Council Housing (Hansard, 30 June 2004)

§ Mr. Austin Mitchell (Great Grimsby) (Lab)
I am grateful for the opportunity to raise this important issue. There is an awful lot of interest in it among my hon. Friends; I wish that there were parallel interest outside the Chamber, where a crime against council housing is largely being ignored by the media. Today, I hope to draw the issue to the media's and the Opposition's attention.

We are talking about the problem of investment in council housing, and specifically about the fourth option, which, instead of forcing tenants and councils to choose from a large-scale voluntary transfer, arm's-length management organisations and a private finance initiative contract, allows for what tenants and councils in the main want to do: stay with the council, and develop and improve council stock under council control. Councils can renovate, renew and build, and I hope that we shall demonstrate today that they can do so more cheaply than any of the alternative options. They could even go on to build more public housing and make the contribution that we need in this country to expand and improve it.

Our housing record as a Government is frankly appalling. We have the lowest public and private bill for housing of any Government since the war. The main consequences of that failure have fallen on council houses. In 2000, there was a backlog of £19 billion of repairs and renovations because of the long Tory years of disinvestment in council housing.

Councils are naturally anxious to do something about the situation. They are proud of their council housing. The Government told them that they could not increase spending enough to finance the huge backlog, so councils had to get money from the private sector to do the job, preferably through a large-scale voluntary transfer, which would bring in housing associations to get finance into the market. However, as that began to flag, the alternative suggestion was to use an arm's-length management organisation by which the councils retain ownership; councils were told that such issues should be put to a tenants' ballot. The results of those ballots have been patchy: there has not been a unanimous clamorous rush to accept the privatisation option that the Government are offering.

I have just been facing a campaign by North East Lincolnshire council, in which it threw in £800,000 of expenditure on propaganda and consultancies to sell the idea of privatisation. It was supposed to put both sides of the argument, but it did not, and rather told tenants that it was crap—I mean appalling—at running council housing and was making a mess of it, so they should vote for privatisation. It issued a prospectus that was pure 76WH propaganda—it was as if Laurence Llewelyn-Bowen was going to redesign every house in Grimsby and the surrounding area, and the residents would be living in paradise if they voted for privatisation.

In the event, 43 per cent. of tenants voted for privatisation. They voted for it on the basis of a prospectus with which the Department of Trade and Industry would never have allowed any private company to float on the stock market. They voted for an organisation with no business plan and no managing director, and it had not told people where it would raise the money. It had not even decided whether it would be a charity or a company. No such company could be floated on the stock market, because it would be specifically ruled out.

In North East Lincolnshire, we are giving council housing away in large chunks to organisations cobbled together after the vote. Elsewhere, votes have gone against the Government's proposals for privatisation. There was a classic case in Birmingham, and more recent cases in Camden and Stroud. Results have been patchy: some ballots are successful, while many are not.

The Government believe in choice and are now providing for choice in the health service and education, particularly for the meritocratic middle classes, who are supposed to have the intellectual ability to choose. However, we do not believe in choice for the tenants of council housing. We believe in offering them three alternatives that they do not particularly want, but not the alternative that they do want, which is staying with the council.

§ David Taylor (North-West Leicestershire) (Lab/Co-op)
My hon. Friend was at the launch of the Local Government Information Unit booklet yesterday. We heard about Hammersmith and Fulham, a three-star-rated housing authority, whose tenants are being denied the choice to stay with that landlord. Does that make sense?

§ Mr. Mitchell
It makes no sense. The whole system is about the negation of choice. We think that choice is appropriate for the middle class but not desirable for tenants of council housing. That is a monstrous social assumption on the part of the Government. I can quote against that assumption some words from my right hon. Friend the Chancellor of the Exchequer. He said that tenants have to fill in a ballot form, but there's only one candidate on the list … this sounds more like a medieval dictatorship than democracy". Unfortunately, he said that in 1996, but it sums up the situation that we face in council estates today.

The first question, therefore, is why the Government are not providing the real choice that tenants and councils want, which is the fourth option of staying with the council and of council housing being financed by the council. That can be done—I shall come to it in a moment.

Secondly, what happens to the areas that vote against privatisation? When my right hon. Friend the Member for Tyneside, North (Mr. Byers) was Secretary of State for Transport, Local Government and the Regions, he said that it would be a Government responsibility to help tenants who voted to stay with the council to reach the decent homes standard. However, my right hon. 77WH Friend the Minister for Housing and Planning said in effect that if tenants voted against privatisation, they had to rot in hell, or whatever the circumstances of their estates were. If they should vote against—as if this was some kind of European referendum in Denmark—the Government would treat them as if they did not exist and ignore their plight when it came to reaching the decent homes standard. I think that he has retreated slightly from that statement, but he has also unilaterally torn up the last manifesto commitment, which was to bring all public housing—not just the housing of those who voted for privatisation, but all council housing—up to the levels of decency. So what happens now? What is the latest opinion in the Office of the Deputy Prime Minister on how tenants who vote against privatisation should be treated and helped to reach the decent homes standard?

The third case against what is going on is simply that it will not work. There are 2.5 million council homes and 6 million people still in council accommodation. We cannot get all of them to ballot for privatisation and to submit a choice between the three alternatives by July 2005 as required. I emphasise that there will almost certainly be a general election early next year, in May or June. The deadline for submitting a choice by local authorities between the three undesirable alternatives is July. Is the ODPM seriously suggesting that in the run-up to and during a general election, we will be bashing the council estates and councils and dividing the Labour party on this issue to force them towards privatisation? It is inconceivable that we should behave in that fashion.

I hope that my fourth point can be answered. The process of privatisation and the three undesirable options, when they are accepted. help the better areas of council housing, not the most deprived areas, because the ballots have been successful in areas with better council housing and better prospects. Only six of the ballots were held in the 100 most deprived areas of council housing. We are channelling the money the wrong way: not to the deprived areas, which most need the renovation and improvement, but to the more prosperous areas. I emphasise again that this privatisation choice that is supposed to give tenants more power does not do so. The tenants are conned into believing that they are going to take an active part in running the properties under privatisation. In fact, the Audit Commission said: Many tenants of such housing associations feel that they are on the board to represent a constituency of tenants. Often this misapprehension is a direct result of mis-selling the role at the time of the ballot. At the time of transfer, tenants are often led to believe that they will have an explicit role in representing the interests of their fellow tenants on the board. This is not compatible with the accepted principle that dictates that as a board member they have to work for the interests of the organisation, that is, that the director's responsibility takes supremacy.

The tenants are simply being conned. That has happened on a massive scale in North East Lincolnshire, where the support of the tenants' assembly was invoked by offering them five places on the board—it has to be said—in the belief that they would be running the new operation; but they will not be doing so. The ODPM is effectively conning tenants. Experience proves that 78WH tenant representation is developed by councils, but withers under registered social landlords. That is the record of the past.

The RSLs are going to generate huge surpluses once they become cost-positive in about 20 years. There is no requirement that those surpluses be used to improve the housing in the area where the RSLs have been given council housing. They can be used for all sorts of purposes by the fort nation of subordinate companies.

My last point is the most telling of all. I hope that my hon. Friend the Under-Secretary will help us with the mathematics by giving us a considered reply—if not now, later. The whole process is expensive. Just consider the costs of this folly of insisting on privatisation. First, massive sums of debt are being written off. In the past year, £800 million of debt was written off. The total allowance by Government for council house building—although they are not allowed to build any more— improvements and regeneration was £834 million. We can afford £800 million to write off debt, but only £834 million to improve council houses.

Secondly, there is the cost of the gap funding and the dowries that have to be given to the new social landlords, particularly in areas of negative equity, such as my own. Huge sums have been devoted to gap funding to help privatisation. In other words, huge sums have been used to give away the council housing that belongs to all of us There is also the shift of housing benefit from other tenants, which the ODPM has been paying this year, on to social security as a result of privatisation, the cost of which is estimated at £249 million per year.

Thirdly, there is the cost of all the consultancies and surveys and the propaganda that has been pouring out to con tenants, which the Audit Commission estimates at £430 per property. That is used not for housing but to enrich consultancies and pour out propaganda. The cost of renovating council housing is higher in the private sector, because it pays higher interest rates and much higher salaries to its top management. The Audit Commission estimates that over a 10-year period it cost £1,300 a year more to renovate council housing in private ownership than by the councils

Arm's-length management organisations cost about £2 billion in the three years up to 2005–06. The sum given to the Glasgow ALMO was equal to the cost of renovating and reaching a decent housing standard for every council house in Scotland.

Finally, there are the costs of a year off for the council officers and housing departments while they propagate and propagandise the case for privatisation. In North East Lincolnshire, repairs have not been done, more houses have been voided and boarded up, estates have been left to rot for a year, while people from the council have gone round propagandising the case for getting rid of council housing and for getting their jobs transferred to registered social landlords so that they can get more pay. That has compounded the situation, which was already bad enough.

All that money has been spent, and for what? Satisfaction, as measured by the ODPM's own surveys, has increased by 2 or 3 per cent. as a result of privatisation. There has been a substantial decrease—5 per cent.—in satisfaction with the repairs. The tenants are not satisfied by the process. The ODPM argues that 79WH it separates management from strategy, but there are no grounds to say that that is an improvement or a benefit—none at all. It has not been able to produce any evidence for that assertion. There are small gains and huge costs.

We are wasting millions of pounds to give away billions of pounds of public assets in council housing, as a result of sheer, simple dogma and ideology—the dogma that private is better than council housing, that private is better than public. It is as if we were changing the ownership of the deck chairs on the Titanic as it went down—the process is as futile, fiddling and useless as that.

I say to the Minister that there has to be a better way—and there is. It is the fourth option: let the councils run their own housing, build and make their contribution to solving the housing crisis. We would not have to devote massive sums of public money to council housing to finance the fourth option, although I would favour that. It would not be a massive cost. We would have to let the councils keep their housing revenue accounts, all of them—let them keep the rents and use them for housing purposes. Since 1990, we have taken £13 billion out of housing revenue accounts to finance the housing benefits of other council tenants—£13 billion is a major part of the £19 billion cost of refurbishment. The daylight robbery process has looted and pillaged housing revenue accounts and we are still taking £1.5 billion a year out of those accounts.

§ Mr. Ken Purchase (Wolverhampton, North-East) (Lab/Co-op)
Does my hon. Friend agree that a central principle of Labour policy has been that poverty should be remitted from the centre? With this housing finance debacle, we have simply said that the poor should pay for the poorest. Is that not against everything that Labour has ever believed in on poverty?

§ Mr. Mitchell
Absolutely; it is an appalling principle, which we maintained for far too long and only ended this year. The Tories began it—it accorded with their philosophy, perhaps—but we perpetuated it for the first seven years of power. Even now, the average tenant pays £2,600 a year in rent and gets back £1,773 in services, repairs, administration costs and the rest of it. In other words, £827 per tenant is not devoted to housing purposes.

Put that money into housing purposes and the fourth option could finance itself. Allow the money that the ODPM now uses to pay the housing benefit of council tenants to go into housing. Let councils keep the money from right-to-buy sales, which now runs to £500 million a year, and use it for housing purposes. Let the councils borrow, as they have the power to do under the Local Government Act 2003. They can borrow on the major repairs allowance and on an investment allowance.

That idea was floated by the ODPM, which consulted councils on it. The Minister for Housing and Planning then told us that there had been no interest. Now he has written me a letter to say that in fact 20 per cent. of councils showed an interest in the investment allowance idea. However, it was quietly shoved into the back cupboard by the ODPM, despite the fact that one fifth of councils were interested in pursuing it. If we had got that, it could have been used for housing purposes. Let 80WH them borrow on the stock and let us have a level playing field with the RSLs, which can use their power to borrow. All that finance could even be supplemented with just a small proportion of the money that is being wasted.

§ Lynne Jones (Birmingham, Selly Oak) (Lab)
Is it not true that the City has always regarded housing associations as a higher risk than local authorities? Therefore, if local authorities were permitted the same freedoms as RSLs, they could borrow the money much more cheaply and the renovations would be carried out more effectively.

§ Mr. Mitchell
Absolutely. That is such a glaringly obvious point that I am surprised that the ODPM has ignored it for all these years—public borrowing is cheaper. That is why it is cheaper to renovate, repair and rebuild council housing, and indeed to provide new council houses, than it is for the RSLs to do so. On that basis, most local authorities can balance their housing books and can use the money to renovate, repair and build anew to make their contribution to tackling the housing crisis that has arisen. Why are they not being allowed to do that? Previous Labour Governments have been so proud of the record of Ministers and local authorities in developing, expanding and improving council housing. Why are we shuffling away from it? Why are we shuffling it off the box? Why are we getting rid of it as if it were some broken-down car to be sold on the second-hand market? That is the present position of the ODPM.

The fourth option will come, because I do not think that even the Minister for Housing and Planning is daft enough to go on banging his head against a brick wall in this fashion. I doubt whether he will be allowed to abrogate the manifesto commitments or to go on with this war against council housing as we approach the election. I am sorry that he is not present to reply today; he probably finds it easier to sit in the office and write letters to the Grimsby Evening Telegraph telling the people of Grimsby that their MP is a liar. That is matter of taste on his part.

My hon. Friend, who is the acceptable face—the very acceptable face—of the Office of the Deputy Prime Minister, is present and will reply. I hope that she will consider the questions that arise. First, I hope that both she and her Department will seriously examine the costs of the fourth option and my assertion that it will be cheaper than the waste of money of going through the present rigmarole of privatisation, the real costs of which are so heavy. I hope that she will tell us definitively and authoritatively what will happen to tenants who reject the three options with which they are provided. Will they be left without the improvement up to the decent housing standard to which the manifesto commits us? Will they be left to rot? What will happen? It is crucial that that question be answered. I hope that she will give us an assurance that under these policies of privatisation the Government are confident that they can reach the decent homes target by 2010. I very much doubt it and I doubt whether tenants will be coerced in that direction.

Finally, I hope that my hon. Friend can give us the declaration of confidence that we need from this Government in council housing and in the ability of the 81WH councils to run efficiently and effectively the housing that they have provided and built up over generations for the benefit of the less well-off people in their areas. I cannot understand the prejudice that exists against councils and council housing, and I am sure that, in view of her constituency, she will not share it. I hope that she will tell us that the ODPM is proud of Labour's record on council housing and that it wants to think again about the attempt to coerce, bully and freeze councils and tenants out of council housing and into handing over the stock at a cost of wasting millions of pounds to give away billions of pounds worth of public property.

§ Mr. Clive Betts (Sheffield, Attercliffe) (Lab)
I congratulate my hon. Friend the Member for Great Grimsby (Mr. Mitchell) on securing this debate on an important issue.

In our manifesto, we committed ourselves to getting all homes to a decent standard by 2010. We did not commit ourselves to transferring all homes out of council ownership into some other form of ownership. We suggested that the decent homes standard could be attained by one of four options, and that tenants should have the right to choose.

Throughout the debate on council housing, there has been an increasing betrayal by Ministers. They have argued that council housing has been mismanaged and has not been kept up to a proper standard of repair through some fault of the system—in other words, they argue that councils cannot deliver a proper standard of housing for their tenants.

In the recent Select Committee report on decent homes, a number of things were suggested with no evidence to back them up. It was asserted that housing could be properly managed only if responsibility was divided: the strategic role of housing should be carried out by councils, but the management should be carried out separately. However, there was no evidence to back up that assertion. Indeed, the Audit Commission said that it could provide no evidence that that was the case, and that it did not believe it to be true. It was also argued that management of council housing was worse than that of housing association properties, but again, no evidence was given to support that. If the Minister has practical evidence to support those contentions, I should be pleased to hear it.

It was also argued that tenants have more participation and involvement in a different system of management from that used in council housing—but there is no evidence to back that up. Some housing associations are good at involving tenants and some are not; some councils are good and some are not. There is no clear evidence to support the contention that, by effecting a change in the way that houses are managed, tenants will become more involved and participate better in the running of their homes.

The Minister for Housing and Planning said in his evidence that if one looks at where stock has been transferred or an ALMO created—mainly stock transfers, because they have been going on for longer—one will see that the standard of housing has improved, and that that shows what a good idea those are. 82WH However, that is a self-fulfilling prophecy. If people are told that lots of money will be available for them to spend on their houses if they vote for a stock transfer, but that that money will not be available if they do not, they will vote for a stock transfer. The money then comes in and is spent, and the houses are brought up to a higher standard. That self-fulfilling prophecy does not prove that stock transfer is right. It merely proves that the Government have set up a mechanism under which money can be spent on the housing stock only if certain methods are used.

We have argued for some time about level playing fields. The Government have got themselves into a real mess on the issue of committing themselves to a decent homes standard and the options to achieve it. They assumed, somewhere in the spending agreements with the Treasury, that tenants would vote nicely in set numbers and set proportions for the various options. They assumed that most tenants would vote for stock transfers, some would vote for ALMOs, and that a very few would vote to stay with the local authority. When the situation changed, and tenants rejected stock transfers—particularly in the case of Birmingham—it suddenly became apparent that the decent homes standard could not be delivered with the allocations of money that the Office of the Deputy Prime Minister and the Treasury had agreed at national level, because tenants were not going to vote in the proportions that had been assumed.

§ Lynne Jones
Tenants in Birmingham are still angry and perplexed that the Government were prepared to make £650 million available to Birmingham to write off debt had tenants voted for stock transfer, but that there will not be a penny extra now that tenants wholeheartedly rejected that option.

§ Mr. Betts
Absolutely. I agree with my hon. Friend. One of the things that really bugs people in this debate is the lack of a level playing field—that the Government are prepared to write off hundreds of millions of pounds to encourage people down one road, but will not support them if they choose to stay with the local authority as council tenants.

The Government's next strategy has been to say, "Well, if we can't persuade tenants to vote for stock transfer, how about an ALMO?" In Sheffield, tenants who, by and large, would have preferred to remain with the local authority, and who totally resisted the attempt by the Liberal Democrats when they came to power to force wholesale stock transfer on them, are now going down the ALMO road, because at least the houses remain in the ownership of the local authority. They see it as a second-best option to get money in to bring their homes up to a decent standard.

That is nonsense in terms of the Government's overall strategy of trying to encourage stock transfer. As the borrowing is done off balance sheet and does not count against Government borrowing requirements, they have insisted that borrowing by an ALMO counts against borrowing requirements in the same way as local authority borrowing Therefore, the Government are not escaping from the problem that they have created. What is the difference between allowing a local authority and an ALMO to borrow? In terms of Treasury rules, there is none.

The Government helpfully brought in prudential guidelines for most council services, where councils can borrow against future income streams. Many of us have been pressing for that for many years to free up capital constraints under which local authorities work. However, they exempted the issue of council housing, so councils cannot borrow against the future rent streams of their housing to fund housing improvements and investment—it was completely disallowed. That was the one major exemption from the prudential guidelines, but there has never been a proper explanation for it.

The idea of investment allowances was strongly promoted by Unison and in the Local Government Information Unit pamphlet, "Housing: The Right to Choose", which was launched yesterday. It is not a sinister mechanism dreamed up in deep recesses of the Campaign group to pervert the Treasury's financial strategy. The idea was actually floated by the Office of the Deputy Prime Minister in a White Paper in 2002 but then dismissed. What is wrong with investment allowances? From relatively small sums—a few hundred million pounds a year—millions of pounds of housing investment could be generated. That could create a fourth way: another alternative for tenants wanting their homes to be improved under the ownership of the local authority.

We have seen one example alter another of the Government making the wrong decisions in terms of their overall strategy. Tenants would not vote in the numbers required for stock transfer ALMOs are now seen as second best. Will the Government guarantee that they will allow the funding—the Treasury still counts it as Government borrowing—for every ALMO that tenants and local authorities vote for to create the decent homes that tenants want by 2010? if that is not guaranteed, another line of choice is cut off for many tenants.

There has been a fundamental change since the then Secretary of State for Transport, Local Government and the Regions, my right hon. Friend the Member for Tyneside, North (Mr. Byers), appeared before the Select Committee two or three years ago and said that the commitment was to decent homes and that every tenant had a right to have their home up to a decent standard whichever way they chose to do it—through private finance initiative, stock transfer, ALMO or staying with a local authority. The current Minister for Housing and Planning changed that approach when, during the inquiry on decent homes, he basically said, if tenants wish to remain with a local authority they choose not to have their home brought up to a decent standard.

The Government's motto for the next manifesto will probably be choice—choice in health, choice in education. What is wrong with choice for council tenants? The tragedy is that through their policy, the Government will do what the Tories ultimately failed to do, which is turn council tenants into second-class citizens with second-class homes. That is fundamentally anathema to many of us who have struggled on behalf of council housing and the rights of council tenants over many years.

Finally, the Select Committee's view on choice, which summarises my case very well, was: The Committee fully supports the Government's commitment to tenant choice and involvement in determining how Local Authority housing should be owned and managed. However, the 84WH commitment to tenant choice is a charade unless Local Authorities are able to act in accordance with the wishes of their tenants. We recommend that the Government take immediate steps to ensure that where a majority of tenants wish for their homes to remain under Council management, they are not penalised when it comes to access to funding for investment in Decent Homes or any other policy initiatives.

§ Mr. Kelvin Hopkins (Luton, North) (Lab)
This policy is clearly part of a process of privatisation and marketisation, which has been going on for a long time. I became a councillor for the first time in 1972, and the first battle in which I was involved was over housing finance legislation, through which the Government decided to move from subsidising houses and keeping rents down towards market rents, where the rents were higher and the tenants were subsidised. That immediately created a benefits trap, which still affects tenants in my constituency.

In my constituency, there are small areas of housing association housing and while canvassing for the general election in 1997, I was told by colleagues, "Don't talk about employment to the people in that street." When I asked why not, they replied, "Because they're housing association tenants—they don't want jobs because if they get jobs they'll lose all their benefits." There was a massive benefits trap for some of the poorest people in my constituency. The rents for local authority housing, although high, were still lower. The whole process is clearly about moving in that direction, which will have disastrous social consequences and, as my hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase) said, will merely churn income between the poor and the very poor. When we took control of the council in 1972, we set about building masses of council houses. We brought the council housing waiting list right down. We had the benefit of a Labour Government who were committed to housing. We even bought large numbers of private sector houses and housed thousands of people.

We now have a situation that is twice as bad as that in 1972: there are not only high rents and benefit traps but a desperate shortage of housing. By moving towards the privatisation of council housing and even higher rents and even bigger benefit traps, the Government are doing nothing to solve the problems of the 7,000 people in Luton who need housing. The only solution is to reinvent council housing as it was and for the Government to take over control and even possibly to develop new town strategies again. It must be public sector housing with low rents, subsidised from the historic equity of local housing, as in the past. I have said similar things before. I should like to make many other points, but those will suffice for now.

§ Jeremy Corbyn (Islington, North) (Lab)
We should put on record our thanks to my hon. Friend the Member for Great Grimsby (Mr. Mitchell) for his phenomenal speech in opening the debate and for his tremendous work for the Defend Council Housing campaign, supported by Alan Walters and many others. It has put council housing right up on the political agenda where it belongs.

I hope that the Minister will recognise that many people around the country simply do not accept the three options that have been proffered by the Office of 85WH the Deputy Prime Minister to deal with the housing crisis. It is simply not on to tell council tenants that they must choose between stock transfer, private finance initiatives and ALMOs, and that if they reject all three, as they have every right to do if a ballot is properly organised, they will get nothing. Where do the decent homes standards fit in with that? What sort of free and open democracy is it if we offer people no real choice other than a form of privatisation of their existing council stock? That is what it amounts to.

Not so long ago in our 1997 manifesto we said that we would free up all the capital receipts that could be used for housing investment. That has not happened. Some have been freed up but most are tied to some kind of private finance initiative or private investment in an estate. Some £2 billion is still being held that cannot be used for housing improvements. When tenants are asked to vote on a stock transfer or whatever, they are not given a free choice. They step out into the unknown if they say no, but many have said no.

I have just been through the experience of a large-scale stock transfer vote on the Tollington estate in Finsbury Park in my constituency. The tenants voted down the stock transfer emphatically: 60 per cent. of them said no. They did so because they were told that in order to lever in this private finance to improve the estate they would have to sell off what little open space there is to build 300 homes for sale on the open market at between £200,000 and £300,000 each, and 120 street properties owned by the council would have to be sold. In other words, in order to improve the housing conditions, which need improving urgently, we would end up with 300 more places for private ownership and sale and 120 fewer places for affordable rent.

The housing crisis in my constituency is worse than it has ever been. There are fewer new lettings and fewer new properties coming on stream from the council or housing associations. In fact, none come from the council; they come only from housing associations. There is a record high number of people in short-term tenancies and short-term lease properties. That is at a phenomenal cost to the public purse, largely through housing benefit. Frankly, the situation is not sensible.

Will the Minister recognise that there is currently a terrible housing crisis in London? Tenants looking for a transfer and people living in hostel accommodation who are desperate for somewhere to live have told me that they have been given only one offer—to move somewhere else in the country. If they have a genuine wish to move out of London, there is no problem, but most people cannot do that. They have to stay in London for family, work, education or whatever reasons. The only way forward is to invest in new affordable property in London.

Is that best done by investing in schemes in which the rents end up higher or by allowing local authorities the freedom to borrow, develop and provide housing for people in desperate need? I simply cannot understand the Government's position, and I do not understand the politics either. What we have done is to say to tenants throughout the country that they have a choice, when in reality they do not. They can choose only either some form of privatisation or going into substandard property that means that the Government cannot 86WH achieve their decent homes standard. I hope that the Minister, having considered the Barker review, the housing crisis in London and the south-east, the huge cost of privatisation and how we are pouring money into the private sector when the work would be done better and cheaper in the public sector, will be able to give us some news on the situation.

A number of estates throughout the country voted against stock transfer and have been left in limbo. Camden as a borough rejected stock transfer and ALMOs, so it has now a problem on its hands. I hope that the Minister agrees that the democratic wishes of the people of Camden should be recognised and that money should be invested for new housing development and improvements by the local authority. The Aylesbury estate in Southwark emphatically voted no, but the tenants have still not seen the improvements to which they have a right, like everyone else in this country who wants to live in decent housing.

Will the Minister please say that she has heard, understood and recognised the arguments for the fourth option and that she agrees that local authorities have provided and can and will provide decent, secure, good quality and cheap accommodation in desperate housing need? The options offered by the Office of the Deputy Prime Minister do not achieve that.

§ Alan Simpson (Nottingham, South) (Lab)
Yesterday, the Leader of the Opposition launched one of his opening salvos for the next general election on the question of choice. He did it on the basis of some half-baked ideas on education, knowing that they do not stack up and, like his colleagues, knowing that when they are put to the electorate, they will be seen through and rejected. I am happy about that—it is a legitimate choice for the electorate at the general election.

What would we have been saying had the Leader of the Opposition sussed his real opportunity? He could have said that, at the next general election, we will offer the electorate a different choice—Tory, Lib Dem or Green, with no fourth option. if he had done that, the Labour party would rightly have called the Tories a bunch of thieves, making an outrageous proposal and committing an act of charlatans that would steal from the electorate the legitimacy of a fourth option. Yet, here we are telling council tenants that they are not entitled to the legitimacy of a fourth option or an equal choice of different ways to address their housing needs.

Nottingham is about to embark on its ballot on the proposals for an ALMO, and the proposal has torn apart the Labour group that has run the city council's housing department for a long time and had some remarkable achievements in the past 10 years, specifically in the development of safe neighbourhood strategies. Councillors and police officers have asked me why we would want to follow a path that pushes council housing out of council management. Local authorities have been the key driver in our safe neighbourhood strategies, because they own and manage the assets in which the tenants live. The police are using their powers to issue antisocial behaviour orders to tackle neighbourhood-based crime, but what makes the difference is when the local authority pulls in the housing department and the education department, and 87WH everyone gangs up to deliver safe neighbourhood strategies and decent standards of behaviour. They can do that because they manage public resources and are at the front line of delivering wider public policies.

I want the Minister to do two things. My hon. Friend the Member for Great Grimsby (Mr. Mitchell) set out the case for the fourth option, but I want her to clarify whether my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) was right that the borrowing rules for ALMOs meant that their borrowing counted against local authority borrowing. Many people in my authority have been persuaded that ALMOs, although a lousy choice, are the only choice, and that improvement work can be done without its counting against the authority's borrowing. If it does count against local authority borrowing, however, the implication is straightforward: ultimately, ALMOs can only be a step towards transferring assets into private hands, because that will be the only way of getting the borrowing off the public accounts. If so, people need to make an honest and informed choice.

Secondly, I would like an assurance. When Nottingham tenants decide how to east their votes in the ballot on the ALMO, they would like to know that the choices are equal, that there is a level playing field and that they will not be financially penalised for deciding to remain council tenants. They will want to be offered the choice of equal financial arrangements, which will apply to all the options, and not to be bribed or browbeaten into taking a path that leads to the surrendering of a public asset. They do not want millions of pounds in bribes to be given away, as my hon Friend the Member for Great Grimsby said, to dispose of billions of pounds of public assets, which we will never get back. I hope that the Minister will give my constituents that assurance.

§ Mr. Ken Purchase (Wolverhampton, North-East) (Lab/Co-op)
I congratulate my hon. Friend the Member for Great Grimsby (Mr. Mitchell) on obtaining this important debate. Labour is on the brink of perhaps its worst domestic policy disaster. So far, the policy has been brutish: it has injured Labour councillors, fractured relationships and divided estates. I sincerely hope that it will also be very short-lived.

This could be Labour's railway privatisation disaster. Let us consider the situation for a moment. At the beginning of the 20th century, more than 90 per cent. of all housing was in private hands. Almost 5 million houses were under democratic control until the Thatcher years; today, 3 million are. In my borough, we now have massive housing shortages, and tenancies are simply not becoming available. People are unable to transfer between different parts of the city, and new people coming in find it extremely hard t o get a council tenancy, unless they are in the direst circumstances. This is the 21st century, in the fourth richest economy in the world, yet I, like many other hon Members, face a dreadful housing shortage in my borough. That cannot make sense to the ordinary person.

Council housing is very popular in my borough, but the Government take no notice. They believe that they know better than the tenants, who, through their life choices, have expressed the wish to be housed and managed by the local authority. There is an exact 88WH analogy with the privatisation of the railway system. The then Government sought to atomise it, split up the ownership and ensure that no one had a coherent view of the whole thing. That was a recipe for disaster, and our Labour Government are now grappling with the consequences. Surely we can learn something from the kind of public policy adopted by the Conservatives throughout the 1980s and apply a bit of common sense to what we are trying to do today.

We have a new privatisation. Council housing was once the symbol of everything that Labour ever achieved. Was it not council housing that completely changed aspects of public health? Did it not make just as big a contribution to the health of the nation as our treasured national health service? It did, and it continues to do so, but we are in danger of atomising it.

We will soon have almost as many landlords as there were at the beginning of the 20th century. Buy to let is everywhere. There will be dozens, hundreds, thousands of individuals who are nicely ensconced in their own home and letting another home to someone else, just like at the beginning of the 20th century.

§ Mr. Hopkins
Does my hon. Friend agree that, historically, one of the most pernicious relationships in human society is that between landlord and tenant?

§ Mr. Purchase
I could not agree more. We had two world wars, and at the end of both of them Ministers declared that we would build homes fit for heroes. We did so, first through the Housing and Town Planning Act 1919 and then through Bevan's heroic efforts at the Ministry of Housing and Local Government.

We did that—that is our achievement. It is not old-fashioned or out of date. It is doing a splendid and amazingly good job, and yet our Labour Government are telling us to get rid of a public asset. I can scarcely believe it. When I hear of Ministers appearing before our Select Committee and saying, "If tenants don't choose one of my three options, they won't have their new kitchens," I think, my goodness! Have we got to the point where a Labour politician actually says, "Trade your democratic heritage for a new kitchen"?

If that is where we have got to, I tell the Minister here today, whom we have heard described as the acceptable face of the ODPM, that this is the time when she can tell us that she will go back to the Department and convince colleagues that this policy is unpopular and unhelpful, divides the Labour groups in our cities and towns, and will not put a single lick of paint on any windowsill in the country.

§ David Taylor (North-West Leicestershire) (Lab/Co-op)
Earlier this month, our television screens were full of remembrances of six decades ago, and the start of the end of the war in Europe was brought back to our minds. The world of peace to which the demobbed soldiers returned was still a world in which Beveridge's five giants of idleness, ignorance, illness, want and, in particular, squalor stalked the land.

Dealing with squalor was one of the most successful areas of activity for post-war Labour Governments and councils. It is not that a long-established policy has failed or faltered in those intervening periods. It has 89WH been remarkably successful in most parts of the country. In an east midlands mining village, a couple with a young daughter and a toddler son left overcrowded accommodation to enter a council house provided by Ashby-de-la-Zouch rural district council. I was that toddler son. I was one of millions in the two decades after the war who had the opportunity to live in decent, affordable, accountable housing where no such option had previously existed.

I have not researched the background of Labour Members, but I would hazard a guess that a slight majority spent some or all of their childhood in local authority accommodation. We are not speaking from the vantage point of ignorance, but from information and experience.

Some powerful speeches have been made in support of the case for option four and council housing. I suppose that the two are intertwined. We have heard the economic argument. As my hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase) said, who is responsible for the Labour party's dramatic and almost rash change of policy, given that it is facing a general election in the next year or so, when a good 10 per cent. of the electorate will be tenants of local authority housing? Surely, it cannot be the Ministers who are notionally in charge of such matters. Is it someone in the white building over the road—the Treasury—that looks balefully at this place and tries to restrain our powers and impulses in our own interests? Is that the driving force behind the change in policy?

The cost is not the driving force. We have heard that when the Government consulted on options in 2002, they suggested an investment allowance, which would allow councils to make use of new borrowing powers. The amounts were pitifully small, much less per year and nationwide than would he written off in Birmingham, as my hon. Friend the Member for Birmingham, Selly Oak (Lynne Jones) made clear.

An allowance of £150 million this year, increasing to £350 million next year would be enough to finance almost £5 billion of new desperately needed housing investment, not just in the inner city of Islington, or the large south-eastern town of Luton, or in Great Grimsby, but in rural areas, especially in constituencies such as mine. There were almost 7 million council houses nationally at the peak, not 6 million. A slight majority of those disappeared under the right to buy. In rural areas, much more than just half the housing has disappeared; indeed, the vast bulk of housing has gone. Young couples in such areas need access to affordable housing.

There is an economic case for council housing, in that it costs less than all the mooted alternatives. There is a political case because it is important to people in the Labour party to look back on and promote the successes of local authorities and Labour Governments in postwar years. There is a social argument, too, in that development and investment in social housing allow there to be an integrated approach to tackle social problems.

Tenants should not be coerced or blackmailed into an alternative option that is not the one they want. They should be given a rational choice and full information 90WH about matters, not simply wiped out of the equation. To my astonishment, earlier this month my good friend, my right hon. Friend the Minister for Housing and Planning, mooted the idea that the 2010 decent homes target would be met if we ignored those tenants who had chosen to stay with their local authority. Apparently, that idea was hastily withdrawn.

Perhaps that was the first swallow of a summer, which will reveal the awful mistake that has been made. There will be apologies. There will be a smokescreen behind which a U-turn will gracefully and gradually take place because we—a Labour Government facing perhaps an historic third term—will depend significantly in some areas and in some marginal seats on the support of people who live in local authority housing. That U-turn will be welcome; it will be even more welcome if my hon. Friend the acceptable face of the Office of the Deputy Prime Minister—although she has not got a lot to beat—can tell us today that the Government are sorry, that they have got it wrong and that they will allow option four. Let us hear that today.

§ Richard Younger-Ross (Teignbridge) (LD)
My party believes in council housing. I do personally, because I spent my teenage years in a very well-designed, modern council house. A lot of council housing was extremely well built, particularly the well-designed post-war estates. However, although there was a lot of good housing stock, a lot of local authorities did not look after it well. I remember my formative years in politics looking at damp running down walls in council flats, in appalling conditions on appallingly managed estates. Clearly, something had to be done to improve that.

The problem today is that the balance has tilted too far one way. The Government set targets for decent homes, and judging from what I have read from the Housing, Planning Local Government and the Regions Committee, on which the hon. Member for Sheffield, Attercliffe (Mr. Betts) sat, they did a good job. However, the targets for decent homes are being impeded by the process of stock transfers. Evidence was put before the Committee on that. Although the Government have said that they want decent homes, they have delayed that process by demanding that the ballots go ahead.

What is required is that magic word: choice. I congratulate the hon. Member for Great Grimsby (Mr. Mitchell) on securing the debate, and he put the point powerfully that there is a fourth option. which is being denied to local authorities and tenants. That is not real choice. The hon. Member for Islington, North (Jeremy Corbyn) questioned how this situation arose. I can tell him: in the 2000 Green Paper, the ODPM stated: We strongly favour the separation of authorities' strategic and landlord responsibilities for housing. This will strengthen both roles. The Government clearly set out, some time ago, that they would split the two roles.

§ Mr. Purchase
I think that the hon. Gentleman misunderstood "strategic" in the sense that we all understood it. This was a regional approach, not a district by district one.

§ Richard Younger-Ross
Clearly, the approach has been a district by district one; that is how I interpreted 91WH it. Perhaps this was mis-sold; it would not be the first time this Government have mis-sold their policies, and will probably not be the last.

The Select Committee report is well balanced and says that there are serious questions about what current Government policy is. On the first option, on stock transfer, the Committee considers the transfer to registered social landlords, and says that there are problems. On ALMOs, it says: ALMOs receive significant extra investment funding as compared to Local Authorities who retain the full management of their stock. Conversely, ALMOs are unlikely to have access to the levels of funding which many RSLs can achieve, because like Local Authorities, ALMOs cannot borrow freely. In other words, there is no level playing field between different models, and this inequality is tiered over several levels. That is a good point, which I hope the Minister will pick up on and answer later. There must be a level playing field.

Still on ALMOs, the Committee said: We have not heard evidence that creating an ALMO per seenhances the achievement of Decent Homes, or indeed of tenant satisfaction. The option of creating an AL MO should continue to be available to Local Authorities, but there should be no financial incentive for Councils to do so. That is exactly the point that I would make: there must be a level playing field between the options. If local authorities are not maintaining their stock well—if somebody asks for their door to be repaired and it takes a month for the carpenter to come to fix it, and there is a two-inch gap at the bottom—that is a real instance—tenants have a right to say, "No, we are not happy with you as a local authority running it. We would like another option. We would like somebody to come and manage our housing stock who will do a better job."

If local authorities have good housing departments, which care and manage their properties well, as my authority in Teignbridge did, there is every reason for tenants to vote for maintenance under the local authority. Teignbridge had a ballot recently, and hon. Members will not be surprised to learn that it decided to vote for ALMO. It voted for ALMO because, as has already been said, there was a large financial incentive to do so. That is wrong, however, and it is not my understanding of democratic choice.

Choice is the new buzz word. All of a sudden, parties seem to believe that talking about choice will win them the next election—if we tell the electorate that there is choice, they will vote for us. In fact, the choice is Hobson's choice, and the electorate are being sold a pup. There is no choice on this issue because the three options are not comparable. The Committee said that PFI did not work at all, so one wonders why PFI is even considered as an option when the Committee has lambasted it so strongly. I am surprised that the Government still allow PFI to be part of the process.

§ David Taylor
For the benefit of people in the Chamber and elsewhere, as Liberal Democrat policy varies between different parts of the country and different parts of this House—even the same person varies the policy from time to time—can the hon. Gentleman tell us what is the Liberal Democrat policy on council housing and the tenants who live in it, who are happy with their landlords?

§ Richard Younger-Ross
It is exactly the same. Local authorities will make their own choice. Labour 92WH authorities have gone down the road of choosing ALMOs and registered social landlords. Liberal Democrat councils have done the same. The hon. Member for Sheffield, Attercliffe referred to the previous leadership of Sheffield choosing RSL. and that was probably the right decision at the time. He then said that the current administration is considering an ALMO, but I do not know whether that has gone through.

Local authorities feel that they are being pressured, and the Liberal Democrat position is that there should be the fourth option and a level playing field. I think that other Members would argue for that. If local authorities want a choice, that is fine, but that is up to them. The choices must, however, be on a level playing field where there is no financial incentive to go down one route rather than another.

§ Mr. John Hayes (South Holland and The Deepings) (Con)
I feel slightly like an intruder in a heated family row, or perhaps an uninvited guest at a wake. For that reason, I shall abbreviate my remarks so that the Minister has the maximum time to respond to the points raised by other Members.

However, some points need to be made from the Opposition's perspective. Some of my favourite Labour Members have contributed to this debate: the hon. Members for North-West Leicestershire (David Taylor), for Nottingham, South (Alan Simpson), for Islington, North (Jeremy Corbyn) and, not least, for Great Grimsby (Mr. Mitchell). The latter has done a service to this Chamber and the House by bringing the matter to our attention and securing a debate on it.

It is an important subject, because social housing is important. When we talk about social housing, we should remember that we are not talking about units and buildings to be occupied, but homes and people, especially vulnerable people. My personal commitment in politics is to mitigate disadvantage in favour of people who are vulnerable and to act in the interests of those who are least able to defend their own interests. That is the proper purpose of people in this House, and it no less true for housing than it is for other areas of public policy.

It is certainly true that we have a problem with social housing. The fundamental problem touched on by several contributors is that we are building an insufficient number of social houses. It is as simple as that. I shall say a word about the management of those houses, but before I do, the Minister has to answer the charge that we are building far fewer houses than we did under the last Conservative Administration. I have the figures for 1990–91, when about 36,000 social houses were completed. She will know that in 2002–03 barely 20,000 social houses were completed. There has been a collapse in social house building, which is causing some of the pressures that we have heard about from speakers today. The hon. Member for Great Grimsby is right that that is at the very root of the problem.

The hon. Gentleman is also right about the proper expectation of people to have decent standards, regardless of how their housing is managed. Let us not be under any illusions about the decent homes standard. Raising standards is a noble objective, but the Government have, to a degree, missed a trick with the 93WH decent homes standard, because people want decent communities. Many of the things that people crave most, like a stable, secure community, are not included in the decent homes standard. People are happy to do things that they can effect themselves, but the things that they cannot control happen right outside their front door.

I should like to see the decent homes standard turned into a decent communities standard, as is being done in locations where a range of agencies are coming together to try to improve the quality of life of people living in council housing or housing that is run by other registered social landlords. That could be achieved by working on those factors that people cannot control—the things that happen outside their front doors.

§ David Taylor
The hon. Gentleman is widely recognised as being at the one-nation end of his party, but will he accept, at least indirectly, the responsibility of past Conservative Governments, of which he was a supporter, for starting the process by which housing authorities were impoverished and enfeebled and through which people on local authority estates were seen as the poor and feckless, to be corralled and ignored? Is this not just the latest stage in the process that his party started?

§ Mr. Hayes
Governments throughout recent history have given insufficient regard to local democracy and have not given proper support to local government in discharging its functions. I am pleased to say that under the current leader of the Conservative party—and the previous one—there has been a renewed commitment to what is called in the modern idiom localism, which really means empowering local people through their communities and local councils to make decisions that have the best impact on their lives. The hon. Gentleman has a point in saying that we have not always got it right across the political spectrum, in terms of trusting people to make decisions that affect them directly.

I have only three points to make. First, it is appropriate that whoever runs social housing should run it properly in terms of allocation, repair, service to tenants, the warmth and security of the homes, and the management of the neighbourhood. That can be done effectively by a variety of agencies. There are good housing associations, good local councils and good ALMOs. All sorts of people involved in the management, running and provision of social housing do it well. Equally, there are people who do it badly.

The idea that every council housing estate was some halcyon place where people lived in a golden age is naive, and we should not delude ourselves. The hon. Member for Great Grimsby is far too wise to have suggested that, and he did not say that. However, it needs to be said that councils do not run housing perfectly, any more than any other agency does. Whoever runs housing, the standards should be universal. It is true that if people are living in council housing—not in one of the arrangements that have been discussed at length today—they should be entitled to the same levels of service and standards of decency as anybody else. That is my objective, and I speak both as 94WH someone who was born and bred on a council estate, as many hon. Members have said that they were, and as the shadow Minister for Housing.

Secondly, I am not against councils building and managing houses. My council—Tory-controlled South Holland district council—is building small numbers of houses and supporting incremental development in our villages, because of the rural housing problems mentioned by the hon. Member for North-West Leicestershire. Those houses will be built to a better standard than the decent homes standard.

Thirdly, we need to recognise that if extra money has to be brought in, and if other people are going to build and run social housing, the standards to which they work, and the rules and regulations to which they must adhere, should be common ones. We cannot have, for example, private sector organisations building and running social housing if they are not asked to conform to the same standards as other RSLs.

The Minister has a lot of questions to answer, given what has been said today. Every Briton should have the chance to live in a warm, secure home that is fit for its purpose and is in keeping with the built environment and the landscape, in both character and style. Every home should be sustainable ecologically and part of a safe, stable and confident community.

We need to inject more money into social housing, and that can be done in a range of ways. There must be consistency in how we run social housing, because people who rent have just as many expectations and just as much entitlement to choices and quality as people who live in market housing. Those ambitions are at the heart of my personal political agenda, and they will be at the heart of the programme of the next Conservative Government.

§ The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Yvette Cooper)
I congratulate my hon. Friend the Member for Great Grimsby (Mr. Mitchell) on securing this debate on council house funding, and I apologise to him, to other speakers and to you, Mr. Deputy Speaker, for missing the beginning of the debate. At one point this morning, as I sat stuck in solid traffic, I considered that it would probably be quicker to walk; however, in my current condition, walking any great distance is probably not a good idea. It was very kind of my hon. Friend to describe me as the acceptable face of the Office of the Deputy Prime Minister, but my acceptable face would have been rather red and puffing had I tried to get here any faster than I did. I apologise again for my lateness.

I recognise the strength of feeling among my hon. Friends on this issue. I admit that I was a little surprised to hear how many of my hon. Friends were so enthusiastic about choice in their contributions, but I recognise the points that they were making, and I want to try to respond to them. I will start with the problems that we faced in 1997—the backlog in council house repairs that we faced, the cuts in investment in new housing that had taken place, and the under-investment in existing housing stock, which left us with 2.1 million homes deemed non-decent. We all agree that it would not be acceptable for any Government to ignore that problem. or the need for heating, to mend windows, and to ensure that people have decent kitchens, bathrooms and so on.

If I have time, I will come back later to the issue of increased investment in the provision of social housing, to which my hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase) and the hon. Member for South Holland and The Deepings (Mr. Hayes) referred. First, I will address the issues of investment in existing housing stock.

We have reviewed the financing regime, which involved a whole series of rigid control mechanisms, and have attempted to improve the funding regimes in place. We have targeted funds where they could achieve the most and encourage investment. For example, there is the major repairs allowance, which is expected to increase to £596 per dwelling by this year. There is also the review of the major repairs allowance. In 2004 we are introducing prudential borrowing, to which my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) referred, in order to replace the old capital financing system, promote capital investment and give authorities much more flexibility to borrow, subject to borrowing being affordable.

We have also substantially increased social housing investment since 1997. We expect to support local authority expenditure on council housing to the tune of £2,500 per dwelling, which represents a massive contribution from the taxpayer. Expenditure on council housing has increased by 13 per cent. in real terms since 1997. Also, we have made available £2 million for ALMOs and £1.4 billion through PFI credits. That will take the overall real increase in investment through the public sector between 1997 and March 2006 to 55 per cent.

§ Lynne Jones
Does my hon. Friend believe that there is a cat in hell's chance of meeting the decent homes target in Birmingham on current resources? Does she not realise that the only way in which the council plans to move towards that target is through wholesale demolitions? We already have a homelessness crisis in the city—we might reach the decent housing target, but only by having hardly any homes, so the homelessness target will be way off the mark.

§ Yvette Cooper
There are two issues. One is about expanding social, affordable housing across the country. That is important, and we are discussing it as part of the spending review and in the context of the Barker review. We certainly agree that social housing needs to be expanded. We inherited two challenges in 1997: to increase and expand social housing, but also to invest in the existing housing stock, which we cannot simply ignore. That has left us with a huge backlog of capital investment. We have massively increased that capital investment, but we need to go further. We should be realistic about looking for different ways of raising resources to go into the housing stock because we inherited such a problem in 1997. Looking at the historic record, one sees that it is wrong to say that the Government have not supported or invested in council housing. We have made a massive increase in investment available to local authorities to put into their local housing stock.

§ Mr. Hayes
I want to get the record straight for the purposes of accuracy. The Minister said that the Government had two objectives: first, to improve the 96WH stock, and secondly to increase the number of houses. However, even within the lifetime of this Government, the number of social house completions has fallen, year on year: in 1999–2000, there were roughly 25,000; by 2002–03 the number was down to 20,000.

§ Yvette Cooper
The hon. Gentleman is well aware of the problem that we face. There were cuts in social housing and new building investment for every year under the last Conservative Government. We inherited a situation in which funding had been cut year on year. We have increased that investment, and changed where new houses are built to areas with the greatest housing need, such as south-east England, where house prices and construction costs are higher. We have had to deal with rising construction costs—recognised by everybody in the sector—that increase the cost of building new affordable homes. We have already doubled the funding for new affordable housing, but we need to go further—the Barker review was clear about that.

The hon. Gentleman wants to score political points on this issue, but I do not see where the additional houses would come from if the housing budget were cut by £400 million, which is his party's policy. We could not get the additional investment if the budget were cut in the way that Opposition Members have suggested.

I will try to deal with where the funding could come from, a point raised by a series of hon. Members. As I said, there has been a substantial amount of additional public investment through changes to public sector borrowing and investment from the taxpayer, but there is a limit on how much the taxpayer can fund and how much public sector borrowing can sustain. That is why it is essential to bring in private sector resources through stock transfer as well.

Some suggestions seem to have been made today almost in frustration at the nature of the public borrowing constraints and the PSBR. I understand those points, but, for very good Labour reasons, we have to take public finances seriously. We cannot simply find ways in which to redefine sums of money. As long as borrowing is effectively guaranteed by the Government in the long run, it counts as public borrowing and has an impact on interest rates and on confidence in the public finances.

§ Mr. Dennis Skinner (Bolsover) (Lab)
Does my hon. Friend not appreciate that that money has to be found at some point? She is young enough to be able to pay the bills; some of us might not be around. She and her family will be paying the bills.

Like my hon. Friend, I was unable to get here on time. I was speaking to a council leader in Bolsover about this issue. Is she aware of the effect of the constant reduction in opportunities for local authorities such as Bolsover district council? That is what really sticks in our gullet. Bolsover is not a metropolitan authority and has limited areas of operation. If it loses its housing, there will be hardly anything left. When the Tories were in power, many other things were taken away, but if housing goes, what does a small urban district council such as Bolsover function for? It will have the refuse collection and that is about it. That is the danger we face.

I want to impress on my hon. Friend the need to get back to local authorities having functions, because if they do not, the quango world will take over. I do not 97WH like the reference to social housing, because to me it is not that at all. This is about quangos and power being taken away from local authorities. That happened mainly under the Tories, but is being repeated under this Government to the extent that local authorities do not have the power to carry out many of those functions. Let us have the fourth option. Yes, I am favour of choice this time.

§ Yvette Cooper
I agree with my hon. Friend about the importance of local authorities being able to take decisions in their areas. We need to give authorities more flexibility and more powers to take all kinds of decisions. Authorities such as his and others throughout the country, including mine, can do a huge amount on some of the links between economic development and housing strategies throughout their areas. There is huge potential for authorities to do more in a way that they were not able to 10 or 20 years ago as a result of different policies.

I want to finish the point about the realities of our financial position. Sensible public finance rules have been critical to sustaining the economic growth that we have had over the past seven years. They have been critical to the jobs growth and the falls in unemployment that we have achieved in that time, which are making a massive difference in constituencies and deprived and disadvantaged areas throughout the country. We should be proud of those achievements, because playing games with the public finances, as the Tories did, was one factor that pushed the country into such terrible recessions, which did huge damage to our areas. For that reason, we must recognise the realities of the way in which the public sector borrowing requirement and the public finance rules work. It is right for us to look for other ways to raise funding. 98WH The stock transfer option has levered in £8.5 billion of private finance, of which £5.3 billion has been used to improve tenants' homes and the remainder to provide a receipt for councils.

§ Mr. Betts
Will not my hon. Friend accept that under the Chancellor's own golden rules, borrowing for investment is treated separately? That is what we are talking about: borrowing for investment. The logic of her argument is surely that there is a limit on the borrowing that ALMOs can do. Is she saying that some tenants will have no choice to remain with the local authority or to go with ALMOs and will have to go for stock transfer because that is the only option left to them?

§ Yvette Cooper
My hon. Friend has raised important points about ALMOs, which I wanted to come on to. I wanted to deal first with stock transfers and move on to ALMOs. He is right that ALMOs count in terms of public sector borrowing and local authority borrowing. In response to a question that he asked earlier, I can tell him that resources will be available for ALMOs that are set up over the next few years, as part of the spending reviews. The ALMO idea was developed because my right hon. Friend the Deputy Prime Minister was keen that we should develop further options for local areas and local tenants within the public sector.

As hon. Members know, the argument is that there is a strong case for separating out the strategic function from the management function for local councils to pursue. I appreciate that hon. Members may disagree with that, but that is the point of disagreement between us. A technocratic disagreement is preferable to concern about the principle and the intention. The intention is, for all of us, to improve decent homes and get more investment into all our affordable housing and to improve tenants' lives as a result.