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10.35 pm
Mr. Nick Raynsford (Greenwich): I am grateful to my hon. Friend the Member for Southampton, Itchen (Mr. Denham) and to the Minister for allowing me to speak briefly in the debate. I pay tribute to my hon. Friend for raising this important subject, which affects a number of his constituents. He has rightly highlighted the disturbing implications for them of the manifest failure of schemes, and the way in which they were put into effect, that were supposed to resolve the problems in their homes.
Some wider issues of public concern ought to be addressed, and I hope that the Minister will attend to them, if not now at least in the near future. First, my hon. Friend the Member for Itchen made a reasonable case for the need for some kind of independent verification and inspection of the quality and validity of the work. Those involved in the process, whether PRC Homes or Michael Dyson Associates, all had a vested interest in the way in which the work was carried out. There seems to have been no proper mechanism to ensure independent scrutiny and inspection.
Secondly, there is the issue of public money. The works carried out to the defective homes under the relevant legislation involved the use of public money, and my hon. Friend has said that more public money is being spent on legal aid to try to enforce remedial works because of the failure of initial work. It is unsatisfactory for public money to be brought into use for a second time by a different route to enforce repair work that would not have been necessary if the original remedial action had been carried out properly.
The Parliamentary Under-Secretary of State for the Environment (Mr. James Clappison):
I appreciate the interest of the hon. Member for Southampton, Itchen (Mr. Denham) in this matter. Perhaps he and the hon. Member for Greenwich (Mr. Raynsford) will allow me to put these issues in the context of the housing defects scheme of assistance as a whole.
In the early 1980s, following discovery of cracking in the columns of an Airey house, the Building Research Establishment conducted a comprehensive investigation into all types of precast reinforced concrete houses built before 1960. The BRE discovered that, unfortunately, in a long-term chemical process known as carbonation, carbon dioxide interacted with the concrete to change its composition, so that the protection that it afforded to the steel reinforcement would eventually be lost, and in due course houses would become structurally unsound.
It is a slow process, and the BRE found that, in most cases, structural failure would not occur for some time. However, all dwellings of that type would eventually be affected, which meant that many former tenants--over 25,000 in England alone--had bought their homes at a valuation that did not accurately reflect the true likely dwelling life.
The homes had been sold in good faith by public sector landlords, in circumstances in which neither the vendor nor the purchaser could have been aware of the inherent defects. Therefore, with all-party support, we introduced the scheme of assistance embodied in the Housing Defects Act 1984. The scheme entailed that, over a 10-year period, owners would receive 90 per cent. grants, or 100 per cent. grants in cases of financial hardship, to reinstate their houses to the structural condition that their original valuation had assumed--the "defect-free" value.
Reinstating houses to that condition meant either removing and replacing the original PRC components or making them structurally redundant. In cases in which it was physically impossible to do so or it offered better value for money, or in hardship cases, the alternative form of assistance would be re-purchase. The primary form of assistance, however, would be through reinstatement.
It was a massive undertaking. In England alone, 22 different PRC house types were initially designated under the legislation as inherently defective, some of them with as many as 18 separate variants. Repair systems had to be designed for all of them that met the stringent standards on which lending institutions rightly insisted to accept houses as assets for mortgage purposes. Therefore, the National House-Building Council set up a subsidiary--PRC Homes Ltd.--to license repair systems that would meet the criteria, and repairers to carry out the work; to approve a list of inspectors to inspect the work; and to issue a 10-year warranty at completion.
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PRC Homes Ltd. was fortunate in being able to call upon advice from technical experts from the local authorities, who were to administer the scheme, and from the lending institutions, BRE, and my Department. The assessment committee met regularly over a period of eight years to evaluate, line by line and drawing by drawing, the specifications for a total of 53 separate repair systems. As a result of their work, less than 1 per cent. of owners eligible under the scheme who have applied for assistance are still waiting for works to be completed, and we expect the vast majority of local authorities, including Southampton, to have completed their programmes by the end of this financial year.
Lending institutions have been supportive throughout. A survey of the largest building societies, conducted in 1986, suggested that almost all would consider on normal terms an application for mortgage on a repaired property, and that generally remains the case today. However, even the most watertight licence and inspection system is vulnerable to human frailty, and there is always a possibility of problems, which is why the PRC Homes Ltd. warranty makes provision for ensuring that defects or damage caused by failure to comply with workmanship, materials or design requirements of the repair system that are discovered in the first two years after completion are rectified by the repairer or--if the repairer becomes bankrupt--by PRC Homes Ltd. itself.
In the specific cases in Southampton which the hon. Member for Itchen has brought to our attention, the repairer did vary a detail from that shown in the licensed system. The variation was picked up by the inspector, however, who instructed the repairer to return to site to carry out remedial work--which he agreed to do, pending release of retention moneys. As I understand it, the variation in no way compromised the structural stability of the dwellings, but merely meant that the new works to render the existing party wall structurally redundant were not completely independent of the unrepaired property next door. A continuous beam linking the two properties had been left, rather than severed at the party wall, as required by the repair system. Until the matter was remedied, obviously the repair could not be accepted by a lending institution as conforming completely with the licensed repair system.
Unfortunately, it appears that at least some of the owners were unwilling to give the repairer access to their houses to carry out the work, and that, for the same reason, later attempts by PRC Homes Ltd. to carry out an independent inspection were also unsuccessful. A warning of legal action by six of the owners then meant that PRC Homes Ltd. did not feel that it could be further directly involved at that stage.
That state of affairs persisted until December 1992, when the hon. Member for Itchen wrote to PRC Homes Ltd. asking for their assistance as an "honest broker". A site meeting was arranged at three of the properties, in April 1993, to agree a schedule of works, but, in June 1993, PRC Homes Ltd. were advised that the repairer had ceased trading.
That meant that PRC Homes Ltd. was now directly involved under the terms of the insurance certificate. However, in October 1993, one of the owners telephoned PRC Homes Ltd. to advise the company that the owners did not want repairs done, and that she and three of the other owners were considering legal action against the
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In April 1994, one of the owners contacted an official in my Department, who advised her that the scheme of assistance was administered by local authorities, and that it therefore did not appear to be a matter in which the Department could become directly involved.
Southampton city council then wrote to my Department in October of that year in response to a request from the owners, inquiring whether it would be possible for the council to re-purchase the properties. It was pointed out that there was no provision in the legislation for assistance by re-purchase after an owner had already received assistance by way of reinstatement grant. That remains the case today, and, in any case, as I have already noted, re-purchase as a form of assistance is available under the legislation only in very specific circumstances, which Southampton city council had evidently decided in 1989 did not apply here.
Re-purchase is not a feasible solution to the owners' problems, and while I obviously sympathise with their desire not to undergo further disruption to their homes
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Both Southampton city council and PRC Homes Ltd. are, I understand, in agreement on the works to be done. I also understand that the council has offered the use of an empty house as alternative accommodation while the work is carried out, and that PRC Homes Ltd. is prepared to meet storage and removal costs, even though the original works were carried out with the owners in residence.
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