House of Commons Hansard Debates for 16 Nov 1992

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housing needs of Britain in 1993 and the years to come. If that is not a con, what is? It is also sad that the rough sleepers initiative, which was supposed to meet the needs of those at the acute end of the housing crisis, has also been cut as a result of the autumn statement.

My party has argued a consistent case for many years. It is that the only way for Britain to be adequately housed is for us to invest in it, led from the public purse by those in charge of the Exchequer and Ministers in spending Departments. We repeat that call today. Let me put it simply, because the arguments have been well made. There should be a large increase in public expenditure, specifically to fund house building and house repairs. It is good value for money, and it not a foolish way to conduct public accounts. We should cut the uniform business rate as that will allow some businesses to put money into housing as well. We should have a stable interest rate policy so that people feel encouraged to buy, in the knowledge that they will not be penalised in the years ahead. We should invest in training and in keeping people in work so that the construction industry can recover.

Perhaps most acutely now, there should be a new element of public finance, a subsidy that would allow people in difficulty to keep their homes or perhaps convert from mortgages to rents. It is entirely possible--and we have put out figures to show this--to start turning the corner of Britain's housing crisis. Our indictment of the Government is that, over the past 13 years--and they cannot blame anybody else because they have been told over and over again--they have, worse than not listening and failing to act, condemned millions of people in a rich and civilised country to conditions that are not only unsatisfactory but often inhumane.

Of all elements of policy, it is this policy and record of which the Government should be most ashamed. I am sad that they have so far given no adequate answers. I hope that now they are at least embarrassed enough to do something about the crisis before many other people suffer as all too many have already done.

4.17 pm

The Minister for Housing and Planning (Sir George Young) : I beg to move, to leave out from "House" to the end of the Question and to add instead thereof :

"notes the Government's continuing commitment to housing policies designed to ensure that a decent home is within reach of every family, and in particular to promoting the growth of owner-occupation, widening choice for tenants, and improving value-for-money and targeting of public expenditure ; and especially welcomes the measures announced by the Chancellor of the Exchequer in his Autumn Statement which--consistently with the need to maintain tight control of public spending in the interests of the economy and the taxpayer--will contribute to stabilising the housing market, will increase the supply of social housing thereby helping homeless families, and will promote investment in renovation of run-down council estates."

The Government welcome this opportunity to debate housing. As the hon. Member for Southwark and Bermondsey (Mr. Hughes) said, it is an important subject to millions of our citizens. The Government are happy to explain and defend their record on housing.

Last Thursday, while most of us were listening to the Chancellor's autumn statement, someone was drafting the motion before the House, a serious motion but one drafted with a strange mixture of Sun headlines and Guardian prose. As I hope to show, all the people mentioned in the

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motion have reason to welcome the measures in the autumn statement. Indeed, I see that, in a release last Thursday, Shelter said : "Shelter strongly welcomes Government initiatives to provide more homes."

That shows that, while Shelter regularly urges us to do better, it recognises progress when it sees it.

By contrast, the rather grudging recognition in the motion-- "although Her Majesty's Government has announced a few measures which will assist some of those in need"--

does less than justice to the scale of the Government's response last week to the case for housing.

Let me set out those whom the hon. Gentleman has identified in the motion. They include those sleeping rough, those in "bed and breakfast accommodation", those

"accepted as homeless by local councils",

those in difficulty with their mortgages, those in housing in need of improvement and the construction industry. Every hon. Member shares his concern for those groups and much was already being done to help, but we plan to do better.

Let me start with the most visible aspect of homelessness--rough sleeping. In a civilised society, no one should have to sleep rough. Over the past three years, under the rough sleepers initiative, we have made available £96 million to provide 900 hostel places, 2,200 places in permanent housing for those in hostels to move on to, and 700 places in flats and houses leased from private landlords. Voluntary organisations estimated that, before the initiative began, more than 1,000 people were sleeping rough in central London. Their most recent count on 5 November showed that just over 400 people were sleeping rough, of whom fewer than 60 were under the age of 25. Many of those remaining will be helped by the initiative under way at Lincoln's Inn Fields to provide accommodation for them and, one hopes, to restore that open space to an attractive park that can be enjoyed by Londoners.

The rough sleeping initiative was to have ended on 31 March next year, but the autumn statement announced further resources to provide continuing help to rough sleepers. A further £86 million will now be made available to enable the excellent voluntary organisations, which are managing the programme, to build on their achievements and to drive the momentum forward to make it unnecessary for anyone to sleep rough. To project that funding as a cut does less than justice to the hon. Member for Southwark and Bermondsey, because the hostels and permanent accommodation are, of course, still there. They will remain available in the forthcoming period. What is happening is that we are providing an extra £86 million over and above the resources originally planned. Moreover, I will shortly be announcing details of this year's cold weather shelters, which will open in a fortnight and which will provide accommodation for people who would otherwise have to sleep rough in central London this winter.

Even before the autumn statement the numbers of those in bed-and-breakfast accommodation had been falling. No one is in favour of it as a temporary form of accommodation. I see it as a measure of last resort. Many local authorities, to their credit, manage not to use it at all.

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In the past year the number of homeless families in such accommodation has gone down from 13,000 to 11,080. As a percentage the number is down from 24 per cent. to 18 per cent. In London the decrease has been more marked--from 8,110 to 5,870.

Those in bed-and-breakfast accommodation have more reason to welcome the autumn statement than any other group because of the way in which the 20,000 extra homes to be bought between now and the end of March compares with the figure of 11,080 who are currently in that accommodation. Those in bed and breakfast and other temporary accommodation will be rehoused more quickly as a result of the £630 million to be spent in England in the next four months. With the private finance that we plan to lever in, I expect the result to be a £1 billion package for recovery in the housing market.

Mr. Nick Raynsford (Greenwich) : Will the Minister confirm that, at current rates of repossession, the number of home owners who are likely to lose their homes between now and the end of March will probably be well in excess of that 20,000? Will he tell us how there is any hope of significantly reducing the numbers in temporary accommodation when there is a huge additional demand to be met from home owners facing repossession?

Sir George Young : The hon. Gentleman knows that the number of court actions entered for repossession has fallen sharply by about 32 per cent. in the past year. The Council of Mortgage Lenders reckons that about 55,000 repossessions have been avoided as a result of the measures it introduced in December.

Mr. Simon Hughes : The Minister quoted Shelter's reaction to the autumn statement and gave a litany of figures. What does he say to Shelter's comments in today's press release on rough sleepers, entitled "Government cuts in help for people sleeping rough. A matter of life and death"? It stated :

"The Government has announced a cut of £5 million in help provided for the growing number of people sleeping rough on the streets of Britain The 13 per cent. reduction ... from £38 million to £33 million was revealed by the Department of the Environment on Friday morning, less than 24 hours after the Government's Autumn Statement".

Sir George Young : The hon. Gentleman is aware that the rough sleeping initiative was originally devised as a three-year programme and no provision was made in the public expenditure survey for any money after 31 March. We have found fresh resources to keep that initiative going and against that background it is misleading to allege that there has been any reduction in expenditure. Planned provision of help to rough sleepers has been increased.

On the question of the extra 20,000 homes to be made available, I am concerned--other hon. Members may share my concern--at the lack of mobility within the social sector of housing. New accommodation tends to go directly to those in temporary accommodation. It would be possible for an existing council tenant to move into the new accommodation and then to move a homeless family into the accommodation thereby released. A council tenant who chose to move would lose his right to buy, but he might be prepared for that if it meant that he could live in a more attractive property than his present home. I want the new stock that is acquired to be used to promote

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mobility. There should be more transfers for existing tenants where the scope for mobility within a council's stock is limited. Of course, councils and housing associations must consider the issue in the light of local circumstances and they must take account of people's preferences. They should not assume that people are not prepared to move voluntarily outside the council sector if that would get them better houses.

I have been in touch with the National Federation of Housing Associations, the Housing Corporation and the Council of Mortgage Lenders. My right hon. Friend the Chancellor of the Exchequer and my right hon. and learned Friend the Secretary of State for the Environment met mortgage lenders and the chairman of the Housing Corporation again this morning, when they underlined the importance that we attach to taking as many properties as possible off the market through the initiative. I am pleased to say that those lenders present confirmed that they would play a full and constructive part in the initiative. They are confident of responding to the challenge that the Government have set them and of providing the target number of homes.

Mr. Jonathan Evans : My hon. Friend referred to his meeting with the Council of Mortgage Lenders. Did he also discuss our right hon. Friend the Chancellor's announcement last week of a reduction in interest rates and the apparent difficulty of some mortgage lenders in passing on that benefit to home owners, sometimes deferring it for many months?

Sir George Young : I was not at that meeting, which was attended by my right hon. Friend the Chancellor and my right hon. and learned Friend the Secretary of State. From the press statement issued after that meeting, I understand that my right hon. Friend the Chancellor reminded lenders of the importance of passing on interest rate reductions as quickly as possible. I understand that shortly after the meeting the Halifax announced a welcome reduction in its mortgage rate.

Mr. George Howarth (Knowsley, North) : I am anxious to pin down the Minister on one point. He is suggesting that the scheme that the Chancellor announced in the autumn statement to create an additional 20,000 properties to rent should be used in some way to facilitate mobility in housing. My understanding is that housing associations are required by statute to operate an allocation procedure and that most allocations are zoned to a particular location. Without specific Government intervention to ring-fence the properties for a national mobility scheme, I cannot envisage how the Minister's suggestion can work in practice.

Sir George Young : The hon. Gentleman is making rather heavy weather of this matter. The housing associations will buy 20,000 properties. In the normal course of events, they would give the nominations to local authorities, which would then nominate families currently in bed and breakfast or temporary accommodation. My suggestion is that the housing associations should continue to give the nominations to local authorities, but that instead of them nominating people in bed and breakfast and temporary accommodation, they should offer transfers to existing tenants. Those people could move into the new homes, if that is what they want, and the homeless

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families could move into the local authority stock thus vacated. That would improve mobility in the social housing sector. It is certainly difficult in London to get a transfer unless one has strong grounds. My suggestion would encourage transfers within local authority stock and also within housing association stock--

Ms. Glenda Jackson (Hampstead and Highgate) : Will the Minister give way?

Sir George Young : Yes, but for the last time as I am anxious to make progress.

Ms. Jackson : My local authority has an inadequate number of two and three-bedroom houses, so the problem of families transferring would not be alleviated by the 20,000 properties to which the Minister referred. Indeed, inadequate properties for the size of family groups are endemic.

Sir George Young : The hon. Lady is making heavy weather of this matter. The whole point about the package announced last week is that the housing associations and local authorities should consult and the stock acquired by the housing associations should be of the sort that local authorities want--the right configuration and size to meet the needs of their areas. It is important that there is close liaison between housing associations and local authorities to avoid the mishmash to which the hon. Lady refers.

Against the background of an extra £597 million for the Housing Corporation this year, I hope that the hon. Member for Leeds, West (Mr. Battle) will have the decency--for I believe him to be a decent man--to admit that the rumour to which he referred in Committee last Tuesday, that the Conservative party might abandon its manifesto commitment to provide 153,000 homes through the Housing Corporation over the next three years, was ill founded. The figure will rise by 12,000 to 165,000.

Mr. John Battle (Leeds, West) : The Minister refers to this year's commitment, but he will recall the Conservatives' clear manifesto pledge of money over three years ago. Is the third year absolutely guaranteed?

Sir George Young : There is a lot of battle smoke around. However the hon. Gentleman looks at the figures, he will find that there is more money for the three years covered by the manifesto--an increase of £597 million this year, with a decrease in the following two years of £155 million and £191 million. That represents an increase, and extra homes are being provided in the early part of the period in question. If the hon. Gentleman wants to intervene again to admit that our manifesto is being more than honoured, I shall be happy to give way to him.

Conditions for tenants on many council estates are unacceptable. The autumn statement made it clear that our popular programme of housing action trusts can continue. Our expenditure provision for next year will allow the momentum of the HAT programme to be fully maintained. That will allow the establishment of three further housing action trusts to follow those in Hull, Waltham Forest, and the successful ballot in Liverpool. I am sure that will be warmly welcomed in areas where housing action trusts have already begun work or are under consideration. The feasibility work on Castle Vale in Birmingham and the Bow estate in Tower Hamlets is largely complete and I expect to make decisions on ballots shortly.

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There will be more resources for the estate action programme. The amount available in 1993-94 will be £356 million, which is £16 million more than this year. On current practice, that expenditure will allow us to fund 135 of the 270 schemes that authorities are anxious should go forward. However, the capital partnership approach announced last Friday will enable us to spread resources even further. The more that authorities contribute from their capital receipts, the higher the number of schemes that we will be able to include in our programme.

Dame Elaine Kellett-Bowman (Lancaster) : Will my hon. Friend the Minister favourably consider the scheme submitted by Morecambe, which has a substantial housing need?

Sir George Young : I am delighted that that popular element in the Government's housing policy has won such favour in a constituency adjoining that of my hon. Friend. I will be happy to send my hon. Friend details of the HAT programme and the procedure that must be observed if a trust is to be established in her part of the country.

Mr. Nirj Joseph Deva (Brentford and Isleworth) : I welcome the prospect of greater mobility and extra funding that my hon. Friend's new scheme will introduce, but Isleworth council is encountering considerable problems because of the way that the points system is used to allocate council housing needs. The new system has disadvantaged many thousands of people. Will my hon. Friend consider re-jigging it to allow for a more equitable share of council properties ?

Sir George Young : I hope that my announcement that the Government felt that there should be more mobility within the local authority stock will encourage councils--including Hounslow--to review their transfer policies, and also to review the way in which priorities are allocated among competing demands from local authority tenants. I hope that all councils will try to find ways of promoting more transfers.

The relaxation of the rules governing local authority capital receipts over the coming year will provide authorities with an extra £1 billion for housing. I expect them to devote the money mainly to renovating rundown council estates, and to implementing the housing investment programme strategy set out in their recent bids. The figure is derived from evidence on local authority returns. Tenants awaiting improvements do not mind whether the work is paid for by borrowing or by a capital receipt ; they want the work done, regardless of how it is funded--and more work will now be done. "Capital receipts" is a phrase that has been much on the lips of Opposition Members. It is worth reminding them that there would be few capital receipts for us to debate if we had taken their advice on the right to buy. We did not think it right to allow authorities simply to spend the capital receipts that they had already built up. The current need is to stimulate the construction industry, and that justifies a temporary relaxation of the requirement to set aside part of the new receipts for that purpose. The relaxation gives authorities some £1.75 billion of extra spending power. Our proposals give them an incentive to promote new asset disposals, and to get in fresh receipts rather than recycling past ones.

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I expect interest in the right to buy to increase as the economy recovers ; I also expect interest in the rent-to- mortgage scheme to increase when the Bill reaches the statute book. Predictably, Opposition Members have already criticised the scheme : the hon. Member for Dagenham (Mr. Gould), for instance, described it as facile and short term. I see nothing facile or short term in treating people as adults and giving them choice--a word used by the hon. Member for Southwark and Bermondsey. Authorities will gain a capital receipt, and they will be able to spend all of it, provided that it comes in before 31 March next year. I predict that Opposition Members will abandon their objection to the rent-to-mortgage scheme when they realise how popular it is, just as they abandoned their objection to the right to buy.

The motion makes the fair point that some local authorities have less prospect than others of generating receipts. We can handle that, up to a point, through the services of a lady called Rita--receipts taken into account. When we allocate credit approvals to local authorities--this, I think, is the process towards which the hon. Member for Southwark and Bermondsey was cautiously nudging his way--we take into account the relative availability of receipts. That enables us to give higher basic credit approvals to the authorities with the fewest receipts--a point raised by my hon. Friend the Member for Colchester, North (Mr. Jenkin).

Authorities with limited receipts will also be able to compete for the capital partnership scheme that was launched on Friday by my right hon. and learned Friend the Secretary of State for the Environment. The scheme provides up to £600 million of public money for projects that will stimulate growth.

The motion also mentions owner-occupiers. The package included help for those facing difficulty with their mortgages : a further and welcome reduction of one percentage point in interest rates. Over the past two years, interest rates have fallen by eight percentage points ; that translates into a saving of more than £130 a month on a typical £33,000 mortgage since the level reached its peak in October 1990. For those who are concerned about the value of their properties, we are taking some 16,000 empty homes off the market in a short space of time. That will increase the number of transactions in the property market, and will reduce the overhang that has deterred many prospective buyers. The measure can only help to return confidence to the market--although none of us wants a return to the excesses of four years ago.

Measures taken a year ago have probably reduced the number of repossessions by about 50,000, but the best mortgage rescue scheme is provided by lower interest rates and a recovering economy, which was the purpose of the measures in the autumn statement. The number of court orders for repossessions has also fallen : in the third quarter of the year, the number of actions entered was 32 per cent. lower than it had been a year earlier.

Mr. Raynsford : Will the Minister give way?

Sir George Young : No. I promised that I would not give way again ; indeed, I believe that I made that promise three times. The longer my speech lasts, the less will be the hon. Gentleman's chance of making his own formidable contribution.

One consequence of the fall in house prices has been the number of people with negative equity--perhaps 1 million,

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according to one estimate by the Bank of England. That phenomenon does not call for the domesday scenario painted by some commentators. Most negative equity borrowers are not having trouble meeting their payments, nor do they want to move, but if they do want to move the property that they move to is likely to have fallen in value, along with their own home. My hon. Friend the Economic Secretary announced on 20 October two measures, which were widely welcomed, to help to promote mobility in those circumstances.

The building and construction industry is also mentioned in the motion. It was assisted last Thursday. Builders have the opportunity to improve their cash flow by selling unsold homes. There will be opportunities for smaller builders to carry out necessary repairs to repossessed homes that need attention. These measures have been welcomed by the construction industry. Neville Sims of Tarmac, for example, praised the Chancellor's proposals as imaginative and as a good way to get money into the construction industry in the regions. The new public-private funding rules announced on Thursday will give a further boost to investment in the inner city areas covered by city challenge.

There is even something in the package for estate agents. The £50 million to enable local authority and housing association tenants to buy homes in the market will increase transactions, as well as freeing up more homes for those on the waiting list.

Because of the rough sleeping initiative, there are now fewer people sleeping on the streets. There are fewer families in unsatisfactory bed-and -breakfast accommodation. The last figures for homeless acceptances showed a reduction, not an increase. The provision of good quality accommodation by housing associations has doubled in the past three years and the ambitious target that we set ourselves in our manifesto is now to be exceeded.

The programme for modernising and improving local authority estates can proceed at a faster pace, thanks to the change in the capital receipts rule. With interest rates for some first-time buyers at 6 per cent., home ownership is more affordable than it has been for more than 15 years ; 20,000 homes, instead of lying empty, are to be put to the use for which they were built and that will help to restore confidence in the housing market.

I recognise that we have much work to do. Any London Member of Parliament knows that there are still shortages of social housing and that too many council tenants live in unacceptable conditions, but we are on the right track. It would be too optimistic to expect the hon. Member for Southwark and Bermondsey to withdraw his motion, but I ask the House to support the Government amendment with enthusiasm. 4.41 pm

Mr. John Battle (Leeds, West) : We, too, welcome the debate. There is nothing in the motion with which we disagree. It is particularly welcome at this time, coming so soon after the autumn statement. The autumn statement day ought to be remembered as the day when unemployment passed, in real terms, the 4 million mark. According to the original calculation of the figures, before the Government's 30 changes to massage them down, on 12 November this year unemployment passed 4 million. I

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mention that at the beginning of my speech because rising unemployment is the primary cause of homelessness and the housing market crisis.

The scale of the housing crisis is daunting and worsens day by day. However, the Government try to put on a brave front and say that they are coping with it. Since the late 1970s, homelessness has more than doubled. In England alone, 147,000 households were accepted as homeless by local authorities in 1991. Many more were turned away as ineligible. More than 1.5 million are on local authority waiting lists. They comprise what could be described as the hidden homeless, often living in overcrowded and inappropriate circumstances. It is estimated that in 1991 an additional 80,000 single people were homeless but ineligible for help. In the past 18 months, more than 100,000 families have had their homes repossessed.

Not surprisingly perhaps, fewer than 100 families have had their homes saved by the Government's "intended" mortgage rescue scheme, which was announced this time last year. The Government promised us at the Dispatch Box that 40,000 households would be rescued. That never happened. More than 200,000 households are now more than six months in arrears with their mortgages ; more than 1 million cannot afford to move because their homes are worth less than they paid for them.

Recently, the Bank of England estimated that further small falls in property values would add an additional 500,000 households to that total. In September this year, after the general election, the Department of the Environment disclosed that a record number of 62, 780 homeless families were living in sometimes terrible quality temporary accommodation. As we now know, since 1979 the proportion of national expenditure, in real terms, spent on housing has more than halved. There has been a significant cut in expenditure. I say "significant" because the cut amounts to £5.3 billion--ironically, exactly the figure of accumulated capital receipts that local authorities have in the bank. To this day, the Government are preventing them from spending that money on housing.

What is the Government's response to the housing crisis? I submit that it is feeble. When we look at the small print of what we were offered in the autumn statement, we see that we have been short-changed. Barely six months ago, on 23 March, during those heady days of the electioneering period, the Secretary of State for the Environment asserted :

"House sales under the Conservatives are picking up."

All this, we were told, would change on 10 April if there were a Labour Government. We were also told that the recovery--I am tempted, Madam Deputy Speaker, to insert the word "sic"--in the housing market would be devastated, just as it was getting under way. The Secretary of State for the Environment was echoed by the Prime Minister on 31 March, when he said :

"We're going to make life easier for people buying their home. Our policies will mean a stronger housing market."

[Interruption.] The hon. Member for Brecon and Radnor (Mr. Evans) may mutter, "Hear, hear", but what every other hon. Member and everybody else in the country knows is that exactly the opposite is true. People were truly conned on 9 April. Families now face the worst housing crisis in our society since the war. It is tempting to add that all the Government's special offers have been heard before and have been found to be second-hand and shoddy goods.

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The latest evidence from the Joseph Rowntree Foundation report, which was published last week, shows that further small falls in house prices threaten to double negative equity. It points out that four out of every 10 Londoners who bought their homes in the past five years now have properties worth less than their mortgages. Basildon now has a negative equity rate of 60 per cent. an average shortfall of £6,500 for every household. That is where the rent-to-mortgage pilot scheme was undertaken. In those circumstances, I cannot imagine that it is going down well in Basildon.

What of the scale of the Government's response? The Government amendment is remarkable in its complacency. It says that the Government are keen to promote the growth of owner-occupation. Many commentators on housing and economic policy now submit that, at 69 per cent., owner-occupation in our society is unsustainable because there are not sufficient homes for people who need to rent. The Government do not seem yet to appreciate that fact. The amendment refers to widening choice for tenants. It does not refer to the fact that under the Housing and Urban Development Bill which is being considered in Standing Committee the Government are taking away tenants' rights in order to push through compulsory competitive tendering.

The amendment refers also to the targeting of public expenditure. It is tempting to add that that may be the only truthful statement in the amendment. It is true that resources are being targeted, because existing resources are being wrapped up and disguised as new money when in fact they prove to be old money.

The moves on interest rates are welcome. They will give hard-pressed home owners some relief, if the interest rate reduction is passed on, but that relief will apply only so long as people have a job and continue to be able to pay their mortgages. The question that many people are asking is whether this will be enough to revive the housing market. Many people think that they live simply one pay cheque away from redundancy and worry that their home may be the next to be repossessed.

The autumn statement was trumpeted in the press as offering extra money, but the Secretary of State was careful to use that weasel word and say that money had been "earmarked" rather than to suggest that new money was available. We discover from the fine print that that was a sleight of hand- -a clever piece of news management to create the impression of new money. The Government are simply juggling the figures in a remarkable creative- accounting exercise.

What does the figure of £1.75 billion mean? It is tempting to ask the Minister, in the light of his statement, how firm that promise is. We are glad that the Government are at last coming around to our common-sense arguments on the need to use capital receipts, but it is not clear whether that promise of funds will be realised. The autumn statement is based on illusion--the £1.75 billion in estimated capital receipts is not there. The Government have acknowledged that only £1.1 billion of that money will be available for housing, and only capital receipts that may be available in the next 12 months will be available as extra expenditure.

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What will happen to the £5.5 billion of receipts that is sitting in local authorities' banks? Why cannot those funds be released?

The Parliamentary Under-Secretary of State for the Environment (Mr. Tony Baldry) : If the hon. Gentleman is to take that point, perhaps he will redefine his position. I quote from an interview with Inside Housing as recently as mid-September in which the journalist commented :

"redefinition of the PSBR, which could theoretically release capital receipts for housing, is clearly not something Mr. Battle is prepared to argue for today."

The hon. Gentleman said :

"Those are the arguments that the Treasury team are going to have to sort out, not me as the Housing spokesman. At the moment, redefinition is not on Labour's agenda. It is not one of my priorities."

Has the hon. Gentleman and his team managed to redefine the PSBR for the benefit of the country?

Mr. Battle : What I said still stands. We have pressed for the phased relief of capital receipts to enable them to be distributed according to need. The Government have not responded. They have simply told authorities that they may spend money which may or may not come in. Amazingly, in the face of current evidence, the Government assume that right-to-buy sales will pick up from their present low, but if they do not do so, the extra £1.75 billion will not materialise. Is not that the truth and should not Ministers be spelling that out? In practice, as the figures work through, people will find that they have been shortchanged again. The key question is whether the money will be available, and that depends on homes being sold to tenants on low incomes, under the right to buy, during a housing market slump and at a time of record repossessions. Most people in work feel that they cannot afford to take the chance of moving to purchase in case they lose their jobs.

A London Weekend Television programme on Friday night revealed that 70,000 people who bought their council flats cannot sell them because mortgage lenders are again doing what used to be described as red-lining. In his conversations with mortgage lenders this morning, what did the Minister say about that and what do the Government propose to do to unlock that situation? In turn, that will be a check on further house sales.

The small print of the autumn statement shows that Government capital allocations for local authority housing will be cut and that credit approvals will be substantially lower. We cannot now say what the figures are, because they will be revealed only in the forthcoming months, but that is the logic of the arithmetic in the autumn statement.

I suspect that the capital partnership is another example of iniative dazzle--an initiative for the media that lasts 24 hours, but in the afterglow realises little. In practice, it is

top-slicing--taking money out of budgets and organising them from the centre again. It is a form of revamping of the estate action scheme. It is also clear that it will depend on bids and competition, with local authorities competing against each other according to how they use capital receipts in forthcoming years.

Sir George Young : Hear, hear.

Mr. Battle : The Minister says "Hear, hear", but that action reduces local authorities' ability to respond to local need and the total amount that is available for them.

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Sir George Young : When I dealt with the capital partnership, I specifically explained that if, for good reasons, a local authority has no access to capital receipts, it will not be penalised in its bid for estate action.

Mr. Battle : It is encouraging to receive that reassurance, but we shall watch to see how it works in practice because we were told the same about the city challenge, and we saw how that worked in practice. Many authorities have been disappointed.

The promised new £600 million depends on sales that may never materialise. The whole project will buy only 16,000 homes, whereas more than 200,000 are empty, and that overhang is dominating the housing market. There is no new money, because £400 million will come from the Housing Corporation's allocation and £200 million from local authority credit approvals.

In practice, it could be argued that housing associations were worst hit in the autumn statement. Housing association grant rates are being cut from an average of 72 per cent. to 67 per cent. In an article in The Roof, Mr. David Edmonds, the former Housing Corporation's chief executive, pointedly showed how private finance would be more difficult to obtain because investors would be worried about whether housing benefit would continue to meet the tab for higher rents. The corporation's 150,000 homes promised over the next three years could be jeopardised because the Government have not got their act together and are forcing up rents. David Edmonds said : "There is very solid reason to argue that the point has been reached beyond which grant rates should not be diminished. How does an association explain to a banking credit appraisal expert that higher amounts of loan are needed, payments on which are serviced primarily by people on HB who pay rents which are increasingly viewed as unaffordable?"

Mr. Jonathan Evans : Does the hon. Gentleman accept that there must always be a correlation between private finance and the grant rate made available by the Housing Corporation to take account of reductions in interest rates? There has been a substantial reduction in interest rates. Whenever an interest rate reduction is made--at least this is what happened when I was deputy chairman of Housing for Wales--an alteration is made to the grant rate.

Mr. Battle : The hon. Gentleman is missing the point that the critical figure of 67 per cent. for attracting private finance is on the margin below which the private sector will not lend money to construct houses in the first place. The promised partnership between public and private money will collapse because the Government are reducing their contribution to housing associations.

Mr. Jenkin : I suggest that the matter is in the nature of public- private negotiations. The private sector will negotiate, of course, for the best terms that it can get and it is right that the Government should play their part and negotiate the best terms for the public sector to get better value for money. Those matters are resolved in the fullness of time. If one goes into negotiation on the basis that one will lose that negotiation, all I can say, on behalf of the homeless, is thank goodness the hon. Gentleman is not in charge.

Mr. Battle : The hon. Gentleman is missing the point that, for months, all the housing associations and the

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