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7.30 pm
Mr. Iain Wright: This is the first time that I have sparred over the Dispatch Box with the hon. Member for Peterborough (Mr. Jackson). I welcome him to the Front Bench and wish him well in his new role.
There has been a huge debate on the first group of amendments. Let me start at the beginning, which seems a long time ago, with new clause 9, tabled by the right hon. Member for North-West Hampshire (Sir George Young). He will recall that we had an interesting debate on a similar topic in Committee in January. I am pleased that it has been raised again, so that I have the opportunity to update the House on our progress since then and my plans for moving matters forward.
In responding to the amendments and the other points that have been raised, I am conscious of the need to address incredibly important points in other parts of the Bill, so I will seek to achieve a balance between responding to the comments of hon. Members and making progress with the Bill.
New clause 9 does two things. First, it prevents registered social landlords from ever—I stress the word ever—using ground 8 in possession proceedings. Secondly, it provides that a court should not grant possession to any landlord under ground 8 if any of the arrears arose as a result of delays or failures in housing benefit payments, unless it considers that it is reasonable to do so.
The Government have already made it clear that for registered social landlords eviction should be used only as a last resort in rent arrears cases, particularly—I stressed this in Committee—where the arrears have occurred as a result of delays in housing benefit payments. Good practice guidance published in June 2005 on improving the effectiveness of rent arrears management included advice and best practice on early intervention policies and proactive approaches. The Housing Corporation also issued housing management guidance in early 2007 which stated:
“Possession proceedings for rent arrears should not be started against a tenant that can demonstrate they have a reasonable expectation of eligibility for housing benefit; provided the local authority with all the evidence required to process a housing benefit claim; and paid required personal contributions towards the charge.”
A pre-action protocol for rent arrears has also been established as part of the civil procedures rules, with
the aim of ensuring that eviction is the last resort for all landlords in rent arrears cases. The protocol sets out various measures that social landlords must take before starting possession proceedings on the basis of rent arrears. However, both in Committee and on the Floor of the House today, the right hon. Gentleman made a strong case, and I recognise that there remain concerns about the actions of a small minority of RSLs and other private sector landlords. I am keen to ensure that those are resolved.
I have therefore asked my officials to convene a working group meeting with the key stakeholders, including Shelter, Citizens Advice, the National Housing Federation, the Council of Mortgage Lenders and the Housing Corporation to examine those concerns and report back to me by the summer, recommending options for a way forward. In light of the regulatory framework that we are putting in place, I am particularly interested in the role that Oftenant could play in addressing the problem for the registered social landlord sector. The reformed system of regulation, which will give a stronger voice to tenants to bring issues of concern to the regulator and a more targeted system of regulatory action, seems a good approach to dealing with the matter.
In addition, as I stated in Committee, the private rented sector review being led by Julie Rugg of the university of York will look at the issue in relation to the private sector. The review is due to be published in October this year. Given my commitment, I hope that the right hon. Gentleman will withdraw the motion.
I turn to the central element of today’s debate—new clause 8, to which my hon. Friend the Member for Great Grimsby (Mr. Mitchell) spoke so excellently. I shall deal with the narrow point, then go on to the wider point, the financing of council housing, which is the subject of the debate. With the greatest respect to my hon. Friend and to 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), who reiterated many of the points that they made on Second Reading, new clause 8 would have no impact on the way that the Secretary of State carries out her existing statutory duties. In that respect it is unnecessary.
New clause 8 would require the Secretary of State to take certain matters into account when determining what subsidy to give to local authorities to support their housing revenue accounts. In particular, it would require her to consider the resources needed to meet the decent homes standard and the need for affordable housing. But the Secretary of State is already required by public law to act reasonably in making the annual subsidy determination and to take into account all relevant considerations. Those considerations would include both housing needs and the resources available.
Paul Holmes: Will the Minister therefore explain why your own study—the Department’s own study published two weeks ago, with six pilot councils drawn from cities and rural areas, a good cross-section, shows that you are underfunding those six authorities by 40 per cent.? How can the Government be taking those considerations into account?
Mr. Deputy Speaker: Order. Not me again. The hon. Gentleman should get his nomenclature right.
Mr. Wright: It sounds as though you have been very busy, Mr. Deputy Speaker.
I want to dispel the myth that the Government have starved council housing of funds. In the decade since we came to power, there has been a 30 per cent. increase in real terms in council house spending, from about £800 a home to about £1,100 a home. There is more money available to councils to improve and maintain their stock. I reiterate that we have not been starving councils and local authorities of funding for housing.
Grant Shapps: Does the Minister share my dismay that the Government have built less council housing every year in their 11 years than we did in any year under Margaret Thatcher or John Major?
Mr. Wright: My right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford) made the excellent point that there was about a £20 billion backlog and appalling standards. People were living in slums in local authority sectors. We have provided sustained investment in social housing, combined with private funding, to provide about 500,000 new kitchens, 500,000 new windows so that people are able to save on fuel bills and achieve greater energy efficiency, and 918,000 new central heating systems. One million children—the equivalent of a city the size of Birmingham—have been lifted out of inadequate social housing. That is a record that we should be proud of, and the hon. Gentleman should appreciate the size of the backlog that we have had to address over the past 10 years.
Mr. Graham Stuart (Beverley and Holderness) (Con): I am grateful to the Minister for giving way, and I hear his points about investment in the housing stock. However, does he not agree with us about the performance on delivering new housing during nearly 11 years of Labour Governments? There have been fewer houses every single year. That is not a proud record, and not one that many of his colleagues behind him would have expected after 11 years of Labour Governments.
Mr. Wright: I expected better of the hon. Gentleman, whom I respect a lot. People in social housing had to contend with inadequate, almost slum housing under his party’s Government. We have a record to be proud of. Circumstances change, and over the period of a decade, the emphasis should be about improving supply. I utterly agree with that, and that is what this Bill—particularly its creation of the Homes and Communities Agency and self-financing in respect of local authorities—will be able to achieve. I hope that the hon. Gentleman will support us on that.
Mr. Austin Mitchell:
We need to shift the argument back to the Minister’s point that the Government were not underfunding. They are underfunding. In 2003, the Department then responsible, the Office of the Deputy Prime Minister, commissioned the Building Research Establishment to look at the allowances for management, maintenance and major repairs. That research, commissioned by the Government, showed that the Government were underfunding the allowances to local authorities by a third. In other words, the allowances
should have been £5.5 billion, but they were £3 billion. The gap has widened since; on my calculation, there should be £6.6 billion today, but there is only £3.4 billion. The Government are underfunding in that crucial respect.
Mr. Wright: Let me address that point, which relates to the central point of the debate, about what system we should use to finance council housing. Let me put the debate in the context of the Bill. Clause 297 will enable us to exclude specified properties within a council from the housing revenue account subsidy system. We intend to use that power to allow councils to apply to exclude new homes that they build from being added to the housing revenue account. That will create an incentive among councils to build new homes by giving them more income from such properties. That issue seems to have cross-party consensus.
As a former borough councillor, who was proud to serve on my local authority, I think that councils have a range of roles with regard to housing. One is key: place shaping. Councils know what is needed in their areas and provide strategic housing assessments to determine the type of houses required and where they should be. They also have a direct delivery role. I am excited that the Bill, in conjunction with other things such as the housing revenue account review that, as Minister for Housing, my right hon. Friend the Member for Pontefract and Castleford (Yvette Cooper) announced in December, will move us into an exciting new era, in which we look fundamentally at how we finance council housing and, crucially, make sure that councils have that direct delivery role. I am proud to stand at this Dispatch Box and say that this is the return of the council house. I hope that the hon. Member for Chesterfield (Paul Holmes) will agree.
Paul Holmes: I only wish I could. However, I do not believe that what the Minister has described will happen; it has not in the past 11 years. How can councils start to build houses and keep all the rent when 75 per cent. of the right-to-buy money goes to the Government, whereas a housing association would keep it all, and when millions of pounds in rent— £4 million this year in Chesterfield—goes to the Government, whereas a housing association would keep it all?
Right to buy takes away from councils that guaranteed revenue flow from rents, whereas housing associations are not subject to the right to buy in respect of most of their stock, apart from that subject to immediate transfer. Councils have no security and income in that respect and cannot apply for social housing grant. Why can the Minister not accept new clause 8 and put housing associations and councils on a level financial playing field?
Mr. Wright: I have just explained the initiatives that we are putting in place. We cannot implement or change something as complex as the housing revenue account subsidy system without undertaking a review and thinking through the consequences. If the hon. Gentleman seriously believes in ill thought through, knee-jerk legislation, I will leave him to it.
There is a serious point about the principles of financing council housing. How is it locally accountable? How do we take into account the redistribution element? How do we ensure a direct correlation between rents paid and services provided? Given the complexities of the system and the redistributive element, we need to address those questions. That is precisely what the housing revenue account review, introduced by my right hon. Friend the Member for Pontefract and Castleford, addressed.
Mr. Wright: Before I give way, let me quote from my right hon. Friend’s written ministerial statement. These are the principles on which we need to undertake a review on council house financing:
“This system should be fair to both tenants and taxpayers. It should be transparent, giving a clear and accurate picture of the balance of support from local and central Government. It should enable delivery of agreed standards of service and accommodation. It should recognise that social rents should help tenants gain and retain work, whilst acknowledging the need for landlords to improve the quality and efficiency of services. And it should be affordable and not expose Government to unacceptable fiscal risks.”—[ Official Report, 12 December 2007; Vol. 469, c. 34W.]
Those are the principles on which we need to move forward; they are based on the good work of the Audit Commission in its 2005 report on financing council housing.
7.45 pm
Paul Holmes: I thank the Minister for giving way; he is being very generous. My point is simply that councils should be treated as housing associations are. If the 10,000 council houses in Chesterfield were transferred to a housing association, they would be treated utterly different. Let the council be treated the same as the housing association. Is the Bill a revolution in council housing? The impact statement for the Bill says that 2,500 houses are involved—that is, an average of five per constituency. That is not a revolution in council housing.
Mr. Wright: I should also like to dispel the myth that registered social landlords are evil incarnate; I do not think that they are. I am keen to see more bang for the public buck. If housing associations can provide extra resources and extra homes and improved services, with the ability to gear up private financing, that should not be dismissed.
When we took evidence during the Public Bill Committee sittings in December, Alan Walter of Defend Council Housing said in response to a direct question from me that he did not think that private borrowing was bad and that it should be encouraged as much as possible. That was entirely right. Before I go on to the important point about levelling the playing field, I give way to my hon. Friend the Member for Hayes and Harlington.
John McDonnell:
A number of the issues that the Minister has just raised are straw men to be knocked down; no one has raised those sorts of arguments. Will the Minister give us a time scale by which the review will be completed, the recommendation will be brought
to the House and legislation will be prepared? Do we now have a commitment that the legislation will happen in this Session?
Mr. Wright: The review will be completed by spring 2009; I anticipate that recommendations arising from it will go out to consultation and that any legislation would take place after that.
Mr. Wright: I am keen to move on. I give notice that this is the last time I will give way on this point.
John McDonnell: Perhaps the Minister needs to take this message back elsewhere. What he has said means that our constituents have a two-year wait before the product of those deliberations and new legislation. One would expect an impact schedule after that of another year to two years. That means that homelessness will grow, that overcrowding will continue and that the 700 children now in bed and breakfasts will certainly multiply twofold. Does the Minister not see that the House is trying to relay a sense of urgency to him on this matter? The new clause reflects that sense of urgency.
Mr. Wright: I also share that sense of urgency; that is why I am keen to see the Homes and Communities Agency on the statute book as quickly as possible. It will be charged with helping to create the 3 million homes that we so sorely need by 2020. It will have about £8.5 billion of public money to achieve that ambition.
As I mentioned in Committee, Sir Bob Kerslake, who will be the agency’s chief executive, mentioned in a letter that, in respect of the transitionary team arrangements, he sees local authorities as the agency’s best delivery partner. I am paraphrasing, but I am not being too inaccurate. With housing at the top of the political agenda and unprecedented sums of public money, I see the Homes and Communities Agency able to step up to the plate and make sure that the country has the homes that it needs in the next few years. I hope that the whole House will be encouraged by that.
Mr. Wright: Given my hon. Friend’s importance with regard to the new clause, I will certainly give way.
Mr. Mitchell:
I am most grateful to my hon. Friend. Another view is that 2.8 million people in council housing are being left to fester, without repairs and maintenance being done properly or on a sufficient scale because of the inadequacy of the management, maintenance and major repairs allowances, and that that will go on until after an election, which will almost certainly be in 2010. The amendment does not ask him to recast the whole business of the housing revenue accounts—that is for the review, which will deal with questions of historical debt and redistribution between authorities—but merely asks him to provide proper resources to manage, maintain and repair according to research into those areas, such as by building research organisations, and to provide a development allowance.
Mr. Wright: I understand what my hon. Friend is saying and respect his views. I would point out to him that in terms of management and maintenance allowances, there were above-inflation increases in 2004-05, 2005-06 and, I think, in 2006-07 of about 6 per cent., 6 per cent. and 4 per cent. respectively. The fundamental point is that the Bill helps to remove, as much as possible, the disincentives for councils to go ahead and build. I think that councils with good performances, in conjunction with other partners will step up to the plate and ensure that we really are building new council houses. There is nothing wrong with that. This country sorely needs it, and I fully welcome it.
However, we must also consider that in the wider context of the difficulties and complexities about how on earth we finance council housing. The housing revenue account is deeply unsatisfying for all concerned. It is so confusing that even my right hon. Friend the Member for Pontefract and Castleford does not understand it, which takes some doing. She has said on the Floor of the House that every time she had to deal with it she had to have a wet towel round her head. That is not good in terms of openness and transparency. We must ensure that it is fit for purpose in the modern age—that there is a direct correlation between rents, services provided and moving on with new builds and improving quality. I would suggest that we are moving towards the level playing field that my hon. Friend the Member for Great Grimsby and other hon. Friends have mentioned, but we need to think about it in the wider context and get rid of some of the complexities that the housing revenue account subsidy system perpetuates.
Ms Katy Clark (North Ayrshire and Arran) (Lab): Does my hon. Friend appreciate that the amendments are in line with Labour party policy as passed at all the recent national Labour party conferences, and does he not therefore think that it is only appropriate to support them?
Mr. Wright: I hope that I am making it clear to my hon. Friend that I am not saying that councils do not have a role. As I said, it is important that they have a strategic role in assessing the housing needs in their area and coming to a view in what particular types of housing are required, whether it is housing for older people or accommodation for young families. That is the sort of thing that we need to be doing through the planning system. However, I genuinely believe that there is also a role for councils to have a direct delivery route. I hope that she will be encouraged by what we are doing in the Bill to move forward further and faster. The review of the housing revenue account subsidy system will make recommendations on how we can fund that. The key point is how we increase transparency and fund this to ensure that everybody gets a fair deal. That is not as easy as has been suggested in the House today.
Lynne Jones: Given my hon. Friend’s assurances, would he care to hazard a guess about how many additional council homes we will be building at the time of the next election?
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