Empty Homes

HC Deb 16 May 2002 vol 385 cc313-60WH

[Relevant documents: Sixth Report from the Transport, Local Government and the Regions Committee, Session 2001–02 HC 240-I, and the Government's response thereto. Cm 5514.]

Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Woolas]

2.30 pm

Andrew Bennett (Denton and Reddish)

I am grateful to have the opportunity to raise the issue of empty homes. I am pleased that you are in the Chair for the start of the debate, Mr. Cummings, as you were a member of the Committee and did much work on the issue. I understand that this is a three-hour debate and that if Divisions occur in the House, injury time will be added on at the end.

I thank the members of the Committee, who worked hard on the issue, the staff who worked for the Committee and did a good job for us, and Professor Christine Whitehead, Professor Ian Cole and Brendan Nevin, who gave us a great deal of advice. Although we did not always agree with their advice, it was helpful.

I draw attention to the appendix of the report, in which hon. Members will find summaries of the letters that were sent to us. A strength of Select Committee reports is the quality of the evidence that we receive. In addition to the good evidence from organisations, we received many useful letters from individuals who stressed the hardship and upset caused by living next to empty properties.

The Select Committee identified two problems. There is a small national problem of houses that remain empty and that cause a lot of nuisance to those who live next door. We want local authorities, in particular, to tackle that problem by intervening at an early stage. People with mental health problems may be involved in some cases; at any rate, some people to whom properties are left are not quick at making decisions about them. Even one isolated property can be a nuisance if the roof is leaking, the walls are covered in graffiti and the windows are broken. We could marginally reduce the housing shortage across the country if we worked harder to bring those properties back into use.

The fundamental problem, however, is the one on which we spent most of our time. It occurs across a large swathe of northern England, where the housing market has collapsed or is weak. Some 250,000 houses across the line of the M62 cannot be sold or are difficult to sell, and many more houses are in that situation in the north of England. The number of people who have attended today's debate shows what a major problem there is in many northern constituencies.

I stress, especially for the benefit of civil servants and the London media, that many of those homes would be attractive to buyers if they were in other parts of the country. We have seen examples of houses on which more than £70,000 had recently been spent but which could not he sold. In places such as Bootle and north Manchester, there are houses that do not sell for £25,000, when they would sell for five times that amount in other parts of northern England and for 10 times that amount in the London suburbs. Therefore, we are not talking about properties that are past their useful life but about those for which there is no demand, even though they are often in good condition.

In Burnley, for example, we saw small terraced properties. In other parts of the country-certainly in some villages-people have knocked two or three small terraced properties together to make one house, which would have been worth a substantial amount. Some houses in Burnley are well-built stone properties, but there is no demand for them.

I am pleased that my right hon. Friend the Secretary of State for Transport, Local Government and the Regions is here to reply to the debate. I want to get across to him the fact that housing failure can occur very quickly. My constituency is in Greater Manchester, and during the Committee's inquiry, my attention was drawn across the border to a street of about 30 houses in the constituency of Manchester, Gorton. People there were very pleased when, just before Christmas, one of those houses sold for £25,000.

Around that time, two people on the street died, but their houses did not go on to the market. A solicitor who did not know the area very well advised those responsible to let the properties rather than put them up for sale. Someone who turned out to have been a drug dealer went into one of the properties, while someone who had been chased out of council housing because their children had caused great nuisance went into the other. Suddenly, residents found that there was a drug dealer and a person with four unruly children aged between eight and 12 on the street.

The immediate impact was that other people on the street put their houses up for sale. Three houses ended up with "for sale" notices outside them, but the owners discovered that they could not sell them. Fortunately, the police managed to deal with the drug dealer, because of his past performance, and he has disappeared from the scene. Furthermore, as a result of some very good work by social workers and the schools in the area, which are exceptional, those unruly children are now behaving pretty well. The perception remains, however, that it is not a good street on which to buy a house, and those three individuals have failed to sell their properties. All that happened in a very short time. The market can go down very quickly, and it is extremely difficult to build confidence back up.

One or two people have put it to me that part of the problem in northern constituencies is ethnic. I want to make it absolutely clear that there is no evidence for that. Indeed, we should put it firmly on the record that ethnic minorities have often helped the housing market to remain buoyant for much longer than it otherwise would have done. People from different ethnic groups who move into an area in no way damage the housing market—the opposite is true.

Several Government Whips and members of the Government are from the area, including my hon. Friend the Member for Manchester, Blackley (Mr. Stringer), and they are particularly concerned about the problem. As another local Member, my hon. Friend the Member for Oldham, East and Saddleworth (Mr. Woolas), has said, the Ritchie report discussed the ethnic issues and the problems in Oldham, but some of its recommendations on housing have not been implemented. I should stress that the failure to implement recommendations in the areas where there was difficulty last summer will make matters worse. Like my hon. Friend, I hope that the Ritchie recommendations can be introduced.

There is a bit of a problem in some areas with placing asylum seekers. The local authorities are doing a good job, but one or two of those in the private sector who make provision for asylum seekers are exploiting the situation. They are putting people into houses that are hard to let and not giving them support in the community. That is making the situation worse. I should stress to the Government that we need a bit more help if we are to deal with the problem. We must ensure that there is support for people who are put into areas of housing weakness, and that the local community is not simply left to cope.

The main exploiters are some private landlords, and there is considerable evidence that they deliberately drive prices down in some areas. For instance, if a house is hard to sell, the estate agent may say to the owners, "Look, we are trying to sell your house but we have had only a few inquiries. Why not bring the price down significantly?" Once the price has been dropped, the agent will find someone to buy the property—usually a property investor from outside the area. In such cases, the estate agent will often say to the investor that he will manage the property and make sure that it is let. At that point, the person managing the property may be tempted to put in tenants who have fairly low standards. The result of that will be that the rest of the properties in the street begin to go down in value. Normally, people who buy properties are interested in pushing the prices up-their own and those of their neighbours.

Dr. Brian Iddon (Bolton, South-East)

Does my hon. Friend agree that another way in which prices are driven down in such areas is when owners or their representatives take the houses to auction? That really does drive down prices.

Andrew Bennett

Yes, I understand that particular variation. However, I want to put across the fact that, although property owners normally want to push prices up, in some areas they are tempted to push them down. Their intention is quickly to get back the capital that was invested through housing benefit payments. They are then left not with a property but with a plot of land. It is the value of the land in which such people are interested.

I have said enough about the problems. I realise that other hon. Members want to speak, so I now turn to the solutions. The Committee's report found out a lot, and we are grateful that the Government's response to it deals with some of the possible solutions. Their response was a little slow, although I welcome today's announcement. I hope that my right hon. Friend the Secretary of State will tell us a little more about how they are getting a move on.

The most important thing is to put a floor in the market in some areas. Local authorities ought to consider designating certain areas, and saying to potential purchasers, "If you buy a house in this area for a reasonable price, we could guarantee it and buy it back if necessary." Doing that would put confidence back into the area, and many of those properties would be occupied. It is crazy that prices in some places on the south side of Manchester should be under continual pressure to rise while in some parts of the north side of Manchester they are collapsing.

It is important that private landlords should be registered. If they then want to get housing benefit, we could enforce certain standards. We have done work on improving compulsory purchase orders—CPOs—and local authorities must get to work on the new regulations. However, we need speedier powers for imposing CPOs. We need to look soon at the question of whether authorities should be able to purchase properties compulsorily to lease them.

Although we have some knowledge of the housing market renewal fund— I will come back to that—we want more detailed information about it. We must also look hard at what the Housing Corporation is doing. It is not doing enough to regulate the housing associations. Indeed, an imminent crisis faces those housing associations that have extensive property holdings. So far, the Housing Corporation has been able to persuade the bigger housing associations to take over the smaller ones that are in difficulty, but it is important that the market does not crash, otherwise the concept of housing being a safe investment will be destroyed.

Then there is the much bigger issue of equity across the country. It is tragic that we have a housing shortage in parts of London and the south-east while so many good houses are going to waste in northern parts of the country. We should be working hard to try to resolve some of those difficulties, because many of those houses are attractive. One or two local authorities have tried schemes. Huddersfield was in the news recently for trying to attract people to move from the south to council properties in the north. I am not sure that it has met with much success. However, retired people living in the south, who have houses worth £250,000, can find houses for a tenth of that price in some of the constituencies that are represented in the Chamber. If those retired people move to the north-west, they will have as good a quality of life and realise a considerable capital income to make their old age that bit more comfortable.

Ms Oona King (Bethnal Green and Bow)

That is a good way to deal with the regional imbalance in housing, but does my hon. Friend agree that it will work only if there is economic growth in the north of England and if the regional development agencies are not used to play one area off against another? People must have somewhere to go and work to do when they get there.

Andrew Bennett

I accept the argument about work and I also accept that few people move house once they pass 40. However, if one has passed the age of searching for jobs, there is some very attractive housing in the north of England. There are also attractive houses in areas of market failure in some south-coast seaside resorts. I understand why someone may not be too keen to move from a London suburb to some parts of the north-west, because they do not know how attractive it is there, but most people from the London suburbs have some idea of what it is like in places such as Hastings, so it might be possible to encourage people to move there.

I agree with my hon. Friend the Member for Bethnal Green and Bow (Ms King) that the main concern is to achieve a fairer distribution of jobs and more equity for those parts of the north of England where the housing is waiting for people if jobs can be created. The Select Committee will listen carefully to the Secretary of State's remarks, but we will want to return to the estimates. I certainly hope that, by the autumn, the issue of the pathfinder projects will be clear, that there will be more money from the spending round and that all those who are currently suffering from market failure will begin to feel that the Government are doing something about the problem.

2.46 pm

Sir Paul Beresford (Mole Valley)

I echo the thanks expressed by the hon. Member for Denton and Reddish (Andrew Bennett), the Chairman of the Select Committee, to its members for co-operating with each other in their discussions. There is a lesson there that those outside the House fail to understand, especially in relation to Prime Minister's questions. I also echo his thanks to the staff and our advisers. As he said, we always listen to our advisers, although whether we follow their advice is another question.

I feel slightly guilty about taking part in today's debate because, although I am a member of the Select Committee, I had no part in producing the report or in any of the Committee's investigations. However, I feel a little less guilty for two reasons. First, my hon. Friend the Member for Epsom and Ewell (Chris Grayling) attended all the investigation days and took part in the Committee's discussions and the assembly of the report. Secondly, although it was not mentioned by the Chairman of the Select Committee, I regard the report as only one of several key reports to be published. Perhaps the Secretary of State also recognises that and will respond to those future reports, rather than looking for friends, which I thought he might be doing by now. That would be encouraging. because the problem is not isolated to a few areas, as some of the interventions that we have heard suggested.

The report is short— almost a snapshot—but it puts into perspective the difficulties in the north and northeast. Of course, we must recognise that the situation in the south-east is entirely different, but I regard the two as interrelated. A microcosm of the problem existed in London some 20 years ago, although the situation there has changed dramatically. There were terrible problems in some parts of London, w here prices were rising and people who had sold up and moved out could not afford to move back. I shall not mention names or areas just yet, but I might be tempted if I am goaded.

The Secretary of State for Transport, Local Government and the Regions (Mr. Stephen Byers)

Go on.

Sir Paul Beresford

Only if I am goaded.

There were areas of deep deprivation, which might explain why the Under-Secretary of State for Transport, Local Government and the Regions, the hon. Member for Northampton, North (Ms Keeble), who I anticipated would reply to the debate, has not turned up. That could be connected with the fact that she was a leading local authority chairman in a key area that suffered some of those difficulties.

The report addressed two contrasting scenarios. The first concerned relatively isolated, almost individual homes— we still find this in London, where there is a healthier housing market—and the destructive effect that individual failure can have, particularly if the property is rented and the housing association or local authority is not prepared to deal with the problem.

The other, which the hon. Member for Denton and Reddish did not touch on, harks back to the past but still persists: some local authorities and housing associations that are large landlords are utterly incompetent. There are classic examples of that north of the border. Glasgow, which has been a disaster area for decades, is setting up a housing association. It will be intriguing to find out whether it will be able to deal with the situation. One frequent cause of problems is that the bigger a landlord's stock, the less able it seems to be to deal with problems. The Glasgow area should have been broken down drastically, if only to allow comparisons to be made between the approaches in different areas.

The second and more tragic issue that the Chairman of the Select Committee touched on is the collapsing housing market. It could be spelled out no better than in the dramatic line on page 5 of the report:

The rows of abandoned terraces, the broken windows and the burned out houses were shocking. That is not understood by many people in the southeast. The north-south divide can be illustrated no more dramatically than by considering my constituency in the south-east where there is exceptionally low unemployment, astronomically rising house prices and a high demand for housing. Looking north, we find a total contrast. The trouble is that demand in the southeast is such that the response of the Secretary of State's predecessor to local authorities that sought low-cost home ownership was to ram the figures in, with the result that our green belts and green fields are disappearing. It is clear that, in time, forcing that type of property into an area will fuel the market rather than stabilise it.

The Sub-Committee made three main recommendations and I intend to restrict myself to those. I am not being sarcastic, but to use a favourite phrase of the Chairman of the Select Committee, there is a touch of motherhood and apple pie in the statement of recommended aims. Beneath them, perhaps taking a little crust off the apple pie, are the sub-recommendations.

I was disappointed by the Government's response to the three recommendations. The Chairman was polite; he said that it was a little slow but he hoped that the Government would push forward. Perhaps that was cream on his apple pie. However, when we actually consider what the Government said, it is a case of "Not me, Guy". We have heard phrases such as pathfinder schemes, tools and stakeholders and a range of announcements on such matters as "lessons to be learned". It is all good spin-doctor stuff. However, the reality is, as we have found with some of the Sub-Committee's other investigations, that nothing is happening. The true statement in the response is the one that says

The wholesale collapse of housing markets is relatively recent in origin. That is correct, and it has got markedly worse since 1997. The Sub-Committee did not really face it, but the basic underlying problem— the Chairman touched on it and so did one of the interventions—is the economic and geographical imbalance in the country. We need to see the report balanced against the severe difficulties of the south-east, where we do not have the right homes because property prices are going through the roof. We would like to keep our green belt and green fields. I admire the fact that, to a degree, we have farmers rather than golfing establishments. I do not want the area to be built on, and nor do any of my constituents. We face a conundrum, and the situation is the complete reverse of that in the north. It is in the hands of the Government who must deal with it.

In the early to mid-1990s, the Labour party in opposition made much propaganda out of the recession. As we came out of the recession, however, the Conservative Government made great efforts to stimulate the economy in the north and check the overheating in the south-east. The main engine was not piles of taxpayer's money, local authority efforts or volumes of regulation, but the close co-operation between central and local government and the private sector. I am thinking of English Partnerships, challenge funding, the single regeneration budget and, most of all, firm and careful use of the planning system.

Overarching all that must be joined-up government, which is a difficult phrase. The Government have said a lot about joined-up government, but there is little evidence of it.

Mr. David Drew (Stroud)

I am sure that all hon. Members present will agree with much of what the hon. Gentleman has said. However, it is wrong to pretend that empty housing is only an urban problem. The problem of houses in rural areas being kept empty is a direct result of the planning system, which may encourage people to make two cottages into one and keep them empty in the meantime. Clearly, the planning system should diversify to ensure that the housing is used. Does the hon. Gentleman agree?

Sir Paul Beresford

To a large degree, I do. One solution must be the planning system. The investigation into the planning Green Paper may be a vehicle on which the Sub-Committee can move. It is not the whole answer, but part of it.

Mr. Geoffrey Clifton-Brown (Cotswold)

My hon. Friend has huge knowledge of the subject. The Government are reversing the joined-up government and the success of urban regeneration that took place under the Conservatives. Does he agree that there are too many schemes and budgets? No one knows what they are, so they are underspent and not effective. The system must be simplified to get urban regeneration going in the north, which will stimulate the economy and reduce the number of empty homes.

Sir Paul Beresford

I was about to thank my hon. Friend, but he has given voice to my next set of thoughts. I was going to say that the approach of the Conservative Government at their tail end was dramatically successful. I got an indication of that in a simple way shortly after the 1997 election, when I checked with a spokesman from the Council of Mortgage Lenders. Although he did not have the figures—he promised to produce them, but did not-he confirmed that lending on mortgages was declining to a remarkable degree in the south-east, but rising in the north, especially the north-east. Our Chairman would have been quite pleased with that, although he has escaped us now. Since 1997, that has completely reversed.

Over and above all the factors that the Chairman mentioned, the key must be to build confidence. We must beat street crime, as we did in London in the 1980s. We need to offset the decline in manufacturing, which comes back to the Treasury and the high pound. We must beat education difficulties. People will not move to areas unless they have jobs, decent education and a crime level that is low, or that people at least feel is low.

We should consider the Sub-Committee's third recommendation, which is probably the most important. It reads:

The planning guidance on the re-use of existing brownfield sites contained in PPG3 must be forcefully implemented locally and regionally with a far more radical curb on greenfield development. Since then, there have been a few words from the Government, but the reality is that they are not implementing that guidance. They are not helping in the north and are being restrictive in the south, especially in the south-east.

The recommendation does not apply to housing alone. It must also apply to businesses, because they provide jobs and opportunities, and to quality housing that goes with the businesses that could move into brownfield sites. Quality housing attracts executives to an area and ensures that businesses will move in and provide jobs for the people who will bring those dilapidated houses back into use. That requires cooperation between the private sector and local authorities.

Ms Oona King

The key point is that if people in the south-east do not want their green belt built on, it is in their interest to ensure that more jobs and infrastructure projects go up north. We must not continue to hog projects such as the national stadium and anything else we can get our hands on.

Sir Paul Beresford

I must congratulate the hon. Lady. I had not quite got to the sporting aspect, but she has succeeded in doing so nicely. From the smile on her face it would seem that it is a score that she wanted to make. I will let her have her moment. The Government response, particularly to that recommendation, was pretty knock-kneed. They mouth platitudes while in reality the previous Secretary of State—I hope that this one will not do the same— hammered the south-east with extra building requirements. I do not know where the new buildings will go— the struggle is enormous. As the hon. Member for Bethnal Green and Bow (Ms King) said, we need to use jobs to persuade people to move north.

The Committee's first and second recommendations of the primary three are also correct. Several local authority areas in London have proved that to be the case. In the late 1970s, whole blocks of south London were designated as slums. In my own area of London at the time, the aim was to bulldoze those slums having shifted the residents out and accommodated them elsewhere. The former local authority took 10 years to move several hundred people into alternative accommodation. It then bulldozed the old accommodation and built what I suspect are the slums of tomorrow. The net gain was six fewer houses, an enormously dissatisfied population and a 10-year wait.

I found that the key was to try to work with people in their homes, with housing associations and with the private sector. The local authority acted as a catalyst and spent much less money by acting solely in that capacity. The most obvious, broad success was achieved through demolition in some areas, but predominantly by enveloping—wind and waterproofing. That gave the residents an opportunity to work on those properties because the initial work had made them structurally sound.

Where residents were elderly or unable to pay the substantial costs, even with the grants available, the cost of the process was set against the property, to be collected at a later date, often when the elderly people died and the property passed on. The intriguing part of the process was that as the work continued the value of properties in the area rose dramatically. The net effect was a big financial gain for the residents or those who inherited or sold the property after the work had been completed.

To my amusement, the Housing Corporation, on which the Chairman of the Select Committee touched, has discovered this as a new idea. It is not. It has been done by local authorities of all political complexions up and down the country. It is done with people in their own homes. Perhaps the most dramatic and intriguing change in my area was the number of branches of stores such B&Q and Wickes that suddenly sprang up to meet demand. That proved that the measures were working.

Mr. Clive Betts (Sheffield. Attercliffe)

I am listening with interest to the hon. Gentleman and I agree with much of what he has said. Birmingham city council was one of the first authorities in the country to develop enveloping schemes in the 1980s, and Sheffield followed closely afterwards. However, the Tory Government of the 1990s, to whom he was paying tribute a few moments ago, changed the rules on enveloping so that grants were no longer available to continue the schemes. The gap in the 1990s when nothing could be done is one of our greatest problems. Does the hon. Gentleman take some responsibility for that?

Sir Paul Beresford

No, because my local authority used the opportunities for gaining capital receipts to find a way around that and provide the grants directly from internal funding. We did not experience difficulties because of Government decisions. We aimed to use capital receipts rather than extensive loans, the use of which I suspect caused Sheffield some difficulty.

The other key factor was the use of the private sector in partnership with local authorities. As many hon. Members will recognise, the Government are referring to planning tariffs and, as the Minister of State recently told the Select Committee, discussing the EU regeneration grant system, which is slowly collapsing or not even working. They have demolished English Partnerships. Everything seems to be spiralling downwards while the north, especially the north-east, is collapsing and the south is being concreted over. I suggested in desperation that the Minister of State had clear signs of the Nero syndrome: he was talking while everything around us collapsed.

As I said, the report should not be considered in isolation. Further reports are to come, which I hope will involve other aspects, until the full, interrelated picture can be seen.

It is not a happy scene for the Government. I am sure that the Minister will be tempted to repeat the "18 years" mantra, but the situation has declined dramatically in the north and north-east since 1997. As the Chairman of the Select Committee pointed out, unless something is done quickly, in some areas, the spread will resemble an unpleasant cancer.

3.6 pm

David Wright (Telford)

I am shocked by your generosity, Mr. Griffiths, in calling me to speak so early in the debate. I expected a long wait.

I welcome the Committee's report on this complicated and critical issue. It helps move housing up the political agenda. For far too long housing has been in the doldrums of the political agenda in this country, and it is time that it moved up. I agree with the hon. Member for Mole Valley (Sir P. Beresford) that the matter is linked to other factors relating to education, welfare and social indicators that make areas sustainable. Housing is crucial. It touches everyone's lives and is extremely important. I shall focus on two aspects—there is an obvious split between public sector and private sector housing—and will draw some of those themes together in conclusion.

Our policy in the local authority and registered social landlord sector in the post-war period has been one of never-ending growth—excluding, of course, the right to buy, which has shaken out properties from the social housing sector. There has been a continuing commitment to providing increasingly more units. We must accept that in some areas that process has been largely unsustainable.

Chris Grayling (Epsom and Ewell)

The hon. Gentleman refers to the right to buy and says that otherwise the provision of housing has been steadily growing. Does he recognise that in the past five years the provision of social housing in this country has fallen dramatically? That is one reason why we are suffering key-worker housing shortages in the south of England.

David Wright

I would have some sympathy with that argument if the hon. Gentleman were not from a party that has pursued a policy of aggressive disposals in London during the past 20 years, selling off properties cheaply. He now complains about the social housing market throughout the country, including London. He needs to look more closely at the policies followed by the Government he supported in the 1980s.

Glenda Jackson (Hampstead and Highgate)

In 1979, when the Conservative Government came to power, London boroughs were building an average of 1,300 homes every year. In 1997, when the Conservatives were finally kicked out, only one house in the entire Greater London area had been built by a London borough.

David Wright

I thank my hon. Friend for those figures, which I believe are mirrored throughout the country. The Conservatives do not have much to say or be proud of in relation to social housing.

Chris Grayling

We must not allow ourselves to be too diverted down that track. The Conservative Government created an entirely new sector of registered social landlords—the housing associations that form the bulk of the affordable housing sector. There was considerable investment in the early 1990s. Since 1997, investment in social housing has fallen significantly, and that statistical information is admitted by the Government.

David Wright

I find it strange that the hon. Gentleman wishes to claim credit for the registered social landlords movement. Its base was rather broader than the construct of his party. It was born of the voluntary sector and of those who wanted to provide housing for people in need. He cannot claim credit on behalf of his party for establishing that movement.

Mr. Clifton-Brown

Is the hon. Gentleman aware that, in The Observer on 28 April 2002, Ben Summerskill wrote:

Just 162,000 new homes were built in 2000-01. This figure is the lowest in any year since 1927 except the war years"? That is under the Government who the hon. Gentleman claims have built more social housing units.

David Wright

I want to develop my argument further. I was trying to explain that, since the second world war, the provision of social housing units has increased. That trend of growth has proved to be unsustainable in some areas, because we are now seeing a decline in demand. My main point is that a "one size fits all" housing policy is no longer appropriate. For too long, our housing policy has been based on the ongoing and increasing demand for social housing in the southeast of England, and that no longer fits all areas of the country. It is time to acknowledge that fact, and we have begun to develop housing strategies that are more regionally distinct.

Some of the policies pursued by Opposition Members when in government during the 1980s exacerbated the problems on social housing estates. For example, they introduced a programme called estate action. It was founded on good principles and objectives, such as trying to improve social housing estates that were falling into decline. However, many of those estates were unsustainable in the long term. In fact, some of the worst estates were saved, when a more radical approach of clearance and redevelopment would have provided quality new housing on a mixed-tenure basis. Several policies pursued by Opposition Members during the 1980s and 1990s created some of the sink estates and, consequently, some of the problems that we now see throughout the country.

Chris Grayling

I thank the hon. Gentleman for giving way again; this will be my last intervention on him. As part of the investigation, we visited the Hulme estate and the Ordsall flats in Salford. Both received investment and precisely fitted the picture described by the hon. Gentleman. The case of Hulme, in particular, is striking. It was an early 1990s initiative and was the model of the way that things should be.

David Wright

I am happy to give credit to the Labour council that was involved in setting up that initiative. My point was that, in many cases, estate action-the platform for the Government's policy during the 1980s—was unsophisticated. We need to take a more sophisticated approach and develop distinct, focused, regional and sub-regional strategies for dealing with the issues surrounding housing demand and empty homes.

We have already heard this afternoon about the cycle of decline that occurs in areas where one or two properties become empty. In my constituency, one of the key signs is a decline in owner-occupation. The private rented sector moves in, purchasing large numbers of properties, but makes insufficient investment for repairs. As a result, such areas fall into decline and malaise. We need to look in a more sophisticated way at how the private sector is operating because, often, small landlords buy up one or two properties but fail to maintain them adequately. We are only now beginning seriously to take demand factors into account in developing our housing strategies.

While I am concentrating on local authorities and RSLs, I should say that a major issue that is not highlighted in the report is the impact that empty properties can have on the sustainability of stock transfer vehicles. If we allow empty properties in towns and cities in the north of England and the midlands to go unchecked, the financial models that have been established for stock transfer vehicles will start to founder. I want the Secretary of State to explain how we could deal with that problem. This is not a party issue; for some time, both parties when in government have addressed the matter of stock transfer. There is a serious issue to do with long-term demand and its impact on transfer vehicles.

Many local authorities are starting to adopt comprehensive clearance strategies. When I worked for Sandwell metropolitan borough council, I was known as Demolition Dave because I believe that we must often accept that certain areas of property are beyond saving, and that they must be cleared and replaced with mixed-tenure developments. There is no political divide over that either. We need to diversify the tenure base in many estates and areas, and local authorities should take public sector clearance far more seriously.

I turn to private sector housing. For several years, our national strategy on private sector renewal has been extremely weak—for instance, it was very poor during the 1990s. The mandatory grant regime meant that many local authority housing budgets collapsed, and we are seeing significant abandonment in private sector areas. Substantial clearance is now on the agenda again for abandoned areas of private sector housing, and we should not shy away from that. We must ensure that redevelopment strategies are implemented effectively.

The report identifies another important issue: the lack of skills in compulsory purchase order activity in the UK. Few local authorities have pursued CPO activity in recent years, and that has led to a loss of that skills base in the local authority sector. We must try to reinvigorate it, so that CPO activity becomes more effective and rapid.

Mr. Clifton-Brown

Does the hon. Gentleman agree that one of the most serious problems in the housing sector is the decline in skills in many local authority planning departments, and that the Government must urgently address that?

David Wright

I do not agree that there has been a decline of skills in those planning departments. My point is about cross-departmental working, especially with regard to CPOs. CPO activity is a technical process, and many local authorities have shied away from such orders for several years. They can be an effective tool, and time and effort must be invested-probably at national level—to reinvigorate that skills base. We need to develop regionally and sub-regionally distinct housing strategies. This is not just a north-south issue. We need a sophisticated policy approach to deal with the problems in the south-east, but we need to look at the other regions too, because they may also have distinct problems that require specific solutions. Intervention strategies need to be based on a comprehensive market analysis. Some of the work that has been done in servicing the Committee-such as that by the Centre for Urban and Regional Studies-was pioneering, and it should he applied throughout the country.

The Government's policy of housing market renewal is crucial, and we must support it. In many areas, we are beginning to make strides towards creating an integrated public and private sector strategy, under the banner of housing market renewal. That needs to be tenure-blind, but it must develop distinct strategies to deal with both public and private sector housing.

Concentrating resources in the most deprived neighbourhoods could lead to areas at risk being ignored. In some urban areas, we may need to write off certain neighbourhoods because they have gone too far to be able to come out of the cycle of decline, and to re-deploy resources in areas that are just beginning to slip into disrepair. That will be difficult for many local authorities—and for many communities. However, we must bite the bullet and adopt that approach—and so must they. Taking the approach that all areas can be saved through refurbishment can no longer be applied, as it no longer fits the agenda. We must be brave enough to take such decisions.

We also need to reintroduce housing investment into other major programmes. One weakness of initiatives such as the new deal for communities and the single regeneration budget has been insufficient emphasis on housing investment. During the past four or five years, I have been involved in bids for such funds in which we were told not to include housing investment. I do not find it pleasing to say that, but it is a fact. We must acknowledge that housing investment can be the cornerstone of ensuring that areas may recover.

Comprehensive regional clearance and redevelopment strategies are important. At present, housing corporations and Government offices produce regional housing statements, but we need local authorities and private sector partners to sign up to those formally and to integrate them with regional planning guidance. There is too great a gulf between our approaches to housing targets and to planning. We must get local authorities to sign up formally to figures and to explain clearly in their local plans and responses to planning guidance how they intend to meet demand and clear and replace empty homes.

We must ensure that registered social landlords review their business plans in respect of empty homes. We will experience a major problem unless we secure recognition that decline of the housing market might destroy the stock transfer vehicles that we have established.

3.20 pm

Andrew Selous (South-West Bedfordshire)

It is a great pleasure to participate in the debate. I became active in politics in the first place because the London borough in which I lived contained more empty council houses than homeless people. I made my maiden speech on Second Reading of the Homelessness Bill, and I was proud to serve on the Standing Committee that considered it with several hon. Members who are present today.

My constituency experience is the reverse of the northern Members present, and is more in line with that of my hon. Friends who have spoken. The overwhelming problems that are brought to my constituency surgeries week by week are faced by homeless young couples who want a first home or by families who are inadequately housed. Examples of such families are those with children who are ready to move out of a cot and into a bed for which there is no space in their room, or those with children who have bedrooms that are so small that there is room for a bed but not a wardrobe. South Bedfordshire district council, which is my local housing authority, manages its housing stock efficiently but is unable to meet the huge demand that is presented by the constituents who visit my surgery week by week.

I am extremely interested in empty properties in my constituency because anything that we can do to increase the supply of houses in my constituency—and, I suspect, in most English constituencies more or less south of Birmingham— would be welcome. I pay tribute to the two recommendations in the Select Committee report that suggest that action be taken on that matter. At the moment, the best value performance indicator for local authorities measures only the number of private sector houses that have been empty for six months. The report recommends that the measurement should be extended throughout all housing sector tenures.

3.23 pm

Sitting suspended for a Division in the House.

3.38 pm

On resuming—

Andrew Selous

I very much support the second proposal in the Select Committee report; local authorities should initiate an immediate review if more than 2 per cent. of their housing stock is vacant. That recommendation is along the lines of an amendment to the Homelessness Bill tabled by the hon. Member for Stafford (Mr. Kidney) who is also present this afternoon. The amendment was supported by all members of the official Opposition on the Standing Committee and by all Liberal Democrat members present, but was sadly lost by a single vote-by eight votes to seven—which was a great shame.

The amendment would have required local authorities to make specific reference to the nature and extent of empty housing and vacant property in their districts. Local authorities would also have had to produce a target for the reuse of such properties and a strategy to achieve that target. It is a pity that the amendment was not agreed to, especially as the Empty Homes Agency estimates that more than half of all local authorities have no credible or effective empty property strategy. It is a matter of great regret that the amendment was not accepted.

I warmly endorse the third major recommendation of the report; that more impetus should be given to PPG3, which supports giving more urgent attention to building properties on brownfield sites. That is especially relevant to my constituency, all of which falls within a green belt. I welcome the provisions in the 2001 Budget to increase the measures used to turn flats over shops into residential properties. That is a huge untapped source; it could make a real difference to constituencies such as mine by increasing the supply of properties.

So far this afternoon, we have considered the supply side of the equation. I should like to dwell briefly on demand. The Department commissioned a report in 1990 entitled "Divorce, Remarriage and Housing: The Effects of Divorce, Remarriage, Separation and the Formation of New Couple Households on the Number of Separate Households and Housing Demand and Conditions". The report estimated that roughly 70,000 extra properties are required a year as a result of various forms of family breakdown. I should be interested to know whether the Department has commissioned further research on the subject to update that report, and what further recommendations Ministers think should flow from that.

On the subject of young homeless people, 86 per cent. of young people leaving home do so because of conflict with step-parents, or when their families fall apart. That is relevant to what we are talking about because the question is one of both supply and demand. I urge the Secretary of State to consider that in his future policies.

3.42 pm

Mr. Peter Pike (Burnley)

I am glad to have the opportunity to speak about the Select Committee report, which I welcome, along with its detailed recommendations.

In many ways, this is the most important debate in which I have taken part in my 19 years in the House, because the issue is of great importance to my constituency. However, I accept that Burnley is not unique; other areas have problems with empty houses. I recognise that there is a problem across east Lancashire, and I support the work undertaken by East Lancashire Partnership in putting forward a bid for housing renewal. I hope that hon. Members will understand if I make Burnley my main theme. We have the biggest problem of any borough in the country. Out of 40,000 houses, 4.000— 10 per cent. of the housing stock— are empty at present.

Burnley has several other problems, which have been given a lot of publicity in recent weeks, but this issue is of great importance, too. Burnley's number one core problem relates to empty houses and all the problems that go with it—dereliction, vandalism, drug addicts, the lowering of the lower end of the housing market, and many others.

The Chairman of the Select Committee, my hon. Friend the Member for Denton and Reddish (Andrew Bennett), referred to two issues on which I would like to touch. One was the rented properties issue. He spoke about a registration scheme, which I strongly support. People across Burnley would recognise that there are major problems with landlords who do not live in the area. They buy properties at a low value and let them knowing that, in most cases, the rent will be paid because of people receiving housing benefit. They are not bothered about who they put in the houses and what problems those people bring to other residents in the area. Such landlords cause the problems to which my hon. Friend referred. A registration scheme to ensure certain minimum standards for such tenancies is important, as is the type of property that is provided in return for the rent.

My hon. Friend referred to the ethnic issue in Oldham. That has been cited as a problem in Burnley; it was certainly used in the election campaign last year and in the council elections this year. Particular reference was made to an alleged preference for certain areas. The accusation was that the council had given more resources to Daneshouse ward, which has a majority of Asian people. It is 40 to 60 per cent. white people, but sometimes people believe that it is 100 per cent. Asian. The reason why that area has received a large amount of resources is because it is the eighth most deprived ward in England. It would be spent on that ward, regardless of who lived in it. Such accusations about preferences are appalling.

It is not true to say that we have not spent resources in other parts of the town. Massive investment has been made throughout the town, but misinformation has been put out as fact and, unfortunately, people tend to believe it. Two years ago, Burnley had a housing stock transfer. The Government wiped off £23 million of residual debt. That allowed the transfer to take place, because the properties were not worth the money that was owed on them. The decline in the value of housing in the area has allowed Burnley and Padiham Community Housing to invest in the properties. We are grateful to the Government for their action because they have now allowed the council to concentrate on the private sector problem.

I was glad that members of the Select Committee came to Burnley. I attended the briefing at Turf Moor. Members toured some of the key difficult areas in the town. I know from comments that were made to me by both Labour and Opposition Members that they were visibly shaken by what they saw. Other areas in the town would have shaken them just as much. I am not criticising them. I have been a member of Select Committees and I know that time is limited, but they only saw a snapshot of the town.

On page 67 of the report, paragraph 4.1 describes what was said at the briefing meeting. It states:

In Burnley, we heard that aspirations had changed and that people wanted more space and higher quality housing than the existing pre-1919 stock. That is true. It must be understood that many people do not want to live in that type of terraced housing. About 20 or 30 years ago, we would have been happy to go on holiday, stay in a boarding house with a toilet at the end of the corridor and a shared bathroom. In 2002, such accommodation is not acceptable. People's housing aspirations have moved on. A terraced house might be decent, but with another terrace in front of it and one behind, little sunlight can get in, and that makes such housing no longer desirable.

The council is worried about the loss of single regeneration budget funding that, until now, has allowed councils to work in areas of private sector housing. The North West Development Agency told the council that its priorities have been shifted by central Government and that it will no longer be able to make funding available for that purpose. That is extremely worrying. The agency said:

Where demolition is proposed there is an additional problem as local residents are frequently trapped in negative equity and relocation grants are inadequate. Constituents visit my surgery week after week with the same problem. Last week, a person told me that he had bought his house for £24,000 a few years ago. He still owes £16,000 on the mortgage. He now has to move because his house is to be knocked down. He will get £10,000, but that leaves £6,000, which his building society is not prepared to forgo. One can imagine that that person feels somewhat aggrieved. People find out that they have a negative equity problem only when they have to move—for work, or any other reason. It is not a problem until they move, but it exists for many people.

The appendix to the Select Committee report includes several letters from Burnley residents. Some of them are tragic and detail moving cases. If any hon. Member thinks that the letters are odd or unique, there is not a single week in which I do not receive one, two or three such letters, and people visit my advice bureau with similar cases.

Last week, a family visited my advice bureau. I have known them for 40-odd years. In fact, one member of the family was on the executive committee of Burnley Labour party when it appointed me to work for the Labour party in Burnley in 1963. The family's home is an absolute palace. The next-door house on one side has been empty for 10 years and the next-door house on the other side has been empty for two years. The house on the opposite side of the road had two fires last week, and a house in the block at the back of the family's home had a fire last week. The family is absolutely terrified of living there, and I would be terrified if I lived there. It is unacceptable that such a situation exists in 2002.

During my 19 years as a Member of Parliament, Minister after Minister has visited Burnley to look at our housing problems, although several of them fell by the waysifde in the Conservative Government almost as soon as they had visited. The problem is getting worse. Lord Falconer of Thoroton, the Minister for Housing and Planning, visited Burnley and east Lancashire on two separate occasions. When we met him in Hyndburn, I thought that it was the first time that we had a Minister who understood both the problem and the action that was needed to deal with it. He accepted that the problem could not be solved overnight, but that it required urgent action followed by a long-term commitment. That is very important.

During my 19 years in Parliament, I have asked more than 300 questions in the House on housing issues, most of which were in respect of Burnley. I referred to renovation grants during an Adjournment debate in 1984. Grants were available prior to the 1983 election, but as soon as the Conservative party won that general election, it axed the available money. We built up a queue of people but we could not find the money to give them grants.

The previous Conservative Government introduced value added tax on renovation work. Recommendation (k) on page 60 of the report suggests that VAT should be equalised for renovation and new build work. There is a good case for that. Areas such as Burnley are low-income areas with low-value properties. They contain many pre-1919 properties. The former Minister, the right hon. Member for North-West Hampshire (Sir G. Young), said that the areas have a peculiar cocktail of problems. The problems cannot be solved because people do not have the resources to invest in a house that might not be worth any more in future. That is the reality that we have to face time after time. I referred to that in another Adjournment debate in 1986.

In the Queen's Speech debate on the first day of the new Parliament, 1 referred to the situation as I saw it. I said:

East Lancashire has 225,000 privately owned properties, about half of which were built before 1919. A quarter of the whole stock, some 52,000 properties, is unfit for habitation, and a similar proportion is in serious disrepair."—[Official Report, 20 June 2001; Vol. 369, c. 139.] That is the problem not only in Burnley, but in east Lancashire as a whole.

Members of the Select Committee who went round Burnley would have noticed boards with a Union Jack-type symbol that read, "Best offer to date: £1,450". In other cases, no offer is mentioned at all because people cannot get an offer on their property.

I hope that the Government will take note of a further difficulty. If one asks for council tax on property that has no value, and that people are not able to sell, it is no wonder that people try to disappear. It is not like having an empty second home. People just cannot get the money, and they feel outraged when they receive a bill for council tax if they are doing everything possible to try to sell their property.

Bradford and Northern housing association, an important association in my area, states:

The level of funding that will be required to tackle declining neighbourhoods is not small—the National Housing Federation estimates that £100m will be needed in 2003/4, rising to £500m by 2005/6". The National Housing Federation states:

Falling demand reflects economic decline, but in some areas of the north and Midlands, decline has accelerated into a downward spiral. That is what we face in Burnley. We are in a downward spiral, and we cannot reverse it by ourselves.

The Government's response acknowledges some of the problems. The Secretary of State said in a statement that

Derelict homes don't just scar the landscape. They make life intolerable for those still living there. Those who can leave, those left are often trapped in negative equity. Legitimate landlords struggle whilst rogue landlords flourish. Crime is endemic. Hard working people find that their investment in a home of their own is suddenly worth a fraction of its true value…The knock on effect is immense, it permeates our towns and cities. Declining areas destroy the fabric of our society. I shall be brief, because I know that many other hon. Members want to speak. Burnley needs urgent action. We welcome the pathfinder project and today's announcement by the Secretary of State of the money raised for preparatory work. A number of options are available for Burnley. Together they will help to solve our problem. I stress that Burnley needs to reduce the number of houses available until it equals the number of houses wanted. As we get nearer to that figure—as those 4,000 empty houses reduce in number—we need to demolish 2,000 of them as speedily as possible. I hope that the Secretary of State understands that. We can then start to see a solution for Burnley and for the other areas affected by this appalling problem. We can start to move forward.

3.57 pm

Chris Grayling (Epsom and Ewell)

It is a pleasure to follow the hon. Member for Burnley (Mr. Pike). We may not share political views, but I am aware of his commitment on this matter. The Select Committee's visit to Burnley was probably the most moving part of our visit to the north-west. His constituency clearly suffers intense problems and there is a real need for urgent action. I hope that the Committee's report will encourage the Government to take the necessary action.

I am pleased to see the Secretary of State here. I am not a founder member of his fan club on transport matters, but I am pleased that he has taken the trouble to attend this important debate. I hope that he will take away with him some of the lessons that hon. Members learned while making the report and some of what is said this afternoon.

For someone who has not been directly exposed to the collapse of housing markets, the Committee's visit to the north-west was a thought-provoking experience. I am not a pure southerner. I have lived also in the northwest. However, unless one has seen the affected areas at close quarters—they are often only a few miles from areas that have perfectly normal, buoyant housing markets— one cannot comprehend the scale of the problem. The report highlighted a number of extremely important issues; some require Government action, but others go beyond intervention, because it is not a problem that can be regulated out of existence. The problem will have to be dealt with by society as a whole.

Some fundamental planning concerns need to be considered; I felt that particularly strongly during our visit to Liverpool. I was a candidate for the Warrington seat for the 1997 general election. I was concerned about the spread of housing into green land in such a pleasant part of rural Cheshire. It is pertinent that only a few miles away, close to the Liverpool city centre, large Victorian houses are standing empty and going to rack and ruin when, in another part of the country, they would have substantial value.

Although I endorse what the hon. Members for Burnley and for Telford (David Wright) said—I agree that, in some places, there may be a need for bulldozers—in places such as Liverpool there is clearly housing stock that should be returned to general use. It makes no sense to continue to develop on green land throughout Cheshire, causing people to drive long distances to work, when there are perfectly decent quality homes in places such as Liverpool and Manchester.

There is no doubt that some of the housing that we saw is obsolete. Some of the terraces in Burnley and east Manchester, for example, were past their sell-by date in the view of all the Committee members who visited them. Tough action needs taking and clearance will be required. We saw examples of new estates that were literally down the road from old estates but which were doing reasonably well on the housing market. It became clear that there were blocks of housing for which there was simply no demand and which, regrettably, would have to go.

We also saw clear evidence that, to coin a phrase, one cannot buck the market through state involvement and intervention. On a rundown estate in east Manchester, we saw examples of housing in its second or third phase of regeneration, which had been done up 10 or 20 years ago with grants provided by local authorities and Government. Those houses had repeatedly been improved to a small extent but then carried on declining. Such examples make it plain that we cannot escape reality and that change is necessary. Some estates will have to be cleared to make way for new housing and some communities may have to reduce in size.

The conclusion drawn by the hon. Member for Burnley is inescapable; in some places communities will have to become smaller to become sustainable again. However, the Committee was concerned about the ways in which some communities were starting to become smaller at their fringes. We saw evidence of haphazard clearance; for example, of a couple of houses being knocked down in a block, creating a scrubby piece of land with no purpose. That type of clearance only adds to the problem and damages rather than enhances the character of the area.

Clearance must be done strategically, and the Government should play a role in that. We cannot simply clear away whole areas of housing without the right compulsory purchase structure and financial underpinning of the clearance. There is a strong case for spending the money on radical change that in the past might have been used merely to shore up some of those areas. Some could be returned to parkland or green belt or turned into development areas, where a new kind of housing could be built that would appeal to a more modern marketplace.

We saw examples of policy failure, too. Gap funding was one such area, and the Committee has recently discussed it in debates on the European regeneration framework. We heard from many people involved in regeneration that the removal of gap funding, of which hon. Members may be aware, occurred because the European Commission suggested that the provision of that funding gave British developers an unfair commercial advantage over their European counterparts. The gap funding was ruled out of order, which is simple madness.

Some schemes in our inner cities cannot go ahead, despite the need for them, due to the lack of gap funding. The Government need to be tougher in their dealings with the European Commission, and we should certainly not have accepted that decision. Instead of providing gap funding in a place such as iverpool—where it could make the difference between a declining and restimulated housing market—we are creating artificial competition rules between British and French developers. That makes no sense when we should be breathing life into areas that can live again.

Another regulatory point about which all on the Committee felt strongly was landlord registration. Given the political corner that I come from, hon. Members will not be surprised to learn that I am no great friend of undue regulation. It was clear, however, that the absence of regulation of private landlords in some of the areas that we saw was an omission. I do not want sweeping regulation of private landlords across the country, and I say that—as the Register of Members' Interests makes clear—as a small private landlord. Indeed, the co-Chairman of the Select Committee, the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), noted during our investigation that she, too, is a small private landlord. I hope and suspect that those of us in that position are responsible, let within the private sector and do a good job for the tenants in our properties. I think that that is true of private landlords across the country.

It is clear, however, that some landlords abuse the system. I would like—the report highlights the need for this—a system that would require landlords to meet certain standards if they wanted to let to people who need housing benefit. Giving local authorities the right, rather than the mandate, to regulate such private landlords in areas with failed housing markets would, the Committee felt, make a significant difference to some of those areas.

My third point relates very much to the other end of the scale. We also visited Tower Hamlets, in the constituency of the hon. Member for Bethnal Green and Bow (Ms King). It was striking from our discussions with people involved in regenerating housing there that they had difficulty with the right-to-buy rules, and I was disappointed with the Government's response on that issue. Those people told us that they would decide to raise the quality of an area by regenerating—stripping out and doing up—a block or a whole estate. Once they announced the scheme, however, people would exercise their right to buy, and their properties would immediately be compulsorily purchased at the full market rate. The whole budget for the regeneration scheme would disappear before the scheme had even started, which is mad. I would not like the right to buy to be curtailed generally, but the situation that I have described is close to insider dealing. It is totally illogical that the current rules on the right to buy permit such circumstances to continue.

The report says that we need radical intervention in the areas that the Committee saw, which is true up to a point. In discussing our experiences as we visited different areas, however, we agreed that there was a limit to how far one could interfere with the market. It was clear, however, that radical solutions are needed, and they are not simply a matter of housing regulation.

We need tough policing initiatives. In one area of east Manchester, I saw people going in and out of a property down the road who did not look like they were about law-abiding business. In every area we visited, people talked to us about drug problems and crime. The hon. Member for Burnley referred to frequent fires. It was striking in his constituency that one could walk down streets and look into houses that still had all the furniture in the front rooms because people had simply gone away. The house next door would be burnt out. The hon. Gentleman is right that that should not be allowed to continue.

Such areas will need tough policing; we need the kind of strong community policing tactics that have been used to clean up parts of New York. The broken windows syndrome can be no more visible than it is in Burnley, Liverpool, east Manchester and the other places that we visited.

We also need tough action against anti-social residents. People should not be able to disrupt the areas that they live in to the extent that was clearly happening in the places that we visited.

Finally, there are several lessons to take into account. In Liverpool, we were told that public transport could make a major difference. The area that we saw really should not have been as run down as it was. It was close to the city centre and had big, attractive Victorian houses, which should have been prime property. Funding a local tram system, for example, in areas that are suffering in that way could make the difference between a failed and a recovering housing market.

The Government clearly need to tackle VAT, because it is totally illogical to stack it more favourably on new housing than on housing renovation. There should at the very least be parity, and there is a strong case for giving VAT preference to investment in rundown areas.

It was also clear to us that regeneration can work only if it is radical; if one takes an area like Hulme and transforms it. We were impressed by the experience of Hulme; a partnership between a Labour Government and a Conservative council, but a model of what urban regeneration should be, creating high-quality, affordable housing and high-quality private housing and transforming an area that had been a derelict ghetto. That is what we should be aiming to achieve in some of the areas.

We should also not be afraid to let communities become smaller, and to return housing areas to green land or parkland if that is appropriate. We must be sensitive to the needs of the residual community; clearly those people have rights. However, we cannot leave citizens who might not know where to go or how to solve their problems living in the middle of wastelands such as we saw. We cannot buck the market or change the world for those people, nor can we restore in all areas a vibrant and buoyant housing market. However, we owe it to them to try to find better solutions for towns such as Burnley. If we fail to do so, we let down not just those people, but our country.

4.11 pm

Dr. Brian Iddon (Bolton, South-East)

I, too, want to look at the problem from a northern perspective. We seem to be hearing mainly from northern people but the problem is greatest—certainly in terms of derelict empty properties—in the north. There is a vast difference between the north and the south.

I should like to question the way in which we approach regeneration. When I became chairman of housing in Bolton in 1986, the environmental health officers marched in and told me about the next clearance scheme: 700 properties, all in one area of Bolton. We would have swept them all away, and the whole community with them. It was clear to me that the money would not be available for all the housing problems that we were facing in both the public and the private sectors. I told the environmental health officers that that was the end of clearance in Bolton until a Government were prepared to make the money available. We have not yet had a Government, including the current one, who have made the money available for that kind of problem. From that day to this, Bolton has cleared only a small number of houses. We have done three terraces of 70 houses between then and now—the largest clearance that we have ever had—yet Bolton has 22,000 unfit properties, 5,000 to 6,000 of which are classed by environmental health officers as irredeemably unfit. There is no way, they tell me, in which they can be saved. We have 4,500 empty properties, mainly in the private sector.

We have not reached the state of Burnley and Salford, where one can see terraces that are largely derelict. We are fighting; we are not complacent. My hon. Friend the Member for Denton and Reddish (Andrew Bennett) has indicated how quickly housing markets can collapse. Our housing officials and councillors are worried that Bolton is on the precipice of market collapse in some areas.

Interestingly, the area that I mentioned, where 700 properties were suggested for clearance in 1986, has been fully improved. The problem is that it is all factory housing built on narrow streets. The living conditions are dense and some of the new immigrants who have moved into those areas have large families—extended families, in fact. When we improve those areas, they want large extensions to be added to the properties, and those cover the small back yards behind the terraces. One of the problems with such regeneration is that it increases the density phenomenally. That is beginning to create other problems. People cannot find anywhere to park, street cleaners cannot clear the streets and the environment becomes a mess, ambulances cannot gain access and fire engines cannot reach houses—they have to run their hoses straight down the street to the middle of a terrace to fight a fire.

I wonder whether that is the right way to improve properties that were on a clearance programme more than 10 years ago. With 22,000 unfit properties in Bolton and 5,000 to 6,000 irredeemable, we should be tackling some of those that are coming to the precipice. Places such as Bolton, Burnley, Salford and Liverpool should be given the money now to clear the properties that are determined by environmental health officers to be irredeemably unfit.

Another problem in the north is that when money has been spent on small two-up, two-down terraces merely to envelop the properties and bring them up to standard—of course, the occupants themselves pay for the extensions—the equity is negative. If people spent the money themselves, they would be deeply in negative equity, never mind the problem of mortgage negative equity that my hon. Friend the Member for Burnley (Mr. Pike) mentioned. If people did up the sort of properties that we have up north down here, those houses would have huge positive equity. That is the big difference between the north and the south.

About 50 per cent. of previous owner-occupiers in the clearance areas in Bolton opted to go into council housing or housing association properties. There were no problems with low-demand estates or empty council properties when we regenerated the town on that scale. I do not think that we should go back to that scale of clearance, but I say to my right hon. Friend the Secretary of State for Transport, Local Government and the Regions and other colleagues that, if regeneration is to mean anything, we will have to do it on the basis of a rolling programme, not in the stop-go way that has predominated in the past. Regeneration must be slow and sympathetic in trying to clear communities to adjacent brownfield land, if it is available. Plenty of derelict cotton mills and clapped-out engineering works and forges in the north are waiting for regeneration. That should not be so difficult.

Regeneration means jobs. In east Manchester, the manufacturing industry collapsed because it was redundant for this country. The cotton industry and the heavy engineering that supported it went abroad, where the labour was cheaper. The grand old post-Victorian manufacturing industry collapsed in east Lancashire and Bolton. The mining industry throughout Lancashire collapsed, and there was huge haemorrhaging of jobs. If we are to reverse that, we will have to provide jobs in the north to make people want to live in areas that have experienced or are still experiencing the problems that we are discussing.

Facilities such as shops and parks are important, too. Perhaps my walk to work here is unusual, but there are green parks wherever one goes in London. In the north, where the old factories were built, it would be a job to find a park, except perhaps for one big park on a peripheral part of the town. Let us put some daylight into those areas. Let us have some green spaces, provide play facilities for children and make those places attractive, so that people want to live there.

I would place the best school in the borough or city in the middle of the regeneration area. People for whom it is economically viable pay the earth to move to a house next to a good school, so that they can get their children into it. If we placed the best school and other facilities into the area that we were trying to regenerate, we would make people want to move there.

The question is one of confidence, as my hon. Friend the Member for Denton and Reddish said. He gave an example of how fragile confidence is. One house goes up for sale or is derelict, and a rumour flies round the constituency that prostitution is rife in a street. Such stories are often only rumours, as my hon. Friend the Member for Burnley will tell us, but they send confidence over the cliff, and down goes the housing market in those areas.

Housing ought to be higher on the political agenda, as my hon. Friend the Member for Telford (David Wright) said. In my book, it ought to be near the top of it. If people do not have good houses, they will not have good health. If children live in an overcrowded property, they will never benefit from even the best school in the area because there is nowhere to do homework. In any case, the place is probably depressing, with wallpaper coming off the walls. How can our young children be educated in properties such as that?

Crime and drugs are a problem in such areas as well. They are where the drug pushers live. I live in the middle of Bolton, and a quarter of a mile from my house heroin is sold in one such area.

We must look radically at the way we regenerate, particularly in the Burnleys, the Salfords, the Liverpools, the Boltons and the Dentons of this world. We are tackling the worst properties but others are falling into unfitness faster than we can tackle those. We have to go back up the chain and save the properties that will be in that condition in a few years' time. I ask the Secretary of State to listen carefully. Please help us in the towns and cities that we have mentioned this afternoon.

4.20 pm

Mr. David Kidney (Stafford)

It is satisfying that so many hon. Members are in the Chamber today and that the Secretary of State is here in person. That is a measure of the excellence of the Committee's report and the importance of its subject. I shall begin by echoing a comment by my hon. Friend the Member for Telford (David Wright). We must not lose sight of the fact that, in tackling housing problems, regional identity is very important, as are differences between regions. We must not get carried away with one monolithic structure or with two—one for the south and one for the north. That would be completely the wrong attitude to start with.

I shall make two assumptions for the purposes of my speech: first, a lot more public money will be available for housing during the next three years; and secondly, the Government's reforms of the planning system will go through largely as they have been proposed. Some may think that those are ambitious assumptions, but I think that there are grounds for optimism on both fronts.

I have heard Ministers say that they have begun to recognise the importance of placing housing at the top of the policy-making agenda. They have been making the links between housing and other factors such as education, health services, law and order, employment and a stable economy. Following the spending review this summer, more money may be available for housing, although spending money is only part of solving the problems.

On the issue of planning, the Government have an ambitious agenda to get away from rigid structure plans that seek to cover the whole country, and to encourage strategic planning regionally and more comprehensive development plans locally that engage local communities in the making of the plans. That is crucial to the success of improving planning.

One of the daughter documents that resulted from the Government's planning reform consultation was about compulsory purchase powers. I hope that everything that the Committee recommended on compulsory purchase powers comes out in the results of the Government's review. In particular, the Committee recommended that the need for housing regeneration and renewal ought to be sufficient authority for obtaining compulsory purchase orders, and that a local authority's master plan should include sufficient indication of the end use to allow the compulsory purchase order to be confirmed.

As a footnote, I add that my ten-minute Bill of a couple of years ago proposed that property standing empty and blighting streets ought to be sufficient grounds for the making of a compulsory purchase order. My eyes slightly stood out this morning when I read the briefing from the Royal Institution of Chartered Surveyors, which goes one step further in suggesting that non-payment of council tax should be grounds for such an order. It also refers to an American scheme, that I personally know nothing about, called QuickTake.

I am sure that points made by the Committee in its other recommendations are relevant to the issue of planning powers. The hon. Member for Epsom and Ewell (Chris Grayling) mentioned suspending the right to buy once a renewal scheme is announced. I see the importance of that and am convinced by the Committee's argument. I am also in favour of broadening the compensation arrangements that are permitted under compulsory purchase order schemes. Particular mention is made of home-for-a-home compensation instead of cash payment.

There is the issue of council tax discounts for housing standing empty, which is a perverse incentive to keep them empty. The Committee says that councils should have the discretion to impose up to 100 per cent. council tax on a ward-by-ward basis, which echoes the warnings that housing conditions vary within quite short distances. The Royal Institution of Chartered Surveyors agrees with that. To hark back to my ten-minute Bill, it recommended that councils should have such a discretion, although I suggested that they should be given the discretion to set the council tax at between nought and twice the standard rate, not simply at 100 per cent. of the rate, to provide some stimulus for people to make up their minds about what to do with their empty properties.

The extra money over the next three years will pay for five policy objectives: first, tackling the problems of failing and failed markets, especially establishing the housing market renewal fund; secondly, facing up to the actions that need to be taken to reduce the number of empty homes, wherever they are; thirdly, confronting the need for more affordable homes; fourthly, confronting problems of high prices in the owner-occupied sector; fifthly, improving the private rented sector.

On tackling the problems of failing and failed markets, we received a briefing from the National Housing Federation, which discusses in more detail the housing market renewal fund referred to in the report.

First, the briefing proposes re-establishing healthy housing markets, to which I would add the Committees' strong recommendation to take preventive action to rescue markets at risk of becoming dysfunctional. Secondly, it suggests a healthier mix of types of housing, dwelling type, tenure and population. Its third suggestion is that social regeneration initiatives should be phased in with the other adjustments.

In north Staffordshire, which overlaps slightly with my constituency of Stafford, we see those differences in the housing market. In Stafford borough and south Staffordshire district, there is a strong housing market, with house prices slightly above the national average, but in the city of Stoke-on-Trent and the borough of Newcastle-under-Lyme, there are some very mixed areas; there are some especially distressed markets in Stoke-on-Trent. That is why one of the Government's pathfinder schemes covers parts of those areas.

One precondition for making the work successful is genuine partnership and co-operation among all relevant stakeholders. The National Housing Federation talks about market renewal plans or prospectuses. The Committee recommended a clear conurbation-wide strategy and a master plan for the development of an area, informed by regional housing statements. The Committee says

"local authorities and registered social landlords should work with private sector organisations such as the Council for Mortgage Lenders".

I am not sure why that organisation was picked out from the many that exist, but it is important.

The Committee pointed out that

"consultation needs to recognise at the outset that change is required and that speed is of the essence".

That has been supported by today's many contributions about the rapidity with which the housing market can fall into dysfunction. The National Housing Federation suggests that a start should be made immediately in pilot areas, and today we have seen the press release about money for pathfinder areas.

Apart from failing and failed markets, the Committee discussed the work of the Empty Homes Agency, which is very valuable, empty homes strategies— not so valuable if they are just more documents to put on the shelf —and empty homes officers. It warns that care must be taken about how they are used. The report quotes a submission from Southampton city council: The City Council contends that Southampton's success is partly due to the appointment of a dedicated empty property officer who, unlike other council colleagues has the benefit of time and flexibility to work through labour-intensive personalised agendas. Such officers can be useful, but appointing them does not automatically solve the problem.

The empty homes strategy was discussed during debates on the Homelessness Bill, which is now an Act. Since then, the Minister has answered my parliamentary question, saying:

"statutory guidance on the homelessness provisions in the Homelessness Act 2002 will urge local authorities to include a review of empty properties within their district as part of their homelessness review".—[Official Report, 16 April 2002; Vol. 383, c. 797W.]

The Committee identifies the problems of blight, antisocial behaviour and waste of a scarce resource. The tools that we need to tackle those problems include persuasion, an appropriate council tax rate and compulsory purchase orders. The latter is not necessarily a resource problem, if a local authority can pass the property straight on to a registered social landlord or even a willing buyer, depending on the use to which the property is to be put. The Royal Institution of Chartered Surveyors even recommends rewards for councils in funding if they achieve targets in empty homes strategies. A footnote on its submission says

For goodness sake Government-sort out the running sore about the use of Council Tax data to trace owners of empty homes! I do not want to go into detail on the other issues that I have mentioned, but the statistics show that there is a growing problem with the availability of affordable homes. We should tackle the shortfall sooner rather than later, because it will contribute to rising house prices as well as misery for those in need.

The report of the Joseph Rowntree Foundation's land for housing inquiry was published in March 2002. That valuable report suggested that the Government had three critical challenges: to redesign the planning system to work proactively to link housing and labour markets, to begin the process of renewing Britain's housing stock and to provide more affordable housing.

In relation to high-value areas, the report called for more use of intermediate housing markets, equity sharing and land pooling or community land trusts. It also identified a need for new types of agencies to deal with the strategic use of land. For high-value areas and areas with failing housing markets, the report calls for a strong lead from Government to promote effective use of land, integrated transport policies, a proactive planning culture and land assembly mechanisms as well as a range of interventions.

The report identifies problems, especially in failing markets, of absentee landlords, high rents paid for by housing benefit without any regard to fitness standards, decent services or conditions for tenants, and it calls for licensing, which I support. There is a Government policy for a statutory licensing scheme for houses in multiple occupation. The Government propose licensing in some areas of the country.

I am not convinced that such schemes can be limited to landlords who receive housing benefit, although I understand the danger of scrupulous as well as unscrupulous landlords worrying about more red tape and the burdens of registration and licensing—landlords preferring an easy life would not let properties at all, which would reduce the supply of private housing. Landlords should receive something in return for registration, such as the assurance of a light-touch licensing scheme and support that benefits business. The Committee suggests support from local agencies such as the police and youth offending teams in relation to antisocial behaviour, but there are other suggestions. We should consider speedy processing of housing benefit claims by council treasury departments, inspections and advice from environmental health officers, deposit and rent guarantee schemes as a matter of course and the availability of capital for improvements to properties. Tax incentives are another story. No commitments will be given today.

Local authorities should be the strategic authority on housing matters. Whether they have the right skills has already been questioned in relation to compulsory purchase orders, and they sometimes seem unwilling to work fully with partners from other sectors. Nevertheless, local authorities are the right people to take the lead role. They may need guidance from the Government about how to reduce the number of empty homes, and they should identify their partners and what they have to offer. Sometimes, my colleagues on Labour councils complain that they do not have enough freedom to act. On this subject they can take centre stage, and I hope that they earn rave reviews.

4.32 pm

Mr. Joe Benton (Bootle)

I shall be brief because much of what I wanted to say has already been mentioned in the main by my hon. Friends the Members for Burnley (Mr. Pike), and for Bolton, South-East (Dr. Iddon). My constituency of Bootle shares many of the problems described. My hon. Friend the Member for Burnley was right in saying that this is one of the most crucial debates for a long time.

I have long been aware of the background to the Bootle problem. As a young boy, I remember many salubrious districts being described as Victorian or Georgian. They are now nothing but ghettoes. The Committee visited one in Bootle, and I apologise, because I was unable to be there that day.

I compliment the Committee and the Chairman—I agree with the bulk of his earlier remarks—on the report. Page 67 of volume I states:

The Council has decided to stop making piecemeal investments in the area and wishes to pursue a strategic approach. There are 4,000 properties in the area, which need to be cleared; many may not be replaced. There is, however a £350 million funding gap to achieving this. I wish to home in on the general point of funding. I agree with everything that has been said about it. At the end of the day, such blighted areas will require one thing above all others, which is constant resourcing. We are facing a huge and frightening problem. That there are funding gaps as large as £350 million displays the magnitude of that problem. I cannot be parochial about the matter; it is a national problem. The Government will have to provide huge resources, and those resources will have to be constant, effective, and applied where they are needed.

Much of what I wished to say this afternoon has been somewhat circumvented. I was going to appeal to the Government to take strong and urgent action to resource such areas and their local authorities. I welcome the Secretary of State's announcement earlier today. However, it is only a kick start, as was said in the preamble to our debate.

Huge resources will be needed if we are to deal with this matter. We must get that across to the Chancellor of the Exchequer in an emphatic manner, when the time comes to consider the spending review. We must say to him that the problem of empty homes and blighted areas throughout the country must receive urgent and constant attention. That will make a big demand on the Exchequer—I am well aware of that. However, that must be said to him, because I can think of few more shocking experiences than to go to some of the areas in my constituency and see what people have to live in.

A quote from a council report will give hon. Members some indication of that and of the extent of the problem:

Significantly more and more owners in these two areas (especially the Bedford Road area) are abandoning their properties altogether and leaving them to deteriorate and attract vandals, drug abuse and other street crime into the area, which in turn drives house prices and demand for the area even lower. The report goes on to give the example of a road that has 26 vacant properties out of a total of 40. We can imagine what that situation must be like, and it is not unique to my constituency.

I emphasise that it is not only the private sector that is facing such problems. They are also faced by registered landlords, such as Riverside Housing Association and Pierhead Housing Association in my constituency. They have properties that are only five or 10 years old and cannot be let because of the surrounding blight.

We are facing a huge problem. Unless we provide constant resourcing and ensure that mechanisms are set up to direct the money to the right places to eradicate the problem, our future will look gloomy. I would say that to any Government. I welcome the initiative that the Secretary of State announced earlier, but I urge him to keep my comments in mind.

4.39 pm

Mrs. Louise Ellman (Liverpool, Riverside)

The Secretary of State has indicated the importance that he attaches to the subject of empty homes by his presence, and by his announcement this morning of an allocation of about £25 million to new pathfinders, specifically to deal with the issue. I thank him for that. I hope that it is just the start and that he will bring us further good news about dealing with this major problem.

The issue is a major problem mainly in the north of England and the midlands. It is extremely important not only for individuals and their well-being, but for general regeneration, local communities and economic development. It has particular significance in Liverpool, which has lost 25 per cent. of its population since 1971. Regeneration is under way in Liverpool. In my constituency of Liverpool, Riverside, unemployment has been halved in the past five years, and investment is visibly evident. Liverpool has submitted a strong bid to become European capital of culture 2008, which I am sure hon. Members support.

For too many people in local communities, too little has changed. In the inner core of my constituency, about 20 per cent. of some local neighbourhoods are vacant. In the inner core of Liverpool, 90 per cent. of housing is in council tax bands A or B, the most susceptible to abandonment. In Liverpool, there are more than 18,500 empty properties—9 per cent. of housing stock—64 per cent. of which are in the private sector. Liverpool has twice as many terraced properties as the national average. It is with older terraced properties in low council tax bands that the greatest problems are experienced.

The issue relates to people's choice of housing. All too often, people trapped in neighbourhoods in economic and social decline find that, when their individual prospects rise, they cannot stay in such areas because the housing that they want is simply not available. They therefore move out. which has an impact on the green belt in the rest of the north-west, especially Cheshire, but other areas, too. The issue is significant not only for individuals, communities and local authorities but for the region.

In Liverpool, the Government have successfully introduced several initiatives to deal with local problems relating to regeneration. The new deal for communities in Kensington and Smithdown deals with housing, among other issues. Regional investment companies such as Include in Dingle have been set up. The Government have provided a great deal of funding for neighbourhood renewal, which I hope the local authority will use for the purpose for which the money was intended— new initiatives—not as a substitute for its own budgets, which it seems to have chosen to cut.

On their own, the initiatives are simply not enough. I welcome the pathfinder initiative and the £2.6 million for Liverpool, Wirral and south Sefton, the grouping that has combined to deal with the issue. However, that alone is simply not enough. I make four requests. First, I ask the Secretary of State to announce the establishment of a housing market renewal fund with significant funding of billions of pounds over a minimum of 10 to 20 years. We need such a fund in addition to existing housing funding in order to make an impact. Such a fund would allow flexibility to deal with the various problems and different areas such as hon. Members have described, must be sufficiently substantial to make a difference, and should have the flexibility to consider different needs in different areas.

Secondly, I ask the Secretary of State to make a commitment to tackling negative equity. People trapped in neighbourhoods may like their individual houses but the street or neighbourhood may be in decline, and they want to move but simply cannot. I ask him to consider the progress of schemes such as the swap scheme in Salford, which is tackling the issue. That is vital for individuals, whose needs must be paramount.

Thirdly, I ask the Secretary of State to address the issue of speculators—that is, landlords who speculate with poor-quality property in areas where housing benefit enables them to make a great deal of money at the expense of tenants. Those tenants may not get a fair deal, and some of them cause problems in their neighbourhoods while the landlord shows no interest in what is going on. I ask the Secretary of State to consider licensing schemes or other means of dealing with the issue.

Fourthly, I ask the Secretary of State to consider gap funding, which was mentioned by the hon. Member for Epsom and Ewell (Chris Grayling). Gap funding is a major issue, but I hope that the Secretary of State will consider it in relation to housing before the Government resolve the wider regeneration issues that relate to it. Why has the Scottish Parliament found a solution to housing gap funding problems and reached agreement with the European Commission, while the Government are still struggling to find an answer? Does that mean that devolved Governments are far more focused on the needs of their areas than central Government? I look forward to his answer.

The extent and significance of the problem has been well articulated by the many hon. Members who have spoken. We must remember that the solution involves, and indeed requires, co-operation and co-ordination between several authorities. Regional development agencies have an important part to play. It is essential that they recognise the importance of housing as a key part of economic development. I am pleased that the North West Development Agency is starting to do that. I urge regional development agencies to consider the significance of housing to economic development, to think about the funding required, and to make housing, and the improvement of it, part of their economic development strategies.

The Housing Corporation has a major role. I am pleased to note that it held its first meeting outside London in Liverpool recently, and I acknowledge its work. The private sector also has an important role. Local authorities are key in driving the issue forward; only elected local authorities, accountable to their populations, can understand, monitor and oversee progress and push for more change. However, regional assemblies also have a critical part to play. Presently, that includes monitoring the work of the regional development agencies, but they also have important work to do in their own right.

I mentioned that the problem was of particular importance for the north and parts of the midlands. Funding for housing, and funding investment, must be considered in regional perspective. I should like the regional development agencies to ask how housing investment funding is allocated. What is the balance between the needs of the south, where the predominant issue is shortage of housing, and the needs of the north and part of the midlands, where the issue is regeneration, including abandonment and empty homes? Those are key problems with a regional dimension, and I hope that, in due course, directly elected regional assemblies will pursue them. In the meantime, I hope that the existing assemblies and chambers will pursue those matters with the regional development agencies.

I congratulate my hon. Friend the Member for Denton and Reddish (Andrew Bennett) on the way in which he has conducted the inquiry into this important subject. I am delighted that so many hon. Members, both on the Select Committee and not, have come to the debate. Above all, I am delighted that the Secretary of State is here. I thank him for the statement that he made this morning, in which he announced £25 million as a starter for the new pathfinder areas, and I hope that he has more good news to bring us at the close of the debate.

4.49 pm

Mr. Clive Betts (Sheffield, Attercliffe)

We should congratulate my hon. Friend the Member for Burnley (Mr. Pike) on the work that he has done, over several years, to push this issue on to the political agenda. We are discussing a matter of great importance not only to his constituency, but to many others.

When the Select Committee travelled around the country looking at the evidence, it became clear that the problem affected different areas in various ways. My first plea would be that although we need a national framework to resolve the problems, we also need local solutions. We cannot have one imposed solution from the centre that seeks to deal with everything in a particular way. Unfortunately, over the years, housing has been littered with grand ideas from central Government that have been forced on local authorities, which have then had to sort out the mess.

During our visits, we saw that one of the clearest connections between the different problems is a lack of investment that dates back several years. My own city of Sheffield is an example. In the early 1980s, we were spending £80 million a year on the private and public housing sectors. By 1997, we were spending only £20 million a year. Thanks to the Government's initiatives, we are now spending £40 million a year. In cash terms, that is still half of what we were spending in the early 1980s. In between, there were years of underinvestment and the problems have grown and developed. The need for investment has increased every year and that is a fundamental problem. Whether we consider the problems in the private sector, such as houses not being demolished because they cannot be replaced—which was mentioned by my hon. Friend the Member for Bolton, South-East (Dr. Iddon)—or those affecting the modernised council houses in Sheffield, underinvestment is still the link. I agree with my hon. Friend the Member for Telford (David Wright), who said that such debates help to move housing up the political agenda. He is absolutely right. Housing is a key issue in so many people's lives.

I am disappointed that when senior figures in the Government make lengthy major policy statements, they often find time for only a small passing mention of housing. I am not referring to my right hon. Friend the Secretary of State for Transport, Local Government and the Regions, who is pushing the issue with more force than we have seen anyone do for a considerable time.

I support the concept of a housing market renewal fund. I welcome the pathfinder projects that were announced today. That is a good step forward. However, £500,000 a year is a gross underestimate of the funding requirements of those types of initiatives. The problem affects many different parts of the country on such a scale that we will have to spend billions of pounds, far exceeding the original estimate.

I agree again with my hon. Friend the Member for Telford about demolition, which my hon. Friend the Member for Bolton, South-East also mentioned. We need to reconsider whether demolition is appropriate in many cases. Some areas, such as Burnley, may simply require that houses are taken out of the housing stock and the site cleared up and improved. In other areas, the houses will need to be replaced, and that is where costs are incurred.

In my constituency, the then Liberal Democrat city council—that fortunately, is no more—tried to force demolition on three estates, Weaklands, Newstead and Scowerdons Farm, against the wishes of most local people. The council promised them brand new homes, but when the issue was pushed, there was no evidence of any money to fund the new houses. Clearly, we need to examine those issues. Demolition may be the answer, but where replacement is needed, the extra resources will have to be made available. We will need to take people with us on those issues, but they will not give us their trust and confidence until they believe that the resources are in the pipeline. I also agree with my hon. Friend the Member for Telford about not necessarily dealing with the worst houses first. When we visited Manchester, we saw properties that had thousands of pounds spent on them only three or four years earlier, but they were empty because people simply did not want to live in them. In the meantime, other houses that might have been saveable three or four years ago have deteriorated to such an extent that they are probably not saleable either. Sometimes, it means throwing good money away.

We need to look carefully—and sometimes probably a little harshly—at the issues and try to concentrate on properties that are saveable. Equally, we should offer communities alternatives to demolition and rebuilding, allowing them the right to remain as communities. That means securing the money quickly and not having massive time lags, such as those in Norfolk Park in Sheffield, where houses were demolished, but four, five or six years later, no new houses have been built because one funding scheme after another has collapsed and failed.

In some areas, stock transfer may be a way of attracting new money. In others, stock transfer is either inappropriate or tenants do not want it. We have seen that happen in Birmingham, and there is a similar feeling in Sheffield. I believe that it was one of the issues that led to the demise of the Liberal Democrat council at the local elections.

I was very pleased that when the Secretary of State addressed the Select Committee in January, he said clearly that if tenants do not vote for stock transfer, funds will still be available to bring their houses up to a decent standard. It is important that people are not forced into stock transfer simply because funding is available only through one form of housing ownership.

I welcome the Government's PPG3 on housing. My constituency has an inner-city element at one end and green fields at the other. There is great resistance to building on the green fields and a lack of commitment to build on the brown fields. PPG3 has helped enormously. It has already been said that gap funding support is needed to start the initial development on the brownfield sites. That happened with the first phase of the Attercliffe village development in my constituency. Unfortunately, there were problems with the European Commission to which the Government did not react quickly enough and, thus, enable a new scheme to be in place. However, a new scheme is now before the Commission and I hope that funding will be available soon.

My hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman) said that the RDA in the north-west was supportive of housing regeneration and of providing funds from its resources, but that is not the case in Yorkshire. The Yorkshire and Humberside RDA has said that it has no intention of funding housing regeneration schemes. That is such a backward step. The decision was taken without consultation with the local authorities or local MPs, and I hope that the RDA will reconsider.

I support many other issues that have been raised, such as the Government's new proposals to deal with antisocial behaviour and the licensing scheme for private landlords, but the scale of the problem is enormous. It has been growing for years; it has suffered from under-investment, as a result of which the problems have not been tackled. Local authorities have not had the resources. If the problem in different forms and different areas is to be tackled in future, substantial extra investment will be needed. That is the key to the problem.

4.56 pm

Ms Oona King (Bethnal Green and Bow)

One day I will speak in a debate—perhaps in the next life without prefacing my remarks by saying that there is no time left in which I can make my speech. That day is not today. I shall just focus on a few matters. I begin first with the Government's response to some specific recommendations of the Select Committee that affect people in areas of both low and high demand.

Recommendation (o) concerns the licensing of private landlords. The Government acknowledge that there may be circumstances when the licensing or registration powers might be used in high-demand areas. Will my right hon. Friend the Secretary of State write to me about that point if he cannot expand on it today?

Recommendation (n) covers the suspension of the right to buy in areas of regeneration. I plead with the Government to rethink their strategy. I wholeheartedly endorse the principle of a public subsidy to help people on low and medium incomes to buy homes, but it is madness to do so at the expense of social housing for the most vulnerable who cannot afford to buy their homes.

I am probably giving the Tories more credit than they deserve, but I genuinely do not believe that the architects of the right to buy intended it as a money-making scheme for private landlords. If they did, it is working well and I congratulate them. If they did not, they and the Government must support changes in the law. At the moment, property companies are offering financial inducements for tenants to exercise the right to buy, so that flats can be leased for commercial letting at market rates and taken out of the stock of socially affordable housing. Worse still, they are going round estates, asking, "Are you in debt?" Obviously, many —people even in this House—will answer yes. The companies then offer to help them with the right to buy, finance the mortgage and pay off their debt.

The sums can be £8,000. The tenant has his debt paid, but he loses his home and the right to local authority housing. The companies are fleecing the taxpayer and siphoning funds—legally, at the moment—that should be going into social housing. The tenants who use the companies are not to blame, but the companies are asset stripping public housing and they must be stopped or at least discouraged from doing so. How can that be done? The clawback period could be extended from three years to seven, so that it would be less in their interests to take such action as it would be economically uncertain. In areas of chronic housing shortage, perhaps we could introduce a stipulation that properties can be sold on only to a key worker— although key workers in London cannot afford houses. The qualification period for the right to buy could be made longer to get people thinking about the right to buy. Other options such as increasing the maximum cash incentive scheme grant could also be considered. If we do not introduce such measures, we are trying to fill the bath without putting in the plug. Last year, 3,000 new affordable housing units were built in London, but 11,000 went under right to buy. It is absolute madness. It has to stop and I ask the Secretary of State for his thinking on the matter. I should like to reiterate my strong support for the Sub-Committee's recommendation to end the council tax discount on empty homes and to equalise the rates of VAT on new-build housing and renovations and repairs to existing stock. We must pull every lever at our disposal to ensure that we reach the Government's laudable and extremely ambitious target of a decent home for all, wherever they live, by 2010. To do that, we need affordable housing and we must deal with the problems in the north and the south. Conservative estimates suggest that that will require an additional £1.7 billion annually for housing. I hope that the Secretary of State will be able to deliver that in the comprehensive spending review, and I thank him for his presence.

5 pm

Mr. Tony Lloyd (Manchester, Central)

This is an excellent report. It brings a range of issues before the House and the country in an intelligent way. It is important that the public should recognise that.

May I draw the attention of my right hon. Friend the Secretary of State to the problem that most of the available initiatives are retrospective? We must sharpen the ability to respond to the crises that break out in different areas. The Chairman of the Select Committee reminded us of the point made in the report about how quickly an area can be transformed by the process of dereliction. I have seen that in my constituency, which the Sub-Committee visited. Within a matter of months a street that has been full of people living contentedly can be transformed into a wreck; one house becomes empty and is trashed, those who have the capacity to move do so and more and more homes are abandoned. Those who are left behind are the owner-occupiers who, because of the nature of the area, are often elderly. They are stuck with all the problems of immobility, exacerbated by the fact that the equity structure means that they have no capacity to move elsewhere.

We need to enable local authorities and other agencies to respond rapidly. My hon. Friend the Member for Stafford (Mr. Kidney) referred to the problem caused by individual empty houses. That is a major problem. I agree with those who said that we should impose a financial penalty on people who allow houses to be abandoned, rather than giving them incentives such as the non-payment of council tax. I understand from my local authority that even when it recognises the need to act quickly, its power is circumscribed. It would make sense if local authorities were able to act quickly at the point of abandonment. We must give them the power to do so.

I should like, briefly, to mention negative equity. One problem is that mortgage lenders are incredibly unsympathetic. They know that they are on to a winner; they can insist that the debt travels with the individual. In a society like ours, in which market failure can be random—it is not always the most obvious areas that are abandoned—those who lend should accept the insurance principle that there is a collective need to underwrite at least some of the damage done to individuals. We, as a society, have abandoned some parts of our northern and midlands cities. In the process, we have insisted that a limited number of individuals pick up the big price tag. That is unfair and inequitable.

I should like to couple my thoughts with those of others, and to draw them to the attention of my hon. Friend the Secretary of State. Hulme in east Manchester has been mentioned. It has done well, under both Conservative and Labour Governments, in terms of the new deal in Manchester. That is important, and it is beginning to rebuild confidence in the area.

In rebuilding east Manchester, we must ensure that we do not transfer the problems to other parts of my constituency or to adjoining boroughs. That is one reason why I welcome the pathfinder approach; it recognises that we should not simply concentrate direct pressure, but allows us to look a little beyond our problems. The pathfinder project is welcome; it is a genuine accomplishment and thanks are due to the Secretary of State. However, as other hon. Members have said, it must be followed by sizeable amounts of money. We need the neighbourhood renewal fund, because it will enable us to intervene in the market. It will make a real difference.

I met some of the residents in the new deal area this week. I asked them, "If there is one thing that you want for this area, what would it be?" They said that they wanted the licence to penalise landlords through the benefits system, but stressed how important it is that such a change should not be years away. They said, "Our problems are here and now. The landlords are doing the damage today, next week, and the week after. We need that legislation in operation quickly, so that we can begin to deal with the worst offenders."

5.5 pm

Glenda Jackson (Hampstead and Highgate)

It has been a fascinating debate. It was kicked off by the attempt of the hon. Member for Mole Valley (Sir Paul Beresford) to rewrite the history of the Conservative Government on affordable social housing. I represent a London seat, and I had to readjust my mind to the term "empty homes". The idea that properties exist that cannot be sold even for £1,000, when in my borough the average house price is more than £300,000, is astonishing.

The basic factor in this interesting debate is the importance of ensuring that everyone in the country has a decent home. The point has already been made that if people do not have a decent home, the major changes that the Government are making—improving education, health and employment—simply will not work.

I make two essential points to my right hon. Friend the Secretary of State on the estimated number of empty properties in London. which varies between 100,000 and 160,000. First, some boroughs have already instituted an empty homes strategy and employ an empty homes officer, who is responsible for finding empty homes and attempting to bring them back into use. I believe that that should be required of all London boroughs. In truth, I think that we should have a Londonwide strategy. One person per borough is not enough. As the Empty Homes Agency said in its evidence to the Select Committee, as many as five local authority departments can be dealing with the issue, but all that happens is that five envelopes go through the letter boxes of empty houses.

Secondly, the Government should take a lead by dealing with their own properties. If such properties are brought back into housing use, I understand that they are required to make a market return. That is simply not feasible for people in desperate need of housing in London. Such people are almost invariably dependent on housing benefit. An increasing number of young people are in need of housing, and virtually no provision is being made for single people of all ages. That is an issue that must be tackled.

I shall not repeat the points already made by my hon. Friend the Member for Bethnal Green and Bow (Ms King) about how some of the worst landlords—not only in London or in England, but in the world—are clearly exploiting public money through the housing benefit system. I therefore believe that, at all possible speed, we should register landlords to ensure that if their tenants claim housing benefit, they have to put money back into improving the housing stock.

5.8 pm

Mr. Don Foster (Bath)

May I say how much I have enjoyed the debate and that it is wonderful that so many hon. Members are participating in it? I genuinely welcome the Secretary of State, whose presence demonstrates the importance of the subject. Like other hon. Members, I welcome today's announcement about the £25 million for the pathfinder project. Like them, I also welcome the Committee's report, and I congratulate the hon. Member for Denton and Reddish (Andrew Bennett), the Chairman of the Select Committee, and all the Committee members for addressing what I believe to be a serious problem.

I suspect that all members of the Committee agree that it is a disgrace that we have three or four times as many empty houses as there are homeless families. We need to address that issue seriously as the report and this debate have done.

Although I said that the ratio was three or four to one, it is difficult to be precise because of the inadequacy— which the report rightly points out—of the information available on empty homes, which allows different people to make different interpretations. To be slightly mischievous, I shall draw attention to the Department's recently published report, "More than a roof: A report into tackling homelessness". Page 34 states:

Much has been done in recent years to reduce the number of empty homes. Overall, the number of empty homes fell from 868,600 in 1993 to 744,200 in 2001. That sounds particularly impressive. However, if we examine other figures such as those provided by the Empty Homes Agency and look at a wider time frame, we discover that there was a significant bump in the figures between 1992 and 1997. On either side of that bump. the figures have remained remarkably static for a long period. Indeed, they show that in 1991 there were 752,700 empty homes and 10 years later in 2001 there were 753,100. In those 10 years the number of empty homes increased.

That demonstrates that we are not doing enough to tackle the problem and that is why the report, with its many sensible recommendations, is so important.

I appreciate entirely that, as the Chairman of the Select Committee said, the report could not tackle all the issues. There are many others that no doubt many of us would like to have seen in the report. For example, I believe that more could have been said about the issue of short life and the contribution that that can make in areas of high demand to reducing the housing problem and reducing crime. I am aware of the difficulties following the Bruton ruling of 2000 and the bad reputation that short life enjoys in some quarters, but I believe that it can make a contribution. Equally, empty commercial property is very little mentioned in the report. Clearly, that issue has huge potential that needs to be addressed.

Many other issues could have been included in the report. I make no criticism of the fact that they were not, but it would be interesting to have much more research on the reasons why some house owners leave their properties empty. For example, it is interesting to note that the Council of Mortgage Lenders believes that a large number of owners are fearful of leasing, renting or letting their properties because they do not believe that they will ever get their tenants out. That may indicate some people's ignorance of current landlord and tenant legislation, but it is clearly a concern that we need to address.

I welcome many of the report's recommendations, including those for strengthening compulsory purchase order powers for local authorities—for which Liberal Democrats have long argued—and the more recent proposals on compulsory leasing, which deserve significant attention. I welcome, too, the report's proposals on putting a floor in the housing market in areas of low demand. I hope, therefore, that the Government will consider that recommendation. Their response says that they will consider the recommendation that the DLTR, the Council of Mortgage Lenders, the Treasury and others should get together to develop an insurance scheme to underwrite the values of property in areas of low demand.

It is worrying that the Government's response seems to imply that they are happy to leave it to local authorities under their existing powers to indemnify mortgage loans. The reality is that although many local authorities recognise that they have the powers, they do not have the resources to implement them.

Local authorities can do a lot. I understand the point that was made a few minutes ago about the importance of finding local solutions to the problems. Therefore, it is disturbing that far too many local councils do not appear to have an effective empty homes strategy.

I make one criticism of the Government's response to recommendation (d) of the report. The recommendation is that, rather than developing

"a discrete empty homes strategy, local authorities should address the problem through a local housing strategy"

that integrates the problems of empty homes with their overall housing strategy. That is right. The Government were wrong to insist in the Homelessness Act 2002 that there be a homelessness strategy separate from a council's housing strategy. The response ought to be integrated. It is disappointing that the Government's response to the Select Committee's recommendation ignored that need for integration.

Local authorities can do a great deal. Their properties often remain empty because of poor management, such as failure to tackle repairs, delays in nominations and the making of unsuitable offers. Some local authorities can do better, but so can central Government. It is all very well for the Government to impose targets on local authorities for the maximum percentage of empty homes, but let us remember that the Government also have a large amount of housing stock. It would be interesting to see what they would do to try to achieve a similar target to that that they have imposed on local government.

I warmly welcome other recommendations, such as the removal of the 50 per cent. council tax discount in respect of second homes and long-term empty houses. My party has campaigned for that for a long time. Consultation ended on 15 February, and all that the Government have said so far is that they will make a final decision later in the year. I hope that the Secretary of State will tell us more about that in his reply to the debate. Let us get on with implementing that recommendation, which has support on both sides of the House.

Frankly, it is complete madness that the Government, having made some welcome moves on the VAT equalisation proposal, are not prepared to go further. All they say is that they

"will keep the VAT treatment or housing under review".

They need to take the Committee's recommendations seriously. It is crazy that full VAT of 17.5 per cent. has to be paid on repair and renovations to bring an empty home back into use, unless it is in one of the exempted categories, whereas no VAT whatever is paid to build a mock-Georgian, four-bedroom, double-garaged house on a greenfield site. That is ludicrous and needs to change.

We need to widen the issues on planning. There is not enough time to go into the details, but we must do much more. The Government are failing to meet their target of building 60 per cent. of new housing on brownfield sites. I wish that they would consider more seriously than they have to date not only the Committee's recommendations, but the imposition of a greenfield development tax.

Hon. Members from all parties have picked up on the regional imbalance. We all recall that only a few years ago the Prime Minister sought to downplay that imbalance, but he was wrong, as there is significant regional imbalance between different parts of England. However, I hope that no one will forget that the problem of empty homes exists in every region of the country, whether there is high or low housing demand.

I referred to the figures produced by the Empty Homes Agency. It is worth noting that the figures for empty homes in low-demand areas such as the northeast, the north-west and Yorkshire and Humberside are 45,000, 140,000 and 100,000 respectively. Those are huge numbers and several hon. Members have explained the reasons for them. However, the same figures show that there are also huge numbers of empty homes in areas of high housing demand. There are 104,000 in London, 86,000 in the south-east and 67,000 in the south-west. As other hon. Members have pointed out, the problem affects rural as well as urban areas.

There remains a need to tackle those regional imbalances, and inter-regional mobility schemes are already in operation. I welcome details of the Burnley and Padiham housing scheme, which has already brought 60 tenants from London to Burnley and has a waiting list of 300. Much more needs to be done to address the imbalances in terms of jobs, skills and the economy generally. That is why the current regeneration schemes are so important.

The sad truth is that there are too many overlapping schemes, each with its own complex and bureaucratic bidding system. Because of that, far too many of those schemes are underspending. Indeed, some schemes have spent less than 10 per cent. of the money originally provided at the announcement of their launch. For example, in the first year of its operation, the new deal for communities, which has now been replaced, spent less than 2 per cent. of the money it was allocated. The European regional development fund underspent by millions of pounds, and other schemes underspent similarly. We need to develop a single, flexible regeneration scheme to which people can gain easy access.

I welcome the report, however, and the Government's response to it. They have taken the report more seriously than some Select Committee reports. It is a tribute to the Committee that the Empty Homes Agency says of the report that it

"represents a radical agenda for action and a check list for the coming few years to ensure that we maximise the potential of this wasted national asset."

That is what the empty homes problem amounts to a wasted national asset—and we need to do something about it. The report makes good recommendations for tackling the problem.

5.21 pm

Mr. Geoffrey Clifton-Brown (Cotswold)

I am delighted to be able to take part in this serious debate. The hon. Member for Denton and Reddish (Andrew Bennett), the Chairman of the Select Committee, introduced the debate very reasonably. We have heard good speeches from hon. Members of all parties, and the attendance in the Chamber shows how seriously hon. Members take the issue.

I welcome the Secretary of State. He will have heard hon. Members' comments, and should be able to take action to deal with the problem and tell us what action he is already taking.

Before the 1997 election, the Prime Minister said that there was no doubt that the homeless problem had been increased by the shortage of affordable rental housing. He said that Labour's approach would be founded on the basic aim of ensuring that everyone had a chance to a decent home, both the majority who wanted to own their own homes and the minority who could not afford to buy or chose to rent. We would all say, "Amen" to that.

The Select Committee report makes some excellent recommendations, but the Government response is somewhat weak. The problem is serious, as the report suggests when it states:

We received many moving letters from those trapped in areas of low demand. They did not prepare us for the desolation that we saw on our visit to the North West. The rows of abandoned terraces, the broken windows and the burned out houses were shocking. There are 280,000 houses in and at risk of low demand in the M62 corridor alone. The hon. Member for Burnley (Mr. Pike) described the situation clearly in an excellent speech. I pay tribute to him, as he has tabled some 300 written parliamentary questions on the subject and has shown dedication to the issue over a long period. The Select Committee visited Burnley Wood in his constituency, which is possibly one of the worst places in the country for this problem, and saw the 30 per cent. vacancy rate of empty homes. If that is not a graphic illustration of the seriousness of the problem, I do not know what is.

The problem is that there are 753,188 empty homes in the country. On any measure, there are approximately 115,000 homeless people, which gives us a one to seven ratio of homeless people to empty homes. Surely, it is not beyond the wit of the Government to start to redress that imbalance. If we make even a small difference, that will have a huge impact on the number of people who are homeless.

It is good to welcome the Secretary of State to the debate, but we should not forget that it is taking place against the background of rising homelessness and a fall in the number of houses being built. A total of 162,000 houses were built last year, the lowest figure in any year since 1927. The number of people in bed-and-breakfast accommodation is rising hugely. Perhaps most tragically, the number of child homeless is rising significantly. The situation is, therefore, serious.

I take the point that there is no one-size-fits-all solution, as many hon. Members have said. Even within London, areas have different problems. Some are affluent, while others suffer extreme poverty. Some have relatively few empty homes, while others have a great number.

On the whole, however, the problem is significantly worse in the north-east and the north-west. My hon. Friend the Member for Mole Valley (Sir Paul Beresford) made it clear that that is because of an imbalance in the economy. Nothing can solve the problem in a more sustainable, long-term way than encouraging economic development and growth, and we must make the climate for such things more satisfactory. [Laughter.] Hon. Members may laugh, but that is what we must do if we are to avoid pouring ever more taxpayers' money into the issue with no real long-term effect. Hon. Members should remember the investment that the Conservatives encouraged in the north-east during our 18 years in power and its knock-on effect on solving some of the housing problems in that deprived area.

In the short time left, I shall ask the Government to consider a number of issues. It is all very well levering in more public sector money, but the Government are taking in significantly more in stamp duty than they did when they came to power-some £7 billion a year more is going to the Exchequer. Surely, a larger fraction of that could be recycled into the housing sector.

What is the Secretary of State doing to consult the private sector, the Council of Mortgage Lenders and the Treasury to ensure that, whatever public money is put into the housing sector, an equally large amount is levered in from the private sector? Ultimately, it is the private sector that can open many doors.

I agree with hon. Members and with the report's recommendation that we need to examine compulsory purchase powers. One reason why our urban regeneration corporations were so successful was that we allowed them to cut through bureaucracy and red tape to acquire large enough blocks of land. As a result, regeneration schemes were large enough and effective enough to make a real difference.

I want to bring the Secretary of State's attention to an innovative scheme in Edinburgh and to ask him whether he can replicate it throughout the country. A developer called George Heywood negotiated with the owners of 70 sites in the city. Taking 50 per cent. of the increased value of the sites, it was possible to raise a huge amount. The money was originally estimated at £21 million, but eventually provided all of the £35 million required to bring in a completely new suburban rail system. Has the Secretary of State considered a system of increased site value to fund public sector infrastructure, using the private sector to fund public sector infrastructure? When the public infrastructure was put into the dome site, there was a huge increase in its value, but the public sector never really benefited.

I quickly want to go through several of the issues that have been raised. Mention was made of the lack of compulsory purchase and planning skills in local authorities. That is a real problem. It is because people who work in local authorities are not valued, are not paid enough and are poached by the private sector. We have recently received many representations to the effect that planning departments in local authorities are losing those key skills, and if they lose those skills, they will be unable to perform their regulatory functions properly. What is the Secretary of State doing to resolve the European gap funding problem? That problem has been solved by the Scottish Parliament, so why cannot the Government solve it for England and Wales?

What is the Secretary of State doing about the scam of right to buy when a local authority has decided that a compulsory purchase order should be implemented? It is totally wrong for developers to be able to come along and make an instant profit. [Interruption.]

Mr. Win Griffiths (in the Chair)

Order.

Mr. Clifton-Brown

What is the Secretary of State doing to make sure that the Housing Corporation properly regulates its housing associations? There have been a few notable failures among housing associations. Others are running their affairs in a sloppy way, taking too long to re-let their properties and letting properties to unsuitable tenants in unsuitable areas.

When is the Secretary of State likely to introduce legislation on registration of houses in multiple occupancy and changes to the law on dealing with rogue landlords? That issue has been raised by many hon. Members and must be dealt with, because landlords are letting to unsuitable tenants and bringing whole areas into disrepute. Furthermore, if the landlord is receiving housing benefit or any other public funds, the public have a right to expect that landlord to manage his property reasonably.

This has been an extremely good debate about a very good report, which has not been regarded by the Government with the seriousness that it deserves. One of the best recommendations in the report is recommendation (tt), which says—[Interruption.] I wish that hon. Members would listen rather than tittle-tattling. The recommendation says:

Different solutions are required in different places, taking account of the circumstances facing the housing market in each conurbation and the need to manage change. The rules governing a Housing Market Renewal Fund must provide sufficient flexibility to take account of that diversity. The Government replied in four lines

As mentioned earlier the housing market renewal fund proposal is being considered as part of the current spending review. We all know that. The Government must take the report much more seriously, and we will be holding them to account. The situation is fragile and deteriorating. I welcome the Secretary of State to the debate today, but I warn him that we will hold him to account and make sure that he delivers on his remarks.

5.32 pm

The Secretary of State for Transport, Local Government and the Regions (Mr. Stephen Byers)

I will be held to account by my hon. Friends because this is a key issue that affects many of their constituents. That is why so many have contributed to the debate today and others who have been unable to take part in the debate have attended, including my right hon. Friend the Member for Gateshead, East and Washington, West (Joyce Quin), my hon. Friends the Members for Ashton-under-Lyne (Mr. Heyes), for Rossendale and Darwen (Janet Anderson), for Stroud (Mr. Drew), for Normanton (Mr. O'Brien), for Bassetlaw (John Mann), and for Knowsley, North and Sefton, East (Mr. Howarth), reflecting the fact that this is an issue of great concern.

Andrew Selous

Will the Secretary of State give way?

Mr. Byers

I want to get through my introduction first, and I am badly squeezed by the time that I have available.

The reason why we have had such a well-informed debate is because it is based on a good report from the Select Committee. I do not often say that about Select Committee reports, but this one analyses the situation extremely well and comes up with some very practical proposals for the way forward. I am disappointed that the Government's response has not been warmly endorsed by Opposition Members, but I want to say how we intend to carry forward the issue, especially in three broad areas: the pathfinder projects; the licensing of landlords; and how to use the planning system to the best possible effect. First, however, I want to touch on a number of other issues that hon. Members raised.

My hon. Friend the Member for Bolton, South-East (Dr. Iddon) raised the important issue of intervening before the situation gets out of control. The report makes that point very well when it talks about areas that are fragile, rather than failing. Such areas have not quite slipped down to the depths that hon. Members have spoken about this afternoon, but they are vulnerable. We therefore need an early-warning system and measures that will allow us to intervene quickly. To be honest, we shall not be able to do that from the centre. We shall have to involve local authorities and other bodies that have responsibility for housing and powers to intervene quickly if we are to ensure that difficulties are not experienced. In introducing the report, the Select Committee's Chairman gave the vivid example of a street in Manchester, Gorton, where the situation worsened rapidly over a handful of months. We must find a way to take powers, so that there can be intervention when it is needed.

Several hon. Members mentioned the right to buy. My hon. Friend the Member for Bethnal Green and Bow (Ms King) has raised the issue with me privately several times, and it is a real issue for her. The hon. Member for Epsom and Ewell (Chris Grayling) also mentioned it. There is an issue about right to buy in areas that are subject to regeneration programmes. I read the Government's response again last night, and I understand why it has been interpreted in the way that it has. Let me, however, make our position clear. Our problem with the specific proposal in the report is that there are practical difficulties with it. We want, however, to give the principle detailed consideration.

There is clearly an opportunity to exploit the right-to-buy provisions as they are presently drafted. That is particularly true in areas where regeneration is taking place, and we must examine what we can do in those cases. I am willing to do that, and the Government will do so. I am more than happy to provide the Committee with a supplementary report at a later date to explain how we think we can deal with this concern. The Government therefore recognise the principle, but we have concerns about the practical proposals and need to consider other ways in which to deal with the issue.

Hon. Members, particularly my hon. Friends the Members for Sheffield, Attercliffe (Mr. Betts) and for Stafford (Mr. Kidney), mentioned regional variations. What is fascinating about housing is that no single solution will apply in the north-west, the north-east and in London. We need a lot of different solutions in place.

My hon. Friend the Member for Sheffield, Attercliffe raised the specific issue of housing stock transfer and what we do to ensure that all our cities and towns have the opportunity to bring their properties up to a decent standard. When one examines the different levels of debt in each housing authority, for example, it becomes clear that what might be a solution in Birmingham will not be appropriate in Sheffield, because the burden and the overhang of debt are different. We must therefore find tailor-made solutions to the housing needs of our cities and towns. That means that we must talk directly with Sheffield, Birmingham, Bolton and so on to identify what the needs and priorities are and how we can respond positively.

My position as Secretary of State is clear. I do not stand in dogmatic opposition to council housing, but believe that there should be genuine choice. That means that we must consider new forms of funding. We have the housing stock transfer, the public finance initiative and arms-length management organisations, to which we must give greater attention. We shall also have the new capital borrowing powers if we get the legislation into this year's Queen's Speech. Therefore, a range of options will be open to individual local authorities.

The three key issues that ran throughout the debate were pathfinder projects, the planning system and landlords. On pathfinders, we have identified nine areas where some 720,000 are in low demand or abandonment out of a national total of some 880,000. Therefore, those nine areas cover the bulk of the problem.

Janet Anderson (Rossendale and Darwen)

I know that the Secretary of State is aware of my disappointment, which is shared by my hon. Friend the Member for Hyndburn (Mr. Pope), that Rossendale has not been included among the pathfinder authorities. Will the Secretary of State give me an assurance that it will be included? I reassure him that he need have no doubts about the ability of Rossendale's local authority to deliver, because it has been Labour controlled since we gained 12 seats from the Tories at the local elections.

Mr. Byers

I am sure that that is the case. On my hon. Friend's specific point, we have drawn up provisional boundaries for the pathfinder projects but we are open to expand them where appropriate. When we consider how we can draw together the details of the pathfinder relevant to Rossendale, we shall give proper consideration to extending it to include Rossendale. That would make a lot of sense, given the opportunity we have to consider the case.

Today, we announced that £25 million would be made available immediately from the capital modernisation fund from the Treasury for the nine pathfinder projects. As I said in my parliamentary reply at 12.30 pm, that money is intended to kick-start the process. We should all be realistic in recognising that significant sums will be needed if pathfinders are to be a positive development. We are seeking not only a housing solution but, as hon. Members have said, a solution to the problems of market renewal, antisocial behaviour, crime and drug dealing. All those issues must be tackled together if we are to overcome the problem of housing.

My hon. Friend the Member for Burnley (Mr. Pike) articulated the difficulties and the desperate situations that people encounter when facing market decline, such as we have seen in Burnley and other places. We have a responsibility to people in Burnley and elsewhere to ensure that the situation does not continue. We will need to use planning effectively if we are to be successful. I am keen that our regional planning guidance should be clear about using that important lever to achieve our objectives, especially in the case of brownfield site development. The next regional planning guidance happens to be for the north-west and will be published on 20 May. When hon. Members read the details of that document, they will see that we intend to use the planning process to move development from greenfield to brownfield sites.

Sir Paul Beresford

I thank the Secretary of State for responding on the question of planning. Will he go on to address the issue of tariffs, which would be a disadvantage in encouraging development on brownfield sites? Many suspicious people would identify another difficulty—I would include myself among those people. Tariffs may be an advantage in areas of development but a disadvantage in other areas, and we foresee the tendency for the tariff to become a form of stealth tax by adjustment of the Government funding, under whatever name it is called at that point. Will the Secretary of State give us an absolute guarantee that that will not happen?

Mr. Byers

We are consulting on the question of planning tariffs and the planning gain we should get from them. We shall use them not as a way of raising tax but to ensure that planning is used as a means of economic regeneration and social renewal. That applies to housing and other areas. I am sure that, when hon. Members see the guidance on 20 May, they will welcome it enormously.

We need legislation to introduce licensing of landlords. Before that, however, we can use the lever of denying landlords the opportunity to get housing benefit directly from local authorities and require that they get it directly from their tenant. That is a significant lever, which we may exercise and to which we are giving proper and detailed consideration. We must ensure that the £11 billion of public money paid out in housing benefit gives us decent accommodation and landlords who discharge their responsibilities.

I would have been delighted to address a range of other issues at length. The empty homes question is a priority for the Government and one that we take seriously and recognise will not simply go away. Housing is rising up the political agenda. There is a responsibility on the Government to respond positively, and we intend to discharge it.

Question put and agreed to.

Adjourned accordingly at sixteen minutes to Six o'clock.