Surplus Rental Income

Clause 50 – in the House of Commons at 1:15 am on 14th June 1988.

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Photo of John Battle John Battle , Leeds West 1:15 am, 14th June 1988

I beg to move amendment No. 85, in page 38, line 4 leave out subsections (6), (7) and (8).

The purpose of our amendment is to challenge the Government on this clause, which proposes to claw back surplus rental income. Although we suggested in Committee that the whole clause be deleted, we are now by the amendment trying to delete the final subsections so that, if the Secretary of State were to claw back the surplus rental income he would not be able to use it in any way. In other words, our amendment would neuter the purpose of the clawing back.

Today has been a strange day for me, as I have experienced a case of upstairs and downstairs. Today, in the Finance Bill Committee, on which I also serve, we discussed housing. The Government's attitude in that Committee contrasts strongly with the statements by the Minister of State in the Housing Bill Committee. This afternoon we discussed the business expansion scheme and, when we put to the Financial Secretary the phrases that the Minister of State introduced so often into our debates on the Housing Bill, such as the social charter and the social rented housing sector, a phrase that he used earlier in this debate, those statements were rebuffed by the Financial Secretary and his supporters, who want to push housing into the fair winds of the private sector without any social protection whatsoever.

A conflict is emerging at the heart of the Government's housing strategy. It has been put together in a piecemeal fashion. When we were discussing the Housing Bill in Committee, the civil servants were drawing up proposals to undermine the Bill by the business expansion scheme included in the Budget.

The Minister appears to be trapped in trying to find the difficult middle way between the public and private sectors. He is trapped at the heart of the Government's policy towards housing associations. In Committee the Minister often used the phrase "meet me in the middle". Earlier, one of his colleagues was anticipating his early retirement from his post. He may well go down as the Minister of "meet me in the middle". One of his typical remarks in Committee was, "Come a bit further to meet us and I am sure that together we can do a great deal more." He has echoed those words as he has gone round to meet members of the housing association movement to suggest that he is holding to the difficult middle way between the public and private sectors. Although the Minister may support the social aspects of the policy, the Secretary of State is firmly undermining the market aspects of the policy, so they contradict one another and the Minister is overruled.

If the axis lies between the public and private sectors, where will the housing association movement fit under the Bill when, in the past, it has lain between the two sectors, with some support from each? Will it be pushed into the free market and be unprotected or, even worse as is suggested in the clause, will its revenue surplus be milked? Although it makes a profit in the free market, that profit will be clawed back by the Government in a form of interference that undermines the whole policy of the free market.

Photo of Harry Cohen Harry Cohen , Leyton

My hon. Friend is making a good point about the money being milked. Has he noticed subsection (3), which states: the surpluses in respect of a period shall be calculated in such manner as the Secretary of State may from time to time determine"? The Secretary of State could fiddle the books so that it would look as though the association was making a surplus, when it was not really doing so, and he could then milk the money.

Mr. Deputy Speaker:

Order. I am sure the hon. Gentleman will bear in mind the fact that we are discussing subsections (6), (7) and (8)—not subsection (3).

2 am

Photo of John Battle John Battle , Leeds West

Thank you for that advice, Mr. Deputy Speaker. I would add only that what happens to the surplus and how it is determined is a moot question affecting the entire clause. I hope that my hon. Friend's points are taken on board by the Minister and that we get a reply so that we do not get the impression that the Secretary of State wants to fiddle the books in the background once the projects have gone ahead.

Earlier in the debate I was surprised to discover that Conservative Members, especially the hon. Member for Darlington (Mr. Fallon), did not seem to have the foggiest idea about housing associations. The hon. Gentleman intervened to correct my hon. Friend the Member for Knowsley, North (Mr. Howarth) when he was describing the funding structure. It is worth reminding ourselves that at the moment housing associations are funded not only by the housing association grant, which is commonly known by the acronym HAG, but by a residual mortgage loan, which is provided either by the Housing Corporation or by a local authority.

I should like to emphasise the role played by local authorities in the past.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

Will my hon. Friend explain that it is common practice in the Civil Service that, whenever a brief is prepared, any abbreviations in the speech are set out in full? For the record, and to ensure that there is no misunderstanding when people read Hansard, will my hon. Friend explain precisely what HAG is, so that nobody could possibly conclude that he was continually referring to the Prime Minister? I am sure that you, Mr. Deputy Speaker, would intervene if you thought that my hon. Friend was doing that.

Photo of John Battle John Battle , Leeds West

I am sure that you would intervene in those circumstances, Mr. Deputy Speaker, and I can assure my hon. Friend that HAG refers to housing association grant. I serve notice on my hon. Friend that I shall refer later in my contribution to GRF. which is another technical term with which we should all be acquainted. It means grant redemption fund, which is the clue to the whole purpose of the clause and the amendment.

Apart from the acronyms for describing the legislation relating to housing associations, I am struck by the fact that Conservative Members seem to fail to acknowledge the central role played by local authorities in supporting housing associations in the past. Yesterday, for example, the hon. Member for Leeds, North-East (Mr. Kirkhope) failed to acknowledge that. Although the hon. Gentleman claims to be a supporter of housing associations, he is prepared to speak and vote against the very means of supporting them in the form of local authority funding. Unless Conservative Members are aware that local authorities contribute to the funding of housing associations, the means of funding them will not be properly understood.

Photo of David Winnick David Winnick , Walsall North

Does my hon. Friend agree that local authorities and housing associations have rarely disagreed about their respective functions and that local authorities, like housing associations, recognise that the councils used to provide the bulk of rented accommodation and that housing associations played a minor role? The housing associations have never disputed that. The extent to which the Government now want housing associations to take over the major responsibility for rented housing goes not only against the wishes of local authorities, but against the wishes of the overwhelming majority of housing associations, which understand that they have a more modest role.

Photo of John Battle John Battle , Leeds West

I am grateful to my hon. Friend for that intervention because he reminds us—I am sure that all hon. Members could give examples of this—of how closely housing associations have worked with their local authorities to draw up various proposals. The very amount of housing association grant is determined once the final scheme costs and the amount of fair rent are known. Drawing up such schemes and getting to that equation demands a great amount of work, in co-operation with local authorities, to put the package together.

Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee, Vice-Chair, Labour Party

I do not want to stop my hon. Friend's flow, but I do not agree with the point that he has made several times. I find it more than a little irksome when my hon. Friend keeps saying that, by their very nature, local authorities work closely with all housing associations. That is not quite the truth. I wish that my hon. Friend would take account of the fact that in some areas the old Coal Industry housing association did not always find favour with the local authorities. Local authorities were keen to ensure that their houses were brought up to a decent standard and they allocated sums of money per house. The Coal Industry housing association ran into a lot of trouble in its later period and paid little attention —especially when MacGregor was at the helm—to providing amenities and ensuring that houses were brought up to a decent state of repair. I hope my lion. Friend will ensure that in all future references he does not make a general point about the "natural togetherness" of the two bodies. In doing so he frustrates my hon. Friend the Member for Don Valey (Mr. Redmond), who, I think, wants to point that out.

Photo of John Battle John Battle , Leeds West

I am grateful to my hon. Friend for making that point. I do not think that I said that all housing associations had such a relationship. I agree that the relationships between local authorities and housing associations have been patchy.

In making the equation to get access to grant, the housing associations believed that the grant would cover the unexpected increase in cost or any unforeseen delay in implementing the contract. In the past, housing association grant has been available to meet the full costs of repair works to properties. When rental income—after deductions for management of housing associations have been made and day-to-day and cyclical maintenance have been carried out—does not meet the mortgage repayments, there is usually a discretionary revenue deficit grant—or, for hostels, a hostel deficit grant—which is made by the Secretary of State to tide them over and ensure that projects are viable. These projects will not be viable under clause 50. Although Conservative Members say that they are friendly towards, and supportive of, housing associations, their legislation proves the exact opposite.

Under clause 45, the Housing Corporation alone wili be given the power to make grant payments, but the removal of the power of local authorities to pay housing association grants on behalf of the Secretary of State will end local authority funding for housing associations. No mention is made of housing association payments for major repair schemes where the local authority holds the mortgage for the original scheme. At present, the Housing Corporation will fund major repairs for such schemes only if no, or only the minimum, housing association grant was paid on the original scheme.

Clause 50 replaces the existing grant redemption fund —I apologise if I refer in future to GRF—with a provision for a rent surplus fund, to be established where a housing association has previously received housing association grant under existing legislation or where it receives the new housing association grant once the legislation becomes law.

Photo of Harry Cohen Harry Cohen , Leyton

I have looked at the figures for housing associations and am interested in the idea of the "rent surplus fund". Rents for housing associations have increased substantially, while housing benefits have decreased. For many low earners, annual rents can be 40 per cent. or more of their annual income. How can there be a rent surplus fund? Is it not purely at the expense of the low earners, who are paying such huge amounts? Surely it is wrong that the Secretary of State should take unto himself and the Treasury powers to take that money from the housing associations and out of the pockets of those poor individuals. Is that not a scandal?

Photo of John Battle John Battle , Leeds West

My hon. Friend has done his homework well, because when, in 1987, the Department of the Environment published proposals for financing housing associations, the Government envisaged that there would not be a rent surplus fund, since a surplus would not arise on new schemes combining public and private finance. That was acknowledged in that consultation document last year. Why will the Government not take notice of that advice and incorporate it in the Bill? Instead, we have a provision that reflects the rubber stamp of the Secretary of State.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

Pensioner couples in my constituency have had their housing benefit reduced by over £5 a week, yet they are facing increases in rent and service charges—the latter being a vague area which many tenants do not properly comprehend—by the Anchor housing association. Any rent surpluses should be used to keep rents to the absolute minimum for tenants who are struggling to make ends meet under this vicious Government, who are robbing them of housing benefit.

Photo of John Battle John Battle , Leeds West

My hon. Friend highlights where this surplus money will come from. When, in Committee, we asked the Minister whether increases in rent would be matched by housing benefit, he said that they would. But the graph of housing benefit in the public expenditure White Paper shows that housing benefit is being reduced each year. There is no sign in that White Paper that housing benefit resources will be increased to pay for the rent increases that will occur under this measure.

The Minister told me in Committee that he would give me a prize if, on reading the Official Report of the proceedings, I found six references to the Bill providing housing benefit. Such references do not exist, because the Minister has not obtained from the Treasury a commitment to fund the housing benefit. The result will be not only increased rents, but people having to find the money from elsewhere to pay those increases. And when the housing associations have rent surpluses, that money will be creamed off under this provision.

Photo of David Winnick David Winnick , Walsall North

Housing associations would like to be in a position to charge fair rents. Under the Bill they will have no alternative but to grant tenancies on an assured basis, and that will represent a market rent. This will be a devastating blow to those who in the past were helped by housing associations but who will now be offered accommodation at a rent which most people in housing need will consider exorbitant, and who, if they had that sort of money, might wish to buy their own homes.

Photo of John Battle John Battle , Leeds West

That is right. My hon. Friend the Member for Bradford, South (Mr. Cryer) speaks of those who will have to pay rent increases, and my hon. Friend the Member for Walsall, North (Mr. Winnick) points out that those increased rents will be at market levels because housing associations will lose their protection under the Bill. As a result, the Secretary of State will be able to direct housing associations to set rent surplus funds, from which he will be able to claw back surpluses accruing from higher rents.

Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee, Vice-Chair, Labour Party 2:15 am, 14th June 1988

My hon. Friend is making a good point. As you probably noticed, Mr. Deputy Speaker, he is keeping very close to the terms of the amendment. He is telling us all about clause 50, and HAG, GRF and all the rest of the gang. What worries me is what will happen to the money that is clawed back. I want to know whether in Committee they discussed what the Secretary of State will do with the surplus money. We know that there is a balance of payments deficit approaching £7 billion. It will increase as North sea oil is gradually frittered away. Has my hon. Friend discussed where the money is going?

There is a suspicion in my mind, based upon the information which my hon. Friend has given us, about where the money is going. I suspect that it will be used to balance the nation's books. So people who are up to the neck in debt and who cannot make ends meet will be helping to meet the growing deficit in the balance of payments so as to keep the Tory Ministers in jobs. I want to know——

Mr. Deputy Speaker:

Order. That is enough for an intervention.

Photo of John Battle John Battle , Leeds West

That is an important point. In Committee we did not discuss what the Secretary of State would do with the surplus, because we expected the Minister to withdraw the clause, not least because the National Federation of Housing Associations had petitioned him to do so because it wanted the grant redemption fund to be abolished. Unfortunately and surprisingly, the Minister was not prepared to withdraw the clause in Committee.

My hon. Friend has asked a good question. I suspect that the money taken from people who had their housing benefit cut and who have had to find extra money to pay their weekly rent will go into the surplus fund and will be clawed back. No doubt that money will be used for future business expansion schemes that are put forward to fund private landlords who want to develop housing which will give no protection to tenants.

Photo of Nigel Griffiths Nigel Griffiths , Edinburgh South

Before he goes on to the iniquitous business expansion scheme, can my hon. Friend clarify whether, when this was discussed in Committee, the Minister was aware of cases like that of a widow in my constituency who in March was paying in rent and rates, after a rebate, £3·96 a month but in April was paying £144·22 a month? Is that what is building up the surplus? Is that what the Secretary of State means when he says that rents are far too low and will have to be doubled? Is it to go towards the new surplus fund which will not be ploughed back into housing but will help bail out the Government?

Photo of John Battle John Battle , Leeds West

As always, my hon. Friend gives the details graphically. He has spelt out the impact of the Government's cuts in housing benefit, despite the fact that the Prime Minister stands at the Dispatch Box and announces that everybody is benefiting from prosperous Britain. My hon. Friend has a reputation for regularly pointing out the lie of that claim.

Photo of David Winnick David Winnick , Walsall North

Will my hon. Friend bear with me? Does he agree that, when we talk about a rent surplus, we should bear in mind cases such as that of a constituent of mine, a lady in her 70s, who burst into tears when explaining to me at my surgery a substantial rent increase which she could not afford? Does my hon. Friend agree that that was embarrassing and distressing for me as a Member of Parliament? I never thought I would see the day when a person in her 70s would burst into tears in my surgery because of the hardship that she was suffering over rent increases, even though I explained to her that, since she had lost much more than £2·50 per week, there would be at least partial compensation. [Interruption.] It is easy for Tory Members to make derogatory noises. I wonder what they would say to their own constituents who are in the same position as my constituent. It is disgusting when such people are penalised day in, day out.

Photo of John Battle John Battle , Leeds West

The clause will result in many people going to their housing associations and bursting into tears after being asked to pay increased rent and then being told that they will be evicted if they are unable to make up the difference between the shortfall in their housing benefit and the new market rent needed to generate the surplus that will then be creamed off.

Photo of Mr Martin Redmond Mr Martin Redmond , Don Valley

Does my hon. Friend agree that, since 1979, successive Conservative Governments have attacked public expenditure and sought to reduce it, and by so doing they lowered income tax? One wonders whether it is the Government's intention to claw back any surplus in order to make further tax concessions to their rich friends in the City. Does my hon. Friend agree that such is a possibility? If it is not, perhaps the Minister will say so.

Photo of John Battle John Battle , Leeds West

My hon. Friend has cited a classic case of taking money from people who need it in the publicly supported sector whom we have always supported in the past. Earlier in this debate, and in the debate on the Finance Bill, there were expressions of surprise that there was no longer a consensus on housing policy. When the House is presented with clauses such as this, which suggests that surplus rents should be used to cut income tax to 20p and put more money in the pockets of those who are already better off, it is hardly surprising that there is no consensus.

Photo of Nigel Griffiths Nigel Griffiths , Edinburgh South

Does my hon. Friend concede that subsection (6) makes it clear that interest too can be demanded by the Secretary of State, so that people who have lost housing benefit, who have been penalised because they have a pension, and whose rents have rocketed to record levels, may not only see surpluses clawed back by the Secretary of State for another, no doubt nefarious purpose, but may also be confronted with interest at penal rates?

Photo of John Battle John Battle , Leeds West

My hon. Friend refers to a point made earlier, when the subject of interest was debated in relation to another clause. Section 53 of the Housing Associations Act 1985 provides that any associations receiving a grant and whose projects yield a surplus arising from increased rental income are required to establish a grant redemption fund. The purpose of that provision has always been to allow the Secretary of State power to recoup the original grant over a period of time. This clause would reinstate that provision with vigour.

Both my hon. Friend and the National Federation of Housing Associations have pointed out that there is no need for redemption fund arrangements, which in the past have yielded only relatively modest sums for the Government and the Housing Corporation. Nevertheless, those "modest" sums are gleaned from the pockets of precisely the people to whom my hon. Friends have referred.

Photo of Mr Robert Clay Mr Robert Clay , Sunderland North

The more that my hon. Friend goes into this horror story, the more it seems to me that a better choice of words for the graph and the Bill would be the Capitalist Robbery Action Programme. Will my hon. Friend care reflect on the acronym for that, because it seems rather appropriate?

Photo of John Battle John Battle , Leeds West

I thank my hon. Friend for putting it into plain language. Anyone who is struggling to understand the Government's policy must wonder why on earth this proposal to milk back the increase and route it into the central kitty for the purpose of making further tax cuts can be explained as freeing the market and generating profits that can be used however the market wants.

We cannot at this stage suggest that the clause be deleted, although that is what we would like to do. Instead, the amendment seeks to ensure that the Secretary of State cannot use any means, whether by paying back and cutting taxes or through the business expansion scheme, to take away that revenue surplus. In that sense we would urge the Minister to step back from the proposal and support the amendment.

Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee, Vice-Chair, Labour Party

Is my hon. Friend referring to HAG or GRF or CRAP? My hon. Friend the Member for Sunderland, North (Mr. Clay) referred to the Capitalist Robbery Action Programme. That sums it up in a nutshell, and from now on, my hon. Friend the Member for Leeds, West (Mr. Battle), who knows all about these matters, should refer to the combination of GRF and HAG under the title of CRAP. I am trying my best to get it in the Official Report.

Photo of John Battle John Battle , Leeds West

The title chosen by my hon. Friend the Member for Sunderland, North (Mr. Clay) to describe the scheme finds an apt response in the Government's consultation document. There we read about this great deregulation proposal and how it will affect housing associations. It says: If rents are to keep pace with those applying to mixed funding schemes"— we shall come to those later— surpluses are therefore likely to build up and it seems necessary to contemplate the retention of the present GRF machinery in some form as an offset to the relatively generous initial HAG payment. As an incentive to efficiency and to the maintenance of sensible rent policies, however, it would seem desirable to enable associations to retain a proportion of those surpluses. The Government have introduced another phrase in that Document—"sensible rent policies". I should be interested to know what they are because we have already had references to market rents and affordable rents. Is that another category in the ragbag in the Government's rent policy?

Photo of Simon Hughes Simon Hughes Shadow Spokesperson (Education), Shadow Spokesperson (Health)

In Committee, the Minister said that the words "sensible" and "affordable" were interchangeable. He never defined them in terms of pounds and pence, but since they are interchangeable the hon. Gentleman may feel free to use either.

Photo of John Battle John Battle , Leeds West

I am grateful for that comment on he Minister's language. He seems to use many interchangeable phrases but there is no flesh and blood on, or definition of, any of them. It reminds me of the social charter that we were promised for the landlords, which has done something of a disappearing act. It simply is not in the Bill. There is no substance or reality in the Minister's words and that sums up the difficulty. He puts smooth words on the policy but the Bill hits tenants hard and pushes housing firmly into the private rented sector.

Photo of Harry Cohen Harry Cohen , Leyton

Various titles which make it easier to follow the debate have been suggested. We have heard about HAG and GRF and CRAP, but may I suggest another? We have discussed how money will go to the Treasury and be wasted on all sorts of things for the Government's friends. Could we not call that Squandering Housing Income from Tenants, which could also be known by its initials?

Photo of John Battle John Battle , Leeds West 2:30 am, 14th June 1988

I am convinced that my hon. Friend's long description of that policy fits tidily with the other description. It reveals what is at the heart of the policy. As for whether the terms are interchangeable, I refer that to those who may have better knowledge.

Let us get away from HAG and the rest, and turn to the new financial arrangements set out in the consultation paper "Finance for Housing Associations: The Government's Proposals". The Government come up with proposals for how to use the surplus which are very interesting. They suggest that retained surpluses will be needed to fund the proposed progressive phasing out of grant for major repairs and the service deficits which many associations are incurring. The document also acknowledges that surpluses will need to be accumulated to strengthen associations' balance sheets to attract loans from the private sector. The problem is that those proposals are undermined by the proposals in clause 50.

Photo of Mr Martin Redmond Mr Martin Redmond , Don Valley

If associations have surpluses, the Government intend to claw them back. If they do not, how can they attract the private sector money? It is a contradiction in terms.

Photo of John Battle John Battle , Leeds West

I am grateful to my hon. Friend for making the point so clearly and succinctly. Housing associations that take part in schemes funded partly by private borrowing and partly by public grant will be expected to bear the major risks, as the grant is likely to be determined when a scheme is first drawn up and will not be increased to take account of any unforeseen or increased costs. That will mean that schemes are not viable.

To expect housing associations to bear the full burden of the risk is also to take away the prospect of their building up any form of surplus that would enable them to take such risks in the first place. It is the same as the equation of capital receipts, in which the Government claw back money to prevent development work from proceeding. The Minister needs to explain how housing associations will be able to build up the reserves to enable them to develop and manage the houses that they already have and hope to extend. They will not be free to do that; they will be chained down because the surplus on the rental income is being clawed back.

A letter from the Hanover housing association is very pertinent to the clause. It says that the National Federation of Housing Associations' stance is to compromise by discussng the extent of a set-off for major repairs; and long term effects of the ADP. That is a new acronym for me to introduce to hon. Members. Abolish GRF in principle, but in practice mitigate it. The letter continues: We are also told GRF is not a matter for the Housing Bill, but for discussion later. Throughout the Committee stage we were promised that the discussion would come later. The Minister said that if we would come a little way to meet him he would come a little way to meet us, and that if we withdrew our amendments he would table amendments on Report that would take account of our objections. The reckoning time for the Minister is now. Where are the Government's amendments to meet our objections in Committee? By and large they are not there.

We asked for more than 101 concessions on the Bill and those requests can be found in the Hansard report of the Committee's proceedings. However, the Government's amendments that we have considered over the past few days and those we are considering now show that the concessions that the Minister promised have not been delivered. It is not surprising that many people are now cynical about the Government's approach to their Committee work and the way in which Bills are brought before the House and are developed.

The letter continues: We were also told GRF is not a matter for the Housing Bill, but for discussion later. Why? GRF was created by statute, and can be abolished by statute. There have been so many changes to the current Housing Bill—why not the addition of a clause abolishing GRF?The writers represent two very different housing associations—one national, specialist, principally newbuild, paying GRF; the other community-based in London, traditionally rehab, in receipt of RDG. Yet we and many others that we have spoken to agree totally that the abolition of GRF is the single most important matter"— I want to repeat that— the single most important matter affecting housing associations today, and must be accomplished quickly if we are to continue to keep our properties in good repair and produce new homes to the standard and quality that our customers, and the government expect in an era of mixed funding. I hope that that goes some way to answering the point raised earlier.

Photo of George Howarth George Howarth , Knowsley North

The letter from which my hon. Friend has quoted makes his point very well.

Will he speculate on the problem facing housing co-operatives which are affected by the same funding regime? My hon. Friend the Member for Leeds, West (Mr. Battle) has quoted a housing association with a wide asset base commenting on the effect that the funding regime will have, while housing co-operatives do not have that wide asset base because they have few assets.

Photo of John Battle John Battle , Leeds West

I am grateful to my hon. Friend for reminding me to make that point and I hope to comment on that in detail later.

The Minister must tell us whether he will continue the 100 per cent. funding for housing co-operatives. Without that funding, they will fail, go under and have no chance. At this late stage, we hope that the Minister will come clean and tell us whether he intends to continue that funding. If he will give us that commitment now, it will save us time later.

Photo of Mr Martin Redmond Mr Martin Redmond , Don Valley

I am afraid that I must disillusion my hon. Friend if he expects the Government to make any concessions that would be helpful to tenants in the private sector. The whole thrust since 1979—I keep repeating this —has been against tenants in the public and private sectors. Successive legislation has borne down on tenants. We must understand that each successive Bill gets worse as it progresses. It becomes more of a mess and the anomalies are sorted out in the courts. The Secretary of State has to come back to the House to rectify matters. I am sorry to have to disillusion my hon. Friend, but we can expect no concessions from the Government.

Photo of John Battle John Battle , Leeds West

My hon. Friend has introduced a hard note of disillusionment. I try to retain hope that the Government might change their mind, but perhaps that is a false dream.

I believe that the Government might change their mind because I find it totally inexplicable for Conservative Members to claim to support housing associations in the press and in public—as the hon. Member for Leeds, North-East claimed—but to vote in Committee and on Report for the clauses that damage housing associations.

Photo of Mr Timothy Kirkhope Mr Timothy Kirkhope , Leeds North East

I have had to listen to an awful lot of nonsense tonight. I am quite prepared to sit here and listen —as I must—to the hon. Gentleman and his colleagues going on and on, but most of what they have said is pretty irrelevant. However, I would be grateful if they would keep me out of this. I am happy to sit here, but please would hon. Members not bring all this irrelevance and nonsense into the discussion.

Photo of John Battle John Battle , Leeds West

With the greatest respect, it is a little late in the day for the hon. Gentleman to say that we should leave him out of this, because he has publicly claimed to participate in the debate. I know that housing associations in his constituency have petitioned him on this matter and expect him to represent them.

Photo of David Winnick David Winnick , Walsall North

I do not know where the Secretary of State is now—probably asleep—but is not his one virtue that he states facts and opinions frankly and does not beat about the hush, like the hon. Member for Leeds, North-East (Mr. Kirkhope)? In his Second Reading speech at the end of October, the Secretary of State emphasised rented accommodation in the private sector and paid little attention to housing associations. He probably takes the same view on housing associations as on local authorities. He basically wants the bulk of rented accommodation to come from the privately rented sector, with a clear profit for landlords and property companies.

Photo of John Battle John Battle , Leeds West

In public, Conservative Members are caught in the same trap as the Minister. The Secretary of State wants privatisation, and tenants to be pushed into the fair winds of the free market, and as soon as Conservative Members are leaned on by their constituents and constituency associations, they make statements, for example in the Yorkshire Evening Post, about how supportive they are of housing associations, while they vote for clauses that will damage associations.

Photo of Mr Timothy Kirkhope Mr Timothy Kirkhope , Leeds North East

I wish to be left out of what I consider to be a wholly irrelevant filibustering attempt. I should like to be involved in a sensible discussion in sensible circumstances on the future of housing associations and the benefits that they can obtain from Government proposals. I have not been petitioned, as the hon. Gentleman suggested, by housing associations in my constituency. That is nonsense and I should like him to withdraw that allegation. I have been involved in constructive discussions, listening to anxieties and passing them on to the Minister. I am happy that many of these proposals reflect those anxieties and will be of great help to my associations.

Photo of John Battle John Battle , Leeds West

I do not intend to withdraw what the hon. Gentleman calls an allegation, because I know it to be true. I need only repeat the sentence in the letter which states: the abolition of GRF is the single most important matter affecting housing associations today. I know that the Leeds federated housing association mentioned that in its submission to the hon. Gentleman. He simply says that he has passed anxieties on. Perhaps that is what many Tory Back Benchers say whenever they meet a problem. Perhaps they say, "I'll look after you and pass on the matter to the Minister." They believe that that is action, but they do not know what goes on in our long hours of debate when we go through the Lobbies and approve clauses that damage the people whom they say they will support. That should be public information.

Photo of George Howarth George Howarth , Knowsley North

Does my hon. Friend agree that the position of the hon. Member for Leeds, North-East (Mr. Kirkhope) is analagous to that of the first world war parson who used to say to the troops departing for the trenches, "May God go with you and I will go as far as the railway station,"? Is that not what he is saying to the Leeds housing associations?

Photo of John Battle John Battle , Leeds West

My hon. Friend, with the eloquence that has marked him out tonight, picks up another characteristic which perfectly describes the actions of Conservative Members.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

On a point of order, Madam Deputy Speaker. I am sorry to interrupt my hon. Friend's speech because I know that he is just getting going, but I draw your attention to the fact that the hon. Member for Leeds, North-East (Mr. Kirkhope) referred to filibustering. You know better than me, Madam Deputy Speaker, that filibustering is in breach of the Standing Orders; it is not permitted and it would be a criticism of your conduct in the Chair. I would be grateful if you could confirm that the Standing Orders have been complied with.

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Deputy Speaker (Second Deputy Chairman of Ways and Means) 2:45 am, 14th June 1988

The hon. Gentleman can leave this matter in my capable hands. I am in charge of this debate for the next few hours and I shall see that it is conducted properly.

Photo of John Battle John Battle , Leeds West

I was tempted to ask the hon. Member for Leeds, North-East to withdraw his allegation of filibustering, because I have tried hard to stick to the detail of the clause. We are discussing the Bill precisely because the Government have tabled amendments at a late stage and that has not enabled us to discuss them properly in Committee.

Photo of Nigel Griffiths Nigel Griffiths , Edinburgh South

Does my hon. Friend agree that the hon. Member for Leeds, North-East (Mr. Kirkhope) has failed to grasp that subsections (6), (7) and (8) give a new power to the Secretary of State to Build Additional Liable Levied Surpluses—or BALLS to the hon. Gentleman?

Photo of John Battle John Battle , Leeds West

I hope that the hon. Member for Leeds, North-East will carry that message back to the housing associations when they call him to account should he vote with the Government against our amendment.

Mixed funding is an important issue to consider. Yesterday the Minister—I hope that he has now woken up —referred to mixed funding as an experimental scheme despite the implications that it is going ahead with a speed that is incompatible with experiment. The housing association movement is being shifted into mixed funding whether it likes it or not.

The Minister admitted that a mistake had been made in the first year when he said: the mixed spending scheme has only just started with a tiny sum of money in the first year and the grant levels too low. Therefore, we have put more money into it and we are developing it as we go along. The scheme is now beginning to work. We are getting used to housing policy being developed as we go along.

Later in his speech, the right hon. Gentleman referred to the "experimental mixed funding scheme" and the second year of the experimental programme". —[Official Report, 13 June 1988; Vol. 135, c. 85.] How long will the experiment last and how will its effects be assessed? How is the experiment reconciled with the way in which his Department and the Housing Corporation are now pushing mixed funding as though it were going out of fashion? There is no experiment. What we have is a forced changeover to mixed funding without any time or mechanism for properly assessing the consequences for housing associations and for tenants, for whom we are particularly concerned. There are no proposals for assessment.

How things have changed since the Minister stood up in Committee and said: we must go carefully with the introduction of mixed funding scheme". —[Official Report, Standing Committee G, 9 February 1988; c. 726.] The Minister is pushing the Housing Corporation into mixed funding like a bat out of hell. It is not a question of treading carefully, and tenants of the housing associations will pay the price.

Photo of Mr Peter Pike Mr Peter Pike , Burnley

As my hon. Friend goes on in the House he will realise that, unfortunately, the Minister to whom he is referring is not responsible. We must look to the Secretary of State, who has gained a hard reputation on every Bill with which he has been concerned. One day I hope that someone will take him to the Ridley evangelical hall, which is just off Queenstown road in Battersea, where he might be converted. He could then introduce some positive legislation that does good for housing and local government instead of mounting constant, vicious attacks on both.

Photo of John Battle John Battle , Leeds West

My hon. Friend is right. I am sure that the Secretary of State regularly advises the Minister to get on with it and push them into the private sector, regardless of the consequences—and to drop his references to the social charter, and so on.

Photo of Mr Robert Clay Mr Robert Clay , Sunderland North

My hon. Friend the Member for Leyton (Mr. Cohen) has a copyright on this, too. While we are discussing the Secretary of State, and as another contribution to our collection of acronyms, it strikes me that the Bill could be described as a private rented income crookery kit. The acronym for that would be a good description of the Secretary of State.

Photo of John Battle John Battle , Leeds West

The ingenuity of some of my hon. Friend's attempts to characterise the Bill defies description. The Minister should explain the Government's intentions toward the speed of transfer to mixed funding. What is his commitment to small-scale housing associations, particularly to those that meet the needs of the ethnic minorities in inner cities? The co-operatives are all continuing on a 100 per cent. pack. Has that commitment been dropped? Will they all be pushed into mixed funding with indecent haste?

The Minister said that mixed funding was experimental—but is it? The Housing Corporation is pushing housing associations to change over to mixed funding now, and yesterday the Minister referred to housing associations overbidding. They are overbidding because the Housing Corporation is exhorting them to change over. If the hon. Member for Leeds, North-East thinks that that is irrelevant filibustering, he must face up to the small housing associations in his constituency. They also exist in the constituencies of other Conservative Members. He must tell them how they will survive when they lose their 100 per cent. because of having been pushed into mixed funding.

Photo of Harry Cohen Harry Cohen , Leyton

I am amazed at this term "overbidding". I have details of disrepair among houses in London. The number of houses needing more than £5,300-worth of repairs was about 255,000 when the Government came to office in 1979, and 360,000 in 1984—up by 42 per cent. It has probably risen considerably since then. Most of those houses are in the private sector, the very sector in which the housing associations will need to be active to get the houses back into use, so that they will not lie empty. How can the housing associations be overbidding when the extent of the problem is so great?

Photo of John Battle John Battle , Leeds West

My hon. Friend has done his research and is well aware, as are Conservative Members, of the submission that those of us who served on the Standing Committee received from the National Federation of Housing Associations. The document was called, "Rents, Rights and Risks". I am sure that the hon. Member for Leeds, North-East will have read it in detail, given that he says that he passed the federation's concerns on to the Minister. One of the things that the federation highlighted was the need to manage the speed of change. It wanted the change to be gradual, because of the backlog of repairs, to ensure that their organisations kept going.

The effect on small associations and on rents needs to be carefully assessed, as does the ability of housing associations to attract the private finance that the Minister and Secretary of State seem to think will beneficently flow to them once they are pushed into the freedom of the open market. If they are to attract private finance on reasonable terms and bear the risks that the Government ask them to bear, their request to shift gradually to mixed funding, rather than to be forced over to it, should be taken seriously.

In Committee, the Minister gave the cosy impression that he was willing to accept the argument of the National Federation of Housing Associations that was presented in the document entitled "Rents, Rights and Risks". He said: The introduction of the mixed funding will not be total. A considerable number of 100 per cent. funded schemes will continue, we shall go carefully and watch how the mixed funding schemes work. He also said: We are in early and experimental days. That is why we must go carefully with the introduction of the mixed funding scheme,"—[Official Report, Standing Committee G, 9 February, 1988; c. 725–6.] In March he commented on the increased percentage of the housing association grant. I apologise for again dragging HAG into the argument. The Minister spoke about the increase in housing association grant for mixed funding as an experimental scheme. He said: I am grateful for the slightly grudging welcome that the hon. Member for Hammersmith (Mr. Soley) gave to the increased HAG rate in the experimental scheme …The experimental scheme—this is still its second year—will have now a higher percentage rate than we first set out." [Official Report, Standing Committee G, 3 March 1988; c. 1350.] Despite the reasssuring warm words from the Minister, all the signs are that the Department of the Environment, pushed by the Secretary of State and the Housing Corporation, is pressing ahead at great speed with mixed funding schemes without waiting for their effects to be properly assessed. Obviously, there are dangers in doing that, especially in working with private finance—which is precisely the purpose and point of the Bill.

The experience, especially of smaller associations, of the changeover to mixed funding shows that it is not experimental. The small associations will be firmly priced out. The change to mixed funding is going ahead and its speed shows that the interests of smaller associations, those dealing with special needs and housing co-operatives, are no longer the Government's priority. Yet the Government claim that housing associations were set up to look after such interests. That policy is being undermined by the clause.

Will the Minister guarantee that 100 per cent. publicly funded schemes will continue for small associations? That guarantee is vital to the existence of emerging associations, especially those associations dealing with ethnic minorities and to co-operative housing associations. If the Minister cannot give that guarantee, there is little prospect of those associations getting started. If they do, they have little prospect of ever being able to increase their housing stock, the housing stock they have will decline and they will not be able properly to repair it.

Do the Government intend that associations that cannot use mixed funding, for whatever reason, should develop or will they fall behind as the lame ducklings of the clause?

Photo of Mr Martin Redmond Mr Martin Redmond , Don Valley

One can only conjecture about the possible strategy of the Government. Could it be that the Government intend deliberately to run down properties by withholding finance? That would bring them to a state of disrepair and the private sector, the sharks from the City, would be allowed to come in and take over valuable assets at a cheap rate.

Photo of John Battle John Battle , Leeds West

My hon. Friend makes a helpful point. Once such a takeover happens, the properties may well benefit from the business expansion scheme, the £500,000 tax gift that has been given to private landlords. There would then be no controls on rents or measures for the protection of tenants in property that has fallen into disrepair. They would be completely removed from the social charter. As we said earlier, business expansion scheme landlords will not be covered by the social landlord charter and will be free to do what they want. As my hon. Friend reminds me, the Government's policy has been to undermine the housing associations and, if the Minister continues to withdraw public support, there will come a point when they are no longer sustainable.

3 am

We should be aware that the housing association grant is being cut from 80 per cent. to 50 per cent. All those measures mean that housing associations can no longer fund inner-city projects. A practical example of that is in Leeds, where many of the rows and rows of back-to-back houses had, not surprisingly, many cellars. When they were knocked down, it was difficult to build on that land without filling in the cellars. However, once a cellar is filled in on a building contract, that counts as an abnormal cost, which then pushes up the cost.

If an association does not receive public support for that, or if it built on land on which there had been a gasometer, the land becomes sterilised and extra funding is needed to make it viable to build houses in inner-city areas. That cannot be done without public subsidy.

Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee, Vice-Chair, Labour Party

It has crossed my mind that it is not just inner cities. The Government have made great play about inner cities and they attempt all sorts of things, but we know that that is a load of whatever acronym was used way back. I am worried about what will happen to agricultural land that is set aside and not used for agricultural purposes for several years. There is compensation of about £200 per hectare. When the farmer has that, along comes a developer, who manages to gain planning permission on land that used to be agricultural, and they make money that way as well.

I do not know whether my hon. Friend has discussed that at any level. It is not just a matter of inner cities. A great deal of money can be made. Housing associations obviously would not benefit, but it is conceivable that some of the surplus funds that are creamed off could be used for those purposes.

Photo of John Battle John Battle , Leeds West

My hon. Friend makes a good point. Perhaps the Bill should be called not the Housing Bill, but the Housing Market and Sales Bill, because that is really what it is. An interesting point in the discussions on the Bill has been the background debate emerging between the Secretary of State for the Environment and the right hon. Member for Henley (Mr. Heseltine), the previous Minister of Defence, who seems to take the line that we should not build in the green belt because he wants developments in the inner cities, supported by public subsidies. That is a contradiction of the heart of Government policy because the Secretary of State for the Environment appears to believe that the free market means that one can build anywhere.

Photo of John Battle John Battle , Leeds West

Yes, even in his back garden.

There should be public assistance in developing some areas and planning to decide which areas should be developed. There should be a planned programme for housing in Britain. We must protect not only the green belt in the rural areas, but the green belt in the inner cities as well. Unless we have a planned programme for housing development in green belts, which the Government appear to be abandoning, it seems that the Government's policies for housing, land and planning will be left in fragments.

Photo of Mr Martin Redmond Mr Martin Redmond , Don Valley

My hon. Friend mentioned long-term planning, but, of course, that is alien to the Government, whose whole thrust is that market forces will determine the day. If that is so, there cannot be long-term planning. The only long-term planning that I have seen is the demise of the rented housing sector, public and private. If we want sensible planning, do not expect the Government to do it.

Photo of John Battle John Battle , Leeds West

The planning point has been admirably made by my hon. Friend. If we leave everything to the market and the short-term, cash-in economy that the Government are developing, inevitably many people, organisations and developments will pay a heavy price. The question raised by our amendments is, if the Bill is carried, who will pay the price? The Bill will hammer small-scale housing associations and housing co-operatives out of existence. It will defeat any attempt to provide for ethnic minorities.

Photo of David Winnick David Winnick , Walsall North

Does my hon. Friend agree that much of the debate about green belt and housing development does not take into account the type of housing so desperately needed by those who cannot afford to buy? There is a need for low-cost housing, housing association dwellings and so on. Is it not unfortunate that the whole emphasis of the Bill is to provide large profits for the private landlord, while making no provison for renting? Will not our constituents who cannot afford a mortgage find themselves in an even worse position when the Bill becomes law?

Photo of John Battle John Battle , Leeds West

My hon. Friend is right. Housing association policy will be shredded by the clause because the special needs category and inner-city developments will not be underwritten. It is imperative that the Government support the amendment. If they really want to convince the housing associations that they are their friends—they make great play of that in public—they must show it in political action by supporting the amendment. We need a clear commitment from the Minister to 100 per cent. housing association grants for the smaller associations and co-operatives. They do not want to be pushed into mixed funding, but if they are they will be priced out of existence.

I urge the Minister to resist the total takeover of mixed funding——

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

I have followed my hon. Friend's valid argument about market forces. The parts of the clause that we wish to delete relate to the process of moving housing associations towards the market, because the Government are concerned only with the market.

Will my hon. Friend compare the Government's attitude in moving the housing sector into the market with such zest and determination, with their attitude towards the farming fraternity—where market forces do not apply and, for example, cereal farmers receive a guaranteed income whatever their output? Many of them receive a guaranteed income for storing the food for which they had already received a guaranteed income. The Government make little effort to change that because the farmers pay money into the Tory coffers.

Photo of John Battle John Battle , Leeds West

The issue of pushing housing associations into the free market is vital because the Minister is abandoning his commitment to social responsibility and is shifting the housing sector into what the Government see as the fair winds of the market sector.

Photo of George Howarth George Howarth , Knowsley North

My hon. Friend has dealt thoroughly with what will happen to small housing associations. Does he agree that one of the problems for smaller associations on outer estates—never mind the inner cities—will be coping with private finance, often in the context of declining property values, especially in the north of England? Will he comment on the likelihood of a building society or any other financial institution wanting to lend to build something that is likely to decline in value? In many cases the building societies and financial institutions will not wish to do so, which will effectively terminate any housing association developments on outer estates where property values are declining.

Photo of John Battle John Battle , Leeds West

If a housing association scheme is to be viable and produce reasonable rents, it must take account of the costs of borrowing the money for refurbishments and maintenance. It should also take into account the cost of a sinking fund to cover future major repairs.

Some such schemes were explored by Leeds council in association with local housing associations and the private funding agencies, but the problem was that the outturn costs were found to be excessive. No schemes could be set up because index-linked funds are not available and mortgage fund finance is restricted to smaller scale loans. It may well be, as my hon. Friend the Member for Knowsley, North reminded me, that the stock exchange is the only source of finance these days at a very high price. However, to put together a stock exchange deal to finance a small-scale housing association is out of the question, given how difficult and complicated that process would be.

Photo of Mr Michael Welsh Mr Michael Welsh , Doncaster North

Is it not a fact that housing associations, especially small housing associations, need 100 per cent. Government grants and loans, and that they need to be protected from the market economy? Surely, in any society, it is the Government's duty to look after the unfortunate and ensure that they have reasonable housing so that they can lead the good life in society.

Photo of John Battle John Battle , Leeds West

There appear to be many contradictions in the Government's policy. If the Bill is enacted, housing associations will be pushed into the same kind of funny money deals that local authorities were prevented from entering into under local government legislation earlier this year. Local councils cannot organise their finances in the open market and go to the stock exchange because a clause was entered in the local government legislation, as a result of what happened in Sheffield, to prevent them raising finance in that way in an attempt to make schemes viable.

There is a great deal of double-think going on in the Government's policies. They suggest going to the free market, but when local authorities and housing associations want to step into the great market of the finance sector, the Government prevent them from doing so. The Minister will have to attempt to square this Bill with legislation elsewhere.

Photo of Harry Cohen Harry Cohen , Leyton

My hon. Friend made an interesting point before he was diverted on to other legitimate points. He gave the example of a cellar having to be filled in at an exceptional cost. That reminded me of a recent case brought to my attention by the local branch of Friends of the Earth concerning a factory in Redbridge that was leaking radiation into the ground. That factory was knocked down and I have now received a letter saying that houses will be built on that dangerous site. Great costs will be incurred to prepare that site for houses, and a housing association may be involved. Under the terms of the amendment, the Government could then add insult to injury and charge those poor tenants, who probably do not know that they are going on to land soaked with radiation, increasingly large sums for attempting to remedy the problem.

Photo of John Battle John Battle , Leeds West

My hon. Friend is right. Ideally, we would not choose to build on many of the sites that we must build on to develop housing. There are also problems with mining subsidence. In one case, Barratt built some homes on a site next to a tip and methane gas was later discovered in those houses. Many problems are emerging in connection with the building of houses, contrary to the Secretary of State's notion that one can just go out and build a house on a green field. That policy appears to underline the idea that the magic of the market will provide. The notion of total commitment to the magic of the market appears to go beyond even what Adam Smith suggested, that all the excessive individuals should have some point of social reference.

I am reminded of a preface written by the former hon. Member for Leeds, North-East, Sir Keith Joseph, to a pamphlet entitled "The Social Market Economy". The pamphlet may have given some people the misleading impression that social values would be brought into the market place and into policy. The Government seem to believe that they have cracked the economy in some mechanistic, materialistic manner, but having, according to them, got the base of the economy right, they are now moving on to tackle areas of social policy such as local government; social security; health; education; and now housing. However, they are not moving social values into the market place—they are moving the market to the heart of those areas of social policy.

Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee, Vice-Chair, Labour Party 3:15 am, 14th June 1988

My hon. Friend should not assume that throughout his life Sir Keith Joseph believed in the monetarist philosophy and the system of the market place, or in the "fair winds" as he called it. When Sir Keith Joseph lost his ministerial car on ceasing to be the Secretary of State for Education and Science, the first place he went was across the road to Westminster tube station to get his photograph taken because he wanted a free bus pass. So he was in favour of market forces while he had a ministerial car, but the moment he lost it, he was into spending public money in a big way.

Photo of John Battle John Battle , Leeds West

I defer to my hon. Friend, who is absolutely spot on in always exposing the contradictions that are at the heart of the Government's policies and practices; has a record second to none for doing that. He has reminded me that even in the clause that we are discussing, we are told that the Bill's purpose is to free the housing associations into the market, but in the clause, we read that although they are free in the market, woe betide them if they make a surplus on their rent account because they are not free to use it and it will he clawed back by the Government.

In conclusion—[HON. MEMBERS: "Shame."]—I urge the Minister not to use housing associations as a sideline for generating revenue for other unspecified projects, the likes of which we could begin to define and at which my hon. Friends have hinted. We should like to know whether housing associations will be contributing to the Treasury to help to get taxes down to 20 per cent. or to fund the business expansion scheme.

I quietly advise the Minister that the housing associations have asked him to abolish the grant redemption fund. They have made their view plain and have lobbied Conservative Members about it. We have been assured tonight that those concerns have been passed on to the Minister, so he must have had innumerable requests from housing associations and his own Back Benchers. Why will he not abolish that tonight? If he cannot do that, why does he not accept our amendments to neuter the effect of the grant redemption fund? Otherwise, the Minister and his Government are clearly pushing housing associations hard and fast into the private sector.

The Minister for Housing and Planning has clearly signalled that he has now abandoned that difficult middle way between the public and private sectors that he has struggled to hold on to throughout this Parliament, but on which he has been losing ground fast because the Secretary of State is leaning on him, and telling him to push harder for this privatisation policy for housing.

This clause will cast housing associations out into the market, abandoning the social responsibility to which the Minister referred regularly in Committee. The Minister can no longer claim the role of the socially responsible Minister, hanging on to the social aspects of the policy, because the market is being wheeled into housing policy. He cannot hold the ends together and, as a result, his time will come—I hope that it is now—because he promised throughout to deliver a socially responsible Housing Bill. He has referred to the needs for social charters and for the social rented sector, but this Bill is a hard and fast Privatisation of Housing Bill. As my hon. Friend the Member for Bolsover (Mr. Skinner) suggested earlier, it is a Bill that simply sets up the conditions such that it would be better called the Housing (Marketing and Sales) Bill.

The Bill will split housing associations by setting the big fry against the smaller fry and will undermine exactly the purposes for which housing associations were set up in the first place. In conclusion, I am sure that after tonight's debate, the housing associations will be absolutely clear about what is happening and what is being done to them and by whom, and about who their real friends are in this Chamber.

Photo of Simon Hughes Simon Hughes Shadow Spokesperson (Education), Shadow Spokesperson (Health)

I support the amendment. This is the last debate that we can have on housing associations on part II. I hope that it is clear by now to the Government and the public that the House considers that housing associations are important and is willing to dedicate a significant time to debate their financial future.

We have had controversial and important debates on the private rented sector. We started today's debate with the amendments and new clause which I tabled, which are linked to the subject on which the hon. Member for Leeds, West (Mr. Battle) spoke and dealing with affordable rents and where the money in the cycle of provision, from taxpayer to user, ends up.

The hon. Member for Leeds, West did a sterling job in moving the amendment. He may not have noticed that he marginally lost the battle of the roses, in that his colleague from the other side of the Pennines—the hon. Member for Knowsley, North (Mr. Howarth)—managed to outstay him slightly. Perhaps, by a slight abbreviation of the comments on this measure, the battle between Leeds and Knowsley could end up evens.

This amendment, and the first group, expose the Government's contradictory policy. The Government have argued that they want private money in housing associations. Amendment No. 85 deletes those parts of clause 50 that would allow the Government to take back money in housing association reserves. As the Government have said, the biggest housing associations —from the largest, the North housing association, with 21,000 members, to the 10th largest, the Northern Counties housing association, with 8,500 members—would be expected to be entirely self-financing, to carry their own risks, not to come to the Government for money and to bail themselves out of difficulties.

The smaller housing associations—some of which are very small—may need private money coming in and need to look to the Government for help if costs overrun. The housing association movement argues strongly that retained surpluses—which the Government want the power to take back—will be needed to fund the proposed progressive phasing out of grant for major repairs and the service deficits which many associations are incurring.

There is an important contradiction. Associations that take part in schemes funded by private borrowing as well as by public grant will be expected to bear major risks, because the grant is likely to be determined at the beginning of a scheme and will not be increased to take account of unforeseen increased costs. To expect associations to bear that risk and at the same time to take away their only prospect of building up a surplus is not only inequitable but contradicts the Government's strategy.

How can the Government tell housing associations to be financially independent and at the same time give themselves power to raid their reserves when it is vital for the associations to retain surplus rental income so as to bear the risks of private finance without raising rents? If the Government claw back those reserves, housing associations will have only one way to raise more funds, and that will be by demanding more from their tenants in increased rents. For many of those tenants housing benefit will not be available because they are working, which will mean them leaving that form of accommodation.

Photo of Mr Michael Welsh Mr Michael Welsh , Doncaster North

The only revenue that housing associations have comes from rents and they can build up surpluses for reinvestment purposes, repairs and so on. Taking that from them will be like taking the crutches from a cripple and telling him to stand on his own two feet.

Photo of Simon Hughes Simon Hughes Shadow Spokesperson (Education), Shadow Spokesperson (Health)

I agree. Having said that they want housing associations to be independent, the Government give them the facility to walk, allow them to build up some reserves and then raid that money. The housing association movement must be extremely unhappy at the thought of the Secretary of State being able to raid those reserves whenever he wishes.

Photo of Mr Martin Brandon-Bravo Mr Martin Brandon-Bravo , Nottingham South

If an association is given a grant to get started and, having got started, builds up reserves which are surplus to its needs, how can they be described as crutches? Surpluses are not crutches.

Photo of Simon Hughes Simon Hughes Shadow Spokesperson (Education), Shadow Spokesperson (Health)

I do not think the hon. Gentleman was present for the earlier debate. The Government claim that they want to use private finance to supplement public finance—I do not dissent from that—to strengthen housing associations. Any reserves built up will be needed, especially by medium and small associations, to avoid them asking the Government in times of difficulty to bail them out. They need the cushion that reserve funds provide. Indeed, the Government agree that without that cushion the private sector will not invest.

I wish to refer to two letters, the first of which was written by an ordained minister in Luton. It was sent today to the right hon. Member for Henley (Mr. Heseltine) and copied to the hon. Members for Luton, North (Mr. Carlisle) and for Luton, South (Mr. Bright), with a copy to me as my party's spokesman on these issues.

This is part of the letter from the Rev. W. J. Salmon: The government intend to encourage the sale of council estates to Housing Associations, and claim that rents will be similar to those at present paid to the Local Authority. At the same time the Housing Corporation are reducing their financial support to Housing Associations, encouraging them to find on the open market. The Associations are therefore having to pay a high rate of interest, which they can only recoup through increased rents. The experience of Housing Associations is that this has forced rents up to unacceptable levels. It would seem to me that these two moves are incompatible. The author of the letter makes it clear that he is not a politician, because he ends by saying: I write not as a belligerent prophet, or a 'Moaning Minnie', but as a Christian Minister seeking to serve to the best of my ability those among whom my Lord has placed me. He was writing about Luton, which is hardly regarded as the least affluent part of the United Kingdom. Clearly he understands the problems of reducing funding and not protecting people against the consequences.

3.30 am

The other letter was sent to my hon. Friend the Member for Orkney and Shetland (Mr. Wallace) after he had visited Bradford earlier this year. The letter is from Mr. Leaper, who is the regional director of Anchor housing association. He may have written to other hon. Members about the matter. He wrote after my hon. Friend had been to Saddlebrook court, which is an Anchor housing association development in his area. He said: I am grateful for the interest you have shown in Saddlebrook Court by visiting it today. It is, unfortunately, likely to be one of the last category 2 sheltered developments Anchor is able to provide, if the new Housing Bill becomes law and there are no amendments to the new Housing Benefit regulations.Many Anchor tenants have already lost up to –20 per week in Housing Benefit as a result of the recent changes in the Housing Benefit regulations.If Saddlebrook Court were built today at the proposed HAG level of 50‥ (it actually enjoys 91·39‥ HAG) the current basic rent of £14·80 for a single flat would rise to over £34. I am sure that hon. Members who represent Bradford and the surrounding areas could confirm this. Rents at this sort of level simply are not on for pensioners of modest means and I hope you will use every effort to persuade the government of the need to improve the Housing Benefit arrangements.I am sure you will have been bombarded with criticism of the proposed legislation and I apologise for yet another letter to read, but I feel that the issues are too important for me to miss the opportunity to make you aware of our concern. My hon. Friend asked me to raise this although I have not visited the development. He intends to contribute to the debate on part IV because he has had experience of the Scottish provision. He is aware, like all hon. Members on this side of the House and, to be fair, some Tory Members, that we cannot take away the protection that is needed for reserves and funding that have been built up over the years without a clear implication that rents will go up.

Photo of Mr Martin Redmond Mr Martin Redmond , Don Valley

The hon. Gentleman might suggest in answer to the letters that he has received that the only way to get the Government to move is to drop one of their own Tridents on them. I am not sure whether even a hydrogen bomb would shift them. They are so dogmatic and so uncaring about the needs of housing associations that one despairs at times about their lack of Christian charity. Certainly they have not shown any since 1979. Yet they continue to argue that they are helping the poorer people and the associations to stand on their own feet, when the reverse is true.

Photo of Simon Hughes Simon Hughes Shadow Spokesperson (Education), Shadow Spokesperson (Health)

The hon. Gentleman is right. I have quoted a minister of the church and a professional in Britain's second largest housing association. They are neither of them politicians but are concerned with meeting need. They say in letters to hon. Members that it is vitally important that resources can be built up and protected.

They say also that if the Government are serious about wanting housing associations to play a greater role—and the Government certainly intend that local councils should play a lesser role, and have always accepted that there will be a large rented sector however much success they have with the right to buy—it is vital that there are affordable rents and adequate funds to ensure that tenants do not have to bear the high and substantal risks of the Government's policy. If the Government are not prepared to ensure that, there can be only one implication. It is that tenants will be priced out of the very market which the Government allege they are trying to create for them.

Photo of Mr William Waldegrave Mr William Waldegrave , Bristol West

This debate has been of a looking glass nature, because both the hon. Members for Southwark and Bermondsey (Mr. Hughes) and for Leeds, West (Mr. Battle) know that their arguments do not accurately reflect the real situation. The existing GRF power to claw back funds was not invented by the Government but was imposed by the Public Accounts Committee, and some Opposition Members may have been signatories to the report in question. Certainly it was an all-party Committee.

The replacement power contained in clause 50 will permit to be done some of the things which the hon. Member for Southwark and Bermondsey wants, and which could not be done under the 1985 Act. The GRF does not allow us to negotiate with the associations, as we should do to ensure that they have proper sinking funds, can deal with repairs and so on. I am sure that the hon. Member for Southwark and Bermondsey knows that we are already having important discussions with the National Federation of Housing Associations. That is how the surplus rent fund will work.

Neither the Public Accounts Committee nor the House would thank the Government for reverting to a system under which the surpluses——

Photo of Mr William Waldegrave Mr William Waldegrave , Bristol West

If I may complete my argument, the hon. Gentleman may find that I will answer his point.

There have been some very jolly ideas about what should be done with the surpluses. One was that they could in some mysterious way be used to pay off the balance of payments deficit. I have not figured out how that can be done using internally generated funds, but never mind. The surpluses will be returned to the Housing Corporation and then ploughed back into the housing association movement. As the hon. Member for Southwark arid Bermondsey well knows, that is what was done with surpluses collected under the GRF system and will be under the new system as well. The funds will not be taken out of housing.

The argument is that, if the total surpluses are left where they fall because the grant has turned out to be moire generous than was calculated when the project was put together, one association will enjoy a windfall while others who may need the money more will receive less. However, that line of argument—whether in respect of the GRF or the new system—has no connection with reality. I repeat that we do not intend that the rent surplus fund system will apply to schemes funded with a mixture of public and private finance. A good many of the other arguments we have heard fall on that.

The clause is not as exciting, let alone as dangerous, nor does it have such wide implications, as Opposition Members have suggested. I suspect that, if we did not have it, we would be rightly criticised by the Public Accounts Committee and perhaps by the hon. Member for Don Valley (Mr. Redmond)—whom I promised to allow to intervene.

Photo of Mr Martin Redmond Mr Martin Redmond , Don Valley

There is some argument about how the surpluses arise in the first instance. Surpluses can only arise through rents. Is it the Department's intention to instruct those housing associations to increase their rents to enable the Government to claw back surpluses, and what does the Minister consider is a surplus? Housing associations may well be gathering some money together for a capital expenditure project. Would lie allow them to carry that money forward from year one over five or ten years to enable them to obtain the necessary finance to embark on that capital project?

Photo of Mr William Waldegrave Mr William Waldegrave , Bristol West

I suspect that the hon. Gentleman, who is learned in these matters, is not as confused as he pretends to be. He knows where the surpluses arise from. Most housing association schemes are financed with a conventional mortgage, plus HAG. HAG is set high at the beginning because there is no rent income. If interest rates and rents move so that less uprun money is needed than was predicted, there is an unexpected surplus. That is why the PAC rightly said that in those circumstances, since it did not arise from anything that the housing association was doing in terms of its own or Government policy, we had to claw that back. We then put it back into the ADP of the Housing Corporation to go to other associations which need the money more. Everyone who knows this subject knows where such surpluses come from. They have come for many years; that is why the PAC asked us to introduce this system.

We are now saying that under the present legislation we cannot do what the hon. Member for Southwark and Bermondsey (Mr. Hughes) wants, which is to build up sinking funds against capital expenditure and major repairs that may fall to be done. Indeed, it may be right to say that there should be some element of building up reserves, particularly to enable the smaller associations that have been mentioned to borrow on the market, as we hope they too will be able to do.

I can assure hon. Gentlemen that there are no nefarious purposes in this, as I think they know in their heart of hearts. Indeed, if we did not introduce such a provision, we would very likely be in trouble with them when they were wearing different hats.

Photo of Simon Hughes Simon Hughes Shadow Spokesperson (Education), Shadow Spokesperson (Health)

Why then is it necessary to include in subsection (6) not only the power for the Secretary of State to appropriate or apply funds for purposes that he specifies, but also to require associations to pay them to him, which is a different and much more far-reaching provision? In addition, will he confirm that the National Federation of Housing Associations is in favour of the abolition and non-replacement of the grant redemption fund system and is not keen on a far-ranging power that allows the Government to retrieve whatever they might choose at any particular time?

Photo of Mr William Waldegrave Mr William Waldegrave , Bristol West

Not surprisingly, the associations have always been in favour of allowing extra surpluses to accrue where they fall. It is much easier for those associations to argue to keep unexpected surpluses than for other associations who have not received the money from the redestribution to argue for that. I must refer the hon. Gentleman to the PAC's arguments on that.

Photo of Mr Christopher Hawkins Mr Christopher Hawkins , High Peak

If I heard the hon. Member for Southwark and Bermondsey correctly, he said that the Bill would drive up some housing association rents from £14 a week to £34 a week. Can my hon. Friend refute that allegation and explain why the Bill will not do that?

Photo of Mr William Waldegrave Mr William Waldegrave , Bristol West

We had a long discussion earlier about rents. We are now talking about the rent surplus fund, but nothing in the rent surplus fund does what my hon. Friend is asking about.

Photo of Mr William Waldegrave Mr William Waldegrave , Bristol West

I think that the hon. Gentleman may have said enough already in his magnificent speech. I hope that, having heard that a large part of that fine oratorical effort was entirely misplaced, he may now consider withdrawing his amendment.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South 3:45 am, 14th June 1988

The Minister is trying to get away with the granting of extra powers to the Secretary of State by suggesting that the Public Accounts Committee imposes something on the Government. The PAC, as he knows full well, has no power to impose anything on them. I dare say that I could pluck half a dozen reports from the PAC that have never even received a response from the Government, let alone been accepted by them.

Obviously some reports have more merit than others. The Government make a selection, rejecting some arguments and accepting others. The notion put forward by the Minister that the repayment of GRF surpluses should be accepted by the Government willy-nilly because of a recommendation by the PAC simply does not wash. If he had said that they had considered it a reasonable recommendation and followed it, that would be one argument, but it is not true to say that the Government had to accept it—that it was imposed on the House. [Interruption.] That is what the Minister said. I have got it down.

Photo of Mr William Waldegrave Mr William Waldegrave , Bristol West

I am perfectly prepared to say to the hon. Gentleman that the PAC suggested the proposal and argued for it, and that the arguments were overwhelming.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

That is a change from what the Minister said at first. He said that it was imposed by the PAC, and it will be in Hansard. That is mistaken: all Select Committees can merely recommend. But if the Minister is now saying that he accepts the PAC's argument, that is entirely different.

The Minister went on to say that the funds are returned to the Housing Corporation for reallocation to the housing sector. That, of course, is understood and welcomed. Under clause 47, however, the Housing Corporation has fairly wide-ranging and arbitrary powers to reduce, suspend or cancel grants. We are confronted by a pretty arbitrary sort of Government.

The Housing Corporation is run by appointees, and nearly all the Government's appointees have been in line with their philosophy. It is a characteristic of the Government that they have been careful to appoint people who share their political philosophy. As a matter of fact I do not entirely dissent from that; the philosophy on the basis of which the Government appoint people just happens to be the wrong one. It means that an arbitrary Government can encourage the Housing Corporation to use the arbitrary powers incorporated in the legislation. At present housing associations may build up prudent surpluses that they can spend on repairs and on development of one sort or another connected with their properties, but the powers for the Secretary of State that are embodied in clauses 6, 7 and 8, which we seek to remove, reduce that discretion.

The Minister argues that the discretion should be removed by action of the Secretary of State, so that he can then instruct the Housing Corporation to have the money, make a judgment and allocate the funds that it considers in the best interests of housing in the housing association sector. That is a very odd philosophy for a Government who believe in the kind of voluntary aided sector which it could be argued that housing associations represent. It is an odd philosophy from a Government who believe in allowing decision-making to develop in what they fondly describe as the enterprise culture. The Government claim that a central organisation should determine where surpluses are distributed instead of leaving the housing association with at least some discretion to develop surpluses when it believes that, in the circumstances, it needs a surplus to develop flats because of local conditions.

Perhaps the Housing Corporation will take local needs into account. However, surely some discretion should be allowed to the housing associations instead of the Secretary of State giving notice to an association under this part of the Bill requiring it to pay—with interest if demanded —the outstanding rent surplus fund at the end of a period of account.

Our other reservation is that we know that the Secretary of State is a fairly arbitrary Secretary of State. We are not convinced that he would use those powers with the understanding and delicacy that is required because he is not known for his understanding and delicacy. The Minister who replied to this debate did so briefly without the characteristic allocation of time devoted to the debate by my hon. Friend the Member for Leeds, West (Mr. Battle). In different circumstances, the Minister might have devoted more time to it.

However, the Minister does not have responsibility for these matters. Although certain work is allocated to him, he knows that the civil servants will tell him that the Secretary of State has the legal responsibility to determine the notice. The Minister of State may recommend to the Secretary of State, but in the final analysis the Secretary of State has the power. When the House grants legislative power to Secretaries of State, the powers leave the House and are vested in the Secretary of State who holds office at the time.

We must be very careful. We must bear in mind that, no matter how liberal a furrow the Minister tries to plough, the fact is that the Secretary of State is an illiberal Secretary of State.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

I would not put the Secretary of State quite in that category. In fact, he might feel vaguely insulted if I did, although that would not prevent me from doing so. However, that description would be inaccurate.

In many respects the Secretary of State is the author of the current satanism spreading through the land, called Thatcherism or monetarism. He is determined, and therefore we must consider his powers and his ability from time to time to give notice to housing associations. Therefore I suggest that the modest amendments to remove clauses 6, 7 and 8 should be supported.

I will not be long because to some degree we have dealt adequately with the clause and I know that many of my hon. Friends want to speak and I can see several of them straining at the metaphorical leash.

I want to refer to Anchor housing, mentioned by the hon. Member for Southwark and Bermondsey (Mr. Hughes). When the hon. Gentleman replies to the letter from the regional director of Anchor housing, I hope that he explains that the proposal to increase rents, possibly to produce a surplus fund to develop Anchor housing units in my constituency and elsewhere, has been made at the most inappropriate time because housing benefit has been withdrawn in varying degrees from many people. I think that the letter says that up to £20 has been withdrawn from individual tenants.

Therefore, it is not a clever time to start the process for increasing rents through the fair rents procedure. As the changes in housing benefit regulations were not a secret —it was known that they would be introduced after 11 April—Anchor housing might have been more judicious in applying for the increases well after the housing benefits had been brought into operation and the cuts were known. I have received a petition from tenants expressing anxiety at housing benefit cuts and pointing out what difficulties will arise.

If rent surpluses are to be redistributed by the Housing Corporation, it will be to areas of need, according to the Minister's explanation. The redistribution will be a curious phenomenon because the Housing Corporation will be redistributing from need to need. I do not know of any Anchor housing, for example, where the tenants are living in the lap of luxury or of any rent surplus that can be more equitably moved from them elsewhere. All the tenants that I can think of in the north will be in difficulties because of rent increases and housing benefit cuts. Therefore, the notion that the Housing Corporation will have this redistributive effect, without further details from the Minister, does not seem to be convincing. Tenants in my constituency are worried about the changes in housing benefit, rent increases and service charge increases and they have written to me about them. Anchor housing has not given a convincing reply.

In addition, Anchor will have to face the effects of this legislation on already slim administrative resources. One anxiety advanced by the Opposition relates to the difficulties that will be forced on tenants by the Secretary of State exercising what he fondly imagines to be a redistributive measure through the Housing Corporation by clawing back housing associations' surpluses. Those surpluses will accrue to prudent associations charging rents which they think will give them sufficient income not only to meet repairs and maintenance, but to produce a modest surplus to provide for needed developments. The position is so generally unsatisfactory that we should vote for the amendment which removes these subsections.

I am also worried that the Secretary of State is given absolute powers. The Minister may say that that is standard practice and it has happened before, so we should carry on. The Bill states that he may from time to time give notice to an association to which this section applies. Civil servants like absolute powers because they do not have to bother preparing briefs or do anything much except go into a room in Whitehall, Victoria street or Marsham street and shove a document before a Minister and say, "Look, Minister, we have calculated that housing associations have £x million surplus, so you should give notice that this should be clawed back because the Housing Corporation says that it needs development money and it can best make a judgment." The Secretary of State then simply has to give notice without justifying it outside the cosseted rooms of Whitehall. That is less than satisfactory.

4 am

Photo of Mr Tony Banks Mr Tony Banks , Newham North West

Did my hon. Friend do that when he was a Minister?

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

Whenever I wanted to do anything I found that a successsion of civil servants wanted to talk to me for long enough to stop me doing so. When I was a Minister, the problem was not to get me to do things but to stop me doing things. In my leisure moments, when I wash aside the misery I underwent when I was a Minister, I am proud of the fact that civil servants were trying to outwit me all the time.

Photo of Mr Martin Redmond Mr Martin Redmond , Don Valley

The Minister said that the Government intended to take surpluses from those associations that held large ones because if they were allowed to keep them other associations would suffer. The impression was that such money could be redistributed to those associations that were living from hand to mouth. The Minister suggested that he intended to rob Peter to pay Paul. If I have got that wrong, perhaps my hon. Friend or the Minister could clarify the position. There has been much discussion about interest rate charges, but I am not sure about the level of the interest rate. British Coal borrows money from the Government and pays a damn sight higher rate of interest than if it borrowed on the open market. How will the rate of interest be clarified?

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

In the clause, the rate of interest is determined by the Secretary of State, with the consent of the Treasury—that keeps a grip on the Treasury. That means that a deputy secretary will have a chat on the telephone with somebody at the Treasury—of course, on the same grade—and they will reach agreement on the interest rate. The deputy secretary will put a piece of paper in front of the Secretary of State, tell him that it is the interest rate to be charged and that the Treasury has given consent. That means that a civil servant at the Treasury has put a bit of paper in front of a Treasury Minister, who has nodded and signed the paper. That is how it is organised.

The Bill does not give absolute power to the Secretary of State, but that power is qualified only by a friend of the Secretary of State, a Treasury Minister. They are both guided by the Civil Service.

The Government have introduced a great deal of complicated legislation and in the maze they are finding it easy simply to say, "We will give the Secretary of State power." That takes such power away from this place and makes it easier for the Government to exercise such powers. I am not in favour of that—I favour scrutiny by this House or scrutiny by Committees of the House. That is another reason why I believe that we should vote against the clause.

Photo of Mr Michael Welsh Mr Michael Welsh , Doncaster North

If the Secretary of State has absolute power, does my hon. Friend agree with what Lord Acton said about absolute power?

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

That is a problem. Those who advise Secretaries of State use that power in an arbitrary fashion. Often Secretaries of State, especially in Labour Governments, do not have the countervailing information to match the power of the inner, secret constitution of our system of government.

I conclude by saying that my hon. Friend the Member for Don Valley (Mr. Redmond) was right: this is robbing Peter to pay Paul. Housing associations will, by and large, apply their money to the worthy objective of developing housing in any case. Their surpluses will be taken from them and given to other housing associations that are not in quite such a good seam and do not possess overwhelming surpluses. They will be given the money to develop housing. That obscures the important underlying need for an injection of new money, so that housing associations can develop both surpluses and housing.

Local authorities should be given new money too, instead of being continually cut back. These clauses will allow the Secretary of State to supervise a diminishing amount of money in the housing association sector, whose effect will be to cut back something that has played a useful part in providing rented accommodation for people who in the main could not otherwise obtain decent accommodation—certainly not from private landlords, whose standards are variable, to say the least.

Photo of Mr Martin Redmond Mr Martin Redmond , Don Valley

The general trend is to give housing associations money to allow them to develop their stock, improve their standards and possibly take over council houses. Does my hon. Friend agree that it is contradictory and morally wrong of the Government to run down local authority involvement in housing, to reduce the money that local authorities spend on maintaining housing stock and to restrict the numbers of dwellings that local authorities can provide for senior citizens? In a range of other issues, the Government have said that we need competing forces for the benefit of the consumer. If there is only one sector, freedom of choice for the consumer will not exist.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

My hon. Friend makes an important point. This is a provision to allow the housing associations to generate their own funds for further development and for redistribution through the Housing Corporation. The Government's policy is to cut local authority expenditure on housing. Every local authority can testify to that. The waiting lists for council houses for rent are increasing and the amount of money available for new build has decreased, or certainly failed to increase, year by year. Since 1979 local authority expenditure on housing has been massively cut back. Because of that, housing associations are under pressure to provide more housing. So my hon. Friend the Member for Leeds, West was right to say that these clauses will bring pressure to bear for increased rents, which will be used to generate funds for further development.

To illustrate what I mean, I give the example of people who have been to see me. Those people struggle from week to week to make ends meet. A couple who came to see me said that they were pensioners and had one week's holiday a year. They do not go to the Costa Brava or Costa del Sol but to Morecambe or Blackpool, to a cheap boarding house, because that is all that their income permits. They told me that a holiday can no longer be taken because of the cuts in housing benefit. Of course the Government will say that only pensioners in the City should be allowed to have holidays and that workers should sit in grim, stark rooms and be thankful that they have a miserable gas fire to look at. That is a reality for many people.

Photo of Mr Allen McKay Mr Allen McKay , Barnsley West and Penistone

I appreciate the work carried out, and the help given me by my hon. Friend when he was a Minister. We are talking about a surplus in rents. We can only get a rent surplus by an increase in efficiency of the organisation or by making rents too high. The Minister says that a surplus should be moved into another area and should not be spent on those who created the surplus. We are only a step away from the Minister saying to a council that it should create a surplus on rent and plough the money into the rate fund.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

In essence, that is what the Government are doing in the housing association sector. They could apply that policy to local authorities.

The people who look for rented accommodation are those who cannot afford mortgages. Young couples often do not have the money for a mortgage. Certainly in London and the south-east the mortgages required are astronomical. Young unemployed couples who want to buy a house, even in the north where prices are lower but are regrettably catching up on the south-east, have no alternative but to look for rented accommodation. They simply cannot afford to buy. They will be faced with a housing association sector that is increasing rents to generate its own developments of more housing and a local authority sector that is being cut. That will force people to go to the housing associations, and the associations will be forced to increase rents.

Photo of Mr Tony Banks Mr Tony Banks , Newham North West

The only reason that I earlier asked my hon. Friend about what he used to do when he was a Minister was to draw to the attention of younger hon. Members the fact that he used to be a Minister. He was a very good Minister and that was the history lesson that I wanted to teach the younger and more enthusiastic hon. Members.

Last Friday I had a case in my advice surgery that proves my hon. Friend's point. A constituent fell into arrears with the mortgage payments and the house was repossessed. The local authority had to put that person into bed-and-breakfast accommodation at a cost greater than the mortgage repayments. That is the lunacy that we are getting ourselves into.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

My hon. Friend is right. If the Government had any sense they would put money into new build houses to be constructed by housing associations and local authorities. That would save the enormous sums that local authorities have to pay for bed-and-breakfast accommodation. The victims of the Government's economic policies, the three million people who have been made unemployed and who face difficulty in paying mortgages, are picked up by the local authorities and helped with council accommodation. However, the local authorities are under pressure. It is a disgraceful situation and has been brought about by the wretched policies of the most disgraceful Right-wing Government we have ever experienced.

Photo of Nigel Griffiths Nigel Griffiths , Edinburgh South

I am pleased that that tribute has been paid to my hon. Friend's record while a member of the Labour Government. He will confirm that the Labour Government's record between 1974 and 1979 on housing associations in Scotland was that of a more than fivefold increase in spending on housing associations resulting in a diversity of housing for rent. On the other hand, the Government's record has been a paltry 50 per cent. increase in eight years. Is that not a lamentable record and a contrast that goes to the heart of the Bill?

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

I am grateful to my hon. Friend for reminding me of some statistics about housing associations in Scotland which, I confess, were at the back of my mind. The Labour Government encouraged housing associations and local authorities to build houses. That is shown by the figures for homelessness, which have shot up since 1979. An underlying economically deprived class is developing, comprising victims of the Government's economic and social policies and cuts in local authority provision.

4.15 am

I do not wish to extend my contribution, but I emphasise my reservations about subsections (6), (7) and (8). If the House approves their deletion, but the Secretary of State wants some reserve powers, the Government could come back via the other place, of which route they are so fond—and that is hardly surprising as they brought in 138 members of the geriatric wing of the Palace of Westminster to ensure a majority for the poll tax Bill—and table an amendment that would, for example, give the Secretary of State power to place a motion on the Order Paper requiring the associations to pay as provided for under subsection (6), with all its powers.

At least, that would be the subject of a motion and would therefore be debated in the House. It would be only an hour-and-a-half debate. It would be unusual procedure —in fact, I do not think that we have ever required a Secretary of State simply to say, "I am giving notice, and I want a motion approving this." However, it would not be a bad thing. We might have to alter the procedures a little, but if we are to get any sort of grip on the Executive, we must stop giving Secretaries of State the power to do virtually anything that they wish. We must restore some power to this place.

When television comes into the Chamber, it will add to the pressure on Ministers. I voted for television cameras so that attention would be focused on this place. Committees do important work, but the Chamber is the most important place and it should be used to provide supervision and scrutiny. It helps Secretaries of State too. because they know that, if they have to come to this place and be scrutinised, they must know their subject pretty well. They must have the argument at their finger tips. because one of the virtues of this place is that it gives Ministers a rough ride if they do not.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

The Government contain their complement of incompetents, but on occasions this place can be incisive, scrutinise Ministers and give them a rough ride. My hon. Friends will remember that when my right hon. Friend the Member for Chesterfield (Mr. Benn) was the Minister and the Tory party were in opposition, there was sustained hissing from the Conservative Members and piles of questions and points of order. My right hon. Friend was certainly put to the test, and he came through it magnificently. Ministers must know their subject thoroughly when coming to this place to answer questions. I do not underrate the power of this place to exercise scrutiny if it so chooses.

Photo of Mr Christopher Hawkins Mr Christopher Hawkins , High Peak

It would be interesting to put the hon. Gentleman's supposition to the test tonight. Earlier, the hon. Member for Southwark and Bermondsey (Mr. Hughes) alleged that some housing association rents would be put up from £14 to £34 a week. I asked my hon. Friend the Minister whether that was true. The hon. Gentleman's belief appears to be that by asking questions of Ministers, one receives answers. I shall be greatly interested to discover whether nay hon. Friend will answer my question. We shall then know whether the hon. Gentleman is correct or whether my more cynical view is correct.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

I do not judge the whole issue by a single question. However, the Minister could stand up now and guarantee that there will not be an increase from £14 to £34 a week. He has a couple of civil servants available who can wave notes at him so that he can find some form of words to use. It is all part of the testing process. Questions can be asked, and if they are not answered the hon. Gentleman must draw his own conclusions. Rents will increase under this Government, and we have been saying that since the debate on the Bill began.

Photo of Jeremy Corbyn Jeremy Corbyn , Islington North

I understand my hon. Friend's comment about this Chamber being a place for incisive debate. I know that he is doing his best, but I do not think that anyone would describe tonight's debate as incisive. Is he aware that the Secretary of State is no longer with us? Apparently, he is the author of the legislation, which probably accounts for the number of Government amendments. Will my hon. Friend comment on why the Secretary of State is not here to answer his serious points about the Secretary of State's personal legislation? Instead, the poor unfortunate Minister of State—who probably does not agree with a word in the legislation anyway—has to plough his way through this God-awful rubbish and cannot answer any of my hon. Friend's questions.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

I cannot believe that the Minister is so cynical as to support the legislation with his vote while fundamentally disagreeing with it. I am sure that if he felt that way he would have a word with the Prime Minister and resign from the Government. That is the honourable course to take if his leader produces legislation with which he does not agree.

The three clauses give the Secretary of State a great deal of power and we should give the Government the opportunity to table an amendment in the other place that would still give the Secretary of State powers, but qualified by scrutiny in this place. If the right hon. Gentleman has indeed written this legislation, I am not surprised that it gives him such unqualified powers. There is, therefore, an even more urgent necessity to get rid of the subsections by voting for the amendment.

Photo of John Battle John Battle , Leeds West

I listened carefully to the Minister's reply to the debate on rents. First, he said that we had already had a debate on rents and, secondly, that the clause would not have any effect on rents. That must be true because the hon. Member for High Peak (Mr. Hawkins) voted for the clause on rents. He could not have known what he was voting for because it is the very clause that will put up rents. The Minister could not refute that in our earlier debate.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

I do not criticise the hon. Gentleman. I am always pleased that, in spite of having been bludgeoned into the appropriate lobby by the Conservative Whip, he realises that he has made an error and, having listened to the debate, has begun to recognise the horrendous consequences of the clause for which he voted. The hon. Member for Southwark and Bermondsey raised the question of increasing housing association rents from £14 to £34 per week, and he is keen to intervene on that point.

Photo of Simon Hughes Simon Hughes Shadow Spokesperson (Education), Shadow Spokesperson (Health)

It is an important point and, as I understand it, the inquiry was made in good faith. The figures were given by a housing professional and happen to be for the region covering Bradford. The second largest housing association in the area asserts that the combined effect of the Bill and the changes in subsidy and housing benefit will be an increase of between £14 and £34. That point was put to the Minister and he did not dissent from it. The matter should be pursued and I will willingly let the hon. Member for High Peak (Mr. Hawkins) have a copy of the correspondence. The Government must answer the questions, because the combined changes will produce such increases in rent levels. I am sure that the hon. Member for Bradford, South (Mr. Cryer) will be keen to ensure that the Minister is not let off the hook on the good example of the effect of this loosely drafted piece of legislation.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

The Anchor housing association tenants who have written to me are already in the £14-plus increase bracket, because of the combined effects of rent increases proposed by the housing association and the cuts in housing benefit. I do not claim that they are in the £34 bracket that I have come across, but I can assure the House that I have received many heated representations from righteously angry constituents who face massive rent increases by virtue of that combination of changes. I am hardly surprised that the Government are not able to give that guarantee. I shall give way to the Minister if he wishes to intervene to say that the rent increases would not be of the order of £14 to £34.

Photo of Jeremy Corbyn Jeremy Corbyn , Islington North

My hon. Friend is right to point out the level of potential rent increases. I have received similar representations from my constituents. The hon. Member for High Peak (Mr. Hawkins), who raised the matter, did not say that he was against the rent increases. As I understood it, he was happy that such large increases should go through. If I do him an injustice, I am sure that he will rise and say that he is opposed to housing association tenants being forced to pay through the nose because of the Government's legislation and presumably he will vote with us when the opportunity arises.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

I shall give way to the hon. Member for High Peak in a moment, but I want first to reiterate my comment that he can make his position clear, thanks to my innate generosity, and to say, secondly, that he will have the opportunity to vote against the clauses by voting for the amendment which will have the salutary effect of sending a quiver through the Government and also ensuring that, if they so choose, they can bring back some modifications through the Lords which will replace the arbitrary powers given to the Secretary of State.

Photo of Mr Christopher Hawkins Mr Christopher Hawkins , High Peak

I did not imply in any sense that I favoured rent increases of 250 per cent., or of the figure suggested by the hon. Member for Southwark and Bermondsey. I was merely trying to find out, on behalf of my constituents in High Peak and other constituents elsewhere, whether the hon. Gentleman's allegations were correct. It would be nice to know for the record whether the allegations are true or false.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

I am delighted that the hon. Gentleman has intervened to make clear his position and, moreover, sent off the Minister's Parliamentary Private Secretary, who was whispering in his ear, telling him, I suspect, not to make such a fuss about those massive rent increases which will occur under this legislation but to keep his mouth shut. Some credit is due even to the Government Benches, for the fact that he sent the PPS away with a flea in his ear to scurry around on behalf of the Minister, sending messages to Conservative Members that they should keep their mouths shut because all of a sudden the Government are concerned.

However, there are not many Conservative Members for him to be concerned about. There is one in the far corner who is taking a close interest in the—Bill[Laughter.]—and four others. The hon. Member for Weston-super-Mare (Mr. Wiggin) took a close interest when he wanted to go to New Zealand to watch trees grow. However, this is a different time and a different place.

Photo of David Winnick David Winnick , Walsall North 4:30 am, 14th June 1988

Although my hon. Friend has somewhat unfairly woken the hon. Member for Weston-super-Mare (Mr. Wiggin), does he agree that having a sleep over there is far more comfortable than the situation of people who, less than a quarter of a mile away are having to sleep in cardboard boxes because of the lack of accommodation and whose plight will not be improved by this rotten Bill?

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

I was saying that the Member for High Peak, who raised with his Minister the question about the increase from £14 to £34, was showing a commendable interest in the Bill and in subsections (6), (7) and (8) about which we are worried. The effect of the clawback that the Secretary of State has powers to impose under clause 50 will force up rents because the Secretary of State will seek to use the provisions to obtain income for redistribution to housing associations for the development of further housing.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

I shall give way to my hon. Friend in a moment.

That is why we are delighted that at least one Conservative Member is taking an interest, albeit somewhat belatedly, as my hon. Friend the Member for Leeds, West has pointed out. If only he had taken an interest earlier—he could have approached the Parliamentary Private Secretary and said, "Put the Minister's bag down and listen to me for a moment. Have a word with the Minister and tell him to stop some of this wretched legislation." But, alack and alas, the revelation has come a little late—although, as we always say, "Better late than never."

Photo of Nigel Griffiths Nigel Griffiths , Edinburgh South

My hon. Friend's expertise in these matters is second to none and, like other hon. Members tonight, he has dwelt in detail on the effects of the subsections and why they should be deleted. Do not Conservative Members want to have it both ways? On the one hand, they want to reassure their tenant voters that they will keep rents at relatively low levels and that they will certainly not cause them to go shooting through the roof. On the other hand, however, they are telling their backers—their landlords and speculative investors—that they want rents to shoot up so that their profits will shoot up as well.

By exposing the contradictions, my hon. Friend has galvanised the one Tory Back Bencher who is paying any attention into action to try to defend his own constituency interests at the price of exposing his hon. Friends to the economic fact that they do not just want rents to double—they want them to more than double, so that their friends' profits can shoot up.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

My hon. Friend is right to emphasise that this legislation, which seems so academic and remote, is a cloak for rent increases in the housing association sector. Rents are increasing in any case in the local authority sector to build up a plateau so that private landlords who are benefiting under this Government, not least from the nefarious business expansion scheme, will see rents climb and their profits increase.

My hon. Friend the Member for Walsall, North (Mr. Winnick) pointed out that, not far from here, there are people who have no alternative but to sleep fitfully through the night, as some of us are doing. But we have comfortable beds available and those people are on the pavements because of the massive increase in homelessness brought about by the Government's vicious, anti-local government attitude and their careless attitude towards the housing associations. Housing associations have helped to fill a gap. With encouragement and support, local authorities could have provided the necessary housing without the use of housing associations. But housing associations exist, we stand on this bridge, and we must do our best for them. I am pretty sure that all the members of the housing associations know on which side of the Chamber—ours—their friends sit. The managers, organisers, members of boards and, most of all, tenants know that their defenders are on the Labour side.

Photo of Jeremy Corbyn Jeremy Corbyn , Islington North

My hon. Friend is right to draw attention to the role that housing associations wish to play in alleviating and ending homelessness, especially in inner-city areas such as London where they deal specifically with those people who sleep on the streets. Is my hon. Friend aware that homelessness is beginning to gnaw at the Government a little? Instead of doing anything about it, they apparently now have friends in central London who encourage use of the Public Order Act 1986 to drive away people who sleep in cardboard boxes. A group of lawyers at Lincoln's Inn are petitioning Camden council to shift these "dossers", as they put it, out of the way because it damages the tourist trade and they do not like waking up in the morning and finding people sleeping on the grass outside their houses. Is that not the ultimate condemnation of the divisions in Tory Britain?

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

I agree. That point may seem remote from subsections (6), (7) and (8), but the potential rent increases to produce the surpluses which the Secretary of State can claw back will increase homelessness. Who would imagine that there is likely to be a homeless problem in Dulwich, near the £500,000 fortified gates behind which the rich elite live because they are frightened?

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

For the Prime Minister, there is the Dulwich bunker, as my hon. Friend says.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

My hon. Friend is producing so many words that I cannot repeat them all to get them on the record, but I know that he wants to speak later. He has a valuable contribution to make, like my hon. Friend the Member for Bradford, North (Mr. Wall), who can testify to everything that I have said about housing associations.

Instead of using a mean-minded approach in this legislation, the Government should inject money into housing. There is a need and a desire among people for a decent roof over their heads. There is no reason why that need and desire should not be met.

The Minister may say, "We are short of money." One can reel off the billions of pounds that the Government are spending: £1·7 billion in the last Budget in tax concessions to the better-off, £1·5 billion for Sizewell B; another £1·5 billion for Hinkley B—nuclear power stations which we neither need nor want and which are potential sources of hazard—and £11 billion for Trident nuclear weapons, which breach the United Nations nuclear non-proliferation treaty. I could go on and on; the money is there if there is the political will. The Opposition say to the Government: get some political will to get some money into housing.

Photo of David Winnick David Winnick , Walsall North

If our proceedings were being televised, viewers would see the interest that is being taken by Labour Members in the whole issue of housing associations and the lack of interest on the part of Conservative Members. Indeed, apart from the Minister, nobody has spoken from the Government Benches, and some minutes ago there were present one Government Back Bencher, the Minister, his PPS and a Whip.

Photo of Jeremy Corbyn Jeremy Corbyn , Islington North

What about the one who was asleep?

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. Hon. Members must relate their remarks to the amendment that is before the House.

Photo of David Winnick David Winnick , Walsall North

The one who was asleep is still asleep.

The assurances that we have been given by the Minister about clawing back the surplus rent funds of housing associations have failed to satisfy us. We have drawn a distinction between the views on that issue of the Secretary of State and those of the Minister for Housing and Planning.

If those in housing hardship—in many cases in housing misery—cannot be rehoused by local authorities and cannot obtain a mortgage, the housing associations may provide the only solution. In the main, those who work for housing associations are dedicated and are not motivated by profit and a desire to see tenants pay the largest possible rents.

Photo of Jeremy Corbyn Jeremy Corbyn , Islington North

Is my hon. Friend aware that many of the pay levels of staff employed by housing associations are considerably lower than the remunerations in equivalent posts in local government? But that has not diminished the dedication with which they undertake their duties.

Photo of David Winnick David Winnick , Walsall North

They are, in the main, dedicated. They believe that they have a role to play in helping to provide adequate rented accommodation for people in need. There has been no dispute between local authorities and housing associations. Housing associations have not asked for more responsibilities or told local authorities that they want to take over large amounts of their housing stock. There has been a partnership. In the main, the people involved in housing associations recognise that the main supplier of rented accommodation is the pubic sector, but the housing associations will provide the additional accommodation that local authorities are not able to provide.

4.45 am

Of course, in the last eight or nine years the position has changed to the extent that local authorities such as mine have not been able to build any houses or flats. Therefore, the function of housing associations has become more important. I emphasise that point because we are dealing with people who cannot obtain mortgages.

Photo of Mr Michael Welsh Mr Michael Welsh , Doncaster North

That is an important issue. If the Bill is passed, the Secretary of State will be able to raid housing associations at any time he desires and take away the rents. Is this not similar to what happened to local authorities which sold houses? They have a large fund of money but are not allowed to invest it in housing and repairs. I hope that I am not giving ideas to the Minister, but I am afraid that the Government may be thinking of raiding the funds of housing associations.

Photo of David Winnick David Winnick , Walsall North

We should all bear in mind the point that my hon. Friend has made because we are dealing with a Secretary of State who, unfortunately, takes an irresponsible position on local authority and housing association revenue.

I was saying a moment ago that we are dealing with people who cannot obtain a mortgage. I am in favour of people being about to buy their own houses. I see nothing wrong with it. I do so myself. But at least there is consensus between the two sides of the House that a substantial number of people, albeit a minority, are not in that position, especially in London and the south-east where it is virtually impossible to buy any type of accommodation, even the smallest one-bedroom flat, at under £60,000. In the west midlands, prices are increasing, though at a slower rate.

We have to find ways and means of ensuring that people do not sleep in cardboard boxes a quarter of a mile from here. They are not all tramps or irresponsible people. Even now, at a quarter to five in the morning, people are sleeping out just a quarter of a mile from here. The hon. Member for Sheffield, Hallam (Mr. Patnick) smiles. He probably has a comfortable home. For all I know, he may have more than one home. If he wishes to intervene, I will give way.

The people who are sleeping in those conditions include individuals who have come to London from areas of high unemployment to seek work, but they cannot find any rented accommodation that they can afford. Therefore, there is a need to ensure that there is proper accommodation for all who require accommodation to rent.

The Minister will no doubt tell us that the purpose of what we are debating is to provide more rented accommodation to ensure that people do not have to sleep in cardboard boxes and that families do not have to spend weeks or months, or sometimes even longer, in squalid bed-and-breakfast hostels. The very point that we are justified in making is that the Bill does not provide a solution for people with limited means.

I believe that part of the reason for the clause that we are debating, and the manner in which housing associations will be forced to charge market rents so that thee will be a surplus for the Secretary of State to claw back, is to ensure that as many tenants as possible are driven into the private rented sector. That is the purpose of it all. On Second Reading the Secretary of State did not shy away from it. He stated that the Bill's main purpose, in so far as it provides for rented accommodation, relates to the private sector. He did not spend much time praising housing associations; I cannot recall him saying anything about them at all on Second Reading on 30 November.

In the past few weeks, we have learnt of many tragic cases, particularly involving pensioners, of housing benefit being substantially reduced. That should make us all the more concerned that housing associations are not forced to apply market rents, particularly in those many cases where housing benefit will be insufficient—where it exists at all—to meet them. Housing benefit has been drastically reduced, and rent officers will have to ensure that tenants do not pay the level of rents that landlords will be demanding and at which housing benefit would be denied.

There is no doubt that the Government's policy is aimed at forcing local authorities to end their role in housing. I put down a parliamentary question asking for an explanation of the Government's role in local authority housing, and the reply was that local authorities are no longer considered to be the necessary providers of rented accommodation. So far as the Government are concerned, the role of local authorities is a diminishing one. Later we shall be challenging the Government's attempt to undermine and diminish the volume of public sector rented accommodation by transferring it to the private sector. What concerns me are the Government's intentions in respect of housing associations. In a few years' time, should the Government remain in office, they may adopt the same attitude towards those associations as they have adopted towards local authorities.

If the purpose of the Bill is to ensure that people who want rented accommodation can obtain it only from the private sector at market rents, why should there be a need for housing associations? Is that not one of the reasons why the Government are insisting that market rents should apply to housing association properties? If the Government wanted to ensure that associations should continue to provide accommodation at reasonable cost, they would not insist on the observance of market rents.

It is necessary to curb the Secretary of State's powers. He has just returned to the Front Bench. I hope that he has had some sleep, although it would not have been the sleep of the innocent. Perhaps the Secretary of State heard me remark that on Second Reading he paid no particular attention to housing associations and did not go out of his way to praise them. We are dealing with a Secretary of State who is as described by my hon. Friend the Member for Bradford, South (Mr. Cryer), and we are concerned that he will use his powers irresponsibly. It may be that if the Minister was the Secretary of State, we would feel a little more confident, because there is a distinction to be made between the two—[Interruption.] It appears that a number of my hon. Friends, and one in particular, disagree.

Photo of Ian McCartney Ian McCartney , Makerfield

I held that view through long periods of the Committee stage and continually gave the Minister the benefit of the doubt in an attempt to obtain concessions that were never forthcoming. However, when it came to the crunch, on all the major issues the Minister always did the Secretary of State's bidding. For years he has been proceeding in such a way as to ensure that tenants' rights have been seriously and dramatically undermined. We must rid ourselves of the belief that we have a benefactor and friend of housing associations and tenants in the Minister. He simply speaks with a smile and grits his teeth. The Secretary of State may be more open, aggressive and arrogant, but the message is the same.

Photo of David Winnick David Winnick , Walsall North

I may have been too generous. I have a weakness in that respect that I must try to curb. I am always most generous to my own colleagues, and I must try to curb any extension of that to Conservative Members.

It could be that the Minister started off reasonably well when he first went to the Department of the Environment, in so far as any Tory can start off reasonably well, hut, having worked in close association with the Secretary of State, he reminds one of Lenin's description of Bernard Shaw as a good man fallen among Fabians. The Secretary of State has exerted undue influence on the Minister. I must confess that the Minister has never struck me as someone who would resign over a policy disagreement. He is ambitious. I understand that they both went to the same school, and there may be some old school ties between them.

We should vote on the amendment before us. It is right that we should demonstrate, as we have been doing for the past three hours, our anxiety about the future of housing associations and the dedication of those involved in them—a point made by my hon. Friend the Member for Islington, North (Mr. Corbyn). They should know of our concern and the indifference of Conservative Members, who have taken no part in the debate and have not supported the housing associations.

Photo of Jeremy Corbyn Jeremy Corbyn , Islington North

Has my hon. Friend had a chance to read the National Federation of Housing Association's publication—"Housing associations 1987–88—the breakthrough"? In it he will find a large number of photographs of Conservative Members of Parliament and, indeed, the Minister, who is now sleeping opposite us, showing their great interest in cutting tapes and opening housing association developments. Is he aware that under the Bill many of those developments will end up as privately owned flats let at high rents, not for the benefit of those for whom they were built in the first place?

Photo of David Winnick David Winnick , Walsall North

That is a useful intervention, as always, from my hon. Friend. Conservative Members give the impression in their constituencies that they could not be more keen or enthusiastic about housing associations, but when they are criticised because the Government do not allow local authorities to carry out their basic function, or what should be their basic function, of providing accommodation, something that has been agreed by successive Governments over the past 60 years, their reaction has always been, "We support housing associations. We will open this, do that, or anything you want." All they want is some useful publicity in their local press. But when it comes to the crunch, when it comes to defending housing associations and trying to ensure that their tenants are not forced to pay exorbitant rents, there is silence. There are two or three Conservative Members present and one is fast asleep in the corner, as far away from housing associations as Mars. In the main they show no interest.

Photo of George Howarth George Howarth , Knowsley North

What does my hon. Friend suppose that Ministers and Conservative Back Benchers will say to tenants when the schemes are opened? I understand that as a result of the introduction of private finance, £10,000 less per unit is likely to be spent on the construction of properties. Will they say, "This is an improvement," or will they say, "Goodness me, we did riot expect standards to be lowered"?

5 am

Photo of David Winnick David Winnick , Walsall North

Undoubtedly the latter. I have often found that Conservative Members, when approached about some harshness in Government policy—even housing benefit—say, "Oh, really? I did'nt realise that. I shall write to the Secretary of State." They then write to the Secretary of State, knowing full well what the reply will be, and they send the reply on to the person who has complained. We know how Conservative Members behave, especially those with marginal constituencies. Those with safe constituencies may not even bother to make representations in the first place.

One of the good things, as I think my hon. Friends will agree, is that Hansard can be sent around, so we can ensure that the manner in which the debate has been conducted is known. The silence—I would not even describe it as an eloquent silence—of Conservative Members will be the answer to the few naive people in housing associations who will not accept our explanation for the indifference of Conservative Members to the housing association movement.

Photo of Mr Tony Banks Mr Tony Banks , Newham North West

May I suggest that my hon. Friend is being somewhat unfair to the hon. Member for Weston-super-Mare (Mr. Wiggin)? He is not actually asleep; he is acquiring knowledge—

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. We are debating amendments that the Opposition have tabled, not individual personalities in the House.

Photo of Jeremy Corbyn Jeremy Corbyn , Islington North

Is my friend aware that the long-term effects on housing associations will be catastrophic: very high rents, the encouragement of the right to buy and, ultimately, a change in the type of person who will live in their properties? Is he also aware that many housing associations have a specific, specialist function? People with disabilities, people from divided and broken homes and people who were formerly homeless or in institutional care will end up in the most appalling circumstances—and probably homeless.

Photo of David Winnick David Winnick , Walsall North

I hope that my hon. Friend will not feel aggrieved if I refer to him as my hon. Friend, as he has said "my friend". It simply shows that I am old-fashioned in such courtesies. I know that my hon. Friend means very well, and he may be right at the end of the day.

My hon. Friend has made the most valid point that could be made. Housing associations have indeed gone out of their way—simply because they see it as part of their function—to help people who, especially nowadays, cannot be rehoused by local authorities. Those people with all kinds of difficulties who have come out of institutions can at least be provided with adequate rented accommodation by the associations. But now that the associations will be forced to charge market rents, the position of the people described by my hon. Friend will be made even worse.

Does not the Secretary of State—even a Secretary of State with such rigid, Thatcherite, Right-wing views as the present one—recognise that the people who have been helped by housing associations will be helped much less as a result of the financial pressure imposed on the associations: the clawback of the rent surplus and the fact that they will be forced to charge market rents, with housing benefit being drastically reduced all the time?

I make a distinction. Perhaps my hon. Friend the Member for Makerfield (Mr. McCartney) was slightly wrong. I believe that the Minister recognises some of the points that have been made, not just because I have made them, but perhaps because others have made them more eloquently. However, the Secretary of State is simply indifferent to those points. It is all the more tragic that the senior Minister in charge of housing has views that reflect the 19th century, or before, rather than the last few years of the 20th century.

Frankly, the Secretary of State is totally and callously indifferent to the plight of those people described by my hon. Friend the Member for Islington, North. If the Secretary of State were to rise, he would tell us that the explanation is simple—people should pay a market rent and the market place is the only solution. He would claim that people buy bread and food and everything else in the market place so they should buy their houses there, too.

We believe that some people cannot afford market rents. If they could, they would buy. Would people choose to pay market rents in London and the south-east if they could get a mortgage? Common sense dictates that if they could, they would obtain a mortgage and as a result of tax relief, have secure accommodation—their own homes. People who are not in that position need rents set at reasonable levels.

I believe that many people, such as those who have been institutionalised, need help in this regard. Their only chance to leave an institution may be if they can be considered safe and secure and can obtain rented accommodation. If market rents prevail, those people will have little chance of leaving an institution. All Conservative Members, including the Secretary of State and the Minister, who do not support the amendment in the Division Lobby will have on their consciences the fact those people will continue to suffer.

I know that many of my hon. Friends want to participate in the debate, so I will bring my remarks to a close. If there are to be surpluses—and we have argued that in many cases surpluses would not be justified if housing associations charged market or exorbitant rents—instead of being clawed back by the Secretary of State, those surpluses should be retained by the associations to cover deficits, to carry out repairs and other essential work, to cover service costs and to ensure that associations have a balance in their accounts.

If there are to be surpluses, they should be retained by the responsible housing associations. No one has said that they are not responsible. It would be better if that money were retained for major repair work and service costs than that it should be clawed back by the Secretary of State with no guarantee that the money will be used for housing purposes. For those reasons, we believe that the amendment is perfectly justified and should be supported.

Photo of Mr Tony Banks Mr Tony Banks , Newham North West

I want to make only a few points. I listened carefully to the Minister, and in effect he said that we were making a fuss over nothing with regard to the amendment.

I will not repeat ad nauseam what my colleagues have said about the Minister's function, role and attitude to housing associations and rent levels in general. We are not in the business of taking the views, opinions and attitudes of the Minister and then claiming that they are different from the harsher opinions and standards of the Secretary of State. We are in the business of looking critically at proposed legislation and deciding whether there are sufficient assurances for us to go along with it. In respect of this part of the Bill, we are not convinced by what the Minister has said either in Committee or on Report.

It is clear that the Government have changed the whole role of local authorities in the provision of rented accommodation. They have made no secret of the fact that they want to get local authorities out of the provision of rented accommodation. They are not keen on having any publicly provided rented accommodation. The Government have so changed the role of local authorities in the provision of rented accommodation that it now appears most likely that they also want to change the role of housing associations in the provision of rented accommodation. In other parts, the Bill changes the role of housing associations.

That is not just us being alarmist. It reflects the views and opinions expressed by housing associations. The Minister can tell me if I am completely wrong, but generally housing associations have deplored these provisions as they affect them. If any housing associations have told the Minister how much they welcome the provisions, I shall gladly give way to him so that he can read out their names. We do not know of any. Clearly, the Minister knows that housing associations are deeply suspicious of the proposals. It comes ill from the Minister to suggest that we are making a fuss about nothing when we say that we are equally suspicious of the Government's intentions in respect of housing associations. They have changed the nature of local authority provision of rented accommodation and it is now only one stage further to change the role of housing associations.

Just as the Government have forced local authorities to push up rates and go for surpluses on their housing revenue accounts, so, if the Bill is passed, they will be able to do precisely the same with housing associations. In the past, local authorities have been told that they must dispose of their housing stock through compulsory sales under the right to buy. Again, with greater powers going to the Government in respect of housing associations, it is only one step from directing them to dispose of their properties. Not only does one see dangers in this part of the Bill for rents, but it is a sign of the Government's likely future response and attitude to housing associations generally.

We can see the time coming when the Government will direct housing associations to continue to increase their rents in order to create surpluses which the Government can claw back to use for other areas of expenditure, perhaps not even necessarily connected with the work of housing associations, or for more schemes for housing, or even for other forms of housing provision within the housing association sector.

The Government are making the poorest people pay for their housing and repairs and then pay for other people's housing and repairs, while owner-occupiers receive more and more subsidies from the Government through taxation relief.

We do not believe that the amendment is a fuss over nothing. The Government's record makes us highly suspicious about their future intentions for housing associations. For those reasons alone—they are enough—we shall continue to push for the amendment.

Photo of Kevin Barron Kevin Barron Shadow Spokesperson (Energy and Climate Change) 5:15 am, 14th June 1988

I should like to follow on from where my hon. Friend the Member for Newham, North-West (Mr. Banks) left off and discuss the deep suspicions that have been aroused by clause 50 and its consequences for housing associations. When the Minister spoke earlier, I had hoped that he would put minds at rest, but he did not allay those suspicions.

One sure way of removing any suspicions is by supporting amendment No. 85. Although that amendment will retain the Secretary of State's power to make housing associations have a grant redemption fund, it will prevent the Secretary of State from taking money from those associations and using it elsewhere. The Housing Associations Act 1985 set up those redemption funds and I am sure that everyone would agree that only a small amount of money has been raised by their operation. The sum raised is not large enough for the Government to believe that it is not being put to good use. That money has given some security to housing associations, but the total raised by them has not been great.

What would happen if the Secretary of State implemented clause 50 unamended? The Minister said that the money would go to the Housing Corporation and not to the Secretary of State. The trouble is that the Secretary of State's record is not good in relation to money received by organisations that are directly funded by his Department. Is it possible to imagine that the Secretary of State will ignore the bonus that will result from the collection of surplus rent—overcharged rent—and that he will continue to make the same level of provision because of his concern about housing need and the importance of housing associations? The extra money will go to the Housing Corporation. Will the Secretary of State ignore such money when it comes to funding the corporation next year? That takes a lot of believing.

One must consider the right hon. Gentleman's record on local government and that of previous Secretaries of State. In those circumstances,, we have every right to be suspicious and to press amendment No. 85. If the Minister does not accept that amendment, we have every right to take it to a vote. In that way we shall have attempted to allay the fears of the housing associations and to keep the Secretary of State's hands off the money. The housing associations should have that money to use in those areas that will be beneficial to housing rather than for the Exchequer to use the money indirectly in areas where it will benefit the high income earners of our society.

We must remember that this is not the only change facing housing associations. The other major change will be the lifting of controls on rents. When the Bill is passed., things will be different. Earlier, we tried and failed to get some form of proper rent ceilings for housing associations, recognising the different problems of incomes among the regions. The Minister did not appear to agree with our desire to give some security to people living in housing association properties—and to homeless people who would like to live in them but whose homes are not yet even on the architect's drawing board, so to speak.

I want the Minister to reconsider his position and say that the Government will not use the housing associations as milch cows, from which the present rent controls can be removed. The Government should not force up rents to the market rents that they keep mentioning. Goodness knows what things would be like in housing if they did that. Many Consevative Members feel that that should happen quickly; members of the Government have made statements that are close to it. It would be a charter for Rachmanism, and I would be completely against it. We should at least assure the associations that they will not be used as milch cows—[Interruption.]

Even if rents were forced up in some areas—[Interruption.] I shall give way to the hon. Member for Nottingham, South (Mr. Brandon-Bravo) if he wants to intervene. If the hon. Gentleman wants a debate with his committee of hon. Friends, perhaps he should take them out to the Lobby, so that those of us who are concerned about the amendment's effect on housing associations can carry on a proper debate here. If Conservative Members want to intervene, they are welcome to do so; if not, they should leave the debate here to hon. Members who are concerned about housing associations, not about tips for Ascot tomorrow—if tomorrow ever comes.

The housing associations have projects on which to spend the money that is likely to accrue in the grant redemption fund. The Minister knows that the Government consultation paper "Finance for Housing Associations" gave many examples of uses to which the associations might put increased income from higher rents. I am not saying that I am in favour of higher rents—that would be misleading, as I am not—but the paper gave some examples.

Retained surpluses would be needed to fund the proposed progressive phasing out of grant for major repairs and for service deficits. If clause 50 is operated in future and the Government claw back the higher rents into the Housing Corporation—and perhaps then into the Exchequer—how will they fund major repairs or service deficits? They are likely to be funded by the tenants. They will be the only available source. The only other person who could fund the housing associations would be the Secretary of State, who would take the money away.

Photo of Nigel Griffiths Nigel Griffiths , Edinburgh South

Does my hon. Friend agree that the Government want to see surpluses being built up not just because rents will be forced up but because that will ensure that proper investment is not made? Underfunding, not just of the housing associations but of any form of housing body that is not in the private sector, is part and parcel of the Government's strategy. A devastating effect of this is the backlog highlighted by the Audit Commission. The Government have done nothing to tackle the problem and, as my hon. Friend says, for tens of thousands of tenants the surplus that will result from clause 50 will be because of under-investment in their homes and of high rents, both of which the Government have supported.

Photo of Kevin Barron Kevin Barron Shadow Spokesperson (Energy and Climate Change)

I am grateful to my hon. Friend for that intervention. In the past six months I have had a classic example of the underfunding of housing associations. An association approached me indirectly through a member of the community in Maltby, which I represent and in which I live, in south Yorkshire. A dramatic change was being brought about in the ownership of houses that had been owned by British Coal. Some of them are still owned by British Coal, but the houses are being sold off to new landlords.

The South Yorkshire housing association, a small association which was formed just a few years ago, was very worried about the matter. We shall later mention the problems with new landlords. That association approached me to see if there was any way at all in which I could get British Coal to reduce the cost of the houses that it wanted to offload on the private market. The price was 50 or 60 per cent. in excess of what could be afforded for homes that would have to be repaired and managed in a reasonable scheme that would have enabled the association to charge a reasonable and affordable rent.

I am glad to say that eventually a deal was struck. I do not know the exact details of the deal, but as a result of it people moved into some houses in Maltby. Others are still on the market. There is still uncertainty about whether the South Yorkshire housing association or another association of the same size will be able to buy the properties. As the Minister knows, if they do not go to a reputable landlord, they will go to auction in the City of London and that will create months or even years of chaos. Housing associations that have bought houses in that way have been able to give some security and are responsible landlords. Without money, the associations would find it difficult to make a bid to a public body that was unloading houses, especially houses that needed repair.

This clause, if unamended, could take the extra funding away. In his consultation paper the Minister accepts that it is not a bad idea for housing associations to have some money. One of the reasons for his belief that they should have some money is that that will enable them to attract money from the private sector and get mixed funding. The consultation paper said that it might not be a bad idea for housing associations to have some money. The Minister is proposing to take money, presumably annually, and give it to the Housing Corporation. How are we to get mixed funding if housing associations will not have money put aside from present need in order to attract private capital into their areas?

Photo of Nigel Griffiths Nigel Griffiths , Edinburgh South

My hon. Friend makes the telling point that the Government's claims about seeking mixed funding are bogus. Is it not the case that what the Government seek to do is to fatten up the housing associations so that they can be sold off to private landlords rather than encourage some mixed funding that might benefit the tenants and provide real investment? Their real motives are to ensure that the private sector takes over that housing, with the ultimate aim that housing is run not for public need but for private greed.

Photo of Kevin Barron Kevin Barron Shadow Spokesperson (Energy and Climate Change) 5:30 am, 14th June 1988

I do not wish to digress too far from what is before us, but I agree with what my hon. Friend said. I mentioned the selling off of the ex-public housing stock of British Coal on to the open markets through auctions, and so on, which the Government have been doing for many years. The only other common thread in the Housing Bill, other than that, is the one to try to deregulate rents in some form, so that the market will be ripe for the spivs and the city slickers to make quick killings. Of course, we have yet to debate the implications of short-term tenancies and the implications of people wanting to buy ex-public housing stock.

Photo of George Howarth George Howarth , Knowsley North

I have to disagree with my hon. Friend the Member for Edinburgh, South (Mr. Griffiths) that the Government's intention is to sell off housing stock to private landlords. My hon. Friend the Member for Rother Valley (Mr. Barron) has made a good point and I hope that he does not repeat it when the Secretary of State resumes his seat, because he might just put the idea into his head.

Photo of Kevin Barron Kevin Barron Shadow Spokesperson (Energy and Climate Change)

I must say that it will be one of many ideas that go through the Secretary of State's head on a regular basis. Presumably, many thoughts have gone through the Secretary of State's head since Second Reading. I do not have to tell my hon. Friend who sat on the Committee that this creature has grown and grown. Presumably, thoughts may still be coming in, but whether they will end up in front of us while we are considering the Report stage, Third Reading or in another place, we shall have to wait and see. There may be backwoodsmen in the other place who also have thoughts about the Housing Bill.

As I said earlier, I do not want to go into great detail on amendment No. 85, but in closing I echo the request to the Minister for Housing and Planning—who is still sitting with his eyes open most of the time—to give a good reason for not accepting our amendment, which would remove the threat that hangs over the housing associations as a result of subsections (6), (7) and (8). As was mentioned in the consultation document, that would give the Housing Corporation the power to give the housing associations the freedom to stand on their own. I am sure that the Minister will want to clarify the position before we move on to other matters.

Photo of Mr Dennis Turner Mr Dennis Turner , Wolverhampton South East

I suppose that there is some merit in our being in the Chamber at 5.30 in the morning discussing housing matters which are important to the people we represent and crucial to the social fabric of the country. It is appropriate that the Minister and the Secretary of State should be here—of course, he has left us—in order to participate in the debate.

It is sad that we are here this morning, because I would have thought that the merits of good housing would commend themselves to the House and the country. It raises the fundamental question why, if we are all interested in good housing for our people, there are so many amendments attempting to find the answer to that question. It is sad that we are debating the amendments on the premise that, through this legislation, the Government have created a great deal of controversy, concern and anxiety within housing associations and local government.

I wish that we were here this morning to commend a Bill that was in the interests of all our people and had the support of all in the House. Clearly, that is not the case, because the legislation represents the doctrinaire attitude of a Government who are not interested in promoting the best housing.

We are suffering from missed opportunities to provide in the Bill the means to respond to the problems in many constituencies. The Minister should have taken the opportunity to resolve some of the problems. He has not done so, because he is under a great deal of doctrinaire pressure to respond to what are allegedly housing issues, but which are in fact the interests of the markets and commodities. The Bill does not face the human need for housing in 1988.

We recently conducted a survey in my constituency to discover the accommodation needs of the elderly and the disabled. The Government say that that should be a function of the housing associations. Our analysis showed 2,500 elderly and disabled people waiting for 50 disabled persons' bungalows. Someone aged 70 would have to wait until he was 120 before being provided with such accommodation. The building programmes and the specialist housing provision simply do not meet the need.

There is a growing need for investment in the unpopular estates with their multi-storey housing and deck access. The Secretary of State should be sufficiently concerned to tackle some of the underlying social problems in the inner cities. The Prime Minister talked about tackling that problem, but where are the resources and commitment in the Bill to begin to approach that problem and the problems of escalating rents and rates? The Government are responsible for inflicting massive rent increases—[Interruption]. Perhaps the hon. Member for Harrow, West (Mr. Hughes) would like to deny that.

Mr. Robert G. Hughes:

What about the rates?

Photo of Mr Dennis Turner Mr Dennis Turner , Wolverhampton South East

I can justify rate increases in terms of the reduction in rate support grant to my local authority arid every authority since 1979. There has been a massive reduction in support for rent and rates, and they have escalated as a consequence.

The missed opportunities in the Bill are there for all I o see. It is a vehicle for Rachrnanism and landlordism. It does nothing to satisfy the expectations, needs and desires of people for good housing. I liken the Government's obsession with markets and commodities to a new game of monopoly. The Bill deals with picking a landlord and picking a tenant. Instead of making purposeful progress towards good quality housing for all our people, the Bill reflects the short-term gift and profits that the Conservatives want to give to landlords.

I hope that the people of this country will realise that the Bill has nothing to do with good housing, making progress with tenants' associations, or delivering the housing that they want. I hope that, even now, the Government will reconsider their obligations in respect of good housing and make purposeful progress to meeting the legitimate needs of our people, rather than following a doctrinaire housing policy that will put money in the hands of landlords and achieve nothing for those people who are crying out for decent housing.

Photo of Ian McCartney Ian McCartney , Makerfield

Clause 50 is part of a family of clauses that we debated in Committee regarding, first, changing the nature of the relationship between local authorities and central Government and the funding arrangements with housing associations; secondly, changing the nature of funding between local authorities and housing associations; and thirdly, in a more general sense, changing the nature of the relationship between housing associations and local authorities. As a member of a local authority and as someone who has been deeply involved with local authority housing and housing associations, I have noticed the changing nature of the relationship between local government and housing associations over the past decade. I want to deal with those changes in detail and the effects of those changes and make it critical for local authorities, such as my own in Wigan, to—

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

Order. I do not think that the hon. Gentleman is looking at the same clause as I am. We are dealing with parts of clause 50 which deal with the surplus rental incomes of housing associations. It has nothing to do with local authorities.

Photo of Ian McCartney Ian McCartney , Makerfield

The new clause concerns local authorities and, if you will allow me to proceed, I shall show you the direct connection. You know me better than to suggest that I would take advantage of your good nature at this early hour of the morning. If you had been with us in Committee, you would have realised that I keep to the subject under discussion. I am attempting to show what has happened and what continues to happen in the metropolitan borough of Wigan and why the concern of the housing associations is mirrored by that of the local authority associations. It is important that clause 50 is amended and that the Minister takes on board the protestations of my hon. Friends who have already spoken.

5.45 am

Wigan is one of the larger metropolitan boroughs. In 1986, the Audit Commission's report into the housing needs of 400 local authorities in the United Kingdom placed Wigan in the top 10 housing authorities for providing accommodation in a wide area for both special needs and general housing categories. It congratulated Wigan on the way in which it operated its housing policies. It commented on the way in which the local authority and the housing associations worked together on the housing investment programme, and on the way in which the housing grant schemes worked so as best to utilise the resources of the local authority and those of the housing association.

Wigan was congratulated on dovetailing the priorities of the housing associations with those of the local authority to enable the housing needs of the community to be met cost-effectively, while considering the needs of the community as a whole not just by providing the general type of housing that one would expect from a local authority, but by working with housing associations to provide more specific types of accommodation for those with special needs, such as the physically and mentally handicapped; and for dealing, through HAG and the housing associations, with the special programmes that are necessary, for those who are physically abused and for the mentally handicapped, and on its programme of reintroducing into the community those who were formerly, or are still, in institutions because of their mental and physical disabilities.

Therefore, there is a direct correlation between this clause and the continuing relationship between the housing associations and the local authorities because the continuation of that funding link will provide the only real new investment in housing stock, both now and in the foreseeable future in many areas. The reality is that, since 1979, Wigan metropolitan borough council's housing investment programme has been cut from £18·7 million to £5·1 million—

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

Order. I have been listening patiently in the hope that the hon. Gentleman would be able to confirm his earlier statement that he would demonstrate the links between the clause and the other matters to which he has been referring. He has not persuaded me at all. I do not see any link between the matters that he is talking about and the provisions of the clause, which deal with the surplus rental income of housing associations. The hon. Gentleman must either address himself to the amendment before the House, or resume his seat.

Photo of Ian McCartney Ian McCartney , Makerfield

I have listened to what you have said, Mr. Deputy Speaker, but again reiterate that there is a direct correlation between what the local authority previously provided through its housing investment programme and what is now having to be provided through the housing investment programmes of the housing associations, and how that programme is agreed jointly—

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

Order. Be that as it may, it still has nothing to do with the amendment that we are discussing. It matters little whether the link exists or not, if it does not bear upon the amendment that is before the House. I hope that the hon. Gentleman will address himself to the amendment.

Photo of Ian McCartney Ian McCartney , Makerfield

It does have some bearing in relation to what happens to the surpluses; to the way in which they are used; to what this proposal will do to the long-term investment interests of the housing associations; and to how that investment relates to the agreed programme of new investment, linking it with the local authorities' priorities in the community.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

My hon. Friend is making a point about a technical matter that we debated at some length in the early hours. The difficulty that arises in relation to subsections (6), (7) and (8), which the amendment proposes to remove from clause 50, is that the surplus accruing to the housing associations, which will be redistributed through the Housing Corporation by the Secretary of State, are the sole method of financing the development of the housing associations. Local authority expenditure is being cut, so there will be no new money available for housing associations, except through rent increases.

Inevitably, housing associations will be called upon to deal with the increased demand for money for new house building stock through rent increases. Is that not the consequence which my hon. Friend outlines in a highly technical way? Probably only the technically expert would understand my hon. Friend's comments, but I fully follow them. His points are clearly linked to subsections (6), (7) and (8), which we are trying to remove.

Photo of Ian McCartney Ian McCartney , Makerfield

I do not want anyone to infer that the Chair does not follow the technical arguments, but my hon. Friend's analysis is correct.

Photo of Mr Keith Bradley Mr Keith Bradley , Manchester, Withington

Will my hon. Friend comment on the relationship with the programmes on community care, which the Government are encouraging? In my constituency, the health authority, as opposed to the local authority, is in negotiation with a housing association to close wards for elderly people, put those people into housing association units and try to get community care to link up. Rents will be charged when the units take over from the hospital wards. Papers to be before the DHSS this Thursday say that housing benefit will fully cover the rents of those elderly people who are to be transferred to the community. As my hon. Friend has made clear, a link with community care has been established. Will he comment on this? I should like the Minister to say that the DHSS will fully fund the new rent levels for elderly people who are transferred to the community.

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

Order. That point is a long way from the amendment. I hope that the debate will be confined to the amendment.

Photo of Ian McCartney Ian McCartney , Makerfield

Having been here since the beginning of the debate, I do not want to fall foul of you, Mr. Deputy Speaker, and end up being named and having to leave before the debate is finished. As my hon. Friends have said—Mr. Deputy Speaker allowed them to continue—there is a link between the surplus and rents, and we are interested in how the money is invested.

Photo of Nigel Griffiths Nigel Griffiths , Edinburgh South

My hon. Friend is doing a sterling job and is convincing me about the powers that the Secretary of State acquires in subsections (6), (7) and (8) over surpluses. It is obvious that the Bill is fundamentally flawed. Rather than give tenants additional rights, it withdraws them, as my hon. Friend would agree. It is obvious from his examples—I am sure that he has many more, which we should like to hear—that the need to have a surplus which can be handed to the Secretary of State will force up rents and leave a backlog of disrepair, which my hon. Friend may like to illuminate for us.

Photo of Ian McCartney Ian McCartney , Makerfield

I should like first to deal with the comments of my hon. Friend the Member for Manchester, Withington (Mr. Bradley). The relationship between housing associations in my area and the funding of special needs projects in the community is critical. There are a number of examples. In my constituency, an elderly persons' home is under construction. It will be not just for those over 65 but for those who are in the mentally confused category. It is critical for the funding of that programme, and for the investment of the Grosvenor housing association, that the Government clarify their intentions under the clause.

The Grosvenor housing association has completed in my constituency in the last 15 months a section for the mentally disabled who are released from hospital by the North-West regional health authority. That is being done with the support of and funding arrangements made by Wigan metropolitan borough council. That project is almost unique in community care in the north-west.

The rent levels in that development are vital, and I hope the Minister will clarify the Government's thinking on that type of project, which is one of a series planned as a joint funding venture between the regional health authority, the local authority and the housing association. It is critical not only in terms of the projects in my area but in terms of the Government's policy of care in the community.

In my constituency we have built refuges for women who have been physically abused. The local authority, together with housing associations, has used inner-area programme resources to cater for the needs of women and children who have been physically abused at home. In Wigan, the Grosvenor housing association and the local authority are investing substantial sums on a programme of new build spread over the coming three years to cater for physically abused women.

The levels of rents and what happens to any surpluses are vital issues in considering the future management and financing of such refuges. Because of the changes in housing benefit, the funding arrangements of some refuges are having to be reconsidered. It is vital for the Minister to clarify what will happen in the sort of special needs circumstances I have outlined.

There are a number of other housing associations in my constituency. In conjunction with the local authority, they operate on a zoned basis. The County Palatine housing association, for example, is building homes for the elderly. The same association is involved in another part of the area rehabilitating properties that were unable to he used by the private sector. They are now being brought back into the public sector for renting. The housing benefit is a critical factor in this investment programme.

A housing association called Church Army specialises in providing housing for the elderly. Let us not forget that since 1979 not one new property has been built in my area specifically for the elderly and elderly disabled. But for investment programmes agreed between local authorities and housing associations, there would be huge gaps in our housing provision. There is a clear link—in practical, day-to-day terms—between the Department of the Environment, the local authorities and the housing associations.

My borough council is not unique in the sort of provision that I have described. Hon. Members in many parts of the country could relate similar stories. The relationship has changed dramatically as the role of the local authority as the major provider of housing has been taken over by housing associations. Indeed, but for the action of those associations, virtually no new build would be occurring for the physically disabled, the mentally disabled, the physically abused, the elderly disabled, the elderly confused and the young homeless. Almost all those aspects of housing policy are funded through the National Federation of Housing Associations. Therefore, it is critical that we understand the effects of the clause on the long-term investment strategy of housing associations.

6 am

Just as important is the relationship between housing benefit and the level of rents. Those most at risk from changes in housing benefit and in rents are the poorest and the most vulnerable. It would be ironic if local authorities, having reached financial arrangements with housing associations after assessing the needs of the community and planning their investment programme, and having a strategy agreed with the Housing Corporation or the Department of the Environment, found that the viability of the projects was undermined and that the people could not be helped.

We did not deal in detail with that aspect of the Bill in previous debates. I debated it in Committee with the Minister and with the Under-Secretary of State, who is not with us at this early hour. I hope that she will be with us during the debates after breakfast. The Minister smiles. I have an ongoing relationship with the Under-Secretary of State in the sense that at least she listens sometimes to the arguments which we put forward. She sticks to her brief and does not make false promises. If there is no promise in the brief, no promise is offered. The Minister of State does not always stick to his brief; occasionally he offers us sympathy and suggests that he may be able to assist us. Unfortunately, in most cases he has not been forthcoming with the assistance.

That was the case in the debate in Committee on the general aspect of investment under this clause. I do not want to run foul of you, Mr. Deputy Speaker, so I will not go into detail on the debate, apart from asking hon. Members to read columns 687 and 688 of Hansard of the Committee proceedings. There the Minister and I debated the allocation of scarce resources in stress areas and how that had been exacerbated by the changes—

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

Order. The hon. Gentleman is now going into matters with which he said that he would not deal. He should return to the amendment about the surplus rental income of housing associations.

Photo of Ian McCartney Ian McCartney , Makerfield

I said that I would not go into detail, but surely, Mr. Deputy Speaker, I am allowed to allude to the debate which took place in Committee, if only to give hon. Members at least an inkling of the discussion which I had with the Minister. [Interruption.] It is all very well for the hooray Henrys on the Conservative Benches who have been at Annabel's all night to make rude remarks from a sedentary position about a subject which crucially affects hundreds of thousands of people who are relying on something good coming from the Bill.

Some of us spent over 180 hours during three months in a genuine attempt to ensure that the Bill would benefit people who require houses. It ill behoves hon. Members who are prepared to debate the Bill to make rude remarks from a sedentary position. If they want to make valid contributions, I am prepared to give way to them at any time, singly or collectively. The hon. Member for Harrow, West (Mr. Hughes) was a member of the Committee, but he rarely availed himself of the opportunity to speak. He usually withdrew his amendments so that he would not have to explain his position. So it is important, Mr. Deputy Speaker, that you allow me at least to paraphrase a little of Hansard's official record of the debate in Committee.

Since that debate on 4 February, the situation has advanced in terms of Wigan borough council. In Committee, I told the Minister that his Department, together with the local authority, the private sector and the housing association, was considering a major development plan for the Worsley Mesnes estate in my constituency. It was originally built in the 1960s and comprised mainly maisonettes, decked flats, and system-built properties of the type from which all of us suffer because of the nature of such developments.

The Department of the Environment, in discussion with the local authority, examined ways of refurbishing the estate and also of introducing private and other sources of capital, ensuring not only that houses could be refurbished but also that the derelict land available could be utilised for new homes and other environmental purposes. If a deal is to be struck between the local authority and the Department, it is necessary to secure housing association investment along with that from private developers. Despite the local authority's reservations, that has been achieved.

Since February, the authority has met housing associations and private sector developers and has made a submission to the Department of the Environment involving the Grosvenor housing association and Beazer Homes. That programme involves not only demolition and the construction of new units to meet special housing needs but the refurbishment of existing maisonettes and decked flats.

The management of those new units will be the responsiblity of the housing associations and not the local authority. Its involvement will be limited to introducing potential tenants to the housing associations from its own waiting list. Critical to the investment will be rent levels and the rate of return to the housing association. I refer to a development costing not just tens of thousands but millions of pounds, in an area that desperately needs refurbishment of its housing stock and general environment.

I want the Minister to give me an assurance not only that that scheme will proceed along the lines of the submissions made to his Department but also that there will be guarantees about the funding of the housing associations and about rent levels. It is essential to the people on our waiting list and to others, including the young, that they should be able to afford the rents of those units. It is not the intention of Wigan local authority, and certainly not of the associations, to provide a refurbished estate only for those who can afford high rents or to purchase. We want it to provide housing for the indigenous community across a wide spectrum of tenancies. This clause is critical to all of that.

It is critical for this reason. I want to quote from a document from the National Federation of Housing Associations which highlights the particular problems involved in investing in such estates. It says: Another important factor is that associations who take part in schemes funded partly by private borrowing and partly by public grant will be expected to bear major risks as the grant is likely to be determined at the beginning of a scheme and will not be increased to take account of unforeseen increased costs. On the estate to which I have referred, unforeseen costs could occur in a number of areas, both in terms of the possibility of mining subsidence and construction problems. For example, the large-scale use of asbestos in the heating pipes serving the deck flats requires additional work even before the refurbishment work commences.

The document goes on to say: To expect associations to bear this risk and to also take away their only prospect of building up some form of surplus is inequitable. That is the view of the housing associations, the very people the Minister is saying he wants to encourage to diversify and become involved in areas of investment and in projects in which they would not usually be involved.

Therefore, I am again seeking an assurance from the Minister about that aspect of funding and the level of rent, what will happen to the surplus and how they will be reworked into the system. The Minister said in an earlier intervention that the surpluses would come back to meet housing needs. I hope that he will elucidate precisely what he meant by that and say precisely where the surpluses will be used. It is ironic that in areas of housing stress, where housing surpluses begin to accrue, they are then reinvested in other areas with lower housing stress or where the priorities are different. The only equitable answer is that, where surpluses arise, they should be reinvested in the community where the housing stress was first established and where the schemes to get rid of it were initiated.

Without that assurance, all the Minister is saying is that once again the Government are using housing stress as a basis to increase rent levels and to decrease the Exchequer's commitment to housing benefit. In the end, those most in need are those most likely to pay the most in terms of financial penalties. I hope that for once in his life the Minister will give a real assurance that the worries expressed by the National Federation of Housing Associations and my hon. Friends will be met.

Photo of Harry Cohen Harry Cohen , Leyton

My hon. Friends have debated the amendment in detail and I welcome that. They have made a number of serious and important points.

Clause 50 is entitled "Surplus rental income". It gives the Minister power to take away the so-called surplus rental income. That is a mandate for daylight robbery. It facilitates robbery mainly from the tenants. In the end, the money comes from the tenants through higher rents. As I said earlier, many of those tenants already pay a high rent in proportion to their earnings. It will be done via the housing associations. The clause gives the Secretary of State amazing powers. He will decide on the method of constituting the rent surplus fund, when it must be paid and any other matters connected with housing activities. He will decide the interest that can be paid, and when it should be paid. He is given immense powers.

The House should not give such widespread and unaccountable powers to the Secretary of State, allowing him to do what he wants to housing associations once the powers are enshrined in law. That is wrong, especially from a Government who were elected on the basis of speeches about their opposition to a centralised state interfering with private individuals, companies and associations. Here we have a centralised state gone rampant, with a Secretary of State able to intervene wholesale.

Housing associations should work privately, without undue dictatorial influence being exerted on them by the Secretary of State. As we have seen from examples in other spheres, such influence could be used by an unscrupulous Secretary of State to wipe out a small housing association that does not fit the bill, or because a private speculator with Conservative party interests has his eye on the association's property. Given the powers in the Bill, the Secretary of State could step in, charge huge rates of interest and say that the association must charge high rents. He could force the association out of the work that it was trying to do and ensure that its properties fell prey to the private speculator. Those powers are grounds for potential corruption, and we should oppose them.

This is an appalling clause. As I have said, it facilitates daylight robbery. I support the amendment, which is designed to stop such an abuse of power.

Photo of John Battle John Battle , Leeds West

I thought that the Minister, after his brief intervention, might have responded to some of the points that have been raised. Before we pass legislation to take away surplus rental income from housing associations, it is important to ask—as many of my hon. Friends have asked—where that income would come from. It is inevitable that the issue should be included in the complex equation of housing associations' financial arrangements, because the Bill will mean tenants paying increased rents.

I tried to intervene to ask the Minister a question. We have not received answers to our questions all night. In particular, I asked the Minister to give us a guarantee that 100 per cent. housing association grant funding will still be available to small housing association schemes. I will give way to the Minister now if he will give us that assurance.

Photo of Mr William Waldegrave Mr William Waldegrave , Bristol West

I will intervene if the hon. Gentleman promises not to go on for another six hours.

Photo of John Battle John Battle , Leeds West

I will not go on for another six hours on this amendment.

Photo of Mr William Waldegrave Mr William Waldegrave , Bristol West

I would not ask for more than that modicum of fairness.

There will be 100 per cent. funding for schemes—which may not always involve small schemes—which cannot obtain finance from the market to meet their objectives. Some of the smaller schemes may be able to borrow money and some of the larger schemes doing special things may not. I do not want to attach the funding specifically to small schemes, but there will be a continuation of 100 per cent. funding if that is the only way to meet the necessary objectives.

Photo of John Battle John Battle , Leeds West

We are grateful for the Minister's contribution, because it will mean that some of the schemes outlined by my hon. Friend the Member for Makerfield (Mr. McCartney) will have a chance of survival and will not be squeezed out or jeopardized.

The Opposition have mounted a spirited defence of housing associations tonight. Housing associations will still be pressing for the grant redemption fund to be abolished. As that cannot be achieved, because the proposal was turned down in Committee, our only option is to support the amendment that will delete the clauses that enable the Housing Corporation to make use of the GRF. In other words, we will neuter the import of clause 50.

I remind the Minister and his Back-Bench colleagues of a sentence in yesterday's debate: It is important not to create an atmosphere in which small housing associations are unable to continue their work in that small area in which they want to work."—[Official Report, 13 June 1988; Vol. 135, c. 82–3.] We have argued all night that we would create an atmosphere if clause 50 were to be passed in its present form. I acknowledge that the words I have quoted come from the hon. Member for Leeds, North-East (Mr. Kirkhope).

If the Minister will not heed our calls on this point, I urge him to heed the calls from his own Back Benchers. This may be the last-ditch stand for some small housing associations and co-ops, and it will be clear from tonight's debate who in the Chamber are the real defenders of housing associations. Conservative Members claim to support the housing association movement, but they will be judged by the way in which they vote in the context of this Bill which will introduce legislation that will damage the housing associations.

I urge all hon. Members to support the amendments and to neuter clause 50 by preventing the clawback of the rental surplus.

Question put, That the amendment be made:

The House divided: Ayes 35, Noes 121.

Division No. 354][6.23 am
AYES
Banks, Tony (Newham NW)Cunliffe, Lawrence
Barnes, Harry (Derbyshire NE)Dixon, Don
Barron, KevinFlynn, Paul
Battle, JohnFoster, Derek
Bennett, A. F. (D'nt'n & R'dish)Griffiths, Nigel (Edinburgh S)
Bradley, KeithHowarth, George (Knowsley N)
Campbell, Ron (Blyth Valley)Hughes, John (Coventry NE)
Clay, BobHughes, Simon (Southwark)
Cohen, HarryIllsley, Eric
Cook, Frank (Stockton N)McCartney, Ian
Corbyn, JeremyMeale, Alan
Cryer, BobMichael, Alun
NOES
Arbuthnot, JamesKnight, Dame Jill (Edgbaston)
Batiste, SpencerKnowles, Michael
Boscawen, Hon RobertLatham, Michael
Bowis, JohnLennox-Boyd, Hon Mark
Brandon-Bravo, MartinLilley, Peter
Bright, GrahamLloyd, Peter (Fareham)
Budgen, NicholasLord, Michael
Burns, SimonLyell, Sir Nicholas
Carlisle, Kenneth (Lincoln)McLoughlin, Patrick
Carttiss, MichaelMalins, Humfrey
Chope, ChristopherMans, Keith
Colvin, MichaelMartin, David (Portsmouth S)
Coombs, Anthony (Wyre F'rest)Maude, Hon Francis
Coombs, Simon (Swindon)Maxwell-Hyslop, Robin
Couchman, JamesMiller, Sir Hal
Cran, JamesMills, Iain
Currie, Mrs EdwinaMitchell, Andrew (Gedling)
Davies, Q. (Stamf'd & Spald'g)Mitchell, David (Hants NW)
Davis, David (Boothferry)Neubert, Michael
Day, StephenNewton, Rt Hon Tony
Devlin, TimNicholls, Patrick
Dorrell, StephenNicholson, David (Taunton)
Douglas-Hamilton, Lord JamesNicholson, Emma (Devon West)
Dover, DenPage, Richard
Durant, TonyPaice, James
Fallon, MichaelPatnick, Irvine
Favell, TonyPorter, David (Waveney)
Field, Barry (Isle of Wight)Ridley, Rt Hon Nicholas
Forsyth, Michael (Stirling)Roe, Mrs Marion
Forth, EricRyder, Richard
Franks, CecilShaw, David (Dover)
Freeman, RogerShaw, Sir Michael (Scarb')
Gale, RogerShelton, William (Streatham)
Garel-Jones, TristanShepherd, Colin (Hereford)
Gill, ChristopherSoames, Hon Nicholas
Goodson-Wickes, Dr CharlesSpicer, Sir Jim (Dorset W)
Gow, IanStanbrook, Ivor
Greenway, John (Ryedale)Stern, Michael
Gregory, ConalStevens, Lewis
Griffiths, Peter (Portsmouth N)Stradling Thomas, Sir John
Grist, IanSummerson, Hugo
Hamilton, Hon Archie (Epsom)Taylor, Ian (Esher)
Hanley, JeremyThompson, D. (Calder Valley)
Hargreaves, A. (B'ham H'll Gr')Thompson, Patrick (Norwich N)
Hargreaves, Ken (Hyndburn)Trippier, David
Harris, DavidTwinn, Dr Ian
Hawkins, ChristopherWaddington, Rt Hon David
Hayward, RobertWaldegrave, Hon William
Hind, KennethWalden, George
Hordern, Sir PeterWaller, Gary
Howarth, Alan (Strat'd-on-A)Warren, Kenneth
Hughes, Robert G. (Harrow W)Watts, John
Hunt, David (Wirral W)Wells, Bowen
Hunter, AndrewWiddecombe, Ann
Irvine, MichaelWiggin, Jerry
Jack, MichaelWolfson, Mark
Jessel, TobyWood, Timothy
Jones, Robert B (Herts W)Yeo, Tim
Kellett-Bowman, Dame Elaine
King, Roger (B'ham N'thfield)Tellers for the Noes:
Kirkhope, TimothyMr. David Maclean and
Knapman, Roger Mr. David Lightbown.
Knight, Greg (Derby North)
Michie, Bill (Sheffield Heeley)Turner, Dennis
Nellist. DaveWelsh, Michael (Doncaster N)
Patchett, TerryWise, Mrs Audrey
Pike, Peter L.
Primarolo, DawnTellers for the Ayes:
Redmond, MartinMr. Allan McKay and Mr. Frank Haynes.
Skinner, Dennis
Spearing, Nigel

Question accordingly negatived.

Photo of Mr Tony Banks Mr Tony Banks , Newham North West

On a Speaker. Heat, rather than I debates. During the course been light, but not hon. Members have complained about the low temperature in the Chamber and I wonder whether anything can be done about it—or perhaps we should huddle together.

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

No doubt the hon. Gentleman's comments about the temperature will have been heard.