Housing accommodation

Part of Orders of the Day — Local Government and Housing Bill – in the House of Commons at 7:30 pm on 8th November 1989.

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Photo of Mr Clive Soley Mr Clive Soley , Hammersmith 7:30 pm, 8th November 1989

This is an important debate which will predominantly affect hon. Members who represent rural constituencies. My complaint about the Minister's lack of a housing policy is quite correct because the amount that we invest in housing is now one of the lowest in western Europe. We should not be having a debate on the problem in rural areas if the Government had not failed to develop a proper housing policy. It is precisely because of that failure that I have been able to point out consistently over the past few years that our housing crisis is no longer primarily an urban or inner-city crisis, but a national crisis which is hitting the rural areas. I know that some Conservative Members are seeking to catch your eye, Mr. Deputy Speaker, and I shall ensure that they have time to do so by keeping my remarks brief. The fact that they are trying to catch your eye shows the level of seriousness of the housing crisis in rural areas.

8.30 pm

When the Government said last year that they planned to increase the number of housing association schemes, it sounded like good news, but when we looked at the small print we found that "schemes" meant only 600 new houses or flats throughout the rural areas of England. No Conservative Member—least of all the Minister—can believe for a moment that that will meet the needs of the rural areas. As I have often said, the Government made the fundamental error of ending council house provision as it used to exist and cutting it back until only 5,000 or 6,000 units per year were being built, without providing an alternative. As I have also often said, the private sector is unable to provide and is continuing to collapse.

The Government did a bit of an about-turn a couple of years ago by beginning to put funds back into housing associations, but even now, when additional funds have begun to flow in, the housing association movement is still not providing the same number of homes as in the mid-1970s and is only just beginning to get back to that figure. Even in a few years' time—for the moment, I am sticking to the rural areas—the housing association movement will not be providing enough accommodation to make up for the loss in the council sector. That is why the right hon. Member for Westmorland and Lonsdale (Mr. Jopling), and the hon. Members for Honiton (Sir P. Emery) and for Taunton (Mr. Nicholson) are in trouble in their areas. That is why people in those areas are saying that their sons and daughters cannot find anywhere that they can afford to rent or buy and that is why the local work force, such as postmen, nurses, teachers and bus drivers, are saying that they cannot find anywhere to rent or buy at a price that they can afford. That is the housing crisis in rural areas. The shared ownership scheme has a small but important part to play. Most—if not all—political parties have always accepted that the shared ownership scheme is useful in helping people to bridge the gap between renting and owning, and we all want to encourage that scheme.

I note that the Lords amendment refers to the full equity or any specified share of the equity". The Government are trying to persuade the right hon. Member for Westmorland and Lonsdale to accept what for him is a compromise. I must be careful. I accused the right hon. Gentleman on Report of not being prepared to press his amendment to a Division, but in fact he did so and he had my full respect for that. The compromise now concerns the amount of the equity and, more importantly, the small print of the deal, to which both I and the hon. Member for Honiton have referred in interventions.

There is understandable anxiety that the housing association may not be able to ensure that it receives back the full amount of money to enable it to repurchase at the price that is being asked at that time. In other words, we must allow for house price inflation because, although we are now going through a slight flattening of the inflation curve on house prices, they are still going up and we know that they will probably go up quite steeply from the end of next year. The housing associations will be asked to pay that price at that time. If they cannot do that without drawing on their reserves, as a result of the tight squeeze they are in and the fact that they are being pushed by Government policy towards private sector finance, they will try to find ways of avoiding doing that. They will at least want to hold the Government to their commitment to fund them in some way.

I notice that the Lords have tied their amendment to rural parishes with a population of 3,000 or fewer. I suspect that the problem goes wider and is affecting all rural areas. I also suspect that the problem for housing associations is the complex relationship that develops on the market price when they come to repurchase and, as the Minister himself acknowledged and as was mentioned in the Lords amendment, the question of the disposal of land price, the use of other funds and the payments of the grant at the time. The housing associations may have a deal, with the land price having an effect on that, but if the Government's price simply takes that into account without giving the housing associations sufficient funds to buy back the property at the price at the time without loss to their reserves, the housing associations will want to avoid such repurchases or, if they are forced to do so, will do so only at the expense of further housing investment in that area.

Such investment may not necessarily be in new housing because it may be investment through repair and renovation schemes. Housing associations may deal with the problem by making up the money through other people's rents. If they do that there is a danger. Let no Conservative Member think that any extra money that the housing association has to find itself can be lost in rents without causing problems. Housing association rents went up last year by 24 per cent. We all know that they will go up again next year and, almost certainly, the year after, unless the Government change the rules that they have introduced. The housing associations are being asked to operate the shared ownership scheme, which is neither cheap nor an easy option. We must remember that the price people are being asked to pay is closer to a mortgage than a rent in most cases, which is one of the problems for people who get into difficulties changing a mortgage into a shared ownership scheme—which many of us would like to see. The difficulty is that the payments are often close to the amount of a full mortgage. Housing associations cannot pass on any surplus that they have picked up in rent without pushing up rent levels generally.

I urge Conservative Members who are interested in this subject to think carefully about the wording and to hold the Government tightly to what appears, on paper, to be a tolerably good commitment to fund the associations. When one looks at the small print, one sees that housing associations will either have to find some extra money from their reserves and squeeze their building, repair and renovation programmes or lose the money in a rent increase. If they do not do that, they will try to avoid buying back because they will not receive the funding that they expected from the Government.

I am deeply disturbed by the Government's proposal and I should have thought that it would have been best to accept the Lords amendment. It is worth reminding the House that some 111 Members of the House of Lords voted for the amendment, with only 38 against; some 10 Tory Members of the House of Lords supported the amendment, as did a significant number of Cross Benchers and a couple of bishops. It would be unwise for the Government to throw out the amendment without bearing in mind the fact that the issue attracted cross-party support in the Lords or without considering the cautionary note I have sounded. I advise the House to agree with the Lords amendment.