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Lord Harding of Petherton: My Lords, I am grateful to the noble Lord, Lord Dean, for initiating the debate. I wish first to answer the point made by him that it was deliberate government policy to reduce council house building. I do not deny that; I do not believe that councils are the best people to build houses. The noble Lord, Lord Dean, referred to Harold Macmillan's building programme. It was no fault of Harold Macmillan's, but that programme included many high-rise flats which have since had to be bulldozed.

The rapid fall in house prices which started in 1989 and continued for two years to the level we have today is affecting many people. As this period also corresponded with a great increase in unemployment, especially among people with high mortgages, it has caused a lot of hardship. I feel very sorry for all those people who have had their houses repossessed or who are unable to move because of negative equity. Thousands of construction workers have been thrown out of work.

In the late 1980s, the housing market became a gigantic bubble which eventually burst. The absurd situation arose when a cupboard in Kensington was sold for an astronomical price. House prices were rising by incredible amounts each year and everyone who was able to scrambled to get on the ladder. The government of the day—I am ashamed to say that it was a Conservative one—allowed that to happen.

It is absurd, however, to say that my right honourable friend the Prime Minister was party to the policy of neglect in high economic decisions made at that time. As

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Financial Secretary to the Treasury, he took no part in interest rate policy, but he was quite right to point out the other day, as the noble Lord, Lord Dean, mentioned, what happened in the late 1980s. He was not blaming house buyers or building societies; he was merely stating what happened then and that it must not happen again.

Anyway, it is no good looking back. We must address the situation today and look at the future. We now have low inflation with house prices lower in relation to average earnings than has been the case for possibly 20 years. It is a good time to buy houses for those who can afford to. Unfortunately, although many are doing so, it is not enough to keep the housing market moving. This is due mainly to the feeling of job insecurity. Different patterns of employment must also be a factor. In the past few years, whole rafts of long-term jobs have gone; part-time working and short-term contracts have become more common.

Of course, the Government's reductions in mortgage tax relief—or MIRAS—have not helped. However, MIRAS, even at the level of £30,000, created a huge distortion of resources towards housing, besides costing the Exchequer millions of pounds in lost revenue. It is no answer to turn the clock back and try to kick-start the housing market by reversing the reductions. I doubt anyway whether it would have much effect. Because of low interest rates, mortgages are much cheaper anyway than they were when MIRAS was at a higher rate in real terms than it is now.

I turn to protection for mortgage interest on income support. The current system is highly unsatisfactory. It leaves 70 per cent. of people with mortgages without any help if they lose their jobs. People with working spouses, redundancy money or savings, or who have part-time or early retirement income, do not qualify. As a result, about 150,000 people on unemployment benefit receive no income support for their mortgages and 50,000 people a year have their homes repossessed. The cost of income support for mortgage interest has risen from £30 million to over £1 billion in 15 years.

The availability of government support and a belief among home buyers that it is all-embracing have discouraged the growth of comprehensive private mortgage insurance. The Government have rightly said that private insurance should ensure that everyone taking out a new mortgage has proper protection, by insurance or otherwise, against the threat of a spell of unemployment.

There have been screams from the Society of Mortgage Lenders which, in my view, is entirely self-interested; the society would much rather that the Government should bear the burden. Surely, though, if someone satisfies a lender that he qualifies for a mortgage he should also be a good insurance risk. Spreading the insurance cover over many people, as all insurance companies do, would mean that the premium should be at a reasonable level.

The private lending sector must also be encouraged by the Government. Many people seem to think that renting is in conflict with home ownership. That is not the case. Many people, especially the young, do not have the resources to get a mortgage and buy a house. The Government went some way to freeing the private renting sector by passing the 1988 Act. Before that Act

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was passed, it was almost impossible to find a privately rented house or flat. I know that from personal experience. When my daughter left university to work in London she wanted to rent a small flat. The letting agent would not countenance a rental agreement with her; it had to be with a company. The reason was that there could be no certainty that she would not become a permanent tenant because of the rent Acts. Luckily, my family had a small private company, which had been set up by my parents to buy the village post office and some other property where we live. At that time, the company owned only six garages. I was therefore able to get the company to rent the property on her behalf. The majority of people would not have been able to do that.

The rent Acts first appeared in the First World War. Labour governments in the 1960s and 1970s made them even more restrictive and included furnished lettings. That means that Britain alone among industrial nations has a tiny private rented sector. The 1988 Act improved the situation. Only recently, however, have owners of houses taken advantage of the terms of the Act. I have recently seen for the first time I can remember houses with "To Let" signs outside them. In Yeovil and Taunton, near where I live, I have recently seen construction sites with advertisement boards showing that houses or flats are being built to let. That is very good news.

However, the 1988 Act did not go far enough. Obviously, there has to be some protection for tenants. Landlord and tenant relationships are often not easy. The law is still far too biased against the landlord. Thousands of privately owned buildings across the country are empty. Because of the existence of the rent Acts for 70 years, many have been allowed to go derelict. Owners will still not go to the expense of doing them up for fear of getting a tenant whom they cannot remove and being stuck with an uneconomic rent. Even when a tenant does not pay the rent for a time, there are tremendous legal difficulties in getting the tenant out. The Government have promised a White Paper on housing in the near future. I hope that it will address the problem.

There are a great many people who cannot afford an economic rent, even if houses and flats were available. By setting up housing associations, the Government have introduced private capital to social housing needs. Council estates are often badly run. I have dealt with that matter previously.

My main message is that the present situation is not as bad as it is painted. It is true that thousands of people have had their houses repossessed, and this year many more will suffer the same fate. That is very sad, but it cannot be avoided. The best prospect for housing in Britain is offered by sustainable, non-inflationary growth. The rising prosperity that the Government's policies will bring is the best hope for restoring confidence in the housing market and the construction industry. As in so many other aspects of policy, there are no quick fixes. Politicians are being dishonest when they try to persuade the public that there are.

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3.31 p.m.

Lord Ezra: My Lords, the noble Lord, Lord Dean of Beswick, has effectively introduced a debate on an issue of fundamental and topical importance which covers many aspects. Obviously in the short time available speakers cannot cover more than one or two aspects. I propose to concentrate on the need to improve the condition of the nation's existing housing stock. I should point out that for many years I have been president of the National Home Improvement Council.

Bearing in mind the relatively small contribution that new building can make to overall housing requirements, the maintenance of as many existing homes as possible in a reasonable state of repair is essential, especially in view of the Government's own forecasts of a 23 per cent. increase in the number of homes needed in the next 20 years.

The last major surveys into the quality of housing stock were made in 1991 and 1992. It emerged from the English House Conditions Survey that there were 2½ million houses, or over 13 per cent. of the housing stock, in need of urgent repair. These are the homes of nearly 6 million people.

The official survey is now four years old. A survey undertaken recently by the National Home Improvement Council, which involved detailed responses from some 75 local authorities, showed that an increasing number of homes failed to meet the fitness standards. The situation appears to be deteriorating.

A relatively high proportion of sub-standard properties represents older stock. They tend to be inhabited by people on low incomes, and particularly by older people. So there is quite a social problem. The situation has serious health and safety implications. Britain has noticeably higher relative rates of winter mortality than other European countries, much of which is attributable to inadequate living conditions. There are also safety risks, particularly where faulty heating systems and wiring could be involved.

The present structure for providing grants for improving property remains as set out in the 1989 Local Government and Housing Act. The Act defined the circumstances under which grants could be made and introduced means testing for the major grant categories. Grants to achieve basic fitness standards became mandatory for those meeting the means test criteria, and provision was made for discretionary grants in special circumstances in addition.

In spite of those clearly stated intentions, I regret to say that the Act has failed to deliver—and for the simple reason that there has been a steady reduction in central government funding towards the grants from a peak of £1.3 billion in 1985-86 to the current level of no more than £260 million. As a result, many of the grants agreed under the means test arrangements have not been met. Furthermore, there has been virtually no scope for discretionary grants.

The Government are currently considering a reform of the grant system, and are concentrating on removing mandatory requirements and increasing the emphasis on area renewal projects. I quite agree that an area approach, which was tried before, is well worth attempting.

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However, it still leaves the question of the major backlog of people who were promised grants but have not received them and who could get into an even worse situation as a result of the proposed reforms.

Apart from the review of the grant system and measures to deal with the backlog of applications, other measures are needed if a serious attempt is to be made to deal with the progressive deterioration of the nation's housing stock. Three measures in particular require serious attention. The presence of the noble Lord, Lord Mackay, on the opposite Bench makes me hesitant to mention my first proposal in view of his reaction to a Question earlier today. It is a reduction of the VAT rate to 8 per cent. on housing renovation and repair work. I hope that the noble Lord's colleague who will reply may not have quite so closed a mind as he had on the subject. My researches show that this would be permissible under European Union regulations. Householders would be encouraged to undertake repairs and improvements to their property; and it could be made much more cost-effective for owners of vacant properties to undertake the necessary repairs. The reduced fiscal proceeds could be offset by increased activity in the construction industry, which, as the noble Lord, Lord Dean, pointed out, is sorely needed.

One of the most serious weaknesses in existing homes is the lack of adequate standards of insulation and other ways of using energy efficiently. Much is already being done by Neighbourhood Energy Action, an organisation with which I have been connected for some years, to insulate the homes of people on low incomes, particularly those of the elderly. I am glad to say that government support for this scheme was recently increased. The scheme has already improved the homes of nearly 2 million people on low incomes. It needs to be further extended and made more flexible to cope with changing circumstances. The Home Energy Conservation Bill, introduced by my noble friend Lady Hamwee and passed in this House on 8th June, should go a long way to identifying where further action will be required to improve energy efficiency in the home. Electricity and gas undertakings could play a larger part in stimulating energy efficiency by their domestic consumers. This could be done, for example, by the provision of loans on favourable terms to install energy-efficient equipment.

The use by local authorities of capital receipts from house sales for housing investment has long been a bone of contention. A suggestion which the Government might be prepared to consider is that the proceeds of future receipts (leaving aside past receipts) might be put into improving the condition of local authorities' existing housing stock. This was attempted in a limited way in the 1992 Budget but there was not enough time for it to bear fruit. The reintroduction of such a measure in the next Budget could have a positive effect.

To conclude, my Lords, there is no doubt that the condition of the nation's housing stock presents a serious problem. The fact that over 13 per cent. of the total stock, involving nearly 6 million people, requires urgent repair can no longer be ignored. But unless concerted action is quickly taken, further deterioration will undoubtedly set

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in. That could add immeasurably to the many other problems that beset the housing market.

3.39 p.m.

The Lord Bishop of Oxford: My Lords, I am grateful to the noble Lord, Lord Dean of Beswick, for the opportunity of debating a subject of such fundamental importance. The Church of England has a long history of concern for housing provision both in a practical way and as a matter of public policy. Parish priests throughout the country know that poor housing conditions are related to so many of the other ills of our society. Conversely, adequate, affordable housing provides a sound base from which children can develop as they ought. Without the basic security of a home, the sense of belonging and rootedness needed for personal growth is virtually unattainable.

The noble Lord, Lord Dean, referred to Faith in the City. That major report produced by the Archbishop's Commission in 1985 concluded that the structure of housing in urban priority areas was "totally inadequate". The authors continued:

    "It is clear to us that the prevalent housing situation of UPAs is quite unacceptable".
Five years later, in 1990, a follow-up report, Living Faith in the City, reported:

    "Sadly the analysis of housing issues presented in Faith in the City remains accurate. The number of homeless people has increased, more dwellings have become unfit for habitation"—
as was emphasised by the noble Lord, Lord Ezra—

    "and new legislation has, for many people, rendered their continuing occupation of their current accommodation uncertain".

The housing shortage in rural areas for those on low incomes has also given rise to concern. Faith in the Countryside, the report of the Archbishop's Commission on rural areas, also published in 1990, said this:

    "One issue above all others—housing—has been at the centre of the evidence which we have received, especially on our regional and diocesan visits".

The figures we have already heard and will hear again in this debate show starkly that the position since then has worsened further. There is still a desperate need for more and better affordable housing. Recent research commissioned by the Joseph Rowntree Foundation emphasises in particular the need for more rented accommodation. I was pleased to hear the noble Lord, Lord Harding, emphasise that.

Home ownership is certainly a desirable option for those who can afford it. But many millions cannot and it may not be suitable for the growing number of people in insecure employment and those who need the flexibility to move for job reasons. Among young people in particular there is much less confidence in the prospect of home ownership than there was 10 years ago. Renting for many is the only option and for a good many more the only realistic one. Yet today there are 1,609,000 fewer council and housing association properties to rent than there were in 1979—a 50-year low. In the past two years the Government have cut funding to housing associations by more than £600 million. Local authority constructions are now minimal.

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I have the honour to be president of the National Federation of Housing Associations, which represents 1,600 housing associations which together provide low-cost rented housing for more than 2 million people. They are the only major providers of new social housing in England today. The NFHA considers that between 130,000 and 150,000 new social rented homes are needed each year between the present day and the year 2001 if the extra demand created by demographic and unemployment changes is to be met. Yet on present funding levels only 51,000 new tenants will be provided with social rented homes in 1996-97. That is well below even the Government's own projection of housing needs, which ranges from 60,000 to 100,000.

I have a table of the investment in social housing from 1979 to the present day and it looks extremely dismal. There has been a year-on-year decline, even taking into account the private finance which is available to housing associations to match grants. The cutting of grants to housing associations means that the number of new rented homes started by housing associations in the current year will fall from an original plan of 40,000 to the very disappointing figure of 17,000.

Housing associations, which have all-party support, remain the key players in the provision of rented housing. But the need is so great that only a combination of private, local authority and housing association initiatives can begin to provide the response required. I emphasise again that the millions of people on low incomes, unemployed or with little job security cannot afford to own their own homes. In 1994 37 per cent. of households in Britain earned less than the Council of Europe's "decency" threshold, compared with 28 per cent. in 1979. And the increase in low paid, part-time work, self-employment and job insecurity all highlight the need for substantial investment in the rented sector at this time.

I know that other noble Lords will stress the relationship between that investment, the decrease in unemployment and the promotion of national prosperity, all of which have been urged in recent reports and are the subject of the last part of this Motion. I want simply to stress the human need and the necessity, one way or another, for all the agencies involved to tackle this problem and to make the provision of rented accommodation in particular a high priority for government over the next five years.

3.45 p.m.

Lord Howell: My Lords, I start by expressing appreciation to my noble friend Lord Dean of Beswick for raising this matter. I totally agree too with the speeches of the right reverend Prelate the Bishop of Oxford and the noble Lord, Lord Ezra.

I had intended to begin by talking about mandatory housing grants, but yesterday the Prime Minister made some comments in that connection in regard to the city of Birmingham which I regard as quite disgraceful and I feel called upon to raise them here. I gave notice to the Government's spokesman that I intended to do so.

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Yesterday the Prime Minister decided to libel Birmingham City Council and the members of that body. He was referring to the report on Monklands and in a throw-away line he said that the Monkland council had created,

    "jobs for the boys and jobs for their families".—[Official Report, Commons, 20/6/95; col. 149.]
He went on to say, referring to wrongdoing and corruption, that it was not an isolated example. He said that Birmingham was another such city; it was on the list. That is a disgraceful slur not only upon the city council but also on the good people of Birmingham. If the Prime Minister had made that statement outside, they would be able to take libel action against him.

At the moment he was speaking the city itself was releasing the results—I am sorry that the Government's spokesman seems to think this amusing—of its internal inquiry into allegations in relation to house improvement mandatory grants. It was an internal audit conducted by the chief executive and the auditors in consultation with the district auditor. It found no evidence whatever of corruption in Birmingham but it found that it was inevitable that Birmingham had to ration mandatory renovation grants to meet the insufficient resources provided by the Government.

The time has come therefore to ask the Prime Minister to put up or shut up. If he possesses any evidence of wrongdoing in Birmingham he should publish it or refer it to the appropriate authorities, who could investigate it. The problem with housing improvement grants in Birmingham is not malpractice by the city council; it is total ineptitude and disarray on the part of the Government. The law states that applications for mandatory improvement grants must be dealt with in six months. Ten thousand such applications now await Birmingham City Council's attention—10,000—and that requires £100 million of allocation to deal with them, as required by the law. The Government are making £14 million available to Birmingham. They refuse to provide the funds that will enable the city to meet the requirements of the law. That is a duplicity or fraud on the householders of Birmingham, and I have no doubt that similar things happen in other parts of the country.

I must ask the Minister when he comes to reply—if I may have his attention again—to tell us whether the Government will provide the funds for Birmingham to meet the legal obligations imposed on it by the Government, or how they expect it to deal with the outstanding millions of pounds when it does not have the resources.

The housing situation in Birmingham mirrors the position described by the noble Lord, Lord Ezra, and the right reverend Prelate the Bishop of Oxford. The city council's housing stock now stands at 99,500, a decline of 20 per cent. in the past 10 years. There are 16,000 applicants on the waiting list for council housing. Nearly 23,000 council tenants want to transfer to another property. Nearly 10,000 households approached the city as homeless in 1994. Almost two-thirds of those were in priority need, meaning that the city had an legal obligation to house them.

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So far as concerns the housing stock, we estimate that we require around £1.3 billion to remedy the problems in the council's own housing stock. More than half of the city's 377 high-rise blocks of flats require urgent attention to the external structure. We have 15,000 inter-war council dwellings which need to be modernised. In the private sector there are 47,000 unfit homes. A further 80,000 are considered to be on the borderline of unfitness. Fifty-seven per cent. of private properties in the city need comprehensive repairs, costing £370 million, but the HIP allocation to Birmingham this year is £20 million. The 27,000 privately rented dwellings in the city have an unfitness rate of 24 per cent. Many houses in multiple occupation are both squalid and dangerous. As I have said, the financial resources available to the city are totally inadequate.

We have been allowed this year to build only 40 houses. The great city of Birmingham has that problem. The housing associations have seen their financial allocation fall from £58.2 million in 1993-94 to £22.4 million in 1995-96, a reduction of 60 per cent. in two years. I could give further examples but I want to make my final point about the future of the construction industry.

I was brought up in the belief that when the construction industry was in good heart the country was in good health. That is certainly not the case today. I mention particularly apprenticeships, on which the whole future of the building industry must depend. The number of apprenticeships has dwindled from the 1988 figure of 90,000 to 1,200 over the past 12 months. In other words, even if the housing market picked up, the skilled labour necessary to build the houses would not be available. The Construction Industry Training Board hopes to get between 12,000 to 15,000 new entrants next year, but it wants to know where the money will come from to provide the jobs for the apprentices if it trains them.

I conclude by asking some questions. First, what are the Government doing to sustain confidence among employers and employees in the construction industry? Are they ensuring a stable workload for the years ahead? Secondly, what are the Government doing to encourage the take-up of modern apprenticeships? Will the TECs and the Construction Industry Training Board have sufficient funds available to them to deal with the matter? Thirdly, what are the Government doing to ensure that our construction industry workforce are properly trained and qualified?

On every front of housing finance and construction we face a disaster. I hope that the debate will provide some answers from the Government to the searching questions being asked on all sides of the House.

3.54 p.m.

Lord Sefton of Garston: My Lords, first I should like to deal with the Latham Report because current news about London disturbs me greatly. One of the claims in the Latham Report—the Government have accepted the report—is that there could be savings of 30 to 40 per cent. in the building industry if certain steps are taken. That claim was made 12 months ago and the report has been in abeyance ever since. The Labour Party has accepted the

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report completely and says that it will implement Latham as soon as it gets control. Unfortunately, it will not get control that quickly. This Government may hang on. So it is very pertinent to ask the Government what they intend to do about Latham.

It will not take long to put the legislation through. There is the question of the resolving of disputes between contractors and sub-contractors. There is the question of the savings in administration and the question of employing project managers in order to ensure that the job the building industry is starting on behalf of a client goes on in an efficient manner. I should like to ask several more questions but I am sure that the Minister is fully aware of all the questions that Latham poses and the solutions the report suggests.

What do the Government intend to do about Latham? They know what the problems are. They have had the report for 12 months. There is no reason to delay implementing it any further. I ask the Government to implement it now because we have a wonderful example of what happens when we let the private trade, without any restrictions or suggestions by the Government, go ahead and do whatever it wants. The problem is right here at home. The National Audit Office has stated that the London Docklands Development Corporation put pressure on the Treasury because Olympia & York, the developers of Canary Wharf, needed the scheme to regenerate the area. What am I talking about? I am talking about a large site. There was the Jubilee Line extension, the London Docklands railway and the road that has now cost £450 million a mile to build. That is what I am talking about. And we are talking about possible savings of 30 to 40 per cent. inside the building industry with the Government as the client. It was a scandalous state of affairs and it was the reason why at 10.30 p.m. in this Chamber I tried to stop the Government from going ahead with these proposals, especially with the proposal for the Docklands Light Railway, in order that we should give them some further consideration. That consideration was not given and now the consequences are coming home to roost.

I talk like this because I want to see the building industry become more efficient. I came into the building industry at the age of 14 and started to serve my time to be a plumber. I then found that I could not get a job. Why could I not get a job? I could not get a job because the building industry sub-contractors were going out of business because of the big boys. That was 70 years ago but it is still going on. So I am interested in the building industry and I am interested in ensuring that people like me who spent years on a pittance learning a trade and trying to contribute to the building industry at least get a job when they finish. The point has been well put by my noble friend Lord Howell. It is important that we do that, but we do not have too much time.

I do not want to sit down before I have dealt with the issue that really concerns me. I hear people say that home ownership is a good thing. The Motion itself refers to the "needs of the nation". At the moment I am not very interested in the needs of the nation with regard to housing because the needs of the nation seem to be getting served by the decisions of the money institutions. That even applies to housing associations. I am concerned about the

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people mentioned by the right reverend Prelate the Bishop of Oxford—the people who cannot afford home ownership. Why should someone on a margin of about £2 or £3 a week be compelled, in order to get a shelter, to invest in a property which he or she will never experience as an owner? We have to recognise that there are, and always will be, such people. They have been persuaded by the Government's propaganda to buy their own home.

The working classes knew that the great deterrent to buying your own home was the tremendous commitment. There was the commitment to repair and to the regular payment which was based, more or less, on interest being paid over a period of 30 years. That was all right while there was a residue from the employment market that was left behind by the Labour Government, who had a considerably better record than this one. While some people were still working they could manage home ownership. Now it has been proved.

When I hear the opposition today boasting about the success of privatisation it makes me think about where that success came from. Let us be honest: it came through the application of efficiency measures in order to improve profitability. What were they? Does one believe that the managers of these wonderful privatised industries work harder? Their only contribution is in giving themselves bigger salaries.

Where did the efficiencies come from? They came from 2.5 million people who were deliberately made unemployed in order to make profits. That is the lesson to be learnt. That caused more growth in the number of people who could not afford home ownership. That is the consequence. We cannot look at this matter unless we consider the whole economy. That is why I say that if we are going to waste millions of pounds on one mile of road and if we are to persuade ourselves to build other projects just to get Olympia & York out of a financial embarrassment (in which they involved themselves by not planning properly in the first place) then we had better look at the economy as a whole. We need to establish its relationship to ordinary people and then do something about it.

The solution is Liverpool. Because of the nature of the town itself, before the war it had one of the worst slum problems in the world. It got out of that and had reached a situation in 1960 where that problem had been solved—I do not need telling from the Front Bench that I ought to shut up. I have not taken half as long as the noble Lord opposite and I have one minute to go.

I finish on this note. One reason why we were able to get out of that problem was the assistance given by the Public Works Loan Board. Some noble Lords on the Government Front Bench and in this Chamber will not remember it. It ironed out all the fluctuations which took place in interest rates over a certain period. But that does not happen now. Local government has been made a slave to the interest rates of the financial markets in Great Britain and that is why we are not getting sufficient money to solve the housing problem. We need to go back to the

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Public Works Loan Board and allow local authorities to do the job which they do best—that is, to provide houses for people in need.

4.3 p.m.

Lord Stallard: Follow that, my Lords. I too wish to congratulate the noble Lord, Lord Dean, on introducing this extremely important debate. If it finished now I believe that a case is established by all that previous speakers have said. Following the noble Lord, Lord Sefton, with his usually robust but accurate assessment of the situation, I shall try to flesh out some figures to make the subject a little more realistic. It has been proved in the past hour or so that this country has a crying need for affordable, rented housing. I would like a pound for every time I have raised that matter both here and in the other place in the past 25-odd years.

The cost of housing need in terms of homelessness, overcrowding, family breakdown and alienation is immense in social and economic terms and far too great even to contemplate, let alone examine, in terms of figures. We all know that. The right reverend Prelate and others mentioned Faith in the City—a tremendous document. We had great hopes for it, but it went the way of all flesh and was destroyed in this Government's hands in the same way as everything else.

There is a need for affordable, rented housing. Every voluntary organisation in the country knows what that means and knows that there is not any. It is not just a question of a shortage; there is none at all. In the district where I live there are scores, perhaps hundreds, of flats and apartments for rent. But the minimum rent for a two-bedroomed flat is between £150 and £200 per week. It goes up to between £350 to £375, and even higher, in some places; for example, Hampstead. No one can say in any language that that is affordable. There are thousands of people waiting for houses, but none of the properties I have mentioned is available to them. Therefore, there is a shortage of available, affordable rented accommodation.

The right reverend Prelate rightly quoted the Government's own figure of a need for between 60,000 and 100,000 homes. The higher figure would be the more accurate. According to the voluntary organisations it is clearly in excess of 60,000. The Housing Corporation has also recognised the need for at least that number of houses—that is to say, between 60,000 and 100,000 affordable, new homes.

But the Government have been systematically under-investing in affordable housing. In 1975 almost 175,000 new homes were started in the social rented sector: by 1980 that figure was just over 56,000. The past decade has seen an annual average of under 34,000 social homes for rent being started. It is estimated that for the current year 1995-96 the figures are the lowest for 50 years with fewer than 20,000 affordable homes likely to be built.

That is just a rough summary of the situation in terms of the numbers needed. When we consider the people who are looking for such homes, we see the gross distortion. The Department of the Environment's projection is between 60,000 and 100,000. If the Government stand by those figures they will have to concede at least two points.

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They will have to say that the independent bodies and the housing charities are correct in calling for the provision of 100,000 affordable homes in new build and renovation, as the noble Lord, Lord Ezra, mentioned, and that the Government have been wrong in ignoring the warnings they have had from all those organisations.

Even now the Government would have to concede that they recognise the level of need put forward by their own department and that the Government's investment is failing to meet it. This year only around one-fifth of the new homes needed will be built. That is a dramatic problem as regards the needs of everyone concerned.

The historic shortfall in affordable homes has resulted in massive increases in homelessness. In 1978, 53,100 households were accepted as homeless by local authorities in England. Last year there were 122,660 acceptances. In other words, the figure is now running at an average of 2,500 households a week in England alone being accepted as homeless. They have fulfilled all the terms of acceptability outlined in the legislation. The number of households qualifying for the term "homeless" is now 2,500 a week. As the numbers grow, so the number of homes available has declined, and the problem of homelessness continues.

In their consultation document of January 1994 the Government had some proposals to change the homelessness legislation. One of their arguments was that the current system operates in favour of the homeless at the expense of those on the local authority waiting list. People on local authority waiting lists are just as much victims of the Government's policy of cutting back the building of affordable houses as homeless people are. Instead of setting two vulnerable groups against each other in competition for scarce resources the Government should recognise the desperate need for more affordable houses all round. The idea of "divide and rule" as a means of solving problems is no longer valid.

There is now a greater need than ever for affordable housing. It has been argued that home ownership is likely to reach its maximum level by the turn of the century. Therefore, further expansion of the rented sector will be needed. Trends in the labour market were mentioned by the noble Lord, Lord Harding. We have moved away from people having a secure, lifetime job with a pension at the end of it, and a secure home. That has now gone. The Government have completely destroyed it. We now have insecure employment with part-time working and no security whatever. That means that people need to be more mobile, whether they like it or not. That in turn means that they will be even less willing, or able, to take on mortgage commitments. That is especially true at this time of loss of confidence in the housing market. So the needs of the economy demand far more rented and affordable homes to enable people fully to participate in the labour market.

A knock-on effect is that the disabled are suffering greatly because of a lack of adequate housing for them. There is also a lack of residential accommodation for elderly people who are in real difficulties.

As I said, there is a great need for more investment in affordable houses. The benefits of such investment are only too clear. I do not have time to explain them, but the need is for a dramatic increase in the amount of

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investment. Economic models show that if £1 billion were invested in social housing, 30,000 new jobs would be created over two years and that between one-third and one-half of the original outlay would be recovered through increased tax receipts and a decreased benefits bill. Now that the Government have begun to recognise that, I hope that they will follow their recognition with some real investment to help solve the problem.

4.11 p.m.

Lord Elton: My Lords, one would not expect the noble Lord, Lord Dean of Beswick, sitting as he does on the other side of the House, to give undue credit to the Government for their policies or undue praise for the results of those policies. Therefore, perhaps it will be in order for me to start by mentioning one or two of the products of those policies which he did not. I refer to the facts that 2.4 million extra houses have been produced; that owner-occupation has risen from 56 to 70 per cent; and that 1.6 million council tenants have been able to buy their homes.

It will no doubt be rejoined to the last two points that the cost of owning a home is now excessive. We have already visited the field of negative equity—and a very tragic field it is. However, it is perhaps worth mentioning that, as my noble friend Lord Harding said, the cost of a mortgage has fallen dramatically. The cost of an average mortgage of £33,000 is now £130 a month less than it was at its peak in 1990. Indeed, surveys have shown that home ownership continues to be popular in spite of the risks and that houses are now at their most affordable level in relation to incomes since 1985.

However, that does not remove the problems to which the noble Lord, Lord Stallard, the right reverend Prelate the Bishop of Oxford and other noble Lords referred. That brings me to the central problem. I agree entirely with the noble Lord, Lord Sefton of Garston, that we must consider housing in relation to the economy as a whole. We cannot look at it on its own. I believe that I am right in saying that the result of noble Lords opposite doing that is that they stick to their belief that the way to stimulate and improve the housing market and make it more affordable, and the way to stimulate the building trade, would be to release local authority capital balances acquired by the sale of council houses. I can see the considerable intellectual and political attraction of that. However, if that were to be done on any scale, which would have an acceptable effect, it would have a further effect on the other half of the economic equation. I refer to the rate of inflation. The conundrum with which all governments are faced is to pull off a balancing trick between restarting the construction industry without increasing inflation. I agree that the construction industry is, and always has been, the motor of the economy. When you build and sell a house, you also give business to carpet manufacturers, washing machine makers and electric bulb suppliers. Therefore, that is highly to be desired.

There is a great political temptation at any moment of political exposure or risk to restart that engine in order to achieve an improvement in the short-term political position. I think that the Government deserve commendation for resisting that in the knowledge that the medium-term result would be an acceleration of inflation.

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The noble Lord, Lord Williams, being an economist, will doubtless destroy my case at the end of the debate and I shall be unable to reply to him, but I might as well make my case so that he can do that. He may find it a little more difficult than he thinks.

The effect of releasing significant sums from reserves in that way would be to accelerate inflation, which would increase the level of both rents and mortgages payable, and so increase the number of people who are unable to find affordable accommodation. That is not the way to break the circle. I believe that in a period of world recession which is almost unprecedented—it is certainly unprecedented since the Second World War—to have achieved a continuous reduction in unemployment for the longest period since the Second World War and to have maintained low levels—

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