I am delighted to introduce this Adjournment debate on an issue of great importance to my city, the council tenants whom I represent and those around the country who, in my opinion, are being systematically mugged in one way or another by the Government as a result of how the housing subsidy works.
I pay tribute to those constituents of mine and council tenants who presented a petition signed by some 5,500 people to the Prime Minister this morning. Later this evening, I will present to the House a further petition on behalf of council tenants in Portsmouth. Both those petitions ask the Government to take action. The promised review is one thing, but the attitude of Ministers when the matter is debated or questions are asked in the House does not make it sufficiently obvious that there will be a change that will benefit my constituents, who see and will continue to see much of their rent go elsewhere and be retained by the Government.
Some 200 councils retain council housing. The housing revenue account subsidy system currently takes money from about 150 of those local authorities and gives money to 50 other councils. In this financial year, 2008-09, the amount paid by those 150 authorities exceeds the amount received by the other 50 by some £200 million. In 2009-10, the excess, estimated to be some £300 million, will be retained by the Treasury, often to meet other, non-council spending needs. It is effectively a tax on council tenants, some of the poorest and most vulnerable people in the country and in our individual constituencies.
In my case, the facts speak for themselves. In the current year, tenants in Portsmouth will lose some £4.6 million to the Treasury, and large increases are expected over the following years. Our council rents have risen. Realistically, our council rents would have increased this year by 7 per cent. We were able to hold them at 5 per cent. only by using balances that could otherwise been used to benefit housing in Portsmouth.
If that £4.6 million were available, it would have addressed a number of the issues and policies that the Government want local authorities to tackle. It would have been good for the local economy. The money could reasonably have been expended on local builders to refurbish and renew existing housing stock. It would also have provided the local authority with the ability to build much of the housing that we need. If things continued according to the present trend and if we were able to retain the money, by 2013 the local authority in my city would be able to provide more than 1,000 new homes, but we will not be able to do so, because we are continually robbed and penalised.
Portsmouth is by no means the worst example. For every pound spent in the Waverley council area, 49p goes back to the Government to be redistributed or held by the Treasury. The council itself is in an extremely precarious situation. It has a long housing waiting list, and it is bottom of the league for fit homes. Why is that? Because it cannot invest the money.
The hon. Gentleman will be aware that the all-party group on council housing, of which he and I are members, is taking evidence today in various rooms in the House which will shortly be submitted to the Minister for Housing. Does he agree that, on the scale of what he is describing, about £200,000 is being taken each hour from capital receipts or housing rent? That is about £300,000 during the period of this debate, £5 million a day and £1.8 billion a year. Those are extensive resources that are urgently needed by people hanging on by their fingernails as far as local authority-owned stock is concerned. It is all part of some subtle, or perhaps relatively unsubtle, coercion to get stock transfer under way. Does he agree?
I agree entirely. I can quote once again from the experience of my local authority. In 10 years, we will not be able to afford to maintain our housing stock. We will not be able to continue being a housing authority, despite the fact that on two occasions council tenants in the city of Portsmouth and in the Havant district, where Portsmouth also has housing, have rejected a stock transfer. They do not want it. They trusted the local authority. I speak as a politician who has spent most of my political life in opposition, but I can say with all honesty that all three political parties that have run Portsmouth have always treated housing as a high priority. The Conservatives, Labour and the Liberal Democrats have always given it priority, shown faith in council tenants and tried to deliver a fair rent. They have always tried to play the game for their council tenants.
I congratulate the hon. Gentleman on securing this extremely important debate. He mentioned Waverley, a council that I share with my hon. Friend the Member for Guildford (Anne Milton), and which is playing a leading part in the campaign. Does he agree that poverty is poverty whether it is in an affluent area or in an otherwise deprived area, and that it needs to be treated as such? Does he also agree that the current system creates extraordinarily perverse incentives? A council that reduces its housing debt and crime and vandalism on its estates has its subsidy reduced, which means that it can spend less money on raising the standard of homes that desperately need repairs.
I agree entirely. I had the pleasure yesterday of meeting the chief executive of Waverley council, who put a persuasive case on behalf of her local authority. What happens in that local authority and others makes double jeopardy look like a fairly even-handed approach. They are punished time and time again, not just once or twice but on three or four different levels.
I congratulate the hon. Gentleman on securing this debate. Does he agree that a number of councils—I cite Guildford, in my constituency, as one of them—do not yet recognise the problem? The matter has come to the fore because of the decent homes standard. In Waverley, on whose housing stock considerable sums need to be spent, they are acutely aware of it. However, for many other councils paying a similar subsidy, it is not quite up there in their heads yet, because they have not yet had to spend as much money on repairs as they will in time.
The hon. Lady makes an excellent point. Sadly, it is not unique. I think that all 150 councils currently being punished in that way could echo her sentiments.
I remember that when I was first elected to the city council in Portsmouth, it had 30,000 council houses. We now have about 13,000. The majority of the houses sold were the easy-to-maintain three and four-bedroom homes. We are left with the blocks built between the wars and in the late ’50s and early ’60s, which are the most difficult in which to secure and maintain a decent living environment. At a time when we need to be spending money on that sort of thing, our residents and tenants are denied the opportunity for their homes to be put in good order.
The hon. Gentleman is being most generous in giving way. Castle Point council tenants are effectively being hit by a double whammy. First, they are paying higher rents than they should; secondly, they are being denied reinvestment in their local area and in repairs and maintenance to their housing stock. Does he agree that in the current economic crisis it would be wise for the Treasury to reverse its policy and leave the money locally? Locally, it would be spent more effectively to help us to help people in poverty and build our way out of the recession.
The hon. Gentleman always makes useful interventions in debates in this Chamber. His point, once again, is made on a solid foundation. It makes sense to keep the money locally, give a boost to the local economy and deal with the issues that the Government want us to deal with. The Government seem blind to the link between higher rents and increases in the amount of housing benefit paid. Generally, across the country, at least 60p in every £1 of rent paid is effectively paid by housing benefit. Forcing up rents may generate income to the Department for Communities and Local Government, but 60 per cent. of that money will be lost through the increased amount of housing benefit that will be payable by the Department for Work and Pensions. Furthermore, some tenants will be forced to claim housing benefit, with all the extra stress and complex disincentives to working that result from that.
The Government take 75 per cent. of the receipts from every right-to-buy sale of a council home through the rent rebate subsidy limitation, and they do not meet the full cost of housing benefit for council tenants. Taking that money together with the housing revenue account subsidy, in the four financial years from 2005-06 to 2008-09, the Government have taken more than £30 million out of the council housing stock in Portsmouth, which is a staggering amount of money. I am grateful to the treasury and the housing departments in Portsmouth for supplying those figures. Again, that is not an exaggeration; it is fact. Sadly, that situation is not unique to Portsmouth—it is a nationwide problem, and many other local authorities are similarly affected.
I was interested to read the brief that the Local Government Association supplied for this debate. It is not often that members of the LGA galvanise themselves into taking a common approach, but on this issue the LGA has a purposeful campaign and a solid position, which I, for one, welcome. I hope that the Government are listening to those at the sharp end of delivering decent homes for people to live in. There is a need to satisfy the increasing demand for housing and to rekindle enthusiasm for council housing. I am proud to say that I was brought up in a council house in Portsmouth. It did not do me any harm—at least, I hope it did not, but others might have a different opinion. I had a rather large extended family, so I expect that many of my neighbours felt that we would have been better off living elsewhere. Antisocial behaviour orders were not in force then; I am not sure that we would have qualified for one of those, but there might have been a suggestion that we would.
I believe that council houses and the Parker Morris standards changed the way in which members of my generation grew up, as we were able to do so in decent homes. It was to the great credit of the Labour and Conservative Governments of those days that they saw in the Parker Morris standards. That was something to be proud of. I remember joining a local authority nearly 40 years ago and thinking how important it was to give people the same opportunities that I had. Many houses in Portsmouth were way below what was a reasonably acceptable standard for people to live in, and it was only through the determination of my predecessor councillors and my peers in the ’70s that the programme continued and people were given that opportunity. I regret that so few houses like that are now built to satisfy the demands of families in cities such as mine.
If the existing arrangements remain in place, collective payments to Government from the paying authorities will exceed £1.2 billion over the next 30 years. That is a phenomenal sum, so we have to be cautious about allowing those arrangements to remain. People will not sit back and allow the current situation to go on. Why should the council tenants of Britain be punished unfairly in that way, and be condemned to live, or to continue living, in properties that the Government know should be subject to improvement under the decent homes criteria? If we do not have the money to do that, we condemn people to go on living in that sort of environment.
What are MPs and local authorities doing collectively? I am delighted to say that my colleague, the hon. Member for Havant (Mr. Willetts), is an enthusiastic supporter of this issue, and I am sure that he would have joined us today if he could have done so. He has a huge number of Portsmouth residents in his constituency, living in what was once the largest council estate in Europe, so he knows, from first-hand contact with his constituents, of the pressures that result from their having to pay council tax to one authority and council rents to another, both of which have great problems delivering the services that ought to be expected in local authority areas.
The good news is that there has been a campaign across the country to show the Government the strength of feeling on this issue, and we have presented 5,500 signatures to Downing street today. Some of the people responsible for gathering that petition are listening to the debate—eagerly, I expect—hoping that the Minister will indicate that some good news is coming. They did not simply take pieces of paper on to the street for people to sign. They sent cards to people, which they filled in and sent back, so this has not been a hit-and-miss, Mickey Mouse petition that anyone could sign whether they were a council tenant or not. All 5,500 signatories are genuine council tenants from the city of Portsmouth, and that gives strength to the campaign. In some local authority areas—other Members are submitting similar petitions to Downing street today—more than 50 per cent. of tenants have signed up to the campaign. That is not easy to achieve, and I am proud that tenants in Portsmouth have led the campaign both locally and, to a great extent, nationally, and have tried to get it recognised.
I am grateful to my hon. Friend for giving way. It is good to see him on the Floor of the Chamber, for a change, instead of in the Chair. Does he agree that while all local authorities, whether they are run by Liberal Democrats, by Conservatives or by Labour, see housing as a priority, the Government unfortunately do not do so?
It is sad to hear any Member say that, but I agree with my hon. Friend to a certain extent, because a real passionate desire is needed. The hon. Member for Great Grimsby (Mr. Mitchell) has made it his life’s work to try to rekindle enthusiasm for housing and to get the message across, but I sometimes wonder whether he is banging his head against a brick wall.
On that point, and in picking up the point made by the hon. Member for Manchester, Withington (Mr. Leech), while I have certainly made representations to Ministers on many occasions about housing supply, it is absolutely ludicrous to conduct a debate on this issue that simply fails to recognise the investment that has come with the decent homes initiative in the past decade and the total transformation of the quality of housing stock. If we are going to be honest about housing in the round, we at least have to recognise those points, do we not?
I do not have a problem with that. However, the situation that we face today in my city is as bad as the one that we faced at the end of the second world war, when a third of the properties were either demolished or totally uninhabitable. The housing waiting list is as long today as it was then, although we have built 30,000-odd council properties. We have begged successive Tory and Labour Governments to do something about this, but they have flatly refused to listen to our pleas that they should provide decent homes for people. I do not decry the fact that lots of money has been put into housing, but this is about council tenants’ rents being misappropriated, and taken from them and given to others in cities that have not been as prudent in caring for their housing estates as Portsmouth has tried to be. That is unfair. Why should those who have tried to do their best for tenants have to pay a penalty now, because others chose not to, or because they did not put their rents up when the thing to do was to keep rents low and choose not to service needs? [Interruption.] The hon. Member for Regent's Park and Kensington, North (Ms Buck) shakes her head, but if she looked at the facts, she would see clearly that some local authorities have refused to deal with many of the problems on their estates and with ageing properties.
I am saying that we are forced to put rents up in cities such as mine, while not providing our tenants with the service that we ought to provide, because other local authorities and councillors have taken soft options in the past by not putting rents up to the same level as we did and not looking after their properties. Why do those 50 councils have to be subsidised by my council tenants? Will the hon. Lady explain why the repair lists in some of those cities are so dramatically high that the Government will not bail them out, although they are forcing council tenants elsewhere to do so?
Part of the problem is that the housing revenue account and the formula for working out what subsidy should go where is very complex, and it is partly based on historic debt. My council is one of those in receipt of subsidy but, nevertheless, I believe that such a subsidy should come from general taxation and those who can afford to pay, not from poor people living in Portsmouth, Cambridge, Waverley or anywhere else.
I agree entirely, and I am happy to know that a representative of one of the receiving authorities is keen enough on this matter to say just that. We need change, which leads me to the issue of what we want. Our key aims are to achieve a fair and locally controlled system of housing finance, and doing so would require the following action: the abolition of the housing revenue account subsidy system; the abolition of the rent rebate subsidy limitation arrangements; all receipts from right-to-buy sales retained by the local authority; rents controlled locally; and all rents retained by, in our case, Portsmouth city council and the housing revenue account. If those changes were to happen with effect from April 2010, it would be of dramatic benefit to those on the waiting list and to existing council tenants. If we do not make those changes, the situation will simply get worse.
How would those changes help the Government meet their aims? They would lead to the poor and vulnerable in our society being treated fairer and better, which I think everyone would agree is important. There would also be savings for the Department for Work and Pensions and better employment prospects for tenants, because they would not be forced into the benefits system by higher rents. The city council itself could finance the building of 1,700 to 1,900 homes over the next five years, which would help meet the desperate need for social housing at affordable rents and help to offset the effects of the recession by maintaining local jobs in building and related industries. Local decision making would empower councils to tailor solutions to local problems and enable them to work with tenants to plan long-term investment in council homes. In addition, devolving power to local councils would stimulate and strengthen local democracy.
Is that too much to ask? Is it really too much to ask from a Government who claim that they care about people on council waiting lists? Is it too much to expect a Government to respond to the known needs of a huge number of people in this country? Is it too much to want to have better and newer homes for people to live in and for children not to be condemned to live on the 20th floor of a high-rise building with nowhere to play and no safe spot, except the corridor in the hall where their flat is? Is it not right to want older people who under-occupy properties to be given a viable alternative so that they can move out of a three-bedroomed home into a decent property? We would love to be able do that in Portsmouth. We have a large number of under-occupied properties, but we face a problem if we expect someone to move out of a three-bedroomed house when we offer them a tenement that does not even have a lift.
If we want people to cease to under-occupy properties, we must use our imagination and deliver for those people the sort of properties in which we would want to live if we had to give up a home with a garden to go elsewhere. These are challenges for all of us, and they are big challenges for local authorities. Local authorities—mine included—could do a lot more if we were able to use the money that we collect from our tenants in the local area. That would satisfy many of the Government’s ambitions.
I am disappointed and dispirited. As someone who is still a member of a local authority after 38 years, despite the worst of the Thatcher era when Mrs. Thatcher did her best to deliver the killer blow to local authorities, in my experience it has never been more difficult to try to bring council properties up to a higher standard. The opportunity to build council houses should be given to local authorities again, so that they can actually do it.
The hon. Gentleman is making a characteristically passionate and persuasive argument. Should we not reach the conclusion that although the Government have had well over a year to enact and publish the housing revenue account subsidy review—we understand that that might be done by the end of spring—they are really using the HRA subsidy system as a weapon to force local tenants into using registered social landlords across the country? That might be appropriate in some cases but not in others, and such a policy has been driven by the Treasury.
I am afraid that I came to that conclusion some time ago. As I said in relation to my own area, if this situation continues, in the next few years it will be impossible for our tenants to remain under the auspices of the housing department of Portsmouth city council. I am disappointed that that might be the case. It would be a tragedy in the short and long term if that were to happen and people lost the democratic option that the Government offered them. They would be forced into a solution that they have repeatedly refused to go along with because they chose and voted with their feet to stay with Portsmouth, rather than take the other options available. If they were forced into such a solution by the sheer economic mayhem that the Government have created in relation to housing finance, it would be unforgivable and completely unnecessary.
It is not right that people should continue to be robbed in such a way. The Government should be prepared to write to every individual council tenant who has had their rent taken in this way and explain to them in simple language why this is happening and why they are being forced to pay more. Will the Government do that? I think not. They will pass the blame on to local authorities. On this occasion, the buck stops with the Minister. I am delighted to see him here today and I will be even more delighted if, when we have finished our debate today, he gave some good news to those tenants sitting in the public gallery and the countless millions of council tenants across the country who are badly served by this system. Those people are literally being mugged every week by a system that they do not understand. As my hon. Friend the Member for Brent, East (Sarah Teather) said, very few people in local government and, indeed, in Government understand the housing finance situation.
When the chief executive of Waverley council invited the Department to her local authority to explain how they could get the decent homes scheme working, it refused the challenge. When we asked it to explain how the subsidy worked and why we were being punished in such a way in Portsmouth, it was difficult to get a coherent answer from the Department. Why should local authorities be put in such an unenviable position and, more importantly, why should council tenants?
I congratulate the hon. Member for Portsmouth, South (Mr. Hancock) on instigating this debate. The subject is important and affects many people who, as he rightly said, are on the lowest incomes and sometimes live in the poorest housing conditions. Like my hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck), I straightaway make the caveat that council tenants now live in much better conditions than they did in 1997 because of the great success of the decent homes programme.
I want to say from the start that when I asked my hon. Friend the Minister about the matter in the House a few weeks ago, I had the clear answer that the Government are now, in principle, in favour of changing what I think everyone now accepts is a flawed housing revenue accounts and housing subsidy system. I welcome the working group that has been set up and that will, I hope, report shortly. This problem does not merely affect those tenants whose houses are directly managed by local authorities; it also affects tenants of arm’s length management organisations. Their houses are managed by an arm’s length company, but the housing funding still essentially rests with the local authority.
If all we were doing today was agreeing that the Treasury should not make a profit out of council house tenants, we could have a simple system—we could alter the figures in the current arrangements and that would be that—but that is not the difficulty. The Treasury certainly should not be making a profit out of council house tenants, but there are other problems. I want to go through the problems as I see them and explain how they affect my constituents, particularly tenants in my constituency.
Historically—certainly when I was chairman of housing in Sheffield back in the 1980s—one could relate services to rents and explain to tenants on a yearly basis how much their rents were going up and what impact on services that would have. There were options: one could consult tenants and ask for their opinions and, hopefully, reflect those opinions in decisions. That cannot be done now because we have separated the delivery of service from the charging of rents. That is fundamentally unhelpful in a democratic society.
In the past, one could even relate an individual tenant’s services to the rents that they paid. We had a system of points-based rents in Sheffield, where points were given for certain attributes of a house. If the tenant asked the authority for a new central heating system, the authority put it in and charged extra rent on the points-based system. Tenants thought that that was great, because there was individual choice. The Government are, in essence, in favour of choice for consumers in the health service and in education. That kind of choice ought to be available to council tenants as well, but it cannot be provided under the current system.
As has rightly been said, the current system is inexplicable. It is inexplicable to tenants—they cannot understand it. I would guess that most councillors and MPs, and probably even some Ministers, do not understand it either. Any system that is inexplicable is a bad system.
Organisations cannot plan. Sheffield Homes is looking to the future and is having to take precautionary steps towards making people redundant because it cannot be sure what its financial position will be in one, two or three years’ time. It is essential to plan ahead for investment in housing. That is fundamental to a successful housing service and delivering quality for tenants, but it cannot be done easily.
It must be nonsense that rents are in any way determined from the centre. I can just about understand the principle of bringing rents of different organisations in an area into line, but if there is a principle here—I am not sure that there is—surely it pales into insignificance compared with the complications of trying to enforce it. Therefore, we must get away from that idea and accept that rents may be different in different areas for similar houses, where one is managed by a registered social landlord and another is managed by an arm’s length management organisation or a local authority.
I accept that guidelines are used to try to fix rents from the centre—the figure this year is 6 per cent.—but the reality is that those guidelines, which are based on finances dictated from the centre, certainly push organisations, councils and ALMOs in that direction.
I will briefly throw in a party political point. It is disappointing that Sheffield council has pushed Sheffield Homes into a 6 per cent. rent increase but given it only a 2 per cent. increase in its revenue this year, which is half what the ALMO needs to keep services going. It is also disappointing that the council began with a commitment that decent homes work carried out to properties in Sheffield would be done to the same standard throughout the programme, from beginning to end. The new Liberal Democrat council has just cut back on those standards, so many people who get work done in the last two years of the programme will have it done to a lower standard. That is a party political point to match some of the ones that were made earlier.
Of course, there is new build—I accept that. The current arrangements in the housing revenue account mean that councils can actually lose grant for building homes. I accept that the Government have gone some way towards redressing that and have said that if organisations come forward and request a social housing grant, the funding can be kept outside the housing revenue account system so that there will not be that impact if they seek to build new homes.
However, this is not just a Government issue. Given the effects of the current financial circumstances on housing generally, we will not get new building of council homes off the ground, even if the social housing grant is increased to a much higher percentage, unless local authorities are prepared to put land in for free to make the system work. That goes right across the board, but some councils clearly are reluctant to do that. They have a role to play as well.
There are clearly problems with the current system, and a system that has that many problems really is not fit for purpose in any shape or form. Perhaps that is why the Government’s working party has been going on for so long: the real difficulty is that we can all say what the problems are—they are easy to define—and we can have aspirations as to how things might change, but it is not as easy to say exactly what kind of system can be developed for the future that will meet the various needs that we can all identify. We will not solve the problems in this debate.
The hon. Member for Portsmouth, South highlighted the problem of authorities receiving subsidy through the system, perhaps from other councils. Perhaps that is unfair, but the fact is that they do. If we were simply to tear up the system and say that money would not be transferred from one authority to another, some tenants would find themselves in difficult circumstances. It is not the authorities that I am particularly concerned about, but the tenants.
I share with enthusiasm many of the points that the hon. Gentleman has made, but I would be grateful if he told me why—in his opinion as a former housing chairman and someone who knows this subject, like others in the Chamber—it has taken so long for people to recognise the stranglehold that the policy has had on local authorities’ ability to deliver what the Government and their citizens want, which is better and more affordable housing. Why has it taken so long to get to this point?
As I cannot answer that question, I will wait for the Minister to respond to it. The Government have acknowledged for the past two years that there is a problem. Perhaps they were a little late in coming to that view. Other people have been campaigning on the issue for slightly longer—I have raised it on many occasions, privately with Ministers and in debates and questions—but at least we have got to a point where the Government recognise the problem. We now have to try to shape the debate and influence the final outcomes.
Dealing with the problems of authorities that are in subsidy will be very difficult, but we are on the Minister’s side in the negotiations that he will have to have with the Treasury. Certainly a situation in which subsidy goes to the Treasury from council tenants collectively is unacceptable, but to introduce a new system and make it work, some Treasury subsidy will have to go into housing at a fairly early stage. I know that that will be difficult, but I am not sure that we will be able to make any new system work otherwise.
I know that other Members want to speak, Mr. O’Hara, so I shall conclude, as the hon. Member for Portsmouth, South did, by trying to develop four principles that I would like to see in any new system. First, there must be that essential link between an ALMO or a local housing authority and their tenants. They must be able to have meaningful negotiations about the rent and services in an area. It is essential that the two are related, and any system that does not allow that to happen cannot be correct.
We have to accept that it is fundamentally wrong that the Treasury should receive subsidy from council tenants collectively. That cannot be right, and the Treasury will have to accept that there is an enormous feeling of resentment across the board, across all political parties and, quite rightly, from council tenants who feel that they are subsidising other services on a national level.
However, I also ask the Minister—this relates to individual local authorities that do not always behave very well in this regard—please, will he tighten the guidelines for local authorities so that they say that money collected from rents has to be spent on services received by tenants, not on subsidising community services in general, which benefit everyone? That happens up and down the country.
In my authority, community wardens are very popular. They are funded by Sheffield Homes, but they do not benefit council tenants only—they benefit the whole community. The maintenance of grass verges and open spaces, and the cutting of shrubs on what were council estates, benefit many people who are not now council tenants, but the funding often comes just from tenants’ rents. We must tighten up on the guidelines to ensure not only that the Treasury nationally does not get subsidy from council tenants, but that local services that benefit the whole community are not subsidised by council tenants alone. I would like the Minister to have a look at that as well.
Finally, there probably will have to be a short-term transitional arrangement to change from the current system to a new one, but, please, do not allow that arrangement, with all the normal damping and tapers that are associated with two systems, to go on for a long time. The current system is complicated enough. To put transitional arrangements from that system on to a new one will make things so complicated that even the two people who understand the current system will not understand the new one. Yes, we probably will have to have transitional arrangements, but they should be kept very brief so that we can get to a new system based on the principles that I outlined.
I congratulate the hon. Member for Portsmouth, South (Mr. Hancock) on securing this debate. I hope that he will forgive me if I focus most of my comments specifically on my area, in the way that he did in respect of Hampshire, although he strayed across to the Surrey border in some of his early comments.
The hon. Member for Sheffield, Attercliffe (Mr. Betts) summed up one of the core problems: there is a sense of injustice about how the system works. One of the difficulties with trying to draw a line under the past and bring in an entirely new system is that, almost inevitably, there will be significant losers as well as gainers. For those losers, if there are to be transition and damping arrangements, much of the good that comes into place is undermined. There are some big concerns about how precisely we should go forward.
The hon. Gentleman was a leader of a local council. I suspect that he was being modest when he suggested that many of us do not have too much of an understanding of the system. As he will know, however, there is all too often a system to be played not only in relation to housing, but across the range of council services. There are individuals at the highest levels of local authorities who understand exactly how those mechanisms work and can ensure that they operate in the best interests of their local authority, and that is nowhere more apparent than in the housing sphere.
The issues that I hope to raise in the few minutes during which I will address hon. Members are slightly different from some of those that have been raised, and they obviously focus very much on my own local authority in City of Westminster. For some months, news coverage of the housing market has been dominated by talk of falling—falling house prices, falling mortgage rates, falling levels of interest for prospective buyers—but that has not been the case with social housing. While the Government appear to be throwing everything but the kitchen sink at helping the often hapless home owner, they have quietly pushed through some quite significant rent increases. Come 1 April, those increases will hit many tens of thousands of council tenants in London, at the very time when they are being squeezed hardest by the recession.
Will the hon. Gentleman, as a prelude to the remainder of his remarks, recognise that Westminster council has the second-highest rent in the country? Does that not reflect the considerable leeway that local authorities have been given over the years to set their own rent levels? Did not Westminster choose to increase rent levels consistently and dramatically during the 1980s and 1990s, which is precisely why we now have the problem that I am confident he is about to describe?
The issue of council rents goes back to the point about how we ensure that we have a fair system. The hon. Member for Sheffield, Attercliffe talked about the Treasury giving subsidies, and some phenomenal subsidies are given to the council rented sector. That has been the case since time immemorial, and it is very difficult to row back from that position.
I accept—this relates to some of the issues in my constituency that I want to discuss—that central London is in an exceptional situation in many ways. However, the difference between the rent for those who live in social housing and council housing, or arm’s length management organisation housing in the case of CityWest Homes, and any market rent is colossal. Understandably, that causes dismay and irritation among those who are not particularly well paid, but who are none the less well paid enough and in stable enough employment that they cannot get into social housing, even though they cannot begin to think about getting on the housing ladder or paying anything like a market rent to live in the centre of London.
In many ways, as we can see from the interest in the Chamber today, some of the Government’s proposals for rents have the makings of a repeat of the 10p tax band fiasco. For those with short memories, the Government hoped to grab the headlines through populist handouts in the 2007 Budget and conveniently to disguise the fact that the abolition of a 10p tax band would mean that the poorest were worst off.
As has been said, the formula for calculating social housing rents is set by central Government. As a result of linking that formula to the retail prices index figure from September 2008, when inflation was at a peak of 5 per cent., the Government are intent on imposing rent increases of 6 to 9 per cent.—by any measure, well over double the current rate of inflation. That works out at a rise of at least £300 a year in the rental bill of the average tenant—at least in Westminster. What is more, tenants in such properties tend to be on fixed incomes because they are pensioners, disabled—either in full-time or part-time work—or just above the benefit threshold. They will be the people who have to find the money by taking their already stretched household budgets back to the drawing board.
It has often been complained—I have some sympathy with the Minister’s situation in this regard—that councils have no flexibility to set their own rents under the current system. I can see that it would be difficult to have a free-for-all. To be absolutely candid, the fact that there are now considerably more Conservative and Liberal Democrat councils than there were perhaps 10 years ago means that we hear this klaxon voice in a way that we did not then. However, as the Minister is aware, London’s local authorities will be forced to impose rises on their tenants or suffer the financial consequences if the formula is not adhered to.
Eight local authorities in the capital—Westminster, Kingston, Southwark, Harrow, Hillingdon, Camden, Brent and Hounslow—oppose the proposed rise and have lobbied the Minister for Housing by sending her a cross-party letter to try to change her mind. My own local authority in City of Westminster has spearheaded the campaign and would like the Government to take a more reasoned approach, keeping any rent rises to an absolute minimum. It believes that the Government should look again at the formula that they use to calculate rent or consider further Government assistance for tenants to mitigate the impact on local authority budgets if Ministers insist on pressing ahead with these inflation-busting increases.
At this point, it is worth mentioning the fact that, should the housing revenue account subsidy system remain unreformed, a 6.2 per cent. minimum increase has already been allocated for the financial year 2010-11.
It is clear that inflexible, centralised control of the rental system is not working, particularly here in the capital. Aside from imposing rent increases on vulnerable tenants in the most difficult of times, it fails to cater for a significant number of people who are, as I said, too poor to buy, but too rich to rent socially.
Earlier this year, I secured a debate in this Chamber on the problems facing London’s housing associations during the economic downturn, as the Minister will know because he responded to it. One of their complaints, which came through loud and clear, was about the inflexibility of the social rent structure, and I want to highlight that concern again.
I accept that wealth disparity has afflicted London since time immemorial. Other London Members in the Chamber—whether from Brent or Kensington—will know that there has been much more polarisation in the relatively short time that we have been Members of Parliament than there was before, and I have certainly seen that in my eight years in the House. There continues to be huge demographic change, and those on middle and low incomes—in the capital, that can mean those who earn well over double the national average wage—get pushed out of area. That includes many families who have lived in our vicinities for generations.
My local housing associations are eager to use their resources to cater for that low-to-middle income group, but the rigidity of the rental system means that they cannot get the most out of their housing stock. In exchanges in the House, I mentioned the example of the housing arrangements of an elderly constituent who passed away last year. She had lived as a secure tenant in her home on the Peabody estate on Wild street in Covent Garden since 1986 for a rent of £75.50 a week, which included services. The estate is moments away from the glitz and glamour of the Covent Garden piazza, and the market rent for the flat would be about £320 a week, which is roughly four times the amount that she was paying. The flat is now being re-let at £116 per week, including services, to a tenant with support needs.
So, the typical difference between the social and market rents in my constituency is often £200 a week, or £10,000 a year. Although that is an extreme example, there will be similar examples of that huge disparity throughout London. What happens to those who fall between the two extremes—those who do not qualify for social housing, but who cannot realistically afford the cost of market rents in central London? At two thirds of that cost, the gap is huge and getting bigger, and we need to find some middle ground.
Housing associations are frustrated that the income that they receive from renting a property in London often barely covers the maintenance costs and that the rental income from a four-bedroomed house is only slightly more than that from a two-bedroomed flat. The same applies when we look at the differences in rent for a zero-carbon home and an old, inefficient property. None of that makes sense.
I appreciate that other hon. Members wish to speak, so I will bring my comments to a conclusion. The current centrally imposed national rental system simply does not and cannot work for London tenants. I suspect that that is an issue not just for the capital, and we have seen it in Portsmouth and other parts of the country. If the proposed rent rises go ahead, they will serve only adversely to affect tens of thousands of council tenants at a time when the Government purport to be doing all they can to mitigate the impact of recession.
Would the hon. Gentleman mind agreeing with me on the issue of rents and subsidy? Is he aware that Westminster council delivered a letter about rent increases to every tenant? That letter included a form of words that suggested that Westminster tenants were contributing to a national pot that was being redistributed across other parts of the country. Will he take the opportunity to agree with me that that is untrue and misleading? Westminster council has enjoyed a cumulative total of £115 million in positive subsidy in the past year, including just under £7 million in positive subsidy in the current year. An attempt to claim that that rent increase is because tenants’ rents are being exported to other parts of the country is simply a lie.
I cannot agree entirely with the hon. Lady. I do not deny that Westminster council has been a net beneficiary of significant subsidy over many years, but we now have a hybrid arrangement, for reasons that have already been pointed out, and are looking for a final arrangement with the social housing fund. A certain amount of cost subsidy is going from Westminster to other parts of the country from the current rents on the basis that has been mentioned, so I do not think that it has been misleading to other tenants.
I know that the hon. Member for Stroud (Mr. Drew) wishes to speak, so I will bring my comments to a close. Many Members across the House would like the Government to look again at the impact of what is and has been a pretty inflexible and centrally controlled system, particularly for those in the capital who remain locked out of the hugely expensive private market. If the Government do not do so, they run the risk of repeating the 10p tax fiasco and penalising the most vulnerable in our communities at a time when those folk are the most in need of a helping hand.
I am delighted to take part in the debate and strongly congratulate the hon. Member for Portsmouth, South (Mr. Hancock) on securing it. I also congratulate him on choosing today for the debate, because some of us on the all-party group on council housing have been listening for several hours to evidence from tenants from different parts of the country, including Birmingham, Norwich and Reading, and also from Stroud, and some of my constituents are here to listen to the debate.
Had the Minister managed to pop into that meeting, he would have heard tenants express a mixture of mystification and anger over the rent situation that they face. There is one thing worse than hearing from me today, and that is hearing from my hon. Friend the Member for Great Grimsby (Mr. Mitchell), who chairs that all-party group and is stuck in that meeting taking evidence to the very end, and I pay tribute to him for what he has done.
The campaign is not recent and has been running for more than a decade. Alan Walter and all those who support Defend Council Housing deserve our support and congratulations for keeping on with the campaign. We think that we are beginning to win not only the arguments, but the outcome, because there needs to be change. I will not speak for long because I want to hear the excellent things that the Minister has to say about solving the problems.
I wish to make three underlying statements on the essence of where we need to go on that. First, I wish to warn against disaggregating the housing revenue account, which Defend Council Housing is also against. It is tempting to say to the councils that are in surplus that they can keep the surplus and that the Government must somehow, magically, find solutions for those that are not in surplus, but there are two problems with that: as a socialist, that is not how I would like to see things go, because those mainly urban authorities deserve support; and more particularly, there is a danger if that does not work out that those involved will be picked off one by one. I have experience in that area and led the campaign, with the tenants who were present today, against the large-scale voluntary transfer, which I thought was the wrong approach at the wrong time, and we won that ballot overwhelmingly, as several others have done. We should not, however, be penalised because we saw the genuine, democratic right of those authorities to choose what they wanted, which is local authority housing. The good point that came out from our meeting today was that we saw how much people want to remain with the local authority. That is not a negative, but a positive.
Secondly, there will have to be a write-off of debts, and I make that point loud and clear because the Exchequer Secretary to the Treasury has just entered the Chamber. There is no way of avoiding that, but would it really be a write-off of historical debt, because many of us—although not all—would argue that council housing has paid for itself many times over? That is the only group being asked to pay off historical debts, as we do not ask for payback from housing associations, or from those in the private rented sector, even though the money ends up with the landlords, or from owner-occupiers who have received subsidies to pay off historical debts. Why then are council tenants being picked on? It is grossly unfair and unjust and we need to do something about it.
Thirdly, we need total transparency, and we must always argue for that. If it does nothing else, it will explain what really goes on. I can make accusations about the local authority in Stroud, which has filched about £5.8 million by taking it out. It could be argued that that was for the benefit of tenants, but it was of course for the benefit of everyone else as well. How is it that we really do not know what the figures mean? That might be because some of us are not so bright or good at calculating those things, or perhaps it is because the matter is so complex that we do not know whether the audit trail leads to central Government, local government or, as many of us presume, a mixture of the two. We need to have clarity, because we will not sort the mess out until the figures are explained to everyone completely overtly.
I will make several other points quickly because we will soon move on to the winding-up speeches. I am worried about the way in which we handle this in relation to older residents living in sheltered accommodation. There is now even less clarity about that, in part because we now have two different finance streams, the normal housing revenue account and the supporting people budgets. As we know, sheltered housing is changing the fundamental basis of what it is there to do, so I appeal to the Minister that we need not only to solve the big problem, but to solve the problem at a micro level. We do not want to disadvantage one group of tenants, even if we can solve the bigger picture. I am aware of the anger over that, and the Minister will have to take my word on that because I, like him, have been meeting tenants over decades. The Government cannot ignore that any longer, and they cannot pretend that a review is the answer until such a review comes up with radical solutions on how to deal with today’s problem. Today’s problem is multi-faceted and is not only about those people in council accommodation whom we want to look after.
I pay tribute to the Government for the decent homes standard, which has dramatically improved the stock, as my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) has said. However, we know that the money is beginning to run out and is certainly getting caught up in the argument over rent increases. It is no good saying to people that a 6 per cent. rent increase can be justified, even if some of the money is being used to improve the standard of housing, and too often it is not. As the hon. Member for Portsmouth, South has said, it is a double bind, because tenants are not only paying more, but getting less for their money. That is not fair and we cannot allow it to happen.
With regard to knowing where we go from here, we need to understand that the reality of the situation is that if we do not fix what we have at the moment, we can never talk about building again. A Damascene conversion would not be a moment too soon. If the Government are saying that part of the solution to our housing problems is that we have to build local authority housing again, despite those who ask why we went through all the arguments of why that was not the right way to go, let us congratulate them and get behind it.
This issue transcends party politics, because if we do not do that, today’s crisis will become tomorrow’s catastrophe. I welcome the fact that we are now seeing that as a solution, rather than as a problem, but we need total transparency on the figure and we need to ensure that the will is translated into action. More particularly, we must recognise that the people who have suffered have done so for too long and that it is about time that we listened to them and dealt with what they are saying to us, because what they are saying to us is right.
I congratulate my hon. Friend the Member for Portsmouth, South (Mr. Hancock) on securing this debate. It is timely, because, in the past two weeks, most council tenants will have received next year’s bill and realised that their rent is going up. This is a time when most people are thinking hard about the services that they receive from their local authority. The figures that my hon. Friend gave were stark, with £4.6 million lost this year to the Treasury, and he spoke about how it will have an impact on the ability to refurbish stock as well as to build. I congratulate him on being able to collect 5,500 signatures, which is a great achievement and testament to the strong feeling in many areas of the country. People think that the money they are spending is going to their own housing, but it is going into Treasury coffers or to fund refurbishment elsewhere.
My hon. Friend also made the point that if authorities were able to keep that £4.6 million, they would be able to build 1,000 new homes by 2013. If we were to apply that throughout the country, it would go some way to meeting the targets that the Government have set councils. Currently, they are simply unable to meet them. The hon. Members for Guildford (Anne Milton) and for South-West Surrey (Mr. Hunt), who represent the Waverley area, are not in their places, but I, too, was lobbied by Waverley council yesterday, and it is doing a good job of bringing the issue to people’s attention. It is worth repeating that for every pound spent, 49p goes to the Treasury, which is an incredible rate of taxation. There are very few other areas in which one would expect poor people to pay such a high marginal tax rate, yet poor tenants pay 49p in every pound of rent straight to the Treasury.
Several hon. Members mentioned the perverse incentives of the current housing revenue account system, and that was a point well made. My hon. Friend also noted that the issue is not just about rent, but about receipts from right to buy, and, when we add the money up, we find that a large amount leaves local housing finance every year.
Many hon. Members made the point that the current system is complex, as I did when I intervened on my hon. Friend. Part of the problem is that many subsidy issues are based on historical debt and on a complicated calculation of what the Government think an area may need. For many councils, the notional debt that is used to calculate the formula for housing revenue bears no relation to the actual debt, so the financial model is very complicated. The hon. Member for Sheffield, Attercliffe (Mr. Betts) made the point that, as a first principle, the Treasury should never make a profit out of poor tenants. The Government’s review seems to have been going on for absolutely ages, and I hope that the Minister will say when it will finally report. When it does, I hope that the second point that the Minister will accept is that poor tenants in one area should not subsidise poor tenants in another. Poor tenants who are in council property are poor wherever they live. It does not matter whether they live in Brent, Portsmouth, Kingston or Cambridge, they are all in the same position, and the people who should subsidise local repairs and rebuilding out of general taxation are people like me, who can afford to pay their taxes, not people who live in social housing.
The hon. Member for Cities of London and Westminster (Mr. Field) made the point well that the Government are forcing rents up. The guideline rent formula sets rents at RPI plus 1 per cent.
The Minister shakes his head, but any council will say to him that, if they do not follow the guidelines, they suffer the financial consequences. The whole HRA system is predicated on the Government’s starting model, which forces councils to put rents up on average by 6.2 per cent. However, the retail prices index has fallen through the floor since rents were set in September, meaning that many council tenants pay substantially higher rents than one would expect for the inflationary average. Throughout the country, council tenants are falling into severe arrears: 40 per cent. of council tenants in London are in arrears, and that is a shocking figure; nationally, the figure is one in three. Some 80,000 tenants in London are in arrears, and 11,000 of them have been threatened with eviction, underlining the point that the rent increases are felt very keenly by people on very low incomes. This is a story about what is happening to the working poor, because those who are in full receipt of housing benefit do not have any difficulties with the rent increase; it is about what is happening to people who are on a low income but in work. The Treasury keeps so much of that rent that it amounts to a tenant tax.
The hon. Gentleman is correct. I have seen many people, not just in council properties but in private rented accommodation, who work, but the rate at which housing benefit falls off makes it difficult for them to sustain work. People get trapped in a situation whereby it is better for them not to work, and that is very distressing for people who may have worked all their lives but live in accommodation that is too expensive to afford if they do not receive housing benefit.
The clear conclusion that everybody has reached is that we need to reform the HRA system.
Before my hon. Friend finishes her speech, I must put the record straight. As much as I would like to claim credit for the petition that was drawn up by people in Portsmouth, I cannot; it was produced and worked on by the tenants themselves, and it is to their great credit that they sustained their effort over such a long period—individually approaching tenants—to get so many signatures. I should love to take the credit, but I cannot, so I congratulate them on their efforts.
I am sure that those who collected the signatures will be grateful for my hon. Friend’s words.
The clear conclusion, which I am sure the Minister will agree with, is that we need to reform the HRA. We have had this debate on the Floor of the House many times, and he has said, “We will reform the housing revenue account system,” but the question is when. I fear that the Government will just tinker with it. The Minister for Housing recently announced that councils would be allowed to keep receipts from right to buy for new properties, and may be able to keep rents for new properties that they build; however, that will make absolutely no difference to overall housing finance for most councils. If the Government are to reform the system, they will have to do a root and branch reform: they will have to give councils the right to keep their right-to-buy receipts and rent in full, and we will need a system in which any required subsidy is provided centrally through general taxation. Only then will we have a system in which the finances are stable enough for councils to plan. If they cannot plan, there is no way they can borrow. The current situation, notwithstanding the need to borrow to build, creates chaos in the running of any housing department, so I hope that the Government will take that point seriously, because 1.7 million families are on the housing waiting list and we desperately need councils to build new homes. They cannot do so under the current system. It is no good the Government saying that they have given councils the permission to build new homes, because, in effect, they have shackled them so that they cannot possibly do so.
I add my warm congratulations to the hon. Member for Portsmouth, South (Mr. Hancock) on securing this important debate, and I echo his comments about the patron saint of council housing, the venerable hon. Member for Great Grimsby (Mr. Mitchell), who is not in his place to share his views, as he often does. The importance of the debate lies in its background—the Government’s lamentable record on housing. That is why it is important that we address the key issues that hon. Members have raised today.
As the hon. Member for Brent, East (Sarah Teather) said, in 1997 just over 1 million people were on the housing waiting list, but now there are 1.67 million—as of 2007—which is an increase of 64 per cent. As of March last year, 78,000 people were in temporary accommodation, which is almost double the number in 1997. This is a significant problem. We are not discussing an arcane academic issue. Where there is consensus, it is on the basis that we need transparency, openness and a focus on local people making local decisions. As I mentioned in my intervention on the hon. Member for Portsmouth, South, it might be appropriate for tenants to wish to move over to a registered social landlord or to remain with their local housing provider—the district, borough or city council—but it is for local people to decide. I have made it clear that the housing revenue account, as it is presently constituted, is being used as a weapon to force people to move to registered social landlords. There is not a level playing field. The perversity and unfairness of the HRA is evident from the remarks made by hon. Members.
It is important to have some historical context here. The housing revenue account was established in the way that it was, under a Conservative Government, because historic debt levels needed to be serviced at that time. That situation does not obtain at present and the Government cannot make that case today.
I agree with the argument made by hon. Member for Stroud (Mr. Drew) on disaggregation; he took issue with the hon. Member for Portsmouth, South who holds the opposite view. Disaggregation as it was practised in the 1980s was about wealthier Conservative councils in the south of England effectively making payments based on housing need, demography and social factors to—generally speaking—Labour-voting areas in the north of England. That was probably right then, but the degree of complication is such that it cannot be justified at the moment, because everyone feels that they are getting an unfair deal.
Before the hon. Gentleman moves on, would he care to remark on the fact that the history of rent increases over the last 10 years, and in the previous 10 years, shows that they were significantly higher in real terms under the previous Government than they are now and that, by and large, they are significantly higher under Conservative councils than under Labour councils?
I do not have the figures, so I cannot agree or disagree. I would probably beg to differ on the latter point. There is a causal link with rent, in terms of rent increases in the 1980s and ’90s, because Labour councils generally did not run their housing stock well and therefore had a larger level of debt and needed to raise rents accordingly.
May I just make some general points about where we agree? The Government have to make the case for 75 per cent. of capital receipts from right to buy being remitted directly to the Treasury. They also have to make the case for only one third of the rent rise being remitted back to repairs and maintenance in the current financial year. Figures published by reputable organisations show that the sum for management, maintenance and repair of council housing stock is effectively underfunded by approximately £2.3 billion at present.
The Minister may laud the decent homes standards, but the money is running out, as the hon. Member for Stroud, who is not in his place, said. The Government had an opportunity at the end of last year to put the money that they used for the £12.5 billion VAT cut into, for instance, facilitating the use of 9,000 empty housing association properties at the end of November 2008 or assisting local councils directly in building council houses. In passing, Dover district council, a Conservative council, chooses to build council houses, notwithstanding the Government’s rules.
The other perverse effect, which was mentioned by the hon. Member for Portsmouth, South and my hon. Friends the Members for South-West Surrey (Mr. Hunt) and for Guildford (Anne Milton), is that good councils that seek to improve the quality of tenants’ lives and the housing stock are being discriminated against and efficiency is punished by the present system. A wider point, which has been revealed by the report produced by Professor Hills at the London School of Economics, is that although there was once a variety of tenure and employment, now only 22 per cent. of people of working age in social housing in this country are working. It cannot be right that that kind of segregation has developed and been allowed to flourish under this Government.
I should like to speak specifically to the issues raised by the hon. Member for Portsmouth, South. He rightly mentioned the failure to meet and fully fund housing benefit costs. That should be an integral part of the review. While I am at it, I should like a definite undertaking today from the Minister about when the review will be published. He has alluded to it in the past, in parliamentary answers, saying that it will be later in the spring. We were told on 31 March 2008, when discussing the Housing and Regeneration Bill on Report, that the report on the review was coming along and that it would be published. However, we are almost a year on and it has not happened.
The hon. Member for Portsmouth, South talked about the quality and type of houses that could be built. I feel duty bound to say that the Government’s regional spatial strategies and their flawed density targets mitigate against building houses. So people are forced, given the situation with registered social landlords and the small number of council houses, to build flats, which is not appropriate.
The hon. Gentleman calls for the abolition of the HRA subsidy, as it now is. I do not agree with him on that. In fact, I take the view advanced by the hon. Member for Stroud.
The hon. Member for Sheffield, Attercliffe (Mr. Betts) made an astute point, saying that the lack of long-term planning in the housing revenue account subsidy system makes it difficult for local housing authorities to plan ahead.
All I want is clarification. I am not quite clear what the hon. Gentleman’s policy is. Is he saying that he wants to change the HRA system? He said that he does not agree with disaggregation. Does he agree with me that the subsidy should be funded through general taxation? I am not clear what the Conservatives’ position is.
The hon. Lady, from a sedentary position, says “no change.” We have yet to see the Government’s proposals and we will comment when they are published.
My hon. Friend the Member for Cities of London and Westminster (Mr. Field) made the astute point that the situation with rents and the 6 per cent. average council property rent rise could be another 10p tax debacle. We know that the rate of council rents was set on historic data in respect of the inflation rate from September 2008.
Flawed data, indeed.
My hon. Friend also made a sensible point about wealth disparities. The hon. Member for Brent, East will also know, because she comes from the same neck of the woods, that that is an important issue that the Government need to look at.
Finally, the hon. Member for Stroud—
The hon. Gentleman must wait with bated breath for the housing Green Paper that the Conservative party will produce soon. He must contain his excitement, but I have no doubt that he will give that Green Paper a robust analysis when the time comes.
Obviously, there is great unhappiness at local level—that has been reflected in hon. Members’ comments today—about the operation of the housing revenue account. There is consensus that there should be clarity, transparency and, above all, alacrity. The Government have had a huge amount of time to get it right. They originally said that would happen in 2010, and they are now saying that it will be in 2009. It is important that local people make local decisions, because what is appropriate for one group of people in Portsmouth will not be appropriate for another group in Sheffield, Attercliffe, Hartlepool and other areas.
This has been a useful debate. The mood of the House is such that I think the Minister will take away our request that the review be concluded quickly, and I hope that he will answer the specific points that have been made by hon. Members today.
It is a pleasure to serve under your chairmanship, Mr. O’Hara, and I congratulate the hon. Member for Portsmouth, South (Mr. Hancock) on securing the debate. As has been mentioned, we often see him in your place in the Chair, Mr. O’Hara, and it is refreshing to see him change his role and come down into the bear pit to debate among us.
As the hon. Member for Peterborough (Mr. Jackson) said, this has been an important, timely and interesting debate on ensuring that the rents paid by people living in council housing are fair. That is vital to help to secure a fairer society so that people who need assistance with their housing needs can look to their local council to provide it at a cost that is lower than the market rate and affordable to them.
Several hon. Members have mentioned the Government’s role in setting rents for local authority tenants, and I want to clarify that. References have been made to the Government imposing high rent increases on tenants. The hon. Member for Cities of London and Westminster (Mr. Field) said “imposed” and “pushed through”, and the hon. Member for Brent, East (Sarah Teather) said “forced”. I completely and utterly disagree, and that is emphatically not the case. Setting rents for council house tenants is a matter for each local authority. Guideline rents for local authorities form part of each year’s housing revenue account subsidy determination to make assumptions about a local authority’s income and its entitlement to subsidy, but we do not and cannot force a local authority to set a specific increase in rents.
Setting rents, particularly deciding the annual increase in rents paid by tenants, remains absolutely a matter for the local authority. That is not something that the Government can dictate or impose.
I am interested in the Minister’s words in confirming that. Last year, Westminster city council’s housing panel said specifically that it is a decision for Westminster city council to decide rents, but that position has completely changed in the past 12 months. Will he confirm that there has been no change in Government policy since the council admitted that it was its prerogative to determine rent levels?
No, I disagree with that. Local authorities have considerable autonomy. They set their own rents, and that is a matter for them. We do not impose rent levels. This year, they have set rents at below guideline rents, which indicates that they can decide individually what to do. That is precisely the policy that has existed for some years, and I cannot reiterate it strongly enough. That is categorically the case, not as we have heard in the debate.
The Minister is exaggerating local authorities’ autonomy because, as the hon. Member for Brent, East (Sarah Teather) said, there would be a black hole in their budgets, not least when there has been so much passporting. I am not trying to make a narrow party political point, because passporting and local government lack of financial discretion came in well before 1997, and I accept that. None the less, the Minister must accept that, given the constraints on local government, the reality is that if councils do not impose rents at the Government’s guideline levels, they will be in dire financial straits, and that applies to many local authorities throughout the country.
I disagree with the hon. Gentleman, and I am pleased that he has given me the opportunity to clarify a matter of debate between him and my hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck), who pressed him on Westminster city council’s subsidy to other parts of the country.
I shall talk about the determination of general subsidy that local authorities provide to the Treasury and which flows back and forth, but first I want to highlight for the hon. Gentleman an answer that I gave to my hon. Friend two weeks ago. She asked
“how much (a) Westminster City Council and (b) CityWest Homes contributed to the housing revenue account in each of the last 10 years; and how much they are expected to contribute to it in (a) 2008-09 and (b) 2009-10”.
My answer was:
“Westminster city council has been a net recipient of housing revenue account subsidy in each of the last 10 years. The authority does not contribute surpluses for redistribution elsewhere and we expect this to continue to be the case in 2009-10.”—[Official Report, 10 February 2009; Vol. 487, c. 1839W.]
In the remaining time, I want to respond to the important point about how council housing is financed. The hon. Member for Portsmouth, South used words such as “mugged” and “robbed”. I tend to use more balanced language, but he is right that more than £200 million this year has flowed from local authorities’ housing revenue account subsidy to the Treasury, although that must be set in a slightly wider context and I am conscious that an excellent Treasury Minister, the Exchequer Secretary, is sitting beside me.
First—this is important—the Treasury is spending around £5.9 billion on housing this year, which far exceeds the amounts that are going back to the Treasury through the HRA subsidy system. Secondly, and also importantly, in recent years, the Treasury has pumped considerable amounts of money into the HRA system: around £54 million in 2007-08, around £42 million in 2006-07, and almost £208 million in 2005-06. One narrow year cannot be used to provide a definitive statement or a comprehensive view.
I understand that it is necessary to review how council house funding is provided and I shall describe what the Government are doing, but first I give way to the hon. Member for Portsmouth, South.
It is not just one year; it is successive years. It has happened in the past, and it will happen in the future, unless the system is changed. Is the Minister really saying that there is a justifiable case for council tenants in one part of the country having part of their rent taken as tax and given to the Treasury so that it can redistribute it? Why? Is he saying that he is convinced that that system should persist? His hon. Friends certainly did not share that view.
The hon. Gentleman cannot infer from my comments that I agree with that. I understand the tone of the debate. The Government know that the HRA subsidy system is unfair, complex, difficult and, in response to a point made by my hon. Friend the Member for Stroud (Mr. Drew), has no transparency. The important point about rents paid and services provided locally cannot be established, and we must do something about that. The levels of management and maintenance also need to be addressed.
My Department is carrying out a fundamental review of council house funding in conjunction with the Treasury to promote fairness and accountability, and to provide a sustainable and long-term future for council house funding. That is essential. Local authority housing is an important part of the housing offer for this country. It has served us well for about half a century, and we want it to have a key role in the 21st century. I am confident that the review will provide a long-term sustainable future for council house funding.