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Council Housing

12.30 pm

Mr. Austin Mitchell (Great Grimsby): It is a privilege to begin this brief debate on council housing. Labour councils all over the country have been proud of their contribution to building council houses and maintaining council house stock. We should be proud of the social housing sector because it belongs to the people and is administered by their elected representatives.

Council housing is now more necessary than ever. Prices in the private sector are rocketing, especially in the south-east, because the laws of supply and demand have gone mad. Although demand for housing has increased, we are building fewer houses than at any time since the great depression of the 1920s and 1930s. People are being priced out of the private housing market; they cannot afford it. We now have a lot of subdivision of families. Single parents, in particular, cannot afford to buy, so they need social housing.

The amount of social housing is shrinking. Housing associations have more money, but they are building fewer houses because costs are rising. A Labour Government—I will repeat that phrase with emphasis in the way that Neil Kinnock would have done at a Labour party conference—a Labour Government are selling council housing at a faster rate than the Tories ever did. The target is the transfer of 200,000 council houses in large-scale voluntary transfers each year.

To pressure councils into selling, the Government have deliberately underfunded council housing. Councils cannot keep up with the volume of repairs. The backlog is huge. In 2000, the Government estimated that the repairs backlog amounted to £10 billion, and the improvements backlog was estimated at £9 billion. In other words, a total of £19 billion is needed for repairs and improvements.

In tackling the problems of social housing, housing associations have many advantages that councils do not have. Housing associations can borrow on the stock market, which gives them a lot of power to build houses and carry out repairs. Their tenants do not have to pay the daylight robbery system—a system whereby the housing benefit of council tenants is paid by other council tenants out of the housing account, which is money provided for housing. Thus the poor are being asked to subsidise the housing benefit of the poorest, instead of that money being paid from the social security system. Tenants of housing associations do not have to pay that. The result is that councils, which are underfunded, have real problems in keeping up with repairs.

My council—North East Lincolnshire council—can do only the most urgent repairs because it does not have the money to tackle other repair problems. We did some calculations for a presentation for the National Audit Office's review of large-scale voluntary transfers. There are about 2.8 million council houses and we calculated that the average rent is some £2,500 a year. Of that, £1,500 goes on management, maintenance and major repairs, leaving £1,000 that is, in effect, siphoned off by Government. Most of the money goes to pay for the daylight robbery system in which housing benefit is paid by councils rather than by the social security system. When it comes to a large-scale voluntary transfer, that

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£1,000 is available to the housing associations to play with, but not to the councils. It gives the housing associations an advantage. They can do repairs, provide better services to tenants, and build new houses.

Last month, I attended a housing conference with the north-east branch of the Chartered Institute of Housing. I heard an exciting presentation by Tom Mannion, the chief executive of the Irwell Valley housing association in Manchester. His association has few problems with arrears, which can usually be quite a problem for councils. It has few problems involving crime, drug-addiction and expulsions, and is able to provide a more effective service, good behaviour contracts with tenants and gold service guarantees so that, when repairs become necessary, tenants can choose which repairs are to be done and the bill is not paid until they are satisfied with the work. Repairs are to be done as soon as a tenant with a gold service contract requests them.

I asked at the conference why councils did not offer the service as a means of improving their housing. My suggestion was received with a laugh of pity. Housing managers gently explained to me that councils do not have the same numbers of staff to go out and cosset and counsel the tenants as housing associations. Nor do the councils have the money or the flexibility to provide such a service. That is why councils face a repair backlog and the problems of sink estates where nobody wants to go. The housing there is going steadily downhill and the council can do nothing about it because it does not have enough money for repairs and renovations to make the estate attractive.

Then, along comes the Audit Commission and kicks councils when they are down. We have just had an Audit Commission report on North East Lincolnshire council that comments on the low morale of staff in the housing department. It says that repairs are done more on a fire brigade basis than planned, and that it would like that to be the other way round. It comments on the number of voids. All those problems are the direct consequence of the council having no money. The lack of money for repairs for the deteriorating estates means that repairs have to be done on a fire brigade basis rather than being planned and orderly.

We should all ask a basic question of the office of my right hon. Friend the Deputy Prime Minister: why are such things being done to social housing when this country needs more social housing and more council housing, as a major contributor on the social housing scene? I hope that the Minister will enlighten us today, but I believe that such things are being done deliberately to make the life and the lot of council tenants so miserable that they vote for large-scale voluntary transfers. Such things are done to force transfers on councils and ensure that tenants vote for them.

Large-scale voluntary transfers are expensive. We are giving away a massive public asset. We are paying the cost of the councils' campaigning, to bamboozle the tenants into giving the asset away. We are giving away the housing benefit of those tenants who transfer, because the benefit comes from the social security budget, not from the other tenants. We are writing off debt to persuade councils to agree to large-scale voluntary transfers. In estimates for 2003-04, £800

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million will be allocated for the purpose, which is nearly as much as the £843 million allocated in the same period for the total budget for council housing credits to fund all council housing. We are giving away that much to encourage large-scale voluntary transfers.

Birmingham City council was offered £650 million in written-off debts if it transferred its council housing. It was taken back when the tenants voted no to a transfer. Ministers should be thoroughly ashamed of supporting, countenancing and continuing such a policy.

Despite all the bribery and bullying, the 200,000 homes target for transfers is not being met, even though everything is predicated on it. The decent homes target is predicated on a transfer of 200,000 homes a year. That target will not be met, and is being quietly dropped. Despite the pressures, tenants are voting no. There have been no votes in Dudley, Birmingham, Southwark, Merton and Ealing, and councils in Nottingham and Sheffield have decided not to go ahead with the transfers. Although everything is predicated on it, it ain't working. That must produce a new decision and a policy change, because policy is running into the buffers in this area. Tenants want to stay with the council. No wonder the Government are beginning, slowly—far too slowly—and painfully to pull back from the implications of their policy. The Local Government Bill, which was announced in the Queen's Speech, contains a provision for councils to be able to borrow. I do not know whether borrowing would be on rents, stock, or service charges, but that is an advance, provided that it is prudential. Of course, everything the Government do is prudent anyway, so I am not worried about that.

The Government are allocating more money slowly and grudgingly, and they are making it somewhat easier for many arm's length management organisations. However, if we are to have an arm's length management run by councils, I do not see why housing cannot stay in a council's possession, with the same advantages given to the council as are given to arm's length management organisations, in which there is potential for corruption. Policy is being modified and it should be modified, because it is stalling and running into the buffers.

I hope that the blue skies review, which my right hon. Friend the Deputy Prime Minister will announce in January, will continue the process of change. I have great confidence in, and enthusiasm for, the Deputy Prime Minister, who could be a driving force behind the big social housing programme that this country needs. That programme has, however, been held in check because my right hon. Friend's Department has not had enough money. With the money and the flexibility that allows councils to borrow, he could initiate the drive that we need. So much else depends on decent housing, particularly social housing, for those people in our society who are less well off. How can people benefit from the provisions for education that we are making unless they have good housing? How can people benefit from the improvements in health that we are making unless the causes of bad health in housing are removed? How can we have a settled society with lower crime rates and less drug addiction unless people have good, affordable social housing? How can we reassert neighbourhood ties unless neighbourhoods are well housed in social housing? None of those things can be done without good housing.

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I simply ask for a level playing field between councils and housing associations. We are proud of councils, which are still mainly Labour and which built the housing stock and created the housing associations. Let us end the daylight robbery whereby housing benefit for council tenants is paid out of housing funds. We must allow councils to borrow, so that they can build, renovate, repair, use the leverage of credit to increase the power of tenants and begin a programme of building. If housing associations and councils are on a level playing field, so that there are not the bribes and benefits to vote for large-scale voluntary transfers, they will be able to compete or co-operate.

What is wrong with competition in social housing? It will serve the consumers' needs. What is wrong with competition to serve particular areas' needs? In some parts of the country, there are too many council houses and numbers need to be reduced. Let us allow councils and housing associations to co-operate so that those can be pulled down and so that they may replenish and review where necessary. Let us allow them to co-operate to build anew where it is needed. With a level playing field we can do that. I ask for a new deal for council housing, so that we can build, improve, repair, renovate and pull down as necessary.

It is almost indecent that Ministers and hon. Members, including myself, are sitting here in London benefiting from the giddy escalation in the price of houses that they own, which are financed out of a parliamentary grant, and, at the same time, are treating indecently those who cannot afford to buy houses and who live in social housing. Although such people might like living in social housing—it should be provided for them—we should not treat people who do not have the money to put down on a house and benefit from the appreciation in value as badly as they are being treated.

Why are we persecuting council tenants? Why are we making life so difficult for Labour councils, which are the front line of the Labour party and which need support, help and encouragement to fulfil their aspirations for their people? Why are we devoting so much time and effort to shuffling round the ownership of social housing when we should be making a massive effort to build, repair, renovate and improve? Why are we throwing away public money on large-scale voluntary transfers when the need is for a massive programme of new building not only to regenerate the economy and provide jobs, but to regenerate the local scene and local society and to improve the lives of the people whom we represent?

12.45 pm

The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Mr. Tony McNulty) : I welcome the opportunity to join my hon. Friend the Member for Great Grimsby (Mr. Mitchell) in reflecting on the importance of high-quality social housing and effective housing management services. I am afraid that he will have to wait for at least a couple of weeks for the answer to several of his questions until my right hon. Friend the Deputy Prime Minister's statement in early January on blue skies—not least—and other things.

I shall set out why the Government believe that retaining housing stock in local authority ownership is only one option for delivering our objectives. It is an

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option. Despite the doom and gloom that has been painted, there is significant investment in our council housing stock and the option remains for all local authorities.

The delivery of thriving, inclusive and sustainable communities in all regions is at the heart of the Government's agenda. As my hon. Friend said, the issue is all about communities, and we must help people who live in some of our most deprived areas to live successfully, to fulfil productive lives and to realise their potential. That was reflected by what my right hon. Friend the Deputy Prime Minister said on 18 July when he announced his decision to examine whether his Department's programmes and policies were delivered in the best way in which to achieve those ends and to secure value for money while achieving the collective aim of the decent home.

I tell my hon. Friend that the decent homes standard has not been dropped in any way, shape or form. We are bang on target to achieve our interim target for 2005. As the Minister for Housing and Planning, Lord Rooker, said recently, we are about 10 per cent. shy of the target for 2010. However, there is not the doom and gloom that my hon. Friend suggested. The fact that we are 10 per cent. off a target that is not due to be met for eight or nine years does not mean that we should tear everything up and start again. I repeat that the decent homes target remains and we shall not be changed from that. The root of everything that we are talking about is the decent standards target and, as my hon. Friend said, the right of everyone to live in a decent home.

The 2002 spending review settlement also provided significant additional resources for housing. By 2005-06, we will be spending almost £6 billion annually on housing compared with the planned spend of £1.5 billion in 1997-98. Alongside that massive increase in resources, the capital receipts initiative that we brought forward in 1997 freed up about £12 billion of receipts up to 1999-2000. That demonstrates our commitment to a step change in delivering our objective of giving everyone the opportunity of a decent home.

When considering how the delivery of decent social housing contributes to the sustainable communities agenda, we are clear that several routes are available to tenants and their landlords. The housing policy statement that was published in December 2002 by the Department of the Environment, Transport and the Regions—a previous incarnation of the Office of the Deputy Prime Minister—set out four housing management investment options for local authorities, and my hon. Friend alluded to them. One such option is the use of arm's length management organisations. It does my hon. Friend no credit to suggest that there is potential for corruption in ALMOs, and he cannot make such a simplistic statement without a degree of justification.

Other options are the private finance initiative, housing transfers and stock retention within existing resources. Three of the four options mean that the housing remains in local authority ownership, and only housing transfers cause the ownership to move outside the local authority. We believe that it is wrong to see that change of ownership as an obstacle while our goal is decent social homes and decent social housing.

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Many authorities and their stakeholders have already determined the option that will best suit them, but almost 100 authorities have yet to decide how they will deliver the decent social housing objective. Time is running out for those authorities and it is wrong that tenants might suffer as a result of inaction by their landlords. Therefore, we recognise that without action by all local authorities, we will not deliver our target by the agreed 2010 deadline. All social housing providers must up their game. We intend that the Government's current review of decent home delivery vehicles will help to ensure that there are no obstacles to local authorities delivering as both providers and enablers and, therefore, no excuses for not doing that. As I have told my hon. Friend, that will be duly reported by my right hon. Friend the Deputy Prime Minister in January.

I recognise that my hon. Friend believes that local authority retention of social housing should be a guiding principle, and that he campaigns for that. However, I believe that our focus has to be on the interests of the tenants—on the conditions of their homes and the services provided to them—rather than simply on who owns the housing. Several of the actions that the Government have already taken demonstrate that: the moves to a consistent rent-setting formula for local authorities and registered social landlords that ensure that rents for similar properties in the same location in different sectors will be similar; the introduction of a single housing inspectorate service to ensure consistent and high standards of provision; and the steps that are being taken to achieve a single social tenure.

There is also an increasing focus on the separation of the landlord function and fulfilment of the role as a strategic housing authority, regardless of whether the local authority retains ownership of the housing. That allows the landlord to focus on improvements in the physical condition of the stock, management arrangements and tenant involvement, and it frees the local authority to ensure that its statutory housing duties are carried out and that housing policy decisions contribute to securing wider community regeneration, as my hon. Friend said. That is possible in private finance initiatives, arm's length management organisations and housing transfers. However, in addressing my hon. Friend's concerns, I will focus on housing transfer.

We know that where tenants play an integral part in choosing the housing transfer option and developing the proposal, they also support it at the ballot. That has not changed recently, despite the cases that my hon. Friend mentioned. During the life of the recent round of housing transfers, when all the votes for and against stock transfer are added up, there are currently four votes in favour to every one against.

There have been notable exceptions to that, such as in Birmingham. That is why tenants are consulted. However, it is wrong to suggest that there has been a sudden and massive sea change, and that over the past year or so every ballot has gone the no way rather than the yes way. The votes are still overwhelmingly in favour

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of transfer, and I do not accept there is a deliberate conspiracy to make council tenants' lives so miserable that they will do everything but vote against transfer.

Mr. Austin Mitchell : Where surveys are conducted in isolation from the campaign for or against large-scale voluntary transfers, council tenants state that their preference is to stay with the council because they can influence it democratically and it is a known and understood system that they quite like. It is true that where there is a campaign where all sorts of glittering blandishments are held out to them of repayments and renovations and a new happy future they might feel the other way, but in the abstract—

Mr. Deputy Speaker (Mr. Edward O'Hara): Order.

Mr. McNulty : My hon. Friend should not belittle the intelligence or sophistication of council house tenants. He has claimed that they are bamboozled now that there are glittering prizes. They make clear decisions on their futures and those of their homes on the back of the information that both sides put in front of them. To talk about them being bamboozled, as though they do not fully understand the process or are easily led, undermines the integrity of my hon. Friend's case and does not say much for his impression of what council tenants are like.

The transfer of housing to a registered social landlord provides an important one-off chance for local authorities, residents and other stakeholders to improve community well-being. It is a vehicle to deliver the decent homes standard and major repairs and improvements to the housing and physical environment, but it can also deliver a range of other things: better housing management services that are strongly linked to a broader neighbourhood management approach; greater tenant participation in the decision relating to their homes and estates, far more often than is the case under the council; accountable and transparent governance arrangements; and partnerships with other service providers and stakeholders to deliver joined-up regeneration and new facilities in the housing transfer area that draw on external funding streams. As my hon. Friend suggested, stock transfer works best in the context of the regeneration of the entire community, rather than when it is simply a function of transfer or management. Together, these things add up to a way to secure a sustainable future for the community.

Confident, empowered tenants create stronger, safer communities. The best way to ensure that people get the best housing possible is to talk to them—to give them accurate and honest information, to ask them what they need, and to give them a chance to influence what happens to their homes and neighbourhoods. For their parts, landlords should not be afraid to get tenants heavily involved in considering how to deliver a sustainable housing service. That would help to challenge rumour and misinformation, and would allow reality to see the light of day.

The involvement of tenants secures their role in a shared vision for the future and therefore helps to create stronger, safer and better-run communities. When we put tenants first, they become active consumers, pushing for better standards and keeping landlords on their toes. They play a part in how increased investment can revive

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and renew our communities. From councils to the private finance initiative or arm's length management organisations, agencies are increasingly understanding that housing is not just about bricks and mortar, or the decent homes standard; it is about revitalising and regenerating our communities. My hon. Friend the Member for Great Grimsby tells a tale of woe but, under the housing transfer, more than 700,000 council dwellings have moved to the housing association sector. More than £11 billion of private finance has been secured for investment in the repair and improvement of the transferred stock and, through the receipt paid to the local authority, for funding much-needed new homes.

As I have made clear, we are looking not only for better homes but for better communities. I am therefore saddened when debates on improving housing conditions and services focus on ownership, and when discussions on housing transfer are hijacked and made into a wider debate, often centred on political allegiances. That is not fair to tenants and it destroys the opportunity to make a real difference.

Our policy of providing additional resources to councils that set up high-performing ALMOs to manage and improve their housing stock is also starting to deliver results. So far, we have accepted 21 councils on to the programme and have made conditional allocations of more than £660 million for the three years to 2004-05. To qualify for that funding, arm's length companies must achieve at least a two-star rating from the housing inspectorate. The first results are encouraging; we heard only yesterday that all eight ALMOs in the first tranche have qualified.

I make no apologies for the National Audit Commission inspecting housing departments. I do not accept what my hon. Friend says about inspection being a bogey word for adding to the sad lot of housing departments. There are flourishing housing departments throughout the country that are run by councils, that do a good, professional and committed job for their tenants. There are others that do not, and if the commission finds them out and sets up a rescue package, and that package is ignored, we are responsible to local tenants to ensure that they get the housing service that they deserve. I was a councillor for 11 years, and can say that there is no magic wand. Housing departments are not all good, and registered social landlords or private providers are not all bad. It is

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incumbent on us to use the inspection process to ensure that council housing departments do what they can to improve the condition of stock and the lot of the tenants.

I congratulate those councils with ALMO status on achieving high standards. Tenants can expect investment to bring nearly 80,000 council homes up to the decent homes standard. Inspection results from the second tranche will come through next year. The private finance initiative is also progressing. In 1999, eight local authorities were chosen to pioneer the housing revenue account PFI scheme as pathfinders. There are now 18 HRA PFI schemes and five non-HRA PFI schemes in procurement.

HRA pathfinders and round 2 schemes were allocated £760 million in PFI credits, and are expected to refurbish about 30,000 homes. Some of the schemes are expected to sign contracts early in 2003. Two non-HRA schemes have signed contracts, and a further four are at different stages of the process.

To conclude, I urge my hon. Friend to focus not on the ownership of social housing, but on helping to ensure that there is minimum delay in giving all tenants the opportunity of a decent home. That is best achieved through securing maximum resources for investment in our social housing in the near future. As part of the blue skies thinking and the public service agreement plus review of the assorted methods of achieving decent homes, there is a lot of thinking going on. We will not move from our key target of decent homes throughout the social housing sector by 2010, although it is quite right that we should reflect on the vehicles that we utilise to reach it.

The Government are doing their part in providing resources that are tied to performance improvements. We make no apologies for that. However, if we preclude housing transfer, and therefore access to private finance, tenants will be in poorer condition housing longer than is necessary. That cannot be right. To those who defend everything but are ultimately defending only the status quo, and have no answers for tenants on a range of council estates, I say: take part in the full debate that will unfold from mid-January, and do not become lost in the notion of ownership. How our people live and how they achieve decent homes is what matters, not who owns the freehold.

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