Housing (Birmingham)

 17 July 2001 1 pm

Lynne Jones (Birmingham, Selly Oak): There is a lot of excellent housing in Birmingham but that is not what I intend to talk about today. The Minister and I were supposed to have attended a reception organised by the National Housing Federation, formerly called the National Federation of Housing Associations, to launch its housing checklist. I now have the chance to bring forward my checklist for investment in housing in Birmingham.

A few weeks ago, there was a debate on housing in London. In replying to that debate, my hon. Friend the Under-Secretary of State for Transport, Local Government and the Regions admitted that, as leader of Southwark council, she was responsible for some of the worst housing in the country. Therefore, I know that she feels deeply about some of the issues that I shall raise today.

Between 1984 and 1987, I was chair of housing in Birmingham and I, too, was responsible for some poor housing. Throughout that time, I was passionate about campaigning for additional investment in housing stock and a more responsive service to tenants, to get away from some of the paternalistic attitudes of the past.

In the 1985 stock condition survey, each local authority had to report the condition of their housing stock to the Department responsible. Birmingham's submission was independently audited and it was concluded that approximately £750 million worth of repair work was needed to secure the condition of council housing stock. There was also a problem in the private sector, but my main purpose today is to discuss council housing stock.

Despite that conclusion, during the years that I was chair, the amount allocated under the housing investment programme averaged £56 million a year compared with our bids of approximately £160 million a year--the amount that we knew was needed. I still have the officer's calculations, which I requested, that compare what would have happened had the investment in Birmingham's housing stock been maintained at the levels set by the previous Labour Government for 1979 and 1980. Had those levels been maintained, an additional £300 million of resources would have been invested in Birmingham's housing stock.

At the same time as we fought to improve investment, we realised that we needed a more responsive housing service. Therefore, the council created new devolved services and opened neighbourhood offices. All housing services were devolved from the central housing department to local offices, and the housing department was streamlined, with housing managers at constituency level given authority and responsibility for devolved budgets.

I was proud of my work and sad to see it turned upside down almost overnight, when new people came in and, in my opinion, returned to the previous failed system. I had inherited a system in which few responsive repairs were carried out. Planned maintenance took place, but in between that tenants could not get work done. The new regime introduced responsive repairs and a reduction in planned maintenance. We never seem to get a happy medium, but go round in circles.

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At the same time that we did not get investment in our housing, social trends meant that the poorest and most disadvantaged people were concentrated in particular neighbourhoods. Those were mainly council estates and inner-city older housing stock where the tenure was owner-occupation, but by very poor people, mainly from ethnic minorities.

The stock continued to deteriorate. In 1993, Birmingham's house condition survey showed the need for investment of £1.3 billion in council housing and £0.7 billion in the private sector. It found that there were 47,000 unfit private dwellings, with 80,000 other houses in the private sector on the borderline of being unfit. There were 27,000 privately rented homes, of which 6,500 were unfit.

The council's 1995 housing investment programme submission made the case for an annual investment of £220 million per year, with £83 million of that going to the private sector. That was not forthcoming, and a meagre £38.6 million--even less than I received during my tenure as chair of housing in Birmingham--was allocated. Things went from bad to worse and in 1997-98 the housing investment programme allocation was down to £28.4 million. I emphasise that that was not money given by the Government, but the council had permission to raise the resources to meet the costs through the housing revenue account.

At the same time, a new subsidy system meant a net loss to Birmingham of £17 million of revenue per year. Birmingham's housing revenue account--the council housing account--has paid more in rent rebates than it receives in rent rebate subsidy. In other words, council tenants paid to subsidise the social security benefits expenditure, which should be paid by the Government. In other tenures, housing benefit is fully covered by the Government. Over that time, council housing was subsidising social security to the tune of £34 million. The lack of investment in housing and the sheer daylight robbery of resources from council tenants' rents demonstrate the previous Government's discrimination against council housing and council tenants. Sadly, this Government have only now changed the system: over the past four years we have lost £34 million.

The dire situation includes deterioration of the housing stock and the increased dissatisfaction of tenants, as well as massive problems in the private sector that need to be dealt with. However, local authorities are blamed for the inadequacies of the services that they have been able to provide to their tenants and other people in need. The situation is so bad that the latest stock conditions survey, which was carried out by FPDSavills on behalf of the council, indicates a maintenance liability of £3.75 billion over 30 years in council housing stock alone. It says that £1.5 billion will be needed in years one to five, yet the council projects that only £315 million will be available during those years. In year one, the investment gap is £187 million.

Faced with that hopeless position, the council is now considering transferring its stock to registered social landlords under the Government's stock transfer programme, and the Government have held out a place for Birmingham. Ministers' letters say that additional investment is possible because registered social landlords can raise private finance outside the borrowing constraints to which local authorities are subject. But why are local authorities subject to that

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kind of constraint? The same housing and people are involved, and, by and large, they will need help in the form of housing benefit in paying their rents. That is not fair, and is yet further demonstration of the discrimination against council housing.

What is now proposed? Apparently, the Government are prepared to write off £650 million of overhanging debt. The new registered social landlords will be released from borrowing constraints. That will enable them to invest more money, and the money that would have gone into debt payments will be released for new investment. However, we must ask whether that is a good way to get a better deal for council tenants. The overhanging debt may be paid off, but the council will face early redemption penalties of £240 million, the cost of carrying out the transfer is £38 million and, on top of that, the improvement work will be subject to VAT.

Why do we have a system under which £240 million will be spent to pay off the money lenders, but not a penny of that will go into bricks and mortar or improving housing? A total of £38 million will go into the pockets of well-paid consultants for their advice. I remember a time when local authority housing officers in Birmingham were invited by august bodies to provide advice. For example, the deputy city housing officer worked with the Audit Commission and the previous city housing officer sat on the Duke of Edinburgh's inquiry into housing. It now seems that we have to hire consultants at a rate of £1,000 a day to tell us how we should deal with our housing stock.

It is clear for all to see that the problem is a lack of investment. Even if that situation improves, the resources released will be woefully inadequate for the task in hand. As I mentioned, we need £1.5 billion over the next five years. It is unlikely that that level of resources will be released. It is something like a third of what will be required after the stock transfer.

A comparison already exists with one small stock transfer in Birmingham, when 2,636 properties were transferred to the Optima housing association. Funding to finance improvements in that housing equated to £89.9 million over five years. If that was scaled up for the whole of Birmingham's council housing, some £3 billion would be needed for the whole stock.

Ironically, one of the beneficial aspects of the proposals is that the management of the stock will be devolved to 10 registered social landlords, which will be locally based under the aegis of one city-wide trust. Those proposals are similar to the kind of devolution that I was trying to bring about back in the mid 1980s. That demonstrates that it is not necessary to have stock transfer to have responsive management. I share the Government's desire to empower tenants so that they have more control over the day-to-day decisions that affect their lives, but I question whether stock transfer will achieve that.

Elections have been held in Birmingham for the shadow board for the proposed new landlords. Sadly, many tenants' representatives were elected unopposed. I have not yet been able to find out the turn-out from the council. I wrote to the council in May and sent a reminder in June, but have still received no response. My guess is that it would be rather low considering how

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little information was given to tenants about the candidates. There have already been two resignations of successful representatives who objected to having to sign what they regarded as a gagging order. The feeling in Birmingham is that the council is not being open about what is going on.

The council has set up housing liaison boards that are, unfortunately, often poorly attended and have not galvanised tenants to participate. However, there is an active leaseholders board, to which I was invited to speak about stock transfer and the Government's proposals for the reform of leaseholder laws. The council no longer seems prepared to allow the board to use council facilities for meetings with an elected Member of Parliament. The chair of the board says that the council's attitude is obstructive.

If we genuinely want to empower tenants, they need to deal with officials who are themselves empowered. One of the problems with the involvement of the housing department is that there are so few clear lines of accountability. Officers on the ground have little power to determine the sort of services that their tenants want.

For example, I recently received a letter from the local neighbourhood housing manager in response to correspondence about the repairs complaints of a constituent who has been waiting several years for a chronically blocked drain to be cleared. Although a promise was made that work would be carried out, the department did not get round to doing the work before it transferred its direct labour organisation to a private organisation known as Accord. The housing officer tells me that Accord is now solely responsible for the inspection and issue of that work and has apparently decided that it will not be carried out because of the cost. Ultimately, Accord controls the work and the budgets, and the housing officer has no authority to insist that it carries out the work.

Housing officials who have to deal with tenants have no say in the repairs that are carried out, and such decisions are made by private contractors who owe no allegiance to the tenants whom they are supposed to serve. I do not believe that that is how to achieve tenant empowerment. If we genuinely want to empower tenants, we need to re-examine the housing benefit system. How can tenants be genuinely empowered if they cannot pay the rent themselves? Many have the rent paid direct, and no customer service contraction is involved. If we genuinely want to empower tenants, we should consider that.

The Government and, no doubt, the Minister will tell us that resources for housing have substantially increased. That is true, but such matters are relative, and we must consider the low base from which we started in 1997. In comparison with total investment over the seven years to 1997 under the previous Administration, the average is about £3.3 million a year. The projected average for the first seven years of this Government--the first seven of many to come, I hope--is £2.6 billion. We inherited £1.7 billion; to the Government's credit, it has gone up to £3 billion but it is still woefully inadequate.

The Government are committed to ensuring that all social housing is brought up to a decent standard by 2010, and a third to that standard by 2004. The question

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Birmingham council tenants will ask is, "Will the necessary resources be made available, whether or not we vote for stock transfer?"

1.20 pm

The Parliamentary Under-Secretary of State for Transport, Local Government and the Regions (Ms Sally Keeble) : First, I congratulate my hon. Friend the Member for Birmingham, Selly Oak (Lynne Jones) on securing the debate. I am well aware that she has had a close interest in housing issues in Birmingham for a long time.

I shall deal with the important issues raised in the debate and put them in the context of the Government's wider policies for housing, which were so effectively taken forward by my right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford) during his term as Housing Minister. The housing policy statement last December made it clear that the Government are committed to the aim of offering everyone the opportunity of a decent home, thus promoting social cohesion, well- being and self-dependence.

The breadth of our agenda is extensive by any standards and I shall set out just a few points. We have underlined the role of local authorities as strategic housing authorities and they have extra powers in that regard. We will raise the quality of social housing; our target is to bring all social housing up to a decent standard by 2010. We are providing new, affordable housing, and increasing investment through the Housing Corporation to more than £1.2 billion by 2003-04, almost double the level of 2000-01. We want to move towards a fairer system of affordable social rents and we are committed to bringing greater fairness and coherence to the structure of social rents. We are also determined to strengthen the protection available to the homeless, in respect of which our main provisions were set out in the Homelessness Bill.

Against that wider background, I shall turn to the position in Birmingham. It has long been recognised that the city council, as the strategic housing authority, faces problems which, given the size of the city, are inevitably on a massive scale. Chief among those problems is the poor physical condition of housing in all tenures. In the council sector, recent stock condition survey information shows that expenditure of nearly £3.5 billion is needed. Some registered social landlords operating in the city report significant problems with regard to stock condition and obsolescence. The private sector also has an estimated 48,000 unfit properties. Those problems can have a particular impact on black and ethnic minority communities in the inner city.

Another major issue facing Birmingham is the relative unpopularity of some of its council housing--for example, some maisonettes and high-rise flats--and low demand for social housing in some parts of the city. The council also faces the problem of failing neighbourhoods and social exclusion. There is an increasing concentration of social deprivation in particular areas, principally in the inner city, but also on some outlying council estates. There is also a close correlation between social deprivation and the social exclusion of particular groups such as black, ethnic minorities and women.

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I am sure that my hon. Friend recognises the importance of housing in the agenda for tackling social exclusion and urban regeneration. She will therefore also recognise that--apart from policies on housing--the work being done through my Department and the neighbourhood renewal programme will be extremely important in dealing with some of the problems and the issues that she identified.

The city council will submit its housing strategy and business plan for 2002-03 at the end of this month. However, the documents provided last year clearly show that the council had already given careful thought to the issues it faces. The city council has gathered information, set out priority issues and explained options for dealing with them.

The city has examined several options for its council housing, including arms-length companies, securitisation, the private finance initiative, partial and whole stock transfers and retention of stock. The council explained how all the options were assessed against a list of objectives, including the need to secure sufficient investment, to modernise all homes in the least possible time across the whole city and to maintain the improved properties in the long term. It also had to consider how to guarantee affordable rents and increase housing choice for all tenants. Housing management issues and how best to promote community regeneration were also relevant considerations.

The council carried out option appraisals in 1999-2000 and its tenants were consulted throughout. As a result of the process, the council concluded that the whole stock transfer represented the best means of enabling it to secure its objectives for council housing. The council also intends that the new community-based successor landlords will play a major role in wider regeneration initiatives in partnership with other organisations and across all tenures.

My hon. Friend pointed out that over the lifetime of the last Administration the Birmingham housing sector effectively lost £300 million in subsidies for repairs and she will recognise that such figures cannot be made up overnight. Different methods and different sources of financing are needed to make up the shortfall.

Lynne Jones : I recognise that we need to make up that loss, but I am asking why it cannot be made available from straightforward public sector borrowing and why the council cannot be given the same freedom to borrow as registered social landlords.

Ms Keeble : I take those points and I will deal with them, but I suspect that we shall be debating this matter for some time. The Government have invested substantial extra money in Birmingham's housing. The housing investment programme allocation for 1999-2000 was £26.5 million; for 2000-01 it was £80.885 million. A drop is projected for 2001-02, but on the basis of a stock transfer. An allocation for major repairs allowance will continue to allow the council to address other housing matters. Even after a stock transfer, the council would still be required to deal with other housing issues.

My hon. Friend asks why the total amount cannot be provided out of public funds. The pressures in Birmingham are replicated across the country because

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of the lack of investment in infrastructure during the last Conservative Administration. The council has taken decisions to make it possible to pay off the overhanging debt and to secure extra finance based on the rental stream.

I assure my hon. Friend that the Government are committed to ensuring that every council tenant and every tenant of social housing will be able to enjoy a decent home by 2010. It remains up to each local authority--in this case, Birmingham city council--to produce a housing strategy that will secure more say for tenants as well as providing them with good quality housing. Every local authority should consult widely and decide which investment option it wishes to pursue. Birmingham city council is a forward-looking authority, so I am sure that it will aim to improve the quality of housing as well as its management. We must deliver not just on quantity, but on the quality and choice agenda that is central to the Government's strategy for housing.

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