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Lord Bruce of Donington: My Lords, perhaps I may use this occasion to ask the Chairman of Committees whether something could be done to improve the quality of the gum on the envelopes.

Lord Monkswell: My Lords, I thank the Chairman of Committees for introducing the report. With reference to paragraph 2, I think we all accept that it will be a useful experiment to relocate the Hansard reporters to the Peers' Married Daughters' Box. That will provide extra accommodation for wheelchairs, which we all agree is very important. Can the Chairman of

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Committees advise us where the Peers' married daughters will be seated should they wish to attend and listen to your Lordships' debates?

Lord Gisborough: My Lords, is the Chairman of Committees aware that unmarked paper is no longer available? Many people would look for it and use it if it were there.

The Chairman of Committees: My Lords, perhaps I may first try to deal with the question of the noble Lord, Lord Bruce of Donington, about gum on envelopes. Not for the first time for someone appearing at the Dispatch Box, the noble Lord, Lord Bruce, asks a very sticky question.

Noble Lords: Oh!

The Chairman of Committees: My Lords, the advantage of it is that the noble Lord proposes to use envelopes not for notes, but in the way in which they should be used. On that point I commend him most warmly. I do not know what can be done about it, but I shall certainly look into it and see whether I can seal the matter on his behalf. I have noticed that elsewhere some envelopes have a very pleasant taste. The noble Lord might feel that that is an aspect which could be beneficially looked into as well.

The noble Lord, Lord Monkswell, asked about the temporary relocation of the Hansard reporters in the Peers' Married Daughters' Box. I stress that this is for an experimental period only in the first place, subject to review later on in the Session. While the Hansard reporters are occupying that place, Peers' married daughters will be accommodated in the area below Bar which is occupied by Peeresses or the spouses of noble Lords. Should there be any occasion when that area was completely full, then they would be located upstairs. But there is no doubt at all that a place will be found for any who require it.

As regards the question asked by the noble Lord, Lord Gisborough, I am told that rough paper is available. There is lined and unlined paper available and also continuation sheets. Although it is of the same quality as the crested paper, it is considerably less expensive than the printed paper. I can see the noble Lord shaking his head. He has much more doubt about the availability than I am given to understand exists. I shall certainly look into the matter and if there is a need to take action, I shall see that it is taken urgently.

On Question, Motion agreed to.

Rented Housing

3.13 p.m.

Lord Dean of Beswick rose to call attention to the case for more rented housing in both the public and private sectors; and to move for Papers.

The noble Lord said: My Lords, people may ask why I have decided to opt for a debate on housing. I believe that it is two years since we had a debate of any

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substance on housing. On that occasion I initiated the debate and our chief spokesman on the environment at that time, the noble Lord, Lord Williams of Elvel, replied.

I ask noble Lords to look at an article by Mr. Stewart Fleming which appears in the New Statesman this week. The article begins on page 30. The headline encapsulates the subject. It says,

    "Will anyone talk about housing"

It is a subject that used to beguile politicians, but it has now dropped from view. That is because it is a problem which governments no longer know how to tackle. I would insert another word and say of the previous government that they did not want to tackle it, as is shown by the wreckage that they left after 18 years.

When I set out on a political career some 40 years ago, I had to choose what my interests would be. I chose housing and health as two subjects which mattered vitally to ordinary people. Health and education now have centre stage, and I do not quarrel with that. I have never been particularly involved with education. But unless we do something about housing, and the deterioration continues, there will be enormous pressures on the health service. When one considers the large areas where there is above average sickness and deprivation of any kind, they can be found in the poorer areas where the worst housing exists. Any statistics will show that.

One of the reasons why I have tabled this Motion is that we have had a new government for six months. They have taken some forward steps in housing, but I do not believe that people are aware of the enormity of the task before us. At the time of Faith in the City and the Duke of Edinburgh's report, about 15 years ago, people were coming forward with suggestions. In order to deal with the deteriorating situation that existed we needed 100,000 new completions a year. In fact, I believe we have topped 50,000 houses on only one or two occasions. If the last Government had carried on building houses and flats at the rate that they were built by the Labour Government under the noble Lord, Lord Callaghan, as he now is, there would have been available today in the housing stock over 2 million more properties to let. That is the sum of the disaster that the previous government inflicted on us.

Not only that, but they insisted on the mandatory selling of council houses in areas where housing was in great need. I took the view then, and I still take it, that the decisions for the respective areas should have been left to the local authorities. I was the chairman for housing in Manchester when we had a waiting list of 30,000. We started to reduce it. But now I find that the waiting list is back to that figure. That is disappointing for those people who have followed the subject of housing all their lives.

I spoke this morning to the former Secretary of State for the Environment, Mr. John Gummer. He commissioned a report which, I believe, was produced earlier this year. The report was prepared by bona fide people with the necessary credentials. The conclusion of the report was that for the 20-plus years from 1996 to 2016 it was envisaged that 4.4 million new lets would

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have to be made available. That was looking into the crystal ball a little and foreseeing some of the future circumstances. I said, "That seems an awful lot, John". He said, "I can assure you that the conclusion errs on the conservative side and it is the minimum". That is 4.4 million houses by the year 2016.

It would take more than 100 years to reach that target of 4.4 million houses with the building programme achieved last year under the previous government. When I used to raise this matter at the Dispatch Box and ask why the Government behaved in such a manner, and why they were stopping councils building council houses, the Government said that they did not want to build them. Our new weapon was the Housing Corporation. That was a reference to my noble friend who has just taken over the chairmanship. I wish her every success because I believe the right type of person has been chosen for it. The Housing Corporation continually laboured the fact that its target was 60,000 houses a year--but it has never reached that target. I do not blame the Housing Corporation but the fact that the resources were not made available. Perhaps my noble friend Lady Dean of Thornton-le-Fylde will correct me if I am wrong, but I believe that the most it ever achieved was 50,000 a year.

But what happened then? The Government cut their subsidy to the Housing Corporation from nearly £3 billion to £1 billion. If we are not careful, it will soon be down to zero. I suspect that the corporation is in serious trouble. How can one have an expanding, forward-looking building programme and let contracts so that they are beneficial in terms of price, if one is faced with such savage cuts? That aspect also needs further consideration.

I think that this Government--I support them wholeheartedly--have to start thinking about finding some money. They may say that the money is not there, but I advise them that if some money is not found and they start on the job the final cost will be absolutely appalling.

What can we do now? The first thing that I would do would be to look at the existing public sector housing stock. It is deteriorating at an alarmingly fast rate. As the money becomes available--the Government must make it available--I would use those initial resources to bring our estates up to standard, and in the same areas I would fund the local authorities to provide community buildings. As a former chairman of housing in Manchester, I know why we have some "deserts" there; it is because we were not allowed the money to develop community and social facilities in the area while we were building housing. All that we were allowed to do was build a huge number of houses, but nothing to go with them. Trouble has now overtaken us. So, that is one of the first things that I would do.

I turn now to a situation which has not been in the news lately, but the last time that I considered this--a few weeks ago--I was disappointed to note that about 600 families are still losing their home each month because of mortgage arrears. Where are those 600 families a month to be housed? They will not buy another house. Once your home has been repossessed

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and you have been tipped out on to the street or have left of your own accord, pushing the keys through the letterbox, you cannot possibly buy another house or obtain another mortgage. What will happen to those people? Unless something is done, we will be deluged by the effects of this problem.

The Government should do something else quickly. One of the last Bills on which I worked at the Dispatch Box (with, I think, my noble friend Lord Williams) involved me complaining bitterly about the attitude of the then government, who imposed a ring fence on the housing revenue account. I pointed out that that meant that if I lived in a council house and paid my rent regularly but the fellow next door did not pay his rent, I would have to make up the deficit in the housing revenue account. I said at the time that that was a most disgraceful attack on respectable people and good tenants. However, the provisions went through. I believe that it is the job of this Government to take such provisions off the statute book as quickly as possible so that we can give honest people a chance.

I know that for quite some time local authorities have not been able to build many houses. Indeed, I believe that they built only 800 in the whole of England last year, yet we have waiting lists of over 30,000. That is the achievement of the last government. Was it intentional? If so, it was downright vicious. Indeed, if it was not intentional it was downright bad management. The previous government cannot have it both ways. In my opinion, they left rented housing in this country in its worst state since the war. When I finished my stint in local government and became a Member of Parliament, the policy was to widen the housing market and to make more options open to people. I never thought that I would have to stand here some years later to consider the wreckage that has been created.

I welcome the fact that the Prime Minister has established the new social exclusion unit, but I hope that we shall not have just two or three years of talk. I do not know whether any of its members will have dealt with this problem at first hand. I suspect that many of them will be academics, who may not be the best people for such a body. I hope that some of its members may have made mistakes in this sector in the past. I hope that they will at least know the mistakes that were made and how to put them right. We must never again experiment with working-class people and council housing, as has happened in this country since the end of the war.

Many post-war council properties are being, or have been, demolished. I refer to walk-up flats and to deck-access flats which local authorities were forced to build because of the method of financial assistance used by government. That happened under governments of both parties. The two men mainly responsible were the late Lord Joseph and Richard Crossman. They were the men who put the thumbscrews on local politicians and said, "If you do not build this type of property, you will not get the subsidy". That entire swathe of building has now been lost.

I know that the City of Manchester has an enormous charge on its housing revenue account for properties which have now been knocked down. The same is true

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in the former constituency of my noble friend Lord Merlyn-Rees. There is a huge charge in Leeds. Indeed, the last time that I checked, the debt charges alone were costing the Leeds housing revenue account over £1 million a year--and that is for a type of housing that should never have been built.

It is important that such things are explained so that we all know what happened. I hope that the Government will act quickly. There is enough evidence even without the new commission. Plenty of people who were involved in such operations can give advice. They know the mistakes that were made and can thus ensure that they do not occur again.

Finally, I say this--I have said it before--society is like a three-legged stool. Our main three social services are housing, health and education. Their order does not matter but if we let the "leg" of housing collapse, the deprivation will spread to the health service and our schools. One of the sad facts of life is that wherever kids are brought up in bad housing, they usually have the double penalty of having to go to a bad school. I represented such an area where the kids attended schools that were in worse condition than the local prison--and that is not an overstatement. We must involve local government once again. Where local authorities want to build, we must get them moving and started. We must make the necessary funding available to the Housing Corporation so that it can do its job. If we do not do that, we shall fail the nation and we shall not be able to put it right in my lifetime. My Lords, I beg to move for Papers.

3.28 p.m.

Baroness Maddock: My Lords, I am grateful to the noble Lord, Lord Dean of Beswick, for giving us the opportunity to debate housing issues today. I must declare various interests. I am vice-president of the National Housing Federation and president of the National Housing Forum. I am also a member of the board of the Western Challenge Housing Association.

This country is almost unique, particularly in the western world, in that 70 per cent. of our population own their own homes, with only about 30 per cent. renting. Of that 30 per cent. the private rented sector represents only 10 per cent. The problems of the shortage of supply compared with demand for social housing have existed for many years. They do not seem to get better as time goes on. The collapse of the housing market exacerbated demand in a dwindling social housing sector. There were two main reasons for that. Falling investment in housing was accentuated by the number of homes lost to that sector because of the right to buy. The figures make pretty sorry reading. In 1996 we managed to build only 29,000 new houses for social renting. That is less than in any year since the war.

Despite the pressures, many imaginative schemes were put in place to try to improve supply in the private sector, particularly through schemes to bring properties not in use back into rent for people seeking social rented housing. All too often many government schemes involving some kind of financial help were short lived.

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Despite that, a good deal of work was done and continues to be done by the Empty Homes Agency. That greatly encouraged many bodies, particularly local authorities, to develop good empty property strategies and thousands of empty properties were brought back into use for renting. It is a good example of partnership between the public and the private sectors. Very often local authorities and housing associations have managed these properties and put them into good order so that they can be let.

Noble Lords will be aware that the Government have launched a series of comprehensive spending reviews. It is hoped that they will report next spring. I trust that they will look at these kinds of schemes which not only bring empty properties back into use--we have about 700,000 in this country--but increase the supply of affordable rented housing. They help to improve neighbourhoods that have been blighted by rundown empty properties and enable private landlords to improve their properties and ensure that they are used and rented out.

The previous government estimated that there was need for about 60,000 new social rented units per year if demand was to be met. However, many organisations involved in the social rented sector, particularly Shelter, the Chartered Institute of Housing and the National Housing Federation, believe that that was a great underestimate. Both I and my Liberal Democrat colleagues have long believed it, too. We estimate that if the demand is to be met about 100,000 properties need to be brought on stream each year. That compares with the 29,000 last year.

Investment is required not only in new homes but also in tackling the backlog of disrepair in both the public and private sectors. Shelter estimates that in the council sector alone there is a backlog of disrepair amounting to £20 million. The results of the Government's review will shape future plans for spending on housing from 1999 onwards. I suspect that that is what this debate is about today. I was relieved to know that the Government intended to involve both the Department of the Environment, Transport and the Regions and the Department of Social Security. The interaction between housing investment, housing benefit, affordability and taxation must be very thoroughly examined before changes are made. The noble Lord who introduced this debate explained clearly why that is so.

This is a short debate and I have time to highlight only a few of the problems that must be tackled. We all want a flexible workforce and we want people to move from welfare to work. However, unless we tackle the poverty trap for those in the housing benefit regime the moment they try to get back into work we will not get very far. The situation is particularly acute for young people. Shelter commissioned a report entitled Benefits Shortfall in the wake of the reduction of housing benefit for young people. It does not make for very happy reading. It is believed that the changes have led to greater homelessness and that that has undermined other initiatives like welfare to work. Shared accommodation is not suitable for many young people, particularly the

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vulnerable. In many areas it is impossible for young people to find accommodation at the amount allowed for the single room rent.

Not only have organisations like Shelter looked into this; private landlords have themselves considered it. They find that tenants are not able to pay their rent. They admit to giving advice not to let to young people under 25. Although the housing benefit changes may reduce the housing benefit bill, they create more homelessness particularly among the young who have to live in unsuitable conditions and considerable instability. That does not help them to get back into employment. I hope very much that the Government will respond today to recent rumours in the newspapers about what will happen to housing benefit and flat rates of housing benefit and the suggestion that housing benefit will disappear altogether.

The problems that we create by not providing decent housing for people have knock-on spending effects in other areas, particularly in health and crime prevention. I shall spend a short time considering what are termed independent social landlords, usually housing associations. Since 1988 the system of funding for new houses has been based on the linking of public and private funds. Such landlords have been the principal providers of new homes. They have been able to do this because they operate outside the public sector borrowing requirement restriction and have been able to borrow private money. Although these landlords appear to be rather robust at the moment, I believe that it is due in part to the collapse of the private housing market. They have been able to buy land and get good deals on the building of homes. That is changing. Unit costs are going up, which means that rents will also go up. We know that in this sector rents are higher than in the council housing sector.

At the same time, expenditure on repairs by these organisations is growing. Tax changes have pushed up their costs. In addition, there has been extra pressure from the Government to keep down rents. I believe that in the short term housing associations will be able to comply. However, the prediction by the board of the housing association on which I sit, following a submission by the financial executive on future finances, is that the association will very quickly move into deficit if it begins to subsidise rents too much. The situation is even worse for council housing where money cannot be borrowed from the private sector. In the short term capital receipts will help but in the long term better solutions must be found.

This leads me to reiterate a view that I and my party have long held. There is an urgent need for the Government to look at the way they account for public borrowing. No business puts capital and revenue together for accounting purposes; no business takes the view that capital investment for long term benefit is bad. Most of our European Union partners accept that, and their financial regimes reflect it. I suggest to both the Prime Minister and the Government that it would be good for this country's internal financial future if they looked seriously at changing the way in which the public sector borrowing requirement is assessed. To

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bring this area more into line with Europe would be a useful boost to the Prime Minister in his request to be at the table in Europe discussing the development of monetary union.

There are two other important areas upon which I shall not dwell because my noble friend Lord Ezra will do so. They are the state of repair in the private rented housing sector and energy efficiency in our housing. The tax regime does not favour that, a matter on which my noble friend will talk further.

Finally, I turn to tackling social exclusion. It is a shame that we do not call it "social inclusion". That is a much more positive way of looking at it. Nothing excludes anyone from society more than being unable to have a warm, safe home in which to live. Unlike the noble Lord, Lord Dean, I studied the make-up of the board, or whatever it will be called, of the social exclusion unit. I am worried that although there is someone from the DoE who has been involved in housing, there is no one from outside government at the coal face on that board. That is a shame.

Today we have seen some of the worst cold weather for some time. I heard on the radio this morning that a government building has been opened up to house the homeless and indeed that our Deputy Prime Minister was cooking breakfast for them. The need for more rented housing is greater than it has ever been. I hope that all this talking will lead to some action to achieve affordable housing in a comprehensive way in the long term. If our citizens are to achieve their full potential, they all need to have a safe, warm and affordable home.

3.42 p.m.

The Lord Bishop of Leicester: My Lords, I, too, am grateful to the noble Lord, Lord Dean of Beswick, for giving us the opportunity to debate this important subject, and to hear of his wealth of experience and that of the noble Baroness, Lady Maddock. The Church of England has been worried about the lack of low cost rented accommodation since the Archbishop's report, to which the noble Lord referred, entitled Faith in the City, drew attention to the problem some 15 years ago.

Since then, through our own church housing associations, Church Urban Fund projects, and in co-operation with our ecumenical colleagues, we have been working actively to address the problems associated with poor housing. We have come to appreciate some of the principal issues involved. Rented housing is vital to give people some degree of flexibility in the housing market. That is especially true for unemployed people or those on low incomes. Unless real housing opportunities are open to people at a price which they can afford, they may face homelessness, overcrowding and being forced into home ownership when they cannot afford it. Then, importantly, we believe that without affordable housing, people often find that they are unable to take up work and are trapped on benefits.

The past two decades have witnessed a dramatic decline in investment in social housing. There has been a shift away of course from the provision of housing by local authorities towards housing associations, but the

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total levels of investment are way below those of the mid-1970s or even the early 1980s. As a result, the number of new affordable homes has fallen dramatically: in England, from nearly 70,000 new starts in 1979 to 22,000 in 1996. Over the same period, there has been a rise in homelessness across the country from 76,000 households in 1980 to 131,000 in 1996.

The conclusion is inescapable: social housing helps to prevent homelessness. If people have a change in their housing situation--let us say that they lose their jobs and cannot continue to maintain their payments, or they marry and cannot continue to live with their parents--it is far better if they can move into council housing or a housing association home when they need it, rather than struggle on until they finally become homeless.

Where the supply of social rented housing decreases, people have to reach a crisis in their housing situation before it seems they can receive any help. Families, especially those with children, then face the stress of being uprooted and spending often long periods in temporary accommodation, removed from the supportive networks of family, friends and schools. In many cases, the trauma of homelessness results in long-term damage to educational prospects and health.

The lack of an adequate supply of social housing has also contributed to the kind of problems which noble Lords were discussing yesterday in the crime and disorder debate. When there is a shortage of social housing, only those who are most vulnerable and needy can gain access to it. Therefore estates get high concentrations of children, people who need support, former homeless families, and those who are unemployed.

A vicious circle is created whereby an estate has few economically active members. Shops and banks withdraw from the estate; other services, apart from the Church, are long gone; social problems increase; and the neighbourhood becomes labelled as a "sink" or "ghetto" estate. If there were a greater supply of affordable housing, a far wider range of people could have access to it, so making such estates more diverse and economically active.

Then there is the problem of housing association rents and the benefits trap, to which the noble Baroness referred. As noble Lords will be well aware, housing associations have been the preferred government vehicle for investment in social housing since the Housing Act 1988. This shift has been dramatic. In 1980 local authorities built 33,500 new homes. In 1996, that had fallen to just 472. In the same period the number of new houses built by housing associations rose from 13,000 to almost 22,000 per annum.

Those new homes, built by housing associations, are subsidised by the Government paying a percentage of the development costs. The rest is borrowed from private lenders, but the average portion which the Government pay has fallen from 80 per cent. in 1990 to 54 per cent. now. Before 1988, that government proportion was determined on a scheme-by-scheme basis, often rising to over 90 per cent. in high cost areas. The shift in the government proportion means that housing associations now have to borrow far more of

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the money privately, which is of course much more expensive. As a consequence, rents have more than doubled over the past nine years, and are likely to increase further.

The rents of some housing association homes mean that tenants are caught in a poverty trap. The noble Baroness mentioned that poverty trap, and I shall give an example. A family with two children, paying £64 a week rent, which is about the average in England for a new housing association letting, would find that its net disposable income begins to increase perceptively only when its gross income rises above £280 a week. From the higher income, the family would have to pay for travel, clothes and other work-related costs, plus school meals, prescriptions, and other benefits previously met for it as an income support recipient.

Unless a household has housing which is affordable to those on average incomes, it is unlikely to be able to afford to take up work, thus threatening the Government's welfare-to-work initiative. So much for social housing--fewer and fewer local authority dwellings, problematic rents for new housing association lettings. But what of the private rented sector?

Over the past decade the private sector, after many years of decline, has seen a marginal increase in its market share of rented properties. As the noble Baroness said, it now stands at approximately one-tenth. I believe that there are two reasons for that increase which are worth highlighting. First, the slump in the housing market from the late 1980s meant that people who were unable to sell their homes sometimes chose to let them instead. Now that the housing market is beginning to pick up and people are beginning to float out of negative equity, owners are starting to withdraw their houses from the rented sector. That might lead to a further contraction in the private rented sector.

Secondly, the deregulation of the private rented sector in 1988 gave landlords a greater ability to evict tenants and charge higher market rents. This brought more private rented accommodation into the sector, but it also had massive consequences for public expenditure. When asked how people on low incomes would afford the new high rents, Sir George Young, the then Housing Minister, said:

    "Housing benefits would take the strain".

Some strain! The level of housing benefit rose from £3.8 billion in 1988 to £11.5 billion last year, and is projected to rise further. In effect, there has been a massive transfer away from a bricks and mortar subsidy towards a personal housing subsidy.

The worry is that this huge amount of public money has not significantly increased the amount of affordable housing available. Nor has it increased the quality of the housing stock. Once again, the high rents of the private rented sector mean that people living there are caught in the benefit trap. Surely, better ways are needed to be found to ensure that public money spent in the private sector is recycled as an investment in quality and supply, otherwise we continue to try to run up a rapidly descending escalator.

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The private rented sector traditionally has had a bad image. Sometimes standards of safety and management have left much to be desired, yet the shortage of social housing has meant that homeless people have been forced to live in sometimes totally inappropriate and insecure private rented housing. But I believe that the private sector in Britain, as on the continent, has a vital role to fulfil, particularly for people who need the mobility and flexibility that it can offer.

There is a need for an increase in good quality private rented accommodation which will be available particularly for young people working in our cities. Some of the repossession problems of the 1980s were a consequence of such young people, for whom home ownership was not a very appropriate solution, being forced into buying by a chronic shortage of any alternative.

We need more balance in our housing provision in this country. Of course, many people will want to own their own homes for at least a part of their lives. But a flexible economy is dependent upon mobility and at different stages in our lives rented accommodation might well be a far more attractive option. But here we return to the basic dilemma. Rented housing needs to be affordable to allow people flexibility in their working lives. It has to be in sufficient supply to ensure that families are spared the trauma of homelessness. Furthermore, there must be a variety of provision so that we can move away from any sense of "ghettoism" of social housing. How we as a society tackle this critical issue, which affects the lives and future of so many of our citizens, will be an important determinant of the health and social cohesion of the nation in the next millennium.

3.54 p.m.

Baroness Dean of Thornton-le-Fylde: My Lords, I, too, thank my noble friend Lord Dean for tabling the Motion. When I looked at the list of speakers I decided that, although it was not long, it contained a wealth of experience and commitment as regards housing. The noble Baroness, Lady Maddock, and our Minister, my noble friend Lady Farrington worked in local authorities and have a great deal of experience of housing. I put my name down with a little diffidence.

I declare an interest in that five weeks ago I was appointed chairman of the Housing Corporation. I believe that I should share with your Lordships some of my experiences and the views that I have reached during that short time. I am still not used to the term "social housing". I suggest that it carries a kind of stigma, but I do not believe that anyone can come forward with a better term. The Housing Corporation was established in 1964 to provide such social housing throughout England and I am now its chairman.

In preparation for the debate and for my work as chairman, I visited the Library, which is the font of a great deal of knowledge, and asked for copies of Oral and Written Questions and debates on housing during the past two years. I expected to come away with a pile of papers, but they did not measure half an inch.

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Housing is at the centre of so much that we want for our communities. It is at the centre of delivering better education for our children and of the health of our nation. It is no coincidence that our previous debate on housing was initiated by my noble friend Lord Dean. It is to his credit that we are having the debate today.

I welcomed in particular the Prime Minister's announcement last week of a social exclusion unit. He recognised the importance of housing, saying that among the unit's first priorities would be the development of policies to improve the worst council estates and to help people who are sleeping rough. Many thousands of our citizens face sleeping rough, particularly in our inner cities. I saw that launch as a clear recognition that good housing plays a key part in creating the right conditions for successful, thriving communities. Members of the Housing Corporation welcome that and wish to play a key part in a constructive manner to help those policies along. Housing is important, too, as regards welfare-to-work. We wish to be involved in that debate and have taken some initiatives to endeavour to do so. I will leave other speakers to deal with the private sector.

In pressing the case for more rented housing, I accept that the Government have many competing policy priorities. It is not a situation of their making, but was inherited by them. It certainly is a great challenge. Previous speakers highlighted the report, which was presented to the previous government and accepted by them, which stated that during the next 25 years there would be a need for 4.4 million homes. In other words, there would be a need for 180,000 new homes each year. If we assume that one-third, 60,000, are for people who cannot afford the marketable price to buy their own home, it points to a housing programme in that social sector of some 60,000.

The current situation faced by the Housing Corporation is that whereas in the financial year 1992-93 its budget was £2.3 billion, this year it is only £700 million. The £2.3 billion helped to fund the building of more than 62,000 social homes to let. Yet we have seen new lettings decline to around 40,000 per annum. I suggest that the balance needs to be addressed urgently. The Government inherited the situation and it cannot be changed overnight. However, additional resources are required and I am sure that the Minister will accept that.

My second point is that, in providing more homes for rent, we must recognise that it is not just a case of putting roofs over people's heads. We have seen that in some of the inner city deprivation which we are facing and paying the price for today. It is about building communities for people which have cohesion for the overall lives of the people living within them. That cannot be achieved by any single agency. I suggest that it cannot be achieved by the Housing Corporation on its own or by local authorities or any other agencies on their own; it must be a partnership in its broadest sense.

It is that partnership within the community that we wish to be part of, and are part of in a number of good practice areas throughout the country today; for example, local councils, the Employment Service, City

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Challenge, where there is one, the development agencies, together with local business and alongside housing associations and the corporation itself. There are good examples of that; for example, the foyer schemes which have been talked about. A few days after the General Election, the Chancellor of the Exchequer paid a visit to such a scheme in a London inner city area. He was so impressed with the foyer that he saw that he said, "We must have one of these in every city in the country". We are a long way from that.

Perhaps I may give as an example the co-op foyer in Wigan, an area of high youth unemployment. There are 42 bed units for young people with 12 information technology training places. Young people are being trained and given confidence, probably for the first time in their lives. They are better able to enter the job market. Social services work alongside with a day drop-in centre which provides any help that may be needed.

The co-op within that development has an arrangement with the local training and enterprise council that once it has placed 25 young people into full-time employment, training or education, it receives funding for that. Therefore, it is proving what can be achieved. It is being paid for that and then recycling that money to use for the next lot of young people. It is a first-rate, value-for-money scheme for the wider community. Certainly within the local community we must ensure that young people have dignity and the opportunity of employment because that brings along with it a much better community in which to live.

I use that example because of the concerns of this Government in relation to youth unemployment. In the short time that I have been associated with the corporation, I have been struck by the diversity of the sector and diversity of the need among members of our community. In London, in Hackney, on what is known as the Holly Street Estate, £20 million was spent on a scheme where the people were moved out of run-down, crime-ridden tower blocks into family housing. A neighbourhood watch scheme was established and residents co-operated with five housing associations to develop and regenerate that area as a community and not simply as housing units.

What was the result? The result was that calls to the police fell by two-thirds. The experience of burglaries, fear of crime and fire and fear that came from just living in the neighbourhood fell dramatically. That is added value and has meant that there is a community which is living in an inner city again and not walking day by day in fear of their lives. Therefore, that is a better quality of life for our citizens.

My noble friend referred to the deck flats in Hume. I was there two weeks ago. As a Mancunian and using lay vernacular, it could almost have been described as a no-go area originally. What is happening now? The deck flats have been pulled down, and, indeed, I saw the area where the last flats had been pulled down. The area is now being visited by town councillors from Europe who wish to see what has taken place. Families are living there. The first set of houses which were built for sale in the area are now being resold. People are prepared to

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buy there; to establish their families in the area; and to work within the community. It is the envy of the area. But it does not come cheap. You cannot just look at it in terms of the cost of putting a roof over someone's head. It must be looked at in terms of the cost of improving the whole community and the whole environment for the citizens who live within it.

It is also about repairing breakdown in our communities and people feeling safe, as I said. In some areas, because of the diversity, the answer is not necessarily just to build new units. It is about regeneration and getting hold of old stock and rebuilding the communities.

I believe--if I may be audacious enough to say so as a chairman of only five weeks--that there must be a local solution to a local problem. It is no good giving instructions from on high. Local authorities should decide their own priorities and strategies. The approach should be one of total tenure within the community. In that regard, the regional development agencies, as proposed by the Government, are a key factor. We should like to work with them within the regions.

Our investment in housing must fit in with those strategies. Through the Housing Corporation, since 1988 £11 billion has been raised from the private sector. As was said, it is true that some 20 per cent. of private sector money went into building houses. Today it is about 46 per cent. but that is variable throughout the country.

I cannot finish my contribution without referring to the tenant. We talk about investment of the taxpayer and the private sector. I suggest that the biggest investment is from the tenants and their families. It is about their lives and the quality of them. I welcome this debate and I shall use every opportunity that I can to promote the case for social housing and to raise the profile of that sector which is profoundly important for our people.

4.6 p.m.

Lord Dixon: My Lords, I too thank the noble Lord, Lord Dean of Beswick, for choosing this important subject for debate today. I have no doubt that my noble friend is one of the most experienced and knowledgeable persons on the subject of housing in the Palace of Westminster, and that includes the other place. My association with him goes back many years when he was chairman of the AMC--the Association of Municipal Corporations--housing committee. At that time Manchester had one of the best council housing schemes in the country and without any doubt at all one of the best direct labour organisations. Therefore, I thank him for giving us the opportunity to debate this important subject.

Since the previous administration were elected in 1979, capital resources have reduced year by year. When I was chairman of the South Tyneside housing committee in 1979 under the government of my noble friend Lord Callaghan of Cardiff, our HIP allocation was about £32 million at 1996 prices. Last year, it had reduced to one-seventh of that. We were building 800 council houses a year. Last year we built none.

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The present Government have, under the phased release of capital receipts, improved matters for this financial year and will undoubtedly increase investment opportunities in future years. Although there is a strong temptation to commence local authority new build, it is my view that we should exercise caution for reasons to which I shall come later in my remarks. We should use the additional resources to refurbish and upgrade existing stock.

For many years those authorities which had the most problematic estates were successful under the various bidding regimes of the last government--estate action, single regeneration and so on. The unfortunate part about it was that the resources earmarked for those programmes came out of the housing investment programme. Although local authorities which submitted winning bids have benefited from large-scale capital investment on problematic estates, that has been at the expense of a reduced level of investment in other local authority council stock. Many tenants of local authority housing felt somewhat resentful when they witnessed large-scale investment in what were seen as problem areas while their own homes and estates were bypassed.

I believe that local authorities should endeavour to provide some new build programmes where a demand is clearly identified as part of an employment-creating strategy. But the main emphasis of the next few years should be on utilising existing resources, upgrading existing houses and helping existing tenants.

The former government's policy was to remove from local authorities the role of providing new accommodation to persons on their housing waiting lists. The previous government enthusiastically gave that role to the housing associations. Public subsidies were made available through the Housing Corporation. The local authority's role became that of an enabler rather than a provider. Housing associations have utilised private funding to lower the public sector contribution on new developments. Many associations submitted bids to the Housing Corporation seeking a lower level of grant than was necessarily available. This shortfall was offset by a larger percentage of private finance or, alternatively, from housing associations' reserves. The Housing Corporation was understandably influenced by bids from associations that required only a low level of public subsidy and would probably give preference to such bids as opposed to a competing scheme from another association that required a higher level of subsidy. It is undoubtedly the case that a higher level of private finance results in higher rents for tenants. The right reverend Prelate the Bishop of Leicester mentioned that.

In the Tyne and Wear area the average rent on housing association estates is in the region of £65 to £70 a week. A recent study showed that everyone on an estate in that area was on benefit. We then see examples of the poverty trap syndrome. Before the general election when I was a Member of Parliament I dealt often with the problem of people who lived in housing association property and then found jobs only to discover that they could not take those jobs as they would be worse off financially through losing the high

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benefits they were receiving as a result of being housing association tenants. A family comprising two adults and two children paying such a rent would have to ensure that the household's breadwinner earned about £15,000 a year to be no worse off when working than when on benefit. As soon as such people find a job, they ask to be put in local authority housing as they cannot afford to pay the housing association rents.

In recent years one of the most worrying problems for local authorities has been the increase in anti-social behaviour on some estates. Areas which suffer from high levels of anti-social behaviour often suffer also from high levels of criminal behaviour. Many estates containing popular, traditional houses are becoming hard to let because of the fear factor. There is nothing worse than seeing an estate full of boarded up houses. That gives a terrible impression.

In my opening remarks I said that we should concentrate our efforts on utilising resources to upgrade existing houses. However, there is a problem. I speak from my experience of South Tyneside council. I refer to the way housing finance is managed. Although the Government have exercised some control over local authority capital programmes, in more recent years the former government introduced tight controls on revenue resources. The main revenue controls are exercised in respect of establishing an annual guideline increase for local authorities and the clawback arrangement in respect of housing benefit subsidy. Any increase above the guideline figure does not qualify for housing benefit subsidy.

Despite South Tyneside having the third lowest rents of all local authorities, the council is constrained by the annual guideline figure. As regards the clawback arrangement that exists in respect to the housing benefit subsidy for 1998-99, some £5.3 million will be taken from the council house revenue account to reduce the Government's housing benefit subsidies. That factor above all others prevents a local authority from reinvesting in its housing estate.

South Tyneside's notional housing revenue account--it is notional in that it is assessed by the Government--has an income of £37 million in rent. That is a higher figure than it actually receives but it is the notional figure assessed by the Government. The council has £19 million to spend on management and maintenance--again, a notional figure, as the council spends more than that--and £12 million to pay off loan charges and other such charges. According to the notional housing revenue account, there is a surplus of £5.3 million. That £5.3 million is taken from the housing benefit subsidies. Therefore council house tenants in the South Tyneside area who are not on benefit are subsidising those tenants who are on benefit. There is something wrong with the system of housing finance when that occurs. What is required in the short term is the abolition of the housing element of the housing subsidy; payment of a standard rate of rent rebate subsidy across the entire country; the preservation of the rent guideline, if desired, with any excess over the guideline being supported by a reduced percentage in the rent rebate system; and action taken to address the inequity of the benefit subsidy system.

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The continued erosion year by year of deemed rent surpluses in South Tyneside's notional housing revenue account is stifling investment, reducing the impact of the capital receipts initiative, and, most importantly of all, forcing more of the burden of financing benefit payments on to council tenants who are not on benefit themselves and often in low paid employment. What is required is a fundamental review of the financing of housing benefits. Council tenants should be allowed the same subsidy on housing benefit that applies to private sector tenants and housing association tenants; namely, 95 per cent. of the subsidy paid. If that were to happen, councils such as South Tyneside would be able to tackle their housing stock, encourage people to move into council houses, and upgrade the conditions of existing tenants by reinvesting some of that money in the council estates.

4.17 p.m.

Lord Marlesford: My Lords, I declare two interests which I think are relevant to the debate. First, I am the chairman of the Council for the Protection of Rural England. Secondly, I am the owner of an agricultural estate in Suffolk which has some rented housing.

We owe a deep debt to the noble Lord, Lord Dean of Beswick, for introducing a debate on this important subject. I am afraid that I did not agree with much of his analysis. I thought that at one point he was rather unfair to the Conservative Party. I hope that he will excuse me if I presume to put him right on that. He implied that in the early days after the war the Tories had not been real house builders. I hope I may remind him that in 1950 at the Tory Party conference Harold Macmillan pledged the Tory Party to build 300,000 houses a year. It was at once denounced by Mr. Aneurin Bevan as a cruel deception and a trick. However, the houses were built by Mr. Ernest Marples who was the engine behind Mr. Macmillan.

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