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Mr. Richards : I thank the hon. Gentleman for giving way, because he is obviously very nervous. Would the-- [Interruption.] Would the hon. Gentleman explain to the House why the hon. Member for Sedgefield (Mr. Blair) is not a sponsor of the motion on which he is speaking ? Is it because the hon. Member for Sedgefield does not support the motion, or is it because the hon. Member for Sedgefield does not have a view on this issue, any more than he has a view on any other important issue ? Is not it yet another example of more blur from Blair ?
Column 823and the quality of its mouthpieces in the House is even poorer. We have just had a good example of that. You know, Madam Speaker, as we know, that there are three hon. Members
Mr. Heald rose
Mr. Straw : I have given two hon. Members chances and I shall not give way to the hon. Gentleman now, unless hon. Members can promise that they will address themselves to the report. Madam Speaker has already made it clear that there is a great deal of interest in the report among hon. Members on both sides--perhaps--of the House who have something serious to say. Three of my hon. Friends wish to make their maiden speeches and I do not want their time wasted by numerous interventions from Conservative Members.
Mr. Heald : The hon. Gentleman is arguing that investment has declined and that that is wrong. Is he making a commitment, on behalf of his party, that there would be higher public spending under Labour ? If so, how much ? Where is the beef ? It is all very well to criticise, but we need to know what he would do.
Mr. Straw : The hon. Gentleman makes a good intervention. I commend him for working it out himself, rather than relying on the central office brief. I shall answer his questions during my speech. We are concerned about using resources which are already there and using existing public spending in a different and better way. If the hon. Gentleman stays where he is, all will be revealed.
I said that the report confirmed our view about the role of public spending. It also deals with our belief about the importance of local authorities. Over the past 15 years, more than 144 separate Acts of Parliament have been passed, each one further removing the powers of competence of local authorities. The report records the widespread view of the experts whom its authors interviewed that
"much of government policy had reduced the capacity of local authorities to be successful partners in a variety of ways". It went on to lament that a major
"loss of autonomy was in the area of capital controls, in particular the restriction in the use of capital receipts from council house sales".
Fifteen years ago, the Conservative party controlled more than half the London boroughs, many of the metropolitan boroughs and by far the largest number of shire districts, including large towns and cities. But as electors have increasingly rejected the Conservatives as a party that could be trusted to run our towns and city halls, Conservative central government has become less and less attached to the realities of urban government and increasingly has had to act like a colonial administration, imposing its will and bypassing those with a local democratic mandate.
It is that which lies at the root of the incoherence of Government urban policy which is so amply spelt out in the report--that and a continuing arrogance that Ministers always know best. What they should have done instead is to listen first, accept advice and then act ; and that--partly to answer the question of the hon. Member for Hertfordshire, North--is exactly what the Labour party is doing. Under the chairmanship of my hon. Friend the Member for Leicester, East (Mr. Vaz), a full-scale inquiry into urban policy, City 2020, is currently under way. My hon. Friend will speak later in more detail on urban policy.
Column 824We have been following much the same approach with regard to housing policy with a major nationwide inquiry, Secure Homes 2000, which is being chaired by my hon. Friend the Member for Leeds, West (Mr. Battle). In stark contrast to the sham consultation of the Minister for Housing, Inner Cities and Construction in his review of homeless policy, our inquiry is listening to what people have to say before reaching conclusions.
I shall revert to the report. To all its criticisms, the Minister says that the recommendations "have been addressed", not least by the introduction of a single regeneration budget and the establishment of single regional government offices. We hope that those new arrangements work. However, we have serious misgivings about the way in which the single regeneration budget may operate. I have four points to make on that.
First, the basic schism between the Department of the Environment and the Department of Trade and Industry has not been resolved ; rather, it is bound into the bidding guidance itself. Secondly, there is a lack of clear criteria which has attracted a multiplicity of bids. I understand that there are 75 bids in the north-west alone. How will they be handled ? Thirdly, there is no evidence of a change of approach from the Government, so we have the absurd situation where elected local councils must compete in the bidding process with unelected, unaccountable and often self- appointed quangos and agencies.
Lastly, there is the question of cash. The simple truth is that the single regeneration budget masks a reduction in the resources available to urban areas. According to the annual report of the Department of the Environment, the amount of resources will drop by more than £100 million between this year and 1996-97. The new arrangements will not inspire confidence if they are simply a smokescreen for further cuts. Indeed, there is so little free new money that the 75 bids in the north-west are fighting this year for a share of a paltry £13 million to £14 million of new money. One of the many problems which the authors of the report faced was to discern the real objectives of the Government's urban policy. How people are housed, in what conditions and at what price is central to the health of all communities, urban, suburban, and rural.
Mr. Straw : I shall give way to the hon. Gentleman in a moment. Yet the authors would have had a similar difficulty in defining the objectives of Government housing policy, as they did on urban policy overall.
The objective of housing policy for any Government from whatever party should be to ensure that everyone has the choice of a decent home at a reasonable price. There should be a real choice of tenure, and in conditions which encourage labour mobility and avoid benefit dependency at the lowest sensible cost to the public purse. Against those tests, the Government's policies have plainly failed. Yes, more people are now owner- occupiers than was the case 15 years ago. To the extent that that has occurred as a result of free choice by people, it is to be welcomed. But we all know that, for many, that has not been the case. The organised collapse of local authority housebuilding and the institution of a policy of high rents have meant that many thousands of people have been forced to buy and are now trapped in homes which are worth much less than they paid
Column 825for them and which they cannot in practice sell. Thousands more face mounting arrears and the prospect of repossession.
Mr. Oppenheim : Does the hon. Gentleman think that local authorities should be able to spend more or all of their capital receipts ? If the answer is yes, does he think that that will add to the public sector borrowing requirement, or will it make no difference to public borrowing ?
Mr. Straw : We now understand why, yet again, the Conservatives got tanked in Amber Valley at the local elections. As my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) said, what a brilliant chap the hon. Gentleman is. Our policy on spending capital receipts is exactly the same policy as that of the Government between November 1992 and December 1993, with the same consequences. In a speech 12 days ago
Mr. Straw : I repeat my advice to the hon. Member for Amber Valley (Mr. Oppenheim). Only one hon. Member who has intervened so far has been wise enough to take it. Given the appalling quality of research at central office these days, Members should not even bother to read briefs, let alone ask questions from them. [Hon. Members :-- "Answer."] I have answered the question, and I will give many more answers in my speech.
In a speech 12 days ago to the Chartered Institute of Housing notable only for its complacency-- [Interruption.] Well, I was saving this for later but I shall raise it now. Our view is that capital receipts should be made available on a phased basis to local authorities to spend. Our belief is that
"There is simply no excuse for authorities not using those receipts in view of the needs"--[ Official Report , 5 July 1983 ; Vol. 45, c. 234.]
That was the view of the then Minister for Housing in July 1983, and it is for the current Minister of Housing to explain now why the Government's policy has changed--particularly because, although the Government's policy has changed, the Minister making that statement has not changed. It is exactly the same Minister who 11 years ago said that capital receipts ought to be spent who is now saying that they should not.
I wish to go on with my speech, and I hope that it will be noted by the Chair, as well as by my hon. Friends, how much time-wasting Government Members have tried to achieve.
Column 826In a speech 12 days ago to the Chartered Institute of Housing notable only for its complacency and overpowering self -congratulation, the Minister for Housing claimed that among many other achievements which the Government could be "proud of" were the latest data on mortgage arrears suggesting that
"there had been a sharp decline in the number of repossessions". That only serves to emphasise the extraordinary myopia of the Ministers. The "Roof" report, on which the Minister relied for his assertion of pride, spelled out that, despite a recent fall in total numbers, that still left
"well over half a million households unable to pay all of their mortgages" ;
and the report stated that repossessions were still at
"record levels compared to previous housing recoveries". Indeed, arrears are running at five times the level of 1984, and repossessions at four times the level.
It is this Minister, apparently so proud of his record, who is still presiding over the human tragedy of 800 families every week losing their homes because they cannot afford to pay their mortgages--in almost all cases through no fault of their own. That is a matter not for pride but for shame.
The Minister has evidently not read his own Department's housing research summary, which showed that one fifth of mortgage holders were experiencing problems with loan repayments. Aside from the Government's appalling record on arrears and repossessions, the Minister's speech to the Institute of Housing was remarkable for something else--his failure at any stage in his half-hour address to devote even a single sentence to the single most important, most damaging and most wasteful aspect of the Government's housing policy. He did not mention their policy of deliberately forcing up rents of local authority and housing association tenants at a rate many times that of inflation, while providing a virtually unlimited subsidy from the public purse to landlords of private sector tenants.
The present Administration have never disguised their hostility to council tenants. Throughout the 1980s, they forced councils to raise rents way above the level of inflation. Since the new housing financial regime was introduced in 1990, Ministers have set about securing rent increases that are nothing short of extortionate. Since 1990, average council rents have risen from £20 a week in 1989 to £33 in 1993. The increase required this year, at 7 per cent., is three times the prevailing level of inflation. Some local authorities, almost all Conservative, have increased their rents even more. In the Minister's borough of Ealing, the average rent is now touching £60 per week--almost twice the average council rent--as a consequence of a deliberate policy. That is one more reason of many why the electors of Ealing so decisively rejected the Conservatives at the polls just eight weeks ago.
I shall return to the social and economic consequences of the Government's policy, which are bad enough, in a moment, but even worse is the increase in rents of housing association tenants. The average rent for such tenants is now £38 per week, but new tenants are being given so-called assured tenancies and they are charged much more. The Minister cited an average rent of £44 a week, but, typically, tenants may be paying £60 or more. The Joseph Rowntree Foundation has produced evidence today to show that, in many cases, the assured rents being paid by housing association tenants are greater than the market rent they could pay in the free market.
Column 827The private rented sector, where rents have been effectively deregulated since 1989, is a similar story. The average private rent was already running at roughly twice that charged in the social housing sector. Despite that, private rents have risen by more than 44 per cent. in three years. As we heard from the Minister, the average local authority rent stands at £33.70, but the average publicly supported private sector rent, £73, is more than double that.
The high rent policy has had the most appalling consequences, which have undermined the prosperity and cohesion of the very communities in urban areas that the Government claim they wish to help. Council house rents are now so high that the Government are deliberately making a profit out of those 1.4 million tenants who still pay a full rent. By 1996-97, that profit is due to reach a staggering £600 million. Not a penny of it will go back to the tenants in terms of better repairs or in new homes for their sons and daughters and their children. No, that profit is used, in the chilling words of the Department of the Environment's annual report, "to offset" the cost of housing benefit in a new form of double taxation.
We have the outrageous situation in which council tenants in work or on retirement pensions, with incomes above housing benefit level but way below average incomes, will, by 1996-97, be paying on average an extra tax of £10 a week towards the housing benefit of those even less well off than they are. No wonder no one, but no one, any longer believes that the Conservative party is the party of either low or fair taxation. How can an extra tax of £10 a week on council tenants in work be justified ? They will be forced to pay what no one else will be paying--an extra £10 towards the social security costs of those who earn just a little less than them.
In housing associations, the excessively high rents paid by tenants are used in a different, but no more acceptable, way to pay for the reduction in grant which the Government have forced on the associations. It has fallen from 87 per cent. in 1988-89 to 62 per cent. this year, and it may be as low as 55 per cent. next year or the year after.
About 1.8 million council and housing association tenants still pay a full rent. They either do not want to or cannot buy a house, or they want to stay where they have always lived, to exercise the choice which the Government say is theirs. Those spiralling rents are increasingly turning the once balanced communities of council and housing association estates into welfare ghettoes, where almost every new tenant is on benefit. As existing tenants become unemployed, the housing benefit system makes it nigh impossible for them ever to escape their dependency on welfare.
On Monday, the Chief Secretary to the Treasury made a speech in Spain claiming that in Britain
"the family was weakened by welfare".
What he should have spelt out is how his Government's policy has deliberately increased the number of people trapped on welfare--people with no realistic chance of a job that can provide them with a family income even of the basic level which they get on benefit--and that one of the principal causes of that welfare dependency is the Government's policy of high rents.
Column 828The average family must earn £270 a week just to be no worse off than on benefit. A recent estimate suggests that every £10 increase in rent pushes up the edge of the poverty trap by between £25 and £70. Tory Members should deal with those issues if they are concerned about the spiralling cost of housing benefit.
Several hon. Members rose
Those in part-time work on family credit face the ludicrous situation that, for every extra pound that they earn, 80p may typically be clawed back and, at the extreme end, 97p is clawed back, principally through loss of housing benefit. Where is the incentive in that ?
Last year, the Select Committee drew attention to that problem. The National Federation of Housing Associations has estimated that, if grant rates are cut to 55 per cent. and rents rise accordingly, 85 per cent. of tenants will be eligible for housing benefit. In the council sector 15 years ago, just 18 per cent. of tenants were on benefit. Now the figure is 64 per cent. and rising inexorably every year.
In the private rented sector, rents are so high that only those eligible for benefit can even contemplate taking on a tenancy. Moreover, those tenants are much more likely to suffer poor physical conditions, or harassment from their landlord. The increase in the size of the private rented sector was another source of "pride" for the Minister in his speech to the Institute of Housing. His figures were wrong for a start.
He claimed, with typical error, that the sector had risen from "around 7 per cent. of total housing stock to just under 10 per cent."
But his Department's figures show a different and much more modest result-- from 9.5 per cent. in 1989 to 10.2 per cent. in December 1993. None of the statisticians in the Library has any idea where the figures come from. I have the Department's figures, which say what I have just said, not what he said. The only explanation that we can come up with is that, typically, the Government have confused the figures for Wales in 1989 with those for England in 1993. On the issue of the private rented sector, we see the greatest collision between blind dogma on the one hand, and common sense, housing needs and the saving of public money on the other. We accept the need for a role for the private rented sector, as I made clear in a speech to the Association of Residential Letting Agents earlier this year, but we do not accept the role which the Government have created for it. Any expansion in private renting has come about exclusively off the back of the public purse. The sector may be privately run but it is publicly subsidised. There is certainly no free market. The Government have deregulated rents, ended security and forced local authorities to pay almost any rent which landlords demand.
Column 829We are therefore faced with a stunning contradiction : allegedly one of the most free enterprise parts of the economy has become one of the most dependent on the state. Private landlords are now fast overtaking farmers as the recipients of the largest amount of state handouts. If Her Majesty's Government want to do something about people who sponge off the state, it is to private landlords, not to the homeless or the beggars, that they should direct their attention.
As a result of increasing rents, housing benefit costs have rocketed, and nowhere faster than for private sector tenants. However, neither tenants, nor the public purse, nor housing generally has benefited--only private landlords. In cash terms, housing benefit for private tenants has increased 3.5 times in five years, from £1 billion in 1988-89 to £3.8 billion in 1993-94. However, in that period the number of claimants increased by only one third--by 300, 000. Yes, the Treasury is right to be worried about that spiralling expenditure, but quite wrong if it believes that a policy of subsidising private landlords in that way makes any social or economic sense.
It is a matter of simple arithmetic to answer the question that the hon. Member for Hertfordshire, North rightly asked me. For the same money, many, many more people could have been housed in local authority or housing association homes--and they would have been better housed too. This is a crackpot policy which is wasting money and leaving people ill-housed. Do not Ministers ask themselves
Mr. Bates : I am immensely grateful to the hon. Gentleman for giving way. I remind him of an interview that he gave to "Roof" magazine, in which he set out his vision for housing in Britain, and said that his No. 1 priority would be to repeal the legislation, which was a provision to allow tenants to purchase their council homes. Does he regret that interview ?
Mr. Straw : Do I agree with it now ? Our policy has changed-- [Interruption.] --but not quite as frequently as that of the Conservative party has changed. If the hon. Gentleman cares to read the reports of the Standing Committee on the Housing Bill for January, February and March 1980, on which I sat, he will realise that much of our opposition was not to the principle of the sale of council houses--for Conservative Members forget that the previous Labour Government had allowed local authorities to sell council houses at a discount. Our opposition to that
Column 830Our opposition to that was based on our anticipation that councils would not be allowed to use the capital receipts from the sale of houses to restore and renew the housing stock.
The other point of that interview, and of a speech that I gave to Shelter in July 1980, which certainly stands the test of time, was that I predicted --although I do not often get such things right--that, 10 years later, there would be a housing crisis, with many more people homeless and with a great shortage of social housing, precisely because the Government had stopped authorities from using their capital receipts.
Several hon. Members rose
To the extent that Ministers ask themselves the question about the
Mr. Riddick : On a point of order, Mr. Deputy Speaker. I apologise to the hon. Gentleman, but he had mentioned, before you took the Chair, that he had given way six times and that that was enough. In fact, he has now given way only five times, so, if he intended to give way six times, he has one left.
Mr. Straw : To the extent, Mr. Deputy Speaker, that Ministers ask themselves how that £2.5 billion spent on private sector landlords is being wasted, we know that they never come up with the correct answers.
Housing benefit costs are increasing. Ergo, say Ministers, it is not the cause of that vast increase that is to be tackled--spiralling Government- dictated rents--but the victims of the policy, the tenants, who are now confronted by the prospect of regional caps on housing benefit, or of all tenants being forced to pay something of their rent, however poor they are. Always remember, by the way, the provenance of the policy that tenants should pay something of their rent. It was a key part of Lady Thatcher's poll tax arrangements, and neither the policy nor she survived them.
There is worse. Such is the dogmatic refusal of Ministers to acknowledge the key role that the public sector should play in social housing that, not content with squandering an extra £2.5 billion on private landlords, even more money is to be paid to them as part of the Government's bizarre policy of changing arrangements for the homeless. The Minister spoke about that in his institute speech, saying that he wanted the private rented sector to play a "yet larger role" in solving our housing and homeless problems. But it will not solve them--it will make them worse, and at far greater cost to the taxpayer than would otherwise be the case.
Mr. David Clelland (Tyne Bridge) : I am grateful to my hon. Friend for giving way. [Interruption.] Payments by Department of Social Security claimants to private landlords is one way in which private landlords are being subsidised, but it is not the only way. Many private landlords in my constituency, and I am sure other constituencies, are encouraging criminal behaviour in the regions in which they operate to drive down the price of properties, drive out owner-occupiers and knock down
Column 831prices. They are then moving more Department of Social Security claimants into the properties and receiving more subsidy from the Government. The Government support such crooks.
Mr. Straw : To calm Conservative Members, may I say that I was reserving that intervention to bring the total number up to six. I find it difficult to count when I am talking, although I know that Conservative Members find it much easier.
My hon. Friend the Member for Tyne Bridge (Mr. Clelland) is right and raises a serious point. With some exceptions, the serious housing benefit frauds and scams are carried out not by tenants, but by landlords, who are making £3.5 billion out of the public purse. They are the biggest scroungers of the lot.
Ministers must address one last consequence of the high rents policy : its effect on economic activity in raising the level of inflation and increasing unemployment. Oxford Economic Forecasting has estimated that every 10 per cent. increase in public sector rents raises retail prices by 0.3 per cent., reduces gross domestic product by 0.1 per cent., increases unemployment by 25,000 and, overall, increases net Exchequer costs by £100 million. Where is the sense in that ?
Just this morning, in complete contrast to and damnation of the Government's amendment, the Joseph Rowntree Foundation published a major report arguing that, unless action is taken to increase the supply of homes for rent, the housing market will be destabilised and that that "will prove damaging to the UK economy as a whole". The report calls, as we do, for an end to policies that are designed to force up rents--especially in the south--for action on mortgage arrears and repossessions, and for action on the private rented sector. Yes, we want to see a viable private rented sector, but we want landlords who accept public subsidies to accept, in return, social responsibilities, including proper regulation of the rents that they charge.
The Joseph Rowntree Foundation report blew another hole in the crumbling edifice of Government housing and urban policy. That policy has been dominated by defunct and discredited ideas, and has denied choice and decent housing to hundreds of thousands of our citizens. It has undermined labour mobility and is now wasting billions of pounds of the public's money.
We now need a change to sensible housing policies which, as the local elections show, people are demanding. As Howard Davies, director general of the Confederation of British Industry, recently said, the shift in subsidy from bricks and mortar to individuals has gone far enough. I would add that it must shift back the other way. Local authorities must be given back their role to build homes for rent. There must be a phased release of the £6.2 billion of capital receipts, still locked in the bank, so that councils can start using some of their money to start that new building, house those in need and put back to work some of the half million construction workers who have paid for the Government's failure by months or years on the dole.
The policy of making scapegoats of the homeless must be abandoned. The Government should recognise that homelessness, and its great increase since 1979, is not an accident or a matter of personal choice. It has arisen due to the malfunctioning of both the labour and housing markets. The double taxation of council tenants who are in work or who are retired and live just above benefit levels must end,
Column 832as must the wasteful and self-defeating policy of extortionate rents in the public sector. New measures of flexible tenure must be introduced and better advice must be given to intending owner-occupiers, so that the dream of a home of one's own never again turns into a repossession nightmare for the families concerned. Labour's approach has won the popular backing of the electorate. Following this month's Euro- elections, one can now walk from Southend to Swansea, from Dover to Dumfries entirely on Labour territory. The once dominant party of the town and city halls of England, the Conservative party, now controls just four London boroughs, one metropolitan borough and not one major town or city in the shires. Only 11 per cent. of the country's council housing stock is in Conservative hands, because the voters--owner-occupiers and council tenants alike--no longer trust the Tories to sustain their communities.
Instead, they trust us, because the people know that, from Labour, they will get sensible, thought-through policies which once again will ensure that everyone is decently housed--one of the most basic rights of any citizen in any democratic state.
commends the Government's achievements in urban and housing policy over the last 15 years, and recognises that Britain now leads the world in imaginative and constructive policy development in these areas ; notes with approval the development of the Single Regeneration Budget and the Government Offices for the Regions which build on the widely recognised success of City Challenge and other initiatives ; welcomes the formation of English Partnerships to carry forward the drive to improve derelict land ; commends the continuing success of Urban Development Corporations in transforming areas of dereliction and disuse ; notes that statutory homelessness acceptances are continuing their welcome decline ; notes that housing associations are now expected to provide some 179,000 homes with Government funding over the first three years of this Parliament, substantially in excess of the 153,000 promised in 1992 ; congratulates the Government on the success of the Right to Buy and its tenant management initiatives ; notes that the English House Conditions Survey showed an improvement in the fitness of housing in all sectors between 1986 and 1991 ; applauds the Government's continued efforts to secure maximum value for money from public spending, and to target resources on the areas and individuals most in need ; and calls on the Government to continue to place England's urban communities at the heart of its policy, and to draw on the commitment and energy of local people and local bodies in tackling the problems of cities, while maintaining the sound public finances necessary for the sustained economic growth which is an essential component of further improvement not only in urban centres but in the whole country.'.
This debate has proceeded along the same lines as a debate that the Labour party initiated three weeks ago, when the hon. Member for Islington, South and Finsbury (Mr. Smith) opened the debate on the environment. He chose the subject matter, and in so doing highlighted the Government's success, revealing a total lack of policies from his own party. Time after time, he was challenged to produce a single proposal or policy, or even to share his general thoughts on what those policies might be. He chose his own ground and was defeated game, set and match. [Hon. Members :-- "When did you write this ?"] I wrote it before I came here today, for two reasons : first, it concerned a debate held three weeks ago ; secondly, I had read the statement by the hon. Member for Blackburn (Mr. Straw) in which he introduces the Labour party's