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Lord Elton: My Lords, in view of the noble Lord's earlier remarks about myself, perhaps I may ask him whether he would regard it as a help or an embarrassment if I were to say that I agree entirely with what he has just said.

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Lord Howie of Troon: My Lords, it would not be an embarrassment to me. As the noble Lord knows, he and I have frequently agreed and we have frequently disagreed, but when we agree, we agree in an amiable manner.

Let me turn to something more general. My noble friends Lord Dean and Lord Sefton mentioned the Latham Report. It was set up some time ago by the Government to inquire into the construction industry, with the hope of making it a more coherent industry. As noble Lords will know, I am a civil engineer. I have spent a lifetime in the construction industry. It is acutely incoherent. It is a preposterous industry. It consists of a vast number of small firms (there are 2,000 firms in the industry) and a few very large firms employing the small firms, often as sub-contractors, with the problems to which my noble friend Lord Sefton drew attention.

The industry nowadays employs about 750,000 people. It used to be considerably more. And it provides something like 10 per cent. of GNP. It is an important part of our economy. But it is incoherent and inefficient. Latham thinks that construction costs could be reduced by about 30 per cent. That is one of the aims which he puts at the end of his report. He bases that on the fact that a good deal of tidying up of contractual arrangements could be made. He makes a number of recommendations as to how that could be done. There are payments, for example. A sub-contractor does a piece of work; he puts in his bill for the work that has been done and he is paid eventually. He is paid eventually—when the main contractor feels that he would like to pay him. But payment should be made when the work is done. That is one of Latham's proposals.

Latham proposes something else which is interesting. He proposes that there should be a register of consultants. As a consulting engineer I applaud that. It was, after all, one of the proposals of the Finniston Committee, of which I was a member, which reported as long ago as 1980. Needless to say, that proposal was abandoned. Latham is now making it again. He suggests a similar register for contractors and specialists. Those registers relate, of course, to public works.

The report also makes another most interesting proposal. It is that public authorities should accept tenders which offer best value for money. That is important. Noble Lords will remember that an important part of the local government Bill we dealt with a year or two ago produced compulsory competitive tendering for architects, engineers and other professional people. We argued throughout the Bill's passage that the criterion should be quality and not cost. That is what Latham recommends. It is essential that Latham's recommendations should be put into practice through legislation.

That brings me back to Finniston, because noble Lords will remember that Finniston's proposal related to the reorganisation of the engineering profession. He proposed that there should be an engineering council set up by statute. The Government left it to the profession to come together voluntarily. This is an area where voluntaryism does not work. It will not work in Latham any more than it worked in Finniston.

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4.38 p.m.

Lord Cocks of Hartcliffe: My Lords, it is said that confession is good for the soul. I am going to confess something now out of cowardice, because when my noble friend Lord Howie found out, had I not said it now, he would be more than outraged. I must tell him that I was a member of the planning committee which made the decision to which he has taken such great exception. I only wish that I was in such a condition for my age as is the tunnel.

I should like to thank my noble friend Lord Dean for giving us the chance to speak about the housing situation in this country. I hope that it will be recognised by noble Lords that I try to be as assiduous as I can about the conventions of the House, but because it is a three-hour debate I fear that at the end of it I shall have to leave because of other arrangements. I hope that I shall be excused. If it is any expiation, I am going to Docklands to try to improve housing conditions there. So it is not entirely ungermane.

My noble friend Lord Ewing of Kirkford mentioned the problems of an ageing population. There is one thing upon which I should like to touch. It is the growing debate about what happens to elderly people. It seems to me that we are moving away from what I have always regarded as a fundamental obligation—that one should look after one's parents when they become elderly. Indeed, I find it sad that these days there are elaborate articles in the financial press advising people on how they can arrange their affairs so that the cost of looking after their parents falls basically on the taxpayer and they can preserve their own means. We talk a lot about people earning a great deal of money, but bus drivers and people cleaning offices pay taxes. It is not fair for those who are better off in society to expect to off-load what most people would regard as their obligations.

Unlike many, I believe that lobbying is perfectly reasonable when it is done properly. I am sure that, like myself, many other noble Lords have received submissions from various groups about today's debate. That is perfectly legitimate and often extremely useful. But pressure groups and lobbyists sometimes develop a compartmentalised attitude and do not look at the wider picture. They pursue their own interests to the exclusion of everything else.

It would be extremely invidious of me to take an example of what I mean from any of the literature that I have received for this debate. Therefore, perhaps I may illustrate my point by reference to another group on which I have touched before in this House; that is, Charter 88.

In the Guardian of 14th June I saw this advertisement:

    "Charter 88 Director Applications are invited for the high profile position of Director of Charter 88, the leading organisation promoting constitutional reform".
Your Lordships may recall that this group believes that we are one of the most down-trodden nations of the world and that the only way in which to regain our rights is to have a written constitution so that we have rights and

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those rights are protected. Your Lordships may say that that is fair enough, but perhaps I may read the last paragraph of the advertisement:

    "We encourage applications from all sections of the community. Unfortunately our 3rd floor office is inaccessible to wheelchairs".
That is really a case of don't do as I do, do as I say; or physician heal thyself.

People may say, "Cocks is being very unfair again" because the charity probably cannot afford to make the office accessible. But noble Lords may feel that that point is overstated when I tell the House that in the past few years Charter 88 has spent well over £½ million on newspaper advertisements.

Some of the literature that I have received has been about the private rented sector. The noble Lord, Lord Harding, mentioned that, as did the right reverend Prelate and others. That is one of the serious aspects of the problem. The Joseph Rowntree Foundation study made a number of points about the private rented sector—that it should be boosted; that most countries subsidise their private rented sectors; and that financial institutions should be encouraged to move into the private sector. Various suggestions are made as to how the situation could be improved.

However, there is a very much simpler way which I have mentioned before in this House; that is, to try to ensure that far more students take courses nearer their homes so that they do not have to move away from home in order to pursue their studies. That happens in Scotland. Most Scottish students live at home; and nobody says that Scottish education is inferior to English education. It is perfectly natural to live at home. People say that going away to study is all part of the experience of growing up. But if that is so, it is part of the experience of growing up which working-class children are deprived of. I never hear academics and student bodies say how sad it is that working-class people cannot develop properly because they do not have that opportunity. It is a vested interest of the ablest and the wealthier children in our society.

Bristol University has been particularly bad in that regard. For more than 25 years I have pursued it to try to ameliorate its admission policy. At the moment, something like 1 per cent. of its students live at home and the rest are accommodated in the private rented sector or in halls of residence. When I was the Member of Parliament for Bristol, before a majority of my local management committee decided that I was not a fit and proper person to be a public representative, most of the problems with which I had to deal were in relation to housing. The local people were desperate for housing and yet hundreds of units of private rented accommodation were taken up by students who really did not require that luxury.

Coincidentally, this morning I received a letter from a person living in Goldney Road, Clifton asking for my support against the university. The letter refers to:

    "the concerns of residents to the gradual encroachment of Bristol university on the grounds of Goldney House Clifton".

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Some noble Lords may know that that is a beautiful house with a wonderful grotto in the gardens. The letter goes on to say, referring to the university:

    "They have just completed a refurbishment of the Halls of Residence in the paddock, greatly increasing the student population and there are now fears that they intend to apply for further planning on the lower slopes of the ground, as they object to the Deposit Bristol Local Plan—October 1993".

It really is time that establishments of higher education took seriously the problem. They should realise that we do not live in compartments and that their responsibilities extend to helping the least able in society.

4.46 p.m.

Lord Beaumont of Whitley: My Lords, I too thank the noble Lord, Lord Dean of Beswick, for introducing this subject for debate today. There are so many aspects that one could talk about but I propose to concentrate on two: first, the swing that we have had from housing for rent to housing ownership and the necessity for a swing back; and secondly, the need for proper ecological and environmental housing.

In the memory of many here, we have moved from an era in which housing to rent was almost the rule for all classes to one where it is almost politically incorrect to say that you should ever wish to live in a house which is not your own. As with all swings of the pendulum, we have gone from one undesirable extreme to another.

When my grandfather, who was a younger son, married, he rented a house and lived in it for the rest of his life. It was not a small house: it was a copy of the centre block of Buckingham Palace. He rented that house for 20 years. That ability to live in rented housing went down through the tenant farmers of all the large estates through all ranges of society. It had its drawbacks, difficulties and problems caused by powerful landlords and powerless tenants. But it was still something which was taken for granted.

We reached a stage in the early stages of this Government's regime at which it was considered to be almost not respectable not to try to own your own house. That is not suited to what most people want. It has flourished on the back of propaganda which suggests that the citizens of rich countries are home owners and those in poor countries are not. That is not true. In a list of countries ranked in order of home owning, Bangladesh has 90 per cent. owner-occupancy and Switzerland has 33 per cent. Therefore, that is entirely contrary to what most people believe.

The truth is that neither extreme is desirable and we need to look at what houses are needed for. Your Lordships' House must be one of the few places left where a large proportion of people have houses which they reckon to hand on to their children. Most of us do not and our children would not thank us if we did. But to trap a wide range of the middle classes in a myth which encourages them to borrow money which they do not have on security of jobs which they may not keep in order to own their houses is extremely stupid.

However, having said that we should now go into reverse and encourage a climate of providing houses to let

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so that families can move easily according to their size at any given moment, I should now like to pass on to discuss what kind of houses they should be. Unfortunately, I do not have time today to go into many of the important points, but I should like to dwell on one of them. It is very simple: they should be healthy for the people who live in them and for the world from which their materials come. That means being choosy with materials, but it does not mean abandoning diversity.

To stray outside of housing for a moment, St. Albans Abbey, which I gather is still in quite good nick, was built 900 years ago with what were already 1,000 year-old bricks from nearby Roman ruins. At the other extreme, many houses in California, on the other hand, are built from "gridcore", which is recycled newspapers, cardboard boxes and timber moulded to maximise strength and minimise weight. Both of those examples have more virtue in their own way than, say, the Fawlty Towers of Marsham Street.

First, we must build to last. It is a fallacy to think that we must build only to last a short time because new technology will make our old houses obsolete. It is the solid buildings which for the most part can be adapted. The standards which we use for building today are unlikely to produce buildings which are acceptable in 30 years' time, let alone 300.

We must build to last and we must build to the highest standards. At present, we do neither. The energy conservation requirements of the latest building regulations just about reach the level adopted in Sweden 60 years ago. If we adopted current Swedish standards we could reduce the amount of domestic heating to a quarter of the current average in this country.

We must concentrate on building in such a way that we can save energy without ruining the poor. Where in northern Europe housing standards are much higher than ours—and where are they not?—energy taxation which is essential if we are to shift taxes from labour to resources (which is essential for a sustainable economy) is feasible without making the poor suffer.

A whole new climate of opinion is needed before those matters can become mainstream in this country, but we have made a start. Among other things, we have made a start with the recent Home Energy Conservation Bill brought through Parliament by people from all parties but chiefly, I am proud to say, by the pertinacity of Alan Beith, Diana Maddock and my noble friend Lady Hamwee, who is to speak shortly. Let us build on that start and move in that direction, remembering that to build cheap and nasty now is to lay up disasters for the future.

4.52 p.m.

Lord Haskel: My Lords, I too am most grateful to my noble friend Lord Dean for giving us the opportunity to debate housing. My noble friend is a very lucky chap because it is such a topical matter. Indeed, it was very good of him to suggest such a topic at this time. Fifteen years ago home ownership equalled security. It was encouraged because it was right to give people a stake in society. But good things abused become disasters. That is what happened with housing. It became a lottery.

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Financial deregulation and the favourable point of the economic cycle allowed households throughout the UK much greater access to credit. This, and tax incentives, fuelled a rapid rise in house prices. With house prices rising inexorably at the beginning, it was a one-way bet. You borrowed from the banks; you bought a house. The value of your house rose without any action on your part. Although it helped, you did not actually have to look after your asset—the value went up faster than it depreciated. Contrary to what the noble Lord, Lord Elton, said, government policy during the 1980s did not ensure that there was more and better housing. What it ensured was that the price of houses went up and up.

Unlike the National Lottery, everyone won or appeared to win at the beginning—home owners, banks, the Government (they won votes), the estate agents, the builders, and the DIY suppliers. Everyone benefited. Many people sold their houses and took profits. Some £20.4 billion of equity was withdrawn at the peak in 1988—certainly a boost to consumption but, I would ask the Minister, what additional resources were being created? Much of the economic boom of the 1980s was based on house price inflation. People withdrew equity on the increasing value of their houses to fuel a spending boom. But what new capital was created? Where is the new wealth now? Where are the new factories, services and infrastructure?

Nothing was created. Prices simply rose and some people won. Now it is the loser's turn in that lottery. As my noble friend Lord Dean said, repossessions are running at nearly 1,000 a week. Moreover, 117,000 plus households are more than 12 months in arrears with their mortgages. Negative equity is estimated at some £8.5 billion and rising.

It does not take much imagination to appreciate the human misery caused by the distress of either losing or being close to losing your home. Homes and jobs are the two pillars on which the lives of most people rest, and repossessions are increasing. There are thought to be nearly 1 million home owners whose houses are worth less than the mortgage taken out on them. Last week we learned that the building societies, insurance companies and banks are adding to the problem by levying extra charges on those in trouble. Measured in human misery, they are very high numbers indeed.

What are the Government doing about it? They seem determined to make a bad situation worse. We have had reductions in mortgage interest tax relief from a high of 40 per cent. to 15 per cent. now but that overlooked the fact that mortgage interest tax relief was built into the price of a house. The reduction in that benefit is reflected in reduced house prices. Added to that is the reduction in income support for mortgage interest payments for those who are unemployed from October. That means that mortgage lenders will be faced with either insuring themselves or making insurance a condition of lending.

The initiative by the Skipton Building Society is helpful but once it ceases to be a competitive advantage and all firms do it it will simply be added to the cost. I can tell the noble Lord, Lord Harding, who called for compulsory insurance, that insurance companies estimate that it will add some £22 a month to the cost of an average mortgage. Even so, the Minister knows as well as I do that

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insurance for mortgage risks is extremely difficult, if not impossible, to define. I am therefore not surprised that two-thirds of the people who have taken out the insurance found, when they came to claim, that their claim was rejected. Let us not forget also that insurance premium tax has to be added.

I am not criticising those actions. I am criticising the timing. When a company or an industrial sector is in trouble, government should not add to the difficulties. Yet at the very time when we need to sustain housing the Government have chosen to add to the problem. In doing so they have turned a problem into a crisis. The situation is made worse by Ministers, and some noble Lords opposite, giving uninformed or biased opinions about whether now is or is not a good time to buy a house.

It seems to me that the Government could do a number of things. The first is to remember the wise counsel of my noble friend Lord Healey. If you are in a hole, stop digging. They should therefore stop playing around with mortgage interest tax relief. The next thing they could do, which is part of Labour policy, is to allow a phased release of the housing capital receipts in the possession of local authorities. I disagree entirely with the noble Lord, Lord Elton, but I do not have time today to explain my reasons to him. The money could be spent on affordable rented accommodation. Private sector building for rent is not replacing public sector housing which has been discontinued. The resources are available; they simply have to be harvested. A further action the Government could take is to help first time buyers on a limited scale and for a limited time.

I hope that the Minister will not be blinkered to the usefulness of Labour proposals in solving the current problems. Our policies are designed to promote a stable housing market, not a lottery, and a real choice for people in the rented sector. That is what we call social justice.

5 p.m.

Lord Desai: My Lords, one of the advantages of being almost the last speaker in a debate is that practically everything one wanted to say has already been said. I am not an expert on any practical matters, unlike many of my noble friends, and therefore I shall stick to theory. Indeed, the housing tragedy that we are currently facing, as my noble friends have pointed out, is very much a sad story of dogma and half-baked economic theory.

I first arrived in this country in 1965. Until then I had lived mainly in rented accommodation, some of it in the public sector and some of it in the private sector. It was only when I arrived in this country that I realised there was a great belief that to own a house was somehow better than to rent it. If one wants housing services, a shelter, comfort and accommodation it should make no difference whether one buys a house or rents it, or whether the house is in the public or private sector. One should have choice in that respect and one should get on with it. But already by the early 1960s the tax structure was being badly manipulated to subsidise ownership relative to renting.

When the noble Baroness, Lady Thatcher, became Prime Minister in 1979 that bias was twisted further and deeper because she was convinced, first, that home ownership was absolutely a sacred goal of public policy,

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if not a virtue in itself, and, secondly, that in order to aid it interest rates had to be so manipulated that home owners would always feel cushioned and protected.

At the same time, mortgage relief was not seen to be a subsidy to the home owner. Home owners were not considered to be scroungers on the public budget—oh no! However, council tenants were considered to be scroungers on the public purse because it was thought the subsidy to council tenants was a great distortion. That again is a fallacy but we shall deal with many fallacies as we proceed. Through the 1980s the subsidies to council tenants were reduced mercilessly and the subsidies to home owners were increased. Indeed, by the time the noble Lord, Lord Lawson, embarked on his 1987 and 1988 budgets the distortion to home ownership was so exaggerated that double mortgage reliefs were being given.

The double mortgage relief given, I believe, in the budget of 1988, was the single most important case of almost criminal folly in economic policy making because that pressed people into buying when they could not afford to do so. It pressed people to buy property at prices which they could not afford. At that time Government policies were fuelling inflation, regardless of all the talk about monetarism and all that sort of thing at that time. Inflation was accelerating and many people entered contracts which any prudent government would not have let them enter into.

Anyone who really believes in the market would have said long ago that these kind of distortions constitute a major diversion of economic resources away from what not just a country needs but what individuals need. To that was added the sale of council houses. People who had never before been in a position of indebtedness became indebted, little realising that even after concessions the prices they were paying for their council houses were inflated. In the late 1980s after having had two bouts of double digit inflation in 10 years—when finally, and quite prudently, it was decided that the country had to put its economic house in order and join the exchange rate mechanism—it should have been known by anyone (as I said publicly) that what occurred was a great deflationary shock and that the country was not used to deflationary shocks. The negative equity which we are witnessing now is, in a sense, basically the simple consequence of trying to adjust to a much lower level of inflation than we had before.

In a world like we have today, home ownership or renting makes absolutely no difference, or should make no difference. Of course the Government will say, "But that is our current policy" forgetting that all the previous policies were also their policies. The Government will say, "We are going to encourage a private rented sector"; but where is the private rented sector? It has not arrived on the scene. While they have wrecked the public rented sector quite badly by selling off council houses and not allowing the building of new council houses, the private rented sector has not arrived on the scene. People with negative equity cannot sell their property and cannot move. People with incomes which are not rising very fast cannot afford to buy, even while prices are stagnant, because mortgage interest relief—quite rightly in my view—has been severely cut. That is why the problem of

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homelessness occurs with the old and with the young. The old are becoming homeless because they have negative equity or they cannot service their mortgages as their incomes have fallen. They are being thrown out. The young cannot afford to buy houses because mortgage interest relief has been so drastically cut.

It would be easy in the circumstances—if sense prevailed—to say, "OK, let us build for the time being a sufficient amount of low cost housing, either through the public or the private sector". There is no question of resources. I will not go into the fallacy mentioned by the noble Lord, Lord Elton, as regards the PSBR. Even if it were true that releasing council receipts would add to the total demand, given the excess capacity of the construction industry which many noble Lords have referred to, it would not cause inflation. But let us not go into that. As I said, there is no shortage of resources but there is a shortage of good sense. We ought to be able to say, as my noble friend Lord Ewing said, that housing is somewhat special. It is not like hamburgers; it is a commodity which has special social consequences. It is society's duty to provide decent housing for everyone at a price that people can afford. After that one can discuss choice, variety, the provision of big or small houses, good architecture and other such matters.

The population of this country is by and large stagnant—it is not galloping—and it should not be beyond our imagination to provide housing in sufficient quantity for those who need it. People are living longer and people want more sophisticated housing, but there are not that many extra families to house. What we need is good sense in this matter. Given the record of the present Government, good sense would require a new government.

5.8 p.m.

Lord Bruce of Donington: My Lords, this is the third or fourth time over the past two years that the House has been grateful to the noble Lord, Lord Dean, for having raised this important question. One rather hopes in view of the very factual speeches that have been made on all sides of the House that we can have reasonable replies to the questions that have been raised. It will no longer suffice to be informed that in real terms it is the intention to spend £x billion over the next five years or that the position since 1987 has vastly improved. Serious questions have been raised which need rather more than the ambiguous reply that we customarily receive at the end of important debates like this.

Noble Lords opposite were not assisted by the noble Lord, Lord Harding of Petherton, who rather admitted that the Government had been seriously at fault in encouraging home ownership by a sustained campaign in the 1980s. He suggested that we ought to put that behind us and move on to better things. We entirely agree.

As for the noble Lord, Lord Elton, who gave us a dissertation on inflation, he really ought to examine his facts again because he talked complete nonsense about inflation. I am very glad that the noble Lord has now resumed his seat. He was obviously completely unaware that during the period immediately following the war,

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until 1974 and the quadrupling of the price of oil, the rate of inflation in this country, under all governments, averaged around 2½ per cent. It was the quadrupling of the price of oil that gave the initial boost to inflation. Until that time, despite the great difficulties, every government, including those of the noble Lord, exceeded the miserable record in house construction that has been achieved by this Government over the past 15 years. They have not really tackled the problem at all.

Those are problems that have been dealt with more than adequately by my noble friends. I observe that there are 11 speakers from my own Benches, three from the Government Benches and three from the Liberal Democrat Benches. We have already heard an important speech by the right reverend Prelate, who brought the fundamental issues before the House.

I want to address myself to one matter on which the Government may themselves be able to act now. Even if they had a wholesale reformation of thinking, even if they had a sudden access of intellect and even if they were prepared to abandon their prejudices, the Government could not influence in the next three weeks or so the rate of increase in the construction industry or in housing in the United Kingdom. I have not consulted my noble friends on either Bench on this issue, but there is one thing that they could do if they were so minded. They could deal with the whole question of repossessions.

According to the Department of the Environment's own figures, repossessions are likely to increase over the next few months. Already there have been 300,000 repossessions in the UK, affecting some 700,000 individuals. There is a way of stopping that. The building societies and banks do not have to repossess. Nobody forces them to. They could wait without any great difficulty. Indeed, if they had the same degree of faith in the Government's economic policies as the Government themselves affect to have, they could lay off for a year without any difficulty until the long-promised recovery, if it ever materialises, takes place. It is not as though the banks were forced to seek repossessions: it is in the control of the banks themselves.

Perhaps I may refresh the memories of noble Lords on this subject. Immediately following the oil glut in the Middle East, the banks rushed to compete with one another to lend money to developing countries, followed hard on their heels by arms manufacturers. They were only too pleased to supply those countries. That situation speedily deteriorated to the point where the banks themselves had to write off billions of pounds owed by other countries.

There is nothing stopping any bank writing off loans that are due to them here, or part of them. The Government could lean on them if necessary. It is not as though the banks do not help other people. I see that the banks stepped in to prop up Barings, particularly the directors and shareholders. They will prop up anybody provided they have sufficient funds already or belong to those particular strata of society with which the bankers have something in common. Therefore, there is nothing to stop the banks and building societies holding their own moratorium on all repossessions.

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Instead, at the moment where arrears occur, building societies and banks levy what they call administration charges on those who are already suffering negative equity. Those charges may amount to £140 to £112 a year extra. They also charge interest on interest. That was prohibited as long ago as 1927 by the passing of the Moneylenders Act. Therefore, it lies within their own power.

Surely the Government, who are always busy putting forward the value of guidance and codes of conduct, could lay down codes of conduct for banks and building societies indicating how they should behave during what the Government believe will be a temporary period. Surely they could do that. If they do not do even that, they might as well say "Goodbye".

5.16 p.m.

Baroness Hamwee: My Lords, I too should like to thank the noble Lord, Lord Dean of Beswick, for introducing this debate on housing needs, and on financial institutions and the construction industry—matters on which we have sometimes touched peripherally.

I was privileged to introduce a debate on housing and homelessness a year ago. I thought that I would remind myself what the Government had to say then on the topic. On that occasion the then Minister said that:

    "the broad aim of our housing policies is that a decent home should be within reach of every family. We have taken steps to increase the supply of housing where it is most needed, by securing better value for money in the public rented sector and by promoting the private rented sector".—[Official Report, 8/6/94; col. 1284.]

My noble friend Lord Rodgers of Quarry Bank asked the Minister during the debate whether the Government had a housing agenda and challenged him by suggesting that there was no housing agenda. The Minister's answer was that the Government had such an agenda—they had the Housing Corporation.

The Government may have a vision, but it is not my vision. It is certainly not translated into any kind of agenda or plan to do anything but reduce spending without tackling the causes of the problem. It seems to me that all sectors are suffering at the hands of the Treasury and its short-term thinking—housing associations, local authorities, private landlords, mortgage lenders and all those who occupy their own property. To use current jargon, I suppose it is a level playing field.

A year ago we also considered a report by the National Housing Forum—Papering over the cracks—on housing conditions and the nation's health. It was an excellent report. It reminded us why housing conditions matter, posing a serious problem for society as a whole as well as for individuals. It reminded us that housing is a capital asset which should be preserved and that investment in housing renewal could be an important component of economic recovery, renovation work being labour intensive and the majority of materials used being made in Britain.

The report made a number of recommendations to the Government. It proposed that,

    "Within the next twelve months"
—that is the 12 months which have now expired—

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    "the government should develop a broad strategy for private sector housing renewal and set national targets for tackling the backlog of unfitness and disrepair in the housing stock over the next ten years".
It suggested that,

    "Financial institutions ... should take on a responsibility for local communities by promoting and stimulating investment in housing renewal in a range of ways".
It also suggested sponsorship of home improvement agencies and the provision of finance to housing associations for renewal projects.

I welcomed that report because housing is not just a numbers game. It raises the question of what has been achieved over the past year. The fact that the forum felt it necessary to report on the connection between housing and economic renewal speaks for itself.

The Joseph Rowntree Foundation—as your Lordships know, it does splendid work in the area of housing—has reported extensively on the connection between housing renewal and construction expenditure. Among other reports, it has made important points about the local connection: that very few local businesses have been created or enhanced; that training programmes are inadequate; and that therefore if there is an amount of work its effect does not last. The work is undertaken but the jobs do not remain.

That is particularly sad given that the physical regeneration of disadvantaged areas, in particular urban areas, involves the expenditure of millions of pounds. This is a major opportunity not only to undertake a specific scheme of work but to invest in the area for generations. It seems that little sustained economic benefit results for local residents.

The Joseph Rowntree Foundation has also reported extensively on a matter which, with other noble Lords, I feel is one of the most urgent: the supply of privately rented accommodation. The study stated that,

    "Private renting ... is a small business; over half of privately rented housing belongs to small-scale individual landlords; only a quarter is owned by companies".

Your Lordships will recall the Business Expansion Scheme. Through the BES, 903 companies raised £3.4 billion and provided 81,000 dwellings at a cost to the Exchequer of only £1.7 billion of tax foregone. I say "only"; I recognise that these are large sums, but the prizes are large, too.

The Joseph Rowntree Foundation study—it was a study by academics at the Universities of Sheffield and York—asked the financial institutions about private renting. Those institutions responded that the political risk and the image were major deterrents. Pension and life funds said that even if returns were good, political risk and image would deter them.

    "If returns were enhanced through subsidy, this would not necessarily induce investment, because subsidies were too subject to change over an investment's lifetime".
In other words, they were asking the Government to consider the whole grant regime.

Banks, too, were cautious. Building societies were more positive. Provided that financial assistance, particularly in the form of grants, was available—I make the point again because it is an important issue for the Government to take up and act upon—they would be willing to lend.

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What are the Government doing to develop ideas for stimulating the sector? Organisations such as the Joseph Rowntree Foundation do splendid work, but we cannot leave the whole area of ideas to the private sector. If the Government have no ideas of their own, I am sure that they would be welcome to plagiarise the ideas of the private sector. But they must get on with the work.

Other noble Lords have said that we attach too much importance to ownership. I so much agree with my noble friend Lord Beaumont of Whitley. We attach importance as a society to ownership. The Government certainly do so. But there must be many families in this country which wish that they had not owned their homes. Over a quarter of a million homes have been repossessed since 1988. That gives only the smallest indication of those families which are teetering on the brink, or those people whose jobs have been affected because they cannot move. One has to couple that with the fact that public housing investment has fallen by 37 per cent. in real terms since 1979-80. In the past year total investment in social housing was at its lowest level in real terms for several decades.

I am not just interested in government research. I should also like to know what the various government departments have to say to one another; and in particular what the Department of the Environment has to say to the Department of Social Security regarding plans for housing benefit, the results of which, it seems, we shall experience shortly. I believe that the Department of the Environment must share the concern of many of us that the greatest effect of the changes will be to depress the private rented sector.

We have heard views on the use of capital receipts held by local authorities. The noble Lord, Lord Elton, spoke of the restriction in order to hold down inflation. I doubt that that argument would attract those in housing need. It does not attract me. I confess myself to be of the tendency which thinks that a good use of resources is indeed a motor of the economy. I thought that the restriction was because central government were determined to reduce the capital base of local government.

Finally, we talked of the "motor" of the economy. We know how other motors—new motor cars—drop massively in value the first time that they are driven away. But the purchaser of a car knows that that will happen. The purchaser of a car has options. Many who are buying housing—I refer to buying in the broadest sense—those who are acquiring housing, find that they have paid for a high performance item and are left with something far more modest. I do not suggest that it is at the level of a clapped-out Mini, but it cannot be resold. Those people have no opportunity to acquire on HP or lease purchase. The Government need to explore all the options.

5.27 p.m.

Lord Williams of Elvel: My Lords, the House will be grateful to my noble friend Lord Dean of Beswick for introducing the debate. Perhaps I may say at once, I hope not impertinently, how impressed I was with the speech of the right reverend Prelate the Bishop of Oxford. If I may say so, he put his finger absolutely on the problem.

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The facts which have come out of the debate—they are facts to which we have to pay attention—are that home owners have endured about six years of crisis marked by falling house prices, negative equity, mortgage debt and repossessions. The housing market itself is depressed. Housing sales in April, a key month in the house buying season, were the worst ever recorded. New house building has been badly hit. Starts in the latest quarter are 14 per cent. down on 1994. The rented housing programme has been drastically cut. Housing association starts in the latest quarter are 35 per cent. down on 1994, and the output of rented homes is expected to fall below 20,000 this year. That is the worst figure for 50 years.

At the same time, tenants of councils, housing associations and private landlords have been faced with disproportionate rent increases forcing ever larger numbers into dependence on housing benefit which is also now being targeted for cuts. In England alone, 1.5 million homes are unfit for human habitation and a further 3.5 million need urgent repairs. Home renovation programmes have almost ground to a halt. A decade ago over 200,000 grants were being awarded each year. The total is now down to 40,000. Long queues are forming in most areas. One hundred and sixty thousand households were accepted by local authorities in Great Britain as homeless last year and there are many more mainly single and childless people whose needs are not reflected in the official statistics. In terms of national expenditure on housing investment, Britain lags 21st out of 22 OECD nations spending just 2.9 per cent. of gross domestic product at the latest count. That contrasts with Germany spending 6.1 per cent. of GDP; France, 5 per cent.; and Italy, 5.3 per cent. Those are the facts.

As many noble Lords know, the construction industry is flat on its back. Latham has not been implemented and there is no sign that it will. As my noble friend Lord Bruce said, the banks and building societies joined in a chase for assets, jumping into the housing loan market. As he rightly said, they do not have to repossess. They can adopt what my noble friend Lady Hollis suggested when we were debating the ill-fated leasehold enfranchisement Bill. It was not a rents-to-mortgages scheme but a mortgages-to-rents scheme. If my noble friend will forgive me, his idea was not original. It came from my noble friend Lady Hollis some time ago when we debated that Bill.

The Government have gone even further and seem to wish to talk down the whole housing market by the business of removing income support. The point here is not just that they are attacking the most vulnerable people. We know that; it is normal for this Government. It is that by introducing such a measure, they are talking down the house price market and therefore talking up negative equity.

There are a number of wild fantasies about remedies for the situation. As my noble friend Lord Haskel pointed out, mortgage protection insurance is a hopeless idea. According to the Association of British Insurers, no serious insurance company would adopt such a scheme and I personally cannot see a market for it. We have now heard about the Skipton solution. The Skipton Building Society has 0.5 per cent. of the house financing market. It

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has suddenly apparently come up with a scheme that will cost money, if indeed it works. I doubt very much that it will.

The situation is one of crisis, and we must consider carefully what we do about it. I shall not join in the debate with the noble Lord, Lord Elton, about capital receipts and inflation. I am sorry that he was not in his place when my noble friend Lord Desai seemed to swat that one aside. He was followed by my noble friend Lord Bruce of Donington. Rather like Jonah Lomu running through Tony Underwood last Saturday, my noble friend marched straight through. So I do not believe that I need worry too much about the arguments of the noble Lord, Lord Elton.

If we are to restore any confidence in the housing market, we must insist on the immediate withdrawal of the damaging plans to withdraw the income support safety net. We must insist on a phased release of some £6 billion which councils are currently prevented from reinvesting in housing in one form or another. We must build on a framework of public/private partnership such as local housing companies to attract additional private investment within a framework which ensures local accountability, as the noble Baroness, Lady Hamwee, pointed out.

In those circumstances, we must examine what the government reaction is. We are told that there is to be a housing White Paper. Of course, at the moment we do not know what will be in it, but, as always with government documents, there have been a number of leaks. We must assume that the leaks are genuine and that what appears in the leaks will appear in the White Paper.

The first point which I understand is under consideration is the removal of existing statutory safeguards for homeless people and their replacement with a weaker framework in which local authorities may be able to discharge their responsibilities simply by offering a short-term insecure letting in the private sector. I understand that that will appear in the Government's White Paper. If so, I can assure the noble Earl that he will have a fight on his hands because it is unacceptable.

We also understand that in the White Paper the current framework for home renovation grants, about which the noble Lord, Lord Ezra, spoke, introduced by the Conservatives themselves only six years ago, will be changed in favour of a discretionary scheme with few incentives to achieve an effective renewal policy. The extension of housing association grant, we hear, is to private developers which will spread an already inadequate budget even more thinly and thus risk depressing standards.

There will be a scheme to allow some housing association tenants to buy their homes, to get the Prime Minister off the rather nasty hook he got himself on by insisting on the right to buy for housing association tenants. The measures may include the distortion, if I may put it like that, of a perfectly sensible idea for local housing companies, simply making it a vehicle for privatisation rather than a positive measure to encourage public/private partnership. The introduction of probationary tenancies is another proposal which I understand is under consideration in the White Paper together with a token scheme for tackling fire hazards.

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In none of that, apart from the most offensive parts, do we see anything like a long-term strategy. I join the noble Baroness, Lady Hamwee, in saying that the housing crisis cannot be solved by short-term palliative measures. First, we must recognise that housing is a social need; it is not just another market. Secondly, we must recognise that the fundamental problem facing us, which we must solve as quickly as possible, is the problem of the most vulnerable in our population, particularly the homeless. That must be done. Thirdly, as the noble Lord, Lord Beaumont, pointed out, we must recognise that demographic changes are taking place in the population. We must plan for them on the basis of a seriously constructed housing budget.

Instead of that, what we get from the Government is panic. I understand that; I should be in a panic if I were in their situation. However, that is not a proper response to housing policy. It may be a response to the opinion polls, but it should not lead the Government simply to try to stitch together things which they think might tomorrow win them a few marginal seats in this, that and the other part of the country. We need a long-term, properly constructed, sensible policy and strategy to combat our housing crisis. If the Government will not do it, then we shall.

5.37 p.m.

The Earl of Lindsay: My Lords, I wish to begin by thanking the noble Lord, Lord Dean of Beswick, for bringing to the attention of the House important issues concerning the demand for housing and how it should be met.

I have listened carefully and with great interest to the points made by noble Lords. Many of them spoke with as much experience as perhaps prejudice—I am not sure. The noble Lord, Lord Williams, was so keen to talk down some of the more positive points made by my noble friend Lord Elton that he forgot that his noble friend Lord Bruce apparently does not like the ambiguity of figures being thrown about on how much money is spent, how the figures are decreasing and so on. The noble Lord, Lord Williams, has thrown down that gauntlet and I shall reply with some of the commitments that the Government have and some of our achievements.

Most people find their own home with no help from the Government. The construction industry and financial institutions ensure that demand for new homes can be met. The role of government is, on the one hand, to create the right economic circumstances for the market to operate effectively and, on the other, to ensure that help goes to the people who need it.

Despite what the noble Lords, Lord Ewing and Lord Beaumont, said, most people prefer to own their own homes, and there can be no doubting the success in expanding owner-occupation. It has increased from 56 per cent. in 1979 to 68 per cent. today. Research shows that the overwhelming majority of people are pleased to have bought their own homes under the right to buy.

A number of noble Lords, including the noble Lord, Lord Desai, addressed some of the fundamental issues of home owning. The Government remain committed to promoting sustainable home ownership. Buying a home remains a sensible investment for most families. It is an

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investment not in a speculative, get-rich-quick sense but an investment in choice, independence and control. It is an investment in security, particularly later on in life when the mortgage has been repaid. As some of my noble friends pointed out, now is the time to buy. House prices are at their lowest in relation to incomes since 1985, which is good news for first-time buyers.

A lot of concern was expressed—it was initiated by my noble friend Lord Harding of Petherton—about those households in negative equity. The Government, of course, share this concern. However, the problem is a direct result of past unsustainable house price inflation and is a painful reminder of the reasons why the Government are determined that there will be no repeat of the late 1980s. The noble Lord, Lord Haskel, referred to that period. Negative equity will decline as house prices edge upwards in line with price movements in the economy as a whole. The number of households affected by negative equity is now significantly lower than it was in 1992.

It is pointless pretending that income support offers an all-encompassing safety net for home owners in difficulty. It does not and it was never intended that it should. There has to be a balance between state and private insurance. What is needed is comprehensive, reasonably priced insurance products for the benefit of all home owners. Despite the cynicism of some, there are signs that a positive and innovative approach is now emerging from the insurance industry and that the services that the industry will be able to offer will provide protection for most home owners. The proof is perhaps in the fact that repossessions are now falling. They have fallen by over 36 per cent. since the 1991 peak. Arrears of six months or more are down 21 per cent. year on year. At the moment, average mortgage repayments are £130 below those that existed in October 1990. A lot of that has to do with the Government's economic policies. The little exposition of my noble friend Lord Elton in this area underpins much of the success.

The right reverend Prelate and others spent much time discussing rented housing concerns. The Government realise that not every household will want, or be able to afford, owner-occupation. The Government are committed to increasing the supply of homes for rent and to providing new opportunities for such households. In particular, the Government are keen to expand the role played by the private rented sector. The noble Baroness, Lady Hamwee, paid particular attention to that area. A healthy private rented sector is a vital partner in promoting sustainable home ownership. Young people should not have to rush to buy a home because no rented homes are available. Private lettings can also provide homes for people who have to move for their job. They can also provide good quality homes for those in particular need.

Apart from the initiatives in this area, I point out to the noble Lords, Lord Ezra and Lord Williams, that the situation in regard to housing renovation grants is not nearly so dire as they stated. I believe that the noble Lord, Lord Williams, gave an inaccurate figure. I know that over 90,000 renovation grants, including disabled facilities grants, were approved in 1994-95, representing

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£433 million worth of public expenditure. I also point out that the present means tested grants system introduced under the Local Government and Housing Act 1989 was to target resources on the most needy households and on the worst condition housing. If there is any adjustment in the terms and conditions of such grants, it is in order to target those resources that are available in the most efficient manner.

The noble Lords, Lord Ezra and Lord Beaumont, were both concerned about energy efficiency and the general improvement of the condition of housing. Both noble Lords know very well that the Government are committed to improving both those features in housing. The range of programmes and measures in place to improve and promote energy efficiency across public and private housing sectors are numerous. Both noble Lords must be aware of the home energy efficiency scheme, which pays for basic insulation, draught-proofing and so on for housing for low-income, disabled and elderly residents.

The noble Lord, Lord Ezra, painted an unnecessarily gloomy picture about the condition of the housing stock. There have been considerable improvements in the past few years across a wide range of features, with many people being generally better housed than they were in 1986, with improved levels of amenities, a wider use of central heating, more homes with double glazing and less overcrowding.

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