Localism Bill

Lord Beecham Excerpts

Wednesday 7th September 2011 Lords Chamber

[Lord Best]

My Lords, Amendments 41 and 51 are also about local authorities having greater freedom to organise their housing affairs without constant barriers being put in their way. These amendments concern the restrictions on local authorities that flow from taxing the sales of right-to-buy properties or any other sales of properties by housing authorities at 75 per cent of the money received by the local authority. Housing associations can sell properties, whether under the right to buy that they operate or on the open market where they have a vacant property. They can recycle 100 per cent of their receipts back into housing, to improving their housing stock and to building new homes.

The housing association of which I used to be chief executive, the Joseph Rowntree Housing Trust, had a programme of selling alternative vacant properties on our estates so that we could get a better mix of people of different incomes living in the same community. We could replace every home that we sold because we received 100 per cent of the funds from that sale to recycle into new homes elsewhere. However, local authorities have to pay 75 per cent of their proceeds back to the Treasury. Now that we are in the mode of reforming the housing revenue account, this seems to be the moment at which that restriction should be lifted and local authorities should be liberated to recycle the proceeds from sales.

I understand that the Treasury is very reluctant to forgo the receipts that it currently collects. That perhaps is understandable, because this is serious money that is coming into the Treasury. It has managed to scoop the pool here for many years, and tens of billions of pounds from right-to-buy sales have gone into the Exchequer. I understand that it does not wish to say goodbye to those arrangements. I also understand that in settling the debt in the new self-financing scheme for local authorities, account has been taken of the rental income that people will forgo once a property is sold. Nevertheless, saying goodbye to 75 per cent of the proceeds from right-to-buy sales, in stark contrast with the way housing associations are treated, seems to be an item on which reform at this time would be very significant.

Let me make it clear that it is not only right-to-buy sales that attract a 75 per cent tax—not a tax on the capital gain, but a tax on the sum received—as it is also imposed on the sale of bits of land and properties that are vacant and not subject to the right to buy. Where local authorities, like the Rowntree trust, would like to sell council houses to get a better mix of incomes across an estate, local authorities will not be able to recycle the proceeds from those sales, as they will have to pay 75 per cent to the Treasury. I think that the Treasury will argue again that it would like to see those receipts coming back to it since deficit reduction is top of the list of the Government’s priorities, but the Treasury is not going to receive anything from the sale of properties outside of the right to buy if local authorities know that it is such a bad deal to sell them in order to regenerate an area using the money they raise. No businesslike authority will proceed with these sales in order to pay money to the Treasury as a voluntary act. Local authorities simply will not do it. The Treasury is not going to forgo capital receipts if the 75 per cent tax on councils is lifted for those properties where the right to buy does not exist—in other words, where the council can make a sale voluntarily rather than being compelled to do so, as with the right to buy. I hope that the Government will be able, if deficit reduction in this spending round is so paramount that nothing can be done about the right-to-buy receipts, at least to offer to some extent a reassurance in relation to the sales of other properties that are not subject to the right to buy.

During the summer I have had discussions and correspondence with the Minister, and I hope that she will be able to tell us this afternoon that there may be some change of the Government’s mind about this very severe restriction on local authority activity, one where the ludicrous level of taxation makes it very difficult to run a business. I beg to move.

[Lord Beecham]

My Lords, the noble Lord referred to the 75 per cent tax levied on the proceeds of right-to-buy sales. It is interesting to note that at the moment there is a good deal of pressure on the Government to abandon the 50 per cent tax charged on those with substantial incomes and that, indeed, at least part of the coalition Government is interested in a mansion tax, which I suspect would be levied at substantially less than 75 per cent. In the context of housing, we should not be thinking in terms of taxation. The nation is paying a very heavy price in terms of housing need for the refusal of Government, initially in the 1980s, to allow any of the proceeds of the sale of council housing to be reinvested in housing and, it must be said, for the somewhat belated and modest change that was made to those rules by the previous Government. It does not seem to make any kind of economic sense.

The money raised by the right to buy would be ploughed back into housing provision. That would have two effects, the first of which would be that it would create assets on the balance sheet; it would not disappear into thin air. Secondly, it would give a much needed boost to the construction industry and therefore to the economy at a time when, as the Chancellor has belatedly conceded, things are not looking good in terms of the projected growth rate. Thirdly, it would lead to employment being taken up and thus a reduction in the cost of paying benefits. Most particularly, I suspect that the result would be that houses would be built rather more quickly than through the hoped-for gains to be made by the proposals in the national policy planning framework, which seem to assume that planning is the reason for the low number of houses being built, whereas of course the key issues are in fact finance and people’s capacity to buy.

Looking at it purely in housing terms, the noble Lord’s amendment makes a great deal of sense. I hope that the Government will rethink their position because it would make an immediate and much more significant contribution to dealing with the housing problem, as well as helping with economic growth without damaging the balance sheet. Indeed, in some respects it would strengthen the balance sheet with assets that are likely to appreciate.

[The Earl of Listowel]

My Lords, I hesitate to speak, having not taken part in previous work on this Bill, but my noble friend’s amendment and his words bring to mind some research that was brought to my attention some years ago into lone mothers living in isolation with their children, scattered around cities. They were often forced to live a long way from their communities and extended family because there was insufficient housing stock to enable them to be placed closer by. So if my noble friend’s amendment will help local authorities to supply enough housing to ensure that parents—more often than not mothers—bringing up children on their own had easy access to their communities and extended family, I certainly want to support it.

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[Lord Beecham]

My Lords, I welcome the contribution of the noble Lord, Lord Newton, not least because he is only the second Conservative Back-Bencher to speak in seven hours of debate on Report. I dare say we will hear a great deal more from him and, I hope, others as we go forward.

I entirely endorse the remarks that have been made so far by noble Lords, and I share the experience of the noble Lord, Lord Tope, of serving as a local councillor. It is frequently a local councillor’s task to take up tenants’ complaints, as one does, with the relevant housing department or ALMO—many authorities have now transferred their stock—to help people through the council’s complaints procedure and to help them move complaints to the ombudsman. Many of us have done that. I find it rather patronising of those who suggest that it is somehow necessary to reconnect councillors with social housing. Most of us who represent areas with social housing regard that as part of our daily, weekly and monthly routine.

However, there are some additional issues to which I would like to refer briefly. First, as I read the Bill, there need be no nexus between the individual making a complaint and the councillor for the area in which he lives, because the Bill speaks of a member of the housing authority. It could be from one end of Newcastle to the other in my own case. There is no necessary connection between the tenant and the member he approaches, and that is hardly sensible, even if one follows the line of the Government’s thinking on this matter.

Secondly, I presume that under the adjudication by the ombudsman there may be the possibility of an award of compensation. That is not necessarily binding on an authority, but it is pretty indicative and most authorities, though I regret to say not all, comply with those recommendations and make a payment when one is indicated. On the face of it, it would seem that the individual member adjudicating would also have that responsibility. It seems distinctly worrying that there should be implicit pressure on a member not only to make a finding but also, perhaps, to award compensation. That does not seem to be a healthy relationship between an elected councillor or, for that matter, a Member of Parliament, and a constituent.

The third factor that we may have to bear in mind is that there are pending changes in the legal aid and advice system that will effectively strip people of their right to legal aid and advice. In this housing area, whether it be with local authorities, housing associations or other landlords, there is frequently a need for legal advice and support, and one fears that effectively removing that source will be unhelpful to tenants. Frankly, imposing the responsibility on elected members, whether councillors or MPs, is by no means a substitute for such proper advice.

All these factors tend to the same direction, namely that the amendment should be accepted by the Government. There is no huge political issue here. As we have heard, there is no demand for this outside, from tenants, their representatives or anybody else. There is no logical basis for the recommendations and I hope that the Minister will indicate that she will think again about the desirability of this additional superstructure on a system which is working perfectly well.

[Lord Whitty]

My Lords, my name is on Amendment 68, which provides for a dual system. I do not think anyone is arguing that the tenants or leaseholders should not have the right to call in their councillor, MP or tenant panel. The issue, as has been said, is whether they should also have—from the start, not just when they have already been to their councillor—the ability to go direct to the ombudsman.

I have two points on this. First, it is not only a contradiction to principles of administrative law, it is also a direct contradiction to most consumer practice in the rest of the economy. As the noble Lord, Lord Newton, said, there are numerous ombudsmen. Some were set up by Parliament, such as the financial services and energy ombudsmen, and some are industry-based, dealing with anything from double glazing to property. In none of those cases is there a filter after the initial filter of having to raise the complaint with the provider in the first place, as my noble friend Lady Hollis has said. After that point, there is not a single example where a third party, of whatever description, is required to intervene. That may be discrimination against the English, but it is certainly discrimination against tenants and leaseholders as compared with any other consumer.

Secondly—this ought to be an obvious point, but it has not yet been spelled out in this crude way—there are a lot of reasons why individual tenants and leaseholders may not want to go to their local councillor. They may have fallen out with them, or had a terrible decision from them, or they may be their political opponent. There are also all sorts of reasons why they may not wish to raise the issue through the tenant panel, although I believe that is a good innovation. They may know people on the panel whom they disagree with or they may not approve of earlier decisions made by the panel. It surely should not be for Parliament to say to them that, despite all their reservations and previous experience, they must go through one of these three channels. All three channels are important and should be there, and if they need to be put on the face of the legislation let us do so. But we must not deny the ordinary social housing tenant or leaseholder within social housing provision the right to go direct to the ombudsman. I plead with the Government to drop this absurdity.

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[Lord Palmer of Childs Hill]

My Lords, this amendment also has the fatal “o” word—ombudsman—in it, but noble Lords need not be afeared because it is a very non-contentious issue to which the noble Baroness, Lady Hanham, has kindly replied, and I agree with her answer. I tabled the amendment about the ombudsman because, when reading the Bill, one notes that the Housing Ombudsman will make a determination, but no mention is made of any compensation element. Determination is all very well, but an applicant may want monetary payment or grovelling of some sort and that is not mentioned in the Bill.

When investigating this in advance of the helpful reply of the noble Baroness, Lady Hanham, I went back to Schedule 2 to the Housing Act 1996, which says, as the Minister implied, that the Housing Ombudsman may,

“order the member of a scheme against whom the complaint was made to pay compensation to the complainant”.

It is already in law that compensation of a monetary sum can be paid. I will make what is almost a drafting point. The laws of this country are so entwined and confused that it is wrong that one has to keep referring back to previous Bills to understand the Bill that one is looking at. We are not talking only of lawyers who will go back and say: “Ah, that is in the Housing Act 1996”. In this Bill one does not see any element of monetary repayment as compensation. I seek acknowledgement that, in whatever paper forms are produced, there will be a cross-reference to the 1996 Act so that people can see that there is a determination. I would be very happy if the Minister would confirm something on those lines. I beg to move.

[Lord Beecham]

My Lords, I will follow the noble Lord, Lord Palmer, on the question of compensation. Clearly, the ombudsman route provides the possibility of compensation. It is not certain whether that would apply to the alternative route, which we debated at some length earlier. Perhaps the noble Earl could indicate whether under the alternative method of the designated person—a councillor, Member of Parliament or tenant panel—there will be the opportunity for a compensation payment to be made by the designated person. If not, we would have two systems, one of which would afford the possibility of compensation while the other would not. I am sure that the noble Earl much appreciated that word in his shell-like ear. In the event that we will have two competing systems, will the Government ensure that guidance is given to tenants that that is the case—in other words, that under one system they may get compensation while under the other they will not? The matter could be discussed in the forum to which the Minister referred. Strange circumstances could arise if the situation were not clear.

[Earl Attlee]

My Lords, Amendment 74 highlights the Housing Ombudsman’s power to order a member landlord to pay compensation to a complainant. I understand that my noble friend would like there to be greater clarity on how the ombudsman calculates the level of compensation to be awarded and I am grateful to him for raising the issue. Our view is that it is not necessary to include any new specific requirements in the Bill. In practice the ombudsman already provides a breakdown of any compensation he has decided to award, which is done in the context of what the ombudsman considers to be fair and reasonable in all the circumstances of the case. This arrangement allows flexibility to address specific issues and to provide a useful level of information, depending on the circumstances of each case. Clearly it would be difficult to attain this flexibility in a legislative duty on the ombudsman.

The ombudsman is intending to consult early next year on a revised statutory scheme to reflect the proposed extension of his jurisdiction to include complaints about local authority landlords, in addition to housing associations. I have no doubt that there will be further opportunities through that consultation process to engage on these and other issues. In answer to the question asked by the noble Lord, Lord Beecham, anything referred to the ombudsman means that compensation can be paid.

[Lord Beecham]

My question is in relation to the other routes that have been included in the Bill and which may be taken further in discussions before Third Reading. Would compensation be payable when the matter is dealt with by a local councillor, Member of Parliament or a tenants panel? If not, would that be made clear to the applicant, whereas the ombudsman would provide the possibility of compensation?

[Earl Attlee]

My Lords, in view of the complexity, a detailed letter would be appropriate.

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[Lord Kennedy of Southwark]

That is a very interesting response. I have heard the exact opposite from the government Bench on many other proposals.

[Lord Beecham]

I remind the Minister of the thrust of the question of the noble Lord, Lord Best—the risk that because an order is enforceable, the RSL sector is regarded as being within the public sector, with consequential adverse effects on the financial status of its expenditure in relation to the Government’s expenditure requirement.

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[Baroness Doocey]

My Lords, I declare an interest as a member of the London Assembly and the Metropolitan Police Authority.

This amendment seeks to deal with the nature and extent of overcrowding and to highlight why the present law is inadequate and needs reform. Overcrowding is an invisible problem compared with homelessness and rough sleeping. Consequently, it tends to be viewed as less of a priority. But overcrowding has a serious impact on children, especially their health and educational attainment, and it disproportionately affects larger households.

Overcrowding is a major problem in London. In 2008 London had more than 200,000 overcrowded households, almost 7 per cent of London’s homes. That was an increase of one-third over the previous decade. About half of these overcrowded households are in the social rented sector; overcrowding is worse in that sector than in any other form of tenure. London has over 40 per cent of England’s overcrowded households in the social rented sector, and nearly 400,000 London children live in overcrowded conditions. The overcrowding rate for black and minority ethnic households in London is about four times that for white British households.

There is no doubt that overcrowding is largely a consequence of housing supply shortage. Therefore this amendment is not a complete solution to overcrowding. For that, we need to build many more homes and, in particular, larger family homes. But this amendment is intended to deal with the abuse of the existing housing stock.

Breaching legal overcrowding standards is a criminal offence, but the official definition of overcrowding has survived unchanged since 1935 and is seriously outdated. Relatively few households are legally overcrowded even though some people have to sleep in living rooms and kitchens. There is little incentive for local authorities to tackle the problem if the law is not actually being broken. This amendment meets the need to provide an updated definition of statutory overcrowding based on the bedroom standard. This would realign the law with the actual problem and would therefore provide local authorities with an incentive to reduce overcrowding. Once there is a serious legal incentive in place for local authorities to tackle overcrowding, it may force them to reorder their priorities when it comes to housing allocation policies.

Overcrowding is a very serious issue. So if the Government are not minded to accept this amendment, perhaps my noble friend the Minister could outline what the Government propose to do to update the official definition of overcrowding, which has not changed for the last 75 years.

[Lord Beecham]

My Lords, even in your Lordships’ House there are not many of us who were around when these standards were laid down in 1935, as the noble Baroness has pointed out. Housing conditions in general have improved since those days, but she is quite right to draw attention to serious issues around overcrowding. They are not confined to London, although her figures show these issues are extremely problematic in the capital. She is also right to draw attention to the particular problems faced by some BME communities, many of whom have large families and find it difficult to secure accommodation which is adequate to house them.

I have every sympathy with the amendment. I note that the measurements are given in “old money”, when perhaps these days we should be looking at metric equivalents, but that is a trivial point. I am however somewhat at a loss as to how to respond to the Government’s response to the amendment. It seems to be based, to put it crudely, upon facile optimism about the effects of the measures that are being taken around the duties to deal with homelessness and, in particular, the use of flexible tenancies as a means by which, apparently by magic, accommodation of the appropriate size in the appropriate location will become available. The Minister for Housing assured us at a meeting a couple of days ago that he does not expect flexible tenancies to go much less than 10 years in duration, as opposed to the two years that was thought to be the benchmark. In his view—I hope he is correct—that will in fact constitute only a handful of cases. Given that, I cannot see how this measure is going to free up significant accommodation in general, let alone for this particular category.

It seems to us in the Opposition that the noble Baroness has touched on a key issue and the Government’s response thus far has not addressed it to any significant extent. Identifying the issue and improving the standards by which the question of overcrowding is to be judged does not in itself transform the situation, of course, but it would certainly allow housing authorities and the Government to have a better view of the reality of the situation.

I hope that the noble Baroness will not mind me quoting the example she gave in a conversation with me, of a recent case of a child sleeping in a bath which was deemed by the housing department to be acceptable because the child was in “a room”. It is extraordinary for this situation to be acceptable to a housing department in 2011. It could hardly have been acceptable in 1935. But statutorily it is acceptable, and she has other examples of that kind. This is extremely worrying and I am sure the Government would be horrified if there were found to be a significant number of such cases.

Strengthening the framework will allow a proper measurement to be taken of the degree to which this is an issue that needs to be addressed, and with a greater urgency than is likely to occur simply as a result of the other changes that the Government have made. I hope that the Minister will talk further with the noble Baroness to see how this can be improved and, beyond that, agree that this is an issue that should be pursued outside the context of this Bill as the Government look into housing policy generally.

[Baroness Gardner of Parkes]

My Lords, I am sympathetic to the idea of the need for action on this. I was very distressed this week to meet someone in a studio flat, or self-contained bedsit, who told me it is impossible for her to sleep. The private accommodation units where she resides are listed as being for one person, but immediately above her, accommodation of the same size is shared by five people. She finds it impossible to sleep, or even live there. She is trying to find somewhere to move to in any case, as her small accommodation is going up from £600 per month to £800 per month, but she works as a cleaner and is experiencing great difficulty.

What worries me is that this is an illegal overcrowding, from what the noble Baroness has said, and yet the tenants are frightened to do anything about it for fear of being put out. I asked her why she did not report it and she said she did not dare because she would be put out and would have nowhere, and until she could find somewhere to go to she could do nothing. This is what worries me about this amendment. It is marvellous to make all these proposals but where is the accommodation going to come from to house all these people?

I come from a very big family and we were fortunate enough to have a house, and space is not so limited in Australia, but if you have a big family would you not rather be somewhere safe and secure, even overcrowded, than nowhere at all? I am very concerned about the impact of being too precise about things. As I say, in theory it is absolutely marvellous but I would really like to know how it is going to work in practice.