Public sector housing has already been discussed today. The earlier debate, in which I spoke for a few minutes, showed clearly how worried my hon. Friends are about housing. I want to draw to the Government's attention the housing crisis in Burnley, but the problems are repeated in many areas. The solution is to be found in the Government taking note, and taking action.
The Parliamentary Under-Secretary has visited Burnley in the last few years and has had an opportunity to examine its housing problems. More recently—on 19 April—the Minister for Housing and Construction visited Burnley. He was able to see for himself at ground level the problems in the public and private housing sectors. The visits were much appreciated by the borough council and myself.
Councillors and officers enjoy a good relationship with the Department's Manchester office. That is illustrated in a letter to me dated 20 July from the chief executive of the Burnley borough council, which refers to the useful and good relationship with the Department's regional controller.
I want to concentrate on two major problems. They are not the only problems in Burnley, but time does not permit me to deal with them all. I do not dispute that the Budget of 9 March 1982 provided for an original finishing date of 31 December 1982 for renovation grants at the higher percentage rate. The time was extended and that was welcome, but ultimately it came to an end last autumn, as announced in a statement to the House. The higher rate of grant was an attraction to many people in Burnley, who found it much easier then to meet their share of the cost.
Another problem is caused by VAT being charged on some renovation work. That means that even more cash has to be found by the owner.
However, they are not the biggest problems. The greatest difficulty is caused by the financial limitations on this year's housing investment programme allocation. Last year's allocation, which was open-ended, was a massive incentive to councils such as Burnley to go all out to encourage people to improve their homes. Up to November last year, Burnley was receiving an average of 260 applications a month, which was encouraging to the council. I am sure that the Under-Secretary will be encouraged by that response by people living in older homes in Burnley. Almost half the borough's housing stocks are older terraced houses built before 1919, with the accompanying problems of disrepair, lack of standard amenities and poor environment. They are, however, in the main solidly built stone houses, as the Under-Secretary of State will have seen for himself when he visisted Burnley. They are worthy of the extension of life that improvement will ensure.
Burnley has a higher proportion of housing lacking standard amenities than any other district in Lancashire —about one in 10—and that cannot be acceptable. A recent report has identified to the council 27 areas within the borough worthy of treatment as general improvement areas or housing action areas, but that treatment cannot proceed, because of the lack of finance. This year's housing investment programme allocation is £5,350,000. By April 1984 grants already approved totalled £3,200,000, and those awaiting approval totalled a further £15,400,000.
To meet last year's statement, the council stopped all further applications for discretionary grant as from November. An amount of £150,000 per month is being released to those on the waiting list. A points system has been introduced, taking into account the length of time on the waiting list, disability, hardship and other items, to determine the fairest possible system of distributing the limited resources available.
The council—both councillors and officials—have been bombarded with submissions from people who have been on the waiting list for a considerable time and from those who can no longer apply for a full improvement grant, but only for a mandatory intermediate grant.
One important point involves the problems that face the Stoneyholme action area, which, for more than half its life, has not been able to receive improvement grants: first because of the moratorium in 1981, and now because of the more recent cuts in the HIP allocation. After the moratorium, there was the boom period for grants in 1982. At first, the council did not have sufficient trained staff to deal with the flood of applications. The problem was dealth with as speedily as possible. As of 19 July 1984, the outstanding grant applications were as follows: improvement grants, 1,599; repair grants, 1,388; intermediate grants, 387 — making a total of 3,374. Within the intermediate grant figure is included a number of people who changed their application for an improvement grant to a mandatory intermediate grant on the basis of their belief that they stand a better chance of getting a grant earlier and dealing with some of their more urgent problems.
Many of the people on the waiting list will have to wait years. The council's HIP allocation, which is at present being considered — on Monday of this week it was before the housing committee — for 1985–86 is £10,400,000, which includes £6 million for grants. The figure of £6 million is realistic, and the council feels that it reflects the capacity of the local construction industry to deal with the problem, assuming that the council is granted the total requested. It is not a reasonable figure in relation to the total requirements.
Week after week, I hear in my advice bureau and read in my post complaint after complaint about people facing major problems who are unable to take action because they cannot obtain the necessary grants. I have seen many tragic cases where houses are in urgent need of improvement. It will be some years before some of the people can deal with their problems.
The council is, of course, trying to give prior approval for urgent work to be done in appropriate cases where it is essential for work to be done without delay — for example, roofing. The problem is that that action does not really help the owner-occupier, because once the work has been done he still does not know when he will receive the grant. I have been trying to get building societies and banks to examine the possibility of lending people money in the hope that they will be able to wait until the grant is ultimately approved and received. I am sure the House appreciates that no builder will undertake work on the basis of the owner-occupier possibly obtaining grant approval and the builder therefore possibly getting paid in two or three years' time. We must deal with the problem, and we need some assistance in doing so.
Before referring to the other major area with which I wish to deal, I should like to mention council house rents. In 1980–81 the Government's subsidy to the housing revenue account was £1·6 million—now it is nil. The change in financing has forced rents up to an unacceptable level for a town such as Burnley. Between 1979–82 rent levels rose by the massive figure of 150 per cent. I must accept my share of responsibility, because part of that rise was during my period of office as leader of Burnley borough council. There is no doubt that we have forced rents up to a level that will not encourage tenants to remain in their houses or to move into council properties.
While rent levels rose by 150 per cent., over a similar period house prices rose by only 10 per cent. In a town with low-priced houses for sale, rent levels now bear an unfavourable comparison. Burnley has always had a high percentage of home ownership, of which we are very proud. We are not opposed to that in principle—indeed, we wish as many people as possible to own their own homes — but there will always be a requirement for public housing to rent. At the moment people cannot afford the rent levels that they are asked to pay, as they are too high.
Time forces me on to the second main problem area, which is the improvement of the council's own pre-war housing stock. The council has about 1,200 pre-war houses, which are now in urgent need of modernisation. The problem is two-fold. First, there is insufficient capital allocation, and secondly, there are the revenue consequences of such improvement. The crazy situation is that improvement of the council's own housing stock has major revenue implications, while improvements in the private sector have only minimal revenue implications.
In the period when funds were available for limited grants, it was surprising that if we sold a house on a council estate and it could get an improvement grant there were minimum revenue implications for Burnley borough council, the ratepayers and rentpayers, but if the council improved the house itself the revenue implications were very high. The council is therefore forced to consider the implications of speeding up the improvement of its own housing stock, such as the consequence on rents or rates, or a combination of the two.
As a result, the council can improve only 100 houses a year, which means that at the present rate it will be nearly the turn of the century before the programme can be completed. We shall then need to tackle the immediate post-war houses. That is totally wrong, in 1984. We have houses built before the war, with bathrooms outside. They were built like that because we had a large number of miners, and in the days before pithead baths the idea was that miners could take a bath before they went into the house and so not take the coal dust into their homes. We have kitchens with Belfast sinks and houses lacking all the modern facilities that should be provided. Money must be made available to deal with that problem now.
I should like to refer to two estates in Burnley—Plane Tree and Bleak House. They are really one estate, and are in the ward which I represented on Burnley borough council from 1976 to March this year, so I know the problems of the estate extremely well. It was the last estate to be built just before the war. There are about 342 homes on it, a few bungalows and a few flats. They were all well built, semi-detached houses. However, the estate is rapidly deteriorating, and that has accelerated in the past three years. The problem needs to be tackled now. At present many of those houses are empty because people will not pay the high rents for the facilities that are provided. Some 18 months ago I asked council officers to look at the estate as a matter of priority and at all possible options for dealing with the problem. Demolition is not acceptable, because the homes are basically too good. Improvement for sale by the council was ruled out by the capital spending implications and the risk of financial loss. Homesteading would only add to the grant problems. The selling price would be low, and there would be little capital receipt for the council.
Improvement for sale through another agency was considered, but the Bradford and Northern Housing Association doubted whether it wished to take it on. The council could have changed its priorities, but I have already referred to the urgent need for grants in the boroughs. We could not transfer resources from there. We could not change the priority for dealing with other estates, because that would only have created problems on the other pre-war estates. It would not have solved the problem, but would merely have shifted it from one estate to another. We certainly could not throw sheltered housing out of our programme.
We considered sale to a developer, and three companies were approached—Barratts, Leechs and Wimpeys. One hundred and twelve houses are being considered as a pilot scheme for a company to develop, improve and sell. That has serious implications. I shall not jump over the moon if the council pursues that course. Nevertheless, it is a possible course and must be considered extremely carefully.
Whatever decision is ultimately taken, it will be a difficult one. On 20 July the council wrote to the Department to ask whether the Secretary of State would issue a special consent to permit the involvement of the Bradford and Northern Housing Association in solving the problem at the Bleak House estate through a scheme involving sales, lettings and, possibly, shared ownership with Wimpeys or one of the other firms. The council understands that that consent is unlikely to be forthcoming.
The problem is urgent and needs to be solved now. If urgent action is not taken and we do not improve these homes in the private and public sectors, the problem will cost the country far more money, because its solution will involve demolition and rebuilding.
This is the second time in less than 12 hours that I have had the privilege of listening to the hon.Member for Burnley (Mr. Pike) talk about housing.
The hon. Gentleman has explained what he sees as the most pressing problems in his constituency. As a former leader of Burnley borough council and a member of the housing committee, he speaks with close personal knowledge of those matters, and no one can doubt the genuine anxiety that he expressed about the problems which his constituents and the local authority face.
I commend the pragmatic and broad-minded way in which the local authority looked at a range of solutions to its housing problems. I only wish that other Labour-controlled local authorities would demonstrate that pragmatism and broad-mindedness when tackling their problems. One must engage all available resources, including those from the private sector, if one is to make a concerted attack on the problems of bad housing.
As the hon. Gentleman said, it was at his invitation that my hon. Friend the Minister for Housing and Construction visited Burnley in April, and I know that my hon. Friend found the visit illuminating, not least what he saw at the Bleak House-Plane Tree estate, a matter to which I shall return later. My hon. Friend asked me to say how much he appreciated the chance to see the position at first hand. I recall my visit to Burnley when Dan Jones was the Member and the hon. Gentleman was the leader of the council.
The north-east Lancashire towns share some particular housing characteristics: a traditionally high rate of home ownership, which the hon. Gentleman mentioned —Burnley was one of the cradles of the building society movement; rows of terraced houses, often stone-built, marching up the hillside from the bottoms of the valleys, and often now in need of major expenditure; and comparatively little recent private sector investment, mainly because of the keen competition from the market for terraced houses.
I was surprised when I was told the prices of houses in Burnley as compared with those in my constituency in London. By London standards they are remarkably cheap, which inhibits builders from building new house for sale. The Government recognise that that limits the ability of Burnley council to generate capital receipts. Its stocks of council houses are small to start with. We have tried to reflect that in our approach to its housing strategy. I am grateful for the hon. Gentleman's kind words about the regional controller for my Department and the good relations that exist between the council and the Department.
The starting point must be the overall level of resources available for housing nationally. The Government have made it a cornerstone of policy to ensure that public expenditure does not consume too great a proportion of the nation's wealth and public sector housing has had to make its contribution to that strategy.
In the longer term, the lower rate of inflation which our policies have brought about will lead to a more stable housing environment, and one in whip investment decisions can be made against a more secure background. Housing has made its contribution to past reductions in public expenditure. Even so, the HIP total for 1984–85 was increased by over £50 million from last year to this.
I shall look more closely at the position in Burnley. The borough received an allocation for 1984–85 of £5·350 million, which represented an increase in cash terms of 21·2 per cent. over the 1983–84 allocation. That was a substantial increase—one of the largest increases in the north-west region and one which went well beyond that suggested by the generalised needs index. The allocation recognised the specific spending needs of the borough council, not least the need for extra sheltered accommodation which the hon. Member mentioned. I am sure that he is right to say that that must remain one of the local authority's top priorities. Given the resources available to the region, Burnley is receiving a fair share of the region's resources.
We have also tried to help by enabling local authorities to plan their housing expenditure for more than one year ahead and to use limited resources sensibly.
For the past two years we have given assurances about the future levels of allocation. When the 1984–85 allocations were issued last November, assurances were given that for 1985–86 and 1986–87 authorities could expect to receive allocations of at least 80 per cent. and 70 per cent. of the current year's allocation provided that they could justify the need for that level of expenditure. That position was not changed by last week's announcement about local authority capital expenditure. Burnley therefore will benefit from having a relatively high starting point on which at least the next two year's allocations are expected to be based.
I shall deal with some of the specific points made by the hon. Gentleman. The Government's view that new-build accommodation should be directed towards special needs is well known and Burnley, in common with many other authorities, has a major need for more sheltered accommodation. My hon. Friend the Minister for Housing and Construction saw the site of such a scheme at Woodbine gardens and I was pleased to learn that that scheme is now well under way, and that there are plans for other similar schemes.
The renovation of privately owned dwellings is particularly relevant to Burnley, as some 80 per cent. of its dwellings are privately owned. The hon. Gentleman argues that the higher rates of grants applicable during the past two years and the inducement of additional allocations available under the indicative figure system, should be continued.
As I think he recognises, in introducing these incentives in the 1982 Budget, we made it clear that they were temporary measures to help the building industry. During the past two years, Burnley has been able to spend a considerable amount on improvements to private sector stock—£2·5 million in 1982–83 and over £5·5 million in 1983–84.
We have enabled the authority to benefit from an additional allocation of £1·7 million in 1983–84 by giving the guarantee of supplementary allocations. We continue to give top priority to home improvement and hope that, within the resources available to them, local authorities will also give a high priority to the improvement and repair of private sector housing. The hon. Member mentioned the problem of repairs to the local authority's own stock. He outlined the problems that that would pose for the local authority's finances in general.
One factor which affects entitlement to housing subsidy is the incidence of new loan charges, including those incurred in respect of council house modernisations. Whether this calculation results in a positive subsidy entitlement depends, of course, on the additional annual amount of housing income which the authority is expected to raise locally. Authorities may choose not to raise housing income by rent increases of the specified amount, but in that case we could not justify making taxpayers' money, in the form of subsidy, available instead. The arrangements for subsidy cannot be changed for that reason.
In the present climate of expenditure constraints in the public sector, it is even more important that authorities should look for private investment to help to solve public sector housing problems wherever possible. The Bleak House estate mentioned by the hon. Gentleman is a good example of an area in which private sector involvement might benefit the authority. My hon. Friend the Minister for Housing and Construction visited this estate and was deeply concerned by what he saw. There is a clear need for urgent action to bring it back into effective housing use. As the hon. Gentleman said, Burnley is considering various options for the estate, including the possible sale of part of the estate to a developer for improvement and resale for owner occupation. My hon. Friend and I are following progress in these deliberations with interest, and discussions are taking place between officials of Burnley council and my Department.
The Government remain committed to tackling housing problems in Burnley and are determined that all available resources should be utilised to do so—and not only those of the public sector. In this context, the remarks of the hon. Gentleman this morning are indeed helpful to our fuller understanding of the situation. I can assure him that in the HIP allocation discussions that are taking place all the points that he has raised today will be considered most carefully.