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1 Nov 2006 : Column 87WH—continued

As I described earlier, our properties are split into, on the whole, street properties and accommodation that is run by Homes for Islington, which is an arm’s
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length management organisation. The difficulty is that the law says that when street properties are done up, which happens under the private finance initiative, there must be a £10,000 cap. It would not be a caricature to say that leaseholders who live in the streets are often professional couples who have bought from original right-to-buyers and who now benefit from living in a flat in a Georgian square that was originally bought by my right hon. Friend the Member for Barking. When their properties are being done up they have to pay only £10,000, whereas pensioners—the original right-to-buyers—who live on the estates are being charged limitless amounts of money. It is terrifying and fundamentally unfair.

My first request today is that the Government should seriously consider adding arm’s length management organisations to a little bit of legislation: the Social Landlords Mandatory Reduction of Service Charges (England) Directions 1997 apply to someone whose property is being done up under the single regeneration budget or the estates renewal challenge fund, so why cannot we also include arm’s length management organisations? If we could just do that, leaseholders on estates in my constituency could have their charges capped at £10,000. At the moment enormous injustices are happening.

Ms Buck: I completely agree with my hon. Friend, but does she also recognise that any cost of applying the cap should not benefit companies and that the cost of the cap should not fall on tenants because of ring-fencing within the housing revenue account? If a local authority chooses to fund a cap as my hon. Friend suggested, the resource should be found other than from the pockets of local authority tenants.

Emily Thornberry: Yes. We should be considering that matter, among others. I wrote to the 80 leaseholders who had originally written to me, and sent them a survey. I do not know whether any politician has ever had the response that I did. Guess how many I got back? I got 80. I asked them about hardship and whether they felt they had been consulted and about fairness. I sent the results to the Department.

I then wrote to more leaseholders. I have pruned the responses from people whose answers were not as disciplined as I wanted, and I have sent the Department 134 cases, detailing the hardship and difficulties that Islington leaseholders have suffered. The Department is reviewing the effect of the decent homes standard on leaseholders, and I hope that that record of the experiences of Islington leaseholders, which I sent to the Department, will be taken seriously and inform their decisions. Something must be done.

Six thousand leaseholders have bought what was formerly social housing in Islington—a very large number. We must consider other factors to ensure fairness for leaseholders, and the legislation allows councils to exercise some discretion. Although we are all in favour of decentralising power and allowing local authorities to make decisions locally based on local information, what happens when we give a local authority the power to exercise discretion and fairness and, as with the Liberal Democrat council in Islington, it refuses to exercise any discretion or do anything to assist leaseholders who are pensioners, suffering because of bills of £35,000 and on pension credit?

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The discretion allows the authority to extend the repayment period, but leaseholders receive bills—huge estimates—and they are told that they will have only two or three years to pay them. They come to me and say, “Emily, what are we going to do?” and I reply, “I’m putting pressure on the Government, and I’m trying to put pressure on the local authority,” to which they respond, “You’ve been doing this, Emily, but nothing is happening.” Authorities can extend the repayment period, provide loans, put a charge on the property—a discretion that the Liberal Democrat council in Islington is prepared to exercise—and even reduce the bills, but they must consider matters case by case.

Andrew Stunell (Hazel Grove) (LD): I agreed with the hon. Lady until her comments verged on the political. Is she aware of the report to Islington council’s executive group in February, setting out the scheme that it now has in place? It seems to answer her point.

Emily Thornberry: The important point about the document to which the hon. Gentleman refers, as with many similar documents, is that it has a fantastic title and it can obtain good coverage in the local paper. However, I invite him to consider carefully what the Liberal Democrat council is actually going to do to assist leaseholders, as opposed to the headlines. He will see that it is not going to do anything. There is nothing of any substance; it is all spin.

Several difficulties can be addressed by exercising discretion and considering the issues case by case. I shall go through some cases. Mrs. A lives on pension credit, and is being charged £10,000. She says that that is very harsh, and she pays £240 a month. Another pensioner, Mrs. B, living on pension credit, has been charged £4,627. Her husband has undergone major surgery for cancer twice in the past four years, and they are struggling to keep their heads above water as it is. Mrs. C, who is expected to pay £8,468, also has a husband with cancer, and Mr. D, who is lucky enough to have a job, says that the £20,000 that he is being charged is one year’s pay.

Mrs. E, another pensioner living on benefit, is being charged £29,287, and she says that because they are leaseholders, it does not mean that they have ways of paying such bills. Mrs. F, another pensioner, will be paying £39,614 for repairs on her flat. She has lived on the estate since 1971, and in all that time no major repairs have been undertaken. Mr. G will be charged £41,000.

We all want our social housing to be brought up to a decent standard, but some Islington leaseholders are being asked to pay an unfair share of the cost. There should be a fair limit. Mrs. A is expected to pay £10,000 out of the £32,000 needed to repair her home, but that is because her property is being done up under a private finance initiative, so she receives a £22,000 subsidy on the work. However, Mrs. F, a pensioner in similar circumstances, is expected to pay the entire £39,000, almost four times as much, just because her property is an arm’s length management organisation property. When Islington tenants voted for an ALMO to take over their properties, would not the possibility of the leaseholders among them receiving limitless bills
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have affronted their inherent sense of fairness and decency and affected their views on whether they should vote for the ALMO?

We must help the poorest. Of the 134 leaseholders whose cases I have sent to the Department, 10 per cent. say that the bills do not cause them hardship, so 90 per cent. say that they do. They also say that they are not receiving value for money, and I agree profoundly. The difficulty is that on the face of it, the framework contracts for which organisations bid under the European Union Official Journal tendering process will include a tender for the cost of a new kitchen or bathroom, but nothing if the building is listed and, for example, one needs tiles from eastern Europe. The builders may originally say, “It’ll cost you £10,000 for a new kitchen,” but when they need to undertake outside works the cost can spiral out of control.

Owing to the new framework agreements, leaseholders do not feel that they are consulted. If they were consulted, they would be able to consider, for example, three builders and their prices, and during the consultation they would be able to opt not for the most expensive, but for the middle price or the lowest. However, because there is already an agreement anda system of preferred bidders, when so-called consultation takes place the leaseholders are not even asked which builder they want. They do not feel consulted, and they are right. There is also therefore little control over the prices that are charged.

In the end, it is largely public money that is being spent. When there are a couple of leaseholders in a block it often does us all a good turn, because they blow the whistle, saying, “That scaffolding has been up for eight weeks, they haven’t done any work on it and we are being charged for it to be up for eight weeks.” The alarm bells start ringing, because public money is being spent. The leaseholders still get charged, and we do, too, indirectly as taxpayers, but leaseholders play a helping role.

Leaseholders are not even told that they have a right to opt out of window installation under the decent homes standard. If one has just installed new windows, why would one need further new windows? It would be a clear waste of money. The leaseholders have a right not to have new windows put in, but in Islington they are not told about it. When they find out, they are told that because they have their new windows, they do not need to pay for new ones as long as they pay for a surveyor to assess them, and for a lawyer. For a leaseholder in Islington to keep their new windows when a property is done up, they have to pay £1,000—to keep their new windows. That is not fair, and people can see that it is not. They also cannot help but wonder, “How much can new windows cost, and how much more than £1,000 can they cost?”

There is a right to appeal, but it is to the leasehold valuation tribunal. Some leaseholders have none the less had some success. One indefatigable woman, Mrs. Wong, has appealed against her service charges generally, and she has enjoyed some success. She is now taking Islington council to the Audit Commission, and I shall certainly support her. We will also refer the matter of leaseholders’ charges in general to the commission. That might be another way in which we can get fairness. But it is a slow process, and the leasehold valuation
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tribunal is scary and intimidating, as is going to the Audit Commission. Why cannot leaseholders in Islington simply get justice?

10.30 am

Andrew Stunell (Hazel Grove) (LD): This has been a worthwhile debate, and the essence of it is decent homes versus leaseholder means. That has been ably illustrated by hon. Members from at least two London boroughs, and I suspect that it applies to a number of others. I had hoped that we might avoid deep political controversy, but the hon. Member for Islington, South and Finsbury (Emily Thornberry) has tempted me into it. She drew extensively on her relevant experience in Islington but skipped over other relevant information that should have been brought to the Chamber’s attention.

Mr. Field: May I take this opportunity to confirm that there no Liberal Democrat councillors in either my constituency or that of the hon. Member for Regent's Park and Kensington, North (Ms Buck)?

Andrew Stunell: It does not sound to me as though the hon. Gentleman is any better off for that.

To put the debate on a less partisan level, I wish to make the point that the information that I have been given—I cannot speak at first hand in the same way as other hon. Members—is that there are some 10,000 leaseholders in Islington with leases from the council. The council still has 27,000 social housing units, although they are now run by Homes for Islington, a separate ALMO. That means that about a quarter of the former stock is held by leaseholders. When the welcome and long overdue decent homes programme gets under way, a lot of leaseholders will find themselves in blocks and buildings for which, like it or not, they will be liable to pay for a slice of the action.

I gather that if leaseholders are lucky, they might get away with a bill for only £500, but if they are unlucky they may get a bill, such as the one to which the hon. Member for Islington, South and Finsbury referred, for £41,000. The average bill for leaseholders in Islington will be about £11,000. Contrary to what the hon. Lady said, that has been a matter of concern to the Liberal Democrat administration in Islington, which has been struggling to deal with it. It produced a significant change to its procedures by ensuring that notification was improved, which deals with the hon. Lady’s important point that there should be a level of certainty about the quotations given and the liabilities that a leaseholder faces.

Mr. John Leech (Manchester, Withington) (LD): There is great uncertainty in Manchester at the moment, because the proposed stock transfer will lead to a number of leaseholders not getting a vote but still being left with a bill to pay. They have not had any indication of the costs that they will incur. Does my hon. Friend agree that the Government ought to afford additional protection to leaseholders in areas where council stock transfers are taking place and leaseholders do not get a vote?

Andrew Stunell: My hon. Friend makes a valuable point. He makes it clear that the problem is not exclusive to central London but arises elsewhere. There
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has been a tendency in public policy to take the view that if someone has chosen to buy their council home, they deserve everything that is coming to them and have foregone their right to be consulted or involved in the process. I agree that leaseholders who have bought their homes are in an exposed position, and perhaps that is a wider point for the Government to pay attention to.

The sense of unfairness is increased by the fact that regeneration programmes and PFI schemes have a cap of £10,000, to which the hon. Member for Islington, South and Finsbury properly referred. I hope that the Minister will tell us why one category of leaseholders has a £10,000 cap protection and another does not. Islington council wanted to know the answer to that question, and in March its then leader wrote to the Deputy Prime Minister in his role as Secretary of State, asking whether the Government would consider introducing a cap. He made the point that it ought not to be funded by a recharge to the housing revenue account, which, as the hon. Member for Regent's Park and Kensington, North (Ms Buck) rightly pointed out, would mean that tenants would be subsidising leaseholders. That would be deeply unfair. The letter said that the funding must come from a common pot from central Government.

I say to the Minister that according to my information from the leader’s office at Islington council, no answer of any sort has been received to that letter sent in March to the Deputy Prime Minister. I agree that it went to the Office of the Deputy Prime Minister at a difficult moment when it was probably more concerned about changing its name plates than answering correspondence, but I hope that the Minister can assure me that she will return to her office straight after the debate and ask somebody why the letter was not answered. I hope that she will indicate that help will be given to leaseholders.

Emily Thornberry: I do not know whether the letter to which the hon. Gentleman refers is one dated sometime in December. If so, I have a copy of it. It is from the ODPM and signed by Baroness Andrews, who wrote it to Steve Hitchens.

Andrew Stunell: Judging by the interventions from all parts of the Chamber, it sounds like we should all sit round a table and produce the correspondence that we have received from different people. Maybe we already have the solution but nobody has managed to put it together.

I know that the Minister wants as much time as possible to speak, and I want to give her that time. I simply say that there is a significant problem. A considerable group of people are at a serious disadvantage and are being discriminated against, and the Minister can provide a solution. I look forward to hearing it.

10.38 am

Mr. Robert Syms (Poole) (Con): I hope that the microphone is working, Mr. Jones, so that I can speak to the assembled.

I congratulate the hon. Member for Regent's Park and Kensington, North (Ms Buck) on securing this debate. Fortunately, as I represent Poole, I do not see
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much of the problem in question, but it evidently causes great angst and difficulty for many thousands of people, particularly in London but also in other parts of our country. It is surprising that there has not been rather more debate on it. I know that the hon. Member for North Southwark and Bermondsey (Simon Hughes) introduced a private Member’s Bill at one point because of the problems in his borough, but I suspect that today will be the first of more debates if the figures that have been given are affecting hard-working families.

The Conservative Government had a successful policy in right-to-buy, but towards the end of their period in office they appreciated that there were problems with leaseholders. That was why the Housing Act 1996 made provisions for capping some of the charges to leaseholders. That led to the reduction of service charges directions of 1997, which capped charges on many leaseholders at £10,000 in a five-year period. Of course, those events were 10 and nine years ago, since when there have been substantial changes in housing policy. I hope that the Minister might comment on the reasons for the move away from that, particularly when it comes to ALMOs.

The hon. Member for Islington, South and Finsbury (Emily Thornberry) made the good point that there are not an awful lot of ALMOs at the moment. However, given that stock transfers are not taking place at the same rate as previously, I suspect that we shall see a large build-up in the ALMO sector, because the system works quite well. However, if there is a disadvantage, the Government will have to examine it.

As we all know, there are cost implications. Who pays? There is nervousness among local people and local government about whether the housing revenue account or the Government should pay. The question of who pays would also need to be considered if one were to review how the cap would work.

One of the major changes in housing policy and the debate over recent years has been the acceptance that it is good to have mixed communities of tenants and owner-occupiers on estates. As we have heard, however, because of the law of perverse incentives, the policy is unfortunately leading to the opposite. People are being put under pressure to sell and move. As the hon. Member for Regent's Park and Kensington, North said, properties end up being rented out by companies, rather for individuals who have lived on an estate, sometimes for generations. That is something that Ministers ought to take seriously.

We have also heard that some authorities are very good, given the parameters within which they operate, and that some are less good. The issue therefore needs a substantial review. Some of the better authorities look at limitations on works, easy payment, voluntary legal charges, loans and equity release, and give leaseholders full information on their choices. The Government have a scheme called “House proud”, which is run by the Dudley building society, but although it is meant to help, I understand that it is not functioning particularly well, not least because of the administrative costs of £12,000 for people who try to access the scheme and solve the problems that they have been given. More
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interest needs to be shown in how we use public policy to help the tenants who are putting leaseholders in such terrible difficulties.

The issue is a major problem. There are thousands of tenants in that position in central London, as we have heard. Westminster has 9,195 leaseholders, Kensington and Chelsea has 2,500 and Southwark has 1,400. They are just three inner London boroughs, so the problem needs to be dealt with.

What are the solutions? A number of solutions have arisen from the debate. We need to look at the legislative framework to see whether more legislation is necessary to give more protection to leaseholders, who feel very vulnerable in the current circumstances. We have all broadly signed up to the decent homes standard, but it is having a severe impact on that category of person, particularly in central London.

We need to consider consultation. There are some good models of consultation with leaseholders, but local authorities are quite often not used to dealing with that category. They are used to dealing with their tenants and have the structures in place to do so, but leaseholders are not always the easiest people to get to, although under the current circumstances rather more of them are banding together in groups to represent their case.

Transparency is a problem. When people are given a high bill, the first question they ask is how it reached £16,000, £20,000 or £30,000. We need to do a lot more to explain to people not only what works might be needed, but how such bills are arrived at. The hon. Member for Regent's Park and Kensington, North mentioned an interesting idea about advice and support. Giving a little bit of Government money towards advice and support might be a great advantage to people who are in that situation. If a local authority is trying to give somebody a large bill and that person does not know quite why, advice and support might be one way of sorting things out. The other interesting idea was to have a sinking fund for leaseholders. Logically, most people in central London do put money aside for years for large works, so the idea of providing funds is something to consider for the future.

A number of issues need to be looked at. The problem causes major heartache and concern. I am guesting today for our housing spokesman, who is no doubt doing important things, but when this debate was scheduled I received a number of phone calls and e-mails. There is a pent-up demand for policy makers and the Government to set out rather more clearly what will happen in the future. I understand the frustrations of the hon. Member for Islington, South and Finsbury, although leaseholders have said nice things about what she is doing in her constituency.

There is a real problem. Doing nothing is not an option, because people are sinking and drowning in a situation that is not of their own making, but which has arisen as a consequence of the laudable objective of the decent homes standard. Even if the Minister cannot give us all the answers today, I hope that she will go away and reflect on some of the stories that she has heard in this debate. I leave her ample time to address some of the concerns that have been expressed, particularly by hon. Members with inner-London constituencies.

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