§ 7.30 p.m.
§ Lord Ezrarose to ask Her Majesty's Government whether they intend to increase the rate of renovation of domestic properties in order to reduce the number of unfit dwellings and help meet future housing needs.
§ The noble Lord said: My Lords, in asking the Question on the Order Paper, I am seeking to draw attention to the case for accelerating the renovation of 74 dwellings in order both to reduce the large number which are unfit or below acceptable standards and to provide for increased housing needs. This is a matter of social and economic importance in which I have a specific interest as president of the National Home Improvement Council. I am delighted that my noble friend Lord Gridley should have chosen this occasion on which to deliver his maiden speech.
§ The basic information on the state of the housing stock is obtainable from the four house condition surveys issued in 1991 and 1993 and covering the whole of Great Britain. That and other material was analysed in the impressive study entitled The State of UK Housing, published in 1997 under the auspices of the Rowntree Trust.
§ What emerges is that in 1991 there were 1.5 million dwellings unfit for human habitation in the United Kingdom. That represents around 7 per cent. of the total number of dwellings, or one in 14. This problem was most severe in Wales, where 13.3 per cent. of the dwellings were unfit to live in. In addition, around 20 per cent. of the dwellings in England and Wales were in urgent need of repair and 10 per cent. in Scotland. The National Home Improvement Council estimates that over 2.5 million homes in total are in need of substantial repair and the situation appears to be getting worse rather than better.
§ The problem has been exacerbated because the number of renovation grants has dropped to one-third the level in the 1980s. The grants reached a peak in 1982–84 when almost 300,000 a year were provided across the UK. In England provision subsequently dropped to around 60,000 a year in the 1990s and in Scotland from 60,000 to 20,000.
§ The Housing Grants, Construction and Regeneration Act introduced last year abolished mandatory renovation grants and replaced them with discretionary grants. The reason was that demand for mandatory grants was far greater than the available resources. It was hoped that the new system would enable local authorities to identify the areas of greatest need. However, the total budget for discretionary grants is now only £250 million a year whereas at the peak it was six times that, nearly £1.5 billion.
§ While that has been happening, owner occupiers have also been spending less on repairs and improvements because of the difficulties of negative equity and falling house prices during the recent recession. Although the housing market has subsequently improved, the improvement is patchy and it will take some time before previous expenditure on renovation is restored. An additional disincentive is that VAT is charged on house repairs and modernisation, which has encouraged the black economy, the cowboy contractor and bad workmanship. VAT is not charged on new build.
§ In addition to the large number of houses below standard or in need of major repair, there are estimated to be some 800,000 unoccupied properties. What that adds up to is that the housing assets of the country are in poor shape and likely to get worse unless there is a major change of policy. The social harm arising from this situation is considerable, as revealed in a study 75 issued in June of this year by the Royal Institution of Chartered Surveyors entitled The Real Cost of Poor Homes. Based on detailed comparative studies it estimated that unfit dwellings in the public sector in England—only one portion of the unfit dwellings of the country as a whole—added £150 million a year to the cost of the NHS, much of that being due to poor heating, ventilation and dampness. Crime resulting from poor housing was estimated to add around £90 million a year to police costs and education was also shown to suffer as a result of poor housing conditions, interference with homework and other adverse conditions.
§ At the same time as the existing housing stock shows those signs of debilitation, with its adverse social and environmental effects, the previous government's White Paper entitled Household growth—where shall we live?, issued in November 1996, showed that, as a result mainly of shifting demographic patterns, nearly 4.5 million new households would be needed over the next two decades. So far the proposal is that the increased demand should largely be met from the construction of new settlements in hitherto undeveloped parts of the country, particularly in greenfield areas.
§ The question I should like to pose is whether a substantial part of that extra demand could be met by a major programme of renovation, restoration and conversion of the existing housing stock. Let us start with the 800,000 vacant dwellings—120,000 in the public sector and 680,000 in the private sector. Current initiatives such as the Empty Homes Agency are bringing back into use around 5,500 of those dwellings per annum, but with a major programme that could be substantially increased. The National Home Improvement Council estimates that around half of the 800,000 vacant dwellings could be brought back into use.
§ Next, let us consider conversions. The demographic trend is towards single person occupancy. Therefore many three or even two-storey houses could be converted into flats. The rate of conversion in the period 1971 to 1991 was 20,000 a year. It has since dropped to 12,000. There are in fact some 6 million pre-1990 three and two-storey houses. Allowing for conversions of not more than 10 per cent., that could provide 400,000 additional units if the previous rate could be restored over a 20-year span.
§ There is also the possible conversion of surplus commercial dwellings such as offices, shops, warehouses and industrial premises. Those would probably be more expensive to convert than domestic dwellings, but good use could be made of otherwise redundant property. In London alone empty offices are estimated to have a potential of up to 20,000 flats. Over a 20-year period it would not be unreasonable to allow for 100,000 units of accommodation from the conversion of commercial dwellings in Britain. Finally, there is the redevelopment potential of the land occupied by large houses which are no longer required as such. That potential is estimated to be up to 300,000 dwellings over the 20-year period.76
§ Taking all that together, over 1 million additional dwellings could be provided through a determined refurbishment and conversion programme which would also improve conditions in the large amount of substandard housing remaining occupied. Naturally, I hope that the Government will be introducing policies to that end.
§ I was encouraged by what the noble Baroness. Lady Hayman, said in the Second Reading debate on the Local Government Finance (Supplementary Credit Approvals) Bill on 23rd July. She made it clear that the priority in releasing the credits was to help local authorities to tackle housing and housing-related regeneration priorities. She stated that the action taken by local authorities might include renovations and improvements to local authority housing and private sector renovations. I should like to ask that added emphasis be given to that in any communication to local authorities.
§ A further measure I should like to recommend is the greater use of discretionary grants. If the total could be raised to £500 million, which is still well below levels of a few years ago, the number of unfit dwellings could be reduced substantially over a five-year period. In a recent Question on the Government's energy efficiency plans I raised the issue of a possible VAT reduction on energy-saving equipment. The same issue arises on the cost of housing repair and refurbishment. I believe that fiscal incentives could play a big part in stimulating home improvement. They certainly have in the past.
I am sure the Government could come forward with these and other measures to deal with the poor state of much of the housing stock. The noble Baroness, Lady Hayman, graphically illustrated this in her remarks on 23rd July on the impact of cuts in housing capital expenditure programmes. which in her words had resulted in,
damp homes and in leaking roofs, rotting windows and doors, inadequate kitchens and bathrooms, and in patch and mend repairs".—[Official Report, 23/7/97; col. 1459.]
§ I believe the Government recognise that a major initiative in home improvement is now urgently required. I hope they also recognise that much of the forecast additional housing needs could be satisfied by suitable renovation and conversion of the existing housing stock.
§ 7.42 p.m.
§ Lord Gridley
My Lords, it is with a deep feeling of honour that I have the privilege to make my maiden speech in your Lordships' House. It is also with a degree of humility, as I have come to realise over the past few weeks the vast amount of knowledge and experience that reside within the House. I should like to thank my noble friend Lord Ezra for initiating this debate, thus giving me the opportunity to be able to speak. Although I cannot admit to there being familiar faces in the House, as the noble Lord, Lord Lofthouse, could last week, I can agree with the noble Lord that it is a comfort to see so many kind and welcoming faces; and none more so than those of my noble friends who occupy these Benches. I should also like to take this opportunity to express my thanks to Black Rod and the Clerk of the 77 Parliaments and their staff for their welcome, guidance and support. It made entering the House a little less daunting.
With the House's indulgence, I should just like to mention my late father who served this House for many years and gave me much support and encouragement throughout my career. I take solace today from the fact that he cannot interrupt me or answer me back. But I hope he is listening.
At this point I feel that I should set out the context of my speaking in the debate. I am currently a lecturer at a college of further education on the south coast. As such, I have listened with great interest recently to debates in this House and I look forward to making contributions in the future in this area. Becoming a teacher four or five years ago was, however, a career change for me. Prior to that I worked for some 13 or 14 years in the building industry, beginning as an apprentice carpenter refurbishing and renovating domestic dwellings in Portsmouth, and finishing as a project manager working on commercial and industrial developments. During my career in the industry I worked on many residential projects, including the refurbishment of flats in Stamford Hill and the building of new flats and the renovation of existing properties in Streatham, one of which, unfortunately, collapsed. I am sure that that has no significance with regard to the subject before the House—I hope not.
I should like to take the angle raised by my noble friend Lord Ezra regarding green field development and use that as an argument for pursuing the renovation of properties which exist in this country. None of us can deny that the need for housing is an issue that has been around for some time and, further, that it is not one that will be solved overnight. We need only to scrutinise housing waiting lists to realise the size of the problem. I am sure that many councils and their housing associations are to be congratulated on the efforts they have made in addressing housing needs but a continued effort is needed with constructive support from central government.
Housing needs for the future are closely linked with three social trends: first, an increase in marriage breakdown; secondly, we are all living longer; and thirdly, younger members of society now wish to live in their own properties at an earlier age. These three trends are imposing an ever-increasing burden on our housing stock. I believe that previous governments—and I am sure the present Government—recognised this. A structure plan has been tabled with all the councils in the country identifying the requirements for housing up to the year 2016.
At this point, I shall, with the indulgence of the House, refer specifically to the Hampshire structure plan, as I live in that wonderful county. The Hampshire structure plan originally identified 13 major development areas, which eventually were narrowed down to three. One is in Andover and another is near Basingstoke. Before I mention the third I should declare an interest. The third is located in what I loosely define as my back garden, although I hasten to add that I do not own it. It is beyond my back garden boundary where 78 I and many others enjoy green fields and ancient woodlands. On this site it is proposed to build between 3,000 and 5,000 homes, some 70 acres of industrial development and all the associated infrastructure.
The Hampshire structure plan requires the provision of 44,000 new dwellings by the year 2011, rising to 56,000 by the year 2016. The question which arises at this point is as follows: is the building of new dwellings the only way of fulfilling the requirements of the structure plan? I think not. One has only to inquire in the right places—of county councillors and local councillors—to get an idea of the number of unfit dwellings that currently exist around the country. The noble Lord, Lord Ezra, has already identified the number. In Hampshire the figure that has been suggested to me is in excess of 40,000. Another comment I have heard is that in one borough there are enough empty properties to fulfil nearly 50 per cent. of the housing needs of that borough. There are 40,000 unfit dwellings. Yet Hampshire has to provide 44,000 new dwellings. There is a tie-in there. To be fair to Hampshire, it is proposing to provide 21,000 dwellings through urban regeneration.
I believe that there are further arguments for more effort to be put into the renovation of existing properties aside from the one that I have already hinted at, which is the adverse environmental impact of developing green field sites. To be more specific, and still environmental, there is the inevitable increase in traffic on our already congested roads, which is an issue which I know is very close to the Government's heart and thinking. Further, there is also the potential of overloading the existing infrastructure of an area if developments are not carefully planned. Many schools in my area, and I am sure across the country, are already suffering from overcrowding.
There is also the movement of an area's workforce to consider. The major development area that I mentioned earlier would attract people currently living and working in Portsmouth, to relocate outside that city and subsequently and potentially to look for new employment outside the city as well, thus leading to the possibility of urban degeneration as opposed to what we all want, which is urban regeneration.
There is also the argument, particularly in the case of Hampshire, that new green field development sites will attract migration into the area from elsewhere in the country, which would have the effect of denying the local population housing. I recently heard argument against that. It is known as zero net migration, which I believe simply means those coming in are off-set by the number going out. I find it difficult to accept that that would actually work to a zero level.
All the arguments that I have tried to put together are strongly in favour of looking very closely at renovating as many existing properties as we possibly can to avoid having to develop on green field sites and creating environmental problems such as the ones I have mentioned. From my own experience I can confirm that the most derelict of properties can be transformed into the most desirable of residences with the application of modern building technologies, fittings and skills. It 79 seems to me almost a criminal offence to see houses left to rot and decay when one can drive a few miles up the road where new houses are going up. Housing is in such demand and we have so many skilled tradesmen who are desperate for the opportunity to work, that it seems somewhat of a contradiction.
In conclusion, the housing needs now and into the next century are an issue that cannot be ignored. There is a desperate need for housing now and without an initiative being pursued in a structured and cohesive manner, that need can only increase. I believe that it would be remiss of me not to give due consideration to the housebuilding industry because, after all, I worked in it for many years and was very pleased and happy to do so.
I hope that I have not implied that all needs can be met by renovation. New housing is also needed. However, I do not believe that this country's housebuilders could meet the requirements of the ever-increasing household population and all the targets that have been laid down. I believe that due attention and action must be given to increasing the rate of renovation of domestic properties alongside the well-planned and careful development of new housing in order to meet the future housing needs of this country.
§ 7.53 p.m.
§ Lord Addington
My Lords, it is a very happy duty that I have now formally to thank my noble friend for his speech. It is more so because he sits on my own Benches. Indeed, I have congratulated maiden speakers before, but never have I had to turn round quite so sharply to do so. It was a speech that addressed the question before it directly. All speakers, with varying degrees of experience of this House, would be well advised to take note of that, because that makes everything a little easier for speakers who follow. In addition, for someone from his background and with such a distinguished father to make a speech of that quality adds to the whole debate.
The question of renovation to increase our housing stock has a very dangerous smell about it. It is so obvious and so straightforward that one should renovate housing whenever possible to meet one's needs. One always believes that there must be a catch somewhere, but in this case the catch tends to be totally of our own making. It is historical.
We have ignored large areas of housing for a variety of historical reasons. That is not a party political point. Housing policy follows fashions. It became fashionable to throw up tower blocks because they were thought to be the answer to everyone's problems. Then it was fashionable to move people out of small houses, which it is now fashionable to renovate because, as has been mentioned by both my noble friends, they are now desirable units, being designed very spaciously for one or two people—the "two up and two down". At one point terraced houses were the lowest of the low in housing. Now they have become very much more desirable properties. As house prices and the machinations of the housing market have changed in 80 virtually all cities in our country areas that were not regarded with any favour—indeed were beyond the social pale in some areas—have become better regarded. People are now moving to where existing housing stock is available. Two and three-bedroomed houses are being turned into flats and single units are being revitalised to fulfil their original function.
Historically, many of these houses are very suited to that process. The up-and-coming 19th century house had little quarters at the back designed for servants. There was a downstairs, a basement and so forth, which were self-contained units which can quite easily be turned into flats. But if the accommodation is old and is in roofs or basements, it suffers from damp and bad lighting. It is not designed for people to live there on a regular basis. Thus I come to the point raised by my noble friend Lord Ezra that people are going to suffer in health terms if they live in such an environment. That is inevitable. If one lives with bad lighting and damp, bronchitis and depression will set in.
So some form of renovation is needed, but the possibility of renovating an existing property is available. When a greenfield site is taken over, invariably the first thing that happens is that there is an added traffic problem, which leads to the building of new roads which pushes up costs in social terms. Surely it is so much better to use what one has because the road system exists and, as such housing tends to be built in dense units, there is also access by public transport. Surely, everything about that makes sense.
The current Government find themselves with a major problem on their hands. All governments of the past century must bear a degree of blame for this problem. There has to be some positive action taken in this field. My noble friend Lord Ezra mentioned that VAT is not charged on new building but it is charged for renovation work. Surely there should be some redistribution of the tax burden. That would have at least some beneficial effect and not necessarily to the detriment of the Exchequer. Surely this type of activity can be carried on.
Now, to commit the sin which was very creditably lacking from the speech of my noble friend Lord Gridley, I digress slightly from the topic in front of us and draw attention to the fact that, under the funds made available by the release of assets raised through the sale of council houses, in the new Bill before Parliament—which I believe is called the Local Government Finance (Supplementary Credit Approvals) Bill—under Part M of the Bill there is the ability to make all new houses accessible to the disabled. That is something to be commended. However, that funding is not available for renovation.
I know that there will probably be more problems with renovation in that field than there will be with new buildings. The structure of the building may not allow all the work to be done that one would expect for a new building. But surely some consideration for disability should be taken into account. Wherever possible, one should bring in a ramp for wheelchair access and doors should be widened. Surely it is not too much to ask that, wherever possible, there should be at least one external and one internal door which are wheelchair-accessible.
81 That was my only specific point on the debate because I am in some danger of reiterating almost word for word what has already been said. I hope, however, that the noble Baroness will be able to make some response on that point, of which I gave her some very brief notice. I hope also that we shall hear something encouraging along the general lines that have been covered because—I hate to say this—the smell of common sense hangs very heavy over this Unstarred Question.
§ 8 p.m.
My Lords, this has been a fascinating debate. The Liberal Democrats have been talking to themselves, very fluently, and, by and large, they have been pursuing the same policy. The debate has been both a surprise and a pleasure. I enjoyed listening to all three speeches. I imagine that the imagery of the concept "absence of light causes depression- has occurred to a number of opponents of the noble Lord, Lord Addington, when they find themselves under him at the end of a scrum.
I listened to the noble Lord, Lord Gridley, as a fellow sufferer of Hampshire's plans—albeit slightly indirectly because my first wife lives right in the middle of what may become Micheldever Station new town. I am delighted to hear that the noble Lord is a lecturer in a further education college. If the Government's reaction to the Dearing Report is to be believed, we are about to start on a period when FE will loom large in the educational plans of the nation. We do not have a great deal of experience of FE in this House and I do not doubt for a moment that we shall find that the noble Lord will make a very valuable contribution. Indeed, given his speech tonight, he will certainly make a very eloquent contribution to our proceedings.
The noble Lord, Lord Gridley, will have the fascination of joining the Liberal Democrats at a time of interest in their future when the question of whether they will join the party opposite in some kind of reunion will arise, as will the question of whether those noble Lords will wish to cross the Floor or remain, as it were, "old Liberals" on the Benches they now occupy. I hope that someone of the noble Lord's obvious sense will choose to join us instead.
The speech of the noble Lord, Lord Ezra, contained many interesting points. Perhaps I may rephrase some of them as questions. Indeed, I shall pose a good deal of what I want to say in the form of questions—not in the hope that the noble Baroness, Lady Farrington, will answer them this evening, but in the hope that she may be able, with some assistance, during the next two-and-a-half months before the House returns, to write to me and to illuminate my darkness with regard to these questions. Since I have found myself in this position on the Opposition Benches, it has struck me as an irritation that what I want to know is the Government's policy, but I cannot know it until I have sat down and I no longer have the opportunity to ask any questions. I shall therefore have to ask a large number of questions now in the hope that I may get some answers later.
82 The noble Lord, Lord Ezra, said that 1.5 million dwellings are classified as unfit for human habitation, with perhaps 2.5 million in all being in need of substantial repair. Are the Government happy with the definitions which lie behind those figures? Is it not true that "unfit for human habitation" means one hole in the roof, perhaps in a room that is not used much, rather than that the whole house is unfit for human habitation? What do the Government estimate as being the cost of making those dwellings fit for human habitation or of completing the repairs which are said to be necessary to those 2.5 million dwellings? Do the Government feel that £250 million is the right level of grant to be put into what is a public/private partnership in order to address the problem? Do they see ways of going further into the business of subsidising private individuals to look after their houses? Do the Government have any ideas on how to spend more money—as clearly the noble Lord, Lord Ezra, would like—or do they have any other innovative ways of taking the problem forward?
Do the Government agree with the noble Lord, Lord Ezra, that there should be no VAT on renovations, as is the case with new build, and do they see any prospect of bringing that into force? Do the Government agree with the noble Lord that it is true that about 800,000 houses are currently unoccupied? Would the Government care to express an opinion as to how many houses ought to be unoccupied at any given time in order to provide a reasonable level of fluidity in the housing market? Do the Government agree with the noble Lord's estimate of the health, crime and education costs of unfit housing? Do they agree with the estimate that about 4.5 million new homes are needed? Do the Government agree with the noble Lord's proposal that some of those homes should be provided by subdividing existing housing or by office conversions? Do the Government have any proposals, other than general encouragement, for speeding up that process if they do agree with it?
Turning to the main subject of the debate, there is common ground between ourselves and the Government that it is enormously important to make our cities places worth living in. Most of us live in cities and as we generally become better off, we shall want a better and better quality of life in those cities. The quality of the neighbourhood generally and the pride we take in it; the way in which transport is organised; the ease with which we can get around; and the availability of shops, recreation facilities and open spaces are all factors which make a great difference to the way in which we perceive life in a city.
As to the type of housing available in our cities, ranging from tower blocks to modern estates, my experience is that the older housing areas usually have the greatest potential attractiveness. They have taken a long time to grow up. They have a complexity and a history about them. The surviving houses—the bad ones will have fallen down some time ago—are potentially, if not actually, extremely pleasant to live in. Renovation of the area as a whole and of every aspect of it is thus extremely important in terms of looking after our cities and continuing to ensure that they are attractive places in which to live.
83 Do the Government agree with that attitude? Do they believe that most of us will continue to live in cities and that people should therefore be encouraged and helped to enjoy living in them? Do the Government agree that one way of achieving that is to encourage people to take more responsibility for their own homes and to help them to do that? Would the noble Baroness like to comment on the article in the Sunday Times which quoted her colleague, Mr. Nick Raynsford, as saying:It is simply not acceptable to make people in urban environments live in unacceptable ways just to protect the countryside"?Other than the tautology of that—if they are living in "unacceptable ways", that is clearly "not acceptable"—does the noble Baroness agree with my alternative phrasing or different way of looking at it? Does she agree that it is simply not acceptable to sacrifice the countryside to avoid having to do hard work in making the cities better places in which to live? The countryside should not be seen as the easy option, as something that can be concreted over just because it is there and just because there is lots of it in conveniently empty parcels. Doing things in the city is much harder and much more complicated because so many other aspects of city life get in the way.
Do the Government agree that having a policy of moving people out into the countryside will largely consist, in practice, of moving the better off and well employed out into the countryside where they can find the good schools and clean air which are difficult to find in the city and that that may contribute—although not, I hope, to the extent of the American experience—to a tendency to decay in the inner city? As Mr. Raynsford said, those who are living in unacceptable ways are those who are the least likely to be able to move out of the city to take advantage of new build in the countryside.
Do the Government have a vision of what our towns and cities should be like in the future? Do they have a vision of transport, jobs and schools developing in a way that results in our cities flourishing and reviving themselves as they have over the past 20 years, given that there is considerably more to do to turn them into the kinds of places that we would like them to be? Do the Government have a policy as to whether towns in the country should swell or whether there should be new build in other areas, such as the noble Lord, Lord Gridley, and I anticipate in Hampshire? For whom are these new houses in the country to be built?
Do the Government intend to repeat the experience of 30 or 40 years ago when whole communities were transported from the inner cities? Or do they see migration taking a more natural course so that only those who are able to afford the greater living and infrastructure costs of the country can move there? I shall listen to the speech of the noble Baroness with great interest. I do not expect an answer to any of my questions now. If the noble Baroness happens to answer them I shall be delighted.
§ 8.11 p.m.
§ Baroness Farrington of Ribbleton
My Lords, I welcome the opportunity presented to us by the noble Lord, Lord Ezra, to consider the improvement to the housing stock of this country. I am aware of the noble Lord's interest and knowledge as president of the National Home Improvement Council. Today he has asked whether the Government intend to increase the rate of renovation of domestic properties in order to reduce the number of unfit dwellings and help meet housing needs. This has provided an opportunity for a wide-ranging debate to take place, albeit a small number of noble Lords have spoken this evening. I believe that we have positive messages to offer in this field. I shall try to respond to as many points as I can and write to noble Lords if I have missed out any of them.
I add my congratulations to the noble Lord, Lord Gridley, on his maiden speech. As he is obviously very knowledgeable about renovations, he may have to guard against other noble Lords seeking his advice on many occasions. His assessment and analysis of the particular local circumstances was valuable. I noted his reference to the responsiveness of Hampshire County Council in seeking to reconcile new housing needs with the need to plan for the future. I believe that that is a very good analysis of what is required at local level. I shall return to that later.
Whatever the Government do must be in partnership with local authorities and must recognise their knowledge. The number of unfit homes in England has been falling by small amounts since systematic measurement was first begun in 1971. Through the quinquennial English House Condition Survey we have been able to analyse the process. Later this year we shall have the results of the 1996 survey. That will show what occurred between 1991 and 1996. Therefore, the latest information available from that particular survey is from 1991. It showed that there were 1.5 million unfit homes. Quite obviously, that is an unacceptable level.
The noble Lord, Lord Ezra, said that the number of renovation grants had fallen to one-third of the level in the 1980s. The early 1980s is not a true comparison. Grants given in the early 1980s were badly targeted with very few going to unfit dwellings. Very often they went to people who could afford to do the work themselves. The current system is now much better targeted with grants going only to those without resources and is focused on the worst stock. It is a fact that within the area of unfit homes and homes for renovation there is a wide range of individual circumstances and financial needs. The noble Lord, Lord Ezra, also said that the budget for discretionary renovation grant was about £250 million whereas at its peak it was £1.5 billion. It is quite difficult to find where the £1.5 billion came from. However, significant amounts of money are being invested by owner occupiers in repairs and improvements. When the result of the review comes out it will be seen that private money has been spent on the housing stock. Government funding must be seen in this context. Even if one went back to the level of grant 10 years ago, the total need for renovation and 85 restoration work to be carried out on houses could not possibly be met solely from the public sector and solely through the system of grants.
Most of the unfit stock is in the oldest housing. Therefore, the majority of unfit homes are privately owned and are the responsibility of their owners. That is a responsibility which owner occupiers take seriously, which is shown by the large amount of work that is carried out by them. As to private sector investment by owners between 1987 and 1991, half the homes identified as unfit in 1986 were made fit by their occupants. Three-quarters of the people concerned did that work without applying for grants; one-quarter did so with renovation grant. Therefore, it is important to recognise that the issue of unfit homes involves private sector non-grant-funded work. Often the greatest amount of renovation activity takes place at the point where homes change hands. Somebody who moves in will invest in improving the occupation.
During the debate no one raised the issue of houses in multiple occupation. It is necessary to place on record that some of the worst stock conditions are to be found in multiple occupation households. We are concerned that conditions at the very bottom of the private rented sector, where tenants have little effective choice about where they live, are often appalling. We are committed to tackling these problems. As a first step we have a manifesto commitment to introduce a mandatory national licensing scheme for houses in multiple occupation. We want to press ahead with this quickly. We have not been able to find room for the legislation in this parliamentary Session which is a very crowded one, but we shall have plenty of time to work it up and consult on the details.
The issue of enforcement is also very important. A local authority has power to identify a property as unfit. It is then under a statutory obligation to take the most satisfactory course of action to deal with it. Normally this means carrying out repairs but sometimes that is totally impractical. The local authority may have to decide which course of action to take in individual cases.
The noble Lord, Lord Lucas, raised the question of fitness standards. He asked what was "fit". Clearly, the fitness standard is itself an important consideration. The standard is made up of a set of requirements which local authorities need to consider. These requirements constitute the minimum conditions and amenities that are considered necessary for a dwelling house to be fit for human habitation. We are currently undertaking a review of the housing fitness standard. There have been calls to raise the standard, which means adding to the requirements. Those that are commonly pressed for and which are well known to the noble Lord are: energy efficiency; internal arrangements; radon; lead in water; noise; fire safety; and asbestos. They are just some of the issues. There is also concern that the standards should be made easier to interpret and should be applied consistently. The review got under way at the end of last year. The department plans to publish a consultation paper setting out proposals for the reform of the fitness standard.
86 The noble Lords, Lord Ezra and Lord Lucas, referred to the impact of housing on health. We recognise only too well the appalling impact that bad housing can have on the quality of life, health and well-being of families and individuals. There is a complex matrix of factors involving health, unemployment, had housing, and family life. Despite all the studies, it is difficult to argue for a straight financial transfer. The noble Lord suggested that if money were transferred from the health budget to housing there would be no increase in public expenditure. On the basis of the research material available, I should not like to argue that case with the Minister for Health. The issue is an important one. We take it seriously. It cannot be resolved by a straight transfer of funds, because of all the factors involved.
Private housing is, first and foremost, a private asset. Responsibility for repair and maintenance must rest with the owners. As everyone cannot afford to do that, renovation grants continue to be available to help those in the most need. This year we have separated out the resources we are making available for disabled facilities grants. Our initial allocation to local authorities in England for private sector renewal loan is £192 million. The noble Lord, Lord Addington, mentioned Part M of the Building Regulations. He asked whether it would be possible through the regulations to insist on adaptation to the same level for disability access. It is difficult to see how it might be possible to have a blanket standard that could be applied across all types of renovation and restoration projects. It would depend on the nature of the work being done and the degree to which it added to the cost. I can give an undertaking to investigate whether it would be possible, in consultation with the local authorities, to produce guidance on how that might be practical and not too expensive.
Resources are finite. There will never be enough to please everyone. One of the key objectives of the legislation providing for renovation grants (Part I of the Housing Grants, Construction and Regeneration Act 1996) is to give local housing authorities the flexibility to develop local strategies for dealing with the private sector problems identified in their areas. That theme has been raised by all noble Lords tonight. It is important that we consider how to respond to the desperate need for good quality housing that exists in a way that meets local circumstances.
The capital receipts initiative is a vital first step towards reversing years of under-investment in housing. The Chancellor has provided an additional £174 million to support capital spending on housing in England this year, with a further £610 million being made available in 1998–99. Those resources will support local authority spending on housing and housing associated regeneration work, as well as the revenue consequences of that spending.
Private sector renewal is one of the range of objectives that we have proposed for the capital receipts initiative in England. Energy efficiency in housing is another. Those objectives were set out in a consultation paper issued last month. It is important to stress that in the first instance it is for local authorities to identify local needs and priorities when they apply additional resources in that area.
87 Housing associations form an important part of the fabric of our housing strategy. The level of reserves now accumulated by housing associations in their rent surplus funds amounts to £350 million. That will provide a substantial sum towards the cost of improvements.
Several noble Lords mentioned the article in the Sunday Times. It is important to set it in context. The consultation that has taken place has raised some important issues. My honourable friend has aired some of the difficult issues raised by the consultation process. However, no final decisions have been taken. I appreciate what has been said about the importance of concentrating development on brownfield sites in urban areas. However, I draw the attention of noble Lords to the fact that the people for whom additional rural housing or the restoration of unfit properties in rural areas are appropriate are often those who already live in the country or who form households from a household which already exists there.
The noble Lords, Lord Ezra, Lord Lucas and Lord Addington, raised the issue of VAT on renovations. The construction industry has campaigned for a reduction in VAT for many years. The general policy on VAT is that the structure of the tax should be kept as simple as possible. Zero rating exists on a wide range of essential domestic expenditure. However, the zero rating of VAT on all renovation building work would not be particularly well targeted as there would be no distinguishing between the benefits available to the millionaire upgrading his property and those available to the householder in financial difficulties. Also, it is by no means clear that under EC law it would be permissible to create a new zero rating.
The noble Lord, Lord Ezra, referred to the black economy. My honourable friend Nick Raynsford, the Minister, signalled in his speech to the Construction 88 Industry Board on 4th July that the Government wish to work with it to tackle the problem of those who create a scandal in the industry.
Household growth and future development is without doubt one of the big issues facing us for the future. There are projections that some 4.4 million new households are expected to form in England alone between 1991 and 2016. Responding to that increased demand will place enormous pressure on local authorities. The previous administration issued the consultation paper to which I have referred entitled Household Growth: Where Shall We Live? The consultation produced over 700 responses. We are considering how to deal with them.
When planning for housing need in the future, we are talking about guidance from the centre. It is impossible from Whitehall to plan, identify and meet the needs of each locality, let alone each region. It is important that we work in the new partnership between central and local government. To that end Ministers have established new working relationships with the local authority associations on housing finance issues. The Local Housing Finance Group, which has representatives of the LGA, the Association of London Government and the Department of the Environment, Transport and the Regions, will meet regularly to consider Ministers' proposals on housing revenue and capital issues. Ministers have also agreed to the first housing liaison meeting which is being arranged for September.
This has been a valuable debate. It is an important area. In the context of the Government's comprehensive spending review, it is extremely important. The terms of reference for the study of housing expenditure, which will also cover housing benefit and other reviews being undertaken, were published on 24th July. I am sure that the contributions to tonight's debate will help to ensure that the response is well informed.
§ House adjourned at half past eight o'clock.