HL Deb 15 April 1999 vol 599 cc913-30

8.35 p.m.

Lord Ezra rose to ask Her Majesty's Government to what extent the refurbishment of houses in poor condition has been taken into account in the Government's plans for additional housing.

The noble Lord said: In asking this Unstarred Question, I declare an interest as president of the National Home Improvement Council. I should like to thank all noble Lords who are to take part in the debate for staying so late to do so. I hope, however, that they will agree that it is appropriate that we should be discussing the question of additional housing at present in view of some important recent developments in government policy.

Ever since the target of 4.4 million new homes by 2011 was announced in 1991 by the previous government, this issue has been a matter of some controversy, particularly with regard to the potential effects on the countryside. The present Government initially adopted that target pending reassessment. It was expected, at one time, that the figure might even increase. In fact, a figure of 5 million new homes was mentioned. In the event, on 29th March the Deputy Prime Minister announced that the Government expected that 3.8 million new homes would be needed by the year 2021. He also made it clear that that should no longer be regarded as a target but would be continually reassessed, either upward or downward, as he put it, in the light of changing circumstances. He stated that the Government were departing from the previous "predict and provide" approach to a more flexible "plan, monitor and manage" approach.

Furthermore, it has been re-emphasised that the Government expect 60 per cent. of the new homes to be on brownfield sites selected on the basis on what they describe as a "sequential" procedure. This is set out in the revision of Planning Policy Guidance Note 3 issued at the end of last month.

Those are welcome developments, but there would still be substantial building on greenfield sites—no fewer than 1.5 million new homes, on the basis of the latest estimates, and assuming that 60 per cent. are built on brownfield sites.

Although new settlements on greenfield sites amounting to several thousand homes at a time are shown as last in the list of possibilities in the revised document to which I have referred, the Government accept that some could still go ahead.

I have personal experience of one such proposal in the area where I live known as Weald Vale, south-west of Horsham in West Sussex. The proposal, which still has to go through the planning process, is to build a 2,000 house settlement on agricultural land currently owned by Christ's Hospital School. That would totally eliminate—I speak from personal experience—the existing rural environment and require a massive increase in the infrastructure services, including water supplies which have been consistently short over many years.

It is difficult to see how those extra 2,000 people could get the water which a much smaller number of people have been unable to obtain. In my opinion, there would be a great advantage to the local community if such disruptive developments could be avoided.

The question is: can the extra 1.5 million homes currently contemplated for greenfield sites be provided in some other way? I believe that that can be done by a major refurbishment of houses in poor condition and by bringing back into circulation the substantial number of unoccupied premises.

The English House Condition Survey for 1996, which is the last one available, showed that over 14 per cent. or nearly 3 million homes in England are in poor condition. Of those, half are considered unfit in relation to the Government's fitness test. Furthermore, 6.6 per cent. of homes, or 1.3 million houses, which are unfit or in need of major repair are located in what are described as poor living conditions; that is, the environment is poor. According to the survey, it is the people occupying such homes who are most likely to want to move. There are also some 800,000 empty homes.

Those statistics suggest that if there was a major programme to recondition unfit homes or homes requiring major repair, particularly in a poor living environment, and to bring back into use unoccupied homes, the need for constructing 1.5 million homes in rural areas could be virtually eliminated.

Most of the homes requiring major repair are located in the private sector. It therefore follows that measures to stimulate home improvement should be directed at that sector. I wish to suggest four measures in particular to be introduced to that end. The first would be to enable home owners on low incomes to be able more easily to raise small additional mortgages. Under existing legislation, such mortgages, although small, could be costly to set up and take time. Simplified arrangements are needed for mortgages relating specifically to home improvement.

Secondly, those whose limited resources would prevent them from taking up such additional small mortgages should be able to benefit from a wider use of grants. There is a case, I believe, for mandatory grants being reintroduced on a larger scale in place of the present discretionary grants which were introduced a couple of years or so ago, and which are being dispensed on much too small a scale to do the job.

Thirdly, I come to the vexed question of VAT. The fact that no VAT is charged on new construction, but the full amount applies to home improvement, acts as a major disincentive to putting right the poor state of the housing stock. Putting that right would also deter the cowboy builders. I was at a lunch today at which Mr. Nick Raynsford, the Minister responsible for construction, was speaking to the building material producers and emphasised the valuable work he is doing in trying to reign in the cowboy operators. Obviously, if the amount of VAT on home improvement was reduced, those operators would be very much deterred.

In spite of the strong arguments in favour of some alleviation of VAT on home improvement, both this Government and the previous government have been against making any change. However, there is now—I put this to the noble Baroness—a unique opportunity to do something about this. The European Council in Vienna in December 1998, as the Minister is no doubt aware, asked the Commission to prepare a directive to enable the VAT rate to be reduced for certain labour-intensive service industries. I am advised that the home improvement sector would certainly fit into that category. Member states that wish to apply for the reduction in VAT—because this is a Community matter—must make their submission before 1st September 1999. I hope that the Minister will confirm that the Government will be seizing this timely and useful opportunity.

Fourthly, the private rented sector has a particularly high proportion of accommodation in poor condition. Some form of tax incentive to landlords to modernise and improve their properties would be desirable.

In conclusion, I contend that the vigorous application of measures such as those I propose would go a long way to providing the alternative to the 1.5 million new homes which are presently contemplated in greenfield areas. All would benefit from such a development. Those who live in poor housing would see their home conditions improved, and those who wish to live in the countryside would find that it remains unspoilt.

8.46 p.m.

Baroness Dean of Thornton-le-Fylde

My Lords, I too declare an interest; I am chairman of the Housing Corporation, the Government quango that both allocates funding for social housing and also regulates the sector. I thank the noble Lord, Lord Ezra, for tabling this important Question this evening. The condition of the housing stock is the issue set out in the Question to which I should particularly like to address my remarks this evening.

This problem is wider than simply a housing issue in its implications for people. Poor housing affects people's health and the education of their children. I was interested to read some figures from an organisation that deals with health and the interface with housing. The Department of Health estimated that poor housing costs the health service—and therefore would save the health service if poor housing did not exist—in its treatment of illnesses, from dampness due to condensation, asthma, coughing bouts and a whole range of health issues directly related to poor housing conditions, around £800 million a year. That is more than the Housing Corporation is allocated each year to spend on social housing.

When we examine the area of poor housing, we see that the incidence of accidents such as fires are much higher in that sector. Quite often when we read about a fire and deaths, we see that it is social housing and housing in very poor condition, privately rented stock, in which the people have lived.

As the noble Lord, Lord Ezra, said, around 1.5 million dwellings in this country are declared unfit for human habitation—that is one in 13 of our total housing stock. It is a problem that occurs particularly in the private rented sector where one in five homes is unfit for human habitation. Thirty-one per cent. of the tenants in those privately rented houses are very poor; 31 per cent. of the private rented sector is in a pretty poor state compared with 8 per cent. of registered social landlord stock. Again, it is the poorest households that suffer—60 per cent. live in unfit homes and half in homes still requiring repair, all on an income of less than £8,000 a year. They are therefore caught in the trap of not being able to do anything to help themselves improve the situation.

When we look at the spread of people living in those poor quality houses, we see that they come from the deprived and vulnerable groups. For instance, 35 per cent. comprise Pakistani and Bangladeshi families; 23 per cent. are black households; and 25 per cent are unemployed. Yet this also affects the young: 29 per cent of 16 to 24 year-olds; and 20 per cent. of people aged 75 years and over. Those people have possibly put their life savings into their homes, the biggest investment that they will ever make. But, at the end of their lives, they just do not have the capital to keep their house in a fit state which would allow them to enjoy a decent standard of living. They almost become prisoners in their own homes because they are in bad housing in poor areas where they are afraid of crime and of their surrounding environment.

In the housing association sector with which I work, the quality of housing is nowhere near as bad as that in the private sector or indeed in the local authority sector. Nevertheless, the corporation is very concerned that, having built decent homes, we need to have the money to maintain them. Under our regulatory process we require housing associations to have regular assessments of the state of their housing stock. They must then transpose that into their business plan to provide the long-term investment to keep that stock in a decent state.

Last year we also took a number of measures to ensure proper maintenance of that stock. Until last year we could not assist people as regards expenditure on reinvestment to maintain any stock built after 1988. The change that we implemented last year meant that we moved from not allowing public subsidy to go into such maintenance and repair to allowing rent surpluses held by housing associations to be used to generate money to invest in the repair and maintenance of stock. That has resulted in something like £80 million to £90 million a year being spent to maintain stock in a good condition. For our part, we now allocate 5 per cent. of our annual development programme to reinvestment. However, having said that, something like 70 per cent. of our total programme is in the whole area of regeneration.

This is quite a controversial issue at present in the sector, especially as regards the north-south divide that we see. In the north, people are leaving their houses; indeed, they are just voting with their feet and walking away. Much depopulation has taken place. As the noble Lord mentioned, we have a lot of empty housing stock. People do not want to go and live in such housing. That, in turn, starts the social decline of empty houses which generates crime, drug dealing and youngsters in cars who cause problems for the community. However, in the south east, there is the problem of there not being enough homes. It is balancing the whole situation which is the big challenge today.

Much of the latter estate is in the local authority area, which for many years has been deprived and starved and unable to spend money on maintenance of such homes. Whereas at one time local authority council housing—like the home in which I was brought up—was something to be proud of, that is no longer the case in too many instances. However, authorities have found a way of dealing with the problem. The previous government introduced the scheme of stock transfer. During the past nine years something like 270,000 homes, which would not have had capital spent on them for improvements, were transferred to housing associations by more than 70 local authorities. As the regulator, we have observed that the private and public funding coming in during the process of transferring all or part of the stock has meant that something like £4.7 billion has been raised and spent on those 270,000 dwellings. Moreover, the process has been speeded up under the present Government. Indeed, in this year alone, I gather that something like 25 local authorities have sought the support of the DETR and the housing Minister to transfer something like 140,000 homes. If that happens, it will allow a lot of private sector funding to regenerate that stock and thereby help keep the people in their homes in that area. So they will not walk away in pursuit of something different elsewhere—perhaps in the area to which the noble Lord referred.

In those transfers, there is no doubting the fact that if we had relief from the 17.5 per cent. VAT which is levied on such stock—as opposed to paying no VAT when one is building on a greenfield site—it would be a very positive move and one which would support the process of using the stock that we have in a far better way than is the case at present. Of course, in those local stock transfers, tenants will have a vote; and rightly so. If they do not want it, it will not happen. Tenants will need to be involved—again, rightly so. After all, their homes are at the centre of their lives.

The poor housing issue is one which I suggest needs to be tackled in the wider sense. It is not just about housing; it is about neighbourhood renewal. We therefore very much welcome the work of the Social Exclusion Unit, with which, I am pleased to say, the corporation is very much involved. It is working towards bringing together a national strategy on the whole issue. It is not intended that it should be applied nationally; indeed, it can only be applied locally. It is intended to give some kind of direction as regards best practice and support so as to force agencies to work together. Again, that will positively help to regenerate the whole area of very poor quality housing, as the noble Lord said. It means that the agencies will have to work together and that they will have to adopt a more pragmatic approach.

We have just concluded a consultation process. At present, we have a very formula-driven process of allocating our funds, but we want to adopt a more pragmatic approach which would be more dependent upon what is needed in the area and upon the quality of the local authority housing strategy. It is no good building houses, as one housing association has done in the north-east, only to find that such houses need to be pulled down when they are less than 10 years old. It is about an inclusive strategy on housing in the area. Certainly the housing Minister, Hilary Armstrong, has been a great help to us in our effort to deal with this very rigid approach. It will be difficult for us because we will have to back our judgments in future rather than bringing out the book and saying "This is the formula, and you have to comply with it". However, we do not mind that at all. Such judgments will be measured against the criteria. We will then stand by that criteria and work in dialogue with the local authorities and our housing associations.

There will be another move in that direction. For example, if one enters an area like Bradford, which I visited a few months ago, one can see that some really good housing has been built. However, in the centre of it all, I saw some private housing owned by Asian families who had put their entire investment into those homes. But those homes are worth less today than when they were bought. So they could not afford to move. Nevertheless, they needed to move for the benefit of the area and indeed for their own benefit. It is to be hoped that our new policy will help to give some relief in that area and that it will step into the private sector where such assistance is needed, provided agreement can be reached with all the parties.

I should like to welcome the announcement recently made that a Green Paper on housing will be published later this year. I am sure that we all look forward to that with interest and that we will all contribute to it. Certainly the release of capital receipts has made a tremendous difference in the area. People are now putting policies together which are changing the whole of their communities. Under the new deal for communities, £800 million will be available in the first year. That is an enormous encouragement to the whole sector. Moreover, for our part, we also had good news this year. For the first time for a number of years our annual funding from the taxpayer through the Government was not reduced. That is very good news, but we are working very hard to meet this new modern agenda.

I should like to point out to my noble friend the Minister that when—and not if—we meet it, we will be back to ensure that that grant starts to go up. We will be able to prove that the work which is being done is actually helping to improve people's lives; indeed, not just their houses but their whole communities. We shall be sure to work in the knowledge that it is a community-based approach and that it is not just the corporation, the Government or the local authority. In other words, it has to be all of the agencies in the area. I suggest that it has to he about maximising the money that we can obtain from the private sector. It will be a very good move.

I started with some very depressing facts. It is not within my nature to be pessimistic; indeed, I am not so on this issue. I am very optimistic. I should like to end on a more positive note and concentrate on the benefits that can be yielded. I am sure that there is no noble Lord in this House who has not heard about the Holly Street development in Hackney. I take it as my closing example, but not to the exclusion of other areas in the country which we have observed through the programmes which are now available. Of course, the Holly Street programme was funded by the single regeneration budget introduced by the previous government. We are now seeing the benefits of that provision in the Hackney area. Tenants in that development have told me that they are happy with their housing. National Health Service staff estimate that there has been a fall of one-third in demand from those tenants for National Health services. Tenants have made fewer visits to their GPs and to hospitals. Tenants have also told me there have been reductions in truancy and in crime, and that drug-pushing in the area has been almost eliminated. That community formerly had been extremely deprived. There are other such success stories throughout the country. However, there is still much to be done as regards tackling social exclusion in this area.

On Monday night I invited the board members of a housing association from Devon to the House to talk to them about the housing provision in their area. A lady board member is a tenant in a development in Plymouth. She told me that she had "lost" her 16 year-old son—although he is still alive—because he had been sucked into the drugs culture on the estate where she lives. She said that she was determined that that would not happen to another family. She and the other women in the area are angry about the situation and they are starting to turn that estate around. My corporation will help to fund their efforts.

I have been the chairman of the Housing Corporation for just over a year. At the corporation's recent conference I must have spoken with some feeling because a housing association chief executive approached me and said, "Brenda, you have obviously joined our housing campaign". I replied, "Oh, no, I have not joined your housing campaign; as far as I am concerned, this is a crusade".

9.1 p.m.

Lord St. John of Bletso

My Lords, I am afraid I cannot speak with the experience and expertise of the noble Baroness, Lady Dean. I am pleased that the noble Lord, Lord Ezra, has taken forward the baton from his noble friend, the noble Baroness, Lady Maddock, who introduced a similar debate on 26th October last year.

In debating this issue of the housing stock, I remember fondly the late Lord Dean of Beswick, whom I know we all miss, who campaigned long and hard for improvements in the British housing stock. I entirely endorse the sentiments of the noble Lord, Lord Ezra, and the noble Baroness, Lady Dean, that refurbishing houses in poor condition and rebuilding the inner cities should be the Government's priority before considering using greenbelt land. Of course, that begs the question of the choice between allowing urban sprawl or instituting positive planning for urban renewal.

The recently published Government Planning Policy Guidance Note 3 on housing clearly underlined the Government's sequential approach to planning for housing and shows the Government's commitment to ensuring that local councils should develop brownfield land and refurbish existing property before releasing greenfield land for housing development. I have no doubt that the Government are making all the right noises about their commitment to curb greenbelt building.

However, the House Builders Federation, which I understand represents 80 per cent. of builders, has pointed out that brownfield sites are often not conveniently distributed across Britain. In many counties where there is highest demand, there is little vacant land. Furthermore, many people do not want to live in the inner cities. The reality is that although the Government are doing everything they can to rebuild and to assist in refurbishing the inner cities, they cannot dictate either people's lifestyles or where they want to live. That is why the focus on refurbishing houses in poor condition—the focus of this debate—should seek to promote improved lifestyles. The examples given by the noble Baroness, Lady Dean, show clearly how an improvement in lifestyle can improve the whole ethos of a community. To achieve maximum effect. refurbishment must constitute improved quality both as regards development and design, with better layouts and a wider choice of sizes and types of houses.

It is vital that areas of urban regeneration are adequately serviced, with shops, supermarkets and transport services, as well as, of course, with factories and local employment, and community and leisure centres, particularly for the young.

It has been suggested that where properties and estates are beyond salvage and refurbishment, the Government should consider ways in which National Lottery cash can be used to turn razed estates into parks or playgrounds. The noble Baroness, Lady Dean, drew attention to last year's report of the Prime Minister's Social Exclusion Unit which detailed the horrors of life on the worst estates. It pointed out that the 44 most deprived areas of England have far higher rates of mortality, illiteracy and unemployment than the rest of the country. The housing Minister, Hilary Armstrong, has often stated that access to decent housing is a basic requirement of life. It is encouraging to note that the Government have made substantial provision for investing in modernising the housing stock, especially as regards urgently needed repairs.

The noble Lord, Lord Ezra, as president of the National Home Improvement Council, is well qualified to comment on the quality of England's housing stock. I was a little alarmed to note, when I read the debate introduced by the noble Baroness, Lady Maddock, that the noble Lord said he felt that there had been no improvement in the quality of the housing stock.

It is a well-known fact, endorsed by the House Builders Federation, that singles comprise 80 per cent. of housing demand for a variety of reasons, including high divorce rates and the rising number of pensioner households. That implies that there will be more need for flats and smaller houses and that there will not necessarily be a need for more land, but rather an improvement in the quality of accommodation.

I have read estimates of almost 800,000 empty dwellings in England and Wales alone which, in theory, would take much of the strain from the housing queue dominated by single people. A recent analysis in the Guardian on housing policy revealed that the extent of derelict land in our towns and cities has grown to an area almost twice the size of Bristol. Furthermore, more and more urban land is becoming derelict each year than is being reclaimed.

A housing research summary released last year by the Department of the Environment, Transport and the Regions showed that successive housing condition surveys reveal that the private rented sector is always in worse condition than other sectors.

I do not want to ramble on. I certainly support the recommendations made by the noble Lord, Lord Ezra, and the noble Baroness, Lady Dean, that the Government should consider more incentives and, perhaps, VAT exemptions for refurbishment. There is no doubt that it will take many years, if not many decades, to transform Britain's so-called "sink estates" into areas where people would want to live. We can only hope that vision of the planning Minister, Richard Caborn, of achieving, nothing less than an urban renaissance", will be a reality and not just a pipedream.

9.9 p.m.

Lord McNair

My Lords, I too am grateful to my noble friend for asking his Question this evening. Like the noble Lord, Lord St John of Bletso, I defer to the great experience of the noble Baroness, Lady Dean.

I heartily endorse the Government's determination to make use of brownfield sites, as other noble Lords have said. However, there is one caveat which I enter on that score. The housing market is not uniform. People will buy a house on an estate on a greenfield site, as the noble Lord has just said, in the belief that they are "going to live in the country". As someone raised, if not born, in the countryside, I know only too well the fallacy of that assumption.

I give a particular instance from my own experience. A planning application that was passed a long time ago for about 300 houses between the villages of Bussage and Eastcombe in Gloucestershire in the 1980s resulted in a huge estate which had no shops, no proper amenities and no infrastructure. The result was between 1,000 and 1,500 people who had to commute to work through tiny villages and up very steep Cotswold hills to reach the centres of employment. Those houses were advertised on Paddington station to people who were already commuting to London from Cheltenham, Gloucester, Stroud and Swindon. The effect of that development was to bring the problems of suburbia to the countryside.

The point is that the purchasers of those houses would have been unlikely to buy houses on land which was part of a large derelict former industrial site, even though the transport links may have been better than they were in the Cotswold countryside.

In order to make a success of developing brownfield sites, I urge the Government to ensure that the whole amenity aspect of the development is taken into account so that they can provide the right kind of housing and encourage people who may not otherwise have lived in an inner-city or city area to do so.

The conditions in the 1996 English house condition survey make depressing reading. I cannot read my notes. I must put my glasses on. I am sorry, I still cannot read my writing.

The private rented sector remains a serious concern, with one in five dwellings requiring expenditure of £6,000 to remedy problems, and in total private landlords needed to spend at least £2.5 billion. Although the rate of unfitness was lower at 6 per cent, the majority of unfit dwellings were owner-occupied, some 830,000 out of 1.5 million, or 55 per cent. of the total. The average cost of dealing with unfitness in the owner-occupied sector was £5,500 and the total bill was £4.5 billion, so we are talking about a lot of money.

About 300,000 dwellings owned by local authorities or housing associations were unfit, with a bill of just over £1 billion to tackle the problem. Bringing unfitness and more minor disrepair together and adding in households in dwellings requiring essential modernisation to kitchen, electrical fittings or heating suggests that almost 2.8 million households, 14 per cent. of the total, were living in what is defined as poor housing in 1996. As one might expect, there is a strong association, as other noble Lords have pointed out, between low income and poor housing, but this information was not included in the 1996 report.

Groups which were more likely to live in poor housing included households where the head was unemployed; a student or in part-time work; lone parent households; households in which the members were under 60 but with a long-term sick or disabled person present. As other noble Lords have mentioned, households with a Pakistani or Bangladeshi origin were particularly badly off, as were younger households of people aged between 16 and 24, especially those living in private rented accommodation, and older people living alone, particularly in households headed by someone over 75 years old.

Overall, levels of unfitness and disrepair remained static over the 1991 to 1996 period. This suggests that the situation is not improving. The general picture conceals some important variations. The first of these is that the dwelling condition varies over time depending on how much has recently been invested in repairs and maintenance, so some backlog of disrepair is to be expected at any one time. Worryingly, however, some two-thirds of dwellings which were unfit were also unfit at the time of the previous survey in 1991. This suggests that a substantial pool of dwellings is being left behind in the housing market and that in many cases people are having to endure poor living conditions for an extended period.

Next, conditions in the private rented sector improved relative to other kinds of tenure, but this came about more from the movement of newer dwellings into the private rented sector than from investment by landlords in the private housing stock. The problem of getting private landlords to keep their dwellings in good repair remains to be resolved.

Thirdly, in the owner-occupied sector there was a rise in levels of unfitness in houses built between the two world wars, which is a cause for concern in the future as these dwellings age further. One way to improve the situation would be to make better use of public resources by replacing the current small number of large capital grants to owners by means tested assistance, with loan interest charges on borrowing for specific repair works. Where the owner could not obtain access to a loan because of limited equity, some form of loan could be offered which would eventually produce a return to the state when the dwelling was sold or the owner's position improved or when the improved dwelling rose in value. These resources could in turn be recycled into further investment in improvement.

Finally, I should like to pick up the point which my noble friend and the other two noble Lords who have spoken mentioned, which is about the Government's opportunity to submit an application to be able to apply a lower rate of VAT on, and I quote, "certain labour intensive industries". The reason why I found this fascinating is that I have done some research, ably assisted by the very helpful researchers in the House of Lords Library. Alerted by a friend of mine, Mr. Farel Bradbury, who takes an interest in such matters—I mention this because unemployment is a very important factor in people not being able to afford better housing—I asked the Library to let me have the unemployment figures for the members of the European Union since before they joined and adopted VAT. It is crystal clear that when you set the unemployment figures for Japan and the United States as a control (they do not have VAT) at the date coincident with the adoption of VAT by the European Union countries, unemployment starts to rise and continues to rise; whereas in the other countries it rises and falls.

What the European Union has done in suggesting that certain labour-intensive industries should have a lower rate of VAT applied to them is to admit that VAT works as a tax on labour, on production. I very much hope that the Government will take the opportunity suggested by my noble friend, as it would help to reduce the burden of VAT.

My noble friend has done us good service in asking the Government this important Question. There are many things that the Government can do to improve the situation. I wish them well if they are energetic about this matter.

9.20 p.m.

Lord Dixon-Smith

My Lords, I must declare an interest as an Essex landowner. I shall return to that. Perhaps I may be forgiven for borrowing a farming cliché to begin my remarks. It is one which the Government Chief Whip, who is sitting opposite, will recognise. There is only one thing worse than a surplus of food, and that is a shortage. So it is with housing.

Returning to the subject of Essex, when I was first elected to Essex County Council, the county had just lost all its London boroughs with the creation of the GLC. The population was just under 1 million. Twenty-eight years later, when I ceased to be directly involved, the population was over 1.55 million. So I know a great deal about the problems of providing houses for an increasing population and the planning process. Living with that sort of ride in the local authority world is quite exciting. The point must be made that one is not merely providing houses but roads, schools, hospitals and everything else that makes a community work. Therefore, as the noble Baroness, Lady Dean of Thornton-le-Fylde, pointed out, we cannot discuss housing in isolation. Dealing with problem housing areas is not simply a matter of providing housing; it involves a whole range of other facilities and altering the approach within the community.

A point that impressed me was the figure given by the noble Baroness, which I did not have, for the cost to the health service of £800 million per annum as a result of health problems such as asthma that arise in poor areas. The 1996 House Building Survey indicates that to put houses that are presently unfit into "a fit state" applying the standard in Section 604 of the Local Government and Housing Act would cost £8 billion. That is only 10 years' purchase in terms of cost to the health service. In public investment terms that is a pretty good rate of return. Clearly the matter ought to have some priority.

The condition of housing and occupation are not necessarily the same thing. It is true that the 1996 survey indicated that 1½ million homes were unfit according to the housing Act definition, but only 798,000 houses—about half—were unoccupied. We must face the fact that there always will be a large number of unoccupied houses. The average life of a tenancy may be 20-plus years, but if my memory is correct on the statistics the average life of a mortgage is only 11 years. That being so, it suggests that there will always be a considerable pool of houses in what might be termed the turnover phase. We should be grateful for that because it is, among other things, a sign of a dynamic and active economy. That is one aspect of the problem.

Furthermore, the "fitness" of houses may change. Using the same 1996 survey, it is interesting to note that of the dwellings that were unfit in 1991, when the previous survey was conducted, half a million had been made fit, so progress had clearly been made. The tragedy was that half a million had become unfit, and so the total did not change. However, I do not think we should become depressed about the situation. Successful action is taking place, but, unfortunately, people's circumstances change, social attitudes in areas change and economic circumstances in communities change. All those pressures can create immense problems.

We have talked a great deal tonight about the physical problems of houses, but the Unstarred Question of the noble Lord, Lord Ezra—for which I am extremely grateful to him—refers to the extent to which the refurbishment of houses has been taken into account in the Government's plans for additional housing. A point which has not yet been made in relation to that illustrates the relentless pressure, faced by the community at large, which created the dreadful figures—if dreadful they be.

Among the statistics that I dug out for this debate were some on household size. In 1971, which was after I started in local government, the average household size was 2.91 people. By 1996 that figure had fallen to 2.43 and it continues to fall. Over that same period, the number of single-person households rose from 17 per cent. to 27 per cent. of the total and the population involved rose from 6 per cent. to 11 per cent. of the total population. In fact, what we are measuring here is, among other things, the breakdown of the family and family life. There are thus many aspects to this problem. Although it may be true that a single person in a single-person dwelling may require marginally less land for that dwelling, it is also a fact that space is still needed for educational, social, recreational and transport purposes. Therefore, the saving in land as household size decreases is probably zero, if not negative. People need space other than just cubic capacity within brick walls.

There is no easy answer to this situation. We shall be obliged to keep working at it for a long time. I do not think that we should expect a simple conclusion. What can be said is that progress is being made and will continue to be made. The Government's ambition to put more housing on brownfield sites is thoroughly worthy, subject only to two comments. First, brownfield sites can be used only once and eventually they run out. Secondly, the greatest difficulty is that the south-east of England, where there is something like 26 per cent. of total housing demand, has, for better or worse, only about 8 per cent. or 9 per cent. of the brownfield sites. That mismatch will cause problems.

I have addressed the reasons why there are very large figures for increased housing demand. That is an unfortunate pressure to which we must accede. I suspect that, because of the situation in the South East, that pressure will keep planners in counties such as Essex, Kent, Hertfordshire, Berkshire, Sussex and Surrey busy—not to say spinning like tops—for many years to come.

9.30 p.m.

Baroness Farrington of Ribbleton

My Lords, I welcome this opportunity to examine the Government's actions to improve the quality of the housing stock. I am grateful to the noble Lord, Lord Ezra, for giving me the opportunity to do this. Along with the changes that we are implementing in the planning system, action will undoubtedly help to meet future housing need while reducing the pressure for new development. A severe lack of resources in the past led to poor condition housing. Under-investment in the past has contributed to a £10 billion backlog of repair work in the local authority stock alone. Substantial investment in renovation of the housing stock is a top priority for this Government. For that reason, we are making available an additional £5 billion for investment in housing over the lifetime of this Parliament, most of the extra money being re-routed through local authorities. They are expected to direct resources mainly towards improving their own stock. The resources made available in 1997–98 and 1998–99 through our Capital Receipts Initiative have already delivered improvements to around 300,000 homes. We expect improvements to be delivered in a further 1.5 million council homes over the next three years. However, authorities will have scope to use the extra resources to boost their existing programmes for renovating private sector housing and providing new social housing where this reflects the priorities in local housing strategies.

Several noble Lords have referred to private sector renewal. The majority of housing in England is privately owned. Private housing is first and foremost a private asset and responsibility for repair and maintenance must rest with owners. That is why the Government's policies for owner occupied housing encourage sustainable home ownership. But, as several noble Lords have said, not everyone is able to carry out essential repair work on his or her own home, and renovation grants continue to be available to help those most in need. In 1989–99 and 1999–2000 we have allocated a total of £331 million to local authorities in England for private sector renewal, with a separate allocation for facilities to meet the needs of those with disabilities. We expect this to support about £552 million-worth of expenditure on private sector renewal. We hope and believe that this will help renovate in excess of 100,000 homes. That is additional to the far greater amount of renovation and maintenance work carried out by home owners and landlords without recourse to public funds. We have also allocated an additional £4.2 million for the Home Improvement Agency programme over the next three years.

This debate has necessarily referred to the issue of planning for housing. Little more than a year ago we made two firm commitments, both of which will have a positive impact on the level of empty homes and houses in poor condition. The noble Lord, Lord Ezra, referred to that matter in detail and drew on his personal knowledge and experience. First, we said that we would introduce new planning guidance to ensure the use of previously developed land and existing buildings for housing before building on greenfields. Secondly, as noble Lords are aware, we set a recycling target of 60 per cent. and made a commitment to, break the mould of predict and provide", in planning for housing. We have delivered on both those commitments. The new consultation PPG3 has set the scene on how authorities should plan for housing, and it represents, as the noble Lord, Lord Ezra, said, a radical departure from the previous guidance.

Our message to local authorities is that when they draw up their development plans and decide planning applications—I know the noble Lord, Lord Ezra, would not expect a specific comment on a current planning application—they make the best use of existing housing and previously developed sites. We are asking local councils to maintain a five-year supply of housing rather than land as at present. That, too, is a significant departure. It means a much closer integration of housing and planning policies, and consequently that authorities will be making better use of the existing stock, including empty homes. The message we keep giving to planners is that we want them to be more pro-active and creative in their thinking. In this way we can completely revolutionise the way we plan for housing need.

Our second commitment was referred to on 29th March by my right honourable friend the Deputy Prime Minister, John Prescott, when he announced the revised household projections, replacing those announced in 1995. Traditionally, those demographic details have been a major determinant in assessing the future housing requirements. The Deputy Prime Minister has now made it clear that the Government do not regard the projections as forecasts or predictions of the number of households likely to form. The old policy of "predict and provide" favoured by the former government is dead. The noble Lord, Lord Ezra, summed it up well by referring to planning, monitoring and managing. It is still the case that the household projections should be taken into account in assessing a region's housing needs, but other factors should equally be taken into account. Regional planning bodies' calculations are now required to take far more account of the level of existing housing which might be available, in particular housing that is empty and substandard.

The noble Lords, Lord Ezra and Lord St. John of Bletso, among others referred to the important issue of looking carefully at empty homes. Empty property has a vital role to play in our new approach to planning for housing. We cannot afford to overlook the opportunities—I refer to the point raised by the noble Lord, Lord Dixon-Smith—which the 230,000 long-standing empty homes in the private sector can offer as an alternative to new development on greenfield land. Many of these properties are in poor condition and in need of renovation before they could be put back into use. Some may be in areas where there is a low demand for housing. I note the point again raised by the noble Lord, Lord Dixon-Smith, about the variation in housing demand in different parts of the country.

If it were a different debate, I could refer to a failure over the past two decades to consider the need for a more equal distribution of economic development across the country as a whole and our belief that the new regional development agencies will contribute to a more even spread given that there are areas of the country other than the south-east. Many of those who contributed to the housing pressure in the south-east did so because they felt that that was the only area where they could gain employment. I recognise that that is a simple analysis, but I am convinced that it is part of the issue.

We welcome the progress made by some 200 local authorities which have an empty property strategy and the role that the empty homes agency plays by assisting authorities to set up those strategies. The extra resources we are making available for housing give local authorities scope for increased action in this area.

The Department of the Environment, Transport and the Regions is funding the empty homes agency to work closely with local authorities to bring more redundant commercial property into residential use and to make better use of empty properties in rural areas. Those areas are faced with real difficulties in meeting need, particularly affordable housing.

The noble Lord, Lord Ezra, asked about the wider use of grants and about loans and equity. Discretionary grants enable local authorities to make decisions at local level as to how and where available resources can be used to best effect, including directing resources to an area-based activity in order to tackle concentrations of poor housing and benefit the wider community. It is important to say that there is a constant tension between the pressure to prescribe and ring-fence funding to local authorities and the recognition that there must be flexibility in meeting the needs identified by noble Lords.

The important issue of the private-rented sector was raised by my noble friend Lady Dean and the noble Lord, Lord McNair. I sympathise with his glasses problem. I had the same difficulty the first time I answered a Question at the Dispatch Box during Question Time.

The housing market needs to operate in the interests of all and we need to work very hard. During previous debates, a particular issue was raised regarding housing in multiple occupation. That is an area in which we must continue to press for improvement in conditions. We are looking at arrangements for enforcing decent physical standards in the private sector in the current review of housing fitness standards. Related proposals from the Law Commission are under study. The Government are also concerned about the amount of housing benefit being paid to bad landlords of substandard properties. That is one of the many issues being examined with regard to the future.

The noble Lord, Lord Dixon-Smith, asked about household growth projections. The latest figures showed the number of new households projected to form in England between 1996 and 2021 to be about 3.8 million, compared with the 4.4 million projected for the 25-year period ending in 2016. These projections are not forecasts, estimates or predictions. They are based entirely on what might be expected to occur if trends continue. They are one of the range of factors which should be taken equally into account by the regional conferences in making decisions about their housing applications. It is for the conferences and the panel to take a realistic and responsible view.

Noble Lords, including the noble Lords, Lord Ezra, Lord McNair and Lord St. John of Bletso, raised the issue of VAT on housing repairs. I confirm that we are examining the anomaly whereby VAT is charged at 17.5 per cent. on conversions, but new build is zero rated. We understand the arguments that are being put forward about unifying VAT rates and recognise that it could help in the efforts to tackle cowboy builders.

There are other economic and technical points to be considered, such as the impact on house prices and the issue of legality. We are aware that consideration of the current EU law is under way. However, I must stress that any changes in the VAT regime are ultimately a decision for my right honourable friend the Chancellor of the Exchequer.

We must make the best use of resources to regenerate rundown areas of housing, whether social housing or privately owned. Noble Lords have referred to regeneration and the circumstances of those living in the poorest housing and the worst neighbourhoods. My noble friend Lady Dean of Thornton-le-Fylde spoke of her specialist experience and knowledge in this field. The social exclusion work and the 18 action teams set up so far are a way of bringing in experts to co-ordinate a huge cross-departmental effort to tackle some of the enormous problems. There is more than £2.3 billion available for a re-focused single regeneration budget. Eighty per cent. of the new resources will be concentrated on major regeneration schemes in the most deprived areas. The remaining 20 per cent. of the SRB resources will fund schemes tackling small pockets of deprivation outside those most deprived areas.

My noble friend also referred to the diversity of need for social housing and the importance of recognising the growing number of difficult-to-let properties in some areas where renovation may meet housing need more effectively than new build. It is so important that we all work together in partnership; not only that local authorities and registered social landlords work in partnership, but that the local authority and the community as a whole work to tackle the wider questions to which she referred.

We welcome the important fact that the Housing Corporation and registered social landlords are committed to refurbishment and housing regeneration.

It is impossible for me to reply to the many detailed points raised in such a wide-ranging debate in such a short time. We believe that we should ensure high levels of urban amenity to halt the exodus to the countryside, and we therefore await with eager anticipation the report from my noble friend Lord Rogers.

The debate has highlighted the importance of housing. From my experience of having worked in local government, as did the noble Lord, Lord Dixon-Smith, any commitment to family life and to improving opportunities, whether for health, education or the life prospects of people is important but, housing is the first and crucial issue.

House adjourned at thirteen minutes before ten o'clock.