense about inflation. I am very glad that the noble Lord has now resumed his seat. He was obviously completely unaware that during the period immediately following the war, 304 until 1974 and the quadrupling of the price of oil, the rate of inflation in this country, under all governments, averaged around 2½ per cent. It was the quadrupling of the price of oil that gave the initial boost to inflation. Until that time, despite the great difficulties, every government, including those of the noble Lord, exceeded the miserable record in house construction that has been achieved by this Government over the past 15 years. They have not really tackled the problem at all.
Those are problems that have been dealt with more than adequately by my noble friends. I observe that there are 11 speakers from my own Benches, three from the Government Benches and three from the Liberal Democrat Benches. We have already heard an important speech by the right reverend Prelate, who brought the fundamental issues before the House.
I want to address myself to one matter on which the Government may themselves be able to act now. Even if they had a wholesale reformation of thinking, even if they had a sudden access of intellect and even if they were prepared to abandon their prejudices, the Government could not influence in the next three weeks or so the rate of increase in the construction industry or in housing in the United Kingdom. I have not consulted my noble friends on either Bench on this issue, but there is one thing that they could do if they were so minded. They could deal with the whole question of repossessions.
According to the Department of the Environment's own figures, repossessions are likely to increase over the next few months. Already there have been 300,000 repossessions in the UK, affecting some 700,000 individuals. There is a way of stopping that. The building societies and banks do not have to repossess. Nobody forces them to. They could wait without any great difficulty. Indeed, if they had the same degree of faith in the Government's economic policies as the Government themselves affect to have, they could lay off for a year without any difficulty until the long-promised recovery, if it ever materialises, takes place. It is not as though the banks were forced to seek repossessions: it is in the control of the banks themselves.
Perhaps I may refresh the memories of noble Lords on this subject. Immediately following the oil glut in the Middle East, the banks rushed to compete with one another to lend money to developing countries, followed hard on their heels by arms manufacturers. They were only too pleased to supply those countries. That situation speedily deteriorated to the point where the banks themselves had to write off billions of pounds owed by other countries.
There is nothing stopping any bank writing off loans that are due to them here, or part of them. The Government could lean on them if necessary. It is not as though the banks do not help other people. I see that the banks stepped in to prop up Barings, particularly the directors and shareholders. They will prop up anybody provided they have sufficient funds already or belong to those particular strata of society with which the bankers have something in common. Therefore, there is nothing to stop the banks and building societies holding their own moratorium on all repossessions.
305 Instead, at the moment where arrears occur, building societies and banks levy what they call administration charges on those who are already suffering negative equity. Those charges may amount to £140 to £112 a year extra. They also charge interest on interest. That was prohibited as long ago as 1927 by the passing of the Moneylenders Act. Therefore, it lies within their own power.
Surely the Government, who are always busy putting forward the value of guidance and codes of conduct, could lay down codes of conduct for banks and building societies indicating how they should behave during what the Government believe will be a temporary period. Surely they could do that. If they do not do even that, they might as well say "Goodbye".
§ 5.16 p.m.
§ Baroness Hamwee
My Lords, I too should like to thank the noble Lord, Lord Dean of Beswick, for introducing this debate on housing needs, and on financial institutions and the construction industry—matters on which we have sometimes touched peripherally.
I was privileged to introduce a debate on housing and homelessness a year ago. I thought that I would remind myself what the Government had to say then on the topic. On that occasion the then Minister said that:the broad aim of our housing policies is that a decent home should be within reach of every family. We have taken steps to increase the supply of housing where it is most needed, by securing better value for money in the public rented sector and by promoting the private rented sector".—[Official Report, 8/6/94; col. 1284.]
My noble friend Lord Rodgers of Quarry Bank asked the Minister during the debate whether the Government had a housing agenda and challenged him by suggesting that there was no housing agenda. The Minister's answer was that the Government had such an agenda—they had the Housing Corporation.
The Government may have a vision, but it is not my vision. It is certainly not translated into any kind of agenda or plan to do anything but reduce spending without tackling the causes of the problem. It seems to me that all sectors are suffering at the hands of the Treasury and its short-term thinking—housing associations, local authorities, private landlords, mortgage lenders and all those who occupy their own property. To use current jargon, I suppose it is a level playing field.
A year ago we also considered a report by the National Housing Forum—Papering over the cracks—on housing conditions and the nation's health. It was an excellent report. It reminded us why housing conditions matter, posing a serious problem for society as a whole as well as for individuals. It reminded us that housing is a capital asset which should be preserved and that investment in housing renewal could be an important component of economic recovery, renovation work being labour intensive and the majority of materials used being made in Britain.
The report made a number of recommendations to the Government. It proposed that,Within the next twelve months
—that is the 12 months which have now expired— 306the government should develop a broad strategy for private sector housing renewal and set national targets for tackling the backlog of unfitness and disrepair in the housing stock over the next ten years".It suggested that,Financial institutions…should take on a responsibility for local communities by promoting and stimulating investment in housing renewal in a range of ways".It also suggested sponsorship of home improvement agencies and the provision of finance to housing associations for renewal projects.
I welcomed that report because housing is not just a numbers game. It raises the question of what has been achieved over the past year. The fact that the forum felt it necessary to report on the connection between housing and economic renewal speaks for itself.
The Joseph Rowntree Foundation—as your Lordships know, it does splendid work in the area of housing—has reported extensively on the connection between housing renewal and construction expenditure. Among other reports, it has made important points about the local connection: that very few local businesses have been created or enhanced; that training programmes are inadequate; and that therefore if there is an amount of work its effect does not last. The work is undertaken but the jobs do not remain.
That is particularly sad given that the physical regeneration of disadvantaged areas, in particular urban areas, involves the expenditure of millions of pounds. This is a major opportunity not only to undertake a specific scheme of work but to invest in the area for generations. It seems that little sustained economic benefit results for local residents.
The Joseph Rowntree Foundation has also reported extensively on a matter which, with other noble Lords, I feel is one of the most urgent: the supply of privately rented accommodation. The study stated that,Private renting … is a small business; over half of privately rented housing belongs to small-scale individual landlords; only a quarter is owned by companies".
Your Lordships will recall the Business Expansion Scheme. Through the BES, 903 companies raised £3.4 billion and provided 81,000 dwellings at a cost to the Exchequer of only £1.7 billion of tax foregone. I say "only"; I recognise that these are large sums, but the prizes are large, too.
The Joseph Rowntree Foundation study—it was a study by academics at the Universities of Sheffield and York—asked the financial institutions about private renting. Those institutions responded that the political risk and the image were major deterrents. Pension and life funds said that even if returns were good, political risk and image would deter them.If returns were enhanced through subsidy, this would not necessarily induce investment, because subsidies were too subject to change over an investment's lifetime".In other words, they were asking the Government to consider the whole grant regime.
Banks, too, were cautious. Building societies were more positive. Provided that financial assistance, particularly in the form of grants, was available—I make the point again because it is an important issue for the Government to take up and act upon—they would he willing to lend.
307 What are the Government doing to develop ideas for stimulating the sector? Organisations such as the Joseph Rowntree Foundation do splendid work, but we cannot leave the whole area of ideas to the private sector. If the Government have no ideas of their own, I am sure that they would be welcome to plagiarise the ideas of the private sector. But they must get on with the work.
Other noble Lords have said that we attach too much importance to ownership. I so much agree with my noble friend Lord Beaumont of Whitley. We attach importance as a society to ownership. The Government certainly do so. But there must be many families in this country which wish that they had not owned their homes. Over a quarter of a million homes have been repossessed since 1988. That gives only the smallest indication of those families which are teetering on the brink, or those people whose jobs have been affected because they cannot move. One has to couple that with the fact that public housing investment has fallen by 37 per cent. in real terms since 1979–80. In the past year total investment in social housing was at its lowest level in real terms for several decades.
I am not just interested in government research. I should also like to know what the various government departments have to say to one another; and in particular what the Department of the Environment has to say to the Department of Social Security regarding plans for housing benefit, the results of which, it seems, we shall experience shortly. I believe that the Department of the Environment must share the concern of many of us that the greatest effect of the changes will be to depress the private rented sector.
We have heard views on the use of capital receipts held by local authorities. The noble Lord, Lord Elton, spoke of the restriction in order to hold down inflation. I doubt that that argument would attract those in housing need. It does not attract me. I confess myself to be of the tendency which thinks that a good use of resources is indeed a motor of the economy. I thought that the restriction was because central government were determined to reduce the capital base of local government.
Finally, we talked of the "motor" of the economy. We know how other motors—new motor cars—drop massively in value the first time that they are driven away. But the purchaser of a car knows that that will happen. The purchaser of a car has options. Many who are buying housing—I refer to buying in the broadest sense—those who are acquiring housing, find that they have paid for a high performance item and are left with something far more modest. I do not suggest that it is at the level of a clapped-out Mini, but it cannot be resold. Those people have no opportunity to acquire on HP or lease purchase. The Government need to explore all the options.
§ 5.27 p.m.
§ Lord Williams of Elvel
My Lords, the House will be grateful to my noble friend Lord Dean of Beswick for introducing the debate. Perhaps I may say at once, I hope not impertinently, how impressed I was with the speech of the right reverend Prelate the Bishop of Oxford. If I may say so, he put his finger absolutely on the problem.
308 The facts which have come out of the debate—they are facts to which we have to pay attention—are that home owners have endured about six years of crisis marked by falling house prices, negative equity, mortgage debt and repossessions. The housing market itself is depressed. Housing sales in April, a key month in the house buying season, were the worst ever recorded. New house building has been badly hit. Starts in the latest quarter are 14 per cent. down on 1994. The rented housing programme has been drastically cut. Housing association starts in the latest quarter are 35 per cent. down on 1994, and the output of rented homes is expected to fall below 20,000 this year. That is the worst figure for 50 years.
At the same time, tenants of councils, housing associations and private landlords have been faced with disproportionate rent increases forcing ever larger numbers into dependence on housing benefit which is also now being targeted for cuts. In England alone, 1.5 million homes are unfit for human habitation and a further 3.5 million need urgent repairs. Home renovation programmes have almost ground to a halt. A decade ago over 200,000 grants were being awarded each year. The total is now down to 40,000. Long queues are forming in most areas. One hundred and sixty thousand households were accepted by local authorities in Great Britain as homeless last year and there are many more mainly single and childless people whose needs are not reflected in the official statistics. In terms of national expenditure on housing investment, Britain lags 21st out of 22 OECD nations spending just 2.9 per cent. of gross domestic product at the latest count. That contrasts with Germany spending 6.1 per cent. of GDP; France, 5 per cent.; and Italy, 5.3 per cent. Those are the facts.
As many noble Lords know, the construction industry is flat on its back. Latham has not been implemented and there is no sign that it will. As my noble friend Lord Bruce said, the banks and building societies joined in a chase for assets, jumping into the housing loan market. As he rightly said, they do not have to repossess. They can adopt what my noble friend Lady Hollis suggested when we were debating the ill-fated leasehold enfranchisement Bill. It was not a rents-to-mortgages scheme but a mortgages-to-rents scheme. If my noble friend will forgive me, his idea was not original. It came from my noble friend Lady Hollis some time ago when we debated that Bill.
The Government have gone even further and seem to wish to talk down the whole housing market by the business of removing income support. The point here is not just that they are attacking the most vulnerable people. We know that; it is normal for this Government. It is that by introducing such a measure, they are talking down the house price market and therefore talking up negative equity.
There are a number of wild fantasies about remedies for the situation. As my noble friend Lord Haskel pointed out, mortgage protection insurance is a hopeless idea. According to the Association of British Insurers, no serious insurance company would adopt such a scheme and I personally cannot see a market for it. We have now heard about the Skipton solution. The Skipton Building Society has 0.5 per cent. of the house financing market. It 309 has suddenly apparently come up with a scheme that will cost money, if indeed it works. I doubt very much that it will.
The situation is one of crisis, and we must consider carefully what we do about it. I shall not join in the debate with the noble Lord, Lord Elton, about capital receipts and inflation. I am sorry that he was not in his place when my noble friend Lord Desai seemed to swat that one aside. He was followed by my noble friend Lord Bruce of Donington. Rather like Jonah Lomu running through Tony Underwood last Saturday, my noble friend marched straight through. So I do not believe that I need worry too much about the arguments of the noble Lord, Lord Elton.
If we are to restore any confidence in the housing market, we must insist on the immediate withdrawal of the damaging plans to withdraw the income support safety net. We must insist on a phased release of some £6 billion which councils are currently prevented from reinvesting in housing in one form or another. We must build on a framework of public/private partnership such as local housing companies to attract additional private investment within a framework which ensures local accountability, as the noble Baroness, Lady Hamwee, pointed out.
In those circumstances, we must examine what the government reaction is. We are told that there is to be a housing White Paper. Of course, at the moment we do not know what will be in it, but, as always with government documents, there have been a number of leaks. We must assume that the leaks are genuine and that what appears in the leaks will appear in the White Paper.
The first point which I understand is under consideration is the removal of existing statutory safeguards for homeless people and their replacement with a weaker framework in which local authorities may be able to discharge their responsibilities simply by offering a short-term insecure letting in the private sector. I understand that that will appear in the Government's White Paper. If so, I can assure the noble Earl that he will have a fight on his hands because it is unacceptable.
We also understand that in the White Paper the current framework for home renovation grants, about which the noble Lord, Lord Ezra, spoke, introduced by the Conservatives themselves only six years ago, will be changed in favour of a discretionary scheme with few incentives to achieve an effective renewal policy. The extension of housing association grant, we hear, is to private developers which will spread an already inadequate budget even more thinly and thus risk depressing standards.
There will be a scheme to allow some housing association tenants to buy their homes, to get the Prime Minister off the rather nasty hook he got himself on by insisting on the right to buy for housing association tenants. The measures may include the distortion, if I may put it like that, of a perfectly sensible idea for local housing companies, simply making it a vehicle for privatisation rather than a positive measure to encourage public/private partnership. The introduction of probationary tenancies is another proposal which I understand is under consideration in the White Paper together with a token scheme for tackling fire hazards.
310 In none of that, apart from the most offensive parts, do we see anything like a long-term strategy. I join the noble Baroness, Lady Hamwee, in saying that the housing crisis cannot be solved by short-term palliative measures. First, we must recognise that housing is a social need; it is not just another market. Secondly, we must recognise that the fundamental problem facing us, which we must solve as quickly as possible, is the problem of the most vulnerable in our population, particularly the homeless. That must be done. Thirdly, as the noble Lord, Lord Beaumont, pointed out, we must recognise that demographic changes are taking place in the population. We must plan for them on the basis of a seriously constructed housing budget.
Instead of that, what we get from the Government is panic. I understand that; I should be in a panic if I were in their situation. However, that is not a proper response to housing policy. It may be a response to the opinion polls, but it should not lead the Government simply to try to stitch together things which they think might tomorrow win them a few marginal seats in this, that and the other part of the country. We need a long-term, properly constructed, sensible policy and strategy to combat our housing crisis. If the Government will not do it, then we shall.
§ 5.37 p.m.
The Earl of Lindsay
My Lords, I wish to begin by thanking the noble Lord, Lord Dean of Beswick, for bringing to the attention of the House important issues concerning the demand for housing and how it should be met.
I have listened carefully and with great interest to the points made by noble Lords. Many of them spoke with as much experience as perhaps prejudice—I am not sure. The noble Lord, Lord Williams, was so keen to talk down some of the more positive points made by my noble friend Lord Elton that he forgot that his noble friend Lord Bruce apparently does not like the ambiguity of figures being thrown about on how much money is spent, how the figures are decreasing and so on. The noble Lord, Lord Williams, has thrown down that gauntlet and I shall reply with some of the commitments that the Government have and some of our achievements.
Most people find their own home with no help from the Government. The construction industry and financial institutions ensure that demand for new homes can be met. The role of government is, on the one hand, to create the right economic circumstances for the market to operate effectively and, on the other, to ensure that help goes to the people who need it.
Despite what the noble Lords, Lord Ewing and Lord Beaumont, said, most people prefer to own their own homes, and there can be no doubting the success in expanding owner-occupation. It has increased from 56 per cent. in 1979 to 68 per cent. today. Research shows that the overwhelming majority of people are pleased to have bought their own homes under the right to buy.
A number of noble Lords, including the noble Lord, Lord Desai, addressed some of the fundamental issues of home owning. The Government remain committed to promoting sustainable home ownership. Buying a home remains a sensible investment for most families. It is an 311 investment not in a speculative, get-rich-quick sense but an investment in choice, independence and control. It is an investment in security, particularly later on in life when the mortgage has been repaid. As some of my noble friends pointed out, now is the time to buy. House prices are at their lowest in relation to incomes since 1985, which is good news for first-time buyers.
A lot of concern was expressed—it was initiated by my noble friend Lord Harding of Petherton—about those households in negative equity. The Government, of course, share this concern. However, the problem is a direct result of past unsustainable house price inflation and is a painful reminder of the reasons why the Government are determined that there will be no repeat of the late 1980s. The noble Lord, Lord Haskel, referred to that period. Negative equity will decline as house prices edge upwards in line with price movements in the economy as a whole. The number of households affected by negative equity is now significantly lower than it was in 1992.
It is pointless pretending that income support offers an all-encompassing safety net for home owners in difficulty. It does not and it was never intended that it should. There has to be a balance between state and private insurance. What is needed is comprehensive, reasonably priced insurance products for the benefit of all home owners. Despite the cynicism of some, there are signs that a positive and innovative approach is now emerging from the insurance industry and that the services that the industry will be able to offer will provide protection for most home owners. The proof is perhaps in the fact that repossessions are now falling. They have fallen by over 36 per cent. since the 1991 peak. Arrears of six months or more are down 21 per cent. year on year. At the moment, average mortgage repayments are £130 below those that existed in October 1990. A lot of that has to do with the Government's economic policies. The little exposition of my noble friend Lord Elton in this area underpins much of the success.
The right reverend Prelate and others spent much time discussing rented housing concerns. The Government realise that not every household will want, or be able to afford, owner-occupation. The Government are committed to increasing the supply of homes for rent and to providing new opportunities for such households. In particular, the Government are keen to expand the role played by the private rented sector. The noble Baroness, Lady Hamwee, paid particular attention to that area. A healthy private rented sector is a vital partner in promoting sustainable home ownership. Young people should not have to rush to buy a home because no rented homes are available. Private lettings can also provide homes for people who have to move for their job. They can also provide good quality homes for those in particular need.
Apart from the initiatives in this area, I point out to the noble Lords, Lord Ezra and Lord Williams, that the situation in regard to housing renovation grants is not nearly so dire as they stated. I believe that the noble Lord, Lord Williams, gave an inaccurate figure. I know that over 90,000 renovation grants, including disabled facilities grants, were approved in 1994–95, representing 312 £433 million worth of public expenditure. I also point out that the present means tested grants system introduced under the Local Government and Housing Act 1989 was to target resources on the most needy households and on the worst condition housing. If there is any adjustment in the terms and conditions of such grants, it is in order to target those resources that are available in the most efficient manner.
The noble Lords, Lord Ezra and Lord Beaumont, were both concerned about energy efficiency and the general improvement of the condition of housing. Both noble Lords know very well that the Government are committed to improving both those features in housing. The range of programmes and measures in place to improve and promote energy efficiency across public and private housing sectors are numerous. Both noble Lords must be aware of the home energy efficiency scheme, which pays for basic insulation, draught-proofing and so on for housing for low-income, disabled and elderly residents.
The noble Lord, Lord Ezra, painted an unnecessarily gloomy picture about the condition of the housing stock. There have been considerable improvements in the past few years across a wide range of features, with many people being generally better housed than they were in 1986, with improved levels of amenities, a wider use of central heating, more homes with double glazing and less overcrowding.
§ Lord Ezra
My Lords, is it not a fact that the resources available for home improvement have fallen very substantially—by three-quarters over the past 10 years? Even though the 1989 Act provides for mandatory and discretionary grants, the resources available to local authorities have fallen to such a low level that very few of those can have effect.
The Earl of Lindsay
My Lords, the Government continue to commit significant resources to home renovation grants and other improvements in this area. As I have already stressed, even if the width, as it were, and quantity of this stream had been better defined, the accuracy with which we are delivering the benefits is considerably better. In terms of cost-effective delivery, the situation is much better now.
With continuing constraints on public spending, the Government are aware that they must consider carefully how best to use the resources at their disposal to ensure that maximum benefit is being obtained for those in need from every penny of public money spent. That is why, since the mid-1980s, the balance of subsidy has shifted away from "bricks and mortar" to suppliers, and has moved towards personal subsidy of rents in the form of housing benefit. That means that resources are targeted on those individuals who need them most.
Social rented housing, with rents set below market levels, will continue to play a vital part in housing people on low incomes. Affordable rents help people escape from the poverty trap and give them stronger incentives to work and save. They are also the right answer in public expenditure terms. We make resources available to the housing associations, the main providers of new social housing, through the Housing Corporation, which allocates the resources in its capital programme on the 313 basis of the Housing Needs Index and on the value for money offered by individual housing association schemes.
I stress that the budget for the housing association sector is some £1.2 billion in 1995–96. The Housing Corporation confirmed that during the period 1992–93 to 1994–95, housing associations will have provided homes for 178,000 households—that is 25,000 more than the target in our manifesto. Over the next three years, it is expected that Housing Corporation and local authority expenditure together, and the private finance that they will attract, will produce a further 180,000 new lettings.
A number of contributors to today's debate questioned why the Government do not allow local authorities to spend all of their capital receipts. The noble Lords, Lord Williams and Lord Haskel, both suggested that one of the options would be a phased release of capital receipts. However, the Government believe that it is right that when local authorities sell assets they should use part of the proceeds to pay off old debt and so keep their council tax down. With local authority debts totalling some £37 billion at the moment and costing almost £4 billion per annum to service, it is quite right that the Government have that priority. As I said, the Government's long-term policy is that there should be prudent management of debt and optimum targeting of available resources.
I should like to touch on the very interesting observations made by the right reverend Prelate the Bishop of Oxford on the shortage of housing in rural areas. Since 1988, the Housing Corporation has run a special rural housing programme targeted at villages below 3,000 in population; 60 per cent. of the programme is targeted at villages of 1,000 or less; 40 per cent. at villages between 1,000 and 3,000. This programme is working well. Between. 1989 and 1990 and the end of 1994–95, over 10,800 units were approved in rural areas; that is some 1,600 above target. The target for the 1995–96 rural programme will be some 6 per cent. of the Housing Corporation's new development programme.
The construction industry exercised a number of noble Lords, notably the noble Lords, Lord Howie, Lord Sefton, Lord Howell and Lord Dean. The Government recognise that the industry is an important part of the economy, accounting for 10 per cent. of the gross domestic product and also for an increasing share of exports, as was mentioned. It has an essential role to play in the creation of the nation's wealth and, to quote another noble Lord, if it contributes to the nation's wealth, it contributes to its health. Lower levels of investment are naturally of concern to housebuilders as well as other organisations not directly involved. However, no one can seriously question that the best answer for the construction industry in the long term is to deliver steady, sustainable, non-inflationary growth. Reductions in the number of spending programmes have been necessary to help us to achieve that. But we continue to have a substantial programme of housing investment—over £2 billion in England alone—providing work for the construction industry.
The construction output increased by 3 per cent. last year after three-and-a-half years of decline and the fall in employment has halted. New orders held up well after their strong resurgence in 1993, and sustained though 314 modest growth is set to continue. British firms are also doing very well abroad. I would also point out that there have been major boosts for construction from private finance on transport projects. The noble Lord, Lord Howie, covered some of that area. It is now coming through elsewhere, particularly in health and education. Private finance initiative contracts worth up to £5 billion should be signed this year. New rules from 1st April have extended PFI to local authorities, providing over £75 billion worth of opportunities. In addition, the volume of private house building output was 7 per cent. higher in 1994 than in 1993 and the first quarter of 1995 was 2 per cent. higher than a year earlier.
Many noble Lords referred to the Latham Report. Perhaps I may update your Lordships on the progress achieved by it. The construction industry board is chaired by Sir Michael Latham and my right honourable friend the Secretary of State for the Environment is its president. It was established to oversee working groups set up to take forward Latham recommendations and to provide a channel for industry and client comment on any proposed legislation.
The Government have repeatedly said that they are in principle prepared to legislate and support Sir Michael's recommendations. However, legislation is subject to a number of provisos. Briefly, they are that we need to know what is wanted in terms of consensus. We need to know what practical legislative solutions can be devised to achieve what is proposed. A consultation paper on proposals for post-dated legislation in the area of latent defects liability and build insurance was published on 12th April. A second paper on fair construction contracts was published on 17th May. Responses to these are awaited or are being analysed.
There are plenty of initiatives in response to the Latham Report. There is plenty of progress and commitment from all the players involved, not least the Government. But I remind all noble Lords who touched on this matter that the majority of the recommendations contained in the report are directly addressed to the construction industry. I do not accept therefore the inference of the noble Lord, Lord Sefton, that the Government alone are responsible for pursuing the Latham Report.
The noble Lords, Lord Howie and Lord Sefton, touched on training in the construction industry. I remind them that the Latham Report acknowledged the importance of training and indeed the points they raised. The Government agree with that. We work with the industry to help sustain a professional workforce. The general enabling response that the Government are producing to the initiatives required by the sport are helping in that direction.
Homelessness attracted wide and often inaccurate comment from noble Lords taking part in the debate. It is an extremely important topic and most of the Government's housing policies are directed to reducing it. I am pleased to inform noble Lords, particularly the noble Lord, Lord Ewing, that the latest homelessness statistics have reinforced some encouraging trends throughout the UK, not solely in England. The first three months in 1995 were the 12th successive quarter to show a reduction in the number of households accepted by English local authorities as statutory homeless over the same quarter 12 315 months earlier. The noble Lord, Lord Stallard, suggested the contrary. The statistics also show that there was a fall of 11 per cent. in the number of households placed in temporary accommodation over the previous 12 months. The situation should improve further as more homes are made available through government grants to enable those local authority and housing association tenants who cannot at present afford to do so to move to a home of their own, releasing their existing home for a family in housing need.
The noble Lord, Lord Ewing, painted a dire picture of Scotland which is a long way from the truth. Sheltered housing has quadrupled since 1979; over 300,000 new houses have been built in Scotland since 1979. The total gross capital provision for investment by local authorities, Scottish Homes and Scottish new towns amounts to nearly £1 billion. On current plans, over the next three years a further £2.8 billion will be made available. The Scottish Homes development programme has been maintained at around the same level in cash terms this year as last year, at £320 million. Resources of over £540 million will be provided to local authorities in 1995–96; nearly £424 million will be available for investment in council housing in 1995–96. Scottish Homes attracted some £500 million in private investment over the past five years through its development programme. Its target for 1995–96 is £175 million. I did not recognise the country the noble Lord was talking about, though we both live in the same county up there.
The noble Lord, Lord Williams, was equally misleading about the proposals to reform the homelessness legislation. He admitted that he was picking up fag ends on this point. But, first, I encourage him to be patient for the White Paper to be published shortly; and, secondly, to take note of what I am able to tell him at the moment.
The Government's proposals to reform the homeless legislation are designed to achieve a fairer approach to the allocation of local authority and housing association tenancies. Under the proposals, local authorities would continue to have a duty to secure accommodation for families and other vulnerable people who have nowhere suitable to live through no fault of their own. The then Housing Minister, my right honourable friend Sir George Young, made clear in July 1994 that there is no question of vulnerable people, which includes families with children, not having a home. There is no question of families having to sleep on the streets or children being separated from their parents and taken into care. The Government are clear that the new legislation must continue to provide safety nets for families and other vulnerable people in need of accommodation to tide them through a crisis. The new provisions would ensure that those in real need would have a satisfactory and settled home for a reasonable period. The aim of the proposals is simply to secure fairer access to social housing.
There are no easy answers to many of the issues raised today, whether we are talking of homelessness, rented housing, the private sector, local authority housing or the fabric of housing itself. The Government must decide where the frontier should lie between state initiatives, private sector initiatives, owner initiatives and so forth.
316 The Government have already achieved a revolution in redefining the role of the state, and housing has been at the heart of that revolution. Four million more households have become home owners. The right to buy has given millions of public sector tenants the chance to become home owners. Local authority tenants enjoy a significantly improved service from landlords, and the private sector has become a major partner in the Government's efforts to ensure that decent homes are available.
The Government do not intend to stop there. They continue to look closely at their policies and programmes. Indeed, many noble Lords will be aware that the Department of the Environment is currently preparing a housing White Paper which will be published before the Summer Recess. What matters most to this Government is that maximum benefit is being obtained for those in need from every penny of public money spent.
§ Lord Howell
My Lords, before the noble Earl sits down, can I take it that he does not intend to say a word upon the matter about which I gave him notice, which was the outrageous attack by the Prime Minister on the city of Birmingham in respect of these matters? Surely we should have an explanation.
The Earl of Lindsay
My Lords, if the noble Lord feels that what I have to say to him on Birmingham is insufficient, I can always write to him after the debate. I can say that local authorities must comply with the law. The local ombudsman has found that Birmingham is not guilty of maladministration for operating a queue, but he has found maladministration in various aspects of its arrangements. That is a matter for the city council, which I understand it has in hand. I hope that that satisfies the noble Lord.
§ 5.59 p.m.
§ Lord Dean of Beswick
My Lords, I thank everyone who has spoken in the debate because I think it has possibly been the best housing debate we have had in your Lordships' House for a long time. I thought I would hear from the Minister some transfusion into the housing situation to deal with the legitimate points that have been raised from all points of the Chamber. But the noble Earl has not even produced a tourniquet to stop some of the bleeding taking place.
In fact, I have to do something now that I regret. I am sorry but I have to challenge most of the figures the Minister has given as the Government's achievements. They are in complete contradiction to the figures that we have from such organisations as the National Federation of Housing Associations. The figure the Minister has given of the number of homes that will be built is absolute nonsense. It is nowhere near accurate. The Minister will recall that some weeks ago there were exchanges on the shortfall in the housing associations' programme and he apologised to me after the debate for the fact that he had been given incorrect information. I was in fact right. This is the first time I have had to say it in your Lordships' House but I do not think the figures the Minister has been given are right and fair.
The Earl of Lindsay
My Lords, the noble Lord does not recollect our conversation accurately. I was summing up a debate initiated by the noble Lord, Lord Williams. The noble Lord was unhappy with the figures I gave him on house build in the previous year and projected home provision in the next three years. I stood by my figures when we spoke outside the Chamber.
§ Lord Dean of Beswick
My Lords, I think that my noble friend Lord McIntosh received a form of apology by letter from the senior Minister. I do not accept the figures. But, having said that, I hope that the Government will realise that they stand alone on the path they continue to go along. They are not solving the housing problem. The figures we have on homelessness are far higher than the ones the Minister has quoted. Who is giving him the figures? I do not know. I am not accusing him of misleading the House, but someone is providing him with inaccurate briefs. That is to be regretted.
However, having said that, I think enough points have been made by distinguished Members of your Lordships' House on the housing situation that the Government will ignore them at their peril. I beg leave to withdraw the Motion.
§ Motion for Papers, by leave, withdrawn.