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Lord Evans of Parkside: Hear, hear!
Lord Dixon: My noble friend Lord Evans of Parkside gives me support by shouting, "Hear, hear!" when I refer to South Tyneside. He and I were brought up in Jarrow. We served apprenticeships in Tyne shipyards. He became a fitter; I became a ship's carpenter. We served our National Service in the Royal Engineers. He became chairman of the Confederation of Shop Stewards Committee; I became secretary. We were both elected to the local authority. He became leader of Hebburn Council; I became leader of Jarrow Council. On local government reorganisation, we were both elected to South Tyneside Council. He became chairman of the Planning Committee; I became chairman of the Housing Committee. We both went to the House of Commons; and we both entered this honourable House together. When we were getting our beans on toast in Hawthorn Leslies canteen, little did we know that our careers would finish up here.
Unemployment in South Tyneside in May of this year was 13.5 per cent., as opposed to the national average of 5.7 per cent. That represents the highest unemployment rate in Great Britain. Among those unemployed are joiners, bricklayers, plasterers, and electricians--all people who build houses. In 1996, South Tyneside Council had a housing application list of 8,725. That means that 8,725 households were waiting for houses, not 8,725 individuals. A further 4,066 tenants were on its transfer list.
Since 1990 the council has set aside housing receipts on the sale of council houses totalling £23,709,000, and in addition in April 1990 had a further £7,557,000 in set-aside assets. The Minister mentioned only those receipts from 1990. Will the Bill take into consideration the receipts under the 1980 Act when giving supplementary credit approvals? Perhaps the Minister will explain when she winds up.
South Tyneside Council has been starved of resources for 18 years. In 1978-79, when I was chairman of the Housing Committee, the HIP allocation at 1997 prices was £41,362,000. We were building and modernising hundreds of houses. The HIP allocation for this year is £3,899,000, with an additional SRB allocation of £764,000, making a total of £4.5 million, or one-ninth of what the council received from the previous Labour Government for maintaining, building and modernising houses.
Perhaps I may give a recent illustration of how the cut-back in housing finance over the past 18 years has affected the council house stock. A fortnight ago I was invited to the 21st anniversary party at Martin Hall pensioners sheltered accommodation in Jarrow. I was invited because 21 years ago as chairman of the South Tyneside Housing Committee I opened the complex. Although the accommodation was clean and weatherproof, the building was virtually the same as it had been when I opened it 21 years ago. No modern adaptations or alterations had been carried out; and the lifts promised many years ago were still awaited. That was not because the council did not wish to carry out the work but because it did not have the resources to do so.
The building and refurbishment programme which South Tyneside is putting together will provide much needed jobs and training in an area which has the highest unemployment in Great Britain. It will allow sensible authorities like South Tyneside to get on with the job they were elected to do. The Bill will assist in the Government's two main objectives: jobs and social justice. I welcome the Bill, and congratulate the Government on the speed with which they have brought it about.
Finally, perhaps I may digress slightly. About seven years ago, while serving in another place I was asked to join the House of Commons tug-of-war team for the annual contest between the Commons and the Lords. Along with other Members of various parties, I willingly agreed. The only thing we had in common was that we were all about the 17-stone mark. I immediately started training in Strangers' Bar on Federation Special. A captain from the Royal Marines showed us techniques of how to use the rope in a tug-of-war. I looked forward to the night when we were to have the contest between the Commons and the Lords, thinking that it was a one-horse race. When I arrived at College Green I had my first glimpse of the House of Lords team. They were massive, like house ends. I said to one of my colleagues, Jimmy Hood, "The Barbarians mustn't have a match on this week". Needless to say, we were well and truly beaten; and it took a week before my arms finally got
back into their sockets. Since that night I have always had the greatest respect for the strength of this honourable House.5.8 p.m.
Lord Dean of Beswick: My Lords, the very pleasant duty falls to me of congratulating my noble friend and colleague Lord Dixon on his down to earth speech, full of facts. It seemed strange when he mentioned former chairmen of large housing authorities. Including myself, there are four or five of us--so we have not done too badly. The next speaker, my noble friend Lord Lofthouse of Pontefract, a former Deputy Speaker, is another chairman of housing in Wakefield, Yorkshire. I first met him some years ago. The only difference between us is an age gap. I was four or five years in front of my noble friends. Nevertheless, I am sure that we shall all want to listen to my noble friend Lord Dixon as often as he wishes to speak because he will have some useful contributions to make. I have no doubt that my noble friend and colleague Lord Lofthouse of Pontefract will do the same.
I was somewhat puzzled by the speech of the Opposition spokesman, the noble Lord, Lord Bowness. For some years I had the privilege of leading on housing in your Lordships' House for my party in Opposition. I became completely fed up with asking Ministers in the former government when we would have a housing policy which would produce houses to let. I never received an answer. Here we have a shadow Minister, in almost his maiden speech, castigating the new Government who are putting forward a policy which has been requested for years as though it is not the thing to do.
I wish to wind the clock back a little to indicate what was going on under the previous government's jurisdiction. A number of independent reports over a period of years were commissioned and produced by politically independent people. The first was Faith in the City, produced under the auspices of the noble Lord, Lord Runcie. It drew the conclusion that the main problem in the country was a lack of low-rent housing so that people could get some sort of home to live in. Almost concurrently, another committee was studying the same problem under the aegis of His Royal Highness the Duke of Edinburgh. That committee was also non-political, and it put forward the same views; namely, that somebody had to produce some housing. Who was it to be? It would certainly not be the private sector. But the government at the time, deliberately and as an act of policy, stopped local government building houses. I became sick and tired of asking why. I was informed by a succession of Ministers, "Oh, we've got something in its place. It will now be the Housing Corporation and the voluntary sector". Their eventual target was supposed to be some 60,000 houses a year. The two reports I mentioned, and organisations such as Shelter, were asking for 100,000 houses a year up to the turn of the century just in order to stand still. The then government did nothing at all. Had they continued with the building policies that they inherited in 1979 and not
sabotaged matters as they did, there would have been between ½ million and a million more houses to rent in the public sector.What was the then government's claim to success? It was the sale of council houses. That policy has run its course. Of course it was a success. They almost literally gave some houses away. For recipients the discounts were so large that they were treated marvellously. But does anyone really believe that it is possible to take over 1 million houses out of the housing pool in the rented sector and not exacerbate the problem of homelessness? That is absolute rubbish. Those houses are no longer there for rent. People may say that they would not have been there anyway, that people would still have been living in them. But a percentage of those would have been available. The building programme could have been continued and could have provided the housing that was being asked for. We should have been in a much healthier position than is the case today.
I wonder whether the Opposition are really serious about their proposals for housing. If they have a policy, what is it? It is obvious that they did not have a policy over the past few years and have not produced one. Yet they carp at the policy before us today.
The noble Lord, Lord Dixon, was quite right. There is a building force available--tens of thousands of builders are still on the dole--and money is available. I shall not go into detail, but I believe that in this Bill the Government are starting to unlock those funds at a rate at which they can be absorbed and used objectively. As the former chairman of a housing committee, I know that the noble Lord was right when he spoke about over-heating and cowboys in the industry. That is the last thing we want.
I hope that this measure is only a very small start in dealing with a very big problem. If we do not treat it in a massive way as it starts to accelerate, we shall be in trouble by the millennium. We shall hardly have made any indent on the problem as it stands today. The Government have started out correctly in introducing this Bill in order to move matters forward. I compliment the Minister on her detailed explanation of the Bill. It is rather sad to hear a carping criticism from a noble Lord representing the Opposition--who have done nothing since 1979 except sabotage everybody else's ideas and efforts to deal with a problem that was looming larger, and is larger than ever today. This Government have inherited the problem and have begun to tackle it. They should be commended, not criticised, for this measure.
5.14 p.m.
Lord Lofthouse of Pontefract: My Lords, it is a pleasure to have the opportunity of making my maiden speech in this House after many years in the other place and in local government. When I first came to this place I wondered how I should settle down. It tended to worry me a little--until, about a fortnight before I had the privilege of being sworn in, I visited the other place and sat in the Gallery. I received something of a shock. Looking down into the Chamber I did not know anybody. When I arrived in this place it was a great
comfort to see many familiar, kind and welcoming faces. It took me back many years to my time in the other place.I should like, first, to say a big thank you to both the Clerk of the Parliaments and Black Rod, and to all their staff, for the kindness and guidance that they have shown to me and to other noble Lords since we entered this place, and would specially thank the noble Lords, Lord Mason and Lord Gregson, who supported me in my introduction to this Chamber.
I shall plead for a little tolerance since it is five and a half years since I was able to stand in the Houses of Parliament and make a speech. So there is, I am sure, a small amount of ringrust there. If it shows through too keenly, I crave your Lordships' tolerance.
I welcome the Bill. In doing so, I recognise that Clause 1 will allow capital receipts to be taken into account in determining future supplementary credit approvals. As your Lordships will be aware, the local government Act of 1989 effectively prevented government from re-issuing the set-aside capital receipts. The new clause makes it legally possible for the Government now to release those set-aside receipts.
It is interesting to note that the legislation does not specify specifically housing receipts; conversely, it does not preclude general fund receipts. The noble Lord, Lord Bowness, on the Opposition Benches referred to that. No doubt noble Lords will be interested to hear what my noble friend the Minister has to say about whether in future years the receipts can be extended and used for general fund purposes such as leisure, education and social services.
Clause 2, the requirement on Ministers to stipulate the period of time over which loans are to be repaid (SCA), effectively gives local authorities permission to take out loans up to the amount of the SCA. Previously, Ministers stipulated that such loans were to be repaid over, say, 10, 20 or 30 years, depending on the type of expenditure funded from such loans. I welcome the fact that that extra constraint has now been removed from the proposed legislation. It therefore provides more freedom for local government. That helps local councils to become more accountable for their actions and also allows them to maximise the financial consequences of their borrowing. This is another step in the right direction. It will allow local government to become more self-sufficient.
The noble Lord on the Opposition Benches kindly referred to myself and my noble friend Lord Dixon, and suggested that we probably have more knowledge on this subject through our work in the other place. I thought that something of a nicety and it was much appreciated. But, listening to the noble Lord's speech, he tended to prove that his knowledge was limited on the Bill that is before us.
The release of £200 million in the current year and a further £700 million next year, as announced in the Chancellor's Budget on 2nd July, demonstrates that the Government are sincere in keeping their manifesto promises. The available funding is part of the Government's intention to release the capital receipts
that currently sit in local authority bank accounts. I hope that your Lordships will agree that it is sensible to make such available resources work for the community by ensuring more investment in the housing stock within such communities.I believe that it is equally sensible that the Government have not restricted local authorities unduly into prescribing where such funds are to be used. It will be left to local authorities' discretion to use resources to meet the highest priority need.
The Government's proposal to use the supplementary credit approval arrangements--that is, to give borrowing permission to local authorities rather than merely allowing authorities to spend the actual cash--is sensible. It overcomes the problem where some authorities have high need and only relatively low cash available. The recognition of housing need in the weighting of distribution is also to be welcomed. The proposed proportion of two-thirds housing need to one-third actual receipts appears very reasonable.
The fact that the Government have undertaken to underwrite the revenue consequences on either the housing revenue account or the general fund, depending on where individual authorities actually spend the resources, will ensure that effectively such additional spending is "free spend". If actual receipts had been used, there would be no long-term call on revenue accounts to repay the loan charges. Ensuring that the revenue consequences are reimbursed from central government should give a neutral impact on the finances of local councils. There may be a problem if loans are over, say, 20 years, with ensuring that such revenue support continues for 20 years. One of the advantages of capital grants/receipts is that there are no ongoing revenue consequences.
I welcome the Government's commitment to release all set-aside receipts during the life of the Government. By that commitment, the Government have avoided the danger of over-inflating the economy by allowing the release of funds accumulated during the previous government's administration to be carried out on a manageable basis. That should ensure that authorities have the ability to maintain value for money. If too much had been released too soon, the construction industry would have been in a most generous supply and demand situation and the consequence would be that tender prices would inevitably increase due to the over-supply of resources. By phasing in such a release in a manageable and realistic manner, authorities should still be able to ensure that the construction industry will compete for the available work. Hopefully, the additional work will aid unemployment and the return to work initiatives. Indeed, the consultation proposal outlines such initiatives as being an integral central policy plank of the initiative.
I welcome the fact that in order to sustain communities and ensure pride for the local population, the Government are also allowing up to 15 per cent. of resources to be used for regeneration-linked housing purposes. Again, such an initiative will aid the return to work scenario and could also be used to aid security and crime prevention.
I believe that if there is any aspect which could be enhanced in the current proposals, it is that an indication--say a minimum of 90 per cent.--of future years' allocations should be notified to local authorities as soon as possible, ideally at least two years in advance.
The biggest single problem facing local authorities under the current capital control regime is that they only receive the following year's allocation each December. Most capital schemes are by nature large-scale and expensive and the contract period can often exceed 18 to 24 months. Such large schemes require a lead-in time of about 40 to 45 weeks. The most effective way of managing such large-scale projects is to have security and knowledge of the funding arrangements for the period when actual work and therefore expenditure is incurred. The wealth is very welcome to local authorities with the vast run-down and shortage of housing throughout the country, not least in my own area which is a metropolitan district council, and with the disrepair and lack of new build. To people who criticise and say that the Bill does not go far enough, I say that it is a start, a responsible start, and I wish it a speedy passage through the House and into legislation.
5.25 p.m.
Baroness Hamwee: My Lords, I have the happy task of following the noble Lord, Lord Lofthouse of Pontefract, and thanking him on behalf of the whole House. He has had a distinguished career and that distinction will, I know, be to the benefit of this House on many occasions. I also congratulate him on having given to Dod a photograph which is clearly up-to-date and recognisable.
I welcome too the fact that we have in this House another northerner with so much local government experience. However, I say that through slightly gritted teeth as a Lancastrian. We are enjoined not to thank all maiden speakers, but I cannot forbear at least saying that if the speech of the noble Lord, Lord Dixon, was typical, I look forward to more to come. Like the noble Lord, Lord Bowness, I have to declare an interest as a serving councillor.
As has been said, housing was the Conservatives' biggest privatisation: 1.6 million homes and the figure I have is £28 billion though a slightly different figure has already been mentioned this afternoon. The privatisation, though not of itself objectionable, had no parallel programme for the replacement of stock and that was objectionable. Therefore, I and these Benches welcome the Bill. But it is not a Bill about the release of capital receipts; it is a Bill about the mechanism for some spending or, as I would prefer to say, investment.
I am bound to make some of the same points as the noble Lord, Lord Bowness, but I hope that the Minister will hear a different tone in what I have to say. I have often wondered whether restrictions on local authorities' use of capital receipts were because central government were concerned about the effect on the public sector borrowing requirement and on council tax levels, both of which to a great extent are artificial matters. Alternatively, was it because of a concern about a power base at local
government level, capital assets being power? Therefore, the previous government were quite happy to see that power base reduced and not replaced.The Chartered Institute of Housing analogy is that if an individual sells a house, he will only pay off his mortgage if he does not need a new house. Similarly, local authorities should be in a position where they can put housing need before debt repayment. In any event, I support investment in housing. As an aside, I hope soon to see that local authorities will be free to borrow from private capital markets to support that programme. I make that comment in the context of being one of those who is not at all concerned about who provides the housing. I do not subscribe to the dogma that local authority housing is good and all other is bad. But I should like to see local authorities being able to play a full part.
I said that the Bill is not about the release of capital receipts, nor, unhappily, is it about local decisions. It encapsulates a centralised approach. As the Minister said, local authorities and other interested parties have been consulted. I believe that the response date for that consultation is the end of this month. I therefore wish to ask the Minister how the responses will feed into the final stages of the Bill. She may say that it is an enabling Bill and that therefore it is not necessary for us to know too much detail about the responses. But we shall have the opportunity to conclude the Bill after those responses have been made. I should be interested to know how those of us outside government can ascertain whether the responses include matters which ought usefully to be reflected in the legislation.
I understand that the balancing act which the Government have carried out is necessary because of the availability of funds and assessment of need not falling neatly into the same geographical areas. But local housing authorities will not be assessing need. The consultation document refers to a one-third to two-thirds approach, one-third reflecting the proportion of set aside receipts and two-thirds being need. I have heard or read somewhere that that is to become 50/50. I do not know whether that was a matter of rumour--the Minister shakes her head. The consultation papers say that the one-third to two-thirds approach is for the current financial year. But there is not much left of the current financial year or will not be by the time the approvals become available.
The general needs index, which I understand will be the basis for assessing need, is not regarded as a perfect measure. For instance--indeed, perhaps most particularly--it does not include homelessness figures. To put it another way, it omits one very important indicator of need. I believe that the Government are looking at that matter but until the index is changed, many local housing authorities, including outer London boroughs, of which my authority is one, will lose out.
I understand that future allocation will be made on the basis of reports from the government officers. Over the years there have been many criticisms about government officers being portrayed as representing some kind of devolution of power. Of course, that is not so. They are a geographical placement of the department's civil servants. I am concerned about matters of transparency and accountability--judging their judgment of the need.
As has been said, the spending which will be allowed is not just to go toward housing. I welcome that and the recognition that successful housing is about more than roofs. I do not underestimate the importance of the contribution to the whole community, though I wonder what the limitation of spending on regeneration to "the housing scheme"--I emphasise "the" housing scheme--will mean. I look forward to the widest interpretation of "housing purposes"--for instance, energy efficiency.
That is all perhaps a little over-idealistic when one considers the need for repairs and new homes. The Minister said, and I understand, that one cannot reverse overnight the effects of the previous government's programme or lack of programme. The repairs backlog in England and Wales on remaining council stock is of the order of £9 billion. Many housing authorities have already acknowledged that they have no hope of undertaking new build, because unless their existing stock is repaired, they will lose that stock as well.
As to numbers, the then Department of the Environment told us a couple of years ago that the number of households in England would grow by 4.4 million in the years between 1991 and 2016, and that that growth would require 176,000 new homes. The last government set the social lettings target at 60,000 units a year, often failing to meet that target, whereas most experts said that the true need was for at least 100,000 units a year. The so-called "release" of capital receipts would, I believe, allow a maximum of 40,000 units a year; in other words, barely enough to compensate for budget cuts that we have seen recently, including the 1996 Budget cut. Noble Lords will be well aware that the Government effectively have accepted cuts to the Housing Corporation's programme as part of their commitment to the previous government's spending targets. I look forward to any words that can give us hope for an increase of significance in the future.
I should like to think that the view ahead could be made a little rosier. I urge the Government to reconsider what is to be done with future receipts from sales of council houses. That matter has already been raised this afternoon. Sales have fallen from their peak but are still generating something of the order of £1 billion a year. I urge them to be used--invested is the term I prefer--on repairs or new build of social housing and not set aside.
I also urge the Government to reconsider what is to be done with non-housing receipts. We are told that education is the Government's number one priority. So why, for instance, is there not a phased release of non-housing receipts for education purposes? I dare say the Minister will respond by referring to the resources for education announced in the Budget. But many education authorities will receive very little once the bidding process is complete although those authorities want to spend on education.
Finally, authorities can invest most effectively if they can plan ahead. That point was made by the noble Lord, Lord Lofthouse of Pontefract. It is important to know as soon as possible how much is to be released not just this year and next year but in subsequent years. To use figures from the Chartered Institute of Housing, £1 billion
released for five years would renovate 280,000 council homes or build 140,000 new homes through housing associations, which could use private funding as well, or build 70,000 new council homes. At the same time it would create something like 20,000 jobs over that five-year period, as noble Lords have already pointed out, with consequent savings in benefits and increased income from tax.The Government have a great chance to do some very real good. The Bill is a first step. But it seems to me that it is a little like the step of a toddler who seems about to take a great stride but hesitates and then, at the last moment, while everyone is watching and holding their breadth, just manages the first few inches. The Bill is not about capital receipts; nor is it about local authorities using their own money. It is about giving permission to borrow to a limited extent. The supplementary credit approvals announced in the Budget are a tottering first step. We on these Benches look forward to confident strides forward.
5.37 p.m.
Lord Lucas: My Lords, in the midst of such expertise, I feel extremely humble. I shall speak of the maiden speeches later. For the moment, let me say that I find it hard to think of anything to add to the speech of my noble friend Lord Bowness, with his great depth of experience. I enormously look forward to the replies that the Minister will give to him. The noble Baroness, Lady Hamwee, is one of the few Members on her Benches who still understands what it means to be in opposition, to test and question the Government. Many of her colleagues seem to believe that they are now in juxtaposition or perhaps even post-position. The noble Baroness has long commanded my admiration and certainly will continue to do so so long as she tests the Government in the way that she has done this afternoon.
I too wonder what is happening to the Government with this Bill. How quickly they have abandoned the golden rule that borrowing should be for capital expenditure. Indeed, they provide a clause in the Bill whereby borrowing will be for revenue. I find that surprising. I hope too, with my colleagues, that the definition of need will be settled, at least before we return to the Bill in October, and that we shall all understand how need is to be defined and who is to measure it. I hope that the noble Baroness, if not now, will then be in a position to expound on how the systems under the Bill will apply to Wales in the future, presuming that at that stage Wales is on the way to having a devolved assembly. It seems to me that the Bill falls slap bang in the middle of the division of controls between central and local or devolved government. It will be fascinating to know how the Government envisage it working in the future.
We were treated to two excellent maiden speeches. I greatly enjoyed the speech of the noble Lord, Lord Lofthouse of Pontefract, though I believe he is reading and believing some of the Government's propaganda more than he ought. He will come to realise as he spends more time here that nobody can sack him and nobody is likely to promote him either. He can speak his own mind and be critical of the Government, unlike his colleagues in the other place who tremble at
the thought of Mr. Mandelson. Here he is a free agent and we look forward to hearing a great deal more from him.
I can say exactly the same to the noble Lord, Lord Dixon. I was on the edge of my seat for every moment of his speech. I listened to it with rapt attention and should his name appear on the Order Paper again to speak, I shall do my best to make sure that I listen to him. I can reassure him that it is possible to obtain beans on toast--I am sure that many of his colleagues can show him where to obtain an excellent plate of it; it is something on which most of us were brought up and most of us insist on. However, I retain one burning question in my mind from his speech: is his house still standing?
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