Housing and Regeneration Bill

Part of Orders of the Day – in the House of Commons at 7:27 pm on 27th November 2007.

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Photo of Adam Price Adam Price Spokesperson (Communities and Local Government; Culture, Media and Sport; Defence; Transport; Ministry of Justice) 7:27 pm, 27th November 2007

If people want to find the devolution dividend—the social gains from devolution—they should look no further than the Bill. Many of the objectionable, more nefarious proposals that Mr. Meacher has just referred to do not apply to Wales. The introduction for the first time of eligibility based on means-testing and the creation of profit-making social landlords—surely an oxymoron—do not apply to Wales, nor does the creation of a new quango. We got rid of quangos in Wales some years ago and we have no appetite for creating new ones.

Having said that, I agree with John Battle that there is something positive at the heart of the Bill. It is implicit that the Government have at long last recognised the scale of the housing crisis, or challenge as they may call it—certainly it is a huge social problem that we had better find some answers to quickly. At long last, there is finally an acknowledgement from Members not just on the Government Back Benches, but on the Front Bench, that the social rented sector, and particularly council housing, has to be a core element of the response. If there is to be a benchmark by which we judge the success of the Bill in years to come it should be the extent to which it has resurrected the council housing sector.

Unfortunately, over the past decade there have been more false dawns in Government policy on council housing than in the revival of the Welsh rugby side. In 1997, when the Government were first elected, they said that they would release the capital receipts that had been held by the Tory Government. Between 1980 and 1997, those receipts could not be touched by local authorities that wanted to build houses to replace those that they had lost as a result of the right to buy. The Labour Government did release the capital receipts in full, but only for debt-free local authorities. That is less than 10 per cent. of all local authorities. In particular, the most disadvantaged areas, where need was highest, could not get access to capital receipts, and about £3 billion of that money still lies in a fund. Those capital receipts, which were built up between 1980 and 1997 from the right to buy, are still held out to local authorities as a carrot; if they transfer their stock, they will get those capital receipts to beef up their general fund.

As I say, there have been false dawns. Take the prudential borrowing ability for local authorities. There was talk of an investment allowance on the part of the Office of the Deputy Prime Minister. That would have been based on need, and local authorities could have used the prudential borrowing requirement intelligently to build up their local authority housing stock. Unfortunately, the Government rejected the investment allowance route, and instead chose the method proposed in the Bill. As we know, post-1997, local authorities get only 25 per cent. of capital receipts from properties sold. The money goes into a pool system. Quite fairly, that is partly to redistribute some of the right-to-buy receipts across the country. I understand the reason for that, but it means that the local authority sector does not get the entirety of the right-to-buy receipts returned to it, even under a Labour Government. That surely cannot be right to any of us who want to support and defend the principle of publicly owned housing.

We hope that we will be able to amend the Bill as it goes through its stages in the House, and on that basis we will support it tonight. In the Bill, there is some acknowledgement of the problem. In the impact assessment, the Government admit that local authorities and the council housing sector have faced two problems. The first problem, as the Government admit, is that they channelled the money through registered social landlords. The second problem is that the housing revenue account subsidy system not only does not provide the entirety of the capital receipts, but does not even give local authorities back the entirety of their rent income. Only 74 per cent. of rent is returned to local authorities. How on earth can they keep up the quality and fabric of their existing stock, let alone build new social housing, given the iniquities of the system?

In the Bill, the Government provide two new options. One is for local authorities to exempt themselves from the housing revenue account system. The problem is that they must buy themselves out with a massive one-off payment to the Treasury. In their own analysis, the Government accept that the vast majority of local authorities, and particularly the ones that need the resources the most, will not be able to buy themselves out. That is part of the problem with Government policy on council housing. If an authority wants to be self-sufficient and wants the receipts of sales and income in order to invest, it has to buy itself out, but if it wants to transfer its stock, the Government write off its debt. That shows that, unfortunately, there still is not a level playing field under the Government's policy on council housing. The other option offered is to exempt new properties from the subsidy system. At least there is partial recognition that the subsidy system has worked against local authorities, but why not offer that exemption across the whole local authority sector? Why confine it to new build?

I have to tell the Minister that as the so-called flexibilities stand, they will be of very limited benefit to most of the local authorities in Wales. That is probably the case in England, too, and it is certainly the case for the authorities that we should care about most—those in areas where social housing need is greatest. Although the acknowledgement of the problem is welcome, the proposition that the Government present in the Bill will do nothing. It will get us nowhere near the level of new council housing build that we need.

I do not oppose targets; in fact, it is important that a Government of the left have targets when we are faced with a huge social need. Why is there no target for the number of council houses that we want, as part of the overall target? The Government refuse to say. There was reference to a figure of 300 new council houses a year—it is even less than that in Wales. That is appalling. All that the Government will say is that probably, as a result of the proposed changes, the figure may increase to several thousand a year. Again, that is a drop in the ocean, if we consider what we really need. Why are the Government not prepared to say that there should be an overall target for the number of new council houses, as part of the entire figure? Then we can judge the effect of the new policy against the target.

On clause 259, I sympathise with local authorities that have gone down the stock transfer route. It is unfortunate that local authorities feel that they have no other option because of the way in which the cards are stacked against them. Recently, Conwy thwarted an attempt to take it down that route by the thinnest of margins—by 50.8 per cent. to 49.2 per cent. Tenants feel that they have no option. A number of local authorities in England and Wales, including Wrexham, have voted against such a change. However, it would appear that the Government are not satisfied when tenants vote no. Under the clause, a piecemeal approach is effectively created. Even when tenants and local authorities decide not to go down that route, there is the potential for landlords—even for predatory private-sector landlords, in England—to try to persuade tenants with inducements, and to cherry-pick the best estates, which eventually vote in favour of stock transfer.

How will it be possible for local authorities in England and Wales to plan for their council housing stock if they do not know, year by year, which estates will be part of that stock, or if the parts of the local authority housing stock that bear the highest income are transferred to the private or independent sector? That is the Tory Government's housing action trust policy of the 1980s: cherry-picking estates. If a whole local authority cannot be won over, the aim is to pick off individual estates. The Government need to think carefully about that.

Finally, in Wales, the Essex review on social housing regulation is due to report by the spring. Will it be possible to incorporate some of the review's recommendations in the Bill? In Wales, there is consensus that we would like to move to a single social tenancy. We certainly want to make sure that where tenants are pushed into the hands of the private or independent sector, there is no diminution of their rights. Scotland has already done that, and there was talk of a single common tenancy in England, although I am not sure what has happened on that proposal. In Wales, there is consensus: we want a single social tenancy across all sectors. Will the Minister allow us to bring such a proposal forward, if the review finds in its favour, in the framework of the Bill?

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