Smith Houses, Leicester

Petition – in the House of Commons at 11:59 pm on 10th June 1986.

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

Photo of Mr Greville Janner Mr Greville Janner , Leicester West 12:01 am, 10th June 1986

I am pleased to have the opportunity to raise on the Adjournment the matter of Smith houses in Leicester. The problem afflicts a number of my constituents who were council tenants but who have, at the Government's behest, and through arrangements made by the Government, bought their homes and have found that those homes are defective and are unable to be repaired as the homes of their neighbours, who are still council tenants, have been repaired. I appeal to the Government, through the Under-Secretary of State for the Environment — the hon. Member for Ealing, Acton (Sir G. Young)— to make appropriate arrangements for justice to be done to those owner-occupiers.

I recognise that the problem does not afflict owner-occupiers only in Leicester. It has reverberations in many parts of the country. I pay tribute to my hon. Friend the Member for West Bromwich, West (Miss Boothroyd) for her efforts to obtain, at least, the movement from the Government which apparently has been made. Alas, it is the apparition of movement and not its reality that we must consider tonight.

There are 250 Smith houses in the city of Leicester. All of them are defective and in need of repair. Forty-two out of the 73 Smith houses — 57 per cent. — in my constituency are occupied by people of modest means who cannot afford to pay the cost of having those homes, formerly council owned, put right at their expense.

Part XVI of the Housing Act 1985 provides a mechanism whereby the local housing authority—in this case the Leicester city council — can distribute repair grants in favour of owner-occupiers and then recover 90 per cent. of the cost from central Government, the owner-occupiers paying the remaining 10 per cent.

On 1 May this year, after much pressure, especially from local councillors—I pay tribute to Councillors Ray Flint and Brian Shore in my constituency— tenants associations, including those representing my constituents, Members of Parliament such as myself, Labour Members and, in fairness, I must say one or two Tories, the Minister has moved. He may not have moved far enough, but any movement from the Government in the direction of sanity is a rarity much to be welcomed.

However, the movement has been extremely limited. In Leicester and elsewhere, the order designating Smith houses was finally made, but there are two obstacles to its implementation. First, the Leicester city council has been prevented from distributing any repair grant and, secondly, the terms of the relevant designation order will limit the scope and effectiveness of the eventual repair grants. Before the Leicester city council can make any repair grants, it must be satisfied, among other things, that once repaired the houses will be acceptable to a lending institution for mortgage purposes.

The Building Societies Association's policy is that it will offer mortgages on defective houses only if they have been repaired using a "repair system" that has been approved by PRC Homes Ltd. The Building Societies Association is not bound, by law, to make that decision. It has concluded that PRC Homes must approve the repair system. PRC Homes Ltd was set up to examine, approve and give warranties on repair systems for defective houses.

Leicester city council has devised a first-class repair system which is being used on its own properties. Fifty properties have been repaired in accordance with the system. Some 50 tenants are thoroughly satisfied with the changes that have been made in their properties which protect those properties from further deterioration. The system has been not only designed by the council's highly skilled and excellent team of architects, surveyors and experts but approved and recommended by two independent experts.

In those circumstances, it will surprise the House to note that PRC Ltd has not approved the system. Indeed, I understand—the Under-Secretary of State will correct me if I am wrong—that PRC has not approved any repair system for Smith houses. No doubt, we shall soon find out if it has. Leicester city council has been told that its system is such that PRC would not approve it, that it would not stand a chance and that it would be a waste of ratepayers' money to apply for approval, because the application would be rejected.

If PRC rejected the Leicester repair scheme because it was not good enough, fine— at least we would know what points had to be corrected. But the question is whether the criteria applied by PRC are correct and whether the Building Societies Association should require approval by PRC. Smith houses are not of prefabricated, reinforced concrete construction. They are not PRC houses. They are not Boot houses, to which the PRC's criteria would apply. It is folly to judge Leicester's repair system, which is already in use for a number of council houses that are tenant occupied, as though they were PRC houses.

Leicester city council's engineers, who are highly competent, highly skilled, responsible and experienced, and two excellent and highly recommended independent consultants have submitted that the opinion that it is unnecessary to require the removal or making redundant of all elements containing steel reinforcement. This would entail the replacement of every block in every wall in every Smith house and require a repair scheme costing up to three times more than the Leicester scheme. If such a repair scheme were necessary, Leicester city council would somehow have to find the money and undertake the measures that have been required for two Boot houses. Last weekend, I went around the Braunstone area of Leicester in my constituency and saw where Boot houses had been pulled down and new homes built in their place.

I am proud to compliment Leicester city council on the care that it shows the citizens of Leicester. It would ensure that the necessary repair scheme was carried out. However, if the council spent three times the money that was needed to do the work, it would not be surprising if it were lambasted for wasting ratepayers' money. There is far too much ill-informed complaint in the House about Leicester city council. With minimum funding and despite vicious cuts by the Government, it is seeking to maintain. its services to its citizens.

I am glad to have the opportunity offered by this Adjournment debate on Smith houses in Leicester to pay tribute to the council for its work for its citizens and to refer to the folly of those who seem to spend their lives happily pouring scorn on what is good instead of joining in building a fine city for those who live there and who are entitled to decent homes.

The Government encouraged tenants to buy their homes, but, in the case of Smith houses, they were encouraged to buy defective houses. The Government, having made provision for tenants to buy those homes, which turned out to be defective, have created a system with which it is impossible to comply. Those owner-occupiers have therefore been let down by the Government whom, unfortunately, they had trusted.

The Leicester city Smith houses have exhibited four defects. I understand that the designation order refers to one defect only, so the owner would have to pay the full cost of repairing the other three defects. In that respect they have also been abandoned by the Government. It is no good the Minister saying that the defects could have been recognised and reflected in the sale price. In most, if not all, cases the defects were not so recognised. People bought their council houses on the basis that the Minister suggested and it is against the whole ethos of the housing defects legislation for the Government to deny compensation to those owner occupiers in this way.

I ask the Minister to look again at the entire system and either to extend the designation order or to make it clear that the repair of the other defects does come within the purposes of the repair grant for the single designated defect. The owner-occupiers, the council and myself, as Member of Parliament for the owner-occupiers, wish the Minister would take the steps outlined so that the houses can be repaired. If he will not do so, it is clear that he is forcing the House to accept the position of last resort.

No doubt one day the council would have to repurchase those homes. That is not what the Government intend, it is not what the council want and it is not what the Opposition would consider right, and I hope that it is not what the Minister wishes either. The council does not wish to have a further burden on its already over-burdened housing investment programme. Certainly most of the owner-occupiers do not want it. They have exercised their right to buy, have moved out of the public sector at the Government's behest, and are now entitled to be helped by the Government and not to be let down in the way that they have been.

All that is against the background of a general housing situation which would not simply permit them to move out of their Smith houses into others, as might be possible where housing is abundant. Half of the housing investment programme is being spent in replacing Boot housing, leaving less for other projects. There are 1,500 Boot houses to be replaced at a cost of £40 million over 10 years. Fifty of the council Smith houses were repaired last year at a cost of £4,500 each. What really matters is that there are some 11,000 outstanding housing applications in this city. People cannot simply move back into the public sector. There are some 30,000 people waiting to be housed in Leicester and, of those who are housed, one in three live in adverse conditions, according to the Office of Population Censuses and Surveys. Four thousand out of the 34,000 council houses lack basic amenities. It is not possible for people to say "We were in Smith houses. We can now move out".

It is calculated that some £50 million would be needed for the council to do its job as it should be able to. In Leicester the council gets £13·2 million from the Government out of that £50 million. It is hardly surprising that it is unable to do the job. As it stands, it is not possible for the council to dip into the city council treasury, which is depleted because the council was forced to use the meagre reserves in the year of rate-capping in order to rebuild the Smith houses at local expense. The Government have propelled people into buying those homes and into acquiring their properties. Those properties were defective and it is the moral duty, if not the legal duty, of the Government to see that those homes are now repaired at the cost of central Government. It is the Government's duty to see that the systems which have been set up are not, as would appear, a tantalising mockery but that they will enable people to get the money that they need in order to carry out the work that they are entitled to in order that they may be housed in a city where far too many people either have no homes or inadequate homes and where some 30,000 people are on the housing list.

Photo of George Young George Young Parliamentary Under-Secretary (Department of Environment) 12:14 am, 10th June 1986

I am grateful to the hon. and learned Member for Leicester, West (Mr. Janner) for giving us this opportunity, albeit brief, to discuss the problems facing Smith home owners in Leicester. I compliment the hon. and learned Gentleman on his attire, which has lent some tone to the Chamber.

The position is not as grim as the hon. and learned Gentleman made out in his speech. I hope that the 72 owners of those houses in Leicester will not be too influenced by what he said about the Act, which he described as a tantalising mockery. That is not so. I hope that I shall be able to explain to him that the Government have leaned over backwards to bring help to people such as the home owners in Leicester who have bought their Smith houses.

Some of the points that the hon. and learned Gentleman made are not totally unfamiliar to me because he has been assiduous in putting them to me through parliamentary questions and through the most recent letter that he wrote on 22 May, which I have studied carefully. I shall send him a full reply, which will also reflect what we have heard today.

The hon. and learned Gentleman understandably focused on the 72 Smith owners in Leicester. But I hope that the House will bear with me if I outline the background to the problem because it is possible to lose sight of that.

When we first discovered the problems with Airey houses in 1982, and then with the other prefabricated reinforced concrete houses, the Government did not take the line that we could have. That line was simply to say "caveat emptor," and that it was down to the owner-occupiers to look out and make sure that they did not buy property that was not of the proper value. Instead, we recognised our responsibility to those who had bought in good faith from the public sector and then found that their houses were defective in ways that could not have been foreseen when they bought. So we introduced first the voluntary Airey scheme of assistance, operated through the repair grant machinery, and then our comprehensive Housing Defects Act 1984.

It is appropriate that the author of that Act should be in his place tonight. My hon. Friend the Member for Eastbourne (Mr. Gow), the then Minister for Housing and Construction, piloted the legislation through the House. I hope that the hon. and learned Member for Leicester, West will give the Government the credit that they deserve for grasping the nettle in that way. I should add that, of course, the Act had all-party support in its passage through the House in the summer of 1984.

I now refer specifically to Smith houses. The problems associated with those houses were discussed during the passage of the Housing Defects Bill, and my hon. Friend the Member for Eastbourne commissioned the Building Research Establishment to study them. The BRE's initial findings were that the houses did not warrant designation under the Act. Although the BRE identified vertical splitting and cracking arising from corrosion of the handling steel in the blocks as a problem which could arise in theory, and which, if it did, might ultimately threaten structural stability, it saw no evidence of it happening in any of the properties that it looked at. That was why my hon. Friend the then Minister announced in July 1984 that he had decided against designation. But we retained an open mind. We told the House that we would continue to look at the matter. We said that, if we could have evidence on the condition of Smith properties and on matters such as valuation and mortgageability, we would look at it again.

The hon. and learned Gentleman referred to the hon. Member for West Bromwich, West (Miss Boothroyd), who took some initiatives in this respect. I should also mention my hon. Friends the Members for Leicester, East (Mr. Bruinvels), for Birmingham, Hall Green (Sir R. Eyre) and for Birmingham, Yardley (Mr. Bevan), who also played a part in the subsequent debate about Smith houses.

As a result of those representations, we asked the BRE to look further at certain properties in Sandwell. At those properties, we saw that what the BRE had said might arise was indeed taking place. That, together with other information that we then had to hand on loss in values, mortgageability and so on, convinced us that we should designate nationally. My hon. Friend the Minister for Housing, Urban Affairs and Construction announced our decision to do so on 19 December.

That is a potted history. I think that it demonstrates that we have been open-minded and have done our best to help owners whom we recognise were in a very difficult position.

Moving on from there, we had discussions with several authorities in the midlands where the Smith owners faced additional problems caused by the use of shale fill in the foundations. We held back on national designation to give those authorities time to make local designations to cover the foundation problems. There was a technical reason why we did not want to designate nationally — that would have knocked out help to Smith owners in Birmingham who had an additional problem with the shale foundation. We made the national designation in late April, and it came into operation on 1 May. All eligible owners are statutorily entitled to assistance.

I shall deal now with some of the specific points that I know are worrying the owners of Smith houses in Leicester. The first point is a basic one. Under the Act, eligible owners are entitled to assistance either by way of a reinstatement grant or repurchase at 95 per cent. of the defect-free value.

As with the PRC designations, we have to provide 10 years as the period over which the owners can get that assistance. The owners will get the assistance to which they are entitled over that time. Many of us hope that this might take the form of reinstatement, but if that proves not to be possible, for whatever reason, assistance will still be forthcoming through repurchase of 95 per cent. of the defect-free value.

That leads me to the basic question of the form that reinstatement should take and the amount of grant assistance that the owners might get. On the latter point, all designated house types have the same eligible expenditure limit for grant purposes, which is £14,000. As I think the hon. Member will know, my hon. Friend the Minister for Housing announced last week that we are proposing to increase the limits for most types and to bring this proposal into effect by the end of August. The important point here is that for the Smith houses we are proposing a new and higher limit of £20,000. I am sure that that will in itself help.

Turning to the form of repairs, the hon. and learned Gentleman expressed concern that the designation itself referred only to defects arising from corrosion of the steel handling bars, rather than from other defects such as cracking caused by movement between the concrete blocks or intersecting walls, or problems with the roofs. Therefore, the cost of some repairs might have to be met by the owners themselves.

We have followed closely the precedent established for PRC houses. I want to make it clear that assistance available under the housing defects legislation should relate in principle only to losses that the owners have incurred, because of defects in their homes that could not reasonably have been anticipated or taken into account in the valuation when they bought the house. Corrosion of the steel handling reinforcements in Smith houses is just such a defect, causing substantial loss in value. That is why we have designated the houses.

I have to say that possible problems with the roofs of some houses—they are of a basically traditional design — or, indeed, movement of the walls caused by temperature or moisture changes, are commonplace things that a surveyor would be expected to recognise. Those problems could not justify extending grant aid to repairs of that nature. That said, it may well be that in order to fix the inherent defect a repair method may sweep up some of the related defects at the same time. If that were the case, the owners would benefit accordingly. But if it did not do so and it turned out that major works were needed to deal with the independent defects and that those would not be grant assisted, the owner might well be entitled to repurchase instead. That could be the case if the other defects were serious enough to prevent the houses from having a thirty-year life, which would mean that they were unmortgageable.

Again, the owner would not be left in the lurch. He would get assistance. In that case the repurchase price would be 95 per cent. of the defect-free value in relation to the qualifying defect.

Photo of Mr Peter Bruinvels Mr Peter Bruinvels , Leicester East

My hon. Friend will have been aware of my problems with Smith houses since 1984, including the 31 Smith houses in the Netherhall estate, and aware of the Vice-chairman, John Dixey. They are concerned to get the repairs done privately. They are confident that the Government will help them in all possible ways, but they are not confident that the city council's way of repairing the houses is satisfactory.

Can my hon. Friend assure my constituents that such a system, once approved, will enable the work to be carried out privately and that, if it is not carried out privately, there will still be an opportunity for the houses to be purchased back by the council?

Photo of George Young George Young Parliamentary Under-Secretary (Department of Environment)

My hon. Friend's second suggestion is indeed the case. If a suitable system is not available and the houses cannot be repaired economically, to obtain a mortgage with a thirty year life, then indeed repurchase is available to those owners.

In relation to the first point, there is no obligations at all to use Leicester city council's own repair system. I hope that other systems will be approved by PRC homes, and owners will be entitled to use both systems. That leads us to the question of whether Leicester city council's proposed repair methods would meet the requirements of the Act. My officials have had discussions with officers from the council, which I hope have been helpful. I know that Leicester council has put a lot of effort into working up its proposed repair method, include drawing upon the advice of consultants, as well as its engineers, and that it is planning to use the method to repair its rented stock. Obviously this is not the best opportunity for a detailed technical discussion of what are, I understand, complex issues, but there are requirements placed by the Act itself which are relevant and which do not apply to the system that Leicester may use for its rented property.

The first is the 30-year life — the property, when repaired, must have an expected life of at least as long as that if the repair is to be acceptable for the Act's purposes. The council believes that its repair method would satisfy this test. That is a matter for PRC Homes. The second is mortgageability — the repaired property must be mortgageable in the private sector. I understand that Leicester council has had some discussion with building societies and other lending institutions. Much will obviously turn on the outcome of those discussions, but I understand that so far the council has not been able to attain the assurances it needs. It was to try to ensure that repair methods were generally acceptable as mortgageable that we, the BSA and the local authority associations themselves encouraged the NHBC to set up the approvals and warranty scheme, so that a repair method endorsed by it would be generally accepted as mortgageable for the purposes of the Act. There is no legal requirement for repair methods to have NHBC approval, but they must meet the tests in the Act.

The hon. and learned Gentleman will ask "What about the NHBC rules on the removal or making redundant of all PRC elements, and how relevant are these to the rather different Smith case?" I think the answer must be that the NHBC will obviously need to consider this. As I indicated in a recent parliamentary answer, its detailed criteria may well require some adaptation because they were framed very much with PRC houses and loadbearing reinforcement in mind, and Smiths, with the non-loadbearing steel handling bars are somewhat different. I think it might help if Leicester could hold further discussions with PRC Homes Ltd. I appreciate that the Smith owners want to be sure that if their houses are to be repaired, that repair will be effective and make the houses mortgageable. Therefore, it is not just a matter of what the Act requires—the owners have a real interest in making sure that their problems will be resolved once and for all.

I stress the point that I made earlier, that the owners have 10 years in which to get assistance. Now, if they want to move quickly, the Act provides for that under the "hardship provisions", with which the hon. and learned Gentleman will be familiar. They allow owners to make a claim for assistance by way of repurchase if it would be unreasonable for them to await a repair. But for the other owners, who would like to have their houses repaired if possible, it may well be best to wait a while and see what methods emerge. Our recent announcement of the increased expenditure limit may well encourage builders and designers to look further into this and to work up suitable ideas.

A year ago we had no approved repair methods for PRC houses, and there were those who feared we might never achieve any, yet now we have 14 approved methods covering four of the major PRC types, with many more in the pipeline. Indeed, I can give the House the good news that last Friday the PRC Homes assessment committee approved a repair method for Orlit houses. This is relevant because, like Smith houses, Orlits were known to be a difficult type to repair, yet we now have an approved repair method for them. I am hopeful that other repair methods will emerge for Smith. Obviously it requires an element of patience, and I understand how frustrating that must be but a good repair, which solves problems once and for all and avoids the need to move, is worth the wait.

We have had a useful debate and I should like to thank my hon. Friend and the hon. and learned Member for raising those points. If I have not covered all the points, I shall write to them and try to be helpful. Basically, the Government want to help home owners and the council to meet the problems that have arisen through the discovery of the defects in the Act. I hope that those in Leicester will do what they can to encourage builders and designers to bring forward suitable repair systems to PRC Homes Ltd. for approval. Then we can make swift progress in tackling these problems.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes past Twelve o'clock.