Welwyn Hatfield Council (Slough Estates)
5:55 pm

Motion made, and Question proposed, That this House do now adjourn.—[Mr. McLoughlin.]

6:19 pm
Photo of Mr David Evans

Mr David Evans (Welwyn Hatfield)

Thank you, Madam Deputy Speaker, for allowing me to bring this issue to the Floor of the House. It is crucial to the financial well-being of all my constituents. To paint the picture, I should like to start with Labour-controlled Welwyn Hatfield council's agreement with two property companies—Slough Estates and the Carroll group. In the late 1980s, putting it simply, Slough Estates was to build a shopping centre in Welwyn Garden City, without any restriction on the type of shops, but was nervous, to say the least, that its investment would be undermined if the Park Plaza scheme, hereafter referred to as The Galleria, did not have a strict tenants mix agreement as to the type of shops.

The council agreed to Slough's request, so the company proceeded to develop the site, and an impressive shopping complex it is, too. The Carroll group pressed for the relaxation of the tenants mix agreement. In an aide-memoire prepared for the Labour council working party, Martin Hayes, the then chief finance officer, said: In view of the very recent approval to the Howard centre and the sensitivity that those developers have always shown to the Park Plaza scheme, the decision to relax the tenants mix agreement in the way suggested cannot be minuted at this stage. Nevertheless, such a decision would have to be acted on behind the scenes. So there we have it. I repeat what Mr. Hayes said: In view of the very recent approval to the Howard centre and the sensitivity that those developers have always shown to the Park Plaza scheme, the decision to relax the tenants mix agreement in the way suggested cannot be minuted at this stage. Nevertheless, such a decision would have to be acted on behind the scenes. The A1(M) working party, which has a Labour majority and includes six Labour members, accepted that decision and the full council endorsed it, although not all councillors were informed of the policy change. In the recent ruling against the council following the change in 1987, the judge said: Thereafter, after 1987 there was a policy of lies. So there we have it again. If I may, I shall repeat what the judge said: Thereafter, after 1987 there was a policy of lies. The leader of the council was Stan Atkinson, a Labour councillor. The deputy leader at that time was Councillor Ray Little, who stood in 1992 as my Labour opponent at the general election and subsequently became leader of the council. Councillor Chris Gillen was chairman of the 1987 A1(M) working party. The judge said: They acted as a nucleus who steered the rest. They are, to their eternal shame, still councillors and have not done what any honourable person should do in these circumstances—resign.

If that was not bad enough, more scandal was to follow. The new Labour leader of the council in 1996, Mr. Ray Little, was offered, three days before going to court, an out-of-court settlement of 16 million by Slough Estates. Without any consultation with the council officers or Labour colleagues, Mr. Little refused on behalf of all the people of Welwyn Hatfield. He should be locked up and the keys thrown away. He single-handedly robbed the people of Welwyn Hatfield—my constituents—of 32 million. What is more, he could not care less.

Can my hon. Friend the Minister please say whether any application was made to the Department of the Environment for permission to use the council's capital receipts to settle the Slough Estates debt when the offer was made and we had the chance to settle the case for just 16 million, before it went to court? If so, was permission refused by the Government?

As a result of that Stalinist slap in the face, Slough Estates took the Labour council to court and won a judgment of 48 million, which has now increased to 53 million with the addition of costs and interest accruing. I repeat the figures in case the House did not hear me. The 48 million has now increased to 53 million. The Labour council decided to appeal, but then withdrew the appeal on legal advice. It is now trying to find the money to pay the debt.

This fiasco should make people think about the consequences of voting Labour, not only in Welwyn Hatfield but across the nation. Where Labour is in control, we have financial incompetence, lies and bankruptcy.

How can we settle this appalling state of affairs? If we wait for my Labour opponent in the forthcoming general election to speak on the subject, we shall wait for ever. Her silence has been deafening, but then she lives in Cambridge. The people of Welwyn Hatfield tell me that she is not interested, because it is not her problem, but for people who live in the constituency, it certainly is.

I want my hon. Friend the Minister to watch my lips. Is he looking? However this debt is to be paid, which it will have to be, David Evans will not allow it to be paid by a surcharge on every household in Welwyn Hatfield, with a council tax bill of at least 1,500. I will say it again, just to make sure that my hon. Friend has heard me. However this debt is to be paid, which it will have to be, David Evans will not allow it to be paid by the people of Welwyn Hatfield through a surcharge on every household, with a council tax bill of at least 1,500.

After the payment of 10 million from reserves, the amount owing is now about 43 million. That is increasing by a staggering 7,000 a day in bank interest. The council has 15 million on deposit from council house sales, which is earning interest at about 900,000 per year. It would like to pay that amount to Slough Estates, thereby reducing the debt to 28 million, with the balance to be paid with the receipts from large-scale transfer of housing stock. I have supported that approach fiercely in the past.

As my hon. Friend the Minister knows, I have been in constant contact in person, by telephone and by letter with my right hon. Friend the Secretary of State. However, I am well aware that there are one or two stumbling blocks that might be difficult to surmount in order to bring the current difficulties of Welwyn Hatfield to a quick conclusion. I emphasise that those stumbling blocks have been created not by the Government, but by the attitude of the Labour-controlled Welwyn Hatfield council.

The first problem seems to me to be how the council would make up the loss of 900,000 interest accruing on 15 million on deposit, which goes directly into income available for expenditure by the council. One presumes that the shortfall would be added to the council tax bills. If that is the Labour council's intention, I say no way.

Does my hon. Friend the Minister believe that the council, having reduced the debt to 28 million, has the incentive to embark seriously on the transfer of housing stock when, over many years, it has dragged its feet on embracing Government policy? That policy would allow my constituents to buy their own homes or agree to have them run by a housing association, which has the interests of tenants at heart.

Even as recently as last month, the Labour group leader said on the front page of Welwyn Hatfield Times that she believed that Labour councillors would refuse to sanction the transfer of housing stock to meet the judgment against the council in the Slough Estates fraud.

In the past couple of weeks, however, the council seems to have had a change of heart. I wonder why. Unfortunately for my constituents, not least those living in council-owned property, the damage has been done by Labour councillors and their cohorts on the council. Their statement in the local newspaper has sent a disgraceful message to tenants, who, as we all know, have their own vote to decide whether a housing association should take over their properties. Labour councillors have effectively said, "Don't vote for the transfer of your home to housing associations." We all know, however, that if they did that under that Labour-controlled council, they certainly would not be any worse off than they are now.

Perhaps the Minister would like to take this opportunity to tell my constituents about the virtues of transferring housing stock to a housing association and the benefits that tenants would enjoy. In my opinion, with its message to tenants, the Labour council is once again trying to obstruct Government policy that would help the people of Welwyn Hatfield and improve the quality of life for tenants, but as we all know, that council says one thing and does another.

Perhaps the Minister can also confirm that whatever is the outstanding debt, 100 per cent. of receipts from the transfer of housing stock to housing associations will be available for use to pay off the debt and not just 25 per cent., according to the current rules.

I expect the Government to tell us tonight what the next step is. The people of Welwyn Hatfield deserve our support. They have been let down by the Labour councillors whom they elected in good faith, year in and year out, over the past 20 years. They are fortunate that we have a Conservative Government to try to protect them—a Government who have also ensured that their council tax is capped. They have a Conservative Member of Parliament who champions their cause without fear or favour.

Finally, may I say that this Member will not allow the Government, civil servants, councillors or officers simply to wash their hands of this nightmare in the hope that it will go away? It must be resolved in the best interests of my constituents, and those who are responsible for the lies, fraud and deceit must be brought to book. They must be made responsible for the debt and they must be disqualified from ever standing as councillors again. In that way, those incompetent, inadequate financial pygmies will never ever be allowed to rob the people of Welwyn Hatfield again.

6:34 pm
Photo of Sir Paul Beresford

Sir Paul Beresford (Croydon Central)

It is always a pleasure to listen to my hon. Friend the Member for Welwyn Hatfield (Mr. Evans). I can advise him that there is no need to watch his lips—we can hear him quite emphatically and clearly.

My hon. Friend repeated the key points of an unpleasant story, the facts of which are well known, and so they should be. It is a private and local grief, and a tragedy for the local people—the tenants and the residents who will have to pay if the council has its way—whom my hon. Friend has championed.

We know that it is a difficult situation. The story is well known and has been clearly related by my hon. Friend. In essence, in 1987, the council took certain planning decisions relating to a retail development in its local authority area. Slough Estates plc, the owners of the Howard centre, a nearby shopping development, considered that it had not been treated fairly and challenged the council's decisions.

Recently—for the benefit of my hon. Friend. I should like to repeat that it was very recently—we heard that, last year, the council was offered an out-of-court settlement of 16 million. We were not aware of that at the time. No application for assistance in regard to the offer was received by my Department, so no decision could be made on a request that was not asked.

The case went to court. Slough Estates successfully sued the council and damages were awarded to the company amounting to 49 million. As my hon. Friend pointed out, those damages were exacerbated by certain actions.

In January, the council applied to my Department for a supplementary credit approval, to release 15 million of invested capital receipts. Under the capital finance system, that money can be used only with a credit approval. We have a firm policy of not issuing SCAs outside certain specific, targeted programmes—for instance, for reorganisation costs. Outside those programmes, SCAs can be given only in the most exceptional circumstances.

We considered Welwyn Hatfield's case extremely carefully, but we concluded that there was insufficient justification for issuing an SCA. Consequently, we turned down its application. Such an approval would lead to an increase in the public sector borrowing requirement. In order to meet our objectives for the public finances, that would have to be balanced by increases in Government revenues from taxation.

My Department gets a number of requests for SCAs each year from authorities facing unplanned demands on their budgets. If we gave way in the case of Welwyn Hatfield, we would be expected to do so in other cases. There would be substantial public expenditure consequences if we met even a proportion of the applications.

My hon. Friend has, however, offered an eminently sensible suggestion—large-scale voluntary transfer of the housing stock. It is a well-proven scheme, which works extremely well and is extremely successful and popular. LSVT increases investment and improves the condition of the existing stock in every case. Housing transfers are not rare, although Welwyn Hatfield council might say that they are, nor are they exotic or an emergency measure. They are becoming a normal, common, well-recognised way of meeting requirements in housing for tenants, with tenants' consent. They are accepted by authorities and councils of all political complexions.

Housing transfer is not just a solution for now, but provides long-term benefits for the future. Public expenditure will always be limited. Housing authorities will never be able to spend as much as they might like in repairing and improving their stock. Private finance is not subject to the constraints of public expenditure. LSVT provides a stable financial future for the upkeep of tenants' homes.

Under the new Housing Act 1996, a local housing company can be set up as the new social landlord to own the stock, in which both local authority and tenants can hold substantial stakes.

Since 1988, 53 local authorities have transferred their stock, generating more than 3.7 billion in private finance. To borrow a saying, "Watch my lips: more than 3.7 billion in private finance." Receipts generated from transfers under the 1997 LSVT programme are expected to be around 350 million, involving 17 local authorities.

Last autumn, we introduced measures that included a three-year holiday from the 20 per cent. LSVT levy that is normally charged on transfers. Welwyn Hatfield is debt free. It no longer has to set aside any of the proceeds from future sales of assets. It would, therefore, have available 100 per cent. of the receipts from the transfer, including the extra 20 per cent., if it transferred within the holiday. The council would not need to touch its invested capital receipts and it would continue to receive the interest on those investments and on anything left from the transfer receipts.

We have increased the size limit for transfers to any one landlord from 5,000 to 12,000. Those such as Welwyn Hatfield with a stock below 12,000 would, if they so wished, be able to negotiate a transfer in one single action, thus saving on administrative costs and keeping the tenants together under one landlord. Tenants like LSVTs because of the benefits that they bring: for example, an accelerated programme of catch-up repairs; guaranteed rent levels for up to five years; much better management—in this case, much, much better management; and closer and real tenant involvement in management.

For the obvious reasons cited by my hon. Friend, transfer would be a sensible policy for Welwyn Hatfield. In fact, it would be sensible irrespective of the court case, in the present circumstances, because transfer brings private investment to the stock and generates resources for the council, which it could use for the benefit of its tenants and the local citizenry.

Labour Welwyn Hatfield has got itself into a corner and that is its own fault. The council now has a way out, which has been suggested by my hon. Friend. I congratulate him on championing the cause of his people, his residents, his citizens and his council tax payers. I only hope that, for a change, the councillors take the very broad hint that has been laid before them by their Member of Parliament.

Question put and agreed to.

Adjourned accordingly at twenty minutes to Seven o'clock.