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Mr. Jones : I think that the two issues are slightly separate. We certainly addressed the former issue, albeit tangentially. The latter issue depends very much on addressing the relationship that I have just described.

My right hon. Friend the Minister has exercised delicate judgment in setting HAG rates for 1994-95 at 62 per cent. I know that the announcement was not universally welcomed but, in revising the original objective of a cut to 60 per cent., my right hon. Friend has shown that he is willing to listen and reconsider. So far, and despite the small reduction in HAG rates announced my right hon. Friend, the great majority of housing associations appear to have been able to continue to raise private finance for development. It is worth repeating here the Committee's concern that "if the Government waits until a funding crisis arrives, any action it then takes may be too late."

Can my right hon. Friend assure the House that he will take a long-term view and, in particular, that he will consider seriously the need to set housing association grant at a level that will enable associations to avoid running out of loan security or finding that they are no longer able to raise money from private institutions ? The second major issue that I wish to raise is that of standards. There are two quite separate concerns here. One relates to standards of housing provision and the quality of the accommodation that associations provide and the other to standards of housing management. On the former, I do not count myself among those who mourn the passing of the Parker Morris standards, which applied to all public sector housing. However, if they build houses that are inappropriate to people's housing needs and aspirations, housing associations will run the risk of replicating some of the social problems that have arisen as a result of the misguided policies of the 1960s and the 1970s.

Therefore, I welcome the recent evidence of a shift towards the rehabilitation of existing property and away from new build, not least because such property is likely to provide tenants with more space and better facilities as well as address the issue of urban regeneration.

Mr. Peter L. Pike (Burnley) : The Government are encouraging the rehabilitation of property and everyone would accept that that should be achieved. However, does the hon. Gentleman accept that in areas where property is of extremely low value, such as in the north, it is difficult for either an owner-occupier or, for the very same reason, a housing association to invest properties that are worth less than the cost of those improvements ?

Mr. Jones : One of the experiences that I have enjoyed in the House has been my period of common service with the hon. Member on the Select Committee on the

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Environment. One of the facts that I will retain until my dying day is that the problem to which the hon. Member referred exists in places such as Burnley. It needs to be tackled in the broad context of urban regeneration, not just through housing association grant but through our approach to home improvements. That is absolutely key to solving the problem.

Can my right hon. Friend the Minister tell the House whether the Government now accept that rehabilitation offers several important advantages over new build ? Does he intend to increase still further the proportion of rehabilitated property ? On the subject of specialisation, the focusing of housing association work not just on rehabilitation but, for example, on the disabled, other specialist groups and rural housing is extremely important and welcome. As for standards of management by housing associations, the Committee learnt that those vary widely. Such is also my experience as a constituency Member, because I have known excellent housing associations and also pretty poor ones. I suggest that that experience is shared by hon. Members on both sides of the House. I therefore welcome my right hon. Friend's announcement last week that the Department is to fund the Institute of Housing's good practice unit for the next three years.

One of the unit's first tasks might be to consider the evidence that the Committee received, which suggested that small, local associations are more popular with tenants than the larger, national ones. Some of the latter came in for strong criticism because of their remoteness and lack of responsiveness. Some evidence, however, suggests a trend towards ever- larger associations, whether through merger or large-scale transfer of local authority stock.

Some large housing associations have an excellent record, either because they really care about delivering quality maintenance or because they have been organised in such a way as to overcome the argument about remoteness. The Paddington Churches housing association, for example, has a development in my constituency. People were naturally worried about a housing association that had its headquarters in Paddington. They have overcome their concern because the association has established an office on the estate to which people can go with their problems about maintenance or queries about their rent. The Sutton housing trust also has its headquarters in my constituency and it has an excellent record of attentiveness to the problems of its tenants.

Do the Government accept, as the Committee has, that a diverse housing association movement, encompassing a range of providers meeting specialist or general needs at local level, represents the most attractive and effective option for enlightened housing management ? If so, what can my right hon. Friend say tonight to reassure those who fear that the Government's policies will lead to the creation of even larger, more remote landlords ?

May I ask my right hon. Friend, purely from my point of view rather than that of the Committee, whether he has considered the scope of rent officers, given the increasing number of assured tenancies ? I wonder whether the jurisdiction of rent officers over housing associations is appropriate any longer and whether it might be better for rents to be set by housing associations, obviously after consultation with their tenants.

Thirdly, I wish to mention tenants' rights, which emerged as one of the main themes of the Committee's inquiry and was the subject of the concluding chapter of

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our report. In all the discussion of bureaucracies, finance, policy initiatives and so on, it is all too easy to lose sight of the fact that the Housing Corporation, housing associations and associated paraphernalia exist to provide a service not to Government, not to Parliament, but to tenants.

The Committee met and spoke to housing association tenants during its inquiry and received written evidence from several more. Although no national organisation was able formally to represent to us the views of all tenants, we heard oral evidence from the Tenants' Participation Advisory Service, an organisation with which I was extremely impressed.

I think that we gained a pretty good idea of what tenants want. In addition to affordable rents, to which I have referred, tenants want access to information, a prompt and effective repairs and maintenance service, to participate in decisions that affect them and to know that any complaints will be dealt with fairly. The news on all those fronts is good.

In their response to the Committee's report, the Government promised that the corporation would seek the views of tenants as part of its monitoring of associations' performance. The corporation also undertook to monitor more closely associations' performance on repairs and maintenance and to improve associations' performance on tenant participation. To what extent have those fine words resulted in action ? What feedback has been received from tenants about the effectiveness of the measures announced in the Government's response to the Committee's report ?

The announcement that a tenants' ombudsman would be appointed preceded the Committee's inquiry but was not divorced from it. In our report, we had much to say about the way in which the proposed service should be constituted and should operate. Although I understand the difficulties involved in proposing primary legislation, I am disappointed that the new ombudsman is not demonstrably independent of the corporation. I wish Mr. Jeffries well and it is to be hoped that he will prove his independence in practice, but I and my colleagues were worried lest confidence in that important service be dented due to its close association with the corporation. With his characteristic fairness, my right hon. Friend the Minister left the door open by promising to keep the new service under review and to place it on a statutory footing, should that prove necessary at a later date. Perhaps he would expand a little on that statement tonight and tell the House how he proposes to review the work of the ombudsman and when he expects to decide whether to legislate. No right is more important to tenants than the right to buy. The situation pertaining to charitable housing associations remains unacceptable to me and to many Conservative Members. I know that in the more enlightened charitable housing associations there has been a growing realisation that they are causing themselves as much damage as they are the tenants because, inevitably, they are driving the most motivated and ambitious of their tenants to leave their estates and to find their homes outside. That is not good for the community, it is not good for the housing association and most assuredly it is not good for the tenant. Therefore, I hope that my right hon. Friend the Minister will send a clear message to the other place that people who own more than one house should not stand in the way of the aspirations of ordinary people who are tenants of charitable housing associations.

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Mr. Nick Raynsford (Greenwich) : I have listened attentively to the hon. Gentleman's speech, which faithfully followed the course of the Committee's consideration and report until he reached the last point, on which I recall no recommendation of the Select Committee. I think that he should make it clear that he is expressing his own view, rather than the view of the Select Committee, on that subject.

Mr. Jones : I am happy to underscore that because not only is it my view, but, over the years, it has been one of the points that have most characterised the differences between Conservative Members and Opposition Members. We believe in the aspirations of those people who wish to buy their homes, even if the hon. Gentleman does not. I could go on at greater length, but I think that many Members wish to catch your eye, Madam Speaker. In conclusion, I welcome the opportunity to consider the work of the Housing Corporation and to acquaint the House with the important work of the Environment Committee. I am also pleased to be able to pay tribute to my right hon. Friend the Minister for his constructive approach to the inquiry and his helpful response to the report. However, there remain some items of unfinished business. I warn my right hon. Friend that today's debate marks only another stage in the process and that, in the best tradition of the Environment Committee, we shall follow up our report before the dust of Marsham street has settled on his files.

4.24 pm

Mr. John Fraser (Norwood) : The Select Committee inquiry has done a service in focusing on a subject that is, in my view, of great economic and social importance. It is of economic importance because, at least in London --housing problems vary in different parts of the country--the capital cannot work efficiently unless there are affordable homes for those who work and receive moderate incomes. I am thinking of people employed in transport, education, health and other essential services ; people begining their careers, who cannot yet afford to buy homes ; and those who are training--often after university--and are still on moderate incomes.

I shall concentrate, however, on the social importance of housing, to which the Committee referred. We do irreparable damage to the fabric of society by gearing housing in a way that adversely affects the construction of society and the preservation of values. There is, for instance, something very wrong with a society that does not enable people to live near their parents. Enormous social reinforcements are provided when grandmothers can look after children and do some babysitting and other members of the family can provide a stimulus. That is an important ingredient in the health of the inner city.

It is equally important for parents to live near their own parents. Like many other Members of Parliament, I am visited every week by people who ask why their elderly mothers, aunts or other close relatives cannot live with or close to them, where they can be taken care of, rather than having to live in expensive old people's homes, sometimes unhappily.

Housing policy, albeit unintentionally, is not just breaking up families but making self-help and sustenance from within the family impossible. That is certainly happening in my borough. It is difficult to rebuild an inner city when the children who grow up successfully there

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cannot afford to live in the area--near their parents--and must move away. Rebuilding inner-city society depends on values as well as bricks and mortar ; one reinforces the other.

There is a further dimension to the social aspect : social housing must be truly affordable for those who work or want to return to work. We need to provide housing that is not a trap and does not create a poverty ghetto. What I find offensive is an apartheid in housing, based on social and economic status.

There are examples in my constituency, where housing has been built on reduced grant for assured tenancies. We are building homes with gardens where people cannot afford to buy a spade ; we are building homes with picture windows and greater floor space, where people can hardly afford curtains and carpets. Children are being brought up by parents who have no money to provide any social stimulus, entertainment or holidays--all of which are important to the growing-up process. We are building housing that imposes heavy penalties on those who want to return to work, to stay in work or to gain promotion.

Let me illustrate the problem by referring to some recent building by housing associations in my constituency. New three-bedroomed homes have been built : the rent is £70 a week, in addition to council tax, charges for heat and lighting--soon to be taxed--and water rates. Let us take the example of a person who is in work, but whose spouse is not ; they have two children, aged 12 and four. If that person's net income is £125 a week--about £150 gross--he or she will pay no rent, being very close to income support levels. If he or she receives an extra £1 in pay, they will lose 65 per cent. of it in a taper on the loss of housing benefit and 20 per cent. in the taper on council tax benefit. Thus, the result of an additional £1 a week will be a net gain of 15p.

Let us take another example--a person with the same family structure but earning £175 a week net. That person's rent becomes £38.05 a week --22 per cent. of a low income. If he or she starts to move up the salary scale, every extra £1 earned will result in the loss of 65p in housing benefit taper and the withdrawal of 20p in council tax benefit--leaving 15p. That is a hell of a loss of benefit for someone earning only £175 a week.

The penalty goes on and on. The figures are not substantially different in the case of a single-parent family and they are very much worse in the case of a single parent who has to pay for child care. Thus, people of moderate income are financially pinned into the home. Despite what has been said about rehabilitation and about concentration on the building of new estates, they are also corralled geographically. We are beginning to build houses with basements again. But they are proverbial basements. They are poverty basements, out of which it is very difficult to climb to the next floor. Such is the housing that is now being constructed with housing association grant.

In a way, the position is even worse than that. Because of the indicative costs, and because of the uncertainty of the cost of converting a street property, housing associations--at least those in my area--are buying fewer properties for rehabilitation. Here we have another reason for the greater difficulty. Every time an individual property is bought, one is up against the private financial bureaucracy that housing associations now have to face. People have to cope with increasing isolation and are not securing the street properties that they want so much.

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If I sound very pessimistic about the new type of housing on assured tenancies, my pessimism is increased by the fact that what is happening, in terms of the poverty trap, to the new assured tenancies--properties built with reduced grant--is happening also in the case of the older housing association properties that were the subject of secure tenancies, with rent control by the rent officer. The Milkwood estate in my constituency is run by the London and Quadrant housing association. That association applied for a rent increase, as, under Housing Corporation procedures, it was obliged to do. It asked the rent officer for an increase of £12 a week, but the rent officer decided on a figure of £14 to £15 a week. Typically, those tenants have had their rents increased from £37 to £51--a rise of 37 per cent. at a time when, for example, people who work for a local authority have had their income frozen.

The same kind of trap is being constructed in the case of the older housing association estates. The rents under private assured tenancies are dragging up those under secure tenancies. The cure is reproducing the complaint. As we try to eradicate the problems of the 1960s--I am thinking of housing problems associated with poverty and with the poverty trap--the Government are driving down the grant and pushing up rents under assured tenancies. Thus, we see the creation of exactly the same phenomenon as prevailed in the past.

And the prospects are even worse than that, I am afraid. It is not just that housing association tenants have to suffer penalties and disincentive. The situation can only get worse as the grant, which at one time was 80 per cent., comes down to 55 per cent. We know that the Government have massacred council housing. During the last Labour Government's final two years, the average rate of building social housing was 120,000 houses a year. The number is now down to 11,000, which is why I refer to the massacre of council housing. It is no wonder that the level of homelessness has gone up. It is not being replaced

Mr. Peter Ainsworth (Surrey, East) : Will the hon. Gentleman give way ?

Mr. Fraser : No, I shall not give way. We are short of time. Housing is not being replaced by housing association production, which is running at only 21,000 homes a year and is set to decrease according to the Government's projection of its expenditure. The Government are creating a greater handicap for housing associations in three ways. The first is caused by cuts. Tulse Hill school in my constituency was knocked down--the Minister will know it well from his time as a councillor in Lambeth--and the site was bought by a housing association to provide homes for 160 people. It lies idle this year and will be idle for the next financial year because the Government have run out of housing association grant, even at reduced rates. It is disgraceful that we have the land and building workers available, but we cannot get on with building houses in an area which has a high level of homelessness.

Secondly, the Government are imposing

Mr. Peter Ainsworth rose

Mr. Fraser : I said that I shall not give way.

The Government are imposing a form of financial cannibalism on housing associations. Associations are having to charge their reserves and existing stock, but the

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time comes when they can no longer eat their own flesh which, in financial terms, is what they are being asked to do. There will be a point at which private finance will say that there is no more security left on the balance sheet on which it can lend.

Thirdly, private finance is beginning to get nervous about the housing association movement. I do not want to be overly pessimistic, but it is getting nervous because it is looking in part to security that is gradually running out and to what is called the rent stream. On the newer housing estates in my constituency which I have described--they are typical of those in the rest of the country--there is not a rent stream but a housing benefit stream. The Department of the Environment does not have complete control over the housing benefit stream and will eventually come up against the golden rule of politics which is, "It can only go on for so long." I give examples of that rule : it was true of the powers and rights of trade unions--the Government said that they could only go on for so long ; it has been true of local government expenditure ; and it is true of housing benefit. As rents go up, as grants are reduced, as the poverty trap tightens and expenditure on benefits goes up, the Treasury will one day

Mr. Warren Hawksley (Halesowen and Stourbridge) : Will the hon. Gentleman give way ?

Mr. Fraser : No, I shall not give way. [Interruption.] Many hon. Members wish to speak and I shall best serve my colleagues by getting on and finishing my speech as quickly as possible.

Eventually, housing benefit expenditure itself will be challenged, which will create a great deal of nervousness in the City, among the building societies and banks, many of them foreign.

I am sorry to close on a pessimistic note. I have only one piece of optimism, which is that the golden rule of politics may yet help me out : "It can only go on for so long" must also apply to the Government.

4.37 pm

Sir Fergus Montgomery (Altrincham and Sale) : I am very glad to be called to speak. I must first declare an interest as my wife is chairman of a housing association

Mr. Fraser : On a point of order, Mr. Deputy Speaker. I too, should have declared an interest as I belong to a firm that advises some housing associations. I apologise for not declaring it at the beginning.

Mr. Deputy Speaker (Mr. Michael Morris) : I an grateful to the hon. Gentleman.

Sir Fergus Montgomery : My interest is not the same as the hon. Gentleman's. I declare an interest as my wife is chairman of a housing association and a member of the Housing Corporation. This is an important issue which was brought to my attention by a group of ladies who came to my advice bureau some time ago. They represented various religious beliefs and wanted to talk to me about housing. As my wife knows more about the subject than I do, I twisted her arm and made her attend the advice bureau with me. We listened carefully to the ladies who spoke with great sincerity and were clearly very concerned about people less fortunate than themselves. We all agreed on one point--the

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vexed question of affordable housing. I have raised the matter in the House before and I will continue to raise it because it is so important.

Some time ago, the Select Committee on the Environment warned of the serious consequences if the housing association grant should fall below 67 per cent. In fact, it has fallen to 62 per cent. today. The problem is that with less grant, housing associations have to borrow from the private sector and as a consequence, rents tend to rise. The net result is that we get rents that are not affordable by low-income households, and that causes great concern.

I am told that in the north-west of England, housing association rents for new homes are nearing market rents. The consequence is--this point has already been raised in the debate--that there are people receiving housing benefit living in those homes because they can better afford to live on the new estates. I am told that on some new estates in the north-west, as many as 95 per cent. of properties are let to tenants who are on housing benefit. They are often single parents with young children.

My right hon. Friend the Secretary of State for Social Security is giving serious consideration to the £9 billion that is spent on housing benefit. Nobody can blame him for that. After all, the social security budget is the largest budget of any Department and housing benefit is the third largest item in the social security budget. It is exceeded only by the state retirement pension and by income support.

If the amount that we spend on housing benefit had been fairly constant for years, one could understand leaving it alone, but the fact that it has risen dramatically in recent years and has now reached £9 billion has led my right hon. Friend carefully to scrutinise it. However, I sometimes wonder whether there is any co-ordination between the Department of the Environment, the Department of Social Security and the Treasury on such issues.

Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury) : Has my hon. Friend considered two factors that may affect the affordability ratio ? First, there are now far lower interest rates than was the case hitherto and, secondly, with construction costs that are far more reasonable than they were at the peak in 1988-89, it is possible to build and refurbish houses far more cheaply than before.

Sir Fergus Montgomery : I accept my hon. Friend's point. The fact that interest rates are far lower is beneficial, although it does not alter the fact that there are still too many people who find it difficult to get housing that they can afford. That is the point I am trying to make.

One of the recommendations of the Environment Select Committee is that the Government should try to develop a strategy for easing the problems faced by housing association tenants and others caught in the poverty trap. As rents increase, the disposable income of tenants who are not receiving housing benefit drops and the possibility of the poverty trap increases.

The National Federation of Housing Associations has defined affordability. It says that affordability exists if the majority of working households taking up new tenancies are not caught in the poverty trap because of dependency on housing benefit or because they are paying more than 25 per cent. of their net income on rent. The association

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stresses that rents are not affordable when more than 50 per cent. of working tenants are either caught in the poverty trap through being dependent on housing benefit or, if not on housing benefit, are paying more than 25 per cent. of their net income on rent. I do not want a growth in the dependency culture. I want to encourage people to stand on their own feet--that was one of the things that drew me to the Conservative party. Of course there are people who we must look after, such as the sick, the elderly and the disabled. However, I want to ensure that young people are encouraged to find work rather than believing that the state should provide for them.

I worry about the people who try to help themselves, such as those who take low-paid jobs and then find that they might have been better off if they had not gone out to work because they would have been more secure financially with benefits. It cannot be right, it is nonsense and economic madness for someone to be better off by not going out to work than by looking for a job. We must also think about the children who are brought up in such an environment. What sort of life will they have if they can honestly believe that they will be better off by not working than by seeking work ? That is an example of initiative being penalised.

Thrift by the elderly is also penalised ; I make no apology for returning to the matter yet again. All of us must know of elderly constituents who, during their working lives, have put money aside, who have done without things and who have saved for the proverbial rainy day. They find that when they retire, their thrift is used to penalise them. As the rules currently apply, people with capital of between £3,000 and £16,000 find that interest is assumed--"assumed" is the all-important word--at the rate of £1 a week for every £250 of capital. As I have said before, I wish that some kind person would offer me such terms because I would transfer my savings immediately and I would live happily ever after.

What incentive does the scenario I have described give to anyone to save ? For years, I have repeatedly posed that question and I have never had an answer. I hope that I shall get an answer today. I should like an assurance that the ridiculously high assumed rate on savings will be considered urgently.

Good housing is vital. As a nation, we can take pride in the fact that we have eliminated the awful slums that were such a blot on our industrial areas years ago. However, I often wonder whether we were wise to build the multi-storey tower blocks and to build the great council estates that sprawl on the outskirts of towns and which took people away from where they had lived as part of a community. We might have been better off spending money on the Coronation streets of this world--the old terraced houses which were well built. If we had only spent some money on modernising them and on making them more pleasant for people to live in, people would have been happier because there was far more community spirit there than one experiences today. However, I realise that there is no point in harping on about what happened in the past. Instead, we must try to ensure that we get things right in the future.

The construction industry needs a boost. I am told that about half a million construction workers have lost their jobs over the past few years. If the estimate that every unemployed person costs about £9, 000 per annum is right--that is the amount paid in benefit and the amount that is

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lost in taxation--a great deal of money is involved. If we could get those people back to work, there would be a tremendous boost to the economy. We desperately need more low-cost housing.

Mr. Charles Hendry (High Peak) : Is my hon. Friend aware that there are 850,000 empty houses in this country ? That translates into about 1,000 empty houses per constituency. Would he not rather those empty houses be brought back into use than more and more new houses being built over the green fields in his constituency ?

Sir Fergus Montgomery : I do not disagree with my hon. Friend. I watched him speaking effectively on this very point on television yesterday. I think that he said that Manchester city council was just about the worst in the country for unoccupied houses.

Mr. Hendry : Second.

Sir Fergus Montgomery : Second ?

Mr. Raynsford : Westminster.

Sir Fergus Montgomery : I do not think that Westminster is top of the list. The hon. Gentleman should verify his facts before he interrupts.

Mr. Tony Banks (Newham, North-West) : You do not.

Sir Fergus Montgomery : I am sorry ; I did not hear.

Mr. Banks : You do not

Mr. Deputy Speaker (Mr. Michael Morris) : Order. Sir Fergus Montgomery.

Sir Fergus Montgomery : I am very grateful, Mr. Deputy Speaker, to have your protection from the hon. Member for Newham, North-West (Mr. Banks).

By reducing unemployment, we would help the building industry and we would rehouse people who are in urgent need. I hope that we would also do something about homelessness. I get depressed at the sight of all those people sleeping rough in our cities today. There are, of course, many reasons for that. Some are there as a result of divorce and broken homes ; divorce has increased enormously over the years. Young people tend to leave home far earlier than they did and that has caused problems. Whatever the reasons, I hope that we can do something to try to solve at least part of that problem.

I praise my right hon. Friend the Minister for Housing, Inner Cities and Construction. He does a great job in housing in the Department of the Environment. He is one of the most caring Ministers and he has earned enormous respect from people in the housing association world. However, I end by making the plea that the Housing Corporation is given adequate funds to enable housing associations to provide housing at affordable rents for people who are desperately in need.

4.49 pm

Mr. David Rendel (Newbury) : This morning, I took the opportunity to attend a meeting of Newbury district council's annual housing forum--an excellent institution which has proposed a number of good ideas in recent years--where I spoke to the council's housing manager and asked his advice on what I should say in the debate this afternoon, were I lucky enough to be called. He said that he could summarise what I should say in just two words :

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"not enough". He said that there was not enough in terms of the approved development programme, not enough in terms of the proportion of housing association grant allowed for housing association schemes and not enough cheap rented accommodation.

If it is true that there is not enough of those things in Newbury, how much more must it be true that there are not enough of them in deprived inner- city areas.

Mr. Peter Ainsworth : The hon. Gentleman is playing true to the form of members of his party, who frequently castigate the Government for not spending enough and, once the Government do so, then say that they are spending too much. Is he aware that total spending on housing of the type that we are discussing has risen by about 60 per cent. since 1988-89 and now stands at about £12 billion a year ?

Mr. Rendel : I hope to show that, in practice, if the Government spend more on housing it is likely to pay for itself and that, therefore, whatever the Government are now spending, it would be beneficial to put more money in.

The housing manager to whom I spoke said that it was wrong for the Government to place more emphasis on shared ownership, for which there is limited demand : only a certain number of people can benefit from that form of tenure.

I recently visited a new housing association being built in Basingstoke by Wimpey, whose people kindly took me round the estate and showed me the different forms and sizes of housing and different forms of tenure. They told me which of the forms of tenure had been the easiest to fill. Interestingly, they said that the hardest to fill was shared ownership accommodation. When I asked why, they said that the answer was obvious : much of shared ownership costs more than outright purchase or renting, which is why people are unwilling to take it. A move towards more shared ownership, therefore, will have only limited applicability in trying to solve our housing crisis.

To a large extent, I welcome the emphasis on rehabilitation in the report of the Select Committee on the Environment. We should all like the standard of housing in this country to be raised. Much housing is in far too poor a condition nowadays and there are many advantages to be gained from rehabilitating older housing stock wherever we can. But a balance should be struck.

There is no point in putting all available resources into rehab or new housing. We must get the balance right. As long as the Government do not go overboard on rehab, I would welcome any moves to put money into that part of the housing movement.

The Government claim that they wish to spread their resources more widely by reducing the amount of housing association grant to each housing association property. One can understand their reasons for wanting to do that, but here again there is a danger in going too far. If Government resources are to be spread more widely, more money will be needed from the private sector and, as has already been said, there is a limit to which the private sector will be prepared to meet its share of housing costs.

Obviously, the more housing sector finance is demanded, the more rents of such housing will rise because interest on that finance will have to be paid. In addition, the larger the proportion of the money from the private sector, the higher the interest rate is likely to be, because the private sector will wish to have a higher interest rate if the risk is large. Clearly, there is a point at which it becomes

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counterproductive to continue to lower the percentage of housing association grant into each housing association property. The Government's new proposals go beyond that point.

What will happen ? Rents will inevitably rise and much housing will no longer be affordable. At the same time, the Government's proposals on homelessness will push more homeless people into the private sector, where rents will also increase, leading to more dependence on housing benefit.

Housing benefit is due to be capped. Somewhere, we shall come to a crunch point. Sadly, for various reasons, many people are losing homes that they have owned for a long time. For instance, people lose their jobs or face difficulties with the Child Support Agency. If they are vulnerable--for example, they may have young families--they will be housed by the local council and the costs of that housing will be met by housing benefit.

When such people find another job, they may be worse off. Even in the present situation, with people being housed in comparatively cheap rented accommodation by local councils, they may face difficulties in paying the rent. For the many who are housed in private rented accommodation at higher rents, the problem will be exacerbated. I foresee a difficulty because if someone loses their job and then their house, they will be rehoused, but if they find another job, they may lose their house again. The Government are leading us into the position whereby people can either have a job or a house, but not both. I am sure that that is not a position which the Government will wish to endure.

Mr. Peter Ainsworth : Is the hon. Gentleman aware that the rate of repossessions has been falling significantly in recent months ? Will he pay tribute to the efforts of lending institutions in achieving that ? Does not he accept that the housing market is on a stabilised, if not improving, trend ?

Mr. Rendel : I accept that there are some signs that the housing market is picking up. We have yet to see whether that will benefit or harm those who need cheap rented accommodation.

The Government say that the housing benefit tapering system will ensure that people cannot lose their house and their job. The problem with the taper, however, as I think all housing professionals accept, is that it is much too sharp. That is why people are often better off remaining on benefits than getting a job.

The tapering effect is 85p in every pound just on housing benefit and council tax, but when one takes on a job one may have extra expenses--for example, with the CSA or because of the costs of travelling to work. With the taper as sharp as it is at present, one may be better off remaining on benefit and not getting a job. We need an integrated tax and benefit system, but were I to discuss that now I should stray wide of the subject of the debate.

I commend two aspects of Government housing policy. The first is their living-over-the-shop initiative, which, if implemented across the country, would contribute a great deal to solving homelessness. It has many advantages. Shopkeepers can gain income and security for their shops. It can bring life back into the town centre and lead, therefore, to crime prevention. It can offer convenient places to live for young couples who have no children, or

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