§ 4.7 p.m.
§ The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Lord Bellwin)
My Lords, with your Lordships' permission, I should like to repeat a Statement now being made in another place by my right honourable friend the Secretary of State for the Environment on housing public expenditure.
"The background to the decision I am announcing today is well-known to the House. This Government face the task of setting public expenditure at levels which the nation can afford. If we fail, the problem with which we are all familiar will continue—a public sector consuming a disproportionate share of the nation's resources, high interest rates and declining investment in the private sector.
"The harmful effects of the policies of recent years can be clearly seen in housing. By 1979, for the average new council house, taxpayers and ratepayers were contributing towards a subsidy of £30 per week. Council rents had fallen to an average of 6.4 per cent. of income—despite a commitment in the last Government's Green Paper to increase rents in line with earnings.
"The net result of Labour's housing policy was to make new building for local authorities so expensive that in every year after 1976 local authorities of both political complexions responded by reducing their programmes. And the rent policies of the last Government have been a major factor in the inability of local authorities adequately to meet housing costs, finance investment and maintain their stock.
915 "Against this background, we have reassessed our housing policy. The Government's expenditure plans for 1980–81 and later years will be published in a White Paper next month, but the local authorities, the Housing Corporation and the New Towns need to settle their programmes now. For these reasons, this year, I am, exceptionally, making an oral statement.
"Our reassessment of objectives must recognise the significant general improvement of housing conditions in the last 30 years. Home ownership has grown from 31 per cent. to 55 per cent. over that period, and we recognise the desire of most people to own their own home. In national terms, the supply of housing and demand are in better balance. Needs and problems have become increasingly specific and local. The emphasis of public sector housing policy now must be to meet particular needs, such as those of the elderly and the handicapped. We have to concentrate on modernising, improving and making better use of the existing stock, rather than on the general provision of new houses, and we must encourage home ownership and the private rented sector.
"We need therefore to adopt new priorities—priorities which are reflected in the Housing Bill and which are critical given the economic background.
"I come now to the programme for 1980–81. The housing investment programes for local authorities in 1980–81 will be allocated £2,199 million at expected outturn prices. The Housing Corporation will be allocated £420 million for the work of housing associations. And the New Towns building for rent programme will be £151 million. In new town development, the proportion of owner occupation is below the national average, yet the demand is high. In future, growth must be based increasingly on the private sector and homes for sale. Taken together, these three housing capital allocations for 1980–81 will in real terms, at 1979 survey prices, be about £540 million or 21 per cent. lower than the forecast outturn for 1979–80. These figures are for England. My Scottish and Welsh colleagues are making separate announcements.
916 "In the new circumstances, it is even more important that local authorities should use available resources in the most effective way to meet local needs. In order to encourage this, the housing allocation to each authority from April 1980 will be in a single block and they will have much greater ability to decide their own priorities. They will also have the new opportunities opened up by the Housing Bill.
"There is a range of ways to promote low-cost home ownership—selling council houses; securing land release for builders; encouraging starter homes; low-cost building for sale, especially for tenants and those on the waiting lists; schemes for improving and selling houses such as acquisition, improvement and sale (AIMS) and homesteading; promoting shared ownership; and by helping priority home buyers with mortgages. In these ways people can be helped to become owners. Full details are in the allocation letter to authorities, copies of which are in the Printed Paper Office.
"The priorities now must be value for money and concentration, under the more flexible arrangement, on the problem areas. In the private sector, the introduction of shortholds and the other provisions in the Housing Bill will improve the availability of rented accommodation without additional public expenditure.
"Exchequer subsidy to local authorities for housing last year amounted to £ 1,148 million in 1979 survey prices. The rent levels of recent years have not only prejudiced the abilities of local authorities to maintain adequately their housing stock but have contributed to the enormous burden of public expenditure. I have therefore concluded that it would be right to issue a supplementary rent increase guideline of 60p a week on average over the second half of 1980–81.
"Mr. Speaker, I have announced today a reappraisal which reflects our assessment of national economic and housing priorities. This is a necessary response to a situation in which the scale of housing subsidies increased under the previous Government to levels far beyond those the nation could 917 afford. From now on we shall concentrate resources where they are needed; and I have today set out realistically what the nation can afford."
My Lords, that is the end of the Statement.
§ 4.14 p.m.
§ Baroness BIRK
My Lords, may I thank the Minister for that Statement, which we have at last had. But even more eagerly than we have awaited it have the local authorities been waiting to find out how they can plan for the coming year. The cut, because of the single block arrangement, has now been gathered together and referred to in the Statement as a cut which is 21 per cent. lower than the forecast outturn compared with last year. However, the £3,200 million spent, converted into 1980–81 prices, shows a cut of £1,000 million over last year, which is almost one-third. Local authorities also asked for £4,650 million for this coming year; so the cut really is one half. In fact, the cut is very much more severe than the Statement indicates.
I should like to ask the Minister how many new starts he anticipates there will be. It is true that because the figures are given in a single block it does not show up there, but the department must certainly have worked this out. Does the Minister also believe that sales will now outnumber starts?
On the question of cutting down in the public sector, may I remind the Minister of what his right honourable friend the Secretary of State said in June? In a Press release then he referred to the need for a healthy public sector as well which would deal with those people who are in need. The chairman of the AMA, who was on the "Today" programme this morning, was asked about the advantages of the single block. He said that this was fine but that there was not much point in having freedom of choice if there was so little to choose from. That is exactly the situation in which local authorities are landed today.
The Statement also refers to council rents. That is despite a commitment in the last Government's Green Paper to increase council rents in line with earnings. The Green Paper said: 918The Government consider that over a run of years rents should keep broadly in line with changes in money incomes.It did not say that in a time of high inflation and very high unemployment rents should go up.
According to the Statement, growth must be based increasingly on the private sector and homes for sale. Yesterday the Department of the Environment published a document which shows that the public housing sector in the fourth quarter was down 13 per cent. on the previous quarter and 27 per cent. down on the corresponding quarter a year earlier. Orders in 1979 were 28 per cent. lower than in 1978. Private housing orders in that quarter—we are talking here not about the time of the last Government but about the time of this Government—were 14 per cent. lower than in the third quarter and four per cent. lower than in the fourth quarter of 1978. And in the year as a whole they were down 9 per cent. on 1978. Does the Minister not agree that when the public sector contracts the private sector contracts also?
May I now turn to that part of the Statement which deals with all the "goodies" which are to be available to people in the future—the range of ways in which to promote low cost home ownership, the sale of council houses, and so on. I find it difficult to understand, unless we are talking about a hopeful, very far future, how this is going to help the 1 million people who are on the housing waiting list and the 3 million families who are living in badly-kept houses which need rehabilitation. That is on top of an inflation rate of over 18 per cent., a 15 per cent. mortgage rate, unemployment up, and going up, children being taken into care because families are homeless, and families in the street because the homeless families Act cannot operate because local authorities do not have the accommodation. And where are old people to go? They are unable to go to old people's homes because those also are being closed as part of the public expenditure cuts.
Since the home is the cornerstone of family life, all this must mean an increasing burden on the welfare services, had results in education from children who are separated from their parents or who are living in bad accommodation, and a 919 further breakdown in marriages. We know very well that one of the big causes of such breakdowns is that couples have to share a home instead of having one of their own. How, with unemployment and with inflation rising as it is, even young people who have lived for three years in a council house are going to be able to buy their own house under the Government scheme, even at a third discount, is just not possible. I believe that this is not an economy in any true sense of the word; it is an economic and social disaster.
§ 4.20 p.m.
§ Lord AVEBURY
My Lords, while thanking the Minister for repeating the Statement I should like to ask how the Government expect local authorities to make housing expenditure plans for the year beginning 5th April when only now, six weeks before the start of that financial year, are they being told how much money is available. Secondly, with regard to the costs of local authority building, mentioned in the Statement, can the Minister say what is the increase in the cost of an average three-bedroom semidetached Parker-Morris house which has been brought about by the rise in interest rates since the Conservatives came into office? How are people going to buy the houses offered for sale by the local authorities when these cuts are likely to add to the mortgage famine? Does not the initial 60p rent rise mentioned come on top of the £2 increase which has already been imposed by the Government, and does not the Minister consider that this will be likely to fuel inflationary wage demands even beyond those of the order of 20 per cent. that we have already seen?
Have the Government made any estimate of the proportion of this £2,200 million which will have been committed already by the local authorities, and whether they will have anything left over for new mortgages or for renovations? Do the Government realise that if local authorities, as a result of these cuts, have to cancel schemes on which they may already have embarked or, at the minimum, on which they may have paid fees, we shall get even worse value for money out of the housing programme than we have done in the past? Have the Government 920 calculated what additional unemployment this reduction will cause in the construction industry, and the amount of the additional unemployment benefit which is payable to the workers in those industries, offsetting the so-called £540 million saving? Finally, have the Government worked out what additional bed and breakfast charges will be incurred by the local authorities in respect of the homeless as a result of the cuts in the housing programme brought about by these reductions?
§ 4.22 p.m.
§ Lord BELLWIN
My Lords, first, to deal with the points raised by the noble Baroness, Lady Birk, she referred to the cut in fact being a larger one than the figures I quoted, using a basis different from the likely out-turn. If I were to quote exactly the same figures using the out-turn figures on the basis as did the previous Administration, it is perhaps interesting to note that we should then have been talking about a reduction from £4.2 billion in 1974–5 to £2.16 billion in 1978–9. In other words, the previous Government in fact halved over four years the actual total housing capital allocation. It was an annual average reduction of £500 million. I think that helps to put things slightly into perspective. If one wanted to make the case even stronger one would have to quote the fact that in the year 1975–6 the reduction was £900 million. So let us by all means be concerned at what I said, but at the same time let us keep it in perspective.
The noble Baroness asked how many new starts there would he. Because the system is changing, because there will be the one block system, it will be up to each authority itself to decide how many building starts it wishes to make. It will no longer be told what it has to do; it will be for it to decide whether its priority in its area, depending on local circumstances, shall be for new building rather than repair and improvement, rather than for mortgage money, or whatever. That will be for the local authorities to decide. Therefore I cannot make a "guestimate" as to what new starts there would be. I should have thought that with all the "guestimates" taking place time and time again over the years as to how many new dwellings would be built, it would not advance us a great deal to be making further suppositions at this time.
921 The next point made by the noble Baroness was a reference that the AMA have referred to as regards the single block, saying, "Yes, it is a help, but not so much if it is not much of a block in total". That is quite right, but of course we are talking about a block to them of £2,199 million. I should have thought that was a fairly substantial total.
In regard to new starts there has been an enormous local authority "under-spend"—some 28 per cent. in fact from the allocations last year; so clearly their assessment as to what the spending on new building should be is perhaps not quite the same as some might have thought.
The noble Baroness asked what happened when private sector contracts as well were contracted. I will only say on that, that what has to be done to help the private sector is what we are proposing in the Bill; namely, to make land more available, to help with planning procedures and with planning attitudes generally. I hope that will help and encourage the private sector. The noble Baroness also asked how all this would help the families on the waiting list and those needing repairs to their houses. I must repeat that the point on repair is the same as I made on new buildings: each authority itself will have to decide. The need for repair, for improvement and so on, varies considerably from one authority to another. In some authorities there is a greater need for new building than in others where here may be a far greater need for improvement or repair. Therefore, giving the extra flexibility of the one block is a significant contribution towards the totality of improvement in housing.
That covers most of the points mentioned by the noble Baroness, but if I have missed any, and if she would like me to do so, I should be glad to write to her with more details. The noble Lord, Lord Avebury, asked me what would be the cost of a three-bedroom Parker-Morris type dwelling in the future.
§ Lord AVEBURY
My Lords, I did not say that. I asked what the increase in the cost of an average three-bedroomed semi-detached Parker-Morris house would be as a result of the increase in interest 922 rates which has occurred since the Tories came into office.
§ Lord BELLWIN
My Lords, with respect I suggest that the question is slightly academic because under the Bill being brought forward Parker-Morris, as such, will no longer be a requisite upon local authorities—it will not be required. Clearly I have not a calculation at the moment as to what it might be if it were to go on in that way, but perhaps, again, I could come back to the noble Lord on that later.
The noble Lord asked me how these cuts would add to the mortgage famine and I must give him the same answer as I gave to the noble Baroness, Lady Birk. It will for be an authority to decide within its block allocation whether, in the light of the local circumstances, it should give more money to mortgages than to some other form of housing subsidy. I know at least one authority that certainly will be doing that in the future.
The noble Lord asked whether the 60p increase on rents would fuel wage demands. Of course, only time will tell as to that, but perhaps the best indication that we might have of that is to look at what has happened as regards earnings in relation to rents. The fact is that earnings have gone up relative to rents since 1974–75 in this ratio: rents have risen by 70 per cent., while earnings have risen by over 110 per cent. So, although the noble Lord may have a case, there again only time will tell; but the figures may give some indication. As to extra unemployment, I do not think he needs me to answer that, because once again it would depend upon how the money was spent. As for the homeless, the same thing applies again. I think what we are saying is that we are moving towards spending what we believe we can afford, not what we feel we ought to be able to afford. I think there is a difference.
§ 4.31 p.m.
§ Lord HALE
My Lords, if the noble Lord wants to refer to what we can afford, will he apply his mind to the problem of overcrowding in lower middle-class houses or working-class houses—I dislike the term—which is increasing? In London an appalling situation is developing.
923 When he refers to the problems of councils and so on, does not he realise that there have been borough councils, in Lancashire for example, for whom housing was an absolute priority problem from the start? We were building what council houses we could in a town like Oldham long before the war. Many of those houses are still let. When he talks about the problems of maintenance and repairs, in connection with that sort of thing there is a problem. I am very concerned about the position. The last Labour Government did at least apply some control in favour of the occupancy of houses that had been once the homes of families and now were divided up. This protection was largely removed by the Court of Appeal. Now we have young girls, students and working-class, sharing a single room, with a lavatory, at £60 a week between four of them. This is not something that is rare; it is commonplace. When the noble Lord talks about the availability of houses, there are more and more stately houses being bought, more often than not, not by British nationals, and there are blocks of flats that to my knowledge have changed hands five and six times in the last few years. I know we are talking about council houses, and I know we are talking about the Government allocation, but the noble Lord himself asked us to apply our minds to the general perspective of the housing situation. It is a dreadful perspective, and the result of all this may be increasing tragedy.
§ 4.33 p.m.
§ Lord BELLWIN
My Lords, the noble Lord will forgive me if I am not absolutely clear as to what answer he wants from me on the particular points he has made. Perhaps I could say that, as regards the housing situation in London, I should have thought that the proposals we are making in the Bill as regards shorthold might very well, and hopefully will, have a significant impact on the availability of accommodation in the private rented sector. Within the inner London area that, I would think, would be a major contribution, if it turns out as we expect.
As to the noble Lord's other observations, he will have to forgive me if I do not quite follow the question he was wanting to put. Everyone has to be concerned about housing; it is indeed a basic fundamental. But I do not think 924 we help the debate by assuming that the proposals made in the Statement today are going to result in what the noble Baroness, Lady Birk, referred to as economic and social disaster, as the noble Lord, Lord Hale, intimated similarly. You have to look at what happened in 1975–76, when a cut of double this size was made in the programme. It did not have that effect, and I do not think it will this time. Indeed, if the one block proposal achieves only a part of what we hope, I think it will be a major contribution to helping generally by giving more flexibility to the totality of the housing scene.
§ Lord DENHAM
My Lords, I know the noble Lord, Lord Ross, wants to ask a question. I think your Lordships may feel that when he has done that, and when my noble friend has replied, it might be time to carry on with the business.
§ Lord ROSS of MARNOCK
My Lords, I do not think I will delay your Lordships long and I do not think the noble Lord needs to reply. I just want to ask the noble Lord whether he appreciates that this is a United Kingdom Parliament. I certainly should have liked to hear what the Statement was in respect of Scotland, because from the point of view of housing undoubtedly we have a very much worse position, particularly in our older cities.
Is there any reason for me to believe that the Statement in regard to future housing in Scotland is any more palatable than that which has already been delivered? Local authority housing in Scotland means far more than it does in England and Wales. Can the noble Lord tell me that the hope is in respect of that? Can he tell me whether he expects, or whether anyone else expects, that persuading anyone in Scotland to buy a council house is going to provide another house? It just means taking one out of the available stock. Mortgage rates are the same in Scotland as they are down here, and in some cases, for example in Aberdeen, the cost of houses is even higher. Bearing in mind that at the present time house building is lower than it has been for over 30 years, are the Government intending to improve the position in Scotland by the Statement that, unfortunately, I have not been provided with?
§ Lord LLOYD of KILGERRAN
My Lords, may I ask a very short question? The noble Lord said that his Scottish and Welsh colleagues are making separate announcements. May I ask whether, so far as Wales is concerned, the announcement will be made in the House?
§ Lord BELLWIN
My Lords, there will he separate Statements, written Statements, in both Houses on the position in Scotland and in Wales. So, hopefully, the information noble Lords require will be available either now or very soon. Perhaps I may make one last comment on the point that the noble Lord, Lord Ross, made as regards the position in Scotland. As it happens, I do know a little of the position in Scotland from another incarnation, and so on. Yes I am inclined to agree with him that in some parts of Scotland the housing position is indeed very bad and requires a great deal of work and help. I cannot tell him what the Statement is as regards Scotland because I do not have it with me. However, on one point I would have to differ with him. I do not accept that when you sell a council house you take it out of the stock. I have said this before and doubtless will say it again when we come to the Housing Bill. The person who occupies a house as a tenant and then buys it, thereby becoming the owner, continues to occupy the same house. He makes it neither more nor less available than before because he continues to occupy it in exactly the same way.
§ Viscount MASSEREENE and FERRARD
My Lords, in order to decrease pressure on housing, is it the Government's intention to amend the Rent Act so that it does not give tenure for life? As my noble friend will know, there are tens of thousands of houses in the country which are empty because the landlords are frightened to let them; they might get a bad tenant, and, of course, he is there for life.
§ Lord BELLWIN
My Lords, as I think I answered not long ago on this same point, I would refer my noble friend to the short-hold proposals in the forthcoming Bill, which we shall be seeing fairly soon. Again, only time will tell, but I at least hope that this will be a major contribution towards making landlords feel that there is greater security for them in renting. There is no doubt that the successive 926 Acts, with their restrictions, have been a major factor—and the figures show that this is so—in reducing the availability of private sector accommodation to rent.
§ Baroness BIRK
My Lords, I wish to refer to two points. First, I think that it is very easy for figures to become confusing when they are thrown across the Chamber. I still maintain that the cut is much greater than it appears to be. I should be grateful if the Minister could write to me to that I can see the figures set out.
Secondly, I should like to press him—and he may like to write to me about this as well—on the question of new starts. Frankly, I find it very hard to believe that the Government do not have, and do not intend to have, some idea of how many new houses will be built and of what sort of increase there will be in our housing stock. I do not think that it makes sense to answer in the way that the noble Lord has answered.
§ Lord BELLWIN
My Lords, I am sorry that the noble Baroness feels that my answer did not make sense to her. The fact is that I can only repeat what I said previously. There has been far too great a willingness to make such forecasts in the past which have invariably been proven wrong, not least in the last year when local authorities alone had an "underspend" of some 28 per cent. on their proposals. Clearly it would not help at all to make such guesses. However, in any case the one-block position makes all the difference: every authority will decide for itself what it will do in its own area.