Orders of the Day — Investment

Part of the debate – in the House of Commons at 6:14 pm on 20th November 1995.

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Photo of Mrs Diana Maddock Mrs Diana Maddock , Christchurch 6:14 pm, 20th November 1995

I am sure that, at some point, one of the Whips may have put that point in the hon. Gentleman's ear, whether it was this afternoon or not.

For many years, I was a city councillor in Southampton and listened to the pleading of landlords who had to pay back rent that had been given to them in housing benefit when their tenants had done a moonlight flit. It is not easy to know which is the best way to deal with that matter. Clearly, my Liberal Democrat colleagues have weighed up local circumstances in the Isle of Wight, and they have come to a conclusion.

Investment is about putting money in now to save greater expenditure in the long run, and to enable us to produce wealth. Investing in good-quality housing, which will last longer and need fewer repairs, is a prime example. We certainly need that now. At the current rate of building, our homes, both public and private, will need to last for a few hundred years each.

Investing in the construction of new homes and schools is one of the most effective ways of getting people back to work. This year and next year, it is estimated that 12,000 more construction workers will lose their jobs solely as a result of last year's cuts in housing association building. It is estimated that, for every pound spent on construction, at least half will be saved not only in lower benefits, but in increased tax revenues.

Investment in housing cannot be measured only in terms of money and finance; the value of investment in homes has a tremendous effect on people's lives. To be homeless can be crippling. Not only is it very stressful: it is also very damaging to people's physical health. Homelessness means that people are often excluded—they are divided from society and shut out from opportunity, education, meaningful work, health care, financial support and, fundamentally, decent housing.

Many such people become trapped in a downward spiral, with the escape route shut off by the many measures enacted by what I believe to be an insensitive and dogmatic Government. For a party that talks so much about the need to help families, its actions on social housing are a betrayal. Investment in supporting families is crucial. Two of the main causes of family break-up are lack of and insecurity in homes and jobs.

Almost 20 years ago, the wider problems of homelessness were recognised in law for the first time, when, in 1977, the Liberal Member for Isle of Wight, Stephen Ross—sadly, no longer with us—introduced the Housing (Homeless Persons) Act, with support from all sides of the House. That Act was passed because people inside and outside the House recognised that homelessness was a long-term problem and that, unless long-term solutions were found, it would lead to countless other problems in health, work and other aspects of people's daily lives.

If we regress to a position where temporary accommodation and 12-month contracts are the norm for homeless families, we will be denying them the security and the stability that they need to get back on their feet. The repeal of the Housing (Homeless Persons) Act, which is effectively what the Government appear to be proposing in their Bill, will be a monumental step backwards in the battle against homelessness. Since it was introduced, the Act has helped hundreds of thousands of homeless families to find a decent home and a stable environment and to recover after the terrible trauma of being made homeless.

I do not deny that there is a serious problem with the length of local authority waiting lists throughout the country, which sometimes leads to people blaming the homeless for apparent queue jumping. In fact, it is a clear and obvious consequence of the way in which the Government have starved councils and housing associations of funds.

The proposal to change the rules on access to social housing is little more than an exercise in scapegoating to try to shift the blame for Britain's housing crisis away from the Government. By their own speeches, Ministers have fuelled a belief—some of them have even convinced themselves—that homeless people are all queue jumping. Now, they feel that they must act if they are to retain any credibility.

Quite apart from everything else that the Government are proposing, these reforms are really something of a con trick. Putting homeless people into temporary accommodation and then on to the waiting lists will not make the waiting lists any shorter or make any difference to the speed with which most of the people currently on them will be housed. The Government's proposals will not reduce housing need or housing demand and they will not increase housing supply.

The Government are failing everyone in housing need. They are also failing the construction industry. The reason for the huge waiting lists for local authority housing is clear—it is quite simply the severe shortage of affordable housing. Fewer houses were built in the social sector last year than in any year since the war. If the rumours about Budget cuts are true, there may be only enough money to invest in 16,000 new properties in the social sector next year. Currently, the waiting list for housing in Birmingham is 16,000.

What I find even more distressing is that the Government are now trying to hide behind the Awua judgment—the legal decision that Brent council's obligation to house a homeless family was adequately fulfilled by placing them in temporary accommodation for 28 days. That judgment has set a precedent that was certainly not intended in the original legislation. It cannot be allowed to stand. It is the logic of the madhouse for the Government to claim that it somehow makes their proposals all the more acceptable. In fact, it makes it absolutely essential that the law in this area is clarified. Liberal Democrats will be fighting tooth and nail to keep the spirit of the current law in the new Bill.

I want to turn from quantity of housing to quality, because both are equally important. I hope that the Home Energy Conservation Act, which I successfully piloted through Parliament last year, will come into force in April. It should lead to some improvements in home energy efficiency, provided that the resources and the investment are put in place. However, at the same time the Government are proposing the negative step of scrapping mandatory renovation grants. They are doing so at a time when 1.75 million homes are either unfit for habitation or below a tolerable standard, and living in those 1.75 million homes are 4.25 million individuals.

I would be the first to accept that the present system of home improvement grants for private home owners is far from perfect. It is very complicated and bureaucratic, and it depends not only on where someone lives, but on whether he can find his way around the red tape involved in getting a grant. In addition, mandatory grants can be awarded only after a property is ruled to be unfit for human habitation, so it is often a case of shutting the stable door after the horse has bolted.

It could be argued that giving more discretion to local authorities would allow them to tackle problems earlier. However, I and many others in the housing sector truly believe that the Government will use the proposed reforms as a smokescreen to hide a further reduction in funding.

Improving the standard of our housing stock, both public and private, should be a major plank of Government policy. It is certainly a sound investment for the future and a way of creating jobs. However, it is not only home improvement grants that the Government are intent on taking away from home owners. Mortgage interest relief has been slashed, at a time when the market has been at its lowest ebb for a long time. Recent cuts in income support for mortgage holders have left home owners with no real effective safety net. The claim that private insurance schemes are practical options for most home owners has been blown out of the water by report after report.

There is no doubt that housing and housing matters are inextricably linked to the economy. The President of the Board of Trade spoke earlier about the need for flexibility. We now have one of the most inflexible housing systems ever, across all tenures.

There is an inherent contradiction in the Government's economic policy that has badly hit home owners—that of trying artificially to pump up the housing market while at the same time pursuing a general anti-inflation policy. One does not have to be an economist to recognise the contradiction there, and to predict the effects that we are now seeing, with more than 1,000 houses being repossessed every week and, consequently, even more pressure on local authority waiting lists. It is one area where the Government have certainly introduced competition. On top of that, an estimated 1.5 million people are trapped in negative equity.

How have the Government responded in their proposed housing legislation? It would appear that they have abdicated all responsibility for the problems faced by home owners and tenants alike, and are proposing legislation which looks likely to consist largely of gimmicks and smokescreens and which, by all accounts, will not provide the long-term programme of investment in homes, which are the vital anchors for all our families.

What could have been a sensible policy to encourage housing association tenants to buy their homes is dreadfully flawed, because the Government are more concerned with the dogma of introducing the right to buy than with the consequences of those sales in some areas. Thankfully, I believe that the Government have finally bowed to pressure and exempted much rural housing from the scheme. Even so, the scheme remains problematic in many areas.

I am astonished when I see how much effort the Government and others are putting into devising ever more devious ways to allow public bodies to go to the private market to obtain capital—not because it is a bad idea, but because Ministers are so bound by their obsession with the notion that it is somehow wrong for public bodies to borrow.

Borrowing to finance revenue spending is the road to disaster, although I have to say that Tory colleagues in my county of Dorset are always encouraging my local authority to do just that. However, borrowing for capital expenditure for investment is lasting. These are the principles on which industry works. One would think that the Government would by now have recognised them, too.

Why should housing associations be able to go to the private sector to seek finance to build homes, but local authorities are not allowed to do likewise? Local authorities are democratically accountable for their spending. The Government's position is even more hypocritical, given the news that grant-maintained schools will be allowed to borrow in the private market. That blows a hole in the Government's policy and their defence of what they have done in this sphere.

We need to be prepared to use our imagination to break free of the constraints which prevent investment. I am thinking of the rule according to which all spending, including capital investment, contributes equally to our main measure of Government borrowing. That point has already been alluded to today. There is no logic in that notion. It makes councils, which desperately need new homes for homeless people, keep millions of pounds locked up unused in their bank accounts.

The Liberal Democrats would separate capital and revenue spending and give local authorities the freedom to invest the money they have in new homes. We would also allow local authorities direct access to capital markets to finance local projects. In all my time in local government and in the House, I have yet to hear a convincing argument as to why local councils' financial wings have to be kept as clipped as they have been by the Government, especially for projects that are likely to reduce their costs in the long term, and create much-needed jobs in their area.

The Labour party seems to be very hesitant and timid in this sphere. I have been waiting for the long-promised housing policy document that the hon. Member for Greenwich (Mr. Raynsford) told me was coming earlier this year. Regrettably, the Labour party seems to be similarly blinkered when it comes to reform of the measurement of the public sector borrowing requirement. I understand that Labour's Treasury team has ruled out any change in Government accounting rules to release funds for investment.

There is too much timidity in politics today. Too many politicians seem scared to challenge traditional orthodoxy.