Housing and Regeneration Bill

moved Amendment No. 75B: 75B: Clause 22, page 12, line 6, at end insert— ““( ) Local housing authorities shall be eligible for financial assistance under subsection (1).”” The noble Lord said: This is a more substantial amendment that bears some discussion and debate. We move on to Chapter 3 of Part 1 and the aspects of the financial provisions and financial assistance from the HCA for regeneration schemes, housing schemes or whatever they are. It is similar to an amendment that was the subject of considerable discussion on Report in the House of Commons along with a number of other amendments, some of which we will discuss in a batch later on in the Bill. Basically, it is about council housing, whether it has a future and whether the Labour Government believe in it any more and are prepared to treat council housing on the same basis as social housing of other kinds. In that sense, it is what might be called a ““level playing field”” amendment. I do not want to repeat a great deal of what was said in the Commons. Rather, I want to lay out the basic case, which is, essentially, about the treatment of local authorities that still have traditional council housing, as opposed to ALMOs or housing that has been transferred to housing associations and so on. The Prime Minister raised a lot of hopes when he said, "““councils will be allowed to build homes again””." In a sense, there is nothing to stop councils building houses now; it is just that, because of the way the system is operated by the Government, most councils do not find it possible. Specifically, they are not provided with the resources to do so. At present the Government prohibit local authorities from applying for a social housing grant to help build new council homes. Again, when I talk about ““council homes”” here, I am talking about traditionally controlled and organised council stock, not ALMOs. Registered social landlords can apply, local authorities with ALMOs or special purpose vehicles can apply, but not traditional council housing with secure tenancies at traditional council rents. This is an extremely controversial issue in the country, in local government and in those areas that still have council housing, which, increasingly, are places where tenants have had the option of various kinds of stock transfers but have opted to stay with their local authority. As a result, the Government carried out what I understand was called the opt-out pilot. The result, published in March 2008, shows that councils that are still running traditional council housing will have a 43 per cent shortfall in funding for management, maintenance and repair of their homes in the next 30 years, which is clearly a very serious matter. Council housing is being underfunded. Those of us who believe in council housing think the system is unfair in the use of receipts and in funding, particularly the fact that those local authorities are not eligible for the social housing grant. At the moment, a majority of councils with traditional council housing are in a position of so-called negative subsidy, meaning that there is a subsidy paid to the Exchequer by council tenants. Continuation of the present system would increase that; it is suggested that if the system were to continue—which is unlikely without some changes—there would be a subsidy to the Exchequer from council tenants of something like £1 billion by 2022. The current financial regime, as I have just said, sees a majority of housing authorities with traditional council housing in negative subsidy. Between 1990 and 2003, some £13 billion has been taken from rents to subsidise other government spending. The Government brought in the major repairs allowance to address part of the problem—that traditional council housing was simply not kept in a proper state of repair, other than day-to-day repairs. It has gone some way towards solving the problem but nothing like far enough. This is all ironic really because, traditionally, going back many years—as, regrettably, some of us can—the debates about subsidising or funding council housing were all a question of the balance between rent and rate levels. Every year, every housing authority had the debate, which was often politically controversial and controversial locally in other ways, and people made those decisions locally. The position has been very different for quite some time, as it is a long time since councils were able to set their own rent levels. In effect, the system is now determined from above, and councils operate it. Some of us may think that that is deplorable as a matter of principle, but it is the position that we are now in. In 2008-09, it is estimated that council tenants will pay around £6.1 billion in rent and, of this, £3.4 billion will be returned to the councils and kept by them for management and maintenance, while £1.3 billion can be spent on repairs through the major repairs allowance. That still leaves a £1.4 billion subsidy to the Exchequer in a single year out of the rents paid by council tenants. In addition, capital receipts from the right-to-buy system simply have not been ploughed back into council housing or, indeed, into social housing; £45 billion has been raised and only one-quarter of that has been recycled into improving public housing, according to a report from the Joseph Rowntree Foundation in December 2005. We all know that a substantial subsidy is being paid through stock transfer. I have talked in the House previously—and I shall not repeat it now—about what happened in my own authority in Pendle when the council decided, against my wishes, and the tenants voted for a stock transfer to a housing association called Housing Pendle, which is nevertheless doing a good job. A large amount of money was spent on that, a lot of which did not go into housing. For example, Pendle Council is now a debt-free authority as a direct result of that stock transfer. That does not seem a sensible way in which to run the public finances, whatever short-term advantages there are to some parts of the system. Debt write-off in the past seven years has resulted in £2.5 billion on stock transfers. An increasing amount is spent on gap funding, with an estimate of £387 billion by 2012. As we all know, if you do not transfer, you do not get anything like the same amount of money to spend on your houses. In Pendle’s case, it was a comparison of £45 million with £10 million up to 2010; without the transfer it would not have been possible to maintain houses of a decent standard beyond then, which is why people went for it. So it is bribery, blackmail and bullying—but it is astonishing the number of places in which the tenants are not accepting that and are voting to stay with their local authorities in traditional council housing. The present system cannot go on. The Government’s answer is to put more pressure on councils to transfer but, whether we like it or not, there will be a lot of places in which the tenants do not agree with that and the councils do not agree with it—and good luck to them, I say. But the management and maintenance allowances of £1.3 billion are too low; the major repairs allowance, at £950 million, is too low; and, in particular, the inability to apply for the social housing grant is a substantial barrier to the expansion of council housing in those areas—which means, effectively, the expansion of the main system of social housing in those areas. The present state of the housing market may be temporary or medium term, but it is probably not long term. Nevertheless, it is becoming clear that if the Government are to meet their target of 3 million new homes by 2020, they will have to bring on board the 200-odd local authorities that still have traditional council housing in areas where that is seen locally as the future and where the tenants will continue voting for it. Unless the Government are able to bring local authorities into the system, they will not build all the new social housing required and will certainly not meet the target of 3 million new homes. By and large, council housing has been a tremendous success in this country in the 80 years or so—it is rather more than that—since it was introduced. It has a real future in those areas where people want to continue it. The way in which the Government are discriminating against it now is a cause for great concern. Without trying to be party political about the issue, I hope that they will be manage to change their policies significantly over the next couple of years. I beg to move.