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Baroness Farrington of Ribbleton: My Lords, I welcome the opportunity presented to us by the noble Lord, Lord Ezra, to consider the improvement to the housing stock of this country. I am aware of the noble Lord's interest and knowledge as president of the National Home Improvement Council. Today he has asked whether the Government intend to increase the rate of renovation of domestic properties in order to reduce the number of unfit dwellings and help meet housing needs. This has provided an opportunity for a wide-ranging debate to take place, albeit a small number of noble Lords have spoken this evening. I believe that we have positive messages to offer in this field. I shall try to respond to as many points as I can and write to noble Lords if I have missed out any of them.

I add my congratulations to the noble Lord, Lord Gridley, on his maiden speech. As he is obviously very knowledgeable about renovations, he may have to guard against other noble Lords seeking his advice on many occasions. His assessment and analysis of the particular local circumstances was valuable. I noted his reference to the responsiveness of Hampshire County Council in seeking to reconcile new housing needs with the need to plan for the future. I believe that that is a very good analysis of what is required at local level. I shall return to that later.

Whatever the Government do must be in partnership with local authorities and must recognise their knowledge. The number of unfit homes in England has been falling by small amounts since systematic measurement was first begun in 1971. Through the quinquennial English House Condition Survey we have been able to analyse the process. Later this year we shall have the results of the 1996 survey. That will show what occurred between 1991 and 1996. Therefore, the latest information available from that particular survey is from 1991. It showed that there were 1.5 million unfit homes. Quite obviously, that is an unacceptable level.

The noble Lord, Lord Ezra, said that the number of renovation grants had fallen to one-third of the level in the 1980s. The early 1980s is not a true comparison. Grants given in the early 1980s were badly targeted with very few going to unfit dwellings. Very often they went to people who could afford to do the work themselves. The current system is now much better targeted with grants going only to those without resources and is focused on the worst stock. It is a fact that within the area of unfit homes and homes for renovation there is a wide range of individual circumstances and financial needs. The noble Lord, Lord Ezra, also said that the budget for discretionary renovation grant was about £250 million whereas at its peak it was £1.5 billion. It is quite difficult to find where the £1.5 billion came from. However, significant amounts of money are being invested by owner occupiers in repairs and improvements. When the result of the review comes out it will be seen that private money has been spent on the housing stock. Government funding must be seen in this context. Even if one went back to the level of grant 10 years ago, the total need for renovation and

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restoration work to be carried out on houses could not possibly be met solely from the public sector and solely through the system of grants.

Most of the unfit stock is in the oldest housing. Therefore, the majority of unfit homes are privately owned and are the responsibility of their owners. That is a responsibility which owner occupiers take seriously, which is shown by the large amount of work that is carried out by them. As to private sector investment by owners between 1987 and 1991, half the homes identified as unfit in 1986 were made fit by their occupants. Three-quarters of the people concerned did that work without applying for grants; one-quarter did so with renovation grant. Therefore, it is important to recognise that the issue of unfit homes involves private sector non-grant-funded work. Often the greatest amount of renovation activity takes place at the point where homes change hands. Somebody who moves in will invest in improving the occupation.

During the debate no one raised the issue of houses in multiple occupation. It is necessary to place on record that some of the worst stock conditions are to be found in multiple occupation households. We are concerned that conditions at the very bottom of the private rented sector, where tenants have little effective choice about where they live, are often appalling. We are committed to tackling these problems. As a first step we have a manifesto commitment to introduce a mandatory national licensing scheme for houses in multiple occupation. We want to press ahead with this quickly. We have not been able to find room for the legislation in this parliamentary Session which is a very crowded one, but we shall have plenty of time to work it up and consult on the details.

The issue of enforcement is also very important. A local authority has power to identify a property as unfit. It is then under a statutory obligation to take the most satisfactory course of action to deal with it. Normally this means carrying out repairs but sometimes that is totally impractical. The local authority may have to decide which course of action to take in individual cases.

The noble Lord, Lord Lucas, raised the question of fitness standards. He asked what was "fit". Clearly, the fitness standard is itself an important consideration. The standard is made up of a set of requirements which local authorities need to consider. These requirements constitute the minimum conditions and amenities that are considered necessary for a dwelling house to be fit for human habitation. We are currently undertaking a review of the housing fitness standard. There have been calls to raise the standard, which means adding to the requirements. Those that are commonly pressed for and which are well known to the noble Lord are: energy efficiency; internal arrangements; radon; lead in water; noise; fire safety; and asbestos. They are just some of the issues. There is also concern that the standards should be made easier to interpret and should be applied consistently. The review got under way at the end of last year. The department plans to publish a consultation paper setting out proposals for the reform of the fitness standard.

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The noble Lords, Lord Ezra and Lord Lucas, referred to the impact of housing on health. We recognise only too well the appalling impact that bad housing can have on the quality of life, health and well-being of families and individuals. There is a complex matrix of factors involving health, unemployment, bad housing, and family life. Despite all the studies, it is difficult to argue for a straight financial transfer. The noble Lord suggested that if money were transferred from the health budget to housing there would be no increase in public expenditure. On the basis of the research material available, I should not like to argue that case with the Minister for Health. The issue is an important one. We take it seriously. It cannot be resolved by a straight transfer of funds, because of all the factors involved.

Private housing is, first and foremost, a private asset. Responsibility for repair and maintenance must rest with the owners. As everyone cannot afford to do that, renovation grants continue to be available to help those in the most need. This year we have separated out the resources we are making available for disabled facilities grants. Our initial allocation to local authorities in England for private sector renewal loan is £192 million. The noble Lord, Lord Addington, mentioned Part M of the Building Regulations. He asked whether it would be possible through the regulations to insist on adaptation to the same level for disability access. It is difficult to see how it might be possible to have a blanket standard that could be applied across all types of renovation and restoration projects. It would depend on the nature of the work being done and the degree to which it added to the cost. I can give an undertaking to investigate whether it would be possible, in consultation with the local authorities, to produce guidance on how that might be practical and not too expensive.

Resources are finite. There will never be enough to please everyone. One of the key objectives of the legislation providing for renovation grants (Part I of the Housing Grants, Construction and Regeneration Act 1996) is to give local housing authorities the flexibility to develop local strategies for dealing with the private sector problems identified in their areas. That theme has been raised by all noble Lords tonight. It is important that we consider how to respond to the desperate need for good quality housing that exists in a way that meets local circumstances.

The capital receipts initiative is a vital first step towards reversing years of under-investment in housing. The Chancellor has provided an additional £174 million to support capital spending on housing in England this year, with a further £610 million being made available in 1998-99. Those resources will support local authority spending on housing and housing associated regeneration work, as well as the revenue consequences of that spending.

Private sector renewal is one of the range of objectives that we have proposed for the capital receipts initiative in England. Energy efficiency in housing is another. Those objectives were set out in a consultation paper issued last month. It is important to stress that in the first instance it is for local authorities to identify local needs and priorities when they apply additional resources in that area.

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Housing associations form an important part of the fabric of our housing strategy. The level of reserves now accumulated by housing associations in their rent surplus funds amounts to £350 million. That will provide a substantial sum towards the cost of improvements.

Several noble Lords mentioned the article in the Sunday Times. It is important to set it in context. The consultation that has taken place has raised some important issues. My honourable friend has aired some of the difficult issues raised by the consultation process. However, no final decisions have been taken. I appreciate what has been said about the importance of concentrating development on brownfield sites in urban areas. However, I draw the attention of noble Lords to the fact that the people for whom additional rural housing or the restoration of unfit properties in rural areas are appropriate are often those who already live in the country or who form households from a household which already exists there.

The noble Lords, Lord Ezra, Lord Lucas and Lord Addington, raised the issue of VAT on renovations. The construction industry has campaigned for a reduction in VAT for many years. The general policy on VAT is that the structure of the tax should be kept as simple as possible. Zero rating exists on a wide range of essential domestic expenditure. However, the zero rating of VAT on all renovation building work would not be particularly well targeted as there would be no distinguishing between the benefits available to the millionaire upgrading his property and those available to the householder in financial difficulties. Also, it is by no means clear that under EC law it would be permissible to create a new zero rating.

The noble Lord, Lord Ezra, referred to the black economy. My honourable friend Nick Raynsford, the Minister, signalled in his speech to the Construction

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Industry Board on 4th July that the Government wish to work with it to tackle the problem of those who create a scandal in the industry.

Household growth and future development is without doubt one of the big issues facing us for the future. There are projections that some 4.4 million new households are expected to form in England alone between 1991 and 2016. Responding to that increased demand will place enormous pressure on local authorities. The previous administration issued the consultation paper to which I have referred entitled Household Growth: Where Shall We Live? The consultation produced over 700 responses. We are considering how to deal with them.

When planning for housing need in the future, we are talking about guidance from the centre. It is impossible from Whitehall to plan, identify and meet the needs of each locality, let alone each region. It is important that we work in the new partnership between central and local government. To that end Ministers have established new working relationships with the local authority associations on housing finance issues. The Local Housing Finance Group, which has representatives of the LGA, the Association of London Government and the Department of the Environment, Transport and the Regions, will meet regularly to consider Ministers' proposals on housing revenue and capital issues. Ministers have also agreed to the first housing liaison meeting which is being arranged for September.

This has been a valuable debate. It is an important area. In the context of the Government's comprehensive spending review, it is extremely important. The terms of reference for the study of housing expenditure, which will also cover housing benefit and other reviews being undertaken, were published on 24th July. I am sure that the contributions to tonight's debate will help to ensure that the response is well informed.

        House adjourned at half past eight o'clock.

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