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We know that home improvement agencies have some weaknesses. They have grown up fairly haphazardly and are ad-hoc organisations, but they are the voluntary sector’s response and, for all sorts of reasons, local authorities have found that they are the best way to pursue the work. Doubtless the Minister knows that I highlighted the role of home improvement agencies when I introduced a debate on the supporting people programme. One worry was whether the ring-fencing of moneys was to go. The ring fence is effectively over, so there is even more of a squeeze, as designed by local authorities. That brings problems in its wake.

The supporting people programme has traditionally accounted for 30 per cent. of the income of home improvement agencies, and housing authorities for 22 per cent. Social services, primary care trusts and fee income, as well as trade with other charities and private sector work, make up the rest. We look carefully at how funding operates. I have alluded to the problem with disabled facilities grants. It is not just a problem in Stroud; it is writ large. We need to ensure that the process operates more quickly and effectively.

Joan Walley: On the disabled facilities grants, does my hon. Friend agree that there is an urgent need for clearer guidance in respect of the Royal British Legion, so that they provide additionality rather than substitute for money that should be provided by Government grants in the first instance?

Mr. Drew: I agree. Where substitution of moneys occurs, it is important that there should be argument about what is new money and what is real money, and whether that is right.

Without denigrating the social rented sector, I will concentrate on the private sector. I may be pre-empting the Minister, but he will probably say that a lot of this is down to local discretion. I welcome local area agreements and how the grant regime could evolve satisfactorily to deal with local targets and priorities, but the process is in its infancy and it is not clear how older people will come out of it. It is clear from all the evidence of Care and Repair England that local area agreements have not necessarily prioritised older people’s housing and services.

The Audit Commission review of the comprehensive area assessment is not uncritical of some of the work done and the moneys spent, but it states that, at best, a single comprehensive area assessment can provide only a snapshot of what is happening and what services are being delivered. More monitoring and measurement are needed to ensure that the moneys that come through local authorities, whether from central Government or complemented in other ways, are being spent wisely and effectively. As my hon. Friend said, that will affect organisations such as the Royal British Legion and how we consider disabled facilities grants.

I know that there is a belief that there are other pots of money out there, particularly in equity release. I have never been against that, but I will say that it is a bit like “over the rainbow”; it is never quite there. It is difficult to persuade people to get involved in equity release, particularly in their later years. It is a form of financial opportunity, but it is also quite complex, and we need to be clear that it is not the answer in itself, only a supplement. Anything that could be done to work through those ideas would be helpful.

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Many contracts now seem to be offered on a short-term basis—for a year rather than three years. Again, that is contrary to Government policy, which is to have a three-year mechanism. I hope that the Minister will address that by saying that there are benefits to ensuring that home improvement agencies have some guarantee that they will be funded over longer periods. That would give people such as me who sit on the boards of Care and Repair organisations some security that there will be money in future. This is a pretty tough year for all the reasons that we know about, but we could see it through if we had some knowledge of where we were going in future.

I hope that the Minister will mention the following actions. Although we accept that local discretion is important, some overall targeting nationally is important, because the problem is national, not local, and the Government should recognise how big it is. They should also recognise that the Audit Commission needs to be encouraged to consider specifically how the comprehensive area assessments can ensure that private sector housing needs are being addressed and that the money is being properly spent, audited and accounted for.

The current strategy should be considered. It is very good, but we should ensure that it is being delivered. That is why the Department for Communities and Local Government is so important. It should look to its successes and talk about them, but it should also ensure that it can defend them in future. As we move away from the ring-fencing of the supporting people programme to area-based grants, we should ensure that that does not mean that it has a weaker part in the structure or that housing and care are denied the appropriate funding.

Penultimately, with the changes in the controls on the disabled facilities grant, it is crucial that the Government monitor how the money is reaching the people whom it should reach and demand that improvements be made. After all, we have put more money in, as well as into the handyperson service. We should ensure that the strategy delivers on the ground.

Lastly, can the Government find more money for this vital issue? If they restored some of the cuts that were made, organisations such as Care and Repair Stroud, of which I am immensely proud, could respond quickly. Its greatest asset is how responsive it is in dealing with customers’ individual needs. It is also responsive to funding changes. It has had to be. It has been the bane of our life that the strategy has changed virtually every year, along with the funding coming through. We are prepared to recognise and deal with that, provided that resources come through.

As the Minister knows only too well, we have grown this area enormously during our time in office. It would be a tragedy to go backwards, because it hits all the right buttons: energy efficiency, fuel poverty and the care needs of vulnerable people, whether they are older or disabled.

4.17 pm

The Parliamentary Under-Secretary of State for Communities and Local Government (Mr. Iain Wright): It is a pleasure to serve under your chairmanship, Miss Begg. I congratulate my hon. Friend the Member for
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Stroud (Mr. Drew) on securing this important debate. I pay tribute to him in general terms for his firm yet charming tenacity in ensuring that housing issues are at the very top of the political agenda, especially community land trusts, on which he has been a leading champion in driving through the agenda. I also pay tribute to him specifically for his work with Care and Repair Stroud, with which I believe he has been involved for close on a quarter of a century.

As my hon. Friend made clear, home improvement agencies help home owners and private sector tenants who are older, disabled or on low incomes to repair, maintain or adapt their homes. They are extremely valuable assets in the local community and play an increasingly important role in helping local authorities to ensure that people continue to live in their own homes in comfort, safety, security and independence.

My hon. Friend made a balanced contribution in which he recognised that the Government have played an important role in developing the sector since 1997. Over the past decade, the sector has undergone substantial growth and restructuring. In 1999, only 54 per cent. of local authorities had a home improvement agency; by 2001, that number had risen to 69 per cent.

As a means of building additional capacity and potential in the sector, my Department invested £5.2 million over two years from 2003. Subsequently, there has been a huge growth in the use of home improvement agencies. Today, about 90 per cent. of local authorities have a home improvement agency, a huge leap from only a few years ago. As well as an increase in the number of agencies, we have also seen a general improvement in the quality of governance. Agencies are now, on average, larger, more robust and financially viable organisations that offer a greater, more diverse and, to use my hon. Friend’s phrase, more responsive range of housing-related support services to older, disabled and vulnerable people.

I have mentioned funding, which was the key theme of my hon. Friend’s contribution. As I have made clear in answers to parliamentary questions that he has tabled, my Department does not fund home improvement agencies directly, but provides money via a number of funding streams that have been mentioned, such as the supporting people and disabled facilities grants, which are available to local authorities and can be used to fund and deliver home improvement agency services. I shall say a little about both of those important schemes.

The supporting people programme has provided unprecedented sums of money to allow local authorities to invest in local services for vulnerable people. As my hon. Friend has said, about 30 per cent. of revenue funding for home improvement agencies across the country is derived from the supporting people grant. The Government have provided about £8.7 billion to local authorities through the supporting people programme since it began in 2003. That has helped about 800,000 people a year, particularly older people, through a range of services, including home improvement agencies.

In December 2007, my Department announced a three-year allocation of £4.9 billion, for the period to 2011, for the supporting people programme. My hon. Friend mentioned short-term, annual funding allocations, and made the point that multi-year agreements, which are usually over three years in the local authority sector, are very important. They provide the stability and greater certainty that allows local authorities and related
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organisations, such as home improvement agencies, to build on previous successes, to plan improved service delivery and to consider greater efficiencies over the following three years. Departmental data show that supporting people funding for home improvement agencies has increased from about £15.5 million in 2006-07 to more than £17.5 million in 2007-08.

My hon. Friend rightly touched on the removal of the supporting people ring fence, which is important in the wider context of the Government policy of allowing local authorities more freedom and flexibility to shape policies according to local circumstances and priorities. Such a policy provides local authorities with an opportunity to develop new and innovative ways of supporting vulnerable people in a range of situations, including, if they so wish, the delivery of more holistic and needs-based services for older people by home improvement agencies. That is important. There will always be tension between the requirements and objectives of Government and the priorities of local government, but the general thrust of Government policy is right. Local authorities should be allowed that freedom and flexibility to determine what is provided locally on the ground.

The disabled facilities grant provides more than half of all capital funding for works carried out by home improvement agencies and is a considerable source of fee income for those organisations. The grant has been hugely successful in funding the adaptation of people’s homes according to their personal situation and has funded the installation of ramps, wider doors, stair lifts and appropriate bathing facilities. Approximately 38,000 households receive a disabled facilities grant each year. The Government recognise the success and importance of the programme and have increased funding accordingly. Indeed, funding has more than doubled from £57 million in 1997 to £146 million in 2008, and the budget will rise again to £166 million by 2010. Following a review, a package of changes that will modernise and improve the programme was announced in February last year. Those changes included raising the grant limit to £30,000, and improving and streamlining the administration and fairness of the means test, so that those in receipt of certain benefits are passported through to maximum assistance.

The grant programme is highly successful, as I have said, but its rules have been criticised for being too restrictive and because some people have waited far too long for adaptations. The Government are committed to maintaining the mandatory aspect of the grant, but we have now relaxed the rules on how grants are managed, giving local authorities the flexibility to develop smaller-scale, rapid-response adaptation services. The grant budget should not be seen as the sole source of funding, and local authorities are expected to contribute towards those costs, as they have always done.

Home improvement agencies also oversee repair and renovation work that is carried out using private sector renewal funding. I know that my hon. Friend is particularly concerned about that issue. That support is provided though a mixture of loans, grants and equity release schemes, as he said, and is a cross-governmental initiative. For example, the Department for Energy and Climate Change has the Warm Front grant programme. In total, about £1 billion is being made available to local authorities
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through the regional housing pot, in the period up to 2010-11, to help to improve housing conditions for the most vulnerable.

I should like to reassure my hon. Friend that my Department has provided about £10.2 billion, for the three-year period up to 2011, for regional housing capital programmes, including those that address the condition of private sector housing stock. There will be an element of concentrating on increasing housing supply, to which I know he is particularly committed, but the points made today are important: during a recession, when house building has slowed and we want to retain the skills capacity within industry, it is vital to retrofit properties, to ensure that we have appropriate housing stock and to improve its energy efficiency. I hope that funding will be provided to allow that to happen on the ground, as the Government have provided funding, having committed about £2 billion for direct improvements to and regeneration of existing housing stock.

We have recently issued guidance to regional assemblies on this matter, which states that they should continue to prioritise those households that are most in need, with the expectation that packages of assistance, which may include grants, loans and equity release schemes, should be made available to them. My hon. Friend will have expected me to say this, and he has pre-empted my comments to some extent, but local authorities have wide powers to provide tailored packages of assistance to owners and tenants for home repairs and improvements through the regulatory reform order. In addition, my Department wrote to all local housing authorities, in November, to remind them of their statutory duties under the housing health and safety rating system and what more they could do to tackle excess cold and climate change issues through their enforcement powers. I remind my hon. Friend that funding is not limited to the regional housing pot and should be drawn from Warm Front and other energy efficiency schemes to provide those tailored packages of support for vulnerable households.

Mr. Drew: The problem is that local authorities will argue that they are meeting their statutory responsibilities. It is the non-statutory areas in which they could make an enormous difference. The handy person scheme, for example, saves enormous sums of money by ensuring that jobs such as changing plugs, which older people cannot do for themselves, are done. That is the sort of area in which we ought to get a clearer, faster form of delivery.

Mr. Wright: I have two things to say on that. My hon. Friend is absolutely right about the handy person scheme, for which we have provided £33 million. It can make an enormous difference because someone can knock on the door of Mrs. Smith or Mr. Bloggs to see whether they are okay and to change a plug. That £33 million will provide enormous savings and will allow people to stay in their homes. That is hugely important.

We fully recognise that local authorities are finding it difficult, in the current economic climate, to balance improved service delivery with efficiencies and appropriate staffing levels, but local authorities can act as a catalyst for economic development and regeneration and can help to stimulate local economic conditions. The approach of making sure that home improvement agencies have
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appropriate funding is a good example of how local authorities can stimulate economic activity and ensure that homes are retrofitted to provide the services that vulnerable people in particular need and desire.

I thank my hon. Friend for securing the debate. I believe that home improvement agencies have a pivotal role to play in helping to adapt our housing stock to the needs of an older society and a society that is retrofitting measures to mitigate climate change. How home improvement agencies are used should be, and is, a matter for local people. However, as I hope that I have demonstrated, the Government have provided substantial resources for this and have given local government the freedom and flexibility to help home improvement agencies to achieve their objectives for older and more vulnerable people locally.

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Dunfermline Building Society

4.30 pm

Willie Rennie (Dunfermline and West Fife) (LD): This is an opportune debate, which I sought last week before the news broke at the weekend about the future of the Dunfermline building society. Mainly, it has been a black week for Dunfermline. After 140 years of trusted service to the community, the Dunfermline is no longer an independent Scottish mutual. It has been a friend to many and has been safe and sure. This week, there have been tears, confusion and, most of all, anger that such a fine institution has come to this.

For the record, I wish to declare that I am a member of the Dunfermline building society; it is an organisation that my family and I have trusted for a number of years. The break-up of the Dunfermline is another clear example of the failure of the regulatory system. We need some clear answers to why the so-called reckless behaviour was allowed to go unchallenged by the regulator for so long. Why was the Dunfermline allowed to ramp up its commercial loan book from approximately £270 million at the end of 2007 to more than £650 million in early 2008 when the property implosion was plain for all to see?

We should remember that, in early 2008, several months had passed since the problems of Northern Rock, Freddie Mac, Fannie Mae, Lehman Brothers and others. How could this have been allowed to happen? I understand that the Financial Services Authority was well aware that building societies—not just the Dunfermline—had adopted a change of strategy to a more risky business model. That change of strategy was openly discussed, yet effective permission was given for the Dunfermline to proceed. The FSA knew about the loan books that had been bought from GMAC-RFC and that they had been sold as a full status when, in fact, they were risky self-certification loans. What was the FSA’s response? No action was taken against GMAC-RFC and there was no direct intervention at the Dunfermline. The only action taken was a round-robin letter sent to all the building society chief executives about their due diligence responsibilities. That is a completely inadequate response, which allowed the society to continue its road to ruin.

At the Dunfermline, it is my understanding that the due diligence stress tests and professional assessments of the proposals to buy a range of loan books from GMAC-RFC and others were overruled. Why was that not also identified by the FSA? Before the old building society regulator was subsumed into the FSA, it had a special focus on building societies. If that structure had remained, we might not be facing the situation that we have today. Bringing two different cultures together under one organisation led to a common set of values and standards that do not reflect the different priorities and culture of the banks on the one hand and building societies on the other. Will the Minister tell me what lessons have been learned in the Treasury, the Bank of England and the FSA about this episode?

Mr. Angus MacNeil (Na h-Eileanan an Iar) (SNP): On Sunday, the perhaps now former chairman of the Dunfermline building society was asked whether he thought that the Treasury was guilty of sacrificing the
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Dunfermline. He said that he felt that the Treasury had sacrificed it. As the Member for Dunfermline, is that also the hon. Gentleman’s view?

Willie Rennie: The issue is covered in fog. Jim Foulds was very emotional on Sunday, and he obviously felt strongly about the society. I had an initial fear that a barrier to getting the necessary deal would be the fact that the Prime Minister lives in Fife and has a seeming attraction and closeness to the society. I also feared that setting a precedent of that nature might be a disadvantage to the Government if there are difficulties with other building societies. I have since had discussions with the Government and many others, and although I think that an awful lot was done to try to save the society, it was not sufficient. However, we will leave the issue of whether the society was sacrificed to the academics and historians.

Will the Minister say whether there has been an investigation into this episode within the FSA? In addition, have all the mistakes that were clearly made with the Dunfermline building society been highlighted and lessons learned so that the culture changes? I am sure that this is not the only episode from which the FSA has had to learn, but it is essential that the lessons are learned. I also want to know what changes will be introduced and if any changes have been agreed so far?

I was grateful to the Chancellor for giving a statement on Monday. I was pleased because it allowed the House to express its views and concerns about the decision. The Chancellor’s tone and approach on Monday was much appreciated; it was sensitive to the staff, Fife and Scotland as a whole. I was appreciative of that, but there are still a number of outstanding questions. On Sunday, the Secretary of State for Scotland said:

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