Rented Housing

HL Deb 17 December 1997 vol 584 cc629-62

3.13 p.m.

Lord Dean of Beswick rose to call attention to the case for more rented housing in both the public and private sectors; and to move for Papers.

The noble Lord said: My Lords, people may ask why I have decided to opt for a debate on housing. I believe that it is two years since we had a debate of any substance on housing. On that occasion I initiated the debate and our chief spokesman on the environment at that time, the noble Lord, Lord Williams of Elvel, replied.

I ask noble Lords to look at an article by Mr. Stewart Fleming which appears in the New Statesman this week. The article begins on page 30. The headline encapsulates the subject. It says, Will anyone talk about housing

It is a subject that used to beguile politicians, but it has now dropped from view. That is because it is a problem which governments no longer know how to tackle. I would insert another word and say of the previous government that they did not want to tackle it, as is shown by the wreckage that they left after 18 years.

When I set out on a political career some 40 years ago, I had to choose what my interests would be. I chose housing and health as two subjects which mattered vitally to ordinary people. Health and education now have centre stage, and I do not quarrel with that. I have never been particularly involved with education. But unless we do something about housing, and the deterioration continues, there will be enormous pressures on the health service. When one considers the large areas where there is above average sickness and deprivation of any kind, they can be found in the poorer areas where the worst housing exists. Any statistics will show that.

One of the reasons why I have tabled this Motion is that we have had a new government for six months. They have taken some forward steps in housing, but I do not believe that people are aware of the enormity of the task before us. At the time of Faith in the City and the Duke of Edinburgh's report, about 15 years ago, people were coming forward with suggestions. In order to deal with the deteriorating situation that existed we needed 100,000 new completions a year. In fact, I believe we have topped 50,000 houses on only one or two occasions. If the last Government had carried on building houses and flats at the rate that they were built by the Labour Government under the noble Lord, Lord Callaghan, as he now is, there would have been available today in the housing stock over 2 million more properties to let. That is the sum of the disaster that the previous government inflicted on us.

Not only that, but they insisted on the mandatory selling of council houses in areas where housing was in great need. I took the view then, and I still take it, that the decisions for the respective areas should have been left to the local authorities. I was the chairman for housing in Manchester when we had a waiting list of 30,000. We started to reduce it. But now I find that the waiting list is back to that figure. That is disappointing for those people who have followed the subject of housing all their lives.

I spoke this morning to the former Secretary of State for the Environment, Mr. John Glimmer. He commissioned a report which, I believe, was produced earlier this year. The report was prepared by bona fide people with the necessary credentials. The conclusion of the report was that for the 20-plus years from 1996 to 2016 it was envisaged that 4.4 million new lets would have to be made available. That was looking into the crystal ball a little and foreseeing some of the future circumstances. I said, "That seems an awful lot, John". He said, "I can assure you that the conclusion errs on the conservative side and it is the minimum". That is 4.4 million houses by the year 2016.

It would take more than 100 years to reach that target of 4.4 million houses with the building programme achieved last year under the previous government. When I used to raise this matter at the Dispatch Box and ask why the Government behaved in such a manner, and why they were stopping councils building council houses, the Government said that they did not want to build them. Our new weapon was the Housing Corporation. That was a reference to my noble friend who has just taken over the chairmanship. I wish her every success because I believe the right type of person has been chosen for it. The Housing Corporation continually laboured the fact that its target was 60,000 houses a year—but it has never reached that target. I do not blame the Housing Corporation but the fact that the resources were not made available. Perhaps my noble friend Lady Dean of Thornton-le-Fylde will correct me if I am wrong, but I believe that the most it ever achieved was 50,000 a year.

But what happened then? The Government cut their subsidy to the Housing Corporation from nearly £3 billion to £1 billion. If we are not careful, it will soon be down to zero. I suspect that the corporation is in serious trouble. How can one have an expanding, forward-looking building programme and let contracts so that they are beneficial in terms of price, if one is faced with such savage cuts? That aspect also needs further consideration.

I think that this Government—I support them wholeheartedly—have to start thinking about finding some money. They may say that the money is not there, but I advise them that if some money is not found and they start on the job the final cost will be absolutely appalling.

What can we do now? The first thing that I would do would be to look at the existing public sector housing stock. It is deteriorating at an alarmingly fast rate. As the money becomes available— the Government must make it available—I would use those initial resources to bring our estates up to standard, and in the same areas I would fund the local authorities to provide community buildings. As a former chairman of housing in Manchester, I know why we have some "deserts" there: it is because we were not allowed the money to develop community and social facilities in the area while we were building housing. All that we were allowed to do was build a huge number of houses, but nothing to go with them. Trouble has now overtaken us. So, that is one of the first things that I would do.

I turn now to a situation which has not been in the news lately, but the last time that I considered this—a few weeks ago—I was disappointed to note that about 600 families are still losing their home each month because of mortgage arrears. Where are those 600 families a month to be housed? They will not buy another house. Once your home has been repossessed and you have been tipped out on to the street or have left of your own accord, pushing the keys through the letterbox, you cannot possibly buy another house or obtain another mortgage. What will happen to those people? Unless something is done, we will be deluged by the effects of this problem.

The Government should do something else quickly. One of the last Bills on which I worked at the Dispatch Box (with, I think, my noble friend Lord Williams) involved me complaining bitterly about the attitude of the then government, who imposed a ring fence on the housing revenue account. I pointed out that that meant that if I lived in a council house and paid my rent regularly but the fellow next door did not pay his rent, I would have to make up the deficit in the housing revenue account. I said at the time that that was a most disgraceful attack on respectable people and good tenants. However, the provisions went through. I believe that it is the job of this Government to take such provisions off the statute book as quickly as possible so that we can give honest people a chance.

I know that for quite some time local authorities have not been able to build many houses. Indeed, I believe that they built only 800 in the whole of England last year, yet we have waiting lists of over 30,000. That is the achievement of the last government. Was it intentional? If so, it was downright vicious. Indeed, if it was not intentional it was downright bad management. The previous government cannot have it both ways. In my opinion, they left rented housing in this country in its worst state since the war. When I finished my stint in local government and became a Member of Parliament, the policy was to widen the housing market and to make more options open to people. I never thought that I would have to stand here some years later to consider the wreckage that has been created.

I welcome the fact that the Prime Minister has established the new social exclusion unit, but I hope that we shall not have just two or three years of talk. I do not know whether any of its members will have dealt with this problem at first hand. I suspect that many of them will be academics, who may not be the best people for such a body. I hope that some of its members may have made mistakes in this sector in the past. I hope that they will at least know the mistakes that were made and how to put them right. We must never again experiment with working-class people and council housing, as has happened in this country since the end of the war.

Many post-war council properties are being, or have been, demolished. I refer to walk-up flats and to deck-access flats which local authorities were forced to build because of the method of financial assistance used by government. That happened under governments of both parties. The two men mainly responsible were the late Lord Joseph and Richard Crossman. They were the men who put the thumbscrews on local politicians and said, "If you do not build this type of property, you will not get the subsidy". That entire swathe of building has now been lost.

I know that the City of Manchester has an enormous charge on its housing revenue account for properties which have now been knocked down. The same is true in the former constituency of my noble friend Lord Merlyn-Rees. There is a huge charge in Leeds. Indeed, the last time that I checked, the debt charges alone were costing the Leeds housing revenue account over £1 million a year—and that is for a type of housing that should never have been built.

It is important that such things are explained so that we all know what happened. I hope that the Government will act quickly. There is enough evidence even without the new commission. Plenty of people who were involved in such operations can give advice. They know the mistakes that were made and can thus ensure that they do not occur again.

Finally, I say this—I have said it before—society is like a three-legged stool. Our main three social services are housing, health and education. Their order does not matter but if we let the "leg" of housing collapse, the deprivation will spread to the health service and our schools. One of the sad facts of life is that wherever kids are brought up in bad housing, they usually have the double penalty of having to go to a bad school. I represented such an area where the kids attended schools that were in worse condition than the local prison—and that is not an overstatement. We must involve local government once again. Where local authorities want to build, we must get them moving and started. We must make the necessary funding available to the Housing Corporation so that it can do its job. If we do not do that, we shall fail the nation and we shall not be able to put it right in my lifetime. My Lords, I beg to move for Papers.

3.28 p.m.

Baroness Maddock

My Lords, I am grateful to the noble Lord, Lord Dean of Beswick, for giving us the opportunity to debate housing issues today. I must declare various interests. I am vice-president of the National Housing Federation and president of the National Housing Forum. I am also a member of the board of the Western Challenge Housing Association.

This country is almost unique, particularly in the western world, in that 70 per cent. of our population own their own homes, with only about 30 per cent. renting. Of that 30 per cent. the private rented sector represents only 10 per cent. The problems of the shortage of supply compared with demand for social housing have existed for many years. They do not seem to get better as time goes on. The collapse of the housing market exacerbated demand in a dwindling social housing sector. There were two main reasons for that. Falling investment in housing was accentuated by the number of homes lost to that sector because of the right to buy. The figures make pretty sorry reading. In 1996 we managed to build only 29,000 new houses for social renting. That is less than in any year since the war.

Despite the pressures, many imaginative schemes were put in place to try to improve supply in the private sector, particularly through schemes to bring properties not in use back into rent for people seeking social rented housing. All too often many government schemes involving some kind of financial help were short lived.

Despite that, a good deal of work was done and continues to be done by the Empty Homes Agency. That greatly encouraged many bodies, particularly local authorities, to develop good empty property strategies and thousands of empty properties were brought back into use for renting. It is a good example of partnership between the public and the private sectors. Very often local authorities and housing associations have managed these properties and put them into good order so that they can be let.

Noble Lords will be aware that the Government have launched a series of comprehensive spending reviews. It is hoped that they will report next spring. I trust that they will look at these kinds of schemes which not only bring empty properties back into use—we have about 700,000 in this country—but increase the supply of affordable rented housing. They help to improve neighbourhoods that have been blighted by rundown empty properties and enable private landlords to improve their properties and ensure that they are used and rented out.

The previous government estimated that there was need for about 60,000 new social rented units per year if demand was to be met. However, many organisations involved in the social rented sector, particularly Shelter, the Chartered Institute of Housing and the National Housing Federation, believe that that was a great underestimate. Both I and my Liberal Democrat colleagues have long believed it, too. We estimate that if the demand is to be met about 100,000 properties need to be brought on stream each year. That compares with the 29,000 last year.

Investment is required not only in new homes but also in tackling the backlog of disrepair in both the public and private sectors. Shelter estimates that in the council sector alone there is a backlog of disrepair amounting to £20 million. The results of the Government's review will shape future plans for spending on housing from 1999 onwards. I suspect that that is what this debate is about today. I was relieved to know that the Government intended to involve both the Department of the Environment, Transport and the Regions and the Department of Social Security. The interaction between housing investment, housing benefit, affordability and taxation must be very thoroughly examined before changes are made. The noble Lord who introduced this debate explained clearly why that is so.

This is a short debate and I have time to highlight only a few of the problems that must be tackled. We all want a flexible workforce and we want people to move from welfare to work. However, unless we tackle the poverty trap for those in the housing benefit regime the moment they try to get back into work we will not get very far. The situation is particularly acute for young people. Shelter commissioned a report entitled Benefits Shortfall in the wake of the reduction of housing benefit for young people. It does not make for very happy reading. It is believed that the changes have led to greater homelessness and that that has undermined other initiatives like welfare to work. Shared accommodation is not suitable for many young people, particularly the vulnerable. In many areas it is impossible for young people to find accommodation at the amount allowed for the single room rent.

Not only have organisations like Shelter looked into this; private landlords have themselves considered it. They find that tenants are not able to pay their rent. They admit to giving advice not to let to young people under 25. Although the housing benefit changes may reduce the housing benefit bill, they create more homelessness particularly among the young who have to live in unsuitable conditions and considerable instability. That does not help them to get back into employment. I hope very much that the Government will respond today to recent rumours in the newspapers about what will happen to housing benefit and flat rates of housing benefit and the suggestion that housing benefit will disappear altogether.

The problems that we create by not providing decent housing for people have knock-on spending effects in other areas, particularly in health and crime prevention. I shall spend a short time considering what are termed independent social landlords, usually housing associations. Since 1988 the system of funding for new houses has been based on the linking of public and private funds. Such landlords have been the principal providers of new homes. They have been able to do this because they operate outside the public sector borrowing requirement restriction and have been able to borrow private money. Although these landlords appear to be rather robust at the moment, I believe that it is due in part to the collapse of the private housing market. They have been able to buy land and get good deals on the building of homes. That is changing. Unit costs are going up, which means that rents will also go up. We know that in this sector rents are higher than in the council housing sector.

At the same time, expenditure on repairs by these organisations is growing. Tax changes have pushed up their costs. In addition, there has been extra pressure from the Government to keep down rents. I believe that in the short term housing associations will be able to comply. However, the prediction by the board of the housing association on which I sit, following a submission by the financial executive on future finances, is that the association will very quickly move into deficit if it begins to subsidise rents too much. The situation is even worse for council housing where money cannot be borrowed from the private sector. In the short term capital receipts will help but in the long term better solutions must be found.

This leads me to reiterate a view that I and my party have long held. There is an urgent need for the Government to look at the way they account for public borrowing. No business puts capital and revenue together for accounting purposes; no business takes the view that capital investment for long term benefit is bad. Most of our European Union partners accept that, and their financial regimes reflect it. I suggest to both the Prime Minister and the Government that it would be good for this country's internal financial future if they looked seriously at changing the way in which the public sector borrowing requirement is assessed. To bring this area more into line with Europe would be a useful boost to the Prime Minister in his request to be at the table in Europe discussing the development of monetary union.

There are two other important areas upon which I shall not dwell because my noble friend Lord Ezra will do so. They are the state of repair in the private rented housing sector and energy efficiency in our housing. The tax regime does not favour that, a matter on which my noble friend will talk further.

Finally, I turn to tackling social exclusion. It is a shame that we do not call it "social inclusion". That is a much more positive way of looking at it. Nothing excludes anyone from society more than being unable to have a warm, safe home in which to live. Unlike the noble Lord, Lord Dean, I studied the make-up of the board, or whatever it will be called, of the social exclusion unit. I am worried that although there is someone from the DoE who has been involved in housing, there is no one from outside government at the coal face on that board. That is a shame.

Today we have seen some of the worst cold weather for some time. I heard on the radio this morning that a government building has been opened up to house the homeless and indeed that our Deputy Prime Minister was cooking breakfast for them. The need for more rented housing is greater than it has ever been. I hope that all this talking will lead to some action to achieve affordable housing in a comprehensive way in the long term. If our citizens are to achieve their full potential, they all need to have a safe, warm and affordable home.

3.42 p.m.

The Lord Bishop of Leicester

My Lords, I, too, am grateful to the noble Lord, Lord Dean of Beswick, for giving us the opportunity to debate this important subject, and to hear of his wealth of experience and that of the noble Baroness, Lady Maddock. The Church of England has been worried about the lack of low cost rented accommodation since the Archbishop's report, to which the noble Lord referred, entitled Faith in the City, drew attention to the problem some 15 years ago.

Since then, through our own church housing associations, Church Urban Fund projects, and in co-operation with our ecumenical colleagues, we have been working actively to address the problems associated with poor housing. We have come to appreciate some of the principal issues involved. Rented housing is vital to give people some degree of flexibility in the housing market. That is especially true for unemployed people or those on low incomes. Unless real housing opportunities are open to people at a price which they can afford, they may face homelessness, overcrowding and being forced into home ownership when they cannot afford it. Then, importantly, we believe that without affordable housing, people often find that they are unable to take up work and are trapped on benefits.

The past two decades have witnessed a dramatic decline in investment in social housing. There has been a shift away of course from the provision of housing by local authorities towards housing associations, but the total levels of investment are way below those of the mid-1970s or even the early 1980s. As a result, the number of new affordable homes has fallen dramatically: in England, from nearly 70,000 new starts in 1979 to 22,000 in 1996. Over the same period, there has been a rise in homelessness across the country from 76,000 households in 1980 to 131,000 in 1996.

The conclusion is inescapable: social housing helps to prevent homelessness. If people have a change in their housing situation—let us say that they lose their jobs and cannot continue to maintain their payments, or they marry and cannot continue to live with their parents—it is far better if they can move into council housing or a housing association home when they need it, rather than struggle on until they finally become homeless.

Where the supply of social rented housing decreases, people have to reach a crisis in their housing situation before it seems they can receive any help. Families, especially those with children, then face the stress of being uprooted and spending often long periods in temporary accommodation, removed from the supportive networks of family, friends and schools. In many cases, the trauma of homelessness results in long-term damage to educational prospects and health.

The lack of an adequate supply of social housing has also contributed to the kind of problems which noble Lords were discussing yesterday in the crime and disorder debate. When there is a shortage of social housing, only those who are most vulnerable and needy can gain access to it. Therefore estates get high concentrations of children, people who need support, former homeless families, and those who are unemployed.

A vicious circle is created whereby an estate has few economically active members. Shops and banks withdraw from the estate; other services, apart from the Church, are long gone; social problems increase; and the neighbourhood becomes labelled as a "sink" or "ghetto" estate. If there were a greater supply of affordable housing, a far wider range of people could have access to it, so making such estates more diverse and economically active.

Then there is the problem of housing association rents and the benefits trap, to which the noble Baroness referred. As noble Lords will be well aware, housing associations have been the preferred government vehicle for investment in social housing since the Housing Act 1988. This shift has been dramatic. In 1980 local authorities built 33,500 new homes. In 1996, that had fallen to just 472. In the same period the number of new houses built by housing associations rose from 13,000 to almost 22,000 per annum.

Those new homes, built by housing associations, are subsidised by the Government paying a percentage of the development costs. The rest is borrowed from private lenders, but the average portion which the Government pay has fallen from 80 per cent. in 1990 to 54 per cent. now. Before 1988, that government proportion was determined on a scheme-by-scheme basis, often rising to over 90 per cent. in high cost areas. The shift in the government proportion means that housing associations now have to borrow far more of the money privately, which is of course much more expensive. As a consequence, rents have more than doubled over the past nine years, and are likely to increase further.

The rents of some housing association homes mean that tenants are caught in a poverty trap. The noble Baroness mentioned that poverty trap, and I shall give an example. A family with two children, paying £64 a week rent, which is about the average in England for a new housing association letting, would find that its net disposable income begins to increase perceptively only when its gross income rises above £280 a week. From the higher income, the family would have to pay for travel, clothes and other work-related costs, plus school meals, prescriptions, and other benefits previously met for it as an income support recipient.

Unless a household has housing which is affordable to those on average incomes, it is unlikely to be able to afford to take up work, thus threatening the Government's welfare-to-work initiative. So much for social housing—fewer and fewer local authority dwellings, problematic rents for new housing association lettings. But what of the private rented sector?

Over the past decade the private sector, after many years of decline, has seen a marginal increase in its market share of rented properties. As the noble Baroness said, it now stands at approximately one-tenth. I believe that there are two reasons for that increase which are worth highlighting. First, the slump in the housing market from the late 1980s meant that people who were unable to sell their homes sometimes chose to let them instead. Now that the housing market is beginning to pick up and people are beginning to float out of negative equity, owners are starting to withdraw their houses from the rented sector. That might lead to a further contraction in the private rented sector.

Secondly, the deregulation of the private rented sector in 1988 gave landlords a greater ability to evict tenants and charge higher market rents. This brought more private rented accommodation into the sector, but it also had massive consequences for public expenditure. When asked how people on low incomes would afford the new high rents, Sir George Young, the then Housing Minister, said: Housing benefits would take the strain". Some strain! The level of housing benefit rose from £3.8 billion in 1988 to £11.5 billion last year, and is projected to rise further. In effect, there has been a massive transfer away from a bricks and mortar subsidy towards a personal housing subsidy.

The worry is that this huge amount of public money has not significantly increased the amount of affordable housing available. Nor has it increased the quality of the housing stock. Once again, the high rents of the private rented sector mean that people living there are caught in the benefit trap. Surely, better ways are needed to be found to ensure that public money spent in the private sector is recycled as an investment in quality and supply, otherwise we continue to try to run up a rapidly descending escalator.

The private rented sector traditionally has had a bad image. Sometimes standards of safety and management have left much to be desired, yet the shortage of social housing has meant that homeless people have been forced to live in sometimes totally inappropriate and insecure private rented housing. But I believe that the private sector in Britain, as on the continent, has a vital role to fulfil, particularly for people who need the mobility and flexibility that it can offer.

There is a need for an increase in good quality private rented accommodation which will be available particularly for young people working in our cities. Some of the repossession problems of the 1980s were a consequence of such young people, for whom home ownership was not a very appropriate solution, being forced into buying by a chronic shortage of any alternative.

We need more balance in our housing provision in this country. Of course, many people will want to own their own homes for at least a part of their lives. But a flexible economy is dependent upon mobility and at different stages in our lives rented accommodation might well be a far more attractive option. But here we return to the basic dilemma. Rented housing needs to be affordable to allow people flexibility in their working lives. It has to be in sufficient supply to ensure that families are spared the trauma of homelessness. Furthermore, there must be a variety of provision so that we can move away from any sense of "ghettoism" of social housing. How we as a society tackle this critical issue, which affects the lives and future of so many of our citizens, will be an important determinant of the health and social cohesion of the nation in the next millennium.

3.54 p.m.

Baroness Dean of Thornton-le-Fylde

My Lords, I, too, thank my noble friend Lord Dean for tabling the Motion. When I looked at the list of speakers I decided that, although it was not long, it contained a wealth of experience and commitment as regards housing. The noble Baroness, Lady Maddock, and our Minister, my noble friend Lady Farrington worked in local authorities and have a great deal of experience of housing. I put my name down with a little diffidence.

I declare an interest in that five weeks ago I was appointed chairman of the Housing Corporation. I believe that I should share with your Lordships some of my experiences and the views that I have reached during that short time. I am still not used to the term "social housing". I suggest that it carries a kind of stigma, but I do not believe that anyone can come forward with a better term. The Housing Corporation was established in 1964 to provide such social housing throughout England and I am now its chairman.

In preparation for the debate and for my work as chairman, I visited the Library, which is the font of a great deal of knowledge, and asked for copies of Oral and Written Questions and debates on housing during the past two years. I expected to come away with a pile of papers, but they did not measure half an inch. Housing is at the centre of so much that we want for our communities. It is at the centre of delivering better education for our children and of the health of our nation. It is no coincidence that our previous debate on housing was initiated by my noble friend Lord Dean. It is to his credit that we are having the debate today.

I welcomed in particular the Prime Minister's announcement last week of a social exclusion unit. He recognised the importance of housing, saying that among the unit's first priorities would be the development of policies to improve the worst council estates and to help people who are sleeping rough. Many thousands of our citizens face sleeping rough, particularly in our inner cities. I saw that launch as a clear recognition that good housing plays a key part in creating the right conditions for successful, thriving communities. Members of the Housing Corporation welcome that and wish to play a key part in a constructive manner to help those policies along. Housing is important, too, as regards welfare-to-work. We wish to be involved in that debate and have taken some initiatives to endeavour to do so. I will leave other speakers to deal with the private sector.

In pressing the case for more rented housing, I accept that the Government have many competing policy priorities. It is not a situation of their making, but was inherited by them. It certainly is a great challenge. Previous speakers highlighted the report, which was presented to the previous government and accepted by them, which stated that during the next 25 years there would be a need for 4.4 million homes. In other words, there would be a need for 180,000 new homes each year. If we assume that one-third, 60,000, are for people who cannot afford the marketable price to buy their own home, it points to a housing programme in that social sector of some 60,000.

The current situation faced by the Housing Corporation is that whereas in the financial year 1992–93 its budget was £2.3 billion, this year it is only £700 million. The £2.3 billion helped to fund the building of more than 62,000 social homes to let. Yet we have seen new lettings decline to around 40,000 per annum. I suggest that the balance needs to be addressed urgently. The Government inherited the situation and it cannot be changed overnight. However, additional resources are required and I am sure that the Minister will accept that.

My second point is that, in providing more homes for rent, we must recognise that it is not just a case of putting roofs over people's heads. We have seen that in some of the inner city deprivation which we are facing and paying the price for today. It is about building communities for people which have cohesion for the overall lives of the people living within them. That cannot be achieved by any single agency. I suggest that it cannot be achieved by the Housing Corporation on its own or by local authorities or any other agencies on their own; it must be a partnership in its broadest sense.

It is that partnership within the community that we wish to be part of, and are part of in a number of good practice areas throughout the country today; for example, local councils, the Employment Service, City Challenge, where there is one, the development agencies, together with local business and alongside housing associations and the corporation itself. There are good examples of that; for example, the foyer schemes which have been talked about. A few days after the General Election, the Chancellor of the Exchequer paid a visit to such a scheme in a London inner city area. He was so impressed with the foyer that he saw that he said, "We must have one of these in every city in the country". We are a long way from that.

Perhaps I may give as an example the co-op foyer in Wigan, an area of high youth unemployment. There are 42 bed units for young people with 12 information technology training places. Young people are being trained and given confidence, probably for the first time in their lives. They are better able to enter the job market. Social services work alongside with a day drop-in centre which provides any help that may be needed.

The co-op within that development has an arrangement with the local training and enterprise council that once it has placed 25 young people into full-time employment, training or education, it receives funding for that. Therefore, it is proving what can be achieved. It is being paid for that and then recycling that money to use for the next lot of young people. It is a first-rate, value-for-money scheme for the wider community. Certainly within the local community we must ensure that young people have dignity and the opportunity of employment because that brings along with it a much better community in which to live.

I use that example because of the concerns of this Government in relation to youth unemployment. In the short time that I have been associated with the corporation, I have been struck by the diversity of the sector and diversity of the need among members of our community. In London, in Hackney, on what is known as the Holly Street Estate, £20 million was spent on a scheme where the people were moved out of run-down, crime-ridden tower blocks into family housing. A neighbourhood watch scheme was established and residents co-operated with five housing associations to develop and regenerate that area as a community and not simply as housing units.

What was the result? The result was that calls to the police fell by two-thirds. The experience of burglaries, fear of crime and fire and fear that came from just living in the neighbourhood fell dramatically. That is added value and has meant that there is a community which is living in an inner city again and not walking day by day in fear of their lives. Therefore, that is a better quality of life for our citizens.

My noble friend referred to the deck flats in Hume. I was there two weeks ago. As a Mancunian and using lay vernacular, it could almost have been described as a no-go area originally. What is happening now? The deck flats have been pulled down, and, indeed, I saw the area where the last flats had been pulled down. The area is now being visited by town councillors from Europe who wish to see what has taken place. Families are living there. The first set of houses which were built for sale in the area are now being resold. People are prepared to buy there; to establish their families in the area; and to work within the community. It is the envy of the area. But it does not come cheap. You cannot just look at it in terms of the cost of putting a roof over someone's head. It must be looked at in terms of the cost of improving the whole community and the whole environment for the citizens who live within it.

It is also about repairing breakdown in our communities and people feeling safe, as I said. In some areas, because of the diversity, the answer is not necessarily just to build new units. It is about regeneration and getting hold of old stock and rebuilding the communities.

I believe—if I may be audacious enough to say so as a chairman of only five weeks—that there must be a local solution to a local problem. It is no good giving instructions from on high. Local authorities should decide their own priorities and strategies. The approach should be one of total tenure within the community. In that regard, the regional development agencies, as proposed by the Government, are a key factor. We should like to work with them within the regions.

Our investment in housing must fit in with those strategies. Through the Housing Corporation, since 1988 £11 billion has been raised from the private sector. As was said, it is true that some 20 per cent. of private sector money went into building houses. Today it is about 46 per cent. but that is variable throughout the country.

I cannot finish my contribution without referring to the tenant. We talk about investment of the taxpayer and the private sector. I suggest that the biggest investment is from the tenants and their families. It is about their lives and the quality of them. I welcome this debate and I shall use every opportunity that I can to promote the case for social housing and to raise the profile of that sector which is profoundly important for our people.

4.6 p.m.

Lord Dixon

My Lords, I too thank the noble Lord, Lord Dean of Beswick, for choosing this important subject for debate today. I have no doubt that my noble friend is one of the most experienced and knowledgeable persons on the subject of housing in the Palace of Westminster, and that includes the other place. My association with him goes back many years when he was chairman of the AMC—the Association of Municipal Corporations—housing committee. At that time Manchester had one of the best council housing schemes in the country and without any doubt at all one of the best direct labour organisations. Therefore, I thank him for giving us the opportunity to debate this important subject.

Since the previous administration were elected in 1979, capital resources have reduced year by year. When I was chairman of the South Tyneside housing committee in 1979 under the government of my noble friend Lord Callaghan of Cardiff, our HIP allocation was about £32 million at 1996 prices. Last year, it had reduced to one-seventh of that. We were building 800 council houses a year. Last year we built none.

The present Government have, under the phased release of capital receipts, improved matters for this financial year and will undoubtedly increase investment opportunities in future years. Although there is a strong temptation to commence local authority new build, it is my view that we should exercise caution for reasons to which I shall come later in my remarks. We should use the additional resources to refurbish and upgrade existing stock.

For many years those authorities which had the most problematic estates were successful under the various bidding regimes of the last government—estate action, single regeneration and so on. The unfortunate part about it was that the resources earmarked for those programmes came out of the housing investment programme. Although local authorities which submitted winning bids have benefited from large-scale capital investment on problematic estates, that has been at the expense of a reduced level of investment in other local authority council stock. Many tenants of local authority housing felt somewhat resentful when they witnessed large-scale investment in what were seen as problem areas while their own homes and estates were bypassed.

I believe that local authorities should endeavour to provide some new build programmes where a demand is clearly identified as part of an employment-creating strategy. But the main emphasis of the next few years should be on utilising existing resources, upgrading existing houses and helping existing tenants.

The former government's policy was to remove from local authorities the role of providing new accommodation to persons on their housing waiting lists. The previous government enthusiastically gave that role to the housing associations. Public subsidies were made available through the Housing Corporation. The local authority's role became that of an enabler rather than a provider. Housing associations have utilised private funding to lower the public sector contribution on new developments. Many associations submitted bids to the Housing Corporation seeking a lower level of grant than was necessarily available. This shortfall was offset by a larger percentage of private finance or, alternatively, from housing associations' reserves. The Housing Corporation was understandably influenced by bids from associations that required only a low level of public subsidy and would probably give preference to such bids as opposed to a competing scheme from another association that required a higher level of subsidy. It is undoubtedly the case that a higher level of private finance results in higher rents for tenants. The right reverend Prelate the Bishop of Leicester mentioned that.

In the Tyne and Wear area the average rent on housing association estates is in the region of £65 to £70 a week. A recent study showed that everyone on an estate in that area was on benefit. We then see examples of the poverty trap syndrome. Before the general election when I was a Member of Parliament I dealt often with the problem of people who lived in housing association property and then found jobs only to discover that they could not take those jobs as they would be worse off financially through losing the high benefits they were receiving as a result of being housing association tenants. A family comprising two adults and two children paying such a rent would have to ensure that the household's breadwinner earned about £15,000 a year to be no worse off when working than when on benefit. As soon as such people find a job, they ask to be put in local authority housing as they cannot afford to pay the housing association rents.

In recent years one of the most worrying problems for local authorities has been the increase in anti-social behaviour on some estates. Areas which suffer from high levels of anti-social behaviour often suffer also from high levels of criminal behaviour. Many estates containing popular, traditional houses are becoming hard to let because of the fear factor. There is nothing worse than seeing an estate full of boarded up houses. That gives a terrible impression.

In my opening remarks I said that we should concentrate our efforts on utilising resources to upgrade existing houses. However, there is a problem. I speak from my experience of South Tyneside council. I refer to the way housing finance is managed. Although the Government have exercised some control over local authority capital programmes, in more recent years the former government introduced tight controls on revenue resources. The main revenue controls are exercised in respect of establishing an annual guideline increase for local authorities and the clawback arrangement in respect of housing benefit subsidy. Any increase above the guideline figure does not qualify for housing benefit subsidy.

Despite South Tyneside having the third lowest rents of all local authorities, the council is constrained by the annual guideline figure. As regards the clawback arrangement that exists in respect to the housing benefit subsidy for 1998-99, some £5.3 million will be taken from the council house revenue account to reduce the Government's housing benefit subsidies. That factor above all others prevents a local authority from reinvesting in its housing estate.

South Tyneside's notional housing revenue account—it is notional in that it is assessed by the Government—has an income of £37 million in rent. That is a higher figure than it actually receives but it is the notional figure assessed by the Government. The council has £19 million to spend on management and maintenance—again, a notional figure, as the council spends more than that—and £12 million to pay off loan charges and other such charges. According to the notional housing revenue account, there is a surplus of £5.3 million. That £5.3 million is taken from the housing benefit subsidies. Therefore council house tenants in the South Tyneside area who are not on benefit are subsidising those tenants who are on benefit. There is something wrong with the system of housing finance when that occurs. What is required in the short term is the abolition of the housing element of the housing subsidy; payment of a standard rate of rent rebate subsidy across the entire country; the preservation of the rent guideline, if desired, with any excess over the guideline being supported by a reduced percentage in the rent rebate system; and action taken to address the inequity of the benefit subsidy system.

The continued erosion year by year of deemed rent surpluses in South Tyneside's notional housing revenue account is stifling investment, reducing the impact of the capital receipts initiative, and, most importantly of all, forcing more of the burden of financing benefit payments on to council tenants who are not on benefit themselves and often in low paid employment. What is required is a fundamental review of the financing of housing benefits. Council tenants should be allowed the same subsidy on housing benefit that applies to private sector tenants and housing association tenants; namely, 95 per cent. of the subsidy paid. If that were to happen, councils such as South Tyneside would be able to tackle their housing stock, encourage people to move into council houses, and upgrade the conditions of existing tenants by reinvesting some of that money in the council estates.

4.17 p.m.

Lord Marlesford

My Lords, I declare two interests which I think are relevant to the debate. First, I am the chairman of the Council for the Protection of Rural England. Secondly, I am the owner of an agricultural estate in Suffolk which has some rented housing.

We owe a deep debt to the noble Lord, Lord Dean of Beswick, for introducing a debate on this important subject. I am afraid that I did not agree with much of his analysis. I thought that at one point he was rather unfair to the Conservative Party. I hope that he will excuse me if I presume to put him right on that. He implied that in the early days after the war the Tories had not been real house builders. I hope I may remind him that in 1950 at the Tory Party conference Harold Macmillan pledged the Tory Party to build 300,000 houses a year. It was at once denounced by Mr. Aneurin Bevan as a cruel deception and a trick. However, the houses were built by Mr. Ernest Marples who was the engine behind Mr. Macmillan.

Lord Dean of Beswick

My Lords, I am sorry that the noble Lord, Lord Marlesford, takes that view. I am as well aware as anyone of the achievements of Mr. Macmillan who on the question of housing would, I believe, stand with me and not with the noble Lord in his criticisms of the former Prime Minister, the noble Baroness, Lady Thatcher.

Lord Marlesford

My Lords, I am delighted to hear that. It is worth having those remarks on the record in memory of both Mr. Macmillan and Mr. Marples.

However, I cannot agree with the noble Lord that it is a terrible mistake to sell council houses. There are all sorts of good reasons for selling council houses. One reason was that at the time the sales started a great many people in this country wished to become home owners. That is laudable and desirable. The sale of council houses enabled many people to become home owners. Perhaps a more important reason, however, is one that has been echoed again and again in speeches made in this House this afternoon; namely, all too often council estates become ghettos. They become thoroughly undesirable places in which to live and they become deprived places. I am sorry that the right reverend Prelate is no longer in his seat. I listened to his excellent speech yesterday afternoon when he spoke about a council estate in his diocese which is "too tough" to live in. What a sad picture that portrayed.

I vividly remember my first experience of such a place when I visited Ferguslea Park in Paisley. It was a terrible sight, with houses boarded up. Anyone could have walked into the housing office with a week's rent and obtained a house instantly. Many of those areas were ghettos. In some areas of London we constantly read about appalling crimes being committed. The criminal environment is such that no one is prepared to help the police to control them. I believe that the breaking up and the sale of council estates has been beneficial on the whole. I shall explain later why I am such a supporter of the noble Baroness's housing associations which in many cases have taken over from council estates.

A central aspect of our debate is affordable housing. It is crucial to subsidise the tenant and not the house. The reason is simple. First, if the house is subsidised, whether privately owned or owned by a local authority council, it will not be properly maintained because the rent will probably not be sufficient to cover the cost of maintaining it properly. As I am sure the noble Lord, Lord Dean, knows, over the decades many council houses have not been properly maintained. Secondly, with the limited public funds available to any government, it is not possible to avoid focusing social help where it is needed. Subsidising tenants rather than houses focuses help where it is needed.

The big change came in 1988 when the present housing benefit scheme came into force, together with the Housing Act 1988 which introduced the assured shorthold tenancies and the assured tenancies. As a result, private sector landlords were prepared to offer housing for rent. Previously landlords had sold let housing as soon as the property became vacant. The property was then immediately lost to the rented sector. Associated with that earlier period were the wicked days of Rachmanism whereby people bought up rented housing in order to get rid of the tenants and then to make a profit from selling it.

The position has now changed considerably. The private sector is now able most usefully to add to the stock of affordable housing because the tenant is subsidised through the housing benefit. The landlord is not being required to charge a wholly uneconomic rent. I have experience as regards rural areas. It has been possible to convert a number of redundant farm buildings into useful dwellings, often for rent. The people who own the buildings on the farms often do not wish to sell them.

The useful Review of Housing Benefit was published in May 1995 by the Social Security Advisory Committee. It quotes the DoE as suggesting that the, typical pre tax return on capital for private rented sector landlords is between 5% and 8% after management costs". The DoE says that this, can hardly be regarded as extravagant". The fact is that in the remaining controlled tenancies under the Rent Act 1977, rent officers are still regularly fixing rents at well below that level. No doubt they believe that they are saving public money. I believe that they are keeping part of the privately rented sector at a lower standard than it should be, because landlords cannot afford to make desirable improvements. I ask the Minister to ensure that, whether rents come under the 1977 Act or the 1988 Act, they are fixed at a reasonable level.

I turn now to the most important housing association sector. The noble Baroness is now responsible for something like 1,000 housing associations. They have done and are doing a wonderful job. In a way they are the providers of the future. In some respects one can say that housing association housing is council housing under another name; but it is very much better than council housing for a variety of reasons. First, the housing is usually built to a higher standard; secondly, housing associations show more imagination in design and location, are often innovative, and add greatly to the quality of the area in which they are located; thirdly, they tend to build in smaller numbers than the old big scale council housing estates, and they build where the housing is really needed; fourthly, their housing is better maintained. I do not know of any housing association houses which are boarded up. Certainly the housing association in Suffolk has done an excellent job and. frankly, there are now many villages in Suffolk where there is not a shortage of affordable housing. In certain areas housing associations—for example Suffolk Heritage Housing Association—have taken over responsibility for council housing. That is a good thing. I believe that about 55 district councils in England have handed over their housing stock to housing associations. That is very desirable.

I am particularly concerned at the impact on the English countryside of the target of 4.4 million new dwellings—it is a target which the present Government inherited from the previous government—which they have undertaken to provide by the year 2016. I reject such a policy of predict and provide. It is like roads. If the Government were to build all the roads people wanted they would still not have built enough. But they propose to build houses at an unacceptable cost to the countryside. I believe that the priority should be affordable housing. The private sector, both as builders and landlords, has a significant part to play. Once the affordable housing is provided, market forces should determine the supply of owner-occupied housing, within the constraints of available land.

The trend towards owner occupation has changed as a result of the collapse in house prices during the late 1980s and early 1990s. That is no bad thing. With a more mobile society, and people moving from job to job, it is not always a good idea for young people in particular to have the debt of a house tied round their necks. The idea that bricks and mortar are the only things into which to put money is almost as bad as the old concept that gold under the bed was the only thing to put money into.

I said earlier that I believed the right to buy was a good idea. On the whole, it has achieved its objectives. I urge the Government to change the Voluntary Purchase Grant Scheme. They opposed it when it was introduced by the previous government. Under the Voluntary Purchase Grant Scheme, if housing associations have houses in an area with greater than 3,000 inhabitants, they are required to be prepared to sell the houses. I believe that that is a mistake. If affordable houses, which are built in an area where they can be built, are sold, further affordable housing has to be built. Often the land is not available except at an unacceptable cost to the local landscape.

We need a more careful assessment of real housing needs. Not nearly enough attention is given to the needs of the smaller households. Not everyone wants a three or two-bedroomed house. I hope that the noble Baroness will focus the attention of her housing associations on that point.

In their 18 years in power the previous government put in place the framework for a better housing policy. I am glad to know from their manifesto that the present Government do not intend to make radical changes to the current framework of housing policy. Indeed, I hope that they will build upon it.

4.30 p.m.

Lord Monkswell

My Lords, in thanking my noble friend Lord Dean of Beswick for opening the debate, I think I must straightaway disabuse the noble Lord, Lord Marlesford, that the present Government are going to carry on the policies of the last government. I think that nothing could be further from the truth. At the start of my remarks I have to declare an interest as a residential landlord; I shall give some details of my experience in that capacity later.

I was particularly struck by the contribution of my noble friend Lady Dean of Thornton-le-Fylde when she questioned the use of the phrase "social housing". That was a very perspicacious remark. The Motion talks of the case for more rented housing in both the public and the private sectors. We need to recognise that there will be a need for rented housing, both public and private, for a number of different reasons. To start with, young people who are not yet settled in their future way of life may not want to commit themselves to buying a property; indeed, they may not be able to afford to buy one. People who move their jobs frequently may think it inconvenient to enter into the commitment of purchasing a house. Also, I would suggest that elderly people may not wish to have their capital tied up in a house as such. So there are a number of reasons why rented housing is necessary and important, and we need to recognise that it goes right across the scale from the bed sitter of the impecunious student at one end to the most grand tenant of the Duke of Westminster at the other.

It may be useful to relate some of my experiences and knowledge of the situation. I should like to take you back to the 1930s to the house that my lady wife grew up in after the war. It was in the council estate of West Derby in Liverpool. It is interesting to think that the estate was not considered to be "social housing"—housing for the poor. This was housing for the middle classes and, dare one say it, for the upper-middle classes, because my wife's grandfather was a sea captain and in Liverpool that would have put him in the top bracket of society.

It is interesting to ponder the standard of housing that was built by municipal corporations at that time. I can relate the experience in the area in which I live in Manchester. There are two estates in the local ward. One is a council estate built by the city council of which my noble friend Lord Dean of Beswick was such a distinguished member, the other a private speculative development. One estate is characterised by quality building standards, good materials, roomy interiors and well-sized gardens. You may think I am talking about the private development; I am not. This is the council estate. On the other hand, the private development goes under the name of Chorltonville and local knowledge has it that local builders used shoddy materials, scrimping all the way around, providing very small rooms and very small gardens. It is one of the unfortunate reflections of the market that houses in Chorltonville retail at over £100,000 whereas houses in the West Derby estate retail for about half that yet are of better quality.

It reminds me of the automobile magazine which asked, "What is the best car in the world, Jaguar or Rolls-Royce?" Having assiduously tested different models and reviewed their performance it concluded that the Jaguar was the better car even though it cost half as much as the other. Yet the public perception was that the Rolls-Royce was the better car. This is one of the difficulties we encounter in the market place in housing. I hope that the Government will think in terms of how we tackle the difference between perception and reality.

I mentioned at the beginning that I had a vested interest as a residential landlord. A couple of years ago I was looking for a house to buy in London. I saw one that was roughly in my price bracket. It was a four-bedroomed house in multiple occupation. Seven tenants were living in absolute squalor. Window frames were falling out and there were no decent facilities. There was a cold water tap in the kitchen and a gas stove that should have been on the tip rather than in a domestic residence. I was advised by the owner that he was netting 00,000 a year from the rents of those tenants. He had been served with notices for improvement by the local authority but seemed quite happy to go along to the court and pay the odd fine now and again. The serving of a notice of improvement was the rule a couple of years ago. It was a Conservative government, in the last dying throes of their administration, who took away the requirement that houses in multiple occupation should be improved by the landlord so that they were fit for people to live in. Not only that: even where legislation required improvement by landlords of houses in multiple occupation the government starved local government of the resources to implement that policy. A number of people have mentioned that when the Conservative government came to power in 1979 one of their first actions was to cut investment in council house building. It seems that council housing and municipal housing were under sustained attack by the previous government all the way through.

The result is that people end up living in squalor. There was a case reported the other day of a young student who had died as a result of incompetent work by the landlord and the person he had employed to fit a gas fire and a gas cooker. I am very glad that those people were severely punished. When we talk about housing we need to recognise that it is a life and death issue. I accuse the previous government of abdicating their responsibility to look after the people of this country.

What prospects do we have now? First of all, the new Labour Government have already acted on the manifesto commitment of ensuring that capital receipts from the sale of council houses received but not spent by local councils are reinvested to help build new houses and rehabilitate old ones. It is interesting that this will be phased to match the capacity of the building industry and to meet the requirements of prudent economic management. I am reminded of the biography of Nye Bevan written by Michael Foot, which explained that even though Nye Bevan as Minister of Housing came under immense pressure to build more houses because of the desperate shortage and the need for housing that existed after the war, he said, "No, I am going to ensure that we build decent houses for decent people." That, in practice, meant building fewer houses because the materials, the skills and the workmen were not available. The resources had to be built up over time. That process of building up the necessary facilities was capitalised on by future Conservative Ministers.

The new Government will do more. Again I quote from our manifesto: We will provide protection where most needed: for tenants in houses in multiple occupation. There will be a proper system of licensing by local authorities which will benefit tenants and responsible landlords alike". I am glad of that commitment.

We will also place local authorities under a new duty to protect those who are homeless through no fault of their own and in priority need. Effectively, the new Government are turning away from the policies of the previous government. I am very glad they are doing so.

4.40 p.m.

Lord Graham of Edmonton

My Lords, the debate has been enlivened by the experience of so many who, although not at the sharp end—that is, desperate to find a decent place to live—have been involved as councillors or Members of Parliament and in other ways. The House therefore has an opportunity to listen to people such as my noble friend Lord Dean, whose experience in this field is unrivalled. I also extend a warm welcome to my noble friend Lady Dean, who comes with the unique qualification of her newly acquired post. Although she has occupied it for only five weeks, she could have fooled me. From the thoughts and experiences she related, it is quite clear that the platform that this House will provide for her to test her own opinions and those of her colleagues in the Housing Corporation from time to time will be put to very good use.

I sense, as previously, that we are at the beginning of what will be seen in years to come as an opportunity for the people of this country to make a great contribution towards solving the housing problem. In fact, the problem will never be solved; it is gigantic, and will be with us for ever. I do not blame the previous government for their record. It would have been impossible, as it will be for this Government, to solve the housing problem. We can only do our best.

The National Housing Federation, the Local Government Association and the Chartered Institute of Housing produced a document entitled, Making Partnership Work. I have no time to go into detail, but the document demonstrated that there are partnerships, collaborations and opportunities for groups and institutions to work together. I commend those three organisations for their endeavours.

We could spend time down memory lane, thinking about the 1940s, 1950s, 1960s, 1970s or 1980s, even the 1990s, and we could castigate a particular government, council, individual or policy. But our concern should be not with what has gone before. By all means we should learn from what has gone before and remember it; but our concern should be with what the Government and the Housing Corporation can do now.

When I was Member of Parliament for Edmonton I confess that I went home from the House more than once having cried in my car, following a surgery during which I had listened to the misery that my constituents brought to me, invariably born out of problems to do with housing. Matters of health, education and employment were all vital; but the condition that brought the most misery was the quality or absence of housing. No one could forget that.

When I look back over my past 30 or 40 years as chairman of a housing committee, a council leader and Member of Parliament, I realise that there are good landlords and bad landlords, good councils and bad councils, good tenants and bad tenants. It is no use castigating a class of people. It is no good saying that private landlords are bad and ipso facto public landlords are good. They may approach the problem on a different level and try to achieve different things.

Looking back over the past few years, the problem that those involved in housing have had to recognise is the enormous change in household formation across the country. At one time the household would be a man, his wife and two or three children, who had modest aspirations. What they wanted was a well-built house with a small garden, access to shopping, and access to trains. Now, people live longer; they live as single units, following divorce; there is separation; and there has been the baby boom. The noble Lord, Lord Marlesford, referred to the break-up of the former council estates and the right to buy one's own house. That was one of the biggest bribes ever placed before the council tenant. Very few council tenants who had nothing would resist the opportunity to buy for £10,000 a house valued at £30,000—and they took that opportunity. But in doing so, not only was the unity of the estates broken up—which is not a bad thing—but the local authorities were then saddled with the desperate problem of how to manage the remaining housing stock. I respect the view expressed by the noble Lord, Lord Marlesford, that it was a good thing. But out of that good thing came some very bad consequences which had to be dealt with.

The cost of putting right the quality of housing in both the public and private sector is a very real problem. I hope that this Government will demonstrate, more than the previous government did, that they want to solve the housing problem. I do not believe that they ever will solve it, but I believe that the will to solve the problem is there.

And there is the experience of the past few years in terms of different forms of tenure. My noble friend Lady Dean alluded slightly to the housing sector which I believe can provide the people of this country with opportunities; namely, the co-operative housing sector.

The noble Lord, Lord Marlesford, while not eulogising, paid tribute to the housing associations. They are unelected and unaccountable, a small group of people who organise themselves and have the opportunity to do good. Nobody elects them; they are removed by themselves, and replaced by themselves. Most people in this place own their own house, and in so doing have a stake in what happens to that house. A tenant in privately rented accommodation does not have a stake, because there is no access to control. A council tenant or housing association tenant may very well enjoy good housing and pay the rent, but such tenants do not have access to control. Who controls the ownership of the premises, or the key to the future?

I should like to say to my noble friend on the Front Bench, who has considerable experience in housing matters, and my noble friend Lady Dean—all I want her to do is to listen, but not necessarily to nod her head (I shall not look in her direction)—is that there is an opportunity for the Housing Corporation and the Government to examine again the possibilities for co-operative housing.

In 1991 the Department of the Environment commissioned Price Waterhouse to carry out an investigation into co-operative and related housing. I take the point about "social housing" made by my noble friend Lady Dean. Whether there was a stigma or not, people knew what was meant by council housing. For a long time it meant good, well-built, decently priced, affordable housing. If that has to be changed, so be it.

Price Waterhouse said, when it examined the co-operative sector: small-scale community-based TMOs [tenant management organisations] are able to deliver superior value for money; in the housing association sector PVCs are a flexible model capable of delivering housing services which compare with the very best mainstream providers; where appropriate PVCs should he encouraged to buy-in services from specialist support agencies; the development of TMCs [tenant management co-operatives] in the local authority sector is more likely to produce better results than forms of TMO where responsibility is diffused and roles are circumscribed. There are 20,000 to 30,000 houses in co-operatives. The tenants are the owners and the tenant-owners are the managers. They have a stake. I say to my noble friend on the Front Bench that if we are to pursue the concept of a stakeholder society we can do it best in the realm of housing. People are stakeholders and many people could, in my view, benefit from it.

Co-operative housing is cost efficient and effective. It gives people the opportunity, through the democracy of the co-operative, not only to have a say in who should come in and who should go out but in all the other ranges of activity. I take the point made by the noble Lord, Lord Marlesford, that such housing will never be free of some form of subsidy. If we want good quality housing, we need to take account of the fact that many people, through no fault of their own, are unable to pay the market rate. There must be a mechanism. This is not the right debate in which to talk about housing finance. I simply say that co-operative housing can be one of the means—and only one—which will help to solve the problem of housing in this country.

The noble Lord, Lord Dean, has once again stimulated a debate about the quality of housing. When he, like me, came into local government—I see the noble Baroness, Lady Seccombe, champing at the bit; she wants to get in her twopennyworth in the debate; she knows all about it—we all had housing experience. In those days housing had a much higher profile, it made people angry and desperate. I have told the House that it made me weep. With a commodity or sphere of public life capable of moving people in that way, we must recognise that the problem must be solved. It can be solved best by collaboration. Another word for "collaboration" is "co-operation". I believe that co-operation in housing, through co-operative housing, is one of the ways in which the problem will be solved.

4.53 p.m.

Lord Ezra

My Lords, as the noble Lord, Lord Graham, said, we have had a wide-ranging and well informed debate from all sides of the House. We are indebted to the noble Lord, Lord Dean, for having introduced it and for having made such a powerful case for increased availability of rented property both in the public and the private sector. The point was vigorously taken up by my noble friend Lady Maddock with her great experience of housing matters. She referred specifically to the poverty trap in housing which was eloquently dealt with by the right reverend Prelate and the noble Lord, Lord Dixon, from his experience.

One of the points I wish to take up was made throughout the debate: the question of the quality of housing. It is a matter in which I have been involved for many years as President of the National Home Improvement Council. Quite recently, on 28th July, I asked an Unstarred Question about the need to increase the rate of renovation of domestic properties, to which the noble Baroness, Lady Farrington of Ribbleton, replied. So she will be aware of what I said on that occasion and will no doubt remember what she said in answer. I reminded the House that, based on house condition surveys and other studies such as the Rowntree Report on the state of UK housing, 2.5 million homes are in need of substantial repair in Britain, representing something like 14 per cent. of all homes in the country. But as regards the private rented sector in particular, the position is even worse. The noble Lord, Lord Monkswell, gave us a graphic illustration of the conditions one can get at the lower end of the private rented market.

The Association of Residential Letting Agents recently stated that: the condition of over a fifth of the privately rented accommodation in this country is among the worst in Europe. Until every part of our sector is managed to reasonable minimum standards, we will never shake off our poor image". This highly regrettable situation is confirmed in depth by the energy report of 1996, issued by the then Department of the Environment, arising out of the last English house condition survey. The report emphasised the point made by the noble Lord, Lord Dean, that cold homes are one of the worst health risks in this country, particularly for the elderly on low incomes who have to live in them.

These conditions tend to be worse in rented accommodation. While 10 per cent. of owner-occupied dwellings lack central heating, the proportion is 40 per cent. in the private rented sector. About 15 per cent. of all converted flats—the most common dwelling type—have no fixed heating of any kind. The elderly on low incomes in private rented accommodation are the part of our population that suffers most. Altogether about 1 million or 22 per cent. of all households with persons over 65 years of age live in homes with SAP ratings below 20 per cent. The SAP rating is a government rating for relative heating efficiency. That 20 per cent. is under half of what is required for normal heating standards.

The Rowntree Report takes a pretty gloomy view of the future, if things are left as they are. Its conclusion states: the abolition of mandatory renovation grants in England and Wales through the 1996 Housing Grant, Construction and Regeneration Act will [no doubt] relieve pressures on local authority budgets but may lead to a reduction in public spending if hard-pressed local authorities cut back on grant provision. In the absence of new measures to encourage private spending and to make it more effective, there is a strong prospect that housing conditions for low income homeowners and those in the private rented sector may deteriorate in the medium and long term,". In other words, the present unsatisfactory situation could get even worse in the future. I do not believe that that is at all acceptable.

Thus I must ask the question which other noble Lords have posed in the debate: has the time not come for a total rethink of the situation, particularly for a rethink of the position relating to the disrepair of such a large proportion of our housing stock? Is there not a need for a national strategy to deal with the problem, as is being urged by the Chartered Institute of Housing?

It is clear, in my opinion, in present budgetary conditions, that the Government are most unlikely to increase renovation grants, however strong the case may be. But could not the system be reshaped to attract private funding? Should there not be some form of registration of private rented accommodation, to ensure that the quality is reasonable and that the heating is adequate and safe? The noble Lord, Lord Monkswell referred to the worrying case of unsafe heating which we read about the other day.

My noble friend Lady Maddock referred to the need for fiscal incentives for the renovation and improvement of property. The noble Lord, Lord Graham of Edmonton, referred to housing co-operatives. There are a large number of new ideas being put forward in this whole area. What we cannot afford to do is to allow things to go on as they are. House condition survey after house condition survey shows that the proportion of low quality domestic dwellings in this country is increasing; there is no reason to suppose that the next house condition survey will not once again reveal that situation.

The Government have limited resources at their disposal. However, they are making capital receipts available to local authorities and I share the view of the noble Lord, Lord Dixon, that the emphasis should be on improvement and renovation of existing stock. Out of all those new ideas a new strategy should emerge. If we are going to create a New Britain, which is the aim of the Government, surely a large proportion of decrepit housing cannot be part of it.

5 p.m.

Baroness Seccombe

My Lords, I add my thanks to the noble Lord, Lord Dean of Beswick, for initiating this debate. It is a subject of immense importance and raises our emotions, as we have seen today. I feel it is timely that we are discussing this issue today as we approach the Christmas festivities. If we were given a Christmas wish I am sure that Members of your Lordships' House would wish that families, particularly those with children, would share in happy, loving times in homes of a high quality in warmth and comfort. Sadly, life is not like that and we have to deal with the situation as it is.

I rise with humility. I listened, as we all have, to people with experience who have shown that they know their subject. I listened to the noble Baroness, Lady Dean, and hope that she will forgive me and not think me rude when I say that she is a fast learner.

We are not dealing with overall housing, but the specific matter of rented accommodation. The Conservative Party has always had home ownership high on its agenda. But at the same time, we always laid great stress on the quality and standards of the rented sector. My noble friend Lord Marlesford illustrated that earlier. We recognise the need for diversity and choice and when in government concentrated on that aim. But, as the noble Lord, Lord Graham of Edmonton, explained, there has been a dramatic change in the way we live over the past 20 years. People are living longer and many elderly people are living alone. We have seen the breakdown of marriage, often leading to both parents claiming the need for suitable accommodation for their children while on staying access. Many young people who would have remained in the family home until marriage or moved to another part of the country, now prefer to have, in current jargon, their own "pad".

For those and many other reasons a massive strain has been placed on resources and now we are told that we need 4 million new homes by 2016. We should keep in mind that we have no increase in population; it is demographic changes that have brought this about. There has been and always will be a real need for rented accommodation. Some people do not want the responsibility of owning a house and all that goes with it. Some may not be able to raise the deposit. Some, due to breakdown in relationships, move to other areas. And some need temporary accommodation.

There are two types of rented accommodation; namely, the private and the social subsidised accommodation. The private sector can provide for many in the groups I mentioned. Social housing can enable those on low incomes to have a decent home. But of course that type of housing does not have to be provided by central or local government. In Britain we have a long tradition of private trusts and charitable foundations providing accommodation for low income families.

I understand the concern of the noble Lord, Lord Dean of Beswick. When his party was last in government between 1974 and 1979, 400,000 private homes were lost from the rental market. That was due to more and more regulation and constraints placed on landlords. The last government understood only too well the importance of the private sector and so, on assuming office, set about deregulation of that sector. Landlords were encouraged to rent out their property, allowing them to set market rents and, in agreement with their tenants, specify a fixed term after which the property could be repossessed.

At the same time, tenants were encouraged to rent property by providing them with extra protection against illegal eviction and harassment. The number of households in that sector increased from 1.7 million in 1988 to 2.1 million in 1996. I believe that that was a direct result of deregulation and other initiatives to sustain the revival of the rented sector.

I turn to social housing. As I said earlier, that does not have to be provided by local or central government. Perhaps the most exciting development in recent years has been the dramatic growth of housing associations. The last government welcomed that diversity and the end of local government monopoly. There are strong obligations to which the associations have to adhere. High standards and quality are required and the incomes of the tenants always have to be borne in mind. Those associations have been enormously successful in building affordable homes and attracting £6.4 billion of private investment.

Local government provision has been strengthened for tenants to ensure high standards of service. Under the council tenants' charter, tenants are now entitled to a lifetime of security; to have urgent repairs done quickly at no cost to themselves; to take in lodgers and sub-let part of their home; to exchange their home for another one; and, most importantly, to be consulted on the management of their homes. Of course, there are many other measures.

Perhaps at this stage I can mention the difficult subject of housing homeless people, for whom I have great compassion. I know of one couple who acted responsibly throughout. They became engaged and applied for accommodation with the council. They waited a number of months before they married. But, on the night of their wedding, they each returned to their parents' home, neither parent being willing to have both of them living with them.

It was many months before a flat was offered. They did not start a family or try to jump the queue in any other way. But one can imagine their misery. In a village everyone knows when a flat becomes vacant; and the couple watched as people who they believed had acted irresponsibly leapfrogged over them. We must be aware and sensitive to the concerns of people in such situations, and I ask the Minister to keep that matter in mind.

In spite of what the noble Lord, Lord Dean of Beswick, said, I am proud of my party's achievements in providing homes of an increasingly high standard. Of course, there are always new challenges and demands as time moves on and there is always much to do. But I cannot finish without reference to capital receipts, as mentioned by the noble Lord, Lord Monkswell. I understand that instead of allowing councils to spend their set-aside capital receipts, as had been promised, the Government now intend to allow councils to borrow more. This can only result in higher public sector debt.

My Lords, I end where I began. We need to keep the housing agenda on the front burner. We should continue to search for imaginative initiatives so that in the not too distant future our wish to see most of our people in decent, warm, safe and affordable accommodation will be on the way to achievement.

5.10 p.m.

Baroness Farrington of Ribbleton

My Lords, this has been one of the most knowledgeable and wide-ranging debates that it has been my pleasure to listen to in the House. I should like to begin by congratulating my noble friend Lord Dean of Beswick on bringing to the attention of the House the important issue of the need for rented housing in the public and private rented sectors.

Housing is at the heart of this Government's wider social agenda to tackle disadvantage and all manifestations of social exclusion. The noble Baroness, Lady Maddock, and my noble friend Lord Dean of Beswick asked about the membership of the social exclusion unit which has been set up within the Cabinet Office. It brings together senior government officials and representatives from local authorities, voluntary organisations and business. That is a good range of knowledge and expertise to cover the many aspects of social exclusion.

Making housing the central feature is integral to our aims of giving people a decent quality of life, involving them and giving them control over the way they live, and supporting family life and healthy families. I agree with my noble friend Lord Dean of Beswick that health and housing are closely linked. In developing our housing policy, we also need to ensure that people are not excluded by benefit dependency from work and the social and economic support and opportunities that work brings.

We recognise that most families want to own their own homes. We are pursuing policies designed to limit instability in the housing market. We recognise that renting plays a vital role in meeting a large part of housing need. The private rented sector contributes to a more mobile and flexible labour market and is a stepping stone to home ownership for those who can afford it. Several noble Lords referred to mobility. If we look at those under 35, even those who are highly qualified and in professional jobs, it is a surprise to my age group and those older than myself to discover how few have permanent appointments and how many know that mobility is part of their future career.

Our objective for social housing is to encourage the provision of well managed housing, of good quality, securing value for money—value for individual and family money and value for public money. That requires a partnership approach, with everyone—government, local authorities, housing associations, communities, voluntary groups, private funders and tenants—working together.

Many speakers, including the noble Baroness, Lady Maddock, and the noble Lord, Lord Dixon, asked about the complex world of local and public funding policy, local authority housing finance rules, regulations and policy, and contributions from public expenditure towards housing. All government departments are engaged in comprehensive reviews of government expenditure. A review of spending on housing is being carried out by the Department of the Environment, Transport and the Regions and the Department of Social Security. This joint exercise recognises the interdependence of spending on housing and spending on housing benefit. Among other things, the review will consider future investment, the better targeting of that investment and how we estimate housing need. Both the definition of the PSBR and the whole issue of ring-fencing the housing revenue account—a complex area to tackle—are part of the wide-ranging review.

One issue—I refer here to the contribution of the noble Lord, Lord Marlesford—is whether it is reasonable to take the view that, where there needs to be investment in renovation of older housing stock that is publicly owned, it should be a charge on all the people living in a community who own it or only on those people who happen to be tenants of the local authority housing. That is one of the issues to be considered during the review.

Behind the review there are a number of fundamentals: making certain that what comes out will work; that there should be no rigid compartments either within social housing or between social housing and other housing; that all the housing sectors should make a contribution to meeting need; that housing strategies should look across all sectors; and that we should look for variations around the country so that local needs can be taken into account. Factors vary from one area to another and a solution in the centre of London may not work in the fells in Lancashire. My noble friend Lady Dean referred to the importance of looking at future housing developments as building and strengthening communities and not merely as bricks and mortar.

The capital receipts initiative was referred to by the noble Baroness, Lady Seccombe, and by my noble friends Lord Dean and Lord Dixon. The previous government slashed capital investment in housing year on year. The noble Lord, Lord Marlesford, and the noble Baroness, Lady Seccombe, hoped that we would build on the previous government's policy. I hope that we will build a little faster, because the rate at which the previous government were building was making the waiting list grow. Under the previous government capital investment fell from £4.3 billion in 1992-93 to £1.7 billion this year. We cannot change that overnight but we have started with £800 million of additional resources.

The noble Baroness, Lady Seccombe, asked whether investment should be linked directly to the receipt of capital receipts by individual authorities. That kind of thinking can lead us into the difficulty of ending up with houses being built in an area where there is little demand and no capital receipts being available in local authority areas where there is great demand. It would fail to meet the needs of those who have the most acute problems to do anything other than follow the wise policy that has been pursued by our Government in the months since May.

The noble Lords, Lord Dean and Lord Dixon, said that a first priority was to tackle the years of neglect in terms of the basic stock. We must recognise that alongside building new housing is the need to renovate, restore and repair the fabric of buildings. Each local authority must identify the specific needs in its area. On current plans we expect about 200,000 additional social lettings to be provided for rent and shared ownership over the four years 1997-98 to 2000-01. Around 60 per cent. of those will be new build. It is important to recognise that the remaining 40 per cent. will be achieved through the restoration of other property.

The noble Lord, Lord Marlesford, was not alone in making a comparison between the relative merits and values of different types of provision. I started by serving on a borough council housing committee, and from my experience, comparisons are odious. To look at whether housing associations, local authorities, the private rented sector or home ownership are best and most ideal in order to solve any particular housing problem is a mistake. The housing associations movement has become increasingly adept at attracting private finance to complement public funding. So if local authorities provide new social housing, in partnership with housing associations, more homes may be provided than would be possible through public resources alone. Housing associations—or registered social landlords, to use their formal title—have skills as developers and managers of housing. They are in a good position to be partners in the wider regeneration of communities with the most severe economic and social problems. Several speakers, including my noble friend Lord Graham of Edmonton, referred to this. It is all linked to the important issue of getting people back to work as part of developing a strategy to improve and develop the housing stock.

My noble friend Lord Graham of Edmonton is renowned for his knowledge of and support for housing co-operatives. He is outstandingly respected in the Co-operative movement. We are keen to see the development of tenant participation more generally. The development of housing co-operatives is seen as part of that wider approach. We are currently reviewing policies for tenant participation, looking at a range of issues including the raising of standards and implementing a more consistent approach to tenant participation across the whole of social housing. The Housing Corporation is currently undertaking a review of tenant participation and housing co-operative strategies.

We have also asked officials to discuss with the Housing Corporation a paper received from the all-party parliamentary group on housing co-operatives in the context of looking at tenant participation in the round. The words spoken by my noble friend Lord Graham of Edmonton were extremely wise as regards the issue of ownership. It is not only ownership through holding the title deeds and the mortgage, but having ownership that stretches in a deeper and more fundamental way. The approach and philosophy of housing co-operatives can often develop that.

The Housing Corporation, which my noble friend Lady Dean has been appointed to chair, is obviously going to be an extremely important player in developing a housing strategy that is comprehensive and that will meet needs. It is always difficult to cope with someone of her ability, skill and knowledge who has been appointed as the first woman to the post. I know that she has been appointed on ability alone. I am delighted that the ability of women of her calibre is now being recognised in such posts.

My noble friend Lady Dean referred to the realism with which we must speak of the financial position. I fully agree with her, particularly as regards those features which she identified as critical: the importance of housing in tackling social exclusion; the relationship of housing to other social policies, illustrated by her reference to foyer schemes and their support for education and training. There is also the importance of good design and effective housing management in saving wider costs, for example, on policing.

The noble Lord, Lord Ezra, referred to the important and integral value of energy conservation both in terms of the quality of our lives and our approach to wider environmental issues. My ministerial colleagues will be looking to the noble Baroness, Lady Dean, and her board to guide the Housing Corporation. They also value the insight that they can give on social housing policies more generally.

The Housing Corporation has an approved development programme. My honourable friend the Minister for Local Government and Housing has already asked the Housing Corporation to develop its programme in a number of ways, ahead of the outcome of our review of spending, placing even greater emphasis on homes for rent, with 80 per cent. of the programme's expenditure, compared with 75 per cent. in previous years.

In this short debate many speakers have referred to the importance of estimating the level of need for the future. The private rented sector is part of the fabric of seeking to meet housing need. The noble Baroness, Lady Maddock, and the noble Lord, Lord Ezra, referred to that. Over 10 per cent., which is 2.1 million households, now occupy that sector. We are seeing a growth in demand for privately rented accommodation. It is extremely important that we recognise that the demand will grow as an additional range of housing units become available.

The noble Lords, Lord Ezra and Lord Monkswell, referred in particular to being fair to good landlords. That is a point which is often forgotten in debates on housing. They stressed the importance of the quality of housing available in the private rented sector. In particular there is the need for a national licensing system for houses of multiple occupation, and that has been recognised by the Government. Of course the noble Baroness, Lady Seccombe, is right when she said that we should minimise unnecessary regulation and control. But there must be a legal duty to protect the health and safety of people living in such accommodation.

The right reverend Prelate the Bishop of Leicester also referred to the range of housing available for people and the need to ensure that it is all of good quality. There is much that can be said about those who will be our partners in the exciting new venture, which is seeking to meet housing needs, working in co-operation with local authorities and a range of agencies.

Many of those involved in this partnership such as the Housing Corporation, as my noble friend Lady Dean of Thornton-le-Fylde is fully aware, have all-party support. The noble Baroness, Lady Maddock, referred to the Empty Homes Agency. That is another example of all-party support.

It is critical that we face the many challenges as we move towards the 21st century. Our aims are clear. We need housing which works and goes on working. The key point underlying our policies for investing in social housing is that we must create a framework which is sensitive to local requirements and which makes the best use of resources. The right reverend Prelate the Bishop of Leicester referred to the impact on individuals of housing problems.

Perhaps I may be forgiven for concluding with a personal anecdote. While I was chairman of the education committee in Lancashire, we appointed a head teacher during that period of the 1980s when it was difficult to sell property. The head teacher ended up being homeless, unable to buy because he was unable to sell. For three months he lived in the homeless families accommodation that was available in that seaside area of Lancashire. He said that without that personal experience he would never have understood how much a child's inability to perform well at school relates to the quality and experience of his home and home environment.

I finish where my noble friend began. Health, housing and education are linked together—and this Government are determined to have a strategy that works in all areas.

5.30 p.m.

Lord Dean of Beswick

My Lords, when I first chose this subject for debate I was a little dubious about whether now was the right time or whether it might he a little too early and we might be expecting a bit too much. I wondered also whether the debate would attract enough speakers. However, this debate has been an outstanding success, and I hope that what has been said will be listened to by the Government at the other end of the corridor.

I thank all noble Lords who have spoken. All contributions have been excellent. The noble Lord, Lord Marlesford, and I disagree slightly on some matters, but I believe that our objective is the same.

I was pleased that my noble friend Lord Dixon referred to my period in local government. In those days, housing policy was "hyperactive"; it was a different wicket. Under the leadership of a man called Bob Thomas—he became Sir Robert Thomas—Manchester cleared 85,000 slum houses in fewer than 20 years. Think of the enormity of that undertaking. I do not believe that that man was ever given sufficient credit for what he did. I played my part, at a pretty high level and, as my noble friend Lord Dixon said, I eventually became the last chairman of the old Association of Municipal Corporations, and was a founder member of its successor body, the Association of Metropolitan Authorities.

This has been a wonderful debate. I conclude by thanking my noble friend Lady Farrington of Ribbleton for the excellent way in which she replied in detail from the Dispatch Box to all the points made. My Lords, I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.