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Council Housing (Nottingham)

Volume 404: debated on Tuesday 6 May 2003

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1.30 pm

Local tenants and residents groups asked me to raise their fears about the future of council housing, and I am grateful that Lord Rooker, the Minister for Housing and Planning, has agreed to visit Nottingham. When he does so, he will have the pleasure of meeting the newly elected leader of the city council, Jon Collins. I place on record my congratulations to Jon Collins—he is a very capable person, from whom we expect great things—and my thanks to his predecessor, Brian Parbutt, and his predecessor, Graham Chapman. They were able leaders of the council who shared the concerns of all the people in Nottingham about arm's length management organisations.

I also welcome the Under-Secretary of State, Office of the Deputy Prime Minister, my hon. Friend the hon. Member for Harrow, East (Mr. McNulty). It is the first time that I have had the pleasure of taking part in a debate with him. I do not know whether he will thank me for saying so, but I believe him to be one of the most able of the new generation of Ministers. If he is allowed to, I believe that he will produce creative and inspirational answers to some of the problems that we face. Just as importantly, he was the leader of a council in a previous life and he brings that experience to bear in this debate.

I will step back a little to provide some perspective on the issue. As we know, the dominance of the Government in our political system has often had a suffocating impact on our Parliament, but nowhere are the effects of our monopoly politics more obvious than in the massively imbalanced relationship between central and local government. Central Government command, but local government is often little more than an agent. The only surprise in 30 per cent. of people voting in last week's local elections is that the figure was so high, given the constant atrophy of local government powers.

Arm's length management organisations—ALMOs—are the latest bright idea to be imposed on the localities by central Government. In many ways, the Prime Minister is lucky that the legislation to impose foundation housing on much of the electorate was passed when we were all so optimistic after the 1997 election, unlike the legislation on foundation hospitals and foundation schools, which may have a more difficult passage.

It need not be like this. This country has a proud tradition of municipal housing. Not long ago, Nottingham city council and its tenants celebrated the 75th anniversary of council housing in the city. Alan Allsopp, the assistant director of housing, told me that, over that period, successive municipal administrations of all parties constructed more than 50,000 homes in the city. That is a record of public provision of which generations of local councillors, public servants and the residents of the city have every right to be proud.

In an era in which our political leaders seem to have little faith in the ability of the public sector, politics or even local government to deliver answers and in which only schoolboy economics from No. 10 are given any validity, this massive local government achievement should give us confidence that such an alternative could exist again in the public sector, albeit in a different form. Local authorities tackled the most appalling slum housing in Nottingham, responded to admonishments to build homes fit for heroes and did their best to ensure that decent housing could be offered to the citizens of Nottingham.

Many homes in the eight large council estates in my constituency of Nottingham, North are a part of this legacy. They were built by the city council for its citizens. We can and should be proud of that legacy. The homes are good: they are solid houses with gardens, or attractive bungalows. There is no deck access, and there are no tower blocks. The majority are popular with tenants, and it is no secret that a fair number have been bought by their tenants over the years. Most observers and tenants unfamiliar with the definition of a decent home would say that those properties represent their idea of a good home—a nice house with a reasonable garden in a well laid out estate.

However, as the Government recognised, we were told in the 18 years up to 1997 that we should not be so proud of council housing. The 18 years of Thatcherite thinking sank their roots deep into political thinking—a particularly acute problem for those who had never thought through a clear alternative. I understand that, at the fag end of those years, the civil service proposed the dismembering of council estates. Thankfully, in 1997 a newly elected Government came in. However, after a year's moratorium, they too seemed to propose a dismembering of council estates. Are those traditional values in a modern setting, or civil service values without political control? Hon. Members can take their choice.

There is now an alternative for this Administration or the next to think through. They could free local government, get off its back, let it make its own mistakes and successes, and let the electorate, not Whitehall, hold it to account and decide whether it has been successful. All that depends on democratically establishing independent local government, ending Whitehall control over the last country in the empire, and letting the natives find their own answers. That would be the antithesis of central control. To partner that, local government would need the financial freedom to raise its own revenue and be responsible for its own borrowing. That would require a leap of policy and imagination that no one seems yet to have dared raise with Sir Humphrey.

Nottingham, like many places, was put in a financial straitjacket when it came to carrying out the modernisation works required to keep its homes in the condition that those who built them would have expected them to be in. I have seen the impact of that struggle in my constituency. In its efforts to be a responsible landlord, the city council has had to repair things that should have been replaced. It has had to put off modernising homes that need modernisation. Throughout, however, the city council stuck to the principle that tenants and residents of the estates that it managed deserved not only a decent home but a decent environment in which to live.

Priority was given to that broader philosophy, and it was backed up by resources. The city council's housing service, Housing Direct, sums up that philosophy with its slogan, "Decent homes in a decent neighbourhood". The incoming Labour Government recognise the challenge of the housing modernisation backlog, and that recognition is genuinely and warmly welcomed in Nottingham. Its chosen weapon is the decent homes standard, which has much to recommend it. Its emphasis will ensure that some of the problems of repair and maintenance raised by tenants will be solved.

However, I repeat that the really big issue for tenants is not the age of their kitchen or the number of cupboards specified in the decent homes standard, but the environment in which they live. The outside environment is just as important as the dry statistics on what should be inside the home. The outside environment must be high quality and sustainable. There must be proper walls and fencing, user-friendly layout, trees, road improvements, safe play areas, off-street parking and secure boundaries. It would be perverse if we aggravated the problems of neighbourhood decay that have blighted other cities in the midlands and the north because we have pursued improvement of the internal environment at the expense of the external.

The decay in other cities in the midlands and the north has been fought off, not least by recent council leaders whom I have mentioned—Councillors Brian Parbutt and Graham Chapman foremost among them. They have realised that we must prevent the decay before it starts. We hope that Government policy will not inadvertently reverse the great effort that has gone into making housing in Nottingham such a success in recent years.

The well known slogan in the private housing sector is "location, location, location". We cannot change the location of our social housing, and must therefore ensure that the environment in areas of such housing is modernised and improved to keep pace with accepted standards, and join up our thinking on antisocial behaviour, poor educational attainment and what goes on in the streets.

Nottingham held a successful series of consultations for tenants to listen to residents' views about the future of council homes. Tenants were very clear in their opinions. They wanted to rent their homes from the city council. Many of them saw no reason why the council should not remain their landlord and why money should not be made available to modernise their homes. However, although it is important for Ministers to see that councils separate the management of housing services from their strategic housing functions, few of us have ever come across a tenant who has argued that the service that they expect to receive from their landlord would be better, "If only the council would separate its strategy for housing from the management of my home."

Nevertheless, we are where we are, and the council cannot be blamed for trying to make the best of that. Tenants welcomed the opportunity to learn more about the challenges that the council faced to improve the standard of their homes, and to express their views on the way forward. If councils are denied the ability to invest as they see fit, arm's length management is the only opportunity to fill the investment gap and to meet the decent homes standards by 2010.

Such is the power of central Government that I suppose that we must be grateful for having a choice rather than the imposition of stock transfer, and the commitment to provide a means of increasing investment in social housing—which has recently been reinforced in the Deputy Prime Minister's regional communities plan—is welcome. It provides a realistic prospect that the much-needed renewal, modernisation and maintenance can be got under way. Nottingham's insistence on greater involvement of tenants at the highest levels will ensure a vigorous and renewed focus for discussions between tenants and landlords on priorities and the future of council housing.

The relaxation of the star rating required of local councils to bid for ALMO cash from three stars to a rating of two to three stars will enable those authorities that are striving to improve to take that route. I know from the quality of the local officers and councillors in my city that they will seize that opportunity with both hands, if the Government encourage them.

However, I would appreciate the Minister's comments on a number of issues. I understand that the funding for ALMOs permits only 5 per cent. of funds to be spent on the environment, as the focus is on meeting the targets for decent homes by 2010. Because a greater sum of money is required to ensure the sustainability of certain neighbourhoods and areas, and because that may be supported by the tenants, is any flexibility proposed for that percentage? Good work in retaining good neighbourhoods and environments alongside good stock could be lost if we are not allowed to support environmental works as well as housing improvements.

I am also concerned about the adequacy of the money that is allocated. I will not bid for money in the next round because I know that the Minister would tell me that, at this juncture, that would be premature. However, I will press him with a different question: if local councils cannot have the housing money that they need without being ALMOs, will they be adequately funded if they take that option? I understand that 14 authorities have already submitted an expression of interest for the next round of bidding, which amounts to £1.5 billion. Together with the ALMOs that have already been approved, that is likely to represent a large commitment with regard to the allocations announced in the spending review. Are there any proposals to re-examine the allocation of moneys in the future? If ALMOs are successful, we would hope that those authorities that can become ALMOs can access some of this money.

I turn now to the question of allowing ALMOs to succeed. Many tenants groups in Nottingham have told me that they are anxious that ALMOs are underpowered and that, if they fail, that would be the slippery slope to privatisation. If they fail, one would imagine that privatisation rather than municipalisation would be next on the agenda. Is consideration therefore being given to ensure the continuing role of ALMOs in the social housing sector? That could be done by granting them greater freedom in, for instance, borrowing from their own resources, or through the retention of a greater proportion of right-to-buy capital receipts, the delegation of responsibilities from local authorities, such as the issuing of antisocial behaviour orders, and other things that would put ALMOs on a more level playing field with registered social landlords.

Almost everyone involved in housing wishes that we were not in the current situation. However, we are in it, so I assure the Minister that everyone in Nottingham—from tenants' groups to councillors and officers of the council—is determined to grasp the opportunities that the Government are offering. I hope that the Minister, in answering some of my points, can help us to make ALMOs a success in Nottingham and that, above all, he will reassure those tenants who, even though hon. Members may be familiar with the legislation, are only now becoming aware of the issues. With the effort of people locally, the commitment of professionals and those from the political level in Nottingham, and the good will of the Minister, we can make ALMOs the success that he and I wish them to be.

1.46 pm

The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister
(Mr. Tony McNulty)

I am grateful for an opportunity to explain a key element of the Government's housing policy. This debate is timely and on a subject that is of immediate and profound interest to the constituents of my hon. Friends the Members for Nottingham, North (Mr. Allen) and for Nottingham, East (Mr. Heppell).

Nottingham city council owns just over 34,000 properties. Following a 10 per cent. stock survey between November 2001 and April 2002, the council has assessed that some 47 per cent. of the stock—16,000-odd properties—does not meet the decency standard. I am pleased that my hon. Friend the Member for Nottingham, North and the council are taking such an active interest in overcoming the problem of substandard housing. I join my hon. Friend in congratulating Nottingham city council on setting up the strategic partnership and on much else that it has already done in the city.

I shall not dwell on the matter, but there was much in my hon. Friend's introduction with which I profoundly disagree. We are not talking about foundation housing. If we were and if that was before our legislature today, hon. Members would be as foolish to vote against it as they would be to vote against foundation hospitals tomorrow. Although there is a proud tradition of municipal housing up and down the land, the best that one can say is that since those municipal houses were built, the record of maintenance, refurbishment and turning estates in stable communities has in some areas been less than proud and sustainable. That is partly why we are here today.

There is a range of options on social housing, but we are not dismembering council estates. I do not agree with my hon. Friend that most housing practitioners wish that we were not here. I have gone round much of the housing sector over the last year, and that has certainly not been my experience. Tenants have expressed any number of preferences up and down the country. However, despite the odd setback, such as in Stockport and Birmingham, there is still a considerable record of achievement from those councils that have chosen large-scale voluntary transfer. The tenants' voice has been measured by ballots, and tenants have said precisely that they think that they will get a better service elsewhere.

However, I take the three key points to which my hon. Friend referred. The Government want to play their part in tackling the challenge. From talking to my hon. Friend and my hon. Friend the Member for Nottingham, East, I am keenly aware that chance or luck is not the reason why Nottingham is not in the same position as other midlands and northern towns, in terms of low demand, mass abandonment and other problems. That has taken a lot of work, and I congratulate the city council on it.

Also, as my hon. Friend the Member for Nottingham, North said, my noble Friend Lord Rooker will be visiting the city on 11 June, and has already had a meeting with my hon. Friend to talk about the option of an arm's length management organisation. It might be useful if I very briefly explain something about the background of ALMOs.

ALMOs have created a new movement in social housing. Local authorities are being galvanised and transformed. The ALMO boards have attracted good-quality committee members. I met the new National Federation of Arm's Length Management Organisations just last week. I told it that, rather than—as some detractors would have it—the ALMO model being large-scale voluntary transfer by the back door, it is community empowerment by the back door, and the front door. Where they have been most successful, ALMOs have taken their tenants with them and have put their tenants in a really powerful, empowered, participating position. That is to be commended.

We must always remember that the ownership of the stock remains with the council, and the tenants remain secure council tenants. In the unlikely event of ALMO failure, that remains the case. I do not understand the point that was made about tenants fearing that a failed ALMO marks a step on the road to privatisation. Perhaps we could discuss that point another time.

Currently, there are 25 ALMOs in operation; they are responsible for managing and improving around 360,000 properties, or one in eight of all council homes. Between them, round one and round two ALMOs are seeking to invest an extra £1.8 billion to bring all their stock up to decent home standards. It is a huge investment. In many areas, tenants are already seeing the benefits in terms of physical improvements, and, perhaps more importantly, an improved relationship with their housing managers. I congratulate all round one ALMOs that qualified for additional funding by achieving the necessary rating of at least two stars from the housing inspectorate. I particularly congratulate the three that achieved excellent three-star ratings: Derby, Westminster and Ashfield—the last being about the closest to my hon. Friend's constituency. Some inspections of round two ALMOs are already in progress, with some due later this year. We await the results with interest.

ALMOs have got off to a great start, but we must not become complacent; there is still a lot to do. Many ALMOs have made tremendous progress to achieve their two or three-star housing inspection rating. Now we want them to sustain that success and bring further improvements for tenants.

The bidding process, the need to win the support of tenants and other stakeholders, the opportunity to operate at arm's length and the need to earn at least two stars from inspectors all appear to have triggered some very constructive thinking about the delivery of services. Very often, the process of bidding—or thinking about bidding—galvanises real concerns about tenants, and an involvement of tenants in a way that does not happen when something is simply imposed from on high, or by the council. That catharsis is very welcome.

Last week, I had a very constructive meeting with representatives of the National Federation of Arm's Length Management Organisations, who impressed me with their enthusiasm and ideas for developing the ALMO concept. I have invited them to take more steps forward. I did not then, and I certainly shall not today, give a thumbnail sketch of what I see ALMOs being some five or 10 years down the line. We have learned already that the key to the success of ALMOs is making the process about more than bricks and mortar—about the environment; about regeneration; about a comprehensive concern for the whole community. There is not much point in having decent homes and refurbished homes in areas where people do not want to live. Nottingham's record up to now is something that, whichever option is chosen, we want to build on.

I discussed with the national federation many of the issues that my hon. Friend has raised, particularly about flexibility, and how ALMOs go forward in terms of a level playing field and other elements. I have told it, for now at least, that the one thing that cannot happen is that ALMOs be set in aspic as a 2001 or 2002 solution to problems that will still exist in 2010, 2020, and beyond. They need to evolve, and discussions are taking place about how that might happen over coming years. I do not think that that will necessarily impact on the criteria for rounds three and four, but it must be an organic and evolving model—a dynamic model, rather than a fixed one. That is entirely right.

As for flexibility, we have just introduced the 5 per cent. flexibility rule for issues such as the environment. We want to see how that beds in before we go any further in topslicing ALMO money. In addition, my hon. Friend made points about other flexibilities to allow best-performing ALMOs scope for borrowing and other such elements. Those things are on the agenda and are being considered. I can say no more than that; they will not happen in an instant.

I thank my hon. Friend for that helpful reply on the question of flexibility. I take it that he is saying that if the council, the ALMOs and the tenants all felt that the balance could be adjusted, he would be open to their representations for more flexibility than 5 per cent.

I would certainly be open to listening to their views as and when ALMOs are up and running and developing. We put in the 5 per cent. flexibility rule precisely to take into account aspects of the shift from bricks and mortar to elements such as regeneration of the environment. That will be reflected, at least in part, in the bidding criteria for successive rounds—that is only right and proper.

People may have concerns about adequate funding. Sufficient funding is in place for rounds three and four. It is complicated, my hon. Friend will know, by the tails from rounds one, two, three and four—there is money there. However, there is still a good deal of money that can make a difference to many communities. With the support given in 2002–03, there is a four-year total of £2.1 billion. Of that, we estimate that about £1.4 billion has been or will be allocated to existing ALMOs through the tail that I mentioned, with some £700 million available for new ALMOs started in 2004–05. As my hon. Friend has said, there is interest; some 200,000 tenanted properties, of which 54 per cent. are assessed as failing the standards, are covered by expressions of interest for round three. If those expressions all lead to bidding by the closing date of 16 May, ALMOs could be looking to invest over £1.5 billion between 2004 and 2010. That is not necessarily £1.5 billion of the £700 million that is left, so we are in negative equity, for want of a better phrase. It is about the tails that will follow through.

I cannot comment on the success or otherwise that the Office of the Deputy Prime Minister will have in the next comprehensive spending review round; bidding does not start until 2004. However, there is a strong commitment, as I said to the national federation, from the ODPM that existing ALMOs and those from rounds three and four will make a substantive difference to their communities and will be funded accordingly. As in many areas of ODPM work, the shift must be away from bricks and mortar to sustainability. It is no accident that the ODPM's core policy document on that area was called "Sustainable Communities: Building for the Future". ALMOs will have to dovetail with the range of other initiatives and programmes.

I know that Radford and Hyson Green new deal for communities programme is in Nottingham, East. The NDC and the city are talking about what they both do in the housing field—they dovetail and complement each other rather than going along separate routes. That is important. There will be other initiatives in Nottingham, now and in the future. The ALMO will have to take account of and work with them. Nottingham council is very active and hands-on anyway, but I know that the council's role does not stop post-ALMO. The people still belong to it; they are its communities. They may have sidelined certain management functions in a particular spot through the ALMO, but the estates are still a vibrant part of the Nottingham community and the council still has a significant role.

What is the way forward for Nottingham? It is in Nottingham's hands. By 2006 it has to come up with a stock option appraisal. It is more than welcome to go down the route of applying for an ALMO. In the next few weeks we shall issue new guidance on both the option appraisal and the criteria for ALMOs. I encourage—I know that it is happening anyway—the city of Nottingham to explore all the options, to consult widely, and to press on with the options and appraisals. If an ALMO is shown to be the right option for Nottingham, I look forward to receiving its bid, and I wish the city council and my hon. Friends the Members for Nottingham, North and for Nottingham, East the best of luck in their bid, should it come, for serving their constituents and the people of Nottingham in something as crucial as housing and the sustainability of communities. That is what we are here for.

This has been a worthwhile debate and I encourage and commend Nottingham for all that it has done so far. If a bid is forthcoming, I look forward to receiving it. However, I make no comment on its chance of success.

Question put and agreed to.

Adjourned accordingly at one minute to Two o'clock.