Council Housing

Part of the debate – in Westminster Hall at 9:30 am on 30th June 2004.

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Photo of Austin Mitchell Austin Mitchell Labour, Great Grimsby 9:30 am, 30th June 2004

It makes no sense. The whole system is about the negation of choice. We think that choice is appropriate for the middle class but not desirable for tenants of council housing. That is a monstrous social assumption on the part of the Government. I can quote against that assumption some words from my right hon. Friend the Chancellor of the Exchequer. He said that

"tenants have to fill in a ballot form, but there's only one candidate on the list . . . this sounds more like a medieval dictatorship than democracy".

Unfortunately, he said that in 1996, but it sums up the situation that we face in council estates today.

The first question, therefore, is why the Government are not providing the real choice that tenants and councils want, which is the fourth option of staying with the council and of council housing being financed by the council. That can be done—I shall come to it in a moment.

Secondly, what happens to the areas that vote against privatisation? When my right hon. Friend Mr. Byers was Secretary of State for Transport, Local Government and the Regions, he said that it would be a Government responsibility to help tenants who voted to stay with the council to reach the decent homes standard. However, my right hon. Friend the Minister for Housing and Planning said in effect that if tenants voted against privatisation, they had to rot in hell, or whatever the circumstances of their estates were. If they should vote against—as if this was some kind of European referendum in Denmark—the Government would treat them as if they did not exist and ignore their plight when it came to reaching the decent homes standard. I think that he has retreated slightly from that statement, but he has also unilaterally torn up the last manifesto commitment, which was to bring all public housing—not just the housing of those who voted for privatisation, but all council housing—up to the levels of decency. So what happens now? What is the latest opinion in the Office of the Deputy Prime Minister on how tenants who vote against privatisation should be treated and helped to reach the decent homes standard?

The third case against what is going on is simply that it will not work. There are 2.5 million council homes and 6 million people still in council accommodation. We cannot get all of them to ballot for privatisation and to submit a choice between the three alternatives by July 2005 as required. I emphasise that there will almost certainly be a general election early next year, in May or June. The deadline for submitting a choice by local authorities between the three undesirable alternatives is July. Is the ODPM seriously suggesting that in the run-up to and during a general election, we will be bashing the council estates and councils and dividing the Labour party on this issue to force them towards privatisation? It is inconceivable that we should behave in that fashion.

I hope that my fourth point can be answered. The process of privatisation and the three undesirable options, when they are accepted, help the better areas of council housing, not the most deprived areas, because the ballots have been successful in areas with better council housing and better prospects. Only six of the ballots were held in the 100 most deprived areas of council housing. We are channelling the money the wrong way: not to the deprived areas, which most need the renovation and improvement, but to the more prosperous areas. I emphasise again that this privatisation choice that is supposed to give tenants more power does not do so. The tenants are conned into believing that they are going to take an active part in running the properties under privatisation. In fact, the Audit Commission said:

"Many tenants of such housing associations feel that they are on the board to represent a constituency of tenants. Often this misapprehension is a direct result of mis-selling the role at the time of the ballot. At the time of transfer, tenants are often led to believe that they will have an explicit role in representing the interests of their fellow tenants on the board. This is not compatible with the accepted principle that dictates that as a board member they have to work for the interests of the organisation, that is, that the director's responsibility takes supremacy."

The tenants are simply being conned. That has happened on a massive scale in North East Lincolnshire, where the support of the tenants' assembly was invoked by offering them five places on the board—it has to be said—in the belief that they would be running the new operation; but they will not be doing so. The ODPM is effectively conning tenants. Experience proves that tenant representation is developed by councils, but withers under registered social landlords. That is the record of the past.

The RSLs are going to generate huge surpluses once they become cost-positive in about 20 years. There is no requirement that those surpluses be used to improve the housing in the area where the RSLs have been given council housing. They can be used for all sorts of purposes by the formation of subordinate companies.

My last point is the most telling of all. I hope that my hon. Friend the Under-Secretary will help us with the mathematics by giving us a considered reply—if not now, later. The whole process is expensive. Just consider the costs of this folly of insisting on privatisation. First, massive sums of debt are being written off. In the past year, £800 million of debt was written off. The total allowance by Government for council house building—although they are not allowed to build any more—improvements and regeneration was £834 million. We can afford £800 million to write off debt, but only £834 million to improve council houses.

Secondly, there is the cost of the gap funding and the dowries that have to be given to the new social landlords, particularly in areas of negative equity, such as my own. Huge sums have been devoted to gap funding to help privatisation. In other words, huge sums have been used to give away the council housing that belongs to all of us. There is also the shift of housing benefit from other tenants, which the ODPM has been paying this year, on to social security as a result of privatisation, the cost of which is estimated at £249 million per year.

Thirdly, there is the cost of all the consultancies and surveys and the propaganda that has been pouring out to con tenants, which the Audit Commission estimates at £430 per property. That is used not for housing but to enrich consultancies and pour out propaganda. The cost of renovating council housing is higher in the private sector, because it pays higher interest rates and much higher salaries to its top management. The Audit Commission estimates that over a 10-year period it cost £1,300 a year more to renovate council housing in private ownership than by the councils

Arm's-length management organisations cost about £2 billion in the three years up to 2005–06. The sum given to the Glasgow ALMO was equal to the cost of renovating and reaching a decent housing standard for every council house in Scotland.

Finally, there are the costs of a year off for the council officers and housing departments while they propagate and propagandise the case for privatisation. In North East Lincolnshire, repairs have not been done, more houses have been voided and boarded up, estates have been left to rot for a year, while people from the council have gone round propagandising the case for getting rid of council housing and for getting their jobs transferred to registered social landlords so that they can get more pay. That has compounded the situation, which was already bad enough.

All that money has been spent, and for what? Satisfaction, as measured by the ODPM's own surveys, has increased by 2 or 3 per cent. as a result of privatisation. There has been a substantial decrease—5 per cent.—in satisfaction with the repairs. The tenants are not satisfied by the process. The ODPM argues that it separates management from strategy, but there are no grounds to say that that is an improvement or a benefit—none at all. It has not been able to produce any evidence for that assertion. There are small gains and huge costs.

We are wasting millions of pounds to give away billions of pounds of public assets in council housing, as a result of sheer, simple dogma and ideology—the dogma that private is better than council housing, that private is better than public. It is as if we were changing the ownership of the deck chairs on the Titanic as it went down—the process is as futile, fiddling and useless as that.

I say to the Minister that there has to be a better way—and there is. It is the fourth option: let the councils run their own housing, build and make their contribution to solving the housing crisis. We would not have to devote massive sums of public money to council housing to finance the fourth option, although I would favour that. It would not be a massive cost. We would have to let the councils keep their housing revenue accounts, all of them—let them keep the rents and use them for housing purposes. Since 1990, we have taken £13 billion out of housing revenue accounts to finance the housing benefits of other council tenants—£13 billion is a major part of the £19 billion cost of refurbishment. The daylight robbery process has looted and pillaged housing revenue accounts and we are still taking £1.5 billion a year out of those accounts.