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House of Commons

Tuesday 3 March 2009

The House met at half-past Two o’clock


[Mr. Speaker in the Chair]

Oral Answers to Questions

Communities and Local Government

The Secretary of State was asked—

Building Regulations (Thermal Efficiency)

1. Andrew Stunell (Hazel Grove) (LD): What plans she has to improve levels of compliance with the provisions of building regulations on thermal efficiency of houses. [259884]

The Parliamentary Under-Secretary of State for Communities and Local Government (Mr. Iain Wright): Before I reply to the question, let me say that I am very conscious that Ivan Cameron’s funeral took place today. I am sure the whole House will wish me to say that our thoughts and prayers are with David and Samantha on what must be a particularly unbearable day.

Our proposals to strengthen the energy efficiency provisions of the building regulations in 2010 will include comprehensive plans to build on previous measures to improve compliance. A number of other initiatives are also under way, including reform of the building control process, extending the powers for prosecution, and simplifying guidance.

Andrew Stunell: I am pleased to hear of the revision of enforcement measures. Does the Minister acknowledge that there is plenty of evidence that, with the development of new technologies and materials, there is an increasing shortfall in the standards of energy efficiency measures applying to new homes? Will he use the problems created by the slump in the building industry as an opportunity to develop an effective enforcement regime and to ensure that there is proper training in the construction industry so that it can deliver the standards that are necessary?

Mr. Wright: I know that the hon. Gentleman takes a particular interest in this subject, and what he has said makes a good deal of sense. We have been working closely with key industry stakeholders in the run-up to a public consultation scheduled for April this year. It is vital for us to try to increase the skills and capability of the industry in order to improve energy efficiency. I agree with the hon. Gentleman that the present circumstances present a huge opportunity for Britain
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and the British economy to ensure that homes are energy-efficient, and also to help to stimulate the construction industry.

David Wright (Telford) (Lab): Two or three companies in my constituency want to engage in new kinds of house construction, and are keen to discuss with the Minister how new systems of build can be delivered. Will he agree to meet those companies so that we can help them to grow, build new homes and provide new jobs in our local economy?

Mr. Iain Wright: I am aware that my hon. Friend takes a particular interest in housing. I greatly enjoyed the housing summit that he arranged in Telford a couple of weeks ago. He is playing a leading role in trying to secure the housing that is needed there and elsewhere. I should be more than happy to meet him and representatives of construction firms in his constituency to ensure that modern methods of construction are adopted, both in Telford and generally.

Mr. James Gray (North Wiltshire) (Con): I thank the Minister for his kind words to David and Samantha Cameron.

I am sure we all agree with the thrust of this question. Of course we should all like to see an improvement in the thermal efficiency of housing and a reduction in its carbon footprint; no sensible person would not. However, does the Minister agree with me, and with representatives of the Council of Mortgage Lenders with whom I had lunch in the House a short time ago, that a significant brake is being put on the housing market at present by something that he could put right at a stroke—the problem of home information packs?

Mr. Wright: A key aspect of HIPs is the energy performance certificate. At a time when people are concerned about rising fuel bills and the economy in general, up-front information about the energy efficiency of a home is helpful to them. In this day and age we need to provide real help with a range of matters, and the energy efficiency of homes is an important part of that.

David Taylor (North-West Leicestershire) (Lab/Co-op): The manufacture of building materials is a very important industry in my constituency, which is part of a mineral-rich county. Relatively recently, I talked to a manufacturer of chimney linings who suggested that over-zealous implementation of the revised building regulations was leading to the slow death of the British chimney because of its thermal inefficiency. Does the Minister agree that the chimney is important, aesthetically, structurally and in health terms, that we need ventilation, and that we do not want to live in hermetically sealed tombs? Will he agree to discuss the topic with me?

Mr. Wright: I do agree with my hon. Friend. In revising the relevant part of the building regulations, we have tried not only to improve compliance and provide extra training, but to issue more guidance to contractors and others so that they can perform the vital task of ensuring that such things as chimneys are energy-efficient. I should be more than happy to meet him to discuss the matter further.

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Paul Rowen (Rochdale) (LD): May I pursue the question asked by the hon. Member for Telford (David Wright)? Has the Minister had any discussions with the Department of Energy and Climate Change about the development of zero-carbon homes? I believe that the current situation would provide an opportunity for pilots to be set up if grants were available. I understand that none is available at present.

Mr. Wright: We are still consulting on the definition of zero carbon, and we are working closely with DECC colleagues. As the hon. Gentleman will know, on 12 February our two Departments launched the heat and energy saving strategy, which is arguably the most ambitious climate change-related initiative in the world. It sets out the Government’s ambitious long-term plan to draw up a route map with the aim of enabling all United Kingdom homes to produce near-zero carbon emissions by 2050. I hope that the hon. Gentleman will join us in ensuring that it works, and that we see real energy efficiency in homes.

Mr. Stewart Jackson (Peterborough) (Con): I thank the Minister for his typically decent and kind words of sustenance for David and Samantha Cameron.

Is it not a cheek for Ministers to lecture everyone else when their own modern headquarters at Eland house has one of the worst energy efficiency ratings of any building, with its display energy certificate getting a risible F rating, which is the second lowest? Does that not reinforce the criticism of the Sustainable Development Commission that

Should not Ministers start to show some leadership and sort out their own backyard first?

Mr. Wright: Eland house was built in the 1990s, I believe by Michael Heseltine, and it is somewhat showing its age—rather like the Opposition Front Bench. We are keen to ensure that we have the most efficient type of buildings available. The energy performance certificate for Eland house can provide information on how we can improve the energy efficiency of the building. I hope that the hon. Gentleman will join me in ensuring that such certificates provide relevant information to improve matters, rather than sitting on the sidelines sniping.

Icelandic Banks (Local Authority Finances)

2. Paul Farrelly (Newcastle-under-Lyme) (Lab): What assessment she has made of the effects of the recent performance of Icelandic banks on local authority revenue and reserves in 2009-10. [259885]

The Secretary of State for Communities and Local Government (Hazel Blears): I, too, would like to send my very warmest thoughts to David and Samantha Cameron at this difficult time for them.

We are regulating to ensure that authorities need not make provision in their 2009-10 budgets for possible capital loss on these investments. The regulation will come into force on 31 March and will give local authorities time to be clearer about the effect on their budgets and indeed their council tax. We have worked closely with the Local Government Association on that approach. It
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has been warmly welcomed on all sides. No authorities at the moment are facing cash-flow problems or an impact on their key services.

Paul Farrelly: I thank my right hon. Friend for that welcome reply. Sadly, Newcastle-under-Lyme borough council invested £2.5 million—more than 5 per cent. of its reserves—in the subsidiary of Landsbanki on 14 September last year, just three weeks before the bank collapsed. In doing so, it ignored the warnings of a previous Conservative cabinet member for finance to avoid Icelandic banks. However, since then it has been saying that it is confident that it will get the money back. Does the Secretary of State agree that it is important that councils are open and honest about the investment decisions they make, and that they should not mislead council tax payers about the losses that they face in such circumstances?

Hazel Blears: Clearly, transparency and openness in relation to financial decisions are essential. Integrity and probity go to the heart of local government. I am not in a position to comment on my hon. Friend’s individual council. That would be a matter for the district auditor. Clearly, those issues will be raised. What I will say is that the Government guidance said to local authorities that they need to have regard to both security and liquidity, and that in those investments the rate of return has to be consistent with proper levels of security and liquidity.

Sir Peter Tapsell (Louth and Horncastle) (Con): In the present political situation in Iceland, with whom are negotiations being held and what progress is being made to restore to local authorities, including the district council in my constituency, the substantial losses incurred as a result of having deposits with an Icelandic bank?

Hazel Blears: The Treasury has for some months been in negotiations and extensive talks with the Government in Iceland. The International Monetary Fund has approved a £2.1 billion loan to Iceland to ensure that Iceland can have a sound banking system. Those negotiations will continue. The Local Government Association is also in negotiations on behalf of individual local authorities to ensure that their position is protected.

Sir Nicholas Winterton (Macclesfield) (Con): The Secretary of State will know that the county of Cheshire disappears in just over three weeks and becomes Cheshire East and Cheshire West and Chester. The existing county council had some £8 million invested in Icelandic banks. Is not it inevitable that the new authorities will suffer financially as a result, particularly when account is taken of the £3.5 million that has been paid to chief executives of the current authorities who have not got jobs in the new authority? That will have to be paid for. In Cheshire East, the transition from the old council has not cost £10 million—it has cost £20 million. Is not that going to prove a problem financially for the council tax payers of Cheshire East?

Hazel Blears: I am sure that the hon. Gentleman is aware that the money held with the Icelandic banks is not money that has been lost; it is money that could be at risk. We are pressing extremely hard to make sure that local authorities recover the maximum amount of
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money that is due to them, in order to protect council tax payers. He will also know that although the reorganisation in Cheshire may involve some up-front costs, in the longer term it will save people in that area a significant amount and improve services for them.

Mr. Clive Betts (Sheffield, Attercliffe) (Lab): My right hon. Friend will be aware that the Select Committee on Communities and Local Government is conducting an inquiry on this issue. We found that many local authorities do not have the necessary internal expertise on these matters, so they commission outside firms. What came as a shock to the Select Committee and the Local Government Association, however, was that in some cases that external help was not advice in the properly understood meaning of the term, but amounted simply to passing on to local authorities information that could have been gained from the internet, such as information about credit rating agencies. Does she agree that the guidance to local authorities should be changed to ensure that all of them have access to proper financial advice, either external or internal, on these matters?

Hazel Blears: I am grateful to my hon. Friend and the Select Committee for conducting the inquiry, and I very much look forward to seeing the report. It is essential that local authorities take proper advice and guidance on making investments. Our national guidance was issued in 2004. Of course, we keep it under review, but it was very clear to local authorities about the need to be conscious of security and liquidity, as well as about trying to get a decent return on their investments. I am delighted that the Committee has conducted the inquiry, and I have no doubt the report will have some lessons for all of us.

Mrs. Caroline Spelman (Meriden) (Con): I will, of course, draw the attention of the Leader of the Opposition to today’s Hansard, which will contain the very kind comments that have been made in all parts of the House.

Parliamentary questions show that the Financial Services Authority knew in early 2008 that the Icelandic banks were in trouble. It is obliged to warn both the Bank of England and the Treasury of any concerns, so given that Ministers knew that alarm bells were ringing, why was no advice given to local authorities or other investors about the higher risks associated with Icelandic banks? Even the Audit Commission was misled into investing in Iceland. Given that the Secretary of State’s Department is responsible for issuing investment guidance to councils, is it not the case that both her Department and the Treasury were asleep on their watch?

Hazel Blears: No, I entirely reject that. Clearly, there has been an issue concerning the behaviour of banks and the investments that have been made in this country and in countries right across the world. The hon. Lady will be aware that Lord Turner, the new chair of the Financial Services Authority, has been asked by the Chancellor to conduct a review of the FSA’s approach and to report to him. I entirely reject the allegation that the Department was in some way negligent in its guidance. That guidance in 2004 made it absolutely clear to local authorities that they should look at security and liquidity and make sure that the return they sought was consistent with a very prudent approach.

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Town and Country Planning Act 1990 (Section 106 Agreements)

3. Mr. Lindsay Hoyle (Chorley) (Lab): What estimate she has made of the sums local authorities have received under agreements under section 106 of the Town and Country Planning Act 1990, which are held in local authority bank accounts. [259886]

The Minister for Housing (Margaret Beckett): Information on moneys collected by local authorities in this way is not held centrally. Government policy is clear that local authorities should not amass significant levels of unspent developer contributions without good reason.

Mr. Hoyle: I might be able to help my right hon. Friend. The Library suggests that about £4 billion of section 106 money is held, and I can say that in my own authority of Chorley, which is a small district authority, almost £9 million in section 106 money is held. As I have mentioned before, we know that there is £3.5 million that can be spent on social housing that is not being spent at present. A new railway station or community centre could be built, as could many other facilities. That would get those in the construction industry back to work, and it would provide the social housing that is needed, as we have an increasing housing waiting list in Chorley. What can my right hon. Friend do to make sure that this money is spent not just in Chorley, but throughout the country, to get us out of this recession now?

Margaret Beckett: I am grateful to my hon. Friend, who I know has a long-standing concern with this issue. I think there is perhaps a slight misunderstanding here, as the figures that the Library will have given him are for the totality of section 106 money across the country, and we understand that about 90 per cent. of that is not cash going to the local authority, so to speak, but direct provision of various agreements and planning obligations, and only some £340 million—although that is still a substantial sum—is available through cash contributions, which must, of course, be used or returned for the appropriate purposes.

I understand completely the point that my hon. Friend makes about wanting to see better use of this money. We give strong guidance to local authorities, and I think he would like to know that, in no small part as a result of his questions on the matter, we have commissioned new research to investigate the use and value of planning obligations for the last full year for which we have data available—2008—and that it will report in the summer. In addition, I have asked my officials to have some research done to understand better the scale and extent of unspent section 106 contributions and to explore the feasibility of pursuing further our work with local authorities to ensure that such money is used for the intended purposes.

Mr. Simon Burns (West Chelmsford) (Con): Does the Minister accept that section 106 money and other incomes that all local authorities have put into bank accounts are being adversely affected by the significant drop in interest rates, which is leaving a significant shortfall in the income that local authorities can spend? Do the Government have any plans to tackle that problem, which is no fault of local authorities?

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