§ Order for Second Reading read.
§ 4.4 pm
§ The Minister for Housing and Construction (Mr. Ian Gow)
I beg to move, That the Bill be now read a Second time.
§ Mr. Speaker
I should inform the House that I have selected the amendment in the name of the Leader of the Opposition.
§ Mr. Gow
On 10 November, I announced to the House that the Government had decided to introduce legislation to provide a scheme of assistance to owners of houses sold by the public sector and since found to be defective or potentially defective. I explained that we would consult the local authority associations about our proposals and that a Bill would be introduced as soon as possible thereafter.
The purpose of the Bill is to relieve the very serious distress and financial hardship of those who, often using all their savings, have bought their homes from public sector bodies in good faith and now find that those homes, through no fault of their own, have been very seriously devalued because of faults in design and construction which have since been discovered and confirmed by the Building Research Establishment.
Right hon. and hon. Members in all parts of the House have written to me about constituents who have bought prefabricated reinforced concrete houses which they find they cannot now sell, often because prospective purchasers have discovered that they cannot obtain mortgages on the security of those houses. As a result, the present owners cannot move, however pressing the reason for doing so.
One of my right hon. Friends has told me of a constituent who was made redundant and obtained new employment in another part of the country, but he cannot sell his house and has had to live away from his family for more than 12 months. Regrettably, that is not an exceptional case. Last month, the hon. Member for Derby, South (Mrs. Beckett) wrote to me about two of her constituents who had bought a Wates house that they could not sell. On 4 April, the right hon. Member for Mansfield (Mr. Concannon) stressed the urgency of the Bill.
The Bill will provide assistance to the owners of PRC houses that were built by public bodies following the two world wars. At that time, there was a shortage of labour and of conventional building materials. To produce urgently needed houses, new methods and materials were used, employing the resources of industries which had been expanded during the wars. In the years following each war some 550,000 houses in Great Britain were built to a variety of different designs. Some 170,000 used PRC load-bearing components. Those houses made a major contribution to the housing needs of the time.
Following a serious fire in an Airey-type house in Barnsley, the BRE was asked to investigate, and in May 1981 it reported that the reinforced concrete components in all Airey houses were liable to cracking and eventual disintegration because of carbonation and, in some cases, the presence of excessive levels of chloride.
895 The Department of the Environment informed all local authorities of the findings. It became clear that, because of the expense of repair and the difficulty of selling the houses, the owners who had bought before knowledge of the defects had become generally known were in need of financial assistance. In September 1982 my predecessor announced a discretionary scheme of assistance for private owners of Airey houses. That scheme was widely welcomed at the time. Most local authorities are operating the scheme, but they are not obliged to do so. Some authorities offer a choice under the scheme between repair and repurchase, but others offer only one of these alternatives; and a few have been unwilling to offer any assistance at all.
By February last year, there were reports that the problems of carbonation and chloride attack were not confined to Airey houses, and my hon. friend the Member for Tonbridge and Malling (Mr. Stanley) asked the BRE to study six other types of PRC house. The findings were published on 10 November. They showed that the PRC components were gradually deteriorating and that in some cases they were seriously cracked. The BRE's information paper stated:The great majority of the houses studied were found to be in structurally sound condition but there was a wide range in the rate of deterioration both between and within types. Some cracking was found in all types and the nature of the process is such that deterioration will continue, albeit very slowly in some cases, and all houses will eventually be affected by cracking. Cracking in a proportion of houses of all types will not occur for some years, and a few houses may not display any evidence of deterioration for, say, the next 30 years or more.
Building societies were already extremely cautious about lending on the security of PRC houses and, not surprisingly, the BRE's findings have confirmed that caution. I regret that some lending institutions seem to have extended their caution to house types which, though of non-traditional construction, are quite different in design from the PRC types studied by the BRE. It is unjustified to assume that, because there are defects in PRC houses, there will be defects in, for example, houses made of unreinforced concrete or of concrete blocks. In particular, we are concerned that the Cruden, Livett-Cartwright and Bell-Livett types are being put in the same category as PRC houses. Though in appearance they may have some superficial similarity to houses of PRC types, these types have steel frames, not PRC load-bearing components.
The Airey scheme, introduced by my hon. Friend the Member for Tonbridge and Malling, was a temporary measure. Repair grants are made under part VII of the Housing Act 1974. To permit repurchase, the Government gave borrowing approval for the acquisition of Airey houses and they fund 100 per cent. of the difference between the defective value—the current market value — and the price paid under the terms of the Department's circular.
The scheme was designed to give immediate help to the 2,000 or so people who had bought their Airey houses. But now a more comprehensive statutory scheme is needed to assist the owners of PRC houses which originated in the public sector, and which are known to be defective.
The Bill provides just such a general legislative framework under which assistance can be given to owners of dwellings sold by the public sector which are, as a class, 896 defective by reason of their design and construction and which, because the defects have become generally known, have been substantially reduced in value.
In my statement to the House on 10 November, I said that we had in mind that assistance should be given to qualifying owners of all types of PRC house built before 1960, but that, pending the findings of the BRE on six further types, we had made no final decision on the coverage of the scheme.
I have now received the BRE's further preliminary findings. Detailed reports on each of the types will be published as soon as possible, and, as with the earlier reports, we shall be sending copies to the local authorities with a request that they be passed on to owners of the types of house concerned.
These further studies confirm the BRE's earlier findings. We have therefore decided that my right hon. Friend in England, and my right hon. Friends the Secretaries of State for Scotland and for Wales, will designate under clause 1 of the Bill all the types of house which were named in the tables which were placed in the Library at the time of my statement. A list of the types which we intend to designate is available in the Vote Office, but it may assist the House if I read out the list now. There are 28 types. They are Airey, Boot, Butterley, Cornish Unit, Dorran, Dyke CC, Gregory, Hamish Cross, Lindsay, Myton, Newland, Orlit, Parkinson Frame, Reema Hollow Panel, Schindler, Stent, Stonecrete, Stour, Tarran, Teebeam, Underdown, Unitroy, Unity, Waller, Wates, Whitson-Fairhurst, Winget, and Woolaway.
§ Mr. Michael Meadowcroft (Leeds, West)
I am puzzled by the omission from that list of Caspon houses, about which I have been in correspondence with the Minister. In the city of Leeds, the ombudsman has had to inquire about those houses. Those who have bought them from the local authority are in exactly the same situation as those who have bought PRC houses, and they expected their houses to appear in the same list. Can the Minister explain why they do not?
§ Mr. Gow
I shall refer shortly to the power of my right hon. Friend to extend the designation beyond the types that I have listed.
My right hon. Friend will be prepared to consider designating at the same time other types of house which conform to the same principles of construction and which, on the basis of the BRE's findings, are likely to suffer from the same defects—that is, types which use load-bearing PRC components and which were designed before 1960. The significance of the words "designed before 1960" is that houses built after 1960, but designed before that date, will be included in the designations; this is of special significance in the case of Cornish Unit types I and II and the Reema Hollow Panel type, which continued to be built after 1960. I hope that a scheme of assistance for houses of these types will be brought into operation later in the year.
§ Mr. Richard Ottaway (Nottingham, North)
The tenor of the Bill seems to be towards PRC-constructed houses. In a number of houses bought from the local authority in my constituency the central heating system incorporates the use of asbestos. The houses have therefore been devalued, although the problem has no connection with PRC. Can my hon. Friend assure me that that problem will also be covered by the umbrella of the Bill?
§ Mr. Gow
No, I cannot give my hon. Friend that assurance, although I shall have something to say about that point later in my speech.
I turn now to the detailed provisions of the Bill.
Clause 1 gives the Secretary of State power to designate classes of building which appear to be defective by reason of their design or construction, and which have been substantially reduced in value by virtue of the defects having become generally known after the house was bought. When making a designation, my right hon. Friend will have to specify the defect which gives rise to it and the date by which, in his opinion, the defect became generally known. That date will be the cut-off date for eligibility for assistance; clause 2 provides that those who acquired a relevant interest in a defective dwelling for value after that date will not be eligible for assistance. Under clause 1 my right hon. Friend must also specify the period of time during which assistance may be sought in respect of defective dwellings.
Clause 2 sets out the conditions of eligibility for assistance. They are that the person concerned owns either a freehold or a long leasehold interest in the dwelling, unless that freehold or long lease is itself subject to a long lease, and that the defective dwelling was disposed of by a public sector authority before the cut-off date. Public sector authority is defined in clause 19 and schedule 3. Disposals by a public sector authority will include disposals by Government Departments. Assistance is to be available only to individuals and not to corporate bodies. Clause 2 provides that those who bought a defective dwelling after the cut-off date will not be eligible for assistance. Knowledge of the defects can take a long time to become known to everyone. The clause provides that assistance shall be available if the local housing authority is satisfied that an applicant who bought a defective dwelling within 12 months after the cut-off date was, at the time of purchase, unaware of the defect and paid a price for it which did not take adequate account of the defect.
Clause 3 defines the two types of assistance available to eligible owners. The main form of assistance is to be a grant towards reinstatement of the defective dwelling, but there will be cases when a reinstatement grant is not the right form of help. That will be so when repairs cannot make the building acceptable as security for a private sector mortgage. The clause provides that, before making a reinstatement grant, local authorities should be satisfied that the repaired house will provide satisfactory accommodation for a further 30 years and that it will be mortgageable.
To protect the ratepayer and the taxpayer, the authority will also need to satisfy itself that a grant is economic in terms of the value of the repaired house and as compared with the cost of the alternative of repurchase. There will also be cases when owners should not be expected to cope with the delays of getting the house repaired or should not be expected to do all the things which fall to the owner who has to carry out the repairs. If the authority is satisfied that it is unreasonable to expect an owner to secure or await the carrying out of the reinstatement work, it must, if the owner wishes, offer to repurchase.
We have concluded that the complexities of covenants and repairing obligations make repurchase the only practicable form of assistance for owners of flats.
898 I have dealt at some length with the first three clauses of the Bill because they provide the fundamental framework upon which the scheme of assistance is based.
§ Mr. Patrick Nicholls (Teignbridge)
When repurchase has to take place, what will be the circumstances of tenants who illustrated their desire to become house owners? When they go back into council accommodation, will they preserve their right to a discount? If so, what will happen in the intervening period when they were house owners?
§ Mr. Gow
When a tenant's house is repurchased by the local authority, he will preserve his right to buy, but the cost floor provisions will operate in respect of the price at which the local authority bought from the owner— in other words, 95 per cent. of the defect-free value. Furthermore, under the Housing and Building Control Bill, which is about to be considered again in another place, we have provided that, when a former owner has had the benefit of discount, that discount will be taken into account in the event of a further purchase.
Clause 4 requires the local authority to deal as quickly as possible with applications for assistance and to give reasons for its decisions where necessary.
Clause 5 and schedule 1 deal with the basis of, and arrangements for, reinstatement grants. Reinstatement grant will be at a rate of 90 per cent. of the cost of the work needed to remedy the defect, subject to an eligible expense limit set by the Secretary of State. If the local authority is satisfied that there would be financial hardship if the owner had to find his contribution of 10 per cent. of the cost of reinstatement, it may give a grant of 100 per cent. The eligible expense limits will be set at a realistic level for each type of dwelling.
Clause 6 and schedule 2 deal with the procedures for repurchase. The owner is to be offered 95 per cent. of the defect-free value of the dwelling, taking account of any improvements made to it since it was sold by the public sector.
§ Mr. Tony Durant (Reading, West)
Will the circumstances that my hon. Friend outlined at the beginning of his speech about compassionate grounds if someone has a problem with moving still hold when the Bill becomes an Act? Will such a person be able to go to his local authority and say that he has compassionate reasons for moving away and ask the local authority to repurchase the property?
§ Mr. Gow
My hon. Friend is entirely right. The position is as he states it.
Clause 8 requires an authority, if repurchase is the appropriate form of assistance, to grant the owner and/or his tenants a secure tenancy in the repurchased dwelling or in other suitable accommodation. The owner might need this help when the proceeds of sale are insufficient to enable him to purchase in the private sector.
Clause 9 provides that owners who have their homes repurchased shall also receive their reasonable legal expenses, and it requires the local authority to bear its own costs of giving assistance to owners.
Clause 10 gives local authorities discretion to designate classes of buildings which have not been designated by the Secretary of State. Not all problems of defective dwellings are national. Certain house types were put up with considerable local variations, and there are cases of the local variation proving defective. There is no reason why 899 help should have to be given on a national scale to deal with a purely local problem. The Bill gives the flexibility to enable local authorities to deal with such problems locally. Once a local authority has designated a class of buildings, owners of dwellings in those buildings will be eligible for assistance on the same terms as when the Secretary of State makes a designation.
Clause 11 requires local authorities to take steps to inform existing owners of their rights to assistance under the Bill and to ensure that, when the designation has been made, prospective purchasers of defective dwellings under the designation are fully informed of the defects and of the fact that, if they purchase their home, they will not be eligible for assistance under the Bill.
Clause 14 enables the Secretary of State to contribute to the expenditure incurred by local authorities under the Bill. Contributions towards the local authority's expenditure on reinstatement grants will be at a rate of 90 per cent.—the same rate of contribution as that in force for repairs grants generally in England and Wales. When we consulted the local authority associations about our proposals last November, we said that we contemplated no contribution towards the local authority's expenditure in repurchasing dwellings. In the light of representations made to us, however, we have decided that there should be a specific Exchequer contribution. That contribution will be 75 per cent. of the difference between the price paid to the owner of the defective house and its defective value.
There will be occasions when it is appropriate that the public sector body that originally sold the defective dwelling should have the opportunity to reacquire it—a right of first refusal, as it were. This will only be necessary when the public sector body continues to be a provider of housing for rent. Clause 18 covers such a situation.
My hon. Friend the Parliamentary Under-Secretary of State for Scotland, in replying to the debate, will deal with any questions that relate specifically to Scotland, but I should make it clear that policy in relation to housing defects is the same in England, Scotland and Wales.
There is a need for procedural adaptation of the Bill's provisions to take account of some differences in Scottish law and procedures. Clause 7 adapts the repurchase provisions of clause 6 for Scotland and clause 13 confers similar jurisdiction on the sheriff in Scotland to that conferred in clause 12 on the county court in England and Wales. In addition, clause 15 amends part I of the Tenants' Rights, Etc. (Scotland) Act 1980 as it applies to those who have been granted a secure tenancy following the repurchase of their defective homes to ensure that they may exercise the right to buy under part I of the 1980 Act immediately, without having to requalify. Other necessary Scottish modifications are contained in the Bill.
My right hon. Friend the Secretary of State for Northern Ireland intends to introduce similar legislation so that owners of defective dwellings in the Province will receive similar assistance.
Clause 20 deals with a matter separate from assistance to owners of defective houses. It is concerned with the prevention of defects rather than with their cure. The Building Societies Association at present recommends building societies to lend on new houses only when the buildings are registered with the National House Building Council. This recommendation is a registered agreement 900 under the Restrictive Trade Practices Act 1976. As such, it could be referred to the Restrictive Practices Court by the Director-General of Fair Trading. The recommendation, first made in 1966 with the full approval of the Labour Government, has worked well.
The Government believe that the public interest can best be served by ensuring that new houses are built according to high standards and sold with a warranty such as that offered by the NHBC. That can be done by ensuring that the present or any future BSA recommendation is not open to possible legal challenge. The new clause will remove the BSA's recommendation from the scope of the Restrictive Trade Practices Act 1976 and from the register of restrictive practices that is kept by the director-general.
At present, the NHBC is the only body that performs such a function, but the clause is designed to ensure that any other body with similar aims and constitution could also be recommended by building societies. I assure the House that an application from a body offering an adequate alternative to the NHBC scheme will be considered sympathetically by my right hon. Friend.
I should like to explain what the Bill does not do. It does not apply to owners of houses and flats that have never been in the public sector. I fully understand the difficulties facing such house owners, but the Government owe a particular duty to those who in good faith have bought houses that originated in the public sector. I do not think that we can or should provide a guarantee for houses that have been developed in the private sector. We have sought to draw the line between the public and private sectors so as to include all owners who should reasonably receive the assistance that the Bill is designed to give.
Coming to the amendment in the name of the Leader of the Opposition, the problem of individuals who have bought defective houses with limited resources is very different from that of local authorities. Legislation is not needed to enable local authorities to repair defective houses remaining in their ownership.
§ Mr. Gow
I shall deal with finance later.
Local authorities already have the necessary power to repair such houses.
During the debate on system-built houses on 12 March, which was initiated by the hon. Member for Pontefract and Castleford (Mr. Lofthouse), in which the hon. Member for Norwood (Mr. Fraser) took part, I said that I would welcome a discussion with the AMA about the problem. A meeting will take place on 14 May. Discussions between the Department and the association about the inclusion of a suitable indicator in the general needs index for housing investment programme allocations are continuing. That matter was raised by the hon. Member for Newham, South (Mr. Spearing) in the debate last month.
It is not necessary to provide a specific grant to assist local authorities in funding expenditure on their defective houses. The new system of general housing subsidies that we introduced in the Housing Act 1980 gives help to those authorities that do not have the resources locally to fund expenditure themselves. That is the right way to proceed.
In this financial year, English local authorities will have more than £2.5 billion available for housing capital expenditure. In fixing that total we took account of the 901 needs of local authorities for spending on their own PRC houses this year. It is absurd to suggest that no provision has been made for such expenditure.
§ Mr. Ron Davies (Caerphilly)
The Minister is, of course, referring to English local authorities. I wonder whether he would reflect on the provision of Welsh local authorities. I refer especially to Rhymney Valley district council, which has an HIP allocation this year of more than £6 million, but a £15 million shortfall at present in its housing improvement grant programme. More than 100 houses have been sold to the private sector, which will present the authority with a bill of more than £1 million. Therefore, 15 per cent. of the council's total HIP allocation would be set aside for the purposes of payment for improvement grants or for repurchase. How can a local authority, with the problems of Welsh valley authorities, manage when 15 per cent. of its HIP allocation is set aside for the purposes of the Bill?
§ Mr. Gow
I understand the hon. Gentleman's concern. That matter falls within the responsibility of my right hon. Friend the Secretary of State for Wales. I shall draw to his attention the point raised by the hon. Gentleman, and I or my right hon. Friend will write to him.
In many cases local authorities are not presented with an immediate problem. There is often no urgent need for repair of PRC houses. In many cases the defects are potential and do not impair the suitability of such dwellings as homes. Local authorities would be wise not to spend money on houses that remain in their stock until that is necessary.
The private owner has a different problem. His house is likely to show serious structural damage within 30 years, so it is not marketable at anything approaching the value on which his purchase was based.
§ Mr. Derek Fatchett (Leeds, Central)
The Minister is tackling the problem simply by looking at it through the eyes of those in the market place. He is not concerned about the comfort of people who live in defective houses. He is dealing with owner-occupiers alone because he is worried about the value of their properties. He is not worried about the value of the accommodation and the living standards of tenants because they do not need to sell the properties in which they live. Is that not a differentiation according to status that takes no account of the fact that tenants, as well as owner-occupiers, will suffer as a result of defective housing? It is yet another example of the Government discriminating between owner-occupiers and tenants, never taking account of the conditions in which people must live.
§ Mr. Gow
The Government are worried about those who in good faith bought houses from the public sector without knowledge of defects because those defects were not discoverable through an ordinary survey. If such a person wishes to move house because he has a new job, he may find that he cannot sell his house. That is a real problem, and the Government are addressing it. When my hon. Friend the Member for Tonbridge and Mailing introduced his scheme to help owners of Airey houses, his proposal was warmly welcomed by the Opposition.
The so-called reasoned amendment is without reason. I hope that the House will reject it and give the Bill a Second Reading tonight.
§ Mr. John Fraser (Norwood)
I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:this House, whilst welcoming the principle of assistance for private owners of defective homes, declines to give a Second Reading to a Bill which provides no help for over one million families who remain tenants of publicly owned non-traditional and industrialised defective homes, which will place further burdens on ratepayers and local authorities, and which fails to place a duty on Her Majesty's Government to help all occupants of defective non-traditional and industrialised homes irrespective of tenure.As we say in our amendment, the Opposition welcome the principle of generosity and care towards those who have purchased defective or unsaleable dwellings from local or public authorities. I have much sympathy with the distress and agony that will face someone who has put his life savings and sometimes many years of repayments into the purchase of a house that he thought was good, and which probably carried the Government's imprimatur of approval from the National Building Agency.
There are several hundred Wates industrialised houses in my constituency. I am visited by constituents who are deeply concerned about the difficulty of disposing of their house. That is not usually because of defects in the houses but because of the reluctance of building societies to give mortgages for them.
Whenever that phenomenon occurs and people face that distress and anxiety we have considerable sympathy with them. We of course welcomed the initial proposals in relation to Airey houses, which provided for 100 per cent. of the cost of purchase by the local authority. We have no objection in principle—indeed we wholly welcome it—to the proposal in the Bill to give assistance through repurchase or reinstatement to people in this unfortunate position. There is no quarrel between the Opposition and the Government on that principle. What we deplore is the extraordinary partiality and prejudice of the Bill and the burdens that will be placed on local authorities facing their most testing financial year shortly after the Bill receives Royal Assent.
Let us be absolutely clear about what the Bill does and does not do. First, it gives 16,500 private owners who bought defective homes from public authorities two new and quite unprecedented rights. First, to the right to buy is added the right to sell back to the local authority if the house is found to be defective. That is despite the Conservative canons of caveat emptor and people standing on their own feet, and we welcome the conversion. Secondly, these people will have a novel right to rent. We only wish that many other people in this country could have the right to rent when they find themselves in housing distress.
The third right is not new. It is the right to buy a second time. The Minister should understand the pressures that will be put on local authorities by people selling back their houses. The Minister says that the Bill is needed and priority must be given to private owners because buyers cannot obtain mortgages and so owners are unable to sell if they wish to move to another part of the country. I warn the Minister that in far more cases than he imagines people will go for repurchase rather than the reinstatement grant. Having sold the house back to the local authority and achieved their second secure tenancy, they wil.1 be agitating to buy another house so as to sell it and move to another part of the country. There will be great pressure 903 to exercise that right and to get out of the local authority area because that is why the people will have been driven to distress in the first place. The Minister must appreciate both the housing and the financial pressures that this will place on local authorities. People will not be content to continue renting with a secure tenancy when they have sold back their houses.
We do not criticise the principle of generosity to those who have been unfortunate in this respect—indeed there are some in my constituency — but we deplore the Government's failure to offer any help to the million or so local authority tenants who never chose to exercise the right to buy and the fact that a substantial part of the cost of the Bill will nevertheless fall on local authority tenants. Moreover, the bill that local councils will have to pick up is likely to be much higher than is set out in the explanatory and financial memorandum.
I cite an example of the prices involved in my constituency. Let us assume that in 1980 a council tenant, seduced by Government propaganda about the right to buy, purchased a defective house with a defect-free value of £30,000. Let us further assume a discount entitlement of 40 per cent. after 10 years' occupation. The net price in 1980 was thus £18,000. Let us also assume that there is no rise in market value by 1985, when the legislation will operate, so that the defect-free value on the open market is still £30,000. The tenant then exercises the right to sell back. As it is five years after the original purchase no discount will be repayable to the local authority. Furthermore, I am assured that a reasonable estimate of the cost of putting right the defects would be about £12,000 in the London area.
In those circumstances, the local authority would be obliged to buy the house back for 95 per cent. of its market value—£28,500—thus paying a premium of £10,500 for a house that was its own property five years earlier. If the market has risen, of course, the premium will be even greater. Taking an optimistic rate of interest, the local authority will then incur loan charges of £2,850 per year. Under the financial provisions in the Bill, however, the local authority will not receive subsidy on the full cost of servicing the £28,500 or even on 75 per cent. of it. The subsidy will be 75 per cent. of the loan charges on the difference between the reduced value with the defects and the price paid. In other words, the subsidy will be on 75 per cent. of the loan charges on £10,500.
Twenty-five per cent. of the loan charges and the entire cost of the reinstatement—£—12,000 will be charged to the housing revenue account. That part of the exercise not borne by central Government will be borne by local authority tenants because Government penalties on local government expenditure and the rate-capping proposals for next year mean that scarcely any local authority will dare to charge the cost of this operation to the general rate account for fear of penalty or surcharge if the rate-capping level is exceeded.
The cost of bailing out those who exercised the right to buy will thus fall on the less fortunate members of the community who did not exercise that right, not to mention the administrative, legal and other costs. It is even more unfair to local authorities which will have to buy back houses that they did not sell. Defective houses sold by the National Coal Board, for example, will have to be bought back by the local authority although the NCB had the 904 capital receipts from the original sale and the local authority will have to bear a large proportion of the loan charges involved.
If the Government are right in their estimate, dealing with private owners will take a maximum of £250 million of public expenditure, which will be financed out of housing investment programmes. Tenants of defective homes that were not sold, however, will receive nothing although the cost of putting their homes right will be about £15,000 million. The calculation is very simple. If it is likely to cost £250 million to purchase or reinstate 16,500 defective homes, the cost of putting right the at least 1 million homes of similar but later construction remaining in the public sector will be about £15 billion. If anything, the Association of Metropolitan Authorities has un-derestimated the cost of the operation.
Our sole objection to the Bill relates to the unfair burden that will be placed on local authorities and the effect on their housing investment programmes. The Government's proposals are the most tight-fisted, penny-pinching, unfair and biased arrangements ever set out by a housing Minister for local authorities. Most of the capital expenditure will be deducted from housing investment programmes and a large proportion of the revenue cost will fall on council tenants if not on ratepayers generally.
The Government should finance the Bill outside the normal housing investment programme at the full 100 per cent. of the cost of reinstatement or repurchase. They must stop hitting at housing programmes, which are already severely affected. Government investment in housing since 1979 has been cut by about 60 per cent. Every penny spent under the Bill will mean a further cut in local authority housing investment programmes. Every serious commentator — I do not describe the Minister for Housing and Construction as such—agrees that we have a severe housing shortage. Until recently nobody seriously thought that the Government would use the Bill to take a further slice from the money available for the normal housing programmes of local authorities.
The Minister was less than frank about where the money was to come from. On 10 November 1983 he introduced a scheme to succeed the Airey houses scheme. He was immediately attacked by hon. Members for the inequity of the proposals and because he neglected the tenanted sector. He did not tell the House then that this was discriminatory assistance for private owners at the expense of the public sector. My hon. Friend the Member for Normanton (Mr. O'Brien) asked:Will the Minister assure the House that the cost of grants and allocations to be made by local authorities will be met in addition to the HIP allocations and not included in those allocations?The Minister replied:The hon. Gentleman will have to await a later statement about that".The hon. Member for Hayes and Harlington (Mr. Dicks), who keeps telling the House that his authority has had to demolish about 1,000 defective Bison houses in Hillingdon, asked the Minister:Why is it that successive Governments have not helped with the housing investment programme?"—[Official Report, 10 November 1983; Vol. 48, c. 427–28.]Again the Minister remained silent about housing investments. Although pressed, he gave no sign that the cost of the exercise, modestly estimated at £250 million, would come from HIPs.
On 28 November the Government published their housing investment programme for 1984–85. The cost of 905 this Bill is not mentioned in the press statement or the HIP for the current financial year, in which the Bill will operate, although a figure of £35 million for housing installation grants is quoted. What is more, the Minister said that he had taken the cost into account when planning a HIP. Where is the evidence for that? The local authority sector HIP for 1983–84 is £2.4 billion, and for 1984–85 it is £2.5 billion. That is not an increase, but a slight cut, if an inflation rate of 5 per cent. is allowed for.
In 1983–84 the net total cost of HIPs, excluding capital receipts, was £1,801 million and in 1984–85 it will be £1,803 million—that is an increase in cash terms of only £2 million—which is again a cut in real terms. There is no evidence in press statements or any publications that HIPs have taken that into account. If they have not taken that into account, the cost of the Bill will mean a cut in new building, capital repairs, housing improvement grants or some other provision.
§ Mr. Ron Davies
Does my hon. Friend accept that in last month's Budget the Government imposed 15 per cent. VAT on many of the works associated with the repair and renovation on this type of housing? In answer to a written question the Secretary of State for Wales showed that that calculation was not accounted for when the initial HIP allocations were offered. Therefore, there will be a further 15 per cent. reduction in the money available.
§ Mr. Fraser
My hon. Friend is absolutely correct about improvement and repair expenditure in the private sector. In the public sector, however, the VAT input will be refunded by the Treasury to local authorities. Between 300,000 and 500,000 applications for improvement and repair grants remain outstanding with local authorities. Until the Budget, damp-proof coursing was exempt from VAT—that is not an improvement nor an alteration—but now VAT will be imposed on it. In addition to cuts in HIPs for 1984–85, that is a hidden cut that the Chancellor of the Exchequer provided for in the Budget.
We must look beyond HIPs for evidence in the public expenditure programme that money will be allowed for the Bill. We can look beyond 1984–85 to 1986–87. There is no evidence of a single penny increase in real terms in central Government expenditure on housing between 1983–84 and 1986–87. An increase of £80 million is allowed for in local government housing expenditure for 1985–86 in cash terms. Apart from that, the level of housing expenditure for the three years from 1984–85 to 1986–87 will remain the same. It will have suffered a cut of £300 million on the level of housing expenditure by local authorities in the last financial year. Where, then, is the evidence that the Government have taken into account the expenditure under the Bill in HIPs or other housing expenditure?
We were told that the cost of reinstatement grants and repurchases would be between £170 million and £250 million at current prices. That will come from other local government expenditure. The financial memorandum to the Bill disguises the full cost to local authorities because it mentions only the cost of repurchase and reinstatement grants and not the costs of purchasing defective houses. Presumably the houses will either remain in a deteriorating state or money will be spent to improve them. Local authoriies will be pushed into spending money on the houses by the pressures exerted on them—rightly so—when houses stand empty and by tenants discontented with 906 the defective state of their homes. If local authorities are not forced to spend money on such defective homes, the Bill will be the charter for the biggest slum acquisition that local authorities have ever undertaken. Their only alternative is to keep a large stock of slum houses and empty homes.
§ Mr. Fraser
I am wholly in favour of the scheme, especially of the money for it. To put it bluntly, we want money for housing.
§ Mr. Fraser
The hon. Gentleman should know that in the next two or three years we shall face a housing disaster because the Government are relying increasingly on capital receipts. Last year they relied on 50 per cent. of capital receipts, this year on 60 per cent. and next year it will probably be 75 per cent. Capital receipts are diving all the time because the first flush of sales of local authority homes has passed. Therefore, the money revenue from capital sales is decreasing and, consequently, local authority expenditure on housing, whether on renovation, new building or improvement grants, is also decreasing It is no answer to shout, "Capital receipts", because capital receipts will not solve the problem. The Bill will provide not a capital receipt, but a capital outflow from local authorities.
Some local authorities are already committed to providing thousands of improvement and repairs grants in the private sector. How can hundreds of authorities finance a public housing programme on the basis of the present investment allocations and the further plundering of housing funds that will result from the Bill? Why cannot the Government follow the precedent of their action on Airey houses, recognise that Britain has been overtaken by a housing disaster, have the courage of their convictions and provide this money for the private sector over and above what most would concede are the depleted funds already allocated to local authorities for the public sector?
We have heard some figures and no doubt many more will be quoted during the debate, and I shall quote some that have been provided by Shelter. Its report states:In some areas the potential demand could cause serious problems for other aspects of the authority's programme. The following table uses the cost estimates included in the bill to compare the potential costs for repairs to privately owned houses only with the 1984–85 basic HIP allocation for five authorities.In Bristol the estimated repair bill is £10 million to £15 million, to be paid for out of a housing investment programme of £12.6 million. In Epping Forest the estimated bill is £4 million to £5 million, which is twice the level of the housing investment programme. In Rochester the estimate is £6 million to £9 million, which is between two and three times as much as one year's housing investment programme. I could continue to give figures, but the evidence must stare the Minister in the face.
§ Mr. Fraser
I thought that the Minister would say that. Of course, they represent estimates for several years 907 compared with one year's housing investment programme. However, even if that meant a plundering of 10 per cent. a year for 10 years on a depleted housing investment programme, it represents a considerable incursion into the money available for those who sorely need homes to rent and who have never been able to buy. That is the point made by every commentator, including the AMA and Shelter, and I am sure that many hon. Members will wish to make it in the debate.
The Minister gave a list of 27 or 28 homes, and I am not sure which have been added to his original list. When the Parliamentary Under-Secretary of State replies, will he give the House his definition of a defective home? The problem will not be just that a house is defective now or that it is likely to become defective some time during the next 30 years; the real problem for many people will be that a prospective purchaser will believe that the house is defective. There might be nothing wrong with the house. It might be a little gold nugget among so much trash, but no prospective vendor could convince a prospective purchaser of that fact if the house falls within a class of houses that is considered defective.
Therefore, we wish to know whether a house that cannot be sold will be treated as defective. The Bill seems to allow for differentiation between houses that are hard to sell, but it appears that a second hurdle must be crossed in that they must also be structurally defective. If that is what the Bill means, it will lead to great difficulty and it will need amendment later. I have received letters from people in many parts of the country. I received a letter only today about Unity houses, which stated:The question of Unity Houses has become an election issue in a By-election for the Chesham Newtown Ward in the Chiltern District Council … The problem with the particular houses in question is not one of defects but relates to the fact that the houses do not receive equal consideration by Building Societies and are therefore blighted even though they may be sound. It is a typical example of the Conservative Government letting down the sector they claim most to represent, the house owner.I do not say that that is entirely correct, but the Minister must agree that blighting is a serious problem. It is similar to the problems experienced when trying to sell homes that are in the path of a motorway or another planning scheme. Once they have been blighted with that reputation they are as unsaleable as though they had been blighted by defect. The Minister must consider that matter carefully.
The Opposition warmly support the principle of help being offered to the 16,000 owner-occupiers who bought defective, non-traditional homes. That is perfectly consistent with the Labour party's attitude. We believe in helping people who are in difficulty through no fault of theirs. That is why we fight so hard for the rights of those who have become unemployed through no fault of their own, and for the rights of the sick who find that the budget of their local hospital has been cut and that staff have been sacked. That is why we fight for the rights of the many thousands of people who have not had an opportunity to occupy any home, let alone a defective, system-built one.
However, we object to discrimination among tenants in the private sector, tenants in the public sector and owner-occupiers. We oppose the lopsidedness of the legislation which, no matter how one describes it, amounts to robbing the less well-off to help those who are slightly better-off, or at least believed that they were. The Government have followed the example of the good Samaritan, but only so 908 far. The good Samaritan did not pay for the injured man at the inn by robbing someone else's poor box. The Bill takes money from one unfortunate sector of the community to help another. Local authorities will have less money to provide accommodation for the homeless, to provide repair grants and to try to repair 1 million to 1.5 million tumbledown, defective, system-built homes. We oppose the Bill's financial provisions because we believe that the Government, having encouraged system building, should now take the responsibility for compensating the owners of such homes.
I shall give a small example of the warped financial arrangements in the Bill. The Minister said that a local authority could, for the purposes of the Bill, designate additional homes as being defective. A local authority that did that would be cutting its financial throat. It would be an act of housing hara kiri. It would be cutting further its housing investment programme, adding to the burden on its housing revenue account and adding, if it dares, to the burden on its rate account. However, in most areas that will not happen; the tenants will have to bear the cost because 75 per cent. of housing authorities do not receive subsidies. If an authority takes its housing revenue account from surplus into deficit by incurring more expenditure on self-designation under the Bill, it will either incur penalties or it will have to cut other expenditure. The Government are going to impose the biggest financial burdens under this Bill at a time when local authorities will be going through a period of financial torture once rate-capping comes into effect.
The Bill ignores the gigantic task facing local authorities with defective, non-traditional, industrialised and system-built houses, of which the AMA estimates there are 1 million or more. Its estimates of expense might prove to be conservative. The Bill puts up two administrative fingers to those who have never bought their homes and those who live in defective premises that are cracking up, damp, leaking, deteriorating, and falling apart.
The scale of the problem can be illustrated from the pre-1960 figures. The Government's figures were published in a consultation document. To take the example of one local authority, Leeds, there were 7,104 defective types of pre-1961 houses in public ownership and 221 that were privately owned. That is without counting the disasters that came after 1960. That figure of 7,104 defective homes is about the half the total of all the privately owned defective homes dealt with in the Bill.
Through the Bill, the Government are saying that they will allow £250 million to be spent on 16,500 privately owned defective homes. On that basis, the Government should be able to say to my hon. Friend the Member for Leeds, Central (Mr. Fatchett) that they will deal with the Leeds problem proportionately and let the local authority have £100 million or £125 million so that it will be treated in the same way as the Government are treating the private tenants. They might say to the people of Sheffield, which has over 2,500 pre-1960 defective publicly owned homes, that it will receive about one sixth of the money that is devoted in the Bill to the private sector. They could offer Southampton, with 1,677 such homes, a proportionate amount, and so on.
What plans do the Government have for housing investment programmes in Birmingham and Bristol? Birmingham has about 2,100 homes that are publicly owned, and about 800 defective homes that are privately 909 owned. I see the hon. Member for Derbyshire, South (Mrs. Currie) smiling. I think that she sold about 800 of them into the private sector.
§ Mrs. Edwina Currie (Derbyshire, South)
If I catch Mr. Speaker's eye later on I shall point out that that figure is a serious underestimate. The city has a great many more defective houses than that.
§ Mr. Fraser
I am glad that I gave way to the hon. Lady because she has illustrated my point. If there is to be help for the 800 private owners in Birmingham—I do not deny them that help—or to the 1,100 private owners in Bristol, will the Minister promise proportionate aid to those local authorities with similar stock?
We object to the detail of this Bill because it is twisted and unfair. Some 75 per cent. of all local authorities no longer receive any housing subsidy. If those authorities have to spend money because of this Bill, that money will almost certainly come out of tenant resources.
This Bill is the most intense form of financial torture that central Government have ever devised, and it comes at a time of intensifying housing shortage, particularly of homes to let. It is wrong that the Government should impose this wholly unfair burden upon local authorities. The Bill amounts to an abdication of Government responsibility. We do not oppose the Bill in principle, and we do not oppose help to private owners. We share their distress and their anxiety. However, because of the shameless bias that this Bill introduces against local councils, against ratepayers, and against public tenants, we shall vote for our reasoned amendment.
§ Mr. Tony Durant (Reading, West)
I welcome the Bill. In my constituency about 100 Wates houses have been purchased, and some are still in the council sector. I am glad that the Government have taken this step to help people. It was right and proper that this should be done, and the Government are to be congratulated. They had no legal liability, but they have taken a moral stance. They felt that it was right that the people should be helped. Had the Government wished to do nothing, they would have had legal grounds for such a decision, but they have consciously decided to help people who have got themselves into great difficulty.
I am sorry that in my constituency, in advance of the Bill, the local Labour party has been spending all its time stirring the matter up and not looking at it from a reasonable point of view. Thank God, home owners are waiting calmly for the facts before getting excited.
I have one or two questions about this proposal. I am concerned about the buy-back arrangements, about which the Bill is not clear. In an intervention in the speech of my hon. Friend the Minister for Housing and Construction, I asked about this matter, and he said that the arrangements covered compassionate grounds—for example, getting a job somewhere else. I see that that provision is in clause 3. However, anybody who wishes to offer his house back in any other circumstances will not be able to have the house repurchased unless it is beyond repair.
As I understand the Bill, houses can be bought back only on compassionate grounds, if the house is in such bad condition that no repair will put it right, or, if it can be repaired, is more expensive than buying it back. That aspect is worrying my constituents. I should be grateful if, 910 when he comes to reply, my hon. Friend the Parliamentary Under-Secretary will make clear what the buy-back terms are. Are the conditions that I have outlined the only grounds for buy-back? I wish to be clear on this. I have studied the Bill carefully, but I cannot see any other reason. Can a person say to the council that he wants to sell the house back because he is not satisfied?
There are one or two other points that worry my constituents. For example, who will pay for the survey? Will the local authority survey all the houses and pay for that survey or will the individual have to ask for his house to be surveyed and pay for it? Can he pass the bill on to the local authority? The owner must know what the condition of the house is. Even if it looks all right, I imagine that, with the news that he now has coming through his letterbox, he will want to have his house looked at, even if there are only one or two small cracks. Is there to be a survey of all such houses in the local authority area, or does the individual have to approach the local authority and say, "I am in one of these houses. Will you please survey it so that I know whether it needs a repair?"?
The hon. Member for Norwood (Mr. Fraser) made a point about a property that he called a "golden nugget" in a row of houses — an individual house in reasonable condition. How does the purchaser know that this golden nugget is all right when all those around it are not? This is a valid point. I should like to see a certificate of some sort given to the owners after the work is completed so that, when a future purchaser comes along, there is some documentation to show that the house is all right If not, in 10 years' time, when we are all dead and buried or gone away, local authorities have changed, and officers have disappeared or retired, there will be no evidence for the present owner to give a future purchaser that the problems of the house were tackled. The house will have been repainted and all sorts of things may have happened.
§ Mr. Wareing
Should not the Minister give some thought to special cases? For example, the Ministry of Defence may have vacated houses, one or two of which may have been sold by the Property Services Agency, as in my constituency. Those houses are surrounded by dereliction. Yet the owners are being told by the PSA that the Bill will have no bearing upon them. Therefore, the value of the houses that have been bought is going down. People will have great difficulty in selling them unless something is done about the deterioration.
§ Mr. Durant
That is not how I understand the position, but I shall leave my hon. Friend the Parliamentary Under-Secretary to explain it. I understand that any house purchased from a public authority, local or national, will be covered by the Bill, so that a person who buys a house from the PSA will be covered.
Some form of documentation is important. I welcome the Bill. It will be of great help to people who bought their houses in good faith.
The hon. Member for Norwood was carping and niggling about the Bill. He made great play about what might happen. My local authority is about to spend £5 million on repairs because it has done its housekeeping and runs its housing account properly. It is using its capital receipts correctly to build up its housing stock. It practises good housing management. The hon. Member for Norwood was merely trying to make a case.
911 Would the Opposition have done anything about the problem had they been in power? I doubt it, because they are against home ownership. They may have done something for council tenants, but I doubt whether they would have done anything for people who buy their own houses. I regret the hon. Gentleman's carping speech, because normally his remarks are considered.
I should like my hon. Friend the Minister to explain exactly what will happen in relation to buy-back. Will the house owner have to initiate a survey, or will that be the local authority's responsibility? Will there be some form of certification when the job is finished so that the home owner has some evidence when trying to sell his house later that it is guaranteed to be in good condition for at least 30 years?
I welcome the Bill and hope that it will go quickly through the House.
§ Dr. David Owen (Plymouth, Devonport)
In the city of Plymouth about 2,000 Cornish Unit houses and a further 100 Orlit houses were built between 1950 and 1953. The Minister's task is to be fair to those who have bought their houses, to private tenants and to those local authorities which face additional financial pressures so that they can be fair to people in the public rented sector.
The hon. Member for Norwood (Mr. Fraser) reasonably objected to the fact that, as yet, there are no financial assurances for local authorities which will have to pay substantial bills. The Minister said that he was to meet the Association of Metropolitan Authorities on 14 May. I understand that in the general needs index of the housing investment programme he hopes to include special amounts for particular local authorities.
A great deal of good will hinges on the outcome of the negotiations. With rate capping and all the other pressures on local authorities which have kept within the financial constraints imposed by Labour and Conservative Governments, they do not have room for manoeuvre in their housing accounts. It is not fair to invoke the capital receipts argument and say that they have extra sources of money.
Plymouth city council has been selling council houses for a number of years without much party political controversy. Criticism has come when the housing waiting list has been allowed to grow and money has not been spent on extra building to reduce the waiting list.
The Minister must go back to the Treasury and find extra money. He has the money for the private part of the equation, but he has not been able to convince us that he has a special allocation to help housing authorities. If he did have that allocation, many anxieties would be laid to rest.
The reasoned amendment expresses anxiety in the only way available to hon. Members. The Minister understandably said that he was dealing not with the legislative aspect, but with his administrative and executive authority. We have no evidence that the Minister will have a new special allocation to help housing authorities. Those authorities have a right to expect that finance. I am sure that sentiment is shared by hon. Members on both sides of the House.
In Plymouth the Cornish Unit Action Association has been formed. It is worried about many aspects of the Bill. 912 I have written to the Minister about how mortgageable such houses will be once repaired. That is the crucial point. The Minister, referring to discussions that are taking place with the Building Societies Association, said:We are discussing with the BSA ways in which the properties can be repaired so that building societies will be able to lend with confidence against the security of repaired dwellings.The Cornish Unit Action Association has been in touch with the BSA, and Mr. Pitt, the head of the BSA's legal services, replied:However, it is too early to say yet whether this project will get under way.Since the Minister rejected my suggestion that the local authority should be lender of last resort and expand its mortgage facility for the specific case, he must reach a satisfactory agreement with the building societies. The period involved is 30 years, which is a short time. A 50-year period is morte appropriate if one is to guarantee a mortgage. Some special arrangements will have to be made with the building societies if the 30-year period is to be established.
I share the belief of the hon. Member for Norwood that many people will want to sell back. They will be anxious about the future and will not understand the mechanical engineering. I believe that an extensive survey of each owner-occupied dwelling should be carried out by the local authority and a full report given to the owner. The costs of such specialised reports are considerable and should not be borne by the owners. A certificate of clearance is essential. If the property is found to be sound, a 30-year guarantee must be underwritten by the BSA. If the property is found to be defective and repairs are carried out under the supervision of a surveyor or structural engineer under a system agreed by the Government and the BSA, work should be guaranteed for at least 30 years.
I am worried about what appears to be the means testing of the grant-aid. What are to be the criteria? It is no fault of the owners that they have all the worry. The aid is to be only 90 per cent., not 100 per cent. as originally envisaged. Means testing in that context is wrong. The people involved have only modest means. They are not normally eligible for means-tested benefits. They have managed to save to purchase a house and are living on the margin. The extra anxiety and cost will hit them hard. I imagine that Treasury pressure led to the Minister being able to offer only 90 per cent. aid. I understand his difficulty.
The Minister has the goodwill of the House on the basis that he has shouldered the responsibility of Government in this regard. It might have been possible for him to shrug it off and to say that this was not the Government's responsibility; that the local authorities, encouraged by successive Governments to use these techniques, made the decision themselves. He has not been a Pontius Pilate and washed his hands of the problem, but he has come to the House with proposals that now need clarification. However, they are skewed mainly to the people who purchase their houses, and do not as yet deal with the problem of local authorities which face considerable additional costs. Many cities bore a heavy cost in post-war rebuilding—in Plymouth, the result of serious damage, and in other cities for other reasons—and they now face serious social deprivation on top of the additional costs.
I have to speak in a by-election today, so I cannot listen to the wind-up speeches. I apologise for any discourtesy in not being present to hear the Minister's reply. I hope 913 that the Bill will be improved in Committee, and that, when it comes back on Report and Third Reading, it will have the support of all hon. Members.
§ Mr. John Heddle (Mid-Staffordshire)
It is right that I should start by declaring two interests, first as a consultant partner to a firm of chartered surveyors which, to my knowledge, has never carried out a valuation or a structural survey on an Airey house or on any of the other 26 designated types. Nevertheless, it is conceivable that at some time in the future it may receive instructions to do so. The second interest that I should declare is that I am a vice-president of the Building Societies Association. As the right hon. Member for Plymouth, Devonport (Dr. Owen) has rightly said, the long-term impact of the Bill on the mortgageability and saleability of these properties is considerable. I wholly endorse the view already expressed that there should be some certificate of guarantee, just as a certificate of guarantee is issued by the National House Building Council in respect of new houses, to ensure that the remedial treatment applied to these properties, which, after all, would come within the purview of the building control functions of the local authority, provides these properties with a realistic and mortgageable length of life.
The hon. Member for Norwood (Mr. Fraser), who opened the debate for the Opposition, wept crocodile tears, as do so many of his hon. Friends, about people deserving the right to rent. I therefore ask why it is that his party continually objects to the principle of shorthold tenancies enshrined in the Housing Act 1980. He went on to plead that there should be a more specific definition of "defective housing". I wholly agree with him on that. He continued to devote the majority of his speech to assuming that "defective" meant not being capable of refurbishment, repair or rehabilitation. I believe that we have learnt from the Airey house experience that the figure of £8,000 quoted for repair is a mean average—and I use mean in the strictest literal sense—and that a large number of these properties, many of which are not necessarily required to be repaired in whole or in part now, in the forseeable future, or in the middle future, would cost not even half that amount of money.
The Bill is a sad, expensive, but, I think, generous epilogue to a wholly understandable need of the Government of the day to provide homes for those returning from the second world war, whose homes were destroyed during that war, and homes to meet the needs of the less-well-off in society. The boom and the demand that this supply met in the 1940s and in the early 1950s was repeated in the 1960s. I do not think that the House should assume that, simply because the cut-off point in the Bill relates to properties built before 1960, the problem will necessarily disappear. These untried, untested, but undertandable systems that were employed in the 1940s, 1950s and 1960s, not at the behest of, but with the encouragement and seal of approval of, the Ministry of Housing and Local Government and the then Ministry of Health, resulted from a duty imposed on the local authorities to provide homes for those in need.
Over the past few years, reports and television documentaries about the demolition of blocks of system-built council flats, the need for urgent rehabilitation of hard-to-let estates and the discovery of defects in these various building systems have been on the increase. Local 914 authoritites blame past Governments for not safeguarding building controls, and they blame the present Government for not contributing enough towards the cost of remedying these defects.
Newspaper reports about serious flaws in the design or building of council houses and flats appear with worrying regularity. Equally worrying is the fact that many of the defective buildings are less than 30 years old, and in some cases less than 20 years old. Reports like these, backed by survey evidence, show also that there is widespread dissatisfaction among council tenants about the state of repair of their homes. Some of this discontent concerns the general standard of maintenance and repair, but some of it focuses particularly on defects that are attributable not to neglect, to age or to normal wear and tear, but to fundamental faults in design and construction.
The Bill does not entirely solve that problem, but nor is it necessarily the problem of Government. The sort of tenants to whom I have referred, those who regularly beat a path to the doors of our advice bureaux on Friday evening and Saturday morning, might prefer to live in a house or a flat that was not owned by the local authority. They might prefer to rent from somebody who collects the rent on a Monday morning. It might be worth considering whether the experience of Sir Lawrie Barratt's company in Liverpool, in Livingston and elsewhere in taking over problem flats and hard-to-let estates, and injecting some life, vitality, colour and individuality into them, would give the tenants of these properties a better way of life. It is, after all, the private sector that will be providing the remedial systems that put these defective properties back into habitable and tenantable order.
I do not think, therefore, that it is necessarily only the fiefdom of the local authority to provide the accommodation for those who rightly deserve the right to rent. It is likely that an estate of property owned by a housing society, or by a private reputable company such as receives the endorsement of the assured tenancy provision of the Housing Act 1980, will be more graffiti-free, more vandal-free and more defect-free than the estate next door owned by the local authority
I have three or four reservations about the Bill. I think it is right that the main emphasis and thrust of it should be on protecting those whom caveat emptor could not protect, and on protecting those who, having instructed a surveyor and valuer, could not uncover an inherent defect that would come to light only if a property had been taken apart meccano-like. That is why I think that it is right, as my hon. Friend said in answer to a question put to him in an intervention by my hon. Friend the Member for Teignbridge (Mr. Nicholls), that, as a former tenant qualified to buy under the right-to-buy provision, his rights should be transferred. I am equally concerned that a tenant who lives in one of these properties, and who at some subsequent time might wish to exercise his right to buy, should have the qualification period under that right preserved. Will my hon. Friend the Minister give consideration in his reply to preserving the right-to-buy qualification period for those tenants living in Airey houses and the other 26 types to which the Minister for Housing and Construction referred? I dealt with that matter in an Adjournment debate that I initiated on 25 June 1982 on Airey houses in my constituency. My right hon. Friend the Secretary of State for the Environment said that the matter would be looked into but it has not yet been resolved.
915 The other point that concerns me is that compensation —as I understand it, although I served my articles some years ago now—should enable the injured party to be returned as near as practicable to the position before the event. That is enshrined in the Land Compensation Act 1973. It is wrong that the injured party, the owner of a property which is blighted, which was once to be the investment of a lifetime but which has become a pig in a poke, will receive only 95 per cent. He should receive 100 per cent. of the defect-free value. With the best will in the world—I yield to no man in my respect and admiration for the district valuers — any human being will subconsciously discount the blight factor in arriving at a defect-free value. The definition of value is that which would change hands between a willing buyer and a willing seller and in this instance there is a willing seller but not a willing buyer because of the blight. That is a perfectly reasonable reason for asking my hon. Friend, if the Bill receives the endorsement of the House today and proceeds to a Standing Committee, to give serious consideration to increasing that 95 per cent. of the defect-free value element of compensation to 100 per cent.
I want to go one step further. The district valuer is employed by the Inland Revenue. He acts as an independent umpire or arbiter. At the end of the day he has been instructed to negotiate terms of compensation by the local authority. In a sense, the local authority is his client. Therefore, his duty ultimately must be with the local authority. It is right that a provision should be included in the Bill to enable people who wish to sell back their properties because they are blighted to instruct an independent surveyor and valuer to act on their behalf in negotiations with the district valuer. The fees should be paid for under what was called scale 5A when I was in practice — a provision that exists in the Land Compensation Act 1973.
If, Mr. Deputy Speaker, your garden were taken for a new motorway — heaven forbid — the district valuer would be instructed to negotiate the value of that piece of land. You would be perfectly entitled to instruct a surveyor to act on your behalf to ensure that fair and reasonable terms and a defect-free value were negotiated. The House should, as the right hon. Member for Devonport said, protect the owner who is being dispossessed through no wish of his own. Every tenant in such a situation can plead genuine hardship. Having been encouraged to buy and having seen the wisdom of purchase he is now being dispossessed and disenfranchised and it is right that in passing the Bill the House should bend over backwards to ensure that fairness and equity prevail.
What lessons can be learnt from the past 30 years? What can we do to ensure that such problems do not recur? System building has been practised worldwide since the pyramids and is likely to continue. New forms of contracts between local authorities and the construction industry should be drafted which clearly spell out future liability in the event of such inherent defects being found in properties built in future. Discussion should take place within the insurance industry in an endeavour to devise a policy to cover local housing authorities against defects caused by design or the failure of construction materials in future.
The Government and their predecessor elected in 1979 have done more than any other Government in recent times to improve the condition and the lot of the majority of 916 people's housing prospects in Britain. Last year the Building Societies Association published a report which showed that of the 40 per cent. who did not own their home, including tenants of local authority properties, 90 per cent. — the majority—expected, not just hoped, to become home owners in their lifetime. Therefore, it is right that the Government should continue to pursue a policy that encourages people to own their homes, to be independent, proud and self-sufficient.
In their brief period of office since 1979, the Government have introduced a tenants' charter, something that the Labour party in government never did. The Government have introduced a right to repair for tenants, which the Labour party in government never did. The Government have encouraged local authorities to release surplus land and assets that have been ignored, which they do not want, to enable them to recycle the money raised thereby to improve homes. That is why I referred in an intervention to capital receipts. The hon. Member for Norwood does not understand that capital receipts do not come only from the sale of council houses but from the sale of idle assets that his and my local authority, the Department of Health and Social Security, and the Ministry of Defence have been ignoring for years. The Bill is an honest and generous measure and deserves the support of the House.
§ Mr. Nigel Spearing (Newham, South)
Until the last third of the speech made by the hon. Member for Mid-Staffordshire (Mr. Heddle) I was beginning to find myself in considerable agreement with him, particularly when he referred to the problem of system building after 1960 and 1970, which is the subject of the 'second report of the Association of Metropolitan Authorities. I also agree with his, I think tentative, advocacy of taking houses apart, meccano-like.
The Minister for Housing and Construction, in his speech on 12 March in a debate initiated by my hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse), did something with which we all agree. He took national responsibiliy for what has occurred in the systems building disaster. He kindly referred to an intervention I made at that time when I ventured to suggest that his method of expressing that responsibility was less than is required. That was the theme of the speech made by my hon. Friend the Member for Norwood (Mr. Fraser) and of our amendment. I urge the Minister to make no final decision at least until has has seen and knows the extent of the total national obligation because we have a future tranche of systems building to consider. I do not believe that he has yet understood the full realities of the matters with which his Bill seeks to deal—in fact, I do not think that anybody knows the full reality of the total obligation of the country and any Government with respect to dwellings built in the 1960s and 1970s. It is to those that I wish to address my speech.
The Minister says that there is no immediate problem. In Newham we have an immediate problem, and I make no apology for centring my contribution today on Ronan Point and its immediate neighbours. Ronan Point, which is in the Beckton area of Newham, partly collapsed in 1968, and that signified the beginning of the end for the high-rise system-built housing. It is therefore a symbol of much of the concern and growing doubt about system-built high-rise accommodation. Indeed, many may be surprised 917 to know that it was rebuilt and has been reoccupied for the past 16 years. There are nine similar tower blocks on the west Beckton estate of Newham, which were built, with slight variations, on the Taylor Woodrow Anglian system.
There was an extensive public inquiry following the collapse of part of Ronan Point. Modifications were made, but these were designed only to guard against a repetition of the explosion which was held to have initiated the collapse. As far as I am aware, those modifications were not related to strengthening the basic structure, although some changes were made in the construction of adjacent blocks to guard against the failure that then occurred. While much useful evidence was given at the inquiry into the nature of the Ronan Point problem at that time, there have been changes in the intervening 16 years, and it is the discoveries of the last few weeks that have caused justifiable current concern.
Ronan Point has 22 storeys and provides homes for over 100 families. It is constructed, as are similar blocks around it, of precast concrete components assembled on site. Some of the internal walls are load-bearing from top to bottom and are supported on a raised podium. The floor to each unit is of similar construction, which, when designed and built, made an airtight joint between each flat. It was this vertical separation of each flat that enabled these tower blocks to come within the then fire regulations. Recently, however, it has been found that there is variable contraction in at least some of the floor units, and therefore there is a breakdown in the compartmentation and a consequent risk which was not there when they were designed and built.
This shows that the building is behaving in a manner that was not anticipated by the designer, and this inevitably causes grave concern. What is not known is the behaviour of those parts of the building not immediately accessible—whether they are behaving as intended or as taken account of in the original design. Therefore, a number of questions arise.
First, what were the assumptions built into the original design? Was that design itself adequate for a building of 22 storeys and has the building behaved as was anticipated? Secondly, what was the quality of the material used in the construction, including the reinforcing material and the precast concrete, and was it in accordance with the specification? Indeed, was that specification itself adequate? What has happened to the concrete in the meantime?
In his opening remarks the Minister referred to what has happened to the concrete of the houses on his list of 28, and it was pretty gruesome listening. I draw the attention of the House to the problem of what could be happening to load-bearing concrete with 22 storeys on top of it. When we think of this load-bearing stress we must consider not only the weight of the building but the pressure of the wind and the bearing moment on the base of the building.
Thirdly, was the quality of workmanship and the mode of construction as directed in the specification?
I suggest that it is only after very full and open examination that answers can be given to these and other relevant questions and that the cost of possible future remedial work can be known and calculated over the book life of the building itself. Indeed, it may even be necessary to ask whether it is possible to calculate the cost of remedial work over the calculated remaining 40 years of 918 the building's notional life. The nature of the building and its construction clearly require that it be empty so that tests can be made in safety and thoroughly.
Other questions arise that ought to have been answered before. Only a full examination can provide the answers. They include the question of the designed and actual movement of the building in wind and in gusty conditions and what effect this has. Why has drainage in this block and other similar blocks been defective, so that tenants in the lower flats have reverse flows through their sinks and water closets, which they are helpless to stop? Why do infestations of insects occur in the internal structural members of the blocks, and are there any long-term cures for a problem that has been endemic in these blocks for many years? Most urgent and important of all, what is the best short-term remedy for the fire risk now shown to be present? The answer to this last question is of particular importance for the residents of the eight adjacent blocks. Of course, it is also in their interest that a full examination of Ronan Point takes place so that their future safety and welfare may be properly assured.
The chairman of the housing committee of the borough council, Mr. Fred Jones, has recommended to his colleagues that the building should be emptied and made available for full investigation. I endorse this as a prudent precaution, which the full committee, meeting tomorrow evening, may wish to take. There could, of course, be inconvenience to those residents who will need to be accommodated elsewhere and repercussive effects on those sorely in need of accommodation, of whom the Government appear to take little account at present. There will also be continuing anxiety for the residents of Abrahams, Merritt, Dodson, Gannon, Ault John Sopp, Bauckham and Hume Points, but the sooner Ronan Point itself can be examined, the better it will be for, and the greater the safety of, residents of these and similar blocks, not only in Newham but throughout the country.
I pay tribute to the Newham tower block tenants association, which was formed by the tower block tenants themselves and which, in co-operation with the borough council and one of its consultant architects, M. Sam Webb, has been responsible for bringing to the attention of housing officials and myself many of the matters which I have dealt with in the course of my speech.
The construction of these buildings throughout the country was a public affair instigated and encouraged by central Government of both parties. The Bill before us this evening is a wholly inadequate response since it is restricted to a relatively small number of private owners and cannot reflect the public duty to those of our citizens who over the last few years have suffered the trials and tribulations of unwilling residents of high-rise blocks. We all know that well-built tower blocks can be most successful. However, that can only be the case when the amount of tower block accommodation in the total public stock is proportionate to the number of people who find that living in them meets their needs.
However, we are not in this Bill concerned with the social implications, important though they are. We are concerned with the safety of people and the structural integrity of the buildings. For this there is an undoubted national responsibility and it is this Government who must discharge it and discharge it in a manner that does not discriminate between categories of tenant or owner. In the meantime, housing authorities facing unforeseen problems such as those now in prospect in Newham must be fully 919 protected. The extent of that need in Newham will not be known until Ronan Point has been subjected to the rigorous examination that the citizens of Newham will now require.
§ 6 pm
§ Mr. Vivian Bendall (Ilford, North)
First, I should declare an interest as a surveyor, auctioneer and valuer, although I have never had dealings with Airey, Orlit, or any other such unit construction.
I should like to pay a tribute to the Government. There is no doubt that for a considerable time unit construction has caused a great deal of anxiety to both tenants in public housing and owner-occupiers. I admire the speed with which both the Minister now responsible and his predecessor, my hon. Friend the Member for Tonbridge and Mailing (Mr. Stanley), initiated action and dealt with this problem in recent years. The living proof of that is the first owner-occupied Airey houses in my constituency, which are now being repaired. The speed with which both the local authority in Redbridge and the Minister have dealt with the problem is commendable.
Of course, I accept that there is concern about the matter. Indeed, I have some reservations about certain parts of the Bill. As many hon. Members wish to speak, I shall endeavour to discuss new points or to reiterate points made previously that are of paramount importance. During the Budget, my right hon. and learned Friend the Chancellor of the Exchequer introduced new VAT provisions that will affect the Leeds-type scheme of repair — an external repair which the Inland Revenue previously accepted as not attracting VAT. Some of my constituents have had estimates close to the £14,000 limit. The addition of VAT will take them over the limit. I have been in touch with the Minister, who has said that he will consider individual cases brought to his attention. I am sure that that will help those affected.
Any hon. Member who has Airey houses in his constituency is concerned about the method of repair for those still within local authority ownership. To try to keep within the HIP allocations, some local authorities may try to repair from the inside of the property. That could cause problems for tenants, especially elderly tenants. Virtually the whole of the front of the property will be removed. My local authority has offered rehousing while the repair is carried out or generous compensation, redecoration and so on. However, elderly tenants may worry about upheaval or having to move out while the repair is being carried out.
I am concerned about the 30-year life that the repair would give to a property. It will cost about £3,500 or £4,000. Yet, for £6,500, £7,000 or £8,000, 60 years life could be given. Surely it would be more sensible for local authorities to spend the extra money to provide double the life for the property. I hope that the Department and the local authorities will seriously consider that point.
Although the qualifying period suggested in the Department's circular is 30 years, even with inflation moving at only 4 per cent. or 5 per cent. per annum it would make economic sense to spend additional money on the rolling repair programme and double the life of the property. When the Minister talks to the Association of Metropolitan Authorities and other bodies about the HIP allocation, I hope that serious consideration will be given to that suggestion.
920 If we are to give the properties an additional 60 years life, local authorities will need more money to deal with tenant-occupied properties. The Minister must be specific. He should consider only HIP allocations for local authorities with Airey or Orlit problems. Any money given should be specifically earmarked and utilised for repairs to those houses, and not used in any other area of housing.
Publicity, although good at times, has sometimes failed to penetrate. At other times it has been inadequate. Because of that, people in my constituency, through ignorance or because nothing was revealed in the searches, have purchased Airey houses after September 1982. One or two of them were in the process of purchasing when the announcements were made. Some had signed their contracts before September, and had to continue with the purchase after the announcement because they would otherwise have lost their deposits. They do not qualify for any grant help. It is disastrous when someone has entered into a contract, then an announcement is made and the person has to complete the contract, but cannot be considered for grant for repairs.
Some of those people obtained a defect-free valuation. However, as my hon. Friend the Member for Mid-Staffordshire (Mr. Heddle) said, the defect-free valuation needs to be properly represented. When compulsory purchase powers are enacted, a person is entitled to instruct an independent surveyor—to be paid for by the purchasing authority.
If those people who purchased houses after 1982 had applied to a building society for a mortgage, the society would have warned them of the problems and refused to grant a mortgage. But if they approached a local authority for a mortgage, the local authority assumed that they had been informed of the problems and were prepared to advance a mortgage. Those people fell into the trap of purchasing a defective property. That would not have happened if they had approached a building society.
With the reservations that I have stated, I heartily support the Bill. I shall wait with interest to see what happens in the negotiations with the AMA, what happens as the rolling programme of repairs takes place, and how the Government view the HIP allocations. Any assistance given by the Government should be given solely for repairs to defective properties and should not be used for other housing purposes. I hope that the Government will give more help as the rolling programme comes into effect. I believe that that help will be forthcoming.
§ Mr. Willie W. Hamilton (Fife, Central)
Although this is a United Kingdom Bill, it is a misnomer to call it the Housing Defects Bill because it excludes those who live in defective council houses, and that is my main criticism of the measure. As the Minister would expect, that criticism is directed at the Scottish aspects of it.
The explanatory and financial memorandum says that the Bill will cover 16,500 dwellings. I presume that that figure covers the whole of the United Kingdom, including Scotland, although that element is not large, as I shall show. It is estimated that the overall cost will be between £170 million and £250 million. I do not argue with that, but I have complaints about the way in which the Scottish problem is being dealt with.
My constituency correspondence these days is comprised in large measure of letters on housing—about allocations, improvements and the rest—and the housing 921 situation in Scotland, along with mass unemployment, is now the major social scandal. I see the Parliamentary Under-Secretary shaking his head in dissent. The hon. Gentleman does not know anything about what is happening and he refuses to come and see it.
The housing record of the Conservatives since 1979 is the worst in living memory. Kirkcaldy district council has a desperate need to modernise, repair and build new houses. The council recently put to the Scottish Office a detailed paper on what needs to be done in its non-traditional housing area. It estimated that the cost per house was £21,000, with a total, covering the whole non-traditional area, of over £40 million. The problems, of which the council gave details to the Minister and which have been supplied to local Members of Parliament, are mind-boggling. Put in that context, the Bill is an absurd and obscene irrelevance.
The Minister gave United Kingdom figures. Such Scottish figures as I have have been provided by Shelter, to which The Scotsman refers this morning, although I have not received the letter which I understand Shelter is sending to all Scottish Members. I hope that when he replies to the debate the Minister will comment on Shelter's statistics. Shelter reckons that only two in every 100 people in Scotland currently living in substandard houses will be helped by the Bill—that help will be given to just over 200 tenants throughout the whole of Scotland—with no help for the other 98.
Shelter also says that the capital allocation for spending on local authority housing has fallen in real terms in Scotland in the past five years by 38 per cent. As the Minister knows, a large and increasing number of local authorities are being deprived of housing subsidies altogether, one of them being Kirkcaldy district council.
The Government must face the fact that a combination of bad and inadequate housing and mass unemployment lead inevitably to enormous social tensions, to vandalism, petty crime and to feelings of frustration, bitterness and hopelessness. It is no good the Government throwing money at the police and the detection of crime while doing nothing meaningful to tackle these social problems. The Bill will make no contribution to solving those problems.
Local authorities in general—I am not arguing only for Kirkcaldy; my remarks are not related solely to that area—must be provided with vastly increased financial resources to tackle the existing problems. In that context the Bill does nothing, and that is why we shall vote against it.
§ Lord James Douglas-Hamilton (Edinburgh, West)
The hon. Member for Fife, Central (Mr. Hamilton) said that only 200 people in Scotland would benefit from the Bill. Part of my interest in this subject stems from the fact that about one third of those in Scotland who bought Orlit variant houses reside in a scheme in my constituency. What is unique about that scheme is that it is the only one in the United Kingdom that was built with aluminium roofs, and those residents do not yet know whether they will be covered by the terms of the Bill.
These are Blackburn-Orlit houses, 214 of which are in my constituency. About 80 of them have been purchased. They are a simplified form of Orlit with prefabricated reinforced concrete frame, cladding and a Blackburn 922 aluminium pitched roof, with prefabricated inner lining and partitions. It is believed that the roofs now need strengthening.
On 15 November last the Minister told me in a parliamentary reply that consideration was being given to including them within the scope of the proposed scheme. On 13 February he said that whether they should be included in the scheme would be considered in the light of the findings of the Building Research Establishment. I understand that there have been problems in respect of that establishment carrying out its inquiries. These houses are popular and the people living in them, both in the public and private sector, are not anxious to have experiments carried out in their homes, and the reasons for that are understandable.
I understand that operations are today being carried out, at least in one house, and it seems that those inquiries are likely to take some time. Will the Minister progress as quickly as possible the research of the Building Research Establishment so that the uncertainty may be cleared up, not only for this group of people but for others who live in Orlit variant houses and who would like to know clearly what evidence there is of deterioration in their homes?
It is inevitable that local authorities will be involved in the matter, and I will give an obvious example. Where there is, say, a block of Orlit variant houses and there has been clear evidence of deterioration, some tenants having purchased and some having not, any strengthening or other repair work should be carried out on the whole block. There should, therefore, be consistency of approach. and I am glad to learn that the Minister is to have talks with the AMA. I received a letter from the Minister which said in relation to the public sector:Expenditure on defective houses will be taken into account in the normal way in assessing housing capital allocations once an authority has considered its priorities and programmed accordingly.It is imperative, after there has been an objective assessment of the extent of the deterioration in each case, that adequate resources should be available to deal with the problem in its entirety.
I have made some inquiries. Michael Dyson, a civil engineering company, examined one type of house. The company discovered that the Blackburn-Orlit represented an improvement on the standard Orlit and that the defects could be rectified comparatively easily. That design—I do not doubt that other hon. Members share the same experience—includes two-storey and three-storey flats, some framed houses and some not framed, semi-detached and small terraced houses. We need to look at each of those houses with the greatest care.
Shelter said:The Housing Defects Bill must be seen as a limited measure, creating a legal right of assistance for the owners of certain houses. This principle of assistance is to be welcomed But on its own the Bill cannot be an adequate response to the problem of defective housing.That is why it is important that we have the power to extend the designations in the Bill. I am glad that the Minister will have discussions on that matter with the AMA.
It has been suggested that a building society might not grant a mortgage unless the repaired house has a long-term guarantee. If the repair is carried out in accordance with a fully engineered design for which the engineer accepted responsibility and repair work was certified by the engineer at appropriate stages, there is no reason for a 923 mortgage application to be refused on structural grounds. In such circumstances, specific additional insurance would not be called for. I should be grateful if the Minister would confirm that that is the position, because this is a source of anxiety to some who purchased houses. I hope that the scope of the Bill will be widened in the light of the confirmed facts.
§ Mr. A. Cecil Walker (Belfast, North)
I support the Second Reading of the Bill. I am pleased to note that the Government are worried about the welfare of those people in Northern Ireland living in defective houses. I ask the Government to enact legislation at the earliest opportunity to include the people of Northern Ireland within the scope of the Bill.
Sometimes people in Northern Ireland are worried at the inordinate time it takes before that part of the United Kingdom is granted parity in many of the issues important to good government. I am sure that the Minister has the interests of Northern Ireland at heart and will take action urgently to alleviate the problems caused by defective dwellings.
The majority of defective houses in Northern Ireland are of the Orlit type, and hon. Members have mentioned those. They are of single and double-storey type. I welcome the statement by the Parliamentary Under-Secretary of State for Northern Ireland the hon. Member for Bath (Mr. Patten) that the Housing Executive will be under a duty to assist private owners of those types of houses.
As the Minister is aware, a small section of our community in Northern Ireland has purchased and is living in Orlit houses built by the private sector. Those people are naturally worried that defects may develop in their houses. I note that the explanatory memorandum states:that the local housing authority have power to resolve that certain other dwellings in their area are defective so as to entitle eligible owners of those dwellings to have assistance by way of grant or, in certain circumstances, repurchase".I trust that the circumstances that I have outlined will allow the Minister latitude to consider sympathetically the small number of unfortunate owners.
I draw the Minister's attention to the various types of housing built under what we know as package schemes. I understand that in certain circumstances such schemes were accepted because of the need for speedy erection of buildings. At one time during the troubles in the Province the need for speed was essential. We needed to rehouse people forced to flee from areas of severe intimidation. Unfortunately, as other hon. Members have pointed out, supervision and design faults have become apparent in some of those houses, a proportion of which are now owner-occupied. As the purchasers were not aware of the problems they were inheriting when they bought the houses under the scheme put forward by the Housing Executive, I hope that the Minister will recognise the difficulties and take the necessary steps to relieve these people.
Clause 5 allows for a reinstatement grant to be made at a rate of 90 per cent. of the cost of the reinstatement works or 100 per cent. in cases where the authority is satisfied that people entitled to assistance would suffer financial hardship. I fully endorse the sentiment of allowing a rate 924 of 100 per cent. in cases of financial hardship, because many of my constituents who purchased houses that are now defective are suffering severe hardship—a number are unemployed, others have health problems and many have urgent financial commitments. Clause 5 is not sufficiently specific in determining cases of financial hardship. A more precise explanation is necessary.
Clause 6 sets out the procedure under which a person entitled to assistance by way of repurchase may request the local authority to enter into an agreement to acquire his interest at a price of 95 per cent. of the defect-free value of the interest. Many owner-occupiers have spent a considerable proportion of their savings on improving their defective houses. It is to be hoped that that aspect will be considered in determining what is 95 per cent. of the defect-free value of the interest. Many of the owners purchased those houses as a lifetime investment. Such ownership is reflected in the way in which they improved their houses and their investment, which to most of them was their pride and joy.
I congratulate the Government on their commitment to those unfortunate citizens who, through no fault of their own, are owners of defective dwellings. It is gratifying that a form of protection will be given in an attempt to come to terms with what could have been an insurmountable hurdle to a significant proportion of our population, many of whom are elderly and need support.
§ Mr. John Powley (Norwich, South)
I hope that the House will give a warm welcome to the Bill. It is sad that it appears, from what we have heard from the Opposition, that that will not be the case. If the Opposition do not support the Bill but vote against it, they will show themselves in their true colours. They are not, as they sometimes pretend, supporters of owner-occupation. They believe that the state should control everyone's lives through local authorities owning homes.
I heartily endorse the remarks of my hon. Friend the Minister for Housing and Construction about the distress and financial hardship suffered by those who wish to fulfil a long-held dream. For the overwhelming majority of local authority tenants, it is a long-held dream to own the home that they live in. As many of my colleagues who have been canvassing on doorsteps in both local and general elections will know, it is a basic human aspiration to own one's home. Moreover, if someone is unable to own his own home, he usually wants others to be able to do so. Therefore, it is right that the Government should introduce a Bill to help those owner-occupiers who have fulfilled their long-held aspirations to be provided with some form of compensation.
To those who have been in local government, it is understandable that such a system of building should have been used in bygone years. Some years ago, there was a housing need but it is not so grave now. System building was seen as a way of building more houses more quickly than would have been possible by traditional means. It is understandable that a local authority or housing committee should have had houses built under that system. Indeed, I visited many parts of the country to see such houses. We saw demonstrations by builders who sought our local authority's assistance in building such houses. For some strange reason, we never accepted that that was the right way to build. I always felt that, although the traditional 925 method was slower, it was more reliable and beneficial in the long term. Nevertheless, I understand why local authorities succumbed to building such houses.
It is also understandable that tenants who occupy such houses should wish to buy them. Many tenants have a great feeling for the homes in which they live. They are not houses but homes to them. They cherish them and many of them put a lot of their own money, resources and labour into making them into homes. As their circumstances improve, such tenants wish to buy their homes and so become owner-occupiers.
My local authority has behaved — unusually for Norwich in some ways—responsibly over this issue. On investigation, I found that about 586 such houses had been erected by Norwich city council. They were a combination of the Underdown and Winget type of property, both of which were mentioned in the list of my hon. Friend the Minister. Indeed, I was pleased to see them on the list. Of those 586 houses, not one was in the private sector. Furthermore, 156 either have been or are about to be demolished. The fact that houses were built in that way does not necessarily mean that they are about to fall down or that those occupying them have cause for immediate concern. My chief executive has told me that some houses are in quite sound condition, and there is no need for concern. Remedial measures have been taken where investigations have shown that houses need attention. My local authority sold three such houses, but in a responsible way they repurchased them. My local authority has also kept tenants informed about what is going on and there has been close liaison between it and the Building Research Establishment.
Of course, that still leaves a problem, whether it be long or short term. The Opposition's amendment criticises the Government for not making resources available for improvements, structural or otherwise, to those houses that remain in local authority ownership. Some local authorities, of course, have been very responsible in their acquisition of capital receipts and have used them for improving and modernising existing properties. I commend them for that. However, other local authorities have not been so prudent. It is clear that local authorities have the chance, if they so wish, to acquire resources from within their areas to carry out such modernisation. They cannot spend the money on houses that they have sold, and hence the need for the Bill, but they can acquire capital resources to carry out structural repairs and modernisation work on other such properties.
That is where I am critical of my local authority. I pay tribute to what it has done in the past, but I am critical because it has been very backward in obtaining capital receipts. It is well known that, more than any other local authority, Norwich city council resisted the right to buy provisions of the Housing Act 1980. Of course, that resistance has denied them the capital receipts and has denied existing tenants the opportunity of having their properties improved and modernised. It has prevented such properties from being improved as we should have liked. My authority's resistance to the right to buy provisions led the Government to exercise their power of intervention and to the local authority having to deny tenants who wanted to transfer the right to buy. There is a clause in the Housing and Building Control Bill 1983—which is now being considered in the other place—that seeks to give those tenants the right to buy back.
926 The House may wish to know that the Government's intervention in Norwich cost my local authority quite a lot of money. That money was spent needlessly. My authority's resistance to the right to buy was abortive and it was certain to lose its case. The Government's intervention has so far cost the people of Norwich £62,000. That sum will increase and is having to be borne by my constituents. It is an example of how an unwillingness to implement the right-to-buy provisions and to secure capital receipts is denying tenants the improvements that they desire.
That £62,000 plus would have paid for improvements to be made to several houses. If my local authority dropped its opposition to the right to buy and encouraged the sale of council houses, it would secure substantial capital receipts. Although none of these houses has been bought in my local authority, many throughout the country have been bought. Under the Bill, those houses that are owner-occupied can be improved and those tenants in my constituency who live in such houses—and there are probably about 400 in Norwich—can look forward more confidently to the possibility of their houses being improved.
Once those houses were improved and given the seal of approval that we all suggest that they should have, those tenants would become owner-occupiers. Given the assurances and the mortgage facilities, they would buy the houses from the local authority, and the local authority could use the capital receipts as it saw fit.
In assisting those who have been unfortunate enough to buy such houses, investing both work and their life savings in them, and have fallen into difficult circumstances through no fault of their own, the Government are making a very good move. However, it is right that the local authorities should have the opportunity to secure the resources to improve the conditions of those who wish to remain their tenants.
§ Dr. Oonagh McDonald (Thurrock)
The remarks of the hon. Member for Norwich, South (Mr. Powley) were most interesting to those who have heard his ritual condemnation of state intervention. First, he praised the Government for intervening to save owner-occupiers; and the latter part of his speech was devoted, to a large extent, to praise of his own local authority for its responsible handling of this and other housing matters. The hon. Gentleman failed to mention the fact that Norwich has been Labour-controlled for more than 50 years. The authority has one of the best housing records in the country. That is hardly a poor example of the state control that the hon. Gentleman chose to condemn. Norwich is to be praised rather than condemned. It is a pity that Mr. John Garrett, the former Labour Member for Norwich. South, no longer represents that area.
I welcome part of the Bill, as others of my hon. Friends have also genuinely done. We have all met constituents who have become extremely anxious because of the statement made last November and the information received from the local authorities about their houses. I am thinking of constituents of mine, such as a woman who, with her husband, bought a house 14 years ago. They are now divorced and, for financial reasons, must sell the house and divide the proceeds. I presume that they will be helped by the Bill. There is also a middle-aged couple who 927 fear they will have nothing to leave to their children. Presumably they, too, will be able to have their house repaired and it will be saleable in future.
I am a little worried about other constituents who I fear may not be helped. For example, a young woman—a nurse—bought the house of her dreams from someone who, in his turn, had bought it from the local authority last December. I am not sure whether or not she will benefit. I believe that the cut-off date has not yet been specified in the Bill. If the Secretary of State has yet to make the decision, I hope that he will rememeber that it takes a long time for news of such defects to seep through not just to would-be purchasers, but—I regret to say—to solicitors, estate agents and others involved in buying and selling property. I hope that the period will be as generous as possible.
I have written to the Minister about the case of another young couple. Having realised that their council house is subject to these defects, they have postponed buying it, although it is a house that they really wished to buy. I await a letter from the Minister about that case.
§ Dr. McDonald
I am grateful to the Minister for that response.
Other hon. Members have asked about the future of houses once repaired and then perhaps sold again to tenants, or houses sold following repairs undertaken by the existing owners of the property. I wrote to the Building Societies Association about the attitude of the building societies. The association replied that societies aregenerally wary about lending on properties of this construction".The association stressed that societies have aneven greater responsibility to purchasers"—than that of the present owners—now that the problems possibly affecting these houses are known".It is obvious that building societies will be cautious—to say the least—about lending on such properties. Those hon. Members who have asked for arrangements to be made for certification have made a quite proper request. I hope that some provision will be incorporated in the Bill. The simplest answer would be for the local authority to supply a generally recognised certificate to show that repairs have been properly carried out. On that basis, building societies would be encouraged to lend to future purchasers. We have all encountered owners of these properties who are anxious because they have to move to another part of the country. They may have to move in order to find employment or to live near an elderly or sick relative. There are many valid and essential reasons why people have to move house. They will need to be able to sell their properties and to know that those who wish to buy them will be able to get mortgages.
My hon. Friends have also stressed the need to consider council house tenants. The Labour party is concerned about the burdens and anxieties of both owners and tenants. Many tenants will suffer from the defects in these properties either now or in the future, and the local authoriies may find it difficult to carry out repairs.
928 My hon. Friend the Member for Norwood (Mr. Fraser) described the financial burdens that the Bill would place upon local authorities. Pressures are built into the clauses. They stipulate that the owner of such a property, on selling it back to the local authority, may either stay on as a tenant or demand another property from the local authority. Yet throughout the country there are growing waiting lists of people who wish to become council tenants or to be transferred to another council house or flat.
Thurrock borough council has a reasonably good record as a housing authority, but the waiting lists of new tenants and transfers have more than doubled since 1979. Even for those whose needs are great, it takes longer every year to become a council tenant or to get a transfer. That is true throughout the country. Thurrock has not been able to build much since 1979. It has completed plans for warden-controlled elderly persons' dwellings in order to enable elderly tenants to move out of houses and flats to make way for young couples. The last one was completed last year. The local authority has undertaken no new housing because of the Government's constraints on its finances. We stress the burdens that that will put on local authorities and the suffering that it will cause to tenants, because they are often the majority.
Thurrock is in the south-east of England where the level of and aspirations for home ownership are high. Thurrock has not resisted the Government's insistence that houses be sold, but it has sold houses reluctantly. It has 569 prefabricated reinforced concrete houses, 236 of which have been sold to tenants. The other 333 are still owned by the council. Some of those properties are Airey houses, which, to judge from the description the chief technical officer sent to me, will need extensive repairs. He estimates that full repairs will cost between £8,000 and £10,000 per dwelling. The cost of repairing other properties is not yet known. It appears that not many of them are defective and in need of repair yet. However, as the Minister admitted last November, the speed of deterioration seems to be faster than was at first envisaged. We never know when quite large cracks or other structural defects will appear in such houses, thus necessitating earlier repair than was envisaged.
The chief technical officer, referring to prefabricated concrete reinforced houses, says:Condensation is, of course, always a problem in this form of construction".We all know from bitter experience in our surgeries that that is the understatement of the year. The properties suffer from streaming condensation. They are cold and damp, and black or green mould creeps on to carpets, into cupboards and up the walls. Such dwellings are unhealthy and utterly unfit for human habitation. Condensation is a serious problem for thousands of council house tenants throughout the country. That is why we complain about the lack of money available for repairs to council dwellings. Like home owners, tenants deserve consideration, especially when faced with such conditions. It is important that the Government accept their responsibility to council house tenants and set aside money for repairs to ensure that the Bill helps home owners, which is correct, but not at the expense of council tenants.
We have a list of types of houses that have been identified as defective. We must face the fact that an increasing number of system-built houses will be identified as defective. At the moment, there are between 100 and 150 types of system-built houses. A timber 929 constructed dwelling, known as the Scotswood house, has been built in my constituency. It is likely that such houses will require major repairs in five to 10 years. The chief technical officer of Thurrock council naturally wants to know whether such property is likely to be added to the list. No doubt other hon. Members will ask about other types of system-built housing.
We must face the problem of houses that were built in the 1960s and even in the 1970s. It is important that such problems should be taken on board. It is not right that owners or tenants should suffer simply because we choose to deal with the problems found in houses of a certain age to list only certain types of buildings.
It is ironic that my constituency should be faced with the problem of defective system-built housing. The House may not be aware that Thurrock has already suffered from such housing, as the sand, chalk and gravel used to build them was extracted from my constituency, leaving 90 abandoned quarries. My constituency suffered for a long time from the dust created by the cement industry. It would indeed by ironic if the tenants of Thurrock suffered again from concrete reinforced houses. I hope that the Minister will encourage the Government to take on board the costs of repairs for council house tenants so that they do not suffer the misery of damp and defective buildings.
§ Mr. Derek Spencer (Leicester, South)
There are 1,000 Boot houses in my constituency, and when my hon. Friend the Minister recently visited Leicester he was presented with a piece of crumbling concrete from one of them. Because of the customary good manners which the people of Leicester exhibit, it was presented to him hand to hand rather than flung, but it is understandable that issues such as this raise strong emotions.
Consideration of the treatment being given to the tenants or owners of those 1,000 Boot houses in Leicester, South gives the lie to the Opposition's amendment, which suggests that the Government are doing nothing for tenants who live in Boot or defective houses. Twenty-seven of those defective houses have now been sold. The Boot houses in Leicester were built in the 1920s—after the first world war rather than the second as many of the houses about which we have heard today were. That gives some substance to my hon. Friend's comment that defects in more recently built houses, especially after 1960, are by no means the pressing problem that some people dress them up to be. It is right that we should take first account of houses that were built in the 1920s.
There is a discrepancy in how private sector and public sector houses have fared. In the public sector, there has been a great spate of activity by the Labour-controlled Leicester city council. It already has advanced plans for demolishing the 1,000 houses that it still owns and building new ones on the same site. It has a rolling programme that will take 10 years and £30 million. I do not support the way in which it hopes that the programme will be funded, but I take the point that the scale of the expenditure is such that it could not have been envisaged two or three years ago when people were anticipating the level of housing investment programme expenditure that might be appropriate in the south of Leicester.
I accordingly wrote to my hon. Friend the Minister in November last year urging him to give special consideration in the housing investment programme allocation to the new and hitherto unforeseen problem 930 faced in Leicester. My hon. Friend has taken heed of what I said. The HIP allocation for 1984–85, despite an overall reduction in real terms of the cash allocation for the east Midlands of 5 per cent., gave Leicester a cash increase. That led to a HIP allocation of about £17.1 million which, together with capital receipts, led to a final programme for 1984–85 of £25 million.
If one walks around the Saffron Lane estate in my constituency where such houses are to be found, it is not surprising to find building and repair work going on. The council is doing repair work and taking the cost from the housing investment programme allocation, where the houses are in the council's ownership. It has begun the initial part of the programme. The council would do well to pay heed to the advice that my hon. Friend tendered about the best way of augmenting those capital receipts in the years to come to speed up the programme.
People who have lived on the estate for many years do not take kindly to the prospect of seeing their environment coming down around their ears during the next 10 years. If the local authority in the south of Leicester paid due regard to the suggestions of my hon. Friend, it would be able to make headway more quickly and alleviate the hardships which might otherwise result from the public sector's overambitious and underfunded programme.
Countless hours have been spent in the council chamber to look after the interests of council tenants. That policy is right and I support it. Countless hours of council officers' time have been devoted to projects that will be implemented in the next 10 years. Like Opposition Members, I support that in principle and in fact. It is right that tenants' interests should be heeded in that way.
Pamphlets have been sent out at public expense to keep tenants well informed of what the council intends 70 do in the coming years. Much has been done by the city council in relation to the necessary work and to its promotion and planning, under the existing housing investment programmes allocation. Much more can be done.
We must compare and contrast that approach with the assistance given by the council to the 27 owner-occupiers There is a hostile and obdurate silence. The city council has done no more than it is legally obliged to do for them But for the Bill, it is clear from the hostility emanating from Leicester town hall that nothing would have been done to assist those owner-occupiers, some of whom have put their life savings into the Boot houses.
The hon. Member for Norwood (Mr. Fraser) stigmatises my hon. Friend for being a good Samaritan but robbing somebody else to pay for his benefaction. The truth of the matter is that if the hon. Member for Norwood had his way he would probably pass by on the other side.
If one goes through the Saffron Lane estate one sees that the Labour-controlled city council is spending plenty of time consulting tenants' interests, but it does not spend even a second in consulting the interests of owner-occupiers. If anything is to be done to help the owner-occupiers, the Government must do it. I welcome, therefore, the speed with which my hon. Friend has come to their assistance.
Some Opposition Members ask why there should be discrimination between the public and private sectors. I put the question the other way round. If the scale of the problem and the way in which it puts hardship on the backs of individuals is grossly discriminate, why not discriminate in the remedy? If hardship is greater in one case than in another, it is necessary to indulge in the 931 distinction so abhorred by the Opposition to do justice to owner-occupiers and tenants. It is right to make such a distinction between the comparatively few owner-occupiers and the many council tenants. Individual hardship is much more onerous for the owner-occupiers than for the tenants, as the tenants can have recourse to the local authority and the public purse. Something should be done to correct the imbalance. The Opposition's intolerable attitude means that they agree with the Bill in principle but do not support it in practice.
§ 7.7 pm
§ Mr. Geoffrey Lofthouse (Pontefract and Castle ford)
I shall be opposing the Bill tonight, although I acknowledge that some aspects of it will be of advantage and assistance to many, certainly in my constituency. I do not oppose the Bill out of political dogma because I readily concede that many council tenants in my constituency support the Government's right-to-buy policy and take advantage of it. To suggest anything else would be dishonest.
The assistance to be given to private owners of defective dwellings is to be welcomed. The deterioration of our older housing is evidenced by the English housing conditions survey. The growing problems of disrepair cause concern. Any help that is given to owners must therefore be supported in the hope that that will safeguard their dwellings.
I could support such a policy wholeheartedly if that were the only aspect of the Bill. Many tenants on the Chequerfield estate in my constituency have purchased their homes. Since that policy was introduced the council has found that many of the flat-topped houses are dangerous and cannot be repaired. Those houses are being replaced by new houses with pitched roofs.
Where half of a semi-detached house has been purchased by the former tenant and the other remains tenanted, it has proved impossible to put a new roof on the council-owned part. Such dwellings stick out like sore thumbs on the estates because the owner-occupiers often cannot afford to replace the roof and because it is not practicable to put a new roof on only one part both properties are left as they are, often in a condition that the council regards as dangerous.
I recognise that the Bill would assist such people, but the Government should also take a positive approach to the public sector, which accounts for about 90 per cent. of the defective dwellings. Assistance should be made available according to need, irrespective of tenure. At present there are no specific proposals for the public sector. The financial arrangements are thoroughly unsatisfactory and increase the burden on local authorities. As I understand the Bill, the right to assistance will be statutory, unlike the earlier arrangements for Airey dwellings. That means that private owners of such dwellings will take precedence over owners and tenants applying for grants for dwellings which may be considerably older and in greater need of repair. Many authorities already have to restrict grants because of the Government's reductions in housing investment programme funds. In some authorities there is a two-year wait for a grant. As my hon. Friend the Member for Norwood (Mr. Fraser) said, the Association of Metropolitan Authorities estimates that nationally 300,000 to 500,000 families are already in the queue for grant aid.
932 The Bill requires local authorities to provide assistance to owners of houses formerly owned by public sector authorities. That does not mean just former tenants. Local authorities will have to provide grants or repurchase houses previously owned by agencies such as the National Coal Board. Such dwellings are often concentrated in particular areas and the authorities concerned will face undue burdens. In my constituency many such dwellings have been purchased from the NCB. It seems unfortunate that they must now be financed by the local authority.
Tenants of council dwellings can apply for improvement grants only on an individual basis. In relation to dwellings of this type, however, they are specifically excluded. They will thus suffer general discrimination through the financial arrangements. Private owners of such dwellings will receive generous assistance — a 90 per cent. reinstatement grant, rising to 100 per cent. in cases of hardship. I do not know who will have the difficult task of deciding which cases involve hardship as there are so many severe cases in the present economic climate, especially in mining areas. We shall have to see how things develop if the Bill becomes law.
The Bill provides for repurchase at 95 per cent. of the defect-free value, plus legal fees, although the owner may have purchased at a 50 per cent. discount, thus enjoying all the advantages of owner-occupation without the pitfalls and responsibilities. The principle of caveat emptor will not apply. Although we do not begrudge this assistance, it is impossible not to contrast it with the provisions made by the Government for tenants. The Government have failed to acknowledge the enormity of the problem. At first the Department conceded only that Airey dwellings were defective. A few months later Orlit houses were included. The prefabricated reinforced concrete types are now being examined by the Building Research Establishment. Yet authorities are having to repair scores of non-traditional and system-built types. It is difficult to believe that the Department is unaware of this. One can only assume that its piecemeal approach is intended to disguise the enormity of the problem. That assessment is reinforced when one considers the financial arrangements in the Bill.
The Bill proposes that the Secretary of State should designate defective types, but the Government have consistently refused to make any thoroughgoing assessment other than of the PRC types—again, presumably, because of the cost implications. Therefore, I cannot see how the true extent of the problem can ever be dealt with by the Bill. Local authorities could, of course, designate types for themselves but the Secretary of State retains the right to intervene and local authorities will in any event be reluctant to make such designations. If they did so, they would not receive additional finance but would merely increase the burden of demands from private owners.
The Bill states that the cost of dealing with the 16,500 PRC dwellings in private ownership will be £250 million, but those dwellings represent only 10 per cent. of the total. For the remainder, in public ownership, the cost would be about £2,000 million, as the AMA has shown. In addition, there are 300,000 other non-traditional dwellings, many of which will have to be repaired, and up to 1 million industrialised dwellings built in the 1960s and 1970s, some of which are in a deplorable state, 10,000 already having been demolished or scheduled for demolition. The AMA estimate of £10,000 million for the total cost of solving the defects problem has already been substantially validated. Indeed, some commentators have suggested 933 that it is too low. Nevertheless, housing investment programmes continue to be reduced both in global terms and for individual authorities known to have major problems. So far as we know, the £250 million cost now admitted by the Government will not be additional money for local authorities. The cost of repairing local authority dwellings is not even acknowledged. In this context, I welcome the Minister's statement that he will be meeting the AMA to discuss the problems. I hope that he will be able to give it news of financial assistance for this aspect.
Some of the burden of the extra loan charges on the £250 million and most of the costs of local authority renovations will fall on the local authorities concerned if further assistance is not made available, although the dwelling types were approved and certified by the Government when they were built. For improvement grant costs, only 90 per cent. of local authority loan charge costs will be reimbursed, but for repurchase costs the position is far worse. Local authorities will receive grants for 75 per cent. of the difference between the defective value and the defect-free value. If a house is valued at £20,000 defect free, the authority would have to pay the owner 95 per cent.—£19,000—although the defective value may be about £10,000. The local authority would receive 75 per cent. of the difference of £9,000—that is, £6,750. In other words, it would receive £6,750 towards an outlay of £19,000. If I am wrong, I hope that the Minister will correct me, but I believe that the remainder would rank for subsidy only if the local authority received housing revenue account general subsidy, which only 25 per cent. of authorities currently receive.
Apart from the cost of modernising their own stock, local authorities would have to find the money to improve the dwellings after repurchase. The House will recall that in the debate that I was privileged to initiate on 12 March this year regarding defective system-built houses some of the more important issues received an airing. My comments, and indeed the Opposition's comments generally, were somewhat measured. We hoped that the Government were taking a fresh look at the defects problem and would approach it positively. However, I am appalled that a Government could present a measure which is so basically unfair and unjust.
Even the title of the Bill is little better than a poor joke. The measure has little to do with housing defects. It is simply intended to give special assistance to those tenants who were fortunate enough to buy their houses and have already had the benefit of up to 50 per cent. discounts. It is a device to ensure that the Government's right-to-buy scheme is not completely discredited when tenants find that they have been encouraged to purchase inherently defective dwellings which will become a great burden to them.
Nevertheless, I do not mind that the Government have decided to help the owners of these dwellings and I hope that the Bill will prevent at least some of those dwellings from continuing to deteriorate. It is interesting to contrast the attitudes of the Government and the Association of Metropolitan Authorities, which has been prominent in this area. The AMA welcomes the help to be given to private owners and recognises its responsibilities for the occupiers of all types of dwellings. However, it says that help should be given to both owners and tenants in accordance with need and irrespective of tenure. What a 934 contrast that responsible attitude is to the Government's single-minded determination to compensate only owner-occupiers. Clearly the Government have no thought for tenants who must live in identical houses and suffer continued deterioration for years to come.
It cannot be right for owners to be compensated while tenants have no specific help and cannot even apply for an improvement grant in their own right. The Government know that local authorities cannot afford to meet the costs of defects from existing housing programme allocations. For them to suggest otherwise would be dishonest. Indeed, the Bill recognises that for the 16,500 owners of these dwellings, the cost is likely to be £250 million. Therefore, on the Government's own figures, for the 90 per cent. of the dwellings that remain in public ownership the cost will be at least £2 million. Realistically, there is no way that local authorities can afford that sum, and it should be borne in mind that there are many other types of defective dwellings which are not even, as yet, being considered by the Government.
The Government must realise that, if the money is not found for local authorities now, the housing stock will continue to deteriorate and the problems will increase. In the end, it will cost much more, and whichever party is in power will have to face a huge bill.
The Bill shows how the Government consistently refuse to face up to their responsibilities for the whole community. They are interested only in those people who are fortunate enough to buy their own dwellings. They have no concern for the vast majority of occupiers of the dwellings who will remain as tenants. It could almost be said that the Government are deliberately punishing the tenants of those dwellings for being unable to buy their own houses.
Although the Bill will benefit some of my constituents, I hope that the House will oppose it.
§ Mr. Christopher Chope (Southampton, Itchen)
On 12 March I had the honour to follow the hon. Member for Pontefract and Castleford (Mr. Lofthouse). I regret that I cannot agree with anything that he said this evening. II was unkind to the Government to suggest that the Bill was biased and unfair to existing council tenants. It is a compassionate Bill that deals with the problems that people who bought these council houses now face.
During that debate I asked what the attitude of building societies would be after the Bill was published. I regret that it has not been possible for my hon. Friend the Minister for Housing and Construction to say what he expects their attitude to be. It is crucial, and unless it changes we shall not make progress in lifting the blight from these properties.
I am grateful to the Minister for announcing that the designation will apply to all the Reema Hollow Panel houses in Southampton, including those which were constructed after, although designed before, 1960. Obviously, all the occupiers of those houses are in the same boat, and those who invested their money in them can be sure that their investment is safeguarded.
There are, however, some defects in the Bill and I hope that they will be rectified. It is a pity that we define all the dwellings in a designated class as defective and treat them all in the same way. That is exactly what building societies have been doing, which is why they have been justly criticised. To treat all dwellings in a designated class as 935 defective is to tar them with the same brush, and to encourage building societies and lending institutions to do likewise. It will inevitably result in the holders of a relevant interest, as defined in clause 2, being able, and well advised, to apply for and obtain assistance by repurchase.
Under clause 3(4)(b) a local authority must repurchase, unless satisfied that, after work to reinstate the dwelling has been carried out,an individual acquiring the freehold of the dwelling with vacant possession would be likely to be able to arrange a mortgage on satisfactory terms with a lending institution".I have not yet heard evidence to the effect that it will be possible for people to obtain mortgages from lending institutions when the Bill is enacted. At present building societies are not even prepared to lend on a PRC house which is structurally sound and not in need of reinstatement.
Yesterday I visited the first Reema PRC Hollow Panel housing estate, which was completed in 1947. All the houses are in excellent condition, but building societies will not lend money on them. Despite the Bill, it is likely that a person who owns a PRC house will be unable to sell it again on the open market because of deterioration through carbonation and chloride attack. As the Building Research Establishment disclosed, that is likely to affect all PRC houses sooner or later. What reinstatement would guarantee against further deterioration? Only rebuilding with new materials would be a guarantee against further deterioration. One loophole would be if local authorities—they are included in the definition in clause 3—were regarded as lending institutions and were prepared to lend money to potential buyers. As a result, the owner-occupier would not be able to claim for a repurchase loan rather than reinstatement.
That would drive a coach and horses through the Minister's admirable intent to enable those who bought PRC houses to resell them on the open market. To avoid local authorities being tempted into such mischief, I hope that the Minister will redefine "lending institution" for the purposes of clause 3 as a building society, and make it clear that only a building society comes into that category. If a building society is not prepared to lend on a PRC house, such a house cannot be sold on the open market.
If the Bill is enacted in its present form, it would be advisable for those who have bought PRC houses to ask the council to repurchase them, because they will not be able to sell those houses even after improvements and repairs have been carried out. However, that might create a farcical position. I do not wish to have to advise the 1,000 people who have bought such houses in Southampton that the only way to get rid of the blight is to sell their houses back to the council. In Southampton, about one third of PRC houses have been bought by tenants, which is a testament to the good quality of the houses and their high acceptability among tenants who wish to buy.
The Building Research Establishment report on the houses shows that only a few are defective and that most of them have life left in them. I cannot refer to the Reema report, because it has not yet been published, but the report on Wates houses concluded that the majority of them are likely to be in good structural condition. Paragraph 3 of the summary of findings states: 936The investigations suggest that corrosion is occurring of reinforcement in the in-situ structural concrete between the … panels in some dwellings.The concrete used locally was poor, butthe precast wall panels are generally in good condition.The report concludes:There is no need for urgent action generally. Cracked or spalled concrete may be repaired if houses are otherwise in good condition. Deterioration may be delayed if houses are maintained in good structural condition.One cannot help but be surprised by the vagueness of much of the BRE report. However, I am not surprised that the BRE is conservative in its attitude and cannot say, "We believe that a large proportion of the houses will last for 50 or 100 years." However, my concern is that, because all the houses are blighted and no building society will lend on them, the only way out for their owners is to sell them back to the council, which they are loth to do.
I hope that my hon. Friend the Minister will consider changing the criteria for eligibility so that structural unsoundness will be the only criterion. If a dwelling were certified as structurally sound, the Government could then offer an assignable guarantee for the present value so that potential purchasers could buy with the benefit of the guarantee and presumably qualify for building society mortgages. Such a guarantee might enable sitting tenants of PRC houses to exercise the right to buy that many tenants have already exercised, because many of them wish to continue living in their homes and to maintain them as secure assets.
If houses have lasted for 37 years, as have the Reema homes which I inspected yesterday, and are now structurally sound, who can say that they will not last another 100 years? It is a great mistake to blight all the houses in that way. I know that it has happened, and I welcome the fact that the Bill will mean that no one will suffer financially as a result of the blighting, except perhaps the great British taxpayer. I urge my hon. Friend to accept that the advantage of assignable guarantees would be that everyone who owns a structurally sound house can obtain the guarantee. If, in the end, some of the houses cease to be structurally sound, the money that would have to be paid by the Government would be paid over a long period, whereas under the terms of the Bill, and if the building societies do not change their attitude, almost all PRC houses will have to be bought back by local authorities. In an area such as Southampton, where the prices are well in excess of £20,000, that would be an expensive exercise. It would be unnecessarily expensive from the Government's point of view.
I am also worried about the terms of resale. If houses are sold back to the council, should there not be a difference in terms depending upon whether the occupier intends to remain as a secure tenant? Should there not be a requirement that the houses be let at fair rents fixed by a rent officer? Such issues are open-ended at present. With the record of some local authorities on rents, those who are considering selling their homes to the council should have some knowledge of the rents that will be charged. Those who sell their house to the council, have their legal fees paid and then buy another house on the open market, which they should be encouraged to do, should receive more compensation than someone who sells his house back to the council, puts the money he receives in the bank and continues to occupy the house as a secure tenant for as long as he wishes.
937 I am also worried about the time scale for dealing with applications. Those of us with experience in local government know that matters take much longer in authorities than people would wish. Clause 4(1) and (2), which uses the words,as soon as it is reasonably practicable to do so",is insufficiently compelling on local authorities. Those who wish to sell their houses to local authorities—I have received letters from several people who wish to move because of their jobs—want action sooner rather than later. If the preamble to the Bill is correct—that local housing authorities will incur only minor administrative costs—authorities that are challenged in the county court might say, "We are not allowed to increase our administrative costs, so it might take a long time to process the application. However, it will be done as soon as it is reasonable practicable." Deadlines should be included in clause 4 so that those who wish to sell back to the council will know where they stand. That alone would concentrate the minds of authorities that are sometimes reluctant on this issue.
I hope that my hon. Friend will have second thoughts about clause 10, because it might cause a great deal of trouble if the Government gave each authority the power to designate its properties as defective in design or construction if it appears to those authorities that they are. I understand that my hon. Friend will have a veto, but it can be exercised only after the matter has been debated in the council chamber, by which time the properties might have been blighted in the eyes of building societies and potential purchasers. I suggest that the Government will regret handing such a power on a plate to the less responsible—the lunatic Left—in local government. My hon. Friend mentioned some justification for this proposal, but he gave no specific examples of where it might be necessary. It must be better for my hon. Friend to retain the power of designation so that he can retain some control.
We have heard this afternoon from Labour Members who represent those areas that not enough money is being spent on public housing. They are mistaken. However, they might use clause 10 as another means of getting at the Government and saying that the houses are defective because of design or construction. I should prefer my hon. Friend the Minister to be responsible for making such decisions, not some hot-headed local authorities.
§ Mr. John Fraser
Can the hon. Gentleman help with something that mystifies me? In the table published by the Minister for Housing and Construction, Southampton was shown as having 1,677 defective houses of Cornish Unit, Reema and Wates construction. None is shown as being privately owned. Why is that?
§ Mr. Chope
That is a matter that I have taken up with the director of housing, and the figures that I have been given for the numbers that are privately owned I have obtained from the housing authority. The official figures must be either because the housing authority filled in the form incorrectly, or misunderstood it, or because the lines have become crossed between Southampton and the Department of the Environment. About 1,000 of the PRC houses in Southampton are privately owned. It is a pity that that is not clear from the appendices, as the hon. Gentleman said.
I have reservations about the Bill, but I shall support its Second Reading because it is a necessary and important 938 measure. Sadly, it is partly necessary because of the blight often brought on perfectly sound housing, as may become clearer when the Reema report is published. The blight has been brought on those houses because of the action of successive Ministers. I hope that the Bill will be able to differentiate between the houses that are structurally sound and those that may deteriorate in future. I hope that some guarantee may be incorporated so that not all the houses will have to be sold back to the local authorities, to the consternation of those who live in them at the moment. On the basis of what I understand is contained in the Bill, I would advise those who occupy such houses that their best bet is to sell those houses back to the local authorities and have a fresh start. That is a regrettable state of affairs.
§ Mr. Ron Davies (Caerphilly)
It is a pity that the hon. Member for Southampton, Itchen (Mr. Chope) decided to end on a sour note, because the earlier part of his speech was constructive, although critical. The point about the problem of blighted houses was a valuable one and I support it. It is disappointing that the hon. Gentleman, who made a valid point, lapsed into the perennial Conservative habit of attacking local democracy, local authorities and people who voluntarily give their time to serve communities.
The hon. Gentleman almost fell into the trap into which the hon. Members for Norwich, South (Mr. Powley I and for Leicester, South (Mr. Spencer), who cannot have been listening to the debate, fell. My hon. Friend the Member for Norwood (Mr. Fraser) made the Opposition's position clear. The Opposition's amendment makes it clear that we accept 100 per cent. the principle of offering support to those who purchase. There is no dispute about that We are not discussing the merits of owner-occupation or of the right-to-buy provision. We are discussing the way in which the Government intend to respond to a particular housing crisis.
Labour Members welcome the Government initiative as far as it goes, but it does not go far enough. The Government have selected 10 per cent. of those who are living in defective housing and are offering them support, while ignoring the 90 per cent. of those who have similar and equal housing problems. That is arbitrary, prejudicial and indefensible. Therefore, I shall vote against the Second Reading.
I have some points to make about the principle, the detail and the applicatin of the Bill. I welcome the presence of a Minister from the Welsh Office. We have discussed these matters together, and shall continue to do so. On the general principle of the Bill, my local authority, Rhymney Valley district council, has 1,096 defective houses. Of those, 142 have been sold, mainly in estates in Hengoed and Penyrhoel in Caerphilly. There is a great deal of concern among ex-tenants about whether the Bill's provisions will act fairly and properly and whether their housing problem will be resolved. I am sure that the Minister will understand that the local authority w ill give every assistance to those ex-tenants in trying to solve their problems.
I am concerned that, although 142 people who have purchased will be assisted, there remain 954 tenants in the public sector who are living in extreme squalor. If hon. Members have not seen the effects of this housing, I suggest that they visit some of it. The Welsh Office Minister knows that he has an open invitation to come to 939 Rhymney valley to see the conditions. I know that he has seen deputations from some of those tenants. The problems are those of damp penetration and condensation, with the result that windows are rotting, walls are peeling, roofs are leaking and families are living in squalor and misery. There is no justification for the Government to say that they will take action, welcome though it is, to support those 142 families while at the same time they are denying resources to 954 families. That is the essence of our objection.
In an intervention in the speech of the Minister I put the problem that we face in Rhymney valley with our HIP allocation. I repeat that point and I hope that it is taken up by the Minister for Housing and Construction and by the Welsh Office Minister. Our HIP allocation this year is just over £6 million. There are 142 dwellings that need repair. Let us assume that the average cost is £8,000 and that all houses are repaired and none of them is repurchased. The cost will be more than £1 million.
The local authority has two choices. It can put back some of its HIP allocation programme, sacrificing new build, on capitalised repairs and improvement grants, at a time when we have a waiting list of £15 million for the improvement grant programme. Secondly, it can tell the 142 families who, as a result of tonight's debate, will be given help that no matter what the Government say or what the debate in the House of Commons has been about, although they are entitled in theory to have a full improvement grant, in practice, because the Government are not making the money available, they will not have the grant.
That is the hard choice facing the local authorities which will have the responsibility of implementing this legislation. I appeal to the Minister and the Welsh Office to recognise the problems that have been created. Additional legal responsibility is being put on local authorities but the financial wherewithal is not being provided to discharge it. This must be looked at closely.
An additional burden is being placed on local authorities but no additional help is being given to them. The explanatory memorandum relating to clause 4 lists the requirements to be placed on local authorities. I remind the Minister that these are the local authorities that the party have been vilifying since they were elected in 1979. The Government have been castigating local authorities for their inefficiency while cutting resources and placing additional responsibilities on them. Now a completely new set of responsibilities will be placed on the administrators in local government and there is not one jot of financial support being given to enable them to discharge these burdens. Their needs are dismissed on page V of the preamble, which says that the demands, "it is expected", canbe contained within existing levels of manpower.How on earth can the Minister say that the expected demand can be contained within existing manpower levels? I am talking about 142 improvement grants. Who will do the detailed survey and handle the repairs? Who will carry out the inspections? Who will be responsible for ensuring that the repair grant money is spent properly and that the works satisfy the demands specified in the Bill? Local authorities have cut manpower levels over the past 940 five years. The Government dismiss the extra burden on local government as if it is something that can be picked up on a Monday morning at no cost.
Local authorities have a choice. Rhymney valley has a £15 million waiting list for home improvements. I remind the Minister of the recent findings by the Welsh house conditions survey which shows that about 8.8 per cent. of houses in Wales are unfit. About 90,000 dwellings are involved. In Mid-Glamorgan 10.5 per cent. of the housing stock is classed as unfit. The Minister says that priorities must be decided. He says that people entitled under the Bill should come forward on the waiting list and that the 10 per cent. of people who have lived for up to 25 years in unfit housing must wait their turn and be put back on the list for another five years.
The Government's attitude is unfair on the people whose expectations have been raised by the Bill. It is unfair to residents who have been on housing waiting lists for a long time and whose expectations have also been raised by the Government's propaganda campaign for improvement grants. It is also grossly unfair on local authorities which will have to make the choice. They might have to say to a disabled person, to a family with a disabled child, or to a family with a leaking roof, "You cannot have an improvement grant because we must give the money to someone who has recently purchased their council house." That is one of two principal weaknesses in the Bill.
First, the Bill applies only to the private sector and not the public sector. Secondly, the Government have come up with a good idea, but they are not providing the money to implement it.
The hon. Member for Southampton, Itchen (Mr. Chope) talked about blight. In my area the demand for housing is slackening and there is difficulty in maintaining the housing stock. Many houses have been sold and purchasers, or ex-tenants, have already experienced the impact of blight. Prospective purchasers are unable to obtain mortgages on property, not because it shows signs of defect, but because it is known that latent defects might be present. What are such owner-occupiers to do?
The Bill provides that local authorities may repurchase houses which cannot be improved at a viable cost. We heard interesting exchanges between the Minister and the hon. Member for Reading, West (Mr. Durant), both of whom gave entirely different interpretations of compassion and of conditions under which local authorities will be allowed to repurchase. I hope that the Minister will make it clear under what circumstances local authorities can repurchase. If a family living in a house which shows no sign of defect but which may have latent defects cannot find a buyer for their house, will the local authority have the funds to repurchase? That is a simple and straightforward question. It is no good the Minister saying "It all depends upon the circumstances."
I was intrigued to hear the Minister mention people who have to move because of their job. I am talking about 10,000 people in my constituency who will not move because of a job. What will happen to them if they want to move two miles down the road for social convenience reasons? Will they have no recourse to go to the local authority and require it to repurchase?
I have discussed the matter in detail with my local authority to see how it would cope with the legislation. A 941 paragraph from a letter from the director of environmental services of the Rhymney Valley district council puts the matter in perspective. It states:The bill provides for assistance 'to deal satisfactorily with the qualifying defect, and includes any other work reasonably required in connection with that work' ".So far so good. I ask the Minister to pay particular attention because the letter is written by someone who is responsible for implementing the legislation, not for putting it through the House with a majority. The letter continues:This may be too restrictive. The remedy of defects will involve major disturbance and it is reasonable that works not strictly required to remedy the defects but necessary to bring the property up to modern standards should be done at the same time, it being both economic good sense and in the occupiers' interests that this should happen. The definition should, perhaps, be widened to allow this to happen by adding words to the effect 'or properly carried out in association therewith'.I hope that the Minister will pay attention to that. I am sure that Government Members, with their keen desire to ensure efficiency and value for money, will recognise that it would be the height of folly to put public money into the improvement of private houses but to restrict the nature of works so that general works are not done to make the property fit and safe.
My final argument is a little technical. People who come within the ambit of the legislation will seek professional assistance. I hope that the Government do not think that the corner cowboy outfit should carry out the work. We do not want someone on the dole or someone who has set himself up as a builder with 10 sheets of headed notepaper to do the work. The work is detailed and technical. Specialists will be needed.
The Minister should at least consider allowing local authorities, with proper funding, to play a more constructive role. If local authorities are involved, they can ensure proper standards and that specialist consultants do the complete job. Local authorities can achieve concessions for ex-tenants and ensure that all the necessary work is done properly.
If the Government were sincere in tackling the task as a housing problem, they would have considered such a provision. I come to the reluctant conclusion that the Government do not regard this as a housing problem. Despite the Government's stated concern about the needs of individuals who have exercised the right to buy, they regard this problem as a distortion of market forces. They argue that they allow market forces and freedom of choice to operate and that now problems have arisen. They are attempting to resolve the problems of people who have bought their houses rather than the problems of the remaining 90 per cent. in the public sector.
The argument can be summarised no better than it was in the New Statesman of 13 April:But defects are clearly not the government's main concern, as illustrated by the preamble to the new bill which explains that suspected houses have been 'substantially reduced in value'. For the government, the purpose of the Housing Defects Bill is to paper over cracks in the right to buy.If the Government were sincere in tackling this housing problem they would not have restricted themselves to 10 per cent., and they would not have restricted the involvement of local authorities when the opportunity exists to tackle what is a major housing crisis in many local authorities. The Government have failed to meet that 942 requirement, and that is why I and, I am sure, many other Opposition and Conservative Members will vote against the Second Reading.
§ 8 pm
§ Mr. Tom Sackville (Bolton, West)
I have the greatest sympathy for people who find themselves in this unfortunate position. If something is not done to set their minds at rest on this matter, it will be a great injustice to people who own homes which may turn out to be, or have already proved to be, defective. Too often people whose homes are blighted for one reason or another are not compensated in any way. I take the example in my constituency of people who find themselves living next to opencast mine installations. Sometimes they cannot even get information on what is going to happen near their homes. They find that they cannot sell, and that their homes have depreciated in value sharply. I applaud the Bill, and the fact that in this case the Government have seen fit to do justice. According to the amendment in the name of the Leader of the Opposition, the Opposition agree with this view. I cannot help wondering, therefore, why they wish to take nearly six hours of valuable parliamentary time to say so. I can only assume that they have taken advantage of the fact that this is a housing related issue to make a general attack on the Government's housing policy which, perhaps, should be the subject of a separate debate in Opposition time. They are carrying on their vendetta against the Government's right-to-buy policy, a vendetta which in my view is out of step with the feelings of many people of all political persuasions in the country, and which does them no credit at all.
In the borough of Bolton there are 30 Orlit and 30 Unity properties in this category which have been purchased from the council. Tests are taking place to establish the defects in these properties, but the results are not yet known. If it is established that they are in need of reinstatement or that they qualify for repurchase, I cannot help asking whether the other approximately 600 tenants of similar properties in the borough will feel that their properties are blighted in the sense that they are living in condemned property that will need major work in the future and therefore regard themselves as second class citizens.
I am grateful for the Minister's assertion that HIP allocations will reflect the number of such properties in each borough. I hope that Bolton council will receive the necessary allocations to take account of this. I very much hope that, as tests continue on these properties and as it is found that the Bill must be extended to cover further types of properties, the Government will take proper regard for the problems that may be faced in Bolton so that, as has already been mentioned by the Opposition, the effects of the Bill do not cut into the resources available for the important schemes that are already needed.
§ 8.5 pm
§ Mr. James Tinn (Redcar)
I shall be brief, as I recognise that other hon. Members wish to speak in the debate.
Some Conservative Members seem not to recognise that it is possible to welcome what is good in a piece of legislation without having to swallow the Bill in its entirety and they criticised in particular my hon. Friend the Member for Norwood (Mr. Fraser) who opened the debate for the Opposition because he did not welcome the Bill in 943 its entirety. Our opposition to parts of the Bill, and particularly to omissions from the Bill, is as genuine as is our welcome for the parts that we like.
When I first read the Bill, and in particular clauses 1 and 2, I was very pleased. As the problem had been recognised, I thought that the Bill would deal with it. However, I have to tell the Minister that his speech disappointed me. While clause 1 gives the Secretary of State wide powers to define people who need help, the Minister made it clear that he intends that it shall be applied only to houses that have been the subject of survey by the Building Research Establishment, and he explained why. He said that it was because people had found particular difficulty in obtaining mortgages, and selling those houses. I point out to the Minister that, following surveys, that difficulty has become apparent in other areas of housing also.
I wish to draw the Minister's attention in particular to the situation in my constituency regarding which I have corresponded for more that 12 months with the Parliamentary Under-Secretary of State. He has written to me regularly, and in some detail, but so far without a solution. A couple, having bought another house because of their changed family circumstances, and having negotiated a buyer for their previous house, may be faced with the sale falling through because the prospective purchaser, while satisfied with the price, and with the property, is informed after a survey that the building society will not provide the money or accept the risk. It is true that the style of property is not the reinforced concrete building, which has caused the Minister particular concern, but a steel frame with exterior cladding of 10 per cent. asbestos and concrete. That is a major fact.
From the correspondence that I have had with the Building Societies Association, and from survey reports that I have seen, that is what has raised doubts in the minds of the building societies. The Parliamentary Under-Secretary of State has tried to reassure me that, according to the best advice of his Department, there is no risk of a health hazard, but building societies do not seem to believe it. Please will the Minister undertake to conduct some survey, other than that which is being made at present into health hazards, into the particular problems of the purchase and sale of houses containing asbestos in their construction? That is a problem quite apart from the disquiet that seems to be felt by building societies about industrialised building generally. I beg the Minister to undertake to do that.
I thought that I would have some good news for my constituents but so far I have heard none from the Minister. If not now, I hope that later he or one of his colleagues will write to me to say that there is at least a possibility of a survey being undertaken into houses constructed partly of asbestos similar to that which is presently being undertaken, which will recognise some of the problems that arise. It will probably be too late to help my constituents who are literally desperate — I do not exaggerate—but let us at least set the wheels turning to try to ensure that people in a similar position will be helped as, thankfully, others will be by this legislation.
I could welcome the Bill with a full heart much more readily if I could have an assurance from the Minister that 944 he has not closed his mind to the problem by restricting the categories of houses to be recognised to those that are the subject of the only survey so far to be held.
§ Mr. Martin M. Brandon-Bravo (Nottingham, South)
It is rather sad that the Labour party's wrecking amendment—for that is what it is—dirties an otherwise excellent step in the right direction in housing affairs. It is a great pity that the desire to oppose blinds it to matters that should have its support. The comments of the hon. Member for Redcar (Mr. Tinn) illustrate that point well.
No Bill is perfect, certainly not on Second Reading. Nor can it contain everything that we would wish it to contain. That should not be a reason why the Labour party should seek to refuse to give the Bill a Second Reading, and few outside the House will ever understand it. At this stage Parliament is unable to offer the end of the rainbow which is quite beyond what we call the art of the possible.
Given our policy of promoting home ownership in what was the publicly funded sector, it is right and proper that we should offer purchasers such guarantees as are fair and reasonable. For most people the purchase of their home is probably the most important financial transaction that they will undertake in their lifetime. The guarantee cannot be open-ended, nor should guarantees apply to homes for which decades of experience show that no such guarantees are ever necessary or reasonable. Families who have purchased traditional homes should not be in any different position in that regard from families who have purchased in the private sector, where traditional construction is the norm. Therefore, it is right that the Bill should address itself to non-traditionally-built houses where provision for long-term remedial work in many types appears to be inevitable.
I welcome the Government's recognition of their moral responsibility to those who have purchased from the community in ignorance or without proper financial recognition of future expenditure over and above reasonable maintenance resulting from structural risk. I stress that as another hon. Member did earlier. I presume that the cut-off date referred to in the Bill, plus the period of grace, will in simple terms mean that if a family purchased before that date, the purchase price did not—indeed, could not — recognise that possible future liability, and therefore they are covered by the legislation. But if, after that date, the purchase price will reflect the liability, families will be advised to take that into account and to make the provision. As I understand it, that liability to inform is covered in clause 11.
I welcome the provision for the minimum 30-year life after restoration. That is only right and proper. I also welcome the reference to the fact that costs should not exceed market value after restoration. I am sure that hon. Members have seen from their local government papers the lunacy of expenditure, particularly on scattered properties that have been municipalised by local authorities, that is 150, 160 or 170 per cent. of what will be the final market value after that money has been spent. I have always felt that to be a dreadful waste of valuable public resources that could have been used to much better purpose within a local authority housing responsibility.
I am a little concerned about clause 5 which deals with hardship. Again, experience in my local authority shows a woolly approach to the hardship clause when it comes to housing improvements. It seems to be the easy way out 945 to assume hardship and to give the higher rate. I note that the quality of work is dealt with in the Bill; and I hope that there will be some form of certification, to which many hon. Members have referred. We should talk about proper certification, and not a crude list of builders who are capable of doing the work. I regret that I am rather suspicious that some authorities will use approved lists in a way wholly inconsistent with the objectives of the Bill and more consistent with other political objectives.
I welcome clause 8 which deals with the right to remain a secure tenant. Hon. Members will know of the tragedy, for whatever reason, of people who are unable to meet their mortgage commitments and, sadly, have to become homeless before the local authority will act.
Clause 10 deals with the Secretary of State's power of veto. It is right and proper that that should be in the Bill, but here I agree with my hon. Friend the Member for Southampton, Itchen (Mr. Chope). It may well be that it is a more sensible approach that that decision should be the Secretary of State's in the first place, rather than that individual local authorities should be allowed to make different decisions on the same types of dwellings throughout Britain and argue that the Secretary of State should veto one and not another.
Nottingham has 500 Tarran houses and 600 BISF houses, which I believe would automatically be covered by the Bill. But we have other dwellings which we call no-fines construction, which I do not think are covered by the Bill. They are not what the man in the street would call traditionally built houses. Therefore, decision-making as to designation should lie with the Secretary of State, not the local authority.
A commentator sought to advise some hon. Members on this side of the House as to the view that the Labour party would take on this legislation. We were told that it could not possibly oppose it because it would not wish to ruin former tenants of their authorities. He obviously does not know some Labour councils, for, as my hon. and learned Friend the Member for Leicester, South (Mr. Spencer) very clearly pointed out, his local authority was quite prepared to allow former tenants to be ruined, as they would have been but for the provision that the Minister is bringing before the House tonight.
My hon. Friend the Member for Reading, West (Mr. Durant) made another most important point concerning the ability of those authorities that have got their house in order and have their HIP allocations properly managed to cope over a period with this problem. However, authorities that have a sheer obsession with public sector new build, and public sector new build alone, will not have the resources, because of mismanagement, to do a proper job. Regrettably, my own local authority has made just that kind of mistake. I referred in an earlier housing debate to the fact that my local authority is demolishing two blocks of flats at an immediate cost to the city of £750,000. My hon. Friend the Member for Norwich, South (Mr. Powley) talked about £62,000 being wasted in Norwich. I wondered then what the reaction would be when I said that my authority was wasting £750,000, because of its obsession with public sector housing.
This, I believe, is an honest and a proper measure designed to provide safeguards for those who have purchased homes with unknown defects, and for that reason we should all support it. Whatever the inadequacies of the Bill, whatever it does not yet contain, we should all support it, for outside this House Mr. and Mrs. Joe Public 946 will make no sense whatever of the Labour party and others voting against this very promising piece of legislation.
§ Mr. Simon Hughes (Southwark and Bermondsey)
I am grateful that I can now deal comprehensively with a succession of points made by Conservative Back Benchers which suggest that it is inappropriate at this stage to say that this Bill goes some of the way, although by no means far enough, towards meeting the problems of some of the people living in defective housing. It is no good the Government coming to the House imagining that they will have an easy ride with yet another half proposal for half-baked legislation. It is the third that we have had in this Session.
We started off with the Rates Bill. Local authorities were to be rate-capped. Nobody knew which ones. The numbers changed and the names were not specified. It was a hollow crown of a Bill, with no content other than threat. We then came, just before Easter, to the Local Government (Interim Provisions) Bill, abolishing elections in metropolitan counties and in greater London next year, changing by ministerial decision the composition of some local authorities, with enormous numbers of inadequacies and points not worked out in the Department—quite clearly a Bill that, for all sorts of reasons, was not in a fit state to be brought to the House. Both Bills were presented with no explanation as to how much money they would save. Now we have a third.
While all hon. Members accept that housing defects represent a problem that it is right that the Government should take the responsibility for dealing with—and we are grateful for that—the other half of that responsibility concerns the subject of discussions which the Minister has told us he will be having next month — and we are grateful for that also—in relation to the 90 per cent. of people who still live in defective housing, the difference being that they are in defective housing still owned by local authorities and are not people who have bought their own property.
Before coming to some of the details of the Bill which have been criticised constructively, and which I hope will be the subject of amendments in Committee, I want the Government and the hon. Members for Nottingham, South (Mr. Brandon-Bravo), Southampton, Itchen (Mr. C'hope), Leicester, South (Mr. Spencer) and others to understand the reason why the Liberal party will join the Labour party tonight and support the amendment saying that we are not ready to give support to this Bill yet because there should be more in it. The reason is that the Government could, and should, have come forward with such proposals by this stage. Because they have not, we must keep up the pressure until they do.
Let me pray in aid as some non-party political support the National Consumer Council, one of many bodies which have no party political allegiance and see the problem from outside the party political arena. It clearly accepts that the owners of the 16,500 houses built by local authorities—persuaded by both Labour and Conservative Governments — in the period up to 1960 which were found to be defective after purchase should be helped to get over their problem in the way they choose—either by having the houses bought back by the local authority or by being given the money to put them right. But the National Consumer Council, in a report entitled, 947Cracking up: Building faults in council homes",which I am sure many hon. Members have read, says:An alarming number of council houses are defective. This is causing unacceptable distress to tenants and endless aggravation to their local authority landlords. The cause is clear. Local authorities and government, faced with a chronic housing shortage, rushed into massive building programmes which used low-cost systems and materials that had not been tried and tested. The building industry must shoulder some responsibility too. It is time for all concerned to face up to the fact that serious and very expensive mistakes were made. We need remedies not excuses.It then lists a series of remedies that are open to the Government, and I hope the Minister will also discuss these with the AMA on 14 May. Those suggested remedies are a sound basis for administrative and executive proposals, particularly in the context of clause 14 of the Bill. The report goes on to list the remedies:The 'new deal' would have the following components: amendment of section 32 of the Housing Act 1961 to require landlords to remedy defects as well as to do repairs".It is no good spending money year after year on repairing surface problems, as any Minister for Housing and Construction well knows, if later the property or estate is going to have to be wholly rebuilt, to give the most dramatic example.
Another component would be the right of tenants to know the nature of the structural problems on their estate. There is an estate in my constituency, the Osprey estate in Rotherhithe, where there are fundamental structural problems, but the tenants have not been able to get hold of the documents from the GLC or the local authority comprising the structural reports produced for the authorities to find out what the position is.
Then there could be new forms of contracts between the building industry and the local authorities so that there would not later be problems for which the local authorities would have to take sole financial responsibility. The Parliamentary Under-Secretary of State for the Environment last year met a delegation of my constituents in relation to the Bonamy estate, an estate built some 12 years ago, which now has structural defects. I regard it as a major failing that the people responsible for the defects in that estate have not been sued. It is now too late, because the defects came to light a long time ago. It is very important that there should be a guarantee that money is not lost in that way and that local authorities, which for some reason—often embarrassment—did not pursue the architects, surveyors and builders, now have no recourse but to pay to put right the defects. In this way large amounts of public money—which all comes from the same source, because it is the people like those in the Strangers' Gallery who pay through taxes and rates for what we are talking about tonight—are spent, when those cuts could have been avoided. In the case of the estate to which I have referred, this cost may be £40 million, and that is for 900 homes, whereas we are now talking about 1 million homes in the context of tonight's debate.
Finally, we need the right sort of insurance policies and the right sort of inspection of properties.
These are matters that I hope the Minister will pursue. They have not been pursued yet. They are not in the Bill. They ought to have been the subject of parallel proposals. We shall not be happy until they are on the table.
948 Certain proposals in the Bill are also defective. One problem is that people may not discover defects in their property in time to do anything about them within the time limits provided by the Bill. Clause 1 provides for the designation of defective property and—similar to other Acts — provides as the test that the defective circumstances have become generally known.
A parallel to that is the Limitation Acts for claiming damages. They provide a time limit of three years—or sometimes six years or even longer—from the time when the claimant first becomes aware of the right to claim. This Bill does not provide a similar period, so that an owner who does not become aware of a defect soon enough will fall outside the scope of the Bill. I think that the Minister acknowledges the need to ensure that the necessary information reaches all the relevant people. They should all be given a proper opportunity to claim, and the Bill should be amended to allow for that.
The hon. Member for Itchen mentioned the risk that building societies would not grant mortgages because of the possible defects in system-built housing. The chief officer of Leeds city council, in a recent letter, said:Obviously there are several comments I could make relating to the role of the building societies in effectively blighting many of these types of property, the effect on housing finances on any repair and repurchase programme".I hope that the Minister will accept a proposal in Committee that any property that cannot be resold because a mortgage is refused will be repurchased if the owner so wishes. If the building societies refuse a mortgage on a property so that it cannot be sold, that property should fall within the scope of the Bill for repurchase. There will be a predominance of repurchase requests — rather than reinstatement—because people will not take on an open-ended responsibility when they can ask the local authority to repurchase the property.
I ask the Government also to accept that there is no justification for limiting the amount of reimbursement to 95 per cent. The Minister will remember that when we discussed the Housing and Building Control Bill in Committee the repair repayment was changed from 75 per cent. to 100 per cent. We must give people their money back. Not only should they have the costs dealt with under clause 9 reimbursed, but the cost of a survey should be met from the public purse.
The care issue is in clause 14, which deals with where the money comes from and how it is provided. That clause is unsatisfactory. First, it gives the Secretary of State only a discretion that hemay if he thinks fit in any casecontribute towards the expense incurred by a local authority in giving assistance in respect of a defective dwelling. I understand that that is also limited to designation nationally and does not include designation by local authorities under clause 10.
The clause provides for reinstatement grant of 90 per cent. when it should be 100 per cent., and for repurchase grant of 75 per cent. rather than 100 per cent. As the hon. Member for Norwood (Mr. Fraser) pointed out, both percentages apply only to the sums incurred in the loan repayment—not the whole cost. Local authorities will be out of pocket yet again, and they cannot afford that.
Other than our complaint that 90 per cent. of houses are not provided for in the Bill, our main complaint is that the Bill puts on local authorities an additional obligation with no additional resources. When the Minister made a 949 statement in November, I criticised the phrase so often used by the Administration, "the need for expenditure by local authorities will be taken into account." I have seen what that has meant in practice. I know that local authorities do not like housing investment programme totals to be allocated in specified parts because they need flexibility, but I have seen no sign since the Government came to power—especially since last June—that "taken into account" means granting adequate resources to do the particular job. Needs may be "taken into account" somewhere in Marsham street, but they are not reflected in the books as additional resources. Until that money is seen to be on the table, the Bill will be substantially defective and its proposals will be inadequate.
My hon. Friends the Members for Truro (Mr. Penhaligon) and for Yeovil (Mr. Ashdown) have spoken on this subject. My hon. Friend the Member for Leeds, West (Mr. Meadowcroft), my right hon. Friend the Member for Plymouth, Devonport (Dr. Owen) and other hon. Members know that they will come under enormous pressure from local authority officers who are trying to do their best. Those officers are saying loudly and clearly, "We have not got the money to do our job properly, and until housing in the public sector as well as the private sector is given the priority it deserves from the Government purse we will not be able to carry out the service for which we are asked." I hope that the Government will accept that plea on behalf of hundreds and thousands of people.
The Bill goes some way towards meeting the needs of some owner-occupiers, which is good and we welcome that. Before the Bill is finally dealt with in both this and another place, it should additionally be backed by proposals to deal with the problem of all those others who live in thoroughly unsound, structurally defective homes. They have as great a right to sound homes as the 16,500 people whom the Bill is intended to benefit. We await the day when that happens, and we hope that it will be sooner rather than later.
§ Mr. Deputy Speaker (Mr. Paul Dean)
Order. The House will wish to know that the Front Bench replies are expected to begin at 9.20 pm. Six hon. Members still hope to speak, and they have sat in the Chamber for many hours. If they are all brief, it should be possible to call them all.
§ Mr. Patrick Nicholls (Teignbridge)
In the next few minutes I wish briefly to consider what the Bill is about. I hope that in doing so I shall answer some of the main criticisms levelled against the Bill in the House, in the press and in comment generally.
The Bill deals with a specific but real source of grievance which, if it had remained unresolved, would have amounted to a substantial injustice. The right-to-buy legislation has been a major step in the Government's attempt to foster and extend the property-owning democracy, and has obviously been welcomed. However, in doing that we have encouraged people in certain circumstances to buy property that has turned out to be gravely defective.
950 We must get the problem in perspective. There have been references today to the original report of the Building Research Establishment. I do not wish to quote at length from it, but some points are worth mentioning. It said:The great majority of houses studied were found to be structurally in sound condition, but there was a wide range in the rate of deterioration both between and within types … the most advanced deterioration appears to be in the main and secondary beams of Orlit houses … no structurally unsafe conditions were found. However, in some houses of some types, early action is desirable to maintain safety.In getting the matter in perspective, we must accept that those findings committed us morally—in no sense could they be said to have committed us legally—to a costly programme of rectification, and the costs involved should not be underestimated.
On the assumption that assistance under these provisions is confined to the eligible owners of 16,500 dwellings, that the average cost of making reinstatement grants would be £8,000 per unit and that the cost of repurchase would be £18,000, the total cost of giving assistance under the Bill will be between £170 million and £250 million at current prices, depending on the number of owners who seek assistance by way of reinstatement and those who seek assistance by way of repurchase. The expenditure will be spread over a number of years and will be £25 million to £45 million in the first year of take-up. They are substantial sums and should not be underestimated.
Clearly, however, the Bill does not commit us—nor should it attempt to do so—to a massive programme, funded by central Government, of total rebuilding, and I shall comment on that shortly. The Bill as drafted provides for compensation only where the case has been properly made out.
In the reaction to the BRE's original findings and publicity which led up to it, there was a tendency—perhaps it was understandable—to over-react. I have in mind, for instance, the criticisms made by the AMA, which estimated that there were 330,000 additional dwellings of non-traditional types, such as Smith and Howard, erected in the 1940s and 1950s and which it is not intended at this point to include in the scheme. It was estimated in part 1 of its report that that would incur a total repair bill of about £5 billion. In part 2 of the report, on industrialised and system-built housing, it is estimated that a further £5 billion in repairs was necessary.
I did not feel on reading that the case had been made out. That report was debated in the House in July of last year and in March of this year, and in the interests of brevity I need only say that it was clear to me on reading the reports that the case was not made out. The simple point that I wish to stress is that we must be careful to avoid making ill-considered and generalised statements which may blight perfectly reputable and worthwhile system-built dwellings, so causing a blight to descend upon them which would only aggravate the problem.
Although the Bill properly assumes that its provisions will be confined to the 16,500 owners of PRC houses, clause 1, under which the Secretary of State may designate other classes of defective dwellings, is drawn very widely indeed. That is good because it means that if further systems are found to be gravely defective, the provisions are there to deal with them.
The criticisms of the Bill have to some extent been crystallised in this debate. In one sense, Labour Members might have welcomed the measure; they are always 951 against the right to buy, and one of the consequences of the Bill will obviously be a strong element of repurchase. One would have thought that the Labour party would have welcomed that. It is clear, however, that apart from what I might call the AMA approach, to which I referred, what is concerning the Labour party most is the idea that there has in some sense been unfair discrimination in providing money for private house purchases while not at the same time doing something for tenants.
Let us be clear what we are talking about. Obviously, if money were no object, it would be marvellous to have a Bill which provided for the complete renovation of every house in the land, so bringing it up to the standard which, in an ideal world, we all wish to see. To expect that is to live in cloud-cuckoo-land. There is no way in which any responsible Government could begin to commit themselves to such a programme.
This is a specific Bill which deals with a specific loss. If a tenant is living in a defective dwelling, he will, in an extreme case, suffer. But when the house owner lives in the dwelling, he suffers just the same, but he suffers the additional loss in that he bought the place at its full value on the assumption that it was not defective, and it is that specific loss to which the Bill addresses itself.
It is worth repeating that the people who have invested in these houses have taken upon themselves the biggest commitment that they will ever make, having been encouraged to buy their properties from the local authorities. It cannot be right to criticise the Bill because it does not go further by providing for the total renovation of the nation's housing stock, a measure that would not be possible in any event. As I say, we are dealing with a narrow problem.
It is clear that many Bills will come before the House that hon. Members will not like. Sometimes one can imagine onself having to vote against the Second Reading of a measure because there are aspects of it that one likes and other aspects that one positively dislikes. What I find incomprehensible about Labour Members in this instance is that they like everything in the Bill but claim that it does not go far enough. The honourable course in such a situation is to vote for the Second Reading and do one's best to amend it in Committee. It is ridiculous to say that the Bill is great so far as it goes, and then try to vote it down.
§ Mr. Stan Thorne (Preston)
The aim of the Bill is summed up in the first sentence of the explanatory and financial memorandum:The main purpose of the Bill is to provide for financial assistance to certain private owners of dwellings.To what extent will it assist my constituents in Preston who are desperately short of decent homes and those whose prospects seem non-existent, at any rate in the short term? I appreciate that other towns and cities in the north-west have similar problems and that I am being parochial. Many hon. Members in this debate have referred to their constituencies, and that is right because we are here to represent the interests of our constituents.
There are many private owners whose resources in recent years have diminished. I can think of mainly elderly private owners, for example in terraced houses, who have difficulty in paying major repair bills. I know of one area 952 in Preston where, as the result of major subsidence, the local authority has had to shore up dwellings. Now important questions must be answered. They include whether the local authority should rehouse, what amounts the owners will receive from insurance companies and what sort of alternative accommodation that money will buy. This measure will not help those people in the slightest, and the Bill will not cover similar future situations.
The Bill will be of no help to many people who concern me and those whom my hon. Friends represent in constituencies such as mine. For those on priority waiting lists, the Bill will not permit local authorities to build more houses, for example for families with small children. Many such families are still forced to live in multi-storey blocks in Preston. Nor will the Bill provide local authorities with the resources to enable the housing committee in my constituency to build new homes and repair existing dwellings, many of which are in a deplorable condition. Indeed, we in Preston now need about £5 million to attack the problem of decayed estates, and we need a rolling programme of about 250 new houses a year for the next five years.
The Bill provides resources for private owners and, therefore, does nothing to enable the local authority in my area to take the necessary action. If the Bill becomes law, will the millions of pounds of public expenditure be addressed to the main priorities of need—for example, the homeless living in deprived conditions? The answer is no. The Bill will do nothing to tackle that problem.
Resources are misused in not being applied to the areas of greatest need—not those in owner-occupied houses but families still waiting for reasonable accommodation in areas such as Preston. Farringdon Park, which the local residents call Dodge City, Moor Nook, Holme Slack and the Grange estate are areas in which houses are boarded up because people have refused to live in them. Will the Bill enable the local authority to overcome that problem? It will not.
There are multi-storey blocks of flats in Avenham and the central areas of town. Until the Government came into office, the prospect was that the Central Lancashire Development Corporation would continue to do its valuable work of urban renewal in Preston. In their wisdom, or ignorance, the Government decided to wind up the corporation in 1985. Another prospective improvement of existing properties has been taken away.
I do not wish to prolong my contribution because other hon. Members wish to participate. The Bill is irrelevant to the position of those in housing need in Preston. I suggest that, if the Government wish to do something useful in Preston and other Lancashire towns, they should give local authorities sufficient resources to repair and to build new houses for rent.
§ Mr. Francis Maude (Warwickshire, North)
The hon. Member for Preston (Mr. Thorne) mentioned a long list of measures that the Bill does not undertake, and the Bill does not set out to undertake them. The Bill properly sets out to deal with the specific problem of certain types of concrete houses that have latent defects. It is interesting that the Bill will affect a number of houses that are presently defect free. My constituency contains 820 concrete prefabricated houses owned or previously owned by the National Coal Board, most of which are Cornish 953 and Wates units. Most of the Cornish units are wholly defect free. They have no visible signs of defects, and surveys have indicated that they contain no defects.
I am intellectually attracted to the idea of my hon. Friend the Member for Southampton, Itchen (Mr. Chope). Rather than spend, say, £8,000 on a house that is presently defect free — an idea that seems to be an affront to common sense — my hon. Friend suggests that we should think in terms of providing a guarantee for such houses. I am sure that objections will be made to that process, and I shall be interested to hear them. I do not propose to answer them at present. I suggest that my hon. Friend the Parliamentary Under-Secretary of State should examine that idea as, in the end, it may be a way of saving substantial sums of public money.
The more than 450 residents of my constituency who have bought NCB houses, many of whom are still working coal, are worried about a number of specific issues, but principally about the way in which the scheme will operate. Many are worried about the survey. Who will carry it out and pay for it? They need guidance quickly on those matters. They have invested large sums of money in their homes. The decision to own one's home is a serious matter for anyone who makes it, especially those whose families do not have a tradition of owning their homes. I am sure that my hon. Friend the Parliamentary Under-Secretary of State acknowledges the great anxiety suffered by those people through not knowing how the scheme will operate.
Will the grant, if made, be sufficient to put a house fully back into a decorated condition? I would welcome an answer to that. My hon. Friend the Member for Reading, West (Mr. Durant) raised the possibility of a certificate being issued, approved by the Building Societies Association, to remove once and for all the blight not only for existing owners but subsequent owners. That would be a welcome move.
People who have bought their houses from the council under the right-to-buy legislation with the benefit of a discount have raised another issue. If the council must buy back the house, what will be the owner's position? Will the provision of the Housing Act 1980 whereby a proportion of the discount may have to be repaid operate in that circumstance? Will the price be a full 95 per cent. of the existing market value, regardless of the discount? What arrangements will be made for inhabitants of those houses while the work is being done? The work needed to be done in some of those houses is substantial, effectively amounting to removing the ground floor while the top floor is propped up. Obviously in some cases houses will not be inhabitable while the work is being done, and that aspect is causing anxiety. Some families may not have anywhere to live for five or six weeks.
Some people will face hardship. Many people living in those houses who, with encouragement from the Government, have taken the plunge may find themselves out of work. I would welcome greater elucidation of the concept of financial hardship. How will that concept operate? What proportion of the numbers involved will be covered by the financial hardship provision?
My constituents are worried also about a small estate—this does not involve the NCB—comprised of Smith system houses owned by the local authority, of which 40 to 50 have been bought by sitting tenants. I think that in April last year the then Minister included the Smith system in the group of houses to be considered by the BRE, which 954 has now reported. The Smith system houses would seem to fall within the same parameters as the others. They are of a prefabricated reinforced concrete structure, and a substantial proportion of the defects found are certainly analogous to those found in other types of houses that are within the Bill's scope.
I strongly urge my hon. Friend the Minister to include Smith system houses in the Bill. It would not enlarge the scope of the Bill enormously and at present a substantial number of people find that their houses are blighted. From a casual and lay examination of the issue, it would seem that the defects are more apparent now in the Smith system houses than in some of the other types. In addition, the defects may be more advanced, and so may be causing more worry and distress.
§ Mr. Gow
As my hon. Friend may know, I have accepted an invitation from my hon. Friend the Member for Birmingham, Hall Green (Sir R. Eyre) to visit Birmingham next month when I shall have an opportunity to look at Smith houses. We are still considering whether they should be included in the mandatory scheme, and I hope that it will be possible to reach a decision following my visit to Birmingham next month.
§ Mr. Maude
I am grateful to my hon. Friend for that information, but I hope that he will bear in mind that there are many estates outside Birmingham, such as the one in Bedworth in my constituency, which will be affected by any decision that he makes.
The Bill is good because it deals sensibly with a specific problem. I hope that Labour Members will change their mind when they go into the Lobby tonight, because I am afraid that perhaps a rather more politically innocent public will note that they have voted against the Bill and will draw a conclusion that the Labour party would not like. This is a good Bill that deserves to be treated in a non-partisan way. It has a limited objective that is dealt with in a sensible and specific way and I hope that the whole House will eventually support it.
§ 9.5 pm
§ Mr. Robert Litherland (Manchester, Central)
I should like to speak about the Bill's omissions and its principle. Many Conservative Members have agreed with the Bill, but, like the hon. Member for Warwickshire, North (Mr. Maude), have asked for certain types of system building in their constituencies to be included.
Structural defects, maintenance costs and the social effects of system building have frequently been discussed at length in Committee, in the Chamber, and in the media, yet there has been little movement by the Government to alleviate the problems of local authorities by means of finance or other support. Once again, I must question the Minister. If the Government recognise that they have a responsibility to the private owner-occupier who has purchased a council property, they must, by accepting that liability, accept responsibility for the same type of property when owned by the local authority, especially as past Governments have enticed local authorities to construct them by offering financial inducements. Those councils built such houses in good faith.
Events have caught up with us. On scores of occasions I have raised the subject of an estate in my constituency that was built between 1969 and 1973. It was built by Bison Concrete Northern Limited—a package system 955 deal. I did not hear the Minister mention that contract when he read out the list in his opening statement. However, that estate of 1,018 flats and maisonettes, which was completed in 1973, is now being demolished. The remedial measures carried out by the original contractor had a very limited effect.
After a survey carried out by the consultants under the auspices of the city architects department, structural defects were found in fire escapes, balconies and balustrades, bridge supports had inadequate bearings, and there were problems with concrete wall panels. There was a tremendous problem with rain leaking in. Four hundred and fifty cases were reported, which caused great misery to the families involved. There were balconies with structural design defects and stair towers that were leaning away from the main structure. The architects' report states thatsome of the stair towers were found to be starting to lean away from the main blocks. A number of panels had cracked and the fixings were no longer secure. On this evidence, all are suspect.It was a catalogue of disaster. There was a choice between spending £9 million to try to rectify the defects and demolishing. In its wisdom the city council has decided to demolish, but, even after the estate has been demolished, there will be an annual debt charge of £670,000 to pay on the sum of £4,800,000 for the next 50 years. That will be the burden that the Manchester ratepayer has to carry. In spite of the improvements that have been made—the heating schemes, the entryphone system and the sectionalising, which alone cost £5,250,000 — the estate is to be demolished. Those properties were completed only in 1973. With such abysmal structures, what are the local authorities' chances of finance and support?
Another development has been added in the past few weeks. The Hulme 3 estate was system-built by Simms Sons and Cook Ltd., which went into voluntary liquidation in 1975. That contractor was not mentioned in the Minister's opening statement.
The city council is currently carrying out a survey of the deck access dwellings in order to be able to estimate the cost of remedial work. There are 802 dwellings in Hulme 3. A structural survey of Hulme 4 will be carried out in the summer and, at a later date, there will be surveys of Hulme 2 and Hulme 5. Hulme 3 is regarded as relatively successful in comparison with other deck access housing in Hulme and in other Manchester estates. However, the findings are the same as those in Wellington street. According to the fabric survey, the roofs are in need of repair and there is water penetration and expansion of joints and so on. We have all heard that miserable long list of failures of building materials in the past. The structural survey revealed corroded handrails, inadequate cover for steel reinforcements and failure of construction fittings. The report states that:It should be noted that the method by which the precast gable units are connected does not afford any great resistance to collapse (e.g. gas explosion).In other words, the construction is dangerous. These methods were foisted on to local councils in the past, but the total cost of remedial work in one section of that estate will be £2,695,000. Those properties were built to last for 60 years.
Hulme 3 is in better condition than most other system-built estates and the city council is therefore reluctant to 956 demolish it. Is it not a scandal and a disgrace that the Government fail to face up to their responsibility? It is unfair to ask the ratepayers of Manchester to meet the cost of the blunders of past Governments. The city of Manchester requires additional capital allocation and urban grant moneys. If the Government can assist the private sector, they have a duty to assist the public sector. If a tenant has purchased one of these properties, the Government recognise that the tenant is not to blame and is a victim of the housing defects. Should not the same criterion be applied to the ratepayers of Manchester? The estates were built with no thought for the interests of the tenants. Local authorities and Governments were taken for a ride by the speculators, most of whom have now gone into bankruptcy or liquidation. Such was the extent of the water penetration. The sufferers are my constituents who live in the houses, some of which have been constructed with compressed straw. We are now having timber-framed houses. Our demand has always been for traditional brick and mortar low-rise houses. I have two grandchildren and I often read them the nursery story about the three little pigs, but for the tenants of Beswick, Hulme and Ardwick it is not a story but reality. That is what the local authority must now put up with and I am afraid that the Government will have to provide the necessary finance.
§ 9.9 pm
§ Mr. Michael Stern (Bristol, North-West)
Like my hon. Friends the Members for Reading, West (Mr. Durant) and for Nottingham, South (Mr. Brandon-Bravo), I welcome the Bill as a highly moral act by the Government. It is moral because the Government have inherited circumstances in which they must pay for the consequences of actions of previous Governments who believed that it was possible to get something cheaply and quickly, whether in housing, roads or bridge building. But, in the words of the well known American phrase, "There ain't no such thing as a free lunch." It is right that the Government should accept that, because previous Governments wanted housing and wanted it now, we must pay the price.
Although I generally welcome the Bill, there is one aspect of it that surprises me about the marketability of the houses that have been sold to the private sector. The Bill will mean that the market in such houses which existed until one year ago has been killed stone dead and might remain dead for years. We shall witness forced local authority purchases of houses that they do not want at prices that they feel unable to afford.
It is clear that the cut-off point mentioned in the Bill has already passed and therefore no houses of the designated type can change hands on the open market except when the local authority is the buyer. That is not my definition of an open market. Until we know the cut-off date, there will be many worried building society managers who have lent money on houses at a time which might prove to be after cut-off date and who might discover that the security on which they lent is worth up to 50 per cent. less than they thought because no reinstatement grant is available on the house.
As I have mentioned to my hon. Friend the Minister in correspondence, some building societies were prescient and refused to lend on system-built houses as soon as the Minister made his statement last November. Others were not so prescient. I am aware of building societies in my constituency that have been lending until recently on 957 houses that have been purchased probably after the cut-off date and will therefore, by chance, be outwith the provisions of the scheme. I hope that my hon. Friend the Minister will consider that point sympathetically in Committee as he did not state specifically on 10 November that no purchases in the private sector would take place after that statement. It might be that, as a result of the cutoff date provision, such purchases will no longer be entitled to reinstatement grant.
With regard to local authority repurchase, I am surprised that an owner will have to wait until a local authority's HIP allocation is sufficient to enable it to provide reinstatement grant. That could be up to 10 years away, bearing in mind the amount of money involved in some local authority areas. Otherwise he will have to go through the indignity of going on bended knees to the local authority saying, "Please, I have compassionate grounds for moving, buy my house." If the local authority refuses, he is stuck with that house and cannot look for a job elsewhere in the country. He must wait for the local authority to respond and to so arrange its finances that money is available through its HIP to finance the reinstatement grant.
The fault in these otherwise admirable proposals is that the reinstatement grant will go with the person rather than the house. I find it difficult to understand why the reverse should not be true. It will not involve greater public expenditure, as the market has been killed. The houses will be entitled to reinstatement grants anyway. If the reinstatement grant goes with the house rather than with the person there would still be a free market in such houses. Local authorities would not be forced to allocate funds in that direction when they would prefer to allocate them elsewhere.
§ Mrs. Edwina Currie (Derbyshire, South)
The legislation will be most welcome throughout the country. I must confess that I have a minuscule constituency interest, as there are only three of the houses in question in owner-occupation in the south Derbyshire housing authority out of the 130 that have been built.
At this time last year I was much involved in these problems in the city of Birmingham. My only regret is that I shall not be there to welcome the Minister on his forthcoming visit to the city, although I hope that a Conservative housing chairman will continue to shoulder the problem of the Smith houses.
I am sure that the Minister will agree with all those of us who have been involved in the city of Birmingham that Smith houses present a serious problem. We all look forward to the day when the Minister says that the Government will look after the owners of those houses.
The Bill has been drawn very widely. The Minister is cautious. That is probably the best approach. I hope, however, that the Bill will be the start rather then the end of the discussion. We in the Conservative party have a special obligation to such owner-occupiers, especially those living in houses bought since the 1980 Act was passed. They bought the houses in good faith and paid the legal price. They often spent much money on the houses and have relieved councils of the maintenance burden. The cases in Bristol have shown that councils are often reluctant to resume the burdens.
Our present obligation does not go far enough. It is not dignified for us to haggle over what types of housing 958 should qualify under the Bill. We should not argue about whether Smith houses have been damaged because of structural faults or some other cause such as the use of colliery shale, which was recommended by the Government of the day. To the people who live in those houses, that looks like nit-picking. We should not be hesitant about whether the houses were designed before or after 1960. The fact is that we sold those unfortunate people rubbish, which they bought from us in good faith. Neither side knew that the houses were rubbish. Nobody did so at the time.
I believe, as has already been suggested, that we should give the owners a bona fide guarantee. I shall paraphrase the words of a Department of the Environment consultation document of November 1983. It said that where the faults—whatever their name and detail—were not discoverable by normal survey at the time when they were sold we should offer the owners the rights outlined in the Bill. It is sheer chance which property a tenant lives in. The right to repair and repurchase should not he subject to a sort of lottery.
It has already been pointed out that if a person wishes to repurchase his property under the Bill he will lose his discount. He will also be obliged to come under the cost floor regulations. That will mean that he cannot exercise a right to buy. He must then persuade the council to move him as a priority from a repaired and possibly modernised and attractive house into another property as a transfer. Only in that way will he be able to exercise his right to buy.
I had great pleasure when serving on the Committee that considered the Housing and Building Control Bill in seeing my hon. Friend the Minister for Housing and Construction finding ingenious solutions to some knotty problems. I hope that my hon. Friend will not think it impertinent if I ask him to exercise his mind again and see whether he can get round this problem for us.
I deplore the Labour party' approach and its amendment. I fail to see why not helping one group of people will help another. In most cases, if a local authority exercises good husbandry and manages its housing revenue account with care and sells off surplus land and council houses it will have plenty of proceeds. The problem is that the authorities do not have the power to repair property that they do not own. The Bill gives them that power. The sale of council houses has brought in major proceeds and the people who bought the houses should have first claim on some of that money. The approach of Labour Members is thoroughly mealy-mouthed. They should welcome the Bill.
§ Mr. Jim Craigen (Glasgow, Maryhill)
There have been contributions from Members representing all parts of the United Kingdom in this debate and it has become abundantly clear that in this Bill we are merely touching the tip of the iceberg of structural faults in housing.
I ask the House to accept the Opposition amendment which seeks to persuade the Government that they have a responsibility to reach out with both hands to tenants and owners when tackling the structural and design problems that have been identified. Housing defect legislation is clearly required and extra resources will be needed to enable local authorities to carry out the necessary repairs. In equity, the same advantages should extend to sitting tenants. My hon. Friend the Member for Thurrock (Dr. 959 McDonald) whose area contains so many abandoned quarries asked the Government to take moral responsibility for tenants. The hon. Member for Reading, West (Mr. Durant) admitted earlier that the Government had no legal liability in respect of the owners but he felt that the Government had taken a moral stance. We simply ask that that moral stance be extended to embrace sitting tenants. That is a vital aspect of justice in dealing with the problems of housing defects.
The legislation will clearly involve many technical difficulties and deficiencies. The Government have not addressed themselves to many of the practical problems that will face public bodies. One cannot isolate the treatment of a property that happens to be owner-occupied from the necessary remedial work required in the premises next door where a sitting tenant has exactly the same complaints and problems. The Scottish Special Housing Association, for example, was reasonably disposed to the repurchase of some properties if only to obtain access to properties retained in public ownership because of the constraints involved in trying to remedy structural and design defects.
In the shape that the legislation is taking one cannot separate neighbour from neighbour or tenant from owner-occupier and there will be many practical problems for local authorities. Moreover, as several hon. Members have said, existing owners who qualify for assistance under the Bill may see little point in commissioning the necessary repairs despite grants of 90 per cent. or even 100 per cent. in cases of hardship if they do not believe that it will ultimately improve their position. If the property next door is eventually demolished by the local authority due to lack of funds, that will scarcely improve the marketable value of the owner-occupied property even after thousands of pounds of public money have been spent on trying to improve it.
The option of repurchase begs the question, which I hope the Minister will answer tonight, about where the extra resources will come from. It is all very well to talk euphemistically in the Bill about the right of assistance, but what about the right of resource to the local authorities that end up having to deal with the problems which were imposed on them by the Government? The local authorities are bing asked to pick up the tab for the necessary repair work.
The Government should be even handed and give the resources to local authorities and other public housing agencies so that they can fulfil their statutory obligations to sitting tenants. We are reaching the point where many local authorities cannot fulfil those statutory obligations. The Government should not seek by sleight of hand to ignore that problem.
An ideological struggle has at times intruded into our debate. One or two hon. Members have spoken of the great demand that remains unsatisfied of tenants to purchase their houses. I wonder how many tenants will wish to purchase them now that structural faults have been identified. I wonder how many sitting tenants are being denied home ownership because the Government are excluding local authorities from the provisions of the legislation. The Government should contrast the position of the 13,250 tenants in Scotland with the remedy that is proposed for the 200 people who have bought their homes.
960 The hon. Member for Bristol, North-West (Mr. Stern) made a short but succinct contribution when he said that the issue is about market value. We are considering not the comforts of those who occupy the houses, but the marketability of the houses when they wish to sell them. It is important to remember that.
I am not a lawyer, but there are a couple of lawyers on the Government Front Bench. Although qualified building firms should carry out the repairs to these properties, I wonder how many cowboy outfits will move into that work, and whether certificates for the work will be readily signed to guarantee a 30-year life for the houses. Many certificates must have been signed in times past for work done. Where are those people who sold Airey houses? Two estate agents declared their interest, but they distanced themselves from any involvement in Airey houses. I shall not ask hon. Members to raise their hands, but many of them distanced themselves from the problems that arose from the sale of those houses.
The Government's proposed scheme for financial assistance will not tackle the problem. Sadly, it will come from the same purse as the housing investment programme, as it is called in England, and the housing support grant, as it is known in Scotland. Yet 30 of the 56 district councils receive no housing support grant. How will they cope with these unexpected problems, with which the Government ask them to deal?
Shelter has written to all Scottish Members, and, as my hon. Friend the Member for Fife, Central (Mr. Hamilton) said, the Bill will do nothing for 98 per cent. of affected families in Scotland. Kirkcaldy district council produced a detailed document estimating the cost of remedying non-traditional houses with structural defects at more than £40 million. My hon. Friend told me today that the Parliamentary Under-Secretary of State for Scotland is refusing to meet the district council. It is shameful that the Minister is prepared to overlook the representations.
§ Mr. Willie W. Hamilton
Not only has the Minister refused to meet the Members leading the delegation from Kirkcaldy district council, but he has refused even to go and see the problem on the ground.
§ Mr. Craigen
If I know my hon. Friend the Member for Fife, Central, he will not leave it at that and he will meet the Minister before long.
I would not be in the hair of my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) tonight had the Government done what they should and introduced a separate Bill for Scotland. The differences between Scottish and English legislation and administrative practice demand a separate Scottish Bill so that there is no intertwining of our legal systems and conveyancing practices. The Scottish Office did not even know when the Bill received its First Reading that it applied to Scotland. I had to telephone the Department of the Environment to confirm that. That proves that in the races the Minister for Housing and Construction leaves his colleagues standing. It is ridiculous that we do not have what we would normally expect with a 21-clause, three-schedule Bill—a separate Bill for Scotland that could have been dealt with in greater detail—
§ Mr. Craigen
My hon. Friend had better watch out or I shall withdraw some of the compliments that I paid to 961 him earlier. Although the financial scheme applies across the board, the implications of housing defects are uneven. Given that we want the Bill to apply to sitting tenants, it would have been highly desirable to have separate Scottish legislation.
Can the Minister assure the House that we can confidently expect to have professional experts tackling the repairs? This is an essentially non-partisan matter, because I accept that the concept of rehabilitation and renovation is based on the assumption that houses will have a 30-year lifespan. However, what guarantees do we have that remedies are available to resolve the problems with prefabricated reinforced concrete structures? Some houses are 30, 40 or 50 years old, and, although the deterioration might be slowed down by some of the processes that have been discovered, perhaps it cannot be reversed if carbonation has set in. Carbonation is a word that is now trotted out so often that we assume that it has always been around, but it is comparatively new to politicians and even to some professionals.
The hon. Member for Ilford, North (Mr. Bendall) made a sound point when he said that what is cheaply done can be dearly paid for in the long run. I agree that we want specific grants. I hope that we shall see the hon. Member for Ilford, North in the Division Lobby in support of the Opposition amendment because we want to extend the benefits of resources and assistance to the sitting tenant.
The business of what is discoverable or not by normal survey at the time that the houses were sold raises interesting implications, which the Minister passed over. My hon. Friend the Member for Caerphilly (Mr. Davies), who tabled shrewd questions on the Order Paper on this subject not long ago, raised the important matter of local authority manpower. These surveys will require much extra local authority manpower.
It is all very well talking about samples, but the small print in the Building Research Establishment document shows that each and every property will have to be inspected. It is not just a matter of looking at a couple of houses in a street and saying that they look all right. The inspectors will have to look at each property in the street if the job is to be done properly. We are talking not simply about owners who thought that they had a capital asset, and find overnight that they have a capital liability, but about the housing stock in the hands of the public—the taxpayer. We shall have a wasting capital asset if the Government do not step in and give the necessary assistance.
I could have usefully made a number of points tonight, but they can be reserved for the long hours in Committee on this important Bill. It is important that the Ministers should be put through their hoops and made to show hon. Members that they know what they are talking about and that this Bill will be all that they have promised to the people whose expectations they have built up so much over the years.
We require extra resources for housing improvement programmes and housing support grant in Scotland. The Bill should be financed outwith those normal methods of housing finance and it should be done at 100 per cent., otherwise every penny spent on these remedial measures will come off HIP and HSG. The local authorities should not be faced with the proposal in clause 14. A lump sum should be given to the local authorities, not this jiggery pokery formula on which they will have to pay substantial interest over the years.
962 The Bill is flawed by the glaring exclusion of sitting tenants from its provision. The hon. Member for Edinburgh, West (Lord James Douglas-Hamilton) said that the scope of the Bill should be widened in due course. I hope that it will be widened tonight, and I trust that a number of right hon. and hon. Conservative Members will go into the Lobby to support our amendment so that we can widen the benefits to include sitting tenants and owner-occupiers in tackling the difficulties of housing defects.
§ The Parliamentary Under-Secretary of State for Scotland (Mr. Michael Ancram)
My hon. Friend the Member for Reading, West (Mr. Durant) described the speech by the hon. Member for Norwood (Mr. Fraser) as "niggling". Having heard the speech by the hon. Member for Glasgow, Maryhill (Mr. Craigen), I am sure that my hon. Friend will withdraw that accusation as being relatively unfair in the circumstances. The hon. Member for Maryhill did himself proud, as he usually does, when he called upon us to vote for the Opposition amendment because he was in favour of value for money. Not only has the hon. Gentleman not read the Bill, which was apparent from his earlier remarks, but he has not read the amendment. If he had he would have realised that it makes no mention of value for money, or anything of that sort.
The hon. Member for Maryhill made it clear beyond peradventure that the amendment is based upon a misconception. To describe it as a reasoned amendment is dangerous because reason should never be based on misconception. The basic misconception is that in some way the Bill harms the tenants of houses which may come within the defective category and that it discriminates in favour of another category—the owner-occupier.
§ Mr. Ancram
The hon. Member for Fife, Central (Mr. Hamilton) may say that, but his speech showed that he too misunderstood what the Bill is about.
Opposition Members have said that certain categories of house must be repaired overnight and that if they are not tenants will be deprived. If the hon. Member for Maryhill had read the Building Research Establishment report, as he said that he had, he would have realised that that is not so in the case of defective tenanted housing or in the case of owner-occupied housing. My hon. Friend the Minister for Housing and Construction last year reminded the House that:The great majority of houses studied were found to be in a structurally sound condition. There were significant differences in the rate of deterioration both between and within types. Some cracking was found in all the types and the nature of the process is such that deterioration will continue, although in some cases very slowly. All houses of these types will eventually be affected by cracking. Cracking in a proportion of houses will not occur for some years and a few houses may not display any evidence of deterioration for the next 30 years or more." — [Official Report, 10 November 1983; Vol. 48, c. 422.]It must be clear that the findings of the Building Research Establishment were that, although there was a latent defect in particular types of housing, in many cases it was not causing a problem and that in some cases any defect was unlikely to show for another 30 years. It is ridiculous to assert that to deal with the tenanted sector problem finance must be provided overnight. It is a question of the problems being assessed and of local 963 authorities assessing priorities. Other problems such as dampness and condensation must be taken into account. In a programmed way local authorities must ensure that they get their stock right.
§ Mr. Eric S. Heffer (Liverpool, Walton)
The Parliamentary Under-Secretary must be aware that Boot houses in Leicester looked good on the surface. Only when they were modernised were the structural problems discovered. It was realised that in a short period the houses would deteriorate rapidly. One cannot always recognise that houses will deteriorate until they are examined. There is a need for all the houses at risk to be properly examined. That might take 30 years, but it could take only 30 days for a house to deteriorate.
§ Mr. Ancram
The hon. Member for Liverpool, Walton (Mr. Heffer) makes my point, that there is no set time for the problems to show themselves. For that reason we cannot regard the problem as something that will arise overnight and must be dealt with within a short time scale. I understand that some of the Boot houses are 60 years old and therefore the problems may be more significant.
The Bill is not about dealing with an emergency, which must be dealt with overnight. It is about dealing with a specific problem and ensuring that a measure of recompense is given to those people who purchased certain houses in good faith and with due prudence, and who have since found, through no fault of theirs — because technical knowledge has progressed since the date of purchase—that their houses do not have anything like the value that they thought that they had. The Government view is that these purchasers are reasonably entitled to such recompense, and that the public sector as the seller has an obligation to discharge in respect of the houses that it has sold.
I deal next with some of the Scottish provisions in the Bill, which is why the hon. Member for Maryhill and I are speaking from the Dispatch Box tonight. He suggested that there should be a separate Scottish Bill. Had his hon. Friend the Member for Fife, Central not given the answer, I would have given that answer myself. If he looks at the extent and nature of the problem in Scotland, he will find that it is small in numbers, but highly comparable with the problem that exists south of the border. In an instance such as this, it would have been ridiculous to have two separate pieces of legislation.
I should like to describe in more detail the purpose of the clauses in the Bill that apply solely to Scotland. The problems faced in Scotland are considerably smaller than those in England and Wales. At present, only 256 houses of types to be designated are known to have been sold by public sector bodies in Scotland. However, the proposed policy in relation to housing defects is the same in England, Scotland and Wales. Although orders, and the designation of defective house types, will be made by my right hon. Friend the Secretary of State for Scotland—
§ Mr. James Molyneaux (Lagan Valley)
The Minister has said that the problem is the same in England, Scotland and Wales. Would he accept, as I think his hon. Friend did, that the problem is the same in Northern Ireland? Would it be possible to arrange with his colleagues in the Northern Ireland Office for the provisions of the Bill to become effective in Northern Ireland on the same day?
§ Mr. Ancram
I shall certainly make that point to my right hon. Friend the Secretary of State for Northern Ireland. However, as the right hon. Gentleman will be aware, my hon. Friend the Minister for Housing and Construction said that the Secretary of State for Northern Ireland intends to introduce similar legislation so that owners of defective dwellings in the Province will receive similar assistance. I hope that he will accept that that is the Government's intention.
There are three clauses that relate to Scotland alone. Clause 7 adapts the repurchase provisions of clause 6 in the Bill to take account of the different land tenure, law and conveyancing practice and procedures under Scots law. Clause 13 is necessitated by differences in the judicial system, and confers a similar jurisdiction on the sheriff in Scotland to that conferred in clause 12 on the county courts in England and Wales. Clause 15 amends part II of the Tenants' Rights, Etc. (Scotland) Act 1980, as it applies to persons who have been granted a secure tenancy, following the repurchase of their defective house in order to ensure that such persons may exercise the right to buy under part I of the 1980 Act immediately, without having to requalify under the existing provisions of that Act. This puts owners of defective houses in Scotland on a similar basis with regard to qualification for a second purchase to their counterparts in England and Wales under the current Housing and Building Control Bill. The other necessary Scottish modifications are contained in the appropriate clauses of the Bill.
Scottish Members may wish to note in particular, however, that clause 18, which requires the local housing authority to offer repurchase to another specified public sector body which disposed of the house, makes reference to the Scottish Special Housing Association. This body owns, and has sold, a large proportion of the PRC houses in Scotland to be covered by the Bill. The intention is that, where repurchase is determined to be the appropriate course, the SSHA, where it has sold the house, should without exception take up the offer to take over the repurchase obligation. I know that that will be welcomed by a number of Scottish Members who have raised the point with me in the past.
I deal next with some of the points that were raised in the course of the debate. I listened carefully to the speech of the hon. Member for Norwood (Mr. Fraser), and in particular to the example that he gave. I did not entirely follow the details of his example, and I wonder whether he would like to write to me or to my hon. Friend the Minister for Housing and Construction about it. He seemed to be ignoring a number of important factors which would have been relevant. He did not—I hope I did not do him an injustice in the notes that I took of his speech—give the value of the defective property. It should be remembered that when the authority repurchases it acquires an asset that is worth its current market value. The hon. Gentleman did not take that into account.
The hon. Gentleman also ignored the fact that the capital receipt obtained on the original sale was greater than it ought reasonably to have been had the defect been known. He ignored the fact that most properties acquired under the Bill will, whether unrepaired or repaired, be capable of earning rent income. We have avoided the complexity of an Exchequer contribution related to net cash flow deficit or surplus which would result from the original sale and subsequent repurchase of each property. If the hon. Gentleman were to make such a deficit and 965 surplus calculation he would find that in many cases the proposed Exchequer contribution under the Bill would exceed the contribution that would be payable under a system based on the estimated deficit or surplus arising from the two transactions.
Finally, if I understood the hon. Gentleman correctly, he assumed a repair cost of about £12,000 in his example. In that case, the great probability is that the repair would be the right course under the Bill in the first place and re-purchase would not arise at all. Therefore, his example is postulated on a false premise.
My hon. Friends the Members for Reading, West and Warwickshire, North (Mr. Maude) asked who will do the survey work on defective dwellings. Under the Bill, it will be for the local housing authority to decide, in accordance with the Bill, whether an owner is eligible for assistance. If the authority needs a survey to enable it to discharge its duties in a particular case it would be for that local authority to commission a survey and pay for it as part of the administrative costs under the scheme. The structure of the scheme is such that surveys will not normally be required for PRC houses because of the analysis done before designation is made under the Bill. Similarly, once repair methods have been developed, it is questionable how far detailed surveys will be needed prior to repair, as PRC houses were built to standard designs with little variation.
§ Mr. Craigen
Does that mean that we are doing it all by remote control and that, because some past analysis has been made, individual properties will not be inspected?
§ Mr. Ancram
The hon. Gentleman still fails to understand the point. If a particular category of house that has been built according to a system has an element in it which is defective for a scientific reason, as is the case in the houses of which we are talking, it is a proper assumption to make that all houses built in that way with those elements have a defect, whether it is latent at the moment or not. Until that latent defect has been dealt with in that way, the value will be undermined as it has been. That is what the Bill is about.
Several of my hon. Friends raised the question of some kind of certificate after the work of reinstatement had been carried out. That is an idea which I am interested in and which we have been considering. It might be worth while, although some questions arise, particularly as to who might carry out the certification and on what basis. However, I want to consider that further with my hon. Friends the Minister for Housing and Construction and the Parliamentary Under-Secretary of State for Wales.
Several hon. Members also raised the question of building society mortgages. It is for building societies to decide whether they will lend on the security of particular types of property. It is not for the Government to tell them what to do. I expect that in time methods of reinstating most defective houses will be devised which will be satisfactory to building societies as well as to those who own the properties. The Departments involved are discussing with the Building Societies Association whether arrangements can be made which will enable societies to be confident about lending on the security of repaired prefabricated reinforced concrete houses.
§ Mr. Bendall
Would my hon. Friend be kind enough to give the House an assurance that the Government will continue with those negotiations to try to bring them to a successful conclusion?
§ Mr. Ancram
I can certainly assure my hon. Friend that the Government will make every effort to bring those negotiations to a successful conclusion, as to succeed in this way will give a great deal more weight to the measures that are being brought forward in this legislation.
The hon. Member for Newham, South (Mr. Spearing) raised, as he often has before, the question of Ronan Point, and I appreciate his concern on this matter. I understand that defects have recently been found in cladding panels in the Ronan Point tower. The London borough of Newham, which owns that building, is to undertake a detailed investigation of the problem. It would be unwise to speculate on the significance of the defects found until that investigation is concluded.
My hon. Friend the Member for Ilford, North (Mr. Bendall) raised the question of the hypothecation of resources for dealing with defective houses in particular. The whole thrust of recent policy in Scotland and in England and Wales is towards giving the greatest possible freedom to local authorities to spend within totals available for housing generally. Although it is tempting to say in relation to some particular problems that it would be suitable to see specific grants made to those houses or that special treatment was deserved by way of hypothecation, the overall effect of proceeding in that way would be to produce a very rigid system, which I believe the local authorities would not like and which could certainly lead to difficulties, such as underspending by local authorities wherever changes of plans or projects were forced upon them by circumstances.
My hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton) raised the question of the Blackburn-Orlit houses. The Building Research Establishment examined a house of this construction in November 1983 but required further evidence before it could come to any conclusion on that construction or its condition. With the assistance of the Edinburgh district council it gained access to a further house on 17 April 1984 and will be analysing its findings before preparing a report. When I receive the report I shall carefully consider whether these houses should be covered by the scheme.
A number of other points have been raised by my hon. Friends and hon. Members of the Opposition. Unfortunately, because of limitations of time, I will not be able to deal with all of them tonight, but I hope that, if there are any specific points, hon. Members will agree that I should write to them. However, I must say that my hon. Friend the Member for Leicester, South (Mr. Spencer) put forward an argument for the principles of this Bill which I certainly would not strive to match and which I believe answered most of the points raised by hon Gentlemen.
The weakness of the Opposition case tonight has been that they have had no argument to put forward relating to this Bill. The basis of their argument has not been that the Bill does anything in particular but about what the Bill does not do, and that is always the weakest argument that can possibly be put up in a debate of this sort. I would say to the hon. Member for Maryhill, for instance, that it is not the purpose of this Bill, however much he might like it to be, to pave the streets of Glasgow with gold. As 967 my hon. Friend has pointed out, the primary purpose of this legislation is to deal with specific and real problems involving people who have bought their houses from the public sector only to find that, as a result of defects having been discovered, the value of those houses has been substantially reduced. While we recognise the problems arising in the public sector, as has indeed been shown by the allocations that have been made available in that particular sphere—
§ Mr. Ancram
The hon. Member for Glasgow, Garscadden (Mr. Dewar) says "What?" The allocations amount to some £3 billion in this current year for the United Kingdom, which is no mean sum of money.
While we recognise those problems, it is important to understand that the mechanism for dealing with them exists already. They can be dealt with over a period of time and there is no need for legislation to secure this. Thus, the reasoned amendment is quite misconceived and irrelevant. The basic problem arises for the private owner, not for the local authority tenant, and we firmly believe that it is right and proper that we should be taking steps to deal with this matter in the way that we are.
I trust that as a result of this debate tonight the House has a clearer idea of the principle and purpose of this Bill. A number of misunderstandings and misconceptions have undoubtedly been voiced by Opposition Members and I hope that they have been answered. However, if, as I suspect, a number of them were hooks upon which to hang a spurious political attack, I believe that the people of this country will have noticed that.
This Bill is an important one. It deals with an important problem. I ask the House to reject the amendment and to give the Bill a Second Reading.
§ Question put, That the amendment be made:—
§ The House divided: Ayes 125, Noes 225.970
|Division No. 254]||[9.59 pm|
|Anderson, Donald||Craigen, J. M.|
|Archer, Rt Hon Peter||Crowther, Stan|
|Banks, Tony (Newham NW)||Davies, Ronald (Caerphilly)|
|Barnett, Guy||Davis, Terry (B'ham, H'ge H'l)|
|Barren, Kevin||Dewar, Donald|
|Beith, A. J.||Dixon, Donald|
|Bell, Stuart||Dobson, Frank|
|Bennett, A. (Dent'n & Red'sh)||Dormand, Jack|
|Bermingham, Gerald||Dubs, Alfred|
|Blair, Anthony||Dunwoody, Hon Mrs G.|
|Boothroyd, Miss Betty||Eadie, Alex|
|Bray, Dr Jeremy||Eastham, Ken|
|Brown, Gordon (D'f'mline E)||Fatchett, Derek|
|Brown, Hugh D. (Provan)||Field, Frank (Birkenhead)|
|Brown, N. (N'c'tle-u-Tyne E)||Fisher, Mark|
|Brown, R. (N'c'tle-u-Tyne N)||Foot, Rt Hon Michael|
|Brown, Ron (E'burgh, Leith)||Forrester, John|
|Bruce, Malcolm||Foster, Derek|
|Caborn, Richard||Fraser, J. (Norwood)|
|Callaghan, Rt Hon J.||Freeson, Rt Hon Reginald|
|Callaghan, Jim (Heyw'd & M)||Freud, Clement|
|Campbell, Ian||Garrett, W. E.|
|Carlile, Alexander (Montg'y)||Godman, Dr Norman|
|Carter-Jones, Lewis||Gould, Bryan|
|Clark, Dr David (S Shields)||Hamilton, W. W. (Central Fife)|
|Cohen, Harry||Harman, Ms Harriet|
|Conlan, Bernard||Hattersley, Rt Hon Roy|
|Cook, Frank (Stockton North)||Heffer, Eric S.|
|Cook, Robin F. (Livingston)||Hogg, N. (C'nauld & Kilsyth)|
|Holland, Stuart (Vauxhall)||Pike, Peter|
|Home Robertson, John||Powell, Raymond (Ogmore)|
|Howells, Geraint||Prescott, John|
|Hughes, Dr. Mark (Durham)||Randall, Stuart|
|Hughes, Simon (Southwark)||Redmond, M.|
|Janner, Hon Greville||Richardson, Ms Jo|
|Kennedy, Charles||Roberts, Ernest (Hackney N)|
|Kilroy-Silk, Robert||Robertson, George|
|Kirkwood, Archibald||Robinson, G. (Coventry NW)|
|Lamond, James||Rooker, J. W.|
|Leadbitter, Ted||Ross, Ernest (Dundee W)|
|Leighton, Ronald||Shore, Rt Hon Peter|
|Lewis, Ron (Carlisle)||Silkin, Rt Hon J.|
|Litherland, Robert||Skinner, Dennis|
|Lloyd, Tony (Stretford)||Snape, Peter|
|Lofthouse, Geoffrey||Soley, Clive|
|McDonald, Dr Oonagh||Spearing, Nigel|
|McKay, Allen (Penistone)||Stewart, Rt Hon D. (W Isles)|
|McKelvey, William||Stott, Roger|
|McNamara, Kevin||Thomas, Dr R. (Carmarthen)|
|McTaggart, Robert||Thompson, J. (Wansbeck)|
|McWilliam, John||Thorne, Stan (Preston)|
|Marshall, David (Shettleston)||Tinn, James|
|Martin, Michael||Torney, Tom|
|Meacher, Michael||Wainwright, R.|
|Meadowcroft, Michael||Warden, Gareth (Gower)|
|Michie, William||Wareing, Robert|
|Mikardo, Ian||Weetch, Ken|
|Millan, Rt Hon Bruce||Welsh, Michael|
|Miller, Dr M. S. (E Kilbride)||Wilson, Gordon|
|Morris, Rt Hon A. (W'shawe)||Young, David (Bolton SE)|
|O'Neill, Martin||Tellers for the Ayes:|
|Park, George||Mr. James Hamilton and Mr. Frank Haynes.|
|Adley, Robert||Clark, Hon A. (Plym'th S'n)|
|Alexander, Richard||Clark, Dr Michael (Rochford)|
|Alison, Rt Hon Michael||Clarke, Rt Hon K. (Rushcliffe)|
|Amess, David||Colvin, Michael|
|Ancram, Michael||Conway, Derek|
|Arnold, Tom||Coombs, Simon|
|Ashby, David||Cope, John|
|Aspinwall, Jack||Corrie, John|
|Atkins, Robert (South Ribble)||Couchman, James|
|Atkinson, David (B'm'th E)||Cranborne, Viscount|
|Baker, Nicholas (N Dorset)||Critchley, Julian|
|Beggs, Roy||Currie, Mrs Edwina|
|Bellingham, Henry||Dorrell, Stephen|
|Bendall, Vivian||Douglas-Hamilton, Lord J.|
|Benyon, William||Dover, Den|
|Berry, Sir Anthony||du Cann, Rt Hon Edward|
|Best, Keith||Durant, Tony|
|Biffen, Rt Hon John||Dykes, Hugh|
|Biggs-Davison, Sir John||Eggar, Tim|
|Blaker, Rt Hon Sir Peter||Fallon, Michael|
|Body, Richard||Farr, John|
|Boscawen, Hon Robert||Fletcher, Alexander|
|Bowden, Gerald (Dulwich)||Forman, Nigel|
|Boyson, Dr Rhodes||Forth, Eric|
|Braine, Sir Bernard||Fowler, Rt Hon Norman|
|Brandon-Bravo, Martin||Fox, Marcus|
|Bright, Graham||Franks, Cecil|
|Brinton, Tim||Goodlad, Alastair|
|Brittan, Rt Hon Leon||Gow, Ian|
|Brooke, Hon Peter||Greenway, Harry|
|Brown, M. (Brigg & Cl'thpes)||Gregory, Conal|
|Bruinvels, Peter||Griffiths, E. (B'y St Edm'ds)|
|Bryan, Sir Paul||Grist, Ian|
|Buck, Sir Antony||Ground, Patrick|
|Bulmer, Esmond||Grylls, Michael|
|Burt, Alistair||Hampson, Dr Keith|
|Carlisle, John (N Luton)||Hargreaves, Kenneth|
|Carlisle, Kenneth (Lincoln)||Hawkins, C. (High Peak)|
|Carttiss, Michael||Hayward, Robert|
|Chalker, Mrs Lynda||Heddle, John|
|Chapman, Sydney||Hogg, Hon Douglas (Gr'th'm)|
|Chope, Christopher||Holland, Sir Philip (Gedling)|
|Holt, Richard||Norris, Steven|
|Howard, Michael||Onslow, Cranley|
|Hunt, David (Wirral)||Oppenheim, Philip|
|Hunt, John (Ravensbourne)||Oppenheim, Rt Hon Mrs S.|
|Hunter, Andrew||Osborn, Sir John|
|Hurd, Rt Hon Douglas||Ottaway, Richard|
|Jessel, Toby||Page, John (Harrow W)|
|Key, Robert||Page, Richard (Herts SW)|
|Kilfedder, James A.||Parkinson, Rt Hon Cecil|
|King, Rt Hon Tom||Parris, Matthew|
|Knight, Gregory (Derby N)||Pollock, Alexander|
|Lamont, Norman||Powell, William (Corby)|
|Lawler, Geoffrey||Powley, John|
|Lawrence, Ivan||Prentice, Rt Hon Reg|
|Lewis, Sir Kenneth (Stamf'd)||Price, Sir David|
|Lightbown, David||Rees, Rt Hon Peter (Dover)|
|Lilley, Peter||Renton, Tim|
|Lloyd, Ian (Havant)||Rhodes James, Robert|
|Lloyd, Peter, (Fareham)||Rhys Williams, Sir Brandon|
|McCrindle, Robert||Ridley, Rt Hon Nicholas|
|McCusker, Harold||Ridsdale, Sir Julian|
|Macfarlane, Neil||Rifkind, Malcolm|
|MacKay, John (Argyll & Bute)||Roberts, Wyn (Conwy)|
|Maclean, David John||Rossi, Sir Hugh|
|McNair-Wilson, P. (New F'st)||Rumbold, Mrs Angela|
|Major, John||Ryder, Richard|
|Malins, Humfrey||Sackville, Hon Thomas|
|Maples, John||Sayeed, Jonathan|
|Marland, Paul||Shaw, Giles (Pudsey)|
|Marlow, Antony||Shaw, Sir Michael (Scarb')|
|Mates, Michael||Shelton, William (Streatham)|
|Mather, Carol||Shepherd, Colin (Hereford)|
|Maude, Hon Francis||Shepherd, Richard (Aldridge)|
|Mawhinney, Dr Brian||Silvester, Fred|
|Mayhew, Sir Patrick||Sims, Roger|
|Mellor, David||Smith, Tim (Beaconsfield)|
|Merchant, Piers||Soames, Hon Nicholas|
|Mills, Sir Peter (West Devon)||Speed, Keith|
|Mitchell, David (NW Hants)||Speller, Tony|
|Moate, Roger||Spencer, Derek|
|Molyneaux, Rt Hon James||Spicer, Jim (W Dorset)|
|Monro, Sir Hector||Spicer, Michael (S Worcs)|
|Montgomery, Fergus||Squire, Robin|
|Moore, John||Stanbrook, Ivor|
|Morrison, Hon C. (Devizes)||Steen, Anthony|
|Moynihan, Hon C.||Stern, Michael|
|Murphy, Christopher||Stevens, Lewis (Nuneaton)|
|Needham, Richard||Stevens, Martin (Fulham)|
|Newton, Tony||Stewart, Andrew (Sherwood)|
|Nicholls, Patrick||Stewart, Ian (N Hertf'dshire)|
|Sumberg, David||Walker, Bill (T'side N)|
|Tapsell, Peter||Walker, Rt Hon P. (W'cester)|
|Taylor, John (Solihull)||Wall, Sir Patrick|
|Taylor, Teddy (S'end E)||Waller, Gary|
|Temple-Morris, Peter||Wardle, C. (Bexhill)|
|Terlezki, Stefan||Warren, Kenneth|
|Thatcher, Rt Hon Mrs M.||Watson, John|
|Thomas, Rt Hon Peter||Watts, John|
|Thompson, Donald (Calder V)||Wells, Bowen (Hertford)|
|Thompson, Patrick (N'ich N)||Wells, John (Maidstone)|
|Thome, Neil (Ilford S)||Wheeler, John|
|Thurnham, Peter||Whitney, Raymond|
|Townend, John (Bridlington)||Winterton, Mrs Ann|
|Tracey, Richard||Winterton, Nicholas|
|Twinn, Dr Ian||Wood, Timothy|
|van Straubenzee, Sir W.||Woodcock, Michael|
|Vaughan, Sir Gerard||Yeo, Tim|
|Viggers, Peter||Young, Sir George (Acton)|
|Wakeham, Rt Hon John||Tellers for the Noes:|
|Waldegrave, Hon William||Mr. Tristan Garell-Jones and Mr. Archie Hamilton.|
|Walker, Cecil (Belfast N)|
§ Question accordingly negatived.
§ Main Question put forthwith pursuant to Standing Order No. 41 (Amendment on Second or Third Reading), and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 42 (Committal of Bills).