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Lord Greaves: My Lords, I remind the House that I am a member of Pendle Borough Council, which is a housing authority. It still has its housing stock but is at the moment in the process of balloting its tenants on a large-scale housing transfer to a registered social landlord, which will be called Housing Pendle. I remind the House of that because I want to fill in the information that my noble friend Lady Scott gave about the way in which councils are being bullied and bribed into doing this from my local knowledge.

The history of housing in Pendle is that we had 5,500 council houses 35 years ago when I was chairman of the housing committee; we now have 3,500. Over many of those years there has been a history of considerable investment in the housing; the housing is still in good condition and there is high tenant satisfaction. But things are changing. In the discussions over whether to carry out this transfer I was not in favour but my counsels did not prevail. I understand why.

The so-called negative housing subsidy which has existed since 1990 has taken something like £14 million away from Pendle to central government. As to the
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right-to-buy proceeds that my noble friend mentioned, at the moment 25 per cent of proceeds are kept by the council and 75 per cent go to central government. The major repairs allowance decreed by central government each year is nowhere near adequate to maintain the houses now and to bring them to the decent homes standard. Indeed, it is considerably less than we would put into the houses if we still had control over rents and the finances. In the words of the council's director of services, the council is being cleaned out by the Government.

Then there is the other side, which is, frankly, blatant bribery. If the stock transfer goes ahead in Pendle there will be repayment of something called "notional housing debt". I do not explain any of these things; I just say what they are called and tell you what the outcomes are, because they are arcane, to put it mildly. The repayment of notional housing debt will leave Pendle council £500,000 per annum better off on its general revenue account—extraordinary. There is a promise of a dowry of up to £15 million over five years to the new housing association, which otherwise will not be available.

Right-to-buy proceeds will be kept in Pendle in total; part will go to the new housing association. An estimated £3 million will probably go the council, which is no longer the housing authority, over the next five years. Something called the VAT shelter, about which noble Lords may know more than me, means that if the amount spent on the stock in the next five years following transfer is, as expected, around £45 million, there could be a £7.5 million VAT windfall, which again will be shared equally between the housing association and the local authority. This is all quite extraordinary—Alice in Wonderland—but it appears to be a fact. Rent arrears, which at the moment total around £200,000, would be paid by Housing Pendle to the local authority, so the local authority general fund will get a £200,000 windfall from its existing housing arrears—again, quite extraordinary, but it is the fact.

In addition to that, Housing Pendle, the new housing association, will have unrestricted rights of borrowing and, because of local circumstances and the deal that is being done with another housing association in Blackburn, will be at less than public workers' loan board rates. Altogether, this adds up to a likely investment in council housing in Pendle of £45 million over the next five years. The estimate of what the council itself, within present rules, can possibly afford, or will be allowed to spend, is around £10 million. Ask the tenants whether they are going to vote for a transfer or not; they would, frankly be quite stupid not to do so. All these outcomes are not the results of any natural laws or anything like that; they are a direct result of central government policy, which, as my noble friend said, will actually cost the public purse generally more than it would otherwise, because the council itself is quite unable to make the investment it would like to in housing.

It also means that Pendle Borough Council is likely to get a windfall, towards its general revenue account and general expenditure, of something like £20 million
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over five years for transferring its housing to a housing association. This money will not go to housing; it will go to the general revenue account. This is a council whose annual revenue account is at around £13 million. It feels like Christmas in one sense, but it also makes me very sad that a council that has looked after its housing, and has the support of its tenants, is being put in this position.

In addition to this we have the penalty imposed on the council for not winning the ballot. If the ballot goes the right way, the costs of all the publicity and planning are paid by central government. If the tenants decide they do not want it after all and vote against a transfer, something like £100,000 will have to be found out of the general fund, from the council tax payers in Pendle, because the tenants voted the wrong way. The whole thing seems to me to be vote-rigging on an astonishing scale. There may be arguments for and arguments against, but it is not a level playing field and the whole system, in my view, is rigged. It is blatant bribery and the Government really should be ashamed of the way in which this is being done.

8.14 pm

Lord Oakeshott of Seagrove Bay: My Lords, I am going to start—basically because he has stolen quite a lot of my speech and I pay tribute to him for that—with the speech of the noble Lord, Lord Whitty. He gave us a frankly devastating account of why—if I may sum up his analysis—housing is the black hole at the heart of new Labour's social policy. That speech should get the widest possible circulation, and I will be commending it warmly to the Liberal Democrat press office in the morning. I say, "Come and join us". My noble friends Lady Scott and Lord Greaves made powerful speeches based on facts and their own deep knowledge of how councils actually work. This House is lucky to have their expertise, and the Minister should take their criticisms, and those of her noble friend Lord Whitty, very seriously indeed.

The Government have bought Kate Barker's fatally flawed analysis of housing affordability and what drives house prices, but they and she miss the key point. Between 150,000 and 200,000 new houses for sale have been completed every year since the 1950s. That total has been very stable over the past 20 years. The flow of new social housing bought for rent by the public sector is now down to a pathetic trickle. In 1996–97 when the Government came to power, registered social landlords and local authorities completed 32,489 permanent dwellings. Last year it was down by one-third to 22,823. It was running at around 150,000 each year as recently as the late 1970s, certainly well within my working memory when I was on Oxford City Council's housing committee and was standing for Parliament in the new town of Crawley. As the noble Lord, Lord Best, pointed out, total housing completions today are at the same level as in the 1920s, and barely half the level of the 1970s.

If we are serious about tackling homelessness and housing crises in the high stress areas of London and south-east England in particular, we must deliver far more affordable housing directly at the point of need.
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Of course increasing supply ultimately affects price, but so does reducing excess demand. There is not a shred of evidence that spraying estates of new executive boxes at £250,000 or £500,000 a time all over the green belts and flood plains of southern England will house key workers for our creaking public services or reduce the rate of house prices over the long haul. Barker's key mistake is to assume that only building new homes for sale reduces house price growth.

Building new social housing meets housing demand more directly. Much of the upward pressure on house prices comes from people being forced deep into debt to buy because they can find nothing to rent. No surprise there, of course, because new affordable housing has dried up and so much social housing has been sold off since 1979. My noble friend Lord Bradshaw made that point particularly strongly, with the expertise and commitment he always brings to this House.

Even with her unhealthy concentration on house building for sale, Barker still says that there is a shortfall of between 17,000 and 23,000 a year in new social housing completions. But the Government are building only 10,000 a year more and, in their Pre-Budget Report response in December, they made it clear that the homeless will have to wait until the 2007 Comprehensive Spending Review before there is any increase even in that miserable figure. Frankly, the Government's so-called market affordability goal for house prices is far too vague. It will not work and it does not deal with the real problems of affordable housing to rent, not just to buy, and homelessness.

I conclude by giving two figures of which the Government should be ashamed. Some 128,000 households were accepted as homeless and in priority need in 2004. That is an increase of a quarter over the Tories' last year in office. Households in temporary accommodation in England have doubled from 45,000 in 1997 to 101,000 today.

The Government have decided that it is not sufficient to have a roof over our head, but we must own it. Why is there choice, Tony Blair's holy grail, in every vital service except housing?

8.20 pm

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