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Council Rents (Lambeth)

– in the House of Commons at 2:29 pm on 24th April 2009.

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Motion made, and Question proposed, That this House do now adjourn. —(Barbara Keeley.)

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Photo of Kate Hoey Kate Hoey Labour, Vauxhall 2:31 pm, 24th April 2009

In a few weeks I will have represented the people of Vauxhall as their Member of Parliament for 20 years. When I was elected, I promised to speak out loudly about their needs and concerns, and to represent them powerfully, whoever was running Lambeth and whoever was in government.

My constituency, covering the north of Lambeth, is a wonderful diverse community with very many people deeply committed to working with others to make where they live a better place to be. The 2007 index of multiple deprivation places Lambeth as the fifth most deprived borough in London and the 19th most deprived in England. There are, of course, pockets of affluence, and one of the most pleasant corollaries of this is that in areas such as Kennington, Waterloo, Stockwell, Brixton and Clapham there is a coming together in the myriad community and voluntary organisations of people from all backgrounds and financial income.

Over the years we have seen huge improvements in the environment in the borough—in our parks, streets, street cleaning and so on. Although a large number of my constituents are well paid, highly educated and play a major role in the wider London economy, many are denied opportunities to succeed and we still face long-term problems, such as higher than average rates of unemployment, low levels of skills, and high teenage pregnancy and crime.

However, throughout my time as an MP there has been one overriding theme of discontent and even anger, as I am sure my right hon. Friend Keith Hill, who I am pleased to see beside me today, will agree. Regardless which political party has been in power at Lambeth town hall, whether Labour, Liberal Democrat or no overall control, there have been real failures in the housing department and in housing management. I emphasise that this is not a strictly party political issue. It has been a fact, regardless who has been nominally in control. There has been a culture of incompetence, arrogance and—I choose my words carefully—outright corruption among too many in the structures of the housing department, many of whom have now left.

I know that the current administration is aware of the situation and of the history, and that greater attention is being paid to trying to tackle it. In particular, I pay tribute to the ongoing efforts of our chief executive, Derrick Anderson, who has taken a huge hands-on role in trying to sort housing out once and for all, and of our cabinet member for housing, Lib Peck, who is relatively new to the job and showing a determination to face up to the challenge. But it is still nowhere near fixed, and I could spend all the time available to me today chronicling the many mess-ups that there have been. I shall however refer to just a few.

During the past few years we have seen a fraudster from within the housing department steal £2.9 million, which was eventually retrieved through insurance; an £11 million budget for homeless accommodation overspent by £6 million, because the council had leased too much property for a declining number of homeless people; and an all-party report by councillors finding that the authority ignored Government homelessness funding cuts, branding the officers reckless. There have been failings to keep contractors in check, shoddy work that is never penalised and countless other examples of financial mismanagement, as well as failings on the monitoring of repairs and other day-to-day management of what is happening on our estates.

The word "blame" could be widely used against many people and the organisation generally over a long period, but my right hon. Friend the Minister of Housing must be aware that the one group throughout all this who certainly cannot be blamed and have had no hand in any of the mismanagement is the council tenants, who make up about 50 per cent. of the residents across Vauxhall and who have suffered terribly poor service from their housing department. The department is often unresponsive, dismissive and hostile. Repairs have not been done and many of my constituents are in despair at the service that they receive.

I want to pay tribute to the many tenant leaders who give up so much of their time to improve the situation—Roz Munday, Rita Fitzgerald, Norah Anne Sheey and, most of all, Pat Scahill from the Mursell estate who has badgered tirelessly to get Lambeth officers to do their job properly. If only the council had listened over the many years to the tenants who knew what was going on. Eighteen months ago I brought a delegation of tenants to see the former Minister, and they said then how dire things were. Those very same tenants now face enormous rent rises to make up for matters beyond their control. They have never been listened to and I hope that they will now be listened to.

The proposed rent increases this year will mean an additional £11.79 a week for a one-bedroomed flat and an additional £12.20 a week for a two-bedroomed flat, rising to £15 a week for larger flats. On top of that, increases in service charges will mean an additional 68p a week across the board. These huge rises, totalling about 16.49 per cent. on average, are by far the largest proposed anywhere in London and indeed in the country, and they will hit many tenants hard, particularly those who do not receive housing benefit. Those people are largely men and women who have worked hard all their lives, paid their taxes and contributed fully to their communities, and they will now find themselves clobbered by these increases, which have nothing at all to do with them.

The reason for the proposed rent increases is to plug the deficit in Lambeth's housing revenue account, which is projected to be £9 million over the next 18 months, and to meet the forecast need to bring the account back into surplus in the medium term. That was despite last summer the tenants council being told by officers that the HRA was fine—no problem. Two months later, we suddenly had a huge deficit and the rent increases were discussed. The suggested alternative of swingeing cuts in the housing repairs budget, which is already not delivering nearly enough and practically nothing on some estates, is just not possible.

The reason for my coming to Parliament today is to see how my right hon. Friend the Minister for Housing can help. I am being very honest. There is a solution and I know that my right hon. Friend wants to help if she can. Lambeth's administration had expectations of receiving funds through the rent constraint allowance, which was paid out in 2006-07 and 2007-08 to authorities that were able to hold down rents. Lambeth was not entitled to receive RCA until the incoming Labour administration de-pooled its rents from its service charges for 2007-08. However, it was considered that that was too late, because by the time the RCA ended at the end of that period, Lambeth had not established a two-year base of data. An earlier de-pooling under the previous administration might have made Lambeth eligible.

The council has calculated that the difference in RCA entitlement before and after de-pooling is a subsidy loss of £11 million—enough to plug the deficit in the housing revenue account. I know that the council leader has been lobbying the Department for Communities and Local Government for a one-off special determination for that amount to reflect the loss from de-pooling in expectation of the RCA in 2007-08, and my plea today to the Minister is to look favourably on that. If the Secretary of State would use her discretionary powers to issue a special housing subsidy determination to grant Lambeth an amount equivalent to that which due to the time lag was lost in the RCA calculations, the HRA would be immediately restored to balance and decent people who do not deserve the worry of all this, particularly at a time of economic recession, would not be penalised by such large rent increases.

There is another way in which my right hon. Friend the Minister might help. Lambeth council has included in its response to the HRA subsidy amending determination consultation a way of allowing an authority that de-pooled in 2007-08 additional subsidy for the amount of RCA lost. Currently, the Government's incredibly welcome determination to get rent increases down to an average of 3.1 per cent., and their offer of help to those local councils that do so, does not in any way help the tenants of Lambeth. All around them they see other boroughs' tiny increases being made even tinier because of the Government's welcome guidelines, and even some boroughs that have made reductions, but all they have is ever-increasing bills.

I know that my right hon. Friend will have huge sympathy for the problems that those tenants face; she has a long history of involvement in and concern about housing. I have been inundated with letters and e-mails from despairing tenants. Time is short and I cannot read from all of them, but I shall read one extract from one e-mail, which sums up the overall feeling. It is from a lady—I shall not give her name—living in my constituency on Minet road. She writes:

"I would like to know if there is anything the parliament can do to intervene against the Rent Increase planned to begin in April 2009 in Lambeth. I usually expect an annual increase in rent but when I received a letter stating that the increase would be £15.00 per week on top of weekly rent I was more than unhappy. The letter from my housing office stated that this is because of mismanagement of funds and basically we have to pay. I work...and am on an average income with two children to support and just cannot afford to pay this huge amount. I think this is wrong, because we the people who live within Lambeth are not responsible for handling the funds that come through and don't think we should be made liable to pay for the council's mistakes. If it is at all possible I would like this to be pushed as far as it can to ensure Lambeth Council clean up their own mess and don't dump the bill on us residents who are already financially strained."

That is a reflection of the very many—the hundreds—of responses that I have had. People feel very upset, as one would imagine.

I know that my right hon. Friend has looked at the issue and been willing to meet me, and I am very grateful for all the meetings that we have had. My right hon. Friend the Member for Streatham has been a Lambeth Member for a very long time, although not quite as long as I have, and we both want Lambeth to be on a level playing field and its housing department to be restored so that we can feel confident about its financial situation. Whatever my right hon. Friend the Minister says today, she should note that we would definitely welcome the Government's greater oversight of that Lambeth department. Tenants asked some time ago for inspectors to go in and try to sort out Lambeth housing, although that request perhaps went a little too far. I accept, however, that anything the Government offer has to come with strings attached—a call for greater oversight to ensure that good practice is followed and the old complacent failures in the department are weeded out.

I know that my right hon. Friend is busy, but she might like to meet representative tenants in the borough so that she can hear directly from them. I also remind her that the Government have taken quite a lot of money—£712 million of subsidy surplus—since 2003-04 from the housing revenue account system. Tenants feel that if only they could get some of it back, it would help their situation.

I thank the Minister for all the time that she has already spent on this issue, but I hope that she can respond today in a way that will give us some hope. I cannot express strongly enough the anger, upset, misery and desperation in the homes of many of my constituents just down the road from Parliament. They feel that they can do nothing to stop this incredible increase and that the last resort has to be for me and my right hon. Friend the Member for Streatham to come here and speak directly to the Minister for Housing to see what the Government can do. I know that the Government want to help, and I hope that between us all we can find a solution.

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S

Thanks to Kate Hoey for raising this issue. As a Lambeth tenant I can safely say that they are among the most corrupt and inefficient in the country. It is impossible to get even a basic service from them without starting the formal complaint process. I currently have three formal complaints running - all relating to housing.
Failure to balance the housing budget should lead to resignations and calling in outside auditors, not to rent increases which punish the modestly waged and hard-working.
Ms. Hoey protests too much that it is not a party issue. It is a party issue. Labour have pretty much run Lambeth council as a banana republic for many years. The Town Hall and Housing Offices are grossly overstaffed with under-qualified people who would not last a week in the private sector.
Basic services are abysmal, particularly housing repairs. No amount of guff about 'diversity' and 'vibrancy' can change that. Lambeth Council needs to forget about 'diversity' and concentrate on 'competence'.

Submitted by Sarah

Photo of Margaret Beckett Margaret Beckett Minister of State (Department of Communities and Local Government) (Housing) 2:45 pm, 24th April 2009

I begin by acknowledging at once the real concern that has been expressed by my hon. Friend Kate Hoey and my right hon. Friends the Members for Streatham (Keith Hill) and for Dulwich and West Norwood (Tessa Jowell) not only in this debate, but over the weeks and months. All Lambeth MPs share the same concerns, and my hon. Friend the Member for Vauxhall has made a powerful case today on the long-standing nature of the some of the problems in Lambeth, about which I have heard on many occasions over the years. As she has rightly and powerfully said, those problems are in no way to be laid at the door of the tenants, who are most impacted by the failures of service and the proposals that the council is making.

I also acknowledge at once that, as my hon. Friend has said, the reason for the rent increase that the council is considering is the need to balance the housing revenue account and the real difficulty in so doing. My understanding is that the council's rises come against a background of what have historically been some of the lowest rents in London and that, in addition, the council has experienced a number of challenging issues in respect of its housing service and management of stock. Incidentally, I entirely accept my hon. Friend's point that such issues have happened under Administrations of all political shades.

Because the problems are of long standing, they can be difficult to resolve. However, I also recognise that the current council has begun to take significant steps forward, and I congratulate it on its progress. For example, it is working hard with the arm's length management organisations to reach a position at which they can qualify for funding to deliver a decent homes investment programme. I hope that the council will ensure that the ALMOs keep the Homes and Communities Agency advised of their progress and of any problems to make sure that there is a full understanding of the position and so that support that might be made available can be discussed.

As my hon. Friend has pointed out, we have recognised the general concerns raised by councils, including Lambeth council, about the current system of providing subsidy for council housing, and its impacts, including those on rents, for this year. The system is complex, and if there is anyone around who sees it as fair or transparent, they are keeping very quiet about it. The Government want to ensure that there is a long-term sustainable system for the future that is fair and affordable for councils, tenants and taxpayers, so a widespread review has been looking in depth at the cost of the landlord business, rents and the use of surpluses, redistribution and the background issues that influence the position in Lambeth and elsewhere. I hope that we will have the report of the review soon.

Whatever comes out of the review, I accept that it is vital that the council puts its housing finances on a better footing for the future. I am grateful to my hon. Friend for saying that both Lambeth's Members of Parliament and its tenants have concerns about that. As local authority and landlord, that is something for which the council has full responsibility. However, I share the concern expressed by my hon. Friend about how working council tenants, many of whom are among the least well-off in the community, can be expected to cope with very high rent increases in the present economic conditions.

Having recognised that, on 6 March I announced that the Government would consult on the overall position with regard to local authority rent increases. Guideline rent increases of just over 6 per cent. for 2009-10 and 2010-11 had initially been agreed with local authorities, after consultation, in order to give what was felt at that time to be much-needed certainty to local councils in planning their future budgeting and their spending on housing. Since then, of course, inflation has fallen very sharply, and it became clear that it would be wise to look again at the position to see whether we could provide help and assistance to council tenants. We had many representations expressing concern about the widening gap between the assumptions made by the Department last September and current levels of inflation.

Because, as a Government, we listen to the concerns that stakeholders express, we accepted that, if at all possible, something had to be done to address the situation, and we reacted quickly. First, I promised to look again at the guideline rent increase for the second year—2010-11—in the full understanding that the certainty that had been thought to be more desirable than anything else was beginning to look less desirable. I then began urgently to investigate the options to offer reduced guideline rents for 2009-10. The system is, as I have said, very complex, and we had to spend some time exploring the financial consequences of the different options. Having done so, and having successfully negotiated the necessary resources, I immediately announced our decision. It is our intention that any council reducing its actual rent rises for 2009-10 in accordance with the level of its average guideline rent reduction—from just over 6 per cent. to just 3 per cent.—will be compensated through increased subsidy, to pass on to the tenant through reduced rent rises.

I will take this opportunity, if I may, to refer to the point that has been raised on this issue—we have not revisited local authorities' allowances, which were set in the original subsidy determination last autumn. They were set, as were the guideline increases, according to inflation assumptions at the time, which were at a significantly higher level, and consequently the allowances are much more generous than they would be if they were calculated now.

Overall, this is a generous offer of improvements for tenants on the maintenance of the funding available to councils to help them to manage their own administrative responsibilities. I hope to see all councils take advantage of this opportunity to help their tenants by lowering their rents in these difficult economic times. I fully accept that, as my hon. Friend has said, against that background the dilemma faced by a council in Lambeth's position is particularly acute. It wants to help its tenants, which neighbouring boroughs may be able to do, but it needs to raise significant sums to tackle the complex and serious underlying problems in its housing finances.

Of course, whatever the guidelines, all councils are free to make their own decisions on the actual rent levels that they set in their particular circumstances. However, we are keen to see what can be done to help councils that wish to provide a better deal for their tenants to lower their rent increases. Our general consultation on the guideline rent reduction ends today, and we are now analysing the responses, so I have yet to establish the level of take-up of our offer or to fully assess the issues that councils have raised in responding. We will carefully consider all the responses, particularly Lambeth's, when we make the final subsidy determination.

My hon. Friend was kind enough to say that she believes that I want to help find a way forward, if at all possible. She is absolutely right about that, because I recognise the strength of the case that she has made. She referred particularly to the rental constraint allowance and to Lambeth's request for a special determination to make an adjustment to increase its rental constraint allowance bearing in mind that it uncoupled service charges from rents in 2007-08. She touched on the fact that that could perhaps deal with councils that are in that general position

It might help if I try to clarify the position. The rental constraint allowance was introduced for a limited period only, between 2006-07 and 2007-8. The purpose of that introduction was to meet a specific Government aim of enabling councils to keep their actual rent increases down to 5 per cent. in those years. Although I recognise the argument that Lambeth is putting, I understand that there was never any intention that the rental constraint allowance itself should be a means of encouraging local housing authorities to separate service charges from rents—de-pooling—in the way that some authorities, although not Lambeth, did at the time. Any benefits that authorities might have derived from de-pooling during the relevant period when the allowance was in place were coincidental.

That suggests that Lambeth has not been treated differently from other local authorities. I know that my hon. Friend will recognise, however reluctantly, the problems that would be caused if Lambeth were treated differently. It is impossible for any Government not to treat all councils fairly and to make particular exceptions because of unique circumstances. However, I assure her that we are prepared to listen and have been doing so, as she was kind enough to acknowledge.

We are already providing sector-led support through the Government office for London to help Lambeth to take forward the progress that it has made and build on its achievements so far. As my hon. Friend acknowledged, Department for Communities and Local Government officials have very recently met council officers, and we are considering very carefully all the issues that they put to us.

I know that it will be disappointing to my hon. Friend that I cannot say today that we have found a way forward through the path that she identified, but I assure her that I will continue to examine these issues very carefully with officers, representatives of the local authority and my parliamentary colleagues. We will reply quickly to Lambeth's response to our subsidy consultation, and I will continue to explore whether there are ways in which, without breaching the normal methods of handling problems that arise in local authorities, we can alleviate the real problems for Lambeth's tenants that she so eloquently identified.

Question put and agreed to.

House adjourned.

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