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Mr. Tony Banks : I know the reason, too. My hon. Friend will agree that it is because public property is considered second-rate and, if necessary, is virtually given away, while private property is sacrosanct. We have seen how the right to buy has been perverted by the Government. Does my hon. Friend agree that it is even more perverse when a specially adapted house is sold to someone who has no need of the facilities and clears them out? They are completely lost to people who could put them to good use.

The Minister was not in the Chamber earlier when we discussed the GLC seaside and country homes. As those homes have been sold, they are no longer available to old people in London to go and enjoy the seaside and country air.

Mr. Cryer : At one time the Government recognised the strength of my hon. Friend's argument. They did so in the 1980 Bill, when they decided to exclude all dwellings designated for elderly people. It was only subsequently that they decided to cast the net more widely, with the result that expensive fittings--which we do not begrudge--were lost to local authorities and future generations. My hon. Friend is right when he says that public housing is regarded as something to be looted.

Mr. Banks : Public assets.

Mr. Cryer : Indeed, public assets.

The Labour party has always had a tolerant view of a local authority's right to sell some of its housing stock and has recognised that there is a demand to buy. However, we maintain that it should be at the discretion of the local authority. The Government say that local authorities cannot make the decision because, for doctrinaire reasons, some will not sell off any of their stock. The local authority should judge whether there is a surplus of housing. I was a councillor on Keighley municipal borough council, which had a surplus of housing. The Labour group agreed with the Conservatives that some housing should be sold. Nobody was harmed because plenty of property for rent was available to people on the waiting list, who had the chance to obtain decent quality housing at a relatively low rent, quickly. The position has now completely changed. Part of that change is attributable to the Government's

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policy to sell public housing and not to allow local authorities to judge what is in the best interests of the community.

A group of Right-wing extremists is temporarily in control of Bradford council. It will not be there after the next elections in May. It is a matter of pride to them that the council is not building new council houses to replace those sold. A policy of replacement is necessary if we are to retain public-sector housing for rent. Bradford council has no replacement policy because of doctrinaire commitment. Are the Government serious about generating a housing policy that will provide for people who cannot afford the deposit on a house?

Such people may not have £2,000, £3,000 or £4,000 to hand because they live from week to week, struggling to pay their bills. They do not have surplus capital, not because they are spendthrifts but because they have a poorly paid job, for example in catering, and use all their income to pay their bills. If they have young children, they have to make provision for them, which is very costly. The choice that the Government say that they have given to people is not available to those who do not have much money. The more money one has in one's pocket, the wider the choice. If one had £50,000, one could buy any make of car--from a mini or a deux chevaux up to a Rolls-Royce. If one has only £5 in one's pocket, there is no choice. One cannot buy a car.

It is just the same with housing. If one has £50,000 in one's pocket, it might buy a terraced house in a town in the north, such as Bradford, although prices there have rocketed because of the Government's policies. One could perhaps buy former council houses for £15,00 to £20,000 ; the price would vary according to the location. However, if one has only £5 in one's pocket, it is impossible to find the deposit to buy a house.

There is no choice. All one can do is get a rented house from the public sector. I emphasise the public sector because the Government have acknowledged that the quality of private sector housing for rent has diminished. The quality of private sector housing is highly variable. The Government dismantled the fair rent legislation and they are preparing the way for market rents.

8 pm

In recognition of the changed circumstances, the Government are seeking powers for the Secretary of State to say to landlords, "You can't sell this property because it does not meet the criteria that have been laid down in the new clause." This is highly specialised property, with the special and expensive adaptations to which my hon. Friend the Member for Newham, North- West (Mr. Banks) referred. These circumstances apply to housing in general. Therefore, the provisions should not be confined to housing that is suitable for persons of pensionable age.

No persons of pensionable age have approached me regarding the possibility of purchasing their flat or bungalow. The reason is that persons of pensionable age would have great difficulty in buying their property. If they are 70, they are unlikely to be given a 20 or 25-year mortgage ; it is unlikely that they will be there to pay the mortgage over 20 or 25 years. Most of them do not have much capital. Those who have some capital want to keep it. They do not want their nest egg to be used up on repairing a property that they have had to buy. That can be expensive. The provision of facilities to persons of pensionable age to buy their dwellings is the result of a

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doctrinaire policy. The Government are divorced from reality. They do not know what people's housing needs are. It is not a question of what people want. People want different things. Most people, however, need a house that is in reasonable condition.

That must seem a very modest aim to many Conservative Members. It is not, however, a modest aim to the constituent to whom I have referred. She has three children, sleeping on the floor. They are at school temporarily. She wants to move to another area, so she does not want them to settle down in any particular school. The housing shortage leads to uncertainty and difficulties for the children. They are unable to mingle with their peers at school just because the local authority may make an offer to house the family in two, six or 10 months time, depending on the number of houses that are available.

The modest requirement of decent housing at a fair rent would be very much welcomed by millions of people who cannot afford to buy their homes. I hope that, belatedly, the Government have recognised that their housing policy is leading millions of people into severe difficulties. I hope, too, that even now it is not too late for them to change their policy, which has caused so much despair.

Mr. John Home Robertson (East Lothian) : I apologise to the Under- Secretary of State for missing his speech. I saw his name on the annunciator in my office and came rushing into the Chamber, but he must have made an uncharacteristically brief contribution. He will be aware, however, of my long-standing interest in housing in Scotland, following our fairly lengthy debates in Committee and in the Chamber on the Housing (Scotland) Bill--now the Housing (Scotland) Act--last Session.

The Opposition have constantly pressed the Government to address the real housing needs and priorities of the people of Scotland. However, there has been no Government response. They have introduced the right to buy and they call that a housing policy. There is a housing crisis in Scotland. About a quarter of the population live in overcrowded accommodation. About 30,000 people become homeless in Scotland each year and have to apply to the local authorities under the homeless persons legislation. There are nearly 200,000 people on local authority housing waiting lists in Scotland. That is a housing crisis, and councillors and Members of Parliament in Scotland come face to face with it in their constituencies, week in, week out. Unfortunately, however, Scotland has a Government who are not elected by the people of Scotland. I suppose, therefore, that the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton) and his colleagues do not realise how important it is to deal with the crisis. The homeless, those on low incomes and those in overcrowded accommodation might like to buy their houses but the right to buy will not overcome their serious, immediate problem : the right to rented housing, the right to have a decent roof over their heads, the right to security. In many cases, the Government are taking those rights away from them.

The right to buy, which we are extending by means of the amendments to which the Minister referred, will encourage more people who might not particularly want to own their own homes to purchase them. I am thinking in particular of former Scottish Special Housing Association tenants, 80,000 of whom are now Scottish Homes tenants.

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They are worried that Scottish Homes will hand them over to the private sector. In many parts of Scotland there are bad memories of private landlords. However, they feel that because of the incentives that the Government are offering they would be crazy not to buy their houses. In the coming months and years, though, they may find it very difficult to cope with the costs of home ownership, insurance and repairs. They are almost being trapped into home ownership. In many cases that may prove to be a burden in the long term because of the dynamics of the Government's housing policies.

The right-to-buy policy makes sense for those who can afford to buy their houses, but that is not a housing policy ; it is a home ownership policy. The Government refuse to address themselves to the problems of people living in overcrowded and bad accommodation and, above all, to the homeless, who are stuck on local authority waiting lists and have no prospect of obtaining accommodation. The right to buy at a discount, which the Government are pursuing so doggedly, is not a policy but a diversion.

A responsible Government in Scotland should be addressing the need for housing for our people and ensuring that houses are built, improved and made available to those who need them. We are still awaiting such a policy, and I fear that we may have to wait until a Labour Government take office here or in the Scottish Parliament in due course.

Mr. Allen McKay (Barnsley, West and Penistone) : This is part two of the equation that I mentioned yesterday when we were debating rents. It involves the destruction of a good housing policy by the policies of the Government and their ideological pursuit of home ownership.

I told the Minister yesterday that my local authority promotes home ownership and helps in every way that it can. It protested against the right to buy--the Minister is well aware of its reasons for doing so--but once it became law it sold its council houses.

Some of the problems that I foresaw when we were debating the Bill in Committee have now occurred. People have bought their homes but, unfortunately, have discovered that they cannot afford them. Once again, they are asking the local authority to rehouse them because of foreclosure on their mortgages. In Committee, I said, "For heaven's sake include provisions in the Bill to ensure that that does not happen. Local authorities should be able to repurchase the houses that they sell." The Government did not take any notice ; local authorities have been powerless to repurchase houses and they have had to be sold on the open market.

About 16 or 17 per cent. of my local authority's housing stock has been sold, but in other areas the figure is as high as 34 per cent. Not surprisingly, the 34 per cent. of the houses that have been sold are the most desirable. If the Minister wants the figures, I have them here.

The Government are now proposing the sale of aged persons' dwellings. They believe that aged persons should have the same right to buy as anyone else. From their point of view, that is admirable, but once again the policy will cause problems. Every bungalow or aged person's flat that is sold on the open market means that someone will not achieve their dream of having a local authority aged person's bungalow or flat. In the rural areas of my constituency, Airey-type dwellings have had to be pulled down and the local authority has replaced them not with houses but with stone-built bungalows overlooking the

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Cawthorn Baison, which has one of the most marvellous views of Yorkshire. The value of those bungalows on the open market must be tremendous, and under the Government's policy they will have to be sold off. However, there are insufficient houses in the area and the children of families resident in the area are having to move away as a result. The more houses that are sold off, the worse the problem becomes. Not a single aged person's bungalow should be sold because it deprives someone of the opportunity of such housing, unless enough money is provided for a replacement. The Government made that mistake with council houses, but they should not repeat it with bungalows. 8.15 pm

Figures for house building in my local authority show that in 1979-80 449 private houses, 297 council houses and 27 housing association dwellings were built, making 773 in total. In 1987-88, 347 private houses, no council houses--because of Government policy--and 56 housing association dwellings were built, making a total of 403. There has been a 50 per cent. drop in house building, but, at the same time, a 54 per cent. rise in the number of homeless people.

The Government have not a housing policy but an ideological hatred of council housing. They hate the idea of councils being housing authorities. They wish to get rid of council housing and leave only sheltered accommodation, part III accommodation and accommodation that they can sell off.

The Government have ruined the history of council housing, the history of housing in general and have hurt hundreds of thousands of people, who will not forget.

Question put and agreed to.

Amendment made in lieu of the Lords amendment : (a), after clause 146, insert the following new clause-- Exception to the right to buy in case of certain dwelling-houses for persons of pensionable age.-- .--(I) In Schedule 5 to the Housing Act 1985 (exceptions to the right to buy), for paragraph 11 (certain dwelling-houses for persons of pensionable age) there shall be substituted the following paragraph--

"11.--(1) The right to buy does not arise if the Secretary of State has determined, on the application of the landlord, that it is not to be capable of being exercised with respect to the dwelling-house. (2) The Secretary of State shall so determine if, and only if, he is satisfied that the dwelling-house--

(a) is particularly suitable, having regard to its location, size, design, heating system and other features, for occupation by persons of pensionable age, and

(b) was let to the tenant or a predecessor in title of his for occupation by a person of pensionable age (whether the tenant or predecessor or another person).

(3) The Secretary of State shall for the purposes of this paragraph disregard the presence of any feature provided by the tenant or a predecessor in title of his.

(4) An application for a determination under this paragraph shall be made within the period for service of the landlord's notice under section 124 (notice admitting or denying right to buy).

(5) This paragraph does not apply unless the dwelling-house concerned was first let before 1st January 1990."

(2) Subsection (1) above does not apply in any case where the tenant's notice claiming to exercise the right to buy was served before the day on which this section comes into force.

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(3) For the purposes of subsection (2) above, no account shall be taken of any steps taken under section 177 of the Housing Act 1985 (amendment or withdrawal and re-service of notice to correct mistakes).'.-- [Mr. Howard.]

Consequential amendment made : (b), in page 146, line 3, after 146' insert

(Exception to the right to buy in case of certain dwelling-houses for persons of pensionable age)--[Mr. Howard.]

Lords amendment No. 272 disagreed to.

Lords amendment No. 278 agreed to.

Lords amendment No. 279 disagreed to.

Amendment made in lieu of the Lords amendment : (a), after Clause 154 insert the following new Clause--

Sale to secure tenants of houses provided for persons of pensionable age : Scotland. In section 69 of the Housing (Scotland) Act 1987. (Secretary of State's power to authorise refusal to sell certain houses provided for pensions of pensionable age) after subsection (1) there shall be inserted the following subsection "(1A) This section applies only to houses first let on a secure tenancy before 1st January 1990.".'.-- [Mr. Howard.]

Lords amendments Nos. 280 and 282 agreed to.

Lords amendment : No. 269, before clause 145, insert the following new clause--

Housing accommodation " .--(1) Part II of the Housing Act 1985 (Provision of Housing Accommodation) shall be amended by the inclusion of the following section after section 32--

"32A--No condition shall be attached by the Secretary of State to the payment of grant to a local housing authority, or to the giving of a consent to :

(i) the disposal of land, or

(ii) the use of funds, or

(iii) the payment of grant to a housing association

by a local authority, which would require such authority or housing association to grant occupiers a right to acquire the full equity or any specified share of the equity of any dwelling which is constructed in a rural parish with a population of 3,000 people or less."

(2) Part II of the Housing Act 1988 (Housing Associations) shall be amended by the inclusion of the following section after section 50--

"50A--No condition shall be attached by the Housing Corporation to the payment of grant to a housing association or to the giving of consent to the use of funds by a housing association, which would require such housing association to grant to occupiers a right to acquire the full equity or any specified share of the equity of any dwelling which is constructed in a rural parish with a population of 3,000 people or less."

Mr. Howard : I beg to move, That this House doth disagree with the Lords in the said amendment.

We heard repeatedly in the previous debate the accusation that the Government had no housing policy save the right to buy. I said during questions this afternoon that our planned public spending on housing over this and the next two years amounts to nearly £13 billion. Against that massive programme, the allegation that we have no housing policies save the right to buy does nothing save demean political debate and bring our discussion into disrepute. Lords amendment No. 269 aims to retain local housing in rural areas for those who need it. We agree with its objective, but we propose to achieve it in a slightly different way. Our policy is that shared owners who own part of their home and rent the remainder should be allowed to become full home owners. The amendment would prevent either the Secretary of State or the Housing Corporation from insisting that publicly assisted shared

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ownership schemes should give shared owners that opportunity. It applies to rural parishes of fewer than 3,000 people.

We recognise the strong concerns that have been expressed on both sides of the House about the need to provide and retain low-cost housing for local needs in rural areas. The Government produced a repurchase scheme designed to ensure that housing associations could keep properties in rural areas in the low-cost housing sector, but there was legitimate concern that the proposal might not work satisfactorily. The Department has been working with those most closely involved to see how we can improve the scheme. As a result of those discussions, we have come up with improved arrangements which I shall invite the Housing Corporation to implement.

We have benefited from the views of a number of colleagues, notably my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling). I am sorry that I was not in my place this afternoon during his speech. My right hon. Friend was entitled to claim a considerable victory. I pay tribute to his persistence and to the

characteristically resourceful way in which he has pursued his campaign over a lengthy period. We have benefited from the views of many in the other place, in particular Lord Stanley, Lord Carter, and Lord Vinson. I am happy to tell the House that the arrangements that I am about to describe have the full support of the Rural Development Commission, the National Agricultural Centre's Rural Trust, the National Farmers Union and the Country Landowners Association. The first point that concerned people was whether the money to pay for the shared ownership property would really be available from the Housing Corporation when it was needed. I can give the House an assurance that the corporation will fund, on demand, housing associations that want to repurchase properties within this scheme. It will do that with the full authority of the Government from its approved development programme.

Of course, a generalised undertaking needs to be applied to the particular properties in question. The corporation will therefore make it clear in writing, when a property is first accepted into the scheme, that the repurchase arrangements will apply. Therefore, in addition to the general undertakings which I am giving now and which the corporation will give, there will be a site-specific undertaking, indicating that the shared ownership housing on a particular site is subject to the repurchase arrangements that I have described. The amount of Housing Corporation funding will normally be that which is necessary to enable the property to be resold for shared ownership, with the new shared owner buying the same proportion of equity as the first shared owner had originally bought. In appropriate cases, the corporation will be prepared to consider making additional grant available so that the new purchaser can acquire a lower share of the equity.

Sir Peter Emery (Honiton) : My hon. and learned Friend has said that the new owner should be able to obtain the same proportion of equity as the previous owner. Will he be able to do so at the same price as the previous owner? Many people are worried about the fact that, although the same proportion may be made available, the price may have escalated, because of the increase in value, to such an extent that cheap housing is no longer available.

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Mr. Howard : That would very much depend on the circumstances in which the housing was made available. It is true that there may have been an increase in the price. As my hon. Friend will appreciate, in all shared ownership schemes, the subsidy goes to the part of the share that is rented and not to the part that is purchased. If the house were originally on land that was made available for a particular scheme at low cost, or at no cost, and were subject to a covenant whereby it should remain available only to local people on low incomes--there are ways in which this objective, which I know my hon. Friend holds dear, can be achieved--although I cannot say that there would be no increase in the price, the price would certainly reflect those special arrangements.

Mr. Soley : Much of my worry is about the market price. A housing association will, in a sense, lose a certain amount of money and need to make it up when it rebuys the property at the new market price. The Government need to be clear about this point. Will they make sure that the housing association can repurchase at the market price without losing its funds in any way? That is crucial.

Mr. Howard : The hon. Gentleman will appreciate from the answer that I gave my hon. Friend the Member for Honiton (Sir P. Emery) that the market price reflects all the relevant circumstances. The fact that a property is subject to the kind of covenant to which I referred when dealing with my hon. Friend's point will be reflected in its market price.

Concern has been expressed that the funds that the Housing Corporation would need to operate the repurchase scheme could reduce the number of projects allowed into the scheme in the first place or could erode the amounts available for rural rented housing. I assure the House that repurchase funds will not be found from the amount set aside within the Housing Corporation's programme for rented accommodation or shared ownership in rural areas--the point on which my right hon. Friend the Member for Westmorland and Lonsdale placed particular stress.

The Government strongly support the case for an expanding programme of low- cost housing in rural areas. I am inviting the Housing Corporation to propose a significant increase in its special rural programme for rented housing, to allow 1,000 approvals next year, 1, 200 in 1991-92 and 1,500 in 1992-93. I am inviting the corporation to identify separately, for the first time, a rural element within its low-cost home ownership programme, to allow 250 approvals next year, 300 in 1991-92 and 350 in 1992-93. Neither of those approval targets will be affected by the demands for repurchase funds.

The localities to which the repurchase scheme applies are wider than those proposed by my right hon. Friend the Member for Westmorland and Lonsdale when we debated this subject in the summer. The scheme will apply in areas eligible for investment under the corporation's special rural programme. That is primarily targeted on settlements in rural areas with fewer than 1,000 people, but that is not intended to be an absolute cut-off point. It may be appropriate for the pre-emption scheme to apply to properties in rural areas with a greater population. It is important that there should be a measure of flexibility at the margin, and the corporation will consider all such cases on their merits.

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The scheme will apply also in rural areas other than those within the special rural programme where the site has received planning permission specifically for the development of low-cost housing for local needs and is covered by a section 52 or similar agreement. It will apply also where a private landowner has made a site available on condition that it is retained for low-cost housing--the kind of circumstances to which I referred in answering my hon. Friend the Member for Honiton.

Some people have been worried by the fact that a housing association has a right to purchase, but not an obligation. They point out quite fairly that if there is a chance of an association not exercising its right, landowners may be reluctant to give land in the first place or local authorities may not feel able to grant planning permission. Where local authorities or landlords are worried about this point, the solution is to enter into a covenant and/or make a section 52 agreement to oblige the association to exercise its right to repurchase. They can do that in the full knowledge that the funds will be available from the corporation to enable the association to meet its undertaking.

We shall, of course, be monitoring the operation of the scheme. We shall want to review its workings after a suitable period. We believe that the improved repurchase scheme and the substantially increased programme for rural housing are important new elements in the Government's drive to meet local housing needs in rural areas. Those who promoted the amendment believe that as well. With their agreement, therefore, I ask the House to disagree with the Lords in amendment No. 269.

Mr. Soley : This is an important debate which will predominantly affect hon. Members who represent rural constituencies. My complaint about the Minister's lack of a housing policy is quite correct because the amount that we invest in housing is now one of the lowest in western Europe. We should not be having a debate on the problem in rural areas if the Government had not failed to develop a proper housing policy. It is precisely because of that failure that I have been able to point out consistently over the past few years that our housing crisis is no longer primarily an urban or inner-city crisis, but a national crisis which is hitting the rural areas. I know that some Conservative Members are seeking to catch your eye, Mr. Deputy Speaker, and I shall ensure that they have time to do so by keeping my remarks brief. The fact that they are trying to catch your eye shows the level of seriousness of the housing crisis in rural areas. 8.30 pm

When the Government said last year that they planned to increase the number of housing association schemes, it sounded like good news, but when we looked at the small print we found that "schemes" meant only 600 new houses or flats throughout the rural areas of England. No Conservative Member-- least of all the Minister--can believe for a moment that that will meet the needs of the rural areas. As I have often said, the Government made the fundamental error of ending council house provision as it used to exist and cutting it back until only 5,000 or 6,000 units per year were being built, without providing an alternative. As I have also often said, the private sector is unable to provide and is continuing to collapse.

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The Government did a bit of an about-turn a couple of years ago by beginning to put funds back into housing associations, but even now, when additional funds have begun to flow in, the housing association movement is still not providing the same number of homes as in the mid-1970s and is only just beginning to get back to that figure. Even in a few years' time--for the moment, I am sticking to the rural areas--the housing association movement will not be providing enough accommodation to make up for the loss in the council sector. That is why the right hon. Member for Westmorland and Lonsdale (Mr. Jopling), and the hon. Members for Honiton (Sir P. Emery) and for Taunton (Mr. Nicholson) are in trouble in their areas. That is why people in those areas are saying that their sons and daughters cannot find anywhere that they can afford to rent or buy and that is why the local work force, such as postmen, nurses, teachers and bus drivers, are saying that they cannot find anywhere to rent or buy at a price that they can afford. That is the housing crisis in rural areas. The shared ownership scheme has a small but important part to play. Most--if not all--political parties have always accepted that the shared ownership scheme is useful in helping people to bridge the gap between renting and owning, and we all want to encourage that scheme.

I note that the Lords amendment refers to

"the full equity or any specified share of the equity". The Government are trying to persuade the right hon. Member for Westmorland and Lonsdale to accept what for him is a compromise. I must be careful. I accused the right hon. Gentleman on Report of not being prepared to press his amendment to a Division, but in fact he did so and he had my full respect for that. The compromise now concerns the amount of the equity and, more importantly, the small print of the deal, to which both I and the hon. Member for Honiton have referred in interventions.

There is understandable anxiety that the housing association may not be able to ensure that it receives back the full amount of money to enable it to repurchase at the price that is being asked at that time. In other words, we must allow for house price inflation because, although we are now going through a slight flattening of the inflation curve on house prices, they are still going up and we know that they will probably go up quite steeply from the end of next year. The housing associations will be asked to pay that price at that time. If they cannot do that without drawing on their reserves, as a result of the tight squeeze they are in and the fact that they are being pushed by Government policy towards private sector finance, they will try to find ways of avoiding doing that. They will at least want to hold the Government to their commitment to fund them in some way.

I notice that the Lords have tied their amendment to rural parishes with a population of 3,000 or fewer. I suspect that the problem goes wider and is affecting all rural areas. I also suspect that the problem for housing associations is the complex relationship that develops on the market price when they come to repurchase and, as the Minister himself acknowledged and as was mentioned in the Lords amendment, the question of the disposal of land price, the use of other funds and the payments of the grant at the time. The housing associations may have a deal, with the land price having an effect on that, but if the Government's price simply takes that into account without giving the housing associations sufficient funds to buy back the property at the price at the time without loss

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to their reserves, the housing associations will want to avoid such repurchases or, if they are forced to do so, will do so only at the expense of further housing investment in that area.

Such investment may not necessarily be in new housing because it may be investment through repair and renovation schemes. Housing associations may deal with the problem by making up the money through other people's rents. If they do that there is a danger. Let no Conservative Member think that any extra money that the housing association has to find itself can be lost in rents without causing problems. Housing association rents went up last year by 24 per cent. We all know that they will go up again next year and, almost certainly, the year after, unless the Government change the rules that they have introduced. The housing associations are being asked to operate the shared ownership scheme, which is neither cheap nor an easy option. We must remember that the price people are being asked to pay is closer to a mortgage than a rent in most cases, which is one of the problems for people who get into difficulties changing a mortgage into a shared ownership scheme--which many of us would like to see. The difficulty is that the payments are often close to the amount of a full mortgage. Housing associations cannot pass on any surplus that they have picked up in rent without pushing up rent levels generally.

I urge Conservative Members who are interested in this subject to think carefully about the wording and to hold the Government tightly to what appears, on paper, to be a tolerably good commitment to fund the associations. When one looks at the small print, one sees that housing associations will either have to find some extra money from their reserves and squeeze their building, repair and renovation programmes or lose the money in a rent increase. If they do not do that, they will try to avoid buying back because they will not receive the funding that they expected from the Government. I am deeply disturbed by the Government's proposal and I should have thought that it would have been best to accept the Lords amendment. It is worth reminding the House that some 111 Members of the House of Lords voted for the amendment, with only 38 against ; some 10 Tory Members of the House of Lords supported the amendment, as did a significant number of Cross Benchers and a couple of bishops. It would be unwise for the Government to throw out the amendment without bearing in mind the fact that the issue attracted cross-party support in the Lords or without considering the cautionary note I have sounded. I advise the House to agree with the Lords amendment.

Sir Peter Emery : I understand the concern expressed by the hon. Member for Hammersmith (Mr. Soley), which many of us have voiced. I congratulate my right hon. Friend the Member for Westmorland and Londsdale (Mr. Jopling), who brought this matter to our attention and pursued it in a proper and reasonable manner. We have been able to show the degree of flexibility of Government policy and of Government Ministers, which many of us have always believed to exist, although Governments are frequently not given credit for being flexible. We have certainly got much further with the Government than would have appeared obvious from the then Secretary of State's reply on a certain night, which did not even seem to understand the problem, let alone begin to meet it.

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The Government's solution has gone through the hoops--it has been closely examined by the Country Landowners Association and by the National Farmers Union. A Minister who can get those two bodies together and persuade them to welcome and agree on recommendations is not doing badly, and I congratulate my hon. and learned Friend on having achieved that. As my hon. and learned Friend said, the solution should be monitored. We must make certain that it does what the Government and what those of us who have been pressing them want it to do.

The decrease in the amount of local housing in agricultural areas is a major worry, as is now accepted by everybody and by the Government. The level of financing suggested by my hon. and learned Friend the Minister slightly concerns me. The Opposition have a point that it may not be enough to meet the problems. One great difficulty is that in some constituencies-- Honiton is a prime example--homes which in the past have always been established as agricultural cottages are now being snapped up by people from the midlands and elsewhere for use as retirement homes. A host of housing is being taken out of circulation that would previously never have been used for anything other than homes for those working in agriculture.

The amount of assistance that may be necessary to sustain homes in agricultural areas needs to be monitored closely and I ask my hon. and learned Friend to give us an assurance that that will happen. I have one other question, with which my hon. and learned Friend did not deal, and which goes wider than low-cost agricultural housing. East Devon district council is very concerned about some of the restrictions that have been placed on it. The local authority purchased land a number of years ago at a reasonable price, very much lower than the market value, yet it is being forced to sell to housing associations at market prices. The housing associations then increase the cost of the housing to a level far higher than the local authority would wish. The local authority has applied to the Department, which has told it that it will have to sell in accordance with the market valuation of the land rather than at its purchase price. The ratepayers would in any case have got back the money spent on the purchase and it seems to me foolish that at a time when we are trying to encourage the provision of low-cost housing and starter homes the Ministry should insist that local authorities, which are in a position to provide low-cost land for such premises, should inflate the price of the land and sell it at market value. That may be to the benefit of the ratepayers, but it is of no benefit in trying to achieve what the local authorities and most people in the area would want--the provision of low-cost housing and starter homes. Perhaps my hon. and learned Friend will pursue that case with me.

I urge my hon. and learned Friend to express our gratitude to those in the other place for pursuing our ideas and translating them into Lords amendments. Without the Lords, we might not have had such an excellent statement from the Government. I am happy to urge my hon. Friends to accept that statement so long as it is understood that the provision will be monitored over the next two or three years to ensure that it achieves the objectives that the Minister has outlined. If that can be done, we shall have achieved a considerable victory.

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Mr. Fearn : I am happy to add my own support and that of my party to the support already voiced for Lords amendment No. 269. I should have liked it to apply much more widely. The fact that it refers to rural parishes with populations of 3,000 or fewer makes it a moderate move. I hope that Conservative Members will join many of their colleagues in the other place and agree to the amendment. As the House knows, the amendment received overwhelming support from all parties in the other place, whose members are knowledgeable about the provision of low-cost housing in rural areas. Many of their Lordships have spent much of their lives helping to provide homes for those who can least afford them. It is the provision of land--at its agricultural rather than its development value--by some of the Lords that makes some low-cost schemes possible. They have the interests of their community at heart, and we should do well to heed their expert advice. Many housing groups also agree with Lords amendment No. 269. Unfortunately, Ministers do not have a reputation for taking kindly to outside advice, especially if it is given to someone else. It may be admirable for the Government to claim that they are standing by the fundamental principle of their housing policy, which is the right to home ownership. But such a policy becomes somewhat dogmatic and foolhardy if it deprives hundreds, if not thousands, of people of the opportunity ever to have a home of their own. The policy is even more foolhardy if it leads to the devastation of whole communities, and that could still happen.

I note that, by trebling the number of low-cost homes to be built in rural areas, the Government have recognised at least some of the problems, and that they have attempted to alleviate them by giving the housing associations the first right to buy. The fact that that right can only be exercised if they buy at open market prices will, as we heard, result in their being unable to buy, so the use of the houses will be lost to local people on low incomes.

Claims that funds will be available for that purpose--for all houses once they have been accepted into the scheme--should be taken with a pinch of salt. The scheme is cash-limited. The Government are the least likely people to agree to an open-ended project. Housing associations wishing to apply for a grant from the Housing Corporation to provide rural low-cost housing will still have to compete with all the others.

Homes will still be sold on the open market to people outside the community, and landowners, including some of their Lordships, the Churches and others, will be reluctant to make the land available, in spite of the Minister's statement about covenants. I did not quite understand that statement, incidentally. That will make it impossible for low-cost housing schemes to get off the ground in the first place.

Dame Elaine Kellett-Bowman (Lancaster) : Surely the whole point of the covenant is that they will be prepared to sell the land with that assurance.

Mr. Fearn : Being a Conservative Member, the hon. Lady may have understood what the Minister said, but I do not think that it was clear. Perhaps the Minister will deal with that point later. Those affected are often vital to the community. They include nurses, farm workers and now even teachers.

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Unless the House agrees to the amendment as it stands, the housing blight in rural areas will not improve and the House will again preside over the break-up of many rural communities.

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