Orders of the Day — Local Government and Transport

Part of the debate – in the House of Commons at 5:41 pm on 7th November 1984.

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Photo of Mr Allan Roberts Mr Allan Roberts , Bootle 5:41 pm, 7th November 1984

There never was such a threat. The Conservatives were guilty of amazing misrepresentations during the general election, on the doorsteps and elsewhere, about the Labour party's attitude to the sale of council houses. It is said that we lost votes over the issue, and that, because of it, many people voted for the alliance rather than for us. However, the policy on the sale of council housing in the alliance manifesto was exactly the same as that of the Labour party. Our position has always been the same as that of the Liberals and the Social Democrats. We are in favour of local authorities determining for themselves, as democratically elected bodies, whether they sell council housing.

If all the best houses have been sold off after nine to 10 years of council house sales, and if the housing crisis has worsened and waiting lists have lengthened, we shall be in a completely new ball game. The promises of the Labour party to help those in housing need will be seen to be far more relevant than any gimmicks that the Conservatives may use, in the run-up to the next general election, to bolster the figures for houses sold.

The Minister declined to go into any details about the possibility of further cuts in the housing budget. Recent newspaper reports have suggested that the Treasury wants cuts of £600 million or more in housing investment in the next financial year. That would be a disaster. It would drastically affect the construction programmes of both the local authorities and the housing associations—although the local authorities are likely to be worst hit. Councils and housing associations are committed to spending on work in progress. New work planned for next year would, therefore, be hard hit. It has been suggested that the number of council homes started could fall by 20,000. Improvement grants would probably dry up completely. In my constituency there are no improvement grants anyway and no new capital expenditure on housing, because the Conservative Sefton council has interpreted the Minister's request for voluntary restraint as a request for a moratorium, even though the Minister said that it was not. If there is a cut of £600 million, home owners will certainly not be able to get improvement grants. That will prove that Conservatives are not—as they claim to be—the supporters of the home owner.

One must consider the proposed cuts in terms of the present housing situation. In 1983 there was a total waiting list of 1·2 million—the highest total ever. There was a transfer list of nearly 600,000. An analysis by Shelter shows that in many areas the reduction in council house building is reducing the number of lettings available to dangerously low levels. In England alone, 78,000 households were accepted by local councils as homeless in 1983, compared with 53,000 in 1978. In London, Shelter found that over 2,000 homeless families were living in bed and breakfast hotels on a temporary basis last summer. The cost of such accommodation in London alone is estimated at £12 million a year—a sum which would be enough to pay off loan charges on 3,000 houses at an estimated cost of £30,000 each.

According to the Government's own housing conditions survey, 1·1 million houses in England were unfit for human habitation in 1981. Nearly a million homes lacked one or more basic amenities. Nearly 4 million homes needed repairs which would cost more than £2,500—a figure which had risen by over 20 per cent. in five years. That is the situation before the consequences of the £600 million cut mooted by the Treasury are felt. The greatest number of homes needing major repairs were in the owner-occupied sector. No money or grants for them are coming from the Government.

The housing stock is aging. According to estimates, in 1971 1·8 million homes were over 100 years old. By the turn of the century, that number will have risen to 4·3 million. That points to an increasing demand for repair and improvement, and hence an increase, not a reduction, in the moneys available. That is not just council housing, it is money provided through local authorities to housing associations and owner-occupiers.

The Housing Defects Act 1984, which the Government are planning to bring into operation on 1 December, designates as defective 170,000 homes built using precast reinforced concrete. Cuts will undermine efforts to deal with the problem in those homes, which the Government have recognised. In addition, the Minister for Housing and Construction announced just two weeks ago that all houses and flats built using large panel systems similar to Ronan Point are to be investigated for possible defects. Defects in some large panel types, for example Bison, have already been admitted. Shelter has estimated that that could mean that upwards of 100,000 dwellings could need repair or demolition. Cuts will clearly undermine repair programmes and in extreme cases there will be a possible risk to safety.

Cuts are economically unsound. There is no sound economic logic for cutting further or for not expanding the housing investment programme. The Treasury is insisting on cuts because, contrary to most accepted accounting conventions, it treats borrowing for capital spending as the same as borrowing for current spending. It is Treasury nonsense, but that is what it does with the public sector. In other words, the Treasury does not recognise capital investment. Its approach to spending on housing has been illustrated as follows—if someone buys a house with a £20,000 mortgage and pays £2,000 in mortgage repayments during the first year after purchase, any sensible person would say that during that year a liability of £20,000 has been created and payments of £2,000 have been made. The Treasury says that £22,000 has been spent, and that there must be further cuts. It does not apply the same logic to the private sector, the owner-occupier, the bank or the insurance company.

Construction is estimated to be one of the cheapest ways in which public spending can create jobs. For every £100 million invested in house building and home repair work, up to £175 million returns to the Exchequer by way of increased payments of taxes and reduced social security payments. Looking at that another way, cutting £600 million from the housing investment budget could mean a net saving to the Treasury — because of the unemployment created—of as little as £150 million.

I ask the Secretary of State for the Environment to fight his corner to obtain some money for investment in capital expenditure on housing so that we can build houses for the homeless and for those in most need, and provide jobs for people who work in the construction industry.

If the Secretary of State wants to find any savings on houses, and if he is forced by the Treasury—because most of the local government and housing legislation we have from the Department of the Environment is Treasury legislation rather than local government or housing legislation—to find some money, let him turn back on the Treasury and consider the amount of money that is given in income tax relief to owner-occupiers at the higher end of the scale who are buying large houses.

We have a system of housing subsidy based on income tax relief on the interest paid on the mortgage which is founded on the unassailable British principle that the richer one is the more help one needs with housing. If we study the figures, we find that they are amazing. The latest year for which comprehensive figures are available is 1983–84. The total value of mortgage interest tax relief amounted to £2,710 million, representing £400 subsidy per mortgagor receiving tax relief. The total council house subsidy, including Exchequer subsidies and net rate fund contributions to local authority housing revenue accounts in the same year came to £1,091, million representing only £188 per local authority dwelling.

I am not opposed to income tax relief for the average mortgagor but I support equal treatment for everyone in every form of tenure in terms of Government financial assistance and subsidy. If further cuts have to be made, perhaps some of the money can be taken from the top end of the owner-occupier market. I hope that the Minister will consider that, rather than a further attack on local authority and housing association subsidies and house building programmes.

I am sure that the gap that exists between subsidies that the owner-occupier and the council tenant receive will have widened even further with higher interest rates in 1984–85 and decreased Exchequer subsidies and rate fund contributions to local authority housing accounts.

Although the reply will be made by the Secretary of State for Transport, I hope that it will cover some of the omissions in the Queen's Speech and in the speech of the Secretary of State for the Environment when he opened the debate.