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Mr. Raymond S. Robertson: This debate is intended to inform the House, so that we may have a sensible and rational discussion. The hon. Gentleman has criticised the level of the HSG order and the rent and management and maintenance assumptions that I have made. Will he give his figures in that regard, so that we may compare my proposals with his in the time available?
Mr. Chisholm: As in the local government debate, Ministers are trying to turn the Opposition Front Bench into the Government. We are nearing the end of 18 years of vicious, downward-spiralling cuts in housing--particularly council housing--and the next Government will clearly have difficulty addressing that situation quickly. The people of Scotland want to know only that our priorities in government are totally different from those of the Minister.
The Minister said openly that he wants to sell off all council houses in Scotland. We say quite clearly that council housing will remain central to our policy. The Conservatives want to pursue a privatisation agenda in Scotland, but we will take a twin-track approach: council housing will remain central, but we shall also support and encourage new housing partnerships in order to secure additional investment. Tenants will play a central and crucial role in those partnerships--the Government do not allow that under their local housing company proposals--and investment will be additional, rather than a cover for massive cuts, as has occurred under this Government.
Mr. Robertson:
The hon. Gentleman obviously got a bit heated and carried away, but he did not answer my question. [Interruption.] I shall keep talking while the hon. Gentleman gets his lines from the hon. Member for Monklands, East (Mrs. Liddell), so that she does not need to whisper in his ear. Are we to take it that the Opposition are unwilling to tell us alternative figures to those in the draft Housing Support Grant (Scotland) Order, and that we shall therefore argue and debate blindly about what the Government intend to do, getting nothing in return from the Opposition?
Mr. Chisholm:
Obviously, when we get into government, we shall have to examine very closely several factors that are relevant to housing. The first factor is the level of the public sector borrowing requirement and, alas, one of the problems that we shall need to confront is a public sector borrowing requirement of at least £26 billion.
If 1992 is anything to go by, the sum will be much larger, because then we were told that the PSBR would be £30 billion, and it was actually more than £45 billion. That is a serious constraint--[Interruption.] I am answering the Minister's question, if he would contain himself. That is a serious constraint on any Government's housing policy. It is not the situation that we would choose to inherit, but I remind the Government that that public sector borrowing requirement was run up by the Conservative Government; indeed, it is the final monument to their economic incompetence.
Obviously, we shall want to examine that. I shall talk about the 75 per cent. rule in a moment, so I shall touch on it only briefly now, by saying that we shall also want to consider the effect of the rule, including its effect on housing benefit. Obviously, when we have reviewed all that, we shall come up with specific proposals to start turning the crisis around, but, because of the vicious downward spiral that has continued for 18 years, there is no magic solution.
Once again, I refer briefly to the Scottish National party, which is committing a cruel deception on the Scottish people by pretending that housing debt can be magicked away. We realise that there is a serious problem of housing debt, but it cannot be magicked away, because, as this evening's figures show, the loan charges from housing debt run at more than £500 million a year, and in an independent Scotland, servicing that debt would put 3½p on income tax, quite apart from the many other SNP spending pledges.
Mr. Andrew Welsh (Angus, East):
I regret breaking into the hon. Gentleman's delusions, but I refer him to the policy document, which clearly sets out how that can be done. The Government have carried out a similar debt commutation for water services. If the hon. Gentleman had the imagination, he would realise that, when all Scotland's resources are available--given that we shall subsidise during the next five years by £12.5 billion, according to the Treasury's figures--those problems could be tackled. Under the hon. Gentleman's solution, there is no solution.
Mr. Chisholm:
That was an interesting and important intervention, because it is the second, or possibly third, time that the hon. Member for Angus, East (Mr. Welsh) has used the figure of £12.5 billion tonight. That figure is the Scottish National party election manifesto: everything depends on that. The SNP has tabled a parliamentary question that talks about £27 billion retrospectively. It has not received a parliamentary answer that talks about £12.5 billion, but the SNP has somehow managed to conjure that up.
The reality is that the SNP has made such an enormous number of spending commitments that they make any sense only if the SNP can conjure up massive surpluses, and that is the problem. On the point that the hon. Member for Angus, East made about debt commutation, of course debt can be commuted, but the debt must still be serviced; the loan charges must still be paid. In an independent Scotland, the loan charges on the present debt would be the equivalent of 3½p on income tax. I do not mind the SNP advancing that policy; I do mind it pretending that it is a no-cost option.
I return to the draft Housing Support Grant (Scotland) Order. Before the various interventions, I was talking about the unrealistic rent assumptions and inadequate management and maintenance allowance. That leads to the general subject of rents.
Since the Government came to power, average council house rents have increased by 535 per cent., compared with a general inflationary movement of 162 per cent. Although the housing support grant affects only a very few councils now, those rents will increase further as a result of the order, and also as a result of the 75 per cent. rule, which I want to discuss now.
Mr. Bill Walker (North Tayside):
The hon. Gentleman appears to be au fait with all the figures. Would he care
Mr. Chisholm:
I am surprised that the hon. Gentleman makes that point, because it was going to be my next but one point, and I am surprised that the Conservative party should want to highlight that, because housing benefit is crucial.
One problem is a lack of figures. I asked a parliamentary question about housing benefit on 29 January 1997, and I was told that housing benefit expenditure figures for Scotland were not available before 1988-89, which is unfortunate; but I shall refer to that question in a moment.
I shall first refer to another parliamentary question, the answer to which, by coincidence, was given to me on the same day at column 250, which shows the full scale of the devastating cuts caused by the 75 per cent. rule--even greater than some housing lobbying organisations have said. In the detailed table on 29 January, I was told that, next year, gross council housing capital expenditure will fall from £341 million to £221 million--a devastating cut of 35 per cent.
I know too well that that will have a devastating effect on council houses in my constituency. Throughout Scotland, 30,000 houses will not have the central heating work, the window replacements or the other necessary modernisation that they require. That is the key problem with the 75 per cent. rule.
I shall now mention something that we are considering very carefully in our review of policy--the housing benefit effect of the 75 per cent. rule. I do not have all the information yet, but I have contacted every council in Scotland to ask a specific question: what element of this year's rent increases is there purely to plug the investment gap caused by the 75 per cent. rule?
In Edinburgh, for example, £1.86 million has been added to council house rents so that a small part of the necessary window programme, which would otherwise be wiped out by the 75 per cent. rule, can be carried out. I want to obtain those figures from every council in Scotland. Then, to balance against the 75 per cent. rule, we shall have a figure that tells us how much extra has been added to rents, and therefore how much extra has been spent on housing benefit because of the 75 per cent. rule. The Government have taken no account of that in imposing that rule.
Mr. Raymond S. Robertson:
Will the hon. Gentleman give a straight answer to the following question, which he did not give in the Scottish Grand Committee in Montrose? God forbid, if there were to be a Labour Government, what would he do about the 75 per cent. rule? Would the rule stay at 75 per cent., would it be reduced to or 30 per. cent. or 25 per cent., or would it be abolished completely?
Mr. Chisholm:
I believe I have shown that we are taking a completely different approach to the matter; I cannot give a specific answer until I have done the research which the Minister has not bothered to do. He has imposed a 75 per cent. rule without even thinking of its implications for taxation via housing benefit.
We accept that the 75 per cent. rule has a PSBR effect. We shall be confronted by a massive PSBR resulting from the Government's economic incompetence; that is one element. The second element is the effect on housing modernisation, and a third element, which the Minister has forgotten, is the effect on housing benefit.
Unlike the Government, we acknowledge that there is a serious problem in the effect on modernisation and the effect on taxation via housing benefit. All that will be taken into account before we make a specific recommendation. The Government do not acknowledge the problem, because their fundamental reason for imposing the 75 per cent. rule was to force council houses into the private sector by starving the council sector of funds.
The Government have highlighted the fact that 72 per cent. of council tenants are on housing benefit, so one can be certain that the increase in housing benefit resulting from the 75 per cent. rule will be large. If we extrapolate the Edinburgh figure of £1.86 million, which is 5 per cent. of the council housing stock, and multiply that by 20, we are talking about almost £40 million, most of which is housing benefit. I do not know the final figures. We are examining the matter in detail.
Increased housing benefit is not just a public expenditure problem. The Government have shown in their housing policy that they are happy for rents to go up and for housing benefit to take the strain. That causes a public expenditure problem, and an affordability problem, with 72 per cent. of tenants on housing benefit. As rents go up, that creates deep poverty traps if people have such high rents that they cannot move from benefit into work.
Affordability is at the heart of our policy for public rented housing. If rented houses are not affordable, deep poverty traps are created. That is already beginning to happen in the housing association sector in England. With the reduction in housing association grant in England, people cannot afford to move from housing benefit into work. That is the last thing we want.
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