HC Deb 24 July 2000 vol 354 cc397-403W
Mr. Gareth R. Thomas

To ask the Secretary of State for the Environment, Transport and the Regions what his plans are for housing investment in future years; and if he will make a statement. [132683]

Mr. Raynsford

I am pleased to announce that the Government's spending plans for 2001–02 to 2003–04, announced by my right hon. Friend the Chancellor of the Exchequer on 18 July 2000,Official Report, columns 219–29, provide extra investment of £1.6 billion a year for housing by 2003–04 compared to 2000–01. These extra resources confirm our commitment in the Housing Green Paper to ensure that everyone has the opportunity of a decent home. Our full spending plans are set out in the tables.

The settlement includes, over the three years: an additional £400 million for council housing placed in arm's-length management companies; support for the transfer of up to 200,000 homes each year from local authorities to housing associations; an additional £250 million for our new Starter Home Initiative; an additional £872 million for new social rented housing; an additional £120 million for a new Safer Communities Supported Housing Fund.

Total additional spending over the three years will be just over £1.8 billion. In addition, we will be boosting the Housing Private Finance Initiative, providing for an extra £600 million investment in council housing over the two years 2002–03 to 2003–04. This will bring total additional investment in housing over the three years to nearly £2.5 billion.

By 2003–04, annual capital investment in housing, excluding the Private Finance Initiative, will have risen to more than £4 billion. This compares with the planned capital investment we inherited in 1997 of just £1.5 billion for 1997–98, with further cuts proposed by the last Government for 1998–99 and 1999–2000. We acted swiftly to tackle past and planned under-investment. Our Capital Receipts Initiative provided nearly £800 million extra in 1997–98 and 1998–99. Through our 1998 Comprehensive Spending Review, we provided an additional £3.9 billion for the years 1999–2000 to 2001–02 so that, in 2001–02, capital investment in housing will be double the amount we inherited.

In the 2000 spending review, we have looked closely at our priorities for housing in the context of our Housing Green Paper and the many initial comments we received in response to it. We concluded that, despite the higher levels of investment planned in 2001–02, additional resources would be needed to fulfil the commitments in the Green Paper. The extra resources we are making available over the next three years are on top of the planned funding level for 2001–02 agreed during the 1998 Comprehensive Spending Review.

Our new spending plans will help to ensure that we meet our Green Paper commitment to bring all social housing up to a decent standard within a decade, with a third of homes that currently fail to reach those standards improved by 31 March 2004.

We are providing an extra £400 million for investment in local authority-owned housing. In line with the Green Paper proposals, we are putting that, together with £60 million of existing resources, into a special pot of £460 million, available to authorities which have set up arm' s-length management companies and demonstrated excellence in their performance under the new Best Value regime. In this way, we are rewarding good performance as well as encouraging authorities to separate their landlord from their strategic function. We expect that the money available will result in improvements to approaching 100,000 homes by 2003–04.

Within the Housing Revenue Account for local authority housing we are providing a Major Repairs Allowance as part of a new, more business-like financial regime. The Major Repairs Allowance will be £1.6 billion in 2001–02. In future years, the amount per dwelling will be up-rated in line with inflation. We expect the total amount to be £1.5 billion in 2003–04 and £1.4 billion in 2003–04, reflecting the reduction in the number of local authority dwellings as a result of stock transfers and Right to Buy. These amounts will be drawn from the total provision for capital expenditure by local authorities.

We also propose that management allowances will rise by 2 per cent. in real terms in each of the years 2002–03 and 2003–04. Maintenance allowances will be up-rated in line with inflation over the same period.

Taken together, we believe these measures will provide authorities with the resources and the freedom to manage their housing assets more effectively.

As the Green Paper stresses, the transfer of council housing to housing associations will play an important part in bringing social housing up to decent standards, in separating authorities' strategic and landlord functions for housing, and in creating a more diverse range of social landlords. We have made provision in our spending plans to support the transfer of up to 200,000 homes each year from 2001–02, where proposals have the backing of tenants. We are conducting a review of the stock transfer process. We will be setting up a new Community Housing Task Force to assist local authorities and tenants to carry forward transfer as part of a reformed process. The task force will help to ensure that new social landlords created by the transfer process empower tenants and regenerate communities.

The Private Finance Initiative is another important option for improving local authority housing. Currently, there are eight authorities testing this approach through pathfinder schemes. Our new spending plans provide £160 million in 2001–02 to fund the existing pathfinders, with an extra £600 million over the following two years to fund new schemes.

The provision of affordable housing is a vital part of our strategy for ensuring that everyone has the opportunity of a decent home. We believe that local authorities are best placed to assess the need for affordable hosing in their areas and to reflect those assessments in their housing strategies, their investment plans and in the implementation of planning powers for affordable housing.

We have already acted to put that policy in place.

We did so through the 1998 Comprehensive Spending Review, increasing the resources available to local authorities for housing investment, including investment in new affordable housing. We also increased the scope available to them to reflect local priorities in their investment plans, through the creation of a single pot for housing capital expenditure. We were able to halt planned cuts to the Housing Corporation's investment in new affordable housing. We have also encouraged the Corporation to strengthen the links between its investment decisions and the priorities of local authorities at regional and local levels.

Our recently revised planning guidance for housing (PPG3) reinforces the powers available to authorities to seek the provision of affordable housing as a proportion of new private developments, complementing public investment. We will be issuing best practice guidance to help authorities to make more effective use of these powers in future years.

These policies are helping to deliver more affordable housing and to ensure that homes are provided where they are needed most. However, we do not believe that this is sufficient. Local authorities and housing associations in urban and rural areas of high demand have impressed upon us the difficulties they face in improving existing poor condition housing for their tenants, while at the same time providing decent homes for families in need of affordable housing.

We have taken account of these representations in the spending review and will increase funding through the Housing Corporation's Approved Development Programme. Ahead of the spending review period, we are providing an additional £50 million this year. This will be followed by an extra £872 million between 2001–02 and 2003–04. Our new spending plans will result in investment through the Approved Development Programme nearly doubling from planned expenditure of £691 million in 2001–02 to £1,236 million by 2003–04. This will allow increased provision of affordable housing in both urban and rural areas. We expect to see increasing use of modern construction techniques and greater efficiency in line with the Construction Task Force report.

Most people aspire to home ownership, and nearly 70 per cent. of households in England own their own homes already. However, despite relatively low interest rates and a stable economy, high house prices in some areas can act as a barrier to home ownership for people on lower incomes. Our Housing Green Paper recognised the need to expand our existing programme of support for low cost home ownership, particularly to help key workers who need to live close to the communities they support. Through our Green Paper, we are consulting on proposals for a new Starter Home Initiative to help key workers to achieve home ownership in high price, high demand areas. Our spending plans provide an additional £250 million between 2001–02 and 2003–04 to support low cost home ownership. We will announce details of the Starter Home Initiative in the light of responses to the Green Paper.

Increased funding for the Housing Corporation's Approved Development Programme and the new Starter Home Initiative will significantly increase the provision of affordable housing. Local authorities will continue to be able to complement Housing Corporation and Starter Home Initiative investment from their own capital allocations, in line with their own local housing strategies. Their funding decisions will influence the total level of affordable housing provision across England.

The spending review has also underlined the importance of supported housing. Our new Supporting People programme will come into effect in 2003–04, providing an integrated policy and funding framework for support services for vulnerable households. We will be providing revenue funding of £153 million between 2001–02 and 2003–04 to ensure the effective implementation of Supporting People.

In the run-up to implementation, we have also decided, in line with the Government's commitment to reducing crime and protecting the vulnerable, to provide £120 million additional capital funding for a new Safer Communities Supported Housing Fund, together with associated capital funding for a new Safer Communities Supported Housing Fund, together with associated revenue support of £17 million. This will provide new housing and support for young people at risk and other vulnerable people, such as those fleeing domestic violence. It will also provide housing and support for ex-offenders and people with drug or alcohol problems. The fund will be administered by the Housing Corporation, and will be conditional on local authorities providing matching capital funding for housing provided in their areas. Projects must also have the full support of the local crime and disorder partnership. More details of this scheme will be announced in the autumn.

Disabled Facilities Grants fund adaptations to enable disabled people to live with dignity in their own homes. We are providing an extra £39 million over the three years for these grants, increasing funding to £88.8 million by 2003–04.

Home Improvement Agencies play an important role in helping elderly and vulnerable home owners to maintain and improve their homes. We are providing an extra £6 million in grants to local authorities for Home Improvement Agencies over the next three years.

Our new spending plans include a total of over £200 million over the three years to prevent rough sleeping throughout England and to help former rough sleepers rebuild their lives through education, training and employment. These resources will ensure that, having achieved the Government's target of reducing the level of rough sleeping by at least two-thirds, those reductions can be sustained.

Table 2: Planned spend for 2001–02 prior to 2000 Spending Review and total spending plans up to 2003–04
£ million
Plans agreed prior to review Total spending plans
2001–02 2001–02 2002–03 2003–04 Totals
Local authority capital 2,305 2,305 2,465 2,545 7,316
Of which:
Housing basic credit approvals 2,305 705 793 842 2,341
Arm's-length management companies 0 0 160 300 460
Major Repairs Allowance 0 1,600 1,512 1,403 4,515
Housing Corporation 890 995 1,158 1,460 3,614
Of which:
Approved Development Programme including ERCF (capital) 691 789 940 1,236 2,966
including Rough Sleepers Initiative capital of 24 24 24 24 71

Our spending plans will help to improve the quality of housing and the support we provide for the most vulnerable members of society.

In addition to quality, choice is a key theme of the Housing Green Paper. By improving the quality and supply of housing, we will also improve the choices available to people as home owners or tenants.

We are also keen to encourage local authorities to introduce more customer-focused lettings schemes which given tenants a greater choice over where they live. Over the next three years, we will be providing £11 million to support pilot schemes involving local authorities and registered social landlords which test choice-based lettings policies.

We are about to conduct extensive research into the availability and quality of local authority gypsy sites. The results will be considered as part of the next spending review. In the meantime, we are making available £17 million over the next three years to help authorities to improve and refurbish a limited number of sites, as part of the Government's policy to discourage unauthorised camping and all the problems associated with it. We will publish details of the scheme in the autumn.

Our aim is to ensure that everyone has the opportunity of a decent home. Our Housing Green Paper sets out our strategy for meeting that aim. Our new spending plans provide the resources necessary to deliver it. This money, together with the additional resources being made available in other programmes, ensures a major contribution to the renaissance of our cities and countryside, which will be highlighted in our Urban and Rural White Papers. Spending Review 2000 Housing

Table 1: Planned spend for 2001–02 prior to 2000 Spending Review and additional spending plans up to 2003–04
Of which:
Housing departmental expenditure limit (DEL) Total capital expenditure Total current expenditure
Plans agreed prior to review
2001–02 3,552 3,072 480
Additional spending
2001–02 128 148 -20
2002–03 645 549 96
2003–04 1,085 945 140
2004–05 1,858 1,642 216

Table 2: Planned spend for 2001–02 prior to 2000 Spending Review and total spending plans up to 2003–04
Plans agreed prior to review Total spending plans
2001–02 2001–02 2002–03 2003–04 Totals
Current expenditure 199 206 218 224 648
including Social Housing Management Grant of 145 145 157 162 463
including Rough Sleepers Initiative current expenditure of 18 18 18 18 54
including Innovation and Good Practice Grant of 6 7 9 10 27
Starter Home Initiative 0 50 100 100 250
Large Scale Voluntary Transfer Pool 86 86 196 211 492
Supporting People 0 20 55 78 153
Safer Communities Supported Housing Fund 0 22 45 70 137
Disabled Facilities Grant 75 87 88 89 263
Home Improvement Agencies 7 9 9 9 26
Rough Sleepers Unit and homelessness 30 30 30 30 91
Lettings pilot schemes 0 6 4 1 11
Tenant Participation Grant 6 6 6 6 19
Neighbourhood wardens 0 2 3 5 10
Other housing expenditure 152 64 42 43 149
Total housing (Departmental Expenditure Limit) 3,552 3,682 4,201 4,647 12,530
Private Finance Initiative for Housing 160 160 300 300 760
Housing Revenue Account Subsidy1 3,096 3,106 3,025 2,958 9,089
1 Annually Managed Expenditure

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