§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Humphrey Atkins.]
§ 11.6 p.m.
§ Mr. Bernard Conlan (Gateshead, East)
The subject which I wish to raise this evening is of great importance to my constituents and is of considerable concern to many other local authorities. It arises from the unfortunate and tragic disaster at Ronan Point some two years ago.
Following that disaster, it was found necessary to instruct all local authorities with buildings of similar construction within their areas to strengthen flats to avoid any further disasters. Nobody, of course, would quarrel with that decision, but it has led to many difficulties. The particular difficulty in relation to Felling and almost certainly every other authority concerned, is that of finance. The Felling local authority is probably affected more from this point of view than any other authority, and later in my remarks I will say a little more about that aspect.
It was a great pity that the Minister declined to accept the request I made some three months ago for him to meet a deputation from the Felling Urban District Council to discuss this serious problem. No doubt he has much other detailed work to attend to, but on reflection I think he will feel that it might have been better if he had met those representatives to hear at first hand their views about how the situation affects their housing revenue account and rating in the area. I hope that in future he 378 will agree to meet such deputations. It is only by a free interchange of view between Ministers and people within the authorities that the democratic processes in the relationship of national to local government will work.
I come to the crux of the matter. There is no question that the cost of strengthening multi-storey blocks of flats puts a great financial burden on local authorities. The authority in Felling probably is affected more than any other single local authority. This has been recognised by Ministerial decisions in the past.
I am pleased that the hon. Gentleman has decided to endorse the decisions arrived at before he came to office. However, those decisions were made largely as a result of the representations which many hon. Members made to the previous Minister. All along the line, the local authority associations have expressed dissatisfaction about the level of grant to be made to local authorities for the work and, in addition, many individual authorities have supported them. I know, too, that many hon. Members on both sides of the House have made similar approaches. There has been a unanimity of view on the level of grant to be made towards the cost of the strengthening work.
To state an historical fact, the hon. Gentleman's predecessor decided initially that a 45 per cent. grant should be made to local authorities towards the cost of this work. That was completely inadequate, and hon. Members said so at the time. As a result of representations made to the then Minister, he decided to increase the proportion to 50 per cent.; in other words, the Government of the day agreed to pay half the cost of the strengthening work. We still considered that to be completely inadequate.
However, following representations from members of the Felling council, the Minister was persuaded that there were special circumstances in Felling's case. It had been decided that it was necessary in the North East to achieve 25 units per annum. It was impossible to achieve that target unless industrialised building methods were adopted. As a result, the Ministry pressed the local authority to engage in industrialised building, and the authority embarked upon a large building programme of this kind. That is the 379 reason why it finds itself in so much trouble today.
In view of the special circumstances of the Felling council, a unique formula was adopted. It was decided that the 50 per cent. grant towards the cost of the strengthening work should be reduced by 1 per cent.: in other words, 49 per cent. was guaranteed to each of the authorities concerned, with the remaining 1 per cent. put into a reserve for distribution to those authorities with the greatest problems. My information is that one of the few authorities to qualify for this additional aid was Felling. Again, the special problems of Felling were recognised.
The Minister now informs the council that, from the reserve made up of the 1 per cent. that was withheld from authorities, Felling is to receive 75 per cent. of the total cost of its strengthening work, as opposed to 49 or 50 per cent. The council is extremely pleased that its special problems have been recognised and that the hon. Gentleman is prepared to pay this additional grant. But there still remain extremely serious financial problems.
The council is unable to withstand the burden of the strengthening costs without additional aid from the Ministry. I suggest that, in all fairness, it would be right and proper that the Ministry should agree to meet 100 per cent. the total cost of the strengthening work.
The Minister will probably reply: "We feel that this is a fair proportion of the cost as between the national Government and the local government". Indeed, I remind him, if he has not got it on his file, that his predecessor told me in correspondence that the original 45 per cent. was considered equitable as between the national Government, the local government, the contractor and the consultants.
I asked—I hope that the hon. Gentleman can answer this question tonight—"How does a contractor working on a fixed-price contract meet his fair proportion of the cost of the liability?" I have not yet received an answer to that question.
I have dealt with the cost of the strengthening work. I turn to another aspect of the problem. I should explain that in Felling there are two separate and distinct developments of the multi-storey 380 type. One is at Crowhall Lane, which, at the time of the Ronan Point disaster, was tenanted. The other, a larger development, is at Nursery Lane where there are four multi-storey blocks. Two of those four blocks were ready for occupation; the other two were near completion. Because of the Ronan Point disaster, the council decided not to put tenants into the completed flats because it wished to act responsibly. But, having taken this decision, the council finds that it is suffering financially, because the hon. Gentleman is allowing, for grant purposes, a rent loss only on the flats which had to be vacated so that the strengthening work could proceed, and he adamantly refuses to agree, for grant purposes, rent loss on the flats which were not occupied.
The rent loss on those unoccupied flats, which do not qualify for rent loss for grant purposes, related to the major part of the development at Nursery Lane. It may surprise the House to learn that the rent loss on this development alone amounts to £110,000. In terms of the budget and finance of his Ministry, the hon. Gentleman may not consider this a large amount. But I assure him that, for a small urban district council, this is a substantial and crippling amount which it cannot afford. Therefore, the council must receive additional aid.
The Felling Council has faced its responsibilities vis-à-vis the housing revenue account with great responsibility. Indeed, I was interested to see tonight's Evening Standard with a rather dramatic headline forecasting annual rent increases from now on for council property. Because of its financial circumstances Felling Council has had to apply annual rent increases over the last four years, and rent increases are therefore no new feature to the housing revenue account.
§ Mr. Conlan
It is 40,000, and to distribute this tremendous amount between this relatively small number of people will impose a heavy burden, indeed.
I conclude by urging the hon. Gentleman to give further thought and consideration to what is generally accepted to be a most genuine case. If the hon. Gentleman cannot concede that his Ministry will pay more than 75 per cent. towards the cost of the structural work, and 381 if he cannot make some contribution towards the substantial rent loss which has been experienced by this council, the population of this small urban district will have forced upon it an inequitable burden which will be out of all proportion to its size.
§ 11.21 p.m.
§ The Under-Secretary of State for the Environment (Mr. Paul Channon)
I think the House will agree that the hon. Member for Gateshead, East (Mr. Conlan) is right to put forward this very important point this evening. This matter is important to his constituency, and it has wider implications than just for Felling U.D.C. I am sure that no hon. Member, on either side, who has examined the effect of the accident at Ronan Point fails to realise the appallingly difficult and unforeseen management and financial problems that have arisen for both large and small local authorities. The consequences of the Ronan Point disaster have been very far-reaching indeed, and I do not minimise them, though I shall have to disagree with some of the things that the hon. Gentleman said.
I hope that the House will allow me to spend a moment or two in trying to get the record straight. This debate, dealing, as it does, with Felling, begins with the report of the Tribunal of Inquiry set up to investigate the collapse at Ronan Point. The Tribunal's most important finding was that the behaviour of Ronan Point following the explosion which removed a load-bearing flank wall was inherent in its design. It followed that other blocks in similar construction were at risk, and the Tribunal went on to recommend that such blocks should be examined and, if necessary, strengthened to prevent a further tragedy occurring. I am sure that the House will agree that that was a wise thing to do.
The previous Administration then issued guidance to local authorities in 1968, Circular 62, in the light of the Tribunals findings. Local authorities were advised to appraise all blocks over six storeys in height built of large precast concrete panels to form load-bearing walls or floors, or both, for progressive collapse, wind-loading, and fire. They were also advised to check the wind-loading on all tall buildings over 100 382 feet. It has been the responsibility of each local authority to decide what action to take in view of the guidance given in the circular, and having regard to the advice of its own professional officers or consultants.
I do not think that any hon. Member would question the need to appraise and, if necessary, strengthen blocks found to be at risk by this independent and highly qualified Tribunal. The question of people's safety is the prime consideration, but the hon. Gentleman rightly raises the question not of safety but of the financial responsibility for the loss that has to be borne. This is a matter of importance to the local authorities which have been confronted with unexpected bills for strengthening work.
Here again the Tribunal's report has some relevance. The previous Administration took the view that the report demonstrated a broad spread of responsibility involving both central and local government, the building industry and the professions. Because of that shared responsibility, eventually the previous Administration thought it right to offer to meet half the total admissible costs incurred by local authorities in the course of carrying out remedial work. I say "eventually" because, as the House will recall, their original offer was only 40 per cent. This was later increased under pressure from various quarters, including the present Government when they were the Opposition.
I refer to the Amendment to the Housing Bill, moved on 16th July, 1969 by the noble Lord, Lord Brooke in another place. In the event that Amendment was withdrawn, but its essence was later embodied in the decision to share costs admissible for grant equally between the central Government and local government. This matter was debated in the House on 18th June, 1969, when pressure from various quarters in the House, including my right hon. Friend the Secretary of State for the Environment and my right hon. Friend the Minister for Local Government and Development, led to a debate on this important issue. The hon. Member for West Ham, North (Mr. Arthur Lewis) ought to be congratulated on raising this matter on so many occasions.
I am tempted, in view of the hon. Member's remarks tonight, about my 383 refusing to receive his deputation, to say that I should be more impressed with his claim to have some effect on that decision if I could pay regard to his intervention in that debate, or his taking part in any Division. No doubt he will be able to explain to his constituents why he did not do so. The details of the last Government's decision were finally notified to local authorities in Circular 29/70 on 21st April, 1970.
I turn to the details of the grant circular. These are very important, because they set out the terms on which local authorities will get grant. There are several areas of controversy. There is the question of the level of the Government's contribution, to which the hon. Member referred. It has sometimes been argued that the Exchequer should meet 100 per cent. of the costs because the Government urged that local authorities should use system building. No one can dispute the fact that successive Governments have encouraged building by industrialised methods, but I do not think that it logically follows from that that the Government should meet the whole of the cost of any resultant defect. Local authorities are independent bodies who, in the last analysis, could have refused to use industrialised building methods, if they did not want them. I do not want to rest my case upon this because the question of philosophy is not important.
It is an exceedingly difficult question to decide what is the correct level of Government contribution in this case. I would point out, however, that the Government are not party to any of the building contracts in question and that there is no liability on them to meet the cost of defects which may arise. I believe that there is no case in logic for a 100 per cent. Government contribution, and if there be no case in logic, it becomes a matter of judgment rather than of arithmetic as to what the level of contribution should be.
My right hon. Friends, when in opposition, were in no doubt that the last Administration's original offer of 40 per cent. was too mean and, as I have already reminded the House, among others we lent our weight to pressure for an increase. But given the decision to fix a grant of 50 per cent., it was as well 384 that one-fiftieth was held back to enable Ministers to give help to small, hard-hit authorities. The grant is not 50 per cent. to all local authorities; it is 49 per cent., and 1 per cent. is held back to help the small, hard-hit authorities. This has enabled us to give Felling substantial additional assistance, as the hon. Member pointed out. In fact, it will receive grant at a rate of 75 per cent. This reflects the exceptional burden with which it is faced. I shall return to the particular circumstances of Felling in a moment.
§ Mr. Conlan
If the hon. Member's party mounted so much pressure when in opposition, why is he now adhering to the decision taken by his predecessor? Why does not he go much further than his predecessor did?
§ Mr. Channon
That is nice of the hon. Member, when he could not persuade his own Government to have a go. I shall deal with the point of Felling and the financial effects on that council.
Local authorities also pressed for rent losses to rank for grant. The circular admits for grant actual rent losses which are incurred when blocks have to be vacated to allow for remedial work. But local authorities also wanted grant for "notional losses". The view of the last Government was that it was important to distinguish between expenditure and what was no more than a short-fall in anticipated income. I recognise that such losses can confront a local authority with a substantial additional burden in the short term and, on taking office, my right hon. Friend looked carefully at all the representations which had been made, including those raised tonight.
I accept the great difficulties which Felling faces and I am certainly not indifferent. Felling has by far the greatest long-term annual burden of all the authorities affected by the collapse at Ronan Point. Felling has five blocks containing 469 dwellings, some of which I have seen. Felling was advised that all needed strengthening, and the total cost is estimated at £709,000. The annual loan charges on this sum, based on a 60-year borrowing, would be equivalent to a standard rate of about 8d. or 9d. in the £. Even after allowing for Exchequer grant at 49 per cent., the council would still have been left with a burden of more than a standard 4d. rate.
385 This was so much more than the burden faced by any other authority, and obviously so much more than a comparatively small urban district council could be expected to bear, that it was thought right to award it a special rate or grant of 75 per cent.—and that is the rate that it will get on all its admissible expenditure. I hope that it is not ungrateful for this, particularly as it is the only authority in the United Kingdom to have established a claim on the special fund. A 75 per cent. grant will bring its long-term burden down to only a fraction over a 2d. rate. It means that, on present estimates, the taxpayer will contribute to Felling about £532,000 out of an admissible expenditure of £709,000.
Felling is also one of the authorities affected in the short term by the decision not to accept notional losses of rent for grant. I understand that the council estimates that it has lost £60,000 in notional rent income. I accept that this will result in a heavy short-term burden. I appreciate and sympathise with the council but, as I have explained to the House, not only now but in July, there is no possibility of treating it differently from other authorities for these notional losses. There are many other authorities similarly affected.
I know that, in August, I declined to receive a deputation which the hon. Member wished to bring. This was not because I am unwilling to see councils and to discuss their problems; on the contrary, I am only too pleased to do so. I receive many deputations from councils and hope to go on doing so. It is simply that we were well aware of Felling's difficulties. There has been lengthy correspondence between by Department and Felling on the council's problems. A series of meetings had already taken place at Ministerial and official level. Two deputations were received from Felling in August 1969 and November 1969, and there were four meetings with the local authority associations at which officials of Felling U.D.C. were present in their capacity as representatives of the U.D.C.A.
Since we had decided that it would not be right to disturb the previous Government's settlement, there was no possibility of any further concessions, and I thought that another meeting would have 386 served no useful purpose but would simply have raised false hopes which it would have been wrong to do when there was no possibility of making an exception in this case. It was for that reason alone—because I thought that it was fairer to the hon. Member and his authority—that the deputation was not received.
On present estimates the total admissible costs of appraisal and strengthening by the local authorities concerned may be around £25 million. The Exchequer grant will therefore total about £12½ million. It would have been very pleasant to increase the amount of Exchequer assistance, but I am sorry to say that this is just not possible, in view of the financial and economic situation which we have to face at present.
Therefore, the terms of the settlement must be looked at as a package. Of course one could have taken a different view of some of the points. We could undo the package and rearrange the contents, but whatever was done, the net result could be no more than to benefit some authorities at the expense of others. Within the financial limits of the grant, one could not hope to satisfy every authority.
Is it right to tamper with a grant settlement which took the best part of two years to hammer out? I think not. The arrangements provide for an equal split of admissible costs between central and local government and for more help to be given to needier authorities. So far, the only one has been that discussed tonight, Felling U.D.C. That is not to deny that some other authorities may be faced with substantial costs in the short term, but I hope that the long-term effect will not be too serious.
I do not want to minimise the problems which Ronan Point has posed. They have been most unfortunate, an unfortunate setback in house building. The arguments concerning grant—
§ The Question having been proposed after Ten o'clock, and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at twenty-four minutes to Twelve o'clock.