Surplus Rental Income

Part of Clause 50 – in the House of Commons at 5:30 am on 14 June 1988.

Alert me about debates like this

Photo of Ian McCartney Ian McCartney , Makerfield 5:30, 14 June 1988

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.