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New clause 1 is a useful opportunity that allows us to argue a little about the principles on which housing policy should be based. It would be useful if, at the end of the debate, the Minister made a policy statement on where the Government stand on council housing, because we are not entirely sure of where that is. If there is an issue that the House has not debated enough, it is council housing. I remember one or two
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Westminster Hall debates on the subject, but it has not been broadly debated. I hope that the Minister will take the opportunity to set out where the Government stand.

I particularly want to talk a little about new clause 8. I became aware of the housing revenue account subsidy system only recently, when I realised that 20 per cent. of all the rents paid by tenants in Poole were taken by the Government to use elsewhere. Taking money out of housing revenue accounts—in Poole, there is an arm’s-length management organisation—essentially means taking money from tenants in one area to subsidise tenants in another. As we have heard in this debate, well in excess of £100 million is taken from some council tenants to subside others.

I have always believed that need has to be the basis of housing policy. However, if it is to be that, it should be met by national taxation, not by using tenants in one area, who may be less well off, to subsidise tenants elsewhere. The figures have been mentioned today: well over £180 million comes from tenants’ rents, and in the vast majority of districts and boroughs people make some contribution, predominantly to the larger cities and inner London. Nevertheless, the transfer of funds and money is very substantial.

Nobody quite understands how the formula is worked out and I welcome the fact that the Government are having a review. However, I suspect that the review will be only modest and I know that some authorities that want to opt out of the subsidy system have been negotiating with the Department, which, as I understand it, wants them to buy themselves out of that system. At the end of the day, if the authorities have to buy themselves out of the system, it may not be worth their leaving it.

I have another point to make about the benefits of council housing versus stock transfer and everything else. If there is a subsidy system in which a local area is losing millions in rents, there is an added incentive for stock transfer, even if the tenants are not pleased with that option because they feel that they are being penalised if they remain council tenants. The contributing authorities include not only relatively leafy Poole and the Surrey boroughs and districts, but authorities such as Bolsover, Chesterfield—I see the hon. Member for Chesterfield (Paul Holmes) sitting in his place—Portsmouth and City of Durham. Many of the former mining areas have quite a lot of public sector stock. Money is coming out of the rents paid by tenants and being redistributed to the Camdens and other areas.

5.30 pm

We should be more transparent about what we are doing. If housing need is the basis of policy, it should be paid for out of general taxation, not by taking money from one set of tenants to subsidise another. In my own borough of Poole, we have very high house prices. That means that social housing takes more of the strain in relation to young couples. If Poole Housing Partnership was allowed the £3 million a year that is taken into new council housing or housing for the elderly, it could manage the housing stock for
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people generally. There is local demand that could be met if that money remained local.

There must be a fundamental reform of the housing revenue subsidy system, which is not fair; I look forward to Government proposals on that. Liberal Democrat Members make an important point: unless there is reform soon, the consequences for many authorities, boroughs and districts that wish to retain council housing will become very severe.

We need a statement from the Minister about council housing. As we have heard, 2.8 million people are still council tenants. Some very good housing authorities, run by local authorities of all political persuasions, provide good local housing. The hon. Member for Great Grimsby is right that some people would prefer to have their housing provided by a local authority than to opt out and be transferred into some new organisation that was subject, as we all know, to salaries going up, and that may not be as responsive to the demands of local people as the local council providing council housing and the local councillors whom people elect to protect their interests.

It is a pity that the issue we are discussing was raised by a Back Bench rather than a Minister. Nevertheless, the debate is a useful and timely opportunity to raise these important matters.

John McDonnell (Hayes and Harlington) (Lab): The House sometimes gets a bit nauseating in its self-congratulations, but my right hon. Friend the Member for Oldham, West and Royton (Mr. Meacher) clinically set out the arguments for the new clause. I thank my hon. Friend the Member for Great Grimsby (Mr. Mitchell) not only for the new clause but for the work that he has done in recent years to maintain this campaign.

I cannot understand—many of us cannot—why the Government do not incorporate the new clause into the Bill, because it would precisely implement the Labour party’s policy. It would also precisely fulfil the promise that was given by the Prime Minister when he was elected leader of the Labour party last year that we would start to build council housing again. When he made that statement, he was cheered to the rafters by Labour party members from constituencies across the country, who knew, as we did, what a housing crisis we were facing. I think that he gave that promise because he understood those problems. To be frank, it was an admission that the existing policy had failed. That policy was based on a belief that the private sector would provide the bulk of new housing that was required by our communities and on an antipathy to local government providing social housing, which led to a forced transfer of council properties into the housing association sector and, wherever possible, devices being used to prevent council houses from being built again.

We need only look at the Government’s own statistics to see what that has resulted in. I was elected in 1997, when we ran a campaign attacking the Conservatives for the scandalous fact that we had 40,000 homeless households. The number of homeless went up to 100,000. Last year, the figure dipped down to 80,000, but that is still a scandal. There is a crisis of housing and homelessness in my constituency such as we have not seen since just after the second world war.
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I have raised this matter in the House before; I find it emotionally difficult to cope with my surgery each week because of the number of people who turn up with their families, including their children, whom I can do nothing to assist because there is not an adequate supply of housing.

About three quarters of those homeless families have children. I looked up the recent Government figures, and 112,000 children are now being brought up in homeless households, some 700 of whom are living in bed-and-breakfast accommodation. There are 700 children living in bed and breakfasts 11 years after the election of a Labour Government.

John Hemming: I share the hon. Gentleman’s concern about children growing up in homeless, rather than roofless, circumstances. Would he agree that that state of affairs has knock-on effects, such as unstable housing and children having to move from school to school? That does not do much good for their education.

John McDonnell: It has catastrophic effects for children, their families and the wider community. There is a continuous churning of families in temporary accommodation with contracts for some housing lasting no more than 12 months—certainly no more than two years in many cases. I thought that the Prime Minister had been clear about what had gone wrong: we had simply stopped building council houses. I looked at some of the figures from the last 20 years. In 1990, the Tories built 16,000 council properties. I know that because I was campaigning at that time in local government about the scandal of so few being built. Last year, we built 251 council properties. The argument will be made that social housing will be picked up by housing associations and other social landlords. It is not. In 1997, when we were elected, 28,554 homes provided by social landlords were built, and last year that number had fallen to 27,000.

We are told that the private sector will make up the difference. The average price of a home is now £219,000, and house price inflation last year was 9 per cent. Many families in my constituency, and I am sure throughout the country, have a debt burden that can only be described as grinding. Individual borrowing is now £1.4 billion. In January alone, £8.4 billion was lent and £7.4 billion of that went on mortgages. It is a massive debt, and it is now predicted that 45,000 families will have their homes repossessed next year. That process has already started in my constituency and I am dealing with those families in my surgeries. Let us look at the Government figures again: 526,000 families, by the Government’s assessment, are living in overcrowded conditions. We estimate that 3 million homes are needed, as the Government have said.

As we heard from my hon. Friend the Member for Great Grimsby, the Bill will not fulfil the commitment that the Prime Minister made last year to build council houses again. The best estimate is a trivial 2,500 homes. The Bill will not enable councils to develop the properties that are desperately needed by our constituents, which is why I cannot understand why the amendment cannot be accepted. All it would do is require the Secretary of State to assess local needs and to provide resources to those agencies best suited to providing the homes that we need. In many instances,
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that will be the local authority. We know what has happened during the past 10 or 11 years when tenants have made decisions about who they prefer as their landlord. We know because it has happened in most of our constituencies. They are clearly told, “If you don’t vote to transfer to the ALMO or elsewhere, you won’t get the money to repair and refurbish your properties.” In any other circumstances, it would be called blackmail. All that the amendments tabled by my hon. Friend the Member for Great Grimsby would do is to produce a level playing field, not preferential treatment, to enable local councils to satisfy the desperate needs of our constituents.

In half an hour, the Prime Minister will go to the parliamentary Labour party to urge a steadying of the ship, and to ask people to buckle down to fighting the local government elections and hold together. One of the ways in which we can restore the Labour vote in constituency after constituency is to go out there and tell people that we will accommodate them decently, build council homes again and treat council tenants fairly again. We will thus restore credibility with those people who put us in power in 1997 and stuck with us throughout the Tory decade and a half.

New clause 1 is worthy of further consideration. I hope that the Under-Secretary does not reject it tonight. If he cannot accept it, at least let us have some further consideration. Perhaps we will then get a rational debate in the other place and a rational housing policy once again.

Mr. Hancock: The hon. Member for Hayes and Harlington (John McDonnell) is not alone in his experience in his surgeries of the despair of those who face repossession. He is not alone in facing the damning lists of people who are desperate for housing, but he is right to tackle the matter in the way in which he has done.

In my 37 years in local government, I always believed that council housing was a good thing for any local authority. I am proud to have been brought up in a council house and I was always proud of the relationship between the tenant, the local authority and the Government. That triangle of strength, whereby all three sides worked together, was good for people. It provided decent homes in areas where they were needed. Mistakes were made—we have all seen the consequences—but the overwhelming majority of people who lived in council houses in the 1950s, 1960s, 1970s and 1980s believed that they were in a decent home and that they could rely on their landlord to take on their responsibilities.

That position changed dramatically, first, under the Heath Administration with the Housing Finance Act 1972, which changed local authorities’ responsibility. In the early 1980s, Prime Minister Thatcher fundamentally disposed of councils’ right to build houses and made it increasingly difficult. She believed that she could change the system of providing social housing in this country. Hon. Members who have already spoken clearly identified that that experiment in trying to shift matters, which worked for a while, is failing now.

The hon. Member for Hayes and Harlington eloquently exposed the decline in housing associations’ ability to provide new housing. They do not want to
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take the risks involved—in many instances, they cannot afford it. They know that, if they build, few people will be able to afford the rents that they must charge for the development.

Mr. Stewart Jackson (Peterborough) (Con): The hon. Gentleman makes a powerful case, but surely he would not want inadvertently to mislead the House and he should perhaps examine the figures for the Blair Government. Since 1997, 17,300 social housing units were completed. In the previous 18 years, 46,600 a year were completed on average.

Mr. Hancock: I welcome that intervention. I had not reached Tony Blair’s part and his appalling treatment of local authorities, especially his total disregard of the role of council houses in providing answers to the housing crisis. Time and again, he mentioned the social consequences of crime and lack of education, but he never once faced up to the housing that his Government denied people. It is shameful for the Labour party, to which I once belonged. If I had not left it in 1980, I would have damn well done so in 1997, when Blair gave no commitment to councils’ right to provide the sort of homes that they should have provided.

New clause 1 is essential. If the Under-Secretary is serious—I accept the good faith that hon. Members have attributed to him—about rebuilding that partnership, new clause 1 is the foundation stone of making tenants believe that we now have a Government who will address their problems as applicants for housing, whether they are homeless; or elderly people who want to move into a different style of accommodation and are under-occupying their properties, but will not move because there is currently no viable offer; or those who desperately want to be rehoused because they are in overcrowded conditions; or the hundreds of thousands throughout the country who are being told by local authorities, not only mine, that they have no chance of being rehoused in a reasonable time.

5.45 pm

A reasonable time for some local authorities is 10 years, because the waiting lists are so long. My local authority has written to people on the housing waiting list and said, “We’ve got to be honest with you—you’re now wasting your time believing that the local authority or housing association is going to solve your housing needs.” What a disgrace that a Labour Government in office for 11 years are forcing local authorities to take those steps. New clause 1 is fundamental. If the Minister sticks to his word, and listens and addresses those issues properly, new clause 1 will be essential—to him, his Government and the future of the Labour party, if it is ever to rekindle any support on housing that it might have had from the people of this country.

Let me turn to the point that the right hon. Member for North-West Hampshire (Sir George Young) correctly made about new clause 9. Not many other hon. Members have addressed this issue, but he was right: ground 8 is essentially an unfair burden. Local authorities and housing associations have no choice but to implement that, while social landlords have no
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choice but to take the tenant to court to get either repossession or an order put on them. That imposes another financial burden, because once the proceedings start that tenant is responsible for the costs involved in the court case and so automatically faces another bill, of £200, on top of what they have already incurred. If we are talking about fairness, clause 9, which covers ground 8, is essential if the people affected more and more by that situation are to be offered any hope.

I am delighted that so many hon. Members have spoken in support of new clause 8, which is our only chance to address once and for all the daylight robbery in the housing subsidy. The council tenants in my city are effectively mugged by the Government year by year. If the relevant provisions are not repealed, close to £100 million will have gone to the Government from our city over the 10-year period from when those provisions first started to bite to 2012. We can imagine what could have been done with that in Portsmouth. Instead, we are having to put council rents up, to help fund the subsidy rip-off that we as a city face and pay the Government. Robbing the least able people—taking away money that could not only refurbish their properties sooner, but put in place the sort of housing that we desperately need—is notoriously bad politics.

The hon. Member for Poole (Mr. Syms) was right when he talked about his borough, but the situation is the same in many other local authorities. I listened to the Secretary of State when she addressed the issue in her presentation on housing a while ago. She said, “Of course the hon. Member makes a point, but it’s all going to be solved in this review,” but we have no idea what the review is going to cover and have been given no indication whatever of what consultation will take place with local authorities. My local authority contacted the Government and asked questions about how the formula is worked out, but was told, “It’s very complicated.” We know that it is complicated—that is why we had to ask. We were at least entitled to a sensible answer from the very people who are mugging citizens in Portsmouth, year by year, to take that money.

My hon. Friend the Member for North Southwark and Bermondsey (Simon Hughes) was right to talk about the problems of leaseholders. Again, we need to be careful, but the amendments that he has tabled address those problems. I meet many leaseholders who want the local authority to buy back their properties, because they cannot afford the surprises that they face when, for example, a new roof is put on a block in which there are only two leaseholders. They are suddenly confronted with bills not for a few hundred pounds but for £15,000 or £17,000. The local authority says to them, “You can’t spread the payment over a period.” People who are in their late 60s or early 70s, or who are even older, face that sort of dilemma, and may then get a court order forcing them to pay the amount. What should they do? Who do they turn to? Surely not a Labour Government. Those people are in that mess because a Labour Government, who were aware of the problem, did not put in place a regime that would allow the issues to be dealt with properly.

My hon. Friend the Member for North Southwark and Bermondsey talked about forewarning people of what is coming, and about making provision for a sinking fund, so that people can pay in advance, and
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know in advance exactly what they have to pay. Why do so many leaseholders find it so difficult just to get the details of the works that are being carried out? Why is the process not explained in a way that they can readily understand?

If the Minister and the Government are really concerned about council tenants it is about time that they showed it. When we heard that there would be a return to council house building, I thought, “I’ll believe it when I see it.” The problem is that I do not have strong enough binoculars to see that far into the future. Many of the people whom I represent, who live in real despair of ever getting a decent place to live, look to the local authority, the housing association and the Government, not for payment of housing benefit or for dilapidated bed-and-breakfast accommodation, but for a decent answer to a fundamental question. They want somewhere decent to live. The Government have failed miserably, not just over the past 18 months but over the past 10 years. As I have said, the Tories are not blameless either.

The Minister can look over the Dispatch Box for a smile from his Conservative opponents, as if to say, “That’s the Liberal Democrats; they are again trying to blame everyone except themselves,” but I am a member of the local authority in Portsmouth and I accept my share of the responsibility for not having been able to deal with the housing crisis there. However, we cannot deal with the crisis because our hands are tied and our legs are shackled, and we are, in the main, dealing with someone who does not want to listen, does not want to look at the problem, and is not saying much to lead me to believe that we will get the help that we deserve.

Mr. David Drew (Stroud) (Lab/Co-op): I shall be brief because much, if not all, of what I want to say has been said. I am afraid that the Minister will find the tone of Labour Members’ speeches monotonous, because many of us will rise to support Labour party policy. That policy has been reaffirmed countless times on the floor in conference, and was spoken of by my hon. Friend the Member for Great Grimsby (Mr. Mitchell). I am sorry that I was not able to hear him speak; I was with my hon. Friend the Minister for Housing, talking about community land trusts, an issue that will come up later. I know that my hon. Friend the Member for Great Grimsby will have waxed lyrical—as did my right hon. Friend the Member for Oldham, West and Royton (Mr. Meacher) and my hon. Friend the Member for Hayes and Harlington (John McDonnell)—to make it clear how strongly we Back Benchers feel about the need to resolve the issue.

Lembit Öpik: How did the hon. Gentleman feel when he heard the hon. Member for Poole (Mr. Syms)—a Conservative Member of Parliament—trying to persuade a Labour Minister to adhere to Labour party policy?

Mr. Drew: I will not go into how we feel about the Conservatives. The easy way for them to achieve what they want is to summon up the courage to support new clause 8 if it is pressed to a Division, because that is a reaffirmation of Labour party policy. It would be good to hear what the official Conservative line is on that.

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