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Housing (England And Wales)

Volume 934: debated on Tuesday 28 June 1977

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With permission, Mr. Speaker, I should like to make a statement on housing policy.

The Government are today publishing a Green Paper on housing policy in England and Wales, together with the first two parts of a supporting technical volume. Copies of these documents—the Green Paper, I regret, in typescript form—are available in the Vote Office. The third and last part of the technical volume will be published next month. My right hon. Friend the Secretary of State for Scotland is today making a similar statement about housing policy in Scotland.

Although the House has had in the past many White Papers on housing, this is the first time that any Government have sought to review their housing policy in a comprehensive and detailed way and to publish the results as a basis for further discussion.

The Green Paper enables us to take stock of the whole national housing situation: to record what has been achieved in the past as well as to judge what needs to be done in the future.

The main conclusions that the Government draw from the review are these:

First, housing conditions have been immensely improved in the last 25 years. Since 1951 we have completed 7½ million new homes, and renovated nearly 2½ million more. In 1951 more than two out of three households were living in physically unsatisfactory conditions or were sharing. Last year the figure had fallen to one in seven.

Secondly, substantial needs remain— not least in respect of those one in seven—2·7 million households—the bulk of whom live in unsatisfactory conditions, and new problems, particularly those of the elderly, the disabled, the single and the mobile, are emerging.

Thirdly, it is no longer sensible to consider housing as a single national problem but as a series of local ones requiring attention area by area.

Fourthly, now that the clearance of irredeemable slums is approaching its end, greater emphasis should be placed upon the renewal and modernisation of property wherever this is sensible. But a substantial level of new house building will still be needed, to deal not only with the backlog of bad housing but with the rising number of households over the next decade.

Fifthly, there remains a demand and need for an adequate supply of rented accommodation, which will be met overwhelmingly by the public sector. But, equally, there is a strong and growing desire for home ownership which should be met.

Against these general conclusions we have looked at arrangements for housing finance. The present general subsidies to tenants and owner-occupiers have been much criticised. Many proposals for change have been made, but the effect of most of the alternatives—when stripped to their essentials—would be significantly to increase the cost to the tenant and to the home owner of renting or buying his house. We reject this approach—first, because such increases would place an additional and unnecessary burden on millions of families, and, secondly, because they would act to check the increase in the supply of decent homes.

We therefore intend to maintain mortgage tax relief and the general subsidy to the public sector. But we do believe that the present housing subsidy system— established on a temporary basis in 1975 —should be recast and made more sensitive to the needs of those authorities with the most pressing housing requirements. On rents, we have in mind that increases should over a run of years keep broadly in line with money incomes.

In recent years there has been much comparison between assistance going to council tenants, on the one hand, and that going to homeowners, on the other. A great deal of analysis has been done on this aspect of housing finance in the course of the review, and this is published in the technical volume. This shows that to arrive at an incontrovertible balance sheet is impossible because the systems are so different and the assumptions so debatable. But the analysis does explode the myth that there is a clear imbalance of benefit one way or the other, and the new subsidy system gives us the opportunity to introduce more formal measures that would be regarded by most as broadly fair between the two sectors. To do this, we are suggesting that the minimum rate of general subsidy towards local authority housing interest payments should be related to the basic rate of tax relief on mortgage interest.

At the heart of our approach to meeting the housing needs of the next decade lies a new role for local authorities in developing effective local housing strategies which must embrace both public and private sectors, in partnership with all concerned—the building societies, housing associations and the housebuilding industry. These strategies will take into account the whole range of authorities' housing activities, including policies for the sale and acquisition of houses.

At the core of an authority's direct contribution to its local housing strategy will be a four-year rolling housing investment programme appraised annually with Government. To co-ordinate national and local policy, I propose to establish a Housing Consultative Council for England with the local authorities and to maintain existing national machinery with the building societies and the house builders. My right hon. and learned Friend the Secretary of State for Wales will be developing existing relationships with the Council of the Principality.

To help the programme of renewal we propose that the emphasis should go on bringing more unsatisfactory houses up to a basic standard, rather than fewer houses to a higher standard. Repairs-only grants will be made more widely available, and we are considering increases in existing cost and rateable value limits for improvement grants. Grants will be made more readily available for houses in multiple occupation and to private tenants.

On empty houses, we intend to speed up procedures for dealing with compulsory purchase orders. We shall also be urging local authorities to take more leases of empty privately owned homes and to reduce vacancies in their own stock.

As a Government, we welcome the clear desire of many to own their own homes, and we wish to facilitate this wherever we can. We intend to clear the path for home ownership for more people more quickly by special Government assistance for first-time purchasers. We shall introduce legislation for a Government savings bonus and for a matching Government savings loan of £500 interest-free for the first five years.

Building societies have a key rô1e to play. We make proposals for them to lend more down market to people with modest incomes and on older property. We also want to build on the steps we have already taken to secure a reasonably stable and adequate flow of mortgage funds. Partnerships between local authorities and building societies should be developed, with local authorities complementing the work of building societies, through topping-up loans and other measures. The local authorities will be enabled to bring their home loans rate into line with the building societies' rate.

Although it is unrealistic to think in terms of reversal of the secular decline of the private rented sector, it will remain important in London and other cities for some years to come. We are studying the problems of the sector in a special review of the Rent Acts, but in advance of this we propose to take measures to encourage letting by resident private landlords and the letting of accommodation over shops and other businesses. We shall also enable private tenants to apply for improvement grants.

So far I have spoken of proposals designed to improve the supply of, and access to, the right kind of housing. But we also propose a tenant's charter—a code of principles and practices designed to protect the rights of public sector tenants, with legislation to give them security of tenure. Tenants will be encouraged to carry out improvements and reimbursed for substantial improvements when their tenancy ends.

We also want to see wider experimentation with new forms of tenure, lying between home ownership and renting—equity sharing, co-operatives, co-ownership—and we wish to encourage the housing association movement, to which the Government have given so much backing already.

Last, but certainly not least, there are special groups of people who deserve separate attention—the elderly, the disabled and handicapped, the homeless, one-parent families. Proposals in respect of all of these are made in the Green Paper. Our policies will also help the single and the mobile.

We intend to hold consultations on the Green Paper with all the major bodies concerned and to allow until 1st November for comment. The proposals put forward have been conceived as a whole. The Green Paper should enable us henceforth to conduct a far more informed debate on housing policy, and it should enable us to meet more sensitively and accurately the wishes and needs of our people, for whom few things are more important than their home.

Will the right hon. Gentleman recognise that there is much in his statement and the Green Paper that I can greet with a cautious welcome. Half of the Green Paper is a package that abandons the more doctrinal obsessions of the Left-wing of the Labour Party, such as the commitment to cut £160 million of mortgage interest relief, and the other half embodies the policy of the Conservative policy as set out in "The Right Approach".

May I ask the right hon. Gentleman three questions? First, would he agree that, as rents are to rise in line with money incomes, this will represent a significantly higher rate of rent increases than those in recent years and certainly a faster rate than that laid down in the Housing Finance Act 1972?

Secondly, will the first-time buyer deposit scheme be available to council tenants wishing to buy their homes? Thirdly, will he recognise that in removing security of tenure in specific cases of private letting he is recognising the adverse effect that this has had on the provision of accommodation in the private rented sector?

We shall seek to use any legislation that the right hon. Gentleman produces to give a much more urgent and generous dimension to the policies to which he referred, such as the first-time deposits, flexibility in private letting and council house sales.

I note what the hon. Gentleman has said. I find far less doctrinal obsession in my party than I do among Back Benchers opposite. On this side of the House, we are addressing ourselves seriously to the problems of housing and all kinds of tenure. We are not seeking to single out one form of tenure for special adverse treatment while treating another even more generously than at present. That is the essential difference between us.

I can give the hon. Gentleman one assurance that will delight most people in the country but may disappoint hon. Members opposite. I do not envisage that increases in rents will be higher under the future formula than they have been in the past two or three years. I hope that this assurance will give the hon. Member for Henley (Mr. Heseltine) some satisfaction.

It would be invidious to restrict the opportunities for taking part in the loan scheme and to exclude particular categories who may wish to become home owners. Therefore council tenants will have the opportunity to take part in the scheme. The question whether, as we have acquired an extra sum that we hope will make home ownership available to more people, the scheme should lead on to the purchase of council houses is a different matter and will depend very much on the policies of individual councils.

I believe that security of tenure in the private rented sector must be sustained and maintained. There is no question about that. However, I think that we need to look a good deal more carefully at those cases where there is a resident landlord and where there is vacant residential accommodation over a shop or business premises. We have to give special attention to these categories.

Order. Before I call the next hon. Member, may I make an appeal to the House? If questions and answers are brief, I shall be able to call more hon. Members than would otherwise prove possible.

I warmly welcome my right hon. Friend's refusal to give in to the pressure from Conservative leaders to cut council house subsidies, which would mean higher rents, but is he aware that the Labour Party will continue to press for a restoration of the cuts in public expenditure, including the cuts in housing? Is it not now possible and desirable to restore those cuts in view of the remarkable improvement in the financial situation and the fact that 250,000 building workers are unemployed?

I thank my hon. Friend for his general welcome. With regard to the cuts in public expenditure, I hope that I have already given evidence that I shall be seeking to find ways, as the situation improves or, in the meantime, by using sources of finance other than those that directly contribute to public expenditure, not only to sustain but to increase the public expenditure programme in housing. The extra £35 million given to the housing corporations, of which the House took note only a week ago, is an earnest of that intention.

As there are 100,000 houses in Wales that are still unfit for human habitation—a higher proportion than in the rest of the United Kingdom—will the right hon. Gentleman consider using the job creation scheme to supplement and speed up some of his proposals?

I take note of the hon. Gentleman's suggestion and will consult my right hon. Friend the Secretary of State for Employment about it. I am aware of the higher proportion of unfit houses in Wales and I believe that the new approach of myself and other Ministers, including my right hon. and learned Friend the Secretary of State for Wales, of dealing with housing problems on a local basis and increasing the possibility of balancing public expenditure between new building and improvements will contribute to the end that the hon. Gentleman has in mind.

I do not wish to indulge in instant politics on a document that has only just been lodged in the Vote Office, but my right hon. and hon. Friends, the majority of whom seem to be at Spithead, will welcome the general approach in the statement, especially the acceleration of compulsory purchase orders and the devolution of power to local authorities.

Will the Secretary of State now seek to end the discrimination against rural districts in rate support grant, such as occurs in Cambridgeshire, which has had the worst of all possible deals? While encouraging local authorities to make available short-term lettings, will the Secretary of State give similar directives to the Services, which are sitting on a large number of empty houses that could be used in the short term by local communities? Will the Secretary of State also look into the growing malaise of environmental health officers who are unable to deal speedily with unsuitable housing?

I welcome the hon. Member's general argument that perhaps we would be wise to study the document before committing ourselves to too many instant judgments. That is the general mood of the House. I have noted his questions, which were not directly focused on the statement but which I suppose have a relationship to it. The purpose of the statement was not to discriminate against rural areas. Our purpose is, above all, to try to identify needs and to meet them—in both town and country—in as generous way as possible.

My right hon. Friend the Secretary of State for Defence is well aware of the problem of the short-term letting of Service housing. There have already been disposals of surplus Army dwellings, and no doubt that will continue. The matter is one of judgment. We do not want to reach the absurd situation where we are disposing of houses that we might need later.

Does my right hon. Friend not agree that although the proposals in the statement are likely to be helpful, the rejection of any proposals for a fundamental financial change is likely to result in our housing problems being substantially worse in 10 years' time than they are today? Can my right hon. Friend dispute that through mortgage tax relief we are able to borrow 50 per cent. more than we could otherwise borrow? Does he not agree that that must have influenced the escalation of house prices in the last 15 years? Does he agree that we are spending too much public money on subsidising incomes and far too little on bricks and mortar? Does he agree that we are spending too much on those who have houses and too little on those who need them?

I pay great attention to my hon. Friend, who has a great knowledge of housing matters. He has contributed to all the debates on housing policy since I have been Secretary of State for the Environment. But I do not of course agree with the propositions that he has put forward. Of course, I do not agree that there would be an advantage to our people if we were to allow, across the board, unnecessary increases in house prices; I do not believe in that. What purpose would that proposition serve? Is it supposed to bring about a better distribution of housing resources? Are we to treat housing simply as another commodity influenced by the market laws of supply and demand? Can my hon. Friend convince himself that by reducing public assistance to both main forms of housing —local authority and owner-occupied housing—we would make further and swifter progress in making up the backlog of need that still exists in our society?

The great difficulties that we have had in the last three years have been tackled mainly by increases in housing subsidies. The increase in public sector housing investment has not only been maintained but has been increased substantially over the years.

Can the Secretary of State spell out exactly where are the incentives to further owner-occupation? Will he explain to the local authorities how they are to top up mortgages when they have so little money available? Does the 1st November date mean that there is no chance of a change in the improvement grant situation until November?

I shall examine the hon. Member's last question. On the generality of the proposals it is not unreasonable to allow a period to enable people to give us their views and to enable us to consult the many organisations and authorities concerned. I believe that there will be an incentive to owner-occupation of an additional character, which is aimed specifically at the first-time purchaser.

I agree that local authorities' mortgage lending has been curtailed. That was one of the ways in which I sought to mitigate the cuts in public expenditure. We have been able to bring the building societies into a relationship with the local authorities, although it is not wholly satisfactory as yet. This is bound to assist. Nevertheless, the local authorities will be able to operate by topping up the mortgages, which will make home ownership available to more people.

Will my hon. Friend allow me the instant judgment of saying that the Green Paper seems to be a sensible compromise of many of the difficult issues that he has had to consider, particularly in relation to local housing strategy? If capital is to be allocated according to the housing strategy prepared by local authorities, is it not essential that they should propose that strategy on a common basis? Does he not agree that the housing lists should be on a common national basis so that they are similar in each area?

The sensible thing is to build upon the success, by and large, of our housing programme. The trend of success is to be seen in the figures. We have to work out in more detail with the local authorities how the strategy is to operate. We must have an assessment of needs on a common basis, otherwise we shall not be able to relate our assistance and programmes to them in the sensible way that we would wish.

Further to the question posed by the hon. Member for York (Mr. Lyon), is it true that in the new arrangements the amount of resources going to each local authority will be determined by the Government and will not, as hitherto, be open-ended until July?

That is so. But I believe that a change from a general and national shortage to a clear position where some local authorities have made progress and are in a better position than others means that we should concentrate on those areas where the needs are greatest. That means that we must assess with local authorities how great are their needs.

Will my right hon. Friend accept that his proposals for the public sector will bring great satisfaction to council house tenants? Does he accept that they will be particularly satisfied with his proposals for security of tenure and the introduction of a tenants' charter? Will that tenants' charter be of an advisory nature or do the Government intend to ask local authorities to adopt a specific charter?

Does my right hon. Friend accept that if he wishes to bring older properties into private ownership he will have to liaise closely with building societies in order to secure mortgages on older properties because at present they refuse to lend against them?

I agree with my hon. Friend's last point. That is what I am trying hard to do not only on a national level but locally. I am trying to establish a continuing relationship with particular building societies and local authorities. Without that we shall not achieve what my hon. Friend would wish —a greater number of older properties being purchased for owner-occupation.

In the first instance it would be sensible to make the tenants' charter something that is advisory and strongly recommended by us, without closing the possibility of legislation at a later stage. With regard to security of tenure, I believe that that requires legislation.

Will the Secretary of State confirm that it is no longer the Government's policy that council rents should cover 50 per cent. of housing costs, as set out in the public expenditure White Paper last year? Will he say how the saving of £180 million, which would have followed, is now to be found from his Department—or is it to be added to the borrowing requirement?

Will he confirm that if rents had risen as fast as incomes during the last three years, they would have risen far more than they have in fact risen over that period?

Yes, they would have risen faster, but they would have risen at a very moderately increased rate and in a regular and orderly way and would have been related to people's actual incomes as they increased.

I think that the House has got into something of a muddle about the 50 per cent. target. This figure appeared in the last but one public expenditure survey committee White Paper It was, as it were, an estimate of what was to happen, not a target, and because the interest rates and interest payments are so important in this set of figures, it is, frankly, a rather meaningless figure to put forward as an indication of what rents should be. For example, it may well be that if interest rates went up far faster than incomes, we should find an even lower percentage than 50 being covered by income. On the other hand, if interest rates, and therefore housing accounts, were to be relieved, with falling interest rates, of a substantial part of their burden, it is possible that the 50 per cent. figure could be exceeded.

Is my right hon. Friend aware that we very much welcome his willingness to experiment with new forms of tenure, particularly equity sharing and various forms of co-operative housing, with which we have made nothing like as much progress as we ought to have made?

My right hon. Friend referred to the need to enable local authorities to lend for owner-occupation at the same interest rate as is charged by the building societies. In view of the importance of this issue to many thousands of less-well-off owner-occupiers, will he take urgent action on this and not wait for the fairly lengthy consultation procedure on the rest of his proposals?

I welcome what my hon. Friend said about the increased effort that should be put in, but a great effort has been made by my right hon. Friend the Minister for Housing and Construction in developing alternative forms of tenure or of ownership, half-and-half equity sharing, and co-operative housing in this country. We shall continue with these efforts.

As quickly as I can, I shall try to make it possible for local authorities to end at the same interest rate as that charged by building societies. I am advised that this requires legislation. [HON. MEMBERS: "Why?"] I understand that it would be excluded from the housing revenue. The difficulty is that at present they are not able to do this, and therefore we must change the law accordingly.

Is the Green Paper a menu without prices or does it carry clear estimates of by how much public expenditure will be increased and in which places, and where it is to be saved and by how much?

As the hon. Gentleman knows, the expenditure proposals are set out in considerable detail in the PESC forecasts, which appear at regular intervals. The implications for housing and the breakdown of the housing budget in the PESC forecasts will continue in the ordinary way. That will give the hon. Gentleman all the precision that he needs.

Taking into account that my right hon. Friend has said that the future rent increases will be geared to increased incomes, will he bear in mind that almost 50 per cent. of existing council tenants receive financial support in some way or other, either by rent rebate or by social security repayment? Will he give an assurance that the increasing amount of money that is needed to finance an increase in building programmes will not be loaded too heavily on the remaining 50 per cent. who already pay substantial rents?

What I am concerned to do, as I am sure my hon. Friend would readily detect, is to link rents in the future in a sensible way with the capacity to pay. But obviously those council tenants —and there are very many of them—who are today receiving rent rebates and other forms of social security assistance will continue to do so.

Will the Secretary of State recognise that there would be a general welcome for a statement which reflects the abandonment, albeit belatedly, of a belief that massive public sector programmes of construction and munici-palisation can solve all problems?

Is he further aware that there will also be a welcome for his greater emphasis on renewal and modernisation? But in that context, after all this time, is it not rather unfortunate that he is considering increases only in eligible cost limits? Will he bring forward proposals before the House rises and include in improvements such matters as improvements in insulation as well?

We are looking at this, and in particular areas of the country we may move ahead of the general easement ci the present limit. But I think there is a danger of exaggerating too much the elfect of the eligible cost limits on the take-up of improved investment grants. I accept what the hon. Gentleman said about the emphasis on renewal and modernisation. It is not all that new. I have been saying it ever since I have been at this Dispatch Box, and my predecessors have also done so.

I think that the mood in the country has changed significantly and is now against massive redevelopment and very much in favour of renewal and modernisation. I assure the hon. Gentleman that I have not abandoned my belief that the public sector and the public sector programmes have a very important, indeed crucial, part to play in the provision of housing for our people.

Will the Secretary of State confirm that the policy of maintaining tax relief on mortgage interest will extend to those houses at the upper level of the mortgage scale?

Secondly, will the Secretary of State tell us whether the savers' bonus for first-time buyers is likely to include a cash grant from the Government? Is he able to say in which ratio this would be to the couples' savings?

I do not intend to change the present system of tax relief as it relates to owner-occupiers. In other words, the house limit still remains, as my predecessor announced it, at £25,000, and relief will not apply to second homes.

I was asked about first-time buyers and the savings scheme. I think that it would be more sensible for the hon. Gentleman to have a chance to study the document, because it is fairly detailed.

Will my right hon. Friend not agree that one of the main inhibitions of local authorities in building is the high rates of interest which they have to pay when borrowing on the money market?

Will he indicate whether there will be any fundamental change in this in order to assist local authorities in carrying out building programmes?

Will my right hon. Friend not agree also that his plans for positive discrimination will certainly assist the areas of great housing stress, such as Merseyside, and, indeed, other areas in the United Kingdom?

It is certainly my intention to concentrate assistance and aid and housing resources on the areas where the needs are revealed clearly. Certainly Liverpool, in my judgment, is one such area, and there are many others.

I certainly agree with my hon. Friend on the great importance of interest rates, and therefore I am sure that he, like myself, greatly welcomes the change in the general trend of interest rates. This is not only helping, and will continue to help, owner-occupiers but makes it easier for builders to raise finance for building, which is very important. The rate was very high indeed on the loans they had to negotiate six months ago, but it has been coming down very helpfully.

Does the Secretary of State appreciate that giving more security of tenure to council tenants makes it more difficult for local authority housing committees to overcome the under-occupa-tion of council houses? What is the sense of giving security of tenure to a couple whose family has grown older but who are continuing to live in a large council house, so denying a young family a house which they should be occupying?

The great majority of local authority tenants enjoy security of tenure. We all know that. Nevertheless, there are certain cases in which in my view it would be right for them to enjoy and have the sense of security that can come only with a statutory enactment. I can only deduce from his question about under-occupation that the hon. Gentleman's knowledge of the real world of council tenants is not as great as his knowledge of the real world of the construction industry.

In replying to an earlier question, my right hon. Friend indicated that one of his objectives in making his statement was to improve the activity rates in the construction industry. Does he really believe that this statement goes far enough to produce that effect? If so, how soon does he expect that the intolerably high levels of unemployment in the construction industry will begin to fall?

The major purpose of the statement is to deal with the longer term, to deal with housing policy from now on. The statement addresses itself to the general questions of tenure and the general questions of financial support to the two sectors. But I believe that with the improvements that we have seen in interest rates, it is possible to envisage an improvement in the pick-up of private sector building, and we are ourselves sustaining a high level of new building and expenditure in the public sector.