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25 Feb 2009 : Column 113WH—continued
I accept that wealth disparity has afflicted London since time immemorial. Other London Members in the Chamber—whether from Brent or Kensington—will know that there has been much more polarisation in the relatively short time that we have been Members of Parliament than there was before, and I have certainly seen that in my eight years in the House. There continues to be huge demographic change, and those on middle and low incomes—in the capital, that can mean those who earn well over double the national average wage—get pushed out of area. That includes many families who have lived in our vicinities for generations.
My local housing associations are eager to use their resources to cater for that low-to-middle income group, but the rigidity of the rental system means that they cannot get the most out of their housing stock. In exchanges in the House, I mentioned the example of the housing arrangements of an elderly constituent who passed away last year. She had lived as a secure tenant in her home on the Peabody estate on Wild street in Covent Garden since 1986 for a rent of £75.50 a week, which included services. The estate is moments away from the glitz and glamour of the Covent Garden piazza, and the market rent for the flat would be about £320 a week, which is roughly four times the amount that she was paying. The flat is now being re-let at £116 per week, including services, to a tenant with support needs.
So, the typical difference between the social and market rents in my constituency is often £200 a week, or £10,000 a year. Although that is an extreme example, there will be similar examples of that huge disparity throughout London. What happens to those who fall between the two extremes—those who do not qualify for social housing, but who cannot realistically afford the cost of market rents in central London? At two thirds of that cost, the gap is huge and getting bigger, and we need to find some middle ground.
Housing associations are frustrated that the income that they receive from renting a property in London often barely covers the maintenance costs and that the rental income from a four-bedroomed house is only slightly more than that from a two-bedroomed flat. The same applies when we look at the differences in rent for a zero-carbon home and an old, inefficient property. None of that makes sense.
I appreciate that other hon. Members wish to speak, so I will bring my comments to a conclusion. The current centrally imposed national rental system simply does not and cannot work for London tenants. I suspect that that is an issue not just for the capital, and we have seen it in Portsmouth and other parts of the country. If the proposed rent rises go ahead, they will serve only adversely to affect tens of thousands of council tenants at a time when the Government purport to be doing all they can to mitigate the impact of recession.
Ms Buck:
Would the hon. Gentleman mind agreeing with me on the issue of rents and subsidy? Is he aware that Westminster council delivered a letter about rent increases to every tenant? That letter included a form of words that suggested that Westminster tenants were contributing to a national pot that was being redistributed across other parts of the country. Will he take the opportunity to agree with me that that is untrue and misleading? Westminster council has enjoyed a cumulative
total of £115 million in positive subsidy in the past year, including just under £7 million in positive subsidy in the current year. An attempt to claim that that rent increase is because tenants’ rents are being exported to other parts of the country is simply a lie.
Mr. Field: I cannot agree entirely with the hon. Lady. I do not deny that Westminster council has been a net beneficiary of significant subsidy over many years, but we now have a hybrid arrangement, for reasons that have already been pointed out, and are looking for a final arrangement with the social housing fund. A certain amount of cost subsidy is going from Westminster to other parts of the country from the current rents on the basis that has been mentioned, so I do not think that it has been misleading to other tenants.
I know that the hon. Member for Stroud (Mr. Drew) wishes to speak, so I will bring my comments to a close. Many Members across the House would like the Government to look again at the impact of what is and has been a pretty inflexible and centrally controlled system, particularly for those in the capital who remain locked out of the hugely expensive private market. If the Government do not do so, they run the risk of repeating the 10p tax fiasco and penalising the most vulnerable in our communities at a time when those folk are the most in need of a helping hand.
3.21 pm
Mr. David Drew (Stroud) (Lab/Co-op): I am delighted to take part in the debate and strongly congratulate the hon. Member for Portsmouth, South (Mr. Hancock) on securing it. I also congratulate him on choosing today for the debate, because some of us on the all-party group on council housing have been listening for several hours to evidence from tenants from different parts of the country, including Birmingham, Norwich and Reading, and also from Stroud, and some of my constituents are here to listen to the debate.
Had the Minister managed to pop into that meeting, he would have heard tenants express a mixture of mystification and anger over the rent situation that they face. There is one thing worse than hearing from me today, and that is hearing from my hon. Friend the Member for Great Grimsby (Mr. Mitchell), who chairs that all-party group and is stuck in that meeting taking evidence to the very end, and I pay tribute to him for what he has done.
The campaign is not recent and has been running for more than a decade. Alan Walter and all those who support Defend Council Housing deserve our support and congratulations for keeping on with the campaign. We think that we are beginning to win not only the arguments, but the outcome, because there needs to be change. I will not speak for long because I want to hear the excellent things that the Minister has to say about solving the problems.
I wish to make three underlying statements on the essence of where we need to go on that. First, I wish to warn against disaggregating the housing revenue account, which Defend Council Housing is also against. It is tempting to say to the councils that are in surplus that they can keep the surplus and that the Government
must somehow, magically, find solutions for those that are not in surplus, but there are two problems with that: as a socialist, that is not how I would like to see things go, because those mainly urban authorities deserve support; and more particularly, there is a danger if that does not work out that those involved will be picked off one by one. I have experience in that area and led the campaign, with the tenants who were present today, against the large-scale voluntary transfer, which I thought was the wrong approach at the wrong time, and we won that ballot overwhelmingly, as several others have done. We should not, however, be penalised because we saw the genuine, democratic right of those authorities to choose what they wanted, which is local authority housing. The good point that came out from our meeting today was that we saw how much people want to remain with the local authority. That is not a negative, but a positive.
Secondly, there will have to be a write-off of debts, and I make that point loud and clear because the Exchequer Secretary to the Treasury has just entered the Chamber. There is no way of avoiding that, but would it really be a write-off of historical debt, because many of us—although not all—would argue that council housing has paid for itself many times over? That is the only group being asked to pay off historical debts, as we do not ask for payback from housing associations, or from those in the private rented sector, even though the money ends up with the landlords, or from owner-occupiers who have received subsidies to pay off historical debts. Why then are council tenants being picked on? It is grossly unfair and unjust and we need to do something about it.
Thirdly, we need total transparency, and we must always argue for that. If it does nothing else, it will explain what really goes on. I can make accusations about the local authority in Stroud, which has filched about £5.8 million by taking it out. It could be argued that that was for the benefit of tenants, but it was of course for the benefit of everyone else as well. How is it that we really do not know what the figures mean? That might be because some of us are not so bright or good at calculating those things, or perhaps it is because the matter is so complex that we do not know whether the audit trail leads to central Government, local government or, as many of us presume, a mixture of the two. We need to have clarity, because we will not sort the mess out until the figures are explained to everyone completely overtly.
I will make several other points quickly because we will soon move on to the winding-up speeches. I am worried about the way in which we handle this in relation to older residents living in sheltered accommodation. There is now even less clarity about that, in part because we now have two different finance streams, the normal housing revenue account and the supporting people budgets. As we know, sheltered housing is changing the fundamental basis of what it is there to do, so I appeal to the Minister that we need not only to solve the big problem, but to solve the problem at a micro level. We do not want to disadvantage one group of tenants, even if we can solve the bigger picture. I am aware of the anger over that, and the Minister will have to take my word on that because I, like him, have been meeting tenants over decades. The Government cannot ignore that any longer, and they cannot pretend that a review is the answer until such a review comes up with
radical solutions on how to deal with today’s problem. Today’s problem is multi-faceted and is not only about those people in council accommodation whom we want to look after.
I pay tribute to the Government for the decent homes standard, which has dramatically improved the stock, as my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) has said. However, we know that the money is beginning to run out and is certainly getting caught up in the argument over rent increases. It is no good saying to people that a 6 per cent. rent increase can be justified, even if some of the money is being used to improve the standard of housing, and too often it is not. As the hon. Member for Portsmouth, South has said, it is a double bind, because tenants are not only paying more, but getting less for their money. That is not fair and we cannot allow it to happen.
With regard to knowing where we go from here, we need to understand that the reality of the situation is that if we do not fix what we have at the moment, we can never talk about building again. A Damascene conversion would not be a moment too soon. If the Government are saying that part of the solution to our housing problems is that we have to build local authority housing again, despite those who ask why we went through all the arguments of why that was not the right way to go, let us congratulate them and get behind it.
This issue transcends party politics, because if we do not do that, today’s crisis will become tomorrow’s catastrophe. I welcome the fact that we are now seeing that as a solution, rather than as a problem, but we need total transparency on the figure and we need to ensure that the will is translated into action. More particularly, we must recognise that the people who have suffered have done so for too long and that it is about time that we listened to them and dealt with what they are saying to us, because what they are saying to us is right.
3.29 pm
Sarah Teather (Brent, East) (LD): I congratulate my hon. Friend the Member for Portsmouth, South (Mr. Hancock) on securing this debate. It is timely, because, in the past two weeks, most council tenants will have received next year’s bill and realised that their rent is going up. This is a time when most people are thinking hard about the services that they receive from their local authority. The figures that my hon. Friend gave were stark, with £4.6 million lost this year to the Treasury, and he spoke about how it will have an impact on the ability to refurbish stock as well as to build. I congratulate him on being able to collect 5,500 signatures, which is a great achievement and testament to the strong feeling in many areas of the country. People think that the money they are spending is going to their own housing, but it is going into Treasury coffers or to fund refurbishment elsewhere.
My hon. Friend also made the point that if authorities were able to keep that £4.6 million, they would be able to build 1,000 new homes by 2013. If we were to apply that throughout the country, it would go some way to meeting the targets that the Government have set councils. Currently, they are simply unable to meet them. The hon. Members for Guildford (Anne Milton) and for South-West Surrey (Mr. Hunt), who represent the Waverley area, are not in their places, but I, too, was lobbied by
Waverley council yesterday, and it is doing a good job of bringing the issue to people’s attention. It is worth repeating that for every pound spent, 49p goes to the Treasury, which is an incredible rate of taxation. There are very few other areas in which one would expect poor people to pay such a high marginal tax rate, yet poor tenants pay 49p in every pound of rent straight to the Treasury.
Several hon. Members mentioned the perverse incentives of the current housing revenue account system, and that was a point well made. My hon. Friend also noted that the issue is not just about rent, but about receipts from right to buy, and, when we add the money up, we find that a large amount leaves local housing finance every year.
Many hon. Members made the point that the current system is complex, as I did when I intervened on my hon. Friend. Part of the problem is that many subsidy issues are based on historical debt and on a complicated calculation of what the Government think an area may need. For many councils, the notional debt that is used to calculate the formula for housing revenue bears no relation to the actual debt, so the financial model is very complicated. The hon. Member for Sheffield, Attercliffe (Mr. Betts) made the point that, as a first principle, the Treasury should never make a profit out of poor tenants. The Government’s review seems to have been going on for absolutely ages, and I hope that the Minister will say when it will finally report. When it does, I hope that the second point that the Minister will accept is that poor tenants in one area should not subsidise poor tenants in another. Poor tenants who are in council property are poor wherever they live. It does not matter whether they live in Brent, Portsmouth, Kingston or Cambridge, they are all in the same position, and the people who should subsidise local repairs and rebuilding out of general taxation are people like me, who can afford to pay their taxes, not people who live in social housing.
The hon. Member for Cities of London and Westminster (Mr. Field) made the point well that the Government are forcing rents up. The guideline rent formula sets rents at RPI plus 1 per cent.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr. Iain Wright) indicated dissent.
Sarah Teather:
The Minister shakes his head, but any council will say to him that, if they do not follow the guidelines, they suffer the financial consequences. The whole HRA system is predicated on the Government’s starting model, which forces councils to put rents up on average by 6.2 per cent. However, the retail prices index has fallen through the floor since rents were set in September, meaning that many council tenants pay substantially higher rents than one would expect for the inflationary average. Throughout the country, council tenants are falling into severe arrears: 40 per cent. of council tenants in London are in arrears, and that is a shocking figure; nationally, the figure is one in three. Some 80,000 tenants in London are in arrears, and 11,000 of them have been threatened with eviction, underlining the point that the rent increases are felt very keenly by people on very low incomes. This is a story about what is happening to the working poor, because those who are in full receipt of housing benefit do not
have any difficulties with the rent increase; it is about what is happening to people who are on a low income but in work. The Treasury keeps so much of that rent that it amounts to a tenant tax.
Mr. Drew: Does the hon. Lady agree that one problem is the segregation between those tenants who receive housing benefit and those who pay full rent? Explaining to people how that can be fair is not easy.
Sarah Teather: The hon. Gentleman is correct. I have seen many people, not just in council properties but in private rented accommodation, who work, but the rate at which housing benefit falls off makes it difficult for them to sustain work. People get trapped in a situation whereby it is better for them not to work, and that is very distressing for people who may have worked all their lives but live in accommodation that is too expensive to afford if they do not receive housing benefit.
The clear conclusion that everybody has reached is that we need to reform the HRA system.
Mr. Hancock: Before my hon. Friend finishes her speech, I must put the record straight. As much as I would like to claim credit for the petition that was drawn up by people in Portsmouth, I cannot; it was produced and worked on by the tenants themselves, and it is to their great credit that they sustained their effort over such a long period—individually approaching tenants—to get so many signatures. I should love to take the credit, but I cannot, so I congratulate them on their efforts.
Sarah Teather: I am sure that those who collected the signatures will be grateful for my hon. Friend’s words.
The clear conclusion, which I am sure the Minister will agree with, is that we need to reform the HRA. We have had this debate on the Floor of the House many times, and he has said, “We will reform the housing revenue account system,” but the question is when. I fear that the Government will just tinker with it. The Minister for Housing recently announced that councils would be allowed to keep receipts from right to buy for new properties, and may be able to keep rents for new properties that they build; however, that will make absolutely no difference to overall housing finance for most councils. If the Government are to reform the system, they will have to do a root and branch reform: they will have to give councils the right to keep their right-to-buy receipts and rent in full, and we will need a system in which any required subsidy is provided centrally through general taxation. Only then will we have a system in which the finances are stable enough for councils to plan. If they cannot plan, there is no way they can borrow. The current situation, notwithstanding the need to borrow to build, creates chaos in the running of any housing department, so I hope that the Government will take that point seriously, because 1.7 million families are on the housing waiting list and we desperately need councils to build new homes. They cannot do so under the current system. It is no good the Government saying that they have given councils the permission to build new homes, because, in effect, they have shackled them so that they cannot possibly do so.
3.39 pm
Mr. Stewart Jackson (Peterborough) (Con): I add my warm congratulations to the hon. Member for Portsmouth, South (Mr. Hancock) on securing this important debate, and I echo his comments about the patron saint of council housing, the venerable hon. Member for Great Grimsby (Mr. Mitchell), who is not in his place to share his views, as he often does. The importance of the debate lies in its background—the Government’s lamentable record on housing. That is why it is important that we address the key issues that hon. Members have raised today.
As the hon. Member for Brent, East (Sarah Teather) said, in 1997 just over 1 million people were on the housing waiting list, but now there are 1.67 million—as of 2007—which is an increase of 64 per cent. As of March last year, 78,000 people were in temporary accommodation, which is almost double the number in 1997. This is a significant problem. We are not discussing an arcane academic issue. Where there is consensus, it is on the basis that we need transparency, openness and a focus on local people making local decisions. As I mentioned in my intervention on the hon. Member for Portsmouth, South, it might be appropriate for tenants to wish to move over to a registered social landlord or to remain with their local housing provider—the district, borough or city council—but it is for local people to decide. I have made it clear that the housing revenue account, as it is presently constituted, is being used as a weapon to force people to move to registered social landlords. There is not a level playing field. The perversity and unfairness of the HRA is evident from the remarks made by hon. Members.
It is important to have some historical context here. The housing revenue account was established in the way that it was, under a Conservative Government, because historic debt levels needed to be serviced at that time. That situation does not obtain at present and the Government cannot make that case today.
I agree with the argument made by hon. Member for Stroud (Mr. Drew) on disaggregation; he took issue with the hon. Member for Portsmouth, South who holds the opposite view. Disaggregation as it was practised in the 1980s was about wealthier Conservative councils in the south of England effectively making payments based on housing need, demography and social factors to—generally speaking—Labour-voting areas in the north of England. That was probably right then, but the degree of complication is such that it cannot be justified at the moment, because everyone feels that they are getting an unfair deal.
Ms Buck: Before the hon. Gentleman moves on, would he care to remark on the fact that the history of rent increases over the last 10 years, and in the previous 10 years, shows that they were significantly higher in real terms under the previous Government than they are now and that, by and large, they are significantly higher under Conservative councils than under Labour councils?
Mr. Jackson: I do not have the figures, so I cannot agree or disagree. I would probably beg to differ on the latter point. There is a causal link with rent, in terms of rent increases in the 1980s and ’90s, because Labour councils generally did not run their housing stock well and therefore had a larger level of debt and needed to raise rents accordingly.
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